Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the potential competitive threat to the UK economy of treating carried interest arising from the management of private equity funds as income rather than capital; and what plans the Office for Tax Simplification has to investigate this issue.
Answered by Lord Agnew of Oulton
The Government recognises that a competitive financial services sector in the UK, which includes the management of private equity funds, is an important part of attracting investment and driving growth.
The UK’s approach to the taxation of carried interest remains in line with most other G7 countries. It seeks to ensure that returns are taxed in line with their character and taxed at rates which appropriately balance the need to raise revenue with the importance of maintaining the UK’s competitiveness for fund management.
The OTS is undertaking a review of CGT and aspects of the taxation of chargeable gains. The review will recommend ways to simplify the tax system in line with the statutory role of the OTS.
Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of whether the publication of the names of borrowers under various financial support arrangements established by the Government would facilitate the identification of funding provided to businesses controlled by unidentifiable owners in tax havens or controlled by directors previously convicted of fraud.
Answered by Lord Agnew of Oulton
The Government has focused efforts on getting support to those who need it in a fast, fair and transparent manner, with data on loan applications and volume and value of loans approved under the loan guarantee schemes published regularly on Gov.UK.
It would be disproportionate for the Government to publish details of each individual recipient of those loans and grant payments.
Furthermore, the Government have been clear that the loans must be repaid, and banks are undertaking appropriate precautions against fraud, including customer checks and the monitoring of transactions. Any fraudulent applications can be criminally prosecuted.
Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government whether (1) they, or (2) the Financial Conduct Authority, have reviewed the accuracy of public statements made by H2O Asset Management on the gating of funds.
Answered by Lord Agnew of Oulton
This is a matter for the Financial Conduct Authority (FCA), which is operationally independent from Government. The question has been passed on to the FCA. The FCA will reply directly to the noble Lord by letter. A copy of the letter will be placed in the Library of the House.
Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the Governor of the Bank of England's comments made on 22 June that the Government would have struggled to fund itself if the Bank had not intervened.
Answered by Lord Agnew of Oulton
The Government does not comment on the Bank of England’s decisions. As stated by the Governor, the Bank uses quantitative easing (QE) to meet its own monetary policy objectives – including ensuring the smooth functioning of financial markets and controlling inflation – and buys gilts only from the secondary market. In line with the institutional separation of monetary and fiscal policy, decisions on QE are a matter for the independent Monetary Policy Committee (MPC).
The borrowing undertaken so far this year has been necessary to support the UK economy at this time. The UK is facing significant economic disruption, but the underlying causes of this disruption will pass. That is why we needed to act to ensure these effects do not become permanent. The Government announced unprecedented support for public services, business and workers to protect against the current economic emergency. Not taking these steps would result in the temporary effects of COVID-19 leaving permanent scars in our economy. The OBR have said that the fiscal and monetary support measures “help to limit the adverse impact on potential output and thus future GDP once the crisis has passed”.
The Government’s cost of borrowing is at an all-time low, despite the recent large increase in borrowing to support jobs and the economy. The gilt market is deep and liquid, with a good track record in responding smoothly to increases in gilt supply. The UK Debt Management Office (DMO) has been set a target issuance level of £275bn over the period April-August (inclusive).
Gilt auctions since the beginning of the COVID-19 crisis have performed well; they have all been well-covered and pricing has been efficient. The UK Government remains the benchmark borrower in its own market and currency and gilts remain the key pricing reference for all sterling fixed income markets. Gilts remain as risk-free assets for major investors both internationally and in the UK. Underlying demand for the UK’s debt remains strong, with a well-diversified investor base, and no uncovered auctions since 2009.
Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government whether they will investigate the time it took for the Financial Conduct Authority to take action to prohibit the regulated entities from promoting the sale of “mini bonds”.
Answered by Lord Agnew of Oulton
This is a matter for the Financial Conduct Authority (FCA), which is operationally independent from the Government.
In November 2019, the FCA used its temporary product intervention powers to introduce a temporary ban on the mass-marketing of speculative illiquid securities, including speculative mini-bonds, to retail investors. This temporary ban applied from 1 January 2020.
On 18 June 2020, the FCA published proposals to make this temporary ban permanent.
Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government whether they will investigate conflicts of interest in the promotion of trade finance bonds in association with Greensill.
Answered by Lord Agnew of Oulton
The Financial Conduct Authority (FCA) is the conduct regulator for the financial services industry in the UK. The FCA will not normally make public the fact that it is or is not investigating a particular matter, in order to protect the effectiveness of any investigation it carries out. The FCA has been made aware of this Parliamentary Question.Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government whether they are considering adjusting the mandate of the Bank of England to make (1) full employment or (2) nominal GDP an equal or higher priority than inflation.
Answered by Lord Agnew of Oulton
Monetary Policy in the UK has the primary objective of achieving price stability, as set out in the Bank of England Act 1998. Price stability is an essential pre-requisite for long run growth.
As the Chancellor reaffirmed in the remit of the independent Monetary Policy Committee (MPC) at the Budget, price stability is defined as a symmetric inflation target of 2 per cent, as measured by the 12-month increase in the Consumer Prices Index (CPI).
The Government’s commitment to price stability and the inflation target remains absolute.
Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what criteria will be used to assess whether a business seeking funding under the Covid Corporate Financing Facility qualifies as making "a material contribution to the UK economy".
Answered by Lord Agnew of Oulton
In practice, firms that meet this requirement would normally be: UK incorporated companies, including those with foreign-incorporated parents and with a genuine business in the UK; companies with significant employment in the UK; firms with their headquarters in the UK. We also consider whether the company generates significant revenues in the UK, serves a large number of customers in the UK or has a number of operating sites in the UK. These criteria are set out in the Facility’s pages on the Bank of England website.
Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what plans they have, if any, to assess the economic impact of stamp duty on the residential property market, including the impact on (1) construction, (2) home repairs, (3) consumer expenditure, and (4) inter-generational wealth distribution.
Answered by Lord Agnew of Oulton
The Treasury continually monitors the residential property market and Stamp Duty Land Tax (SDLT) returns, and HMRC publish quarterly SDLT statistics. The Government keeps all tax policy, including SDLT, under review.Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government whether (1) they, or (2) the Financial Conduct Authority, are investigating the value of H2O Asset Management’s transactions on behalf of (a) regulated investment funds under its management, (b) parties related to H2O Asset Management, and (c) H2O Asset Management affiliated companies and executives.
Answered by Lord Agnew of Oulton
This is a matter for the Financial Conduct Authority (FCA), which is operationally independent from Government. The question has been passed on to the FCA. The FCA will reply directly to the noble Lord by letter. A copy of the letter will be placed in the Library of the House.