Financial Conduct Authority: Accountability

Debate between Wendy Chamberlain and Alistair Carmichael

Wednesday 1st May 2024 Westminster Hall

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I beg to move,

That this House has considered the accountability of the Financial Conduct Authority.

It is a pleasure to serve with you in the Chair, Sir Philip. I welcome the Minister to his place. I know that he has an interest in these issues, and I hope that this debate will be a productive exercise for us all.

It may be worth explaining a little bit about how I came to be interested in the FCA. I probably speak more about fishing than financial services in this House, but the FCA came to my attention as a consequence of constituents who I have been helping. They were victims of a Ponzi scheme, and they lost hundreds of thousands of pounds as a consequence of fraud. The perpetrator was sentenced to 14 years, later reduced to 10 years, in the High Court of Justiciary.

On no fewer than three occasions, the FCA, or the Financial Services Authority as it was initially, failed to read the warning signs and take action. As a consequence, that was allowed to continue. Had it acted at the first available opportunity, there would have been only one victim of Alistair Greig, rather than hundreds.

As is often the case with these matters, a handful of people were determined to fight, but they were rebuffed at every turn. They were told, “No, this is nothing to do with us. It is not a matter of regulation; it is a question of the creation of a principal and of an agent,” and the rest of it. They took court action, which cost them £2 million, and they lost, but eventually the FCA was forced to put them into the financial services compensation scheme, which gave most of them compensation, albeit capped at £85,000. One of my constituents was out for £130,000, so he is £45,000 down and has suffered a further loss as a consequence of the fact that he was one of the brave souls who was party to the court action. The 95 people who were behind that court action are now left with a bill of almost £2 million.

Notwithstanding the fact that this is a consequence of the way that the FCA has gone about its business, it wishes to have no further part in any discussions with the people who were affected. I organised the screening of a documentary in the House a few weeks ago. Even the judge who heard their case turned up. I have never heard of this happening before, but the Financial Conduct Authority did not want to know. No one from the organisation was prepared to come to this House, sit in a room for an hour with the people whose lives had been most dramatically affected by their decisions, look them in the eye and explain what they had done.

[Wendy Chamberlain (North East Fife) (LD)]

My right hon. Friend is outlining a very concerning story. When many hon. Members think about the FCA, including me as an MP from the 2019 intake, it is in relation to its legislative authority for ensuring the changes on access to cash. Does he agree that ensuring that people get the right support so that communities have the access to cash that they deserve is a real concern?

Universal Credit: Farmers

Debate between Wendy Chamberlain and Alistair Carmichael

Wednesday 24th April 2024 Westminster Hall

[Wendy Chamberlain]

The hon. Gentleman always gets straight to the key issues in his interventions. I will talk about a number of the things that he referenced. Indeed, the monthly aspect of universal credit is one of the key challenges.

Let me start with the basic point: the Government are asking the vast majority of farmers to go through the process of transitioning to universal credit from tax credits now, right in the middle of peak farming months. For example, it is the middle of lambing season. Let me be blunt: sheep farmers do not currently have the time to sort through accounts, visit the jobcentre or have interviews by phone. We all recognise that farming is not a 9 to 5 job where appointments can be scheduled. The sheep three fields down having a difficult birth will not be able to hold on just because the jobcentre is due to call. The farmer who cares deeply for their animals and also cannot afford to lose income if things go wrong will not be able to stay in the farmhouse to wait for that call. They will be down in the field with the sheep to keep an eye on things and intervene if need be. Even if there is a phone signal, which is not always guaranteed, a farmer can hardly talk through the viability of his or her business while elbow deep in that sheep.

I appreciate that that sounds slightly comical, but it is deeply frustrating for farmers and incredibly stressful when they are worried about losing their income. It shows a failure within the DWP system to understand how farming works, so I ask the Minister: what thought and consideration was given to farmers when the decision to roll out the transition to universal credit was made? I know the National Farmers Union raised concerns about the transition as early as 2018 in evidence to the Work and Pensions Committee. Did the Government pay any attention to that? Even if they are talking to the NFU, I cannot see the outcome in those policy decisions.

I recently tabled a written question asking for an impact assessment on how the roll-out of universal credit to farmers has been done. The response—I will be honest—did not exactly answer the question, so I will make the assumption that the answer is no. If I am wrong, I am happy to be corrected on that, and I hope the Minister will use her time to set out the findings from that assessment. But the response I received did point me to the latest findings from the “Move to Universal Credit”, in which there was only one paragraph relevant to farmers—an observation that additional checks on self-employed claimants may be a factor in the low take-up of universal credit. Obviously, that is a part of it, but it somewhat understates the issue, and it also conflates all self-employment businesses. Farming is very different to somebody, for example, running a shop, selling handmade products, or a tradesperson such as a joiner. Here we are: I am going to assume that the Minister has heard the warnings from the NFU, has seen correspondence from MPs, has spoken to farmers herself, has had her officials carry out research into the farming industry, and has seen the media coverage on the radio, specialist farming news and print media.

In any case, I will explain why universal credit fails farmers. Universal credit does not account for variable incomes and does not allow for those incomes to be averaged out. The very nature of farming means that farming income varies significantly through the year, or even over multiple years. I want to go back to that sheep farmer who is busy saving their animals and bringing new ones into the world, rather than speaking to a work coach. That lamb will not be ready for sale until much later in the year, meanwhile the sheep and the lamb will require food, shelter, water, shearing and possibly extra hands on the farm to help out in the busy months. An animal farmer might in some cases try their hardest to grow crops to be harvested in each season, but often that is not practical. Not all areas are suitable for all produce, and even if they were, economies of scale mean that it can be more profitable to specialise. That does not mean there is no work that needs to be done until harvest and sale time; just that the work done by farmers does not get paid for many months. Meanwhile, seed, fertiliser and fuel costs are all going up. That is arguably one of the reasons why some farmers need extra support in the first instance.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

Like my hon. Friend, I have had correspondence with the Government on this issue. The sheep farmer example is a very good one. That sheep farmer will have income, possibly in the autumn from the sale of the sheep, possibly from a basic payment, and possibly from something like the less favoured area support scheme. There might be a small wool cheque at some time in the late summer or early autumn, but apart from that, that is all the income, which then has to be spread and harvested throughout the rest of the year. That is the reality for the sheep farmers to which my hon. Friend refers, and it shows the virtual impossibility of shoehorning that into a universal credit scheme that looks at things on a monthly basis.

[Wendy Chamberlain]

I am grateful to my right hon. Friend, and he has illustrated part of the challenge. We are finding that, when that income spike happens, that is the very point where farmers are losing the benefit to which they should be entitled. It is important to recognise that sometimes it all goes wrong: a really bad harvest; illness among livestock; a year of barely breaking even; or worse. Otherwise, in the main, hopefully all that hard work and waiting pays off and payments come in. After months of very little, there is a significant income boost, and a boost that—as I have just said—will write off universal credit for that month, even though that income boost will have to stretch over the many months until the next sale day.

Tax credits allowed farmers to average out their income over a multiple-year cycle to truly reflect their monthly income over time. Universal credit only takes a one-month snapshot, and I know that people have experienced difficulties with universal credit in occupations such as farming for that very reason. Given that work coaches are required to assess whether self-employment is gainful, there is a significant risk of months of loss being seen as not real work. Recently, on that very issue, a headline in the Telegraph stated: “Farmers claiming benefits told their farms are ‘hobbies’ and to get jobs”. Some work coaches might understand how farming works, but it is clear that others certainly will not and do not—it cannot be left to luck. I doubt the Department has spare funds to train all work coaches in farming practices, so a standard reform of how income is assessed would surely be a much fairer and efficient path to take.

Another related issue that I will highlight is the imposition of the minimum income floor after the 12-month transition period. I fully accept that there must be measures to stop people being able to potentially manipulate benefits to prop up an unsustainable small or hobby business. Applying a deemed minimum income when calculating universal credit works in those cases, but I seriously question why it is useful to take vital income support away from farming families in those months where their produce is being produced rather than sold. Farmers are not earning the minimum wage in those months, so why on earth are we pretending that they do?

The 12-month transition period is welcome, but the nature of farming will not change in the course of a year. Arguably, all that will do is push the problem down the road, so I urge the Minister to go away and review it. If she is genuinely concerned about farmers exploiting universal credit, there must be other anti-abuse provisions that we could be looking at. The minimum income floor is a blunt tool that is doing more harm than good.

My final point is similar to my first, because after the administrative burden of applying to universal credit, farmers must continue providing monthly income updates. Farmers are not accountants; they often operate in partnerships and, most importantly, they work full time doing the actual farming. Their definition of full time is different from others, because it means well over 12 hours per day, seven days a week. When exactly does the Minister think that farmers will have the time to meet those obligations?

I ask the Minister to not just repeat the same platitudes that have been signed off and sent in a standard letter, which my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael) and I have both received. I have seen that letter shared online many times, and I assure the Minister that it has done nothing to reassure anyone.

The good news for the Minister is that she needs only to look back to the tax credit system to find out what works; she does not need to reinvent the wheel. What farmers need is a system that allows for averaging income over multiple months and years, where benefits are paid during income spikes and where there is no assumed minimum income when it is low. They need a system without the administrative burden of monthly appointments and paperwork, and with an understanding of how farming works and the variety of set-ups, be that tenant farmers, those in partnerships, and everything in between.

It is not just farmers saying that. I have an example from a rural land and property agent, who has published a blog entitled “Why the Universal Credit System Isn’t Working for Farmers”. The Farming Forum threads on the change currently have nine pages of comments on one thread, while another thread has 24 pages. There is a Facebook support group for farming families that has been deliberately kept open so that MPs, journalists and others can see what farmers are saying about this change.

Yesterday, on that Facebook page, someone anonymously posted that because their family were so busy on the farm they could not get to the job centre, and their benefits had been stopped. The writer went on to say, in their own words, that they wanted to chuck themselves off a bridge as a result. A few days before that, someone wrote that they were able to feed their children but they could not afford to eat that day themselves. They used to get £700 in tax credits a month, but the assessment for universal credit does not take into account the difference between income paid to the family and income used to meet farming bills.

The system change means that someone who is producing our food cannot afford to eat. That is just not okay. Farmers are literally the reason why we are here in the Chamber with full stomachs, why our children have the energy to go to school and learn, why we can go to the supermarket and make our dinners tonight and why our restaurants are some of the best in the world. It is not an issue that will go away; it is a crisis for too many farming families. We must support them, and I hope that the Minister’s response recognises the gravity of the situation.

Defined-Benefit Pension Schemes

Debate between Wendy Chamberlain and Alistair Carmichael

Wednesday 17th January 2024 Westminster Hall

[Mr Carmichael]

The hon. Gentleman strikes at the reasons why I brought forward this debate. We might benefit from a wider and longer ventilation of the issues at some later stage, but we have 30 minutes today, so let us use it. I had the opportunity to discuss the issues yesterday with the Minister, and he is alive to the concerns.

When it comes to regulating pensions, and indeed other similar financial provisions, the law of unintended consequences is never far away. The Government are right to be cautious, but they have to be alive to the fact that this is an emerging crisis. What happens to the beneficiaries of the BP and Shell pension schemes today could happen to just about any pensioner the future. As those pension funds come to a point of greater maturity, the concern that we hear from BP, Shell and other pensioners is that decisions are being taken not in relation to their best interests, which is the primary fiduciary duty of the trustees, but because of other concerns. There is a significant number of significant issues for the Government to look at in relation to pension regulation, not least of which is the balance between the companies that have created these pension funds in the first place and the independence of the trustees.

[Wendy Chamberlain (North East Fife) (LD)]

With 60,000 BP pensioners impacted, it is unsurprising that I too have been contacted by constituents. There is a wider debate about the fact that if multinational companies such as BP and Shell are making these decisions, smaller companies will end up making similar decisions if something is not done. My right hon. Friend mentioned appointed trustees. Does he agree that BP has a duty to take the advice of its appointed trustees to prevent real-terms cuts to pensions? Otherwise, what is the point in having trustees at all?

Cost of Living: Pensioners

Debate between Wendy Chamberlain and Alistair Carmichael

Tuesday 16th January 2024 Commons Chamber

[Wendy Chamberlain]

I am grateful to the hon. Member. I agree that many people feel they are being held hostage by the vagaries of energy prices and systems. Although the cap and other measures have gone some way to helping with that, there is no doubt that it is a huge challenge. It also demonstrates why the triple lock remains required.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

While we are on energy prices, I am acutely aware that, as we speak, pensioners in my constituency are having to brave serious snow conditions and, because we have the highest level of fuel poverty anywhere in the country, they will feel literally and metaphorically out in the cold. Does my hon. Friend agree that Ofgem has a role to play in the creation of a social tariff, or even a geographically-based tariff?

[Wendy Chamberlain]

One challenge in my right hon. Friend’s constituency is the number of his constituents who are off grid. We know that there is a lack of regulation in the sector off grid. One other challenge for the Government in responding to energy price fluctuations was getting a lot of money out to many people easily, and administrative issues materialised for those off grid. Many of them have still not seen the money to which they are entitled. We need to look at better regulation of our energy system.

I was talking about the Future Pension Centre and the challenges experienced by many constituents across the UK in topping up their pensions. I tabled a presentation Bill on the issue to extend the deadline and was glad that the Government took that up. In responding, will the Minister tell us what discussions he is having with His Majesty’s Revenue and Customs about making its systems align and function properly? If those systems were working as they should, many constituents would not have a gap to fill in the first instance. Will he consider implementing a proper receipting system so that older people have proof of payment as they do with any other transaction?

We know that errors by the Department for Work and Pensions are all too commonplace; we need only to look at the experience of the WASPI women—the Women Against State Pension Inequality—to see that. Those women, through no fault of their own, lost their ability to plan for their retirements. They lost their financial autonomy. Many of them continue to live in poverty, while others have sadly died without seeing any compensation.

I know that we are all awaiting the final report of the ombudsman setting out its recommendations for compensation for the WASPI women, but in the meantime will the Minister agree to meet me to discuss the next steps? He and I worked successfully together on the all-party parliamentary group on ending the need for food banks before he took on his current role, and I hope that we can do so again.

I return to pension income and want to raise pension credit with the Minister. This top-up benefit is the simplest tool at the Government’s disposal to lift pensioners out of poverty. It feels like every year we have a new attempt at increasing uptake with a fancy leaflet or other information campaign. I am sure we all go to the drop-ins, have our pictures taken and share them with our constituents, but pension credit take-up remains stuck at 63%, which suggests that the campaigns simply are not working. Pensioners either do not know about the benefit or do not realise they are eligible, or some struggle with the stigma of being seen to claim it.

I have been in this role for more than three years, and I have spent a lot of time having conversations about how to improve uptake. Clearly, an annual leaflet is not doing the trick. We need a long-term strategy on pension credit uptake with two key focuses: how we share data to identify people eligible for pension benefit, and how we target them efficiently and effectively so that they actually claim it and do not feel stigmatised?

Sub-postmasters and Sub-postmistresses: Remuneration

Debate between Wendy Chamberlain and Alistair Carmichael

Tuesday 23rd May 2023 Westminster Hall

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I beg to move,

That this House has considered remuneration for Post Office sub-postmasters and sub-postmistresses.

It is a pleasure to serve with you in the Chair, Mr Twigg. The House has spent a fair amount of time in recent months considering the question of the Post Office and dealings with postmasters and postmistresses, but most of that has been in relation to the very long tail of the Horizon scandal. I make absolutely no complaint about that.

I have had debates in here and in the main Chamber where I have said that, in my view, the basic reason that whole scandal was allowed to happen was the culture that existed within the senior management of the Post Office. Basically, the people at the top just did not trust those at the sharp end of the businesses. As I have dealt with constituency cases relating to Horizon and seen some of the more recent advents, such as the bonus payment paid to Nick Read, the chief executive of the Post Office—in an act of utter tone-deafness—my concern is that the culture remains unchanged. If it has changed, it has not changed to the extent or at the speed that we would like.

A recent poll on the question of confidence in the board of the Post Office on the Facebook group Voice of the Postmaster attracted no fewer than 367 votes, and it was a 100% vote for no confidence. I mention Voice of the Postmaster because that is, as it were, the provisional wing of the organisation representing sub-postmasters. I have always worked very well with the National Federation of SubPostmasters over the years, but I increasingly hear concerns from sub-postmasters that the way in which the federation is constituted makes it difficult for it to represent sub-postmasters in the way they would want to be represented. I do not know the truth of that. It is not my job, or even the Minister’s, to reach a final decision on that at the moment, but I think we have to be aware and respectful of concerns when we hear them. There is clearly a job of work for Ministers and Post Office management to be done in that regard.

Figures provided by the Post Office recently in a conference call to postmasters and postmistresses show that it had a revenue and income last year of £915 million, while its total capital and spend on historic matters, which excludes compensation, was £85 million, and the compensation schemes cost £63 million. The Post Office employed 3,500 people, with a people cost—I assume that is a wages bill—of £180 million. A fairly crude arithmetic would suggest an average salary in the region of £48,000.

I would contrast that with what I and, I suspect, many of us around the country hear when we speak to the sub-postmasters and sub-postmistresses in our communities. My interest was really caught by one of the sub-postmasters in Shetland, Brian Smith, who runs the Freefield sub-post office in Lerwick, which is one of the bigger sub-post offices in Shetland. He came to me, showed me the figures and said quite simply, “How do I make a living from this?”

I went back to see my constituent last week and he showed me his remuneration note. He is open for 51 hours per week, with two people serving. He pays above minimum wage, but at minimum wage that would be £1,071 per week, which would be £4,641 per calendar month for wages only—before even turning on a light switch or heater. His income from the post office in that month was £4,153.56. I can find no better illustration of the mismatch between what sub-postmasters need by way of remuneration and what they actually receive.

[Wendy Chamberlain (North East Fife) (LD)]

My right hon. Friend is laying bare the facts. In my constituency of North East Fife, we have lost a number of post offices since I was elected because a franchisee pulled out, as it simply does not make any money. It is easier to have a Costa Coffee machine than a Post Office counter for making money. People are not coming forward to reopen post offices, so remote communities are subject to being served by a Post Office van, when it is in operation. Does he agree that we need to do something?

[Mr Carmichael]

I absolutely agree. I see this process happening and it has not happened suddenly; it has been happening for years. People retire, give up or for whatever reason decide they do not want to continue and nobody comes forward, so the post office remains nominally open, but in fact there is no service in the community—there might be some from another branch or wherever, but frankly the core of what the sub-post office is about is lost.

I think of the example of the post office in the village where I live. It is in the village shop. It was bought recently by somebody who had given up a career—of 51 years, he tells me—in IT, so he was not doing this to increase his income. He has transformed the shop. He has taken what was a good Orkney country shop and brought in a whole range of different fresh foods—Orkney fish, Orkney beef, everything. The quality of what we can get in that shop now is phenomenal, but he tells me it costs him to have a sub-post office counter in the business. It should not be costing somebody like that. That should be something that adds value, but we are seeing the determination and commitment of sub-postmasters and sub-postmistresses around the country being taken advantage of.