Draft International Tax Enforcement (Bermuda) Order 2017
Draft Double Taxation Relief and INTERNATIONAL TAX ENFORCEMENT (KYRGYZSTAN) ORDER 2017
Clive Lewis Excerpts(8 years ago)
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Clive Lewis (Norwich South) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hosie. I welcome the opportunity to participate in scrutinising these two tax enforcement orders. Work that has contributed to ensuring that the UK overseas territories have adopted the common reporting standard a year earlier than other parts of the world is to be commended. It is vital that tax that is rightly due is paid and any avoidance promptly investigated and, where appropriate, prosecuted. However, we should be cautious in assuming that tax treaties between wealthy and low-income nations are without problems.
We know that low-income countries rely more heavily on tax revenues than their rich counterparts, and the revenues can be assumed to be more urgently needed to provide public services such as health and education. Treaties have historically been one of the elements of the global tax system that have stood in the way of low-income countries collecting the tax revenue that is fair and just—undermining the ability of local companies to compete on a level playing field. It is therefore vital that we get this right.
With regard to the Double Taxation Relief and International Tax Enforcement (Kyrgyzstan) Order, I ask the Minister why the treaty does not include the provisions against tax treaty abuse that were agreed as minimum commitments by the UK and all states participating in the G20/OECD project on base erosion and profit shifting, also known as BEPS. Those anti-abuse provisions are included in the multilateral instrument on BEPS, and would be imported into a treaty if both parties to that treaty list it as a covered agreement. The proposed agreement with Kyrgyzstan was not listed as a covered agreement by the UK when it signed the MLI in June 2017, although the one with Lesotho, tabled a few weeks ago, was. Are the Government content to proceed with the treaty without ensuring that it contains the anti-abuse provisions accepted as a minimum commitment under the BEPS project?
In addition, why does the treaty not include a provision for the arbitration of disputes in article 24, while the recently considered treaty with Lesotho did include such a provision, despite the fact that developing countries have, through the UN committee of tax experts, opposed inclusion of such arbitration provisions in tax treaties? If the UK is willing to sign a treaty with a country such as Kyrgyzstan without an arbitration provision, why was it included in the Lesotho treaty? Why has there been a delay in bringing the treaty to the House? It appears that the treaty was signed in Bishkek in June last year. Why was it not considered here earlier? Is that a result of the greater than average scrutiny to which the Lesotho treaty was subject?
With regard to the International Tax Enforcement (Bermuda) Order, will the Minister tell us whether the Government have arrangements in place for the automatic exchange of tax information? I think the Minister did mention that, but if he could clarify it once more, that would be really helpful. Finally, the explanatory note to the order states:
“The 2017 Arrangement replaces the 2007 Arrangement and makes provision for automatic exchange of tax information, which was not provided for in the 2007 Arrangement.”
Paragraph 6 of the 2017 arrangement provides for automatic exchange. It states that that will be done under procedures to be determined “by mutual agreement.” The UK-Bermuda agreement of 2014 to improve tax compliance stated that
“the Parties are committed to promoting a new single global standard in the automatic exchange of tax information and will look to align this agreement to that new global standard in due course”.
Has that been done, and can the Minister provide details?
Oral Answers to Questions
Clive Lewis Excerpts(8 years, 1 month ago)
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Mr Hammond
I imagine that the right hon. Gentleman is referring to the Swansea Bay tidal lagoon project which, as he knows, is under consideration by the Government. An announcement will be made in due course.
Clive Lewis (Norwich South) (Lab)
Contrary to the Treasury’s own assessment, a report by the Institute for Public Policy Research North recently found that transport investment in London is two and a half times higher per capita than in the north. We know that in Norwich Britvic is shedding hundreds of jobs, citing poor transport as a key cause. That inequality hurts business and local authority revenue, so what actions will Ministers take to redress this unjust imbalance? Will they commit to working with the Mayors of Manchester and Liverpool on the convention for the north that was announced this morning?
Mr Hammond
I just do not recognise or agree with the hon. Gentleman’s figures. The Infrastructure and Projects Authority’s analysis shows that infrastructure investment per capita in the north is actually higher than in the south-east.
Draft Soft Drinks Industry Levy (Enforcement) regulations 2018
Clive Lewis Excerpts(8 years, 1 month ago)
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Clive Lewis (Norwich South) (Lab)
It is a pleasure, Sir Edward, to serve under your chairship. We can all agree that childhood obesity is a health time bomb. It poses serious health issues now, but it will also create health issues for decades to come. It will blight millions of lives with poor health and it will impose huge financial costs on the health service.
The NHS estimates that type 2 diabetes consumes over 8% of the NHS budget, and that is certain to rise in the coming years. It is clear that serious preventive action to protect children and young people from excessively sweet drinks and the industries that promote them aggressively is not only medically sensible but makes financial sense. That is why Public Health England, the British Dental Health Foundation and the Royal College of General Practitioners are all in favour of the levy, and it is why we support it too.
However, it must be clear that this measure on its own simply cannot do the job being asked of it. I have mentioned some headline figures, but they do not capture the scale of what is coming. Type 2 diabetes used to be a disease of middle age. Nowadays diagnosis of the disease in people in their early 30s is commonplace, with teenagers also being diagnosed. That means millions of extra cases, many of which will mean potentially decades more healthcare per person on top of what we would normally expect. That is just one disease. I have not mentioned the increase in strokes, heart disease and cancer: all diseases that will generate decades of extra healthcare spending per patient.
That brings me to the ideological crux of the tax. What is it for? Is it a scrambled attempt to raise money to plug gaps in the education budget, or is it meant to reduce childhood obesity? The Minister mentioned £1 billion guaranteed funding for the Department for Education, and I welcome that, but where is that money coming from? I know that sometimes a magic money tree can be found, but we would like to know for sure where that money is coming from and whether it is ring-fenced and protected.
Can the Minister tell us what assessment has been made of the HMRC’s capacity to enforce the levy, given that it has been widely documented that HMRC lacks the necessary resources and capacity to cope with its current workload, with even more cuts are on the horizon? Can he tell us how HMRC will monitor the effectiveness of its compliance strategy? Can the Minister tell us how the Treasury plans to plug the shortfall in the levy predicted by the Office for Budget Responsibility in relation to funding from the Department for Education for initiatives that he cited that support physical education, after-school activities and healthy eating?
Ultimately, this tax may make a dent or two in reducing childhood obesity, but we know that on its own it will fail in that role. The coming health consequences of obesity will be like a tsunami; this measure on its own is like putting a couple of extra life jackets on the Titanic. For it to have any meaning it must be part of a wider strategy. The Government are planning to cut real-terms spending on public health by 4% a year until 2020. The Royal College of Paediatrics and Child Health reported last week that most local authorities have cut spending dedicated to promoting physical activity in children. They also criticised the Government for their failure to establish an overarching child health strategy. I know that the Minister mentioned it, but the royal college criticised it with regard to the integrated, holistic approach that would make strategic sense of the levy. The Opposition cannot yet see that plan in place. Finally, will the Minister make an assessment of the impact of the levy on childhood obesity, because many people argue that on its own it will make little or no impact at all?
Robert Jenrick
I am grateful to the hon. Gentleman for his support for the levy, which will play an important part in tackling childhood obesity. As I was at pains to stress in my opening speech, the levy is only one element of a much wider Government strategy. The Opposition and other right hon. and hon. Members will have seen the childhood obesity plan that was published. Nobody pretends that the soft drinks industry levy contains all the elements of that plan, but it is a significant element and, again, I am grateful to the hon. Gentleman for his support.
The levy is working, and we have seen that in the large number of suppliers of soft drinks that have already reformulated their products. As a result, the tax will raise less revenue than was previously expected. It was never designed as a tax-raiser; it was always designed to stimulate improvements in public health. In the autumn Budget of 2017, we laid out our expectation that the levy would raise around £275 million, yet the Treasury remains 100% committed to the original promise of over £1 billion of extra money for the Department for Education.
Clive Lewis
While we welcome the £1 billion—the extra funding—to plug those gaps, if the Government then cut 3.9% of spending on public health and, it is predicted, millions by 2020, does the Minister not concede that they are giving with one hand and taking with the other?
Robert Jenrick
I dispute the hon. Gentleman’s analysis of our funding of the NHS, which has risen in every year of this Parliament. In the autumn Budget of 2017, the Chancellor committed to providing more money for both the NHS and adult social care.
The levy is an example of where the Government are taking action. We are using the tax code to change behaviours for the public benefit, and we are committed to significant increases in spending for school sports, breakfast clubs and all the other important things that will benefit from the funds coming from the levy. Every single penny raised by the levy will go to support school sports and the public health initiatives that I mentioned, plus the additional revenue that the Treasury committed to and is in no way backing down on, despite the success of the levy.
Robert Jenrick
If the hon. Gentleman does not mind, I will press ahead on this occasion; I have given way to him in the past.
As for the capacity of HMRC, this is a task that HMRC is very used to and has expertise in. It uses that capacity for all forms of alcohol excise duties, such as those that apply to the spirits industry and so on. There is no reason to question whether HMRC can do this work. Indeed, the powers that we are considering today are those that HMRC has requested. The levy has been fully subject to a public consultation with the industry. HMRC’s voice has been heard in that consultation and we believe that HMRC will be effective in enforcing this levy and in ensuring that there is no criminality, or only minimal criminality, involved with it.
As for the question of whether or not we have reviewed, or will review, the impact of the levy, we have committed to such a review—in 2020, I think—so that will be the point at which we can clearly see the impact of the levy on both public health and the industry. With that, Sir Edward, I commend the regulations to the House.
Clive Lewis
I will just clarify matters on the issue of public health cuts and sum up very quickly. We support the levy, but there are caveats. One of the key things that I wanted to mention is public health cuts. The King’s Fund, the widely respected health think-tank, has said that
“too many local government services that affect the public’s health are facing death by a thousand cuts.”
The Local Government Association said in December:
“Cutting the public health budget is short sighted and will undermine the objectives we all share to improve the public's health and to keep the pressure off the NHS and adult social care. Further reductions to the public health budget reinforces the view that central government sees prevention services as nice-to-do but ultimately non-essential.”
How can the sugar levy make sense when many other measures that might help to reduce childhood obesity are being cut? That is something that we will continuously raise when it comes to this levy.
I will conclude by saying that my first priority today is the health and wellbeing of our children—I, too, am not here to defend the soft drinks industry—but in the absence of a thought-through strategy, it is hard to disagree with the British Soft Drinks Association in its response to the Budget in 2017 that
“it’s worth bearing in mind that there is no evidence taxing a single product or ingredient has reduced levels of obesity anywhere in the world.”
The Chair
I will put the question. As a matter of coincidence, I was at my dentist’s this morning and he showed me a rather horrifying film about the danger of sugar, so he will be very interested in our proceedings.
Question put and agreed to.
RBS Global Restructuring Group and SMEs
Clive Lewis Excerpts(8 years, 2 months ago)
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Clive Lewis (Norwich South) (Lab)
I beg to move,
That this House is deeply concerned by the treatment of small and medium-sized enterprises (SMEs) by the Global Restructuring Group of the Royal Bank of Scotland; notes that there are wider allegations of malpractice in financial services and related industries; believes that this indicates a systemic failure to effectively protect businesses, which has resulted in financial scandals costing tens of billions of pounds; further believes that a solution requires the collective and collaborative effort of regulators, Parliament and Government; and calls for an independent inquiry into the treatment of SMEs by financial institutions and the protections afforded to them, and the rapid establishment of a tribunal system to deal effectively with financial disputes involving SMEs.
May I echo your comments, Madam Deputy Speaker? As generous a soul as I am when it comes to interventions, I will limit the number I take to two or three, if at all possible, because I understand that Holocaust Memorial Day is also a crucial issue that everyone here would want to see debated fully afterwards. None the less, there are a lot of Members here, on both sides of the House, who want to speak about an issue that has deeply affected many of their constituents and small businesses across the country. I thank hon. Members for their support for this important debate, as well as the Backbench Business Committee for allowing the time, particularly the Chair, my hon. Friend the Member for Gateshead (Ian Mearns). He has made it clear to me and others that he was keen for the debate to take place, and here it is.
As the details of the various scandals that have hit our financial services sector trickled out over the last few years, I think we all started by treating the stories we heard with a certain scepticism. They just did not seem to make sense. Indeed, when I read letters from one of my constituents, my first reaction was to think that the story he was telling simply could not be true. “No bank could have dared to behave in such a brazenly outrageous way,” I said to myself. My constituent, Andi Gibbs, was forced by his bank, RBS, to buy an interest rate-hedging product, which should have protected his business against rising interest rates, but in fact drained it of cash. RBS then placed the business into its Global Restructuring Group. He lost his business, his home, his marriage and, I think it is fair to say, almost his sanity. His crime: nothing more than being an entrepreneur who banked with RBS.
Nick Smith (Blaenau Gwent) (Lab)
Does my hon. Friend agree that the RBS Global Restructuring Group had real cultural problems? When its top tips included the advice,
“Rope: Sometimes you just have to let customers hang themselves”,
there is clearly something very wrong occurring.
Clive Lewis
I agree with my hon. Friend. We know that 16,000 small businesses were put into GRG from 2008, and the vast majority were liquidated. That tells us all we need to know. This was meant to be somewhere from which they could try to come back as viable businesses, but far from being an intensive care unit, it was more like an abattoir, where they were stripped and taken apart.
Mr Philip Dunne (Ludlow) (Con)
Does the hon. Gentleman agree that one reason why many Members found this story almost unbelievable—a story that affects so many of our constituents—was that the conditions of any settlements agreed by the GRG with businesses that were in trouble included gagging orders, or confidentiality agreements, which have prevented them from speaking openly about the plight that they have faced?
Clive Lewis
I agree with the hon. Gentleman. Indeed, some businesses ended up in GRG simply for saying, “I’m not happy with my bank. I want to move.” When we talk about how they were “stressed”, we should also be aware that the bank used this term as it saw fit. Many businesses were treated appallingly, and the hon. Gentleman raises the point very clearly.
As time has gone on, we have discovered that Andi Gibbs is not alone. He is not even one of hundreds, but one of thousands. As many Members will be aware, the stories keep coming, backed up by evidence. It has now become clear that we have not just a series of individual scandals, but a full, systemic failure that needs to be addressed by this House. However, I want to focus briefly on what got us here and, more importantly, how we work toward a constructive solution.
Sir Vince Cable (Twickenham) (LD)
Does the hon. Gentleman share my disgust that, four and half years after I referred, as Secretary of State, many of those cases—the Tomlinson report—to the Financial Conduct Authority, we still have only an interim report? Is he aware that the BBC has seen a copy of the final report? It contains the following incriminating phrase:
“Management knew or should have known that this was an intended and co-ordinated strategy and that the mistreatment of business customers was a result of that”,
and the head of GRG responsible for that policy, Mr Nathan Bostock, is now chief executive of Santander.
Clive Lewis
That is a very valid point. I hope we will hear from the Government today that there will be action on this issue. Owners of small and medium-sized businesses, including many of my constituents and those of other Members, are tired of the foot-dragging that has gone on for long enough. The Treasury Committee supports the report’s publication, and even the Financial Conduct Authority would probably conclude that it would be far more helpful for it to be published. Its publication is long overdue. People need to see the full extent and scale of what RBS and, potentially, other banks have been up to.
Melanie Onn
My hon. Friend said earlier that this situation affected failing businesses. My constituent Andrea Willows is in the public Gallery today. Her business was not failing, but the bank absolutely refused to provide any kind of funding for a shorter-term loan payoff, attributing it all to a larger loan pay-off instead. She had to come up with the full cost of multiple loans to pay off about £635,000, which made things completely impossible for her. That is exactly what these banks have done: they have made it impossible for hard-working people to continue to run their businesses although they were not in trouble in the first place.
Clive Lewis
I agree with my hon. Friend. During my time on the all-party parliamentary group on fair business banking and as a Back-Bench MP before that, I heard many similar stories of companies that had been forcibly distressed, or had been described as being distressed by the bank and then carved up like a Sunday roast.
Clive Lewis
I will continue.
As many Members will know, the stories keep coming, backed up by evidence. It is now clear that we are seeing not just a series of individual scandals, but a full, systemic failure that needs to be addressed by the House.
Let me now focus on how we can move forward. The APPG on fair business banking has identified a series of achievable and transformative objectives that will support our business community. My focus today, however, will be on dispute resolution, restitution, and the need for an independent financial services tribunal with the teeth that will enable it to tackle complex and, for the individuals involved, life-changing scenarios.
I want to touch briefly on the past, because it is important to separate the crises into two distinct phases. The first crisis, in 2007-08, was a crisis of liquidity. The second, which we are discussing today, is a conduct crisis that not only spans the financial services industry, but extends to the role of the professional advisers who are such an integral part of the system. They are Law of Property Act receivers, surveyors, accountants, insolvency practitioners and solicitors. They are all fundamental parts of this matrix, and I will return to them shortly.
The recent section 166 FCA report on RBS GRG concentrates on the years between 2008 and 2013, when banks were under extreme pressure to shore up their balance sheets. However, that behaviour did not spring up spontaneously. Senior banking insiders who worked in RBS between the mid-1990s and the crisis are clear that there was such a modus operandi in GRG for years before the liquidity crisis. Indeed, GRG and its predecessor, Specialist Lending Services, had been known as the “mortuary for businesses” since the late 1990s. During those heady days of liquidity, businesses might have had an opportunity to re-bank with competitors, but once the liquidity crisis hit, that was no longer an option Ever since then our business community has had to deal with the consequences, which have been ramped up to an industrial scale.
Although the title of the debate refers to RBS GRG, it is just a symptom of the underlying issues. In the course of the APPG’s work, it is hard to identify an institution that has not found itself at the centre of a conduct scandal, and I am sure that other Members will give many examples today. The APPG has come across similar instances among the major banking institutions. The HBOS Reading fraud, as a result of which bankers and their associates were jailed for a total of 47 years earlier this year, may seem easy to push aside as “a few bad apples”, but, in reality, it is a consequence of the same systemic failure.
Clive Lewis
I will make some progress first.
In the HBOS case, as with GRG, quite simply, everyone thought that they would not get caught, and so it escalated. We have to ask ourselves how it is possible that this has gone on for so long, completely unchecked. We should have caught it much sooner, but instead it has been left to a dedicated group of individual victims such as Paul and Nikki Turner—and to a relentless pursuit by journalists such as Andy Verity, Joe Lynam, Siobhan Kennedy, James Hurley, Jonathan Ford, Ruth Sunderland, Tom Warren, Ian Fraser and Heidi Blake, to name just a few—to keep the issue alive. That is the journalism that the British public need: journalism that investigates the acts of the powerful and holds them to account. It is the fourth estate playing its rightful role in a healthy, functioning democracy.
Even now, as we begin to get our heads around the issue, we are still not addressing it properly. Why? Because our response thus far has been piecemeal. We must take a step back, and look at the entire ecosystem in which such behaviour managed not just to survive, but to thrive.
Let me briefly remind the House of the possible scale of the scandal. At its peak, GRG held assets of more than £90 billion on its books—all the businesses that were put into special measures. We cannot know for sure how many of those businesses would have survived in another, more benign environment; that is a “how long is a piece of string” question. Indeed, some businesses were placed in GRG for no other reason than the fact that they had made a complaint against the bank. We have to ask ourselves how many of them should have been there in the first place.
Much has been made of the fact that the businesses were “distressed”, but that is a subjective and ambiguous term. We do know that 90% of GRG-administered businesses never made it back to mainstream banking. That is a very high proportion. The cost is immeasurable, but we believe it to be in the tens of billions. Let us be clear: that is the potential size of the injustice that has taken place in our country. If it is indeed that big, it may be the largest theft anywhere, ever. If we begin to take into account the opportunity costs to the economy of business failure and businesses that have been unable to grow—if we begin to include the loss of jobs, homes, health, relationships and taxes—we see that the costs are likely to be immeasurable.
Scandals on this scale cannot happen in a vacuum. The role of Law of Property Act receivers, solicitors, insolvency practitioners and surveyors must be considered. Even in circumstances in which every person playing a part has played to the letter of the law, the outcomes have been catastrophic. We have to ask ourselves how that is possible.
As things stand, a business owner understandably assumes that the whole system works effectively, and that when it fails, he or she will have access to justice. That is a logical assumption for those of us who believe that all aspects of our lives should be covered by the rule of law. Anything else is little better than the Wild West, and is no basis for the stable and successful economy that Members in all parts of the House want to see.
The House must tackle the inherent inequality of power in the relationship between businesses and their lenders. From the moment when a business signs a one-sided contract laden with onerous and ambiguous contractual terms, through its life cycle, and into—potentially—insolvency, there is nowhere independent and affordable for that business to go if it is in dispute with its lender. In all cases, businesses must rely on the limited scope of the financial ombudsman, various trade associations and individual institutions to handle complaints. What is the outcome? The public, and businesses, see a group of large, powerful institutions and trade bodies operating from behind castle walls, with no transparency or external accountability, save an expensive and prohibitive court process that is beyond all but the most well-resourced. Justice, for them, is out of reach, and RBS knows that.
When ad hoc redress schemes are set up to deal with scandals such as interest rate hedging products, GRG and HBOS Reading, they are wholly unsatisfactory and largely discredited. They appear to be a cynical exercise in limiting financial institutions’ liabilities rather than a genuine attempt at restitution. The fact that the entire exercise is conducted behind closed doors and the banks are allowed to act as judge, jury and executioner only fuels suspicion. The use of an “independent person”, whom the bank itself appoints, will never instil trust. It is akin to a burglar being allowed to pick the members of the jury for his trial.
To add insult to injury, in the cases of the interest rate hedging product scheme and the RBS GRG scheme, the fact that insolvency law allows the institutions to pay themselves back for their own misconduct brings the process into the realm of farce. It is a system that does not instil confidence. The best our institutions can say is, “Trust us, we’re doing the right thing; but if you don’t like it, sue us.” We have only to look at the content of the debate today to see that self-regulation alone is simply not enough.
I want to be clear: those of us who support this motion are not calling for extensive regulation. We are, however, calling for accountability, transparency and justice, because without proper transparent accountability there can be no trust. Ultimately, trust is what the financial sector depends upon; if we undermine and pollute it, it will never survive in the long run.
The cold fact is that right now in this country the trust that once existed has been shattered. This distrust has become so severe that it is affecting business confidence and productivity. The Government’s own industrial strategy cannot be delivered on these shaky foundations. Simply, if we are to move on, we need to get a handle on the issues and look at the whole ecosystem for our businesses. That is why today we are calling for an inquiry that cuts across departmental lines and looks at the protections afforded to businesses during their life cycle. That way we can map out a long-term plan to ensure sufficient safeguards to prevent such things from ever happening again. More urgently, we are calling for a tribunal system to be set up to deal with financial disputes, a system analogous to that which already exists for employment tribunals. That does not require any primary legislation. The legislation already exists to enable the rapid establishment of a tribunal; it just needs the political will to carry it through.
Andrew Bailey at the FCA has openly supported the tribunal idea, but we are concerned about the recent focus on extending the remit of the Financial Ombudsman Service as this is not the right solution for what is a very complex problem. Once established, this tribunal system will help to ensure that banking works better, not just in the interests of its customers, but for the banking industry itself. This is important because we all acknowledge that the financial sector is critical to the UK’s future prosperity, and the relationship that SMEs have with their bank is a central part of that. In an effectively regulated economy, the relationships between SMEs and the finance sector should be symbiotic, not parasitic; each supports the sustainable growth and the success of the other. But that is not where we are.
It is time that the Government, the FCA and Parliament step up to the plate to ensure that businesses get fair treatment and access to affordable justice. Our businesses deserve nothing less. Our economy requires nothing less, especially at this critical time with Brexit approaching.
This matter has been left to drift in the regulatory and legislative wilderness for too long. The consequences have been catastrophic not only to individual lives but to confidence in our entire financial system. In the wake of Brexit, the introduction of a tribunal system will help to rebuild the strong relationships that once existed between SMEs and their banks, helping the growth of our economy and the international reputation of our financial sector.
It is, however, important to say that constructive progress has been made. The banking futures project brought together stakeholders across the spectrum to produce a coherent and ambitious plan for rebuilding trust. If Members have not read it, I would certainly suggest that they do so. The all-party group on fair business banking and finance has formed a working group, which will be formally announced in the near future, to discuss and look at this area. We should have no doubt that this is an important first step for businesses and industry, but it is just one part of the jigsaw, for with a problem this big, only a systematic, open-minded challenge to the status quo will work for businesses, our banks and our economy. This is an opportunity for us to show the business community and, indeed, the country that behind the lively exchanges that take place here and are seen on television, we as parliamentarians can put aside political point scoring and come together and work toward a common goal. I therefore commend this motion to the House.
Several hon. Members rose—
Clive Lewis
I thank the Minister for his response, and I thank all the hon. Friends and hon. Members across the House who have taken part in this passionate debate today, whether they are self-confessed capitalists, such as the hon. Member for Hazel Grove (Mr Wragg), seeking to challenge crony capitalism or those such as my right hon. Friend the Member for Tynemouth (Mr Campbell) who are perhaps seeking more traditional socialist transitional demands. There has been almost unanimous support across the House for the motion. We want justice for our constituents and a banking system fit for the 21st century. In effect, we seek nothing less than the renewal of the broken social contract between banks and the public. Unfortunately, the language used in today’s debate has painted a picture of a social contract that lies in tatters. We have heard references to a web of deceit, a dash for cash, systemic abuse, parasitic relationships and asset stripping. Three words that we have heard repeatedly today are “enough is enough”.
I want to make a couple of comments about the Minister’s input. He said in his opening remarks that he and his Government would stop at nothing and spoke of the need for a fundamental culture change, but he then offered little except more warm words. I understand that he has been in his job for just seven days, but this situation has been going on for some time now and the issues are out there, a point which has been made clearly by Members across the House. The Government still seem to favour a solution involving the Financial Ombudsman Service, but even with some extension of its role, it is suitable only for low-level disputes. It has no powers of disclosure. It cannot enforce decisions. It has no teeth. It cannot adjudicate. It cannot deal with complex cases.
John Glen
I fully recognise the frustration that the hon. Gentleman is expressing, but I also said that the Government rule nothing out. We will see what the proposals are and respond accordingly. I think that that is a reasonable position given the relationship between the Government and the FCA.
Clive Lewis
I acknowledge the Minister’s remarks, but time is not on the side of many people, so many of whom have been affected for so many years. I understand the Government’s reluctance to say anything today, but they must come to a conclusion quickly. From listening to Members from across the House, we understand that if we rebuild justice and confidence in our banking system, that would be good for business and good for banks and would maximise our country’s economic potential. I will conclude with the words of the late, great Errol Brown of Hot Chocolate fame—one of my favourites—because if we get this right,
“Everyone’s a winner, baby”.
Question put and agreed to.
Resolved,
That this House is deeply concerned by the treatment of small and medium-sized enterprises (SMEs) by the Global Restructuring Group of the Royal Bank of Scotland; notes that there are wider allegations of malpractice in financial services and related industries; believes that this indicates a systemic failure to effectively protect businesses, which has resulted in financial scandals costing tens of billions of pounds; further believes that a solution requires the collective and collaborative effort of regulators, Parliament and Government; and calls for an independent inquiry into the treatment of SMEs by financial institutions and the protections afforded to them, and the rapid establishment of a tribunal system to deal effectively with financial disputes involving SMEs.
Business of the House
Clive Lewis Excerpts(8 years, 2 months ago)
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Paul Maynard
I know that the Leader of the House takes this matter immensely seriously, and I certainly did when I was a responding Minister. We have strict guidelines to which we expect Departments to adhere, and they are monitored carefully. I urge the hon. Gentleman to ensure that he chases up the replies that he has not received. We will make sure—as I am sure that the Leader of the House will do—that we always strive for continuous improvement.
Clive Lewis (Norwich South) (Lab)
Can the Minister make time to debate the planned closure of the Unilever and Britvic plants in Norwich South? Local people want the Government and Ministers to take action. So far, we have a Business Secretary refusing to come to the city to meet the workers, a trade Minister who says that he does not want to be involved and another business Minister who says that he actively wants to see the plant close. Will the Government please pull their finger out?
Paul Maynard
I certainly heard the hon. Member’s point of order yesterday and I share and understand the concern that many Unilever employees feel about the current and growing uncertainty. The Government are certainly disappointed that Unilever has decided to close the Norwich plant. We welcome its commitment to maintaining most of the mint production in Norwich, and stand by ready to help the workforce wherever we can. This is a worrying time, and we need to work with Unilever to get further clarity over what is intended.
Public Sector Pay Cap
Clive Lewis Excerpts(8 years, 8 months ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Elizabeth Truss
I thank my right hon. and learned Friend for his question. The pay review bodies are responsible for gathering the data on how we ensure that we retain and recruit the high-quality staff that we need in our NHS. I know they have looked at that in their reports this year, as I am sure they will do in future.
Clive Lewis (Norwich South) (Lab)
In the exceedingly fine city of Norwich, we have three NHS trusts, two local authorities and a teaching hospital—thousands of public sector workers who contribute to our economy, and who are struggling to make ends meet. Surely the Government must understand that austerity is dying on its feet. They should invest in those people. If they lift the public sector pay cap, they will invest in Norwich’s local economy. It is a win-win for everyone.
Elizabeth Truss
I should say to my fellow Norfolk MP that we are seeing improved public services in Norfolk, both in the health service and in our local schools. That is a result of the Government reforming services and investing in them, and ensuring that people receive pay that helps to retain and recruit the best possible staff.
Oral Answers to Questions
Clive Lewis Excerpts(9 years, 9 months ago)
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Harriett Baldwin
The hon. Gentleman is absolutely right to highlight the fact that the UK’s universities are unanimous in expressing the value that they put not only on higher education, but on the potential for those educated in universities to export in due course. He is absolutely right to highlight the fact that all other trade deals would be worse than the current zero-tariff trade deal that we have as a member of the EU.
Clive Lewis (Norwich South) (Lab)
8. What assessment he has made of which groups within the UK population will benefit from planned changes to (a) capital gains and (b) corporation tax.
The Financial Secretary to the Treasury (Mr David Gauke)
Changes to capital gains tax will provide greater incentives to invest in companies. Up to 130,000 individuals a year, including up to 50,000 basic rate taxpayers, are estimated to pay lower tax as a result of the changes to CGT. The further cut to the corporation tax rate to 17% announced at the Budget will benefit over 1 million companies, large and small, supporting UK companies to invest, grow and create jobs.
Clive Lewis
Treasury figures show that just 200,000 individuals will benefit from capital gains tax to the tune of £600 million in the first year—a giveaway of £600 million. On corporation tax, we have the lowest in G7—lower even than Saudi Arabia, Russia and China. At the same time, the Resolution Foundation found that the poorest 20% of families in this country will lose £565 over the course of this Parliament because of the Government’s policies. Where is the social justice in that?
Mr Gauke
One of the hon. Gentleman’s hon. Friends asked earlier about encouraging business investment, which we want to encourage because it is through having an environment in which businesses invest that we see improved productivity, the conditions for growth and people benefiting from higher wages. I say to the hon. Gentleman, and to the House as a whole, that pursuing policies that favour business investment and encourage businesses to invest, such as cutting CGT and corporation tax, is important for all our constituents.
Energy BILL [ Lords ] (Fifth sitting)
Clive Lewis Excerpts(10 years, 1 month ago)
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Clive Lewis (Norwich South) (Lab)
I thank the Minister for her comments. I shall speak against Government new clauses 1, 2 and 3.
Throughout the debate on the Bill—in Committee, on Second Reading and in the other place—we have heard that Government decisions on energy policy, particularly with regard to renewables, have had a corrosive effect on investor confidence. It is appropriate to go through the list again, because it is quite despicable: the solar subsidy has been cut by 64%; the biomass subsidy has been cut; the biogas subsidy has been cut; the green deal has been scrapped; the renewables exemption from the climate change levy has been ended; and support for community renewable energy products has been slashed.
Clive Lewis
I will make some progress through the list before giving way. The Government are attempting to sell off the Green Investment Bank and have baled out of their manifesto commitment by cutting £1 billion from carbon capture and storage. The list goes on. The early closure of the renewables obligations is the next chapter in the long, sorry list that I have just read out.
Oliver Dowden
The hon. Gentleman missed out a few things from his list—for example, the fact that 98% of solar panels were introduced under this Government; or that wind power, which has trebled under this Government, is set to increase by another 50%; or that we are on course to meet our 30% renewables target; or that we have doubled investment in renewables. Perhaps the next time he reads out his list he can add those further points to provide some balance.
Clive Lewis
I will come back to that point. Let us have a look at the renewable energy country attractiveness index, which saw a major reshuffling of the 10 most attractive countries for renewable energy potential and growth. One of the biggest losers was the United Kingdom, which dropped out of the top 10 for the first time since the information was published back in 20013. It was specifically because
“a wave of policy announcements reducing or removing various forms of support for renewable energy projects has left investors and consumers baffled”.
Rishi Sunak
I wonder whether the hon. Gentleman has seen the report from the Climate Action Network, which I understand is an umbrella group of dozens of NGOs involved in climate change, including Greenpeace and Friends of the Earth, which recently ranked Britain the second-best country in the world for tackling global warning, right behind Denmark, and represents a very strong commitment for tackling climate change. I would be interested in his thoughts on that.
Clive Lewis
I will come back to that. I am informed that it relates to climate change commitments, not the renewables that this Government and the previous coalition Government have invested in, or as my list just demonstrated, have been cutting left, right and centre. But let me give you a counter-quote from Neil Woodford, head of Equity Income, one of the best performing funds. In December 2014, he said:
“The electricity industry has for too long been the victim of a misguided, short-term and politically inspired policy mess. The Government has to be held to account for its policy decisions. As long as it (and its predecessors) believes that it can arbitrarily move goal posts in this way, without appropriate economic justification, the more likely it will be that the industry will continue to shun the necessary investment in electricity generation infrastructure that the economy so clearly needs.”
Clive Lewis
I will push on. I have a few more of those chocolate sweets I might give away. If successful, the Government will be going back on their own legislation and closing the renewables obligation for onshore wind a year earlier on 1 April 2016, a date that will not be lost on any hon. Members here. If successful, the Government will have adversely singled out the most cost-effective, low-carbon technology available to us, at a time when the Secretary of State herself admits that the UK is on track to miss its legally blinding EU obligation on renewable energy by an estimated 50 TWh hours, a shortfall of almost 25%.
The Government’s answer is ever more reliance on the EU emissions trading scheme—a scheme, as we have already heard while discussing clause 80, we need less reliance on in coming years, if we are to attain the most cost-effective pathway to our carbon budget commitments. So why is there an almost obsessive compulsion to attack one of the country’s most successful renewable forms of energy?
The only answer I can glean from the debate so far is that it boils down to a few ambiguous lines in the Tory party manifesto which it is fair to question. It says:
“We will end any new public subsidy for onshore wind.”
First, these are not public subsidies. Strictly speaking, the payments come out of bills, not the public purse. While the word “new” is also open to a broad interpretation, let us not forget that this is an existing, not a new subsidy—a subsidy that was already closing as part of the Energy Act 2013.
The Minister will also be aware of the huge amount of consensus and engagement with industry, proper consultation and pre-legislative scrutiny, that arrived at the 2017 wind-up day for the renewables obligation.
James Cartlidge (South Suffolk) (Con)
Will the hon. Gentleman, my fellow East Anglian MP, give way?
James Cartlidge
Is the hon. Gentleman suggesting that billpayers are volunteering that extra per cent?
Clive Lewis
I will come to the point about the cost to billpayers later in my speech. Even with the retrospective grace period the Government have announced, many renewables companies will be adversely affected. Michael Rieley, senior policy manager for Scottish Renewables, said:
“However, many of our members will be bitterly disappointed that ministers are not going to allow projects which have submitted planning applications to be given a grace period.”
More importantly, as I have mentioned already, this retrospective chop-and-change approach by Government is damaging investor confidence in the wider energy sector.
Oliver Dowden
Will the hon. Gentleman give way to another East Anglian MP? [Interruption.] I do not agree with the designation but people at a higher pay grade have determined that.
Oliver Dowden
The hon. Gentleman talks about the poor investment record, and says that companies are being put off investment. Can he confirm that nearly £52 billion has been invested in renewables since 2010 when the Conservatives first came to power?
Clive Lewis
I have no doubt that they have made that investment in renewables. However, I am talking about investor confidence. I will give an analogy of investor confidence. I was in the Army, where we orienteered by taking a reference point from something 100 or 200 metres away that we could see on our map. However, if you want to make the best progress—if you want to allow your men to make the best speed—you look at the far horizon, find a point and aim for it.
That is what this is about: investor confidence for the long-term future. What the Government have done, with one fell swoop, by trying to end the renewables obligation early, is say they can chop and change as they see fit for political motives. That sends the wrong signal to the market and investors.
Simon Hoare (North Dorset) (Con)
I am grateful to the hon. Gentleman for being generous with his time. May I put to him this countervailing thought? The onshore wind sector is now very mature. It has got a good basis and is “proving its worth”. Is the hon. Gentleman saying that it should always be subsidy-reliant?
I do not buy this lack of market confidence. Paris and everything else point to a decarbonisation of energy generation. Investors are not going to have that policy pulled from under their feet. That should give plenty of market confidence to the private sector and others to invest. To have them continually drip-fed public money, irrespective of which purse it is taken from, has to stop. If the market pretends to be surprised by that, the Government would be surprised, because our policy was trailed very well months in advance of the election.
Clive Lewis
I thank the hon. Members for their interventions. We are not talking about subsidies ad infinitum. We are just saying stick to the plan; that is all we are saying. Whether it is solar or wind energy, subsidy should be seen as a glide path. What the Government have done is chop the wings off. I have lists of quotes from investors who will say that this is not the best way forward.
A report last week from Bloomberg New Energy Finance research forecast that these measures will see the UK lose at least 1 GW of renewable energy generation, enough to power 660,000 homes over the next five years. The figures suggest that after 2020 the renewables infrastructure will collapse to almost nothing because of a lack of investment.
David Hostert, the analyst behind the research, said:
“Without some form of change in policy support, we could see investment drop off a cliff after 2019.”
Meanwhile, Maria McCaffery, chief executive of RenewableUK, said:
“The Government’s decision to end prematurely financial support for onshore wind sends a chilling signal not just to the renewable energy industry, but to all investors right across the UK’s infrastructure sectors. It means this Government is quite prepared to pull the rug from under the feet of investors even when this country desperately needs to clean up the way we generate electricity at the lowest possible cost—which is onshore wind. People’s fuel bills will increase directly as a result of this Government’s actions. If Government was really serious about ending subsidy it should be working with industry to help us bring costs down, not slamming the door on the lowest cost option.”
I come back to the point on bills, Let us look at what this saves the average household. According to the Government’s own assessment, the changes will save just 30p on consumer annual energy bills and increase the UK’s carbon emissions by 63 million tonnes.
Ultimately, these measures are a backtracking, chaotic travesty. They make no sense, punish one of our most cost-effective and successful renewable industries and endanger this country’s energy security by undermining investor confidence. As such, I urge the Minister to drop them.
Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)
Tempted though I am to talk about solar, carbon capture and the Green Investment Bank, I will not go over issues that have been well covered in debate in both the Chamber and this Committee. Instead, I will focus on onshore wind.
As part of the Bill, the Government propose to close the renewables obligation to new onshore wind projects from April 2016, one year earlier than originally planned. As the only current mechanism that enables large-scale onshore wind to enter the power market, the proposed early closure of the RO poses a significant threat to the future of the onshore wind sector and the UK’s growing green manufacturing, export and investment potential, while increasing the difficulty and cost associated with achieving our decarbonisation targets.
We agree that swift passage of the Bill with clear and consistent RO grace period provisions is needed in order to provide certainty to investors in the onshore wind sector as quickly as possible. The renewables industry fears that the longer legislative uncertainty over RO closure persists, the greater the risk of otherwise eligible projects running out of time to deliver under the proposed grace periods. We share the concerns of the hon. Member for Southampton, Test in that respect.
We thank the Government for having the foresight to include grace periods in relation to onshore wind projects, but feel that the grace periods put forward by the Government do not quite fulfil the Conservative party’s own manifesto promise, and we urge further consideration in that respect. Both the Minister herself and the hon. Member for Daventry have spoken in this Committee of the manifesto commitment to ending “any new public subsidy” and allowing local people to “have the final say”.
Indeed, the Minister stated clearly her intent at the Energy and Climate Change Committee of 20 October 2015, when she pointed out that the primary purpose of the grace periods was ensuring,
“that those who have spent money in a significant investment and achieved everything technically to meet the cut-off date, but through reasons beyond their control have not actually made it, are not penalised for reasons beyond their control”.
The Conservatives have perhaps been true to their word on the first point, but by closing the RO one year early, they are not necessarily allowing the people in Scotland, Northern Ireland, Wales and England who have agreed to site wind farms in their area to have the final say unless, as a minimum, more comprehensive grace periods are implemented. We see much cross-party support in this House for such a consideration.
I would like to take this opportunity to thank Ben Williams and Katy Stout of the Department of Chamber and Committee Services for assisting us in the inclusion of such a complex set of amendments. While I am on the subject of the extremely rare occasion when a Member of Parliament gives praise where it is actually due, instead of taking it for himself, I would also like to thank Scottish Renewables, RenewableUK and Energy UK, among others, for their significant contributions in respect of these amendments.
I apologise to the Committee in advance, but I would like to take some time to put on record a detailed explanation of the intent of each amendment, which should assist our collective decision-making process. Amendments (b) to (r) relate to new section 32LJ of the Electricity Act 1989, inserted by new clause 2, on the approved development condition. The new section sets out the Government’s grace period criteria for projects that may receive renewables obligation certificates after the 31 March 2016 deadline. However, the current grace periods do not cover a number of circumstances in which an onshore wind developer could reasonably have been expected to continue to receive support under the ROC regime but are excluded because of the 18 June 2015 deadline.
Amendments (b) and (c) are technical and are required to fix inconsistencies so that all of the amendments, taken as a whole, make sense when read together with the existing legislation. Amendment (b) is required because of the definition of planning permission in new section 32LJ(7). The grace period condition covers appeals and can therefore only cover applications under the Town and Country Planning Act 1990 and the Town and Country Planning (Scotland) Act 1997, since a right of appeal only arises in respect of such applications. The amendment limits the application of the grace period condition to such cases. Amendment (c) is required because amendment (o) now covers judicial review cases and there is therefore no need to refer to judicial review within new section 32LJ(4)(b)(i).
Amendments (d) and (f) ensure the availability of the grace periods to cases of non-determination, whereby the statutory period for the determination of a planning application expired on or before 18 June 2015, but where a time extension had been agreed between the developer and the planning authority which expired after 18 June. Amendment (d) covers examples of projects which receive permission after 18 June 2015 following a non-determination appeal, where extension of time for determination has been agreed following the expiry of the statutory period before 18 June. However, it does not benefit projects where an extension of time has been agreed and which subsequently received planning permission without an appeal. Amendment (f) is, therefore, required to cover projects where an extension of time has been agreed and which subsequently received local planning permission without an appeal.
These amendments are fair because they avoid penalising developers who seek to negotiate with a planning authority rather than appealing for non-determination immediately following the end of the statutory time period for such a determination. A case study for this would be the Binn Eco Park, Perthshire, for which I am happy to provide a synopsis, should one be required.
Amendment (h) ensures the availability of grace periods to cases where an application has been called in by Ministers. The amendment covers the situation where the statutory period for the determination of the planning application expired on or before 18 June but the application was referred to the Secretary of State, Welsh Ministers or Scottish Ministers and was subsequently granted after 18 June. The amendment is necessary to ensure that projects for which an application for planning permission was submitted within sufficient time to allow a decision to have been granted prior to 18 June, but which were subsequently called in and then granted, are not unfairly prejudiced.
Amendment (i) covers the case of projects that have had local planning permissions resolved on or before 18 June but were technically granted by the planning authority after that date. This amendment is fair because it covers projects where there was approval by the local planning committee on or before 18 June 2015 but an official written consent notice was given after that date. There are a number of projects where recommendations to approve were made prior to 18 June but delays stemming from pre-election purdah or resource constraints in local authorities meant that projects did not receive final consent or a full committee resolution until after this point. A great deal of investment will have gone into projects in good faith and without foreknowledge of the cut-off point of 18 June. A case study would be Twentyshilling Hill, Dumfries and Galloway, which is, of course, in the constituency of our Scottish Conservative MP, the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale.
Amendment (j) covers applications for section 36 consent made before 18 June, where the consultation period for local authorities and others had expired on or before 18 June. Industry believes this amendment should address a significant anomaly over eligibility for projects consented under the section 36 regime, compared to those consented under the Town and Country Planning Act 1990 and the Town and Country Planning (Scotland) Act 1997 regimes. Under section 36 of the 1989 Act, the relevant planning authority is not the decision taker but can object to the proposal, after which there must be a public inquiry and then a decision by the Secretary of State or devolved Minister, as appropriate. This process is analogous in practice to a refusal under local planning, followed by an appeal. While the Government’s grace period provisions, as drafted, would allow a successful appeal after 18 June to become eligible for the grace period, the provisions do not cover this analogous situation under section 36. This means that small extensions of larger sites, which must follow the section 36 route, are, in particular, treated disadvantageously in respect of grace period eligibility compared to sub-50 MW stand-alone developments.
Sub-paragraph (iii) also reflects the need to provide for cases that do not go to inquiry but where the other provisions of the amendment apply, in addition to cases that do go to inquiry. Were this not to be included, section 36 applications ultimately issued permission without a local authority objection and without an inquiry would be penalised in comparison with those which did go to inquiry.
Amendment (k) covers applications for consent made under the Planning Act 2008 before 18 June and when a deadline for receipt of representations has passed on or before 18 June. The amendment ensures that projects requiring a development consent order are eligible for the grace period in the same circumstances as an equivalent project requiring a section 36 process.
Chris Heaton-Harris
We had a conversation earlier—I believe the hon. Gentleman was in the room—about the importance of interconnections and what they bring, including risks, when it comes to our continent. To a certain extent, I agree with him.
I will start by doing something quite unique in this debate: quote the Conservative party manifesto verbatim, not because, as my hon. Friend the Member for North Dorset said, I did not read it in the first place—that would be a slur beyond belief—but because this whole debate is essentially dancing on the head of a pin about how words should be used. Let me start with the opening salvo. The bolded headline is:
“We will halt the spread of onshore windfarms.”
That is fairly definitive and certain: we are going to stop any more onshore wind farms. The manifesto goes on to say
“Onshore wind now makes a meaningful contribution to our energy mix and has been part of the necessary increase in renewable capacity. Onshore windfarms often fail to win public support, however, and are unable by themselves to provide the firm capacity that a stable energy system requires.”
This is the bit we are debating today:
“As a result, we will end any new public subsidy for them and—
to help the hon. Member for Stalybridge and Hyde, that is “and”, not “and/or”—
“change the law so that local people have the final say on windfarm applications.”
Clive Lewis
Will the hon. Gentleman read the next paragraph in his party’s manifesto, which talks of
“committing £1 billion for carbon capture and storage”?
I would like to hear his comments on that, because the Chancellor has clearly cut that £1 billion pledge, which was in black and white in his manifesto. Government Members chop and change when it suits them, which makes our point about investor confidence.
Chris Heaton-Harris
I thank my hon. Friend; I could not have put it better myself and that is handy, because I was quoting from a Library document and I could not have told hon. Members what the next paragraph would have been, so I very much appreciate my hon. Friend’s help.
I gave a bit of a history lesson explaining why I set up what was almost a caucus, to use American terms on the day we are getting the results of the Iowa presidential caucuses. I think I could say that the 101 Members of Parliament I got to sign a letter and then campaign pretty hard were a caucus. The caucus that I led—it was not just me leading it; there were plenty of people taking a strong lead in this area—was certain about what it wanted to achieve when it came to the future policy for onshore wind. We wanted to make sure that onshore wind received no new subsidies. We were fed up with the way our communities had been treated.
As I said on Second Reading and as I think the Committee has agreed, I was quite happy about the second part of the commitment—a change to the law so that local people have the final say on wind farms—because I thought that that was pretty much the case, until a particular wind farm planning appeal came about. That was the Kelmarsh wind farm appeal, when the planning inspector ruled in favour of the development going through because he said that national policy in the area of renewable energy trumped all local concerns. And those local concerns were huge: they were concerns about a grade 1 listed building built in 1732 and about the site of the battle of Naseby. The inspector said in his report that this wind farm would have a “distinct visible presence” over Rupert’s viewpoint, King Charles’ oak viewpoint, Sulby hedges, the Royal Observer Corps lookout post and Mill Hill viewpoint. These are places and viewpoints from the battle of Naseby which I would argue—and I do argue with my colleagues—was the battle where Parliament fought for itself properly and won properly for the first time. The birthplace of Parliament was going to be overlooked by massive turbines, nearly the size of the London Eye.
The inspector said that national policy outweighs
“any harmful impacts it may have in terms of the setting of heritage assets, the living conditions of local residents in terms of visual impact and noise in particular, the…enjoyment of the countryside, biodiversity, notably bats, and other matters”
What I thought was a local issue to be dealt with local planners, which is where I think the whole Committee wants to return such matters, was being elevated to national policy level.
Clive Lewis
The hon. Gentleman is being generous in giving way. Will he be joining the community of Balcombe and other communities across the country who are opposing fracking in their areas? Will he be supporting them in the local decisions they are making, very powerfully, in opposing fracking? Fracking, as we have heard, will potentially have a national contribution to make, but locally, they do not want it. Will he respect their opinions as well?
Chris Heaton-Harris
As I said on Second Reading, we need to evolve our planning system so local communities benefit very much from any developments. I cited the French system which my fellow Eurosceptic colleagues will be very uptight about. There is a better way of dealing with planning when it comes to helping local communities to decide whether to take onshore wind, fracking or other things, but I do not think we are there yet.
To return to what happened in my constituency with onshore wind, with which this part of the Bill deals, we launched a very simple campaign. We got on board, some Members will recall, the former Energy Minister, my right hon. Friend the Member for South Holland and The Deepings (Mr Hayes), who said, “Enough is enough. We are going to make changes.” I thought that was a good signal that the Conservative manifesto might have something fairly solid on this. The following Energy Minister, my right hon. Friend the Member for West Suffolk (Matthew Hancock), said on the Floor of the House on 6 March 2015—a date that in my mind definitely came before the General Election campaign:
“We have made it absolutely clear that we will remove onshore wind subsidies in the future, and that the current 10% that is in the pipeline for onshore wind is plenty.”—[Official Report, 6 March 2015; Vol. 593, c. 1227.]
I thought that was probably enough of a signal as to where our manifesto was going. Forget the petitions, the questions, the debates and all the other points that were made on the Floor of the House. I was very pleased when I saw the Conservative Party manifesto.
If Opposition Members choose to dance on the head of a pin about whether “new public subsidy” refers to renewables obligation certificates or anything else, perhaps that allows me to talk about things in the second part, which we have all agreed. Let us talk about the way that local people can have the final say on these matters. Let us talk about something the Committee has agreed on previously—how we decommission big energy projects.
It cannot be said that these are not big energy projects. Supposedly, decommissioning is a given—the costs are being set aside when it comes to the North sea—but it is not yet part of the Bill when it comes to onshore wind. The Committee debated earlier the jobs, the supply chain, recycling, the sites that are properly and safely returned to nature—all phrases used by the hon. Member for Southampton, Test about the decommissioning of oil and gas. Yet we currently have a system in place that simply does not allow for decommissioning bonds or any way to ensure that the developer ends up paying to decommission a huge chunk of metal being stuck in the countryside. If we are talking about making sure that local people have the final say on wind farm applications, perhaps we should allow them to include the costs of decommissioning to be stuck into a fund and subtracted from subsidy at source.
Clive Lewis
Can the hon. Gentleman envisage a situation where he actively campaigns against wind turbines that are already established?
Chris Heaton-Harris
There are communities out there now that are directly affected by amplitude modulation from wind turbines. I can cite Cotton farm in South Cambridgeshire. That constituency is on the border between two local authorities, both of which have passed motions in the council chamber and written to the Government asking for stronger guidance on these points.
Noise is monitored on a regular basis by a set-up in the community to scientific standards. When an onshore scheme is mooted, noise readings are taken using the same equipment, verified by a third party. Because we can predict when amplitude modulation is likely to occur—it depends on atmospheric conditions, meteorological patterns and wind speed—and can see all those factors happening in front of us, we can predict where the noise will fall. The developer can therefore be asked to shut the turbines down so that they do not cause harm, as has happened in Cotton farm a couple of times. I can absolutely see myself campaigning with other communities up and down the country to ensure that the amplitude modulation from turbines that are already up does not cause undue concern in local communities.
Initially, 10 or 15 years ago, the equipment required to set these up was very expensive. Now, it can be done for about £3,000. Most communities, and certainly a number of developers, could afford that, which would possibly take this problem away. I am trying to make the point to the hon. Member for Norwich South that there are, as my nan would say, many ways of skinning a cat.
The Government have been particularly slow to implement these provisions. I would like them to go further. I am pretty sure I could get together a decent-sized political caucus to do that. If we seriously intend to argue against part of the Bill falling under the auspices of the Salisbury doctrine, and if we are going down the line of dancing on the head of a pin over these issues, the consequences further down the line for this industry will be a lot worse than if we accepted that the Government had a clear manifesto pledge that they are effecting today.
Clive Lewis
I thank the Minister for her comments. It has been an intriguing debate. I did not realise that the Minister was part of the “windy 101”. I have learnt something today.
Hon. Members on this side of the Committee believe, unfortunately, that the real reason these amendments are being made is to satisfy the interests of a few constituency MPs—some of them are here today—ahead of the UK economy. This will not save consumers money as the Minister has claimed, but will do the exact opposite by destabilising energy investment and adding to bills in the long run. We have internationally binding renewables targets to meet and it makes sense to do so in the most cost-effective way possible. Arbitrarily ruling out onshore wind when there are perfectly sensible locations that can accommodate it simply makes it all the more expensive for us to meet our targets. The amendments lie at the heart of what is wrong with the Government’s approach. The UK energy industry may account for just 3% of GDP, but it accounts for 18% of investment.
In 2013, jobs in renewable energy grew by 6% in the context of 1.2% growth in the wider economy. Public support for low-carbon technologies including onshore wind remains high even among Conservative voters. The sector is vibrant and dynamic, representing a huge opportunity for our future. What investors want to hear from the Government is a real long-term economic plan and stable policy regime. I am afraid that the amendments represent the polar opposite of that goal.
The Chair
May I make it clear that we are about to vote on Government amendment 5, not the amendments on which the Minister just responded.
Question put, That the amendment be made.
Spending Review and Autumn Statement
Clive Lewis Excerpts(10 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)
This spending review delivers on the commitment we made to the British people that we would put security first—to protect our economic security by taking the difficult decisions to live within our means and bring down our debt, and to protect our national security by defending our country’s interests abroad and keeping our citizens safe at home. Economic and national security provide the foundations for everything we want to support: opportunity for all, the aspirations of families and the strong country we want to build.
Five years ago, when I presented our first spending review, our economy was in crisis and, as the letter said, there was no money left. We were borrowing one pound in every four we spent, and our job then was to rescue Britain. Today, as we present this spending review, our job is to rebuild Britain—build our finances, build our defences, build our society—so that Britain becomes the most prosperous and secure of all the major nations of the world, and so that we leave to the next generation a stronger country than the one we inherited. That is what this Government were elected to do, and today we set out the plan to deliver on that commitment.
We have committed to running a surplus. Today, I can confirm that the four-year public spending plans that I set out are forecast to deliver that surplus so that we do not borrow forever and are ready for whatever storms lie ahead. We promised to bring our debts down. Today, the forecast I present shows that, after the longest period of rising debt in our modern history, this year our debt will fall and keep falling in every year that follows.
We promised to move Britain from being a high-welfare, low-wage economy to a lower-welfare, higher-wage economy. Today, I can tell the House that the £12 billion of welfare savings we committed to at the election will be delivered in full, and delivered in a way that helps families as we make the transition to our national living wage.
We promised that we would strengthen our national defences, take the fight to our nation’s enemies and project our country’s influence abroad. Today, this spending review delivers the resources to ensure that Britain, unique in the world, will meet its twin obligations to spend 0.7% of its income on development and 2% on the defence of the realm.
But this spending review not only ensures the economic and national security of our country, it builds on it. It sets out far-reaching changes to what the state does and how it does it. It reforms our public services so that we truly extend opportunity to all, whether it is in the way we educate our children, train our workforce, rehabilitate our prisoners, provide homes for our families, deliver care for our elderly and sick, or hand back power to local communities. This is a big spending review by a Government that do big things. It is a long-term economic plan for our country’s future.
Nothing is possible without the foundations of a strong economy, so let me turn to the new forecasts provided by the independent Office for Budget Responsibility, and let me thank Robert Chote and his team for their work. Since the summer Budget, new economic data have been published which confirm this: since 2010, no economy in the G7 has grown faster than Britain. We have grown almost three times faster than Japan, twice as fast as France, faster than Germany and at the same rate as the United States. That growth has not been fuelled by an irresponsible banking boom, like in the last decade. Business investment has grown more than twice as fast as consumption, exports have grown faster than imports, and the north has grown faster than the south. For we are determined that this will be an economic recovery for all, felt in all parts of our nation, and that is already happening.
In which areas of the country are we seeing the strongest jobs growth? Not just in our capital city—the midlands is creating jobs three times faster than London and the south-east. In the past year, we have seen more people in work in the northern powerhouse than ever before. Where do we have the highest employment rate of any part of our country? In the south-west of England. Our long-term economic plan is working.
But the OBR reminds us today of the huge challenges we still face at home and abroad. Our debts are too high; and our deficit remains. Productivity is growing, but we still lag behind most of our competitors. I can tell the House that, in today’s forecast, the expectations for world growth and world trade have been revised down again. The weakness of the eurozone remains a persistent problem, and there are rising concerns about debt in emerging economies. These are yet more reasons why we are determined to take the necessary steps to protect our economic security.
That brings me to the forecasts for our own GDP. Even with the weaker global picture, our economy this year is predicted to grow by 2.4%. Growth is then revised up from the Budget forecast in the next two years to 2.4% in 2016 and 2.5% in 2017. It then starts to return to its long-term trend, with growth of 2.4% in 2018 and 2.3% in 2019 and 2020. That growth is more balanced than in the past. Whole economy investment is set to grow faster in Britain than in any other major advanced economy in the world this year, next year, and the year after that.
When I presented my first spending review in 2010 and set this country on the path of living within its means, our opponents claimed that growth would be choked off, a million jobs would be lost and inequality would rise. Every single one of those predictions has proved to be completely wrong. So, too, did the claim that Britain had to choose between sound public finances and great public services. It is a false choice; if we are bold with our reforms we can have both. That is why, while we have been reducing Government spending, crime has fallen, a million more children are being educated in good and outstanding schools, and public satisfaction with our local government services has risen. That is the exact opposite of what our critics predicted. Yet now, the same people are making similar claims about this spending review, as we seek to move Britain out of deficit and into surplus, and they are completely wrong again.
The OBR has seen our public expenditure plans and analysed their effect on our economy. Its forecast today is that the economy will grow robustly every year, living standards will rise every year, and more than a million extra jobs will be created over the next five years. That is because sound public finances are not the enemy of sustained growth; they are its precondition. Our economic plan puts the security of working people first, so that we are prepared for the inevitable storms that lie ahead. That is why our charter for budget responsibility commits us to reducing the debt to GDP ratio in each and every year of this Parliament, reaching a surplus in the year 2019-20 and keeping that surplus in normal times. I can confirm that the OBR has today certified that the economic plan we present delivers on our commitment.
That brings me to the forecasts for debt and deficit. As usual, the OBR has had access to both published and unpublished data, and has made its own assessment of our public finances. Since the summer Budget, housing associations in England have been reclassified by our independent Office for National Statistics and their borrowing and debts been brought on to the public balance sheet, and that change will be backdated to 2008. This is a statistical change and therefore the OBR has re-calculated its previous Budget forecast to include housing associations, so that we can compare like with like. On that new measure, debt was forecast in July to be 83.6% of national income this year. Now, today, in this autumn statement, the OBR forecasts debt this year to be lower at 82.5%. It then falls every year, down to 81.7%—
Mr Speaker
Order. Mr Lewis, get a grip of yourself, man. Calm. Take up yoga—you will find it beneficial, man. Now look, the record shows that the Chancellor stays for a very considerable period after his statement to respond to questions, and Members will always find the Chair a friend if they wish to question a Minister—[Interruption.] Yes, they will. Those who have questions to ask will be heard. Meanwhile, the Chancellor will be heard.
Royal Bank of Scotland
Clive Lewis Excerpts(10 years, 4 months ago)
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Jeremy Quin
I acknowledge and appreciate the hon. Gentleman’s point. I would have a much better case if I could say that all the problems were pre-crisis, but they were not; I fully acknowledge that. There are clearly issues that were endemic in RBS’s culture, and I sincerely hope that it has got a grip on that now.
RBS certainly does have a grip on its corporate structure and how it is conducting its business. It is now far more focused back on the UK and on UK corporate lending. It is the largest single lender to UK corporates, the largest supporter of SMEs, and the largest provider of mortgage lending. That is what we all want to see and wanted to see when the stake was initially taken.
Clive Lewis (Norwich South) (Lab)
The hon. Gentleman is saying that RBS has changed and improved its culture, but in The Times this week there was an article suggesting that it has been falsifying the mis-selling data that it has been giving out. I wonder what has actually changed if it is still misbehaving and, in effect, telling these porkies. Surely, in that case, it has not reformed itself and is just the same as it always has been.
Jeremy Quin
I have a lot of faith in the regulatory system that Ministers have put in place over the past five or six years under the coalition Government and this Government. What we need to focus on, as a House, is ensuring that we have the regulatory system that will deliver the results for our constituents and for the broader UK economy. I am nervous that the motion proposed by the hon. Member for Edmonton, although well intentioned, would delay support going into the economy.
I was serving in the Treasury when the stake in RBS was originally taken. I know that no hon. Member would be under any illusion that that stake was ever taken in a leisurely manner with a view to getting a tidy investment. The decision was taken by Labour with the very best of intentions, and it was the right decision to support the UK economy and the UK banking system at an absolutely critical moment.
Clive Lewis (Norwich South) (Lab)
I thank the hon. Member for Aberconwy (Guto Bebb) for his detailed analysis, and I thank other Government Members for their progressive contributions to today’s debate, some of which have been quite surprising from the perspective of Opposition Members. I would also like to thank my hon. Friend the Member for Edmonton (Kate Osamor) for introducing the debate and for her thorough speech. In fact, it was so thorough that she has left me only slim pickings for my own speech.
I want us to take a step back and remind ourselves of the bigger picture of the role RBS plays and has played in our financial system, and of just how high the stakes are when it comes to sorting out our banking system. Let us not forget why we own RBS in the first place. This is the bank whose reckless profiteering and pursuit of growth at any cost brought the UK economy to its knees—a bank that in 2009 made the biggest loss in UK corporate history and taxpayers paid a high price for its hubris; a bank whose ill-fated takeover of ABN AMRO has become a byword for corporate over-reaching, and whose former chief executive officer, Fred “the Shred” Goodwin, has become a byword for greed and irresponsibility. It is somewhat ironic that the poster child for the failings of privately owned banks has now become the poster child for the Government’s ideological insistence that banks are better run in the private sector. This bank’s own track record hardly bears out that assertion.
The Government would have us believe that there is no real alternative to reprivatisation, and that anyone who says otherwise is a 1970s throwback who simply wants to keep RBS in its current form forever, but, as we have heard from other Members today, there are plenty of alternatives. As my hon. Friend the Member for Edmonton so eloquently argued, keeping RBS in public hands does not have to mean running it all from Whitehall. It could mean transforming it into a network of local banks, accountable to their local communities—banks run in the public interest and not in the interest of a narrow few; banks that simply do not engage in the kind of speculative and risky activities that caused the global financial crisis in the first place, but instead are mandated to stick to their core social function of providing capital for sound businesses and providing banking services for local people.
Whether we look overseas at the thriving local public interest banks in countries such as Germany, Switzerland and Japan, or closer to home at the proposals of “firebrand radicals” such as Nigel Lawson, the Archbishop of Canterbury and Virgin Money, there is no shortage of ideas when it comes to the structural reform of RBS. What is lacking is the political will on the Government Benches for serious change. Indeed, the most worrying aspect of the Government’s attitude to RBS is the broader direction of travel that it represents. We are essentially being told, “Move along now. There is nothing to see here. We have fixed the problems that led to the crisis, and it can never happen again. It is safe to return to business as usual.” That was evident from the manner in which the sale of RBS was announced.
Jeremy Quin
Does the hon. Gentleman accept, though, that there have been dramatic changes in the regulatory environment? Happily, we will not be returning to 2003, because of the ring-fencing that has been introduced and the extra capital: RBS now has a capital base of 16%. Have there not been improvements in that respect?
Clive Lewis
I think that there have been changes, but as I said earlier, in an intervention, the fact that RBS is back again, and possibly about to be investigated for yet more fraud, does not exactly encourage me to think that those changes have been deep enough.
As I was saying, the sale of RBS was announced not to Parliament, but to a white-tie dinner full of City grandees, in a speech that also promised the City a “new settlement” on financial regulation. We are now starting to see what that “new settlement” looks like, with the Government caving in to economic blackmail from the likes of HSBC, which threatened to move its headquarters unless key post-crisis measures such as the bank levy and the ring fence between retail and investment banking were watered down—that, I think, answers the point made by the hon. Member for Horsham (Jeremy Quin); with the competition authorities ruling out action to break up big banks, even though they acknowledge that their customers are getting a raw deal; and with rumours that the Chancellor personally arranged the sacking of Martin Wheatley, the head of the Financial Conduct Authority, who has a reputation for being tough on bank misconduct.
Some commentators have even suggested that the Government’s desire for a quick sale of RBS is partly responsible for their magnanimous attitude towards the big banks: that the Government do not want to do anything that could damage the bank’s share price in the short term. If that were true, it would be incredibly short-sighted. We would effectively be trading in the chance to build a genuinely safer banking system in our haste to return to the pre-crisis status quo.
Andy Slaughter
My hon. Friend is making some excellent points. Does he agree that when RBS was mainly in the public sector, both the present Government and the coalition missed an opportunity to try to act responsibly? An organisation called Move Your Money—it is run from my constituency, and I think that it was mentioned by my hon. Friend the Member for Edmonton (Kate Osamor)—represents and campaigns for consumers, but it needs a partner in the banking sector that will do what local businesses and local people want.
Clive Lewis
I entirely agree. When we listen to the debate, we begin to feel that the Government are acting not in the interests of consumers, but in their vested banking interests. That seems to be their priority. We seem to be back to the pre-2008 mentality that the banks should be given whatever they want and we can have economic growth built on a house-price bubble fuelled by an oversized banking system without worrying too much about rebalancing our economy towards manufacturing or what we will do when the whole house of cards inevitably collapses.
We should consider, however, the effects on ordinary people like Andi Gibbs in my constituency who owned a business pre-crash. He was in effect mis-sold products by RBS and ended up with the now infamous global restructuring group. He not only lost his business; he lost his home, his wife, his family and his mental health. This is the price people pay when we do not get the banking system right. We now have a fantastic opportunity to get it right, and we must not squander it.
Drew Hendry
I made a point earlier about provisions for consequences for the people who take action that means that others with houses and businesses suffer through the malpractice the hon. Gentleman is describing. Does he agree that now is the time to look at having regulations that would put in place such consequences for people who take such action?
Clive Lewis
The hon. Gentleman makes an interesting point, and I agree we should be looking closely at the retribution that should be dished out to those who in effect ruin people’s lives; that is right and proper.
Successive attempts to persuade banks to lend more to small business have fallen flat, with some, like the enterprise finance guarantee scheme, actually being abused by RBS to exploit its small business customers. There could hardly be a clearer illustration of the fact that we have failed to get to the root causes of the problems in our banking system. The Chancellor and the banks may want us to move on and forget about the crash, but the British people have not forgotten. Whether it is mis-selling of PPI, mistreatment of small businesses or rigging the LIBOR and foreign exchange markets, they do not see that banks have really changed.
The warning signs of another crash are building. We may not have long to make sure our economy is better prepared than it was the last time. The Bank for International Settlements recently warned that we are living in
“a world in which debt levels are too high, productivity growth too weak and financial risks too threatening.”
In the UK, household debt is rising again, with the Office for Budget Responsibility predicting that, by the end of this Parliament, it will be higher than it was in 2008. Just last week, UBS warned that the London housing market is the most overvalued in the world and is in “bubble-risk territory”. In other words, the so-called recovery is not a sustainable one based on higher wages, higher productivity and creating new green jobs. Instead it is being driven by consumer spending propped up by ever-growing household debt, and fuelled by a banking system that still finds it more profitable to inflate house prices than to lend to productive businesses.
Having successfully rebranded a crisis caused by too much private debt as a crisis caused by too much public debt, the Government are now presiding over a new debt bubble that threatens to do exactly the same as what happened in 2008. Maybe instead of continuing to rely on the same institutions that got us into a mess in 2008, we should be promoting new types of bank, with ownership structures and business models that clearly distinguish them from the status quo: banks that are not beholden to the need to maximise profits, but which have a social mission and can genuinely put customers and the economy first. Our stake in RBS gives us a unique opportunity to do this.
When the history of this period is written, will the current Government be remembered as one who learned the right lessons from the crash, or as one who turned a blind eye and squandered the opportunity to build a better banking system?