Premier Motor Auctions

Austin Mitchell Excerpts

Tuesday 17th March 2015 Westminster Hall

[Austin Mitchell (Great Grimsby) (Lab)]

The tale I want to tell today is an everyday story of business folk who have been robbed of their company by big banks acting in collusion with one of the big four accountancy houses—two sets of robbers, both too big to be touched by the machinery of regulation that we have. It is a story that is told several times in the Tomlinson report; those stories relate mainly to the Royal Bank of Scotland, whereas this story relates to Lloyds bank.

By analysing the process of company theft by banks and big accountancy houses working in collusion, I have discerned four stages. First, they introduce a Trojan horse to the company. Whoever it is, the Trojan horse then buddies up to the company and finds its vulnerabilities, while presenting a nice image and offering advice. Naturally, if that Trojan horse is a representative of one of the big four accountancy houses, they will be trusted, because we can trust the big four, can we not? They are big institutions of great repute that are worthy of trust. The third stage is that the Trojan horse insists on restructuring the company’s finances to put the bank in control. In the fourth and last stage, the company is put into administration for the bank to take for its own or to sell on to whoever is interested.

That is the technique and the four stages that were applied to Premier Motor Auctions, a Leeds-based auction firm that was profitable and well run. Lloyds bank itself described it as profitable and as a business of significant value. The company had an overdraft with Lloyds of £1.75 million. The Trojan horse was Irving Warnett of PricewaterhouseCoopers, who was put into Premier Motor Auctions, and welcomed by the company, as a non-executive director. As he put it, he was there as a “critical friend” to advise on how to run the business. Warnett went on to create a £2 million black hole in the company’s accounts by insisting—wrongly, as it turns out—that it had to have a separate account for its business with the Driver and Vehicle Licensing Agency, business that was in itself profitable. Legally that was not true, but the company went and created a separate account, which in turn required the overdraft to be increased from £1.75 million to £3.75 million.

At that point, the bank used its power to take control of the company. At the same time, it transferred the account to the Lloyds business support unit, which charged a higher interest rate and a £250,000 arrangement fee for its services to the company. Having created the black hole and transferred the account, the bank immediately instructed Keith Elliott, the chief executive and owner of Premier Motor Auctions, to sell the company “vigorously and robustly” via an administration that was to be handled by PwC.

As anyone sensible would, Elliott fought back. He got a rescue deal from a venture capital firm called Endless, which described the company as an “excellent firm” enjoying record sales. Lloyds scuppered the deal with Endless. It demanded 50% of the new deal. The manager of the Lloyds business support unit in Leeds said, “This is our attempt to crystallise the position and do an Endless/Lloyds deal without Keith Elliott.”

Not to be beaten—he is a resilient man and who can blame him for fighting to retain control of a company he built up?—Keith Elliott did another deal, with Scottish Motor Auctions, which would have secured the £2 million by which the overdraft had to be reduced to stop the administration. Someone—we do not know who, but it was either someone from Lloyds or PwC’s man, Irving Warnett—scuppered that deal in 24 hours. Lloyds has given me a long explanation, which I am inclined to accept, and which says that it was not someone from Lloyds, so the finger points at Irving Warnett and PwC. The deal was scuppered and Premier Motor Auctions was put into administration. In charge of the administration was Ian Green, the head of PricewaterhouseCoopers’ business recovery service and the boss of Irving Warnett, the man who had been put into the company in the first place and who was the architect of the whole financial arrangement.

Lloyds therefore got an equity interest in a company that Lloyds Development Capital had wanted to take over for some time. Through the administration, it took over a company that was making an annual profit—and still is—of £2.7 million. As for PwC’s share of the deal, it of course got a much higher fee for the administration than it would have from the simple transfer.

To put it bluntly and accurately, that is theft. That company was stolen. I have raised the issue in Parliament before, and Keith Elliott and I have raised it with various bodies. Elliott raised it at the Lloyds annual general meeting, and wrote to every director and partner of PwC, until eventually he was told to stop contacting the firm because he was becoming a nuisance.

After that, we went to the regulators. Regulators are surely there to protect companies and those who run them from theft and from having their company stolen from under their feet—what are they there for if not to offer that protection? Every one of them turned out to be a broken reed. Both Elliott and I appealed separately to the Institute of Chartered Accountants, which is the regulator for PricewaterhouseCoopers. It refused to investigate, because the case was “not a disciplinary matter”. I hope hon. Members have noted that point: theft is not a disciplinary matter, so if one of the big four accountancy houses colludes in the theft of a company, it cannot be disciplined—it is not a disciplinary matter. I do not know what it is; perhaps it is business acumen, but apparently it is not theft or a disciplinary matter. That was the response from the ICA. Elliott and I both wrote to protest against the decision, and it wrote back to say it would not answer any further correspondence on the matter. We were becoming a nuisance—as we should have been.

We then went to the Financial Reporting Council—the regulator of regulators. It too refused to investigate, saying that it was “not in the public interest” to do so. In other words, theft does not matter and is not in the public interest; or perhaps—I do not know whether this was what it was saying—theft is in the public interest but investigating it is not in its view. That is obvious balls. It is rubbish, and should never have been allowed.

When PricewaterhouseCoopers refused to answer my questions, the then Minister in the Department for Business, Innovation and Skills, the right hon. Member for Cardiff Central (Jenny Willott), kindly wrote to PwC—I am grateful to her for doing so—to say that it should answer MPs’ legitimate questions. That is absolutely right and I am grateful to the Department for that. PwC told the Yorkshire Post, which inquired about how that had gone, that it had written to the Minister, who had no further questions to ask.

The Yorkshire Post then discovered, through a Freedom of Information Act request, that the Department had not received a letter from PwC. I do not know whether that was a lie commensurate with the lie it told the Public Accounts Committee when it said that it was not selling tax evasion schemes, but it certainly was not true. It escaped from the Minister’s requests.

Ian Powell, a senior partner at PricewaterhouseCoopers, wrote to me:

“I am satisfied that PwC acted properly.”

When someone is judge and jury in their own case, it is easy to develop satisfaction that their company acted properly. So that was a nice reply, saying “something off” to me.

Mr Warnett had been retired by that time—I do not know why—and PwC has refused to allow him to be interviewed about his part in the matter, either by me or the new liquidators. He will not answer questions and PwC will not answer questions. In particular, it will not answer questions on the crucial issue of what Irving Warnett did to increase the debt, whether that was right—the lawyers say that it was not—and what he did to scupper the Scottish Motor Auctions deal, which would have saved Premier Motor Auctions from going into administration.

After being sent lots of letters, PwC gave me some answers in a final letter on 14 November. Those answers turned out not to be correct, but it says that it has answered. Instead of answering the questions, a woman from PwC wrote to me—Margaret Cole is her name, and she describes herself as general counsel to PwC—and told me, kindly:

“It is apparent from your latest letter that you believe that Parliament has a role in resolving disputes such as this. I do not agree with this”.

That is what she said. She continued:

“The courts are the ultimate and appropriate forum.”

In other words, she is saying, “Don’t go whimpering to Parliament if your company is robbed, thieved or if PricewaterhouseCoopers colludes with a bank to take it. Don’t go whimpering to Parliament—it’s got no power. Don’t go to the regulators, because they’ve got no power. Go to the courts, and face PricewaterhouseCoopers’s enormous army of highly paid lawyers. Drive yourself into bankruptcy by embarking on legal action against these big battalions.” That is to a man who has lost his company and his money. That is incredible advice and it is unbelievable that PwC should have the impertinence to say to a Member of Parliament, “Parliament’s not the forum; it’s the courts. And we’re bound to win in the courts because we’ve got weight, scale, big lawyers and clever arguments.”

That letter makes it clear that the little guy is very vulnerable in such situations and that he has no means of redress. It is clear that the big four and the banks are too big to take on, break up or deal with. Their power is overwhelming. It has increased and it must be diminished. They must not be able to crush the small guy on a whim in their determination to take on a profitable company.

Instead of chaps regulating chaps, we need effective regulation, just as they have in the United States, to stop such theft. If we do not get that, a threat will hang over all small and medium-sized enterprises that are in financial difficulties or have to turn to the banks for overdraft facilities. They will be crippled, robbed and possibly stolen by those powerful predators.

The big four and the banks are the new barons, with enormous power, and the citizen has little power. I am glad to say that Keith Elliott is still fighting back, now not only against the dirty deal imposed on him, but for all the small and medium-sized companies threatened by that kind of brutal takeover by financial institutions.

The power of these big institutions—the banks and accountancy houses—is far too great and must be diminished, but that can be done only by regulation and by making them accountable: by redressing the balance that weighs so heavily against the ordinary Joe. That is Parliament’s job and I hope that the Minister will tell us how the Government will address that imbalance and provide some means of redress for small companies and their directors who face such a situation. I am fighting on behalf of not only Premier Motor Auctions and Keith Elliott, but all companies threatened with that kind of financial takeover by big institutions.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

It is a great pleasure to serve under your chairmanship, Ms Dorries. I congratulate the hon. Member for Great Grimsby (Austin Mitchell) on securing the debate. I recall, as he mentioned, that we debated this subject in November 2013. The fact that he has returned to it for discussion today is testament to his tenacity and willingness to pursue the matter raised by his constituent, Mr Elliott, who he feels passionately has suffered a real injustice.

In our discussion almost 18 months ago, I set out that I shared and had some sympathy with many of the concerns raised. A wide range of people have expressed concerns about some aspects of insolvency regulation, which is why we have taken steps to make changes. I set out, which remains the case today, that I did not have powers to intervene in this case. Of course, the changes we are making will not be retrospective, but I hope to be able to set out the package of reforms that we have been able and continue to bring forward to strengthen the insolvency regime, which together are a bold step forward. I hope that the hon. Gentleman will be reassured by that.

I appreciate that that does not help in this specific case, which is covered by the systems that applied at the time. I know that the conflict of interest issues have been considered by the court, who dismissed that application. The ICAEW reviewed the complaint and concluded that there were no such issues. The Insolvency Service then considered the ICAEW’s handling of the complaint and did not find fault, so in terms of the different routes available in this specific circumstance, it was hard to see how the redress the hon. Gentleman ultimately seeks would be possible. However, in terms of the wider regime going forward, we are determined to improve the situation for companies that might find themselves in similar situations.

I appreciate that that will be frustrating, not least for the hon. Gentleman’s constituent, but he has been able to set out his concerns about the case and the behaviour of the different organisations involved in handling it powerfully. If I may give my view, which is perhaps different from that given by those organisations, I think it is absolutely the place of parliamentarians to represent their constituents’ views, raise issues of concern and put those firmly on the record in Parliament when they believe that an injustice has been done. I do not think it is for other organisations, frankly, to tell MPs whether this is an issue that they should or should not pursue on their constituents’ behalf.

On that note, although we are from different parties, I would like to recognise that the hon. Gentleman has a reputation for being a great defender of his constituents, with ever-forthright comments about whatever issue of the day he is concerned about. Although this may not be his last contribution in this House—I hope it is not—it may well be one of the last, and Parliament will certainly be losing a character when he steps down from his constituency in a short while.

I will turn to what we are specifically doing to strengthen insolvency regulation shortly, but first, let me say that we have an open mind on whether to take further steps. The ethics code requires administrators to satisfy themselves that the board is happy with the appointment and to consider any threats to their independence. We are reviewing that in conjunction with the regulators and seeing whether it is sufficiently robust, so that is one area in which there could be further movement, depending on the outcome.

[Austin Mitchell]

Will the Minister tell us what is happening about the Tomlinson report, which is a review of a series of very similar cases to this one, but concerning RBS? That demands action, too.

[Jo Swinson]

Great minds think alike, because that was going to be my very next point. In 2014, the Financial Conduct Authority announced that it had appointed firms to conduct an independent skilled persons report to examine RBS’s treatment of business customers in financial difficulty and consider the allegations that were set out in the report by Lawrence Tomlinson, which were about poor practice that he had evidence of. Once the FCA skilled persons report has been published, which we expect to happen this summer, we will carefully consider whether any issues need to be taken into account in terms of insolvency legislation—including the regulation of insolvency practitioners—that have not been addressed by the reforms in progress. It may be that those issues are already addressed by our package of reforms, but if further issues are raised, we will keep an open mind about taking further steps.

I turn to measures that we are already taking on strengthening insolvency practitioner regulation. The Small Business, Enterprise and Employment Bill, which is currently before the House, contains measures to strengthen the regulatory regime for insolvency practitioners. The introduction of regulatory objectives will make sure that insolvency regulators have a framework within which to carry out their activities. That is intended to make sure that a consistent approach is applied and to give a reference point for discussions between regulators, insolvency practitioners and the Insolvency Service. The objectives set out in the Bill will ensure that the regulators have a system of regulating insolvency practitioners that gives fair treatment and consistent outcomes for people affected by their acts or omissions.

Regulators will have to encourage an independent and competitive insolvency profession, whose members deliver high-quality services at a fair and reasonable cost, with transparency and integrity. They must seek to maximise returns to creditors and be prompt in making those returns, and the public interest must be protected and promoted during the insolvency process.

Another measure could have been relevant in this case, had the provisions been in place at the time; I am referring to the power to allow the Secretary of State to apply to the court for a direct sanctions order against an insolvency practitioner, when that is in the public interest. The sanctions could be a range of measures, including revoking authorisation and a financial contribution to creditors. I said when we previously discussed this issue that there was literally no power for Ministers to intervene, but the new regulation addresses that. We anticipate that, because this is a strong power, it would be used sparingly. It would need to be used when there was clear public interest and evidence of serious breaches of law or standards by insolvency practitioners, and when swift action was necessary. None the less, that gap, where previously there was no power, is being filled and there will be a power. Combined with other measures in the Bill, that should hopefully address the perception that the current disciplinary procedures for insolvency practitioners are not always effective in delivering fair and prompt outcomes for those affected.

The sanction powers and the regulatory objectives will hopefully make sure that we have a clear, transparent system that can hold people who do not deliver to account. Those changes, along with work that the Insolvency Service is doing with both the profession and the regulators to enhance the regime, should improve trust and confidence without the need for further intervention. However, if that set of measures is not sufficient and there is still a lack of trust and confidence in the system, we have the back-stop power in the Bill to establish a single insolvency regulator. That is if we do not see the anticipated improvement and confidence in the regime.

Many people express surprise that there are eight different regulators that authorise insolvency practitioners. I confess that before becoming the Minister responsible for insolvency, I was not aware of that. I had heard of some of the bodies, but was not fully aware of the degree of complexity. I well understand the view that that diversity does not necessarily help matters. I can see the potential benefits, including choice, but that fragmented regulatory landscape can lead to problems of inconsistency and complexity.

We were working, even before introducing the powers in the Bill, to deliver more consistency. A common sanctions framework has been agreed and a single gateway for complaints set up. That should ensure that, whichever body regulates a particular practitioner, the complaints process and the outcomes will be consistent across the profession.

I will turn briefly to the improvements made in relation to pre-packs, which have been a concern of many hon. Members. The Government commissioned Teresa Graham to conduct an independent review in 2013, and her recommendations were published in June 2014. The report concluded that pre-packs were an important and valuable part of the insolvency landscape— indeed, I think it was intended and hoped that a pre-pack would be the solution in this case, even though there was not a successful outcome—but that there was a lack of transparency and confidence, particularly where a sale was to a connected party.

The review recommended a voluntary package of reforms, which my officials have been working with stakeholders to implement. The reforms include setting up a pool of experienced business people to scrutinise a planned pre-pack sale to a connected party and a strengthened professional standard for pre-packs, which will require more information on the valuation and marketing of businesses to be provided to creditors. We are working to put that in place. The review also recommended that we should take a back-stop power for use if the voluntary reforms were not successful, and we have done that in the Bill. Those reforms are in place, and we hope that they will be successful, but if not, we have additional powers in the Bill. Sometimes additional powers can also act as an incentive for all those involved to ensure that the voluntary regime delivers the outcomes needed.

There has been significant concern about the fees that insolvency practitioners charge. Earlier this month, I announced new legislation affecting how IPs charge fees. In the future, they will be required to give clear information on their fees and expenses before asking creditors to approve them. Where fees are based on time costs, creditors will need to agree an estimate of the likely fees. If the insolvency practitioner’s fee then exceeds the approved limit, they will need to seek further approval before being able to draw any additional amounts. Basically, the estimate acts as a cap on fees. Those measures deal with the concerns that many creditors had about a blank cheque in effect being written for the administrators, and have been welcomed by the profession and creditor bodies.

I have mentioned some of the other things that are already being taken forward, such as the review of the ethics code and the new complaints gateway, which will bring some consistency to the issue. People are becoming more aware of the complaints gateway. Last year, nearly 1,000 complaints were dealt with via that single complaints gateway. That is a sign that there is a degree of success from the changes that we are making.

I hope that the hon. Member for Great Grimsby will recognise that the Government have listened and continue to listen to the comments that he and others make about the problems in parts of the insolvency regime, which generally is very highly regarded. We need to remember that we have one of the best regimes in the world. Our insolvency profession is highly skilled and undertakes difficult work in challenging circumstances, saving many businesses and thousands of jobs each year. However, we must always strive to improve it. That is why we are undertaking these reforms. They will mean that in the coming months we will have an improved insolvency regime, including a better regulatory regime that will inspire greater confidence that insolvency practitioners and their regulators are working in a way that strikes the right balance between parties affected by insolvency. I hope that cases such as the one—

Repeal of the Fixed-term Parliaments Act 2011

Austin Mitchell Excerpts

Thursday 23rd October 2014 Commons Chamber

[Mr Allen]

It is hard to pick the substance out of that intervention, but I will do my best. This is the first time that we have had a fixed term; the hon. Gentleman is a new Member, so he may not know that. When we have gone through the process once and come to it again, I hope we will have learned a few lessons. It gives us time to plan, whereas a system where there could be a general election at the drop of a hat means that we are in a state of febrile suspense about whether we are going to go to the electorate. Rightly, that is the first thing on our minds, rather than holding Government to account and perhaps developing an understanding of why Parliament is a separate institution from Government. Should the hon. Gentleman be re-elected and we have a four or five-year term, perhaps he will be able to find more time to understand some of those things a little more deeply.

Let me go back to how Parliament will benefit from this situation. Imagine a situation where each Select Committee has the power and the drive, and perhaps even the personnel, of a Committee like the Public Accounts Committee so that it could look at value for money, seriously examine Government accounts, and seriously examine accounting officers—and possibly even Government Ministers. Very few, if any, Select Committees other than the PAC can do that. Imagine what we could then do in terms of our constitutional role outlined by William Gladstone, who said that our role in Parliament is not to run the country but to hold to account those who do. It would be a massive step forward. People at home would say, “These guys are really earning their crust. They are not just shouting at each other on a Wednesday afternoon—they are figuring out how to save me, a taxpayer, a lot of money, how to make our services work better, how to involve people, and how to get ownership of the things we have in our society.”

[Austin Mitchell (Great Grimsby) (Lab)]

I agree with everything my hon. Friend says about the benefits of Select Committees, pre-legislative scrutiny and all the other things that we want to develop, but the pre-supposition of his argument is that the people elect a Government who have the power to continue for a fixed term—in other words, they have a majority and can maintain it to carry out a legislative programme for a fixed term. In the present circumstances, with a multi-party system emerging and the two Government parties unevenly balanced, is that going to happen?

[Mr Allen]

We do not contrive a system for each result—we have to do it on the basis of principle. The principle that we know when a Parliament begins and ends is very important, not just for us here in our own cosy little world but for people outside. It is important for the electorate to understand why we are doing what we are doing, and that principle allows that to happen.

My Select Committee took evidence from other Select Committee Chairs, none of whom said that they wanted to go back to the old system. They all said, as I did as a Select Committee Chair, “This enables us to have greater planning ability, even within our own Select Committee.” I will give one example from my own Committee. As you know, Madam Deputy Speaker, as one of its most important members before you came to exalted high office late on and robbed us of one of our main contributors, my Committee spent four years looking at whether we should devise a written constitution. We considered what other options there were; conducted a very detailed investigation through an external body, King’s college London; took copious amounts of evidence; and carefully produced a document that everyone can be proud of and that will stand the test of time. That is not possible if we think that in a couple of years’ time there might be a general election when Members, rightly, will want to be in their constituencies and so on. These things allow us to plan our work, as MPs and Select Committees, much more easily.

We also improve public debate if we allow people outside to see what we are doing—our measures, our policies, our options—and thereby engage with people. Rather than just being a glorified electoral college to elect a Prime Minister some time in the early hours of general election day, we can get a real role in life as a Parliament and start to produce good legislation and better law, and to do things that the public will be proud of us for in holding Government to account. We would not lose Bills in the “wash up” but be able to plan effectively. A lot of people in this House worked on the Sex and Relationships Education Bill, which, as finally drafted, had the support of most people. That Bill was lost because a general election was called. People outside who had an interest in young people growing up with fully rounded capabilities and full knowledge so that they could raise good families of their own found it inexplicable that Parliament could act like that.

The next area I want to turn to—I will try to be a little more brief, Madam Deputy Speaker, since you have glowered at me—is Government and the civil service. I had the privilege of being sent by my Select Committee to each of the permanent secretaries in Whitehall. To a man and a woman, they basically said the same thing, including the Cabinet Secretary, Sir Jeremy Heywood—that planning, long-termism and sequencing had improved markedly since people knew when the beginning and end of the Parliament were. That allows the civil service to address the comprehensive spending review and say, “We know when the next Government will be coming in, so we will have things ready for them. Perhaps they will want to do things differently, if they are not another coalition Government.” That also helps with budgeting.

That mindset goes down the pipe from the civil service and Government to local government, which then has a sense of the expenditure model it could operate over the next five to 10 years. It also gives our national health service an idea of when to plan hospitals and train doctors and nurses, which are long-term activities. It allows the civil service and Government to get to grips with those things.

The voluntary sector is also affected. I speak as someone who was plagued by not knowing from one year to the next where the next cheque was coming from or how much it would be worth. People would be fired at Christmas in the hope that we could put them back to work on 5 April. What a stupid way to run a system—making it up as you go along. Paralysis at one level means chaos at another, all because we cannot do what every business, local government and president in western democracy does as a result of knowing the beginning and the end of a governing period and how to plan life within it. Finally, this also applies to the electorate. I hope that sensible electors will view everything I have talked about as evidence that we can be more rational and more fit to govern.

At the end of the day, the key things are not those I have listed, but the fact that knowing the date of a general election, how a Prime Minister is elected and how a Member of Parliament gets the honour of the job the public give them is not a gift from an over-centralised Executive who are used to running an empire, but a right of which every citizen in our democracy should be aware. Those are the benefits of having a fixed-term Parliament.

I will talk briefly about what should happen in the last year of a fixed-term Parliament. The last year can be used not in a conventional way but in order to say, “Yes, this is the year we are going to run up to a general election. Can we involve people and have a public education drive? Can we, as parties, perhaps with the help of the Office for Budget Responsibility or other institutions, cost all our programmes?” We could have that debate a year out from a general election, rather than the mud-slinging that happens in the last few days leading up to a general election, where one party says, “You’re spending too much,” another says, “You’re not spending enough,” and another says, “We’re going to raise money, but you’re borrowing too much.” Let us try to work all that out. At the end of the day, we might surprise ourselves. Despite all the rhetoric, there can be common ground on a lot of stuff. The least we can do in Parliament—not the Government; leave them in Whitehall and No. 10 for now—is to figure out what the key problems are for the nation on whose behalf we are meant to parlay.

That is a different approach, but we also need to keep this Government to their promise of creating a House business committee to enable us to have the time to do those serious political activities, rather than have the same old dogfight. We as a Parliament could have a real impact on the main parties’ manifestos by creating an evidence base for policy, figuring out what works for that policy and making sure it is properly costed.

I hope that is a convincing argument for the need for clear planning and accurate budgeting and for involving the British people in our Parliament. We need to be confident that we are better than just doing what whoever runs the Government tells us to do or just opposing them from the Opposition Benches. We have gained a lot, but we can do even more. The Prime Minister committed to a review of the Fixed-term Parliaments Act 2011 in 2020. By then I hope we will have made progress, built on the Act and gone from strength to strength. I hope that will lead us to achieve two things that may just turn the tide and result in the electorate looking at us as something other than pariahs: better government and honest politics.

--- Later in debate ---

[Austin Mitchell (Great Grimsby) (Lab)]

I support the proposal to repeal the Fixed-term Parliaments Act 2011. I congratulate the hon. Member for Gainsborough (Sir Edward Leigh) and his colleagues on raising the issue. It seems to me that we should have much shorter Parliaments. It is possible to have fixed terms, but there has to be a right or an ability to end a Parliament in circumstances such as war, economic crisis or disaster. We can therefore have a term that is fixed, but the period should be shorter.

The best evidence against five-year Parliaments—frankly, five years is too long—is the long, slow death rattle of this Parliament. If Members want to see a monument to the failure of five-year Parliaments, they should look at what is happening now. In effect, this Parliament and this Government did all they were going to do in their first three years. Most of that was wrong of course, but it was done during those first three years. Frankly, we are now just hanging on in this House with nothing particular to do. It reminds me of the old Bing Crosby song:

“We’re busy doing nothing,

Working the whole day through,

Trying to find lots of things not to do”.

The attendance at this extremely important constitutional debate shows that Members do not particularly want to be in the Chamber; they would rather be in their constituencies fighting an election campaign. That is what, at the end of this Parliament, we are really doing: if we are not fighting an election campaign, we are busy throwing custard pies at each other.

At this moment in this Parliament, the Government have got to the end of their tether. There has never been a better moment to use Oliver Cromwell’s words—they apply to all of us—when he dismissed the Long Parliament:

“You have sat too long here for any good you have been doing. Depart, I say, and let us have done with you. In the name of God, go!”

But this agony now has to be prolonged, with the farce of pretending to do things when we are just electioneering and throwing trivia at each other, until the end of March, before there is a renewal in the election in May. This Parliament is conclusive proof that five years is too long.

The hon. Member for Poole (Mr Syms) said that four years might be reasonable, but emphasised the need for continuity in economic policy. The usual claim for a five-year Parliament is that that gives the Government time to implement their policies, but this Parliament has given this Government time to change every policy that they started out with. We started out with “Hug a hoodie”, but that turned out to be cutting benefits for young people. We started out with “Hug a Husky” and “Save the environment”, but that ended up as “green crap.” We started out with “Support the European Union”, but we now use every possible occasion to provoke dissent and argument within the European Union. We started out with “Immigrants welcome”, but it is now, “Keep everybody out.” We started out with “We’re all in it together”, but that has ended up with putting the penalties and pains on the poor, while rewarding the rich.

Even continuity of economic policy, which is claimed to be the most sacrosanct element during this Parliament, has not been provided by a five-year term. The only continuity of economic policy to which this Government can lay claim—apart from cuts to everything, or slash and burn, which is the Government’s only long-term economic plan—has been produced not by them, but by the Bank of England. Frankly, the independent Bank of England has saved the Government. We now have a recovery, but if interest rates are kept flat to the floor, as they have been for the six years since the crisis, and if money is printed at a record rate—through quantitative easing, we have printed £375 billion—there is bound, at some stage, to be a recovery. That is not the Government’s long-term economic plan. Their plan was to cut and slash and burn everything and to roll back the state. The Bank of England’s management of the economy has produced the only successful long-term economic policy. Therefore, the argument for long-term economic policies also fails.

My hon. Friend the Member for Nottingham North (Mr Allen) is too hopeful about long parliamentary terms. He mentioned five-year and even 10-year Parliaments, which caused me to shudder in my seat. What is the best term for a Parliament? I do not want it to be thought that, now that I am leaving, I want to cut everybody else’s joy and pleasure by reducing the parliamentary term to three years, but I would like to do so. I have said that consistently. I proposed it when the Fixed-term Parliaments Bill was discussed in 2011.

[John Hemming]

The hon. Gentleman is making the case for shorter Parliaments. The question is who should make the decision. Should the term be fixed or should the Prime Minister be given back the power to make the decision purely on party interest, thereby costing everyone a lot of money?

[Austin Mitchell]

There could be a combination of the two. That happens in Australia and New Zealand. In New Zealand, there is a fixed three-year term, but the Prime Minister can call an election earlier. The Executive has to have that right and power. Most Governments work out their three-year term and do not go earlier. Some go earlier to seize a particular moment or because of an emergency. We have to give the Government that power, otherwise we will have the situation that Germany found itself in when the Social Democratic party had to engineer its own defeat in Parliament before it could get an election.

[John Hemming]

Why does the hon. Gentleman believe that the Prime Minister alone should be able to make that decision, rather than Parliament through a majority?

--- Later in debate ---

[Austin Mitchell]

In saying the Prime Minister, I meant the Government. It has to be a collective decision. It will effectively be a party decision, although in my experience most of the elections that have been called by the Labour party have not been party decisions, because I have not been consulted. I am not sure whether the Liberal Democrats are consulted on such matters.

[John Hemming]

I thank the hon. Gentleman for the confirmation that it would be a party decision taken in the party interest. Should it not be a decision that is taken in the public interest?

[Austin Mitchell]

I think that that would be difficult to arrange. It is a political decision that is taken by the Executive. In a democratic party, I would hope that the Executive would consult the party. That did not happen before the elections that were called by my party when we were in power, but I felt that it should have done. Jim Callaghan certainly should have consulted me, because if he had called an election in October 1978, we probably would have won. He tended not to listen to my advice, however loudly it was put. That was a failure of Back-Bench power.

I am in favour of a three-year term. At a pinch, I would accept a four-year term. It should be a fixed term, with the ability to call an early election in extreme or difficult circumstances. If we had that, we would not have to have all the silliness of the recall legislation that we were dealing with on Tuesday. I have never known a more stupid Bill than the Recall of MPs Bill. I was not given the opportunity to vote against it, because there was no vote. All parties are grovelling before the electorate by saying, “Let us sacrifice ourselves and throw MPs to the wolves.” There would be no need for recall if we had a three-year term, because by the time the machinery of recall had cranked into operation, the three years would be over and the electorate would be able to turn everybody out and make a new choice.

I am being moderate by calling for short, triennial Parliaments. I am old enough to have been a Chartist, I suppose, but I am not espousing annual Parliaments, as the Chartists did. A three-year Parliament accords with the mood of the public, as we read it in the major polls and surveys. There is an alienated mood. People want to be heard. They are angry and upset. They want to have an influence, but they feel that MPs are not listening and that Parliament does not represent them.

[Mr Allen]

Will my hon. Friend just beware and look across the Atlantic, where there are two-year terms? The people in the Houses that are elected on that basis are permanently campaigning. On one level, that might be a good thing, but because it means that they are permanently having to raise money for their election, it might not be regarded as progressive.

[Austin Mitchell]

I am arguing not for a two-year term, but for a three-year term. In any case, there is a big difference. Although my hon. Friend is right that members of the House of Representatives have to raise endless amounts of money to fight elections, that would not be necessary in our system because we provide free television adverts for the parties. The money that members of the House of Representatives raise mainly goes to the television networks to put on attack adverts about the other side. That would not be necessary here.

However, I am arguing not for a two-year term, but merely for a shorter term. That is in accord with the public mood, because the people want influence—they want a say. They feel that MPs are not listening and that we are in it for ourselves. They feel that decisions are being taken on immigration, economic matters and all sorts of things, over which they have no control. They want to be heard. The only effective way of ensuring that they are heard, that I know of, is to have more frequent elections. That is why I am in favour of a three-year term. We are too remote from the people if we have long, five-year terms.

If we had the fixed three-year terms for which I am arguing, it would be necessary to make two concomitant changes. First, we would have to limit the tenure of the Prime Minister. In recent experience, at the end of six or seven years, Prime Ministers are barmy, have delusions of grandeur or even competence, or are just brain-dead and exhausted. A seven-year limit on prime ministerial power would be a good idea.

My hon. Friend the Member for Nottingham North has much more faith in the two-party system than I have, because his argument presupposes strong government for a long period. I am worried that the days of one-party government are gone. We must not forget that in the ’40s and ’50s, 90% of people voted for one of the two parties that could form a Government; now, the proportion is only two thirds. The system is crumbling. The parties are losing membership and are hollowed out. They are controlled by small coteries and no longer represent the two great divisions in our society.

The main parties are weakening and we are developing a multi-party politics. However much we attack UKIP, it represents a point of view. Whatever we say about the Liberal Democrats—Tory Members have been scathing about the poor Liberal Democrats, who have left sulking, and about their participation in government—they represent a section of the community. We also have the Scottish nationalists and the Greens. Multi-party politics cannot work without proportional representation. The system has to be changed.

The change that introduced proportional representation in New Zealand has been very successful. It ensures that all legislation has the support of a majority of the parties in Parliament. That is desirable, because it means that the public are consulted and have a say, and through their parties they influence the legislation. [Interruption.] I am winding towards what I would hopefully call a peroration, so I would rather not give way at this moment. If we have a change of that nature for shorter Parliaments—and I think we need one—it must be accompanied by proportional representation so that we can work with the system, and so that the multiple views of society are represented in this place, rather than it being the scene for a conflict between just two parties.

Education Funding

Austin Mitchell Excerpts

Monday 5th July 2010 Commons Chamber

[Michael Gove]

I am afraid that County Durham is one of the local authorities that has not reached financial close, but I would encourage all schools that believe that they can make use of academy freedoms to move down that route. We are, of course, encouraging sponsors, with whom we have been in negotiation, to do everything possible not just to transform teaching and learning, but to improve the environment in which children learn.

[Austin Mitchell (Great Grimsby) (Lab)]

Does the Secretary of State agree that, whatever his criticisms of the Building Schools for the Future programme, some of which were justified, his announcement today will cast a pall of gloom and uncertainty over areas such as mine, which have yet to benefit from it? Does he also agree that in north-east Lincolnshire, we have particular problems in that we desperately need the new school building as a stimulus to the system and we desperately need the jobs and economic stimulus that that building will bring? It is also an area of high unemployment and under-privilege, which suffers from under-attainment in educational standards. Should not the particular needs of an area such as that be taken into account before deciding to cancel any part of our programme?

[Michael Gove]

I am grateful to the hon. Gentleman for his points about the defects in the Building Schools for the Future programme, which shows him being typically bipartisan and capable of rising above party divisions in order to acknowledge such flaws. I also appreciate that in his constituency a fantastic school, Havelock academy, is unaffected by today’s proposal. However, I am afraid that because two schools in his constituency have not reached financial close, they will not receive the investment that he might have hoped for. I appreciate that in Great Grimsby there are problems with educational attainment, and I look forward to working with him to do everything that we can to raise attainment in that constituency.