Fresh Brexit chaos as government shelves Financial Services Bill in face of looming defeat

Posted On: 
4th March 2019

The Government’s Brexit legislation timetable has been thrown into "chaos" after ministers were forced to pull a key bill because it was facing a humiliating defeat.

MPs were set to vote later today on the legislation which will allow financial services firms to continue to operate in the event of a no-deal Brexit
Credit: 
Parliament TV

Ministers took the decision to postpone the Financial Services bill just hours before before it was due to be debated and voted on by MPs.

The bill, which is one of several pieces of crucial legislation required to be passed before the UK leaves the EU, will now have to be re-scheduled for debate in the Commons.

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Up to 22 Conservative MPs were set to defy the Government to vote for a cross-party amendment aimed at forcing new tax transparency rules on British Overseas Territories.

According to the Financial Times, leaders in Jersey, Guernsey and the Isle of Man have warned ministers that the amendment was “contrary” to the current constitutional relationship they enjoy with the UK.

Conservative MP Andrew Mitchell, who tabled the transparency amendment alongside Labour MP Margaret Hodge, told PoliticsHome: “This amendment is an important continuation of the British G8 agenda on transparency and openness to combat money laundering and tax evasion.

“In the face of certain defeat, the Government have pulled the business for today, but the business will return and so will this important amendment.”

He added: “Parliament decided last May that the British Overseas Territories should adopt open registers of beneficial ownership and so now should all members of the British Family. The EU adopts them from the end of this year, 2019.”

Meanwhile, Shadow Treasury Minister Jonathan Reynolds said the Government’s decision to shelve the vote was “risible”.

“The Government is just in chaos. They have pulled this Bill today because they knew they would be defeated,” he told PoliticsHome.

“They had told us this was a key piece of legislation necessary in the event of a no-deal Brexit, and that it was essential to pass it quickly. However, when faced with amendments calling for no ‘race to the bottom’ in financial regulation post-Brexit and in greater transparency in the crown dependencies, they have run away. These are both things the Government says it is in favour of. It is risible.”

Shadow Chancellor John McDonnell added: “More evidence that this government is incapable of getting its business through Parliament. People have just had enough of the Chancellor dragging his feet on tax avoidance. We are demanding action now and no further delays and excuses. The government has been a friend of tax avoiders for too long."

A spokesperson for the Treasury said: “The Beneficial Ownership amendments were tabled on Thursday, and we want to give them proper and thorough consideration. The Government will not move the Bill today but will reschedule it to ensure that there is sufficient time for proper debate.”