Cryptoassets: Regulation

Richard Fuller Excerpts

Wednesday 7th September 2022 Westminster Hall

[The Economic Secretary to the Treasury (Richard Fuller)]

It is a great pleasure to serve under your chairmanship, Ms Rees. I join all hon. Members who have spoken in congratulating the hon. Member for West Dunbartonshire (Martin Docherty-Hughes), first, on securing the first parliamentary debate on this topic and, secondly, on his tour de force speech covering the opportunities and risks of crypto technology. I expect that this will be the first of many debates on the subject.

During today’s debate, hon. Members have rightly focused largely on the risks of the new technology, concerns about consumer protection and areas for regulatory clarity, but I suggest that we all share the hope that, through innovation and creating the right conditions, we can achieve opportunities for the crypto industry in the UK to contribute largely to the growth of the wider economy.

I hope to cover a number a points that the hon. Member made in his opening speech. I will start with three of them: financial inclusion issues, particularly with regard to central bank digital currencies; requirements for carbon neutral data centres; and enforcing the existing law against fraud. I hope to cover those points in my speech, but if I do not, I look forward to engaging with him, the hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) and her APPG in the future.

Throughout the debate we have spoken about a wide range of related but distinct terms, and I would like to take a moment to separate some of them. First, distributed ledger technology is exactly what it says: it is a form of technology that allows ledgers to be kept up to date despite being in multiple places or distributed. Secondly, blockchain is a type of DLT that uses encryption, adding security and new functionalities. That is the technology that underpins crypto, although it also facilitates innovation in many other sectors, such as trade finance. Thirdly, cryptoassets are privately issued digital assets that rely on distributed ledger technology such as blockchain for their workings and security. So-called cryptocurrencies are the most well-known cryptoassets today. I will use the phrase “crypto technologies” to refer to cryptoassets and the blockchain that underpins them in the round. Stablecoins are cryptocurrencies that seek to maintain a stable price by pegging to a real commodity or a currency, but there are other forms of stablecoins that have their supply regulated by algorithm. Again, there are two separate terms under that overall heading.

I and other hon. Members have mentioned the central bank digital currency, which is a form of digital money issued by central banks. CBDCs are structurally different from cryptocurrencies, which are almost always decentralised whereas CBDCs are controlled by a central bank. The Government have already committed to issuing a public consultation on this topic, jointly with the Bank of England, later this year.

A number of hon. Members pointed to the issue of financial inclusion. There has been no decision on the issuance or design features of a CBDC, or indeed whether we will do one. In those decisions, considerations about financial inclusion and accessibility of central bank digital currencies will be at the heart of any technical design decision. I hope that addresses one of the concerns raised by hon. Members.

In all its forms, we are still on the cusp of the technology breaking through, and its uses are likely to evolve dramatically in financial services. As hon. Members have said, thousands of cryptoassets, including Bitcoin, have been issued, and together these have a total market capitalisation of around $1 trillion today.

[Martin Docherty-Hughes]

There is so much value. Does the Minister recognise that this technology is not new? It has been around for nearly three decades.

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[Richard Fuller]

Absolutely. One of the issues, which the hon. Gentleman raised in his speech, is how pervasive the technology has become since 2008. We are still looking at the different applications and different levels of the technology, as I outlined at the start of my speech, both within financial services and more broadly within Government. He mentioned the issues in Estonia and in the economy as a whole. The technology has been around for a while, but it has many tentacles that have spread in many different ways through countries and international economies.

The hon. Gentleman will also know that in addition to that growth, as he and other hon. Members have mentioned, there has been substantial volatility. Notwithstanding those market fluctuations, the potential for DLT technology underpinning cryptoassets remains powerful in many ways. Across the world, NFTs are entering common parlance. The hon. Member for Erith and Thamesmead (Abena Oppong-Asare) talked about one that could have a revolutionary impact on the creative industries.

Blockchain technology is being used in healthcare to store patients’ medical records securely; in housing to record property rights; and in supply chains to track the path and safety of food throughout the farm-to-table journey. In Government, we are developing opportunities here in the UK to use distributed ledger technology for customs and international trade, to ease the import of goods. DLT has the potential to change how our financial markets work, too. That is why new have started work to understand how it might be applied to a UK sovereign debt instrument.

Even the fundamental architecture of the internet may undergo changes as Web3 becomes more popular, with blockchain offering the potential to drive a more decentralised, user-owned ecosystem. The innovation powered by DLT could spill across society, well beyond the scope of today’s debate, which rightly focuses on financial services.

As crypto technologies grow in significance, the UK Government are seeking ways to achieve global competitive advantage for the United Kingdom. We want to become the country of choice for those looking to create, innovate and build in the crypto space. We are already the leading European fintech hub, second only to the US worldwide. By making this country a hospitable place for crypto technologies, we can attract investment, generate new jobs, benefit from tax revenues, create a wave of groundbreaking new products and services, and bridge the current position of UK financial services into a new era.

[Dr Cameron]

I thank the Minister for his important points about taking things forward in a progressive way. Given the current uncertainty in the Government sphere, while the UK is still committed to making the UK the global home of crypto, what progress has been made in establishing the cryptoasset engagement group that was announced in April, to bring on board leaders from the sector and engage positively?

[Richard Fuller]

The hon. Lady is right to mention the importance of bringing people together. I will refer to that. May I also take the opportunity to re-emphasise the work that her APPG is currently doing on regulation for consumer protection in this space? There are multiple participants and interests, so I echo her point.

At the forefront of this is something that we have talked a lot about when it comes to the culture. We have highly driven entrepreneurs with great skills. Having their teams in the UK enables us to build the wealth and experience that can power further discoveries and growth in a constructive way.

As is always the case with innovation, there are risks that need to be managed. For one, cryptoassets can be used to hide ill-gotten gains through corruption or organised crime. Since January 2020, cryptoasset firms operating in the UK have been subject to the money laundering regulations. We recently brought forward legislation to implement the financial action taskforce travel rule for the transfer of cryptoassets.

Cryptoasset firms must conduct customer due diligence checks, just as banks do, including sanctions screenings. Through the Economic Crime (Transparency and Enforcement) Bill, we will give law enforcement new powers to seize and recover cryptoassets. As would be expected of a global financial centre, we will put a very robust system in place, and will never compromise on our high standards. That was the key point made by the SNP spokesman, the hon. Member for Glenrothes (Peter Grant).

Separately, there are legitimate concerns, highlighted by the hon. Member for West Dunbartonshire and echoed by my hon. Friend the Member for Rother Valley (Alexander Stafford), about the energy intensiveness in the process of creating some types of cryptoassets. As a global centre for green finance, we are already looking closely at energy usage associated with certain crypto technologies, and I will take away the point the hon. Member for West Dunbartonshire made about carbon neutral data centres regulation.

We have also said that we will seek to protect consumers by legislating to bring certain cryptoassets into the scope of financial promotions regulation, because it is essential that investors understand the risks they are taking and that there is more transparency from firms. I know that some firms are concerned about the way in which this regime might be implemented, to the possible detriment of UK firms. We are looking very seriously at that issue.

I say in reply to the hon. Member for Erith and Thamesmead that the UK’s approach on a lot to do with financial services is to have an agile system that relies robustly on the regulators to write their rules as things are brought within the regulatory perimeter. That underpins our approach. It underpins the work in the new Financial Services and Markets Bill, and that is distinct from the perhaps more legalistic approach of the European Union trying to define in statute right from the start what the regulations should be. In the United Kingdom we trust regulators to work at speed and effectively to write the rule books that are right at that point in time.

[Abena Oppong-Asare]

I thank the Minister for his answers. He said that it is the regulator’s responsibility to address this, but the Government also need to take responsibility. I would be grateful if the Minister could let us know whether the Government will produce a comprehensive framework. Can he also tell us what work the Government have done to check that the FCA has the capacity and expertise to look into this?

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[Richard Fuller]

I am grateful to the hon. Lady for emphasising those additional points. She will know that the Bill that we are discussing in the House later today will bring stablecoin within the regulatory perimeter. There are two other aspects of cryptoassets that I think she is referring to. One is central bank digital currencies, on which there will be a consultation towards the latter part of this year. The other is the broader aspect of cryptoassets, which has been part of the discussion today. That will be consulted on, both by Her Majesty’s Treasury and the FCA, in the months ahead.

The hon. Lady’s second point was about the resources available, and the skills in the FCA. I have full confidence in both of those. The FCA has had increasing resources; I meet its head regularly and discuss these matters with them, so I am confident that the resources and the skills are in place.

[Abena Oppong-Asare]

Will the hon. Gentleman give way?

[Richard Fuller]

I am conscious of time, and I have a few more things to say. I have mentioned a few of the known risks that we face, and they present real challenges. We will, however, be better placed to shape the sector and lead it to social and economic good if we actively engage with it from the outset, and that is what the Government are doing. The role of the Government is to be on the front foot to achieve a global advantage. To do that, we in Government must provide a solid framework, so that decision makers can take decisions in a risky environment, and we are bringing forward a number of reforms, through carefully tailored regulation. Informed by the sector, and after a consultation that is open to anyone, we will create a dynamic regulatory landscape; that is how we will tackle issues ranging from fraud to volatility and environmental considerations.

The Government are legislating to bring certain stablecoins, where they are used for payment, within the regulatory perimeter by expanding the payments and e-money regulatory frameworks. Increased competition between stablecoins and existing UK payment systems could lead to lower costs and improved services in the long run. Through the Financial Services and Markets Bill, we will build into our regulatory framework an ability to harness those benefits of stablecoins. At the same time, we will protect consumers by ensuring that the face value of stablecoins is backed by the underlying funds, and that consumer funds will be safeguarded if a stablecoin provider becomes insolvent.

In the first instance, we wanted to focus on areas of immediate potential and concern, but the market has changed sufficiently for us to look at regulating a broader set of cryptoassets. Earlier this year, we committed to consulting on this broader regulation, including the trading of unbacked cryptoassets such as Bitcoin. We will continue dynamic engagement with industry; for example, the FCA’s recent CryptoSprints brought together over 100 industry participants to discuss future regulation. We know how important it is that there remains strong co-ordination between the UK authorities as we develop the regime; that is why the Cryptoassets Taskforce, launched in 2018, continues to have a vital role in informing where regulation can drive forward UK objectives.

As we build a regulatory regime that delivers safe, sustainable and—I hope—value-creating innovation, we will ensure that we are at the cutting edge of legal innovation, so that the UK has a strong legal foundation for this technology. Following a request from the Government, the Law Commission recently published new proposals for reforming property law relating to digital assets and smart contracts. The Government have asked the Law Commission to consider the legal status of decentralised autonomous organisations, which the hon. Member for West Dunbartonshire referred to. They are a new form of online, decentralised organisational structure. We are exploring ways of enhancing the competitiveness of the UK tax system to encourage further development of the cryptoasset market in the United Kingdom.

We are undertaking this work because we have a choice: the UK can either be a spectator as this technology transforms aspects of life, or we can become the best place in the world to start and scale crypto technologies. The Government choose the latter course. We want the UK to be the dominant global hub for crypto technologies, and so will build on the strengths of our thriving fintech sector, creating new jobs, developing groundbreaking new products and services—

Motion lapsed (Standing Order No. 10(6)).

Draft Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022

Richard Fuller Excerpts

Monday 18th July 2022 General Committees

[The Economic Secretary to the Treasury (Richard Fuller)]

I beg to move,

That the Committee has considered the draft Money Laundering and Terrorist Financing (Amendment) (No.2) Regulations 2022.

It is a particular pleasure to serve under your chairmanship, Ms Ali. This Government recognise the threat posed to the United Kingdom by economic crime and are determined to do whatever it takes to combat money laundering and terrorist financing. Money laundering can undermine the integrity and stability of our financial markets and institutions. It is a global problem and represents a significant threat to the United Kingdom’s national security. It is a key enabler of serious and organised crime, which costs the UK at least £37 billion every year. Global leadership is vital and must be underpinned by strong action here at home. While our domestic action must be strong, it must also be proportionate in order to minimise the burden on legitimate customers and businesses. Striking that balance is the reason why the Government continue to review and amend the money laundering regulations.

In January 2020, the Government transposed the European Union’s fifth money laundering directive, which provided for the addition of art market participants, letting agents and cryptoasset businesses into the regulated sector, and set out discrepancy reporting requirements to improve the accuracy of the UK’s beneficial ownership registers. Since leaving the European Union, we have had the opportunity to ensure that the money laundering regulations go further in protecting the United Kingdom’s reputation as a safe place to conduct business. We made several changes to the money laundering regulations earlier this year in relation to high-risk countries and trusts, which allowed us to respond to the latest economic crime risks and protect the United Kingdom from overseas illicit finance flows. However, as we all know, there is more work to be done, which is why the Government are making further necessary updates to the money laundering regulations through today’s secondary legislation.

Anti-money laundering regulation must keep pace with the rate of technological change so that no part of our financial system is open to exploitation by criminals. This instrument therefore extends the Financial Action Task Force’s recommendation 16, known as the travel rule, to cryptoasset firms. It will require information on the identity of the originator and beneficiary of a transfer of funds or assets to be sent and recorded by the firms making that transfer. This supports the detection and investigation of money laundering and terrorist financing, as the transfers of cryptoassets will become subject to the same rigorous anti-money laundering requirements as bank transfers. We are also closing a gap in the regulations by requiring proposed acquirers of already registered cryptoasset firms to notify the Financial Conduct Authority ahead of such acquisitions. That will allow the FCA to object to such changes in control before they take place, enabling it to make sure unregistered firms cannot gain access to the United Kingdom.

The instrument also makes several other discrete, targeted changes that are intended to ensure that the regulations are appropriately aligned with updated risk assessments and new international standards. For example, it will ensure that we are aligned with the FATF standards on proliferation financing by introducing a requirement for supervised persons and the private sector to identify and assess risks of potential breaches, non-implementation or evasion of the targeted financial sanctions related to proliferation financing.

The instrument will go further by strengthening and clarifying how the anti-money laundering regime operates and by ensuring that the United Kingdom’s anti-money laundering supervisors have the right powers available to them to respond to new and emerging threats. For example, the instrument will expand the requirements in the regulations to report discrepancies between the information gathered by regulated firms and that held at Companies House, both in the course of ongoing business relationships and for entities in scope of the new register of overseas entities.

To support the objectives of upcoming limited partnership reform and to improve the transparency and integrity of the companies register, the instrument amends the definition of a trust and company service provider—TCSP—to cover the formation of all business arrangements, not just companies, that are required to register at Companies House and to ensure that customer due diligence is conducted for customers of TCSPs.

The instrument makes several technical and clarificatory changes to the regulations to ensure that they are up to date and continue to work in the best way possible. I hope that I have shed light on the main element of this instrument, and I thank hon. Members in advance for their examination of the issues. I hope they will join me in supporting the instrument, and I commend it to the Committee.

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[Richard Fuller]

I thank the hon. Lady for her wise words about the import of the instrument we are considering and for the Opposition’s overall support for it. She asked a series of questions, and I will reply to them directly. If I miss any, she may want to come back on them.

The hon. Lady asked about the timetable and particularly about cryptoasset firm regulations. One reason why that is coming later is that firms require a technological solution, and in order to get robust solutions, we felt it was appropriate to give time. She also asked specifically about a risk from Russian kleptocrats, but I will write back to her on that point because it covers issues beyond the one I have just made. I will also get back to her on regulation 10.

On the bank account portal, the issue is that the UK has several pre-existing capabilities, such as customer information orders. However, the hon. Lady asked a specific question about the assessment of the costs. I will get back to her on that, but I think the issue has to be seen in the context of what is already in place, rather than an assumption that we have to build something from scratch. The hon. Lady also asked about working with our equivalents in the Crown dependencies and about a potential way around the regulations. That is an important point, and I will continue the normal dialogues with my equivalents in the Crown dependencies.

The hon. Lady asked about the issues around the timetable for the economic crime Bill. I am afraid I am not in a position to advise her any further on that today, but I am sure I will be able to as the Bill comes forward. I think I have answered most of the questions. If I missed any, the hon. Lady can advise me subsequently. On those that I have not answered today, we will respond in writing in due course.

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[Richard Fuller]

The SNP spokesperson makes interesting points, some of which echo those made by the Opposition spokesperson. On the timetable, I will get back to him. He asked about the merits of two additional offences—failure to prevent sanctions evasion and conspiracy to commit sanctions evasion. I have no comment on that, but I would be interested in anything the hon. Gentleman has to send to me to look at.

The hon. Gentleman asked about a full Companies House reform, and he expressed some of the frustration that hon. Members on both sides of the House have expressed. He will be aware that the Treasury has provided Companies House with £60 million, I think, to begin those reforms, but he is right to draw the Committee’s attention to the issue and to hope that further reforms will be forthcoming. Some of those reforms feature in these regulations—for example, the further tightening of some of the restrictions, particularly around TCSPs.

Question put and agreed to.

NHS Pensions and Staffing

Richard Fuller Excerpts

Wednesday 13th July 2022 Commons Chamber

[The Economic Secretary to the Treasury (Richard Fuller)]

Thank you very much, Mr Deputy Speaker.

Let me begin by thanking my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) for securing the debate and for the points that he has raised. I also note the contributions of the hon. Members for Central Ayrshire (Dr Whitford), for Strangford (Jim Shannon), for Llanelli (Dame Nia Griffith), for Carmarthen East and Dinefwr (Jonathan Edwards) and for East Dunbartonshire (Amy Callaghan), who made, forcefully, the point that this is an issue that affects all parts of the United Kingdom.

Because these issues are complex and my hon. Friend rightly set them out in full in order to put them on the record, I am rather short of time, so, if I may, I will move rather quickly in responding to some of my hon. Friend’s recommendations. Let me add that I shall be happy to follow this up with other Members who have spoken if they want to raise specific constituency points.

I think that everyone present has noted the pressures on our NHS. Indeed, before taking on my new role, I spent a considerable amount of the last six months with my own GPs. I know that the issues relating to pressures on GPs are complex, including the overall questions of compensation and burnout, and my hon. Friend rightly mentioned the issue of abuse of NHS staff, which has occurred to a shameful degree over the last six months and which no member of our health service should ever have to deal with.

However, my hon. Friend focused on the issue of pension tax and the NHS, and made three specific recommendations. The first concerned the differential use of CPI figures, and he was right to raise that issue, because it is the spike in inflation that has laid bare some of the problems in the way in which calculations are made. The issue relates to the disparity between the CPI figure used for uprating the opening value of a member's benefits and the CPI figure used to assess revaluation in public service schemes. This effect is particularly notable in the NHS pension scheme, where accrued benefits are adjusted upwards each year by CPI plus 1.5%—which, to be fair, makes it one of the most generous pension schemes available.

I understand that this difference in figures will lessen the headroom that scheme members have in their annual allowance calculation. That may cause more members to exceed the annual allowance, and cause those who already routinely exceed it to exceed it by more, with the result that some may receive annual allowance tax charges. The British Medical Association has asked the Government to amend the Finance Act 2004, so that the CPI figures used in uprating the opening value and the figure used for revaluation in public service schemes are the same. However, there are some further issues that must be considered in this discussion, which my hon. Friend may not have mentioned.

First, the Government have a duty to balance support for all pension savers across the United Kingdom. The use of September CPI to measure inflation in the year before the tax year is a well-established feature that is used across the tax system. Any changes would impact all pension savers, not just NHS staff.

The current approach provides certainty to individuals at the start of the tax year about what their opening pension value will be for annual allowance purposes. I appreciate that, for those with a defined benefit pension alone, this certainty may not be seen as much of an advantage. However, for others across the country who may have some defined benefit accrual but are now saving into a far less generous defined contribution scheme, this certainty allows them to plan their finances and pension contributions for the coming year.

[Dr Whitford]

Will the Minister give way?

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[Richard Fuller]

I really cannot; I have only two and a bit minutes left.

Secondly, there is a perception that the use of different CPI figures will disproportionately hit senior NHS staff. This is said to be because the revaluation of accrued rights in the 1995 and 2008 sections of the NHS pension scheme will lead to a large pension input amount for clinicians, while the annual allowance calculation will use a lower CPI figure when calculating their opening value. This is the so-called pseudogrowth that my hon. Friend mentioned. I am afraid that this point ignores the fact that, for most NHS employees in the 1995 and 2008 sections of the NHS pension scheme, their accrued benefits remain linked to their final salary, which means that they do not have their benefits revalued each year.

Thirdly, I have heard concerns over so-called negative accrual that cannot be used to offset positive accrual in later years. This point conflates actual pension accrual that benefits pension savers with notional accrual used for the purposes of the annual allowance calculation. It is a fact that defined benefit schemes are more difficult to compare against the annual allowance than defined contribution schemes. In a given year, where individuals accrue rights to future annual pension payments, it is necessary to calculate a comparable figure for their savings to test against the annual allowance to ensure fairness between those in defined contribution and defined benefit schemes. On this point, my hon. Friend and other hon. Members have raised an important issue this evening, and I will go away and consider it further.

In response to my hon. Friend’s second recommendation, I know that the BMA and others have said that the action taken at Budget 2020 on the tapered annual allowance was not enough. However, the cost of this intervention was £2.2 billion over five years, and it was targeted at the very highest earners in society. It will be hard to justify focusing more Government support on them, especially in the current climate. This includes replicating the temporary scheme used in the 2019-20 tax year.

My hon. Friend’s third recommendation for an unregistered scheme was also mentioned by the hon. Member for Carmarthen East and Dinefwr. I understand the comparison that senior clinicians draw with the position of the judicial pension scheme 2022, which is unregistered for tax purposes. However, I believe that a distinction remains to be drawn between NHS high earners and the judiciary, and that there are unique circumstances relating to judicial appointments—in particular, that judges are unable to return to private practice after taking up office, and that many judges take a significant pay cut to join the judiciary. However, we all recognise that there are significant issues around doctor and GP retention, and the points raised this evening have struck a chord with me. I look forward to discussing them further with hon. Members.

Question put and agreed to.

UK Gross Domestic Product

Richard Fuller Excerpts

Monday 13th June 2022 Commons Chamber

[John Glen]

Perhaps unsurprisingly, I cannot give the hon. Gentleman that figure at the Dispatch Box at this point, but we have introduced timely, temporary and targeted interventions. We recognise with a real sense of empathy the fact that people will be struggling. We have been very clear from the time we made this series of announcements and over the past six months that we will not be able to ameliorate the impact of every single additional cost. The key intervention we need to make is to encourage that growth and productivity in the economy in the context of fiscal responsibility and the commitments we have made to intervene so far.

[Richard Fuller (North East Bedfordshire) (Con)]

My right hon. Friend has rightly spoken about the importance of growth in bringing together people, capital and ideas, but there is a fourth element, which is regulation. What Conservatives want to see is a comprehensive Government strategy for light-touch, pro-growth deregulation. Can he tell me what he is doing in his Department to set an example to other Departments of achieving better regulation that will support growth?

[John Glen]

Yes, I can. In a few weeks’ time I shall introduce to the House a financial services and markets Bill that will fundamentally reset the way that our financial services industry, which constitutes 10% of the economy, will be regulated into the future. That will be underpinned by strong, independent world-class regulators in the Prudential Regulation Authority and the Financial Conduct Authority, but with an obligation to look at competitiveness and global growth as a secondary objective. That is absolutely imperative. We must make sure that we have an economy that takes account of what is going on elsewhere and regulates accordingly.

Tackling Short-term and Long-term Cost of Living Increases

Richard Fuller Excerpts

Tuesday 17th May 2022 Commons Chamber

[Rishi Sunak]

I am now going to make some progress. Our plan is to build the economy of the future. That is why, this autumn, we will cut taxes on capital, on people and on ideas to drive up growth and support businesses to do so.

While we are talking about growth, we have heard a lot during these debates—I think the right hon. Member for Doncaster North also mentioned it—about the Labour growth that we experienced between 1997 and 2010. It was obviously a very long time ago that we last had a Labour Government, so let me remind the House of the facts.

Under the Labour Government, the UK’s cumulative economic growth was third in the G7. Under this Government, despite having lived through the worst recession in more than 300 years, our cumulative growth is also third in the G7. Let us also remember that when the Opposition last arrived in office, unemployment was 7%. When they left, 13 years later, it was of course higher at 8%. New figures out this morning, as we have heard, show that today, the UK’s unemployment rate is less than half that, at 3.7%, the lowest in almost half a century.

The story is the same on public finances. The deficit in 1997 was 2% of GDP. By 2010, it was nearly 10%, and £1 in every £4 the Government spent was borrowed. There was, as we heard, no money left.

[Richard Fuller (North East Bedfordshire) (Con)]

May I add to what the Chancellor says that under this Conservative Government we introduced the living wage, which has increased wages for the poorest in our country at a higher rate than the last Labour Government ever had the courage to do, and we now have the lowest unemployment rate for 50 years?

[Rishi Sunak]

My hon. Friend is absolutely right. This year’s increase in the national living wage is worth £1,000 to someone working full-time who is on the national living wage. That will benefit millions of people, particularly those on a low income. That is our priority and those are our values.

The approach to borrowing that I have described is not the approach of this responsible Conservative Government. Today, despite having spent hundreds of billions throughout the pandemic, we are providing the highest sustained level of public sector investment in decades and investing record amounts in public services such as the NHS. This Government are on track to have borrowing low and debt falling again. That is our record: robust growth, more jobs and being responsible with the country’s finances.

History reminds us that, at times when we face severe supply problems, an unconstrained fiscal stimulus risks making the problem worse, pushing up prices still further and ingraining expectations of higher inflation—a vicious cycle leading inexorably to even higher interest rates and more pain for tens of millions of mortgage holders and small businesses. Let us be in no doubt, simply trying to borrow and spend our way out of this situation is the wrong approach; those paying the highest price would be the poorest in our society. Instead, the Government are taking a careful, deliberate approach. We will act to cut costs for those people without making the situation worse. We will continue to back people who work hard, as we always have, and we will do more to support the most vulnerable—and, unlike others, we will not simply borrow our way out.

So yes, we are helping families by cutting their costs, and it is irresponsible to suggest otherwise. That support will always be part of a broader plan to grow the economy, encourage investment and create more high-skilled, high-wage jobs, all built on the foundation of strong public finances. That is our economic plan. We are providing £22 billion-worth of support to help families with the cost of living. We are creating more jobs, more investment and higher wages. That is what this Queen’s Speech is all about, and I commend it to the House.

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[Richard Fuller (North East Bedfordshire) (Con)]

It is a pleasure to listen to the right hon. Member for Walsall South (Valerie Vaz) and to follow her. It is also a pleasure to be able to welcome Her Majesty’s Gracious Speech, introduced by this Prime Minister and this Chancellor. They are leading a Government who continue to look at finding long-term solutions to large, persistent problems and having the courage to pursue them fully. The debate today is entitled “Tackling short and long-term cost of living increases”, and many of the contributions have rightly focused on the immediate pressures on the cost of living. If I may, I want to mention a couple of points that look at longer-term solutions.

The first relates to an issue that came up in our Business, Energy and Industrial Strategy Committee: the problem of decarbonising home heat. If we wish to achieve our net zero goals in the timeframe that we as a Parliament have set out, one of the most significant challenges will be how our households are to afford changing the way they heat their homes to be consistent with net zero. The up-front cost appears to be about £12,000, and it is well beyond the ability of any household to afford that, essentially to replace something that is working perfectly satisfactorily with something that will hopefully work perfectly satisfactorily but have much less impact on the climate. It was clear in our hearing that no obvious solutions are around today that would solve the issue. That led to a significant debate in the Committee.

I want to draw the attention of those on the Front Bench to solutions around the idea of net zero community green schemes. In a previous contribution I talked about the possibility of attracting the enterprise investment scheme towards a net zero scheme, but there are also ways to get patient capital and pension fund capital in. Bankers without Boundaries has been working with the UK Cities Climate Investment Commission on green neighbourhood funding models that combine the opportunity to retrofit housing—putting in the insulation that many very poorly insulated houses require—with the installation of heat pumps and other work on a community basis, while also considering ways to make the step change in recycling that the Government are trying to accomplish, so that we can make a big step forward on the circular economy.

Interestingly, by doing it on a community basis, we have two significant public gains: a financial model is created that can attract pension fund money because it has a long-term return and is at scale; and we get over the inequities of saying that individual households ought to be providing the finance for achieving net zero, which means many poor families and households will never be able to make that leap. Attracting such private capital can substantially reduce the cost to the Treasury of achieving that long-term gain. It will not affect energy bills in the short term but, my goodness, it is the sort of idea we need if we are to find a pragmatic rather than ideological solution to achieving green energy change.

I echo the comments of my right hon. Friend the Member for Chipping Barnet (Theresa Villiers), as we need substantial regulatory change in this country. Even since our exit, we have stuck with the EU’s sclerotic regulatory powers for too long. We have made insufficient progress towards getting the agility she described, and we rely too much on regulatory agencies that, I am afraid, too frequently show themselves to be asleep at the wheel.

The BEIS Committee has previously looked at the Financial Reporting Council and the Pensions Regulator and their issues with BHS and Carillion. It is nice to see an audit reform Bill in the Gracious Speech, but it is only a draft Bill. We need to look at the issues with Ofgem. Where on earth was Ofgem last year and the year before? Absolutely nowhere. Ofgem’s job is to improve competition. We had someone before the Committee who was then at university. When asked whether he had a finance director, he said, “I don’t need one.” When we pressed him, he said, “Well, I’ve got my dad.” He was responsible for £300 million of consumer expenditure on energy. Ofgem is asleep at the wheel, just as the FRC and the Pension Regulator were historically asleep at the wheel and the Bank of England is potentially asleep at the wheel, so let us have real, substantive reform of our regulatory agencies to ensure that we have performance indicators and oversight by this House and by the public.

[Several hon. Members rose—]

Tackling Fraud and Preventing Government Waste

Richard Fuller Excerpts

Tuesday 1st February 2022 Commons Chamber

[Rachel Reeves]

My hon. Friend speaks powerfully. I would like the Minister to explain, at the Dispatch Box, why drugs gangs got tens of thousands of pounds of taxpayers’ money when my hon. Friend’s constituents could not get a penny.

The Chancellor and other Ministers were warned repeatedly about the risk of fraud. In June 2020, the Chancellor was advised by the Fraud Advisory Panel, Transparency International, Spotlight on Corruption and the former director of the Serious Fraud Office that there were

“serious weaknesses that enable fraudsters and corrupt insiders to exploit the bounce back loan scheme and the covid business interruption loan scheme.”

and that that would create a “risk to the taxpayer”. They offered to provide the Chancellor with information, advice and support to improve the control of the funds, yet it seems the Government were not interested in that advice.

[Richard Fuller (North East Bedfordshire) (Con)]

Stripping away the political rhetoric, the hon. Lady is making some very serious points for the Government to consider. However, on reflection, does she now think it was wrong for her Labour colleagues in 2021 to call so readily for the Government to use taxpayers’ money to support GFG Alliance, which was subsequently investigated by the Serious Fraud Office?

[Rachel Reeves]

I understand that MPs want to represent businesses employing people in their constituencies, but it is the role of the Chancellor and the Government to make sure that money goes only to people who deserve it, not fraudsters. The hon. Gentleman was a member of the Business, Energy and Industrial Strategy Committee, which I chaired. The Committee did ask the Government to get money to businesses that needed it, like those mentioned by Labour Members, but basic checks that could have been done in a matter of minutes were not done. He will know, because of this Government’s tax rises and the increase in energy prices, that an average household in his constituency will, from April, be £1,378 worse off.

--- Later in debate ---

[Michael Ellis]

It is not worth answering that point, Mr Speaker.

As I said, we have given the Insolvency Service and Companies House new powers to prevent rogue company directors from escaping liability for their bounce back loans. So far, that has been used in respect of almost 62,000 companies holding loans worth £2.1 billion. We are giving the Insolvency Service new powers to disqualify rogue company directors and we have already introduced regulations that allow for greater scrutiny of pre-pack administrations.

Crucially, newspaper reports that the Treasury has written off £4.3 billion in fraudulent covid support payments are simply not true. The £4.3 billion is not a figure produced or recognised by HMRC. As the Chancellor of the Exchequer has said, we are not—I repeat, not—ignoring money relating to fraud in our covid support measures and we are definitely not writing it off. We were and remain determined to crack down on fraud wherever it arises. That is why, for instance, we invested more than £100 million in a taxpayer protection taskforce. At the March Budget last year, we created a taskforce of more than 1,200 HMRC staff to combat fraud in our coronavirus loan schemes. To hear the Opposition, they would deny the existence of those 1,200 staff, who are busy working away to combat fraud. The taskforce is expected to recover up to £1 billion from fraudulent or incorrect payments.

[Richard Fuller]

Can my hon. Friend take us back to the points that Lord Agnew made and clarify whether I have it correct? In putting out much-needed money, the Government relied on intermediaries, and therefore much of it went through the banking system. I think I heard Lord Agnew say in the other place that many of the issues related to two banks out of the seven. It looks to me that a lot of the concerns raised by Opposition Members—validly—relate to processes within some of the banks. Can my hon. Friend clarify whether I am right on that, and the Government’s intentions regarding that?

[Mr Speaker]

May I suggest that there is plenty of space if the hon. Gentleman wishes to speak? These are becoming speeches, rather than questions. I am more than happy to put him on the list if he wishes. We have plenty of room.

--- Later in debate ---

[Alison Thewliss (Glasgow Central) (SNP)]

“Lamentable”, “woeful”, “arrogance, indolence and ignorance”—the words of Lord Agnew’s resignation should still be ringing in the Minister’s ears, as should the fact that the disconnect and disinterest in a range of Departments were part of the problem that he outlined. His words should prompt the Government to take action to fix the scandal of taxpayers’ money walking out the door.

In Lord Agnew’s resignation letter, he said:

“As the Minister for Counter Fraud, I have been asked today to publicly defend in Parliament our track record in countering fraud across Government. Unfortunately I am simply not able to do that given the lamentable track record that we have demonstrated since I took up this post nearly two years ago.

It has certainly not been through want of trying, but the Government machine has been almost impregnable to my endless exhortations.”

That is certainly a condemnation of the Government. The Paymaster General has become the Minister for defending the indefensible in the House, as he does yet again today. Perhaps if other Front-Bench Ministers and Conservative Back Benchers took the example of Lord Agnew and his attitude to them, many of them would learn something and resign too.

We are in a cost of living crisis, yet the sums of money that could go to help people now lie in the offshore bank accounts of crooks and fraudsters. Let us not forget that HMRC has stated that the levels of fraud in the covid support schemes are in line with its original planning assumptions. Planning for £4.3 billion-worth of fraud is absolutely breathtaking. The money that was committed in the Budget came far too late because these problems have been known about for years. The bounce back loan scheme, about which Lord Agnew was denied information as a Minister—that should really worry us all—is of course a UK Government-backed scheme, with an estimated £4.9 billion lost to fraud. Just look at the loans paid out to companies that were not trading. Lord Agnew indicated that 26% of losses are estimated to be attributed to fraud rather than to credit failure. This cannot be fobbed off to the banks, because the Treasury asked them to do this and they did it because the loans were Government-backed.

Let us put these figures into some context, because they are massive amounts of money. Scotland’s entire devolved social security system is forecast to cost £4.1 billion in the next financial year. The Institute for Fiscal Studies has calculated that a one-off £500 stimulus cheque for those on universal credit could cost £3 billion. A 5% pay increase for all the NHS staff in England would be £1.7 billion. This is money that could have been much better spent had it not walked out the door and into the hands of fraudsters.

We cannot deny that the money needed to go out the door quickly in the pandemic. I remember, during those early days, hearing on the Treasury Committee from banks and Treasury officials about how concerned they were about the fraud risk. Some of the checks that could have prevented this fraud are simple—a national insurance number or an HMRC reference—but others speak to a long-term systemic failure that the UK Government have been warned about repeatedly—the system of registration at Companies House. That is not an issue of reform, as some have tried to point out; it is an issue of legislation and an opportunity that this Government have missed time and again.

[Richard Fuller]

I am looking forward to hearing the hon. Lady’s recommendations on reforming this important area. She mentioned her role on the Treasury Committee. Did she, at the time, have concerns about the use of the British Business Bank for the delivery of loans to businesses?

[Alison Thewliss]

The British Business Bank being a relatively new mechanism, of course there were concerns about that. We took a lot of evidence on the concerns that existed around loans and other things that were going out the door, but that does not mean that things could not have been put in place to prevent this, and we did hear evidence to that end.

[Richard Fuller]

rose—

[Alison Thewliss]

I have a lot to get through. If the hon. Gentleman wants to make a speech later on, I am sure we will all be incredibly interested to hear what he has to say.

I have spoken at every opportunity, and Ministers have heard me at every opportunity, on the need for reform of Companies House, and it still baffles me why the Government are so lackadaisical about this clear open door to fraud. Companies House remains a repository of information, not a checking service. It is not an anti-money laundering supervisor. In answer to me at Treasury questions earlier, the Economic Secretary to the Treasury referred to the 2018 Financial Action Task Force report, but that still means four years of inactivity in this House. In 2018, as he will remember, we also had the Sanctions and Anti-Money Laundering Act 2018, a further missed opportunity to have closed this door and locked the fraudsters out.

Companies House has no connection with the UK Government’s Verify scheme, which is required for a passport, a driving licence or a tax return. For a minimal fee of only £12, someone can set up a company in the UK with no checks on who they are and what they intend to do with that company. Compare this with, for example, the £1,012 for a child to take up their right to citizenship. The money involved is absolutely baffling. Last year, in This is Money, Martin Swain, director of strategy, policy and external communications at Companies House, admitted:

“Even though, sometimes, we know that the information is incorrect or potentially fraudulent, the registrar is legally required to register it.”

The Companies House website even has a disclaimer at the top that says:

“Companies House does not verify the accuracy of the information filed”.

Why is this being allowed to continue? Even a simple drop-down menu in the registration process would stop people putting in things like “Anytown, Anywhere” rather than a place that really exists.

Charter for Budget Responsibility and Welfare Cap

Richard Fuller Excerpts

Monday 10th January 2022 Commons Chamber

[Mr Clarke]

The Bank of England has obviously helped to underpin our wider response to the crisis that we face. Clearly, it does have a bearing on the relevant significance of debt, but it would be simply irresponsible to leave ourselves exposed in the manner in which we risk being if we fail to constrain the borrowing, which risks otherwise becoming an unacceptable burden and which would leave us very vulnerable. A 1% rise in interest rates would cost the Exchequer £22.8 billion in 2025-26. That is a meaningful level of exposure and one which we want to take action to address.

[Richard Fuller (North East Bedfordshire) (Con)]

To help the Minister, would he not also point out that, under this Government, the Bank of England has reduced the proportion of new debt issuances, which are attached to rising inflation rates? So at least, due to the actions of the Bank of England over the past two or three years, that exposure has declined.

[Mr Clarke]

My hon. Friend is absolutely right. We are certainly not saying that we are in an untenable situation, but we are saying that it is important to meet our fiscal rules and to get debt falling as a percentage of GDP. As Conservatives, we believe that and we have won elections four times in the past 12 years on that basis. It is important that we continue to uphold that.

[Mr Clarke]

I think it remains the case that we need to make sure that our debt-to-GDP ratio is more sustainable than it is at present, and I do not think colleagues would significantly demur from that. I take the point that, obviously, there is an interaction—some of these interactions are of a relatively circular nature—between the Bank and Exchequer, but none the less, it is important that we control our public debt. Indeed, we were able to respond to the pandemic as comprehensively as we did precisely because of the fiscal space created since 2010. The fact that we faced two once-in-a-generation shocks in just over a decade highlights why we must have the buffers to provide support when it is needed most and why we must act to rebuild those buffers, so that we are ready for any future shocks. In its most recent “Fiscal risks report”—not an easy one to splutter out—the OBR said:

“In the absence of perfect foresight, fiscal space may be the single most valuable risk management tool”

that we have.

The third and final reason we need to keep our debt under control is simple: our public finances are the legacy we leave for future generations, and the decisions we take now will have a material impact on the lives and livelihoods of our grandchildren. They will help or hinder their future ability to tackle long-term challenges, from climate change to an ageing population, or indeed to seize the opportunities that lie ahead.

The charter for budget responsibility contains new fiscal rules to guide us back to fiscal sustainability in a fair and responsible way. The rules will ensure that we get debt down over the medium term. They will allow us to deliver a significant uplift in capital investment, in turn driving economic prosperity, but without burdening future generations with borrowing to fund our day-to-day spending. The new rules require that underlying public sector net debt, excluding the impact of the Bank of England, must as a percentage of GDP be falling. The current budget must be in balance, which means that everyday spending must be paid for through taxation. Both rules must be met by the third year of every forecast period, giving us the flexibility to respond to events in the near term, such as omicron, while credibly keeping the public finances under control.

Finally, a third rule will ensure that public sector net investment does not exceed 3% of GDP on average over the forecast period. This rule will allow the Government to deliver on our ambitious plans for investment over this Parliament, with the highest sustained levels of PSNI as a proportion of GDP since the late 1970s. With this rule, we are delivering on plans to invest more than £600 billion in gross public sector investment over this Parliament to spread prosperity across the UK. The £4.8 billion levelling-up fund is part of that. An unprecedented investment package of £5.7 billion for eight English city regions to transform their local transport networks is also part of it. On top of these commitments, the UK Infrastructure Bank is now open for business and is expected to support more than £40 billion of infrastructure investment. Crucially, the rule also mitigates the risk of increasing debt to an unsustainable level. Our fiscally responsible approach supports growth while keeping debt under control.

Combined, these rules will guide responsible decision making. The International Monetary Fund has noted that

“Countries that have followed a debt rule have typically managed to reverse a jump in debt...significantly faster than other countries”,

and it recently assessed that the

“new fiscal rules have anchored fiscal policy well”.

Thanks to our support for the economy and early responsible decisions to strengthen our public finances, in its October forecast, the independent Office for Budget Responsibility confirmed that the rules were met. The current budget is in surplus and underlying debt is forecast to fall in the current target year, 2024-25. The rules will guide fiscal policy for at least this Parliament and will be reviewed at the start of each Parliament to ensure they reflect the economic context and mean that we can deliver for the British people.

In addition to the rules in this charter, we will go further, becoming one of the first countries to formally consider the broader public sector balance sheet in our management of fiscal policy. The OBR will now forecast broader measures, including public sector net worth, which it says provides a fuller picture of fiscal sustainability and allows for more sophisticated analysis.

The charter also retains the welfare cap in order to keep welfare spending on a sustainable path and to support the other rules in strengthening the public finances. Since the cap was last set at Budget 2020, the covid pandemic has had a significant impact on the medium-term outlook for welfare spending. To reflect that and to align with the updated fiscal framework, the level of the cap is being reset in line with the latest forecast. That leads to an effective increase of £10.5 billion in the cap by 2024-25.

[Richard Fuller]

I would like the Chief Secretary to educate me a little bit, because what I cannot appreciate is the impact of covid on welfare expenditure. In the short term, I can understand why that would be significant, but why does that move forward into the medium term, when one would anticipate that the economy is recovering and we have demand for people to go back into employment?

[Mr Clarke]

The reality is that much of what we have put in place—this has been a £400 billion response—will take time to filter through the economy and out the other side. Clearly we expect some of it to taper away, but there are large parts of the package that we have had to put in place to support lives and livelihoods that will undoubtedly take time to wash through the wider economic settlement. The welfare cap is designed to be an automatic stabiliser, but it is also partly a measure by which we can be held to account as a Government, because this is not like departmental spending; it is more akin to AME spending—it is not something where we can manage it in the usual way. Therefore it is important that by setting this cap, we give ourselves at least a benchmark against which our performance in managing those pressures can be measured by the end of the forecast period. It is vital to ensuring that we have a welfare system that provides fairness and accountability to the taxpayer and the House.

The updated charter delivers on our commitment to budget responsibility in a way that is appropriate to our current circumstances. I understand very well the concerns that hon. Members may have about inflation and rising prices. We have already introduced more measures to put money into people’s pockets—increasing the minimum wage and cutting the universal taper rate. Although we have had to take important steps to protect the NHS and safeguard our economy, my right hon. Friend the Chancellor said in the Budget

“my goal is to reduce taxes. By the end of this Parliament, I want taxes to be going down, not up.”—[Official Report, 27 October 2021; Vol. 702, c. 286.]

We want to reward innovation and hard work, as well as the sacrifices of the British people over the last two years. Our plan for stable public finances in the charter puts us in the best possible place to achieve this goal and to stay true to our Conservative ideals. Tonight, hon. Members have a clear choice—to vote for fiscal responsibility, a credible path back to sound public finances and a stronger economy for the British people, or to let slip the anchors and leave our economy vulnerable and adrift.

The charter balances flexibility to support the economy and our stated manifesto goals in the near term with stronger public finances in the medium to long term. It supports our vision for a stronger economy, levelling up across the UK through significant cash investment, and it safeguards a stable, prosperous future with a strong fiscal legacy for generations to come.

--- Later in debate ---

[Richard Fuller (North East Bedfordshire) (Con)]

One of the primary reasons a Parliament was established was to protect property owners from the excessive claims of the state, and over the last quarter century this is a duty that successive Parliaments have spectacularly failed to fulfil. Encouraged by benign trends and with the irrepressible pressure of the media to spend more and take on more responsibilities, while hampered by a globalisation of capital that has moved the ownership of property offshore and therefore made it harder to tax, the political class in this country and in this Parliament appears to have lost any sense of the responsibility to pay for what they spend.

As speakers have said in this debate already, the UK now has the highest peacetime tax burden since world war two. The UK Government have direct debts of £2.6 trillion. In addition, there are unfunded pension liabilities and other off-balance sheet liabilities that take that total closer to £4.6 trillion, yet speaker after speaker, even in this debate, says, “Spend more, spend more.”

Since 2009, the Bank of England has been printing money, and notwithstanding the very clear points made by my right hon. Friend the Member for Wokingham (John Redwood), that £895 billion of quantitative easing is a potential debasement of the currency. Even though it may have been moving interest from one hand to the other hand between the Treasury and the Bank of England, there is a long-term understanding from capital markets that if Governments and sovereigns are quite happily able to print their own money, those who wish to lend money in the future will ask for a higher interest rate to cover that risk. UK Governments over the last 30 years have benefited from at least a 30-year decline in the yield curve, and perhaps we have grown used to an expectation that a lender will, in real terms, actually pay for the privilege of funding public expenditure.

To me, this is a very precarious financial situation for the UK Government, so what of our prospects? The right hon. Member for Wolverhampton South East (Mr McFadden) and the hon. Member for Glasgow Central (Alison Thewliss) talked about economic growth somehow being the magic cure, saying that the United Kingdom was doing uniquely poorly and that they had a special plan. But the truth of the matter is that economic growth across all the developed OECD countries has declined from an average of over 3% per annum in the 1970s and ’80s to an average of below 2% in the period since 2000. The relative position of the UK to the OECD is better now than it was in the ’70s and ’80s, so the argument that the UK Government are missing something in their growth strategy that other countries have found is without foundation. I have heard the right hon. Member for Wolverhampton South East make this point before, and it is a neat point. That is why I went to check the figures, and I would encourage him to do likewise.

Geopolitical risks are growing, partly driven by a 50-year strategy to integrate China economically and politically into the democratic system. That is now at least in question, if not in reverse. We should think very carefully about the fact that disengaging China and its productive capacity from the global trading system risks adding to inflationary pressures. Demand from sovereign borrowers among all developed countries has risen from 70% of GDP a few years ago to over 200% of GDP—not just the UK but all developed countries. That is a level not seen since world war two, and it puts pressure on international global liquidity that increases expectations that the 30-year decline in yield curves may well go into reverse.

I am yet to see any evidence that all of us politicians have really learned how to stand up to the constant demands to spend more and involve the Government more as the answer to every single question that the media put to us. I would only hope that we pay more attention to those who have to pay for that rather than to getting the credit for saying that we can solve every problem.

Greater risks, rising interest rates, higher inflation expectations and a political class that has not really focused on the need to pay for things are the context in which we have the Government’s charter for budget responsibility. It is a welcome addition, because it makes changes that start to confront some of those pressures. There is an additional focus on assessing the affordability of public debt. It is rather a surprise that we did not have that as a focus previously. It has also added a cap on investment expenditure of 3% of GDP. I take the good point made by my right hon. Friend the Member for Wokingham that that sounds a bit reminiscent of the European Union plans. However, there does seem to be a problem of Departments bidding to the Treasury based on expectations of the rate of return they are going to make and the Treasury then having to stand back and be a barrier against all those demands on the public purse. The cap on investment expenditure is a prudent addition to make.

The charter adds a new key indicator of public sector net worth. I encourage the Minister to move very quickly to let us have the details on that. New Zealand put this together in the last millennium, so it cannot be that hard to do, although I recognise that it can be misleading as well as insightful.

One thing that is not in the charter is the consequences for breaking fiscal rules. This point was made by the hon. Member for Glasgow Central. It is good to write certain fiscal rules but it is also good for there to be consequences on behalf of taxpayers for Governments who do not meet those rules, and that should be more than just a new rewriting of the rules.

Finally, I want to make a point about long-term trends in the Bank of England. Paragraph 3.20 of the document says:

“The Treasury’s objective in relation to debt management policy is…to minimise, over the long term, the costs of meeting the government’s financing needs, taking into account risk, while ensuring that debt management policy is consistent with the aims of monetary policy.”

I like the phrase “over the long term”, which hides all sorts of problems. I thought I would try to find the long term, so I turned to the January 2020 working paper by the Bank of England, “Eight centuries of global real interest rates,” to see what it might tell us about the Bank’s thinking. I am concerned that the Bank of England has had a view about inflation rates that is a little too benign. The working paper says:

“Against their long term context, currently depressed sovereign real rates are in fact converging ‘back to historical trend’…real rates could soon enter permanently negative territory.”

This is the big question I would like the Minister to answer: is it the expectation that we are living, for the foreseeable future, in an era in which we anticipate that interest rates, in real terms, will be negative and declining? Or will that be the long-term trend, but subject to major fluctuations in the short term? People’s livelihoods depend much more crucially on that expectation than on other things we might debate in the near future.

Health and Social Care Levy

Richard Fuller Excerpts

1st reading
Wednesday 8th September 2021 Commons Chamber

[Richard Fuller (North East Bedfordshire) (Con)]

Like my hon. Friend the Member for Bexhill and Battle (Huw Merriman), the Chair of the Select Committee on Transport, I will be supporting the Government on this measure. In so doing, I will be breaking a pledge in the Conservative party manifesto at the last general election. That is not done lightly, and I do it for two mean reasons.

First, the £400 billion cost of covid has created a gap in the country’s balance sheet that cannot be ignored or wished away. It has to be dealt with, and it is fiscally responsible for the Government to produce today’s measures. Secondly, as hon. Members have said, we have deliberated on the reform of social care for more than a decade, with every day of delay creating more risks for families. I want reform, and it is best done by this Government at this time.

However, there will be consequences from these increases in tax rates—they will hold the economy back. Public services require a thriving economy to fund them. In turn, a thriving economy requires people to be inspired to create, take risks, invest capital, make profits and grow their businesses, skills and talent. As Conservatives, this is something we understand. It is capitalism and competitive markets that deliver. I would like to hear a little more from our Government about how good the power of free markets is and a little less boasting about the latest ways in which they are spending taxpayers’ money.

With taxation rates already at highs for the past 60 years, for Conservative Members to describe themselves as “low-tax Conservatives” means that they need to be supporting efforts to reduce public expenditure. Every departmental Minister should right now, ahead of the Budget, be raising the bar for investment decisions and casting out those projects that fall short. Each Minister should be taking an axe not just to obvious waste and inefficiency, but to meaningful slices of expenditure that reflect an over-bloated state rather than an essential public need. That applies to all Departments, including the Department of Health and Social Care.

The NHS is a great hallmark of British society, but it is not a religion. It is an organisation of people to achieve a social purpose. As an MP, my role—our role—is not to deify the NHS but to hold it to account for its effectiveness in achieving that social purpose. It is so dispiriting when taxpayer funding for healthcare is increased and the immediate response of those in positions of knowledge or responsibility in our health services is to say that the funding is not enough. It is dispiriting and it is irresponsible to the taxpayer. It is not acceptable that the leadership of the NHS shies away from even the most modest of productivity targets. It is not right that, by the British Medical Association’s own calculations, more than half—70,000—of the 134,000 people involved in general practice are non-clinical administrators, and yet so many of my constituents find it so hard to get an appointment.

I wish to see reform of social care that eliminates the excessive cost risk for families. I recognise that a private insurance market for these risks cannot exist without significant state intervention and that, for a period at least, taxpayer support is required as care services are reformed. As of today, we have promises but not guarantees for reform. I am placing considerable faith in these reforms being implemented by 2023. The Government and the NHS must deliver.

Economy Update

Richard Fuller Excerpts

Wednesday 16th June 2021 Commons Chamber

[Steve Barclay]

The furlough is available—it extends to the end of September—but the hon. Gentleman seems to be suggesting that it is there almost indefinitely, as opposed to being an exceptional measure in response to the exceptional circumstances of the pandemic. Given the wider fiscal cost, not least the £352 billion spent to date, I do not think that that would be fiscally responsible.

[Richard Fuller (North East Bedfordshire) (Con)]

May I commend my right hon. Friend for the Treasury’s response to the immediate challenge of covid, but also for having an eye on the longer-term challenge of inflation? We are now in the 13th year of competitive quantitative easing by the Fed, the Bank of Japan, the European Central Bank and the Bank of England. May I ask for his reflections on its effect on his near-term economic plans?

[Steve Barclay]

Of course, decisions on quantitative easing are for the Bank of England, which is independent. The last time I looked, I think the initial response to the global financial crisis was approximately £75 billion, and there has been about a twelvefold increase in QE since then, so I understand my hon. Friend’s underlying point. Ultimately, what my right hon. Friend the Chancellor has been focused on is the plan for jobs and supporting the economic recovery. We can see from the output data that the economy grew by 2.3% in April, as I said earlier, and GDP data has come out of the Office for Budget Responsibility forecast.

However, as my hon. Friend, who takes a deep interest in the matter, well knows, the picture remains challenging. There were 1.9%—or half a million—fewer employees in May than in February 2020, and 3.4 million people are still on furlough. It is a challenging picture, but I think that the plan for jobs is working, and the data suggests that.

Better Jobs and a Fair Deal at Work

Richard Fuller Excerpts

Wednesday 12th May 2021 Commons Chamber

[Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)]

There is so much to welcome in the Queen’s Speech, which will make our great country safer, stronger and fairer. I am particularly pleased to welcome the legislation to support the introduction of the UK’s first freeports. We have already seen the impact of this Budget announcement in the Tees Valley, where GE Renewable Energy has committed to creating 2,250 jobs, mostly within the confines of the freeport zone.

Speaking of the Tees Valley, it would be remiss of me not to congratulate my friend Ben Houchen on his astounding victory in the mayoral election last week. To win re-election with 73% of the vote represents a huge personal mandate but also a resounding endorsement by the people of the Tees Valley of this Government’s plan to deliver on their priorities. That stands in stark contrast to the remarks of the hon. Member for Chesterfield (Mr Perkins), which were so typical, I am afraid, of the doom and gloom that characterises the Opposition’s approach not just to the crisis and our handling of it but to the wider prospects and outlook of this country. That goes to the heart, I fear, of their electoral dilemmas.

Creating a more prosperous country where someone’s life chances are linked not to where they come from but to who they are capable of being lies at the heart of the mission of levelling up. A good job, a good school for their children and a good home of their own are what millions of people rightly yearn for. On the last point, the planning legislation in the Queen’s Speech is vital if we are to deliver the number of homes required where they are most needed.

In constituencies such as mine, an ordinary family can, with hard work, aspire to own a really nice home of their own. Sadly, however, we need to acknowledge that in too much of the south of our country, our housing system is more less, as a market, completely broken. People working hard, even two-earner couples, are priced out of any realistic prospect of owning the home that they want and are instead trapped in an overpriced and heavily subsidised rental market, which further diminishes their ability to save.

[Richard Fuller (North East Bedfordshire) (Con)]

The issue of planning is particularly important for my constituency, which is growing at three times the national average already. Does my hon. Friend accept that one welcome aspect of reform would be that for the 1 million housing approvals already in place, the economic incentives are there and the pressure is there for those to be implemented?

[Mr Clarke]

I absolutely take my hon. Friend’s point. He is quite right that this is a complex problem and we need to address aggravating factors, including land banking by developers, which undoubtedly makes the situation harder to address.

We must confront the difficult reality that this is fundamentally a problem of supply. We should not privilege the interests of those who have homes over those who do not. In 1979, the green belt was 721,000 hectares. It has since more than doubled to over 1.6 million hectares, much of which is not genuinely green. Up to 11% of UK brownfield land, over 4,000 hectares, lies within the constraint of the green belt. The Government are proposing sensible steps to release some more land, a fraction of the total, to build the homes that are so badly needed while protecting areas that local residents cherish and choose to exclude.

Striking that balance deftly is vital. I am not advocating a planning free-for-all, and nor is anyone on the Government Benches, but I make a serious appeal to the House to recognise the urgency of the problem that we are storing up in the south-east corner of England, in particular, and to take action to address this. Fundamentally, land scarcity is the problem. Today the land that houses are built on accounts for 72% of its sale value. In 1995, it was 55%, while in the 1950s it was roughly 25%. The pattern is clear. From a centre-right perspective, we cannot be surprised if it becomes harder to make the case for popular capitalism in communities where too many people, particularly younger people, cannot see a realistic route to build that capital in their own lives.

We have to fix this, and I make a plea for us to do so. The most important thing we can do is to focus on sensible solutions to this planning impasse, because if we do not get it right, we will cut a generation of people out of home ownership, and there will be very serious consequences that we are already starting to see in the capital. We ought to look at how we distribute the burden of planning more sensibly. Rather than there being some additional homes in almost every community, perhaps we should be looking more at garden towns and even cities, because that might concentrate some of the pressures and some of the agglomeration advantages of creating those new communities.

However we choose to address this problem, we cannot ignore it, and the Government are right to be addressing it as part of a strong Queen’s Speech that will ultimately deliver on the promise of levelling up not just in communities such as mine, which are the typical centre of attention, but in the wider sense, recognising that if we do not get this right there will be exclusion and deprivation in parts of the country that are typically associated with being much more successful and affluent.

--- Later in debate ---

[Richard Fuller (North East Bedfordshire) (Con)]

It was an engaging speech by the hon. Member for City of Chester (Christian Matheson), and he made some important specific points that I am sure the Government will bear in mind. I wonder, however, whether he will accept this more fundamental point. In the 2019 election, when the country was looking for a person who could identify opportunities as the country went through substantial changes to its economic relationships by leaving the European Union, and a person who had the ambition and drive to fulfil those opportunities, it chose my right hon. Friend the Prime Minister. As we reflect on the elections last week, will he also accept that although there was a substantial amount of support for the successful vaccine roll-out, the Prime Minister and the Chancellor’s support for such a vast array of activity across Government was also rewarded by the public? Those fundamental points of trust in the Prime Minister and in his ambitions for this country are resonating with the public and are reflected in the Queen’s Speech, which I wholeheartedly support.

[Andrew Griffith (Arundel and South Downs) (Con)]

Does my hon. Friend agree that the only person to whom the hon. Member for City of Chester (Christian Matheson) should be directing his comments in respect of fire and rehire, as the events of the weekend showed, is the right hon. and learned Member for Holborn and St Pancras (Keir Starmer)?

[Richard Fuller]

My hon. Friend, as is customary, makes a poignant point, which I am sure will be reflected on with glee by those on the Opposition Front Bench.

The longer context for this Queen’s Speech is that, since 2010, the thread all the way through has been a focus on the value of work. In the first period of 2010 to 2015, a lot of that was about benefit reform, so that people who had to go out to work did not look at their neighbours and think, “Well, they’ve got a better life living on benefits”. The second part was the Conservative Government implementing a living wage commitment—a commitment this Government continue with. The third, which we are seeing in this Queen’s Speech, is the identification that ultimately what we are looking for is a lifelong commitment from the Government to support people’s skills development.

What is so exciting about the skills and post-16 education Bill is that it is starting to focus on potential. It does not matter who someone is, where they are, how rich they are or how poor they are; what matters is what their potential is for this country. However, I would urge the Government to look at three ways of going a bit further. First, can we broaden even further the scope of what we understand as potential? As we have seen, potential can come in academic potential and it can come in skills potential, but it can also come in commercial potential and it can come in artistic and creative potential. Where are the mechanisms—creative mechanisms—for those talents and for unlocking that potential?

Secondly, can we also get a better balance of where the risks for taking part in these programmes comes? At the moment, all of the financial risk lies on the person choosing what they decide to do. As a paper by Peter Ainsworth on the education, enterprise and giving-back grant suggests, institutions should have more skin in the game. There should be a sharing of risks between the institutions that are trying to tap into and unlock that potential and the individual who is seeking such forward movement.

Thirdly, why is there not an opportunity now to have more competition both between types of providers for Government resources—between the academic track or the skills track, and potentially the commercial track or the artistic track—and within those types, between universities, based on an accountability of how well institutions are fulfilling potential?

There are a number of measures in the speech that are particularly relevant to the people of Bedfordshire. The commitments on air pollution will be particularly relevant to people in Sandy and other parts of the community along the A1 corridor. I welcome, cautiously, the Government’s obesity strategies, but I worry that some of the measures may inadvertently harm certain producers, including Jordans, which is a manufacturer of healthy cereals in my constituency.

I firmly welcome the Government’s commitments to drug and alcohol rehabilitation in criminal justice, which was such a crucial part of the successful election of Festus Akinbusoye as police and crime commissioner of Bedfordshire last week. On planning, I echo the concerns that other Members have mentioned.

I do think the Government need to make sure that the 1 million existing approvals are actioned—that there is a tax and build schedule—otherwise the Government will not just face a northern powerhouse group on the Back Benches, but have a southern alliance to tackle.

Finally, looking across the Atlantic, one wonders how powerful countries and empires end. There are two substantial ways they do so in peacetime: the first is that Governments spend too much, and then tax their populations beyond their tolerance to take it; and the second is that Governments debase their currency, and then inflation lets rip and destroys savings. Let us make sure that, as a fundamental part of this, we maintain and hold up the probity of public finance.