Local Bank Closures

Paul Masterton Excerpts

Wednesday 12th June 2019 Westminster Hall

[Paul Masterton (East Renfrewshire) (Con)]

I thank my hon. Friend the Member for Moray (Douglas Ross) for having secured today’s debate. This issue is of real concern to my constituents, who have been hit by a number of closures of bank branches in recent years. I am a member of the Scottish Affairs Committee, which has done a lot of work in this space: we have done a bespoke short inquiry into RBS’s significant run of bank closures, and we are going to do another one into access to cash. I am sure the Minister will be sick of the sight of me, since he was in front of the Committee this morning.

I will touch a lot on some of the points that our Committee has drawn out through our inquiry, and focus in particular on the impact of bank branch closures—especially the last bank in town—on the local post office network. That network is often used by banks as a justification for abandoning a community and a high street. It seems to me that banks effectively want post offices to do their work for them, often at a loss, as the hon. Member for Motherwell and Wishaw (Marion Fellows) has explained. From evidence given to my Committee, we know that banks do very little to ensure the longevity and sustainability of the post office network on which they rely so heavily. In East Renfrewshire, half a dozen post offices have closed over the past couple of years for a variety of reasons. Just about every single one of those post offices was included in the so-called consultation documentation produced by a local bank as the nearest place for customers to carry out their transactions.

The Government need to set out a clear policy paper on how to tackle this issue, and reform the access to banking standard from a voluntary agreement into something with more legislative backing. They also need to do more to facilitate genuine alternatives to banks using the post office as a quick fix when closing branches. Post offices are not a replacement for branch services, and their staff do not have the training to act as banking specialists; my hon. Friend the Member for Moray ran through a whole range of things that they cannot do and explained well the lack of awareness about the post office. However, it is crucial to ensure the post office network is receiving adequate funding to deliver banking services, rather than post offices subsidising bank branch closure programmes, which is effectively what is happening at the moment.

I agree that banks need to look seriously at sharing space to keep a local presence; that is particularly important when the last bank leaves. If those banks still want to pass the buck to the Post Office, the Government should explore making them responsible for setting up and funding banking hubs. Such hubs could be located or co-located in post office branches in certain instances, but the post office branches themselves and the services currently available through them should not be seen as a replacement for banking services. The Government could raise the bank corporation tax surcharge and the bank levy to fund the provision of banking services in the post office network and a network of community banking hubs, especially when it comes to staff training. In 2019-20, those two taxes are forecast to raise over £4 billion. Of course, funding should also be available through fines collected for non-compliance with the standard.

My constituents living in Neilston saw their post office suddenly closed in March, leaving that village without any banking services whatsoever. The same has happened in Eaglesham, at the other end of the constituency. Post offices that banks used as excuses for why their branch was no longer needed are gone. Where are the banks? They simply do not care; as far as they are concerned, it is now the Post Office’s problem. Their responsibilities to the communities they used to serve are, in their view, over.

Surely, the least we can expect is that if banks want to pass the buck to the Post Office, they ensure that post offices are sustainable alternatives to bank branches in the long term. It is quite clear that for my constituents, they are not. As I told the executives of RBS, Bank of Scotland, TSB and Clydesdale Bank when they appeared before the Scottish Affairs Committee, it is completely unacceptable for high street banks to rely on the post office network as a justification for abandoning local communities while doing nothing meaningful to ensure the continued survival of that network.

Oral Answers to Questions

Paul Masterton Excerpts

Tuesday 21st May 2019 Commons Chamber

[Mr Speaker]

I am sure that the people of the Isle of Wight were most gratified that the right hon. Lady was among their number, even if only for a relatively short period.

[Paul Masterton (East Renfrewshire) (Con)]

4. What assessment his Department has made of the effect of the annual tapered allowance on members of the NHS pension fund.

[Ruth Jones (Newport West) (Lab)]

5. What assessment the Government have made of the effect of the annual tapered allowance on the (a) recruitment and (b) retention of doctors in (i) hospitals, (ii) primary care and (iii) the armed forces.

--- Later in debate ---

[Paul Masterton]

I am grateful to the Chancellor for that answer, and particularly to the Government for accepting that the taper contributes to capacity gaps and retention issues in the NHS. Given that the costs of increased waiting times, delayed diagnosis and knowledge gaps far outweigh the tax revenue generated, would not the sensible and fiscally responsible thing be just to scrap the taper altogether?

[Mr Hammond]

I understand my hon. Friend’s point. However, the overall reforms to pensions allowances that were made in the previous two Parliaments and include the tapered annual allowance are necessary to deliver a fair system and to protect the public finances. These measures affect only the highest-earning pension savers and are expected to raise £6 billion a year. But, as I said, we are monitoring the response of high earners in the NHS, and I expect that my right hon. Friend the Health Secretary will be able to make an announcement soon.

Clydesdale Bank and SMEs

Paul Masterton Excerpts

Tuesday 19th March 2019 Commons Chamber

[John Glen]

I have listened carefully to the hon. Gentleman a number of times. As I have said to him previously, we need an effective mechanism that small businesses can get reliable and efficient access to and answers from. I have seen the investment that has gone into the expanded provisions of the ombudsman service. I know that he is not convinced, but this matter is not set in stone forever. Obviously the service needs to deliver. In my conversations with the chief executive of the ombudsman service, as in my conversations with UK Finance and the chief executive of every bank, I have said that this is the top priority in this area of my portfolio.

[Paul Masterton (East Renfrewshire) (Con)]

Thank you, Mr Speaker, for granting this urgent question. I have met too many individuals in my constituency who ran serious, sensible businesses and were a model in their borrowing but whose lives have been ruined by the behaviour of unscrupulous banks. Thank you for giving us the opportunity to air this on the Floor of the House.

I understand from my constituent Ian Lightbody that, despite the tireless efforts of him and his CYBG Remediation Support Group, they have not had the courtesy of a response from the CEO and chairman of CYBG, which sums up the complete contempt and disregard of Clydesdale Bank’s senior management for small business owners. Will the Minister join me in demanding that the bank, as a first step, shows some courtesy to these individuals and at least engages with them?

[John Glen]

Yes. I am happy to take up the case of Mr Lightbody and ensure that he gets a conversation with the right people.

Sport in the UK

Paul Masterton Excerpts

Monday 4th February 2019 Commons Chamber

[Paul Masterton (East Renfrewshire) (Con)]

In 1979, David Jones, the janitor at St Cadoc’s Primary School in Newton Mearns, coached his team of 14 primary 7 schoolboys to the first of three consecutive mini world cups at Overlee playing fields in Clarkston. That was the beginning of a remarkable local legacy, which over the next 20 years saw the team grow to include around 50 pupils from three year groups. By 2004, teams included all seven years of the primary school. A couple of years later, the primary school team had evolved into a local club, with more than 250 registered players from over 10 different schools. Continuing its growth beyond those foundations as a school football team, the club converted to a registered charity, whose aim is

“to encourage public participation in sport”.

As of December 2018, 900 registered girls and boys now play netball or football for the club each weekend. Recognising the value of sporting activities to local kids, fees are kept as low as possible and the club also operates a hardship policy to ensure that every child can participate, no matter what their family circumstances might be.

Backed by an incredible team of volunteers, the club continues to go from strength to strength. St Cadoc’s is an incredible example of a small school team growing into a true community-wide organisation benefiting hundreds of local kids each week, but it also needs a bit of help. It has exhausted local facilities and, with its size and ambition, it has reached the limit of what is possible. This has meant putting on hold its community outreach programme, which it had hoped to launch as soon as possible. The programme will take St Cadoc’s to the next level in its work in the community, providing wheelchair football at the local special needs school, walking football for the elderly, and specialist sessions for children and young adults with Down’s syndrome.

On 28 April 2019, the club will attempt to complete 5,000 miles in 12 hours at Eastwood high school in Newton Mearns to raise the money it needs to deliver its outreach programme for the entire community, and that is where I and—whether by agreement or force—my wonderful constituency office team will be helping out, completing a few miles ourselves to help the club to reach its goal. St Cadoc’s youth club rightly has a place in the heart of the East Renfrewshire community, and in my view it is precisely the sort of grassroots club that underpins the health and wellbeing of our young people, and the success of our great nation in sport.

I would also like to take this opportunity to mention an important professional sporting event taking place this week. For the first time in 26 years, Great Britain will host a home tie in the Federation cup, the women’s equivalent of the Davis cup tennis competition. The team of Jo Konta, Heather Watson, Katie Boulter, Harriet Dart and Katie Swan, captained by former British No. 1, Ann Keothavong, will compete against seven other nations between Wednesday and Saturday this week at the fabulous facilities at Bath University. With a dozen top 100 players competing for their country, this is a fabulous opportunity to witness world-class tennis. I am sure that the whole House will join me in backing the Brits and wishing Team GB every success in their bid for promotion to the world group.

Draft Market Abuse (Amendment) (EU Exit) Regulations 2018 Draft Credit Rating Agencies (Amendment, Etc.) (EU Exit) Regulations 2019

Paul Masterton Excerpts

Wednesday 23rd January 2019 General Committees

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

It is a pleasure to serve in this Committee with you in the Chair, Mr Davies. I am grateful to the Minister for those helpful explanatory remarks.

Of course, the Minister and I are here once again to discuss two of the many Treasury statutory instruments that make provision for the financial regulatory framework after Brexit in the event that we crash out without a deal. On each such occasion, my Front-Bench colleagues and I have spelled out our objections to the use of secondary legislation in this manner, as well as the challenges of ensuring proper scrutiny of the sheer volume of legislation that passes through delegated legislation Committees.

As I mentioned yesterday in relation to another statutory instrument, the Committee takes place in the context of a Government refusal to allow debate on the Floor of the House concerning the exceedingly complex MiFID transposition legislation, and just a couple of days following a Division on statutory instruments to implement a customs union with our Crown dependencies, with little to no indication of how that would interact with our future customs relationship with the EU27. The prospect of no deal looms large, given the Government’s refusal to rule it out, so we must recognise that, on 29 March, instruments considered by delegated legislation Committees such as this may well become what we rely on, especially given the very real risk that the Government are simply running down the clock. Such instruments could represent real and substantial change to the statute book; they need proper scrutiny and in-depth analysis.

[Paul Masterton (East Renfrewshire) (Con)]

I take the hon. Lady’s point, but is it not a bit rich to go on about the necessary scrutiny when half the people on her own side have not turned back up after the Division?

[Anneliese Dodds]

I do not know why other hon. Friends are not here. I am sure they will be coming back soon. It may be because they have been informed that another vote is just about to happen. I apologise if my remarks have to be cut in half as a result, as the Minister’s were.

Yesterday, in another Committee, I had a long discussion with the Minister about why an impact assessment had not been produced for the statutory instruments we were considering. I am grateful to him for the clarification he gave me earlier, but although we have an impact assessment for one of the instruments this Committee is considering—the credit rating agencies regulations—we do not have one for the market abuse directive and market abuse regulation transposition regulations. Yesterday, I and other hon. Members indicated our frustration at being required to be prepared to pass legislation without having been provided with an impact assessment, and that remains the case.

I note the comments by the right hon. Member for East Yorkshire about the details of the explanatory memorandum. In yesterday’s Committee, it was intimated in the explanatory memorandum that an impact assessment had been produced. The Minister generously said he had left that statement in the explanatory memorandum to draw the Committee’s attention to the fact that there was not an impact assessment. That was a valiant attempt to explain the situation, but it is my understanding that we have the same situation with the MAD-MAR regulations. I hope that is resolved as soon as possible. We need those impact assessments to be able to understand the potential impact of this significant legislation.

As the Minister explained, the two statutory instruments we are considering relate to important elements of the post-crisis financial architecture. With the Committee’s permission, I will discuss them in reverse order and begin with the credit rating agencies regulations. Regulations were introduced at EU level following credit rating agencies’ failure properly to assess the riskiness of complicated financial instruments—not least those structured finance products, such as collateralised debt obligations, that were backed up by sub-prime mortgages—in the run-up to the financial crisis. We all know the impact of what occurred then, when credit rating agencies were improperly regulated or, indeed, not regulated.

Arguably, credit rating agencies also facilitated the very sudden downgrade of the credit ratings of a number of countries, which obviously had a significant impact on their ability to borrow and on the cost of their doing so. If the Government continue on their current trajectory and we leave the EU without a deal, it will be essential that we do not dilute the regulatory framework for credit rating agencies in the UK, and that any ratings used for regulatory purposes, such as assessing capital adequacy, are robust.

With that in mind, I have a number of questions about the credit rating agencies regulations. First, I would like to push the Minister a bit more on the FCA’s capacity to deal with the new tasks and powers assigned to it by the draft regulations. I believe he said that the FCA now has 158 staff working on Brexit, but of course the draft regulations give it significant new powers with respect to criminal sanctions and investigations. Many of us may feel that such an extension of its role would have been better dealt with through primary legislation. I will come back to that, but there remains an issue with the FCA’s capacity to exercise those no-deal powers.

Yesterday, the Minister maintained that resourcing had not been raised with him at his last meeting with the head of the FCA. The Minister stated previously that the FCA would be able, in extremis, to garner additional resources by raising its levy on market participants. If there is a no-deal Brexit, markets may be operating in conditions of extreme uncertainty and considerable turbulence, so they may not greet an additional levy request from the FCA at that moment with unadulterated joy. I hope the Government are considering that point and what might happen if the FCA needs additional finance but its request is contested by market participants.

Secondly, under the draft regulations, the FCA will have the power to develop regulations relating to credit rating agencies. I am concerned about the scope of the draft regulations and whether they really fall within the powers provided by the withdrawal Act. In particular, regulation 3 states:

“The FCA may make such rules applying to credit rating agencies…(a) with respect to the carrying on of a credit rating activity, or (b) with respect to the carrying on of an activity which is not a credit rating activity, as appear to the FCA to be necessary or expedient for the purpose of advancing one or more of its operational objectives under Part 1A of the Act”—

the Financial Services and Markets Act 2000. That seems a very broad power: it appears to empower the FCA to add to the corpus of law developed by the EU in its regulations on credit rating agencies. It is unclear where the justification for such a power lies. Is it provided for by the withdrawal Act deficiency powers? If so, will the Minister indicate under exactly which circumstances he envisages the power being used? I think the Committee needs that information before it can approve the draft regulations.

I also have a question about co-operation. As the Minister outlined, the draft regulations will remove any obligation to co-operate in processes intended to ensure appropriate regulation of credit rating agencies. Again, that seems like a policy decision rather than a technical one. For example, although in theory it would be possible to participate in the European ratings platform from outside the EU, that appears not to have been envisaged— the draft regulations do not provide the mechanisms to allow even the possibility of it. It would be helpful to understand why not.

Lastly, I am a bit confused by the manner in which the draft regulations have been presented. For example, the background information in the explanatory memorandum focuses on the use of credit ratings for regulatory purposes, but of course the EU’s regulatory machinery for credit rating agencies also imposes a large number of requirements on the agencies themselves, including many requirements to prevent any kind of conflict of interest. They are not allowed to provide advisory services or rate financial instruments without sufficient high-quality information on which to base their ratings, and they have to disclose their models and methodologies and publish an annual transparency report.

There are also a number of requirements that relate to directors on boards. Those goals have not been referred to; I assume that that is because they were already dealt with in the 2009 credit agencies regulation, but I hope that the Minister can confirm that. On my reading, the purpose of the 2009 regulation was to set out the means of implementing those requirements, rather than to provide a level 1 justification, as it would be called in EU parlance.

I have a related concern that it could be difficult to perform functions that relate to the internal operations of CRAs outwith the regulatory colleges that operate at EU level. It would be helpful if the Minister indicated whether, in his view, those controls will be maintained adequately without such co-operation.

Let me move on to the 2018 draft regulations, which implement what is colloquially known as MAD-MAR. MAD-MAR II was implemented in 2014—

Finance (No. 3) Bill

Paul Masterton Excerpts

Committee: 2nd sitting: House of Commons
Tuesday 20th November 2018 Commons Chamber

[Robert Jenrick]

I clearly hear my right hon. Friend’s point, and I have fairly set out the chain of events that led to this moment. As I said, I enormously respect my hon. Friend the Member for Chatham and Aylesford and her decision. When I was first elected to Parliament, an elderly constituent sent me a quote by John Quincy Adams:

“Always vote for principle, though you may vote alone, and you may cherish the sweetest reflection that your vote is never lost.”

On this occasion, of course, my hon. Friend is not alone, and I am grateful for her work in this area.

Government amendment 17 complements Government amendment 16, both of which relate to amendments 12 and 13. As I have just set out, the Government recognise the strong will of the House that the implementation date for the new maximum stake for fixed odds betting terminals be brought forward to April 2019. The Treasury has been clear throughout the process that we do not seek to use the issue of FOBTs to increase Exchequer revenues, but we do have a responsibility, which I hope Members on both sides of the Committee will recognise, to protect the public finances and to ensure that we have the means to fund our public services. The cost of eliminating the damage caused by FOBTs must not be paid for by our having fewer doctors, fewer teachers and fewer people working in mental healthcare.

[Paul Masterton (East Renfrewshire) (Con)]

I welcome this change. In my constituency there are betting shops sandwiched between pubs and chemists giving out substitution treatments. Does the Minister not agree that the savings to the public purse from preventing people from falling into problematic debt, and preventing highly addicted people from falling into other troubles and needing to rely on the NHS and other services, will be far greater than the tax received from these gambling machines?

[Robert Jenrick]

My hon. Friend makes an important point that has been raised by many others and that I am sure was a significant contributor to the decision of the Department for Digital, Culture, Media and Sport to take this action.

The point I am making is a separate one; that in making the decision to reduce the cap on FOBTs, we want to ensure that the Exchequer can protect its revenues so it can continue to fund public services. To do so, clause 61 increases the rate of remote gaming duty to 21% from 15%, and amendment 17 complements amendment 16 by ensuring that both changes are implemented at the same time in April 2019.

Throughout this process the Treasury has been clear that we want to raise only a commensurate sum of money to protect public services, and that we want to ensure that both the stake change and the change in taxation occur at the same time. That is exactly what we intend to do. This increase applies to anyone who offers online games of chance to UK players, including online roulette, online poker and online slots. This change should ensure that we take decisive action on FOBTs without having to cut services or raise taxes on those outside the gambling sector. To recognise this, I ask the Committee not to press amendments 12 and 13 and to support Government amendment 17.

New clause 12 would require the Chancellor to prepare a report describing the public health effects of the gambling clauses in this Finance Bill, for publication before the House within six months of Royal Assent. The Government take the impact of gambling on individuals’ health seriously, which is why we have listened to Members on both sides of the House and taken the action we have on FOBTs. This summer the Gambling Commission published a well-received paper on how to measure gambling-related harms, setting out how it intends to move forward in such a large and vital area of analysis. I hope that colleagues on both sides of the Committee agree that the Gambling Commission should be left to carry out its important work in this area without the Treasury attempting to carry out its own competing analysis on the very limited effect on public health of a change in accounting periods, which is what the new clause would bring into effect.

--- Later in debate ---

[Ronnie Cowan]

I absolutely agree with the hon. Gentleman. A second point is that there are dormant betting accounts with money in them but we cannot access them. If that money could be released and freed up for gambling care, there would be more money in the pot to do some good.

Meanwhile, our TVs are haunted by advertising aimed at the most vulnerable. We even have products aimed at grooming children to be the next generation of gamblers. The gambling industry has to ask itself some very serious questions about its marketing strategy. I wish to thank Hamleys toy store for moving swiftly to remove a product deemed undesirable from its shops across the UK when I brought it to its attention. Our children must be protected. For the majority of adults, gambling is fun.

[Paul Masterton]

I thank the hon. Gentleman for giving way and also for all the work that he has done as part of the all-party group. Does he share my concern about the number of apps aimed at young children, which are effectively based around the concept of gambling? Although they may not be what he or I would consider to be gambling, the sort of behaviour and the risk-reward elements involved seem to ingrain that behaviour from a very young age, which is deeply concerning.

[Ronnie Cowan]

It is particularly disturbing when we know that people are sitting back and designing these apps in precisely that manner. They know exactly what they are doing, but they do not seem to have any conscience that will stop them from doing it.

For the majority of adults, gambling is fun—if it is under control. Many people can set a limit and not go beyond it. While I would pay for a ticket to a concert or a rugby match, their chosen form of expenditure for entertainment is gambling, and I am not questioning their choice. However, when we offer a licensed product that has the potential to damage the customer, we need to take steps to ensure that the possibility of damage and the consequences of that damage are as limited as possible. Gambling-related harm caused by an addiction to gambling is as much a public health issue as damage caused by drugs and alcohol, but it is not always seen that way.

--- Later in debate ---

[Chris Philp]

It will not have escaped the hon. Lady’s notice that by the fifth year of the five-year period there is a fiscal loosening of £30 billion—that is hardly austerity—and that the NHS will receive a huge amount of extra money, including the NHS in Scotland via Barnett consequentials. I think that we can say very clearly that this was not an austerity Budget. I agree, however, with her more serious point. As my hon. Friend the Member for Ochil and South Perthshire said, where a law is passed, it should be properly enforced, and if there is more scope to enforce this law, it should certainly be done.

A further legislative measure was announced over the summer in relation to transparency. By 2021, we will start recording the ultimate beneficial ownership of property owned by companies, which is an important measure, because some properties, particularly very expensive, high-end properties, are often owned in offshore companies, but there is currently no transparency in respect of who owns those companies. As of 2021, we will know who the ultimate beneficial owners are, and that will also create an interesting taxation opportunity that I strongly commend to the Financial Secretary.

At the moment, when an ordinary property is bought or sold by an individual, it triggers residential stamp duty, but when a transaction takes place whereby the company owning the property is sold, no residential stamp duty is paid, because, as far as the Land Registry is concerned, no change of ownership has taken place. At the moment, we have no visibility over any change of ultimate beneficial ownership, because it is not registered, but from 2021 we will, because that change will have to be registered. I suggest, for a future Budget, that a change of ultimate beneficial ownership should trigger a stamp duty charge as though for a direct change of ownership, as would happen if any of us bought a property. That would yield significant extra residential stamp duty.

I will give an example. I am aware of a transaction in Belgravia, not far from here, that took place two or three years ago. It was a collection of luxury houses developed by an offshore company—based in the Cayman Islands or British Virgin Islands—and sold to a Chinese gentleman for £110 million, but he did not buy the property and therefore no stamp duty was payable. He bought the offshore company and no stamp duty was paid. Had that change of ultimate beneficial ownership been registered and had stamp duty been payable, a stamp duty charge of about £16 million would have been crystalised for the Exchequer’s benefit.

I suggest we collect that sort of money in the future. Of course, that property is liable for annual taxation on envelope dwellings, because it is held in a company, but that only levies at a rate of £226,000 a year, so the payback period is 73 years, and most of these properties are traded more frequently than that. I challenged the hon. Member for Oxford East earlier to come up with some ideas for raising revenue and combating non-compliance. There is my idea. I hope that a future Budget adopts it and takes it forward.

I will conclude—I know the shadow Chancellor wants to hear more, but I have to disappoint him—by briefly addressing Government clauses 15 and 16 on intellectual property charges and charges in relation to fragmented profits. This is an extremely important area, because a number of large corporates are using intellectual property charges to spirit away profits attributable to UK operating activities.

Most notoriously, Starbucks used this about five or six years ago. It managed to extract almost all its UK profits by levying an intellectual property charge in relation to its beans. It said the beans were special beans and had a very high charge on them, and it managed to register pretty much zero UK profit. That is precisely the kind of intellectual property charge that these measures are designed to combat. An arm’s-length, third-party intellectual property charge cannot possibly result in zero profit for the company paying that charge, and it is right that the Government are taking further action.

Multinationals take their profits out of the UK and into, typically, the Luxembourg, Swiss or Caribbean jurisdictions, and intellectual property charges are more often than not the means by which they do so. I strongly commend clauses 15 and 16 for taking direct action to prevent avoidance measures that have undoubtedly cost the Exchequer. I think that I have spoken long enough about these clauses, which I shall be extremely happy to support if there are Divisions in 10 minutes’ time.

[Paul Masterton]

It is a pleasure to follow my hon. Friend the Member for Croydon South (Chris Philp), although, as ever, the problem with following him is that he has done such a thorough and detailed job of going through the minutiae of pretty much every single piece of the Bill that there is not a huge amount left for me to say. However, I will do my best and raise a few points that I know are particularly important to people and businesses—particularly small businesses—in East Renfrewshire.

One reason why these measures are so important comes back to the perception of fairness. Action to deal with tax avoidance and evasion is important because people often perceive that they are playing by the rules and doing everything right, while other guys—often the big guys with lots of money, who can afford to pay the “big four” huge sums—are able to find clever ways of reducing their tax liability.

There have been many examples of companies diverting profits, in a way that is not fair and is not right, to other jurisdictions with much lower tax levels to save themselves money. They are taking money that was produced when taxpayers in this country went into their shops and bought their goods, supporting them and their products, but that money is not being kept in our economy or reinvested in our economy. It is being shunted offshore to other jurisdictions, where it is swept up and often manoeuvred around other areas, particularly when a global business is moving it around to prop up less competitive and less successful parts of that business offshore.

Since 2010, an extra £180 billion or so has been brought in as a result of some of the measures that we have introduced. That is a huge amount, which is being reinvested in the country in which it was produced. It means more money for our schools, hospitals and small businesses—the sort of money that can give people a bit of a break.

I want to touch briefly on the new clause tabled by the hon. Member for Glasgow Central (Alison Thewliss). She talks frequently, and with a great deal of knowledge, about Scottish limited partnerships—rightly, I think, because they are being increasingly scrutinised and are coming under the spotlight. They have been around for a long time, and previously no one paid much attention to them—no one really understood what they were being used for. They fall within a slightly odd grey area in terms of the Companies Act 2006. In my former job as a pensions lawyer, they were used as a vehicle to allow companies to put an extra step between them and an investment. They helped companies to reduce their tax in relation to employer contributions that they had made through the sweeping round of funds.

That was a legitimate funding mechanism, but there is no doubt that because of where Scottish limited partnerships sit in relation to the wider tax system, they are being used pretty unscrupulously. A lot more stuff has been coming out about them, and I think that the hon. Lady is right to go on probing and testing to establish whether their proper use is being properly enforced and checked.

[Alison Thewliss]

I am glad that the hon. Gentleman agrees with me about Scottish limited partnerships. Does he also agree that the whole scope of the issue needs to be investigated, and that the Government need to bring their consultation report back? It is clear that when one loophole is closed another opens, and there seems to be some evidence that people are now moving to Northern Ireland to try to get around the rules. The Government must do something very soon before people jump over and do something else.

[Paul Masterton]

The hon. Lady has highlighted the key point that I made at the beginning of my speech about highly trained and well-paid accountants. The Government are always playing catch-up because she is right: what happens is that a loophole is identified, it takes quite a long time to get a measure to close it through the process, and by then everybody has already moved on to the next thing. We need to get better at pinpointing—almost like in a game of chess, thinking two moves ahead and saying, “If we close this down, where are they going to move next?” These people working in the private sector are able to find these money-saving methods, so there is no reason not to have people working in government thinking along the same lines.

I support what the Government are doing to reduce the tax gap. It is important to bring in the extra money that is properly due in this country by closing loopholes and stopping the feeling that the big corporate guy is getting away with something while I, the guy struggling with my own small business, am paying what is due. There is a real sense of unfairness in the practices that these measures are designed to tackle, and I look forward to supporting them in four and a half minutes’ time.

[James Cartlidge]

It is a pleasure to be called to speak on this important subject of anti-avoidance, and to follow my hon. Friend the Member for East Renfrewshire (Paul Masterton). I will take up his underlying point about fairness. There are incredibly important measures in the Bill in relation to avoidance that also deliver other more positive outcomes. I am referring to the area of capital gains tax.

Earlier we discussed exit charges and CGT, but there is also an important measure in relation to foreign ownership of UK property. Non-residents will now have to pay CGT on the sales of UK commercial property, and under the way that property structures can operate, residential property could also be covered.

Anti-avoidance measures can have a positive impact. We should not underestimate the huge impact of inflows of foreign investment in pushing up property prices in this country, particularly in London, and thereby spreading out through the south-east and around the rest of the country.

Business Banking Fraud

Paul Masterton Excerpts

Tuesday 9th October 2018 Westminster Hall

[Paul Masterton (East Renfrewshire) (Con)]

I congratulate my hon. Friend the Member for Hazel Grove (Mr Wragg) on raising this important issue. It is a shame that he continues to have to do so.

Several of my constituents have been adversely affected by the unscrupulous behaviour of the banks mentioned today. I want to bring attention to the despicable actions of Clydesdale bank, which has not been mentioned, under the tutelage of its parent company National Australia bank.

The NAB Customer Support Group was set up by a small group of SMEs that were crippled by long-term, fixed-rate loans made via tailored business loans issued by the Clydesdale and Yorkshire banks. Many of the businesses have closed down, but most are struggling to survive, burdened by unmanageable interest rates and unable to break from the fixed rate due to extortionate breakage penalties of up to 40% of the loan, arising from the bank’s alleged signing of interest rate swap agreements with third parties.

The bank charges costs arising from exiting embedded interest rate swaps via the small print in the terms and conditions. However, with the passing of time, the bank admitted that there were no such micro-hedges, or match hedges, in place and that all interest rate risk was dealt with by the parent company, National Australia bank. The uncontrolled promotion of these products—driven, as always, by generous commissions—has caused enormous damage to the SME sector and the wider economy, especially in Scotland, including the west of Scotland.

Members of the support group are here today, including my constituent Ian Lightbody, and their objective is to bring the bank to account for the damage it has caused and to persuade or force it to apply satisfactory redress to all affected SMEs. Over the past few years, the FCA has been shown to be impotent. That must change, particularly now that some of these cases are so serious that even Police Scotland feels they merit investigation.

In June 2014, representatives of Clydesdale bank appeared before the Treasury Committee. The bank’s evidence was weak and, to be frank, misleading—apparently, with the benefit of hindsight, deliberately so. It said it would investigate fixed-rate tailored business loans, but it investigated only cases where a complaint was already live or had previously been made. That meant that around 7,500 people were not contacted or given the opportunity to have their loan investigated. The bank’s chief executive officer confirmed to the Treasury Committee that he did not believe that his bank’s tailored business loans were deliberately designed to avoid FCA regulation. However the Committee’s subsequent report, “Conduct and Competition in SME Lending”, concluded:

“The lack of public oversight, minimal transparency and limited coverage of the scheme mean that the Committee cannot be confident that Clydesdale’s separate internal review will deliver outcomes equivalent to the FCA review upon which it is intended to be based.”

The report went on to state:

“To protect themselves against the risk of providing a TBL’s hedging function, banks need to hedge the risk themselves. The FCA said that ‘the bank will have entered into a separate IRHP’”—

interest rate hedging product—

“‘with a third party in order to manage its financial risk of entering into the loan’.”

The Bank’s CEO, Mr Thorburn,

“confirmed that this was the case for Clydesdale Bank.”

Clydesdale bank subsequently confirmed that there was actually no third party and that, in effect, all the loans were self-funded. Despite that, and despite it charging and receiving substantial break costs from customers, it refused to address the devastation it caused to businesses and lives across Scotland. It charged for long-term interest rate hedges that, it can be proved, it and its parent company never matched.

Ian Lightbody’s firm was informed in 2012 that to break its loan it would have to pay a 22% break cost on a loan of hundreds of thousands of pounds. It had cashed in personal pension funds and arranged alternative funding to secure the future of its companies and, in particular, of long-standing employees. Naturally, that became untenable, and it had to close several companies.

Another of my constituents, Craig Brock, had long-standing companies with loans amounting to substantial millions of pounds with Clydesdale bank. In 2012 it gave him just 30 days to refinance. It appointed BDO as administrators, and the companies were sold on to Paradigm Ltd, allegedly at arm’s length. It turned out, of course, that Paradigm was another Clydesdale-funded company. The FCA confirmed to the 2015 Treasury Committee inquiry that it wanted more power to investigate Clydesdale’s tailored business loans:

“The FCA has written twice to the Treasury to raise concerns about the sale of loans with embedded interest rate hedging features and the FCA’s inability to address the problem under the current perimeter of regulation. However, the Treasury appears not to have responded formally to the FCA on the matter”.

There can be no doubt that these products were, at best, mis-sold and, at worst, fraudulently pitched and designed to fall outside the FCA rules. The bank and these products should be investigated by the FCA without delay. Thousands of SMEs and businesspeople across the UK took these products with no proper explanation of either the conditions or costs associated. They deserve our support, and they deserve justice.

Oral Answers to Questions

Paul Masterton Excerpts

Tuesday 11th September 2018 Commons Chamber

[Paul Masterton (East Renfrewshire) (Con)]

The Economic Secretary to the Treasury saw at first hand when he visited East Renfrewshire a couple of weeks ago how small businesses are utilising FinTech to become more efficient and agile. What are the Government doing to help more small and medium-sized enterprises, such as First Floors in Giffnock, which he visited, to understand and take advantage of the opportunities FinTech presents?

[John Glen]

My hon. Friend is absolutely right. It was a privilege to meet David Hepburn at First Floors and see the value of new products. The Government are committed to stimulating more investment in FinTech, and it was a privilege to visit FinTech Scotland, which is doing a lot, too. We have invested a considerable amount to increase the numbers of people who are taking this step to innovate in finance, and with open banking we will see more.

Taxation (Cross-border Trade) Bill

Paul Masterton Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Monday 16th July 2018 Commons Chamber

[Priti Patel (Witham) (Con)]

I rise to speak to new clause 36, tabled in my name and those of other right hon. and hon. Members. I want to be clear that a strong deal that delivers a new equal partnership between the UK and the EU based on co-operation to advance mutual interests while respecting the sovereignty of this country is of course in everyone’s interests. This is also a golden opportunity for our country to become a free and independent nation, setting up its own laws and in control of its own destiny. I do not think that anyone in this House would disagree with that. We understand that the Government are engaged in the negotiating process and that all negotiations require a degree of give and take. There are of course certain red lines that cannot be crossed, as is being made clear in the debates that we are having right now and in the proposals that we are taking to the European Union.

New clause 36 cements into legislation the principle of reciprocity. It is clear and unambiguous. It was disappointing to see that the White Paper did not commit to that principle. The proposal in the White Paper does not deliver an equal partnership. It delivers one that does not put us on a level playing field. Because it states that

“the EU would need to be confident that goods cannot enter its customs territory without the correct tariff and trade policy being applied”,

we would effectively adopt much of that policy and collect tariffs on behalf of the EU.

However, the White Paper then states that

“the UK is not proposing that the EU applies the UK’s tariffs and trade policy at its border for goods intended for the UK.”

We are therefore being asked to pass legislation that would mean that while the Government can agree with the EU to collect taxes for it and provide assurances about goods entering the UK that are heading to the EU, we would not expect the same arrangements to be provided by the EU in return. Why are we planning to give the EU assurances and confidence that we do not expect in return?

[Paul Masterton (East Renfrewshire) (Con)]

Will my right hon. Friend confirm whether it is her view that new clause 36 conflicts or is in line with Government policy, as per the White Paper published last week?

[Priti Patel]

I just made the point that it was disappointing that the principle of reciprocity was not in the White Paper. My hon. Friend has already heard me say that I want an equal partnership, but what has been proposed is not equal. It is yet another compromise with nothing in return.

The Government have the chance to address that by backing new clause 36. The EU would then know that it cannot attempt to steamroller the Government on this issue in the negotiations and that if it wants to benefit from the UK collecting its tariffs, it needs to adopt a similar reciprocal arrangement.

Thus far, the Government have negotiated in good faith with the EU. We have been open, transparent and have already made many compromises and concessions, which is only right and fair. Within a week of taking office, the Prime Minister gave up our turn to the hold the EU presidency in the second half of 2017 as a gesture of goodwill. We offered a guarantee on citizens’ rights as early as possible, but the EU would not accept it. We have offered £40 billion of British taxpayers’ money, yet the trade deal that would benefit this country and the EU has been blocked by EU officials, who are, quite frankly, not engaging with us.

As we progress to the next stage of the negotiations on the future of the UK-EU relationship, Britain needs to be an equal partner with the EU, not its tax collector. New clause 36 would ensure that genuine reciprocal arrangements are established and would put it into law that the UK will not be part of an EU VAT regime and that Northern Ireland will be treated the same as the rest of the UK. We propose putting into law as a safeguard what the Government have said they want.

The public want to know that their political leaders will stay true to the promise made to them that Brexit means Brexit and that we are putting plans in place for our nation’s economic and political renewal, so the Government need to have the desire to modify their proposals and listen to the public.

Scottish Economy

Paul Masterton Excerpts

Wednesday 27th June 2018 Westminster Hall

[Paul Masterton (East Renfrewshire) (Con)]

It is a pleasure to serve under your chairmanship, Mrs Main. I congratulate my colleague on the Scottish Affairs Committee, the hon. Member for Rutherglen and Hamilton West (Ged Killen), on securing this important debate.

East Renfrewshire is home to the thriving small businesses and micro-enterprises that power the British economy while also providing investment and employment for the local community. It is these companies that help make Britain one of the largest economies in the world, which helps provide our vital public services. We have more established names, such as Barrhead Travel and A. C. Whyte, which are based in East Renfrewshire but are world leaders in their sector, as well as dynamic, newer enterprises, such as J&M Murdoch & Son, which was recently recognised in the 2018 London Stock Exchange report, “1000 Companies to Inspire”. The Scottish and UK Governments must prioritise and support those companies and many thousands like them, if we are to encourage investment and continue to grow our sluggish economy.

For too long, however, a high oil price has hidden Scotland’s economic underperformance, allowing Scottish Governments of both colours to neglect fixing the Scottish economy’s fundamentals. Most recently, the Scottish Parliament’s own highly respected Economy, Jobs and Fair Work Committee unanimously agreed a report that stated that in Scotland,

“levels of GDP growth are marginal, productivity low and wages are stagnant”.

Scotland’s major problem, as the hon. Member for Rutherglen and Hamilton West has highlighted, is its productivity, which is at a lower level than it was in 2010. The gap between UK and Scottish productivity is larger than it was in 2009.

The Scottish Government do deserve some credit for setting up the new Scottish national investment bank. Ultimately, however, it was a rehashed announcement of something that has already supposedly been launched multiple times by this tired, separatist Government. If it does come to fruition, it will be a positive step for the Scottish economy, but we will have to wait and see what happens.

Last year, the Scottish economy grew at less than half the rate of the UK and slower than every single EU country. Future predictions are not particularly positive. The Scottish Fiscal Commission forecasts that Scotland will fail to match wider UK economic growth for the next five years. That is really important, because it means less money for the Scottish NHS, Scottish schools and other Scottish public services. It means less money in the pockets of those struggling to get by and businesses taking on fewer staff. It means less money circulating in the local economy, something which contributes to the picture of high streets across Scotland, where local businesses simply cannot continue.

Let us not forget that behind the economic data, this is a real story for people throughout Scotland. Entrepreneurs are risk takers, innovators and wealth creators. They need both our Governments to support them, but too often they are the victims of competing priorities. The UK Government have recognised the importance of increasing productivity, with the publication of the industrial strategy, and city deals are an important part of solving the productivity puzzle. The Glasgow city region deal is investing £44 million in East Renfrewshire. I was pleased to visit a number of the projects recently. City deals also demonstrate the benefits of Scotland’s two Governments working together rather than pulling apart—we need a heck of a lot more of that.

Meanwhile, businesses in rural Scotland, including areas such as Eaglesham and Uplawmoor, continue to be hampered by poor broadband—a basic necessity in the 21st century. People across Scotland have been hit with a double whammy, as the SNP Government raise taxes on more than 1 million Scots—22,000 of them in my constituency—on top of significant council tax hikes. Local employers suffer under the highest business rates across Europe. I do not understand why the Scottish Government believe that when 80% of our economy is based in the service sector they can boost economic growth by taking more out of hard-working people’s wallets.

The truth is that the Scottish economy needs a kick. It is flatlining and the Scottish Government’s high-tax agenda may be the final straw. The UK Government have introduced various measures, including the national living wage, personal allowance increases and wider business initiatives, such as the industrial strategy, to help mitigate some of the damage, but they also can and should do more. We need a pragmatic approach and some better joined-up thinking between Scotland’s two Governments. Nine successive quarters of declining activity in the construction sector, for example, is not acceptable. The hon. Member for Midlothian (Danielle Rowley) dealt well with some of the challenges facing that sector.

Yesterday saw the departure from Holyrood of an Economic Secretary whose legacy is one of declining productivity, skills, job quality and investment, and an economy with one of the lowest GDP growth rates in the OECD. Scotland needs a Scottish Government prepared to invest and give businesses the opportunity and security they so desperately need. Roll on 2021, when we will finally get one.

--- Later in debate ---

[Drew Hendry]

No, I am going to make progress. The Fraser of Allander Institute estimates that 80,000 jobs are at risk.

[Paul Masterton]

Will the hon. Gentleman give way?

[Drew Hendry]

No, I am going to carry on, because I have only a minute.

The UK Government are paying no real attention to stimulating the oil and gas industry. Fortunately there is now an upturn in oil and gas prices, and we need investment from the UK Government.

I have much more to say, and as we are the third party in Parliament I should have hoped for more time to say it, but unfortunately that is not the case—