Northern Ireland Protocol

Jim Shannon Excerpts

Thursday 15th July 2021 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Member for Harwich and North Essex (Sir Bernard Jenkin) on setting the scene and on all right hon. and hon. Members on their incredibly important, vital and very detailed contributions.

Where do I start? How do I condense my thoughts into the short time that has been allotted to me? What fresh words do I use to elaborate on the terrible deal that has been made for Northern Ireland that I have not used on the 21 other times I have raised this issue in the House in the last number of months? What can I say to ensure that the intelligent and respected Members grasp what we as a party have warned about and argued against since the inception of the Northern Ireland protocol?

Because the title of the debate is “Northern Ireland Protocol”, I will give some examples of the issues that have affected my businesses. Small businesses have been unable to order stock from the mainland and unable to source pet supplies, and they are paying additional fees to the companies that will send the goods to Northern Ireland. A local discount shop owner told me that every order has an additional £30 administration cost. That does not sound like much, but, as his profit margin on a £1 good is 15p, he must sell an additional £200 of goods to pay for the Northern Ireland protocol fee.

Ask any importer and they will say that the increase in container costs from China, which range from $2,800 to $14,700, has seen prices increase to cover the difference to ship goods from 55p to 75p. That is difficult for businesses as it is. They try to absorb costs if possible, but Northern Ireland businesses are under additional pressure due to the insidious protocol. While big stores such as Tesco and Asda have used their exemption to continue to supply pet food and treats, smaller high street businesses have lost another income stream.

Does that feel like the best of both worlds? It does not to Cotters in Newtownards and so many other decent businessmen that have survived covid, only to fall victim possibly to the outworkings of what was proposed to be a paper exercise only. That is what we were told. Seven months in, businesses are in a worse position, not a better one. So, too, is the constituent who went to order a knee support on Amazon Prime day, only to be told that, as they live outside the recognised zone, the supplier would not send it to them. My hon. Friend the Member for North Antrim (Ian Paisley) gave an example of that earlier. My constituent must therefore purchase knee supports that cost an extra £9 due to their postcode. It does not feel like a better position for them, does it?

We think next of those who want to enjoy a staycation on the beautiful shores of Strangford, or of course anywhere in Northern Ireland. This guy is from across the water. He would come to my constituency regularly with his dog. His words sum up perfectly what the Northern Ireland protocol has done. He says:

“I write to you as a UK citizen who enjoys holidaying in Northern Ireland with my pet dog. This year, despite moves by the Northern Ireland Minister Edwin Poots to withhold checks at ferry ports until October, it would seem that I still must be in possession of certificates for rabies and tapeworm, which haven’t been recorded in the United Kingdom since 1922 at a total cost in excess of £200. Therefore I am not prepared to obtain these and I am unable to get a definitive answer to my question, namely, ‘Can I travel with my dog without the said certificates?’…This really will do much harm to Northern Ireland tourism.”

It does not feel better to him. Nor, indeed, does it feel better to my local economy, where he would have come on holiday. It would have benefited from his bed nights and spend in local shops and restaurants.

It does not feel better to the Unionist who has felt the abandonment—I say that respectfully—of the Government like at no other time in living memory. It is a harder pill to swallow when we have a Government who proudly state their belief in this United Kingdom. That is not a reflection on those who have spoken, because they are committed to the Union. Unfortunately, it has to start at a higher level.

I have not got time to give all the examples, but there are many others from businesses in clothes, food, farm machinery, cars, steel and engineering as well as nurseries and farmers. There are even individuals who used to order products but now cannot, or find the cost to be prohibitive. It is a difficult position for people when their own Government are a party to severing ties that affect not simply their business and income but their constitutional position. That causes those loyal to the Queen and Crown to ask why they cling to that when their loyalty is not reciprocated. The sacrifice of Ulster to the slavish demands of Europe engaged in petty warfare is clearly an acceptable sacrifice to make.

This is absolutely not the best of both worlds—unless that world is the eradication of the Union. For those who cherish the Union and honour the blood shed to stand against terrorism, and for the democratic right of the people of Ulster to determine their nationality, this is not the best of any world whatsoever. I have deliberately not referenced bangers from Bangor, although I could, because people in my constituency work for the company in Bangor that produces sausages. They are also on the frontline. I stand by the phrase “we are better off out”, but the preface of this is that we are better out together, and that is what I want to see—we are a package deal.

I am asking Government once more to put into action their phrase, “stronger together” and, for that to happen, to trigger article 16. Save the day in this Chamber and they will have the support of the Unionist community. Stop the European nonsense, allow Northern Ireland her rightful standing as an integral part of the United Kingdom of Great Britain and Northern Ireland once more, and give us the same rights in Northern Ireland as the rest of the United Kingdom—parity and equal rights for all.

--- Later in debate ---

[Mr Harper]

My right hon. Friend puts it very well. There are serious risks here, which is why we need to address the perfectly reasonable concerns that many people have in Northern Ireland.

It would be helpful if the Minister could indicate when the Government will set out their thinking—obviously, there is not long to go before the recess—and whether that will be announced in such a way as to give us the chance to question Ministers. The right hon. Member for Lagan Valley (Sir Jeffrey M. Donaldson), who leads the Democratic Unionist party, set out its checklist for how it is going to test any proposals that the Governments bring forward. It would be helpful to know—I do not expect the Minister and the United Kingdom Government to completely agree with the right hon. Gentleman—

[Jim Shannon]

Why not?

[Mr Harper]

Well, they may. My request was going to be for the Minister to set out which of the tests that the right hon. Member for Lagan Valley set out the Government agree with and which they perhaps do not. Listening to his objectives, I do not think that that list can have come as an enormous surprise, so it would be helpful to get a bit of a steer about the extent to which there is some commonality.

My final point is that, very clearly, as several of my hon. and right hon. Friends have said, there was envisaged in the protocol and the political declaration the idea that the protocol was not a permanent solution but a temporary solution. Certainly, both sides—the British Government and the EU—said that they would take seriously alternative arrangements that could be put in place to enable businesses in Northern Ireland to have unfettered access to the Great Britain market, but just as importantly, to enable businesses in Great Britain to trade freely with Northern Ireland, for the benefit of both Northern Ireland businesses and consumers in Northern Ireland.

Even if one accepts—and I am not sure that I do—that those arrangements could not have been put in place several years ago when we left the European Union, saying that they can never be put in place and that, as technology and business procedures develop, we cannot develop our arrangements, seems unreasonable. Both the EU and the British Government should, working together, be able to take those forward. I look forward very much to listening, in the not-too-distant future, to the Minister’s response to what has been an excellent debate on both sides of the House.

Financial Conduct Authority and Blackmore Bond plc

Jim Shannon Excerpts

Wednesday 30th June 2021 Commons Chamber

[Peter Grant]

For the second time in a few days, the hon. Gentleman has managed to read my notes a couple of paragraphs ahead of me. I am going to come on to that.

My concerns cover not just the Financial Conduct Authority but other regulators, such as Companies House, the Insolvency Service, the Financial Reporting Council and the professional bodies that regulate the audit of limited companies. Of those, only the FCA falls directly under the remit of the Treasury, so that is what I will focus on tonight, but I will continue to apply for debates so that the part played by other regulators can be examined.

[Jim Shannon (Strangford) (DUP)]

Will the hon. Gentleman give way?

[Peter Grant]

I think the sky would fall down if I did not give way to the hon. Gentleman.

[Jim Shannon]

I am sure the sky will not fall down, but I appreciate the hon. Gentleman’s giving way.

Does the hon. Gentleman agree that financial devastations such as the Blackmore Bond scandal have the potential to be avoided if there is proper scrutiny by regulatory authorities, which the hon. Member for Thirsk and Malton (Kevin Hollinrake) referred to? Does he also acknowledge that, often, that work starts with us in this House making legislative change?

[Peter Grant]

The hon. Gentleman is absolutely correct. Ultimately, the regulator is us. If we highlight deficiencies in the system, we must try to get them put right. That is partly why I was so keen to secure this debate.

As the hon. Member for Thirsk and Malton (Kevin Hollinrake) mentioned, in March 2017, the Financial Conduct Authority received information from a very reliable, experienced financial services professional that a company called Amyma Ltd was using high-pressure sales techniques to target individuals to persuade them to invest in Blackmore Bond. The source, a Mr Paul Carlier, described in detail what he had seen and heard, and explained exactly why he was convinced that it was illegal. He made a point of sending his concerns directly to the then chief executive of the Financial Conduct Authority, among others. As a mark of gratitude, the FCA wrote back and said that it was aware of the situation and it was being passed on to the appropriate department.

It was the end of 2019 before there was any obvious sign that the FCA had done anything. To be fair to it, when it acted, it did not hold back. It banned outright the sale of mini-bonds to the kinds of investors whom Blackmore Bond had been deliberately targeting. If the FCA had done that earlier, it could have prevented up to £26 million of the losses eventually suffered by Blackmore’s victims.

The FCA has said that the sale of these kinds of investments was an unregulated activity, that Blackmore Bond plc was not registered or approved by the FCA for any regulated activity, and therefore that the whole thing was beyond its scope. That is just not good enough. What the FCA is effectively saying is that it had the legal power to ban the sale of these mini-bonds absolutely but could do nothing to stop one rogue company selling them to one particularly targeted group of vulnerable investors. I simply do not buy that.

While the sale of these high-risk bonds to investors who wanted low-risk investments was allowed to carry on in an unregulated free-for-all, the promotion of those same bonds is a regulated activity. The FCA’s website says that all adverts and promotions for financial services or products

“must be fair, clear and not misleading”.

Blackmore Bond’s promotional materials failed all those tests—something I will return to soon. Again, it took the FCA far too long to do anything, and when it did something, it did not do enough.

The FCA will claim that at some point during 2019, it was able to get Amyma’s website taken down. It seemed less keen to be reminded that in August 2019 Paul Carlier had to tell the FCA that the website was back up again. It may be just coincidental that a few weeks after Blackmore Bond went into administration, the director and sole shareholder of Amyma placed that company into voluntary liquidation, having first reduced the company’s assets from £316,000 to nil in the space of 18 months, meaning that the creditors of Amyma, including Her Majesty’s Revenue and Customs, would not see a penny of the £188,000 they were owed. It appears that Blackmore Bond really can pick its professional and business advisers very carefully.

Coming back to the promotional materials, though, under section 21 of the Financial Services and Markets Act 2000, any financial promotion must either be issued by an FCA-authorised company or have its contents approved by such a company. There are exemptions, but I have no indication whatever that any of those exemptions comes close to applying to Blackmore Bond. So if Blackmore Bond issued financial promotions that had not been approved by an FCA-registered firm, that was an offence under the Financial Services and Markets Act and the FCA should have been dealing with it.

The company issued its mini-bonds in six ways. For each one it issued an “information memorandum”, which appears, as far as I can tell, to have been approved by an FCA-registered firm. But that was not the only marketing it did. My constituent, who has probably lost £40,000, provided me with a copy of a separate document that he received. It is dated 3 October 2016—the same date as the information memorandum for the first series of mini-bonds. The FCA has confirmed to me that it meets its definition of a financial promotion. It was therefore an offence that it was circulated without being approved by an authorised firm, and there is nothing in this document to suggest that it was ever approved by an authorised firm. The FCA is not convinced about that. Its view is that it “cannot categorically say” whether the document was or was not lawful when it was circulated. But if that is the case, surely, knowing what it knows now about the operation of Blackmore Bond, if it “cannot categorically say” that it was not a criminal offence to send it out to potential investors, it should be investigating it.

Then we come on to the requirement for this and any other financial promotion to be fair, clear and not misleading. I am aware of the time, so I can only give a few examples of statements in the document that are either blatantly false or extremely misleading. On page 5 it tells bondholders that their money will be backed by “100% asset-backed security”. Not true; it was never the intention that the bondholders would even be guaranteed first call on all the assets, never mind that there was never a time, after the first series of bonds was issued, when Blackmore Bond plc ever held enough assets to repay the value of the bonds it had sold.

On page 4 it says:

“Blackmore Bond is part of The Blackmore Group”—

that bit is correct—

“a multi-channel investment group with a proven track record.”

The Blackmore Group was only incorporated in February 2016; it cannot possibly have had a proven track record by October 2016. It certainly could not have realised the £22 million in profits and property development that is claimed in the same document.

On page 4 we are told that

“The Blackmore Group”

has

“assets under management of £25 million”.

So how come The Blackmore Group’s accounts for 2016, signed by the directors, tell us that the total value of their assets was £390,000, and that after allowing for creditors and other liabilities, the total value of the Blackmore Group at 2016 was £2,281? How can that have created assets under management of £25 million?

Finally, on page 18, the directors promised:

“There are no fees or charges”—

completely untrue. Page 24 of the information memorandum devotes over half a page to explaining why the company will have to pay fees. They say that they will pay fees essentially for the marketing of bonds and for investor relations, and that those fees will not exceed 20% of total bond value. They then entered into an agreement with Surge Financial Services Ltd—a company well known to those who have an interest in financial misdealings—that they would pay it exactly 20% of the total bond value.

What the directors forgot to mention in any promotional literature was that they were also going to pay themselves a management fee. During 2017, the directors of Blackmore Bond plc chose to pay £1.4 million of management fees to the Blackmore Group Ltd, of which they again were the sole shareholders, the sole directors and the sole beneficiaries. Why did they choose to conceal that information from this document, and from the information memorandum that was sent out to persuade people to buy their bonds? Effectively, the directors were making sure that their cut was cleaned out of Blackmore Bond plc’s accounts as soon as—sometimes before—it hit the bank account, so that whatever happened to that company, their money would be saved and the poor investors would be left with nothing.

Blackmore Group does not of course have to publish a profit and loss account, and even the very sketchy financial statements it does publish are not audited, so it is anyone’s guess what Mr McCreesh and Mr Nunn did with that £1.4 million, and that, as I say, was only up to December 2017.

During my investigations into this affair, I received a copy of a chain of emails between one bondholder and Patrick McCreesh, who, as I say, with Phillip Nunn, owns and runs the entire operation. The bondholder is not a constituent of mine. He was happy for me to quote at length from his emails. He is happy for me to give his full name, but I have chosen not to identify him entirely, but his name is John—and it genuinely is John.

John’s investment was with another Blackmore company, Blackmore Estates Ltd. The bond was due to be repaid in January 2020, but by March 2019 John had got worried, because he had not heard anything from Blackmore Estates for a while, and he wanted to know what had happened to his money. Patrick McCreesh advised him that Blackmore Estates was now part of Blackmore Bond plc, and set out to persuade him not to claim back the investment he was legally entitled to in January 2020, but to reinvest it in Blackmore Bond plc.

There were numerous email exchanges, but by 16 August John was really getting worried because his online account with Blackmore did not seem to show anything. There was no indication whether he had any money left at all. He then wrote:

“Patrick, I have entrusted you with my military retirement fund, my only savings. Unlike others I cannot afford to live without this money. You have had my investment since 2015 and I am yet to receive a single penny back. If things are going downhill why would you call me personally and persuade me to re-invest only a few months ago?”

That referred to a telephone conversation they had in about April 2019.

Three times further to that between August 2019 and January 2020 John reminded Patrick McCreesh in the most poignant terms that this was all he had. It was a pension he had got by serving with distinction in Her Majesty’s forces. Patrick McCreesh knew that John could not afford to lose the money, yet he deliberately set out to entice him to leave the money with McCreesh, and not to take back the money he was entitled to, but to put it into a company that by the summer of 2019 Patrick McCreesh and Phillip Nunn knew had no future. They had not published audited accounts for some time, but they had prepared draft accounts that showed that, in the first two years of its existence, one third of the bondholders’ entire money had disappeared. By July 2019, Nunn and McCreesh knew the business was dying. McCreesh still went out and deliberately targeted this poor gentleman to fleece him of what McCreesh knew was all he had.

As I say, I have pages and pages from the email exchanges between John and Patrick McCreesh in relation to, as I said earlier, whether the conduct was criminal, civilly unlawful or simply despicable. I am happy to share the remnants of my speech with anyone who wants to look at it. It makes it perfectly clear of the behaviour certainly of one of those two directors that to describe it as despicable would be excessively charitable to Mr McCreesh, and I have no indication that Mr Nunn would have been any better.

John will not ever get his military pension back, and there are 3,000 other Johns out there. They were all taken in by two individuals with a track record of dodgy financial dealing, but who are still free to go and set themselves up as directors of a different company and start all over again. That will not be by selling or mis-selling mini-bonds to people like John, because that is now illegal, but they will find another way. Until the Financial Conduct Authority and other regulators scare them out of the way, there will be another generation of Johns, and in 50 years from now or 100 years from now, our successors will be in the successor to this Parliament bemoaning the fact that billions of pounds have been taken out of the pockets of hard-working people and used to fund a luxury lifestyle for charlatans, crooks and conmen.

The Financial Conduct Authority was not the most culpable party in this. Nunn and McCreesh were, and they have to be called to account somehow. The Financial Conduct Authority was not the only regulator that failed because it did not have the powers, failed because it did not use the powers or possibly failed because it did not have the resources to deal with the amount of financial misdealing that is going on just now. But one way or another, for the sake of the next generation of Johns, the Financial Conduct Authority and the other regulators have to get their act together, and they have to do it quickly.

UK’s Financial Services Industry

Jim Shannon Excerpts

Monday 21st June 2021 Commons Chamber

[Bim Afolami (Hitchin and Harpenden) (Con)]

It is a pleasure to speak with you in the Chair, Madam Deputy Speaker, as always.

I am delighted to speak about the UK’s greatest success story and one of our most vibrant and innovative sectors, financial services. I am proud to champion it in Parliament through my role as chair of the all-party parliamentary group on financial markets and services. I speak as a former corporate lawyer at Freshfields Bruckhaus Deringer, and Simpson Thacher & Bartlett. I have also worked in strategy and restructuring at HSBC, so I have experience in the sector. I would like to use this debate to set out my vision for the future path of our financial services sector at a very critical time, to ensure that it delivers benefits to constituents and businesses across our great country.

As the Minister I know appreciates, it is difficult to overstate the importance of financial services to the UK economy. It accounts for almost 7% of the UK’s total economic output. The sector employs over 1 million people, two thirds of whom work outside of London, contrary to what many believe, providing benefits that extend well beyond the historic walls of the City square mile, to bustling financial hubs such as Edinburgh, Belfast, Cardiff and Leeds. Financial services are also a major contributor to the Exchequer, accounting for more than £1 in every £20 of total UK tax receipts, which go to support our public finances and important services such as the NHS. At the same time as having that domestic focus, the UK leads the world as an internationally competitive financial centre. Financial services are an advert for global Britain, attracting international investment.

[Jim Shannon (Strangford) (DUP)]

Does the hon. Member agree that the potential of Brexit to allow for the regulation of our financial services has not yet been realised and that there is more to do in legislating appropriately to ensure a balance, so that growth and the regulation of practice and outcome go hand in hand? We can do better; the potential is there.

[Bim Afolami]

I thank the hon. Gentleman for his intervention. Indeed, he is right, and I will comment later on ways in which we can use our new freedoms to improve the output of the financial services sector.

Some say that we should not speak too much about financial services, lest it upset certain people in the country or is alienating in some way. I suppose that is a hangover from the financial crisis, but I completely reject that view. We are at a new moment now. We have a fantastic financial services industry; it is world leading, and we need to be proud of it. Indeed, in the face of the unprecedented economic uncertainty created by the pandemic, our financial services industry stood up to the challenge. The financial system remained resilient and responded to customers’ needs, demonstrating the central role that it plays in facilitating and protecting our economy.

When corporates were strapped for cash, there was no liquidity failure in the banking system. Instead, bank lending surged. Working in partnership with the Government, the Treasury and the Bank of England, the sector was able to provide a comprehensive package of support, which included facilitating over £75 billion in emergency finance to 1.6 million businesses. I am pleased to announce to the House that more than £100 million of that support went to my constituency of Hitchin and Harpenden to support more than 2,400 fantastic local businesses through covid and the lockdown. That was on top of an array of forbearance measures for personal customers, including 2.75 million mortgage payment deferrals, 1.8 million credit card and loan payment holidays, and 27 million interest-free overdrafts to customers. In short, our financial system did its job. When there was a crisis, it provided a safety net for the constituents and businesses of Members on both sides of the House.

However, now we need to look forward and build back better from coronavirus. Our financial services industry is at a crossroads. Brexit and the return of rule-making powers to the UK for the first time in decades has created a unique chance, as the hon. Member for Strangford (Jim Shannon) remarked, to refit our financial services sector in a way that is better suited to our domestic needs and even more internationally competitive. Parliament, Government, regulators and the industry now have the opportunity to ask fresh questions about what the future of financial services in the UK should look like and how we should fine-tune the rules that govern the sector to provide the right conditions for it to thrive.

At the same time, the UK faces huge international competition. Across the Atlantic, New York is cementing itself as a leading international financial centre. In Asia, financial hubs are catching up with us fast, whether it be Hong Kong, Singapore or other cities. The ambitions of our European friends and neighbours to create onshore financial centres within the European Union bloc at the expense of London—let us not kid ourselves about that—is becoming increasingly apparent. If we are to continue to reap the benefits from this world-leading sector based here in the UK, it is crucial that we get our regulatory changes right in the next period, ensuring that the UK remains an attractive location for both domestic and international firms in the years to come.

Let me now turn to the steps on how we can achieve this. I am glad to say that the Government are wasting no time in realising their ambition to strengthen the UK’s position as a global financial hub. The Prime Minister met financial services leaders on this precise issue only a few weeks ago. Central to the Government’s ambition is the landmark Financial Services Act 2021, on which I spoke in this House and served in the Committee, as the Minister will remember. I once again commend him and his team for their hard work in achieving this vital piece of legislation, which already puts down much of the groundwork on which we can build. Alongside that, I commend the findings from the Government-commissioned reviews from Lord Hill and Ron Kalifa on, respectively, listings and FinTech. I appreciate the work the Government are doing to implement their recommendations without hesitation. I have been checking on this. When one engages with what the Government are actually doing, it is clear that they are more than exceeding expectations in really looking at these reviews to see what can be done as quickly as possible.

In the longer term, the Treasury is undertaking a wide-ranging review of the future regulatory framework for financial services. It is important to be clear that this is not—I repeat, not—a regulatory race to the bottom, as many would suggest. The Chancellor rightly stated, when setting out his vision for the sector in this House, that the UK will maintain the highest, most effective global standards as we look to shape the future of the industry. Indeed, there is no future of the industry with poor-quality, bargain-basement regulation; the future of the industry is high-quality, high global standards. However, we should take the opportunity to fine-tune this regulation, where it benefits the UK, to make it simpler and more responsive to the industry. The future framework should also be more proportionate, particularly to mid-tier providers—I have them in my own constituency in certain areas—that are currently saddled with disproportionate regulatory costs compared with many larger financial institutions that have armies of lawyers and accountants and various other people to help to deal with that regulation. Frankly, Brexit makes sense if we can take the opportunities available to us to do things better and more flexibly in areas where we have a real advantage. Financial services is one of the key areas in which we can do this.

As our powers are returned from the European Union, we must strengthen the political accountability to which regulators will be subject given their enhanced responsibilities. We have given them enormous power to make rules that have a huge impact on the livelihoods of literally millions of people. That power needs to be properly scrutinised and checked by Parliament and indeed this House. However, this House is not currently best equipped to carry out this role in terms of our structures. Scrutiny of the sector currently lies with the Treasury Committee, but its remit is incredibly broad in dealing with everything that the Treasury deals with. Therefore, having sustained and detailed oversight of technical regulations and aspects of financial services is going to be difficult. I encourage the Minister to consider the conclusions of the recent report by the all-party parliamentary group on financial markets and services. Ah, there it is—he has it in his hand; he has read it, which is good. It calls for a new specialist Joint Committee of both Houses to be established with a specific remit for overseeing not the Treasury, which already has the Treasury Committee, but our regulators and the financial services sector in particular. That would ensure that Parliament could take a central role in helping guide and scrutinise regulators while balancing the needs of the sector with the wider public policy aims that we all know.

Looking abroad, we need to promote international trade in financial services. As we review our framework, we need to understand that the Government’s work on trade agreements is vital but, frankly, whether it be within this House, outside this House or in the press or the media, too rarely do people think of trade as including services. I urge the Government to ensure that we apply the same level of focus in our trade agreements on services as we do on any goods. The Government must prioritise financial services in their trade deals and their emerging trade agenda more broadly and be explicit about their key importance to our country. In economic terms, the opportunities for financial services with our international trade are huge.

Promoting international trade is also about ensuring that we attract the best international talent to the UK. The new global talent visa and the new Office for Talent will be very important steps in helping achieve that ambition. I commend the Government on bringing them into force. It is also worth saying that, on the international agenda, our emerging partnership with Switzerland is very promising. I ask the Minister for his reflections on how that partnership could help really strengthen our financial services sector and, indeed, our industry.

One key area in which the UK risks falling behind its international competition is getting the right levels of taxation for the banking sector. At present, the UK’s banking industry is burdened with a number of sector-specific taxes such as the bank levy and irrevocable VAT that are not dependent on profits and represent a fixed cost to firms each year. Indeed, almost half of total tax receipts are made up of such sector-specific payments, taking the UK’s taxation rate for banks well above financial centres such as New York and Frankfurt. I therefore agree with the Government’s view that the planned increase in the main corporation tax rate to 25% would make the UK’s bank taxation system uncompetitive. To help address that, I support the Chancellor in his Budget announcement of a review to the bank surcharge, which is an additional 8% charge that banks pay on their profits that dates from the aftermath of the financial crisis. It is my view that the time has come to get rid of that surcharge. This is not about giving tax cuts to bankers: it is about the UK remaining a competitive place for firms to do business so that the public can continue to benefit from the success of the sector in this country.

I have already mentioned Ron Kalifa’s FinTech review. Without repeating all its requirements or recommendations, I bring the Minister’s attention to four key things about how we navigate the new world in which we find ourselves, the world of FinTech and how the Government should address them. First, in relation to policy and regulation, we need dynamic leadership that protects consumers yet nurtures FinTech activity and encourages competition. Secondly, on skills, we need to ensure that FinTech has a sufficient supply of domestic and international talent and the means to train and upskill our current and future workforce. My personal view is that we need to retrain and upskill adults in support of UK FinTech by ensuring access to short courses from high-quality providers at low cost. We should support the establishment of new coding schools all over the country, with two-year courses and admission on aptitude, raw ability and potential only. Such a measure could be a real benefit. Indeed, we need investment in FinTech. We need to help complete the funding ladder from start-ups right the way through to the initial public offering. Indeed, we also need national connectivity. We should not just accept where FinTechs are in the UK, whether it be in London or anywhere else. We need to strengthen their connections across all four nations.

For domestic customers, saving and investing should be simplified. At a time when the complexities and choices facing consumers are ever more complex, we need to make it all much easier for people. It is currently vastly easier to spend online today than it is to save and invest for tomorrow. We need to help harness technology to drive investment.

Turning this picture round will require thinking about financial services regulation, and it is good to see a number of regulatory barriers to financial services customer journeys under scrutiny. The Financial Conduct Authority’s support for an open finance agenda is a key example of that, and more opportunities will become available to UK policy makers as we build our regulatory framework. In turn, that will enable us to bring the UK’s regulatory agenda closer to the saving and investment needs of UK citizens. For that to work, trust will be key. Existing brands such as Fidelity are already working hard in that space.

I have considered a number of topics in this speech, but I will draw my remarks to a close. To echo the Chancellor’s words, financial services are a jewel in the crown of the UK economy. The sector is one of the engines of Britain’s economic prosperity, and it should be put front and centre of any future trade deals, and in our regulatory changes. My specific questions to the Minister are these. First, will he update the House on the Treasury’s plans for the 8% surcharge and whether it can be scrapped? Secondly, will he provide an update on implementing the recommendations from the Hill and Kalifa reviews? Thirdly, what is the Government’s emerging view on how Parliament should scrutinise the regulators that implement so many financial services rules? Finally, what opportunities does the Minister see with our trade agenda, and in particular our deepening relationship with Switzerland?

As we look to build back better from the pandemic and level up every corner of the UK, we have a once-in-a-generation opportunity to restructure the way our financial services sector works. We must take that opportunity and help to set Britain’s financial services sector up for a new global future.

Levelling-up Agenda

Jim Shannon Excerpts

Tuesday 15th June 2021 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to speak in this debate, Sir Edward, and to follow the hon. Member for North East Derbyshire (Lee Rowley).

I am wholeheartedly behind the Prime Minister in his calls for us to level up, and indeed the action behind those calls in the form of funding. I was grateful to hear that each region will receive a share of the funding to strengthen and enhance areas of excellence. In Northern Ireland, it not just a matter of what we could spend the money on; we have so many areas that are on the cusp of the next level. As the hon. Member for North East Derbyshire alluded to, it is not just about the money; it is about how the money can help us build on what we have. That is what I will speak about.

We are widely considered to be Europe’s cyber-security capital. We could easily take that to a global level if we invested more fully in our infrastructure and connectivity, and increased the number of tech placements and learning courses. We have the skills and a pool of available people, so we want to build on that. With more levelling up, we could take it to the next stage.

The film industry has taken off with the success of “Game of Thrones” and “Line of Duty”, which featured Strangford lough in my constituency. It was always a challenge for me to find which part of Strangford lough it was on, but it was good to be able to put the two together. Anything from TV series to major film releases, based in any period of history or in the modern day, can be produced in Northern Ireland. Where better to find built-up cities, beautiful countryside and ocean views—we have it all. I say that unashamedly, and investment will certainly bring about dividends as we attract more global companies to our shores.

The agrifood sector is doing well and creating jobs, and the investment has been great. We have the highest standard of products. I look to Lakeland Dairies, Mash Direct and Rich Sauces, to name but a few global entities that are well-grounded and employing local people in large numbers to supply to China and America, as well as Europe. We have the product; we need the marketing and the support to see what level we can get to. Again, it is about levelling up what we have.

We have not even scratched the surface in exploring the tourism potential we have, from spa breaks to second holidays, from walking groups to cruise ship stop-offs, from water sports to mountain hikes, from high-end boutiques to antique treasure troves. We have much to offer. With a bit of levelling up, our borders will not be able to contain the volume of visitors flocking to our shores. With levelling up, we can build on what we have. We need to level up our connectivity and disengage from Tourism Ireland. We need an entity concerned only with promoting what we have to offer in Northern Ireland. I challenge anyone who has come to Northern Ireland to say that it was not more than they expected.

We must also give local councils the ability to get funding to host more global events, such as the golf opens and other sporting events. Northern Ireland is also awash with culture—we have such a tale to tell and we need to attract investment to match that. Again, we must level up.

In the short time allocated me, I have indicated three diverse areas in which we are ripe to level up, and yet the funding allocated cannot carry out all the work. The infrastructure work required is immense and our connectivity requirements are huge, but so too will be the reward. I therefore ask the Minister, whom I greatly respect, and the Government to deliver our share of the funding. If they do so, everyone in Northern Ireland will benefit, operating at the top level at which we are designed to operate. We are already levelling up; we need that extra bit to level up and do even more.

National Insurance Contributions Bill

Jim Shannon Excerpts

2nd reading
Monday 14th June 2021 Commons Chamber

[Fay Jones (Brecon and Radnorshire) (Con)]

I am not used to being called so early in the batting order, Madam Deputy Speaker. I am very grateful.

I made my maiden speech on a small but mighty Bill, and this is another. I very much welcome the contents of the Bill. These small but meaningful changes will make a real difference to many of my constituents.

There are two elements of the Bill on which I would like to focus. The first is what it would do for freeports. I was elected in 2019 on a manifesto that promised to create up to 10 freeports around the UK. They are a cornerstone of the Government’s levelling-up agenda, which recognises that talent is spread evenly across the country but opportunity is not. As someone who represents an often-forgotten part of the world, I am determined to see that agenda through.

We know that a freeport is an area within a country’s geographic border but outside its customs area, but there is no one model for freeports. That is their strength: they can be implemented in a number of ways.

[Jim Shannon (Strangford) (DUP)]

Does the hon. Lady share my interest in and my demand for having a freeport in Northern Ireland too? I understand that this legislation does not necessarily help that happen, but does she support us in our calls to have a freeport in Northern Ireland?

[Fay Jones]

As a Member of the Northern Ireland Affairs Committee, I certainly welcome that suggestion. I was greatly reassured by the Minister’s reference to that in his opening speech, and I hope that further details will come forward as soon as possible.

Freeports can be implemented in a number of ways. For example, manufacturing businesses operating in a freeport can benefit from tariff inversion, whereby tariffs from a finished products are lower than those on its component parts. Further tax and non-tax incentives, such as lower rates for corporation or even employment tax, which we are discussing this afternoon, as well as simplified customs processes can also be offered.

Although a freeport is a fairly new buzzword in our political discourse, it is important to remember that this is not a new idea. The UK used to operate a number of freeports. In fact, prior to the creation of the Welsh Assembly, now the Senedd, a freeport even operated in Cardiff.

Back in 2016, the then up-and-coming Member for Richmond (Yorks) (Rishi Sunak), now my right hon. Friend the Chancellor of the Exchequer, argued that freeports could turbocharge the UK’s post-Brexit economy. Free of the customs union and state aid rules, he argued that tens of thousands of jobs could be created with a successful freeports programme. He was right then, and he is right now.

In 2018, my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) highlighted in a Westminster Hall debate just how positive a freeport in the UK could be. He cited the example of the Jebel Ali Free Zone in the United Arab Emirates and explained how it has transformed Dubai. It now hosts 7,000 global companies, employs 145,000 people and accounts for around 40% of the UAE’s total direct foreign investment. That is a dramatic example, but there is no reason to believe that freeports in the UK cannot be just as successful as those around the world, perhaps even more so given our strong links with the United States, Europe and the Commonwealth.

I warmly welcome clause 1 of the Bill, which introduces a new zero-rate national insurance contribution for employers taking on employees in a freeport. The Government have already outlined the 10 areas of the UK where freeports will be created. Eight sites in England have been successful, and the Government have committed to creating one in Wales. I understand that the First Minister of Wales has expressed reservations and an unwillingness to work with the UK Government on a Welsh freeport, so may I urge the Minister, my close neighbour and friend across the border, who knows Wales extremely well, to press full steam ahead and work with his colleague the Secretary of State for Wales in setting up a Welsh freeport.

A rising tide lifts all boats—to continue with the maritime theme—and a freeport in Wales will create jobs and growth in all parts of Wales. That is especially important for me in mid-Wales, because, throughout the recent Senedd election, constituents told me that all they want is for their kids to have a future in Brecon and Radnorshire. They want them not to leave at 18 to go to university, only to come back 30 years later when they can afford to buy a home. They want them to have good jobs when they leave education. This is not part of the Welsh Government’s current plan for Mid Wales. We are forgotten about, but I am determined that that will not be the case. My constituents are determined that we will not be ignored and will not stand still.

The other clause that I want to focus on is clause 6, which makes a small but important change for our military community—employers who hire an armed forces veteran immediately after they leave the forces will be able to claim a new zero-rate national insurance contribution. Employers will be able to claim the relief from April ‘22, and transitional arrangements will allow a retrospective claim for the 2021-22 tax year. This is extremely close to my heart, and I declare an interest in that my partner is a serving member of the armed forces.

Brecon is a proud garrison town and, like the Minister, we have a number of military sites and personnel of whom we are very proud. The barracks and the infantry battle school, Sennybridge training area, are important military assets and I am fiercely proud of them. Although my campaign to save Brecon barracks from closure is a persistent thorn in the side of the Ministry of Defence, our support for veterans must go beyond maintaining high-quality sites and shiny silverware in the mess. We must look at a suite of policy instruments and make swift but sweeping changes to improve things for veterans once they leave active service.

The changes outlined in the Bill could save an employer, who employs a veteran, up to £5,500. This makes a veteran even more attractive to an employer, and the Minister should be commended for pursuing this, especially as we remember that our veterans are getting younger. The House of Commons Library estimates that the percentage of veterans of working age is projected to increase from 37% at the moment to 44% in 2028.

I am particularly pleased that the Bill covers veterans right across the United Kingdom equally. All four nations need to be comprehensive in the way that we look after our veterans. Wales is currently the only part of the United Kingdom not to have a dedicated veterans commissioner—someone on the side of veterans who can challenge local authorities and health boards to ensure that veterans can access the services that they need. Earlier this year, I called on the UK Government to address this imbalance and create a veterans commissioner for Wales, and I am extremely grateful to both the Secretary of State for Wales and the former Minister for veterans’ affairs, my hon. Friend the Member for Plymouth, Moor View (Johnny Mercer), for the work that led to the announcement on St David’s Day that they were actively considering creating such a post, but this needs to be done in co-operation with the Welsh Government, so that the postholder has oversight to challenge Welsh health and education services. May I take this opportunity to urge both sides to come together and create this role so that Welsh veterans can benefit from the protection that their colleagues have in England?

I am grateful for the opportunity to speak on this small, but important Bill and wish it swift passage through the House.

--- Later in debate ---

[Jim Shannon (Strangford) (DUP)]

Thank you, Madam Deputy Speaker. When you are in the Chair, I always seem to get called earlier. I am not sure why that is, but thank you very much.

It is a pleasure to speak in this debate. I add my support for the Government proposals. A lot of hours have gone into them, so I will make some comments about them.

Broadly, the national insurance contributions that are raised in a year look after the benefits that are used in that year. They are therefore very important. We deal with an enormous number of people every day in our offices who have benefits issues, and we know that our contributions and everybody’s contributions make a difference. I have stated numerous times in this House over recent months that now is the time to ensure that the investments we have made through the furlough scheme and the coronavirus grants system to secure business pays off by having businesses repay their debt through tax and national insurance over many years of success.

The end must be clear: sustainable and expanding small and medium businesses. In my constituency and, I believe, in many other constituencies, small and medium businesses contribute to everyday life through employment and by creating the prosperity we wish to see. I want to see them encouraged on every possible occasion.

The Bill is one cog in that mechanism of growth, regrowth and enhanced growth. I welcome that the Government are completely committed to that. My attention was immediately drawn to a few components of the Bill. Of course, time prevents me from delving into them all, but I first highlight the proposed new zero rate of secondary class 1 national insurance contributions for employers who hire an armed forces veteran during their first year of civilian employment after leaving the armed forces. Employers will be able to claim relief on the earnings of an eligible employee up to the NICs upper secondary threshold from April 2022, and transitional arrangements will allow retrospective claims for the 2021-22 tax year. Like everyone, I really welcome that. I am pleased as punch to see it in the Bill. There is a clear commitment to our veterans, and here is one way of showing it.

I say gently to the Minister that many veterans are missed by the charities. I know some of them in Northern Ireland, and I deal with them regularly in my constituency. They seem to fall under the radar of the charitable organisations. I want to ensure that when the Treasury works to make the proposal happen, there is clear help, co-operation and co-ordination with the veterans’ charities, because they identify the people and then this system can help those people get the jobs. It is therefore logical to me that they work together. If they work together closely, they can bring the real benefit that I wish to see.

This is a fantastic step, and I thank the Minister and the Government for it. It is welcome that we will remember veterans in actions, not simply in prose. I congratulate the Government on proposing these steps to make it more attractive for a business to put its faith in a serving soldier, who may well be acclimatising to civilian life and the different burdens it entails. I have regularly met soldiers who come out of the forces after 20 or 25 years, or even fewer, and who find civilian life extremely difficult. Two weeks ago, I went to a horse charity, People for Horses, where June Burgess helps people who have served in the military or in the police or prison service in Northern Ireland to deal with their post-traumatic stress disorder through contact with horses. I believe that we can do the same thing here in a really important way.

The point that this provision flags up for this humble man is the fact that the Government have managed to extend it to the whole of the United Kingdom of Great Britain and Northern Ireland, and rightly so. I am truly grateful for that, because every regiment in our armed forces is made up of men and women from every corner of this great United Kingdom. That is right and proper, yet it does highlight that other armed forces promises do not similarly extend to each part of the UK. The ungenerous might highlight that such failings have perhaps made President Macron think it acceptable to comment that Northern Ireland is not part of this great nation; wow, does he need a lesson in geography. A mixed message may be seen by those who wish to push their own narrative, but I commend the Prime Minister and the Foreign Secretary for making it clear to President Macron that Northern Ireland is an integral part of the United Kingdom of Great Britain and Northern Ireland. For that reason, I again wish my Government to make abundantly clear the absolutely bedrock foundation that, in every aspect of life, without a successful border poll the six counties of Northern Ireland were, are and will be British.

This legislation regarding troops is for every serviceman and woman, regardless of their accent. Whether we have my very broad Northern Ireland accent, the Scots accent of my colleague on my right, the hon. Member for East Lothian (Kenny MacAskill), or a Welsh accent, we are all going to qualify for this, which is good.

We also welcome the Minister’s commitment to freeports. From reading the Library notes and listening to the Minister beforehand, it is clear that the commitment is not only to freeports here in the mainland but to freeports in Northern Ireland as well. That is really good news and I welcome it. There is some work for the Northern Ireland Assembly to do; there seems to be work for the Northern Ireland Assembly to do every day, and that is the way it should be. In this case it has clear job to do, and I want to make sure that that happens and that we all gain advantage.

I also noted that some of the correspondence on freeports in the notes referred to ensuring the incentives are not exploited for tax avoidance purposes. The Government have taken on the task of making those who pay tax accountable in their own country, as they should be, and I want to make sure of that and therefore ask the Minister to comment on it in summing up. Some correspondents pointed out that freeports had gained a negative reputation for enabling tax evasion through the storage of high-value goods, but the Government have proposed the creation of a tax site within any UK freeport to support and facilitate a robust system of monitoring and ensure that the available reliefs are claimed legitimately. I therefore think the Government have addressed this, but want to make sure that it is on the record. I also ask the Minister to indicate what discussions the Government have had with the Northern Ireland Assembly to ensure that the freeports issue continues to move forward for Northern Ireland.

I welcome as well the move to address tax avoidance in the form of a provision to allow changes to the disclosure of tax avoidance schemes regime as it applies to national insurance contribution avoidance schemes. I am informed that these changes also mirror amendments to the disclosure of tax avoidance schemes regime as it applies to other tax avoidance schemes made by provisions included in the Finance Act 2021.

When I speak to the ordinary businessman in the street—the self-employed trader, or the employer of five members of staff in a small shop—they talk about the fact that they cannot afford to hire a high-flying accountant who can find and use loopholes, and they watch on with increasing frustration as the big companies that could afford to pay any contributions get away with not paying. I believe that the Government are again setting the marker for those companies by ensuring they are accountable; they should pay tax in their own country and make sure that they pay the right amount as well.

Our businesses need a level playing field and help, and it is my hope that this Bill will enable those avoiding and evading tax to be brought into line. It is my hope that this Bill helps to ensure that those who can pay should pay and do pay. If we make that happen, we will be going in the right direction. If we all do the right thing—us here and those outside—we will all benefit.

0.7% Official Development Assistance Target

Jim Shannon Excerpts

Tuesday 8th June 2021 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I congratulate the right hon. Gentleman on bringing the matter forward. The House is very much united behind him. It is not just the scale of the aid cuts, but the speed of the enforced shutdown of operations that is hugely harmful. Aid and development are not a tap that we can turn off and on whenever we like. It is time for the Government, on this occasion, to step up to the spot and make sure that they reinforce the aid budget and increase it back to what it was in the past.

[Mr Speaker]

May I just gently say that we have a lot of speakers and I want to hear from everybody? If you are going to intervene, I am sure that you will understand if you go down the speaking list.

Business Rates Reduction Services

Jim Shannon Excerpts

Wednesday 26th May 2021 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Member for Thirsk and Malton (Kevin Hollinrake) for highlighting the issue today.

I beg indulgence. The hon. Gentleman and I worked alongside an incredible person and I want to take a moment to place on the record in this House the passing of a gentleman whose work was monumental on regulatory issues. He was a good friend of mine and a good friend of the hon. Gentleman, and well known to many other Members of this House. He was Brian Little. He was one of my constituents, a good friend for nearly all my life, and all his life as well—we were of a similar age. He was a passionate advocate for the underdog, well known in this House in the realms of finance and reform. Brian will be sadly missed. His shoes are difficult to fill. I just want to have that on the record, Mr Hollobone.

[Kevin Hollinrake]

May I associate myself with the hon. Gentleman’s words? Brian was a great man—a great man who did much work for many businesses that could not fight for themselves, in the battle against larger banks. He did a tremendous job, in his inimitable way. He was humble. It was never for himself. It was always, as the hon. Gentleman says, for the underdog, fighting an almost impossible battle. He had many a great success in that regard.

[Jim Shannon]

I thank the hon. Gentleman for his intervention. His words resonate with my own. The family will be greatly encouraged by our comments.

It is a pleasure to follow the hon. Member for Walthamstow (Stella Creasy) and her reasoned and valuable contribution—a well-thought-out contribution, which we wholeheartedly support. She referred to cross-party support. I hope my comments today will add cross-party support to the two previous speakers.

I understand that the regulations for business rates relief are handled in a different way in Northern Ireland than here on the mainland, and in Scotland, but the issues are the same. The ten-minute rule Bill regarding business rates means that we perhaps can and should take a UK-wide, holistic view of this matter.

I read with great interest the comments that highlight the belief that business rates were designed for a bygone era, where business went hand-in-hand with high street premises. The way we shop is now changing forever and the coronavirus has exacerbated those changes. Online sales now account for 33% of all retail sales, compared with 20% only a year ago.

I have been very impressed with my local council in my constituency of Strangford, which is working with businesses on the high street to retain their presence while they enter online forums. I have seen businesses, many of which were only able to open last week in Northern Ireland, come to terms with the new click-and-collect era and other ways of doing business. As we have watched businesses roll with gut-wrenching punches, it has highlighted to me that perhaps we, too, in this place, must advocate for change that makes sense in the post-covid world, where we are today. I see the wisdom, as I have seen many times in the past, of the rationale of the hon. Member for Thirsk and Malton. I am interested to hear more and learn more of the outworking of the proposals that I have heard from my respected colleague and friend, as well as of those from the hon. Member for Walthamstow.

When I read the Library briefing for today’s debate, I was dismayed but not shocked at the companies seeking to take advantage of struggling businesses who are appealing the rates. The scams were wide-ranging and intricate, and it is clear that the current system leaves itself open for the kinds of abuses that both hon. Members refer to—yet another indicator that something needs to change, and change soon. The FSB contacted and asked me to put on record, as others have done, that they believe business rate companies should be licensed to access business rates records on behalf of businesses. There would be a low barrier to access, but a condition of the license would be to ban cowboy practices. The hon. Gentleman for Thirsk and Malton’s introduction used a lot of descriptive nouns for them without using any bad language, which I thought was quite good and I really relate to that. We could probably think of other things which would be unparliamentary and not appropriate. Nonetheless, it illustrates how we all feel.

While recent business rates reductions during the pandemic were welcome, too many businesses find themselves with an unexpected bill from these companies. Their predatory payment tactics mean that where Government policy reduced the bill to nil, these companies claim the reduction as part of their work, and charge year on year. Many businesses end up with a bill for £1,000 plus, when the only change has been as a result of Government policy. The Government does it, and they do it because that is their job. These guys come along and charge for it, when the Government does all the work. It reminds me of the cuckoo. We all know what the cuckoo does—he jumps into the nest of another bird, eats all the food that the parents give and has nothing to do with the parent birds. These are cuckoo companies and in my opinion deliver something that is totally wrong. Too often the conditions are hidden in the trading terms and conditions.

I welcome the schemes in England, such as extra targeted support packages for businesses and relief for retail, hospitality and leisure businesses, and the corresponding help in Northern Ireland. I put on record my thanks to the Minister and the Government—my Government—for all they have done to help businesses in the constituency of Strangford, and across the whole of the United Kingdom of Great Britain and Northern Ireland. They have kept those businesses afloat and we thank them for it. However, the fact of the matter is that businesses will need ongoing help. Rather than further complex and detailed schemes, now is the time to overview and change the entire system, as the hon. Gentleman for Thirsk and Malton referred to in his introduction. There must be a genuine review of how we can support businesses to survive, maintain a presence, and importantly continue with job creation. I believe we will get a bounce whenever we come out of lockdown, but we need to continue that bounce right through into the months and years ahead. When it comes to business, we have to play the long game, investing in small businesses, and knowing that in the end we will recoup every penny that has been outlaid when jobs continue and taxes are paid in manageable amounts to keep the business open and viable.

In conclusion, I believe the suggestions of the hon. Member for Thirsk and Malton are useful in moving forward, and I join him and the hon. Member for Walthamstow in asking the Government to put serious thought and manpower behind making this change for the good of business, our economy, and consequently, the quality of life throughout the whole of the United Kingdom of Great Britain and Northern Ireland.

Finance Bill

Jim Shannon Excerpts

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

[Claudia Webbe (Leicester East) (Ind) [V]]

When we look at our world today—a world in which half of global wealth belongs to the richest 1%, a world in which large corporations possess more financial power than many post-colonial countries, and a world in which British Amazon warehouse workers earn in eight weeks what the company’s chief executive makes in one second—it is clear that we need to radically reassess how we tax large corporations.

It is therefore shameful, as my hon. Friend the Member for Ealing North (James Murray) made clear, that the British Government are the only G7 Government not to support US President Biden’s plans to halt the race to the bottom on corporation tax. However, I do not believe that even these plans for a global minimum rate of corporation tax for large multinationals go nearly far enough. We should be much, much bolder than the 15% or 20% threshold that is being discussed. After all, we are talking about corporations that have made super profits out of this pandemic and are paying low wages to our workers. The fact that our Government are not even willing to engage with this most basic of proposals reveals how unserious they are about reining in the rampantly unequal power of large corporations.

We know that tech giants currently pay a negligible amount of tax. A report by Fair Tax Mark found that for the Silicon six of Facebook, Apple, Amazon, Netflix, Google and Microsoft, the gap between the expected headline rates of tax and the actual tax paid between 2010 and 2019 was $123 billion. This is as unsustainable as it is unjust.

It is important to bear in mind that billionaires exist when and where workers are exploited, as has been cruelly demonstrated by the testimony of Amazon workers who have bravely and painfully disclosed the conditions under which they are forced to work. Rather than blocking international efforts to address this crisis, the Government must properly tax large corporations and invest to build a radically fairer country. That means not only rejoining the international plan led by President Biden but making the case that the minimum threshold be increased. It is important to remember that in the period post world war two, the top rate of corporation tax was actually as high as 52% for large companies—this, after all, was introduced by a Conservative Chancellor—but in the 1980s it was reduced to 30%. Since 2010, the Conservatives have cut corporation tax from 28% to 19%—by more than most among relatively rich countries. This shows that they would rather raise funds by squeezing the British people than reduce the corporate profits of wealthy shareholders.

The super deduction is wasteful and open to abuse. Are we going to see, as has been reported by The Times and others, tax breaks handed out for investing in swimming pools and jacuzzis as opposed to targeting support at British businesses that have been struggling during the pandemic, or even as opposed to targeting investment to end child poverty? Currently one in two children in my constituency are living in poverty—that is 42% of children who could be saved. Child poverty is a political choice, and this Bill is the proof of that. Are we going to see this measure as opposed to targeting investment to end the starvation wage that workers in Leicester’s garment industry receive while making clothes to fund the super-bonuses of retail brands such as Boohoo and others? Quite simply, the super deduction will allow multinationals such as Amazon to write off their tax liabilities.

As we recover from the coronavirus, we must learn the lessons from the 2008 financial crash. The 99%—the many—must never again be forced to bail out the super-rich. The Government must recognise that in our country of deep and unequal wealth, the ultra-rich and large corporations should be asked to contribute their fair share. Corporation tax is a tax on profits, not people. Cutting it means more profits in the pockets of wealthy shareholders and less in those of nurses and other essential frontline workers. To enable much-needed investment, an increased tax on company profits is necessary and long overdue, and it should be raised above the Government’s 25% limit, which is still the lowest of the G7 countries. Above all, it is vital that we enter the debate around taxing the super, ultra-rich and large corporations with much more ambition, as it is one of the most powerful weapons in the Government’s arsenal to combat the rampant inequality that defines our era.

[Jim Shannon (Strangford) (DUP) [V]]

I am grateful for the opportunity to highlight a number of issues during the Report stage of the Finance Bill. I am always pleased to see the Minister in his place and I hope that I can put forward some points to which he will be able to reply.

I want to refer to clause 6, in part 1. I have spoken on this issue on numerous occasions, and I am thankful for the clarification the Government have sought to provide. However, I am still left disappointed at the rationale as regards corporation tax. The hon. Member for Leicester East (Claudia Webbe) referred to this as well. The measure sets the charge for the main rate of corporation tax at 19% for the financial years beginning 1 April 2022 and 1 April 2023. These changes mean that from 1 April 2023 the main rate of corporation tax for non-ring-fenced profits will be increased to 25%, applying to profits over £250,000. A small profits rate will also be introduced for companies with profits of £50,000 or less, so they will continue to pay corporation tax at 19%. Companies with profits between £50,000 and £350,000 will pay tax at the main rate, reduced by a marginal relief providing a gradual increase in the effective corporation tax rate.

The impact assessment that the Government have produced highlights the issue that I want to speak about. It states that there is no impact on families, but goes on to say:

“However, if businesses struggle or are unable to pay increased Corporation Tax, this could impact on their family formation, stability or breakdown. To support, HMRC can provide a Time To Pay arrangement.”

The issue is clear, at least in my mind and, I suspect, in the mind of many others: businesses have already struggled. While rates and wages may have been paid, and we are grateful for those schemes, the fact is that many small businesses have still had to pay out rent for equipment that they were precluded from using to make a profit, so their income was massively affected and many people’s personal savings were totally wiped out. They then took out a coronavirus business interruption loan to help them to make it through. We are beginning to come to the other side—thank the Lord for that—where they are seeking to rebuild, but instead of a meaningful reduction, there is merely a stay of execution with corporation tax.

That will affect many businesses and, by extension, many homes and families. It seems that it could well mean the end of many of our small businesses; while that is sad on a personal level, it is devastating on an economic level. We must remember that small and medium-sized businesses are the backbone of our economy. The Financial Secretary and his Conservative Government have been committed to helping small businesses. All those small and medium-sized businesses are the backbone of the whole United Kingdom—they certainly are in my constituency of Strangford.

I repeat what I have said before in this Chamber: there is no point in carrying businesses thus far, only to allow them to flounder now before any repayment is made. The Government have admitted that there will be a reduced incentive to incorporate businesses that would usually seek to take this step. All this has an effect on the long-term income to our economy. I know that the Government want a stronger economy; we all do, and I believe that we need some help.

Northern Ireland is well placed to be a central hub for business. We have much to offer, yet people can go south of the border to lower corporation tax and greater incentives. Along with my colleagues in the Democratic Unionist party, I have often argued for a reduction in corporation tax to attract businesses to Northern Ireland. I believe that the corporation tax rate repels investors, so I urge the Financial Secretary to look at the issue again. I understand that historically he has wanted a UK-wide rate of corporation tax. However, I want a UK-wide customs market, and that is not the case—ask the local small grocer who cannot even get in dog treats to sell because of the Northern Ireland protocol. There are differences made by this insidious protocol that affect our corporations and small businesses alike. It is clear that if the Financial Secretary insists on one size fits all, it must be applied in every aspect of manufacture, delivery and retail.

The Northern Ireland Assembly is establishing a working group on the consequences of creating our own corporation tax band and its effect on our block grant; maybe the Financial Secretary could highlight where those discussions have taken us so far. I believe that there is an opportunity for him to step in and do the right thing for the UK with a view to the long term. That is what I am requesting, even at this very late stage.

The UK is stronger together. I believe that the United Kingdom of Great Britain and Northern Ireland will always be stronger together. That has become the mantra of our Government, and I agree with it, but it needs to be more than words: action must follow the words and show our strengths. I believe that a reasonable rate of corporation tax across the board is a step to strengthen the Union, not cause more division.

[Jesse Norman]

I am grateful to all Members who have taken part in this debate. Let me pick up on several issues that have been raised, starting with the super deduction. You will be aware, Madam Deputy Speaker, as I think some Opposition Members are not, that it has been described by the CBI as

“a real catalyst for firms”,

while the British Chambers of Commerce said:

“We particularly welcome the massive ‘super deduction’ investment incentive.”

They are absolutely right. It is a terrible shame that the Labour party has decided to try to tarnish the super deduction, a measure from which many capital-intensive businesses around this country will benefit, especially in the north, the north-west, the north-east and the midlands. As my hon. Friend the Member for Devizes (Danny Kruger) rightly picked up, it is a measure that benefits local businesses up and down the UK. He picked Wadworth, a well-known brewer, and rightly so, but there are many, many other businesses for which that is also true. He was absolutely right to highlight that.

Let me come on to questions of wider taxation, if I may. There seems to be an astonishing level of ignorance among Members on the Opposition Benches. They seemed to be unaware that the tax gap—the difference between the amount of tax actually collected and the amount of tax that could potentially be collected—is at its lowest rate in our recorded history, at 4.7%. It may be of some interest if I point out to them—they can reflect on this—that in 2005-06 under the Labour Government it was 7.5%, so it has fallen dramatically, I am pleased to say. Tax that was not being collected by the Labour Government at that time is now being collected by the Conservative Government of the present day, and a very good thing that is too. That is a record on which they should spend some time pondering. The fact of the matter is that this Government have always made it plain that they will be very tough—as tough as they can be—in order to collect the tax that is due and to make sure that corporations and individuals pay it wherever they are due to.

Better Jobs and a Fair Deal at Work

Jim Shannon Excerpts

Wednesday 12th May 2021 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I spoke to the Chancellor beforehand about this. During the lockdown, covid loans were made available to companies. Companies in my constituency have indicated to me that the repayment scheme is not over a flexible period of time and they have to pay back large amounts of money in one go. To ensure that those companies can survive beyond the lockdown and into next year, may I ask the Chancellor whether it is possible to make some flexibility in the repayment of those loans for those companies?

[Rishi Sunak]

The hon. Gentleman makes an excellent point. It is one that, I hope, we have already addressed. He is right about the importance of companies having the cash flow to bounce back strongly, which is why late last year we introduced something called “pay as you grow” to help the 1.3 million small and medium-sized companies that have taken bounce back loans. It means that automatically, at their choice, they will be able to turn those loans from five-year repayment loans to 10-year repayment loans, which almost halves the monthly repayments. Furthermore, it gives them the option to go for interest-only repayment periods of six months or for payment holidays, none of which will impact their credit rating as long as they do it in advance. That should be automatically communicated to businesses by their bank. I hope that is helpful to the small and medium-sized companies in his constituency.

Financial Services Bill

Jim Shannon Excerpts

Monday 26th April 2021 Commons Chamber

[John Glen]

I am delighted to speak again on the Financial Services Bill following its passage through the other place, where it has been well looked after by my colleagues Earl Howe, Lord True and Baroness Penn. As our first major piece of financial services legislation since leaving the EU, the Bill will enhance the UK’s world-leading prudential standards, protect financial stability, promote openness between the UK and international markets and maintain an effective financial services regulatory framework and sound capital markets.

The Bill was thoroughly scrutinised in the other place, with more than 200 amendments tabled across Committee and Report. In total, the Lords made 21 amendments to the Bill. During the passage of the Bill, there has been a lengthy discussion about how best to address issues of consumer harm in the financial sector. Lords amendment 1 before us today proposes that this should be addressed through a requirement on the Financial Conduct Authority to bring forward rules that would place a duty of care on financial services firms in relation to their customers.

The Government are committed to ensuring that financial services consumers are protected and that steps are taken quickly to address new issues when they are identified. However, the Government believe that the FCA already has the necessary powers and is acting to ensure that sufficient protections are in place for consumers. The Government therefore cannot accept this amendment, but recognise that Parliament wants to be assured that the FCA’s ongoing work will lead to meaningful change.

I will today set out the standards that firms must already adhere to when providing financial services to their customers. These are governed by the FCA’s “Principles for Business”, as well as specific requirements in the handbook. These principles set out how specific requirements on firms work, and they include:

“A firm must pay due regard to the interests of its customers and treat them fairly.”

The FCA’s enforcement powers allow it to ensure that these standards are met, although the FCA recognises that the level of harm in markets is still too high and is committed to taking further actions.

The Government agree with the concerns that were raised in the other place that this harm may in part stem from an asymmetry of information between financial services firms and their customers. The risk is that many firms may seek to exploit this asymmetry. The FCA is well aware of how informational asymmetries and behavioural biases can influence consumer behaviour, and is committed to ensuring that these issues are addressed where it considers that they may result in harm. The Government therefore support the FCA’s ongoing programme of work in this area and believe that it will deliver meaningful change for the benefit of consumers.

The FCA has considered its existing framework of principles, and whether the way in which firms have responded to the principles is sufficient to ensure that consumers have the right protections and get the right outcomes. Building on this, the FCA will consult in May on clear proposals to raise and clarify its expectations of firms’ actions and behaviours, and on any necessary changes to its principles to deliver this. These proposals will consider how to raise the level of care firms must provide to consumers through a duty of care or other provisions. Ultimately, the proposals in this consultation will seek to ensure that consumers benefit from a better level of care from financial services firms.

I have therefore tabled amendment (a) in lieu of Lords amendment 1. This amendment will require the FCA to consult on whether it should make rules providing that authorised persons owe a duty of care to consumers. It ensures that the FCA will publish its analysis of the responses to this consultation by the end of this year. It also ensures that the FCA will make final rules following that consultation before 1 August 2022.

I hope that the establishment of these clear milestones demonstrates the commitment of both the Government and the FCA to delivering better outcomes for financial services consumers. In line with commitments made in the other place regarding Parliament’s scrutiny of the financial services regulators, I can confirm that the FCA will bring its conclusions to the attention of the relevant parliamentary Committees, giving them an opportunity to consider the proposals and, if they choose, to express a view or raise any issues. The FCA will respond to any issues that are raised by parliamentary Committees.

I now turn to Lords amendment 8 on mortgage prisoners. It is an issue I take extremely seriously, but I am afraid that the Government cannot accept this amendment. We must continue to be guided by the facts and the evidence. The FCA’s analysis shows that half the 250,000 borrowers with inactive firms meet the normal risk appetite of lenders and could therefore switch if they chose to without any Government intervention.

[Jim Shannon (Strangford) (DUP)]

I have been contacted by many constituents who are in a precarious position and do not have such options. My hon. Friends the Members for North Antrim (Ian Paisley) and for South Antrim (Paul Girvan) have conveyed to me that some of their constituents are also in that position. I respect the Minister greatly, but is it not possible to reconsider given the precarious position that my constituents and others find themselves in?

[John Glen]

I thank the hon. Gentleman, as ever, for his contribution. I will go on to explain the situation of the remaining 125,000 individuals who could be categorised in that way, the actions that we have taken to date and what we will continue to look for. If that category can move without Government intervention, they are not “prisoners”.

Of the remaining 125,000 who cannot switch, 70,000 are in arrears and therefore could not secure a new deal even if they were in the active market. Those borrowers need to work with their lender to agree an appropriate repayment plan. The remaining 55,000 who are with inactive lenders and are up to date with their payments but who cannot switch are paying on average only 0.4 percentage points more than similar borrowers on reversion rates with active lenders—those with similar characteristics. The reason these borrowers are unable to switch is not that their mortgage is with an inactive firm but that they do not meet the risk appetite of lenders. They may, for example, have a combination of high loan-to-values, be on interest-only mortgages with no plan for repayment, or have higher levels of unsecured debts, non-standard sources of income or poor credit history. Similar borrowers in the active market are also typically unlikely to be offered deals with new lenders.

As I have set out previously, the Government and FCA have undertaken significant work in this area to create additional options that make switching into the active market easier for some borrowers. In particular, the modified affordability assessment allows active mortgage lenders to waive the normal affordability checks for borrowers with inactive lenders who meet certain criteria—for example, not being in arrears and not wishing to borrow more.

--- Later in debate ---

As much as it pains me not to be able to pass a quick simple fix, patched on this problem by this amendment, it is not a workable solution that addresses the problem adequately. I will keep working with Ministers to ensure that, absolutely, we work with the FCA to look for the workable solution to this and to help borrowers end their misery. In summing up, I hope that the Minister will give us hope and progress on helping those people effectively.

[Jim Shannon]

It is a pleasure to speak on this issue, Madam Deputy Speaker, and I thank you for giving me the opportunity to speak in the debate this evening.

As other Members have, I will speak to Lords amendment 8 on mortgage prisoners. In an intervention on the Minister earlier, I expressed concern about the issue. I do so having been asked by numerous constituents to highlight the dreadfully precarious position in which many have found themselves. I will give one example. The hon. Member for Thirsk and Malton (Kevin Hollinrake) also gave an example, and such examples are real-life ones of people on the frontline.

I have spoken on a number of occasions—I believe this to be the fifth time since 2017—on the subject of mortgage prisoners and, from the outset, I make it clear that my colleagues and I will vote in favour of Lords amendment 8. I have the deepest respect for the Minister, but there has to be more than cake tomorrow to assure my colleagues and me on behalf of my constituents. We hope that he and Her Majesty’s Government will do what is right for those people.

As we have all heard, the Lords amendment coined the phrase, “mortgage prisoners”. That is what my constituent has highlighted—she believes her family to be prisoners of their mortgage. She writes:

“My husband and I, like many others in Northern Ireland are classed as mortgage prisoners, through no fault of our own. Like many others in Northern Ireland, our mortgage was taken out with Northern Rock, which subsequently collapsed. Our mortgage was then sold to a vulture fund without our consent. As these vulture funds are not an active lender, they do not offer mortgages, hence are unable to offer alternative mortgage products.

We are penalised on very high interest rates, which at the moment is currently well over 4% above the BOE base rate. This is crippling us, never mind the detrimental effect that it is having on our mental health.”

Sometimes it is not just about the finances; it is the effect on mental health as well.

Her email was not the only one to use such terminology. My belief is that the Lords amendment would take strides to free those who have thus far been all but imprisoned through no fault of their own, unable to do anything but scrape by, not entitled to Government help or aid, as their wages are sufficient on paper, but not in reality. I agree that a cap on the standard variable rate of interest for mortgage prisoners on closed books would address the issue.

I do not propose to spend much time rehearsing the specific arguments, which others have done already. Instead, I wish to make two points that are self-explanatory. Last Monday, the Minister came to the House to tell us that a compensation fund for London & Capital bondholders—with a sum of £120 million of UK taxpayers’ money—would be necessary following the excellent forensic investigation and analysis report by Dame Elizabeth Gloster. I understand the rationale behind that decision, and yet it leads me to my second point : why not a solution for the mortgage prisoners tonight? As I said, and have been reiterating for years, there continues to be what I can only term a failure to regulate in any way vulture funds such as Cerberus, but at the same time Her Majesty’s Treasury rightly made the decisions on Northern Rock. Despite limited efforts by the FCA, due to the restrictions placed in legislation by Her Majesty’s Government on the regulatory perimeter, little or nothing has been done for those mortgage prisoners in more than a decade. It is time for that to stop and for Her Majesty’s Government to start finding credible solutions.

A constituent contacted me to tell me that there is a rumour that the Conservatives will impose a three-line Whip against Lords amendment 8. If that is true, it is very sad. I also believe, with respect, that it is disgraceful. Many of my constituents are worried. They have talked to me personally. My hon. Friends the Members for North Antrim (Ian Paisley) and for South Antrim (Paul Girvan), and my other colleagues have all expressed the same concern. We have to make a decision tonight on behalf of our constituents that ensures that their viewpoints are heard, and we have to do it in the best way that we can in this House, which is by how we cast our vote.

After seeing at first hand the impact of no action on the lives of mortgage prisoners in my constituency and beyond, I can do nothing but agree. If this is the line of the Government against these 250,000—or the half a million, as one hon. Member has said—struggling families, I will be supporting Lords amendment 8. I have no difficulty in that and I shall ask all other right-thinking MPs to do the same.

A decade of struggle has passed. We have it in our hands, right now, in this Chamber, to make a change. It is, I believe, right to do so. I shamelessly ask Members to do what is right on this occasion for those families in the middle section who have been squeezed beyond belief, physically, financially and mentally. Let us give relief to them, as today, right now, it is in our gift to be able to do so.

[John Glen]

I am extremely grateful to all Members who have contributed to this debate. I will not to rehearse the arguments that I made at the outset, but will respond in the right spirit, in the right way, to the constructive and careful analysis that we have had from many Members across the House this evening.

Let me start by addressing the right hon. Member for Wolverhampton South East (Mr McFadden). I said to him during the Committee stage that I was always listening. I think that I have proved that to be the case in the way that the Government have responded on the climate change amendment and on “buy now, pay later”. I listened very carefully to the hon. Member for Walthamstow (Stella Creasy) who spoke with characteristic deep knowledge of the sector. It is absolutely clear that we need to get the legislation and the intervention right when it comes to “buy now, pay later”. She rightly asserted the massive growth in that sector and the unfortunate consequences that will certainly befall, and that does befall, a number of consumers. We will work quickly to examine that market and what interventions will meet the need.

I am very tempted to address a whole number of points around Lords amendment 8. It is a real priority of mine to find a response that meets the unfortunate situation where people are trapped in very difficult circumstances. I pay tribute once again to my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) who made a passionate speech, identifying Louise, a mortgage prisoner, whose personal story was one to which the whole House was sympathetic. A number of other colleagues raised similar stories. None the less, I do need to have a proportionate response—a response that can take account of data. I appreciate the excellent work carried out by the all-party group and I recognise its dataset—449 people. None the less, when I am faced with data from the FCA, looking comprehensively at 23,000 cases, I cannot deny that asymmetry. I will commit to continued dialogue to try to find a way forward. Those are not empty words; they reflect the complexity of this matter—a matter that is underpinned by half a generation of different rules and regulations. Before the crisis, people could borrow in ways that today we would think totally unacceptable, and that are indeed unacceptable. The market must provide better solutions than it can provide at the moment, and I will look carefully at what we can do to ensure that that happens.

The hon. Member for Glasgow Central (Alison Thewliss) made a number of points on Lords amendment 1 about the duty of care, and I have set out at length my approach to that, which is again to examine and listen carefully to what the FCA is saying. It will then be obliged to come forward with rule changes. So these are not empty words; they recognise all the work of the charities and organisations that are highlighting this case. Of course, in financial services there is a strong dynamic of change, and the Government and regulators must be ready to step in and make appropriate interventions as that market changes.

I believe that this Bill is a key component of a new, broader regulatory strategy that will underpin the UK financial services sector as a genuine world leader now that we have left the European Union. I welcome the speeches from my hon. Friends the Members for Grantham and Stamford (Gareth Davies) and for South Cambridgeshire (Anthony Browne), which exhibited a deep knowledge and a constructive approach to this very sophisticated industry, underpinned with a lot of personal experience. I will take from this debate many points of detail. I do not agree with every point that has been made on Lords amendment 8, but I stand ready to engage with Members across the House to seek to find solutions. I am proud to have been able to lead this Bill through the House.

Lords amendment 1 disagreed to.

Government amendment (a) made in lieu of Lords amendment 1.

Lords amendments 2 to 7 agreed to.

Motion made, and Question put, That this House disagrees with Lords amendment 8.—(John Glen.)