The Economy

Ian Blackford Excerpts

Thursday 24th October 2019 Commons Chamber

[Kirsty Blackman]

I absolutely agree. I was about to come on to the details in our amendment about the loss of freedom of movement and the problems it will cause. As our amendment sets out, we believe

“that freedom of movement has brought immeasurable social, cultural and economic benefits to the people of Scotland, England, Wales and Northern Ireland and the European Union as a whole”.

I wish to focus for a moment on the economic benefits of immigration and the significant problems that will be caused by the implementation of the immigration Bill that the Government intend to bring forward.

Each EU citizen who comes to Scotland adds £34,400 to GDP each year. That is not an insignificant number. Those people who choose to come to live and work in Scotland are largely young and working, they have relatively few healthcare needs and are contributing economically to our country’s wealth. Reducing the number of EU migrants by setting arbitrary salary levels and reducing our ability to attract both long-term and seasonal migrants will hit our economy even harder than some of the other things associated with Brexit. We do not want this future. We want our country to continue to be the welcoming, inclusive, outward-looking country that it is and we absolutely reject the Tories’ proposals on immigration.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

Is it not the case that, over the last 100 years, Scotland has faced a unique challenge in growing its population and it is only since being in the EU, with the benefit of EU migrants, that Scotland’s population has begun to grow? What right-minded person would put that rising population—that rising workforce—at risk by ending free movement?

[Kirsty Blackman]

One of the first political moments I remember came when Jack McConnell was talking about Scotland’s population dipping and about the massive concerns there were around the millennium about its population going below 5 million; I think that was the number at the time. I recall hearing that and thinking, even as a 14-year-old in 2000, how devastating it was. I am so pleased that we have had the freedom of movement that has come as part of the EU.

My kids go to school with so many children from so many countries around the world, and a huge number of them are from the EU. They are living in Aberdeen. Outside London, Aberdeen has the highest percentage of non-UK-born people in the UK, which is amazing for a place that people think is quite far away. Actually, we are pretty good at attracting people. But we struggle with the immigration rules. Every week people come to my office and sit around my table crying because the UK Government are saying that, despite the fact that they have jumped through every possible hoop that has been put in front of them, they are not able to stay and they must return to Nigeria, Poland or whichever country it is that they originate from. This UK Government are attempting to make that situation worse, not better.

I wish to look at the economic impact of failing to support technologies that help to meet our climate change targets. In Scotland, we have the skills, ability, capacity and geography to become world leaders in these technologies, but we need the UK Government to stop messing around and to take their responsibilities seriously. We must have immediate action to support and invest in carbon capture and storage technologies. We are uniquely placed, with our geology, to capitalise on this and to become world leaders in this space, and we cannot have the situation that happened when George Osborne was in the Treasury: he pulled funding at the last moment for these vital future technologies for our country.

We also need the UK Government to take their responsibilities seriously on this. They cannot just set a target of 2050 and then refuse to set out a plan for how they are going to get there. They should look at what the Scottish Government have done on the green new deal, which sets our targets and makes clear how we are going to reach our target of 2045, rather than just having an arbitrary, pie-in-the-sky target. As my hon. Friend the Member for Edinburgh North and Leith (Deidre Brock) said, the UK Government are doing lots of talk, but no actual action. So we would like them actually to take action through the environment Bill.

Leaving the EU: Economic Impact of Proposed Deal

Ian Blackford Excerpts

Wednesday 20th February 2019 Commons Chamber

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

(Urgent Question): To ask the Prime Minister if she will make a statement on the economic impact of her Government’s proposed deal for the UK exiting the EU.

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

At the end of November, the Government published our analysis that assessed the economic impact of leaving the European Union. It not only included an analysis of the Government’s negotiating position, as set out in the July 2018 White Paper, but went further still and considered three other scenarios: a free trade agreement, a European economic area-type relationship, and a no-deal scenario.

Specifically, the analysis showed that the outcomes for the proposed future UK-EU relationship would deliver significantly higher economic output—about seven percentage points higher—than the no-deal scenario, which would result in lower economic activity in all sector groups of the economy compared with the White Paper scenario. That is why we should pass the deal, to avoid no deal and support jobs and the UK economy.

In publishing the work, the Government delivered on their commitment to provide an appropriate level of analysis to Parliament. In addition, the House has had plenty of opportunity to debate both the analysis and the deal that is on the table. As the Prime Minister has said, we will bring a revised deal back to the House for a second meaningful vote as soon as we possibly can.

In the meantime, it is right that that the Government are afforded the flexibility and space to continue our negotiations. That is because the agreement of the political declaration will be followed by negotiations on the legal text. The UK and the EU recognise that that means there could be a spectrum of different outcomes. We need to approach the negotiations with as much strength as possible. The focus must now be on the future, planning and prioritising that which matters.

Let me remind the House that we will have an implementation period, a new close relationship with the EU and, crucially, the ability to strike trade deals around the world. We are bringing back control over our money, borders and laws to mould a prosperous and ambitious new path for our country, and on our terms. No matter what approach we take, the UK economy will continue to be strong and grow into the future.

[Ian Blackford]

With respect to the Minister, this was of course a question to the Prime Minister, and it is the Prime Minister who should be answering. This is a matter of the utmost importance, because this House is going to be asked to vote on the Prime Minister’s deal. The specific question I asked was about the economic analysis that the Government have done on their deal. It is quite clear from the Minister’s answer that the Government have done no analysis on this deal. On arguably the most important matter that this House has voted on since the second world war, we do not have an economic impact assessment from the Government. It is, once again, this Conservative Government treating this House and the United Kingdom with contempt. It is a disgrace that the Government have continued to duck and dive in respect of their responsibilities.

Economists are clear: the Prime Minister’s deal is set to hit GDP, the public finances and living standards. Analysis published by the London School of Economics estimates that

“the Brexit deal could reduce UK GDP per capita by between 1.9% and 5.5% in ten years’ time, compared to remaining in the EU.”

The National Institute of Economic and Social Research has warned that

“if the government’s proposed Brexit deal is implemented, then GDP in the longer term will be around 4 per cent lower than it would have been had the UK stayed in the EU.”

Bank of England analysis states the UK Government’s deal will raise unemployment by 4% and inflation by 2%. The Prime Minister is running feart of the truth, with her Government refusing to admit the damage that her deal will do.

The Government cannot claim that their November document covers their deal. Let us look at the facts. Page 17 of the Treasury analysis looks at the modelled average free trade agreement and states:

“As such, it does not seek to define or model a bespoke agreement.”

But the Prime Minister tells us she has a bespoke deal. The Treasury analysis continues:

“This scenario is not indicative of government policy, as it would not meet UK objectives including avoiding a hard border”

in Northern Ireland.

There we have it in black and white: the Treasury analysis conducted last year does not account for the Prime Minister’s deal. So, I say to the Government, where is the analysis? MPs continue to be expected to vote on the proposed deal without the Government explaining the economic consequences. That is the height of irresponsibility.

The deal would be a disaster for Scotland, taking us out of the EU single market and customs union. We know that up to 100,000 jobs in Scotland are under threat. The Government are sticking their head in the sand. Everyone knows this Government are bringing our economy to its knees. We cannot allow the Tories to drive us off the cliff edge.

No Government can be allowed to bring forward a vote on such a significant matter without an economic assessment. It must be published. Shame on the Prime Minister if she fails to protect our economy; shame on those on the Government Benches if they allow businesses to collapse and jobs to be lost; and shame on any MP, including the Leader of the Opposition, if they march through the Lobby to deliver a deal that secures economic catastrophe.

No Member should believe that there is a binary choice; there is not. This is not a choice of no deal or this deal. Both are bad. Both will plunge our economy into an unmitigated disaster.

[Mr Speaker]

Order. Before I ask the Minister to apply, I very generously did not interrupt the flow of the right hon. Gentleman’s eloquence—or, indeed, for that matter the eloquence of his flow. However, by way of a public information notice, may I say to the House—this is not directed particularly at the right hon. Gentleman, as I have seen this burgeoning phenomenon in recent times—that an urgent question is supposed to be that, not an urgent oration? With whatever rhetorical force and insistence it is delivered, it is supposed to be a question and I have noticed over recent times an increasing tendency on the part of Members who have secured such an opportunity, through the courtesy of the Chair, to launch into a lengthy preamble, sometimes constituting the entirety of their remarks.

For future reference, because in future I will have to cut people off if they abuse the parameters, however inadvertently, it is supposed to be a question; a sentence of preamble is one thing, but thereafter a Member should put a series of inquiries to the Minister on the Treasury Bench. We will leave it there for now. The right hon. Gentleman has made his point, but I know that he will not misbehave again.

Spring Statement

Ian Blackford Excerpts

Tuesday 13th March 2018 Commons Chamber

[Mr Hammond]

I am a great fan of the concept of intergenerational fairness. My right hon. and learned Friend will know, as a former Chancellor of the Exchequer, that all Chancellors look at all options in the run-up to every Budget. I can undertake that I will do so in the run-up to Budget 2018. In the meantime, I can tell him that there is a mechanism for voluntary donations to Her Majesty’s Treasury, and in case he has mislaid it, I will send him a copy of our bank details.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

I have to say, that was much ado about nothing. The real tragedy is that we are 10 years on from the financial crisis, but austerity is still with us, and there was a lack of hope given to the people of the United Kingdom from the statement today.

At the weekend, we saw the hon. Member for Moray (Douglas Ross) at the Glasgow Celtic versus Rangers football match, in his other job as a linesman, waving his flag and enthusiastically calling for a red card. If anybody deserves a red card today, it is the Chancellor of the Exchequer.

We hear the Chancellor proclaiming that we have had consistent economic growth since 2010 and that we can look forward to continued economic growth over the course of the coming years. The reality is that in 2019, when we are supposed to be leaving the European Union, the OBR predicts that growth will be a measly 1.3% and is forecast to remain at around 1.5% over the coming years, significantly below the historical trendline of growth for this country.

When I hear the Chancellor talking about wage growth, he ought to reflect that we have had a lost decade of wage growth in the United Kingdom. Let me prick his balloon on this one, because the OBR book is very clear that real earnings growth will “remain subdued” for the next five years. That is the reality, and perhaps the Chancellor should stop spinning and be honest with people about what is going to happen. The Chancellor talks about light at the end of the tunnel. Let me tell him that the light at the end of the tunnel is a hard Brexit and the impact of lower growth, which is going to cost jobs and prosperity in this country.

Slow earnings growth, higher inflation and cuts to the benefit system are resulting in falling incomes for the poorest households and in rising inequality. Once again, the Chancellor has failed to bring his Government’s disastrous austerity programme to an end. Worse still, he has his head firmly in the sand over Brexit.

This Government are going ahead with a devastating cut to Scotland’s budget. [Interruption.] I hear the Scottish Tories shouting “Rubbish”. Perhaps they could join those of us on the SNP Benches and defend Scotland’s interests. Let me explain the reality: over the decade from 2010-11 to 2019-20, Scotland’s block grant has been cut by £2.6 billion in real terms, which is an 8.1% cut. [Interruption.] The people of Scotland should watch the Scottish Tory MPs who are calling out: once again, they are failing to stand up for Scotland’s interests. [Interruption.] Let me say respectfully that these Tory MPs have been here for quite some months, and they should understand that if they want to speak, they should try to catch your eye, Mr Speaker. It is undignified to call out in the way they are doing. [Interruption.]

[Mr Speaker]

Order. There is much excitable gesticulation taking place on both sides of the House. I urge Members to keep their Order Papers to themselves, and not to lash out with their hands, gesticulating in all sorts of directions. They are in danger of becoming rather eccentric denizens of the House.

[Ian Blackford]

Thank you, Mr Speaker. These are, after all, serious matters. The extent of the block grant reduction is highlighted by the Fraser of Allander Institute, which has noted:

“By 2019/20 the resource block grant will be around £500 million lower than in 17/18”.

I pay tribute to my hon. Friends on the SNP Benches who fought so hard on behalf of their constituents to have Police Scotland and Scottish Fire and Rescue Service VAT scrapped. That was a fantastic result. However, the reality is that Scotland has suffered under this policy for the past five years. Will the Chancellor be bringing forward plans to return the £175 million that has already been paid? VAT should never have been charged: it was a vindictive measure imposed on Scotland by a Tory Government. Give Scotland back the £175 million to invest in our frontline services. Will Scottish Tory MPs join the SNP in standing up for Scotland, or will they remain silent on the cash grab we have seen from Westminster?

This Tory Government’s austerity policies disproportionately affect the most disadvantaged individuals, while giving tax breaks to the better-off in society. The Resolution Foundation recently estimated that the Government’s austerity programme will leave the poorest third of households an average of £715 a year worse off by 2022-23. In Scotland, we have a new progressive income tax policy. [Interruption.] I can hear Conservatives saying, “Up”, but the reality is that for most people in Scotland tax is lower. The Scottish Government are able to reverse this year’s real-terms budget cut inflicted by this Tory Government, and ensure that the majority—I repeat, the majority—of taxpayers in Scotland pay less than in the rest of the UK.

However, Scotland’s new taxation powers should not exist simply to mitigate UK Government austerity. In Scotland, the SNP Government have gone further to support those on low incomes. In the recent budget at Holyrood, a package was secured that raises the threshold of a guaranteed 3% increase for those earning up to £36,500, benefiting up to three quarters of Scottish public service workers—a Scottish Government on the side of hard-working public sector workers.

As we near the EU summit at the end of this month in Brussels, the progress of this Government in readying for Brexit has been nothing short of shameful. The UK Government’s own analysis tells us that, under all scenarios, Scotland would suffer a relatively greater loss in economic output than the United Kingdom as a whole. A no-deal scenario would be significantly devastating, threatening to reduce growth by a massive 9% over 15 years.

Make no mistake: a hard Brexit is going to hit the pockets of families and lead to a loss in tax revenue expectations, and is therefore going to affect spending on public services, yet the Chancellor is silent on the risks to our economy—risks to our economy when the stresses and strains of a near decade of austerity are hurting. The fact is that Scotland is shackled to a sinking ship.

The Scottish budget passed last month illustrates the real divergence in political choices across the UK. In Scotland, we have chosen to stand by our outstanding public sector staff and give them the pay increase they deserve. We continue to mitigate the worst atrocities of this Government’s ideological austerity agenda. We will continue to press for nothing less than continued UK membership of the single market and customs union to prevent the economic catastrophe of an extreme Tory Brexit. We will never stop fighting to get justice for the 1950s women, whom the SNP are so happy to support.

In conclusion, the choices are clear and the opportunities obvious. The Chancellor must wake up to the economic injustices he has overseen, and he must tell this House as a matter of urgency how the economy will stand a hard Brexit.

[Mr Hammond]

Probably a matter of rather more immediate urgency for the people of Scotland is how their economy will withstand the highest rates of taxation in the United Kingdom—an economy that, under the SNP Government, is already growing more slowly than the economy of the United Kingdom. I do not know about a sinking ship; I suggest to the right hon. Gentleman that this is about keeping afloat.

The right hon. Gentleman talks about earnings. I suggest that he looks at real household disposable income, which, as I am sure he knows, is now 4.4% higher than at the start of 2010. We have cut taxes for 31 million people across this country, at a time when his Government are putting taxes up. We have taken 4 million people out of taxation, improving the ability of people to retain their hard-earned incomes.

The right hon. Gentleman talks about Brexit, spreading alarm, but he knows very well that my right hon. Friend the Prime Minister is working tirelessly to deliver a Brexit that will secure British jobs, British businesses and British prosperity. We would be aided in that enterprise if he and his Government worked closely with us to deliver an outcome that is good for the whole of the United Kingdom.

The right hon. Gentleman talks about Scotland’s budget and the block grant, but of course Scotland now has its own tax-raising powers, and the people of Scotland know how he intends to use them. Perhaps he has forgotten, but I will try to help him with his short-term amnesia: at the autumn Budget in 2017—just four months ago—Scotland received an additional £2 billion of funding as a result of the measures announced then.

As for the VAT on police and fire services measures being vindictive, the Scottish National party Government were told explicitly that it would not be possible to refund VAT if they went ahead with the police reorganisation, and they decided to do so anyway. He may use the adjective “vindictive”, but I suspect my right hon. and hon. Friends will be able to think of another adjective to describe a Government who pursued such a ridiculous course of action.

RBS Closures (Argyll and Bute)

Ian Blackford Excerpts

Wednesday 24th January 2018 Westminster Hall

[Brendan O'Hara]

I could not put it better myself, so I will not try to. Let me be clear: there is more to these ruthless closures than the effect on individuals and businesses. As many know, Argyll and Bute is a beautiful but remote part of the country. With that remoteness come many demographic and economic challenges, but we are determined to overcome those obstacles. Argyll and Bute Council, Highlands and Islands Enterprise, the Argyll and Bute Economic Forum, Scottish Rural Action and I, along with many others, have been busy telling folk that Argyll and Bute is open for business. Together we have been actively promoting Argyll and Bute as a great place to live, work, raise a family, invest and open a business, but the Royal Bank of Scotland has kicked us in the teeth.

As Cleland Sneddon, the chief executive of Argyll and Bute Council, said:

“I believe RBS has a responsibility to those rural communities that have banked with them for generations and this decision appears to have scant regard to their particular needs…Argyll and Bute Council has called on RBS to urgently review this decision”.

Nicholas Ferguson, chair of the Argyll and Bute Economic Forum, was equally scathing:

“For the last few years, major efforts have gone into changing the depopulation trend in Argyll and Bute. To do this, we needed to create jobs and major progress has been made…But Argyll is a place of many small firms.

These rely heavily on local banking services and the plans by RBS to close their offices in three of our most important towns would be a major setback…As the UK government is the principal owner of RBS, I would strongly request that this decision be reversed.”

Those two are not alone. Emma Cooper of Scottish Rural Action, who is a constituent living on the Isle of Bute, said:

“It is our opinion that these branch closures demonstrate a lack of care and compassion from RBS about rural communities and vulnerable people, who will be disproportionately impacted by the decision, and the process by which these decisions were made was unethical.”

As the Minister can tell, Argyll and Bute is demanding action on the issue. He does not need me to remind him that there is a precedent: George Osborne, when he got involved as Stephen Hester was leaving RBS, told the BBC’s “Today” programme that

“as the person who represents the taxpayer interest...of course my consent and approval was sought”.

So there is precedent, and it is an undeniable fact that the Government have the power to intervene. It is only a matter of whether they choose to exercise that power and to get involved.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

Will my hon. Friend give way?

[Brendan O'Hara]

If the intervention is extremely short.

[Ian Blackford]

My hon. Friend is making a very important point. Have not the Government demonstrated that they have intervened on matters relating to management of the Royal Bank of Scotland? Nothing is more important to our communities than the maintenance of the bank branch network. The Government have a responsibility and a duty to ensure that RBS recants this decision.

[Brendan O'Hara]

My right hon. Friend is absolutely right.

The Minister should be in no doubt: the people of Argyll and Bute, Argyll and Bute Council, the Argyll and Bute Economic Forum and Scottish Rural Action demand that the UK Government intervene to stop the closures. Will the UK Government choose to get involved, or will they ignore the overwhelming opinion of the people of Argyll and Bute and choose to abandon my constituents to the RBS hatchet men? My constituents want to hear from the Government that they will bring Ross McEwan to the Treasury to tell him that, in the interests of our communities, the brutal branch closures will not go ahead. Anything less than that and the UK Government will stand accused of being complicit in the shameful betrayal of rural Scotland.

In conclusion, will the Minister tell me whether RBS management consulted the UK Government ahead of the announcement? If so, what advice did it receive from the UK Government? Does he accept that the UK Government, as the largest shareholder, can intervene to stop the closure, should they choose to do so?

--- Later in debate ---

[John Glen]

I will come on to a number of practical steps that I think can challenge the banks’ logic and help hon. Members across the House.

We have to acknowledge the change in the way that we use banks, and the fact that banks will adapt to reflect the shift in consumer patterns. That means making tough decisions, such as modernising their services to maintain profitability. I go back to what I said two weeks ago on this spot: the decision is not for the Government, and it is important that I explain why. I acknowledge the point that has been made about Stephen Hester, but there is a material difference between the Government, as the largest shareholder, being consulted on who the chief executive is, and the day-to-day operational decisions made branch by branch. There is a reasonable difference in the level of involvement. Each bank’s branch strategy, including whether to open or close individual branches, is for the management of that bank to determine. The Government rightly do not intervene in those commercial decisions in this bank or in any other bank.

[Ian Blackford]

rose—

[John Glen]

I will not take an intervention, because I need to make some progress. Likewise, the Government do not manage the RBS Group; that is headed by its own board, which is responsible for strategic direction and management decisions. By its own volition, RBS has announced a number of branch closures in line with its commercial strategy. Obviously, banks will keep a number of factors in balance when they make these decisions: customer interests, market competition and other commercial considerations. The decisions are theirs to take, but they are also theirs to defend.

I say to the hon. Gentleman who secured the debate that by bringing the matter to the attention of the House again, he is doing a very good job of challenging the bank to justify the decisions it makes. It is for the bank to do that. Indeed, two RBS executives gave evidence to the Scottish Affairs Committee on this very matter last week, and they were pressed on their rationale. I have read the transcript, and they made it clear that customer behaviour is changing and bank branch networks logically are changing to reflect that.

RBS Rural Branch Closures

Ian Blackford Excerpts

Monday 18th December 2017 Commons Chamber

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

I begin by declaring an interest as a customer of the Royal Bank of Scotland. I hold an account in one of the branches that has been slated for closure.

The Proclaimers might put it this way: Bannockburn no more. Beauly no more. Biggar no more. Carnwath no more. Castlebay no more. Comrie no more. Douglas no more. Gretna no more. Inveraray no more. Kilwinning no more. Melrose no more. Stepps no more. Tongue no more. Those are 13 locations that RBS is clearing out of in Scotland—abandoning its customers and leaving those places with no local bank. We do not accept that those and the other branches of which the closure has been announced should be shutting their doors, and we demand that RBS reverse its plans.

In those 13 communities in which RBS has announced closures, it is the last bank in town. RBS made a commitment that it would not close the last branch in any location, but here it is, isolating 13 communities that will be left with no branch banking facilities. RBS now says that the commitment not to close the last bank in town no longer applies. The pronouncement that RBS would not close the last bank in town was right when it was made in 2010, and it remains the right thing to do in 2017.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

In addition to the towns and villages that my right hon. Friend has just mentioned, branches in Grantown, Aviemore and Nairn in my constituency—they are vital to the tourism industry—are also scheduled for closure. One fifth of the highlands economy is made up of tourism, and it is mostly cash-based. Does he agree that it is not good enough for the UK Government to stand by while what the Federation of Small Businesses calls a “hammer blow” is delivered to small businesses in the highlands?

[Ian Blackford]

I absolutely agree with my hon. Friend. Of course, it is not just about those 13 branches. There is justified anger in many communities surrounding the 62 branches signalled for closure in Scotland and the 259 in the United Kingdom. RBS is turning its back on communities throughout the United Kingdom, and it will find that those communities call on it to think again.

RBS is a bank that we all have a stake in. We collectively own just short of 73% of the company. We rightly bailed the bank out in 2008, at a cost of £45 billion. We own RBS. We saved RBS in order that it could continue to offer banking services to our communities, to individuals and to businesses.

[Stephen Gethins (North East Fife) (SNP)]

I thank my right hon. Friend for the powerful case that he is making. Is he aware that the closures that were recently announced are not the only ones? Some months ago, many of us campaigned against closures in Cupar, Leven and Anstruther, which have also been left without RBS branches.

--- Later in debate ---

[Ian Blackford]

I absolutely agree with my hon. Friend. The closures have a cumulative effect.

[Several hon. Members rose—]

[Ian Blackford]

I know that many people want to intervene, but I will try to make some progress because of the time. I will take some interventions later.

[Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Just before my right hon. Friend makes some progress, will he give way?

[Ian Blackford]

Nice try. Having a bank on the high street that collects and issues cash and provides other banking services is instrumental to the economic wellbeing of all our communities. Individuals and businesses rely on the access in person to banking services. Why did we save RBS, if there is no recognition that there is a liability on the bank to serve its customers and communities? Customers who have been loyal to RBS for generations find branches being closed on them. That is happening to people such as Cyril French, who lives in Plockton and is a customer of RBS at the Kyle branch. Cyril is 87 and has Alzheimer’s. The staff at the RBS branch are of enormous assistance to him when he goes on his weekly visit to the branch. What is Cyril to do if the bank closes? The next nearest RBS branch would be in Portree on the Isle of Skye, more than 40 miles away. On highland roads, this would take more than an hour, and he would have to be taken there either by family members or by his carer. Is that what Cyril should have to endure to visit a local bank?

Let us think about the local businesses that rely on the bank for depositing and collecting cash. Where are they to go? Let us take businesses such as the thriving Eilean Donan Castle in Lochalsh, which uses the Kyle branch. It is 43 miles from the next nearest RBS branch in Portree. Eilean Donan Castle is a thriving tourist destination, with over 540,000 visitors a year. It deposits millions of pounds of cash a year at the Kyle branch. Its insurance policy demands that it has as many as three staff members to take the cash to the bank. The impact on it of their having to drive to Portree rather than Kyle would be considerable in terms of time and staff resource.

When customers visit their local branch, they will often do other shopping, go for a coffee and such like. The closure of the last branch in Beauly in my constituency will drive valuable business away from the town. Personal customers and businesses will go to Dingwall or Inverness and will more than likely take their other business with them to these places. Closing the last bank in town has a similar effect to the removal of services such as local schools, and it undermines the sustainability of our communities.

[Brendan O’Hara (Argyll and Bute) (SNP)]

As my right hon. Friend knows, there are three Royal Bank of Scotland branches in my Argyll and Bute constituency—in Campbelltown, Inveraray and Rothesay—which are earmarked for closure. Is he aware of the profound anger and the sense of betrayal that is felt by rural communities across Scotland at these brutal closures? The bank closures are completely undermining the great work, being done by so many, of saying to the rest of the UK and the rest of Europe that rural Scotland is open for business. These bank closures must stop.

--- Later in debate ---

[Ian Blackford]

I agree with my hon. Friend. That is why I say to the Royal Bank of Scotland that it should please listen to the justifiable anger that there is throughout the country. RBS has been a much-loved institution, and one that has been cherished by our communities. We are appealing to RBS to think again, to stop and to reverse these closures.

[Jim Shannon (Strangford) (DUP)]

I congratulate the right hon. Gentleman on bringing this matter to the House for consideration. I have had five banks close in my constituency: three Ulster Bank branches, one Trust Bank branch and one Bank of Ireland branch. Does he agree—many in the House will suspect this to be the case—that people, especially elderly people, will not use banking services, but will keep their money in their house? Is there not a fear that that will lead to more robberies, more violence and more unrest?

[Ian Blackford]

I hope that that is not the case, but the hon. Gentleman raises a justifiable concern about the safety of our elderly citizens in their community, and it is another good reason why RBS should think again.

[Caroline Flint (Don Valley) (Lab)]

I think all of us want to make sure that small branches in our rural and semi-rural areas are kept open. Does the right hon. Gentleman agree not only that, when these branches close, funds for small businesses shut down, but that, when the last bank in a community closes, as in Bawtry in my constituency, it is a major blow to the community the bank serves?

[Ian Blackford]

The right hon. Lady is absolutely correct. The bank manager, in particular, is a valued member of the community. He understands the community he works in and he understands the businesses, and that link is a vital one to retain.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

Will the right hon. Gentleman give way?

[Ian Paisley (North Antrim) (DUP)]

Will the right hon. Gentleman give way?

[Ian Blackford]

I must make some progress, but I will try to take interventions later.

The scale of the closure announcement is breathtaking, and RBS needs to think again. It simply goes too far. I say to RBS tonight: let us work together and put these closures on hold. Let us work with RBS to sustain its ability to do business in its branches in the rural communities. Let us understand the challenges that it faces and rally community support to enable RBS to remain an integral part of our communities.

RBS is trying to create a picture of these branches as a relic of the past, saying that demand for branch banking has declined and that customers are not utilising the branches. Let me tell the House about the reality for the branches in my constituency that are earmarked for closure. I obtained these figures, which are for the last calendar year, from RBS: Mallaig has 1,001 customers with 10,098 transactions; Kyle has 2,436 customers with 25,000 transactions; and Beauly has 3,439 customers with 29,000 transactions. These are not small numbers. Almost 7,000 of my constituents in Ross, Skye and Lochaber rely on RBS providing branch banking services in branches that are earmarked for closure.

--- Later in debate ---

[Several hon. Members rose—]

[Ian Blackford]

I will come on to that aspect, but I must apologise that to get through my remarks, I will not take any interventions for the rest of my speech.

I received the numbers that I issued a couple of minutes ago from RBS two weeks ago. I have asked repeatedly for the relevant figures for all the branches in Scotland that are earmarked for closure. RBS has refused to release the figures. It has published figures for bank use detailing only those that use the bank every week of the year. According to RBS, only 11 customers use Mallaig on a weekly basis, 27 visit Beauly and 51 use Kyle. We know the reality. As opposed to the 51 regular customers trumpeted for Kyle, there are actually 25,000 transactions. If we focused on the so-called 51 customers, we might be sympathetic to the demands from RBS to close the bank, yet the fact that there are 25,000 transactions a year allows me to conclude that the branch is still relatively busy.

Why doesn’t RBS come clean and tell us the number of transactions in all the threatened branches? I ask the Minister to put pressure on Royal Bank of Scotland to come clean and tell us the truth about the number of transactions in all the branches in Scotland and throughout the United Kingdom. It is a disgrace that RBS has not released the full figures and I stand here asking RBS to do so publicly: do not hide behind so-called commercial confidentiality; it simply will not wash.

[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)]

Will my right hon. Friend give way?

[Ian Blackford]

One last time.

[Dr Cameron]

I have been contacted by extremely vulnerable constituents regarding the closures that are planned for Strathaven and Lesmahagow, including those with learning disabilities and disabled members of the community who find it difficult to travel or use the internet. Does my right hon. Friend not think that RBS is letting down the most vulnerable in our constituencies?

[Ian Blackford]

My hon. Friend makes a valid point. That brings me back to why I hope RBS reflects on what it has done. It has simply gone too far. Let us work together to protect the interests of our communities, and particularly the vulnerable citizens within them.

RBS has given the figures for three branches in my constituency. It should publish the others and let us see the full picture of the demand for branch banking. Let us have an honest debate. RBS needs to be transparent. I can tell RBS that people in all the affected communities are angry and want it to engage properly with them. RBS has simply not thought this through properly.

There has been no public consultation on the closure plans. Why not? Yesterday in the Sunday Mail, RBS stated:

“We are not required to consult with communities in advance.”

It went on to say:

“We find that many customers wished they had used other ways to bank earlier when they get comfortable.”

The sheer arrogance of those statements is breathtaking. Let me say clearly to RBS: customers want to use branch banking; stop spinning and treat customers with respect.

I thank the Unite union, which has been in touch with me over the past few days. I state publicly that I will work with Unite and the workforce to seek to limit job losses. Here again, RBS has to come clean. I am indebted to an RBS whistleblower who has contacted me in the light of public statements that RBS has made. It is claimed by RBS that the full-time equivalent job losses in Scotland are 165. I am informed that the actual number of workers being cut is 321. I am told UK-wide the figure is 1,446 jobs against the 685 on a full-time equivalent basis that has been published. The expected redundancies across the UK in a worst-case scenario are 971, including 97% of the 216 customer service officers in the branches affected; 86% of the 246 associate personal bankers; 84% of the 126 customer service managers; and 49% of the personal bankers. It is clear that the chances of redeployment within the RBS network will be slim for a lot of staff members.

Those figures are in a paper forwarded to me in a document about restructuring the branch network. I have told RBS I have been given details of the figures contained within the report. RBS is not only turning its backs on its customers—it is turning its back on its staff members. We are talking about valuable jobs in the rural economy. We are talking about a loss of opportunities for young people in rural economies. The leaked report goes on to say:

“Our personal banking strategy is to give our customers choice and offer outstanding service that is effortless every day and brilliant when it matters.”

I do wonder who could write such meaningless management-speak. When branches are closed, there is a withdrawal of service. Spinning to say outstanding service is being delivered is simply unacceptable. RBS has even had the gall to say customers would get a better service. How? One suggestion from RBS is to use post offices. In Munlochy on the Black Isle, RBS shut its branch. “Not to worry,” it said, “you can use the post office.” The only problem was that the post office shut six months later. Somewhere along the line, RBS has to take responsibility for its own customers and not pass the right of service on to a third party. They are RBS customers.

The intended closure of the branch in Castlebay in Barra would be funny if it was not so serious. There will be no bank on the island of Barra. It reminds me of the line from “Whisky Galore”, the Ealing comedy: “There is no whisky.” The cruelty in this case is that there will be no bank. The journalist Rita Campbell of the Press and Journal made a trip last week from Barra to the nearest bank in Lochboisdale, a journey of 62 miles, including a six-mile ferry crossing. It took seven hours and 10 minutes to reach Lochboisdale and return to Barra. How can RBS treat its customers in such a shameful way? RBS must reverse the closure of the branch in Barra and elsewhere.

We must also press the UK Government to accept their responsibilities. Collectively, we own RBS. Above all else, RBS was saved to provide banking services to our communities. We paid a heavy price to bail out RBS. There are taxpayers in every community that is threatened with the ending of banking services. Can I ask the Minister what notice the Government were given, as the majority shareholder, of the closure plans? What discussions have the Government had with RBS? Will the Government summon Ross McEwan, the chief executive officer, to the Treasury and tell RBS that in the interests of all our communities the closure plan must be stopped? It will not wash.

The Government have to accept their responsibilities as the majority shareholder. I say to the Minister: do not rise to your feet and tell us it cannot be done, it is a commercial decision and the Government cannot intervene. The Government have intervened before. When it was announced that Stephen Hester, the previous CEO, was leaving RBS, the then Chancellor George Osborne was interviewed on the “Today” programme and said the following:

“Let’s be clear, it was a decision of Stephen Hester and the board but, of course, as the person who represents the taxpayer interest, and we have got a huge stake in the Royal Bank of Scotland because the previous government put a huge amount of taxpayers’ money into it, of course my consent and approval was sought.”

Just dwell on the words:

“my consent and approval was sought.”

It was right for the Government to give their approval on a member of the management team and it is right for the Government to give their approval or not on decisions that would remove access to branch banking from many of our citizens. It is clear that the Government can act. The Government must act. A failure to halt is a failure to act in the national interest and the interest of our citizens. It would, Minister, be an abrogation of responsibility.

Yesterday, the Secretary of State for Scotland—I can see him sitting on the Front Bench, and I welcome him to the debate—was quoted in the Sunday Mail. He said:

“Branches are a lifeline for many people, especially in rural areas. RBS needs to remember its responsibilities to customers and reconsider these harmful moves.”

On this occasion, I agree with the Secretary of State, and I hope that he will join me in asking the Government to take their responsibilities seriously. If the office of Secretary of State for Scotland has any authority, this call from the Secretary of State must result in a halt being called to the plans. Does the Secretary of State for Scotland have any authority with the Treasury? Will the Minister act tonight? Call in the RBS management and put a stop to these closures.

Tonight, the Minister has it in his gift to listen to these calls and act. Stand up and be counted or, like RBS, the UK Government will be turning their back on our constituents.

Budget Resolutions

Ian Blackford Excerpts

Wednesday 22nd November 2017 Commons Chamber

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

I want to wish the Chancellor all the best. He talks about preparing for the future, but let us look at the reality of the figures contained in the OBR book. We are faced with the United Kingdom falling to the bottom of growth in the G7. When we look at GDP per capita for the years 2019 and 2020, we see that the OBR has reduced its forecasts from 1.7% to 0.7% for 2019 and from 1.9% to 0.7% for 2020. That is what post-Brexit Britain is going to look like—an absolute shredding of growth forecasts for the next three years. The OBR talks about GDP—

[Stephen Kerr (Stirling) (Con)]

Will the right hon. Gentleman give way?

[Ian Blackford]

No, I will not, because this is the third party speech and the practice is that it is not to be intervened on.

The change in GDP that we will see in the OBR book is a cut to GDP of 2.7%—that is what this Government are presiding over. It is a threat to the wages, living standards and job prospects of people up and down the United Kingdom. This Government should be ashamed of themselves. When we look at the rhetoric of the Budget speech—[Interruption.] Conservative Members are laughing, but we see a fiscal loosening in this Budget of 0.1%. That does not take into account the reality of the risks the people of the UK face.

Let me welcome the removal of VAT on our police and fire services, but remind the Chancellor of the Exchequer that, together with his friend the Secretary of State for Scotland, he was given the opportunity to support an SNP amendment to the Finance Bill in 2015 that would have removed VAT from Scotland—[Interruption.] I can hear the remarks that are coming from those on the Conservative Benches, but I remind them that the Conservative manifesto supported the establishment of Police Scotland. It was the vindictiveness and nastiness of the Tory Government that imposed VAT on Scotland, which has ripped £140 million out of our frontline services. When the Chancellor of the Exchequer and the Secretary of State for Scotland were given the opportunity in the 2015 Finance Bill to act they failed. It is a disgrace that we have had £140 million taken out of frontline spending—

[Luke Graham (Ochil and South Perthshire) (Con)]

On a point of order, Mr Deputy Speaker. I seek clarification as to whether we are allowed to try to intervene on the right hon. Gentleman’s speech—whether he takes an intervention or not is another matter.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

The rules are that the Chancellor of the Exchequer and the Leader of the Opposition are not to be intervened on, but the courtesies go to the leader of the SNP here. He may wish not to give way, and that is his choice. What I suggest—[Interruption.] Order. He has made it clear that he wants the same courtesies that have been established for others, in which case he will not be giving way. So it will save us a lot of time if people do not keep standing.

[Ian Blackford]

Thank you very much, Mr Deputy Speaker. It is about time the Scottish Conservatives showed some proper respect, not just to the SNP here, but to the Scottish Government in Edinburgh.

Let me return to my point. It is an absolute disgrace that we have had £140 million taken out of frontline spending by a Tory Government ahead of this announcement. VAT should never have been charged to the Scottish police and fire services. The sole blame for that lies with the Conservative Government. [Interruption.]

[Mr Deputy Speaker]

Order. Mr Kerr, you are a normal, gentle person—a man who comes to Chorley and shows such dignity. I am hoping you will show me some dignity today.

[Ian Blackford]

Thank you, Mr Deputy Speaker. The SNP spoke out, here and in Holyrood, 140 times before the Government finally saw sense. What about the £140 million that has been paid? The Chancellor has confirmed today what we knew all along: that it was a political choice to charge VAT on our emergency services. He has accepted that he was wrong, but I am calling on him and his friends from Scotland on the Tory Benches to make sure that we push for a refund of the VAT that has been paid over the past three years.

The Chancellor has painted a picture of a strong economy, ready for the impending economic disaster of Brexit. We all have to wonder just what planet he is on. Most workers are seeing a decline in their living standards and have done so since the financial crisis. We are living through the worst decade for wage growth in 210 years. Young people are going to be poorer than their parents. Housing has become unaffordable for many. The austerity economic model has failed millions—the Prime Minister alluded to that when she talked about those “just about managing”. Today’s Budget was an opportunity to address these challenges and make this a Budget for people and prosperity.

The reality is that nothing in this Budget deals with the challenges we face. We face the impending UK exit from Europe. We know that the Government are preparing for a no deal, yet the Chancellor made no mention of how the economy would cope with that. The cliff edge is before us and the Chancellor sits transfixed, unable or incapable of rising to the challenge. No doubt he recognises the economic self-harm that comes with leaving the single market and the customs union, but he has failed to act. Why? It is because the Brexiteers have set the agenda for this Government and the Chancellor is without the authority to challenge the madness. The Chancellor, like his Government, is in office but not in power.

We know that the Prime Minister has to present a financial settlement to the EU27 over the coming days, yet there was no mention of that in the statement—none at all. This Government have to take their head out of the sand and accept that the future indicates the likelihood of significant economic self-harm.

Before the winds of Brexit hit us, the starting position for millions of people is that by then they will have already been struggling with nine years of austerity. The cuts being imposed on public services mean impacts on service delivery, and public service workers in particular are feeling the squeeze. This Budget shows that the Chancellor is either blind to what is going on or is behaving like a frightened rabbit caught in the headlights. Either way, people are going to pay the price for his lack of leadership. [Interruption.] I can see the Chancellor saying, “An extra £2 billion for Scotland”, but let me tell this House the reality: it is a £250 million cut in real terms. That is what the Government here are delivering to the people of Scotland.

This Government used to speak of the empty rhetoric of the “long-term economic plan”, but they have failed to provide a vision and have no plan for delivering prosperity. The long-term economic plan has given way to no plan. Scratch the surface of the economy and we see a structure barely coping with the state of society: a structure that is so unfairly built in the favour of the wealthy that we have created a situation where we have the worst wage growth in 200 years and the IFS tells us that an additional 400,000 children will be in “absolute poverty” within six years due to the benefits cuts that are to come. Let us remind ourselves that there are still £12 billion of welfare cuts to come from this Tory Government.

The case is that working people are paying the price for this Government’s ideological obsession with austerity—and let us make no mistake, it is an ideological obsession. It is a pity that people watching and listening to this cannot see the Conservative Members sitting there laughing while people in our country are paying the price—those Members should be utterly ashamed of themselves. Effective stewardship of our economy has to recognise the importance of fiscal and monetary policy working in tandem to create the circumstances of sustainable and inclusive economic growth. Any disconnect leads to a failure to deliver an economy that works for all, and that is precisely what is happening. A failure to deliver a Budget for prosperity hits all workers, in particular those in the public sector.

In September, the Scottish Government became the first in the UK to announce they will scrap the public sector pay cap, as our nurses, teachers, police officers and firefighters deserve a fair deal for the future. Future pay rises will be based on the cost of living. Today, the Chancellor betrayed public sector workers by refusing to fund a fair pay rise.

It is not just the squeeze on pay that is leaving low earners struggling to get by; the UK Government’s social security cuts are specifically designed to remove the welfare state. The SNP will never accept this ideological attack on the most vulnerable in our society. The damaging and destructive universal credit system must be halted and fixed. I welcome some of the things that we have heard today, but they simply do not go far enough. The cuts to work allowances are still taking place. While young people are pushed into poverty, universal credit is not fit for purpose. The Chancellor of the Exchequer should call a halt to it today and reform the system properly.

We also call on the Chancellor to scrap the two-child policy and the immoral rape clause. According to the IFS, the two-child cap on tax credits will mean about 600,000 three-child families losing £2,500 a year on average and about 300,000 families with four or more children losing a whopping £7,000 a year on average. Most of those families are in work. If we want to make work pay, let us remove the rape clause.

There is nothing in the Budget for the women born in the 1950s who are seeing a rise in their pensionable age of up to six years, without proper notice. That is depriving millions of a pension that they have paid for and that they are entitled to. Time and again, the Government have been asked to slow down the rate of increase in women’s pensionable age. It is increasing at a rate of three months for each calendar month. Either the Chancellor decides to act now to deliver fairness to 1950s women, or he will find that Parliament does it for him. There is a private Member’s Bill that calls for mitigation to be put in place for 1950s women. I say to the Government: recognise the cross-party nature of that Bill and act, or face defeat.

While the Tory attack on benefits pushes more families into poverty, the financial squeeze on household incomes continues as Brexit bites. Today, inflation sits at 3%. Prices are rising at a faster rate than wages. The Resolution Foundation has calculated that inflation of 3% combined with the benefits freeze will impact on 7.3 million children, 2.4 million disabled people and 800,000 people looking for work. There was no answer to that from the Chancellor—there was nothing in the Budget.

Let me tell the Chancellor and those on the Tory Benches what life is like outside the gilded rooms of Whitehall: electricity bills have increased by 9%—[Interruption.] You laugh, when people in Scotland and the rest of the United Kingdom have seen electricity prices rise by 9%. [Interruption.] You really ought to be ashamed of yourself and I hope that your electorate hold you to account. I refer, by the way, to the hon. Member—the so-called honourable Member—for Ayr, Carrick and Cumnock (Bill Grant).

The price of children’s clothing has increased by 6.7% and the price of butter by 12%. Bus and coach fares have risen by 13% and train fares by 3.4%. Transport insurance is up by 12.6%, motor vehicle insurance by 13% and travel insurance by 10%. That is the reality for ordinary working people in Scotland and the rest of the United Kingdom.

While inflation is making the cost of the weekly shop soar, real wages are falling. There was nothing in the Budget to address that. The rise in inflation and the squeeze on wages are creating a crisis for low-income earners. Between 2010 and 2016, official GDP per employee had risen by 3.5%, yet real wages are 1.1% lower, when adjusted for consumer prices index inflation. If inflation is calculated to include housing costs, real wages are down by 7.2%. That is the economic record of the Tory Government. The collapse of UK productivity growth has driven low growth and stagnant wages.

While many of my constituents and families across the UK are relying on credit cards to put food on the table, a different story is unfolding in the City. Under the Tory Government, boardroom pay has soared. From 2010 to 2016, the average remuneration for FTSE 100 chief executive officers almost doubled. The average remuneration of an executive director has doubled from £1.5 million to £3.1 million.

The inequality goes much deeper. European Commission figures reveal that the UK had the biggest increase in the EU’s gender pay gap in 2015. The difference in average hourly pay between male and female workers jumped from 19.7% in 2014 to 20.8% in 2015. In effect, women are working unpaid for more than two months a year compared with men.

The Government have not only driven thousands into poverty; they have failed to invest in building an inclusive economy fit for future generations. The legacy this Chancellor leaves is an economy that works only for the rich and the reckless. We need a Government that will create the circumstances to deliver inclusive, sustainable economic growth; a Government that will encourage investment, enhance innovation and drive up productivity and living standards; a Government that recognise that monetary and fiscal policy have to work in unison. The focus on monetary policy has driven up house prices and stocks and shares, but failed to drive investment in the real economy.

Back in 2009, quantitative easing was an obvious choice as part of the attempt to restore confidence and growth, provided that it was matched with fiscal measures, such as investing in our infrastructure and building capacity in our economy, with a focus on investment to improve efficiency. There was an opportunity to invest in the economy to kick-start growth and productivity. However, under the steer of this Government, there was investment to benefit the wealthy. In the end, that has done nothing but exacerbate the gap between rich and poor.

Even the Bank of England has recognised the negative effect of this policy. In 2012, it said that although quantitative easing had increased asset prices, it had disproportionately benefited the top 5% of households. Standard & Poor’s argued that—[Interruption.] I see the Chancellor waving his hands, but this is important and something for which he ultimately has to take responsibility. Standard & Poor’s argued last year that inflating asset prices had exacerbated the gap between rich and poor. It found that the wealthiest 10% of households held 56% of all net financial assets in 2008, and that by 2014 the proportion of the nation’s wealth in the hands of the richest 10% had increased to 65%.

It is easy to see why the Tories do not want to change this policy. Reducing inequality has never been one of their aims. The evidence is stark: quantitative easing has mostly benefited those who started with considerable wealth. The FTSE 100 was sitting at 3,805 on 18 March 2009, just ahead of the launch of the QE programme. Last night, the market closed at 7,411. That is growth of 95% in just over eight years. The Government have stuffed cash into the pockets of the wealthy, while ordinary folk have paid the price for austerity. The cry “There’s no money” flies in the face of the Government’s own agenda.

A further £70 billion was invested in QE after the Brexit vote, taking the programme to £435 billion. That is £435 billion that has been put on to our debt, with no plan for how it will be repaid. We could have invested in our infrastructure, for example by dealing with the demand for housing and dampening the rise in house prices at affordable levels. We could have invested in connectivity—in transport and in digital—to allow our citizens and businesses to compete, rather than being caught in the slow lane of transport snarl-ups and fighting to get decent broadband or mobile connectivity. Such investment in our people and infrastructure would have grown the economy and tax receipts, allowing us to cut the deficit. There would have been a payback. The Government could have supported businesses at the same time as supporting people. They cannot tell us that there is no money when they can invest an additional £70 billion in QE at the drop of hat. They must take responsibility and create the circumstances for inclusive growth and prosperity. Of course, taking responsibility is not something that this Government do.

Some £6.9 billion is lost to our schools and hospitals every year because the Government have failed to tackle aggressive tax avoidance and tax evasion. I call on them to take tough new action to ensure that the richest in society and the biggest corporations pay the taxes they owe in full. They have chosen to cut public spending while protecting the super-rich—of course, the Tories are the party of the super-rich. If they will not take the action required, they should devolve the powers needed to tackle the issue to the Scottish Parliament.

When I asked the Chancellor last month about any assessment he had made of the interrelationship between monetary and fiscal policy, the answer I got was that monetary policy was the responsibility of the Bank of England. There was no regard for a link between the two. It is left to the Bank of England to shine a light on the failure of the Chancellor to engage in joined-up thinking. In written evidence to the Treasury Committee, the Bank of England admitted that the steep rises in house prices in the decade preceding the crisis, together with a fall in long-term interest rates, have led to

“a sharp rise in intergenerational dispersion of wealth benefiting in particular older people who had already entered the market before prices began to rise.”

The Government have avoided every opportunity to invest in young people. What hope—[Interruption.] The Chancellor says, “Rubbish”. I am afraid I am actually giving him facts from respected institutions, not least the Bank of England. Is the Chancellor really saying that the Bank of England is wrong as well? I think the Bank of England might have something to say about that.

What hope do millennials have to cling on to? Robbed of their housing allowance and lumbered with chronic student debt, this Government have gone out of their way to avoid investing in young people. The intergenerational wealth unfairness is creating the perfect storm for future generations. Research from the Resolution Foundation shows that today’s 27-year-olds are earning the same amount that 27-year-olds did a quarter of a century ago. A typical millennial has actually earned £8,000 less during their twenties than those in the preceding generation.

We have missed chance after chance to invest in inclusive growth opportunities. The Government have been the proverbial one-club golfer relying on monetary measures, but in a vacuum. Even the IFS has warned the Chancellor about his calculations. First of all we had George Osborne proclaim he wanted to balance the books by 2015. That did not happen. Now the current Chancellor wants to eliminate borrowing by the mid-2020s. But with Brexit set to hit the economy, even the IFS has called on him to abandon his fanciful fiscal targets. There is more uncertainty on forecasts now than ever before. The Chancellor himself told the Treasury Committee that a

“cloud of uncertainty is acting as a temporary damper, and we need to remove it as soon as possible”.

Well, there was nothing in the Budget today to remove it.

Mr Deputy Speaker, I am in a giving mood. I will give the Chancellor a bit of fundamental economic advice. End the suicidal flirtation with a no-deal scenario, give business something to invest in and work on keeping the UK in the single market. The stupidity and recklessness of some on the Government Front Bench who rode around in that famous red bus has to be the most damaging economic pledge in modern history. They said £350 million a week for the NHS. Well, they are silent on that now. The Foreign Secretary and Environment Secretary should listen up, because here are some home truths about the mess they have created: the Bank of England has confirmed that 75,000 jobs are at risk in the financial sector owing to Brexit; the London School of Economics has revealed that Scotland’s towns and cities could lose up to £30 billion over five years; the Fraser of Allander Institute revealed that Brexit would cost Scotland up to 80,000 jobs and see wages fall by £2,000 a head per year; and now the Chancellor is planning for a no deal—a complete catastrophe which is unfolding on his watch. He knows how devastating such a path would be for the UK economy. He has given Departments £250 million to carry out work in preparation. To put that into context, that would pay for 11,553 new starter nurses, teachers or police officers.

It is not just the spending to fund Brexit that is costing communities, however. Leaving the EU will cut off the financial social funds we have benefited from for so long. This will be devastating for communities where poverty and destitution at the hands of the Tory austerity policies have seen volunteers pick up the pieces. Although as the UK haemorrhages EU funding and the Chancellor proclaims austerity is essential to save, he did manage to find £1 billion for the DUP—quite remarkable. The Chancellor found £1 billion for the Northern Irish Executive to spend on devolved areas, but no additional funds were provided to Scotland or any other part of the UK. Cash for votes—not very honourable at all.

And what use are the Scottish Conservatives, who pledged to work as a bloc to protect Scotland’s interests? That was their chance to shine: a golden opportunity to show they were prepared to put politics aside and stand up for Scotland. But no, party loyalty prevailed and now Scotland is being overlooked in this dodgy deal. This money cannot be processed until the discussions have concluded on the appropriateness of the way in which the UK Government decided to provide the additional financial support. The Barnett formula rules mean that Scotland, Wales and Northern Ireland are entitled to an extra £2.9 billion and £1.67 billion respectively as a result of the deal. Where are the Scottish Tories standing up for that £2.9 billion that Scotland deserves? Where are the calls from the Scottish Tories for this UK Government to match the deal from Northern Ireland? They have been found wanting.

Year after year, the UK Government continue to let down our world-class oil and gas industry in the north-east of Scotland. Two years ago, the Conservatives boasted about the creation of a new oil and gas ambassador, who would

“promote the North Sea around the world and boost inward investment”.

How embarrassing, then, for the Chancellor that the role, two years later, has yet to be filled. It seems that the Chancellor and his Cabinet colleagues have simply forgotten about our North sea industry once again. Despite the Chancellor’s tight grip restraining Scotland’s economic potential, the SNP in Scotland has delivered for our people.

[Anna Soubry (Broxtowe) (Con)]

On a point of order, Mr Deputy Speaker. Is it in order for hon. Members to make speeches in which they completely ignore the contents of the Budget that the Chancellor has just delivered?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

That was definitely not a point of order and the right hon. Lady knows it. She has provided a running commentary all the way through. I think I have heard more than enough for the time being and I want to get to the end of the speech by the leader of the SNP.

[Ian Blackford]

Thank you, Mr Deputy Speaker.

In Scotland, international exports are up 41% between 2007 and 2015. The latest employment figures show that Scotland has higher employment rates and lower unemployment rates than the UK. Youth employment continues to outperform that in the UK. The Scottish Government fulfilled their commitment to reduce youth unemployment by 40% four years ahead of schedule—that is how to make fiscal targets.

But it is not just about the ability of the Scottish Government to deliver an inclusive society that works for all; it is their vision for an economy that benefits all. When the UK Government chose the rape clause, the Scottish Government chose the baby box. When the UK Government trebled tuition fees, the Scottish Government maintained the principle of free tuition for all. When the Conservatives pushed for a dementia tax, the Scottish Government stood by free personal care for the elderly. We know that an economy is not just a tool for inclusive growth, but is central to the social fabric of the society in which we grow up. It is time for an economy that benefits all. End the damaging austerity agenda and stop the catastrophic ideological obsession with a Brexit no deal.

[Several hon. Members rose—]

Oral Answers to Questions

Ian Blackford Excerpts

Tuesday 18th April 2017 Commons Chamber

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

T3. As we are congratulating football teams, I am sure the House will want to join me in congratulating Hibernian football club, which has returned to the top league in Scotland.The Chancellor of the Exchequer has a brass neck when he talks about a stable and resilient economy. The growth in the money supply, which has been trending at around 6%, is mainly down to an increase in personal borrowing and credit card debt. When are we going to get fiscal measures that will stimulate the economy, rather than relying on the boom and bust we are seeing again?

[Mr Hammond]

I can confidently predict for the hon. Gentleman that, after the general election on 8 June, there will be a Budget that will give him the answers he is seeking.

UK Sovereign Wealth Fund

Ian Blackford Excerpts

Wednesday 14th December 2016 Westminster Hall

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Owen. I congratulate the hon. Member for Weston-super-Mare (John Penrose) on securing the debate and raising this most important topic. He asked whether there could be consensus across the House. There are those of us on this side who have been arguing for infrastructure investment for quite some time, for the simple reason that we need to build capacity in the economy—we need to create the circumstances for growth.

We all want a high-wage economy; we would absolutely welcome that. The debate is about the mechanisms that will create it. We make the point that if we want to deliver a balanced budget in this country, that has to come through the delivery of economic growth; it cannot come on the backs of the poor, as has been the case over the last few years because of austerity. The issue has to be about building capacity in the economy, creating the circumstances for growth, which perhaps can deliver the kind of outcomes that the hon. Gentleman talks about.

I am delighted that we are having this debate, but in some senses it is happening too late for us in Scotland. As the House of Commons Library briefing paper confirms, more than 30 countries have sovereign wealth funds, and it is estimated that funds based on oil and gas receipts are responsible for more than half the global total value of those funds. We in the Scottish National party have long argued that we should have established a wealth fund from our oil revenues to ensure that future generations could benefit from the proceeds of North sea oil. Not for the first time, and over a long time, Westminster was not listening.

The UK Government have taken a staggering £340 billion in tax receipts from North sea oil. Where has that gone? Why have we not seen a legacy from that bounty for all the people in this country? It was not invested to ensure that there was a legacy for future generations. Rather than North sea oil receipts being looked at as a bounty that could be invested to ensure that there was future growth, the proceeds of North sea oil were frittered away.

Let us contrast the UK’s lack of foresight with the foresight of our near neighbours in Norway. Norway’s wealth fund, to which the hon. Gentleman referred, now exceeds $905 billion; the value is $177,000 per capita—for each Norwegian citizen. That astonishing sum shows what can be done if people take the right approach to investing in their future. The Norwegians recognised that oil was a bonus. It will run out at some point, but they ensured that their country would have a lasting benefit. Let me quote what The Economist said in an article in September this year:

“Two decades after Norway’s government paid a first deposit into its sovereign-wealth fund, the country is learning how to manage a behemoth. The vehicle, which is used to invest abroad the proceeds of Norway’s oil and gas sales, has amassed a bigger fortune than anyone expected, thanks to bumper oil prices.”

The hon. Gentleman has talked about a wealth fund that may build up over generations, but Norway has achieved the largest wealth fund in the world after two decades because it was prepared to put something away for future generations. In that sense, I support the broad outline of what he says. The article goes on:

“As the direct benefits of oil decline—around 46% of Norway’s expected total haul of oil and gas is gone—the relative importance of the fund will grow. The annual revenues it generates now regularly exceed income from oil sales.”

Establishing a wealth fund from the benefits of North sea oil receipts is an effective means of protecting an economy from oil prices that can prove to be volatile. In that sense, the lucrative revenue generated by oil and gas is used to protect its own longevity as well as the overall prosperity and stability of an economy during price swings. We have known all that for decades.

The McCrone report, delivered to the UK Cabinet Office in 1974, claimed that North sea oil revenues could have made an independent Scotland as economically prosperous as Switzerland. The report was so alarming for the UK Government that it was buried as top secret for 30 years. That is, perhaps, of little wonder. Scotland’s bounty has kept the UK afloat; there is no lasting financial legacy for Scotland. The Norwegians have a foundation of financial security; we have a UK Government who would not come clean on the benefits of North sea oil and have denied us the opportunity to have our own legacy from that bounty. Yes, let us plan for a sovereign wealth fund, but that should have been delivered over the past few decades.

Denis Healey said the following about the saga:

“I think we did underplay the value of the oil to the country because of the threat of”

Scottish

“nationalism”.

He said he thought that Westminster politicians

“are concerned about Scotland taking the oil, I think they are worried stiff about it.”

That is the reality, yet we are constantly told by Westminster politicians about the perils of Scottish independence and that we cannot afford to take responsibility for our own destiny. If we had this oil fund, that would give us the tools to manage any financial storms like those we have witnessed over the past few years.

Denis Healey let the cat out of the bag; it was a worry that the wealth of Scotland could create this oil fund and undermine the significance of Westminster. McCrone suggested way back in the 1970s that an oil fund should be set up, but here we are in 2016 asking why we have not done so.

[Mr Gregory Campbell]

There is an emerging consensus about the need to think long term in regard to the wealth fund. Does the hon. Gentleman agree that some people will listen to his comments about an oil fund, which would, by its nature, have a very limited lifespan—the oil is going to run out at some stage in the near future—and think we need to think beyond that lifespan? We need to be talking about a generational expectation rather than a general election expectation.

[Ian Blackford]

I agree, in so far as we have to establish the mechanisms to make sure that we have something left for future generations and the issue is not just about oil. What I want to do in this debate is talk about the missed opportunities and how we can learn from them.

I will come specifically to how we can deal with not only the financial crisis but the decline in oil prices over the past few years. We cannot run away from the fact. We know that oil prices are depressed at the moment and that revenues from North sea oil have declined alarmingly, and that that will remain the case for the next couple of years. However, there is still the value of 2 billion barrels of oil in the ground under the North sea, and at some point oil prices will recover: there will still be the opportunity to create that oil fund out of the North sea oil revenues.

[Mr Gareth Thomas]

In the words of Oasis, the hon. Gentleman is looking back in anger. I understand, given his political perspective, why he is doing that. Might I encourage him to look forward and to think about how we might establish a sovereign wealth fund going forward? Has he had the chance—assiduous politician as he most definitely is—to reflect on the Co-op party proposal, which envisages turning the Crown Estate into the beginnings of a UK sovereign wealth fund?

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[Ian Blackford]

I am grateful for the hon. Gentleman’s kind remarks. We need to make sure that people in this country can benefit from the wealth that is created. It is a reasonable contribution to the debate to consider what should happen with the Crown Estate.

I would actually take things a stage further because I want to see the benefits of the Crown Estate come down to our communities. There is considerable value generated by the Crown Estate in the highlands and islands of Scotland and we have seen none of the direct benefit of that. Of course some of that will be devolved to the Scottish Government over the coming years, but I do not want the assets of the Crown Estate to sit in a fund, whether that be in London or in Edinburgh; I want my communities in the highlands and islands to benefit directly from it.

There is a bounty that will no doubt come from offshore wind over the course of the next few generations, and I want to take that opportunity to make sure that its benefits and bounty are reinvested back into the highlands and islands, so that we can broaden the base of sustainable economic growth. I agree with the broad direction of travel that the hon. Gentleman has suggested, but I would do it in a slightly different way to make sure that our local communities get direct benefit from the bounty of the Crown Estates.

I know that many other Members want to speak, so I will move on quickly. We have long argued that to take account of the volatility of North sea oil, we have to establish not just one, but two, funds as and when circumstances permit: a stability fund and a savings fund. Why a stability fund? It is an implicit recognition of the volatility of commodity pricing and a desire to set a cautious budget that would allow excess tax receipts generated in periods of high oil prices to be released for current spending at a time of price weakness. That would create stability of revenue sources for Government spending and protect the economy from price shocks.

Secondly, a long-term savings fund would, as is the case in the 30 countries that have established such funds, have a long-term legacy for future generations. A lack of vision and a focus on only the short-term have seen the UK consistently refuse to do that. If we are now seeing an emerging consensus challenging that, I will be delighted.

Although I welcome this debate and the initiative of the hon. Member for Weston-super-Mare, what he argues for is simply not going to happen in the short term given the state of the UK’s finances today. We need to make sure that in Scotland, as circumstances dictate, we can return to this as a solution for us all.

In the short term, maximising the potential for the North sea and west of Shetland must be a priority. The fiscal and regulatory regime must therefore support ongoing investment, so that we can continue to benefit from the oil that is still there to sustain jobs and our future prosperity. We have taken a substantial bounty from the North sea. Now is not the right time to establish a wealth fund; now is the time to put in place mechanisms that will support the industry, development and the ability to extract longer-term value and, of course, taxation revenue.

Just as those in Westminster sat on their hands when an oil fund should have been established, they have now been slow to respond to the weakness in oil and gas prices. Inaction has impacted the ability to maximise recovery in the industry. Today, the priority is to support this industry with an eye on creating the circumstances that will allow us to return to the needs of establishing an oil fund. For us, recovery in the oil industry and in tax revenues goes hand in hand with a transition to a green economy. It is part of a holistic approach that recognises that we need to adapt to a new, low-carbon economy.

I say yes to a sovereign wealth fund, but as part of a wider strategy. It is just a pity that we have missed so many opportunities and that, in the meantime, Scotland has missed out.

[Jim Shannon (Strangford) (DUP)]

It is always nice to be called to speak, Mr Owen. I congratulate the hon. Member for Weston-super-Mare (John Penrose) on setting the scene on a subject that has to be discussed and given some thought in this House. Those of us here, and those who unfortunately have not been able to make it, will have ideas about how to do this. This is the first stage of a discussion that we should, perhaps, have had many years ago. At least we are starting the process; let us start it with this discussion. I look forward to the shadow Minister’s contribution, other Members’ contributions and, in particular, the Minister’s response on how to take this forward.

We are considering the proposals put on paper by the hon. Member for Weston-super-Mare in his report, “The Great Rebalancing: A sovereign wealth fund to make the UK’s economy the strongest in the G20”. That is a very grand title, but it encapsulates his thoughts on the subject—and, perhaps, our thoughts as well. An enormous level of thought and groundwork went into these proposals. I congratulate the hon. Gentleman on the paper, which we read—not just the background notes—back home, and it gave us food for thought. I am astonished that he found the time to do so much work on it. Anyone who takes the time to read the background notes will understand the time that he has put into writing this paper, which is worthy of discussion in the House, and in Westminster Hall today.

I was raised to save for a rainy day, as many in my generation were—and that is not just because I am an Ulster Scot and we think that every pound is a prisoner. I was taught to save for a rainy day at an early age by my mother and father, and it has not done me any harm over the years. I am now married, of course, and the money is never my own anymore; it belongs to her, but that is by the bye. I do not wish to dumb down in any way the hard work of the hon. Gentleman, but to me this is like the Government saving for a rainy day, as I said to him when discussing the debate beforehand. The hon. Member for Ross, Skye and Lochaber (Ian Blackford), who spoke before me, is a strong advocate for the WASPI—Women Against State Pension Inequality—women and their pensions, and I am glad he is here. Before I came in, I thought, “What if we had had this fund 20 years ago? We would have been able to look after the WASPI women and make sure their pensions were covered.” We did not, but at least we have chance to look at this issue now.

[Ian Blackford]

As always, the hon. Gentleman makes a number of pertinent remarks. There is a view that we do not have the resources to pay the appropriate pensions to people, but we should keep an eye on the Government Actuary’s Department, which has argued—I am keen that people should not get away from this—that the national insurance fund will be in surplus to the tune of about £30 billion by 2016-17. The resources are there to give the women what they are due, and over the next 20 or 30 years, pensions will remain affordable.

[Jim Shannon]

I thank the hon. Gentleman for those figures. I was not aware of them, but if that money is available, perhaps we are in a position to start the fund today with some of those resources.

I am sure that, like me, many hon. Members, including the hon. Gentleman, will know of 63-year-old women in their constituency who still have to work as their pension is unavailable. Those women are wishing that in the 1980s, at the time of the North sea oil find, which we have heard many comments about, the Government had decided to invest in a rainy day fund, which could have helped the pension pot. For that reason, the sovereign wealth fund must be considered seriously by the Government. That is why this matter is worthy of debate.

This issue is not cut and dried, by any means. There is talk of the Government’s shale fund being similar to this plan, as the hon. Member for Weston-super-Mare mentioned, but this is not the day to debate the pluses and minuses of fracking. A lot of hard work would need to be carried out before the fund saw any profit, but many people are already making claims about the potential for shale oil, if that comes through—and I suspect that, at some time, it will. We must think about what can be done for the future benefit of all people in the UK. Today’s austerity is a reality for us all. We have to be honest in this House about moneys and finances.

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[George Kerevan (East Lothian) (SNP)]

I begin in time-honoured fashion by thanking the hon. Member for Weston-super-Mare (John Penrose) for securing this debate. I say that genuinely because we do not get enough chance to think long term or to debate issues in detail, and this is a practical issue on which to do so.

This has been a limited debate, and I begin my summing up by agreeing with many of the hon. Gentleman’s reasons for having some kind of sovereign wealth fund. In the current context, the most important reason is that a sovereign wealth fund would provide inter-generational justice. There have been discussions about a UK sovereign wealth fund since the 1970s; the issue has come and gone. There have been many arguments for a sovereign wealth fund and, in the ’70s, the North sea oil money had arrived and we needed to do something sensible with it.

Such reasons are episodic. On both sides of the House, we have all come to understand that inter-generational fairness is an issue. Successive generations have repeatedly used up available funds, often making a mess of the economic situation, and left it to future generations to pick up the pieces, as the Women Against State Pension Inequality Campaign is at the moment.

In the absence of any inter-generational mechanism for creating such fairness, we have to consider some kind of sovereign wealth fund. The Government are on record as seeking some form of inter-generational justice, and this is the only mechanism currently under discussion that has any chance of success. Without prejudging how we do it, a sovereign wealth fund is worthy of discussion because it exactly fits the kind of programme that the Government have suggested.

The hon. Gentleman did not examine in any great detail the other argument for some kind of sovereign wealth fund. During a periodic economic crisis, a sovereign wealth fund, provided we do not touch the capital, would give us an emergency revenue stream that can be put to use without unbalancing the broader fiscal mix. Since 2008, at the same time as building up the equity base of their sovereign wealth fund, the Norwegians have been able to tap some of the income stream temporarily, to offset lower tax revenues as a result of the global economic crisis. Again, that would seem to recommend itself to the Treasury.

[Ian Blackford]

I applaud what Norway has done, but one of the weaknesses of the Norwegian model is that it invests primarily in equities and bonds. If we get this right, there is an opportunity to invest in infrastructure. My hon. Friend is right that we should draw down only on the income streams, but there is a real opportunity to invest in infrastructure to build capacity and growth opportunities, as well as investing in financial assets.

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[The Economic Secretary to the Treasury (Simon Kirby)]

It is a great pleasure to serve under your chairmanship, Mr Owen.

I start by thanking my hon. Friend the Member for Weston-super-Mare (John Penrose) for securing this debate today. The issues it raises go to the heart of the Government’s economic approach, which is to get our finances in order and to build for the long term-success of the country. I read with great interest my hon. Friend’s paper, produced with the Social Market Foundation; I might indeed consider purchasing it as a small Christmas gift. The objectives that informed his paper are all ones that I share, along with Members on both sides of the House, I am sure: to see the UK’s economy strengthen and grow sustainably in the future.

Let me start by addressing the idea of sovereign wealth funds more generally, because I agree that they can form an important part of any country’s strategy for investing in its future success. Often, they are a way for Governments to manage fiscal surpluses, foreign currency operations or balance of payments surpluses. They can indeed be an effective tool for both planning sustainable investment and managing volatility in receipts. We have seen how they can work well for countries that have large fiscal surpluses. Hon. Members have mentioned Norway’s Government pension fund; there is also Saudi Arabia’s Saudi Arabian Monetary Agency’s foreign holdings fund.

However, we are not debating today the valuable role that sovereign wealth funds play in other countries around the world; we are considering whether such a fund would be appropriate for the UK, and—importantly—appropriate at this time. As the House is fully aware, we are not in the same position as many other countries that have elected to set up such funds. The crucial point is that the UK has not run a surplus since the start of this century, although we are now committed to doing so.

We have chosen the path of a credible fiscal policy that will restore our economy for long-term health, and although we are no longer seeking to deliver that surplus in 2019-20, we remain resolved to do so, to bring our public finances into balance. That is why we have committed once again in the autumn statement to deliver the surplus: we set out our plan to make that happen as soon as possible in the next Parliament, while in the interim bringing cyclically adjusted borrowing below 2% by the end of this Parliament, and getting public sector net debt, as a share of GDP, to fall in this Parliament, too.

I share my hon. Friend’s conviction about the need for strong and sustainable public finances for the UK and I understand his interest in exploring the potential for a British sovereign wealth fund. I agree with the hon. Member for Strangford (Jim Shannon) that the country should be prepared for a rainy day—sensible advice that we should all listen to. However, given that UK debt will soon be at a 50-year high of 90.2% of GDP, our priority must be to return the public finances to balance and to get the debt falling before we can consider a sovereign wealth fund in more detail. However, although such a fund may not be an appropriate avenue for us to explore at this stage, I will touch on some of the issues that today’s consideration has raised.

One such issue has been our infrastructure. One of the key roles that a sovereign wealth fund can perform is to act as a vehicle to fund sustained investment in infrastructure. Although we may not have a sovereign wealth fund, or even a formal statutory target for the proportion of our GDP that we invest in infrastructure, the Government share my hon. Friend’s conviction about making the infrastructure investments we need that will boost our productivity and strengthen our economy. That is why we have asked the National Infrastructure Commission to make recommendations on the future infrastructure needs of the country.

Once again, I refer all Members to the commitment in the autumn statement, where we prioritised high-value investment in infrastructure and innovation. That included the new national productivity investment fund, with £23 billion of extra spending targeted at high-value projects that will deliver more opportunities and higher living standards for working people—whether that is more homes, better transport links or the 21st-century digital capacity we need.

[Ian Blackford]

The Minister is setting out why he thinks it is not relevant to set up a sovereign wealth fund today, but does he accept that there was a missed opportunity with the £340 billion bounty that came from North sea oil? That could have been used to establish an oil fund that would have delivered benefits for today and the future.

[Simon Kirby]

I often say as an MP—I suppose the same is true as a Minister—that it would be nice to have a crystal ball, a magic wand and a time machine. We are where we are, and we have to make the best decisions going forward—rather than looking back in anger, if I may quote the hon. Member for Harrow West (Mr Thomas).

The additional capital will take public sector net investment to over 4% of GDP for the rest of this Parliament, well above the average of the last 30 years; in real terms, it has been more than 50% higher on average this decade than it was under the whole period of the previous Government.

Another aspect of my hon. Friend’s excellent paper was the suggestion that a new national debt charge be carved out of income tax to help pay down the debt. He will know how much I share his conviction that we need to get debt falling, but I know he also shares the Government’s commitment to helping people who are just about managing. It is important that we build an economy that works for everyone. That is why we would not look to deliver a new income tax charge in our current position. Indeed, as part of the tax lock, we have legislated not to increase the main rates of income tax, national insurance contributions and VAT during this Parliament. Alongside that, we have prioritised an approach to taxation that supports working people, such as our increase in the tax-free personal allowance.

Savings (Government Contributions) Bill

Ian Blackford Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Monday 12th December 2016 Commons Chamber

To be clear, this is not a scheme we would have initiated. We have huge reservations about any move by the Government away from a collective pension system towards an individualised payments system. That is a very slippery slope that the Government will not be here to regret. That is why we will continue to scrutinise the lifetime ISA—a potential Trojan horse for the current pension system—and the Help to Save scheme, which is an attempt to salve the conscience of a few Conservative Back Benchers after the chainsaw the Government have taken to tax credits. If the Government will not concede, we shall pursue new clauses 2 and 6 to a Division.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

It is a pleasure to be called to speak in the debate. I rise to speak to new clause 7 and amendments 7 to 11 and 13 to 22, which were tabled in my name and those of my hon. Friends.

We in the SNP—[Interruption.] I see that Conservative Members are laughing, but if the Government had taken this issue seriously and accepted some well-intentioned amendments in Committee, we would not have had to table all these amendments this evening. Let me tell Conservative Members that this Bill is a seriously bad piece of legislation, and they should take it seriously, not scoff at it.

The Scottish National party has consistently warned of the dangers of the Bill and its consequences for savers. The SNP is supportive of any initiative that promotes savings, but the lifetime ISA is a gimmick, as it will work only for those who can afford to save to the levels demanded by the Government to get the bonus. The LISA falls short of real pension reform, and it is a distraction to allow the Treasury access to taxes today rather than having to wait for tomorrow.

Savings into a LISA are made out of after-tax income; pension contributions are tax exempt and tend to receive employer contributions. Saving through pensions remains the most attractive method of saving for retirement. While anything that encourages saving for later life has to be welcomed, the danger is that the Government will derail auto-enrolment. Help to Save is another example: we agree working to encourage savings is welcome, but once again the UK Government are only scratching the surface, rather than really targeting those struggling to plan for emergencies or later life.

The Bill risks seducing young people away from investing in a pension by encouraging investment in a lifetime ISA. We have said before that no one investing in an ISA can be better off than someone investing in a pension. Why are the Government persisting with the Bill? Let us be clear: if we pass the Bill tonight, we could create circumstances in which young people might be sold a lifetime ISA when their interests would be better served by investing in a pension. That is what we will do if we pass this Bill.

In Committee, we sought to make sure that safeguards were in place and that advice was available for applicants to remove that risk, but for some reason the Government refused to accept our reasonable proposals. This evening, we are pressing new clause 7, which would require the Secretary of State to make regulations requiring all providers of LISAs or Help to Save accounts to provide applicants, at the point of application, with both advice on the suitability of the products to the individual and information on automatic enrolment and workplace pension schemes. Auto-enrolment is still in its infancy and is due to be reviewed next year, although we heard today that increases in payments to auto-enrolment schemes are now off the agenda. That too should be debated by the House and changed.

That has to be our priority for savings, but if we are not successful in pressing the new clause tonight, our only alternative is amendment 15, which would completely remove the LISA from the Bill. Our primary problem with the Bill as drafted is the LISA. While the UK Government rely on low opt-out rates from auto-enrolment to justify their claim that the LISA would not risk pension savings, we are not convinced. The Bill is a missed opportunity to focus on strengthening pension saving, rather than tinker with the savings landscape.

The amendments we tabled in Committee aimed to delay the LISA until safeguards were built in; they also highlighted the need for mandatory advice. The Government say that the LISA is a complementary product, not an alternative to pension saving, but they have given no real thought to the difficulties facing consumers in understanding their options and, for those who have savings, whether they are in the best product for their needs. Pensions are already confusing and complex; the LISA as it stands adds to that complexity. We need to build trust in savings. That can only come if consumers have confidence in what is offered to them. A new suite of savings products that in many cases are inferior to existing offerings does not help build confidence in savings.

On Second Reading the Financial Secretary said:

“What is attractive about the lifetime ISA is that people do not have to make an immediate decision about why they are saving this money…people not having to make that decision at an early stage when they cannot see what is ahead.”—[Official Report, 17 October 2016; Vol. 615, c. 607.]

That is an astonishing statement. Why is the Financial Secretary not saying that we ought to be encouraging pension savings? I get the point that we need to consider ways to help young people to get on the housing ladder. Perhaps we need to think about how investments in pension savings might help in that regard. That is one of the reasons I keep asking for the establishment of a pensions and savings commission, so we can look at these matters in a holistic manner. I keep making the point, and I make no apology for saying again, that nobody should be better off with a LISA than with pension savings.

The long-term cost of forgoing annual employer contributions worth 3% of salary by saving into a LISA would be substantial. For a basic rate taxpayer, the impact would be savings of roughly one third less in a LISA over a pension by the age of 60. For example, an employee earning £25,000 per annum and saving 4% of their income each year would see a difference in excess of £53,000. After 42 years, someone saving through a pension scheme would have a pot worth £166,289.99 at a growth rate of 3%; in a LISA at the same growth rate the value would be only £112,646.75. That is a difference of over £53,000, and the difference would be even greater if wage growth was factored in. That is why we cannot support the Government tonight on the LISA elements of the Bill.

Without the introduction of advice, we are creating the circumstances in which mis-selling can take place. How can we stop someone being sold a LISA when a pension plan would be better for the consumer’s needs? We cannot. That, quite simply, is why the Bill is wrong. The Government ought to be thoroughly ashamed of themselves. They are creating the circumstances in which mis-selling can take place. I point the finger of blame at the Government for introducing this Bill and at every Member who is prepared to go through the Lobby tonight to support the Bill. Dwell on the example I gave where someone earning £25,000 per annum saving 4% of their salary could be as much as £53,000 worse off after 42 years. Who can honestly support that? That is not in consumers’ interests. It is de facto committing a fraud on savers in this country.

Today research has been published by True Potential. A poll of 2,000 employees showed that 30% of people aged between 25 and 40 would chose a LISA instead of a pension and that 58% of 25 to 34-year-olds would use their LISA for retirement savings. These statistics are the early warnings of the potential for mis-selling. Tonight, the House must vote to protect the consumer interest by backing new clause 7 to put in place an advice regime; failing that, Members should support amendment 15, which would delete LISAs from the Bill. Failure to do so will be a failure to take responsibility by each and every Member of this House.



I said on Second Reading:

"We would resist any further attempts to undermine pension saving and, specifically, to change the tax status of pension savings. That would be little more than an underhand way of driving up tax receipts—sweet talking workers to invest after-tax income in LISAs when their interests are best served by investing in pensions.”—[Official Report, 17 October 2016; Vol. 615, c. 620]

The sheer fact that the use of LISAs for retirement savings will be encouraged will confuse the public that this is a pension product and could disincentivise retirement savings in what should be traditional products. The Government's response that an amendment on advice would not work in practice, as it would create a barrier to accessing the LISA, is another quite extraordinary argument, as all that advice would do is make sure that consumers can make informed decisions. If there are consumers who choose to invest in a pension rather than a LISA product, I would be delighted, and so should the Government be.

The Government said it would be the role of the Financial Conduct Authority to ensure that sufficient safeguards are put in place. Specifically on advice, we welcome the FCA’s proposed protections: firms will be required to give specific risk warnings at the point of sale, which include reminding consumers of the importance of ensuring an appropriate mix of assets is held in the LISA; they will also have to remind consumers of the early withdrawal charge and any other charges and they will have to offer a 30-day cancellation period after selling the LISA. However, still the risk is simply too great for the Government to treat it as an afterthought. There must be a formal mechanism to assist those seeking to increase saving, particularly where they are looking for a retirement product.

Even the Association of British Insurers, which cautiously welcomes the LISA, has said:

“LISA (and other ISA products) receives savings from money that is already taxed. This keeps the burden of taxation with working age people and takes money out of the real economy”.

This takes us back to why we are here and what the Government are proposing and why it is wrong.

As I also said on Second Reading:

“SNP Members welcome any reasonable proposals that encourage savings—we will work, where we can, with the UK Government to seek to encourage pension savings—but we very much see the Bill as a missed opportunity for us all to champion what we should be focusing on, which is strengthening pensions savings. Instead we have another wheeze that emanated from the laboratory of ideas of the previous Chancellor, the right hon. Member for Tatton (Mr Osborne), and his advisers, who had form on constantly tinkering with the savings landscape. The right hon. Gentleman may have gone from the Front Bench, but his memory lingers on with this Bill.

Let us recall what the former Chancellor said in his Budget speech this year:

‘too many young people in their 20s and 30s have no pension and few savings. Ask them and they will tell you why. It is because they find pensions too complicated and inflexible, and most young people face an agonising choice of either saving to buy a home or saving for their retirement.’”—Official Report, 17 October 2016; Vol. 615, c. 618-19.]

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[The Financial Secretary to the Treasury (Jane Ellison)]

This has been a wide-ranging debate, albeit with a relatively small number of speakers. Many of the arguments today were given a good airing during our Bill Committee discussions. I will try to address the key points raised by hon. Members, and will also set out why we think the Government amendments are necessary.

First, however, I want to touch on a point of policy that is of some relevance to the debate: a change to charges in the first year. We are making a small change to charges on early withdrawals from the lifetime ISA in its first year of operation, for the benefit of consumers. Although these rules will be set out in regulations, so do not affect the substance of the Bill before the House today, as a courtesy I thought some hon. Members would be interested, given the points raised in oral evidence to the Bill Committee.

The 25% Government charge on unauthorised withdrawals from the lifetime ISA recoups the Government bonus and applies a small additional charge. This is fair as it reflects the long-term nature of the product and ensures that individuals save into it for the intended purposes, protecting Government funds and taxpayers’ money. However, in 2017-18 only, the bonus will not be paid monthly, as it will be from April 2018 on, but will be paid as an annual bonus at year-end. This could create a difficult case where people face a 25% Government charge up to 12 months before they receive the bonus. We have listened to representations on this point, and so, to improve the product for consumers, I can confirm that there will be no Government charges in 2017-18.

If people want to withdraw from their lifetime ISA in 2017-18, they must close their account, and there will be no Government charge to do so. No bonuses will be paid on such closed accounts.

An individual who has closed their account will be able to open another lifetime ISA in 2017-18 and contribute up to £4,000 into it, if they wish to. From April 2018 the Government bonus will be paid monthly. This means that the 25% Government charge on withdrawals other than for a first-time house purchase, in the event of terminal illness or when the individual is over 60 will apply as per the overarching policy intention.

Government amendment 3 is about data sharing, and I wrote on this issue to the hon. Members for Bootle (Peter Dowd) and for Ross, Skye and Lochaber (Ian Blackford) and copied in the rest of the Bill Committee. We have heard that the lifetime ISA will provide an eligible first-time buyer with a new choice in saving for their first home, in addition to the existing help to buy ISA scheme. Both schemes provide that generous Government bonus of 25% that can be put towards a first home.

As we set out when we first announced the lifetime ISA, we intend that individuals will be able to save into both a Help to Buy ISA and a lifetime ISA, but they will only be able to use the bonus from one of the schemes when they buy their first home. Amendment 3 introduces a new paragraph to schedule 1 to allow HMRC and the administrator of the Help to Buy ISA to share information about bonus payments and charge-free withdrawals so that those rules can be policed. It also provides appropriate safeguards and sanctions in relation to the use of account holders’ information, including a criminal offence for unlawful disclosure of that information, in line with HMRC’s established duty of taxpayer confidentiality. The amendment is straightforward and will ensure that the scheme rules on Government bonuses can be effectively administered. I hope that the House will accept it.

Government amendments 4 and 5 concern residency conditions for Help to Save. That is a targeted scheme, as we have heard, that will support lower-income savers by providing a generous Government bonus on their savings. It is only right that that Government bonus should be available for savings made while an account holder is in the UK or has an appropriate connection with the UK, such as Crown servants serving overseas. The Bill already provides that, as well as meeting conditions in relation to working tax credit or universal credit, an individual must be in the UK to open an account. However, it is currently silent on the rules that apply where an account holder leaves the UK during the four-year lifetime of an account.

The amendments address that situation by allowing regulations to provide that the monthly payment limit for Help to Save can be set at nil in certain cases. We intend to use that power to provide that an individual cannot make payments to an account, and cannot thereby earn additional Government bonus, when they are not in the UK or do not have the appropriate connection to the UK. That will be supported by a requirement to notify the account provider if an account holder’s circumstances change and they will be absent from the UK. That approach broadly mirrors the arrangements currently in place for ISA accounts. The amendments also provide for a penalty where there is a failure to notify the account provider of such a change. However, that penalty will not apply where there is a reasonable excuse for the failure, and any person who receives a penalty will have the right to appeal. The House will have the opportunity to consider regulations dealing with eligibility for an account before the launch of the scheme.

These amendments allow an effective targeting of the generous Help to Save bonus, so that it can be earned only on savings made by individuals in the UK, or with an appropriate connection. On that basis, I hope that the House will accept them.

I will now respond to the non-Government amendments and new clauses. Again, we debated most of these issues at length in Committee. I will try not to recap all the arguments and to summarise the main ones.

New clause 3 and new clause 7 both concern advice for people opening either type of account. We have heard concerns that people may not get all the advice they need. I have been clear that the regulation of providers is the role of the independent Financial Conduct Authority, which regulates ISA providers and will likewise set the framework for the Lifetime ISA. It is consulting on its approach at the moment. On 16 November, it set out its suggested approach.

The Government of course want to ensure that people have the information that they need to make important financial decisions. We will provide clear information on gov.uk as well as work with the Money Advice Service and its successor to ensure that they make appropriate and impartial information available. The risk of mandating that people receive independent advice is that it makes investing in these products prohibitively expensive for many people. In Committee, we talked about the cost associated with mandating financial advice of that nature. Therefore, although I understand the sentiment behind those new clauses, I urge hon. Members not to press them and instead look at what the FCA has recommended in its initial suggestions to us.

[Ian Blackford]

Will the Minister give way?

[Jane Ellison]

I will, although the hon. Gentleman spoke for 20 minutes on this subject. I will take a brief intervention.

[Ian Blackford]

Speaking for 20 minutes when consumers are exposed to risk is not unreasonable. Can the Minister tell me which workers who have access to auto-enrolment will be better off under a LISA than they would under a pension?

[Jane Ellison]

I accept entirely, and it is evident from the hon. Gentleman’s speech, that he objects in principle to the lifetime ISA, but the matter before the House is whether we legislate for it, and the new clause I am addressing at the moment concerns financial advice. I have given examples of where the Government will be steering people towards advice. We are as keen as anyone that people have access to advice, but I urge him to look at the FCA consultation and what it has said, because it is the FCA’s job to steer us in that regard.

--- Later in debate ---

[Jane Ellison]

I am just saying that nothing in the Bill precludes that from happening now, so the amendment is unnecessary. We are in constructive discussions with the credit unions. They are not precluded from being part of a multiple provider model in future. I have laid out that, throughout the consultation, we identified that that was not a suitable model for the starting point. However, I honestly think that we are essentially coming at this from the same point of view. I hope that, in the light of what I have said, hon. Members will not press the amendment. As I say, we will continue to have those constructive discussions.

Amendment 7 seeks to pay the bonus every six months, rather than at the two and four-year mark of the Help to Save product. We believe that paying the bonus at two years and at account maturity strikes the right balance between giving people enough time to build up their savings and develop a savings habit and allowing them to access the bonus within an appropriate timescale. That is supported by evidence from similar savings schemes. Some Members will be aware that the savings gateway pilots showed that the optimal period for the saving habit to be embedded is two years.

I emphasise that people will still have full access to their savings with Help to Save, so even if they are able to save for only six months, they will still be entitled to receive a bonus at the two-year point or at maturity. I hope that that reassures hon. Members that we have looked carefully at the issue. I accept that it is, to an extent, a judgment call, but evidence from the savings gateway pilots, as well as from other peer-reviewed research, shows that the optimal time for the saving habit to be embedded is about 19 to 24 months. We think that we have struck the right balance, so I hope that the amendment will not be pressed.

Amendments 8 to 11 centre on the contribution limits. Not many Members spoke specifically about the issue and we explored it well in Committee. It is about being able to contribute a two-monthly average of £50. Our consultation specifically addressed the question of whether individuals should be able to pay in more than the £50 limit in certain circumstances. Respondents were very clear that that would add complexity to the scheme, both for savers and for account providers. It is worth noting that the Office for Budget Responsibility-certified forecast suggests that people will deposit £27.50 into their accounts each month on average. The £50 monthly limit is adequate, so I hope that the amendments will not be pressed.

Amendment 12 centres on eligibility for under-25s. The issue was explored in Committee and it has been touched on briefly today by the hon. Member for Ross, Skye and Lochaber. Our intention is to passport people into eligibility for Help to Save from working tax credit and universal credit. That is a well-established way of targeting people on lower incomes, and we think that it is the most simple and effective method for determining eligibility. Importantly, it removes the need for people either to complete a further means test to prove that they are eligible for an account or to contact the Government, both of which deter people from opening accounts. It also avoids additional costs associated with developing a new and complex eligibility checking system.

The hon. Gentleman also touched on amendment 13, which seeks to exempt bonuses from bankruptcy proceedings. Our approach is consistent with what we have done elsewhere. In the benefits system, for example, deductions are sometimes made to claims to repay debts. We think that, in reality, any accrued bonus represents an asset to the account holder and should be treated as such during any insolvency proceedings. Again, I urge Members not press the amendment.

The hon. Member for Harrow West began by speaking to new clause 1, which focuses on save-as-you-earn and the payroll reduction, which is also the subject of amendment 14. Both proposed amendments seek to introduce rules to allow people to deduct automatically amounts from their salary into a Help to Save account. In fact, amendment 14 goes further by proposing the introduction of auto-enrolment for Help to Save, allowing employers or benefit-paying bodies to divert money from employees’ pay into a Help to Save account, unless they opt out.

As I said in Committee, we want the decision to save into a Help to Save account to be an active choice made by eligible individuals at a time that is right for them. For many, that will mean saving flexibly, putting aside what they can afford each month, rather than committing to having a fixed amount deducted each month from their salary. There is nothing in the Bill to stop an employer offering payroll deduction for Help to Save to their employees, but we do not intend to make it a statutory requirement for employers to offer payroll deduction for Help to Save. Automatic enrolment into workplace pensions must remain the priority for employers.

New clauses 2, 4, 5 and 6 seek to place a duty on the Government to review or publish analysis on certain aspects of the policies. In all cases we have already conducted an impact assessment, published alongside the Bill. At the time of the autumn statement, we published a cumulative distribution analysis of all the policies implemented during the 2015-20 Parliament, including of the lifetime ISA and Help to Save. We believe that it is important to look at the cumulative impact of tax and spending decisions, rather than the impact of individual measures in isolation. The distributional analysis that the Government have published since 2010 has always taken that cumulative, rather than measure-by-measure, approach.

As with all Government policies, we will, of course, keep the lifetime ISA under review to ensure that it is meeting its objectives. Indeed, we already regularly publish a wide range of detail about the take-up of Government-supported savings accounts such as ISAs. We intend to take a similar approach to the lifetime ISA, so we have already done a lot in that regard.

We discussed the interaction with the housing market in Committee, as the hon. Member for Bootle (Peter Dowd) has said. In essence, any impact that the lifetime ISA has on the housing market is likely to be very difficult to detect among other factors. As was said in Committee, the accusations that this product benefits only the wealthy do not bear scrutiny, given that the Help to Buy ISA has been used to buy homes worth on average £167,250, which is well under the property price cap. The accusations are not fair.

The interaction with automatic enrolment dominated the contribution of the hon. Member for Ross, Skye and Lochaber. We covered the issue in detail in Committee, and I once again stress the Government’s absolute commitment to automatic enrolment. It is wrong to say that we are seeking to derail it. The lifetime ISA—the Treasury is clear on this—is designed to be a complement to automatic enrolment and workplace pensions, not a replacement. Our costings do not assume that people will opt out of their workplace pension in order to pay into a lifetime ISA. Encouragingly, the figures show that the opt-out rate is very low so far. Taking all those things together, we do not think that the proposed new clauses are necessary, so I urge hon. Members not to press them.

Amendments 15 to 22 would effectively cancel the lifetime ISA from the Bill. It is evident from my comments so far that I have no intention of accepting the amendments. It is clear that we have a disagreement in principle. The hon. Gentleman’s accusations against the measure bordered on hyperbole. He said that he is prepared to look at any reasonable proposal that helps people to save, but we know from the consultations on the complex subject of saving for the future that this is a product that will help many people save. It is a direct response to the comments made in response to a public consultation about the complexity of savings options.

[Ian Blackford]

rose—

[Jane Ellison]

No, I am going to press on.

[Ian Blackford]

rose—

[Jane Ellison]

No. We have had a good debate, both in Committee and here, and I am going to press on. I have to date taken slightly less time than the hon. Gentleman—

[Ian Blackford]

rose—

[Mr Speaker]

Order. The Minister is clearly not giving way. It is apparent to everybody else in the Chamber and I am sure that it is now apparent to the hon. Gentleman.

[Jane Ellison]

Amendments 15 to 22 seek to cancel half the Bill—I am not going to accept them. I refer the hon. Member for Ross, Skye and Lochaber to the FCA’s consultation; I do not think that it would recognise his comments, and neither do I.

Amendment 1 would change the normal maturity period for Help to Save accounts from 48 to 24 months. In practice, people would be able to save into a Help to Save account for only two years rather than four. We designed the scheme so that people can save into a Help to Save account and get a Government bonus after two years, and then continue to save and receive a further bonus when the account matures after four years. We have done that because we want the target group to be able to save as regularly as other people and they may take longer to save towards that vital rainy day fund. It also provides an incentive for people to continue saving beyond two years, which fits with our objective to encourage people to develop a long-term saving habit. I hope that the amendment will not be pressed.

Finally, amendment 6 would delay commencement until April 2019, when automatic enrolment into workplace pensions will be fully rolled out. We have been very clear that we do not expect lifetime ISAs to drive opt-outs from pension saving. There is, therefore, no reason to delay. In fact, such a delay would disadvantage those who wish to open a lifetime ISA and who have been preparing for a 2017 launch. The hon. Gentleman completely disregarded the fact that self-employed people do not have the option of access to a workplace pension scheme. That came out in evidence to the Bill Committee. There was not a word about the self-employed.

[Ian Blackford]

Will the Minister give way?

[Jane Ellison]

No, I will not.

The proposal would also delay Help to Save for a year, disadvantaging the savers on low incomes who will benefit from the scheme. Like many hon. Members, I am passionate about the Help to Save scheme and want to see it go ahead as planned. I intend to work with all who have been mentioned—the credit unions, many financial inclusion charities, and the Churches—to ensure that we exceed the take-up target for Help to Save. I will be delighted if we vastly exceed the target, and that is my intention.

--- Later in debate ---

[Ian Blackford]

I must say that I think we will repent of this legislation in due course. We cannot get away from all the evidence that was presented to us. The evidence from the Association of British Insurers makes it abundantly clear that anyone who has the opportunity to invest in a workplace pension will be worse off investing in a LISA than investing in their pension. I listened to the Minister talking about those who are self-employed and who do not have the opportunities and advantages of auto-enrolment when what we should have been doing was introducing legislation to deal with that problem.

We have the opportunity to do that when we review auto-enrolment next year. There is no need for this legislation for ordinary people; they will not benefit from the LISA. I put it to the House that this will reward those who have already maxed out their pension schemes by giving them another opportunity that will help them through this Government bonus. It is not so much a LISA as what we would call a “Rupert”—a really useful perk for extremely rich Tories. They are the only people who will benefit from the Bill.

When it comes to what is really important, I am delighted that True Potential has published its evidence today. Let me give two statistics from that. First, 30% of people aged between 25 and 30 would, if given the opportunity, choose a LISA instead of a pension, and 58% of 25 to 34-year-olds would choose the LISA for retirement savings. We know that those with the opportunity to invest in a pension will always be better off. As I said on Second Reading, the Government have wilfully created circumstances in which young people in this country will be mis-sold LISAs. The Government should be utterly ashamed.

Savings (Government Contributions) Bill (Fifth sitting)

Ian Blackford Excerpts

Tuesday 1st November 2016 Public Bill Committees

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

I beg to move amendment 10, in clause 6, page 3, leave out lines 36 to 39 and insert—

‘(2) This Act comes into force on the day after the establishment of an Independent Pensions and Savings Commission.’

This amendment would delay the commencement of the products until an independent pensions and savings commission is established.

The amendment would delay the commencement of the products until an independent pensions and savings commission was established. The Scottish National party has long called for the establishment of an independent pensions and savings commission to look at the crisis in saving for retirement. Following the success of the Turner commission, we should recognise that we need a standing commission to help us steer a long-term, sustainable path for pensions and savings. The Cridland commission is looking at the state retirement and pensionable age, which we welcome, but all such matters should be looked at holistically.

A commission of experts, free from political influence, could focus on all aspects of pensions and savings, with a view to delivering a universal pensions and savings system that enables dignity in retirement. Such a commission is needed to minimise politically motivated changes to pensions and savings, with the aim of eliminating complexity and perverse incentives. We have voiced our legitimate concerns that the Bill risks undermining pension savings and redirecting consumers to products that will not confer the greater level of benefits that pension savings offer. We need to pause and consider what we are seeking to achieve with pensions and other savings products, while making sure that we build confidence in pension savings in particular.

Malcolm McLean of Barnett Waddingham, the pensions consultant, who is a former head of the Pensions Advisory Service, said:

“Much of pension policy seems to be dictated by political expediency rather than the needs of consumers… Political time horizons are too short. Pension policy is controlled by a government whose agenda is short-term, yet pensions are a long-term issue.”

Chris Noon, a partner at the consultancy Hymans Robertson, also commented on the need to free pensions from the political system, saying:

“Political temptation to raid pensions in hard times is too great. We need less meddling and more long-term thinking. We need to get the best brains together to work out how we deal with longer term, intergenerational issues.”

[The Financial Secretary to the Treasury (Jane Ellison)]

Good morning to you, Mr Wilson, and to the rest of the Committee.

As we have just heard, the amendment concerns the date from which the Bill will come into force as an Act. The hon. Gentleman has outlined his reasons for wanting a delay. The amendment would provide that the Act will not come into force until the day after the establishment of the independent pensions and savings commission he has just described.

Over the course of our deliberations in Committee, we have discussed why the schemes in the Bill are really positive steps for savers, so I will not go through those arguments at length again. The fundamental point is that we want both the lifetime individual savings account and Help to Save to become available to people as soon as possible. A delay would not be fair to the people who could have benefited from them. For example, delaying the lifetime ISA for a year would mean that people would miss out on the chance to save up to £4,000 into such an ISA and get a bonus of up to £1,000.

[Ian Blackford]

Will the Minister confirm that anyone who has the opportunity to enrol in an auto-enrolment pension is going to be better off doing that than investing in an ISA? That is one of the issues we are trying to determine with the amendment.

[Jane Ellison]

To some extent, we are returning to a debate we had during last week’s proceedings. The products in the Bill are not designed to be an alternative to pensions. The Government could not have been clearer in expressing our strong support for auto-enrolment and pensions saving more generally. Help to Save is very much a product directed at people for whom there is very little choice available in the savings products that are currently on the market.

[Ian Blackford]

I apologise for coming back to this, but it is critical. My real worry is that there is nothing that will prevent someone from taking out a LISA and perhaps not taking out an automatic enrolment pension, when the latter would be best for their financial interests. My real concern with the LISA and its consequences is that we will end up with savers putting money into products that are, in this case, not fit for purpose.

[Jane Ellison]

That takes us back to territory we have covered. I do not doubt the hon. Gentleman’s sincerity in putting forward his concerns, which he has expressed during debates on other amendments, but as I say, the Government are completely committed to auto-enrolment. We want to have a robust, functioning pension system, but there is also a need for complementary products.

--- Later in debate ---

[Jane Ellison]

Yes, I do. That is exactly right. I remind the Committee of the independent Financial Conduct Authority’s remit in this regard. Its role is to regulate the providers of policies to ensure, as is its ordinary remit, that they are transparent to consumers about the products that they are offering and that those products are sold with suitable safeguards in place. That is in addition to the Government publishing factual information about the lifetime ISA on gov.uk and working with the Money Advice Service and its successor to ensure that appropriate information is available. I reiterate that if we want individuals to be well informed, those are the mechanisms by which an individual, with their individual circumstances, will be informed. I genuinely do not think that a commission is the way to look at advising each individual, because by its very nature, it cannot look at each person’s affairs, life and aspirations and say what is right for them. We need to give people individual advice.

[Ian Blackford]

I am very grateful to the Minister; she is being generous with her time. The whole point about a pensions and savings commission is not to look at each individual and give advice, but to ensure that we bring Government policy together and look holistically at all the issues affecting pensions and savings, deal with the fact that we have had so many gimmicks like these and get something that is right for the long term for those who wish to save for their pensions.

[Jane Ellison]

I do not accept that these are gimmicks. I do not think the hon. Gentleman means what he said about Help to Save. If we can help thousands of families to save money for a rainy day and stave off disaster, to which they are all too susceptible at the moment, that would be a very good thing, and all of us on the Committee could take pride in that.

[Ian Blackford]

To clarify, I am talking about the LISA. I have not made any reference to Help to Save in this regard. I am specifically addressing what I see as the shortcomings of the LISA.

[Jane Ellison]

Indeed, and we have debated that in previous sittings. The thrust of the hon. Gentleman’s argument is that the Government do not consult and are not reviewing things, and that Governments—I suspect he means Governments of all colours—have tinkered with these things. I do not accept the broad point. We have done consultations on Help to Save and the lifetime ISA came out of an extensive consultation on pension tax relief. It is worth noting that there was no clear consensus from that. It is not as if the truth is out there, and if we just have an enormous commission, we will come to one point of view that everyone agrees with. In this area, there is a lot of debate and contention, and therefore we are trying to find a way through that goes with the grain of human nature and common sense. That is why having the lifetime ISA as a complementary product to auto-enrolment or people’s other pension arrangements makes sense.

I will finish the point about Government reviews, because it is worth getting it on the record. We already hold all savings policy under review, particularly through the Budget process. Our commitment to reviewing policy is also evident in the review of the state pension age, which will be informed by the independent report led by John Cridland, and the upcoming review of automatic enrolment in 2017. The Government are not walking away from the important job of scrutinising how things land in reality, but I am not persuaded that the reasons the hon. Member for Ross, Skye and Lochaber advanced for a delay are right in the context of these two products and this Bill.

[Ian Blackford]

Does the Minister accept that the Turner commission was a force for good and for change in pensions and savings in this country? Out of the Turner commission, we effectively got auto-enrolment, about which there was cross-party consensus in the House. That is what we seek to achieve by taking these issues away to a commission. That would create the circumstances in which we could all work together to improve the pensions and savings landscape in this country.

[Jane Ellison]

Let me try to wind this debate up on a note of consensus. Where we can achieve consensus on important long-term reforms—auto-enrolment is a very good example—it is wise to do so, but we are debating apples and pears here. The debate about what is the right way to go in the pensions and savings landscape over the next several decades is separate from, albeit related to, the Bill and the two products that we want to bring in to augment the available landscape of products for individuals in this country.

--- Later in debate ---

[Ian Blackford]

I beg to move, That the clause be read a Second time.

This new clause builds on new clause 2, tabled by the hon. Member for Bootle, and it makes specific reference to advice to be given on automatic enrolment and workplace saving. Many people are in the dark about what they can expect from the state and their employers when they retire. The complexities in the system and in products and the lack of independent advice are not only confusing but may lead to a lack of uptake on saving.

In March 2016, Citizens Advice, which delivers the face-to-face channel of Pension Wise, found that some of the most used pension terms were confusing for customers. It said that people would find it easier to understand their pensions if the industry used simple, standard language to describe its products. It says that some people are also unclear about terms that appear to be more straightforward, which puts them at risk of missing out on the best pension options for them.

--- Later in debate ---

[Jane Ellison]

I totally accept that point. I suspect that some of us on the Committee would put ourselves in that category, casting their mind back over the years. The point is that the regulatory landscape today is very different from what it was; the hon. Member for Luton North made that point in one of our debates last week.

The Government are fully committed to providing advice. The Treasury sponsors the Money Advice Service, which has started to play a greater role in co-ordinating financial education programmes in schools. We have seen a lot more progress on that. We have the 10-year financial capability strategy, led by the Money Advice Service and supported by industry, which aims to improve financial capability across the nation. We see many different bodies going into schools and working with young people. There is always more to do, but I genuinely think that we are looking at a very different landscape from that of some decades ago. While we would never be complacent, that is why we want to take all the measures that I have mentioned to provide advice and information.

We have to find a balance in ensuring that people can access accounts that could greatly benefit them and their family. It is worth reiterating that with Help to Save, people’s money is not locked away. If individuals change their mind or decide the scheme is not for them, they are free to close their account and withdraw their savings, free of charge. I want to end with that reminder. We have designed the product with maximum flexibility in mind for a group of people whose current financial exclusion we should be ashamed of as a nation. We want to do something about that.

[Ian Blackford]

I am disappointed that the Minister has decided to reject the new clause, because it is about ensuring that those applying for the LISA or Help to Save have appropriate advice, which is important to them. We have talked about ensuring that people are aware of the other choices that they have, particularly auto-enrolment. The new clause is about ensuring that we do not end up in a situation where there could be any dubiety about the potential for mis-selling. This is not about the regulator; it is about ensuring that consumers are given all available information at the point of sale. On that basis, I seek to press the new clause to a vote.

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