Asked by: Catherine West (Labour - Hornsey and Wood Green)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to the Prudential Regulation Authority's consultation paper entitled CP7/22 – Credit Unions: Changes to the Regulatory Regime, published 21 September 2022, what assessment he has made of the potential impact of a 50 per cent cap on interest-bearing deferred shares on (a) the ability of the sector to raise capital and (b) access to finance for financially excluded consumers.
Answered by Andrew Griffith - Minister of State (Department for Science, Innovation and Technology)
The Prudential Regulation Authority (PRA) is an independent, non-governmental body responsible for regulating and supervising the financial services industry, including credit unions. Although the Treasury sets the legal framework for the regulation of credit unions, it has limited powers in relation to the PRA’s decision-making processes, including any proposed changes as part of their sectoral consultation work.
Regulators are obligated to provide a cost benefit analysis on any proposed changes and an estimate of those costs and benefits if reasonable. This consultation paper includes a cost-benefit analysis; the PRA estimates that any costs are, overall, proportionate to the additional risks involved.
The Government is a strong supporter of the mutuals sector and recognises the unique role credit unions play in their communities, providing savings and affordable loans to their members. As part of the Financial Services and Markets Bill, the Government is bringing forward changes to the Credit Unions Act 1979 to allow credit unions to offer a wider range of products and services. This will allow credit unions to continue to grow sustainably in the future and support them in the vital role they play in financial inclusion.
Asked by: Catherine West (Labour - Hornsey and Wood Green)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will hold discussions with the Prudential Regulation Authority on the potential merits of making an assessment of the proposal for a 50 per cent cap on interest-bearing deferred shares.
Answered by Andrew Griffith - Minister of State (Department for Science, Innovation and Technology)
The Prudential Regulation Authority (PRA) is an independent, non-governmental body responsible for regulating and supervising the financial services industry, including credit unions. Although the Treasury sets the legal framework for the regulation of credit unions, it has limited powers in relation to the PRA’s decision-making processes, including any proposed changes as part of their sectoral consultation work.
Regulators are obligated to provide a cost benefit analysis on any proposed changes and an estimate of those costs and benefits if reasonable. This consultation paper includes a cost-benefit analysis; the PRA estimates that any costs are, overall, proportionate to the additional risks involved.
The Government is a strong supporter of the mutuals sector and recognises the unique role credit unions play in their communities, providing savings and affordable loans to their members. As part of the Financial Services and Markets Bill, the Government is bringing forward changes to the Credit Unions Act 1979 to allow credit unions to offer a wider range of products and services. This will allow credit unions to continue to grow sustainably in the future and support them in the vital role they play in financial inclusion.
Asked by: Catherine West (Labour - Hornsey and Wood Green)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to the Prudential Regulation Authority’s Consultation Paper, CP7/22, entitled Credit Unions: Changes to the Regulatory Regime, published in September 2022, what assessment he has made of the implications for his policies of those amendments and their impact on credit unions financial services; and whether his Department has had discussions with the Prudential Regulation Authority on the reason for not producing a cost-benefit analysis of the proposed changes.
Answered by Andrew Griffith - Minister of State (Department for Science, Innovation and Technology)
Both the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) are independent, non-governmental bodies responsible for regulating and supervising the financial services industry, including credit unions.
Although the Treasury sets the legal framework for the regulation of credit unions, it has strictly limited powers in relation to the PRA and the FCA’s decision making processes, including any proposed changes as part of their sectoral consultation work.
As part of this legal framework, the regulators are obligated to provide a cost benefit analysis and an estimate of those costs and benefits if reasonable.
Asked by: Catherine West (Labour - Hornsey and Wood Green)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment his Department has made of the potential merits of introducing bank hubs on high streets for those unable to use internet banking.
Answered by Andrew Griffith - Minister of State (Department for Science, Innovation and Technology)
The government believes that all customers, wherever they live, should have appropriate access to banking services.
Banks are investing in new shared hubs that enable personal and business banking customers to access services such as depositing cheques, checking their balance and withdrawing and depositing cash. To date, industry has committed to shared bank hubs in 29 locations across the UK. Bank hubs also offer a dedicated space where customers can see community bankers from their own bank, where it is participating. The first post pilot phase bank hubs have opened in Brixham (Devon) and Cottingham (Yorkshire).
The locations of bank hub sites are recommended by LINK (which operates the UK’s largest ATM network). In the event of a closure of a core cash service or request from a local community, LINK will undertake an assessment of the community’s access to cash needs. LINK takes into account relevant information such as the size of the population, number of shops, demographic data and the nearest alternative services. In circumstances where LINK considers that a community requires additional cash services, industry will ensure a suitable shared solution for all cash users in that community, such as a bank hub or ATM.
There are also alternative options to access banking services for those who cannot use internet banking, including via telephone banking and via the Post Office.
Asked by: Catherine West (Labour - Hornsey and Wood Green)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the impact of the additional tax deduction for R&D costs for small and medium-enterprises on those organisation's ability to (a) recruit and retain staff and (b) maintain technological equipment.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
As part of the ongoing R&D tax reliefs review, as announced at the Autumn Statement, the Government is reforming the R&D tax reliefs to ensure taxpayers’ money is spent as effectively as possible, to improve the competitiveness of the RDEC scheme, and take a step towards a simplified, single RDEC-like scheme for all.
The SME scheme costs twice as much as RDEC, and its cash value to firm is three times that of RDEC - yet it incentivises as little as 60p of additional R&D for each £1 spent, compared to as much as £2.70 additional R&D per £1 of RDEC. In addition, following the corporation tax rise from April 2023, the SME scheme would have become even more generous in cash terms and the Research and Development Expenditure Credit less.
There is significant error and fraud in the small and medium-sized enterprises (SME) scheme, with the generosity of the relief making it a target for fraud. By contrast, the separate R&D expenditure credit is better value but has a rate that is less internationally competitive.
Following these changes support for R&D investment will continue to increase, with R&D expenditure from businesses via tax credits estimated to increase from £37.2 billion in 2020-21 to around £60 billion by the end of the scorecard period, 2027-28. In addition, direct funding for R&D will reach £20 billion a year by 2024/25. From 2021-22 to 2024-25, this represents a 54 per cent cash increase in Innovate UK’s budgets and 70 per cent of Innovate UK’s grants to businesses go to SMEs.
The Government will consult on the design of a single scheme, and ahead of Budget work with industry to understand whether further support is necessary for R&D intensive SMEs, without significant change to the overall cost for supporting R&D.
Asked by: Catherine West (Labour - Hornsey and Wood Green)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, for what reasons the additional tax deduction for research and development costs for small and medium enterprises will be cut from 130 to 86 per cent.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
As part of the ongoing R&D tax reliefs review, as announced at the Autumn Statement, the Government is reforming the R&D tax reliefs to ensure taxpayers’ money is spent as effectively as possible, to improve the competitiveness of the RDEC scheme, and take a step towards a simplified, single RDEC-like scheme for all.
The SME scheme costs twice as much as RDEC, and its cash value to firm is three times that of RDEC - yet it incentivises as little as 60p of additional R&D for each £1 spent, compared to as much as £2.70 additional R&D per £1 of RDEC. In addition, following the corporation tax rise from April 2023, the SME scheme would have become even more generous in cash terms and the Research and Development Expenditure Credit less.
There is significant error and fraud in the small and medium-sized enterprises (SME) scheme, with the generosity of the relief making it a target for fraud. By contrast, the separate R&D expenditure credit is better value but has a rate that is less internationally competitive.
Following these changes support for R&D investment will continue to increase, with R&D expenditure from businesses via tax credits estimated to increase from £37.2 billion in 2020-21 to around £60 billion by the end of the scorecard period, 2027-28. In addition, direct funding for R&D will reach £20 billion a year by 2024/25. From 2021-22 to 2024-25, this represents a 54 per cent cash increase in Innovate UK’s budgets and 70 per cent of Innovate UK’s grants to businesses go to SMEs.
The Government will consult on the design of a single scheme, and ahead of Budget work with industry to understand whether further support is necessary for R&D intensive SMEs, without significant change to the overall cost for supporting R&D.
Asked by: Catherine West (Labour - Hornsey and Wood Green)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will make an assessment of the potential merits of making the HMRC helpline a freephone service.
Answered by Richard Fuller
HMRC is not considering making HMRC helplines a freephone service.
Moving HMRC’s helplines onto freephone 0800 numbers would mean that HMRC would have to fund the helplines and pass the cost on to the taxpayers.
HMRC’s judgement is that it is fairer for the businesses and individuals that use the helpline to pay, rather than the public through general taxation.
0300 numbers, which HMRC currently uses, cost no more than 01 and 02 numbers and will typically come out of inclusive minutes on customers’ phone contracts.
Many customers will be able to access the services and support they need through one of our 200 plus digital services available through GOV.UK and via the HMRC app, which are free to use.
Every day around 1.4 million users are supported through HMRC's online digital services, not including thousands more customers who are using commercial tax software products to help manage their taxes.
Asked by: Catherine West (Labour - Hornsey and Wood Green)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the potential impact of the increase in interest rates on (a) homeowners and (b) mortgage availability in Hornsey and Wood Green constituency.
Answered by Andrew Griffith - Minister of State (Department for Science, Innovation and Technology)
There are c.28.1 million households in the UK, 8.4 million of which have a residential mortgage. Around 75% of residential mortgage borrowers are on fixed-rate deals and are therefore shielded from interest rate rises in the short term.
When mortgage borrowers are in financial difficulty and struggling to pay their mortgage, Financial Conduct Authority guidance requires firms to provide support through tailored forbearance options. This could include measures such as a payment holiday, partial payment, or an extension of mortgage term.
The Government has also taken a number of measures aimed at helping people to avoid repossession, including Support for Mortgage Interest loans for those in receipt of an income-related benefit, and protection in the courts through the Pre-Action Protocol, which makes it clear that repossession must always be the last resort for lenders.
There remains a broad range of mortgage products on the market, and those looking to take out a mortgage are encouraged to shop around and speak to a mortgage broker. The pricing and availability of loans is a commercial decision for lenders in which the Government does not intervene.
Asked by: Catherine West (Labour - Hornsey and Wood Green)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will call for an independent inquiry into the Financial Conduct Authority's handling of the collapse of Blackmore Bonds.
Answered by Andrew Griffith - Minister of State (Department for Science, Innovation and Technology)
The Financial Conduct Authority (FCA) is responsible for securing an appropriate degree of consumer protection across a broad range of financial services products. However, it does not regulate all financial services firms and products. Blackmore Bond Plc was not authorised by the FCA and the sale of the ‘mini-bond’ product it offered was not an activity regulated by the FCA. The FCA does not have power to investigate a firm that is unauthorised and not carrying out any regulated activities. The Government therefore has no plans to commission an independent inquiry into the FCA’s handling of the collapse of Blackmore Bond plc.
Asked by: Catherine West (Labour - Hornsey and Wood Green)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what recent discussions he has had with the Financial Services Ombudsman about reducing waiting times in both allocating and investigating cases.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Financial Ombudsman Service (FOS) is an independent non-governmental body. The Treasury is not involved in the day-to-day operations of the FOS and the remit of the FOS is set out by the Financial Conduct Authority. The rules on how the FOS should handle complaints state that ‘The ombudsman will attempt to resolve complaints at the earliest possible stage. Inevitably some cases will be more complex than others and therefore take more time to resolve, however the FOS should deal with all cases in a timely manner.
Nevertheless, the Government agrees that it is vitally important that the FOS should be accountable for its performance and the quality of its work. The FOS answers to a board of directors, appointed by the Financial Conduct Authority, and must make a report each year on the discharge of its functions which is required to be laid before Parliament. This ensures Parliament is able to scrutinise the efficiency, effectiveness and economy with which the FOS carries out its functions. There are also regular meetings between Treasury officials and the FOS where relevant emerging issues are discussed.