Section 5 of the European Communities (Amendment) Act 1993

Roger Mullin Excerpts

Wednesday 19th April 2017 Commons Chamber

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

It is a pleasure to make my final speech in the Commons before the general election. The electors of Kirkcaldy and Cowdenbeath will determine whether I return to make any speeches here in future.

I was intrigued by and enjoyed the opening remarks of the hon. Member for Bootle (Peter Dowd), who pointed out that it is rather strange to be debating this subject: we are facing being dragged out of the European Union, yet we are discussing convergence. I knew this would be a tremendously popular debate—we need only to look around the full Benches to see how popular it is—so I took a leaf out of the Leader of the Opposition’s book and tweeted that I was going to be speaking on this important topic, in the hope that I would get the equivalent of “Mary from Rochdale” letting me know the key points I should raise. Only one person replied with a suggestion of what I should include in my speech, and it was: “Can you say hello to my Auntie Sadie in Balloch?” I could not possibly do that in a speech of such importance, but perhaps that clarifies how many of the things we debate in this House are very technical and difficult for the public to engage in. On a serious note, they are none the less very important.

The Minister talked about the OBR forecasts. Yesterday, I showed great prescience—or lack of it. Scott started to work for me on the day that the general election was declared. I gave him one task to prepare for this speech: I asked him to contact the Library and to find out how many independent evaluations had ever been done of the Treasury or OBR models of the UK economy. This morning, the Library staff got back to say that they could not find that any such evaluations had ever been undertaken. That is perhaps not surprising when we see some of the results of those models.

In following up, I asked the Library staff to look into how the OBR model was described by the OBR. They directed me to the OBR’s website, on which we find the wonderful statement that much of its model is based not on hard fact but on the judgment of those who use it. Different people might get incredibly different results using the same model. There will come a time when Governments of whatever shade are going to have to consider the way in which we understand and model the economy, and how far we can ever rely on forecasts of the type the House has been receiving for a good number of years.

This could obviously be a fairly wide-ranging debate but, thinking about the future, I thought I would make one or two remarks about issues that will still need to be addressed when we have exited the European Union. Exiting itself will not contribute anything; it will require the will of Government to do something. The Minister rightly mentioned the importance of business investment. Last year, the House held a debate on quantitative easing —I seem to recall that the hon. Member for Bootle took part in it—that I think was slightly less popular, in terms of the numbers taking part, than this debate. None the less, it was interesting that so many of those who spoke in that debate talked about the problem that QE had created for investment. The assumption from the original essay by Friedman in 1969 was that introducing QE would lead to a rise in asset prices, the consequence of which would be to increase confidence in business and a significant increase in investment. We know that that has not happened, despite well over £600 billion of QE being introduced. It would be interesting to know how the Government, or the future Government, will tackle the rewinding of QE.

In recent days, senior bankers have made some very intemperate remarks about the business sector. I wish to point to one that was made just two days ago in the Daily Express by a senior executive from the Royal Bank of Scotland. He described as a “bunch of chancers” a group of small and medium-sized enterprises that were pursuing some reconciliation of the problems they experienced from the Global Restructuring Group and the like. Can Members imagine any other industry talking about its customers as a bunch of chancers? Apparently, those customers were called that because they may have the audacity to go to the courts to seek redress. If Members look at the RBS accounts, they will see that RBS has tripled the amount of money that it has set aside for the hiring of lawyers to defend cases—I see a Member nodding. It expects to defend cases worth something in the order of £1 billion. Surely that says something about our banking culture which will need to be addressed.

One matter that I have been pursuing in this House is the issue of Scottish limited partnerships and other forms of limited partnerships that have been, particularly since 2008, subjected to use by international criminals, including, and perhaps particularly, those from eastern Europe, Ukraine, Russia and the like. The amounts involved now total many billions of pounds. About 10 days before recess, there was an urgent question on the latest money laundering scandal. When I questioned the Minister at the time, I pointed out that, at the heart of these scandals, lie these limited partnerships. Since 2008, 22,000 Scottish limited partnerships have been created. They are completely opaque; we have no idea who owns them. Many of them seek to operate in tax havens and to launder significant amounts of criminal assets.

[John Redwood]

Before he closes his remarks, do the hon. Gentleman and his party think that the EU is right to say that state debt should not be above 60% of GDP?

[Roger Mullin]

It is perfectly reasonable for the EU to make such a statement and to seek to have some control over debt. It is interesting to note that the Scottish Government can at least say today, all these years after the Scottish Parliament was created, that they have absolutely no debt. That is certainly something that this Government cannot claim.

Regardless of whether we were going to be in or out of the EU, this country—the UK and all its member nations—would still face major economic challenges that require will and intelligence to address. Surely that is the message that we should all be taking to our constituents as we face the future.

Money Laundering: British Banks

Roger Mullin Excerpts

Tuesday 21st March 2017 Commons Chamber

[Simon Kirby]

Absolutely. This Government are fully committed to ensuring that taxpayers are fully protected and that we do all we can to stamp out illegal money laundering activity.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

This revelation is shocking, but it is not in the least bit surprising. For over a year, I have been campaigning in this House on associated areas. After the story was released yesterday evening, I undertook research that indicates that at the heart of the issue is the banks’ use of limited partnerships—not only Scottish limited partnerships, but many other forms—that allow the criminals to hide their ownership of companies. It is through that mechanism that these things are happening.

I have several questions for the Minister. First, the Department for Business, Energy and Industrial Strategy closed its review of limited partnerships on Friday. Will the Government allow me and other interested Members to resubmit to the review, although it is formally closed, so that we can raise this important matter and have it considered in the review?

Secondly, when one looks at the outcome and the extent of the situation, it is too much to believe that we are the world leader in money laundering regulation in general, so it is time for another look at that. Thirdly, a key concern of many in the House is that the banks have not had a supportive whistleblowing regime in recent years. We need to encourage, not inhibit, whistleblowing.

[Simon Kirby]

In this alleged case, my understanding is that the bodies used were limited companies, not limited partnerships. Last year, BEIS introduced the register of people with significant control, and we will be consulting shortly on UK property-owning foreign companies. That is a step forward.

The hon. Gentleman mentioned the limited partnership consultation; I am sure that any right hon. or hon. Member who wants to write to the Secretary of State for Business, Energy and Industrial Strategy can do so. It is also appropriate to say that we are world leaders in financial regulation. The FCA does a good job, is held in high regard by the rest of the world and strikes the right balance between consumer protection and fairness.

Class 4 National Insurance Contributions

Roger Mullin Excerpts

Wednesday 15th March 2017 Commons Chamber

[Mr Hammond]

There again, we have a manifesto commitment to spend 0.7% of GDP on overseas aid. That commitment has been legislated for and is therefore locked, unless this House were to decide otherwise.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

This is another right boorach. The last Chancellor who had to make a U-turn lasted only a few weeks thereafter, so before this Chancellor leaves office, will he confirm that, since he said that this decision was only made at 8 o’clock in the morning, that means it has not been taken to the full Cabinet?

[Mr Speaker]

I am very grateful to the hon. Gentleman; I shall add the word “boorach” to my vocabulary.

Budget Resolutions

Roger Mullin Excerpts

Thursday 9th March 2017 Commons Chamber

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

During the heated interchanges that took place a short time ago, I was wondering whether this was merely a private fight or if anybody could join in—I will take this opportunity to join in. Let me declare first of all that my approach to understanding economics is different from that of the Front-Bench spokesmen, so if the House will forgive me, I will take a couple of minutes to set out why I see things slightly differently so that Members can better understand my critique of particular aspects of this Budget.

I am highly critical of an approach to economics that seeks to mimic the physical sciences and imagines that it can predict the future through statistical means. Great economists of the past of different traditions, ranging from Adam Smith to Karl Marx, would have rightly scoffed at that notion. When I picked up the Office for Budget Responsibility’s “Economic and fiscal outlook” yesterday, it fell open at page 45, which Members will recall contains chart 3.8, on effective exchange rate assumptions. If we look at that chart—some hon. Members are doing so—we can see that the OBR is able to accurately plot the past, which contains wild variations in the exchange rate, and that the biggest variations are often due to not economic decisions, but political ones, such as the EU referendum. The OBR’s prediction for the future, however, is a perfect straight line parallel to the horizontal. The only thing we know is that that is the least likely thing to happen to the exchange rate but, owing to that approach, built-in assumptions make us highly vulnerable to misreading the actions that need to be taken. Straight lines rarely predict human activity.

It was therefore with genuine concern that I heard the Chancellor deem it important in the opening section of yesterday’s statement to read out spreadsheets and forecasts as though they were going out of fashion while entirely failing to mention in any depth the key issues challenging the future economics of this country. As has been said, he failed adequately to address the challenges of Brexit, for example, but I will come to that in a moment.

Allow me to reflect a little on different ways of looking at the economy and to make three key observations. First, an economy is not a machine but a network of relationships among human beings. What do these networks do? They are built upon myriad individual and collective decisions that are affected by an almost infinite array of influences. Not only do we not know the future with any degree of precision, but we cannot know the future with any degree of precision, yet that is what such detailed forecasts pretend, and they are provided without even any margins of error.

We know that decisions are critical, so I thought about how I could highlight the importance of that and some of the things that the Government could do. The best example came to me yesterday when, along with many Members, I attended the WASPI women demonstration. Those people face having to make key decisions about their future, but this Government utterly disrupted the way in which they were able to make rational decisions, because they were given no proper notice about the huge changes being made to their pensions. Rather than helping to give some coherence to the economy to enable people to make as rational a decision as possible, the Government’s actions have caused disruption. The effective operation of the marketplace is being disrupted, not helped.

Secondly, we cannot ignore the influence of politics on economic activity and vice versa. By entirely ignoring the effect of Brexit in his speech, the Chancellor ignored the influence of such a political decision, but some of the effects of Brexit should have been tackled. The failure to guarantee the rights of EU citizens in this country will lead to disruption in the labour market. I am sure that I am not alone in knowing constituents who either have already left or are preparing to leave the country, including people who run small businesses, a German couple, someone in the creative sector, and one or two university researchers.

[Keith Vaz]

The hon. Gentleman and the SNP should be commended for raising this issue on so many occasions. It is the practicalities that worry me. EU citizens are extremely worried and distressed about their current position, so they need their applications to be processed, but there is no provision in the Budget to allow for those applications to be processed efficiently. Millions of people will have to go through the system.

[Roger Mullin]

I entirely agree with the right hon. Gentleman. Indeed, that is a great worry to me, as it is to him and to many others. It is about not only the system’s efficiency, but its effectiveness and ability to make the right kinds of decisions in complex individual cases. I have constituents who have been here for many years but are finding it difficult to get various applications through.

[Mike Weir (Angus) (SNP)]

My hon. Friend is making a good point, as did the right hon. Member for Leicester East (Keith Vaz). This is not just about individuals. There will be an impact on the local economy of areas such as mine that rely on migrant labour for fruit picking and will face great difficulties if that labour is not available. There are huge economic consequences in addition to the personal consequences.

[Roger Mullin]

That is precisely my point. What was seen as a political decision to exit the EU immediately has consequences for individuals whom we value in our communities. That has implications for the labour market, and the disruption of the labour market has economic consequences. We cannot get away from the fact that an array of influences are coming to bear due to Brexit, but the Chancellor thought that the sensible approach was to utterly ignore them. We also need to pay attention to other matters connected to Brexit. As far as I am aware, the Chancellor said absolutely nothing about how he was going to fill the funding gaps for rural communities, the agricultural sector or university research. Everybody is uncertain about those gaps. How will the Government address them in general? They have already said that they will fill the gap in one or two small instances, but there is no general response. That is another disruption that the Government are not addressing.

Thirdly, whereas the Treasury and the OBR can offer only snapshots of the economy at different times, people who may call themselves part of the classical economic tradition would say that an important feature of the real world is how the market economy operates, which is based on a process of incessant change and growth. Although the Government talk about some aspects of that, such as the importance of research and development and of stimulating innovation, not nearly enough regard has been paid to the importance of how we are to stimulate innovation and, through that process, stimulate growth in the economy.

There are practical implications of that view of looking at things. Policies in recent years—near-zero interest rates from central banks and austerity from Governments—have specifically protected one group of people while harming everyone else. They have boosted the asset prices of the wealthy while destroying the savings pool of those with modest amounts in the bank. The policies harm pensions and penalise savers. They represent everything that classical economists have opposed. Paradoxically, they are the antithesis of the free market and a further illustration of what David Stockman calls “crony capitalism”. It is not hard to find the human embodiment of crony capitalism in this House.

I will now comment on some of the measures. I read an article in the Financial Times by Sir Nicholas Macpherson a few days ago—[Interruption.] He is a friend of the hon. Member for Bootle (Peter Dowd). Sir Nicholas said that Budgets were supposed to be about tax. For perfectly reasonable historical reasons, the United Kingdom has developed an enormously complicated tax system over hundreds of years. When I talked to a Treasury official some weeks ago, he told me that, so far, he had found more than 1,100 tax reliefs in the system. Every tax relief provides an opportunity for a loophole, so it is perhaps not surprising that estimates of the tax gap vary between £36 billion and £70 billion.

Given the changing nature of society, should our tax system and some of our approaches to tax rely on what happened 150 years ago or more? Surely the time will soon come when we have to look systematically at the entire tax system with a view of not just simplifying it, but making it fit for purpose for the type of economy and labour market that we have today. I am therefore disappointed that there was no reference to that in the Budget.

We have already heard excellent points about the problem facing the self-employed, so I will not dwell too long on that, but there is one area in which the Government could help. For 30-odd years before I entered Parliament, I ran small research companies and the like. In the last few years before I entered Parliament, I decided that I was going to take life a bit easier—some chance—so I stopped running a limited company and simply proceeded, with associates and individuals, by picking the jobs that I found interesting and wanted to do. I applied for a job with the Government, but they said that I could not be considered for it unless I became a limited company. The UK Government’s procurement processes therefore encourage people to do what the Budget says the Government do not want them to do. If we are to move down the route of sorting out this part of the economy, as the Government would see it, might it be a good idea for them to practise what they preach by sorting out their own procurement policy?

Too often in this House we hear the Government making policy changes and announcements in which they almost assume that every labour market is like an inner city. When I heard what the Government were doing on self-employment, my thoughts did not immediately go to how labour markets operate in Glasgow or the City of London; I thought about my friend in Skye and some of my friends in the highlands who have no choice but to rely on self-employment. They cannot choose to work for corporations that do not exist. They are what might be called “necessity entrepreneurs”, and they do not work in just one sector. They have to job around and they undertake lengthy travel. They also have absolutely none of the security that people in employment have. The Government think it is a good idea to burden those people all of a sudden, but I cannot see how on earth their chosen proposal will give any support to local economies the length and breadth of this country. We need much more effective analysis of those matters.

Of course, being a Scot, I am particularly concerned about the duty on whisky. Given the state that the Government are in, and given what we face in the future, if there was ever a bad time to make it more expensive to buy whisky, this is it. Surely we do not want to start by penalising one of the most effective products produced in this land that is not only essential to the Scottish economy, but makes a massive contribution to the economy of the whole United Kingdom.

Many Members want to take part in this debate, so I will finish by returning to a group I mentioned earlier. At its heart, the economy is a collective human endeavour. We cannot understand economics abstractly; we have to understand it in terms of its effect on individuals, families and communities. If ever there was an example of how the Government have departed from the genuine concern for humanity that should be at the centre of our concerns about the economy, it is surely their malicious treatment of the WASPI women. We have a long way to go.

Oral Answers to Questions

Roger Mullin Excerpts

Tuesday 28th February 2017 Commons Chamber

[The Financial Secretary to the Treasury (Jane Ellison)]

It is worth noting that the SDLT reforms in the 2014 autumn statement reduced the tax for the vast majority of homebuyers and that all transactions up to £937,000 now pay the same or less in SDLT. As a London MP, I am obviously aware of the phenomenon to which my hon. Friend refers, but from the available data we do not yet have a clear consensus on the market impact of the higher rates of SDLT for additional residential properties or those at the upper end. We will continue to look carefully at that.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

T7. The systemic maltreatment of businesses, as exemplified by the Royal Bank of Scotland’s dash for cash, requires action. Does the Chancellor accept the case for imposing a duty of care on the banks, particularly in their dealings with small and medium-sized enterprises?

[The Economic Secretary to the Treasury (Simon Kirby)]

The Financial Conduct Authority has published a summary of the main findings of its skilled persons report on RBS’s global restructuring group. The FCA is carefully considering that, and it would not be appropriate for me to comment while the process is ongoing.

Cerberus Capital Management: Purchase of Distressed Assets

Roger Mullin Excerpts

Wednesday 22nd February 2017 Westminster Hall

[Sammy Wilson (East Antrim) (DUP)]

It is a joy to serve under your chairmanship, Mr Owen. May I first of all apologise for the earlier interruption as a result of my phone going off? I congratulate the hon. Member for East Lothian (George Kerevan) on securing this debate. The issue of how Cerberus has dealt with the distressed loan books that it has purchased and the impact that has had on individual businesses is of great importance in Northern Ireland.

I say at the outset that I do not want to deal with the issues raised by the hon. Gentleman at the end of his speech about the sale of the NAMA assets to Cerberus, other than to say this: there was an acknowledgment at that time in Northern Ireland that NAMA had taken £4.7 billion of loans in Northern Ireland under its auspices for a number of years and had been in charge of those loans, but that there were flaws in how it was dealing with the loans. It was felt that there were very good reasons for getting away from a Government-controlled agency, which had difficulties making decisions because of the political connotations and political constraints, and that it was better that those loans were moved from NAMA to another body.

Indeed, there was support for that in Northern Ireland. It was seen as a way of freeing up the market. Having taken the loans on and written them down, and with the Irish taxpayer having been responsible for the costs of the write-down of many of them, it was a difficult decision for NAMA to make and for the Irish Government to allow. They tried to get the market moving again, and allow those people who had borrowed money and defaulted on loans some liberty—they wanted to get equity or money back into the market, and allow people to develop assets and perhaps make money from them. It was therefore felt that moving the assets to a separate body would be better. That is the background to the sale of the assets, for which Cerberus was eventually the successful bidder.

At that stage Cerberus made a number of promises, which it conveyed to the Northern Ireland Executive. First and significantly, it said that it would adopt a long-term strategy and was not involved simply to make money quickly by moving in, closing down the businesses, selling off their assets and leaving. Many of the businesses were viable in their own right but had moved into the property market during the property boom and found that their core business was affected by the loans they had taken on for property. Cerberus made it clear that it would adopt a long-term strategy and look for assets that could grow in capital terms over a longer period and that had an income stream. It indicated that it would be prepared to make money available because it had funds not only to purchase the assets, but to lend to owners of the assets when it was felt that there was potential to enable them to develop and grow, and pay back the loans.

Secondly, Cerberus made it clear that there would be no fixed period and that it was not looking at a time horizon. Again, that provided assurance for many businesses.

Thirdly, Cerberus said that it would use local staff, and that it would employ people who understood the market and the businesses. Significantly, I remember dealing with one case that perhaps shows how Cerberus were much more aggressive. An individual faced a staff member that Cerberus had employed from the bank that he had previously banked with and which held his loan. That same person was demanding far harsher terms from him when working for Cerberus than they had offered as a bank employee when the loan rested with that bank. That shows what happened, despite the promises that were made. By the way, the banks were not easy on their customers, and yet the same employee, when operating for a different firm, was much more aggressive and hard-headed.

Fourthly and very importantly, Cerberus indicated that—I do not know whether this is true of the loan books that were purchased from other banks—it does not pay and build into the value of any loans that it purchases the value of personal guarantees. Cerberus made a virtue of that, saying that, as no value was attached to the personal guarantees, it would be easy to exempt people from personal guarantees. Very often, the personal guarantees prevented businesses from being able to borrow, and to try and develop an asset, because they always had the value of the personal guarantee hanging over them.

Fifthly, Cerberus said there would be a presumption in favour of the incumbent—in other words, where possible, it would try to work with the people who held the loans. That made good sense. They knew the assets and were probably already involved in the business, so they would be easier to work with.

Lastly, Cerberus indicated that it would find ways of trying to liquidate the companies through equity finance and loans, and in other cases by writing down debts.

As I am sure Members have found time and again, Cerberus claimed that it wanted to work with individuals and to have a consensual approach with the people who held the loans. That has not been the experience, although in some cases, businesses will testify that it worked. I can think of large businesses in Northern Ireland that were able to do deals, but by and large, the approach has been aggressive—aggressive to the point of incompetence, in fact, as one financial adviser put it to me. Sometimes there was a deal to be done, but when those working on behalf of Cerberus saw a chink of light and that a business was able to pay, they went even further and pushed harder until they pushed them to the brink. In one case when they were on the brink of a deal, some of the assets that were part of the deal were sold, which brought the deal down. There was aggression to the point of incompetence. It might be argued that what happened was good for Cerberus. In some cases it might not have been, but importantly, it was often not good for the businesses. Viable businesses were put to the wall. In some cases, when they did survive, individuals and business owners were driven almost to distraction and had health issues.

Another difficulty was reaching an agreement—I think of what an individual I dealt with said. Cerberus would only speak to businesses when it wanted to speak to them, and businesses wanting to try to move on often found that they were hitting a blank wall—so much for the consensual approach. Even when that did happen, trying to get information about what a deal would look like was very difficult. Rather than trying to help businesses, the approach has almost been more about staring them out, and businesses have been adversely affected.

In most cases—financial advisers tell me this—despite the fact that no timescale was set, Cerberus is loth to do deals beyond two years. A two-year horizon is much too short for businesses when there have been large debts and a big fall in the assets, and when they have been relying on building up an income stream and looking for capital increases in the value of assets as the economy picks up. That has forced many businesses simply to say, “Look, we can’t continue. We will have to accept bankruptcy or constrain ourselves much more than we had anticipated.”

This is the important point: there is very little if any oversight of this area and no regulation, yet it has a huge impact on our economy. Businesses that employ people, pay tax to the Treasury and provide local services are put in jeopardy as a result of loans that can be easily transferred from one financial institution to these companies. There is little or no regulation and the people who originally took out the loans have no say. The terms of those loans can then be changed at the whim of the business that has taken over. I do not believe that that is good for the economy. Some strengthening of the regulations and oversight of the businesses is needed. There also needs to be protection for those who have taken out loans in the first place on certain terms, so they cannot have those loans changed.

Finally, the Treasury needs to look at a point that was well made by the hon. Member for East Lothian: as a result of transfer pricing, the local subsidiary is given loans at high rates of interest to purchase the assets, which keeps its profits down in the United Kingdom, thus avoiding taxes. I would be interested to hear the Minister’s response on the levels of corporation tax paid by businesses such as Cerberus.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

rose—

[Albert Owen (in the Chair)]

Order. While Mr Mullin takes his seat on the Front Bench, let me say that the debate will finish at 5.44 pm, so Members have plenty of time, but they should leave at least 10 minutes for the Minister to respond to the debate and two minutes for Mr Kerevan to wind up.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

It is a pleasure to serve under your chairmanship once again, Mr Owen. Thank you for inviting me to take my seat on the Front Bench.

We all owe a great debt to my hon. Friend the Member for East Lothian (George Kerevan) for securing this debate, especially the companies that have been driven to the wall or destroyed by the actions of Cerberus. I know that some of those companies are represented in the Public Gallery today; I hope they find that we have done justice to their cause. My hon. Friend certainly has.

[Patrick Grady (Glasgow North) (SNP)]

I have a constituent who was affected by the behaviour of the Royal Bank of Scotland’s global restructuring group. Does my hon. Friend agree that there is a huge lack of trust in such major institutions, particularly RBS, which is largely owned by the public purse? It falls to the Government to get a grip on the situation and take the necessary actions that my hon. Friend the Member for East Lothian (George Kerevan) outlined, so that public confidence can be restored and some of the businesses affected can have some hope of restitution.

[Roger Mullin]

I agree wholeheartedly. Indeed, in a debate on a related issue last week, I raised the fact that many people and small businesses will find it extraordinary that banks such as RBS have no duty of care towards the customers they deal directly with. Given all the tales of misery caused either by the banks directly or by Cerberus, surely we need to ensure that there is proper regulation and a proper duty of care towards those who suffer at the hands of such institutions.

[Sammy Wilson]

The hon. Gentleman makes a point about banks’ duty of care and their improper behaviour. The coalition Government commissioned a review into that matter, but it has never been published. One wonders why its contents have not been made open for debate so that we can see the banks’ practices.

--- Later in debate ---

[Roger Mullin]

I agree entirely. Perhaps the Minister will give a more detailed response to that point than I can, because it dumbfounds me that such secrecy has surrounded so much of this.

Yesterday I spoke on the Criminal Finances Bill, so I feel particularly at ease speaking about this matter a day later. As we have heard from a number of Members, much of what has happened has involved what ordinary members of the public would call criminal activity. Indeed, some legal actions are under way; obviously I cannot speak about them in detail, but the fact that they are being pursued speaks for itself. I am not sure what the correct term is, but if there were ever an example of a company that operates to standards that are the very reverse—[Interruption.]

[Albert Owen (in the Chair)]

Order. The Minister and his Parliamentary Private Secretary may pass notes to each other but not speak. There should be only one speaker at a time.

[Roger Mullin]

If the messages that are being passed are going to answer some of my questions, I will not object too severely.

As I was saying, Cerberus is an example of a company that operates to standards that are the very reverse of a duty of care towards small businesses in our country. Surely we can expect the Government to be concerned about the effect on the good people who have suffered at its hands. In my constituency, a perfectly good trading company of many years’ standing was completely destroyed by the actions of Cerberus, in a similar way to another company mentioned earlier. It was willing to repay the loan, but the additional fees that it was stuck with and the way in which Cerberus operated drove it to bankruptcy. I will not name the company, because like other hon. Members I do not want to embarrass anyone who may be listening, but I am genuinely concerned about the health of the family who were treated in that way.

Let me comment on some points made by other hon. Members. My hon. Friend the Member for Ayr, Carrick and Cumnock (Corri Wilson) said in an intervention how difficult it has been to get a conversation between Cerberus and those affected by its actions. It seems that it is unwilling to speak except in the remarkable case that the hon. Member for East Antrim (Sammy Wilson) mentioned, when it sought to buy assets in Northern Ireland and was only too happy to make promises such as adopting a long-term strategy—that would be a novel thing for it to do.

[George Kerevan]

On the subject of secrecy and Cerberus, is my hon. Friend aware that Stephen Feinberg, Cerberus’s founder, is the leading candidate to undertake the review of the American secret service under Donald Trump?

[Roger Mullin]

Yes, I am aware of that. One can be fairly confident that that review of the secret service will itself be done in the greatest of secrecy.

I was also taken by some of Cerberus’s other promises that the hon. Member for East Antrim mentioned, such as making a presumption in favour of the incumbent and not squeezing value out of assets. It would appear that Cerberus has decided to act in a way that is precisely the reverse of its public promises.

I must pay yet more tribute to my hon. Friend the Member for East Lothian for the clear way in which he set out one or two facts that I hope the Minister will respond to, particularly the manufacturing of distress by the operation of such institutions and the movement from regulated to unregulated markets.

Cerberus proudly proclaims that it can make profits of 17% to 20% out of the tax avoidance schemes that it engages in, extracting value by moving between the UK, Ireland and the Netherlands. It is therefore not only small and medium-sized enterprises that are victims of the way in which Cerberus is operating, but the Treasury as well. I particularly look forward to the answer that the Minister must surely give to the question that my hon. Friend asked in his opening remarks: what has the loss been to the taxpayer in the UK from the actions of Cerberus? Everyone deserves to receive an answer to that this afternoon.

--- Later in debate ---

[Simon Kirby]

The hon. Gentleman raises a fair point. I will answer it shortly, if he bears with me.

Not only were customers’ mortgage terms and conditions unchanged by the sale, but they continued to be served by the same mortgage company with the same skilled and dedicated staff. In the contract with Cerberus, UKAR went further to ensure that specific additional protections were in place, including a one-year lock-in period that limited any increase in interest rates to changes in the base rate. All the mortgages are still protected by Financial Conduct Authority regulation. Owing to comprehensive planning and preparation, it was a well-executed sale, achieving good value for money and a good outcome for customers.

Various Members have expressed their views concerning purchases of assets by Cerberus. Unsurprisingly, I will not comment specifically on sales made by other parties to a private bidder. However, in the context of our sale, I will turn to some of the specific points raised by Members, including the hon. Members for East Antrim (Sammy Wilson), for East Lothian and for Bootle (Peter Dowd). They made thoughtful and helpful contributions.

One point that was raised was the tax domicile of Cerberus. UKAR’s sale was structured as a UK sale, and the taxes resulting directly from the sale are paid in the UK. However, we do not consider a bidder’s tax jurisdiction as part of the selection process for three reasons: first, to do so would greatly reduce the number of bidders able to participate, which would risk losing the competitive tension that is essential for maximising value; secondly, companies can and do change their tax arrangements, so there would be no guarantee that a UK-domiciled company would continue to be so in the future; and thirdly, to discriminate against a company based on its tax jurisdiction would risk our being exposed to legal challenge.

The hon. Member for Bootle mentioned the Public Accounts Committee. I note that its conclusions were that the transaction was executed successfully and that there were many positives from the sale. The Treasury response to the recommendations was clearly set out in a report, “The sale of former Northern Rock assets”. He also mentioned the NAO’s criticisms and touched on the important area of lessons to be learned. As the NAO report notes, UKAR and UKFI carried out a complex transaction “professionally” and “within a tight timeframe”. As the NAO suggested, we have increased transparency around the objectives of Her Majesty’s Treasury, UKFI and UKAR and ensured that strategic documents are drawn together in one place. UKAR has now published its framework document.

We heard about Project Eagle and the sale of Northern Irish loans by the National Asset Management Agency in Ireland. Specifically on that issue, Cerberus provided UKAR with suitable assurances consistent with the detailed submission it made to the Northern Ireland Committee for Finance and Personnel, which conducted an inquiry into the sale. That provided sufficient comfort. When we selected Cerberus as a preferred bidder, it was on the shortlist for another portfolio in Ireland. More generally, as UKAR would for any bidder, it carried out thorough due diligence of Cerberus as part of the selection process.

The hon. Member for East Antrim expressed various concerns about the treatment of businesses by Cerberus. I listened to those concerns carefully. When it came to the UKAR sale, customer treatment was a key consideration. Our sale did not contain any commercial loans. The NAO report states that the FCA protections for the borrowers whose mortgages were sold remain in place, and that the FCA continues to be satisfied.

We are aware that Cerberus is a buyer of assets across the UK and further afield. It is subject to the UK regulatory regime here and other regulatory regimes in other jurisdictions in which it operates. I am proud to say that the UK Government have ensured that we have a strong system of regulation here in the UK.

We have heard today about other asset purchases by Cerberus. It is an active buyer of assets across the UK and further afield. As I have said, it is not for me to comment on sales made by other parties to a commercial bidder, but we assess all bids thoroughly through our extensive due diligence carried out on any bidder for any assets. We particularly assess value for money and, importantly, continued fair treatment for customers. The assets in the recent £13 billion sale were not distressed assets. Having been originated a number of years ago, they were considered well seasoned assets, and Cerberus paid above book value for them. In any case, ensuring the continued fair treatment of existing customers is a key consideration in all sales, as I have said.

In short, the sale of £13 billion of former Northern Rock assets to Cerberus was a successful step on the way to returning assets to the private sector. It meant £5.5 billion coming back into the national purse, as well as the transfer of nearly £8 billion of liabilities from the public balance sheet to Cerberus. The sale was managed effectively, and it attracted good competition and secured a good price.

[Roger Mullin]

Minister, you have been talking for some considerable time. Am I being unfair in saying that the gist of your argument is that you do not consider that Cerberus has acted in any way unfairly—

[Albert Owen (in the Chair)]

Order. I know that the hon. Gentleman was referring to the Minister, not to me, but the Minister must respond now.

Draft Bank of England and Financial Services (Consequential Amendments) Regulations 2017

Roger Mullin Excerpts

Wednesday 18th January 2017 General Committees

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Flello. There is one area to which I want to draw the Minister’s attention, to express why we have grave concerns about the regulations. It is that of limited liability partnerships. As he will be aware, the Government launched a review on Monday because of the extent of international criminality that has been able to take place under the previously existing regulatory system.

Nothing in the proposed changes will strengthen the capacity to protect against the kind of abuse that has taken place through not just Scottish limited partnerships, which have received a lot of publicity in the past year or so, but other limited liability partnerships. I can see nothing at all in the regulations that will allow for the proper regulation of an area that the Government have admitted is of major concern.

Draft Bank of England and Financial Services (Conseqential Amendments) Regulations 2017

Roger Mullin Excerpts

Wednesday 18th January 2017 General Committees

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Flello. There is one area to which I want to draw the Minister’s attention, to express why we have grave concerns about the regulations. It is that of limited liability partnerships. As he will be aware, the Government launched a review on Monday because of the extent of international criminality that has been able to take place under the previously existing regulatory system.

Nothing in the proposed changes will strengthen the capacity to protect against the kind of abuse that has taken place through not just Scottish limited partnerships, which have received a lot of publicity in the past year or so, but other limited liability partnerships. I can see nothing at all in the regulations that will allow for the proper regulation of an area that the Government have admitted is of major concern.

Double Taxation Treaties (Developing Countries) Bill

Roger Mullin Excerpts

2nd reading: House of Commons
Friday 16th December 2016 Commons Chamber

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

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

I wish to start by quoting a statement from the UK Government with which I agree 100%—[Interruption]—strange as that may seem. The UK Government’s aid strategy states:

“International development is about much more than just aid.

I am bringing this Bill forward, because international development is about much more than just aid.

I became interested in these types of issues many years ago when I first started doing international work. My first such job was for the Food and Agriculture Organisation of the United Nations. Over the years, I have worked on 26 international assignments that have involved countries in the developing world. I have worked in places that I did not even know existed before I was asked to accept a contract—being a Scotsman I accepted the contract and then looked up the place on the map. I have been in places such as the Marshall Islands, in the middle of the Pacific ocean, and in the middle east, in places such as Oman and Yemen—where at one stage I thought I was being kidnapped—but most of my time and 16 of my assignments have been in Africa. On my last assignment before joining this House, I was funded by the Norwegian Government to evaluate the Benguela Current Commission’s research unit, which was researching the Benguela current as it ran up South Africa, Namibia and Angola.

I have had a long interest in development matters. I have never been funded by a charitable body, always by bilateral Government arrangements or sometimes at the request of the United Nations or the World Bank, as well as on a couple of occasions by the Asian Development Bank. One thing that struck me in my early days doing such work was that although I believe passionately in aid and funding and that the Government have done absolutely the right thing by being at the forefront of paying an agreed percentage of GDP to the developing world, that will never be enough to address the needs of some of the poorest countries in this world. Indeed, there is great danger in seeing international development solely as a function of aid.

Let me tell the House one thing. There have been estimates that if somehow the world was able to stop all the tax evasion and tax avoidance in the continent of Africa, and to clean up the system, including in the small areas I am considering, the tax that could be earned in Africa would be far greater than the entire international aid that is fed into Africa. My challenge today is to people who say that they do not like international aid in the sense of our sending money for good purposes to the developing world.

[Stewart Malcolm McDonald (Glasgow South) (SNP)]

I wonder whether my hon. Friend has anyone in mind when he says that.

--- Later in debate ---

[Roger Mullin]

Funnily enough, I have more than one person in mind. If we were to scour this House I might well find one or two who take that position, but I do not think that today is a day to be mean-spirited about anyone.

[Mark Durkan (Foyle) (SDLP)]

The hon. Gentleman should not invite a voice-activated intervention.

[Roger Mullin]

I can tell this is going incredibly well already.

One thing I wanted to say at the beginning of my speech was that, being who I am, I could have been very disappointed in the raffle, but here I am with 45 minutes or thereabouts to discuss my private Member’s Bill. Most Members would be keen to get a full hearing and a vote, but I know that that is not going to happen with this Bill. However, I could not be prouder than to have my Bill considered following the one that this House has just chosen to accept. [Hon. Members: “Hear, hear.”] I am sure that there are many people who feel the same.

I come back to my experiences in different parts of the developing world. In the agencies I worked with over the years, I came across many people who, although they were devoted to helping alleviate poverty and engage in capacity building and believed in the need for aid—many had worked in this field for many years, including a great friend of mine from Lossiemouth called David Thomson, who has worked in more than 60 countries—they also passionately believed that we would never cure the problem until we liberated those countries so that they could better take care of their own resources.

What do we know about international taxation treaties or double taxation treaties? They are set up for firms, such as UK firms, that operate in a developing country but are headquartered in the UK. They are often called double taxation treaties because nobody wants a company to be taxed twice on the money it earns. So these treaties were set up—in many cases, many years ago—to try to prevent double taxation.

However, over the past 10 to 15 years, what we have seen developing are not treaties that allow companies to be charged in just one place, but treaties that are part of an arrangement that allows too many international and multinational corporations to avoid paying tax in any country. We want to find ways in which we can assist countries in the developing world to take responsibility—to take care of their own taxation system and to invest taxes in their own society as they see fit, thereby building a capability that means they are no longer dependent on traditional aid.

[Patrick Grady (Glasgow North) (SNP)]

I warmly congratulate my hon. Friend on bringing forward the Bill. Does he agree that one country that could really benefit from being able to mobilise its own domestic resources through taxation is Malawi? He spoke about treaties being agreed some time ago. The treaty currently in place between the United Kingdom and Malawi is in fact between the United Kingdom and the colony of Nyasaland, because it was signed before the country achieved independence—something, of course, that we in Scotland hope to do eventually as well.

--- Later in debate ---

[Roger Mullin]

If memory serves me correctly—I go back much further than 1955—the treaty with Malawi does not include goods such as televisions, because they did not even exist in Malawi in those times. The treaty is so out of date that it does not capture the nature of modern commerce. The UK Government have been making moves in recent times to renegotiate the treaty, and that is very welcome, but it remains the fact that there is still a place for that 1955 treaty today, and it is by no means the only such treaty.

Research has been undertaken by, for example, ActionAid, and I compliment it on the campaigns it has been running and thank it for the assistance it has given me in constructing this small Bill. That research looked at more than 500 double taxation treaties throughout the world and suggests that despite all the good work the UK Government have done over the last 10 years or so, the United Kingdom and Italy still have more restrictive treaties than any other country—around 13 are still in place.

What are taxation treaties about? They are about how much tax should be paid. Some restrictive treaties actually prevent Governments from imposing taxes—say, some types of corporation tax—that they may wish to impose, so they remove democratic responsibility in terms of countries putting together their tax.

The second thing taxation treaties typically deal with is where the tax is actually paid. In a bilateral relationship, the treaty often favours the country where the company is headquartered. Why are companies in advanced western societies—not just the UK, but the US, Germany, Italy and the like—engaged with developing countries?

I do not know of any international corporation that wants to move its headquarters from London, Edinburgh, New York or Berlin to site them in some poor country in central Africa, but they do want to operate there. Why is that? The typical type of operation is to exploit the country’s natural resources—minerals and the like. In another country I am very familiar with—Namibia—there is diamond mining, which is exploited by some large Australian corporations, among others, and uranium mining. Other types of natural resources are found in the Benguela current, which has some of richest fishery grounds in the world.

[Dr Philippa Whitford (Central Ayrshire) (SNP)]

I have had an association with Zambia through fundraising, and on a trip there I became aware of almost a new form of colonialism. There are many Chinese companies where not only the leaders but the entire workforce are Chinese, so copper is being mined, the profit is being taken away and there are no jobs at all going into the local economy.

[Roger Mullin]

I was unaware of that case, but there is a parallel. When I was first asked to go to Namibia shortly after its independence to meet members of the Government in the large fishing port of Walvis Bay, they asked me and the others who were there to do a study on how they could Namibianise, as they called it, the fisheries sector. We asked why that was a priority, and they said, “We have one of the richest fishing grounds in Africa, but we’ve been under the apartheid regime of South Africa and that form of colonialism for years. There isn’t a single company in Walvis Bay owned by Namibians, and more than 90% of the people employed in the whole sector are non-Namibians.” The Namibian Government eventually took control and Namibianised the entire fisheries sector within 10 years, and it was more productive afterwards. It was a great success. Perhaps we tend not to hear about the successes where Governments in Africa and elsewhere take control and make a real difference for themselves.

I passionately believe that if we could liberate these countries to have more control of their own economies and taxation systems, that would move them away from any culture of dependency that some people say they have. It would be more liberating for them and better for everyone all round. I could be wrong, but I believe that it would be a better way, in the longer run, to achieve everyone’s objective of removing the scourge of the type of poverty that exists in these countries, with which we are entirely unfamiliar in the United Kingdom.

[Patrick Grady]

I thank my hon. Friend for giving way again; he is being very generous with his time, as he is in so many aspects of his conduct. One country in central Africa, the Democratic Republic of the Congo, should be one of the richest countries in the world. We all carry a little bit of the DRC around with us in our pockets because that is where the coltan that makes our mobile phones comes from. Yet because of the factors he is describing, it is one of the world’s worst conflict zones. Does he agree that effective tax treaties would not only mobilise resources for Governments in such countries to invest in the development of those countries but help to strengthen their governance, bureaucratic and civil service structures, which would in itself provide stability and development?

[Roger Mullin]

I agree entirely. I will respond to that with a slight oversimplification. Let us look at it in this way. If a country has become solely dependent on aid funding for its development and does not have full control of its own taxation and its own mineral resources, what kind of governance structure is set up to accommodate that? It will be about people chasing aid funding, not developing and liberating themselves economically. In some countries, quite a large of part of their administration and democracy is based on managing aid-related matters much less than on managing its own taxation and related matters. Therefore, the infrastructure will benefit through such moves.

I think that the Bill will provide a further advantage for the United Kingdom Government. In another field, I have been trying to persuade the Government to respond to my representations about international criminal activity in Scottish limited partnerships. I am delighted to see that the Financial Secretary is present to respond to the debate, because last week we had what I thought was an extremely constructive meeting about the issue. We recognised that to address the issue of Scottish limited partnerships we had to involve not merely the Treasury but the Home Office and its Criminal Finances Bill, as well as the businesses that would be conducting a consultation. Three different partners would need to be brought together, so that we could begin to create a joined-up approach.

What I am saying, and what my simple Bill is saying, is this. Would it not it be a good idea if those who are responsible for negotiating tax treaties with countries in the developing world had to take reasonable account of our own Government’s international aid policy, because otherwise the Government’s international aid policies, and what they want to achieve in that regard, could be countered in a negative way through the negotiation of tax treaties by others who do not support those aims? It must surely be helpful to governance here, as well as in other countries, to create a system that is much more joined-up. That is surely in everyone’s interests. Who is going to argue against it? Well, my hon. Friends and I can probably predict who, but it seems to me that no rational person could object to a Government’s pursuing their aims in a joined-up and rational manner.

[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)]

I congratulate my hon. Friend on bringing this extremely important issue to our attention. Does he agree that his proposals would also go some way towards creating sustainable jobs and livelihoods in developing countries, an ambition that sits firmly at the heart of the sustainable development goals that the UK Government are signed up to achieve?

[Roger Mullin]

I strongly agree with my hon. Friend. The joined-up approach that I mentioned is not just within Departments; it comes about through international commitments that the Government have made to others. It is therefore good that we sign wider international treaties relating to development.

[Hannah Bardell (Livingston) (SNP)]

“Trade over aid” was mentioned earlier. Many companies and organisations in the United Kingdom, and particularly in Scotland, will benefit from the Bill. The Glasgow film-maker Carol Cooke, who runs Scrumptious Productions, works with Barefoot in Business in Uganda to support grassroots women’s organisations and encourage women to run their own local businesses. The Bill will help more businesses of that kind, in the UK and specifically in Scotland, to go out to countries that are trying to develop their local economies.

[Roger Mullin]

That is a wonderful example. Double taxation treaties will benefit people in a wider sense—a cultural sense—although that is not stated in the Bill. If we can achieve fairer tax and fairer trade, along with mutual respect and more cross-pollination between countries than we have today, that, in its own modest way, will contribute to a more peaceful world. Generally, the more people engage with each other, the less likely they are to deal with each other in less than rational ways.

[Mark Durkan (Foyle) (SDLP)]

I commend the work that the hon. Gentleman has done on the Bill, and, of course, the work done by ActionAid. He has referred to fair tax and fair trade. I hope that the Bill will proceed, so that it can be improved in one significant respect. If there are indeed to be the new trade deals with developing countries that we are told there will have to be in the post-Brexit world, they should not take place without new tax treaties. The Bill deals with when such tax treaties are introduced, but it does not insist on their creation. That would be insisted on if new trade deals had to be accompanied by new tax treaties.

--- Later in debate ---

[Roger Mullin]

My main response to the hon. Gentleman is to apologise for being higher up the ballot than he is, because obviously he could have made a much better job of this than I have, but I hope that he appreciates my modest efforts. I agree with what he said. This is a modest Bill; it does not ask for anything particularly dramatic. I am only too well aware that it is likely to have technical flaws that the Government would like to address. If the Bill progresses to Committee, I would fully expect amendments to be tabled and debated, because that is what this process is about. A Second Reading debate is about the principles of a Bill, not about whether every i has been dotted and every t crossed. I would be keen to see the hon. Gentleman’s point brought in to strengthen the Bill, if it progresses.

[Kirsty Blackman (Aberdeen North) (SNP)]

I appreciate my hon. Friend promoting the Bill. Following on from the point made by the hon. Member for Foyle (Mark Durkan), does my hon. Friend agree that, if the UK is going to be much more responsible for negotiating trade deals than it has been in recent years, it would be good to start the process with a big gesture of good will to put us on a much better footing with regard to negotiating both trade and tax deals in future?

[Roger Mullin]

My hon. Friend makes a very good point.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. I appreciate that the hon. Gentleman is answering the point made by the hon. Member for Aberdeen North (Kirsty Blackman), but—I am not particularly criticising the hon. Gentleman, who addresses this House with expert rhetoric and I can always hear what he says—I am taking this opportunity to make a point about other Members who are sitting in that corner of the Chamber. It is not just an old-fashioned rule that when you stand up to speak, you must address the Chair; if you do not, your voice goes into the corner and the Minister, other Front Benchers and I cannot hear what is being said. I appeal to Members that, even though they are currently exchanging interventions with one another in that corner of the Chamber, they please address the Chair, because everybody else wants to hear what is being said. I am not criticising the hon. Gentleman; I am just asking for his co-operation.

[Roger Mullin]

Thank you, Madam Deputy Speaker, for your wise words and for giving me the compliment that others in the Chamber wish to listen to me.

On the post-Brexit situation, I am sure that many hon. Members will acknowledge that there has been great concern about the imbalance between the negotiating ability of the UK Government, who have not employed negotiators for many years, and the capacity of the 27 remaining EU countries, which will have access to all the negotiators. It is thought that the Government will be at a disadvantage by having to face large numbers of really skilled negotiators and using people who may be less skilled.

I ask the Government to think about what we are saying about how treaties are negotiated between a country as powerful as the UK and countries such as Malawi and Namibia. I have been in countries that do not have any of their own negotiators. Even worse, they sometimes have to bring in people from a country in the developed world to assist them in negotiating with that very country. When I was in a country in Africa, I worked alongside a German who was funded by the aid organisation GTZ, and part of his task was to negotiate on behalf of that country with the German Government. We can see that there is scope for difficulty—compromise and the like—in all that. We need to make sure that we build capacity in such countries to enable them to ensure fairness. There is an ethical responsibility on us to ensure that we deal with those countries fairly, which is in the interests of everyone.

The Minister is keen to have sufficient time to respond, so I will leave my remarks there, other than to say that I am very grateful to hon. Members for staying and showing an interest in what, for me, is an important matter. I wish everyone a happy Christmas.

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[Jane Ellison]

There are two things I would say. First, our work on double taxation treaties cannot be seen in isolation from the wider work we have led through the OECD on the BEPS project and a lot of the legislation we have passed. Since just 2015, there have been more than 30 different measures that will come into effect on avoidance and evasion.

My second point, to reiterate what I was saying before I took the hon. Gentleman’s intervention, is that these are mutually agreed treaties. If a country is not comfortable with anything being proposed—not that the UK would propose anything close to what he suggested—the treaty is mutually agreed and it is right that we respect the balance developing countries wish to strike in negotiations as much as we would respect any country’s position. Our network of treaties with developing countries demonstrates that. We have no power to force a developing country to sign a treaty that is against its interests, and would never try to do so. If the UK and a potential treaty partner cannot come to an agreement that satisfies us both, the treaty simply will not go ahead.

I turn to some of the specific issues that the Bill would entail for any Government negotiating such treaties, because while we respect and agree with the thrust of the Bill’s intent, we do not think we could, from a technical point of view, carry out some of the analysis that the Bill suggests.

Let us take, for example, the idea of assessing the impact. Given the long timescales, the complex and shifting interactions with domestic law and the lack of a reliable comparator, we believe it is simply not possible to produce meaningful estimates of the revenue effects of a tax treaty in the sort of timeframe that the hon. Member for Kirkcaldy and Cowdenbeath is suggesting. These are long-term projects with partner countries. Successive Governments have never attempted to produce assessments of the effect on the UK, let alone for a partner country. To attempt to do the latter—to assess the impact for the partner country—would very likely not be welcomed by that country, as it would essentially represent the UK’s uninvited judgment of its tax policies. I entirely endorse his comments about mutual respect. However well intentioned, the idea of our passing judgment on another country’s tax policy runs counter to the key principle of mutual respect.

[Roger Mullin]

I am afraid that I do not accept the Minister’s point about evaluation for the following reasons. She says we have very good treaties, which are well respected and work well. How do we know that they work well if there is no evaluation of them? No one was suggesting that any evaluation would be one-sided. It is perfectly possible to have bilateral or multilateral evaluations.

[Jane Ellison]

I understand the hon. Gentleman’s point, but I still cannot agree with him. He asks how we can show benefits. I repeat that countries enter into these agreements willingly. We have over 130 of them, and there are more in the process of renegotiation, particularly those that are outdated. Countries would not be seeking to renegotiate or enter into that bilateral discussion if they did not feel there was mutual benefit in their doing so.

I have recently signed several such treaties—we have recently exchanged treaties with Colombia and Lesotho—and had the opportunity to talk to countries about why they do it, and it is clear they believe it is to our mutual advantage. Over time, these bilateral relationships must be to our mutual advantage. It is also worth noting that countries can rescind treaties. If countries did not think it to their advantage, they could rescind the treaties. We have not locked countries into these arrangements; they are entered into by mutual agreement, and countries can exit from them.

The Bill also asks us to assess the benefits of foreign direct investment, but again that would be very difficult, if not impossible, on the basis that FDI depends on such a wide range of factors. Investors will consider all sorts of things, including: existing and planned infrastructure; changes to the country’s legal system; political stability—often critical in the developing world; the education level of the workforce; and access to markets. The idea that we could assess in isolation the direct contribution of a tax treaty is impracticable. It would be part of a mix that moves a developing country from poverty to greater wealth; during that journey, all those things, and more, begin to fall into place to produce an environment in which wealth can be created to the benefit of the country because people want to invest there. To analyse one of those things in isolation, however, would be an extremely difficult proposition.

Commercial Financial Dispute Resolution Platform

Roger Mullin Excerpts

Thursday 15th December 2016 Commons Chamber

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

I shall be mercifully brief. I am afraid I have a slight throat infection, so I am forced into brevity against my better judgment.

I would like to address just one area: culture. Many outstanding speeches have gone into lots of detail on the way in which people have been crucified by the banks through the mis-selling of products that were entirely unsuitable—that were not transparent and simply existed, at the end of the day, to allow people to asset-strip perfectly good businesses in our society. I have a number of constituents who have been affected. I will not go into great detail on them because, like those of my hon. Friend the Member for Aberdeen South (Callum McCaig), they do not particularly want to be named, and I fear that if I give too many details, others might find out who they are. One of them was a victim of Clydesdale bank, then National Australia Bank, and then the utterly appalling Cerberus. They have, as he put it, stolen his assets and put him completely out of business—a family business—creating problems not just for him but for his entire family. Another businessman said to me of the Clydesdale bank-NAB-Cerberus lot: “They have destroyed a business, and the mafia couldn’t have bettered the way in which they did it.”

A business close to the boundary of my constituency was promised in statements by Ross McEwan of RBS that proper mechanisms would put in place, and that there would be proper resolution, so that it would get back fees that were unsustainable and quite ridiculous. It then found that what RBS did not state was that it was surrounding this with such difficult conditions that this medium-sized business in central Scotland is unable to get back a penny of—would you believe?— £1.8 million in fees that RBS is imposing on it.

At the heart of this is a cultural problem of a particular sort. It is fundamentally about a complete lack of ethics in the banking sector in relation to businesses, including small businesses. Broadly speaking, there are two major ways in which one can look at ethics. The first is the so-called ontological approach—looking at the processes along the way. Were those processes properly transparent, and was the information properly provided, so that along the route, before one sees an outcome, it can be expected that banks operate ethically? Banks have demonstrably failed on those measures, so from the ontological point of view, they fail the test of operating ethically.

Of more interest to me from an ethical standpoint is the so-called consequentialist view—looking at the outcomes of the banks’ behaviour. Judged on that basis, they have demonstrably completely failed this community—small and medium-sized businesses in this country—and society as a whole. We can look at this from the point of view of medical ethics. The medical profession says that one should operate on the principle of non-maleficence; basically, one has an obligation not to inflict harm intentionally. If ever there was a case of operating to inflict harm intentionally, in order to gain from the destruction of businesses, it is the way in which many of these banks have been operating. We need to get action on this.

I support the motion, but there are two additional things that I would like to see. First, there should be imposed on the entire banking sector a proper and rigorous duty of care towards its customers. Unless we get a duty of care, the banks will continue to have an easy path towards ignoring the rights of individuals and businesses, and potentially continuing to destroy them for their own gain. Secondly, there should be far greater strengthening of support for whistleblowers in the banking community. The Government should contemplate putting in such severe penalties against financial institutions that they are deterred from blackmailing and harassing people who are doing society a favour, because, so often, it is the whistleblower who suffers, rather than the perpetrator of the crime.