Bank Profits: Windfall Tax

Jim Shannon Excerpts

Wednesday 6th December 2023 Commons Chamber

[Richard Burgon (Leeds East) (Lab)]

Today I am calling on the Government to introduce a windfall tax on the banks, which have exploited the cost of living crisis to make super-profits, just as the energy companies did before them. Such a tax could create much-needed funds to invest in our public services and to help bail out those hit hard by the ongoing economic crisis. Before I make the case for that, however, I want to look at where we are after 13 years of Tory misrule.

British economic growth was recently downgraded again. Britain has now seen well over a decade of economic stagnation. We are living through the largest fall in living standards since records began 75 years ago. This will be the first Parliament in history in which people are poorer at the end of it than at the beginning. What a record! Wages are set to be no higher in 2028 than they were 20 years before. That is the slowest wage growth in 200 years, and it has cost the average worker £10,700 a year in lost pay growth. Shockingly, 9 million younger workers have never worked in an economy where they have seen sustained average wage rises.

Income inequality in the UK is higher than in any other large European country. We have a much weaker economy and much lower living standards. That is the record of the Government’s agenda of austerity, deep public service cuts and trickle-down economics. They have created a social nightmare, too. Fourteen million people live in poverty, including over 4 million children. One in seven people is facing hunger, and 6 million households are in fuel poverty. As the cost of living crisis continues to hit families across the UK, this should be a time to bail them out. It should be a time of public investment to boost economic growth and living standards, and to rescue our public services. Instead, the Government are plotting another £20 billion-worth of cuts to public spending. I cannot think of a single policy that would cause more economic and social harm.

When we talk of a worsening economic and social crisis, we cannot forget the class politics of it all: how it affects the 99% and how it affects the 1%. We hear a lot about the cost of living crisis, but it is not a crisis for the elites. For them, it has been boom time. There have never been so many UK billionaires, and British billionaires have increased their wealth by £120 million every single day over the past decade. The profits of the UK’s largest companies are now 89% higher than before the pandemic. Bankers’ bonuses have hit record highs. Bosses’ pay at the largest 100 companies has been going up and up, and has increased by 16% in the past year.

One sector that has been doing very well out of the crisis is banking. Just like the oil and gas companies, the banks have used the crisis to line their pockets. While millions of people struggle to pay their mortgages and rents, the banks have been cashing in. Higher interest rates have enabled them to charge households more for mortgages and firms more for loans, but those higher interest rates have not been passed on to savers.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Gentleman for bringing forward the debate; I spoke to him beforehand. Does he not agree that the closure of high-street banks—there have been some 11 in my constituency of Strangford— especially in rural communities, has left a massive problem of rural isolation and that there should be a windfall tax on the banks making profits, with that money routed to the rural communities who have felt the brunt of the banks’ thirst for enhanced profits over service, which seems to be their calling card?

[Richard Burgon]

The hon. Member makes an important point. The example he gives of the closure of so many high-street banks, which disadvantages people in my community as well as in rural communities, just goes to show that the banks’ huge increase in profits has not been achieved through delivering a better service to consumers at all. Higher interest rates have not been passed on to savers; they have been hoarded by the banks, creating a windfall for them of many billions for doing nothing productive.

Such a transfer from the public to banks would be unjustifiable at any time, but it is especially so when so many people are struggling to cover the essentials and our public services are on their knees due to Tory cuts. The banks should face the same type of tax on their unearned and underserved windfalls as the energy companies.

The pre-tax profits of the big four banks—Lloyds, Barclays, HSBC and NatWest—show why that would be a just tax. In the first nine months of 2023, they made a staggering £41 billion in pre-tax profits, which is almost double the £23 billion they made in the same period last year, according to research by Unite the union. The question we must answer is this: will we allow the Government to claim that more austerity and cuts are inevitable and that public investment is unaffordable, or are we to build a better tax system that focuses on making the wealthiest pay their fair share?

[Richard Burgon]

The hon. Member makes a valuable intervention. I will come to how it was unjustifiable for the Government to reduce the surcharge in that way. Both approaches are possible and desirable, with yes, a windfall tax, but also reversing that cut.

If we build a fairer, better tax system that focuses on making the wealthiest pay their fair share, we can invest in rebuilding the economy so that it serves the majority of people, we can invest in renewing our public services, and we can give people back some hope. A windfall tax on unexpected and undeserved bank profits can play an important role in creating that fairer tax system. Banks are not reinvesting their profits in the economy; they are handing out huge pay and bonuses, which could go even higher, aided and abetted by the Government’s decision to scrap the bonus cap.

That all comes at a time when the banks are turning their backs on local communities. As the hon. Member for Strangford (Jim Shannon) mentioned, bank branches have been disappearing from our high streets at an alarming rate. Since 2015, almost 6,000 branches have permanently closed their doors. At a time of deepening social crisis, while banks collect record profits, they have made it even more difficult for working people to access their finances and get financial advice.

[Jim Shannon]

Does the hon. Member not feel that there is something immoral about banks making high profits, closing branches and seeing their profit margins actually grow, while people are being left disadvantaged? There is something immoral about that. People are being disadvantaged, while others are making more.

[Richard Burgon]

The hon. Gentleman is completely correct: there is something immoral about the way that banks’ profits are soaring while they are not delivering a better service for their customers, particularly vulnerable customers—the less affluent, the disabled and the elderly. That is not how we should be going about things, and he makes an important moral case.

Based on the latest quarterly results, a windfall tax in the UK could raise between £4 billion and £16 billion this year from the profits of the big four banks alone, depending on the form that that windfall tax takes. That is billions of pounds that could be used to boost public investment and to tackle the soaring inequality that we are facing. Spain’s progressive Government offer us an example. They introduced a 4.8% windfall levy on certain bank incomes and commissions above a threshold of €800 million. Replicating that here could raise almost £4 billion this year. Even Margaret Thatcher introduced a form of windfall tax, with a 2.5% tax on banks’ non-interest-bearing deposits. In words that sound all too familiar today, Thatcher said that the banks had

“made their large profits as a result of our policy of high interest rates rather than because of increased efficiency or better service to the customer.”

Such a tax in the UK, according to Positive Money calculations, could raise up to £11 billion today, and a windfall tax, in whatever from, would be popular. According to a poll commissioned for the TUC, three quarters of the public support a windfall tax on banks’ excess profits, including 76% of people who voted Conservative in 2019.

Perhaps the simplest move—we heard this in an earlier intervention—would be to reverse the tax break for banks that the Government introduced in last year’s autumn statement. They slashed the bank profits surcharge from 8% to 3%, saying that this was to cushion them against the impact of higher corporation tax rates. But this surcharge, along with the banking levy, was one of the special taxes raised on banks after the financial crash due to the greater risks that banks posed to our wider economic stability. The risk they pose clearly still remains and so too should the surcharge.

The TUC general secretary, Paul Nowak, rightly described the slashing of the surcharge as starving our public services of much-needed funds at the worst possible time. Reversing it could provide key funds to, for example, introduce universal free school meals, scrap the two-child cap or fund a proper pay raise for junior doctors. The TUC estimates that the Treasury will lose at least £1.5 billion a year over the next four years, although it believes that it is likely to be more given the recent boost to bank profits.

Positive Money estimates that reversing cuts to both the bank surcharge and the levy could raise more than £4 billion this year. We need to be clear about this: it was a political choice for the Prime Minister to slash the surcharge on the banks just as it was a political choice to scrap the cap on bankers’ bonuses. Doing so is a sign of what is so wrong in our current taxation system.

It is clear that more of the same Tory dogma of the past 13 years of cuts and trickle-down economics is not the answer. All that that would succeed in doing is deepen the social crisis that is harming so many families in Britain. It is time that we put a stop to that. It is time to tackle the tax perks handed to the wealthy. The banks were bailed out when they were in trouble during the 2007 global financial crisis. It is now time for them to be taxed fairly to help bail out communities that are suffering because of the Tory party’s focus on building an economy that serves the wealthy few while the vast majority fall ever further behind. A windfall tax on bank profits is a just policy, it is economically sound and it would be welcomed by people across this country. I look forward to the Minister’s response.

Independent Complaints and Grievance Scheme

Jim Shannon Excerpts

Thursday 30th November 2023 Westminster Hall

[Dame Maria Miller (Basingstoke) (Con)]

I beg to move,

That this House has considered the work of the Independent Complaints and Grievance Scheme.

It is a great pleasure to serve under your chairmanship, Sir Robert. I am here today because the reputation of Parliament matters, and how we conduct ourselves here matters. Like many workplaces, we are grappling with issues around bullying, harassment and sexual misconduct, and we are looking for ways to not only give people routes to redress but change the culture of our organisation to ensure that such issues do not find any solace in our midst.

I stand here today representing a number of colleagues who, through the establishment of the Independent Complaints and Grievance Scheme, have become Ministers but still have very strong opinions on this issue and want to see it dealt with in the right way. I refer in particular to the pivotal role played by my right hon. Friend the Member for South Northamptonshire (Dame Andrea Leadsom), who introduced the ICGS in July 2018. She has recently taken up a ministerial position and is unable to take part in the debate, but I note that she is here in body as well as in spirit.

I also note that I was a member of the recent Speaker’s Conference on the employment conditions of Members’ staff, and the excellent report which came from that underlines the importance of the changes recommended for the ICGS, some of which have not yet been carried through in full but were part of the recommendations of the Speaker’s Conference.

This is a timely debate, because there is an independent review under way into how the ICGS has developed over the last five years. The review issued a call for evidence on 22 November, and I know that a number of colleagues will want to provide feedback through that. Because we are midway through a review, the Minister responding to the debate will inevitably be somewhat curtailed in what she is able to say. I hope that this debate gives some individuals the opportunity to recognise that they can contribute through the review and to hear from the Minister the Government’s support for this important programme of work within Parliament.

The vision of the ICGS, introduced in the wake of the #MeToo scandal, was to ensure that everybody who works in or visits Parliament is treated with dignity and respect and to underline that there is absolutely no place for bullying, harassment or sexual misconduct in any workplace, including Parliament. The scheme is there for all current and former members of the parliamentary community, not just MPs, and it is the first of its kind anywhere in the world.

The initial working group, chaired by my right hon. Friend the Member for South Northamptonshire, was made up of Members of all parties in this place, noble peers from the other place, members of staff of both Houses and trade union representation for House staff. It was a thorough piece of work, embracing a huge range of views, and it demonstrated the importance of not only enshrining those views in the process that was developed but getting their support for the recommendations.

The research into the problem and the possible solutions was incredibly detailed, taking advice from legal experts and employment advisers. A number of hearings were held, to hear the sometimes shocking stories of colleagues who work here. The result was widely consulted on with Members right across the House and was agreed on the nod; there was no dissent to what was put forward. It is important to note that the House chose to vote on the specific processes to be followed because of the possible serious sanctions involved and the nature of the allegations. When we come to review this, it is important that we also look at the fact that the process needs to closely echo what this House agreed to and ensure that there has not been any mission creep along the way.

The ICGS proposals took a holistic view, looking at change processes, and, importantly, changing the culture of the organisation—as I say, as many other organisations are doing across the country. The key features of the scheme as it was originally envisaged were: the development of a behaviour code that would apply to everyone; the development of new training to support continuous professional development; the maintenance of respectful behaviour, proper induction courses and exit interviews to identify bad practice wherever it occurs; and, of course, the independent scheme itself. Again, that is very much what other organisations are doing to try to address these sorts of problems.

The scheme was designed to enable any complainant to call a strictly confidential helpline with their grievance and have it assessed in a timely fashion by an independent case examiner, who would also invite the complainant and respondent to give their sides of the case, with witnesses if necessary, and provide for the appropriate mental health support for all parties. The issues are difficult.

Should the independent case examiner find that there was no case to answer, the matter would be dropped with no publicity or consequences. Should, however, the case be upheld, the findings would be escalated to the employer or manager of the person accused and the ICGS would identify appropriate sanctions, which would include written or oral apologies, training, a requirement to prohibit contact, and, in serious cases, dismissal of the respondent.

In instances where an MP was the respondent, an escalation through the Parliamentary Commissioner for Standards to the Committee on Standards, which could recommend perhaps a suspension, including potentially allowing for a recall vote if that was triggered. The House had to agree the scheme and the process to be followed because of the implications of the sanctions. More recently, for sanctions against MPs the Independent Expert Panel was introduced as an extra layer in the process. That was not originally considered necessary by the working group, but has been put in place subsequently.

Were the complainant to report an issue that could break the law, the ICGS case examiner offers support and guidance to the complainant to go to the appropriate police force. Should the complainant not wish to do that, the ICGS has a protocol with the Met police to enable anonymised reporting to take place to ensure safeguarding of the wider public.

[Jim Shannon (Strangford) (DUP)]

The right hon. Lady has put forward a very detailed and constructive case that needs to be looked at. Over the years, lots of constituents have come to tell me about issues to do with workforce bullying in the constituency. They tell me that their biggest concern is the time it takes for things to happen. Frustratingly, it means that sometimes they almost give up. Can the right hon. Lady confirm for all of us here, but for me especially, that the timescale will be sufficiently fast to ensure that the complaint, if upheld, can be dealt with within a 28-day timescale? Is that possible?

[Dame Maria Miller]

I thank the hon. Gentleman for his timely intervention. I will come to the specifics of that point later in my remarks. One reason for calling the debate today is that there is not that surety. The cases go on for months, not weeks, because of the number of cases that are being referred to the ICGS. There needs to be a review of how the organisation operates to address the very remarks that the hon. Gentleman has made. He is absolutely right to say that if there are allegations of serious bullying, harassment or sexual misconduct, they need to be dealt with in a timely manner. Delay helps no one—not the accused or the victim.

One working group recommendation was that Members’ staff should have access to proper human resources support and advice, which is not routinely available in Parliament at the moment. That recommendation has not been implemented, despite it being one of the important recommendations from the working group. That means that Members’ staff with a complaint have nowhere to go other than the ICGS, which is unsuitable if their complaint does not relate to harassment, bullying or sexual misconduct.

The report from the recent Speaker’s Conference has also highlighted that issue. Its recommendations recognise that if staff have concerns about their employment or if their relationship with their Member of Parliament starts to break down, there are few routes through which they can seek support. The ICGS may be the only route they are aware of, even though it may not be appropriate for their complaint. Unfortunately, that means that a significantly higher number of general complaints on issues such as working conditions or contractual disputes are being reported to the ICGS helpline, because staff have nowhere else to go.

The fifth annual report of the ICGS was published last month. It stated that only 31 of the 479 contacts to the helpline—under 10%—were about bullying, harassment or sexual misconduct. Any complaints are distressing and unacceptable in a modern workplace, but the ICGS helpline is getting clogged up by the many complaints that are outside the remit of the ICGS.

With that in mind, the Speaker’s Conference recommended that the budget of the Members’ Services Team be expanded to hire more HR professionals to deliver an HR service to Members’ staff. The ICGS was set up to deal with bullying, harassment and sexual harassment. The lack of a clear pathway for issues that would normally be dealt with by an HR department has inundated the ICGS throughout its life so far. As the hon. Member for Strangford (Jim Shannon) said, that means that the grievances of many complainants are not tackled swiftly enough, which results in further distress.

The 31 serious cases in the ICGS report show that the average time taken for a serious case to conclude is not a matter of weeks, as the hon. Member for Strangford mentioned in his intervention, but 184 working days. That is far too long for someone who has been subject to bullying or sexual harassment in the workplace. For the benefit of both sides, these things need to be dealt with swiftly.

The new director of the ICGS, Thea Walton, is committed to reducing that time, but the system has been working in that way for the past few years. We should fully implement the initial proposals that Parliament agreed when it established the ICGS. The Speaker’s Conference supported many of those recommendations, particularly the creation of an HR department for Members’ staff. That will provide a swift and timely service, and lead to the sort of culture change we all want to see—whereby people who work in this place feel valued, heard and supported if need be.

First, the review must prioritise the improvement of the timeliness of investigations through ensuring that cases are dealt with in the appropriate way and that the ICGS is not inundated; secondly, we must set up the HR department; and, thirdly, we must implement the other elements of the ICGS programme that was agreed in this place, including the establishment of induction courses for new joiners. To reiterate, I am not talking only about Members of Parliament, but the whole parliamentary community. There should also be exit interviews for those who leave abruptly, and we should promote the take-up of training courses to upskill team managers and staff more generally.

The review must consider the role of the Parliamentary Commissioner for Standards in the ICGS. The commissioner was specifically identified as the individual to whom MPs could appeal should they be subject to allegations and the case find against them. That was to ensure the possibility of an independent review of the case, and therefore to take into account the level of public of scrutiny when an accusation of bullying, harassment or sexual misconduct by an MP is made public. That appeal process meant that there was an additional check, which was capable of ensuring that decisions had been taken fairly and correctly, and had been based on evidence not bias. Should the PCS uphold a case against an MP, the process is now that the case is sent to the Independent Expert Panel, which investigates the findings and makes a recommendation. That then goes to the Committee on Standards, which will bring a recommendation to the House. That process is different from other investigations by the PCS—such as those in relation to the misuse of stationery or other more day-to-day matters—and reflects the sensitivity of these complaints about bullying and sexual harassment.

The nature of the sanctions also needs to be considered, particularly given the possibility of further appeals and the complexity of what we are talking about. The Independent Complaints and Grievance Scheme deals with some of the most difficult complaints. It does matter not only to those complainants who are reporting abuse, but also to the reputation of Parliament, that we have an effective system by which to deal with those sorts of allegations. In having an effective system, we do not only have sanctions in place; we create an environment that will enable the culture of our organisation to evolve. Too often, the ICGS is seen as being there just to punish MPs, but it is actually there for the whole parliamentary community, and there are around 14,000 non-MPs working in and around Parliament and across the country who rightly want an effective process by which to tackle bullying, harassment and sexual misconduct when it occurs.

I urge hon. Members and right hon. Members to have a look at and take part in the review, because it matters not only to our staff and ourselves that we get it right; it matters for the way that our Parliament is perceived across the country and the world.

National Insurance Contributions (Reduction in Rates) Bill

Jim Shannon Excerpts

2nd reading
Thursday 30th November 2023 Commons Chamber

[Laura Trott]

I think by my count none, which is unfortunate and I think speaks to their lack of the commitment to cutting tax that we have on this side of the House. The Bill will cut taxes for 29 million working people. It has three measures: the reduction in national insurance contributions in class 1 primary main rate; the reduction of the NICs class 4 main rate; and the removal of the requirement to pay class 2 NICs. We are prioritising national insurance for two key reasons. First, we want to put more money in the pockets of working families, and NICs are the most targeted way to do that. Secondly, better reward for work makes working more appealing, and the more people work, the more there is a boost in growth.

Let me take the House briefly through the measures in the Bill. The first is the reduction in the employee class 1 NICs main rate, which the Chancellor announced in the autumn statement. By reducing the main rate by two percentage points, from 12% to 10%, on earnings between £12,570 and £50,270, we will cut taxes for more than 27 million employees. That will save the average worker more than £450 a year, and they will see the benefit in their payslips right at the start of the new year, as this legislation will come into effect on 6 January.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister, and the Government, for what they are bringing forward. The cut in national insurance in the autumn statement is a welcome step, and my constituents tell me that. Unfortunately, many are also saying that the average working-class family, including many in my constituency, will still be facing the highest taxation levels. I am not being churlish, not for one second—I want to make that clear—but can the Minister encourage me and my constituents that there is more to offer from the autumn statement and that those people have more to gain?

[Laura Trott]

I thank the hon. Gentleman for the opportunity to talk about this, because it is important. Taxes for the average worker will have gone down by £1,000 since 2010. We have not hidden from the fact that we had to make some very difficult decisions to pay back our covid debts, and those have fallen on the highest paid, because that is the value that we espouse as a party. Because of those difficult decisions, which were opposed every step of the way by the Opposition, we are able to cut taxes for everybody—that is what the values of Conservative Members are all about.

We will cut and reform national insurance contributions for the self-employed by cutting the class 4 rate by one percentage point from 9% to 8% from April 2024. Finally, we will remove the requirement for self-employed people with annual profits above the national income tax personal allowance of £12,570 to pay class 2 NICs, also from April 2024. Those who pay voluntarily will still be able to do so, and I assure hon. Members that low-paid self-employed people who make voluntary class 2 contributions will not pay more.

The Bill simplifies the system for self-employed taxpayers, bringing it closer to the system for employees, and not only putting more money in their pockets but reducing the administrative burden. As a result of changes in the Bill, a self-employed person who is currently required to pay class 2 NICs every week will save at least £192 per year. Taken together with the cut to class 4 NICs, an average self-employed person on £28,200 will see a total saving of £350 in 2024-25. That will benefit around 2 million people. Importantly, those with profits under the small profits threshold of £6,725 and who pay class 2 NICs voluntarily to get access to contributory benefits, including the state pension, will continue to be able to do so.

The Government are committed to tax cuts that reward and incentivise work, and that grow the economy in a sustainable way. These measures do just that. The Office for Budget Responsibility states that the autumn statement package will reduce inflation next year, and measures in the Bill will be worth more than £9 billion a year, the largest ever cut to employee and self-employed national insurance.

A vote for these measures is a vote to give 29 million people an average yearly saving of more than £450. These reductions in tax will not only benefit those in work; according to the Office for Budget Responsibility, they will lead to the equivalent of almost 100,000 people entering work, because they will ensure that work pays and will drive more people to seek employment.

There is another point here, and that is about choices. I hope that the Opposition will support these measures today, if only for the reasons I have already set out. The public support them and business supports them. If the Opposition do not support them, it will represent a choice. The shadow Chancellor, the right hon. Member for Leeds West (Rachel Reeves), has often spoken of her fiscal rules that will have debt falling in the final year of the next Parliament. At the autumn statement last week, the OBR confirmed that public sector net debt is set to fall in that final year, with headroom of £30 billion. Implementing the permanent tax relief for business investment, plus the legislation before the House today, represents a choice to use around £20 billion of that £30 billion of headroom on these measures.

There is a path here, if the Opposition want it, to deliver the £28 billion a year. They could use up every penny of headroom, reject full expensing and reject today’s tax cuts, but what they cannot do—what the OBR, the financial markets and every secondary school maths textbook will not let them do—is vote for our policies today, borrow an extra £28 billion a year and still meet their own fiscal rules. The numbers simply do not add up. That is what I mean by choices.

The Opposition have to choose. Do they stick to their plan to borrow an extra £28 billion a year, which the Institute for Fiscal Studies says risks sending inflation, interest rates and mortgage rates up, or do they choose our plan to bring inflation down, taxes down and debt down? They cannot have it both ways. If the shadow Treasury team has no answer today, it will fall to the Leader of the Opposition to grasp the issue. Rather than anonymous briefings to the BBC over the weekend, he will have to make a choice. That is the difference between being the party of opposition and being the party of government: credibility with the public over credibility with their activists.

This Bill represents the choices made on this side of the House. I have spoken at length about why we have made them. I hope that the shadow Financial Secretary to the Treasury, the hon. Member for Ealing North (James Murray), can inform us honestly and straightforwardly on which side of those choices his party will land. If he cannot, we can all conclude, as Lord Mandelson himself said only a few months back, that Labour is not ready to be the party of government. I commend the Bill to the House.

Economic Growth

Jim Shannon Excerpts

Tuesday 14th November 2023 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I commend the right hon. Lady for her strong and wise words. Like me and others in the House, she believes that the life sciences sector can grow and do much more. In 2019, the pharmaceutical sector alone provided 18% of research and development spending. There are almost 600,000 jobs in the industry and it contributes £36.9 billion in gross value added to GDP. Does the right hon. Lady agree that if we are to ensure that everyone can gain from life sciences, there must be better distribution across all of this great United Kingdom of GB and NI, and that NI must be a part of that?

[Rachel Reeves]

I could not agree more with the hon. Gentleman. Our life sciences sector is key for Great Britain and Northern Ireland, and yet too many businesses are looking to relocate, including to the Republic of Ireland, but we want those jobs and those investments here in Britain.

There was no legislation in this King’s Speech for fairer tax measures. The Chancellor and the Prime Minister have been so quick to raise taxes—they have done so 25 times between them—that we now have the highest tax burden in 70 years. It is the biggest tax hike ever in a single Parliament, with working people and businesses hit hard, yet the Government allow unjustifiable tax loopholes to remain. I believe that if people make Britain their home, they should pay their taxes here, too. That is why we will abolish the non-dom tax status and introduce a modern scheme for people who are genuinely living in the UK for short periods. Why is it so hard for this Prime Minister to say the same?

There was no legislation in this King’s Speech to increase security at work or to update employment rights. Having confidence to plan a family’s future should be not a luxury but something that working people deserve, and we need to grow our economy from the bottom up and the middle out. If an economy is not working for working people, it is not working at all. This King’s Speech has no serious plans for tackling the cost of living crisis or for growing the UK economy.

The Conservative economic failures are piling up high: a failure on growth; a failure on infrastructure investments; a failure on the cost of living; a failure on public services; and a failure on tax. The responsibility for such disappointment and damage has been a Conservative team effort these past 13 years. The Government cannot get our economy back on track or make our country better off. The Conservatives cannot and have not tackled the cost of living crisis because they are the cost of living crisis.

Oral Answers to Questions

Jim Shannon Excerpts

Tuesday 14th November 2023 Commons Chamber

[Bim Afolami]

I thank my hon. Friend for his question. [Interruption.] I do; I know how much he cares about these issues and campaigns on them frequently in the House, and I commend him for it. The Government are committed to delivering on a UK green taxonomy to provide investors with clarity on which economic activity should be labelled as green. We expect to consult this autumn. The green taxonomy will provide an important tool for enabling the supply of relevant and reliable sustainability information for the market, and information will come in due course.

[Jim Shannon (Strangford) (DUP)]

One of the things that concern Northern Ireland MPs is the fact that when it comes to defence jobs and getting contracts, Northern Ireland falls behind. The Minister will be aware that Thales, on the border of my constituency, was recently able to secure its workforce. What steps can he take to ensure that each region of the United Kingdom, but especially Northern Ireland, can benefit from defence spending for the workforce? We can do the job the same as everywhere else; we just need the opportunity.

[Bim Afolami]

I thank the hon. Member for his question, which is incredibly important. As he knows, this Government are absolutely committed to ensuring that jobs in the defence sector, within an ESG framework, are protected. I am happy to meet him to discuss further the issues relating to his constituency and Northern Ireland.

Environmental, Social and Governance Developments

Jim Shannon Excerpts

Monday 23rd October 2023 Commons Chamber

[Alexander Stafford (Rother Valley) (Con)]

As the founding chairman of the all-party parliamentary group on environmental, social and governance, I am delighted to have secured the first ever debate on environmental, social and governance developments in the UK in this place. I refer the House to my entry in the Register of Members’ Financial Interests and to the all-party group’s interests as well.

ESG is a set of characteristics that can be used to assess the non-financial elements of an investment or business decision. In its simplest form, ESG is a way to take into account potential risks and rewards that might not be obvious from a balance sheet. Everyone, in their own way, incorporates ESG criteria into each and every economic decision, even if unknowingly.

For instance, the property developer does not buy land next to a crumbling cliff; a family might choose not to go to a particular shop because they have heard that it treats its employees badly; or a woman might change jobs to work for a firm that is fighting the gender pay gap. ESG is simply the use of non-financial criteria in decision making—a way for investors, companies and individuals to get a bigger picture of the impact of their investments, which will help them better understand the risks and, more importantly, the rewards.

Recently, there has been much debate about ESG, as it has risen in prominence. The number of ESG assets under management has grown by more than 150% since 2015, with global ESG assets expected to exceed £41 trillion or about four times the value of all the assets held in the UK. They will also account for a third of all assets under management by 2025. This scale-up has been met with some concern about ESG perhaps having some underlying political current. This is wrong. In its true form, ESG is simply an investment strategy—one that, like all investment strategies, aspires to low risk and high return. ESG is not a political stance, a way of life or a mantra for investors, although of course in some situations it is unfortunately used wrongly to pursue certain political agendas. In others, it is seen as shorthand for ethical or impact investing. However, it is neither.

In this debate, I will be sticking to our definition of ESG as an investment strategy and hoping to make the case to Government for why we should be encouraging it, what problems we have to overcome and how best to claim the crown, and the associated benefits, as the world leaders of ESG investing.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Gentleman for securing this debate. Does he agree that if we create a science-based and world-beating taxonomy, businesses that can show alignment with the UK green taxonomy will automatically be in alignment with international taxonomies, which should ensure that there is no divergence, which should subsequently enhance our capacity? Does he further agree that Government and the Minister have a role to play in assisting businesses to achieve that potential, so that all of us in the United Kingdom of Great Britain and Northern Ireland can gain and everybody can be a winner?

[Alexander Stafford]

I thank the hon. Member for intervening; it is always a pleasure when he joins such debates. He mentioned the Minister, who I know has a good, keen, personal interest in ESG, having worked in the field prior to coming to this place. The hon. Member is completely right about the green taxonomy. We need a robust taxonomy—I will come to that later—but it is a shame that we are behind where we should be with the green taxonomy. We need to be careful to ensure that our green taxonomy is robust and world leading. One of the many benefits of leaving the European Union is that we can define what we want and how we want it ourselves. By having a UK green taxonomy, we can ensure that we are world leaders in the UK, including in Northern Ireland especially, which I know has a high level of financial services.

Let me go back to the meat of my speech. It is not the case that those investing along ESG lines do not want to see good done for planet and people—they do. For example, we know that ESG investors are sometimes willing to pay higher fees and to see lower returns than their more returns-focused peers. The Wall Street Journal reported earlier this year that ESG funds could charge up to three times more. I do not exclude those types of companies and investors from this discussion. Rather, in holding the first ever debate on ESG in the House, I hope that more discourse will lead to more action.

It is clear that using non-financial metrics, and thereby factoring in all the data available to make the most rational, informed investment decision possible, will lead to financial returns. For example, more ESG-aligned employers will be able to hire better candidates for less—something known as taking a green cut, which is the attitude that up to 48% of younger people were recently reported as taking. Equally, improving environmental ratings through technology can lead to huge efficiency savings for companies. For example, some studies have shown that using low-energy lighting has a payback of less than 12 months, which is a win for the company’s bottom line and its sustainability standards. This reflexive impact of ESG is known as “double materiality”, which is how a business is affected by changing conditions—be they climate, social, or governance—and what that company is doing to contribute to or militate against those changes. That is becoming more and more important for investors to factor in.

There are also huge financial benefits to be gained from embracing ESG for the whole country, including Northern Ireland. The UK is already home to the oldest and most trusted conventional financial centre. That is coupled with the City of London’s commitment to sustainability, topping the Global Green Finance Index. Therefore, with a little extra effect, we will secure a home for ESG investors inside our border.

ESG’s recent rise in popularity has caused some growing pains. Primarily, the lack of universal frameworks and metrics mean that trust in ESG is at an all-time low, as we have seen in anti-ESG proposals approved by boards globally. In ESG investing, as in all business, trust is paramount. Just as an investor must be sure that their investment is sound, and that they will not suddenly find themselves out of pocket, an ESG investor needs to be sure that any claims to sustainability are true.

We have a rich history of accounting for financial accuracy in this country, with the Domesday Book perhaps being the earliest example—in that case, the new, or relatively new, King William checking that his investment was as profitable as he had thought. That invasion of 1066 did not come cheap. It took 800 years, and a parliamentary Select Committee to develop something closer to modern accountancy practices, but the UK is now an oasis of bookkeeping and verifiable investing. Fraudulent financial claims can be easily spotted and shut down. Why then, is the same not the case for fraudulent ESG claims?

One of the main causes of the problem is that much of what ESG seeks to account for is intangible and therefore incalculable with our current frameworks. How, for example, might a company begin to calculate its effect on biodiversity? What metric can an investor look for to see an investment’s diversity score? This problem is not insurmountable. Twenty years ago, as major economies were waking up to the true effects of increasing carbon emissions and climate change, the issue of how to count carbon seemed similarly difficult. Today, after much trial and error and leadership from the UK, we can quickly and easily calculate the carbon footprint of any business, person, or product.

Developing frameworks to help business understand, quantify and account for non-financial factors is difficult but very important. Proper frameworks are the first lines of defence against a full breakdown in trust in ESG reporting and investing. They will also help to stop so-called greenwashing, where a product or investment is marketed as being more sustainable than it is. Despite the name, this applies across all three ESG objectives. Such distrust is made worse by some ESG advisers and ratings agencies, whose business plans seem to depend on being able to sell five-star ESG ratings to the highest bidder, without giving any proof of them whatever—a veritable wild west of the ESG world. Of course, many of these businesses are doing comprehensive evaluations of the products, but given the difficulty that an investor would have in distinguishing the good ratings from the bad, it is hardly the confidence-inspiring boost that they need.

I know that the Treasury is well aware of the concerns, and I am pleased that there was a consultation held earlier this year on how best to introduce regulation on ESG ratings. This is a good and necessary step, but we are in danger of winning the battle but losing the war if we delay any further. I urge the Minister to speed up this regulation as much as possible.

We can go further than regulation, however, and set up the frameworks we need to allow any investor or company to understand quickly and easily the ESG impacts of their investments. A taxonomy—essentially a classification of what is and what is not allowed—would do just that, and the Treasury’s plan to develop a UK green taxonomy is exactly the right step. This taxonomy, as well as its social and governance cousins, would clearly outline investments that are sustainable—and therefore could be marketed as such—and those that are not. Given that the EU’s version of a green taxonomy is dead in the water—it is a bureaucratic nightmare that is no longer fit for purpose—we can make our own decisions here.

We are lucky that, thanks to Brexit, we have been given the chance to design our own robust taxonomy, one that could and should lead the world and entrench the UK as the true home of sustainable finance. Sadly, we have seen our taxonomy delayed and delayed and delayed. I was pleased to see the UK green taxonomy mentioned in this year’s green finance strategy update, but on the original timeline we should already be halfway through the legislative process by now.

Business Banking: Undesignated Client Accounts

Jim Shannon Excerpts

Wednesday 18th October 2023 Westminster Hall

[Kelly Tolhurst (Rochester and Strood) (Con)]

It is a pleasure to speak under your chairmanship, Mrs Cummins, on an issue that is affecting many businesses across a number of sectors. It is an issue that is extremely important to the businesses that are affected, and one that could have a significant impact on many businesses and their customers in future. I want to raise the situation faced by a number of small businesses with ongoing struggles to get access to the bank accounts that they need to carry out day-to-day functions and protect their clients’ customer funds.

Over the past couple of years, I have heard horror stories from a number of reputable and long-established companies that have been driven to the brink of closure as a result of how anti-money laundering regulations, particularly the Joint Money Laundering Steering Group guidelines, are being understood and implemented by UK banks. Many small businesses that deal with large quantities of client money use pooled client accounts, also known as undesignated client accounts.

I have a background in the marine industry, so I have a good understanding of, knowledge of and relationship with the industry. That is why, when the Association of Brokers and Yacht Agents reached out to me to highlight its concerns, I understood that it was a real issue and that I needed to work with the association, along with the Treasury and other relevant parties such as UK Finance and the Financial Conduct Authority, to try to resolve it. Yacht brokers are a very resilient bunch and are a key part of the UK’s marine industry, so when I hear that they are facing challenges that threaten their businesses, it is something of great concern that we must take seriously.

Although I initially raised this issue on behalf of the yacht broking industry, I have since learned that it is an issue that affects a number of other industries and sectors, including letting agents, estate agents, jewellers, care homes and even solicitors. I suspect it affects many more. I have had recent engagement with Propertymark, the professional body for property agents, which represents over 12,500 member branches in the UK, some of whom are being affected in the same way.

I will briefly explain why the yacht broking industry has come to use those types of accounts, and where we are up to with getting this resolved. In the early 2000s, the yacht broking industry faced a severe crisis when yacht broker and new boat dealer BA Peters went into liquidation. This created shockwaves throughout the industry, as BA Peters did not have a pooled client account in place. As a result, clients’ money was not protected when the company collapsed. Numerous individuals lost their deposits and the proceeds of sales, with some receiving only 23p for every £1 they were owed. It also resulted in a massive bill for the Insolvency Service to conduct a thorough investigation to try to identify client funds and into which of the many accounts they had been paid. This devastating experience exposed the vulnerability of client funds and the need for urgent safeguards.

[Jim Shannon (Strangford) (DUP)]

I congratulate the right hon. Lady on bringing forward this debate. We spoke beforehand. Does she agree that some banks are being accused of using the legislation she referred to as a way of closing accounts that are not profitable? I have several examples from back home in Strangford—I could read out two pages of them—of businesses being given no other reason for closure than this legislation. Does the right hon. Lady agree that the loophole must be closed?

[Kelly Tolhurst]

I thank the hon. Gentleman for his questions. Something is going on, and it is worrying. Banks are there to help us with our personal finances, but they are also a key part of how all businesses operate within the UK. I would be very disappointed if they were taking a cynical approach to potentially reduce costs of applications. However, having heard that some organisations are now being requested to implement a number of individual accounts, maybe there is a business case for them to want to administer 1,000 bank charges rather than just one.

In the aftermath of this, the yacht broking industry came together to ensure that such a calamity could never occur again. It was unanimously agreed that all yacht brokers should establish pooled client accounts as a standard practice. The PCAs were designed to protect client funds and enhance transparency in financial transactions. That became industry standard practice and is a prerequisite for any business joining an association such as ABYA. It is now a requirement by many professional indemnity insurance providers to hold client funds in these accounts. To formalise those efforts, brokers that set up PCAs with banks obtained letters confirming that funds held in those accounts were exclusively client funds and not part of the broker’s trading capital. Thus, they could not be used to offset business loans or overdrafts with that bank. That strengthened the protection of clients’ interests and returned confidence to the marine sector.

In 2009, it was made compulsory for anyone acting as an introducer for marine finance or settling marine finance to be registered with the Office of Fair Trading. That was a significant step towards regulating the industry and ensuring that financial transactions adhered to established standards.

In 2015, the Financial Conduct Authority was formed. The FCA introduced the FCA Handbook, taking over regulatory oversight. In 2016, the FCA confirmed that yacht brokers did not fall within the scope of the FCA handbook for holding PCAs, but did need to be registered for acting as an introducer for finance and insurance.

In 2020, significant changes occurred to the anti-money laundering regulations. That was when I first heard of the struggles that the industry were coming up against. Anti-money laundering legislation was introduced in 2017, as were updated Joint Money Laundering Steering Group guidelines, but notably they did not mention yacht brokers being excluded from FCA registration, or that their PCAs could be assessed using a simplified due diligence approach. That led to confusion and concern within the industry. As a result, major UK banks such as Lloyds, HSBC, Barclays and NatWest started to refuse to open PCAs for yacht brokers and threatened a number of businesses with the closure of their accounts.

Over the following months, I heard numerous stories from businesses within the industry that were fearful that, should they have their accounts closed, they would be unable to trade. Reputable businesses that had been trading for decades were suddenly faced with that terrifying prospect. Many of those yacht brokers are small independent family-run businesses. Contrary to what often comes to mind when yachts are mentioned, they are not large businesses trading in multimillion-pound superyachts and they do not have thousands of pounds in capital behind them; they tend to be long-established reputable small businesses operating in our coastal communities, where the marine industry may be a key part of the local economy, selling smaller boats for UK leisure.

Some of those family-run businesses—registered UK companies—operate across borders to support UK clients to buy, sell or hire their boats. Many of their clients are repeat customers because of the great experience they have encountered and the reassurance and confidence that their funds are safe.

All ABYA-member brokers are required to abide by strict professional standards to minimise fraud and money laundering. Yacht brokers are required to complete “know your customer” checks to verify clients’ official documentation such as driving licences, passports and utility bills, to ensure that the documents are valid and that the person is not on the anti-money laundering or politically exposed persons lists.

Purchasers receive a legally signed sale and purchase agreement, and all transactions are done by bank transfer, so there is a full audit trail of the money. ABYA yacht brokers do not accept any form of cash payment. As I mentioned, brokers undertake their own checks and specific sale and purchase agreements for every transaction, and they rely on UK and EU banks to transmit funds to the PCA from their own bona fide and validated clients.

Despite the checks that brokers carry out and the detailed recording of transactions, the fact that UK banks now consider yacht broking to be a high-risk business might imply that UK banks are failing their customers’ AML and politically exposed person checks before opening their client accounts.

In January 2022, ABYA and I held a crucial meeting with the Chief Secretary to the Treasury, who was then the Economic Secretary to the Treasury, and UK Finance. Following that meeting, he agreed to issue guidance allowing banks to simplify due diligence for opening and maintaining PCAs. That decision was made to try to temporarily ease the conflict between banks and account holders, and to encourage banks to keep accounts open while a comprehensive review of the anti-money laundering regulations was undertaken. This review was expected in December 2022 but, to the disappointment of both me and the industry, it was pushed back a year until December 2023. I am grateful to the Chief Secretary for the action and the interim guidance he provided in his previous role, but unfortunately that did not go far enough to prevent many banks from closing some of those accounts, which had a devastating impact on some of our small businesses.

In May 2020, we witnessed Barclays close the first pooled client account of a yacht broker because it was not registered with the FCA and part of its business involved cross-border transactions. Members will be unsurprised to learn that cross-border transactions are a fairly normal part of yacht sales, given the nature of boats. The stress that caused the company, including its potential collapse, and the impact on clients resulted in the director of that small UK-registered company suffering a mental illness for which, 18 months on, he is still receiving medical treatment and support.

That move set a worrying precedent. In May 2023, Barclays blocked the accounts of another company without appropriate notice, preventing the company from accessing its funds for three weeks. Not only that, but the bank transferred the funds from a European pooled client account into pounds sterling and placed the funds into the company’s account, without the authority of the clients whose funds were in the pooled client account. I understand that ABYA has asked the FCA to investigate that case, as it believes that Barclays had breached the provisions of the FCA handbook. As an aside, I have been made aware of another case in which such action by a UK bank has affected personal bank accounts, so I am concerned about how widespread that type of action is among some UK banks.

The FCA has acknowledged ABYA’s concern but has refused to conduct a full investigation and take appropriate action against Barclays, which I believe sets a dangerous precedent by endorsing Barclays’s actions and destabilising the security of PCAs for all industries. The FCA has advised ABYA that its members should report the incident to the financial ombudsman, which they have done, but they have been advised that it could take up to 18 months for it to report back.

To enable their business to continue trading, the directors of the affected company had to personally fund their clients’ sales and purchases, while Barclays sat on its client funds. That has also had a significant impact on the mental health of the directors of those businesses. Only last week, HSBC approached yacht brokers to ask them to stop using their pooled client accounts. I have recently been made aware that marine insurance companies, which have thousands of clients, are also being asked to cease using pooled client accounts.

The consequences of those developments extend beyond the yacht broking industry. They are a concerning precedent, which indicates that funds held in PCAs for clients may not be as secure as was previously believed. The situation has implications not only for the yacht industry but for lawyers, estate agents and care homes, as I have mentioned. Only last week, Propertymark members reported that Lloyds had threatened one of their members with account closure if they continued to use PCAs. That forced the property agent to open and hold individual client accounts for the rents and deposits of every landlord they worked for, and this particular agent was working with over 100 landlords.

ABYA has been at the forefront of the efforts to address the issue. It has tried to push various individuals who have influence over the matter to work together and with the industry to find short and long-term solutions. The Treasury has met and been in communication with ABYA’s chairman, Peter Norris, and has agreed to meet him again. For that, I am grateful. I am also grateful for the continued engagement I have received from the Treasury and its Ministers over the last 18 months. ABYA has worked to strengthen its code of practice and engage with banks consistently over the past couple of years. ABYA has candidly and consistently said that it will put in place whatever measures and changes to its code of conduct are necessary to ensure that banks have confidence to offer these services to ABYA members.

Since the FCA’s confirmation that yacht brokers do not need to register to hold PCAs, one bank has asked its customers to register as a high-value dealer with His Majesty’s Revenue and Customs for anti-money laundering purposes. ABYA is currently in consultation with HMRC to see whether it is possible to register as a high-value dealer, as such registrations normally apply only to businesses that deal in cash transactions of over £10,000 or €10,000. I understand that HMRC is questioning whether that is a necessary registration.

It has been a particularly tiring and frustrating few years for the industry, and ABYA and other industry representatives can only do so much. They have shown their willingness to find solutions, but we need the same willingness and drive to find a solution. As I have mentioned, these are often long-established small businesses or sole traders. Like any businesses, these companies are lifelines for their owners, employees and local economies, and they rarely have significant capital reserves to keep them afloat while seeking a resolution with the banks. It has been heartbreaking to hear the panic and distress that some of the businesses have been put through. Some business owners have been driven to the point of illness or, in some cases, have wanted to take their own life because of the stress of the potential loss of their business. As someone who ran a business prior to becoming an MP, I can totally empathise and understand how those business owners may be feeling.

Can the Minister confirm that there will be no more delay in bringing forward the consultation on the review of the anti-money laundering regulations? Can the Minister also assure me and those listening that he and the Treasury are engaging with the banking sector to represent the views of these small businesses, which are struggling to survive as a result of the actions that have been taken? Will he commit to urgently finding a short-term solution for this very real issue, which is having a devastating impact on people’s businesses and livelihoods?

Local Bank Branch Closures

Jim Shannon Excerpts

Tuesday 5th September 2023 Commons Chamber

[Amy Callaghan (East Dunbartonshire) (SNP)]

For being the party of the bank and the bankers, the Tories have a shocking record of keeping banks on our local high streets. It speaks to a pattern of this Government prioritising profit over people. This being my first Adjournment debate, I am proud to hold it on a topic important to my constituents, given the state of local bank branch closures in East Dunbartonshire, but I am frustrated and disappointed that this issue is on all our minds.

Despite the severity of the topic, I am very much looking forward to an intervention from the hon. Member for Strangford (Jim Shannon), the highlight of every Adjournment debate, as you will be only too familiar with, Mr Deputy Speaker.

[Jim Shannon (Strangford) (DUP)]

First of all, I commend the hon. Lady for bringing this subject forward. The Scottish National party has been at the fore in headlining the issue of bank closures, and I wish to add my support.

It is an increasing problem back home—Northern Ireland has lost 27% of bank branches in the last three years, according to statistics from the Consumer Council. One of those was a Barclays bank branch in Newtownards, where I have my office. For rural constituents, it means they have to drive up to 40 minutes to the nearest Barclays in the neighbouring constituency, or take a taxi or a bus. Does the hon. Lady agree that bank branches are crucial to the economy, especially the rural economy, and that the frequent closures of local branches are doing more harm than good for customers? The hon. Lady is to be congratulated on bringing this issue forward.

[Amy Callaghan]

I could not agree more. I welcome the hon. Member’s intervention—I kicked him into gear, didn’t I? It was much appreciated.

Local bank branches are closing right across Scotland, and at a higher rate than in the rest of the UK.

--- Later in debate ---

[Andrew Griffith]

This Government take responsibility, and I was just about to explain how, for the first time, we have taken the statutory right to protect the use of cash. That has been on the statute book for a number of weeks after the House passed the Financial Services and Markets Act 2023. It is also why we support the very rigorous guidance given by the Financial Conduct Authority in cases where bank branches are closing.

[Jim Shannon]

Will the Minister give way?

[Andrew Griffith]

I will take an intervention. We are on the Adjournment and should be mindful of time.

[Jim Shannon]

Rural communities are probably the larger part of my constituency, and I have lost 12 or 13 rural banks. Every one of them was a focal point for customers, which hits on the important point made by the hon. Member for Argyll and Bute (Brendan O’Hara). At the same time, every one of those banks has made extra profit and extra fees, which just does not add up. Why not keep them open and share some of that dividend with all the customers who need the banks?

[Andrew Griffith]

The hon. Gentleman is working his way towards one of the potential answers. Colleagues have mentioned the banking hubs. When a bank seeks to close a branch, the FCA process normally includes consultation with the local Member of Parliament. The financial sector now has a consumer duty to think about putting customers’ needs first, which is one of their weighty duties. As we deal with this significant change, a number of alternatives are in place. One is the local post office, and I believe there are still nine post offices in East Dunbartonshire. As the banks’ business traffic coalesces, they can help to support the economics of a post office in a particular area. That is one opportunity. Some 99% of personal banking customers can transact in their local post office, and there are over 11,000 post offices across the United Kingdom.

Oral Answers to Questions

Jim Shannon Excerpts

Tuesday 5th September 2023 Commons Chamber

[Andrew Griffith]

My hon. Friend represents the views of his constituents in this place clearly. He is quite right; although they are private entities, banks benefit from a privileged place in society and they should focus on doing their core functions brilliantly, treating customers fairly and making a sustainable return for shareholders, rather than taking sides on politically contentious matters.

[Jim Shannon (Strangford) (DUP)]

Today it is because some people may have a different political view; tomorrow it could be the fact that someone has a different religious viewpoint. I am a Christian, and as chair of the all-party parliamentary group for international freedom of religion or belief, I stand up for those with Christian beliefs, those with other beliefs and those with no beliefs, because I believe sincerely that they have a right to have that belief. If ever the day came when banks censured anybody because they had a different religious belief, I would stand up against that. Does the Minister agree?

[Andrew Griffith]

Let me be clear: yes, the Government agree with that. No one should be debarred from access to banking facilities in our society because of a lawfully expressed view. If he and other hon. Members wish to make representations, the Financial Conduct Authority is currently conducting a review of this matter.

Covid-19 Pandemic: Fiscal Policies

Jim Shannon Excerpts

Monday 17th July 2023 Commons Chamber

[Mary Kelly Foy (City of Durham) (Lab)]

The austerity programme has been one of the most damaging policies our country has seen in decades, and one statistic demonstrates its complete failure: there were more than 300,000 excess deaths between 2012 and 2019. More than 300,000 people died as a result of austerity—they were human beings, with families and friends. Like us, they had aspirations and dreams, but now they are gone, perhaps because of decisions made in Departments and in this House. That is an injustice; after all, the first duty of the British Government is to keep their citizens safe and the country secure. Were those 300,000 people kept safe? Evidently, they were not. That is the sort of statistic that future generations will read and wonder how on earth we could have allowed it to happen.

The subject of my debate is fiscal policies and the covid-19 pandemic, but what I want to get at is the extent to which austerity left us unprepared for the pandemic. I started with that statistic to present the situation in Britain prior to the outbreak of the virus. My speech will discuss healthcare, and the Minister may think, “What’s this got to do with the Treasury?”. I hope that I can convince him on that by saying that our health services require money from his Department, because what matters about cuts is their effects.

It is clear that the austerity programme hollowed out our welfare state, including the NHS. To be ready for a pandemic, we need a strong healthcare system, but we just did not have that in 2020. I was outraged by former Prime Minister David Cameron and former Chancellor George Osborne at the covid inquiry. They denied that their austerity programme had any impact on the pandemic, and it was especially chilling watching George Osborne. Their justification for austerity is at odds with scientific evidence and opinion, which I shall outline.

In their expert evidence to the covid-19 inquiry last month, Professor Clare Bambra and Professor Sir Michael Marmot stated that austerity policies post-2010 had an adverse effect on health inequalities; that health inequalities narrowed in the period of higher public expenditure, from about 2000 to 2010, but widened again post 2010—

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Lady for securing this debate. She is right to say that covid has affected health, but it has also affected finance. Does she agree that covid-19 will have rippling effects upon finances for years to come, and that many people are now grappling with the reality of prices increasing at a greater rate than wages? Does she also agree that the Government must take hold of the financial market once again with a firm grasp and with a strategy to help families in my constituency and hers, and indeed across this great United Kingdom of Great Britain and Northern Ireland?

[Mary Kelly Foy]

I thank the hon. Gentleman for that intervention, and I will come on to that issue in my speech. He is completely right that there will be an ongoing impact on future generations not only from covid, but from the impact on the public purse.

The scientific research also found that between 2000 and 2010, geographical inequalities such as infant mortality rates and life expectancy were reduced, but they then increased after 2010. Why did that happen? It was about money. By 2019-20, after a series of austerity Budgets, health spending was about £50 billion below what it should have been had it matched previous Government commitments. This far surpasses the much-vaunted cash injection of £20 billion between 2019 and 2024 as part of the NHS long-term plan. That level was too little, too late for what was to come.

The results of austerity are not hard to find right across the NHS, with one of the more tangible measures being bed capacity. Between 2010-11 and 2019-20, the average daily total of available beds contracted by 8.3%—nearly 13,000 beds. Britain had less than half the number of critical care beds relative to its population than the average in OECD European Union nations.

Austerity also meant years of pay caps and pay freezes. In other words, there were pay cuts, in real terms, for NHS workers. They were earning thousands of pounds less in real terms in 2019 than in 2010.