It is right for the Government to get rid of the bank levy, and I am very pleased to note that it will be reduced by 2020, but it had to be replaced by something,
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and, again, we must ask what the banks are getting for their money. The levy can be justified on the basis that we provide, as a society and as a country, a very benign and stable economy, which the banks can use to their advantage to make money.
It is not entirely unreasonable for institutions that are trading in the purest form of capital, which is cash, to be able to take advantage of that economy and make money out of it. They have a social function to perform: they have to distribute money from where it is accumulated to where it is needed, which is a very democratic process. They also have to do complicated things such as modifying maturity on deposits to loans, which is a very difficult business. None the less, we provide one of the best regulatory environments in the world. It is expensive, admittedly, but it is very good. We have a sound economy, we are getting back on our feet, and, relative to the rest of world, we can be very proud of what we have achieved. It is justifiable for the banks to pay something as a contribution to that. However, I have reservations, and I therefore ask the Minister to carry out an ongoing review of what is happening with the new bank tax, starting with the banks themselves.
It is right that the banks that will be affected are predominantly the larger ones. People talk about challenger banks. The British Bankers’ Association has about 250 members. There are a lot of banks in the UK, and 47 of them can be considered to be challenger banks. Some are as small as Kingdom bank, which has a balance sheet of just £50 million; others, such as Metro bank, are doing very well.
Most of those banks will not be affected because their profit does not exceed £25 million, but in some instances, to which the hon. Member for Wirral South (Alison McGovern) alluded, non-bank profits could be brought into this tax regime. However, I do not think it is a bad thing if some non-bank profits are moved into separate divisions within a bank. If there is a wealth manager function within the bank, for example, is it such a bad thing for that element to be separated from the bank in what effectively amounts to a protective ring-fencing, so one side can be protected from the other? I do not think there is anything too bad about that, as long as the bank is not destabilised. Of course, the regulator will have a look at that.
The vast majority of banks will not be affected. Challenger banks will be able to try and build up their profits, and when at some point those profits exceed £25 million, they will start paying the surcharge. It will be worth seeing how many banks pay it in the future, but it should be borne in mind that their legal structure enables those banks to raise capital through equity transactions. They can sell extra shares, which is how they can build their capital so they can meet the challenge of building market share against the bigger banks.
The mutuals, however, are a different animal. There seems to be some confusion over quite how many of them are being affected, but it is certainly a small number. I thought it was only two, but it could be as many as five. Mutuals cannot go to an equity market to raise capital—I do not agree with the argument that this is taking money out of the lending market, although I suppose that is probably a fact—but they are still better off than they otherwise would have been in 2010 with corporation tax at that level.
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The biggest problem for the mutual companies is that, in trying to build their assets, they have to build their equity base, which can be done only through retained profits. We therefore must be cautious about taxing them a little more and slowing the rate at which they can build retained profits. Having said that, the biggest building society, Nationwide, has created a new hybrid bond that can bring cash into its balance sheet, proving that there are alternatives.
I am genuinely happy to support clauses 16 and 17 for all the reasons I have discussed, but I say to the Minister that there may be unintended consequences. While I do not necessarily think we need an immediate review, given that this is going to be coming in over a number of years and changes will take a bit of time, the Treasury should have a look at the effect particularly on mutuals and the smaller challenger banks that possibly have non-banking earnings and are making profits of around the £25 million mark, to see whether this has a negative effect on them.
Roger Mullin: I wish to speak to SNP amendments 3 and 4, and let me say three things at the outset. First, I am seeking to curry favour by making my remarks fairly short, as we have had a long two days; I hope that is appreciated. Secondly, our amendment gives the Government the opportunity to change their approach to setting the 8% surcharge by introducing it in a tiered manner. This would have the benefit of removing a cliff-edge and replacing it with a more manageable approach. However, and thirdly, we do recognise that our amendment may not be the only way of achieving a more sensible introduction of the surcharge, and therefore we are keen to hear the Minister’s response.
What is the fundamental issue? A number of fine comments have already been made about building societies, the problems of retained profits and the like, so I shall mention some other matters. Our concern is primarily centred on the impact this Bill will have on challenger banks and the adverse consequences it will have on competition and diversity and in respect of entry barriers for prospective new challengers.
As Carlos Suarez Duarte, vice-president at rating agency Moody’s, said,
“profitable challenger banks will be the most affected by the new charge on profits,”
while changes to the bank levy
“will be positive for UK banks with large overseas operations such as HSBC and Standard Chartered.”
About 30 banks are subject to the current levy, but the new 8% additional tax on profits will affect any challenger bank with profits of more than £25 million, expanding the scope of bank taxes to potentially around 200 institutions, The Daily Telegraph estimates.
I and my colleagues have little issue with the surcharge applying to institutions that have posed a systemic risk to the sector, but the smaller banks have not posed such a danger. Indeed, the coming of the era of the challenger banks is seen by many as part of the solution to the problems posed by having too few, too powerful institutions. Challengers are not part of the problem in this regard; they could be part of the solution.
Indeed, the surcharge as currently proposed will have perverse effects on the Government’s own banking strategy. The Chancellor vowed only a couple of months ago to
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boost retail banking competition by proposing at least 15 new licences over the next few years, but as Nigel Terrington, chief executive of Paragon Group, which recently launched its own bank, said:
“This surcharge took everyone by surprise and does seem to be contrary to the stated government policy of wanting to increase competition.”
Indeed, as he has also commented:
“It feels like they’ve replaced a punishment tax on the larger banks with a charge on all of us. What did we do wrong—I thought we were part of the solution, not the problem?”
In effect, this surcharge will prove a barrier to encouraging new entrants. Indeed, the tax will hit small profitable domestic banks particularly hard, which completely goes against previous Government efforts to lower the barriers to entry for new lenders, which we welcomed. Anne Boden, the founder of Starling, has previously praised the Government strongly on more than one occasion, but she has recently been quoted as saying in relation to the new surcharge:
“It is not just a constraint on the development of smaller banks, but, more importantly, not in the best interests of consumers.”
Many of the challenger banks’ consumers and customers will be small and medium-sized enterprises. As a former owner and director of a number of SMEs myself, I know from bitter experience how difficult it can be, particularly in the early years of trading, to access banking support. That is why, in my life before entering this place, I was supportive of the move to enable the establishment of more challenger banks willing to deal more effectively with the needs of the SME sector. That is particularly important in the Scottish economy, which is heavily reliant on SMEs.
Analysts, including Gary Greenwood of Shore capital, have been highly critical. He, like others, has argued that the surcharge as currently planned will be counterproductive, and that it will inhibit the ability of smaller banks to grow and compete as effective challengers. He states:
“Banks can lever up their equity by 10 to 20 times, so for every £1 of tax you take off them, you rip £10 to £20 of lending capacity out of the market. It is crazy.”
Crazy indeed. By harming lending and therefore investment, particularly by SMEs, this will also have the effect of creating a further problem for achieving higher levels of productivity in the economy. We need more investment, not less; more lending, not less.
The Government’s explanations of why this burden should be placed so heavily on small profitable domestic banks are unconvincing. It is hard to find any analyst who sees this as helpful for competition, diversity or entry. I hope the Minister will reflect on these arguments, and perhaps address the following questions. Have the Government undertaken a detailed analysis of the likely effect on SME lending in the four countries of the UK, and if so will they publish it? Have the Government changed their policy on the need for effective banking competition? I look forward to hearing their response, and hope that it is strong and purposeful enough to satisfy our concerns.
Huw Merriman:
I very much support the Government’s proposals, and I particularly welcome the balance that they intend to strike between ensuring that banks make a fair contribution and giving greater recognition to the role that they play in providing jobs and powering growth.
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I also welcome the fantastic critique given by my hon. Friend the Member for Wyre Forest (Mark Garnier), which has resulted in my putting half my speech into the bin. It would not have been half as eloquent as his.
The hon. Member for Wirral South (Alison McGovern) mentioned the behavioural implications of the proposed change. Scottish National party Members have also touched on that subject and asked whether challenger banks were being punished via their profits. I do not believe that tax itself, either on profits or on the balance sheet, will stop risky transactions. Indeed, the European Union transaction tax would mean that a bank would pay tax at the outset and would then be free to enter into a potentially catastrophic transaction at a flat fee. In comparison, the UK’s approach has been to require banks to set aside capital, with a requirement for more to be set aside against riskier transactions. That is not a tax; it is capital being set aside. By separating the balance sheet of retail banks from the riskier investment banks, the investment bank does not have the capital to enter into that potentially catastrophic transaction in the first place. Measures taken by this Government—and, to be fair, by the prior Government, too—have helped the UK buffer itself well following the crisis of 2008.
9 pm
Alison McGovern: I do not know whether the hon. Gentleman misunderstood or whether I misunderstand him, but the particular concern in relation to profits is the impact on mutuals, which, by definition, have little access to capital and use their profits to grow capital for lending. That is the effect there is concern about. Does he think the proposed tax would be good for mutuals?
Huw Merriman: The point made earlier was that this measure helps the likes of HSBC and Standard Chartered, so I took the new clause to be about more than just mutuals, with it being about an unfair benefit being added to certain banks. I am trying to highlight that tax is not necessarily the means to control riskier transactions. Reference was made to those banks, which is why I was extending the point. With an allowance of £25 million set in place, the smaller institutions will be buffered to a certain extent. In addition, I do not believe it is essential that we start treating different institutions differently. Of course some pay less tax because they have fewer profits.
Mr Steve Baker (Wycombe) (Con): I am wondering whether my hon. Friend is as surprised as I am that Labour Members have discovered that tax on profit is harmful. Will he join me in welcoming their discovery that tax can actually do harm? Does he believe it represents a new direction of travel for Labour?
Huw Merriman: My hon. Friend puts the point much better than I could have. I commend the Committee for this section of this debate, because it is where it is at its most thoughtful and most articulate—perhaps because it is at the close of business.
The by-product of the regime to which I made reference is that foreign investment banks have moved their head offices from London to their home nations but not necessarily their jobs. That means that UK taxpayers are not liable for bank failure in the same way as they would have been previously. The point I wish to articulate
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is we should not just think of tax as the means to control the behaviour of banks; we should look at the regulation, and the separation of investment banks and retail banks. That has been a success.
As we move into the newer regime and as banks, to use their own rating, would be on “negative watch”, it is right that they pay an increased premium for the risk that still exists. We should absolutely be on our guard in that respect. It is also right that we treat them as another corporation—with corporation tax but with the tax in addition on profits. To address the point made in an intervention, I do believe that there are buffers within, but I also do not think it requires an amendment to state that the Treasury must undertake a periodical review, because the Treasury will of course do that on a daily and weekly basis. Given the support that this Government have given to allow challenger banks to be set up, the Treasury will of course ensure that the help is provided and that this is on watch throughout.
I welcome this change of approach, and believe the time has moved on from when we have a bank levy towards when we have an ordinary tax on profits. On that basis, I very much support the Government’s line.
George Kerevan (East Lothian) (SNP): I will be brief, Mr Howarth. I just wanted to respond to some of the points made by my colleague the hon. Member for Wyre Forest (Mark Garnier). Nobody from my side of the House disputes that the bank levy was in need of reform. Indeed, he made it sound far too well organised and manufactured; it was ad hoc, arbitrary and unpredictable, and it definitely needed to be replaced by something more predictable. Therefore, we are in no way rejecting the notion of moving to a surcharge on profits, which could be an effective way of raising the funds from the banks and, in a sense, of surcharging them for the social service that we provide through the Treasury in protecting them.
I do not go as far as the hon. Gentleman in relation to what I would describe as the gentle blackmail from HSBC and Standard Chartered Bank. If anyone looks at the turmoil in the Asian markets and in China at the moment, they will not think that it was a good moment for a bank to shift their headquarters from London to Hong Kong.
Let us accept that there will be a change. Our view is that we need a mechanism that allows the Treasury to use statutory instruments to vary the rate and the application of the surcharge as it evolves and as we learn whether it is impacting adversely on some banks, building societies and mutuals. That is all we are saying. We are trying to find common ground with the Chancellor. We are moving in the same direction, but the Government are rushing the application. They are making it too uniform and are choosing arbitrarily a rate of surcharge that is simply designed to reproduce the current level of tax yield. That is a bad way of approaching how we manage the surcharge on the banks.
I suppose the essence of the argument—this is really where I want to go—is that there are differences between the challenger banks and the larger banks. Those differences are not just based on their level of profit. It is quite clear that it is proportionately more expensive for the smaller
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banks to provide the capital to support the credit risk in their loans once it is weighted against their risky assets. We know that from the work that has been done by the Competition and Markets Authority, and I would prefer to take its view rather than the special pleading from the banks—even the special pleading from the challenger banks.
The Competition and Markets Authority has looked at the expense to the different scale of banks in providing the capital to support their credit risk. It has come up with figures that say that on a typical £100,000 loan to a small business, a challenger bank, or a bank of that scale, has to put aside roughly £8,000 per £100,000 loan, compared with about £6,000 from one of the very large banks. The mathematical reason for that is quite simple; it is not rocket science. The smaller bank with the smaller balance sheet is carrying proportionately more systemic risk on each loan. When a small bank loses a customer or has a non-performing loan, it is quite costly to it given the scale of its balance sheet. Therefore, when we start doing the risk-weighted analysis, it will have to put more capital by; it will cost it more. It is economies of scale. Big banks have economies of scale. A specific non-performing loan to a small business is a relatively small risk to the larger bank, so the cost to it will be small. It follows on from the matters of big and small economies of scale. Nevertheless, they act as a barrier to the smaller banks being able to grow.
If we impose a uniform profits surcharge on all the banks, there is a higher real burden on the smaller banks. I would like the Treasury to take that into account as we move along, and have the powers to be able swiftly to shift the rates. I was trying not to be prescriptive in laying down how we would set different levels for different kinds of banks; I wanted a system to evolve. I want the Treasury to have the powers to do that so that if it does prove to be more costly for the challenger banks and to be taking more from their profits and their ability to raise capital, we might think about different kinds of banding, and that would be up to the Treasury to consider. We are simply saying that the smaller banks have different cost structures and therefore different risk elements, which means that imposing a single levy on profits across all the banks, big and small, is a bit too arbitrary and a bit too ad hoc. In other words, it brings us back to the sort of problems that we had with the original bank levy.
Harriett Baldwin: It has been a great pleasure to have my Opposition shadow, the hon. Member for Wirral South (Alison McGovern), in the Chamber today making the points that she has. I sincerely hope that next week she will continue to be my Opposition shadow, because it is clear that she takes her role very seriously. I know that she supported the hon. Member for Leicester South when it came to nominating the leader of her party, so I hope that her point of view prevails when it comes to the announcement on Saturday.
Alison McGovern: I thank the Minister for giving way. First, I supported my hon. Friend the Member for Leicester West (Liz Kendall). Secondly, I thought I liked the Minister.
The Temporary Chair (Mr George Howarth): Order. Before the Minister resumes her speech, fascinating and colourful as this exchange is I hope that it will not be too extended.
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Harriett Baldwin: You are quite right, Mr Howarth. What I wanted to say was that one would not believe from the remarks that the hon. Member for Wirral South made at the beginning of the debate that the banking system had fallen into massive failure, meaning that this Chancellor had to take steps in 2010 to sort out the country’s banking system and the deficit. Listening to the hon. Lady this evening, one would have thought that banks were then paying less tax than they are today but in fact, after the changes in clauses 16 and 17, the banking sector will pay the lowest rate of bank tax in the G7.
One would also not believe from the remarks we heard at the beginning of the debate that over the 13 years for which the hon. Lady’s party was in power there was no increase in competition in banking. There were more than 20 inquiries into banking competitiveness, but they were obviously unsuccessful. The hon. Lady asked a number of questions, and although I do not want to detain the House for long with this entertaining discussion I want to respond to some of the points raised in the debate.
I was asked a couple of times about building societies, and I said that 90% of building societies would be unaffected by these changes. Obviously, the vast majority of building societies do not make a profit of more than £25 million a year, so the sector will benefit from the reduction in corporation tax over the life of this Parliament down to 18% by 2020.
Alison McGovern: I asked the Minister specifically what that 90% meant— 90% by number, or by size?
Harriett Baldwin: Absolutely, and it is 90% of all building societies. Clearly, a handful of building societies are big enough to be able to pay the additional levy contained in these clauses and, even after the surcharge, they will still be paying a lower rate of corporation tax than they were paying under the previous Labour Government. With the hon. Lady’s conversion to lower taxes, she should be welcoming and celebrating the fact that the Budget announces these long-term changes.
The hon. Lady also asked whether the numbers in the Red Book take into account the corporation tax changes, and indeed they do. She asked about revenues after 2020-21 and I am delighted that she recognises that it will be the Conservative party that will be making those decisions after the next general election. She asked about the Ernst and Young forecast in today’s papers, and even she got the giggles when she raised the forecast, which is really quite laughable. It takes into account only one side of the equation in terms of the potential rise in the take from bank corporation tax.
The hon. Lady asked about competition, and I have mentioned the competition track record of her party when in power, but it is helpful to be able to talk about the range of things my party did in the last Parliament to improve bank competition. It is a strong focus of this Government. I am glad that the SNP spokesman, the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin), mentioned the ambition to have 15 new banks receive a banking licence. I understand that there are a large number in the pipeline. Indeed, one new bank has already got its licence this year.
8 Sep 2015 : Column 370
9.15 pm
The additional steps we have taken to increase bank competition include giving the Financial Conduct Authority and the Prudential Regulation Authority a strong focus on competition; creating the new Payment Systems Regulator to ensure that the challenger banks gain access to the payment systems on fair terms; and introducing a seven-day current account switching service, which is about to have its second anniversary—over 2 million people have now used that simplified switching service. Of course, the Small Business, Enterprise and Employment Act 2015 requires big banks to refer to other organisations any small and medium-sized enterprises that it might have turned down for finance. We are taking a range of steps to improve banking competition.
The hon. Member for Kirkcaldy and Cowdenbeath asked whether the tax regime supports the challenger banks. Of course it does, because the rate of corporation tax will fall to 18% by the end of this Parliament, which means an extremely attractive rate on the first £25 million of profits, and the vast majority of challenger banks will fall into that category. By the end of this Parliament, and taking into account the surcharge, the combined rate for a bank that makes £200 million in profits, for example, will be 25%. That will be a very competitive rate, and it balances the need for revenues to the Exchequer with the need for capital formation in the banking system.
Alison McGovern: I know that the Minister is trying to rattle through this quickly, but I have a question. We can all trade previous Governments’ records—I could draw attention to the impact on mutuals and building societies generally in 1986—but let us talk about the future. Clearly these changes will have an impact on building societies, which offer consumers a unique proposition because of their structure. Will she commit this evening to ensuring that the changes she is making will not harm the mutual banking sector?
Harriett Baldwin: Again, I am surprised that the hon. Lady seems to want me to keep mentioning the rate of corporation tax, because it is now lower for building societies than it was when her party was in power—it seems an extraordinary line of attack. Yes, a handful of building societies are large enough to pay the surcharge, but 90% of them—by number—will not only be unaffected by the change, but will benefit. Capital formation and the ability to retain earnings within the mutuals will improve as a result of the corporation tax reductions that we are introducing, which she opposed in the manifesto she stood on at the general election.
In conclusion—I will be quick, because I know that the Committee wants to express an opinion—I commend clauses 16 and 17 and schedules 2 and 3 to the Committee, and I respectfully request that the hon. Members for Wirral South and for Kirkcaldy and Cowdenbeath do not to press amendments 3 and 4 and new clause 1.
Clause 16 accordingly ordered to stand part of the Bill.
Clause 17 ordered to stand part of the Bill.
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Banking companies: surcharge
Amendment proposed: 3, page 74, line 4, leave out “8%” and insert “the relevant percentage”.—(Roger Mullin.)
Question put, That the amendment be made.
The Committee divided:
Ayes 60, Noes 303.
Division No. 65]
[
9.19 pm
AYES
Ahmed-Sheikh, Ms Tasmina
Arkless, Richard
Bardell, Hannah
Blackford, Ian
Blackman, Kirsty
Boswell, Philip
Brock, Deidre
Brown, Alan
Cameron, Dr Lisa
Chapman, Douglas
Cherry, Joanna
Cowan, Ronnie
Crawley, Angela
Docherty, Martin John
Dodds, rh Mr Nigel
Donaldson, rh Mr Jeffrey M.
Donaldson, Stuart
Edwards, Jonathan
Ferrier, Margaret
Gethins, Stephen
Gibson, Patricia
Grady, Patrick
Grant, Peter
Gray, Neil
Hendry, Drew
Kerevan, George
Law, Chris
Lucas, Caroline
Mc Nally, John
McDonald, Stewart
McDonald, Stuart C.
McGarry, Natalie
McLaughlin, Anne
Monaghan, Carol
Monaghan, Dr Paul
Mullin, Roger
Newlands, Gavin
Nicolson, John
O'Hara, Brendan
Oswald, Kirsten
Paterson, Steven
Ritchie, Ms Margaret
Robertson, Angus
Robinson, Gavin
Salmond, rh Alex
Saville Roberts, Liz
Shannon, Jim
Sheppard, Tommy
Simpson, David
Skinner, Mr Dennis
Stephens, Chris
Thewliss, Alison
Thomson, Michelle
Weir, Mike
Whiteford, Dr Eilidh
Whitford, Dr Philippa
Williams, Hywel
Wilson, Corri
Wilson, Sammy
Wishart, Pete
Tellers for the Ayes:
Owen Thompson
and
Marion Fellows
NOES
Afriyie, Adam
Aldous, Peter
Allan, Lucy
Allen, Heidi
Amess, Sir David
Andrew, Stuart
Ansell, Caroline
Argar, Edward
Atkins, Victoria
Bacon, Mr Richard
Baker, Mr Steve
Baldwin, Harriett
Barclay, Stephen
Barwell, Gavin
Bebb, Guto
Bellingham, Mr Henry
Beresford, Sir Paul
Berry, Jake
Berry, James
Bingham, Andrew
Blackman, Bob
Blackwood, Nicola
Blunt, Crispin
Boles, Nick
Bone, Mr Peter
Borwick, Victoria
Bottomley, Sir Peter
Bradley, Karen
Brady, Mr Graham
Brazier, Mr Julian
Bridgen, Andrew
Brine, Steve
Brokenshire, rh James
Bruce, Fiona
Buckland, Robert
Burns, Conor
Burns, rh Sir Simon
Burrowes, Mr David
Burt, rh Alistair
Cairns, Alun
Carmichael, Neil
Cartlidge, James
Caulfield, Maria
Chalk, Alex
Chishti, Rehman
Chope, Mr Christopher
Churchill, Jo
Clark, rh Greg
Clarke, rh Mr Kenneth
Cleverly, James
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Costa, Alberto
Cox, Mr Geoffrey
Crabb, rh Stephen
Crouch, Tracey
Davies, Byron
Davies, Chris
Davies, David T. C.
Davies, Glyn
Davies, Dr James
Davies, Mims
Davies, Philip
Davis, rh Mr David
Dinenage, Caroline
Djanogly, Mr Jonathan
Donelan, Michelle
Double, Steve
Dowden, Oliver
Doyle-Price, Jackie
Drummond, Mrs Flick
Duncan, rh Sir Alan
Duncan Smith, rh Mr Iain
Dunne, Mr Philip
Ellis, Michael
Ellison, Jane
Ellwood, Mr Tobias
Elphicke, Charlie
Eustice, George
Evans, Graham
Evans, Mr Nigel
Evennett, rh Mr David
Fabricant, Michael
Fallon, rh Michael
Farron, Tim
Fernandes, Suella
Field, rh Mark
Foster, Kevin
Francois, rh Mr Mark
Frazer, Lucy
Freeman, George
Freer, Mike
Fuller, Richard
Fysh, Marcus
Garnier, rh Sir Edward
Garnier, Mark
Gauke, Mr David
Ghani, Nusrat
Gibb, Mr Nick
Gillan, rh Mrs Cheryl
Glen, John
Gove, rh Michael
Graham, Richard
Grant, Mrs Helen
Gray, Mr James
Grayling, rh Chris
Green, Chris
Green, rh Damian
Greening, rh Justine
Grieve, rh Mr Dominic
Griffiths, Andrew
Gummer, Ben
Gyimah, Mr Sam
Halfon, rh Robert
Hall, Luke
Hammond, Stephen
Hancock, rh Matthew
Hands, rh Greg
Harper, rh Mr Mark
Harrington, Richard
Harris, Rebecca
Hart, Simon
Haselhurst, rh Sir Alan
Hayes, rh Mr John
Heald, Sir Oliver
Heappey, James
Heaton-Harris, Chris
Heaton-Jones, Peter
Henderson, Gordon
Herbert, rh Nick
Hermon, Lady
Hinds, Damian
Hoare, Simon
Hollingbery, George
Hollinrake, Kevin
Hollobone, Mr Philip
Holloway, Mr Adam
Hopkins, Kris
Howarth, Sir Gerald
Howell, John
Howlett, Ben
Huddleston, Nigel
Hunt, rh Mr Jeremy
Hurd, Mr Nick
Jackson, Mr Stewart
Javid, rh Sajid
Jayawardena, Mr Ranil
Jenkin, Mr Bernard
Jenkyns, Andrea
Jenrick, Robert
Johnson, Gareth
Johnson, Joseph
Jones, Andrew
Jones, rh Mr David
Jones, Mr Marcus
Kawczynski, Daniel
Kennedy, Seema
Knight, rh Sir Greg
Knight, Julian
Kwarteng, Kwasi
Lancaster, Mark
Latham, Pauline
Leadsom, Andrea
Lefroy, Jeremy
Leigh, Sir Edward
Leslie, Charlotte
Letwin, rh Mr Oliver
Lewis, Brandon
Lewis, rh Dr Julian
Liddell-Grainger, Mr Ian
Lidington, rh Mr David
Lilley, rh Mr Peter
Lopresti, Jack
Lord, Jonathan
Loughton, Tim
Lumley, Karen
Mackinlay, Craig
Mackintosh, David
Main, Mrs Anne
Mak, Mr Alan
Malthouse, Kit
Mann, Scott
Mathias, Dr Tania
May, rh Mrs Theresa
Maynard, Paul
McCartney, Jason
McCartney, Karl
McPartland, Stephen
Menzies, Mark
Mercer, Johnny
Merriman, Huw
Metcalfe, Stephen
Miller, rh Mrs Maria
Milling, Amanda
Mills, Nigel
Milton, rh Anne
Mitchell, rh Mr Andrew
Mordaunt, Penny
Morgan, rh Nicky
Morris, Anne Marie
Morris, David
Morris, James
Morton, Wendy
Mowat, David
Mundell, rh David
Murray, Mrs Sheryll
Neill, Robert
Nokes, Caroline
Norman, Jesse
Nuttall, Mr David
Offord, Dr Matthew
Opperman, Guy
Parish, Neil
Patel, rh Priti
Paterson, rh Mr Owen
Pawsey, Mark
Penning, rh Mike
Penrose, John
Percy, Andrew
Phillips, Stephen
Philp, Chris
Pickles, rh Sir Eric
Pincher, Christopher
Poulter, Dr Daniel
Pow, Rebecca
Prentis, Victoria
Pritchard, Mark
Pursglove, Tom
Quin, Jeremy
Quince, Will
Raab, Mr Dominic
Redwood, rh John
Rees-Mogg, Mr Jacob
Robertson, Mr Laurence
Robinson, Mary
Rudd, rh Amber
Rutley, David
Sandbach, Antoinette
Scully, Paul
Selous, Andrew
Shapps, rh Grant
Sharma, Alok
Shelbrooke, Alec
Simpson, rh Mr Keith
Skidmore, Chris
Smith, Chloe
Smith, Henry
Smith, Julian
Smith, Royston
Soames, rh Sir Nicholas
Solloway, Amanda
Soubry, rh Anna
Spelman, rh Mrs Caroline
Spencer, Mark
Stephenson, Andrew
Stevenson, John
Stewart, Bob
Stewart, Iain
Stewart, Rory
Streeter, Mr Gary
Stride, Mel
Stuart, Graham
Sturdy, Julian
Sunak, Rishi
Swayne, rh Mr Desmond
Swire, rh Mr Hugo
Syms, Mr Robert
Thomas, Derek
Throup, Maggie
Timpson, Edward
Tolhurst, Kelly
Tomlinson, Justin
Tomlinson, Michael
Tracey, Craig
Trevelyan, Mrs Anne-Marie
Truss, rh Elizabeth
Tugendhat, Tom
Turner, Mr Andrew
Tyrie, rh Mr Andrew
Vaizey, Mr Edward
Vara, Mr Shailesh
Vickers, Martin
Walker, Mr Charles
Walker, Mr Robin
Warburton, David
Warman, Matt
Watkinson, Dame Angela
Wharton, James
Whately, Helen
Wheeler, Heather
White, Chris
Whittaker, Craig
Whittingdale, rh Mr John
Williams, Craig
Williamson, rh Gavin
Wilson, Mr Rob
Wollaston, Dr Sarah
Wood, Mike
Wragg, William
Wright, rh Jeremy
Zahawi, Nadhim
Tellers for the Noes:
Simon Kirby
and
Sarah Newton
Question accordingly negatived.
8 Sep 2015 : Column 372
8 Sep 2015 : Column 373
Impact of changes to the bank levy rate and of the banking companies surcharge
‘(1) The Chancellor of the Exchequer shall, within three months of the passing of this Act, undertake a review of the overall impact of the changes made by sections 16 and 17 of, and schedules 2 and 3 to, this Act, on:
8 Sep 2015 : Column 374
(a) the structure of bank balance sheets;
(b) the long-term tax revenue from the banking sector; and
(c) competition and diversity within the banking sector.
(2) The Chancellor of the Exchequer must lay a copy of the review before both Houses of Parliament.’—(Alison McGovern.)
Brought up, and read the First time.
Question put, That the clause be read a Second time.
The Committee divided:
Ayes 228, Noes 302.
Division No. 66]
[
9.32 pm
AYES
Abrahams, Debbie
Ahmed-Sheikh, Ms Tasmina
Ali, Rushanara
Allen, Mr Graham
Anderson, Mr David
Arkless, Richard
Austin, Ian
Bailey, Mr Adrian
Bardell, Hannah
Barron, rh Kevin
Benn, rh Hilary
Berger, Luciana
Betts, Mr Clive
Blackford, Ian
Blackman, Kirsty
Blenkinsop, Tom
Blomfield, Paul
Boswell, Philip
Bradshaw, rh Mr Ben
Brock, Deidre
Brown, Alan
Brown, Lyn
Buck, Ms Karen
Burden, Richard
Burgon, Richard
Byrne, rh Liam
Cadbury, Ruth
Cameron, Dr Lisa
Campbell, rh Mr Alan
Champion, Sarah
Chapman, Douglas
Chapman, Jenny
Cherry, Joanna
Clwyd, rh Ann
Coaker, Vernon
Coffey, Ann
Cooper, Julie
Cooper, Rosie
Cowan, Ronnie
Coyle, Neil
Crausby, Mr David
Crawley, Angela
Cummins, Judith
Cunningham, Alex
Cunningham, Mr Jim
Dakin, Nic
David, Wayne
Davies, Geraint
De Piero, Gloria
Docherty, Martin John
Dodds, rh Mr Nigel
Donaldson, rh Mr Jeffrey M.
Donaldson, Stuart
Doughty, Stephen
Dowd, Jim
Dowd, Peter
Durkan, Mark
Eagle, Ms Angela
Eagle, Maria
Edwards, Jonathan
Efford, Clive
Elliott, Julie
Elliott, Tom
Esterson, Bill
Evans, Chris
Farrelly, Paul
Farron, Tim
Fellows, Marion
Ferrier, Margaret
Fitzpatrick, Jim
Fletcher, Colleen
Flint, rh Caroline
Flynn, Paul
Fovargue, Yvonne
Foxcroft, Vicky
Gapes, Mike
Gethins, Stephen
Gibson, Patricia
Glass, Pat
Glindon, Mary
Godsiff, Mr Roger
Goodman, Helen
Grady, Patrick
Grant, Peter
Gray, Neil
Green, Kate
Greenwood, Lilian
Haigh, Louise
Hamilton, Fabian
Hanson, rh Mr David
Harpham, Harry
Harris, Carolyn
Hayes, Helen
Hayman, Sue
Healey, rh John
Hendrick, Mr Mark
Hendry, Drew
Hepburn, Mr Stephen
Hermon, Lady
Hodgson, Mrs Sharon
Hollern, Kate
Hopkins, Kelvin
Hunt, Tristram
Hussain, Imran
Irranca-Davies, Huw
Jarvis, Dan
Johnson, Diana
Jones, Gerald
Jones, Graham
Jones, Mr Kevan
Kane, Mike
Kaufman, rh Sir Gerald
Keeley, Barbara
Kerevan, George
Kinahan, Danny
Kinnock, Stephen
Kyle, Peter
Lavery, Ian
Law, Chris
Leslie, Chris
Lewell-Buck, Mrs Emma
Long Bailey, Rebecca
Lucas, Caroline
Lucas, Ian C.
Lynch, Holly
Mactaggart, rh Fiona
Madders, Justin
Mahmood, Mr Khalid
Mahmood, Shabana
Malhotra, Seema
Mann, John
Marsden, Mr Gordon
Maskell, Rachael
Matheson, Christian
Mc Nally, John
McCarthy, Kerry
McDonald, Andy
McDonald, Stewart
McDonald, Stuart C.
McFadden, rh Mr Pat
McGarry, Natalie
McGinn, Conor
McGovern, Alison
McInnes, Liz
McLaughlin, Anne
Meacher, rh Mr Michael
Meale, Sir Alan
Mearns, Ian
Monaghan, Carol
Monaghan, Dr Paul
Moon, Mrs Madeleine
Morden, Jessica
Morris, Grahame M.
Mullin, Roger
Murray, Ian
Newlands, Gavin
Nicolson, John
O'Hara, Brendan
Onn, Melanie
Onwurah, Chi
Osamor, Kate
Oswald, Kirsten
Owen, Albert
Paterson, Steven
Pearce, Teresa
Pennycook, Matthew
Phillips, Jess
Phillipson, Bridget
Rayner, Angela
Reed, Mr Jamie
Rees, Christina
Reynolds, Emma
Reynolds, Jonathan
Rimmer, Marie
Ritchie, Ms Margaret
Robertson, Angus
Robinson, Gavin
Robinson, Mr Geoffrey
Salmond, rh Alex
Saville Roberts, Liz
Shannon, Jim
Sheppard, Tommy
Sherriff, Paula
Shuker, Mr Gavin
Simpson, David
Skinner, Mr Dennis
Slaughter, Andy
Smeeth, Ruth
Smith, rh Mr Andrew
Smith, Angela
Smith, Cat
Smith, Jeff
Smith, Nick
Smith, Owen
Smyth, Karin
Spellar, rh Mr John
Stephens, Chris
Stevens, Jo
Streeting, Wes
Stuart, Ms Gisela
Tami, Mark
Thewliss, Alison
Thomas, Mr Gareth
Thomas-Symonds, Nick
Thompson, Owen
Thomson, Michelle
Timms, rh Stephen
Trickett, Jon
Turley, Anna
Turner, Karl
Twigg, Derek
Twigg, Stephen
Vaz, rh Keith
Watson, Mr Tom
Weir, Mike
Whiteford, Dr Eilidh
Whitehead, Dr Alan
Whitford, Dr Philippa
Williams, Hywel
Wilson, Corri
Wilson, Phil
Wilson, Sammy
Winnick, Mr David
Winterton, rh Ms Rosie
Wishart, Pete
Woodcock, John
Wright, Mr Iain
Zeichner, Daniel
Tellers for the Ayes:
Heidi Alexander
and
Susan Elan Jones
NOES
Afriyie, Adam
Aldous, Peter
Allan, Lucy
Allen, Heidi
Amess, Sir David
Andrew, Stuart
Ansell, Caroline
Argar, Edward
Atkins, Victoria
Bacon, Mr Richard
Baker, Mr Steve
Baldwin, Harriett
Barclay, Stephen
Barwell, Gavin
Bebb, Guto
Bellingham, Mr Henry
Beresford, Sir Paul
Berry, Jake
Berry, James
Bingham, Andrew
Blackman, Bob
Blackwood, Nicola
Blunt, Crispin
Boles, Nick
Bone, Mr Peter
Borwick, Victoria
Bottomley, Sir Peter
Bradley, Karen
Brady, Mr Graham
Brazier, Mr Julian
Bridgen, Andrew
Brine, Steve
Brokenshire, rh James
Bruce, Fiona
Buckland, Robert
Burns, Conor
Burns, rh Sir Simon
Burrowes, Mr David
Burt, rh Alistair
Cairns, Alun
Carmichael, Neil
Cartlidge, James
Cash, Sir William
Caulfield, Maria
Chalk, Alex
Chishti, Rehman
Chope, Mr Christopher
Churchill, Jo
Clark, rh Greg
Clarke, rh Mr Kenneth
Cleverly, James
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Costa, Alberto
Cox, Mr Geoffrey
Crabb, rh Stephen
Crouch, Tracey
Davies, Byron
Davies, Chris
Davies, David T. C.
Davies, Glyn
Davies, Dr James
Davies, Mims
Davies, Philip
Davis, rh Mr David
Dinenage, Caroline
Djanogly, Mr Jonathan
Donelan, Michelle
Double, Steve
Dowden, Oliver
Doyle-Price, Jackie
Drummond, Mrs Flick
Duncan, rh Sir Alan
Duncan Smith, rh Mr Iain
Dunne, Mr Philip
Ellis, Michael
Ellison, Jane
Ellwood, Mr Tobias
Elphicke, Charlie
Eustice, George
Evans, Graham
Evans, Mr Nigel
Evennett, rh Mr David
Fabricant, Michael
Fallon, rh Michael
Fernandes, Suella
Field, rh Mark
Foster, Kevin
Francois, rh Mr Mark
Frazer, Lucy
Freeman, George
Freer, Mike
Fuller, Richard
Fysh, Marcus
Garnier, rh Sir Edward
Garnier, Mark
Gauke, Mr David
Ghani, Nusrat
Gibb, Mr Nick
Gillan, rh Mrs Cheryl
Glen, John
Gove, rh Michael
Graham, Richard
Grant, Mrs Helen
Gray, Mr James
Grayling, rh Chris
Green, Chris
Green, rh Damian
Greening, rh Justine
Grieve, rh Mr Dominic
Griffiths, Andrew
Gummer, Ben
Gyimah, Mr Sam
Halfon, rh Robert
Hall, Luke
Hammond, Stephen
Hancock, rh Matthew
Hands, rh Greg
Harper, rh Mr Mark
Harrington, Richard
Harris, Rebecca
Hart, Simon
Haselhurst, rh Sir Alan
Hayes, rh Mr John
Heald, Sir Oliver
Heappey, James
Heaton-Harris, Chris
Heaton-Jones, Peter
Henderson, Gordon
Herbert, rh Nick
Hinds, Damian
Hoare, Simon
Hollingbery, George
Hollinrake, Kevin
Hollobone, Mr Philip
Holloway, Mr Adam
Hopkins, Kris
Howarth, Sir Gerald
Howell, John
Howlett, Ben
Huddleston, Nigel
Hunt, rh Mr Jeremy
Hurd, Mr Nick
Jackson, Mr Stewart
Javid, rh Sajid
Jayawardena, Mr Ranil
Jenkin, Mr Bernard
Jenkyns, Andrea
Jenrick, Robert
Johnson, Gareth
Johnson, Joseph
Jones, Andrew
Jones, rh Mr David
Jones, Mr Marcus
Kawczynski, Daniel
Kennedy, Seema
Knight, rh Sir Greg
Knight, Julian
Kwarteng, Kwasi
Lancaster, Mark
Latham, Pauline
Leadsom, Andrea
Lefroy, Jeremy
Leigh, Sir Edward
Leslie, Charlotte
Letwin, rh Mr Oliver
Lewis, Brandon
Lewis, rh Dr Julian
Liddell-Grainger, Mr Ian
Lidington, rh Mr David
Lilley, rh Mr Peter
Lopresti, Jack
Lord, Jonathan
Loughton, Tim
Lumley, Karen
Mackinlay, Craig
Mackintosh, David
Main, Mrs Anne
Mak, Mr Alan
Malthouse, Kit
Mann, Scott
Mathias, Dr Tania
May, rh Mrs Theresa
Maynard, Paul
McCartney, Jason
McCartney, Karl
McPartland, Stephen
Menzies, Mark
Mercer, Johnny
Merriman, Huw
Metcalfe, Stephen
Miller, rh Mrs Maria
Milling, Amanda
Mills, Nigel
Milton, rh Anne
Mitchell, rh Mr Andrew
Mordaunt, Penny
Morgan, rh Nicky
Morris, Anne Marie
Morris, David
Morris, James
Morton, Wendy
Mowat, David
Mundell, rh David
Murray, Mrs Sheryll
Neill, Robert
Nokes, Caroline
Norman, Jesse
Nuttall, Mr David
Offord, Dr Matthew
Opperman, Guy
Parish, Neil
Patel, rh Priti
Paterson, rh Mr Owen
Pawsey, Mark
Penning, rh Mike
Penrose, John
Percy, Andrew
Phillips, Stephen
Philp, Chris
Pickles, rh Sir Eric
Pincher, Christopher
Poulter, Dr Daniel
Pow, Rebecca
Prentis, Victoria
Pritchard, Mark
Pursglove, Tom
Quin, Jeremy
Quince, Will
Raab, Mr Dominic
Redwood, rh John
Rees-Mogg, Mr Jacob
Robertson, Mr Laurence
Robinson, Mary
Rudd, rh Amber
Rutley, David
Sandbach, Antoinette
Scully, Paul
Selous, Andrew
Shapps, rh Grant
Sharma, Alok
Shelbrooke, Alec
Simpson, rh Mr Keith
Skidmore, Chris
Smith, Chloe
Smith, Henry
Smith, Julian
Smith, Royston
Soames, rh Sir Nicholas
Solloway, Amanda
Soubry, rh Anna
Spelman, rh Mrs Caroline
Spencer, Mark
Stephenson, Andrew
Stevenson, John
Stewart, Bob
Stewart, Iain
Stewart, Rory
Streeter, Mr Gary
Stride, Mel
Stuart, Graham
Sturdy, Julian
Sunak, Rishi
Swayne, rh Mr Desmond
Swire, rh Mr Hugo
Syms, Mr Robert
Thomas, Derek
Throup, Maggie
Timpson, Edward
Tolhurst, Kelly
Tomlinson, Justin
Tomlinson, Michael
Tracey, Craig
Trevelyan, Mrs Anne-Marie
Truss, rh Elizabeth
Tugendhat, Tom
Turner, Mr Andrew
Tyrie, rh Mr Andrew
Vaizey, Mr Edward
Vara, Mr Shailesh
Vickers, Martin
Walker, Mr Charles
Walker, Mr Robin
Warburton, David
Warman, Matt
Watkinson, Dame Angela
Wharton, James
Whately, Helen
Wheeler, Heather
White, Chris
Whittaker, Craig
Whittingdale, rh Mr John
Williams, Craig
Williamson, rh Gavin
Wilson, Mr Rob
Wollaston, Dr Sarah
Wood, Mike
Wragg, William
Wright, rh Jeremy
Zahawi, Nadhim
Tellers for the Noes:
Simon Kirby
and
Sarah Newton
Question accordingly negatived.
8 Sep 2015 : Column 375
8 Sep 2015 : Column 376
8 Sep 2015 : Column 377
8 Sep 2015 : Column 378
The Deputy Speaker resumed the Chair.
Bill (Clauses 16, 17, 43 and 45, and Schedules 2 and 3) reported, without amendment, and ordered to lie on the Table.
Business without Debate
Delegated Legislation
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Consumer Protection
That the draft Consumer Rights Act 2015 (Consequential Amendments) Order 2015, which was laid before this House on 18 June, be approved.
That the draft Enterprise Act 2002 (Part 8 Domestic Infringements) Order 2015, which was laid before this House on 18 June, be approved.—(Kris Hopkins.)
8 Sep 2015 : Column 379
Online Retail Delivery Charges
Motion made, and Question proposed, That this House do now adjourn.—(Kris Hopkins.)
9.45 pm
Gavin Robinson (Belfast East) (DUP): I am grateful for this opportunity—
Madam Deputy Speaker (Mrs Eleanor Laing): Order. Other hon. Members do not stand up in their places when a Member is speaking.
Gavin Robinson: I thought I had stepped out of place there and that I had done something wrong.
I am grateful for the opportunity to raise an important consumer issue that affects individuals’ rights across the United Kingdom, but most particularly in Northern Ireland, the Isle of Man, the Channel Islands and the highlands and islands of Scotland. I am indebted to Kellin McCloskey in the Gallery from the Consumer Council for Northern Ireland and David Moyes of Consumer Advice Scotland for all their hard work on this issue. I thank the Minister this evening for being prepared to respond and recognise that on this issue, a continued and concerted effort is required to effect the changes necessary to bring a level playing field to consumers right across the United Kingdom.
On 30 June, I put a question to the Secretary of State for Business, Innovation and Skills:
“Has the Secretary of State had an opportunity to consider last week’s report from the Northern Ireland Consumer Council, which highlights the barriers to online consumers getting postage to Northern Ireland, the islands or the highlands of the United Kingdom? What steps can the Secretary of State take to create, dare I say it, a ‘one nation’ consumer market where the inhibitors and the barriers are removed once and for all?”
In response, I was delighted to hear from the Secretary of State:
“I have not yet had an opportunity to look at the report, but now that the hon. Gentleman has mentioned it, I shall certainly do so, and I shall then be able to respond to him on the issue that he has raised. He may be interested to know, however, that just today it was reported that consumer confidence throughout the United Kingdom had hit a 15-year high, which means that the Government’s long-term economic plan is working.”—[Official Report, 30 June 2015; Vol. 597, c. 1336.]
I am delighted that consumer confidence was at a 15-year high, but I suspect the following figures I seek to rely on from the Consumer Council for Northern Ireland’s report are just not as encouraging to read.
When a constituent of mine contacted me about an online purchase, he explained how initially delighted he was to read that not only had he found a good deal online from a reputable site, but that delivery was advertised as “Free in the UK”. It was only at the final pay page that he discovered that the free delivery he had been promised was for mainland UK only, and that to proceed with the purchase he was required to pay an additional £5.99. Unclear as to whether this was an isolated issue, another constituent who works in east Belfast explained that he had faced a similar problem. Using eBay on this occasion, the inducement of free UK postage and packaging was quickly withdrawn when he supplied his postcode. To proceed with the
8 Sep 2015 : Column 380
purchase, he had to phone the retailer directly and agree a fee of £14, representing an additional 10% of the item cost.
Ian Blackford (Ross, Skye and Lochaber) (SNP): I am grateful to the hon. Gentleman for giving way and for securing this most important debate. As he rightly said, it affects constituencies right across the United Kingdom and certainly in the highlands of Scotland.
I note that a survey from Citizens Advice Scotland, published today, shows that average delivery prices across the UK have increased from £4.99 to £5.01 over the past three years—a decline in prices in real terms—yet over the same time the average highland surcharge over and above that has increased form £12.10 to £14.23. When we consider that online shopping is 15% of the retail market in the UK, consumers in rural areas are facing a massive increased cost to participate in this growing market. Does the hon. Gentleman agree that the Government must protect consumers in rural areas from being exploited, and that, it is a first step, via a division of the universal service obligation, to take into account the growing importance of parcel delivery in the modern world?
Gavin Robinson: Of course I agree with the hon. Gentleman. Perhaps uniquely in my short experience in the Chamber, this Adjournment debate has struck some interest from the more peripheral parts of the United Kingdom. I do not wish to be mean or unkind, but it is important that I do not accept interventions from across the Chamber, to give me the opportunity to put forward my points. I should note that the hon. Member for Romford (Andrew Rosindell), the chairman of the all-party group on the Isle of Man and the all-party group on the Channel Islands, has taken a keen interest in this issue. I am grateful to Members from across the Chamber who have highlighted the importance of this matter.
The Consumer Council for Northern Ireland, following its survey, indicated that 33% of online retailers applied a delivery exclusion to Northern Ireland. That can include higher delivery costs, longer delivery times or a refusal to offer a service at all. Other peripheral areas of the UK face high exclusion rates: 42% in the Channel Islands, 38% in the Isle of Man and 31% in the Scottish highlands and islands. Regrettably, and astoundingly, the figure for Northern Ireland as a whole stands at 33%. That is in stark contrast with the rest of the UK: 3% for the entirety of Scotland and Wales and only 1% for the entirety of England. Half of all online retailers in the UK fail to offer the same delivery options across the country, 17% refuse to deliver at all, 20% apply higher costs and 18% take much longer to deliver. The average one-off cost is £10 when free delivery is withdrawn, so while free UK postage and packaging is advertised, £10 is the average additional cost levied on a Northern Ireland consumer. An additional £2.71 is sought when the standard price for delivery is unavailable.
It is easy to try and give a reason for this. I will not use the vocabulary contained in this tweet, but this evening, when I announced that this Adjournment debate had been accepted and that we had the opportunity to raise this issue in Parliament, I got a rather caustic reply saying, “Well, of course it’s more expensive. You live on an island. What do you expect?” Of course, that goes some way to explaining the nature of the issues, but it does not answer or resolve the frustration facing consumers.
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Unlike for letters, there is no universal regulated service for parcels. Standard delivery operators prefer to offer their services in densely populated and urban areas, and in offering retailers a contract price, they limit their own costs, and of course no one is forced to proceed with their purchase, should they not find the terms attractive.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP): As was mentioned, Citizens Advice Scotland today published a report highlighting not only that more than 1 million people in rural Scotland are still suffering the inequity of delivery surcharges, but that these surcharges are still increasing. Taking into account inflation, delivery costs are now 10% higher than three years ago. People in the highlands and islands are paying more for deliveries. Does the hon. Gentleman agree that this punishing difference in costs must not be allowed to continue?
Gavin Robinson: Yes, I do. I am seeking to outline some of the reasons why that might be, but I think there is a role for the Government, which is why this Adjournment debate is so important.
There is a substantive unfairness in leading a consumer through the entire process of purchase, only to levy a charge at the final stage. It is unfair and—I suspect—illegal. The first obvious issue engaged is the Consumer Protection from Unfair Trading Regulations 2008. I am talking about a situation where someone is enticed into a sale that includes, as part of the terms, free postage and packaging in the UK, only to find the offer reneged upon when a postcode is provided. I would be interested to hear whether the Minister believes that to be a misleading inducement. Secondly, there is a contractual issue with the delivery agent only.
Jim Shannon (Strangford) (DUP): I congratulate my hon. Friend on bringing this matter before the House for consideration. I often wonder, as I am sure he does too, whether people know that they have a 14-day cooling-off period. If they do not, is it not perhaps time that the Government, and particularly the Minister’s Department, set about educating people about their rights?
Gavin Robinson: I am grateful to my hon. Friend for raising that important point. Seventy-two per cent of consumers in Northern Ireland are unaware that there is a cooling-off period available to them, so that if they make a purchase and they are not happy with the terms, they have 14 days in which to return it and recoup their costs.
That leads back to the issue of postage. The relationship for the consumer is with the retailer and the retailer alone. The retailer has a consequential relationship with the service agent. Only one in 10 consumers is aware of that relationship, so nine out of 10 consumers in Northern Ireland are unaware of how best they should either return an item or seek a refund, or to whom they should speak should that issue arise. Similar contractual conundrums exist in the tourism sector, although of course anything purchased through a travel agent registered with the Association of British Travel Agents is protected as part of a global package.
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There may be merit in the Minister’s considering what better protections could be available for consumers in this country. Most importantly, Parliament transposed the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 last year. They eliminate hidden charges and promote price transparency for distance and off-site sales. I very much suspect that the Minister will say that a process of education is required and may move towards that as a solution. Although that would be a wonderful initiative, may I respectfully urge him to recognise that it may not be enough? I have mentioned the trading standards issue concerning false representation on UK free postage and packing, and the need for an holistic control similar to that applying to travel agents, and I would welcome education. However, the issue of mis-selling and unfair terms of postage relates primarily to smaller retailers and independent traders. They use sites such as eBay and Amazon as a medium, and there is no reason why such large organisations should not live up to the spirit and the letter of the regulations on behalf of the small independent retailers who use their sites. Will the Minister consider mandating those organisations that provide the online medium for retailers to ensure that they, on behalf of those retailers, live up to the legislation?
I want to thank you, Madam Deputy Speaker, for the opportunity to have this debate and all those who have come into the Chamber and given their support on an important consumer issue. It is one that leads to a great deal of frustration for people, whether they live in Northern Ireland, the Channel Islands, the Isle of Man or the highlands and islands in Scotland. I think the figure for Northern Ireland for prospective purchasers who will refuse to go through and will not go back to a site is 39%. If we are interested in the one nation consumer market and if we believe that retailers who offer free postage and packaging in the UK should provide it, then I hope that those of us on the Opposition side of the Chamber can work together with the Minister to see how best we can redress the balance and give consumers the best chance to avail themselves of the offers they seek.
9.58 pm
The Minister for Skills (Nick Boles): It is a great pleasure to reply to this Adjournment debate with you in the Chair, Madam Deputy Speaker. I congratulate the hon. Member for Belfast East (Gavin Robinson) on securing this debate, which is very much on a subject of constant, day-to-day importance for his constituents and those of so many hon. Members. It is a tribute to the importance of this subject that, perhaps rather later than we hoped and on an evening after a day when we were here even later, there are nevertheless many more people at an Adjournment debate than is customarily the case.
I have a great deal of sympathy for the case that the hon. Gentleman laid out, not least because earlier in my life—you might even say in my mis-spent youth, Madam Deputy Speaker—I ran a business in the fair city of Belfast. I spent a long time commuting and dealing personally with the shipment of goods to the paintbrush factory that we ran just off the Crumlin Road and then shipping its products out of Belfast. I well know the difference in cost between shipping something to Felixstowe and shipping it to Belfast.
8 Sep 2015 : Column 383
I have a great deal of sympathy for the case that the hon. Gentleman makes—that it is very unfair that consumers in some parts of the country should be treated so very differently from those on the mainland. I think he will understand that in an intensely competitive market, which the market for the delivery of parcels is, there will always be a variation in prices that reflects the true variation of shipment costs. When many of the goods purchased are themselves being shipped to the UK from elsewhere, it is not that surprising that getting them to an address in Hertfordshire is going to cost the consumer rather less than getting them to an address in Belfast East.
Patricia Gibson (North Ayrshire and Arran) (SNP): Does the Minister agree that the Scottish Government’s road equivalent tariff fare structure should be helping to reduce the cost of delivering goods to the islands of Scotland, such as the Isle of Arran and Isle of Cumbrae in my constituency, and that more must be done to ensure that any such reduced costs are passed on to consumers? Does he further agree that the whole point of the statement of principles on parcel deliveries was to secure a better and fairer deal for consumers in our rural areas? However, more must be done to increase delivery operator and retailer buy-in to these principles, given that Citizens Advice found that only four out of 449 businesses had even heard of this statement of principles.
Nick Boles: I thank the hon. Lady for her intervention, and I certainly agree with her about the statement of principles. I would like to come on in a minute to what we can do to make sure that more people understand and adhere to it.
Let me briefly address the question of the distant and far-flung parts of Scotland, which a number of hon. Members have represented through their interventions. As it happens, another part of my mis-spent youth—and, indeed, my mis-spent middle age—was regularly spent in the islands of Scotland, specifically on the island of Colonsay, where I have often spent the best weeks almost every summer of my life, including this last one.
My one observation here would be that all those islands, including Colonsay, are connected to the mainland —currently by the Caledonian MacBrayne ferry, a part of my life that I shall always cherish, not least the fry-ups. I know that this summer the Scottish Government were going through what I understand to be a somewhat controversial process of contracting out the tendering of the ferry service operated by Caledonian MacBrayne. It occurs to me that in the process of tendering that service, it might be possible to suggest to potential bidders—I believe Serco was much discussed in the local papers at the time—that they should group parcels together and take them to the various islands at a flat charge. It might be possible for the Scottish Government to achieve a lower cost and more universal service through these contracts for ferry services than is currently the case. That is simply an idea off the top of my head, having had a number of conversations in the Colonsay hotel this summer about the Scottish Government’s particular proposal.
Let me conclude with a constructive suggestion. The hon. Member for Belfast East made the very good point that the Government have passed legislation, set out
8 Sep 2015 : Column 384
principles and have high expectations, and that we have established that people should call trading standards if they have a problem or call Citizens Advice to report any bad behaviour. It is indeed outrageous, as the hon. Gentleman said, that people discover that a delivery option is either not available or available only at a dramatically higher cost only at the very end of the transaction process. It is clear from the principles we have laid out that that is not acceptable behaviour. I suggest that, later in the autumn, we organise a round table. The hon. Gentleman is welcome to come and speak at it, as, indeed, are any other interested parties.
Lady Hermon (North Down) (Ind): Will the Minister give way?
Nick Boles: I shall be happy to give way to the hon. Lady, but may I finish describing my proposal first?
I propose that we invite representatives of Citizens Advice Scotland, and, indeed, the representatives of the Northern Ireland organisation who produced such an excellent report. Critically, I propose that we also invite senior executives from the big online retailers, and ask them what they are doing to ensure that information is provided transparently, early, and upfront. What are they doing to ensure that, as far as possible, the same options are available to all consumers, and that, when costs vary, they vary only in accordance with the true underlying costs of transporting parcels? I should be happy to organise such a round table, to chair it, and to welcome the contribution of all Members—
Nick Boles: Including the hon. Lady.
Lady Hermon: The Minister is very kind, and I am very grateful to him for inviting the Independent Member for North Down to the round table talks that he is to chair. May I, however, urge him to do something more, today of all days? Earlier today, in a special statement, the Secretary of State for Northern Ireland again conveyed her commitment to a one-nation Government, and the hon. Member for Belfast East (Gavin Robinson) used the same phrase quite frequently this evening. At those talks, could we see those words “one nation Government” translated into proposals for action? That is what people want to see when it comes to online charges for deliveries in Northern Ireland: they want to see evidence that there will be that commitment to a one nation Government.
Nick Boles: I am certainly happy to promise action, in the sense of trying to ensure that the statement of principles that we have agreed to publish is adopted by online retailers, and that, if it is not, action is taken to ensure that those retailers step up to the mark. However, I want to be a little bit cautious about implying that we will pass legislation imposing flat charges, meaning that every delivery service must charge the same prices for every part of the United Kingdom. I simply do not believe that that would work, or would be in the long-term interests of consumers, because it would drive out competitive providers of delivery services.
Ultimately, there is progress. The percentage of online retailers who are offering delivery options on a uniform basis is growing, and the percentage who are doing the
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things that we do not want them to do is shrinking. However, that is not happening fast enough. I think that, working together, we can put more pressure on the industry—on the Amazons, the eBays and, indeed, some of the smaller players—to act more responsibly, without necessarily legislating or regulating further. I shall be happy to work with them, and with SNP Members and other representatives of the fair country of Scotland—the other representative, or two—to achieve that goal. If we can work together, I am sure that we can make some progress, and achieve that one nation for consumers throughout the United Kingdom.
Drew Hendry: I have a brief question for the Minister. Would he consider giving consumers the option of using Royal Mail, rather than paying the standard charge that is applied by traders?
Nick Boles:
That is an interesting question, which leads me to make a point that may correct an impression that was created earlier by the hon. Member for Belfast
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East. The universal obligation applies to parcels, it is a five-day service and it involves uniform charges, but it is not compulsory for retailers to offer it. What I believe the hon. Gentleman is suggesting is that we should make it a requirement to do so. We may find that, at some points, we will part company on some issues.
This Government are a determinedly deregulatory Government. We do not believe in imposing more burdens on business, and I believe the direction of travel in terms of costs of delivery and the universality of the service suggests that that is the right approach, but I am certainly happy to discuss any issue at this round table; it will not only be me who puts things on the agenda.
If nobody else has any further questions, let me say that I look forward to working with all hon. Members on this issue and I thank the hon. Member for Belfast East for raising it.