Gareth Davies MP: speeches

Speeches

• 28 Jan 2025 · Finance Bill (Second sitting) · Hansard source

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  I am afraid I have not taken the time to read the academic reports, but I greatly value and emphasise the work of the OBR, which the Conservatives established in government. The new Government have taken it forward and are already seeking to bolster its impact on the Treasury’s work. If the hon. Lady will forgive me, it is the OBR’s work that I look at, and that work says that this budgetary measure is highly uncertain. As I was pointing out, that leaves questions for markets and for the Labour parliamentary party when it comes to which taxation will have to go up and what spending will be cut if that figure is not met. I will leave that to the Minister to address.

• 28 Jan 2025 · Finance Bill (Second sitting) · Hansard source

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  Clause 43 and schedule 12 mirror the proposals that we set out in March 2024. The Minister will therefore be very pleased to hear that I have not picked up any significant murmurings of discontent on this clause, and I have no further comments.

• 28 Jan 2025 · Finance Bill (Second sitting) · Hansard source

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  Currently, a person who is UK resident but not UK domiciled pays tax on any UK income and gains but can choose for their non-UK income and gains to be taxed on a remittance basis. Part 2 of the Bill provides for the abolition of non-domiciled status from April 2025, as the Minister points out, and for its replacement with a new regime for the taxation of foreign incomes and gains on the basis of UK residence. It therefore terminates the current tax regime for those who are resident but not domiciled in the UK, while creating a temporary repatriation facility for historical foreign income and gains to be brought into the UK over the next three years. Those changes will also be applied to trusts under the Bill and inheritance tax will also be brought into the new, residence-based system. Although the shape of the overall package is much the same as the one the Conservatives announced in the spring Budget 2024, there are a few notable differences on the detail. Before I move through the chapters—we will spend a bit of time on that, starting with chapter 1—I will first provide some context by noting that, net of the reforms we announced in March, Labour’s adjustments to the new regime are forecast to raise £12.7 billion over the next five years. This means the measure we are considering is the second biggest revenue-raising new policy in this entire Budget. Labour’s adjustments to the temporary repatriation facility alone account for £10.6 billion. These are significant sums, but also highly uncertain, according to the OBR. There is significant uncertainty in particular around the behavioural responses and the size of the tax base, according to the OBR’s assessment. The OBR also says it is unclear to what extent inflows to the temporary repatriation facility are additional over the long term rather than bringing forward disposals which would otherwise have attracted full rates of taxation. When the second biggest revenue-raising new policy in a Budget is so uncertain, according to the OBR, bond market jitters come as no surprise. The emphasis Labour has placed on this policy, which makes up a massive chunk of the Bill, is compounding its conundrum ahead of the OBR’s March forecast. It exacerbates fiscal instability by adding to the risk that revenues will not be as high as anticipated. This brings us back to the same old questions we have been asking, including in the Chamber today: which taxes will Labour have to raise if there is a shortfall, or which services will they have to cut? The Minister will say that we need to wait for the OBR’s revised forecasts, but will those include an update on these highly uncertain figures? Turning specifically to chapter 1, clauses 37 and 39 introduce the new four-year 100% relief on eligible foreign income and gains for those arriving in the UK who have not been UK tax residents in the 10 tax years immediately prior to their arrival. I acknowledge that that mostly mirrors the proposals we put forward in the March Budget 2024 but would be grateful if the Minister could none the less address the following points.

• 28 Jan 2025 · Finance Bill (First sitting) · Hansard source

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  I will intervene anyway. As I said, any certainty that can be provided to businesses regarding the tax system is a good thing. The point I am trying to make—I will try again—is that corporation tax is just one tax paid by businesses. They also pay national insurance contributions. They also use reliefs such as the business rates relief the Minister talked about—by the way, the Government have cut that from 70% to 40%, although I am not sure that it was clear before the election that they would do that. The uncertainty has been caused by all the things that the British public were told would not happen, but that then did happen. We are talking about corporation tax today, and I can see that you are, quite rightly, about to bring us back in scope, Mr Mundell. I will leave it here by saying that British businesses pay more than just corporation tax, and what they need is certainty across the board. We have a corporation tax road map, but why do we not have a holistic, comprehensive business tax road map that includes national insurance, business rates and other taxes borne by businesses? That is my point.

• 28 Jan 2025 · Finance Bill (First sitting) · Hansard source

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  It is clear that the Government have launched an attack on farmers across rural communities in our country. The family farm tax is a disgrace. Farmers have protested and tried to make their voices heard, but still cannot get a meeting with the Chancellor of the Exchequer. I urge the Minister, who is very open to meetings, to have a word with his Chancellor, who is consistently in hiding and running out of the country when things get difficult as a result of her decisions. Perhaps it is true that the Environment Secretary wants farmers to pay even more tax. Why else would he say to farmers in Oxford, “Convert your barns into holiday lets,” while over the road the Treasury is taking away these reliefs and making it more tax inefficient for them to do so? This is yet another area where the Labour Government seem intent on cancelling out genuinely pro-growth deregulation, which we welcome, with anti-growth taxation.

• 28 Jan 2025 · Finance Bill (First sitting) · Hansard source

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  As the Minister set out, clause 25 and schedule 5 repeal special tax rules relating to the commercial letting of furnished holiday accommodation. The changes were first announced in our Government’s Budget in March 2024, and we will not oppose them. However, it is important to view the measures in the context of the wider changes to the circumstances of the hospitality sector as a result of Labour’s Budget—most notably the hike in national insurance contributions.

• 28 Jan 2025 · Finance Bill (First sitting) · Hansard source

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  These sittings are long, but I did say at the beginning of my speech that we announced in March 2024 that we would bring in this same measure and that we will support it today. I am not saying that we are against it, but I am saying two things. First, as I was saying at the beginning of my speech, the context in which the measure is being introduced is very different from the context in March 2024. The context today is that hospitality businesses across the country, but particularly in rural communities, are being hit by a series of taxes that they did not ask for, did not vote for and were told would not happen. That is the context in which we find ourselves. Secondly, His Majesty’s official Opposition have a duty to communicate the concerns of the British public and the sectors that will be directly impacted by this measure. It is vital that His Majesty’s Opposition scrutinise whatever policies are put in front of us, with a forward look at how that will economically damage or benefit communities. As you can tell, Mr Mundell, and as the hon. Member for Cities of London and Westminster can tell, I take a constructive tone. When we do support measures, we will say so, and when we do not, or we feel that additional scrutiny is needed, Members better believe that I will be there. That is what I am doing today. I hope that addresses the intervention from the hon. Member for Cities of London and Westminster. In the interests of scrutiny on behalf of the many thousands of people that will be impacted by the measure and in a context of a wider hammering through the tax system by this Labour Government, let me continue my questions on behalf of the Chartered Institute of Taxation. First of all, I seek confirmation from the Minister that an FHL disposal must be made before 6 April 2025 in order for a qualifying replacement asset to be eligible for roll-over relief, even though the replacement asset itself can be purchased up to three years after FHL disposal. Secondly, I seek confirmation that lettings must cease altogether before 6 April 2025—not just furnished holiday lettings, but even unfurnished long-term rentals—for an FHL disposal to qualify for business asset disposal relief. Thirdly, I seek confirmation that married couples or civil partners who jointly own an FHL must make an election if they are to continue to split the income unequally, rather than reverting to the normal 50:50 rule, and make a declaration to HMRC before 6 April 2025 if this is to have effect in the 2025-26 tax year. I ask those questions constructively, on behalf of the Chartered Institute of Taxation, and if the Exchequer Secretary is not able to answer them, of course I will take a written answer by way of letter following this sitting. In addition to the confirmation on those three points, I would be grateful if the Minister could provide reassurance that HMRC guidance has been specifically and sufficiently clear on these points, so that those affected are aware of the implications of the changes. It is important to remember that when the Government make changes and when we made changes, we were very conscious—I am sure he is too—that the public are aware. He should take all measures possible to ensure that people are aware of these changes, but I appreciate his guidance on what measures are being taken. Finally, on the case of joint ownership—

• 28 Jan 2025 · Finance Bill (First sitting) · Hansard source

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  As the Minister set out, clauses 23 and 24 extend the availability of the 100% first-year allowance for business expenditure on zero emission cars and for expenditure on plant or machinery for an electric vehicle charging point. Both allowances are extended for a single year from April 2025. In their current forms, both allowances were introduced by Conservative Governments. Although we will not oppose the clauses, there are a few questions that I would like the Minister to address. The first relates to a point that has been highlighted by the Association of Taxation Technicians concerning clause 24. The ATT has queried why the specific allowance for charging points is being extended when this expenditure has been covered by both the annual investment allowance and full expensing since the Conservative Government made those reliefs permanent in 2023. That means that the allowance is really relevant only to unincorporated business—for example, a partnership or sole trader— that has already used its annual investment allowance in full, which is a scenario that the ATT considers to be quite rare. According to the ATT, we should be able to tell how rare this is from the number of claims made for this specific allowance on tax returns. Will the Minister provide any information that he has to hand on that? HMRC has said it expects 6,000 unincorporated businesses to be impacted by clauses 23 and 24. Does the Minister have a figure for clause 24 alone and for specific unincorporated businesses that have exhausted their annual investment allowance? At the very least, I would be grateful if the Minister explained to the Committee the rationale behind that specific extension, given the context that the ATT has so clearly set out. The cost to HMRC of implementing the clauses is a cool £1.2 million—a relatively high figure for the extension of a pre-existing allowance for a single year. If clause 24 is largely redundant, this hardly seems good value for money on HMRC’s part. I therefore ask the Minister to provide a clause-by-clause breakdown of the £1.2 million of taxpayers’ money that HMRC will spend to be able to execute the relief. Turning back to clause 23, electric vehicles, unlike charging points, are not in scope of the annual investment allowance or full expensing, so I will not question the extension of that specific allowance, which we welcome. However, given the Government’s ambition to accelerate our transition to electric vehicles, I cannot help but wonder why they are putting a brake on the allowance after just a single year. The Red Book states that the allowance will “help drive the transition to electric vehicles”, yet from April 2026, a business investing in these cars will receive relief only through annual writing-down allowances of either 18% or 6%, depending on the car’s emissions—those incentives are less generous and less immediate. At Budget 2020, we extended the EV allowance by four years to provide the support and certainty to businesses that the Minister says he so desperately wants. This Labour Government have declined to do the same, creating what some—not me—may call a cliff edge. As Labour increases the pace and the burden of the transition to net zero, they are also shifting the burden away from His Majesty’s Government and on to British businesses and British consumers. Once again, it is they who will pay the price for the Government’s obsession with decarbonising our grid and imposing net zero policies on the British public.

• 28 Jan 2025 · Finance Bill (First sitting) · Hansard source

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  I am sorry, but there was a very loud cough when the hon. Lady intervened. Would she repeat her intervention?

• 28 Jan 2025 · Finance Bill (First sitting) · Hansard source

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  Does the Labour Member who is about to intervene on me support holiday lets?

• 28 Jan 2025 · Finance Bill (First sitting) · Hansard source

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  It is a great pleasure to see you in the Chair, Mr Mundell. This is one of many Finance Bill Committees that I have participated in. The subjects have changed somewhat each time, but something has remained consistent: the presence of the hon. Member for Ealing North. It is a pleasure to see him in his place, and I hope that his experience as the Treasury Minister in a Finance Bill Committee is as unpleasurable as mine when I was facing him. As the Minister rightly set out, clause 1 imposes a charge to income tax for the year 2025-26, which is a formality. Clause 2 sets the main rates of income tax in England and Northern Ireland for 2025-26—the 20% basic rate, the 40% higher rate and the 45% additional rate—leaving them unchanged. Clause 3 sets the default rate and savings rate of income tax for the tax year 2025-26 for the whole of the United Kingdom. Clause 4 freezes the starting rate limit for savings at £5,000. Of course, the Government’s big announcement on income tax in the Budget was that they would not extend the freeze to income tax thresholds beyond April 2028. Committee members will be aware that that announcement does not need to be legislated for, as the income tax personal allowance and the basic rate limit are subject to consumer prices index indexation by default, unless Parliament overrides that via a Finance Bill, and Parliament has not overridden indexation beyond the 2027-28 tax year. As the current legislative framework did not allow the Government to enact their announcement on income tax thresholds at the Budget, we must take them at their word that they will keep their promise and not succumb to the temptation to override the thresholds in future. Given the possibility that rising borrowing costs have eliminated the Chancellor’s headroom under the Government’s own stability rule, I would be grateful if the Minister could reconfirm that they will allow CPI indexation to resume from 2028-29 and that they will not renege on that promise. On a point of clarity, I would be grateful if the Minister could confirm whether the unfreezing of income tax thresholds in 2028-29 will involve an increase to the fixed portion of the income tax higher limit, which he will be aware of. The limit is set at £100,000 plus twice the personal allowance, and that £100,000 is not indexed to CPI by default. Should we expect the additional rate to rise only in so far as the personal allowance rises, or will that £100,000 be unfrozen too? I would appreciate an explanation on that. I leave it to others to interpret what it says about this Labour Government and Budget that a non-binding commitment merely not to raise some tax thresholds in three years’ time is presented as a big win for the British taxpayer. On income tax, as with most of the Government’s more positive policy announcements, the benefits are prospective and entirely speculative. Meanwhile the pain, as we have seen with national insurance contributions and in other areas, is very much immediate and certain. Pensioners left out in the cold by the Government this winter will recognise that all too familiar pattern. A pensioner who receives the full rate of the new state pension without additional income—whose income from April is roughly £12,000—is now in most cases no longer receiving the winter fuel payment. The Government have defended that decision by referring to the triple lock. Will the Minister update the Committee on when the Government now project the full rate of the new state pension to exceed the income tax personal allowance, and how many pensioners they expect will be newly taken into income tax as a result of the development? If he cannot tell the Committee, perhaps he and his colleagues will vote in favour of new clause 3, which would require the Treasury to produce and publish forward projections for the number of people receiving the full rate of the new state pension who are liable to pay income tax, and specifically what the tax liability of their state pension income will be. Pensioners cannot easily alter their financial circumstances, yet they were given less than six months’ notice of the withdrawal of the winter fuel allowance. They must not be blindsided for a second time by the taxman—especially not those who are just about getting by without additional income beyond the state pension. I urge Members and the Minister to vote for new clause 3 to prevent that from happening.

• 28 Jan 2025 · Finance Bill (First sitting) · Hansard source

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  Oh, so it was more of a heckle than an intervention, but that is very welcome too; it makes it a bit more lively for the very large audience we have today. I would be grateful if the Minister could set out the policy of this Labour Government. Do they support holiday lets? The Environment Secretary clearly supports them and wants farmers to diversify into them, while at the same time the Treasury—yes, we announced the policy in March—clearly wants to tighten up the rules on taxation. It would be great to hear the Minister clarify that, but it seems that the answer depends on which Minister one talks to on any given day. Let us see what the answer is in this Committee, from this Minister, today. Clause 25 also touches on a long-standing issue of whether letting constitutes a trading activity or a property business. The FHL regime created a clear distinction by deeming a letting business to be considered a trade for certain purposes. Some organisations, such as the excellent Chartered Institute of Taxation, are concerned that removing the regime removes this distinction and could open up a whole can of worms, leading to costly disputes for both the taxpayer and HMRC. Can the Minister clarify what defines a letting as a trading activity in the absence of the FHL regime, or at least commit to the publication of updated, clearer guidance for the industry on that subject? The Chartered Institute of Taxation is also seeking confirmation on the following points—

• 28 Jan 2025 · Finance Bill (First sitting) · Hansard source

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  As the Minister set out, clauses 13 and 14 set the charge and rates of corporation tax for financial year 2026. The main rate remains unchanged at 25%, with the standard small profits rate at 19%, and the standard marginal relief fraction remains three 200ths. In Committee on the last Finance Bill, the Exchequer Secretary to the Treasury, who was then the shadow Financial Secretary to the Treasury—a great Opposition role—told the House that if Labour won the election, they would bring certainty back for businesses by capping the rate of corporation tax at 25% for the whole of the next Parliament. At that point, he spoke of capping corporation tax and publishing a business taxation road map as though they were two separate things. This year’s Budget makes clear that there is no cap outside the road map, and once again, as with income tax, we must take Labour at their word that they will stick to a non-binding commitment, which is not legislated for in this Finance Bill. It is unclear how much certainty or stability such a loose commitment will bring, especially when the Budget blindsided businesses with a £25 billion tax hike. Not only that, but the corporate tax road map itself says that, while the Government are committed to providing stability and predictability in the business tax system, they cannot rule out changes to the corporate tax regime over the course of this Parliament. Given the Government’s ongoing worries about headroom and the uncertainty and instability that has created, will the Minister reconfirm for the parliamentary record the Government’s commitment, first, not to raise the headline rate of corporation tax for the duration of this Parliament; secondly, not to raise the small profits rate or reduce the marginal relief currently available; and thirdly, to maintain full expensing and the annual investment allowance, as well as writing down allowances and the structures and buildings allowance without meaningfully altering their eligibility?

• 28 Jan 2025 · Finance Bill (First sitting) · Hansard source

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  Let us be clear: it is good when a Government set out a tax rate over a multi-year period; we accept that that is a good thing. However, does the Minister accept—to the point raised by my hon. Friend the Member for Gordon and Buchan—that although a road map has been set out on corporation tax, the Labour party has created uncertainty by saying, before the election, that it would not increase national insurance contributions and then, immediately after the election, hitting businesses with a £25 billion tax rise, including not only a rate change but a threshold change that brings many new businesses into the tax regime? Does the Minister accept that the problem is about more than corporation tax? It is about the entire business tax ecosystem. On that basis, the charge is very clear: his Government have caused great uncertainty and great damage to British businesses.

• 28 Jan 2025 · Finance Bill (First sitting) · Hansard source

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  As the Minister set out, clauses 5 and 6 set the appropriate percentage used for calculating the taxable benefit for a company car for tax years 2028-29 and 2029-30. In those tax years, the appropriate percentage for EVs will increase by 2% to 7% in 2028-29 and 9% in 2029-30. For most other vehicles, the appropriate percentage will increase by a further 1% in each year, up to a maximum of 39%. Hybrid vehicles are the standout exception. The effect of these clauses for vehicles capable of operating on electric power while producing between 1 gram and 50 grams of CO 2 per kilometre is to introduce a steep increase in the appropriate percentage of as much as 13% in 2028-29 to reach 18%, before rising to 19% in 2029-30. Whereas previously the appropriate percentage for cars with emissions between 1 gram and 50 grams of CO 2 per kilometre would rise as the electric range reduced, from 2028-29 that system will be replaced with a single flat rate, regardless of the electric range. That means that hybrid cars with the greatest electric range, which are presumably the least polluting, will see the steepest tax rise. Any distinction between hybrid vehicles will be eliminated for the purposes of these provisions. Indeed, as the explanatory notes make very clear, rates for hybrid vehicles will align more closely with the rates for internal combustion engine vehicles, as the Minister just pointed out. It will not have escaped Members that these new rates take us to 2030. The Government have confirmed their intention to ban the sale of new petrol and diesel cars by that date. What has not yet been confirmed is the future of hybrid vehicles. The Department for Transport is consulting on which hybrid cars can be sold alongside zero emission models between 2030 and 2035. The Minister, naturally, will not pre-empt the outcome of that consultation, but these measures effectively do just that. While the Department for Transport parses the differences between plug-in hybrid electric vehicles and hybrid electric vehicles, the Treasury is eliminating that distinction altogether by 2028, let alone by 2030. Not only that, but the Treasury is effectively lumping all hybrid vehicles in with those powered by internal combustion engines. Treasury Ministers will be aware that the manufacturing of hybrid vehicles and engines supports thousands of British jobs, as my hon. Friend the Member for Gordon and Buchan alluded to, and car manufacturing firms operate on a multi-year investment cycle. The contradictions between the Bill and the Department for Transport’s consultation send a less than clear signal, which puts those jobs at risk. I would therefore be grateful if the Minister clarified the Government’s intention in making these changes, especially when the House of Lords Environment and Climate Change Committee has heard that these rates have been the single most effective intervention to date in changing consumer behaviour around different types of vehicles. I would also be grateful if the Minister outlined what steps the Treasury and HMRC are taking to make the general public aware of these changes. I grant they are quite technical, but they could impose a significant additional tax bill on certain taxpayers with plug-in hybrid vehicles. The Chartered Institute of Taxation raised that as a key area of concern, which could confront unsuspecting taxpayers—those seeking to do the right thing by purchasing a less-emitting vehicle— with a massive and steep tax rise. A higher rate taxpayer on £51,000 whose company car is a plug-in hybrid VW Golf could face an additional tax bill of as much as £1,600 in 2027-28. That strikes me as neither fair nor proportionate. It has been reported that this Labour Government ordered no fewer than 10 petrol hybrid Jaguars upon assuming office to supplement the existing departmental, chauffeur-driven pool cars. If the Minister is confident that the consequences of the changes have been communicated and fully understood, I am sure he will be able to inform the Committee of the extra tax liability in 2028-29 of someone on a salary similar to that of a Treasury Minister—£110,000—whose full-time work car is a plug-in hybrid Jaguar F-Pace valued at roughly £60,000 with an electric range of just under 40 miles. As the Committee can tell, we have serious reservations about the communication of the changes, the unfair overnight tax hikes they impose on taxpayers just trying to do the right thing, and the mixed messages they send to vehicle manufacturers by contradicting other areas of Government policy and consultation. The measures concern the ’28-29 and ’29-30 tax years, so the Government have time to think again and to bring back a better calibrated policy in a future Finance Bill. For the reasons that I have set out, we will vote against the clauses.

• 28 Jan 2025 · Finance Bill (First sitting) · Hansard source

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  Thank you, Mr Mundell. I am grateful for the hon. Member’s intervention; we all want to see people able to get on the housing ladder, particularly younger people. There is much work to be done on that. However, I would say two things. First, I question how much of an impact the measures will have on that, but I am happy to see evidence and data from the Treasury to prove her point. Secondly, we cannot deny that the hospitality sector is in different circumstances to when the previous Government announced the measures in March 2024. As I will discuss, the measures will have an impact on the sector. I think the hon. Member would agree that it is important to support our hospitality sector, hear their concerns and for me, as the official Opposition spokesperson, to make remarks on their behalf. As I was saying, this is not just about national insurance contributions, but the reduction in the secondary threshold for that tax, as well as the reduction in business rates relief, which has gone down from 70% to 40%. Each of those measures creates significant new costs for the hospitality sector, which is crucial to rural and coastal economies across the country. It is those same rural and coastal economies that will be disproportionately affected by the provisions of clause 25 and schedule 5.

• 21 Jan 2025 · Green Infrastructure Investment · Hansard source

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  Never in doubt, Mr Speaker. May I welcome the Parliamentary Secretary to the Treasury, the hon. Member for Swansea West (Torsten Bell), to his place? The removal of investment allowances from our domestic oil and gas industry is strangling domestic supplies at a time when our storage levels are depleted. Labour’s ideologically driven, unachievable obsession with decarbonising the grid by 2030 might be good news for Chinese renewables manufacturers, but it is bad news for British households. Is it not the case that the only growth that we will see from Labour’s energy policy is in the amount that people pay for their energy bills, or can the Minister stand up now and commit—just as Labour did during the general election campaign—to cutting energy bills by £300?

• 7 Jan 2025 · Draft Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2024 Draft Financial Services and Markets Act 2000 (Designated Activities) (Supervision and Enforcement) Regulations 2024 Draft Short Selling Regulations 2024 · Hansard source

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  It is always a pleasure to see you presiding over us, Mr Vickers. The Minister has covered the instruments pretty well, so I will make a few remarks, and then I have a couple of pretty straightforward questions. Let me first speak to the statutory instrument on ringfencing. As the Minister set out, the regime came into force in January 2019, requiring the largest UK banks to separate core banking services from their investment and international banking activities. The intention with the ringfencing regime was to protect British banks from shocks, whether originating from elsewhere in the group or in global financial markets. The regime currently applies to banks with more than £25 billion in retail and small and medium-sized enterprise deposits. The original legislation contained a statutory review clause requiring His Majesty’s Treasury to commission an independent review within two years of the regime coming into effect. The review was commissioned in 2021, chaired by the excellent Sir Keith Skeoch, and the review panel reported in March 2022. The SI that we are debating seeks to implement recommendations from the Skeoch review that were aimed at improving the operation of the regime. It amends previous FSMA-related SIs from 2014 to adjust the regulatory regime applying to ringfenced bodies. As the Minister set out, the changes will raise the threshold for inclusion in the ringfenced regime from £25 billion to £35 billion, and add a new exemption for retail-focused products that undertake minimal investment banking activity. Regulatory reporting requirements by ringfenced banks are also being reduced, while restrictions on the geographical operations are being relaxed. The products and services that ringfenced banks can offer are also being relaxed, as in the case of trade finance agreements. Finally, when banks become the subject of the regime because of an acquisition by a ringfenced bank, a four-year transition period is being introduced. This is a long way of saying that I very much welcome the action that is being taken by this Government as relates to this statutory instrument. However, there are two points that I would like some clarification on, given that the financial landscape is continually changing and has changed a lot in the past two years alone. Regulation must adapt to changing conditions, so let me ask two questions. First, will the £35 billion threshold be reviewed again in the future? Secondly, what will be the process for adjusting the threshold in response to future market developments and inflationary pressures? Turning to designated activities, under the 2023 Act His Majesty’s Treasury makes regulations to designate activities related to financial markets, including financial market exchanges, instruments, products or investments. The Act also gave the FCA powers to make rules and give directions relating to those designated activities. The designated activity rules framework includes provisions that allow the Treasury to designate certain activities to be regulated by the FCA, without the requirement for those carrying on the activities to become authorised persons. The SI in front of us today rightly aims to provide the FCA with the supervisory and enforcement powers to enforce the rules it makes within that framework. We support the measures set out in this SI. However, I again have a couple of points to raise, particularly points that were raised in the other place and points that I understand were raised by the Minister, as reported in the Financial Times on 4 December 2024, regarding the naming and shaming of firms by the FCA. I completely appreciate that the FCA has reopened its consultation, but I should be grateful if she would provide clarity on two points. First, at what point exactly in the enforcement process would the naming and shaming take place? Secondly, how will the Government hold the FCA accountable for its new approach, as the Minister herself said was needed in the interview? Finally and briefly, we turn to the Short Selling Regulations 2024. The SI establishes a new legislative framework for the regulation of short selling by creating a designated activity of short selling, thus giving the FCA powers to make and enforce rules for this practice. Short selling does play a vital role in financial markets, such as providing liquidity. However, it is important that the FCA has the tools it requires to monitor short selling activity and intervene when necessary to mitigate risks. This SI introduces a requirement for the FCA to publish anonymised aggregate net short positions based on all individual position notifications that it receives. It also removes restrictions on uncovered short selling of sovereign debt and sovereign credit default swaps, as the Minister said, as well as sovereign debt notification requirements. The Opposition support the measures set out in this SI. I have no further questions.

• 6 Jan 2025 · Frozen Russian Assets: Ukraine · Hansard source

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  I welcome the intervention. Our position in government and in opposition has been that we should do whatever it takes to hold Russia to account and to ensure that Russia pays, and we support Ukraine. I have set out a number of ways, financial and other, in which we did that in government. Whether in government or in opposition, we clearly have concerns about legal obstacles, which may or may not exist, and it is right that we debate that today, as well as the impact on markets, sentiment and investor confidence. The issue is not as simple as some perhaps suggest. There are a number of factors, but we should leave the option open and continue to explore all options when it comes to supporting Ukraine, and holding Russia to account and ensuring that it pays.

• 6 Jan 2025 · Frozen Russian Assets: Ukraine · Hansard source

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  I will take one more intervention.

• 6 Jan 2025 · Frozen Russian Assets: Ukraine · Hansard source

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  I welcome the intervention by my right hon. Friend, who is extremely diligent in his assessment of such matters. I will allow the Minister, who is actually in the Government, to provide their legal assessment of what may or may not be possible. I have set out our concerns, which we are happy to continue to debate and discuss, as I have said, but it is right that throughout the House we continue in our support for Ukraine. It is right that we continue to discuss all the ways we can support the Ukrainians. If there is a way, we should look at it.

• 6 Jan 2025 · Frozen Russian Assets: Ukraine · Hansard source

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  I congratulate the hon. Member for Tunbridge Wells (Mike Martin) on securing this debate and giving an incredibly moving speech, in which he told the story of Sasha—and, of course, 19,000 other children. What is happening in Ukraine is absolutely heartbreaking, and he is right to raise those concerns in the House today. Last week, many people started 2025, just as we start every new year, with hope, optimism and determination that this year will be better than the last. It is therefore right that our first debate this year is about our united resolve to ensure that Ukraine can continue to oppose Russian aggression, and about ways that we in this country can continue to support our friend and ally in this task. We have heard a number of excellent speeches from across the House, which have been both informed and incredibly moving. For 1,047 days now, Ukrainian men, women and children have been suffering the consequences of the most recent stage of a war that they did not ask for and did not start, and that continues to claim the lives of so many of their friends, family and fellow countrymen. We Conservative Members are proud of our record of support for the people of Ukraine. In government, we provided over £12 billion in military, humanitarian and economic support. Because of this, the United Kingdom has rightly taken its place as a global leader in defending Ukraine. The UK was a first mover in providing vital aid, from helmets and body armour to, yes, Storm Shadow missiles and Challenger 2 battle tanks. We created safer routes for those fleeing the conflict, through the Ukrainian family scheme and the Homes for Ukraine scheme, in which many Members participated. We established Operation Interflex, which has trained over 50,000 Ukrainian recruits on British soil since the illegal invasion in 2022, and we imposed the largest and most severe set of sanctions Russia has ever seen, with 2,000 individuals, countries and groups sanctioned. This ensures that we are targeting not just the sectors of strategic significance to the Russian Government, and that those in and around the Kremlin are left with nowhere to hide, no matter where they are based. Just as President Putin has so far sacrificed the lives of hundreds of thousands of his countrymen on the altar of his personal imperial ambitions, he seems determined to destroy the future prosperity of the Russian people. As my right hon. Friend the Member for South West Wiltshire (Dr Murrison) said, Putin must be made to pay for his actions, and a number of other Members also made that clear. Ukraine must continue to be supported in its fight against Putin’s war machine, so we welcome the fact that this Government are continuing much of the vital work that we started to strengthen the Ukrainian response. However, British support for Ukraine is underpinned by our willingness, and that of our NATO allies, to also invest in our own defence. That is why I hope that the Government will keep to their pre-election pledge of increasing defence spending in this country to 2.5% of GDP. As I have said before, I am pleased that there is such clear consensus on support for Ukraine in this House. On military support, humanitarian aid and indeed sanctions, where the Government take responsible and sensible further steps, the official Opposition will of course support them. The last Conservative Government were one of the most vocal proponents of repurposing frozen Russian assets, and we drove our G7 and European allies to coalesce around the most ambitious solution. The announcement by the Treasury on 22 October that the UK would contribute £2.26 billion to the G7’s extraordinary revenue acceleration loans to Ukraine scheme represents progress on that journey, and we very much welcome that, but we should never stop looking for innovative ways to legally mobilise frozen sovereign assets. It would therefore be good to hear from the Minister what further steps the Government are exploring. Given that the House is debating frozen Russian assets, it would be helpful for it to be provided with the most up-to-date information. First, can the Minister update the House on the total value today of Russian assets frozen by the G7 and of the total assets frozen by UK jurisdictions? Secondly, can he give some indication of the allocation of frozen assets by type? There has been some discussion of that today, but it would be helpful if the Government gave that breakdown to colleagues. Today’s debate is focused on the seizure of frozen Russian assets to assist Ukraine. The Minister will be well aware—this has been discussed at length today—of the various legal considerations, internationally and domestically, relating to seizure. Given recent comments by the EU’s chief diplomat, I look forward to the Minister clarifying exactly what the Government’s position is. Will he update the House on the Government’s latest discussions—many have called for this today—with our G7 partners and other allies on seizure? We should never allow ourselves to forget what this debate is ultimately all about. Many of us are returning to this place after a restful and perhaps indulgent Christmas break, but I remind the House that the people of Ukraine faced a very different Christmas. Nothing illustrates that better than the fact that on Christmas day, as Ukrainians gathered together at St Michael’s cathedral in Kyiv, praying for peace and victory in 2025, their prayers were cruelly interrupted by the piercing sound of air raid sirens. Be in no doubt that the fight continues, not just for those on the frontline, but for all those who want their country to be free again.

• 17 Dec 2024 · National Insurance Contributions (Secondary Class 1 Contributions) Bill · Hansard source

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  I agree completely with my hon. Friend, who has once again made a very astute intervention. It marries very clearly with what we have seen in business confidence. He mentioned the record since the pandemic. Business confidence has tanked to low levels that we have not seen since the economy had to be shut down during the pandemic. A survey by the CBI, which makes for stark reading, says that 62% of businesses have said that they will have to reduce recruitment, while 48% have said that they will be reducing existing staff levels. That is all because this Bill will impact them in ways they never imagined and were never told about. Whether businesses freeze or cut jobs, or, as the Chartered Institute of Taxation has warned, shift employees to a self-employed basis, or, even worse, offshore workers to overseas destinations, the potential impact on employment should absolutely worry us all. That is why we have tabled new clause 1, which would require the Chancellor to publish an assessment of the impact of this tax rise on the employment rate within a year of the passage of the Act. It is not controversial; it just seeks clarification and an assessment.

• 17 Dec 2024 · National Insurance Contributions (Secondary Class 1 Contributions) Bill · Hansard source

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  The hon. Gentleman was not here at that time, but those of us who were in Parliament then faced an incredibly challenging time in very difficult circumstances. Billions of pounds went to support businesses in his constituency; if he has a conversation with the average business that benefited from the furlough scheme, I am sure he will correct the record. The problem is that socialists fundamentally do not understand or care what it means to have an idea, to take a risk or to work hard day in, day out to make a business a reality. That is the problem. They think it is all so easy—that profits just flow in. They think it will all be all right, because Government can step in and take us much tax as they want. That is not the case. If Government Members talk to the average business in their constituencies, they will find this out; if they set up a business, they will see it for themselves. Perhaps most worrying of all, not only do the Government not understand the private sector, but they have completely overlooked the different ways in which the public sector provides for our communities, as my hon. Friend the Member for Hinckley and Bosworth (Dr Evans) set out. Whether healthcare, childcare or the charity sector, organisation after organisation has warned Ministers that this tax rise will impact the services they provide. That may not have been intended, but the Government have yet to act. That is why we have tabled amendments 13 to 15 and 16 to 18, which seek to protect certain key sectors from both parts of this tax in Great Britain and Northern Ireland respectively.

• 17 Dec 2024 · National Insurance Contributions (Secondary Class 1 Contributions) Bill · Hansard source

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  I find it difficult that the Labour party says that we are irresponsible with public finances, yet when we faced a once-in-a-century pandemic and spent £400 billion or £500 billion to support residents, business and families in Stoke and across the country, we decided that we needed to pay that money back and did not want debt to keep on rising. Yes, we made difficult decisions in the face of a global pandemic. There is no global pandemic today. This is a political choice, and that is the difference.