Economies of the UK Islands

Robert Jenrick Excerpts

Wednesday 9th May 2018 Westminster Hall

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

It is appropriate that you are in the Chair, Mr Rosindell, as you are Parliament’s greatest champion of a different type of island: our overseas territories and Crown dependencies.

I thank my hon. Friend the Member for Havant (Alan Mak) for raising this important issue and for enabling a range of Members from across the House, representing all parts of the United Kingdom, to participate and give a complete tour of the British Isles. One thing we have learned today is that, although the British Isles are a great archipelago of more than 6,000 large and small islands and isles, relatively few of our constituents live on them, and we are perhaps less appreciative of them than we should be. Perhaps more than at any other point in our history, we are disconnected from our coast and our coastal communities. The Government are keen to change that and to ensure coastal communities and islands are properly represented. Today’s debate is an important part of that.

We want to raise productivity, living standards and economic growth in all parts of the United Kingdom, and of course islands and island communities are an essential part of that. Members representing the Isle of Wight, Hayling Island, Orkney and Shetland, Cumbrae, Arran and others have told the stories of their communities, many of which have been very positive. An important part of what we have heard today is that, although living on an island can cause problems, to which the Government, at a national or a local level, must respond, there are also opportunities for economic growth. Wonderful benefits can come from living in communities that are close and, as the right hon. Member for Orkney and Shetland (Mr Carmichael) said, can be very outward-facing to the rest of the world.

We appreciate that the barriers to growth can include a lack of opportunity—which can be a barrier to social mobility—poor connectivity and relatively high costs for transport, public service delivery and goods in the private sector. Although living on an island has many benefits and wonderful opportunities, which anyone who has grown up on one no doubt always lives with, the mainland can exert a strong gravitational pull, particularly to the young, and can at times lead to a drain of talent and youth. However, we have heard today about a number of islands whose populations are rising, which is very positive indeed.

Many of the barriers that island communities face are obviously a natural consequence of their geography and are common to all. Crudely, there are three types of island within the British Isles. The Isle of Wight is unique, in that it has a very large population—more than 130,000 people—and no bridge linking it with the mainland. I will turn to its specific demands in a moment.

The islands in the second category are mostly in Scotland, but there are a few off England, such as the Isles of Scilly. The populations of those islands, such as those represented by the right hon. Member for Orkney and Shetland, can still be substantial. They have no bridge to the mainland, and their remoteness poses particular problems, which require solutions, although they have smaller populations than the Isle of Wight.

Third are the islands, such as Hayling Island, that are connected to the mainland by roads. I do not want to diminish the challenges and issues they face, but they have commonalities with rural areas of the United Kingdom that have issues relating to remoteness. They are, to an extent, different from the islands that are separated from the mainland and do not have road links. I will address each of the three types. I apologise that this is a crude way of dissecting the issue, but it is at least a lens through which to look at it.

My hon. Friend the Member for Isle of Wight (Mr Seely) talked about the challenges and the opportunities of the Isle of Wight, which has a substantial population and no road connection to the mainland. The Government must think carefully about how we can assist it in delivering public services and ensuring its economy continues to grow. With the exception of the Isles of Scilly, it is unique—in England, at least—and we need to think about that when preparing new formulas for schools, local government, policing and other matters. I want to consider that with my hon. Friend in the future. I will talk about some of those issues in the time available to me.

A common thread for the Isle of Wight and all the other islands we have discussed today is digital. Although they are somewhat—at times, very—remote, the opportunities presented by the new economy are huge. They can help us break down some of the barriers and enable those islands to be highly connected to the rest of the world. We heard about new broadband opportunities in Newport, and I am sure there are other examples elsewhere in the British Isles.

We are focused on improving digital infrastructure on the Isle of Wight, in particular. It is clearly a critical part of life today. The Government are investing some £1 billion to ensure our digital infrastructure is fit for the future. I believe that the Isle of Wight was one of the first areas to benefit from the £400 million digital infrastructure investment fund. That was when investors Infracapital channelled some of the allocation into WightFibre to help to roll out full-fibre broadband to more than 50,000 homes, to some of which my hon. Friend the Member for Isle of Wight might have referred in his speech. Alongside that, Infracapital will invest £35 million of its own money to fund the expansion of the company’s infrastructure across the Isle of Wight. That is very positive and shows what we can do working together—although of course there is more work to be done.

On transport, roads are another vital part of the Isle of Wight’s infrastructure. From 2013 the Government will provide up to £477 million to Isle of Wight Council for a highways maintenance project through a private finance initiative that is under way. That will allow the council to carry out vital improvements and maintenance to local roads over a 25-year period.

We also recognise that transport to our islands must be adequate. That was not really touched on in my hon. Friend’s remarks, but having spoken to his predecessor in the past I know of concerns about the Isle of Wight ferry. Such concerns are no doubt common in other islands served by a single ferry company. The Competition and Markets Authority is aware of those concerns, which I expressed in my first meeting with the new CMA chief executive, Andrea Coscelli. The CMA is independent and the decision to take forward any investigation is its alone—the Government have no levers to direct the CMA as to which investigations it should choose, but I have raised the matter with him and know he is fully aware of it.

[Mr Seely]

I did not mention the ferries in my speech because I wanted to talk more broadly about the economy, but the relevant authorities are well aware that I would be keen to call for another investigation. However, I am not doing so at the moment because the new transport board on the Island is trying to work constructively with our ferry companies. I want to give that a chance to work first—for Wightlink, Red Funnel and Hovertravel to work together more closely and to be more supportive of the Island, driving our economy and being part of the solution, rather than part of the problem. That is why nothing is happening at the moment, but there is that option.

[Robert Jenrick]

I thank my hon. Friend for his constructive approach. I suggest that he engage with the CMA if he wishes to take anything forward.

Schools do not fall directly within my remit at the Treasury, but in advance of the debate I reviewed the performance of Isle of Wight schools. I appreciate that in some cases there are some long-standing difficulties. The new national funding formula will help to address that challenge. Under the new formula, the Isle of Wight stands to gain up to 3.2% for its schools, which represents an increase of £2.2 million, or £140 per pupil. Clearly the new formula’s interest in sparsity of population will help in some island cases, but not in all because some islands are relatively densely populated. In certain parts of the Isle of Wight, however, that sparsity provision will help—I believe two primary schools will be eligible for funding in that respect. Certainly the specific challenges of the Isle of Wight need to be considered in future funding formulations.

I shall turn briefly to the comments of the right hon. Member for Orkney and Shetland and to those islands that fall into the category of remote, or very remote, and without any of the direct transport links of a road bridge. Clearly, such islands require careful consideration by central Government. We shall work as constructively as possible with the Scottish Government in areas where we can collaborate. When the right hon. Gentleman was in Government, he created the 2014 island framework to encourage the UK Government to work closely with the islands around Scotland. We would like to see such initiatives continue.

The Government also recognise the issues with broadband, and we want to do what we can to assist in Scotland. For example, more than £50 million of the superfast broadband programme went to the Scottish highlands and islands to provide access to download speeds of at least 24 megabits per second. Recently, we announced the winners of phase 1 of the £25 million 5G testbed competition. That includes £4.3 million for the 5G RuralFirst testbed, which will be based primarily in the Orkney Islands.

As far as possible, we continue to support North sea oil and gas through continued Treasury investment, and a strong and stable fiscal framework for the oil and gas industry, most recently with the announcement of the transferable tax history, which has been widely welcomed by the industry. I take on board the comments of the right hon. Gentleman with respect to renewables and the essential role that they play, and will continue to play, in the future of islands such as the Orkneys and Shetlands. I shall take away his suggestion about wave and tidal funding.

Finally, on islands connected to the mainland by road, the most prominent one we heard about today was Hayling Island, which sounded like a wonderful place. I would love to visit the bookshop or the ferry and, on a day like today, we would all like to be on an island such as Hayling. Many of the issues raised by my hon. Friend the Member for Havant are common in other rural areas elsewhere in the United Kingdom, and we are concerned about them. We are, for example, making further investment in roads. We have launched the large local majors programme, which is potentially transformative for market towns and smaller communities that require significant road investment projects. I encourage my hon. Friend to take that up with the Department for Transport, if applicable.

We are also aware of bank closures, which have been widely debated in the House and are common to a number of communities throughout the United Kingdom, although I appreciate that in islands the effect can be greater than elsewhere. The schools funding formula will help many island communities, as it will in my hon. Friend’s constituency, and we would like to see that taken forward. Since 2012 the coastal communities fund has invested £174 million in projects focused on economic development, growing and regenerating coastal areas. The Isles of Scilly have benefited from the fund, as did the Hayling coastal community team in 2015, from £10,000. Funding round 5 is now open, with £40 million available to spend from April 2019 until the end of March 2021.

[Mr Seely]

Will the Minister give way?

[Robert Jenrick]

In a moment if possible, but I am conscious of time.

I encourage all Members present to take advantage of that fund, where applicable, feeding into it and putting in their applications as soon as possible. From the Treasury’s perspective, I shall continue to work with my colleagues at the Ministry of Housing, Communities and Local Government as we proceed to consider what the next stage of the fund will be. I shall ensure that the comments about islands we have heard today are fed into that process. I would like to work with my hon. Friends the Members for Isle of Wight and for Havant to ensure that the next iteration of the fund takes on those views and works for coastal communities.

I thank all colleagues who have attended the debate to discuss these matters. We are very committed to taking this agenda forward and to ensuring that island communities have the funding and support they require to have vibrant communities and economies. Over the course of the year, whether in making decisions about applications to the coastal communities fund or in shaping the UK shared prosperity fund—that is an important discussion to be had in Parliament over the year to come, and I again encourage hon. Members representing coastal communities to take it seriously and engage in it—we shall continue, I hope, to display our commitment to the islands of the British Isles and their communities.

Landfill Tax (Disposals Of Material) Order 2018

Robert Jenrick Excerpts

Monday 30th April 2018 General Committees

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

I beg to move,

That the Committee has considered the Landfill Tax (Disposals of Material) Order 2018 (S.I. 2018, No. 442).

This statutory instrument builds on changes made to landfill tax for England and Northern Ireland in the Finance Act 2018, which clarified what a taxable disposal is for the purpose of the tax, and extended landfill tax to sites that do not have an environmental permit but should have—in layman’s terms, illegal waste sites. In 2008, the Court of Appeal ruled that some materials received on a landfill site are not waste, and therefore not taxable. Clearly, that has created uncertainty about what constitutes a taxable disposal, and has led to increased complexity for landfill site operators, as well as litigation. The order addresses that uncertainty; it will support the legitimate waste management industry by simplifying the tax system and by providing clarity for legitimate landfill site operators.

The order ensures that, for permitted sites, the scope of the tax will remain unchanged. The changes do not alter the burden of the tax or create any additional administrative requirements. The Finance Act cracks down on illegal waste sites by making it harder for rogue operators to profit from evading landfill tax. That is in direct response to calls from industry to remove the financial advantage that rogue operators have over legitimate businesses. As part of that, HMRC has been given the power to pursue complicit individuals across the supply chain. Not only will those individuals be liable for the tax that will be due on the waste, they could additionally face a penalty of up to 100% of the tax liability. In the most serious cases, individuals could be sent to prison, bringing this criminal behaviour in line with other such activity, such as VAT fraud.

The order goes further; it allows certain materials that are prohibited from permitted landfill sites, such as tyres, to be taxable when they are disposed of at sites that do not have environmental permits or licences in place. That ensures that we do not create an obvious loophole and that we further strengthen HMRC’s position on illegal waste sites.

Landfill tax was introduced with the specific aim of discouraging the disposal of waste to landfill, and to encourage more sustainable ways of managing waste. In that, it has been successful in the years since it was introduced, in 2000. The amount of waste sent to landfill has fallen by over 65% in the UK. Over the same period, recycling rates have jumped from 18% to 44%. But changing the economics of sending waste to landfill has in part resulted in fly-tipping and, on a large scale, illegal waste sites, because rogue individuals and criminals have seized the opportunity to undercut legitimate businesses. We are all aware of the prevalence of those sites in many of our constituencies—mine included—and the impact that they have on local communities and the environment. They are a blight and, at times, a risk to health.

It is becoming increasingly clear that a minority of those sites are a direct consequence of organised crime, which appears to have infiltrated the waste industry. At its most serious, those criminals are linked to other concerning areas of criminality, including the drug trade. We take that extremely seriously, but addressing it will take action from across government. Clearly, there is a role for the tax system to play, and that is why we have made these changes to landfill tax in the Finance Act. They are intended to act as a deterrent to individuals looking to profit from this behaviour at the expense of our local communities.

Building on that, the Department for Environment, Food and Rural Affairs has taken steps to strengthen the powers of the Environment Agency. In 2017-18, the Environment Agency took 93 successful waste crime prosecutions, resulting in fines totalling in excess of £380,000 and 17 prison sentences. But we must go further. As of this year the Environment Agency has the power to lock the gates of illegal waste sites and block entry, ensuring the prevention of further waste piling up on the sites and increasing all the associated risks to health and the environment.

In the Budget last year, the Chancellor provided the Environment Agency with an additional £30 million specifically to support its work in tackling waste crime, doubling the total provided since 2014. The Environment Agency works with the police and law enforcement agencies to tackle the organised crime element behind much of the problem. We want to see much more aggressive enforcement by the Environment Agency and rogue individuals and criminals brought to book.

The changes implemented by the statutory instrument will help to simplify the tax system and will provide greater clarity and certainty to legitimate landfill operators, but the instrument is only one part of our response to the issue of illegal waste sites, which undercut legitimate businesses, threaten the environment and blight local communities. By making these changes to landfill tax we are taking further steps to tackle the issue. I commend the order to the Committee.

--- Later in debate ---

[Robert Jenrick]

I am grateful for the constructive comments by the hon. Member for Stalybridge and Hyde, and I appreciate his concerns. In fact, I met the Mayor of Greater Manchester recently, who mentioned a site near the hon. Gentleman’s constituency in Gartside Farm. I have a site in my constituency, and several members of the Committee have them in theirs, so that is something shared by hon. Members in all parts of the country. We take the issue seriously, and I am grateful that the hon. Gentleman appreciates that and is supportive of the measures that we are taking today.

The hon. Gentleman made several points. I do not have the figures for the number of sites to hand, but I am happy to write to him with those. I am advised, however, that the number of illegal waste sites has not increased substantially in recent years. That is not to diminish the fact that there are a large number of them across the country, some of which are deemed by the Environment Agency to be in a state that poses significant risk to the public.

As for monitoring the sites, as I outlined in my opening remarks, we have given the Environment Agency new powers to lock the gates of illegal waste sites and so block entry to ensure that further waste is not piled up, because in most of the more egregious situations the waste takes a number of days, or even weeks, to enter the site. The agency now has more powers.

On funding, so that the Environment Agency can take the action required, as I said the Chancellor has provided the agency with an additional £30 million specifically to support its work in tackling waste crime. That amounts to doubling the total provided since 2014. I work very closely with the Minister responsible at DEFRA, the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Suffolk Coastal (Dr Coffey). I intend to continue doing so, looking at specific sites, at how we might be able to help and at ensuring that the Environment Agency has the powers and resources it requires. That is a dialogue we intend to continue.

On money laundering, there is increasing evidence that the more severe instances of illegal waste sites are linked to organised crime and at times to serious organised crime. That includes money laundering, which is exactly why we are taking the action in the order—to make it less lucrative, and easier for HMRC to take action against criminals and rogue individuals.

More action can be taken in the area, and we at the Treasury are elevating its importance with our colleagues at the Home Office and with those involved in tackling serious organised crime, to ensure that all parties appreciate that illegal waste sites are an extremely concerning area of activity that has progressed from simply fly-tipping to something that poses significant risk to the public.

[Crispin Blunt (Reigate) (Con)]

The Minister refers to links to the drugs trade. What did he have in mind when he made that remark?

[Robert Jenrick]

I have met a number of colleagues from across the House who have such sites in their constituencies, and the evidence we have is only anecdotal, but it is that the individuals behind some of the sites appear to be linked to a range of different criminal activities. That is something that the police and the Environment Agency are aware of and following up on, but I have no specific evidence to bring before the Committee. However, that is certainly the view that has been expressed to me by law-enforcement officers across the country when we have looked into such matters.

[Mr Mark Francois (Rayleigh and Wickford) (Con)]

While we have the Minister here and on the landfill tax, I wish to make a brief plea for the landfill tax credit scheme. A number of companies have operated the scheme to provide charitable donations for a whole range of causes, which I will not list now: suffice to say that the scheme is extremely important. Each year, in the run-up to the Budget, the Treasury runs the rule over the scheme and has tightened up some of the scheme criteria, which is fair enough. May I make a plea, however, that when the Treasury does so again next year the scheme is maintained, because it does such good work?

[Robert Jenrick]

My right hon. Friend makes an important point. I will not comment on what may or may not be in a future Budget, but the point he has made is one that has been heard at the Treasury, certainly in the build-up to and after the most recent Budget and previous ones. From my own constituency, I know the good works that the landfill credits do for local community projects. We are certainly very aware of the point he makes, and we will bear it in mind as we approach the Budget.

Question put and agreed to.

Independent Financial Advisers: Regulation

Robert Jenrick Excerpts

Tuesday 24th April 2018 Westminster Hall

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

I begin by thanking my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) for securing this important debate. I also thank you, Mr Gray, for chairing it.

I am aware that this debate has been prompted by the constituency cases that my hon. Friend has highlighted today—those of Helen and Mr Mohun-Smith. As my hon. Friend will no doubt appreciate, I cannot comment on the specifics of the cases, although it has been extremely useful to listen to and learn from them. I was very concerned to hear the evidence he brought before us today and laid out so clearly and painfully.

Successive Governments have sought to put in place a policy framework for the regulation of the financial advice market, and they have provided the independent Financial Conduct Authority with the powers that it needs to set out the rules for this market and to enforce them to ensure that consumers are treated fairly. It is troubling to hear the issues that my hon. Friend’s constituents have experienced, which suggest either that the framework itself has not been able to give them the protection they deserve or that the FCA has not acted to enforce the rules in the way we would have hoped it would.

Consumers depend on good advice from honest and reliable individuals to manage their life savings properly, to help them make life-changing decisions and to ensure their security in retirement, especially following the implementation of pension freedoms. We want people to access help to make those important decisions, from simple guidance and information to regulated financial advice.

To ensure that the market for financial advice functions effectively, we have to protect people from unscrupulous advisers, and we also have to protect the majority of reputable advisers from those who would do down their industry and their jobs. The independent FCA has set out the rules for the market, and it has been tasked by us to enforce those rules robustly to ensure that consumers are always treated fairly.

Firms and advisers have to be authorised by the FCA, they have to be qualified to provide advice and they have to ensure that such advice is suitable for an individual’s personal circumstances. As in any walk of life, there will always be individuals and firms out there who try to bend the rules or even to commit fraud and other forms of criminal activity. The FCA has the ability to take swift enforcement action to ban individuals firms from providing financial advice, although that does not appear to have happened in the cases that my hon. Friend has mentioned, and I will give thought to the point he made about ongoing re-approval. More action may be required in that regard.

In other cases, advisers might not provide suitable advice, leading to financial loss for consumers. In those cases, consumers can refer to the Financial Ombudsman Service for compensation, which is usually up to a maximum of £150,000 per individual. The advisory firm is then legally required to provide that compensation. Sadly, it is often the case that firms go into liquidation and cannot provide the compensation that individuals deserve. There is then a second tier of protection through the Financial Services Compensation Scheme, which is mainly funded by an annual levy on the financial services industry. Since it was founded, the FSCS has helped millions of people and paid billions of pounds in compensation.

As my hon. Friend mentioned, the current limit for compensation from the FSCS for people who have received bad advice is £50,000 per person. Hon. Members will be pleased to know that the FCA has recently consulted on raising that compensation limit to £85,000, with an intention to introduce the new limit from 1 April 2019. We would strongly support such an increase. A limit of £85,000 would mean that—based on historical data, at least—only 2.5% of claims relating to investments and only 3.8% of claims relating to pensions advice would not have been fully compensated. Clearly, there will be individuals who have invested and lost far greater sums, perhaps including my hon. Friend’s constituents, but the vast majority of consumers would be protected.

Of course, when setting a compensation limit for the FSCS, the FCA has to strike a balance, providing an appropriate level of compensation to enough claimants, without placing an undue burden on the reputable financial advisers and firms that pay the levies—of course, those costs would be passed on in the end to consumers.

That is why it is mandatory for firms to be covered by professional indemnity insurance, which brings us on to another point raised by my hon. Friend. Such insurance should cover many claims, reducing pressure on the FSCS. The FCA published its consultation paper on the FSCS in October 2017, and it is considering whether to go further, to prevent firms from buying professional indemnity insurance that does not allow claims when the policyholder or a related party is insolvent. The FCA will issue a paper on this matter shortly, and we will welcome the decision that it makes.

The FCA has to remain vigilant in cases where firms go into liquidation to avoid paying compensation to consumers before re-forming as “new” firms. Andrew Bailey, the chief executive of the FCA, whom my hon. Friend referred to, has recently said that this practice, which is often called phoenixing, is actively being examined by the FCA and that the FCA is also considering whether the existing rules are sufficient or the creation of new rules is required.

For example, the FCA placed asset sale restrictions on eight advice firms last year in an effort to clamp down on phoenixing. That was done to prevent the common practice of transferring assets that belong to the collapsed firm, including from the client bank, to its former directors, who of course go on to set up a new firm.

[Kevin Hollinrake]

I am grateful to my hon. Friend for addressing so accurately and so well the points that I made. Is he surprised, as I am, that what he referred to as professional indemnity insurance beyond an insolvency, which is commonly known as run-off cover, is required in many other sectors but not currently in this sector? Is he also surprised that the FCA countenances a situation whereby an adviser it licences as an approved person is able to carry on activities with professional indemnity insurance even though that insurance does not cover the activities they are advising people about?

[Robert Jenrick]

I am surprised by both the points that my hon. Friend has just raised. He and I both worked in professions before coming to this House—I worked as a lawyer, and he worked as an estate agent—and it is surprising that, in the profession of financial adviser, those practices are permitted. I hope that answering such questions will be part of the scope of the FCA’s inquiry and the work that it will subsequently do.

To return to phoenixing, we will work with the FCA to ensure that appropriate rules are in place. I intend to ensure that action is taken in this area. Phoenixing in these circumstances is wrong. It leaves consumers and taxpayers out of pocket and tarnishes the reputation of the industry. Just as with phoenixing in other businesses, these practices can be deeply corrosive to public confidence and to trust in the system, and the effects are, in time, passed on to the whole economy. We want an economy and a society that understand that entrepreneurs and businesspeople can fail—and often do so on the road to later success, wealth, job creation and flourishing new businesses—but those who fail deliberately or recklessly damage our economy and public faith in capitalism, and they must be stopped.

I would like to use this opportunity to raise some additional critical points. The Government have been implementing other policy areas to ensure that we have a better-functioning market for financial advice that benefits consumers. The first of these is the retail distribution review launched in 2006, which drastically altered the current charging market for independent financial advisers, encouraging them to charge set fees and prohibiting them from receiving commission from product providers. That was an important step forward, reducing incentives for advisers to recommend investments in which they had a financial interest, and improving the overall quality of financial advice. It has been welcomed by the sector and those who rely on it.

More recently, under this Government, the Treasury and the FCA launched the financial advice market review in 2015, with the goal of improving the accessibility and affordability of financial advice. Research we have done shows that those with high incomes generally—although not always—have access to quality advice, but those with moderate or low incomes, who arguably have the greatest need, have found decent advice far less accessible. The final report, which we published in March 2016, set out a package of 28 recommendations, which the Government and the FCA have now implemented. Although the recommendations of that review will take time to take effect, we have had encouraging feedback from market participants that the work we have done, which the FCA must now take forward, will make a real difference to consumers, and we are already seeing some tangible results in that respect.

I thank my hon. Friend for bringing this discussion on a very important topic here today. I will raise the points he made with Andrew Bailey at the Financial Conduct Authority again—I appreciate that my hon. Friend has already been to see him. I will highlight the cases he has brought to my attention and will ask for further explanations. He does not bring cases to this place lightly. He has a great deal of experience in business. He and the constituents he has talked about deserve answers and actions, and others in his constituency and across the country deserve to be protected.

The issue is not static; the Government and the FCA are committed to ensuring that it remains under constant review. I will urge the FCA to step up its efforts, particularly in respect of phoenixing, which is a wider problem and a challenge for all of us who believe in a free economy and who want to see its reputation protected. Like all Members of this House, I want to see consumers and members of the public protected, and the reputations of those who choose to pursue careers as financial advisers protected, not tarnished by the actions of the few.

Question put and agreed to.

Patient Transport Volunteer Drivers

Robert Jenrick Excerpts

Monday 23rd April 2018 Commons Chamber

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

I thank the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) for raising an important issue about which I know that he feels strongly—as do others, which is evidenced by the fact that so many Members have stayed in the Chamber to listen and contribute to the debate. Like me, the hon. Gentleman represents a rural area where the distances that constituents must travel to visit doctors, dentists, opticians and hospitals are considerable; in his case, they are very large indeed, perhaps larger than those in any other constituency. I know that he raised this issue during his time at Holyrood —I have seen the questions that he asked and the answers that he received—and I am glad that he has had the opportunity to raise it again in the House of Commons.

The Government greatly value the significant contribution of members of the public who, as volunteers, support others up and down the country. We recognise that those who provide transport, particularly in rural areas, enable vulnerable people, such as the elderly and those without cars, to have the access to appointments or treatment that would otherwise be very challenging, very expensive, or both. As was pointed out by my hon. Friend the Member for Moray (Douglas Ross), it is not simply a question of practicality; it is also a question of the care, the kindness and the company that the volunteers give to others. I have seen that myself when I have volunteered once or twice with my own local voluntary transport scheme in Nottinghamshire.

I pay tribute on behalf of the Government to both the individuals and the voluntary transport schemes. The volunteers who staff many of these schemes make them possible. In my constituency, we benefit from a superb scheme run by Lucy Fountain in Newark, who I have got to know and respect enormously. I believe that, as the hon. Member for Caithness, Sutherland and Easter Ross says, the Government do and must play a role in ensuring that the schemes continue, that volunteers are respected for the time and commitment they put in, and that they are not at any financial disadvantage.

As a Treasury, we need to consider carefully the barriers standing in the way of people doing this work—I believe that we have done that, but I hope we will continue to do so. Tonight, I am very happy to outline where we stand and the work we have done in recent years, but I also accept the suggestion of a meeting to take these matters forward.

It is right that the tax system should allow volunteers to be reimbursed for their reasonable expenses and it must be the principle that wherever possible volunteers are not left out of pocket. Organisations are free to reimburse volunteers at whatever rate they choose but, to make it easier for volunteer drivers and to create simplicity in how one is reimbursed for the miles driven, the Government allow organisations to make approved mileage allowance payments, or AMAPs. Payments within the AMAPs scheme do not incur a liability to tax, as the hon. Member for Caithness, Sutherland and Easter Ross explained.

The scheme covers reasonable costs associated with using a private car for business miles or voluntary work and the approved rates, as we have heard, are set at 45p per mile for the first 10,000 miles and 25p thereafter. The reason for the higher rate for the first 10,000 miles has always been to reflect the fixed and variable costs associated with operating a car. No matter how small the number of miles driven, motorists will of course always be liable to pay for insurance, servicing the vehicle and purchasing a new one in due course. In general, that means that when driving a shorter distance the overall cost per mile is higher than when those fixed costs are spread over a greater number of miles. Drivers carrying passengers can also claim an additional 5p per mile per passenger. For volunteer drivers, of course, this is particularly relevant, but it is also designed to incentivise people to take part in drive to work schemes and so on. If a driver is travelling with one passenger, 50p per mile could be paid tax-free for the first 10,000 miles. It should be stressed that 50p is only the maximum outlined by the Government. Many voluntary transport schemes choose, at their discretion, to offer a lower sum. My own in Nottinghamshire offers 42p per mile, so there are questions of variations across the country that are outside the control of the Government.

Volunteers are also afforded one further preferential treatment. Unlike for employees, the reimbursement of a volunteer’s travel expenses covers them from home to the place of voluntary work. When one is travelling from one’s home to pick up a patient in their home, all of that journey is reimbursed. This can be considerable. However hard voluntary transport schemes like my own try to match the patient with the volunteer, the distances in a constituency such as the hon. Gentleman’s can be very large, so that preferential treatment is important.

Seen in the whole, we think that the current rates represent a fair allowance for the vast majority, ensuring that volunteer drivers are not left out of pocket. The system is designed to be simple and clear, as volunteers are required only to record their annual mileage rather than to keep any other motoring records or expenses. As the hon. Gentleman said, such a requirement would be too onerous for volunteers. It has to be said that the vast majority of volunteers do not exceed 10,000 miles of volunteer driving, but I appreciate that regional variations exist.

To take an example from England for context, a QualityWatch report found that only 3% of emergency admissions travelled more than 30 km to a hospital, with an average distance of just under 9 km. Preparing for this debate, I asked my own voluntary transport scheme. It covers a rural area—far less rural than the hon. Gentleman’s constituency, but an area where hospitals are 20 to 30 miles away from the principal town. I appreciate that that is only a fraction of the distances he described. The average mileage for a volunteer driver in that rural area was 4,000 miles a year, and the busiest driver last year completed 9,000 miles. I do not want to dismiss those individuals who drive more than 10,000 miles. I am sure there are some, and the hon. Gentleman and other hon. Members from the highlands of Scotland have mentioned some of them—

--- Later in debate ---

Motion made, and Question proposed, That this House do now adjourn.—(Mike Freer.)

[Robert Jenrick]

As I was saying, I am sure that the hon. Gentleman is correct and that there are individuals who travel more than 10,000 miles a year. We have to recognise that, by definition, these are the most active and the most public-spirited members of the public. They are giving up enormous amounts of time; they are almost professional volunteers, given the amount of time they are willing to give up. Their generosity should be provided for and their costs reimbursed wherever possible.

[Douglas Ross]

We are focusing in this debate on volunteer drivers, but will the Minister also take this opportunity to acknowledge that there are others in our communities who help? For example, Keith Cancer Link, which was established 35 years ago in Moray, raises money to pay for taxis to take people from Keith to Aberdeen and Elgin for their treatments. It is right that we highlight what the drivers do, but we should also highlight what others in our constituencies do to help.

[Robert Jenrick]

I am happy to agree with my hon. Friend. There is a range of schemes across the country, particularly in the rural areas that most of the hon. Members here tonight represent. They include volunteer driver schemes and community bus schemes, as well as schemes run by the whole range of charities supporting hospitals and healthcare across the country.

Returning to the question of those travelling more than 10,000 miles a year, I am pleased to report to the hon. Member for Caithness, Sutherland and Easter Ross that there is provision for them, but it is slightly different from what he has outlined this evening. HMRC allows individuals to claim their actual costs if they travel more than 10,000 miles—or indeed any mileage—at the discretion of the individual or the community transport scheme. Those who travel particularly long distances and feel that the rates do not cover their costs should ask their community transport scheme for the actual costs of their motoring. The individual will need to keep records to show that no taxable profit has been made, but there is no need for them to make any declaration to HMRC or to include the information on a tax return unless they make a profit, which presumably they do not.

I would encourage the hon. Gentleman’s constituents to consider asking the organisations they volunteer for to reimburse their actual costs, if they feel that that would more accurately reflect the costs of their motoring. The organisations might wish to do so, at their discretion, for the small number of volunteers who exceed 10,000 miles. I do not doubt that some individuals will fall into that category, and that in some parts of the country, such as his own, there will be a considerable number. There is an opportunity for them to do this with relatively little burden on themselves. It will certainly not involve the level of reporting that he thought would be required. To ensure that all those who use AMAPs understand their entitlement, HMRC last week published new guidance relating specifically to volunteer drivers, which includes the point that I have just made. We hope that it will provide a useful resource, and I will place a copy of it in the Library of the House.

To conclude, I again thank the hon. Gentleman for raising this issue. I should also like to thank the volunteer drivers across the country who play such a valuable role in many of our communities, particularly in the rural parts of the United Kingdom. I have listened closely to his comments, and to those made by others who have spoken in the debate tonight, and I would be more than happy to continue the conversation in a meeting with him and any other rural Members who would like to join in. As with all taxes, the Treasury keeps the AMAPs system under review, to ensure that it continues to be fit for purpose and to achieve its stated aim. I am happy to do that again, as I am sure the Chancellor will do as we approach the Budget in November.

As I have set out this evening, we believe that the current system is fair and consistent for the majority. For the small number who go the extra mile and who travel more than 10,000 miles, there is that additional system under which they can claim their actual costs with only a relatively low burden to themselves and the organisations they volunteer for. I hope that the guidance published at my request on Friday by HMRC will provide further clarity, and I suggest that the hon. Gentleman looks at it. I am happy to provide it to him. If he has comments or concerns about it, we can discuss them in the conversation that I hope we will have in the coming weeks. I hope this has been helpful, and I look forward to continuing this conversation and to ensuring that volunteer drivers across the country are properly respected and reimbursed for the important contribution that they make.

Question put and agreed to.

Oral Answers to Questions

Robert Jenrick Excerpts

Tuesday 17th April 2018 Commons Chamber

[Jack Brereton (Stoke-on-Trent South) (Con)]

5. What steps he is taking to invest in the infrastructure of small and medium-sized cities.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

In this Parliament, investment, including in infrastructure, will be at its highest sustained level since the 1970s, and our cities large and small are an important part of that strategy. We recently launched the £1.7 billion Transforming Cities fund to upgrade infrastructure, in addition to £345 million of funding for local road projects in England.

[Jack Brereton]

I thank the Minister for his response and for meeting me recently. Does he agree that cities such as Stoke-on-Trent are perfectly placed to benefit from investment through the Transforming Cities fund?

[Robert Jenrick]

I quite agree: Stoke-on-Trent is exactly the kind of city that we designed the Transforming Cities fund to benefit. From the meeting we had, I know that my hon. Friend sees opportunity in Stoke—in Stoke station, at junction 15 on the M6 and in the proposal for a ceramics park. With the dynamic Conservative leadership in Stoke at the moment, we look forward to receiving that application.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

I do not often get angry in the Chamber, but can I ask the Minister to stop spending his time in Maidenhead and Runnymede and come to the real towns and cities of this country like Huddersfield, where we can see the deterioration of infrastructure everywhere we look? That is because this Government have cut and cut local authority spending—that is the truth. He should get out more and see what this country is really like.

[Robert Jenrick]

The independent Infrastructure and Projects Authority has said that by the end of this Parliament, central Government funding for infrastructure will be greater in the north than in the south. The hon. Gentleman is speaking to the wrong Minister if he thinks that we do not care about the north. This son of a Liverpudlian and a Mancunian, born in Wolverhampton and representing North Nottinghamshire, needs no lessons from him.

[Mr Speaker]

I accept that Huddersfield is a most admirable place. My grandma lived there all her life, as I have told the hon. Member for Huddersfield (Mr Sheerman) before. Splendid place, splendid woman.

--- Later in debate ---

[Richard Drax (South Dorset) (Con)]

Cities are important, but so too are seaside towns such as Weymouth. We desperately need investment in those places, or they will just go to rack and ruin. Having met a Minister from the Ministry of Housing, Communities and Local Government recently, I understand that Government are looking at initiatives for towns and seaside towns. Can the Minister confirm that that is true? If so, what money will be available?

[Robert Jenrick]

My hon. Friend raises an important point. The Government’s strategy is not limited to cities. The Transforming Cities programme is for our smaller and larger cities, but we are also interested in coastal towns and communities. I recently met a number of parliamentary colleagues representing those communities, and I would be happy to meet my hon. Friend to talk about how the Treasury will be working with CLG.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Does the Minister accept that as we leave the EU, many people across the United Kingdom will want to see economic development beyond the south-east of England, and that enterprise zones such as the one in my constituency could be used to maximise inward investment and produce productivity and prosperity for everyone across the UK?

[Robert Jenrick]

I entirely agree. That is why we are working with Mayors such as the Mayor of Tees Valley, who is producing a development corporation and has new powers of planning reform and so on to drive forward the economy of that part of the north-east. We are very happy to talk to other hon. Members who would like to take forward similar proposals.

[Mr Peter Bone (Wellingborough) (Con)]

6. How much his Department has spent on preparing for the possibility of no deal with the EU when the UK leaves the EU.

--- Later in debate ---

[John Howell (Henley) (Con)]

12. What discussions he has had with Cabinet colleagues on ensuring that people have high-tech skills to increase productivity.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

The Government are working across Departments to help to prepare businesses and working people to seize the opportunities that technology will bring. At the Budget we announced, among other measures, a trebling of fully qualified computer science teachers, the creation of a T-level in digital skills and the retraining partnership that my right hon. Friend the Chancellor has spoken about.

[John Howell]

What steps are the Government taking to make sure that these skills are widely available?

[Robert Jenrick]

My hon. Friend makes an important point. We are trying to roll out our changes in apprenticeships, T-levels and other matters as quickly as possible across the country. We commissioned the Juergen Maier “Made Smarter” review to increase the adoption of digital technology in businesses—particularly small and medium-sized enterprises—and we will follow up on that in the months to come.

[Kerry McCarthy (Bristol East) (Lab)]

The circular economy has the potential to create hundreds of thousands of jobs in this country. What discussions has the Minister had with the Secretary of State for Environment, Food and Rural Affairs about how we can maximise these opportunities?

[Robert Jenrick]

The hon. Lady raises an important point. We are working closely with the Department for Environment, Food and Rural Affairs, and my right hon. Friend the Chancellor announced a call for evidence on single-use plastics in the spring statement. We intend to make proposals in due course.

[John Mann (Bassetlaw) (Lab)]

13. What comparative assessment he has made of the size of the national debt (a) today and (b) 12 months ago.

Decommissioning Relief Deeds

Robert Jenrick Excerpts

Tuesday 27th March 2018 Written Statements

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

At Budget 2013, the Government announced it would begin signing decommissioning relief deeds. These deeds represent a new contractual approach to provide oil and gas companies with certainty on the level of tax relief they will receive on future decommissioning costs.

Since October 2013, the Government have entered into 86 decommissioning relief deeds.

Oil and Gas UK estimates that these deeds have so far unlocked more than £5.7 billion of capital, which can now be invested elsewhere. In compiling this estimate, Oil and Gas UK discovered a clerical error in their previous estimate. As a correction, the figure reported for 2015-16 should have read £5.5 billion. Independent checks have been made to ensure the error has not been repeated.

The Government committed to report to Parliament every year on progress with the deeds. The report for financial year 2016-17 is provided below.

Number of decommissioning relief agreements entered into: the Government entered into 11 decommissioning relief agreements in 2016-17.

Total number of decommissioning relief agreements in force at the end of that year: 83 decommissioning relief agreements were in force at the end of the year.

Number of payments made under any decommissioning relief agreements during that year, and the amount of each payment: two payments were made under a decommissioning relief agreement in 2016-17, totalling £5.4 million. These were made in relation to the provision recognised by HM Treasury in 2015, as a result of a company defaulting on their decommissioning obligations.

Total number of payments that have been made under any decommissioning relief agreements as at the end of that year, and the total amount of those payments: two payments have been made under any decommissioning relief agreement as at the end of the 2016-17 financial year, totalling £5.4 million.

Estimate of the maximum amount liable to be paid under any decommissioning relief agreements: the Government have not made any changes to the tax regime that would generate a liability to be paid under any decommissioning relief agreements. HM Treasury’s 2015-16 accounts recognise a provision of an aggregate £327 million in respect of decommissioning expenditure incurred as a result of a company defaulting on their decommissioning obligations. The majority of this is expected to be realised over the next five years.

[HCWS590]

The Economy

Robert Jenrick Excerpts

Thursday 22nd March 2018 Commons Chamber

[Vicky Ford (Chelmsford) (Con)]

It is a great honour to follow the hon. Member for Shannon, which is a beautiful part of our United Kingdom, and it is great to hear so much positive news. [Hon. Members: “Strangford!”] I mean the hon. Member for Strangford (Jim Shannon). I know the area well.

I have frequently said that the economy must come first, because only with a strong economy can we maintain our public purse and fund our other ambitions for healthcare, welfare, education and security. That is why it is such excellent news that the deficit is under control, the debt is falling, employment is at record highs, unemployment is at record lows, inflation is coming back down, real wages are set to rise, and our economic performance is outstanding. Manufacturing output is up for, I think, the ninth month in a row. It is almost impossible to open a newspaper today without seeing yet another good-news story about our economic statistics. [Interruption.] I hear Labour Members laughing, but let us not forget the state in which they left the economy.

A strong economy, however, must be a strong economy for all, and that is why I am also pleased that wealth inequalities are shrinking and the gap between the richer and the poorer is becoming less enormous.

As I said in my maiden speech, innovation drives growth, and science and research are at the heart of that innovation. I am a member of the Science and Technology Committee. We are in the middle of a digital revolution, the world’s fourth industrial revolution. We are world leaders in science and technology, and it is key to our success that we maintain that status. I am therefore delighted that science and research are at the heart of the Government’s industrial strategy, and that the commitment to increasing investment in research and development to a massive 2.4% of GDP is coupled with the largest investment in research and innovation by any Government in 40 years.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

The largest ever.

[Vicky Ford]

Is it now the largest ever? I thank my hon. Friend.

Those are phenomenal targets, ambitions and spending, but they are coupled with specific, targeted actions to unlock some of the most innovative sectors. It has been great to be in the House when we have been discussing how to unlock investment in the next generation’s batteries so that we can get the automated vehicles sector up and running and leading the world. My constituency is the home of radio. The first ever radar messages were sent out to the world from Chelmsford. The Space Industry Bill will mean that this country can not only make satellites and be part of their manufacture, but actually launch them.

I also spoke about productivity in my maiden speech, because it is key to our success. I said then that the people of Chelmsford spent too much time sitting in traffic jams and waiting for delayed trains, that it was a waste of their personal time, and that it hit the nation’s productivity. I was so pleased yesterday when the Government identified 44 parts of the country that would receive a further £4.4 billion of investment in our roads, railways and infrastructure. My part of Essex is a key element of that. The infrastructure in which the Government are investing will help not just to deliver new housing for the future, but to unlock our productivity and enable people to get on with their lives.

I want to say something about taxation, because it is part of the big picture of how we get the economy working. Under the last Labour Government, I was working as a volunteer chairing the local free school. I recall one of my best members of staff coming to me and saying that she had to hand in her notice because she simply could not afford to work any more: she would be better off claiming benefits. Ensuring that the tax system works for those who are on the lowest incomes, and ensuring that work pays, has been key to the Government’s success. That is why I am so proud that 4 million people have been taken out of tax altogether, and 24 million, I believe—the figure may have increased—have benefited from tax cuts. The tax gap has in fact narrowed, and those on the lowest incomes are now paying the lowest tax, with those on the highest paying more.

--- Later in debate ---

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

I thank all right hon. and hon. Members for their contributions today. We have heard a succession of Opposition Members espousing doom and gloom. There was one honourable exception—the hon. Member for Strangford (Jim Shannon). In that cocktail was mixed a dose of collective amnesia about the legacy of the last Labour Government. The shadow Minister, the hon. Member for Oxford East (Anneliese Dodds), could not even acknowledge the incredible, unprecedented economic success of her own constituency, where, thanks to this Government, we have seen record jobs levels and record levels of low unemployment. In the spring statement, we heard about further progress with the great Oxford to Cambridge and Milton Keynes corridor, one of the greatest growth and prosperity generators this country has ever seen. The shadow Chief Secretary, the hon. Member for Bootle (Peter Dowd), a proud Liverpudlian, could not bring himself to acknowledge the investment we are seeing in Liverpool. Well, this son of a Liverpudlian will tell him that there is unprecedented foreign and domestic investment being made into Liverpool’s ports. We even heard an unprovoked attack on Tigger by the shadow Chief Secretary—this time, of course, I do not mean on the Chancellor of the Exchequer.

What a difference we heard in the contributions from Conservative Members. My right hon. Friend the Member for Witham (Priti Patel) set out a bold plan—a vision for economic renewal as we leave the EU. My right hon. Friend the Member for Wokingham (John Redwood) invoked the legacy of Margaret Thatcher, going further than she ever went, exhorting us to take advantage of the opportunities presented by Brexit. We believe that Brexit will not determine the future of this country—rather, it is about the choices we make next. We are going to ensure that those choices are the right ones and that they are pro-innovation and pro-growth.

What infectious enthusiasm my hon. Friend the Member for Clacton (Giles Watling) shows for his constituency. What a difference a Conservative representative makes. I knew I was making a good investment in Clacton when I went there to support him in 2014. I am afraid it took him a little longer to come to this place, but we in the Conservative party believe in making long-term rather than short-term investment. He could not be a member of the class of 2014, but he did get in a few years later.

We heard from my hon. Friend the Member for Angus (Kirstene Hair) a devastating critique of the SNP’s failing economic record and about the fact that the greatest, most enduring and important single market that this country has ever known is the single market of the United Kingdom, which we will always support.

Six themes emerged in the debate. First, of fundamental importance to us all—our central mission since the Conservatives arrived at the Treasury in 2010 and found that note on the desk saying that there was no money left—has been to restore the public finances so that we can live within our means and provide the confidence and credibility that every economy requires. We need that confidence to create the jobs, which have been created, to secure the inward investment, which is at record levels, and to keep interest rates low so that people can stay in their homes and continue to have economic security. We will continue to work towards that, today and in future.

As my right hon. Friend the Chancellor said at the spring statement, debt is now forecast to be nearly 1% lower than at the autumn Budget, and we will see the first sustained fall in debt for 17 years. That is a turning point in the nation’s recovery from the financial crisis that was left to us in 2010.

We have heard today about manufacturing, which is enjoying its longest period of sustained growth for a generation. UK foreign direct investment is leading Europe—it is third in the world behind only the United States and China—and is continuing to grow, even after the Brexit referendum. What do we hear from Labour Members on that? That they have learned nothing. We heard a series of bad puns and jokes with which the shadow Chief Secretary, the hon. Member for Bootle, managed to outdo his usual record. The Labour party would destroy the credibility that we have built up over the past few years. It does not know how to manage an economy. The last time the shadow Chancellor, the right hon. Member for Hayes and Harlington (John McDonnell), managed anything was before I was even born—and then he was sacked by Ken Livingstone for being too left wing.

Secondly, we have heard how, as a result of our hard-won economic credibility, we have secured the prize of record high levels of employment and record low levels of unemployment. Nothing matters more to our constituents than the dignity and security of a job. More young people, women and disabled people are enjoying employment. Some 3 million more jobs have been created and there are more jobs in every region and nation of the United Kingdom.

[Anneliese Dodds]

Does the Minister acknowledge that under his Government, record levels of in-work poverty are affecting children?

[Robert Jenrick]

I am surprised that the hon. Lady cannot bring herself to welcome what I have just described, even in her own constituency, where jobs and employment are booming—

[Anneliese Dodds]

Answer the question.

[Robert Jenrick]

I will come to the hon. Lady’s point.

It is not just important to us to create a country of working people; it is our mission to create a nation of well-paid people in secure and fulfilling careers. We are doing that by tackling the root causes of our low national productivity as no Government have done before. We are seeing some positive signs. Inflation is falling—it fell from 3% to 2.7% in February—and the OBR has said that it will keep falling, leading to real wage growth.

[Alison Thewliss]

Two thirds of children in poverty are in working families. Does the Minister regard that as a positive sign?

[Robert Jenrick]

I am proud of the fact that more people are in work. When I go back to my constituency, Newark in the north midlands, where unemployment is currently at 1%, I am proud of our record and that more families are enjoying the key ingredients of economic security: a job and a reliable wage.

[John Redwood]

Did the Minister notice that the hon. Members for Oxford East (Anneliese Dodds) and for Glasgow Central (Alison Thewliss) on the Opposition Front Benches failed to remind the House that many people on lower incomes have been taken out of income tax altogether, that the living wage has been raised so we are dealing with this issue of low pay, and that inequality, as normally measured, has come down? Why do they never mention those things?

[Robert Jenrick]

My right hon. Friend makes a series of important points. Let us look at them. By increasing employment and reducing unemployment, we have sought not just to increase employment, but to tackle those people who are on the lowest wages and secure a better tax environment for them. The living wage will rise to £7.83 next month, which is £2,000 more for the average person in full-time employment.

[David Linden]

I am most grateful to the Minister for giving way. I hope that he will clarify to the House that that rise in the national living wage—and indeed the national living wage itself—does not apply to those under 25. Will he clarify that for Hansard?

[Robert Jenrick]

Our priority is to ensure that younger people in the workplace gain the skills that they need in good and secure employment and then, in time, they will benefit from the living wage, which did not exist before this Government created it. We have increased the personal allowance; we have taken 4 million British people out of tax altogether; and we have reduced the tax of 31 million of our fellow citizens.

On the subject of fair taxation, which was raised, the top 1% are paying 27% of the income tax in this country. On the subject of enforcing tax and reducing avoidance and evasion, the tax gap in this country is at its smallest ever level. It is one of the smallest of any developed country in the world and it is certainly smaller than the previous Labour Government left it. The bottom 20% of earners—this is an important statistic—have seen real wages increase by 7% since 2015. We have high levels of employment and we are working hard to support the lowest paid in society.

Thirdly, we have addressed productivity by investing in skills to ensure that our workers and fellow citizens have the skills that they need for the jobs of the future. We have seen that in many of the measures that we have discussed today: in increasing vocational and technical education; in our apprenticeships; in the advent of T-levels, one of the greatest innovations in our secondary education system since the creation of the A-level; in increasing numeracy and digital skills in schools with maths teachers, with IT teachers and with coding at primary level; and in the creation of the national retraining partnership—a partnership between the Government, the private sector, the CBI and the TUC, which was launched last month by the Chancellor—to ensure that workers have the skills that they require as the world of work changes in the years to come.

For small businesses and family businesses, we have increased management training and skills training, so that the greatest innovation in our economy is diffused throughout the regions and to the smallest businesses, we are backing people such as Sir Charlie Mayfield with his Be the Business movement, and we are undertaking a review of the long tail of British businesses, which was announced by the Chancellor in the spring statement. All of that will help to ensure that productivity increases in all parts of the United Kingdom and in all parts of the economy. What are the early results of those efforts? We have 2 million more children in good or outstanding schools than in 2010.

Fourthly, addressing productivity also requires us to invest in our infrastructure. The level of infrastructure investment—both public and private—by the end of this Parliament will be greater than at any time since the 1970s.

[Peter Dowd]

I thank the hon. Gentleman for mentioning my constituency earlier. I would like to mention his if he does not mind. Roger Blaney, the leader of Newark and Sherwood District Council, was speaking in response to a report that ranked the district near the foot of the social mobility league table. He put Newark and Sherwood

“323rd out of 324 local authority areas based on factors such as education outcomes, employability and housing prospects.”

Does the Minister still think that he is doing a good job for his own area?

[Robert Jenrick]

I most certainly do. That report revealed decades of underinvestment and neglect by Labour councils in Nottinghamshire, which let down their old former coalfield communities—the communities that they have taken for granted for too long. We are changing that, and the policies of this Government have seen, in my constituency, 40% more young people in good or outstanding schools, and a new free school in Newark, which I have created and of which I am proud to be a governor. Those are the practical changes that will transform the lives of local people. In the midlands and the north, we do not take them for granted; we get things done for them.

We are making long-term investments in infrastructure —road, rail, broadband and mobile—in all parts of the United Kingdom. The Infrastructure and Projects Authority, which measures our spending in those areas, said that there will be more central Government investment in the north of England over the course of this Parliament than in London or the south-east. We have created a pipeline of £600 billion of investment in construction and other infrastructure. The challenge now is less about money and more about ensuring that we have the construction workers and skills that we need to deliver on those projects. We are backing the midlands engine, the northern powerhouse and the Oxford-Milton Keynes-Cambridge opportunity. We are creating new deals in Sheffield, hopefully in the borderlands between England and Scotland, in north Wales and in other parts of the United Kingdom, where we believe in allowing local people to have greater say over their own lives. The Mayors whose positions we created—including Andy Street and, in the Tees Valley, Ben Houchen—are already making a huge impact and putting their own areas on the map.

Fifthly, we are embracing new technology, not turning away from it. We want to ensure that the United Kingdom leads the world in the technological revolution, but we also want to ensure that that works for everyone as the world of work changes profoundly. The pace of change has never been faster, but it will never be so slow again. The tech entrepreneurs and investors I meet are not preoccupied by Brexit. Their eyes are fixed on the horizon and so are ours. This is true of companies in FinTech, life sciences, artificial intelligence, autonomous vehicles and electric cars, and green growth, all of which we are taking seriously in our industrial strategy and in other policies. At least 15 UK tech companies could float today for in excess of $1 billion—companies that did not exist five or 10 years ago, including Citymapper, Deliveroo and Farfetch. This country is on the cusp of something great and we do not want the Labour party to lose that.

[Peter Dowd]

Does the Minister agree with Councillor Blaney that his constituency is the “Cinderella of regional funding”? What is he doing about that?

[Robert Jenrick]

Well, we have been investing in all parts of the United Kingdom, including the east midlands. We created the midlands engine, which I just mentioned and which is designed to unleash the economic potential of the midlands. In the west midlands, we have seen the huge potential that Andy Street has now given to a city that has been run by the Labour party for too long.

What are we doing to invest in new technology? As my hon. Friend the Member for Chelmsford (Vicky Ford) described, we are investing more in research and development than has been invested since the 1970s, when the statistics were first recorded, so we are probably investing more than has ever been invested in modern times. We have made the R&D tax credits more generous. We are investing in the enterprise investment scheme and the entrepreneurs’ relief that are so important to crowd in investment to the United Kingdom from all over the world. The Chancellor is today at the FinTech summit that the Treasury is hosting, with 600 investors from all over the world coming to the United Kingdom to see some of our most exciting business that are creating 60,000 new jobs in the FinTech sector alone.

What have we done to create a business environment? We have lowered capital gains tax and corporation tax, and committed to lowering it still further. Labour would reverse those changes. Our reductions in corporation tax have actually resulted in more tax revenue for the Treasury and more money for public services. That is prosperity over ideology.

[Anneliese Dodds]

I am sure that the Minister wants to be accurate on these matters. Therefore, perhaps he will slightly correct his suggestion that the increased revenue was due to the reduction in corporation tax. So many commentators—including, I believe, the IFS—have said that the increase in revenue is due to, for example, banks returning to profitability, and it should not be connected with the reduction in rate.

[Robert Jenrick]

In the Treasury we try to deal in facts, rather than in comments, and the effect of reducing corporation tax has been an increase in revenue.

The Chief Secretary and other Conservative Members have said that we must make the case once again for free markets—something we thought we might never have to do again. However, as Margaret Thatcher and, I think, Tony Benn—an unusual pairing—used to say, “There are no final victories in politics, and if you want to continue to win important arguments, you have to keep making them and restating them over and over again.” The case for free markets is threatened as never before by the hard-left, heirloom policies and personalities of Labour Front Benchers. As someone who used to work in the auction business, I can spot an antique a mile away.

The central battle on this conflicting vision of our society is being fought again. That matters for two reasons. First, just as our parents and grandparents paid the price for this ideology last time it was employed in this country, we do not want our children and grandchildren to pay the price for its resurrection today. Last time, it left us a weak country saddled with debt and high taxes, unable and unwilling to embrace new technology or to invest in public services—and working people paid the price.

Secondly, to paraphrase Robert Kennedy, living in a democracy is not merely about the absence of tyranny but the presence of freedom. A free market matters to us and our constituents not just because we have learned that it is the best way to run an economy but because it underpins all our other freedoms. That is why we will continue to defend it as we build an economy and a country that works for everyone.

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

Let me just say to the Front Benchers that if they agree 10 minutes, they should stick to that, because I do not want it to break down in future with people taking advantage by allowing the Opposition to have 10 minutes and then you carry on for 17 minutes. I think we have to be fair to both sides. If we make agreements, let us please stick to them. If it is 15 minutes, I do not mind, but at least let us be honest with each other when we make those decisions.

Question put and agreed to.

Resolved,

That this House has considered the economy.

CERN Pensions: UK Tax Treatment

Robert Jenrick Excerpts

Thursday 15th March 2018 Commons Chamber

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

I can always count on my hon. Friend the Member for Spelthorne (Kwasi Kwarteng) to put me in my place.

I thank my hon. Friend the Member for Poole (Sir Robert Syms) for highlighting this issue. I want to say how proud we are of the pioneering work carried out at CERN and of the work of all those who have retired and returned to the UK. Poole is a beautiful place to retire to, by the seaside.

It seems appropriate to be talking, if only tangentially, about CERN’s work in the week in which we lost that great physicist, Stephen Hawking. One of the few scientific bets that he lost in his career was that the Higgs boson would never be found, so even somebody of his genius can get things wrong every now and again.

The Government are committed to a fair and consistent tax system. This is especially important in pensions, as the Government promote saving through tax incentives and allowances. We want those incentives to work and to be fairly distributed. My hon. Friend outlined the history of the issue before us today. As he said, the Government reviewed this regime at autumn statement 2016, and announced that the UK tax treatment of foreign pensions would be changed to be closely aligned with that of UK pensions. Following that, the Finance Act 2017 legislated so that, with effect from 6 April 2017, 100% of income from foreign pensions has been liable to UK tax; it was previously 90%. This aligns the tax treatment of UK pensioners with the treatment of those who earn their pension overseas, ensuring a fair system. At the outset when contributions are made towards a pension—whether that pension is UK or foreign—they are usually free of any tax paid in the UK. With this change, the tax treatment of contributions and payments are now consistent.

My hon. Friend raised a series of points on which I hope to provide some clarity. He was kind enough to speak to me before this debate and mention a number of international organisations where British citizens work and make a valuable contribution, including the OECD, NATO, the United Nations and others. My hon. Friend noted that pensioners from these international organisations or organisations of a similar type are reimbursed, for example, 50% of their income tax payments. It important to say that this does not arise as a result of any country’s tax rules. It is not because of a particular deal made by the United Kingdom with any of these organisations, but because of the specific provisions within the pension scheme of that international organisation.

It would be CERN’s decision whether it wanted to make a similar provision in its pension scheme either for the future, or to reopen and reassess their past practice for CERN pensioners who had retired, were drawing on their pensions and are now my hon. Friend’s constituents. Any payments received by UK residents are subject to UK tax, including reimbursement. That is the case for all international organisations. I will return to the EU, which, as is so often the case, has special treatment.

The UK only supports special tax treatment for international organisations when the employees have worked for the organisation in the UK, which I hope my hon. Friend will understand is a somewhat different situation for tax purposes. Aside from the EU, the UK has no bilateral agreements in relation to the tax treatment of international organisations with other countries. We do with the EU, which is our only exception, and that is common practice across the Union.

My hon. Friend mentioned international comparisons. We understand that other major economies are typically taking a similar approach to the UK with respect to taxing pensions. Countries such as France, Germany and Switzerland all tax occupational pensions such as CERN’s and the foreign income of their residents. There may be other examples such as those that he raised and spoke to me about earlier. Of course, I am happy to look into that. It may be a topic that we could discuss were we to meet. Certainly, our major international competitors and the countries from which, one presumes, a majority of CERN’s employees are drawn take an approach similar to the one that we have taken.

In our correspondence prior to this debate, my hon. Friend suggested that the Government could introduce a 25% tax relief on CERN pensions to mirror the tax-free lump sum. I understand that that would be an attractive proposition for CERN pensioners. However, the tax-free lump sum is not an allowance. If a qualifying lump sum is not paid, this relief is not available. These lump sums can be paid free of UK tax whether built up in a foreign or a UK pension if the qualifying conditions are met. Allowing for 25% tax relief outside of these circumstances would, we believe—I hope that my hon. Friend will understand this—undermine these qualifying conditions, which apply to all pensioners.

I hope that my comments have at least explained the rationale behind the Government’s policy. I appreciate the concerns that my hon. Friend raises. I assure him that the Government have not sought to target individuals unfairly or to impact on the work undertaken by those at CERN or, indeed, by any other of our citizens who choose to live and work abroad. As he says, this is an incredibly important and increasingly prevalent aspect of the modern labour force, with increasing globalisation and a global market for the most talented individuals, certainly in the scientific and research world.

The changes we made in 2017 stopped people from transferring their pensions abroad to avoid UK tax. That was a consideration, but it was not the primary motivation. Our primary motive was to do this as part of a wider move towards consistency and fairness in pensions and taxation. The Government recognise that those in receipt of foreign pensions do face additional costs in accessing their pension. That was the original motivation behind the 90% rate that was introduced, I believe, in the 1970s. However, we have taken the view that it is not for Government to compensate these individuals for their choice to work outside the UK or to enable them to use this as a UK tax break. It is the Government’s role to encourage a fair and sustainable tax regime in the UK. The changes that we made have equalised the system, from which only overseas-based employees were previously able to benefit.

I again thank my hon. Friend for raising this issue. I also thank his constituents and others who may be paying attention to this debate for the ground-breaking work that they have done at CERN, which the Government and, I think, all Members are rightly proud of. We are proud that UK citizens have played a part in that and that they have chosen to return home to the UK for their well-earned retirement. The Government are delighted to welcome home British expatriates who have worked abroad to spend their retirement in places such as Poole. We recognise that that plays an increasingly important part in our economy.

I hope that my hon. Friend’s constituents will appreciate the Government’s rationale for making these changes over the past few years. We took a decision to treat all UK pensions consistently. Such judgments are difficult ones, and do involve winners and losers, but we appreciate the views of his constituents, and I would be happy to meet him and them in person, if it would help to further the conversation, and to listen to their specific concerns and see what, if anything, we can do.

[Sir Robert Syms]

I thank the Minister for that offer. This is a complex area, and I think that my constituents would be grateful for at least a brief meeting just to go through some of their concerns, outside the public spotlight.

[Robert Jenrick]

I thank my hon. Friend. This is a complicated area. I hope that my comments today have provided some answers to him and his constituents, but of course I would be happy to meet him and to bring along Treasury officials, who might be able to shed further light on this matter and answer their questions in greater detail. They are understandable and important questions, because they concern the financial security his constituents can enjoy in later life.

I hope that this evening’s debate has provided some answers and that the meeting that follows will provide more. We believe that the previous approach was fair. It was driven by a desire for consistency and fairness for all British pensioners, and we hope that right hon. and hon. Members can support that as a principle. Once again, I thank my hon. Friend for raising this important matter.

Question put and agreed to.

Draft Financial Services And Markets Act 2000 (Carrying On Regulated Activities By Way Of Business) (Amendment) Order 2018

Robert Jenrick Excerpts

Wednesday 7th March 2018 General Committees

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

I beg to move,

That the Committee has considered the draft Financial Services and Markets Act 2000 (Carrying on Regulated Activities by Way of Business) (Amendment) Order 2018.

It is a real pleasure to serve under your chairmanship, Sir David. The draft order, which was drafted in consultation with the Financial Conduct Authority and the Prudential Regulation Authority, will set out the circumstances in which a business needs a deposit-taking licence to borrow via a peer-to-peer lending platform. Peer-to-peer lending platforms allow any investor, including a consumer, to lend money directly to businesses or to other consumers, but the draft order applies only to business borrowers.

Peer-to-peer lending is still a relatively new financial service: the world’s first peer-to-peer loan originated here in the UK in 2005. At the industry’s request, the Government legislated in 2014 to bring peer-to-peer lending platforms within the scope of financial services regulation. Running a peer-to-peer lending platform is a discrete activity—it is not another type of asset management service, for example—so we introduced bespoke legislation to regulate it as such.

We sought to balance consumer protection, which is extremely important to us, with allowing the sector to grow and evolve, to ensure that we lead the world in peer-to-peer lending and in creating a bespoke regime for it. This approach, which is typical of our commitment to ensuring that regulatory frameworks remain fit for purpose in the face of rapid technological change, has led us to be rated as the best place in the world to establish a FinTech business. The FCA is conducting a full and planned review of peer-to-peer lending and the industry more generally, to deepen our understanding and inform future regulation, should further steps be required.

Let me briefly set out what the draft order seeks to achieve. For a professional lender, there is a degree of responsibility involved in taking deposits from members of the public, who—perfectly understandably—may not have the same degree of financial literacy. A business that wishes to accept deposits from the public to wholly or materially finance its activities must be authorised and regulated by the FCA and the PRA. Such activity is considered as accepting deposits by way of a business, and regulatory permission for it is known colloquially as a banking licence. Requiring businesses to obtain such a licence ensures that depositors are protected from financial harm or loss.

The existing legislation, which was inherited by the industry, could be interpreted as implying that a business that borrows money via a peer-to-peer lending platform is, technically, accepting deposits from the public in the same way that a bank might. Such a business could be deemed to be accepting deposits by way of business and therefore to require a banking licence. In reality, such borrowers do not accept deposits as their core business; for the vast majority of commercial borrowers, using peer-to-peer lending is simply a new way of finding capital to finance working capital requirements, to fund investment in research and development, new equipment or premises, and to drive growth forward.

The current legislation has left some peer-to-peer lending platforms unsure whether a business borrowing via their platform requires a banking licence. The practicalities of obtaining and maintaining a banking licence just to borrow via a peer-to-peer platform are burdensome both for the borrower and for the platform. The requirement for a banking licence increases costs and ultimately risks making peer-to-peer lending unviable for most businesses as a source of finance.

The draft order will provide the clarity for peer-to-peer lending platforms and business borrowers that the industry and businesses require. We believe that it will be welcomed by all sides. It will make it clear that a peer-to-peer borrower that uses deposits solely to finance its other business activity should not need a banking licence. However, it will ensure that regulated financial institutions —those for which accepting deposits is the essence of their business—will still need a banking licence to accept funds from the public, regardless of whether they do so from a peer-to-peer lending platform or another means.

The certainty that the order provides will ensure that legislation that predates the invention of peer-to-peer lending does not place undue burdens on the sector or impede its growth. As such legislation focuses solely on business borrowers, this is a business borrower-facing piece of legislation. It does not affect the existing regulatory protections for consumers, which we agree are extremely important, as consumers increasingly turn to peer-to-peer platforms.

The Government’s approach underlines our commitment to ensure that businesses can access the finance they need to grow and expand and can enhance competition in the financial services industry, while ensuring that we in the UK have a forward-looking regulatory regime adapting to new technology and continuing to lead the world.

--- Later in debate ---

[Robert Jenrick]

I am grateful to the hon. Gentleman, who represents the Opposition, for his positive comments with respect to peer-to-peer lending. We believe it is an important development in financial services, and it is one we want to support, but we must ensure it is appropriately regulated to protect consumers and businesses of all scales, as well as to ensure that the industry has the clarity in regulations and law it deserves so that it can operate with confidence within the law.

That is the essence of the order. It will ensure that the industry can move forward with confidence, knowing that the law is clear and that those who want to use such services—smaller businesses in particular—can have clarity that they are not in breach of the law. It is a question not of deregulation or changing the law but of clarifying it so that everyone benefiting from the peer-to-peer lending industry today and in the future can understand that they are in compliance with the law.

To give a practical example of how the present situation might confuse or concern a business, a manufacturing business seeking to borrow money from a peer-to-peer lender—perhaps to purchase new equipment to help it grow and develop—might be concerned about whether the current law required it to have a banking licence. The industry has come to us proactively and said that it is important that the Government provide the greatest possible clarity for businesses that seek to raise money for perfectly legitimate purposes and are not engaged in financial services—businesses for which taking out money through a peer-to-peer lending platform would be not their sole, or even the majority of their, business function, but purely to service the future growth of their primary activity. We want to clarify the position for that kind of business in particular.

In terms of the future, I point the hon. Gentleman to the FCA’s review. I am sure that it would welcome his comments and his involvement in that review if he or the Opposition had further points to make about the future of peer-to-peer lending.

Question put and agreed to.

Future of ATMs

Robert Jenrick Excerpts

Thursday 1st March 2018 Commons Chamber

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

May I begin by wishing you, Madam Deputy Speaker, and other hon. Members a happy St David’s day? As the subject of today’s debate is cash and its availability, I wish the same to the staff of the Treasury’s Royal Mint in snowy Llantrisant today. I had the pleasure of visiting them last month for the appointment of the Royal Mint’s first ever female deputy master and chief, Anne Jessopp. Anne is the first woman to hold that post since the Mint was founded in 886 AD. It has taken just over 1,000 years, but a woman is now finally in charge at the Mint, and as my hon. Friend the Member for North Dorset (Simon Hoare) said, a woman is the chief cashier at the Bank of England.

One of Anne Jessopp’s first tasks as deputy master of the Mint was to launch the 50p piece that the Mint has created for the 100th anniversary of female suffrage. Unfortunately, although those coins are available online at www.royalmint.com and can be purchased by visiting the Royal Mint, not many of them will enter circulation. That is because there is limited demand for new coinage. Therefore, the Mint, over the course of this year, is unlikely to require new 50ps. Therein lies part of the heart of today’s debate: the use of coinage and notes is in decline, and digitisation is transforming the way we use cash and spend money, as it is every other aspect of our lives.

I am grateful to my hon. Friend for raising this important issue. The relatively few Members who were able to join us today due to the poor weather is no reflection of the importance of this issue to either the Government or Members of Parliament. First and foremost, I want to assure Members that the Government recognise the importance of widespread access to free cash, and we will do everything we can, with the industry, the regulators and LINK, to ensure that access is maintained.

I want to address three areas, which I hope will allay some of the concerns that my hon. Friend raised and speak to how important this is to the Government. The Treasury and I personally will be following this extremely closely as it develops in the months and years to come.

First, as my hon. Friend laid out well, the increasing digitisation that we are experiencing across society is having a major impact on cash. It has been important already, and I think its impact will be quite profound in years to come. That plays into a wider debate that the Treasury is interested in and in which all parts of Government have to engage, which is how we can embrace the new and ensure that the United Kingdom makes the most of new technology and does not shy away from it. We cannot stop the world and get off it, but we have to protect the vulnerable in society and ensure that the benefits of new technology work for all people in all parts of the United Kingdom, whether in great cities such as London or in rural areas such as Dorset, Nottinghamshire, Cornwall and the others represented here today.

The use of cash has fallen from 62% of all payment volumes in 2006 to 40% in 2016, the last year for which we have reliable figures, and it is predicted that, by 2026, it will make up just 21% of all our payments. As my hon. Friend rightly pointed out, however, claims that we will move any time soon to a completely cashless society are off the mark. The use of cash—both coinage and notes—will continue to decline significantly in the years ahead, but it seems unlikely that any of us will live in a country without any form of cash. That poses an important challenge to Government on how we can manage this period of transition in a way that works for everyone.

Cash remains extremely important in the day-to-day lives of UK consumers and businesses. It is still the form of payment that the UK public reach for the most, and 5% of the adult population rely either entirely or almost entirely on cash to make all their day-to-day payments. Many of them, of course, are the most vulnerable, the most financially excluded and the most elderly members of society.

To provide free access to cash, the UK has one of the most extensive free-to-use ATM networks in the world. Compared with our major international competitors, including the United States, our network is extensive and generally free, and those are important things that we want to continue. There are more ATMs in the UK than ever before, about 54,000 of which are free to use, which represents an increase of 50% in the past decade alone.

[Ged Killen]

Is not the Minister concerned that the LINK decision on the interchange fee might reverse free access to cash? The problem is that LINK is relying on the ATM operators themselves to tell it when cash machines are no longer financially viable. Is it not the case that many machines may already have closed after the event?

[Robert Jenrick]

The hon. Gentleman raises an important point, which I hope I will be able to answer over the course of my speech. One of the motivations for LINK and the industry’s actions is to reduce modestly the number of ATMs in those areas with the greatest density, including cities such as London, but their pledge to the Government and to consumers, which I will go on to talk about, is that that will not be to the detriment of those in rural areas, market towns or harder-to-serve areas, which are not exclusively rural but could be areas of greater deprivation, even in cities such as London. We have had a fairly strong promise from LINK and from the regulator that there will be no detriment to rural areas. I will come on in a moment to how that will be enforced in practice.

We all recognise that there is a decline in the use of cash, which is making it harder to maintain our current level of free access to cash. That is the challenge that the changes hope to address. I appreciate that we have to view the issue through the lens of bank branch closures, which affects my constituents and those of most Members across the House. The Government, the financial services industry and the regulator therefore have to act to ensure that the needs of the consumer continue to be met. My comments, on behalf of the Government, represent consumers, not the regulator or LINK. My hon. Friend the Member for North Dorset is absolutely right that we in this House represent the consumers, and their interests must be our primary concern.

Secondly, I wish to address exactly how we do that, which brings me to the particular role played to date by the Payment Systems Regulator and the role it will play in the future, if it lives up to the Government’s expectations. In November, LINK—the main payment scheme behind the UK’s ATM network—launched a consultation on reducing interchange fees by 20%. As I have said, that was designed to reduce the duplication of cash machines in city centres while protecting the more isolated machines. That is the organisation’s stated objective, to which we will hold it to account. At the time, the Government and many Members of this House were clear that any changes must not have a harmful impact on consumers. If machines are lost in cities, the impact should be generally imperceptible, and if they are lost in rural and harder-to-serve areas, they should be replaced, wherever possible.

[Simon Hoare]

I agree with my hon. Friend about the overprovision of ATMs in a city centre environment, but I just want to make sure that he is alert to the fact that ATM providers—the Cardtronics of this world—often use the moneys they secure from such machines to subsidise rural provision. In effect, they are cross-accounting. The opportunity to use that cross-subsidy spare fund will, in effect, disappear as a result of a diminution of ATMs in large cities. That is one of the big problems.

[Robert Jenrick]

My hon. Friend raises an important point to which the regulator must pay close attention, but it estimates that the impact of the changes will be modest, even in city centres with a heavy density of ATMs. The main operators of card machines—the companies he mentioned earlier—are generally financially successful. This industry has more than £1 billion of revenue a year, and its market caps are between £500 million and £1.5 billion. Generally speaking, these sizable businesses are in sound financial health. There is no reason to believe that the changes will alter that, although the regulator must bear that factor in mind.

The PSR, which the Government established to deal with such difficult issues, has taken the lead in examining the area. It has engaged with LINK and held a consultation. My hon. Friend raised concerns about the scope of that consultation, but the PSR believes that it has engaged with MPs, although perhaps not as much as it could have done. It has spoken to a number of different parties across the country—indeed, future consultations could learn lessons from the number of individuals and parties to whom it chose to reach out.

The PSR has come back with three requirements that LINK’s proposals must fulfil. First, there is a commitment by LINK to do “whatever it takes”—we must remember those words—to protect the broad geographical spread of free-to-use ATMs. Secondly, any cuts in the interchange must be incremental, and at just 5% in the first year. There will be a review after one year, so in July next year there will be a review before the next cut of 5% could, or would, be implemented. I have received assurances from LINK and the PSR that no further cuts will take place unless they are satisfied that there has been no significant material detriment to the rural and harder-to-serve areas. Thirdly, there will be a greater than ever focus on financial inclusion, and LINK will continue filling gaps in the network and protecting those ATMs in areas that are harder to serve.

LINK will maintain all free-to-use ATMs that are a kilometre or more from the next or nearest free-to-use ATM, including where a community loses ATM access because of a branch closure. LINK will increase the subsidy for ATMs in areas with poor cash access to keep free-to-use machines going. It will conduct an annual review not just in the first year but, if the changes continue, every year thereafter. That review will consider the impact of the interchange fee reduction on the provision of free-to-use ATMs as phased in over the four-year period, and take action as and when required.

LINK has promised to place a page on its website from 1 July that will have sufficient specificity for every Member of the House to look at their constituency. It will show every free ATM across the country, so MPs will be able to view availability in their part of the world. The website will highlight any areas where free ATM availability is in danger of being lost and state what action is being taken to tackle that. For example, my hon. Friend will be able to look up the ATM that we have heard about in his constituency and see whether it is in danger and what action is being taken to address that. That is important to ensure that MPs and people across the country—including those local councillors who were mentioned—can continue to monitor and ensure that LINK lives up to its promises.

Finally, the way that the PSR will police LINK’s commitments can, and should, be stringent. We set the PSR up in 2015 with a specific statutory objective to ensure that the interests of the users of payment systems—not those of the banks—are promoted, with robust powers to enforce that. We expect the PSR to step in and act if needed. I have spoken to the PSR and to LINK, and the PSR understands the importance that the Government place on free access to cash, and the strength of feeling in Parliament and the country. Both organisations have made an explicit commitment to do whatever it takes to maintain the network and provide an additional subsidy per ATM at whatever level is required, to ensure that any machine that is in danger of being lost is replaced by another within a reasonable distance.

In conclusion, I again thank my hon. Friend the Member for North Dorset for raising this important issue that affects my constituents and people across the country. I have been assured by LINK and the PSR that the motivation for these changes is to ensure that the proliferation of ATMs in urban areas is sustainable, and that we continue to have a free-to-use ATM network—an important issue for the whole country and one that sets it apart from many others—but not at the cost of harder-to-serve areas: the rural areas and the market towns. The promise made to me by LINK is that it will do whatever it takes. The pledge has been made to me by the regulator that it will robustly hold LINK to account for that. The Treasury and I will be watching both very hard to ensure that those pledges are fulfilled on behalf of the people of the country.

Question put and agreed to.