Finance Bill

Stephen Phillips Excerpts

Monday 5th September 2016 Commons Chamber

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

Does the issue not go further than that? Our constituents’ money generates the revenues and therefore the profits of such companies. It is not just unfair to them because they pay their taxes; their money funds the profits that generates the taxation that ought to be paid to the Revenue.

[Caroline Flint]

I congratulate the hon. and learned Gentleman, who is a former colleague on the PAC, on his promotion.

Greece

Stephen Phillips Excerpts

Monday 6th July 2015 Commons Chamber

[Mr Osborne]

My hon. Friend makes a good observation. There is no straightforward mechanism for a country to exit the eurozone; it is not provided for in the treaties. Of course, if the eurozone wanted to propose a change to the treaties, then we would be very willing to sit down and discuss it.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

My right hon. Friend will know that 90% of the world’s physical trade travels by sea. He may also know that Greek individuals and companies are the largest owners by tonnage in all sectors of the market. Any reduction in tonnage across the world is not only damaging to international trade but potentially highly inflationary. Has he given any consideration to this, and what discussions has he had with partners to ensure that sufficient shipping tonnage remains available for all international trade?

[Mr Osborne]

We have stayed in touch with all interested parties. Of course, the shipping industry is an incredibly important part of the Greek economy and the global economy, but we do not currently see a particular disruption to the shipping industry that we should be alarmed about.

The Economy

Stephen Phillips Excerpts

Thursday 4th June 2015 Commons Chamber

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

May I be the first to congratulate you while you are in the Chair on assuming your position, Madam Deputy Speaker? As it happens, this is turning out to be a Parliament of firsts for me. Last week I think I was the first Member in this Parliament to be granted an urgent question, and I am the first Member to have been called by you. I am tempted to ask whether you can enjoin the House not to interrupt me, on the basis that this is perhaps a maiden speech. I say that because, after I was granted the urgent question last week, someone at Sky kindly tweeted that a new Member had been granted an urgent question. I have obviously made an extraordinary impact on the media over the course of the past few years.

May I also congratulate all the Members who have made their maiden speeches today? They are my hon. Friend the Member for Bexhill and Battle (Huw Merriman), my hon. and learned Friend the Member for South East Cambridgeshire (Lucy Frazer), the hon. Member for Glasgow South West (Chris Stephens), my hon. Friends the Members for Horsham (Jeremy Quin) and for Cannock Chase (Amanda Milling) and the hon. Member for Greenwich and Woolwich (Matthew Pennycook). They will all obviously have fine parliamentary careers, although I remind them that in 1837, when Disraeli, whom we have already heard about twice in this debate, made his maiden speech, he ended it, after a considerable amount of barracking, with the words:

“I will sit down now, but the time will come when you will hear me.”

Well, the House has heard from all those Members today, and it is much better for having done so.

I have sat through the entirety of the debate, and if I may I would like to commend the right hon. Member for Doncaster North (Edward Miliband) for one of the finest speeches I have heard during my five years in this place. It was a speech that, in common with my hon. Friend the Member for North West Leicestershire (Andrew Bridgen), I am pleased he did not make before the election. It was a speech that, essentially, could have come from the Conservative Benches, because it was a speech about one nationism. One nationism is what this Government and this party stand for. The Gracious Speech, on which we are debating the Address, is a speech about one nation. It is a speech about this country over the next five years, and about what the Government’s plans, on which we were returned with a significant majority, are going to achieve.

Time is very limited in this debate given the number of speakers, but there are three areas on which I wish to very briefly focus my remarks. I understand that this is principally a debate on the economy, but the first area relates to the Human Rights Act 1998. A rumour has grown up on the Conservative Benches—or at least that is what I hear from my hon. Friend the Member for Newark (Robert Jenrick), who is now the Parliamentary Private Secretary to the Lord Chancellor and Secretary of State for Justice—that I am somehow going to be difficult in relation to the Human Rights Act, given my background and role as a lawyer. That rumour is misplaced.

I stood on a manifesto—I want to remind Conservative Members that we all stood on a manifesto—that said we would replace the Human Rights Act with a British Bill of Rights. That does not need to involve our withdrawal from the European convention. What we have said, and what we said in the manifesto in 2010, is that the Act can and should be replaced by a British Bill of Rights which is justiciable in the courts of this country, whether they are the courts of England and Wales, or of Scotland or Northern Ireland. That, as was made crystal clear by an editorial in The Sun last week and by what we were told on the doorstep during the general election campaign, is what the British people want.

The other thing that the British people want in relation to Europe, albeit unconnected with the European Court of Human Rights, is a referendum on the European Union. It is this party that is going to deliver that referendum. I remind everybody in the House—all right hon. and hon. Members, whether they are the most fervent Europhile or the most ardent Eurosceptic—that we are all here because we were elected in a democracy. If we believe in democracy, as we all ought to do, then giving the British people a say on whether they want to continue to be part of what the European community has become is absolutely the right thing to do.

I have already said that the right hon. Member for Doncaster North mentioned Disraeli in his speech. Disraeli also said, in a very famous passage, that he was

“a Conservative to preserve all that is good in our constitution, a Radical to remove all that is bad.”

This is a Government who have my support in relation to the Gracious Speech, because they are Conservative in relation to what is good in our constitution and they are radical in relation to what is bad.

Oral Answers to Questions

Stephen Phillips Excerpts

Tuesday 27th January 2015 Commons Chamber

[Mr Osborne]

We have a free-at-the-point-of-use national health service, which we are proud of and will continue to fund. What is clear is the total confusion in Labour’s health policy today. This morning the Labour leader said he was going to use his so-called mansion tax to pay down the deficit; six days ago the shadow Chancellor said that money would be used to pay for his NHS plan. It is total confusion today. The only way to have a strong national health service is to have a strong economy.

Let me end on this note. We read in the last couple of days that the shadow Chancellor has been sidelined from the general election:

“In a major humiliation, party bosses have quietly shunted”

him

“out of the media spotlight”.

Let me reach across the Dispatch Box and offer the hand of friendship. Let us resolve that we are both going to put him at the centre of this general election campaign.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

T2. By sticking to our long-term economic plan, huge strides have been made towards reducing the deficit—something that seems to evade the shadow Chancellor. Does my right hon. Friend agree that there is only one party that can be trusted to take the difficult decisions needed for prosperity in this country and for sound public finances, and it is the one that he and I represent?

[Mr Osborne]

My hon. and learned Friend is absolutely right. In Lincolnshire and across the country, people have seen unemployment fall and businesses grow. We have got to stick with the long-term economic plan, particularly at a time when the global economic risks are increasing. By working through that plan, we can deliver that economic security for his constituents and mine, and make sure this country has a brighter economic future.

Oral Answers to Questions

Stephen Phillips Excerpts

Tuesday 29th April 2014 Commons Chamber

[Mr Osborne]

Well, I do not think the hon. Gentleman is Abraham Lincoln, but the point I would make is that we can only see an increase in the living standards of the British people if the British economy is growing and jobs are created. That is exactly what our economic plan is delivering.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

T2. Further to the question from my hon. Friend the Member for Kettering (Mr Hollobone), the House will also recall that earlier this year the shadow Chancellor said:“do I think the level of public spending going into the crisis was a problem for Britain? No, I don’t, nor our deficit, nor our national debt”.As the last Government were spending more than they took in as early as 2002, does my right hon. Friend agree that this shows they still cannot be trusted to take the difficult decisions needed to control public spending and get the deficit down?

[Mr Osborne]

I absolutely agree with my hon. and learned Friend. [Interruption.] The shadow Chancellor is chuntering away, but this is what he said on the radio this morning: “I don’t think I’ve been too pessimistic in the last few years.” He predicted that the economy would be choked off and that jobs would be lost, but the reverse is happening. In Sleaford and North Hykeham, as my hon. and learned Friend knows, the claimant count has come down and 1,700 jobs have been created.

Charter for Budget Responsibility

Stephen Phillips Excerpts

Wednesday 26th March 2014 Commons Chamber

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

When this Government came to office in 2010, they faced immediate and terrifying problems. Listening to some of the contributions from Opposition Members, that seems to have been forgotten. The prudence of the policies that have been pursued by the Government over the past four years has done much to make us forget what we knew at the time—that this country had been brought to the brink of bankruptcy by a Labour Government who, in their 13 years in office, borrowed more money than all their predecessors put together since the foundation of the Bank of England.

If we are never again to repeat the mistakes of the past, we must not forget where this country found itself in 2010, as we should not forget that the authors of the crisis that this country faced are now sitting on the Opposition Front Bench and who would again be king, notwithstanding their clear demonstration in their handling of the British economy in their time in office, that they are unfit to hold it.

[Guy Opperman (Hexham) (Con)]

Given that the Opposition have opposed every budgetary and welfare cut throughout this Parliament thus far, why should we ask the public to believe them now, particularly given what the shadow team say in private?

[Stephen Phillips]

I do not know what the shadow Chancellor and his Treasury shadow team say in private. I do know that when I talk to people in my constituency, they have not forgotten that the authors of the troubles that we found ourselves in and that we are still recovering from and will be for a considerable time are those who again want to hold the reins of power.

[Mrs Anne McGuire (Stirling) (Lab)]

In the hon. and learned Gentleman’s historical and economic analysis, when is he going to factor in a little thing such as an international financial crisis that did not start in Britain?

[Stephen Phillips]

He is going to factor it in right now, and he is going to tell the right hon. Lady the truth. The truth is that this country was in a much worse place to weather that financial crisis because of the fact that we had borrowed more money than any other developed economy. Indeed, we had borrowed just about as far as we could possibly go. The truth of the matter is that we would have weathered the financial crisis, which I quite accept was an international crisis, if the last Government had done their job properly, fixed the roof while the sun was shining and had not over-borrowed—if they had not done all the things that led to the difficulties that this coalition Government have had to pick up.

It is quite apparent that the hubris of Opposition Members knows no bounds. There is no plan. They have no plan for the British economy other than the plan that they had during their time in office: spend, spend, spend. That is one reason why it is important that this measure comes before the House today.

Let us recall precisely what we are talking about. This is a prudent measure from this Government, and it updates the charter that was previously laid before the House, and which the House approved. When history comes to look at the record of this Government and the things that they have done, it will see not just that the Government have taken steps to cure the British economy of the malaise from which it was suffering in 2010; they have in addition taken the necessary measures to address the structural changes that were required so that we can go forward. The establishment of the Office for Budget Responsibility—obviously, four years ago—means that we can never again see economic and fiscal forecasts of the type that enabled the previous Government to spend so foolishly the money that we simply did not have.

The charter comes before us again today, and in part it does so because of the announcement, quite correctly, by my right hon. Friend the Chancellor of the Exchequer that we need to take action. We need to take action to stop benefits running out of control as they ran out of control under the previous Government. The figures have been quite startling, and they have been given in this debate. The simple fact of the matter is that this charter, with its cap on benefits, is something that the House should support. I am pleased that the Opposition are going to support it; they should all be supporting it, because it is the right thing to do.

Finance (No. 2) Bill

Stephen Phillips Excerpts

Wednesday 17th April 2013 Commons Chamber

[Nigel Mills]

The hon. Lady is right. I have not sought to defend those who peddle tax avoidance schemes. It is probably human nature for us all to try to minimise our liabilities. I personally think that we should try to adjust our tax regimes so that they get much closer to taxing the real profit that is declared, rather than allowing a collection of reliefs, allowances, incentives and so forth to provide scope for manipulation of the various circumstances in which people find themselves. However, I accept that people would still try to get round the simplest tax code in the world, and that we would need provisions to stop them.

My amendments are designed to ensure that, if the Revenue uses this power, it uses it to deal with the largest, most outrageous schemes. We do not want it to go around threatening all the small taxpayers who are simply trying to go about their way of life. I was not convinced that the wording of the Bill, and certainly not the wording proposed by the right hon. Member for Oldham West and Royton, would meet those concerns. I tried to provide a de minimis: the tax at stake would have to be above a certain amount before the rules could be applied. That would provide certainty, ensuring that the vast majority of taxpayers would not be subject to some retrospective, random rewriting of the law.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

My hon. Friend is making a powerful speech, and is advancing a compelling argument for his de minimis principle. The problem is, in my view, that it is a compelling argument for the exclusion of part 5 of the Bill, and that the de minimis principle that he seeks to introduce ignores the other principles that he has advocated. Does he agree with that?

[Nigel Mills]

Yes, I do. Various Members have expressed concern about the principle before. I think we must accept that the House has concluded that the only way of tackling the problem of excessive outrageous tax avoidance is to risk the principle of the reading of the rule of law, and to be satisfied that a relatively minor version is what is needed to tackle tax avoidance. I am not sure I would have come to the same conclusion. The previous Government looked at a general anti-avoidance rule about a decade ago, and having consulted for quite a while and made various drafts, they decided not to proceed, probably because of the same concerns that my hon. and learned Friend has set out. You perhaps remember those days and that consultation, Ms Primarolo.

--- Later in debate ---

[Catherine McKinnell]

I am pleased that my hon. Friend has raised that issue and reiterated the difficulty the Chancellor faces in pursuing, with such a one-direction approach, his clearly failing economic policies. He refuses to change course, even though the economy clearly shows that his approach is not working, as does the impact on ordinary people up and down the country. Instead, he is ploughing on for political reasons—because he simply cannot lose face by changing direction.

Let me return to the principal issue. It is right to raise the impact of tax avoidance on public services, which are suffering as a result of the tax gap.

[Stephen Phillips]

If it is so important to impose an anti-abuse rule such as that which the Government propose to introduce, can the hon. Lady explain to the House why the Labour Government, who were in power for 13 years, did absolutely nothing in that regard?

[Catherine McKinnell]

That is clearly untrue. The Labour Government had a proud record of tackling tax avoidance at every level. We introduced endless targeted measures that brought in an additional £16 billion of revenue. We introduced the disclosure scheme, which, as the Minister will say, has been highly successful, which this Government are building on and which brought in an additional £12 billion of revenue. I shall take no lessons from those on the Government Benches about tackling tax avoidance, because although the Government talk tough the action is yet to be seen on the ground.

Clearly it is unfair and wrong that companies can avoid tax on profits that have been generated from economic activity in the UK. I am sure that we can all agree on that. The profits have been generated by hard-working UK tax-paying consumers and businesses with what appears to be one rule for those at the top and another for everybody else.

There will sometimes be good reasons for companies to pay little or less tax. Some firms invest large sums in research and development, assets and infrastructure. That must be celebrated and acknowledged, but people are rightly entitled to ask what is going wrong when a company can make sales of £1.2 billion and describe itself to investors as profitable yet report no profit in the UK. It totally undermines the concept of a level playing field when good British companies pay their fair share on profits generated in this country whereas others seem to get away with not doing so.

As we all know from our constituency postbags, people are angry about the devastating consequences of tax avoidance not just on the UK and our public services but on developing countries, with multinational giants using tax havens and artificial corporate structures to shift profits offshore and away from the places where they were generated.

We have heard much tough talk from the Government about their apparent determination to tackle tax avoidance. Before us today we have the coalition’s flagship policy on this issue, the general anti-abuse rule. Announced in the 2012 Budget and building on the 2011 report by Graham Aaronson, QC, the GAAR will apply to income tax, national insurance contributions, corporation tax, capital gains tax, inheritance tax, petroleum revenue tax, stamp duty land tax and the new annual tax on enveloped dwellings. I welcome the statement on page 4 of the guidance that was finally published, which suggests that the GAAR

“rejects the approach taken by the Courts in a number of old cases to the effect that taxpayers are free to use their ingenuity to reduce their tax bills by any lawful means, however contrived those means might be and however far the tax consequences might diverge from the real economic position.”

That is a significant advance on the current situation, but, in the Treasury’s words, the GAAR is intended to address

“artificial and abusive avoidance schemes but without creating uncertainty for business investment”

and will attack

“only those schemes that are the intended target and not a broader spread of business arrangements.”

The Budget 2013 policy costings documents suggested that the GAAR

“would be highly targeted on abusive avoidance that has abnormal features”

and goes on to suggest that the people affected are likely to be those involved in “highly contrived tax avoidance”. Mr Aaronson believes that the GAAR is

“clearly intended to apply only to egregious, or very aggressive, tax avoidance schemes”.

Indeed, clause 204(2)(b) refers to the use of “contrived or abnormal steps” to obtain a tax advantage. Those are definitions that I would say—many would agree with me—are highly subjective and require greater clarity in the final guidance. As the Chartered Institute of Taxation pointed out before the guidance was published, how does one interpret “abnormal” and to what extend does the term “contrived” cover what many tax experts would think—rightly or even wrongly, in many people’s view—is simply tax planning? Page 23 of the final guidance, published on Monday, simply states:

“The words “contrived” and “abnormal” are not defined, and therefore will be applied in their normal sense.”

Oral Answers to Questions

Stephen Phillips Excerpts

Tuesday 12th March 2013 Commons Chamber

[Mr Gauke]

This figure of £3 billion that is repeated time and again is simply inaccurate. It makes no assumption for behavioural effects whatsoever, and this was never the position of the Labour party. The fact is that the cost is £100 million, recouped several times over by other measures contained in the last Budget that are getting more money out of the wealthy.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

14. What progress his Department has made on ending the abuse of tax avoidance schemes.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

The Government are fully committed to tackling tax avoidance, taking all necessary steps to protect the Exchequer. Since 2010, the Government have introduced 26 changes to the law to close loopholes and tighten our legislation against tax avoidance. We are introducing a general anti-abuse rule in this year’s Finance Bill to tackle abusive avoidance schemes, and we will be consulting on measures to address high-risk promoters of avoidance schemes.

[Stephen Phillips]

I am grateful to my hon. Friend for that answer. One of the drivers of these aggressive tax avoidance schemes has been the cottage industry that has grown up among those who seek, for their own financial gain, to persuade those who want to pay their taxes to enter such schemes. What steps are the Government taking to deal with the promoters of these aggressive tax avoidance schemes?

[Mr Gauke]

My hon. and learned Friend is absolutely right to raise this issue, which the Government have focused on extensively in recent months. We have consulted on what we can do in this area, and I hope that we will be able to report back on that shortly. We have also strengthened the disclosure of tax avoidance schemes regime, making it increasingly difficult for people to peddle these artificial, contrived schemes that involve people not paying their fair share. We do not think that that is right and we are doing something about it.

Infrastructure (Financial Assistance) Bill

Stephen Phillips Excerpts

Monday 15th October 2012 Commons Chamber

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

Is not the real point that the Government are taking action? Does my hon. Friend agree that it is that action that is important? We do not necessarily need to consider what the measures of success might be in the future, as the real point is that the Government are actually doing something, unlike the previous Government.

[Sajid Javid]

As always, my hon. and learned Friend makes a fantastic point and I agree wholeheartedly.

The Government have agreed in principle, and subject to strict approvals criteria, to make financial support available to infrastructure projects, using the strength and credibility of our balance sheet to support the investment we need. The Treasury and the Secretary of State already have common law power to issue guarantees, make loans, and give other financial assistance. In addition, in some cases, Secretaries of State have express statutory powers to support infrastructure. However, the Treasury does not have authority to incur expenditure in relation to guarantees on the scale that I have outlined. Moreover, Members will know that there is a long-standing convention dating back to 1932 that Government should not rest significant and regular expenditure under common law powers on the sole authority of general supply legislation. So, to achieve the crucial level of financial support required for key infrastructure projects, we need new primary legislation.

The legislation authorises the Treasury and, where appropriate, the Secretary of State, to incur expenditure for providing financial assistance. The Bill will allow the Government to support crucial investment in key areas of economic and public service infrastructure. That will include utilities, such as energy and telecommunications; transport, such as railways and roads; infrastructure to provide public services, such as hospitals and schools; and housing development to deliver much-needed homes. We estimate that up to £40 billion of investment in infrastructure and an additional £10 billion in housing investment could be accelerated under the UK guarantee scheme using the powers in the Bill. Importantly, we will put in place strict guidelines and eligibility criteria for the schemes to protect the taxpayer and ensure the Exchequer does not take on unacceptable fiscal risks.

In Committee, I was asked about application time frames. Let me clarify that the time frames are detailed in the scheme rules, not in the Bill. Any proposal that receives an infrastructure guarantee will, as a minimum, have satisfied the requirements to be nationally or economically significant; financially credible; good value for money for the taxpayer; not solely dependent on a guarantee to proceed; and ready to start construction within 12 months.

The projects we expect to back will be structured to minimise potential losses to the Exchequer, so there will be a minimal impact on public sector net borrowing as a result. The exception is under the extreme circumstances that a guarantee is called upon or other forms of financial assistance are provided. Furthermore, we will levy a commercial charge for the services received by infrastructure providers, ensuring that companies pay a fair price for the benefits they receive and taxpayers receive a fair price for any risk being taken.

We have designed the UK guarantee scheme to ensure that critical infrastructure projects receive the investment they urgently require.

--- Later in debate ---

[Chris Leslie]

Although the Opposition will not oppose the Bill on Third Reading, we do not think that the matter should rest there. It is not the most impressive Bill ever placed before this august Chamber. The Minister said that he was grateful for the excellent and informative debate we have had so far, but we had a pretty farcical two hours of scrutiny in Committee; we managed to debate only clause 1 and had no debate on a third of the amendments that were tabled. I think the Government showed a large measure of disrespect to the process of parliamentary scrutiny in the way they misallocated time for today’s discussions.

This legislation is very much in the frame of mind of the “wait and see” game we are used to seeing from the Chancellor and the Treasury team. They hope that something will crop up but are not exactly sure what. The Minister said that he hoped there would be some expressions of interest in something or other but that, ultimately, he cannot predict the future. My right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) asked the killer question: what will be the measure of success for the Bill? What answer did the Minister give? Essentially he said, “We cannot not really predict that, but we are confident that projects will come forward, so judge for yourself.” That is a totally embarrassing and appalling way of managing and advocating what should be a far more sophisticated approach to making public and economic policy.

The country deserves far better than the “wait and see” approach from Ministers. Surely there should be some semblance of projections for how the Bill will be deployed and some way of gauging what that interest is, rather than just putting it out there and hoping that something will happen. But of course we must not forget that the Bill is in large part a device to make it look as though the Government are actually busy. There is one effective sentence in clause 1 that covers the blushes of the accounting officers so that underwriting arrangements can span various financial years, but essentially this is makey-uppy, make-work legislation to make the Government look determined and busy in the Chamber.

Do not forget that we will have a growth Bill in due course, although we are still not clear what will be in it. The Prime Minister famously said that we cannot legislate for growth, so we will see what becomes of that Bill.

[Stephen Phillips]

The hon. Gentleman criticises the Minister for not laying out what the hon. Gentleman regards as the criteria by which the Bill’s success is to be measured. What are the criteria by which the Opposition will measure the success of the Bill, given that they are not going to divide the House on Third Reading?

[Chris Leslie]

We did not have time to discuss some of our amendments. We wanted far more information about the nature of the loans, underwriting and even grants being given to the private sector. The right hon. Member for Bermondsey and Old Southwark (Simon Hughes) tabled some important amendments that we did not get the chance to discuss in any great detail.

My amendment 5 simply talked about making sure that the public can know to whom the financial assistance is being given—a pretty basic tenet of transparency and accountability for public resources. The Minister could not say that that information would be in the public domain. We are not even necessarily allowed to know to whom the financial assistance is being given.

The Minister says that due diligence will be thorough as far as the Treasury is concerned, but what about the rest of us? Our constituents send us here to keep an eye on what the Executive are doing with public money. Without that basic information, how are we to judge the success of the legislation?

--- Later in debate ---

[Mr Raynsford]

The Minister opened his Third Reading speech by claiming that we had had an excellent debate. If only! He must have had his tongue in his cheek when he said that. We have had a shockingly truncated debate in which only one group of amendments has been properly debated. The second group received only a perfunctory opportunity for debate, and that was cut short by the timetable at 9 pm. That left no time for any debate on three of the Bill’s four clauses. Frankly, that is not an adequate performance and I hope that conclusions will be drawn in the other place.

When I intervened on the Minister to ask what success criteria had been set to assess the Bill’s effectiveness, after a rather telling pause in which he had difficulty identifying success criteria, he referred me to the provision for annual reports, thereby neatly highlighting the fact that we had not had a debate about the frequency of the reports. I tabled an amendment to have those reports at six-monthly intervals, in order to make the point that the urgency for action to stimulate investment in infrastructure required a more accelerated timetable than the leisurely one proposed by the Government. Of course, we had no chance to debate that amendment, because it related to clause 3, which we never reached.

As my hon. Friend the Member for Nottingham East (Chris Leslie) rightly emphasised, the Minister’s response to our request for a definition of the success measures was essentially one of “Wait and see”. Frankly, this country cannot afford to wait and see. We are facing a serious economic crisis, which is more acute in the construction sector than in almost any other sector of our economy, and the serious problems affecting the construction industry are impacting more widely on the whole economy.

Urgent action to stimulate construction investment is absolutely vital. In theory, the Government are aware of that, because the Bill’s explanatory notes start with reference to the need for fast-track legislation. The notes ask:

“Why is fast-tracking necessary?”

They go on to say:

“The financial assistance is designed to assist infrastructure projects that may find it difficult to obtain private finance…The Government understand that there are currently commercially and economically viable infrastructure projects that are stalled because they cannot secure private finance. The timing of the UK’s proposed financial assistance is currently unclear, but the evidence indicates that there are projects that might be waiting only for finance before they can proceed to the construction phase.”

That may well be correct. We share the Government’s stated objective of bringing forward and accelerating the necessary investment. However, if that is the case, why can the Government not name a single project that stands ready and waiting to receive the benefit of the financial guarantees offered by the Bill?

In July, Lord Sassoon, speaking for the Government, referred to £40 billion-worth of projects that were ready to go by the autumn. I put it to the Minister that we are now in the autumn. If we are to see a significant proportion of that £40 billion of investment reasonably soon, we need to know very soon what those projects are. I put it to the Minister and to all Government Members from both coalition parties that it is not good enough to talk about good intentions but fail to come forward with concrete, practical proposals, particularly when they have said that the projects are shovel-ready and that it is only the lack of financial support from the private sector that is holding them back. They have said that the Bill is here to unlock that potential.

I repeat my question to the Minister: what are the success criteria? We believe that one measure of success would be a considerable increase in the investment in infrastructure. Back in 2009, in the depths of recession, investment in infrastructure was running at about £11.5 billion. That was the highest level for 20 years and was an indication of the previous Government’s commitment to infrastructure investment as one of the measures to deal with recession. Investment in infrastructure is now down to £8.6 billion and further falls are forecast. That is the record of the present Government. They have presided over a catastrophic fall in construction activity. Infrastructure, which was one of the few parts of the construction sector to survive the worst of the recession in the early years, is also falling. The industry is desperate for assistance.

[Stephen Phillips]

The right hon. Gentleman refers to the record of the present Government, but it was under the previous Government that house building fell to its lowest level since 1923 and 1924. Why does he not welcome the action that this Government are taking in the way that it should be welcomed?

[Mr Raynsford]

The hon. and learned Gentleman clearly did not listen to the contribution of my right hon. Friend the Member for Wentworth and Dearne (John Healey), who pointed out that house building levels have gone down further under this Government. The levels are now at their lowest since the 1920s and are lower than when the Government came to office.

The sad thing is that when the Government came to office, the housing sector was recovering. [Interruption.] It was recovering. If Government Members look at the statistics, they will see that in—[Interruption.] They clearly do not want to listen to the statistics. In the second quarter of 2010, there were more than 30,000 new starts in the housing sector. That was a recovery from the depths of recession. Since then, that level has never been matched. In the latest quarter, the number of starts was down to 23,000—a level that is consistent with an output of less than 100,000 in any one year. That is a shameful record, for which this Government are responsible. I say to Government Members that, for all their bravado and posture, their record is a shameful one and will hang around their necks as the British electorate come to see just what a mess their failed policies have left.

In conclusion, this is a Bill that we cannot object to in principle, because investment in infrastructure and housing is vital. Sadly, it is a Bill that, on the evidence that we have heard tonight, will not deliver what the Government say they would like to see and what Opposition Members would dearly love to see: increased investment in infrastructure and housing. The country needs it and the industry needs it. Sadly, I fear that the Bill promises it, but will not deliver it. Only time will tell, but the Government’s failure to respond adequately on the question of the success criteria speaks volumes about how this is a triumph of spin over substance.

Consumer Insurance (Disclosure and Representations) Bill [Lords]

Stephen Phillips Excerpts

Tuesday 6th March 2012 Commons Chamber

[Chris Leslie (Nottingham East) (Lab/Co-op)]

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

It is fortunate that we have the opportunity to debate the Bill on the Floor of the House on Report and Third Reading for a number of reasons. First, the Committee stage of the Financial Services Bill is currently under way upstairs in Committee Room 12, where the Financial Secretary, who usually deals with these issues, is answering the debate and addressing the many amendments that I and my hon. Friends have tabled. It is a shame that the Government saw fit to put only one Minister on that Committee, because it means that he is unable to join us in this debate. I have popped down briefly. It is a pleasure to see the Economic Secretary fielding the questions on his behalf. I have a number of them for her on the detail of the Bill.

Secondly, it is fortunate that we are having this debate on the Floor of the House because, rather bizarrely, the Government chose to take Second Reading upstairs in Committee. I did not know that such Bills could have a Second Reading debate on the Committee corridor, but apparently, under one of the more arcane Standing Orders of the House, Law Commission Bills can be debated upstairs in Committee on Second Reading and never usually see discussion on the Floor of the House. I do not believe that it is right for primary legislation not to have a hearing on the Floor of the House. That is an important principle. However, despite my objections, the Second Reading debate happened upstairs. I challenged the Financial Secretary to hold the Report stage on the Floor of the House and he eventually relented, under extreme pressure. I regard that as one of my greatest triumphs in opposition. It turns out that the Report stage could also have been taken in Committee, so this piece of primary legislation need never have seen the Floor of the House of Commons.

I realise that I have digressed, Mr Deputy Speaker, but I just wanted to show how fortunate we are to have the opportunity to debate the Consumer Insurance (Disclosure and Representations) Bill here today.

This is a broadly positive Bill. I place on the record my thanks to the Law Commission and the Scottish Law Commission, which in 2009, when the previous Administration were in office, published a joint report entitled, “Consumer Insurance Law: Pre-Contract Disclosure and Misrepresentation”. That report resulted in this Bill.

The new clause is simple and, I hope, relatively uncontroversial. I hope that the Government will accept it as a positive step forward. The many hon. Members who have joined us for this debate will know that consumer insurance is incredibly important to all our constituents. We are talking not just about life insurance, which members of the public might want to take out, but more day-to-day insurance such as household and contents insurance, building insurance, motor insurance, flood risk insurance, personal effects insurance, health insurance and even pet insurance. There are a number of insurance schemes that the Economic Secretary or my hon. Friend the Member for Clwyd South (Susan Elan Jones) may have taken out. Consumer insurance is, therefore, incredibly important.

Although superficially it looks as though the Bill changes only small aspects of contractual matters, it nevertheless gives us the opportunity to take stock of the state of the consumer insurance market and to ask where it is heading, particularly in the light of its provisions. The Bill has a number of important purposes, which I will touch on at Third Reading. Essentially, the story goes back to the 18th and 19th centuries, when a degree of common law had accrued and there were questions about a new contract for insurance. At the start of the 20th century, it was felt that the Marine Insurance Act 1906 needed to be placed on the statute book.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

indicated assent.

[Chris Leslie]

I note that the hon. and learned Gentleman recalls that from his history studies. Although, strictly speaking, the 1906 Act applies only to marine insurance, it has since been generally understood that it applies to all forms of insurance. Essentially, its provisions are the building blocks of the contractual process that is involved in the consumer insurance trade.

[Stephen Phillips]

The hon. Gentleman will know that the 1906 Act, which was drafted by Sir Mackenzie Dalzell Chalmers, is commended to the House by many insurance lawyers as a wonderful piece of drafting. I suppose, as this is my first intervention in this debate, that I should refer the House to my entry in the Register of Members’ Financial Interests; I am an insurance practitioner. Does the hon. Gentleman think that it is a good idea for Parliament to intervene in this way, given that there are certain respects in which the 1906 Act altered the common law? For example, the test of loss in relation to marine insurance now differs from the test of loss in relation to non-marine insurance.

[Chris Leslie]

I am grateful to the hon. and learned Gentleman for bringing his experience to bear on this debate; it is incredibly useful. I suppose that, to a certain extent, we all ought to declare an interest in these matters as consumers, because some of our arrangements may be affected.

The hon. and learned Gentleman is right that the 1906 Act has stood the test of time for a considerable period, indeed for more than a century. I confess that I do not have a copy of it in front of me, but I will paraphrase its arrangements. It enshrined in law certain principles of disclosure. In particular, it placed a considerable emphasis on the requirement for the party seeking insurance to disclose any issues that might be broadly relevant in the insurance process. It did not require the insurer to ask a series of specific questions about the particulars of the individual being insured. That was left to the discretion of the insurer. That is part of contract law. Of course, common law has accrued since that time. Some serious problems have developed in recent decades in relation to where the balance is struck between the insurer and the person being insured. The onus falls perhaps too heavily on the person who is being insured.

For example, if you have taken out household contents insurance recently, Mr Deputy Speaker—I am not sure whether you have, but I suggest that you do, because it is a wise thing to do even though it can be quite expensive—you may have been asked a number of questions about the type of mortice lock you have and other things about your place of residence. If you did not volunteer particular data about the building in which you reside, how frequently you are away on business and so on, an insurer with a beady eye on avoiding an obligation to pay up could invalidate your insurance should you be unfortunate enough to be burgled and need to make a claim. That would be through no fault of your own, other than your failure to disclose a number of matters to the insurer.

--- Later in debate ---

[Stephen Phillips]

I rise to make only a short contribution. The new clause is misconceived. The Law Commission did not think it necessary, and with the greatest respect, the hon. Member for Nottingham East (Chris Leslie) has undermined his own case, because only in circumstances in which claims that ought to be paid have not been paid might there be any adverse impact on the costs of the types of insurance contract that the Bill covers.

I say to the hon. Gentleman and the whole House—to be fair, there is no one but him and the Opposition Whip on the Opposition Benches—that in this day and age, I am pleased to see the Bill before us. It is not only long overdue, and perhaps I shall speak to that on Third Reading, but it is inconceivable either that it will remove products from the market or add greatly to the costs of the type of insurance contract that it is designed to cover. I cannot help feeling that the hon. Gentleman will not wish to press the new clause to a Division.

[Chris Leslie]

I hear the hon. and learned Gentleman’s points, and I do not wish in any way to denigrate the importance of the Bill—it is an extremely positive and important measure—but the fact that it originated with the Law Commission does not necessarily make it perfect or negate the need for a review. He should not be under that illusion. Just because those fine minds at the Law Commission introduced the Bill does not necessarily mean that we should not scrutinise it.

[Stephen Phillips]

I am not for a moment suggesting that the Bill should not be scrutinised.

Insurance companies ought to pay claims that they have not paid previously as a result of an inadvertent misrepresentation or non-disclosure—everyone wants that change, which is the reason for the Bill. The only way in which the costs of the types of insurance contract that the Bill covers will increase is if claims that ought previously to have been paid—legitimate claims—are paid. Disreputable insurance companies—I venture to suggest that there is none left in this country—currently might decline to pay a claim on a specious basis. For that reason, the review proposed in the new clause is unnecessary. I anticipate that the Government will not wish to carry it out, and the hon. Gentleman is rather hoist on his own petard because of the argument he has made in support of the Bill.

[Jonathan Evans]

My hon. and learned Friend will know that arrangements are in place for the Financial Ombudsman Service to look at the circumstances to which he refers—when an apparently proper claim is declined by an insurance company on specious grounds. Notwithstanding the 1906 Act, the financial ombudsman has, under the “treating customers fairly” provisions, which were put into operation by the Financial Services Authority, many times ordered a payment to be made. Is that not one of the reasons for the Bill? The situation will be that legislation rather than the financial ombudsman will be involved in righting wrongs.

[Stephen Phillips]

My hon. Friend makes a valid point. The insurance industry has long been regulated and the ombudsman has long been able to make declarations, but there are circumstances in which one cannot go to the ombudsman—for example, if the financial value of the contract is too high. There are circumstances in which the ombudsman will not intervene—for example, if legal proceedings between the consumer and the insurance company or, if Lloyd’s, some other insurer, are already afoot. In addition, experience dictates that the financial ombudsman is not, for example, particularly au fait with some of the more obscure parts of insurance law with which the Bill grapples, such as those parts of common law that deal with basis clauses and the turning of representations into warranties when made the basis of the contract.

I hear, then, what my hon. Friend the Member for Cardiff North (Jonathan Evans) says, but it is fair to say that the Bill is not only welcome but contains proposals that the Law Commission has properly considered and requires no review of the type that the new clause contemplates. For those reasons, the new clause is, in my respectful view, misconceived; and for those reasons, I am sure that the hon. Gentleman will not push it to a vote.

[Mr Christopher Chope (Christchurch) (Con)]

I was rather attracted to the new clause tabled by the hon. Member for Nottingham East (Chris Leslie). The idea that the House should engage in post-legislative scrutiny is a good one and accords with good legislative practice. That, effectively, is what he is saying. He is not saying that the House would necessarily be involved; he is saying that the Treasury, the Department sponsoring the Bill, would have an obligation to assure everybody about the impact of legislation. This could be an important precedent. Perhaps, in due course, it will be part of official Opposition policy to provide for post-legislative scrutiny.

This area of insurance is extremely complicated and, as the hon. Gentleman said, very expensive for many people. The reason it is so expensive is that there is an enormous amount of fraud, particularly in relation to motor accidents. We heard recently about the high incidence of claims for whiplash. Almost everybody involved in even the most minor bump is encouraged to claim on their insurance for whiplash injuries, and invariably the insurance companies end up paying a lot of money to prevent what they would describe as nuisance claims from going to full litigation. Effectively, they are held to ransom, and not surprisingly it is the customers of those insurance companies who end up paying the bill through higher premiums.

That situation is particularly pernicious with compulsory insurance, which motor insurance is—third party, fire and theft, and so on—for people seeking to drive a motor vehicle on the road. It is particularly tough on young people, and has been made tougher by this ludicrous European legislation declaring that insurance companies cannot take account of whether a young girl belongs to a class group with a lower claims rate than a young man who belongs to a group with a higher claims rate and who therefore will face additional costs.

As a consequence, the premiums for young women have increased significantly faster than premiums for young men. I suppose I have a family interest, because my daughter has recently acquired her first car and taken out her first insurance policy. I can reconfirm what the hon. Member for Nottingham East said. Obviously, she did not have a no-claims record, because she did not have any driving experience, and in the end, the best deal was from a company offering her 10 months’ insurance, which gave her the prospect of getting a no-claims discount after 10 months rather than after a year.