Oral Answers to Questions

Richard Burgon Excerpts

Tuesday 27th October 2015 Commons Chamber

[Greg Hands]

Last week’s state visit by the President of China was exceptionally successful, including the Manchester leg of his journey. Various announcements have been made in Manchester concerning the northern powerhouse, but particularly important was the announcement of the first direct flight connecting Manchester and the northern powerhouse region to China. I am sure that that will prove vital to the connectivity of the northern powerhouse, and will ensure that inward investment is brought into the region.

[Richard Burgon (Leeds East) (Lab)]

Last week, credit rating agency Moody’s concluded that the Chancellor’s decision to fully devolve business rates to local authorities will lead to an increase in council debt levels and fragmentation of the creditworthiness of local government, and will leave many local councils, including Lancashire County Council, with their credit rating downgraded. In the light of that analysis, what safeguards can the Chancellor promise will be put in place to ensure that poorer areas of the country, including in the Government’s so-called “northern powerhouse”, do not lose out on vital revenue as a result of this Government’s reforms?

[Greg Hands]

The hon. Gentleman needs to know that over many years a large number of local authorities have been calling for precisely this kind of devolution of the tax base so that they have control over their own decisions and the funding given towards them. Many of the local authorities calling for these additional powers have been the Labour authorities in inner-city areas, particularly in the north and the northern powerhouse. We intend to deliver on that to make sure that there is devolution in this area.

Draft Financial Services and Markets act 2000 (regulated activities) (amendment) (No. 3) order 2015 draft financial services and markets act 2000 (relevant authorised persons) Order 2015 draft financial services and markets act 2000 (Misconduct and appropriate regulator) order 2015

Richard Burgon Excerpts

Thursday 22nd October 2015 General Committees

[Richard Burgon (Leeds East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Nuttall, not least because this is my first appearance as a member of the shadow Treasury team in a Delegated Legislation Committee. I welcome this as my first opportunity to respond to the Economic Secretary, whom I thank for her detailed opening remarks.

My remarks will be brief on this occasion because we do not seek to divide the Committee today. The Economic Secretary and I will, in the time ahead, be debating the Bank of England and Financial Services Bill. Both sides of the House wish to see a dynamic and thriving financial services sector that supports our economy and the people of this country as whole, but we are concerned to see that the necessary regulation is in place to deliver a resilient sector on which the electorate can rely to deliver for all of us. These three orders amend the Financial Services and Markets Act 2000, which created the Financial Services Authority as a new single statutory regulator for the financial services sector.

Since the financial crisis of 2008, of course, numerous legislation on financial services regulation was initiated by the Labour Government but happily continued under the coalition and today’s Government, with the Bank of England and Financial Services Bill currently in the House of Lords. We have the Independent Commission on Banking and the Parliamentary Commission on Banking Standards to thank for much of the progress since 2008.

We are not opposing the orders, so I will not detain Members long, but I have a couple of brief questions for clarification on one order and a question about another order to make a broader point. First, on the draft Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No. 3) Order 2015—this is a simple question for clarification and to bring me up to speed—will the Minister confirm why pre-2004 mortgages are being regulated differently from post-2004 mortgages? Secondly, will she explain why bridging loans are being exempted from credit agreement regulations? I suspect that is because such loans are not held for very long, but I would appreciate her clarification. I am happy if she wishes to send that clarification to me in writing.

On a wider point, the Financial Services and Markets Act 2000 (Misconduct and Appropriate Regulator) Order 2015 extends the PRA’s oversight and approval of senior managers to UK branches of foreign banks and investment firms, as the Minister has explained. Essentially, that means that the PRA has to approve senior managers as fit and proper people to carry out their functions. Those senior managers will become subject to UK rules and regulations on conduct. The claim is that that helps to strengthen individual accountability in banks. The change was first proposed in the Chancellor’s 2014 Mansion House speech in the wake of the LIBOR scandal:

“Let us not wait for the next wave of scandals in financial markets to hit us before we respond…I am also extending the senior managers regime to cover all banks that operate in this country, including the branches of foreign banks.”

That move, set out more than a year ago, is undoubtedly welcome, but I suggest that the measure is a survivor of an approach in the post-crash period that was dominated by public concern about the risks in the financial sector and the lack of viable legal trial for individuals who may have caused the crash. The approach during that period, as demanded by public opinion, was to appear tough on the banks. The Bank of England and Financial Services Bill directly weakens the wider package for strengthening individual accountability in banks, of which this order forms a part.

I also note the points raised this week by the Bank’s Governor, Mr Mark Carney, at the Treasury Committee. He said that

“there may need to be some adjustments”

to existing regulation. We will keep an eye on any proposals that Mr Carney might advocate.

I reiterate that we fully welcome the proposals in the draft orders to extend the PRA’s oversight and approval of senior managers to those representing interests outside the UK. On the more general issue, I want reassurance from the Minister that the Government will not row back from necessary regulation of the financial sector, because appropriate regulation is absolutely essential to safeguard our economic future, and to help deliver the dynamic and thriving financial services sector that we wish to see to support our economy and the people of this country.

Finance Bill (Sixth sitting)

Richard Burgon Excerpts

Thursday 15th October 2015 Public Bill Committees

[Mr Gauke]

The clause will apply to both individual and business accounts, so it could be used in such circumstances. I will not detain the Committee for long on this subject but, on corporate tax avoidance, we have strengthened the capabilities of HMRC’s large business teams, introduced a diverted profits tax and led the way on the OECD’s work on base erosion and profit shifting. The Government have a proud record in that area.

However one looks at the tax gap, and there are different views on the size of the tax gap, corporate tax avoidance is a relatively small proportion. Whether one looks at the authoritative and well-respected HMRC numbers or at Richard Murphy’s numbers, no one claims that corporate tax avoidance is a large part of the tax gap. That is not to say that corporate tax avoidance is not important. It is important, but we also need measures that address all types of people who fail to pay the taxes that are due.

[Richard Burgon (Leeds East) (Lab)]

I thank the Minister for confirming that the clause will apply to business, as well as to individuals. Will he also clarify whether leaving £5,000 in a debtor’s account will also apply to small businesses that owe tax? I am concerned that small businesses may need much more than £5,000 to pay the wages of their staff.

[Mr Gauke]

The £5,000 limit applies across the board, including for businesses. This measure is used only at the end of a process and, particularly for businesses, HMRC operates a time to pay process. I dare say that members of the Committee have experience of businesses in their constituencies that have had difficulty in paying tax when it is due and that have engaged with HMRC. Very large numbers of businesses have been able to defer such tax payments because of short-term cash-flow issues and have subsequently repaid them. HMRC does a lot of that, and it works successfully.

Joint accounts have been raised with us, and they have been raised in the Chartered Institute of Taxation briefing. If joint accounts were automatically excluded from the scope of this provision, it would provide an obvious opportunity for debtors to avoid paying what they owe. If we had gone down that route, it would be perfectly reasonable for the Opposition to say that it would be easy to walk around the provisions. However, we have made it clear that we want to strike a balance between recovering money from debtors who are refusing to pay and protecting the rights of other account holders. There are safeguards for joint account holders, including third parties who have a beneficial interest in money in a debtor’s accounts. Direct recovery will only be applied to a pro rata proportion of an account’s balance. All account holders will be notified that action has been taken, and all account holders will have equal rights to object or appeal. Joint account holders will also have clear appeal routes if they feel that their funds have been wrongly targeted.

Budget Resolutions and Economic Situation

Richard Burgon Excerpts

Monday 13th July 2015 Commons Chamber

[Richard Burgon (Leeds East) (Lab)]

When I think of this Budget, I think of my constituents who will be hard hit by the measures it sets out; measures that were cheered to the rafters by the Conservative party, led in fist-pumping style by the right hon. Member for Chingford and Woodford Green, known to my more polite constituents as Iain Duncan Smith.

This Budget is bad for the economy and bad for the poorest, whether working or not, in my constituency and in our society. It takes money from the poorest in society and hands it to the wealthiest. Do not just take my word for it; criticism and concern has ranged from the TUC and major trade unions to Citizens Advice, the Joseph Rowntree Foundation and Barnardo’s, and from the Institute for Fiscal Studies to the Local Government Association and the Federation of Small Businesses. For example, Paul Johnson of the IFS has said:

“In general the more important tax credits are to someone’s income at present the less likely they are to be compensated by the higher minimum wage”—

note that he refers to the minimum wage, not the living wage—

“But the key fact is that the increase in the minimum wage simply cannot provide full compensation for the majority of losses that will be experienced by tax credit recipients. That is just arithmetically impossible.”

This Budget negatively affects a majority of the population. The IFS says that 13 million people will lose out through the freeze in benefits and tax credits. This Budget is bad for people in my constituency of Leeds East, where the cuts to tax credits will hit an overwhelming majority of families. In Leeds East there are 9,600 families with children claiming tax credits, 6,100 of whom are working families, with 12,600 children affected. The scale of the impact in my constituency and constituencies like it across the country should make Conservative Members ashamed. Sixty-seven per cent.—two thirds—of families in Leeds East receive tax credits, while 75%—three quarters—of children are in families receiving tax credits. This is an attack on the incomes of the poorest while helping the wealthiest.

Freezing benefits for four years and cutting tax credits will reduce real incomes. The Joseph Rowntree Foundation makes it clear:

“For those out of work, especially childless adults, it will further widen the distance between their incomes and what is needed to achieve an even basic standard of living. This is of course deliberate, in that the aim of the Government is to sharpen work incentives for those not currently in work.”

Citizens Advice says that

“a government serious about making significant savings to the welfare bill needs to tackle problems at the source including insecure work and failures in the housing and childcare markets...Cuts to welfare including freezing benefits for four years, lowering income disregards and work allowances, and cutting tax credits will all have a very serious impact on many people’s ability to meet day to day costs.”

I have to mention George Osborne, the Chancellor—

[Madam Deputy Speaker (Natascha Engel)]

Order. I say this in the spirit of helpfulness. We name Members not by their names but by their constituencies. This is the second time that the hon. Gentleman has done it, so I ask him to use the constituency or job title—“the Chancellor” will do.

[Richard Burgon]

The Chancellor’s so-called living wage is a con. He claims to be giving Britain a pay rise but his living wage premium is actually a new minimum wage undercutting the rate proposed by the Living Wage Foundation.

Quote after quote that I now do not have time to go into sets out the reality of the Government’s Budget. Many measures, as other Members have mentioned, are an attack on the hopes of young people. They include excluding under-25s from the so-called living wage, preventing young people from living independent lives by cutting their access to housing support, and abolishing student maintenance grants for the poorest and raising university fees. What we needed to hear in the Government’s Budget was a call for investment to publicly deliver affordable social housing, access to well-funded further and higher education, and new jobs and apprenticeships with better pay that would allow people to live decent and stable lives.

People in my constituency and areas like it across the country are not a priority for this ultra-Thatcherite Government. They talk about a northern powerhouse, but we need only look at what is happening with trans-Pennine electrification. They are cutting funding for infrastructure in Leeds and in the north. They talk about devolution, but I and many others fear that the real aim is to devolve the blame for the national Government’s austerity economics. We must not give up fighting against what is being done to my constituency and areas like it by this Government, who are all about siding with the rich and the powerful. I look forward to carrying on fighting, alongside Labour colleagues, campaign groups and trade unions, against this Government’s cruel plans and for a better society.

Greece

Richard Burgon Excerpts

Monday 6th July 2015 Commons Chamber

[Mr Osborne]

We keep in touch with all the tour operators. Most of them have very big operations in Greece, but they are satisfied with the arrangements and the support we are providing. As I say, these holidays are going ahead. People are not seeing any great disruption and are making a contribution to the Greek economy. We want to continue to provide good travel advice. We will change the travel advice if we feel we need to, but the travel advice at the moment is not, “Do not travel to Greece”; it is just, “Make sure you are prepared.”

[Richard Burgon (Leeds East) (Lab)]

Does the Chancellor agree with the Greek Prime Minister, who stated after the referendum result was announced last night that the IMF’s recent report on its sustainability confirms the Greek position that debt restructuring is necessary to reach a final sustainable solution to end the crisis both for Greece and for Europe? Does he not agree that a European conference on debt cancellation is a necessary part of that solution?

[Mr Osborne]

The sustainability of Greece’s debt payments is clearly a big issue. That is why it failed to meet the IMF payment last week and faces such a big challenge with the ECB repayment later this month. That is one of the challenges, but alongside it—and the IMF draws this to our attention as well—there must be some indication that the Greek Government can undertake the kind of reforms that will modernise the Greek economy, make sure it is a success and ensure a stream of tax revenues in the future. No one is pretending that it is easy, but that is the substance of the negotiation.

Oral Answers to Questions

Richard Burgon Excerpts

Tuesday 16th June 2015 Commons Chamber

[Mr Osborne]

I welcome my hon. Friend to the House. I know that he will be a strong voice for Dudley. We are looking at smaller enterprise zones that are better fitted to areas such as his, to build on the success that we have had with the bigger enterprise zones. Enterprise zones for individual towns will help the west midlands and the black country to be an engine of growth for the British economy.

[Richard Burgon (Leeds East) (Lab)]

T4. Is the Chancellor aware of the letter in The Guardian on Friday from 80 senior economists, in which they say—these are their words—that his plans are “risky experiments with the economy to score political points…have no basis in economics”and“are not fit for the complexity of a modern 21st-century economy”?Does this not show that the Chancellor’s extreme cuts agenda is out on a limb and that his ideological fixations are outside the economic mainstream?

[Mr Osborne]

I do not read The Guardian every single day but I was made aware of that letter. I disagree. The same sort of people were saying the same things five years ago and now we have one of the fastest-growing economies of any major economy in the world. This is not the first thing on which I disagree with the hon. Gentleman. This morning he called for the abolition of the monarchy, so he is making an interesting start to his political career.