Loan Charge

Adam Holloway Excerpts

Thursday 11th April 2019 Commons Chamber

[Adam Holloway (Gravesham) (Con)]

I pay tribute to the right hon. Member for Kingston and Surbiton (Sir Edward Davey) and the Loan Charge Action Group for all that they have done, and indeed to the Minister, who for a long time has been given a hard time on the subject.

I am speaking today on behalf of about 100 constituents whose lives have been blighted by this and who have lived with awful uncertainty for about three years. After last week’s debate, I met a number of them at the City Praise Centre in my constituency. I have to say that when I first met constituents about this, my heart did not exactly bleed for them; it is not fair for one particular group of people to pay income tax at a lower rate than the rest of the workforce, and lots of my constituents are in real need, living in substandard accommodation and waiting months for hospital appointments, so I cannot condone the systematic loss of revenue to the Treasury.

[Bob Stewart]

The people who are coming to my hon. Friend are normal people, such as nurses—some of them actually work for HMRC.

[Adam Holloway]

I thank my hon. Friend and absolutely agree.

My view has since shifted, however, as I have come to understand more about their circumstances. These people are not pocket Al Capones out to defraud the system; they are self-employed professionals who are contracting to different entities, paying their own pensions, without the protection of regular employment, and trying to avoid the complexities of IR35. I guess any of us would wish to minimise the tax we pay, and HMRC knew about those arrangements for decades and was slow in taking legal action, and inept in shutting it down.

[Sir Henry Bellingham (North West Norfolk) (Con)]

Does my hon. Friend agree that one of the great iniquities here is that HMRC knew what was going on but did not actually do anything about it with expedition and decisiveness at the time?

[Adam Holloway]

Absolutely, and now of course it is pursuing an aggressive policy that, on any analysis, is retrospective on my constituents. These constituents may have been naive and over-optimistic, but most of us are in no doubt that, for many years, they all believed that these schemes were lawful and an effective means of mitigating their tax. I therefore support a delay to the implementation of the loan charge to allow an independent tribunal to assess the issue of retrospectivity, and, in light of that, to consider whether the loan charge is fair and proportionate after taking into account, first, the failure of HMRC to take effective action for all those years, and, secondly, the fundamental protections that every taxpayer should expect.

Finally, I fear that this policy is another example of how those at the very highest echelons of our Government seem to have a tin ear when it comes to the good people whom they represent.

2019 Loan Charge

Adam Holloway Excerpts

Tuesday 20th November 2018 Westminster Hall

[Ross Thomson (Aberdeen South) (Con)]

It is a pleasure to serve under your chairmanship, Mr Walker. I congratulate my hon. Friend the Member for Wycombe (Mr Baker) on introducing the debate and being such a champion on this issue. My inbox and my surgeries have been inundated.

I represent Aberdeen South, which is the energy capital of Europe and the hub of our oil and gas industry. Many who worked in oil and gas were actively encouraged by their companies to get involved with such schemes, to set up a personal limited company and to get off the company books. Many did so for many years. Many felt assured that they were being advised by chartered accountants and tax advisers. Everything was above board. It was their belief that their professional accountant could not advise anything illegal; otherwise, their chartered status would be revoked.

[Adam Holloway (Gravesham) (Con)]

Of course it is a failure of successive Governments, but in 2011 the Government actually looked at this. They did not come up with a definitive answer and as a result these schemes proliferated.

[Ross Thomson]

My hon. Friend is absolutely right and I could not agree with him more. For many, this option seemed to be the obvious choice. The retrospective nature of this decision is causing great distress. As has been said, there is a huge human cost. I want to take this opportunity to share with the Minister and hon. Members the stories of my constituents.

One constituent wrote to me and said:

“It’s been going on for a few years now and taking its toll on my family. As we are unsure where we’ll get the money to pay any outstanding tax, their bullying tactics in getting you to sign up to pay and the fact they demand you to reach a settlement with them, even though when we have done everything they ask, they have still not come back with any settlement figures.

Not only that, they are saying even if you settle or pay back the loans, there’s a strong possibility it won’t end there, so we go back to their scaremongering tactics they’ve deployed for you to pay up front and ask questions later, it’s totally unjust for our future as being a democratic society”.

Another constituent said:

“I like to think I understood the risk I was taking and had every confidence in the scheme I was using, I did not entertain the prospect that the Government would be prepared to violate the core principle of the rule of ‘legal certainty’ by introducing retrospective legislation going back 20 years…This weekend I have received my settlement ‘offer’ under HMRC’s settlement offer and am currently in the process of deciding whether or not to accept their terms. Whilst I sincerely would like to settle and move on, I am deeply concerned that their CLSO2 is extremely unfair and punitive.”

Iraq Inquiry Report

Adam Holloway Excerpts

Thursday 14th April 2016 Commons Chamber

[Mr Adam Holloway (Gravesham) (Con)]

I completely agree with my right hon.—and gallant—Friend the Member for Haltemprice and Howden (Mr Davis) that it is unconscionable to continue to delay the publication of this report. National security checking of the Iraq inquiry is holding up publication of a report that is critical to our national security. Only by understanding how we got involved in this gigantic geo-strategic error of an invasion can we learn the profound lessons for our political class, the military and the diplomatic establishment. Indeed, the question is ultimately about the whole mechanism of government. The sub-text for too many of us in politics and the media is who might be damaged by the contents of the report. We play to the gallery, and love to play the man and not the wrecking ball that shattered security assumptions and the balance of power in the middle east.

Is not the real question the substance of the report and the answers it might give to how we managed to get embroiled in Iraq, perhaps providing pointers to the sister conflict in Afghanistan, our well-intentioned but disastrous intervention in Libya and our clueless response to the rise of so-called Islamic State? Six hundred and thirty-four British troops and at least 150,000 civilian lives were lost in them, and as a consequence we face a far greater strategic threat from theo-fascism than we faced at 9/11.

When the report is published we might hope that, through Sir John’s access and witnesses, we can start the necessary self-examination of how we got ourselves into these wars. I believe that our ongoing failure is caused by a lack of effective political and military leadership.

From what I have seen on the ground since I became an MP in 2005—in Iraq, Afghanistan, Libya and last week in Syria with my right hon. Friend the Member for Haltemprice and Howden—I believe that the full panoply of the Government machine has become dysfunctional in four overlapping parts. First, we have suffered from having a narrowly focused class of professional politicians who understand politics, not leadership, and who have almost no understanding of the complexities or realities on the ground. Secondly, we have ambitious civil servants who know that careers advance by staying close to what the rest of the group think. Thirdly, we have military officers with a civil service mindset who have also learned that the right answer is “we can do it” rather than “we can’t do it without…”. Finally, we have experts who are ignored or marginalised.

No experts were present at President Bush’s Prairie Chapel ranch when Prime Minister Blair agreed to support a US-led invasion of Iraq. Of course, Prime Minister Blair was determined to uphold the US-UK alliance, but he does not seem to have made even the slightest attempt to stop his friend President Bush from driving us drunk into Iraq. Back home, we needed to find reasons to go into Iraq, and we created the infamous dossier in a sort of late-night essay crisis. So late into the night did they work in Downing Street that they managed to read the bit from the top-secret, single-source report about missiles but failed to read the “analyst’s comment” section of the CX. They failed to see the comment that there was no way in which the missiles referred to could still be in the hands of Saddam Hussein.

Most of the public, as well as many people in Parliament, were in good faith convinced by the Prime Minister. Later, we convinced ourselves that we were in Afghanistan to “fight them over there” so that we did not have to “fight them over here”. Several years ago, after I had given a presentation to an immensely senior person in a previous Government, he asked me, “Adam, are you really saying that the Taliban are not a threat to the UK?” That revealed a fundamental misunderstanding of the difference between the Taliban and al-Qaeda; it almost beggared belief. That difference between a local xenophobic tribal traditional movement and a death cult was not, and is still not, understood.

We cannot be too unfair on the politicians, however, because they are sometimes not very well served by their civil servants. Throughout these wars there has been a tendency to push what I call a “good news only” culture—what General Petraeus described as “putting lipstick on pigs”. We have all heard the mantras, have we not? “We are where we are. We’re making progress. Yes, there are some challenges, but overall we really are moving forward.”

A Secretary of State for Defence was in a briefing at Basra air station that a friend of mine attended. Apparently, the Minister banged the table and said words to the effect of “Why have you not been telling me the truth? I had no idea things were quite so bad.” The Minister denies this.

Another friend was astonished accidentally to find himself in a briefing in Basra at which all those assembled were told what they should and should not tell Prime Minister Gordon Brown. At a briefing in Helmand, the Defence Committee—on which I then sat—was told, as usual, how brilliantly things were going, but when I was on a private trip to Kabul a few weeks later the official in question bounded up to me in a bar and said, “Adam, I’m really sorry about that briefing I gave you the other day in Helmand. The trouble is, we just don’t get promoted for telling the truth.”

[Paul Flynn]

I am very much enjoying the hon. Gentleman’s authoritative speech. Will he confirm what he has just said, because it is a matter of some importance? I was expelled from the House for saying the same thing some years ago. Will he confirm that the story that those young people going to Afghanistan were actually stopping terrorism on the streets of Britain was an untruth; that those people were deluded into going there in the belief that they were defending their families here; and that the only reason the Taliban were killing our soldiers in Afghanistan was that we were there and that as soon as we came out they lost interest? Does he think that there was a continuing deception of our soldiers, many of whom lost their lives?

[Mr Holloway]

I entirely agree with the hon. Gentleman in the sense that the original invasion of Afghanistan was highly effective and that the Afghan people essentially removed al-Qaeda and the Taliban, but unfortunately it was the disastrous NATO deployment to Afghanistan that whipped up the insurgency. I shall come on to that point in a minute if I may.

As I was saying, people do not get promoted for telling the truth. I sent my first draft of this speech to a friend who is a well-known and courageous BBC foreign correspondent. He emailed me, saying, “Reminds me of being attacked for negative coverage that I put out in Iraq and Afghanistan by officials who later admitted, either privately or in memoirs, that things were actually worse than I was saying in my news reports.”

With some hugely honourable exceptions, the same is true of senior military officers. After a recce of Helmand in 2004, a military officer reported back to his boss, a general at Permanent Joint Headquarters. The general asked him, “So, what’s the insurgency like in Helmand?” The officer replied, “Well, there isn’t one, but I can give you one if you want one.” At the time, the mission statement at PJHQ actually stated that the military were to give “politically aware” advice. The top brass volunteered the UK for Helmand and, as in Iraq, assured Ministers that it was doable with the original force numbers.

We experienced exactly the same with the lack of equipment. Military people in Afghanistan constantly reminded us that we had enough helicopters to do the job. A few weeks before Colonel Rupert Thorneloe and Trooper Joshua Hammond were killed by an improvised explosive device, Rupert wrote that he and his men were making “unnecessary...road moves” because of the lack of helicopters. He went on to say:

“This increases the IED threat and our exposure to it.”

A senior British general briefed the Defence Committee at ISAF headquarters in Kabul, and basically tore my head off for being a naysayer. When I was back in Kabul a few weeks later, again on a private trip, I went to see him at the end of the day. As I rather nervously walked into his office, I said, “Well, general, are we still winning?” He said, “If we damn well are, I’ll be dead by the time we do.” I was hearing one thing in public and another in private.

As a soldier, I was in Iraq before the war in 1991, and in 2003 I found myself back on the ground. As I have said before, I will never forget driving into Mosul after the regime dissolved and the city collapsing into anarchy before our eyes. It was the first time as a journalist that I had kept a sub-machine gun close to me. There were bodies on the streets. There was chaos, and a really nasty, threatening environment. American jets were coming down low, fast and noisily to intimidate people. I went to a police station to find out where the American troops were in the city. Saddam Hussein lookalikes were standing around, and the police brigadier general told us where the Americans were. Just before we left he said, “When you find the Americans, can you please get them to come up here and give us our instructions?” I hope you will agree that it was pretty astounding that, as their regime was falling, they were taking instructions from the Americans. I found the American colonel, and when I had done my business with him I said, “By the way, the Iraqi police brigadier general up the hill wants his instructions.” The American colonel said, “You can tell him to go **** himself.” It was quite extraordinary.

We ignored other experts who could have helped us. Of all the people who knew anything about Iraq, who suggested it was a good idea to dismantle Ba’athists like those police officers from the various structures of government? Would any expert have thought that that was a good idea, if asked? I do not know of anyone, apart from General Tim Cross, who thought about our responsibility to the people of Basra after the invasion.

In Afghanistan, too, the experts were consistently ignored. I was there in 1984—for part of my gap year before I went to university—when the mujahedeen were fighting the Russians. No one listened to our officials who had run the training programme for the Afghan resistance. No one listened to the senior ex-mujahedeen commanders living in north London or in the suburbs of Kabul. No one heard the concerns being expressed by the expert contractors to our foreign intelligence services, who knew many of the Taliban leadership personally. No one spoke to the agronomists who had been working for decades in the Pashtun belt.

[Mr David Davis]

Does my hon. Friend agree that the criticisms he is rightly laying at the door of several different establishments should properly be laid at the top of those establishments? Just before the Iraq war, a regimental colleague of ours serving in the planning section of the Ministry of Defence said to me, “David, I have never known a war in which the British officer class has been less happy”—so somebody was asking questions and not getting any answers.

[Mr Holloway]

Absolutely. If my right hon. Friend will forgive me, I will give the House one more anecdote on this subject. I had a barbecue in my garden in Gravesend for the officers of a regiment that was about to go to Afghanistan. I asked the officer who would be responsible for engaging with the local community in Helmand province how he would do that. He came up with a pretty unconvincing answer. About 15 minutes later the colonel, the commanding officer who was about to lead his troops on a six-month tour, took me aside and said, “Adam, I’ll tell you the best way to influence the people living in Helmand positively towards us: it’s not to get on the plane in the first place.”

No one listened to the experts. The Pakistanis, for example, know a little bit about Afghanistan and the Taliban, and the Russians certainly do—but of course, as ever, we knew it all. I remember sitting in Kabul with the general who had looked after Helmand province for a couple of years after the Russians had left. I said to him, “ISAF must be consulting you the whole time.” He looked down at his four mobile phones and said, “No one has rung me yet. I am still waiting for them to ring.”

[Bob Stewart]

I thank my hon.—and gallant—Friend for allowing me to intervene. History teaches us lessons. To maintain the safety and security of civilians, the allies who liberated south-east Asia rather distastefully used the Japanese army. We should have understood that lesson when the war in Iraq was apparently over.

[Mr Holloway]

I thank my hon. Friend for that interesting intervention.

To continue my theme of the inexperienced political class ignoring the experts, Britain’s one ambassador who actually understood what was going on and expressed it to politicians now works for HSBC. On Syria, we have not taken advice from officials who have been deployed forward with the Syrian opposition, as was. They argue that ISIS is fundamentally a political and counter-terrorist problem, much less a military problem, and a function of broken politics in the countries concerned and in the wider region. We have again thrown ourselves behind an American-led, largely military strategy that, until recently, threatened to turn the whole of Syria into hell.

Iraq went wrong, and the NATO deployment to Afghanistan cannot be counted as a success, and neither can Libya or Syria. The sanctions being imposed on ordinary people in Syria today cannot be considered a success.

[Sir Gerald Howarth]

I am grateful to my hon.—and gallant—Friend for giving way. I agree with much of what he says, and I particularly endorse his comments about military commanders. They do themselves, their country and this House no service by not telling us the truth. They need to speak truth unto power.

I gently suggest to my hon. Friend that we went into Libya because Benghazi was about to be subjected to genocide. Had we not done so, we would have been criticised for allowing thousands of innocent people to be destroyed. We were on the horns of a dilemma. The Prime Minister was in a difficult position, and I do not blame him for his decision. We would be in just as bad a position now had Benghazi fallen.

[Mr Holloway]

I drove down with my friend Leo to the frontline at Ajdabiya. The armoured vehicles that had been hit on the edge of Benghazi were still warm. I completely agree that if the vehicles had got into town it would have been enormously serious, but to proceed with regime change, when some of our officials did not accept that there were tribal issues in Libya, was a big mistake, for which the people of Libya are paying the price.

Our overall approach since 9/11 has left our country facing much greater dangers. Neither Saddam nor the Taliban threw so much as a petrol bomb at the west, yet the images of Iraq, Afghanistan, Libya and Syria on the websites of global jihad will have terrible consequences for our people.

After the chemical outrages in Damascus, Parliament was asked to vote to bomb the Assad regime. Three years later, we were again asked to vote to bomb, but this time it was to bomb the forces opposing Assad. I wonder how many of us here voted to bomb both the Syria Government and their opponents. It is little wonder, especially after Iraq and Afghanistan, that the public do not have much confidence when Ministers tell them that they deserve their backing in such endeavours.

When the Chilcot report eventually is published, we will need to scour its content in the hope that it might lead us to take more seriously the security of our people and move us away from the dreadful career politics that have infected us. Chilcot may point to dysfunction rather bigger than just Iraq and rather closer to this Chamber. We must learn from our mistakes, and we owe that to our people and to those in countries where we have contributed to unimaginable insecurity.

Banking (Responsibility and Reform)

Adam Holloway Excerpts

Tuesday 7th February 2012 Commons Chamber

[Mr Bailey]

I agree. Lower-paid bank employees, of whom I was once one many years ago, have suffered collateral damage as a result of the antics of those who were their superiors and managers. If we are to debate the matter in the round, we must make that distinction.

[Mr Adam Holloway (Gravesham) (Con)]

Will the hon. Gentleman give way?

[Mr Bailey]

No, I have given way twice, and there is a time limit on speeches.

There is a disconnect between wealth creation and money making in our society, which is offensive to our sense of fairness and bad for the economy as well. The business context can be demonstrated in a number of ways, one of which came home to me when I visited Rolls-Royce in Derby, and spoke to a bright, young girl at the company who was an Oxbridge engineering graduate. She told me that of her Oxbridge cohort she was the only one to go into engineering with an engineering degree: other engineers went into banking. Given the debate about the importance of manufacturing, engineering excellence and rebalancing the economy, to my mind, that demonstrates an important issue: we will not rebalance the economy unless we rebalance the rewards for working in different sectors. We cannot achieve one without the other.

Another factor is the relationship between banks and industry. It is fair to say that the German economy has survived better than those of other European countries, and one of the reasons for that—I accept that it is not the whole picture—is the relationship between banks and industry, which historically have worked together on a much longer-term basis. German SMEs are not totally immune to the problems facing their British counterparts, but they are not nearly as great. The Minister set out the situation with Project Merlin and gave a litany of schemes that have been put in place to help small businesses, but the fact is that lending is falling. Probably every Member has an example of an SME in their constituency coming to them and saying, “If only we could get a grant or get the bank to help, we could invest this or buy that, and we would be able to employ more people and expand, and that could get us out of recession.” The fact is that there is a dysfunctionality in our banking system’s relationship with industry that is grossly impeding our ability to create jobs and grow our way out of recession.

My hon. Friend the Member for Streatham (Mr Umunna) quoted Robert Jenkins, a member of the Bank of England’s Financial Policy Committee, when he made the point that £1 billion less in bonuses could provide £20 billion for SMEs. Banks must factor in risk when lending to businesses, but that £1 billion, if diverted, would be written off their balance sheets anyway. Why not look at some scheme whereby money that might have been allocated for bonuses is diverted, either through taxation or another scheme, to lending for small businesses? That could make a huge difference to the capacity of small businesses to play a full role in growing us out of recession.

Alternatively, we must look at tax. The bankers bonus tax would provide the basis for stimulating the economy. A high proportion of small businesses say they are not applying for loans because they are so lacking in confidence about their future prospects and current levels of consumer spending, and that is a barrier. Getting 100,000 more people into work as a result of that stimulus would help to overcome the problem.

I will conclude my remarks by acknowledging—one or two Members have mentioned this, quite validly—that our financial services industry in itself is hugely important to our economy, so we must be careful to ensure that any measures are proportionate and will not have unintended consequences that could damage the industry. However, there is no doubt whatsoever that the industry is not serving our wider economy or society as well as it could do. The sorts of measures that the Opposition propose would go a considerable way towards changing that.

We have a window of opportunity, with public opinion behind us and all the economic and social statistics demonstrating the validity of the case for taking action. The Government should lead on this, but at the moment they seem to be finding excuses for not doing so. If they would only apply to this matter the same resolution and commitment they have shown on welfare reform and other areas, we could have a change that would transform the economy and generate that sense of fairness in this country.

--- Later in debate ---

[Stephen Williams]

I am responsible for my party’s statements and, indeed, my party’s mistakes in certain instances but, as I said in my intervention on the hon. Member for West Bromwich West (Mr Bailey), in the previous Parliament, my right hon. Friend the Member for Twickenham (Vince Cable) warned consistently about the coming economic catastrophe. The hon. Gentleman was not here at the time, but I think that he would have been ashamed to hear the jeering and cat-calling that my right hon. Friend had to put up with at the time.

It was the culture, not just the lax regulation, that led to some of the problems we have experienced in recent years. During the last decade of the Labour Government, executive pay rose on average by 13.6% per annum, while the FTSE share index rose by just 1.7% a year. In 2002-03, the bankers bonus pool, which is at the centre of the motion, totalled £3.3 billion. In 2006-07, the year before the crash and everything starting to go wrong, the pool was £11.4 billion. In the year of the crash itself, when all the bankers were staring into the abyss, the pool was £11.5 billion. I do not recall any Minister at the time being worried about the size of the bonus pool or the distorting effect it must have had on executive behaviour.

[Mr Holloway]

I do not know whether the hon. Gentleman finds this attitude terrifying, but I do, and it is on both sides of the House. We can blame the bankers all we like, but the truth about the problems across the developed world and the reason we are in schtuck is that successive Governments have not been able not to give in to demands to spend more money. In a global economy savvy investors and taxpayers—the best people—run off when they see a lynch mob. This is crazy.

[Stephen Williams]

My hon. Friend makes an interesting philosophical point about the whole culture that we have perhaps all grown up in over the past 30 years. It would require more than an eight-minute speech in a three-hour debate to deal seriously with those issues, but I am trying to raise some of them. For instance, when considering how to respond to the outbreak of collective madness on the streets of some of our cities last summer, we should recognise that some of what he says is relevant to the feelings of dislocation and despair that some people felt, but it was also about out-of-control remuneration, lax regulation and complacent political oversight. Opposition Members do not like me saying this, but I say it every time and will say it again: a previous Labour Business Secretary, Peter Mandelson, said that new Labour was intensely relaxed about people getting filthy rich. Because of that, we saw the dislocation of director and shareholder interest.

Oral Answers to Questions

Adam Holloway Excerpts

Tuesday 8th February 2011 Commons Chamber

[Mr Osborne]

The reason difficult decisions are being taken is because of the policies of the Labour party. Until the Opposition—and in particular the man who had greater influence over Labour’s economic policy than any other—face up to that, they will not be a credible alternative. We are clear that we need to put in place steps to deal with the budget deficit and to ensure that the banks lend more, including in Nottingham, and pay less in bonuses than they did when Labour was in government. We expect to have announcements on that in the next week, but we need also to reform the way we help people who are unemployed, and that is what the Work programme will do.

[Mr Adam Holloway (Gravesham) (Con)]

T6. Given the astronomical levels of debt left to families in my constituency, can the Chancellor confirm that the planned cuts for this April that he inherited from Labour were just £2 billion less than those of the Government?

[Mr Osborne]

I can indeed confirm that, and this is one of the great paradoxes at the moment. The plan, which the previous Government all appeared to have signed up to, including the shadow Chancellor—that is, the plan put in place by the last Chancellor of the Exchequer—starts in eight weeks’ time and involves billions of pounds of cuts, amounting to just £2 billion less than what we are planning this year. We have not had any proposals from the Opposition; they have eight weeks to come up with a plan.