The Economy

Alun Cairns Excerpts

Wednesday 22nd June 2011 Commons Chamber

[Mr Wright]

I hope that the hon. Lady, who has not listened to the rest of the debate, will take into account the conclusion drawn by the manager of the largest bond fund company in the world. He stated that the budget reforms

“are long-term requirements for a stable and healthy economy, but the move towards it, in fact, if implemented too quickly, could stultify economic growth.”

That seems an eminently sensible conclusion.

[Alun Cairns (Vale of Glamorgan) (Con)]

Why should we accept the hon. Gentleman’s version of events when the OECD, the CBI, the Institute of Directors and the Federation of Small Businesses are calling for fiscal tightening in order to ensure the stability in the economy necessary to provide growth, as is happening?

[Mr Wright]

The growth projections are falling rapidly, and have been downcast three times. When I speak to my constituents and businesses in Hartlepool, they are concerned about a lack of confidence and a lack of investment in the future of this country that will undermine our long-term ability to fight the global downturn.

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[Mr Robinson]

All we know at the moment is what has happened and many forward-looking forecasts are no better than those of the OBR, which was set up by the Government to provide a so-called independent forecast. Let us be clear that we welcomed and accepted that. All we can look at is what has been achieved; we will come on to the forecasts in a few moments. If we show a moment’s hesitation or doubt about them, I hope that Government Members will understand why. I followed the first 10 years of the Labour Government very closely, and I do not think that we ever had to revise any forecast three times in a matter of six months. If we do not listen to the forecasts and do not treat them as if they had already been achieved, I hope that the hon. Gentleman will understand why.

There are some things we can welcome. We can welcome the good effort in job creation in the private sector. According to the Chancellor this afternoon, that means 520,000 jobs, so let us welcome that. The trouble is, however, that the OBR says—this is the bible we have to go by—that before the end of this Parliament, 200,000 more people are going to be unemployed than it originally thought. We have 520,000 on the one hand and 200,000 more on the other. There is always a negative balancing out the positive in all these areas. If we take inflation, for example, it has gone through the roof at 4.5%. Manufacturing output has been a good effort up until the last quarter, but it is now down again. It is not surprising that an intake of jobs in the private manufacturing sector has supported that output, built on the back of the previous Government’s policies. [Interruption.] No, they do not like to hear it, but it is a fact. Why did more than two thirds of the private sector increase in employment take place before the spending round announcement? It happened on the back of the reflationary policies of the previous Labour Government.

[Alun Cairns]

rose—

[Mr Robinson]

I will give way in a few moments.

Those are the facts and that is the situation. If we look at the balance sheet of the Government’s economic policy in its first year, we see that even in the two areas where the Government had until recently done relatively well, the signs are now bad, so I find it hard to believe that there are any factual or objective grounds for thinking that they have done well overall or that their policies are going to work. The Chancellor continues to say that the plan is working, but all he is really saying is that he is retaining the support of those he set out to gain support from in the first place by adopting an essentially old-fashioned, deflationary bankers’ policy of cutting demand in the economy. That is what he set out to do and that is what he is doing. The prospects of it succeeding are poor.

[Alun Cairns]

rose—

[Mr Robinson]

I will take the intervention later, if I may.

We are now at the stage where we have to make up our minds whether the Government’s economic policies are going to work or not. In a very good article published in today’s edition of The Guardian, Robert Skidelsky argues that the choice between the two economic policies has to be made by anyone wanting to make a serious stand on these issues. He says that the theories or sets of policies have been set out by all the famous, much-lauded figures in the Bank of England, the International Monetary Fund and all the rest of them. If we are dealing with what economists think—it is not the only thing that matters—we should also mention people like Stiglitz and Krugman who say that the policy is wrong.

If we look at the history, we find that it tends to be the people who are not part of the conventional wisdom or not part of the establishment, so to speak, who get it right and that the establishment nearly always gets it wrong. There is no attempt to get out of the box into which the Government have so constrained their policies—they like it and feel it is their comfort zone. I am talking about bankers and international organisations that are intent on deflation, which they are inflicting in the present crucifixion of the Greek economy—where they effectively continue to throw good money into failed policies.

Let me briefly read from the article:

“The Keynesians…among whom I number myself”—

and I am happy to be there, too—

“will have to eat their words if growth picks up and unemployment falls in the next 12 months”.

That is to say, if the Government’s policy comes right, the debt falls and deficit crisis is met, we could then celebrate the success of the policy. On the other hand, it might not work—and it is time for Members to decide where they stand on this. I happen to believe that there is no evidence to suppose that it will, much as I would like it to work: it will not work; it never has worked in history. It is not working in Greece or in Ireland. Greece has had two further doses of deflation and two goes at decreasing VAT, and it is still not working. It is getting worse, because they are not dealing with the root of the problem, as the shadow Chancellor made clear in his speech.

What could be done? Given that the Government will not want to change their policy, they have only one way out: another heavy incidence of quantitative easing. This time, the Government will have to stand up to the Bank of England for once in their life, and say, “We want this money to be put to productive ends.” We create the money, but nobody knows where it goes, except to make bankers’ profits in overseas investment markets. The Government should say, “We want the money to be made available through a bank”—such as the green investment bank, which could be much expanded—“to the British economy for, above all, investment in small and medium-sized enterprises.” The argument from the Governor of the Bank of England will be, “We can’t distort capital markets, you know. This is interfering in the market.” Of course it is; it is an attempt to avert the wastefulness that we have seen from so many of the policies so far.

Where should that money be channelled? In a very good contribution earlier, my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) said that the housing market is dead on its feet at the moment. The new housing market is, I think, at an all-time low. The money, therefore, should go into housing, and into transport, which is desperate not for HS2 but for sensible things such as the four-tracking of the line between Coventry and Birmingham, about which I know something, and at other points such as in Wales. The other good thing would be that the railway policy could be executed much more quickly and fully.

Will the Government change course? No. Will their policy work? No. Are there alternatives? Yes. I understand why they do not want to touch VAT, but they could at least get the Governor of the Bank of England to do quantitative easing of a large scale, £200 billion, and ensure that, instead of being dissipated into overseas markets, a good part of that money is used for the productive sectors of the British economy. That would make a big difference and be a start to the change of policy that we need from the Government.

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[Owen Smith (Pontypridd) (Lab)]

We have heard a lot today about learning the lessons of history, but what we heard from the hon. Member for Stourbridge (Margot James) shows that the Government clearly have not learned the lessons of their own history. In the last years of the Labour Government, we listened to the Conservative party talk about wanting more deregulation and complain that we were over-regulating. We concede now that we were not regulating the banking sector as vigorously as we should have done, yet still we hear calls for further deregulation. That is a lesson that Conservative Members really ought to learn.

Equally, Conservative Members ought to look much closer, and with a far less jaundiced and more objective eye, at the Government’s past year of performance. Any objective reading, any audit of how they have performed economically, must tell them, as it tells us, that it has been a disastrous year. Unemployment is higher by 1.5%, inflation is higher by 1.6%, output is down by 0.7% and manufacturing, which went up for a period as there was restocking and which boomed partly because of big deflation in the value of the pound, has now ground to a halt. We are not seeing a manufacturing-led recovery. Critically, growth, the key driver of our economy, is flat, non-existent, zero.

[Alun Cairns]

The hon. Gentleman focuses on manufacturing, but how does he contrast performance over the past 12 months with that over the previous 12 years, when manufacturing in Wales in particular, and in the west midlands, fell dramatically from representing close to a third of the economy to nearer 20%?

[Owen Smith]

I answer candidly that we have already said that we need a rebalancing of our economy. On both sides of the House, there was far too great an emphasis on the belief that we were in a post-industrial society and manufacturing was not an important part of the mix. We have learned the lessons, as I hope Government Members have. I hope that there will therefore be an active industrial policy from the Government, like the one that the Opposition are talking about. That is the only way in which we will improve manufacturing.

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[Alun Cairns]

The hon. Gentleman talks about the number of people looking for jobs in his constituency this year compared with last. What would he say to the Welsh Government about that, and what is their responsibility for it? They have contributed to the greatest decline in Welsh gross domestic product over the past 12 years, making Wales the poorest part of the UK, which it was not previously.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Before the hon. Member for Pontypridd (Owen Smith) answers that intervention, I ask hon. Members please to keep interventions very short, because a lot of hon. Members wish to speak.

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[Chris Evans (Islwyn) (Lab/Co-op)]

It is always a pleasure to follow the hon. Member for Gloucester (Richard Graham), whose constituency always brings back happy memories for me—we like to visit friends there.

One thing that I have noticed in this debate is that there has been a lot of rewriting of history on the Government Benches. Straight away, all we have heard is, “Labour got it wrong in 13 years of government.” Well, if Labour got it wrong, why were those who are now on the Government Benches so quiet? We did not hear a word. We did not hear them say anything. In fact, in September 2007, a month before Northern Rock went down the plughole, the then shadow Chancellor said, “We’re going to follow Labour’s spending commitments for the next few years.”

[Alun Cairns]

rose—

[Chris Evans]

A voice from Wales. I hope that it is sensible.

[Alun Cairns]

I am grateful to the hon. Gentleman for giving way, but the conclusion that Labour got it wrong was demonstrated 12 months ago in the last general election.

[Chris Evans]

Why did I bother giving way? That is another complacent attitude.

When the Government talk about deficit denial, they miss the point completely. There seem to be two theories. If we follow the Chancellor’s logic, cutting the deficit by £112 billion will encourage the private sector to create jobs. The private sector is going to come to the rescue and all those people who worked in the public sector will get jobs in the private sector. Wonderful—if it works. The other theory is that the Chancellor’s taking £112 billion out of the economy is doing nothing for consumer confidence. When I talk to the shopkeepers on the high street in Blackwood, they say, “The cuts haven’t even bitten yet, Mr Evans, but we are already feeling the pinch.” I am worried about that.

We talk about short-termism, and there seems to be no realisation that the policies to cut the deficit that we put in place today will have ramifications down the generations. There has been a lot of talk about the ’80s. I know that Conservative Members like to worship at the altar of Baroness Thatcher, but when I say that name to anyone in the valleys, they think of two things: fear and hurt. We have had problems with Scottish Power putting its prices up, affecting the most vulnerable in society, but we could do absolutely nothing about it because everything was sold for short-term gain. In 1992, I remember talking to a friend down the pub, and he was in tears. He had gone for a job as a grass cutter and when I asked him what was wrong, he told me that he had not got the job because there had been 60 applicants. “I’m not good enough to cut grass”, he said.

Now, those people have children of their own, and they are worried, too. Figures released in June show that one third of jobseeker’s allowance claimants in my constituency are young people under the age of 24, and I am seriously worried that we are going to have another lost generation. People talk about all this anger against the Labour party, but the only anger I have heard is against the banks. Privately, those on the Government Benches will admit that it was the bankers who did it, but for reasons of political point scoring and advantage, they would rather say that it was the Labour Government who did it—[Interruption.] That is the truth.

Regulatory and Banking Reform

Alun Cairns Excerpts

Thursday 16th June 2011 Commons Chamber

[Mr Hoban]

My hon. Friend makes an important point. We hope that the pre-legislative scrutiny of the Bill will start shortly. It is programmed to take 12 sitting weeks. We want to make sure that the legislation progresses through this House and the other place as quickly as possible and that it is properly scrutinised. We need to make sure that we do not make mistakes in haste that we repent of at leisure. It is also important to recognise that the FSA is starting to adopt the new style of supervision that we would like to see it exercise, and that should give us some comfort that the lessons have been learned and are now being put into practice.

[Alun Cairns (Vale of Glamorgan) (Con)]

I welcome my hon. Friend’s statement, which I am sure will go a long way towards reintroducing stability within the economy in general and the banking system. What reassurance can he give that the stability will apply to the banks as well as consumers, so that the banks can go on generating wealth? That will reduce the risk that banks’ headquarters will leave the UK to establish elsewhere.

[Mr Hoban]

It is important that the UK should remain a global financial centre. We need to get the regulation and supervision in place that ensures that London can continue to prosper and grow and also that there is no wider threat to the economy and taxpayers.

Funding Formula

Alun Cairns Excerpts

Tuesday 18th January 2011 Westminster Hall

[Alun Cairns (Vale of Glamorgan) (Con)]

It is a privilege to serve under your chairmanship, Mr Dobbin. Before the debate started, I forewarned you that I may have to leave early because of my Select Committee responsibilities, and I apologise for that.

I congratulate my hon. Friend the Member for South West Bedfordshire (Andrew Selous) on securing this debate. I recognise and support the spirit in which he has raised this sensitive matter, which affects all the nations and regions of the United Kingdom. He has underlined the point that we have a reforming Government and that bold steps need to be taken to come up with a formula that will serve all the nations and regions in a positive and constructive way that is dependent on need. The debate has been going on for some time in Wales. Even before the evidence was as stark as it is now, there was a view that relative deprivation in Wales meant that the Barnett formula was not serving Wales well.

A mathematical formula, such as the Barnett formula, offers significant advantages. The first advantage is that it offers a guarantee of funding, particularly to devolved Administrations, who need such a guarantee to plan, which prevents, for example, the Welsh Assembly Government, or the Wales Office on its behalf here in Westminster, becoming involved in horse trading year on year. Such a mathematical formula obviously offers that guarantee. The second advantage is that in times of limited or reduced spending, the Barnett formula offers protection to the devolved Administrations.

On the other hand, there are significant disadvantages with the formula being so far out of date, and I regret the time that it has taken to get to this point. The previous Government should accept their responsibility for leaving it so long. Despite Lord Barnett’s strong view that the formula needed reform, it was not accepted. He plainly said that the formula was unfair.

[Hywel Williams]

My memory of that slightly pre-dates the hon. Gentleman’s. I draw his attention to numerous debates over many years when Front-Bench spokesmen on both sides used the formulation, “The Barnett formula serves Wales well.” The hon. Gentleman should concede that both Conservative and Labour Governments were staunch defenders of the Barnett formula. My party, of course, took another view.

[Alun Cairns]

I shall square that point in a moment, but I do not want to let the previous Government off the hook for their delaying tactics in resolving the matter because of its sensitivity. Whereas Lord Barnett plainly said that it was not fair, the then Chief Secretary to the Treasury said that it was fair enough. That certainly was not good enough for Wales. I regret to say that despite 13 years in office, the previous Government did not have the opportunity to resolve the formula.

[Guto Bebb (Aberconwy) (Con)]

It is important to point out that back in 1999 and 2000, Wales, on average, received £125 for every £100 in England. In 2010-11, Wales receives around £112 for every £100 in England. Therefore, the Welsh treatment under the Conservative Government is significantly better than it was under the Labour party, when there was a significant decline in funding for Wales.

[Alun Cairns]

I will come on to the convergence in a moment. None the less, it is a point that is well made and that should be recognised by the Labour party. It is important not to confuse freedom of devolution, which enables nations to pursue their own policies, with funding. There is naturally a link, but because there is a policy, subsidy or generosity in one particular area, it should not then be used as proof or evidence of over-funding when we consider the whole context.

[Owen Smith]

I was rising to make precisely that point. Does the hon. Gentleman fear, as I do, that the hon. Member for South West Bedfordshire (Andrew Selous) will not be happy when we have a needs-based formula, because those examples that he cherry-picked earlier will still exist? The politics of envy, which underpins some of his concerns, will still play into this debate.

[Alun Cairns]

That point only demonstrates the hon. Gentleman’s misunderstanding of the spirit and tone of the debate presented by my hon. Friend the Member for South West Bedfordshire. My hon. Friend identified the differences, but recognised that that freedom needs to take place when we consider devolution. The obvious things in Wales are free prescriptions and—this one has focused attention of late—tuition fees. To those hon. Members who are critical of the Barnett formula because it is advantageous to Wales, I say that our NHS waiting lists are much longer and that the cancer drugs fund does not apply, so there are considerable drawbacks, and they need to be taken in the context of the whole funding settlement. It is far too easy to pick a policy that has been prioritised by the Welsh Assembly Government without accepting the areas that may not have been prioritised. Health is the obvious one. In England, for example, there is a guarantee of no cuts in NHS spending, whereas in Wales there will be real-term cuts and financial cuts to the health service. That point should be recognised in the debate.

My hon. Friend the Member for Aberconwy (Guto Bebb) has referred to the positive contribution of the Holtham commission. The two volumes of the Holtham commission can be brought down to a few figures. At the moment, Wales receives £113, which will drop to £112, for every £100 that is spent in England; Scotland receives £120; and Northern Ireland receives £124. Holtham concludes that Wales needs £115, which is marginally more than it is currently being awarded; Scotland needs £105, which is a significant reduction from its £120 now; and the figure for Northern Ireland is not far from what it already receives. That is the first needs-based assessment that has taken place. If that is not accepted in general terms, it is certainly an exceptionally useful starting point of where the needs lie.

The hon. Member for Arfon (Hywel Williams) has said that, historically, Wales has been underfunded by £300 million, but that fails to understand the convergence that has taken place over the past 13 years or more. That £300 million is the current level, and it would have been a much smaller level in the past.

A very good point has been made about Crossrail. Despite the view that the Labour party in Wales is taking at the moment, we can compare the spending on Crossrail with that on the Jubilee line. The spending on the Jubilee line was Barnettised, but the spending on Crossrail by the previous Government was not, which highlights another way in which Wales was treated unfairly by the previous Administration. It is far too easy to point the finger, when a real debate is taking place on satisfying the needs-based requirement.

My closing points—I am conscious of the time—relate to the way forward. All the nations and regions need to engage in the debate about this extremely sensitive area. Those who are allied with the Scottish National party are a block not only to any form of debate—that position is natural, because of the way in which Scotland would lose out—but to changes elsewhere in the United Kingdom. As the hon. Member for Arfon builds up a strong relationship with the Scottish nationalists, he must recognise that that is blocking reform in Wales, because every part of the UK needs to engage in this debate if we are to come up with a needs-based formula that satisfies all the nations and regions of the United Kingdom.

Independent Financial Advisers (Regulation)

Alun Cairns Excerpts

Monday 29th November 2010 Commons Chamber

[Mark Garnier]

Yes, I agree entirely. It is absolutely the case that the harder-working and more successful IFAs simply will not have time to take the exams and start dealing with the dead hand of regulation from the FSA.

With up 10,000 experienced IFAs of good standing potentially being forced to retire for no valid reason, it is estimated that as many as 3 million existing clients, many of whom will be elderly, will lose access to their trusted adviser as of 1 January 2013. I fear that without the FSA looking again at grandfathering the experienced through the process of implementation and without a rethink about commissions, independent financial advice will become the preserve of the wealthy only.

[Alun Cairns (Vale of Glamorgan) (Con)]

Will my hon. Friend give way?

[Mark Garnier]

I have just about finished actually.

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[Mr Mudie]

I completely agree.

I forgot to congratulate the hon. Member for Wyre Forest on securing the debate and on introducing it. I also congratulate all Members in the Chamber. It appears that the only thing we can do is to come to the Chamber and voice our anger and concern. When the Committee discussed with the Bank of England the new powers of the new regulator, it was the British Bankers Association, of all people, who raised the democratic deficit. The point was made that we were handing so much power to the regulators and the banks that there was great danger that they would be pronouncing and taking action on matters that affect us as representatives of our constituents —matters relating to employment and standards of living. In our humility and generosity, we are passing great power to the regulators on matters for which we will be accountable—perhaps not in law, but in the view of the public. We will be accountable for the actions of the regulators, so a rethink is very necessary.

[Alun Cairns]

I thank the hon. Gentleman for giving way. I, too, pay tribute to my hon. Friends the Members for Wyre Forest (Mark Garnier) and for West Worcestershire (Harriett Baldwin) on initiating the debate. I congratulate them on that.

Does the hon. Member for Leeds East (Mr Mudie) accept that the FSA could be acting in the context of, on the one hand, lack of regulation in the banking industry in the past, leading to a complete knee-jerk reaction and, on the other, disproportionate regulation at the consumer end of the market, such as the debate is highlighting?

[Mr Mudie]

I do not completely agree. I think the banks could be the beneficiaries if 30,000 independent financial advisers are taken out of the market. The hon. Member for Wyre Forest referred to Lord Turner, whose attitude was that the number would not be 30,000, but between 10,000 and 20,000, which was acceptable, otherwise the FSA would not be doing it. There was no explanation why the number was acceptable, or of the unintended consequences of the decision. The authority had just decided that it would be acceptable.

Ordinary people who have worked in the industry for decades will be hurt by the decision. It is not a knee-jerk response to oppose the direction of a decision and the manner in which it is being imposed on individuals who have worked in the industry without blemish. It would not happen in other industries and other practices. In addition, there seems to be a lack of interest in the diminution of choice for the ordinary consumer of all ages if the decision is forced through.

The Treasury Committee has asked for responses. I plead with every Member, whether or not they are in the Chamber, to do some writing and complain. They should ask the very able Chairman of the Committee, who is standing by the Speaker’s Chair, to call a review meeting so that we can call individuals on this subject. We do not want to tie it up in a long agenda where it receives only 10 minutes’ scrutiny; we want a full meeting where witnesses are placed under real scrutiny and asked both to account for the decision and to reconsider it.

[Harriett Baldwin (West Worcestershire) (Con)]

All I can say is “Wow!” when I see how many colleagues and Opposition Members have shown up this evening to take part in this historic debate. I believe this is the first time in this Chamber that the Financial Services Authority, which was set up by the former Prime Minister as the independent statutory regulator, has been subject to such parliamentary scrutiny. In fact, I believe that we are today showing that we can, and do, take a real interest in what the independent statutory regulator is doing.

The Chairman of the Treasury Committee pointed out how many Members are in the Chamber this evening for a Back-Bench business debate, when we are not obliged to be here by anyone other than the constituents who have contacted us with their concerns.

[Alun Cairns]

I support what my hon. Friend said about the number of Members present this evening, which is unusual, as she pointed out. The indication so far is that this is a cross-party issue and that party politics is not playing a part in it. The comments from the Opposition Benches support the comments made in the debate.

[Harriett Baldwin]

I entirely agree. We have learned in the past few years how important good financial regulation is.

Imagine the outrage there would be in the Chamber if a Minister said from the Dispatch Box, “I am going to put between 20 and 30% of an industry out of business at the stroke of my pen on 1 January 2013”? It is unbelievable that we have allowed an organisation to grow and, unscrutinised by this legislative body, have such a power over our constituents’ lives.

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[Heather Wheeler]

My hon. Friend is correct. Is that not interesting? Many of us have been trying to get to the background of why this retail distribution review was brought in and where the FSA was coming from. The statistics really speak for themselves, and I am astonished that we find ourselves in this position.

[Alun Cairns]

Even if the statistics were much worse than they are, does my hon. Friend believe that the proposals in the RDR would lead to improved and safer advice for clients? I certainly do not believe that they would, even if the statistics were worse.

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[Chris Leslie]

As I say, this is a good time to debate those matters. There are options that must be explored. We have not bottomed out the debate. Perhaps the Financial Services Authority can consider not necessarily the hon. Gentleman’s suggestion in particular, but why commission changes are not being made across the wider financial services sector. There have been historic problems with mis-selling of products, not solely from an IFA perspective, and I can see why many people feel that these changes are necessary.

I would not counsel hon. Members to take issue with every section of the RDR—many of those who spoke in the debate did not. It is right, for example, that there should be proper clarity between independent and restricted market advisers, and that rather than waiting for the customer to inquire, there should be full disclosure on that up front.

[Alun Cairns]

rose—

[Chris Leslie]

I have only a couple more minutes.

The crux of the matter must be the issue of qualifications—the A-level equivalent threshold for financial advice. Although I understand the move to a QCF level 4 standard, which seems entirely fair, it is sensible that there should be a mechanism to allow some sort of conversion of existing qualifications or existing experience to that new level 4 qualification. I cannot believe it is beyond the wit of the FSA, Ministers and others to find some way of doing that. Hon. Members such as the hon. Member for Meon Valley (George Hollingbery) spoke about how we should look at the grandfathering issue and what options there might be. It is important to move that forward.

[Alun Cairns]

rose—

[Chris Leslie]

I should like to conclude because I want the Minister to be able to explain in a way that he did not necessarily do in the first flush of debate on the topic in Westminster Hall, and possibly reflect the views of the vast number of Conservative Members. I am still perplexed that the Financial Secretary to the Treasury chose that McDonalds diploma analogy. Perhaps he will reflect on that and recognise that some IFAs were slightly astounded by that reflection on their professional integrity. He might want to choose his words more carefully.

It is important that parliamentary accountability should be voiced. The more I reflect on these financial services policy issues, the more it strikes me that there is a democratic deficit. No, we do not want to be embroiled in the day-to-day operational issues of regulation, but policy is policy and we are accountable for that. Perhaps, as my hon. Friend the Member for Leeds East (Mr Mudie) suggested, we can return to the issue when we come to the FSA reform Bill and discuss amendments to that. Hon. Members will log and remember today’s debate and we can come to that later on in the day.

It is a shame that there is no motion tonight on the issue. It would have been useful for Members to express the formal position of the House of Commons on the matter. This is a time for the Minister to listen to the debate and perhaps reflect carefully on the measured and worthwhile comments that have been made by hon. Members across the Chamber.

Equitable Life (Payments) Bill

Alun Cairns Excerpts

Tuesday 14th September 2010 Commons Chamber

[Gordon Banks (Ochil and South Perthshire) (Lab)]

I will also try to keep my remarks brief.

First, I associate myself fully with the remarks of my hon. Friend the Member for Leeds North East (Mr Hamilton). I look forward to seeing the amendments proposed by my right hon. Friend the Member for East Ham (Stephen Timms) as the Bill moves into Committee. This is such an important issue to the people who have been affected by it, and we do need a solution, but I worry that the solution we will get from the Government will bear no likeness to what they promised or intimated when they were in opposition.

In terms of the number of representations from constituents, this is the biggest matter that I have dealt with since coming to this place. It is certainly the longest running issue for me, and many other Members will have had it on their plates for much longer than I have. However, we should think about those who lost their money. They have had worry and hardship from the start, and what is the solution? To my constituents who are affected, it is the implementation of the ombudsman’s recommendations. Let us be honest: if we were personally affected, that is what we would want. It was what my constituents wanted from the last Government and what they expect from the current one.

The tone of the communications that I am receiving from my constituents is changing from blaming the Labour Government to blaming the Conservative party, the Liberal Democrats and the coalition Government. In reality, the blame game is not really productive, as the events of the past decade have shown. We all know that the problem and its causes have spanned different Governments, and that there have been failures by all parties. I worry that we are being set up for another failure, and I do not want that to happen to my constituents.

[Alun Cairns (Vale of Glamorgan) (Con)]

Will the hon. Gentleman give way?

[Gordon Banks]

No, I will not.

Like other Members, I want the Government to have their moral hat on. Forgetting about the failings of the past, this is their opportunity to do right by those who have lost out, and their action should be moral, not party political. Ministers can stand up to Treasury officials and do what is right.

We have heard a lot today about the £5 billion price tag, but let us be clear that it is not £5 billion this year or next. As Members on both sides of the House have said, it could be spread over several years, or possibly decades. It does us as parliamentarians no good to throw telephone number-like figures around to frighten people into believing that we cannot do anything. We need to help the trapped annuitants who are locked into their losses.

I wish to address a point that Members from all parties have made. Many of the people affected are not rich. They span all walks of life, and they were doing the right thing by investing for their future. We need a commitment to help those people now, and we need costs to be allocated so that we understand the annual cost over, say, 10 years. However, we also need to be aware that about a third of the 1.5 million people affected had invested all their future in Equitable. Some of those people have lost their homes and cars, and with them their dignity, and we should take the opportunity to restore that dignity. As I have said, my constituents feel that despite their hopes, nothing has changed with the change in Government.

[Alun Cairns]

Will the hon. Gentleman give way?

[Gordon Banks]

No, I will not.

The situation has been a shock to my constituents and a disappointment to hon. Members of all parties, as we have heard from them. I am concerned that the Treasury is going to impose a limit, in the hundreds of millions of pounds, that will not address the problem, fulfil our moral obligation or improve the hopes and ambitions of many of my constituents. Will the Government confirm whether reports that the Treasury has already set aside money are accurate? If so, how much money and why that amount? Will that be the lot, and who will it be for? We hear a lot about a fair solution, and that is what we need, not just a fair process.

Some will ask why people continued to invest in a failing company. The problem was that there was nothing to cause investors concern. Perhaps if they had known what regulators knew—or should have known—and what Equitable Life itself knew, the situation would have been different, but they did not. That is the crux of the need for fairness.

This is an enabling Bill, and as such I have no problem with it, but we do not know what it enables. The water is murky. What will happen to trapped annuitants, including those who are still in work and will retire in future? What happened to the belief that the Conservatives would sort out the problem, and what has happened to bring the coalition around to embracing Chadwick in some way? The Government do not necessarily accept Chadwick, but they are preparing their information based on Chadwick’s £500 million figure. I ask the Financial Secretary to do all he can to make the Government’s position clear, because it is not clear to me, and judging from my mailbag it is not clear to my constituents. When he was in opposition he implied that he would sort out the mess, but now he is creating his own mess.

Perhaps I can leave Ministers with a few questions to ponder. Do the Government still accept the parliamentary ombudsman’s recommendation, and do they accept her belief that the Chadwick advice cannot mesh with her recommendations? How will she be consulted about the Government’s proposals, and as others have asked, when will the House have the opportunity to debate the Government’s approach to compensation? Finally, and most importantly, when will the Financial Secretary stand up to Treasury officials and do in government what he promised to do in opposition?

--- Later in debate ---

[Ms Margaret Ritchie (South Down) (SDLP)]

I, too, congratulate the hon. Member for Congleton (Fiona Bruce) on making her maiden speech. She has a hard act to follow in Ann Widdecombe, and I hope that she will follow in her footsteps, if not her dance steps.

As you know, Mr Deputy Speaker, I represent a constituency in Northern Ireland. Like other hon. Members, I have been written to by many constituents, particularly elderly ones, about the unresolved, inexplicable and inordinate delay in bringing forward payments in a fair and equitable manner for Equitable Life policyholders. They are very proud people, many of whom are entrepreneurs in industrious communities. Some are farmers or bin men, and they represent a wide cross-section of the local population. Many of them are still waiting for the matter to be resolved, having waited a considerable time already.

I wish to make it absolutely clear that, in the majority of cases, those who invested in Equitable Life were not in the high income brackets. I can certainly say that on behalf of my constituents who were affected. In the majority of cases, their investment in Equitable Life over many years was itself a struggle to meet, but their sense of responsibility drove them to make that commitment to their future. I fear that when we talk of investors, it is all too easy to think about those in receipt of large pensions. We are talking about people in the lower and middle income brackets. Many of our constituents who are affected are farmers, fishermen, small business men, dinner ladies and librarians—and the list goes on. During their working lives, those pensioners contributed much to society for the minimum return.

There is a clear need to resolve the issue. Much forensic work has been done, including the reports of the ombudsman and Sir John Chadwick. However, we thought we had a resolution. On 11 May, the coalition Government issued a statement in which they agreed to implement the ombudsman’s recommendation to make fair and transparent payments to Equitable Life members, but sadly that has not happened. Hon. Members are now aware that such “fair payments” will be based not on the guidelines set out by the parliamentary ombudsman, but on those set out by Sir John Chadwick, which the Bill seems to follow.

The previous Government’s appointment of Sir John Chadwick was an attempt to devise a system of limited ex gratia payments, which would be made only to those who were disproportionately affected. The coalition Government appear to be continuing down that road, as we understand that the independent payments commission will abide by Chadwick’s proposals. Victims will receive less than 10% of their losses, and the total sum that the commission is working to repay will be a meagre £400 million, in the face of estimates by the Treasury’s own actuaries of much greater losses.

I caution the coalition Government against going down that route, not only on the grounds of the independent parliamentary ombudsman’s recommendation and fairness for the many investors who have been left quite desperate, but on the grounds of what is right and proper at the heart of government. The handling of the Equitable Life issue by the previous Government and the coalition strikes at the heart of democracy and at the question of how the Government treat many people.

[Alun Cairns]

I certainly accept the hon. Lady’s criticisms of the previous Administration, but does she accept that the coalition Government’s prioritising the Bill early in this Parliament demonstrates some sort of commitment? However, I recognise the need for greater negotiation with EMAG to reach an appropriate settlement.

[Ms Ritchie]

It would have been much better for the coalition Government to implement the ombudsman’s recommendations. That would have been much more democratic and it would have reflected the needs of all our constituents.

Finance Bill

Alun Cairns Excerpts

Tuesday 20th July 2010 Commons Chamber

[Mr Byrne]

Perhaps the hon. Lady could explain why the Conservatives supported our spending plans until 2008. As for public sector productivity, she will know as well as I do that if more medical staff are put on to nurse patients, one might get a higher survival rate and better care, but such outputs do not show up in the cold light of productivity statistics.

[Alun Cairns (Vale of Glamorgan) (Con)]

The right hon. Gentleman talked about an illusion, and we can trade statistics back and forth, but at the election the ultimate judgment came down to the British people, who judged that Labour had failed to regenerate the economy and offer a way forward. That was the ultimate judgment, as opposed to the rose-tinted spectacles that he appears to be looking through.

[Mr Byrne]

I am grateful to the hon. Gentleman for raising the question of mandates. If one thing is clear in the debates that we have had in the months since the election, it is that there is absolutely no mandate for the VAT measure in the Finance Bill. I would be interested to hear how he is explaining that to his constituents.

I do not believe—nor have I heard any explanation of this—that some kind of recovery plan on the cheap could have delivered the economic recovery that is now under way. In life’s difficult moments, one is always open to advice, but the truth is that if we had followed the prescription of the Conservatives, we could have kissed goodbye to the recovery, not least because our banking system would have collapsed, the cash points would have stopped, the dole queues would have spiralled, repossessions would have spiked, and Britain’s small businesses would have been submerged beneath a wave of foreclosure, bankruptcy and liquidation.

--- Later in debate ---

[Mary Creagh]

No, I want to finish my point. There is an important point to make about cots. No matter where people get their cot from, they should never put a baby to sleep on another child’s mattress, because they do not know what has happened to that mattress—whether it has been vomited or urinated on, for instance.

We talk about putting babies “back to sleep”, and about cutting the rate of sudden infant death—which predominantly happens in lower income households. There are issues here to do with families living in overcrowded housing and babies sharing beds with their parents, yet the hon. Lady is saying that new mums and expectant mums are supposed to go round hauling cots home in their eighth and ninth month of pregnancy and then putting them up. Frankly, she ought to think a little more about what she wishes for her constituents.

[Alun Cairns]

On a point of order, Mr Deputy Speaker. I seek your guidance on what cots have to do with the Finance Bill, and on the relevance of the points that have just been made.

Office of Tax Simplification

Alun Cairns Excerpts

Tuesday 20th July 2010 Commons Chamber

[Mr Gauke]

Yes, the OTS could consider such matters. Essentially, rates will not be matters of complexity and will be entirely for the House to consider. However, the point that my hon. Friend highlights is one that the OTS might well be looking at in its small business review.

[Alun Cairns (Vale of Glamorgan) (Con)]

I am grateful to the Exchequer Secretary for his statement. Will the OTS receive representations from business organisations and individuals who can make a contribution to simplifying the tax structure?

[Mr Gauke]

We will certainly encourage the OTS to take representations. Mr Whiting and Mr Jack are keen to do so and will be establishing consultative committees to provide organisations and businesses with an opportunity to have their say and more generally to engage with businesses. We believe that, in the tax area in particular, it is important that we engage with business. That has been a characteristic of this Government, and we hope to continue to do that.

Economic Affairs and Work and Pensions

Alun Cairns Excerpts

Tuesday 8th June 2010 Commons Chamber

[Alun Cairns (Vale of Glamorgan) (Con)]

It is a privilege to have the opportunity to make my maiden speech in the debate in response to the Gracious Speech, and it is a pleasure to follow the right hon. Member for Stirling (Mrs McGuire). I congratulate the Ministers on their appointments and look forward to supporting them in tackling their challenges between now and the next general election.

I wish to pay tribute to my immediate predecessor as MP for the Vale of Glamorgan, John Smith. His campaigning efforts, which were primarily on tackling deep vein thrombosis and latterly in favour of the defence technical college proposed for St Athan, were recognised by those on both sides of the House. I strongly support his approach on both issues, and he is very much respected in the constituency. I also recognise the contribution of the previous Conservative Member for the constituency, Walter Sweeney, who will be remembered for, among many things, having the smallest majority in the House of Commons following the 1992 general election—it was a majority of 19. Thankfully, I am not in that position, but I do not take any vote for granted and I aim to keep my majority somewhat larger than that.

I also take pleasure in referring to the late Sir Raymond Gower, whom many senior hon. Members will recall with great fondness. He served the Vale of Glamorgan’s constituents from 1951 until his untimely death in 1989. His reputation for responding to and serving constituents is still recalled affectionately in the constituency, and his prolific letter writing to and on behalf of constituents came long before modern technology made such communication relatively straightforward. His efforts were extraordinary. I hope to be able to follow the principles of Sir Raymond’s approach to constituency work with passion and conviction, and to stand up, here in the Chamber, for equality of opportunity irrespective of background. It is ironic that Sir Raymond Gower’s maiden speech was about devolution to Wales and his call for greater “home rule”, as it was referred to then, because a commitment to such a referendum has been made by this Government.

It really is a privilege to represent the Vale of Glamorgan, my home constituency. It contains rich farmland, three main towns, numerous villages and hamlets, and a magical coastline. It has a fantastic history and I am confident that, with the Government’s support, it has a great future. It contains areas of prosperity and pockets of deprivation. I am confident that the policies announced in the Gracious Speech will go a long way to help overcome the deprivation, to meet the need for regeneration and to help to protect the fantastic environment.

The constituency’s three prime towns are Cowbridge, Llantwit Major and Barry. The Romans built a small fort in Cowbridge in the 1st century. In 1254, Sir Richard de Clare, the Lord of Glamorgan, granted the town its first charter and in 1886 Cowbridge was the last recipient of a royal charter given by Queen Victoria. David Lloyd George and Iolo Morganwg have strong links to the town, which was the birthplace of Sir Leoline Jenkins, who was the principal of Jesus college, Oxford. He endowed the town’s grammar school and formed its long-standing association with Jesus college.

Llantwit Major came to prominence with the foundation of a monastery, which was established by St Illtud in the late 5th century. It became a seat of learning and religion, attracting royalty and St David himself. It is the nearest town to St Athan, with its significant RAF base which is the proposed site of the £13 billion defence technical college—I strongly support that policy.

Barry, too, has a great history. The name derives from St Baruc, who was drowned in the Bristol channel and buried on Barry island. The rapid expansion of the town dates back to 1884, when a group of colliery owners built a railway line and a dock, but interestingly the original Barry Dock and Railway Bill was defeated in Parliament in 1883. By 1913, Barry had become the largest coal-exporting port in the world, and the railway line also brought millions of tourists to Barry island to enjoy one of Wales’s most spectacular beaches.

Latterly, the town has become well known because of an Essex boy and a Barry girl —Gavin and Stacey. Even a former right hon. Member of this House, John Prescott, has appeared in an episode with Nessa, Smithy and the other characters. Stacey and Uncle Bryn live on the steepest road in my constituency, and the Essex home in the programme is actually located in Dinas Powys, in my constituency. I apologise in advance, Mr Deputy Speaker, should I ever ask, “What’s occurring?” or should I thank you by saying, “Tidy”. The new interest in the town, combined with the regeneration efforts of the local authority, mean that Barry has an exciting future ahead of it.

Although the Vale of Glamorgan’s gross domestic product is at or slightly above the UK average, there are great differences between its communities. The overall headline masks the deprivation, which has its roots in the change from the former industries, and because the GDP of other parts of Wales is lower, areas of deprivation in my constituency are left wanting. I want to fight for equality of opportunity. I was contacted last week by a constituent who had been made unemployed and did not qualify for training support to enhance his prospects because he lived in the Vale of Glamorgan. Had he lived in the neighbouring authority area, he would have been eligible for projects that receive European aid.

I wish to conclude my remarks by returning to the issue of the proposed defence technical college, which is the largest private finance initiative scheme. I recognise that the strategic defence review needs to take place and that the Government also face financial challenges, but this project would use money that is already committed and is already being spent by the Ministry of Defence, and it would spend it more efficiently and effectively. We owe this to our armed forces; it is important to Wales and the Welsh economy, but it is most important for our brave men and women who serve in our armed forces, because it will give them the world-class training that they most desperately need and deserve.