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Fri, 5 June 2020

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Craig Tracey MP: The Budget must commit to freeze the Insurance Premium Tax

Craig Tracey MP: The Budget must commit to freeze the Insurance Premium Tax

Roisin Buckley | Chartered Insurance Institute

7 min read Member content

Craig Tracey MP, Chair of the APPG on Insurance and parliamentary aide to Secretary of State for Business Andrea Leadsom, recently advised an audience of future insurance industry leaders on how best to engage with Parliament at the Chartered Insurance Institute’s New Generation Reception.


Opening his remarks at the Chartered Insurance Institute’s New Generation Reception, the Conservative MP Craig Tracey acknowledged the pre-election deadlock which had stricken the House of Commons: “It is quite nice to say welcome to quite a dull day in Parliament” he quipped.

Mr Tracey worked for 20 years running his own insurance brokerage, before being elected to Parliament in 2015 as the MP for North Warwickshire. He was the obvious choice for Chair of the All-Party Parliamentary Group on Insurance, which is supported by Chartered Insurance Institute (CII). Mr Tracey’s background and knowledge of financial services shone through as he addressed the audience gathered in Parliament’s Terrace Pavilion, where he was joined by speakers Shayne Halfpenny-Ray of the CII and Seth Williams from the Association of British Insurers (ABI).

The CII, who sponsored the event, is the premier professional body for the insurance and financial services profession. Their policy work is designed to “enable public trust,” stated CII’s Director of Policy & Public Affairs Matthew Connelly, who introduced the speakers.

“Building public trust is about interacting with policy makers and public institutions,” Mr Connelly said, gesturing around the room.

Attendees were partially drawn from the CII’s New Generation programme, a scheme designed to attract rising stars from the insurance industry and offer them training in policy, media and networking. Craig Tracey MP had been set the unenviable task of explaining to the audience what MPs do and how to influence them.

Industry lobbying and Parliament

 “Our job a lot of the time is to help individuals, but also to help businesses,” the MP explained.

“The Westminster Bubble really does exist… You are cut off from what is actually going on, you spend your whole life in this building” he highlighted, encouraging the audience to get in touch with their local MPs first and foremost, and invite them on visits.

 “The Insurance and financial services industry, not just in regional areas but nationally, does employ a lot of people… [all MPs] have people in [their] constituencies who are employed in the insurance industry,” Mr Tracey pointed out.

“Don’t take for granted that an MP will understand what you are talking about”, the MP said, offering a 101 on public affairs to attendees, “you must be prepared to furnish MPs with the facts.”

When seeking to influence MPs “get in early, don’t leave it too late,” he encouraged. 

The ABI’s Seth Williams said the mindset to have when lobbying MPs was to focus on the solutions you could bring them, not problems with the current system.

The CII’s Policy and Public Affairs Adviser Shayne Halfpenny-Ray defined CII’s work in Parliament and with MPs as being a “critical friend” to decision makers by “ensuring they have access to expertise to help them make better decisions.”

“We also have an obligation - in a wider interpretation of our Royal Charter public trust remit - to use our ‘seat at the table’ to help shape the decisions that will affect the future of the profession in the public interest,” Mr Halfpenny-Ray said.

Mr Halfpenny-Ray proudly pointed to CII’s Royal Charter as their ‘USP’ when working with Government. The Charter means that the CII “represents the interests of the wider public and therefore MPs’ constituents, and not just the interests of the sector itself,” when speaking to MPs, he highlighted.

Mr Halfpenny-Ray stated that the CII’s style of public affairs was different to most as it was one based on partnerships.

“We are a natural partner – not lobbyists… This is a relationship we take extremely seriously… to secure and justify the confidence of public,” he explained.

Mr Halfpenny-Ray outlined CII’s extraordinary range of work in this regard – from their work with the Cabinet Office sponsored ‘Access to Insurance’ working group, which aims to improve access to insurance for consumers with disabilities, to their Insuring Women’s Future’s Initiative.

Looking forward, CII are working on a new ‘Ageing Society’ campaign as part of their existing Insuring Futures initiative. Mr Halfpenny-Ray summarised this project as making the insurance profession “more inclusive” and to “help people build financial, physical and mental wellbeing throughout their lives.”

CII is a “hub that other organisations can rally around”, Mr Halfpenny-Ray stated, pointing out that the ultimate aim of CII was to be a “catalyst for change”.

Insurance after Brexit

When considering the future of the insurance industry after Brexit, Mr Tracey struck a decidedly upbeat tone.

“Contrary to popular belief, the Prime Minister hasn’t banned the word Brexit,” Mr Tracey buoyantly stated, before adding “yet”.

When asked by PoliticsHome if the insurance industry is prepared for a post-Brexit Britain Mr Tracey leapt to its defence: “Now that we know what the direction of travel is, [the industry] seems really, really excited about the opportunities.

“The beauty of our business in general in this country is that they are successful for a reason – they have had to adapt to changes over time.”

According to the Political Declaration struck with the EU, the UK is currently aiming for an ‘equivalence’ arrangement - the EU would acknowledge the UK’s regulatory regime and allow the UK financial services sector some access to the single market. However, if the UK opts against persuing equivalence, it could arguably become more competitive by loosening certain financial regulations.

When asked how the insurance industry was approaching the upcoming trade talks with the EU, Mr Tracey said that the APPG he chaired had been working with the industry bodies to “come up with a direction, on whether they see equivalence as the right way forward.”

 “There have been conflicting views, but we are now coming to a consensus, which is great,” Mr Tracey said.

“But I do think it is a really, really exciting time for the insurance industry,” the MP for North Warwickshire enthused, “I have often accused [the insurance industry] of having got a little bit complement, a little bit lazy, and Brexit has given it a push to look at other markets and other opportunities.”

However, he was quick to emphasise, “Government has its part to play in being an enabler of those [opportunities]”.

The MP hinted that the prolonged confusion over the Brexit withdrawal agreement to date had indeed impacted on morale in industry. The industry “is ready to go,” he stated, “they just needed to know what the timeframes were.”  

The Budget

With the Budget just around the corner, PoliticsHome asked Craig Tracey MP what he hopes will emerge from the Chancellor's Red Book on March 11th.

The Chair of the APPG on Insurance responds instantly.

“The main thing we want to see is a freeze in Insurance Premium Tax (IPT). [The freeze] is critical, particularly now we are moving into Brexit. We need to ensure that the industry stays strong financially,” he states.

The past few Budgets have seen significant increases to IPT, with it increasing from 6% to 10% in 2015, and then up to 12% in 2017.

Mr Tracey points out that the tax targets motorists in particular and “disproportionately hits young people when we are trying to encourage them to take out car insurance.”

“We would love to see a reduction, but we are rational,” Mr Tracey says.

The MP added that it was important regulators saw their role as one of enabling and promoting the insurance industry, not simply “just to regulate” it. The Government “must look at regulation” and how to ensure “it is competitive, and stays competitive,” he stated. 

Looking ahead

“We are in a position now where we can move forward, particularly for the insurance and financial services industries,” Craig Tracey MP said, referring to the passing of the Brexit Withdrawal Agreement.

Speaking directly to the young leaders in the audience, Mr Tracey had inspiring remarks to conclude the event.

“As the New Generation you are coming through at exactly the right time. This is an exciting time in the country’s future, and you can all make a difference,” he encouraged. 

“You all have a chance to shape that future.

“You can be a part of the solution. If had not realised I could make a difference I would not be doing this job today,” the MP stated, drawing the event to a close. 

To read more about the CII's work CLICK HERE.

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