Oral Answers to Questions
John Glen Excerpts(4 years, 1 month ago)
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Shabana Mahmood (Birmingham, Ladywood) (Lab)
The Economic Secretary to the Treasury (John Glen)
I hold regular discussions, usually on a six-weekly basis, with the chief executive of the Financial Conduct Authority on a range of issues regarding the regulation of financial markets, including the insurance market.
Shabana Mahmood
Insurance companies are exploiting the cladding scandal by charging leaseholders extortionate, punitive and unethical prices for their buildings insurance. The Treasury and the FCA have frankly done nothing while people are forced to find eye-watering sums of money because of a scandal that they did not cause, and there is no transparency as to how their premiums are being calculated. After many years, a Government Minister has finally written to the FCA, but will the Treasury now step up and ensure that the FCA not only looks into this matter but provides redress for my constituents and the thousands of people across this country who are experiencing severe financial distress?
John Glen
The FCA has been looking at this matter, and last week my colleague the Secretary of State for Levelling Up, Housing and Communities wrote to the FCA to ask it to look at whether there is a market failure. Since then, it has written back, with the Competition and Markets Authority, to say that they are engaging with the industry and will produce a statement on the matter in due course. I recognise the concerns that the hon. Member has raised and the dysfunctionality that may exist in the market, and it is important that that is looked at carefully.
Theresa Villiers (Chipping Barnet) (Con)
Reform of Solvency II could unlock billions to create jobs, enhance prosperity and help to raise living standards. May I ask the Government to make some progress on this?
John Glen
We are making progress. We are in deep conversations with the Prudential Regulation Authority and its actuaries on the way that the risk margin and the matching adjustments should be altered to release that additional capital. We are confident that progress will be made and we are also working closely with the insurance industry to see that that comes to pass.
Kenny MacAskill (East Lothian) (Alba)
Nigel Mills (Amber Valley) (Con)
The Economic Secretary to the Treasury (John Glen)
My hon. Friend, who has great expertise in this area, makes a reasonable point. The Government’s Help to Save scheme is under way, but the Government continue to work very closely with the Money and Pensions Service to look at new ways of increasing financial resilience and getting young people to understand the opportunities of saving earlier.
Alison Thewliss (Glasgow Central) (SNP)
Lord Agnew resigned because he could no longer defend the level of fraud in the bounce back loan scheme and the lack of action to tackle it. Much of that has been facilitated by the absolute shambles of the Companies House register. I do not want Ministers to fob this off to the Department for Business, Energy and Industrial Strategy, because that is exactly the disconnected approach that Lord Agnew criticised. If there is an economic crime Bill, will Ministers take action to give Companies House anti-money laundering responsibility, rather than watching as fraudsters using UK shell companies waltz off with billions of pounds of public money?
John Glen
I am grateful to be able to confirm to the hon. Lady, as I have on numerous occasions in Committees over the last two or three years, that this is a key priority for us in the Treasury. Obviously, as the Chancellor said, we cannot comment on future legislative agendas, but the measures she mentions, picking up on the Financial Action Task Force report from 2018 with respect to Companies House, are something we agree with.
Selaine Saxby (North Devon) (Con)
Bob Blackman (Harrow East) (Con)
I have no argument against compensation being paid to the victims of the London Capital & Finance scandal, but I am concerned that they were paid 80% of the losses, yet the 800,000 victims of Equitable Life received only 22%. Does the Minister agree that it is a principle of fairness and of ensuring that people who save for their retirement are properly compensated?
John Glen
I thank my hon. Friend for his question. He has a long-standing interest in the issue. The difference between the two is that people received compensation from Equitable Life on the basis of relative losses, which is the gap between what they received from their policy and what they could have expected from investing in a similar product. With LCF, the bondholders were expected to lose the majority of their principal investment and stood to get less back than they put in. The schemes were looked at in the context of their respective instruments and appropriate support was given. There are no plans to open up compensation for Equitable Life again.
Dan Jarvis (Barnsley Central) (Lab)
The Budget confirmed that total funding through the UK shared prosperity fund will, at a minimum, match the size of EU funds in each nation, and in Cornwall. If the Treasury were to do the same with all the other less-developed regions, as it should, South Yorkshire would be on course to receive £900 million of investment over the next seven years. Will the Chief Secretary to the Treasury give an assurance that we will get our fair share?
Coronavirus Grant Schemes: Fraud
John Glen Excerpts(4 years, 2 months ago)
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Mr Pat McFadden (Wolverhampton South East) (Lab)
(Urgent Question): To ask the Chancellor of the Exchequer, if he will make a statement on fraud in the coronavirus grant schemes.
The Economic Secretary to the Treasury (John Glen)
Since March 2020, the Government have delivered a comprehensive multibillion-pound package to support individuals and businesses during the pandemic. As the House would expect, the Government have taken the issue of potential fraud relating to covid grant schemes extremely seriously.
Robust measures were put in place to control error and fraud in the key covid support schemes from their inception. For instance, to minimise the risk of fraud and error and unverified claims, the coronavirus job retention scheme and self-employment income support scheme were designed in a way to prevent ineligible claims being made up front, and made grants for employees and businesses using existing data held on Her Majesty’s Revenue and Customs’ systems. That included cut-off dates around scheme eligibility and the need for customers to be registered for pay-as-you-earn online or self-assessment. In 2020-21, HMRC recovered £536 million of over-claimed grants.
To further bolster anti-fraud measures, at the spring Budget last year, the Government invested more than £100 million in a taxpayer protection taskforce of more than 1,200 HMRC staff to combat covid-related fraud. This taskforce is expected to recover between £800 million and £1 billion from fraudulent or incorrect payments during 2021-22 and 2022-23.
The Government’s bounce back loan scheme supported more than £46 billion of finance to 1.5 million businesses. We are continuing to actively work with the British Business Bank, lenders and fraud authorities to tackle fraud and to recover loans obtained fraudulently. The value of prevented fraud was £2.2 billion, and we continue to recover further funds through our counter-fraud work. In addition, as part of the spring Budget last year, we announced plans to significantly strengthen enforcement activity against fraudulent bounce back loans. That included introducing processes with the Insolvency Service to prevent the fraudulent dissolution of companies being used as a means to escape liabilities, granting the Insolvency Service new powers and investing further in the National Investigation Service.
Importantly, throughout the pandemic we have been transparent about the estimated level of fraud and error in the covid schemes, and HMRC’s annual report and accounts, which were laid before the House in November last year, included the latest information on error and fraud in the HMRC-administered covid-19 schemes. Figures on estimated losses and the bounce back loans, including those due to fraud, were published in the Department for Business, Energy and Industrial Strategy’s annual reports and accounts.
Given the unprecedented efforts that the Government have made to protect jobs and livelihoods during this pandemic, it would have been impossible to prevent all related fraud. However, we have taken reasonable steps, and will continue to do so, to deflect and combat that fraud, and we will continue to be vigilant.
Mr McFadden
I am grateful to the Minister. Last week, the Government confirmed that they expect to write off around £4.3 billion of the funds allocated to coronavirus help schemes. There was no press release, no Instagram video, no statement to this House and no sight of the vanishing Chancellor at all; it was just buried away on the Government website. The Government website states, and the Minister repeated the claim, that from the beginning:
“Robust measures were put in place to control error and fraud in the key coronavirus support schemes.”
If robust measures to prevent fraud were in place, why did they fail to this shocking degree?
In November, the head of HMRC estimated that around half the money lost could be recovered. Why has that estimate now been downgraded to only a quarter of the funds? Why are the Government giving up so easily and not doing more to track down the money, rather than allowing it to remain in the hands of the fraudsters and criminals who have stolen it from taxpayers?
Mr Deputy Speaker, £4.3 billion is a huge sum of money. It is enough to take hundreds of pounds off energy bills this year for every household in the country. It is about the same annual amount as the Chancellor took off people on universal credit in the Budget in November. It is roughly the same as half the annual policing bill for the whole country. This write-off of £4.3 billion comes as households face a cost-of-living triple whammy of rocketing energy bills, the Chancellor’s tax increases and a decline in real wages. Coming on top of the billions wasted on crony contracts and the amounts lost in loan schemes, these levels of waste destroy any claim that the Conservative party had of being careful stewards of the public finances. Will the Minister launch an investigation into how this happened and do more to recover this money from the fraudsters who stole it in the first place?
John Glen
I thank the right hon. Gentleman for his comments, which I am very happy to address. First, we are not writing anything off. The figures quoted are what we expect that taxpayer protection taskforce to recover in the next two years in which it will exist. HMRC has longer to address fraud in the schemes, which it will do in the context of wider compliance activity. HMRC did not produce the figure of £4.3 billion. I understand that it was an inference made by journalists who subtracted £1.5 billion from the estimate of the amount to be recovered by the taxpayer protection taskforce from the £5.8 billion estimated as error and fraud in 2020-21. That was published and Jim Harra and others from HMRC publicised all this before Christmas—in November. HMRC simply used the same numbers in a “mythbuster” article to be published later this week.
Those are the facts. There is nothing new here today, but I would like to address some of the underlying concerns. The right hon. Gentleman is absolutely right to say that fraud is unacceptable. We think that, which is why—as I said in my opening remarks—in March last year, the Chancellor dedicated £100 million to employ 1,265 people from HMRC to undertake these fraud checks and to bear down on the fraud. We have had 13,000 one-to-one inquiries and sent 75,000 letters to those thought to have incorrectly claimed.
I point out to the right hon. Gentleman, however, that many of these schemes were stood up, refined and adapted very quickly. In order to meet the needs of individuals, the self-employed and businesses up and down the country, £81.2 billion of payments were made across the three main schemes. Although I recognise that there has been an element of fraud, the Government have never been complacent about that. Grants for employees and businesses used data on HMRC systems. The design of the scheme was informed by expert advice from HMRC, which has extensive knowledge and understanding of where errors and fraud risks lay. We have implemented post-payment compliance to identify and recover overpayment, and we have invoked automated controls into digital claim processes, which have prevented 100,000 ineligible, mistaken claims.
The Government are not complacent at all about error and fraud. We will continue to bear down on it, and I urge Members of the House and members of the public to continue to contact HMRC, as they have done, as we seek to maximise the recovery of moneys lost.
Kevin Hollinrake (Thirsk and Malton) (Con)
I say to the Opposition that it is the easiest job in the world to stand on the sidelines and criticise, but what would they have done? Would they have waited and left businesses in peril? Would they have done that in search of the perfect? Some £407 billion has gone to businesses, the vast majority of which went to the right places. Of course there will be lessons to learn, but if the same situation happens again, will my hon. Friend prioritise the needs of business, rather than making the perfect the enemy of the good?
John Glen
I thank my hon. Friend for the clear point behind his question. We were straining every sinew in the Treasury to get money out as quickly as possible. On 14 April 2020, a Labour party press release stated:
“It is clear that additional action needs to be taken to increase the take-up of the different measures. We have called for urgent action…as take-up is worryingly low.”
That is why we intervened to change the design of the bounce back loan scheme and to make it 100% backed to get the money out quickly—£46 billion to 1.5 million businesses. I am sure that lessons can be learnt from what we have done—absolutely they can—but the principle of getting that money out and designing schemes with HMRC’s excellent input during that period was imperative for the Government.
Alison Thewliss (Glasgow Central) (SNP)
It seems, again, that when the going gets tough, the Chancellor goes missing.
HMRC said in its statement that fraud in the covid support schemes is in line with its original planning assumptions, but expecting this eye-watering level of fraud seems almost worse than it happening by accident. We see it also in the bounce back loan schemes. How much of the fraud relates to UK company structures and the related issues at Companies House, which make the UK such a magnet for money laundering?
As well as the Treasury being out of pocket, constituents of mine employed by companies deliberately employing dubious corporate structures did not even receive the furlough payments to which they were fully entitled. What consequences will there be for those companies, and for those people who never received the money that they were due, due to fraud and error? For the many people around these islands who received no support whatsoever—those who were excluded from support schemes—this fraud and error is all the more galling. Will the Minister apologise to them and put that right? Finally, when HMRC is chasing down an estimated 170,000 families who claimed child benefit in error, why is it letting fraudsters and criminals waltz off with £4.3 billion of public money, all of this in the midst of a cost of living crisis? That money should be in the pockets of our constituents, not of criminals.
John Glen
I listened very carefully, as I always do, to the hon. Lady. I totally agree that we must not accept any fraud and error as inevitable, and we will continue to bear down on that. From the start we designed the schemes to involve “know your customer” and anti-money laundering checks on application. Measures were put in place by the British Business Bank to detect multiple applications—indeed, there was co-operation among UK Finance members on that. Subsequently, we have developed further interventions involving the National Investigative Service, the Insolvency Service and Companies House data to prevent rogue company directors from escaping liability. We will continue to bear down on the fraud that may have occurred. But initial data on the repayment of bounce back loans shows that in only 2% have borrowers defaulted, and only 7% are behind repayments in any form. There is no complacency in the Government’s approach, and we will continue to look at ways to maximise what we can reclaim where there have been errors and fraud.
Derek Thomas (St Ives) (Con)
It is right that we look carefully at how council tax payers’ money is spent, but let me refer to the current covid grant scheme, particularly for Cornwall. We in Cornwall need reassurance that Cornwall Council has absolute discretion in how to ensure that current leisure grants, for example, go to the businesses that most need them. At the moment, the council is saying that it has to pay the money to whoever applies, irrespective of how well their business is doing. My understanding from the Government is that, if a business is impacted by omicron, staff shortages, or reduced consumer demand, that is when the grant is paid. Could the Minister confirm to me, and to Cornwall Council, that it is for the council to ensure that the money goes where it is most needed, and that is what the Government intend?
John Glen
I can certainly confirm that the intention behind the range of interventions was to find the most appropriate delivery mechanism for the different support payments, and obviously we have worked with local authorities to give them that discretion. Every authority will need to be held to account for how it has decided to deliver the grants. My hon. Friend has made a clear case for where those priorities need to lie, and we are clear about the intention behind the grants, but it will be for local authorities throughout the country to make their decisions in the right way.
Nick Smith (Blaenau Gwent) (Lab)
Seventy-one million pounds of taxpayers’ money was fraudulently claimed through the eat out to help out scheme. How many arrests have been made, and are the criminals now enjoying prison food?
John Glen
I am sorry, but I cannot give the hon. Gentleman an exact answer. What I can say to him is that, according to HMRC, the expectation of fraud as part of that particular intervention in the summer of 2020 was about 8.5%, and the figures submitted by Jim Harra, the head of HMRC, in last year’s report were in line with the expectations set out at the start of this journey.
Mr Philip Hollobone (Kettering) (Con)
Our much-loved Kettering gymnastics club provides sporting facilities for about 1,000 local young people every week. It is a not-for-profit club, registered with HMRC under the community amateur sports club scheme, and it operates as a club and not as a business. It has previously received covid grant funding from the council, but the later schemes issued in December 2021 seem to refer just to businesses, rather than to clubs. Can the Minister clarify the Government’s guidance to local authorities about whether clubs are eligible for the new funding?
John Glen
I recognise that the gymnastics club in Kettering, along with so many other clubs of that type around the country, provides an enormously valuable point of contact for young people. I should be happy to examine my hon. Friend’s point in detail and write to him with clarification, rather than dealing with it from the Dispatch Box. The principle of giving discretion to local authorities in order to meet the needs in particular communities has guided the Government throughout this process, and we have used this grant channel a number of times for that reason, but I will look as sympathetically as I can at the question that he has raised.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
The Minister referred to default as though it were the equivalent of fraud. The Public Accounts Committee has examined in great detail the issue of fraud in this area. As I am sure he knows, there are grants and bounce back loans taken fraudulently that people will be repaying, but the criterion on which they obtained them was itself fraudulent.
The Minister seems to be accepting this level of fraud. Will he make a clear statement that fraud at all levels will be investigated? We gained the impression from HMRC and others who appeared before us as witnesses that they would take the low-hanging fruit and let a lot of fraud continue without being tracked down.
John Glen
I know that the hon. Lady’s Select Committee is conducting an in-depth inquiry. I believe that the second permanent secretary and others appeared before the Committee last week, and I look forward to its report.
I can absolutely clarify that we do see the distinction between a credit loss and fraud. What we are talking about here is: what are the most effective mechanisms, and over what timeframe, to get that money back? Also, we have received moneys back from, for example, the furlough scheme: moneys and grants that were made in error. So it is a complicated picture. I am certainly not suggesting from this Dispatch Box that the Government are writing anything off, or do not grasp the distinction between a credit loss and fraud. This needs to be tackled, but it needs to be tackled in a time and money-efficient way. Obviously the law of diminishing returns begins to apply after a certain point, and we will again by led by HMRC and its excellent advice as we pursue the matter.
Dr Julian Lewis (New Forest East) (Con)
The Government are saying that fraudsters will still be relentlessly pursued. If, heaven forbid, the Minister ever had to implement such a scheme in the future, would he regard it as a satisfactory result to know that 99% of these huge sums of money went to the intended recipients?
John Glen
I thank my right hon. Friend for his question. He helpfully highlights that many of these grants and schemes were very effective in getting money to the right people in a timely way. I spoke earlier to an official from HMRC, who said, “We managed to get some of the money out in six days. If we had spent more time designing in more verification, we could have made it watertight. That would have taken several months and many businesses would have gone to the wall.” That was the dilemma we faced. I am not saying we got everything right, but it was certainly done in all good conscience to try to get the balance right.
Mick Whitley (Birkenhead) (Lab)
The announcement that no action will be taken to recover the nearly £4 billion fraudulently claimed from the covid support schemes stands in stark contrast to the Government’s treatment of some of the poorest people in my constituency who had their benefits cut off, and who were even chased through the courts, for making the simplest of mistakes when claiming benefits.
Will the Minister concede there is a double standard when it comes to holding the rich and powerful to account, whether for breaching lockdown restrictions or even for downright fraud? Will he also commit to providing redress to my constituents who have suffered so enormously as a result of this Government’s heavy-handed approach to accidentally misclaimed benefits?
John Glen
I do not accept the premise of the hon. Gentleman’s question. The estimate of the amount of fraud is broadly in line with what we see in other Departments, including the Department for Work and Pensions. There is no complacency here. There is a desire to iterate our response by using insights into behaviour to examine all avenues to reclaim this fraud, and we will continue to take that approach fairly across all the schemes.
Mr Toby Perkins (Chesterfield) (Lab)
It is interesting to hear the Minister confirm what I have often believed—that it was pressure from my colleagues on the shadow Treasury Bench that forced the Government to extend their proposed action to support businesses. I am glad he has confirmed that, but, on the specifics of this case, does it not say everything about this Chancellor that he is willing to write off £4.3 billion but does not have the courage to come to this place to respond to the question asked by my right hon. Friend the Member for Wolverhampton South East (Mr McFadden)?
John Glen
I have been in the Treasury for more than four years under three Chancellors. I have supported them all to the best of my ability, and I will continue to do so. What I can tell the hon. Gentleman is that the Chancellor has been absolutely committed from the start to design the best possible scheme to provide the money to support businesses and individuals up and down this country. Since then, the £100 million investment in extra HMRC personnel has been designed to maximise the recovery of fraud. The work on duplicate application checks, the changes in director information and the HMRC turnover check—all these insights were designed to minimise the loss to the taxpayer. That governs the Chancellor’s approach, and it governs the approach of all Ministers and officials in the Treasury.
Stephen Flynn (Aberdeen South) (SNP)
What does it say about the integrity of this Tory Government that they are willing to write off billions of pounds of taxpayers’ money while, at the same time, cutting the income of millions of people on universal credit during a cost of living crisis?
John Glen
This Government made a range of interventions to support people in different forms and in different ways. We were clear from the very start that we would not be able to help everyone. One of the issues we had to reconcile was verification of people’s identity and status, and this measure to prevent fraud arguably stopped some people accessing the benefits of some of these schemes. I do not accept the premise of the hon. Gentleman’s question.
Matt Western (Warwick and Leamington) (Lab)
The Minister will be aware that in 2020-21, Companies House showed the greatest ever number of incorporations. Did the Government not sniff something going on? If they did, why did they not act? If they are honest, do we not face taxpayers everywhere having to pick up the £4.3 billion bill for their failing?
John Glen
No, I do not accept that, I am afraid. At every stage the Government took the best advice that we could on the flows of data that were available from HMRC and Companies House, which conditioned the design of the schemes. Subsequently, insights and input from Companies House, HMRC and the Insolvency Service have governed how we seek to tackle and recover moneys from fraud.
Tony Lloyd (Rochdale) (Lab)
The Minister shows a degree of nervous embarrassment but very little by way of contrition. Companies in my constituency face closure because they are struggling. What would that £4.3 billion have done for those that did not qualify for any assistance from this Government?
John Glen
I am of course very concerned about businesses that are struggling and have been in difficulty, but I am pleased that the economy has recovered far quicker than many anticipated it would this time two years ago, and I am pleased that unemployment is at about 4.1%, rather than the 12% that was anticipated at the start of this crisis. There is no complacency from this Government, and there is an absolute determination to support businesses in getting back on their feet and trading. That is why we put in place so many interventions, which were designed in different ways to maximise the support to businesses and individuals across this country.
Wendy Chamberlain (North East Fife) (LD)
The Government say time and again that support during the pandemic for the people who fell through the gap between the job retention scheme and the self-employed scheme would be too difficult to administer because of the risk of fraud. We now know that, simultaneously, companies that were defrauding taxpayers were being supported. We are left to conclude that the decision not to help those 3 million people was simply political. Those small businesses, sole traders and entrepreneurs should be the driving force of the UK’s economic recovery in the months and years ahead. What impact has this lack of support had on those sectors, and what will the Government do to support them going forward?
John Glen
The hon. Lady points to the fact that none of these schemes was perfect. She recognises implicitly that checks against data to verify people’s identity were necessary to ensure that they were suitable recipients of taxpayers’ funds. Unfortunately that meant that some were not able to secure the support that they sought. Where we can, we have moved forward and iterated these schemes, focusing and targeting them on the sectors of the economy that were most hit at different stages in this crisis, but I concede that unfortunately we were not able to help everyone, as we would have liked.
Andrew Gwynne (Denton and Reddish) (Lab)
The Minister said that the Government were straining every sinew to get money out quickly, and nobody disagrees with that, but there must be retrospective due process to ensure that there was proper compliance. Defrauding the public purse can never be acceptable. One emergency loan for £4.7 million went to a firm founded just two days before it received the funds. How many other companies had only just been formed?
John Glen
Unfortunately, I am sure that there are examples of people who conducted fraud; that is self-evident. I urge the hon. Gentleman to give as much information as he can to HMRC, so that these matters can be chased up. There was always a balancing act between speed of delivery and risk of fraud, and Government and Ministers’ decisions were made in the light of the best advice. It was not a perfect situation. However, we were urged to get that money out—not just by Labour but by the CBI, the Federation of Small Businesses and numerous other organisations—and we responded. I think that was generally acknowledged, and it certainly was by the shadow Chancellor at the time.
John McDonnell (Hayes and Harlington) (Lab)
This is outrageous. This is an attempt to shift the blame to everybody but the Government. Of course MPs across the House were pressing the Government for speed of action—for everyone, not just for a select few—but we were also raising issues of fraud. I wrote to the Chancellor within weeks of the scheme’s being introduced about the information coming in about fraud. I tabled parliamentary questions on 3 July. I simply asked what measures were in place. What response did I get?
“I cannot go into specific detail about measures either in place or in development. For the same reason, it is not possible to release the number of fraudulent applications or associated investigations.”
I asked the same questions about the number of companies going bust and so on but still receiving grants.
I ask the Minister: what other organisation loses billions, yet no one is held to account, no one resigns and there is not even a word of apology—not a single sentence of regret? That money could have been used effectively to lift people out of poverty and to support jobs, yet through the incompetence of this Government, it has gone missing.
John Glen
I thank the right hon. Gentleman for his question. I do not accept the premise behind it, but I do accept that we moved £81.2 billion of support through various schemes out to businesses and individuals up and down the country, and that there was an element of fraud, which we will continue to bear down on aggressively.
Florence Eshalomi (Vauxhall) (Lab/Co-op)
The Minister may be aware that my Vauxhall constituency is home to world-renowned arts and cultural centres and small independent theatres, many of which are supported by young, up-and-coming independent actors, freelancers and artists who received no support whatsoever. Seeing the Government wipe away this £4.3 billion debt is another slap in the face for people who have struggled for the past 22 months without any support, even though they are taxpayers. I pay tribute to the many business improvement districts across Vauxhall—the South Bank BID, Vauxhall One, Brixton BID and This is Clapham—which support small and independent businesses up and down my constituency that struggled and often did not qualify for any grants because of the rateable values associated with inner-London constituencies. Does he understand that many people feel anger when they see the Government write off this £4.3 billion?
John Glen
As a former arts Minister who visited many of those organisations in the hon. Lady’s constituency in years past, I recognise the enormous contribution that creative industries make there and across the country. Of course, the grants we gave through the Department for Digital, Culture, Media and Sport, the recovery fund, and the support through local authorities got to many of those organisations. I stand here today not with a sense that nothing could have been done better, but recognising that there was a balancing act between speed of delivery of support to businesses, and complexity, with the delays that would inevitably have ensued. I am contrite about our not getting everything right, but I am also clear about the real dilemma that we faced at the time.
Jim Shannon (Strangford) (DUP)
I think everyone in this House recognises that Government stepped in and helped; I know my constituents recognise that, and we want to put that on record. HMRC stated in November that its taskforce was expected to recover some £1 billion in fraudulent or incorrect claims over the past two years and referred to some 23,000 investigations that had been opened. Only 25% of the money will of course be returned, so can the Minister clarify how that came to be, and what lessons have been learned for any future financial claims?
John Glen
As ever, I thank the hon. Gentleman for his question. I set out in my previous answers the dilemmas with respect to speed of delivery. However, HMRC has done a fantastic job in designing the schemes and standing them up quickly under enormous pressure. We will continue to work closely with HMRC and take its advice as we make decisions on how to tackle enduring fraud risk. More broadly, lessons can be learned about the design of future schemes.
Mr Deputy Speaker (Mr Nigel Evans)
Thank you, Minister, for responding to the urgent question. We will have a brief pause to allow those who are leaving to leave.
Charter for Budget Responsibility and Welfare Cap
John Glen Excerpts(4 years, 2 months ago)
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The Economic Secretary to the Treasury (John Glen)
I would like to start by agreeing with the remarks of the shadow Chief Secretary to the Treasury, the right hon. Member for Wolverhampton South East (Mr McFadden), concerning the great sadness at the passing of Jack Dromey at the weekend. I debated some legislation with him three years ago and he was a man of the greatest integrity. He was one of the best of us and he shall be missed across the House. My thoughts and prayers are with his family, especially the right hon. and learned Member for Camberwell and Peckham (Ms Harman), at this difficult time.
It is a privilege to close the debate on behalf of the Government and I thank Members, who have made informed contributions. In a few moments, I will turn to the substantive points that they have raised.
The pandemic has left us with levels of borrowing unparalleled in our peacetime history. Without considered action, something that was necessary in the short term could easily become unaffordable in the long term. The British people look to us now for a clear commitment that we will address that threat. As a Government, we will always be responsible with their money and, once the crisis has passed, deliver on our promise to strengthen the nation’s finances.
The charter represents a world-leading framework to guide us—a clear path back to fiscal sustainability—and it sets out a route to prosperity. On the one hand, we will get debt falling and rebuild our fiscal defences. On the other hand, we will support the economy to the best of our ability and invest in the future. To do otherwise would mean failing to fulfil our own potential and denying future generations the chance to fulfil theirs. Instead, we choose a plan that will enable us to rebuild the fiscal buffers, create the conditions for a strong economy and deliver on our historically significant investment plans. It also provides a sustainable welfare system while increasing the level of the cap, to reflect the impacts of the pandemic on our society, as the Chief Secretary to the Treasury set out in his opening remarks. In the plainest terms, to vote for the welfare cap motion is to vote simply to increase its level.
I want to turn now to some of the substantive points made in the debate. I do not recognise the characterisation by my right hon. Friend the Member for Wokingham (John Redwood) of this debate as a “Maastricht tribute debate”, but I do recognise his enthusiasm for growth and his desire to target growth. That is obviously a critical element of the Government’s strategy. It is absolutely clear that we need to focus on greater productivity and it is important that, as set out in our plan for growth, with a focus on skills, infrastructure and innovation, we will deliver the key priorities of levelling up and net zero. I do not think that we disagree about the importance of economic growth and productivity, but because of the actions that we took to support our economy, we have been more successful than previously feared in preventing the long-term economic damage of covid. In its latest forecast, the OBR revised down its scarring assumption, from 3% to 2%.
The remarks of the hon. Member for Glasgow Central (Alison Thewliss) were echoed in part by the hon. Members for Glasgow East (David Linden) and for Cynon Valley (Beth Winter) and the right hon. Member for Hayes and Harlington (John McDonnell). I make it really clear to the House that the £10.5 billion increase to the cap provides the headroom above the forecast to allow for fluctuation in cap spending, and the cap only formally applies in 2024-25. The hon. Lady referred to rolling rules. Obviously, they can absorb some of the shocks and endurable challenges we face. I also draw her attention to the remarks of the Institute for Government:
“The rationale for a rolling target is that it provides flexibility should the economic situation change.”
I turn now to the very thoughtful and characteristically well-informed speech by my hon. Friend the Member for North East Bedfordshire (Richard Fuller), who set out the historic perspective but also recognised the changing macro-economic realities globally.
I thank hon. Members for their speeches. None of us in this House takes stewardship of the public finances lightly. It is important that we recognise that we take all steps that we can to ensure that this country is set on the right course. Therefore, I commend the motions to the House.
Question put.
Treasury
John Glen Excerpts(4 years, 2 months ago)
Ministerial CorrectionsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
John Glen
We have also released £96 million of dormant asset funds to Fair4All Finance, to support access to affordable credit products, including those from credit unions. Last Monday, on Second Reading of the Dormant Assets Bill, we introduced the extension of the pool of moneys that will be available from an extended range of financial instruments—£880 million over the next 10 years—which will be for Fair4All Finance to allocate.
[Official Report, 14 December 2021, Vol. 705, c. 271WH.]
Letter of correction from the Economic Secretary to the Treasury:
An error has been identified in my speech.
The correct information should have been:
John Glen
We have also released £96 million of dormant asset funds to Fair4All Finance, to support access to affordable credit products, including those from credit unions. Last Monday, on Second Reading of the Dormant Assets Bill, we introduced the extension of the pool of moneys that will be available from an extended range of financial instruments—£880 million over the next 10 years—which will be available for allocation.
Covid-19: Government Support for Business
John Glen Excerpts(4 years, 3 months ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Speaker
The Minister will answer the question, and then you can say your piece.
The Economic Secretary to the Treasury (John Glen)
It is clear that omicron is much more transmissible than other coronavirus variants, which is why, as the Prime Minister announced on Sunday, we are offering every eligible adult a booster dose before the end of the year. To get more jabs in arms, we have taken the proportionate and responsible step of moving to plan B in England to slow the spread of covid-19.
The rapid spread of omicron means this is a challenging time for a number of sectors, including hospitality. The Chancellor will be speaking to UK hospitality representatives this afternoon to understand their concerns. The Government continue to offer considerable support to businesses that might require extra assistance into next spring, as part of the £400 billion of direct economic help that we have provided during the pandemic.
For instance, we have reduced the VAT rate for hospitality and tourism businesses to 12.5% until March. Eligible retail, hospitality and leisure businesses in England are also benefiting from 66% business rates relief until March. And at the recent autumn Budget the Chancellor introduced a further 50% business rates relief for eligible businesses into the 2022-23 tax year.
Businesses can continue to apply for the additional restrictions grant until March 2022, as part of more than £2 billion of discretionary business grant funding during the pandemic. Businesses can benefit from our extension to the recovery loan scheme, which helps small and medium-sized enterprises to build back from the crisis by providing guarantees to lenders on finance of up to £10 million. Firms are also protected from eviction until March 2022 if they fall behind on their rent.
Firms in the arts and culture sector, meanwhile, can access the £2 billion culture recovery fund, the sports recovery package and the film and television production restart scheme until the end of April 2022. And our £800 million live events reinsurance scheme is giving event organisers confidence to plan ahead. Furthermore, the devolved Administrations have received an extra £12.6 billion this year, including an additional £1.3 billion in the autumn Budget.
This Government are helping businesses in every region and nation of the UK during these difficult times. We are speaking to the most affected sectors, and we will continue to respond proportionately to the virus’s changing path to support jobs, businesses and individuals, just as we have since the start of this pandemic.
Mr McFadden
Forgive me for my Christmas eagerness, Mr Speaker.
I extend my best wishes to my hon. Friend the Member for Leeds West (Rachel Reeves), the shadow Chancellor, as she recovers from covid at home. We know where she is, but where is the Chancellor? Why did he decide to proceed with a trip to California on Tuesday, when it was already clear that UK businesses were struggling to cope with what the Prime Minister himself has called a “tidal wave” of omicron?
Even if the Chancellor is abroad, California is not exactly a communications desert. They have television, and I have even heard that they have the internet, but it is still radio silence from the Chancellor. There is tumbleweed rolling through the Treasury, which says he is in communication with officials, but what about some communication with businesses that are losing bookings by the hour and watching their December profits vanish into thin air? Last night the chief medical officer advised the public to deprioritise social contact. Adherence to that advice will have a clear and direct impact on the hospitality industry, live music, theatre and other public events across the country.
The Government documents for plan B say that the decision on economic support will be made
“based on the data at the time.”
That time is now, so let me ask the Minister this: what measures will the Government take to ensure that those who have to isolate at home have proper sick pay that enables them to follow the rules? What will the Government do to help hospitality businesses affected by the chief medical officer’s advice to deprioritise social contact? Will any support also apply to live music, theatre and other events?
What are the Government doing to maintain supply chains, should they be affected by staff absences in the coming weeks? What is the Government’s response to the hospitality industry’s call to maintain the value added tax rates for that sector at 12.5%? Will the Government also allow local authorities to release any unused funds they may have from previous covid aid packages to support businesses right now?
The principle here should be that the level of support should match the economic restrictions in place. It is not about a blank cheque; there has already been enough wasteful spending from the Government in the past two years. Any package should be timely, proportionate and properly targeted and must guard against fraud. That is why it needs the full and focused application of Treasury Ministers and officials.
We are not in lockdown, but it would be totally disingenuous to pretend that businesses can trade normally when the Prime Minister has used a special national broadcast to warn the nation of a “tidal wave” of covid infections and the chief medical officer has told us to cut back on social contact. The Government cannot pretend that nothing has changed. This is not the time to abandon businesses, so will the Minister commit to announcing a package of support by the end of today—I mean UK time, not California time—that matches the situation that British businesses and workers now face?
John Glen
I thank the right hon. Gentleman for his questions. The Chancellor has been deeply engaged with business representatives throughout this pandemic and he will continue to be so. He was on a long-planned business trip to the United States, conducting Government business, and he will continue to engage today with other Ministers, with representatives of the hospitality sector and others, to hear their concerns about what further support should be required.
However, I will not be taking lessons from the right hon. Gentleman on some of these measures. Last year, when we put in place the bounce back loans, it was the shadow Chancellor at the time, the hon. Member for Oxford East (Anneliese Dodds), who specifically engaged constructively with the Chancellor to agree the basis for those loans. We have continued to work constructively throughout on a range of interventions for multiple sectors. We put in a package of measures at the Budget offering additional support and as of yesterday the covid additional relief fund will provide £1.5 billion for those in the supply chain to deal with some of the additional challenges. Of course the Government recognise the additional pressures that these measures and this strain of the virus bring, and of course we will engage carefully and listen carefully to those business representatives this afternoon.
Sir Peter Bottomley (Worthing West) (Con)
The Minister has talked about some of the costs that will be reduced. The problem with the reduction of Christmas cheer, especially in the hospitality and entertainment industries, is revenues.
If I listen to my publicans, restaurateurs and hoteliers, I know they will want to hear after the meeting this afternoon how their revenues can be lifted, how they can treat their staff properly and how the loss of revenue from those events that cannot be postponed will in some way be made up to them. That is what matters most in most constituencies, including mine.
John Glen
I thank the Father of the House for his comments, and point out that there is £250 million of funds still to be given to businesses through the additional restrictions grants. Three out of four local authorities have between 5% and 40% of their funds unallocated. However, I recognise that this is a distinct new challenge, and that is why I and the Chancellor will be having meetings with representatives from the affected sectors this afternoon to see what more needs to be done.
Chris Stephens (Glasgow South West) (SNP)
The omicron variant is now present in all Scottish health boards, so I am sure the Minister will congratulate Scotland on being the first nation in the UK to vaccinate 50% of the eligible population with the booster jab.
On Tuesday, during the First Minister’s address to the Scottish Parliament, the Treasury sent out a press release indicating that more covid support was coming, but it later backtracked and pulled it. In response to those erroneous claims, the Scottish Finance Secretary has written to the Chancellor seeking clarification. When should the Scottish Finance Secretary expect a reply? Do we have to wait for the Chancellor to return from California? Does the Minister not believe that the Government’s flip-flopping and flippancy of the last few days has undermined the devolved Administrations and that assurances of funding must be provided right now?
John Glen
Of course, the devolved authorities will secure £77.6 billion next year, which is £12.6 billion more than this year. Just yesterday, £430 million of additional money was agreed with the Chief Secretary to the Treasury. The hon. Member should contact the Finance Secretary in Scotland to clarify what he is talking about, because that money was allocated yesterday by the Chief Secretary.
Theresa Villiers (Chipping Barnet) (Con)
Government policy has been clear that people can proceed with their Christmas socialising plans as expected. However, yesterday the chief medical officer said that people should limit social contact, which will clearly have a devastating effect on hospitality businesses. Can we have clarity about how people should plan their social contacts for Christmas?
John Glen
The advice is clear: one should get the booster as quickly as possible—I did so on Saturday—take lateral flow tests and act responsibly. On Monday, I shall take my Salisbury team out for lunch.
Mr Kevan Jones (North Durham) (Lab)
Public health messages need to be clear and consistent, but last night the Prime Minister’s press conference was confusing and sowed turmoil in the hospitality sector. Another sector that is already hurting is small coach and bus operators, such as Stanley Travel in my constituency, who rely on Christmas and the new year for income to tide them over the fallow period of January and February. When the Chancellor comes back from his winter sun trip to California, will the Minister ensure that he does not forget the sector as we look at support in the coming months?
John Glen
The right hon. Gentleman legitimately raises a point about the whole range of businesses affected. That is why the Government’s priority was to give local authorities maximum discretion in how to allocate funds. As the Chancellor has done yesterday, today and every day, he will continue to focus on the needs of the economy and businesses up and down the country.
Mr Steve Baker (Wycombe) (Con)
I am reassured that my hon. Friend the Minister will take out his team on Monday. Like him, I took a lateral flow test this morning. However, is it not the case that when officials give advice, it has a massive capacity to herd the public into particular behaviours? Therefore, while the Government have formally allowed hospitality businesses in particular to stay open, the reality in my constituency is that fantastic businesses such as The Old Queens Head in Penn and Tylers Green have seen massive cancellations. What reassurance can he give me that when officials speak—particularly from podiums at press conferences—they stay within the bounds of the policy decided by Ministers, and that what Ministers have decided takes into account the broad spectrum of collateral harms that follow from, for example, encouraging people not to mix together?
John Glen
It is really important that we follow the best advice to get jabbed, take those lateral flow tests and wear masks. However, where we possibly can, we should also continue to engage with our local communities and support our businesses at this difficult time. Of course, that means that judgments have to be made, and people must take responsibility for their decisions in the light of that guidance.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
Small and medium-sized enterprises make up a significant proportion of the UK hospitality sector, and in recent days they have seen their footfall decline by as much as 40%, with one business I know of having had 79 cancellations in three hours. This comes at a time when businesses also continue to face high energy costs, supply chain disruptions and dropping consumer confidence. If we know this, it beggars belief that it is not clear to the Government. We have been meeting hospitality businesses since last week. Why is this meeting happening only today, and are the Government going to commit to come forward with a package of support that will give confidence for Christmas and the months ahead by the end of today?
John Glen
As I have said, the Government are meeting a dozen representatives from the sector this afternoon to assess the latest situation and see what more can be done.
Dr Andrew Murrison (South West Wiltshire) (Con)
I sympathise with my hon. Friend and good neighbour in having to deal with data that is changing extremely rapidly. We know from South Africa and southern Africa that things may be changing, perhaps for the better, but we cannot rely on that, so the cautious words of Ministers and officials and the measures that we passed earlier this week are absolutely appropriate. Does my hon. Friend agree that, at a time of change such as now, it is important that the House is convened to debate the issues and that we should seek an opportunity next week and the week after for us to meet again so that Ministers can update the House on the current situation and change what is required one way or the other, if that is necessary? The public expect that level of leadership.
John Glen
I thank my right hon. Friend and neighbour for his question. As I think he will appreciate from his time in government, some of those decisions come from those above me. It is critical that we are clear about what we are doing and why we are doing it, and the basis for the decisions that we are making.
Jeremy Corbyn (Islington North) (Ind)
It is pretty obvious that during this crisis many workers have lost a lot of income, wages have gone down and living standards have gone down. For those who have to self-isolate or are sick and have to rely on statutory sick pay, SSP is wholly inadequate. Will he, in his consideration of business support, include an immediate substantial increase in SSP so that living standards can at least be maintained?
John Glen
The Government will always look at such matters. We have maintained the self-isolation £500 payment, means-tested through local authorities, but we will obviously keep all matters under review.
Steve Brine (Winchester) (Con)
Boosted this morning, Mr Speaker.
Listening last night to the Prime Minister’s Downing Street conference, I could see why there was no statement to the House. No new Government policy was announced. Then Professor Chris Whitty answered a question from the BBC, and at a stroke, the chief medical officer changed Government policy and put this country—certainly hospitality, and Winchester’s hospitality bears this out from what I am hearing—into effective lockdown. May I ask—yes or no—whether what Professor Whitty said last night is now the policy of the Government, namely, that we should socialise carefully? What in practical legal terms does that mean?
On support, because advisers are now running the show—I bet none of them run businesses facing complete ruin as a result of what was said last night—the Treasury is going to have to do more. Otherwise, we risk wasting the amazing support that Her Majesty’s Treasury gave last year. We are going to have to do more, whether or not we want to be here and whether or not I think we should be here, or businesses will face ruin and thousands of people are going to lose their jobs.
John Glen
I have been very clear that we should get boosted, encourage our constituents to get boosted, take the lateral flow tests, wear masks and engage in normal activity as far as we can. There will not be a legal definition of what every individual should do on an individual basis, but most people will use common sense, and that is really important. I recognise the core point that my hon. Friend makes. The sector will need engagement from Government, and that is why Ministers—not advisers— will be engaging with that sector this afternoon.
Wendy Chamberlain (North East Fife) (LD)
As the Father of the House said, we will all be receiving emails from businesses in our constituencies. One has written to me saying:
“As with most businesses, a hospitality business is not run from one day to the next. Plans are in place for staff, events and orders.”
These are businesses that were struggling already with accrued debt and a staffing recruitment crisis before omicron hit. Does the Minister agree that, if businesses are facing the same set of circumstances they faced when they received support from the Government, it is reasonable for them to expect the same level of support again?
John Glen
We have put in a range of interventions, be that through loans, the furlough scheme, support through grants or support through reliefs from VAT and business rates. We will continue to look at what specific sectors are facing in these coming days and weeks, and we will act appropriately in light of those changed circumstances.
Bob Blackman (Harrow East) (Con)
Clearly we are all going to have to live with covid for a long time to come. Businesses in my constituency report a double whammy: people cancelling bookings for hospitality and shortages of staff as a result of people testing positive for covid, doing the responsible thing and not coming in. Can my hon. Friend look at ways we can promote business and encourage people to take on short-term roles in the hospitality industry to cover these gaps? We need to provide incentives for business to continue.
John Glen
As ever, my hon. Friend makes sensible points, and I will certainly look carefully at what he has said, and we will look at in light of the representations we receive this afternoon.
Kevin Brennan (Cardiff West) (Lab)
The hon. Member for Winchester (Steve Brine) is right: the Government are trying to sing two different songs at the same time, and the result is a cacophony of mixed messages in everyone’s ears. This afternoon, the Chancellor needs not just to listen, but to act, because the taxes we are talking about are supposed to be taxes on business activity, not business inactivity caused by misfortune and Government mixed messaging. Will the Minister tell the Chancellor this afternoon when he meets him, albeit from California, that action is what is required now, not just listening?
John Glen
I am grateful for the hon. Gentleman’s points. I have constant contact with the Chancellor, and I will make sure he is very aware of the range and strength of opinion in the House today.
Greg Smith (Buckingham) (Con)
I welcome my hon. Friend’s commitment to the meetings this afternoon, but a common theme has developed on both sides of the House of reports, including in my constituency, of pubs losing 50% to 60% of their bookings. Like the right hon. Member for North Durham (Mr Jones), I have a local coach operator that reported losing £40,000-worth of bookings yesterday alone. While advisers press the panic button way beyond what this House voted for a couple of days ago, can my hon. Friend give me an absolute assurance that there will be a decision by Ministers after his meetings this afternoon that will give businesses the clarity they need on the support they will get in this effective lockdown?
John Glen
What we will do is listen carefully and act appropriately. Just yesterday, we secured this covid additional relief fund to support the supply chain and city centre economies, but I fully recognise that we are in a very difficult and rapidly changing set of circumstances, and it is important that Ministers act and make decisions on the basis of that data and the evidence that is presented to this House.
Owen Thompson (Midlothian) (SNP)
While it is important that we have a swift health response, it is equally important that we have a swift financial response to support that health response in tackling the impact of covid. What steps are being taken to ensure that these decisions are taken quickly? It is not good enough simply to wait until the Chancellor can wake up, whenever that is, in California. When will the Government finally ever do anything to support those who have been excluded from any support at any time throughout this entire pandemic?
John Glen
Clearly we have worked hard throughout to bring customised support to different sectors, with a range of grants, reliefs and direct support through furlough. The Chancellor was very clear from his earliest statements last spring that it would be impossible to protect every single job, but just this week we have seen unemployment at 4.2%, which is obviously considerably better than was anticipated. There is no complacency on behalf of the Treasury or the Chancellor, who is fully engaged in looking at what interventions are appropriate in addition to the comprehensive winter plan, which was laid out in advance to give reassurance over the coming six months. As I have said, circumstances have now changed, and we will need to look very carefully at the implications of that.
Martin Vickers (Cleethorpes) (Con)
Like my hon. Friend the Member for Buckingham (Greg Smith), I have had a coach operator on to me this morning, so may I urge the Government to look at the wider impact of what is happening? It is welcome that the Chancellor and his team are meeting the hospitality sector, but the closure or limited closure of that sector has a massive knock-on effect, for example, on coach operators and taxi drivers. Sadly, this is going to mean more online sales and another hit to the high street, so may I urge the Minister to ensure that the wider aspects of what is taking place are considered in the meeting later?
John Glen
I thank my hon. Friend for his question. He is absolutely right to draw the House’s attention to the wider impact across related businesses, which is why Ministers will this afternoon meet a range of representatives, to ensure that the full understanding of the Government is grasped.
Mr Clive Betts (Sheffield South East) (Lab)
I simply say to the Minister that unless he acts today to help hospitality businesses they will not be there next year to be helped—that is the simple reality. People choosing not to go to hospitality events, following guidance not to go to the office, is having a big impact on the revenues of public transport operators—bus, coach and Supertram operators in Sheffield. Will he have urgent conversations with the Transport Secretary about extra help for those operators—already we have seen massive cuts to services—and give the money to the transport authorities so that it can be best spent in the interests of passengers?
John Glen
Of course discussions will take place across government. The hon. Gentleman draws attention to the transport sector, where of course significant support has been given. However, I take on board his point.
Kevin Hollinrake (Thirsk and Malton) (Con)
I welcome the fact that the Minister and the Chancellor are meeting those in the hospitality sector this afternoon. There is no doubt that they are suffering because of some of the mixed messages we have heard in the past few days. The obvious places to help them would be by looking at VAT again, potentially reducing it back to the 5% rate until the end of March, and at the recovery loan scheme. As the Minister knows, the original schemes—bounce back loans and the Coronavirus Business Interruption Loan Scheme—did not require a forward viability test, whereas the recovery loan scheme does. It is very difficult for those in hospitality at the moment to demonstrate forward-looking viability for their businesses, so will the Minister look again at the scheme and look to reform it so that businesses can access this vital financial support?
John Glen
As ever, my hon. Friend brings sensible and credible points to the Chamber on these matters. He is very familiar with the different aspects of small and medium-sized enterprise financing. The recovery loan scheme, operational until June next year, gives a 70% guarantee to lenders, but of course we will look at all those measures in the round, and I look forward to our meeting later today on other matters.
Ms Karen Buck (Westminster North) (Lab)
I am acutely aware, having a constituency on the edge of the west end, of the impact that the pandemic has had not only on hospitality and tourism, but on the culture, arts and live performance sector. Last night, it was reported that 12 west end shows were unable to go ahead because of illness among the cast, many of whom are self-employed. Will the Minister confirm that he or fellow Ministers will be meeting representatives of the theatre and live performance sector to discuss the impact of this latest wave of the crisis on their finances?
John Glen
We will continue to engage with the sector. I just draw the hon. Lady’s attention to the £2 billion culture recovery fund; the emergency resources support fund, which gives up to £3 million of support to charities and £1 million to commercial entities in that sector; and the £800 million to the live events reinsurance scheme. However, we will continue to engage across different sectors of the economy.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Newcastle has a fantastic night-time economy and the Chancellor should visit, as it is a lot closer than California. Those businesses will be seeing a real reduction in footfall and trade, as will their suppliers directly, because of the omicron variant. What support is the Minister offering to them directly as a result of the omicron variant?
John Glen
As I mentioned, there is outstanding support from the local additional restrictions grant, which local authorities have available. I would be happy to hear from the hon. Lady where Newcastle’s local authority is on the disbursal of that grant. As I said, we are meeting representatives from across the economy this afternoon and we will look carefully at what can be done.
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
Merry Christmas, Mr Speaker, to you and the excellent House staff.
It should have been a very busy Christmas period, but hospitality, entertainment and linked businesses in my constituency, on top of trying to contend with soaring energy costs, are being hard hit. They are losing bookings and events after the Prime Minister announced his recent plan. Where is the Chancellor? Why did he not announce a corresponding support package plan for those affected? What support package can businesses in my constituency apply for to help them in these difficult times?
John Glen
I have already set out a number of support measures that we have taken, which are ongoing through to next March, such as business rates relief, grants from local authorities, grants that we have already given and a concession on the lower VAT rate. Of course, I recognise the reality of behaviour at the moment. We have to assess that, look at the data and look at what the appropriate measure is. It is really clear: we have not shut anything down. What we have done is set out new conditions which people are finding it difficult to come to terms with. I understand that, which is why we have to work carefully with the sector to look at what sort of support we can bring in.
Mike Kane (Wythenshawe and Sale East) (Lab)
Sacha Lord, Greater Manchester’s night-time economy adviser, just said:
“100,000’s staff hours are being slashed up and down the UK, due to cancellations. A large proportion”—
of those staff—
“are on a living wage.”
He says that the silence from the Chancellor is “deafening” and it is, “Unforgivable and Unforgettable.” Does the Minister agree?
Gavin Newlands (Paisley and Renfrewshire North) (SNP)
I just asked the Secretary of State for Transport about support for aviation and was given the Department for Transport’s greatest hits. The truth is that the aviation sector was hardest hit. Its recovery has been uneven and the weakest in Europe. It will need support. Measures already brought in, such as the coronavirus large business interruption loan scheme, will have to be extended for some sectors, in the same manner as CBILS. Thousands of jobs have gone in my constituency. Does the Treasury actually understand how serious the situation is?
John Glen
Yes, we do, and that is why we have given £12 billion of loan guarantees through the covid corporate financing facility for the aviation sector. At the Budget, we put in the airport and ground operations support scheme to help with fixed costs over the next six months. Of course I recognise that the situation is having a significant impact on the sector and the Government will remain engaged to support where we possibly can.
Ian Mearns (Gateshead) (Lab)
A number of different things have happened this week in the Government’s messaging, but one significant thing was when the Prime Minister made his television statement on Sunday and told people to work from home if they can. Reinforcing that message has meant that, this week, an awful lot of people are not in the places that they expected to be, which has resulted in cancellations of bookings for hotels and restaurants. Rightly, reinforcing that message has had an impact that the Treasury needs to react to.
John Glen
I recognise that, which is why I have set out today the engagement that we are having to try to determine exactly what we need to do.
Lilian Greenwood (Nottingham South) (Lab)
For more than a week, hospitality businesses and workers in Nottingham have been contacting me desperately worried about falling custom at what should be their busiest time of year. I have also heard from hair and beauty salons in my constituency that are facing cancellations and wondering how on earth they will get by on a reduced income when they are already struggling to pay back the loans that they took out to survive lockdown. Why do the Government not seem to understand the urgency of the situation and what will the Minister now do to help?
John Glen
What I will do is ensure that the hon. Lady’s point is passed to the Chancellor. I will also ensure that the engagement is as broad as possible across Treasury Ministers, so that the full impact of the evolving circumstances is reflected in our response.
Sam Tarry (Ilford South) (Lab)
A few weekends ago, on Small Business Saturday, I was happy to host the first inaugural Ilford business awards. With about 1,500 nominations, it spotlighted the best businesses in Ilford. Recent research from the TUC, however, shows that 647,000 workers in hospitality, retail and entertainment do not currently qualify for statutory sick pay and many will be incredibly anxious about what that means, especially given the contradictory advice from Government scientists and the Prime Minister in the past few days. Why have the Government let down the industry so badly? What will the Minister commit to do to help to support those industries today?
John Glen
Today we are having meetings to discern exactly what the data is showing and what interventions we need to make going forward.
Dave Doogan (Angus) (SNP)
I think I am now the sixth Member to mention the coach sector, and I hope the Treasury is listening to hon. and right hon. Members in that regard. Robert Black’s of Brechin has contacted me to say that bookings have been disappearing like snow off a dyke since the omicron situation developed. I have also been contacted by The Townhouse in Arbroath, The Stag in Forfar and many others, and I am not taking my staff out on Friday because I am following advice. There are booking cancellations right across the board. It is an omicron support package that we need—where is it coming from?
John Glen
As I have said repeatedly, the Government are engaging across sectors. I recognise the depth and breadth of the impact of this variant, and we will look very carefully at what we need to do.
Chris Law (Dundee West) (SNP)
Despite the Treasury spin, last night’s Cobra meetings only confirmed that of course there is no money coming to Scotland; the money announced by the Treasury on Tuesday was pre-announced money. The Scottish Government have already acted to deliver £100 million of funding to support businesses disrupted by health advice in Scotland. They want to give more, but they cannot, due to the restrictions in place on devolved borrowing. Does the Minister accept that this aspect of the devolution settlement is hampering the ability of devolved Governments to act as necessary?
John Glen
I am sorry, but I cannot accept that. The Government have given an additional £12 billion to the devolved Administrations, which also benefit from the reduced VAT, the recovery loans and the other UK-wide measures, and the additional £430 million that was agreed this week.
Liz Twist (Blaydon) (Lab)
Two weeks ago, on a very frosty north-east morning, I met small businesses at my business forum. They told me of their concerns about what might happen over the Christmas period with covid-19. They included beauty businesses and businesses such as the Railway Tavern in Rowlands Gill in my constituency. Will the Minister please urgently address the need to support our hospitality and personal care businesses throughout this situation?
John Glen
The hon. Lady makes a very reasonable case about businesses in her constituency. As I have said, we will be engaging with the sector to come forward with appropriate interventions based on the data and the experience across the economy.
Rachael Maskell (York Central) (Lab/Co-op)
One thing is clear: we can trust the word of the chief medical officer more than that of the Prime Minister, as the Government sleepwalk into another covid crisis. In York, we have a significant hospitality sector. It is really struggling, as are many other businesses. What steps is the Minister taking with Her Majesty’s Revenue and Customs, as the tax year comes to an end, to ensure greater flexibility for businesses so that they can have longer to repay money to the Treasury?
John Glen
As ever, the hon. Lady makes a reasonable point. We have to look at the range of interventions and ways that we could support the economy at this time. She raises an interesting area for us to focus on, and I am sure that will be a substantive area of considerations with the Chancellor.
Margaret Ferrier (Rutherglen and Hamilton West) (Ind)
The music industry has been hit hard. The industry trade body LIVE—Live music Industry Venues and Entertainment—has concerns that while venues can technically stay open, they are haemorrhaging money and that will lead to permanent closures. Will the Chancellor maintain the current rate of VAT beyond March 2022? In addition to support packages, will the Government fix the insurance scheme for cancelled events to include pandemic-related cancellations?
John Glen
I thank the hon. Lady for her question. The Government worked very closely with the sector in the determination of the parameters of the live events reinsurance scheme—I was involved in it myself—over late summer. That £800 million scheme will give events across the country confidence, but I obviously recognise that that needs to be kept under constant review, as all the measures do.
Jim Shannon (Strangford) (DUP)
I thank the Minister for his answers to the questions and, clearly, for the commitment to financial support to help businesses, but may I ask him a question on behalf of travel agents and tour operators, which are again taking a very specific hit, not simply from cancellations but from frightened people being afraid to book for the future? Will he explore urgently a financial aid scheme alongside the one that is so clearly needed for the hospitality industry as a whole?
John Glen
Throughout this pandemic, we have received representations from many sectors, we have introduced a range of interventions to deal with the challenges, and we will continue to engage with sectors across the economy, including travel operators, which have been reflected a number of times in the concerns of Members across the House this morning.
Overseas Framework Consultation
John Glen Excerpts(4 years, 3 months ago)
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The Economic Secretary to the Treasury (John Glen)
The Chancellor’s Mansion House speech and accompanying document—"A new chapter for financial services”—set out the Government’s vision for an open, green and technologically advanced financial services sector that is globally competitive and acts in the interests of communities and citizens, creating jobs, supporting businesses and powering growth across all of the UK.
In December 2020, HM Treasury published a call for evidence on the UK’s overseas framework, and the regimes within it, to ensure that they continue to work effectively and support the UK’s consumers, firms and markets. The Government issued a response to that call for evidence and set out next steps for this review in July 2021.
In doing so, the Government stated that they remain committed to maintaining a safe, open and globally integrated financial system, enabling international financial services business by reducing barriers and frictions, where safe and practicable. Our overseas framework, including regimes such as the overseas persons exclusion, has been a fundamental part of the success of the UK as a global financial centre.
In responding to the call for evidence, the Government said that there were four principal areas that they wanted to look at in more detail:
The overseas persons exclusion (OPE);
Investment services equivalence under Title VIII of the Markets in Financial Instruments Regulation (MiFIR);
Recognised overseas investment exchanges (ROIEs);
The Financial Promotion Order (FPO) in general, and specifically in relation to the distribution of certain overseas long-term insurance products in the UK.
The Government’s response to the call for evidence noted that there are still information gaps about how firms use the OPE, how they might do so in future, and what the implications are for UK financial markets, including their resilience and safety. We have been working closely with the Financial Conduct Authority, the Bank of England and the Prudential Regulation Authority to gather further information in preparation for an upcoming consultation on the UK’s regime for overseas firms and activities. This involves considering whether the access for overseas firms remains appropriate following the UK’s exit from the EU and given technological developments that are changing how firms can serve their clients.
The Government are committed to maintaining an overseas access regime that ensures firms based in the UK can connect with counterparties and customers globally, while continuing to ensure that those with significant UK business lines continue to maintain the appropriate operations, regulatory permissions and authorisations in the UK; and are able to be supervised effectively. We want to ensure the UK remains a world-class environment to do business and maintain the ability of UK and global firms to benefit from the UK’s deep wholesale markets, which has been key to the UK’s leading global role in financial services.
The Government have noted the feedback from respondents to the call for evidence that the current overseas framework is complicated, difficult to navigate and that the implications of any changes to the framework should be carefully considered. As such, the Government intend to assess how the current framework is being used and consider the implications of any reforms in careful detail before bringing forward proposals on potential changes to the UK’s regime for overseas firms and activities. The consultation will also consider changes to the UK’s overseas framework which will make it more coherent and easier to navigate, reinforcing the Government’s commitment to maintaining an open financial centre.
In considering how best to move forward, the Government want to be fully informed about the views of stakeholders. We would emphasise the importance of further evidence being provided on how these regimes are used, and how market participants navigate them, so we can ensure they continue to support the principles that guide our approach to cross-border financial services.
[HCWS490]
Co-operatives and Mutual Societies
John Glen Excerpts(4 years, 3 months ago)
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The Economic Secretary to the Treasury (John Glen)
It is a pleasure to serve under you in the Chair, Dame Angela.
I thank my hon. Friend the Member for Wycombe (Mr Baker) for calling today’s debate. As we have heard, he is a strong believer in the transformative capabilities of the co-operative and mutuals sector. He opened the debate with a very reasonable challenge on the drivers and enablers of growth across the different parts of the sector. I will reflect carefully on what he said and examine further the proposals that underlay some of the contributions this morning, but I will also think about what we can do to work with regulators to address those drivers.
I also thank the other Members who have contributed this morning. It has been a fascinating debate, and we have heard about a number of enterprises, across a number of constituencies, that are making a real difference to communities up and down the country. The Government strongly support the co-operative and mutuals sector—not just financial mutuals, which offer mortgages, affordable credit and insurance, but the whole sector across the country. We see it as making a special contribution to society and the economy due to, as Members have said, the focus on the interests of their members in the long term, the democratic nature of those institutions, and their local focus and commitment.
The evidence for that is clear. For example, a recent report from the Association of Financial Mutuals highlighted that mutual insurers serve over 30 million people across the UK, and that contribution deserves recognition. I have recently engaged a number of times with the hon. Member for Harrow West (Gareth Thomas), who is unable to join us this morning, and I recognise that he has brought forward a set of proposals and written to the Chancellor. We will be reflecting on that very carefully. I have received correspondence from LV= subsequent to the vote, and I will continue to update the House on that.
I am a big believer in the power of co-operative institutions of all sizes, from the giant Co-operative Group to High Wycombe Rugby Club and the Chalke Valley Community Hub in my own constituency. It was interesting to hear from the hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) about his prolific investments, from the Clipper pub to sail-powered fishing; I am pleased that this forum has perhaps offered him further investment opportunities from my hon. Friend the Member for Wycombe.
The variety of businesses embracing the co-operative model founded by the Rochdale Pioneers almost 200 years ago is something to be championed, and there is much that other sectors can learn from the guiding principles of co-operatives and mutuals. Those organisations can contribute to a new era of responsible capitalism in which financial services, firms and businesses do not just focus on their bottom line, but also on their societal impact. The hon. Member for Cardiff South and Penarth (Stephen Doughty) highlighted a number of examples in his constituency, such as the taxi drivers and the work going on to improve the quality and resilience of the supply of food in schools.
I agree that there is potential for the sector to generate even more prosperity, opportunity and liberty by helping people to take greater control of their lives and finances. Clearly, though, co-operatives and mutuals need strong foundations. In recent years, we have made some significant advances on that front. We have cut the red tape facing the sector through measures such as the Co-operative and Community Benefit Societies Act 2014. We made it easier for such organisations to attract capital, and that supportive approach continued during the pandemic. Co-operatives and other mutuals were not only given access to our financial assistance schemes, but we also took legislative action through the Corporate Insolvency and Governance Act 2020.
Beyond the pandemic, we have reaffirmed our commitment to the co-operative model and the values that underpin it through our £150 million community ownership fund, which supports co-operatives and community-owned businesses to level up the UK by enabling them to take over valuable and viable local assets at risk of closure. The first set of announcements on that were in the recent Budget, and that is across the whole of the United Kingdom. That will mean a minimum of £12.3 million in Scotland, £7.1 million in Wales, and £4.3 million in Northern Ireland. We have announced 21 projects receiving the first tranche of that funding, which I hope will be a significant intervention. Another issue I would like to focus on—to reference the points made by the hon. Member for Neath (Christina Rees) on the Marcora law and her wider engagement with the experience in Italy—was discussed in a previous debate. I am sorry that she was disappointed with the Under Secretary’s response and I look forward to her ten-minute rule Bill in the new year.
However, we need to recognise the difference between the UK and Italian economies, which I think will make the Marcora law less effective here. We cannot subsidise businesses that are predisposed to fail. I remain open to discuss any constructive proposals with her, but Italy has a much higher rate of long-term unemployment than the UK has currently, so it is not clear if providing an advance sum of unemployment benefit would generate savings on welfare spending in the UK, as it may do in Italy. I am sincere in my call to bring forward constructive proposals, appropriate for the UK economy, perhaps drawing on the experience we have seen in Italy.
Christina Rees
I thank the Minister for his offer to have further discussions. Can I bring more information about the success of the Marcora law in Italy to share with him at that discussion?
John Glen
Absolutely. I sincerely look forward to that and we will engage with the substance of the information.
In my role as Economic Secretary, I would like to focus on the role of mutuals as providers of financial services, because they can play a significant role there. I see these organisations as key to providing people with greater financial stability and therefore greater choice. Indeed, I believe this is levelling up in action.
Credit unions are at the core of this. A few weeks ago, I visited the Glasgow Credit Union that the hon. Member for Glasgow South West (Chris Stephens) mentioned, and a few years ago I visited 1st Class Credit Union in Glasgow. They are two of the largest and most successful credit unions of the 402 that exist across the United Kingdom. The Glasgow Credit Union even offers mortgages, consequential of the deep relationships and bonds it has with its members and its understanding of their financial position. That demonstrates the potential that well-organised, well-supported credit unions can provide in communities.
The hon. Member for Strangford (Jim Shannon) listed the 13 credit unions in his constituency and talked about the distinct tradition that exists in Northern Ireland with respect to credit unions, across multiple sectors. Credit union and co-operative legislation is devolved in Northern Ireland, but I continue to listen carefully to what the hon. Gentleman has to say on this matter.
Affordable finance is key to generating opportunity, wealth and liberty for people around the country.
Chris Stephens
The hon. Member for Strangford (Jim Shannon) and I both raised the point about the Prudential Regulation Authority, the work it does and the capital requirements it places on credit unions. Does the Minister have anything to say about that? Can he encourage the PRA to make some changes to help successful credit unions?
John Glen
I am extremely grateful for the prompt; one of my kind officials passed me a note on this matter and reminded me that there has been progress in this area. We saw some changes in the way that was delivered last year. In 2020, the PRA implemented a simplified capital regime for credit unions to remove barriers to growth. This created a graduated rate approach, removing the 2% capital buffer and the link between capital requirements, activities and memberships. These changes were broadly welcomed by the sector, but I have committed to continuing to work with the sector further. I hope I will be allowed to introduce legislation next year to address some outstanding concerns that exist within the sector as a whole. I am grateful for the prompt and to the hon. Member for Glasgow South West for raising that matter.
As I said, affordable finance is key to generating opportunity, wealth and liberty for people around the country. We provided £3.8 million to fund the pilot for the no-interest loans scheme, which I have championed over a number of years. The scheme is run by Fair4All Finance, which encourages credit unions and other non-profit lenders to offer these loans. I believe that when this gets through the “proof of concept” phase imminently, it stands to be able to expand significantly. A number of individuals have approached me wanting to support this work, and I look forward to campaigning to broaden that pool on a sound foundation of how it would operate.
We have introduced other changes to help credit unions to generate greater opportunity and wealth for communities. For instance, we introduced and ran a pilot prize-linked savings scheme for credit unions until March this year, which was a real success. Independent research found that it helped to increase positive awareness of credit unions, enabled individual savers to build financial resilience and demonstrated that prize-linked savings be an effective tool in encouraging people to build a nest egg. We have 13 credit unions around the country and the Association of British Credit Unions Ltd currently involved in continuing the scheme, and I hope more will join them in future.
We have also released £96 million of dormant asset funds to Fair4All Finance, to support access to affordable credit products, including those from credit unions. Last Monday, on Second Reading of the Dormant Assets Bill, we introduced the extension of the pool of moneys that will be available from an extended range of financial instruments—£880 million over the next 10 years—which will be for Fair4All Finance to allocate. We will bring forward legislation when parliamentary time allows. That phrase is used a lot, but I am working hard to generate that opportunity in the next Session. It would allow credit unions to offer a wide range of products and services.
I want to spend a moment on building societies, because they are key to unlocking opportunity and driving positive change across the country. For example, in mortgages, Yorkshire and Skipton building societies are among the first institutions to bring back a 95% loan, when there was a problem in the spring, and 95% loan to value mortgages after the lockdown. That obviously brings first-time buyers on to the housing ladder. In addition, the sector is pioneering new products that will decarbonise the UK housing stock. For instance, Nationwide offers a green additional borrowing mortgage, and the Leeds building society has launched two new mortgages for the most energy-efficient homes.
To help building societies continue to flourish, we want to ensure they benefit from an appropriate legislative framework. That is why last week we published a consultation proposing several changes to the Building Societies Act 1986, working with their representatives, to try to provide them with greater flexibility in their funding model, and maintain their key mutual status, which is so important. The consultation also includes proposals to update their corporate framework in line with companies.
Sir Mark Hendrick
The Minister has waxed lyrical on the good work that the Government are doing on credit unions and is now touching on building societies. Is he considering changing some of the regulations on demutualisation? As I mentioned earlier to the hon. Member for Wycombe, if we cast our minds back, we will remember that the demutualisations of the past gave a number of those building societies, which were more dependent on mortgage lending, a lot of leverage that made them very vulnerable during the financial crisis. Will the Minister comment on that, and on how he will be proactive in developing the co-operative sector, as well as building societies, through his work on mutuals?
John Glen
I mentioned the response we are considering when I talked about the hon. Member for Harrow West and LV=. The reason I am waxing lyrical is that we have genuinely put in place specific interventions across a number of dimensions of the broader sector to ensure that building societies can continue to operate more effectively, offering services that their customers want, and retain their current status. I mentioned the community ownership fund as a source of support for individuals and community groups, encouraging them to form new business models that might be more effective in dealing with their long-term community interest.
I am conscious of the time, but I hope I have illustrated that the Government are committed to supporting mutuals and co-operatives and the unique qualities they provide. Just as those organisations provided opportunity, wealth and liberty to those Rochdale pioneers, we see them as key to strengthening communities, expanding possibilities and increasing prosperity for people today. I look forward to continuing the conversation on specific interventions. As I said to my hon. Friend the Member for Wycombe as I entered the Chamber this morning, it is important that we strike the right balance between hearty aspirations for a healthy sector receiving appropriate consideration of reasonable changes to the rules and regulations underpinning them, and a doe-eyed romanticism about things that are not financially secure in the medium and long term. My job is to interrogate those opportunities and take legislative action where I can, but also to be clear that we have to take a clear, economically valid and reasonable approach to this issue if we are going to have a secure and thriving sector, which I sincerely hope we will.
Greenwashing in Finance
John Glen Excerpts(4 years, 3 months ago)
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The Economic Secretary to the Treasury (John Glen)
It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) on leading this debate, even if he acquired it from my hon. Friend the Member for Kensington (Felicity Buchan). I wish him well in his new role on the Treasury Committee, subject to the approval of the House later this evening. I thank him for the constructive contributions that he has made during my tenure, including on this subject.
Let me start with a simple statement of fact: the Government have high ambition to transform the UK financial sector and align it with net zero. We are taking bold action to deliver on that. As my hon. Friend mentioned, we launched two record-breaking green gilts this year in September and October, and announced new sustainability disclosure requirements for businesses across the economy to report their impact on the planet. We are starting to see real results. London was ranked the leading hub globally for green finance this year in a leading index run by Z/Yen, overtaking Amsterdam. I do not want to be complacent, but I think we have made significant progress already, specifically on green finance.
Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)
I thank my hon. Friend the Minister, for giving way and I congratulate my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) on securing this debate. On the issue of those reporting requirements, as has been said companies clearly have indirect as well as direct impacts through their supply chains. Is it only direct impacts that will have to be reported, or will the indirect impacts of company supply chains also have to be acknowledged?
John Glen
I thank my hon. Friend for his intervention. I shall come in a few moments to address the details of the reporting requirements, the mechanisms for enforcing them and their extent. If I have not adequately scrutinised his point and given him the right response, I will right to him—but I hope I will cover it fully in a moment.
Z/Yen said that London was
“propelled up the table by the government implementing measures to stimulate Britain’s green finance sector”
and that it
“has the best sustainability standards in the world”.
As my hon. Friend the Member for Thirsk and Malton mentioned, at COP26 the Chancellor announced that the UK would go further and become the world’s first net zero-aligned financial centre. That is easier said than done. In fact, delivering this will require the Government and private sector to work hand in glove—I welcome the UK private sector’s leadership on this. At COP26, we heard that organisations with $130 trillion of assets globally have now made a net zero commitment. These are big numbers with big implications; it is critical that the claims that firms make about their green performance are credible and backed up with real action.
I will now turn to the title and substance of today’s debate. It is absolutely clear that we need a robust approach to greenwashing. We have heard that phrase a lot over recent years, but I would define greenwashing as when businesses, or investment funds, make misleading or unsubstantiated claims about the environmental performance of their products or activities. That can lead to the wrong products being bought—undermining trust in the market—and to misallocation of capital intended for sustainable investments. In other words, it has the potential to be a significant problem at a time when we are trying to make a sincere and credible transition that is verifiable.
The Treasury Committee report on decarbonisation and green finance, published in June, was also clear that
“‘greenwashing’ is detrimental to good consumer outcomes and to the achievement of... net zero”.
As interest in environmental, social and governance investing increases—which it is, rapidly—it is only right that there should be more attention given to, and more scrutiny of, the claims that firms make. It is for all those reasons that the Government have sought to be on the front foot on tackling greenwashing.
I will take the Chamber through the three areas of action: disclosures, mainstreaming climate into financial regulation, and transition plans. On disclosures, as I mentioned previously, it is the Government's intention to propose legislation, I hope in the next Session, to implement economy-wide sustainability disclosure requirements. This will see financial services firms, real economy corporates and investment funds reporting information on the risks they face from climate and environment, and those that they create. A key element of SDR will be reporting against the UK green taxonomy, which my hon. Friend the Member for Thirsk and Malton has mentioned. The taxonomy will set a robust standard for when economic activities can be considered environmentally sustainable. It is specifically designed to tackle greenwashing by creating a common understanding of which activities, and which investments, can actually be considered green. There is one other aspect on disclosures. Asset managers, asset owners and investment products will all be required to substantiate any sustainability claims they make in a way that is accessible to clients and consumers. All of this will create much-needed transparency in the market and ensure that firms cannot claim things without backing them up.
Our second area of action as a Government has been mainstreaming climate change in the UK’s financial regulation. In March, the Chancellor set out new remit letters to the Financial Conduct Authority and Prudential Regulation Committee, which included climate change for the first time. In November, the FCA published its new environmental, social and governance strategy, and the themes of trust and transparency are core to the FCA’s plans in this area. I am also aware that market participants are increasingly reliant on third-party ESG data and rating services to make decisions, which is why the Government are considering bringing these firms into the scope of FCA regulation and will report back next year.
I also want to address transition plans. Industry leadership on climate change, particularly through net zero commitments, has been impressive, but commitments need to become concrete action. That is why the Chancellor announced at COP26 that the UK would move towards making the publication of transition plans mandatory in the next 12 months. A transition plan should set out an organisation’s high-level carbon targets, its interim milestones and, most importantly, the actionable steps it plans to take. That will improve transparency around how those headline commitments translate into action.
My hon. Friend the Member for Thirsk and Malton asked me a number of questions about which businesses will have to report, when those requirements will come into force and how reporting will help us reach net zero, and I will take those in turn. We will ensure that any burden on business is proportionate and provides useful information for investors’ decision making. Exact details of organisations and products in scope will be determined by the relevant regulators and Government Departments following consultation. Anticipated timings are set out in the roadmap that we published in October.
The UK’s approach ensures that the SDR will come into force in a sequenced, co-ordinated manner, so that reported data flows from corporates to the financial sector, investors and financial market participants make sense, are logical and are scrutinisable. The “Greening Finance” road map, published by the Government in October, sets out the indicative path to introducing integrated sustainability disclosure requirements across the whole economy. The implementation of legislative and regulatory measures will be subject to the parliamentary timetable that I referenced earlier.
In terms of the impact of reporting on the UK getting to net zero, high-quality corporate sustainability reporting is clearly foundational to investors having the information that they need to make well-informed investment decisions. Any action to align capital investment with the transition to net zero is contingent on financial markets having access to the right and relevant information, and identifying which companies are successfully managing their climate-related risks and opportunities. Fixing that information gap is the first phase of the UK’s approach, and getting market participants to act on the information is the second phase, which will ensure that financial flows across the economy shift to align with that net zero commitment. There has been a concerted attempt across Government to ensure that we are very clear about what that journey needs to look like, and more will flow from the legislation next year. I hope that addresses my hon. Friend’s points.
The Government are taking determined action to tackle greenwashing and maintain trust in the growing market for sustainable finance. I thank my hon. Friends the Members for Thirsk and Malton, and for Central Suffolk and North Ipswich (Dr Poulter) for their well-informed contributions and challenges. I hope that this has been a helpful exchange for my hon. Friend the Member for Thirsk and Malton. I will consider his points carefully, as I always do, and take forward any elements to which I have not responded.
Question put and agreed to.
Financial Services: UK Economy
John Glen Excerpts(4 years, 3 months ago)
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Dame Angela Eagle (Wallasey) (Lab)
It is a pleasure to follow the hon. Member for South Cambridgeshire (Anthony Browne), who has opened this Backbench Business debate and is a fellow member of the Treasury Committee. He has given us a grand tour of a large and diverse sector of the economy that is, as he pointed out, very important. He also pointed out that it is affected by a range of issues at the moment.
The hon. Gentleman gave us some of his ideas on what should be happening post Brexit with some of the more complex of the EU directives that have been onshored—in particular, MiFID—which have been against the grain of how the UK financial services and insurance industries have always tended to work. He hinted at the philosophical difference between EU regulation in these areas and how the UK more traditionally did it; it is the difference between having principles-based regulation, which is not so specific, and the EU way of doing regulation, which tends to be so specific and puts a lot of those specifics in legislation. When I was in the Treasury and in the Department for Work and Pensions as Pensions Minister, it was a battle that we constantly had with the EU in the Council of Ministers and with the Commission.
Dame Angela Eagle
I can see the Minister is nodding, possibly because he recognises some of those tensions, which always existed when we were in the EU.
When we were in the EU, because of the size of the influence of the UK financial services industry as part of that bloc, we had a very good and effective way of pulling at least a lot of the regulation that went on more towards our way of doing things. One of the worries I have post Brexit, which I suppose is a philosophical and practical worry, is that the EU will now go off and do a lot more of the things that we were able to persuade it not to do when we were a member. The divergence between how EU regulation works and how we may wish our future regulation of financial services to work is likely to grow larger.
It has not been a very friendly divorce to date, and there may well be implications to that, too, in terms of competition for business. We have seen some of that in the wholesale markets for euros and we will doubtless see more of it. The outcome of our way of leaving the EU will challenge some of the agreements that we came to and the influence we were able to have when we were inside the Council chambers, the European Parliament and the European Commission, rather than the situation we find ourselves in now. As the hon. Member for South Cambridgeshire said, that can be an advantage, but it can also be a disadvantage. It is an opportunity, but there are also threats and issues that we have to deal with. We have a sharp disjunction with the recent past, after 40 years of that kind of influence, that we will have to deal with in the coming period. We have the inadequacies of the non-existent deal on financial services, which was part of the EU-UK so-called trade agreement, and those are already having an effect.
The hon. Gentleman was right to say that we are in a period of rapid regulatory change, which would have been the case regardless of whether we left the European Union. The fact that we have, and the fact that we have onshored all this regulatory machinery, means that we now have to start looking at how we wish to change all of it.
Even thinking about the sheer weight of work and oversight that will have to be done by the Treasury Committee is quite overwhelming, as the hon. Gentleman acknowledged in the exchange we had during his speech. The Minister must go weak at the knees when he thinks of the detailed work that he will have to put in to deal with the onshoring in the aftermath of Brexit, and whether we want to move quickly or slowly to adapt the laws and regulations that we have imported.
Members of the Treasury Committee have also gone weak at the knees thinking about how they might have some oversight, because of the highly technical nature of much of that regulation. We certainly need to be significantly more tooled up than we have been if we are to have proper oversight of what the regulators are tasked with doing, what philosophical direction the Government wish to go in, and what the practical aspects of that method will mean for our financial services industry and, of course—they have not been mentioned much—for consumers in the UK and for financial stability.
We should not lose sight of those two basic reasons why we have to get regulation right. Consumer protection is a huge issue in financial services, as the hon. Gentleman touched on when he said that financial services are not always the most popular sector of our economy. Perhaps some of those who supply and form part of the industry ought to stop and think about why that is they case and do some self-reflection about it.
Clearly, financial stability is also crucial in an era when markets are becoming more rapid and more global. In the context of highly rapid technical change, financial stability becomes even more important, because innovation outruns the capacity of many regulators to keep up with what on earth is going on in some markets. Those two important issues have to underpin all regulation; the future of the entire financial services industry rests on them.
Regulatory change in a rapidly evolving situation with a lot of flux is inevitably difficult for those who participate in the market and for those who wish to regulate it. It is also difficult for those such as the Minister who want to see how it can be properly harnessed and allowed to be beneficial to our economy while being safe. It is a period of big uncertainty and flex. New technology has the capacity to change things and lead to innovation, some of which might be fantastic and some of which might be awful. That structural issue has hit us greatly through the innovations of digital currencies.
The systems that control financial services have to deal with the practical and philosophical issues that arise, such as whether digital coins are ever stable, what central banks ought to be doing to deal with that, and whether the wild west of Bitcoin and the rest should be left as a gambling thing on the side. Those markets can be volatile—the wild west—but the capacity of software such as open registers and blockchain, and their potential for transparency and in-time and open trading of all sorts of things, could be harnessed for good purposes as well as for the more nefarious ones that feature on the darker edges of the net. On top of that, the demands of climate change will cause a systemic change in the way that things are valued, priced and assessed for value.
That structural change will completely change the context in which the financial services industry has to exist. In the UK, which is one of the most open economies in the world and always has been, we know how important the financial services sector is, and not only to London as a global centre. In 2020, it was worth £164 billion to the UK economy, which is the third-largest sector by size in the OECD. That is 8.6% of economic output, half of which is generated in London but half of which is generated across our regions. Of the 1.1 million jobs, 91,000 are in my region of the north-west. As the hon. Member for South Cambridgeshire pointed out, it is one of the few sectors where we have a healthy trade surplus—£46 billion in 2020. It is the fifth-largest economic sector in our economy, and all the more important for that.
As the hon. Gentleman also pointed out, the sector is important for taxation, with £28.8 billion in tax taken from it. According to PwC, it makes up £75.6 billion, or 10% of the total receipts. In the face of such change—technological, structural or the disjunction of Brexit—any Government would want to see how they could remake the environment in which the financial sector can operate and flourish to benefit and protect the sector so that it can benefit and protect our economy. We certainly all have a stake in ensuring that that is the case.
In that area of flux, we have to remember that the regulators, although they could be powerful, are struggling with an increasingly complex and fast-moving environment that they are not always geared up to deal with in detail or to keep on top of. We have seen the travails of the Financial Conduct Authority and how it manages the perimeter, and philosophically the view of caveat emptor—that the buyer should beware in all circumstances. When things go wrong, the reputation of the entire financial services sector is at stake, so it is a difficult balance.
The Financial Conduct Authority gave evidence to the Treasury Committee yesterday, some of which reflected how difficult it is to try to remake a regulator after scandals such as London Capital & Finance, at the same time as operating within all the extra complexity and uncertainty. It has a formidable task. I suspect that being chair of the FCA is one of those jobs where people are told that, if they do a stint, they will get the diplomatic equivalent of the Washington embassy as a reward. The current Governor of the Bank of England is one example of that.
The FCA needs to be strengthened. We as policy makers, and the Minister in particular, have to think about how it can practically do the job. The job cannot be so big and complex that it is undoable. Sometimes, the way that the FCA has to cope means it is difficult for it to achieve a balance and be given a job that it can sensibly do. We know there is a big turnover of staff at the FCA at the moment, and that there is workplace stress and unrest. We know that the head of the FCA is trying to transform that organisation into what he calls a lean organisation that can respond very quickly to what is going on in the market and in the areas it has to regulate. I am not convinced that it has that balance right yet, and I am not even convinced that that job can sensibly be done without more support.
I want to deal with a couple of areas that the hon. Member for South Cambridgeshire did not touch on. These are what I would call threats to the reputation of the financial services industry in this country. First, I want to talk about economic crime, which I think poses a threat to the entire sector and its integrity if it is allowed to get out of hand. We know that there are rising levels of economic crime, fraud and scams that have been turbocharged during the lockdown. The sector itself has survived covid and the lockdown pretty well so far, because it could manage remotely—it does a lot of its work remotely in the first place—but one of the things we have all seen, unfortunately, is the rise in fraud and scams. We have also seen, and perhaps it is inevitable when it is one of the biggest global centres of financial services, that London has attracted the attention of international criminals and fraudsters who wish to launder their money through cities like London. We know that, as a major financial centre, it is a target for all of these kinds of people.
The Intelligence and Security Committee, in its Russia report, which was suppressed for far too long and was finally published after the 2019 general election, said that London is considered the “laundromat” for corrupt money. We have seen that kind of magnet effect, which is extremely disturbing, and I do not think that we have yet really got a handle on it. There are regulatory failings, there are legislative failings with the structures we have to try to deal with this, and there are certainly enforcement failings of the laws that we do have.
The Economic Secretary to the Treasury (John Glen)
It is a great pleasure to respond to the debate on behalf of the Government. It has been an extremely well-informed debate, and I have enjoyed listening to all the contributions. I particularly thank my hon. Friend the Member for South Cambridgeshire (Anthony Browne), the hon. Member for Wallasey (Dame Angela Eagle) and the hon. and learned Member for Edinburgh South West (Joanna Cherry) for sponsoring the debate. They were absolutely right to point out that the financial services industry is critically important to the United Kingdom’s economy, and to champion the UK as an environment that ensures that the sector is able to retain its competitiveness on the world stage.
I discerned five themes as I listened to the debate: the response to the pandemic, the issue of levelling up, green finance, the context for our international relationships, and regulation, about which there have been a range of comments across the wholesale and retail sector.
I have been the Economic Secretary for nearly four years, and in that time I have come to recognise the vast economic contribution that the financial services industry makes to this country—we have heard a great deal about that today—but I have also observed the many hidden contributions that it has made, which have been particularly clear during the pandemic. On the frontline, bank staff have kept branches open and supported vulnerable customers at times that have been very worrying for them financially. In the back offices, people have rolled up their shirt sleeves and worked all hours with us and the regulators to deliver tens of billions of pounds of emergency loans. I have already thanked the industry publicly for what it has been doing, and I am delighted to do so again today at the Dispatch Box.
My hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) mentioned the £100 million of loans and other support in his constituency, and that has been replicated across the country. The bounce back loans, the coronavirus business interruption loan scheme and the forbearance measures were critical at what was a critical time for our country.
I recognise and acknowledge the sentiments about the financial services industry not always getting a good press. This is not just about banks, although they are critically important for the underpinning of lending to our economy. However, I think we should also recognise, as the Scottish National party speakers did, that the industry is not just about the square mile but about the whole United Kingdom. I visited the constituency of the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) a few weeks ago to see the bank hub that is active there and informing the industry’s response to the challenge of access to cash.
In places such as Birmingham, Bristol, Glasgow, Cambridge, Edinburgh and Merseyside, this industry is critical. There is not an equitable distribution across every region, but there are hubs of real significance. Two thirds of people employed in the industry work outside London: 37,000 in Northern Ireland, 69,000 in Wales, and 153,000 in Scotland. I am proud that the Government have used that imperative to headquarter our new national infrastructure bank in Leeds and to establish our new economic campus in Darlington.
The sector has also made significant progress on diversity and inclusion, so that the very best people for the job have an equal opportunity to succeed, no matter what their race, gender or background might be. There is a lot more work to be done in that area, and I commend the incoming Lord Mayor of London for his championing of that agenda during his tenure.
I want to address some of the points raised by Members during the debate. I thank my hon. Friend the Member for Wimbledon (Stephen Hammond) for his kind words, his focus on the importance of the regional agenda, and his challenge to ensure that we have opportunities across the regions. The opportunity to secure high-paid, high-value jobs beyond Wimbledon and across the United Kingdom is a real imperative. I draw his attention to the Kalifa review into FinTech that was published at the beginning of March, and to the money secured and announced in the Budget for the centre for financial innovation and technology, which will be a key driver of that.
My hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) mentioned levelling up and also raised some specific concerns about debt advice. I draw his attention to the work we have done with the breathing space scheme, which went live in May. I recognise the uncertainty around the maps and the reprofiling of face-to-face and online debt advice. I am taking a close interest in that. We are also trying to innovate when it comes to no-interest loan schemes, which are at the proof of concept phase and could make a massive contribution to assisting many vulnerable people.
My hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill) put a stark statistic before us when he said that more than 36% of his constituents worked in financial services and the broader legal and professional services sector. It is a critical sector for our economy. The financial services sector also has a crucial role to play in our response to climate change. The ambition is clear: we want the UK to be the best place in the world for green and sustainable investment. As a Government we have taken bold action in this area to transform the UK financial sector. That has involved introducing new economy-wide sustainability disclosure requirements for businesses, and the kick-starting of a green financing programme with two record-breaking sovereign green bonds: one for around £10 billion on 21 September and a further £6 billion on 21 October, achieving a “greenium”—a premium on what we would have gained from a non-green bond—of around 2.5 base points. We will not be complacent about this. We also need global action on green finance, and the Chancellor recently hosted the COP26 finance day, which saw financial firms with assets of over £130 trillion committing to net zero.
My hon. Friend the Member for Bromley and Chislehurst also drew attention to the role of the City of London Corporation in green finance, and I absolutely endorse his recognition of its contribution and in particular that of Catherine McGuinness, who has been the policy lead through most of my tenure. She has done an excellent job, and her tenure comes to an end next spring. As I have said, the Lord Mayor is also committed to taking on his predecessor’s leadership in that area.
Looking ahead, it is important that we do not rest on our laurels, as the motion recognises. There are obviously strong competitive pressures in the industry, and it is my mission to help to deliver the Chancellor’s vision for an open, green and technologically advanced financial services sector that is globally competitive and acts in the interests of communities and citizens across the UK. In his speech on 1 July, the Chancellor said that we should be proud that people around the world looked to this country for leadership, and we should be. We have an opportunity and a responsibility to lead the world on international standards, FinTech, green finance and much more.
When I took on this role in January 2018, the nature of the international relationship that the UK would have in financial services was uncertain. We have now left the EU institutional framework and, where it makes sense to do so, we are taking advantage of our new freedoms to refresh the UK’s position as the world’s pre-eminent financial centre. We are not deregulating, but we are looking at those international relationships. We have set out a clear, ambitious programme of work to broaden and deepen those relationships. We have signed trade agreements with Japan, Singapore, the European economic area and the European Free Trade Association, and reached agreements in principle on free trade agreements with Australia and New Zealand.
I recognise that in many of these free trade agreements, financial services will not be as prominent because the regulator-to-regulator dialogues that exist on an ongoing basis are so instrumental in unblocking opportunities on both sides in financial services. The Swiss mutual recognition agreement, which we are negotiating at the moment, will be the most ambitious financial services agreement globally in both breadth and depth.
I recognise the uncertainty of the EU relationship. We have co-operated fully, and it will be for the EU to determine what sort of dynamic it wishes to have. I was pleased to visit my counterparts in Madrid last week, and I met several bank leaders over there. The warmth that exists towards the UK in financial services is clear, and I have recently had conversations with other bilateral partners.
We need a regulatory framework that is more agile, that avoids politicisation and that gives decision making to the independent and expert regulators. I take the point raised by my hon. Friend the Member for Wimbledon on the need to ensure proper scrutiny of that autonomy. I recognise and appreciate the support for the secondary growth and competitiveness objective that we set out in the consultation, and it is now critical that we clarify in legislation how the responsibility of scrutinising those independent regulators will work. It will be for Parliament to determine how to examine the way in which those regulators meet the objectives we will set out in primary regulation.
Members mentioned a number of initiatives concerning the wholesale markets review. I see broad consensus on the vast majority of issues identified in the consultation document. We are talking about incremental changes informed by deep dialogue with industry.
On the prospectus regime review, I am delighted to say there was extensive support for the proposals in our recent consultation, and I look forward to pushing ahead with our reforms. We are taking forward the recommendations of the Kalifa review on FinTech. We must remain at the cutting edge of technology and innovation in financial services. I recognise that its application both to the regulators and to the financial market’s infrastructure will be significant.
We have responded to the call for evidence on insurance and Solvency II, and we are now working closely with the PRA to identify an optimal reform package across both the risk margin and the matching adjustment. This is complex work, but we are taking it forward with enthusiasm.
It seems to me that the House is largely in agreement on two things. The contribution of the financial services sector to the country is critical, but we cannot take it for granted, and I will never do so in my role. I am proud to be delivering on the Government’s vision for an open, green and technologically advanced financial services sector that is globally competitive and acts in the interests of communities and citizens across the United Kingdom.
I welcome the many varied and well-informed contributions this afternoon. I agree with the motion, and I encourage others to do the same. It would be remiss of me not to welcome the hon. Member for Hampstead and Kilburn (Tulip Siddiq) to her place as my shadow, and I look forward to discussing these matters with her in future.
Oral Answers to Questions
John Glen Excerpts(4 years, 3 months ago)
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Mr Toby Perkins (Chesterfield) (Lab)
The Economic Secretary to the Treasury (John Glen)
Previous receipt of covid-19 support should not, in and of itself be a barrier to credit provided that the applicant meets the lender eligibility criteria. It remains important that lenders carry out checks to ensure that they do not lend to individuals in an unaffordable way.
Mr Perkins
I take the Minister’s point and I agree with what he is saying, but that is not the reality of what people are finding in my constituency. Business owners as diverse as a music teacher, a house renovator and an airport taxi driver have been told that the reason they cannot get a mortgage or other credit arrangements is that they have availed themselves of the Government’s schemes. Their businesses are up and running, and it is concerning if no assessment has been performed. Will the Minister get in touch with people at the high street banks and prevail upon them to ensure that businesses with a sustainable track record that simply used those schemes are not penalised for that reason?
John Glen
The Government have worked with the Financial Conduct Authority and we will continue to work with it and with credit agencies to ensure that those payment holidays have no impact on borrowers’ credit ratings. However, the checks that banks and financial institutions undertake need to reflect changes to individuals’ income. We do not seek to involve ourselves in commercial decisions. The mortgage lending rates to the self-employed are in line with those overall for the self-employed, but of course I will continue to work with the banks and financial institutions, and the regulators, to keep the situation under review.
Siobhan Baillie (Stroud) (Con)
Helen Hayes (Dulwich and West Norwood) (Lab)
The Economic Secretary to the Treasury (John Glen)
The Government recognise that inflation is rising, and are closely monitoring the situation. The Bank of England is responsible for keeping inflation at its 2% target. As my colleagues mentioned earlier, we are working with international partners to tackle global supply chain disruption, and are taking targeted action worth more than £10 billion over the next five years to help people with the cost of living.
Helen Hayes
As food and energy bills are skyrocketing this winter, far too many of my constituents face the appalling choice between heating their homes and putting food on the table. Will the Minister therefore confirm how much more my constituents on average earnings will be paying in income tax and national insurance from next April, as a result of the Government’s decision to freeze the income tax personal allowance and to increase national insurance contributions?
John Glen
The Government very much recognise the challenge that people are facing, which is why we have introduced a range of interventions, including: the warm home discount; the household support fund, giving £500 million to local authorities to distribute; changes to the taper rate; and an increase in the national living wage. That range of interventions will help with the cost of living challenges, and will help many of the hon. Lady’s constituents.
Mr Steve Baker (Wycombe) (Con)
Is it not the case that the dreadful seeds sown by years of ultra-cheap credit and quantitative easing are now bearing their awful fruit through inflation, the ultimate stealth tax?
John Glen
I do not agree with my hon. Friend’s characterisation of the causal relationship, but I recognise that the Bank of England continues to be responsible for monetary policy. My hon. Friend has always held distinct views that represent a particular school of economists, and I will continue to listen carefully to what he has to say to the House.
Mr Speaker
We now come to the shadow Minister; welcome to the Front Bench, Tulip Siddiq.
Tulip Siddiq (Hampstead and Kilburn) (Lab)
There is a cost of living crisis, temperatures are falling and Ministers are ignoring average households, who are struggling to pay enormous bills. Household energy bills have increased by more than £230 since last winter and are set to increase even more early next year, and we have recently seen higher tax receipts from energy bills. Will the Minister back Labour’s policy of using this money to cut VAT on people’s energy bills to zero over the next six months?
John Glen
I welcome the hon. Lady to the Front Bench. I draw her attention to the answer that I just gave concerning the number of interventions that the Government have made, including the warm home discount and additional support through local authorities. Households in the lowest income decile receive on average more than £4 in public spending for every £1 that they pay in tax. The Government are acutely sensitised to the challenges that we face this winter.
Kelly Tolhurst (Rochester and Strood) (Con)
The Economic Secretary to the Treasury (John Glen)
The Joint Money Laundering Steering Group guidance helps firms to meet their obligations under the money laundering regulations. Banks should take measures to assess risks presented by pooled client accounts to ensure that the accounts are not abused for criminal purposes.
Kelly Tolhurst
Yacht brokers have been using pooled client accounts for years to protect large sums of their clients’ money, without issue. Changes to the guidance have meant that banks are now closing some of these accounts, putting some of these professional, long-established businesses at risk. Will my hon. Friend meet me, UK Finance, and the Association of Brokers and Yacht Agents, to find a solution quickly? This is an important sector of the economy for some of our coastal communities, such as my constituency.
John Glen
My hon. Friend knows a lot about this matter and the industry, and I take her concerns very seriously. Although the Government will never insist on individual lending decisions and behaviours of banks, we will engage closely. I will meet her, and the Association of Brokers and Yacht Agents, and I will write to UK Finance to ensure that the guidance that is posted is being used effectively in the circumstances that she has raised.
James Murray (Ealing North) (Lab/Co-op)
The Pandora papers show how overseas shell companies secretly buy up luxury property in the UK. In 2018, the Government published draft legislation for a new register of such entities to crack down on the use of UK property for money laundering. This is a matter of law and order. Ministers promised to deliver that register in 2021, yet for some reason, since the current Prime Minister took office, that commitment seems to have been abandoned. Will the Minister now, four years since the UK anti-corruption strategy was published, finally admit that the promise of delivering a register in 2021 has been broken, and will he give us a firm date by which the register will be in place?
John Glen
I draw the hon. Gentleman’s attention to the financial action taskforce report in December 2018 that gave the UK the best ever evaluation in terms of anti-money laundering. There are two or three areas where we have taken action.
John Glen
The hon. Member keeps asking “Where is the register?” I will answer the question in a moment. What the Government have done is put in an additional £63 million in the last Budget to deal with Companies House reform, which is one of the areas. We have been the world’s leader in terms of common reporting standards. We were the first country, five years ago, to raise the standard in terms of transparency. We will implement that register when legislative time becomes available.
Christine Jardine (Edinburgh West) (LD)
Paul Maynard (Blackpool North and Cleveleys) (Con)
Can the Chancellor confirm that, contrary to industry suggestions, the Government remain committed to legislating for access to cash as soon as possible?
The Economic Secretary to the Treasury (John Glen)
Absolutely, I can. We will legislate, regardless of what the industry brings forward.
Stephen Morgan (Portsmouth South) (Lab)
The Minister will be aware that Viktor Fedotov, the secret co-owner of Aquind, has been implicated in a £72 million fraud scheme linked to Putin’s Russia. Can the Minister say what due diligence has been done on the project company and its owners, and if he and ministerial colleagues will protect our national infrastructure from these alleged fraudsters by stopping the disastrous project once and for all?
John Glen
The Government remain absolutely committed to protecting this country from illicit finance. We have been a leader in the global community, making this place the safest place to do business, and we will continue in that vein.
Jacob Young (Redcar) (Con)
A key way to support economic growth is to help level up our forgotten high streets, such as Eston Square, where the old precinct building is blocking key investment and preventing new businesses from moving in. When the Chancellor is next up in Teesside, will he come with me to Eston, and meet leaders at Redcar and Cleveland Borough Council to see what can be done to level up Eston Square?
Gareth Thomas (Harrow West) (Lab/Co-op)
The Chancellor of the Exchequer will be aware of the considerable public unease about the proposed demutualisation of Liverpool Victoria. Will he therefore consider sympathetically the cross-party letter he has received from over 100 parliamentarians calling for a review of the law governing mutuals?
John Glen
As the hon. Gentleman knows, we have had considerable engagement on this subject. This is a matter for the Financial Conduct Authority, and we have discussed it. Obviously, members will now vote on the proposal. On the broader issue of how this sector is treated, I remain willing to engage with him on further changes and reforms that may help it in future.
Martin Vickers (Cleethorpes) (Con)
Ministers will know of the importance of the Humber ports to the regional and national economy. Access to Immingham and Grimsby ports is in part via the A180, which has an old concrete surface that is crumbling and in need of urgent repair. This afternoon I will meet Highways England to discuss that. May I tell it that the Chancellor will fund those improvements?