Taxation (Post-transition Period) Bill

Stephen Flynn Excerpts

3rd reading & 3rd reading: House of Commons
Tuesday 15th December 2020 Commons Chamber

[Kevin Hollinrake]

The trouble with new clause 1 is that it says the provisions have effect

“notwithstanding any relevant international or domestic law”.

Subsection 2(g) states that that means “any other legislation”. This Parliament’s decision would affect any other legislation, and so this is an overarching amendment. The key thing is that we would all agree that international agreements and free trade are important, and we need to make sure they are fair on all parties subject to those agreements. We must not forget that this is a two-way street. We want the other signatories to these trade agreements—be it Canada, Japan, the EU or whatever—to adhere to these agreements as well. It is not just about the UK heading into these agreements. We partly do that through the agreement itself, of course, but also through the soft power that the UK holds and the respect that people have for the United Kingdom.

There are some special circumstances regarding the withdrawal agreement, because there were two sides to the coin. Yes, there were the commitments that we made under the withdrawal agreement and the Northern Ireland protocol, but there was also the EU’s commitment to use its best endeavours to deliver an ambitious free trade agreement. As Members on both sides of this Chamber have said, there is no doubt that some of the things that the EU has done over the past few months have indicated that it was not using its best endeavours and that it was acting in bad faith, particularly on things such as requiring exit summary declarations for products manufactured in Northern Ireland and then shipped to the rest of the UK. That is simply unacceptable. As the right hon. Member for Leeds Central (Hilary Benn) said, what on earth would the EU do with these things if we exported them from Northern Ireland to the rest of the UK? Describing all goods that went from Great Britain to Northern Ireland as “at risk” would also be simply unacceptable. I was very pleased that those key issues were resolved last week. It largely went by without notice or recognition from many Opposition Members and some parts of the media. New clauses 1 and 2 are interesting. I will not be supporting them, but I will be supporting the Bill.

[Stephen Flynn (Aberdeen South) (SNP)]

It is a pleasure to see you in the Chair again, Mr Deputy Speaker.

When I put my name down to speak in this debate, I guess I did so more out of intrigue than expectation, given the shenanigans and the boorach of last week. We all saw what unfolded over the Ways and Means resolutions, the Bill coming 24 hours later and then off to Committee of the whole House, where nothing changed whatever. A week later, here we are on Report, with, as far as I can see, a very clear likelihood that the Government’s Bill will move forward without a single change, despite the best valiant efforts of the hon. Member for Stone (Sir William Cash) and his desire again to get the Government to break international law.

In that regard, I must pause and reflect; I find it utterly fascinating that, despite getting what they appear to want, Members of this Parliament who have—from what I have heard—seemingly spent their entire lives working towards the political cause of leaving the European Union still seem thoroughly unhappy. I take a little bit of joy in knowing that they are so bitterly disappointed that even their friends in the Government still refuse to do just what they want. Now, I cannot be the only one who has looked at Twitter, and it appears that there may well be a breakthrough in terms of an EU trade deal. I do not know whether the Minister is sighted on the developments on this occasion, because I do not think he was last week, but I do not think that I am overreaching or overstepping in any way, shape or form to suggest that, although that may be the case, the hon. Member for Stone may still be unhappy.

[Sir William Cash]

Will the hon. Gentleman give way?

[Stephen Flynn]

Of course I will let him intervene.

[Sir William Cash]

I am so glad. I can only say that, actually, sovereignty is not just a theoretical concept; it is a practical necessity. It is on the basis of that that we are able to enter into arrangements internationally that are justified by our own terms of reference. The problem with the EU is that it wants to impose its terms of reference, and it never wanted us even to be able to compete with it as a third country after we had left. But it could not deny that it was lawful, so it resorted to all these other obstructions.

[Stephen Flynn]

I admire the hon. Gentleman’s repetition, but ultimately, when it comes to sovereignty, there is only one sovereignty that I am interested in: the sovereign will of the people of Scotland. When we look at the European Union in terms of sovereignty and the will of the people of Scotland, our views have been completely ignored. The people in my constituency voted overwhelmingly to remain. Aberdeen city as a whole is projected to be the hardest hit city in the entire UK as a result of Brexit, irrespective of whether we get a deal or not. Although I do not want to encourage the hon. Gentleman any further, I simply cannot understand the premise of his argument—that he is willing to break international law and is talking about sovereignty, while simultaneously rejecting the sovereign will of the people of Scotland.

[Sir William Cash]

Will the hon. Gentleman take one last intervention?

[Stephen Flynn]

No, the hon. Gentleman has had plenty of opportunities to intervene and, indeed, speak today, and I think I will be doing everyone a favour if I just continue. I see that the Minister is laughing as well.

On the purpose of the Bill, I would like to reflect on the comments of the shadow Minister, the right hon. Member for Wolverhampton South East (Mr McFadden), because what he said was incredibly important. I apologise if I am misquoting him but I think he talked about the Bill hovering as a threat. That is an important point to reflect on, particularly as we look at what was being undertaken last week and the entire process that we have gone through.

I want to conclude, because I am aware that I am close to havering, and in Scotland, when someone starts doing that, they should probably sit down. As we look forward to what the Bill will do for online sales and the level playing field that it will create on VAT sales, which is important—I see the hon. Member for Thirsk and Malton (Kevin Hollinrake) nodding his head, and it is worth repeating that we agree on this point—we know that that level playing field should go further, because Northern Ireland will, in effect, have a beneficial agreement compared with anywhere else in the United Kingdom, be that Wales, England or Scotland. The level playing field that the Government are putting in place for online sales should also apply to Scotland to help our ability to access EU markets, and I would encourage the Minister to reflect on that point.

[Matt Western (Warwick and Leamington) (Lab)]

I rise to speak to new clause 3 and amendments 1 and 2. Three years ago, we were given the advice that this deal was going to be the “easiest in human history”. As we have just heard in the past hour or so, it is not quite as easy as some expected, and here we are with just 16 days to go. I appreciate that the Government are trying to manage expectations by talking about no deal, but in the last 30 minutes or so there has been lots of speculation online about whether a deal may have actually been struck.

Yesterday, I was listening to someone from an independent freight haulage company based in Nuneaton in north Warwickshire, and they were saying how frustrated they were by the lack of clarity coming from the Government. They were talking about the 300% to 400% increase in paperwork that they were expecting, the mixed messages from the Government, the fact that they had had to invest in new software and the fact that the lorry parks were not ready. I guess this is why the amendments and new clause 3 that my honourable colleagues have tabled, which I support, are so important. Being so close to the end of the transition period, we urgently need clarity for our businesses.

We on the Labour Benches just want to get a deal done, contrary to what is being said by some in the Chamber, because at the end of the day this is all about ensuring that our businesses have a prosperous future—have a future, indeed—and that we protect people’s jobs and livelihoods. That is why no deal would be absolutely desperate for so much of our economy, particularly in the wake of the pandemic. Like my right hon. Friend the Member for Wolverhampton South East (Mr McFadden), I really do not understand why it has taken so long for this Bill to be published. It seems that the Government were holding it back as one of their cards—maybe again threatening to break international law and damaging our reputation—but businesses cannot plan on that basis. They cannot work on a last-minute approach. That might work in negotiations in the political sphere, but it has been damaging for business. Rather than having messages such as a “check, change, go”, they have been demanding the substantive advice from the Government which, sadly, businesses across my constituency have not been receiving.

I spoke earlier to one of those businesses—a retailer and importer—and it said, “This is utter chaos. We desperately need clarity and urgency, so that we can start planning, but at the moment we cannot get hold of the goods that we’re going to be able to sell in the first quarter of next year.” I understand what the right hon. Member for Wokingham (John Redwood) said about UK sovereignty, but the quid pro quo is about access to markets and obligations. I liken it to how businesses have to work. If they want to be in the app market and use the Apple platform, they have to pay to be part of that. If they want to be on the Sony PlayStation platform, they have to pay to access that. It is the same with the European market.

Taxation (Post-transition Period) Bill

Stephen Flynn Excerpts

2nd reading & 2nd reading: House of Commons
Wednesday 9th December 2020 Commons Chamber

[Jesse Norman]

I have no doubt that the Chancellor of the Duchy of Lancaster will be updating the House over time as the different provisions he has negotiated come into force but, from our point of view, the position remains as stated, that is to say that VAT will become chargeable by a slightly different legal means, but in substantially the same way in Northern Ireland as it is at the moment. The mechanisms we have put in place are designed to ensure that, as far as possible, VAT will be accounted for in the same way as it is today.

Existing rules in relation to movements of goods between Northern Ireland in the EU, including the rules relating to acquisitions and distance selling, will continue to apply. Goods entering Great Britain from Northern Ireland will be subject to VAT as though they were imports under the relevant UK legislation. Similarly, goods entering Northern Ireland from Great Britain will also be subject to VAT as though they were imports and relevant EU or UK legislation will apply, but let me add that the Government are adopting an approach that minimises any changes for goods moving between Northern Ireland and Great Britain.

[Stephen Flynn (Aberdeen South) (SNP)]

On a point of order, Mr Deputy Speaker, can you clarify whether Members in the Chamber should be socially distancing by staying on the seats that have ticks on them?

[Mr Deputy Speaker (Mr Nigel Evans)]

Yes, that is what the ticks are there for. I hope that all Members will abide by them so that we can have safe social distancing. Thank you very much.

--- Later in debate ---

[Stephen Flynn (Aberdeen South) (SNP)]

It is a pleasure to follow the hon. Member for Broadland (Jerome Mayhew), particularly given the fact that he highlighted that just yesterday, we were all wondering what was going to be in this Bill.

What a complete and utter boorach the last 24 hours have been. The right hon. Member for Orkney and Shetland (Mr Carmichael) rightly highlighted the shambolic scenes that we have all seen. I heard yesterday from those on the Government Benches that the reason for this is that we are currently in a fast-paced environment. This has been going on for four and a half years, with three Prime Ministers and two general elections. How many resignations? How many U-turns? And the Government leave it until three weeks before the end of the transition before they bring forward something, and they do so with less than 24 hours’ notice of what it will actually entail. What a complete and utter embarrassment. Government Members are the ones who tell us that this is the place where power should lie, yet they are the ones who treat it with more contempt than anyone else. If I was not so disappointed, I would laugh at their sheer hypocrisy.

To turn to the Bill—I am very mindful of time—the hon. Member for South Ribble (Katherine Fletcher) was right to highlight one of the good elements of the Bill, in relation to online VAT. We should all support that, particularly at this moment in time, given the challenges that we are all seeing on our high street. We need to see a level playing field, and if we can bring that level playing field about, we should be willing to do it. I hope, however, that the Government will continue to go further and revisit the issue of the digital services tax, where they have the powers to make further inroads into levelling that playing field.

You will be unsurprised to learn, Mr Deputy Speaker, with just 60 seconds to go, that my agreement with the Government ends there, for four simple reasons that I will cover quickly. The first one is this: England voted to leave and England will leave. Wales voted to leave and Wales will leave. Northern Ireland voted to remain and Northern Ireland is going to get the best of both worlds; it is going to get access to the EU market while simultaneously remaining in the United Kingdom. And what of Scotland? What do we get? Scotland was told that we should stay in the United Kingdom in order to lead the United Kingdom—lead, don’t leave. We wanted the same access as Northern Ireland. We put forward numerous proposals, yet time after time, this UK Government completely ignored our views and desires in that respect. That all adds up, and it adds up in the minds of the very people this UK Government are going to have to rely upon the next time we go to the polls on our independence.

Taxation (Post-transition Period) (Ways and Means)

Stephen Flynn Excerpts

Ways and Means resolution & Ways and Means resolution: House of Commons
Tuesday 8th December 2020 Commons Chamber

[Stephen Flynn (Aberdeen South) (SNP)]

Of course, it was the United Kingdom Government who were threatening to break international law. Does he have any similar examples from the European Union, or is it simply a one-way street as far as he is concerned?

[Kevin Hollinrake]

The hon. Member makes a fair point, but I would point him back to the political declaration, which sat alongside the withdrawal agreement, within which there were clear commitments from the European Union to agree an ambitious free trade agreement. He must accept, as commentators on that side of the fence—on the Opposition Benches—have also said, that it is clear the European Union has been difficult in these negotiations, and more difficult than perhaps many had anticipated. It is clearly in the European Union’s interests and their constituents’ interests to agree a free trade deal without this kind of last-minute drama.

Financial Services Bill (Twelfth sitting)

Stephen Flynn Excerpts

Committee stage & Committee Debate: 12th sitting: House of Commons
Thursday 3rd December 2020 Public Bill Committees

[Stephen Flynn (Aberdeen South) (SNP)]

I beg to move, That the clause be read a Second time.

[The Chair]

With this it will be convenient to discuss the following:

New clause 27—Legal protections for small businesses against the mis-selling of financial services—

‘(1) Regulation 3 (Private Person) of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001 is amended as follows.

(2) In sub-paragraph (1)(a), leave out “individual” and insert “relevant person”.

(3) In sub-paragraph (1)(b), leave out “individual” and insert “relevant person”.

(4) After paragraph 1, insert—

“(1A) For the purposes of this regulation, a “relevant person” means—

(a) any individual;

(b) any body corporate which meets the qualifying conditions for a small company under sections 382 and 383 Companies Act 2006 in the financial year in which the cause of action arises;

(c) any partnership which would, if it were a body corporate, meet the qualifying conditions for a small company under section 382 Companies Act 2006 in the financial year in which the cause of action arises.”’

This new clause seeks to give small businesses greater legal protections against the mis-selling of financial services products.

[Stephen Flynn]

New clause 26 seeks to give retail clients greater legal protection against the mis-selling of financial services products, and new clause 27 seeks to give small businesses greater legal protections against the mis-selling of financial services products. I want to make a couple of quick remarks on that matter.

I do not need to tell hon. Members how important small businesses are. They make up three fifths of employment, and half the turnover in the UK private sector goes through small businesses. Those are telling figures. What is more, just 36% of small businesses use external finance; indeed, seven in 10 would rather forgo any growth than take on external finance. That is an important point that the Government must reflect on.

As they deliberate on why that may be the case, I will provide some additional information. There is a history of mis-selling, which causes small businesses a great deal of concern. Although regulation has been tightened, gaps remain. For example, small businesses complained earlier this year about the mis-selling of interest rate swaps. The FCA found that 90% of those businesses did not have a clue what that meant in reality, and it went on to talk about the dialogue between sophisticated and unsophisticated businesses in that regard.

The ultimate issue is that small businesses did not know what they were getting themselves into, and I think that is telling. No one wants that situation to arise, now or in the future. I encourage the Government to take heed of that and, therefore, agree to both new clauses.

[John Glen]

The Government are committed to ensuring that the interests of individuals and businesses that use financial services are protected. With the creation of the conduct-focused Financial Conduct Authority in 2013, we have ensured that those interests continue to be placed at the heart of our regulatory system and given the priority that they deserve.

The Government have given the FCA a strong mandate to stop inappropriate behaviour in financial services, and it has a wide range of enforcement powers—criminal, civil and regulatory—to protect consumers and businesses alike. That means taking action against firms and individuals that do not meet appropriate standards.

These new clauses, which have been tabled by the hon. Members for Glasgow Central and for Aberdeen South, seek to broaden the scope of parties that can seek action for damages related to mis-selling of financial services. The changes are unnecessary, however, because businesses already have robust avenues for pursuing financial services complaints. The Government are committed to ensuring that we do not unnecessarily push up the cost of borrowing for small businesses by creating additional legislative burdens.

In April 2019, the remit of the Financial Ombudsman Service was expanded to allow more SMEs to put forward complaints, and that covers 97% of SMEs in the UK. An enterprise that employs fewer than 50 people and has a turnover that does not exceed £6.5 million is entitled to bring a complaint to the FOS. If that complaint is upheld, the FOS can make an award of up to £350,000 in relation to acts or omissions that took place on or after 1 April 2019.

Moreover, SMEs will also have access to the business banking resolution service, an independent non-governmental body, which will provide dispute resolution for businesses. It will serve two purposes. First, it will address historical cases from 2000, which would now be eligible for the FOS but which were not at the time, and which have not been through another independent redress scheme. Secondly, it will address future complaints from businesses with a turnover of between £6.5 million and £10 million.

Given the robust avenues that are available to businesses for pursuing financial services complaints, I hope the Committee will agree that the new clauses are not necessary, and I respectfully ask the hon. Members not to press them.

[Stephen Flynn]

I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

New Clause 29

Review of Impact of Scottish National Investment Bank Powers

“(1) The Chancellor of the Exchequer must review the effect of the use of the powers in this Act in Scotland and lay a report of that review before the House of Commons within six months of the date on which this Act receives Royal Assent.

(2) A review under this section must consider the effects of the changes on—

(a) business investment,

(b) employment,

(c) productivity,

(d) inflation,

(e) financial stability, and

(f) financial liquidity.

(3) The review must also estimate the effects on the changes in the event of each of the following—

(a) the Scottish Government is given no new financial powers with respect to carrying over reserves between financial years,

(b) the Scottish Government is able to carry over greater reserves between financial years for use by the Scottish National Investment Bank.

(4) The review must under subsection 3(b) consider the effect of raising the reserve limit by—

(a) £100 million,

(b) £250 million,

(c) £500 million, and

(d) £1,000 million.” —(Alison Thewliss.)

This new clause requires a review of the impact of providing Scottish Government powers to allow the SNIB to carry over reserves between financial years beyond its current £100m limit.

Brought up, and read the First time.

[Alison Thewliss]

I beg to move, That the Clause be read a Second time.

New clause 29 would require a review of the impact of providing the Scottish Government with powers to allow the Scottish National Investment Bank to carry over reserves between financial years beyond its current £100 million limit. As Members may know, the Scottish National Investment Bank has been firmly established as a public limited company and has a proposed mission to focus the bank’s activities on addressing key challenges and creating inclusive long-term growth, including

“supporting Scotland’s transition to net zero, extending equality of opportunity through improving places, and harnessing innovation to enable Scotland to flourish.

It will provide patient capital—a form of long-term investment—for businesses and projects in Scotland, and catalyse further private sector investment.”

The bank’s first investment, announced the other week, was £12.5 million to the Glasgow-based laser and quantum technology company, M Squared, to support the company’s further growth in Scotland, which speaks to the bank’s proposed core missions.

The Scottish National Investment Bank will help to tackle some of the biggest challenges we face in the years to come, delivering economic, social and environmental returns, but currently there is a slight barrier, in that the Scottish Government can only roll over £100 million of their annual reserves. We are asking for the UK to look at increasing that to allow the Scottish National Investment Bank to get on with the job that it is set up to do.

As the Committee can see, the new clause asks the Government to introduce an impact assessment—because that is what we can do in this Committee; we can ask for reports and impact assessments—looking at increasing the Scottish Government’s reserves by £100 million, £250 million, £500 million or £1 billion for business investment, employment, productivity, inflation, financial stability and financial liquidity. We need the Government to come on board with that and provide some help to us. It is a huge and important project, so much so that the UK Government seem to be copying it by having an investment bank.

We would like to have an infrastructure bank for Scotland that can meet Scotland’s needs and priorities. It is desperately important that we do that. The bank will learn from banks such as KfW in Germany, which was set up after the war by the UK, and then we learned nothing from it ourselves. We want to be able to get on and do this and invest in Scotland’s future, but unfortunately we need the Government’s co-operation at this point to do that.

--- Later in debate ---

Brought up, and read the First time.

[Stephen Flynn]

I beg to move, That the clause be read a Second time.

[The Chair]

With this it will be convenient to discuss

New clause 32—Scrutiny of FCA Powers by committees—

“(1) No provision may be made by the Financial Conduct Authority under this Act unless the conditions in subsection (2) are satisfied.

(2) The conditions in are that—

(a) a new statutory committee comprising Members of the House of Commons has been established to scrutinise financial regulation, and

(b) a new statutory committee comprising Members of the House of Lords has been established to scrutinise financial regulation.

(3) The Treasury must, by regulations, make provision for and about those committees.

(4) Those regulations must provide that the committees have at least as much power as the relevant committees of the European Union.”

This new clause requires statutory financial regulation scrutiny committees to be established before the FCA can make provisions under this Bill.

[Stephen Flynn]

I will be incredibly brief. Again, both new clauses 31 and 32 are about oversight and scrutiny. I have absolutely no doubt that Conservative Members will want to take back parliamentary sovereignty and ensure that this place has oversight of the Government’s actions.

[John Glen]

I think I have previously detailed my response to new clauses 22 and 26 why it would not be appropriate for Parliament to scrutinise all regulator rules made in relation to those two specific measures. These new clauses go further, and would require all rules made by the Financial Conduct Authority in relation to anything within this Bill to be approved by Parliament before the rules can be made, and would prevent the FCA from exercising its powers effectively. New clause 31 would make the FCA’s rule making subject to parliamentary approval. New clause 32 prevents the FCA from making rules under the Bill until two new parliamentary Committees are established. The same arguments that I made previously are relevant here: new clause 31 would apply a higher level of parliamentary scrutiny—to the FCA only—when making rules in areas covered by the Bill. That would mean that those areas were inconsistent with other areas of financial services regulation not covered by this Bill or within the remit of the Prudential Regulation Authority, which will retain the existing scrutiny requirements.

Parliament would need routinely to scrutinise a large number of detailed new rules on an ongoing basis. That is very different from the model that Parliament has previously put in place for the regulators under the Financial Services and Markets Act 2000, where it has judged it appropriate for the regulators to take these detailed technical decisions where they hold expertise.

Turning briefly to new clause 32, although I note that Select Committees of both Houses already have the option to scrutinise the regulators as they see fit, it is naturally for Parliament to decide how best it wishes to scrutinise financial services regulation. However, I do not believe that it is appropriate to make the introduction of an investment firms prudential regime, or any of the other changes enabled by this Bill, subject to the establishment of new parliamentary Committees. Nor do I believe it is for the Treasury to make regulations related to the establishment or functioning of parliamentary Committees. As the right hon. Member for Wolverhampton South East pointed out in an earlier sitting, that is a matter for the House to decide.

I would like to reassure the Committee that I am committed to ensuring appropriate accountability and scrutiny around new rules for our financial sector. That is why I recently published a consultation document on the review of the future regulatory framework for financial services. This review seeks to achieve the right split of responsibilities between Parliament, Government, and the regulators now that we have left the EU. It seeks views, including those of all parliamentarians, on how we can best scrutinise and hold the regulators to account, while respecting and safeguarding their independence. I look forward to engaging with hon. Members on that subject but, given what I have said, I suggest that they might consider withdrawing the new clause.

[Stephen Flynn]

I am not surprised, but I am disappointed. I would like press new clause 31 to a vote.

Question put, That the clause be read a Second time.

Financial Services Bill (Eleventh sitting)

Stephen Flynn Excerpts

Committee stage & Committee Debate: 11th sitting: House of Commons
Thursday 3rd December 2020 Public Bill Committees

[Mr McFadden]

Thank you for your chairmanship, Mr Davies. I rise to speak to new clause 2, in my name and the names of my hon. Friends. We discussed equivalence when we were debating clause 24 or 25, so it might relieve the Minister and the Committee to know that I will not repeat everything I said about how we got to this position, but let us look at what the current situation is.

First, we have withdrawn from the EU, and in so doing we have withdrawn from any joint decision-making process about mutual access to financial services. Secondly, a few weeks ago the Chancellor announced a unilateral move on the UK’s part to grant equivalence recognition to EU member states and their firms. Thirdly, there is a legislative mechanism to do that in the Bill. Fourthly, we now await decisions on equivalence from the EU. Finally, in terms of the regulatory picture, we have spent a lot of legislative time in this House—probably no one more than the Minister in the past two years or so—legislating to onshore various EU directives. That is where we are.

The aim of onshoring that vast body of legislation was to have a parallel position, or as near to one as we could reach, on day one of the end of the transition period. At the same time, though, we have given our regulators powers to diverge in various ways from the terms of these directives in future. We have discussed that quite a few times in Committee, and the Minister said that the Government are not interested in diverging for the sake of divergence, but of course there are many in the Government, and in his party, for whom divergence is the whole point of the exercise, because it is all about sovereignty. Although we may be almost totally in line on day one—new year’s day—what about day 100 or day 1,000?

Nothing in new clause 2 alters the power to diverge. If the package of onshoring and granting new powers to the regulators that the Minister is taking through is there, nothing in the new clause alters that, but it asks for a report on where we have reached in that process. We know that a positive outcome of this process could have a very significant bearing on the UK financial services industry. It would mean better access for our firms than without that process. It certainly would not give them what they have at the moment, but that is water under the bridge—we debated that earlier in Committee.

The converse is also true, of course: if we do not get equivalence recognition, it would have implications for jobs, tax revenue and how the UK is viewed as a home for inward investment in the financial services industries. All that the new clause does is to ask for a report on where we have got to in the process or, alternatively, a statement on who has refused to grant equivalence of recognition.

I hope the Economic Secretary does not mind if I point out that I cannot be the only one who is struck by the clamour, particularly on the Government Benches, for economic evidence to justify covid-protective measures. Everybody wants the exact detail of how that will affect their local economies. If that is the case, it is only right that the Government report on the economic consequences of the other major process that we are going through. That is the intention behind the new clause.

The sector is hugely important for the United Kingdom, as has been mentioned many times during our debates over the last couple of weeks. All that the new clause does is to ask for a report on where we are on market access. I very much hope that we have a positive outcome on that. Some of it may be about good will, and it might depend on what is agreed in the next week or two—we do not know. It is certainly in the interests of the sector to have a positive outcome. The least we can ask is that the Government report to the House on that.

Finally, if the outcome is positive, the Government will probably want to report back anyway. If the outcome is not positive, Parliament has a right to hear about that, too.

[Stephen Flynn (Aberdeen South) (SNP)]

Just to be clear, Mr Davies, do you wish me to speak to new clause 2 or to new clauses 28 and 36?

[The Chair]

You can speak to new clause 2 as well as to your new clauses 28 and 36.

[Stephen Flynn]

Then I will do that—thank you. It is a pleasure to see you in the Chair once again, Mr Davies. It is probably accurate and correct that the new clauses are grouped together, because they are quite similar in scope, particularly when considering the wider issue of divergence. I will come back to that.

New clause 28 seeks to provide an impact assessment before disapplying European Union rules or applying rules different from those of the EU. That is incredibly important, because it goes to the core of what the Bill is about in relation to our leaving the European Union. Only a few day ago, the Governor of the Bank of England highlighted that a no-deal Brexit could of course lead to a worse economic situation than covid. We need to be in a position to assess the reality of what the Government seek to do. That should apply in the case of no-deal, a good deal—as far as the Government see it—a bad deal or a “Boris deal”.

We should compare what we could have had with what we get. We should be open and transparent with the public about that. The Government talk about wanting to take back control and parliamentary sovereignty; let us take that back to the people as well and show them that the Government are being open and transparent with everything that is put forward. That is particularly important in a Scottish context because—lest we forget—the people of Scotland did not vote for Brexit, and they do not want it to happen, so it is incumbent on the UK Government to provide that clarity to them, particularly on such important matters.

If the Government are proud of the actions that they are taking and seek to go down a different path, they should be willing to follow up on their actions and be open and transparent, not shy away from that.

That takes me on to new clause 36, which would do something very similar to new clause 28, but rather than looking at the potential impact of future decisions, it would provide for an annual review of the decisions that had been taken. That, as the right hon. Member for Wolverhampton South East said, is, in the context of equivalence, incredibly important, particularly if we are to see the UK diverge from the European Union in any way, shape or form. As we have heard, the Chancellor has guaranteed equivalence to the European Union, so it will have access to the UK markets, but of course there is not a similar agreement in place for us. Conservative Members would, understandably, argue that that is the EU’s fault and that the EU should be delivering that for us, but, as I said on Second Reading, who can blame it when this is a Government who simply cannot be trusted, a Government—lest we forget—who are willing to break international law?

Irrespective of that, we should all be concerned about the reality of not having equivalence in place and what that could lead to. We have made and heard suggestions that it could mean, ultimately, divergence in relation to MiFID—the markets in financial instruments directive. It could mean divergence in relation to the wider insurance regulatory framework. I appreciate that there are arguments both in favour and against in that regard, but we need always to be mindful of what we are seeking to diverge from in relation to our wider relationship with the European Union. I appreciate that it will ultimately be in the gift of the Government to do these things, but they should surely have some concerns about the actions that they will be taking.

I go back to the comments that I made about new clause 28. If the Government are proud of the actions that they take and have taken, they will be willing to accept both new clause 28 and new clause 36 and to put their money where their mouth is and be open and transparent with the people of Scotland and the people of the United Kingdom that their decisions have not been ones that have had disastrous consequences for the economy of the UK. I suggest that if they do not accept the new clauses, that is because they know the damage that they are going to do.

[The Economic Secretary to the Treasury (John Glen)]

What a pleasure it is to serve under your chairmanship once again, Mr Davies. These new clauses seek to place requirements on the Government to make various reports related to the UK’s withdrawal from the EU and the subsequent evolution of our financial services regulation.

New clause 2 deals with equivalence, which is an important mechanism for managing cross-border financial services activity. I can well understand hon. Members’ interest in that. However, the obligation that the new clause would impose on the Government—essentially, to report on the status of the EU’s considerations about UK equivalence—is beyond the Government’s power and therefore not something that the Government can agree to do.

The right hon. Member for Wolverhampton South East rightly referred to my right hon. Friend the Chancellor’s speech on 9 November, in which he made clear that we have made equivalence decisions—17 of the 30 that we have to make. We have co-operated very fully with the EU in terms of a timely response to the 17 questionnaires. Again, we cannot determine how it responds. Equivalence assessments are an autonomous process, managed separately from trade negotiations. That applies in the case of the EU, and where the EU chooses to grant the UK equivalence, that will be done in accordance with its own decision-making process. EU equivalence determinations are unilateral and do not require the UK’s agreement. Those decisions will be published and readily available to all, including UK parliamentarians.

I can reiterate today the Government’s commitment to operating an open and transparent approach to equivalence as the Chancellor explained in his speech on 9 November. Our overall approach is outlined in the recently published guidance document on the UK’s equivalence framework. That document makes it very clear that transparency will be one of the key principles of our equivalence framework.

As part of this, the Treasury will provide Parliament with appropriate information about the operation of the equivalence framework. After the end of the transition period, future equivalence decisions will be made by regulations laid before Parliament, giving Members the opportunity to consider and scrutinise the Treasury’s decisions as part of the UK’s normal legislative process.

As I said, the Chancellor recently announced a package of equivalence decisions following the completion of our assessment of the EU, where we took a thorough but proportionate outcomes-based assessment against the criteria in legislation. As the EU has confirmed publicly, there are many areas where it is not prepared to assess the UK at the current time. In the absence of clarity from the EU, we have made decisions to provide clarity and stability to industry, supporting the openness of the sector and to help to deliver our goal of open, well-regulated markets.

Oral Answers to Questions

Stephen Flynn Excerpts

Tuesday 1st December 2020 Commons Chamber

[Owen Thompson (Midlothian) (SNP)]

What recent discussions he has had with his Scottish counterpart on the effect of his Department’s fiscal policy on household income in Scotland.

[Stephen Flynn (Aberdeen South) (SNP)]

What recent discussions he has had with his Scottish counterpart on the effect of his Department’s fiscal policy on household income in Scotland.

[The Chief Secretary to the Treasury (Steve Barclay)]

This year, the Government have put in place an unprecedented package of support to protect incomes and jobs right across the UK. Analysis published earlier this year shows that our interventions significantly protected people’s incomes, with the least well-off in society supported the most.

[Steve Barclay]

As my right hon. Friend the Chancellor set out a moment ago, the Financial Secretary to the Treasury will be meeting that group, but we have also targeted the support, including on those who are majority self-employed. Through that targeting, we have been able to confirm an additional £2.4 billion of support for the Scottish Government.

[Stephen Flynn]

In his spending review statement last week, the Chancellor failed even to mention Brexit, but the Office for Budget Responsibility was not quite so shy; indeed, it painted a particularly bleak picture. So can the Minister clarify this: does he accept the OBR’s findings, and if so, does he therefore agree that the Scotland’s economic future will be detrimentally impacted by any Brexit on the watch of this Tory Government?

[Steve Barclay]

What economic analysis has always shown is that Scotland’s trade with the rest of the United Kingdom is much more important than its trade with Europe. However, Government Members have always been clear that we seek a deal. The asks that the negotiating team have put forward are extremely reasonable, and Lord Frost and the team continue to work to that effect.

Financial Services Bill (Seventh sitting)

Stephen Flynn Excerpts

Committee stage & Committee Debate: 7th sitting: House of Commons
Thursday 26th November 2020 Public Bill Committees

[John Glen]

At this point I cannot give her chapter and verse on the exact attribution of resources to this measure, but I can look into that and come back to her.

[Stephen Flynn (Aberdeen South) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Davies. I will be brief. The Minister has made a compelling case, but perhaps not as compelling as that made by the right hon. Member for Wolverhampton South East, who made illuminating remarks on the potential price of bread, although I encourage him to go to Aldi, where he will get it for a lot cheaper than £1.10.

What is proposed here is a common-sense approach that would give the wider public confidence that the Government are taking this matter seriously, notwith- standing the Minister’s remarks thus far. In general terms, I do not think there is a huge difference between the two positions, but looking at both sides, I think the common-sense approach would be to tighten this process and make it more robust; that would provide the public with the confidence they feel they need on these matters, particularly given the scale of past scandals.

[Mr McFadden]

I listened carefully to what the Minister said. I do not think anyone looking at the issue would conclude that the responsibility for these actions had been fairly allocated, so there is an issue. I am not saying we want to go around looking to put people’s heads on spikes—we do not want that sort of politics—but it does rankle with our constituents when certain types of crime that are, candidly, easier to understand are met with heavy punishments while somebody who does a very complex crime that is more difficult to understand can somehow get away with it.

Having said that, I accept that legislation for criminal offences, and particularly for custodial sentences, needs to be very carefully drafted in exactly the right way, and I cannot say that I am 100% certain that my amendment is, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Financial Services Bill (Third sitting)

Stephen Flynn Excerpts

Committee stage & Committee Debate: 3rd sitting: House of Commons
Thursday 19th November 2020 Public Bill Committees

[John Glen]

Thank you very much. I will now let other colleagues take part.

[Stephen Flynn (Aberdeen South) (SNP)]

Q Thank you, Dr Hawley, for the information you have shared so far. Can I refer you point 16 of your written submission? It says:

“However, there is no corporate offence in the FSA and it is therefore not clear that prosecutors would be able to hold companies to account were similar conduct to reoccur.”

I will be open and honest with you: I do not have a legal background, so perhaps you could elaborate on that further. Either there is the ability to do something or there is not. That ties in with the remarks about Barclays in point 21, which quotes remarks that it

“effectively removes companies with widely devolved management and functioning boards”.

The term “effectively” implies that it could or could not. Can I have a little more clarity on that point?

Dr Hawley: Yes, absolutely. We have checked that with lawyers, and it is the case currently under the Financial Services Act that if you wanted to bring a prosecution for misleading statements on benchmarks—let us hope that will not happen again because financial institutions have learned the lessons from last time—the only way that you could hold a company to account would be under the directing mind principle that I mentioned earlier. You would have to show that one of the directors knew and intended for this to occur. There is no comparative offence, as there is under the Bribery Act, of a failure to prevent misleading statements being made, for which there could be a corporate fine. That would be almost impossible to do if a bank were making misleading statements.

The Barclays judgment has made that even more difficult and narrower. Prosecutors and the Serious Fraud Office can no longer say, “We’ve got the evidence on the CEO and CFO, and we think we can prove it, so we will take this to court.” The court then turns round and says, “No, it’s not just that. You have to show that the board actually delegated authority to these people.” It set a whole new hurdle for how you hold corporates to account. What we are hearing from people is that this is going to lead to a massive decrease in corporate prosecutions, because the grounds for bringing a company to account are so narrow now that they are almost impossible. I cannot say that it would not happen, but I can say that it would be an extremely brave prosecutor to risk public money in the courts to try.

[Stephen Flynn]

Q Thank you for that clarity. To play devil’s advocate a little, in terms of the individual versus collective responsibility, which is effectively what is being inferred here, do you see any dangers in going down that route?

Dr Hawley: The corporate route?

[Stephen Flynn]

Yes.

Dr Hawley: We do not see any dangers, because, generally, if you can hold the company to account, you are more likely to be able to hold the individuals to account. There is some evidence from the US, where the lack of senior executives going to jail has been contentious.

I think there is a real issue around senior executive accountability. We have seen a series of acquittals in the UK courts, in the Tesco’s case and in the Barclays case. There are some quite serious issues that need to be looked at in terms of how senior executives are held to account. I could argue to bring forward an amendment to address that as well, but that is not what we have done in this written evidence. We are just focusing on the corporate offence, and we do not see any reason why it would undermine efforts to hold senior executives to account. I would be interested to hear those arguments, because I have not heard any coherent arguments about why it undermines individual accountability.

[Stephen Flynn]

Thank you.

[The Chair]

It might be helpful for colleagues and our witness to say that we have 18 minutes left and three people who want to ask questions, so people might want to be mindful of that.

Financial Services Bill (Fourth sitting)

Stephen Flynn Excerpts

Committee stage & Committee Debate: 4th sitting: House of Commons
Thursday 19th November 2020 Public Bill Committees

[The Chair]

Stephen Flynn, could you make your way to the mic and speak right into it? That one will work, although it has Duncan Hames’s name by it.

[Stephen Flynn (Aberdeen South) (SNP)]

Q I am sure that Duncan would be overjoyed to be associated with me.

Thank you, Minister Isola, for presenting yourself before us today and for the information that you have provided. I would like to follow on from the shadow Minister’s questions about the competitive advantage that Gibraltar may or may not have. As I see it, the Bill seeks to create a level playing field, but it could be inferred that Gibraltar has a competitive advantage over our constituent parts of the United Kingdom—indeed, the home nations—given that it has abilities in relation to corporation tax and other forms of taxation that the home nations do not. How would you assess that? I appreciate that you sought to answer Mr McFadden in that regard, but do you feel that we could see a situation in which businesses will seek to take advantage of what is clearly a level playing field with a competitive advantage for yourselves?

Albert Isola: The simple answer is no, and I will tell you why. If you think about it, we have been setting our own tax rates for the past 20 years, during which we have had access to the United Kingdom market through the European Union single passporting system. I do not think that I have ever heard any discussion in the financial services environment about different tax rates in different member states of the European Union, let alone Gibraltar, having an impact. It is not as if an advantage were being created by the Bill that would endure to 1 January next year and beyond. Where we are today is where we have been for the past 10 or 15 years with different tax systems.

I do not think that you will find a company that—with the level of investment that it requires in terms of capitalisation, particularly with respect to insurance—will make a judgment call on a difference of 9% in corporate tax, assuming that it can make a profit. As I said to the shadow Minister, the information that I have from the firms that have come here is that that is very low on their list of priorities, if it is there at all. I do not see it having the impact that you suggest; if there were such an impact, it would already have happened a long time ago. As I mentioned, the firms that are in Gibraltar today have been here for a very long time, and as they have grown, so have we. Our market share has been 20% for the past year or two; it was a lot less before those businesses grew and became more successful.

[The Chair]

As there are no further questions, I thank you, Minister, for joining us remotely from Gibraltar as our final witness of the day. This is the end of our fourth and last evidence session.

The Committee will meet again, not here but in Committee Room 14, on Tuesday at 9.25 am—bright-eyed and bushy-tailed for our first sitting of line-by-line scrutiny.

Ordered, That further consideration be now adjourned. —(David Rutley.)

North of England: Economic Support

Stephen Flynn Excerpts

Wednesday 11th November 2020 Westminster Hall

[Stephen Flynn (Aberdeen South) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Efford. Congratulations to the hon. Member for Barnsley Central (Dan Jarvis) on securing the debate. I have listened closely, and there have been a lot of passionate voices for the north of England, which is utterly fantastic to hear. On this occasion, there is much more that unites the Members present than divides them. I certainly wish them well in trying to get the Government to keep the promises that they have made and to go further in some instances, as Members have requested.

My biggest take from the debate is that I need to get my hands on The Yorkshire Post to see what all the fuss is about.

[Holly Lynch]

You could do with a subscription!

[Stephen Flynn]

We do not have The Yorkshire Post in Aberdeen at the moment, but I will put a call in with a local corner shop to see whether I can get it.

This debate has been wide-ranging and has focused on people’s priorities: jobs, support and ensuring that they can live good lives. I will provide a little context as someone who also represents the north, but, as Member for Aberdeen South, it is the north-east of Scotland. The right hon. Member for Rossendale and Darwen (Jake Berry) mentioned that many of his constituents have continued to work throughout the pandemic, which is also true of many of my constituents. As everyone will be aware, the oil and gas industry cannot stop. If it did, we would all be in a bit of trouble—that is for sure—so my constituents have been working incredibly hard throughout the pandemic.

When the oil price plummeted, however—it absolutely crashed in early March and into April—the Government did not lift a finger. Not a single penny of sector-specific support was put behind an industry that has given more than £350 billion to the Treasury over decades. That was a disappointment not just to me, but to each and every person in Aberdeen who has a friend or family member whose job is intrinsically linked to the success of that sector.

Beyond that, we have not seen any Government investment in what comes next. We all know that oil and gas are depleting resources, but as far as I can see, there has so far been no firm commitment to hydrogen, which has been mentioned by several Members, or to carbon capture and underground storage, which is also of keen interest to Members in the north of England. The Government have not made those commitments, whether for the north of England or the north-east of Scotland. Quite frankly, that is not good enough.

The issues do not stop there. Although we are in the midst of this pandemic, we cannot escape the fact that we are just weeks away from the end of the transition period and, potentially, from leaving the European Union without a deal. My city is projected to be the hardest hit in the UK as a result of Brexit. Where is the mitigation from the Conservative Government? There has been none to date.

Beyond that, in the last couple of weeks alone, my Aberdeen constituency has been the hardest hit in job vacancies—once again, across the entire UK—with a 75% decline. The issues in the north of England that have been spoken about are ones with which I sympathise, but they are not unique. Certainly, in the north-east of Scotland, we are bearing the brunt of the inaction of this Conservative Government, decades of inaction from UK Governments and insufficient investment in the future.

I am conscious of time, so I will bring my remarks to an end by reflecting on the wider situation in Scotland. As it stands, we have no clarity on the Scottish budget. Next year, we will have to rely on the UK Government telling us how much we will have before we can spend it on our vital public services. We have no clarity on what the shared prosperity fund will look like or whether Scotland will have additional borrowing powers.

On top of that complete and utter contempt for Scotland, the Internal Market Bill seeks to take back the devolved powers that we have. The hon. Member for Barnsley Central referred to the need for further devolution in the north of England. I commend him on those remarks and wish him good luck, but he needs to be wary of getting that devolution only for the UK Government to strip back the powers that they have given.

I appreciate that I have already said that I would make my final comment, but I have one more. [Laughter.] That is true of all of us in this House at times; repetition is something we are particularly good at. I will conclude by saying, once again, that I wish Members across the House well in their fight with the Government to get the investment that they need. Be mindful of the fact that Scotland also requires that investment, but where we differ is that we have a choice. We have another route to get what we want, which is for the people of Scotland to vote for independence.