Global Economy

Steve McCabe Excerpts

Thursday 11th August 2011 Commons Chamber

[Mr Osborne]

My hon. Friend is right to draw attention to the Doha round. The significance of this is that it is available for the countries of the world to seize—today, this month or next month—and implement. If one is looking around the world for something that could, in very short order, increase global demand, it is sitting there in the Doha trade round. I hope that we make progress at the G20. I suspect we will certainly be a leading advocate of making progress and we have some good allies, for example in China, but I have to say that there remain considerable obstacles, not least in the Democrat and Republican parties in the United States.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

If it is true that we are being used as a safe haven, why are we not seeing significant growth in the value of sterling?

[Mr Osborne]

As I say, I have a simple policy not to comment, as previous Chancellors have also decided to do, on the value of sterling. I do not propose to break that commitment today.

Summer Adjournment

Steve McCabe Excerpts

Tuesday 19th July 2011 Commons Chamber

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I want to raise an issue on behalf of my constituent, Mrs Noureen Shah. She is one of several people caught in the same nightmare, and my right hon. Friend the Member for Warley (Mr Spellar) and my hon. Friend the Member for Walsall South (Valerie Vaz) have constituents who are also affected.

Mrs Shah was persuaded in 2006 to invest in the Cube, a development in the Westside district of Birmingham. It includes offices, an hotel and 244 apartments. Mrs Shah paid a deposit of about £65,000—her children’s legacy—and like other investors she was told that the properties would be completed in 2008. Gateley solicitors say that that is not the case and, apparently, buried in the large contract is a clause that covers delays. That is just as well, because the building contract was not let until 22 June 2007—two days before the cut-off point—which, not surprisingly, made a 2008 completion date impossible.

Early in 2010, the developers, the Birmingham Development Company, went bust and PricewaterhouseCoopers was called in as the administrator. The company was eventually restructured as Aruna Project LLP. Nearly half the investors cannot raise a mortgage because of the collapse in the value of the properties, but director Neil Edgington of Aruna is not too concerned, telling Property Week in April 2011,

“I’m sure some”—

that is, some investors—

“will need more of a nudge than others. Some people will need a bit of encouragement via the legal route”.

Such intimidation has been the hallmark ever since. Lloyds TSB claims that it is

“working closely with administrators to ensure all outstanding cases are handled fairly”,

but it appears that “fairly” means that the Cube, which started out on the loan book of HBOS, is going to be paid for by bankrupting and evicting from their own homes the small investors who have been foolish enough to believe the sales pitch.

Lloyds and Aruna are now using the solicitors Gateley to threaten those small investors. It is a disgrace, and I would appreciate it if the Secretary of State would agree to have a look at what has happened in this case.

Oral Answers to Questions

Steve McCabe Excerpts

Tuesday 8th February 2011 Commons Chamber

[Mr Gauke]

My hon. Friend is right to say that we have increased the personal allowance, taking 880,000 people out of income tax, resulting in an income tax cut for millions of people. It is none the less the fact that we must tackle the deficit. To the extent that the Labour party wants to do anything about the deficit, it advocates reducing the deficit by increasing taxes by more. Think what that would do.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

17. What assessment he has made of the effectiveness of support and advice on financial planning and financial literacy for young people and vulnerable groups.

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

The Consumer Financial Education Body, which is soon to be renamed the Money Advice Service, has statutory objectives to improve understanding of financial matters among the general public, and to enhance the ability of members of the public, including young people and vulnerable groups, to manage their financial affairs. CFEB is the independent body that is responsible for measuring the effectiveness of its work.

[Steve McCabe]

Given people’s reliance on citizens advice bureaux, is the Minister at all worried about the cuts to them, including the closure of all five in Birmingham? How will that help vulnerable people who are seeking reliable financial advice?

[Mr Hoban]

The Government take the issue of financial advice very seriously. That is why we have supported the establishment of CFEB, which will be funded through a levy raised on the financial services sector, which is very important. It is also important that CFEB takes forward its work and considers how to reach out to some of the most vulnerable people in society.

Bank Bonuses

Steve McCabe Excerpts

Tuesday 11th January 2011 Commons Chamber

[Mr Osborne]

That was one of the things that Labour Cabinet Ministers said at the time—and indeed, quite a few of them have lived up to it since leaving office.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

The Deputy Prime Minister threatened very serious action against bankers who sought to pay themselves unjustifiable bonuses. Should we regard the Chancellor’s answer today as a description of the very serious action that the Deputy Prime Minister was talking about?

[Mr Osborne]

I have made it very clear that nothing is off the table unless we can agree a settlement with the banks that allows an increase in lending, an increase in community contributions and a lower bonus pool.

Finance Bill

Steve McCabe Excerpts

Tuesday 6th July 2010 Commons Chamber

[Ms Eagle]

Mr Deputy Speaker, it looks like someone is applying for your job. Every clause in the Bill hinges on the forecasts made by the Office for Budget Responsibility that appear in the Red Book. In fact, those forecasts run through every part of this Budget debate like the words in a stick of Blackpool rock. So the hon. Gentleman cannot, in all honesty, however late the hour, try to claim that the points I am making have nothing to do with the Bill before us.

Could it be that Sir Alan has decided to sling his hook because he was forced to become a kind of extension of the Conservative party spin machine last week, when he brought forward that highly contentious explanation—coincidentally just an hour ahead of Prime Minister’s Question Time—of the likely effects of the Budget on jobs? We can only speculate about whether that was the case, but I would be interested to hear whether the Exchequer Secretary is able to shed any light on this matter, in the interest of transparency, when he winds up the debate.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I appreciate my hon. Friend’s point that we can only speculate on this matter, but it is none the less a worrying one. Given the ham-fisted effort that we have just seen to silence our debate, does she think that it might be better if the Treasury Select Committee agreed to conduct a short inquiry into the circumstances surrounding Sir Alan’s departure?

[Ms Eagle]

I am sure that the newly elected Chair of the Treasury Select Committee will make up his own mind about that, but it would be interesting to see whether Sir Alan would actually appear before any such inquiry, whether or not he were still in his job.

We have seen a steady unravelling of the central claims contained in the Budget since it was first unveiled to the House just 15 days ago, on 22 June. It was billed as the unavoidable Budget, and this is the legislation that has come from it. The Budget strategy and judgments were presented by the Chancellor and his spin merchants as infallible. The choice that he made was to cut the deficit further and faster, and that was offered as the only possible option. That is why these measures are before us today in the Bill, particularly the VAT increase. The neo-liberal economic ideologues who have seized control of our economic policy are in the grip of their narrow-minded dogma, and they will contemplate no alternative.

In truth, a highly risky political gamble is encompassed in this Bill—and it is a gamble with our social and economic well-being. The Government have made a political choice to eliminate the entire structural deficit by 2014-15—hence the revenue-raising measures in this Bill. This goes further and faster than even the Tory party promised in its election manifesto, and it is certainly against the explicit judgment on the dangers of cutting spending too soon, which was a prominent part of the Labour and Liberal Democrat manifestos. This worry about the macro-economic risks of targeting the deficit above every other consideration by speeding up its elimination is well represented in the mainstream economic debate, even if it has not featured at all in the Government’s calculations.

The Budget judgment before us tonight is not just pre-Keynesian; it is actually Hooverite. It is not an economic, but a political and ideological, imperative being pursued in this Finance Bill. This is not an unavoidable Budget, but a huge and risky gamble with the recovery. According to the Chancellor, the overriding problem for our economy now is how the bond markets might react to insufficient austerity.

The fact that the deficit hawks have taken over in the European Union and in the G20 does not make their addiction to synchronised fiscal pain any more desirable than it was in the 1930s. It does make it fashionable, but it still may not work. The fact that these huge cuts in demand will be synchronised also increases the dangers of this policy from a macro-economic point of view. There is increasing evidence that the markets are now beginning to worry about the prospects for growth and the likelihood of a return to low or no growth, Japanese-style.

This was also billed as the emergency Budget. It had to take place immediately after the general election, according to our increasingly melodramatic Chancellor, to avoid catastrophic disruption in the bond markets, threatening the very future of our nation. Nothing matters, it seems, except the deficit. Jobs do not matter and unemployment is a price worth paying. The risk to our social fabric does not matter; it can be dismissed as long as the deficit is eliminated.

We all agree that the deficit has to be tackled, and we had set out a path to cut it by 68% by the end of this Parliament. This was prudent and was far less risky to the recovery than the hazardous path that Government parties have now chosen. How odd it is, then, that the result of all the hype about the economic emergency is a very tiny Bill. We have before us an 11-clause Finance Bill; it is just 26 pages long, and nine of them are superfluous because they are reprinted virtually word for word from the VAT section of the Finance Bill 2009.

Financial Services Regulation

Steve McCabe Excerpts

Wednesday 16th June 2010 Commons Chamber

[Mr Osborne]

Of course, it is important that we have the right people doing regulation. The FSA made mistakes, and it has been very candid about them. Lots of institutions made mistakes in the build-up to the crisis—including, of course, the British Government. The people at the FSA have worked incredibly hard in the past couple of years, and I should put on record my tribute to the work that they have done. As for the institutional arrangements that we will put in place, there will be a parliamentary statement tomorrow.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Will the changes that the Chancellor envisages have any impact on the bonus culture at the FSA? I understand that it cost us a record £22 million and reached 84% of its staff last year, at the very time when it was calling for curbs on bank bonuses.

[Mr Osborne]

I remember that at the time I, too, was surprised by the FSA’s decision. If the hon. Gentleman will allow me to say this, those questions are best asked once we have made clear what the new institutional arrangements are. Then we can get on to the pay and rations.