Asked by: Matthew Pennycook (Labour - Greenwich and Woolwich)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to the White Paper, The Future Relationship Between the United Kingdom and the European Union, published in July 2018, what assessment he has made of the effect of the policies set out in that White Paper on transactions in euro-denominated assets for the UK financial sector.
Answered by John Glen
Derivatives clearing is an integral part of the UK financial system and the financial stability of both the UK and the EU. This includes euro-denominated clearing, which forms an important part of the overall financial structure in London, generating economic efficiencies from which many firms in the UK, in Europe and internationally benefit.
We aim to ensure that we avoid outcomes that impose unnecessary costs and disruption on individuals and businesses as the UK leaves the EU. We have been clear that equivalence, as it currently stands, will not work for the UK, and will not work for the EU.
As set out in the White Paper, the UK is seeking a future UK-EU relationship which recognises the autonomy of each party over decisions regarding access to its market. Importantly, it also includes a bilateral component which would create shared commitments for the governance of the relationship, establish extensive supervisory and regulatory cooperation, as well as robust and transparent processes. This includes appropriate timelines and notice-periods if market access was to be withdrawn.
The effect of the agreement would be stability for the UK-EU financial ecosystem and the continuation of economically valuable financial services under a new balance of rights and obligations.
Asked by: Matthew Pennycook (Labour - Greenwich and Woolwich)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to the White Paper, The Future Relationship Between the United Kingdom and the European Union, published in July 2018, what assessment he has made of the effect of policies set out in that White Paper on derivatives clearing for the UK financial sector.
Answered by John Glen
Derivatives clearing is an integral part of the UK financial system and the financial stability of both the UK and the EU. This includes euro-denominated clearing, which forms an important part of the overall financial structure in London, generating economic efficiencies from which many firms in the UK, in Europe and internationally benefit.
We aim to ensure that we avoid outcomes that impose unnecessary costs and disruption on individuals and businesses as the UK leaves the EU. We have been clear that equivalence, as it currently stands, will not work for the UK, and will not work for the EU.
As set out in the White Paper, the UK is seeking a future UK-EU relationship which recognises the autonomy of each party over decisions regarding access to its market. Importantly, it also includes a bilateral component which would create shared commitments for the governance of the relationship, establish extensive supervisory and regulatory cooperation, as well as robust and transparent processes. This includes appropriate timelines and notice-periods if market access was to be withdrawn.
The effect of the agreement would be stability for the UK-EU financial ecosystem and the continuation of economically valuable financial services under a new balance of rights and obligations.
Asked by: Matthew Pennycook (Labour - Greenwich and Woolwich)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what advice his Department has issued to the financial sector on contract continuity (a) during the implementation period and (b) after 31 December 2020.
Answered by John Glen
The UK and EU negotiating teams reached a hugely important milestone in the Brexit process by agreeing the terms of a time-limited implementation period (IP).
The document “HM Treasury’s approach to financial services legislation under the EU (Withdrawal) Act 2018,” published by HM Treasury on 27 June 2018, sets out that during the IP, access to one another’s markets will remain unchanged and firms will be able to trade on the same terms as now until 31 December 2020. This will allow citizens and businesses in the UK and across the EU to plan with confidence for life after our withdrawal, on the basis that businesses can operate as now throughout the IP.
The White Paper, “The future relationship between the United Kingdom and the European Union,” published on 12 July 2018, sets out HMG’s position on the future relationship in financial services with the EU. As set out in the White Paper, the UK is seeking a future UK-EU relationship which continues to facilitate economically beneficial cross-border financial services, with a scope that reflects global business models. The White Paper also includes a proposal to protect consumers and businesses through a commitment that existing contracts can be fulfilled even if access is withdrawn. The effect of the agreement would be to provide stability for the UK-EU financial ecosystem.
Asked by: Matthew Pennycook (Labour - Greenwich and Woolwich)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what progress he has made on replicating the insurance agreements that the EU has with third countries that enable reciprocal arrangements for insurers to open agencies and branches in third countries after the UK has left the EU.
Answered by John Glen
As agreed at the March European Council, during the implementation period the UK is to be treated as a Member State for the purposes of international agreements. This includes the insurance agreements that the EU has with third countries. This provides certainty and confidence that there will be no disruption to existing relationships underpinned by international agreements.
We are engaging with partner countries to plan for continuity of the effect of existing agreements, for example the EU-Swiss and EU-US agreements, adjusted appropriately to reflect our departure from the European Union.
Asked by: Matthew Pennycook (Labour - Greenwich and Woolwich)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what estimate he has made of the total amount that will accrue to the public purse from the Loan Charge 2019.
Answered by Mel Stride - Shadow Chancellor of the Exchequer
The charge on disguised remuneration (DR) loans is estimated to raise £3.2 billion for the Exchequer by 2021. Further information can be found in the ‘Disguised remuneration: further update’ policy paper, published on 22 November 2017: www.gov.uk/government/publications/disguised-remuneration-further-update/disguised-remuneration-further-update.
The charge on DR loans is estimated to affect up to 50,000 individuals. Outstanding DR loans will be treated as UK income and charged to tax on 5 April 2019. An individual will usually have to pay tax on UK income even if they are not resident in or a citizen of the UK, and the charge on DR loans is no different. As a result, no assessment has been made of how many of the 50,000 estimated to be affected are non-UK resident or non-UK citizens.
Asked by: Matthew Pennycook (Labour - Greenwich and Woolwich)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many non-UK citizens HMRC has estimated are liable to pay the 2019 Loan Charge.
Answered by Mel Stride - Shadow Chancellor of the Exchequer
The charge on disguised remuneration (DR) loans is estimated to raise £3.2 billion for the Exchequer by 2021. Further information can be found in the ‘Disguised remuneration: further update’ policy paper, published on 22 November 2017: www.gov.uk/government/publications/disguised-remuneration-further-update/disguised-remuneration-further-update.
The charge on DR loans is estimated to affect up to 50,000 individuals. Outstanding DR loans will be treated as UK income and charged to tax on 5 April 2019. An individual will usually have to pay tax on UK income even if they are not resident in or a citizen of the UK, and the charge on DR loans is no different. As a result, no assessment has been made of how many of the 50,000 estimated to be affected are non-UK resident or non-UK citizens.
Asked by: Matthew Pennycook (Labour - Greenwich and Woolwich)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, with reference to the Government’s technical note on a temporary customs arrangement, published on 7 June 2018, whether the UK will make payments to the EU to participate in a backstop customs arrangement; and if he will make a statement.
Answered by Mel Stride - Shadow Chancellor of the Exchequer
Asked by: Matthew Pennycook (Labour - Greenwich and Woolwich)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, what recent estimate he has made of the additional funding required by (a) his Department and (b) HM Revenue and Customs) over the next two years to prepare effectively for the UK leaving the EU.
Answered by Elizabeth Truss
As announced at Autumn Budget 2017, HMT is making £3 billion of additional funding available over the next two years - £1.5 billion in both 18/19 and 19/20 – so that departments and the Devolved Administrations can continue to prepare effectively for Brexit. HMT is working to understand what each department needs to prepare effectively, and what additional funding should be supplied – HM Treasury will aim to agree 2018/19 allocations in early 2018. Departments’ funding requirements for 19/20 will be affected by progress in negotiations with the EU and will therefore be decided at a later date. Additional funding received from the Reserve will be set out at Supplementary Estimates in the usual way.
Asked by: Matthew Pennycook (Labour - Greenwich and Woolwich)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to page 22 of Autumn Budget 2017, how the £3 billion set aside to prepare for the UK leaving the EU will be allocated across (a) government departments and (b) public authorities.
Answered by Elizabeth Truss
The additional funding from the Reserve in 18/19 and 19/20 is being set aside to ensure funding is available as required. HMT will work with departments and DExEU over the coming weeks to refine estimates of departmental requirements and will allocate 18/19 funding in early 2018. Departmental allocations for 2019-20 will be agreed later in 2018-19. Departmental allocations from the Reserve will be set out at Supplementary Estimates in the relevant year as is usual.