Oral Answers to Questions

Lord Bellingham Excerpts

Tuesday 18th April 2017 Commons Chamber

[Mr Philip Hammond]

We are very keen on employees having an opportunity to take a stake in the businesses for which they work. We will look carefully at any proposals that would tend to enhance productivity by incentivising and encouraging employees.

[Sir Henry Bellingham (North West Norfolk) (Con)]

T5. Given the large proposed increase in probate fees, and bearing in mind that deceased people’s bank accounts are frozen, will the Chancellor or the Chief Secretary look at allowing the fees to be paid after probate has been granted and the estate has been wound up?

[Jane Ellison]

In most cases, the Ministry of Justice expects that banks will be able to release enough cash from the estate to pay the probate fee, and we know from HMRC that the average estate is 25% cash. The MOJ is working with the British Bankers Association and others to put arrangements in place.

Oral Answers to Questions

Lord Bellingham Excerpts

Tuesday 29th November 2016 Commons Chamber

[Mr Hammond]

First, if the hon. Gentleman that if he looks at real household disposable incomes, he will see that the picture is rather brighter, and they present a much more real picture of what people in the economy are experiencing. He is right to say that real wages are a reflection of productivity performance, and the only way sustainably to raise real wages is to raise the productivity performance of this economy. So rather than whinging about whether something was done this year, last year or six years ago, and perhaps with a careful eye on the performance of the previous Labour Government in this area, he might care to welcome the announcement made last week as an appropriate initiative to try to raise the UK’s productivity performance, and raise real wages and living standards over the long term.

[Sir Henry Bellingham (North West Norfolk) (Con)]

6. What steps he is taking to encourage business investment in (a) the UK and (b) East Anglia.

[The Chancellor of the Exchequer (Mr Philip Hammond)]

The Government are taking significant steps to encourage business investment in East Anglia and in all regions of the UK by cutting corporation tax to the lowest rate in the G20, delivering a £6.7 billion business rates package and allocating the £23 billion of public investment through the national productivity investment fund to ensure increasing and improved productivity. The autumn statement also announced £27 million for the Oxford to Cambridge expressway road link, as well as funding for the east-west rail link, and local enterprise partnerships in the east of England will also receive up to £151 million of local growth funding.

[Sir Henry Bellingham]

I welcome the Chancellor’s reply and the announcement of investment in the Oxford to Cambridge corridor and the transformational effect that that could have. Will he also ensure that other schemes to the east of Cambridge, such as the vital Ely North rail junction and improvements to the A47, also go ahead on time? He will be aware that they are crucial to the future economy of west Norfolk and other parts of Norfolk.

[Mr Hammond]

I will certainly pass on my hon. Friend’s comments about that particular rail scheme to my right hon. Friend the Transport Secretary. My hon. Friend will know that we have a large programme of rail infrastructure in place and that the additional funding for the east-west rail link that was announced last week was outside that core rail programme. I hope that he will agree that the Oxford to Cambridge corridor represents a real growth opportunity for the south and the east of England to exploit Britain’s two best known universities and their world-class research reputations to enhance the productive capacity of our economy.

House of Lords Reform and Size of the House of Commons

Lord Bellingham Excerpts

Wednesday 19th October 2016 Commons Chamber

[Pete Wishart]

Again, that is probably average estimated figures.

There we have it. Those are the aristocratic Members of the House of Lords. Just to make it even more surreal —I think that somebody has mentioned this already—26 places are reserved for bishops in their cassocks. They are not just any ordinary bishops in their cassocks; they have to be Church of England bishops in their cassocks. Again, this is the only legislature in the world that has a place reserved for clerics other than the Islamic Republic of Iran.

The coup de grâce, the ultimate horror of the membership of the House of Lords, is not the aristocrats or the bishops. It is the fact that we still have 104 Liberal Democrat peers. Roundly rejected by the electorate, the Liberal Democrats are kept alive in that crypt on a political life support system. People of Britain, welcome to your legislators! We have aristocrats, bishops and unelected Liberal Democrats. Is that not a great contribution?

[Sir Henry Bellingham (North West Norfolk) (Con)]

If the hon. Gentleman is serious about reducing the size of the House of Lords, as my hon. Friend the Member for Broxbourne (Mr Walker) mentioned a moment ago, has he thought of a system whereby we have indirect elections based on the number of votes cast in the general election, with each party having an electoral college, with perhaps a ceiling of 500 peers, as an interim measure? That would suit the hon. Gentleman’s party and it would remove the outrage of 104 Lib Dem peers in the House of Lords.

[Pete Wishart]

The hon. Gentleman makes a reasonable suggestion, but I am not going to suggest how we conclusively deal with the issue. All I am saying to the House today is that we must deal with it. We cannot continue to increase the numbers in the House of Lords while decreasing the numbers in this place. I would respect any suggestion that came forward, as long as it deals seriously with that.

While describing the other place and all its undemocratic horrors, we still have the audacity to lecture the developing world about the quality of its democracies. We have the gall to tick developing countries off about corruption, patronage and cronyism when we have a Chamber down the corridor that is appointed by a Prime Minister. How dare we suggest that to the developing world when we have such an absurd, chaotic system?

Because the House of Lords is a stranger to democracy, because it is in the hands of a small elite and because it is an appointed, created Parliament, there will always be a temptation to delve into the outer edges of corruptibility. The only qualifying characteristic and feature that some of the appointees seem to have is the ability to give large amounts of money to one of the main UK parties. This was tested to the limit by my hon. Friend the Member for Na h-Eileanan an Iar (Mr MacNeil) when he raised the question of cash for honours, one of the biggest political scandals of the past decades, where we saw a sitting Prime Minister being questioned by the police and some of his key members of staff and fundraisers actually elected. That is what we have done. We have created a Chamber that is immensely corruptible, and we should take that on board.

--- Later in debate ---

[Michael Ellis]

We have a process whereby we accept that the size of the House of Lords needs to be looked at, but there are priorities, and that is not a priority in this Parliament. Attempts were made in the last Parliament. This Parliament has pressing business. Although the size of the House of Lords is recognised as large, reform needs to be dealt with in due course, and preferably by consensus.

[Sir Henry Bellingham (North West Norfolk) (Con)]

Before my hon. Friend moves on, will he give way on that point?

[Michael Ellis]

I need to make some progress, if I may. Time is moving on, as Mr Speaker said.

The coalition Government also introduced some small-scale reform under the Lords Spiritual (Women) Act 2015— the hon. Member for Cardiff South and Penarth (Stephen Doughty) referred to bishops—which fast-tracks female bishops into the House of Lords by prioritising them in filling vacancies for the next 10 years. The reality is that there have been reforms. The first female bishop was introduced about a year ago in October 2015.

I should point out that the House of Lords has cut its operating costs by 14% in real terms since 2010. Its membership has changed, too. More than 150 peers have left the Lords since 2010, with more than 50 retiring since that facility was introduced two years ago. Indeed, there are 400 fewer Members of the House of Lords now than in 1998. The House of Lords is not as large as it was but is substantially smaller than in 1998.

It is right that the House of Lords continues to look at how it can work more effectively. Where further possible steps can command consensus, Her Majesty’s Government would welcome working with peers to take reasonable measures forward in this Parliament. If that is possible in consensus with peers, we would welcome doing so.

At the same time, it is vital that we continue to reform parliamentary boundaries. The Conservative manifesto commitment was to

“address the unfairness of the current Parliamentary boundaries, reduce the number of MPs to 600 to cut the cost of politics and make votes of more equal value.”

It is crucial that votes are of more equal value. Without the implementation of the boundary reforms, MPs will continue to represent constituencies that were drawn up on data that will be up to 20 years old at the 2020 general election, disregarding significant changes in the population. The principle of equal-sized constituencies, endorsed by the Committee on Standards in Public Life, is one that I would have thought Members on both sides of the House accepted. It is crucial to have votes of equal value across the United Kingdom.

Oral Answers to Questions

Lord Bellingham Excerpts

Tuesday 19th July 2016 Commons Chamber

[Jane Ellison]

I understand that there may be some logistical barriers to acquiring the papers—[Interruption] —with the journalists, in fact. I will write to the hon. Lady with more detail, but I do not believe there is any fault on the part of Her Majesty’s Treasury.

[Sir Henry Bellingham (North West Norfolk) (Con)]

15. Does the Minister agree that one strand of activity in the campaign is to continue to reduce corporation tax? Does she agree that we should have an aspiration to have the lowest corporation tax of any country in Europe?

[Jane Ellison]

Obviously, the effective rate is what really matters. We have set out a sensible and good ambition for 2020, but internationally what matters is what people pay. I return to the point that the UK has led the world. More and more countries have signed up to looking at how we ensure that multinational corporations pay what they should.

Oral Answers to Questions

Lord Bellingham Excerpts

Tuesday 7th June 2016 Commons Chamber

[Harriett Baldwin]

My right hon. Friend the Chancellor mentioned earlier the important work that UKTI is doing in not only promoting the Exporting is GREAT brand around the world, but, now—across the whole Government—encouraging all our embassies around the world to focus their resources on increasing the potential opportunities for our world-class exporters.

[Sir Henry Bellingham (North West Norfolk) (Con)]

22. Is the Minister aware that more than 25% of small businesses in France and Germany export, whereas the figure in the United Kingdom is about 20%? Does she agree that not just UKTI, but chambers of trade and business organisations such as the Federation of Small Businesses, can play a role in encouraging more small firms, in particular, to export?

Budget Resolutions and Economic Situation

Lord Bellingham Excerpts

Monday 21st March 2016 Commons Chamber

[Sir Henry Bellingham (North West Norfolk) (Con)]

It is a pleasure to be called early in the debate and to follow the two Front-Bench speeches—particularly the quite superb opening speech by the Secretary of State. I pay tribute to him and his team of Ministers, who serve us really well.

This was a Budget for small businesses and enterprise as much as anything else. I welcome the doubling of small business rate relief and the increase in the maximum threshold for relief from £12,000 to £15,000. I really welcome the reduction in corporation tax, the capital gains tax changes, and particularly the 10% rate on long-term investments in unlisted companies, which will do a great deal for start-ups and business angels. I also welcome the stamp duty changes on commercial properties and the abolition of national insurance for the self-employed.

The other day, I worked out that this is the 40th Budget, including emergency Budgets, that I have been privileged to listen to, but this is without doubt one of the best Budgets, if not the best Budget, for small businesses, enterprise and wealth creation in our communities.

The Opposition have accused the Chancellor of favouring the rich, but let us hang on a moment. In the last financial year, the richest 1% paid 28% of all income tax. That is really quite staggering, and it completely undermines the Opposition’s argument.

[Toby Perkins]

Like other Conservative Members, the hon. Gentleman seems to be celebrating the fact that, under a Government that have seen the rich get much, much richer and the poor get much, much poorer, the rich are actually starting to pay more tax. Would it not be better not only if the top 20% paid more tax, but if the bottom 20% actually got wealthier rather than poorer?

[Sir Henry Bellingham]

I am grateful to the hon. Gentleman for that intervention; he and I get on very well together, and I respect his views. However, I would refer him to the comments by Paul Johnson, the head of the Institute for Fiscal Studies, who pointed out that, over the past few Budgets, higher earners have

“seen huge reductions in pensions tax relief”,

as well as a host of other measures, such as a “clampdown on buy-to-let”, and that they have been “squeezed in other ways”. He points out that this Budget’s impact on income distribution has been “incredibly modest”. That underscores the point that this is a fair Budget and, indeed, one for all our constituents and communities.

In the few minutes I have left, I want to touch on the devolution proposals. I support devolution. The flexibility that comes with making Government money available at the local level and responsive to local aspirations makes sense. I will certainly look carefully at the Secretary of State’s proposals for the combined authority in East Anglia. However, I would ask the Minister who winds up to confirm whether the £30 million a year is new money and whether the £170 million for housing will be spread over 30 years or treated on an annual basis. Could we have a look at that?

I certainly support the idea of devolution, but I am sceptical about the idea of elected mayors, for the following reasons. Back in 2000 and 2001, I was one of those politicians who were vehemently opposed to the now Lord Prescott’s proposals for regional assemblies, on the grounds of extreme cost and empire building. I also took the view that they would probably lead to the demise of the shire counties. I therefore regard the plan to bring in elected mayors with extreme suspicion. We are going to have to look at the cost very carefully. I remember when we discussed the plans for police and crime commissioners four years ago, and the view was that they would cost very little. It was said that the chairman of the authority—who is now called the police and crime commissioner—would sit in the police headquarters at no extra cost, but our PCC now costs £1.37 million and has a large number of staff in a separate building. He has built a mini-empire. The cost of the 41 PCCs across the country comes to £52 million.

[Barbara Keeley]

Does the hon. Gentleman agree with the Chancellor, who, as part of devolution, has forced an elected mayor on Greater Manchester? Does he think we should have devolution without forcing elected mayors on areas that do not want them and never voted for them?

[Sir Henry Bellingham]

This discussion is going to have to continue, because the most important thing is to have the support of the local authority.

I am worried about empire building. The new mayor is not going to operate out of a garden shed, although if one of us is elected in East Anglia perhaps we will do so. He or she is going to want to build a large empire and have a large number of staff, including directors of this and that division and department. Before too long, there will be a lot of pressure to have an elected assembly, and the heads of highways, infrastructure and housing will then become elected. Before we know where we are, we could well have an elected assembly.

I am glad that the Secretary of State has shown the courtesy to stay for my speech, because he has obviously been here a long time. People in Birmingham, Manchester, Newcastle and London feel an affinity with and an attachment to their city, so they are more likely to support the idea of having a mayor. I feel absolutely no affinity whatsoever with East Anglia, but I do feel an affinity with Norfolk. Does East Anglia include the three counties of Norfolk, Suffolk and Cambridgeshire that will be in the combined authority? Does it include Essex as well? No, it does not. What about Bedfordshire and Lincolnshire, just north of my county boundary?

I think that a mayoral election would face the problem of a pitiful turnout of perhaps 12% or 15%, so there would be no mandate. I am also worried that the institutions of Norfolk county could be undermined: this could be the death knell of Norfolk County Council, Suffolk County Council and Cambridgeshire County Council.

I also think this could lead to conflict with MPs. If I open a factory or campaign on a big issue and the elected mayor comes along and says, “Hang on, I also have a mandate of all of 12%,” and starts ordering us around, that is not good for the constitutional relationship between MPs and their voters. I am bruised by my experience of campaigning against the incinerator proposed by Norfolk County Council, when the local enterprise partnership suddenly waded in behind the county council.

I ask my right hon. Friend: can we have devolution, but can we also look very carefully at the idea of an elected mayor? Let us have devolution first, perhaps with a Minister for East Anglia. Perhaps that could be his colleague, the Minister for Housing and Planning, my hon. Friend the Member for Great Yarmouth (Brandon Lewis). Let us then move very cautiously before we turn to the election of a mayor. If I do not have an assurance from my right hon. Friend, it will wreck what is an absolutely outstanding Budget.

Oral Answers to Questions

Lord Bellingham Excerpts

Tuesday 27th January 2015 Commons Chamber

[Mr George Osborne]

This Government do not target a particular exchange rate. Successive previous Governments found to their cost that doing so was difficult and damaging. What we do is ensure that Britain is competitive. I think the best thing to do to support exports is to make sure that our British businesses are taxed in a competitive way; they have great skilled work forces working for them—[Interruption.] They are chuntering away on the Opposition Front Bench. I seem to remember that when the Labour leader was asked recently when Britain would join the euro, he said it depended on how long he was the Labour leader. It is still official policy to join the euro and tie the currency up to the eurozone—with all the ensuing chaos that would follow.

[Mr Henry Bellingham (North West Norfolk) (Con)]

Is the Chancellor aware that since 2010 unemployment in my constituency is down by a staggering 1,000? What assessment has he made of the role of small business start-ups in reducing unemployment?

[Mr Osborne]

Small business start-ups have been central to job creation. We have helped them with the employment allowance and the enterprise investment scheme, and we have given the new enterprise allowance to young unemployed people to help them to start businesses—and that has been a great success. We have in place many initiatives to back our brilliant small businesses in Norfolk and across the country.

Oral Answers to Questions

Lord Bellingham Excerpts

Tuesday 9th December 2014 Commons Chamber

[Danny Alexander]

I agree with the hon. Lady that we need to do more to reduce the level of unemployment among our young people, but I point out to her, and it would have been fair for her to point it out, that we have seen a very sharp fall in the level of youth unemployment and a very sharp increase in the level of employment of young people in the past 12 months. That suggests to me that the policy mix the coalition has put in place is precisely the right one to achieve those objectives.

[Mr Henry Bellingham (North West Norfolk) (Con)]

8. When he next plans to meet representatives of high street retailers to discuss levels of tax; and if he will make a statement.

[The Chief Secretary to the Treasury (Danny Alexander)]

I met small business representatives in Inverness on Saturday as part of small business Saturday. In response to concerns expressed by small businesses, the Government have taken decisive action that has reduced employment and property taxes paid by high street retailers. As of April this year, businesses can claim a deduction of up to £2,000 in their national insurance contributions, and next year 300,000 shops, pubs and cafes will receive a business rates discount of up to £1,500.

[Mr Bellingham]

The Minister is probably not aware—there is no reason why he should be—that I have recently been visiting shops in the high streets of both King’s Lynn and Hunstanton. Is he aware that they are delighted—absolutely thrilled—with the business rate discount that is now being raised to £1,500? Can he give me an estimate of how many shops in my constituency will benefit from that?

[Danny Alexander]

I was not aware of my hon. Friend’s shopping habits, but I am very glad to hear that he has been spending time with small businesses in his constituency.I can tell him that in the King’s Lynn and west Norfolk area there are 1,280 small businesses that will benefit from the £1,500 discount. That is something worth celebrating in his constituency, as it is across the country.

Financial Conduct Authority Redress Scheme

Lord Bellingham Excerpts

Thursday 4th December 2014 Commons Chamber

[Mr Mark Williams (Ceredigion) (LD)]

I would say it is a pleasure to speak in this debate, Madam Deputy Speaker, but I wonder whether it really is. We have had three of these debates so far and, sadly, they have been enriched by the experiences right across the country of our long-suffering constituents. My contribution will be no different in bringing some of those experiences to the attention of the House, but I particularly wish to address the issue of fixed-rate loans—tailored business loans, as they are known in some quarters—how dangerous and toxic those products are, and how they remain excluded from the FCA review, an anomaly that should be addressed.

First, however, it would be remiss of me not to congratulate, again, my hon. Friend the Member for Aberconwy (Guto Bebb), the all-party group he founded and Bully-Banks. I shudder to think where we would be without him and those who were galvanised into founding Bully-Banks to push the agenda forward. It would be churlish if I did not at the start of my contribution acknowledge, as my hon. Friend did, the record of the redress scheme in so far as it is a redress scheme, but today’s motion clearly spells out our sense of disappointment. More than that, it highlights our feelings about the inertia, helplessness and heartbreak expressed by many of the small business owners who have been mis-sold these products in the cases we are all dealing with.

I have spoken in this Chamber before about one business in my Ceredigion constituency, and I will do so again. I can see at least two or three former Aberystwyth students here who will know the business in question. The asset-rich farms, hotels and pubs in my constituency, which is dependent on agriculture and tourism, were very clearly targeted by the banks. There was a time when the trickle of cases that came into my surgeries reached torrent proportions. There were many, many cases of people coming to see me. Clearly, the policies had a direct impact on the employment base of my constituency, reliant as it is on seasonal trade. If there is the prospect of three or four large hotels closing down in a constituency, it is a very serious matter.

I have mentioned the case of Mr Mansel Beechey, the licensee of the Hen Llew Du Public House in Bridge street, Aberystwyth, and I want to continue to use his example. The fact that it is an unresolved case speaks volumes. He made a complaint to the bank about the mis-sale of his tailored business loan, an unregulated product, back in April 2012. It took Clydesdale and Yorkshire Bank well over six months to respond to that formal written complaint and, despite the efforts of my office facilitating meetings with some of its most senior personnel, the matter remains unresolved. Dither, delay and prevarication are the watchwords of its game. Its most recent excuse was that matters could not be progressed because of staff leave. That was at the beginning of September. Let us not forget that I am talking about an iconic and once successful business—one that had a future—being put in jeopardy. The fear is that the bank seeks to put this matter into the long grass.

I refer now to the commendable work of the Treasury Committee, which conducted a brief inquiry into this matter. We heard evidence from Mr David Thorburn and Debbie Crosbie of the Clydesdale and Yorkshire Bank. The hon. Member for Dundee East (Stewart Hosie) raised the matter of the TBL sales process and asked Ms Crosbie:

“If a customer is able to identify that that process did not happen, that that warning was not explicit, that would count as a mis-sell would it, in terms of your review?”

Ms Crosbie replied in the affirmative. She said:

“We believe that once you examine that process, and find that it had not been carried out in accordance with what we had agreed is appropriate, we would absolutely redress a customer and we have done so on a number of occasions.”

Ms Crosbie also stated that

“the customer gets a fixed payment for a fixed period of time and that payment will never change as long as the customer does not want to terminate the agreement early.”

That is the mis-match between what we are told by managers, the experience of the Select Committee and the practice on the ground for Mr Beechey and his family.

Given the recent press coverage concerning the National Australia Bank, the parent bank, issuing a profit warning to Clydesdale and Yorkshire Bank and linking the bank to an imminent disposal, it is not surprising to learn that this bank drags its feet in addressing mis-selling issues with potentially dire consequences for some of our constituents. It serves its purpose to do so, often allowing the customers—my businesses in Ceredigion—to teeter on the brink in the hope that Her Majesty’s Revenue and Customs will then move in and finish them off.

I very much concur with what my hon. Friend the Member for Aberconwy said about the changing attitude to HMRC as the debate on consequentials has moved on. Sadly, the reality here is that virtually all of Clydesdale and Yorkshire’s lending was done via tailored business loans on fixed rates and, as those products fall outside the scope of the FCA review, the bank has thus far avoided any effective redress scenario.

My hon. Friend the Member for Nuneaton (Mr Jones) and others have talked about our despondency—and the despondency of our constituents—over the role of the FCA. When the Financial Services Authority morphed into the FCA, we were assured that the new organisation would enforce rules and punish breaches and that it would focus on the behaviour of financial professionals. In short, we were promised that it would be a true watchdog. We have looked to the FCA to sort out this mess and to do so in a way that is both fair and timely, but that has not happened. As we have heard from other Members, the FCA has still not released comprehensive details of what constitutes a mis-sale. The agreement between the FCA and the major banks on which the review process is founded remains a secret agreement. Where is the transparency and fairness for these businesses that are so badly affected? Where is this protection for customers that is supposed to be at the heart of the FCA’s work?

[Mr Henry Bellingham (North West Norfolk) (Con)]

I have a business in my constituency that took out a fixed-rate tailored business loan, which had a hidden swap attached to it. The bank is trying to say that it is not regulated. Surely the key point is one of fairness and of putting all these people back in the position in which they would have been before.

[Mr Williams]

My hon. Friend is right. It is about fairness and the implications of these policies. Whether the policies were sold independently or hidden in a loan agreement, the implication has been the same. They were sold by the same people and so should be included in any future review.

The redress scheme has excluded a large number of people. Even before we drill down and thoroughly examine the scheme, it is hugely significant that a large number of businesses fall outside it. The scope of the scheme is too narrow and restrictive. It does not deal with the reality of what has gone on, which means that, as it stands, it will not change or reform bank behaviour or properly compensate people.

The scheme sets out that

the IRHP Review does not require customers to assess for themselves whether or not their sale was compliant.”

If, as the FCA insists, there is no requirement for disclosure, how can it ever be possible to tell whether the banks, in reaching a judgment, are relying on erroneous information, or, as I have frequently come across, deliberately not taking information into account?

If the review process is to be transparent and fair, why is the customer not given a chance to view the evidence that the bank puts forward in the review and, if they feel it to be necessary, to have the opportunity to comment on it? How does the FCA fail to see that there will always be suspicion and mistrust when the process is shrouded in secrecy, and customers are deprived of the opportunity to view the evidence submitted by the bank to the bank’s own review team?

We need to address the controversial matter of the offer of alternative products. As part of the redress, reviewers seem to be hellbent on suggesting that if my constituents had not taken out a particular type of hedging product, they would almost certainly have taken out something similar. Is it now really the case that providing customers with an alternative product as part of redress is actually a widely accepted or well-established principle?

Despite the brief and the impressive statistics, the FCA is still failing to address the issue of confidence; there remains a crisis of confidence in the banking industry. Many people, such as Mansel Beechey and my constituent in a related matter, David Grant of Llechryd, have deep misgivings about the industry, and this is not just a matter of justice; in communities such as mine, the small businesses that the Chancellor, the Deputy Prime Minister and the Prime Minister have said are so important to our economic recovery need action and assistance. If we do not act, we will fail many of our constituents, and it will be to the detriment of us all in terms of both justice and the economy.

--- Later in debate ---

[Mark Garnier]

The hon. Lady is absolutely right, and I shall return to that as I progress through my speech.

My first point is that there is little consistency between the banks in how they tackle the problems they have created. One of the FCA’s frequently asked questions is:

“Are the offers consistent between banks?”

Interestingly, its response reads:

“The independent reviewers report regularly to the FCA, both on the judgements they are making and how the banks are performing, and will regularly bring all the independent reviewers together to ensure consistency of approach. The FCA also collects data on the offers being made by each bank and we carefully consider any variances to ensure that the standards are being applied consistently.”

That in itself demonstrates that there is a huge amount of useful information that we are not getting a chance to see. It goes on:

“We also regularly select individual case studies to follow up with banks”.

The FCA is trying to be consistent, but cannot say that it is being consistent. We have heard on many occasions this afternoon about its not being consistent.

My example concerns not one of my constituents but someone else who came to see me and involves how the banks treat businesses that have gone into insolvency. Clearly, any insolvent business will have an insolvency practitioner winding up that business. It is a tragic time, but somebody has to come in and do it. In the event of an insolvency, the banks are involved both as a creditor, as they have lent money to the business in the first place, and as a debtor, as they owe redress and in many cases consequential losses to the business. Some banks behave quite well. HSBC is a reasonably good example and recognises that the insolvency practitioner is duty bound fairly to distribute the assets of an insolvent business to a wide range of creditors. To that end, HSBC will pay what is owed under the redress and consequential loss scheme into the insolvency practitioner’s funds and then put in a bid for what it is owed from the original bank loan. The insolvency practitioner therefore makes a correct and fair assessment of who is owed what, and in some cases HSBC will get back not just less than it lent but less than it would have got back had it done what RBS does.

RBS is a frequent flyer in this debate, so I shall have a go at it, too. I am told that RBS will offset what it owes by way of redress and consequential loss against what it is owed by way of repayment of the loan. Therefore, although it is still owed money by the bankrupt business, it is owed less than it otherwise would have been, and when RBS seeks to limit its losses at the expense of other creditors’ owed money, those creditors will lose money as a result of RBS’s mis-selling. That is just plain wrong.

It is also wrong that some loans have been left outside the redress scheme. Those who took on tailored business loans, otherwise known as hidden or embedded swaps, have had exactly the same financial problem but for a technical reason are outside the regulated arena. Under article 85 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, due to some pretty technical reasoning, if a loan looks like a duck, swims like a duck and quacks, it is in fact a donkey. Some pretty smart lawyers have looked at that and the inescapable fact is that the legislation was written in a way that allowed many businesses to be mis-sold swaps in an area that is unregulated.

The FCA’s frequently asked questions talk about these so-called commercial loans, stating:

“Commercial loans generally fall outside the regulatory remit of the FCA and we therefore cannot direct the banks to set up a review of these products”.

That might possibly be so, but is not the act of an FCA member’s selling any product to an unsophisticated customer a regulated activity that therefore falls under the FCA’s remit?

[Mr Bellingham]

I agree entirely with my hon. Friend. Many of these businesses are not large concerns—some are SMEs and some are micro-businesses—and one could not describe some of the proprietors as highly sophisticated business people. As far as they were concerned, they were mis-sold these fixed-rate tailored business loans with the hidden swaps attached to them. Some have been dealt with very quickly by the banks, but others have not and the banks have just ignored them completely.

[Mark Garnier]

My hon. Friend makes an incredibly important point. The point of the regulator, the FCA, is to protect unsophisticated consumers, but it has manifestly let down the consumers who subscribed.

The paragraph in the FCA briefing note continues:

“The FCA has received legal advice supporting this view”—

about article 85. It goes on to say that the Treasury Committee has carried out scrutiny of that advice. I am a member of the Treasury Committee and I think it is worth putting on the record just what that constitutes.

The Treasury Committee asked the regulator on many occasions for sight of the legal advice on these embedded swaps and on many occasions it said no. We asked whether we could send our legal advisers around to have a look at the advice on our behalf, but it continued to say no. We had a public evidence session with the chief executive officer and chairman recently and questioned them about the issue again. The answer they gave was that they were not prepared to let us see the advice as it was confidential. We pressed them on whether we could send our legal team to have a look at it and they answered that they needed space from Parliament to conduct their activities.

The regulator is answerable to Parliament. Although I am sympathetic to the submission that the regulator cannot have every confidential document shown to all hon. Members, who may well then tell the press, the CEO and chairman simply cannot say that they need to be excused one of their most fundamental duties—that of answering to us here in this place. In the end, we pressured them to relent and our legal adviser looked at the advice they had been given, and in fact they were right. But this is a sorry story of the regulator not understanding its duties and its constitutional place as answerable to Parliament.

In any sort of resolution scheme, it is inevitable that some people will feel well treated and others hard done by. One of my constituents was entitled to redress but felt that he did not need it, because he had bought exactly the product that he wanted and expected and he thinks it unfair on other people that he should seek redress when he took what he thinks was a fair deal. But he is unusual. I have constituents who have been completely and totally rolled over by the banks. Consequential loss offers are derisory for businesses that have taken a lifetime to establish and just a few telephone calls by mis-incentivised relationship managers to destroy. There are no consequential loss payments for reputations destroyed, or for goodwill wasted and track records smashed.

I was a member of the Parliamentary Commission on Banking Standards. We looked hard at how the regulator could drive better standards in the banking industry. There should be incentives for better behaviour, and banks are working on making their staff perform to higher ethical standards, but for every carrot there must be some sort of stick. If it is possible for banks to be fined for fixing LIBOR and forex benchmarks and for mis-selling insurance products, why have those banks who have destroyed so many businesses been allowed to choose their own form of redress with no further financial penalty?

I am baffled why the regulator has set up a redress scheme that is voluntary, has just one opportunity for appeal and is not being reviewed or assessed. Surely, it is right that people who are unsatisfied can have an independent appeal assessed by the Financial Ombudsman Service. A special unit could easily be set up at the FOS, funded by the banks, to give one last chance of appeal to those small businesses that fall outside the FOS’s remit but inside the redress scheme. I am also baffled why the regulator will not publish the terms of reference and the agreements between the regulator and the banks on how the scheme is managed and run and what is expected of it all. That lack of transparency can only lead to mistrust in the system and the regulator. I am also concerned that the regulator is so reluctant to share with agents of the Treasury Committee legal advice on whether embedded swaps are regulated.

With so many people left destitute and impoverished by what has happened, it is wrong that no one has been brought to account over this. Until such time as fines are levied and front-line staff guilty of mis-selling brought to book, confidence in the banking sector and the regulator will struggle to improve and standards may languish at an unacceptable level.

The last sentence of the motion before us calls respectfully for the Government to consider a review of this whole process and the conduct of the regulator. I urge my hon. Friend the Economic Secretary to the Treasury to look carefully at whether to hold an independent review of this whole regrettable scheme.

--- Later in debate ---

[Andrea Leadsom]

I will certainly write to the FCA about all the cases raised in the Chamber today—and I will expect a reply.

[Mr Bellingham]

The key point is that some of the commercial loans—fixed-rate tailored business loans with hidden swaps—are not taken seriously by some banks. Indeed, some people in the FCA are saying that those loans are not regulated, so it would be very helpful if she looked at that point with the FCA.

[Andrea Leadsom]

Tailored business swaps were provided by largely Yorkshire and Clydesdale bank, which has voluntarily agreed to look at redress in a similar way to that in which the interest rate swap redress scheme works.

I want to move on because there is another debate to follow. Let me address some of the questions raised by my hon. Friend the Member for Aberconwy. He asked why some banks are not splitting the original loss and the consequential losses, and he pointed out that the amount of redress paid is inconsistent between banks. He mentioned the fact that a particular whistleblower says that banks have pressurised independent reviewers to serve the banks’ interests rather than those of the SME, and argued that the FCA is not showing the bank-by-bank redress numbers. He asked whether we should set up an appeals process for reviewers to look at each other’s banks’ reviews, and spoke about the lack of payment of consequential losses beyond the 8% that is normally provided. He addressed the issue of HMRC’s tax treatment of redress and of whether embedded swaps should be included. I want to run through those issues very quickly.

I can assure my hon. Friend and all Members that the FCA has been determined throughout the process to get to the bottom of this. Occasionally, Members might think that the FCA is not interested or not keen to resolve the matter, but that could not be further from the case. In particular, the FCA carefully considers any variance in redress offers to make sure that standards are applied consistently. It selects individual cases for review based on feedback from customers, campaign groups and MPs to ensure these have been dealt with fairly. Independent reviewers report regularly to the FCA, both on the judgments they are making and on how the banks are performing, and independent reviewers regularly meet each other to ensure a consistent approach to assessing claims.

My hon. Friend referred to the agreement between the FCA and the participating banks. As I understand it, this agreement sets out the principles of how the review should have been undertaken. I understand, too, that the FCA is prohibited from releasing these agreements by confidentiality restrictions. I can assure Members, however, that I will write to the FCA and ask for clarification, bearing in mind Members’ desire to have that made public if possible.

Oral Answers to Questions

Lord Bellingham Excerpts

Tuesday 2nd September 2014 Commons Chamber

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

I am grateful for that question, and we all sympathise with some of the difficulties that people have faced. It is fair to say that this Government are closing the loopholes in that area, dealing with intermediaries, and reforming the construction industry scheme to ensure that people who are employed have the full employment rights that they deserve.

[Mr Henry Bellingham (North West Norfolk) (Con)]

T7. Is the Chancellor aware that unemployment in my constituency has fallen by nearly 700 since July last year, thus giving new hope to many families? Will he tell the House how the UK’s job creation record compares with other G20 countries?

[Mr Osborne]

The answer is that it compares very well. There has been a much faster rate of job creation in the United Kingdom than in the rest of Europe, for example, which I suggest is because we have instilled confidence in our ability to pay our way in the world through our difficult but necessary deficit reduction plan. We have helped businesses to employ extra people through the employment allowance and other tax changes, and we have created a more entrepreneurial economy, so that people who were out of work when this Government came to office got a chance of being in work, with all the security and opportunity that brings.