(10 years, 5 months ago)
Commons ChamberI am grateful to the hon. Gentleman for making such an important point about poverty in Wales, because it needs to be recognised. However, even in the darkest, most difficult days, when coal mines and steel plants were being closed and things were extremely difficult for those communities, Wales was not the poorest part of the United Kingdom. After 13 years of Labour control, Wales is sadly the poorest part of the United Kingdom, but it is now experiencing higher and faster growth than most other parts of the UK. That goes to show that the UK Government are playing their full part in our turning the corner and getting out of the cul-de-sac that the Labour party left us in. That was what Labour left us.
We talk about balance across the economy, but more needs to be done to strike that balance in every way, and the Budget has taken a significant step in that direction. There has been significant support for manufacturing, including a £7 billion package that provides elements for capping the carbon price support scheme. One benefit of that £7 billion will be the £50,000 cut in energy prices or costs for a mid-size manufacturing plant. There are hundreds of those in Wales, including several in my constituency, and as a result of the Budget they will get a £50,000 cut in energy costs.
Does my hon. Friend also recognise today’s important initiative in relation to export credit guarantees, which will encourage particularly small and medium-sized enterprises looking to export beyond the shores of the United Kingdom? That will make a significant difference in the high-resolution manufacturing industry, which is so well catered for in the part of the UK he represents.
I am grateful to my hon. Friend for underlining that point. I was going to come on to it, but his intervention presents me with an opportunity to highlight again the balance that the Chancellor is determined to restore to the economy to ensure that every part of the country and every sector within every part of the country is playing a part in promoting the economic growth and is sharing in and generating the prosperity.
The other point I wanted to make on energy related to the support for the energy-intensive industries. Dow Corning in my constituency exports 90% of its output. It is a true success story in the Vale of Glamorgan. The high energy prices really did raise some serious questions for the management of the organisation, but this support will be welcomed far and wide within the group and particularly in Barry, where it is the largest employer.
We need to acknowledge that as this recovery has been built, some people have had to pay quite a significant price, including savers, many of whom are pensioners. Of course, low interest rates were essential to deliver the economic growth we all need and on which public services are built. I am particularly pleased that the Chancellor has recognised that it is time for the growth to be shared with our savers and pensioners. Today’s announcements on encouraging saving, and especially the pensioner bond, is significant. A 2.8% return predicted for one year and a 4% return for three years is really quite important for people who want to be able to plan their future and for those who have done the right thing in that they have worked hard and saved hard.
The changes to the ISA are extremely important and very welcome. They will simplify the process, again providing certainty and security: if people work hard, save hard and do the right thing, this Government are on their side.
Finally, I just want to say this: “If you’re a pensioner or about to retire, there is significant help; if you’re employed, the tax allowance will make a big difference; if you’re a saver, there is extra support; if you want to export, there is help available; and if you’re involved in manufacturing, there are significant energy cost reductions.” This is a Chancellor who is building sustainable economic growth as part of our long-term economic plan.
(12 years, 4 months ago)
Commons ChamberMy hon. Friend is making very forceful points, especially on the FSCS. As that is currently funded by the industry itself, and given that the FCA cannot have detailed knowledge of the workings of every product, does my hon. Friend agree that in order to ensure that there is adequate protection, the FCA must work with the industry and accept the intelligence that comes from it?
My hon. Friend is absolutely right about that.
I want to touch on the impacts, however. Smaller firms dominate the advisory and investment sector, and they clearly do not have the capital available to make the sizeable pay-outs that are an integral part of the scheme on behalf of other companies. The larger banks are present in most major financial centres, but it is the success of innovative smaller companies that marks out Britain’s financial services industry, or at least has done hitherto.
I am aware, as I have spoken to this company in recent days, of a FTSE 250 firm whose costs have risen by 270% under the compensation scheme, year on year, from 2009 to 2010. That includes some £4.7 million of interim levy costs for Keydata, a current cost of £470,000 for MF Global—again, I fear that that is an interim cost—and some £700,000 for Arch Cru. The company had predicted that its total cost for MF Global could end up being as high as £9.5 million.
This situation is an enormous concern. Firms are facing increased liabilities through the compensation scheme and the future structure of the supervisory regime does not suggest that prudential regulation of these firms is likely to be improved. This matter should be addressed in this Bill, as the FCA will not be a specialist prudential regulator. As I say, the experts are located elsewhere, so it is crucial that the Bill contains adequate safeguards and assurances that robust information-sharing schemes are to be put in place between the two regulators.
I briefly wish to discuss my new clauses 2 and 3, which seek to amend section 166 of the Financial Services and Markets Act 2000. Section 166 sets out arrangements for a report by a skilled person, and the whole section urgently requires changing. The FSA has the power to insist on an investigation without determining who does it and without paying for it. The result has been that too many recent section 166 reports have cost the players in the financial services market huge sums, without producing anything of great value. Under the current regime, firms are guilty until proven innocent, and they have to pay for their own prosecution, regardless of whether guilt is proved or not.
The number of section 166 reports has, perhaps understandably, risen dramatically since the 2008 financial crisis. Nevertheless, such reports are increasingly used as a standard regulatory method, rather than being reserved, as they should be, for the most serious cases. They are becoming a phenomenally big burden on hard-pressed small firms. The costs can run into hundreds of thousands of pounds in each and every case, and companies often cannot recoup the costs, even if there is no evidence of wrongdoing.
I know that others wish to speak, but I just wish to put on the record the breakdown of the cost of section 166 reports. As I say, this is now an issue of major concern. In 2006-07, there were just 18 such cases, at a cost of £3.8 million. That number increased to 29, 56, 88 and 95 cases respectively for each of the four succeeding years, with the costs increasing from £3.8 million to £32.2 million for the year 2010-11. It is essential now that the FSA, which has not previously selected skilled persons to have a direct line of accountability, changes its whole approach on this matter. There is much more that I would like to say and I am sorry that time is so limited this evening. I hope that this matter will come back for further scrutiny, although I am afraid that that will be in another place.