Financial Services and Markets Bill

Geoffrey Clifton-Brown Excerpts

Report stage
Wednesday 7th December 2022 Commons Chamber

[Emma Hardy]

I rise to speak to new clauses 22, 23 and 29 and amendments 19, 21 and 22 in my name, which are all about financial inclusion. I thank Martin Coppack from Fair By Design, the Phoenix Group and Mastercard for meeting me earlier this week to talk about why they support financial inclusion.

When we think of financial inclusion, we tend to think of the consumer groups that support it, such as Citizens Advice, and it is not widely known that it is supported by FTSE 100 companies such as the Phoenix Group, Mastercard and Legal & General. When I asked why they support it, they said that since we left the EU, regulators are more powerful than ever before. Of course, I do not believe that the Government should have the call-in powers that were debated earlier. That huge transfer of powers to the regulator means that it becomes even more crucial for Parliament to set the correct objectives; we have to get the objectives right if we are to allow our regulators to function effectively in the post-Brexit world.

There was a rumour that the Government were keen to push back on any additional objectives for the regulators. Apparently, they compared it with the national curriculum, where everybody wants to get their bit in, and perhaps in the same way, everybody wants their bit to be a new objective for the regulators. But even if that is the case—clearly, there is a demand for the regulators to have many new objectives and for objectives to be strengthened—that does not mean that we are incorrect, because financial inclusion is important. Ensuring that the FCA has regard to financial inclusion turns it from a nice to have to something that we must have. It would embed financial inclusion in the design of financial services and products forever.

When I met people from Mastercard and they were talking to me about future innovations in financial services, fintech and the way financial services are developing new products, they said that at the moment financial inclusion is seen as an add-on, in that they develop a product, and financial inclusion is fitted into it by asking, “Well, how can we make this financially inclusive?” Those from Mastercard told me that they want financial inclusion to be there from the beginning, so that when new products are designed and created, it is given primacy, and is there throughout the whole design.

Without financial inclusion, constituents will continue to face what is called the poverty premium. I have spoken before about the poverty premium, which is basically the additional cost of being poor, and it explains why it is so expensive to have such a low income. In Kingston upon Hull West and Hessle, the poverty premium works out at £459 per household, which is nearly £6 million paid in extra costs by my constituents just because they happen to come from lower-income families. This is all calculated by Fair By Design.

For too long, the idea of financial inclusion has been a hot potato passed between the FCA, the Treasury and other regulators and Departments, with nobody prepared to take ultimate responsibility. For example, the Competition and Markets Authority started to carry out investigatory work on the poverty premium across essential services, but in the end determined it was too difficult, and it now signposts organisations to sector regulators such as the FCA. However, the sector regulators say that this is not their responsibility, as it involves elements of social policy and pricing of risk—and so we go on.

We are asking the FCA to collate the information needed to really look at and analyse the poverty premium. Of course, as we expected, the FCA says it does not want another objective. I think we probably understand why it does not want to be given any additional work to do, but it is our job as Parliament to set and establish the types of financial services we want, and to ask what our principles are as parliamentarians, what things we care about and what we want our future financial services to look like. Surely Members across the House would agree that having a financially inclusive sector or financially inclusive products that cater for people right across the population of the UK, not merely the most profitable ones, is a good thing.

When I was talking to people from Mastercard and Phoenix about this, they said that financial inclusion could open up new markets for them among those who would be interested in their products, if they were designed in an effective way. My new clauses and amendments ask the FCA to have regard to financial inclusion, and would place a duty on the FCA to report to Parliament annually on how well it is doing with financial inclusion and giving that information back to us. The proposals would end the current damaging situation by placing a clear remit on the regulator to ensure it routinely and properly explores financial inclusion issues across its work, allowing greater clarity on unintended consequences and the best interventions needed to ensure financial inclusion, as well as who is best placed to act.

The Government could save my constituents in Kingston upon Hull West and Hessle nearly £6 million, and it would not cost them a penny. Surely that, if nothing else, means that the Government should look more favourably at the amendments I have tabled.

[Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I am grateful to catch your eye, Madam Deputy Speaker.

I congratulate the hon. Member for Blaenau Gwent (Nick Smith) on tabling new clause 10, for which he should receive much of the credit. This amendment has an extremely simple intent in laying a duty on the FCA to report to Parliament on

“(a) the adequacy and appropriateness of the FCA’s use of its regulatory powers; (b) the measures the FCA has taken to protect vulnerable consumers, including pensioners, people with disabilities, and people receiving forms of income support; and”—

finally and most importantly—

“(c) the FCA’s receptiveness to the recommendations of the Consumer Panel.”

I will now say why paragraph (c), in particular, is so important. The hon. Member has explained clearly why the FCA should regularly report to Parliament, and in my role as deputy Chairman of the Public Accounts Committee, I have constantly urged openness and transparency, wherever possible, so that our constituents can make full and proper judgments on the actions, or lack of them, of regulators such as the FCA.

Like the hon. Member for Blaenau Gwent, I will give the House an example. The PAC inquiry that we held in April and June this year highlighted the plight of some 2,000 of the 7,700 British Steel pensioners who in 2019 suffered significant financial shortfalls because of the wrong advice given by a significant number of independent financial advisers who advised pensioners to opt out of their valuable defined-benefit pension schemes. To add further insult to injury, the actions by the regulator caused a number of independent financial adviser companies to go out of business or merge with others, and therefore the compensation that pensioners received rightly was capped. I know this is a complicated subject but both the hon. Member and I are using it as an egregious example of why the FCA needs to be more accountable to Parliament and our constituents. This amendment stems from recommendations 5a and 5b in the PAC report “Investigation into the British Steel Pension Scheme”, published on 21 July:

“The FCA should be more proactive and consumer-focused in its engagement with stakeholders. It should have a better mechanism for responding to consumer harms and collect more evidence on a regular basis to pick up on issues that are being raised, especially from emerging risks in financial markets…The FCA must also review how effective the Financial Services Consumer Panel is at consumer protection and how it influences policy debates within the FCA from a consumer angle.”

The hon. Member and I have had discussions with the Economic Secretary, who is on the Front Bench today, and I believe he is sympathetic to the principle that the FCA needs to be much more accountable. If that is the case, I very much hope that he will concede the principle of this amendment and incorporate it as a Government amendment in the other place. Neither the hon. Member nor I wish to be prescriptive about how or when this reporting should take place to Parliament; that is a matter for the Government.

No financial institution will ultimately exist without its consumers. The whole point of the FCA as a regulatory authority is to protect their interests. Rather than having to work through long and complicated reports, there needs to be clear, easily available information on what regulators are doing, or not doing, on their behalf. All of this requires a fundamental shift in the regulator’s—the FCA’s—attitude to the consumer and a commitment to engage more when things go wrong.

Finally, I want to comment on the fraud aspects of the Bill. The PAC recently conducted an inquiry on fraud and discovered that 41% of all reported crime in June was accounted for by fraud, up from 30% in 2017, yet just 1% of police resources is being devoted to fraud crimes. So we urgently need to see the Government’s new comprehensive fraud strategy.

[Stella Creasy]

I rise to add my wholehearted support to the comments of my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy), to new clause 7, to my Front Bench, and indeed to the points made by the hon. Member for The Cotswolds (Sir Geoffrey Clifton-Brown): many of us have had concerns about the FCA and its ability to represent consumers for many years, and it is good to see that work being done.

I shall focus on new clause 28. The bridge of the Titanic received seven warnings about icebergs. It was told exactly where the iceberg was, but on hearing those warnings it varied the direction of travel by one or two degrees yet kept going full steam ahead. The visible iceberg was 50 to 100 feet high and 200 to 400 feet long, yet still they ploughed into it. It does not take a rocket scientist to recognise that we have a personal debt crisis in this country with a cost of living crisis, that our constituents are struggling because there is too much month at the end of their money, and that those who make their money from those who are struggling are licking their lips.

This Bill is about financial regulation yet one of the most pernicious legal loan sharks is the buy now, pay later industry. The pool in which they fish is wide. This country has £205 billion-worth of consumer credit lending to account for, up £482 million on the previous month. People are borrowing not just to pay Peter and Paul, but to pay for their mortgages, to put food on their table, petrol in their car and clothes on their children’s backs. Let me be clear: I do not stand here with a hair shirt on saying nobody should borrow, but in that environment, when our constituents are being exploited by these companies, it is absolutely right to regulate them and protect our constituents, yet that is not what is happening here.

For nearly three years we have been warning the Government on the need to act on legal loans harks and the buy now, pay later companies—those warnings that came to the bridge of the Titanic. The Klarnas, the Laybuys and the Clearpays are the companies whose names we see when we go to check out online. They account for 6% of all online spending in the UK, and that is expected to double in the next two years. High thousands of reputable retailers have them on their websites. They have them not to help people to spread their payments as the companies claim, but because people spend on average 30% to 40% more if they use buy now, pay later.

But what people are telling us very clearly is that they are spending money they do not have. A quarter of all buy now, pay later users have been unable to pay for at least one essential because they are having to make repayments on buy now, pay later products. Some 25% of users have also missed a payment or made a late payment on a buy now, pay later loan in the last 12 months.

--- Later in debate ---

[Andrew Griffith]

My hon. Friend is absolutely right that that is a critical priority. We heard the figures—no one disputes them—about the growing prevalence of fraud, much of which is displacement as people go online. We need to give people the tools to protect themselves and we need to ensure that it is a high priority for those who seek to protect us.

We will empower the public with information. The hon. Member for Kingston upon Hull West and Hessle talked about financial inclusion. As we know, there is a slight difference of opinion, in that the FCA considers that that is already within its remit. It is absolutely something that I would like to see greater transparency on, and perhaps that is somewhere we can make common cause.

[Sir Geoffrey Clifton-Brown]

On fraud, about which I gave the figures to the House earlier, we had a hearing of the Public Accounts Committee the other day. I suggested two things: first, fraud should be made a strategic priority for every police force; and secondly, every police officer in the country should receive at least some basic training in the likelihood of fraud crimes.

[Andrew Griffith]

Fraud is of course a shared responsibility between the Treasury and my hon. Friends in the Home Office, and when it comes to the report that the hon. Member for Hampstead and Kilburn is quite rightly challenging us to produce as quickly as possible, we want that report to be right rather than quick, but we do need to bring it forward as quickly as possible. We will use the time wisely to engage with expert stakeholders, which could well include the training of which my hon. Friend speaks, and we will come forward with that early in 2023.

In addition, this Bill is a seminal moment in protecting victims of authorised push payment fraud. It will ensure swift protections for the vast majority of APP scam victims, reversing the presumption and making sure they receive swift reimbursement so that they are no longer victims of this crime. The measure enables the Payment Systems Regulator to take action across all payments systems, not just faster payments, which is where the fraud occurs most, so that it does not merely get displaced. The Government expect protections for consumers across all payments systems to keep pace with that.

Finance Bill

Geoffrey Clifton-Brown Excerpts

Report stage & 3rd reading
Monday 24th May 2021 Commons Chamber

[Abena Oppong-Asare]

Once again, I thank all Members who have spoken. This has been a varied and wide-ranging debate, with Members focusing on different aspects of the Bill.

My hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) spoke about the impact of overseas buyers buying properties in her community in bulk. My hon. Friend the Member for Hornsey and Wood Green (Catherine West) spoke about the impact that dirty money is having on her local area and how other countries, such as the USA, are using sanctions to target corrupt individuals. Both are excellent champions for their constituents, who are too often at the sharp end of the housing crisis.

[Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)]

Will the hon. Lady give way?

[Abena Oppong-Asare]

I am afraid that we have to make haste.

My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) spoke passionately about the impact of the Bill on poverty and public health. She is absolutely right to draw attention to the Government’s failure in this area. My right hon. Friend the Member for Hayes and Harlington (John McDonnell) spoke about the measures in the Bill that are hurting the lowest earners in our society. He has always been a champion for the lowest paid.

Other hon. Members, including the right hon. Member for Haltemprice and Howden (Mr Davis), spoke about the exploitation of workers through umbrella companies. As my hon. Friend the Member for Ealing North (James Murray) said earlier, we are extremely concerned about the Government’s approach to workers’ rights, including their broken promise to include an employment Bill in the Queen’s Speech. We also share Members’ concerns about people being forced into umbrella companies and losing rights as a result. I urge the Government to look carefully at this issue.

I thank the Minister for his answer to my question on the non-resident stamp duty surcharge. I am aware of the consultation in 2019 to seek views on the decision on 1%, which led to the 2% stamp duty surcharge. I also point out that the Chancellor made an announcement in that same year, when he was Chief Secretary to the Treasury, in relation to implementing a non-resident stamp duty surcharge at 3%, so this commitment has been watered down.

I am sure that we will return to this issue during future debates and I thank Members for the points they have raised today. I will end by returning to the issue of the register of overseas ownership. As I said earlier, the Government’s failure to introduce this legislation is extremely disappointing. We will push new clause 24 on this issue to a vote, but I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

New Clause 24

Review of impact of 2% non-resident surcharge

‘(1) The Chancellor of the Exchequer must review the impact of section 88 and schedule 16 of this Act on tax revenues, residential property prices, affordability of residential property, and the volume of property purchases by non-residents, and lay a report of that review before the House of Commons within six months of the passing of this Act and once a year thereafter.

(2) The review under this section must include an assessment of what those impacts would have been if the provisions in the Draft Registration of Overseas Entities Bill had been in force.’—(Abena Oppong-Asare.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

Financial Services

Geoffrey Clifton-Brown Excerpts

Consideration of Lords amendments
Monday 26th April 2021 Commons Chamber

[Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)]

Who will be responsible for maintaining the list? Will it be Her Majesty’s Treasury? What will be the procedure to review it so that countries may come on to it and existing countries may come off it if they no longer meet the criteria?

[John Glen]

I thank my hon. Friend for his reasonable question about the updating of the list. The Financial Action Task Force meets three times a year to determine the countries identified on its public lists. As such, the UK’s new autonomous high-risk third countries list could be updated up to three times a year to mirror the decisions made by FATF. We will look at that carefully. FATF monitors the UK—indeed, it did a mutual evaluation of the UK in December 2018 and gave us one of the highest ever rankings—and constantly updates countries who are high risk around the world.

I will make a few points in response to the right hon. Member for Wolverhampton South East. In recent years, the Government have taken a number of actions to combat economic crime, including creating a new National Economic Crime Centre to co-ordinate the law enforcement response to economic crime, and passing the Criminal Finances Act 2017, which introduced new powers, including unexplained wealth orders and account freezing orders, and established the Office for Professional Body Anti-Money Laundering Supervision to improve the oversight of anti-money laundering compliance in the legal and accountancy sectors. In 2019, the Government and the private sector jointly published a landmark economic crime plan that outlines a comprehensive national response to economic crime such as fraud and money laundering, as mentioned by the right hon. Gentleman. It provides a collective articulation of 52 actions being taken in both the public and private sectors in the next three years to ensure that UK cannot be abused for economic crime.

The hon. Member for Glenrothes mentioned the Cayman Islands. As of the FATF plenary in February 2021, FATF collectively agreed to include the Cayman Islands in its list of jurisdictions under increased monitoring. As that is one of the FATF public lists that the UK autonomous list mirrors, the Cayman Islands will be included in the UK’s list of high-risk third countries. The outstanding issues that the Cayman Islands must address are outlined in FATF’s publicly available statement.

I hope that the House has found the debate informative and will join me in supporting this important step to ensure that we have an up-to-date framework to protect the financial system from money laundering and terrorist financing.

Question put and agreed to.

Business of the House (Today)

Ordered,

That, at this day’s sitting, the Speaker shall put the Question on the Motion in the name of Keir Starmer relating to the Health Protection (Coronavirus, International Travel) (England) (Amendment) (No.7) Regulations (SI, 2021, No. 150) not later than 90 minutes after the commencement of proceedings on the motion for this Order; the business on that Motion may be proceeded with at any hour, though opposed; and Standing Order No. 41A (Deferred divisions) shall not apply.—(David Duguid.)

Spending Review 2020 and OBR Forecast

Geoffrey Clifton-Brown Excerpts

Wednesday 25th November 2020 Commons Chamber

[Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)]

May I admire my right hon. Friend the Chancellor’s stamina in answering well over 90 questions? I also warmly welcome his statement this afternoon and in particular the £100 billion he announced on infrastructure spending, which includes some vital projects in my constituency, notably the levelling-up fund and the feasibility study for the Cirencester light railway, the reconfirmation of the funding for the A417 and, above all, the extra funding to improve gigabit broadband, which is an issue my rural constituency suffers from. Will he confirm that very hard-hit economies, such as Gloucestershire’s, will benefit from this infrastructure funding, and that it will help speed up a strong recovery?

[Rishi Sunak]

I thank my hon. Friend for his kind words in support. He is absolutely right: we want to ensure that this record investment in infrastructure brings tangible benefits to our constituents wherever they live, whether that is in the rural south-west or a town up in the north-east. All the people of this country should see measurable improvement in the quality of their lives and see the opportunities that they can seize ahead of them. That is something that the Government will focus relentlessly on and intend to deliver.

Economic Update

Geoffrey Clifton-Brown Excerpts

Tuesday 17th March 2020 Commons Chamber

[Rishi Sunak]

We have an extensive security and support network, which extends beyond statutory sick pay to an NHS that is free at the point of use. Our welfare and security support system works well, and we buttressed it with an extra £1 billion investment last week.

[Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)]

Although I congratulate my right hon. Friend on the package he has worked very hard on, sadly, I received a phone call today from one of my employers, whose contract had been cancelled forthwith. He has had to lay off 1,000 people. There will be a lot of very anxious people tonight. Although they are probably entitled to employment and support allowance and universal credit, they will suffer a considerable drop in their wages. I urge the Chancellor to come up with an employment support package as soon as possible.

[Rishi Sunak]

I thank my hon. Friend for his support. I have sympathy with his constituents in that situation. That is why we strengthened our security and safety net last week, but the best thing we can do is help employers get through this and ensure that those jobs are ready for people to go back to as soon as practically possible.

HMRC Impact Analysis: Customs

Geoffrey Clifton-Brown Excerpts

Tuesday 8th October 2019 Commons Chamber

[Jesse Norman]

This is a long document at some 45 pages or so, but I would have hoped that the right hon. Gentleman could have made it to page 9. He claims that the cost to British business will be £15 billion, but it says perfectly clearly at the bottom of page 9:

“The latest…estimate for the annual administrative burden…is £7.5 billion (updated to reflect 2017 data)”.

I am in no sense happy about that—[Interruption.] I am just correcting the record. The right hon. Gentleman said £15 billion, when in fact the figure is £7.5 billion. That figure is, of course, prior to any mitigations that might be put in place by the Government.

Let me turn to the right hon. Gentleman’s other concerns. He criticised the Government for, as he puts it, failing to secure a deal. All his party had to do was support the perfectly sensible series of deals that have been put before this Parliament, and it would have a deal.

I am not going to comment on unsourced speculation of the kind mentioned by the right hon. Gentleman. Let me just remind the House that when this Government’s predecessor came into office in 2010, debt was at a peacetime high thanks to the previous Labour Government. The deficit was at almost 10% and, interestingly, inequality under the Labour Government was significantly higher than it is today.

[Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)]

The number of customs declarations is likely to increase from 50 million now to 250 million when we have to start to export to the EU. This will be governed by a customs declaration service system. Will the system cope, and will there be enough agents to handle that volume of transactions?

[Jesse Norman]

We believe the system will cope. Of course, there are a lot of easements in place, and there is already a functioning CHIEF—customs handling of import and export freight—system to handle the current level of declarations.

Loan Charge

Geoffrey Clifton-Brown Excerpts

Thursday 11th April 2019 Commons Chamber

[Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I rise to support my constituent, Kieran Smythe, who bought schemes extending back to 2014. He believed that the schemes that he was sold were approved by HMRC and a QC.

As many Members of this House have said, the problem is that HMRC has been very slow to react to this whole matter. As far back as 2004, Dawn Primarolo, when she was Paymaster General, said that the Government would legislate to stop these schemes. The Government legislated again in 2011, but it was not until the Finance Act in 2017 that the loophole was closed.

Let me say in the very short time that I have left that the excellent Library briefing that we have been given says that the Government estimate that 50,000 individuals will be affected by the charge on these disguised remuneration loans, of whom only 24,000 so far have contacted HMRC. It is my understanding that if they have not contacted HMRC and agreed a repayment scheme by 5 April this year, they will be liable to a full range of payments and penalties.

In closing, I simply say to my right hon. Friend the Minister that if this debate is to have meant anything, can there please be a little flexibility in how those payments and charges are investigated, so that at least everyone paying them can be fully satisfied that they are properly due?

Business Rates

Geoffrey Clifton-Brown Excerpts

Tuesday 2nd April 2019 Commons Chamber

[Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I am very grateful to you, Madam Deputy Speaker, and Mr Speaker for affording me this opportunity to have a long dilation on the subject of business rates. I am under no illusion: I do not think my popularity is why so many people are present. It is all to do with the popularity of and the worry about business rates and their effect on our high streets up and down the country. I am sure Members will have an infinite number of examples of how their high streets have been disadvantaged by the impact of business rates.

[Bill Wiggin (North Herefordshire) (Con)]

My hon. Friend has misled the House, although unwittingly. He is very popular; it is his natural humbleness and modesty that prevails upon us today. In Ledbury, which has one of the finest high streets in Christendom, there are only two shops that are part of the chains that can be seen on ordinary high streets, yet the shops in my constituency, like those everywhere else, are under tremendous pressure. More and more of them are becoming charity shops. Although none of us has anything against that, it is surely a sign of a deep unhealthiness in our high streets.

[Sir Geoffrey Clifton-Brown]

Ledbury comes second in Christendom after Cirencester, which is beaten by no high street town in this country. My hon. Friend is right, of course. The 80% rate relief that charitable shops get encourages a large number of them. I have a substantial number in Cirencester, although they are in the secondary streets, rather than the main square. I can perhaps beat Ledbury, in that I had only one major chain in my constituency. It was the House of Fraser, and it has recently gone bust, so as far as I know, I have no major high street chain in my constituency.

[Sir Peter Bottomley (Worthing West) (Con)]

However modest we may be about each other, it is the popularity of both the subject and of my hon. Friend that has drawn the crowd. In addition to shops, will he talk a bit about the rating imposition on automatic cash machines? Cash machines are needed in many places where the banks have gone, and if the rates go up on them, we will start losing them as well.

[Sir Geoffrey Clifton-Brown]

My hon. Friend reads my mind. A long way further in my speech, I have a little section on ATMs. ATMs and public loos get a good allowance under the rating system, so I will be talking about that.

[Ms Nadine Dorries (Mid Bedfordshire) (Con)]

I am sure that my hon. Friend remembers well that a long time ago—1997—I used to live in his constituency. In fact, we worked on his election campaign together. At the time, the Cotswolds constituency was booming with pubs and businesses. The high streets in Chipping Campden and other villages were doing incredibly well, but what we now see as a result in his constituency, which I had the pleasure of visiting recently, is that there has been a churn in businesses, because many of the small and medium-sized businesses, due to the high rates and high rents on the properties in his beautiful constituency, find it incredibly difficult to sustain the costs of both high rent and high business rates. This problem is found not just in his constituency but across the UK, due to the high rateable value of properties. Does he agree that we need complete reform of the business rating system?

[Sir Geoffrey Clifton-Brown]

I well remember meeting my hon. Friend for the first time in the Eight Bells pub in 1997, when we were both a little younger—[Interruption.] She says, in parentheses from a sedentary position, “better looking”—I was not going to say that in case I came within the bounds of the code, which I think might well touch on the sort of remark that I might make. Nevertheless, I wholly concur with her sedentary remark.

[Craig Mackinlay (South Thanet) (Con)]

I put on record that I have been trying to take action for a number of years to exempt public conveniences from business rates. Especially in respect of the towns in my constituency—Ramsgate, Broadstairs and Cliftonville are tourist areas—I have always said that public loos are often the first thing that people use and the last thing that they remember, and they should be thus exempted.

[Sir Geoffrey Clifton-Brown]

I am sure that the tourists in my constituency will be greatly relieved to hear what my hon. Friend has to say. In my constituency, which is very dependent on tourism, I have been having a big battle with the local council to keep public conveniences open, because it is really important. If someone comes for a day’s outing to the Cotswolds or goes to my hon. Friend’s constituency, they cannot last all day. They need somewhere to go, and I was delighted when the Government gave that sort of relief.

[Mr Jim Cunningham (Coventry South) (Lab)]

rose—

[Rachael Maskell (York Central) (Lab/Co-op)]

rose—

[Sir Geoffrey Clifton-Brown]

Oh my God, I have got competition. I will give way to the hon. Lady first.

[Rachael Maskell]

I am very grateful to the hon. Gentleman. We have debated business rates on numerous occasions, because York, which is known for its retail offer, currently has about 50 empty properties. Does he agree that the business rates system is broken and that we need to move forward to a turnover tax or a profit-related tax, thereby enabling a much fairer system to be in place?

[Sir Geoffrey Clifton-Brown]

I am particularly pleased to see the hon. Lady in the Chamber today, because she was one of the very few people who were present when I held my Adjournment debate on this subject on 8 October last year. If memory serves me—I am sure that she will correct me if I am wrong—I think that on that occasion, she told the House that there were 24 empty shops in York. If it has gone up to over 50 now, that demonstrates a deteriorating situation. If I have the figures right— she is smiling so perhaps she would like to give the House correct figures for last year compared with now, if she knows them, but if not, I have them here and I will look them up at some time during the speech—clearly business rates are having a deleterious effect on the high street. I will come to that in my speech.

[Mr Jim Cunningham]

The hon. Gentleman and I came into the House together, so we know each other quite well. To be frank, we have had many debates about rates in general terms, whether they were about the poll tax or business tax and so on, and quite frankly, it is about time—I agree with the hon. Member for Mid Bedfordshire (Ms Dorries)—that there was an inquiry to have a good look at the whole system of funding local government in this country. What is happening now is that a lot of local government expenditure, because of the reduction in Government grants to local authorities, has been shoved under business rates. As I said about 18 months ago, we cannot go on like this. Something has to give and we have to look at that properly.

[Sir Geoffrey Clifton-Brown]

I agree with the hon. Gentleman. He is quite right: we have known each other and been friends for a long time, and he has had a long interest in this subject. I will certainly come on to the subject of wholesale reform of the business rating system. Indeed, the British Hospitality Association, which I will refer to later, is calling for a royal commission to look into wholesale reform of the rates. Indeed, it was a manifesto commitment of my party, but the party seems to have gone cold on wholesale reform of the business rates system, for reasons to do with protecting the £30 billion of revenue it raises, as I will refer to in a moment.

[Steve Brine (Winchester) (Con)]

As the manifesto seems to be very popular this week, I will read from it. We said:

“we will also conduct a full review of the business rates system to make sure it is up to date for a world in which people increasingly shop online”.

The pretty market town of Alresford in my constituency has a chocolate box row of shops that includes a beautiful bookshop, but people increasingly tell me they use it to look, view and try, and then go online to buy the books. It is totally untrue that the Government have not done anything to help with businesses rates—we have supported those affected by the revaluation, introduced the discretionary rates scheme and said we will introduce more regular revaluations—and the very good Minister, who is in his place, has done a lot. That said, it is probably time to consider a more structural change away from just property—I understand why the Treasury likes property taxes—to a more transaction-based tax, which might help bookstores such as the one I referred to in Alresford.

[Sir Geoffrey Clifton-Brown]

I am grateful to my hon. Friend for that thoughtful intervention, and I want to reassure him and the Minister that I have not called this debate to criticise the Government. I called it to come up with some helpful and positive suggestions for how we might reform system, wholesale or otherwise, while bearing it in mind that we need to raise that £30 billion. Clearly, the Treasury cannot afford any reduction in that amount.

[Sir Desmond Swayne (New Forest West) (Con)]

Is the fundamental problem one of the taxation system or the nature of retail and our changing tastes? In my view, the rating system does not help—it sets high streets at a disadvantage—but fundamentally people have changed the way they shop, and retail has to respond with a better offer and experience.

[Sir Geoffrey Clifton-Brown]

I agree with my right hon. Friend, and I have a section in my speech about the changing circumstances of big online companies vis-à-vis the rating system.

[Several hon. Members rose—]

[Sir Geoffrey Clifton-Brown]

I will get a little further in my speech and then accept a few more interventions. If I can make some progress, hon. Members might see where I am coming from.

The Red Book says that the amount collected by the business rates in 2019 is about £30.9 billion, but even this simple proposition is clouded by how much the Government have to provide for a loss on appeals, which alters the uniform business rates multiplier to allow rates under legislation to rise by at least RPI every year. Whatever happens to appeals, rates or reliefs, the Minister and his Department have to make up that £30.9 billion elsewhere.

I come now to the kernel of what I want to say today, and this in part addresses the interventions from hon. Friends. The OECD revenue statistics database makes it perfectly clear that the UK tops the league of taxation on immovable property both as a percentage of taxation and as a percentage of GDP by some margin. The UK paid 9% of rateable taxation in 2016. Our nearest rival, France, paid 7%; Germany just 1%; and Luxembourg barely a quarter. This must be a major reason why manufacturing business is not as competitive as in our nearest European rivals.

To shore up this £30.9 billion of revenue, the Treasury has had to increase the complex array of reliefs and allowances to compensate for some of the most damaging consequences of the tax, so in every Budget more or less, one sees a new allowance or relief to mitigate some of the worst effects of the tax. As the hon. Member for York Central (Rachael Maskell) has already done, I refer the House to my previous debate on this subject on 9 October 2018, when, as reported at column 117, my right hon. Friend the Minister listed some of these many reliefs.



We were all pleased when, in his Budget on 29 October last year, the Chancellor recognised that many small retail businesses were struggling to cope. I am sure that Members throughout the Chamber can give examples of businesses that are struggling to cope with the high fixed costs of business rates.

[Alex Chalk (Cheltenham) (Con)]

rose—

[Sir Geoffrey Clifton-Brown]

I give way to my neighbour from Cheltenham.

[Alex Chalk]

Nurseries in Cheltenham provide a vital public service for parents, enabling them to go to work, but they are marginal businesses, and it is very hard for them to make money. Circus Day Nursery has written to me saying that it is struggling with the impact of business rates, and that the Government’s great intentions to allow local dispensations to be provided by councils are not being pursued in practice. Has my hon. Friend any views on the impact of business rates on the viability of the local nurseries that are so vital to our communities?

[Sir Geoffrey Clifton-Brown]

I do have a view, as it happens. Later in my speech I shall be dealing with discretionary hardship relief from local authorities. Some of that could go towards my hon. Friend’s struggling nurseries, but the problem is that cash-strapped authorities are reluctant to give any discretionary reliefs at all. When we reach a point at which rates retention is one of the only sources of income for the small borough and district councils, they will be even less willing to provide hardship relief.

[Several hon. Members rose—]

[Sir Geoffrey Clifton-Brown]

My goodness! My golly! Actually, I think that my hon. Friend the Member for Faversham and Mid Kent (Helen Whately) was first.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. Before the hon. Member for Faversham and Mid Kent intervenes, I must make two points. First, I think it important for the hon. Member for The Cotswolds (Sir Geoffrey Clifton-Brown) to be allowed to finish responding to one intervention before being interrupted by another. Secondly, I know that it is very tempting to look at the Member who has intervened, but it is a good idea to face in this direction because of the microphones. Obviously, no one would want to miss a word of the debate.

[Helen Whately (Faversham and Mid Kent) (Con)]

The reason for my enthusiasm about intervening at that particular juncture was my wish to raise a point that is remarkably similar to—if not the same as—the point raised by my hon. Friend the Member for Cheltenham (Alex Chalk). A couple of weeks ago I visited a nursery in my constituency whose staff told me about exactly the same problem. Business rates are a huge challenge to its success as a business, but it provides a very important service for local parents—especially mums, but also dads. Regulations require them to have a certain amount of floor space, so they are hit pretty hard by business rates. I am keen to hear the section of my hon. Friend’s speech that deals with possible cases for extra support, and I hope that nurseries will be considered in that regard.

[Sir Geoffrey Clifton-Brown]

I do apologise, Madam Deputy Speaker, for not facing you. Of course I should like to face you all the time, but my hon. Friends have been tempting me in the other direction. I will try not to be tempted again.

My hon. Friend is absolutely right. The problem for nurseries is partly a business rates problem, but it is also connected with the pledge in our manifesto to grant free nursery spaces for an extra number of hours. That means employing extra staff, which the nurseries are finding hard to do. Nurseries—and I visit some in my constituency—are facing difficulties of all sorts. We must help them where we can. I am sure that my right hon. Friend the Minister has heard my hon. Friend’s intervention; perhaps he will say that we can help in some way.

[Mr Marcus Jones (Nuneaton) (Con)]

Will my hon. Friend give way?

--- Later in debate ---

[Sir Geoffrey Clifton-Brown]

Of course.

[Mr Jones]

I thank my hon. Friend. I now cannot remember what I was going to say. [Laughter.]

My hon. Friend has identified the high street as an important aspect of business rates. In the last few years, the saviours of many high streets have been casual dining and high-quality bars and restaurants, and in many places the rateable values are so high—above £100,000 in many cases—that none of those businesses has benefited from the generous allowances and discretionary reliefs provided by the Government. Does my hon. Friend agree that we need to ensure that we do not kill the goose that laid the golden egg?

[Sir Geoffrey Clifton-Brown]

My hon. Friend has touched on another subject with which I shall be dealing later. He will know that the British Beer and Pub Association has made specific recommendations on pubs. Suffice it to say that in all our constituencies, the hospitality industry is one of the few very bright lights on the high street. The numerous restaurants, bed and breakfasts and hotels are the one thing that is keeping most of our high streets going.

I welcome very much my right hon. Friend the Chancellor’s statement in his Budget that small retailers in England with a rateable value below £51,000 will get a third discount on their bills. I know that that will have been a great deal of help to a lot of small businesses in this country, and a lot of small businesses in my constituency have told me how grateful they are for that relief. I congratulate the Treasury on that.

[Robert Courts (Witney) (Con)]

My hon. Friend has been very generous in giving way. I entirely commend the Government for the package of business rates relief that has been given, although I recognise, as he does, the pressures that high streets are under with the business rates system. I also would be interested in a thorough reform of that system. Does he agree that, in the meantime, there are many things that local authorities can be doing to drive footfall and to help the high street? I am thinking particularly of West Oxfordshire District Council —his neighbouring authority, of course. The two adjoining local authorities work closely together. They have a flagship policy of free car parking, which has done a great deal to drive footfall and to help the high streets, particularly of Witney and Chipping Norton, where we have a plethora of great independent shops. In many ways, those high streets are thriving. Does my hon. Friend agree that local authorities such as West Oxfordshire should be commended for that, and that we could see that practice spread throughout the country, which would help the high street?

[Sir Geoffrey Clifton-Brown]

I totally agree with my neighbour’s intervention. His towns are much the same as mine; they are small market towns with a lot of independent retailers. He is right that anything that our local district councils can do to encourage those local independent retailers is helpful. In Cirencester, for example, they have a scheme whereby parking is free after 3 o’clock —just the sort of time when perhaps the high street was beginning to slow down—to encourage more people to come in later in the afternoon to do their shopping. That is precisely the sort of intervention that a local authority can make to help struggling retailers in our constituencies.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

The hon. Gentleman is not without friends on the Opposition side of the House. He knows my constituency well because he pursues sporting interests in it, and his aunt and uncle—very nice people—are constituents of mine. He knows from his sporting interests that one must give the gillie a tip. If I may draw the hon. Gentleman’s attention to his future remarks about ATMs, the distance between ATMs militates against easy access. Where I come from, it is necessary to travel a very long way indeed to get to a cash machine. I would suggest that that is not at all good for the local businesses.

[Sir Geoffrey Clifton-Brown]

The hon. Gentleman has been a friend of mine for many years, and my family and his have been friends for even longer, so I do know his area very well indeed, especially his family town of Tain. It is a relatively recent phenomenon that the Valuation Office Agency has started rating ATMs. There is a particular quirk in the system: if an ATM is situated inside a bank or a post office, it is not rated, but if it is situated on the wall of the bank or post office, it is rated.

The hon. Gentleman and others—particularly in Scotland, because of the distances that they have to travel—have had numerous debates on bank closures, which may result in the removal of the one ATM in town. I am sure that a factor in the banks’ decision in closing those ATMs must be that they are now rated, whereas hitherto they were not. Perhaps my right hon. Friend the Chancellor might look at that, particularly for all market towns. Up and down my constituency, all my market towns have lost ATMs in the last few years, and in some of those market towns only the post office still has an ATM facility. Now even the post office in some of those market towns is coming under threat. That is becoming a real problem for my constituents—particularly constituents with businesses who need to withdraw cash.

[Mr Marcus Jones]

Many ATMs are in petrol station forecourts and convenience stores. Many of those places are situated in some of the most deprived communities, and as a result of the business rate levied on those machines, quite often they are put in those stores on the basis that people have to pay to withdraw their cash. People who withdraw £10 or £20 quite often end up paying £1.50 or £2.50 to get their money. Would it not be helpful if the business rates on ATMs could be looked at, so that, hopefully, more people could access their money without paying an exorbitant charge?

[Sir Geoffrey Clifton-Brown]

I entirely agree with my hon. Friend, and I am sure that my right hon. Friend the Minister will have heard the plea from those of us who represent rural areas, where the one or two ATMs in our market towns play a very significant part.

[Bob Stewart (Beckenham) (Con)]

Does my hon. Friend have any idea of the logic behind an ATM on the outside wall of a bank having to pay business rates when those that are inside do not? It beats me! Perhaps there is a reason, but I do not understand what it would be.

[Sir Geoffrey Clifton-Brown]

I understand that there are two reasons. The first is that the Valuation Office Agency can get away with saying that an ATM on the outside of the building is, in the jargon, a different hereditament from the main building on which it sits. The second argument that is given in the official explanation is that ATMs are often not run by the same company as the building on which they sit, and that as it is a different company, it can be rated as such. Those are the official explanations, but I am sure that my right hon. Friend the Minister, who is far more expert in these matters than I am, will be able to give us a better one.

Returning to the £51,000 and the question of discretionary relief as opposed to allowances, the Minister knows that this is the core of my speech. It was the core of my speech last October, and it is the core of my speech today. This £51,000 is still a discretionary relief. While the majority of local councils have now pledged to provide the resources for their local businesses to benefit from this change, there are some that, regrettably, have not been forthcoming with their support of this measure, either by delaying their decision to implement it or by putting systems in place that require businesses to apply for the relief, firmly putting the onus on businesses to take time out from their day job to claim back money that is rightfully theirs. That means that businesses in those areas are being disadvantaged.

Of course this still does not resolve the complexity, and I believe that simplicity is always the key. We all know that small businesses are under increasing and unfair pressure from out-of-town retail parks and online retailers, and I am sure that Members here tonight will have lots of examples of that. For example, for every £1 in business rates that our small high street operators are taxed, the big online and out-of-town retailers pay significantly less, averaging around 16p. We can immediately see the competitive disadvantage for high street retailers, compared with the large out-of-town retailers and big online organisations.

[Rebecca Pow (Taunton Deane) (Con)]

My hon. Friend is making a powerful case. There is an area that has been left out of the discretionary discount, and I wonder whether he agrees that the Government ought to look again at the guidance on this. I am talking about grass-roots music venues. We have lots of them on our high streets. This was raised with me by the Creative Innovation Centre in Taunton. These are places where many of our young musicians find their feet; it is how Ed Sheeran started, for example. They also generate money for the local economy, and I believe that they ought to be classed with pubs when it comes to the discount because they also serve food and drink. I believe that a special case should be made for them. It would cost only £1 million over two years in money “lost” to the Treasury, but it would generate so much more for the economy if they could be included in these discretionary rates.

[Sir Geoffrey Clifton-Brown]

My hon. Friend has made yet another good case for a completely different class of business to have this relief. We can see the complexity of the rates system, and it is probably a good idea that we should have a royal commission to look into business rates in their entirety, as the British Beer and Pub Association and the British Hospitality Association are calling for, to see how they can be made to work better.

[Rebecca Pow]

I forgot to say that a lot of information about this arose as a result of the inquiry by the Select Committee on Digital, Culture, Media and Sport into the UK live music industry, as it was one of the things that was highlighted. It is stifling our young talent coming through the chain.

[Sir Geoffrey Clifton-Brown]

I am all for anything that encourages our young talent to come through the chain, as my hon. Friend puts it. One of the great strengths of this country, as I meant to say when I opened this debate, is the 5.7 small and medium-sized businesses in this country, especially the 0.5 million new businesses that have been formed in the past five years or so. They are all capitalists risking their capital, many of them with a mortgage on their house to support their business. They work hard, and they succeed, and hopefully those small businesses will become medium-sized or large businesses.

All Governments of all colours have always been tempted to impose more taxation and bureaucracy on those small and medium-sized businesses, because they are easy targets and they do not move. What we should be doing is the reverse—making it easier for them to exist and make profits.

[Sarah Newton (Truro and Falmouth) (Con)]

I am pleased that my hon. Friend was able to secure this debate. He is making a really powerful case on the importance of small businesses in our communities. Is it not interesting that there are no Opposition Members here at all, while Government Members, even as the House is about to adjourn, are standing up for small businesses? As Conservatives, we are the party for small businesses. I very much commend my hon. Friend’s recommendation that we look in the round at what we can do to simplify taxation on small businesses. That is really important, but as we do so, I have noticed something positive about business rate retention. Local authorities are now working far more constructively with small businesses, so that that income raised in that community flows to them. Local authorities have to be concerned about small businesses, whereas in the past, when they got cheques from central Government they were not so focused on them. In the new scheme, let us think about the link between local authority funding and small businesses.

[Sir Geoffrey Clifton-Brown]

My hon. Friend, along with most of my hon. Friends, if not every single Member who is in the Chamber, is passionate about defending small businesses. I can see that she is shortly going to make a speech to support her small businesses—perhaps very shortly; I cannot possibly foretell.

[Bob Stewart]

Will my hon. Friend give way?

[Sir Geoffrey Clifton-Brown]

Yes, because my hon. Friend has been very patient.

[Bob Stewart]

As a small factual correction, when my hon. Friend said “5.7 small and medium-sized businesses” he meant 5.7 million. That is a small point, and I know it was a slip of the lip.

[Sir Geoffrey Clifton-Brown]

Indeed it was a slip of a lip. The figure of 5.7 million small and medium-sized businesses is terrific, and shows the entrepreneurialism in this country, which is why our economy is doing so well and why we have such full employment at present.

[Priti Patel (Witham) (Con)]

I commend my hon. Friend on the debate, which is incredibly wide ranging. I should like to touch on wholesale reform of business rates. The Government have done an awful lot of good work to give discretionary rate relief and to support SMEs in constituencies and towns such as Witham. Does he not agree that wholesale rate reform could be the gateway or avenue to get local authorities in particular to invest in town centre development strategies that could help to grow the base of small business and achieve a much more sustainable local economy that meets local needs as well as helping entrepreneurs and small businesses in towns such as Witham and places across the Witham constituency, and the country, to continue to invest and develop?

[Sir Geoffrey Clifton-Brown]

I entirely agree with my right hon. Friend. We have to be far more innovative, as the world is changing. The digital world is foisting change on us, whether we like it or not, and our local councils and our local people have to be far more innovative and entrepreneurial. That is why I welcome the system that the Treasury has brought in, which will allow local authorities to keep a bigger proportion of the rates of new businesses, as opposed to existing businesses, to encourage them to do precisely the sort of scheme she mentions.

[Ms Dorries]

I am grateful to my hon. Friend for giving way to me a second time. He is incredibly generous.

On innovation, Flitwick high street in my constituency could not be more different from Chipping Campden high street in my hon. Friend’s constituency. Given the housing crisis and housing shortage, it may be that not all high streets can survive and that we need to do something innovative with them.

On a humorous note, my hon. Friend mentioned that we met in 1997 in the Eight Bells pub on Chipping Campden high street. For 21 years he laboured under the impression that I was trying to chat him up, and I had to disabuse him of that notion only recently.

[Sir Geoffrey Clifton-Brown]

I had better not comment on that publicly for fear it might lead me down the wrong business rates avenue.

[Dr Caroline Johnson (Sleaford and North Hykeham) (Con)]

My hon. Friend has spoken about the high street and perhaps, in some respects, the high street may need to change from being entirely retail to a place where people can meet and be entertained. One issue limiting such change is that many small business premises on our high streets are owned by self-invested personal pension schemes. As such, they need to remain commercial property to remain in those pension schemes. Will my hon. Friend or the Minister comment on whether properties that change from commercial to residential, in line with a slightly shrinking high street, may be able to stay within those pension schemes for a period so that such change is not hampered by the SIPP rules?

[Sir Geoffrey Clifton-Brown]

My hon. Friend makes a very good point, and I am sure it has been heard by the Minister. I am being urged to hurry up as I have taken an awfully long time, so I will not take too many more interventions.

The rates on Amazon’s nine distribution centres have fallen by an average of 1.3% and ASOS has seen its bill fall by 0.8% because, although Amazon owns 20 million square feet of warehousing from which to supply customers, it does not have to occupy premium premises on the high street to get the footfall that a high street retailer needs. This provides those large businesses with an automatic advantage, making it easier for them to slash prices while maintaining a profitable margin. I have already demonstrated how they pay much lower business rates per square foot.

Although the Government have introduced a diverted profits tax and a new digital services tax, which will raise £400 million, I do not believe some of these very large digital platforms are actually paying the just amount of tax on their turnover in this country that a British business would pay.

I have previously mentioned that the British Independent Retailers Association has long advocated changing the current threshold or discretionary relief to an allowance—the difference being that one is discretionary and an allowance is automatic—which would cut red tape for both local and national Government. It could be applied at source, as opposed to being dependent on the local council, reducing the need for the £3.7 billion spend on mandatory and discretionary allowances and reducing the Government’s current compliance cost for processing small business rate relief claims. I have already explained the difficulties with different councils applying different criteria.

Paradoxically, unknown to me at the time of my debate on 8 October 2018, the Minister had answered my written question, 176219, the day before, in which he said:

“The Government is committed to considering the feasibility of replacing small business rate relief with a business rates allowance”.

So the Government had actually conceded the point for small businesses, once the local authority and HMRC systems are linked in line with our planned digitisation of business rates. I would be grateful if my right hon. Friend the Financial Secretary updated the House on where we have got on the matter.

[Mr Marcus Jones]

Will my hon. Friend give way?

[Sir Geoffrey Clifton-Brown]

I want to make a little more progress.

The Government want to make tax digital, citing that they will be

“transforming tax administration so that it is more effective, more efficient”.

Would it not be worth investigating how tax could become truly joined up by ensuring that an allowance would be applied automatically, maybe at the point at which the Valuation Office Agency makes a valuation of a property? If it comes up to £51,000, that would automatically trigger the allowance that a business would be able to get, and it would simply be deducted from its bill. What a great simplification of government that would be.

There is a precedent for this, of course. Income tax has a personal allowance for all but the top 5% of earners, and that is automated. I am advocating the same principle for rates. I believe that this policy could get cross-party support. After all, the Housing, Communities and Local Government Committee’s report, “High streets and town centres in 2030”, recommended

“that the complexity surrounding rate reliefs and the administrative burden they create for retailers should be addressed”

and simplified. All this needs is joined-up thinking and a plan of action to allow the Treasury to adapt the current operational systems for the benefit of businesses up and down the country.

Madam Deputy Speaker, I am grateful to you for allowing me to speak about this important subject at length. I hope that, as a result of my speech, we will see some action from the Government to ensure that business rates are reformed.

[The Financial Secretary to the Treasury (Mel Stride)]

We have had a very good debate on the extremely important matter of business rates. I will reiterate right at the start that this Government want to see taxes as low as possible. We have made a number of advances in that respect, as the House will know, in areas such as income tax and corporation tax. Equally, we want the burden of rates on businesses up and down the country to be as low as possible. For that reason, as several right hon. and hon. Members have highlighted, we doubled the small business rates relief, from £6,000 to £12,000 as a rateable value threshold, taking 655,000 businesses out of business rates altogether.

We also switched from the retail prices index to the consumer prices index for the uprating of the multiplier, further reducing the burden by £5 billion over the next five years. In 2016 we introduced £300 million for hard cases, which is there for local authorities to use at their discretion. We doubled the level of rural rate relief, from 50% to 100%, to help small communities where perhaps there is just one pub, post office or petrol station. A number of right hon. and hon. Members mentioned the discount of one third brought in at the last Budget.

I congratulate my hon. and gallant Friend the Member for The Cotswolds (Sir Geoffrey Clifton-Brown) on securing the debate. He asked a number of sensible and relevant questions about the whole way we structure our business rates. He asked specifically about the allowance, which we have discussed previously. We are looking at that seriously, but it depends to a large degree on our getting in place the digital arrangements between local authorities so that we can transfer information on business premises owned by the same entity. That programme will be introduced by about 2024, but I am happy to have further discussions with him on the matter.

[Sir Geoffrey Clifton-Brown]

I truncated the last bit of my speech, but I was going to say that the existing IT platform is regarded by the professionals who have to work with it as being clunky and difficult to work. Does the re-design by 2024 that my right hon. Friend mentioned include an entirely new programme?

[Mel Stride]

I will have to come back to my hon. Friend with an answer to that specific technical question, but I will gladly do so.

Several Members rightly mentioned our high streets package. My right hon. Friend for New Forest West (Sir Desmond Swayne) made reference to the fact that it is not all about business rates; it is also about how we design and evolve our high streets to face the changing nature of retailing, which of course includes the rapid advance of online retailing.

Several Members mentioned the digital service tax that we are committed to bringing in by 2020, and we will do so unilaterally in the absence of a multilateral move on the behalf of other countries.

Draft Financial Regulators' Powers (Technical Standards Etc.) and Markets in Financial Instruments (Amendment) (Eu Exit) Regulations 2019

Geoffrey Clifton-Brown Excerpts

Wednesday 20th February 2019 General Committees

[Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I welcome the Minister to his place and I have one simple question that I am sure he will be able to answer: if there is a dispute over decisions made by UK regulators during the transitional period and the EU, will that be dealt with through the arbitration procedure?

Draft Import of and Trade in Animals and Animal products (Amendment etc.) (EU Exit) Regulations 2019 Draft Trade in Animals and Related Products (Amendment) (EU Exit) Regulations 2019

Geoffrey Clifton-Brown Excerpts

Tuesday 19th February 2019 General Committees

[David Rutley]

I am delighted to hear that. The instrument includes amendments to nearly 50 pieces of EU legislation. Members of the Committee will be pleased to hear that I will not go through every regulation—[Hon. Members: “Go on.”] I will, but not today. Now, I will outline the most important aspects of the legislation.

The instrument makes technical amendments to ensure the continued operability of 14 EU instruments concerning imports of live animals or reproductive products; 17 concerning imports of animal products intended for human consumption; six that lay down protective measures against the introduction of particular diseases; two that cover the EU pet travel scheme; and seven that relate more generally to the import regime for animals and animal products. This instrument also contains minor technical amendments to references to fees in two domestic instruments.

The amendments ensure the continuation of veterinary controls and other import conditions that safeguard animal and public health. They allow for authorisation of businesses to continue and for the maintenance of health certification and transport requirements, and allow appropriate actions to be taken in cases of reported non-compliance or disease outbreaks in other countries. Furthermore, they provide for the continuation of the existing health and documentary requirements for the non-commercial movement of pets into the UK under the EU pet travel scheme.

In addition, the amendments transfer certain powers and functions from the European Commission to our respective UK Ministers. The amendments give Ministers the power to take appropriate action in relation to trade restrictions resulting from disease outbreak. Regulation 3 of and schedule 1 to the instrument provide the power for the appropriate UK Minister and Northern Ireland Department to draw up lists of third countries approved as having equivalent official disease controls for continuing trade with the UK in live animals and animal products.

The Trade in Animals and Related Products (Amendment) (EU Exit) Regulations 2019 make technical amendments to EU-derived domestic legislation. Importantly, this instrument amends our main English animal trade instrument—the Trade in Animals and Related Products Regulations 2011. That is key legislation for the import of these commodities into England. It establishes a system for trade in live animals and genetic material with other EU member states, and for imports of animals and animal products from outside the European Union.

The measure also amends two related instruments that regulate the non-commercial movement of pet animals into Great Britain: the Non-Commercial Movement of Pet Animals Order 2013, and the Rabies (Importation of Dogs, Cats and Other Mammals) Order 1974. The instrument will allow these laws to continue to work after EU exit, for instance, by removing redundant references to EU bodies, functions or legislation, and replacing them with domestic equivalents. It will also amend phrases that would no longer be correct, such as changing “legislation of the European Union” to “retained EU law”.

Taken together, the two instruments that we are considering ensure the continuation of appropriate certification, sufficient pre-notification of imports, checks of certain consignments, and isolation and vaccination facilities. That safeguards our current strong biosecurity standards for imports of animals and related products, and provides for the continuation of the existing legal framework around the movement of those trade commodities and pet animals.

These instruments have different territorial extent and application, and the devolved Administrations were closely engaged in their development. The first instrument applies to the whole of the UK; in the second instrument, part 2 applies to Great Britain and part 3 applies to England only. The devolved Administrations are tabling their own versions of the amendments in the second instrument, which relate to their own “mirror” legislation and are being laid as separate affirmative instruments.

As stated, these instruments make technical amendments to maintain the existing standards, and no impact is anticipated. As they do no more than is necessary to enable domestic legislation to be operable immediately after EU exit, there is no statutory requirement for public consultation. Formal consultation and impact assessments have not been performed, as these amendments will not introduce additional requirements or costs for stakeholders.

[Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I am sorry to interrupt my hon. Friend, particularly as I wholly approve of these instruments, because they are a significant consolidating measure. He has said two or three times that the measures will have no financial impact on users. Would he therefore say what arrangements will be made for consultations on any fee increases?

[David Rutley]

As I said before, there will be no extra costs or fee increases.

[Sir Geoffrey Clifton-Brown]

I am grateful to my hon. Friend for that explanation, but paragraph 6.1 of the explanatory notes says:

“This instrument amends…forty-six directly applicable pieces of EU legislation…It also introduces amendments to the domestic powers to recover fees in relation to activity relating to imports of animals and animal products from the EU.”

That presages the prospect of fee increases, does it not?

[David Rutley]

With my hon. Friend’s permission, I will proceed with my speech and then, when I conclude, I will address that point in more detail.

As I was saying, the Department for Environment, Food and Rural Affairs has engaged with various major stakeholders, including the Food and Drink Federation, the International Meat Trade Association and the National Farmers Union, on the subject of these instruments, and those stakeholders raised no concerns with DEFRA’s approach.

In relation to the wider effect of leaving the EU on animal trade and pet travel more generally, DEFRA has of course made extensive engagement. In relation to the equine sector and pet travel, DEFRA has engaged with key stakeholders, who are also content with the proposed approach to equine movements and pet travel.

These instruments are required to ensure that the UK’s statute book continues to function correctly after EU exit. Each year, products of animal origin and live animals imported to the UK are valued at over £19.3 billion, of which 80%—about £15 billion—comes from trade with the EU. If these amendments are not made, there would be considerable disruption to the UK’s imports system, resulting in a threat to the UK’s biosecurity, and a lack of clarity for industry and non-commercial pet travel, which would be likely to lead to additional costs for importers and stakeholders.

Although the UK is under no legal obligation to adhere to EU rules for trade following EU exit, failure to do so could result in the UK being unable to trade in animals and their products with EU member states and third countries. The Government’s policy is therefore to maintain current standards, legislation and arrangements relating to such trade on the day the UK leaves the EU.

Regarding the EU’s pet travel scheme, the amendments are required to ensure that safe pet travel without quarantine can continue into the UK. Currently, 300,000 pet animals move into the UK each year, through the pet travel scheme. If these amendments were not made, EU pet passports for pet animals travelling from the EU would no longer be valid in the UK, which could cause travel disruption. The UK’s ongoing application to become a listed third country for the purposes of pet travel between the UK and EU member states also depends on maintaining EU minimum health standards.

In conclusion, the trade in animals and animal products that do not constitute a risk to human or animal health is of significant importance to the UK’s food security and economy. The technical amendments in these instruments are essential for the continuation of the UK’s current trade and import regime, and for minimum disruption to pet travel. They will also ensure that our strict biosecurity controls on animal trade are maintained at their current levels when we leave the European Union. I commend the statutory instruments to the Committee.

--- Later in debate ---

[David Rutley]

I thank hon. Members who have contributed to the debate. As I said, the draft regulations will ensure that the robust certification, pre-notification and biosecurity standards for imports of animals and related products set out in EU legislation will be maintained. That is an important point, and one not lost on Members who have spoken in the debate.

I am grateful to the hon. Member for Stroud. He showed his characteristically thorough approach, and I will try to answer his many questions briefly. First, however, I will respond to a concern expressed by my hon. Friend the Member for The Cotswolds about fee increases. Fees are set out in other domestic legislation, so would require parliamentary oversight and prior industry consultation before any amendment. That is not part of this legislation; it is separate. The amendments in regulations 4 and 5 are simply enabling powers to allow fees to be charged for imports from the EU in future.

[Sir Geoffrey Clifton-Brown]

I am sorry, I do not want to cause the Minister any additional difficulties, but in the Cotswolds, which my neighbour, the hon. Member for Stroud, and I represent, we have a large sheep industry. Most of that sheepmeat, whether dead-weight or light-weight, goes to the continent. Currently, it is not subject to checks; in future, it will be subject to checks, and the farmers involved will have to pay the charges. That will have quite a severe impact on certain sectors of the economy. I would be grateful if my hon. Friend—if not now, some time—set out in detail the Government’s impact assessment of that.

[David Rutley]

I will gladly follow up on that. We are discussing the draft regulations, however, and the points that my hon. Friend has just made, good as they are, are outwith the narrow confines of the legislation—although we have discussed a lot today. Some of the checks that he is concerned about relate to what will happen in the EU, rather than in the UK. Nevertheless, I will give him the specifics and follow up on his points in detail, ensuring that they are fully considered.

Consultation and impact assessments were raised by the hon. Members for Stroud and for Motherwell and Wishaw. Again, notwithstanding the fact that there will be significant changes to how we deal with exports and to some extent imports—we are trying to have a friction-free approach to imports from the EU—those changes and impacts are outwith what we are discussing today. Yes, there have been impact assessments and consultations on other aspects, but the specific draft regulations—