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Key role for All Party Insurance Group

It was interesting to hear the City Minister Stephen Barclay tell MPs, peers and industry representatives at the All Party Parliamentary Group on Insurance and Financial Services this week that it had a key role in educating politicians and the public about some of the key issues facing the sector. This was precisely the sort of role we envisaged for the Group when I helped get it established way back in 1991.

With challenges such as the impact of the discount rate on premiums, travel sickness claims, financial exclusion and Brexit swirling around the industry it finds itself firmly implanted in the political agenda. The communication channel that the All Party Group provides is vital in ensuring that these debates are well informed and have a clear understanding of the insurance and retail financial services sector perspective.

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Barclay: APPGIFS has key role

Read how social media covered the meeting with Stephen Barclay on Storify.

While the industry has improved its own communication with politicians and government departments immensely since the Group was founded, there is still a role for a genuine All Party Group that is open to backbench members of both Houses of Parliament that holds meetings in public that anyone can attend. Usually there is an opportunity for the public to ask questions too.

The administration of the Group is still provided by Insurance Post which ensures it is a neutral platform, not a lobbying group. Nowadays it is in the very capable hands of the content director Jonathan Swift who is always keen to hear from people who want to present to the Group or just be kept up-to-date with news on its meetings.

The current chairman, former insurance broker Craig Tracey, is always keen to hear direct from people in the industry or from outside about issues they think the Group should be addressing. He can be contacted at craig.tracey.mp@parliament.uk.

The Group continues to attract support from new Parliamentarians with new MPs from both the 2015 and 2017 General Elections joining the Group. The full list of members is here APPG members Oct 2017

The Group has three further meetings arranged for this session

Tuesday 31 October
What will Brexit mean for the UK insurance and financial services sectors?
This session will look everything from existing regulation such as Solvency II to future trading opportunities and recruitment in a Post-Brexit Britain.

Confirmed speakers:
Chris Beazley, chief executive, London Market Group
Jonathan de Beer, EU-exit co-ordinator, Association of British Insurers
Michael Tripp, partner, Mazars
Erik Vynckier, board member, Foresters Friendly Society and former chief investment officer – insurance, Alliance Bernstein

Tuesday 21 November
Making insurance more affordable and transparent
This session will look at everything from the progress of Flood Re to recent criticism of dual pricing and use of jargon, to see what can be done to improve the reputation of the UK insurance and financial services sector.

Confirmed speaker:
Andy Bord, CEO, Flood Re, More TBC

Tuesday 12th December:
Subject TBC

All these three meetings will be at 4.30pm in Committee Room 17 of the House of Commons. It is advisable to allow at least 30 minutes to access the Palace of Westminster via the public entrance as this can be very busy when Parliament is sitting and operates airport style security checks.

 

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Brexit: the cliff edge approaches

Another day, another speech full of wishful thinking on Brexit from our lame-duck Prime Minister.

Negotiating our departure from the European Union was never going to be easy, let alone constructing a new relationship with the EU once we leave. These are statements of the obvious. Obvious that is to most informed observers: not, it seems, to our crippled, fractious government which, despite giving itself almost nine months before pressing the Article 50 button, has been woefully ill-prepared, making it easy for Michel Barnier and his EU negotiating team to ridicule our deeply flawed strategy at every turn.

Barnier is not the ideal choice as the lead EU negotiator. He is notoriously inflexible and deeply committed to the long-winded, bureaucratic procedures that the EU favours. These leave no detail overlooked and have enabled the EU to dismiss the UK’s feeble attempts to devise a coherent negotiating strategy. This hasn’t been hard as we have a government that is still negotiating with itself and has no idea of where it wants to get to by March 2019, let alone how it is going to get there. The EU team, however, is looking dangerously stubborn and inflexible.

It could have been different.

The UK could have grabbed the moral high ground and re-shaped the agenda early on by addressing the three main areas identified by Barnier as his priorities. In doing so, the negotiations might – I stress might – have taken on a more fluid, constructive tone.

Moral high ground

We should have made a generous and wide-ranging declaration regarding EU citizens already resident in the UK. Morally it is the right thing to do and economically we need them. By addressing this straight away we could then have demanded the EU respond with similar generosity towards the British citizens living in the EU. Thousands of people are still facing an uncertain future as a result of both sides using them as political pawns.

Future liabilities

The EU was always going to present a large, very detailed estimate of what it believes the UK’s future liabilities to the EU are. We appear to have been taken by surprise and have stumbled blindly towards making a back-of-the-envelope counter offer. What was David Davis and his team doing for nine months? Why didn’t that have a counter-offer ready or, better still, have a properly costed, defensible offer ready on day 1 of the negotiations?

Irish border question fraught with danger

The third of Barnier’s initial hurdles is the Irish border. The moment he flagged this up alarm bells should have been ringing in Whitehall because EU politicians do not understand the fragility of the peace in Northern Ireland. The European Parliament’s chief Brexit co-ordinator Guy Verhofstadt betrayed the extent of their ignorance during his recent visit to Belfast when he said he was shocked by the walls dividing the Catholic and Unionist communities. Nobody who knows the first thing about the long, troubled history of Ireland would have made that comment.

The future of the Irish border is obviously a key issue but it should never have been made such a high-profile issue at the start of the negotiations. It needs handling with much more care than it is now receiving. We should have made clear that it is an issue that needed to be taken out of the headlines for as long as possible with the opportunity for those who live in Ireland and represent the different communities to shape their future.

Not only should more attention have been paid to the sensitivity of the Irish question but it is also clearly premature to attempt to resolve it.

What sort of border we have between Northern Ireland and the Irish Republic depends entirely on our future relationship with the EU. If we stay in the Single Market and accept a reasonable degree of free movement of EU citizens then the border can stay very much as it presently is. The harder the exit of the UK from the EU then the more attention has to be paid to a new border settlement. To make a decision at the outset of the negotiations is to almost pre-judge the outcome.

Cliff edge Brexit will damage everyone

Unfortunately, it looks increasingly likely that the outcome will be a hard, hastily patched-together Brexit, the so-called cliff edge feared by businesses here and across the EU. It will be the most damaging for everyone.

With the UK government crippled by infighting and the EU team stubbornly refusing to come down from its lofty perch, the next round of negotiations offer little prospect of progress. The best we can hope for is some sort of messy transitional deal with some sensitive high profile sectors such as agriculture and fisheries excluded and the rest left to muddle along for a few years until the politicians come to their senses. That’s the best but neither Theresa May nor any of the inadequate pretenders to her soon-to-be-vacated throne seem remotely capable of achieving even that.

 

Euroclearing is an inevitable casualty of Brexit. Even Leave campaigners told us that

The growing realisation in the City of London that the multi-billion Pound business of clearing Euro transactions through London’s financial system is going to come to an end with Brexit really shouldn’t be the shock some think it is.

Since Jeremy Browne, the former Liberal Democrat minister now acting as the City of London’s Brexit envoy, came back from visiting Paris and Luxembourg last week, the City has been panicking about the threats to its role, especially Euroclearing. It shouldn’t panic. It should resign itself to losing that lucrative business.

This really shouldn’t be a surprise to anyone.

It took the intervention of the European Courts in March 2015 to ensure London could continue to have a role in clearing Euro-denominated transactions after the European Central Bank tried to restrict that role to countries within the Eurozone. The court said that it had to be open to all countries within the European Union, not just those in the Eurozone. Obviously once we leave the EU this protection no longer applies and it would be extremely naive not to expect the ECB and other Eurozone countries to move to take back this business.

Certainly leading pro-leave economists were not naive about that, nor were they shy about telling us it would happen.

I chaired a roundtable in the City a few weeks before last year’s referendum attended by Gerard Lyons, one of the Economists for Brexit and a former adviser to Boris Johnson. He was clear in his view that if we voted to leave we would lose the Euroclearing role the UK government had fought so hard to win.

It is almost impossible to construct a argument for London retaining the role that goes beyond pointing to the expertise and systems that London has built up as it created a major role for itself in this business. Unfortunately, expertise and systems in the world of financial services are relatively easy to move, especially when there is regulatory and governmental backing for doing so.

It is an argument that was lost the day we voted to leave the EU. The City has to let it go and concentrate on the battles around access to European markets that can be won and which could be even more damaging if they are not.

May wanted the election to be about leadership: it is and she is the one coming up short

This election is not turning out as anyone planned or predicted. Who would have thought less than a week from polling day Theresa May would be fighting desperately to drag the campaign focus back to Brexit only to find Jeremy Corbyn swooping in to grab the headlines on the issue that was meant to be her strongest card?

A month ago most people didn’t give Labour a chance: now no-one is laughing when Corbyn talks of what a progressive Labour government might do if it wins. He is a formidable campaigner as his two victories in the Labour leadership elections show and this was the one factor I thought might save the Labour party from the oblivion predicted for it at the start of the campaign.

How do we find ourselves contemplating a Labour revival, at least in England and Wales, and where might we be when we wake up a week today?

It undoubtedly starts with the Tory campaign which must be one of the worst run by any major party for over 30 years. This was meant to be the Brexit election with May sweeping back into Downing Street in total command of the domestic political landscape. That is one scenario we can dismiss and the responsibility for that has to lie with May herself.

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May personalised the campaign and now it is backfiring. It is her poor leadership that is under scrutiny

The moment she published her manifesto – she reminded us it was “my manifesto” several times at the launch – the wheels started to come off her campaign. The shambles over the ill-thought through proposals on social care exposed her weaknesses and, crucially, meant the Tories lost control of the campaign agenda. It allowed Labour and the other opposition parties to focus on domestic issues, a much stronger policy area for them. As the Tories floundered in the wake of the social care chaos they were able to mock her claims to be strong and stable: weak and wobbly quickly became common currency.

Little has gone right for the Tories since then.

Corbyn’s last-minute decision to appear in the BBC television debate was clever and further strengthened his position. He probably didn’t make quite as big an impact as he hoped but it certainly didn’t backfire on him and it has definitely further damaged May in the eyes of most of the electorate.

How will this play out over the next week?

We can be certain that the Tories will throw huge resources at the campaign but that will not help them much unless they can find a weakness in the Labour campaign to exploit in the same way as opponents have exploited their social care blunder. Will that happen? Who knows? As we all know a week is a long time in politics.

The entire focus now is on the extent and impact of the Labour revival. It has pushed the other parties to the relative periphery.

We all knew UKIP was as good as dead before the campaign started and so it has proved. The Greens just haven’t shown up, although they should hang on to their one seat.

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Farron has struggled to make an impact

The failure of the Liberal Democrats to build any momentum has been one of the surprises of the campaign. On paper the promise of a second referendum should have been more attractive to many of the 48% who voted to remain in the EU last year. It hasn’t and the Lib Dems haven’t been able to re-focus their campaign strategy. Tim Farron has also struggled to develop the sort of gravitas that third party leaders need if they are to capitalise on the additional media coverage an election campaign brings. Think Grimond, Thorpe, Steel, Ashdown, Kennedy and even Clegg – Farron pales beside them.

The Lib Dems will do well to come out of the election with 10-15 seats, a long way below their expectations at the start of the campaign.

As to the overall result, a lot now depends on Scotland. If the Labour revival takes hold north of the border then the Conservative majority could be under threat – the polls suggest they could edge ahead of the Tories as the main challengers to the SNP. Couple that with any hint of a late Lib Dem uplift and we will be heading for a hung Parliament. Without that combination we will probably be more or less back where we started with a modest Conservative majority but with a hugely damaged Prime Minister who many in her own party will have lost confidence in.

May’s opportunistic election has damaged her and damaged the country and, above all, showed that the Brexit negotiations are far from safe in her hands.

Ill-thought out Tory social care plans won’t work

The proposals to pay for residential and home-based social care by taking a charge against the value of people’s property above a floor of £100,000 are so poorly thought through they are almost embarrassing.

We all know there are serious problems in paying for social care and that we have to find ways of funding it that are fair, effective and workable. The Conservative proposals are none of those things.

All the way through their manifesto it shows signs of having been written in haste (which we know it was) with little real debate or discussion and absolutely no sense-checking. It was  written by a small group close to May who clearly reflect her own chronic inability to take advice or listen to alternative points of view. No-where does this serious flaw reveal itself more than in the proposals for paying for social care.

They tell us nothing about how the scheme will work. Simple questions about how properties will be valued can’t be answered by anyone. Will it be the value at the start of social care or at the end (which could be years apart)? How will disputes about valuation be dealt with?

People paying thousands, tens of thousands or even hundreds of thousands of pounds towards their care will expect a much greater choice and higher standards. Providers – local councils – will need to engage with people who will see themselves as customers in a much more enlightened way. Already many local authorities are shying away from the consequences of this by turning their backs on the existing system, as former pensions minister Steve Webb explained to the BBC this morning.

Could they launch an Equity Release boom?

Crucially, they say absolutely nothing about how this new scheme would cope with existing charges on a property and what there is to stop people using a first charge to shield the value of their property from social care charges. If people see the equity in their property as being the prime source of a generous inheritance for their children what is there to stop them taking out an large equity release plan, drawing down the money, and putting it in a trust for their children? Provided they live for seven years and the trust is properly constructed this will even be free from Inheritance Tax.

We all know that property values continue to be a huge distorting factor in our economy but many people have taken that into account in planning their own finances, including how they will cope with lower pensions and pass on money to their children. You can’t rip that up in their faces and expect them to meekly accept it.

As a consequence, the Tories may be about to spark a huge boom in equity release schemes.

There are no case studies, no details, no clarity about how the social care plans will work which is why they have been so easy to attack and dub the “Dementia Tax”.

The similar lack of detail about the plans to means test the Winter Fuel Allowance has also made that proposal easy to turn into a millstone around the Tories’ necks.

This isn’t just about the detail of particular proposals. It is also highly revealing of the style and competency of Theresa May and the small team around her. This is how they work: superficial thinking not shared with people, tested by experts and announced as take-it or leave-it choices. That will really work well in the Brexit negotiations.

Election debates turn attention away from policies and onto personalities

The televised debates between the party leaders introduced in 2010 and repeated in 2015 could fall by the wayside this time as a result of Theresa May’s refusal to participate.

Is that necessarily a bad thing? If you think elections should focus on policies rather than personalities then perhaps we are better off without them.

I accept that the personality of the person who going to be Prime Minister is not without some importance. However, we already know who that will be and if some political earthquake does occur between now and polling day and Labour emerges as the largest party is there really much we don’t already know about Jeremy Corbyn?

The relentless focus on party leaders – of which the TV debates have become a significant element – also shifts the culture of our politics further towards a presidential system and away from the Parliamentary system we are meant to cherish. This relentless focus on one person in each party leaves too much undisturbed in the policy undergrowth. As we are living in an age when policy matters more than usual it needs to be vigorously explored. The TV debates have never done that effectively.

The first set of debates in 2010 were interesting, partially because of their novelty and partially because they put the three main party leaders on an equal footing but they didn’t really help the electorate understand the policies the parties were likely to pursue once in government. There was a perception at the time that they helped Nick Clegg, the least well-known of the three, although people seem to forget the Lib Dems lost seats at that election. They still emerged as a large enough force to form a coalition with the Tories but were their policy objectives in a hung Parliament ever exposed in the TV debates? Not to my recollection.

By the time we got to 2015 the format had fragmented and just about everyone had successfully grabbed a lectern in the studio with seven leaders taking part in the main debate, some themselves not even contesting seats in the election. Other debates went ahead without David Cameron and some were reduced to solo appearances. It was highly unsatisfactory.

It was hard to escape the feeling that they had turned into a circus, carefully managed and done more for the benefit of TV ratings than voter enlightenment. With the huge army of spin doctors trying desperately to put their gloss on their leaders’ performances we moved even further away from focusing on people who were actually standing for Parliament. That isn’t healthy.

I won’t be sad to see them disappear and really hope that the TV companies don’t try to go ahead with a debate among opposition leaders with an empty chair for May, the rather childish suggestion of Nicola Sturgeon and others.

I don’t blame the opposition for trying to make some capital out of May’s refusal to take part but she may be doing the whole electoral process a big favour with her stance.

This is the Brexit election. That won’t be good for everyone

This will be the Brexit election. Labour may try to ignore the issue – judging by Jeremy Corbyn’s initial reaction – and shift the focus to the NHS, austerity and living standards but they will remain minor issues. It will be about Brexit. The fate of parties and individual MPs will hang on how they play this divisive, toxic issue.

Tories

The Tory manifesto will commit them to a hard, uncompromising Brexit. This will suit those MPs in favour of leaving the European Union but it will be a tough campaign for those who backed Remain and who might be feeling the hot breath of the Lib Dem passion for Europe on their necks.

The two big prizes to be gained for backing Brexit will be winning back votes lost to UKIP in the last two elections and potentially gaining large numbers of anti-EU Labour voters, although I can’t see that actually delivering many Labour seats into Tory hands.

The Tory strategy, especially regarding the Lib Dems, is likely to remain fairly fluid until after the local elections in the first week of May. Any hint of a major Lib Dem revival will see them commit significant resources to the constituencies deemed to be most under threat with blunt accusations about ignoring the will of the people. If that doesn’t happen then they will likely extend their targeting of vulnerable Labour seats.

Labour

The only thing that could have been worse for Labour would have been if Theresa May had waited until the boundary review was completed. By undoing the gerrymandering of the Blair government this threatens to wipe out dozens of Labour seats. New boundaries or old, Labour is in complete disarray: all over the place on Brexit, crippled by infighting and with an organisation that is incapable of managing the office tea round let alone a General Election.

All the signs are that Corbyn will stubbornly stick to his anti-austerity agenda. This may be very worthy but surely he hasn’t the ability to drag the campaign away from its Brexit core? If there is a little caution in answering that question it is because of the way he triumphed against the odds twice in Labour leadership elections.

It is still hard to see Labour doing anything other than losing 20 to 30 seats, mainly to the Tories who will work hard to attract anti-EU Labour voters.

Liberal Democrats

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Farron: big test for inexperienced leader

The strong anti-Brexit stance of Tim Farron has already brought the Lib Dems electoral success in Richmond Park and is likely to do so in other former Lib Dem seats. They should regain several of the seats they lost in the 2015 meltdown, especially where they can exploit strong pro-EU sympathies against an equivocating or Brexit supporting Tory MP. The hopes of many in the party of emerging with 50 to 60 seats seem wildly optimistic at this stage: half that number would represent a major success.

The election has probably come too soon for their over-stretched organisation to exploit Labour’s potential vulnerability in some urban seats over its hesitant response to Brexit.

The biggest unknown is how the relatively inexperienced Farron will perform and whether he can impose himself on the campaign from a very weak position.

UKIP

Virtually leaderless and with its main paymaster having gone off in a huff this election could mark the end of UKIP as an even vaguely credible political force. They will find their vote relentlessly squeezed by the Tories and even with Labour performing poorly it is very hard to see any prospect of the once much trumpeted UKIP threat in Labour heartlands amounting to anything.

SNP

The SNP will remain the dominant force in Scotland, the only question being just how dominant? The strong pro-EU majority in Scotland won’t be easily attracted to the Tories and Labour hasn’t done anything to win back its once loyal voters. The Lib Dems could take back a couple of seats with their anti-Brexit, pro-Union message but we can be certain of a strong SNP presence at Westminster for several more years.

There will be twists and turns, the odd rogue opinion polls and possibly some shockwaves from the French presidential elections but as the starting gun is fired on a seven week campaign the smart money has to be on May being re-elected with an increased – but not overwhelming – majority and a renewed mandate for a hard Brexit.