Draft Northern Ireland Banknote (Designation of Authorised Bank) Regulations 2020
John Glen Excerpts(5 years, 9 months ago)
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The Chair
The Economic Secretary to the Treasury (John Glen)
I beg to move,
That the Committee has considered the draft Northern Ireland Banknote (Designation of Authorised Bank) Regulations 2020.
It is a pleasure to serve under your chairmanship, Mr Mundell. In a rather unique arrangement, the UK is one of a handful of countries where commercial banks are authorised to issue banknotes alongside the central bank. Currently, seven banks are permitted to issue commercial banknotes in the UK: four in Northern Ireland and three in Scotland. That represents a tradition with cultural importance that the Government support.
One of the issuing banks in Northern Ireland, Ulster Bank, is part of the Royal Bank of Scotland Group and a direct subsidiary of NatWest bank. As part of a planned restructure, RBS Group will remove Ulster Bank’s banking licence later this year and transfer it to the NatWest legal entity. This instrument has been laid before the Committee to ensure that Ulster Bank-branded banknotes can continue to be issued.
As is required by the Banking Act 2009, the instrument will transfer the authority of issuance from Ulster Bank to NatWest, with the consent of the Bank of England. It is a routine procedure and it has been carried out before: in 2017, the authority to issue RBS-branded banknotes in Scotland was transferred between two entities of the RBS Group. Importantly, the major stakeholders in the change, RBS Group and the Bank of England, have remained in contact with the Government throughout the process and are supportive of the measures before the Committee.
In summary, the instrument ensures that banknotes already printed or issued by Ulster Bank will remain valid once this structural change to RBS Group has taken place. Furthermore, once the authority for these notes has been transferred to NatWest, it will be able to print and issue banknotes with Ulster Bank branding. This instrument ensures that all those holding Ulster Bank banknotes can remain confident in their value. I hope colleagues will join me in supporting these regulations. I commend them to the Committee.
John Glen
I would be very happy to address the points made by the right hon. Member for Wolverhampton South East, and then the more substantive points made by the hon. Member for North Antrim. As the right hon. Member for Wolverhampton South East says, this is essentially an administrative change, and there will be no change in the validity of the notes in question. I am glad that he was not tempted to discuss the value of the pound. I can confirm that in taking any measures, we always take account of the interests of the whole of the United Kingdom; that principle will always guide the Chancellor and Ministers in the Treasury.
Among the range of issues that the hon. Member for North Antrim raised was the question of a review. There are no plans for a review. He cites the issue of commercial advantage. It is for individual banks to determine the design of a note; typically, they pick designs that are non-controversial. As he pointed out clearly, Northern Ireland’s countryside and economy have enormous merits and offer powerful symbols for a bank.
On the wider issue of access to cash, some real challenges have been thrown up by the covid experience, and we are working on them. We have clearly set out our intention to legislate, and there is a live UK Finance and LINK scheme looking at access to cash. I am pleased to confirm that Danske Bank, Ulster Bank and the Bank of Ireland have been involved in the provision of bounce-back loans. They have been active participants in conversations with the Chancellor and me.
The Government have no say whatever on the artwork featured on notes. On promoting the notes as currency that can be used in London, the Association of Commercial Banknote Issuers has a marketing endeavour to promote different types of notes. Northern Ireland bank notes are legal currency and usable, but sometimes people are not familiar with them. There is nothing the Government can do about that.
As I have set out, this statutory instrument will ensure that the long-standing practice of commercial note issuance in Northern Ireland continues under the Ulster Bank brand. The SI makes a routine procedural change, but it represents an important process in maintaining the public’s confidence in the value of the notes they hold, which is an important aspect of the economy. I hope that the Committee has found this afternoon’s sitting informative, and that it will support the regulations.
Question put and agreed to.
Exiting the European Union: Financial Services and Markets
John Glen Excerpts(5 years, 9 months ago)
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The Economic Secretary to the Treasury (John Glen)
I beg to move,
That the draft Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2020, which were laid before this House on 24 March, be approved.
Madam Deputy Speaker (Dame Rosie Winterton)
With this it will be convenient to discuss the following motion:
That the draft Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2020, which were laid before this House on 6 May, be approved.
John Glen
I welcome my opposite number, the right hon. Member for Wolverhampton South East (Mr McFadden), to his place. He has a distinguished history of public service and I look forward to a constructive dialogue with him today and on future occasions.
As the House will be aware, the Treasury has been undertaking a significant programme of financial services legislation since 2018, introducing almost 60 statutory instruments under the European Union (Withdrawal) Act 2018. It has been an enormous privilege for me to do the vast majority of those measures. These SIs were made prior to exit day—31 January 2020—and covered all essential legislative changes needed to ensure a coherent and functioning financial services regime at the point of exit, had the UK not entered a transition period.
The European Union (Withdrawal Agreement) Act 2020 received Royal Assent in January this year. The 2020 Act contains a general rule that delays those parts of the SIs that would have come into force immediately before, on or after exit day, so that they instead come into force by reference to the end of the transition period, which we leave at the end of this year. Over the course of this year the Treasury will therefore, where necessary, continue to use powers under the European Union (Withdrawal) Act 2018, as amended by the 2020 Act, to prepare for 1 January 2021. This will involve the Treasury bringing forward a small number of SIs that, in particular, will ensure that recently applicable EU legislation will operate effectively in the UK at the end of the transition period. The SIs before the House today are two such instruments. The approach taken in these SIs is aligned with the general approach established by the EU (Withdrawal) Act 2018, providing continuity by retaining existing legislation at the end of the transition period but amending where necessary to ensure effectiveness in the UK-only context.
I turn to the draft Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2020. From now on, I will refer to this instrument as the OTC SI. In preparation for the UK’s withdrawal from the EU on 31 January 2020, Parliament approved several EU exit instruments to ensure that the European market infrastructure regulation would continue to operate effectively in the UK at the point of exit. EMIR was updated on 1 January this year by a regulation known as EMIR 2.2, which now applies in the UK. The OTC SI that we are discussing today address deficiencies in the UK’s post-transition framework arising as a result of that update.
EMIR is Europe’s response to the G20 Pittsburgh commitment in 2009 to regulate over-the-counter derivative markets in the aftermath of the last financial crisis. EMIR mandates the use of central counterparties, known as CCPs, to manage risk between users of derivative products. EMIR has been effective in increasing the safety and transparency of derivative markets, thereby reducing the associated risks that users may face, and UK CCPs play an essential role in reducing systemic risk and ensuring the efficient functioning of global financial markets.
EMIR 2.2 introduced an updated third country or non-EU CCP supervision framework, including an updated recognition regime. This means that EU authorities can have greater oversight over third country CCPs that are systemically important to the EU. Perhaps the most substantial update in EMIR 2.2 is the ability for the European Securities and Markets Authority to tier third country CCPs according to their systemic importance to the EU as part of the recognition process. ESMA will now take on certain supervisory responsibilities for systemic third country CCPs known as tier 2 CCPs.
This OTC SI updates the UK’s recognition framework in line with EMIR 2.2 by transferring ESMA’s new powers to the Bank of England after we leave the transition period. That includes the ability to tier non-UK CCPs as part of the recognition process, and to supervise non-UK CCPs that are systemically important to the UK. The Bank of England has already been given the power to recognise non-UK CCPs wishing to operate in the UK in an earlier SI under the EU (Withdrawal) Act. EMIR 2.2 also empowers the Commission to adopt delegated Acts setting out the details of how the framework will function in practice. This includes how tiering and deference to the rules of home authorities referred to as “comparable compliance” will function. This instrument transfers the power to establish these frameworks to the Bank of England.
Since the Bank already has responsibility for safeguarding financial stability in general, and managing systemic risk in CCPs in particular, this is an appropriate conferral of functions as it allows the Bank to manage the systemic risk posed by some non-UK CCPs in a way that is appropriate for the UK. The statutory instrument therefore transfers the remaining Commission functions—including the power to deploy the so-called location policy—to Her Majesty’s Treasury.
Under EMIR 2.2, ESMA can recommend to the Commission that a third-country CCP that is felt to be substantially systemically important should lose permission to offer some services to EU clearing members, unless those services are offered from inside the EU. This is referred to as the location policy, the inclusion of which in EMIR 2.2 the UK did not support because of concerns that it could lead to market fragmentation and reduce the benefits provided by the global nature of clearing. However, the powers in the European Union (Withdrawal) Act 2018 under which we introduced the SI extend only to the addressing of deficiencies arising from withdrawal. During the passage of that legislation, commitments were made that the powers would not be used to make significant policy changes, so I am not going to deviate from that.
The OTC SI transfers the powers to use the location policy to the Treasury, subject to advice from the Bank of England and appropriate procedural safeguards and transitional provisions. I assure the House that because of the very different nature of the UK’s clearing markets, it is hard to foresee circumstances in which the Bank would appropriate the use of that tool in practice. EMIR 2.2 also makes changes to internally used supervisory and co-operation mechanisms but, as the UK is no longer part of the EU, those provisions are removed by the SI.
Finally, the OTC SI updates the recognition powers set out in the temporary recognition regime, which was established by a previous SI to enable non-UK CCPs to continue their activities in the UK after exit day, while their recognition applications are assessed. This SI updates the recognition requirements in line with the new EMIR 2.2 provisions. The Treasury has worked closely with the Bank of England to prepare the instrument and has also engaged with the financial services industry, as we have done throughout. The draft legislation has been publicly available on the legislation.gov.uk website since 24 February, and the instrument was laid before Parliament on 25 March.
In summary, the OTC SI is necessary to ensure that existing EMIR legislation will continue to function effectively in the UK from the end of the transition period, following the updates made in EMIR 2.2. In particular, it will ensure that the UK has the tools necessary to manage the financial stability risks posed by some of the largest non-UK CCPs.
Let me turn my attention towards the second of tonight’s SIs, the Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2020. Although this SI makes amendments to approximately 20 pieces of legislation, the number and nature of the amendments are modest and minor. They act to preserve the effect of recent changes to EU legislation in the UK, and in doing so limit any impact on business that would otherwise arise at the end of the transition period.
Primarily, this SI fixes deficiencies in recently applicable EU legislation, which is congruous with the Treasury’s approach to previous financial services EU exit instruments and the approach required by the European Union (Withdrawal) Act 2018. It also revokes pieces of retained EU law and UK domestic law that it would not be appropriate to keep on the statute book at the end of the transition period.
This SI contains a small number of minor clarifications and corrections to previous financial services EU exit instruments. The House will be aware of the unprecedented scale of the legislative programme that the Treasury has undertaken, which has been carried out with rigorous checking procedures. However, errors are unfortunately made on occasion, and when they arise it is important that they are corrected as soon as possible. This has happened previously, and I will continue to be completely transparent when such shortcomings become apparent.
I note that this SI also includes provisions initially included in the Cross-Border Distribution of Funds, Proxy Advisors, Prospectus and Gibraltar (Amendment) (EU Exit) Regulations 2019, which were laid using the made affirmative procedure in October 2019, when at the time it was necessary to ensure that the SI was in place prior to the previous exit date of 31 October. That SI subsequently ceased to have effect, but it is important that those provisions, which include amendments to the UK’s prospectus regime to ensure it remains operational in a wholly domestic context, are in force before the end of the transition period. Those provisions have therefore been included in this IS.
I would like to say a few words on the amendments that this SI makes to a previous EU exit instrument, the Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019, which I shall now refer to as the equivalence SI. The equivalence SI allows the Treasury to make equivalence directions for EEA states during the transition period for specified provisions. Today’s SI adds additional equivalence regimes to the scope of the power for the Treasury to make equivalence directions for EEA states during the transition period. This is through the inclusion of provisions relating to central securities depositories, which are entities that hold financial instruments and trade repositories that collect and maintain records of derivative trades.
This SI also amends the existing drafting on the length of the direction power to tie it to the end of the transition period. This will enable Ministers to make directions during the transition period to come into force at the end of the transition period, granting equivalence to the EEA for those regimes. Finally, this SI clarifies that the Treasury can impose limitations on the application of state-level equivalence decisions in granting equivalence to the EEA—for example, in response to EU conditions placed on the UK. As with the OTC SI, the Treasury has been working closely with the financial services regulators in the drafting of this instrument and has engaged with the financial services industry.
In conclusion, the Government believe that these instruments are necessary to ensure that the UK has a coherent and functioning financial services regulatory regime at the end of this year when we leave the transition period, and I hope that the House will join me in supporting them. I commend the regulations the House.
John Glen
It is a pleasure to be able to respond to the points made by the right hon. Member for Wolverhampton South East (Mr McFadden), and the hon. Members for Glasgow Central (Alison Thewliss) and for Strangford (Jim Shannon). The latter made a number of points about the conduct issues associated with banks and his exchanges with me on the BBRS. I am sensitive to the fact that in the context of the loans and interventions the Government have made there are conduct challenges, but I think it would be appropriate for me to address that on a separate occasion. However, I note his correspondence.
The right hon. Gentleman addressed three clear questions to me, one of which was about the money laundering reference and the language. Just because we do not have an obligation, it does not mean to say that we do not have a desire to co-operate. The bottom line is that if there is not a reciprocal obligation on the other side, it would be perverse for us to insert language creating that obligation. As he made clear, we have consistently been leaders in regulations in financial services, in particular, and we would look to continue to press for ever higher standards in that regard.
The right hon. Gentleman’s second point was about the issues of the loss of passporting and the nature of the cross-border dynamics. Clearly, we are working through the equivalence process, which the Government are committed to. We are working closely with the Bank of England, the PRA and the FCA.
The SIs are required to ensure that the UK has a functioning equivalence framework during the transition period, and they are not linked to the ongoing UK-EU negotiations on financial services. I will come to the right hon. Gentleman’s further points and those of the hon. Member for Glasgow Central about the bigger picture at the end.
On the right hon. Gentleman’s third point about equivalence and the ability for us to make decisions, we have just updated what we had on the basis of changes that have happened since we left. EMIR 2.2, which is the location policy that was introduced, was something that we voted against, but we are now obliged to have it because those are the terms of reference that we adopted through the passage of the legislation. As I said in my earlier remarks, however, I think it is improbable that we would use that. We hold most of the systemic CCPs and we would probably not have a need to use that in an offensive way.
The hon. Member for Glasgow Central made some broader points. She pointed out the mistakes that we have made and that this had happened before. During the 60 SIs—she has participated in the vast majority of them—these have been the exceptions. This legislation was laid out in advance. It was available and accessible to everyone. My officials and officials from the regulators have worked very hard, but I concede that these mistakes need to be rectified.
On the sentiments around the notion that we will not achieve the same level of access, having the freedom to set our rules does not mean that we are automatically predetermined and predisposed to divergence. Indeed, across the globe in financial services regulation, we have taken a leadership role at the Basel Committee and in other regulatory environments. I anticipate that that is the posture that we will wish to take in future. Within the EU, when we were members, we had a leadership role in financial services.
The Government are committed to supporting the growth of financial services not only in the City but outside the south-east. The hon. Lady is correct to say that we wish to see more jobs and financial services across the United Kingdom, including in Glasgow and Edinburgh.
I have addressed the substantive points that have been raised. There was a wider discussion about the nature of the financial services negotiation and the wider negotiation, but I do not think that is in scope tonight. I hope that I have conveyed that the instruments are necessary to ensure that the UK has a coherent and functioning financial services regulatory regime at the end of the transition period, and that hon. Members across the House will join me in supporting the regulations. I commend them to the House and I hope that the conversation has been informative.
Question put and agreed to.
Resolved,
That the draft Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2020, which were laid before this House on 24 March, be approved.
EXITING THE EUROPEAN UNION (FINANCIAL SERVICES AND MARKETS)
Resolved,
That the draft Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2020, which were laid before this House on 6 May, be approved.—(John Glen.)
UK Debt management Office
John Glen Excerpts(5 years, 9 months ago)
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The Economic Secretary to the Treasury (John Glen)
The United Kingdom Debt Management Office (DMO) has today published its business plan for the financial year 2020-21. Copies have been deposited in the Libraries of both Houses and are available on the DMO’s website, www.dmo.gov.uk.
[HCWS289]
UK Counter-Terrorist Asset Freezing Regime: 1 October 2019 to 31 December 2019
John Glen Excerpts(5 years, 10 months ago)
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The Economic Secretary to the Treasury (John Glen)
Under the Terrorist Asset-Freezing etc. Act 2010 (TAFA 2010), the Treasury is required to prepare a quarterly report regarding its exercise of the powers conferred on it by part 1 of TAFA 2010. This written statement satisfies that requirement for the period 1 October 2019 to 31 December 2019.
This report also covers the UK’s implementation of the UN’s ISIL (Da’esh) and Al-Qaida asset freezing regime (ISIL-AQ), and the operation of the EU’s asset freezing regime under EU Regulation (EC) 2580/2001 concerning external terrorist threats to the EU (also referred to as the CP 931 regime).
Under the ISIL-AQ asset freezing regime, the UN has responsibility for designations and the Treasury, through the Office of Financial Sanctions Implementation (OFSI), has responsibility for licensing and compliance with the regime in the UK under the ISIL (Da’esh) and Al-Qaida (Asset- Freezing) Regulations 2011.
Under EU Regulation 2580/2001, the EU has responsibility for designations and OFSI has responsibility for licensing and compliance with the regime in the UK under Part 1 of TAFA 2010.
EU Regulation (2016/1686) was implemented on 22 September 2016. This permits the EU to make autonomous Al-Qaida and ISIL (Da’esh) listings.
The tables setting out the key asset-freezing activity in the UK during the quarter can be viewed online at https://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2020-05-19/HCWS244/.
[HCWS244]
Bilateral Loan to Ireland
John Glen Excerpts(5 years, 11 months ago)
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The Economic Secretary to the Treasury (John Glen)
I would like to update Parliament on the loan to Ireland.
In December 2010, the UK agreed to provide a bilateral loan of £3.2 billion as part of a €67.5 billion international assistance package for Ireland. The loan was disbursed in eight tranches, and the final tranche was drawn down on 26 September 2013. Ireland has made interest payments on the loan every six months since the first disbursement.
HM Treasury has today provided a further report to Parliament in relation to the loan as required under the Loans to Ireland Act 2010. The report relates to the period from 1 October 2019 to 31 March 2020. It reports fully on the one principal repayment and one regular interest payment received by HM Treasury during this period, and sets out details of future payments up to the final repayment on 26 March 2021.
HM Treasury received a further payment on 20 April 2020, after the scope of the report published today. In line with the agreed repayment schedule, HM Treasury received a total payment of £406,672,904.07 from Ireland. This comprises the repayment of £403,370,000 in principal and £3,302,904.07 in accrued interest. The total outstanding principal on the loan is £1,613,480,000, and the Government continue to expect the loan to be repaid in full and on time.
A written ministerial statement on the previous statutory report regarding the loan to Ireland was issued to Parliament on 3 October 2019, w, column 62WS.
[HCWSD219]
Finance Bill
John Glen ExcerptsMonday 27th April 2020
(5 years, 11 months ago)
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The Economic Secretary to the Treasury (John Glen)
It is a privilege to close this debate on behalf of the Government. This is my first opportunity to congratulate the newly appointed shadow Treasury team and to welcome the hon. Member for Houghton and Sunderland South (Bridget Phillipson) to the Dispatch Box. I also welcome the hon. Member for Oxford East (Anneliese Dodds)—I spent a lot of time with her in Committee debating Brexit matters before Christmas—to her role and welcome the constructive tone that she took in opening this debate.
In last month’s Budget, my right hon. Friend the Chancellor initiated a coherent, co-ordinated and comprehensive economic response to the challenges of covid-19. As the shocking impact of the virus around the globe has become more apparent, the Chancellor has announced further unprecedented packages of support, doing so most recently this afternoon, with the new bounce-back loan scheme and refinements to make the CBIL scheme more accessible—points that I am sure my hon. Friend the Member for Wellingborough (Mr Bone) and the hon. Member for Hackney South and Shoreditch (Meg Hillier) will welcome, given what they said in their speeches. Such measures may not be to the taste of true free marketeers such as my hon. Friend the Member for Wycombe (Mr Baker), or even my right hon. Friend the Member for North Somerset (Dr Fox), but when they and my hon. Friends the Members for Yeovil (Mr Fysh) and for North East Derbyshire (Lee Rowley) welcome them, we know that such measures must be necessary.
The hon. Member for Bethnal Green and Bow (Rushanara Ali) was among those who argued that we should invest in public services to protect frontline services—and we are. The Government have allocated more than £14 billion from the covid response fund to go towards public services, including the NHS and local authorities.
I recognise that some sectors of our economy are experiencing enormous disruption. My hon. Friend the Member for Altrincham and Sale West (Sir Graham Brady) highlighted the challenges faced by the aviation sector, which is of course eligible for the coronavirus jobs retention scheme, under which the Government will pay up to 80% of staff wages up to £2,500 a month. We have offered support to households, too, by increasing the universal credit allowance by £1,000; providing meals or vouchers for eligible home-schooled children in place of free school meals; and making nearly £1 billion extra available for local housing allowance.
I acknowledge that the task is by no means complete. As my hon. Friend the Member for Broxbourne (Sir Charles Walker) eloquently argued, our wellbeing and our economy are not in competition. The Government will do whatever it takes to safeguard people’s health and livelihoods as the situation develops. We will continue to back NHS workers and those who support them on the frontline—for example, by exempting from vehicle excise duty medical courier vehicles that transport medical products and by reforming the tapered allowance so that doctors can spend more time treating patients without facing a higher tax burden.
As my hon. Friend the Member for North East Derbyshire reminded us with his reference to the 93-year wait for a bypass in his constituency, the Bill also delivers on commitments made to the British people at the general election in December. It is vital that these measures are not delayed. The Bill furthers the Government’s ambition to unleash the potential of our economy by increasing the credit rate for research and development expenditure credit and for the structures and buildings allowance—measures welcomed by my hon. Friends the Members for Meriden (Saqib Bhatti), for Stourbridge (Suzanne Webb) and for Penistone and Stocksbridge (Miriam Cates).
The digital services tax will improve the fairness and sustainability of our tax system by ensuring that digital businesses that access the UK market make a fair contribution to the Exchequer. It is anticipated to collect £2 billion in revenue. I welcome the support expressed from all parts of the House for the concept of a digital services tax, and thank the Chair of the Treasury Committee, my right hon. Friend the Member for Central Devon (Mel Stride), for his remarks on the subject. I acknowledge the work that he did on the matter while in government. I also note his reference to the need for better data on the loans scheme; the Government will address that and his letter will be responded to shortly.
The Bill reduces the tax burden on some of the most vulnerable and deserving members of our society, including the Windrush generation and victims of the troubles, for whom compensation will no longer be subject to income, inheritance or capital gains taxes. Kindertransport payments made by the German Government will no longer be subject to inheritance tax either.
This Bill helps in the Government’s efforts to move towards a greener and more sustainable economy, as mentioned by the right hon. Member for Kingston and Surbiton (Sir Edward Davey), and confirms that the CO2 emissions figures for vehicle excise duty will be based on the worldwide harmonised light vehicle test procedure for all new registered cars from 1 April 2020. In addition, zero-emission cars will no longer be subjected to the VED expensive car supplement. These measures will help to ensure that, as our economy develops and grows, it does not jeopardise our environment. I know that many of these measures will attract widespread support across the House. I thank Opposition Members for the constructive and collegiate approach that they have taken over the past few weeks. In that spirit, let me address some of the valuable points raised further in today’s debate.
The shadow Chancellor raised a number of important issues, including tax avoidance, which was also raised by the right hon. Member for Warley (John Spellar). This is a priority for the Government, and in last month’s Budget the Chancellor announced further measures, including legislation to strengthen HMRC’s existing anti-avoidance powers. The Government also plan to issue a call for evidence on the next steps to reduce or end the use of disguised remuneration schemes.
The shadow Chancellor also touched on the subject of entrepreneurs’ relief, a point echoed by my hon. Friend the Member for Weston-super-Mare (John Penrose). Most of the cost of this relief previously came from those making gains over £1 million. With such extreme gains now ineligible for this relief, we can ensure that the support is targeted where it was intended: at small businesses.
My hon. Friend the Member for Arundel and South Downs (Andrew Griffith) raised the prospect of a unified income tax and national insurance regime. The Government are indeed committed to a tax system that is simple and easy to use, which is why we created the Office of Tax Simplification in 2010 and put it on a permanent statutory basis in 2016. We have implemented more than half of the 400 recommendations that the OTS has made to date.
Tonight, this House once again has the opportunity to come together in the national interest. This Bill gives us the tools we need to mitigate the worst effects of the virus today, but it also lays the foundations that will allow our economy to return to strength in the months and years ahead. This is a Bill that will ensure that we truly have a 21st-century tax system: one that is not only competitive but fair and sustainable—a Bill that will help to deliver our commitment to zero carbon emissions by 2050, positioning the United Kingdom at the forefront of clean and sustainable future growth; a Bill that will help Britain to bounce back, levelling up investment and opportunity and putting in place the pro-enterprise policies that will ensure that this country remains one of the best places in the world to start and grow a business, a point made very eloquently in an informed speech by my hon. Friend the Member for South Cambridgeshire (Anthony Browne).
Through the action that the Government have taken, and with the support of the whole House, we will defeat this virus. We have heard speeches from the Shetlands to Central Devon, and from many constituencies in between. Everyone is committed to ensuring that the Government do everything they can to relieve the distress that our nation is now enduring. We will shepherd our country safely through this period of uncertainty and disruption. The United Kingdom will emerge from this crisis stronger, more resilient and more united than before. For all these reasons, I commend the Bill to the House.
Mr Deputy Speaker (Mr Nigel Evans)
I, too, would like to associate myself with the comments of the shadow Minister in thanking all those who have made today’s proceedings work so smoothly. Thank you very much.
Temporary Changes to Pensions Tax in the Context of Abatement for Returning Workers
John Glen Excerpts(5 years, 11 months ago)
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The Economic Secretary to the Treasury (John Glen)
At this time, it is important that key public sector workforces can bring back workers with relevant and valuable experience to ensure that the Government can continue to provide critical public services. I am working with colleagues across Government to ensure we remove any potential barriers to those who wish to return to work to help in our fight against covid-19.
For public sector workers returning to support the Government’s response to covid-19 the Government intend to temporarily suspend tax rules that would otherwise apply significant tax charges to pension income received by recently retired individuals aged between 50 and 55. This change, taken alongside complementary changes to rules for relevant public service pension schemes (subject to relevant HM Treasury agreement), will help ensure individuals’ pension income will remain protected if they return to work at this important time.
The measure is designed to ensure that we can continue to provide important public services at this time. As these proposed tax changes form part of our response to covid-19, they will initially apply in respect of payments made in the period from 1 March to 1 June 2020.
HMRC will set out operational guidance in due course, but this measure will only apply to people returning to roles as a result of covid-19. I am working with colleagues to identify relevant workforces who should benefit from these changes.
The Government’s actions will provide relevant public sector staff associations with the assurance that their members with pensions in payment and pension benefits will be unaffected if they wish to play their part in our response to this virus.
[HCWS196]
Financial Services Regulation
John Glen Excerpts(6 years ago)
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The Economic Secretary to the Treasury (John Glen)
In preparation for leaving the European Union, HM Treasury made over 50 EU exit statutory instruments under the European Union (Withdrawal) Act 2018 to ensure the UK’s financial services regulatory regime stood ready for all scenarios at exit day. This included introducing a range of temporary permissions and transitional regimes to minimise any disruption to firms and consumers as we leave the EU.
The UK has now left the EU and entered a transition period, which will last until 31 December 2020. The European Union (Withdrawal Agreement) Act 2020 (“EUWAA 2020”) delayed those parts of the EU exit statutory instruments that would have come into force immediately before, on, or after exit day so they instead come into force at the end of the transition period. As a result of further secondary legislation made under the EUWAA 2020, the temporary permissions and transitional regimes will also now apply at the end of the transition period.
While, in general, the same laws and rules will apply at the end of the transition period, HM Treasury recognises it will be important, irrespective of the agreement that is reached between the EU and UK, for the regulators to have the flexibility to smooth any adjustments to the UK’s regulatory regime for financial services at the end of the transition period.
The Department will therefore retain the regulators’ “temporary transitional power” (TTP), which was introduced via the Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019, and shift its application such that it is available for use by the UK regulators for a period of two years from the end of the transition period.
The TTP will allow the Bank of England, the Prudential Regulation Authority and the Financial Conduct Authority to phase-in changes to UK regulatory requirements so that firms can adjust to the UK’s post-transition period regime in an orderly way, in line with the objectives already set by Parliament.
[HCWS188]
Pension Reforms
John Glen Excerpts(6 years ago)
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The Economic Secretary to the Treasury (John Glen)
The Government are developing proposals to address the unlawful age discrimination identified by the Court of Appeal in the 2015 reforms to the judicial and firefighters’ pension schemes.
On 15 July 2019, the Government announced they would take steps to remove this discrimination retrospectively [HCWS1725]. It confirmed that this would apply to pension scheme members with relevant service across all those public service pension schemes that were introduced in 2014 and 2015, regardless of whether individuals had made a claim. This is a complex undertaking, and it is important to get it right.
Since February 2020 relevant pension schemes have been conducting technical discussions with member and employer representatives to seek initial views on the Government’s high-level proposals for removing the discrimination.
I am grateful for the constructive engagement of trade unions, staff associations, public service employers and other stakeholders in these discussions. The Government are considering the initial views of stakeholders and continuing to work through the details of the technical design elements of the proposals. Detailed proposals will be published later in the year and will be subject to public consultation. The Government will welcome views on these proposals.
For the avoidance of doubt, members of public service pension schemes with relevant service will not need to make a claim in order for the eventual changes to apply to them.
I would like to reassure members that their pension entitlements are safe. The proposals the Government are considering would allow relevant members to make a choice as to whether they accrued service in the legacy or reformed schemes for periods of relevant service, depending on what is better for them. The Government will provide more detail later in the year, but if an individual’s pension circumstances change as a result, the Government may also need to consider whether previous tax years back to 2015-16 should be reopened in relation to their pension.
The Government will also set out their proposal to remove the discrimination for future service in the forthcoming consultation.
In January 2019, the Government announced a pause to the cost control mechanism in public service pension schemes, due to uncertainty about benefit entitlements arising from the McCloud judgment. Alongside their proposals for addressing discrimination, the Government will also provide an update on the cost control mechanism.
[HCWS187]
Oral Answers to Questions
John Glen Excerpts(6 years ago)
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Mr Alistair Carmichael (Orkney and Shetland) (LD)
The Economic Secretary to the Treasury (John Glen)
The Government take seriously their climate change responsibilities, including the target of net zero greenhouse gas emissions by 2050. That means enabling a diverse range of low-carbon technologies, and we see the use of marine renewables in the future energy mix, though developers must demonstrate how those can compete with the low prices achieved by wind and solar technologies.
Mr Carmichael
In order to compete with those technologies, these renewables have to get from the research and development stage to commercial deployment. The industry knows that and has come up with a mechanism known as the innovation power purchase agreement. Is there any reason why the Government are not engaging with that? I have to tell the Minister that these developers are not going to hang around in this country forever. If they cannot make that step here, they will go elsewhere and do it.
John Glen
I am very aware of the 1,700 people who work in this area in the right hon. Gentleman’s constituency and across Wales and Scotland. I am also aware that he wrote to the previous Exchequer Secretary, who moved post before he could get a reply. At the moment, renewables are five times more expensive than wind and solar, but the Government will engage in a dialogue with the industry as we look to resolve this and move forward constructively.
Paul Bristow (Peterborough) (Con)
The Economic Secretary to the Treasury (John Glen)
Low-paid workers will continue to benefit from above-average pay rises, with the national living wage set to reach two thirds of median earnings and to be extended to workers aged 21 and over by 2024, providing economic conditions allow. That is projected to benefit nearly 4 million low-paid workers.
Paul Bristow
I thank the Minister for that response and for everything he is doing to protect jobs in Peterborough and across the country. I was proud to stand on our manifesto in December and, in particular, on our commitment to protect the low paid. The Government have taken vital steps in the short term to protect jobs. Will he confirm that this Budget is also providing a £200 tax cut for the typical family in Peterborough?
John Glen
Absolutely. I can confirm to my hon. Friend that a typical employee will be about £104 better off next year through the cut in national insurance and the freeze in fuel and alcohol duties, and the abolition of other taxes, such as the tampon tax, will also be of benefit to many of his constituents, for whom he has been fighting hard since he came to this place.
Kevin Brennan (Cardiff West) (Lab)
Many low-paid workers are self-employed. When I raised this matter with the Leader of the House yesterday, he said:
“The Government are inevitably conscious that when we close places by order and that has an effect on people’s livelihoods, there is a societal responsibility.”—[Official Report, 23 March 2020; Vol. 674, c. 27.]
Many of these low-paid self-employed people work in the music industry. I know that we have an urgent question coming up, but I say to the Minister that they will be looking for more reassurance than we have heard so far this morning that the Government are going to introduce a scheme and do it soon.
John Glen
My right hon. Friend the Chancellor has set out clearly not only the range of measures that we have taken but our determination to come up with an enduring solution that addresses the range of challenges. The whole Treasury team is fully aware of how distressing and challenging people are finding it out there and we are working as fast as we can to come up with a solution that works for everyone.
David Linden (Glasgow East) (SNP)
If the current coronavirus and financial crisis has taught us one thing, it is that we need to look again at zero-hours contracts and the difficulty that they put many of our constituents in. I very much welcome the measures that have been brought forward on support for businesses and employees, and I very much hope that we will hear about support for the self-employed in the response to the urgent question this afternoon, but there is a lot of concern among zero-hours workers. Will the Minister outline what support the Government are going to bring forward for zero-hours workers in Glasgow East?
John Glen
If they are on pay-as-you-earn, they are eligible for the job-retention scheme, but the hon. Gentleman makes a fair point about the range of concerns that exist, and we continue to look carefully at what we can do to enhance the measures that have already been announced. He will be aware of the enhancements to the welfare package—my right hon. Friend the Chancellor has announced that an additional £6.5 billion has been put in so far—and we will continue to look at what more can be done.
Bill Esterson (Sefton Central) (Lab)
I encourage the Minister not to make the perfect the enemy of good in the design of the scheme. Many self-employed workers are worrying about their inability to put food on the table this week. They are finding the universal credit system completely overwhelmed, so I encourage Ministers to announce the scheme and make sure that the cash gets through. It has to be soon; otherwise, people are going to be in real hardship.
John Glen
The hon. Gentleman makes a reasonable point. That issue is why we have tried to move forward on interventions that could be done quickly and have done them as quickly as we can. In respect of universal credit, we have increased the UC standard allowance from £317.82 to £409.89 per month for single claimants. We have increased the local housing allowance, we have relaxed the earnings rules for self-employed UC claimants, and we will continue to look at every measure that we can to make an impact in the lives of those people who are suffering as the hon. Gentleman describes.
Patrick Grady (Glasgow North) (SNP)
The Minister talks about looking at every measure that we can, but the Chancellor just appeared to rule out a universal minimum basic income. Is that not quite disappointing? The way to answer these questions—the way to avoid thousands of people being laid off, ending up on universal credit and potentially getting trapped in the benefits system—is to provide a minimum income guarantee for everyone. That would also help to provide a fiscal stimulus in the economy once we start to get through this crisis.
John Glen
My right hon. Friend the Chancellor set out clearly the reasons why we have some concerns about, and indeed would not want to have, that universal guarantee. We want to make sure that the interventions we make are targeted at those who are most in need at this time, and not giving money unnecessarily to people who are wealthy.
Joy Morrissey (Beaconsfield) (Con)
The Economic Secretary to the Treasury (John Glen)
The right hon. Gentleman makes a very reasonable point, and sets out a range of issues. The Government will be looking into this, and I will liaise with my colleagues in the Department for Business, Energy and Industrial Strategy to ensure that they are focusing on all the dimensions of the problem that he has outlined.
Sir Desmond Swayne (New Forest West) (Con)
Christian Matheson (City of Chester) (Lab)
One of the problems with this crisis is that we do not know how long it is going to last. I have businesses in my constituency—events companies, conference companies and sporting companies—that have long lead-in times to organise their events, but they cannot cancel them yet and thereby claim insurance because there is no Government guidance. Do the Government have any plans to give guidance, particularly to the insurance companies and events companies, that will perhaps say, “No events for the next six months”?
John Glen
We are working closely with the insurance industry, and obviously events companies are underpinned by contractual obligations. We established that if they have cover relevant to non-specified diseases, the announcements by the Prime Minister and the Chancellor have triggered those policies to be paid out, but I am happy to look at any specific cases that individual Members want to bring to me, which I can take up with industry representatives.
Stephen Crabb (Preseli Pembrokeshire) (Con)
In the wake of the last economic crisis, when we needed the banks to stand on the side of small businesses, too often they did not, and many of us have seen too many examples of small businesses being bullied into bankruptcy. What can my right hon. Friend the Chancellor say about the posture he wants to see from the banks at this time?
John Glen
The Chancellor and I have had dialogue with individual heads of high street banks. I have been speaking to the head of UK Finance this morning and will be convening a meeting of bank representatives later today. We anticipate that the banks should be taking the most sympathetic forbearance measures possible, and we have set out very clearly, as my right hon. Friend the Chancellor did, that the loan scheme is interest-free for the first 12 months, with no fees or repayment penalties. I expect the banks to step up to the mark, as I know they will. We have to remember that many of the people actually delivering this service in high street branches or in call centres are not very well paid and are working flat-out to deliver a key service to our nation at this time.
David Linden (Glasgow East) (SNP)
The message from the Prime Minister last night for our constituents to stay at home could not have been clearer, but many of our constituents who are staying at home will have increased energy bills as a result. The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) is co-ordinating a cross-party letter to the Government asking for a reduction in VAT on energy bills. Are they willing to look favourably upon that to support our constituents, who will have higher energy bills as a result of staying at home?