Cost of Living

Andrew Selous Excerpts

Wednesday 27th November 2013 Commons Chamber

[Sajid Javid]

The hon. Gentleman tempts me and I will come to jobs shortly as there is plenty to tell. He should recognise that employment is at its highest level since records began, and that most jobs created are full time. Also, there is nothing wrong with part-time work.

[Andrew Selous (South West Bedfordshire) (Con)]

Because the Government have taken the difficult decisions necessary and stuck to a long-term plan, the claimant count has fallen by more than a third in my constituency, where 730 more people are in work than when the other lot were in power.

[Sajid Javid]

The information my hon. Friend provides is true of almost every constituency in the country.

Oral Answers to Questions

Andrew Selous Excerpts

Tuesday 5th November 2013 Commons Chamber

[Sajid Javid]

The hon. Lady should know, as she would if she looked at the facts carefully, that the Help to Buy scheme is priced on commercial terms; it is designed to break even and it will not cost the taxpayer anything.

[Andrew Selous (South West Bedfordshire) (Con)]

Does the Minister share my concern that, reportedly, some young people have actually given up saving for a deposit, and will he ensure that those of us on the Government Benches will stand with those people who have a dream of home ownership to make sure it can be fulfilled?

[Sajid Javid]

My hon. Friend is absolutely right. Some Opposition Members believe that only people who have rich parents that can help them meet some of the large deposit requirements should be able to buy their own home. That is not the policy of this Government, who support hard-working families.

Oral Answers to Questions

Andrew Selous Excerpts

Tuesday 10th September 2013 Commons Chamber

[Sajid Javid]

My hon. Friend is absolutely right to raise education as another way of tackling the causes of poverty. Thousands of children up and down the country are benefiting from the pupil premium and the further educational reforms that are taking place, not least the focus we put on apprenticeships.

[Andrew Selous (South West Bedfordshire) (Con)]

Is not the real truth about child poverty the fact that median hourly pay rose by only 0.3% a year between 2003 and 2008? The only real answer for the United Kingdom economy is for it to be a high-skill, high-value-added economy. Our school reforms, and in particular our poverty-busting university technical colleges, are the answer to the problem.

[Mr Speaker]

The question is about fiscal policy, so a very brief reply will suffice. We are grateful to the Minister.

Finance Bill

Andrew Selous Excerpts

Tuesday 2nd July 2013 Commons Chamber

[Greg Clark]

I shall come to that. The hon. Gentleman professed not to recognise the problem that existed. As I have said, given the position that he enjoys, I would expect him to be aware of the long-standing damage to the competitiveness of an industry that employs people in his constituency. There are some very distinguished firms in his constituency. The Nottingham office of Brewin Dolphin has been there for 150 years, and I think that it is a vital component of our regional economy. These are valuable jobs, and they exist throughout the country.

The British investment management industry has a strong reputation internationally, yet—here we come to the reason for the reform—since 2000, countries such as Luxembourg and Ireland have increased their market share of domiciled funds dramatically in comparison with the United Kingdom. In fact, the UK’s share of EU domiciled funds has dwindled to less than half that of Luxembourg and has been overtaken by Ireland.

What is the reason for that? It cannot be because the reputation of British fund management has declined, as many of the funds domiciled elsewhere in Europe are in fact managed remotely by fund managers within the UK. It cannot be because the fundamental competitiveness of UK financial services has declined, because we have maintained, and very often increased, our market share in other parts of the financial services industry. For example, twice as many euros are traded in the UK than in the entire eurozone. One of the principal reasons for this competitive decline is a consequence—unintended, I am sure—of a change in the tax system that was made in 1999, and whose effect everyone agrees has been deleterious.

Schedule 19 to the Finance Act 1999 imposed a special stamp duty reserve tax—SDRT—on the investment management industry when fund managers match investors leaving a fund and surrendering their units with those joining the fund and purchasing the units. Because the fund manager is not buying any UK shares, no stamp duty reserve tax is payable, but schedule 19 imposes a tax of 0.5% on the fund manager, as if the shares have been bought. Of course, whenever a fund manager buys UK shares within a fund, full stamp duty is paid. As well as being complex and burdensome—requiring frequent tax calculations and returns to be sent to HMRC—there is a major flaw with schedule 19. Anyone who does not wish to pay schedule 19 can simply invest in otherwise identical funds, have them managed by a UK fund manager, but have them domiciled elsewhere, and that is what has happened in recent years. Such a non-UK fund could hold exactly the same equities as a UK fund, and that is happening in large numbers. It could be managed by a UK fund manager, but the investor would—by investing in a fund in Luxembourg or Ireland, for instance—not need to pay schedule 19.

Why should this matter? [Interruption.] I think the shadow Chief Secretary should take an interest, since he was not aware of the problem to which this is the solution. What are the advantages of having funds domiciled in the UK? First, there are advantages in terms of jobs, particularly in the regional economy. While fund managers can operate from anywhere, most jobs in fund management come from ancillary services and the professional services associated with them. These are high-value jobs in IT, legal services and accountancy support, and they are typically in the jurisdictions in which the funds are domiciled.

Secondly, there are advantages in terms of tax revenue. Although schedule 19 imposes SDRT on fund managers matching investors for UK funds, the Exchequer would be advantaged by having more funds domiciled in the UK, as that would involve the paying of income tax, national insurance, VAT, business rates and other taxes by people who would be employed here, rather than in Luxembourg, Ireland and other countries, and corporation tax by the companies supplying ancillary services.

Finally, who pays? It is pensioners who pay. Schedule 19 does not come out of the pay of fund managers. It is a cost of business that is invariably passed on to UK investors. It comes out of the returns and lessens the funds that are otherwise available.

[Andrew Selous (South West Bedfordshire) (Con)]

My right hon. Friend is making an excellent speech and I am listening with great interest. Is there not a further point in that, given that the Government have just started rolling out auto-enrolment, many lower paid workers across the country have a real interest in the health of the fund management industries for their pensions, and probably want their money managed in the UK rather than Luxembourg?

[Greg Clark]

My hon. Friend makes an excellent point. He is absolutely right. Already 81% of investors in UK funds are pension funds or insurers, meaning that people’s income in retirement is impaired and fewer funds are available for investment in the real economy. Two-thirds of individuals approaching retirement are contributing to a pension fund from where these charges are taken, and the introduction of automatic enrolment will mean that many more ordinary working people will be saving into a pension for the first time and will be affected.

So there is a double imperative to act now to correct this situation in which funds are moving from being domiciled by choice in this country to overseas. First, any continuing loss of competitiveness by the UK fund management industry risks destroying, possibly for ever, the critical mass and prominent global position that the industry has had. Secondly, we are on the cusp of a once-in-a-generation opportunity for the UK fund management industry, and, with it, the UK economy, because in July the EU’s alternative investment fund managers directive comes into force, creating a much more effective single market across Europe in fund management. It is estimated that €250 billion of funds may be available for the UK, and other competitors, to play host to. That is to say nothing of the significant growth shown in the emerging economies, where a burgeoning middle class is looking to make investments for which the EU is an attractive home.

--- Later in debate ---

[Tim Loughton]

So the mystery is why on earth it is not happening and the Prime Minister has not been able to say, “We back this amendment.” However, I trust what he has said. Those I do not trust are those who oppose the amendment, because those who oppose it as some sort of 1950s throwback are the ones who are being judgmental about how certain people choose to live their relationships. That view has been endorsed on many Labour party members’ blogs. Disgracefully, they seek, in effect, to pit working mums or dads against stay at home mums or dads, who are of course no less, and often more, hard-working.

My support for a transferable married couples tax allowance has never been based on some moral stance on types of relationship. My concern, as might be expected, is based on what is best for children. That is why I have suggested that it is limited in the first instance to families with children under the age of five. Two statistics say why. For a 15-year-old living at home with both birth parents, there is a 97% chance that those parents are married. For a five-year-old with parents at home, there is a one in 10 chance of those parents splitting up if they are married, but a one in three chance if they are not married. The cost of family breakdown is £46 billion and rising. That is what we need to attack.

Marriage accounts for 54% of births but only 20% of break-ups among families with children under five. We must recognise that in the tax system and we do not. That is what this modest amendment seeks to put in statute as a starting point to appreciate that.

[Andrew Selous]

My hon. Friend is making an excellent speech. Does he agree that we encourage many things in the tax system—for example, employees cycling to work? It is therefore no great surprise that we want to support marriage, given the number of families that split up each year.

[Tim Loughton]

And marriage was invented before bicycles, so why do we not support that, recognise it and value it, as we all do?

There are those who have come up with arguments against the figures, saying it is all about causation and effect. The millennium cohort research revealed that the poorest 20% of married couples are more stable than all but the richest 20% of cohabiting couples, so it is insulting to say that marriage is the preserve of the middle classes or better educated or better-off people.

This amendment alone will not solve all the problems that I have laid out. I am not naive enough to suggest that £150 or whatever the end result may be when this amendment becomes law in some form, as we hope, represents the difference between staying married or getting divorced, or getting married or cohabiting, but it does send a clear and strong message that we value families who take the decision to bring up their children within marriage. When I stood on our manifesto in 2010, and for many years before, my Front-Bench colleagues agreed with that. My amendment makes that a reality, beyond all doubt.

Spending Review

Andrew Selous Excerpts

Wednesday 26th June 2013 Commons Chamber

[Mr Speaker]

Following the example of the Hilling handbook, I call Mr Andrew Selous.

[Andrew Selous (South West Bedfordshire) (Con)]

Will the Chancellor confirm that there will be a cap on benefits and not on the state pension in future?

[Mr Osborne]

Yes, absolutely. We received representations to include the state pension. We are not going to do so, but of course that will ultimately be decided at a general election.

Royal Bank of Scotland

Andrew Selous Excerpts

Thursday 13th June 2013 Commons Chamber

[Sajid Javid]

The hon. Gentleman is right about being honest, of course, and in the interests of honesty, it is important to point something out. Since he seems to have suggested that the previous Government played no role in the failure of RBS and that it was just a failure of poor banking, let me remind him of what the then shadow Chancellor, my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley), said in 1997 when the then Government planned to change the regulatory system. He said:

“The process of setting up the FSA may cause regulators to take their eye off the ball, while spivs and crooks have a field day.”—[Official Report, 11 November 1997; Vol. 300, c. 732.]

[Andrew Selous (South West Bedfordshire) (Con)]

While RBS has clearly had a turbulent past and taxpayers rightly want their money back, is not the really important point that RBS has gone from a bust bank under the last Government to a normal bank now, and that it has actually made a profit of over £800 million in the first three months of this year, and that business lending is up in the first quarter to over £13 billion, almost £8 billion of which was to small businesses?

[Sajid Javid]

My hon. Friend is absolutely right. RBS has ended what I referred to as the rescue phase. Stephen Hester successfully brought the bank back from the brink and has started to refocus it, and the new strategy that RBS has set out will focus it even more on lending to UK businesses and households?

Economic Growth

Andrew Selous Excerpts

Wednesday 15th May 2013 Commons Chamber

[Ed Balls]

Unlike the Chancellor, the markets do not pay a huge amount of respect to the credit rating agencies. The hon. Gentleman agrees with me on that. That is why, two or three years ago, it was so ridiculous for the Chancellor to say, “Trust me. I’ll keep us as a safe haven because I’ll keep the triple A credit rating.” We told him, in 2011 and 2012, that the plan was not working, that the economy was not growing and that the deficit was not coming down, but when we told him to change course, he said, “I can’t do that because the credit rating agencies will downgrade us.” Well, they downgraded us anyway, because the economy was not growing.

[Andrew Selous (South West Bedfordshire) (Con)]

The shadow Chancellor believes in plain speaking, so I want to give him a third—and perhaps final—opportunity to tell us the amount of extra borrowing that his policies would require. Just a number—plain and simple.

[Ed Balls]

I am not going to write our Budget for 2015 two years ahead. That would be the wrong thing to do. Right now, if the Chancellor had done what I recommended a year ago, borrowing would be coming down. At the moment, however, it is absolutely flat.

What have we learnt in the last seven days? What have we learnt from today’s Tory amendment about the priority of the Conservative party? What are Conservative Members demanding in their amendment? What are they rebelling on? Accelerated bank reform? Energy market reform? Housing investment? Infrastructure investment? Tough welfare reform through a compulsory jobs guarantee? If they want all that, they can vote for our amendment today. But no, according to the Tory amendment, the No. 1 priority that is so vital that Conservative Members are planning to vote against their own Government’s Queen’s Speech involves enabling legislation to allow Eurosceptic Conservative MPs to try to take Britain out of the European Union.

The Tory amendment states that those Members

“regret that an EU referendum bill was not included in the Gracious Speech.”

Let me tell the House what they should be regretting. They should regret the fact that, after three years of pursuing a failing economic plan, the Chancellor is still ploughing on regardless, even when the IMF is telling him to change course. They should regret the fact that, when calculations based on Institute for Fiscal Studies figures show that families are, on average, £891 worse off this year, the Government have cut taxes for the highest earners, giving a £100,000 tax cut to 13,000 millionaires. They should regret the fact that the Government have refused to use the Queen’s Speech to put in place the long-term reforms necessary for our economic future—reforms that I fear will not be in the spending review, either. The Chancellor and the House should regret, too, the fact that the Conservative party seems to have been hijacked by those within its ranks, including within the Cabinet, who are determined to lead Britain out of the EU regardless of the impact on investment and jobs.

--- Later in debate ---

[Ed Balls]

Normally there are plenty of interventions in debates on the economy, jobs and growth, but it seems to be Europe that really gets them going. I give way to the hon. Member for South West Bedfordshire (Andrew Selous).

[Andrew Selous]

The shadow Chancellor is being very generous in giving way. Will he explain very briefly what he meant when he said hat he did not want his party to be caricatured as the anti-referendum party?

[Ed Balls]

We are not against the idea of referendums. We proposed the first referendum, in the 1970s. If there were a change in the balance of power in the treaties, we would support a referendum, but it would be wrong to do so now.

--- Later in debate ---

[Mr Osborne]

This is what I have to say about the idea that this Government had some kind of golden economic inheritance from the Labour party: we inherited a situation in which Britain had had the deepest recession since the 1930s, the worst banking crisis in the entirety of British history and the highest budget deficit in the entire peacetime history of this nation. If that is a golden economic inheritance, I would hate to see what the hon. Gentleman thinks a hospital pass looks like.

The shadow Chancellor mentioned France in his remarks. Exactly a year ago the Labour leader could not contain his excitement about the economic programme being unveiled in France and about the red carpet being rolled out for him at the Elysée palace. “Chers camarades” is how he addressed the Socialist party gathering. He said, “What President Hollande is seeking to do in France, I want to do in Britain.” We do not hear much these days about Labour’s French connection. We still have liberté and egalité, but not much fraternité—although fraternity has never been a great topic for the Miliband family.

What we did not hear from the shadow Chancellor was his response to the fact that 1.2 million jobs have been created in the private sector, and that although, yes, our deficit is still too high, it has fallen by a third. He says we are borrowing more. We were borrowing £158 billion a year as a country in 2009-10, and this year it is forecast that we will be borrowing £114 billion. That is a £45 billion reduction in borrowing. None of that has been easy to achieve, and every single measure has been opposed by Labour. Not a single measure in its amendment today would help deal with that deficit, but our plan of monetary activism, fiscal responsibility and supply-side reform is delivering progress.

[Andrew Selous]

On employment, is the Chancellor aware that the United Kingdom’s overall employment rate is growing at almost double that of the United States and is rising faster than that of any other G7 country?

[Mr Osborne]

My hon. Friend is absolutely right. Last year, employment in the UK grew faster than in the US, France, Germany, Japan and the eurozone as a whole. Employment in the UK is now above its pre-recession level. Of course we must go on taking the difficult measures necessary to get our deficit under control, and make sure we support businesses that want to hire people to support the private sector recovery. The path being offered by the Opposition, however, would lead to complete disaster.

Budget Resolutions and Economic Situation

Andrew Selous Excerpts

Thursday 21st March 2013 Commons Chamber

[Vince Cable]

There already are regulations that affect bankers’ bonuses, which we introduced long before the European Parliament and which firmly cap the amount of bonuses that can be paid out in cash, as opposed to stock, which is not redeemable in the short run. That reform has already been made in order to stabilise the banking system.

I agree that the banking crisis did enormous damage. As someone who has probably spent more time thinking and writing about it than most people in the House, I acknowledge that I have underestimated the damage that was done by the collapse of the banking system, especially the crippled, semi-state owned banks—to such an extent that even if we now ordered those banks to lend more, they would be institutionally incapable of doing so. What we have realised is that there are two problems. The first is the problem that has arisen from the banking collapse itself and the de-leveraging that followed it. The other is the fact that over a decade ago the bankers stripped out their capacity for local relationship banking. Effectively, they looted their banks and denuded them of the capacity to engage in sensible business lending. Of course, that was anticipated in the Cruickshank report, which the Labour Government ignored, but it has done serious damage that makes it difficult to revive conventional business lending. We are trying a series of initiatives to do that.

On Friday, a new tranche of money will be made available for non-bank lending. Today, we had the advanced manufacturing supply chain initiative, which is helping to fund our supply chains. I put in the Library this morning a written ministerial reply on the business bank, which gives a time profile for how that new institution will support challenger banks and new forms of wholesale financing in the banking sector. The Chancellor’s speech yesterday included a positive initiative on equity capital and helping to relieve some of the burdens on companies going to the alternative investment market on the equity side.

[Andrew Selous (South West Bedfordshire) (Con)]

The Secretary of State is right about the loss of relationship banking: we need to put that right. However, will he acknowledge that businesses can fund themselves in two ways? One is to go to the bank and the other is to raise share capital. What the Chancellor did yesterday on AIM shares and ISDX shares—getting rid of stamp duty—is incredibly useful, but does the Secretary of State agree that business owners need education in how to seek out share capital to grow their businesses? That is key.

[Vince Cable]

My hon. Friend is right. There are a series of bottlenecks in raising risk capital. At the top end, the problem is accessing equity markets, and at the bottom end the problem is in raising angel finance, which is something else that we are trying to support. As it happens, the business bank will have a role not just in lending, but in developing equity markets for small-scale companies.

Oral Answers to Questions

Andrew Selous Excerpts

Tuesday 12th March 2013 Commons Chamber

[Greg Clark]

My hon. Friend raises a very important point. The review is under the auspices of the Financial Services Authority, and each bank has had to appoint independent reviewers who are themselves accountable to the FCA. It is absolutely crucial that the objectivity they bring to bear cannot be compromised, and I have given the FSA clear feedback that it should have that in mind during the review.

[Andrew Selous (South West Bedfordshire) (Con)]

4. What steps he has taken to increase the amount of (a) lending and (b) equity financing to the real economy.

[The Chief Secretary to the Treasury (Danny Alexander)]

The funding for lending scheme is aimed at boosting bank lending to the real economy and has already led to some of the cheapest mortgage rates on record. Through the seed enterprise investment scheme, the Government provide generous tax relief for investment in firms with high growth potential, and we will deploy an additional £1 billion through the business bank.

[Andrew Selous]

Does the Chief Secretary agree that raising share capital is a vital way to help businesses grow, in addition to loan finance? Between 40 and 50 extra initial public offerings in technology companies could come to the UK in the next six months if we get conditions right, so in the forthcoming Budget will the Treasury do all it can to help businesses access share capital?

[Danny Alexander]

I certainly agree that there is a need to diversify the range of funding sources, including the one my hon. Friend describes, particularly for small businesses and businesses with high growth potential. That is the purpose of the seed enterprise investment scheme. The business bank has a remit to try to diversify the range of sources of finance available for small businesses, because in this country we are too dependent on solely bank finance. I shall certainly consider what my hon. Friend said.

Economic Policy

Andrew Selous Excerpts

Monday 25th February 2013 Commons Chamber

[Mr Osborne]

That is the first sensible question we have heard from the Labour party all afternoon. I agree with the hon. Lady that we have to make sure that the decisions we take on reducing the size of Government are implemented. Collectively as a Parliament we have to reduce Government spending and we have to get the deficit down. I look forward to her support in the Division Lobby as we take further difficult decisions this year.

[Andrew Selous (South West Bedfordshire) (Con)]

We learned this morning that the UK oil and gas industry is set to invest an extra £100 billion in the industry, with anticipated tax revenues of a further £25 billion to the UK Exchequer. Does that not give us some cause for confidence in and optimism for the public finances as we move forward?

[Mr Osborne]

My hon. Friend is right that it is very welcome news from the oil and gas industry, and it is partly because we have been able to provide certainty on decommissioning relief, which it has long sought. One of the challenges for the UK economy is the secular decline in the North sea oil field as it reaches its maturity. Although we will get oil out of it for many more years, we have to look to the post-North sea future, and that is one of the big challenges for the SNP.