Self-employed Persons: Financial Support

Bambos Charalambous Excerpts

Tuesday 24th March 2020 Commons Chamber

[Steve Barclay]

My right hon. Friend draws attention to the challenge that emerged from some earlier questions: the simpler the scheme, the less it accommodates often legitimate and deserving issues that Members raise on behalf of their constituents. I am very happy to have further discussions with him, but he will recognise the tension between simplicity and addressing all the concerns that colleagues raise.

[Bambos Charalambous (Enfield, Southgate) (Lab)]

Two of my constituents are musicians. One is in an orchestra, and the other is a freelancer. One will get 80% of his income paid, and the other will be on statutory sick pay. Surely, it would be better to have a system where one wealthy freelancer benefits but 100 do not go hungry.

[Steve Barclay]

I refer to my earlier comments. We are trying to target the support towards those who are in need, in a way that is operationally as deliverable as possible, mindful of the issues that have been raised. We also want to accommodate the other point that colleagues from across the House have raised, namely that we must ensure that those who have legitimate needs are not excluded from the measures.

Loan Charge 2019: Sir Amyas Morse Review

Bambos Charalambous Excerpts

Thursday 19th March 2020 Commons Chamber

[Bambos Charalambous (Enfield, Southgate) (Lab)]

Let me say from the outset that I am no fan of tax avoidance. The law on disguised remuneration schemes should have been—and now has been, rightly—tightened, but the aggressive retrospective action taken by the Government in pursuing the loan charge policy and the profound effects that this has had on many people’s lives are quite simply unjust and unfair.

A significant number of people affected by the loan charge policy, including some of my constituents, are freelancers, contractors, locums and agency workers. When IR35 was introduced by the Government of the day in 1999, some of those who were employed by limited company or personal service companies sought and took professional tax advice and were advised to use umbrella company loan schemes instead, as those schemes were “tax law and HMRC compliant”. Acting in good faith and following the advice to the letter, many entered into these loan schemes. In some cases, particularly in the public sector, people were not even aware that they were being paid through loans.

When the loan charge was introduced in 2017, seeking to recover a 20-year retrospective tax charge for all remuneration paid in the form of a loan, those affected were rightly angered and aggrieved, particularly as HMRC lumped all the loans together into one and insisted on the tax being paid in a single year. The shock and stress of such a draconian and unjust measure caused intense pressure on many of those affected and their families. There have been seven known suicides by people who are facing financial ruin as a result of the demands of backdated tax from HMRC, even though it is questionable whether the tax was even owed. Relationships have broken down, and it has affected people’s mental health.

It is worth noting that HMRC has pursued individuals acting in good faith, rather than those who enabled the disguised remuneration loan schemes. Thankful for small mercies, the fact that HMRC is now only pursuing schemes going back 10 years, instead of 20, is to be welcomed, but many individuals are still caught by the current situation. It seems that, unlike in other areas of law, statutory time limits are of no consequence.

When the Prime Minister was running to be leader of his party, he promised a review of the loan charge situation. That review was led by Sir Amyas Morse, and the report was published in December 2019. While I welcome the recommendations of the Morse report, many of which the Government have accepted, unfortunately it does not go far enough. The report also has one fatal flaw: it concludes that the law was clear from 2010. There were a number of ambiguities at the time, such as the situation relating to those who are self-employed. If the law was so clear at the time, why did HMRC not enforce the law then, but instead choose to introduce the loan charge in 2017?

As a member of the loan charge all-party parliamentary group, I call on the Government to do a number of things. I ask them to amend the date from which the loan charge applies from 2010 to when the Finance Bill received Royal Assent in 2017; to ensure that closed tax years remain closed; to ensure that those with incomes of under £30,000 have any outstanding balances written off after 10 years; and to ensure that legislation covers business owners and directors, as well as individual contractors.

The Government and HMRC’s reputation has been damaged by the way that they have mishandled the loan charge situation. One principle that must underpin our legal and tax system is that things should be just and fair. Unfortunately, the loan charge and its aggressive application has been neither just nor fair.

[Sally-Ann Hart (Hastings and Rye) (Con)]

The hon. Gentleman talks about the system being just and fair. As British people, we uphold the rule of law. That is part of the very nature and fabric of Britain. Retrospective legislation, in itself, is against the rule of law.

[Bambos Charalambous]

The hon. Member makes an excellent and pertinent point. We are discussing tax going back 20 years, and retrospective legislation should not be applied in this situation, because that is clearly unfair and unjust.

We must consider that, beyond the financial aspects of tax recovery, we are dealing with real people who need to be treated with fairness and respect. We have a moral duty to ensure that no more homes are lost, no more bankruptcies are filed, no more lives are lost and no more families are broken because of the loan charge policy.

Coronavirus: Employment Support

Bambos Charalambous Excerpts

Thursday 19th March 2020 Commons Chamber

[John Glen]

I take the challenge from my hon. Friend in the spirit in which it was intended. There is no sense that the Treasury is trying to over-engineer anything. We are not trying to restrain spending for the sake of restraining it. We want to bring forward an effective package of measures that effectively meets the needs of the most vulnerable. My hon. Friend makes the reasonable point that a number of colleagues of great seniority have raised significant points of interest, and I will ensure that their contributions are heard at the heart of this process today.

[Bambos Charalambous (Enfield, Southgate) (Lab)]

Dental practices are at high risk of spreading coronavirus, yet there was nothing for them in the financial package on Tuesday, which means they have to stay open, with an increased risk of spreading coronavirus. Will the Government give assurances that they will cover fixed-price dental costs so that dentists can close and provide only urgent care?

[John Glen]

The hon. Gentleman makes an interesting point. I will take it back to my colleagues in the Department of Health and Social Care and see what can be done.

Budget Resolutions

Bambos Charalambous Excerpts

Monday 16th March 2020 Commons Chamber

[Bambos Charalambous (Enfield, Southgate) (Lab)]

Uncharacteristically, I congratulate the Chancellor on his Budget: a Budget that admits the immoral failure of Tory austerity. The Tories’ decade of cuts has been savage, and, while I acknowledge that the Budget is a step in the right direction, it will not undo the damage done to our communities by austerity.

Let us not get carried away by the Tories’ apparent budget U-turn; let us check the small print. The Chancellor was right to promise that

“whatever extra resources our NHS needs to cope with coronavirus, it will get.”—[Official Report, 11 March 2020; Vol. 673, c. 279.]

The coronavirus pandemic is changing rapidly and could be the greatest challenge in a generation, but there are some glaring omissions from the Budget, which, if unaddressed, will repeat austerity’s failings.

Local councils are responsible for public health, and find themselves on the front line fighting coronavirus. Public health plays a huge role in preventing ill health, protecting the population and promoting education through communication, but with the new financial year for councils a fortnight away, there is still no mention of the public health grant. The Chancellor managed to find £500 million a year for potholes but said nothing about public health, and there has been an £850 million real-terms cut in public health funding. The Health Foundation predicts that an annual injection of £3.2 billion is needed to reverse Government cuts.

In my constituency, we have an endemic problem with public health funding. Earlier this month, my hon. Friends the Members for Enfield North (Feryal Clark) and for Edmonton (Kate Osamor) and I wrote to the Prime Minister to point out that public health grant calculations do not take measures of need and deprivation into account. Enfield is the ninth most deprived borough nationally. Even before coronavirus hit, the public health needs were complex and serious, yet Enfield receives £48 per head for public health whereas nearby Islington receives £104, more than double that amount. This simply feels like a postcode lottery. It is immoral to allow health inequalities to deepen in one of the poorest boroughs when fair funding could reverse the process.

That brings me to the second glaring omission, social care. We know that older populations and those with underlying health conditions are particularly vulnerable to this cruel virus, but it is also projected that the majority will recover. However, to be discharged after a hospital stay, many vulnerable people will rely on social care infrastructure, and there is a real danger that people will continue to be stuck in hospital. Let us take the example of my constituent’s mother. Despite being medically fit for discharge, she found herself unable to leave hospital for many weeks while waiting for a social care assessment. Once the assessment was done, there was a lack of appropriate social care, so she was stranded in hospital for an extra two months. That meant that a hospital bed needed by a sick person was being occupied by someone who did not need it. In November last year, one in three people up and down the country were waiting in hospitals for social care services.

The pandemic’s pressure on the NHS and the pressure on social care are intrinsically linked. An underfunded social care system only increases the pressure on the NHS when people cannot be discharged from hospital. The Chancellor should recognise that the social care system needs rebuilding. A situation that was unacceptable before coronavirus is now intolerable. We need immediate financial support to help adult social care services, keep vulnerable residents safe, and reduce pressure on the NHS. Public health must be properly funded, and historical injustices in funding must be urgently addressed.

To conclude, I welcome increased NHS funding, but I will not fall for the populist Budget hype. Other parts of the health and social care system have been neglected. Until the glaring omissions of funding for public health and social care are addressed, the Budget lacks substance. My constituents demand proper funding for our council, which is on the frontline of the fight against the pandemic.

Oral Answers to Questions

Bambos Charalambous Excerpts

Tuesday 11th February 2020 Commons Chamber

[Jesse Norman]

That is a very telling point, and I draw the House’s attention to the parallel issue of sanitary products for women, on which I am pleased to say we will be able to act after we have left the EU.

[Bambos Charalambous (Enfield, Southgate) (Lab)]

10. What recent discussions he has had with the Secretary of State for Housing, Communities and Local Government on the adequacy of allocations of funding for local authorities.

[The Chief Secretary to the Treasury (Rishi Sunak)]

The financial health of local authorities remains a priority for the Government and for me personally as a former local government Minister. I am pleased to say that next year’s local government finance settlement outlines and will deliver the biggest year-on-year increase in local government spending power for over a decade.

[Bambos Charalambous]

For over 10 years, Enfield has been significantly underfunded, which has had a huge impact on the provision of local services. The proposed settlement goes nowhere near addressing the shortfall. Will the Minister meet me and the Enfield Borough Over 50s Forum to discuss Enfield’s needs?

[Rishi Sunak]

I am pleased to say that the Ministry of Housing, Communities and Local Government is undertaking a review of the funding formula for local government, and I am sure that Enfield Council has participated in that. There will be a formal consultation later this year, and I encourage the council to input its particular needs if those are not adequately captured by today’s formula. In the forthcoming financial year, Enfield can look forward to an almost 6% cash increase in the spending power it has available for its residents and communities.

Oral Answers to Questions

Bambos Charalambous Excerpts

Tuesday 9th April 2019 Commons Chamber

[Bambos Charalambous (Enfield, Southgate) (Lab)]

T3. My borough of Enfield has seven times more households living in temporary accommodation than the national average, with 18% of people in Enfield classed as being low paid. I have no doubt that the two figures are related so how can the Chancellor defend the Government’s record on in-work poverty, insecure work and zero-hours contracts, which have caused so much hardship for so many?

[Elizabeth Truss]

I think the hon. Gentleman should speak to his friend the Mayor of London about what he is doing to increase house building in London.

Oral Answers to Questions

Bambos Charalambous Excerpts

Tuesday 5th March 2019 Commons Chamber

[Mr Hammond]

As my hon. Friend is aware, because I have said it already this afternoon, the spring statement is not a fiscal event, but I will update the House on the Office for Budget Responsibility’s forecasts for the UK economy and for the public finances. I will follow the approach that I took at spring statement 2018 and also provide the House with an update on progress since the 2018 Budget and set out our intended direction for announcements later in the year. Although it is not a fiscal event, I already anticipate my hon. Friend beating a path to my door before the Budget in the autumn.

[Bambos Charalambous (Enfield, Southgate) (Lab)]

T3. Schools in my constituency face severe budget pressures running into millions. By 2021, some schools will not be able to afford any teaching assistants, learning support assistants, office staff or site staff. Does the Chancellor realise the perilous state of schools’ finances, and will he announce adequate funding for schools in his spring statement next week?

[Elizabeth Truss]

As the Chancellor said, the spring statement is not a fiscal event. We are increasing school funding in real terms per pupil, but of course we need to ensure that we are investing properly in our education system. We are looking at human capital and what will be the most important investments, and we will report on that at the spending review.

Securitisation Regulations 2018

Bambos Charalambous Excerpts

Wednesday 13th February 2019 Commons Chamber

[Bambos Charalambous (Enfield, Southgate) (Lab)]

It is a pleasure to follow the hon. Member for Aberdeen North (Kirsty Blackman).

Not everyone appreciates the role that securitisation of loans and debts played in the financial crash of 2008, but it was a substantial role, with devastating consequences. To give some context, in the years prior to 2008, a calamitous decision was taken by executives in large US-based international banks to securitise sub-prime mortgages, which were mortgages given to people who had virtually no way of paying them back. Because of predatory lending, the number of these sub-prime mortgages continued to rise. They were then pooled together with other loans and debts and packaged as a financial product in the form of mortgage-backed securities that received triple A ratings from the credit rating companies.

[Mr Ranil Jayawardena (North East Hampshire) (Con)]

The hon. Gentleman is surely arguing that sub-prime lending was mismanaged rather than securitisation itself. Do I understand him correctly, or is he suggesting that securitisation was the problem?

[Bambos Charalambous]

It was both. It was the sub-prime lending and it was also the packaging of these products into securitisation with other, better products that were then triple A rated.

[Mr Jayawardena]

But is it not true that securitisation is really helpful in recycling capital, thereby providing investors with a stream of income that is useful to them and allowing responsible financial institutions to direct their capital at new people who want, for example, to borrow money to buy a home?

[Bambos Charalambous]

If done properly, there is benefit in securitisation, but it was not done properly in the United States, and therefore we need to take extra precautions now to ensure that it is done properly.

[Mr Jayawardena]

The hon. Gentleman is very kind to give way again. I want to unpick that a little further, because it is helpful. Can he confirm that securitisation is a good way of managing risk across a portfolio of loans, so that those with worse credit ratings can be properly and openly matched up with those with better credit ratings, to ensure that investors have a blend that they can draw an income on in the long run and allow institutions to use the capital they have secured from investors to offer new products to new people?

[Bambos Charalambous]

But if credit rating companies do not give the correct ratings, as happened in the United States, it all falls apart. I am happy to carry on the conversation with the hon. Gentleman in Strangers’ afterwards.

There was a big investment in mortgage-backed securities, with many financial institutions choosing to invest in them because of their promised high rate of return. When people started defaulting on sub-prime mortgages, the mortgage-backed securities lost their value, and the financial institutions that had invested heavily in them became exposed and suffered catastrophic losses. Since that time, steps have been taken to ensure that we never again experience the shockwaves of those failing giant financial institutions and the aftermath. We need a robust system of dealing with the risk of any such exposure due to securitisation, and that requires primary legislation.

As the hon. Member for Aberdeen North said, what we have before us are ill-conceived regulations that do not address the whole picture, and these changes are being made without the House having a chance to properly scrutinise them. Let us be clear: these regulations are not required due to the fear of a no-deal Brexit. They have conveniently been slipped in by the Government, under not the European Union (Withdrawal) Act 2018 but other legislation.

The regulations give responsibility to the Financial Conduct Authority to supervise the compliance of people involved in securitisation practices and allow it to impose certain penalties and take other steps to monitor securitisation. Such changes should not be made via secondary legislation. The complexity of these measures needs proper scrutiny. The very fact that the regulations change provisions in criminal law by preventing the FCA from instituting criminal proceedings for money laundering and insider dealing is a serious matter that is worthy of proper debate and scrutiny, which cannot be done via this debate. The regulations are wrong-headed, as schedule 1 amends primary legislation and transfers significant powers to the Treasury, the Financial Conduct Authority, the Prudential Regulation Authority and the Bank of England.

[Mr Jayawardena]

I am enjoying the hon. Gentleman’s contribution, even if we come from different starting points. Does he support the FCA having such a role but object to the principle of how this is being arrived at, or does he object to the FCA having this role? If not the FCA, who should it be?

[Bambos Charalambous]

Those are exactly the sort of points that should be made via a debate on primary, not secondary, legislation.

[Mr Jayawardena]

Will the hon. Gentleman give way?

[Bambos Charalambous]

I will not give way again, as I am almost at the end of my contribution.

These are important changes that Parliament needs to get right, due to the dire consequences of what went wrong in the past. These measures are opaque, unconstitutional and lacking in proper scrutiny. I invite the Government to withdraw the regulations and introduce primary legislation, to allow thorough and proper scrutiny to take place. Without such assurances, I will vote for the motion in the name of my right hon. Friend the Member for Islington North (Jeremy Corbyn) and against the Government.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I call Anneliese Dodds.

Finance (No. 3) Bill

Bambos Charalambous Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 8th January 2019 Commons Chamber

[Sir Edward Davey]

Having taken that wonderful intervention, I bring it to the House’s attention that the hon. Member for Wellingborough (Mr Bone) has signed my new clause. It is bringing the House together at a time when elsewhere it is divided.

I end on what this loan charge and its retrospective nature have meant for our constituents. It has caused misery. It has affected people’s lives, their health, their families. It has caused gross misery. Some people believe they will have to go bankrupt if they are forced to pay, or that they might lose their homes, and that is why the House is united against this retrospective action. I really hope that the Minister will get to his feet, accept the new clause, go ahead with the review and bring it back before the end of the tax year, so that the House can see it and vote on it.

[Bambos Charalambous (Enfield, Southgate) (Lab)]

I rise to speak in support of new clause 2. I was staggered to learn that entrepreneurs’ relief costs the Treasury an estimated £2.7 billion, and this to allow people selling companies worth up to £10 million to keep half the money they would otherwise pay in capital gains tax.

I was even more surprised to learn that this tax relief was concentrated among a few very wealthy individuals, with 6,000 people making gains of over £1 million and averaging £450,000 in tax relief each. This relief is only benefiting the very wealthy and should be reviewed as to its effectiveness. If it is scrapped, the £2.7 billion could be used to fund schools buckling under the pressure of funding cuts and provide huge investment in special educational needs and children and adolescent mental health needs. It could also go some way to funding children’s services and social care in local authorities and policing.

This is not the only area where the Government are giving away money that could otherwise be put to better use. Under amendment 22, in the name of the hon. Member for Aberdeen North (Kirsty Blackman), the Government are being asked to review the expected effects on public health of the changes made to the Alcoholic Liquor Duties Act 1979. The Alcohol Health Alliance has stated that the Government’s own figures show that alcohol duty cuts from 2013-14 have cost the Treasury £4 billion, which is the equivalent yearly cost of employing over 100,000 teachers. The figure is expected to rise to £9.1 billion by 2024. Considering the pressures on budgets as a result of austerity, that is not an insignificant amount.

The freeze on duty on beer, spirits and cider for 12 months from February 2019 is in effect a cut, as it is not keeping in line with inflation. Indeed, it has not done so for six of the last seven years. Cheap alcohol has a tremendous effect in causing damage to people’s health, the economy and wider society. Alcohol is the leading risk factor in respect of the deaths of people aged 15 to 49. In England alone, there are more than 1 million hospital admissions and 24,000 deaths related to alcohol every year. That is a clearly an impact that the Government need to consider when they set duties on beer, spirits and cider. Cuts in alcohol duty have a double effect. They reduce revenue for the Treasury, which in turn reduces the amount of funding for the NHS, while simultaneously increasing demand and costs in the NHS by encouraging the consumption of cheap alcohol. I therefore ask the Government to review the impact of the alcohol duty freeze on public health.

--- Later in debate ---

[Liz Twist (Blaydon) (Lab)]

Does my hon. Friend agree that the stories we hear from our constituents suggest that some of them are not only afraid of losing their homes and livelihoods, but are actually having suicidal thoughts because of the pressure that is being put on them to pay the money?

[Bambos Charalambous]

That is an excellent point, which I was about to make myself. While the large accountancy firms have gone unpunished for creating tax avoidance schemes for big banks, those individual contractors are bearing the brunt of HMRC’s powers. I have been informed by the Loan Charge Action Group of suicides, bankruptcies and relationship breakdowns as a result of the stress involved in their dealings with HMRC. The group has said that many of the people being pursued by HMRC unwittingly signed up to loan-based schemes, but the promoters of the tax avoidance vehicles have not been targeted.

I ask the Minister to reconsider these measures and to ensure that people are not punished when they should not be.

Oral Answers to Questions

Bambos Charalambous Excerpts

Tuesday 11th December 2018 Commons Chamber

[Mr Speaker]

I say very gently to the Chancellor, to whom I have been listening with great care, that it is quite difficult to vote for something if there is not a vote. I am only trying to help him; it is a point that is so blindingly obvious that I am surprised that I have to state it, but manifestly I do.

[Bambos Charalambous (Enfield, Southgate) (Lab)]

3. What discussions he has had with Cabinet colleagues on the adequacy of funding allocated to local authorities for children’s services.

[The Chief Secretary to the Treasury (Elizabeth Truss)]

Spending on the most vulnerable children has increased by over £1.5 billion since 2010. Thanks to our increased investment in childcare, the overall early years and children’s services budget has increased to £12.7 billion this year.

[Bambos Charalambous]

Will the Minister please acknowledge that she is simply putting a sticking plaster on the crisis in children’s social care? It is essential that children’s social care gets an extra £3 billion by 2025, and the Chancellor’s Budget commitment is less than 3% of the way there. Will the Minister admit that we are not on track to meet this target?

[Elizabeth Truss]

It is certainly the case that we are seeing rising demand for children’s services, but the important thing is that we help children’s services departments intervene early. We are rolling out a pilot programme this year to adopt models like that used in North Yorkshire that has reduced the number of children going into care, the number being arrested and the number ending up in accident and emergency, so it is important that we spend the money in the right way.