Banking Sector Failures

Drew Hendry Excerpts

Thursday 12th July 2018 Westminster Hall

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Bone. I congratulate the hon. Member for East Lothian (Martin Whitfield) and the hon. Member for Stirling (Stephen Kerr) on securing this important debate. I am delighted to speak for the Scottish National party and I share almost all the concerns that have been raised so far. I say almost, because I have a few more direct criticisms of the UK Government and what they could have done and should do in the future, but I will come to those in due course.

What I think we would find in common among those who have looked into the practices of the rogue banking sector is the palpable anger about the treatment of people who have found themselves in grossly unfair situations. The hon. Member for East Lothian started off by talking about the drive for high standards in the industry; there is a drive among some people who are committed to achieving that, but that drive must be reflected among those in positions of power. He pointed out the absolute failure to support small businesses, particularly given the percentage—99.9%—of businesses and the £1.8 trillion figure that he outlined. I do not think it is often explained to a wider audience just how big and important the sector is, and it is vital across the nations of the UK.

The hon. Gentleman also made the point that trust in the banking sector has never been lower, and unfortunately I think that is the case. I say unfortunately, because I want to talk about the good parts of banking later on, but he is absolutely right. There is such a wide range of factors involved in the situation, and of course in the Scottish context the issue is quite disproportionate. I agree with his comment on that.

[Bob Stewart]

We are talking of trust. We are talking of despair—utter despair—in people. The despair with the banking sector is so great that that despair will be translated towards politicians unless we sort this out and help entrepreneurs. They have a right to expect us, as politicians, to sort this. Where else can they go but to us?

[Drew Hendry]

In typical passionate fashion, the hon. Gentleman makes a strong point. He is right that more politicians should be angry about this, and not just the hon. Members in this room or in the debates we have had recently in the Chamber. This is a critical matter that many more hon. Members should be focused on and concerned about. The hon. Member for East Lothian talked about the Government’s role, and I will come on to agree with some of the things he said and add my own comments. The disgrace of the Global Restructuring Group, which has been well rehearsed many times, is a vicious application of sharp practice by the GRG—although there were others, of course, and it was not alone in that.

The hon. Gentleman talked eloquently about the lost businesses, marriages and homes, and the people who have been stripped of their dignity and, in some cases, even pushed toward suicide. He made some positive proposals for the legal rights of SMEs, which were repeated by other hon. Members. He also said, tellingly—this is important for people—that the victims are not going away. This is not going to disappear just because the banks want it to; it will continue to be brought up.

The hon. Member for Stirling talked about entrepreneurs, and he is right. Entrepreneurs are important around the nations of the UK as those who take the risks—that is what it means. Anybody who has been in business knows that entrepreneurs often have to take risks that go beyond the norm, putting houses and property on the line, and in certain circumstances putting their family on the line—as we have heard in the context of the unfortunate outcomes—to take opportunities in business. He talked about fostering energy and ambition, which is exactly what banking should do. In some cases it does, and I will come back to some of that later, but I agree that it has proved to be frighteningly easy to erase businesses through technical breaches. That has been one of the biggest complaints.

The hon. Gentleman highlighted the sneaky practice of banks using insolvency practitioners to do their dirty work. He spoke about RBS GRG’s asset stripping and loading up on the profits from that, as well as its brutal application by RBS and other banks. We can all pinpoint a constituent who has been hammered by these things, and the hon. Gentleman spoke eloquently about his constituent John’s business being stolen from him. A common theme from all the contributions was the health effects on such people, including stress, anxiety and even heart problems, with families being almost torn apart. Similar to the line about victims not going away—I mean that in a positive way—he talked about the human cost, and he asked the Minister directly for clear action to ensure that justice is served. I will come back with some asks for the Minister as well.

The hon. Member for Beckenham (Bob Stewart) spoke passionately, and rightly so. I do not say that in a glib way; he is right to be passionate and outspoken. He talked about people being terrorised by GRG and Dunbar bank, about people’s life’s work being taken away from them and the fact that there is one-way loyalty. Isn’t that true? In all of the cases we have heard about, that has been the situation—it has been a one-way street. Some of the banks have been predatory; there is no other way to put it.

The hon. Gentleman also talked about small and medium-sized enterprises being unable to match the legal armies of the banks. That is a vital observation, because after the banks carried out this sharp practice—we do not know, but some may still be doing some of this without it coming to light—there was no real recourse. People do not have the ability to tackle it. By the nature of the problem, they do not have the money to access the rights for action. He pointed out that the Financial Ombudsman Service, as it sits, is not fit for purpose for SMEs. The hon. Gentleman said that small business is the life and blood of his nation, and I think that is even more acute in Scotland, where small businesses are even more central to the economy, as was mentioned.

I pay tribute to the hon. Member for Thirsk and Malton (Kevin Hollinrake) for his work. He made a point that I want to stress: banks provide vital services for businesses. When we criticise the people working in the banks, we talk about a fairly small number of key decision makers. We must appreciate that an army of people work in the banks who are good, hard-working, dedicated and honest people of great integrity who help people in their communities and in the wider business sector. I know that there is agreement around the room on that, but it is important to underline it.

As I said, banks provide vital services. When banks operate in the way they should, it is fantastic. When they operate in the ways we have seen, particularly with some of the decisions made at a corporate level over the past few years, it is absolutely destructive and no good at all.

[Kevin Hollinrake]

The hon. Gentleman makes an excellent point about people working in those banks who have integrity. Through our work on the all-party parliamentary group, we met people at a senior level who were appalled at what happened within GRG. The second phase of the FCA investigation should now take place, to name individuals and find out who was ultimately responsible. However, it is not apparent that a thorough investigation and questioning of such people, who could provide evidence on exactly what happened, is taking place. It needs be shown that it is.

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[Drew Hendry]

The hon. Gentleman has highlighted that fact, and I think we all agree with him.

The other comments made by the hon. Gentleman are worthy of highlighting. He talked about the banks being too big to fail, sue or regulate; well, isn’t that the case? We have seen that over recent years. He talked about how reports can suddenly change from saying that there are widespread problems to there being only isolated examples. How come? He also talked about the FCA allowing banks to undertake internal inquiries and compensation schemes, which, again, seems completely incompatible with its role. The hon. Gentleman also said that regulators should be fearless defenders, not complicit in allowing these practices to happen. I thank him for his comments.

[Martin Whitfield]

I take the opportunity to pay tribute to my immediate predecessor, who worked with the APPG on the forerunner to this report. I am sure that this is the case, but does the Scottish National party agree on the need for a financial transactions tribunal along the lines of employment tribunals, which carry so much public confidence?

[Drew Hendry]

There is a need to tackle that. I will come on to exactly what my party proposes, which I think the hon. Gentleman will find favour with.

I do not want to lose the words of the hon. Member for Thirsk and Malton, who said—this is not a direct quote; I hope he will forgive me—that Ministers do not require the good will of the banks to hold them to account. That is important. Finally, he talked about the major banks being so large and complex that it seems impossible to rein them in. He mentioned a solution being a financial services tribunal, so that plaintiffs do not face a cost, win or lose. We have to consider that.

I understand that there is a bit of time left, so if it finds favour with hon. Members I will make a few more comments. I wanted to talk about all these issues, but I will start with the impact of some of the decisions made by the banks on local communities. People in rural areas have been hit by the closure of their banking services. My constituency alone has seen branches close in Inverness, Nairn, Aviemore and Grantown-on-Spey.

I was sent an appeal by the Badenoch and Strathspey Disability Access Panel. Its members felt so strongly that they got together to send their concerns. They wanted to communicate their concerns to Members about the adverse impact of bank closures on rural communities generally, and on the disabled members of those communities. They said:

“Recently the Royal Bank has closed its branches in Aviemore and Grantown, and the Bank of Scotland has closed its branch in Kingussie.”

For those unfamiliar with the geography of my constituency, those are quite disparate communities. Closing the branch in Grantown means that somebody wanting to access RBS services now has a round trip of more than an hour—in good weather—to Inverness to do so. They also say:

“Like the community in general, disabled people are very dissatisfied by the use of Mobile Banks, which offer only limited facilities for a few hours in the week. This causes problems of privacy, queuing (whatever the weather) and security, e.g. sums of money can build up between the visits of the bank and people are rightly worried about the safe keeping of them.”

They are worried about being seen in open queues as they go to mobile banks with piles of cash on them. Cash businesses often have to operate in rural economies. They also say:

“Disabled people have particular worries. The banks claim that Internet banking is a viable alternative, but many disabled people have no access to the internet. Furthermore, they find the option of having to undertake a return journey of between 20 and 30 miles (or more) to visit a proper bank distressing, because it either means depending on someone for transport or trying to use public transport, which is far from frequent in a rural community and which can be challenging to access for a person with a disability.

Finally, the banks have failed in their duty of keeping customers informed. How accessible are the sites chosen for the vans, how accessible is entry into the van, what facilities for the disabled are available in the van, e.g. for deaf or visually impaired people, and how well trained are the staff in dealing with the needs of disabled people? It may be that the banks have made adequate provision, but there has been no attempt to communicate this to disabled customers, who may be deterred from making use of the mobile bank. Incidentally, there has been an occasion when the mobile bank did not appear because of mechanical failure, but there was no system in place for the public to know what was happening.”

They were waiting in the cold for something that would turn up, without communication.

The disability access panel said of one customer that she uses a stick and walking from her house to the bank is a “big undertaking”. No seats are provided for people who are waiting,

“so she had to stand outside, which was difficult. The steps were very high—they did help her up the stairs but she doesn’t think she could do this every week. She asked for bank statements and was told they couldn’t do it…she would have to go to Inverness.”

They could only offer her the balance, just like at an ATM. The panel continues:

“She gave them feedback but they only noted it down on a bit of paper, she didn’t feel they took her complaint seriously.”

All I have had from RBS in response is that it has forwarded some information about the current situation. It is looking for a coach builder; it has not found one yet, but in the short term it is using a system called MyHailo, so customers will have a fob that they can press to get a member of staff from the van to come out. That answers very few of the criticisms that were made.

It is a disgrace that, despite being a 70% shareholder in the bank, the Government have failed to use their influence to represent Scottish communities and reverse devastating branch closures. The public bailed out the Royal Bank of Scotland; it cannot repay communities by simply abandoning them. It is a dereliction of duty that the UK Government did not make stronger representations to RBS about the impact that the closures will have on communities across Scotland and the other nations of the UK as they roll out. RBS branch closures have a devastating impact on Scottish communities, particularly, as I have said, in isolated rural areas. RBS has underestimated how much people rely on traditional in-branch banking services.

[Stephen Kerr]

I wish to support what the hon. Gentleman has just said and add to it. The Royal Bank of Scotland and others who are party to the process of bank branch closures have underestimated the anger that those closures have caused in communities in my constituency and throughout Scotland. That anger towards the Royal Bank of Scotland is not going away. Real reputational and brand damage has been done to what was otherwise a great—a grand—Scottish institution.

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[Drew Hendry]

The hon. Gentleman and I normally disagree on just about everything. Very occasionally, we find points of agreement, and it is impossible to disagree on this issue. There is palpable anger. I talked about the comment by the hon. Member for East Lothian about the failure of trust in the bank. That is at grassroots level. It is right inside the communities. How daft is it to have trust in the bank demolished at the very top level and right at the grassroots? It is just crazy behaviour; it is also harmful behaviour. It is clear to me that some people are just looking for a very short-term gain, so I thank the hon. Gentleman for his intervention.

There is more I could say on the rural issue, and there is a lot more that people would say, but I want to get on to the treatment meted out by RBS’s Global Restructuring Group to SMEs in the aftermath of the financial crisis.

[Stephen Kerr]

I think that the hon. Gentleman and I will find that we can agree on a number of things this afternoon, and for that reason alone, this debate is noteworthy. He mentions the short-term gain that the Royal Bank of Scotland feels that it is making through the branch closures, but the amounts of money involved are minuscule in the context of the bank’s operations, and the damage that the closures are causing, if that were to be quantified—I am sure that it would have to be somehow—would be far greater than a few million pounds. The Royal Bank of Scotland must accept that it has a social responsibility that goes beyond mere pounds, shillings and pence.

[Drew Hendry]

This is becoming a habit, but I completely agree with the hon. Gentleman. I have cut my notes a wee bit shorter, but the point I was going to make was exactly that: the sell-off of assets does not make any financial sense in the longer term. If we believe that the vans are going to stay—that requires a stretch of the imagination—they still have to employ people and incur costs. When we hear figures of x million pounds, that sounds like a lot of money to some people, and in some contexts it is a lot of money, but in terms of the scale of the bank, it is a tiny drop in the ocean, so again, I agree with the hon. Gentleman.

As I said, I will turn to the treatment meted out by RBS’s Global Restructuring Group. In the aftermath of the financial crisis, it behaved in a completely unacceptable and disgraceful manner. I concur with hon. Members that it is also a disgrace that the UK authorities have failed to intervene. Following the credit crunch, GRG took control of 16,000 SME customers with £65 billion of assets in Project Dash for Cash. Following allegations of malfeasance, GRG was reportedly disbanded in August 2014. More than 12,000 companies were pushed into the bank’s controversial “turnaround” division; and between 2007 and 2012, the value of loans to customers in GRG increased fivefold to more than £65 billion. With the threat of foreclosure of loans, the banks seized control of customer assets cheaply from businesses that they claimed were failing even though they had not defaulted on any loan repayments.

When we state the situation as simply as that, we wonder how it can be the case, yet as we have heard, time and again it was. We have said this before in the main Chamber and other debates, but it is absolutely shocking that bank managers were able to increase their bonuses by identifying customers who could be squeezed in what RBS itself, in a 2008 email, called “Project Dash for Cash”. The leaked document disclosed that the taxpayers’ bank ran down businesses as part of a premeditated strategy to cut lending and bolster profits. People should be in jail for doing that.

RBS is not alone in being embroiled in this scandal. Several other banks, including Clydesdale, were caught in similar scandals.

[Kevin Hollinrake]

The hon. Gentleman makes a very good point about the financial interest and financial benefit that some of the executives saw. He may be aware that Nathan Bostock, who was one of the senior executives at GRG and is now at Santander, where I understand he earns £4.6 million a year, is still getting a bonus from RBS—in terms of deferred bonuses—of £1.8 million this year. Despite what has happened at GRG and the fact that it came about as a result of the priorities of the management, that person still earns millions of pounds in the financial services industry.

[Drew Hendry]

That was a stunning intervention. This is not just about people getting away with it; it is about people being rewarded for it and continuing to be rewarded for it. In any other place, this would be a great national scandal, of huge proportions. The fact that not so many people know about it is still a real problem for the way we are operating across the nations of the UK.

As I said, RBS was not alone. Clydesdale bank was caught in similar scandals. National Australia bank, former parent to the Clydesdale and Yorkshire banks, will be forced to cover £406 million of PPI provision, under a divestment agreement. NAB was forced to save £1.7 billion for UK banking sector costs. Nearly 70,000 small firms, 8,372 of them Clydesdale bank customers, took out what were called tailored business loans, which means that they are not eligible for compensation.

The Tomlinson report had already shown the damning practices conducted by GRG, saying that it

“artificially distresses an otherwise viable business”.

The report stated:

“Once in this part of the bank, the business is trapped with no ability to move or opportunity to trade out of the position—they are forced to stand by and watch an otherwise successful business be sunk by the decisions of the bank.”

We have heard testimony on that from other hon. Members around the Chamber.

I could say a lot more; I have a lot more to say, but I am wary of my voice dragging on through the debate. I have considerably more to input, but I will move on to the Scottish National party’s point of view. We demand that the UK Government create a permanent commercial financial dispute resolution platform to alleviate the situation for victims of mis-selling. We believe, as other hon. Members do, that the current system of commercial dealings with the regulator and litigation processes around mis-selling is, to say the least, inadequate. It is vital that every victim of mis-selling is given fair and equal access to justice.

We believe that asking the victims of mis-selling to take on the banks in court is not only immoral, but financially unworkable. The independent review process has been accused, as we have heard, of lacking in checks and balances. The role of the independent reviewer was to oversee cases, to ensure they are fair. Customers criticised the process, however, for the unaccountability of the reviewer, who would often fail to disclose the information that had been provided to them by the banks.

We call on the FCA and the UK Government to do all in their power to ensure that businesses, particularly small businesses, are informed about what they could be asked to sign up to and, critically, the consequences of doing so. It is time—the Minister has heard this from around the Chamber—for the UK Government and the FCA to step up to the plate to ensure that businesses get fair treatment and access to affordable justice.

The compensation scheme set up by RBS is simply not good enough. Given that many of the complaints were that sound businesses were being ruined, many company owners were also looking for compensation for consequential loss, rather than simply the fees they paid, which put them out of business. There is a separate consequential loss complaint scheme. By its nature, it is more complex and the calculation of loss is far more difficult. There are still questions, however, about the effectiveness of an ad hoc voluntary company compensation scheme.

We look to the UK Government to pick up where the FCA has failed and produce a comprehensive review into banking culture to ensure that history does not repeat itself for those customers. The SNP condemns the FCA’s decision to scrap its review on banking culture barely months after it was announced in 2015. It is vital that the Government take the necessary steps to ensure that the banking culture does not slip into pre-financial crash habits.

We fervently opposed the UK Government’s decision to scrap the reverse burden of proof, which had been recommended by the Parliamentary Commission on Banking Standards, and call for it to be reinstated in legislation.

There are many other points I could make, but I want to draw my remarks to a conclusion so that others can speak. I want to underline the key points I have made. It is a disgrace that the UK Government have failed to use their influence from their 70% stake in RBS to represent Scottish communities and reverse the devastating branch closure programme. The Royal Bank of Scotland has failed to consult adequately on closing Scottish branches, with no clarity on the required performance of the 10 given a reprieve, which seem to be set up to fail. The treatment displayed by the Royal Bank of Scotland’s Global Restructuring Group to SMEs in the aftermath of the financial crisis was completely unacceptable. It is a disgrace that the UK authorities have failed to intervene.

The Government must now create a new, permanent commercial financial dispute resolution platform, to alleviate the suffering of victims of mis-selling. The UK Government must pick up where the FCA has failed and produce a comprehensive review into banking culture to ensure that history does not repeat itself. I add, as a parting shot, that leaving the European single market will also be disastrous for the financial services industry.

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[Drew Hendry]

The Minister mentions commercial issues for the banks, but surely ownership of the bank, certainly such a large majority ownership, plays some part in the commercial process. Would it not have been correct for the UK Government to use the fact that they largely own the bank to make a decision to protect the people it is supposed to serve?

[John Glen]

I thank the hon. Gentleman for that intervention, but I will take the opportunity to correct him. The Government do not have a 70% shareholding. We have a 62.4% shareholding. We do not have control of the day-to-day running of the bank, in the same way as the Scottish Government do not have control of Prestwick Glasgow Airport, yet they have a complete shareholding in it. We need to be real. There is a difference between ownership and day-to-day control. I want to address the practical issues because our constituents want to know what is being done to deal with these challenges. Before I go into that, I want to acknowledge that in previous debates I was challenged by Members from constituencies in Scotland. I will visit Scotland for four or five days at the end of August during the recess to address specifically the issues around rural banking. I went to look at the mobile banking units of one of the banks in Derbyshire in the previous recess, and I take very seriously the concerns about how effectively they function in terms of support for disabled people.

[John Glen]

I want to try to address our constituents’ concerns about bank closures and what the Government are doing to see that their services are provided. The Post Office and the banking industry have a commercial agreement that enables 99% of the UK’s personal and 95% of the UK’s business customers to carry out their day-to-day banking. I am concerned about the effectiveness of that arrangement, so I am determined that public awareness of those services should be greater. I am pleased that UK Finance and the Post Office have responded to my call for further action, particularly when the last bank in town closes, to make sure that the transfer of responsibility—

[Drew Hendry]

Will the Minister give way?

[John Glen]

I will not keep giving way—I need to finish what I am saying. I will give way in a moment. Let me just finish this point.

The Government also support the industry’s access to banking standards, overseen by the independent Lending Standards Board, which commits banks to better communicate with customers and those who need more help when a bank closes. I am not seeking to duck any issue and I look forward to further engagement on this matter.

[Drew Hendry]

I appreciate the Minister’s giving way, and I appreciate that the issue is sensitive for many of us in rural constituencies. If the position is that the UK Government do not brook any interference or intervening in commercial decisions, how can it be the case that the Minister is listing a number of interventions that he is about to make in a commercial situation?

[John Glen]

I was making it clear that, as a Minister, I do not make the operational day-to-day decisions about which individual branches should close. My responsibility is to see that consumers have access to the services they need, and I have done that through brokering the arrangement between UK Finance, which represents the banks, and the Post Office, which provides services when closures take place.

The hon. Member for East Lothian mentioned insolvency practitioners.

Air Passenger Duty

Drew Hendry Excerpts

Tuesday 10th July 2018 Westminster Hall

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship, Sir David. I congratulate the hon. Member for Belfast East (Gavin Robinson) on securing the debate, which is very important for the reasons he outlined. I also congratulate the Minister for being in his place this morning—I know how challenging that is at the moment, so well done.

It is very unusual to be in a debate with colleagues from the Democratic Unionist party and find that we agree furiously. In fact, it is a unique experience for me—I could recite many long disagreements—but today, the protracted issue, as the hon. Member for Belfast East rightly said, is the lack of action on APD and the economic barrier that it has put down. He further described it as an arbitrary charge that affects the economy, tourism and connectivity. Northern Ireland and Scotland, and particularly the highlands, which I represent, have something in common: air transport is not a luxury. We do not use it purely for holidays—it is part of the public transport mix and very important to us. The hon. Gentleman listed the number of airports affected, but that can be extended throughout the north of England and around the nations of the UK. Scotland is directly affected.

[John Howell]

Within five months, I will have travelled to the US, Aberdeen, Israel, which I came back from yesterday, Lisbon and Nigeria. That is not unusual and is part of what being an MP is about. I am not unusual in the scheme of things in the UK, because that is what my business colleagues are doing. The hon. Gentleman is absolutely right to make that point.

[Drew Hendry]

Other right hon. and hon. Members will have to make up their minds whether the hon. Gentleman is unusual, but I leave that with them.

As the hon. Member for Belfast East pointed out, the tax does not work as an environmental incentive. It is simply an economic disincentive. The money goes into the general tax pool every year and does not go to tackle the environmental issues other than in the way that any other tax might. There is no direct funnelling of that money into environmental initiatives—otherwise there would be significant differences. As he said, all studies show that a reduction in APD would produce a net benefit to the economy.

The hon. Member for Strangford (Jim Shannon) said that PwC stated that if APD is scrapped, the Treasury will gain. He made the telling point that a Treasury report found that the UK is ranked 135 out of 136 countries in terms the cost to the traveller. That is damning of the cost of air travel through APD. He further pointed out that Ireland scrapped APD in 2014—an independent country making a decision for itself—and tourism shot up by 47%.

The hon. Member for Belfast East introduced a side issue, which I also thoroughly agree on, of cutting VAT rates for tourism. Combined with tackling APD, that would be of huge benefit to areas throughout the nations of the UK where tourism and visitor numbers are extremely important to the local economy. We support that strongly and we would commit to it if the power was with us. On the hon. Gentleman’s closing remarks, I cannot send a Valentine to the Tories because it certainly would not be sincere, but the comment about it being a humorous way to highlight a serious problem is valid.

[Mr Gregory Campbell]

Smaller airports suffer disproportionately from APD, such as airports in Scotland and my own airport in Londonderry, where we are trying to get route development money. Does the hon. Gentleman agree that that double disadvantage—the difficulty of attracting new routes and APD—needs to be countered and that action should be taken to help?

[Drew Hendry]

I will come on to some specific issues in Scotland, because the picture is different, particularly in the highlands and islands, but the hon. Gentleman’s point is very well made for the rest of the Scotland, where there are direct APD effects.

The hon. Member for Strangford pointed out that it is the highest tax of its kind in the EU. It is worth repeating that the cost in Germany is half. The scandalous figure is that, for long haul, it is the highest tax in the world, which affects tourism. The revelation that the hon. Gentleman sneaks off to use Dublin airport will probably reverberate around his local community.

APD is a competitive disadvantage. ABTA calls it a “tax grab”. The hon. Member for Strangford pointed out that Northern Ireland is losing out on connectivity opportunities. Again, it has that in common with other parts of the nations of the UK. His feeling was that the UK Government should just get on and reduce or scrap APD. We are always grateful for some motherly advice in Parliament—there is nothing more true than penny wise and pound foolish. The UK Government could benefit from a net increase in income from other taxes. The hon. Gentleman pointed out the impact of 61,000 jobs—that is a significant benefit that raises the question of why APD has been allowed to continue to so long. Why has it not been addressed?

Air passenger duty is one of the most expensive taxes of its kind in the world, as we have heard. It hampers Scotland’s ability to secure new direct international routes and maintain existing ones. It is simply a regressive tax. Combined with the other unfair tax on our tourism sector—VAT—we face among the highest taxations in the world. An independent report found that reducing air departure tax, as it is called in Scotland, by 50% will boost Scotland’s air connectivity and economic competitiveness.

Encouraging the establishment of new routes, which would enhance business connectivity and inbound tourism, would help to generate sustainable growth. That is why the Scottish Government remain committed to a 50% reduction in ADT by the end of the Scottish Parliament in 2021. We want to get on and deliver it.

We want to abolish ADT entirely when resources allow, but that cannot be delivered until the UK Government and the Scottish Government can ensure that exemptions afforded to the highlands and islands remain. The Scottish Government understand the importance of the exemption. Therefore, the introduction of ADT in Scotland will be deferred until the issue of the highlands and islands exemption is resolved. As a highlands MP, I know only too well that air connectivity is critical for the highlands and islands, and I welcome the Scottish Government’s determination to deliver the best possible outcome for the area. I could not possibly countenance the withdrawal of support for the highlands and islands which, for the reasons I pointed out, would lead to substantial difficulties for people who rely on air transport as part of the public transport mix.

Highlands and islands airports have been exempt from air passenger duty since 2000 because of the area’s low population density and peripherality. The current APD exemption helps support the viability of commercial air services in the highlands and islands. Without it, we would face reduced flights and the withdrawal of important services to the region. Alternative surface journeys by road, rail or sea are long, particularly for those coming from the islands, whose journeys often include overnight stays or overnight ferry travel.

Recognising the social and economic importance of flights to the region, the Scottish Government have worked to reduce the cost of air travel, but residents of the highlands and islands still pay more than people who live in other regions of the UK. The Scottish Government have worked closely with Transport Scotland, VisitScotland, Highlands and Islands Enterprise and, crucially, Highlands and Islands Airports Ltd to develop the network at Inverness airport and improve international air connectivity to the region. That has brought new routes, including a British Airways route to Heathrow and a KLM service to Amsterdam, and improved the frequency of existing routes. Similar work has led to the expansion of the air network serving smaller regional airports in the highlands and islands.

The introduction of those new flights has enabled our business and tourism sectors to flourish, but more could be done. We are all too well aware that those connections remain some of the most fragile across these isles. Since being elected in 2015—I served in the last Parliament as Transport spokesperson for the Scottish National party, and I am now its Business, Energy and Industrial Strategy spokesperson—I have consistently made the point that they are crucial to Scotland and to the highlands and islands. That is why the case for the exemption remains, and why the UK Government must provide assurances about route protections and public service obligations in respect of the third runway at Heathrow.

The Minister knows that the Scottish Government cannot implement ADT unless a solution is found to the problem with the exemption. Will the UK Government look at why APD was handed over in a state that put that exemption at risk? The Scottish Government were effectively given responsibility for APD without the power to implement it. What assessment have the UK Government made of the state of APD? What is the Department doing to resolve the issue with the highlands and islands exemption while supporting the Scottish economy? The Minister will be aware that the Scottish Government have convened a new highlands and islands working group, which includes organisations with expert knowledge of the highlands and islands economy. Its first meeting was on 15 June. What support have the UK Government offered that working group?

The Scottish Government want to continue to work with the UK Government to find a solution. While the UK Government continue to set APD rates, they should take the impact on the Scottish economy seriously. As we heard, that impact is also felt by the economies of Northern Ireland and of the other nations of the UK. Since APD was transferred in the state it was, will the Minister review it for the rest of the nations of the UK?

--- Later in debate ---

[Anneliese Dodds]

I beg the hon. Gentleman’s pardon. I am very sorry about that. He will perhaps be even more perplexed when I mention that, rather than pound pinching, my family talked about looking after the pennies and the pounds looking after themselves. Perhaps that reveals a psychological difference between lowland and Ulster Scots. Of course, we need to look after the pennies and the pounds—that is the whole point. We need to trace exactly the impact of APD.

Studies suggest that the evidence about APD’s impact on passenger numbers is mixed. As many Members said, such a duty is unusual in the international context, but the number of passengers using UK airports has increased by 15%—a substantial increase—in the past five years. Of course, APD needs to be considered in the context of there being no tax on aviation fuel and no VAT on domestic or international flights. There are also different levels of APD for different kinds of flights, and exemptions for children were introduced in 2015 and extended in March 2016.

I will focus on four issues: the long-term viability of APD, regional competitiveness, the unequal impact of APD on different groups of Britons, and environmental issues. From a revenue point of view, there are clearly significant concerns about APD’s long-term viability. The Government have moved to provide industry with earlier notice of APD changes. The rates for next year were announced last autumn. That is surely positive for industry but, as I mentioned, we have had no indication of the Government’s view of the long-term trajectory of the tax, particularly in the context of the race to the bottom occasioned by internal competition in the UK. The tenor of this debate demonstrates that the starting gun has been fired on that race—it has begun, and we need to know the Government’s response.

We must view increases or reductions in APD in the context of taxation generally across income levels. It is notable that, given the increasing popularity and accessibility of air travel, many more people pay APD. As my hon. Friend the Member for North Tyneside (Mary Glindon) said, many more people enjoy hard-earned holidays abroad, and there are also people who need to travel abroad for family or work reasons.

Equally, APD is far less significant for household incomes than VAT, another transaction-based tax, which Members touched on. We would be in a different situation if the potentially regressive impacts of consumption taxes as a whole were cancelled out by progressive income taxes, for example, but of course the Government reduced the top rate of income tax. The latest Office for National Statistics figures suggest that overall, unusually in Britain’s history—at least in recent times—people in the least well-off decile pay a greater proportion of their income in tax than those in the most well-off decile. That is a peculiar situation.

Another concern we must note is about APD’s impact on regional competitiveness, which has been a focus of the debate and was perhaps its motivation. As we have discussed, APD levels were devolved to the Scottish Government in the Scotland Act 2016 and initial suggestions were that it would be halved and then potentially removed altogether.

We have discussed at length changes mooted in Northern Ireland, where there has been a call for evidence. We got useful detail about the operation of that from the hon. Member for Belfast East. As I understand it, the Government stated in February 2015 that they would also consider the case for devolving APD to the Welsh Assembly. We have therefore seen much change in relation to this duty.

All those changes naturally raise questions for airports contiguous to other airports not subject to the same APD levels, whether they are contiguous to Scotland or to the Republic of Ireland. We heard interesting thoughts on that from the right hon. Member for Belfast North (Nigel Dodds) and the hon. Members for Upper Bann (David Simpson) and for East Londonderry (Mr Campbell). Of course, the hon. Member for Strangford (Jim Shannon) —I have got it right this time—gave us a typically passionate and inclusive speech and a glimmer of his holiday plans. I hope they are more sedate and relaxing than those of the hon. Member for Henley (John Howell), whose itinerary of recent movements sent my head into a bit of a spin.

We also heard from my hon. Friend the Member for North Tyneside, who pointed out research suggesting that the duty has a significant impact on people living in her area. She is always a doughty supporter of their interests.

The Treasury published a discussion paper on options to support English regional airports in July 2015, but it is difficult to find out what concrete steps have occurred since then. Furthermore, the Government have said they will look at the matter once legislation concerning state aid changes is produced. An indication from the Minister of the Government’s thinking on that would be helpful; it is particularly important, given the points made by the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) about the situation for the highlands and islands.

There is often confusion in this place, though certainly not on the hon. Gentleman’s part, about the impact of EU state aid provisions in general. Of course, they prevent the provision of arbitrary support, but, as he suggested, low levels of population could be a feasible basis for such an exemption.

[Drew Hendry]

The hon. Lady makes the point well. This is an exemption based on population density and the regional difficulties in the highlands and islands. Indeed, it should be possible—I hope it is—for the Scottish and UK Governments to work together to solve that problem.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

We are.

--- Later in debate ---

[Anneliese Dodds]

I am grateful to the hon. Gentleman for those comments. I acknowledge that there is not necessarily the awareness to ensure that it does have such an impact. Some of the matters he just raised have led to calls for a redesign of the duty, which some believe could lead to a greater environmental impact. One suggestion, which was examined in 1998, was whether it would be better to levy the duty on planes rather than passengers to reduce under-occupancy and lessen emissions. However, the then Government suggested that a restructuring of APD would be more appropriate and the four bands were introduced. Of course, since then we have gone down to two bands.

It is interesting to note that the highly interventionist right hon. Member for Wokingham (John Redwood)—he is not often described as that—argued that, on reducing under-occupancy through such a measure,

“there is a green case to be made there.”—[Official Report, 23 April 2007; Vol. 459, c. 729.]

However, the practicalities of doing so are highly complex, which may be why that did not develop at that time. In particular, it is difficult to exempt transit and transfer passengers from the calculation, which led Alistair Darling away from initial moves in that direction.

The taxation of aircraft fuel has been mentioned as an alternative, but that is prevented by the network of bilateral air service agreements under the principles of the Chicago convention. It would be helpful to hear whether the Minister has been involved in attempts afoot internationally to alter that agreement to provide more flexibility.

[Drew Hendry]

I am grateful to the hon. Lady for giving way yet again. She is talking about alternatives for taxation. Does she agree that had APD been used directly for environmental measures, it would have had a huge impact? For example, it could have been involved in the creation of alternative biofuels and other incentives and operations to reduce dramatically the environmental impact, yet it has not been spent in that way at all.

[Anneliese Dodds]

I am grateful to the hon. Gentleman for that interesting point. Hypothecation of tax is relatively unusual in the UK. My party believes—he will expect me to say this—that there needs to be much more investment in those technologies. That would be positive for our country, whether funds are hypothecated from a particular area or found through other mechanisms.

One other aspect of the international context—this was mentioned to me by a Minister—is the ICAOs agreement on the carbon offsetting and reduction scheme for international aviation, which was introduced in October 2016. Members have referred to the EU’s emissions trading scheme in that context, but we have not yet heard from the Government about whether we will remain part of the ETS beyond 2020. If we follow existing patterns for APD, Parliament will set the rate for 2021 next autumn. It would be helpful to get a clearer idea about how the Government view international schemes such as that of the ICAO interacting with multilateral mechanisms such as the ETS. The general lack of clarity on environmental matters amplifies the fact that the UK Government seem to lack any long-term vision about what constitutes green taxation in the first place, let alone how it should develop in future. This is a bit of a cheesy point, but I contrast that with the shadow Treasury team, which includes a shadow Minister who is focused exactly on such matters, and on the link between environmental and Treasury issues.

In conclusion, I am afraid that I lack the poetic sensibilities and contacts of the hon. Member for Belfast East, but I congratulate him again on securing this debate. I look forward to hearing from the Minister about the five issues I raised: whether there will be a 360° review of APD; whether there is a long-term plan for it; what the Government’s view is about the substitutability of short-term flights, and whether that should be taken into account; whether the Government are participating in international attempts to reform the Chicago convention; and what their view is of the interaction between the ICAO scheme and the ETS, and what the future will hold for carbon trading for the UK beyond 2020—that point is very germane to this debate.

Scottish Economy

Drew Hendry Excerpts

Wednesday 27th June 2018 Westminster Hall

[Luke Graham]

Not just now. According to figures provided by the House of Commons Library, the unemployment rate for my constituency of Ochil and South Perthshire is 0.5% higher than the UK unemployment rate. Meanwhile, the Scottish Fiscal Commission’s predicted growth rate for Scotland is 0.7% in 2018, 0.8% in 2019 and 0.9% thereafter until 2022. In comparison, the Office for Budget Responsibility forecast the UK growth rate to be 1.5% this year, 1.3% next year and to rise thereafter to 1.5% over the same period.

The more observant among us will have noticed that for every single one of those economic statistics, Scotland lags behind the UK in terms of economic performance. However, it is not just in GDP, employment and unemployment rates or forecast growth that that is the case. Scotland’s median weekly earnings are also lower than those of the UK. When it comes to small business confidence, Scotland lags about 23 percentage points behind the UK. Meanwhile, Scotland has higher public sector expenditure per head yet lower public sector revenue per head than the UK. Put simply, Scottish taxpayers are not getting value for money from their public sector.

Under the guidance of the SNP, the Scottish economy has grown at half the UK rate. It has failed to meet its targets to match the UK GDP growth rate and succeeded only in overseeing the slowest growth rate of any country in the EU.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

Does the hon. Gentleman agree with his right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy that the responsibility for the growth of all the nations of the UK sits firmly with him?

[Luke Graham]

That is why we are having a debate in this place—because growth is the responsibility of the United Kingdom. The problem is the claims of the SNP Administration that they champion economic growth in Scotland. Scottish Enterprise is devolved. Much of the tourism is devolved. The scream for powers has meant that so many levers have been denied to this place and put into Edinburgh. Although I agree that accountability —[Interruption.] If you want to make an intervention, stand up and make one, madam.

--- Later in debate ---

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship, Mrs Main. I congratulate the hon. Member for Rutherglen and Hamilton West (Ged Killen) on securing the debate, and share his disappointment that neither the Secretary of State for Scotland nor any of his team turned out for the debate.

I should like to give some uncommon—

[Stephen Kerr]

Will the hon. Gentleman give way?

[Drew Hendry]

I was just about to give the hon. Gentleman some praise—but carry on.

[Stephen Kerr]

It is a well-known convention in the House that no Secretary of State or Cabinet Minister responds to debates in Westminster Hall, and the point that the hon. Gentleman made was not entirely fair.

[Drew Hendry]

If the hon. Gentleman had been listening to what I said, he would know I said “or any of his team”. [Interruption.]

[Mrs Anne Main (in the Chair)]

Order.

[Drew Hendry]

It is such a shame: I was going to offer some unusual, uncommon praise for the hon. Member for Stirling (Stephen Kerr), with whom I commonly duel across the Chamber, where we fervently disagree. However, his speech today was unusually positive. It may have been slightly off track, as he admitted, but judging by its tone he was at least looking for some opportunity.

I would also almost make an honourable exception of the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone). Until he took an intervention, which unfortunately did not point out that Highlands and Islands Enterprise still operates exactly as it did in the past, or mention the new south of Scotland enterprise agency to go with it, he was talking about Scotland’s strengths. Otherwise, what a desperate collection of speeches talking Scotland down—

[Christine Jardine]

rose—

[Jamie Stone]

rose—

[Drew Hendry]

I will not give way just now. We are short of time.

Scotland has strong economic fundamentals. We heard nothing about its vast natural resources, the innovation there, or the talent of our people. Scotland has the most inward investment of anywhere in the UK outside London.

[Luke Graham]

Will the hon. Gentleman give way?

[Drew Hendry]

I am going to make some progress.

That inward investment is happening in the face of Tory austerity, during which time the Scottish Government have focused on building an economy of the future—taking measures to unlock innovation and drive productivity. As we have heard today, productivity is the key, but what we have not heard today is how UK productivity has flatlined for the past decade. As economists will agree, productivity is not everything, but it is almost everything, to an economy.

The hon. Member for Ochil and South Perthshire (Luke Graham) talked about the city deals, but not about how, for example, when one of those deals was put together in Inverness, the Scottish Government put in £135 million and the UK Government—in a so-called partnership—put in only £52 million.

[Christine Jardine]

Will the hon. Gentleman give way?

[Drew Hendry]

No, I am not going to give way. I am going to make some progress; there is limited time in the debate.

The hon. Member for Ochil and South Perthshire also talked about the Scottish Government having a surplus this year. The Scottish Government work with a fixed budget; they cannot overrun on that. Other Members have mentioned Governments working together, but the present Tory Government cannot even work with the other parties in the Scottish Parliament on Brexit, so how can they be trusted to work with the Scottish Government? The other falsehood—I am sorry, I will take back that word. The other erroneous suggestion made was that Scotland is under a high-tax agenda. That was to forget conveniently that 70% of people in Scotland now pay less tax than they did last year.

The biggest threat to Scotland’s economy comes from the Tory Government’s reckless—[Interruption.]

[Mrs Anne Main (in the Chair)]

Order. The hon. Gentleman’s comments will be heard. Hon. Members will please refrain from barracking.

[Drew Hendry]

Thank you, Mrs Main.

The biggest threat to Scotland’s economy comes from the Tory Government’s reckless obsession with a hard Brexit. That is not being challenged by the Labour Front Benchers. We have no protection from it. The Scottish Government have put forward, in “Scotland’s Place in Europe”, an option to enable Scotland to avoid the worst effects and stay in the single market and customs union. Incidentally, this week the EU chief negotiator Guy Verhofstadt said that that would be entirely acceptable. Scotland is likely to be hammered by a hard Brexit.

[Christine Jardine]

On that point—

[Drew Hendry]

No, I am going to make progress. The Fraser of Allander Institute estimates that 80,000 jobs are at risk.

[Paul Masterton]

Will the hon. Gentleman give way?

[Drew Hendry]

No, I am going to carry on, because I have only a minute.

The UK Government are paying no real attention to stimulating the oil and gas industry. Fortunately there is now an upturn in oil and gas prices, and we need investment from the UK Government.

I have much more to say, and as we are the third party in Parliament I should have hoped for more time to say it, but unfortunately that is not the case—

[Mrs Anne Main (in the Chair)]

Order. The hon. Gentleman is not under a time limit. I was just indicating that other colleagues wish to speak.

[Drew Hendry]

In that case I will keep going; thank you very much for allowing me to do that.

[Jamie Stone]

I would not want the hon. Gentleman to misunderstand me. I do not decry the efforts being made by Highlands and Islands Enterprise. However, anyone who thinks that despite its best efforts it is more than a poor shadow of what went before, in the Highlands and Islands Development Board, is in dreamland. Surely hon. Members agree with me about that.

[Drew Hendry]

I disagree, and so do many businesses that I interact with in the highlands on a daily basis.

Production efficiency in the oil sector has risen for the fifth consecutive year, reaching 74% in 2017, demonstrating sustained efficiency improvements and maximising the economic recovery. Oil & Gas UK’s “Business Outlook for 2018” shows growth in investment and a further 5% increase in the forecast production for that year. Recent industry announcements about BP’s successful working discoveries in the Capercaillie and Achmelvich wells and Shell’s redevelopment of the Penguins field demonstrate the investment potential that the UK fields still hold. Over the next decade our oil and gas sector can capitalise on the decommissioning market, which is forecast to reach £17 billion; but that is only if the right decisions on investment are made.

[John Lamont]

The hon. Gentleman points out the challenges for the oil and gas sector, but on Monday when the Scottish Affairs Committee was taking evidence on the sector in Aberdeen, we heard people saying they wanted fracking to be expanded in Scotland. Does he support the industry in making that call?

[Drew Hendry]

I certainly do not support fracking. I do not believe that a country as rich in natural resources and renewable energy as we are—and indeed one with the oil and gas industry that we have at the moment—needs to go for fracking. I absolutely support the ban on fracking in Scotland. [Hon. Members: “There is no ban!”] There is a ban in Scotland. As to an effective ban, a court ruled in the past week that that is the case: fracking cannot go ahead in Scotland under the current situation.

[Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Unfortunately I am a bit late to the debate, but I have been paying attention. I am amazed by the efforts of Conservative Members, in relation to thinking of Scotland as a country. They are the people who want to see Scotland as a region. [Interruption.] They should remember that the Norwegians have an oil fund, whereas they have squandered Scotland’s oil.

--- Later in debate ---

[Drew Hendry]

Thank you, Mrs Main.

The other issue I wanted to touch on was the opportunity for carbon capture and storage development in Scotland. There is a measure of co-operation between the UK and Scottish Governments, but there is nowhere near the required level of ambition from the UK Government. The rug was pulled out from under Peterhead, where £1 billion of investment was supposed to be put into the carbon capture and storage operation. At the time, that was judged to be just about enough. Now, the UK Government’s overall investment in carbon capture and storage is set to be about £100 million, which is desperately insufficient for the needs of the carbon capture industry, and nowhere near the amount needed to show the ambition that we should be showing to lead that industry. I will draw my remarks to a close, and I thank you, Mrs Main, for allowing me the extra time.

[Mrs Anne Main (in the Chair)]

The hon. Gentleman was not on a time limit. With the permission of the Front Benchers, I will take four extra minutes from them and place a two-minute time limit on the last two Back-Bench Members, who have been here for the entire debate.

[Douglas Ross (Moray) (Con)]

I will be brief. I congratulate the hon. Member for Rutherglen and Hamilton West (Ged Killen) on securing this debate. He started with a tettie point, which was repeated by the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry). A UK Minister is present to respond on the UK Government’s behalf, and I do not see any problem with that.

The hon. Member for Rutherglen and Hamilton West said that in his speech, he would mention a third way—a Labour way—and I was excited about that, because on Monday night, the small rump of Scottish Labour MPs voted three different ways in the Heathrow debate. Some voted for it, some voted against it, and others joined the Scottish National party in sitting on their hands. In a debate about the future of Scotland’s economy, it is interesting that not a single SNP Member who has spoken or intervened has mentioned their last-minute decision to change their mind about Heathrow on orders from Nicola Sturgeon and to stop the investment into Scotland’s jobs and economy.

[Drew Hendry]

Will the hon. Gentleman give way?

[Douglas Ross]

The hon. Gentleman spoke for 10 minutes; I cannot take an intervention from him.

SNP Members sat on their hands and abstained, despite talking in the debate about all the positive interventions that would come to Scotland as a result of Heathrow’s expansion.

It is good that some SNP MSPs can speak out against their party. My hon. Friends have quoted a report, “Scotland’s Economic Performance”, by a cross-party committee of the Scottish Parliament and supported by SNP MSPs, which says:

“Levels of GDP growth are marginal; productivity is low and wages are stagnant.”

Easter Adjournment

Drew Hendry Excerpts

Thursday 29th March 2018 Commons Chamber

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

Mr Speaker, may I start by wishing you, the House staff and all Members a very enjoyable Easter break? May I encourage Members to visit the highlands, and indeed to come to my constituency, where tourism comprises 20% of the economy? It is no surprise that people choose to go there, as we have one of Europe’s fastest growing cities, surrounded by stunning countryside. The growth of direct flights from Inverness airport has delivered record-breaking numbers of passengers and stays in our fabulous hotels, and our excellent restaurants are being used as well.

Why would not you, Mr Speaker, come to Inverness, Nairn, Badenoch and Strathspey to enjoy the snow sports in the Cairngorms or the golfing in Nairn? You could go on a cruise along Loch Ness with Jacobite Cruises. You might even choose to visit Tomatin distillery, Dalwhinnie distillery or indeed Speyside distillery, which has ambitious plans for expansion, starting with a new shop and visitor attraction in Aviemore.

We encourage cycling and walking in my constituency, and we have fantastic biking and walking trails. I pay tribute to Grantown Grammar School. Its approach to outdoor education includes fully integrating mountain biking and other activities into the school day.

[Bob Stewart]

I wish to help the hon. Gentleman by saying that my uncle was at school on the edges of Loch Ness as a boy and saw the Loch Ness monster. As a consequence, tourism expanded hugely—it was in all the Scottish newspapers. It was only at his funeral that it was allowed that that was a fake.

[Drew Hendry]

I was initially grateful for the hon. Gentleman’s intervention, but that is a scurrilous attack on what is quite clearly one of my constituents. I will not have that and hope that he will withdraw that comment.

While in my constituency, Mr Speaker, you could pop along to the Highland Wildlife Park to congratulate the highly trained staff on the UK’s first and only polar bear cub—a born highlander. Or you might take a trip to the Landmark Forest Adventure Park, which was recently awarded the Travellers’ Choice award by TripAdvisor and named in the top 1% of visitor attractions worldwide. In the city, we have exciting plans for Inverness castle and the launch of a truly world-leading augmented reality app, which will put Inverness history into perspective and enable people to grasp it with their own hands.

My constituency is internationalist, diverse and welcoming. We have welcome friends, neighbours and colleagues from all over the world. The children at Central Primary School in Inverness speak 21 languages. We are pleased to welcome Inverlingo, a new meet-up group for internationals living in Inverness so that they can be linked to EU nationals and we can share their value in our society. We will soon have the opening of the honorary Polish consulate in Inverness, too.

Our people care deeply about supporting others who need help, and I wish to thank just some of the organisations involved. Mikeysline, which recently opened the Hive in Inverness, offers a place for people aged 17 and over to drop in when they are feeling low or depressed, or when they simply need some space or support. The volunteers there do incredible work. Birchwood Highland recovery centre is the first and only mental health residential recovery centre in Inverness, and recently celebrated its 10th anniversary.

In World Autism Awareness Week, a special mention must be given to the Highland One Stop Shop and all the fantastic people who fought to keep that service open. They are delighted with the Scottish Government funding and the private donor who has committed to help them.

I thank the community transport groups that work wonders in Merkinch and Badenoch, and pay tribute to the contribution of the volunteers there. The Badenoch and Strathspey community transport group has an innovative project that matches up school kids with elderly people so that they can learn from each other skills such as IT.

The Boat of Garten community centre, and Emma Macdonald and team at the hall, put in huge effort to make sure that there is always something going on, from “Boat Reel” film screenings to family fun days and “Showboaters” theatre productions. Boat of Garten was featured on Channel 4’s “Village of the Year”.

I could go on and on about what is happening in my constituency. I congratulate the Inverness chamber of commerce on its 125th anniversary. I also congratulate Inverness BID—the business improvement district—on the renewal of its mandate to operate in the city.

Banking in North Ayrshire

Drew Hendry Excerpts

Wednesday 14th March 2018 Commons Chamber

[John Glen]

No, I will not.

The hon. Lady and her colleagues are entitled to ask questions, as they have done very effectively this evening, and to press RBS on its rationale. Although I do not agree that the Government should or could cancel RBS’s decisions, I am certain that the hon. Lady’s views, expressed here again this evening on behalf of her constituents, will have been heard by RBS.

I turn to the Government’s role with respect to the Post Office. The hon. Lady has previously said that the Government have “not lifted a finger” to help. I beg to differ. The Government are taking action, and I welcome the opportunity to reiterate that. For those who still need or want to bank in person, we have helped to expand and improve face-to-face banking services at the Post Office. There are 11,600 post office branches in the UK, 24 of them in the hon. Lady’s constituency. There is a post office in each of the three towns that she mentioned—Kilwinning, Kilbirnie, and Saltcoats. Indeed, across the UK, 99% of personal customers and 95% of business customers can do their day-to-day banking at the post office.

In response to the hon. and learned Member for Edinburgh South West (Joanna Cherry), who was concerned about—

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

rose—

[John Glen]

I am going to response to the points raised. I have five minutes.

On the concern about small businesses and cash lodgements, RBS offers cash courier services, while the post office can accept up to £2,000 without prior notice, and further arrangements can be made on a case-by-case basis. As the hon. Member for North Ayrshire and Arran has mentioned previously, this might not be a service that people are yet fully familiar with, but I believe that it offers a valuable alternative and that people are adjusting to the reality of what can be obtained from a post office. It is important that the people who can benefit from these services know about them, so I will keep pushing the banks and the Post Office to do more to raise awareness of the expanded services that they jointly offer. It is important that they make this case proactively and publicly. We should spread the message far and wide. We can all do our day-to-day banking at the post office. We in this House can help to reassure people who may be worried about this issue.

On the oversight of banks, where they do decide to close branches, the Government’s ongoing support for the industry’s access to banking standard is making a real difference. All the major high street banks have signed up to the standard, which commits banks to a number of outcomes when a branch closes: first, that they will give at least three months’ notice—I think that RBS, certainly in some cases, has given six months’ notice—secondly, that they will consider what services can still be provided locally and communicate clearly with customers about alternative ways to bank; and thirdly, that they will ensure that there is support available for customers who need extra help to bank online or to access services at the local post office.

The standard is not just a list of outcomes—it has teeth, because the Lending Standards Board monitors and enforces it. It is actively monitoring how RBS Group and other banks fulfil their obligations to their customers when branches close. It has a range of tools and sanctions at its disposal should a bank fall short. I know that it is very open to talking to Members on behalf of their communities, and I encourage the hon. Lady—

Spring Statement

Drew Hendry Excerpts

Tuesday 13th March 2018 Commons Chamber

[Mr Hammond]

Yes, the housing investment package that we have put together is important, because it has ensured that financial support will not be the constraining factor in building more homes in this country. We have other constraints—including skills constraints, land supply constraints and materials supply constraints—but finance will be available. The measure that I announced in the autumn Budget to remove stamp duty for 1 million first- time buyers will allow 1 million mostly young people once again to aspire to the dream of home ownership.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

On the Chancellor’s announcement on cashless and digital measures, he claims that he will ensure that cash will be available for those who need it. He further claims that his is the party of small business. If he stands by that, will he come to Nairn, Grantown and Aviemore to explain to businesses there why, with more than 70% of the shares in the Royal Bank of Scotland at his command, he is failing to block the closure of its branches? The Federation of Small Businesses says that those closures will make it more difficult to do business in Scotland.

[Mr Hammond]

It is absolutely always a pleasure to visit Nairn, but I have no immediate plans to do so. As the Prime Minister has told the hon. Gentleman and his hon. Friends on several occasions, we do not interfere in the day-to-day management decisions of the Royal Bank of Scotland—[Interruption.] Let us treat this seriously. The consultation that we published today is about cashless and digital payment systems, but it specifically acknowledges, as I said in my statement, that we also have to ensure that cash is available to people who need it. If the hon. Gentleman looks at the consultation when it is published, he will see that we are determined to address that issue. I hope that he will engage in that consultation.

RBS Closures (Argyll and Bute)

Drew Hendry Excerpts

Wednesday 24th January 2018 Westminster Hall

[Brendan O'Hara (Argyll and Bute) (SNP)]

I beg to move,

That this House has considered RBS branch closures in Argyll and Bute.

It is a pleasure, as always, to serve under your chairmanship, Sir Henry. The Royal Bank of Scotland’s decision to close 62 of its branches in Scotland—a decision that will leave 13 towns in rural Scotland without a single bank—is, in short, a disgrace, and will inflict further long-lasting reputational damage on the Royal Bank of Scotland. For it to have announced the decision to close almost one third of its branch network so callously, without even the courtesy of a consultation period with the communities involved, is quite frankly appalling. For a Royal Bank of Scotland spokesperson to respond, when asked why it did not consult before announcing the closure plan, that “we are not required to consult communities in advance” just shows the contempt in which we customers are held.

One would have thought, hoped and certainly expected that having been bailed out by the public purse to the tune of £45 billion, the Royal Bank of Scotland would have exercised a degree of humility before steaming full speed ahead with a closure plan on this scale. One would have thought, hoped and certainly expected that, being 73% owned by the public purse, the Royal Bank of Scotland would have consulted its largest shareholder before making this shameful announcement, which will cause long-lasting damage to communities across Scotland, both urban and rural.

I would be interested to learn from the Minister if Royal Bank of Scotland management ever consulted the UK Government ahead of the announcement. If it did, what advice did the UK Government give the Royal Bank of Scotland regarding its bank closure programme?

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

My constituency faces the loss of four branches, not only in Inverness but in the thriving tourist towns of Grantown, Aviemore and Nairn. Does my hon. Friend agree with me and the Federation of Small Businesses, which has said that this is bitterly disappointing news for not only people, but businesses in the highlands that will now have difficulties with cash transactions?

[Brendan O'Hara]

My hon. Friend is absolutely right. That is a point that I will come to with some vigour later. The decision of the Royal Bank of Scotland to turn its back on so many of our communities, particularly those where it is the last bank in town, despite an earlier promise not to do such a thing, is a scandalous abdication of its social responsibility to rural Scotland, and to those people who were forced to keep it afloat when it threatened to sink without trace during the financial crisis a decade ago.

--- Later in debate ---

[Brendan O'Hara]

I absolutely agree. It is a double whammy for so many of our rural communities. Whether RBS likes it or not, there are still plenty of people who rely on a local, accessible bank in their town or village: the elderly, who still depend on an over-the-counter banking facility; people with learning difficulties, who have built a relationship with bank staff and trust them to help with their banking needs; small shops and businesses—of which we have an abundance in Argyll and Bute—that still primarily use cash; and, of course, foreign tourists, of whom we have a plentiful supply in Argyll and Bute, looking for a cash machine or the ability to change currency, for which a local bank is essential. Moreover, as the hon. Lady said, people do not yet always have sufficiently reliable broadband to bank online, and let us not forget that some people still do not want to bank online. Every one of those groups will be affected.

[Drew Hendry]

I thank my hon. Friend for giving way once again; he is being very generous. He makes the point very powerfully about access for people in rural communities, and for those who are disadvantaged in different ways. Online banking just does not cut it. For example, people cannot get cash from their computer, and when the branches go, so do the cash machines, which further disadvantages businesses and people in our communities. Does he agree?

[Brendan O'Hara]

I absolutely agree, and I find it utterly bewildering that the work was not done—or, if the work was done, that the Royal Bank of Scotland did not reach that very obvious conclusion.

Let me be clear: I have no doubt that the number of people accessing their local branch is falling, but I question the way in which RBS has collated the numbers. It is twisting and manipulating them to make them justify a predetermined case for branch closures. The Royal Bank of Scotland appears to have a pretty unique way of calculating the number of customers accessing its branches. My right hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford) said in the main Chamber just before Christmas that

“RBS is trying to create a picture of these branches as a relic of the past”—[Official Report, 18 December 2017; Vol. 633, c. 883.]

RBS is saying that “demand for branch banking” has declined to such an extent that customers are abandoning branches in their droves.

RBS Global Restructuring Group and SMEs

Drew Hendry Excerpts

Thursday 18th January 2018 Commons Chamber

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

I also commend the hon. Member for Norwich South (Clive Lewis) for bringing this important debate here today. He started by talking about people’s incredulity that any bank could act in this way, and we have heard from right hon. and hon. Members from all parts of this House about how these things have impacted on people. As the hon. Member for Edinburgh West (Christine Jardine) said, families have suffered. That is the background to this; it is not just businesses that have suffered. People have lost businesses, lost incomes and lost homes. We have seen the break-up of marriages and mental health impacts. Grimly, as we heard from the Treasury Committee memo, the view was that customers could just hang themselves, and there is testimony of people attempting suicide. It is shocking stuff.

Some of those affected feel responsible for losing their family businesses and feel deep shame at that happening. These things have devastated people, many of whom, as we have heard today, had good businesses that were ready to contribute to the economy and to aid productivity. Earlier, the hon. Member for West Bromwich West (Mr Bailey) described GRG as death row, and it was for some.

When people tried to fight these injustices, they would face enormous financial costs. I understand that it cost £10,000 just to raise an action, which was beyond the capability of many people in those circumstances. Businesses with as few as 10 employees have been affected. This issue has had an enormously wide reach. If people could look to take forward legal action, they would find that the banks had sewn up all the solicitors in the area, making it impossible to get the correct level of representation.

As we have heard from Members on both sides of the Chamber—and the SNP feels just as strongly about this—we need to see justice for people. Those on the Government Front Bench should have heard loud and clear today the strength of feeling from all parts of this Chamber and beyond. People will be shocked and disappointed that these things have been allowed to happen. It is unacceptable that banks have devastated firms, spreading misery by making people bankrupt and homeless.

The FCA’s final summary of the Promontory report exposes a set of serious failures by RBS to protect companies it should have been serving. As the evidence mounts, so too does the responsibility to act.

[The Economic Secretary to the Treasury (John Glen)]

indicated assent.

[Drew Hendry]

I am glad to see the Minister nodding and that he seems to be willing to take this forward. I hope that substantial action is taken.

We in the SNP believe that the current system of dealings with the regulator and the litigation process on mis-selling is inadequate. It must be a priority for the Government to ensure that every victim of mis-selling is given fair and equal access, so that they can see justice done. As the hon. Member for Stirling (Stephen Kerr) mentioned, an independent body is required. We call on the Minister to commit to and create a permanent commercial financial dispute resolution platform to serve the victims of mis-selling. He must pick up where the FCA has failed and produce a comprehensive review of banking culture to avoid a repeat of these things.

In the aftermath of the financial crisis, when all banks were required to rebuild their capital, it was alleged that the main focus of the Global Restructuring Group was to liquidate, rather than support, businesses through further lending. The main charge against GRG is that it prioritised the realisation of assets over other, more business customer-supportive actions. Recently, we have also heard accusations of the mis-selling of rate swaps, and GRG is not alone in drawing criticism. As my hon. Friend the Member for Dundee East (Stewart Hosie) mentioned, SMEs have complained about tailored business loans sold by the Clydesdale Bank.

The Tomlinson report was damning of GRG. Much of the evidence pointed to businesses that were otherwise perfectly viable in the medium to long term, as we have heard in much of the testimony today, being moved into the RBS turnaround division—the GRG—and being trapped there, with no escape. Businesses were sunk by the bank, with the bank taking out all it could, beyond what was reasonable, and to such an extent that it directly contributed to the businesses’ financial deterioration and, in some cases, collapse. Technical breaches were used as excuses. There was evidence in some instances of covenants being used to put businesses in default and to transfer them out of local management.

Time does not allow me to go further into some of the details of the inequities that have been visited on people who have suffered at the hands of GRG and as a result of the unfair business banking practices we have heard about today. The Government must ensure that there is a firm mechanism that is fair for people, so that they can get justice in this case. I look forward to hearing what the Minister will tell us at the end of this debate.

Finance (No. 2) Bill

Drew Hendry Excerpts

Committee: 2nd sitting: House of Commons
Tuesday 19th December 2017 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

I would like to start by correcting an omission that I made yesterday. I should have said that our thoughts are with the Chairman of Ways and Means and his family at this time. It sounds like a really horrendous thing for a family to go through, particularly at Christmas time.

I thank the shadow Minister, the hon. Member for Brent Central (Dawn Butler), not just for tabling new clause 6, but for the way in which she engaged with us in advance of the debate. I appreciate the time that she took to speak to us about the new clause so that we could discuss how it looked. I think it is absolutely brilliant; it is one of the best new clauses that we have seen when considering a Finance Bill, and I have tabled a few in my time. I want to speak in favour of the new clause and state our support for it.

I will start by covering why we need the new clause. Although there has been a bit of discussion, we have not talked about what it means in its widest sense. Subsection (2) talks about

“the impact of those provisions on households at different levels of income”,

as well as on protected characteristics, the public sector equality duty and

“equality in different parts of the UK and different regions of England.”

A lot of the debate today has focused on women, which is completely reasonable, but the new clause captures several other things that could have been more fully discussed.

Why do we need an assessment of the impact on various groups, particularly those mentioned in new clause 6? We need it because people in the protected groups or at the lower end of the income spectrum have been disproportionately hit by the actions of this UK Government, as can be seen in a number of ways. It can be seen in the fact that we have young people in jobs on zero-hours contracts. We have those jobs, and the Government say it is wonderful to have so many people in employment, but despite that, we are not seeing an increase in household disposable income because people are not receiving the wages they should receive for such employment. They are in precarious jobs and they are not receiving enough money, and the benefits freeze has been a major added factor. It means that people are earning even less, because the benefits freeze has hit them doubly.

The Government have caused another issue by reducing disability payments. The UN has said that the UK has not done enough to ensure that the UN convention on the rights of persons with disabilities is being met, and no Government in any developed country or nation should seek to be in such a position. We have not had a proper assessment of the impact on disabled people of the changes that this UK Government have made.

The UK Government have also not taken seriously their responsibility to young people in society. We have a living wage that people cannot live on: it is not calculated as something that people can live on; it is a pretendy living wage put forward by the Government. It is not applicable to people younger than 25. Therefore, we have a living wage that people cannot actually live on, but the Government somehow think that the labour of people under 25 is worth less than that of those over 25, even though they may be in exactly the same job and should therefore be earning the same amount.

As has been pretty widely covered, the Budget and successive policies of this UK Government have a disproportionate impact on single parents, the majority of whom are women. We see a disproportionate number of them coming through the doors at our surgeries. Do you know what, Mr Owen? It is absolutely and totally ridiculous that we are seeing a rise in rickets in this country. We are seeing people who cannot afford to eat or to give their children nutritious food because of the decisions of this UK Government.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

Does my hon. Friend agree it is a scandal that many children will be getting food and presents this Christmas only through the actions of food banks and charities, such as Moray Firth Radio’s Cash for Kids in my constituency? That should not be allowed to happen. With universal credit, this is happening far too often across the nations of the UK.

[Kirsty Blackman]

I absolutely agree. This year—in 2017—my office has referred 35 people to food banks, and we have gone to the food bank on five occasions on behalf of constituents who have come through the door and told us that they have not eaten for a number of days. This is supposed to be a country that cares for people who are just about managing, but it is failing them. The people who go to food banks nowadays are working. They are not earning enough money from their jobs to feed their families, so they are having to go to food banks.

We have seen this Government attack people who have protected characteristics, but we have not seen any impact assessments because the Government do not want to admit what they are doing. We have seen attacks on the WASPI women, who, despite having worked all their lives, are being asked to wait even longer for their pensions. We have seen changes with the rape clause and the two-child policy, meaning that women should not have more than two children and, if they conceive as a result of rape, they must write that down on a form and say so explicitly. Why should they have to relive that just to please this Government? We have seen increasing household debt—that has been raised as an issue by the Bank of England—and decreasing household savings. We have seen young women unable to go to school because they cannot afford tampons and towels to provide themselves with a basic level of human dignity.

Another change that has not been talked about hugely in this place is the attack on a group of people with protected characteristics. A massive and increasing number of people come to my surgery because they have no recourse to public funds. It is a particular issue with those fleeing domestic violence, the majority of whom are women. The UK Government have determined that they should have access to public funds for only six weeks if they are from outside the EEA, and not at all if they are from inside the EEA. If they have been living on a joint income with their partner and are fleeing domestic violence, they have no protection from the UK Government because they are giving them no recourse to public funds. That is an attack on a group of people with protected characteristics, and we should no longer tolerate that.

The hon. Members for Oldham West and Royton (Jim McMahon) and for Brent Central (Dawn Butler) mentioned what local authorities have to do in relation to impact assessments. I was a local councillor for eight years before being elected to this place. When we produced budgetary measures, or anything we were going to do in the city that would have an impact on communities, we had to produce an impact assessment specifying how it would affect people with those protected characteristics. If a local authority making decisions for the third largest city in Scotland has to do that, why are the UK Government making decisions that affect every man, woman and child across these islands without producing an impact assessment? Is it because they are ashamed of what they are doing and unwilling to be honest with the people?

In Scotland we are looking at having a progressive taxation system. We are lifting the pay freeze and next year we will be the fairest taxed part of the United Kingdom. [Interruption.] The hon. Member for Beverley and Holderness (Graham Stuart) says that we will be the highest taxed part. Some 70% of taxpayers in Scotland will pay no more tax next year than they do this year. Only the highest earners will be paying moderately more. [Interruption.] No one earning less than £33,000 next year will pay any more income tax than they would in England.

RBS Rural Branch Closures

Drew Hendry Excerpts

Monday 18th December 2017 Commons Chamber

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

I begin by declaring an interest as a customer of the Royal Bank of Scotland. I hold an account in one of the branches that has been slated for closure.

The Proclaimers might put it this way: Bannockburn no more. Beauly no more. Biggar no more. Carnwath no more. Castlebay no more. Comrie no more. Douglas no more. Gretna no more. Inveraray no more. Kilwinning no more. Melrose no more. Stepps no more. Tongue no more. Those are 13 locations that RBS is clearing out of in Scotland—abandoning its customers and leaving those places with no local bank. We do not accept that those and the other branches of which the closure has been announced should be shutting their doors, and we demand that RBS reverse its plans.

In those 13 communities in which RBS has announced closures, it is the last bank in town. RBS made a commitment that it would not close the last branch in any location, but here it is, isolating 13 communities that will be left with no branch banking facilities. RBS now says that the commitment not to close the last bank in town no longer applies. The pronouncement that RBS would not close the last bank in town was right when it was made in 2010, and it remains the right thing to do in 2017.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

In addition to the towns and villages that my right hon. Friend has just mentioned, branches in Grantown, Aviemore and Nairn in my constituency—they are vital to the tourism industry—are also scheduled for closure. One fifth of the highlands economy is made up of tourism, and it is mostly cash-based. Does he agree that it is not good enough for the UK Government to stand by while what the Federation of Small Businesses calls a “hammer blow” is delivered to small businesses in the highlands?

[Ian Blackford]

I absolutely agree with my hon. Friend. Of course, it is not just about those 13 branches. There is justified anger in many communities surrounding the 62 branches signalled for closure in Scotland and the 259 in the United Kingdom. RBS is turning its back on communities throughout the United Kingdom, and it will find that those communities call on it to think again.

RBS is a bank that we all have a stake in. We collectively own just short of 73% of the company. We rightly bailed the bank out in 2008, at a cost of £45 billion. We own RBS. We saved RBS in order that it could continue to offer banking services to our communities, to individuals and to businesses.