The Growth Plan

Nick Smith Excerpts

Friday 23rd September 2022 Commons Chamber

[Kwasi Kwarteng]

We openly repudiate a socialist vision of society. We do not believe that the state should take more and more of people’s income. We think that people should keep more and more of their earnings.

[Nick Smith (Blaenau Gwent) (Lab)]

The Chancellor has sacked his permanent secretary and muzzled the Office for Budget Responsibility, and is man-marking the Governor of the Bank of England. The Chancellor’s free-wheeling ideology is crushing dissent. Will the Governor of the Bank of England still be in his job by Christmas?

[Kwasi Kwarteng]

The Governor of the Bank of England is entirely independent. We actually have very good relations. We speak regularly, which I think is a good thing. The hon. Gentleman might think it is man-marking; I think it is very cordial. We exchange ideas, and we intend to continue doing so.

Financial Services and Markets Bill

Nick Smith Excerpts

2nd reading
Wednesday 7th September 2022 Commons Chamber

[Rishi Sunak]

Not for now.

First, on Brexit, with the future regulatory framework, the Bill represents a significant move away from relying on retained EU law as a means of regulating the UK’s financial services sector. Clause 1 provides for a full sweeping away—a full revocation—of essentially all the retained EU law concerning financial services in the UK. This is radical and this is right. Indeed, it is what Brexit was all about and this Bill delivers it.

We will move appropriately to the Financial Services and Markets Act 2020 model where the Government set the overall policy approach and delegate the operational implementation of those regulations to the independent regulators. As my hon. Friend the Minister said this is the internationally respected gold standard for how to do this. I was pleased to hear the Minister comment on the call-in power, and I urge him and the Government to quickly bring forward the means for that power, because both my hon. Friend the Member for Salisbury and I believe it is the right thing to do. We talked about accountability earlier in this debate. It must be right for a democratically elected Government, with the consent of this House, on an exceptional basis, to intervene on financial regulation in the public interest, and I hope that the Government will follow through with those plans.

On what this Bill does to support competitiveness, for the first time, our financial regulators will have a new statutory objective to support international competitiveness and growth, moving us in line with jurisdictions such as Australia, Singapore, Japan and Hong Kong. There will be new statutory panels to give better external scrutiny and challenge on the regulators’ cost benefit analyses. We heard much about the Markets in Financial Instruments Directive over the past several weeks and I am pleased that the Bill brings forward those reforms to MiFID: to remove restrictions such as the double volume cap when trading in wholesale capital markets to improve pricing for investors; to modify the transparency regime in fixed income and derivatives to remove unnecessary burdens; and to modify the commodities position limits so that market activity is not unreasonably restricted.

There are three areas on which I urge the Government to consider going further than I think we heard in the Minister’s opening remarks. First, to improve the efficiency of capital markets raising, there is an opportunity to reform European regulations in the prospectus directive. I hope the Government will bring forward draft statutory instruments for us to consider during the Bill’s passage. Secondly, the European packaged retail and insurance-based investment products directive is ripe for reform. I suggest repealing PRIIPS and replacing it with a tailor-made regime specifically for UK markets. This will eliminate a counterproductive regulation, broaden the range of products available for UK investors and, indeed, increase UK retail participation in our financial markets.

[Nick Smith (Blaenau Gwent) (Lab)]

Does the right hon. Gentleman think that the Bill sufficiently challenges the Financial Conduct Authority to speak up and support consumers?

[Rishi Sunak]

Yes, I do: the Minister touched on provisions that increase consumer protection. My hon. Friend the Member for Salisbury spent a lot of time ensuring that consumers would have that protection, particularly with regard to scams, as the Minister outlined in his opening remarks. That is an area that needs attention.

Thirdly, on ringfencing, I suggest that the Government not only accept the recommendations of the independent Skeoch review, but consider going further. I know that this is a Government with a deregulatory zeal for growth, so I suggest two areas in particular: first, to review the threshold limits, which have not been looked at since they were initiated; and secondly, to take a fundamental look at the ringfencing regime in light of the fact that it was established after the financial crisis and that we now have a full stand-alone resolution regime.

It is worth recalling that more than half of Europe’s fintech unicorns are based in the United Kingdom, so it is important that the Bill continues to support innovation. I am pleased that it does so in two specific areas. It builds on our pioneering and world-leading regulatory sandbox to include the opportunity to pilot new sandboxes for distributed ledger technology in financial market infrastructure. That has the potential not only to lower costs and improve efficiency, but to improve financial stability. I am glad that the Government are also proceeding to bring stablecoins into the payments legislation, because that will create the conditions for stablecoins issuers and service providers to operate and grow in the UK.

I ask the Minister and the Government to consider implementing all the fantastic ideas that were contained in the speech by my hon. Friend the Member for Salisbury in April regarding blockchain and crypto, notably proceeding with a sovereign gilt issue using distributed ledger technology, but also enabling the trading of exchange-traded notes on crypto on UK exchanges, where we risk falling behind Europe if we do not act.

Why does all this matter? It matters for three specific reasons. The first is jobs. The industry provides more than 1 million jobs, and not just in London and the south-east; two-thirds of those jobs are in places such as Southampton, Chester, Bournemouth, Glasgow, Belfast, Edinburgh and Leeds. It is incredibly important. Secondly, it is one of the most important industries for our economy in terms of contribution to our GDP and tax revenues, and it is something that we as a country are genuinely world-class at. There are only a handful of industries where a country can say that, and financial services is one of those for us. It deserves the support of hon. Members on both sides of this House to ensure its continued success.

Lastly and most importantly, this Bill serves as a template for what the Government want to do across the rest of their business. It takes advantage of the opportunities of Brexit, radically reforms our regulations to support innovation, growth and investment, and, although I would like the Government to go even further, it has my full support.

--- Later in debate ---

[Nick Smith (Blaenau Gwent) (Lab)]

I am glad to see the introduction of the Bill. Its provisions for securing access to cash, which I think should be free, will be welcomed in Blaenau Gwent. I strongly endorse the focus in chapter 3 on improving the accountability of financial regulators. Which? magazine has described this as a “once in a generation opportunity to strengthen the UK’s financial services regulatory regime”—quite the mouthful—but much more still needs to be done.

Unfortunately, I have lost confidence in the main regulator, the Financial Conduct Authority. Its oversight of the British Steel pension scheme scandal was plain hopeless. I saw the stress and grief of steelworker pensioner constituents who had been ripped off, and I have seen in my own experience as a member of the Public Accounts Committee just how useless the FCA can be. Despite being duty-bound to ensure that consumers were given quality financial advice, the FCA displayed poor oversight of the adviser marketplace. It consistently failed to act, even though it was aware of the risks to pensioners transferring out of a defined-benefit scheme. It failed to regulate a marketplace rigged against the steelworkers.

A recent Public Accounts Committee report found that the FCA failed to protect BSPS members from unscrupulous financial advisers who were financially incentivised to provide unsuitable advice, and that the regulator was “behind the curve” in its response. As a result, after much prodding, the FCA itself found that a staggering 47% of transfer recommendations were unsuitable. This has meant that many BSPS members have suffered years of nagging worry and losses to their pension pots, and had their plans for retirement ruined.

The National Audit Office discovered that, in the claims made to the Financial Services Compensation Scheme, the average individual loss stands at an eye-watering £82,600. Due to the FCA’s failures, the final bill for the coming redress scheme will likely be in the hundreds of millions of pounds. Despite having the powers to respond to the thieving and poor adviser behaviour, the FCA has issued just one fine in relation to the BSPS case.

Although I welcome the FCA’s efforts to improve its consumer-facing work in recent months, I am not convinced that the proposed framework will ensure that consumers are properly protected. It is good that the Treasury will have increasing powers to direct the FCA to make, review and enforce new rules as and when the need arises—the Treasury needs to jump in where necessary—but we need a fit-for-purpose FCA that robustly defends its consumers at the outset. It needs to hold bad actors to account from the get-go.

Therefore, I believe that consumer protection should be better embedded in chapter 3 of the Bill as a key accountability of the regulator. That is why I hope to see amendments made to mandate a much sharper focus on consumer protection with statutory panels that centre on the consumer. In Committee, there should also be a review of the FCA’s enforcement powers, which may need boosting.

Confidence in the regulator to have the best rulebook, enforcement and a culture that stands behind the consumer is key. Financial sharks that rip off working people need to be netted. The FCA needs to look across our country as well as at the City of London. Therefore, I ask the Minister to make doubly sure that the Bill has the strongest possible provisions for consumers and that the regulatory culture at the FCA is fit for purpose—something much more like the Securities and Exchange Commission than the limp enforcement regime at the FCA now.

Experience shows that the FCA consumer panel needs the firepower to challenge the culture at the FCA. Will the Minister please look again at that topic? A strong consumer voice must be at the heart of all our financial regulators; it needs to be a fundamental guiding principle.

Draft Social Security (Contributions) (Amendment No. 2) Regulations 2022

Nick Smith Excerpts

Monday 28th March 2022 General Committees

[The Financial Secretary to the Treasury (Lucy Frazer)]

I beg to move,

That the Committee has considered the draft Social Security (Contributions) (Amendment No. 2) Regulations 2022.

I will explain why we are bringing this draft statutory instrument before the Committee. As Members are aware, from April the new health and social care levy will increase class 1 and class 4 national insurance contributions rates by 1.25 percentage points. That will secure a long-term dedicated source of funding for our national health service and for those who require care. The instrument will apply the 1.25-percentage point increase to those paying the married women’s reduced rate of national insurance in the 2022-23 tax year. As the result of a drafting oversight, that group are excluded from paying the levy. If the legislation were not enacted, the result would be an unfairness, as not everyone would be in the same position and therefore not everyone would be treated equally.

This draft SI will increase the married women’s reduced rate from 5.85% to a temporary rate of 7.1%. The reduced rate is a lower form of NICs, currently paid by fewer than 1,000 women. Originally, it was introduced to allow women to use their husband’s NI contributions to qualify for a state pension at a time when fewer women worked. However, the scheme has been closed to new entrants since 1977. In fact, today, the circumstances in which a woman might pay the reduced rate are relatively unusual: a woman must have joined the scheme before May 1977, she must have been married at the time and have not divorced since, and she must still be under the state pension age and have not had a break of two years or more in her employment history.

[Nick Smith (Blaenau Gwent) (Lab)]

Will the Minister let us know the average age of the women affected by the new draft regulations?

[Lucy Frazer]

They will, obviously, be at the older end of the spectrum, as the scheme has been closed to new entrants since 1977, although some will still be in work. Very few people are in the scheme—we think fewer than 1,000.

This is new legislation, but the change it will implement has been anticipated for some time. We have already communicated the 2022-23 NICs rate on the gov.uk website. Employers, and software and payroll providers are expecting the change and have updated their systems. Legislation is already in place to ensure that, from April 2023, those paying the married women’s reduced rate will be subject to the health and social care levy. There has never been a suggestion that that category of women ought to be excluded.

[Nick Smith]

The Minister was unable to answer my question about the average age of the women affected by the draft regulations. Will she go back to the Department to get an assessment of the question and please write to the Committee?

[Lucy Frazer]

I am happy to do that. As I mentioned, those women will be of an older generation, of an older age, but I am happy to get the specifics, if the hon. Gentleman wishes me to do so.

--- Later in debate ---

[Nick Smith]

I thank the Minister for giving way again. She is being generous with her time and her efforts, but she did not answer the question of my colleague, my hon. Friend the Member for Rotherham: will the Government write to the women affected by this issue? She mentioned that it had been on the Government website, but given that WASPI women and others have complained that they were not properly informed of changes to their pensions and other financial arrangements of the Government through time, will she assure us categorically that she will write to those affected, please?

[Lucy Frazer]

I thank the hon. Gentleman for his question, but I reiterate: there is no need to notify the women, because everyone knows that the social care levy is coming in. It has been widely publicised. The current position is that everyone who is eligible to pay that tax will pay it, so there is no need to tell a group of women who through an oversight were not included in the levy that they will now be included, because at the moment they will not think that they are not.

Economic Update

Nick Smith Excerpts

Thursday 3rd February 2022 Commons Chamber

[Rishi Sunak]

I can give my right hon. Friend that assurance. It is absolutely right and proper that the Bank is independent of Government on matters of monetary policy. That is exactly what has always been the case over the past two years and it will continue to be the case. I can wholeheartedly give him that assurance.

[Nick Smith (Blaenau Gwent) (Lab)]

The Chancellor will be pleased that his campaign team are behind him today. Does he really think that the super-profits of $20 billion made by Shell are untouchable? His hands-off approach will not persuade many people across our country.

[Rishi Sunak]

What millions of people across this country will see today is a Government who are on their side and a Government taking action to help them with the anxiety they feel about rising energy bills. We are doing it in a proportionate, fair, targeted and responsible way to protect people not just today, but for years.

Tackling Fraud and Preventing Government Waste

Nick Smith Excerpts

Tuesday 1st February 2022 Commons Chamber

[Michael Ellis]

That is a very peculiar happenstance that my hon. Friend rightly mentions. Other local authorities around the country made good use of that generous provision, and I think Rotherham have questions to answer.

[Nick Smith (Blaenau Gwent) (Lab)]

On Lord Agnew of Oulton, who resigned over the fraudulent covid business loans, the good, decent Lord said that there was “zippo of detail” on how the Government plan to deal with the issue of business loans. Can the Minister say how the Government will claw back the £77 million loss on the eat out to help out scheme from the missing Chancellor?

[Michael Ellis]

If the hon. Gentleman will allow me to make some progress, he may hear about what the Government have been doing, and will continue to do.

The Government’s priority at the time was to get financial support to businesses. That was the alpha and omega of everything—it was to get that financial support to businesses, and their employees by extension, and as quickly as possible, to protect jobs and livelihoods. In total, we made available over £100 billion of loans and grants to over 1 million businesses, through bounce back loans, the coronavirus business interruption loan scheme, the coronavirus large business interruption loan scheme, and business grants. There were myriad schemes that we were using.

Cabinet Office

Nick Smith Excerpts

Thursday 20th January 2022 Ministerial Corrections

[Daniel Zeichner (Cambridge) (Lab)]

5. When the Government plan to bring forward legislative proposals to reform public procurement.

[Nick Smith (Blaenau Gwent) (Lab)]

7. When the Government plan to bring forward legislative proposals to reform public procurement.

[Nia Griffith (Llanelli) (Lab)]

16. When the Government plan to bring forward legislative proposals to reform public procurement.

Coronavirus Grant Schemes: Fraud

Nick Smith Excerpts

Tuesday 18th January 2022 Commons Chamber

[John Glen]

I can certainly confirm that the intention behind the range of interventions was to find the most appropriate delivery mechanism for the different support payments, and obviously we have worked with local authorities to give them that discretion. Every authority will need to be held to account for how it has decided to deliver the grants. My hon. Friend has made a clear case for where those priorities need to lie, and we are clear about the intention behind the grants, but it will be for local authorities throughout the country to make their decisions in the right way.

[Nick Smith (Blaenau Gwent) (Lab)]

Seventy-one million pounds of taxpayers’ money was fraudulently claimed through the eat out to help out scheme. How many arrests have been made, and are the criminals now enjoying prison food?

Downing Street Christmas Parties Investigation

Nick Smith Excerpts

Thursday 9th December 2021 Commons Chamber

[Michael Ellis]

The matter my hon. Friend raises is a matter for the inquiry to uncover, but I can assure him that the people who work in No. 10 Downing Street, including over the pandemic, are hard-working industrious people who are seeking to serve their country. They work very hard to do that. What he mentions is a matter of great concern to the people of this country, as it is to me. We all wish to know the terms of the investigation, and I have announced to this House what the terms and the scope of the investigation are. They will clearly be published and a copy of the terms will be laid in this House.

[Nick Smith (Blaenau Gwent) (Lab)]

Revelations of the 18 December gathering in No. 10 Downing Street have triggered much anguish across the country, so may I press the Minister on how exactly the Government Legal Department will support the investigation?

[Michael Ellis]

The Government Legal Department can provide support in a number of ways, and it will be up to the Cabinet Secretary to decide how he wishes to seek its support. One of the things he could do, for example, is ask for its advice as to the legal position on various matters. There are myriad ways that the Government Legal Department can help and give advice. It will be up to Simon Case as Cabinet Secretary, who heads the home civil service, to deal with the matter.

Oral Answers to Questions

Nick Smith Excerpts

Tuesday 2nd November 2021 Commons Chamber

[Rishi Sunak]

I thank my hon. Friend for the kind invitation, which he also sent me by phone. I look forward to accepting it soon and to celebrating Stoke’s success in not one, not two but three levelling-up fund bids.

[Nick Smith (Blaenau Gwent) (Lab)]

2. What recent fiscal steps he has taken to help resolve supply chain issues.

[The Exchequer Secretary to the Treasury (Helen Whately)]

Current stresses on supply chains are a consequence of global factors; as economies around the world recover, demand is outstripping supply. Where it makes sense, we are taking action to support UK supply chains, such as increasing the supply of lorry drivers to help the haulage sector meet demand for deliveries.

[Nick Smith]

Last week’s National Audit Office report on supply chain finance highlighted that huge contracts involving Greensill Capital, signed off by the Treasury, provided no benefits to the NHS. Does the Minister accept the NAO report, and will she ensure that in the future, contracts are properly awarded to avoid this kind of insidious lobbying?

[Helen Whately]

I am sure that the Government will be responding to the NAO report in due course, but I can assure the hon. Member that the Treasury works very hard with the Department of Health and Social Care to make sure that funding for the NHS, which we are increasing substantially, goes to good use and improves care for patients.

Oral Answers to Questions

Nick Smith Excerpts

Tuesday 27th April 2021 Commons Chamber

The Chancellor of the Exchequer was asked—

[Nick Smith (Blaenau Gwent) (Lab)]

How his Department determined the criteria for assessing bids to the levelling-up fund; and if he will make a statement.

[The Chief Secretary to the Treasury (Steve Barclay)]

The £4.8 billion levelling-up fund will invest in local infrastructure that has a visible impact on communities across the United Kingdom. It has been jointly designed by the Treasury, the Ministry of Housing, Communities and Local Government and the Department for Transport.

[Nick Smith]

Having waited so long, I really hope that the levelling-up fund will boost infrastructure in south Wales. I have already written to the Chancellor about the improvements that are needed for the Ebbw Vale to Cardiff line, to help young people especially to get to work, so can the Minister assure me that this investment will finally be seen through?

[Steve Barclay]

I share the hon. Gentleman’s desire to boost infrastructure in south Wales, and he is quite right to focus on young people getting to work, given how impacted they have been by the pandemic. He knows that his area in particular has received additional funding for capacity, and this will enable it to bid for the levelling-up fund to address the issues that he highlights.