Equitable Life

Rosie Winterton Excerpts

Thursday 21st January 2021 Commons Chamber

[Bob Blackman (Harrow East) (Con) [V]]

I beg to move,

That this House expresses grave concern regarding the Government’s continued inaction with respect to the injustice suffered by Equitable Life policyholders, the vast majority of whom have only received partial compensation compared to the confirmed losses directly attributed to regulatory failures despite the Government’s acceptance of the Parliamentary Ombudsman’s findings to compensate victims in full in relation to the maladministration of Equitable Life; notes the concern previously expressed by the Public Accounts Committee on the transparency and accuracy of the payments being made to victims; further notes the Government’s failure to fulfil the Committee’s request to publish an intelligible and transparent explanation to policyholders on how to verify the correctness of the compensation they have received; notes examples of grossly inaccurate payments, adjusted only when identified by policyholders, gathered by the Equitable Members Action Group (EMAG); notes the Government’s continued insistence that there have been no mistakes in the methodology for calculating payments to policyholders; and therefore calls on the Public Accounts Committee and the Public Administration and Constitutional Affairs Committee to establish a joint inquiry into the accuracy of the payments made to victims of the Equitable Life scandal.

This debate has been delayed since 26 March 2020 because of the covid pandemic. I thank the Backbench Business Committee for finding the time for it, and the Leader of the House and Mr Speaker for allowing us to participate virtually in debates so that we can explore these issues in some detail. I declare my interest as co-chairman of the all-party parliamentary group for justice for Equitable Life policyholders. I co-chair the group with the hon. Member for Leeds North East (Fabian Hamilton), who sadly has a prior commitment and cannot be with us this afternoon. Our all-party group now has 289 members—almost a majority of the House—which demonstrates how important the issue is to all our constituents.

I want to set out several things during the debate and to frame it appropriately. The Equitable Life case is absolutely unique. There have been other failures of pension schemes and of financial institutions—failures that unfortunately happened, and where, quite rightly, the Government have not chosen to bail out the organisations. But this failure was unique. Back in the 1980s, Equitable Life started what can only be described as a Ponzi scheme. I distance the current Equitable Life board from what was going on in the 1980s, but the company then deliberately set out to create a scheme whereby it promised bonuses that could not be achieved and could not be sustained in the long term.

As a result, over 1 million people invested their money with Equitable Life, in the expectation that it was a safe and secure environment in which to hold their money. That led to a position in which it was all very well while the money was coming in, but when the money had to be paid out in such a way that the scheme was recognised as being unsustainable, action clearly had to be taken.

The Equitable Life case is unique because, of course, it was a conspiracy between Equitable Life, the regulator and the Government of the day. Equitable Life was considered too big to fail because if it did, the Government would have had to pick up the costs. The scandal went on, and the House of Lords was involved in setting aside the position way back in 1999, as a result of which Equitable Life closed to new business in 2000.

Some 10 and a half years ago, I was proud to stand and be elected on a manifesto—as was my hon. Friend the Minister—that promised full and proper compensation for the victims of the Equitable Life scam. Basically, people lost their livelihoods and the pension that they all looked forward to in their old age. It should be recognised that Equitable Life victims are typically retired nurses, teachers, civil servants and factory and shop workers, plus small business owners, who had no choice following the scandal but to set up a personal pension. The majority of those individuals had less than £20,000 in their pension pot.

In 2010, we promised the victims proper and full compensation, neither of which has been delivered. Almost 1 million pension savers have received just 22% of the losses they suffered following maladministration. It is worth reminding the House that way back in 2008 the parliamentary ombudsman ruled that this was the most severe case of maladministration ever seen and that the victims’ loss was directly attributable to a decade of serious, serial regulatory maladministration. It is therefore right that we set out to compensate the individuals affected.

So far, the Treasury has refused to disclose the full workings of the calculations of the payments that have been made. That can hardly be considered transparent. In 2010, we promised that victims’ losses amounted to £4.3 billion and that they would be provided with full compensation. The amount was later revised to £4.1 billion, but so far only £1.5 billion has been allocated for compensation. The Government allocated £620 million to those already receiving an annuity, leaving only £780 million to share among the 1 million other victims, plus £100 million of contingency. That has meant that the pension savers have received only 22.4% of the money that they lost as a consequence of a decade of failure by the Treasury and the financial regulators.

Let us be clear about what else has happened. For some bizarre reason that I have never been able to fathom, those people who were classified as the pre-1992 trapped annuitants—the most vulnerable and the oldest victims of this scam—were excluded from the scheme. It is true that we were able, through lobbying and the good work of Ministers, to ensure that those victims received a one-off payment of £5,000, increased to £10,000 if they were on pension credit. That went some way towards compensating them.

The reality is that to compensate the entirety of those pre-1992 victims would cost no more than £100 million. They were excluded because of the position on their having taken out their policy before 1 September 1992. The question of what happened between them taking out their policies and 1 September 1992 seems bizarre. The ruling seems to have been that they could not have known that this was a Ponzi scheme and they could not have known about the regulatory failure prior to 1 September 1992, so even though they were in ignorance, they should be excluded. In my view, that is an injustice that we need to put right.

In addition, we seek to achieve full payment for the 895,000 traced pension saver victims, which would finally settle the unpaid debts covering their losses that were incurred through no fault of their own. That would cost £2.6 billion and could be phased over time. We also want equality of treatment for the pre-1992 trapped annuitants, which could easily be met with the underspend of the £1.5 billion already allocated.

We need to see full transparency on the Treasury calculations. There remains serious doubt over the accuracy and reliability of the methodology that has been used by the Treasury to calculate moneys owed to qualifying Equitable Life policyholders as part of the compensation scheme that was established under the Equitable Life (Payments) Act 2010. The Treasury should disclose full details of how those calculations were made. The motion calls for the Public Accounts Committee and the Public Administration and Constitutional Affairs Committee to hold a joint inquiry into payment accuracy.

The Equitable Members Action Group, which represents the Equitable Life victims, has uncovered cases where policyholders were significantly undercompensated for their losses due to errors in the Treasury’s calculations. In those instances, no attempt was made by the Treasury to contact the policyholders, and cases were only revealed following appeals made to the independent review panel. In all cases of appeal to the independent review panel, the appeal was upheld and the panel made recalculations that resulted in increased payments made to the policyholder. Not a single appeal has failed to be upheld. The most extreme case brought to our attention so far is that of a policyholder whose losses were calculated as £17, when they were actually £8,661. He won on appeal. EMAG is calling for a joint inquiry into the accuracy of the payments made to victims of the scandal, which is something we all wish to see.

We are all living through an immensely challenging and unpredictable period due to covid and the current economic position. The virus has had a significant impact on people of all ages, but especially the elderly. Many Equitable Life victims are currently confined to their homes, increasingly vulnerable and worried for their futures, which makes the need for this issue to be settled all the more important. This, after all, is a debt of honour. Equitable Life victims were pushed to one side as a direct consequence of the timing of the 2008 financial crisis, which saw the UK’s banking corporations bailed out, while hard-working and responsible pension savers took the hit. The same must not happen again.

Equitable Life victims did the right thing and saved prudently for their retirement. The Government should now do the right thing by them. The current crisis has shown that money can be found when the political will exists. As I said, this is a debt of honour that must finally be paid. The compensation payments would be spent on or shared down the generations, and in doing so would be recycled in the economy, supporting the economic recovery that we all need.

I thank you, Madam Deputy Speaker, for allowing me to introduce the debate. I look forward to hearing contributions from Members on both sides of the House and to the response from my hon. Friend the Economic Secretary to the Treasury.

[Madam Deputy Speaker (Dame Rosie Winterton)]

As colleagues will know, a large number of Members wish to contribute to the debate, so I will introduce an immediate four-minute time limit. When Members are speaking virtually, a clock will appear on the screens of Members participating virtually and the screens in the Chamber. For Members participating physically, the usual clock in the Chamber will operate.

Financial Services Bill

Rosie Winterton Excerpts

Report stage & 3rd reading & 3rd reading: House of Commons & Report stage: House of Commons
Wednesday 13th January 2021 Commons Chamber

[The Economic Secretary to the Treasury (John Glen)]

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

[Madam Deputy Speaker (Dame Rosie Winterton)]

With this it will be convenient to discuss the following:

Government new clause 28—Forfeiture of money: electronic money institutions and payment institutions.

New clause 1—Report into standards of conduct and ethics in the financial services industry—

“(1) The Treasury must prepare and publish a report into standards of conduct and ethics of businesses regulated or authorised by the Financial Conduct Authority.

(2) The report must include—

(a) an assessment of the prevalence of unlawful practices in the sector, including—

(i) tax evasion, and

(ii) money laundering;

(b) an assessment of the prevalence of other practices including—

(i) the charging of excessive fees,

(ii) the provision of inadequate advice to customers, and

(iii) tax avoidance;

(c) consideration of the case for the establishment of a public inquiry into standards of conduct and ethics within the UK financial services industry, under the Inquiries Act 2005; and

(d) an assessment of the present arrangements for the regulation of the financial services sector and the Government’s plans for further reform of the regulatory system.

(3) This report must be laid before Parliament within six months of this Act being passed.”

This new clause would require the Government to publish a report into the standards of conduct and ethics of businesses regulated or authorised by the Financial Conduct Authority, including consideration of the case for the establishment of a public inquiry.

New clause 2—Report into anticipated use of the Debt Respite Scheme—

“(1) The Treasury must prepare and publish a report into the anticipated use of the Debt Respite Scheme over the five years following the passing of this Act.

(2) The report must include an assessment of—

(a) the number of people likely to use the Breathing Space scheme

(b) the number of people likely to be offered a Statutory Debt Repayment Plan,

(c) the scale of personal and household debt within the UK economy and the impact of this on use of the Debt Respite Scheme,

(d) the effectiveness of current mechanisms to prevent people having recourse to the Debt Respite Scheme, and

(e) the potential for additional policies and mechanisms to complement the work of the Debt Respite Scheme.

(3) This report must be laid before Parliament within six months of this Act being passed.”

This new clause would require the Treasury to publish a report into the anticipated use of the Debt Respite Scheme, including the effectiveness of the current mechanisms to prevent people having recourse to the Debt Respite Scheme.

New clause 4—Facilitation of economic crime—

“(1) A relevant body commits an offence if it—

(a) facilitates an economic crime; or

(b) fails to take the necessary steps to prevent an economic crime from being committed by a person acting in the capacity of the relevant body.

(2) In subsection (1), a ‘relevant body’ is any person, including a body of persons corporate or unincorporated, authorised by or registered with the Financial Conduct Authority.

(3) In subsection (1), an ‘economic crime’ means—

(a) fraud, as defined in the Fraud Act 2006;

(b) false accounting, as defined in the Theft Act 1968; or

(c) an offence under the following sections of the Proceeds of Crime Act 2002—

(i) section 327 (concealing etc criminal property);

(ii) section 328 (arrangements etc concerning the acquisition, retention, use or control of criminal property); and

(iii) section 329 (acquisition, use and possession of criminal property).

(4) In subsection (1), ‘facilitates an economic crime’ means—

(a) is knowingly concerned in or takes steps with a view to any of the offences in subsection (3); or

(b) aids, abets, counsels or procures the commission of an offence in subsection (3).

(5) In proceedings for an offence under subsection (1), it is a defence for the relevant body to show that—

(a) it had in place such prevention procedures as it was reasonable in all circumstances for it to have in place;

(b) it was not reasonable in the circumstances to expect it to have any prevention procedures in place.

(6) A relevant body guilty of an offence under this section shall be liable—

(a) on conviction on indictment, to a fine;

(b) on summary conviction in England and Wales, to a fine;

(c) on summary conviction in Scotland or Northern Ireland, to a fine not exceeding the statutory maximum.

(7) If the offence is proved to have been committed with the consent or connivance of—

(a) a director, manager, secretary or other similar officer of the relevant body, or

(b) a person who was purporting to act in any such capacity,

this person (as well as the relevant body) is guilty of the offence and liable to be proceeded against and punished accordingly.”

This new clause would make it an offence for a relevant body authorised or registered by the Financial Conduct Authority to facilitate, or fail to prevent, specified economic crimes.

New clause 6—Money laundering: electronic money institutions—

‘(1) The Proceeds of Crime Act 2002 is amended as follows.

(2) In section 303Z1 (Application for account freezing order)—

(a) In subsection (1) after “bank” insert “, electronic money institution”

(b) In subsection (6) after “Building Societies Act 1986;” insert—

“‘electronic money institution’ has the same meaning as in the Electronic Money Regulations 2011.”

(3) In section 303Z2 (Restrictions on making of application under section 303Z1), in subsection (3) after “bank” insert “, electronic money institution.”

(4) In section 303Z6 (Restriction on proceedings and remedies), in subsection (1) after “bank” insert “, electronic money institution.”

(5) In section 303Z8 (“The minimum amount”), in subsection (4) after “bank” insert “, electronic money institution.”

(6) In section 303Z9 (“Account forfeiture notice”), in subsection (6)(b) after “bank” insert “, electronic money institution.”

(7) In section 303Z11 (“Lapse of account forfeiture notice”)—

(a) in subsection (6) after “bank” insert “, electronic money institution”

(b) in subsection (7) after “If the bank” insert “, electronic money institution”

(c) in subsection (7) after “on the bank” insert “, electronic money institution.”

(8) In section 303Z14 (“Forfeiture order”), in subsection (7)(a) after “bank” insert “, electronic money institution.”

(9) In section 327 (Concealing etc), after subsection (2C) insert—

“(2D) An electronic money institution that does an act mentioned in paragraph (c) or (d) of subsection (1) does not commit an offence under that subsection if the value of the criminal property concerned is less than the threshold amount determined under section 339A for the act.”

(10) In section 328 (Arrangements), after subsection (5) insert—

“(6) An electronic money institution that does an act mentioned in subsection (1) does not commit an offence under that subsection if the arrangement facilitates the acquisition, retention, use or control of criminal property of a value that is less than the threshold amount determined under section 339A for the act.”

(11) In section 329 (Acquisition, use and possession), after subsection (2C) insert—

“(2D) An electronic money institution that does an act mentioned in subsection (1) does not commit an offence under that subsection if the value of the criminal property concerned is less than the threshold amount determined under section 339A for the act.”

(12) In section 339A (Threshold amounts)—

(a) in subsection (1) leave out “327(2C), 328(5) and 329(2C)” and insert “327(2C), 327(2D), 328(5), 328(6), 329(2C) and 329(2D)”

(b) in subsection (2) after “deposit-taking body” insert “or electronic money institution”

(c) in subsection (3) after “deposit-taking body” insert “or electronic money institution”

(d) in subsection (3)(a) after “deposit-taking body’s” insert “or electronic money institution’s”

(e) in subsection (3)(b) after “deposit-taking body” insert “or electronic money institution”

(f) in subsection (4) after “deposit-taking body” insert “or electronic money institution”

(g) in subsection (8) after “deposit-taking body” insert “or electronic money institution.

(13) In section 340 (Interpretation), after subsection (14) insert—

“(14A) “Electronic money institution” has the same meaning as in the Electronic Money Regulations 2011.”’

This new clause would update definitions in the Proceeds of Crime Act 2002 to reflect the growth of financial technology companies in the UK by equalising the treatment of electronic money institutions with banks in regard to money laundering regulations.

New clause 7—Regulation of buy-now-pay-later firms—

“Within three months of this Act being passed, the Treasury must by statutory regulations make provision for the protection of consumers from unaffordable debt by requiring the FCA to regulate—

(a) buy-now-pay-later credit services, and

(b) other lending services that have non-interest-bearing elements.”

This new clause would bring the non-interest-bearing elements of buy-now-pay-later lending and similar services under the regulatory ambit of the FCA.

New clause 8—European Union regulatory equivalence for UK-based financial services businesses—

“(1) Within three months of this Act being passed, the Treasury must prepare and publish a report on progress towards regulatory equivalence recognition for UK-based financial services firms operating within the European Union.

(2) This report should include—

(a) the status of negotiations towards the recognition of regulatory equivalence for UK financial services firms operating within the European Union;

(b) a statement on areas in where equivalence recognition has been granted to UK based businesses on the same basis as which the UK has granted equivalence recognition to EU based businesses; and

(c) a statement on where such equivalence recognition has not been granted.”

This new clause would require a report to be published on progress towards, or completion of, the equivalence recognition for UK firms which the Government hopes to see following the Chancellor’s statement on EU-based firms operating in the UK.

New clause 9—Debt Respite Scheme: review—

“(1) The Chancellor of the Exchequer must review the impact on debt in parts of the United Kingdom and regions of England of the changes made by section 32 of this Act and lay a report of that review before the House of Commons within six months of the date on which this Act receives Royal Assent.

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

(a) households,

(b) individuals with protected characteristic as defined by the Equality Act 2010,

(c) small companies as defined by the Companies Act 2006.

(3) In this section—

‘parts of the United Kingdom’ means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland; and

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

This new clause would require a review of the impact on debt of the changes made to the Financial Guidance and Claims Act 2018 in section 32.

New clause 10—Legal protections for retail clients against the mis-selling of financial services—

‘(1) Regulation 3 (Private Person) of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001 is amended as follows.

(2) In paragraph 1(a), after “individual”, insert “, partnership or body corporate that is or would be classified as a retail client”.

(3) In paragraph 1(b), leave out “who is not an individual” and insert “not within the definition of paragraph 1(a)”.

(4) For the purposes of this regulation, a “retail client” means a client who is not a professional client within the meaning set out in Annex II of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU.’

This new clause seeks to give retail clients greater legal protections against the mis-selling of financial services products.

New clause 11—Legal protections for small businesses against the mis-selling of financial services—

‘(1) Regulation 3 (Private Person) of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001 is amended as follows.

(2) In sub-paragraph 1(a), leave out “individual” and insert “relevant person”.

(3) In sub-paragraph 1(b), leave out “individual” and insert “relevant person”.

(4) After paragraph 1, insert—

“(1A) For the purposes of this regulation, a ‘relevant person’ means—

(a) any individual;

(b) any body corporate which meets the qualifying conditions for a small company under sections 382 and 383 Companies Act 2006 in the financial year in which the cause of action arises;

(c) any partnership which would, if it were a body corporate, meet the qualifying conditions for a small company under section 382 Companies Act 2006 in the financial year in which the cause of action arises.”’

This new clause seeks to give small businesses greater legal protections against the mis-selling of financial services products.

New clause 12—Pre-commencement impact assessment of leaving the EU Customs Union—

“(1) No Minister of the Crown or public authority may appoint a day for the commencement of any provision of this Act until a Minister of the Crown has laid before the House of Commons an impact assessment of—

(a) disapplying EU rules; and

(b) applying rules different from those of the EU

as a consequence of any provision of this Act.

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

(a) business investment,

(b) employment,

(c) productivity,

(d) inflation,

(e) financial stability, and

(f) financial liquidity.

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

(4) The review must also estimate whether these effects are likely to have been different in the following scenarios—

(a) if the UK had left the EU withdrawal transition period without a negotiated comprehensive free trade agreement, or

(b) if the UK had left the EU withdrawal transition period with a negotiated agreement, and remained in the single market and customs union.

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

(6) In this section—

‘parts of the United Kingdom’ means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland; and

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

This new clause would require the Government to produce an impact assessment before disapplying EU rules or applying those different to those of the EU; and comparing such with various scenarios of UK-EU relations.

New clause 13—Review of Impact of Scottish National Investment Bank Powers—

“(1) The Chancellor of the Exchequer must review the effect of the use of the powers in this Act in Scotland and lay a report of that review before the House of Commons within six months of the date on which this Act receives Royal Assent.

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

(a) business investment,

(b) employment,

(c) productivity,

(d) inflation,

(e) financial stability, and

(f) financial liquidity.

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

(a) the Scottish Government is given no new financial powers with respect to carrying over reserves between financial years,

(b) the Scottish Government is able to carry over greater reserves between financial years for use by the Scottish National Investment Bank.

(4) The review must under subparagraph 4(b) consider the effect of raising the reserve limit by—

(a) £100 million,

(b) £250 million,

(c) £500 million, and

(d) £1,000 million.”

This new clause requires a review of the impact of providing Scottish Government powers to allow the SNIB to carry over reserves between financial years beyond its current £100m limit.

New clause 14—Application of money laundering regulations to overseas trustees: review of effect on tax revenues—

“(1) The Chancellor of the Exchequer must review the effects on tax revenues of section 31 and lay a report of that review before the House of Commons within six months of the date on which this Act receives Royal Assent.

(2) The review under sub-paragraph (1) must consider—

(a) the expected change in corporation and income tax paid attributable to the provisions in this Schedule; and

(b) an estimate of any change attributable to the provisions of section 31 in the difference between the amount of tax required to be paid to the Commissioners and the amount paid.

(3) The review must under subparagraph (2)(b) consider taxes payable by the owners and employees of Scottish Limited Partnerships.”

This new clause would require the Chancellor of the Exchequer to review the effect on public finances, and on reducing the tax gap, of section 31, and in particular on the taxes payable by owners and employees of Scottish Limited Partnerships.

New clause 15—Parliamentary scrutiny of FCA provisions—

“Any provision made by the Financial Conduct Authority under this Act may not be made unless a draft of the provision has been laid before and approved by a resolution of the House of Commons.”

This new clause subjects FCA provisions under this Act to the affirmative scrutiny procedure in the House of Commons.

New clause 16—Scrutiny of FCA Powers by committees—

“(1) No provision may be made by the Financial Conduct Authority under this Act unless the conditions in subsection (2) are satisfied.

(2) The conditions are that—

(a) a new statutory committee comprising Members of the House of Commons has been established to scrutinise financial regulation, and

(b) a new statutory committee comprising Members of the House of Lords has been established to scrutinise financial regulation.

(3) The Treasury must, by regulations, make provision for and about those committees.

(4) Those regulations must provide that the committees have at least as much power as the relevant committees of the European Union.”

This new clause requires statutory financial regulation scrutiny committees to be established before the FCA can make provisions under this Bill.

New clause 17—Review of impact of Act on UK meeting Paris climate change commitments—

“The Chancellor of the Exchequer must conduct an assessment of the impact of this Act on the UK meeting its Paris climate change commitments, and lay it before the House of Commons within six months of the day on which this Act receives Royal Assent.”

This new clause would require the Chancellor of the Exchequer to review the impact of the Bill on the UK meeting its Paris climate change commitments.

New clause 18—Review of impact of Act on UK meeting UN Sustainable Development Goals—

“The Chancellor of the Exchequer must conduct an assessment of the impact of this Act on the UK meeting the UN Sustainable Development Goals, and lay it before the House of Commons within six months of the day on which this Act receives Royal Assent.”

This new clause would require the Chancellor of the Exchequer to review the impact of the Bill on the UK meeting the UN Sustainable Development Goals.

New clause 19—Money laundering and overseas trustees: review—

“(1) The Treasury must, within six months of this Act being passed, prepare, publish and lay before Parliament a report on the effects on money laundering of the provisions in section 31 of this Act.

(2) The report must address—

(a) the anticipated change to the volume of money laundering attributable to the provisions of section 31; and

(b) alleged money laundering involving overseas trusts by the owners and employees of Scottish Limited Partnerships.”

This new clause would require the Treasury to review the effects on money laundering of the provisions in section 31 of this Act, and in particular on the use of overseas trusts for the purposes of money laundering by owners and employees of Scottish Limited Partnerships.

New clause 20—Regulatory divergence from the EU in financial services: Annual review—

“(1) The Treasury must prepare, publish and lay before Parliament an annual review of the impact of regulatory divergence in financial services from the European Union.

(2) Each annual review must consider the estimated impact of regulatory divergence in financial services in the current financial year, and for the ten subsequent financial years, on the following matters—

(a) business investment,

(b) employment,

(c) productivity,

(d) inflation,

(e) financial stability, and

(f) financial liquidity.

in each English region, and in Scotland, Wales and Northern Ireland.

(3) Each report must compare the analysis in subsection (2) to an estimate based on the following hypothetical scenarios—

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

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

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

(d) that the UK signs a comprehensive free trade agreement with the United States.

(4) The first annual report shall be published no later than 1 July 2021.”

This new clause requires a review of the impact of regulatory divergence from the European Union in financial services, which should make a comparison with various hypothetical trade deal scenarios.

New clause 21—Duty of care specification—

“(1) The Financial Services and Markets Act 2000 is amended as follows.

(2) After Section 1C insert—

‘1CA Duty of care specification

(1) In securing an appropriate degree of protection for consumers, the FCA must ensure authorised persons carrying out regulated activities are acting with a duty of care to all consumers.

(2) Matters the FCA should consider when drafting duty of care rules include, but are not limited to—

(a) the duties of authorised persons to act honestly, fairly and professionally in accordance with the best interest of their consumers;

(b) the duties of authorised persons to manage conflicts of interest fairly, both between themselves and their clients, and between clients;

(c) the extent to which the duties of authorised persons entail an ethical commitment not merely compliance with rules;

(d) that the duties must be owned by senior managers who would be accountable for their individual firm’s approach.’”

This new clause would mean that the FCA would need to ensure that financial services providers are acting with a duty of care to act in the best interests of all consumers.

New clause 22—Extension of the Breathing Space and Mental Health Crisis Moratorium—

‘(1) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 shall be amended as follows.

(2) In section 1(2), for “4th May 2021” substitute “31st January 2021”.

(3) In section 26(2), for “60 days” substitute “12 months”.’

This new clause would bring forward the start date of the Debt Respite Scheme and extend the duration of the Breathing Space Moratorium from 60 days to 12 months.

New clause 23—Impact of COVID-19 on the Debt Respite Scheme: Ministerial report—

“(1) The Treasury must prepare and publish a report on the impact of the COVID-19 pandemic on the implementation of the Debt Respite Scheme.

(2) The report must include—

(a) a statement on the extent to which changes to levels of household debt caused by the COVID-19 pandemic will affect the usage and operation of the Debt Respite Scheme;

(b) a statement on the resilience of UK households to future pandemics and other financial shocks, and how these would affect the usage and operation of the Debt Respite Scheme; and

(c) consideration of proposals for the incorporation of a no-interest loan scheme into the Debt Respite Scheme for financially vulnerable individuals affected by the COVID-19 pandemic.

(3) The report must be laid before Parliament no later than 28 February 2021.”

This new clause would require the Treasury to publish a report on the impact of the COVID-19 pandemic on the implementation of the Debt Respite Scheme, including consideration of a proposal for the incorporation of a no-interest loan scheme into the Debt Respite Scheme.

New clause 24—Mortgage contracts: regulation of management and ownership—

‘(1) Article 61 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 shall be amended as follows.

(2) After paragraph (2), insert—

“(2A) Managing a regulated mortgage contract is also a specified kind of activity.

(2B) Owning a regulated mortgage contract is also a specified kind of activity.”

(3) For sub-sub-paragraphs (3)(a)(ii) and (3)(a)(iii) substitute—

“(ii) the contract provides for the obligation of the borrower to repay to be secured by a legal mortgage of land (other than timeshare accommodation) in the United Kingdom;

(iii) at least 40% of that land is used, or is intended to be used, as or in connection with a dwelling.”

(4) After sub-paragraph (3)(c), insert—

“(d) ‘managing’ a regulated mortgage contract means having the power to exercise or to control the exercise of any of the rights of a lender under a regulated mortgage contract.

(e) ‘owning’ a regulated mortgage contract means holding the legal title to a regulated mortgage contract or to own beneficially the rights of the lender under a regulated mortgage contract.”

(5) For paragraph (4), substitute—

“(4) For the purposes of sub-paragraph (3)(a)—

(a) ‘mortgage’ includes charge and (in Scotland) a heritable security;

(b) the area of any land which comprises a building or other structure containing two or more storeys is to be taken to be the aggregate of the floor areas of each of those storeys; and

(c) ‘timeshare accommodation’ has the meaning given by section 1 of the Timeshare Act 1992(c).”’

This new clause would require the regulation of the ‘management’ and ‘ownership’ of a regulated mortgage contract.

New clause 25—Standard Variable Rates: Cap on charges for Mortgage Prisoners—

“(7) The FCA must make rules by virtue of subsection (1) in relation to introducing a cap on the interest rates charged to mortgage prisoners in relation to regulated mortgage contracts with a view to securing an appropriate degree of protection for consumers.

(8) In subsection (7) ‘mortgage prisoner’ means a consumer who cannot switch to a different lender because of their characteristics and has a regulated mortgage contract with one of the following type of firms—

(a) inactive lenders: firms authorised for mortgage lending that are no longer lending; and

(b) unregulated entities: firms not authorised for mortgage lending.

(9) The rules made by the FCA under subsection (7) must set the level of the cap on the ‘Standard Variable Rate’ at a level no more than 2 percentage points above the Bank of England base rate.

(10) In subsection (9) ‘Standard Variable Rate’ means the variable rate of interest charged under the regulated mortgage contract after the end of any initial introductory deal.

(11) The FCA must ensure any rules that it is required to make as a result of the amendment made by subsection (7) are made not later than 31st July 2021.”

This new clause would require the FCA to introduce a cap on the Standard Variable Rates charged to consumers who cannot switch to a different lender because of their characteristics and who have a regulated mortgage contract with either an inactive lender or an unregulated entity.

New clause 26—Conditions for the transfer of a regulated mortgage contract—

“(1) A regulated mortgage contract shall not be transferred without the written consent of the borrower.

(2) When seeking consent from either an existing or a new borrower the lender must provide a statement to the borrower containing sufficient information in order for them to make an informed decision.

(3) The statement provided pursuant to subsection (2) must be approved in advance by the Financial Conduct Authority and shall include—

(a) a clear explanation of the implications in terms of the interest rates which will be offered to the borrower including details of the policies and procedures which will apply for the setting of mortgage interest rates and for the making of repayments if the transfer takes place;

(b) how the transfer might affect the borrower;

(c) the name and address of the intended transferee, and of any holding company applicable;

(d) the relationship, if any, between the lender and the transferee;

(e) a description of the intended transferee and of its business, including how long it has been in operation, and details of its involvement in the management of mortgages; and

(f) confirmation that in the absence of a specific consent the existing arrangements will continue to apply.

(4) Each borrower shall be approached individually and shall be given a reasonable time within which to give or decline to give their consent.

(5) In this section, ‘regulated mortgage contract’ has the meaning given by article 61(3) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.”

This new clause would require the written consent of the borrower for the transfer of a regulated mortgage contract and require lenders to provide specified information to borrowers when seeking this consent and for this statement to be approved in advance by the FCA.

New clause 30—Offence of facilitation of or failure to prevent financial crime (No. 2)—

“(1) A financial services company commits an offence if it—

(a) facilitates, aids or abets a relevant offence;

(b) does not take all reasonable steps to prevent the commissioning of a relevant offence.

(2) A financial services company guilty of an offence under this section shall be liable—

(a) on conviction on indictment, to a fine;

(b) on summary conviction in England and Wales, to a fine;

(c) on summary conviction in Scotland or Northern Ireland, to a fine not exceeding the statutory maximum.

(3) For the purposes of this section—

‘financial services company’ means any person, including a body of persons corporate or unincorporated, authorised by or registered with the Financial Conduct Authority’;

‘relevant offence’ means—

(a) fraud, as defined in the Fraud Act 2006;

(b) false accounting, as defined in the Theft Act 1968;

(c) any offence under the following sections of the Proceeds of Crime Act 2002;

(d) tax evasion;

(e) an offence under Part 7 of the Financial Services Act 2012; and

(f) insider dealing, as defined in the Criminal Justice Act 1993.”

This new clause would create an offence in cases where financial services companies facilitate or fail to prevent financial crime.

Government amendment 15.

Amendment 13, in clause 33, page 39, line 37, at end insert—

“(c) the successor account must bear, in each financial year, at least the same level of bonus as the mature account before maturation.”

This amendment would ensure customers do not lose any bonus should their funds be moved from a matured account into a new one.

Amendment 14, in clause 33, page 39, line 37, at end insert—

“(7) Regulations under sub-paragraph (2) may only be made if the conditions in sub-paragraph (8) are met.

(8) The conditions referred to in sub-paragraph (7) are—

(a) There must be an account available to any affected customer which provides at least as generous a bonus structure as the matured account.

(b) The customer must have been successfully contacted by a relevant Department or public body.

(c) The customer must have been given full and accessible information on the effects of changing account.”

This amendment would ensure customers are contacted and informed before their funds are transferred.

Amendment 4, in clause 37, page 44, line 9, at end insert—

“(c) after subparagraph (2) insert—

(2A) A person may not be appointed as chief executive under paragraph 2(2)(b) unless they have the consent of the Treasury Committee of the House of Commons.”

This amendment would require a candidate for the position of chief executive of the FCA to receive the consent of the Treasury Committee for their appointment.

Amendment 3, in clause 37, page 44, line 14, at end insert—

“(2C) A person may not be appointed as chief executive under paragraph 2(2)(b) until the Treasury has prepared and published a report on the effectiveness of the FCA under the tenure of the previous chief executive.”

This amendment would require the Treasury to prepare and publish a report on the effectiveness of the previous chief executive in advance of the appointment of a new chief executive.

Government amendments 16 to 21.

Government new schedule 1—Forfeiture of money: electronic money institutions and payment institutions.

Government amendment 22.

Government amendment 23.

Amendment 5, in schedule 2, page 60, line 18, at end insert—

“(f) impose requirements relating to the publication of quarterly statements on portfolio holdings.”

This amendment would allow the FCA to impose requirements on investment firms to publish quarterly statements on their portfolio holdings.

Amendment 6, in schedule 2, page 60, line 18, at end insert—

“(3A) General rules made for the purpose of subsection (1) must impose requirements relating to the publication of quarterly statements on portfolio holdings.”

This amendment would require the FCA to impose requirements on investment firms to publish quarterly statements on their portfolio holdings.

Government amendments 24 to 26.

Amendment 1, in schedule 2, page 63, line 5, at end insert—

“(ba) the target for net UK emissions of greenhouse gases in 2050 as set out in the Climate Change Act 2008 as amended by the Climate Change Act (2050 Target Amendment) Order 2019, and”.

Amendment 7, in schedule 2, page 63, line 5, at end insert—

“(ba) the promotion of ethical investments with reference to the judgements of the International Court of Justice or the High Court of England and Wales concerning genocide under Article II of the United Nations Convention on the Prevention and Punishment of the Crime of Genocide, and findings of genocide or ethnic cleansing by a United Nations-mandated investigation.”

This amendment would require the FCA, when making Part 9C rules for investment firms, to have regard to findings of genocide by the courts and UN-mandated investigations.

Amendment 8, in schedule 2, page 63, line 5, at end insert—

“(ba) the likely effect of the rules on trade frictions between the UK and EU, and”.

This amendment would ensure the likely effect of the rules on trade frictions between the UK and EU are considered before Part 9C rules are taken.

Amendment 9, in schedule 2, page 63, line 5, at end insert—

“(ba) the likely effect of the rules on the UK meeting its international and domestic commitments on tackling climate change, and”.

This amendment would ensure the likely effect of the rules on the UK meeting its international and domestic commitments on tackling climate change are considered before Part 9C rules are taken.

Amendment 10, in schedule 2, page 79, line 25, after “activities” insert

“in the UK and internationally”.

This amendment would ensure the likely effect of the rules on the relative standing of the United Kingdom as a place for internationally active credit institutions and investment firms to be based or to carry on activities are considered both in terms of their UK and international activities before Part CRR rules are taken.

Amendment 2, in schedule 3, page 79, line 29, at end insert—

“(ca) the target for net UK emissions of greenhouse gases in 2050 as set out in the Climate Change Act 2008 as amended by the Climate Change Act (2050 Target Amendment) Order 2019, and”.

Amendment 11, in schedule 3, page 79, line 29, at end insert—

“(ca) the likely effect of the rules on trade frictions between the UK and EU, and”.

This amendment would ensure the likely effect of the rules on trade frictions between the UK and EU are considered before CRR rules are taken.

Amendment 12, in schedule 3, page 79, line 29, at end insert—

“(ca) the likely effect of the rules on the UK meeting its international and domestic commitments on tackling climate change, and”.

This amendment would ensure the likely effect of the rules on the UK meeting its international and domestic commitments on tackling climate change are considered before CRR rules are taken.

Government amendments 27 to 31.

[John Glen]

Our financial services sector is critical to our national effort to recover from the impacts of covid-19 and move towards a resilient, open and sustainable future for the UK economy. The Bill is the next step in a process to take back control of our financial services legislation, having left the European Union and come to the end of the transition period.

There are a large number of amendments to address, so I will speak at some length, but hopefully as succinctly as possible. Let me start with the 20 new clauses and amendments tabled in my name, which do four things. I will first address new clauses 27 and 28, new schedule 1 and amendments 16 to 20. I hope that the right hon. Member for Wolverhampton South East (Mr McFadden) will be pleased to see this set of new clauses and amendments, which have been tabled in response to an issue that he raised in Committee.

The Government remain committed to supporting the FinTech sector. The UK is widely considered to be a leading market—probably the leading market—for starting and growing a FinTech firm, and I am proud of that reputation. It has recently become clear that provisions in the Proceeds of Crime Act 2002 are creating challenges for some types of smaller firms known as e-money institutions and payment institutions. These institutions, which include industry leaders such as Revolut, Worldpay and TransferWise, have experienced significant growth over recent years. Currently, they need to submit a defence against money laundering request—which I shall refer to as a DAML from now on—to the National Crime Agency, to seek consent before proceeding with any transaction involving criminal property, however small.

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I look forward to another session of robust and informed debate, and I hope that I have provided the House with clear and reasonable explanations for the Government’s position on the amendments before us today. Thank you for your patience.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Before I call the shadow Minister, I should say that we have until 6 o’clock for this debate and a number of colleagues want to get in. I have introduced a five-minute time limit to start with, to try to accommodate some of the main people behind other amendments, but it is very likely that I will quickly have to take that down afterwards; I just warn colleagues that that may well happen.

I remind hon. Members that when a speaking limit is in effect for Back Benchers, a countdown clock will be visible on the screens of hon. Members participating virtually. For hon. Members participating physically in the Chamber, the usual clock in the Chamber will operate.

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

Madam Deputy Speaker, may I wish you, the Minister and the House a happy new year?

The Bill returns to the House at a very important moment for the country’s economy and our financial services industry. We have just come to the end of the transition period with the European Union, and we are of course in the teeth of the battle against the virus. Against a background like that, the business of legislating can seem even more prosaic than usual, and perhaps that is even more the case with a Bill such as this one. It is a mixed bag of measures dealing with everything from onshoring various EU directives to the length of the term of office for the chief executive of the Financial Conduct Authority. Some of it is a necessary consequence of our withdrawal from the European Union, and other parts look as though they have been sitting in the Treasury waiting for a legislative home, like policies hoping for a passing bus.

I want to focus on the amendments tabled in the name of the Leader of the Opposition and then turn to some of those tabled by my right hon. and hon. Friends. The first amendment I want to speak to is our amendment 1 on the UK’s net zero commitments. The Bill sets out, in schedules 2 and 3, a list of things that the regulators have to have regard to in the exercise of their new and expanded functions under the Bill. It talks of international standards and competitiveness, yet nowhere is there a mention of the overarching goal that will shape so much of our economy in the decades to come.

In this place, we have rows and arguments about all manner of issues, but sometimes the things that generate the most heat, if the Minister will pardon me the pun, are not always the biggest or most important issues. Conversely, just because an issue has bipartisan support does not make it less significant, and there is no doubt that the Climate Change Act 2008, as amended by the Climate Change Act (2050 Target Amendment) Order 2019, is one of the most significant pieces of economic legislation to pass in this country for many years.

To achieve our net zero goals will require wholesale change in many walks of life. The briefest of looks at the Committee on Climate Change’s report on how this should be done shows what the main areas will be. On energy, we need to find replacements for fossil fuels, we have to invest in the shift to hydrogen and we are still trying to make carbon capture and storage a practical reality. On transport, the transition to battery power will have to proceed at an ever-increasing pace. On housing, we need not only to build new zero-carbon homes, but to retrofit millions of existing homes with zero-carbon heating systems. Agriculture, food production and even the clothes we wear—all these things will undergo big change, and all of them will require significant financial investment.

The UK financial services sector has a huge role to play. In seeking a post-Brexit role, what better long-term mission could there be than empowering the change that we need to make to preserve the planet for future generations? This is not just my view—the Chancellor himself has said as much. In his statement on the future of financial services, given two months ago from the Government Dispatch Box, he not only announced the first green gilts, but said he wanted to see

“the full weight of…capital behind the critical global effort to tackle climate change”.—[Official Report, 9 November 2020; Vol. 683, c. 621.]

Yet this Bill, which empowers the regulators in so many other ways, is totally silent on that issue. The Minister says we might do it in the future. [Interruption.] He says from a sedentary position that we will do it in the future. He has an opportunity to do it today—he could just accept the amendment. What is the point of waiting until the future to do this, as he has indicated he will, when there is an amendment that does not seek to add any new commitments but simply to make this part of the remit of our financial services regulators?

There are many reasons, as my newly ennobled—if that is the correct word; newly honoured, perhaps—hon. Friend the Member for Wallasey (Dame Angela Eagle) said, to say no to amendments, but “not invented here” is one of the worst if the Government have indicated they are going to accept it.

The Government say they want the UK to be the centre for green finance globally, but their first legislative outing on this sector since we left the European Union says nothing about mandating the regulators of the industry to make that part of their mission. As I said, our amendment does not seek to add to the commitments on net zero that the UK has already made, which are already set out in legislation and enjoy the support of all sides of the House, but to make these part of the remit of the regulators that shape our financial services industry. There is already a move towards greater environmental investing from investment funds and from consumers who want to invest in this way, and there is a desire for these products, so why do the Government not back that up by making it part of the regulators’ remit?

We know that these commitments cannot be met without large-scale investment. To anyone who says to just leave it to the market if there is an investor desire, we also know that it cannot be done by the private sector alone. This will take both the private sector and the public sector working together and pulling in the same direction. It is in that spirit that we put forward the amendment. We ask for something that has bipartisan support, is in line with the post-Brexit goal for the sector as set out by the Chancellor himself and will make it easier for the country to achieve its commitments.

Further to that, we are also asking for something that the Minister said in recent minutes that the Government will do at some point anyway. We very much hope that, between now and six o’clock, the Government will reconsider and accept the amendment, which they said they agree with and will bring forward in some way themselves at some point.

Just two weeks ago, the House approved the post-Brexit trade and co-operation agreement, but for financial services this is basically a no deal agreement. The references within it do no more than repeat standard pledges of co-operation in every free trade agreement. The Prime Minister himself acknowledged that, for this sector, he did not achieve as much as he hoped. Indeed, within a few days of the agreement, £6 billion-worth of euro-denominated share trading shifted from London to European exchanges—an immediate response to the new situation.

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[Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)]

I rise to support amendment 7, in the name of the hon. Member for Bethnal Green and Bow (Rushanara Ali), myself and 41 other Members. The Minister knows well, because we have had this discussion before—just in case it was to be private, I want to make it public, not because I do not trust him, but I just think it is helpful for him to know that—that the amendment seeks to bind or hold those involved in financial trade and investment to a definition of who they should not trade with and why. To that extent, it introduces the concept of a genocide definition. This measure is also in the Trade Bill, which is coming back to the House, and I make no apology for supporting the hon. Member for Bethnal Green and Bow in this. She will speak later, but as I understand it, she may not move the amendment. However, that is not the point. The point is that it is time to air this argument.

For too long, we have allowed ourselves to walk away from the issue of genocide without ever managing to hold any country guilty of this. Successive Governments have found it impossible to act because these issues are apparently referred to the International Criminal Court. The Government say to me, “It’s a matter for the international courts,” but they know full well that any reference to the ICC has to come from the Security Council, and it will never come from the Security Council because at least two of the nations there will always block it, particularly if it is to do with them or their allies. That is a distinct weakness, and I refer, of course, to the Chinese Communist party and Russia.

Let me give a couple of examples. We have discussed many times—the Foreign Secretary made a statement on it this week—the fact that many companies invest in, take trade from and take goods from areas of the world that are using slave labour. We know that this is happening in many places. For example, what is happening to the Rohingya is, in my view, likely to be defined as genocide. We can also look at what is happening to the Uyghurs in China. It is becoming more and more apparent every day that between 1 million and 3 million Uyghurs have been moved into labour camps. They are used as slave labour. They face forced sterilisation. There has been an 85% drop in their birth rate in that area. They have been moved out of their original area of work, and they are no longer allowed to speak their own language.

That is just one aspect, but a very brutal one, of what the amendment tries to deal with. After the Rwandan genocide in 1994, nothing happened. After the Bangladesh genocide in 1970, nothing ever happened. After the Cambodian genocide, nothing ever really happened. We still do not know what will happen, if it ever does, about Daesh’s genocide against Christians, Yazidis and so on, and companies will never be held to account for what they were involved in.

I realise that time is short, so I will conclude. Neither this amendment nor the one to the Trade Bill ties the Government’s hands. It does not give courts the right to proceed with investigations without reference. It does not give them the power to make criminal punishment, and it does not strike down trade deals or force criminal prosecutions. It would raise to the attention of the Government and the world that, at last, a domestic court here in the UK—the High Court or maybe the Court of Session—will be able to rule that, by all probability, genocide has taken place, and any financial institution, company or organisation involved with that area where genocide has taken place or with that country would no longer be allowed to do so. The Government would have to make that decision; that is the point.

I understand that, this week, the Board of Deputies is coming out in support of the amendment to not only this Bill but, importantly, the Trade Bill. I also understand that the US Senate, having seen what we have put forward, now plans to do the same. We have a chance here for leadership in the world. I thought we left the European Union to empower our courts and to give leadership. Again and again, I have been told by Ministers, “Not this, not now, not here.” The simple question I ask is, “Exactly when, what and how?” because that is never answered.

I finish by reading this:

“First they came for the socialists, and I did not speak out—

Because I was not a socialist.

Then they came for the trade unionists, and I did not speak out—

Because I was not a trade unionist.

Then they came for the Jews, and I did not speak out—

Because I was not a Jew.

Then they came for me—and there was no one left to speak for me.”

We need to speak out for all these oppressed peoples, whether it is in finance or in trade, and take the moral high ground.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I emphasise that before too long I will have to take the time limit down to four minutes, and I know that the SNP spokesperson is aware of this. I call Alison Thewliss.

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[Madam Deputy Speaker (Dame Rosie Winterton)]

Let me just say that after our next speaker, John McDonnell, the time limit will be cut to four minutes.

[John McDonnell (Hayes and Harlington) (Lab)]

From the speeches of the previous two speakers, we can see that there is a thread running through the bulk of the amendments. It is that no matter how significant the contribution of our financial services to our economy, the widespread concerns about the probity of their operations should not be ignored.

New clause 1 standing in my name and the names of other hon. Friends would require the Government to publish a report; to come clean about the standard, conduct and ethics of businesses in the financial services; and to assess publicly the prevalence of unlawful practices such as tax evasion and money laundering and the prevalence of charging excess fees, tax avoidance and providing inadequate advice to consumers. New clause 1 would require the Government to consider and report on the case for a public inquiry and any plans for further reform of regulation.

The FCA plays a core role in the regulatory structure, and in this Bill it is gaining even greater powers. The appointment of the FCA chief is critically important therefore in determining the effectiveness of our whole regulatory system. For that reason, amendment 3 in my name would ensure that before the appointment of a new chief executive, the Treasury would publish a report on the FCA’s effectiveness under the outgoing chief executive. That would allow lessons to be learned. Amendment 4 would give some teeth to parliamentary scrutiny of the FCA by making the appointment of the chief executive subject to approval by the Treasury Committee.

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[Seema Malhotra (Feltham and Heston) (Lab/Co-op) [V]]

I support amendments 1, 2 and 8 and the remarks made by our Front-Bench team to oppose any post-Brexit race to the bottom in regulation. It is also vital that we move towards a deal on equivalence in financial services with the EU.

Financial regulation has to adapt to market innovations to ensure that consumers are well protected, and it is under this call for consumer protection that I also speak in support of new clauses 24 to 26. These push for a fair deal for the 250,000 mortgage prisoners stuck for 10 years paying high interest rates. The all-party parliamentary group on mortgage prisoners, which I co-chair, has been contacted by hundreds of mortgage prisoners, who describe the worry and the stress that comes from being trapped as they are. The Minister suggested that the SVRs paid by mortgage prisoners are just 0.4% higher than SVRs at other lenders. Our case studies, which include nurses, teachers, members of the armed forces and small businesspeople, tell another story.

It is inappropriate to compare the rates that borrowers with inactive lenders are currently paying with those paid by SVR customers at other active lenders. If mortgage prisoners were with an active lender and up to date with payments, they would have access to a product transfer giving them a lower fixed rate. I will illustrate this through two constituents. The first is with an active lender. Last year, when she contacted my office, she was paying an SVR of 4.14%, but as she was with an active lender, we were able to help make representations. She is now on a two-year fixed rate of 1.79%, and saving over £5,000 a year in mortgage payments.

The second constituent’s Northern Rock mortgage was sold to Landmark and is ultimately owned by Cerberus—a mortgage with a fully regulated high street bank sold off to a vulture fund. The family are not being offered any new deals, costing them over £6,000 a year more than if they were with an active lender. I cannot put into words the stress that this has caused the family, who have nearly lost their home more than once.

When the Government sold these loans to Cerberus, UK Asset Resolution told Lord McFall that returning these mortgages to the private sector would result in their being offered fixed rates. In a “Panorama” investigation two years ago, a UKAR spokesperson said that Cerberus had the ability to lend to former Northern Rock customers and that they had believed they intended to do so. They said:

“The reply to Lord McFall sent on behalf of the UKAR board of directors was based on information presented to UKAR and the board had no reason to disbelieve this at that time.”

If UKAR was misled by Cerberus, to date there have been no consequences, and today we have Landmark refusing to offer my constituent any fixed rates. Capping SVRs for mortgage prisoners is an issue of consumer protection.

I turn briefly to new clauses 24 and 26. Expanding the regulatory perimeter to help mortgage prisoners is supported by the APPG and the UK Mortgage Prisoners campaign group, and there is support from the Building Societies Association, which has said:

“It is essential that the FCA and the Government take action urgently to ensure that consumers whose mortgage is sold to an unregulated lender have robust consumer protections extending to interest rates.”

An expansion of the regulatory perimeter would give the FCA all the power it needs, in the words of the Governor of the Bank of England to the Treasury Committee in his appointment hearing, to “conclusively address” the question of mortgage prisoners. New clause 26 says that consumers would need to consent before their mortgage is sold on to an inactive lender. Supporting these amendments provides immediate help to mortgage prisoners who have suffered far too long and are now hit harder by the pandemic.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Before I call Andrew Jones, I should say that after Stella Creasy I will reduce the limit to three minutes.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

The core purpose of the Bill is to ensure that the regulatory framework for financial services will continue to be effective now that we have left the EU. Of course, there are other measures in the Bill, on matters such as the open market arrangements with Gibraltar and debt advice; it is wide in scope.

In Committee, we considered the Bill in detail, and I commend my hon. Friend the Minister for his knowledge and vision. It would be fair to say that some of the measures that we looked at were in very specialist areas and were perhaps a little dry; I am thinking about the work to transition away from LIBOR and implement the Basel standards. That obviously had not been easy work; it had been detailed work, and the development had taken place over a significant period.

The Minister has placed certain underlying principles at the heart of his work, and we see them in the Bill. The first is ensuring that the UK will have world-leading prudential standards, and that those will be overseen by regulators with the powers they need. There is no doubt that the world, including the UK, has seen appalling financial scandals; I am thinking about insider dealing, money laundering and bank fraud. Our regulators must be equipped to deal with this fast-moving market. They must be careful that they are not so backward-looking that they are solving the last crisis, but they are also nimble enough to have proportionate regulations for the sector.

The second principle that my hon. Friend the Minister is operating under is the recognition that different types of activity, and different scales of company, require different approaches. The Bill enables the introduction of the tailored investment firms prudential regime. I believe that the whole Committee wanted to see a firmer approach taken to wrongdoing, alongside measures to ensure that the UK’s strong position in this critical sector is maintained. I think that the Bill does that—indeed, that is the bulk of the Bill—but it does, of course, require regulators to enforce that properly.

A further principle of my hon. Friend’s work is helping people with debt problems. We have already heard about clause 32, which introduces changes to the debt respite scheme. Those are of great significance to many of our constituents up and down the country. Essentially, there are two elements: a breathing space and a statutory debt repayment plan, the point being early intervention and recognition of the problem. That will help people escape the cycle of debt, which is sometimes very easy to get into and very hard to break out of.

In our evidence session, the Committee heard from Peter Tutton, head of policy at the debt charity StepChange. Mr Tutton described this as “a cracking scheme”—I wrote down the quote when he gave us his evidence. That is a significant endorsement of the Minister’s work. The Bill also contains a measure to provide a route for a successor account when the Help to Save term matures, so that the balance is transferred to an alternative savings account—again, practical support that will help many people.

There are many new clauses and amendments before us. I welcome Government new clauses 27 and 28 and new schedule 1, which basically broaden—update, really—the Proceeds of Crime Act 2002 to include e-money institutions. I am pleased to see that that is supported by the Labour party in its own new clause 6, which will not be moved. There is clearly a recognition on both sides of the House that the Act needed to be updated and tackled.

New clause 7, in the name of the hon. Member for Walthamstow (Stella Creasy) and many others, looks at the unregulated “buy now, pay later” market. It is easy to see how an interest-free product could help people spread payments for a sofa or other high-cost item, but it could also be a route into debt trouble. I am pleased that the Minister has commissioned a review, which is due to finish very shortly. May I just ask him to consider its recommendations very promptly?

Overall, this is a good Bill. I thought that the Committee scrutinised it well, and I will support it this evening.

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[Stella Creasy (Walthamstow) (Lab/Co-op) [V]]

I shall speak to new clause 7 in my name and those of over 70 other Members from across the House.

This Christmas, one in four consumers used “buy now, pay later” credit to pay for their Christmas shopping. It is a simple premise: these companies allow people to spread payments for items over a series of weeks, breaking what seems a high cost up-front into chunks they can take out on their debit or credit card, with no interest charged. There is a place for this industry in the UK, just as there is a place for payday lenders like Wonga, but Wonga is no longer with us because it used technology to exploit an age-old problem that many face: too much month at the end of their money. In lending to who it did and in the way that it did, ultimately Wonga went bust, but not before it had plunged millions in the UK into debt.

The companies in question say that it is not fair to compare—that this is just how millennials want to buy. Well, as old as I am, I do know this: when it comes to credit, if the deal is too good to be true, it probably is. Compare the Market research shows that these forms of credit have been used 35% more during the pandemic as everybody shops online. Most UK retailers have Klarna, Clearpay or Laybuy now as a payment option—indeed, it is often the first one people are given. Retailers pay for their services because they know that if people use them, they will probably spend more than they are meant to—on average 30% to 40% more. Which? research shows that 24% of users spent more than they planned to because such an option was available at the checkout. As the Minister said, many then end up taking out debt to repay that debt. If it looks too good to be true, it is.

Increasingly, consumers are being caught out, committing to more spending than they can afford. Twenty-seven per cent. of users said that they used the option because they could not afford the product they were buying outright in the first place. Currently, this slips through a regulatory loophole because the companies do not charge interest and make you pay within—[Inaudible.] It means that they do not have to abide by the existing information offers that other forms of credit have to.

FCA rules require lenders, before they lend, to highlight the key costs and risks of the credit product. Contrast that with the behaviour of these companies. Shortly before Christmas, the Advertising Standards Authority upheld my complaint about adverts by Klarna that involved social media influencers encouraging followers to use Klarna to buy products to improve their mood during lockdown: if they had mental health issues, debt was the answer. On its Twitter, it tells its customers who ask about its product that it is the “smoother” way to shop. You can get

“what you want, when you want”—

with no mention of what happens if you do not pay or checking of whether you can afford to repay. And because it is not regulated, there is no redress through the Financial Ombudsman Service either.

Ministers say, “Let’s wait for the FCA report”, and that they are ready to take swift and proportionate action. That is exactly what new clause 7 does. It ensures that whatever comes out of that review will get the parliamentary time to be put into practice within three months of the Bill becoming law. If we leave it longer, waiting and waiting as we did with the payday lenders, our constituents will suffer. Even the companies themselves, just like turkeys who think Christmas is a good idea, say that regulation should happen.

So much of the history of credit regulation in this country has been one of delay and dither—and debt as a result for our constituents. Constituents are now living through a time when millions are furloughed and many more are facing redundancy, so their income will get lower, not higher. I know that the Minister recognises that there is a problem here. I brought forward new clause 7 so that we can put his words into practice and make sure that it is not our constituents who end up paying the price later.

[Madam Deputy Speaker (Dame Rosie Winterton)]

We come to Angela Richardson on a three-minute limit.

[Angela Richardson (Guildford) (Con) [V]]

It was an honour to serve on the Financial Services Bill Committee and it is a privilege to speak on Report today.

I will speak to specific amendments, but first I would like to say that last century—well before the global financial crisis of this century—I was cutting my teeth in this sector, settling trades, including derivatives, for a US investment bank in New Zealand. We watched in shock as the actions of a lone trader in Singapore caused the collapse of Barings bank. I worked through the subsequent insertion of Chinese walls between departments, saw the creation of compliance and risk management roles and the impact of a change in culture on the institution. I therefore understand the importance of proper regulation and confidence in our regulators. I was pleased to hear the Minister confirm in his opening statement that this corporate governance continues to be strengthened today.

It is only appropriate that the scope of the Bill extends to effectively tackling money laundering and providing clear, streamlined procedures for dealing with entities that engage in this type of activity. As more aspects of our lives, including financial activities, move online, so do illicit activities such as money laundering. Therefore, legislation aiming to prevent and deal with illegal financial activity must have as broad a scope as possible, bolster existing legal provisions and be as clear and as easy to enforce as possible.

New clause 6 rightly aims to broaden the scope of the Bill to prevent money laundering in the context of electronic money institutions. However, the language of the new clause is inconsistent with legislation already in place, potentially generating confusion that could result in diminished enforcement ability. The Government’s new clauses 27 and 28 and new schedule 1 better achieve the desired effect of a more robust and comprehensive enforcement regime, which is why I will support them today. I am pleased that the Opposition Front-Bench team will not move new clause 6.

--- Later in debate ---

[Kevin Hollinrake]

I very much appreciate the efforts that the Minister is making to try to tighten up in many areas. We are on the same page about many different aspects of the measures that we are talking about. Looking at the Bill from afar and taking a helicopter view, for decades, we have been willing to preside over a system that I would describe as financial feudalism. Some people live by a completely different set of rules and are not held to account properly by the rules that are in place. Unless we start to put measures in place that hold individuals to account for some of that egregious behaviour, we will not stamp it out.

That behaviour undermines the faith in the very system that we believe in—the free market system. We cannot simply hold our hands up and say, “It’s the bankers again,” or, “It’s the money launderers again.” We have to tackle those issues and put measures in place to do that. We did with the Bribery Act 2010, which was effective in giving individuals a corporate responsibility to stamp out bribery. Again, the Government acted on tax evasion in 2017.

There are still other areas, however, where we allow people to steal, defraud, launder and lie. That is not to say that there are not some good people in our financial institutions, and there are some very good bankers, but we need to hold individuals to account for things such as LIBOR, foreign exchange rigging, and the disgraceful scandal at HBOS and the Royal Bank of Scotland, where only one individual has been held to account with a directorial ban. As I have said before, over a similar period of time, between 2008 and 2018, there were £9 billion of criminal and corporate fines in the US, but £260 million in the UK.

I am glad that the Government support the principles behind new clause 4 and will bring their own measures forward. It is absolutely vital that that is not just kicking things into the long grass and that those measures are brought forward quickly so that we can hold individuals to account for failing to prevent corporate fraud and money laundering.

The key thing that I will talk about in my last 54 seconds is mortgage prisoners. Again, the fact that we let people’s mortgages be sold to vulture funds in the first place is because we do not have proper regulatory oversight and we do not lean on them as the FCA can on regulated firms. The promises that were made to Lord McFall and others were simply not carried through.

New clause 25 in particular is a nuclear option. I am not a person who would like to cap anything—the market should deliver those solutions—but we do not have a proper solution for the many people who are trapped on very expensive rates. The evidence that we have says that it would not affect the marketplace of residential mortgage-backed securities, about which the Minister is concerned; that it would be highly effective; that we could define it for a certain cohort; and that it would relieve hundreds of thousands of people from dire financial straits overnight. I ask him to look at that again.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I am going to be very strict in making sure that Members stick to the three-minute limit from now on.

Taxation (Post-transition Period) Bill

Rosie Winterton Excerpts

3rd reading & 3rd reading: House of Commons
Tuesday 15th December 2020 Commons Chamber

[Sir William Cash (Stone) (Con)]

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

[Madam Deputy Speaker (Dame Rosie Winterton)]

With this it will be convenient to discuss the following:

New clause 2—Provisions of Act to have effect notwithstanding inconsistency or incompatibility with international or other domestic law—

(1) The provisions of this Act have effect notwithstanding any relevant international or domestic law with which they may be incompatible or inconsistent.

(2) Accordingly (among other things)—

(a) regulations under this Act are not to be regarded as unlawful on the grounds of any incompatibility or inconsistency with relevant international or domestic law (and section 6(1) of the Human Rights Act 1998 does not apply in relation to the making of regulations under this Act);

(b) all rights, powers, liabilities, obligations, restrictions, remedies and procedures which are, in accordance with section 7A of the European Union (Withdrawal) Act 2018, to be recognised and available in domestic law, and enforced, allowed and followed accordingly, cease to be recognised and available in domestic law, or enforced, allowed and followed, so far and for as long as they are incompatible or inconsistent with any provision of this Act;

(c) section 7C of that Act ceases to have effect so far and for as long as it would require any question as to the validity, meaning or effect of any relevant separation agreement law to be decided in a way which is incompatible or inconsistent with a provision of this Act; and

(d) any other provision or rule of domestic law that is relevant international or domestic law ceases to have effect so far and for as long as it is incompatible or inconsistent with a provision of this Act.

(3) Regulations under this Act are to be treated for the purposes of the Human Rights Act 1998 as if they were within the definition of “primary legislation” in section 21(1) of that Act.

(4) No court or tribunal may entertain any proceedings for questioning the validity or lawfulness of regulations under this Act other than proceedings on a relevant claim or application.

(5) The period mentioned in each of the following provisions (standard time limits for seeking judicial review), or any corresponding successor provision, may not be extended under any circumstances in relation to a relevant claim or application—

(a) rule 54.5(1)(b) of the Civil Procedure Rules in relation to England and Wales;

(b) section 27A(1)(a) of the Court of Session Act 1988 in relation to Scotland; and

(c) rule 4(1) of Order 53 of the Rules of the Court of Judicature (Northern Ireland) 1980 (S.R. (N.I.) 1980 No. 346) in relation to Northern Ireland.

(6) The jurisdiction and powers of a court or tribunal in relation to a relevant claim or application are subject to subsections (1) and (2).

(7) In section 7A of the European Union (Withdrawal) Act 2018, in subsection (5)—

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

(b) at the end of the subsection insert “, and

(g) the provisions of the Taxation (Post-transition Period) Act 2020 (provisions to which this section is subject).”

(8) In this section—

“relevant claim or application” means—

(a) a claim for judicial review in relation to England and Wales,

(b) an application to the supervisory jurisdiction of the Court of Session in relation to Scotland, or

(c) an application for judicial review in relation to Northern Ireland, where the claim or application is for the purpose of questioning the validity or lawfulness of regulations under this Act;

“relevant international or domestic law” includes—

(a) any provision of the Northern Ireland Protocol;

(b) any other provision of the EU withdrawal agreement;

(c) any other EU law or international law;

(d) any provision of the European Communities Act 1972;

(e) any provision of the European Union (Withdrawal) Act 2018;

(f) any retained EU law or relevant separation agreement law; and

(g) any other legislation, convention or rule of international or domestic law whatsoever, including any order, judgment or decision of the European Court or of any other court or tribunal, but does not include the Convention rights within the meaning of the Human Rights Act 1998 (see section 1(1) of that Act);

“relevant separation agreement law” has the meaning given by section 7C(3) of the European Union (Withdrawal) Act 2018.

New clause 3—Treasury use of powers—

(1) The Treasury must, within four working days of the day on which this Act is passed, publish a report setting out the timeframe within which it will use the powers to make regulations conferred by—

(a) section 40A(2) of TCTA 2018;

(b) section 40B(1) and (2) of TCTA 2018;

(c) section 30A(4) of TCTA 2018;

(d) section 30B(1) and (3) of TCTA 2018;

(e) section 30C(5) of TCTA 2018; and

(f) section 5(2) of this Act.

(2) The Treasury must publish an annual report setting out how it has made use of the powers referred to in subsection (1).

(3) Each report under subsection (2) must include an assessment of—

(a) what considerations the Treasury made when deciding to use its powers, and

(b) the impact of the regulations on individuals and businesses throughout the UK, and specifically in Northern Ireland.

Amendment 1, in clause 1, page 2, line 43, at end insert—

“(4A) The Treasury must publish guidance setting out its proposed approach to the reliefs, repayments and remissions referred to in subsection (3)(b) within four working days of this section coming into force.”

Amendment 2, in clause 2, page 4, line 24, at end insert—

“(5) The Treasury must publish guidance setting out its proposed approach to the reliefs, repayments and remissions referred to in subsection (4)(a) within four working days of this section coming into force.”

[Sir William Cash]

The clauses before us are directly related to what was originally in the United Kingdom Internal Market Bill, and they were there for a very good reason. They were there because it is absolutely essential that we maintain our sovereignty, and the decisions must be taken by Parliament, and should not be taken by the House of Lords, whose Members are unelected. We are the House of Commons, and that part of the House of Commons which is elected has a Government who were elected in December 2019, almost exactly one year ago. In that general election, it was made quite clear that the decision before the British people was effectively to be decided in line with what was decided in the referendum. There are therefore two things joining together, in conjunction with one another: the referendum in 2016, followed by a whole series of enactments of Parliament. That includes the decision on the notification of withdrawal, which was accepted by the Labour party and was voted through in the House of Commons by 499 to around 120. It is not as if anybody could say that the supremacy of Parliament was not made manifest in the light of the referendum.

There was then a series of other enactments, and we eventually ended up with a confirmation of Acts of Parliament, including the European Union (Withdrawal Agreement) Act 2020, which was passed after the general election. Section 38 of that Act made it abundantly clear that we had the right to insist—as a matter of constitutional principle and through the enactment of an Act of Parliament—that the United Kingdom was sovereign, and, furthermore, that we would be allowed to override the withdrawal agreement. That was contained in section 38(2)(b), which specifically refers to section 7A and in turn therefore directly relates, through the use of the word “notwithstanding”, to the overriding direct effect. That is a very important point—a point that is conveniently overlooked by some people, who continually assert that somehow or other the Government have been out of order, breaking international law or breaking constitutional principles. But they never come forward with any arguments; as I said in a recent speech in the House regarding the attitude of the House of Lords, they were basically strong on assertion and empty in argument.

Taxation (Post-transition Period) Bill

Rosie Winterton Excerpts

Committee stage & Committee: 1st sitting & Committee: 1st sitting: House of Commons
Wednesday 9th December 2020 Commons Chamber

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

Before I ask the Clerk to read the title of the Bill, I should explain that in these exceptional circumstances, although the Chair of the Committee would normally sit in the Clerk’s chair during Committee, I will remain in the Speaker’s Chair in order to comply with social distancing requirements, although I will be carrying out the role not of Deputy Speaker but of Chairman of the Committee. Chairs of the Committee should be addressed as such, rather than as Deputy Speakers.

I must also modify the call list slightly in the light of the selection and grouping of amendments by the Chairman of Ways and Means. I will call the right hon. Member for Wolverhampton South East (Mr McFadden) to open the debate by moving amendment 2; we will then follow the rest of the call list as published, starting with the hon. Member for Stone (Sir William Cash). I will call the Minister at the end to respond to the debate.

Clause 1

Duty on goods removed to Northern Ireland

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

I beg to move amendment 2, page 2, line 43, at end insert—

“(4A) The Treasury must publish guidance setting out its proposed approach to the reliefs, repayments and remissions referred to in subsection (3)(b) within four working days of this section coming into force.”

[The First Deputy Chairman]

With this it will be convenient to discuss the following:

Clause stand part.

Amendment 3, in clause 2, page 4, line 24, at end insert—

“(5) The Treasury must publish guidance setting out its proposed approach to the reliefs, repayments and remissions referred to in subsection (4)(a) within four working days of this section coming into force.”

Clause 2 stand part.

Clauses 3 to 4 stand part.

Amendment 1, in clause 5, page 7, line 44, leave out subsection (3).

This amendment is connected with NC1, which would make all substantive regulations under the Bill subject to the affirmative procedure.

Clause 5 stand part.

Clauses 6 to 12 stand part.

New clause 1—Regulations—

“Notwithstanding any other enactment, a statutory instrument containing regulations made under this Act, other than regulations made under section 11, may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.”

This new clause would make regulations made under the Bill (other than the commencement regulations in clause 11) subject to House of Commons affirmative procedure.

New clause 2—Treasury use of powers—

“(1) The Treasury must, within four working days of the day on which this Act is passed, publish a report setting out the timeframe within which it will use the powers to make regulations conferred by—

(a) section 40A(2) of TCTA 2018;

(b) section 40B(1) and (2) of TCTA 2018;

(c) section 30A(4) of TCTA 2018;

(d) section 30B(1) and (3) of TCTA 2018;

(e) section 30C(5) of TCTA 2018, and

(f) section 5(2) of this Act.

(2) The Treasury must publish an annual report setting out how it has made use of the powers referred to in subsection (1).

(3) Each report under subsection (2) must include an assessment of—

(a) what considerations the Treasury made when deciding to use its powers, and

(b) the impact of the regulations on individuals and businesses throughout the UK, and specifically in Northern Ireland.”

That schedule 1 be the First schedule to the Bill.

That schedule 2 be the Second schedule to the Bill.

That schedule 3 be the Third schedule to the Bill.

That schedule 4 be the Fourth schedule to the Bill.

[Mr McFadden]

As well as speaking to amendment 2, I will speak to amendment 3, which makes the same points, and say a word about new clause 2. All three have been tabled in the name of the Leader of the Opposition and those of my right hon. and hon. Friends.

Clause 1 sets out the new customs regime that will apply to goods moving between Great Britain and Northern Ireland—specifically those that are deemed to be at risk of entering the EU single market. The Northern Ireland protocol that the Government have signed up to requires such a regime as a result of their decision to leave the single market and the customs union. It will mean a system of paying customs duties for those who move such goods.

As yet, none of us knows whether a deal will be agreed, although we know that an important dinner is taking place in Brussels tonight. However, we welcome the announcement of a trusted trader scheme today, although it comes very late in the day. That scheme will remove some of the possible tariffs on goods that move from Great Britain to Northern Ireland in the event of a no-deal Brexit, but for other goods we are clear that we do not want to see additional costs for businesses and communities in Northern Ireland.

The House should note that Northern Ireland consumers have, on average, about half the discretionary income of consumers in the rest of the United Kingdom; the long and the short of it is that they simply cannot afford such additional trade tariffs on goods. There therefore needs to be a system for at-risk goods that do not leave Northern Ireland, in line with the agreement that Northern Ireland remains part of the UK’s customs territory and that customs duties should not apply to goods that travel between Great Britain and Northern Ireland if Northern Ireland is their end destination.

The protocol and the arrangements agreed yesterday by the Chancellor of the Duchy of Lancaster and his counterpart create new requirements for businesses to be set out in regulations. Clause 1 is specific about that, for example in new section 40B of the Taxation (Cross-border Trade) Act 2018, which states that the Treasury

“may by regulations provide”

for which goods the new duties will apply to, and make

“provision about reliefs, repayment and remission…checks, controls or administrative processes”

and other matters.

My broad point is that that is obviously a description of new arrangements that are not in place right now; that is why they are being introduced in the Bill. As I said on Second Reading, it would be better for the Government to acknowledge that this is a new regime with new requirements, instead of the pretence that everything will carry on exactly as it is.

As I also said on Second Reading, we only have three weeks to go. Businesses in Northern Ireland and those that do a lot of trade with Northern Ireland will be asking, “What does this mean for me? What processes do I have to go through? What do I have to pay? If the goods remain in Northern Ireland, will I be entitled to a rebate if I have paid? How will I claim that rebate? How will this system work?” Those are all legitimate questions about the new regime being introduced by the Bill and the regulations enabled by it. Amendment 2 asks the Treasury to reach conclusions and to publish answers on these matters in the coming days. Frankly, it is already too late to expect businesses to absorb more than 100 pages of legislation within a few weeks. But even if it is too late, we cannot afford more delay, which is why our amendment calls for the publication of guidance on this within a few days of the Bill coming into force.

I should stress that nothing in this amendment alters the regime that the Government are trying to bring in. Everything in the amendment is fully in line with the Northern Ireland protocol and with the commitments that the Government have made as part of that. We want to provide clarity for businesses as soon as possible, rather than leaving open-ended the time for these regulations to be published.

In response to my question at the end of the Second Reading debate, the Exchequer Secretary to the Treasury said with confidence that she was sure this could all be done by 1 January. I hope she is right and that any scepticism that all these arrangements will be completed in the three weeks between now and 1 January is unfounded. Let us hope that she is right. The amendment asks for the Government to outline precisely how these duties and tariffs, if they are necessary, will be rebated. Businesses will be asking that question and, quite reasonably, they will want an answer.

Will businesses be required to pay up front and then be reimbursed by HMRC, as envisaged in the Northern Ireland protocol? Is that what the Government have in mind? If so, the Minister should know that there are fears that such a rebate system could be hugely complex. Indeed, some fear that it is not fully built, but we are told that it will all be ready for 1 January. These are vital questions. As it stands, the Bill does not fully answer them, nor does it set out a timeframe in which they will be answered, which is why we have tabled amendments 2 and 3 to the Bill.

Finally, new clause 2 is an attempt to give both Parliament and the public some timetable—some road map—for the blizzard of regulations that are enabled by the Bill and to secure a report on their impact in the future. As I said, this is a new regime. The Bill legislates for something that we have not had to do before in the United Kingdom, and we should at least have the courtesy of reporting on how it is operating in the future. New clause 2 asks for both a timetable of the regulations and a report on how the new regime has operated. These are completely reasonable amendments. I hope that, in a spirit of generosity, the Government will find it within themselves to accept them, and I look forward to hearing the Financial Secretary to the Treasury wind up the debate.

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

Sir William Cash is not here, so we go to Alison Thewliss.

[Alison Thewliss (Glasgow Central) (SNP)]

I am very sorry to hear that the hon. Member for Stone (Sir William Cash) is not here, because I am sure that there is so much more that he could have added to this debate that he has not already said.

[The First Deputy Chairman]

He may have withdrawn but I have not been told, so that may explain it.

--- Later in debate ---

[The Financial Secretary to the Treasury (Jesse Norman)]

Dame Rosie, what a delight it is to see you in the Chair, metaphorically if not actually.

It is a measure of the wide gulf between the House’s professed intentions and its actual activities that we are about to wind up within a very few minutes, and nothing like to time, the scrutiny of the Bill in Committee. I thank those who have spoken. Let me do service on my part by keeping my remarks brief, although I will say that nothing could have surprised me more than that my hon. Friend the Member for Stone (Sir William Cash) will not be taking the opportunity to make a trivial two-hour speech.

The right hon. Member for Wolverhampton South East (Mr McFadden) said that somehow the Government were pretending there was no change. Of course, he then went on to say that nothing has changed. We are not pretending anything. We acknowledge that there is change and that is specifically why we have used the language we have of making the changes as easy and as frictionless as possible for all parties concerned.

The right hon. Gentleman raises concerns and questions about Northern Ireland. I remind him that the Trader Support Service, which was launched on 28 September, has 18,000 subscribers already. He asks us to publish guidance. I can tell him that guidance has been published already, on 26 October.

The hon. Member for Glasgow Central (Alison Thewliss) saw Brexit—rather helpfully—as an opportunity to return powers to Parliament. How right she was. That is why I am a supporter of the United Kingdom of Great Britain and Northern Ireland, and of the Parliament that stands at its centre. My hon. Friend the Member for Arundel and South Downs (Andrew Griffith) rightly said that it should be for the Bill to make matters as easy as possible. I agree with that. He pointed to the absolute game-changer in clause 7. I agree with that too.

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

I believe the right hon. Member for Wolverhampton South East may wish to withdraw his amendment.

[Mr McFadden]

I point out to the Minister that he said guidance was published in October; he cannot be referring to the guidance referred to in clauses 1 and 2, which talks about the regulations under the Bill. However, on the basis of the whole debate, we will not press the amendment to a vote tonight, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.

Clauses 2 to 4 ordered to stand part of the Bill.

Amendment proposed: 1, in clause 5, page 7, line 44, leave out subsection (3).—(Alison Thewliss.)

This amendment is connected with NC1, which would make all substantive regulations under the Bill subject to the affirmative procedure.

Question put, That the amendment be made.

Taxation (Post-transition Period) (Ways and Means)

Rosie Winterton Excerpts

Ways and Means resolution & Ways and Means resolution: House of Commons
Tuesday 8th December 2020 Commons Chamber

[Anthony Browne (South Cambridgeshire) (Con)]

You talked about the notwithstanding clauses as irresponsible and said that the damage may have been done, but would you like to join me in welcoming the Government reaching an agreement in the Joint Committee, as was announced just a couple of hours ago, on the issues that those clauses were intended to address?

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. Just a gentle reminder not to use the word “you” to the shadow Minister, because “you” means me.

[Bridget Phillipson]

In fact, I had just indicated that very point. Everyone on the Opposition Benches is delighted that the Government have in recent days managed to conclude a trade deal with North Macedonia, but what message does it send to our friends in the USA, who have made their position on this point very clear, that the Government no longer regard it as at all times non-negotiable that they will uphold the rule of law? It is because of our concerns on that point that we have tabled the selected amendment to the first resolution. We wish to append the text of the first resolution, at the end, with a clear limitation that provisions under that resolution may not place this country in breach of its obligations under law. The amendment would insert new text at the end of the current text of the first resolution to ensure that

“any such provision must not place the United Kingdom in breach of its obligations under the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community…and specifically its obligations under the Protocol on Ireland/Northern Ireland of that Agreement.”

Obviously, in the last two hours the Government have announced that they have reached an agreement in principle with the European Union on that protocol and will therefore resile from their expressed intention to enact legislation that would have breached those agreements. Of course, Opposition Members welcome that news, even as we find it astonishing that it should ever have been delivered and shambolic that it arrives so late. We would not, until this autumn, have ever imagined it necessary to make it clear in a resolution of the House that the Government, in exercising their powers, must obey international agreements into which they freely entered. Yet, as a result of the deep irresponsibility of the Government, that is precisely where we find ourselves today. We will not oppose the substantive resolutions, and we shall wait to see what further reassurances the Minister can provide before deciding whether to press our amendment to a vote.

We recognise that there needs to be a lawful basis for the collection of VAT, customs duties, aviation fuel duty and insurance premium tax, even while we do not yet know what the Government propose to table by way of a Bill. Let me repeat that: we do not yet know what the Government propose to table by way of a Bill—less than 24 hours before its Second Reading and Committee of the Whole House. Less than a month before we leave the European Union, we simply do not know with any certainty what measures the Government intend to set out. This extraordinary state of affairs undermines the ability of Members to give such important legislation the scrutiny it rightly deserves, not to mention the ability of businesses to plan. Is the Minister really telling us that it was not possible before today to set out the Government’s proposals on aviation fuel duty or insurance premium tax? Of course it was. These clauses were held back—they still are—so that the Government could, until a few hours ago, continue to brandish the threat of breaking international law as part of their negotiating tactics with the European Union, believing they have an ace up their sleeves, when in fact the whole world sees the Government as a pack of jokers.

Although we will not oppose these resolutions, we cannot and will not vote for any measures that the Government introduce that would breach agreements into which this country has entered with her friends and allies, because the consequences of such unlawful acts have been made clear to us. The Speaker of the United States House of Representatives said:

“The U.K. must respect the Northern Ireland Protocol as signed with the EU to ensure the free flow of goods across the border. If the U.K. violates that international treaty and Brexit undermines the Good Friday accord, there will be absolutely no chance of a U.S.-U.K. trade agreement passing the Congress.”

UK-EU Future Relationship Negotiations and Transition Period

Rosie Winterton Excerpts

Monday 7th December 2020 Commons Chamber

[Penny Mordaunt]

I thank my right hon. Friend for his very kind words. It would be remiss of me not to mention, in his absence today, the Chancellor of the Duchy of Lancaster, who has done an incredible job, in addition to his work on the covid pandemic, with chairing XO—the EU Exit Operations Committee—every single day, I think. Since I have been in this post, I have been the default chair, but I have only chaired it on a few occasions. He has done that, he has done a huge amount of work in building rapport with his oppo on the Joint Committee on the withdrawal agreement, and I think he deserves huge credit for the immense efforts that he has taken both on the transition and on ensuring that the withdrawal agreement Joint Committee and its specialised committees are churning through the work that they need to do not just for UK citizens, but for citizens in the rest of the EU. So I shall take my right hon. Friend’s praise and pass it on to the Chancellor of the Duchy of Lancaster.

As I said, there will be very few things that are outstanding that businesses will need to be apprised of that are contingent on the final negotiations. We have put together comprehensive information for all Members in this House, and they will find that in their inboxes. We will also conduct webinars with their caseworkers if there is a demand for that. We have a programme already set up to do that. I would also put on record the incredible work of the border delivery group and civil servants in all Departments, who not just have ensured that we are ready for the transition and whatever comes to pass, but have been working to secure these negotiations. I thank all Members for putting on record in the Chamber today our resolve and our will to get a deal, but not a deal at any price.

[Madam Deputy Speaker (Dame Rosie Winterton)]

We will now have a three-minute suspension to allow for the safe exit and entry of hon. and right hon. Members.

Future of Financial Services

Rosie Winterton Excerpts

Monday 9th November 2020 Commons Chamber

[Rishi Sunak]

I thank my hon. Friend for his question. He will know from his extensive experience in financial services how important the announcements today are. He makes a very interesting suggestion, and I would love to meet him to discuss it further and see what we can do.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Thank you. We will have a three-minute suspension to allow the safe exit and entry of right hon. and hon. Members.

Black History Month

Rosie Winterton Excerpts

Tuesday 20th October 2020 Commons Chamber

[Sir John Hayes]

My hon. Friend has, among other colleagues, played a noble role in challenging some of the institutions that have bought exactly the cultural Marxist agenda that I describe. I am thinking in particular of the work that he, I and others have done in ensuring that the good names of Sir Winston Churchill and Horatio Nelson are not besmirched. In doing that, we are of course not arguing that all that came before us was good and pure, but to take the view that those individuals should be judged by the standards of today and not seen in the context of their time is ahistorical rather than an interpretation of history, as the hon. Member for Glasgow North East was advocating.

The stories of these figures are not based on the advancement of the interests of a few—of a small subsection of society—but are stories of dedication and duty, service and sacrifice for the common good, for the many. So compelling is their heroism that many migrants to Britain, notably from Africa and the West Indies, chose to name their children Nelson, Winston and Gordon after men who are among the empire’s greatest sons. Yet now culture warriors are determined, by reinventing the past, to dictate the future. Under their heel, history must be rewritten and the very concept of heroism obliterated. It is time for patriots in this country—black and white, regardless of their origins—to fight back and to reclaim heroism, patriotism and history from those who seek to distort and demean all that has gone by in the pursuit of political ideology.

The overwhelming majority of the British public, and in particular the working classes—the class that I come from, in stark contrast to the right hon. Member for Islington North (Jeremy Corbyn), who spoke earlier—take a view different from that of the bourgeois metropolitan elite. Most people in this country are deeply proud of their country and its history. Earlier this summer, polling for Policy Exchange’s history project found that 69% of people rightly believed that UK history as a whole was something to be proud of; just 17% thought it was something of which to be ashamed.

While it is right to celebrate the historic contribution of black, white and Asian Britons, let us first and foremost celebrate what we share. Let us celebrate all of our yesterdays, for unless we do, all our tomorrows will be poorer and poisoned. As I said earlier, I want others to contribute, so I shall conclude. As one of the few qualified history teachers in this place, let me offer this lesson: ours is a land of hope and glory—a proud Union with a past to be proud of.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. I just want to point out that I am trying to get everybody in and if people who have spoken intervene again, that prevents others from getting in.

--- Later in debate ---

[Mr Steve Baker (Wycombe) (Con)]

Next Tuesday is an important anniversary in black history. It is the 41st birthday of the independent nation of St Vincent and the Grenadines. I am proud that Wycombe is home to the largest population from the islands outside the islands.

One of the most tricky experiences of my 10 years as a politician was in a preceding Black History Month. I remember being with some Caribbean ladies from St Vincent and the Grenadines 2nd Generation, the organisation that celebrates their history. I was asking about why black history is so important and I was told a difficult story. It was one of those moments when the atmosphere cooled and suddenly felt very still—I can see it vividly in my mind’s eye, although I may forget the exact words that were spoken.

A Caribbean lady with a British name said to me, “Every time I write my name, every time I see my name, every time I hear my name, I am reminded that I am descended from slaves.” How can anyone gainsay such a thing? What a thing to say and believe; what an experience to have. I cannot possibly know what that is like. I dare say that other people do not feel the same, but that lady’s story stays with me still. I am very proud that my community has a really vibrant presence from St Vincent and the Grenadines.

One of the people who the community will be celebrating this Black History Month is George Alexander Gratton. I will let the National Portrait Gallery tell his story:

“Born on the Caribbean island of St. Vincent, the son of African slaves. Like other slaves, he was likely to have been named after the sugar plantation's owner or overseer, a common practice at the time that identified slaves as the property of their owners. He suffered with a condition characterised by pigment loss in the skin, resulting in white patches, now known as Vitiligo. His owner, perhaps aware that culturally held superstitions could put the child at risk, saw an opportunity to profit”—

of all things—

“from his condition. He was sold for 1000 guineas, shipped to Britain and consigned to the care of John Richardson who exhibited him in a circus for the paying public”.

I will not read how he was marketed. The description continues:

“Contradictory to this callous exploitation, childless Richardson had the boy baptised and treated him like a son. When Gratton died at a young age, Richardson held onto his body whilst a customised brick vault was constructed to bury him at All Saints Cemetery, Marlow. He requested on his deathbed in 1837 that he be buried in the same vault as Gratton.”

That story illustrates some of the extraordinary complexity of black history in the United Kingdom, both shameful and quite moving.

But let us not pretend that all black history lies in the past. After I made some remarks recently on the BBC’s “Politics Live”, I found myself in conversation with a black woman a little younger than me who had grown up and gone to school in my constituency. She told me a story from when she was growing up—they did not spot this at the time—of a teacher putting her and the Asian children in the class in a separate room and not teaching them: flat-out, frank racism, visited upon a British woman a little younger than me in a school in my constituency some years ago. That is a shocking and shameful thing.

When, then, we turn to the recent BLM protests, I have been listening very carefully to my constituents. Notwithstanding the reasonable remarks of my right hon. Friend the Member for South Holland and The Deepings (Sir John Hayes) about the ideology that drives some, I think that it is incumbent on all of us really to listen and get alongside our constituents and friends—our fellow citizens—and to try to understand their life and where they are coming from. I can stand here today and say that I believe that we are all morally equal, that we are all equal before the law, that we are all politically equal, and that we must all have equal opportunity. I can say that and I can believe it, but I am sure that there are some people in my constituency who do not believe it and who roll their eyes when they hear it, because it is not their lived experience.

I am very proud to have been asked by Albie Amankona and Siobhan Aarons to be the chair of the advisory board for Conservatives Against Racism for Equality. I am going to work with them to develop a conservative and a liberal language of equality and inclusion, and of justice—a language that supports life in a free society, and does not adopt the ideas of intersectionalism and critical race theory that set us against one another. I want to work with them and with everybody in this House to make real this idea of equality.

Since he said it at a celebration in my constituency—a celebration of our wonderful Vincentian community— I am going to quote His Excellency Cenio Lewis, and I shall send him a record of it in Hansard afterwards. He said something with great humility, passion and force, which encapsulates enormous wisdom and which I hope will stay with us all: “Let’s remember we are no better than anyone else, but no one is any better than us.”

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. I will now have to reduce the time limit to five minutes. I have been able to warn the hon. Member for Ipswich (Tom Hunt).

Covid-19 Economic Support Package

Rosie Winterton Excerpts

Wednesday 14th October 2020 Commons Chamber

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order.

--- Later in debate ---

[Beth Winter (Cynon Valley) (Lab)]

The covid pandemic has exposed and exacerbated an already broken economic system that is rigged in favour of the wealthy while eroding workers’ rights and remuneration. The system is broken.

My constituency of Cynon Valley is a case in point. The local authority has endured £90 million of Tory Government cuts since 2010 and austerity. Some 23% of the population are living in poverty while child poverty rates are even higher—at 35%. Alongside that, we are one of the areas that have been hardest hit by the coronavirus like other of the poorest communities elsewhere in the United Kingdom. We have one of the highest rates of covid and of death from covid in Wales and, in certain points, one of the highest in the UK. Tory austerity measures have left people in my constituency poorer and therefore more susceptible to the virus.

Since the 1980s, we have experienced the demise of traditional industries and unemployment rates have risen sharply recently. A quarter of the workforce have been furloughed and workers are fearful for their future. Figures for universal credit claimants have almost doubled this year and they are above the UK average. The future is also bleak for our young people. The number of benefit claimants doubled between March and July this year.

The UK Government’s original furlough scheme was welcome and did provide a lifeline for many businesses but it fell short of what was required. The Chancellor’s belatedly announced job support scheme is woefully inadequate and is applicable only to certain groups. We have done things differently in Wales and the Labour-led Welsh Government have put in place an extremely generous package of support for businesses—the best in the UK. This includes the economic resilience fund, which is providing further grants to enable businesses to adapt to post-covid realities, to support the foundational economy and to assist businesses adversely affected by the local lockdown.

But the purse strings remain with the UK Government, and that places severe constraints on what we can achieve in Wales. The current arrangements between central Government and Wales are insufficient to meet our needs. We need a genuine four-nation partnership approach not only to eradicate the virus from our country—it can be done, because other countries such as New Zealand have done it—but to develop the right economic strategy and end the poverty trap that damages so many communities and individuals both financially and in terms of health. We need to end the dead hand of financial inflexibility from the UK Government so that the Welsh Government can carry over moneys from one year to the next and ease borrowing limits.

The current situation is not an inevitable consequence of the pandemic; it is the result of a political choice. With the UK entering the worst recession of any OECD country with estimates as high as 4 million unemployed, action is needed now and I urge the Government to stand by their commitment to do whatever it takes and provide an economic package that will cater for everyone. This could include reforming the job support scheme to reimburse everyone at 80% of wages or higher, provide sector-specific support, provide support for specific groups and end precarious working arrangements. Alongside that, we desperately need welfare reform to provide a safety net, and we can begin by reversing the £30 billion cuts in the social security budget since 2010.

We can afford that by taxing wealth. It is estimated that if wealth were taxed at the same rate as income tax, it would raise £174 billion a year. In 2008, the Government paid £500 billion to bail out the banks. We can do this if the political will is there. Do this Government have the political will to act to help people in communities like mine or will they continue to help the millionaire cronies with juicy contracts so they can profit—

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order.

The Economy

Rosie Winterton Excerpts

Thursday 24th September 2020 Commons Chamber

[Christine Jardine (Edinburgh West) (LD) [V]]

[Inaudible.]

[Madam Deputy Speaker (Dame Rosie Winterton)]

We seem to be having some trouble hearing Christine Jardine. I will move on and try to come back to her if we can sort out what is wrong with the sound.

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

Throughout this crisis, the Chancellor has moved with speed and determination to protect jobs and family incomes. I welcome his comments today about targeting job support on viable companies with viable jobs. Implicit in that, though, is a recognition that, sadly, unemployment will continue to increase, so will he say a bit more about the importance of the social security safety net at this time and reaffirm the importance of the increase that we made right at the start of this crisis to universal credit and perhaps tell us that there is no intention on the part of the Government to withdraw it?

--- Later in debate ---

[Rishi Sunak]

Decisions on the exact operation of our welfare system are for the Secretary of State for Work and Pensions, but I will happily reflect on the point that the right hon. Gentleman makes. He is right that that has made a significant difference in the early stage of this crisis, but as we go through it, we will make sure that we adjust and tailor our support to match the needs of the moment.

[Madam Deputy Speaker]

Let us see whether we can go back to Christine Jardine.

[Christine Jardine [V]]

I hope that you can hear me this time, Madam Deputy Speaker. 

I thank the Chancellor for early sight of his statement, which I cautiously welcome, to the extent that he has listened to calls from Liberal Democrats to extend furlough and create some flexibility based on the German Kurzarbeit model, but what about the 3 million people who have had no support for six months and will still be excluded from financial help? Where are the job creation plans to tackle unemployment and for those who cannot work for a third of the time? Where are the incentives for manufacturing and industry to invest in this country and create new jobs—the green revolution—allowing us to compete with our European neighbours, who are already moving ahead of us?

--- Later in debate ---

[Rishi Sunak]

I thank my right hon. Friend, who is a very good friend of mine, for his warm comments. Whatever I have been able to do over the past several months is in no small part thanks to the instruction that he has given me when he was my boss in not one, but two different Department jobs. He is absolutely right about the importance of infrastructure investment, and he was one of the first people to talk passionately about the need to increase significantly the amount of money that the Government invest in the UK’s infrastructure. It was he, as Chancellor, who put in place the infrastructure revolution, and I can commit to him that I will absolutely deliver on that. He is right that we must publish the national infrastructure strategy; we will do so this autumn.

[Madam Deputy Speaker (Dame Rosie Winterton)]

In order to allow the safe exit of hon. Members participating in this item of business and the safe arrival of those participating in the next, I am suspending the House for three minutes.