Tag: United Kingdom

The chancellor’s raft of financial services reforms are “unconvincing”, a cross-party group of MPs has said. 

The Treasury select committee, chaired by Conservative MP Harriett Baldwin, has said that none of Jeremy Hunt’s so-called Edinburgh reforms implemented so far “will make a substantial difference to the UK economy”.

It comes after the chancellor unveiled plans last December to update regulation of the financial services sector in the wake of the UK’s departure from the European Union. 

Among the proposals was the plan to reform post-2008 rules on bank ringfencing, where lenders separate their retail activities from their riskier investment banking arms.

In total, Hunt’s plans contained more than 30 proposals focused on repealing retained EU law in financial services and replacing it with a new framework.

The Treasury committee outlined the chancellor’s claim to have completed 21 of the 31 reforms to financial services he set out last year.

But the committee found that six of the 21 are in fact not complete, and a further six should not have even been considered reforms in the first place.

“More than a decade after the financial crash and six years after the UK voted to leave the European Union, the Treasury was absolutely right to look at updating regulation of the financial services sector and identifying rules which needed to be reformed or removed to encourage growth in this important economic sector”, said committee chair Harriett Baldwin.

She added: “We welcome many of the changes as logical and sensible measures. We do, though, question the validity of claims that welcoming consultations, establishing reviews or publishing documents should be considered reforms.

“The Edinburgh reforms were given considerable fanfare last December but, 12 months on, the lack of progress or economic impact has left them feeling like a damp squib.”

Economic secretary to the Treasury Bim Afolami responded: “My number one priority in this role is to deliver on the Edinburgh reforms.

“The reforms have shown the UK’s dedication to fostering a sensible, innovative and robust financial landscape – over the past year we’ve made significant strides towards creating an environment that supports economic growth, openness and the well-being of savers.”

Afolami, who was appointed in Rishi Sunak’s reshuffle last month, will be speaking in Edinburgh today to mark the anniversary of the financial reforms.

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Rishi Sunak is facing fresh pressure after it emerged the government’s flagship Rwanda deportation scheme has already cost £240 million, despite no asylum seekers yet being sent to the African nation. 

It was revealed that the government has spent £100 million in the 2023-24 financial year, on top of the previously paid out £140 million figure.

Additionally, according to a letter from the Home Office to commons committee chairs, ministers are expecting additional costs of £50 million in the coming year.

It would bring the total spent on the scheme to £290 million.

Challenged on the cost of the plan, Tom Pursglove — who was appointed illegal migration minister yesterday in the wake of Robert Jenrick’s resignation — defended the £290 million figure as the “right investment”.

After Robert Jenrick’s resignation, Rishi Sunak has never been more exposed

He told Sky News this morning: “We have always said that this is an economic and development partnership as well as a migration partnership.

He added: “We think it’s right that we support the Rwandan government with the economic development piece as well as spending some of that money on some of the costs that are associated with getting the partnership up and running, in terms of the infrastructure [and] capacity building”

“When you consider that we are unacceptably spending £8 million a day in the asylum system at the moment, it is a key part of our strategy to bring those costs down.

“I think this is the right investment to make, that will help us to achieve those objectives of saving lives at sea, stopping people drowning in the Channel, as well as getting those costs under control in a way that I think taxpayers across the country would all want to see.”

In a mini-reshuffle yesterday, Downing Street announced that the prime minister had split Robert Jenrick’s former immigration minister post in two. 

The two new Home Office ministers of state — one for illegal migration and one for legal migration — are Michael Tomlinson and Pursglove.

Tomlinson, a former deputy chairman of the European Research Group (ERG), has been appointed the illegal migration minister and will take the leading role on the new emergency legislation on Rwanda.

How Rishi Sunak could fight a ‘stop the boats election’

Pursglove, officially minister of state for legal Migration and delivery, also signalled this morning that the government could be open to compromises with Conservative MPs on the Rwanda policy.

He told Sky News: “There will be parliamentary debates, there will be opportunities for people to bring amendments, the House will consider them in the normal way.

“As ministers, we will engage constructively with parliamentarians around any concerns that they have and handle that in the way that we would any other piece of legislation.”

Reacting to the news of the cost of the Rwanda policy, Labour described the revelation as “incredible”.

Shadow home secretary Yvette Cooper said: “How many more blank cheques will Rishi Sunak write before the Tories come clean about this scheme being a total farce?

“Britain simply can’t afford more of this costly chaos from the Conservatives.”

It comes after prime minister Rishi Sunak yesterday vowed to “finish the job” of reviving his plan to deport asylum seekers to Kigali.

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Former prime minister Boris Johnson has denied wanting to let Covid “rip”, as he faces his second day of grilling at the official Covid inquiry.

This morning, Johnson was shown a series of extracts from former chief scientific adviser Sir Patrick Vallance’s diaries. In one passage, Vallance quotes Johnson as advocating a “let the virus rip” approach to the Covid virus and being prepared to let the elderly “accept their fate”.

Lead inquiry lawyer Hugo Keith KC noted that the phrase was used more than once, with Vallance even recording the PM saying, in reference to the elderly: “They have had a good innings”

Under question from Keith, Johnson hit back, saying the implication that he wanted to delay a national lockdown to the last possible moment was “rubbish” and “completely wrong”.

He appeared to accuse the inquiry of “culling accounts” from people’s “jottings in meetings”.

“I had to challenge the consensus in these meetings”, he added.

Keith puts it to Johnson that his recorded views here led him to ignore his advisers about a circuit breaker in late 2020 and avoid a national lockdown until the last possible moment.

Johnson claimed this line of questioning “does not do justice to what we did. … to say we were remotely reconciled to fatalities across the country or that I believed it was acceptable to let it rip”.

Questioned further on the “let it rip” phrase, Johnson conceded:

I’m sad to say there are plenty of people who had used the phrase in conversation with me, I was trying to represent a view that was sadly quite widespread, that the approach might be to segment the most vulnerable and protect them and to allow the vast majority of the population to gradually acquire immunity.

He contended that the let it rip phrase “was common parlance at the time and remains so”, adding: “I don’t wish to be repetitive but this is exactly what you’d expect me to be talking about at this stage.”

In a further exchange, Boris Johnson was asked if he accepted the argument that a tier system should have been put in place earlier.

“I think that the truth is that we already, for a long time, had a kind of tiering in the sense that some places… remained under measures for a long time”, Johnson responded.

He added “It took a while to work out the… system, and to work out how to move places up and down [of tiers].

“I think one of the lessons of the whole experience is that when you set up these artificial boundaries between epidemiological areas using council boundaries or whatever you’re going to create huge problems.”

“We ran into those.”

Boris Johnson tells Covid inquiry his job was to control ‘challenging characters’ — as it happened

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How are we going to get to net zero here in the UK? Will it happen overnight, through economic degrowth or turning off the taps on the North Sea? Of course not – it will require innovation and new industries led by a skilled workforce.

There are around 200,000 skilled workers in the UK’s oil and gas industry and supply chain, many of whom are based in the North East of Scotland, including in my own constituency of Banff and Buchan.

The SNP and Green Scottish Government and their ‘presumption against new oil and gas’ doesn’t only risk losing these skilled workers, but also the energy transition to net zero itself.

If the oil and gas industry is shut down too soon, before we have increased our domestic, low carbon technologies capacity, there is a real risk of many of these workers going overseas before jobs have been created here for them to transition into. Indeed, ninety per cent of these workers have transferable skills needed to successfully transition to net zero – we cannot afford to lose them.

That is why it’s important to remember the recently consented Rosebank field, other fields already consented like Jackdaw and yes, also those fields awaiting consent such as Cambo, do not represent an increase in North Sea oil and gas production. Rather, it is part of managing the steady decline in domestic production we have seen since the 1990s.

Oil and gas will be phased down as a function of demand as more renewable and low carbon energy ramps up. But, we now need the national and devolved governments to work together, and be open to all kinds of energy investment to ensure skills and supply chains are kept here to help deliver the energy transition.

The UK government has created the frameworks to unlock renewable and low carbon technologies via the Energy Act, where it has taken legal powers to introduce funding models for energy projects such as hydrogen and carbon capture utilisation and storage (CCUS). I’m lobbying ministers to use these powers to back our CCUS industry and start allocating funding to clusters like Acorn in my constituency of Banff and Buchan. I wish the SNP would also get behind this project too, rather than continually and cynically talking the project down.

The energy transition however is not just about changes in where we get our energy from. Skills need to be developed across every area of the economy. For example, only 30% of garages in Scotland offer repairs and maintenance for electric vehicles (EVs), with a lack of qualification as the main barrier to more garages offering this.

Similarly with home heating, there are currently under 400 heat pump engineers in Scotland, far short of the 4,000 required to meet Scottish Government heat pump targets. Every sector is likely to have an element of change as different technology emerges. But it’s not just about heat pumps and EVs, we also need to make sure we have the skills, technology, expertise and supply chains to produce the energy on which these products depend. We must ensure this aspect of the skills transition is not ignored.

The private sector should be incentivised to feed into qualifications and technical education courses for skills which are needed today and will be needed in the future. Like defence, energy is one of those sectors of the economy, reserved to the UK Parliament but which is highly dependent on education, skills development and apprenticeships – which are devolved. This is a perfect example of the need for the UK Government and devolved administrations to work together. From primary school energy-related projects to energy-related college courses, there is a huge opportunity to embed the opportunities of the energy transition in curricula across the whole United Kingdom.

Our young people learn about how the climate is changing, and how it is impacting us both here in the UK and across the globe, so we must also show them that they can be part of the solution. We must continue to do more to attract young people, especially young women, into learning STEM subjects. We must also show that a career that starts in oil and gas helping decarbonise that industry, could easily transition into other parts of the energy sector, just as the sources of our energy transition do.

Only if we have a skilled and inspired workforce to drive our energy transition forward will we have any chance of reaching our net zero targets. What we need, instead of virtue-signalling policy promises that don’t appear, is a pragmatic jobs-first approach to getting to net zero.

Whether it’s the SNP’s ‘presumption against oil and gas’ or Labour’s ‘Just Stop Oil’ approach, it is clear that only the Conservatives have a pragmatic, proportionate and realistic approach to delivering our energy security and net zero objectives.

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October 2012 marked a landmark moment in pension policy, when employers, in phases, were legally required to automatically enrol eligible employees into a workplace pension scheme. Over 10 years on from inception, the policy has been heralded as a success by government, addressing the challenge of decades of declining pension saving and the movement away from final salary (defined benefit) pensions.

When it comes to participation rates, there is very good reason to be positive. The latest available figures show 79% eligible employees in the UK are members of a workplace pension scheme, equating to 22.6 million people. Prior to auto enrolment, this figure was sitting at just 47%[1].

Graph: Office for National Statistics – Annual Survey of Hours and Earnings (ASHE)

However, while participation has improved significantly since 2012, the amount most people are saving for their future finances continues to be far short of what is needed for a decent retirement income. Modelling from Phoenix Group’s longevity think tank, Phoenix Insights, found there are around 14 million defined contribution (DC) pension savers who are not on track for the retirement income they expect (DC pensions are the schemes typically offered by employers to meet auto enrolment requirements).

And they’re not just slightly ‘off track’. The average size of the saving gap for this group is around £337,000, and for 68% of them the gap is bigger than £100,000[2].

Inertia: a double-edged sword

Under automatic enrolment, employees are defaulted into a pension at the statutory minimum contribution level. This includes a contribution from the employer alongside a personal contribution. Since 2012, the total minimum contribution has risen gradually from 2% of a band of earnings to the current level of 8%, where it has been fixed since April 2019 with no confirmed plans for further increases.

Employees can increase their personal contributions above the minimum however engagement among adults with workplace pensions is very low. Secondary analysis of the British Social Attitude survey by Phoenix Insights found 65% of UK adults know ‘little’ or ‘nothing’ about workplace pensions despite 78% acknowledge saving into a workplace pension is something they are ‘used to doing’[3].

The challenge of engagement centres around the behavioural principle that auto enrolment harnesses: inertia (or ‘going with the flow’). Eligible employees are defaulted into saving for their retirement without the need for action. While inertia has been important for boosting pension participation and low ‘opt out’ rates, it is a double-edged sword as poor engagement means people are unlikely to voluntarily increase contributions above the default level.

Addressing the under saving crisis

To tackle the under saving crisis there is broad consensus that we need to increase the default contribution rate from 8% to support people’s financial futures. But until now, there has been no discussion for how we do this in a way that that balances the interests of savers, employers and the wider economy.

Phoenix Group has looked to address this gap, partnering with WPI Economics to develop a framework to support policy makers determine how and when default contributions should increase from 8% to 12%. The framework forms part of the report, Raising the bar: a framework for increasing auto enrolment contributions, which lays out the economic and financial conditions that will enable the rise.

Asking individuals and businesses to increase pension contributions in the wake of a prolonged period of high inflation and a volatile macroeconomic environment is a crucial consideration. So acknowledging the costs to individuals and businesses has been one of the key principles for the tests for determining when contributions should rise.

It’s crucial this issue isn’t kicked into the long grass. We urge all political parties to commit to ensuring contribution rates are at the right level and address how they will do this in manifestos ahead of the next general election. And to ensure savings adequacy remains in the spotlight, there should be a regular statutory review for the government to assess whether savings levels are at the right level, measured against the framework we’ve laid out.

Increasing default contributions will make a material difference to people’s future retirement income. Inaction could leave generations of future retirees enter retirement unable to enjoy the lifestyle they hoped for, and at worst could mean millions more will end up relying on state support later in life.

Tim Fassam has served as the Director of Public Affairs at Phoenix Group since 2022. The Phoenix Group is the UK’s largest long-term savings and retirement business.

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Robert Jenrick entered parliament in 2014 after seeing off a challenge from UKIP in a by-election. In such contests, parties tend to pick the most generic, least troublesome candidates after rounds of rigorous vetting. Jenrick, the mild-mannered lawyer, was pointedly prototypical.

In parliament, Jenrick acquired the moniker “Robert Generic” as he climbed the greasy poll briskly if tediously. Somewhere along the way Mr Generic met Rishi Sunak, elected a year after him at the 2015 election; the two formed a close bond.

Then in 2019, Sunak and Jenrick, alongside now-deputy PM Oliver Dowden, formed two-thirds of the triumvirate that co-wrote an article for the Times backing Boris Johnson for the Conservative leadership. It was, and still is, considered a watershed moment: the party up-and-comers — and competent sensible-types at that — were swinging in behind Bojo with symbolic synchrony. Under Johnson, Jenrick became housing secretary, performing his cabinet duties with a quintessential lack of colour.

Bounced out of cabinet by the then-PM in late 2021, Jenrick subsequently fell in behind his old ally, Rishi Sunak, in consecutive leadership contests last year. He was rewarded for his loyal support with a return to cabinet — but significantly not as a department lead. 

Instead, he would serve as minister for immigration, deputising for right-wing firebrand Suella Braverman. The Home Office was roundly judged to have been surrendered to Braverman as part of a pre-accession pact with the wannabe PM. At the time, as Conservative MPs fumbled for a replacement for Liz Truss, it was an act of relative elegance. Two former opponents had agreed to put their differences aside in favour of mutually assured career development: an ultimate marriage of convenience.

But the pact would have political consequences, that was plain to see. And in this light, the appointment of longtime loyalist Jenrick to be the cabinet-attending Home Office No 2 was immediately interpreted as Sunak constraining Braverman’s power and influence. Rather than let his new home secretary craft a semi-autonomous institutional power base in government, in slotted Jenrick. The immigration minister, on these terms, emerged as a crucial component of the PM’s political operation.

‘The fortunes of the Conservative Party are at stake’ – read Robert Jenrick’s resignation letter in full

Thus, as the salience of migration increased with a new pledge and new legislation, Jenrick’s profile raised in turn. But more than this: at every stage it was the immigration minister — not Braverman — who was entrusted with the Home Office’s trickiest parliamentary and media assignments. He amped up the “vice-signalling” as Mickey Mouse murals were painted over and his rhetoric hardened.

In this way, for a period, it seemed like Sunak’s strategy was working. Jenrick emerged as the de facto home secretary as Braverman quieted. Sunak’s gambit had, seemingly, paid off. 

But what did Jenrick make of the dynamic? His apparent rhetorical sops to the Conservative right did not change his characterisation as Sunak’s moderating manager in the Home Office. His net satisfaction rating among Conservative members tumbled over time, reaching — in his last Conservative Home cabinet ranking as immigration minister — a dire -8.9 points.

Ultimately, contextualising Jenrick’s evolution from Sunak lackey to darling of the Conservative right poses all kinds of analytical problems. But what seems clear is, right now, is that it happened quickly. 

That takes us to reshuffle day: 13 November 2023. 

Suella Braverman was sacked and the post of Home Office lead was left wide open. Perhaps Jenrick thought it should have been him tasked with filling the void, having acted as no less than de facto home secretary for so long. Did that not warrant a de jure promotion?

But with Lord Cameron vaulted into the Foreign Office, James Cleverly was subsequently slid across. It came ahead of a crucial period for the department as the Supreme Court’s ruling on the Rwanda and the release of net migration figures loomed.

In this way, soon after the Supreme Court ruling, it was reported that Jenrick was firmly behind “four of the five points” that comprised Suella Braverman’s “Plan B” proposals. It came after Cleverly’s first interview as home secretary by the Times revealed the new department chief did not consider the Rwanda Plan the “be all and end all” of the government’s “stop the boats” agenda. 

Already, a discursive chasm was opening between new Home Office lead and deputy. 

Next, in the wake of the publication of new legal migration figures, Jenrick was said to have sent a five-point plan to Downing Street. In light of recent events, it can be viewed as Jenrick’s first ultimatum, and the Daily Mail reported the immigration minister as on “resignation watch”. Still, the suggestion was largely dismissed. Jenrick is a Sunak poodle, right? 

But the immigration minister leaned into the reports. He told the commons last Monday that there were “strong arguments” for an absolute cap on the numbers of immigrants allowed each year, adding: “There are definitely strong arguments for using caps, whether in general or on specific visas — but these are conversations that we need to conclude within government”.

It was clear: Jenrick was now filling the Braverman-shaped hole in the Home Office by putting himself at the head of demands in the Conservative Party on migration, legal and illegal.

The former immigration minister’s resignation yesterday shows just how seriously he is taking this self-assumed role. Indeed, he is willing to cause the prime minister, a longtime friend, considerable political pain to pursue this path. 

Chris Bryant: ‘Has Jenrick resigned because Rwanda bill is crazy or because he doesn’t think it’s crazy enough?’

But what else does it reveal? Yesterday, as the news filtered into the commons chamber as Cleverly delivered a statement on the new Rwanda bill (with Jenrick conspicuously absent), it was viewed as immediate evidence that the Conservative right would not be throwing its weight behind the bill. 

In his resignation letter, Jenrick made clear he wanted to bypass the European Court of Human Rights, labelling the bill “a triumph of hope over experience”. And, in the minutes before the former immigration minister signed off his goodbye missive to Sunak, chair of the European Research Group of Conservative MPs, Mark Francois, told the commons the reports Jenrick had resigned are “deeply worrying”.

Significantly, Francois’ ERG — along with a constellation of other Conservative right caucuses — has deployed a “star chamber” of lawyers to unpick the new Rwanda legislation. It is likely that when this group reports, in a throwback to the Brexit tumult of 2018, associated MPs will say they are unable to support the bill. 

This would be a dire situation for the PM. We have already seen his government lose a House of Commons vote this week — and now the next could be just around the corner on a far more politically potent issue. In any case, Sunak will want a significant commons majority in order to stare down the Lords in any potential parliamentary “ping pong” to follow. 

Fighting back, reports suggest Sunak could treat the vote as a confidence issue. It is analogous to how Boris Johnson treated votes on his Brexit deal in 2019 — or, to take what might be a more worthy comparison, how Liz Truss intended to treat the opposition day motion on fracking in the dog days of her premiership. 

In fact, in treating the vote as a confidence issue, Sunak may merely be inspiring more agitated MPs to send in their letters to the 1922 committee. 

There is another question: how will Robert Jenrick feature in the tumult to come? With his resignation, he has essentially confirmed he will vote against the bill — taking much of the Conservative right with him in the process. 

In the end, the only political pathways that lay ahead for Rishi Sunak point to deepening, crippling political turbulence. “Unite or die”, Sunak told his MPs yesterday — what is for certain is that sustained intra-Conservative hostilities will only further damage the PM’s dire electoral prospects.

‘Now or never’: Braverman says Conservative Party faces ‘electoral oblivion’ if Rwanda bill fails

Josh Self is Editor of Politics.co.uk, follow him on Twitter here.

Politics.co.uk is the UK’s leading digital-only political website, providing comprehensive coverage of UK politics. Subscribe to our daily newsletter here.

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