The Economy

Part of the debate – in the House of Commons at 2:23 pm on 24th October 2019.

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Photo of Harriett Baldwin Harriett Baldwin Conservative, West Worcestershire 2:23 pm, 24th October 2019

It is an honour to follow Vernon Coaker, who made a very powerful speech. I am proud to have been part of a Government who helped to bring in changes to tax rules and the living wage that have meant that, as the Resolution Foundation has said, we have had the biggest fall in the number of those on low pay in our economy in 40 years.

That is not what I was planning to talk about, however; I plan to talk about an industry that has not had a lot of focus over the past three and a half years. I welcome the fact that there is a financial services Bill in the Queen’s Speech. Over the past three and a half years, we have talked a lot about some very important industries. We have talked about dairy farmers and fishermen, and about the importance of car manufacturing and manufacturing generally, but we have not spent a great deal of time talking about our biggest export sector: the financial services sector. I think all of us on both sides of the House can agree that when that sector works well, it is the driver and the engine of our economy. It employs about one in 14 of all our constituents—2.3 million people, two thirds of whom are outside the M25. It pays a lot of taxes—£75 billion last year. About £1 in every £10 of public spending is funded by the financial services sector. Let me give some concrete examples. Instead of 20,000 extra police, we would be able to pay for only 18,000 extra police if those tax revenues were not there. Instead of 40 hospital expansions, we would be able to pay for only 36 if those tax revenues were not there. It is therefore a very, very important sector.

I am keen to hear from Ministers exactly what is going to be in the financial services Bill. After all, it is a sector where we have made substantial progress in terms of sound regulation. I want to know whether this Bill is going to be similar to the one that fell at Prorogation. I want to hear what the Government’s vision will be for regulation in this sector after we leave the EU. I see from the political declaration on the future partnership that the vision is a great deal of equivalence between the UK and EU sectors. I would be interested to hear from the Government what their vision is for how that equivalence might work. In the third declaration, only three paragraphs —paragraphs 35 to 37—cover that vision so far, so it would therefore to be good to hear Ministers elaborate on how the equivalence mechanisms might work. How will there be arbitration in terms of those equivalence mechanisms? How will there be a process of notice if one sector does not meet the equivalence criteria? How will things change when the in-flight files that currently exist in the EU in this sector have to be incorporated into UK law? What degree of manoeuvre will this place have in relation to this sector when we have left the EU? These are very important questions that we have not had enough time to debate over the past three and a half years. This sector has already seen a change in export earnings—down to £60 billion last year compared with £69 billion in 2015. It would be very valuable if, when she winds up, the BEIS Secretary could talk about how she would view this mechanism working.

The financial services sector is vital to our economy. It is vital to every single one of our constituencies and every single person who relies on financial services for their business to grow, right across the country. It would be good to hear the Government’s plan for the sector in terms of that future partnership.