Credit Institutions and Investment Firms

Andrew Turner Excerpts

Tuesday 8th November 2011 Commons Chamber

[Mr Cash]

I very much agree with the hon. Gentleman. The more I have heard from him over the past few years, the more I have admired his determination to speak the truth. That is the position. This is not a party game; this is serious and it is deadly. This move is determined and deliberate. That is what people need to know.

Roland Vaubel, the famous economist from Mannheim university, talks about the use of the qualified majority voting system in the Council of Ministers as a form of “regulatory collusion”, and mentions the strategy of deliberately raising rivals’ costs. Particular groups of countries—there are no prizes for guessing which—enter into arrangements behind the scenes, and vote accordingly. Both France and Germany use that system to their advantage, and as I said in the Financial Times the other day, we are being outmanoeuvred.

Despite all the time, money and effort being put into the Vickers report, there are, as the shadow Minister made clear, serious worries that Vickers may yet be undermined by the very proposals that we are discussing. The problem goes much further, but I do not need to enlarge upon all that any more.

Some people tend to sneer at the idea, which I occasionally put forward, that our sovereignty is the most important issue of all. I say that for one reason and one reason alone—it is only by exercising the sovereignty of this House on behalf of the British people that we have any chance of being able to return and repatriate powers if the other member states are not prepared to negotiate.

I am prepared to listen to the Prime Minister telling me that he will fight hard, or whatever answer he gave me yesterday, but I remain totally unconvinced. We are at risk as a result of proposals such as these, so it is absolutely essential that we get things right. When I wrote a pamphlet for him—in fact, for the general public—called “It’s the EU, Stupid”, I set all that out, so I do not need to enlarge on it any further.

I have got out of the way the general points that I believe are necessary to put the whole matter in context. I see the Foreign Secretary laughing a little. I do not hold that against him, but I have to say that this is no laughing matter; it is a very serious question. We are reduced to having to argue about reasoned opinions and subsidiarity. Important though those are, as I have said, there is a dagger pointing at the City of London. Not just this particular draft regulation but an accumulated vast array of weaponry is being aimed at the heart of our economic system.

[Mr Andrew Turner (Isle of Wight) (Con)]

Could my hon. Friend help by reminding me how much is owed to the City of London as a proportion of national income?

[Mr Cash]

It has been declining, and that is another reason for concern, but the latest figure is something of the order of 15% to 20% of our gross domestic product. Take that away, and where would we be? The draft regulation is a deliberate attempt to do that, and it is only one document of many.

The aim of the Basel Committee on Banking Supervision is to

“enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide.”

I hope that it succeeds. However, the various directives in question relate to the taking up and pursuit of the business of credit institutions and to capital adequacy, and they are collectively known as the capital requirement directive or CRD. They introduce a supervisory framework within the EU, designed, it is stated, to

“ensure the financial soundness of credit institutions (banks and building societies) and certain investment firms.”

I take a slight interest in that, because my family founded the Abbey National building society back in the 19th century and the National Provident Institution in 1835. Those institutions were run on sound grounds and lasted until very recently, but have unfortunately now been mopped up as a result of some of the international goings-on in the financial sphere.

In 2011, the European Commission proposed a draft regulation—the document referred to in the motion—and a draft directive, known together as CRD IV. They would incorporate the Basel III agreement on prudential requirements for credit institutions and investment firms into EU law. How often have I said that the danger is that when a matter is transferred to EU jurisdiction, we lose control? Because of section 2 of the European Communities Act 1972, we cease to be able to control it. We hand over control of the drafting, method and interpretation of the law, and its effect on our own institutions, our own initiative and our own ability to be innovative and succeed.

The proposals are still before the European Scrutiny Committee, pending the receipt of further information from the Government. Meanwhile, the Committee has recommended that the House submit a reasoned opinion on the draft regulation to the European Commission, the Council of Ministers and the European Parliament. A draft is annexed to the Committee’s report. I mention that because if enough member states issue a reasoned opinion, we will be able to stop the proposals. I strongly urge the Government to get as many member states as possible together, and I am sure they are doing that, if only to retrieve the situation as best they can.

Of course, as we all know, other member states will know what we are up to, and they will not enter into an arrangement to submit a reasoned opinion. We have seen that in the past—we do not get the requisite number of member states, and the proposal goes through. This is a test not just of the Government but of the integrity of the system. If a reasoned opinion is required because the Commission has exceeded its powers in relation to subsidiarity, nothing should prevent that from going ahead on an objective basis. I am not trying to pre-empt the decision, but I am anxious, on the grounds that I am about to mention, for other member states to understand that a reasoned opinion is necessary. It is in their hands to prevent the proposals from going through.

I turn now to the argument about the objectivity of a reasoned opinion. When the Commission makes a proposal for legislation, it is now required under the European treaties to produce a “detailed statement” that makes it possible to appraise the proposal’s compliance with the principles of subsidiarity. I do not for a minute demur from what I said during the Maastricht debates—that subsidiarity was a con trick intended to establish hierarchies, not true subsidiarity. We shall see.

That detailed statement is not just a bureaucratic procedure for its own sake, although one might be forgiven for thinking that some in Brussels think it is. It is the principal means left whereby national Parliaments and electorates can assess the basis on which the Commission considers legislation to be necessary at supranational rather than national level. The presumption underpinning subsidiarity is that decisions are best taken as close to the citizen as possible. Amen to that, providing that it happens.

It is not sufficient to underline the importance of those detailed statements. I remind, or inform, the House that no piece of European legislation has ever successfully been challenged in the Court of Justice of the EU on the grounds that it breached subsidiarity. Not one. That sends a very powerful message. There is not a little suspicion, therefore, that subsidiarity is just something to which lip service is paid. It strikes the democratic gong, but is not followed by any lunch. One of the jobs of national Parliaments—that is us here in the Chamber—is to try to change that position.

Oral Answers to Questions

Andrew Turner Excerpts

Tuesday 6th September 2011 Commons Chamber

[Mr Andrew Turner (Isle of Wight) (Con)]

8. What fiscal measures he is taking to reduce the costs of businesses which employ less than 25 staff.

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

Small businesses play a vital role in the economy and the Government have taken a number of steps to support them. The Government have provided support for small businesses and employers by reversing the previous Government’s planned £3 billion tax on jobs, reducing corporate taxes and introducing a moratorium on new domestic regulation for micro-businesses.

[Mr Turner]

Does the Minister agree that we should make it as simple as possible to set up small businesses in the UK and get rid of unnecessary regulations and red tape?

[Mr Hoban]

My hon. Friend is absolutely right. We need to reduce the burden of red tape to encourage small businesses to set up and to create more jobs. That is one reason why, for example, we introduced a moratorium exempting micro and start-up businesses from new domestic regulation for three years from 1 April 2011.

Fuel Prices and the Cost of Living

Andrew Turner Excerpts

Wednesday 16th March 2011 Commons Chamber

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

I am grateful for the opportunity to speak in this debate and convey the feelings of my constituents about fuel prices. In Na h-Eileanan an Iar—as the good Speaker himself would say and, of course, did say—we are paying the highest tax per litre in the UK; we are doing so consistently, at a range of fuel stations throughout the entire constituency. That has been the situation throughout the life of this Government and indeed the previous one. The last lot—the Labour Government—made excuses; this lot—the Tory and Liberal Government—are making promises. The upshot at the pumps in Ness, in Uig, in Back, in Stornoway, in Lochs, in Tarbert, Harris, in Lochmaddy, in Balivanich, in Creagorry, in Daliburgh and in Castlebay is the same; excuses and promises equal exactly the same.

The rural fuel derogation has been announced twice at Liberal Democrat conferences that have been six months apart, but there has still been no formal approach to the EU Commission. Can we be given an indication of how long it typically takes to get such a measure approved by the EU Commission, especially as it has given approvals in respect of far less rural areas in other places in Europe than the Hebrides and other Scottish islands?

[Mr Andrew Turner (Isle of Wight) (Con)]

I hope that the hon. Gentleman is not speaking only of Scottish islands, because the Isles of Scilly are included in this and I hope that the Isle of Wight will be too.

[Mr MacNeil]

As the hon. Gentleman knows, and as I have demonstrated in the past, I have great sympathy for the Isle of Wight and indeed for the Cornish Isles of Scilly, so I hope that this will extend to them as well.

May I suggest that the Government put in place a maximum percentage that can be taken at the pumps in taxation, or at the very least a desired percentage to be taken in taxation, just as the inflation rate seems to be a desired rate and a target for the country? I say that because in the UK 62% of the price of petrol is duty, which is the highest level in Europe—the lowest level in Europe is 46%. May I also ask the Government to examine the fuel distribution network, because many people have long had deep concerns about profiteering between refineries and retailers in what seems to be a very opaque business model? We have to ensure that any gains we make in the—so far promised—rural fuel derogation are felt at island pumps and are not snaffled away elsewhere.

We know what fuel tax is doing to people’s pockets on a daily basis up and down the land: it is affecting the poorest more, as this is a highly regressive tax. In areas such as mine, where wages are below the national average, the cost of living is higher and fuel poverty is high—my constituency has the highest in the land—the regressive nature of this tax is really felt. The tax pulls money out of the economy from families, businesses and individuals, and from local authority budgets and health board budgets. Clearly we need help and I ask the Government to provide it in tackling fuel tax and in taking the foot of high fuel tax off the neck of the islands’ economy.

When I last spoke in the House on this matter, on 7 February, I said—I have checked the Hansard record—that fuel was £1.44 a litre. My office in Stornoway tells me that it is now £1.48 a litre, and I shudder to think what it might be the next time I speak on this issue in the House, because the cost seems to be going in one direction. Before the staff at Benbecula airport correct me, yet again, on the price, I point out that the price in Uist will inevitably be higher. I understand that the price in Uist and Benbecula is more than £1.50 a litre. Consistently, throughout the length of my constituency, we are paying the highest fuel tax in the UK. The simple re-announcements of the intention to have a rural fuel derogation without any change coming at the island pumps are greeted with nausea by my constituents, who are tired of hearing pious words and are instead looking for pious actions.

Fuel Prices

Andrew Turner Excerpts

Tuesday 15th February 2011 Westminster Hall

[Glyn Davies]

I am hugely grateful to my honourable neighbour, if that is a proper parliamentary term to use. No, I did not know that it was four times more sparsely populated. As he started to speak, I was intending to go straight to Google to find out the relative levels, but I accept the figure he gives. We know that Powys is sparsely populated. In the past, there would have been Government initiatives to address the problem, but I cannot think of any current great initiative. We need one, and we need to be added to the list of places where fuel price alleviation might be provided.

I wanted to make this contribution, first, because the issue is hugely important to my constituents, and, secondly, to encourage the Chancellor to recognise in his Budget that it is one of the greatest problems facing the remotest parts of rural Britain. The insidious impact is, as I described earlier, an anti-regional policy that makes it far more difficult to bring development to the remotest parts of our country.

[Mr Andrew Turner (in the Chair)]

I call Andrew Bingham. You have until 20 minutes to 11.

Independent Financial Advisers (Regulation)

Andrew Turner Excerpts

Monday 29th November 2010 Commons Chamber

[Harriett Baldwin]

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

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

[Mr Andrew Turner (Isle of Wight) (Con)]

Does not my constituent, Mike Ward of Ward Financial Services, have a point when he says: “People need to understand that business has changed in recent years. People won’t trust banks as much as they did in the past, so they must be careful not to undermine the relationship between themselves and their clients. That would not be the right way forward”?

[Harriett Baldwin]

I thank my hon. Friend for that intervention. It is the banks that are likely to be advantaged by the change in regulations. I am afraid I have only six minutes in which to raise the many questions that I have about the regulation. I shall focus on a couple of areas that my hon. Friend the Member for Wyre Forest (Mark Garnier) did not touch on much in his remarks, which were extremely comprehensive.

I want to hear more about the handing of a competitive advantage to the banks. It is my understanding from my discussion with the Financial Services Authority that banks that are trading overseas could come into this country and continue to offer advice. The European Union is about to consult on something called the directive for packaged retail investment products. It would be wise for the FSA to wait and see the results of the consultation before it takes permanent steps here to put out of business 20% of independent financial advisers.

I have also heard through the Westminster Hall debate that my hon. Friend the Minister has talked about the free annual financial health check that the Consumer Financial Education Body will be able to offer. I want to hear more tonight from the Minister about how that will be delivered and what the additional cost to the industry through the social responsibility levy will be. Has that additional cost to the industry been factored into the £1.7 billion that is the five-year cost of the retail distribution review?

For the remaining four minutes at my disposal, I shall focus on my main area of concern, which has been raised by colleagues—the question of the qualifications. Imagine if nurses who were qualified were suddenly told that from now on, nursing was to be a degree-level qualification, and that all existing nurses would have to pass that degree-level qualification or they would not be able to practise their profession. That is what is happening to our independent financial advisers.

If I thought that passing an exam would prevent mis-selling and we would never have another incidence of mis-selling in future, I would be more supportive of the idea, but I do not see that an ability to pass an exam, which someone in their 20s might be much better at—certainly, I was—than by the time they get into their 50s and 60s, when they have all that experience about financial advice, precludes mis-selling in the future.

I can offer a few examples. We have been inundated with correspondence on the issue, but a couple of important examples stand out. One adviser wrote to me who is already qualified to chartered financial planner status. He is an associate of the Chartered Insurance Institute, which maps across to a degree-level qualification, but with the FSA’s new standards, it appears that there will be gaps. If advisers with such a qualification do not fill those gaps in the two years available, they will no longer have a livelihood in the industry. That is blatantly retrospective regulation.

Another important example that was brought to my attention was a letter from the chief executive of a friendly society based in Cleveland on Teesside. The case may be raised in the debate; I hope so. The chief executive wrote to me explaining that his door-to-door sales force who sell funeral policies for £1 a week and life policies for up to £5 a week will now be required to take the degree-level qualification. As such, he felt that his friendly society with its 10,000 low-income customers would have to shut it doors. May I urge the Minister to try to influence the independent statutory regulator to be more respectful of experience as a qualification?

Vulnerable People (CSR)

Andrew Turner Excerpts

Tuesday 9th November 2010 Westminster Hall

[Andrew George]

My hon. Friend makes a very good point about one of the great difficulties that occur when there is family break-up. I fear that as a result of these kinds of measures we might get more family break-ups, because of the stress and pressure under which families might be placed. In our constituency surgeries, we all see families in that very sad situation. We see single parents “without care”, as they are sometimes rather unfairly described, who find themselves wanting to have contact with their child or children but being unable to do so because of their very constrained circumstances. This policy will only make that situation worse.

[Mr Andrew Turner (Isle of Wight) (Con)]

I wonder whether the hon. Gentleman could look at levels of pay. In Cornwall, and similarly on the Isle of Wight, there is a higher level of pay in the summer and a lower level in the winter. Is that catered for in his understanding?

[Andrew George]

Other than with people who live in uncertain accommodation—winter lets during the winter and very uncertain accommodation in the summer—I am not aware of any circumstance in which people have variations in their rents, with a landlord varying the rate of rent on the basis of the tenant’s income. My hon. Friend makes a very good point. I am afraid that the system does not allow or cater at all for seasonality in working families’ employment and income.

A further incongruous circumstance is the potential conflict between this policy and what the Minister’s colleagues in the Department for Communities and Local Government appear to be doing regarding the registered social landlord sector. The intention is to allow, and even encourage, registered social landlords to increase the rent on their properties up to a notional 80% of the market rate for a particular location. The net effect of that—it will apply, I understand, to future new dwellings and to re-lets—is to create a rather strange circumstance: on the one hand the Government appearing to want to get the housing benefit bill down, but on the other hand one of their Departments appearing to ratchet it up. Of course, a large proportion of people in social rented accommodation—60% of those living in the accommodation of one of my RSLs—are in receipt of housing benefit, and ratcheting up the benefit in those properties would result in an increase in the housing benefit bill.

There will be other strange circumstances. People who seek to downsize their properties—for example, an older person living alone who wants to move into a single-person bungalow to release a family house for a local family—will be discouraged from doing so because the re-letting situation will mean that their rent could go up significantly if they were to pursue that otherwise relatively selfless act. By pursuing a re-let—a transfer—their rental might go up and their housing benefit might not cover it.

Because of the time, I shall quickly canter through a few other issues. First, on the wider issues of welfare reform, many of us will have read in the newspapers and heard in the media over the weekend the comments of the Archbishop of Canterbury, the Chartered Institute of Housing, the National Housing Federation, the Child Poverty Action Group and Action for Children, all warning about the unintended consequences. I certainly exonerate the Minister and her colleagues from wishing to pursue an intentional policy of impoverishing vulnerable people; I think that it is entirely unintended.