Financial Services Bill

Debate between Baroness Burt of Solihull and Sheila Gilmore

Monday 23rd April 2012 Commons Chamber

[Lorely Burt]

I agree that the companies that spend money on unsolicited calls to people who may have a financial problem are the ones that need to make the most profit, to cover the cost of doing so. However, responsibility for debt management is moving to the new FCA, and new guidelines are being issued. As long as those guidelines are strong and properly enforced, part of the market may still be able to benefit from providing debt management advice.

[Sheila Gilmore (Edinburgh East) (Lab)]

Will the hon. Lady consider the fact that it is not necessarily about whether there are charges so much as it is about who pays them? The intention behind the new clause is to protect consumers from being the ones who pay. Is it not possible that debt management companies can find another way of funding their work rather than having consumers pay the price?

[Lorely Burt]

That should ideally be the situation, and when the new regulations are produced there should be a careful consideration of whether any up-front fees should be paid to debt management companies.

New clause 10 would require mortgage lenders to inform existing customers about potential interest rate changes. I have to declare an interest: I was a mortgage adviser in one of my past lives, so I know a little bit about the matter, and I suggest that any reputable mortgage company should do that anyway. It is not in their interests to encourage people to take on mortgages that they will not be able to repay should financial circumstances worsen. The new clause may therefore be superfluous. I completely understand and appreciate the sentiment behind it, but the matter will probably fall within the FCA rules and within the ethical behaviour that one should expect from any mortgage lender.

Finance (No. 4) Bill

Debate between Baroness Burt of Solihull and Sheila Gilmore

Monday 16th April 2012 Commons Chamber

[Sheila Gilmore (Edinburgh East) (Lab)]

After that version of what the Budget holds, it is worth quoting another, as today’s editorial in The Times was not nearly as enthusiastic as the hon. Member for North East Somerset (Jacob Rees-Mogg). In its words:

“When the Budget speech is still leading the news three weeks after delivery, something has gone awry.”

It is rather strange, because in the beginning people thought that so much had been spun out to the press in advance that there could not be much controversy left. It all seemed to have been massaged and put out in advance, so people would not be too surprised. Three weeks after the Budget, however, as The Times says, something has gone awry. Clearly, that view is not shared by the hon. Gentleman, but it is widely held throughout this country. Behind all the jokes about pasties, granny tax, stamp duty and caravans, the biggest thing that has gone awry is the fact that there is very little in this Budget to help grow the economy. That is the serious part of all this.

This morning—I think it must have been on the “Today” programme—I heard the commentator say that the Government have handed over the responsibility for economic recovery to business. The problem is that the OBR does not expect business to step up to the plate any time soon, so it appears that nobody will be responsible for the recovery. This is what the OBR had to say in its March report:

“Relative to our November EFO”

report,

“we have made a further downward revision to business investment, as we believe that non-financial companies’ balance sheets may be weaker than official statistics suggest. Set against this, we expect a boost to the level of business investment of 1 per cent from the corporation tax rate cut announced in the Budget.”

The reduction in the forecast for business investment for 2012-13 is 6.9% off the November forecast and the increase that is expected this year in business investment is only 0.7%, so it appears that business will not be stepping up to the plate.

We have heard a lot about corporation tax and Opposition Members have been accused of not being interested in that, but when one looks at the detail, one sees that the corporation tax cut that people have made so much of is expected to lead to an increase of only 1% in business investment over the whole forecast period. If a reduction in corporation tax is so important to the Government, it seems a rather modest step. In striving above all to create what he feels is a fiscally neutral Budget the Chancellor is constraining his Government’s apparent remedies to our economic situation. We have seen the same thing with the national loan guarantee scheme and the credit easing we were promised in November which was finally announced to be alive and kicking the day before the Budget. That is really an acknowledgement that previous measures to encourage business to invest have not worked.

What does the OBR say? It says:

“Under current funding market conditions, the Government guarantee on the first tranche should lead to lower funding costs and some additional net lending. The scale of the initial tranche is not large enough to have a material impact on our aggregate business investment forecast”.

It goes on to say that the

“benefits associated with further tranches are less certain.”

Again, one of the tools that the Government say they have to aid economic recovery appears to be exceptionally modest, so it is not surprising that the OBR does not expect a recovery in growth to the historical average before 2014.

The rise of the tax threshold is something that the Liberal Democrats are very proud of. They waved their Order Papers frantically at the time of the Budget.

[Lorely Burt]

Yes, we did.

[Sheila Gilmore]

And we heard a great deal about it from the hon. Member for Bristol West (Stephen Williams). I would be more interested in listening to their view on this if they acknowledged how many other measures have not helped many of the low-paid. Raising the tax threshold is not in itself a bad thing—[Interruption]—but when people have suffered other losses, the net effect is not what the hon. Member for Solihull (Lorely Burt) appears, from a sedentary position, to think it is. Someone who is now out of tax as a result of this year’s tax threshold increase will find that it is not worth as much to them as they might have thought because while they are gaining with one hand they are losing with the other. If they are entitled to housing benefit or council tax benefit, they will get less because of the changes in tax so the net effect will be that they receive less. Over the period since 2010, families in particular have taken a big hit with more than £500 a year being lost through changes in tax credit and other benefits. The hon. Member for Solihull laughs and perhaps she does not care about that because the tax threshold seems to be such an important mantra for her party but it is not enough if at the same time people are suffering losses. If we want to talk about the real position for families, particularly those with children, we have to look at the whole picture. Those who face the loss of tax credits this year know exactly what that means for their families. As I said earlier, I am very disappointed that the Government were willing to listen to some critics, and make changes for those on the higher rate of tax who are about to lose child benefit, but were not prepared to look at the much bigger working tax credit losses that will be suffered by people on much lower rates. If they were listening, they should have made the change for both, not simply for those on higher rates of tax.

We have heard a lot about tax simplification—indeed, it was the reason for the so-called granny tax—but it appeared to go out of the window when it came to child benefit changes for higher rate taxpayers. The Finance Bill will give us a complicated set of arrangements that will involve making decisions about whether two people are a couple, whether or not they are regarded as living together and when a relationship has sufficient permanency to affect the provisions. All those issues are extremely complicated and, as even some Government Members have said, they will involve employing more people to work them out. As we said, there will be administration costs.

When the changes were announced with a great flourish at the Tory conference, we pointed out the anomalies, difficulties and expense that would arise. I suspect that there will be further changes yet, because there is no point in pretending that the measure is not difficult.

On the higher tax rate issue, it was far too soon to jump to the conclusion that the 50p rate was not bringing in the revenues one might have hoped for. It was hardly given the opportunity to start. In effect, people on high incomes were using a form of blackmail on the rest of us: “If you put up taxes, we’ll find ways of avoiding them.” What did the Government do? They rolled over and said, “Oh all right then, we’ll lower the rate of tax.” If low-paid workers or people who lost their working tax credit when they could not find enough hours decided that sensible tax planning for them would be to stop work, because they would better off, they would be regarded as people who would rather stay at home watching daytime television than work hard. There is one rule for one set of people and one rule for another.

Tax avoidance should be tackled, but it is not a good sign when at the first whimper from higher rate taxpayers—the first effort to avoid the tax—the Government say, “Okay, we’ll change the tax rate for you.” That is what the Government stand for. It has been clear in this and previous Budgets that there is gross inequality in the way people are treated. People at the bottom who have been suffering from the changes in tax and benefits and are struggling to keep their heads above water find that even the new jobs supposedly created over the past two years—most of which were created in 2010—are part time and do not give them a higher standard of living. I urge Government Members to rethink their support for the Budget and to vote with us tonight.

Women (Government Policies)

Debate between Baroness Burt of Solihull and Sheila Gilmore

Wednesday 8th June 2011 Commons Chamber

[Lorely Burt (Solihull) (LD)]

Let me begin by adding to those of others my congratulations to the hon. Member for Leicester South (Jon Ashworth). I can see that he is no token man, as I know that he has a two-week old baby and I can see the shadows under his eyes from here. I welcome his comments celebrating the cultural diversity of his constituency. Clearly, he is going to be a great advocate for Leicester South.

I think that the previous Labour Government and this coalition Government have a lot in common. We both want to redress the imbalances between men and women through public policy. It is fair to say that Labour did many things that benefited women, such as increasing the maximum age for children at which parents could apply for flexible working. That change followed a very similar private Member’s Bill that I had introduced the year before, which would have extended the right of request to the parents of children up to the age of 18. My Bill was unceremoniously voted down by Labour, which then reintroduced the measures in a form that applied to the parents of children up to the age of 16. I do not mind the previous Government’s doing that: they saw a good idea and grabbed it. Indeed, I think we should all work together more to pool our best ideas, particularly in the current, grave economic circumstances. That might be too radical a notion for this debate and this Parliament given the way things have been going so far but it is an aspiration of mine. I am very glad that this Government are consulting on extending the right to request for all employees. That will remove the stigma when some staff have a right that is denied to others. It will also acknowledge the fact that employees are more loyal and productive when there is an acknowledgement that they should be able to have a reasonable work-life balance.

Another thing that Labour did that particularly benefited women was allowing any years they spent caring for others to count towards pension entitlements in future. Why the Labour Government never restored the earnings link during their 13 years is beyond me. Why would they not have done that if they believed that the economy was strong, not knowing that the so-called growth was based on a house of cards and unsustainable debt? How much more difficult has it been for us, while we are trying to deal with the biggest deficit in peacetime history, to redress some of those injustices at the same time? We put our actions where our mouth was and immediately committed to restoring the earnings link with the triple guarantee. A much fairer and better pensions system that will raise the level of a single person’s pension to £140 in today’s money will be introduced by the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), who has responsibility for pensions. That system will help the poorest pensioners more than anything that was introduced by the previous Government. Of course, the poorest pensioners are mostly women. Two thirds of people on pension credit are women and the average woman receives £40 less per week in her state pension compared with men. Even with the changes brought in by Labour, it would have been 2050 before pensions were equalised between the sexes.

Something else that will greatly help is the move to the universal credit system of benefits, which has been mentioned by several hon. Members, rather than the complex system that we currently use. That change will mean that work always pays and will encourage people to return to work rather than stay at home on benefits because that is more financially beneficial.

[Sheila Gilmore]

But surely even in the Government’s projections and the impact assessments of the Welfare Reform Bill, it would be an exaggeration to say that work will always pay, particularly for those people who have child care costs.

[Lorely Burt]

The Government are investing more than £3 billion in this, but every single factor cannot be taken into account in determining whether the outcome will be better or not. The Government are looking into what we can do about child care costs. The hon. Lady raises an important issue, which I know is being taken very seriously by my hon. Friends on the Front Bench.

Under the proposed system, 31% of women who are entitled to benefits will be better off than they are at the moment. In addition, women returning to work after having children will be able to build up their hours gradually without being unfairly penalised by the system. It will also help take-up. In 2008-09 only 80% of people took up child tax credits. There has been much discussion about that today. I hope that changing to a simpler system will ensure that those who need the money get it.

However, I agree with the sentiments expressed in the motion about the disproportionate effect of the planned increase in the pension age on women born between December 1953 and October 1954. I am delighted to see that the Minister of State, my hon. Friend the Member for Thornbury and Yate, has come into the Chamber. I declare an interest: I am one of those women. Although I expect still to be going like a train at the age of 70, I entirely understand where those women are coming from and the unfairness of imposing change too late for many to do anything about it. I therefore ask my hon. Friend the Pensions Minister to do all he can to ensure that the proposal is reconsidered and a measure introduced that will be a little fairer to that tranche of women.

Consumer Credit and Debt Management

Debate between Baroness Burt of Solihull and Sheila Gilmore

Thursday 3rd February 2011 Commons Chamber

[Sheila Gilmore (Edinburgh East) (Lab)]

I want to thank my hon. Friend the Member for Walthamstow (Stella Creasy) not only for securing this debate, but for the campaign that she has been waging on this subject since she was elected. Mention has been made of the review of consumer credit, and of the consultation, which closed some time ago. It is important to remember that that review would not even have looked at some of these issues if my hon. Friend had not pushed for them to be examined, so we are here today in part because of her efforts.

It always worries me when people say things like, “We don’t need to regulate yet” or, “We’re all in agreement with this, but—”.

[Lorely Burt]

The Labour Government had 13 years in which to regulate, and they conducted three investigations into this very subject. They did not bite the bullet, however, so the hon. Lady should not be criticising us. We are conducting a consultation nine months into this Government.

[Sheila Gilmore]

The hon. Lady has been told on several occasions by various Members that the proposal in the motion is different from some of the proposals that were not taken up by the previous Government. If I had been in this place then, I would have been pushing my Government to do exactly what the motion proposes. It is not good enough to say, “If your Government did not do this, you should not propose it now.” For how long does she think should we be disbarred from making such proposals? One year, two years, 13 years? On that basis, we might as well not be here at all, but perhaps some Members on the Government Benches would prefer that.

Royal Mail Privatisation

Debate between Baroness Burt of Solihull and Sheila Gilmore

Tuesday 18th January 2011 Westminster Hall

[Lorely Burt (Solihull) (LD)]

The hon. Member for North Ayrshire and Arran (Katy Clark) has rightly initiated this debate today. It is important that we ensure that the Post Office is protected and that legislation such as the Postal Services Bill does not have an undue effect. She asked many pertinent questions of the Minister and, like her, I look forward to hearing the answers.

Having worked for some years on issues within the remit of the Department for Business, Innovation and Skills, under its various names, I have attended numerous statutory instrument Committees whereby the Government of whom the hon. Lady was a supporter put in subsidies year after year to support the Post Office. That was absolutely right. However, what happened under the previous Government was that they managed a decline. The very important social value of the Post Office has been recognised. Nevertheless, it has not necessarily been given the legs to be able to compete in a changing business situation in this country.

The new coalition Government are taking a different approach to the Post Office. We have no less desire than the Labour party to ensure the Post Office’s future, but we are trying to adopt a different approach to enable the Post Office to stand on its own two feet. Several hon. Members have mentioned the £1.34 billion that the Government have committed to protect the network of 11,500 post offices, which we have said will remain. That is considerably better than managing the Post Office’s decline. We do not want any more post office closures. We want the Post Office to remain in public ownership, unless it goes for mutualisation itself.

The hon. Lady mentioned the inter-business agreement at a little length. The chairman of Royal Mail has said that such an agreement will be drawn up for the maximum legal period before any sale. My hon. Friend the Member for Colchester (Bob Russell) raised the issue in a new clause for the Postal Services Bill. It was argued at some length that a long period would benefit the Post Office, and I totally agree. Where I perhaps disagree, however, is on the practicalities. We are talking about an agreement between two commercial companies, which need the flexibility to negotiate an inter-business agreement that benefits both; if it does not, it will not necessarily hold together. There was also some discussion of how such an arrangement could be implemented, and the conclusion was that it would not necessarily work well under existing EU law.

The hon. Lady mentioned the post bank, and I, too, was disappointed that we did not go down that path. However, we have secured the ability for people belonging to virtually every bank in the United Kingdom to conduct transactions. That is a very good second best, which will at least make sure that the banks start to play ball and respond to the need to be more flexible in conducting their financial transactions.

What about the Post Office’s future? My hon. Friend the Member for Argyll and Bute (Mr Reid) mentioned some of the losses that we have seen, as well as some of the potential losses. A little while back, the Post Office card account went out to competitive tender. Lord Mandelson, who had just been appointed Business Secretary, stopped that straight away. I thought, “Brilliant.” We really cannot afford to lose the Post Office card account in that way. Like my hon. Friend, I hope that it will continue.

[Sheila Gilmore]

The hon. Lady mentions the Post Office card account, and those who are active in promoting financial inclusion have suggested that introducing more functions into the Post Office card account might be one way of assisting people who do not have access to mainstream banking. Another issue, which is much discussed, and about which I have heard a lot of discussion since I arrived in the House in May, is the possibility of linking credit unions with post offices. I have to say that there has been more discussion than actual tying things down, and I understand that there are cost issues, but does the hon. Lady agree that those two additional functions would be useful for post offices and contribute to the financial inclusion agenda?

[Lorely Burt]

I certainly agree that it is important that we extend the range of services available to people who do not have a traditional bank account, and the Government are actively considering how that can best be done. I certainly applaud the work of credit unions, although I am not entirely sure whether they have sufficient coverage and continuity to form a national service at this stage. However, the Government are actively considering these matters, and we are doing all we can to reach a practical solution on increasing financial inclusion for those who are unbanked.

The hon. Member for Newton Abbot (Anne Marie Morris) described all sorts of different ways of introducing flexibility, and the Government are fizzing with ideas about how we can be more flexible. We can adapt to the changing commercial landscape and to the internet. My hon. Friend the Member for Argyll and Bute mentioned vehicle excise duty licences, and I am sorry to say that I am guilty of using the internet to renew mine, because it takes five minutes. The point, however, is that there are many other functions that post offices can carry out; they do not have to exist in their traditional format to deliver a postal service to their customers.

I am very hopeful that some of the pilots that are being undertaken will prove successful. It is good that schemes are being piloted, because we can iron out some of the problems that might otherwise ensue. We will take the best ways of responding to the changing landscape. We do not want to continue giving subsidies to the Post Office; we want it to be vibrant, commercial and profitable and to stand on its own two feet.

Fixed-term Parliaments Bill

Debate between Baroness Burt of Solihull and Sheila Gilmore

Tuesday 16th November 2010 Commons Chamber

[Sheila Gilmore]

I thank my hon. Friend for that information, because it adds to the important case that we are presenting. The people who find this highly amusing clearly have not had the experience that we had. It is incumbent on a Government who said that they would want to look at the evidence and make decisions on the basis of hard facts to listen to the evidence being given by people who have been through this process and who understand the complexities of devolution in a situation where we still have a UK Government. We have had experience of this, as have the elected bodies, which have given their view very clearly to the UK Government but have been ignored. They were not consulted before this, but they gave their view and told of their experience, so it is not asking too much of any Government to say, “Perhaps we have not got this right.”

Perhaps the simplest thing for the Government to do is not to try to see whether they could slip the election by a month, as has been suggested by some people. That would represent the worst of all possible worlds for the voters, let alone for the political parties. The simplest thing would be to say, “We have got this wrong, but we believe in fixed-term Parliaments.” The Labour party proposed fixed-term Parliaments in its manifesto and the Liberals believe in them too. I am not sure whether the Conservatives believe in them, but they introduced this legislation so presumably they now do. We all seem to agree that there should be fixed-term Parliaments. On that basis, why are we having this debate? Because the coalition Government are so determined to stick to their first thought, which was to have five years.

The Government may be doing that only for advantage and to feel that they have the longest possible time in which to be the Government. I have to say to the hon. Member for Epping Forest that she and others on the Government Benches may feel that they have an entitlement to sit for five years, having been elected, but a lot of people in the country have a very different view. The majority party in the coalition did not get a majority for its policies. The junior partner in the coalition went to the people on a different set of policies, so the people who voted for the Liberals did not vote for the programme of this coalition Government. The Government’s approach seems particularly unfortunate for democracy in this country, given that the Government do not have a mandate to rule in the majoritarian fashion that they are doing.

[Lorely Burt (Solihull) (LD)]

Is the hon. Lady therefore saying that her party does not accept that a coalition of two parties is sufficient to run the country? Does she believe only in first-past-the-post majority rule, and must we keep having elections until we get some sort of majority Government by default?

[Sheila Gilmore]

Coming from Scotland and having seen both coalitions and minority Governments in operation, I am very open to various ways of running a Government. I would not for a minute want to suggest that it always has to be an absolute majority, that first past the post is what we need or that we need majorities.

[Sheila Gilmore]

I thank my hon. Friend for his intervention, with which I wholly agree.

Ordinary electors thought that a hung Parliament would be a good idea, because they genuinely believed that there would be openness and that people would listen to different points of view. That has not happened. The strong views of the elected Governments of Wales, Scotland and Northern Ireland have not been listened to. The bulk of the evidence given to the Select Committee on Political and Constitutional Reform, of which I am a member, was clearly in favour of four-year fixed-term Parliaments. Why should that weight of evidence be ignored? Was that what people expected from a more consensual and open approach? I think that a lot of people thought that coalition meant that we would get the best bits from everyone and that everyone would sit around and have discussions—

[Lorely Burt]

We did.

[Sheila Gilmore]

The hon. Lady seems to think that they did get the best bits from everyone, but that makes it clear to me that she did not believe in the manifesto on which she stood because so many parts of it seem to have been ditched in favour of the policies of the other party.

A small and simple change—a very small concession—that would not in any way interfere with the principle of fixed-term Parliaments would make it far easier for the Bill to be passed relatively quickly. It would allow national elections in all parts of the United Kingdom to go forward in the best possible way and our devolved Parliaments and Assemblies to present their policies to the electorate in the way they want to.