Finance (No. 3) Bill

Vicky Ford Excerpts

Committee: 1st sitting: House of Commons
Monday 19th November 2018 Commons Chamber

[Vicky Ford (Chelmsford) (Con)]

Does my hon. Friend agree that the fact we should be looking at is the fact reported by the OECD that the proportion of jobs that are low paid is at the lowest level for the past two decades? We should be celebrating that.

[Jack Brereton]

That is absolutely right. We should be looking at those figures, not some of the figures being used by Opposition Members, who want to keep people on a level of pay that is lower than it would ever be, because they want to keep people out of work and keep people in the workless society we saw under the previous Labour Government.

We on this side of the House have made work pay, and the long-term benefits of doing so are clear in the expansion of our non-inflationary production potential. The last time unemployment was so low, 40 or more years ago, there were massive peaks in inflation. The contrast with today is stark and we should be proud of our work as a country in digging ourselves out of the mess left by the Labour party.

For people in Stoke-on-Trent making work pay has added to the renaissance of our fine, proud city and its industries, and the situation is the same in once-forgotten manufacturing towns across the country, which are seeing a revival in real jobs for real levels of take home pay. Indeed the ONS estimates that real household disposable income per head was 4% higher in quarter 2 of 2018 than at the start of 2010, and the OBR expects it will increase by a further 3.2% by the end of 2023. At the same time, income inequality is down, and is lower than it was in 2010. To refute a number of the claims made from the Opposition Front Bench, the number of children in absolute low-income poverty has fallen since 2010.

[Jack Brereton]

The reason is that the facts show that the number of children living in absolute poverty has fallen since 2010 and will continue to fall, because of the policies of this Conservative Government.

[Vicky Ford]

Does my hon. Friend agree that for every £1 those on low income pay in tax, £4 of public spending goes towards them, whereas for those on higher income, for every £5 they pay in tax they receive only £1 back in public spending, and that is because we are a fair society, which means that well-off people contribute to helping those on lower incomes?

[Jack Brereton]

I thank my hon. Friend for those comments, which show that the highest earners are paying their fair share, while the lowest paid in society are being supported as much as we can. That is what this Government have been doing: reducing taxes for the lowest paid in society and ensuring that the lowest paid can be paid more.

I reject many of the views of the hon. Member for Oldham East and Saddleworth (Debbie Abrahams). She made some comments about statistics and then used statistics in her own way. I will also refer to the G7 by saying that only in the UK and Japan have the lowest paid seen their wages grow in that time, and income inequality is lower than it was previously.

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[Robert Jenrick]

I appreciate the point the hon. Gentleman makes, but perhaps he has missed the argument I have tried to make, which is that this is not prejudging the later outcome of how we should handle our carbon pricing as we leave the EU; it is trying to ensure that in the unlikely event, which the Government wish to avoid, of a no-deal Brexit we can maintain the system as close as possible to the present one. We chose the price of £16 because that is broadly the same as where the EU’s floating price has been in recent months. Of course the price has floated very widely from as low as £6 to as high as over £20, so making that assessment is not a precise exercise, but we believe that £16 is a reasonable figure to maintain stability, and that seems to have been well received by the industry and environmental groups.

Clause 90 is about preparatory expenditure. Alongside preparing for no deal, the Government are developing long-term alternatives to the EU emissions trading scheme. As set out already in the outline political declaration on the future relationship between the EU and the UK, we are considering options for co-operation on carbon pricing, including, if possible, linking a UK national greenhouse gas emissions trading system with the EU ETS. Clause 90 will allow Departments to begin preparatory expenditure on a UK ETS, which is included in the Bill, to prepare for a linked or unlinked domestic trading scheme. It does not mean, as I said earlier, that a final decision has been made as to which option to implement, but it does ensure that all the options are kept open and we can proceed with the kind of planning that one would expect.

I shall now turn briefly to amendments 8, 9 and 10 and new clause 10 tabled by the SNP. Amendments 8 and 9 propose that the Government must table a statement on the circumstances that require expenditure in the case of clause 90 and an estimate of the expenditure to be incurred and that the House would come to a resolution to approve that expenditure. New clause 10 and amendment 10 would require the Chancellor to review the expenditure implications of the carbon emissions tax and lay a report of that review before the House within six months of the passing of the Bill, and no regulations could be made by the commissioners unless that had taken place.

A statement of circumstances, as required by amendments 8 and 9, is in our opinion unnecessary. We are legislating because the UK is leaving the EU, and as part of that we have to prepare a domestic ETS, as mentioned in the outline political declaration, and for a carbon emissions tax only in the event of no deal.

More importantly, with all these amendments, the Finance Bill is not and has never been the place for detailed questions of expenditure. The Finance Bill is primarily a Bill about tax. Parliament gets other opportunities to review and vote on departmental expenditure, and if that is important to the hon. Member for Aberdeen North (Kirsty Blackman), I suggest that she direct her scrutiny to the estimates process when it arises in due course.

New clause 17 would require the Chancellor to review the carbon emissions tax to determine its effect on the UK carbon price and the UK’s ability to comply with its fourth and fifth carbon budgets. We are confident that the carbon emissions tax would be similarly effective to the EU ETS, and I can assure Members that there are already robust requirements to report on progress towards the UK’s emissions reductions targets. For example, the Climate Change Act 2008 provides a world-leading governance framework that we certainly support. First, it ensures that the Government are required to prepare and lay before Parliament an annual statement of emissions, setting out the total amount of greenhouse gases emitted to, and removed from, the atmosphere across the UK and the steps taken to calculate the net UK carbon accounts. Secondly, the independent Committee on Climate Change is required to prepare and lay before Parliament an annual report on the Government’s progress towards meeting the UK’s carbon budgets, which the Government are required to respond to. Thirdly, the Government are required to prepare and lay before Parliament a statement setting out performance against each carbon budget period and the 2050 target. We believe that, taken together, these are strong existing mechanisms, which are respected and understood, to ensure that we monitor and report to Parliament on greenhouse gas emissions. I therefore urge hon. Members to reject new clause 17.

Let me turn to amendments 2, 7 and 21 to clause 89, which deals with minor amendments in consequence of our EU withdrawal. We need to ensure that the tax system continues to work effectively and that we maintain stability and certainty, including in the event that the UK leaves without a deal. To allow us to do that, clause 89 will allow minor technical amendments to be made to UK tax law to keep it working as it does now and to update it to continue to work with changes made to other areas of law on account of EU exit. Clause 89 will provide the Government with the power to make such minor amendments.

These are, I stress again, minor and technical changes that are absolutely necessary to maintain the continued effect of tax legislation in the unlikely event of no deal. I can reassure the Committee that the power is not being taken to make changes to do anything other than ensure that existing tax legislation continues to have effect in the event of no deal. It will not be used to change tax policy or the tax paid by taxpayers. To reassure the Committee of that, I have placed a list of changes that the Government intend to make under the power in the Library and sent a copy to the shadow Chief Secretary to the Treasury.

[Vicky Ford]

I thank the Minister for reaffirming that it is not the Government’s intention to leave with no deal. It is the intention to leave with a deal. On tax, there seemed to be some confusion over the weekend about the draft withdrawal agreement. Some people seemed to suggest that the UK would be bound into the EU tampon tax for a further five years. Can he confirm that under the withdrawal agreement, VAT on goods sold after the transition period will be subject to rates set by the British Government, not EU law?

[Robert Jenrick]

My hon. Friend, who is always well informed, is correct on both counts.

[Vicky Ford]

I thank my hon. Friend for confirming that from the Dispatch Box. Does he therefore agree that, before jumping to conclusions about what the draft withdrawal agreement says, colleagues should instead look at No. 10’s response to Steerpike’s 40 so-called horrors and at the true facts and answers from the lawyers who negotiated it before coming up with their own concerns?

[Robert Jenrick]

I would obviously advise all right hon. and hon. Members to read the withdrawal agreement, unlike the Leader of the Opposition, and not to rush to conclusions. The document produced by No. 10 to which my hon. Friend refers, which rebuts over 40 suggested flaws in the agreement, was very instructive, and I certainly found it helpful.

To finish on this point, I re-emphasise that I have laid before the House a comprehensive list of the changes that will need to be made to tax legislation. I advise right hon. and hon. Members who are interested to take a look at it. They will see that the changes are indeed minor and technical items that are not, I hope, controversial.

Amendments 14 and 22 would require the Government to publish an economic and fiscal analysis of the effects of our exit from the European Union before using the powers in clause 89. I can reassure the Committee that the Government have already confirmed that before we bring forward the vote on the final deal, we will ensure that Parliament is presented with the appropriate analysis in good time to make an informed decision. The Chancellor set that out in his letter of 23 August to the Chair of the Treasury Committee, a copy of which is in the public domain. He said that that analysis would look at the economic and fiscal effects of leaving the EU.

To provide Members with further detail today, I can confirm that that analysis will bring together evidence from across the Government, insight from external stakeholders and a range of data and analytical tools. The analysis will consider the long-term costs and benefits of moving to new trading relationships with the EU and the rest of the world. Having considered the amendment and spoken to several right hon. and hon. Members, I am happy to confirm that the baseline for this comparison will be the status quo—that is, today’s institutional arrangements with the EU. The analysis will consider a modelled no-deal scenario, or World Trade Organisation terms; a modelled analysis of an FTA scenario; and a modelled analysis of the Government’s proposed deal. Each will be compared against the status quo of the current institutional arrangements within the EU.

Amendment 14 would not require the analysis to be published until after the Bill receives Royal Assent. As a result, the Bill would not be binding on the Government until after the meaningful vote had taken place. I hope that the commitment that the Government have made today and the conversations that I have had with Members from across the House will provide reassurance that we will publish an appropriate analysis—the analysis that right hon. and hon. Members seek—in good time before the meaningful vote.

I turn briefly to the OBR’s role, which is mentioned in amendment 14. The House will know that the OBR’s remit is clearly defined in the Budget Responsibility and National Audit Act 2011, and that the amendment, which asks the OBR to assess our analysis of the effects of a deal, goes beyond its statutory responsibilities. That would set an undesirable precedent, with Parliament being able to commission specific pieces of work from the OBR on an ad hoc basis outside the clear and bounded remit set in the OBR’s charter. That would effectively transform the OBR into a parliamentary budget office, fundamentally changing its purpose and potentially damaging its credibility. Such a decision should be taken only after a full and frank debate on its own merits.

The House will be aware that the Treasury Committee, which is headed by my right hon. Friend the Member for Loughborough (Nicky Morgan), has appointed Sir Stephen Nickell, formerly of the OBR, to provide an independent view of the Government’s analysis. My officials have already had initial conversations with Sir Stephen about the scope and scale of his review, to ensure that we can provide him and his team with the necessary information in due course. I hope that that gives further reassurance to Members that scrutiny, of the nature that they seek, of the Government’s work will be undertaken by the Treasury Committee.

Furthermore, the OBR has already published a detailed review of the approach taken in the analysis provided across Whitehall, comparing it with other academic publications since the referendum. We believe that extending the OBR’s remit, as proposed by amendment 14, would require the OBR to analyse alternatives to Government policy. That would draw the OBR into political debate and expose it to a significant risk to its credibility and that of the UK’s fiscal framework. It remains highly unlikely that the OBR could, in the time available, go beyond the points it has already made in its discussion paper in any assessment of the Government’s analysis, bearing in mind its capacity and modelling today.

As for the effects of the power mentioned in amendment 20, I hope that my previous assurances will reassure right hon. and hon. Members that the Government intend to use the power not to introduce tax policy changes, but merely to secure the continued effective operation of the tax system. I hope that my right hon. and hon. Friends who sought this amendment will see that we have listened and engaged and that the reassurances that I have provided today achieve the amendment’s purpose. I therefore urge them not to proceed with their amendments.

I turn to amendment 15, which calls for the Government to provide a list of powers in relevant tax legislation that the Treasury has acquired since June 2016, or that it expects to acquire, relating to any EU exit scenario. All such powers have been passed as primary legislation. They have been scrutinised by this House and were voted through accordingly. As with all legislation, that which relates to these powers is in the public domain, should anyone wish to examine it. I do not think that it is necessary to reprise this list. I hope that hon. Members will see that amendment 15 is therefore entirely unnecessary, and I encourage them not to proceed with it.

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[Grant Shapps]

My hon. Friend is absolutely right. This is a crazy situation. We are driving pilot training out of the UK, but English is the language of the air and should be our natural advantage. Our ambassador for the all-party group Carol Vorderman regularly reminds us that she wanted to go into the Air Force but was rejected, not through any lack of knowledge, STEM education or mathematical ability, but because she was a woman. It cannot be right that our Government are not able to address this.

I am very hopeful that the Minister will take on board clause 89, which will allow the amendment to tax legislation in consequence of leaving the EU, to do what other EU countries have somehow already managed to do—such as Spain, which does not charge VAT on pilot training. This gives us an enormous opportunity as a country to take a big chunk out of the global pilot training market, which should be, in effect, a massive export for the UK.

While we are on the VAT issue, I have one other point. This country has the ability to lead aviation into a much quieter, cleaner and more environmentally friendly future. The future of aviation eventually is to have electricity in planes—electric planes—but that will not happen without having the same dedication and enthusiasm that this Government and the previous one showed towards electric vehicles transferred to electric aviation.

This is a revolution in aviation that is coming, but it would be very encouraging if we saw the UK lead the way, and, again, this is in no small part down to how VAT is treated, in terms of not only pilot training but the inquiry, investigation, research and development that goes into electric aircraft.

The all-party group is starting a STEM aviation working group headed by a fantastic woman called Karen Spencer from Harlow College. It has the aviation STEM college at Stansted airport, where it is training 294 youngsters this year and over 500 young people next year in STEM aviation qualifications. I encourage the Minister to go and see it for himself. I believe that if we work together on this we can make aviation a much more inclusive profession, and it starts with clause 89 and what can be done under these amendments to tax legislation in consequence of EU withdrawal.

[Vicky Ford]

I too wish to speak about clause 89, which allows the Treasury to make minor amendments to tax legislation after we have left the EU.

EU tax issues are often extremely controversial. I think back to EU tax decisions I have seen in the past, such as the decision not to introduce a financial transaction tax, which this side of the House always strongly objected to but the other side would strongly have proposed at a European level. We objected to it because we felt it would have unintended economic consequences. Then there were the changes to the VAT MOSS—mini one-stop shop—situation for digital tax for small businesses. These decisions were taken without deep consultation or deep impact assessments, but were then found to have a huge number of unintended consequences. There were also the controversial issues to do with VAT on tampon taxes that sometimes came back.

[Anneliese Dodds]

It is important that Members are not misled, and it is important to say for the purposes of accuracy that a number of EU countries are looking to move forward with a financial transactions tax through the open method of co-ordination that I know the hon. Lady is very well aware of through her expert knowledge of the EU.

[Vicky Ford]

That brings me back to the point I was making: EU taxation matters can be hugely controversial, partly because decisions affecting tax at an EU level are often unanimous decisions, and therefore it would be very difficult for one member state to change them if a decision has gone wrong. Because they are so controversial it is worth thinking about the delegation of powers given to Ministers here. Indeed, during my time looking at European matters, I long argued for the concept of better regulation before decisions were made. People should be consulted and impact assessments published. Only after the assessments have been made public and the views of stakeholders who might be affected taken into consideration should decisions be made.

That is why I sit on ESIC, the European Statutory Instruments Committee, to which the hon. Member for Aberdeen North (Kirsty Blackman) referred. It was a Committee that I argued we needed. She suggested that when it decides to change a negative instrument to an affirmative instrument, that is because of some controversy with the Government’s decision, but by establishing that Committee, under the excellent chairmanship of my right hon. Friend the Member for Derbyshire Dales (Sir Patrick McLoughlin), we can ensure extra transparency in these complex decisions. I genuinely believe that we should think carefully before giving delegated powers to Ministers. However, clause 89 is very much about making minor decisions. It is tightly worded, and I do not believe that the amendments tabled by Opposition Members are necessary, as they would cause over-complexity. Amendments under clause 89 would be necessary, were we to leave the EU without a deal.

I am absolutely convinced that leaving the EU without a deal is not in the interests of this country, and I am glad to hear Ministers confirm that. However, I would also be glad to hear Ministers confirm that they will give Members a great deal more detail about the impact assessments of a no-deal scenario and a deal scenario, and also how that compares with remaining a member of the European Union, before our final vote on the withdrawal agreement, so that we can all be fully apprised of the impacts and make our decisions wisely.

[Kevin Hollinrake]

I want to speak first to amendment 14. The hon. Member for Streatham (Chuka Umunna) is no longer in his place, but he said that all the choices before us were the worst possible choices and worse than the deal that we have today. I was certainly not someone who campaigned to leave the European Union—I have my reservations about our departure from an institution of which we have been a member for effectively 45 years—but we should not ignore the opportunities that lie ahead of us.

I do not look at these things through rose-tinted spectacles, but many years ago, following protests by those concerned about the impact on their livelihoods of imports from India by the East India Company and the successful lobbying of their Members of Parliament, legislation was introduced from 1700 called the Calico Acts, which banned all imports of calico—rough-cotton cloth—from India. That gave rise to the industrial revolution, because at that point we could not produce enough calico, so Watt linked his steam engine to Hargreaves’s spinning jenny and mass production resulted.

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[Vicky Ford]

Does my hon. Friend agree that stability in the carbon pricing regime is as important as any other area of business legislation? That is why it is important that we deal with the devil in the detail in the Bill.

[Kevin Hollinrake]

My hon. Friend makes a good point. Above all, business is looking for stability. It is absolutely right that in the worst-case scenario, in which we end up with no deal, we have a stable framework to enable us to manage our future trading relationship with the European Union.

[Vicky Ford]

Does my hon. Friend agree that although the clause is helpful in giving some stability, it does not give anything like the level of stability that would be delivered by a negotiated exit?

[Kevin Hollinrake]

It is hugely important that we have the negotiated exit that we all want. No deal is the worst possible option, and it is not where we want to go. Nevertheless, we cannot take no deal off the table.

I return to my key point about our future energy emissions and ensuring that we reduce our carbon emissions wherever we can. We are world leaders in moving our electricity production away from coal, which we have committed to phasing out by 2025, and into gas.

Finance (No. 3) Bill

Vicky Ford Excerpts

2nd reading: House of Commons & Programme motion: House of Commons
Monday 12th November 2018 Commons Chamber

[Mel Stride]

The hon. Lady will know that the deficit was up at about 10%—£150 billion a year—at the time we inherited the mess that her party left us with. That deficit has now reduced by a full 80%, to below 2% of GDP, and will go down further as we move forward. Now, let me make some progress.

As I was saying, these are the economic facts of life and, as a great lady once said:

“The facts of life are conservative.”

Under this Conservative Government, sound finances are being restored. The future is brighter, bringing with it our increased commitment to our public services, most notably to our highest priority of all, our national health service. Thanks to the commitment of this Government and the hard work of the British people, we are now entering a new era. The deficit is fading, real wages are rising, the debt is declining and better times are returning. We now have a near record level of employment, with unemployment at a 40-year low, and we have halved youth unemployment since 2010. Central to this progress is my right hon. Friend the Chancellor’s Budget and this Bill.

This Bill introduces a tax cut for 32 million people, through bringing forward by a year our manifesto commitment to increase the personal allowance to £12,500 and the higher rate threshold to £50,000.

[Vicky Ford (Chelmsford) (Con)]

Will my right hon. Friend confirm that this means there will be a tax cut for the lowest earners in our society?

[Mel Stride]

My hon. Friend is absolutely right; a large proportion of the tax cut that has been delivered is in the form of a significant increase in the personal allowance—that amount someone can earn before they pay any tax—and that of course has benefited the low paid very significantly and will continue to do so.

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[Mel Stride]

The hon. Lady will know that we are a first mover: we are one of the first countries in the world to take this approach. She will also know that this is a complicated tax and a tax that we absolutely have to get right. I have already spoken about the restricted scope of this tax. We want to make absolutely certain that it works and that it does not discourage technology companies from coming to this country, as they do in their droves under the economic policies of this Government.

[Vicky Ford]

Given that digital companies know no borders, does the Minister agree that, while we take this first step to introduce taxes on international digital companies, it is important to continue to work with our neighbours and others across the world on an international effort to do so?

[Mel Stride]

My hon. Friend is totally right. We have been in the vanguard of efforts conducted through the European Union, the OECD and the G20 to come up with a multilateral approach on this matter. That is the preferred option of the Government, and rightly so, because it obviates the problems that one would otherwise have with aspects of double taxation. It is helpful if we all move together, and that is still our aspiration, but we have said that if we do not get that multilateral agreement within the next year or so, we will move ahead with our measure.

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[Peter Dowd]

It is not in the Finance Bill. Frankly, the hon. Gentleman should worry more about the 8% cut to per pupil school funding in his constituency than trying to get me to answer questions that the Government should be answering.

[Vicky Ford]

On police funding, when the Government proposed hundreds of millions of pounds of additional funding for the police by raising the police precept, why did the Labour party vote against it? [Interruption.]

[Peter Dowd]

From a sedentary position my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) says that one in four policemen have gone from his constituency. That is similar to what has happened in my constituency and, I suspect, in the hon. Lady’s constituency. There is not one penny more of day-to-day spending in the Budget. She should be asking her Government why the police are still being underfunded.

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[Peter Dowd]

The hon. Gentleman really must listen more—[Interruption.] I will send him a signed copy of my speech; he might learn a thing or two.

We believe in building a coalition of the many—a broad, democratic movement of 95% of the public—to spread prosperity across the furthest reaches of our country. We cannot in good faith increase taxes on those who have struggled for eight long years while the richest continue to accrue even more wealth.

[Vicky Ford]

I thank the hon. Gentleman for giving way—I was listening. What does he intend to do to individuals earning over £80,000 a year?

[Peter Dowd]

Actually, we set out our tax policies in “Funding Britain’s Future”, and I will send a signed copy to the hon. Lady for her to have a look at. Perhaps Government Members can have a tutorial with Sir Roger Scruton and tease out some of the issues.

On Brexit, yet again, we have seen the Government using our exit to hand themselves broad powers, indefinitely. This is a continuation of the theme that I described—of a Government’s demand for power, even though they are clueless about how to exercise it.

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[Peter Dowd]

I refer my hon. Friend to the response given by the Minister earlier. We are prepared to look at all proposals.

[Vicky Ford]

The shadow Minister just said that the Bill is light on content, but it is 315 pages long. I have just read his Labour party document “Funding Britain’s Future”, which is eight pages long, three of which are footnotes. What am I missing, sir?

[Peter Dowd]

What is the hon. Lady missing? A great deal, I would contend.

Oral Answers to Questions

Vicky Ford Excerpts

Tuesday 6th November 2018 Commons Chamber

[Elizabeth Truss]

We already have an advances system that enables those families to be covered for that period. Universal credit is designed to mirror the world of work to make it easier for people to get into work and that is exactly what it is doing, as opposed to the previous benefits system, which trapped people in poverty and kept people where they are, which is what the Labour party wants to do.

[Vicky Ford (Chelmsford) (Con)]

Universal credit comes to my constituency next month. Will the Chief Secretary confirm that the changes made in last week’s Budget mean that there is more support for working families with children, more support for people with disabilities and more support for the self-employed and that, crucially, people will not need to wait five weeks for a payment?

[Elizabeth Truss]

My hon. Friend is right on all those points. What we were also able to do in the Budget was make sure that there is £690 boost for those on the national living wage and a £130 basic rate tax cut. We were able to do that because of the improvement in the public finances, thanks to getting more people into work. The reality is that the reason we had £100 billion extra in our Budget is that this Government have taken responsible decisions.

Business Banking Fraud

Vicky Ford Excerpts

Tuesday 9th October 2018 Westminster Hall

[Mr Wragg]

The hon. Gentleman is absolutely correct: it was systemic across the whole business lending sector. He is right to put that on the record.

The Turners’ reward for bringing the case to the bank’s attention back in 2007 was to be branded conspiracy theorists. The bank—first as HBOS, then as Lloyds—tried to evict them from their home 22 times, spending more on legal action than the value of the home itself. It sent a top partner from one of the country’s best regarded law firms to Cambridge county court to watch the hearings. The Turnbull report, which details a comprehensive cover-up of the fraud from within the bank, notes lawyers as saying that, once the Turners were out of their home, they would have to accept their fate. This was not the pursuit of justice but a witch hunt to silence whistleblowers.

The Turners approached the Financial Standards Authority, the Serious Fraud Office and the Treasury. Indeed, there was a debate in this very room in June 2009, during which Members urged the authorities to investigate. However, all they encountered was denials and deflection. As my hon. Friend the Member for Wycombe (Mr Baker) pointed out, the case was eventually taken seriously only after Thames Valley police recognised that a crime had been committed. The investigation took seven years to complete and the resource of 151 officers and staff, and it cost £7 million, with only £2 million eventually recovered from the Home Office. Thames Valley police stated that they could have done it in half the time and for half the money, if only the bank had co-operated fully. Unfortunately, the scale and difficulty of investigating the fraud only serves as a warning to other cash-strapped police forces: “Investigate at your peril”.

The reality is that white-collar crimes such as this are expensive and difficult to prosecute, and the agencies responsible for fighting economic crime simply do not have the necessary resources to tackle complex, mid-tier banking fraud. The SFO takes on only a small number of very large cases and has a budget of £53 million. The National Crime Agency’s economic crime command has a budget of £10 million, and the newly established National Economic Crime Centre has a budget of just £6 million. Compared with the sheer scale of fraud in the United Kingdom, which is estimated at more than £190 billion a year, and given the potential for consequential losses, these investigative budgets are, frankly, insignificant.

For those who may think that this is a one-off, it is important to note that the processes employed by HBOS in this case—turnaround units, business valuations and the use of insolvency—are exactly the same tactics seen in the case of other complaints that the all-party parliamentary group on fair business banking has investigated. Such complaints were found to be commonplace, as the hon. Member for Cardiff West (Kevin Brennan) alluded to, across most financial institutions. The system is ripe for abuse, and we have serious concerns about it.

At this point, I pay tribute to the incredible dedication of the co-chairs of the all-party group, my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) and the right hon. Member for North Norfolk (Norman Lamb). In addition, I thank the group’s officers and members for their significant work in running a thorough inquiry into how so many SMEs were abused by their banks, exposing the scale of the issue and the mechanisms by which the frauds were conducted. The APPG has produced an important report that identifies the shortcomings in the current investigative tools and bodies and makes vital recommendations as to how we might start to unpick this sorry mess.

I reiterate the APPG’s calls for a full public inquiry into the treatment of businesses by financial institutions. There are currently more than 10 different inquiries looking at different, isolated issues. It is time that we had a holistic approach and investigated the system as a whole.

[Vicky Ford (Chelmsford) (Con)]

I thank my hon. Friend for his work in this area. Two of my constituents have been affected—one through a mis-selling of swaps by RBS and the other through the dreadful situation at HBOS that my hon. Friend has mentioned. Does he agree that the tragedy of this case is partly the lack of transparency and independence, and that people feel that they cannot get fair redress? A decade later they are still not being treated fairly by those institutions.

[Mr Wragg]

My hon. Friend is spot on. The level of obfuscation by these institutions would be quite suspicious if one were to suspect them of any wrongdoing. I am sure that we can deduce our own conclusions from their behaviour.

On a civil level, the APPG’s proposal for a financial services tribunal has been well received, and we look forward to the Government’s response. That may at least provide a civil remedy for those who have been wronged. However, we have been asked what will happen when civil mistreatment tips over into the criminal abuse of power. Where is there to go? At this point, there is no satisfactory answer. The Thames Valley police and crime commissioner believes that we should have regional fraud squads akin to our counter-terrorism squads, funded by the Treasury via FCA fines and funds recovered from criminal gangs. We wholeheartedly support those proposals. Whatever action is taken, it requires the utmost degree of urgency, so that more and more cases do not—as has already started to happen—run into statutes of limitations, lose documents and evidence to the sands of time or see responsible and culpable individuals leave the industry and witnesses become unavailable.

I look forward to Members’ contributions and the Minister’s response. As I mentioned at the start, this is becoming an all too familiar debate, and I rather hope that we are not all back here in six months reliving it again. I also hope that we can resolve to agree a path of action that will see the tarnish start to be scrubbed off Lady Justice and allow her to start to uncross her arms.

Oral Answers to Questions

Vicky Ford Excerpts

Tuesday 11th September 2018 Commons Chamber

[Elizabeth Truss]

When the Conservatives came into government in 2010, the vast majority of money spent locally was raised centrally, damaging accountability. We have now switched that around, and more money—the vast majority of it—is being raised locally. Of course, we have recently given councils more power to raise council tax, to meet growing demand in areas such as social care and children’s services, and we will continue to look at that.

[Vicky Ford (Chelmsford) (Con)]

This summer, we saw the devastation of the collapse of an elevated roadway in Italy. In Chelmsford, the main route into the city is over the Army and Navy flyover, which is now 40 years old. I am not suggesting that it is on the brink of an Italian disaster, but it will need replacing. What funds might be available to assist?

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

My hon. Friend and I met earlier in the summer to discuss the flyover, and she raised concerns then. I appreciate that it has been closed, owing to safety concerns, over the summer. Funding is available through Essex County Council, and of course through her local enterprise partnership, which has received almost £600 million over the spending period.

Taxation (Cross-border Trade) Bill

Vicky Ford Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Monday 16th July 2018 Commons Chamber

[Anna Soubry]

I have to say to my hon. Friend that that is absolute codswallop. When I went to Toyota, we were shown exactly the places where the parts had come from. For example, some parts had come from Japan. There was a special arrangement with Japan whereby the parts come into the factory and sit in a bonded warehouse. Those parts number less than 1% of the total. Toyota has 2.5 million parts coming into that factory, and the vast majority come from the European Union—it relies on frictionless trade.

With great respect to my hon. Friend, he is somebody who makes the case that we should be a member of the World Trade Organisation. Let us just get this one straight. If our country joins the World Trade Organisation—[Interruption.] Well, we are a member through our membership of the European Union. If we are a member of the WTO in our own right, we will have to abide by its rules, which say that every member must secure its borders—I repeat, must secure its borders. That does not just mean that our country, when we leave the European Union, must secure its borders, but that the European Union, whether it likes or not, must secure its borders. What does that mean? There will have to be a hard border between Northern Ireland and the Republic of Ireland. It is dishonest and disingenuous for people to stand up and make out that something other than that is the reality.

The White Paper faces up to Brexit reality, and that is what Conservative Members must now do. We have to face that reality, just like I have had to face the reality that we are leaving the European Union. Hon. Members have to do the right thing by their constituents and put trade and business at the heart of Brexit.

[Vicky Ford (Chelmsford) (Con)]

I want to go back to the point about enforcing our border. Some people say that, if we were trading under WTO rules, we would not need to have a border in Ireland, but under the WTO’s most-favoured-nation rules, if we did not enforce the border in Ireland, we would be in breach of our agreements with other parts of the world. We would have no right to say, “No border.” Furthermore, if Ireland did not enforce the border with the rest of the UK, it would be in breach of its obligations to the EU, and if the EU did not require Ireland to respect the border, it would be in breach of its obligations across the world. So I thank my right hon. Friend for making that point so clearly.

[Anna Soubry]

That was a very long but very good intervention.

--- Later in debate ---

[Vicky Ford]

On the rules of origin, the hon. Gentleman may wish to read the pan-Euro-Mediterranean convention on rules of origin, which covers a broader area than just the customs union. It is possible to have agreement on rules of origin outside the customs union.

[Mr Leslie]

My experience is very different in terms of the information I have. If we look across the range of goods as a whole, there are problems with rules of origin outside the customs union.

The second problem with the facilitated customs arrangement is that it breaches article 3 of the General Agreement on Tariffs and Trade—GATT—which is part of the World Trade Organisation rules. Article 3 is the national treatment principle, which says that we should not treat imported goods unfairly relative to domestically produced goods. Because of the track and trace requirements in the facilitated customs arrangement architecture, we will have to treat imported goods differently to those produced and made in the UK.

The third problem is that if we want to make free trade agreements with the rest of the world, the Government are shooting themselves in the foot with the facilitated customs arrangement because article 24 of GATT states that we have to eliminate substantially all trade barriers between constituent trade authorities. If the UK is having to collect tariffs on behalf of the EU, that introduces a barrier that will have to fetter future free trade agreements. I do not particularly believe we can get better FTAs beyond the customs union; I think our leverage as part of the EU is superior, but on a technical level a facilitated customs arrangement, I am afraid to say, is just not going to wash.

--- Later in debate ---

[Charlie Elphicke]

In the referendum campaign, the Home Office told my constituents that the jungle would move from Calais to Dover. The former Prime Minister said that there would be queues of lorries and gridlock on the way to Dover—a mantra that the Labour party took up. The Treasury told my constituents that they would lose their jobs and their homes to boot in a calamitous disaster.

Despite that level of fear, my constituents believed in the opportunity that lay before them. Two thirds voted to leave the EU. Why? Because they believed in the kind of opportunities and the kind of Britain that we can build. They believed in better. They believed in the future, in our sense of nationhood and independence and in the country that we could build: independent and out in the wide world. It is important to remember that, because change does not come easily; it takes political courage.

Our voters have shown more courage than far too many Members of this House, who fear change and are afraid of grasping opportunities and what the world offers. Our voters better understand the need for that courage. They can look at the figures and see that the EU has been in relative decline in the past few decades, going from 30% to just 15% of GDP. [Interruption.] The spokesman for Brussels, the right hon. Member for Carshalton and Wallington (Tom Brake), does not like those figures, but they are true. Our voters also know that 90% of future economic growth in the world will come from outside the EU. That is why it is so important to believe in better, back our constituents and make a success of Britain out in the world—a global Britain.

[Vicky Ford]

We are leaving the EU and that means that we need to have a new relationship with the single market and the customs union—we cannot carry on as we were before. However, leave voters were told time and again that trade would continue and that having customs clarity was important to that trade.

I want to dispel some myths. First, zero-tariff regimes are not the same as no-tariff regimes. A no-tariff regime, which we have now, means no customs declaration and no rules of origin. A zero-tariff regime means both. That is why I am glad that the White Paper says that we will have no customs declarations and no rules of origin.

On myth two, we do not need to be in a customs union to resolve the rules of origin issue. That can be done through a PEM convention. On myth three, being in a single rulebook on goods does not stop us from doing trade deals with other parts of the world—just look at Switzerland. On myth four, trading on World Trade Organisation rules means that there will have to be a goods border in Ireland, otherwise the UK will breach our agreements with other trading partners, as will the EU. On myth five, just-in-time delivery of goods coming from China, which takes four weeks at sea, is not the same as just-in-time delivery across the channel.

I support some of the amendments. New clause 37 on no hard border in the Irish sea makes sense. Amendment 72 also makes sense. However, I am concerned about amendment 73. I do not like the EU VAT regime, but we need more clarity on that. On new clause 36, I agree we need a balanced approach on tax collection, but how it is worded is very unclear. I do not understand how the word “reciprocity” works in a legal framework when it is country to country versus us to EU. There needs to be a much clearer legal basis.

[Mr Speaker]

There is one minute.

Oral Answers to Questions

Vicky Ford Excerpts

Tuesday 3rd July 2018 Commons Chamber

[Mr Philip Hammond]

I assure the hon. Lady that on Friday, as I have done consistently for the past two years, I will argue for a future relationship with the European Union that protects our important supply chains, protects British jobs and protects British business.

[Vicky Ford (Chelmsford) (Con)]

British insurers, such as the ones based in Chelmsford, face a dilemma over what will happen to their European clients’ contracts: it would be immoral for them not to pay out on claims, but illegal if they do so. Will you urge the European regulators to come up with the same sensible, pragmatic solutions as the British regulators?

[Mr Speaker]

Well, I won’t, but the Chancellor might.

A120 Dualling

Vicky Ford Excerpts

Tuesday 19th June 2018 Westminster Hall

[Will Quince]

I thank my right hon. Friend for that intervention. I could not agree more that we do not have a holistic approach at the moment and, as a result, people are not seeing the bigger picture and the prize that is on offer.

[Vicky Ford (Chelmsford) (Con)]

I thank my hon. Friend for letting me make this point. On joined-up thinking, does he agree that resolving the issues on the A12 is also part of the bigger-picture solution? Unlocking the issues on the A120 is key to unlocking the improvement on the A12, which we also need in order to ensure that Essex is better connected.

[Will Quince]

I thank my hon. Friend for that intervention. It is almost as though she has read my mind, because in my response to my right hon. Friend the Member for Witham, I intended to make exactly the point that the A120 cannot be seen on its own, in isolation, as the panacea. It is not the whole answer, but it is part of an overall picture that includes the A12; that is why the extra lane is so important between Chelmsford and Colchester—and beyond, up into Suffolk. This is also about our rail line, and we need to get this right. We have a whole fleet of new trains starting to arrive next year on the Great Eastern main line. If we start to unlock the additional capacity that will come with the digital railway—if we start to see that investment from the Department for Transport via Network Rail in our rail line—all of a sudden we will become a real powerhouse, because through transport infrastructure we open up economic opportunities and business growth. In particular, Colchester, but also wider Essex and the eastern region, will be the place to invest and the place to relocate a business to. The size of the prize is so great—it is a huge opportunity—and the Government really should sit up and listen to us about it. If Departments work together on housing, transport infrastructure and beyond, and if they work with us, the opportunities are huge.

My final point is not just about the economic case, but about why this scheme is so important to the region. That is clear to see, because of the overwhelming and clear support from everybody—and I mean everybody. Borough, district and county councils, the local enterprise partnership, businesses and business groups—such as the chambers of commerce—are absolutely invested in it. They have been so invested in it that they have put in money, resource, time and effort. We all know from our postbags the number of people who contact their Member of Parliament about issues with the A120 and how keen they are to see those issues resolved.

Whether it is about the economic and business case, the social impact on our constituencies or just the fact that we need to connect a major international airport, a major international port and a very important town in the middle—Colchester—we have to ensure that the A120 scheme goes ahead. I encourage the Government to stump up the cash to make it happen.

--- Later in debate ---

[Rachael Maskell]

I most definitely did not say that. The hon. Gentleman must have misheard me. I emphasised the focus we need to put on intermodal transport in particular, looking at issues such as increasing capacity on our rail networks, because we know other serious challenges are afoot across our freight industry. It is important we take those considerations on board.

[Vicky Ford]

I have campaigned for rail freight for many years. Is the hon. Lady aware that Chelmsford is the busiest two-platform train station in the country and there simply is not additional space to take additional freight down the great eastern main line in the timeframe involved? Digital networks may add a bit more, but we need to resolve the freight by mending this road and our road networks, not just by saying, “Let’s get it on the trains.”

--- Later in debate ---

[Rachael Maskell]

I have already answered the hon. Gentleman. I said that we would have an intermodal approach to all transport systems. It is crucial that we look at the opportunity that public transport can provide.

[Vicky Ford]

Will the hon. Lady give way?

[Rachael Maskell]

If I may move on a little, we will see what time there is left. It is important that our approach to strategically developing economic growth, transport planning and housing development brings all development and planning together. We have seen a piecemeal approach to planning, which has not looked at how to serve economic or residential communities and ensure that there are sufficient transport mechanisms to provide that support. We believe that truly sustainable economic and residential hubs need to work together with the integrated transport system in order to best serve communities. We know that in the developments that have taken place, 81% of people living in those areas drive to work, as opposed to having wider options and intermodal choices. That is what I am arguing today.

[Vicky Ford]

The hon. Lady said the Labour party would invest in either rail or road. This Government are committed to investing in both. Which is she planning to cut?

[Rachael Maskell]

The hon. Lady is again taking my words and not using them in the way they were said. We will look at intermodal first and at the wider options of ensuring properly integrated transport. Any Government should do that, to ensure that we have the most sustainable and usable rail, bus, active travel and road system that there is. Intermodal integration will give us the best transportation system. Talk to anyone across the transport sector: they would agree with that approach, as do many Government Ministers, who say that they want to see an intermodal shift, too. I have heard such words many times from the Government. I am sure they would agree that is also important, if they are looking at proper economic and residential investment, such as is being suggested by the scheme presented today. That is the approach Labour would take.

We need to ensure that improvements made today do not call for further improvements and widening just a few years down the road, as has happened in many of these schemes. We need long-term solutions and investment put in place, to ensure there is not chaos in the future.

--- Later in debate ---

[Rachael Maskell]

I will not take the hon. Gentleman’s intervention. [Interruption.] No, it is not a no.

As I have said—

[Vicky Ford]

It is not a yes.

[Rachael Maskell]

As I have said in this debate, we need to look at that intermodal option and that has not been presented in the case that I have read. Clearly, we need to see investment across all our modes of transport, so that hon. Members’ constituents have real choice over how they travel and so they do not have to take the car if it is their preference to take a bus or train. That is what I am saying. We have got to see integrated—

Financial Services

Vicky Ford Excerpts

Thursday 26th April 2018 Westminster Hall

[Vicky Ford (Chelmsford) (Con)]

I beg to move,

That this House has considered the financial services and the impact on the UK economy.

It is a privilege to serve under your leadership, Sir David. I thank the Backbench Business Committee for granting time to discuss this important matter, and the 16 Members who supported the application. They all agree that the financial services sector is of specific importance and that the House should set aside proper time to discuss the issues that affect it.

Today is of course a very quiet day in this place, and time for the debate was allocated only last week. Many Members have given me their apologies because they cannot be here due to previous constituency commitments, and a bit of a gremlin in the parliamentary IT system unfortunately meant that the debate was advertised on the Parliament website only last night. Fortunately, I have received many comments in the past few days from stakeholders representing literally millions of people about the importance of this debate, and it is really important that we point out to the public that the fact that not many Members are present right now does not mean that many of them do not care about this issue— they do.

I will address the financial services sector in its own right and its importance to the wider economy, lay out some of the many considerations that the Brexit negotiations bring for the sector, and raise some specific actions that the Government may wish to consider taking. Fundamentally, we know from history how important it is to get the regulatory environment for financial services right, and it is important that we, as legislators, focus on those issues.

London is the leading international financial centre. Some 1.1 million people are employed directly in financial services, and the number of people employed in the sector increases to nearly 2.3 million when other professional services are added. One in 14 people working in Britain today works in financial and professional services. Those jobs are not just in the City of London: Manchester is a leader in legal services, as is Birmingham in accountancy; Edinburgh has a global reputation for fund management; and Northern Ireland is increasingly an area of expertise for vital back-office and middle-office functions. Two thirds of financial services jobs are based outside London. In fact, 21 cities and towns across the country have more than 10,000 people working in the industry.

More than 3,000 jobs in my constituency are in financial services, many of them in insurance, and many of my constituents commute to London to work in the sector. It is estimated that, across the country, banking employs more than 400,000 people, insurance more than 300,000, management consultancy more than half a million, accountancy 360,000, and legal services 340,000.

But this is not just about jobs: the financial services sector is a massive contributor to the public purse. TheCityUK estimates that the sector paid more than £72 billion in tax last year—11% of total British tax receipts and 4.5% of our GDP. Some £31 billion of that came from income tax and national insurance contributions. The banking sector alone paid £35.4 billion, of which £17 billion was from non-British banks that have chosen to locate here.

The sector is key to our trade. Of every £100 generated in our economy, £11 comes from financial services—it is among Britain’s largest industries. According to the Office for National Statistics, UK-based financial and related professional services generated a trade surplus of more than £80 billion in 2015—larger than the combined trade surplus of all other industries. It is fair to say that British financial and related professional services firms are the face of British businesses around the globe. A large proportion of that trade is with our partners in Europe; more than £27 billion of UK financial services exports go to the EU. Maintaining that trade and the jobs and tax it brings matters hugely to our economic prosperity.

Access to financial services products makes a real difference to real lives. Buying a house and taking on a mortgage is the single largest financial decision most people will ever make. Two thirds of families in the UK own their own home. There are 11 million mortgages across the country. Furthermore, more than 1 million people have opened help to buy ISAs since they were introduced in 2015. Those have helped people buy more than 100,000 homes, and they have been used particularly in areas such as the north-west and Yorkshire and the Humber.

Three quarters of British families and households have savings and pensions managed by the UK fund management industry, and pension providers are key to delivering a better future for us all. We have the second largest pension industry in the world, with total investments of nearly £3 trillion. At the end of last year, more than 9 million people in this country had been automatically enrolled into pensions thanks to this Government’s actions. Insurance services are vital to consumers, too. More than 20 million households have motor insurance, 19 million have contents insurance, and 16 million have buildings insurance.

People also use banks: 99% of British adults have at least one bank account. That is great. We know retail banking is going through a massive transformation. Consumers are moving from paper, cheques and cash to online and contactless payments and records. Government figures show that 56% of consumers used online banking last year. That is great, but it means that nearly half the population did not. The issue of bank branch closures is not just for rural areas. I represent the city of Chelmsford, and I have had many emails from constituents who are concerned about the last bank closing in the Great Baddow area. It is right that MPs raise the issue often in the House. Post offices can and will provide some of the services that people need, but there also needs to be clear and specific communication to those affected.

Financial services are also of huge benefit to the public sector. People in my constituency really want to see investment in infrastructure—that is a top priority— and dynamic financial services are key to getting the infrastructure we need. I should probably declare an interest: I had a long career in infrastructure finance before entering the House. The UK Government aim to invest more than £240 billion between now and 2021, of which it is estimated 45% will come from a diverse range of private investment sources.

Financial services are also key to supporting other businesses. They provide current accounts and insurance cover, and help companies to raise the money they need to invest, grow and create jobs. The total value of loans from major banks to British businesses is just over £460 billion. More than a third of that is lent to small and medium-sized businesses. Last year, British companies raised £27.2 billion by issuing shares, nearly £24 billion of which was raised on the London stock exchange. Companies also raise money from corporate bonds, asset finance, angel investment, crowdfunding, peer-to-peer funding and private placements. According to research by Cambridge University, in 2016 more than 33,000 small and medium-sized enterprises had already received funding—totalling more than £3 billion—from alternative finance providers. That market is growing rapidly.

The UK is a global leader in the FinTech sector. Investment in FinTech more than doubled last year. We are the second largest FinTech country in the world, just after the US. FinTech products have given access to services to many people who found themselves excluded from traditional financial services. FinTech products have increased transparency, dramatically reduced the cost of everyday transactions and helped to fight financial fraud and improve security.

Last month, the Chancellor launched the FinTech sector strategy, which I welcome, but many other parts of the financial services industry could benefit from such sector strategies too. The financial services sector comprises many different subsectors, each of which needs and deserves detailed and specific focus. It is important that we have that focus now, especially because of the Brexit negotiations. Financial services will be very much impacted by the type of Brexit we have.

I will give the example of the insurance sector, which, as I have said, is a major employer in my constituency. The UK is a global leader in insurance services. We are home to the largest insurance industry in Europe. Our commercial insurance market facilitates the flows of trade across all of Europe and acts as a massive bridge to the markets in North America and across the world, in Latin America, Asia and Africa. Many clients across the rest of the EU rely on the London market to provide certain insurance and reinsurance products that they simply cannot get in their own markets.

That is why, every year, European companies pay insurance premiums worth over €9 billion into the London market and why €7 billion of international business is written in the London market by organisations whose parent companies are elsewhere in Europe. Once the UK has left the EU, UK-based insurance and reinsurance undertakings will lose their right to conduct business in EU27 member states by way of freedom of establishment and freedom of services—and vice versa: European companies will lose their right here, unless there is a deal allowing that to continue.

A further technical but very concerning point is that, in December, the European Insurance and Occupational Pensions Authority issued an opinion saying that insurance contracts concluded before the withdrawal date by British companies into the EU27, and by EU27 companies into Britain, are in principle valid post-Brexit, but that those same firms would not be able to continue to ensure the continuity of their services to businesses and customers on a cross-border basis after we exit. That would include their not being able to service the claims of existing policyholders.

The continuity of servicing of cross-border contracts after Brexit is a real concern. According to the Bank of England, 36 million insurance policyholders—individual people—in Britain and the EU are potentially affected. That is only insurance policyholders; there is another £26 trillion of outstanding uncleared derivatives contracts. It is in the interests of both the UK and the EU to resolve the issue of contract continuity, both during the transition period and thereafter, and I am pleased to have heard the Chancellor mention that recently.

As well as resolving contracts, there is the issue of market access. The London Market Group, which represents the commercial insurance sector, points out that without continued access to insurance markets there will be disruption across a wide range of sectors, including aviation, marine, bank lending, satellite communications, shipbuilding and even nuclear power. Market access in the insurance sector is important to those other sectors that come to London to get insurance.

It is also important in sectors other than insurance. British-based asset managers manage more than £1.5 trillion of assets for EU clients. Two thirds of the debt and equity raised by European companies comes from British-based banks. Three quarters of European forex and interest rate trading takes place in the UK. Trade in services is not just a one-way street, and it is important to remind people on the other side of the channel of that. The UK imported £76 billion-worth of services from the EU in 2016, an increase of about 10% on previous years. Financial services also underpin the cross-border flow of goods. I have just bought a new car; like most new cars bought in Britain today, it comes with a financial services contract. The service is linked to the good.

When it comes to the financial services sector, the concept of no deal with Europe is not a good deal for Britain, and it is not a good deal for the rest of Europe either. There is no free trade agreement anywhere in the world that offers anything like the depth and breadth of what is needed by the EU and UK financial services players to help to keep the sector and to ensure it continues to underpin the wider economy. That is why it is right that the Prime Minister, in her Mansion House speech, called for a

“broader agreement than ever before.”

It is important that we focus on the details of what that relationship could look like. Companies in financial services have very long lead times to plan their businesses. Once contingency plans have been put in place, they are unlikely to be undone. The agreement on the transition period is welcome, but it is not legally enforceable until we also know what the withdrawal agreement looks like. Firms, especially in the EU, are still being asked by their regulators to continue planning for a no deal scenario, which risks the transition agreement being undermined in practice. In contrast, the Bank of England and the Prudential Regulation Authority have given helpful guidance to firms here that they can continue to operate under the current regulatory regime. One thing I ask the Minister to do is to work with our European counterparts to try to ensure that firms on the other side of the channel can be given similar messages to the one the Bank of England is giving.

On the long-term agreement, an organisation called the International Regulatory Strategy Group prepared an excellent report on “A New Basis for Access to EU/UK Financial Services Post-Brexit”, which I strongly recommend. It concluded that a deal should be sought that was based on mutual recognition and regulatory co-operation, delivering market access rights. That view has broad support from across many areas of the financial services community.

The UK Government have called for cross-border access in financial services based on regulatory and supervisory co-operation. It has been encouraging to see an acknowledgement of the importance of services in the EU’s own negotiating guidelines. It is important to recognise that, if we are to achieve that high level of market access, we also need a high level of regulatory dialogue, trust and co-operation. The lessons of the last financial crash remind us how important good regulation is, because if a failure happens it can become systemic. The crash also emphasised the need for international co-operation and made us realise that, when it comes to cross-border institutions, the regulatory framework needs to work across borders too.

However, it is important to remember that the industry has come a long way since 2008. Across the world, capital requirements on large banks are now 10 times higher than they were before the crisis. British banks have raised over £130 billion of loss-absorbing capital. The recovery and resolution regime, which I am proud to have played a part in negotiating, means that failed banks can be wound down without needing to rely on taxpayer bail-outs. Fundamental to that is the fact that senior executives can now be held individually accountable for the banks they run.

Under this Government’s leadership, the UK has worked with regulators all across the world to improve the stability of the financial sector. When it comes to the detail of the regulation, we have worked most deeply with our neighbours in the EU. We have created a common rule book in many subsectors of financial services, and industry players in the vast majority of those subsectors want to continue to use that rule book. It is important that we focus on how that co-operation continues and what sort of regulatory environment we want to have going forward.

There is huge devil in the detail of financial services regulation. We should not kid ourselves that global rule-making will replace the level of detail that EU-UK co-operation has given, and we should remember that our co-operation with Europe has helped us to have a stronger influence on the global stage.

The example of taxpayers’ money no longer being needed to bail out a failing cross-border bank was critical to building British stability in financial services after the financial crash. We agreed that that should happen at a global level, but it was actually getting the devil in the detail right between the UK and the rest of the EU that enabled us to get the detailed negotiating right and to then take the details back to the global stage.

In his excellent Canary Wharf speech, the Chancellor spoke of ongoing co-operation on a number of areas, including market abuse, transaction reporting, stability monitoring and the means to identify prudential concerns about individual firms. Achieving a successful Brexit negotiation is fundamental to ensuring that the UK’s global financial services sector remains competitive and is able to continue to deliver not just for the British economy but for clients across Europe, too.

I know I have already spoken for quite a long time, but I will use this opportunity to take a few more minutes to focus on areas where I think the Government or our regulators might take action. On supporting innovation, the FinTech sector deal is very welcome. Open banking provides huge opportunities, allowing customers to better compare deals and find the best products to suit their needs. It means that we will get new market entrants, and some of the services that they will offer will be taken up by people who have been or have felt excluded from traditional services.

The Government could do more to unlock the sharing of data in this space, especially by increasing transparency over capital requirements for new bank start-ups—sorry, I am a bit of a geek on bank capital requirements, after many years of negotiating—which would help to get more of those new businesses and ideas off the ground. The growth of green finance is potentially very exciting, and targeted measures could put us at the forefront of that exciting area of innovation.

I will look at a few issues on regulatory oversight. Our financial services sector has a strong reputation across the globe for high standards of regulation and transparency, which is vital in underpinning the trust that delivers the sector’s success. However, the industry has not always been perfect, and when issues arise it is important that they are dealt with fairly. Many small and medium-sized businesses were badly affected by the mis-selling of interest rate hedging products—especially by organisations such as the Royal Bank of Scotland and HBOS—in the run-up to the financial crash and in how those products were managed thereafter.

One of my constituents told me how he was forced to hand over the keys to his business, which he had grown and delivered, and was then given no transparency on what happened to the businesses thereafter. These are complex cases, and many of those affected still do not believe that they have been given a fair hearing or fair compensation. There have been questions on whether the Financial Ombudsman Service has the capacity to cope, and I understand that a new independent investigation into it is being undertaken. It is important that we take this opportunity to move forward and restore that confidence, so I will be grateful if the Minister will keep a firm eye on how we deal with those legacy cases.

As Members of Parliament, it is important that we focus on consumer issues. The Government have rightly taken action to cap the charges associated with payday loans. However, a recent Which? study found that consumers needing to borrow as little as £100 could sometimes be charged up to £156 more for the loan by a major high street bank than a payday lender would have been allowed to charge when borrowing the same amount for the same period. There is a particular issue with how banks treat heavy overdraft users, who are often quite vulnerable. It appears that we may need to look at the way banks lend in this area. I understand that a consultation on that was meant to be launched in the spring but that it has been pushed back to next year. I ask the Minister to look at that issue.

Cyber-security is a big issue, and I am honoured to chair the all-party parliamentary group on cyber security. I strongly recommend Members look at it. Cyber-crime is now second only to political risk as one of the key challenges facing the financial sector, and the sector is taking action. Yesterday morning I was with TheCityUK to launch a major new report on how boards and companies can better protect themselves with cyber-security. Cyber-security is often linked to money laundering, and it is absolutely right that tackling that economic crime is a major priority for the Government and the industry.

Many Members on both sides of the House have mentioned money laundering issues in the past few weeks, especially since the terrible incident in Salisbury, which the Minister, my hon. Friend the Member for Salisbury (John Glen), dealt with so thoughtfully. It is a significant and important issue, on which Britain needs to lead the world, so it has been good to see the Chancellor this week putting the fight against dirty money right at the top of the International Monetary Fund’s agenda for leaders across the world to focus on.

Regulators here have also asked the Government to look at some potential legal and regulatory barriers that currently limit effective counter-fraud procedures. It is easier to transfer money at speed across different bank accounts today than ever before. Many legitimate customers welcome that, but that speed of transfer is also exploited by criminals.

There needs to be a balance between openness and speed, and I would like to see the Government and regulators looking at ways to enable banks to share information across the industry and for us to discuss whether the approach to payment processing could be flexed to allow more time to scrutinise higher risk payments. I remember a constituent of mine coming into my constituency surgery traumatised because he had lost his life savings thinking he was genuinely buying the car of his dreams, only to find it had been a massive fraud. It was impossible for the bank to track down what had happened to that money afterwards.

If the law were changed, banks tell me that they would be able to share data more quickly and safely, so they could better detect and prevent those types of economic crime. Innocent people’s life savings are being stolen, and we should do what we can to stop it. I would love to see the Government and the regulators working to see if there is anything more we can do to make sure that we can target those incidents while also protecting personal data.

One of the great things about the Government’s industrial sector strategy deals is that they run across all areas of Government and identify areas where all Departments can help to deliver success. The financial services sector is no different from others in this area. On skills, the sector needs to know that there is a strong pipeline of talent of people who have the skills, education and training needed to keep the industry globally competitive—particularly focusing on areas such as FinTech and cyber.

Financial services is a people-driven business, but many of those people commute, so investment in infrastructure—physical as well as digital—is key. We need to connect those regional clusters, reduce journey times and bring a larger number of people within an easily commutable distance of jobs in those sectors. My goodness, how much we need to improve our commuter experience! My local railway station in Chelmsford is the busiest two-platform train station anywhere in the United Kingdom. We need investment in infrastructure to ensure that people can get to work in this sector. We also need to provide housing and to enable our country’s businesses and ideas to connect with markets across the globe.

As I said, financial services do not exist just in London. Just as it is for other industries, localism is important for this one. Local and devolved decision making can help. An industrial strategy must be suitable for the whole nation, but local differences need to be permitted. The most effective way to support this industry is to have a strategy that gives local areas the power to focus on their strengths.

The UK’s financial and professional services sector is a world-leading industry today and is well placed to continue to lead the world in the future. We cannot divorce this sector from our wider industrial strategy. Our dynamic financial services industry is key to every other part of our country’s industrial performance. It is the key pillar of our economy and deserves the full and focused attention of the Government and Members of the House.

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[John Glen]

The hon. Gentleman has made a valiant attempt to try to draw out from me something over which, as he is probably very aware, I have little control. I do share with him an appreciation of the centrality of financial services in the City of London and we have a shared understanding that, if the EU does not come to a place of understanding about City of London financial services, it would leave Europe a lot less competitive.

To address that, the Chancellor set out what our future regulatory framework should look like, underpinned by three things: a binding dialogue for regulatory requirements, supervisory co-operation arrangements that are reciprocal and reliable, and an independent arbitration mechanism to provide durable dispute resolution. That is clear. It is complex, but necessarily so, given what we are dealing with.

Reaching such an agreement with the EU need not be a challenging objective because the status quo is an unbeatable precedent to work from. Our markets are already deeply interconnected; our rule books are identical; and our mutual commitment to world-leading standards is unbeatable. The EU itself has challenged the notion that financial services cannot be addressed in trade negotiations, as evidenced in its approach to creating a deep bilateral framework with the US in the Transatlantic Trade and Investment Partnership negotiations. In those negotiations, the EU pitched a relationship based on mutual recognition of regulations and a unique dialogue on aligning future rule-making. TTIP is a precedent for the approach that we wish to take with the EU. It is in neither the UK’s nor the EU’s interest to exclude financial services from the future relationship.

The UK is clear that there are limitations to how much either of us can achieve unilaterally. The reality is that the European Council and European Parliament have now formally recognised the need to address the terms of market access in financial services between the UK and the EU, so we need to come to the table and discuss it further.

Myriad financial services on which businesses rely to reduce their costs are derived from or pass through, or are linked to, the UK market. Businesses also reap the benefits of the savings and capital flows to consumers across the continent. Those flows untap greater financial prospects for a broad range of people and allow them to access new products and services, such as innovative investment opportunities, tailored and appropriate debt products, and technology-driven solutions such as open banking.

My hon. Friend the Member for North East Derbyshire talked about shared services in the context of the challenges relating to bank closures. The only inhibitor to that is the banks themselves—there is no restriction on finding a shared venue. I know from my conversations with banks in my constituency that phenomenal changes are going on in the age profile of bank users. Just before the Easter recess, I took the opportunity to visit different banking environments and a mobile banking facility in Derbyshire. I was very impressed with what I saw. It happened to be a Lloyds mobile bank, and it came to the village twice a week at the same time. It had disabled facilities. Of course, we all want to retain that certainty about the bank network, but that is not possible because it is a commercial decision. I am in active dialogue with a range of banks, as we all are as constituency MPs, and I know that these are difficult decisions. I commend my hon. Friend’s suggestion, and I raise it actively when I meet representatives of banks.

[Vicky Ford]

On bank branch closures, I too commend the suggestion about bringing together many banks to operate out of the same premises, although that could be difficult to achieve. People have raised with me the issue of depositing cash. The people who run the church or school fête tend to have large quantities of small denominations of cash. Is there more we can do to ensure that the Post Office offers that service?

[John Glen]

UK Finance and the Post Office have come to a new understanding about how the Post Office’s services are made available if the last bank leaves a town or community. In 99% of cases, the services that an individual non-business customer would wish to use are accessible in post offices. There are some limits—this needs to be checked, but I am pretty sure it is £2,000 in cash—but alternative arrangements can be made if necessary. Although I accept that in some cases there is a cultural barrier to the widespread use of post offices, there is no functional reason why they cannot provide the vast majority—99%—of the services that most consumers and 95% of small businesses want. I urge my hon. Friend to look into those options and make that clear to her constituents.

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[Vicky Ford]

I thank hon. Members for their contributions. Many times since joining this place, I have heard hon. Members take very angry and aggressive positions in opposition to each other. It is good, on this calm and quiet Thursday afternoon, to hear hon. Members speaking in support of the financial sector, and about their pride in it and in the way the people who work in it and in the related professional sector use those services and their careers to support customers and the wider economy.

I want to pick up a couple of small issues. The Minister stated clearly that Britain does not want a bonfire of regulation; our aim is to continue to be a benchmark of good regulation across the globe. I absolutely support that aim, and I think it is important that we continue to say that again and again.

The Minister also made the very clear point that, from the British point of view, we want to give certainty in the Brexit negotiations to businesses and consumers on this side of the channel that they will not face disruption. We want to ensure that their contracts continue to be recognised during the transition and beyond, and we need those on the other side of the channel to give the same level of certainty.

I am going to make terrible mistakes if I try to name everybody’s constituencies—

[Alison Thewliss]

Glasgow Central.

[Vicky Ford]

The hon. Member for Glasgow Central (Alison Thewliss) said she is extremely concerned about how soon we can give certainty in the EU negotiations. There are two sides to giving certainty. The Government’s statements—especially the detailed HSBC Canary Wharf speech—contain a huge amount of detail about the need for ongoing co-operation. The EU negotiators have also talked about wanting to have super-equivalence, and that is helpful, but we have not seen the same level of detail. It needs to come from both sides.

In my experience of many years of EU negotiations, having a seat at the table was sometimes helpful—that will be missed—but there were other times when it was a challenge. The financial services industry is much more important to our economy than it is to that of many other countries, although it does support them, but that left us with different exposures. That is why we did not want to have an identical approach to solve certain issues; the approach of maximum harmonisation—one size fits all—that we increasingly see across the single market is very challenging.

The hon. Member for Stalybridge and Hyde (Johnathan Reynolds) spoke about needing to confirm whether we are going to align. To me, that sometimes means having a completely identical approach, which can be a challenge. One thing I learned from my time in European politics is that there are times when the EU recognises equivalence, but without that being identical. I particularly look at the way in which we treated the bank sector. When we introduced our bank levy, the rest of Europe, particularly within the eurozone, had the funded deposit guarantee system. There were two different ways to solve the same issue to make sure that funds were set aside in case there was failure, but they are both built into the legislation.

[Jonathan Reynolds]

My point was not around the specifics of regulations; it is a question of economic models and the partnership we seek with the European Union. We have to try to move the negotiations forward. We have to give them an unequivocal sign of what our future intentions are, or we simply will not get the progress that we need. We are already way behind where we need to be. The point around equivalence is simply this: yes, that model will work, but it must have legal certainty. Without that certainty we will have the migration of business.

[Vicky Ford]

On legal certainty, I completely agree. It is only five or six stops on the Jubilee line to get to Canary Wharf, so I took the bother to go and listen to every single word that was said in that speech. I wish more Members from this House had bothered to go and listen to it and to speak to the industry players who were there afterwards, because it went into detail and addressed very important things—especially how one was going to co-operate with the colleges of supervisors that have been set up on a bank-by-bank basis. Speaking to the individuals who are responsible for the regulatory functions within their own institutions and getting that level of detail was welcome. It is not fair to criticise only the British side of the negotiations for not giving enough detail—the British side has given significant detail.

Maintaining ongoing co-operation, dialogue and exchange of information is key in building regulatory trust. Let us not forget that £45 billion of taxpayers’ money had to be spent bailing out RBS; we had to bail out branches of not just the British bank but the Dutch and Irish bank because there was no legal mechanism for a cross-border reorganisation of a bank in crisis. That has been resolved, and part of the way it has been resolved is by having that ongoing dialogue that brings together the British regulators with the Dutch and the Irish. The very clear message from the Chancellor that he wanted to continue to be part of that should be welcomed. It is not as simple as saying we need alignment to give legal certainty. From the contributions that I had from organisations prior to this debate, the calls are for more legal certainty to be given from the other side of the negotiation table.

I thank Members for the many suggestions on how to deal with the issue of branch closures. There are clearly different problems in different parts of the country. As I said, my part of the country is an urban area—a city—and because we are seeing a change towards digital banking, there is less demand for physical banking, so we need to manage that transition.

I thank my hon. Friend the Member for North East Derbyshire (Lee Rowley), who made fantastic points so eloquently about the future of financial services, reminding us that we need to look forward to what sorts of services we want come 2028 and beyond. The actions that we take are absolutely key. Unlocking some of the benefits of the digital age, but also making sure there is perhaps some friction in the system so that we can put protections in for consumers, is definitely one of the actions I want to continue focusing on after this debate. I think that will help to protect people from cyber-attacks on their bank accounts.

It is absolutely vital that we continue to champion these industries, to support the people who work in them and to work with other parts of the world. I completely welcome the comments that the Minister made about setting up the regulatory working group with the United States and other parts of the world, and I wish him great success. Let us pick up the specific issues that have been addressed by Members here to make sure that we make targeted interventions where we can to help the industry, the people who work in it and the very many of our constituents who are, at the end of the day, consumers of these services and rely on them. Thank you, Sir David, for this wonderful afternoon.

Question put and agreed to.

Resolved,

That this House has considered the financial services and the impact on the UK economy.

Oral Answers to Questions

Vicky Ford Excerpts

Tuesday 17th April 2018 Commons Chamber

[Mr Speaker]

Single-sentence inquiries: I call Vicky Ford.

[Vicky Ford (Chelmsford) (Con)]

Last night, the pound hit its highest rate against the dollar since the referendum. Will the Chancellor join me in welcoming this sign of international confidence, which is so contrary to the run on the pound predicted by the shadow Chancellor?

[Mr Hammond]

I welcome all signs of international confidence, but I never comment on the exchange rate of the pound.