Financial Services (Banking Reform) Bill

Guy Opperman Excerpts

Wednesday 11th December 2013 Commons Chamber

[Emily Thornberry]

With respect, I am even more confused than before. What is the point of bringing in an offence that will change the behaviour of bankers, but will not, by itself, defend the banks? As I understand it, if the behaviour that we seek to stop is reckless banking, the reason that it should be criminalised is in order to stop banks failing and the financial system crashing.

There are other difficulties with this offence, which include recklessly to take a decision or to fail to prevent the taking of a decision that results in the failure of a bank. That sets a high threshold and, as has already been pointed out, it is not clear who, of those who may have behaved in a reckless way in our banks and who may have brought down the banking system before, would have been prosecuted. The Minister has not been able to assist us as to who might have been prosecuted under the offence. [Interruption.] It is unfortunate that the Minister is distracted at the moment, but the point I am making is important, and I hope that he will be in a position to address it.

It is difficult to prove that aspect of the offence, and prosecuting it would be a risky undertaking for the prosecuting authorities who will be expected to invest public money in prosecuting such matters. There is no point in putting something in legislation that can be discussed on doorsteps but will never be used to prosecute. We have seen the Serious Fraud Office struggle with high-profile, high-risk prosecutions. Too often such prosecutions end in shambles because of the behaviour of the Government, which have cut the SFO’s funding from £53 million in 2008 to £30 million by the end of this Parliament. Differences can be made to the behaviour not only of banks but of businesses generally. May I just add that of course I support Labour’s position on a stringent licensing regime for bankers, the imposition of a fiduciary duty of care on financial-sector staff for clients and customers and its call for a dedicated financial crime unit. In a moment, I will move on to what will work better, but before I do that, I give way.

[Guy Opperman (Hexham) (Con)]

Let me take the hon. Lady back to her last point on prosecutions. I speak as a former prosecutor of serious fraud work, although not for the SFO. Either there is the 51% test of prima facie evidence at the start of the case, or there is not. How the case then ends up, once the matter has been examined by a jury, is a matter for a jury and occasionally a judge. She is being a little harsh on the SFO, which is doing a fantastic job under very difficult circumstances.

[Emily Thornberry]

I am more than happy to put it on the record that I am a critical friend of the Serious Fraud Office. Sometimes the emphasis is more on the word critical, especially after what we have seen in the newspapers today, with the crash of yet another serious fraud case because the SFO asked an agent, which clearly had a conflict of duty, to do its investigation. That is yet another mistake that the SFO has made. If we want the SFO to turn a corner, we need to do more than show good will. This Bill provided us with an opportunity to change things. It is unfortunate that more attention was not paid to changing corporate liability.

I listened carefully to what the hon. Member for Chichester (Mr Tyrie) said in his contribution, and I undertake to send him, as a Christmas present, Labour’s policy paper in relation to fraud. If we can change corporate liability to ensure that if an individual within an organisation behaves in a way that is dishonest and to the advantage of the larger organisation, we can prosecute the organisation, unless it can show, in the same way that it can under the Bribery Act 2010, that it has in place controls over its staff, it would have an impact on our banking system. If I may say so respectfully, introducing such legislation will have a greater impact than the measures proposed in this Bill. If we were to introduce a different form of corporate liability, we could increase the fines hugely, and that money could be ploughed back into the Serious Fraud Office. Then we would have an organisation of which people in the City of London would be afraid. They would be prepared in most circumstances to come to an agreement with the SFO to have a deferred prosecution agreement.

DPAs will not ever exist under the status quo. The DPA legislation has been passed but, as I understand it, no one has come forward to say that their company has been doing wrong, that they want to admit that, that they will pay a fine, that they will change their ways, that they want auditors to come and see how they are behaving and that they will point out the individuals who have been behaving in a criminal way. I respectfully submit that that is how to change the culture. That is how we ought to be working and I look forward to discussing it with the hon. Member for Chichester once he has read the Christmas present I intend to send him. If elected in 2015, Labour intends to introduce its own economic crime Act, and I hope that we will take the issues further and develop them. Obviously, I would be interested to hear the hon. Gentleman’s reactions.

National Infrastructure Plan

Guy Opperman Excerpts

Wednesday 4th December 2013 Commons Chamber

[Danny Alexander]

I certainly agree that the Department for Transport is working very hard to deliver a large number of projects. I am grateful that that is recognised by at least one Opposition Member. As I said in my remarks, we need to make sure that local views are listened to as part of feasibility studies. I am sorry if the hon. Gentleman has had difficulties in getting across such views, and I will certainly pass that point on to colleagues in the Department for Transport. I wholeheartedly agree with him about the importance of trans-Pennine connectivity. That is why we initiated the feasibility study in the first place, and I hope that he will welcome its proposals when they are made.

[Guy Opperman (Hexham) (Con)]

A clear timetable and a change from the Labour Government’s failure to address the problems of the A1 and the A19, as well as rail projects, will be very welcome in the north-east. My right hon. Friend has visited Northumberland, and he knows that some truly rural areas have no broadband whatever. Will he expound in a little more detail how communities such as mine, which has no broadband and no possibility of getting it under the present schemes, can access the extra funding?

[Danny Alexander]

My hon. Friend draws attention to a very serious problem. Like him, I represent a large rural constituency, so I am very aware of these issues. Back in June, I announced additional funding to extend the target for the proportion of the population with access to superfast broadband. Today, we are announcing a small fund to stimulate innovation to find the best and cheapest technological solutions for getting superfast broadband to absolutely everybody, no matter how far they live from an exchange. We will get as far as we can towards that objective. If my hon. Friend has any ideas or if innovative companies in his constituency have any thoughts about that, I would be glad for them to contribute to the process.

Cost of Living

Guy Opperman Excerpts

Wednesday 27th November 2013 Commons Chamber

[Sajid Javid]

We know that if we had continued the plans recommended by the Labour party, the country would be borrowing a lot more. According to the independent Institute for Fiscal Studies, Labour plans to borrow at least £200 billion more, which would push up borrowing costs for many hard-working families up and down the country.

[Guy Opperman (Hexham) (Con)]

Does the Minister agree with the North East chamber of commerce, which said that the most important factor in raising living standards is to increase skills levels with an increase in skills funding and a doubling of apprenticeships? Is that not the true foundation of a long-term recovery?

[Sajid Javid]

I agree wholeheartedly with my hon. Friend, and I am sure he agrees that the Government were right to increase funding for apprenticeships, which are up by more than 1.5 million since the start of 2010.

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[Roberta Blackman-Woods]

My hon. Friend makes an excellent point. We need to see much more action from the Government on securing decent employment and career paths for our young people, as we all want.

[Guy Opperman]

Will the hon. Lady give way?

[Roberta Blackman-Woods]

I am sorry, but I will run out of time if I give way. I apologise to the hon. Gentleman.

The north-east has the highest proportion of people paid below the living wage—32% of workers are paid less—and research published by the Resolution Foundation has further confirmed that the north-east was the region where workers were most likely to be trapped in low earnings. The Office for National Statistics said:

“In April 2012, median gross weekly earnings for full-time adult employees in the North East were £455, joint lowest with Wales and lower than the UK median of £506.”

So people in the area that I represent are having to contend with lower wages, but they are also having to deal with rising prices. They are being burdened with not only increasing energy costs, but increasing costs for child care, for example. Energy prices have angered people throughout the country and all we have heard from the Government is excuses for the actions of the big six. When npower recently announced an eye-watering rise in electricity costs of 9.3% and in gas of 11.1%, The Journal, our local newspaper, reported that Dorothy Bowman, a campaigner for elderly people from County Durham, said that the price hike would leave householders with a stark choice. She said:

“They will have to choose food or heat, it will be too expensive for both. This is at the wrong time for people”.

She went on to say that npower did not care at all

“about their customers and the dire misery they are subjecting them to, they just care about their profits. If they were going to do this why not do it in spring, now people have no choice.”

She said the elderly would suffer, but so would young families living on a tight budget. I think she makes the point very strongly indeed.

In addition, The Journal reported on 25 October that an official at thinkmoney said:

“Regionally, problems with utility bills appear most severe in Northern Ireland, London and the North East.”

That is why we need Labour’s energy price freeze and long-term reforms to the energy market.

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[Guy Opperman (Hexham) (Con)]

The cost of living is a legitimate subject for debate. I was interested to hear Ross Smith of the North East chamber of commerce comment on the solution:

“My answer to this is ‘it’s skills, stupid’—alas that doesn’t fit with easy election messages or election cycles.”

To be fair, that was a tweet, playing on Bill Clinton’s famous line in 1992 that, “It’s the economy, stupid”, so I asked Ross to expand on it yesterday as part of my consultation in preparation for this speech. He said that

“the most important factor in raising living standards in the long term is to increase skill levels so that people can play a more productive part in a stronger economy and be rewarded accordingly.”

I could not agree more.

To that end, we must look at apprenticeships, which surely can play a key part in any skills regeneration. The north-east is clearly leading the way. The number of apprenticeship starts in the north-east has increased by 11% since 2010-11, to 38,340. That was up from 18,510 in 2009-10 and 13,500 in 2005-06. In other words, it has trebled since the Blair Government. In my constituency, the number of apprenticeship programme starts has gone from 430 in 2009-10 to 690 in 2012-13.

Of course, it is not just about the number of apprenticeships; it is also about their quality. To that end, I am delighted that the Government have decided that one of the skills pilots will be in the north-east. In fact, it was the North East local enterprise partnership and the Adonis review that suggested the skills pilots that will go ahead. It is to be joined by the Stoke-on-Trent and Staffordshire LEP and the West of England LEP. It is a chance for businesses to engage with their skills and apprenticeship needs so that there is a focus on the particular parts of the economy where growth in jobs is needed in the long term.

There is ample evidence of the successes, whether the opening of the engineering academy in Hexham by Egger, with 40 jobs created, the work done by Nissan, the 38 new jobs in the IT sector, the new apprenticeship jobs in Accenture, whose managing director came to see me yesterday, or the work done by Siemens, particularly in relation to the university technical college in Durham. I strongly hope that the LEP will carry that forward in such a way that the Adonis report will have a true impact.

One cannot address the economy, certainly in my region, which has 2.4 million people, without looking at the Adonis report. No other region in the country has addressed its strengths and weaknesses as the north-east has with that report. It was business led, written by experts, apolitical, hard hitting and realistic. It assessed both the strengths of the local area and the weaknesses. It celebrated assets but acknowledged that there have been successive failures, by successive Governments, to improve job numbers, address skills deficits, increase university starts and generally grow the economy. I am profoundly grateful to all its authors.

At the report’s heart lay a desire for more and better jobs, as it identified the crucial lack of private sector employment. However, as it states:

“More jobs alone will not re-balance the economy. The North East needs higher skilled and higher paid jobs to produce an economy which matches others and provides the quality of opportunities that its residents and young people need to prosper.”

How do we proceed to do that? We must support the necessary investment in apprenticeships, build on the skills pilots and consider the recommendations in the Adonis report—I will not repeat its 24 pages, Madam Deputy Speaker, despite the Irn-Bru you saw me have at the Scotland Better Together event earlier. The seven local authorities must be allowed to go forward. They are coming together and driving forward with a regional voice to match the likes of Manchester which has led the way so well in these matters in the past.

I cannot finish without addressing the motion. On the proposed energy price freeze, I entirely endorse the comment from my hon. Friend the Member for Tamworth (Christopher Pincher) that one should always be wary of geeks bearing gifts. I accept that there is a need for long-term housing supply, but it is a shame that my two Labour authorities are keen to build on the green belt, rather than on the other available sites. I would certainly support action for young people, but it is this Government who have trebled the number of apprenticeships and set up the welcome north-east skills pilot. I find it very easy, therefore, to reject the motion.

[Graham Jones (Hyndburn) (Lab)]

The hon. Gentleman referred a moment ago to brownfield sites in urban areas, but does he accept that not every brownfield site is economically viable, and is he aware of his local authority’s assessment of brownfield sites and their economic viability? Perhaps he could give some figures on the viability of the sites in that area.

[Guy Opperman]

I could speak for an hour, and have done so on several previous occasions in the House, on Labour-run Northumberland county council’s failure to provide brownfield sites and its proposal to build on the green belt, whether around Ponteland, Hexham or other sites in Northumberland. Alternatively, there is Newcastle—again a Labour council—which is proposing massive building on green-belt land. We campaigned extensively against the building of more than 10,000 houses on that land.

[Graham Jones]

Does the hon. Gentleman also accept that building on greenfield sites is sometime cheaper and so provides for affordable accommodation, and that brownfield sites, particularly contaminated brownfield sites, can be comparatively very expensive?

[Guy Opperman]

I have no doubt that building on contaminated brownfield sites can be difficult, but in my constituency, for example, the police authority has sold the site of a former police station that could be built on perfectly properly. For 20 years, taxpayers—that includes the hon. Gentleman and me—paid more than £1 million to keep the former Stannington hospital site secure, yet nothing was built on it. We now have former government sites being built on and providing homes, but of course that is not green belt. He was keen to make his point about brownfield sites, but he also spoke about greenfield sites. We have huge difficulties in the north-east with investment in and building on greenbelt sites by local authorities.

I have gone on too long and been distracted—

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

indicated assent.

[Guy Opperman]

The Opposition spokesperson chunters from a sedentary position. On jobs figures and the economy, she will doubtless be addressing the fact that in her constituency unemployment has fallen by 12.5% in the last year, that youth unemployment has fallen by 16.5% and that the number of apprenticeship has risen from 620 in 2009-10 to 1,170 according to the most recent statistics. That is real action to help people in the north-east.

[Angie Bray]

Will my hon. Friend give way?

[Guy Opperman]

I will not give way to my hon. Friend. I have great respect for her, but it would not be fair on those who have yet to speak.

National Insurance Contributions Bill

Guy Opperman Excerpts

Monday 4th November 2013 Commons Chamber

[Mr Gauke]

My right hon. Friend makes a very good observation. I can rarely remember so few Labour Members being present for the opening of a Second Reading debate. I was beginning to take it personally, but he has reassured me that this issue does not attract the interest of the Opposition. Labour is the party that intended to increase the jobs tax. Pretty much the only measure that they had for deficit reduction was to increase employers’ national insurance contributions, which was not a sensible approach at all.

We are not predicting how many jobs the Bill might create because a number of factors apply. It is interesting to note, however, that the Federation of Small Businesses believes that the measure is better than the one that it had advocated, which it anticipated would have created 45,000 new jobs. It has carried out a survey of its members and 28% of respondents believed that this measure would help them to increase the number of people they employ. That is a very encouraging step.

[Guy Opperman (Hexham) (Con)]

I accept entirely that the Minister cannot give specifics on the number of jobs the Bill will create, although quite evidently it will create jobs. Can he estimate how many employers he expects it to assist, particularly in the north-east?

[Mr Gauke]

That is a similar point, and, as I say, I am nervous about giving precise numbers. Of the FSB respondents, 28% believed that this would help them. We believe that we have to consider a range of measures, but clearly measures that reduce the cost of taking on staff must help in increasing employment. For example, the Bill would enable a business to take on four people on the national minimum wage and not pay any employers’ national insurance contributions at all. That will clearly help.

Financial Services (Banking Reform) Bill

Guy Opperman Excerpts

Tuesday 9th July 2013 Commons Chamber

[Guy Opperman (Hexham) (Con)]

After the global banking crash, my constituents in Northumberland wanted to see better banking, higher standards, fewer scandals, greater competition and a greater degree of choice and service. In the past three years, this Government have been on a slow but continual journey to reinvigorate British banking and clear up the mess that we inherited.

I believe that over the next couple of years smaller regional banks will spring up throughout this great country, and I want briefly to address the House on that matter. Paragraph 49 of the banking commission’s main summary gives an excellent summation of its views on competition in retail banking. I refer anybody interested in this to the grave and weighty paragraphs 313 to 343 of the larger volume, where they will see, in particular, the evidence of Anthony Thomson, the co-founder of Metro Bank, with whom I have worked at great length over the past two years to try to reinvigorate the regional banking market.

That culminated in a series of efforts that have been made with the various regulatory authorities, starting with meetings that my hon. Friend the Member for Chichester (Mr Tyrie) and I had in February 2012 with Mr Hector Sants, the then chief executive of the Financial Services Authority. Mr Sants followed that up by writing on 12 March 2012:

“We are conscious of the balance to be struck between ensuring high standards at the gateway, and the importance of allowing innovation and appropriate levels of access for new firms…there has been public debate about the potential advantages of new entrants in the area of small, regional banks focused on servicing the SME sector. In such cases we will be proportionate in our approach and would invite all firms with a viable business model and appropriate levels of resources to a pre-application meeting to help guide them through the application process”.

Those were wise words and a significant step by the then chief exec of the FSA.

Then came the Bill that became the Financial Services Act 2012, which, I am pleased to say, passed its Second Reading in this House on 23 April 2012. To my surprise, the Labour party voted against clause 5, which specifically emphasised

“the ease with which new entrants can enter the market, and…how far competition is encouraging innovation.”

Be that as it may, the banking commission and other parties hugely improved the approach to regional banking. I support the efforts of everyone involved and echo the words of the Minister and the shadow Minister.

Following a huge amount of effort outside this House to encourage regional banking, Mr Thomson and I held a conference in Gateshead on 7 June that was attended by 142 delegates, including the Minister. More important, however—this is of key relevance to the banking commission’s findings—Sam Woods, the director of the domestic UK banks division at the Prudential Regulation Authority, and Victoria Raffe, the director of authorisations at the Financial Conduct Authority, were also in attendance on that day. Those two people are in effect the gatekeepers of regional banking and of the authorisations and regulation that lie ahead. They were welcome and made the case that regional banks are the way ahead.

I for one expect at least three or four banks to spring up in the north-east over the next 12 to 18 months, ranging from asset-backed lenders such as Cambridge & Counties bank—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I know that the hon. Gentleman is going to draw his speech into the Third Reading, because this is the Third Reading debate. The two must come together and it would be helpful if that happened sooner rather than later.

[Guy Opperman]

I will totally draw it into Third Reading, Mr Deputy Speaker. Those particular persons are very much affected and are working hand in glove with the Bill, which I support wholeheartedly.

Financial Services (Banking Reform) Bill

Guy Opperman Excerpts

Monday 8th July 2013 Commons Chamber

[Greg Clark]

The hon. Gentleman makes a good point. He will know from our proceedings during the passage of the Financial Services Act 2012 that we needed to reverse the catastrophic decision to take supervision of the banking system away from the Bank of England, which had always exercised that role with authority and commanded respect not only in this country but throughout the world. That Act corrected the situation, and the PRA is part of the Bank of England, as he knows, so we have restored that authority.

[Guy Opperman (Hexham) (Con)]

Does the Minister agree that higher banking standards and the PRA’s new role were enthusiastically endorsed at the multi-level banking seminar in support of regional banking that we held in Gateshead only last month?

[Greg Clark]

My hon. Friend’s ingenious intervention allows me to pay tribute to the excellent event he hosted in Gateshead at which there was palpable enthusiasm for challenger banks entering the market, especially ones with a regional focus. He and I share an ambition that the north-east should be the home of such a bank, which would do wonders for the region’s economy, with its strong, vibrant business culture. The area would benefit from the local knowledge of such an institution. The PRA and the FCA were represented at the discussion, and he is right to reflect that everyone who was present on that Friday was enthusiastic about the steps the PRA is taking to make it easier for challenger banks to come forward.

[Chris Leslie]

If the Government are so enthusiastic about the concept of regional banking, will the Minister explain to the hon. Member for Hexham (Guy Opperman) why their report, which came out at lunchtime, explicitly rules out any review of a structural arrangement involving regional banking for the Royal Bank of Scotland?

[Guy Opperman]

You voted against it.

[Chris Leslie]

Perhaps the hon. Gentleman did not hear me first time round. I am tempted to repeat myself, but it is important that he realises that his right hon. Friend the Minister has ruled out such an arrangement for RBS.

[Greg Clark]

The right way to approach this is to make it possible for regional banks to enter the market across the board, which is precisely what the PRA is doing. It has reduced the demands that entrant banks must satisfy to establish themselves as a business and speeded up the authorisation process, which is all to the good.

[Guy Opperman]

Does the Minister recall that in April last year, the Labour party, taking its lead from the hon. Member for Nottingham East (Chris Leslie), who is sat in a sedentary, chuntering position on the Opposition Benches, voted against the implementation of the competition regulations that would have made regional banks happen?

[Mr Speaker]

Order. The notion of somebody sitting not in a sedentary position is a challenging one, but I am grateful to the hon. Gentleman for raising his point while on his feet, rather than from his seat.

Investing in Britain’s Future

Guy Opperman Excerpts

Thursday 27th June 2013 Commons Chamber

[Danny Alexander]

I am grateful for the hon. Lady’s comments on the Trafford Park Metrolink extension. On her question, I will certainly look into that, because I do not want the Homes and Communities Agency to be doing anything that holds back housing associations from engaging in appropriate developments. I will take up her point with my right hon. Friend the Secretary of State for Communities and Local Government.

[Guy Opperman (Hexham) (Con)]

Northumberland residents will welcome the good news about the A1, flood defences, and the potential school rebuilding programme. Greater funding for broadband is key to England’s least densely populated county. I know that my right hon. Friend has visited Northumberland. Will he give more details about the expanded broadband plans?

[Danny Alexander]

There is a broadband plan in Northumberland that has been negotiated by the local authority with the supplier, funded partly by national Government and partly by local government. Today’s announcement is about extending broadband to reach 95% of the population of Northumberland and to work with the industry to find ways to get broadband, whether mobile or 4G, to 99% of the population. We will keep my hon. Friend updated on that.

Economic Growth

Guy Opperman Excerpts

Wednesday 15th May 2013 Commons Chamber

[Guy Opperman (Hexham) (Con)]

I am glad to see that the shadow Chancellor is beginning to agree with our plans for regional banking reform with local banks. However, he would improve his banking credibility if he were to repay the £3 million owed by the Labour party to the Co-operative bank. Does he agree with that?

[Ed Balls]

I have to say—

Budget Resolutions and Economic Situation

Guy Opperman Excerpts

Thursday 21st March 2013 Commons Chamber

[Vince Cable]

The right hon. Gentleman does not know, and I do not yet know, what the final outcome of this massive scheme will be. To be lectured with righteous indignation by the people who created a massive property bubble that destroyed this country’s economy and wiped out enormous gains in people’s living standards is the most gross hypocrisy.

Let me turn to some of the other issues that the shadow Chancellor raised.

[Guy Opperman (Hexham) (Con)]

The shadow Chancellor took us on an interesting history tour of former Chancellors. Does the Business Secretary recall who it was who advocated light-touch banking regulation, sold our gold and uttered the famous phrase, “No more boom and bust”?

[Vince Cable]

Yes, I think we do. That bears repetition and the hon. Gentleman has done it very well.

--- Later in debate ---

[Guy Opperman (Hexham) (Con)]

The good constituents of Hexham will welcome action on fuel duty, support for the victims of Equitable Life, action on increased infrastructure, tax-free child care, decreases in corporation tax, support for business and the raising of the personal allowance up to £10,000 by 2014, which will take millions more low-paid people out of tax altogether.

The action on fuel duty is the most important thing to the people of Hexham and Northumberland. There is a stark contrast between a Labour Government who raised fuel duty 10 times in 13 years and this Government who have managed, even in these difficult times, either to keep it flat or to reduce it. I listened to the speech by the hon. Member for Dumfries and Galloway (Mr Brown), with whom I have debated fuel duty on many occasions, and it was as if I lived on a different planet, certainly not the one on which the previous Prime Minister increased fuel taxes. The reality is that the hon. Gentleman and I have the same sorts of constituents and this Government are looking after them with regard to what is the most important issue to them, namely fuel. The previous Government kept raising fuel prices. They were woeful.

[Mr Russell Brown]

All I will say, as I have told the hon. Gentleman before, is that the previous Government—this is a fact—froze or abandoned potential increases on 13 occasions over nine years.

[Guy Opperman]

There may have been plenty of times when the previous Government chose not to raise prices, but they did increase them on 10 occasions, and those with long memories in Northumberland and in Scotland remember that. [Interruption.] Opposition Members may chunter, but that is the bottom line.

The full acceptance of the Heseltine report was particularly welcomed in the north-east. It was specifically called for by the north-east chamber of commerce and has been welcomed by business. Exports from the north-east are up, jobs have improved dramatically since May 2010, and the number of apprentices has doubled. There has been a dramatic improvement. The Corus plant was shut by the previous Government—it was the titanic industrial issue in the build up to the 2010 election—but reopened by this coalition Government.

This Budget comes at a time of self-examination in the north-east. The January declaration and Lord Adonis’s review of the north-east, which I am contributing to and support wholeheartedly, are making a real difference to understanding how the region can improve itself. That is an example of proper self-examination from a detached standpoint.

Bank lending is another important issue. I welcome the Business Secretary’s statement on developments on the business bank and the fact that the Opposition have finally begun to realise that local community banking is a good idea. Sadly, when I invited the shadow Minister, the hon. Member for Hartlepool (Mr Wright), to support my campaign for local community banks in a debate on manufacturing on 24 November 2011, he declined to do so, and the point was raised with him again on the same day the following year. The proof of the pudding lies in the fact that, during an April 2012 debate on the Financial Services Bill, the Labour party voted against clauses in favour of greater competition for local banks, greater ease of entry and greater ability to open a local bank. Why would Labour Members vote against greater competition and a local community bank that makes money for the community, with profits going back to the community? It is illogical in the extreme.

I welcome the fact that the Labour party has finally come on board and accepted that local community banking is a good thing. It has taken a while and I hope that Labour Members will back up what they are saying in public with votes in support of greater competition for local people. It is vital that our campaign for local community banks continues. The work done by the Financial Services Authority is to its credit. It has made it much easier to set up a community bank.

[Neil Parish]

I agree with my hon. Friend about bank lending. Does he agree that getting greater competition locally is essential so that businesses can get better rates of interest and better deals with banks?

[Guy Opperman]

That is entirely the case. As we all know, 75% of bank lending in this country comes from the big banks and few smaller community banks are supported. The decline in local lending is definitely affecting SMEs.

There were four challenges to the creation of new local banks. First, there was a lack of legislation to facilitate such changes. We passed that legislation in the Financial Services Act 2012. The second challenge was the length and complexity of the authorisation process. That has been reduced through our work with the FSA, so it is now much easier to set up a smaller bank, whether it is a bank established by an industrialist to back a local community or an infrastructure bank like Cambridge & Counties bank or Hampshire Trust.

Thirdly, the level of capital that new banks were required to hold used to be very high. They were effectively judged exactly as Barclays would be judged. That has also changed. The FSA has made it very clear, as I have demonstrated in this House by reading out letters to me from the FSA, that it requires lower amounts of capital on an ongoing basis from smaller entrants to the market. Finally, the scale and complexity of the infrastructure was proving to be a burden. That is also being addressed.

The future must surely be local community banks, run by somebody from the local community, investing in that local community. A gradual disaster took place under successive Governments over the past 25 to 30 years, whereby local community banks were divorced from the ability to make decisions locally. Community banks could make a decent amount of profit and return it, when a certain percentage is reached, to the community.

I am delighted to say that on 7 June, the FSA, the Prudential Regulation Authority, the Financial Secretary to the Treasury and various other people will be coming to Newcastle for a debate on how we will take regional banking forward in this country. I urge all interested parties to come.

Banking Reform

Guy Opperman Excerpts

Monday 4th February 2013 Commons Chamber

[Greg Clark]

The hon. Lady makes an excellent point. I should like very much to see banks in our great regional cities, as used to be the case: banks that can take deposits from local people and, knowing what local investment opportunities they have in the area, can establish a connection. So far it has been very difficult for new banks to obtain banking licences within a reasonable period, and to satisfy the regulatory requirements. We are doing all that we can to lower the barriers to entry, so that we can achieve exactly what the hon. Lady has described.

[Guy Opperman (Hexham) (Con)]

I welcome the proposal, as well as the fact that we are taking on the bully banks on interest rate swaps and clearing up the big banks, which have had grave deficiencies for a considerable time. Does the Minister agree that the Bill will also make it easier to create the local, regional banks that we need to provide the competition, access to finance and community trust we are trying to establish in places such as the north-east, where we are proposing a bank for that region?

[Greg Clark]

My hon. Friend is right about that, and it may interest the hon. Member for Kingston upon Hull North (Diana Johnson) to know of the example that he and I were discussing in Newcastle recently. We were looking at ways in which we can make it possible for there to be a north-eastern or Tyneside bank that can specialise in the north-eastern economy.