Financial Services Bill (Seventh sitting)

Abena Oppong-Asare Excerpts

Committee stage & Committee Debate: 7th sitting: House of Commons
Thursday 26th November 2020 Public Bill Committees

[John Glen]

Clause 8 is the first of 14 clauses that amend the benchmarks regulation in order to provide the FCA with the powers it needs to oversee the orderly wind-down of critical benchmarks such as LIBOR. Critical benchmarks are benchmarks that meet certain criteria—for instance, they are used in a significant volume of transactions, or the benchmark is based on submissions by contributors, the majority of whom are located in the UK. A number of powers in the benchmarks regulation are limited to the oversight supervision of critical benchmarks or the administrators of such benchmarks.

Clause 8 adds new criteria for what may be designated as a critical benchmark. As a result, a benchmark will be considered critical if its cessation would cause significant and adverse impacts on market integrity in the UK, even where the benchmark has market-led substitutes, provided one or more users of the benchmark cannot move on to a substitute. The new test means that, as a critical benchmark winds down, the value of contracts that use the benchmark diminishes. The powers available to the FCA to manage the wind-down of critical benchmarks will remain available, provided that the benchmark meets the relevant tests to remain designated as a critical benchmark.

In addition, one of the existing tests for what may be designated as a critical benchmark has been changed. The test originally stated that a benchmark would be designated as critical where it met either both a qualitative and quantitative threshold of use in more than €400 billion-worth of products, or the qualitative threshold only. The quantitative threshold has now been removed, as it has become redundant. This measure has been welcomed by industry as an important development in managing LIBOR transition, and will ensure that the FCA has the powers it needs to manage the orderly wind-down of this critical benchmark.

I am aware, as a result of my engagement with industry—indeed, the Committee heard evidence of this last week—that there is support among market participants for additional safe harbour provisions to complement the provisions in this Bill. I can assure the Committee that we are committed to looking into that further issue and providing industry with the reassurance it needs. That conversation is ongoing and, I think, is to the satisfaction of the industry; we are working to a conclusion with it. However, given what I think the Committee will concede is the complexity of the matters involved, I cannot commit to an outcome, and I think the industry recognises that.

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

I want to go back to what happens if moving to another benchmark is “not reasonably practicable”. I note that the Minister is looking into that and seeking reassurance. One thing that we are particularly concerned about in this clause is the question of whether “one or more users”, if it is reasonable and practicable, can switch to a market-led substitute benchmark. How do the Government define what is reasonably practicable in this case? Will he explain that to me, please?

[John Glen]

I am grateful to the hon. Lady for her question. In terms of the benchmark’s being classed as critical and the appropriateness of substitutes, certain contracts face barriers to moving off a benchmark. While some contracts are bilateral and that renegotiation may be possible, many contracts are multilateral and involve the consent of multiple parties before a change can be made. Therefore, in some cases, achieving consensus on the changes is likely to be difficult or impossible, due to the absolute number of parties that will be involved, or due to the threshold at which consent would be achieved. In those situations the existence of an appropriate substitute is not relevant, as users will not be able to move on to it. The complexity of what they are on means that there is not anything substitutable.

--- Later in debate ---

In truth, this is a complex judgment made by the regulators in the context of what is happening in the market, the readiness of the alternatives, and what I have just described. The Government will make a direct evaluation of that, but here we are setting out the context in which that power will be used by the FCA.

[Abena Oppong-Asare]

On the point about the Government making a direct evaluation, if the benchmark user argues that it would not be reasonably practical to move to a market-led substitute, but the Treasury disagrees with that, what recourse does the user have to challenge this decision?

[John Glen]

These matters will be governed by protocols with the industry. The industry would have a dialogue with the FCA, through which these matters would be resolved. There would be a dispute, I would imagine, about the number of contracts, the number of people involved in those contracts, and the readiness of an available alternative. Usually, these matters would be resolved through dialogue and consultation.

[Abena Oppong-Asare]

That is really helpful, in terms of the dialogue with the FCA. Will a process be followed to ensure a fair system is applied with regard to substitutes that disagree with the Treasury process, or will how it is done be judged at that time?

[John Glen]

The complexity of these contracts and their reference to these benchmarks necessitates ongoing dialogue. There is a significant team in the FCA that deals with this work. The industry has been very concerned about this. This is a live, ongoing conversation. Given the context, and the history that the right hon. Member for Wolverhampton South East and I set out, and how appalling this situation was previously, there is wide consensus that this should be done in an open and collaborative way. This regulation will be used in that spirit.

North of England: Infrastructure Spending

Abena Oppong-Asare Excerpts

Wednesday 25th November 2020 Westminster Hall

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

Thank you for the opportunity to speak in this debate, Mr Gray. The hon. Member for Southport (Damien Moore) has secured a timely debate. He mentioned the Government’s 10-point plan and nuclear investment opportunities to unleash potential. That was echoed by the hon. Member for Wakefield (Imran Ahmad Khan).

We know that the Chancellor is expected to set out infrastructure spending commitments in his comprehensive spending review today. Given that the north of England has been disproportionately impacted by covid-19 in health and economics, according to the report by the Northern Health Science Alliance, any investment in that region is timely and welcome. We are concerned about the disproportionate economic consequences of covid-19, which make the Chancellor’s announcements on infrastructure spending so important today. Therefore, as shadow Exchequer Secretary to the Treasury, I must ensure that the Government’s actions are closely scrutinised. The north needs real investment, not just empty promises and half-finished projects.

The hon. Member for Southport mentioned that there was a lack of Labour Members at this debate. A similar debate was held on 11 November, led by my hon. Friend the Member for Barnsley Central (Dan Jarvis), on support for the economy in the north of England. A number of my colleagues have been vocal on this issue but are unable to attend this debate due to covid-19.

To be the bearer of bad news, the Conservative Government have failed to deliver their promise to deliver infrastructure investment. The right hon. Member for Tatton (Esther McVey) said that she had asked for local investment for local transport, where people were waiting two hours for a train and it was hard to find a bus route. She also mentioned digital infrastructure. My hon. Friend the Member for Weaver Vale (Mike Amesbury) talked about closing the economic divide, dealing with economic inequality and powering up the north, as well as the unfinished business of devolution.

The right hon. Member for Elmet and Rothwell (Alec Shelbrooke) talked about short, medium and long-term projects, which must be transformational. The hon. Member for Leigh (James Grundy) talked about congestion and air quality—I know that he was also at the last debate. He spoke about connecting his constituency to Greater Manchester. I agree with him that the time for talking needs to stop.

Six years on from the announcement of Northern Powerhouse Rail, that line has still not been approved, let alone started. Transport for the North’s website states that the project will be the region’s single biggest transport investment since the industrial revolution. Far from something to brag about, that is a damning reflection of the Government’s commitment to investing in the north.

[Jonathan Gullis]

Will the hon. Lady give way?

[Abena Oppong-Asare]

I am afraid that I will not, as time is short. I ask the Minister to tell me when the northern regional economy will be taken more seriously. When will the Government deliver investment in projects in line with other regions of the UK?

When it comes to delivering projects, the Prime Minister’s portfolio is one of failure. The failed London garden bridge project cost the taxpayer £53 million. The Olympic orbit tower, which was forecast to make a profit of £1.2 million in its business plan, has produced a debt of £13 million, which grows by £700,000 every year. We have seen a theme of failed projects played out in the regions of the UK. In the west midlands, people are still waiting for the Midland Metropolitan University Hospital, which will eventually open four years too late and cost taxpayers £700 million. The Royal Liverpool Hospital is more than five years late and projected costs are now expected to reach £1.063 billion after the collapse of outsourcing giant Carillion, and the taxpayer is still on the hook for £739 million of the overall figure.

I sincerely hope that, for people living in the north of England, the Government’s pledge to level up is successful, but I believe it would be much more fruitful to focus on ongoing projects, a point that has been made by other hon. Members in this debate. That would enable the Government to draw on the great research and infrastructure that is already available in the north and to consult with people living in the region on what they need to see from the Government, rather than announcing a new shopping list of proposals that are unlikely to come to fruition and that will not benefit those who are most in need.

[Sara Britcliffe]

Will the hon. Lady give way?

[Abena Oppong-Asare]

I am afraid that I am unable to.

We know that people living in the north of England have suffered the worst impact on their mental wellbeing, are more likely to have lost their jobs due to covid and have had much higher rates of covid-19 fatalities. The north needs social, economic and health recovery from covid-19 that will address the immediate issues. Labour has consistently called for support for mental wellbeing, including a schools recovery curriculum. We have called for investment in local authorities so that they can provide services that locals are proud of. We need to see the return of youth clubs, libraries open seven days a week, access to leisure facilities and community hubs.

With regard to creating sustainable, high-quality jobs, we have already done the work for the Government and set out to create 400,000 clean, green jobs across the country over the next 18 months. The plan requires three simple steps. If the Government knuckle down and agree to work with MPs across the House, businesses big and small and members of the public, we will be able to create not only a sustainable economy, but a sustainable future for our planet.

We need to recover jobs, with investment and co-ordination to secure up to 400,000 additional good green jobs. We need to retrain workers—something I think we all agree on—and equip them with the skills needed to deploy the green technologies of the future. We also need to rebuild businesses, with a stronger social contract between Government and businesses to tackle the climate crisis and ecological deterioration, while promoting prosperity and employment. I urge the Minister to recommend this plan to the Chancellor and to ensure that yet more money is not thrown at projects that are unlikely ever to be completed.

Financial Services Bill (Fifth sitting)

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Committee stage
Tuesday 24th November 2020 Public Bill Committees

We very much feel that the UK Government have not met the promise in their rhetoric on climate change. We know that there is much more that could be done. Although the purse strings are held and the decisions made in Westminster, we will continue to put pressure on the Government to be more ambitious and to do more. Our amendments would push them and the regulators a wee bit further, to try to move a good deal faster because of the pressure of the climate emergency that we face. We cannot wait until some point down the road to make the changes. We need to start today.

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

I am delighted to speak in favour of amendment 24. In just 12 months, the UK will host and hold the presidency of the 26th UN climate change conference of the parties in Glasgow, where the world will be watching. The amendment shows that the UK means business on climate change and that the Government are putting in place their promise to join forces with civil society, companies and people on the frontline of climate action ahead of COP26. It has the support of all political parties, so this is in no way party political or controversial.

Last week the Committee heard evidence from the likes of the Finance Innovation Lab and Positive Money, which support the amendment. The witnesses mentioned that it would be helpful if the FCA could refer to the Climate Change Act when preparing secondary legislation. Will the Minister therefore consider putting in capital requirements for investment firms, introducing weighting on environmental, social and governance issues such as penalising assets that have climate risks? As we know, the Bill covers legislation on packaged retail and insurance-based investment products, which will bring the £10 billion market to the EU.

We also heard last week that the Bill could be improved further, with a key information document that investors receive when looking at PRIIPS to include disclosure on environmental and social governance issues, and to ask the FCA to ensure that happens. I am sure the Minister will agree that that would help the Prime Minister achieve his ambitious 10-point plan—it is certainly ambitious—for the green industrial revolution.

It is important to know that there is a drive towards greater ESG integration across the financial sector, which investors are pushing for as well. This is an opportunity for the Bill to be shaped more robustly, and it sends a really strong message that the UK takes climate change seriously.

As we sit here today, hundreds of young people are meeting virtually at the mock COP, ensuring that net zero goals are deliverable. I am therefore surprised that elements of the amendment are not already in the Bill, given the Prime Minister’s ambitious 10-point plan for a green industrial revolution, which will not be deliverable if we do not reinforce our commitment to environmental sustainability in the Bill.

The amendment, which I believe is rather reasonable, would lay the foundations for sustainable environmental infrastructure with substance. As mentioned by a number of colleagues, this is not controversial but something that we really need right now. Particularly as we are dealing with covid, we need to be thinking seriously about the environment. The only way we can ensure that this is delivered is by putting something in the Bill that requires firms and the regulator to step up on this issue.

We do not have time for delay. This is an opportunity for us to put our heart into the Bill and deliver what we have promised, and it falls in line with what all political parties have been asking for.

[Stella Creasy]

The shadow Minister is making a powerful speech. I take the point made by the Government side, but I always wonder: what about the counterfactual? What problem will there be if we do not put these things into legislation? What message would that send about what might be jettisoned if, God forbid, we had another crisis on a similar scale to this year’s? Action on climate change is something that we simply cannot afford to go slow on. The counterfactual on this is an important issue, because it gives us an opportunity to say that if we do not put it into legislation, we are sending a message that this might be an optional extra, rather than an integral part of our future as a country.

[Abena Oppong-Asare]

My hon. Friend makes a good point. The UK Government constantly say on their website that they plan to go further and faster to tackle climate change. As my hon Friend has mentioned, this is a perfect opportunity to ensure that this is implemented in the Bill. I am surprised, frankly, that it is not in there. All that we are asking for is a reasonable amendment that already falls in line with the Government’s objectives. It is not going to create any extra work. We need to think about the future, particularly if we do not take action to address climate change, because we are heading for difficult times and I am really worried about the future for younger generations.

[John Glen]

Let me say at the outset that the Government are fully committed to reaching our climate change aims both domestically and internationally. We have set our commitment to net zero in legislation. When I was listening to the right hon. Member for Wolverhampton South East discuss the range of interventions and announcements that the Government have made in recent weeks and pivot back to the good work done previously, this underscores the fact that looking at this through a bipartisan lens is probably the most effective way. The aims that we share should be supported by sectors across the economy, not least financial services, as the Chancellor set out in his recent statement to the House.

Amendment 20 would insert the net zero target into the FCA’s accountability framework for the implementation of the investment firms prudential regime. Amendment 39 is similar, as it would insert an additional consideration into the FCA’s accountability framework, requiring the FCA to have regard to the likely effect on the UK’s domestic and international commitments on climate change.

I fully support the intention behind these amendments, of course, but the aim of this measure is to enable the implementation of a specific prudential regime to apply to a specific type of firm. The current “have regards to” provisions in the Bill are those that the Treasury found to be immediately and specifically relevant and that reflect issues raised by industry. I think about our relative standing and the importance of considering and aligning with international standards. Those are the ones that also relate to the equivalence decision and are directly tied to the implementation of the IFPR.

As the Chancellor set out in his statement outlining the new chapter for the financial service in the UK, if we are to achieve the net zero target it will mean putting the full weight of private sector innovation, expertise and capital behind the critical global effort to tackle climate change and protect the environment. The Treasury and the regulators are already making ambitious strides to that effect, and Members have referred to the role of the former Governor, Mark Carney. I draw attention to the green finance strategy, which the Government published just 15 months ago, and to the work across a number of activities in the City on which I have been seeking to lead over the past three years. The green finance strategy is something that the regulators have actively supported.

Financial Services Bill (Sixth sitting)

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Committee stage & Committee Debate: 5th sitting & Committee Debate: 5th sitting: House of Commons & Committee Debate: 6th sitting: House of Commons
Tuesday 24th November 2020 Public Bill Committees

[The Economic Secretary to the Treasury (John Glen)]

It is great to be under your chairmanship again, Dr Huq. I thank the right hon. Member for Wolverhampton South East and the hon. Member for Glasgow Central for their comments.

The right hon. Gentleman opened with a depiction of the appalling situation with Boohoo, the Levitt review and the challenge of securing widespread adherence to higher standards of corporate governance. He mentioned the actions of Sir Douglas Flint from Standard Life Aberdeen, with whom I have worked closely during the last three years.

Many of the particular aspects of that case are beyond the scope of the Bill, but the right hon. Gentleman uses it to illustrate the reasons why he tabled the amendments, which would introduce a new “have regard” in the accountability regime to which the Prudential Regulation Authority and Financial Conduct Authority would be subject when implementing the Basel standards and the investment firms prudential regime respectively. The amendments would require the PRA and FCA to consider higher standards in social practice and corporate governance when making new rules under the Bill.

It is unclear from the wording of the amendments whether regulators would need to look at their own best practices or those of the firms they regulate. Regardless, I fully support the intention behind the amendments. Indeed, I have chaired the asset management taskforce over the past three years: we have had 10 meetings with industry representatives, including Catherine Howarth, whose responsible investment charity ShareAction has done some significant work on stewardship and how we can get better transparency across the whole of the ESG agenda. Indeed, I believe that our report on that will be produced imminently.

There is no doubt that the regulators are committed to the highest levels of equality, transparency and corporate responsibility. For example, the UK has some of the toughest requirements on bonus clawback and deference in the whole world. The Government, working with the regulators, were also world-leading in the design of an accountability regime for senior managers in the industry; sequentially, over the past three years, that has extended to more and more parts of the financial services industry.

FCA solo-regulated firms are expected to have undertaken a first assessment of the fitness and propriety of their certified persons by 31 March 2021. The senior manager and conduct regime, implemented for all banks, building societies, credit unions and Prudential Regulation Authority-designated investment firms in 2016, was extended to cover insurance firms in December 2018 and most other FCA-regulated firms by December last year.

However, the track record of our regulators should not make us shy away from making them legally accountable for upholding the highest standards going forward. The fact is that the regulators, as public authorities, are already subject to the requirements under the Equalities Act 2010, as are businesses across the UK, including firms within the scope of the PRA and FCA remits. They already have existing powers and duties under the Financial Services and Markets Act 2000, which is being amended by this Bill, in respect of pay, transparency and principles of good governance. In fact, they are already responsible for making rules on remuneration under these two prudential regimes.

I recognise that when I think about the City, there are significant elements that need more work. For the past while, I have been responsible for the women in finance charter. I am currently conducting a series of challenges to the CEOs of banks, looking at what they are doing to address, beyond the targets, a pipeline of talent, so that there are better opportunities for more women to reach the executive level. I will speak more about that later this year.

Sound governance is necessary to support the regulator’s primary objectives of safety and soundness, market integrity and prevention of harm; a new legal obligation in this space would only be duplicative and redundant. It would likely conflict with existing obligations on the regulators in exercising their duties to ensure the sound governance of regulated bodies, creating confusion over whether these vaguer concepts conflict with the regulator’s general objectives.

I do not believe that this Bill is the right place for such changes, but there might be other routes to reassert how important we think these matters are. The Government are currently considering the policy framework in which the regulators operate through the future regulatory framework review, which I mentioned this morning and on Second Reading. I would welcome right hon. and hon. Members’ engagement on this important question—I really would. The matters that the regulators need to have regard to as part of this Bill reflect considerations immediately pertinent to these specific prudential regimes and, I believe, provide the right balance.

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

I am really happy to put forward amendment 25, because it will require that, when making capital requirements regulation rules, the FCA must have a high regard to standards in social practice and corporate governance, including pay, adherence to equalities legislation, transparency and corporate responsibility.

We know that best practice corporate governance results in social and economic gains, and that is something the Government are particularly passionate about. Companies that persist in treating climate change solely as a corporate responsibility issue, rather than a business problem, are running a risky business and stand to lose out.

We have seen businesses turn the need to tackle climate change into successful business opportunities. For example, BrewDog, the world’s largest craft brewer, will remove twice as much carbon from the air as it emits every year, becoming the first carbon-neutral brewery. If companies can already shoulder this social responsibility and incorporate it into a successful business model, there is no reason not to hold all businesses to the high standards our country needs to tackle imminent social and political issues.

Climate change affects every facet of everyone’s lives. The effects of climate on companies’ operations are now so tangible and certain that the issue demands a strategy and leadership from the Government. Government intervention has worked before, and it will work again, particularly through amendment 25. Take the Equal Pay Act 1970, for example, which was mentioned previously. Business and civil society converged, and companies with over 250 employees were made to publish data on pay gender discrepancies, resulting in a win-win scenario. Excellent work is now being done to tackle this further and understand racial, gender and environmental concerns, which are intricately linked. We have to follow civil society’s work on equal pay and extend the reporting to data collections on the grounds of racial equality and environmental equity, because our actions will be futile if our evidence is not fertile.

There is no one-size-fits-all approach to climate change: each company’s approach will depend on the particular business and strategy. What we are calling for in this amendment is for the Government to support and enable employers to publish an action plan to tackle climate change and social inequalities, including initiatives to mitigate climate-related costs and risks in client value chains. Jesse Griffiths, the CEO of the Finance Lab, had some important advice for the Committee last week. He said:

“I think that the absolutely fundamental issue with regards to the Bill is that it is an opportunity to put social and environmental purpose at the heart of both the regulation and the duties of the regulators.”—[Official Report, Financial Services Public Bill Committee, 19 November 2020; c. 113.]

Environmental engagement is economic effectiveness, and this amendment will improve the economic health of our businesses and the environmental health of our country.

The amendment would also ensure that regulators can act in accordance with social needs, and ensure that businesses maintain corporate responsibility while still thriving in a competitive marketplace. When the Government asked Ruby McGregor-Smith to review the diversity pay gap, I welcomed that initiative. Campaigners have moved mountains in terms of identifying the profitability, both social and economic, of deepening our commitment to diversity and opportunity of wealth and health creation for all. In McGregor-Smith’s review, “The Time for Talking is Over, Now is the Time to Act”, she highlights how for decades, successive Governments and employers have professed their commitment to racial equality, yet we see that vast inequalities still exist. We must ensure this does not happen with our commitment to environmental stability, and the amendment will help ensure that.

Racial equality, gender equality and environmental stability can never be achieved unless we understand the ways in which they are intricately linked. As Ruby says, the time for talking is over, and I am sure that all the young people participating in the mock COP as we speak agree. I know that I mentioned this earlier about young people, but they are important: they are our future, and we really need to take them into consideration. With 14% of the working-age population coming from a black or minority ethnic background, we know that employers have to take control and start making the most of our talent, whatever their background.

The point stands out when looking at the pay gap for disabled people in the UK. In 2018, the median pay for non-disabled employees was £12.21 an hour, while for disabled employees, it was £10.63. The Minister mentioned earlier that he sat on the asset management taskforce—

[John Glen]

Chaired.

[Abena Oppong-Asare]

Chaired—apologies; I have bad hearing. He gave examples of shared actions and how to get better transparency, and mentioned that regulators are already committed to higher transparency. I am sure he agrees with me that businesses need to be held to account. The amendment will also help to create an environment that nourishes talent equality and protects our natural habitable environment.

The amendment basically brings huge financial, environmental and social rewards. Companies must realise they cannot ignore those issues anymore. However, we know that most companies will act only when they see a reason to do so. What we need is less talk and more action.

Draft Customs Safety, Security and Economic Operators Registration and Identification (Amendment etc.) (EU Exit) Regulations 2020

Abena Oppong-Asare Excerpts

Monday 23rd November 2020 General Committees

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

On behalf of the shadow Treasury team, I welcome this opportunity to address this draft statutory instrument. I should also like to pass on the apologies of my colleague the shadow Financial Secretary to the Treasury, my hon. Friend the Member for Ealing North (James Murray). He has not been attending Parliament during the covid-19 outbreak for medical reasons, although he and I have discussed this statutory instrument in detail before today’s sitting.

The Opposition recognise that the UK has left the EU and very much support the Government in ensuring as smooth an end to the transition period as possible on 31 December. However, we have concerns about three issues in the draft instrument, on which I would welcome a response from the Minister. As he just mentioned, the Union customs code is the overarching legislative framework for customs, adhered to by all EU member states and the UK during the transition period. The code’s registration requirements were due to be incorporated into UK law at the end of the transition period, with amendments made by the Customs (Economic Operators Registration and Identification) (Amendment) (EU Exit) Regulations 2019. However, as the explanatory memorandum to the draft instrument makes clear, the necessary amendment to the Union customs code power to require businesses to register with a customs authority for other legislation was omitted from the regulations. We understand that the draft instrument corrects that error, revokes the previous regulations and ensures that there is no change in the UK’s registration powers after the end of the transition period.

Although it is welcome that the error was identified and, we hope, corrected in time, how can the Financial Secretary be confident that the Government have not made any other such errors, particularly given the scale of the necessary preparations for the end of the transition period? I would be grateful if he explained with references to specific processes that may be in place how he is making sure that any such errors are identified and corrected in time.

Secondly, as the Financial Secretary said, the draft instrument introduces a six-month temporary waiver on entry summary declarations for goods from the end of the transition period. It would therefore run from January to June 2021. The explanatory memorandum explicitly asserts that that is to mitigate the impact on readiness that the covid-19 pandemic has had on the logistics industry. However, the original statutory instrument, which the draft instrument intends to replace, also envisaged a six-month waiver from March to October 2019. Although we recognise that situations then and now are not directly comparable for a number of reasons, that raises questions about whether six months is a reasonable period for the situation we face now. I therefore ask the Financial Secretary to make clear today why the six-month waiver is needed. Assuming that he now considers covid to be the contributing factor, how can he be confident, if the six-month waiver was needed to deal with the process pre-covid, that six months will be enough now, given the additional effects of covid on the situation?

The draft instrument changes the deadline for when declarations need to be submitted for short sea journeys to reflect the fact that goods coming into and going out of the UK will come into contact with a customs border much more quickly after the end of the transition period. To achieve that, a number of changes will have to be made. They include allowing declarations to be submitted up to two hours before arrival or departure. The period is currently longer—in some cases, up to 24 hours. We understand and appreciate that the change seeks to avoid congestion as a result of late changes to the transportation of goods, and it seems to make sense in principle. However, the explanatory memorandum notes that HMRC will need to put processes and procedures in place so that entry summary and pre-departure declarations are submitted within the relevant timescales.

We are very conscious that HMRC is subject to job cuts and reorganisation and will have a significant amount of work in the coming months, not only assisting with the end of the transition period, but, realistically, also managing many of the Government’s covid support schemes. How can the Financial Secretary therefore be confident that HMRC will have the capacity to put in place the processes and procedures that the draft instrument envisages?

Thank you again, Mr Stringer, for the opportunity to raise concerns with the Financial Secretary about the draft instrument. As I said at the beginning of my speech, we recognise that the UK has left the EU, and we very much support any steps that the Government are taking to ensure that the ending of the transition period on 31 December is as smooth as possible. However, I would welcome a detailed response from the Financial Secretary to the concerns that I have set out.

Financial Services Bill (Third sitting)

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Committee stage & Committee Debate: 3rd sitting: House of Commons
Thursday 19th November 2020 Public Bill Committees

[The Chair]

It might be helpful for colleagues and our witness to say that we have 18 minutes left and three people who want to ask questions, so people might want to be mindful of that.

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

Q I want to go back to what Mr McFadden and Mr Flynn talked about, particularly regarding this Bill, so that I have a better understanding. One of the things I am concerned about is that there seems to be more of an onus on punishing the individuals, in comparison to the companies. Earlier in your comments, when questioned about creating corporate and not individual offence, you mentioned holding a company to account, and that, to an extent, that can be done by holding the individuals to account. However, there have been concerns about holding senior executives to account, particularly with Barclays and Tesco. Do you have any direct recommendations that can strengthen the Bill so that it can hold companies to greater account so that we do not have that loophole where individuals are held responsible for this?

Dr Hawley: We actually have two suggestions. One is to introduce a “failure to prevent” offence for individuals, where, effectively, you are in a senior position and this happens on your watch. That is one way of doing it. The other way is to do what happens with the Competition and Markets Authority, where the court has the power to disqualify a director where there is a corporate offence. That is something that was put down in an amendment to the sanctions and money laundering regulations. Those are two legislative options—one of them a bit more radical than the other. The Competition and Markets Authority one is already there in law; it is just a matter of making it effective for these particular economic crimes.

We also think that there needs to be some more blue-skies thinking about whether, when there is a deferred prosecution agreement, companies should be required to claw back some of the money from the senior executives who were running the company when the wrongdoing occurred, because it is unfair that they get to move on, often with huge financial benefits. We saw that with the recent Airbus case—the director left with a massive golden handshake, and then the company and shareholders were left to pick up the fine. I think there is a way to make how the corporate fine is shared fairer. There are quite a lot of potential ways to do it, and we would be happy to provide a paper on that before 3 December, if it would be useful to the Committee.

[Abena Oppong-Asare]

Q That would be helpful. The Bill also increases the maximum sentence for criminal market abuse from seven to 10 years, in line with comparable economic crimes. Do you think that is a strong enough incentive to prevent offences? Is that something you have come across, with crimes going on for some period of time? Do you feel that the maximum sentence will deter that?

Dr Hawley: It is welcome that it has increased. Higher sentences are important, as we see in the US—there are higher sentences for white-collar crime, and people actually go down. To be honest, it is also about enforcement. Actually, quite a few prosecutions for a certain level are better than very few for a high level. It all comes down to regular enforcement, which is something that we very much hope there will be greater thinking about—enforcement resourcing for any of the laws that will be put in place.

[Abena Oppong-Asare]

Q Thank you. I have a final question, which is about your report. I know that my right hon. Friend the Member for Wolverhampton South East asked you a question about the prospect of smaller companies being at a higher risk of fines, which you said you were concerned about. Is there anything specific that could be put into the Bill to help ensure that does not happen? You mentioned earlier that it is easier for smaller companies to be prosecuted, because it is easier to identify the people involved. That seems like a massive and unfair disadvantage for smaller businesses. I am worried that if we do not address this issue, smaller businesses will be prosecuted whereas, effectively, larger companies will not. Do you have specific recommendations that could be looked into?

Dr Hawley: The basic and essential one is that if you introduce a “failure to prevent” economic crime, it immediately covers that gap; it immediately brings larger companies into the reach of prosecutors for economic crimes. We still think the Law Commission will need to look at how the identification doctrine still applies and carries on creating unfairness, even after you have introduced a “failure to prevent” offence, but it would be an immediate stopgap that would stop that happening. I cannot think of any other way of doing that.

[Abena Oppong-Asare]

Thank you.

[Julie Marson (Hertford and Stortford) (Con)]

Q Thank you for your evidence, Susan. I think we all agree that it is such an important area, and your evidence is really interesting.

I was looking at some of the specialist fraud and financial crime law firms’ response to the Law Commission’s review, particularly how it relates to the “failure to prevent” suggestion. They have called the Government’s desire to look at that in the round a very measured approach, and they have pointed to the fact that there have been lots of developments in regulatory and legal environments since the call for evidence. They have said that, actually, the best approach is probably to wait and see—to review, and to look at the entire issue in the round. Given the complexity and the cost to business, what is your response to that?

Dr Hawley: What has happened since the call for evidence closed is the Barclays judgment. We have also had a judgment in the Serco case, in which Serco was involved in procurement fraud against the MOJ, and it could not be the party to a deferred prosecution agreement—only its subsidiary could—because of these corporate liability rules. How it fits with the regulatory system is a really important question. As you will have seen from our evidence, we think that can be really properly thought through and hammered out at the guidance stage to the “failure to prevent” offence. That is where you would have a really good discussion with the private sector, bringing them in to show how you make those parts fit together.

I would like to add that on the regulatory side, as I mentioned earlier, we are seeing a worrying decline in the number of fines imposed by some of the regulatory bodies, for instance in the money laundering space. Creating a criminal offence—it is important to note that it is not a new criminal offence, but a different way of holding people to account for the same criminal offence—would open up a broader range of people who might bring action against a company. We have seen criticism in the paper, including from some of the law firms, about a lack of action by the Financial Conduct Authority on money laundering regulations, very few investigations and no prosecutions of corporates. If it were a criminal offence, companies might be looking at investigations by the SFO, which would really make them sit up.

I think it is about deterrence and how you ensure that compliance with the regulations is not just a box-ticking exercise, which is the risk if you take only a regulatory approach. What is really interesting about the responses to the Government’s call for evidence is that the vast majority of respondents do not think that where a serious crime occurs, a regulatory approach is appropriate; there need to be criminal approaches. I was really struck by how common that was. I think there is some urgency, if I am honest, particularly in relation to the UK falling behind emerging standards elsewhere, but also with the problem of inequality before the law, which I think could become really heightened when the response to the covid crisis plays out. You might get quite a lot of resentment when large actors are seen as getting away with it.

Financial Services Bill (Fourth sitting)

Abena Oppong-Asare Excerpts

Committee stage & Committee Debate: 4th sitting: House of Commons
Thursday 19th November 2020 Public Bill Committees

[The Chair]

I have seen two other Members indicating. First, I will come to Abena Oppong-Asare.

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

Q I found your comments really insightful. I have several questions, but first I want to go back to your comment about how the Bill does not mention any environmental priorities. You have come with several recommendations, and you said that you have seen the amendments, particularly amendments 20 and 24, which you support.

I want to clarify something you mentioned, which is that there should be an element of penalising large organisations for not carrying out environmental risk assessments. As we know, there are large organisations and companies such as Barclays that do that. I wanted to hear from you about how those penalties would be carried out. Are they financial ones? The concern that I have is that big companies would be able to afford to pay financial penalties, so is that really a great incentive or way of holding them to account?

Fran Boait: This idea is really in the capital requirements regulation, the idea being that financial institutions and banks lending towards high-carbon sectors would have to hold much more capital against that loan. I agree with the concern that they would maybe go ahead and do it anyway, but I think this is an important mechanism for pricing in climate risk, which has taken off in the past couple of years. There is obviously a recognition from the Financial Policy Committee of the Bank of England that climate risk is a huge risk to financial stability—both transition risk and physical risk—so we need to think about that.

Implementing a penalising factor requiring them to hold higher capital should have an important effect. We have seen a similar thing already done in the housing system, which has not completely solved the problem because it is systemic, but it is an important step forward in regulation and really signals to the market that the regulators do want to keep control of the situation. It is not going to solve everything—it is not going to completely stop lending into the fossil fuel industry—but it is quite an important step forward.

The key here is that there should also be a mechanism for scrutinising the CRR that we are onshoring. At the moment, it seems to say, “We are not going to say what we are going to do. We are going to let the financial regulators decide what it is,” which is very dangerous. As Pat McFadden pointed out, it was capital and the lack of banks needing to hold it that resulted in the crash, and it will be the lack of banks needing to hold capital against fossil fuel lending that will keep that carbon bubble, if you like, being pumped up. I am keen to continue the conversation about wider regulation and other things that need to be done alongside that in order to ensure a transition out of fossil fuels, and towards a green economy.

[Abena Oppong-Asare]

Jesse, do you have any further comments?

Jesse Griffiths: Yes. I think it is another extremely important question, and it is an extremely important way to think about the impact of regulation, as being about what kind of incentives it places on different actors to behave differently.

With regard to climate, there are three key points. One is about disclosure: that is why, for example, we made the recommendation on the PRIIPs point that the key information document should have better disclosure on environmental and social governance issues. That creates an incentive between the sellers of those products and the investors buying them, and we know there is strong demand in the investment industry to know much more about those issues and try to redirect their investment towards greener ends. That is important. Disclosure is obviously also important in terms of civil society and the public understanding what different institutions are doing, and also the Government.

The second point on incentives is the point that Fran has made, which I would fully support. Finding ways to disincentivise or penalise fossil fuel investments in particular is extremely important. The scientific research shows us that if we exploit only those oil and gas reserves that are already being exploited, we will still go above the dangerous 1.5° threshold, without even taking coal into account. There really is not any room for further investment in fossil fuels, so it would be an important signal to think about how we fundamentally disincentivise that by introducing penalties for that within the capital requirements of organisations.



The third point is that this is a newish area for regulators. Although we have been thinking about it for a long time and many regulators have been discussing it, it is not like all the answers are known. We had a report a couple of years ago called “The Regulatory Compass”, which explored what it would look like if regulators put a social and environmental purpose at the heart of what they do. There is a lot to do, and a lot of thinking to do there. The first step is, through Bills such as this, giving regulators the responsibility to think about that. I think that is extremely important.

Those are the three main things. The fourth incentive point is that regulation does not solve everything, as Fran said. It is important not to try to solve all problems through this lens, but to think about all the other things that we should be doing—investing in the green future and so on—if we are to solve the climate crisis.

[Abena Oppong-Asare]

Q The Bill mentions a statutory debt repayment plan; I want to get your thoughts on that. Are there elements that you are concerned about? Do you think it goes far enough, and if not, can you make some recommendations? Can I go with Jesse first?

Jesse Griffiths: You can. I do not have anything in particular to say that goes beyond the evidence from StepChange and others on this point. I fully support what they said.

Fran Boait: Similarly, a point that StepChange brought up that it is critical to keep in mind when looking at this kind of regulation is how we look at debtors and the stress and strain that they are under. We need to ensure that their needs are prioritised above those of creditors.

Earlier I made a macroeconomic point about financial services: unless we get our financial services sector better aligned with the needs of the people, small businesses and different parts of the economy in this country, household debt will keep rising. Obviously, we also need good direction from the Government’s fiscal spending plan. The direction of financial services and the direction of Government spending are critical in tackling household debt. If we do not look at some of those underlying systemic causes, we will keep kicking the can down the road, in terms of household debt being a problem. Although changes such as breathing space are welcome, they do not tackle the underlying causes and the need to get the number of people in problem debt down.

[Stella Creasy]

Q I want to follow up on a couple of things. First and foremost, Jesse, you were talking about the co-operative banking sector, what we could do, and what would be within the scope of the Bill, given that co-operative and mutual banking would be covered by the Prudential Regulation Authority. Obviously, there are a number of requirements on co-operative banking that we could consider superfluous now that we have this legislation. I am thinking in particular about section 67 of the Co-operative and Community Benefit Societies Act 2014, which has some unnecessary constraints, given the capital structure it requires. Do you agree that it would be helpful in creating a level playing field, and ensuring that co-op banks and mutuals could compete, to recognise that as the Bill provides prudential regulation that covers those banks, those earlier provisions are superfluous?

Jesse Griffiths: Yes, I think that is very sensible. The main point I would make is that those institutions are very different from other types of financial institution, and need a proportionate regulatory regime. The point that you raised is important. They frequently raise the idea of establishing a network of 18 regional banks on the model of the German Sparkasse system. For that to work, they would need to centralise IT and other services so they do not have to replicate those across the different institutions. As they have, embedded in the network idea, an agreement that they will not compete with each other, they can fall foul of competition regulations, so those would need to be considered.

Those are some of many examples that show you need a different regime for these types of institutions. On following a model like the Sparkasse system, in Germany those regional institutions are jointly responsible for each other, so that creates a very powerful incentive for them to be prudent and responsible lenders. If that internal incentive is already there, you should consider which other regulations are not so necessary for those institutions because, by their nature, they are highly prudent lenders.

Financial Services Bill (Second sitting)

Abena Oppong-Asare Excerpts

Committee stage & Committee Debate: 2nd sitting: House of Commons
Tuesday 17th November 2020 Public Bill Committees

[The Chair]

I have second the shadow Minister, Abena Oppong-Asare.

[Abena Oppong-Asare]

Q Thank you, Chair. Thank you for coming to speak to us. There are four audit firms and one of the allegations is that they are very close to each other and cosy with big companies. What are your thoughts on that? In the Bill, it is not very clear that that has been addressed.

Chris Cummings: I am terribly sorry. I was having an IT glitch and I missed your question. I do apologise. Can I ask you please to repeat the question?

[Abena Oppong-Asare]

Q The four audit firms: there are concerns that they are very cosy with each other and are very close with the big companies. The Bill does not essentially address that kind of issue. It does not seem very clear to me. Do you have any thoughts on how that could be addressed in the Bill to strengthen it so that there is better transparency and the relationship is less cosy?

Chris Cummings: Thank you for the question. We take the very strong view that we, as investors, rely entirely on public information. The quality of information produced by management is pivotal to the investment decisions that we make as investors. That has led to the point now where the investment management industry has a stake in more than a third of the FTSE. We think long and hard about investing in any particular company, listed or unlisted, and that is why we believe that it is the investor who is the client of the audit. A company pays for the audit, but it is the investment community that is the client of the audit. That is why we are so outspoken in pushing for better quality audits, and ensuring that the chairs of the audit committee take their responsibilities towards their investors seriously.

We absolutely worry about too close a relationship between an auditor and the company that they are auditing. That is why we feel that audits should be reviewed and we are constantly striving to have a more competitive ecosystem in the audit world, so you raise a very good point. If I may, I will offer to review that section of the Bill in more detail, and if we see anything that strikes us as being too weak or in need of strengthening, I will write to you with our proposals on that very quickly.

[Abena Oppong-Asare]

Q I want to follow up on that, because I recently read your comments about a new audit regulator in the Financial Times. The proposals gave me the impression that you felt that it would be able to ensure better reporting, and essentially hold the governance authority accountable to Parliament. Are you able to explain further about that?

Chris Cummings: Indeed. The audit profession has been through three major reviews recently. We entirely support the proposals to bring ARGA into existence. The work the FRC has been doing to prepare for the transition to ARGA has been commendable, but we need to go one step further and actually encourage policy makers to ensure that ARGA is brought into being as quickly as possible. Personally, I have been impressed by the new head of the FRC’s ability to convene and cajole the audit companies to exercise some soft power, to encourage them to improve the quality of audit. Still, it is not the same as having that statutorily recognised independent regulator, and we encourage this Committee—and other parliamentarians —to push for the establishment of ARGA as soon as possible.

[Abena Oppong-Asare]

Thank you, Chair.

[The Chair]

I call Gareth Davies. Gareth, I think you will have to move to the microphone over there.

Financial Services Bill (First sitting)

Abena Oppong-Asare Excerpts

Committee stage & Committee Debate: 1st sitting: House of Commons
Tuesday 17th November 2020 Public Bill Committees

[Ms Eagle]

Thank you, Chair.

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

Q Thank you for taking the time to speak to us. I know that you are in favour of the Bill, as it will give you greater agility and flexibility to deal with things. Going back to some of the comments you made earlier about the consultation process, in which you were clearly fully engaged, one of the things I want to find out relates to the consultation discussions, and obviously you have more responsibilities. Will you shed some light on what came out of those discussions in terms of making sure that there is effective accountability and oversight in relation to the additional powers that you are likely to be given?

Sheldon Mills: I will go first and then pass over to Vicky. It is useful to start with our current accountability, because the Bill and future regulatory frameworks being consulted on by the Government deal with that issue. We wish to be accountable. As an independent regulator, an important part of our process is for us to have public accountability. We serve the public and ultimately are scrutinised by Parliament. Our main form of scrutiny is that of the Treasury Select Committee, but we attend many other Committees. Explaining our activity to Parliament is an important part of our work. Below that, within the Financial Services and Markets Act for the FCA specifically, are our statutory panels. They are there to scrutinise our work in a much closer engagement with the organisation. Then we have the consumer panel, the practitioner panel and the small business practitioner panel, as well as the advisory panel on markets and listings. They are able to make public their views, and—believe me—they do very often make public their views on our activity. In addition to that, we will consult on our policies when we do policy-making work ourselves, as do other public authorities. We will also provide access to non-confidential information and data so that all interested parties can make their views known to us.

We also evaluate our work to ensure that it meets its intended outcomes. We already have an existing accountability framework that would sit well with the additional rule-making powers we may get through the Bill and as we move forward with the proposed reform to the financial services regulatory regime. The future regulatory framework is out for consultation, so I will not say much in relation to it, but we of course acknowledge that there may need to be adjustments to the accountability framework to accord with the additional powers that we are getting. We look forward to seeing the responses to the Government’s consultation in relation to that.

[Abena Oppong-Asare]

Q Just for clarification, during the consultation period there was no analysis looking, in terms of the additional powers, at how the accountabilities need to be changed. My understanding, from what you have just told me, is that it is very much reliant on the processes you think you have got already, which I have concerns about, if I am honest, because the current processes do not appear to take into consideration the additional powers.

Sheldon Mills: As I said, we acknowledge that we will be getting additional powers and there may need to be changes to that accountability framework. Within the Bill, you see the foundational approaches in terms of how things may change. Within each of the specific policy areas, if we take the investment firms prudential regime review, there are certain “have regards” obligations that we will need to take account of in that regime. I think that is a sensible approach to take as you bring in onshored regulation. There are specific needs that Parliament considers it is appropriate for us to consider for that onshored regulation. Then, that “have regards” mechanism of pointing that out to us and us being accountable for meeting those “have regards” in accordance with our statutory objectives is a sensible approach and adds an additional layer of accountability and scrutiny for us.

There are other mechanisms within the future regulatory framework, which is out for consultation. Again, I do not have a strong view on them. I recognise that we are getting more rule-making powers and we may need to have more strengthening of the accountability framework.

[Abena Oppong-Asare]

Q I put the same question to the other witnesses.

Victoria Saporta: To response to your question directly, yes, from the very beginning we had discussions with Treasury colleagues about how, within the narrow confines of this Financial Services Bill—I can talk about the related but quite distinct issue of the future regulatory framework—we could be more accountable, given that the Bill effectively gives the Government powers to revoke particular narrow areas of what will become, on 1 January, primary legislation, and then asks the regulators to fill in those particular gaps. The Government were keen that the process should be part of an enhanced accountability framework.

As Sheldon has said, within the confines of this Bill, the enhanced accountability framework applies to the updating of the rulebook to take into account the new Basel III provisions and the investment firms regulation, and three new “have regards” regulatory principles, which are set out in the relevant schedule and refer to us having to take regard of relevant standards recommended by the Basel Committee on Banking Supervision. That applies obviously to the PRA. We need to take the likely effect of the rules on the UK’s relative standing as a place for internationally active credit institutions and investment firms to carry on activities. Also, we need to take into account the likely effect of the rules on the ability of firms to continue to provide finance to households and businesses. This is an enhanced accountability framework, and the Bill also obliges us to publish how we have taken into account these “have regards”.

Those measures are within the proposals in the Bill to enhance our accountability publicly. There is the separate issue of the consultation that the Government are currently doing on how the future regulatory framework will look, what the enhanced accountability provisions within that are and how they should apply. I would not want to pre-empt that consultation but, clearly, the Government are interested and are trying to look at ways of keeping our feet to the fire, and that is absolutely appropriate.

[Harriett Baldwin (West Worcestershire) (Con)]

Q My questions are for the FCA. In terms of the impact of the Bill on the end consumer and the end user of financial services, what impact assessment has the FCA done on the potential regulatory cost and how that might affect the consumer? We hear a lot from financial services firms about the cost to them, not only of regulations, but also of the fees that they have to pay to the FCA. What business plan and cost assessment has the FCA done on the impact that the measures and the responsibilities in the Bill will have on the industry, which will then be passed on to the consumer, or will it be a reduction in cost?

Sheldon Mills: We have not undertaken a cost-benefit assessment of the Bill. That would be a matter for the Government. We have considered, as we discussed in response to earlier questions, the impact on resources within the FCA. Our current intention is to keep that within our current financial envelope, so we are not predicting at this stage an increase in fees or levies to take account of the Bill. That is all I can say at this stage.

In terms of the impact of the Bill and the onshored legislation, when we review the regulations on the investment firms prudential regime and so on, we will do a cost-benefit analysis of the rules and regulations that we are proposing at that stage. At this stage, we will not be doing that—that would be a matter for the Government, not for us.

In terms of the impact on consumers more generally, as I said, there are aspects of the Bill that are very consumer enhancing. I do not think they came up very much on Second Reading, but the provisions in relation to breathing space will be very helpful for consumers facing issues around statutory debts, which we are interested in as a financial regulator. The issues in relation to the register will be extremely helpful for us in terms of tackling fraud and scams. There are many elements of the Bill that are helpful. It is complicated, but the investment firms prudential regime is also consumer enhancing; currently, the capital requirements facing investment firms are those for the systemically important banks, and they are not fit for purpose. This regime will help us have a capital and prudential regime that is fit for investment firms. So there are a whole host of aspects of the Bill that are supportive of consumer interests and will not necessarily increase costs in a way that will be inimical to their interests.

North of England: Economic Support

Abena Oppong-Asare Excerpts

Wednesday 11th November 2020 Westminster Hall

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

It is a pleasure to see you chair the debate, Mr Efford; I am not saying that for brownie points. This is my first time speaking as the Opposition spokesperson, and my first time speaking in a Westminster Hall debate; I am not saying that because I want extra speaking time.

I thank my hon. Friend the Member for Barnsley Central (Dan Jarvis) for showing leadership in bringing forward the debate; this is a really important time to talk about the issues facing the north. My hon. Friend mentioned how covid has massively affected the north—the unemployment numbers are much higher, and much more support needs to be given. I share those concerns and commend him for his leadership in helping individuals locally.

I thank everyone who contributed to the debate. All Members have shown so much passion for their constituencies, and I can see at first hand the challenges that they face on such a huge scale. It is good that we have been able to have deep, meaningful conversations without getting into any political point scoring.

I will mention those Members whose comments particularly touched me, although I will not be able to mention everybody. The right hon. Member for Rossendale and Darwen (Jake Berry) talked about football clubs in his constituency and the need for a northern economic recovery fund. My hon. Friend the Member for Halifax (Holly Lynch) talked about the £15 million deficit that her council has. I echo her calls for infrastructure investment in rail—a point also made by the hon. Member for Leigh (James Grundy). My hon. Friend the Member for Batley and Spen (Tracy Brabin) spoke passionately about the challenges in her constituency and about extending the local growth fund, which is particularly important. My hon. Friend the Member for Weaver Vale (Mike Amesbury) referred to the unemployment in his northern constituency and spoke powerfully about more investment in hydrogen. That point was echoed by a number of Members.

My hon. Friend the Member for York Central (Rachael Maskell) talked about the economic situation in York and called for transparent data, investment, modelling, infrastructure and a fresh economic plan. We need a shift towards economic investment. Rather than just maintaining current housing developments, we need to think about the future. The hon. Member for Wakefield (Imran Ahmad Khan) made a really strong case for his constituency, which encouraged me to visit it again. I have been there once, and I will definitely go again. He talked about the disparity between the north and the south, and how he is working collaboratively to try to address the issues.

It is crucial that attention is brought to this issue, because covid-19 will affect not just London but the whole country. We have to acknowledge that some parts of the country are suffering a lot more than others. We have already seen businesses close. I have seen the impact in my constituency and know from conversations how it has affected so many people across the country. The Government are failing to plug the gaps and address those issues—a point that a number of colleagues have echoed.

Businesses that have survived so far will struggle without extra support pumped in, and we need to think about that. We need to think about protecting local and regional economies. We need there to be local jobs, local businesses and strong economies. We need there to be local jobs, local businesses and strong local economies. That is not just so that people can earn a living and survive, but so that the different regions of the UK can thrive.

This is not just a Treasury issue, but a health issue, a tourism issue, a Department for Digital, Culture, Media and Sport issue and an environmental issue; it goes across Departments. We are facing one of the biggest challenges of our time, and we need to ensure that the north of England and all other regions that continue to be affected by covid-19 are fully supported.

As some of my colleagues mentioned, local authorities have been forced to negotiate the financial support that they will receive in tier 3. An example is the negotiations last month with Greater Manchester, which continued for 10 days—10 days when the Mayor of Greater Manchester was fighting for sufficient financial support for his constituents. Initially, the Government said to workers in Manchester that they would get only 67% of their pre-crisis income—67%. They said that 80% was impossible. Then, when the restrictions in the south were introduced this month, they changed their mind. Why was that?

The Chancellor of the Exchequer has yet to come clean on the phantom funding formula—I am still struggling to understand it—that he is using to determine funding for areas under tier 3 restrictions. What we really need is clear, consistent and fair funding for jobs and businesses, not to be playing poker with people’s livelihoods, because people are suffering. They are really suffering and are expecting to see leadership from us so they can address the barriers they face.

I want to echo calls from hon. Members in this Chamber, such as that from my hon. Friend the Member for Barnsley East (Stephanie Peacock), who talked about an exit plan for the national lockdown. That was echoed by other Members. The Chancellor needs to end the last-minute scramble to announce economic support measures and set out a proper plan for the next six months.

The Government need to fix test, trace and isolate, so that different parts of the UK can understand their local covid risk and find a way to recover. We need clarity—this has been echoed by a number of colleagues, such as my hon. Friend the Member for Bradford South (Judith Cummins)—on the economic support for local areas and what they can expect once lockdown finishes. The Government need to set out what they plan to do with regard to recovery, jobs and rebuilding businesses.

So many people have fallen through the gaps. Now the Government must step up, working across all parties and with local leaders, to ensure that those affected are supported. A number of people have talked about a green economy—something I support. Can the Minister confirm that the upcoming spending review will secure a green recovery across the country? The Labour party really wants to see a safety net that includes scrapping the five-week wait for universal credit, the two-child limit, the savings cap and the overall benefits cap. That would help to alleviate the financial hardship faced by many of those on the lowest incomes during this pandemic.

We need to see the Government stepping up to provide support for those who have been excluded from the start. There is still nothing beyond social security for those who have been excluded, and many of the self-employed remain cut out from social security if they have amassed small amounts of savings.

The support must be long-term and help different regions, including the north, to respond to their individual needs and support local growth. The Government must put in place changes to enable people who are off work to use the time to gain valuable skills for the future. That needs to be done urgently; we do not have time to just sit and have conversations about it. Rapid work needs to be done.

I appreciate that it will take years to rebuild crucial industries and identities if this support is not secured. The Government must act now and treat every region of the UK with the same respect for local people and local pride.