Oral Answers to Questions

Rushanara Ali Excerpts

Tuesday 27th October 2015 Commons Chamber

[Mr Osborne]

We have very strong wage growth at the moment in the west midlands and across the country. That is, of course, very welcome. The introduction of the national living wage will benefit, I think, around 300,000 people in the west midlands, including my hon. Friend’s constituents. That is part of a package to support the working people whom she represents and to give economic security to that west midlands engine that we all want to see.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

T2. Following last night’s votes, the Chancellor said that he would listen. Will he confirm that he will not be writing to the 3 million families before Christmas delivering the devastating news that their tax credits will be slashed? Surely the Chancellor—an aspiring future Prime Minister—does not want to go down in history as Scrooge delivering devastating news to millions of people. Or does he?

[Mr Osborne]

Obviously, we will inform families once the changes that we have made become law.

Budget Resolutions and Economic Situation

Rushanara Ali Excerpts

Friday 20th March 2015 Commons Chamber

[Hilary Benn]

No one is arguing about the pace, because the time it will take local authorities to come up with a local plan will differ. I think most of us agree—although clearly not everyone does—that every local authority ought to have a plan. If they do not, are they taking responsibility for their local community? On that, we have a different view.

We will give new powers to local authorities to create housing growth areas and new homes corporations, so that they can assemble land and work with builders—small and large—construction firms and self-builders to get more homes built.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

Does my right hon. Friend agree that the Mayor of London is undermining the social housing target by watering it down and making it an aspiration? In contrast, our policy is to set private developers a target on social housing and intermediate development of between 25% and 40%. Surely the Mayor of London is undermining any attempt to deal with the housing shortage, leading, frankly, to the social cleansing of people who cannot afford to buy houses that are worth hundreds of thousands of pounds.

[Hilary Benn]

My hon. Friend is absolutely right. As we have heard in this debate, the problem is most acute in London. The consequences of not building sufficient affordable homes are being felt in many ways, such as in the number of people who are privately renting, in higher rents that people cannot afford and in the housing benefit bill. Ultimately, it is a self-defeating approach.

One problem is that the process of house building has been far too passive for local authorities in many parts of the country. They identify the land and then hope that someone will come along with a proposal. The Lyons review is about creating the means—the tools—for local authorities. I bet Ministers wish that they had applied their minds and come up with a report like the Lyons review.

--- Later in debate ---

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

The Budget painted a distorted picture of our society—one that people living in constituencies such as mine will struggle to recognise. There are low wages, almost 1 million people are not in employment or training, some 750,000 young people are still unemployed and the average family is £1,200 a year worse off under this Government.

The Chancellor told us that the sun was shining. I do not know what planet he is from, but the sun is certainly not shining for most people across the east end, where my constituency is situated. The idea is at best hollow and at worst insulting to people who are struggling, people who are having to rely on food banks and people who are struggling to pay their bills, yet the Chancellor has the nerve to say that the sun is shining. Perhaps it is shining on his friends, but it is not shining on the vast majority of people in this country, who are struggling to make ends meet.

The Chancellor’s proposals will mean further cuts in health, education, social care and many other public services. He boasted of a “truly national recovery”, yet in my constituency and across the nation, people are simply not feeling that recovery. They are feeling the squeeze on their living standards and they are feeling deeply stressed because they are working incredibly hard but their salaries are not rising.

Child poverty has been rising over recent years. In my constituency, the rate of child poverty has risen to become the highest in the country. One in two children now lives in poverty. That is a disgrace. That situation is affecting millions of families around the country, yet this Government have failed to deal with the challenge of child poverty. They have redefined child poverty rather than tackled its root causes.

Some 22,000 people in my constituency and the constituency of my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) are stuck on housing waiting lists. Week in, week out, we meet people who are stuck with disabled family members who need appropriate housing, but who cannot be rehoused because the Government are not building enough social housing, not just in London but around the country.

We also face high long-term unemployment, with long-term youth unemployment across the board at 30%. Youth unemployment for ethnic minority young people has risen in the past five years by 50%. That is a disgrace and it shows that the Government do not care about inequalities across racial groups. They pay lip service, but do nothing about the substantive inequalities they have presided over. They have watered down anti-discrimination legislation and cut the budgets of equality agencies that regulate discrimination. The Government need to think again about the massive racial and social-class inequalities that are affecting people around the country. They have done nothing to help those who face the burden of child care costs, and they have failed to deal with the many young people who are desperately looking for appropriate training and work. It would have been a great help had they said to young people, “We will give you a job guarantee and the appropriate training so that you can get an opportunity and a foot on the ladder.”

We need a much better proposition for the vast majority of people in our country who are still struggling and cannot see any hope or light at the end of the tunnel, despite the Chancellor’s reference to the sun shining. What they see and have experienced is a bleak proposition and future, and the Government have promised yet more cuts to the very services and help that those people desperately need to provide the springboard for them to succeed. The Government have said nothing about the need to tackle the millions of people now working on zero-hours contracts.

Hundreds of carers came to see me this week. They are looking after people but are on zero-hours contracts, do not have proper recognition, and are not being paid properly. This Government have closed Sure Start centres up and down the country, and many more will close because of their proposals to make stringent cuts, due to their ideological obsession with slashing and burning. That has not changed, even though we heard a lot during the last election about a new kind of Cameron Government—a compassionate Conservative Government. That is utter nonsense, and the people of our country can see the true colours of this Tory Government, despite the so-called progressive influence of their Liberal Democrat friends, which is frankly a scandal. The Liberal Democrats propped up a Government who have been vicious in their impact on communities across the country, including in my community and across the east end.

As my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) said, we have been trying to fight off cuts to GPs surgeries—five were at risk of closing and we had to take to the streets to stop them closing for just two more years, although they may still close because the Government have not provided any assurances. Some 99 surgeries across the country are affected, including 22 in the east end where health inequality is scandalously high, yet the Government’s Health and Social Care Act 2012 failed to make tackling that one of their key objectives.

We have had to fight the closure of police stations. Yesterday I went to campaign for Matthew O’Callaghan in the constituency of the Education Secretary. Her constituents were saying that local police stations have closed and local council offices are used for people to make complaints that would otherwise have been made to the police. That must be done during office hours, so in an emergency there is nowhere to go, and nowhere to report a crime and receive a crime reference number for serious incidents. That is in the Education Secretary’s constituency. In other areas lights are being switched off, which is affecting women’s safety, including in the constituency of the Secretary of State for Communities and Local Government.

As my hon. Friend has said, constituencies such as ours face record cuts to further education. Nationally there are some £70 million of cuts to further education colleges, which 4 million people attend. I know that they will be rallying with their teachers, trade unions and anyone who will support them to tell those seeking election this May that their rights and needs must be understood. Parliamentary candidates, whoever they are, need to show that they care about the education of those 4 million people who attend further education colleges. This Government have slashed and burned, and ruined the hopes of those people. I call on people to take action and ensure that every parliamentary candidate prioritises the needs of their education and training. If they do not, people must ensure that parties and candidates who are not willing to support adult education and give people hope are shown at the ballot box that a difference can be made and that people’s political power is vital and will be exercised. That is 4 million members of the electorate. I hope the Government take note of their power because they will use it and demonstrate that it is not okay for the Government to come in, slash and burn, and cut off the hopes and aspirations of 4 million people who go to further education colleges.

The IFS has said there has been little detail about the cuts that the Government propose, but the poorest will bear the brunt of the likely cuts in public services. I hope the Government will set out exactly where they will make cuts, because up and down the country people are desperately worried that the cuts will fall on the NHS or local schools. The Government have already said that they will cut across budgets, including in education, and we must know where those cuts will be made. It would be fundamentally dishonest of the Government not to set out where they will be. I hope that the Government will be straight with the public and not try to deceive them—[Interruption.] If Conservative Members want to say something they should have the courage to do so; otherwise they should keep quiet. The public have heard enough from the Government and are fed up with them, as are Labour Members.

There are two visions of what is at stake in the coming weeks ahead of the general election. The Government’s plan is to impose deeper cuts over the next four years and put public services such as the national health service in harm’s way. That means more homelessness, more food banks, and less protection for the elderly who need care. It means more poverty, inequality, social division and social disunity. It means a much harsher society—I remember that clearly from when I was a child in the ’80s and we had to live during the Thatcherite period. It means a society where people are left behind in their millions. That is not the society Labour wants.

We propose a society that is united, has inclusive growth, and where we look out for those who are less well-off, give people hope and support their aspirations—a society where we invest in training and education so that our future growth is dependent on those who succeed, through investing in their education and giving people support and the opportunity to contribute to our country. It means investing in our national health service so that those who need care can get it, rather than having to rely on a poor service because we are not investing in health care—the NHS is still considered the best value health care in the world, and we should be proud of what we have achieved as a country. We must ensure that we support those who earn the least by investing in a national minimum wage, and support parents through child care. I hope that on 7 May people will look at those two visions and see ours as a progressive inclusive vision that will unite our country.

Oral Answers to Questions

Rushanara Ali Excerpts

Tuesday 9th December 2014 Commons Chamber

[Danny Alexander]

Actually, I was not aware of either of those facts, but they do not surprise me because of the entrepreneurial spirit and the brilliant businesses we have in the north-east of England. I believe it is the only region of this country that is a net exporter to the rest of the world. Through the measures we are putting in place, including the investment in infrastructure, we need to continue to support that part of the country.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

Does the Chief Secretary agree that we need to redouble our efforts to reduce the unemployment level for young people from 730,000, and that some 1 million young people are still not in training or education? Does he think that his Government could do much more to get them back to work?

[Danny Alexander]

I agree with the hon. Lady that we need to do more to reduce the level of unemployment among our young people, but I point out to her, and it would have been fair for her to point it out, that we have seen a very sharp fall in the level of youth unemployment and a very sharp increase in the level of employment of young people in the past 12 months. That suggests to me that the policy mix the coalition has put in place is precisely the right one to achieve those objectives.

Income Tax

Rushanara Ali Excerpts

Wednesday 5th November 2014 Commons Chamber

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

I do not envy the historian who will eventually write the book on the record of this Government. When such a history is written, the decision to cut the 50p top rate of tax will surely be seen as a turning point—the moment when this Government revealed their true colours; when they talked of hard choices for those on lower incomes, while awarding the richest 1% a tax cut worth £3 billion; and when the phrase “We’re all in this together” turned into material for satire.

People in my constituency and across the UK are facing a cost of living crisis, the scale of which the Government are unable to understand or empathise with, never mind tackle. The one part of the previous speech that I agreed with was the bit at the end, about how so many people continue to struggle. We all need to come up with a way forward that serves their interests. That is what I want to focus on. On average, households will be £1,600 a year worse off by 2015 due to tax and benefit changes made by this Government. Changes made to taxes and benefits since 2010 have meant that families where one parent is working to support children are nearly £4,000 worse off.

Let us consider youth unemployment, which is still close to 800,000. Why is it that Government Members—[Interruption]—I hope the hon. Member for Taunton Deane (Mr Browne) will stop heckling—cannot consider how this tax break could have instead been used to get those 800,000 young people back to work? Surely they deserve a chance to make a contribution to our economy. Time and again—

[Mr Jeremy Browne]

Will the hon. Lady give way?

[Rushanara Ali]

I think the hon. Gentleman has had plenty to say already. I am going to continue, because the time limit—

[Mr Browne]

rose—

[Rushanara Ali]

If I get through my speech without the hon. Gentleman interrupting and heckling, I might consider giving way to him.

Time and again, it is those most in need who are suffering on this Government’s watch. Shockingly, 2.6 million children across the UK face poverty, which is 600,000 more than in 2010. The recent report by the End Child Poverty coalition found that half the children in my constituency are growing up in poverty, a figure that has risen since 2010. Of those, two in three are in working households. One in five people across the country face low pay. Against that backdrop, it says everything about this Government that they chose to focus their efforts on reducing tax rates for the highest earners. Surely we should think about putting in place a more just and fairer tax system, but also one that gives opportunity to young people who are out of work.

Those working people across the country who are struggling at the moment will no doubt wonder why this is happening. In this House, the Chancellor said in 2011 that he was

“not going to balance the budget on the backs of the poor”.

At the same Budget, he went on to say that it would not be right to remove the 50p tax rate, asking those on much lower incomes to make sacrifices. The Government should be clear: the working people in constituencies such as mine and beyond do not feel as if they have stopped making sacrifices. We must keep remembering that. They have not stopped making sacrifices. Those people face low wages and they continue, day in, day out, to experience hypocrisy from this Government, who refuse to tackle poverty—both in-work poverty and child poverty—and when child poverty continues to rise, year in, year out. It is a disgrace and it needs to be taken seriously.

The hypocrisy continues. Only last month, the Chancellor remarked at the Conservative party conference:

“there remains a large budget deficit and our national debt is dangerously high.”

What was his answer? It was a two-year freeze of tax credits and benefits, yet two thirds of those who will be affected are in work. Such a measure, hitting the least well-off, is deemed necessary, but the pressure on the top earners is off. How is that acceptable? How is that fair? How is that justified?

[Ian Swales (Redcar) (LD)]

Will the hon. Lady give way?

[Rushanara Ali]

If I am going to give way, it will be to the hon. Member for Taunton Deane—unless he starts heckling again.

According to calculations by the Office for Budget Responsibility, the Treasury lost around £200 million from top earners due to them deferring income, as my hon. Friend the Member for Nottingham East (Chris Leslie) said in his opening speech. The Chancellor will also struggle to resist calls to cut the top tax rate even further, as he and the Prime Minister have refused to rule that out. Perhaps the Minister will clarify whether the rate will be reduced further, or perhaps she will be able to rule that out.

Our approach on the Labour Benches is about a broad-based recovery, where everybody makes a contribution and where those who are most able to can make a bigger contribution. If we are serious about getting people back into work and giving young people an opportunity, this tax cut should be reversed. We need fairness embedded in the tax system, starting with top earners. That is why I support today’s motion.

I am happy to take an intervention from the hon. Member for Taunton Deane now, but I hope he will show some manners.

[Mr Jeremy Browne]

I am always respectful of good arguments in this House; I just do not understand the hon. Lady’s argument that the way to help with youth unemployment is to have a much higher top rate of personal tax than existed under Tony Blair. We have had a fall in youth unemployment under this Government. We have had a fall since the top rate of tax was cut from 50p to 45p, and we have a much lower rate of youth unemployment than France, which has higher rates of personal tax on high earners. With all due respect, I just do not understand the central premise of the hon. Lady’s speech, but at the end of it maybe she can clarify it for me.

[Rushanara Ali]

The hon. Gentleman seems to have forgotten that we got a 1 million young people into work, while over the last four years youth unemployment has remained close to 1 million. It has only recently gone down, but it remains at some 800,000. Perhaps the hon. Gentleman could explain to those young people who do not have an opportunity, who have been unable to get work and who do not have much to look forward to when it comes to making a contribution by getting jobs what he and his party, working with the Government, propose to do about it. Frankly, he is living on another planet if he cannot understand the plight of some 800,000 young people who remain unemployed today.

Time is running out, so I shall conclude by saying that we need to think carefully about how best to support those who cannot manage to make ends meet. We need to be aware that the £3 billion-worth of tax cuts could have been used to stimulate the economy by supporting those who are not in work at the moment. Frankly, that £3 billion could be used to create more apprenticeship and training opportunities for those not currently in work. I hope that Government Members will consider what it means to create a fairer society. It does not mean giving tax breaks to those who are most well off—the top 1%—when everyone else in our country is struggling.

--- Later in debate ---

[Rushanara Ali]

I understand that the hon. Member for Harlow (Robert Halfon) said on “ConservativeHome” that the 50p tax rate would make the Conservatives look like they were looking after vested interests.

[Mark Garnier]

The hon. Lady will have to ask my hon. Friend about that. I was referring to the shadow Chancellor and saying that if my hon. Friend was at the conversation he would know what was said. In any case, my hon. Friend has a career in front of him.

We need inward investment. We have talked about the 1970s when we had exchange controls in a very different type of economy. Now we need to set a direction of travel to provide absolute certainty to any company looking to invest in this country. It can never, ever be the case that the message coming out from this place is one where politics overrides the interest of investors coming into the country. The hon. Member for Bethnal Green and Bow talks about vested interests, but if we are referring to the vested interests of someone who is going to invest in this country, I would do everything I could to support those vested interests, because it means bringing jobs for my constituents. The more jobs they bring, the higher the salaries, the better the standard of living. It will work.

Money Transfer Organisations

Rushanara Ali Excerpts

Tuesday 9th September 2014 Westminster Hall

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Streeter.

I am extremely grateful and delighted that we have a chance to debate the important issue of international finance and money transfer organisations. The new Minister’s predecessor, the right hon. Member for Loughborough (Nicky Morgan), was extremely supportive in responding to and working with officials and many Opposition Members to try to get a lasting solution to the challenge faced by money transfer businesses, which need banking facilities to ensure that remittances can be sent to developing countries, particularly to support family members and economic and humanitarian development. I hope that the Minister will update us on the progress that her Department and other Departments have made on trying to come up with a workable and effective solution that will ensure that the sector gets the support it needs and that there is greater transparency on the actions of banks and on how they enable remittance to flow safely.

In June 2013, Barclays bank announced its decision to close accounts held by community-based money transfer businesses. A number of the affected businesses were in my constituency, which is how I got involved with the campaign to build support in Parliament and across the country. I am grateful to some 50 hon. Members on both sides of the House who joined the campaign, who spoke in community meetings with Ministers and who supported me and others in setting up the “Save Remittance Giving” campaign, which has commanded the support of some 122,000 people who signed the petition to highlight the concern about the ending of banking facilities for the many UK money transfer businesses that were trying to get help and support to people in developing countries. We were fortunate in having the support of not only parliamentarians but people from community groups—particularly in the British Somali community but also in the British Asian community and many other diaspora groups and ethnic minority communities—and, more broadly, from the media and non-governmental organisations such as Oxfam and, of course, the Overseas Development Institute, both of which lent their expertise and are examples of how important remittance is in complementing development aid efforts.

The flow of remittance from the UK to people in developing countries accounts for more than £15 billion each year, and the vast majority of those transactions are made by people to poorer family members and to remote places across the world in the form of food, medical aid and assistance. The transactions can help to build schools, hospitals and roads. Many hon. Members on both sides of the House have visited countries, working with their constituents, to see some of those projects happen because the British ethnic minority and diaspora communities have contributed directly to develop their countries. That is particularly the case in countries that have come out of conflict and are trying to rebuild. Somaliland, which is the beacon of a region that is trying to rebuild after a conflict that affected the region’s fate for so long, is one such example. Many of my constituents who are originally from Somaliland have worked tirelessly to raise money and find appropriate ways to get remittance into Somaliland and beyond, particularly during the east African famine crisis, to support people and help rebuild their country.

The stakes are incredibly high, not only for development and developing countries but for us. If we do not have legitimate ways to ensure that ordinary people can get support to their family members and the societies that they have come from, so making their contribution to rebuilding those countries, we will miss out on an important opportunity to ensure that remittance can play a significant role not only in the past but in the future.

Governments across the world have faced pressure to reduce their aid budgets, and our Government have faced that pressure from certain sections of the media. I am glad that the aid budget has not been reduced, and I hope that on Friday the International Development (Official Development Assistance Target) Bill, which would legislate for a development aid target of 0.7%, takes a step closer to being enshrined in law. Successive Governments across the world have faced pressure on their development assistance budgets, and we all know that, combined across the world, remittance eclipses the world’s combined budget for overseas development assistance. This is not about small amounts of money going to individuals, although that is important; it is about the collective effort that citizens make to support family members and fellow citizens across the world, particularly in the poorest countries.

Last year, following the campaign, following the efforts of communities across the country and following the media attention, we encouraged Ministers in the Treasury and in the Department for International Development, working closely with officials, to find a long-term solution to the problem, so that money transfer businesses can be given the bank facilities that they need. Without access to clearing banks, it is virtually impossible to give assistance, particularly to countries without a proper banking system.

I am grateful to the Minister for continuing the effort to try to establish a process through the action group on cross-border remittances. As the framework set out, the process needs to be robust, effective and safe. Will she provide an update on that process? I thank her for keeping us updated. My understanding is that the safer corridor pilot will be implemented in September and that, subject to the effectiveness of that pilot, further action may be taken to roll out the facility to other countries in which the problem has arisen.

We need to act quickly because if citizens are left to their own devices to get help to their families in places such as Somaliland, Somalia and elsewhere—countries that have no banking system and no proper provision, and about which there are terrorism and security concerns—without the support of safe routes through money transfer companies, they are more at risk of having their money hijacked, which is not only dangerous and damaging for those affected but can have major ramifications for our security. There is a clear economic and humanitarian dimension, but there is also a security dimension.

In the wider context, many parts of the world are undergoing humanitarian emergencies. Families want to get help to loved ones in post-conflict and conflict-affected states, whether they are in Afghanistan, Somalia or beyond, so we must ensure that there is a way for them to do so. We must also ensure that non-governmental organisations can get assistance in countries where remittance facilities are not available. For example, Mo Farah, double Olympic winner, joined our campaign because his country is affected but also because the Mo Farah Foundation is in exactly that position. Aid agencies have a vested interest in ensuring that facilities that work are set up.

I hope that the Minister will use this opportunity to answer our questions. First, although the pilot is welcome, there is an urgency to the situation of money transfer businesses that have been operating successfully but that now face the prospect of banking facilities being made unavailable to them. That has already happened to some of them. There is a gap before a new facility is introduced, and they are unable to access banking facilities in the meantime, so their businesses could go bust. Therefore, no such businesses could be left operating in some countries. Essentially, we face the possibility that a facility that can have a powerful and positive effect will be made available too late. Will the Minister update us on whether she has had any success in her Department working with the Foreign and Commonwealth Office to ensure that the banks that have withdrawn or threatened to withdraw provide a further period of reprieve until the pilot is tested and can be rolled out and until the final programme is in good shape and lessons have been learned?

I am grateful that the World Bank has been drawn into the discussion and is a member of the group. It has an important role to play in co-ordinating efforts and getting the US Treasury involved. What role has the World Bank and the Minister’s Department played in discussions with the US regulators and US Treasury? Decisions made in the US on banking regulation have had a knock-on effect on our banks and their choice to withdraw banking facilities. It is critical to ensure that the UK and US Governments work together. Both countries, as well as other western countries, can benefit from a lasting solution, from the humanitarian, economic and security perspectives.

Our final questions are about the advice and guidance published by the Minister as soon as she took up her new ministerial position. It may be too soon to say, but how confident does she feel that the banking sector will see the guidance as addressing its concerns and that its confidence will be improved and increased, so that it can start to provide banking facilities to remittance businesses? Is an impact assessment process built in to see whether the guidance is having the desired effect of building confidence in the banking sector? I know from the feedback I have had that some money service businesses do not see any change. Can the Minister give any examples of banks that have come back and said, “Given this guidance”—I understand that it is legally binding—“we are in a position to provide banking facilities to MSBs that pass those tests.”? Are there any such examples, and are her officials working to establish that?

On the effort to build a commercial environment in which small and community-led businesses can operate, given that they have extensive and trusted community networks in the UK and the countries where they operate, how can we work with the grain of those networks, so that money flows transparently and in an appropriate and safe way that reinforces the kinds of safeguard needed by both the remitter and our Government and so that the money is not at risk of ending up in the wrong hands?

The debate has gone on for about 15 months now, since the day when Barclays decided to withdraw banking facilities from a number of money transfer businesses in my constituency and throughout the country. The sector creates 3,500 jobs, which are at risk, and it has been quietly doing important work to get help and support to millions of people in some of the poorest places in the world.

I believe that we have a once-in-a-lifetime opportunity to work together rather than saying, “The banks have decided that they will get big fines from the US regulators.” The MSBs predominantly have had nothing to do with that. The US regulators fined HSBC and other banks for their activities, and the banks have responded by trying to crack a nut with a sledgehammer, punishing the vast majority of MSBs, which are law-abiding. Many MSBs provide assistance to security services where necessary, by supporting them to tackle money laundering and terrorism, and work responsibly with our Government and agencies. It is vital to ensure that the sector is strong and can support people in developing countries.

This is also a once-in-a-lifetime opportunity to ensure that the pilot involving World Bank officials, Treasury officials and others, if it is effective, provides a tool to get money safely into post-conflict countries without banking systems. If the pilot is successful in Somalia, it might be applicable to Afghanistan and many other countries where money flows are happening, but we are not clear how, and where they could be fuelling terrorism and other activities that are extremely dangerous not only for those countries but for us. In that context, I hope that the Minister will seize this big opportunity for her, through her role and her brief, to develop a tool that could save millions of lives and improve security in our country.

Finance Bill

Rushanara Ali Excerpts

Tuesday 1st July 2014 Commons Chamber

[Mr Redwood]

The main reason they pay more tax, of course, is that they generate and declare more income here, which is surely what we want them to do. If the Labour party is with me so far in wanting decent public services, and if it is with me in accepting that the money for those services has to come from the better-off, because by definition we do not want to tax the poor, then surely it is with me in wanting to have more rich people here to venture, save, put their money at risk and to make more money with their money so that there is more of it to tax. This country is now very dependent on income tax from the top group of earners, who produce 30% of income tax, and on the capital gains tax, stamp duty and other taxes that apply mainly to rich people with big assets. That is sustaining public services. It is very important that Members of this House, who might not like those people—clearly the Labour party dislikes them intensely—recognise that they are very useful members of society and that their revenue is crucial to being able to redistribute money across the country. If Labour Members wish to have more equality, they must think about the optimising rate. Surely it is best to try to find the rate that maximises revenue, rather than a penal rate that satisfies people’s sense of jealousy—or whatever it is—about those who have or make a lot of money.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

The right hon. Gentleman is wrong about the Labour party disliking rich people intensely and should retract that statement. If he is not prepared to do so, perhaps he will explain why many people feel that his party dislikes ordinary families and poor families intensely, as highlighted by their policies.

[Mr Redwood]

That is simply not true. I am delighted to hear that the hon. Lady likes rich people—there are quite a few in her party, so let us hope she gets on well with them—but it is absolutely false to suggest that Conservatives have no interest in people who are out of tax altogether or who are on low incomes; we are desperately concerned that they should get better educational standards and have more opportunities so that they can get a job and then go on to get a better job. We wish them well, and we are very keen to work with all those in our constituencies so that they can take advantage of opportunities. We would like them to be on higher incomes. In the meantime, unlike the Government she supported, we have taken many more of those people out of tax altogether, because we think that those on an income of less than £10,000 a year should not have to pay tax. They will probably be receiving some benefit assistance.

Another point that the hon. Member for Birmingham, Ladywood did not respond to was the fact that the latest figures show that inequality rose under the Labour Government but has actually fallen a bit under the coalition, mainly because we have taken an awful lot of people at the lower end of the income scale out of tax. We have a very progressive system: the income tax system now exempts anybody on less than £10,000 and has a 47% rate, if we take national insurance as well on the highest incomes; and the benefit system rightly gives a lot of money to people at the low end of the scale and should not give any money to people at the top end.

--- Later in debate ---

[Mr Redwood]

I do not think that the economic circumstances were as different as the hon. Gentleman thinks. In the early ’80s the Conservative Government inherited an economic crisis from Labour, just as this Government did. There was a lot of unemployment and a big task in getting people back to work and getting the economy growing again, rather like today. The Government at the time managed to do that, just as this Government are, so I do not accept his point.

However, I find the fact that Labour is going backwards on these issues rather perturbing. Why can the modern Labour party not understand the basic points that the Labour party that was victorious between 1997 and 2010 understood fully? Why can it not understand that it is possible to take the tax rate too high and get less revenue? The Treasury has now accepted the doctrine of the Laffer curve and understands that putting the tax rate above the optimising rate would surely be a very foolish thing to do. It knows that that applies to capital gains tax, as it clearly does to income tax. I submit that 50% was well above the optimum rate, because we collected rather less revenue than many people would have liked. I welcome the fact that the Government have started to put that right.

I do not think that we need the study that the Labour party is recommending today, and I advise it to think again about what it learnt in the ’80s and ’90s but appears now to have forgotten. It shows that the former Labour Chancellor was clearly not crowd-pleasing when he refused to increase the rate from 40%—he was clearly antagonising many of his Back-Bench colleagues by not doing so—so there must have been a good reason for it. I think that reason was a sensible one: it would have raised less revenue, rather than more. I urge the Government to reject new clause 14.

[Rushanara Ali]

It is worth considering some of the context of our debate today on the Finance Bill. Almost 15 years ago, the then Labour Government introduced the national minimum wage. That historic measure increased the value of work for around 2 million people across the UK. At its heart was fairness and dignity for all at work. Yet today we are debating the impact of a substantial tax cut for 13,000 millionaires introduced by this Government. At a time when more than four out of five people surveyed in a recent Ipsos MORI poll said that they faced a cost of living crisis, the contrast cannot be overstated. It would be almost impossible to find so clear a contrast between the ambitions and motivations of two Governments. The bottom line in this debate is that the Government’s proposals in the Finance Bill do almost nothing to address the cost of living crisis.

[David Wright]

My hon. Friend mentioned Ipsos MORI. If we look at public attitude surveys, we see that one of the reasons why there is a breakdown of trust in politics is the very approach that she is discussing. People on low incomes—indeed, those on middle incomes—are facing a cost of living crisis, while the wealthiest are getting a tax cut. That is why people switch off from politics; they see the double standards being pursued by the Government.

[Rushanara Ali]

I could not agree more. I heard the speech of the right hon. Member for Wokingham (Mr Redwood), but it is clear that there are major divisions in our society. We should all be concerned about that. Tax breaks are given to those who do not need them—to millionaires; responsible millionaires will admit that the stance being adopted is divisive. We should protect those who are struggling the most as well as ordinary middle-income families in this cost of living crisis. I hope that the Government will take on board some of the points made about the social consequences of the tax inequalities that the Government are introducing and making worse.

Let us take my constituency of Bethnal Green and Bow as an example. Families there are significantly worse off than they have ever been. Child poverty is at 42% and there is still high unemployment. There are still major problems of worklessness and young people who are not in training or education. That is a major problem around the country: 870,000 young people remain unemployed.

Changes in taxes and benefits made since 2010 make one-parent families working to support children an average of £3,720 a year poorer. That staggering fall in living standards will affect the most vulnerable. The issue is not envy, but the fact that my constituents are struggling. They will rightly continue to ask why millionaires in the City are receiving a tax cut from the Government of about £100,000 a year. My constituents are working hard to make ends meet and their children are living in poverty. While they continue the battle to survive, they ask why the Chancellor is giving £3 billion a year in tax breaks to millionaires. How is that fair? How are we all in this together if that is the Government’s priority?

[Jonathan Edwards]

Given what the hon. Lady is saying, would she support a 50% rate on earnings above £100,000?

[Rushanara Ali]

I am here to debate the new clause. I am focused on what the Government are doing. I support the new clause because it is not fair that £3 billion a year should be going to millionaires. On top of that, as my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) mentioned, bonuses in the financial sector are up by 83%. My constituents are living between the City of London and Canary Wharf; they see the inequities and want a fair chance. They are not complaining about people earning a decent living, but they want the Government to be fair in how they tax.

[Mark Field (Cities of London and Westminster) (Con)]

The hon. Lady represents a seat next door to mine. We both have significant numbers of constituents living, as she would put it, in poverty—although poverty levels today are very different from those certainly in the first half of the last century and before—and significant numbers who are relatively well off. Does she not recognise that by reducing tax rates we are bringing more money into the Exchequer? She says that the issue is not about the politics of envy, but does she not recognise that higher rates of tax would bring less into the Exchequer to pay for the very services that our more poverty-stricken constituents so desperately need? She is undermining the very case she tries to make.

[Rushanara Ali]

I have great respect for the hon. Gentleman, but I do not agree. My hon. Friend the Member for Birmingham, Ladywood set out the facts in her speech, so I will not reiterate them; others want to speak. The hon. Gentleman will know about the disparities all too well. The Government have a responsibility to make sure that the tax system is fair, and fairness is at the heart of a progressive tax system admired by people in other countries. The changes that the Government have introduced—prioritising tax breaks for those who least need them while ordinary families continue to struggle—are deeply disturbing and unfair.

[Mr Iain McKenzie (Inverclyde) (Lab)]

We are hearing people say, “Tax them less and they will pay more.” Why does that not work all the way down the tax scales? We are seeing middle-income families being sucked into higher tax brackets to pay for the lifting of the less well paid out of tax altogether.

[Rushanara Ali]

The Government have made a great deal of their efforts to support middle-income families, but frankly their words have been empty. They have prioritised those at the top. Will the Minister say whether his Government will rule out reducing tax further for high earners to 40%? I give him the opportunity to say so now. The revenue that the Government are forgoing could be used to support others—to get young people back to work, for instance.

[Mark Field]

rose—

[Rushanara Ali]

I will not give way again as I am conscious that others wish to speak. I will conclude.

The Government’s so-called long-term plan should not be pursued at the expense of those in lower and middle-income families. That is why the new clause would rightly force the Chancellor to publish how much extra tax would be paid by high earners under the 50p rate. That would establish how much those earning more than £1 million per year would contribute. That would go a long way towards giving us the clarity we need.

Our vision is to work towards cutting taxes for the 24 million people on middle and lower incomes through the introduction of a 10p starting rate of tax. That is not only the way to a fairer system of taxation but the only way to nurture sustainable growth for all. After three years of flatlining, the growth that we are beginning to see is welcome, although it is still coming much slower than it is to countries such as the US and Germany.

Opposition Members have a vision for a broad-based recovery forged through the efforts of all people from all backgrounds. We must remember that average wages will have fallen by 5.6% by the end of this Parliament. How does that make our society one in which we are all in it together? I do not hear members of the Government or Government Back Benchers use that phrase any more. I challenge them to use it today if they still believe that it is not a joke as far as most people in this country are concerned. Only Labour’s plans for a fairer and more progressive taxation system will support the return of wages to a level seen before 2010.

In conclusion, I return to the basic premise of Labour’s argument. It is simply not acceptable or fair for millions of people to pay more in tax while millionaires pay less. Since 2010, tax rises and cuts to benefit have left average households worse off. Real-terms decreases in wages across this Parliament have made the financial plight of ordinary people across the UK tougher. People have become dependent on food banks as they have never been and there is rising homelessness in cities such as London. There is rising poverty—child poverty in particular—not only in my constituency, but up and down the country, but this Government still find the energy and will to reward the top 1% of earners while everyone else suffers.

The Government have pandered to the worst suggestions of their critics, namely that they are out of touch, have failed to spread any meaningful recovery to those who desperately need it and are out for the few and not for the many. For those reasons I support Labour’s proposals on the tax cut and support the new clause.

[Ian Swales (Redcar) (LD)]

It is a pleasure to follow the hon. Member for Bethnal Green and Bow (Rushanara Ali). I agree that we should be aiming for a tax system that is as fair as possible and accept that the timing of the top rate cut was not good for public relations or for feelings throughout the country. But let us examine the genesis of this situation.

In 2010, 6 April was an important day. It was the day that the top rate of tax was raised from 40p to 50p. It was also the day that Parliament was dissolved—the very last day that Labour Members sat on the Government Benches. They were sat on these Benches for one day with the top rate of tax at 50p. Clearly, as the right hon. Member for Wokingham (Mr Redwood) said, the rate was raised in the full knowledge that Labour was likely to lose the general election. It was the then Chancellor’s leaving present, which he knew would keep leading to headlines and would be the gift that kept on giving. Listening to the speeches made by Opposition Members today one would imagine that there had been a 50p tax rate throughout their time in government, and not simply on the last day on which they sat on the Government Benches.

Money Transfer Accounts and Remittance Sector

Rushanara Ali Excerpts

Wednesday 22nd January 2014 Westminster Hall

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

It is a great pleasure to serve under your chairmanship, Mr Owen. First, I pay tribute to my hon. Friend the Member for Cardiff West (Kevin Brennan) for securing the debate and for working with me and other colleagues on this very important subject and the Save Remittance Giving campaign, which had the support of 47 Labour MPs and, later, MPs from other parties. Notably, it has also had the support of nearly 130,000 members of the public. The campaign has been led particularly by the Somali community, but there are others involved, including communities throughout the country who have a direct interest in remittance giving; many non-governmental organisations, such as Oxfam; and constituents whose origins are not in developing countries but who understand how important it is that we support remittance giving.

Remittance giving plays a vital role in reinforcing and complementing our international aid efforts to developing countries such as Somalia, and particularly areas such as Somaliland, which provide a beacon of hope for that country, showing how remittances, along with development aid and a transition to peace and stability, are vital. If we need an example of a country that could make great strides through remittance contributions, that is the country to look at. I will focus on Somaliland and Somalia today, because of the unique situation that there is no banking system in that country.

There are many parallels. The Syria conference starts today, and when we debate how countries can move towards a peace settlement, the question of countries in conflict or coming out of conflict without banking systems becomes ever more important. Somalia and Somaliland are an example of the importance of banking and remittance that, if we can find a solution to the current problem, will pave the way for other countries coming out of conflict that do not have banking systems. In such circumstances, people need to be able to remit legally—through legitimate means—in a proper banking process.

[Sir Tony Baldry]

I think the whole House supports the work that the hon. Lady and others have been doing in campaigning on remittances. She is perfectly right to draw the attention of the House to the fact that Somaliland and Somalia have no banking system—in Hargeisa, one sees people literally pushing wheelbarrows around with Somali shillings. Does she agree that one thing that the Department for International Development and all of us should be trying to do is help both Somalia and Somaliland to develop a genuine banking system? There needs to be a clearing banking system in both Mogadishu and Hargeisa if those countries are to have any sustainable development.

--- Later in debate ---

[Rushanara Ali]

I could not agree more. There is a very important question for the Minister about the role that our finance Ministry, working with international Finance Ministers and with our International Development Secretary, can play in taking the lead on supporting countries that are making the transition, so that they can have an effective banking system. That has to happen simultaneously with efforts to find a solution on the issue of remittance. It is critical if we want to ensure that our security and our interests are also served.

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

The hon. Lady has referred several times to finding a solution. Does she agree with me and with an Oxfam spokesman who has said that what is really required is a long-term, sustainable fix to ensure that this problem does not occur?

[Rushanara Ali]

Yes, of course we need a long-term solution as well as an interim solution. My hon. Friend the Member for Cardiff West set out brilliantly the background—how we got here. Barclays made its decision, following on from decisions that other banks had made, which has led to virtually no opportunities for money transfer companies to use banking facilities to carry out their business, and as a result, many have gone out of business. At this rate, there will not be many left if we do not get our act together and find an interim solution, as well as a long-term solution that involves coming up with an international framework.

Britain has led on these issues in the past and I believe that it can do so again. That is my appeal today to the Minister—that he will work with the Secretary of State for International Development and the Chancellor of the Exchequer and put genuine effort in during the short window of time that we have managed to gain, thanks to the injunction achieved by the company based in my constituency, Dahabshiil, led by Mr Abdirashid Duale. As a result of that, although other companies have closed, it is still going. It is virtually the last one standing, but it is also the biggest company that supports remittance to developing countries.

We have until October, and if a solution—an interim solution as well as a long-term one—is not found, we may see devastation in Somalia, because there are almost no other routes to get money in apart from physically carrying cash, which I am sure no one wants people to be doing, because of the dangers of criminality, terrorism, extremism and many other things. We cannot have a situation in which people must physically transport cash and place themselves at risk of being criminalised, not to mention being the target of criminals, as they try to get money to their communities because of the desperate situation.

Let me remind hon. Members of the context particularly of Somalia, but also of many other countries—we have seen this in Pakistan, Bangladesh and many other countries. At times of crisis, people need to get money into remote places, so even countries with a banking system struggle to enable people to get support—to get remittances—in. That is where money transfer companies play a vital role. They have intimate—close—networks and trusted relationships in remote villages around the world, whereby people can get money to those who cannot travel easily because the infrastructure is not good enough in those countries or because they live in remote places.

Money transfer companies are also vital in times of disaster, as we saw during the humanitarian disaster in east Africa, which affected Somalia, the floods in Pakistan and Bangladesh, the cyclones, and disasters in many other countries. We need to ensure that there are ways in which remittances can be given, so that the pressure on humanitarian assistance does not increase further, which undoubtedly it would do if remittances were prevented from getting to people quickly and safely. Global remittance flows are greater in value than all the international aid budgets put together. We need safe and legal—legitimate—mechanisms whereby people can get help to their families.

In the previous debate, the Minister himself said that his elderly family members had received remittances in the past and continued to do so. I have a similar experience, because my family do the same. It is a critical way in which people support each other. The British Muslim community donate millions of pounds in zakat, which also takes the form of remittances. All those contributions build a vital lifeline for people in developing countries who might not qualify for development aid, but who none the less receive support for education, health care and other costs that enables them to live a decent life.

Remittances contribute greatly to economic development, as I have seen in my constituency, where communities have come together to raise money. I attended a recent event at which some 500 people from the British Somali community got together to raise money. It was organised by some of my constituents who are here today: Ayan Mahamoud, Abdi Rashid Gulaid and many others. They raised nearly £1 million in one evening by calling on the community to act to rebuild their country, to rebuild roads and to rebuild infrastructure.

That is a case in point of communities helping themselves to rebuild their country, rather than depending on aid. We have heard a lot from Ministers from the Department for International Development about the need for self-reliance. I passionately believe that that is what people want in their own countries, and the best way to encourage that is to build a system of remittance through which people can send money legitimately to help rebuild their countries and lift the inhabitants out of poverty. Such a system can work alongside the important international aid effort to which we contribute.

My hon. Friend the Member for Cardiff West set out the background and described the inconsistencies inherent in the decision by Barclays. The Government must act to provide a medium-term and a long-term solution to this serious problem. The fact that 130,000 people got behind the campaign and tens of thousands more signed petitions—teenage Somali girls even went around markets and visited people’s houses to get them to sign up to the campaign—shows how much people believe this matters because it affects their lives. People talk about communities feeling disfranchised, but that is an example of a community that led the way because the bank’s decision affected their families and friends so directly.

If we can find a solution to support a country and a community that historically have felt let down by politics—international politics as well as our politics—we will show that we care passionately, as the Prime Minister has said, about countries such as Somalia and support their transition towards peace, stability and economic development. The best way to do that is by supporting legitimate ways to help people help themselves and their families through remittance.

The most urgent of the challenges we face is time. Thanks to the campaign, the support of Members from across the House and the engagement—with some pressure—of Ministers in the Treasury and the Department for International Development, we now have a framework. As my hon. Friend the Member for Cardiff West said, the action group on cross-border remittances needs urgently to meet and identify a chair. I hope that the Minister will set out in detail what will happen. We have a window of opportunity that nobody would have believed possible last summer, thanks to the work of the campaign, MPs and the media, and not least the support of double Olympic champion Mo Farah. His foundation, which uses Dahabshiil, has been directly affected because it will find it difficult to send money back to Africa. He said:

“I just cannot see how cutting the remittance lifeline squares with British foreign policy in the Horn of Africa. It will undo all the good work the government has achieved in the region”.

I echo his comments.

The Government have done good work in championing the cause of Somalia and Somaliland, and the Opposition have supported that effort through the Somalia conference. Whether a solution to the problem is found in the coming months—both an interim solution, to ensure that people can continue to remit to countries such as Somalia and places such as Somaliland, and a long-term solution—will make a critical difference to whether Somalia can avoid further conflict and devastation.

I hope that the Minister will push for the action group to come up with a solution that addresses the decision made by Barclays and other banks. Such banks need to feel that the regulatory framework allows them to provide banking facilities to money transfer companies without fear of big fines. There must be consistency and transparency in the decisions made to remove banking facilities from certain companies. The Government must learn lessons from the past, and look at what was done in cases where concerns were raised about money laundering.

Most importantly, as several experts have highlighted, the decision not to provide legitimate banking facilities to money transfer companies will simply drive the whole industry underground. We will return to the bad old days of money flows going into countries without regulation and without their Governments knowing how much money is going in. Some of that money will absolutely end up in the wrong hands, which is dangerous for those countries and for our security. That issue must be confronted. We need a solution that addresses issues of security and counter-terrorism. The withdrawal of legitimate banking facilities will open the way for such forces and present bigger dangers for us, particularly in countries such as Somalia and the surrounding region where there are major concerns about extremism and terrorism.

[Simon Wright (Norwich South) (LD)]

Does the hon. Lady think that as part of the solution, more might be done to promote mobile money transfers? According to a survey by the Gates Foundation, the World Bank and Gallup, more than one in three adults already use mobile money in Somalia. Might that be an important part of the solution?

--- Later in debate ---

[Rushanara Ali]

There is no question but that mobile technology can help, and many have cited M-Pesa as a potential example. The reality is that such technology does not go far enough, however. Not everyone can afford a mobile phone. In countries where mobile phones are cheap and there are banking systems and proper infrastructure, it is much easier to create the possibility of mobile phone transfer, but Somalia is a long way from that and, in the short to medium term, such a solution would not be adequate. In the long term, it might be a complementary facility, and I know that the action group will want to look into that.

However, mobile transfer is no substitute, and anyone who thinks that it might be is, frankly, living on another planet. Somalia has no infrastructure, and it does not have the required banking system. There are major challenges to using mobile technology to get remittances into the country; if that were not true, we would not be having this debate.

[Kevin Brennan]

Further to that point, is my hon. Friend aware that the survey that made those claims about mobile technology was based on 1,000 people in Hargeisa? That is hardly representative of Somalia as a whole.

[Rushanara Ali]

My hon. Friend is right. The integrity of that survey has been questioned, particularly by the Somali community in Britain. The remitters felt that it did not address the seriousness of the issue and was a superficial exercise. Frankly, going only into Hargeisa is not good enough. The trusted networks that organisations such as Dahabshiil and other money transfer companies use to reach people in remote places are critical to support across the country. That is the major challenge that we must address.

Some in my constituency, and elsewhere, have pointed out that if they want to get remittance in without the proper facility, which has so far been provided by Barclays, they will have to do so via Kenya. Family members would have to leave and go to Kenya, or to Hargeisa. If they live at the other side of the country, they would have to travel many hundreds of miles to get there. It could cost hundreds of pounds to get somewhere to access the remittance.

Imagine doing such a thing even in our country, never mind in a country without roads, safety, electricity, air transport and the necessary support. Add in the cost and it makes it pointless to get the remittance that family members might be sending. Remittance amounts might be small, but they are significant in providing support. The cost of retrieving the money, however, is too high if there is no direct route via money transfer companies that can get to remote villages. If there is no proper facility, the cost of people travelling to the capital, or to another country, is too high. That is not a solution.

I know that my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) wants to speak, so I will start to conclude. I also want to hear from the Minister, and would like him to have as much time as possible to highlight the work he is doing on the issue. I know that he is working with colleagues across Departments on a solution to the problem. I hope he will have some good news.

Where do we go from here? We need strong international leadership from the UK Government. We have done that historically, so there is no reason why our Chancellor and the Secretary of State for International Development cannot lead the way. I welcome the fact that the working group involves the World Bank. If it was not for the campaign, and the pressure from the community and Members from all parties, that might not have happened. I am grateful to the Minister for rising to the challenge and recognising the significance of the issue, as well as the potential benefit for the UK if we lead the way to a solution.

There are economic benefits for us. If we can build a remittance framework to support economic development in countries in Africa, we can do more trade with such places in future. We need to be ahead of the curve. Other countries, such as China or India, are represented in Africa, while our banks are pulling people out, including the diaspora communities with strong links that could do more for our trading relationships in Africa. Remittance is the first route in for our businesses. I have seen that in countries such as India, Pakistan, Bangladesh and many others. There are potentially huge economic benefits if we create the climate within which the diaspora and minority communities can remit, trade and pave the way for our companies to follow, as has been the case in other countries.

There are longer-term benefits for the Treasury, and not only in engaging with the issue directly, coming up with an international solution and paving the way for our international partners. There are also benefits because for any country coming out of conflict without a proper banking system, or with one that has been devastated by conflict, the risks of money laundering and the financing of terrorism will be reduced if the security dimension is addressed and there are proper facilities. That is why Governments must step up. Companies such as Barclays, HSBC and others have said that they will be fined. Companies will have their motives, reasons and deep concerns about being clobbered with a big fine by US regulators. I have sympathy for that, but at that point the Government and the international community must step in to deal with the market failure. That is where I believe that our Government can play a vital role.

I am grateful to the Minister and the Chancellor for letting me know, informally, that they have had discussions on the issue. I would like to see more formal discussions at the G20 and other international summits where the issues of financial exclusion and remittance can be raised. I know that that has been done informally, but what plans does the Minister have to raise such issues more formally in the relevant forthcoming summits? On the role of other agencies, will the Minister explain how his Department is working with the Financial Conduct Authority, banks and other relevant agencies to come up with a solution? What role could the publicly owned banks play? Could we work with them to come up with an interim solution, as well as a long-term one?

I hope that the Minister will answer the questions that have already been asked, but I would also be grateful if he set out his plans for an interim solution, as well as a long-term one, before October. The time line has been set: if a negative decision is reached in October— the deadline set by the courts for Dahabshiil, the biggest provider to Somalia and Somaliland in my constituency—the vital remittance lifeline for Somalia will be removed. That is dangerous. Will the Minister be able to press on with a solution before then? If there is no long-term solution in that time frame, there must be an interim solution so that, beyond October, where there is a time lag, Dahabshiil does not face closure once again. That would be devastating to Somalia and Somaliland.

I thank colleagues from across the House for their contributions. I also thank the Save Remittance Giving campaign, of which I am very proud to be the chair, and the more than 100,000 people who supported it. I know that they will continue to campaign and to keep pressure on the Government. I hope that they continue to do so and work with their MPs, whichever party they belong to, to come up with a solution that will protect such a vital lifeline to millions of people in developing countries, especially Somalia and Somaliland.

[Several hon. Members]

rose—

--- Later in debate ---

[The Financial Secretary to the Treasury (Sajid Javid)]

It is always a pleasure to serve under your chairmanship, Mr Owen.

I congratulate the hon. Member for Cardiff West (Kevin Brennan) on securing this important debate. I listened carefully to him and to all other hon. Members who spoke. They set out a well-argued case and made their points well.

Remittances play a vital role in supporting the people and economies of countries throughout the world. As we have heard, they are a financial lifeline for the families of Somalis, Pakistanis, Poles and other diaspora groups that are living here in the UK. A healthy and functioning remittance sector is crucial for thousands of our constituents up and down the country. We heard from the hon. Member for Bethnal Green and Bow (Rushanara Ali) about her personal experience, and she referred to comments that I have made about my own personal experience. My parents came to this country from Pakistan. They have many loved ones still living there who rely on remittances. I have seen what it is like if sometimes those remittances are missed or not received—it can make a real difference to day-to-day living standards—so I am grateful to Members who have shared personal stories, or told stories on behalf of their constituents, and their contributions show just how important a topic this is.

The UK is a global leader in the fight against money laundering and terrorist financing. Our banks and regulators have a vital responsibility to ensure that there is not inadvertent financing of criminal activities that could pose real risks to British citizens, as well as to national and international security. The Government are proud of our international role on this issue—we are setting the agenda. The Prime Minister received wide international recognition for his role in driving forward that agenda during our presidency of the G8 last year.

The right approach to tackling money laundering and terrorist financing should support a healthy and growing money transfer sector, rather than stifling legitimate money flows or financially excluding honest customers. I assure hon. Members again that the Government are committed to achieving that approach, and I shall set out the steps that we are continuing to take as we work closely with the private sector to facilitate a sustainable, market-based solution to what I accept is a real challenge.

The context for the debate is the trend in recent years for banks in many countries to withdraw accounts from money service businesses in response to perceived risks, and to reputational and regulatory concerns. That is important, because access to banking facilities makes remittances quick and transparent, and keeps costs low. We need to be clear that neither the Government nor regulators can compel banks to offer an account to any customer. Such a decision taken by a bank is private and commercial, and in accordance with their risk appetite and compliance with legal and regulatory requirements. The Government cannot intervene in banks’ day-to-day decisions. I was asked about the publicly owned banks in the UK, and the same applies to them: the Government cannot intervene in their commercial decisions or prevent—

[Rushanara Ali]

The question is about not the Government forcing banks to act in a certain way, but whether discussions have taken place to encourage banks to look at a solution so that they can play an active role. In the session that the Minister hosted last year, the chief executive of one bank was receptive to such dialogue. It is about working with them to find out whether there is a way forward, rather than telling them what to do. Some more enlightened individuals—board members—in the banking sector are worried about the impact of this situation and the damage it does to their banks’ reputations, and they are keen to explore this issue.

[Sajid Javid]

The hon. Lady makes a good point. Banks should be concerned about the reputational impact that could arise as a result of their decisions. I confirm that the Treasury, the British Bankers Association and other representatives of the banking industry have discussed the issue. We are engaged with all banks, including state-owned banks. I stress that what a bank does, or does not do, is ultimately a commercial decision for it to take.

--- Later in debate ---

[Sajid Javid]

I cannot tell the hon. Gentleman specifically whether a representative was nominated or if there will be one in the group, but I can certainly look into that and get back to him. I can confirm that we are working with the Somalia Government, through the Foreign and Commonwealth Office, on this issue overall.

The Somalia-focused working group may be of particular interest to many hon. Members in the Chamber. The group has been tasked with developing a safer corridor pilot to ensure secure remittance channels to Somalia. The group will work with the World Bank, which will provide technical expertise, and the pilot will aim to improve the security, transparency and oversight of this existing remittance channel. The Department for International Development has held consultations to identify appropriate representatives for the working group on the safe corridor. International partners, including the World Bank, the G20 and the international strategic alliance on law enforcement, are also supporting this work.

The group working on the pilot has agreed its final terms of reference, through consultation with stakeholders, and these will be presented to the action group next week. The Somalia-focused group, working with its partners, including the World Bank and others, believes that there is a one-year implementation for the pilot project.

Before I conclude, I want to make sure that I have answered questions raised by hon. Members, if I have not answered them already. The hon. Member for Cardiff West asked about international engagement. I hope that I have given him some insight into that, regarding our working with the G20, the World Bank and other international partners. We are also working through the EU. The hon. Gentleman knows that a payment services directive exists, but a second payment services directive is being negotiated with EU partners. We have taken a strong interest in that to ensure that whatever comes out of it does not make this situation any more difficult, but helps to improve it by encouraging the development of rules to deal with money laundering and our other natural concerns that are proportionate and do not make the situation difficult for banks throughout the EU. We have to keep in mind that Britain has, I think, more money service businesses than any other European country, so that is another important aspect of our international engagement.

Several hon. Members asked how well Government co-ordination is working. We have a steering group at Government level, of which the Treasury is part, which meets every single week. As well as the Treasury, the group involves the Cabinet Office, the Foreign and Commonwealth Office, the National Crime Agency, which provides information from our intelligence agencies that we think might help, Her Majesty’s Revenue and Customs, the Financial Conduct Authority and the Department for International Development. The Treasury is a core part of that group, which has proved important in ensuring that we stay on top of the issue and treat it with the urgency that it deserves.

[Rushanara Ali]

I thank the Minister for his answers, but I have a couple of further questions. First, are there likely to be any impact assessments on cash couriers? Will the group’s terms of reference include what it would mean if cash couriers were going into those countries? What should Somali and other remitters expect? Secondly, will the terms of reference be published? Will there be opportunities for people in the community and the various sectors, and for the NGO community and Opposition Members, to feed in their suggestions?

Pub Companies

Rushanara Ali Excerpts

Tuesday 21st January 2014 Commons Chamber

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

I have two points to make. One relates to the many pubs in my constituency and the curry industry, which is worth about £4 billion, and the other to the inter-relationship between beer and curry. What assessment has the Secretary of State’s Department made of the impact on pubs and the alcohol and restaurant industries of the increase in VAT to 20%?

[Vince Cable]

Just about every aspect of the fiscal and economic implications for this industry has been exhaustively reviewed, and I will try to find out the answer to that specific question from the various studies that have been done. I do not think that we have specifically analysed the interaction between beers and curries, but I am sure that there is a positive correlation.

Money Transfer Accounts

Rushanara Ali Excerpts

Wednesday 17th July 2013 Westminster Hall

[Hugh Bayley (in the Chair)]

Order. Colleagues who want to take their jackets off are free to do so.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Bayley.

I am delighted to have secured this debate on the provision of money transfer account services by banks and their impact on Britain’s ethnic minority communities in particular. Remittance plays a vital and complementary role in helping to lift millions of people out of poverty across the world, and it plays a vital role in ensuring that, as well as our commitment to aid, we engage the public in giving to their loved ones, who are often on the verge of poverty and would not qualify for development aid. This is a vital debate because we need to consider how we support individuals to give to family members across the world.

Remittance helps to save lives through direct support by providing for loved ones in remote areas of the world. It helps save lives in the Indian subcontinent, for instance in Pakistan and Bangladesh, and in many other places, especially during times of crisis such as Cyclone Sidr in Bangladesh a few years ago and the earthquake and floods in Pakistan. Many of our constituents from various African and Latin American countries send money through remittance.

I will focus on the recent decision that has propelled us into calling for this debate. Barclays made the decision to withdraw banking facilities from small and medium-sized community-based money transfer agencies, which provide low-cost, legitimate routes for sending money to remote places across the world. In some of those places, it is very difficult for mainstream money exchange and money transfer companies that do not have networks, agents or structures to get assistance to family members. Taking the example of disasters, those are the times when people need to get assistance to their families immediately, which is certainly what happened in countries such as Pakistan and the many others that I mentioned.

[Angie Bray (Ealing Central and Acton) (Con)]

I thank the hon. Lady for giving way so early in this debate. One area she has not mentioned is Poland. I have a large Polish community in my constituency that is facing the loss of One Money Mail, which has become a tried and trusted service for many people in the Polish community when sending remittances back to Poland. Those people are extremely concerned that they may have to lose the service, which they have grown to trust and which they use frequently; it will be a great loss to the community.

[Rushanara Ali]

I thank the hon. Lady for her intervention. She has added an important perspective to the debate, which is that the issue also affects countries that people might not have thought about.

I commend parliamentarians, because some 46 Labour MPs have already signed a letter to Barclays, and I know that the all-party group on Somaliland and Somalia has also made representations to the Government. MPs and parliamentarians from both sides of the House, and many other people, have raised the alarm bell with the Government. That highlights our deep concern about how decisions that have been made in the past, not just by Barclays but by other banks such as HSBC, to remove banking facilities that are affordable for hard-pressed families who are trying to get support to other parts of the world, have been supported rather than punished. We should encourage people to give, and I hope that the Government will consider the issue closely.

According to the Financial Times, more than 250 money transfer companies are now facing closure following the decision by Barclays to withdraw the service. Other banks have already withdrawn it, so the suggestion that those small and medium-sized companies could go elsewhere is nonsense. We need to ensure that the decision of those banks does not send a signal to other banks that there is something wrong with such businesses and that other banks should not do business with them, which is essentially what has happened. That is the insidious conclusion that is being drawn at the moment. Allegations are being made that those businesses, many of which are in our constituencies, are engaged in activity that is not legal.

Barclays has said to me that it is concerned about only the 1% of companies that represent 46% of the problem. The Government and regulatory authorities should consider how to assist Barclays and other companies that need to clean up operations where there are problems. If that 1% is a problem, assistance should be provided to address that problem rather than involving the 99%, in the case of Barclays, that do not pose a problem. If that logic were applied to the banking sector, for instance, we would not have a banking sector left. I ask the banking sector to have some empathy and to think about what the consequences would have been for it if, during the financial crisis, all companies in the sector had had to be shut down just because there were certain bad apples.

I hope the Minister will consider the issue and answer the question about how we can focus and zoom in on the areas where there are cowboy operators, which none of us want. The diaspora and ethnic minority communities in this country and across the world do not want to see cowboy operators; they want legitimate, well regulated mechanisms for sending money to loved ones.

As I said, 45 other MPs and I supported the letter to Barclays bank that the Minister has seen, and I look forward to hearing what he, his Department and the regulatory authorities will do to try to help with this important matter. We are asking for some breathing space. We are asking Barclays—I do not believe this is an unreasonable request—to extend the date from August by another six months to give the Government, the regulatory authorities and the Minister the breathing space to bring people together, including the British Bankers Association, the banks and interested parties such as the money transfer agencies and the communities that use their facilities, wherever possible, to arrive at a solution that does not lead to the industry’s closure.

More than $3.2 billion of remittance a year is sent from the UK, and remittance amounts to some $530 billion worldwide, which is more than the total global international development budget. We must act internationally in concert with our American partners. The decision to apply fines to Standard Chartered and HSBC has led to the decision by UK banks such as Barclays to stop remittance facilities. Frankly, the companies have nothing to do with what has happened in the US with the breaching of sanctions, or with the other cases in which banks have been involved, but they are being punished.

If we do not find a way to address the problem, the risk is enormous, because there will be no legitimate ways for people to send money to remote parts of the world. Of course, there is virtually no way for people to get assistance to countries such as Somalia through a legitimate route. We need a constructive way forward, and I hope the Minister can explain how his Department and officials will work with the banking sector to develop an industry-wide solution so that we can ensure that the remittance and money transfer industries are strengthened in light of the crisis, rather than destroyed.

I also hope that the Minister will consider that if banking facilities to money transfer agencies end, what is likely to happen is what used to happen before a regulated mechanism was in place. On the whole, people who are not wealthy want cheap and affordable means to get assistance to their loved ones, particularly in times of desperation and crisis, such as when a family member has died and money needs to be sent quickly for burials and associated costs, or when there is an urgent health care emergency, likely or actual conflict or a humanitarian emergency, as was the case in Somalia and the rest of east Africa in 2011 and as is likely to happen in future. If there is no legitimate route to send money, there is a major risk that the industry will be driven underground and that clandestine mechanisms will be used to get money to family members. If that happens in the billions of pounds, we will not be providing remitters with the back-up, support and legal mechanisms to send money safely to their loved ones. It will also mean that some countries are unlikely to be able to monitor the amount of money flowing into their economy, leading to inflationary pressures.

Furthermore, there are security issues. People worry, rightly, that their money might end up in the wrong hands, and potentially in the hands of extremists. In countries such as Somalia and Somaliland, there are grave concerns about that risk.

[Yasmin Qureshi (Bolton South East) (Lab)]

I congratulate my hon. Friend on securing this debate. She mentioned that more than £2 billion in remittances is sent abroad. It is important to emphasise that although that is a large amount, people often send small amounts— £50 or £100—to their family. Small businesses are therefore incredibly important to people without a lot of means who send small amounts of money.

[Rushanara Ali]

My hon. Friend is absolutely right. The amounts of money are often small. People work hard to make a living and provide a bit of support. I know that because many of my constituents tell me stories about how they are supporting the education of distant relatives or immediate family members by sending them money every month. During Ramadan, which we are in right now, people have a duty to give charity, or zakat. They want to give it to people they know who are poorer, and not through charitable organisations, where administration costs are high compared with direct giving. There are many occasions on which people give small amounts of money. For example, the Muslim community in Britain contributes £100 million in charitable giving during the month of Ramadan alone.

A local activist in my constituency recently said:

“There is simply no other legal way of sending money to Somalia. If these firms are closed, it just means people will have to carry large amounts of money from airport to airport, and all that’s achieved is that everyone will end up a criminal.”

We cannot risk criminalising people who are simply trying to support their families.

Another major opportunity is at risk. Ethnic minority communities have insights and connections in their countries of origin. I see that in my constituency, as I know other right hon. and hon. Members do. They have insights into how to trade with their countries of origin, and affordable remittance facilities are critical to doing so. We are closing off opportunities for small businesses to operate and develop. It is also costing more than 3,000 jobs here in the UK and jobs in those countries.

[Mike Freer (Finchley and Golders Green) (Con)]

I congratulate the hon. Lady on securing this debate. She has explained the security issues created by driving remittances underground. Is it not also true that it could drive the business into the hands of the big American globals, wiping out our domestic small and medium-sized enterprises in the market? That is a dangerous step, which the Government should do all they can to avoid.

[Rushanara Ali]

Absolutely. I would be interested to hear whether the Minister has had any representations from such companies. I understand that some lobbying has been done, certainly in America. It would be useful to know whether he has had representations from bigger agencies, including MoneyGram and Western Union. One concern is that the underlying agenda is to shut down small operators because they do not charge as much and banks do not get as much revenue, and that this is about profit as much as anything else. We need clarity on the criteria that Barclays and other banks have used to stop providing banking facilities.

It is depressing that, unfortunately, the banking sector seems to have learned nothing from the past few years. Small community-based businesses are being hurt while they are trying to run decent businesses and support people. They should come together to consider how to address some of the underlying problems. We understand that there are grave concerns in the banking system about being fined by the US authorities. It is right that we should support the banking sector in ensuring that their due diligence processes are done, but that cannot be an excuse to shut down smaller companies just because they provide competition.

I will press on quickly to a few final points so that others can speak. Somalia presents a unique problem: it does not have a banking sector. That means not only that Somalia will be affected when remittance flows stop, but that humanitarian aid organisations such as Oxfam will lose the ability to send money to the region. Some 40% of people in Somalia who depend on remittance would be affected by that decision. Last year, the Somali authorities said that about $2 billion, or one third of the country’s GDP, is channelled to Somalia through small money transfer agencies.

The country has come out of a conflict that went on for a long time and cost many lives. It relies on the Somali diaspora around the world, who are working hard to rebuild Somalia and Somaliland. This decision would cripple the country. We cannot afford to let that happen, not least because it is in our interest to have a stable, prosperous and effective state in Somalia and Somaliland. That is what my constituents, many of whom are from Somaliland, want. I hope that the Minister will see the connection between this decision and its effect on undermining our aid and peace-building efforts in countries such as Somalia.

Although it could be said, and the Minister may have been told, that this is not as much of a problem for other countries that have a banking sector, the reality is—as he will know from his experience and background, as I do—that in remote places such as the Indian subcontinent, where we have our origins, during floods and in areas where there is no proper infrastructure and no proper roads, getting money to people is difficult. The banking sector is not localised enough. Banks such as HSBC might call themselves the world’s local bank, but they are not local enough. Our response must address the fact that it is impossible to get money to people, in particular at times of crisis, in countries throughout Africa, where there are still major infrastructure problems, and in many Asian countries, so that the banking sector—Barclays in particular—does not fob the Government off by saying, “Well, there are plenty of other operators available,” or, “The Government own a couple of banks, why don’t they to do it?” We need an industry-wide solution that is constructive and that safeguards the remittance industry and companies providing remittance services at low cost.

I have a few final points. On competition, I hope that the Government and the regulatory authorities will look closely at what is really going on. To what extent is this about trying to respond to the fact that these organisations are giving—to use a metaphor—the larger money transfer agencies a run for their money? To what extent is this about the regulatory pressures? I believe that to some extent it is. Where the regulatory concerns are legitimate and genuine, what can the Government and the regulatory authorities do so that we have a set of criteria for those companies to fulfil? Barclays and the regulators certainly have not provided any criteria or explained why banking facilities are being withdrawn. That is the least that these businesses should expect when they employ more than 3,500 people here in the UK and provide desperately needed assistance, not to mention trading opportunities between our country and developing countries.

I hope that the Minister will be able to look broadly at those interconnected issues. I have been told by his fellow Minister in the House of Lords that Barclays is merely making a commercial decision, but we have a responsibility to developing countries, where remittances support millions of people, taking pressure off our international aid budget. We also have a responsibility, if the sector is pretty much eliminated through those decisions, to ensure that money transfers and flows are not driven underground. How do the Minister and his colleagues in the Department for International Development intend to address this? Will he work with our American allies on an international solution, because we recognise that they are calling the shots on fines? Will he make representation to Barclays to provide six months of breathing room to allow the industry, working with the Government, to come up with a framework that can protect this vital industry?

As we speak, thousands of people are signing petitions; the diaspora community, in particular, and the aid agencies in the different sectors believe that people’s lives will be devastated. I hope that the Minister will work with the regulatory authorities on a solution—my colleagues and I are also happy to work with him—because we do not want to return to a debate in years to come and hear that, because of the decision today, many of the agencies stopped operating and people ended up being exploited. In some cases, money might be stolen—we have seen past examples of that—because the sector is not regulated at all, and in some cases remittances might end up in the hands of the wrong people, such as terrorists, and that would be a dereliction of duty on our part. The international community has a responsibility to ensure that people can get money safely and securely, and at an affordable rate, to their loved ones around the world.

[Hugh Bayley (in the Chair)]

I intend to start the wind-ups at 3.40 pm, which leaves us about 45 minutes. With six people wanting to speak, that works out at about seven and a half minutes each.

--- Later in debate ---

[Sajid Javid]

The hon. Gentleman raises a fair point. He is correct, to the extent that if individuals cannot find a legitimate alternative that can reach the parts of countries they want to reach at a reasonable cost, they may be tempted to use illegitimate means, which makes the issue all the more important. I accept his general point.

We are committed to ensuring that commercial decisions taken by banks do not inhibit individuals in the UK from remitting money to families abroad, but, once again, there may be challenges. Individuals might need to approach firms other than those with which they are used to dealing. There may be increased charges. Remittance flows to some countries may be affected, specifically those with less developed or non-existent banking sectors, such as Somalia, as we heard from the hon. Member for Cardiff South and Penarth. I share his concern.

[Rushanara Ali]

I was encouraged to hear the Minister’s reference to his personal experience—his family experience —but I am disappointed at the lack of focus in his response on the fact that we need an urgent solution. I appreciated his time before the debate thinking through a constructive way forward. I hope that he will use the last 10 minutes to talk about how he will get his officials, the FCA and interested parties to use their insights to look at how we can solve the problem. He would be commended for making that happen. Across Government —in DFID as well as in the Foreign Office and his Department—and in his party and my party, there are grave concerns, which have been expressed in the debate. I hope he will use the last 10 minutes to focus on action and delivery, because he will be commended for that.

[Sajid Javid]

The hon. Lady is absolutely right to set that challenge and say that we should focus on action and delivery, and that is what I believe we are doing. I am sure she understands that there is no magic bullet or overnight solution that can be provided by any Government. As we heard today, this is a complex matter. The hon. Member for Nottingham East (Chris Leslie) recognised in his remarks that the banks have legitimate concerns. Other regulatory authorities are involved and hon. Members have mentioned the United States. Whatever the solutions, they may not be perfect and we may not get back to the world as it was before in this space. There will probably be changes to the structure of the industry. I hope she will be reassured, as I make further remarks, that we take the issue seriously.

The hon. Lady mentioned DFID, which I was coming to. I have discussed the recent bank actions with DFID officials and my right hon. Friend the Secretary of State for International Development. Initial indications do not suggest a significant impact on the economies of developing countries or their humanitarian situation. The Government will however assess the impact of market restructuring on developing countries and work with private sector and aid partners to mitigate any negative repercussions. The Secretary of State confirmed that the provision of UK Government aid will not be affected. My hon. Friend the Member for North West Norfolk (Mr Bellingham), who has great experience in development, talked about the work of DFID. It has said that it will commission an independent research report to understand the impacts of the recent bank actions on development outcomes in recipient countries.

[Rushanara Ali]

rose—

[Simon Danczuk]

rose—

[Sajid Javid]

I shall give way first to the hon. Lady.

[Rushanara Ali]

I thank the Minister for being generous. Can he explain what evidence DFID used to come to that conclusion? I have not been given any evidence, nor have my hon. Friends or other hon. Members. DFID should be looking at how to improve this important industry, because we want to end aid dependency. It is scandalous that DFID is being so complacent and commissioning a research project, when businesses will go bust in the next month. Will he press DFID to take urgent action with him? I accept that there are no magic wands, but there have been constructive suggestions in the debate, which I ask him to take forward and lead on. He will be commended for coming up with a solution.

[Sajid Javid]

I assure the hon. Lady that DFID takes the issue as seriously as other parts of Government and Members here today do. DFID, the FCO and the Treasury are working closely on it, because it affects all three Departments.

Oral Answers to Questions

Rushanara Ali Excerpts

Tuesday 29th January 2013 Commons Chamber

[Sajid Javid]

I can confirm the figure used by my hon. Friend. Indeed, if we take account of all the tax changes we have made in the personal allowance, I can also say that an individual on the minimum wage and in full-time employment will see their tax bill halved under this Government.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

23. More than 50% of children in my constituency are living in poverty, with the Child Poverty Action Group warning that the Government’s tax and benefit changes will push 1 million children into poverty by 2020. Why did the Minister and his Department decide not to publish the child poverty impact assessment alongside the Welfare Benefits Up-rating Bill?

[Sajid Javid]

As a child, I lived in a two-bedroom flat with seven people, and I saw child poverty on my street every day. I know that the hon. Lady cares passionately about this issue—[Interruption.]