Finance (No. 2) Bill

Roger Mullin Excerpts

Monday 11th April 2016 Commons Chamber

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

This Bill follows in the wake of yet another Budget that began to fall apart within a few short hours of the Chancellor’s statement—indeed, perhaps his future statements should be entitled, “Not the Budget”. If the Budget created disarray on the Government Benches, this Bill, with its clamjamfry of unco-ordinated clauses, presages yet more failure and demonstrably fails to address some of the major economic challenges of our time.

I admit that it was a great joy to read all 580 pages of the Finance Bill over the recess, and although I will come to a number of specific issues and technical problems, the Scottish National party has one overriding message for the Government: you cannot build economic success on the back of social injustice. Every social injustice is a hammer blow to economic progress. In recent times, we have seen the ways in which this Government wanted to place further injustice on the shoulders of the disabled, the disadvantaged and the 1950s-born women while at the same time operating an economic system that disproportionately protects and enhances the privileges of the most wealthy in society. Creating such division does not bring progress.

I said in my maiden speech, quoting Adam Smith:

“No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”

Times move on, of course, and reflections on our current predicament can best be summed up by Professor Stiglitz, who said:

“Rather than justice for all, we are evolving into a system of justice for those who can afford it”.

I am confident that hon. Members will be able to rehearse many instances of social injustice created by this Government, so allow me to move on and reflect on an issue that I raised in the House on 3 February this year—namely, the problem of tax evasion, particularly through the use of tax havens in British overseas territories. Little did I know at the time how prescient that debate in February would prove to be.

I have to say how disappointing I found the Prime Minister’s statement earlier today, despite its containing one or two modest proposals that I welcomed. Let us put this into context. According to Jason Hickel of the London School of Economics, tax havens hide one sixth of the world’s total private wealth—in excess of $20 trillion. I have already commented elsewhere that the revelations in the millions of papers that have been released from Mossack Fonseca are but the tip of a gigantic iceberg. Indeed, Panama does not even make it into the top 10 tax havens. Taken together, Britain and her overseas territories are at No. 1, outdoing Switzerland by some margin. Commenting on a single address in the Cayman Islands, Ugland House, President Obama said:

“That’s either the biggest building in the world or the biggest tax scam on record”.

It is not surprising he said that, given that 19,000 businesses are registered at that one address. It is a big hoose, as I said in February.

At least four major issues relating to tax havens need addressing. The first—the subject of much current debate—is the extent to which the makers of laws and the guardians of the wider public interest are themselves benefiting from tax scams. This is an understandable issue of concern, but we fool ourselves if we think that that is the sole or primary issue. It does, however, have regard to openness and transparency. I agree with my right hon. Friend the Member for Moray (Angus Robertson) that it would be a positive and welcome move if Cabinet Members, as well as the Prime Minister, were to choose willingly to open up their tax returns to public view.

The second issue, which deserves more focus, is the avoidance of tax. I deliberately say “avoidance”, because that is of course legal. It strikes me, however, that for the average member of the public, it is not a convincing defence for the type of institutional behaviour that we have witnessed in recent times, including from large multinational corporations, to say, “It is legal”. I am sure that I am not the only new MP to have been subjected to huge lobbying by corporations and other financial bodies. They mobilise vast resources to “help” the Government and they are very successful. They have managed to influence the creation of an international system of finance that enables tax avoidance on a huge scale. Not only that, but they happily operate a system that hides from scrutiny the owners of vast wealth, while the ordinary man in the street has no such luxury.

The third issue, which has surprisingly been the subject of much less scrutiny so far, is the extent of the evasion of disclosure of the source of money itself. There are good reasons to suppose that it is not only corrupt political leaders but drug traffickers, terrorist organisations and other types of criminals who inhabit the shady world of international finance. Sadly, the Panama papers suggest that some legally registered institutions may have colluded in the protection of criminals who stash their cash behind anonymous, untouchable trusts and other financial vehicles. I hope we can take it from the Prime Minister’s statement today and from the Minister’s welcome remarks earlier about making it a criminal offence for some types of such “advice” to be proffered by otherwise legal institutions that we will see considerable progress on this matter.

The fourth issue I wish to raise is where these funds are and how they are set to work for their beneficiaries. As we know, these funds do not actually sit in Panama, the British Virgin Islands or the Cayman Islands. One of their biggest centres is, as we know, London. For example, hundreds of very expensive properties in London have been brought by unknown persons. We need transparency here, too. Some, like my hon. Friend the Member for East Lothian (George Kerevan), have argued that it should be illegal to own property or land in the UK where the beneficiary is unknown—a breathtakingly simple measure to address a cause of great concern.

All this calls for radical reform in each of those four areas, but I am sad to say that neither the Finance Bill nor the Prime Minister’s statement earlier goes nearly far enough to inspire any confidence that the matter will be adequately addressed. It is very disappointing, for example, that the Prime Minister continues to resist calls to do something about trusts. Even if he was right in his interpretation three years ago about how to proceed, this is three years later and public perceptions throughout the world have changed radically. It is time to broaden the scope of action.

The truth is that while this Government, through this Finance Bill, are taking feeble measures to tackle tax evasion, at the same time, in an act of social and economic injustice, they are mounting an attack on small individual contractors who serve rural communities, preventing them from having travel expense relief. These people are not tax dodgers; they are flexible workers, with both private and public clients, who are essential to many rural communities in Scotland. Yet at the same time as these people are attacked, the Government are protecting tax dodgers and millionaire Tory donors by continuing to allow huge loopholes in the system. We must get a commitment to a more open and transparent system that involves all overseas territories, trusts as well as companies, and full and independent scrutiny of the so-called Panama papers.

There is scope in Committee for the Government to be much more ambitious and to present new clauses for debate. They can be assured that it is certainly our intention to do that. Furthermore, the claim that this Finance Bill will adequately address other tax dodges lies in ruins, when we consider its implications for the so-called Mayfair tax loophole. We do not believe the Finance Bill makes anything like sufficient progress in its treatment of so-called carried interest, which is seen by many members of the public as another example of one rule for those with modest means and of huge favours being given to those of considerable wealth and income. Again, this is an area we shall pursue in Committee.

I turn now to wider economic matters. In his 2012 Budget speech, the Chancellor acknowledged Britain’s falling share of world exports and stated that

“we want to double our nation’s exports to £1 trillion this decade.”—[Official Report, 21 March 2012; Vol. 542, c. 797.]

Jings, he can certainly dream can oor George! However, the figures are moving in the wrong direction, and the Chancellor is likely to fall short of his target for £1 trillion in exports by 2020 by at least some £300 billion.

[Callum McCaig (Aberdeen South) (SNP)]

A rounding error.

[Roger Mullin]

Indeed. Failing to meet targets is of course one of the great characteristics of the Chancellor, but to miss it by such a huge margin creates a new category of failure—a right bourach, perhaps. Furthermore, rather than making even modest progress, we find that in the last three months of 2015, the UK had achieved a record-breaking near £33 billion current account deficit.

Part of our declining relative performance speaks to a long-term failure to address adequately the central issue of productivity in our economy. On productivity, this Finance Bill fails to address fundamental concerns. Raising levels of productivity is essential to raising growth in the economy. As my hon. Friend the Member for East Lothian pointed out on 22 March, developed countries with higher levels of growth, including Australia, Sweden, Spain and the United States, to name only some,

“experienced faster…growth than the UK in 2015, largely because they experienced faster productivity growth.”—[Official Report, 22 March 2016; Vol. 607, c. 1412.]

We need productivity growth, too, to enable the cash economy to grow, to enable wage growth and to grow tax receipts.

There are many factors, of course, that affect productivity growth. Some are well known and relatively uncontroversial —areas such as investment in research, development, innovation, and of course, infrastructure. In these areas, the UK lags well behind many of our major competitors. On a number of occasions, I have pointed to the relative decline in investment in R and D compared with our G8 competitors. As things stand, we are bottom of the G8 on R and D spend from both private and public sources, and there has been a reluctance, to put it mildly, to raise infrastructure spend to the necessary levels.

The SNP believes that in order to achieve a sustainable future, R and D expenditure and investment could benefit from a comprehensive, dramatic and territorial review, and that there should be increased planned infrastructure spend beyond the narrow confines of London and the south. As for skills, the subject has already been raised by the hon. Member for—

[John Mann]

Bassetlaw.

--- Later in debate ---

[Roger Mullin]

Correct! I am delighted that the hon. Gentleman remembered. He referred to the importance of skills, which are of course fundamental to productivity growth. For some 30 years, the UK has been failing, particularly at the intermediate and higher-intermediate skill levels.

Let me come on to another iniquity in the Bill: the continuing failure to relieve Scotland’s police, fire and rescue services from the burden of VAT. The Government’s excuses on this are well rehearsed, but they are hollow words. Their actions confirm that, rather than supporting the police and fire services in Scotland, the Tories are their enemies.

This Finance Bill rides uneasily alongside the Chancellor’s statement to the House on that

“we are going to deliver a strong and compassionate society for the next generation”.—[Official Report, 22 March 2016; Vol. 607, c. 1388.]

I do not know a single young person or couple that will be able to take advantage of raising the amount that can be invested in an ISA to £20,000 a year. I do know, however, all too many constituents, many of them young, who live on take-home pay that is much less than £20,000 annually.

The actions of this Government are not building a strong economy for the future and are certainly doing nothing to create a compassionate society. This Government and this Chancellor are not merely failures; they are purveyors of misery.

Budget Resolutions and Economic Situation

Roger Mullin Excerpts

Tuesday 22nd March 2016 Commons Chamber

[Mr Wright]

The hon. Gentleman makes an important point about infrastructure, and there was very little in the Budget to address that. Earlier, I mentioned the possibility of rebalancing. In 2012, we were promised an export-led recovery, and the Government announced proudly a target of £1 trillion of exports by 2020. I am all for ambition and for stretching targets, but given the Government’s limited ability to shift the needle on the value of exports by companies, that ambition seemed at best somewhat misplaced and, at worst, even very foolish.

The OBR stated last week that the Government will miss its target by 36%, which is £357 billion, and that net trade will actually be a drag on economic growth for every single year of this Parliament, but there was nothing in this Budget to boost exports. The word “exports” did not even pass the Chancellor’s lips in his statement on Wednesday and it was not mentioned again this morning. Does that mean that the Government have shelved that target? Will Ministers consider providing assistance and encouragement in the form of export vouchers so that firms from Britain can invest and export?

A further way to boost productivity is by investing in skills, and the flagship skills policy of this Government is the target of 3 million apprenticeships by 2020, funded through the apprenticeships levy. Now, only 2% of larger firms will pay that, so what will happen to the other 98% of firms, as well as the detail of the levy? We were promised by the Minister for Skills in the run-up to the Budget that all would be revealed, including this new shiny model, in the Chancellor’s Budget statement, but for a Budget billed as putting the next generation first, there was precious little detail about how the apprenticeships levy—only 12 months from its start—will operate in practice. As with exports, the word “apprenticeships” was not even mentioned by the Chancellor.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Does the hon. Gentleman agree that one of the biggest drags skillswise on productivity in our economy is at the intermediate and higher intermediate skill levels? We have had this problem for more than 30 years.

[Mr Wright]

The hon. Gentleman makes an important point. My point is that by trying to ramp up the quantity of apprenticeships while making a major—possibly the major—change to the institutional architecture of apprenticeship delivery, the Government risk missing their target and that, as a result, the skills policy in this country will be affected adversely.

Budgets are rarely remembered past a couple of weeks or months. This one will be remembered, but for all the wrong reasons: incompetence, callousness, clumsiness and the resignation of a Cabinet Minister. It is also concerning that it will be remembered for downgraded productivity and a failure to address it, leading to lower economic growth, relatively falling living standards, lower tax receipts and deteriorating public finances. The Budget has helped to make this country somewhat poorer.

Budget Resolutions and Economic Situation

Roger Mullin Excerpts

Wednesday 16th March 2016 Commons Chamber

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Last night, I had the great honour of attending an Adjournment debate secured by my hon. Friend the Member for West Dunbartonshire (Martin Docherty-Hughes) in honour of all those who died and were affected by the Clydebank blitz. His was a quite remarkable speech.

Today, we turn to a much more miserable statement by the Chancellor of the Exchequer, heralding yet another attack on some of the most vulnerable in our society. People will be asking themselves what is going on in this society of ours, when a £1.2 billion cut can be made to some of the most vulnerable people in our society at the same time as yet more largesse is thrown before some of the richest in our society.

This Chancellor can be relied upon for two things: to cut, cut and cut again the investment in the ordinary people of this country; and to pile failure upon failure upon failure to achieve any of his targets, whether they be on debt, exports or even, as in this Budget statement, a significant downgrading of growth in our economy. Indeed, listening to the Chancellor I recalled the dictum of Albert Einstein that insanity is doing the same thing over and over again and expecting a different result. If ever we had a Chancellor who exhibited insanity, it must be this one.

The economy faces great challenges, including a lack of investment in key areas such as research and development, a lack of a coherent plan to tackle the problem of productivity in the economy, and a complete failure to address problems of extreme inequality, which are harming our economy. I was keen to listen to the hon. Member for Newark (Robert Jenrick), who I do not think is in his place, when he said that Ronald Reagan was his great hero. If Ronald Reagan was associated with the idea of trickle-down economics, this Chancellor has become synonymous with trickle-up economics. The poor and vulnerable are being asked to sacrifice themselves to feather the nests of the rich, the powerful and the undeserving in our society.

The hon. Member for East Antrim (Sammy Wilson) spoke wisely about the problems of inequality in our society. Growing inequality seems to be the only target this Government are capable of achieving, but it is not a target that anyone in a civilised society should be proud of. The right hon. Member for Don Valley (Caroline Flint) made a welcome speech about the initiatives she is taking, which I hope the whole House will be able to support, to make the tax affairs of large multinational tax corporations much more transparent. Much more needs to be done about how transfer pricing and the transferring of profits is undertaken. It does no one in our society any good to featherbed those who simply want to move their tax affairs to the most convenient location to avoid making their contribution to society.

I was pleased to see in the Red Book that some progress was being made on a possible city deal for Edinburgh and the Lothians, which affects my own area. There is also recognition that some progress is being made with regard to Inverness. I have to say, however, that the Government’s record in supporting potential city deals in Scotland is nothing short of shameful. Progress is far too slow and far too modest.

The Chancellor has also missed some of the great opportunities he has been presented with in recent weeks. Perhaps the greatest opportunity he missed was to address the problem of 1950s-born women, who are facing an attack on their pensions and retirement age. Surely, given all the money that can be found for the rich and famous, the Government could have done something for the people in our society whose retirement is being pushed back and back, with insufficient notice and consultation.

On growth, the Science and Technology Committee has noted that the European Council, as far back as 2002, adopted a target of 3% of GDP being spent on public—

Local Government: Ethical Procurement

Roger Mullin Excerpts

Tuesday 15th March 2016 Westminster Hall

[John Mc Nally (Falkirk) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Streeter. I particularly thank the hon. Member for Birmingham, Northfield (Richard Burden) for securing the debate. Like other hon. Members, I am quite curious as to why the Westminster Government want to censure local government authorities for making ethical decisions on where to invest their own pension funds.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Does my hon. Friend agree that it is not possible to make any economic decisions that are devoid of ethical impact?

[John Mc Nally]

I thank my hon. Friend for that intervention. I agree with him: that is the reason why we are here today—to discuss the ethical decisions that have been made by local authorities. I shall proceed as fast as I can, Mr Streeter.

The whole thing strikes me as not good practice; indeed, it could be called bad practice. I would like the Minister to explain to me the reasons for that interference by the Government with the principles, with the decisions made by trustees on behalf of local communities, who appoint tried and trusted fund managers to look after the pension funds for them. The Government are quite breathtaking in their contradictions. The Chancellor of the Exchequer has stated that he wants to start northern powerhouses; he wants to give local people more say in what is happening in their local communities. Yet he is telling them, “Sorry, you’re not going to get a say in what your pension funds do.” That is an absolute shambles of a policy, and it sounds to me as if he just made it up as he went along—for what reason, I would love to know. It would not be right to deny pension funds the right to direct their fund managers on how they want their investments to work for them. It is that local authority’s business. Local authorities alone are answerable to their communities in terms of how they want their funds to work for them.

Can the Minister explain to me and others why this policy differs from the one that I have just mentioned? The Government want to introduce powerhouses in the north of England to give people more powers, but now they are introducing this policy. I want to hear an answer on that. It sounds like an absolute and total contradiction. There is one rule for the Government and another rule for local authorities. That is absolutely and blatantly wrong.

We can compare the Westminster Government with the Scottish Government, who take a much more considered approach, with proper regard, respect and trust for the social and environmental investments made by pension fund managers on behalf of local authorities in Scotland. My local authority in Falkirk has £1.8 billion in its fund and at this moment might well be looking at investing with the Green Investment Bank. If that bank moves away from its original purpose—God forbid—of investing in green energy, surely an authority has the right to withdraw funding from that organisation; it will need to alter its investments accordingly. And the same is true for that pension fund with regard to international developments. That statement of investment principles must be honoured.

Scotch Whisky Industry

Roger Mullin Excerpts

Wednesday 9th March 2016 Westminster Hall

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

It is a pleasure to serve under your chairmanship, Mrs Moon. I thank my hon. Friend the Member for Argyll and Bute (Brendan O’Hara) for initiating this important debate today.

Whisky is Scotland’s gift to the world, a gift that brings enormous benefit to the Exchequer. It has a substantial impact on our trade statistics and generates substantial employment in Scotland. The success of the whisky industry is rooted in rural Scotland, where the addition of well-paid employment puts substantial income into many local economies.

There has been a renaissance in Scotch whisky with so many iconic brands being marketed and sold throughout the world. Its brand identity is unparalleled and has been hard won, although it needs to be protected and invested in. There is a competitive threat from other products, but none have the right to call their product Scotch whisky. The rich diversity of successful Scotch whisky global brands has helped to create the circumstances for an explosion of investment in new distilleries, often small community-based operations that add to the rich tapestry of unique product offerings and the breadth of those offerings to the discerning palate. Each whisky is unique and is shaped by the environment and character of each distillery with the barley, the local source of water and the peculiarities of the still among other things affecting the character of each whisky.

We have several distilleries in my constituency, including some in the planning and development phase. In Skye, we have the iconic Talisker whisky, which was the favourite of writer Robert Louis Stevenson. In his poem, “The Scotsman’s Return from Abroad”, he said:

“The king o’ drinks, as I conceive it, Talisker, Islay, or Glenlivet.”

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Will my hon. Friend give way?

[Ian Blackford]

Because of lack of time I want to press on, but before my hon. Friend the Member for Argyll and Bute gets excited about Islay being mentioned in the same sentence as Talisker, I should point out to him that the king of whisky, Talisker, is the first and foremost whisky to be mentioned in the poem.

Moreover, in the film “Charlie Wilson’s War”, CIA agent Gust Avrakotos presents Congressman Wilson with a bottle of Talisker. The agent explains to Charlie that Scotch is mentioned in a Robert Louis Stevenson poem, but the bottle is bugged and allows him to listen to the congressman’s conversations. One would hope that in this House Talisker may be enjoyed by all and certainly never used for more subversive activity, although with this Government you never know.

One website on whisky stated the following of Talisker:

“This alluring, sweet, full-bodied single malt is so easy to enjoy, and like Skye itself, so hard to leave.”

What must be kept in mind is that Talisker distillery and so many of our distilleries are located not just in the most beautiful parts of our country but in areas of varying degrees of fragility of economic activity. Talisker is located on the western side of Sky where the potential for full-time, year-round employment is limited. The distillery employs 45 staff members, a significant number for an island with a population of just over 10,000. It is of note that only nine of those jobs are in production, with the vast bulk of employment being around the visitor centre. Last year, it welcomed a grand total of 67,000 visitors. The distillery is the second highest visitor attraction in footfall on the island of Skye.

Clearly many people come to Skye to visit Talisker, among other places, helping to grow and develop our tourist offering and tourist spend, not just at Talisker but throughout the island. The motion today refers to the economic value of whisky to our country. That economic benefit is based on the direct value of the whisky industry to many rural communities in my constituency and elsewhere. Talisker is a well-established, successful brand, but the story does not end there.

Torabhaig distillery is under construction on the Sleat peninsula on Skye. This distillery is expected to employ a staff of eight when it enters production. There are also plans for a new distillery on the island of Raasay. There is a birth of a new spirit in the Hebrides, a spirit that will excite the whisky world with these new ventures adding to the appeal of Skye and Raasay as the premium whisky region of the entire industry.

I have many distilleries in my constituency. The Glen Ord distillery in Muir of Ord is a contrast with Talisker. It employs just shy of 60 workers and as well as production of the Singleton of Glen Ord brand and a successful visitor centre, there is also a maltings at Glen Ord as well as an engineering base for the parent company, Diageo.

I am glad to say that not far from Glen Ord, just outside Dingwall, is another new distillery, GlenWyvis, based on a long-held tradition of distilling in this area, under the name of the previous Ferintosh distillery. Our national bard, Rabbie Burns, famously lamented the previous loss of this distillery when he said in 1759:

“Thee, Ferintosh! O sadly lost!”

Well, it is lost no more.

Because of lack of time, I will wrap up. We celebrate the success of the whisky industry, but let me quote Douglas Fraser of the BBC, who stated in 2013:

“Scotch whisky is a national brand worth toasting. It is a drink that can only be distilled and matured in one country—Scotland—but which sells in to 200 markets around the world. How did Scotch go from cottage industry to global phenomenon and how does it benefit its country of origin?”

That question requires more time for debate than we have today, but let me reflect briefly on employment.

As has been mentioned, 40,000 jobs are connected with the industry, 7,000 of which are in rural Scotland. My challenge to the industry is that, as well as the very welcome investment in distilleries, more can be done to make sure a greater part of the supply chain is secured in the area of production. Let us increase the dividend available for those in whisky-producing areas and let us toast the success of the industry, but let us have the ambition to grow this fantastic industry on a sustainable basis. To encourage this to happen, the Chancellor must play his part next week by reducing duty and introducing greater equity for the Scotch whisky industry.

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[Gavin Newlands (Paisley and Renfrewshire North) (SNP)]

It is a pleasure to serve under your chairmanship, Mrs Moon. I congratulate my hon. Friend the Member for Argyll and Bute (Brendan O’Hara) on securing the debate and providing us with an opportunity to discuss the significant contribution that the whisky industry makes to the national economy. I am well aware of the contribution that the industry makes to his constituency of Argyll and Bute, an area that I regularly visit for family trips, and my office manager, an Ileach, speaks often about the importance of the distilleries to the Islay economy. With eight distilleries on an island of 3,000 people, and another two being planned, soon there will be one distillery for every 300 residents. My office manager tells me that, from hazy memory, the Islay festival of malt and music is a very good time to be on the island.

Like Argyll and Bute, my constituency of Paisley and Renfrewshire North benefits greatly from having an active and successful whisky sector in the area. We have heard much, rightly, about areas of production, but there are equally important parts of the industry. Indeed, I recently visited the Chivas Regal bottling plant in my constituency and spoke with staff about the work that they do. The facility employs more than 500 staff, and it is where the company bottles most of its whisky portfolio, including brands such as Chivas Regal, the Glenlivet and Aberlour and the super-premium products such as Royal Salute. Chivas Regal is famous the world over—

[Roger Mullin]

Does my hon. Friend agree that in the aspect that he has mentioned—bottling—the whisky industry has led fantastic growth in productivity and innovation? The growth has been such that in Fife, the bottling plant in Leven now bottles not only malt whisky, but most of the company’s London gin.

[Gavin Newlands]

Indeed. I thank my hon. Friend for that intervention. The productivity leads to further investment, which I will come on to later.

The staff at the Paisley site are proud to distribute whisky to all corners of the world, including China, India and the United States. During my visit, I was grateful to be shown around the new north bottling hall, which was opened last year as part of a wider £40 million investment by Chivas Brothers and helps to highlight the positive future that the whisky industry has in Renfrewshire and across the UK.

However, it is not only Chivas that operates in my constituency. Diageo is also well represented, with facilities near Braehead and at Blythswood. Both are long-standing providers of many jobs in the constituency, and I look forward to visiting them in the near future—that was a plug. Chivas and Diageo are extremely important to the Renfrewshire economy and help to support more than 1,000 local jobs. The Scotch Whisky Association estimates that the Scotch whisky sector directly employs 10,800 people. I am very proud to say that about 10% of those jobs are based in my constituency. Back home in Renfrewshire, we probably do not realise or appreciate how important our constituency is to the wider success of whisky. The three plants based in my constituency are extremely important, both locally and nationally, and I would like to record my thanks to all those workers who contribute to the success of the “water of life”.

We cannot stress enough the importance of the whisky industry to Scotland. It is part of our DNA, and we are famous all over the world for being the home of whisky. According to the SWA, the whisky industry’s contribution to the UK’s GDP amounts to £5 billion and it helps to support 43,000 jobs across the UK. In 2013, more than 1.1 million visits were made to whisky distilleries, with many of the visitors coming from all over the world to sample some Scotch whisky and see how it is distilled. Scotch whisky can be and has been described as the star performer of the UK economy. When we look at the activity of the industry in overseas markets, it becomes clear why it is so important to our national economy. Last year, Scotland exported 99 million barrels of whisky, which, according to the Library, were worth almost £4 billion, with imports amounting to £200 million. Without the success of whisky, the UK’s trade deficit would be 11% higher than it is today.

Given the success and significance of whisky in the national economy, our call for a further reduction in spirit duty by 2%, which is supported by the SWA, is entirely legitimate. A 76% tax burden is entirely excessive and ultimately unsustainable. What is more, with less than 9% of the EU population, UK consumers pay 25% of all EU spirit duties. Indeed, revenue raised by spirit duty has gone up by more than £100 million in the last year, following the Chancellor’s 2% cut in last year’s Budget, so he does not have to look too far for the evidence.

The future is bright for the Scotch whisky sector. I see that at first hand in my own constituency with the investment that has been made in the plants in Renfrewshire. We should be proud that our whisky is famous the world over and attracts tourists all year round. Scottish whisky is one of the star performers of our national economy. It is vital to our local communities and vital to supporting local jobs, and we should do as much as we can to encourage its growth in any way we can. Slàinte!

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[Calum Kerr (Berwickshire, Roxburgh and Selkirk) (SNP)]

I am delighted to get to sum up last. I know that my party likes to claim that we are the official Opposition—but I like this new order in Westminster Hall.

It is rare to have the opportunity to sum up with such a good-looking group of MPs. I do not know whether it is to do with the balance in the Chamber. The hon. Members for Salford and Eccles (Rebecca Long Bailey) and for Brigg and Goole (Andrew Percy) are very welcome to join the Celtic brotherhood—and the Minister too. [Interruption.] He has Celtic connections.

We have heard the benefit of an upbringing and affinity with the product we have been talking about, in the amazing lyrical literary references throughout the speeches.

[Roger Mullin]

I have another one. Does my hon. Friend agree with the great Norman MacCaig? I was sitting one time in Sandy Bell’s and said “Norman, would you like another dram?” and he said, “Roger, my family motto is ‘Excess is not enough.’”

Draft Income Tax (Construction Industry Scheme) (Amendment of Schedule 11 to the Finance Act 2004) Order 2016

Roger Mullin Excerpts

Tuesday 8th March 2016 General Committees

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

It is a pleasure to serve under your chairmanship, Ms Dorries. I will be very brief. I have just three points to put to the Minister. First, unusually, we have received no complaints from any quarter about—

[The Chair]

Order. May I make the point that it is normal practice to catch the Chair’s attention to speak before the Minister responds? In future, Mr Mullin, when you attend debates, you can speak after the Opposition Front Bencher, but please try to let the Chair know that you want to speak before the Minister makes his or her closing remarks. This means that the Minister may have to come back again, which prolongs the debate.

[Roger Mullin]

My apologies, Ms Dorries.

On the basis that there have been no complaints, and that, as the hon. Member for Wolverhampton South West pointed out, the unions are also satisfied, there is no good reason to oppose the order.

My second point is that I think the restriction of the three tests makes absolute sense and simplifies matters for businesses. My third point, which is not intended as a serious criticism, is that having run a number of small businesses in the past, I think that the opportunity could usefully have been taken to reduce the threshold to the same level as the VAT threshold and thus simplify matters even further. However, we will not oppose the measure.

Question put and agreed to.

draft Employment Allowance (Excluded Companies) regulations 2016 Employment Allowance (Increase of Maximum Amount) Regulations 2016 draft social security (Contributions) (Limits and Thresholds amendments and national insurance funds payments) regulations 2016

Roger Mullin Excerpts

Monday 29th February 2016 General Committees

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Wilson, and to see Members who have been on many Committees with me in my short career here. I commend the hon. Member for Wolverhampton South West for his detailed scrutiny of the regulations.

The Scottish National party’s perspective is that the regulations faithfully enact what the Government announced in both the Budget and the autumn statement. In that regard, I do not see anything technically troublesome about the implementation of the regulations. We might disagree about the policy backdrop and we might think that more could be done to encourage the employment of apprentices. In Scotland, for example, an apprenticeship applies only to a full-time job, so we would want more done to enable that to occur. However, in broad terms, given the answers to the hon. Member for Wolverhampton South West, we are content with the proposals.

Bank of England and Financial Services Bill [ Lords ] (Fifth sitting)

Roger Mullin Excerpts

Tuesday 23rd February 2016 Public Bill Committees

[Harriett Baldwin]

I sense that the hon. Gentleman does not welcome the freedoms that the Government are proud to have given British retirees. We no longer require them—this was the case for so long—to purchase an obligatory product that might not be right for them at the time. Indeed, the evidence suggests that two thirds of people were not shopping around to get the right price, so I accept that awareness and education are an important part of the reforms. I cannot agree with him that the reforms have not made a huge step forward in trusting people who have worked hard all their lives, saving their money, and they now have more freedom to do what they want with it.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

I have some sympathy with the comments of the hon. Member for Bassetlaw. May I press the Minister on the numbers she quoted? She said that 2.2 million people have accessed the website, leading to in excess of 50,000 to follow through with more detailed face-to-face guidance. If my arithmetic is correct, that is a conversion rate of only 2%. That is a matter of concern to a lot of people. The type of advice being made available at a detailed level means that we are not adequately helping the numbers of people seeking to use the freedoms. There is concern that many people are cashing in early for different reasons with a lack of understanding of the long-term implications.

[Harriett Baldwin]

Again, I could not agree more that we need to take a long, hard look at the provision of advice in this country. As the hon. Gentleman is aware, the financial advice market review was launched last summer and the consultation closed at the end of December. A large range of people have been supportive of the aspirations set out in the review to make advice more widely available and more affordable for all our constituents. It is an ongoing piece of work, and he should wait for more exciting announcements—[Interruption.] He and I share excitement about many things, including the leptokurtic distributions that came up the last time we were on a Committee together. Clause 27 is narrowly focused on extending the Pension Wise service to those who are going to be accessing the additional freedoms that will come into force next April in relation to the secondary market in annuities.

People have rightly asked me about scams, and I want to put it on the record that there is absolutely no complacency about the potential for scams. However, the numbers thus far do not support the case that there has been an increase. Some people have a constant desire to take advantage of people, particularly the vulnerable elderly, in many ways. Nobody should ever accept a telephone call about pensions from anybody unless they have a pre-booked appointment for such a discussion. The single most important thing that we can do to alert people to the horrendous activities of people who prey on the elderly is to get that message out in our constituencies. The over-65s are the victims of some 80% of all attempts at financial crime. They are less familiar with the technology and more vulnerable when someone sounds plausible on the telephone. If any Member wants to work with me to spread the message more widely in their constituencies, I will be wholeheartedly in favour.

Bank of England and Financial Services Bill [ Lords ] (Third sitting)

Roger Mullin Excerpts

Thursday 11th February 2016 Public Bill Committees

[Rob Marris]

It is a ray of sunshine to be serving under your chairmanship on this bright day, Mr Brady. Amendments 37 and 38 are straightforward, and I am sure that the Government will accept them, so perhaps we can move on to debate the clause. Proposed new section 1JA(1) gives the Treasury the power to give directions to the Financial Conduct Authority. The rest of the new section deals with how that power shall be exercised at least once in each Parliament, and with the publication of those directions. Our straightforward amendments would tidy that up.

One must recognise that there is a balancing act between the FCA’s independence and the need for public accountability, refracted through the Treasury. That is always difficult, and we accept that, but there is a bit of a problem with the Financial Conduct Authority. Immediately after Second Reading a couple of weeks ago, there was a debate for more than two hours in which I think it would be fair to say that Members from both sides of the House expressed grave concerns about some of the actions or inaction of the Financial Conduct Authority. It is purportedly independent of the Government and the Bank of England, but there is so much cosy overlap.

We have Dr Bailey, who now seems to have all kinds of hats. I stand to be corrected, but I think he is the deputy governor for prudential regulation and has been the chief executive officer of the Prudential Regulation Authority since April 2013. He is therefore also a member of the Bank’s board of directors, the PRA board and the Financial Policy Committee, and now he is going to the Financial Conduct Authority. There are questions not about that gentleman’s integrity, but about perceived conflicts of interests and so on. There is someone on the FCA board, Jane Platt—she also joined in April 2013—who is the chief executive of National Savings and Investments. Sir Brian Pomeroy, CBE, joined the FSA board in November 2009. I think that he may still be on the FCA website.

The FSA was abolished because it was, shall we say, pretty useless. Private Eye, correctly in my mind, used to characterise it as the Fundamentally Supine Authority. If we look at the prosecutions, or the lack thereof, and the steps taken by the FSA after the crash in 2008, or the lack thereof, it did not exactly cover itself in glory as an institution. I make no comments on the individuals within it; I am referring to the institution. The Government recognised that, and therefore we had the Financial Conduct Authority.

It is all a bit cosy. The noun of this Committee thus far seems to be groupthink. That refers to the risk that those who have a cosy relationship will start to be blinkered in the way in which they exercise their regulatory functions. The FSA has been characterised by Professor Alastair Hudson, whom I thank for his assistance in tackling what is quite a technical Bill. He said, “The FSA previously began to think of itself as being in partnership with the financial institutions which it was supposed to regulate.” I think he had a point. So, I suspect, did the Government, which is why we now have the FCA, not the FSA.

However, there is still a big question mark over the FCA’s relationship with the Government, which is to do with how independent it is. The Minister has previously told the House that the FCA’s decision to abandon its investigation into the culture of banking, which had not actually started, had nothing to do with the Treasury. That, of course, touches on questions of groupthink, blinkered thinking and so on. I do not impugn her for saying that, but looking at it from the perspective of Labour Members, that is a surprising situation. It is relevant to what we are discussing, because of course proposed new section 1JA, to be inserted by clause 18, talks about the Treasury giving directions to the FCA in certain circumstances.

The FCA, in its business plan for 2015-16—the year we are in—said that it would do a culture review:

“In 2015/16 we will conduct a new thematic review on whether culture change programmes in retail and wholesale banks are driving the right behaviour, in particular focusing on remuneration, appraisal and promotion decisions of middle management, as well as how concerns are reported and acted on.”

It would have been very useful to have had the fruits of that culture review before us when debating the Bill.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Is the hon. Gentleman aware that there are quite a number of studies that indicate that approximately 70% of major organisational failures can be attributed primarily to cultural problems?

--- Later in debate ---

[Roger Mullin]

I hear and accept entirely what the Minister says about not interfering in operational matters. However, I invite her to indicate whether, at some stage, a review of the culture would help the Government.

[Harriett Baldwin]

I think we can all agree that that would be a fascinating study to read, but I will not get involved in directing the FCA to change its business plan. That would be interfering with the operational independence of the FCA, which I am sure Opposition Members do not want me to do.

Bank of England and Financial Services Bill [ Lords ] (First sitting)

Roger Mullin Excerpts

Tuesday 9th February 2016 Public Bill Committees

[Harriett Baldwin]

The hon. Gentleman serves as a member of the Treasury Committee, and I believe he was also a member of that Committee in the previous Parliament, so he will remember that it produced a report in 2011 called “Accountability of the Bank of England” which recommended that the court’s membership be reduced to eight—smaller than we propose. It emphasised that a smaller court would allow for

“diversity of views and expertise”

while still being

“an efficient decision-making body”.

He may want to go back and look at the evidence base that the Committee looked at. It is important to emphasise that the Bill does not make a change in terms of the membership, which remains at possibly up to nine.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Does the Minister therefore believe that the Cabinet should be reduced in size?

[Harriett Baldwin]

The Cabinet, as the hon. Gentleman knows, has fluctuated in size over the years. On the evidence base, we are obviously talking about the experience of the Bank of England having in the past, particularly in the run-up to the financial crash, had a significantly larger court. I think there were 19 members in the run-up to 2009, and it was thought that that was a very large and unwieldy body. I think it still falls short of the number of people who currently attend Cabinet. There is a range of different views of effectiveness, but the important point to emphasise is that the Bill does not intrinsically make any changes to what is already there, although in practice we currently have seven non-executive directors on the court.

Importantly, the Bill also provides for the continued balance of internal and external members on the MPC, the FPC and the newly formed PRC. Following the addition or removal of a deputy governor, the Government may make a corresponding change to the number of members appointed by the Chancellor in the case of the FPC or PRC or the Governor in the case of the MPC.

New clause 5 would require the court to publish transcripts of its discussions within six months. I agree completely with the hon. Member for Leeds East that transparency is critical. The Bank of England makes decisions that affect all of us and it must be accountable to the public, and enhancing transparency is central to that. That is why I am so pleased to bring this Bill to the Committee: it makes governance of the Bank much more transparent in several ways. First, it makes the entire court responsible for the oversight functions. No longer will an oversight committee oversee the work of an oversight board. Every member of the board, executive or non-executive, will be clearly responsible for oversight of the Bank.

Secondly, the Bill removes a greater barrier to transparency and unnecessary complexity. In 2013, the Parliamentary Commission on Banking Standards noted the complexity of the present regime. It said:

“The accountability arrangements of the new structures”—

that is, the structures that exist now—

“are more complex than those of the previous regulatory regime. The PRA is a subsidiary of the Bank, and the FPC is a sub-committee of the Court of the Bank.”

The Bill will change the FPC’s status from a sub-committee of the court to a committee of the Bank and will end the PRA’s subsidiary status, establishing the Bank’s three policy committees on a common statutory footing.

The final and perhaps most significant means of enhancing transparency is bringing the whole Bank into the purview of the National Audit Office for the first time in its history. Allowing the NAO to conduct value-for-money reviews across the Bank will increase its accountability to Parliament and to the public. In turn, this will build greater public trust in the Bank’s operations and governance, supporting its vital independence role in the UK economy.

I agree with the hon. Member for Leeds East that transparency is important: it improves accountability and ultimately makes the Bank’s governance better. However, I disagree with him that mandating transcripts of court sessions will make governance better. As hon. Members are aware, the court is now required to publish the minutes of every meeting within six weeks. That was not always the case, but I am glad to see that the court has published historical records of its minutes, including those during the financial crisis. Through this, Parliament and the public now have greater insight into the governance of the Bank and the key decisions made. Transcripts are a different matter entirely.

We are fortunate in this debate because the impact of transcripts on Bank discussions has already been examined by Governor Warsh in his review, “Transparency and the Bank of England’s Monetary Policy Committee”. He said:

“Creating a safe space for true deliberations is among the most critical indicia of organisations that make good decisions, according to the leading academic and empirical literature and my own observation”.

I am sure we all want a court that makes good decisions. The alternative would be extremely costly for all of us. Governor Warsh looked at the MPC’s two discussion days and found that the different nature of the day one and day two discussions required different approaches to transcript publication. It makes sense to see which of those days is most like a court session and what Governor Warsh recommended. Day one is when the MPC members deliberate, challenge the evidence before them and question one another—exactly the kind of role that the court performs very effectively. Day two is very different. In Governor Warsh’s words:

“With few exceptions, the deliberations are nearly complete, policymakers are heard, and their judgments tallied.”

I think it is clear that day one is closer to the deliberations and discussions of a board.

[Roger Mullin]

I thank the Minister for explaining Governor Warsh’s views, but I would like to challenge his view that the academic literature is all one way. In fact, some of the academic literature points out that in more private settomgs, people are more prone to groupthink.

[Harriett Baldwin]

As a distinguished academic himself, the hon. Gentleman will know that academics often differ in their points of view. It is clear that in this case the distinguished Governor Warsh has come down in one way, and here in our deliberations we have come down in favour of producing a transcript, and Hansard performs that incredibly valuable role for us. I will make some further points, which I hope will convince him of the wisdom of the position that the Government are taking on transcripts.

When Governor Warsh looked at releasing transcripts of the day one deliberations, which he described as “safe space” deliberations, he found that

“Should the transcripts of the Day 1 deliberations be made public, the quality of the deliberative process would risk being materially impaired, to the detriment of sound policymaking.”

He went on to make a clear recommendation that

“the Day 1 policy discussions should no longer be recorded nor should they be transcribed.”

Publication of transcripts of meetings of the court would have a “chilling effect” on discussion and the quality of debate and harm decision making. I therefore hope that the hon. Member for Leeds East will not press his new clause.

--- Later in debate ---

[Harriett Baldwin]

There is, but the purpose of the deliberative body, as we have heard, is effectively to act as the board of the Bank of England, supervising the different committees. Prior to the financial crisis, members of the court were often selected specifically to represent a range of sectoral interests, including many of those proposed in the amendments. The first problem with the amendments is that requiring representatives of different sectors and regard to regional representation will entail a much larger and therefore oversized and dysfunctional court. Before the financial crisis, when the court had non-executives specifically to represent different interests—why stop at the four listed in the amendment?—the court had an incredible 16 non-executives, rendering it far too large to operate effectively and unable to hold the executive properly to account.

[Roger Mullin]

I think the Minister may have been in error when she implied that the new clauses would introduce a requirement. Our new clause 2 simply says

“the Chancellor of the Exchequer must have regard to the importance”

of balanced representation.

[Harriett Baldwin]

The hon. Gentleman is right to highlight that difference. Of course, what the Chancellor of the Exchequer would have regard to is the quality and ability of those individuals to perform the function they are asked to perform. The Banking Act 2009 sensibly limited the court to nine non-executives, and in practice we have now reduced the number of non-executives to seven while keeping that non-executive majority, which means that the court is now sufficiently small to form an effective body that can challenge the executive. The amendments before the Committee would inevitably mean a return to a large, inefficient and ineffective court.

A second problem with amendment 9, which would require sectoral representation on the court, is that it would give rise to conflicts of interest. The amendment calls for several practitioner representatives on the court. We have tried that in the past, too. During the crisis, the conflicts of interest meant that some of those on the court who could have been of most assistance to the Bank had to leave the room for the most important decisions, such as on liquidity provision to the markets and on individual firms. That hampered the court’s ability to respond effectively.