Banking Reform

Nigel Evans Excerpts

Monday 29th November 2010 Commons Chamber

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. A six-minute limit will apply to all Back-Bench speeches.

Terrorist Asset-Freezing etc. Bill [Lords]

Nigel Evans Excerpts

Monday 15th November 2010 Commons Chamber

[Mr Llwyd]

No, I meant the Dangerous Dogs Act 19—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Shall I vacate my seat while you two have a chat? Please can we have no sedentary interventions?

[Keith Vaz]

I give way to the leader of the Welsh nationalists.

Equitable Life (Payments) Bill

Nigel Evans Excerpts

Wednesday 10th November 2010 Commons Chamber

[Mr Fabian Hamilton (Leeds North East) (Lab)]

I beg to move amendment 1, page 1, line 7, at end insert—

‘(2A) Payments authorised by the Treasury under this section to with-profits annuitants shall be made without regard to the date on which such policies were taken out.’.

[The First Deputy Chairman of Ways and Means (Mr Nigel Evans)]

With this it will be convenient to discuss the following:

Amendment 2, page 1, line 7, at end insert—

‘(2A) The Parliamentary Commissioner for Administration shall report to Parliament on the implications for payments to which this section applies of the findings of the Independent Commission on Equitable Life Payments, no later than one month after the publication of such findings.’.

Amendment 7, page 1, line 7, at end insert—

‘(2A) In determining the amount of the payments that it is appropriate for the Treasury to authorise under subsection (2), the Treasury must have regard to such matters relating to the adverse effects of that maladministration on those persons and the proper calculation of their resulting losses as have been determined by the Parliamentary Commissioner for Administration to be relevant to and appropriate for that calculation.’.

[Mr Hamilton]

I tabled my amendment because, although I am well aware that the Bill is an enabling measure, I feel strongly that a group of Equitable Life policyholders has been unfairly excluded from the compensation scheme that the Government have put in place. You will be pleased to know, Mr Evans, that I will not rehearse the entire history of the Equitable Life saga, because I do not think that we have the time this afternoon. However, to put my amendment into context, it might help right hon. and hon. Members if I remind them of some of the background to the case that I am about to put for the with-profits annuitants who took out their policies before 1992, for whom the Government’s proposed scheme will not offer any compensation at all—in stark contrast to the post-1992 with-profits annuitants for whom 100% compensation is now proposed.

Founded in 1762 as a mutual insurance company based on the ideas of James Dodson, a fellow of the Royal Society and a man well ahead of his time, Equitable Life started selling pensions as early as 1913, but it was not until 1957 that the society started to sell its infamous guaranteed annuity rate, or GAR, pensions, which gave a clear and unambiguous return on capital invested depending on the age at which the policyholder decided to start taking the annuity. That was to carry on until 1988, at which point the society realised that its rates were so good and so far ahead of the rest of the market that they were unsustainable.

In December 2000, Equitable Life was forced to close to new business. By that time, it had more than 1.5 million members. In the last Parliament, the Select Committee on Public Administration said in its introduction to its December 2008 report:

“Over the last eight years many of those members and their families have suffered great anxiety as policy values were cut and pension payments reduced. Many are no longer alive, and will be unable to benefit personally from any compensation. We share both a deep sense of frustration and continuing outrage that the situation has remained unresolved for so long.”

In June 2009, following many complaints from constituents over the past few years I introduced an Adjournment debate in Westminster Hall on Equitable Life. In it, I was critical of the then Labour Government —my own party’s Government—and although I loyally and strongly supported almost all the previous Government’s policies, I felt that we were wrong on this issue and should have done far more to implement the parliamentary ombudsman’s full and damning report of July 2008 entitled “Equitable Life: a decade of regulatory failure”. Needless to say, that did not make me very popular with my colleagues on the Front Bench at the time. My right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne), the then Chief Secretary to the Treasury, tried his best at the end of the last Parliament to implement what I believe to have been a flawed exercise to bring in some sort of compensation scheme by employing Sir John Chadwick to design a system, but that took so long that it was overtaken by the general election in May.

The new coalition Government decided initially to continue the Chadwick process, to the disappointment of the Equitable Members Action Group. However, I must thank my right hon. Friend for his courtesy and the help that he tried to give me when he was Chief Secretary. He clearly understood the moral imperative that Parliament and the Government had to Equitable’s policyholders, but his hands were tied and no compensation scheme was forthcoming under the previous Government. That was a great shame.

When Sir John Chadwick finally published his long-awaited report on 22 July, his recommendation on the total compensation to Equitable policyholders was for just £400 million to £500 million, or about £400 to £500 per person, out of the estimated total losses of approximately £4.8 billion, as calculated by the actuaries Towers Watson almost two years ago. I am reluctant to give praise to the Government parties, but I was delighted when the Chancellor of the Exchequer, in his speech to the House on the comprehensive spending review on 20 October, scrapped the Chadwick report and proposed a compensation package amounting to £1.5 billion. That figure was a threefold increase on Sir John Chadwick’s initial proposal but was still insufficient to make up for the losses incurred by Equitable policyholders. More importantly, however, the Government accepted at long last the report of the Parliamentary and Health Service Ombudsman in full. Again, I must reluctantly give credit to the Government for having done something that I wish my Government had done long ago.

Any delight that surviving Equitable policyholders and I felt at the Chancellor’s announcement was soon clouded by the details of the proposed compensation package. All the 37,000 post-1992 with-profits annuitants will eventually receive 100% compensation for their losses since then, but none of the estimated 10,000 pre-1992 with-profits annuitants will receive any compensation. Let me explain how my amendment goes to the heart of this issue.

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[Nadhim Zahawi]

rose—

[The First Deputy Chairman]

Order. Before the hon. Gentleman responds to that intervention, may I remind Members that interventions should be short and that this is not a Second or Third Reading debate? We are speaking to the amendments that are before us and if we focus on them, we will make quicker progress.

[Nadhim Zahawi]

My hon. Friend makes a good point. However, having listed that extraordinary chronology of debacles, it is clear that there could be a problem if we left things open and said, “We might be able to revisit them at some other stage.” We would be opening up other doors, and that may cause further delay. I come from a world of business rather than of politics and I believe that, if we try to put a line under a terrible situation and compensate people, we should do it quickly and completely.

Mr Evans, I take on board your remarks. All I will say is that the Minister should be applauded. There will be no means-testing and the dependants of the deceased policyholders should be included in any compensation. I have had a number of heartrending letters in which relatives have written, saying, “It is too late for us because our loved ones have passed away.”

I understand the passion that the hon. Member for Leeds North East has shown through amendment 1. The problem with the amendment was outlined by my hon. Friend the Member for Cardiff North (Jonathan Evans), who said that it was very difficult to put a quantum on what that number should be. In the current economic climate, I would find it hard to support it if we said, “Oh well, maybe it is £100 million extra from reserves; maybe it’s £100 million that we can bring in from future years.” None the less, the hon. Gentleman made a strong point about the annuitants from 1991 going forward, and I hope that the Minister was listening carefully.

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[Chris Leslie]

I beg to move amendment 3, page 1, line 7, at end insert—

‘(2B) The design and administration of any scheme of payments to which this section applies shall be independent of government.’.

[The First Deputy Chairman]

With this it will be convenient to discuss the following:

Amendment 4, page 1, line 7, at end insert—

‘(2C) The Treasury shall publish details of the independent appeals procedure for policyholders as defined in subsection (2) above to use in the event of dispute over the compensation payment decision in their case, no later than three months after commencement of this Act.’.

Government amendment 6.

New clause 1—Distribution of payments—

‘(1) An independent payments commission shall be established comprising three members appointed by the Secretary of State.

(2) The independent payments commission shall design a distribution scheme for payments made arising from this Act.

(3) In designing a distribution scheme under subsection (2) the independent payments commission shall consult with interested parties, including the Equitable Life Assurance Society and representatives of policyholders.

(4) The Treasury may make provision by order made by statutory instrument for payments to be made in line with the distribution scheme designed by the independent payments commission.

(5) A statutory instrument containing an order under subsection (4) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.’.

[Chris Leslie]

I shall speak to amendments 3 and 4, which stand in my name and the names of my hon. Friends. Amendment 3 would enshrine in the Bill the fact that the design and administration of any payments scheme should be independent of Government. It is pretty straightforward and simple—in fact, it would be difficult for it to be more straightforward and simple—but we think it important to try to encourage the Government to enshrine in the Bill the Minister’s pronouncements so far that the design of the compensation scheme should be independent of Government. That is an extremely important point, especially as it was part of the conclusions drawn by the parliamentary ombudsman herself.

The Minister has asked the independent commission, chaired by Brian Pomeroy, to report by the end of January, but there is too much wiggle room for the Minister then to take those recommendations and bring the design and the administration of the subsequent payments scheme in-house within the Treasury. I see no clear reason why the Bill does not contain clarity on the next steps forward, particularly in relation to the daunting task of creating a payments scheme to cover upwards of 1 million policyholders not falling into the 100% compensated with-profit annuitant category.

Many other policyholders are still sceptical of the Government’s intentions and EMAG, which is the body representing many of those policyholders, is voicing its discontent with those who, before the election, signed up to their pledge to create “fair and transparent” payment schemes, which they now attack as akin to asking 1 million people—to quote the words of EMAG’s Paul Braithwaite—to

“share a pack of Smarties”.

Obviously, EMAG is making its point in its own particular way, but clearly there is some doubt and some cynicism about the approach that the Minister is taking. I am sure, having heard what he has had to say before, that he indeed wants a level of independence in the payments scheme as far as possible, but I do not understand why that commitment has not been included in the legislation. That would seem to me to be the best way forward.

Amendment 4 seeks to tackle the issue of any appeals procedure that might be necessary for policyholders in the compensation scheme. We suggest that no later than three months after the commencement of the Bill the Treasury be required to spell out quite how that appeals procedure would operate for the policyholders who are not content with the judgments made in the compensation scheme that eventually ensues. Several hon. Members argued for an appeals procedure on Second Reading on 14 September—my hon. Friend the Member for Ynys Môn (Albert Owen) among them—and it was also raised by my right hon. Friend the Member for East Ham (Stephen Timms).

In that debate, the Minister stated that he had raised the issue with his officials but that there were clear problems. He said he would pursue it, so the purpose of the amendment is to find out whether he has had the opportunity to do so and what the appeals process will look like. I certainly expect that there will be complexity, not just in the payment scheme but in any subsequent individual appeals adjudication, and that could be quite difficult to imagine at this stage. However, it needs clarification given the route that the Minister has chosen, moving away from the ex gratia model in the Chadwick methodology and instead accepting the ombudsman’s approach to compensation.

I was glad that the Minister said there were components of the Chadwick methodology that he favoured bringing into any compensation scheme—specifically that there would be no burden of proof on individual policyholders to show that they had been misled by the regulatory returns. That would certainly make the scheme simpler. Will the Minister take this opportunity to tell us whether the independent payments commission will eventually metamorphose into an authority for administering the payments? If so, will it be asked to design an appeals system, or is it the Treasury’s intention to undertake that part of the design?

Perhaps the Minister could say whether he sees any parallels with the appeals system set up when the former Department of Trade and Industry introduced an appeals mechanism in respect of the ill-health complaints about what was then known as vibration white finger. He will remember that a series of complex compensation payments were made in those cases, but an appeals system was set up that had a route into a judicial process and eventually to the High Court. If some policyholders might become involved in a judicial process, it would be useful to have clarity about whether the same will happen.

Will the Minister also confirm not only, as I think he said, that the administrative costs of operating the compensation programme will be separate from the compensation fund, but that any appeals costs will also be separate from the compensation fund? I am sure that the Committee will welcome any clarification of the Government’s intentions, and in the meantime we felt that the amendment was a reasonable device to ensure that those answers are forthcoming.

Finance (No.2) Bill

Nigel Evans Excerpts

Monday 8th November 2010 Commons Chamber

[Chris Bryant (Rhondda) (Lab)]

On a point of order, Mr Deputy Speaker. I have never seen you in the gym, although you may visit it regularly, but when I was there earlier this evening, the Division Bell did not ring. I do not know whether it did not ring in other parts of the estate, but I hope that it will ring on this occasion—although I am here now.

[Mr Deputy Speaker (Mr Nigel Evans)]

Funnily enough, that is a point of order for me. It may be the first that I have taken.

I do go to the gym, although I do not go to the one to which the hon. Gentleman has referred. I thank him for giving me notice of his point of order. I have asked for someone to be in the gym in time for the next Division in order to ascertain whether the bells are working normally. The hon. Gentleman should be reassured that the matter is being investigated as we speak.

Question put, That the clause be read a Second time.

The House proceeded to a Division.

Mr Deputy Speaker: Order. It has been brought to my attention that there is a problem with the Division bells not only in the gym, but in other parts of the parliamentary estate. I am therefore giving Members a further two minutes to vote in the current Division. In the meantime, may I ask that the bells be investigated in Norman Shaw North as well as in the gym? I also advise all Members to be attentive to the monitors as well as the Division bells, because there may be more Divisions this evening.

Comprehensive Spending Review

Nigel Evans Excerpts

Thursday 28th October 2010 Commons Chamber

[Tony Cunningham (Workington) (Lab)]

On a point of order, Mr. Deputy Speaker. Why was no decision made about whether the debate that we had been having all afternoon had gone on long enough?

[Mr Deputy Speaker (Mr Nigel Evans)]

The rules of the House dictate that once the debate has gone past 6 o’clock it finishes and we move on to the Adjournment debate.

Savings Accounts and Health in Pregnancy Grant Bill

Nigel Evans Excerpts

Tuesday 26th October 2010 Commons Chamber

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. As hon. Members will have just observed, a number wish to speak in the debate. The winding-up speeches will begin at 9.40 pm. If everyone is to have an opportunity to speak—and I know that a number of Members have been present throughout the debate—I must ask those whom I call to exercise time restraint so that their colleagues can contribute as well.

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[Gregg McClymont]

I was listening closely to the hon. Gentleman’s comments. Given what he was saying, will he support a further round of quantitative easing if that is necessary to stimulate the economy, given the possibility of a prolonged—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. This is going rather wide of the mark and now may be an appropriate time to remind colleagues that we have the wind-ups at 9.40 pm. I would be grateful if Mr Rees-Mogg could show some restraint, as well as everybody else that follows.

[Jacob Rees-Mogg]

I would have finished by now, but I have taken a number of interventions, which it is a privilege to do. [Interruption.] It is a privilege, because the interventions are very interesting and they allow us to get to the nub of this difficult matter. Of course it is not popular to take something away. Of course it is easy to stand up raging about £190 being taken away from women who are about to be pushing prams. Of course the decision to take £250 away from their children is a hard one, but it is right, because the country cannot afford this. If the economy is to grow, we must have sound public finances. If that happens and if people can keep their own money, rather than have it taken from one pocket by the Government to be put into another pocket by another Department of the same Government, we can get economic growth and we can see what we saw in the 1980s, when the economy boomed, individuals got increasingly prosperous and Britain was back among the top world nations. That is what I want to see, that is what the Government are doing and that is why I am thrilled to be supporting the Bill.

Finance (No. 2) Bill

Nigel Evans Excerpts

Monday 11th October 2010 Commons Chamber

[Mr Deputy Speaker (Mr Nigel Evans)]

Had I noticed anything out of order, I would have been sure to have pointed that out. As it is, I believe that the shadow Minister is now moving on.

[Ms Eagle]

I was just about to do so, Mr Deputy Speaker, but suffice it to say that Kitchener’s Army became a tragic symbol of a lost generation, pointlessly sacrificed because of the idiocy of those in charge. Perhaps, whether he realises it or not, the Prime Minister was on to something with his choice of exhortation.

[Jacob Rees-Mogg (North East Somerset) (Con)]

I thank the hon. Lady for giving way and add my congratulations on her elevation. It will be a great privilege to listen to more of her speeches, I hope often on Kitchener. I fear that she has maligned the late noble Lord Kitchener of Khartoum, the rescuer of what remained of Gordon’s body from Khartoum. Perhaps most relevantly, the death rates in the camps established in South Africa were exactly the same as—

[Mr Deputy Speaker]

Order. This would be a fascinating debate at another time and, perhaps, in another place.

[Ms Eagle]

Thank you, Mr Deputy Speaker. I know whose side I would rather be on in any attempt to rehabilitate Lord Kitchener.

As the spending review approaches, we are beginning to see increasing signs of nervousness about the likely effects of the cuts, and that is just among Ministers. We already know that the Government have taken a decision in principle that a huge increase in unemployment is a price worth paying to get the deficit down. In an admission that the spending review will depress economic activity, the Chancellor recently made it clear that he will sanction the resumption of quantitative easing, or increasing the money supply, should the cuts in demand tip the country back towards recession. However, the extent to which monetary policy can be effective when interest rates are so low and demand is depressed is the subject of well-placed scepticism in very respectable economic circles.

Equitable Life (Payments) Bill

Nigel Evans Excerpts

Tuesday 14th September 2010 Commons Chamber

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

I thank the hon. Member for taking much less time than he could have done. Everybody can see how many Members are standing and everybody can do the maths. We want to get as many contributions in as possible, so I ask hon. Members to show great discipline.

--- Later in debate ---

[Several hon. Members]

rose—

[Mr Deputy Speaker]

Order. I thank Members for getting their messages across while showing time discipline.

--- Later in debate ---

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. The winding-up speeches will begin at 9.30. I ask the two remaining speakers to divide the remaining time between them.

Finance Bill

Nigel Evans Excerpts

Tuesday 20th July 2010 Commons Chamber

[Owen Smith]

On that specific point of corporations looking to the future and thinking about how to plan their business, can the hon. Gentleman tell me of any industrial sector or any big British company that has responded to the austerity budget and said that they now anticipate significant growth and taking on new people? I have not seen any such report.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Before the hon. Member for West Suffolk (Matthew Hancock) resumes his speech, let me say that we allow some latitude on Third Reading of the Finance Bill, but that it would be useful if Members made reference to the Bill from time to time.

[Matthew Hancock]

The reductions in corporation tax that are outlined in this Bill have been welcomed by the CBI, the British Chambers of Commerce, the Institute of Directors and the Federation of Small Businesses. Indeed, a multitude of business organisations have welcomed it. Even the Engineering Employers Federation said that this was a path in the right direction. That shows the support from business organisations.

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[Matthew Hancock]

On a point of order, Mr Deputy Speaker. I am new to the House. Could you possibly advise me whether it is appropriate for a Member to make an entire speech having stated in advance that he or she will take no interventions whatever?

[Mr Deputy Speaker (Mr Nigel Evans)]

It is very much up to hon. Members whether to take any interventions or a number of interventions, but what I have heard from the hon. Lady tells me that she is going to take no interventions during her speech.

[Jacob Rees-Mogg]

On a point of order, Mr Deputy Speaker. The hon. Lady said that she was not taking any interventions because the debate had to finish in an hour. The Order Paper, however, says the debate may continue until any hour. Can you explain to a new Member which is correct, Mr Deputy Speaker?

[Mr Deputy Speaker]

Funnily enough, I was waiting for that point of order to be made earlier. The Order Paper is always correct, and this debate could indeed go on until any time.

[Mary Creagh]

In that case, Mr Deputy Speaker, I am happy to take all interventions, even though I have spent three minutes clarifying those points.

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[Mr Deputy Speaker]

The relevance is the subject of VAT, which is addressed in the Bill, but I would reiterate the guidance given before I took the Chair, which is that people must, please, keep to the contents of the Bill and show some restraint, as many Members wish to speak.

[Mary Creagh]

We have had a debate on the higher-rated goods, which will be permanently more expensive following the votes that we will have this evening, but I also want to talk about the cuts to Labour’s child trust fund.

--- Later in debate ---

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Before I call the next speaker, in response to the point of order from Mr Rees-Mogg I stated that the Order Paper, as ever, was correct and that the debate could carry on for some time. However, hon. Members will also note if they look at the Order Paper that there is other business this evening. Another debate is to follow this one and it can last three hours, so I ask for some self-restraint for the duration of this debate.

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[Mr Umunna]

Of course, I agree with my hon. Friend. In addition, behind closed doors, some people in the Treasury share the pessimism about the state of our economy, with a leaked Treasury document showing an expected unemployment increase of 1.3 million over the next five years owing to the coalition Government’s economic policies. As well as the colossal human cost of those job losses, that will exacerbate the deficit by significantly increasing unemployment benefit payments, as I mentioned before, and cutting income tax and national insurance receipts significantly, but let me go on to the next point, as I wish to make some progress.

According to the Chief Secretary, the Bill will help to reduce the deficit and take action to eliminate the structural deficit, which is, of course, an obsession of the Government. We have already seen that their determination to do that could lead to the biggest cuts in Government spending that we have seen for many decades, but let us linger a little on the claim that the Bill is “responsible”. I have already explained how the coalition has sought to conflate public finances before the financial crash with the measures taken to mitigate the crash’s impact on hard-working ordinary people, but it is crucial that we establish what is “responsible” and what is not. The facts tell a very different story from that told by the coalition Government.

When Labour came to power, as the shadow Chief Secretary has said, public sector net debt was 42.5% of GDP. On the eve of the financial crisis, it was 36.5%, and interest payments had fallen from 3% to 1.6% of national income. A recent report by the IFS found that,

“the UK public finances were in better shape when the financial crisis began than they were when Labour came to power.”

By contrast, Germany’s indebtedness amounted to 65% of national income in 2007. In France, the figure was 63.8%; in Italy, 103.5%; and Japan ran consistent deficits, with the result that it owed 167.6% of national income by 2007. In short, the UK Government’s borrowing at that time was not of the order suggested by the Conservative party and certainly did not by any stretch of the imagination cause the economic crisis that followed.

That crisis, of course, caused the world economy to contract for the first time since the second world war. As I said, that called for decisive fiscal expansion—for billions to be injected into failing banks and into a flagging economy. How lucky we were that the then Government intervened. I for one refuse to apologise to Government Members for the bold action that the Labour party took to keep people in work, to ensure that they could still take money out of the ATM cash machines in the wall and to prevent the recession from mushrooming into a catastrophic depression.

Let it be said loud and clear that responsibility was what the previous Government did, but irresponsibility is pinning the blame for the size of the public sector debt on the previous Government and using that as a reason to hack off chunks of the public sector through spending cuts. Will Hutton, whom the Government have just appointed to head up their commission on high pay in the public sector, hit the nail on the head when he wrote in October that it was not the Labour Government

“that got us into this mess…What got us into this mess above all was the 30-year rise of Big Finance”.

However, the same people who insist that the previous Government got us into this mess propose in the Bill a corporation tax cut that will gift millions to big finance—that is what I call irresponsible.

Let me finish by examining the claim around which much of the Budget debate has revolved: that this was an “unavoidable” Budget, thus making the Finance Bill unavoidable, too. The two parties in government have made a set of choices that, I dare to venture, predate the economic crisis by a number of years. The game plan on which the Budget was based was disclosed long ago in the 2005 Conservative manifesto, the author of which happens to be the new occupant of No. 10 Downing street. The Conservatives pledged in their manifesto to slash 250,000 public sector jobs and to abolish 168 public bodies. Back then, Howard Flight, the party’s deputy chairman, was secretly recorded saying that the cuts publicly advocated by his party were a fraction of those planned. He said that the actual plans had been recalibrated into something that would be “politically acceptable” and that his party

“had to win an election first”,

but that afterwards

“you can actually get on with what needs to be done.”

We therefore cannot say that we were not warned, although people’s surprise that the Conservatives have been joined in their venture by the Liberal Democrats is wholly understandable.

Given all the shifting political sands and hidden agendas, the game of choices necessitates an eagle eye, because what stands out from the Bill and the Government’s general economic policies is not just the unfair VAT rise and the corporation tax gift to the City, as well as the disingenuous rhetoric with which they are presented, but what is absent from the Budget and the Finance Bill. Where, for example, is the plan to make the financial services sector bear its fair share of the burden? The Wall Street Journal said that the City should

“count itself lucky with the coalition government's emergency budget”.

Of course, the Government will introduce a bank levy that is forecast to raise about £2 billion, but that is a pin-prick when one considers the vast profits made in the sector. Even the IMF has proposed that the levy should raise £6 billion a year if we are properly to curb the “reckless behaviour” of the people in the industry. That additional £4 billion a year could—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. The hon. Gentleman’s speech is going wider than the Finance Bill itself, so will he please direct his comments to the Bill?

[Mr Umunna]

I was actually reaching the end of my speech, Mr Deputy Speaker. The key point that I am trying to make is that there is an alternative: a deficit reduction strategy that is based on growth and fair tax rises, as opposed to the scorched earth policy being pursued by the two parties in government. The alternative is similar to the strategy that President Obama is pursuing in the US which, in vain, he is trying to persuade our Prime Minister to follow. The alternative is to go for a more sensible timetable for deficit reduction, because as Roger Bootle of Capital Economics said last week before the Treasury Committee,

“In straightforward economic terms, I am not sure it would make a great deal of difference if the adjustment were over a longer period.”

The alternative is to avoid the overwhelmingly avoidable measures presented in this Bill—not least the VAT rise—that ultimately hit the poorest hardest. I assert that the Bill is four things: avoidable, unfair, damaging to business and deeply irresponsible.

Finance Bill

Nigel Evans Excerpts

Thursday 15th July 2010 Commons Chamber

[Mr Christopher Chope (Christchurch) (Con)]

I beg to move amendment 18, page 2, line 23, leave out ‘“6 per cent”’ and insert ‘“5 per cent in the case of personal health insurance, and 6 per cent in any other case”’.

[The First Deputy Chairman of Ways and Means (Mr Nigel Evans)]

With this it will be convenient to discuss the following: amendment 19, page 2, line 23, leave out ‘“6 per cent”’ and insert ‘“5 per cent in the case of motor insurance, and 6 per cent in any other case”’.

Amendment 15, page 2, line 26, at end add ‘, subject to a report having been laid by the Secretary of State containing an assessment of the consequences of the changes in subsection (1) on consumers and the insurance industry.’.

Amendment 48, page 2, line 32, leave out subsection (4).

[Mr Chope]

The amendments aim to tease out from the coalition Government and, in particular, the Exchequer Secretary, who is responding to this debate, what the Government’s attitude is towards people who do the right thing and try to relieve the burden on the public sector and the national taxpayer. Although it would be wrong to suggest that the inspiration for the amendments came from the Secretary of State for Transport, he was on to an important principle recently when he said that if a pensioner has a bus pass but can afford to pay their fare, they should not use the pass but pay the fare themselves and thereby relieve the local taxpayer of the costs consequent upon the use of that subsidised bus pass. It is a subsidy of general application—it goes to people irrespective of their means and ability to pay.

We know that quite a lot of people choose to buy medical and personal health care in the private sector without burdening the state and the taxpayer. If those people choose to do that through personal health insurance, this Budget will increase the financial penalty on them. In other words, it will be a disincentive to people taking responsibility for their own personal health care through personal health insurance. Many years ago, it was the policy of the then Conservative Government that those who subscribed to personal health care insurance should have their subscriptions tax deductible. That was based on the worthy principle that, if we did that, we would encourage more people to take responsibility for their own health care. We have moved a long way from that now.

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[Claire Perry (Devizes) (Con)]

In trying to square the circle of how we can raise taxes when there is no money, it is interesting to note that we have not committed to Labour’s rise in fuel tax, which was going to add a further £425 million—[Interruption.] If you read the small print in Labour’s last Budget, you will see that there was a plan to raise an additional £425 million—

[The First Deputy Chairman]

Order. We are not referring to taxes that are not proposed in the Bill. We are talking specifically about the amendments to the Bill.

[Mr Redwood]

How wise you are, Mr Evans.

I was making the point that the Minister, in responding to this debate on the insurance premium tax, might assuage some of our grief if he were to say that the Government had looked at the total package of taxes on the motorist and that they were aware that this was yet another example of the piling high of taxes on the motorist. Although this individual tax increase will not be large for many motorists—it will be more penal for young drivers and high-risk drivers—it is none the less an additional burden. Even if the Minister cannot accept the amendment, I hope that he will look at other ways of dealing with the problem of fair motoring taxes.

Every time something like this happens to motorists—this time, it is the insurance tax levy—they say, “We are being sandbagged again. Where are those better roads? Where is that safer junction? Where is the wish to spend money on improving the flows on the roads so that we can travel in a more fuel-efficient, green manner of which the Environment Secretary would approve?” There never seems to be the money to do that. We know that this bit of taxation on the motorist, like most others, primarily goes not to making better roads but to a wide range of other purposes; it gets lost in the general coffers.

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[Several hon. Members]

rose—

[The First Deputy Chairman]

Order. It may be of interest to the Committee to know that I shall not be allowing a debate on clause stand part separately from the debate currently taking place.

[Mr Bone]

Thank you, Mr Evans. I am very grateful to have been called. It is a great pleasure to serve under your chairmanship for the first time since you have been elevated to your new role. I refer Members to my entry in the Register of Members’ Financial Interests.

The right hon. Member for Birmingham, Hodge Hill (Mr Byrne) made an interesting and measured speech, which I hope my hon. Friend the Exchequer Secretary will respond to in due course. I could not agree more with the right hon. Gentleman’s last point. We should not be increasing insurance premium tax to anything like European levels. That is one thing we do not need to learn from Europe.

I support the two amendments tabled by my hon. Friend the Member for Christchurch (Mr Chope) and I warmly support the comments made by my right hon. Friend the Member for Wokingham (Mr Redwood). My remarks about relief on motor insurance will be brief. The arguments have been made powerfully and I entirely support them. The amendment about health insurance concerns me the most.

The coalition Government have three areas of protected spending, where public spending is guaranteed to rise: the health service, overseas aid and the European Union. I want to deal with the relationship of the proposals to the health budget. Each year, £100 billion is spent on the NHS and the Government rightly recognise that spending will have to increase. There is no way round it. Demand on the health service will grow and grow, so there will have to be a real-terms increase. Even allowing for that, however, there will not be enough money to do everything in the health service.

One of my constituents is suffering from cancer and needs cancer drugs. She has to sell her house to pay for those drugs. If she had been insured, that would not have been the case. I am convinced that that lady uses the NHS most of the time, so she has not chosen to opt out by insuring herself against everything, but there will always be aspects of health provision that the NHS cannot cover because of their cost. That will mean that people have to pay extra, as this lady is doing for her cancer drugs. If we are to encourage people to insure themselves against such risk, we need to send the right signal.

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[Chris Leslie]

Happily.

[The First Deputy Chairman]

Order. Just before that happens, can we please restrict ourselves to the Bill and the amendments to it?

[Geraint Davies]

I shall bear that in mind. My hon. Friend will know that I had a previous responsibility for adapting Wales to climate change in terms of flood defences, and he will be interested to know that there are literally—

[The First Deputy Chairman]

Order. That is much wider than what we are discussing today.

[Chris Leslie]

Those who require insurance, on which the amendments would seek a report from the Treasury in order to reveal the impact not just on the Exchequer, but on individuals, will also be concerned about their contents insurance and buildings insurance, which are often where the cost of picking up reparations after flooding occur. It would be wrong of me not to pay tribute to my hon. Friend for his work before he entered Parliament.

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[Chris Leslie]

That is a reasonable point, but I should not want to stray beyond the terms of the amendment, suffice it to say that the hon. Gentleman asks a reasonable question, because if we agree to the amendments we might be forgoing revenue to the Exchequer. My view, which he may have heard before but I am happy to share with him, is that the banks should not gain £400 million cash-back from the corporation tax reduction that they will enjoy.

[The First Deputy Chairman]

Order.

[Chris Leslie]

Mr Evans, I felt an obligation to help the hon. Gentleman and hoped that, with that short interjection, you would indulge me.

To return to my general point, insurance is not only a public good, but a necessity for many of our constituents. Our constituents also often make the choice to take out insurance. Although I would not say that all insurance policies are good value for money and although we want to see more competition, I feel uncomfortable about the constant ratcheting up of the costs to our constituents of compulsory insurance, particularly motor insurance.

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[Stewart Hosie]

I beg to move amendment 16, page 3, line 12, leave out ‘22 June 2010’ and insert ‘a date set by the Secretary of State by regulation.’.

[The First Deputy Chairman of Ways and Means (Mr Nigel Evans)]

With this it will be convenient to discuss amendment 17, in schedule 3, page 19, line 38, leave out ‘22 June 2010’ and insert ‘a date set by the Secretary of State by regulation.’.

Clause stand part.

Schedule 3 stand part.

[Stewart Hosie]

I do not intend to delay the Committee. By and large, I am very supportive of clause 6. The two-year extension for people reaching the age of 75 in order to allow them to buy an annuity when it is most effective for them is a good thing to do. The clause seems to be pretty well drafted and the description of it is extremely good. I am pleased about the protection in paragraph 8(2) of schedule 3, which provides that if a member dies before a year has passed since their 75th birthday, and at the date of death there are still funds held for the purposes of the arrangement that have not been designated as available to pay an unsecured pension, not paid as a lump sum, and not applied towards the provision of a scheme pension or a dependent’s scheme pension, those funds are treated as though they had been designated as available for the payment of an unsecured pension and will then be taxed on death at a rate of only 35%. That makes sense.

However, I am aware, through a constituent of my hon. Friend the Member for Angus (Mr Weir), that there are a small number of individuals who have already reached 75, or will hit 75 before 22 June, and who did not buy an annuity because it was not worth it or not effective. I want to describe the position of that person and then see what help the Minister might be able to provide, or hear her explanation of how the clause might assist.

As the rates for annuities were very low, this gentleman did not take up one on reaching 75 in 2007. Instead, he chose a scheme pension that allowed him, subject to pension regulation supervision—a specialist firm did that for him—to continue to manage his pension fund for a period of 10 years and take the actuarially calculated levels of income from it. That was very sensible and prudent. However, the downside is that on his death, if any of that fund is left, it will be subject to inheritance tax at a rate of 80% before it passes to a family member of his choice.

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[Bill Esterson]

The right hon. Gentleman mentioned the record of the last Labour Government on pensions, but what about the record of the previous Conservative Government when it came to the mis-selling of pensions? I trust he would accept that that was a serious problem.

[The First Deputy Chairman]

Order. That is much wider than the amendment.

[Mr Redwood]

I would love to deal with that point, but I shall take your advice, Mr Evans. The real sin was the tax and regulatory raid on pensions under the last Government, which led to the wholesale closures of final salary schemes, and as a result of which most people starting out in work today have no access to a final salary work-based scheme in the way that their parents’ generation did. That is a great tragedy. However, this provision is a small move in the right direction, so I hope that the House will warmly welcome it. Well done to the Minister.

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[Stephen Timms (East Ham) (Lab)]

Schedule 4 provides for the exemption from income tax of expenses paid or reimbursed to MPs, following the introduction under the Parliamentary Standards Act 2009 of the popular new scheme for paying the expenses of MPs administered by the Independent Parliamentary Standards Authority. I understand that that will broadly have the effect of maintaining—[Interruption.]

[The First Deputy Chairman]

Order. Far too many conversations are taking place in the Chamber. Will those who are leaving please do so quietly?

[Stephen Timms]

I appreciate that the arrangements will broadly have the effect of maintaining the tax treatment that applied to similar expenses paid under the previous arrangements. Tax treatment of MPs’ expenses used to be dealt with by specific legislation or long-standing extra-statutory concessions. As hon. Members will know, a long-term project has been undertaken following the judgment in the Wilkinson case of 2006 to place all the statutory concessions on a proper legislative basis. Can the Minister confirm that the previous concession, which I think is numbered A.54—Members of Parliament: accommodation, allowances and expenses—has, with this legislation, been withdrawn, and whether any of the other extra-statutory concessions outstanding are affected by the Bill?

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[Stephen Timms]

Clause 8 and schedule 5 amend the corporation tax rules on loan relationships and derivative contracts that apply to amounts not fully recognised for accounting purposes. This is a good example of the way in which the obligations that the previous Government introduced in 2004 on the disclosure of tax avoidance schemes are bearing fruit by revealing forms of avoidance that represent loopholes that need to be closed, which is what the clause does. The intention behind the clause was announced by the previous Government at the time of the March Budget. The provision is tightly targeted. I am not aware of any adverse reaction, and I certainly support the clause, but will the Exchequer Secretary give us his assessment of how much tax avoidance will be prevented by blocking the loophole?

I was pleased that the coalition agreement included the commitment:

“We will make every effort to tackle tax avoidance”.

Clauses 8 and 9 are the first concrete signs of that commitment being delivered. However, will the Exchequer Secretary tell us a little more about how those efforts will be pursued and what is meant in the coalition agreement by the commitment to

“detailed development of Liberal Democrat proposals”?

If I understand correctly, Liberal Democrat proposals in this area include: changing the taxation of benefits in kind; increasing the proportion of HMRC time spent on income tax evasion; a new general anti-avoidance provision for corporation tax, with companies paying a commercial rate for HMRC pre-clearance—I imagine that that is being subsumed in the wider discussion about a general anti-avoidance rule; and legislating to establish the beneficial ownership of property that is sold to prevent the avoidance of stamp duty land tax. Will the Exchequer Secretary confirm what the coalition agreement meant? Are all those initiatives—

[The First Deputy Chairman]

Order. I think that the right hon. Gentleman is going much wider than the provision before us. Will he confine his remarks to what is contained in clause 8?

[Stephen Timms]

Of course I will, Mr Evans.

I accept that there will always be areas in which there is legitimate uncertainty among business and their representatives about how the law applies. However, I am pleased that clause 8 and schedule 5 are being brought forward to block one more unwanted loophole.