National Insurance Contributions (Secondary Class 1 Contributions) Bill

Tulip Siddiq Excerpts

2nd reading
Tuesday 3rd December 2024 Commons Chamber

[Richard Fuller]

To be fair, my former colleague did not last quite as long as the lettuce, and the public made their judgment clear on that and many other issues at the general election. The hon. Gentleman’s point is fair, but it is not particularly relevant to the decisions he will be asked to vote on today. Hospices in his constituency will know how he votes. GPs in his constituency will know how he votes. Charities in his constituency will know how he votes. I will be interested to see whether he votes with his conscience or with the party line.

Less than one in four of the public now believe that the Government are handling the economy well. It is not just the public who have lost faith in the economic competence of His Majesty’s Treasury; it is the Prime Minister himself, who apparently on Thursday will ditch the ambition for the United Kingdom to be the fastest-growing economy in the G7, removing at a stroke one of the key planks of Labour’s economic plans. The Bill will add to that lack of faith in this Labour Government, because this measure to raise national insurance contributions directly contradicts Labour’s election promise not to increase taxes on working people.

In the election campaign, the Prime Minister, the Chancellor and the entire Labour Treasury team, including the Minister, repeated the phrase from their manifesto, which stated:

“Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.”

Yet today, with the election behind them, increasing taxes on working people is exactly what Labour is proposing to do.

The shadow Minister is shaking his head.

[The Economic Secretary to the Treasury (Tulip Siddiq)]

You’re the shadow Minister.

[Richard Fuller]

I am terribly sorry—the Minister. He shakes his head and says that it is not true. Let me turn to one of his favourite independent economic groups, the Resolution Foundation, whose analyst James Smith said, “Even if it”—the employers national insurance change—

“doesn’t show up in pay packets from day one, it will eventually feed through to lower wages…This is definitely is a tax on working people, let’s be very clear about that.”

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[The Economic Secretary to the Treasury (Tulip Siddiq)]

It is an honour to close the debate on behalf of the Government. When the hon. Member for Grantham and Bourne (Gareth Davies) loses his seat, he can work as my speechwriter, because he is right that I am going to say all the things he said, but I will come on to that soon.

Let me start by thanking hon. Members for their contributions to the debate. There were some powerful speeches, including from my hon. Friends the Members for Chipping Barnet (Dan Tomlinson), for Bournemouth East (Tom Hayes), for Leeds South West and Morley (Mr Sewards), for Gateshead Central and Whickham (Mark Ferguson), for Dartford (Jim Dickson), for Welwyn Hatfield (Andrew Lewin), for East Thanet (Ms Billington), for Rochdale (Paul Waugh), for Loughborough (Dr Sandher), for Basingstoke (Luke Murphy) and for Reading West and Mid Berkshire (Olivia Bailey). .

Before I come to the specific points raised in this debate, I want to reiterate the purpose of the Bill. Our priority in the Bill is to restore stability to our economy, repair the public finances to fix our economy, and support long-term economic growth. The Chancellor recognised that to do that, the Government needed to make difficult decisions. That is why under the measures in the Bill, employers are being asked to contribute more. First, the Bill provides for a rise in the rate of employer secondary class 1 national insurance contributions from 13.8% to 15%. Secondly, it provides for a decrease in the secondary threshold for employers from £9,000 per employee to £5,000. Thirdly, it provides for changes to the employment allowance, to increase it from £5,000 to £10,500, and removes the £100,000 eligibility cap, so that the vast majority of employers benefit.

The hon. Member for North Bedfordshire (Richard Fuller) asked at the start of the debate where the extra money raised will go. Let me remind him that the Government uncovered a challenging fiscal and spending inheritance with £22 million of in-year pressure on public finances. We have taken difficult but necessary decisions to fix the foundations of our economy and to fix public services. The Budget provided additional day-to-day funding to stabilise and support public services. Day-to-day funding will now grow at an average of 3.3% in real terms over this year and next, compared to 0.2% under the last Government’s plans.

[Dave Doogan]

A £200 million black hole in the Scottish Government’s core finances, rising to £450 million when partner agencies are included—what kind of stability does the Minister think that will bring to public services in Scotland?

[Tulip Siddiq]

If the hon. Gentleman is patient and listens carefully to my speech, I will come on to the Scottish Government, so he does not need to worry.

The increase in employment NICs raises revenues for the NHS and increases funding for contributory benefits such as the state pension, easing wider pressures on public finances. It is part of the Government’s announcement of an additional £22.6 billion of day-to-day spending over two years for the Department of Health and Social Care, including the NHS.

[Bradley Thomas]

Can the Minister tell the House which decision was harder, giving an inflation-busting pay rise to union paymasters or cutting the winter fuel payment?

[Tulip Siddiq]

The best decision that we have ever made in government is putting money back into the pockets of working people.

Questions were raised by the hon. Member for Isle of Wight East (Joe Robertson), the hon. Member for Yeovil (Adam Dance) and the Liberal Democrat spokeswoman, the hon. Member for St Albans (Daisy Cooper). The hon. Lady asked a number of questions about the NHS. The Government will provide support for Departments and other public sector employers for additional ER NICs costs only. That will apply to central Government, public corporations and local government. Primary care providers—GPs, dentists, pharmacies and eyecare provider—are valued independent contractors who provide nearly £20 billion worth of NHS services. Every year we consult each sector both about what services they provide and about the money to which providers are entitled in return under their contracts. As in previous years, this issue will be dealt with as part of that process.

[Daisy Cooper]

I am grateful to the Minister for addressing my earlier questions. Rather than taking with one hand and giving back with the other, would the Minister support moves to exempt all health and care providers?

[Tulip Siddiq]

The Department of Health and Social Care will confirm funding for general practice for 2025-26 as part of the usual GP contract process later in the year, through consultation with the sector. I understand the concerns about the impact on the healthcare sector, but I can assure the hon. Lady that the Department of Health will continue to engage with GPs, dentists and pharmacists as part of the usual contract process, and that changes in NICs will be taken into account in those discussions.

Let me now turn to the rant, I would say, rather than speech, from the hon. Member for South Shropshire (Stuart Anderson). I was not quite sure what question he was getting to, but he did ask very clearly whether the Chancellor understood the impact of the economic policies that she was making, and whether she would remain in her place. Considering those questions, I wondered what he thought about economics as a whole, so I decided to look into him. Not long ago, he said:

“I have worked with Liz Truss on many occasions…I believe that her economic position…and her parliamentary experience make her the best option to lead our country.”

[Stuart Anderson]

Will the Minister give way?

[Tulip Siddiq]

With pleasure.

[Stuart Anderson]

I stand by the comments that I made. [Interruption.] I do. I fundamentally believe that Liz Truss would be a better Prime Minister than the one we have now.

[Tulip Siddiq]

If you will forgive me, Madam Deputy Speaker, I feel that a lettuce would have better judgment.

I turn to the devolved Governments. The Government will provide Departments and other public sector employers with support for additional ER NICs costs only. The funding will be allocated to Departments, with the Barnett formula applying in the usual way. The overall outcome of the Barnett formula is that all the devolved Governments will receive at least 20% more funding per person than the equivalent UK Government spending in the rest of the UK. The Scottish Government will receive £47.7 billion in 2025-26, including an additional £3.4 billion through the operation of the Barnett formula. The Welsh Government will receive £21 billion in 2025-26, including an additional £1.7 billion through the operation of the Barnett formula.

[Dave Doogan]

The Minister is being very generous in taking a second intervention from me. I realise that the bar for credibility in the Treasury is very low right now, but she hoots and toots about the level of the block grant for the Scottish Government. In what universe does the block grant go down year on year? Of course it is higher than in previous years. Has she got the faintest idea how it works?

[Tulip Siddiq]

I do have the faintest idea how it works, which is why I am on this side of the House and the hon. Gentleman is on that side. That is why I am a Treasury Minister and he is not, and probably never will be.

The hon. Member for Huntingdon (Ben Obese-Jecty) spoke about hospitality. Without any Government intervention, retail, hospitality and leisure relief would have ended entirely in April 2025, creating a cliff edge for business. [Interruption.] I know the truth hurts, which is why the hon. Member for Thirsk and Malton (Kevin Hollinrake) is chuntering from the Opposition Front Bench. Our Government have decided to offer a 40% discount to RHL properties by introducing a cash cap of £110,000 per business in 2025-26, and we have frozen the small business multiplier. This package is worth over £1.6 billion in 2025-26 and is aimed at supporting the most vulnerable businesses, ensuring that over 250,000 RHL properties receive the full 40% support.

[Graham Stuart]

Will the Minister give way?

[Tulip Siddiq]

I am reluctant to do so, but I will.

[Graham Stuart]

I thank the Minister for giving way. The OBR had to issue a correction to table 3.2 in chapter 3 of its report. Originally, there was RDEL compensation for public sector employees and for adult social care. The correction was made to reduce the sums by £800 million, typically per year, for RDEL compensation just for public sector organisations. Why did the correction need to be made, when was it made, and why was the OBR told so late that social care was not getting the support that it clearly needs?

[Tulip Siddiq]

As far as I am concerned, the current numbers are the correct ones.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

The Minister mentions business rates and the small business multiplier. Will she confirm the continuation of small business rates relief for the rest of this Parliament?

[Tulip Siddiq]

That is under review, and we will come back to the hon. Gentleman soon.

I turn to the questions from the hon. Member for Eastleigh (Liz Jarvis) about childcare providers. She may be aware that I served on the shadow Education team for a long time. I realise the value of early years providers, and I know that they drive economic growth and break down barriers to opportunity. We have committed to making childcare more affordable and more accessible, which is why we promised in our manifesto to deliver the expansion of Government-funded childcare for working parents, and to open 3,000 new or expanded nurseries by upgrading space in primary schools to support the expansion of the sector. However, I say to the hon. Member that the Government inherited the worst economic circumstances since the second world war, and our first step must be to fix the foundations of our economy. In spite of the challenges, the Chancellor announced in her Budget significant increases to the funding that early years providers are paid to deliver Government-funded childcare places, meaning that the total funding will rise to over £8 billion in 2025-26.

I am grateful to have had this opportunity to respond to the questions that have been raised today. I also want to thank my officials for their work on bringing the Bill to the House. Before I finish, however, I want to answer a question that the right hon. Member for East Hampshire (Damian Hinds) asked in his speech: what is the mission of this Government? Well, let me tell him. This Government’s mission is economic stability, restoring our public services, a thriving workplace, making sure that we have a strong education system and strong public services, putting more money in working people’s pockets, and fixing the foundations of our economy. The mission is to rebuild Britain. The Conservatives left a mess, and we will do a better job than them. I commend the Bill to the House.

Question put, That the amendment be made.

Oral Answers to Questions

Tulip Siddiq Excerpts

Tuesday 3rd December 2024 Commons Chamber

[The Economic Secretary to the Treasury (Tulip Siddiq)]

I read that report with great interest and have a lot of sympathy for those who suffered. However, a lot of the incidents described happened a very long time ago. The FCA has made substantial changes in response to those experiences. That does not mean the end of our engagement with the FCA, but we are continuing to hold it to account and it has made changes since the report came to light.

[Bob Blackman]

The FCA has been completely defensive in response to the report. Since the historical elements quoted by the FCA, 13 major scandals have erupted. I will not intrude on your time, Mr Speaker, because I am sure that you would not want me to list them all, but Woodford Equity, car finance and others have come to light since the details came out. Clearly, there is a need to fundamentally reform the FCA so that victims of scandals are properly compensated and the industry is properly regulated in the way that we would all like to see.

[Tulip Siddiq]

I understand that lots of people have suffered, as the report explains, which I said I have read. However, I do have confidence in the FCA; I have sent it remit letters outlining what we expect it to do to deliver on its objectives. The FCA is looking at certain things such as its rulebook, which we think is too extensive, to look at rules that no longer need to be applied but, overall, we are working with the FCA closely and we believe that it is trying its best. It is not possible to have a system where nothing ever goes wrong, but we are trying to minimise that and ensure that there is consumer protection. The FCA knows that we are working together to deliver on its objectives.

[Ms Stella Creasy (Walthamstow) (Lab/Co-op)]

5. What assessment she has made of the adequacy of funding for the Money and Pensions Service.

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[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

WealthTek was placed into administration by the Financial Conduct Authority after losing £80 million of its clients’ money. FCA-appointed administrators are now deducting fees from victims’ compensation. My constituents Dominic Knights and his wife have between them lost thousands of pounds. What is the Treasury doing to safeguard the £85,000 compensation limit?

[The Economic Secretary to the Treasury (Tulip Siddiq)]

The FCA is held to account by the Government and Parliament, but Treasury Ministers cannot comment on individual cases, and the Treasury has no stake in the operational issues of the FCA. I am very happy to meet with the right hon. Lady and the FCA to discuss that matter, but let me be clear: the FCA is an independent regulator.

[Steve Yemm (Mansfield) (Lab)]

T9.   What measures are the Government taking to support small independent retail businesses in town centres such as mine in Mansfield, and will the Chancellor join me in congratulating Mansfield business improvement district on its successful renewal ballot, which was announced last Friday?

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[Tulip Siddiq]

My hon. Friend will know that there is a long-standing debate about the relationship between financial and real economy growth, on which there is no consensus. The Government are clear that we see the financial services sector as a key part of our future economic success. The growth of the UK economy and our wider missions will not be achieved if we do not champion one of our biggest assets—the growth of the UK’s financial services sector—and mobilise it towards achieving those goals.

[Munira Wilson (Twickenham) (LD)]

Achieving for Children is the arm’s length body of Richmond council that delivers its vital children’s services, yet because of the rise in employer’s national insurance, it now faces a staggering bill of £588,000 because the employees are not directly employed by Richmond council. When the Chancellor looks at her local government settlement, will she build in reimbursement for councils such as Richmond, or indeed exempt arm’s length bodies?

Draft Scottish Rates of Income Tax (Consequential Amendments) Order 2024

Tulip Siddiq Excerpts

Monday 2nd December 2024 General Committees

[The Economic Secretary to the Treasury (Tulip Siddiq)]

I beg to move,

That the Committee has considered the draft Scottish Rates of Income Tax (Consequential Amendments) Order 2024.

It is a pleasure to serve under you as Chair, Sir Roger. The draft order enables the calculation of deficiency relief to take account of the introduction of the Scottish advanced rate of income tax. Deficiency relief reduces the tax that some individuals are required to pay when certain life insurance policies come to an end. It applies in unusual circumstances in which the policyholder would otherwise be taxed on more than the actual economic gain they made on the policy. That might include when a tax charge arose on an earlier withdrawal.

On 22 February this year, the Scottish Parliament introduced the new Scottish advanced rate income tax band. That means that, from 6 April 2024, the former Scottish higher rate income tax band was split into the Scottish higher rate and the Scottish advanced rate income tax bands. The current deficiency relief rules do not take account of the new tax band. This reduces the amount of deficiency relief available to a small number of Scottish taxpayers from 6 April 2024.

The order applies from 6 April 2024, and ensures that the new Scottish advanced rate of income tax can be included in the calculation of deficiency relief. At the same time, the Government are taking the opportunity to simplify the wording of the legislation. The order ensures that the calculation of deficiency relief takes account of the new Scottish advanced rate of income tax.

--- Later in debate ---

[Tulip Siddiq]

I thank the hon. Gentleman for his co-operation and for commenting on the lateness of some of the people behind me—I am sure that the Whip will have taken notice of that, but not me, because that is not my job.

Only Scottish taxpayers who are entitled to deficiency relief and who pay tax at the Scottish advanced rate of income tax will be affected. The measure only affects Scottish taxpayers who claim deficiency relief and whose tax is taxable at the Scottish advanced rate of income tax. I cannot give the hon. Gentleman an absolute number, but the criteria apply to people whose income is taxable at the Scottish advanced rate of income tax, as he referenced.

The hon. Gentleman will be pleased to know that guidance is available. The “Insurance Policyholder Taxation Manual” from His Majesty’s Revenue and Customs contains guidance on deficiency relief. It will be updated to reflect these changes, so people can refer to that, and it is available on gov.uk.

I will answer a question about the order applying retrospectively, because I think the hon. Gentleman alluded to that. The Scottish advanced rate of income tax applies from 6 April 2024, but applying these provisions from the state ensures that no taxpayers are adversely affected. I hope that those answers are satisfactory—[Interruption.] I am being handed another piece of paper, which I will read. Oh, the number affected is fewer than 10, and the Exchequer impact is less than £5 million per annum. I hope that satisfies him.

This order ensures that the calculation of deficiency relief takes account of the new Scottish advanced rate of income tax. I am glad that the Opposition will not oppose it and are in agreement. I commend the changes to the Committee.

Question put and agreed to.

Finance Bill

Tulip Siddiq Excerpts

2nd reading
Wednesday 27th November 2024 Commons Chamber

[The Economic Secretary to the Treasury (Tulip Siddiq)]

Just as it was an honour to close the Budget debate on behalf of the Government, it is an honour to close the debate on Second Reading of the Finance Bill—the first Finance Bill by a Labour Government in 14 years. I thank hon. Members for their contributions, and look forward to hearing further contributions during the Committee of the whole House and the Bill’s remaining passages, alongside the Exchequer Secretary to the Treasury.

Before I address the numerous points raised in the debate, it is worth reflecting briefly on the points made by the Exchequer Secretary in his opening remarks on what the Bill will achieve. The Bill legislates for key measures in the Budget—a Budget in which we took tough decisions on tax, spending and welfare to restore Britain’s economic stability. The Bill delivers on our manifesto commitments and starts the work of moving to a fairer, more sustainable tax system while raising the revenue needed to adequately fund our public services. The Government have taken a balanced approach that will create a fairer system while still promoting growth and wealth creation.

We are adjusting the rate of capital gains tax, for example —a tax paid by fewer than 1% of adults every year—to raise some of that revenue. Although rates have increased, the Government will maintain the UK’s position as having the lowest CGT of any European G7 economy. There are no changes to CGT rates on property or the annual exempt allowance, and there is a phased increase to business asset disposal relief, to give entrepreneurs time to adjust. That is just one of the many measures in the Bill that will move us to a fairer system, where those who can pay do pay. [Interruption.] I will get on to farmers, hon. Members will be pleased to know.

I congratulate my hon. Friend the Member for South Derbyshire (Samantha Niblett) on an excellent maiden speech. She is absolutely an inspiration to her teenage daughter, but also to young women across the country, including my daughter. I thank her for that. We are very pleased to have her. We need more people with careers in tech in the House. She is very welcome.

We also heard powerful contributions from my hon. Friends the Members for Darlington (Lola McEvoy), for Crewe and Nantwich (Connor Naismith), for Macclesfield (Tim Roca), for Barking (Nesil Caliskan), for Vale of Glamorgan (Kanishka Narayan), for Makerfield (Josh Simons) and for Harlow (Chris Vince). I pay particular tribute to my hon. Friend the Member for York Outer (Mr Charters) for his play on words—as an English graduate, I always enjoy that, and I thought he was excellent.

Hon. Members have extensively discussed the agricultural property relief changes announced in the Budget, and will note that they are not included in the Bill. That is because the Government are committed to technical consultation on tax legislation. We feel it is important to get complex legislation right, and to give businesses and those affected by tax changes the certainty that they need ahead of the measures coming into force. The Government will publish draft legislation on this measure before legislating for it in a future Finance Bill.

[Dr Evans]

I am grateful to the Minister for making that point. Is there a timetable attached to that that she could set out to this House? Many businesses will have listened to that statement, and will want to know exactly when they need to make their business decisions.

[Tulip Siddiq]

We will set out plans in due course. The Bill does, however, extend the scope of agricultural property relief from 6 April 2025 to land managed under certain environmental agreements. That supports the UK Government’s wider environmental objective of supporting farmers and land managers so that they can deliver, alongside food production, significant and important outcomes for the climate and environment. The measure is intended to prevent the loss of APR being a barrier to the involvement of agricultural landowners and farmers in land use change under environmental agreements including, but not limited to, the environmental land management schemes in England and equivalent schemes elsewhere in the UK.

I want to address something the hon. Member for St Albans (Daisy Cooper) talked about: family farms. This is not in the Finance Bill, but I will still refer to it. Individuals can pass on a sum of up to £325,000 inheritance tax-free; £500,000 if that includes a residence being passed to a direct descendent; and £1 million when a tax-free allowance is passed to a surviving spouse or civil partner. There is also a full exemption from inheritance tax when passing assets to a spouse or civil partner.

[Daisy Cooper]

I am grateful to the Minister for giving way. Madam Deputy Speaker, I beg for your patience as I retread some of the remarks I made earlier. It is my view that the family farm tax gives us the worst of both worlds at the moment. It does not prevent equity companies from buying up land, but it does treat family farms as collateral damage. I urge her to think again on this measure and think about introducing a genuine family farm test. If she were to do that, she would certainly have the Liberal Democrats’ support.

[Tulip Siddiq]

It was a difficult decision, and I understand the point the hon. Lady is making, but the reforms to agricultural property relief mean that farmers can access 100% relief for the first £1 million and 50% relief thereafter, meaning an effective 20% tax rate. It was a difficult decision, but we had to do it to fund public services.

My hon. Friend the Member for Bolton West (Phil Brickell) talked about tax avoidance and fraud. To stop people taking unfair advantage of our system, the Government announced in the Budget the most ambitious ever package to close the tax gap, raising £6.5 billion in additional tax revenue per year by 2029-30.

[Graham Stuart]

Will the Minister give way?

[Tulip Siddiq]

The right hon. Gentleman has spoken enough times in the debate, so I will not be taking yet another intervention from him.

The hon. Member for Bognor Regis and Littlehampton (Alison Griffiths) raised questions about SMEs and high streets. The Government have been absolutely clear that we need to take difficult decisions to deliver long-term stability and growth, and that stabilising public finances is the only way to create long-term stability in which businesses can thrive. But we recognise the need to protect small employers, which is why we have more than doubled employment allowance—she may like to know that—meaning that half of businesses with mixed liabilities will either gain or see no change at all next year.

The right hon. Member for East Hampshire (Damian Hinds) raised questions about VAT on private schools hitting SEND pupils. To protect pupils with special educational needs and disabilities who can only have their needs met in a private school, the local authorities and devolved Governments that fund those places will be compensated for the VAT they are charged on those pupils’ fees. I hope that reassures him.

The right hon. Gentleman also raised a point about faith schools. Of course the Government value parental choice and recognise that some people want their children to be educated in a school with a particular faith ethos. My hon. Friend the Exchequer Secretary met the Partnerships for Jewish Schools and the Association of Muslim Schools during the consultation period on this policy. To ensure fairness and consistency between all schools that charge fees, faith schools will remain in the scope of the policy. It is worth noting for the right hon. Member that some faith schools are likely to be less impacted by the policy if some of their income is derived from voluntary donations from the community, because donations that are freely given and for which there is no obligation are outside the scope of VAT. As such, not all the income that small faith schools receive will necessarily be subject to VAT. I hope that reassures him a bit.

[Marie Goldman (Chelmsford) (LD)]

I thank the Minister for giving way. I want to ask her specifically about what she just said about special schools still getting funding. Is she aware that many parents of children with special educational needs choose to send their children to special schools even though they do not have education, health and care plans, so do not have funding through local authorities and so will still be affected by this measure? I wonder what she thinks about that.

[Tulip Siddiq]

My hon. Friend the Exchequer Secretary says that he will write to the hon. Lady about this, but we note the points that she has made, and we are looking into them.

The hon. Member for Gordon and Buchan (Harriet Cross) asked about oil and gas investment. We recognise that oil and gas will continue to have a role in the energy mix during the transition, but we need to drive public and private investment towards cleaner energy. The money raised by these changes will contribute to public investment while the sector continues to benefit from £84.25 in relief for every £100 of private investment. To reflect our commitment to facilitating cleaner home-grown energy, the Government have confirmed that the sector will continue to benefit from a decarbonisation investment allowance with a value similar to the relief that it received prior to the November energy profits levy rate increases.

I end by saying that the Bill delivers on key manifesto commitments from this Labour Government. It provides stability, it supports businesses, and it moves us to a fairer, more sustainable tax system. For those reasons, I commend it to the House.

Question put, That the amendment be made.

Draft Financial Services and Markets Act 2000 (Ombudsman Scheme) (Fees) Regulations 2024

Tulip Siddiq Excerpts

Monday 25th November 2024 General Committees

[The Economic Secretary to the Treasury (Tulip Siddiq)]

I beg to move,

That the Committee has considered the draft Financial Services and Markets Act 2000 (Ombudsman Scheme) (Fees) Regulations 2024.

It is a pleasure to serve under your chairship, Mrs Harris. These regulations are made under powers in the Financial Services and Markets Act 2023. The Committee may be aware that the Secondary Legislation Scrutiny Committee raised this statutory instrument as an instrument of interest in its second report, which was published on 5 September.

This instrument will enable the Financial Ombudsman Service—the FOS, as it is commonly known—to charge case fees to claims management companies and relevant legal professionals when they bring cases to the FOS on behalf of complainants. The FOS enables consumers and financial services firms to resolve disputes without having to go through the courts, which can be expensive and time consuming for both parties. To deliver a service that is cost-free to consumers, the FOS is funded by a combination of case fees paid by firms subject to complaints and an annual levy on industry. The FOS is designed to be an accessible service that consumers can use for free, and the majority of consumers raise their complaints directly with the FOS.

However, some consumers choose to use claims management companies or legal professionals to bring claims to FOS on their behalf. Collectively, they are known as professional representatives. These professional representatives normally take a cut of any compensation awarded as payment for their services. This payment can be as much as 30% of the compensation awarded to a consumer. Currently, while these professional representatives can make money from bringing a case to the FOS, they cannot be charged for doing so.

Many of these professional representatives act responsibly, but there is evidence that some are taking advantage of the cost-free nature of the service that the FOS provides. Rather than properly assessing complaints and taking forward those with merit, these representatives submit large numbers of complaints that are poorly evidenced. This behaviour is negatively impacting the ability of the FOS to promptly resolve other consumer complaints. As firms are required to pay a case fee of £650 regardless of whether or not a complaint is upheld against them, this practice also has significant costs for industry.

Firms subject to large numbers of complaints from professional representatives can face significant bills in case fees, despite not being found to have committed any wrongdoing at all. The Government have also noted concerns that firms experiencing this treatment might feel pressured into settling claims early. In order to reduce the overall cost to a firm, they may simply offer to settle for an amount below the £650 case fee, even where they feel that the claim itself is without merit.

In order to address those exploitative practices, the regulations will enable the FOS to charge a case fee to professional representatives for bringing complaints on behalf of claimants. This will ensure that there is a financial incentive for those professional representatives to carefully consider the merits of any cases that they are bringing. There will now be a cost to flooding the Financial Conduct Authority with templated complaints that have a low chance of success. Charities bringing complaints on behalf of consumers are not included in the instrument and will therefore not be charged by the FOS. Of course, the FOS remains completely free for consumers to access directly. The FOS will be responsible for determining exactly who is charged and any level of fee. This is in line with how the system already works for financial services firms subject to complaints.

In anticipation of this instrument, the FOS consulted on its proposed detailed approach to charging fees to professional representatives. It published a statement on 15 November detailing the feedback it had received to the consultation, and its initial response. In that feedback statement, subject to Parliament approving this instrument, the FOS proposes that professional representatives will be charged a fee of £250 for each case they bring. When the FOS finds in favour of the claimant represented by the professional representative, the fee will be reduced to just £75. In addition, each professional representative will not be charged for the first 10 cases that they bring each year. In that way, we hope, the FOS has sought to disincentivise bad behaviour while ensuring minimal impact on those professional representatives bringing cases with merit.

If this instrument is approved, the FOS will confirm its final plans, having considered the responses to its consultation. The approach taken through this SI ensures that the FOS will remain cost-free to consumers while ensuring that the poor behaviour of some professional representatives does not undermine the ability of the FOS to deal with consumer complaints properly. I therefore commend the regulations to the House.

--- Later in debate ---

[Tulip Siddiq]

I thank the shadow Minister for his support so far on all the SIs we have debated; long may it continue, but I have a feeling we may disagree on some things in the future. There was cross-party support for the enabling power behind the instrument when it was debated during the passage of the Financial Services and Markets Act 2023. He will remember that at the time, I also supported the then Government, because a lot of the legislation was fit and right for the sector.

We are committed to tackling poor behaviour from professional representatives, as were the previous Government. We want to ensure that the FOS can focus on promptly resolving consumer complaints, as the shadow Minister said, and to reduce the impact of complaints on financial services firms when they are not appropriate.

The shadow Minister asked how long it will take the FOS to implement these rules and how we will monitor them. If the SI is approved, we expect that the FOS will shortly announce when it will start to charge fees. We will then work closely with the FOS and the FCA to progress that important work. There is not really a deadline on it; we just have to see how it progresses after the SI. I guess those organisations are waiting for us to approve the SI before they take on the work, but as he can imagine, we work closely with the FCA and the FOS to monitor progress.

I am afraid I will have to come back to the shadow Minister on his technical question, because I am not sure that we have any answers. It looks like my officials want me to write to him, if that is okay.

I thank the Committee for its consideration of the draft regulations. They may sound simple, but they will have a huge impact on people bringing complaints and how much that costs them. They will play an important role in ensuring that the FOS can properly focus on resolving consumer complaints, a lot of which will come from people who live in our constituencies, and reduce the impact of spurious complaints on financial services firms.

I thank all hon. Members for supporting me and for turning up on a Monday evening.

Question put and agreed to.

Financial Assistance to Ukraine Bill

Tulip Siddiq Excerpts

2nd reading
Wednesday 20th November 2024 Commons Chamber

[The Economic Secretary to the Treasury (Tulip Siddiq)]

It is a pleasure to close this debate on what remains a very important and pressing issue. As Ukraine enters yet another difficult winter, I am proud of the consistent support that this Government have shown through not just our £2.26 billion ERA contribution, but the long-term commitments we have made to supporting Ukraine’s capacity for self-defence.

I join the Opposition spokesperson, the hon. Member for North Bedfordshire (Richard Fuller), and my right hon. Friend the Chief Secretary to the Treasury, along with my hon. Friends the Member for Burton and Uttoxeter (Jacob Collier) and for Gateshead Central and Whickham (Mark Ferguson) in saying how proud I am that there is unity across the House in standing shoulder to shoulder with Ukraine at this very difficult time. This is a complex issue, and I will try to answer the questions posed by the Opposition and my hon. Friends. If I have missed out anything, I am happy to write to Members.

Before I get into the nitty-gritty of the Bill, I pay tribute to my hon. Friend the Member for Amber Valley (Linsey Farnsworth) for making such a powerful maiden speech. I think I am right in saying that her late mother Margaret, David, Martin and all her children would be extremely proud of their extraordinary daughter, mother, stepmother and wife. I very much welcome this “vicious dictator” to the House. We need more of them in the women’s parliamentary Labour party, so I am pleased to have her here.

The hon. Member for North Bedfordshire asked about the timing of the release of the funds. We intend to begin spending the funds early next year to ensure that the funding supports our Ukrainian allies as soon as possible. We intend to do so in three equal tranches over three financial years, starting in 2024-25, and the G7 has agreed that all ERA funds will be given out by the end of 2027. He also asked about how the UK will be repaid. We are providing the funding as part of the wider G7’s extraordinary revenue acceleration loan initiative, which means that the UK will be repaid via the extraordinary profits generated from immobilised Russian sovereign assets in the EU. The EU has already enacted the necessary regulations to operationalise the Ukraine loan co-operation mechanism, which will distribute the profits. That came into effect on 29 October, as he is probably aware.

The hon. Member asked about what will happen to the UK if the loan is not repaid. The repayment will rely on profits continuing to flow from immobilised RSAs into the EU over multiple years. The UK and the wider G7 have committed to ensuring that Russian sovereign assets remain immobilised across our jurisdictions until Russia ceases its war of aggression and pays for the damage that it has caused to Ukraine, and G7 lenders have worked closely together to design the ERA in a way that allows for repayment in a scenario in which profits cease and Russia pays Ukraine. I hope that answers his question, but I can write to him if he wants more detail.

On NATO’s spending target, there is a clear commitment from the Government to spend 2.5% of our GDP on defence, which has categorically not changed. The hon. Member will have seen in our manifesto that we will set up a path towards spending 2.5% of GDP on defence, and this will be done at a future fiscal event.

The hon. Member asked about the total value of assets and private assets. Between February 2022 and October 2023, £22.7 billion-worth of Russian assets were frozen due to UK financial sanctions regulations—a marked increase on the figure of £18.39 billion that was provided in the Office of Financial Sanctions Implementation’s annual report in 2021-22. OFSI is currently analysing data on immobilised assets, and on the type and value of the assets.

Like many Members, the hon. Member for Lewes (James MacCleary) asked about the involvement of the ERA in asset seizure. I have to make it clear that the G7’s ERA scheme does not represent the seizure of Russian sovereign assets in any way; it is about using the extraordinary profits that the EU has set aside to pay a series of loans to Ukraine. He and the hon. Member for Honiton and Sidmouth (Richard Foord) asked about seizing Russian sovereign assets in the UK. Russia’s obligation under international law is clear: it must pay for the damage it has caused to Ukraine. The G7 agreement to use the profits from immobilised Russian sovereign assets for the loan is an important step towards ensuring that Russia pays. Although we continue to consider all lawful avenues by which Russia is made to meet its obligation to Ukraine under international law, it is important that the UK and the G7 remain focused on delivering the ERA and the benefit that it will give to Ukraine right now, because we are very conscious of the situation in which the country finds itself.

A few other Members, including my hon. Friend the Member for Leeds Central and Headingley (Alex Sobel), asked about the proceeds from the sale of Chelsea FC. The Government are working hard to ensure that the proceeds from the sale of Chelsea reach humanitarian causes in Ukraine as quickly as possible. My hon. Friend might know that the proceeds are currently frozen in a UK bank account while a new independent foundation is established to manage and distribute the money, but this is something that we are working on and we are trying to move it along as quickly as possible.

My hon. Friend the Member for Halesowen (Alex Ballinger) asked whether this was an unlimited resource loan. The negotiations remain ongoing on the details of the loan terms, but I am focused on ensuring that there is limited impact on Ukraine’s balance sheet. My hon. Friend the Member for Macclesfield (Tim Roca) talked about the implications of the Trump victory for Ukraine. I cannot speculate on any policy decisions that the incoming Administration of President-elect Trump may make, but we have welcomed bipartisan US support for Ukraine, which has been key in the international effort. I feel that Ukraine’s security is vital for global security. If there are any other questions that I have not answered, I will write to Members. I am conscious of the time and I want to finish by thanking hon. Members across the Chamber for their contributions to the debate.

[Richard Foord]

I am grateful to the Minister for giving way. I have heard her say that at this stage the Government intend to work on the profits rather than the seized assets themselves, but will she undertake to talk to ministerial colleagues in Finland, Czechia and Estonia to find out how they have gone about seizing and using confiscated assets?

[Tulip Siddiq]

I have listened closely to what the hon. Gentleman has said, especially with regard to other countries, and I am happy to have conversations with ministerial colleagues across different countries and find out what they are doing. This is our position for now, but this is an ongoing situation and things will move. I am happy to speak to Ministers from different countries who are using assets differently.

The ERA is an innovative scheme. It will ensure that Ukraine receives vital support throughout 2025 and beyond. It will take the money generated from Russian sovereign assets and use it to support Ukraine in the best possible way. This is further proof for us that the G7’s support for Ukraine will not falter, and that the UK will stand shoulder to shoulder with Ukraine for as long as it takes.

I echo the comments of my hon. Friends the Members for Lichfield (Dave Robertson) and for Rushcliffe (James Naish) in thanking the people of our country for all the support that they have shown Ukraine. Madam Deputy Speaker, I hope you will indulge me for one minute while I say that my own constituents of Hampstead and Highgate have opened their doors for Ukrainian refugees, giving them their homes, community spaces and education spaces, and I particularly pay tribute to my local synagogue, South Hampstead synagogue, which is providing free English lessons for Ukrainian refugees. I was very pleased to meet those people in Parliament last week.

Question put and agreed to.

Bill accordingly read a Second time.

Financial Assistance to Ukraine Bill (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Financial Assistance to Ukraine Bill:

Committal

(1) The Bill shall be committed to a Committee of the whole House.

Proceedings in Committee, on Consideration and on Third Reading

(2) Proceedings in Committee shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.

(3) Any proceedings on Consideration and proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion two hours after the commencement of proceedings in Committee of the whole House.

(4) Standing Order No. 83B (Programming committees) shall not apply to proceedings in Committee of the whole House, to any proceedings on Consideration or to proceedings on Third Reading.

Other proceedings

(5) Any other proceedings on the Bill may be programmed.—(Anna McMorrin.)

Question agreed to.

Financial Assistance to Ukraine Bill (Money)

King’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Financial Assistance to Ukraine Bill, it is expedient to authorise the payment out of money provided by Parliament of any sums required by the Treasury or Secretary of State for the purpose of providing loans or other financial assistance to, or for the benefit of, the government of Ukraine as a result of—

(a) the arrangements described as the Extraordinary Revenue Acceleration Loans for Ukraine announced on 14 June 2024 at the G7 summit in Apulia in Italy, or

(b) any subsequent arrangements that are supplemental to or modify or replace those arrangements.—(Anna McMorrin.)

Question agreed to.

Speaker’s Committee for the Independent Parliamentary Standards Authority

Ordered,

That Marie Goldman, Leigh Ingham, Gordon McKee, Charlotte Nichols and Jesse Norman be appointed to the Speaker’s Committee for the Independent Parliamentary Standards Authority until the end of the present Parliament, in pursuance of paragraph 1(d) of Schedule 3 to the Parliamentary Standards Act 2009, as amended.—(Lucy Powell.)

House of Commons Members’ Fund

Ordered,

That Holly Lynch, Sir Charles Walker and Peter Grant be removed as Trustees of the House of Commons Members’ Fund and Mark Tami, Chris Elmore and Dr Danny Chambers be appointed as Trustees in pursuance of section 2 of the House of Commons Members’ Fund Act 2016.—(Lucy Powell.)

Draft Collective Investment Schemes (Temporary Recognition) and Central Counterparties (Transitional Provision) (Amendment) Regulations 2024 Draft Insurance Distribution (Regulated Activities and Miscellaneous Amendments) Regulations 2024

Tulip Siddiq Excerpts

Tuesday 19th November 2024 General Committees

[The Economic Secretary to the Treasury (Tulip Siddiq)]

I beg to move,

That the Committee has considered the draft Collective Investment Schemes (Temporary Recognition) and Central Counterparties (Transitional Provision) (Amendment) Regulations 2024.

[The Chair]

With this it will be convenient to consider the draft Insurance Distribution (Regulated Activities and Miscellaneous Amendments) Regulations 2024.

[Tulip Siddiq]

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

The regulations we are introducing today will ensure that the regulatory framework for financial services is aligned with the UK’s needs following our exit from the European Union. They ensure that UK businesses and individuals can continue to access the products and services that they need even when these originate from outside the UK and that UK authorities have appropriate control over which firms can access our markets. They also ensure that the statute book is clear, comprehensive and relevant to our domestic market.

First, let me turn to the Collective Investment Schemes (Temporary Recognition) and Central Counterparties (Transitional Provision) (Amendment) Regulations 2024. UK investors and firms rely on a wide range of financial products and services to meet their needs, ranging from individuals saving for a rainy day, all the way to multinational corporations needing to settle multimillion-pound transactions. In a highly international industry, many of these products and services originate from outside the UK. Ensuring continued access for UK investors and businesses is therefore crucial to the continued functioning of our economy.

This instrument deals with two such areas of global market access—the ability of collective investment schemes or funds to market to UK retail investors and the ability of overseas central counterparties to provide services to UK firms. I will speak to each of these areas in turn.

The Government previously introduced a new route for overseas funds to become recognised for marketing to UK investors—the overseas funds regime, which the Committee will be familiar with. In July 2024, the first equivalence decision under that regime came into force. This means that certain retail schemes from the European economic area will be able to market to UK investors on an ongoing basis.

Funds from the EEA had been able to passport freely into the UK prior to the UK’s exit from the European Union and a temporary regime was introduced to allow those funds to continue doing so. These temporary arrangements will end in December 2025. The overseas funds regime represents a more permanent solution. However, it will take time to transition the more than 8,000 funds with temporary access to the new regime. Therefore, this instrument extends the temporary regime for a further year, until 2026, to allow for a smooth transition and to avoid any cliff-edge risks.

It is important that the temporary regime continues to work as intended for those funds still using it, namely those funds not in scope of the Government’s equivalence decision. At the same time, we are conscious that the temporary regime should wind down in an orderly fashion. This means that funds in scope of the equivalence decision should be directed towards the overseas funds regime. If they fail to apply or become recognised under that route, they should lose their ability to market freely to UK investors. The instrument also makes technical changes to ensure that is the case, and that sub-funds within the temporary regime are treated appropriately depending on their characteristics.

The two changes combine to ensure that the Government’s decision under the overseas funds regime and the transition from the temporary arrangements will be implemented smoothly, without unintended consequences for investors or fund operators.

Let me turn to the second set of changes delivered by this statutory instrument in relation to overseas central counterparties. Central counterparties, or CCPs, are vitally important market infrastructure firms that help make markets safer and more efficient. They sit between the buyers and sellers of certain financial instruments, providing assurance that contractual obligations will be fulfilled. The process of transacting through a CCP is known as “clearing”.

During EU exit, the Government set up the temporary recognition regime, or TRR, which allowed overseas CCPs that were recognised by the EU before the end of the transition period, and therefore had market access to the UK, to continue to provide services to UK firms. This allowed UK authorities the time to start putting in place longer-term market access arrangements for those overseas CCPs after EU exit.

The TRR has largely functioned well and ensured that EU exit did not disrupt the provision of clearing services into the UK. However, as it stands right now, a CCP within the TRR automatically loses its right to remain in the regime if its EU recognition is withdrawn. This has meant that, since EU exit, several CCPs have exited the TRR, and moved into the UK’s accompanying “run-off regime”, as a result of decisions taken by authorities outside the UK.

There are a variety of circumstances that could lead to EU authorities withdrawing EU recognition from overseas CCPs, but these circumstances may not always be relevant to the UK. For instance, EU recognition has previously been withdrawn because co-operation arrangements have not been agreed between the European Securities and Markets Authority and the relevant national regulator of the overseas CCP. This statutory instrument therefore removes continued EU recognition as a condition for remaining in the TRR. This, combined with the Bank’s continued ability to move a CCP out of the TRR for financial stability reasons, ensures that our UK authorities have appropriate control over which overseas CCPs can provide services to UK firms.

I now turn to the Insurance Distribution (Regulated Activities and Miscellaneous Amendments) Regulations 2024. The UK’s financial services sector is central to growing growth in the UK economy, as we discussed in the Chamber yesterday, and insurance is a fundamental contributor. Effective and proportionate regulation is key to this, we believe, and therefore we must ensure that domestic regulation is clear and not burdensome to understand. This statutory instrument makes technical legislative changes that remove or amend references to insurance-related EU directives. It is no longer necessary to refer to them now that the UK is not part of the EU and now that the regulatory regime for insurance distribution is set out entirely in UK law and regulator rules.

This instrument amends the Terrorism Act 2000, the Proceeds of Crime Act 2002, the Counter-Terrorism Act 2008, and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. It replaces insurance distribution directive-related references with references to the equivalent provisions in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. This instrument makes similar amendments to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 itself. It also changes the monetary threshold in article 72B of that order below which a person whose main business is not insurance distribution is excluded from regulation by the Financial Conduct Authority. This instrument provides that the threshold will now be denominated in sterling rather than euro. The scope of the exclusion on the distribution of sterling-denominated insurance policies will no longer be dependent on changing exchange rates.

Finally, this instrument removes references to regulations made under the insurance distribution directive from the Financial Services and Markets Act 2000 (Qualifying Provisions) Order 2013. These provisions gave the Financial Conduct Authority powers to investigate and remedy breaches relating to the insurance distribution directive —powers which are no longer required now that the directive no longer applies in the UK. The amendments made by this instrument may be technical, but they are important in bringing the statute book up to date. Failing to make them could cause confusion as to the relevance of EU law to domestic regulation.

In closing, these statutory instruments make mostly technical changes, which are necessary to ensure that our statute book remains up to date and adequately reflects the UK’s exit from the EU. They also make important provision regarding the provision of services into the UK, either by ensuring that UK firms and investors can access the products and services that best suit their needs, or by giving UK authorities appropriate control over when certain services can be provided. I hope the Committee will join me in supporting these regulations, and I commend them to the Committee.

--- Later in debate ---

[Tulip Siddiq]

I thank the Opposition spokesperson for his points. He knows this area well and I am glad he supports the work that we are doing. We will keep an eye on the timeline, as he says, but regulatory and supervisory frameworks of the UK and other jurisdictions can change over time, so it is important that the Government monitor that; we will be keeping an eye on it. We want to ensure that the changes that happen in the UK and regimes in the EU and other overseas regimes are compatible with the existing equivalence determinations with an outcomes-based approach. So he is right to say it is important for the growth of the financial services sector. I have already taken proportionate steps to monitor any changes over the timeframe pertinent to existing equivalence determinations, but I will keep an eye on the deadline and the wider growth. The FCA has made the process very clear for funds, and it is working closely with the firms as well.

Further exact timings can be found on the FCA’s website. I am also happy to write to the hon. Gentleman if he would like. All UK equivalence decisions are taken on their own merits, following a technical, outcomes-based assessment of the other country or territory’s regulatory and supervisory regime. So the Government will make equivalence decisions when it is in the UK’s interests to make them—I am sure he is aware of that—but any decisions regarding the granting of equivalence decisions for the UK are a matter for the European Commission. However, I did meet Commissioner McGuinness, the outgoing Commissioner, and I have plans in the diary to meet the new Commissioner. I will raise this subject when I go, because I do think it is important, for the growth of financial services, as the hon. Gentleman says, and for the wider economy.

I hope you found the debate informative, Mr Efford, and I hope hon. Members will join me in supporting the regulations.

[The Chair]

I was hanging on your every word.

Question put and agreed to.

DRAFT INSURANCE DISTRIBUTION (REGULATED ACTIVITIES AND MISCELLANEOUS AMENDMENTS) REGULATIONS 2024

Resolved,

That the Committee has considered the draft Insurance Distribution (Regulated Activities and Miscellaneous Amendments) Regulations 2024.—(Tulip Siddiq.)

Government Debt Issuance Pilot: Distributed Ledger Technology

Tulip Siddiq Excerpts

Monday 18th November 2024 Written Statements

[The Economic Secretary to the Treasury (Tulip Siddiq)]

My right hon. Friend the Chancellor of the Exchequer announced on Thursday 14 November at Mansion House that the Government intend to launch a pilot digital gilt instrument (DIGIT), using distributed ledger technology.

Distributed ledger technology (DLT) refers to a variety of technologies characterised by their use of networks of ledgers that update and synchronise simultaneously. DLT has the exciting potential in the long term to make transactions more efficient. DLT also brings other benefits across markets, such as automation, greater resilience, and transparency.

The Government’s intention is to work with industry to test this new technology across the life cycle of a Government debt instrument. This will enable the Government to explore the potential benefits that DLT could bring to the debt issuance process, as well as stimulate the wider development of DLT platforms and infrastructures across UK capital markets.

This issuance will support the Government’s commitment to maintaining the UK as a world leading and global financial centre. DLT is being explored with increasing ambition by other financial centres and there is potential for significant growth in the use and exchange of digital assets in the coming years. The Government acting now will help position both itself and the UK market to adapt to these changes.

This pilot aims to issue a digital bond with similar features to a conventional gilt. It will utilise the digital securities sandbox (DSS), which opened for applications in September 2024. The DSS provides a regulatory environment through which firms can use DLT to create, trade and administer securities, while being supervised by the Bank of England and the Financial Conduct Authority. It allows market participants to experiment with DLT-based market infrastructures in a controlled and monitored setting, ensuring that any potential risks are managed while fostering innovation.

The pilot is experimental in nature and, therefore, will sit outside of and be separate from the Debt Management Office’s gilt and Treasury bill operations. This will ensure that the pilot will be independent of our world-class debt management programme.

The Government will engage with the sector in the new year on what an issuance could look like and what technology options are available to facilitate an issuance.

[HCWS228]

NatWest Group: Government Shareholding

Tulip Siddiq Excerpts

Monday 18th November 2024 Written Statements

[The Economic Secretary to the Treasury (Tulip Siddiq)]

I would like to update the House on the disposal of £1 billion-worth of Government-owned NatWest Group—formerly Royal Bank of Scotland—shares, representing approximately 3.2% of the company, by way of a directed buyback transaction on 11 November 2024.

The Government’s remaining shareholding represents approximately 11.4% of voting rights in the company, which demonstrates the continued progress being made towards the Government’s intention to return their shareholding in NatWest to private ownership by 2025-26.

Rationale

The Government are committed to returning NatWest to full private ownership, given that the original policy objective for the intervention in NatWest—to preserve financial and economic stability at a time of crisis—has long been achieved. The Government only conduct sales of NatWest shares when it represents value for money to do so and market conditions allow.

Format and timing

The Government, supported by advice from UK Government Investments, concluded that selling shares to NatWest, in a single bilateral transaction, represented value for money.

Share buybacks are a common practice undertaken by companies looking to efficiently deploy their excess capital. Following approval of amendments to the buyback contract between HM Treasury and NatWest by non-Government shareholders at the 2024 NatWest annual general meeting, the bank is now able to purchase up to 15% of its share capital from HMT on a rolling 12-month basis. This is the fifth sale of shares via an off-market share sale directly to the company.

The sale concluded on 11 November 2024, with NatWest purchasing a limited number of its Government-owned shares. A total of approximately 262.6 million shares—around 3.2% of the bank—were sold at the 8 November closing price of 380.8p per share. The reduction in the Government’s shareholding is less than the percentage sold following the cancellation of shares by NatWest. Following this transaction, the Government’s shareholding stands at approximately 11.4%.

Details of the sale are summarised below:

Financial Services: Mansion House Speech

Tulip Siddiq Excerpts

Monday 18th November 2024 Commons Chamber

[Madam Deputy Speaker (Caroline Nokes)]

Mr Speaker is very disappointed that the Chancellor of the Exchequer has not come to the House in person to update us on last Thursday’s Mansion House speech, which included important new policy announcements on a range of issues, including the consolidation of local government pension funds. I am sure that Members would have welcomed the opportunity to question the Chancellor personally on it. Mr Speaker is very sorry that the Chancellor has not seen fit to come here herself.

[The Economic Secretary to the Treasury (Tulip Siddiq)]

I apologise on behalf of the Chancellor for the fact that she could not be here. If there are any specific questions for her, I will ensure that she knows what they are, and that she personally writes to Members.

With permission, Madam Deputy Speaker, I will update the House on the Government’s work to support the growth of the UK economy. The financial services sector is the jewel in the crown of the UK economy, as I am sure everyone across the House will agree. It is one of our largest and most successful sectors, employing 1.2 million people and making up 9% of gross value added, and the UK is the second largest exporter of financial services in the G7. On Thursday night at Mansion House, the Chancellor placed the sector at the heart of the Government’s growth mission and, building on the economic stability and public investment that the Budget provided earlier this year, she set out a plan for investment and reform of the sector.

The plan builds on the rapid work that the Government have already done to support the growth of the sector. One week into office, the Government welcomed the biggest changes in the UK’s listings regime in more than three decades; in our first month we launched the landmark pensions review and in September we delivered the final stage of the post-crisis capital reforms for banks, working closely with the Bank of England, strengthening our banking system while also protecting lending to the wider economy.

The package that the Chancellor set out at Mansion House builds on those steps, beginning with a commitment to develop a comprehensive plan to grow our financial services sector. In spring next year, the Government will publish the first ever financial services growth and competitiveness strategy, giving the financial services sector the confidence it needs to invest in the long term by setting out our plans for the sector over the next 10 years. Published alongside our modern industrial strategy, it will be clear-eyed about our strengths, proposing five priority growth opportunities: fintech, sustainable finance, asset management and wholesale services, insurance and reinsurance markets, and capital markets, co-designed with voices across the financial services sector.

From the base of long-term stability, the Chancellor also laid the foundations for getting even more investment into our country. The Government have already confirmed our plans to capitalise our flagship investment vehicle, the National Wealth Fund, to invest in the industries of the future. To support investment in our green industries, the Chancellor’s speech confirmed the Government’s next steps to deliver a world-leading sustainable finance framework.

The Chancellor also set out our plans in another key area that I know has generated interest across the House: pension funds. The UK has one of the largest pension markets in the world, but pension capital is often not used enough to drive investment and growth in our economy. Thanks to the excellent work taken forward by the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Wycombe (Emma Reynolds), the Chancellor announced the interim report of the pensions investment review. The report sets out our plans to harness the collective size of our pension funds to create larger pools of capital for investment, supporting pension funds to invest at scale. To do that, we will deliver a significant consolidation of the defined contribution market and the Local Government Pension Scheme in England and Wales, providing better outcomes for savers while supporting investment for growth. Indeed, we could unlock around £80 billion-worth for investment in private equity and infrastructure through those actions alone, according to domestic and international comparisons.

Alongside economic stability and higher levels of investment, the Chancellor’s Mansion House speech put reform at the heart of the Government’s growth agenda. The Government’s approach to regulation is a core part of that. Across our economy, we will upgrade our regulatory regime, reviewing the guidance we give to the Competition and Markets Authority and other major regulators to underline the importance of growth. That includes our financial services regulators. While it was right that successive Governments made regulatory changes after the global financial crisis to ensure that regulation kept pace with the global economy of the time, it is also important that we learn lessons from the past. Those changes have resulted in a system that sought to eliminate risk taking, and in some cases they have had unintended consequences that we as a new Government must now address.

Regulation has costs as well as benefits. It has costs for firms when they are spending large sums on compliance and not using that money to innovate and to grow, and it can have costs for consumers, for example by restricting access to financial advice that could help them to plan for the future. While maintaining important consumer protections and upholding international standards of regulation, we therefore feel that now is the moment to rebalance our approach and take forward the next stage of reforms needed to drive growth, competitiveness and investment. To support that aim, the Government issued new growth-focused remit letters to the financial services regulators to make clear that the Chancellor and I fully expect them to support the Government’s missions on economic growth.

The Financial Ombudsman Service plays a vital role for consumers in getting redress. That will not change, but reform is needed to create a sure environment. We will work closely with the Financial Conduct Authority and the FOS to develop a new agreement between the two institutions, with clear expectations on how they co-operate, including on historic market practice and mass redress events. The Government welcome the call for input that asks for views on how to improve the rules governing how the FOS operates.

The Government’s ambitions for reform are much wider than regulation. Building on our work to improve the UK’s listing regimes, we are unlocking funding for our capital markets and legislating to establish, by 2025, PISCES—the private intermittent securities and capital exchange system—which is an innovative new stock market to support companies to scale and grow. We are also supporting innovation in the financial services sector by launching a pilot to deliver a digital gilt instrument using distributed ledger technology, as my written statement sets out.

Insurance markets are pivotal to supporting growth and creating resilience by helping us to manage risk. The Government have launched a consultation on captive insurance, where a new approach could cement the UK’s position as a leading financial services centre.

As the House will know, this Government prioritise the growth of the mutuals sector. We have launched a call for evidence on the credit union common bond, asking regulators to report on their mutuals landscape to support their growth, and welcoming the establishment of an industry-led mutual and co-operative business council.

The Chancellor also published the national payments vision to set out the Government’s ambition for this vital sector, ensuring that our approach to regulation allows firms to grow and innovate, and including decisive action to progress open banking and to support our fantastic fintech businesses.

Finally, we are working with tech platforms and telco networks to reduce the scale of fraud originating on their platforms. The Chancellor, the Home Secretary, and the Secretary of State for Science, Innovation and Technology, have written to leading tech and telecom companies, calling on them to go further and faster, with clear action to reduce the level of fraudulent activity that exploits their platforms and networks. We will be monitoring that closely in the coming months.

This is a significant package to support the growth of the financial services sector and invest in the wider economy. I have heard lots of murmuring from Opposition Members while I have been speaking, which I hope shows their approval for our overall package. I look forward to working across the House to deliver these important reforms from the first Labour Mansion House speech in 14 years.

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Minister.

[Mark Garnier (Wyre Forest) (Con)]

I thank the Minister for advance sight of her statement, and I congratulate the Chancellor, via the Economic Secretary, on her maiden speech to Mansion House. It has gone down broadly very well, and we are pleased that she recognises the City for what it is. The Minister rightly points out that the UK hosts a competitive and global financial centre, but changes to regulation must not be burdensome, and they must be worked through properly with the industry. When and where the Government take steps to enhance the performance of that sector, they can be guaranteed of our support. As the Chancellor mentioned in her Mansion House speech, in a generous tribute to her predecessor, much of the regulation reform discussed today was started under a Conservative Chancellor. I therefore wish to put on record recognition for my right hon. Friend the Member for Godalming and Ash (Jeremy Hunt) and the work he did in that area.

Before I turn to the substance of the statement, inevitably I will talk about the Budget. It is worth reminding the House of the most pressing parts of the Chancellor’s Budget, which she left out of her Mansion House speech. In her speech she mentioned the word growth no fewer than 41 times, but we have to look at the facts. When the Conservatives left government, we had the fastest growing economy in the G7, but now growth has halved. The Chancellor’s increase in national insurance means that businesses are picking up the tab to pay for Labour’s open tap on spending. She will no doubt have read the letter sent to her by 200 hospitality businesses, highlighting job losses across their sector and a wider range of sectors. Despite all her talk about growth, business groups and economists agree that Labour’s approach to the Budget is choking the momentum of our economy. Britain deserves a Government who back growth, empower investment and deliver prosperity. I hope that the Minister today will admit to the British public that while she talks about growth, her party’s plans to grow the economy fall short of an economic growth agenda.

On the substance of the reforms that the Minster has outlined today, we believe that the objectives that the Chancellor is attempting to achieve with her Mansion House reforms are broadly the right ones. First, it goes without saying that delivery of the reforms that the Conservatives started in government is to be welcomed, including the focus on growth; my right hon. Friend the Member for Godalming and Ash (Jeremy Hunt) legislated to ensure that financial services and markets regulation has a secondary growth duty. It is regrettable that the Government could not publish the final version of the pension investment review or the pension Bill in time to accompany this statement.

As I turn to my questions, I should make it abundantly clear to the Minister and the House that these reforms must remain focused on delivering the best deal for pension savers. While additional investment is welcome, the pension market should not be treated as a Government cash cow for public investment if it loses sight of the paramount objective of delivering a secure return for savers. It is true that unlocking greater investment and delivering greater returns for pension savers can come together—both can happen at the same time—but I must push for the publication of the finer details of this policy. The emphasis must still be on pension savers. While greater investment and greater returns can come together, security in retirement is what the pension industry is all about.

Work to reconcile those two aims was furthered by my right hon. Friend the Member for Godalming and Ash when he announced reforms earlier this year, which included requiring pension funds to publicly disclose how much they invest in UK businesses compared with those overseas, and disallowing schemes that performed poorly for savers from taking on new business from employers. Can the Minister confirm that those reforms remain Government policy, and that nothing she is announcing today changes those policy strands?

Can the Minister set out a timeframe for the proposed mega-funds? Some 86 local authority pension funds will be consolidated into just eight. What are the criteria on which the Government have chosen eight? Why not one, 10 or 15? The Government note that the local government pension scheme in England and Wales has

“assets…split across 86 different administering authorities…with local government officials and councillors managing each fund.”

Can the Minister clarify whether each of the 86 local government pension funds will have a stake in each of the eight mega-funds, or will they each be allocated to just one mega-fund, thereby possibly distorting the risk profile of that pension fund?

The Government state that the consolidation into a handful of mega-funds will enable the funds to invest more in assets such as infrastructure. Can the Minster confirm whether the “infrastructure” that the Government mention in their press release refers to both public and private infrastructure projects? On the topic of infrastructure, what is the expected return on Government-owned infrastructure projects? Will pensioners ever be mandated to take lower returns to support the Government’s investment objectives? The Minister with responsibility for pensions, the hon. Member for Wycombe (Emma Reynolds), who is in her place, gave rise to some ambiguity about whether there will be mandating of pension fund investment in Government projects in her Financial Times article this morning. Furthermore, will the trustees overseeing these mega-funds be restricted by the Government as to what they can invest in, or will they be free to choose their investment and risk profiles?

The Government also state:

“A new independent review process will be established to ensure each of the 86 Administering Authorities is fit for purpose.”

Can the Minister give any further detail on that review? Who will be running it, for how long will it be running, and what is considered “fit for purpose”? How many of these funds would have to be considered not fit for purpose for the Government to reconsider the number of mega-funds?

To conclude, we support what the Government are trying to do with their reforms, many of which are ours, but questions remain about the detail of the policy. We will scrutinise the detail of the legislation when published. I finish as I started—by saying that the Government are talking about investment and growth, but have just delivered a Budget that downgrades growth and crowds out business investment. Those things are not compatible, and we urge the Government to put forward a workable plan for growth. They must not rely solely on the financial services sector to bail them out.

[Tulip Siddiq]

I thank the Opposition spokesperson for his comments. I think he welcomed the news, although I am not quite sure. He spoke a lot about the ex-Chancellor, the right hon. Member for Godalming and Ash (Jeremy Hunt), who did a lot of work in this space. I remind the House that the ex-Chancellor said that there was

“Much to welcome in the Chancellor’s Mansion House speech today.”

The Opposition have said that these are “broadly” good reforms; I thought I would remind the Opposition spokesperson of that. I also remind him that we are not interested in sticking-plaster politics. We have a long-term vision for the economy, which is why we are looking at using the national wealth fund and the industrial strategy to ensure that we grow the economy.

I will answer a few of the hon. Gentleman’s questions, but if I do not get to all his pension questions, the Minister with responsibility for pensions is happy to meet him. I point out that our public services are crumbling, and that we inherited a £22 billion fiscal black hole from the previous Government. We had to make difficult choices to fix the foundations of the country and restore desperately needed economic stability in order to allow businesses to thrive. He pointed out that hospitality businesses were contacting him. More than half of employers will see either a cut to or no change in their national insurance bills. To support the hospitality industry, we are permanently cutting business rates for retail, hospitality and leisure from 2026. That comes alongside a 40% relief on business rate bills next year for thousands of premises.

We are committed to delivering economic growth by boosting investment and rebuilding Britain, which is exactly what our Budget did. The interim report of the pensions investment review, which the hon. Gentleman had a lot of questions about, put forward proposals to drive scale and consolidation in the defined contribution workplace market. The Local Government Pension Scheme is still consulting. The final version will come out in spring next year, but as I said, the Minister for pensions is happy to speak to him. There is international industry consensus that the scale and consolidation benefit investment and savers, and that these measures could unlock around £80 billion of productive investment.

On the hon. Gentleman’s questions about the reforms taking autonomy away from local authorities, under the proposals in the consultation, each administrating authority would retain control over the most impactful decisions by setting their investment objectives and strategic asset allocation. The consultation proposes that implementation of the chosen strategy be delegated to investment experts in the asset pool, who are best placed to execute the investment objectives to meet the desired investment outcomes. I hope that reassures him that we will not take autonomy away from the authorities.

The hon. Gentleman talked about the overall package of boosting UK economic growth and benefiting pension scheme members. The objectives are complementary. Driving consolidation and tackling waste in the pension system ensures that schemes can achieve the necessary economies of scale and efficiencies to pursue diversified investment strategies. I reassure him that assets such as infrastructure and private equity are seen as part of the balanced portfolio, and can enhance savers’ returns. They will boost economic growth, so he does not need to worry about that, and we will benefit the communities where pension savers live.

The hon. Gentleman spoke a lot about what the previous Government did. They talked a lot about pensions, but they actually never did anything. We have shown in the first few months of a new Labour Government that we mean business, and we have our action ready to go. By next spring, he will see the full details in the Bill.

[Madam Deputy Speaker (Caroline Nokes)]

I call the Chair of the Treasury Committee, Dame Meg Hillier.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

I draw the House’s attention to the fact that a family member works for Allied Irish Bank, and to the fact that I am a trustee of a pension fund.

I want to ask my hon. Friend about the remit letter for the Financial Conduct Authority. Just as the pushmi-pullyu in “Dr Dolittle” did not know which way to go, there is a danger that if we try to pursue the secondary objective while protecting consumers, consumers could lose out. Could she set out clearly how she expects the FCA to ensure that it maintains its approach of protecting consumers? Could she pick up on the comment from the hon. Member for Wyre Forest (Mark Garnier) about whether there will be any move to mandate pension funds to invest in UK infrastructure?

[Tulip Siddiq]

I thank my hon. Friend for that question. On pension funds, we are not looking at taking that action right now, but I will let her know when we take further action. On the remit letters, we are committed to financial inclusion and to ensuring that consumers are looked after. That is why, in their remit letters, I have asked regulators to have regard to that, and why I have made it clear that our top priority is to promote growth and international competitiveness. The laser focus, in the remit letters, is on growth, but they are not intended to encompass the entire scope of the Government’s vision for the sector. She should be in no doubt that consumer outcomes are top of our agenda. I have made that clear in every meeting I have had with the regulators.

[Madam Deputy Speaker]

I call Liberal Democrat spokesperson Daisy Cooper.

[Daisy Cooper (St Albans) (LD)]

We welcome any reforms that will provide an effective route to growth without putting undue pressure on people’s savings, so we look forward to seeing more details from the Government. In the meantime, I press Ministers on their broader goal of getting investment in innovation. Constituents in St Albans report that their small and medium-sized enterprises have invested in innovation. They have successfully applied for research and development tax credits, only for His Majesty’s Revenue and Customs to claw them back. It is right that HMRC tackles errors and fraud, but thanks to Conservative inaction, it is now widely accepted that a number of SMEs are seeing their valid claims rejected or withdrawn, while others are simply not applying for the tax credits at all. Will the Minister please conduct an urgent review of HMRC’s approach, with a particular focus on whether it is undermining the growth and innovation of the SME sector?

[Tulip Siddiq]

I thank the hon. Lady for her comments. I will pass them on to the Financial Secretary to the Treasury, who will look into the matter. I am worried to hear what she says about SMEs; she is absolutely right that they are the heart and soul of our economy—we should be looking into that. I will ensure that he writes to her, but if she needs a further meeting, I am sure he will meet her.

[Ms Stella Creasy (Walthamstow) (Lab/Co-op)]

Members from across the House have long called for financial regulation of “buy now, pay later” companies. Because of the delay in regulating those companies, a third of people seeking debt advice do so because of them. The Woolard report in 2021 identified the urgency of the FCA regulating the industry as soon as possible. I welcome the Government’s commitment to regulating them, but I am bemused, as many are, as to why it will take until 2026 for the regulations to take effect and for our constituents to be protected. Everybody knows that regulation needs to happen, and what the regulations are, and the FCA has been waiting since 2021 to do it—so why are we giving these legal loan sharks two Christmases-worth of presents, and allowing them to exploit our vulnerable constituents in this cost of living crisis?

[Tulip Siddiq]

I thank my hon. Friend for her question. She has done an enormous amount of work in this area, and I applaud her for that. She was instrumental in the Government taking our initial steps to regulate the “buy now, pay later” sector. There is a need for “buy now, pay later” during a cost of living crisis, and people will access those companies’ products, but I have brought this under FCA control so far, and have regulated to ensure that it is safer, and that people do not store up a huge amount of debt that they cannot pay back. The consultation is open until 29 November, and I ask her to urge others to feed into it to ensure that we get this policy right; that was not done by the previous Government. I will bring forward legislation as quickly as possible, but I thought it was important to hear what people and the industry had to say, because we want to regulate properly. She is being patient, and I ask her to be a bit more patient; our intention is to make the sector as well regulated as possible under the FCA.

[John Glen (Salisbury) (Con)]

I warmly welcome much of what was announced last week—the work on listings, mutuals and the remit refresh—but I say to the hon. Lady and the Minister for pensions that there is considerable reticence in the pensions industry when it comes to many of the drivers of change highlighted last week. We need a complete cultural shift and change in appetite from those who lead the pensions industry. I urge her to keep under review the fiscal incentives, and the transparency and accountability rules, so that we can see the performance gap that results from not making some of these changes. I look sympathetically on the aspirations that she has set out today, and I wish her well as she moves forward with these critical changes, which should have a lot of support from across the House.

[Tulip Siddiq]

I know that the right hon. Member did a huge amount of work in the financial services sector while he was in office. The civil servants still talk about how amazing he was—much to my dismay sometimes! We agree that there needs to be a change in appetite in this place. Transparency is top of the list, as the Minister for Pensions just whispered in my ear. We thank the right hon. Member for his constructive approach on the review, and urge him to tell the people he knows in the sector to respond to and feed in to the consultation.

[Ms Polly Billington (East Thanet) (Lab)]

The Minister will know that investment in our energy system is vital to our mission of being a clean energy superpower, creating jobs and cheaper, cleaner and more secure home-grown energy to power our economy. What is she doing to ensure that financial service regulators support the Government’s mission while upholding high industry standards?

[Tulip Siddiq]

I know that my hon. Friend takes a keen interest in this area—she been talking about it for the 25 years that I have known her. We agree that it is important. The FCA and the PRA are required to have regard to the UK’s net zero emissions target, as set out in the Climate Change Act 2008. The Mansion House speech set out the Government’s next steps to deliver a world-leading sustainable finance framework. That will be a huge part of our financial services strategy, as part of the industrial strategy, next spring. I urge her to consult and feed in on that.

[Lisa Smart (Hazel Grove) (LD)]

I speak as a former trustee of a local authority pension fund. Much of the correspondence that I received from pension fund members was not about the returns that they received, but about the investments they were in but could not choose to come out of because it was a defined benefits scheme. I appreciate that the review is ongoing, but can the Minister confirm that any review will consider retaining the autonomy of local authorities in deciding not to invest—whether in companies, countries or sectors—for environmental, social and governance reasons?

[Tulip Siddiq]

The consultation is ongoing, but I repeat that each administering authority will retain control over impactful decisions by setting out investment objectives and strategic asset allocation, and they will have control over their pooled assets. The Minister for Pensions will be happy to meet the hon. Lady should she wish to discuss that further. As the hon. Lady said herself, the consultation is ongoing, so she may wish to wait until after it is complete.

[Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)]

I declare an interest as a proud Labour and Co-operative MP. It was great to see the Chancellor outline the ambition to grow the co-op and mutual sector and to see regulators come forward in that work. Is there a timeframe for that process? As the Minister said, to ensure the growth of the UK economy, we need rich and diverse growth in the mutual and co-operative sector as well.

[Tulip Siddiq]

As my hon. Friend said, she stood on a ticket as a Labour and Co-operative Member of Parliament, and she has done a lot of work in that area. Last week, the Chancellor set out multiple new measures to unlock the full potential of the mutual sector, as we outlined in our manifesto. That included publishing a call for evidence and reforming the credit union common bond, and asking the PRA and the FCA to report on the current mutual landscape by the end of 2025.

[Dame Harriett Baldwin (West Worcestershire) (Con)]

I declare an interest as a trustee of the parliamentary pension scheme. There is a lot to welcome in the Chancellor’s Mansion House speech, a lot of which was taken from the Mansion House and Edinburgh reforms of the previous Chancellor. I particularly welcome the increase in access to financial advice that the Minister has said she is taking forward. Can the Minister confirm the end of the senior managers regime in the City, which I believe was in the Chancellor’s speech, and if that is the case, how does she plan to take it forward and will it require primary legislation?

[Tulip Siddiq]

The Government will consult on replacing the certification regime, and will seek the views of industry and all interested stakeholders in doing so. We are working closely with the PRA and the FCA on that. If the hon. Lady meant certification of the senior managers regime, we are keeping that under review at the moment, but it was not mentioned in the way that she thinks it was.

[Gregor Poynton (Livingston) (Lab)]

Before the election, Labour set out plans to grow the mutual sector in our “Financing Growth” report, which was welcomed across the sector. In fact, my local credit union, the Caledonian Credit Union, welcomed the report—I declare an interest, because I am now a member of that credit union after I visited. I welcome the setting up of the mutuals and co-operative business council. Will the Minister explain how that will drive growth in the sector?

[Tulip Siddiq]

As my hon. Friend knows, the Mansion House speech set out multiple new measures to unlock the full potential of the mutual sector. As he says, we welcome the establishment of an industry mutuals and co-operative business council, alongside our delivery of legislation to support the building societies sector last month. We want to ensure, through those measures, that the sector can grow, and to support inclusive growth across the UK. In the few months that I have held this position, the main complaint in the mutual and co-operative sector seems to be that it is difficult to operate within the current regulatory framework, as it is not set up to support mutuals and co-ops in the way it supports other businesses, so I am looking at that. I am very happy to continue that conversation, but this is about considering the regulatory framework to ensure that it is for fit for purpose in doubling the mutual sector, which was a commitment in our manifesto.

[Rupert Lowe (Great Yarmouth) (Reform)]

In her Mansion House speech, the Chancellor announced that we would change the emphasis of regulation from risk to growth. The FCA and PRA have effectively regulated the London market into terminal decline, embedding Stonewall philosophy and diversity, equity and inclusion into financial regulation, starting with the Financial Services and Markets Act 2000. That was followed by the markets in financial instruments directives I and II, which imported EU regulation into the London market, prioritising a European bank lending model over our equity capital market tradition. Given that regulators cannot regulate for growth, the only solution is to disband the FCA and PRA, and return to the light-touch regulation under the Bank of England that secured London’s position as a vibrant capital market until 2000. Could the Minister explain with clarity the Government’s strategy of regulating for growth, which appears to me to be an oxymoron?

[Tulip Siddiq]

Our regulators do a very good job, and we are lucky to have them, but we will hold them to account. When the Chancellor talked about risk taking, she was saying that the post-financial crisis regulatory changes created a system that sought to eliminate risk, but which has gone too far and led to unintended consequences. For example, the certification regime has helped to improve standards and accountability, but some elements have become overly costly and administratively burdensome. That is what we are looking at. Getting rid of the regulators is not the way to grow the economy. Holding them to account, and considering how we increase risk taking in our system, is the way in which this Government will approach things.

[Katrina Murray (Cumbernauld and Kirkintilloch) (Lab)]

As a long-term member of the NHS Scotland credit union, I know the importance of having community and workplace-based savings and lending provision, which is much more accessible for people on low incomes than buy now, pay later. However, it has become much more challenging for the sector to operate beyond the common bond. What is the Minister doing to ensure that credit unions are able not only to compete with the wider financial sector, but to thrive in those circumstances?

[Tulip Siddiq]

I absolutely share my hon. Friend’s enthusiasm for credit unions—I have visited those in my constituency several times and know what good work they do. We have made clear our strong support for the mutual sector. We recognise the value that credit unions bring to their members in local communities, including in her constituency. The Chancellor launched a call for evidence on reforming the credit union common bond during the Mansion House speech last week. We want to understand whether reform is needed in that space to help credit unions to grow substantially. Once we have completed the call for evidence, we will consider how much of that reform we can take forward as a Labour Government.

[Mike Wood (Kingswinford and South Staffordshire) (Con)]

The Pensions Minister will be all too aware of the ongoing problems facing members of the west midlands pension fund, one of the country’s largest public sector pension funds. Why does the Economic Secretary think that the Chancellor’s eight mega-funds will provide a better service than the west midlands pension fund in investing those people’s pensions?

[Tulip Siddiq]

We will build on the success of the pools that already exist. If the hon. Gentleman is not satisfied with my answer, the Minister for Pensions is happy to meet with him.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

Much like my hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi), I am a proud member of the Co-operative party, so to have so much co-operative and mutual content in the Mansion House speech, the new co-operative and mutual business council in particular, was music to my ears. Will the Minister say a little more about how she anticipates that Ministers will interact with the new business council? Will her Treasury colleagues consider new financial instruments to help co-operatives and mutuals meet the growth that they know is available to them?

[Tulip Siddiq]

I know that my hon. Friend is an active member of the co-operative and mutuals movement. The Government have already taken the first step, with two statutory instruments laid on 14 October. We are committed to progressing the remaining changes to the Building Societies Act 1986 following Royal Assent of the Building Societies Act 1986 (Amendment) Act 2024. I will look at further SIs to try to further the work here, but I want to support the industry-led council, and I welcome the opportunity to work with it and discuss and test policy proposals with representatives and experts from across the sector. I know that view is shared across the Treasury, including by the Chancellor, who asked about it this morning in our ministerial meeting.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

Investing in small pension funds is boring, because it is risk-averse, safe for beneficiaries and principally concentrated in this country. While investment in UK start-ups and tech through venture capital and other vehicles is to be warmly welcomed, if it happens, there is nevertheless a very real risk that funds will simply be invested overseas, and the Canada experience suggests that that may very well be the case. What assessment has the Treasury made of the extent to which the small pension funds that the Minister envisaged being amalgamated will simply have their capital and investments lodged overseas in the tech and start-up companies of other countries and deprive our own of the same?

[Tulip Siddiq]

We are looking at a diverse portfolio of assets, and the pension funds mentioned by the right hon. Gentleman have already pooled and are investing in the UK.

[Tom Hayes (Bournemouth East) (Lab)]

Bournemouth is a wonderful place to represent for lots of reasons; one very good reason is the presence of a large finance sector. We have JP Morgan and Nationwide building society, which I was pleased to visit recently and hear from about its aspirations. Over the last 14 years, that sector on the south coast has been starved, so what steps will the Minister and this Government will take to support coastal finance hubs? Moreover, I recognise that her diary will be quite booked up, but can I invite her to come to Bournemouth and meet with representatives of those firms? If she does, I am happy to buy her an ice cream.

[Tulip Siddiq]

My hon. Friend will know that I can never resist an ice cream, so I probably will visit after all. Places such as JP Morgan, which employs 4,000 people in the financial services industry, are vital to us. One of the things that the Chancellor’s speech built on was the significant steps that the Government are already taking to enhance the competitiveness of our financial services sector. We want to look at the biggest changes to the UK’s listings regime in more than three decades and—my hon. Friend will be familiar with this—deliver the final stages of the post-crisis capital reforms to banks. With our financial services growth and competitiveness strategy, which I hope my hon. Friend will write to us on, we want to give the industry certainty and the confidence to invest. That is the main thing that the financial services sector wants right now, and people in Bournemouth will probably agree with that. I look forward to that ice cream.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for her statement. We must welcome the news that London edges closer to New York as a financial hub. However, the Minister is aware that growth happens only if we attract investment. I believe that the decision to pool pension funds into larger investment vehicles is a bold one, yet the Chancellor must ensure that guarantees are in place, so that the mega-pool of pensions does not go down the drain, and that guardrails are in place to safeguard the nation’s pension pots.

[Tulip Siddiq]

I reassure the hon. Gentleman that boosting return for savers is at the very heart of this agenda, which is why we are pursuing this pensions review. We want these reforms to increase security and boost people’s pension pots, and we want to unlock about £80 billion of productive investment. The Government’s reforms are already in the pension schemes Bill, and they could boost a typical defined contribution saver’s lifetime pension pot by £11,000. I do not want the hon. Gentleman to worry, because we have our eye on how to protect pensioners and savers.

[Steve Yemm (Mansfield) (Lab)]

In my constituency of Mansfield, our member-owned mutual organisation, Mansfield building society, provides essential banking services. It is a significant local employer and invests in projects to support my community. What is the Minister doing to unlock the full potential of the sector and organisations such as Mansfield building society?

[Tulip Siddiq]

I have already mentioned our first step with the two SIs laid on 14 October, which try to modernise the Building Societies Act, and I am happy to send my hon. Friend further information on that.

The main thing we will do is carefully consider the findings of the Law Commission reviews to understand whether reform of the legislation is needed to ensure that businesses are better supported and grow more in the future. The response to the calls for evidence will be carefully considered by myself and others, and any potential reform will require formal consultation. I want to make sure that my hon. Friend knows that at the top of our agenda is trying to unlock the full potential of this important sector after 14 years of that not having happened.

[David Pinto-Duschinsky (Hendon) (Lab)]

I thank my hon. Friend the Minister for sharing her statement and welcome the support that it has gathered from across the House. However, I noted that the right hon. Member for South West Wiltshire (Dr Murrison) mentioned concern about pensions. Members will, of course, remember that it was the Conservatives who caused chaos in the markets with their mini-Budget, putting all our pensions at risk. What will the Government do to ensure financial stability and make sure that there can be no repeat of the chaos that they caused?

[Tulip Siddiq]

My hon. Friend knows this area well, having worked in the Treasury in a former life. We will absolutely make sure that we avoid the mistakes of a certain Liz Truss and work very closely with the TPR and the FCA to deliver all our reforms and ensure that we do not make any decisions that shake the stability of the economy, because we want to have a stable financial services sector and a stable economy to encourage investment and ultimately deliver on our growth mission.

[Amanda Martin (Portsmouth North) (Lab)]

Portsmouth people welcome the national wealth fund, the industrial strategy and the Chancellor’s Mansion House speech, as well as the stability that it offers our country and its much-needed economic growth. Does the Minister agree, though, that consumer protection is a vital issue that we must ensure does not get lost in our growth strategy? Will she say what the Government are doing on this agenda to ensure that?

[Tulip Siddiq]

Consumer protection is at the heart of anything that we do in financial services. As well as being a Minister, I am a constituency MP; every time I have one of my surgeries, I hear about people who have been either a victim of fraud or taken out a buy now, pay later product without realising the consequences.

We want to give enhanced consumer protections to people through the Financial Ombudsman Service, but we are very aware that it needs to be reformed, which is why the Chancellor mentioned it over and over in her speech. We plan to introduce legislation on that as soon as possible, because we want to deliver better protection for millions of consumers after years of uncertainty. I am also making progress on financial inclusion at the moment, and I can send my hon. Friend more information on that if she wants. We are setting up a financial inclusion committee, which is meeting next week, and I am happy to let my hon. Friend know what we are doing in that to protect consumers.