Public Service Pensions and Judicial Offices Bill [Lords]

Matt Rodda Excerpts

2nd reading
Wednesday 5th January 2022 Commons Chamber

[Matt Rodda (Reading East) (Lab)]

I am grateful for the opportunity to close the debate on behalf of the Opposition. As my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) said, we do not oppose this important Bill—indeed, I welcome the serious debate that has taken place this evening—but we will continue to hold the Government to account as the Bill progresses. I thank Members on both sides of the House for their valuable contributions, and I am grateful to the hon. Members for Gloucester (Richard Graham) and for Bromley and Chislehurst (Sir Robert Neill), the right hon. and learned Member for South Swindon (Sir Robert Buckland), the hon. Member for Glenrothes (Peter Grant), the right hon. Member for Newark (Robert Jenrick), my right hon. Friend the Member for Hayes and Harlington (John McDonnell) and the hon. Member for Edinburgh West (Christine Jardine).

Our public sector workers play a vital role, and I pay tribute to the hard work of our NHS staff, teachers, police, firefighters and many other dedicated public servants, all of whom are affected by this Bill. We owe these public servants an enormous debt of gratitude for their vital work during the pandemic. As we heard, these workers had to be at work physically throughout the pandemic—not at home or working online. They were caring for the sick, delivering key services or keeping our streets and communities safe. It is right that these dedicated workers can expect a decent pension in their retirement. It is not always understood that most of the schemes in question operate on a pay as you go basis, with workers themselves contributing throughout their working lives.

The shadow Chief Secretary, my right hon. Friend the Member for Wolverhampton South East, raised a number of important questions in his speech, and I am afraid to say that, so far, Ministers have failed to fully answer them. I hope the Minister, in his closing remarks, will now reassure these hard-working public servants about a number of matters.

The most important question is, where will the £17 billion it will cost to fix the Government’s mistake in 2015 come from, and who will pay this enormous bill? Will it be the taxpayer, or will it be the pension scheme members?

The next question is about the design of the remedy the Government have put forward. I welcome their decision to accept the mechanism favoured during the consultation, but we need clarity about whether that choice will incur any costs for the pension scheme members concerned. If the Government are going to ask scheme members to take potentially significant decisions, will they commit to providing much more information to pensioners and savers to help them avoid making costly mistakes? Ministers have failed to do so in the past, and even now they seem reluctant to include pension scams in their important Online Safety Bill, despite the spiralling costs of pension fraud and mis-selling.

We also ask the Government to be clear about how the cost control mechanism will work. We were told at first that if costs breached the ceiling, benefits would be reduced, but the Government have said that no member will see benefits reduced in this case. What does that mean? How will the necessary funding be provided, and is there going to be a time after which such a guarantee may lapse? Ministers have left a number of crucial questions unanswered about part 2 of the Bill as well: what are the estimated costs to the Treasury of underpinning the liabilities of former employees of Bradford & Bingley and Northern Rock, and are those costs additional to the £17 billion budgeted for the McCloud response, or are they part of the scheme and the overall response?

Carrying on to the next part of this important Bill, which concerns the judiciary and has been the subject of much of the debate this evening, do the annual allowance and lifetime allowance not apply to judges? I ask the Minister to clarify that very important point: it is unclear, and it must be clarified. If judges are not covered by the same rules, how will the Government justify that decision to other pensioners? Indeed, does that decision leave the Government open to legal challenge in the future? Furthermore, colleagues in the other place voiced concerns that raising the mandatory retirement age for judges could make it more difficult to increase diversity in our legal system. I hope the Government will make available further details of how they plan to ensure this does not happen. We understand the need to clear the backlog of cases, but I urge the Government to do far more to increase diversity in this very important profession.

I will also take this opportunity to underline the concerns raised by the Police Superintendents’ Association and, indeed, the Fire Brigades Union. Scheme members in the police and fire services could be adversely affected by this Bill because of the ways in which the years between 2015 and 2022 are treated. We know that the Home Office said that further work was needed on this issue, and Ministers have discussed it with representatives of the police and fire services. How will the Government now address this important point? I hope the Minister will speak to that in his closing remarks.

Finally, I urge the Government to respond to the points raised by the Public Accounts Committee when it went through the proposals in a great deal of detail. We must fully understand the consequences this Bill could have for both employees and employers, and I am concerned that the Government have not properly considered the knock-on effects on public service recruitment and retention, which are both absolutely critical issues for these vital public services. There is also a risk that more means-tested benefits may be required if there are changes to public service pensions, and that public service pensions may be worse off. I hope that we will hear reassurance from Ministers on those crucial points. I assure the House and the wider public that we in the Labour party will keep raising these important questions, and I hope the Government will respond in a timely and appropriate manner.

I realise that time is pressing, so I will end my remarks with the following: on an issue of such great importance as the future pensions of so many public sector workers, the public deserve to be confident that the Government have adequately prepared for all eventualities and fully understand the consequences of their actions. Public sector workers, as well as Members of the other place, have made their concerns and questions clear, and it is regrettable that they have not been answered in full so far today. I hope that the Minister will now take his opportunity to reassure the House, the wider public, and public servants about these important points.

Working People’s Finances: Government Policy

Matt Rodda Excerpts

Tuesday 21st September 2021 Commons Chamber

[Liz Twist]

I thank my hon. Friend for her intervention and share her concern about the number of people who will be affected by this cut. Being in work is not enough; we need better quality jobs, with proper conditions and adequate pay.

I want to mention the energy price cap rise and the inevitable cost rises that will follow. Many of these families will feel the impact of that. Many may be living in poorly insulated homes and may feel the need to increase the heating in their properties. We know that there are links between poor quality housing and poverty and, indeed, poor health, so the energy price cap rise will have a significant impact on those families—probably more significant than for some of us. Labour wants to keep the uplift until we can replace universal credit with a better, more compassionate social security system that properly supports those who need it.

I want to refer also to the increase in universal credit claims as a result of the pandemic. I have managed to get information from Gateshead Council showing a significant increase in council tenants across Gateshead claiming universal credit. Indeed, from April 2020 to the end of March 2021—almost exactly that whole year of the pandemic—there were 1,758 new universal credit claims. Some of those dropped off during the year—perhaps they were not eligible, or whatever—but there was still an increase of nearly 1,100 tenants claiming universal credit.

One other issue, which we have talked about often and must not forget, is the five-week wait, which leads to incredible arrears, certainly in Gateshead. By 31 March, 69% of Gateshead tenants were in arrears by an average of £666. Clearly, those arrears need to be resolved at some stage. They are a debt around the neck of those people.

I want to talk about the national insurance rise. Research from the New Statesman and the Resolution Foundation shows that people in the north-east will lose a higher proportion of their disposable income than those in the south of England due to incomes on average being lower in the north-east: people in the north-east will lose up to 25% more income than those in the south-west. When it comes to social care, people will still need to sell their home to fund their care, especially people with lower value homes. They will still face a substantial cost before the cap kicks in. Homeowners in the north-east could face care costs of up to three fifths of their assets, including the value of their home, while homeowners in London face costs of just 17% of their assets due to the difference in the value of housing. That is deeply unfair, on top of the additional contribution for many workers who, as I said, are in relatively low-paid jobs.

[Matt Rodda (Reading East) (Lab)]

My hon. Friend is making a compelling and powerful speech about a wide range of issues affecting her region, and I commend her speech to the whole House. I was particularly moved by the point about housing and the difficulty for many tenants. Does she agree that there is a huge need for more council houses in this country?

[Liz Twist]

I absolutely agree about the need for additional council housing.

The rise in national insurance will disproportionately affect younger people and those on low incomes. It is absolutely right that we need more money for the NHS and social care after years and years of cuts, but it cannot be right that it is the lowest-paid earners who pay for it. The Government’s plan will not end the crisis in social care or help to fix the backlog in the NHS.

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[Jessica Morden]

My hon. Friend is right. We owe a debt of gratitude to all those out there in the community—in churches and in other organisations—who have stepped up to help those who are suffering the most.

According to the BBC food price index, food prices have risen by 8.3% since January, with meat and fish up by 22% and fruit and vegetables by 14.7%. As has already been said today, the Government have done very little to address the supply chain issues which are leading to higher prices yet again. We are seeing HGV driver shortages and delays at borders and ports, and we need the Government to address those problems. As we have seen in many news reports, the costs of raw materials for many goods and services have risen as well, affecting the cost of furniture, women’s clothes, vets’ bills, second-hand cars and more. So much for the positive strategy from this Government for shaping our future post Brexit.

[Matt Rodda (Reading East) (Lab)]

My hon. Friend is making some excellent points about the wide range of problems that families are facing—not only the deeply mistaken cut in universal credit and the end of the furlough scheme, but wide-ranging price rises linked to supply chain issues and the Government’s ineptitude in so many respects. All those problems are hitting ordinary people across the country very hard. Do we not face a perfect storm for many of our residents?

[Jessica Morden]

My hon. Friend is spot on. It is indeed a perfect storm, with all those factors coming together at the same time.

Petrol and diesel are also more expensive, costing more than they have since 2013, and the cost of buying a home has skyrocketed in Newport East. Home-Start Cymru has highlighted the huge rise in prices in Monmouthshire, and we have seen the same in Newport. That has put the opportunity to buy beyond many people, particularly our local young people trying to get on to the housing ladder. Housing insecurity has increased, with more mortgage arrears and more people pushed into renting. My hon. Friend the Member for Houghton and Sunderland South mentioned the research carried out by Zoopla, which has reported that rental prices have risen by 5% in the last 12 months, while wages have remained stagnant for many. Average rail fares are rising three times faster than wages, and are 50% higher than they were in 2010. Studies by the Office for National Statistics suggest that those who commute to work are set to experience the steepest increase in rail fares next January. As we heard from my hon. Friend the Member for Reading East (Matt Rodda), it is all coming together in a perfect storm.

There are further problems on the horizon. This week we have seen the crisis in energy costs and soaring prices. Fuel debt is already the third most common type of debt with which people seek help. The energy price cap for October—just as the cold weather sets in, furlough payments end and the universal credit uplift is scrapped—is set at £153, higher than the warm home discount payment, which has been set at the same rate since 2014. As Martin Lewis has said on his website, that payment should be increased in the Budget, and I hope that the Ministers are listening to that too.

The CAB estimates that 2 million households are already behind in paying their energy bills. As I have mentioned the CAB, it is important to note that while demand for debt advice has gone up and up, funding for debt advice services has decreased. If the Government do nothing else as we come into the autumn, they should at least look at properly funding our debt advice services.

The cutting of the universal credit uplift will be the biggest overnight cut to social security, with 8,630 households in Newport East alone seeing their money cut by £20 a week. I know at first hand from my constituents, as many hon. Members do, how the uplift has been a lifeline for those struggling to buy essentials.

Health and Social Care Levy Bill

Matt Rodda Excerpts

2nd reading
Tuesday 14th September 2021 Commons Chamber

[Catherine West (Hornsey and Wood Green) (Lab)]

I must agree with the hon. Member for South Dorset (Richard Drax) in one regard: we are talking today about not a small tax rise but a whopper. This levy takes us back to 1950s levels of taxation.

The post-pandemic recovery is currently particularly fragile. Usefully, the House of Commons Library sent me the statistics on the jobless figures today—I am sure many other Members have theirs—and in Hornsey and Wood Green there are 6,430 jobless people. That is 4,000 more than pre-pandemic, so the idea that the recovery is secure is for the birds. There is a real question mark in my constituency over job retention following the end of furlough, because the recovery in the service-based economy is yet to take off securely.

What is on the minds of my constituents in Hornsey and Wood Green? First, the likely cut of £20 per week for those on universal credit, which will affect 12,970 households in Hornsey and Wood Green.

Secondly, the two-child limit. If people in Hornsey and Wood Green have large families and rely on the benefit system for some assistance, only the first two children get any help. I am a third child. I do not know how many Members are third, fourth or fifth children, but they should think about their parents cursing them because they were born third, fourth or fifth.

Thirdly, energy bills are about to go up. I am sure the Minister has done his own analysis of the fact that we did not have a windy summer, which meant that the renewables did not do as much as we had hoped. We will be reliant on gas and even coal, which we should not be given all our commitments in respect of COP26. For those reasons, we will see increases in our energy bills this winter.

Fourthly, the potential for higher food costs is on my constituents’ minds—that is, if they can find the food that they like in the supermarkets after the effects of Brexit and covid.

[Matt Rodda (Reading East) (Lab)]

I am grateful to my hon. Friend for giving way on that very good point. Does she agree that it is fundamentally unfair for hard-working younger people, who face dramatically increased costs of living and high rental costs, to have to pay more than their landlords, who will not be taxed under the Government’s proposal?

Health and Social Care Levy

Matt Rodda Excerpts

1st reading
Wednesday 8th September 2021 Commons Chamber

[Mel Stride]

I will not, actually, because I am very low on time.

That is the sword of Damocles that hangs regularly over the head of our Chancellor, so that leads us to taxation. If we look at taxation and the amounts involved here, there are only three taxes that we could consider. About two thirds of all tax is raised through income tax, national insurance and VAT. We then ask ourselves, “What criteria are we going to apply to the tax measures to test whether they are the right ones or not?” There are at least two. One is that we should look after the least advantaged in our society—the lowest-paid—and the second is that we should look after those who are the youngest, who have borne the greatest brunt of the economic consequences of the pandemic.

[Matt Rodda (Reading East) (Lab)]

Will the right hon. Gentleman give way?

[Mel Stride]

I will not—I am very short on time. We are looking to the younger generations, to some significant degree, to fund predominantly the needs of elderly people and social care. If we look at those taxes, income tax rises would have been very progressive—there is no doubt about that. We would have had to have about twice the level of increase that we are looking at with national insurance to have raised the same amount of money. I think we need—the Minister made this point—a UK-wide solution to this, not one based on income tax, where, of course, elements of income tax are devolved to other nations across the United Kingdom.

If we put up VAT, that would be hugely regressive, particularly at the level of income received rather than expenditure. That would therefore have been wrong. We are also up at 20%, I think—near the upper limit of where VAT should be, given the distortionary consequences of going further.

That inevitably leads us to national insurance, just what Labour was led to in 2003. The original proposal, it seems to me, failed both of my tests. If we just put up national insurance, it would have been regressive. It would have hit the poorest hardest, but what is right about the Chancellor’s approach is that he has extended it to those beyond the state retirement age and those receiving income by way of dividends. That critical move makes this, in general, the right approach.

There are many issues that the Committee will no doubt look at. One of them is that a regrettable consequence of the increase in the employer’s national insurance rate is that it will exacerbate the so-called “three people problem”, whereby the different tax treatment of the employed, the self-employed and those receiving income through their own company will be widened, with consequences for IR35. I am out of time, but I support this motion today.

--- Later in debate ---

[Alison Thewliss]

The hon. Lady is absolutely correct. The Government have learned nothing from the austerity that caused so much damage with the last crash. They are about to repeat their mistakes, and those on the lowest incomes will be hammered most, again.

The Institute of Directors has called the hike “political opportunism” and has highlighted the tax on dividends, which will hit sole traders and small company directors, many of whom were completely and unjustifiably excluded from UK Government support during the pandemic. It really does rub salt in the wounds.

[Matt Rodda]

I am grateful to the hon. Lady for giving way on that excellent point. In my constituency in Reading, many of the same families will be affected; she is wise to point that out, and I reiterate that point. It appears that the same very hard-working groups of people, many of whom are key workers or are with small businesses, are being affected disproportionately by this unfair tax rise. At the same time, it is not solving the fundamental problems with social care.

[Alison Thewliss]

Absolutely. It does nothing to resolve either issue, and it makes it all the harder for people who have suffered so hard during the pandemic and been excluded from support to get back on their feet and bring money back into the economy. It makes no economic sense whatever.

Of course, the unjust effect of the national insurance hike will be compounded in Scotland because the Prime Minister is proposing that Scottish tax contributions be used to fund England-only policies. My constituents and people across Scotland are generous people, and I am sure that very few of them would begrudge the principle of funding the NHS and fixing social care after the pandemic, if indeed they had any faith that this Government were capable of fixing anything. But as things stand, the Scots, Welsh and Northern Irish stand to be taxed twice: first for the health and social care system that they actually receive from their own Government, and then for the NHS and social care in England, for services that they do not have access to, where money more often than not appears to be squandered on dodgy contracts and cronyism scandals.

We know from the United Kingdom Internal Market Act 2020 and other Tory Brexit legislation that we cannot trust Government Members to respect our hard-won devolution. I am not reassured in the slightest by all the talk yesterday from the Prime Minister about directing money raised from the new levy into health and social care services in Scotland.

Compensation (London Capital & Finance plc and Fraud Compensation Fund) Bill (Second sitting)

Matt Rodda Excerpts

Tuesday 15th June 2021 Public Bill Committees

[John Glen]

Out of courtesy, I am very happy to respond to my colleagues. The right hon. Member for Wolverhampton South East asked why the 80% figure was not 100%. As I have tried to explain through the submissions that I have made, the Government have been trying throughout to balance the interests of bondholders and the taxpayer to ensure that we have a fair level of compensation in respect of the financial losses incurred. The scheme is based on the FSCS level of compensation but, as he knows, it is 80% up to that cap of £68,000 to reflect the unregulated nature of the LCF product.

I emphasise that it is imperative to avoid creating the misconception that Government will stand behind bad investments in future, even where the FSCS does not apply. That would create a moral hazard for investors and potentially lead individuals to choose unsuitable investments thinking that the Government will provide compensation when things go wrong. To avoid creating that misconception, and to take into account the wide range of factors that contributed to the losses that the Government would not ordinarily compensate for, the Government will establish the scheme at the level of 80% of LCF bondholders’ initial investment up to the maximum of £68,000. With any investment, there is clearly a risk that sometimes investors will lose money, and the Government and taxpayer cannot and should not be expected to step in and compensate for every failure and every loss. It would not be right or fair for investors in non-regulated products to receive fuller compensation than those who have invested in regulated products, for which the maximum amount is capped at £85,000 under the FSCS.

On the remarks of the hon. Member for Glenrothes about the individuals involved in an ongoing serious fraud inquiry, I am not familiar with the detail, but obviously I am happy to receive any representations. I hope that brings satisfaction to the Committee.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2

Loans to the Board of the Pension Protection Fund

[Matt Rodda (Reading East) (Lab)]

I beg to move amendment 3, in clause 2, page 2, line 7, at end insert—

“(3) No loan shall be made under this section until the Secretary of State has laid before Parliament an impact assessment of the means of repaying the loan, including specifically the impact on pension schemes from the Fraud Compensation Fund levy.”

This amendment would prevent the Secretary of State from making a loan to the Board of the Pension Protection Fund for the purpose of compensating eligible pension schemes until he or she has laid before Parliament an impact assessment of the Fraud Compensation Fund levy on different pension sectors.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 5, in clause 2, page 2, line 7, at end insert—

“(3) Before making a loan under this section, the Secretary of State must lay before Parliament an assessment of the levels of fraud in the pensions system.”

This amendment would require the Secretary of State to publish a report on the levels of fraud in the pensions system before making any loan under new section 115A of the Pensions Act 2004.

Amendment 6, in clause 2, page 2, line 18, at end insert—

“(5) Within twelve months of this Act receiving Royal Assent, the Secretary of State must publish a report on the operation of the Fraud Compensation Fund in connection with any loan made under section 115A.”

This amendment would require the Secretary of State to publish a report, within twelve months of this Act being passed, on the operation of the Fraud Compensation Fund in connection with any loan made to the Board of the PPF under new section 115A of the Pensions Act 2004.

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[Matt Rodda]

We have tabled a number of amendments seeking to improve the Bill. Amendment 3 seeks to ensure that we have clarity and certainty before taking the step of asking key pension schemes to fund the majority of the bill for the Fraud Compensation Fund. It is perhaps worth reflecting on the evidence we heard this morning, which was so illustrative on this issue. One socially important pension scheme—the People’s Pension fund, which we heard about today—was asked to put forward a large amount of money to help support the compensation fund. The fund is known to take a large number of people—many of them women, on low incomes or self-employed—who have started to save for a pension through auto-enrolment. I am sure the whole Committee will agree that it is a worthwhile objective of Government policy to encourage pension savings by a wide range of people, not just the wealthier sector of the community.

Specifically, amendment 3 would prevent the Secretary of State from making a loan to the board of the Pension Protection Fund for the purpose of compensating eligible pension schemes until he or she has laid before Parliament an assessment of the impact of the Fraud Compensation Fund levy on different pension sectors, thereby allowing Parliament to consider the issues affecting them. That is essential because, as we have heard, the burden of compensating victims of fraud is falling disproportionately on certain groups. As we heard this morning, just two schemes—the People’s Pension and the National Employment Savings Trust, which are both not-for-profit operators—have historically ended up paying the lion’s share of the fraud compensation levy, despite their size and the fact that there is no tangible connection between those funds and the fraud that we are trying to address.

It is perhaps helpful to mention the figures again, for the sake of clarification. To recap, the PPF’s 2019 annual report and accounts reported that the FCF levy raised £6.9 million. What is truly surprising to casual onlookers, however, is that 37% of that was paid by the two pension schemes that I mentioned—NEST and the People’s Pension—even though they managed only £20 billion of the roughly £2 trillion of assets held in UK workplace pensions. They were managing just 1% of the total, which is a tiny amount, as I am sure everyone will agree. There is clearly a mismatch, and I am sure that the Minister, who has obviously followed this in great detail, will want to respond because something strange seems to be going on. With the figure now enlarged significantly to hundreds of millions of pounds, and with the potential repayment of the loan via an increased levy, it is understandable that the schemes are anxious about where the burden of repayment will fall. That is a fair point, and one that I am sure we would all want to consider thoroughly.

We have been promised a review of the levy later this year, and I appreciate that the Government are willing do that. However, it does not seem right that, given the significant sums involved for the loan, the legislation should proceed without pausing—all we are asking for is a pause—to consider its impact. Both of the pension schemes I have mentioned play a hugely important part in expanding pensions coverage, and I am sure that members of the Committee are aware of the national policy challenge of encouraging more people to save for their pensions. We all want a much larger proportion of the community—ideally, everybody—to have access to a pension scheme that they can save into as well as the state pension. The two organisations I have mentioned have many low-income savers who I am sure we want to support. It is crucial that we consider the long-term viability of those schemes as we consider the structure of the levy, and that the long-term viability of the two pension schemes is not jeopardised.

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[The Chair]

In case any Member did not quite understand what I said at the top, all of the proposed amendments to the clause are being debated now, including amendments 5 and 6. Mr Rodda, to confirm, are you aware of that, and do you wish to speak to amendments 5 and 6 now?

[Matt Rodda]

I am very grateful, Ms Ghani. I would like to speak to amendments 5 and 6. Amendment 5 obviously covers a very different area. I sponsored it because I think that the central principle of this country’s pensions system—I am sure the Committee agrees—is that people who work hard all their lives and who contribute and save diligently are able to receive a decent pension in their retirement. I hope there is cross-party agreement on that. I am sure there is; historically, that has been the case.

In recent years, however, it has become clear that an increasing number of pensioners—and, indeed, people approaching retirement, who are also an important group and are in some ways quite vulnerable—have been set back significantly as a result of what are commonly called pension scams. As the Bill Committee, we have a duty to protect people and to help them prepare for their retirement. Amendment 5 therefore seeks to require the Secretary of State to publish a report on the levels of fraud in the pensions system before making any loan under new section 115A of the Pensions Act 2004. We believe that that is a crucial first step in tackling pension scams. Obviously, there are a whole series of ways to tackle them, and we appreciate that the Government are taking other steps. This is important because the consequences of the scams can be utterly devastating for those directly affected. They are also potentially expensive and damage trust in the pensions system as a whole and the operation of many businesses in the sector. It is critical that we have a system that is robust and protected against scams. The Bill highlights the consequences for everyone, including other scheme members, when fraud is allowed to spiral unchecked.

The pandemic has, sadly, given rise to an increase in fraud, as many criminals have taken advantage of the confusion and, in some cases, the isolation of vulnerable people to prey on those who, sadly, can fall victim to these dreadful crimes. However, pension scams were already on the rise. It is worth noting that, since George Osborne’s pension freedoms were introduced in 2015, fraudsters have taken advantage of confusion around what the rules precisely allow. We warned at the time that those reforms would significantly increase that risk. The Government must acknowledge, as I am sure they will, the failings of pension freedoms and their associated tax problems, as in the case of the NHS.

One of the most egregious abuses of pension freedoms has been a scam by sophisticated criminals who trick people into accessing their pensions before the legal age of 55, relying on confusion about the rules, and then abscond with the funds, leaving people in a desperate situation. In some cases, the victims suffer a double injustice: not only do they lose their entire pension pot in some cases; they are also aggressively pursued by HMRC for tax penalties, having broken the rules on money they no longer have. There are some truly heartbreaking cases of innocent people being misled and sadly losing their life savings, as well as being left with tax debts of tens of thousands of pounds.

We would like reassurance that the Department for Work and Pensions and the Treasury will look into tackling this problem in the wake of the Dalriada judgment last year. The Government could provide that reassurance by supporting amendment 5 as a crucial first step. They should also find a way for HMRC to work with the authorities to make sure that these crimes are properly investigated, targeting the promoters, not the victims, and recognising the dreadful circumstances in which those victims find themselves through little fault of their own.

The High Court judgment that is at the centre of the loan we are discussing today is linked to exactly that type of fraud. In its recent report on pension freedoms fraud, the Select Committee on Work and Pensions recommended that particular aspects of pension freedoms and the Pension Protection Fund be reviewed in further detail in that light.

We agree with the Select Committee. Our amendment, which calls for an assessment, could form an important part of tackling the issue. It is important that the Government publish the report the amendment seeks, in order to show the public that they are not simply looking at the symptoms of fraud, but tackling the causes. I am sure the Minister will want to consider that point. The Government should set out an action plan to protect pension savers and an assessment of the level of fraud in the system as part of that work.

I know the Minister campaigned to tackle cold-calling last year in the Pension Schemes Act 2021. The Bill quite rightly tackled telephone cold-calling, but people can be approached in a cold manner online. I ask the Government to consider that avenue for scams. There has been some mixed messaging, but I hope the Minister, who I know is in touch with the sector, will take the point on board. I have written to the Secretary of State for Digital, Culture, Media and Sport to ask that the Government act on this point and include it in the online harms Bill, which is an appropriate place to tackle these serious scams, alongside many others.

Pension savers are particularly vulnerable in the few years just before retirement, when savings have accumulated but before they have actually retired. Pension transfers, especially for those in defined-benefit pension schemes, can be targeted by criminals, alongside pensions liberation fraud, which we are talking about today. This is where the Money and Pensions Service should play a bigger part. As Members will know, the service is a Government-funded body that offers free pensions advice to people aged over 50, through its Pensions Wise service.

Is it possible for Pensions Wise to play a bigger role? I hope the Minister will consider that point. It could be helpful and supportive to individuals, as well as helping the operation of the sector—the businesses that are operating legitimately, as the vast majority are.

It was disappointing that the Government rejected a proposal in proceedings on the Pension Schemes Act that would have booked a default Pensions Wise appointment for everyone in the five years prior to their retirement. The amendment was put forward by the Chair of the Work and Pensions Committee, my right hon. Friend the Member for East Ham (Stephen Timms), and was supported by the Opposition. It would have meant that everybody would automatically get some basic knowledge about where they stood, better protecting them against scams.

Finally, I would like to share some research from the People’s Pension and the Police Foundation that demonstrates the scale of the problem and why we need to act urgently. The true level of pensions fraud in the UK, though large, is unknown, but could it be as high as £14.6 billion, based on the average pot size of £63,700.

I hope the points I have set out are helpful and that the Minister will consider them. We would like to see this area addressed by the Government. I urge the Minister to respond to my points.

Ms Ghani, should I speak to the other amendment now?

[The Chair]

The amendments are grouped, so they are all to be debated together. Do you have a contribution on amendment 6?

[Matt Rodda]

Yes. I will move straight on. I appreciate your tolerance.

Amendment 6 seeks to perform another important role—ensuring that the PPF and the Fraud Compensation Fund work effectively and efficiently for all parties, which I am sure everyone here would support. The amendment would require the Secretary of State to publish a report, within 12 months of the Act being passed, on the operation of the Fraud Compensation Fund in connection with any loan made to the board of the PPF under proposed new section 115A of the Pensions Act 2004.

In the debate on amendment 3, I set out why we needed a fuller understanding of the way the levy works and its impact—I mentioned the two not-for-profit organisations that are doing such valuable work—in order to improve the situation for savers and pensioners. I will not go into the detail of those arguments again, but they are applicable and equally important for this amendment.

It is crucial to highlight the context in which we put forward the amendment. A very limited number of schemes are currently propping up the fraud compensation levy by paying disproportionate contributions, even though they do not have a meaningful connection to fraud at this time.

--- Later in debate ---

[The Chair]

Let us try to ensure that we get through this portion of business before the Division. The Opposition spokesperson may of course respond, but let us keep it brief.

[Matt Rodda]

I am grateful to the Minister for his response. I feel that he is being somewhat generous in his description of the Government’s assessment of this problem and the level of response. I urge him to redouble his efforts and to focus on some of these points in further detail.

I think that the hon. Member for Glenrothes is right to draw attention to the subtle legal difference on the issue of the impact assessment. Surely, given the scale of what is going on, it would be wise to carry out an impact assessment. I appreciate the pressure of time, but perhaps with the considerable resources of DWP, which has the largest staff quota of any Department and a very able group of civil servants, it would be possible to carry out an impact assessment on a rapid turnaround, given the scale of what we are talking about and, indeed, the problems of the sector as a whole.

On the ongoing consultation and the possibility of reviews in this area, will the Minister agree to meet me and the not-for-profit providers to explore the particular issues affecting them?

[Guy Opperman]

I will, of course, agree to meet them. I already meet NEST and the People’s Pension regularly, and they have made a very good pitch for a reduced levy. It is already a reduced levy, as I am sure the hon. Gentleman is aware, and there is already a 0.75% cap, but of course I am looking forward to meeting them as part of the ongoing consultation.[Official Report, Vol. 697. 17 June 2021, c. 3MC.]

[Matt Rodda]

I am very grateful to the Minister and put on the record my thanks to him for offering that meeting. I look forward to seeing him and discussing the matter.

On amendment 5, the Minister mentioned the regulations in the Pension Schemes Act 2021, but will he write to me to discuss some of the ways in which the specific parts of the regulations relate to this issue? He has been reported in the media as suggesting that it might be wise to consider pension scams in the online harms Bill. Perhaps he will comment on that now or write to me separately, because we would like to work constructively with the Government on this matter. I appreciate that online harms are a huge and wide-ranging issue, and I have a constituency interest in violent crime in respect of a tragic incident in Reading.

[Guy Opperman]

I would be happy to write to the hon. Gentleman. He can read in detail what I said in The Times on both occasions, and that is pretty much all I can say on that matter.

[Matt Rodda]

I thank the Minister for his candour and for offering me a cutting from The Times, which is a fine newspaper.

Finally, on the PPF annual report, the issue is that while these documents are very worthy, and we should all read them, there is a delay. I urge the Minister to consider the need to reassure organisations in the sector, pension savers and pensioners themselves in the near term, rather than our having to wait well into 2022 before the 2021 annual report is available.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 ordered to stand part of the Bill.

Clause 3 ordered to stand part of the Bill.

Bill to be reported, without amendment.

Compensation (London Capital & Finance plc and Fraud Compensation Fund) Bill (Second sitting)

Matt Rodda Excerpts

Committee stage
Tuesday 15th June 2021 Public Bill Committees

[John Glen]

[Matt Rodda (Reading East) (Lab)]

[The Chair]

[Matt Rodda]

A fundamental change is under way and it needs to be addressed. I hope that the Minister will reflect on that. First, the scope of who is compensated for fraud has been drastically expanded by the High Court judgment. Secondly, the industry structure has radically altered since the levy was first designed. Both of those points are important, and combined they will, potentially, have a huge impact on the rest of the sector. Careful consideration neds to be given to that. An impact assessment is necessary to give parliamentarians, sector experts and decision makers in the round a broader understanding of this complicated situation.

--- Later in debate ---

[The Chair]

[Matt Rodda]

[The Chair]

[Matt Rodda]

These are crucial funds that support large numbers of savers—indeed, increasingly so in this country, as we enjoy the success of auto-enrolment, which is a great step forward for pension savers, and indeed future pensions across the country, providing greater access to pensions. Millions of workers across the country, at different stages of their lives, pay into these schemes and rightly expect their pension pots to be given the best possible chance to grow. Yet because the levy is passed on to savers through charges, it is current Government policy to ask savers to do the right thing in order to pay for the damage caused by criminals. As we heard earlier, this is not happening on a small scale but on quite a large scale.

--- Later in debate ---

[The Chair]

[Matt Rodda]

[Guy Opperman]

[Matt Rodda]

[Guy Opperman]

[Matt Rodda]

Committee rose.

Finance (No. 2) Bill

Matt Rodda Excerpts

Committee stage & Committee of the Whole House (Day 1)
Monday 19th April 2021 Commons Chamber

[Sarah Olney (Richmond Park) (LD) [V]]

I wish to speak to clause 5 relating to the changes in personal income tax allowances and to clause 28 relating to the freezing of the lifetime allowance on pension pots.

There is no doubt that the last year has made unprecedented demands on the public purse, and it is right that the Government should be prepared to take difficult decisions on taxation as we move forward, as we all very much hope, out of the pandemic and into the changed world beyond. However, the Government made clear commitments in their 2019 manifesto that they would not raise income tax on working families and they have broken that commitment in this Bill. The freezing of the personal allowance and the higher tax bands means that more working people will pay tax and at higher rates than they would otherwise have expected.

Clearly the Government are banking on a consumer-led recovery and this tax burden on working families will reduce the amount of discretionary spend available to households, limiting their ability to spend on consumer goods. As housing costs increase to their highest ever levels, household budgets will continue to be squeezed, and piling additional tax charges on top will create an enormous burden for those who are already struggling to make ends meet. It is a particular insult to those in our NHS, who have sacrificed so much to keep us all safe this year and have been told to expect only a 1% pay increase for their trouble. Our nurses will have to give back more of that 1% in tax than previously despite all that they have already given. This is particularly galling when compared with the Government’s decision to delay a corporation tax increase. The Government have chosen to tax hard-pressed frontline workers first and large, profitable corporations later. Only those companies that have remained profitable throughout the pandemic would be paying corporation tax next year, which is why an immediate increase in corporation tax could have captured the windfalls or excess profits of those who found their revenues increased as a result of the unusual trading conditions of the last year. This would have been a far more equitable route to raising income than putting the burden on hard-working families.

On clause 28, I urge the Chancellor to carefully consider the impact on NHS pensions of freezing the lifetime pension allowance. I have heard a few stories from constituents about how this measure interacts with their final salary scheme. While a figure of a little over £1 million would rightly strike most as more than sufficient as a tax-free pension pot, senior doctors in the NHS are finding it extremely difficult to assess whether or not their overtime will result in their yearly calculation of their lifetime allowance being tipped over the threshold and result in a current tax bill. The British Medical Association estimates that the number of GPs taking early retirement has tripled over the past decade and puts this down partly to the uncertainty about their tax bills.

It is worth noting that when the lifetime allowance was first introduced in 2006, it was set at £1.5 million, rising to £1.8 million in the financial year 2010-11. Since the Conservatives came to power, it has reduced every year to the current level of only just above £1 million. Like the freezing of the personal allowance, this has the impact of catching more ordinary people in the taxation net, and again we see that the Chancellor wants to raise money off the back of hard-working NHS frontline workers while protecting profitable corporations.

This issue has been a problem for doctors for the last few years, so the Government have no excuse for not knowing that the freezing of the pension lifetime allowance would make the situation worse. Have the Government carried out an impact assessment of the measure on NHS retention of senior staff? I am extremely concerned, at this time when our senior NHS staff are exhausted and facing a huge backlog of elective surgery, that skilled staff should not feel compelled to take early retirement because of an unintended and avoidable tax consequence.

The Finance Bill seeks to tax hard-working families and penalise those who have been working so hard to keep us all safe this year, and the Liberal Democrats cannot support these measures.

[Matt Rodda (Reading East) (Lab)]

I want to offer my support to the shadow Minister, my hon. Friend the Member for Ealing North (James Murray), who put his case very fairly. I want to illustrate what that means in my constituency of Reading East and perhaps develop some of the points he made.

I particularly want to raise the growth in the use of food banks, which has been very significant across the country, and our area is typical in so many ways, as indeed it is in many instances. The growth in the use of food banks illustrates why the Budget was such a complete failure, because the Government failed to offer real help to many families. In particular they offered very little to those in the greatest need, as we heard from the shadow Minister, and very little to those who are self-employed and have recently set up a small business. Indeed, the3million campaign group rightly pointed out that, although a small number will benefit from some measures offering further support for recently set-up small businesses, most will not, and that has been widely recognised in my constituency.

Before going into the detail of local food banks, I want to thank all the volunteers at our local council in Reading and many others, both businesses and individuals, who have helped support food banks by generously giving their time and putting the community and others first at what is a very difficult time for so many people. I have tried to keep in touch with the pressures by going to help myself and to receive regular briefings from food banks and other charities, and I want to describe to colleagues what this is like.

Finance Bill

Matt Rodda Excerpts

Report stage & Report: 2nd sitting & Report: 2nd sitting: House of Commons
Thursday 2nd July 2020 Commons Chamber

I turn to new clause 22, much loved by my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), who is not in his place. It modifies the current enterprise investment scheme and seed enterprise investment scheme so that individuals who made EIS and SEIS investments before a future fund investment in the same company will not lose relief on those previous investments when the future fund loan converts into shares or is repaid. As the House will know, those schemes were intended to encourage investment in smaller, higher-risk trading companies by offering tax reliefs to individual investors who subscribe for new shares in qualifying companies. The Government announced the future fund as part of its business package in response to covid-19. Current EIS and SEIS legislation means that some future fund investors who have used those schemes for previous investments in the same company might lose their reliefs, depending on how and when the loan converts. The new clause intends to ensure that those investors do not lose that relief as a result of investing in the future fund to support innovative UK companies that may have difficulty raising finance during this period.

[Matt Rodda (Reading East) (Lab)]

May I press the Minister on innovative companies getting a lack of support from HMRC? I have come across a case in my constituency where a very innovative British company appears to have had a lack of support from the agency. Would he look into that for me?

--- Later in debate ---

[Wes Streeting (Ilford North) (Lab)]

I thank the Financial Secretary for making the case for the Government’s new clauses this afternoon. Throughout the coronavirus pandemic, the Labour party has made clear as the official Opposition that we seek to work constructively with the Government in response to this unprecedented public health crisis which, as we have seen, has brought about an economic crisis to follow it. In that spirit, and to ensure the smooth passage of legislation, we have helped to expedite the progressive measures taken by the Government, and this afternoon will be no exception.

I wish to speak to new clause 29, which has been tabled in the name of my hon. Friend the Member for Oxford East (Anneliese Dodds), the shadow Chancellor, and other hon. and right hon. colleagues. Yesterday afternoon, I addressed the Government’s poverty of ambition on climate change. This afternoon, I want to address their poverty of ambition on tackling poverty itself.

The Conservative party has now been in government either alone or in coalition for a decade. Over the past 10 years, their record on poverty in this country and on tackling poverty in this country has been absolutely lamentable. According to the Government’s own Social Mobility Commission, 600,000 more children are now living in relative poverty than in 2012, and that is projected to increase further due to benefit changes and the obvious economic impact of covid-19. As of 20 February this year, some 14 million people were in poverty, according to the Joseph Rowntree Foundation, including 2 million pensioners and 4 million children. We know that the impacts of poverty are felt disproportion- ately among different communities. Children from black and minority ethnic groups, for example, are more likely to be in poverty, with 45% of BAME children living in poverty, as compared with 26% of children in white British families.

We believe that the Government are failing on something that should be the most basic of priorities for any Government. That is not just our view as the Opposition party; the Government’s own Social Mobility Commission has said:

“The government should be more proactive in addressing poverty overall.”

It is worth bearing in mind that behind every statistic is a child, and 30 years ago I was one of those children in the child poverty statistics, growing up on a council estate in London’s east end, sandwiched between the bright lights of the City of London and the glistening lights of what was then the blossoming London Docklands Development Corporation land, which has become Canary Wharf. Today, they are two global financial centres at the centre of our global city. In between is a vista of poverty that was bad then and remains bad now.

One of the things I find most frustrating about the experience I had growing up in a council flat in the east end in the 1980s is that I look back, and I think about the conditions of the council flat I lived in and the embarrassment of not wanting to bring friends home from school because the conditions were not ones that we were proud of. It was a source of shame and embarrassment. I think about the experience of relying on free school meals, and the stigma that arises from having to collect a dinner ticket while other children go and pay for their food quickly—and get the best food, I hasten to add, while handing over their cash. I think about the difficulties my mum had as a single mum, balancing the challenge of bringing up a child while relying on the benefits system, and having to make compromises in choosing how she spent the family budget: the choice between putting food in the fridge or some extra money in the electricity meter.

One of the things that makes me most angry is that, when I think about my experience, which I thought was bad in the 1980s, and compare it with that of children growing up in the same circumstances today, as seen in my own constituency casework, things have got worse for children in the decades following my childhood, when things ought to be getting better. Whereas I had the stability of a council flat—albeit not a nice one—and a roof over my head, children in my constituency today, and no doubt in those of so many others across the Chamber, are growing up in temporary bed-and-breakfast accommodation, being moved from pillar to post and living in substandard accommodation, with disruptive consequences for their education and their schooling, and the inability for them to form lasting friendships and for their families to build supportive networks and family relationships.

When I think about the enormous strides that were made, particularly by the last Labour Government, in tackling educational disadvantage, I think it is outrageous that, in this country in the 21st century, children still today arrive at school at the age of five with their life chances already limited and in many cases predetermined, because we failed to get early years right. Sure Start centres have closed, and the support for families is no longer there. As a result, children arrive at school, at five, less prepared than their peers from more affluent backgrounds. It makes me angry that, for all the difference made to my education through programmes under the last Labour Government and the impact they have had on children since—the London Challenge and Excellence in Cities—today children are leaving school at 16 at a time when the attainment gap between children from the most advantaged backgrounds and the least advantaged backgrounds is actually widening, and where the further education system in which many working-class young people go on to study has been described by the Government’s own Social Mobility Commission as “undervalued and underfunded”. This is at a time when the changing nature of our economy and the changing nature of the world of work make post-16 adult education delivered in further education settings more important, not less. We should be making progress, but we are in reverse gear.

[Matt Rodda]

My hon. Friend is making an extremely powerful speech, which focuses us, as we should be, on this vital issue. Does he agree with me that a central part of the problem many families face is that the costs of food and of rent have risen so dramatically, with the impossibility of being able to afford a home? In my constituency in Reading, it is very difficult for many people to get on to the housing ladder. Many young professionals and young families are crammed into flats, which are hugely expensive. They are also suffering huge problems with the high cost of food. Does he agree with me that this is a very significant part of the problem?

[Wes Streeting]

I strongly agree with my hon. Friend, and that brings me neatly on to the next point I was about to make about employment conditions in our country. For my mum, as a single mum, it was difficult to hold down a steady, stable job and often she was reliant on temporary, casual, low-paid work to help make ends meet. Looking at the picture in the labour market—and this was pre-pandemic—even in households where one or both parents are working, children are still growing up in poverty. As my hon. Friend said, over the last decade we have seen the bills going up, but the wages failing to follow.

We have also seen labour market conditions that mean that, even when people are doing the right thing, as the vast majority of people want to do—going out to work, often with two, three or even four jobs in a week, and working all the hours God sends to try to make ends meet—they are still unable to make ends meet. It should never be the case, especially in a country with the wealth and opportunity available here, that when someone goes to work and puts in a full week’s work, at the end of the day they still do not have enough to make ends meet. Things are likely to become even more challenging in the wake of the economic fallout from coronavirus. Unemployment statistics from recent months have been not only jaw dropping but unprecedented, and the pace at which our economy has collapsed as a result of the necessary shutdown has been astonishing. I welcome and recognise the steps that the Chancellor has taken to try to protect people’s incomes, but unless he goes further than he has already announced, many people will face greater poverty and hardship later this year.

Finance Bill

Matt Rodda Excerpts

Report stage & Report stage: House of Commons & Report: 1st sitting & Report: 1st sitting: House of Commons
Wednesday 1st July 2020 Commons Chamber

People point out that they declared what they were doing on their self-assessment form. Even the tax code was okayed by Her Majesty’s Revenue and Customs. They were told that this was a less burdensome way of doing things than starting their own plc. As soon as the first sniff of a discrepancy appeared, they paid the shortfall. The retrospective aspect is worrying; people are now being told that all these other things will be reopened. In the case of my constituent, HMRC mixed this up with a student loan from years ago, which had been was paid off. There are aggressive letters, maladministration, and, for this constituent, health issues. That is just one example from a three-figure number of examples that I could give.

[Matt Rodda (Reading East) (Lab)]

Does my hon. Friend agree that the common characteristic of the people who have contacted many of us is that they are very hardworking? They have tried to play by the rules. They have possibly been sold a scheme that they did not fully understand, and may have been manipulated by unscrupulous advisers, and now they face threatening behaviour from HMRC. It is truly difficult for these people, many of whom work in IT in the Thames valley, and in creative industries. Does she agree that the Government need to show these people some understanding?

[Dr Huq]

My hon. Friend is completely right. HMRC needs to show some humanity in these cases. The scheme was obviously badly implemented, with inadequate impact assessment. The word “scandal” is frequently used and often misapplied, but in this case, all the elements needed are there. People have been pushed into bankruptcy; families have been fractured; people are facing financial ruin and losing their homes. As we have heard, there have been seven suicides. The all-party parliamentary loan charge group, which is very active—I am sure it is in everyone’s inbox all the time—has sent round a letter from the daughter of one of the people who sadly took their own life about the impact that has had on everyone involved.

The Morse review is a start, although the APPG feels that it could do better and go much further. All of us have seen these cases; my hon. Friend the Member for Liverpool, Wavertree (Paula Barker) described the situation movingly.

--- Later in debate ---

[Taiwo Owatemi]

I have been contacted by many residents who are extremely worried about the changes to the furlough scheme and their potential impact on unemployment. One of my constituents, James, recently got in touch with me to say that the company that his partner works for has already announced that it will be letting almost 40 employees go. The reason the company gave, I am told, was that the Government have asked employers to share the load of the furlough scheme from August. As can be imagined, staff at the company have been left heartbroken and have said that they feel this is completely wrong and runs contrary to the much repeated idea that a furlough scheme was a job retention scheme. James has said to me that while he understands that companies must ensure that they can continue to operate on a sustainable financial footing, it seems very unethical of the company to make the decision to reduce its numbers two months before that would start to become a significant financial burden on it.

The Prime Minister has repeatedly said that companies should not use the scheme just to keep employees on their books, only to get rid of them later, but should use it as a scheme to retain jobs. This compounds my view that the furlough scheme masks the true extent of the crisis in our jobs market. Since the start of the crisis, the Government have been too slow to take these threats seriously. We have seen very little from the Government around preventing unemployment since their economic package was created. If we do not take action now, we could see even more people lose their jobs.

This crisis requires a regional response, so that places such as the west midlands are not left behind. The Government’s one-size-fits-all approach fails to understand how our economy works. My own city has seen a devastating impact, with mass redundancies coming at Coventry College. Last week, I spoke about the impact on the aviation industry, with job losses at Rolls-Royce Ansty and in the arts and small businesses such as Exhibit 3Sixty. We need to protect our industries in the west midlands. That is why we need decisive rapid action to boost the economy, to provide small and medium-sized firms with the support they need, and to give businesses the strongest incentive to start creating jobs again.

My office has already started this work. Working alongside Coventry City Council, we are getting ahead of the response. I will not sit idly by while people in my community lose their jobs and vital skills. I have been holding a series of meetings with employment and skills agencies, as well as with Coventry and Warwickshire chamber of commerce and other business groups, to discuss supporting businesses during this time and upskilling people so that they can secure jobs for the future and find new work now. As part of its employment and skills priority for Coventry, the city council has been working with partners to host a series of virtual jobs fairs, with thousands of views and impressions to give people a head start. But this effort cannot be left up to us. The Government must do everything in their power to create support systems for those who become unemployed as well as new opportunities. We need to see the Government working with employers, unions and local government, with a joint approach across government to maximise job creation and comprehensive support to tackle unemployment.

[Matt Rodda]

Does my hon. Friend agree that there is a role for private sector landlords in this, working with the Government and local authorities? I have been quite taken aback by the approach of a number of commercial landlords who put extreme pressure on tenants at this time, which I believe is quite wrong.

[Taiwo Owatemi]

I agree with my hon. Friend; that is completely wrong.

No business or individual should be left behind. Every livelihood deserves the chance to survive this crisis. Otherwise, who knows what impact it will cause? Where there are job losses, will the Government commit to retraining those workers, whether old or young, through a future jobs fund so that they can harness the jobs that will come out of the crisis? Those jobs should be part of a new, prosperous economy, and they should be green, well-paid and sustainable. We do not need a race to the bottom, the slashing of safety regulations or the austere measures that we have seen in the past 10 years. The Chancellor said that he would do “whatever it takes” and frankly that is the least that my constituents in Coventry North West deserve. We have seen 18 years of growth and millions of jobs lost in two short months. To restore dignity, to save jobs and create new ones and to stimulate this much-needed recovery, bold progressive action is required. Nothing less will do.

Loan Charge 2019: Sir Amyas Morse Review

Matt Rodda Excerpts

Thursday 19th March 2020 Commons Chamber

[Matt Rodda (Reading East) (Lab)]

It is a pleasure to speak in this important debate. I will be brief and focus my remarks on two or three key areas that have been partially mentioned by some colleagues earlier. I thank the right hon. Member for Haltemprice and Howden (Mr Davis) for securing this debate and commend the work of the all-party parliamentary group and the cross-party nature of the debate today, which is helpful.

First and foremost, I put on record my fundamental support for a fair tax system. We obviously need to raise taxes to pay for vital public services, but that system clearly has to be fair. I think that the points made by a number of colleagues across the House on the matter are absolutely right, and I am grateful for the emerging consensus on the issue.

Secondly, I highlight the importance of the issue of the loan charge. The fact that this debate is taking place today in a period of sustained national crisis—indeed, it is a crisis for the whole world—is interesting, and it does underline the importance of this issue. I was approached about it a number of times during the general election, like many Members here today, and I have had constituents contact me about it. There is deep unease in the community, certainly in the constituency I represent, which is made up of Reading itself and the neighbouring town of Woodley, about the problem, which affects many people. I noted the figure of 50,000 people across the country. It certainly seems to be higher than that, given the proportion of people in my community who seem to be affected.

I draw Members’ attention to the effects on a typical town of its type, as Reading is, and specific industries where I believe there may be a particular likelihood of the problem arising. In the area I represent, a very large number of people are self-employed and have microbusinesses or work as consultants in one form or another. That is spread across a huge range of sectors, from traditional small businesses through to people with trades or IT skills and public servants. It is a vast range of people.

I want to add to the point made by my hon. Friend the Member for Ealing Central and Acton (Dr Huq) about locums in public services affected by the issue. I know of cases where a number of people in public services have to set up as a company and work on that basis, perhaps as a supply teacher or in some other interim role in public services. I should declare an interest, as I have certainly operated in that way in the past as an interim public servant. In the more distant past, I was a full-time civil servant. Locums are a well-known type of employment and a subset of those people—not all of them—are affected by the loan charge.

As well as my area, many other nearby parts of the country have similarly high levels of employment in IT. There is a particular prevalence of self-employment among IT professionals. If we think of the great IT businesses in this country—companies such as Microsoft, Oracle or Vodafone—many of them are headquartered in the Thames valley or west London. Many of those large businesses rely heavily on subcontractors who have often no choice but to set up a limited company that then serves the much larger organisation.

In my area, many people who are affected by the loan charge are in the IT industry. There are whole WhatsApp groups of people in parts of the IT industry that are buzzing with concern about the matter. As has been said, the issue ranges back over many years and there is deep uncertainty and pressure on these workers and their small businesses and, indeed, their families, because of this whole problem. As I said earlier, we are debating this issue at a time of national crisis. Imagine how that concern overlays itself on top of the existing pressures that we talked about earlier today and yesterday. Quite rightly, we in this House have discussed and raised with the Government the importance of supporting small businesses at this time of national crisis.

Imagine how it would feel to be a small business person or an IT subcontractor who was the breadwinner in their family. Their source of income could dry up because of this crisis, which is not of their making and that they have not anticipated. At the same time, they face the long-standing problem of the loan charge looming over them, with the very grave measures that other colleagues have mentioned today. Some of the examples that have been mentioned are truly dreadful. Imagine that pressure. That is what we need to do today—to think about what it feels like for somebody who is a small business person or self-employed. I know the Minister is dutiful and well-read and, as was said earlier, he has written a biography of Adam Smith. I hope that he will look again at the evidence clearly and thoroughly and in the context of the current situation affecting small businesses.