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Budget Resolutions - Income Tax (Charge)

Part of the debate – in the House of Commons at 2:56 pm on 30th October 2018.

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Photo of Nick Smith Nick Smith Opposition Whip (Commons) 2:56 pm, 30th October 2018

It is a pleasure to participate in the Budget debate. There were some announcements to be welcomed yesterday, such as the tax on big tech companies. I have been calling for those changes since my time on the Public Accounts Committee, and they are long overdue. In the round, though, this Budget fell well short of what is required. After the Prime Minister’s big talk of ending austerity, what we got was too little, too late. To get the changes we need to create jobs and prosperity in all parts of the UK, there is only one solution: a Labour Government.

Today, I want to focus on a key issue that has affected families in south Wales and on which the Government have failed to act, and that is helping people to protect their pensions. Last year I called attention to a brewing steel pensions crisis. Facing a hard deadline on their future options, British Steel pension scheme members found themselves targeted by unscrupulous pensions advisers. There were nearly 8,000 transfers out of the scheme, and we know that 872 of those were advised by firms that were eventually required to stop advising. Worryingly, one financial planner has said that the high number of compensation claims submitted against just one of those firms might be the tip of an iceberg.

Too many people saw their hard-earned pension pots put at risk, including constituents of mine who were worried sick about their future. They needed an immediate, robust and decisive response from the regulators. Unfortunately, poor co-ordination, unclear consumer information and weak oversight meant that the response for those consumers has been hesitant and insufficient. It was often unclear who they needed to approach for help. Unbelievably, they were expected to take up their concerns with the advisers they suspected of fleecing them. Pensioners researching specific advisers had to go through a lengthy process to find out basic information. They needed to search the Financial Conduct Authority’s register to decipher legal notes that were sometimes closer to double Dutch than plain English. The FCA is now making changes to its register, but it still is not giving people critical information in a straightforward enough way.

The most pressing problem remains the sorry state of financial regulation and pensions oversight. As a Work and Pensions Committee report found, while interest in steel pension transfers was increasing from late April 2017, it was not until November that the FCA began to take action. At that point, a full-scale crisis was under way. Even then, it was not until December that it was taking regular action against suspect firms. While there has been some progress, it has not been clear enough for us to give concrete answers to the people affected, or to give us confidence that this will not happen again.

Nowhere is this more evident than with one of the firms most closely identified with this scandal, Active Wealth (UK), and its director Mr Darren Reynolds. The Financial Services Compensation Scheme is paying out over £500,000 for claims related to this firm alone, yet 162 claims, many from steelworkers, are still open. Mr Reynolds failed to turn up to Parliament to answer questions. The ability of his company to advise on pension transfers was restricted and the company is now in liquidation. Despite this, Darren Reynolds is still listed as an active person on the FCA register. From my inquiries, he does not appear to have been referred for more serious investigation. What needs to be done for this sector to tackle this bad behaviour and for this character to be properly held to account?

The pensions debacle that hit steelworkers last winter should never have happened. It is a stark warning that regulating these businesses is not working well enough. It happened because we have a system of pensions and financial regulation that fails to protect hard-working people. After much criticism, the FCA and the Pensions Regulator say they are working better together, and that is a positive step. However, this is not a problem of co-ordination alone; we also need stricter penalties, better information and far tighter oversight. The Government urgently need to look at what has happened to drive improvements in the future. They need to review current regulation on pensions advice regularly, make sure that any wrongdoing is aggressively dealt with and ensure that consumer information is easy to find and to understand.

I want to include this personal plea for action. Many of my family were steelworkers or miners, and our steelworkers put in decades of toil to earn these pension pots. Some have found these pension pots put at risk because of the wrongdoing of some and the inaction of others. The Chancellor needs to put this right and to get on the side of working people.

I will end by focusing on the extreme pressure that the Government’s recent proposals on pension valuations could cause our police forces. Gwent police estimate these could cost them the same amount of money as 100 officers. The Government need to give our police more funding. Instead, however, they are forcing expensive accounting tricks on them with no notice. That is not right.

Finally, I point out that there is a better path. For a genuine end to austerity, real help for our public services, and rules and systems that work for working people and those in retirement, we need a Labour Government.