Banking

Debate between Mark Garnier and Harriett Baldwin

Wednesday 15th January 2014 Commons Chamber

[Harriett Baldwin (West Worcestershire) (Con)]

It is a pleasure to follow the hon. Member for Linlithgow and East Falkirk (Michael Connarty). I, too, encourage many of my small businesses to look around and to act as customers. They do not have to stay with the bank they have been with since they were students.

I could not believe the bare-faced cheek of the Opposition motion on the Order Paper when I read it this morning. I am sure you felt the same, too, Madam Deputy Speaker, because you will recall—in your very impartial way—the state of the banking sector when this Government came to power. It is worth recalling the mess that we had to deal with when we took over. We had had the first run on a bank in this country for well over 100 years; we had had the biggest banking failure in the world; and we had had a decision, taken under conditions of panic by the former Chancellor and Prime Minister, effectively to nationalise large parts of the banking system. The Opposition motion should acknowledge that that was a deliberate decision. The natural course of events under capitalism would have been for those banks to fail, for all their employees to lose their jobs and for the branches in all our constituencies to close, followed by a restructuring process taking place outside state ownership. Instead, we have effectively perverted the course of capitalism, and that was a deliberate choice.

[Mark Garnier (Wyre Forest) (Con)]

Will my hon. Friend remind the House who the architect of the Financial Services and Markets Act 2000 was? That Act set up the Financial Services Authority, the regulator that manifestly failed to regulate the banks properly, which allowed the collapse to happen. Will she also remind us who the City Minister was at the time of the banking collapse?

[Harriett Baldwin]

I think I am right in saying that the then City Minister is now the shadow Chancellor. My hon. Friend rightly reminds us that the regulatory architecture that allowed this disaster to occur was also set up by the previous Government. Having been regulated by that regulator for many years, I know how important it is that the regulation of banks has been returned to the Bank of England. That is important because the Bank of England sees the canary in the coal mine when banks have problems with day-to-day liquidity. The Bank of England was able to see such problems in the run-up to the crash, whereas the Financial Services Authority, in its lofty headquarters in Canary Wharf, was at one remove from that, and there was no ability to join up the reaction. My hon. Friend makes an incredibly important point.

At the start of this Parliament, our Government inherited, in effect, a state-owned oligopoly in the banking system, and that is not a good place to be if we want to achieve a competitive and healthy banking system. The Government have embarked on a long-term economic plan to reform the banking system and make it more responsive to the needs of businesses and consumers up and down the land. That cannot be done overnight—it takes time. Step No. 1 was to reform the system of financial regulation. That was an extremely thorough and elaborate process, involving many people from within this House and the other place, and as of last year we had the final enactment and implementation. So we have taken some difficult and long-term decisions to reform the regulatory architecture in a way that will make it impossible for this sort of crisis to occur in the future.

Secondly, we have established a long-term economic plan for people and for businesses in this country. We have reformed the way in which the economy is working: we have lowered the cost of mortgages for home owners; we have lowered the cost of government for council tax payers; and we have lowered the cost of fuel over and above what the Opposition planned, so that people who drive to work do not have to pay that extra £11 in tax that had been planned for them.

Thirdly, I come to the final piece of this journey in passing on to future generations a banking sector that is, once again, fit for purpose: addressing this problem of the state-owned oligopoly. We cannot restructure the failed banks effectively within the Government’s ownership, and the best way to say that we have closed this terrible chapter that we inherited in the banking system will be by privatising the banks that are publicly owned and returning them to the private sector. We have started on that with the sale of the first tranche of Lloyds shares. I sincerely hope that the Minister will be able to reassure us that it is the Government’s plan to return Lloyds shares to the private sector.

I also argue that it is in the best interests of the economy and the country that we move now to return RBS, whose share price is still well below that paid by the former Prime Minister for its shares, to the private sector, even if that means recognising and crystallising a loss which is the price we pay for Labour’s banking failure. At the moment we are in the worst of all possible worlds: we have a system where we need to allow new entrants to come into the space, but a large semi-state-owned dinosaur is taking up a lot of market share. It would be better for that to be restructured effectively within the private sector.

My argument today is that the Government need to get out of the banking business as quickly as possible. It is not the role of government to be setting the compensation of every banker in this country. The Government must set the framework and the regulation, but this level of micromanagement is a function—a symptom—of the terrible inheritance that we received. By getting out, we must recognise that we will reform the banking sector for our children and our grandchildren. It will mean that those banks will then restructure within the private sector, and the socialists will never be able to get their hands back on running a large sector of our economy.

School Funding (Worcestershire)

Debate between Mark Garnier and Harriett Baldwin

Tuesday 23rd October 2012 Westminster Hall

[Harriett Baldwin (West Worcestershire) (Con)]

It is a pleasure to speak under your chairmanship, Mr Weir. I should start by placing on record my interest in this matter as a governor and associate governor of Hallow primary school in my constituency for many years.

Worcestershire is one of the lowest-funded counties in the country for education. It is 147th out of 151 for per pupil funding and a long-standing member of the f40 group. According to the National Governors Association, the guaranteed unit of funding for pupils in Birmingham is £5,689, yet in neighbouring Worcestershire it is only £4,601—a difference of 20%. That has been going on for years. Mrs Susan Warner, head teacher of Lindridge primary school, said to me in one of the many letters that I have received on the subject:

“There is very little reasoning behind this unfair distribution and it appears to be purely historic, with no-one really understanding how the allocations were made in the first place.”

Last year, my right hon. Friend the Secretary of State signalled his intention to deal with the national unfairness of the school funding formula with “Consultation on School Funding Reform: Proposals on a Fairer Funding System”. That was welcome, but in an environment in which the overall school budget is only rising with inflation, it apparently will not be implemented this side of 2015.

In the meantime, the Department has decided to simplify the allocation formula for the direct schools grant, replacing the outdated and unfair national formula with a clearer one by reducing the number of allowable factors from 40 to a maximum of 12. The principle of a single flat amount per pupil in each stage of education from primary to sixth form makes sense. It is intuitive and, given that 80% to 85% of the cost of each school place relates to the salaries of teachers whose rates are set nationally, it makes sense to have a per pupil amount of funding that is broadly the same nationally.

[Mark Garnier (Wyre Forest) (Con)]

I congratulate my hon. Friend on securing this important and useful debate for the county of Worcestershire. She talks about the ratio of staff costs being 80% to 85%, but in Wyre Forest we see that rising as high as 95% as more experienced staff go up the internal pay scale. That puts even more pressure on schools locally to try to perform with these very limited budgets.

[Harriett Baldwin]

I thank my honourable constituency neighbour for that observation. Staff costs certainly form by far the largest part of a school budget. It makes sense to have money follow the pupil, as that gives a clear signal to schools that they will do better if they can attract more pupils. The pupil premium, which has been welcomed at £600 per pupil on free school meals, will be even more welcome in Worcestershire when it is increased from 2013 by 50% and set at £900 per pupil. As the pupil premium now links to the pupil level the concept of income deprivation, it stands to reason that the main pupil funding allocation should be set more equally at national level as well. If the pupil premium is a national amount, why should not the main per pupil amount be more equal, too?

Kidderminster Enterprise Zone

Debate between Mark Garnier and Harriett Baldwin

Wednesday 15th June 2011 Commons Chamber

[Mark Garnier]

My hon. Friend makes a good point; this is about the whole of Worcestershire and it is incredibly important that we work together for this important opportunity.

[Harriett Baldwin (West Worcestershire) (Con)]

I thank my hon. Friend and neighbour for securing this extremely useful debate. Does he agree that developing the Kidderminster enterprise zone would be extremely beneficial, particularly for those in the north of my constituency, because it would be so easy for them to travel to Kidderminster for work?

[Mark Garnier]

My hon. Friend makes a very good point. The whole point about an enterprise zone is that it will not only help people in the immediate vicinity, but attract many people and a lot of economic activity from a fairly wide area—a point I will develop later in my speech. The economy of the south of the county looks to the rural and research-based drivers in her constituency, and the north of the county looks to the black country as its engine for growth. It is for this reason that strengthening the advanced manufacturing base in the north of the county will draw down the manufacturing prosperity of the black country into Worcestershire.

The issues Worcestershire faces are important and the LEP has already got to grips with the major economic priorities and challenges that the county will face in the coming years. Crucially, private sector employment shrunk over the past decade by 1%. This trend was more marked in the north of the county, with Kidderminster seeing an 8% reduction in private sector employment and Redditch seeing a 14% reduction. That said, Redditch has a greater proportion of manufacturing jobs in the region, which is encouraging.

Moreover, work by the West Midlands Regional Observatory shows that Kidderminster and, to a lesser extent, Redditch suffer from problems relating to longer-term restructuring and job losses from the contraction of their industrial base, lower employment rates and higher claimant levels, especially among young people, and a higher proportion of the working-age population having no qualifications at all. To deal with those issues, the LEP sees restructuring the local economy away from public sector jobs, supporting and growing the tourism industry, and building on the industrial assets in the north as the key priorities. It was with this in mind that the Worcestershire LEP identified Kidderminster as the unanimous option for the Worcestershire bid for an enterprise zone.

The town of Kidderminster was once the hub of the world’s carpet industry, with some 20,000 people employed in that key industry as recently as the ’70s and ’80s. Carpets declined as the preferred floor covering, although I am pleased to say that that trend is now in reverse.

Independent Financial Advisers

Debate between Mark Garnier and Harriett Baldwin

Wednesday 20th October 2010 Westminster Hall

[Harriett Baldwin (West Worcestershire) (Con)]

It is a great pleasure to serve under your chairmanship, Mr Caton. I hope the Minister will forgive me for holding this debate on a day when he probably has quite a few other things on. As he knows, however, such debates are a bit of a lottery, and I was not expecting mine to come up today.

According to the Library, this is the first time that the regulation of independent financial advisers has been debated in a Chamber of the House, and we have to ask why. Colleagues on the Treasury Committee discussed the topic yesterday, and I have put my toe in the water by asking for a 30-minute debate today. Given the interest that I have encountered in the issue—I have had a binder full of correspondence since the debate was announced last Wednesday—I anticipate that this is not the last that we will hear of it.

[Mark Garnier (Wyre Forest) (Con)]

The interest that I have encountered is certainly unprecedented, and I too have a very large binder. Will my hon. Friend work with me to secure a Back-Bench business debate in which we might have an opportunity to debate the issue for up to three hours on the Floor of the House?

[Harriett Baldwin]

Yes. I thank my hon. Friend for that suggestion and I would be delighted to support it.

IFAs are regulated by the soon-to-be-abolished Financial Services Authority, the independent statutory regulator set up by the previous Government. Banking supervision is to return to the Bank of England, while many other regulatory functions will go to a new consumer protection body. Thus, this seems an opportune time for the House to debate some of the implications of those policies and some of the functions involved.

Fewer people are benefiting from defined-benefit pension schemes. More individuals are being asked to contact an IFA to obtain advice. Many will receive lump sums from an inheritance or perhaps a redundancy payout, and they will need professional advice to make the most of them. With auto-enrolment beginning in a few years’ time, people will also have to decide whether they need to opt out. Many younger people will leave university with student loans. Many older people will need to buy annuities or to make arrangements to pay for long-term care. All those transactions require some financial advice.