A senior Tory MP is facing questions over whether he used his Commons Treasury committee role to lobby for post-Brexit changes to City rules, which stand to benefit the industry where he has a second job.
John Baron, who in addition to his role as an MP is co-owner and chief investment officer of Baron and Grant Investment Management, used at least three meetings of the influential committee to request “urgent” changes to rules covering investment trusts, which his firm specialises in managing.
This includes two hearings with Jeremy Hunt on the chancellor’s autumn statement and spring budget. At one hearing this month, Baron called for “immediate action” and “fast-track legislation” to support the UK’s £260bn investment trust sector as part of the chancellor’s “Edinburgh reforms” deregulation package.
He also used a December committee meeting with Nikhil Rathi, the chief executive of the Financial Conduct Authority (FCA), to ask for “assurance” that rapid action would be taken to “iron out these problems”.
Baron declares his financial interests in the parliamentary register, including a stake of at least 15% in Baron and Grant, and a £500 payment for five hours’ work a month as chair of its investment committee.
The MP told the chancellor that investors were “shunning” investment trusts and withdrawing money from the sector because of “overzealous regulation” that the government needed to change.
Industry figures show that investment trust fundraising has collapsed from more than £70bn between 2014 and 2021 to less than £7bn in the past three years.
Baron said he “always declared” his interests when raising this issue, which he said had “never been for personal gain”. His questions on the Treasury committee were in the interests of “the sector and investors alike, in the public interest”, he added.
The long-serving Tory MP for Basildon and Billericay is, however, facing questions about whether he took advantage of his position to raise his own special interests with government.
Tom Brake, a former Liberal Democrat MP who helped design the UK’s lobbying register while serving in David Cameron’s coalition government, has written to the parliamentary commissioner for standards calling for an investigation into whether Baron broke the code of conduct for MPs concerning lobbying.
“I consider Mr Baron’s actions to warrant an investigation into whether he is in breach of the code,” said Brake, who now works for the campaign group Unlock Democracy.
Baron, a former banker who has used investment trusts in a private and professional capacity for almost 40 years, also suggested in a regular column he writes for Investors’ Chronicle that his actions had influenced government.
“A few of us in parliament have lobbied the government – and with the help of the Treasury select committee, the chancellor has listened,” he wrote.
Brake said that while Baron had registered his interests and referred to them in the meetings, he may have broken rules that require members to focus on the public interest.
“I would argue it is in Mr Baron’s personal interest to pursue inquiries about investment trusts, but I do not consider there is a clear case that it is in the public’s interest. In these circumstances, I believe it would be appropriate for him to recuse himself,” Brake said.
Baron said the rules he was seeking to change had “not affected Baron and Grant any more than they have any other investor, not least because the company is not an investment trust” and said reforms would benefit the whole sector.
The rules he is pushing to change involve the way investment trust costs are disclosed to consumers, as part of UK rules being drawn up by the Treasury to replace EU legislation post-Brexit. Critics say the rules are misleading, unnecessary and make investment trusts appear more expensive than other funds.
Hunt told Baron at the Treasury committee this month that the government was committed to replacing the EU rules with “something better”.
Baron said: “I am confident there is no wrongdoing here – just a desire to do the best for the sector and investors alike, at no personal gain for myself. I have been championing the sector in my Investors’ Chronicle column for 15 years now, with all fees having been donated to charity.”
An FCA spokesperson said it was taking action to give consumers access to clear charging information. Harriett Baldwin, the chair of the Treasury committee, said: “I always remind members to draw attention to their interests in the register when they ask questions that are relevant to those interests.”
