Oral Answers to Questions

Pat McFadden Excerpts

Tuesday 15th September 2020 Commons Chamber

[Rishi Sunak]

The hon. Lady is slightly confused. On one hand she speaks about people who were not eligible for the self-employment scheme, but those who were excluded earned more than £50,000 and were in the top 5% of all earners, with an average median salary of £200,000. In the same question she speaks about targeting support to those who cannot afford food. She should figure out which issue she cares about.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

When the circumstances change, policies should adapt. Infection rates are growing, local restrictions are becoming more common, and this morning’s figures show levels of unemployment at a two-year high, and rising, particularly among the young. France and Germany have extended their employment support for a further year. Is it time to reconsider the jobs cliff edge that is approaching at the end of next month, and at least to extend employment support to those sectors that cannot yet go back to work, and areas hit by local lockdowns, so that businesses and workers are not punished for doing the right thing?

Co-operative and Community Benefit Societies (Environmentally Sustainable Investment) Bill

Pat McFadden Excerpts

2nd reading & 2nd reading: House of Commons
Friday 11th September 2020 Commons Chamber

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

I am grateful to be able to make a short contribution to this debate. In the midst of the coronavirus crisis that we are going through, there is an active debate about how we should come out of it and recover from it economically. On that note, I congratulate my hon. Friend the Member for Cardiff North (Anna McMorrin) on bringing forward a Bill that creates a platform for an important contribution to that debate.

Many people would argue—I include myself among them—that it is not enough just to try to recreate the economy as it was in February; we should aim to come out of this crisis with a more sustainable economy and a better funded public space. If we have learned anything during this crisis, it is that good public services can help protect us and guarantee the safety and security of our whole society in such situations. Any society is only as strong as its weakest parts when fighting a pandemic. Co-operatives have a big part to play in that.

Scarcely a conversation with investors or financial institutions can go by these days without hearing the letters ESG. Environmental, social and governance considerations are being put forward as greater priorities in investment decisions, and it is in that context that the Bill put forward by my hon. Friend is highly relevant to the debates about what investment should seek to achieve.

As we have heard in the debate, co-operatives have been part of our society and economy since 1844, when the Rochdale Society of Equitable Pioneers was established. The principle that a business can be run and owned by its members for the benefit of the community it serves has become a much cherished and valuable part of British life. The co-operative movement was part of the foundation of the Labour party, and we have always had a close relationship with it. As we have heard, there are some 7,000 co-operatives operating in the UK, with a combined turnover of around £38 billion. Perhaps I should declare my interest, in that I am a member of the Co-operative party and a member of the Revolver World co-operative in my constituency, which sells excellent Fairtrade tea and coffee—so, Mr Deputy Speaker, if you want a good cup of tea or coffee after this debate, you know who to ask.

Let me turn to the Bill, which seeks to deal with an essential and important question of financing. It tries to deal with the question of how co-operatives can raise equity finance without compromising the mutual nature of their ownership and governance model. At the moment, co-ops can raise finance either from their members’ resources or they can borrow to invest, but they cannot issue conventional shares, as other enterprises can, without threatening the mutual status of the organisation. The reason for that, of course, is that anyone who invests in an enterprise by buying shares gets the rights—those ownership and voting rights—that share ownership brings. The Bill tries to deal with that essential problem for co-operatives, which does not affect other enterprises that can issue shares freely.

The other distinguishing feature of the Bill is that clause 1(3) envisages that these shares are for environmentally sustainable investment—that they are green shares. As we have heard throughout the debate, the desirability of restricting this new class of shares for green purposes has been the subject of some disagreement and discussion. It is fair to say that some in the co-operative movement regard the scope as too narrow and point to the much broader range of social and economic benefits of co-operatives. They would rather see a more generic share-issuing power with the emphasis on the form of investment and the protection of the mutual model, rather than trying to be too focused on the purpose of the investment. However, even those in the co-operative movement who have doubts about the purely green criteria set out in the Bill still want to see it receive a Second Reading and to deal with the issues about the scope of the shares in Committee.

I think that a couple of straw people have been set up in the debate. One is that if we issue such green shares, it will somehow stop the Government doing green investment. There is no reason why the Government should not invest in retrofitting housing, for example, just because we make a change in how co-operatives can raise financing, so that need not detain us.

There has also been the issue of green bonds. Of course they can play a role, but again, why should one crowd out the other? We already operate in a world of capital markets where there are bonds and equities, and no one has ever suggested that because we have equities, we cannot have bonds, so why should that be the case here? I accept that there is some debate about the scope of these green shares, but I do not accept that somehow, as a consequence, they will run against the issue of green bonds or inhibit the Government from doing what they want to on such investments.

There are not too many opportunities to legislate on co-operatives, and this one is still a potentially valuable way to facilitate equity investment in the co-operative sector. The co-operative movement has wanted to do that for some time and the Bill seeks to address that long-standing problem by creating this new class of share, which would not only facilitate equity investment, but safeguard co-ops from the risk of demutualisation as a result. Similar provisions are already in place for building societies in the UK through core capital deferred shares, and legislation like this has, as we have heard, recently been passed in Australia—a country that I believe our Prime Minister is increasingly looking to for inspiration, so I am somewhat surprised to hear Government Members not wanting to follow the Australian model when it seems to have such influence in other parts of our public life at the moment.



The Bill allows the issuance of these shares, but restricts the voting rights of investors holding them to one vote, and creates other safeguards to stop that investment resulting in a move to turn the Co-op into a conventional private company. As many Members have said in the debate, there is no point in creating this new financial instrument if the result of it is to destroy the co-operative essence of the enterprise, so the Bill seeks to safeguard against that danger. It also envisages that the shares are permanent capital—not withdrawn by the holder but tradeable to other holders if the original holder so wishes.

We believe that legislating for this new type of share could open up a new and important channel for investment in co-operatives in the future. Acting on that basis is in keeping with the new emphasis on ESG goals in financial services and markets. If investors really are becoming more interested in things other than quarterly returns and if the quality of supply chains, the sustainability of investment, the broader contribution to the good society really are going up the agenda for investment decisions, then this Bill is one way to make more of that kind of investing a reality. We want to see it done in a way that does not threaten the mutual model or the essential membership ownership that gives co-operatives their distinctive character.

I make no predictions about the fate of the Bill today, but we do believe that there is merit in the kind of financial instrument that it envisages and, for that reason, the creation of this financial instrument deserves the support of the House.

[Mr Deputy Speaker (Mr Nigel Evans)]

Let me just explain what is happening, because it has been a while since we have had a Friday sitting. When I call the Minister, the debate will continue as long as people who are on the call list are trying to catch my eye. At the end of that, I will then call Anna McMorrin to end that debate. If anybody wishes to withdraw from the call list, please come and see me in the Chair.

Stamp Duty Land Tax (Temporary Relief) Bill

Pat McFadden Excerpts

2nd reading & 2nd reading: House of Commons
Monday 13th July 2020 Commons Chamber

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

It has been a pleasure to listen to this debate and the many interesting contributions. I cannot mention every Member who has spoken, but we have had a lot of interesting contributions. The hon. Members for South Thanet (Craig Mackinlay) and for Runnymede and Weybridge (Dr Spencer), and perhaps one or two others, urged the Government to abolish stamp duty completely. The hon. Member for Dudley South (Mike Wood) spoke of the importance of confidence in the market in the face of impending job losses.

In a thoughtful contribution, the hon. Member for Penistone and Stocksbridge (Miriam Cates) spoke of the impact of relationship breakdown on housing transactions. My hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) spoke of the appalling conditions that many families find themselves living in, and eloquently set out how distant is the dream or aspiration of home ownership for so many people. The hon. Member for South Cambridgeshire (Anthony Browne) gave us the benefit of his long experience in these matters in calling for an increased rate for second homeowners.

Stamp duty holidays are a familiar feature of economic crisis management. As has been referenced in the debate already, in 2008 the then Chancellor, Alistair Darling, raised the level at which stamp duty was paid in an effort to kick-start the housing market, which had been hit hard by the global financial crisis. At that time, the measure had a positive effect and brought forward an increase in the number of transactions. This time, we do not yet know of the effect.

As my hon. Friend the Member for Liverpool, Walton (Dan Carden) said, another thing that we do not know is whether the Government really intended to introduce this measure, at least at this time. We saw the briefing, the counter-briefing, the leak and the counter-leak; in the end the Government have announced it now, rather than in some post-dated way that would have simply killed the housing market stone dead. After all, why would anyone choose to buy a house now if they were promised a tax cut on the transaction in some months’ time?

It is normal, of course, for the Treasury to weigh up its options for a statement such as last week’s. There is nothing wrong with considering different ideas, accepting some and rejecting others, but for that exercise to work, it has to be done in private. If the leaks were not a problem, Government Members must ask the Prime Minister why he was railing against them at the end of last week when he was discussing these measures. Once it was out in the open, the Chancellor had to act, so the first question to be asked about this policy, before we even get to its merits, is: was it the result of a £4 billion leak? If that is the case and the Chancellor was effectively bounced into this policy as a result of information coming out in an unintended way, this must be the biggest plumbing bill of all time. We might never know, so let me turn to the merits of the policy itself.

The reason the Chancellor gave for the measures before us was that housing transactions had fallen sharply in April and May. It is true that housing is a very important part of our economy, for all the reasons that we have heard in the debate. Governments of both colours have supported the ambition of people to own their own home, as we do today. Depending on where you live, stamp duty can be a significant cost to house buyers. Although the history of temporary cuts in stamp duty rates tells us that, over the longer term, they might make little difference to the volume of transactions, they can serve to bring forward demand when a market has been hit for one reason or another. When people move house, there is a positive knock-on effect, and we have heard about many of those effects today, whether it is the purchase of new furniture or electrical goods or the employment of people doing repairs and renovations.

We do not oppose this measure. We support the desire for people to own their own homes. We certainly do not celebrate the reduction in home ownership over the past 10 years or the fact that 800,000 fewer people under the age of 45 own their own home today compared with 10 years ago—and 10 years is important. The Government have had a decade to address the question of home ownership. I put it to all the champions of home ownership who have spoken in the debate: are they really proud that it is harder to own a home now than it was when they came into office 10 years ago? Are they really proud that it is so much more difficult for younger people to get on the housing ladder? I do not think they can be proud of that decade-long record.

As with a number of the measures announced last week, we have concerns about how well this is targeted. Stamp duty has changed over the years, with different rates put in at different levels. If the Chancellor really wanted to announce a stamp duty holiday, was it necessary to extend it to buy-to-let landlords and people purchasing second homes? What will be the benefits for overseas buyers, some of whom have seen the most expensive London property almost as a reserve currency? Both those groups are already treated differently within the existing regime, and they could have been treated differently in this change. That is why we have tabled a new clause calling for a report on the effect of this decision on these very different groups of homebuyers. We are for measures that help hard-working people to buy their own home, but we are not for measures that simply channel funds to areas where they are not needed or that go against the grain of some of the changes that have been made to stamp duty in recent years.

That takes me to a wider point about the measures announced last week. The job retention bonus has been criticised by a number of commentators for having a significant dead-weight cost—that is to say, giving money to businesses for doing things they would have done anyway. That is why the measure was not signed off by the head of HMRC, who questioned the “value for money” of the proposal. It was of course absolutely essential for the Government to step up and support the economy during a lockdown that was imposed for public health reasons, and the costs of not doing so, both economically and socially, would have far outweighed the costs of doing so. But that does not mean that the Treasury and the Chancellor are absolved of the duty to target that support properly on measures that really can make a difference to the recovery, or to use taxpayers’ money wisely.

Like all Budgets and all Budget statements, the measures announced can look a little different after a few days’ examination and scrutiny, and that has proved to be the case with last week’s statement. Within 24 hours of this supposed statement for jobs, thousands of job losses in Boots and John Lewis were announced—great British companies in a sector that got almost no attention from the Chancellor last week. So the question, above and beyond the detail of the measures before us tonight, is whether, after last week’s statement, all these measures match up to the scale of the economic and, in particular, the jobs challenge that the country is facing. We called for a Budget for jobs because we have heard the warnings about the danger to jobs in many parts of the economy. This is not a crisis that affects all sectors equally. The Chancellor conceded that point with his targeted cut in VAT for tourism and hospitality. It is absolutely right to help those sectors, but there are others that desperately need help too—retail, manufacturing, aviation, transport and many more.

There is one more crucial point. Getting the economy moving again is not just a matter of the kind of measures that we are debating this evening, because the health response and the economic response have to go together. It is not just the lack of a £10 discount that is stopping people eating out; it is fear—fear and lack of confidence that the Government are adequately on top of the public health situation. After tens of thousands of deaths, and with the Government’s boast of a world-beating track-and-trace system having been turned to dust, it is little wonder that there is fear and lack of confidence. If the Government really want to get the economy moving again, they have to give the public the confidence that they are on top of the public health crisis as well as putting the right economic support measures in place.

We do not oppose these measures, but we remain convinced that the economic and health responses must be brought together, and that more measures than those announced last week will be necessary to help the economy through the very tough period for jobs that is already upon us.

Oral Answers to Questions

Pat McFadden Excerpts

Tuesday 7th July 2020 Commons Chamber

[Rishi Sunak]

The most important thing for all these sectors is for them to be safely reopened. That is why I am delighted that last weekend we were able to meet the target set out in our reopening plan. The Prime Minister has spoken about reopening our remaining closed sectors in the coming weeks, which is welcome news. The hon. Lady is right that these sectors have faced hardship. That is why, as I said, they have received considerable extra support from the Government in the form of business rates holidays and cash grants.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

Thousands of jobs losses have been announced in recent days, and many more are expected if the furlough scheme is withdrawn from all sectors at the same time. With young people facing the most difficult labour market conditions for a generation, and many otherwise viable businesses in trouble because of social distancing rules, does the Chancellor accept the case for employment support being aimed directly at the sectors most likely to be hit by job losses in the coming months?

[Rishi Sunak]

Those who call for a sector-specific approach are not always able to articulate exactly how they would define those sectors and also the supply chain that they serve. The most important thing is to have provided broad, generous and swift coverage to protect 9 million jobs, as this Government have done, and now to reopen these sectors so that we can get as many of those people back to work as quickly as possible to the jobs that they have.

Finance Bill

Pat McFadden Excerpts

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

Brought up, and read the First time.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

I beg to move, That the clause be read a Second time.

[Mr Deputy Speaker (Mr Nigel Evans)]

With this it will be convenient to discuss the following:

New clause 1—Loan charge: report on effect of the scheme—

“(1) The Chancellor of the Exchequer must commission a review, to be carried out by an independent panel, of the impact in parts of the United Kingdom and regions of England of the scheme established under sections 20 and 21 and lay the report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider the effects of the provisions on—

(a) business investment,

(b) employment,

(c) productivity, and

(d) company solvency.

(3) A review under this section must consider the fairness with which HMRC has implemented the policy, including whether HMRC has provided reasonable flexibility around repayment plans with the aim of avoiding business failures and individual bankruptcies.

In this section “parts of the United Kingdom” means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland;

and “regions of England” has the same meaning as that used by the Office for National Statistics.”

This new clause would require a review of the impact of the scheme to be established under Clauses 20 and 21.

New clause 31—Restricting the loan charge to cases where taxpayer knew loan was taxable—

“(1) In Schedule 11 to F(No.2)A 2017 (employment income provided through third parties: loans etc outstanding on 5 April 2019) in paragraph 1(1)—

(a) at the end of paragraph (b) omit “and”; and

(b) at the end of paragraph (c), insert—

“, and

(d) if the relevant year is 2015/16 or an earlier tax year, one of the conditions 1 to 3 is met.”

(c) After paragraph 1(1), insert—

“(1A) Condition 1 is that—

(a) P submitted a return in accordance with section 8 of TMA 1970 for the relevant year,

(b) the loan or quasi loan was not accounted for in the return as income, and

(c) P knew that the loan or quasi loan should have been accounted for as income in the relevant year.

(1B) Condition 2 is that P has not been issued with a notice under section 8 of TMA 1970 for the relevant year.

(1C) Condition 3 is that P has been issued with a notice under section 8 of TMA 1970 for the relevant year but that notice is or has been withdrawn under section 8B(2) of that Act.”.

(2) In Schedule 12 to F(No.2)A 2017 (trading income provided through third parties: loans etc outstanding on 5 April 2019) in paragraph 1(2)—

(a) at the end of paragraph (a)(ii) omit “and”; and

(b) at the end of paragraph (b), insert—

“, and

(c) if the tax year in respect of which the loan or quasi loan should have been accounted for as income (or otherwise treated as a receipt of a revenue nature for income tax purposes) (“the relevant year”) is 2015/16 or an earlier tax year, one of the conditions 1 to 3 is met.”

(c) After paragraph 1(2), insert—

“(2A) Condition 1 is that—

(a) T submitted a return in accordance with section 8 of TMA 1970 for the relevant year,

(b) the loan or quasi loan was not accounted for in the return as income (or otherwise treated as a receipt of a revenue nature for income tax purposes), and

(c) T knew that the loan or quasi loan should have been accounted for in the return as income (or otherwise treated as a receipt of a revenue nature for income tax purposes).

(2B) Condition 2 is that T has not been issued with a notice under section 8 of TMA 1970 for the relevant year.

(2C) Condition 3 is that T has been issued with a notice under section 8 of TMA 1970 for the relevant year but that notice is or has been withdrawn under section 8B(2) of that Act.”.

This new clause provides that, in respect of loans made in 2015/16 tax year and any earlier tax years, the loan charge applies only if the taxpayer submitted their tax return and deliberately did not declare the loan to be income. The clause also extends this protection to taxpayers who were not required by HMRC to submit tax returns.

New clause 35—Review of Off-Payroll working (IR35) legislation—

“(1) The provisions of section 7 and Schedule 1 of this Act do not have effect unless the Treasury has conducted a review of Off-Payroll working (IR35) legislation and has laid a copy of the report of that review before both Houses of Parliament.

(2) A review under (1) must include assessment of—

(a) impact on individuals’ livelihoods,

(b) impact on individuals’ employment rights, and

(c) relevant business practices.

(3) Any review under (1) must be carried out no later than 31 December 2025.”

This new clause would provide that the IR35 provisions of the bill would not take effect unless the Treasury has conducted and published a review of off-payroll working legislation.

Amendment 16, page 2, line 23, leave out clause 7

Amendment 55, in clause 20, page 15, line 6, at end insert—

“(3A) An amount paid, treated as paid or due to be paid under a qualifying agreement is also a qualifying amount if—

(a) the amount is referable (directly or indirectly) to a qualifying loan or quasi-loan,

(b) the tax year in which an amount representing the loan or quasi-loan should have been accounted for as income (or otherwise treated as a receipt of a revenue nature for income tax purposes) (“the relevant year”) is 2015/16 or an earlier tax year, and

(c) one of the conditions 1 to 3 is met.

(3B) Condition 1 is that—

(a) the person to whom the income tax liability the agreement referred to in subsection (2) relates (“P”) submitted a tax return in accordance with section 8 of TMA 1970 for the relevant year, and

(b) the loan or quasi loan was not accounted for in the return as income (or otherwise treated as a receipt of a revenue nature for income tax purposes).

(3C) However, condition 1 is not met if P knew that the loan or quasi loan should have been accounted for in the return as income (or otherwise treated as a receipt of a revenue nature for income tax purposes).

(3D) Condition 2 is that P has not been issued with a notice under section 8 of TMA 1970 for the relevant year.

(3E) Condition 3 is that P has been issued with a notice under section 8 of TMA 1970 for the relevant year but that notice is or has been withdrawn under section 8B(2) of that Act.”.

This amendment is consequential on the new clause “Restricting the loan charge to cases where taxpayer knew loan was taxable”. It provides that a prior settlement with HMRC can be unwound unless the worker failed to account for a 2015/16 tax year (or earlier) liability in his or her tax return deliberately despite knowing that the loan should have been included as income.

Amendment 17, page 85, line 2, leave out schedule 1.

Amendment 20, in schedule 1,  page 97, line 15, leave out “2021-22” and insert “2023-24”

This amendment and 21 to 36 and 57 seeks to delay the introduction of the IR35 changes until the tax year 2023-24.

Amendment 21, page 97, line 17, leave out “2021” and insert “2023”

Amendment 22, page 97, line 21, leave out “2021” and insert “2023”

Amendment 23, page 97, line 23, leave out “2021” and insert “2023”

Amendment 24, page 97, line 25, leave out “2021” and insert “2023”

Amendment 25, page 97, line 26, leave out “2021” and insert “2023”

Amendment 26, page 97, line 38, leave out “2021” and insert “2023”

Amendment 27, page 98, line 4, leave out “2021-22” and insert “2023-24”

Amendment 28, page 98, line 8, leave out “2021” and insert “2023”

Amendment 29, page 98, line 12, leave out “2021” and insert “2023”

Amendment 30, page 98, line 30, leave out “2021” and insert “2023”

Amendment 31, page 98, line 34, leave out “2021” and insert “2023”

Amendment 32, page 98, line 37, leave out “2021” and insert “2023”

Amendment 33, page 98, line 40, leave out “2021” and insert “2023”

Amendment 34, page 98, line 44, leave out “2021” and insert “2023”

Amendment 35, page 98, line 45, leave out “2021” and insert “2023”

Amendment 36, page 98, line 47, leave out “2021” and insert “2023”

Amendment 57, page 97, line 36leave out ‘2021’ and insert ‘2023’

New clause 12—Assessment of impact of provisions of this Act—

“(1) The Chancellor of the Exchequer must review in parts of the United Kingdom and regions of England the impact of the provisions of this Act and lay a report of that review before the House of Commons within one month of the passing of this Act.

(2) A review under this section must consider the effects of the provisions on—

(a) GDP

(b) business investment,

(c) employment,

(d) productivity,

(e) company solvency,

(f) public revenues

(g) poverty, and

(h) public health.

(3) A review under this section must consider the following scenarios—

(a) the Job Retention Scheme, Coronavirus Business Interruption Loan Scheme, Bounceback Loan Scheme and Self-employed Income Support Scheme are continued are continued for—

(i) six months,

(ii) the next year,

(iii) eighteen months,

(iv) the next two years; and

(b) the Job Retention Scheme, Coronavirus Business Interruption Loan Scheme, Bounceback Loan Scheme and Self-employed Income Support Scheme are ended or changed in any ways by a Minister of the Crown other than as specified in (a).

(4) In this section—

“parts of the United Kingdom” means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland;

“regions of England” has the same meaning as that used by the Office for National Statistics.”

This new clause would require a review of the impact of the Bill in different possible scenarios with respect to the continuation of the coronavirus support schemes.

New clause 18—Review of changes in Act—

“(1) The Chancellor of the Exchequer must review the effect of the changes in this Act in each part of the United Kingdom and each region of England and lay a report of that review before the House of Commons within two months of the passing of this Act.

(2) A review under this section must consider the effects of the changes on—

(a) business investment,

(b) employment, and

(c) productivity.

(3) A review under this section must consider the effects in the current and each of the subsequent four financial years.

(4) The review must also estimate the effects on the changes in the event of each of the following—

(a) the UK leaves the EU withdrawal transition period without a negotiated comprehensive free trade agreement,

(b) the UK leaves the EU withdrawal transition period with a negotiated agreement, and remains in the single market and customs union, or

(c) the UK leaves the EU withdrawal transition period with a negotiated comprehensive free trade agreement, and does not remain in the single market and customs union.

(5) The review must also estimate the effects on the changes if the UK signs a free trade agreement with the United States.

(6) In this section—

“parts of the United Kingdom” means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland;

and “regions of England” has the same meaning as that used by the Office for National Statistics.”

This new clause requires a review of the impact on investment, employment and productivity of the changes made by the Act over time; in the event of a free trade agreement with the USA; and in the event of leaving the EU without a trade agreement, with an agreement to retain single market and customs union membership, or with a trade agreement that does not include single market and customs union membership.

[Mr McFadden]

It is a pleasure to be facing my old sparring partner from the Treasury Committee of some years ago across the Dispatch Box. In this debate we will cover a number of amendments dealing with IR35 or off-payroll working, through to the loan charge and the impact of this Finance Bill on the crucial issue of jobs.

On IR35, we have always said that we need an approach that brings together the consideration of tax and employment law and that levels up protections for the self-employed, as well as dealing with the current implications of the tax system, which sometimes boosts bogus self-employment. The Chancellor has already hinted at changes to the tax regime for self-employed people as a consequence of the help given to them through the current crisis. Some contractors have raised concerns about being treated like an employee for tax purposes but not for employment rights purposes. Given the huge ongoing labour market difficulties caused by the current crisis, I would like to ask the Minister what consideration the Government have given to the timetable for their proposed changes and, in particular, what their attitude is to the amendments before us tonight calling for a delay in the roll-out of the IR35 changes to the private sector, so that we can get the balance between tax and employment rights correct.

Many Members have also received representations about changes to the loan charge. We have supported attempts to deal with tax avoidance, but also expressed concern for those advised into such arrangements, by either employers or the promoters of such schemes. We will continue to press the Government to review how the promoters of disguised remuneration schemes have been tackled—or not tackled, as the case may be—by HMRC and ensure that those who promote such schemes are held to account.

[Sir Edward Davey]

I agree with what the right hon. Gentleman has been saying. Would he support the option of the House having a vote tonight on new clause 31, which relates to the loan charge? There are many people watching our deliberations who hope that this House will express a view on the loan charge, and I am told that at the moment that is not likely to happen. Will he confirm from the Front Bench that the Labour party would like a Division on new clause 31?

[Mr McFadden]

The matter of what is voted on is of course, a consideration for the Speaker. I do not always get to decide what is voted on in this House.

New clause 26, standing in my name and those of my hon. Friends, focuses on the issue of jobs and does so for the very good reason that that is the principal economic challenge facing us right now. If there was any doubt about that, we need only look at the news over the past 24 hours—1,700 jobs lost at Airbus, up to 5,000 job losses announced by the owners of Upper Crust, 4,500 at easyJet a couple of days ago, another 4,500 at Swissport, and many more around the country that do not make the front page of the national news. These are not just numbers. Every one of them is a human story of a livelihood taken away and a family wondering how they will pay the bills and what the future will hold for them.

Across the country, the claimant count measure of unemployment is up by 1.5 million since the start of the year. In addition to those out of work and the estimated 9 million on furlough schemes, it is estimated that up to 8 million employees are working fewer hours than usual. These stark figures show us that we are facing the jobs challenge of a generation. It is decades since young people leaving school, college or university graduated into a labour market such as this.

Giving my age away, I remember, as a young teenager growing up in Glasgow, attending the people’s march for jobs. Unemployment back then was around 3 million. The vocabulary of it infused the times—“signing on”; “the Girocheque”. It even gave birth to the great band UB40, named after the unemployment card that people got for signing on. The damage caused by that mass unemployment affected not just the city where I grew up, but the Black Country that I now represent, and many similar communities across the country. Long-term social and economic pain was caused by far too many people facing a life on the dole, and we must never go back to those days. If we have learned anything from that experience of the 1980s, it is that the cost of not acting is greater than the cost of acting, and we must do everything we can now to prevent mass unemployment. That is the challenge facing us.

At the start of this crisis we called for wage support to help people through. The furlough scheme and the self-employed furlough scheme were the right and necessary things to do, but as lockdown is eased, and support from those schemes starts to be withdrawn from next month, we can see the danger facing the economy. The danger is that businesses that have been just about hanging on start to let people go, caught between having no income and facing rising employment costs. This is the moment that the Government need to act to preserve jobs, jobs, jobs.

[John Redwood (Wokingham) (Con)]

I agree with the right hon. Gentleman about the importance of jobs. Is he worried that the reform the Government have in mind might mean that a self-employed person working on their own in one of our constituencies could lose a contract to a foreign company, because the big company undertaking the contract might think that was safer?

[Mr McFadden]

I am not sure about the part of the right hon. Gentleman’s intervention that referred to foreign companies, but the turbulence of the labour market right now does pose a danger to contractors. The Government have already recognised that to some degree in the delay announced for this measure.

Withdrawing support schemes at the same pace for all sectors does not recognise that some sectors are in far more difficulty than others, and that is particularly true for any sector based on the idea of people gathering closely together. Many sectors such as transport, aviation, sport, theatre, music, and others, are global British strengths, but right now they are on their knees. Dropping the social distancing rule from two metres to one metre is not enough when, in some cases, any kind of social distancing is impossible. Let us take live music, for example, which is based on the very opposite of social distancing. The break-even point for many venues and events is often being 80% to 90% full, and the change to one metre will not make that much difference to them. We need an approach that takes into account the different impact on different sectors.

If there was already a sectoral problem in withdrawing employment support, there is also now a geographical one, because Leicester is entering its second period of lockdown. Our thoughts go out to the people and businesses there who, like the rest of the country, have made great sacrifices over the past few months. We cannot yet know how long that second period of lockdown in Leicester will last. It could be a few weeks, but equally, it might be longer. Neither can we know whether Leicester will be the only place to go into another lockdown. Other cities may follow, and there has already been speculation about where those might be. How can it be right to withdraw employment support on a national basis when we are no longer in a single national position on the easing of lockdown?

We are asking people and businesses in Leicester today, and possibly other cities in the days and weeks to come, to shut down for a second time, and they should not be penalised for doing so. Will the Minister consider as a matter of urgency flexibility in the unwinding of the furlough and other support schemes, to take account of the new development of at least one, but possibly more, local lockdowns? Let me now turn to the future, and the jobs that might be created. The Government announced their back-to-work plan yesterday.

[Jim Shannon]

Something that concerns me—and I know that it also concerns the right hon. Gentleman and many other Members—is the fact that manufacturing as a proportion of the UK’s GDP has fallen from 30% in 1970 down to 10% today, which is perhaps why our economy has not grown as it should have. I understand that if we do not get that figure up from 10% to 15%, we will not have a manufacturing base for the future. Does he share my concern that if we do not retain, restore and increase our manufacturing base—including in the aerospace sector, for companies such as Bombardier in my constituency—it will not have a future?

[Mr McFadden]

There is no MP from the west midlands who does not care about our manufacturing base. It is a vital part of our economy. It may be true that we make less than we used to, but it is also true that we make more than we think, and we should never be dismissive of the activity and the creativity of making things in this country.

The Government announced their back-to-work plan yesterday, praying in aid President Roosevelt and the new deal. First, the Prime Minister wanted to compare himself to Churchill. Now it is Roosevelt. We have to wonder why he seems so uncomfortable with just being himself. Let us look at the comparison. F. D. R.’s new deal did indeed rescue the United States from the great depression. Millions of workers were hired, 255,000 miles of roads were built, as were 40,000 schools and almost 1,000 airports—major infrastructure projects that modernised the United States and stood the test of time, all at a cost of around 40% of pre-depression United States GDP. By contrast, what the Prime Minister announced yesterday was around 1% of the cost of the new deal—one cent on the dollar, if you will. He has taken the old political maxim, “Under-promise and over-deliver”, and turned it on its head.

I know that the Minister likes a good book. One of the shorter, but nevertheless hugely illuminating, studies of Roosevelt’s approach comes in Doris Kearns Goodwin’s book on leadership. In it, she sets out Roosevelt’s watchwords behind the new deal. I will leave the House to make its own judgment on the comparison between this and the Prime Minister. First, “Strike the right balance of realism and optimism”—not everything has to be claimed to be the biggest or the best in the world. After the events of recent months, systems that just worked would be an improvement. We then have, “Infuse a sense of shared purpose and direction”, “Lead by example”, “Forge a team aligned with action and change”, “Bring all stakeholders aboard”, “Set a deadline and drive full-bore to meet it”, “Address systemic problems. Launch lasting reforms”, “Be open to experiment”, “Adapt and be ready to change course where necessary”, and “Tell the story directly to the people”. That was Roosevelt’s approach, and I will leave it to others to judge whether the Prime Minister’s approach falls short not only in scale but also in spirit.

[Sir Edward Davey]

Like the right hon. Gentleman, I have read books about F. D. R. I have studied F. D. R. The Prime Minister is no F. D. R.

[Mr McFadden]

Quite.

Infrastructure expenditure is, of course, welcome, and we support it. It makes sense to do this when interest rates are historically low.

[Sir Mike Penning (Hemel Hempstead) (Con)]

There are people in our constituencies whose lives are being destroyed every day because the loan charge has been applied to them retrospectively. Forget what Mr Speaker might say—will the Labour party support new clause 31 if it is called? If not, why not?

--- Later in debate ---

[Mr McFadden]

On the loan charge, as I said, we have always supported cracking down on tax avoidance and we support action against those who enabled the scheme. New clause 31 makes a connection between people’s tax treatment and what they knew; I believe we have to explore that principle as a matter of taxation and think carefully about how to proceed. I look forward to the debate on that later.

Draft Northern Ireland Banknote (Designation of Authorised Bank) Regulations 2020

Pat McFadden Excerpts

Wednesday 24th June 2020 General Committees

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Mundell. As the Minister said, these regulations change the authority for issuing Ulster Bank notes in Northern Ireland from Ulster Bank to NatWest. The banks are part of the same group, and we therefore agree that this is a technical change that should not make any difference to the Northern Ireland public. We welcome, in particular, regulation 6, which makes it clear that the change will not affect the validity of banknotes previously issued by Ulster Bank; they will have the same validity as before.

As the Minister said, there is a long tradition of having separate banknotes in Northern Ireland and Scotland. They are valued and appreciated by the public. NatWest bank is going through a name and branding change. Its previous guise, RBS, is a note-issuer of long-standing experience. It will continue to issue distinct notes under the Ulster Bank brand in Northern Ireland.

It would be tempting to ask the Minister lots of questions, not so much about the design or authorisation of these notes as about the decline in their value in recent years. As of this morning, that decline was about 17% over the past four years, under the Government’s watch. However, I fear that if I went too far down that road, you might tell me that I was not keeping strictly within the terms of the regulations, Mr Mundell, so I will leave the discussion of the Government’s record of devaluing the pound for another day. Instead, I make a plea to the Minister: if the Treasury is planning to announce a stimulus package in the coming weeks, will it take into account the full and specific circumstances of Northern Ireland, to help the economy there recover from the economic consequences of lockdown, and to insulate it against any damage that may be forthcoming from the agreement reached between the UK and the EU?

We do not intend to divide the Committee on the regulations, and we hope that these bank notes issued in Northern Ireland will continue to be popular long into the future.

Exiting the European Union: Financial Services and Markets

Pat McFadden Excerpts

Tuesday 16th June 2020 Commons Chamber

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

Like many who have spoken in the Chamber today, on the fourth anniversary of her death, my thoughts are very much with our former colleague Jo Cox and her family.

As we heard from the Minister’s opening statement, these statutory instruments are quite technical in nature. I would like to thank him for his welcome, and to thank him and his officials for providing some briefing on their meaning and effect. Overall, these instruments seek to replicate at national level the regulatory regime for financial services to which we currently subscribe—and which in many cases the UK designed—at EU level. Until the end of the transition period, we will of course continue to follow the EU’s regulatory rulebook. This is about what will happen in January if, as the Government confirmed last week, the end of this year marks the end of the transition period.

As the Minister outlined, the regulations cover areas such as money laundering, supervision, central counterparties, the cross-border distribution of funds and the desire to maintain the pre-Brexit relationship between the UK and Gibraltar on financial services. In most of these cases, they are taking the supervision of the rules governing these areas from EU bodies and transferring them to either the Treasury, the Bank of England or the Financial Conduct Authority.

On the detail, I have a few questions I would like to put to the Minister. On the money laundering provisions, why is the current duty to co-operate with supervisors in other countries being removed and replaced with the weaker power to co-operate if we so choose? In what circumstances would we not want to co-operate to tackle money laundering, which can fund everything from international terrorism to the drugs trade? On cross-border distribution of funds, can the Minister confirm that these statutory instruments enshrine the loss of passporting rights for our financial services that will result from the Government’s decision to withdraw from the single market as well as from the EU itself? On equivalence determinations, can he confirm that, although these SIs create a regime for the UK to make decisions on the regulatory regime in other countries, as yet we have no guarantee that our own regulatory regime will be regarded as equivalent by the rest of the EU?

We can only hope that this exercise in taking back control is a little more convincing than last week’s decision on border checks from the Cabinet Office. After having four years to prepare, the Government dropped their plans for border checks on goods because we simply could not implement them, even though our own goods will be subject to border checks when we export them overseas.

Paragraph 36 of the political declaration, on which the current negotiation is based, states that the UK should have concluded its equivalence assessments by the end of this month. If we are only now legislating to take the powers to do that, can that exercise possibly be completed in just two weeks’ time?

Taken together, these changes and others in similar statutory instruments represent a significant increase in the functions and power of the Treasury, the Bank of England and the Financial Conduct Authority. What accountability arrangements will there be for those bodies in the exercise of their new powers? Alongside the transfer of functions, accountability must surely be enhanced if claims of restoring parliamentary sovereignty are to mean anything in reality.

More broadly, there is an obvious contradiction at the heart of all this. These regulations are intended to ensure continuity for UK financial services at the end of the transition period, yet the Government’s stated intention for withdrawal is to erect new trade barriers between our financial services and the rest of the EU, so even as we replicate at UK level the EU regulations that we played such a big part in designing, we are pursuing a course that will be incapable of replicating the market access that we have at the moment.

That is not my judgment; it is the stated aim of Government policy. It is the equivalent of one of the shops reopening this week and putting lots of new stock in its window but telling a substantial proportion of its previous customers that they are no longer welcome to shop in the store. For all the debate there has been about Brexit, its impact on services has not been debated nearly as much as it should have been.

We are not dealing here with just-in-time supply chains and trucks on ferries; we are dealing with regulations and rules. We are taking the area that makes up 80% of our economy and, in the case of financial services, a sector in which we trade at a substantial surplus with other countries, and inserting new barriers between us and our nearest customers. The fact that the sector is resigned to that and has established alternative bases in Dublin, Luxembourg or wherever does not change the reality of it.

We do not intend to divide the House on these measures, because regulatory continuity is better than not having a regime in place at all, but no amount of duplication can avoid the basic fact that although we can replicate the rules, we cannot replicate the market access to which these rules apply at the moment and for which they were designed in the first place.

Economic Update

Pat McFadden Excerpts

Tuesday 17th March 2020 Commons Chamber

[Rishi Sunak]

I know that my hon. Friend is a champion of the self-employed. Some of the measures announced last week at the Budget will benefit them, as will, indeed, some of the loan and other grant measures announced today, depending on their circumstances, but my hon. Friend is right and we will of course keep an eye on that issue as we develop these packages.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

The difference with this crisis is the profound effect it is having on human behaviour. The Chancellor has acknowledged that the big missing piece from the package announced tonight is direct financial support for workers who are laid off as a result of the advice that the Government have given to the country, so will he commit now—in principle if he cannot give the number—to bringing forward a package of support for a significant proportion of the wages of those who have been laid off as a result of this crisis?

[Rishi Sunak]

I have already committed to that urgent piece of work that we are undertaking. We have already improved the financial security available to people who find themselves either ill or off work, as a result of the £1 billion invested last week in these measures.