Autumn Statement

Barry Gardiner Excerpts

Wednesday 3rd December 2014 Commons Chamber

[Barry Gardiner (Brent North) (Lab)]

Will the Chancellor confirm that the £2.3 billion identified for flood defences was originally announced last year, and that of the 1,400 schemes he says are going forward, 1,119 are not fully funded but rely on 80% partnership funding and a 10% efficiency saving that has yet to be made? Will he also confirm that the 300,000 households he says will have a reduced flood risk are going from “low” to “very low” risk, and that households at “significant” or “high” risk will rise from 490,000 to 800,000 in the next six years?

[Mr Osborne]

I know the hon. Gentleman represents a constituency named after a river, but he has not been fair about our flood defence policy. Did we set out the money last year? Yes, we did. We then said, “Let’s have a plan for how to spend that money”, and this week we have announced all the different schemes that show how it can best be used. That is an increase on the capital funding that the previous Labour Government provided. Flood defence schemes have always involved a contribution from businesses, and today I announced—the hon. Gentleman did not mention this—that we are expanding the tax relief available for those contributions.

EU Budget (Surcharge)

Barry Gardiner Excerpts

Monday 10th November 2014 Commons Chamber

[Mr Osborne]

My hon. Friend is absolutely right; they gave into all Europe’s demands and handed over more and more British taxpayers’ money. They were neither wise before this event, nor particularly wise after it.

[Barry Gardiner (Brent North) (Lab)]

Can the Chancellor confirm that when the EU budget is reconciled, it will show that the surcharge to the UK was paid in full, that it will show quite separately that there was a rebate that was applied, and that therefore his attempts to link the two are simply nonsense?

[Mr Osborne]

What we achieved was the simultaneous application of the rebate, so we will pay only £850 million.

Oral Answers to Questions

Barry Gardiner Excerpts

Tuesday 4th November 2014 Commons Chamber

[Barry Gardiner (Brent North) (Lab)]

Her Majesty’s Revenue and Customs figures released this month show that the amount of uncollected taxes has increased by £3 billion each year under the Chancellor. What difficulties has he found in collecting those taxes, and what does he propose to do about them?

[The Financial Secretary to the Treasury (Mr David Gauke)]

I am not sure whether the hon. Gentleman was in the House when we debated that at some length a few minutes ago. The fact is that the tax gap for 2012-13 was lower as a percentage of tax receipts than in any year under the Labour Government. Tax yield from HMRC has gone up by £7 billion since 2010-11.

amendment of the law

Barry Gardiner Excerpts

Monday 24th March 2014 Commons Chamber

[Barry Gardiner (Brent North) (Lab)]

Many Government Members, both this afternoon and in the preceding days of this debate, have said that it has been a Budget for savers. That is an irony, coming from a Government who have pumped more than £375 billion into the economy to buy Government bonds. That has been singularly responsible for reducing the yield to savers. The Bank of England working paper 442, on the impact of quantitative easing on the economy, states that the 8% increase in money holdings is estimated to have depressed yields by an average of 150 basis points. That was in 2012. Quantitative easing now is not £122 billion, or 8%; it is more than £375 billion.

[Mr Newmark]

Unless the hon. Gentleman is suffering from selective amnesia, he will know that it was the Labour Government who separated responsibility for QE from the Treasury and the Government and gave it to the Bank of England.

[Barry Gardiner]

I am not suffering from amnesia, selective or otherwise. I do recall that the process started in 2009 under the Labour Government, so I accept the hon. Gentleman’s point. Equally, we have to accept that the Bank of England’s own figures show the impact that that has had on savers over the lifetime of this Government. Elderly savers have had to bear the brunt of that. The Chancellor is trying to win them back with changes to the rules on individual savings accounts, and, for those approaching a decision on their pension pot, the prospect that they need not purchase an annuity. It is, however, QE that has in large part kept savings rates so low.

Government Ministers need to reflect on the changes to ISAs. They are a boost to mid-caps and the alternative investment market. Alternative investments are riskier. In the 2013 Budget, the Chancellor abolished stamp duty on AIM shares. By uniting share and cash ISAs, the Chancellor has boosted what is inevitably a riskier element of the City and is encouraging people to undertake less secure investments with their savings. It is important that that sort of incentivisation should be considered most carefully by Treasury Front Benchers. My hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) spoke of it being beyond the capacity of ordinary people, who include most of Labour Members’ constituents, to accumulate £15,000 in one year to put into an ISA. That suggests that the Government, in framing the Budget, have again been out of touch with the reality for many people.

I am deeply concerned that unfettered access to pension pots undermines the whole basis for tax relief on pension contributions in the first place. We give people tax relief on pension contributions precisely because we want to ensure that they do not become more of a burden on the state in old age. We may well be seeing the birth of the next great financial mis-selling crisis. Independent financial advice is all well and good, but in the past many advisers have shown themselves to be better at ensuring that their clients’ money serves their own purposes and interests rather than the interests of the clients whom they are supposed to be advising.

I am even more worried that the ability to access one’s pension pot should not become a way for the Government to tip people over the threshold of £23,500, where they will have to start contributing to their care costs. At today’s rates, a £25,000 pension pot would generate an income from an annuity of approximately only £1,500 a year. On top of the state pension, and even a modest works pension, an elderly person in need of care would not normally be pushed over the contribution threshold in such circumstances. Previously, the pension pot could be used only to purchase an annuity. Now that it can be converted into cash, I fear that a local authority could insist, under the rules, that it is converted into cash, thereby forcing someone to contribute to their care costs. I ask the Minister to give us a clear reassurance about that. Greater freedom for savers should not be a back-door way of enabling Governments to get their hands on people’s pension pots.

Nearly one in five of our young people is now without a job. The pity—and, I hope, the shame—of this Government is that they preferred giving tax cuts of £42,500 to the very richest in our society to giving a job guarantee to the young and long-term unemployed. Do the coalition partners truly believe that the families of this country would rather see bankers keep their exorbitant bonuses than see their children assured of quality training and serious jobs?

[Mr Newmark]

I am listening carefully to what the hon. Gentleman is saying. He should at least give the Government credit for abolishing national insurance contributions for employers who hire people aged under 21, to give young people a chance on the jobs ladder. That has brought youth unemployment down.

[Barry Gardiner]

The hon. Gentleman has made a reasonable point. It would be a very strange Budget if all its measures were objectionable to the Opposition. My purpose is to flag up the areas of disagreement, and the areas that I believe will pose serious problems to the economy in the future.

The reality for my working constituents is that they are earning less, and earning less in jobs that are less secure. As their real wages have fallen, they have had to rely all the more on housing benefit. That is why the welfare bill under this Government is rising rather than falling. More people are having to claim housing benefit because their wages have simply failed to keep pace with inflation. No wonder the Government are spending £13 billion more on welfare than the Labour Government did in 2010, and no wonder they are spending £30 billion more than the Chancellor himself predicted in 2010. Is it not incredible that a coalition Government who came to power saying that borrowing was the problem have borrowed more in three years than the Labour Government did in the 13 years during which they were in office?

People do not forget that it was this Government and this Chancellor who said that they would balance the books by 2015. Now, in the Budget, the Chancellor has had to admit that in 2015 there will be a £75 billion deficit, and that, in addition, he will be borrowing £190 billion more than the amount promised in 2010.

The Government need to answer the single question that should be asked about all Budgets. Cui bono? Who benefits? We are asking about more than mere distribution. We are asking about fairness, about equality and about justice. On that question, the Government have failed.

--- Later in debate ---

[Mike Kane]

Poor working people were going hungry, and he campaigned for them, so I think he would understand that poor working people are now cold, and that he would campaign for them as well.

[Barry Gardiner]

Will my hon. Friend give way?

[Mike Kane]

Do I get an extra minute? Yes? Then I will give way.

[Barry Gardiner]

My hon. Friend is making an excellent speech. May I assist him by saying that Richard Cobden might have thought the price freeze less important than the restructuring of the vertical integration in the market, which it was buying time in order to do?

[Mike Kane]

I agree with that, even if I do not quite understand all of it. It was very good. I am very proud that Richard Cobden ran his campaign from Manchester and changed the world. Once he had won, the campaign eventually brought down the Peel Government, so there is hope for us on these Benches.

My second point is that we should put young people back to work. Nearly 900,000 young people are out of work in this country, and many are in my constituency. Their parents are very worried about their children’s future. Nearly 1,000 young people under the age of 24 in my constituency are in that position. We could pay for measures to address that with a tax on the bankers bonuses. In 1997, the new deal did an immense amount for the estates in Wythenshawe. In my opinion, it did even more than the introduction of the national minimum wage. It transformed the estates and got people back into work, which makes a great difference to the cohesion in our communities.

Finally, it would make a real difference to the standard of living in my constituency if we were to extend free child care for working parents to 25 hours a week for their three and four-year-olds. That would help more young women to get back into the workplace. The lack of affordable child care is a real obstacle for working poor families, but we could achieve that change in the next Parliament while balancing the nation’s books in a fairer and more equitable way.

--- Later in debate ---

[Nicky Morgan]

No, I will make some progress. The right hon. Member for Neath (Mr Hain) talked about exports. Exports to countries outside the EU continue to grow, rising by 23% since 2010. The right hon. Member for Wolverhampton South East (Mr McFadden) talked about the referendum on the EU damaging investment. That is a common theme on the Labour Benches, but the Government believe it is time to trust the people and ask them about important issues. Labour Members clearly do not.

The hon. Member for Penistone and Stocksbridge (Angela Smith) talked about support for energy-intensive industries, which she and I have discussed before. She encouraged us to make strong representations to the European Commission for the extension of compensation, and I take those points on board. The hon. Member for Southampton, Test (Dr Whitehead) spoke about the carbon price floor, and the hon. Member for City of Durham (Roberta Blackman-Woods) talked about the north-east needing more support. The right hon. Member for Holborn and St Pancras (Frank Dobson) talked about Euston station.

The hon. Member for Barrow and Furness (John Woodcock) talked about Olympic-scale investment under this Government, and the hon. Member for Hartlepool (Mr Wright) mentioned productivity. He is right; the job is not yet done. That is why we do not think that anyone should entrust the keys to those who crashed the car. The hon. Member for Washington and Sunderland West (Mrs Hodgson) missed the fact that this Government are already spending £5 billion on child care, before we get to tax free child care.

I welcome the hon. Member for Wythenshawe and Sale East (Mike Kane) to the House. I know this was not his maiden speech, but if he can raise a laugh after five hours of a Budget debate he is a welcome addition to the House. He mentioned reform of air passenger duty. That is what I was discussing with his predecessor just before Christmas, and I look forward to continued discussions on that.

My hon. Friends the Members for Wolverhampton South West and for Brentford and Isleworth said that we need greater business investment, and they are right. Investment has been too low for too long, and it has held back growth. Had business investment increased by just 10% in 2012, the level of GDP would be £12 billion higher. We must create an environment that encourages business to invest.

[Barry Gardiner]

Will the Minister answer the question that I put to her in my speech about whether local authorities will be able to insist that pension pots are converted into cash to put people over the threshold for care costs?

[Nicky Morgan]

I am sure we do not want to see that, but we will look at it in more detail as we go through the scheme. The Government have set out a clear intention to help people with their care costs, and nothing in last week’s announcement should diminish the fact that we want people to have affordable care costs, and not to be worried about getting older and being able to afford their care.

The most important point about business investment was the extension and expansion of the annual investment allowance, which means that from next month 99.8% of businesses will get a 100% investment allowance. Almost every business in Britain will pay no upfront tax when it invests. We have already mentioned the policies on pensions and savings, and the Government believe that we will give people the opportunity to save now, and to control their finances better in the future. The Government believe that responsible people who have worked hard and saved sensibly all their lives should have the freedom to decide how to use their own savings. The changes we announced last week recognise that, and act on it.

My right hon. Friend the Secretary for Communities and Local Government spoke earlier about some of the other Budget measures that will boost our communities. He spoke about Ebbsfleet, the enterprise zone in Coleraine, and the Cambridge city deal. I wish to put on record how pleased I was to be at the launch of the Leicester and Leicestershire city deal this morning. Many hon. Members will already have seen the difference those schemes can make in their areas, and I pay tribute to all those in Leicester and Leicestershire who worked so hard to secure that deal. It will boost the economy of our city and county.

This Budget will ensure that more people have jobs to go to at the start of the day and can return to their own homes at the end of the day. It will give people a greater amount of their earnings at the end of the month, and greater access to their savings at the end of their careers. Of course there is more work to do, but this Budget represents another sensible step to get our country back on its feet, and I commend it wholeheartedly to the House.

Ordered, That the debate be now adjourned.—(Harriett Baldwin.)

Debate to be resumed tomorrow.

Oral Answers to Questions

Barry Gardiner Excerpts

Tuesday 10th December 2013 Commons Chamber

[Sajid Javid]

My hon. Friend is well versed in these matters and makes a significant contribution to the debate on monetary policy. He will know, therefore, that monetary policy is determined by the independent Bank of England, but I will ensure that Governor Carney is made aware of his concerns.

[Barry Gardiner (Brent North) (Lab)]

The World Bank and the independent TEEB—the Economics of Ecosystems and Biodiversity—report both state that 7% of global GDP could be lost by the devaluation of natural capital by 2050. Will the Government investigate what percentage of UK GDP is being lost through the depletion of natural capital?

[Danny Alexander]

The hon. Gentleman makes an incredibly important point. We in the Treasury and this Government have been examining the issue of natural capital, which we have taken forward in a way that previous Governments have not. I will certainly get the Minister responsible to reply in more detail on the specific point that the hon. Gentleman raises, because it is very important.

Autumn Statement

Barry Gardiner Excerpts

Thursday 5th December 2013 Commons Chamber

[Mr Osborne]

I agree with my hon. Friend which, of course, is not very difficult because that is now the general conclusion. Indeed, I have just heard that a source in the office of the Leader of the Opposition says:

“Labour has a very strong economic argument to make. Unfortunately it was not made well in the Chamber today.”

I agree with my hon. Friend about growth in Norfolk and across East Anglia, and there is real commitment to science, which I know is a particular passion of his. As detailed in the document, we intend to set out next year a long-term science strategy so that we can get right the investments in technologies and discoveries that will transform our world.

[Barry Gardiner (Brent North) (Lab)]

While the Chancellor was speaking, 30-year-high storm surges have been battering the coast of Britain. If he looks at the national infrastructure plan, he will find that the rate of coastal realignment is happening, in the view of the Energy and Climate Change Committee, at only one fifth of the pace necessary to avoid wholesale flooding that will cost billions of pounds to the economy. Will he look at that issue again, and at the funding for flood defences that this year has been reduced from £633 million to £527 million?

[Mr Osborne]

I will certainly look at the report that hon. Gentleman mentions. As I said in my speech, it is right for all of us to remember that people are enduring some very adverse weather conditions on the east coast of Britain and our emergency services are working hard to protect them.

On the broader point, we are investing in flood defences. We have recently increased the investment going into flood defences, and that is all part of the long-term infrastructure plan that this country needs.

Money Transfer Accounts

Barry Gardiner Excerpts

Wednesday 17th July 2013 Westminster Hall

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

It is always a pleasure to serve under your chairmanship, Mr Bayley, and I know you take a great personal interest in these issues. I congratulate my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) on securing this important debate. I also congratulate other Members on the excellent contributions that we have heard so far.

I declare a number of interests. Like many other Members, I have a significant number of constituents from Somaliland, Somalia, Yemen, Pakistan, India, Bangladesh and Sudan. Those communities have a long and proud history in my constituency, and they all remit funds to those locations. I also declare an interest as the secretary of the all-party group on Somaliland and Somalia.

Some weeks ago, these issues were brought starkly to my attention by a number of the money transfer organisations involved in remitting to Somaliland and Somalia. A month ago, we had urgent discussions with the new ambassador to Mogadishu and with senior Foreign Office officials, so people have been aware of this challenge for some time, and I will return to that at the end of my remarks.

I want to underline how important remittances are and how crucial it is that we find a solution and get things right. Members have spoken of the value of remittances to individual families, who are often in difficult circumstances. Oxfam provided a helpful briefing, which said:

“in most cases, money received is used to cover basic household expenses including food, school fees and medical costs.”

It notes that, in a recent survey,

“one third of respondents said that they would not be able to meet these basic needs if remittances were stopped.”

That is in addition to the concerns Oxfam and other humanitarian organisations have about their ability to provide services if money transfer services are stopped.

Many hon. Members have mentioned the security and stability implications, particularly in the case of Somaliland and Somalia. The hon. Member for North West Norfolk (Mr Bellingham) eloquently noted that the changes could be a step back for the country, which is coming out of conflict and instability. That is certainly not what the UK Government want, particularly after the recent Somalia conference and the many other steps that friends of Somaliland and Somalia have taken to see the two countries progress.

Remittances are also a complement to aid. There are two crucial issues. This is not only about my constituents; it is also very much in the UK national interest to find a solution to this problem. Remittances play a crucial role alongside our aid moneys. In the end, we want to graduate countries out of aid and ensure that they can stand on their own two feet, so pulling the rug out from under a number of them in this way will be particularly problematic.

We have heard many of the figures already, but I want to reflect on a few of them. I have tabled questions to the Treasury, and the answers show that the UK remits upwards of $23 billion a year to third countries. Remittance flows globally are estimated at upwards of $500 billion. Those are huge sums and often dwarf aid flows to countries.

An answer from the Minister of State at DFID said that the Department estimated that Somaliland received upwards of £500 million annually, while 50% of Somalia’s gross national income came from remittances, which ultimately supported 3.8 million people. Those are huge numbers, so this is not a small problem—it is fundamental to the ability of these countries to be successful. As my hon. Friend the Member for Bethnal Green and Bow said, Somaliland and Somalia face particular problems, which need to be addressed. They do not have the services that are available in some other countries, and with 70% of money transfer services potentially affected by the changes, we really have a very large problem.

I do not think that anyone would disagree that we want safe and secure transfer methods for senders and recipients. There are also legitimate concerns about money laundering, terrorist financing and other issues, although only a small amount of remittances are affected by such activities, and the vast majority end up in the destinations where they belong. However, we really could be jumping from the frying pan into the fire. We could increase the security risk and end up with channels for transferring money that are not policed or regulated in the same way as existing channels. Individual constituents could be ripped off, as they are forced to use more expensive or less secure methods of sending remittances —indeed, there is the possibility of theft increasing and money going missing—rather than the reputable organisations that already operate in this field. With 70% of money transfer services potentially at risk from the changes, we have a huge problem.

As I said at the beginning of my remarks, I met Foreign Office officials and the new ambassador to Mogadishu some weeks ago. Since then, I have had discussions with the Minister and with other officials. I have also had discussions with Barclays itself. My hon. Friend the Member for Brent North (Barry Gardiner) and I secured a meeting with it the other week, and we had a constructive conversation, notwithstanding the criticisms and concerns that have been raised, a number of which Barclays must answer further questions on. To be fair, however, Barclays was constructive, and it did not just want to shrug its shoulders and turn away from the issue; it wanted to work with the Government and diaspora communities to find solutions.

I was therefore concerned when Barclays told us that it had written to the Treasury two weeks ago. I have the letter here, and it is dated 3 July. Indeed, Barclays has had other correspondence with the Treasury. I very much hope that the Treasury has responded by now. Barclays offered to sit down and have constructive discussions with the Treasury, the Foreign Office, DFID, the Home Office and all the other interested Departments to try to find solutions. This is really one of those cases where the Government have to step in.

[Barry Gardiner (Brent North) (Lab)]

We were indeed at the meeting together. It is a very constructive suggestion that there should be a round table with all the major banks, which can then work with Treasury to resolve the problem. It is unfair to load everything on to just one bank, which happens to be the last in line. The Treasury needs to address this issue very seriously. Mr Bayley, let me also apologise for coming late to the debate, owing to another commitment.

[Stephen Doughty]

My hon. Friend makes the point perfectly. As I said, there was a great willingness on the part of Barclays to sit down with Departments. I hope the Minister can reassure us by telling us what steps have been taken—perhaps in the past week—so that we can know that these conversations are going on and will involve all the crucial Departments. Obviously, numerous Departments, banks, organisations and Members have an interest in resolving this matter. Barclays had a number of technical solutions, which I was unable to comment on, but I hope that Treasury officials and the Minister might be able to.

I second the comments made by the hon. Member for North West Norfolk regarding the need for the Government to engage in urgent discussions with the United States, where a lot of the regulatory pressures are coming from, so that we can secure answers.

In conclusion, this is a huge problem with serious implications not only for my constituents and their families, but, ultimately, for this country’s national interests in international development financing and our security needs. We urgently need to find a solution because time is pressing and will run out at the end of August; otherwise we will find ourselves in a very difficult situation.

--- Later in debate ---

[Sajid Javid]

I will come to that point before I finish, but, given the questions asked today, let me say a few words about Barclays.

When I met Antony Jenkins, Barclays chief executive, we discussed its recent decision to end its relationship with a number of money services businesses in the UK and I tried better to understand its perspective. Although we did not discuss decisions taken on individual firms, I was reassured to understand that the recent review of its customers in the sector is being conducted on a case-by-case basis. I was also reassured that it is working with firms to manage the impact of its decision. He confirmed that Barclays will consider on a case-by-case basis extensions to any initial notice period it has given companies, particularly where those companies can show that they are in active discussions with other banks that may take their business.

[Barry Gardiner]

Will the Minister give way?

[Sajid Javid]

I do not have much time. A number of questions were raised by hon. Members, but I will give way very briefly.

[Barry Gardiner]

Without wishing to betray any confidence that Barclays relayed at the meeting with me and my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), it is clear that it has decided not to continue to do business with certain remittance companies, and, despite what the Minister has said about the assurances he received from the chief executive, that was made very clear to us in the meeting. The matter is much more urgent that the Minister is acknowledging.

[Sajid Javid]

I take those points on board. The hon. Gentleman is right to suggest that Barclays has made the decision. It is however showing flexibility over the timing of closing certain accounts, and that flexibility is better than no flexibility.

I shall turn to a few questions raised by hon. Members. The hon. Member for Bethnal Green and Bow asked whether I had received representations from the large money transfer companies. I have not received any representations from such companies. She also suggested—if I understood her correctly—that the banks’ behaviour could be anti-competitive. There is no evidence that banks are acting in concert or are distorting competition. They appear to have acted in accordance with their commercial interests and their desire to minimise risk.

The hon. Member for Rochdale (Simon Danczuk) asked why larger organisations, such as Western Union, are not affected by the decisions of the banks and whether the banks would benefit from the withdrawal of some services. The short answer to why some larger institutions are not affected is that their internal compliance procedures are in many cases similar to what the banks themselves adopt internally; in many cases, they spend more resources on compliance and transparency issues, which they are clearly in a better position to afford than smaller operators; and in many cases they are regulated differently. All companies are supervised by HMRC, but there is a difference between a company registered with the FCA and one fully authorised with it, and banks take that into account.

The hon. Member for Rochdale and others, including the hon. Member for Nottingham East, asked whether we were having discussions with the US. We work closely with the US Treasury and State Department at all times on all regulatory matters, including money transfer. It is important to point out that since many transfers are ultimately in US dollars, there is a US interest. Lastly, I asked the British Bankers Association for a round-table meeting and it has agreed. We will have one, the Government will of course take part and I look forward to it.

Spending Review

Barry Gardiner Excerpts

Wednesday 26th June 2013 Commons Chamber

[Mr Osborne]

Yes.

[Barry Gardiner (Brent North) (Lab)]

Because 67% of the Department of Energy and Climate Change’s budget is ring-fenced for the Nuclear Decommissioning Authority, the Chancellor’s 8% cut actually equates to a 35% cut when the Department has to deliver an infrastructure plan which, at £200 billion, is the largest this country has ever seen. How is it going to be able to do that?

[Mr Osborne]

The hon. Gentleman makes a good point about infrastructure capacity in Whitehall, and we will set out changes to infrastructure delivery tomorrow. The Department of Energy and Climate Change is part of that. Not only is the Energy Secretary on the case, but the new permanent secretary, Stephen Lovegrove, is too, and they are confident that they can deliver this within the budget.

Financial Transaction Tax and Economic and Monetary Union

Barry Gardiner Excerpts

Tuesday 18th June 2013 Commons Chamber

[Barry Gardiner (Brent North) (Lab)]

GDP is a measure of productivity, but it is not a measure of wealth, and it is not a measure of growth in the real economy. Derivative volumes have ballooned out of all proportion to the growth of the real economy. Some would say that that says much more about rent extraction by the financial services sector than a real world story of genuine and proportionate insurance.

When the global financial crisis hit in 2008, many banks were weakened precisely by their exposure to derivatives. In fact, Warren Buffett has described them as financial weapons of mass destruction. They have traded those derivatives at ever-increasing speeds. It is the institutions that are heavily involved in high value, high frequency derivative trading that would feel the biggest impact of the FTT, and whose riskier activities the rest of society has a vested interest in reining in. That is precisely the point that my hon. Friend the shadow Minister made. The public want to see these activities curtailed to reasonable levels such that they reflect the genuine risks of economic growth.

It was Avinash Persaud, the former J.P. Morgan and UBS executive, who in the Financial Times recently commented:

“this small tax on churning would limit some of these activities and help to refocus the financial system on to its purpose of the safe financing of real economic activity.”

That is a good thing and we should be open to the idea of exploring it with our colleagues across the water.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

My hon. Friend is making some strong points. Does he recall Lord Turner describing some of the activities to which he is referring as “socially useless capitalism”?

[Barry Gardiner]

My hon. Friend is absolutely right. The public want politicians to get back to focusing on the real productive economy. They are bewildered, frankly, by the spin-off of derivatives. I was on the floor of the New York stock exchange when it all went belly up on 24 September 2008, and I remember discussing what all the turmoil was about with members of the Senate Banking Committee in Washington a couple of days later. When I returned to the UK, it was clear that people could not understand how things had become so far divorced from reality.

The hon. Member for South Northamptonshire (Andrea Leadsom), who is unfortunately no longer in her place, made the point that an FTT on derivatives might hit pensioners. I do not think that is a convincing argument. Pension funds are obviously vital to our economy, and they buy derivatives to insure against the risk of poor performance by their portfolio, but those funds are much more likely to hold their derivatives until they reach maturity, which means that they would have to pay only a tiny amount under an FTT because their trades are far fewer—the very opposite of the type of short-term, superfast trading that grew in the run-up to the crisis. Most of the burden of paying the FTT would fall on superfast traders and speculative exchanges, which are very far removed from the real economy.

I want to introduce another note into the debate before sitting down. Our Government, along with many other participants in the United Nations framework convention on climate change, have stated that there will be a green climate fund. That fund will have to raise $100 billion each year by 2020—that is the minimum that the UK and our European negotiating partners think will be necessary to help developing countries increase their own economies, reduce poverty and offset the impact of dangerous climate change. The FTT would be an extraordinarily adept mechanism for raising those funds, which are vital to real growth in our economy. If we look at the UK economy, we will find that only 6% relates to the green economy, yet that 6% provided 30% of our economic growth in 2011. I would like to see the funds from the FTT predicated to use in the green climate fund.

Cyprus

Barry Gardiner Excerpts

Monday 18th March 2013 Commons Chamber

[Greg Clark]

The ECB made a clear statement today that the situation in Cyprus is unique, and I think that a study of the situation there would confirm that.

[Barry Gardiner (Brent North) (Lab)]

The ECB action was supposed to create stability, but it has created instability. The Minister has made it clear that the Chancellor was not consulted on that beforehand, but has the Chancellor made it clear to the ECB that, although this particular deal may be renegotiated, the instability will linger in precisely the way the hon. Member for North East Somerset (Jacob Rees-Mogg) suggests?

[Greg Clark]

The whole House has an interest in ensuring that right across Europe, in countries that are members of the eurozone or those that are not, there is confidence in the banking system. This period of several days of uncertainty is undesirable. We need to get arrangements in place, as the hon. Member for Nottingham East (Chris Leslie) said, to have clear resolution plans in advance. It needs to be sorted out quickly, because the situation is undesirable. I think that it is in everyone’s interests that it is resolved very soon.