Economic Responsibility and a Plan for Growth

Debate between Nigel Evans and Pat McFadden

Wednesday 19th October 2022 Commons Chamber

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

On a point of order, Mr Deputy Speaker, the motion that the House has just passed, with no opposition from the Government,

“calls on the Government to publish the Office for Budget Responsibility forecasts immediately alongside Government estimates of windfall profits for the next two years from energy producers in the UK.”

Both those pieces of information are very important. The House has just called on the Government to publish them immediately. I seek your help in making sure that that happens.

[Mr Deputy Speaker (Mr Nigel Evans)]

I thank the right hon. Member for his point of order. Those on the Treasury Bench will have heard what he has to say. He is absolutely right that the Government must respond within a certain period of time to say how they will act now that that motion has been passed.

Co-operative and Community Benefit Societies (Environmentally Sustainable Investment) Bill

Debate between Nigel Evans and Pat McFadden

2nd reading & 2nd reading: House of Commons
Friday 11th September 2020 Commons Chamber

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

I am grateful to be able to make a short contribution to this debate. In the midst of the coronavirus crisis that we are going through, there is an active debate about how we should come out of it and recover from it economically. On that note, I congratulate my hon. Friend the Member for Cardiff North (Anna McMorrin) on bringing forward a Bill that creates a platform for an important contribution to that debate.

Many people would argue—I include myself among them—that it is not enough just to try to recreate the economy as it was in February; we should aim to come out of this crisis with a more sustainable economy and a better funded public space. If we have learned anything during this crisis, it is that good public services can help protect us and guarantee the safety and security of our whole society in such situations. Any society is only as strong as its weakest parts when fighting a pandemic. Co-operatives have a big part to play in that.

Scarcely a conversation with investors or financial institutions can go by these days without hearing the letters ESG. Environmental, social and governance considerations are being put forward as greater priorities in investment decisions, and it is in that context that the Bill put forward by my hon. Friend is highly relevant to the debates about what investment should seek to achieve.

As we have heard in the debate, co-operatives have been part of our society and economy since 1844, when the Rochdale Society of Equitable Pioneers was established. The principle that a business can be run and owned by its members for the benefit of the community it serves has become a much cherished and valuable part of British life. The co-operative movement was part of the foundation of the Labour party, and we have always had a close relationship with it. As we have heard, there are some 7,000 co-operatives operating in the UK, with a combined turnover of around £38 billion. Perhaps I should declare my interest, in that I am a member of the Co-operative party and a member of the Revolver World co-operative in my constituency, which sells excellent Fairtrade tea and coffee—so, Mr Deputy Speaker, if you want a good cup of tea or coffee after this debate, you know who to ask.

Let me turn to the Bill, which seeks to deal with an essential and important question of financing. It tries to deal with the question of how co-operatives can raise equity finance without compromising the mutual nature of their ownership and governance model. At the moment, co-ops can raise finance either from their members’ resources or they can borrow to invest, but they cannot issue conventional shares, as other enterprises can, without threatening the mutual status of the organisation. The reason for that, of course, is that anyone who invests in an enterprise by buying shares gets the rights—those ownership and voting rights—that share ownership brings. The Bill tries to deal with that essential problem for co-operatives, which does not affect other enterprises that can issue shares freely.

The other distinguishing feature of the Bill is that clause 1(3) envisages that these shares are for environmentally sustainable investment—that they are green shares. As we have heard throughout the debate, the desirability of restricting this new class of shares for green purposes has been the subject of some disagreement and discussion. It is fair to say that some in the co-operative movement regard the scope as too narrow and point to the much broader range of social and economic benefits of co-operatives. They would rather see a more generic share-issuing power with the emphasis on the form of investment and the protection of the mutual model, rather than trying to be too focused on the purpose of the investment. However, even those in the co-operative movement who have doubts about the purely green criteria set out in the Bill still want to see it receive a Second Reading and to deal with the issues about the scope of the shares in Committee.

I think that a couple of straw people have been set up in the debate. One is that if we issue such green shares, it will somehow stop the Government doing green investment. There is no reason why the Government should not invest in retrofitting housing, for example, just because we make a change in how co-operatives can raise financing, so that need not detain us.

There has also been the issue of green bonds. Of course they can play a role, but again, why should one crowd out the other? We already operate in a world of capital markets where there are bonds and equities, and no one has ever suggested that because we have equities, we cannot have bonds, so why should that be the case here? I accept that there is some debate about the scope of these green shares, but I do not accept that somehow, as a consequence, they will run against the issue of green bonds or inhibit the Government from doing what they want to on such investments.

There are not too many opportunities to legislate on co-operatives, and this one is still a potentially valuable way to facilitate equity investment in the co-operative sector. The co-operative movement has wanted to do that for some time and the Bill seeks to address that long-standing problem by creating this new class of share, which would not only facilitate equity investment, but safeguard co-ops from the risk of demutualisation as a result. Similar provisions are already in place for building societies in the UK through core capital deferred shares, and legislation like this has, as we have heard, recently been passed in Australia—a country that I believe our Prime Minister is increasingly looking to for inspiration, so I am somewhat surprised to hear Government Members not wanting to follow the Australian model when it seems to have such influence in other parts of our public life at the moment.



The Bill allows the issuance of these shares, but restricts the voting rights of investors holding them to one vote, and creates other safeguards to stop that investment resulting in a move to turn the Co-op into a conventional private company. As many Members have said in the debate, there is no point in creating this new financial instrument if the result of it is to destroy the co-operative essence of the enterprise, so the Bill seeks to safeguard against that danger. It also envisages that the shares are permanent capital—not withdrawn by the holder but tradeable to other holders if the original holder so wishes.

We believe that legislating for this new type of share could open up a new and important channel for investment in co-operatives in the future. Acting on that basis is in keeping with the new emphasis on ESG goals in financial services and markets. If investors really are becoming more interested in things other than quarterly returns and if the quality of supply chains, the sustainability of investment, the broader contribution to the good society really are going up the agenda for investment decisions, then this Bill is one way to make more of that kind of investing a reality. We want to see it done in a way that does not threaten the mutual model or the essential membership ownership that gives co-operatives their distinctive character.

I make no predictions about the fate of the Bill today, but we do believe that there is merit in the kind of financial instrument that it envisages and, for that reason, the creation of this financial instrument deserves the support of the House.

[Mr Deputy Speaker (Mr Nigel Evans)]

Let me just explain what is happening, because it has been a while since we have had a Friday sitting. When I call the Minister, the debate will continue as long as people who are on the call list are trying to catch my eye. At the end of that, I will then call Anna McMorrin to end that debate. If anybody wishes to withdraw from the call list, please come and see me in the Chair.

Finance Bill

Debate between Nigel Evans and Pat McFadden

Report stage & Report stage: House of Commons & Report: 1st sitting & Report: 1st sitting: House of Commons
Wednesday 1st July 2020 Commons Chamber

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

I beg to move, That the clause be read a Second time.

[Mr Deputy Speaker (Mr Nigel Evans)]

With this it will be convenient to discuss the following:

New clause 1—Loan charge: report on effect of the scheme—

“(1) The Chancellor of the Exchequer must commission a review, to be carried out by an independent panel, of the impact in parts of the United Kingdom and regions of England of the scheme established under sections 20 and 21 and lay the report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider the effects of the provisions on—

(a) business investment,

(b) employment,

(c) productivity, and

(d) company solvency.

(3) A review under this section must consider the fairness with which HMRC has implemented the policy, including whether HMRC has provided reasonable flexibility around repayment plans with the aim of avoiding business failures and individual bankruptcies.

In this section “parts of the United Kingdom” means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland;

and “regions of England” has the same meaning as that used by the Office for National Statistics.”

This new clause would require a review of the impact of the scheme to be established under Clauses 20 and 21.

New clause 31—Restricting the loan charge to cases where taxpayer knew loan was taxable—

“(1) In Schedule 11 to F(No.2)A 2017 (employment income provided through third parties: loans etc outstanding on 5 April 2019) in paragraph 1(1)—

(a) at the end of paragraph (b) omit “and”; and

(b) at the end of paragraph (c), insert—

“, and

(d) if the relevant year is 2015/16 or an earlier tax year, one of the conditions 1 to 3 is met.”

(c) After paragraph 1(1), insert—

“(1A) Condition 1 is that—

(a) P submitted a return in accordance with section 8 of TMA 1970 for the relevant year,

(b) the loan or quasi loan was not accounted for in the return as income, and

(c) P knew that the loan or quasi loan should have been accounted for as income in the relevant year.

(1B) Condition 2 is that P has not been issued with a notice under section 8 of TMA 1970 for the relevant year.

(1C) Condition 3 is that P has been issued with a notice under section 8 of TMA 1970 for the relevant year but that notice is or has been withdrawn under section 8B(2) of that Act.”.

(2) In Schedule 12 to F(No.2)A 2017 (trading income provided through third parties: loans etc outstanding on 5 April 2019) in paragraph 1(2)—

(a) at the end of paragraph (a)(ii) omit “and”; and

(b) at the end of paragraph (b), insert—

“, and

(c) if the tax year in respect of which the loan or quasi loan should have been accounted for as income (or otherwise treated as a receipt of a revenue nature for income tax purposes) (“the relevant year”) is 2015/16 or an earlier tax year, one of the conditions 1 to 3 is met.”

(c) After paragraph 1(2), insert—

“(2A) Condition 1 is that—

(a) T submitted a return in accordance with section 8 of TMA 1970 for the relevant year,

(b) the loan or quasi loan was not accounted for in the return as income (or otherwise treated as a receipt of a revenue nature for income tax purposes), and

(c) T knew that the loan or quasi loan should have been accounted for in the return as income (or otherwise treated as a receipt of a revenue nature for income tax purposes).

(2B) Condition 2 is that T has not been issued with a notice under section 8 of TMA 1970 for the relevant year.

(2C) Condition 3 is that T has been issued with a notice under section 8 of TMA 1970 for the relevant year but that notice is or has been withdrawn under section 8B(2) of that Act.”.

This new clause provides that, in respect of loans made in 2015/16 tax year and any earlier tax years, the loan charge applies only if the taxpayer submitted their tax return and deliberately did not declare the loan to be income. The clause also extends this protection to taxpayers who were not required by HMRC to submit tax returns.

New clause 35—Review of Off-Payroll working (IR35) legislation—

“(1) The provisions of section 7 and Schedule 1 of this Act do not have effect unless the Treasury has conducted a review of Off-Payroll working (IR35) legislation and has laid a copy of the report of that review before both Houses of Parliament.

(2) A review under (1) must include assessment of—

(a) impact on individuals’ livelihoods,

(b) impact on individuals’ employment rights, and

(c) relevant business practices.

(3) Any review under (1) must be carried out no later than 31 December 2025.”

This new clause would provide that the IR35 provisions of the bill would not take effect unless the Treasury has conducted and published a review of off-payroll working legislation.

Amendment 16, page 2, line 23, leave out clause 7

Amendment 55, in clause 20, page 15, line 6, at end insert—

“(3A) An amount paid, treated as paid or due to be paid under a qualifying agreement is also a qualifying amount if—

(a) the amount is referable (directly or indirectly) to a qualifying loan or quasi-loan,

(b) the tax year in which an amount representing the loan or quasi-loan should have been accounted for as income (or otherwise treated as a receipt of a revenue nature for income tax purposes) (“the relevant year”) is 2015/16 or an earlier tax year, and

(c) one of the conditions 1 to 3 is met.

(3B) Condition 1 is that—

(a) the person to whom the income tax liability the agreement referred to in subsection (2) relates (“P”) submitted a tax return in accordance with section 8 of TMA 1970 for the relevant year, and

(b) the loan or quasi loan was not accounted for in the return as income (or otherwise treated as a receipt of a revenue nature for income tax purposes).

(3C) However, condition 1 is not met if P knew that the loan or quasi loan should have been accounted for in the return as income (or otherwise treated as a receipt of a revenue nature for income tax purposes).

(3D) Condition 2 is that P has not been issued with a notice under section 8 of TMA 1970 for the relevant year.

(3E) Condition 3 is that P has been issued with a notice under section 8 of TMA 1970 for the relevant year but that notice is or has been withdrawn under section 8B(2) of that Act.”.

This amendment is consequential on the new clause “Restricting the loan charge to cases where taxpayer knew loan was taxable”. It provides that a prior settlement with HMRC can be unwound unless the worker failed to account for a 2015/16 tax year (or earlier) liability in his or her tax return deliberately despite knowing that the loan should have been included as income.

Amendment 17, page 85, line 2, leave out schedule 1.

Amendment 20, in schedule 1,  page 97, line 15, leave out “2021-22” and insert “2023-24”

This amendment and 21 to 36 and 57 seeks to delay the introduction of the IR35 changes until the tax year 2023-24.

Amendment 21, page 97, line 17, leave out “2021” and insert “2023”

Amendment 22, page 97, line 21, leave out “2021” and insert “2023”

Amendment 23, page 97, line 23, leave out “2021” and insert “2023”

Amendment 24, page 97, line 25, leave out “2021” and insert “2023”

Amendment 25, page 97, line 26, leave out “2021” and insert “2023”

Amendment 26, page 97, line 38, leave out “2021” and insert “2023”

Amendment 27, page 98, line 4, leave out “2021-22” and insert “2023-24”

Amendment 28, page 98, line 8, leave out “2021” and insert “2023”

Amendment 29, page 98, line 12, leave out “2021” and insert “2023”

Amendment 30, page 98, line 30, leave out “2021” and insert “2023”

Amendment 31, page 98, line 34, leave out “2021” and insert “2023”

Amendment 32, page 98, line 37, leave out “2021” and insert “2023”

Amendment 33, page 98, line 40, leave out “2021” and insert “2023”

Amendment 34, page 98, line 44, leave out “2021” and insert “2023”

Amendment 35, page 98, line 45, leave out “2021” and insert “2023”

Amendment 36, page 98, line 47, leave out “2021” and insert “2023”

Amendment 57, page 97, line 36leave out ‘2021’ and insert ‘2023’

New clause 12—Assessment of impact of provisions of this Act—

“(1) The Chancellor of the Exchequer must review in parts of the United Kingdom and regions of England the impact of the provisions of this Act and lay a report of that review before the House of Commons within one month of the passing of this Act.

(2) A review under this section must consider the effects of the provisions on—

(a) GDP

(b) business investment,

(c) employment,

(d) productivity,

(e) company solvency,

(f) public revenues

(g) poverty, and

(h) public health.

(3) A review under this section must consider the following scenarios—

(a) the Job Retention Scheme, Coronavirus Business Interruption Loan Scheme, Bounceback Loan Scheme and Self-employed Income Support Scheme are continued are continued for—

(i) six months,

(ii) the next year,

(iii) eighteen months,

(iv) the next two years; and

(b) the Job Retention Scheme, Coronavirus Business Interruption Loan Scheme, Bounceback Loan Scheme and Self-employed Income Support Scheme are ended or changed in any ways by a Minister of the Crown other than as specified in (a).

(4) In this section—

“parts of the United Kingdom” means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland;

“regions of England” has the same meaning as that used by the Office for National Statistics.”

This new clause would require a review of the impact of the Bill in different possible scenarios with respect to the continuation of the coronavirus support schemes.

New clause 18—Review of changes in Act—

“(1) The Chancellor of the Exchequer must review the effect of the changes in this Act in each part of the United Kingdom and each region of England and lay a report of that review before the House of Commons within two months of the passing of this Act.

(2) A review under this section must consider the effects of the changes on—

(a) business investment,

(b) employment, and

(c) productivity.

(3) A review under this section must consider the effects in the current and each of the subsequent four financial years.

(4) The review must also estimate the effects on the changes in the event of each of the following—

(a) the UK leaves the EU withdrawal transition period without a negotiated comprehensive free trade agreement,

(b) the UK leaves the EU withdrawal transition period with a negotiated agreement, and remains in the single market and customs union, or

(c) the UK leaves the EU withdrawal transition period with a negotiated comprehensive free trade agreement, and does not remain in the single market and customs union.

(5) The review must also estimate the effects on the changes if the UK signs a free trade agreement with the United States.

(6) In this section—

“parts of the United Kingdom” means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland;

and “regions of England” has the same meaning as that used by the Office for National Statistics.”

This new clause requires a review of the impact on investment, employment and productivity of the changes made by the Act over time; in the event of a free trade agreement with the USA; and in the event of leaving the EU without a trade agreement, with an agreement to retain single market and customs union membership, or with a trade agreement that does not include single market and customs union membership.