Oral Answers to Questions

Guy Opperman Excerpts

Tuesday 29th January 2013 Commons Chamber

[Greg Clark]

The hon. Lady is not quite right. In fact, the greater number of jobs created have been full time rather than part time. It is important to understand that the term “underemployment” refers to people who would like more hours even if they are employed full time. The fact is that 90% of people in work say they do not want any more hours. Most of the rise happened before the election. Since the election, the number of full-time jobs has increased faster than the number of part-time jobs.

[Guy Opperman (Hexham) (Con)]

The Minister and I met local enterprise partnership members in Newcastle 10 days ago and discussed the city deal and the increase in job numbers. Does he agree that, with a 9,000 increase in job numbers in the north-east in the last quarter, all jobs should be welcomed, whether they are part time or full time?

[Greg Clark]

My hon. Friend is absolutely right. The number of hours being worked in the country is at a record level. We should not sneer at people who choose to work part time. That is their option, and they have more opportunities to work part time and full time than they had before.

Autumn Statement

Guy Opperman Excerpts

Wednesday 5th December 2012 Commons Chamber

[Mr Osborne]

First, unemployment had gone up under the Labour Government and they, like all Labour Governments in history, left office with unemployment higher than when they came into office. Secondly, if the hon. Lady looks at the employment forecasts she will see that, as I was saying to her hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), 1 million jobs are forecast to be created over the coming period. As I have said, we are in a tough economic situation—I am not trying to disguise that from the House today—but I think that the decisions we have taken to help businesses and working people will be warmly welcomed.

[Guy Opperman (Hexham) (Con)]

The improvements to the A1 and the freezing of fuel duty, which was raised 10 times under the previous Labour Government, are warmly welcomed by Government Members. However, may I urge the Chancellor to consider the call from the Chair of the Treasury Committee for local community banking to kick-start lending to small and medium-sized enterprises and local banking in local areas?

[Mr Osborne]

I welcome what my hon. Friend says about the dualling of the A1 up to Newcastle—I hope that in future we can do that as far as the Scottish border—and his comment on fuel duty. He has spoken to me personally about what more we can do to get community banking. There are still many issues to deal with in our banking system. We have to make it more competitive and encourage more entrants, and community banks can be part of the solution.

Air Passenger Duty

Guy Opperman Excerpts

Thursday 1st November 2012 Commons Chamber

[Henry Smith]

My hon. Friend has anticipated what I was about to say. The Netherlands scrapped air passenger duty after studies conducted by the Dutch Government established that it was costing the economy more than it was bringing into the Treasury. I think that it is for the same reason that only six European countries charge any form of air passenger duty, and the amounts that they charge are very modest.

[Guy Opperman (Hexham) (Con)]

My hon. Friend is making a very articulate case not only on Gatwick’s behalf but in favour of the change that we all want to see, but does he agree that air passenger duty is not just a London tax? If the Government are interested in supporting the regions of England, at the very least they should bear in mind the fact that a change in APD would make a huge difference to regions such as the north-east and the north-west.

--- Later in debate ---

[Sir Roger Gale (North Thanet) (Con)]

Most Members have made the point about the value of the aviation industry to the UK as a whole. It is of considerable value to all the UK’s major conurbations, and particularly to the south-east. Historically, Heathrow has been one of the major—if not the major—hub airports in the world. The interlining that has gone on through Heathrow over decades has been worth almost incalculable sums of money, not merely to the aviation industry but to business as a whole through the people who hold business meetings in airport meeting rooms and the people who come through London and spend money doing business in the City or as tourists. That is what is at stake and it is difficult and dangerous to ignore those facts.

At the moment, the United Kingdom is losing business. Not in 10, 15 or 20 years—it is happening now, today. Every day we lose business to Schiphol, to Frankfurt and to Charles de Gaulle. Would not the French, give or take Mr Hollande, like to create in Paris the financial centre of Europe, to replace London? It is not a pipe dream on their part; it could happen if we drive the business travellers away from the south-east of England. I am sorry that this is to some extent a south-east problem, but that happens to be where the City of London is and we cannot change that.

There are two issues: airport capacity and air passenger duty. My friend the hon. Member for Central Ayrshire (Mr Donohoe) and the hon. Member for Aberdeen South (Dame Anne Begg) both made the point that people are now travelling short haul to interline and take long-haul flights from Schiphol, Frankfurt and Charles de Gaulle. They pay APD on the short-haul flight and get a much cheaper and better deal on the long-haul flight to the far east, Brazil—a developing market—and, of course, the United States. It is happening now.

[Guy Opperman]

My hon. Friend is making an articulate case about the impact on the economy of Great Britain, but there is also an impact on overseas economies. For example, the APD banding is so arbitrary and wrong that the APD for somewhere such as the Caribbean is more than for somewhere as far away as Hawaii. Surely that shows the illogicality of this blunt tax.

[Sir Roger Gale]

If I wanted to use one word to describe the banding, it would be chaotic. That is what it is. We are losing business now.

We have an opportunity—I have a constituency interest in this—in Manston, Kent’s international airport. My hon. Friend the Economic Secretary to the Treasury is aware, I think, of the opportunity Manston presents. It has one of the longest runways in the country and also one of the widest—three runways wide—because during the war it was used for landing planes one after the other. There is no suggestion that it should ever become a fourth, fifth or sixth London airport, but it could be developed at very modest cost to take the pressure immediately—not in 10 or 15 years’ time—off Gatwick, which in turn, with released capacity, could take the pressure off Heathrow. That would create the breathing space we need while the Government work out whether to have a third runway at Heathrow, a second runway at Gatwick, a second runway at Stansted or Boris island—that is not the purpose of this debate. If we are to develop Manston and use its capacity, we must give it a chance to breathe commercially, and air passenger duty is damaging that chance.

We need a modest investment in infrastructure, and the Minister of State, Department for Transport, who has responsibility for aviation, will visit us very soon. As long as the air passenger duty element of travel from the United Kingdom is as high as it is, regional airports such as Manston, and the many others that Members across the House have represented this afternoon, will suffer. Because Manston is in the south-east, it will presumably be banded at a south-east price, which in itself is nonsense. We must take into account the nature and capacity of each individual airport. I want air passenger duty to go completely, but I believe that in the interim, as a short-term measure, we have to look seriously at banding, which has been referred to, and at some kind of variation between regional and hub airports.

The Economic Secretary to the Treasury might be new to his role, but he is very bright and he can do sums, which is why he got the job. It is very easy to say glibly that something is worth £2 billion, £5 billion or whatever to the Treasury without taking into account what my hon. Friend the Member for Windsor (Adam Afriyie) referred to as the downside. The real cost must be calculated in terms not just of aviation lost, but of lost business, tourism and all the other things that flow from being a world-class, international centre, which is what London is, always has been and must be allowed to remain.

There is a Treasury mantra—I am looking to the civil servants’ box—which says that more tax equals more money. That card was played earlier this afternoon with regard to beer duty. It is wrong. A modest amount of tax might raise a modest amount of money, but there comes a point, and my hon. Friend the Economic Secretary must recognise this, when a tax kills the goose that lays the eggs, whether they are gold, silver, bronze or straightforward eggs. We cannot go on killing this industry, and that is what is happening. Of course, another huge concern has been voiced by holiday travellers. The impact on family holidays is dramatic and costly.

VAT on Air Ambulance Fuel Payments

Guy Opperman Excerpts

Wednesday 11th July 2012 Commons Chamber

[Guy Opperman (Hexham) (Con)]

I beg to move,

That this House supports wholeheartedly the work and actions of the Air Ambulance Service nationally, and all the individual crew members and staff, who provide an outstanding service to people up and down the UK; notes that the Air Ambulance Service is a charitable organisation, funded by donations given by the general public, and without any direct funding from Government; further notes that the Air Ambulance Service has saved successive governments millions of pounds; notes that the Air Ambulance Service provides an emergency service similar to the Lifeboat Service, and that the Lifeboat Service has been excluded from the EU VAT Directive on fuel costs since 1977, whereas the Air Ambulance Service has been required to pay for VAT on fuel; notes that successive governments have failed to provide a rebate or exemption to the Air Ambulance Service for this VAT; calls on the Government to conduct an urgent review of this situation; and further calls on the Government, in the next 12 months, to consider providing for grants to the Air Ambulance Service commensurate to the sums incurred by the Air Ambulance Service for the VAT on the fuel they purchase, and to publish the outcome of that review within this timescale.

This is a cross-party debate arising from an e-petition that has approximately 150,000 signatures and is supported by many Members up and down the land. Our support for the air ambulances and the e-petition derives from a constituent of my co-sponsor of the motion, the hon. Member for York Central (Hugh Bayley), to whom I give my thanks. The constituent is Mr Ken Sharpe. I also thank the Backbench Business Committee for its support and Mr Speaker for finding time for it to be heard.

On 1 August the eyes of the world will be on London for the Olympics. For months I have been rigorously training my body to be at the peak of physical perfection. But I shall not be lining up against Usain Bolt. I shall be in the sleepy village of Edale, in north Derbyshire, where I, the hon. Member for Sheffield Central (Paul Blomfield) and other hikers will be about to commence a 280-mile hike along the greatest walk in the world, the Pennine way. I shall not be walking for a gold medal. My goal is not gold, but hard cash to support the Great North air ambulance service, which is of course the finest of all the air ambulance organisations. Others may be cheering on Jessica Ennis and sipping the corporate champagne, but this ageing, fattening ex-jockey will be existing on a prime diet of beer and flapjacks as I wearily trudge my way north to Northumberland. Usain Bolt has nothing to fear.

This debate is supported not only by the e-petition, but by a petition run by my local paper, the Hexham Courant. Other newspapers up and down the land have also done a great deal to raise the profile of this debate. It is a cross-party debate, giving the Treasury a fantastic opportunity, over the next 12 months, to consider all the information to do with air ambulances, how they are funded and how VAT applies to their fuel, and to come back with a possible solution after the Budget next year.

What is certain is that the issue derives from Europe, an issue that may have been occupying some of our minds these past few months. When our illustrious forebears took us into Europe—purely, as we all understood, for economic reasons—there was a requirement to sign up to the EU VAT directive, which covers UK VAT legislation. In 1977, the lifeboat service was exempted from the VAT on marine diesel. However, as the air ambulance did not exist at the time, it was not exempted and has subsequently been required to pay VAT on fuel costs. We are in this situation today because of that anomaly. As we have learned since the Budget in March, the Government are keen to clear up VAT anomalies.

We Back Benchers are often asked by Whips to believe many outlandish things—that the European Union always makes sensible decisions or that we will one day win a penalty shoot-out or have a Wimbledon singles winner. Today I will ask the House to accept one basic principle: that there is no real difference between a lifeboat and a helicopter. The lifeboat services are exempt from the VAT exclusion but the air ambulance charities are not—but they are both, I suggest, providers of life-saving emergency services that deserve all our support and all the exemptions made available for their vital work so that they may continue.

My constituency is the second biggest in the country; it has schools with catchment areas almost the size of the M25. It has rough, rural country, often without roads. In the west of Northumberland, our nearest hospital is well over an hour away; sometimes the four-wheeled ambulance struggles to be with us within an hour, if at all.

When I was a thinner and better jockey, I met many other jockeys who had struggled after a fall when they needed to be airlifted to hospital. People frequently have to be supported and airlifted to safety from the A1. This is not just a rural issue, but one that affects cities and towns just as much, when there is a lack of access or urgent transfers are required.

[Anne Marie Morris (Newton Abbot) (Con)]

I absolutely commend my hon. Friend’s argument. Devon Air Ambulance in my constituency is absolutely vital. There are very rural parts of the countryside and I entirely agree that it seems disproportionate that it should have to pay VAT, unlike the lifeboat services.

[Guy Opperman]

I endorse everything that my hon. Friend has said; she is a great supporter of that organisation.

[Mr George Howarth (Knowsley) (Lab)]

I congratulate the hon. Gentleman on being fortunate enough to raise this debate. As he pointed out, urban areas are often as dependent on air ambulance services. The North West Ambulance Service, based in my constituency, is highly regarded right across the region.

[Guy Opperman]

The right hon. Gentleman mentions an exceptional air ambulance charity, which is supported not just by him but by all MPs concerned with the north-west.

Put simply, in my part of the world—and all others, for that matter—health care would be jeopardised without the charitable air ambulance service. I am not denigrating the providers of other emergency services, but we could not operate without the Air Ambulances. For example, the Great North air ambulance covers an area of 8,000 square miles, from the Scottish borders to North Yorkshire and from the east to the west coasts. The helicopters can be anywhere in the region within 15 minutes and on board are specialist trauma doctors and paramedics, who bring expert accident and emergency qualities to the scene. However, each mission costs £2,500, regardless of whether the patient is airlifted. That takes into account the cost of the aircraft, storage, paying the pilots and paramedics, and medicine and other equipment. There are hundreds of call-outs per month, and the same applies all across the country. Given that this involves paying in excess of £100,000 a year on fuel, of which VAT represents 20%, there will be a significant saving not only to the Great North air ambulance service but to several others, and that would equate to life-saving missions.

[Andrew Bridgen (North West Leicestershire) (Con)]

I commend my hon. Friend for securing this debate. East Midlands Air Ambulance is based in East Midlands airport in my constituency. I have met the crew, and they are genuine professionals who, as he says, go out every day saving people’s lives, especially along the M1 and M42 corridor, where the roads are very dangerous.

[Guy Opperman]

At this stage, one has to acknowledge that only a fool would fail to see that the Government are in the headlock of a debt crisis, a eurozone meltdown and a struggling economy. Everyone accepts that they are short of a magic chequebook. However, I am pleased to point out to the Treasury that those at the air ambulance organisations are not difficult people. We do not seek a solution straight away. The motion asks for an urgent review and a study of the submissions and financial arrangements of the air ambulance charities, and for a long-term solution to be reached at some stage in the near future. On any interpretation, successive Governments have got a great deal from this free service. No Government have ever properly addressed this loophole, and we are giving this Government a chance, over the next year, to investigate and address the problem.

We may be divided on many things, but we should all support this wonderful organisation. The sums that the Treasury would have to find are relatively slight—considerably less than £200,000 a year. Given the amount that the charitable organisations raise from members of the public and the amazing service that is provided, at the end of this debate we should be able to agree that there is no fundamental difference between a lifeboat and a helicopter, because both services are invaluable and should receive our support equally.

--- Later in debate ---

[Guy Opperman]

I suggest that the principle is the key. The proposed change would, without a shadow of doubt, potentially save lives. If anyone doubted the universal appeal of the air ambulance, we should look at who has spoken in this debate.

The debate was commenced on the Scottish border, in Hexham, but took in the constituencies of my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith), my hon. Friends the Members for Penrith and The Border (Rory Stewart) and for York Outer (Julian Sturdy), and the hon. Member for York Central (Hugh Bayley), as well as other Yorkshire constituencies, such as that of my hon. Friend the Member for Pudsey (Stuart Andrew). We then went down to the constituencies of my hon. Friend the Member for Brigg and Goole (Andrew Percy), the right hon. Member for Wentworth and Dearne (John Healey) and the hon. Member for Leeds North West (Greg Mulholland). Then we travelled down the country, taking in the constituencies of my hon. Friend the Member for North West Leicestershire (Andrew Bridgen) and the right hon. Member for Knowsley (Mr Howarth), as well as constituencies in London, such as those of my hon. Friends the Members for Brentford and Isleworth (Mary Macleod) and for Hendon (Dr Offord), before going down into Kent, to the constituency of my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch). We then went down to the constituency of my hon. Friend the Member for South Dorset (Richard Drax)—not forgetting my hon. Friend the Member for Rugby (Mark Pawsey), whose constituency we passed on the way—before finally heading down towards the vast reaches represented by my hon. Friend the Member for Newton Abbot (Anne Marie Morris), and that is without taking into account the areas represented by the shadow Minister, the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), and the Minister.

I am grateful that this has been a cross-party debate. My thanks go to all who signed the petition. The debate was also well informed, but it would have been helpful if the shadow Minister had remembered the 10 fuel duty rises from the last Government, which have had such an impact on the air ambulance service, and the fact that this Government have not put fuel duty up once.

To sum up, I want to give particular credit to two groups of individuals: to all the staff of the air ambulances, all over the country, and to all those who raise money for individual air ambulances. Last weekend I was at the Haydon Bridge beer festival, and I shall be at the Otterburn show raising money for these institutions this coming weekend. Anybody who has no plans for the Olympics in the summer can come and join me on the Pennine way odyssey, which is taking place in August, or give funds to the event. The principle is the key. The proposed change will save lives, and I commend the motion to the House.

Question put and agreed to.

Resolved,

That this House supports wholeheartedly the work and actions of the Air Ambulance Service nationally, and all the individual crew members and staff, who provide an outstanding service to people up and down the UK; notes that the Air Ambulance Service is a charitable organisation, funded by donations given by the general public, and without any direct funding from Government; further notes that the Air Ambulance Service has saved successive governments millions of pounds; notes that the Air Ambulance Service provides an emergency service similar to the Lifeboat Service, and that the Lifeboat Service has been excluded from the EU VAT Directive on fuel costs since 1977, whereas the Air Ambulance Service has been required to pay for VAT on fuel; notes that successive governments have failed to provide a rebate or exemption to the Air Ambulance Service for this VAT; calls on the Government to conduct an urgent review of this situation; and further calls on the Government, in the next 12 months, to consider providing for grants to the Air Ambulance Service commensurate to the sums incurred by the Air Ambulance Service for the VAT on the fuel they purchase, and to publish the outcome of that review within this timescale.

Community Banks

Guy Opperman Excerpts

Tuesday 10th July 2012 Westminster Hall

[Guy Opperman (Hexham) (Con)]

The case for local community banking and the break-up of the Royal Bank of Scotland to create a series of local banks has never been stronger. Since the global financial crash, the merits of a vibrant system of local banks have become apparent; it is the issue of our time. We need to look at finding new ways to unlock the finance that households and small businesses need. We need new local banks that will promote competition, reinvigorate community lending, improve the finances of small and medium-sized enterprises, and encourage local saving. They would work on the principle of using local credit to support manufacturing and start-ups, and they would not leave the disadvantaged at the mercy of loan sharks and money changers.

Local banking works. We should bear it in mind that 70% of German lending to SMEs is via local banks. And we wonder why the German economy is doing better than ours. The experience of other countries that have a thriving local banking sector—countries such as Germany, the US and Switzerland—has demonstrated that smaller, locally focused institutions are the ones that provide economic resilience. Studies of the humble German savings banks—or Sparkassen, as they are called—which form a network of 430 independent but mutually supporting local institutions, show that they have made modest but steady profits through both boom and recession. By comparison, the mighty Deutsche Bank has plunged from huge profits to calamitous losses.

In this country, we have a missing tier of banking. Let us consider the period between December 2007 and December 2011, which saw a sharp decrease in lending by the large commercial banks in Europe. In that period in Germany, large commercial bank lending fell by 18%; in Switzerland, it fell by 34%; and in the UK, it fell by 17%. During the same period, however, lending by local savings banks rose; the German savings banks saw lending rise by 18% and the Swiss cantonal banks saw lending rise by 22%. But in the same period the UK saw neither a rise nor a fall in lending.

[John Stevenson (Carlisle) (Con)]

I am grateful to my hon. Friend for giving way and indeed for securing this very important debate. Does he agree that what we need in the UK is a two-tier banking system? We need the large banks nationally, but we also need—as he is suggesting—smaller banks operating at a local level. Having a two-tier system would be beneficial to our economy overall.

[Guy Opperman]

I completely agree with my hon. Friend and I entirely applaud the Government’s approach—by way of the Vickers report—to addressing the problems with the larger banks. Everyone can see that there is a fundamental problem with large banks and their failure to lend. The fact is that they are almost operating as a monopoly; the largest six banks run the show completely.

The other end of the telescope and the other end of the problem is the lack of local banking. My hon. Friend talks about a two-tier banking system and I agree that, instead of having a single monolithic and almost monopolistic banking structure in which only the five or six big banks lend money, we need the larger banks—of course—but we also need the smaller banks operating at a local level.

Quite frankly, we have lacked that system in this country. Ever since the 1930s, approximately, the banks and building societies in the UK have become ever larger as some of them have been swallowed up by their neighbours and by their more predatory rivals. Consequently, we have gone from having a large variety of banks and building societies to having fewer and fewer banks and other organisations working in the banking community. Of course, that has the effect of reducing competition, reducing the ability for a new entrant to gain access to the market and reducing the ability of businesses to gain access to credit.

I must stress at the outset of my speech that the present crisis in banking and in bank lending is not in any way the fault of local branch staff. I assure the House that those staff are just as frustrated as I am at their inability to run accounts as they used to in the old days. I come to this particular debate with a background in business and with two years of experience as a constituency MP in Northumberland, where I have repeatedly seen decisions on lending being made by a Hexham bank manager, or another local Northumberland bank manager. Those decisions then become part of the responsibility of the credit risk team whenever there is any difficulty with the account.

If an individual SME has a problem with its account, such as a bad debt or a problem with cash flow, it is almost impossible for it to go back to the same manager and argue the case that it is a viable, proper business going forward. That is because the decision-making process has been taken away from the individual local bank manager in Hexham, Ponteland or wherever. What happens now is that the decision is not even taken in Newcastle or anywhere else in the north-east but by a credit risk team that is many miles away. I have attempted to go to those credit risk teams to make a case, but of course it is almost impossible to do so. That system must change. Again, I make it clear that what I am saying today is not a criticism of local bank staff who are working throughout the country. It is a criticism of the board members in London, who seem to have totally forgotten their fundamental role.

I was interested to see that the Leader of the Opposition has commented on banking in the last few days. Like the Church, we always welcome new converts, given the past record. However, the necessary reform of the banks is being left to this Government, as we bring the banks to heel with the Vickers report, clear up the LIBOR mess and implement a much stronger system than the light-touch regulation that we saw before.

Change will not happen without competition. Yesterday the Leader of the Opposition was extolling the need to create more competition for our banks. However, on 23 April in the Financial Services Bill Committee the Opposition voted to prevent competition in banking. I was present for that debate, which saw the Opposition introduce amendment 28, which would have deleted clause 5 of the Bill, thereby deleting the requirement for enhanced competition. So I must ask the question: how can one be in favour of local banks while stopping competition?

The Leader of the Opposition is also out of touch if he thinks that the answer to this banking crisis is to force banks to close some of their high street branches. That is hardly what the voters in my part of Northumberland are crying out for; that much is certain. Residents in Haydon Bridge and Haltwhistle who are losing their local bank branches will tell the Leader of the Opposition that the problem with the banking sector was casino banking and greed, and not—as we heard from Labour this week—having too many local branches. My constituents want to see local branches providing a local service.

[Chris White (Warwick and Leamington) (Con)]

I congratulate my hon. Friend on securing this debate. I would like to know his thoughts on how our local communities can hold these banks to account. Although having local community banks is an excellent idea, if we create smaller banks out of RBS how can we ensure that the local communities will have control over those banks’ priorities? In my constituency, industries such as the green energy industry and the video games industry have big potential for growth. How can local communities ensure that local banks are given the mandate to tailor themselves to local business needs?

[Guy Opperman]

The reality is that Hampshire, for example, has done what I am talking about and set up the Hampshire bank, or Hampshire Trust. It is backed by the local chamber of commerce and by local authorities. It is regulated, so it is possible to have a county bank that is regulated, but on a lighter-touch basis—I use that phrase again—than the larger banks such as Barclays or HSBC. Moreover, if we broke up RBS, which I will come on to discuss, the individual shareholders would have a say in a local county bank.

How do we create local banks? First, one must address the barriers to entry, which are considerable. Metro Bank has recently been established in London and the south-east, but only at huge cost and only after overcoming many hurdles. The example of the Hampshire bank shows that county banks can be created. I see no reason why we cannot do the same in Northumberland, or in the wider north-east region, and set up “The Bank of Northumberland” or “The Bank of the North-East”.

However, the truth is that a banking licence is notoriously difficult and costly to obtain. To try to remedy that situation, along with my hon. Friend the Member for Chichester (Mr Tyrie), who is the Chairman of the Treasury Committee, I met the chairman of the Financial Services Authority, Hector Sants, at the beginning of March. My hon. Friend and I sat down and tried to explain the problems to Mr Sants, and I am pleased to say that under this Government the FSA is considering trying to reduce the barriers to entry for smaller local banks.

On 12 March, the FSA’s chief executive wrote to me:

“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.”

He added:

“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”.

In those circumstances, and with the background of a banking crisis, we need to look at the elephant in the room that is the Royal Bank of Scotland. The Government are understandably impatient to sell the 83%-nationalised bank, but the health of the public finances ultimately depends on the health of the economy, which itself rests on the stability and usefulness of the banks.

The taxpayer bail-out and the subsequent problems of RBS are well documented, and it now seems clear that the chances of the Government selling RBS as it is, and making a profit, or anything like one, are but a dim flicker at the end of a long tunnel. What the Government did with Northern Rock was undoubtedly the best option and the only real one, but RBS is different. I see RBS as an opportunity—as the Americans often say, “Don’t waste a good crisis.” We have a unique opportunity to seize the moment, and to ensure that RBS is managed for the benefit of the taxpayers, who own 83% of it, thereby transforming the banking sector. I suggest that we do not sell RBS as it is, but break it up, decentralise the branch management and use it to form the basis of devolved local community banks—imagine a local bank for every city or county—linked, where possible, with the local authorities and chambers of commerce.

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

I had not intended to speak—I just wanted to listen—but for clarity, will the hon. Gentleman say whether he is suggesting a form of mutualisation of RBS?

[Guy Opperman]

In real terms, the current RBS would go back to the people on a local basis, and if the hon. Lady listens I will explain how the shares could be devolved.

We would end up, I suggest, with dozens of little banks like 3i. The 3i Group plc is a large FTSE 100 company that started out as a Government business bank, as a support mechanism to get the country out of the 1930s depression. The new banks would be governed locally, with lending decisions made by managers who understood the local economy better than anyone at a London head office ever could. The managers would be embedded in their local economy, and could base their judgments on knowledge of people and businesses without being overruled by a credit risk computer or centralised targets. Their success would be intertwined with the success of the local economy.

I suggest that breaking up RBS is only half the solution. The next fundamental question is: what do we do with the Government shares? We could sell them, but I disagree with that proposal. We should give all 45 million people on the electoral roll the Government-owned RBS shares, making every voter a shareholder of a local bank created from the devolution of the RBS branches. Each local bank would coincide with a county or city council, and in my patch that would create a bank of Northumberland, with every adult in the county as a shareholder. Each bank’s lending powers would be limited to persons and businesses within its council boundary, and with residents as shareholders, the bank’s administration could be run by the existing council, to save costs and dovetail with existing infrastructure. If the plan went ahead, the 45 million shareholders would dwarf the 10 million that were created in the 1980s through the sell-off of BT and British Gas. It is crucial to remember that the Government did not bail out the banks—the public did. Their hard-earned money kept the banks afloat, and it is now time for them to share some of the rewards.

As well as giving taxpayers an effective rebate in the form of shares, the move would help to restore confidence in the banking industry, and boost the economy. The public is rightly fed up with a system that has become overwhelmed by small vested interests, a London-centric base and personal greed. What better way to repair that than by giving every voting member of the public a stake and a say in our state-owned bank? I accept that people could sell the bank, but the force of having 45 million British taxpayers holding banking shares could help transform the economy even if individual shares were sold. The alternative—there is one—is to give the shares and the branches to local authorities, which would be localism in its purest form, with state banking returned to a position of support for local communities, building on the German, Swiss and US models.

I am grateful to the Speaker for the opportunity to put my case today, and I thank the New Economics Foundation think-tank for its support. The endowment of local community banks, constrained not to lend beyond county borders and able to provide support for local businesses, is an important part of supporting local economies and communities across the country. With a mission to recycle savings locally and expand credit for productive loans that benefit the local area, but on a sound commercial footing, the strength of the case for reinstating a system of community banking is ever increasing. I suggest that we do not need to replace the commercial banking sector, because we can offset it and balance it out with a new system of banking. That would certainly introduce competition into a sector that is crying out for it, and transform banking in this country.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

It is a great pleasure to serve under your chairmanship, Mr Robertson. I congratulate my hon. Friend the Member for Hexham (Guy Opperman) on securing this important debate. He raised some interesting and important points to which I hope to respond.

First, let me make it clear that the Government believe that it is important for consumers to be able to access an appropriate range of financial products and services, and that we are committed to fostering a strong, diverse and competitive banking sector. To achieve that, we must ensure that consumers can apply competitive pressure and hold their banks to account for the services they offer. In a competitive market, customers should be able to vote with their feet and switch their custom to banks that provide the best products and services for their needs. The Government are, therefore, committed to fostering diversity and promoting competition in the banking sector.

To help with the delivery of those aims, the banking industry has committed to introducing a fast, safe and hassle-free switching service, which will ensure that by September 2013 customers can switch accounts within seven days. That is further to transparency measures that are already being implemented more widely in the personal current account market, including making charges clearer on customers’ monthly statements, and providing an annual statement of charges for each customer.

As well as people having the freedom and information to switch banks according to their needs and wishes, it is important that new firms are free to enter the sector. I am pleased that we have seen a number of new entrants into the current account market in recent years, including Metro Bank, and it is essential that the regulatory regime facilitate that wherever possible. That is why the Chancellor announced in the banking reform White Paper that the Bank of England and the Financial Services Authority will conduct reviews of the prudential and conduct requirements for new entrants to the banking sector, to ensure that the requirements are proportionate and do not pose excessive barriers to entry or expansion for new, and prospective new, entrants. The conclusions of those reviews will be published in the autumn when the FSA and the Bank of England set out the detail of the new supervisory models for the Prudential Regulatory Authority and the Financial Conduct Authority, and the FSA and the Bank of England have committed to introducing the changes in advance of the new regulatory structure, where possible.

The Government are also committed to promoting mutuals and fostering diversity in financial services. By promoting financial mutuals, the Government are ensuring that consumers have an alternative model, which can provide competition to the shareholder-owned banks. Last Thursday, we set out the Government’s vision for the building society sector in “The future of building societies”. The document, which has been warmly welcomed by the sector, confirms the Government’s support for the distinctive alternative offering provided by building societies. It outlines the Government’s intention to remove unnecessary barriers to growth, and to help create a more level playing field with banks. In addition, in January the Prime Minister announced that the Government will introduce a co-ops consolidation Bill, which will raise the profile of the co-operative alternative and make it easier to adopt it as a corporate form. By ensuring there is an environment in which building societies can not only survive but thrive, the Government are facilitating a mutually owned source of competition for the big banks for many generations of home owners and savers, and supporting building societies with ambitions to expand their business models: for instance, into providing vital lending to small businesses.

Promoting diversity in financial services goes wider than banks and building societies. Credit unions can act as an excellent alternative, providing affordable financial services to people who would not otherwise be able to access them. This Government have taken action to help promote credit unions and their role of offering financial services to their communities. We have removed unnecessary burdens by bringing into force a legislative reform order giving a much wider group of people the ability to take advantage of the benefits of credit union membership. We have brought Northern Ireland’s credit unions under the regulatory oversight of the FSA so that from April, for the first time, the deposits of Northern Ireland credit union members will be protected by the Financial Services Compensation Scheme, enabling members to save with credit unions with confidence. We have also announced a credit union expansion project, which will invest £38 million to help credit unions modernise and grow in order to offer a real alternative to high-cost credit providers. Through all those actions, the Government are creating an environment where credit unions can offer an alternative and compete with banks to serve families and businesses that need to save and borrow for their future.

My hon. Friend discussed the Royal Bank of Scotland and advocated its playing a role in supporting the creation of local community banks. The Government’s shareholdings of RBS are managed on a commercial and arm’s-length basis by UK Financial Investments Ltd, a company wholly owned by the Government. UKFI’s overarching objective is to protect and create value for the taxpayer as shareholder, with due regard to financial stability and promoting competition. UKFI’s role is to manage the investments, not the banks. The banks retain their own independent boards and management teams to manage the banks commercially without interference from shareholders. Like all banking service providers, they must balance customer interests, market competition and other commercial factors when considering their strategy, so the Government do not tell RBS or any other bank where to operate branches.

On shares for the people—my hon. Friend explained his proposal in detail—UKFI will consider the full range of alternatives for investment and make its recommendations based on market conditions, an assessment of investor demand and value for money considerations. However, the ultimate decision to proceed with any transaction will rest with the Chancellor.

My hon. Friend also described the difficulties that local business can face in accessing finance from banks. I assure him that the Government recognise that small and medium-sized enterprises are fundamental to economic recovery. That is why the Chancellor launched two credit easing schemes in March 2012. The national loan guarantee scheme reduces the cost of borrowing for SMEs by 1%, and the business finance partnership will invest £1.2 billion through non-banking lending channels. Together, the schemes support SMEs in accessing cheaper finance while diversifying the range of finance resources available, stimulating the non-bank lending sector. At Budget 2012, the Government also extended the enterprise finance guarantee, which will enable over £2 billion of lending over the next four years to businesses with insufficient collateral or track record.

We continue to help UK businesses access the finance they need. That is why the Chancellor and the Governor of the Bank of England announced the new funding for lending scheme at Mansion House on 14 June. The scheme will support credit for the whole economy by making it easier for banks to lend to businesses and families. In return for additional new lending across the whole economy, the scheme will reduce bank funding pressures, which have been increasing due to instability in the international financial markets. We are working closely with the Bank of England on the design of the FLS and will release further details shortly.

As I mentioned in my opening remarks, the Government believe that it is important for consumers to be able to access an appropriate range of financial products and services and are committed to fostering a strong, diverse and competitive banking sector, a point raised by my hon. Friend. I hope that it is clear to him from the initiatives I have described that we are pursuing a substantial agenda in that area through both regulatory and non-regulatory means.

The regulatory landscape is changing, just as customers’ needs are, and the financial services sector will need to continue to evolve to take account of that. At the same time, it is important that it continues to meet the needs of ordinary customers, an issue that I know is close to my hon. Friend’s heart.

I thank my hon. Friend once again for raising these important issues and bringing them to my attention and that of the House, and I thank my hon. Friends the Members for Carlisle (John Stevenson) and for Warwick and Leamington (Chris White), and the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson), for their contributions.

[Guy Opperman]

Clearly, the disposal of RBS, in whatever shape or form, is ultimately for the Government and the Chancellor of the Exchequer, having considered a full range of alternatives, market conditions and value for money. If it is not commercially viable to return RBS to the private sector, will the option of returning it to a local banking organisation, as I have described, be considered?

[Mr Gauke]

My hon. Friend is absolutely right that that is a decision for the Chancellor of the Exchequer. All I will say at this point is that I am confident the Chancellor will want to consider all options, particularly in the circumstances my hon. Friend describes. Numerous factors would need to be taken into account in any decision, including value for money for the taxpayer.

The Government are clear that banks and building societies should serve the economy. I assure my hon. Friend that the issue will continue to receive the highest level of attention from Government. We are grateful to him for raising so many important issues in this debate.

Petrol and Diesel

Guy Opperman Excerpts

Wednesday 23rd May 2012 Westminster Hall

[Robert Halfon]

As so often, my hon. Friend has hit the nail on the head. We need a fair fuel stabiliser that looks at prices at the pump, so that when the international oil price goes up tax at the pump goes down. That really would be a fair fuel stabiliser.

[Guy Opperman (Hexham) (Con)]

I support my hon. Friend’s campaign. I represent the least densely populated constituency in England. In Northumberland, fuel is a key issue, as I am sure it is everywhere else. I suggest that there should be an Office of Fair Trading examination, much like those we have carried out so successfully in remote communities into other forms of heating and other oil.

[Robert Halfon]

I thank my hon. Friend for his remarks. That matter is an important part of my argument.

On the August rise, the Automobile Association says that a 3p rise in petrol prices will switch £1.8 million a day out of the economy and into petrol costs, draining money away from high streets. At the same time, a report by the respected Centre for Economics and Business Research shows that cutting duty by 2.5p would create 175,000 new jobs. The RAC Foundation and the Institute for Fiscal Studies—both very respected—show that revenues from motoring taxes are set to collapse by between £10 billion and £13 billion a year over the next decade, as people are driven off the roads by economising on fuel. That is why I urge the Government to think again.

Financial Services Bill

Guy Opperman Excerpts

Monday 23rd April 2012 Commons Chamber

[Chris Leslie]

I accept that. It gets to the nub of the issue. There is no single variable that has an impact like pulling a lever and an economic outcome comes along down the track. A number of factors combine to create an economic outcome. That is why people say it is sometimes more of an art than a science, but in so far as there is an ability to make projections or to measure, that assessment is needed. I hope it could be as sophisticated an assessment as the hon. Gentleman suggests.

[Guy Opperman (Hexham) (Con)]

I endorse the points made by the Chair of the Treasury Committee. Is it the accepted view on the shadow Front Bench that the promotion of competition is the key objective?

[Chris Leslie]

We want to see more competition in the financial services sector. That is an important aspect of improving choice and reducing costs for consumers, but essentially the amendments that I have been discussing relate to prudential regulation. I do not think the competition argument necessarily supersedes that.

I agree, and there is cross-party support for this, that we need to improve prudential regulation within our financial regulatory system. There is a degree of consensus in that area, which is why we did not vote against the Bill on Second Reading, for example. The question is how that pans out. The Chair of the Select Committee began his comments by saying that the Bill is defective in a number of regards and needs significant improvement. Amen to that. I agree. That is the problem and that is why I have so many concerns about aspects of the Bill, particularly in clause 5, in respect of the way the Government are choosing to divide up the regulators.

I must move on. Another area about which I have concerns is the Government’s refusal to accept that the Bank of England should be under a duty to minimise the use of public funds—to minimise the recourse to taxpayers’ money—in order to support or rescue parts of the UK financial industry. If we were all to go back to our constituencies and explain what we were doing on Monday, we would say that we had been talking about the Financial Services Bill. Most of our constituents would say, “Good. Does that mean that the taxpayer is not going to be on the line to bail out all those banks again in the future?” and of course we would all want to say yes. That is the whole purpose of what we are supposed to be doing here.

One of the most important things we need in the Bill is a provision to ensure that the system is designed such that any changes or rescue arrangements will not burden the taxpayer in the future. It is important to specify that the Bank of England should take responsibility for minimising that likelihood. It is a pretty straightforward amendment. These should not be partisan issues. That aim should be at the heart of the Bank’s financial stability objective. We know about the costs of bailing out the banks and how those have hit public finances.

Having heard the Minister’s entreaties in Committee, the hon. Members for Wyre Forest (Mark Garnier) and for West Suffolk (Matthew Hancock) and others said that the our earlier amendment was deficient because it would have placed a duty on the Bank of England to minimise the use of public funds. I have thought about that carefully and come back with an amendment that simply requires the Bank to have regard to the need to minimise that. I hope that removes any worry about justiciability, which was one of the arguments upon which the Minister relied to rebut the suggestion in Committee. I do not think it is reasonable to say that it will blur or confuse the issue if we ask the Bank of England to keep in its mind’s eye the impact that any of its decisions will have on public funds. Ultimately, most of our constituents would expect us to legislate today to minimise the recourse to public funds. I hope the Minister will accept the amendment. If not, the other place will return to the issue.

The hon. Member for Chichester pointed to amendment 53 in my name and that of my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) about parliamentary scrutiny. For this House, it is an incredibly important issue and I know that Members on the Government Benches feel strongly about it too. We are giving the Bank of England extensive new powers that will affect businesses, consumers and our constituents. We still do not know what these macro-prudential tools will be. We had a report from the Bank of England last December intimating that they may touch on certain aspects of loan-to-value ratios, although Paul Tucker, the deputy governor at the Bank of England, said the other day, “This looks like hot stuff. Maybe it’s too hot for us to handle at the Bank of England.” Maybe that is for the Treasury to decide. I think the Bank of England recognises that there is an accountability deficiency. That golden threat of accountability does not lead back to Parliament, as it should.

--- Later in debate ---

[Guy Opperman]

It is a pleasure to speak in this debate, albeit briefly. Like Mark Antony in “Julius Caesar”, I come to praise the Bill, not to criticise it. I accept that the Government are all honourable men and women, but so, it might be reasoned, are the members of the Treasury Committee, who are also honourable men and women, advancing a slightly contrary view.

I support the fundamental ethos of clause 1 and welcome the review of the performance of the Bank of England. I certainly do not support Opposition amendment 28, which would remove clause 5; that would be entirely wrong in the present circumstances. I speak as a critical friend of the present system and as the secretary of the all-party group on the Arch Cru Investment Scheme, which is seeking to recover compensation for the thousands of men and women in this country who have lost their lifetime savings. What happened to them is manifestly wrong, and anything that this House can do to strengthen the regulatory system to prevent such disasters, I welcome wholeheartedly.

I speak also as an MP who, almost every week, has a constituent come to me saying that they are unable to obtain bank lending and finance. That is because of the lack of competition in the present banking structure—an issue that is raised regularly. I urge the House to embrace greater competition and to open up the market to competitors to the existing large banks, which will be in a position to provide the bank finance sought by businesses up and down the country.

The other end of the telescope must also be addressed. At present, we have the large banks, but there are no small banks. Germany and America have local banking structures that work tremendously positively: individuals can set up local banks, which provide for a community purpose above all else, which is manifestly a good thing. That is why I support wholeheartedly the competition objectives set out in new section 1E of the Financial Services and Markets Act 2000, inserted by clause 5, which states that there should be an emphasis on

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

I have met the chairman of Metro bank, which is that remarkable thing: a bank set up to exist at the weekend. It opens on weekends and at 8 o’clock in the morning. Imagine what could be done if we had that at the local level.

I am grateful for what Hector Sants, the present chief executive of the FSA, told me in a letter dated 12 March:

“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.”

The letter continues:

“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”.

The Bill will, I suggest and sincerely hope, make it easer to establish local banks, which can only be a good thing.

[Kelvin Hopkins]

I rise to express my strong support for the amendments in the name of my hon. Friend the Member for Hayes and Harlington (John McDonnell).

There are two components of the argument: the first is the relationship between the Governor of the Bank of England and the Government, but the second is the relationship between this House of Parliament and the Government. On both, I strongly believe my hon. Friend has a point. Like him, I was unhappy about the decision to hand power over monetary policy to the Bank of England and give it independence. All aspects of macro-economic management ought to be matters for Ministers accountable to Parliament. I maintain that view and, in a sense, recent events have proved that my hon. Friend and I were right. I thought at the time that if the Governor of the Bank of England or the Monetary Policy Committee chose to be hawkish on interest rates when we had a recession on our hands, there could be a serious conflict between the Bank and Government. Fortunately, the Bank has been sensible in managing monetary policy and that clash did not occur, but it could have happened in 2008. Had the Bank been governed by a hawkish Governor, we could have seen a serious clash and those powers no doubt taken away. I was comforted by the thought that if the Bank of England got out of control, we could easily take back powers. It is not the same with the European Central Bank, where powers have been given away and cannot be taken back.

In relations between Parliament and Government, pre-appointment hearings have been shown to be a success. I have been involved in not just the two most recent pre-appointment hearings, but in developing the arguments in favour of pre-appointment hearings as a member of the Public Administration Committee for the past 10 years. Brilliant work was done by Tony Wright, who made a real impact on our constitution. Pre-appointment hearings are first class. They are not just an experiment; they are here to stay. I would like the Governor of the Bank of England to be subject to a rigorous pre-appointment hearing so that we know that they will serve the economy and relate to the House, and not just be a law unto themselves. I have probably run out of time. I know the Minister needs to speak, but I have made my point.

IMF

Guy Opperman Excerpts

Monday 23rd April 2012 Commons Chamber

[Mr Osborne]

I can tell my hon. Friend that his west midlands constituents will not have to pay any more taxes for the loan and will see no cuts in public services as a result of it. The money comes out of the foreign exchange reserves—the foreign currencies that Britain holds and always has held. I would also say to the people of the west midlands and elsewhere that the money is available for all countries in the world that get themselves into difficulties. They have to meet certain conditions—very tough conditions—before they get access to the money, but if the world did not have a global institution such as the IMF, we would be in a much worse place. All the manufacturers and exporters in the west midlands understand that problems in the world economy and our export markets come back to bite us very quickly indeed.

[Guy Opperman (Hexham) (Con)]

Businesses in the north-east want a secure, worldwide support system for the global economy and welcome this decision on the IMF, but the man in the street in Newcastle and Hexham wants to know whether we have ever failed to get our money back from the IMF.

[Mr Osborne]

No we have not failed to get our money back from the IMF. Britain was one of the creators of the IMF, because we understood after the 1930s that if countries just walk away from problems in the world economy, the problem is very much worse. In the north-east, we have manufacturers such as Nissan in Sunderland. Nissan is making a big new investment in the UK. It is doing so, in the end, because it has faith that the world economy will be a more stable place, one of the reasons being that we have strong institutions such as the IMF.

Pay and Consultants (Public Sector)

Guy Opperman Excerpts

Tuesday 13th March 2012 Westminster Hall

[Guy Opperman (Hexham) (Con)]

I have 60 seconds to change the world. In my respectful submission, no one should earn more than the Prime Minister, the lead general in Afghanistan, the Lord Chief Justice or my local chief constable. The issue of excessive pay is raised on the doorstep in the north-east, and should, frankly, be addressed.

The Government are right to raise the tax threshold to £10,000, but I would like to go further. No one—at all—who earns the minimum wage and works a standard week should pay tax on their income. That would take it slightly beyond the £10,000 threshold. I support the work of the TaxPayers Alliance, the High Pay Centre, the High Pay Commission and the campaign against excessive executive pay—organisations that I work with regularly.

I finish my 60-second bid for glory on executive pay in the public sector by saying that, while I support a lot of what the hon. Member for Hammersmith (Mr Slaughter) said, it must be acknowledged that we are clearing up the mess of a light-touch regulation regime and the problems relating to Mr Thompson’s £600,000-plus salary, which not a single member of the BBC whom I have ever met could possibly justify.

Jam Jar Bank Accounts

Guy Opperman Excerpts

Tuesday 28th February 2012 Westminster Hall

[Damian Hinds]

The hon. Gentleman is absolutely correct. There is a generation that is more comfortable with managing such matters online, if they have access to a desktop personal computer, or, for those who do not have that, through smart phones, mobile phones and auto-voice recognition. However, there is a cadre of people for whom that is less appropriate.

The third question on product design is how to market such accounts, by whom and to whom.

Why would we want a great increase in jam jar banking? First, it would reduce the extent to which people trip into debt. Secondly, the poorest would pay less, both directly, through lower bank charges; and indirectly, because service providers would have a lower average cost of collection. Therefore, the poverty premium, as highlighted by Save the Children and others, would be reduced. Thirdly, and just as importantly, it would stimulate savings through a sort of a nudge. One of someone’s jam jars would automatically be a savings account, and they would have to say yes or no to put a few pounds away every week or month. We all know what a difference that makes; it can be quite transformational to have savings and assets.

[Guy Opperman (Hexham) (Con)]

As my hon. Friend knows, I am leading a campaign for the establishment of community-based local banks. Would one of the best custodians for jam jar accounts not be a community-based local bank? Such banks allow people to save locally with a local bank manager, with whom there can be a close, personal relationship. That would increase savings and the benefits of a jam jar account.

[Damian Hinds]

My hon. Friend makes a fine point, and I commend him on his leadership in the local banking movement. I will say a few things about credit unions, which I think share some characteristics.

I have talked about the “Why?” of jam jar accounts, and it is also fair to ask, “Why now?” There are three good reasons why the issue is particularly relevant at the moment. First, the Government and Members on both sides of the House are focusing, rightly, on the cost of living. We discussed heating bills in the preceding debate, and there are active debates about rail fares and petrol and diesel costs. Bank charges are also a significant part of the cost of living. The second reason why the debate is particularly timely is because of the introduction of universal credit, the move from fortnightly to monthly payments, and the move away from direct payments to landlords. The third reason is the sector modernisation fund of £73 million for credit unions that the Government are supporting. That presents new opportunities for development in that sector.

[Damian Hinds]

My hon. Friend is right. Of course, there is a potential benefit for landlords and other service providers. There is a line of argument that goes: why not just keep the two-weekly payments and the direct payments to landlords? However, a key objective of universal credit is to make the receipt of benefit feel more like being in work, which usually means having to cope with monthly payments, not having money paid direct to a landlord and so on. The use of such accounts is a good way of helping people through that, which is a perfectly legitimate aim, while keeping the key features of universal credit.

We know that Ministers are interested in this area. Most recently, in answer to a written parliamentary question tabled by my hon. Friend the Member for North Swindon, which was published after I applied for the debate, the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), confirmed that the Government are actively looking at the potential for low-cost budgeting accounts.

So why do they not exist already? Well they sort of do, just not on a particularly big scale. Last year, there were four providers of jam jar accounts, although three of them are not the household names that most of us would recognise. Until now, a key driver for the development and roll out of such accounts has been debt management companies wanting to have greater security of payment schedule, rather than consumer advertising. So although they exist, they do not exist at scale. Social Finance estimates that there are only about 150,000 such accounts in the UK. They do not exist through big brand institutions—by the way, the exception to that is the Royal Bank of Scotland. I know that it is not very fashionable these days to say nice things about RBS, but I commend it for having such an account, which it uses for its most challenging customers. However, that also means that the account is not actively marketed to the general public. Someone would struggle to walk into an RBS branch and open such an account, unless they are referred on to it.

[Guy Opperman]

Given that RBS will potentially be sold or divested by the Government in the longer term, is that something that should be carried through post-sale and hopefully made part of a community-based organisation?

[Damian Hinds]

In the interests of time, I will have to leave that question hanging—fascinating though it unquestionably is—because I must plough on.

The third important point is that such accounts are not available at an attractive price—with the exception of the RBS account. Typically, they cost the consumer about £150 a year. Why are such accounts not available at scale through big brand institutions at an attractive price? That is a very good question. Intuitively, such accounts seem like an attractive concept. In fact, many hon. Members here might reflect that, in our own personal finances, we mimic how jam jar accounts work. We might have a separate current account for household bills or a separate credit card that we use for car payments or something like that.

There is an attraction to such an idea, but the key stumbling block is economics. There is no reason to believe that the banks that do offer such accounts at the prices I talked about are making above normal profits, although at scale the cost should come down. Social Finance estimates that it should be possible to provide such accounts at between £5 to £7 a month, which is around £60 to £85 a year. The biggest sensitivity to that cost is the extent to which call centre human support on budgeting and so on is provided.

In any case, that is still a lot of money, so the question of how to pay for it remains. My hon. Friend the Member for Wirral West touched on some of those issues a moment ago. There is some reason to believe that people—consumers themselves—would be willing to pay something. In the credit market, if we think about how much consumers implicitly are willing to pay for the convenience and flexibility of home credit over cheaper sources, there is some evidence that people value and would pay for control. Some research suggests that maybe people would be willing to pay £1 a week—£50 a year. However, that still seems rather a lot. That could possibly be augmented with some other charges for ATM withdrawals and so on.

Some people might say, “Get the banks to pay for it. They’ve done all these bad things, so they should do it.” To be fair to banks, they do quite a lot in the corporate social responsibility sphere already, including with credit unions. We could perhaps get them to provide such accounts on a semi-commercial basis, forgoing their normal profit margin. What would not be a good idea is to suggest that other customers should cross-subsidise those with jam jar accounts. There are two reasons for that: first, for competition policy reasons and, secondly, because it is generally a bad idea in the interest of effective markets.

As my hon. Friend the Member for Wirral West mentioned, there may be a role for service providers, particularly housing associations and utility companies, who would benefit from having a more reliable payer. Particularly for the most risky customers, a housing association, for example, might even be willing to provide cash support for the costs. Perhaps more generally, one would be looking for softer support in terms of marketing and so on to reach scale.

We are talking about banks and consumers, but is there a role for the Government? There is certainly not a role for the Government in telling people what sort of bank account they should have. There is also not a role for the Government in telling banks what should be in their new product development pipeline. However, there is a real social interest in all these issues, as I outlined earlier. If it is a question of bringing together organisations that may all have an interest, some of which may not know about it yet, in developing this market, perhaps the Government are best or uniquely placed to do that.

In my final minute or so, I have three simple asks of the Government, to which I would love to hear the Minister’s response. The first ask is to prod the banks and continue to stress to them the benefit that may be had both to society and potentially to them in developing these products. There may even be a pure commercial case to be made for them. After all, I often remark that nobody knew until 3M brought it to market that the thing that was really holding back their office productivity was a little yellow square piece of paper that can be stuck to the wall. Sometimes products just have to get out there before we realise their potential.

The second ask is to consider having a pilot scheme in one area, working with a housing association and one or more utilities. It would then be possible to quantify the benefit that comes from security of payment and collection cost, as well as to assess the beneficial impact on individuals in terms of their budgeting behaviour, the amount of money they save and their propensity to start to make savings.

My third ask is to work with credit unions. This Government have been a great supporter of the credit union sector, particularly through the £73 million modernisation fund. If part of that were to be used to develop a robust, sustainable common banking platform, it would open up all sorts of possibilities, including this one. There would also be the potential to work with the Post Office, which would provide a great new source of revenue and business to post offices, which matter so much to all of us in our communities and constituencies.

We know that financial inclusion, helping people to make the transition into work and helping hard-pressed families with the cost of living are all things for which Ministers have shown a passion. They are also all things where jam jar banking could make a substantial difference. I hope very much that Ministers will continue to work with consumer groups, housing associations, utilities, banks and credit unions to help to stimulate such accounts into becoming an at scale reality.