EU Budget (Surcharge)

Andrew Bridgen Excerpts

Monday 10th November 2014 Commons Chamber

[Mr Osborne]

My hon. Friend makes a good point that the hon. Lady would have paid the whole lot. We are paying £850 million because of the application of the rebate.

[Andrew Bridgen (North West Leicestershire) (Con)]

I congratulate the Chancellor on halving the recent EU demand in record time. I wish he had just continued a little longer, because with his skills he might have got us a net refund. Does he agree that for those for whom this result is not enough, nothing would ever have been enough? Does he also agree that, however distasteful we might find it, while we are in a club we have to abide by the rules, and that only a future Conservative Government will give the people a say—and a chance to leave the club—in a referendum in 2017?

[Mr Osborne]

My hon. Friend is right. Part of the reform we seek in Europe is reform to make sure that the money that British taxpayers pay is well spent. Indeed, we want to make sure that the money of all European citizens is well spent in Europe. He is absolutely right that the only way to get that reform is with a Conservative Government, and then the British people can decide in a referendum.

Income Tax

Andrew Bridgen Excerpts

Wednesday 5th November 2014 Commons Chamber

[Chris Leslie]

We have consistently opposed this outrageous change to dish out a tax cut for the very privileged 1% in society. The hon. Gentleman should join us, and I hope he will, in voting for today’s motion, as it is about a key divide in British politics and in Scottish politics. It is very important that we expose the fact that by cutting the top rate of tax on earnings above £150,000 from 50p to 45p Ministers have wilfully accelerated the divide between the majority and the richest 1%.

[Andrew Bridgen (North West Leicestershire) (Con)]

Will the shadow Minister concede that the considerable increase in personal allowances under this Government has been of no benefit to those earning more than £150,000 because between £100,000-worth and £110,000-worth of earnings all the personal allowances are removed?

[Chris Leslie]

The hon. Gentleman has done more for the very wealthy earning over £150,000. At this time of pressure on our public spending and on his constituents and mine, what did he decide to do? A typical millionaire, he gave away a benefit worth £100,000. He voted for that cut in the 50p rate of tax, which the vast majority of people feel is an obscene example of the unfairness of this Government. It is particularly a stain on the reputation of the Conservatives, but I want to hear how the Liberal Democrats justify their votes for the cut in that 50p rate.

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[Kate Green]

I agree with my hon. Friend. Mine is not by any means one of the poorest constituencies in the country, yet we stand to benefit relatively little. I would therefore be grateful if the Minister said something about the geographical context.

[Andrew Bridgen]

The hon. Lady claims that her constituents are not benefiting from the cut in the top rate of tax from 50p to 45p. However, they are benefiting from the highest economic growth of any country in the G7 and from the 1.8 million new jobs created in this country—more than in the whole of the rest of Europe added together.

[Kate Green]

That brings me to my second point, which is about how this growth, and jobs growth, is affecting—allegedly benefiting—my constituents.

Ministers are very fond of asserting that work is the best route out of poverty and that the increase in jobs is therefore of benefit to working families. Of course, work ought to be the best route out of poverty, but the wage squeeze that we have seen in recent years means that that is simply not proving to be the case. When two thirds of children in poverty are living in households where someone is in paid employment, Ministers cannot be satisfied with a growth strategy that so misses the point in terms of rewarding those who aim to work and do the right thing. One of the reasons why those families are not benefiting from this jobs growth, apart from wage restraint, is that many of the in-work financial support measures that we put in place to support low wages—as indeed did earlier Conservative Governments, through family credit—have been eroded, frozen or cut under this Government. My second request to the Minister is for a more comprehensive answer than the one he gave a few moments ago to my question about what exactly is Ministers’ strategy for addressing in-work poverty, which is felt very acutely by many families in my constituency.

My third question for the Minister is one that I asked of Ministers at Treasury questions yesterday about the gender impact of a cut in the top rate of tax. As we know, men are disproportionately likely to benefit from cuts to income tax, particularly cuts to higher-rate taxes, and women are disproportionately affected by rises in consumption taxes because of their responsibility for managing the household budget. This has a direct feed-through to levels of child poverty. If women—[Interruption.] The hon. Member for Taunton Deane (Mr Browne) has clearly not looked at the many decades of social policy analysis in relation to this. If he has time later, I will take him through it. There is plenty of evidence that poor children have poor mothers. [Interruption.] If he thinks that this is sex discrimination, I am afraid that his analysis of the gender dimension of fiscal policy is even slighter than I understood it to be.

Yesterday I asked Ministers whether they could explain the gender analysis of their fiscal policy, which is exacerbated by things like their marriage tax breaks, the vast majority of which will benefit men, putting money in wallets, not purses. That will mean, again, that children lose out and child poverty is impacted.

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[Andrew Bridgen (North West Leicestershire) (Con)]

I welcome today’s Opposition motion, which is an opportunity to show the clear ideological divide between Opposition and Government Members. The Opposition’s motion reiterates their intent to reintroduce the discredited 50p tax rate, which, taken with other policy announcements, such as the so-called mansion tax, clearly demonstrates their willingness to sacrifice the current economic growth and prosperity and, indeed, our nation’s economic future, on the altar of their socialist beliefs. It is probably an attempt to shore up a sort of core-vote strategy—a failing strategy—that will do nothing to increase the nation’s belief in the credibility of either the Leader of the Opposition or the shadow Chancellor.

If we go back to the politics of the 1970s, as the Labour party is proposing, we might want to remember the words attributed to the then Labour Chancellor, Denis Healey who, talking of tax, said that he would squeeze the rich “until the pips squeak”. Social mobility and the ability to move between countries was not as high in the 1970s, but that policy led to what was called the brain drain. I seem to remember from my childhood that, given our economy then, we were regarded as the sick man of Europe, which we are far away from being under this Government’s long-term economic plan.

[Frank Dobson]

Does the hon. Gentleman acknowledge that average annual economic growth during the Callaghan and Wilson Governments was almost exactly equal to the miraculous levels achieved during Mrs Thatcher’s prime ministership?

[Andrew Bridgen]

The right hon. Gentleman, whom I much respect, has the advantage of me in years and service in this House. His figures may well be correct—I cannot challenge them with the information I have—but he must look at the economic backdrop of the relative growth of other economies in the world at the moment, and at the challenges that we face, such as the drag of the eurozone. There is no doubt that this Government are set to deliver the highest economic growth of any developed economy in the world this year.

[Mr Jeremy Browne]

I hope that my hon. Friend can shed light on an aspect of the Opposition’s outlook. Given that the shadow Chief Secretary to the Treasury thinks that the introduction of a 50p rate would have no behavioural impact, and that it is inherently virtuous to have higher taxes on people who create businesses and wealth and who employ people, why would he be willing to stop at 50p when he could go up to the levels of personal taxation that Labour presided over last time they were elected without Tony Blair as their leader?

[Andrew Bridgen]

My hon. Friend is absolutely right. [Interruption.] It is in the nature of the Labour party that there is always another tax. Labour Members say, “One more tax will do it”, but it never ends, does it? He is quite right that the ability to earn—I stress that the word is “earn”, not “be given” or “inherit”—£150,000 a year or more does not—[Interruption.] Madam Deputy Speaker, this is ridiculous.

[Madam Deputy Speaker (Dame Dawn Primarolo)]

Order. This is getting absolutely ridiculous. The hon. Gentleman has the Floor. We do not need the rest of the Members in the Chamber to engage in separate conversations. If they wish to do so, they can go outside and have a conversation. Otherwise, they should listen respectfully to the hon. Gentleman who has the Floor.

[Andrew Bridgen]

Thank you, Madam Deputy Speaker. If the shadow Minister wishes to intervene, I am more than happy to give way.

[Chris Leslie]

The hon. Gentleman said that the 50p rate was clearly ridiculous, but my hon. Friend the Member for Vale of Clwyd (Chris Ruane) quoted the previous Chancellor of the Exchequer, my right hon. Friend the Member for Edinburgh South West (Mr Darling), who said before the last election that he could not countenance reducing the 50p rate while so many people were bearing such a burden in our society. Does the hon. Gentleman really think that that burden has lifted?

[Andrew Bridgen]

The deficit of £150 billion that we inherited from the previous Labour Government has been reduced by a third, but there is much more work to be done. If the hon. Gentleman will bear with me and listen to my speech, during which he will have the chance to intervene, I think that I will answer many of his questions.

The ability to earn more than £150,000 does not give or guarantee happiness, health or friends, but it does give choices. People who earn more money have more choices. My definition of poverty is having no choices: people with no choices are in poverty. One of the choices people have is about where they are domiciled for tax. With taxes rising in France, there has been a flight of people to the UK, to such an extent that, as was pointed out at a meeting with the Mayor of London a few months ago, so many French people live in London that it is the fourth largest French city.

I have always been a great believer in this quote:

“Those who do not learn from history are doomed to repeat it.”

When the right hon. Member for Edinburgh South West (Mr Darling) brought in the 50p tax rate before the last election, I naturally assumed that he did not take on board George Santayana’s sentiments, as history has told us time and again that

“for a nation to try to tax itself into prosperity, is like a man standing in a bucket and trying to lift himself up by the handle.”

Yet the Labour party persist in this notion that having one of the highest top rates of tax in the world will increase revenues and make the country more competitive. My hon. Friend the Member for Wolverhampton South West (Paul Uppal) was quite right to quote Abraham Lincoln, who said:

“You can’t make the poor richer by making the rich poorer.”

He described economic inequality as benign, rather than malevolent. Understanding the difference leads to understanding why allowing the greatest number of opportunities works better for increasing everyone’s wealth than trying to equalise outcomes. That was true then, and it remains true now.

The Labour party’s economic blindness seems to extend to failing to take note of what is happening over the channel in France. It is in its third year of being led by the Leader of the Opposition’s comrade Francois Hollande. After the Socialist Government increased a range of taxes, including the top rate of tax, revenues have proven to be half of what was expected. France has virtually no economic growth, and it has a black hole of billions of euros in its public accounts, to the point that it now wants the UK to pay €2 billion to help to bail it out. An uncompetitive top rate of tax decreases the incentive to work, reduces the amount of money for investment and, as has been seen in France, ultimately reduces the size of the economy.

What the Opposition do not seem to grasp as they play 1970s politics is that we live in a different world from that of the 1970s, when the UK had draconian top rates of tax. The principal difference is that high earners now have the option to live elsewhere, without any inconvenience, because of the internet and much improved air travel. We do not want to go back to the brain drain, and to being the sick man of Europe.

Plenty of people have offered advice on this issue to the Labour party. Let us take the comments of Mark Giddens, a partner at UHY Hacker Young, who stated:

“We would lose some of the edge that we currently have over other Western European countries in attracting successful entrepreneurs and investors. We will also find it harder to compete against other major English speaking economies such as the USA”.

The evidence seems clear. Under the French model we see high tax rates, anaemic growth, high unemployment and lower Government revenues; under our current model the long-term economic plan is working, we have the fastest economic growth in the developed world, and an economy that has created more jobs than the rest of the EU combined, leading to more tax revenue.

We can see in the HMRC analysis that was mentioned by the Minister and published in 2012, that the 50p rate was raising nothing like the £3 billion that Labour estimated at the time and continues to hold dear. Indeed, the direct cost of the reduction in the rate of income tax at that time was estimated at only £100 million. When other lost tax revenues are taken into account, it is evident that there was no direct cost to the Treasury in cutting the top rate of tax from 50p to 45p, not to mention the wider economic impact of that higher rate of tax, as we have seen in the French economy.

When Nigel Lawson cut the top rate of tax from 60p to 40p in 1988, the tax take rose and top earners paid a larger share of it. When the Treasury decided to set the rate of capital gains tax at 28%—up from 18% under the previous Labour Government—it stated that its studies had concluded that that rate maximised the tax take. If the optimum rate of unearned income is 28%, I suggest it is unlikely that the optimum rate of income tax should be nearly double that level. Figures show that less than 1% of the population earn more than £150,000 a year, yet those people contribute approximately 30% of the total income tax take. That is a total of £49 billion from the 45p rate, compared with only £40 billion raised the year before when the rate was 50p— evidence that when we cut the rate of tax, revenues rise.

What is Labour’s case for tax rates that will lead to decreased revenues? When the measure was first suggested it was nothing more than a pre-election attempt to convince its core vote that it was still the party of squeezing the rich, and remains so today. At the same time, Labour was obviously laying a bear trap for the incoming coalition Government. It was a Trojan horse of a policy; a Trojan horse of a tax. Members will have noticed that I have referred to France rather a lot in my speech. That is because for the future of the UK should Labour win the next election, we have only to look across the channel and see what has happened. As the Leader of the Opposition said previously, “What Hollande is doing in France I want to do in Britain.”

[Mr McKenzie]

How does the hon. Gentleman feel about comments from the hon. Member for Harlow (Robert Halfon) who said that cutting the rate of tax to 45p would emphasise to the public that again, the Conservative party is indeed the party of the rich?

[Madam Deputy Speaker (Dame Dawn Primarolo)]

Order. I said at the beginning of the debate that if we co-operated with each other and each speaker spoke for no more than nine or a maximum of 10 minutes, everybody would be able to speak without a time limit. The hon. Gentleman has now spoken for 13 minutes, so I would be grateful if he would think about drawing his remarks to a conclusion.

[Andrew Bridgen]

I am sorry, Madam Deputy Speaker, but I was enjoying myself. In conclusion, by continuing to advocate a return to the 50p rate of tax, the Labour party is demonstrating that it is not a credible party of opposition, and certainly not of government. It is in fact a left-wing pressure group, ignoring economic evidence from around the world and determined to represent the interests of its union bosses.

[Geraint Davies (Swansea West) (Lab/Co-op)]

It is a great joy to follow the hon. Member for North West Leicestershire (Andrew Bridgen). He told me that he is capable of generating energy out of potato peelings, and he certainly illustrated that today. I am also pleased to follow my hon. Friend the Member for Stretford and Urmston (Kate Green), who made a point about the inequality imposed by the Government’s economic policies. Given the inequality between men and women’s earnings, if women earned the same as men—they do not—I understand that they would basically be working for free from today onwards. That is the level of inequality we face.

It is all very well talking about raising tax thresholds. Everybody likes that, I guess, but as has been pointed out, it is not a panacea, certainly not for people who are moving in and out of work on zero-hours contracts—the 1.1 million people moving in and out of benefits—and having to go to food banks and so on, or those who cannot get jobs regularly. While many people welcome raising tax thresholds, it is costing us £11 billion a year. I mention that because it has been suggested that the measure under discussion today, the 50p tax rate—the static value of which is supposed to be £3 billion—is somehow insignificant and incidental, but it is still a significant figure, given the money the Government are giving away in raising tax thresholds.

Today the Prime Minister said again that he will be giving away £7 billion—there will basically be cuts in public services to pay for more tax giveaways. We are moving now to a situation where the Tories are saying, “Public services bad; tax cutting good” and many communities are feeling the pinch as a result, which is unfortunate.

During Prime Minister’s questions, the Prime Minister said that it would be “immoral” to rack up debt and leave it to our children as an inheritance, yet I put it to the Minister that the Government are doing precisely that. Their economic strategy is generating a low-income, low-wage economy, at the same time as pushing up the tax thresholds, which people have welcomed. The net outcome is that income tax receipts are going down. Instead of going up by 7%, they have risen by 0.1%, and the tax and national insurance increase that was supposed to continue to rise is £13 billion short this year.

The deficit reduction that the Chancellor planned for the autumn statement will be £11 billion down. Why? Because he predicted that wages would rise by 2.5% and they have risen by 0.5%. And why is that? As I mentioned, it is about insufficient investment from banks in productivity, and cuts to benefits for students or fees for sixth formers. In addition, the infrastructure that generates productivity and higher wages is being undermined, so the tax take is getting worse. Under Labour, 55% of the economy was debt; it is now about 75%. Borrowing under this Government over the past four years has been more than in 13 years of a Labour Government. It is a complete catastrophe.

[Andrew Bridgen]

rose—

[Geraint Davies]

I will give way to the hon. Gentleman in a moment. He was banging on about the 1970s, but let us remember more recent history and the fact that in the 10 years to 2008, the economy grew under Labour by 40% before we met the banking disaster. Two years on, thanks to the fiscal intervention of Brown and Obama, it was growing again by 2010. We have been flatlining since then because of the economic incompetence of the hon. Gentleman and his colleagues.

[Andrew Bridgen]

Perhaps I can drag the hon. Gentleman back to today’s motion and Labour’s wish to bring back the 50p tax rate. What does he say about the comments of Lord Myners, a Labour peer, who said of the shadow Chancellor:

“The economic logic behind his thinking would not get him a pass at GCSE economics…he takes us back to old Labour and the politics of envy”?

That was in The Daily Telegraph on 25 January 2014.

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[Mark Garnier]

The hon. Lady will have to ask my hon. Friend about that. I was referring to the shadow Chancellor and saying that if my hon. Friend was at the conversation he would know what was said. In any case, my hon. Friend has a career in front of him.

We need inward investment. We have talked about the 1970s when we had exchange controls in a very different type of economy. Now we need to set a direction of travel to provide absolute certainty to any company looking to invest in this country. It can never, ever be the case that the message coming out from this place is one where politics overrides the interest of investors coming into the country. The hon. Member for Bethnal Green and Bow talks about vested interests, but if we are referring to the vested interests of someone who is going to invest in this country, I would do everything I could to support those vested interests, because it means bringing jobs for my constituents. The more jobs they bring, the higher the salaries, the better the standard of living. It will work.

[Andrew Bridgen]

My hon. Friend is bringing his knowledge of taxation to the Chamber. Does he agree with me and with Lord Digby Jones, who was the Trade and Industry Minister under the last Labour Government, when he said recently on the BBC of the 50p tax rate:

“It’s great politics but it’s lousy economics…Are we talking politics or are we talking what’s right to create wealth and jobs in the nation?”?

[Mark Garnier]

My hon. Friend makes a fine point. Digby Jones is a wise and sensible—[Interruption.] He was a Minister in the former Labour Government, although he was the only Minister ever not to be aligned with a political party—I concede that point.

The key point about the direction of travel is that we must make every effort to give certainty to those investors coming into the country. Mucking around with the tax rates and providing a confused message about the top level of tax is bad economics. I hope that the Minister—although now may not be the right time—will give us some indication that, should the economic recovery and the recovery of the public finances continue, there will ultimately be a 40p tax rate as a target. I suspect she may not want to commit herself at this point. As I say, mucking around with tax rates is detrimental to our economic recovery.

[Mr Iain McKenzie (Inverclyde) (Lab)]

I will follow your direction, Madam Deputy Speaker, on the length of Members’ contributions because I know that some Members still wish to speak in the debate.

I think that we will have no argument about the fact that austerity has been painful. What divides us in the Chamber is where we see that pain being inflicted most. Labour Members believe that it is targeted on the whole at people at the lower end of the income scale—they have been feeling most of the pain in these difficult economic times. Incredibly, billions in tax cuts have been given to people at the upper end of the income scale. The top 1% of earners have been given a tax cut worth £3 billion, in stark contrast to those at the other end of the income scale, who have been struggling in these difficult times.

Let us look at what little has been given to lower earners and how that was paid for. It did not come from the top earners; it came from the Government dragging down the tax bracket to take in middle-income families, who have paid through going into the higher tax bracket for anything that has been conceded to people at the lower end by moving the threshold up. I suspect that the Government wished that to go unnoticed but we have well and truly figured that one out and the public have noticed it, too.

On top of that, households will on average be nearly £1,000 a year worse off by 2015 as a result of Government tax cuts and benefit changes. That means that hard-working, middle-income families are being squeezed into a cost of living crisis. We see that day in, day out. I certainly do in Inverclyde. I see that in everyday events. More and more families are having to shop around during their weekly shop, looking for bargains. Those families are in work, yet they are finding it difficult.

As has been highlighted, whatever happened to putting into practice the Government’s well-used phrase, “Those with the broadest shoulders should bear more of the burden”? That was pushed to one side when those people were relieved of that burden through tax cuts.

If people can pay more, they should pay more in these difficult times. That is only fair. That is what this debate is about—fairness in these times of tax pain. It is not only me saying that. Some members on the Government Benches have been saying it, too. The coalition partners, the Liberal Democrats, have been saying it. Most notably, the Deputy Prime Minister said that this was the wrong time to send the wrong message by cutting the higher-tax level. Even Lord Heseltine, who once looked as if he would lead the Conservative party and become the next Prime Minister, has said that it is the wrong message to send out.

Tax avoidance is increasing under this Government. As we heard only the other day, £35 billion of tax has been avoided, yet the Government are reluctant to go after the tax-avoidance loopholes and to take the burden off lower-income earners. In addition, the Government have again cut staff levels at HMRC.

Austerity is being applied at the wrong end of the social spectrum by this Government. That is as clear as day. By their actions, those who can least afford it will be asked time and again to step up and make that contribution. It is not just the lowest paid—middle to low-income earners are also taking the brunt of the austerity.

Let me talk a little about hard-working families in Inverclyde. Government Members claim that they are producing more employment—that more people are in jobs. In Inverclyde, 26% of children live in poverty. Three quarters of them come from working homes. It is an absolute disgrace that, in this day and age, that level of child poverty is allowed to exist.

People say that good things come to those who wait and they talk about the Government’s long-term economic strategy. I will tell Members what good things came to those who waited: it came to those bankers who paid themselves a bonus after waiting to cash in on the lower tax rate. However, it did not come for one of my constituents, who waited almost a year to be assessed for her disability benefit and had to rely on the good will of others.

We support lifting many of the low paid out of tax altogether. They are not being lifted out of poverty. They are still captured in the circle of poverty. Their outlay does not match their income and that is evident when we look at where they are buying the basics of life: they have to look for bargains time and again.

[Andrew Bridgen]

The hon. Gentleman is talking with great passion and emotion about the hard-pressed people in his constituency. I am completely with him on that, but can he explain how deterring the top 1% of earners, who are already paying 30% of all income tax, from economic activity, or even driving them out of the country, will help his hard-pressed, hard-working constituents, or mine?

[Mr McKenzie]

The hon. Gentleman argues that, if we put the 50p rate back in place, we would see a mass exodus of billionaires. It is not me who is saying that that would not happen; it is his coalition partners. The Lib Dems say that that would not happen; they do not see it transpiring. If he is talking about the employment that has been created, he will see that in my area of the country, part-time work and temporary work, especially at this time of year, are on the increase. Labour Front Benchers have talked about helping those on lower pay and lowering the starting rate of tax to 10p. The public were hit by one of the first increases in tax that the Government put in place: the VAT rise, which has hit them hard, too.

Remember that this Government promised to balance the books in this Parliament. They have reneged on that promise and are actually borrowing more. Therefore, the time scale to balance the books under this Government has been pushed out even further. That can mean only one thing for those already feeling the pinch of austerity: they are going to feel the punch of austerity if this Government get back into power. It is about balancing the books in a fairer way.

We say that a 50p higher rate would help to do that. It is time for the economic circumstances to require those who can pay more to pay more. A 5p increase will not chase them out of the country, despite what the hon. Member for North West Leicestershire (Andrew Bridgen) thinks. Labour will reverse the £3 billion tax cut for the top 1% of earners as part of our plan to balance the books in a fairer way. In contrast this Government have increased tax for millions while millionaires are given huge tax cuts. It is time for top earners to pay the 50p rate. If this Government will not put that in place, the next Labour Government will.

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[Mr Browne]

I have not the faintest idea what the hon. Gentleman is talking about. It seems like complete nonsense. I am not in favour of punishing anybody. If people can keep a higher proportion of the product of their labour, they will be incentivised to keep working and be productive. That applies to people who are earning £20,000, and who have seen a big cut in their income tax under this Government, but it also applies to people who are earning £220,000 and who might have set up successful companies employing 150 people in the hon. Gentleman’s constituency or in mine. I am not seeking to punish people. I am not one of those politicians who believes that we can make some people happy only by making others unhappy. I want us to be a harmonious country in which everyone is incentivised to work and can see the product of their labour.

[Andrew Bridgen]

My hon. Friend has hit the nail on the head. Does he agree that Opposition Members are still failing to appreciate that we need a strong economy, driven by entrepreneurial people, in order to have the strong public services that we need? That is where all the money comes from.

[Mr Browne]

I do agree with that, although I do not always agree with everything put forward by those on the Government Front Bench. For example, it is important—as the hon. Member for Wyre Forest said—that we should remain a member of the European Union. I know that some Conservative Members are uncomfortable with that, but we are part of the world’s biggest single market. It is an attraction to investors from outside the EU that they can invest in the United Kingdom not only because it is the sixth biggest economy in the world but because we can act as a stepping stone into the largest single market.

We also need to adopt a broadly liberal approach to migration. It is extremely important for our country that we can attract high-talent people from outside the European Union. We see quite a lot of that in London, with people coming to our capital city as well as to the other parts of the United Kingdom to invest and to grow businesses. That is important for our national prosperity.

I take an economically liberal approach across the board, but it is important that we have an enterprise economy for all the reasons that I have stated. An enterprise economy is important if we are to fund public services, for example. Many Members will have travelled widely. I would simply recommend that they try out the public services in countries that have had a heavy dose of socialism. After all, people were only escaping over the Berlin wall in one direction. They were not trying to escape from the west to the east in search of a better quality of life or better public services. A lot of the dysfunctional countries with real social problems are those that do not raise enough money to be able to fund decent public services. In no country in the world do politicians want to have bad hospitals and bad schools. Some countries do not have good hospitals and good schools because they cannot afford to fund them, and that is because they do not have an economy that raises enough revenue to do that. That is because they keep deterring wealth-creating entrepreneurial behaviour. It is all so straightforward that it feels frustrating having to explain it to people.

My philosophical and concluding point is this: all the money we are talking about is being earned by individuals working; it is not our money, the Government’s money or the Leader of the Opposition’s money. When he talks about giving money back, as if he were some sort of Santa Claus figure who is there to decide how much of your own money you are allowed to have and we should be extremely grateful to him, or to the shadow Chief Secretary, for benevolently allowing us to keep a bit of it—

Oral Answers to Questions

Andrew Bridgen Excerpts

Tuesday 4th November 2014 Commons Chamber

[Andrea Leadsom]

The right hon. Gentleman is possibly being a little mischievous. As a veteran Chief Secretary to the Treasury from the previous Government, he should well understand that, according to the OBR’s comments and looking at its 2010 forecast errors over time, the biggest difference between 2013 and earlier was the lack of external shock. In 2011, high commodity prices ate into disposable incomes and the euro area crisis damaged credit and confidence. He should well understand why the deficit reduction was impacted by external shocks.

[Andrew Bridgen (North West Leicestershire) (Con)]

According to the International Monetary Fund’s “World Economic Outlook”, the UK is set to grow at rates that will put other major European economies to shame. What measures does the Minister believe have allowed that out-performance of our European partners?

[Andrea Leadsom]

My hon. Friend is quite right. The UK is now growing at the fastest rate in the G7 and, indeed, is forecast to grow at the fastest rate in the G20. That is the result of our long-term economic plan—reducing business tax rates in order to get more people into work; more people paying their taxes and more people able to bring home a wage. That long-term economic plan is what is bringing our economy back into growth.

Oral Answers to Questions

Andrew Bridgen Excerpts

Tuesday 5th November 2013 Commons Chamber

[Nicky Morgan]

It is interesting to note that the main fall in wages and salaries came in 2007-09, when growth fell from 5.7% to less than 1%. Of course the Government understand that the situation is very difficult, but I am surprised that the hon. Gentleman has not welcomed the fact that the claimant count in his constituency has fallen by 11% under this Government, whereas it went up by 75% under the previous Government.

[Andrew Bridgen (North West Leicestershire) (Con)]

Will my hon. Friend tell the House by how much those on low and middle incomes are going to be better off because of this Government’s decision to raise the personal allowance to £10,000 from April 2014?

[Nicky Morgan]

I thank my hon. Friend for his question. The average taxpayer will be better off by £700 a year as a result of these changes.

Interest Rate Swap Derivatives

Andrew Bridgen Excerpts

Thursday 24th October 2013 Commons Chamber

[Andrew Bridgen (North West Leicestershire) (Con)]

Will my hon. Friend give way?

[Sir Gerald Howarth]

If my hon. Friend will forgive me, I will not, as other hon. Members wish to speak.

We have Mr Chris Sullivan, the chief executive of the corporate banking division—a very big wig in the Royal Bank of Scotland—saying that he is committed to the “fair and timely treatment” of the bank’s customers. I say, “Thank you very much,” to Mr Sullivan, because his letter was dated 3 August 2012 and yet my constituent has still seen no action. It is high time that the banks understood the gravity of the situation and the concern felt by the public. It is high time that they understood the risks they pose to businesses and the fact that they are damaging the United Kingdom by failing to address these concerns. They must do so forthwith, and the Government must give them every help so to do. I hope that eventually—indeed, soon—our constituents who have put their money on the line to try to generate wealth for our country and improve the economy will be given a better deal.

[George Freeman (Mid Norfolk) (Con)]

I am grateful for the opportunity to speak in this important debate, and I want to add my name to those of other colleagues in paying tribute to my hon. Friend the Member for Aberconwy (Guto Bebb) for his leadership and to the Bully-Banks campaign. I commend my hon. Friend the Member for Wyre Forest (Mark Garnier) for enlightening us all on how these mechanisms work, and I am grateful for the work of the all-party group, of which I am happy to be a member.

I want to speak about the context in which we need to view this issue, based on my own experience. I believe that this is the end of a banking boom-and-bust and bail-out, which speaks volumes about the role of banking in the economic crisis that we face. On the basis of my previous career in small businesses in East Anglia, it seems to me that the big bang, along with all the many good things, triggered a major cultural and financial neglect of the real bread and butter economy on the ground. Over the last 15 or 20 years, Norfolk has certainly seen a wave of bank closures, a “computer says no” culture, and a neglect and undermining of what was traditionally viewed as the backbone of our local economy, but what became in recent years, particularly under the last Government, rather unfashionable and, dare I say it, boring for the bankers of today.

Norfolk now sits on the cusp of a major economic renaissance—in life sciences, in engineering and in energy. I thank the Government for investing in the infrastructure but in that sector the banks have largely been irrelevant, in my experience, to such early-stage companies because they are too risky. Those companies usually rely on venture finance from angels, and corporate venturing from customers.

We thus need to ask ourselves some big questions about the banks’ role as our economy goes forward. Of course the banks play a crucial part. America has 20,000 banks and a new one is started nearly every week, and I believe that our banking sector and our financial services sector is one of our greatest and most innovative sectors. We sometimes talk about the City as if it comprised just four or five big banks; in fact, it is a fabulous crucible of financial innovation that should be celebrated and encouraged. The problem lies with the few big banks at the top that were bailed out by the last Government in such a way as to see them sitting on too many real businesses in the real economy that we need to grow and support.

I am going to speak about three of my constituents who have suffered as a result of the problem we are debating. Mr Andy Keats is a local entrepreneur who built up a number of companies—in this case, a successful 13-year-old company with 30 local employees, which is about to be sold for £3.5 million. When Mr Keats decided that he wanted to move his banking from RBS to Barclays, RBS stopped passing on the sales income from credit and debit card sales in the business. The business went insolvent within six weeks, and for the last four years, he has had to deal with RBS and NatWest and has had to face a series of major issues and challenges, to which I have been party. I have seen at first hand banks not responding and when they do, ignoring previous communications, and passing on debts to debt collection companies.

[Andrew Bridgen]

Does my hon. Friend agree that one explanation for the banks’ lack of enthusiasm to get on and pay out compensation is that if businesses that have gone bankrupt have no access to the redress scheme, there is no incentive for the banks to grasp this nettle, so the Government need to do something to force their hand?

[George Freeman]

My hon. Friend makes an excellent point for which I am very grateful.

Mr Keats has also pointed out that the solicitors acting on behalf of the bank sometimes take court action without serving necessary notice.

I cannot name the second constituent because, like so many in these circumstances, he wishes to remain anonymous. He is a leading local business man and something of a pillar of the community. His business was pushed into accepting interest rate derivative products by unscrupulous bank salesmen. He has filed legal action against his bank so that the statute of limitations does not time out on his claim, which is a very real threat.

The third constituent is Paul Adcock, the managing director of Adcock’s of Watton, a great family business on the high street of a great Norfolk town. He was one of the first campaigners to make a complaint and a key leading light in the Bully-Banks campaign. I want to pass on my thanks, on behalf of my constituent, to my hon. Friend the Member for Aberconwy because the campaign has been a huge help to him. Adcock’s, a major local business and a pillar of the local establishment, racked up £175,000-worth of unscheduled charges. In September this year, Barclays finally settled. I want to put on record my constituent’s thanks for doing so.

This is not just a local issue. It is an enormous issue that runs across our economy. The numbers are eye-watering. The Bully-Banks campaign has estimated that this mis-selling scandal has cost small businesses more than 400,000 jobs in our economy, with £1.7 billion a year lost to the Treasury. It has led directly to the loss of 162,000 jobs, and to the inability of SMEs to create 251,000 jobs that they would have been able to create otherwise. More than 30,000 small businesses still face long delays, and fewer than 7% of claims being considered by Royal Bank of Scotland had reached the redress stage by the end of the month, while nearly five times as many—32%—had reached that stage at Barclays. Just 2% of those whose cases have been deemed eligible for review have accepted offers of redress. The banks have, I believe, set aside £3 billion for redress purposes, and less than £2 billion has been paid to just 32 businesses so far.

We need a speedy and fair process for redress and compensation. I urge the Minister to use all the mechanisms at his disposal to encourage the FCA to accelerate its handling of claims, to ensure that the banks are not allowed to kick them down the road, to separate direct and consequential losses, and to ensure that the settlements are fair. We must be careful not to define consequential losses in such a way as to undermine the potential for future SMEs to raise funds from the banks.

We are lucky enough to have a Minister with a glittering career in finance and small business behind him, and, I do not doubt, a glittering career in politics ahead of him. Our group could not have a more doughty and outspoken campaigner and supporter of our cause on the Front Bench. I urge him to bring to this issue the skill that he has brought to other issues with which he has dealt, and to ensure that it is viewed in the context of the wider banking crisis, whose resolution will enable our economy to recover properly.

[Ian Swales (Redcar) (LD)]

It is a great pleasure to speak for the first time with you in the Chair, Madam Deputy Speaker.

I, too, congratulate the hon. Member for Aberconwy (Guto Bebb), not only on securing the debate but on his fantastic leadership of the campaign and the comprehensive speech that he has made today. These debates show Parliament at its best, although it is a little worrying that the banking industry seems to move tortoise-like between them, and to take on the characteristics of the hare only during the few days before and after they take place. Perhaps we just need to have more of them.

As I spoke in our last debate on this subject, I shall not repeat everything that I said then, but I do want to say something about the question of advice. Small businesses typically have an accountant and a bank, and in the past have typically relied on both to be on their side. However, it is clear from the mis-selling scandal that they should have been given independent financial advice, because the banks were no longer on their side, and were now treating them as potential consumers of sophisticated products.

If the banks insist on not being on the side of small businesses and on treating them primarily as sales prospects, we should be thinking about the regulations. We should be thinking about what sort of advice the banks should be telling their clients to seek, about what disclosures of commission they should be making, and about other matters that would be the norm if the banks were selling to private individuals. After all, many of the businesses that we are discussing are not much bigger than the affairs of a private individual. I hope that the Minister will respond to that point.

Some of my constituents, like those of other Members, are following today’s debate closely. Theirs is a very familiar story. Stephen Lilley wanted a loan, and stated explicitly that he wanted to pay it down as quickly as possible. However, he found himself locked into a long-term fixed deal involving a fixed amount of money. Roy Myers turned up to sign the papers for a fairly large loan, only to find that clauses were being inserted at the point of signing. He had no time to consider what was happening.

A point that I do not think has emerged clearly today is that the businesses that are involved in such arrangements are effectively locked into their existing banks, and cannot get out. There has been some predatory behaviour on the part of banks in those circumstances. A business in my constituency which, partly because of the banking arrangements, was in heavy weather financially, found itself having to pay an extra £500 a month for a “special relationship manager” who did not actually do anything. That was merely a way of extracting yet more money from the business. In another case—we heard of a similar example earlier—a life insurance policy was forced on a constituent who did not need it. People have very little room for manoeuvre when they are locked into their existing banks.

I welcomed last year’s decision by the FCA, but progress has been painfully slow. I was present when Barclays turned up at the all-party parliamentary group, many months ago, and convinced us that it was organising a great big operation and that things would move very swiftly from that point onwards—which, of course, they did not. Meanwhile, the lives of more and more businesses and individuals are moving on, and things are happening to them. A couple of months ago, one of my constituents who is a member of a support group was speaking to a woman who was ill at the time, and who has subsequently died. That is another person to whom the banks are no longer having to talk.

A great many businesses have gone bankrupt. The hon. Member for Harrogate and Knaresborough (Andrew Jones) raised a point that had not occurred to me before. If it is true that the banks will not have to compensate those behind bankrupt businesses, they have a financial incentive to bankrupt businesses. I have been around long enough to know that whatever banks have a financial incentive to do, we can pretty much count on their doing.

[Andrew Bridgen]

Does my hon. Friend agree that not only is this situation awful for the SMEs that have been caught up in the mis-selling scandal, but it sends a strong negative message to anyone who is thinking of going into business in this country? Does it not send them the message that the banks cannot be trusted, and provide them with a big incentive not to go into business at all?

[Ian Swales]

Absolutely. Earlier, the hon. Member for South West Devon (Mr Streeter) referred to the reputation of the banks. I think that they will have an enormous job to do to recover their reputation, and to rebuild the trust that new business people should expect.

I hope that the Minister will say something about the question of what happens when businesses have gone bankrupt, or their proprietors are deceased. Do they simply drop off the banks’ lists? If that is the case, I think that we should be very concerned about what the banks are doing and what they are incentivised to do.

There has been good news this week about the separation of compensation from consequential loss. Both the constituents of mine who are following this debate particularly closely have received money in the last few weeks. Why, Members may ask, should they be at the front of the queue? The two of them have been prepared to go very public—they have even appeared on television—and, amazingly, the banks appear to have moved them to the front. Cynic I may be, but I would guess this was part of a process of dealing with the most vocal people first, and of course it should not be like that.

The question has been raised of whether criminal activity has taken place. I think that there is a whole spectrum ranging from relatively innocent bank employees, selling something that they have been told to sell, to clear misrepresentation, lies and so forth. I think that Bully-Banks is finding that the same names recur in some cases, and I think that when what is clearly criminal activity has taken place, those involved should be prosecuted.

We have all talked about the need for extra pace. I hope that the Minister will put maximum pressure on the banks and the FCA to speed up the process, and will show that the Government are on the side of small businesses and our constituents.

Air Passenger Duty

Andrew Bridgen Excerpts

Wednesday 23rd October 2013 Commons Chamber

[George Freeman (Mid Norfolk) (Con)]

It is a pleasure to follow the hon. Member for South Down (Ms Ritchie) and her colleague the hon. Member for East Antrim (Sammy Wilson). I welcome the new Economic Secretary to the Front Bench; I have no doubt that she will be a huge asset to the Government and the House.

I declare a slight interest, as I have cousins in Northern Ireland and, in my prior career, I spent far too many hours on internal flights, particularly to Scotland. Like many, I have enjoyed city breaks with my family; I shall spare the House the details of our recent trip to Amsterdam.

The democratisation of air travel in recent years has been a force for good, opening up to millions of families opportunities previously denied them. Millions more people are enjoying the thrill and experience of easy air travel and all that it opens up. Air travel does, of course, have a high carbon footprint, but just as the air industry has achieved stunning breakthroughs in safety through the extraordinary application of private sector expertise, investment, innovation and science, I have no doubt that it will be a force in demonstrating potential for energy-efficient air travel as well.

My principal reason for speaking this afternoon is to discuss the business of air travel and the role of air travel in business and in the economic predicament faced by this country. We are rightly—I commend the Government for it—putting an emphasis on the rebalanced economy and unlocking the power of our regions and cities to drive a new model of innovation-led growth, and air travel is an important part of that.

However, let us turn to the charge sheet that the House is presented with this afternoon and the motion, which calls for air passenger duty to be scrapped. The first charge is that it is a green tax, but, as the hon. Member for East Antrim said, it was not introduced and justified on that basis. However, he explained that even if it were, that would be no reason for not getting rid of it. This country, the western world and the whole world face a challenge in increasing energy efficiency and reducing the carbon footprint. Although that would not be a reason for introducing APD, it is worth bearing it in mind that we need to send a signal that rail travel, car-sharing and other forms of energy-efficient transport are to be encouraged.

The second charge is that the tax is regressive. The data in the ONS publication “The Effects of Taxes and Benefits on Household Income, 2011/12”, which I commend to colleagues, make it clear that it is not regressive; in fact, it is no more so than VAT. I think we would all love to get rid of that too—certainly colleagues in the House today would love it; we would like to get rid of most taxes—but we are not in a position where we can afford that luxury.

The third charge, interestingly, is that the tax is disproportionate. In fact, the Government have limited the rise in APD to inflation in the period 2010-11 to 2013-14, and in this year’s Budget they ensured that the rate will remain constant in real terms. This afternoon I looked online and found an air ticket to Berlin for £80, £13 of which is APD. That does not seem to be a prohibitive level of tax that will put people off.

[Andrew Bridgen (North West Leicestershire) (Con)]

Does my hon. Friend share my sentiment that it is good to be on the Benches of a Government who realise the need for tax competition? We realise the need for competitive corporation tax rates and income tax rates; surely APD is a tax and we need to be competitive on that too. We have the highest APD in Europe. Of the 27 countries in the European Union, only six charge APD, and the Republic of Ireland is going to reduce it to zero in April next year. Should my hon. Friend not bear it in mind that we need to compete?

[George Freeman]

My hon. Friend makes a good point. He must have spotted my notes, because my very next point is that we need to view this in the wider context of business and tax competitiveness. I hugely welcome the fact that the Government have committed to reduce corporation tax from 28% to 23% and, in due course, to 20%, meaning we are constantly cited as one of the top three in the G8 on tax competitiveness, as stated in the 2012 KPMG global survey. That is a strong signal to global businesses that we are open for business, and it supports my hon. Friend’s point that we need to view this in the context of wider support for businesses and tax competitiveness.

The fourth charge is that the tax is bad for Northern Ireland. In this respect, I have some sympathy with the case made by colleagues from the Province. The fact that the Republic has cut APD creates a particularly difficult situation in Northern Ireland. The Minister said, encouragingly, that the Northern Ireland economy is not showing signs of suffering as a result, with very high growth and new jobs being created. That is a testament to the creativity and entrepreneurialism of the people of Northern Ireland. The changes made to the tax in November 2011, which reduced long-haul rates to the same as those for short-haul, and the devolution of the matter to the Assembly are important and welcome measures. However, I have a lot of sympathy with the argument that locally, given the situation in the Republic, there is a particular problem that the Government will need to look at.

The truth—an inconvenient truth, to borrow a phrase—consists of three points. As a generation, a Parliament and a Government, we face, and have to deal with, the most massive crisis in our public finances. We inherited from the previous Government £1.2 trillion of debt—£5,000 for every man, woman and child in the country. Debt interest alone is now the fourth biggest item of Government expenditure, and it is set to rise, if the coalition has not acted, to £76 billion a year in interest payments. We have a structural crisis in the public finances—in pensions, in welfare, in health and in debt interest.

Despite the very best efforts of the Government to contain the crisis and make sure that they do not trigger a downward spiral in public confidence in the economy, we still face a huge challenge to restore our public finances. We do not have money to spare. There is no such thing as a free tax cut; the closest thing is a tax cut on wealth creation. That is why I support the steps that the Treasury has taken on corporation tax to put in place a competitive tax environment for our businesses and why, in particular, I support a new deal for start-up businesses—the people who are at the coal face of creating new jobs. The truth is that APD is not a tax on business creation; it is a tax on air travel, which is not the same thing.

Finally, this tax raises £2.8 billion a year, and that figure is set to rise to £3.8 billion in 2016. That is a significant amount of money. Interestingly, it is nearly the same amount as that which the Government have given away in a fuel duty cut, which has caused huge reductions in income at the Exchequer and has a relatively low impact on people’s pockets. Abolishing APD would have a small impact on GDP and hard-working families, but it would lead to a major £4 billion cut in our deficit credibility. I hope Ministers resist it.

Living Standards

Andrew Bridgen Excerpts

Wednesday 4th September 2013 Commons Chamber

[Greg Clark]

I want to make some progress.

The Labour party’s policy, according to the Institute for Fiscal Studies, is to increase Britain’s debt by £200 billion. That would be ruinous, because—this is linked to living standards—that borrowing would fall to the ordinary working people of this country. They would suffer a double hammer blow: more money would be taken out of their incomes to repay debt and there would be higher interest payments on mortgages and business loans. A 1% increase in interest rates would cost householders with a £100,000 mortgage £1,000 a year.

Today and throughout the past three years, the Labour party has persisted in talking down the economy, but its policies would take down the country. In fact, one of the biggest sources of concern in the British economy today is the total absence of a credible economic policy from the people who in 20 months’ time aspire to be the Government of this country. That is of concern even to people in the Labour party. Even the noble Lord Mandelson said recently that the risk of pursuing Labour’s economic policy was too great:

“I don’t think you can really take a chance, I think the markets, whose confidence in us to pay back what we borrow—that confidence is the determining factor.”

He went on to say that

“a lurch in policy…would be quite a risk which I would not blame the chancellor for refusing to take.”

By the way, Lord Mandelson is a friend of the shadow Chancellor. He said:

“I also happen to like him…well, more than I used to.”

We are here to discuss the cost of living and the cost of living is Labour’s legacy. Of course families are finding it tough. The Labour party talks about the cost of living without any mention of its record in government on living standards. It was the Labour Government who doubled council tax. Even in the depths of the recession, when my hon. Friend the Member for Peterborough (Mr Jackson) presciently asked them to consider freezing council tax, as this Government have gone on to do, they flatly refused.

[Andrew Bridgen (North West Leicestershire) (Con)]

On that point, will my right hon. Friend join me in congratulating Conservative-run North West Leicestershire district council, which has frozen council tax for four years running, and in condemning the leader of the Labour group, who suggested that we should raise council tax by 2% this year?

[Greg Clark]

I congratulate my hon. Friend’s council. We know that council tax is an important bill that people face. That is why when we came to office, knowing the pressures faced by ordinary working people and families, we froze it.

The same is true of the Labour party’s record on fuel duty. Its fuel duty escalator meant that what working people paid to fill up their car rose by more than inflation every year. Petrol would be 13p a litre more if Labour had stayed in office.

Energy prices for the home escalated under Labour. Between 1997 and 2010, the average domestic gas bill doubled. These matters were raised in our earlier exchanges, but the hon. Member for Leeds West omitted to say who the Energy Secretary was in the last Government. It was the current Leader of the Opposition. When I shadowed him across the Dispatch Box, these issues were not addressed, despite our urging him to do so.

In its 13 years in office, the Labour party failed to safeguard pensions. In one notorious year, it increased the state pension by 70p. This Government have restored the link to earnings. Labour presided over the biggest fall in the number of homes being built since the 1920s, with the consequence that rents have risen and, for the first time in 100 years, the proportion of people who own their own home has fallen.

--- Later in debate ---

[Lisa Nandy]

I find the hon. Gentleman’s comment alarming. Perhaps it is time for Government Members to attend an economics course or, more pertinently, a history lesson. If we fail to learn what happens when considerable deregulation causes a global financial crisis—supported and egged on by Conservative Members—we will be condemned to repeat it.

I was telling the House about the indignity, anguish and anxiety that afflict many of my constituents, and that daily grind people down. There are a number of things the Government could do, and I want to address them in the short time that I have. First, the Government should and could take immediate action to create jobs by investing in infrastructure. We badly need new schools, we badly need new homes and, in some areas, we badly need new hospitals. Constituencies like Wigan, where the construction industry has always been important to the local economy, need that investment, not just because we will get the buildings we need but because it will provide jobs and apprenticeships for young people.

Construction used to be one of the key routes for young people leaving school to get into the labour market and learn skills that could take them beyond the sort of low-paid work that hon. Members have described. If the Government were to take action immediately, it would be a huge relief not just to me but to the 1 million young people who are out of work and who ought to be a national priority. We know that this should be a national priority, because we know what happens when young people are left out of work: they suffer prolonged periods of unemployment, insecure employment and wage-scarring effects well into their 40s. What we are seeing at the moment is limited action to create apprenticeships. I am seeing young people in a revolving door of apprenticeships, taking on work experience, internships and apprenticeships over and over again. These do not lead to a real, paid, lasting job. Government Members heavily criticised the future jobs fund for being expensive, but I say to Ministers: please recognise that investing money in young people up front is repaid in droves. It is the right thing to do morally; it is the right thing to do economically.

Many young people are on zero-hours contracts and I want to say something about the increasing casualisation of the work force, something that the workers in the Hovis factory in my constituency are rightly standing up against at the moment. People on zero-hours contracts tend to earn lower wages as a whole, and we have seen compelling evidence of widespread exploitation. I would be grateful if the Minister paid some attention to what I am saying, because this is something that affects people across the country, including, perhaps, in his constituency.

[Andrew Bridgen]

The hon. Lady speaks passionately about youth unemployment. If the Opposition have all the answers on youth unemployment, why did it rise by 40% under the previous Labour Government?

[Lisa Nandy]

Again, I would really like to send the hon. Gentleman on a history course. If he looks more closely at what happened under the previous Government, he will see not only that youth unemployment fell, but that at the one point in the mid-2000s when it rose it was because there were more young people compared with the number of jobs. It was due to an increase in the number of young people, not a shortage of jobs. The previous Government immediately took action to reduce youth unemployment, something I hope Ministers revisit and learn from in view of the problems we have now.

I was talking about the widespread exploitation of people on zero-hours contracts. Whole sectors are now dominated by this. I represent women in my constituency who work in the home care sector, and I have heard appalling stories about the way they are treated. One woman was forced to take eight hours of shifts on no notice whatever. She has two young children and had to take them with her and lock them in her car while she tended to older people. I would be really grateful if the Minister stopped laughing for a moment, because this is very serious. When the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson), responded recently to a debate in Westminster Hall packed with Labour MPs raising similar concerns, she did not say very much. However, it cannot be beyond our wit to bring in some kind of statutory code or regulation and ensure that it is enforced. I take the Minister’s point that some people like zero-hours contracts, but, given the widespread exploitation of people in that situation, surely it is time to take action.

Oral Answers to Questions

Andrew Bridgen Excerpts

Tuesday 12th March 2013 Commons Chamber

[Greg Clark]

I can confirm that the Clydesdale bank has now become part of the review, as have all the other principal banks. The hon. Gentleman has raised the case of his constituent with me before; even though the product was not within the review’s terms of reference, Clydesdale has agreed to consider it as part of the review.

[Andrew Bridgen (North West Leicestershire) (Con)]

I have constituents who are concerned that the FSA may come under pressure from the banks to water down its findings and reduce the scope of the redress scheme, to their disadvantage. What can my right hon. Friend say to reassure my constituents about that important issue?

[Greg Clark]

My hon. Friend raises a very important point. The review is under the auspices of the Financial Services Authority, and each bank has had to appoint independent reviewers who are themselves accountable to the FCA. It is absolutely crucial that the objectivity they bring to bear cannot be compromised, and I have given the FSA clear feedback that it should have that in mind during the review.

Financial Services (Banking Reform) Bill

Andrew Bridgen Excerpts

Monday 11th March 2013 Commons Chamber

[Chris Leslie]

I do not want any of our banks to be in a position of over-extending themselves, putting at risk either their customers or the taxpayer. It is very simple. We need to listen to the carefully thought through advice of the banking standards commission, the Vickers report and others, including the incoming Governor of the Bank of England, on these particular issues. The Government may call it the British dilemma, but it is astonishing that they always seem to be asking the European Union to come to their rescue at some point with some reform to deal with bail-in or whatever other problems happen to be around later on down the track. That is not adequate.

Let me deal with the issue of derivatives inside the ring fence, as I know that the parliamentary commission has been concerned about it. The Vickers report said that derivatives trading should not be allowed—full stop. The parliamentary commission recognised, however, that there were services on the margins where some simple derivative products might be permitted, but it added that

“allowing ring-fenced banks to sell derivatives other than as an agent creates additional prudential and conduct risks.”

I agree with the commission on that issue. We need clearer protections to prevent abuses within the ring-fenced retail banks where derivatives are sold. That was illustrated, of course, by the mis-selling of some interest rate hedging products to small and medium-sized enterprises. The danger is one of information asymmetry between customer and vendor and the fact that the trade became exceptionally lucrative for the banks. We have to move away from this era of the exploitation of the customer’s lack of knowledge, and the commission was clear about that in the three tests it set.

We have seen one of the drafts of the secondary orders, subsequent to the commission’s recommendations. It is therefore worth comparing that order with the tests that the commission has set. The commission said that there should be adequate safeguards against mis-selling, but as far as I can see, the draft order does not go into any detail about how the Prudential Regulation Authority or the Financial Conduct Authority will enforce anything new. The commission said that there should be a clear definition of simple derivatives, which will be allowed, versus complex derivatives, which will be disallowed, but the draft order seems to define simple derivatives quite widely—in other words, as instruments designed to tackle interest rate risk, exchange rate risk, default risk, liquidity risk or for dealing in assets included in the liquid assets buffer. It would be easier if the Minister set out what would not be allowed rather than what would be allowed in the ring fence.

The third test relates to limits on the proportion of a bank’s balance sheet. The commission thought that was necessary, but the draft order so far leaves out what that percentage should be. There is a space left for a figure before the percentage sign, so perhaps the Minister can give us a sense of what that proportion of the bank’s balance sheet should be. That was one of the commission’s tests, as I said, so we need to secure assurances from the Minister about the Government’s intentions. As Martin Taylor said in his evidence to the commission:

“I can’t see the point of having a fence round the chicken coop, electrifying it to keep the foxes out, and then inviting a family of tame foxes to live inside it.”

That sums up the problem quite neatly. I have already alluded to the bail-in powers. Again, it is disappointing that the Government are relying on future European directives as the means to achieve bail-in rather than building it into the Bill before us. I do not think that the frequent excuse of “We’re waiting for the European Union” will do any longer.

We need also to focus on some of the other issues that should be in the Bill today, particularly rebuilding consumer choice, financial inclusion and a diverse market. The Bill is silent on all those areas. There is nothing about challenger or new entrant banks; nothing to ensure a universal obligation on banks for basic bank account services. There is also pussyfooting around on switching of bank accounts, about which I know some Government Members are concerned. There is nothing on mutuality, despite the pledge in the coalition agreement to

“foster diversity in financial services, promote mutuals and create a more competitive banking industry”;

and nothing about a fiduciary duty of care for clients and customers. We will table amendments to ensure that high street lenders offer a basic bank account, which is particularly necessary because of the onset of universal credit. We want a report within six months addressing obstacles to new-entrant challenger banks and current account provision. We also want Parliament to have an opportunity, soon after Royal Assent, to examine the adequacy of customer switching arrangements, and we want the publication of bank data on “lending deserts”, the postcode areas where—as we are finding in our constituencies—some small and medium-sized enterprises and customers find it difficult to gain access to credit. Other tests need to be included in the Bill to fulfil the coalition’s mutuality pledge. We also want a duty to be imposed on directors of ring-fenced banks to operate prudently and to safeguard deposits, and we want them to have a fiduciary duty of care to customers throughout the financial services.

[Andrew Bridgen (North West Leicestershire) (Con)]

The hon. Gentleman has rightly described consumer choice as the main driver of any market. Does he believe that encouraging Lloyds Banking Group to buy HBOS, or intimidating it into doing so, increased or decreased consumer choice in this country?

[Chris Leslie]

The hon. Gentleman may not have noticed it, but there was a bit of a financial storm going on in the financial services sector at the time. He may think that his constituents who had deposits in Lloyds would have been better off had the bank not been saved in the way that it was, but I do not think that they would have enjoyed the experience of turning up at the cash machines and not being able to get their money out. I think that rescuing the banks was a necessary step at the time, but now we must learn from that crisis, which occurred not just in the United Kingdom but in the United States and throughout the developed world. If Government Members think that they can get away with rewriting history, and that the former Prime Minister uniquely got on a plane, caused the collapse of Lehman Brothers, and then went off to Greece and Spain, they must be living on a different planet.

[Andrew Bridgen]

Does the hon. Gentleman not remember that Lloyds Banking Group needed to be bailed out only because it was intimidated into taking over HBOS by the last Government?

[Chris Leslie]

I disagree. I think that there was a high-risk, high-return culture in the banking sector—we saw it in the United States, and we saw it here—which Government Members fuelled through their deregulatory philosophical approach.

--- Later in debate ---

[Sir Peter Tapsell (Louth and Horncastle) (Con)]

I asked Harold Macmillan what the secret was of making a good speech in the House of Commons and he said, “I once asked David Lloyd George that very question and the answer I got was, ‘Don’t say anything interesting or important in the first five minutes of your speech—just wait for the Chamber to fill.” I am not sure that that will happen this afternoon, which is a pity because I believe that if this Bill finishes up as the Act I hope it will be, it will be the most important Bill of the whole of this Parliament. It may stop the second shoe falling, as it did in 1931, to use the phrase of the time. After the stock market crash of 1929 came the slump and the 1931 crisis.

In 2007-08—but in 2008 in particular—we saw the greatest financial crisis since the 1930s, which resulted in almost a decade of slump that was only solved by Adolf Hitler. If we can get this Bill right and make sure that 2008 is not repeated, it will be an enormous achievement.

Hank Paulson is the former head of Goldman Sachs and was US Treasury Secretary at the time of the 2008 crisis. If hon. Members read his book, they will see that the critical day was 15 September 2008. He says that everybody who mattered in finance was in his room and that, although he is a big man who was a famous university footballer in his youth, the stress and strain was so great that during the course of the conference he had to leave the room twice to vomit. He writes that on that day capitalism was on the verge of total collapse. I think that people have forgotten the seriousness of that crisis.

I believe that crisis was more important than 9/11. As it happens, I woke up in my club in New York on the morning of 9/11, so taking part in this Second Reading debate means that, during the course of my life, I have been present at two very important events. The fact is that the 2008 crisis ruined the lives of millions of people all over the country. Many of my constituents are suffering real hardship as a result of the measures that had to be taken to deal with the effects of the crisis, and the same is true right across the world. We really must prevent it from ever happening again, but I fear that there is a real danger that it could happen again.

The high spirits—to put it at its most polite—of investment bankers do not seem to be unabated. Many banks are in a weak state, including, as we heard only three or four days ago, Goldman Sachs itself. Some major European banks are close to bankruptcy. This Bill is a belated but welcome attempt to prevent the banking crisis of 2008 from happening again.

The Opposition spokesman is the hon. Member for Nottingham East (Chris Leslie) and in far-off days I was the hon. Member for Nottingham West, so we have a certain amount in common. Our views on regulation also have a great deal more in common than he has indicated. There is no reason why he should know what my views are on anything—nobody really does and I only do on a day-to-day basis. He should look up a speech that I made on 16 July 1984. I spoke for 40 minutes—in those days, Back Benchers were allowed to make proper speeches—and strongly opposed the deregulation of that time, which, in those days, was called big bang. Deregulation had suddenly became tremendously fashionable. Lady Thatcher, Keith Joseph and all the monetarists were terribly keen on it, but one of the reasons why I resigned from the Opposition Front Bench on which the hon. Gentleman now sits and why I refused to serve in Margaret Thatcher’s Government is that I disagreed with it.

I reread my speech last night and if the hon. Gentleman reads it, he will see that I predicted, very clearly and unbelievably presciently—I was much younger and more alert then, and knew how to put points so much better than I do now—exactly what would happen and the reasons why. I also predicted the tremendous decline in the moral standards of the financial world that would result from the internationalisation and Americanisation of the City of London. That, of course, is what, unfortunately, happened.

In that speech against big bang, I opposed the absorption of high street banks, merchant banks and stockbroker firms—I was a partner in one—into universal banks, free to speculate, on their own account, with the money of depositors and large sums of borrowed money in what is now called leverage, which we and America pronounce differently. I will not go into the arguments about ratios, except to point out that, even as respectable a hedge fund as Carlyle was dealing on a ratio of 30:1. The leverage situation was one of the causes of this disaster.

At the beginning of this Parliament I described the banks as today’s over-mighty subjects and that is what they are. They have been strongly lobbying the Vickers commission and the Treasury not to deal effectively with the bank that is too big to fail. I take the view that if a bank is too big to fail because of the systemic effect that would have, it is too big to exist at all and should be broken up now. As a start, I strongly support the recent recommendation of the Governor of the Bank of England to break up the Royal Bank of Scotland.

Glass-Steagall imposed an absolute separation between commercial banking and investment banking. It also banned proprietary trading in commercial banking. The essence of Glass-Steagall in 1933, by which Roosevelt managed to save the American banking system, was to root out conflicts of interest, which are the evil at the heart of universal banking. Banks were told that they had to choose between servicing a client and promoting their own short-term interests. Combining the two inevitably creates conflicts of interest that lead to many other problems. That is what Mr Paul Volcker, unquestionably the most distinguished and experienced banker in the world, urged on America in what became known as the Volcker rule and on our Parliamentary Commission on Banking Standards, which has been chaired so ably and brilliantly by my hon. Friend the Member for Chichester (Mr Tyrie).

I read the accounts of what is being said and the questions that are being put at the parliamentary commission with great jealousy, although I do not want to be co-opted on to it. Its second report reached me just before lunch, and I chose lunch. However, I will read the report and all the subsequent reports with the greatest possible interest. I find it difficult to understand how anyone who has read the complete account of Mr Volcker’s evidence to my hon. Friend’s commission, as I did at the time that it was published, could fail to be persuaded that we need, in effect, a complete return to Glass-Steagall.

What I mean by a complete return to Glass-Steagall is that we should have none of this nonsense of ring-fencing, which used to be called Chinese walls. It never works. Chinese walls turned out to be papier-mâché. I worked in the City for 40 years and I promise Members that it is impossible to make that work.

[Andrew Bridgen]

Does the Father of the House remember that it was President Bill Clinton who relaxed the Glass-Steagall rules in return for the American banks lending to sub-prime borrowers? Were not the seeds of the financial crisis sown at that point?

[Sir Peter Tapsell]

Yes, they were. The American banks turned mortgages for people who could not afford to pay the interest into derivatives disguised as bonds and then sold packets of them—500 or so—all over the world. They could not have done that under Glass-Steagall. That really makes the point, so perhaps I ought to sit down now.

Infrastructure

Andrew Bridgen Excerpts

Tuesday 12th February 2013 Commons Chamber

[Catherine McKinnell]

This Government’s choices on spending and tax have resulted in millionaires being given a tax cut while the poorest bear the brunt. We are seeing the results of that, not just in the suffering that we see at our constituency surgeries, but in the lack of economic growth. That is why it is so disappointing—indeed, unforgiveable—that the coalition Government have been asleep at the wheel on the issue of infrastructure investment.

[Andrew Bridgen (North West Leicestershire) (Con)]

Will the hon. Lady give way?

[Catherine McKinnell]

I will give way one last time and then I must make some progress.

[Andrew Bridgen]

I thank the hon. Lady for giving way. Does she not recall that a pledge was slipped into and hidden away in the Labour manifesto to cut capital spending—that is, infrastructure spending—by 50% had her party formed the next Government?

[Catherine McKinnell]

That shows, once again, the Government’s utter complacency and head-in-the-sand approach to this whole issue. The hon. Gentleman knows that his Government have spent £12.8 billion less on capital investment than Labour planned, so I will not take lectures on that from any Government Member.

Time and again over the past two years we have heard the Prime Minister and Chancellor expound the value of infrastructure investment in delivering growth in the economy and, crucially, creating new jobs. All the evidence shows, however, that their record is one of inaction, complacency, delay and failure to deliver, which, combined with private sector uncertainty, is having a highly damaging effect on Britain’s construction industry for one.

The much-vaunted national infrastructure plan, published back in 2011, identified 40 priority projects that the Government stated were

“of national significance and critical for growth”.

However, despite the Government’s proclaimed focus on those so-called priority areas—and, indeed, a Cabinet Committee that is supposed to be overseeing progress—we are yet to see spades in the ground for too many of those projects.

Last year’s autumn statement announced a £5.5 billion infrastructure package, but this is to be paid for by cuts to departmental spending and underspend, including capital underspends, and one third of the projects included in the package had been previously announced by the Government. Indeed, describing the 2011 infrastructure plan as

“hot air, a complete fiction”,

the director general of the British Chambers of Commerce urged the Government to develop

“bold leadership and some creative ideas”

and to “get a grip” on this issue in order to stimulate economic growth.

The CBI’s assessment of the Government’s performance does not get any better, with its annual infrastructure survey last year finding that 73% of its members do not think that transport infrastructure will improve over the next five years and that two thirds believe that the UK’s energy and water infrastructure is unlikely to get any better. This has been damningly described by the CBI director general John Cridland as

“a wake-up call that businesses in Britain are looking for action and we haven’t seen any yet.”

Even the Deputy Prime Minister finally appeared to wake up to the importance of this issue—although a little late in the day—when he acknowledged last month that the coalition cut capital spending too deeply when it came into government. We were all desperately disappointed that the latest apology did not come via YouTube—the “I’m Sorry” infrastructure remix. We were offered this particular mea culpa via The House magazine, which he told:

“I think we’ve all realised that you actually need, in order to foster a recovery, to try and mobilise as much public and private capital into infrastructure as possible.”

Yes, that is what the Opposition have been saying all along.

In their first three years, this Tory-led Government have spent £12.8 billion less in capital investment than would have been spent under the plans inherited from Labour. That is a fall of 8%. According to the Government’s Office for Budget Responsibility, the coalition will spend £7.3 billion less on capital investment over the course of this Parliament than was planned by Labour.

This debate is not just about investment. Ensuring that infrastructure projects get off the ground and deliver jobs and growth requires the political will and determination to drive things through—something that is sadly and damagingly lacking under this Government. The economic situation in which we find ourselves requires urgent action from Government, such as that proposed in Labour’s five-point plan for jobs and growth, which would bring forward long-term infrastructure projects, as we did in the aftermath of the global financial crisis. That plan includes the construction of thousands of affordable homes.

We need a comprehensive long-term plan to rebuild Britain’s infrastructure for the 21st century—a long-term framework that gives investors the confidence that they need to invest consistently and that will deliver real results for the UK economy. That is why my right hon. Friends the Leader of the Opposition and the shadow Chancellor have asked Sir John Armitt, the chair of the Olympic Delivery Authority, to conduct a review into how long-term infrastructure decision making, planning, delivery and finance can all be improved.

As this issue is of such national significance, a cross-party consensus is required to deliver what we need. We have seen what can be achieved when we reach a consensus and plan for the long term across Parliaments and across political divides. The Olympics showcased Britain as the great country and the one nation that it is, but that was Labour’s legacy. What will be this Government’s legacy? If they are not careful, it will be dither, delay, stifled economic growth and stagnation. It is time to get a grip. The Opposition motion calls on the Government to do just that, and I commend it to the House.