Women and the Cost of Living
Caroline Lucas Excerpts(11 years, 1 month ago)
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Gloria De Piero
Those comments were absolutely offensive. I thank my hon. Friend for highlighting them, and for asking the question that exposed the reality of the Government’s position.
Women feel it when their Sure Start centres are cut and the cost of child care continues to rise. They understand that the Government are not doing enough to help them, and they could teach David Cameron a thing or two about tough decisions. The other week I met a different Chipping Norton set: Lisa, Amanda, Toni and Laetitia. Lisa told me that, as a new mum caring for a young child and a husband with cancer, the children’s centre in the Prime Minister’s constituency saved her from having a breakdown. That Sure Start centre is now threatened with closure. Sheila, in my constituency, is in her 80s. She is a widow living alone in Sutton-in-Ashfield, and is worried about how she is going to keep warm this winter. To do so, she has to spend the day at her son’s house. Half of mums surveyed by Netmums said that to save money they turn off the heating when their children are out. This is their Britain.
Caroline Lucas (Brighton, Pavilion) (Green)
The hon. Lady is making a compelling case about how the Government’s misguided austerity programme is leading to social devastation and is economically illiterate. Does she agree that cutting public services hits women with a triple whammy—as the group most dependent on public services, as employees of public service and as the ones who have to fill the gap when public services go?
Gloria De Piero
It is absolutely right that women are hit three times as hard, and I will explain later how that has happened.
Half of mums surveyed by Netmums said that to save money they turned off the heating when their children were out. The Government talk about recovery, but these women know it is definitely not a recovery for women. Under this Government, unemployment among women has reached its highest levels in a generation, long-term female unemployment has increased eight times as fast as for men, the number of older women unemployed has increased by more than a third, and black and minority ethnic women are twice as likely to be unemployed as the national average.
Trident Alternatives Review
Caroline Lucas Excerpts(11 years, 5 months ago)
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Danny Alexander
I will make some progress before giving way.
For the first time in a generation, the Trident alternatives review shows that there are credible and viable alternatives to the United Kingdom’s current approach to nuclear deterrence. A different approach would allow the UK to contribute meaningfully to the new multilateral drive for disarmament initiated by President Obama, while maintaining our national security and our ultimate insurance policy against future threats.
Danny Alexander
My hon. Friend will have a chance to see the proposed Liberal Democrat policy paper when it is published in a few weeks’ time. The purpose of this debate is to consider the Trident alternatives review.
Caroline Lucas
On the review’s comprehensive nature, does the right hon. Gentleman not agree that a review that fails even to consider the option of not replacing Trident at all and having no nuclear submarines is ultimately flawed? Decades after the cold war and in the midst of austerity, the key question that has to be asked is whether Britain needs a nuclear submarine system that will cost us £100 billion over the next 30 years.
Danny Alexander
That is of course a legitimate point for political debate, but the purpose of the review was to consider alternative nuclear weapon systems that could act as a deterrent. The review was never designed to consider the option of unilateral disarmament, although the hon. Lady is free to argue for that.
Mr Jones
I know that the hon. Gentleman has studied this subject thoroughly and is an expert. I totally agree with him. As I said, the Chief Secretary clearly has not read his own report because, as the hon. Gentleman rightly says, it outlines the problem with having only two submarines.
The Liberal Democrats briefed the newspapers earlier this week that the two-boat option would be a way forward, and the Chief Secretary has just re-outlined that ludicrous policy. My right hon. Friend the Member for East Renfrewshire (Mr Murphy) hit the nail on the head yesterday when he said that it was a little like installing a very expensive burglar alarm on one’s house with no batteries and putting up a sign saying, “Burglars, come in.” The only difference is that this would be a multi-billion pound deterrent that would not deter.
Caroline Lucas
I am sure that the hon. Gentleman, and indeed the Government, would pride themselves on adhering to international law, so can he explain how maintaining an arsenal of nuclear weapons for decades to come is in line with the UK’s obligation under the nuclear non-proliferation treaty, which is
“to pursue negotiations in good faith on… nuclear disarmament”?
Mr Jones
It is very consistent, and I am very proud of the Labour Government’s record on reducing our nuclear stockpiles, as we reduced the number of WE177 bombs and the number of warheads. I disagree with the hon. Lady’s position, but I respect the fact that she has one, which is a lot more honest that the Liberal Democrats.
However, credit should be given where credit is due. I think that the Chief Secretary should get some credit, because he managed to do something yesterday that I thought was remarkable, although I am sad that it was not reported more in this morning’s newspapers: he got the Prime Minister and Len McCluskey, the general secretary of Unite, to agree with one another, on this occasion on the Liberal Democrat proposals. That was some feat. If he is able to bring two individuals with such diametrically opposed views together, clearly he should turn his attention to the middle east peace process. Quite rightly, Unite described the Liberal Democrats’ position not only as reckless, but as a farce and a fudge, and that is exactly what we have here—[Interruption.] The Chief Secretary says that if Len McCluskey agrees with it, it must be a nonsense position, but he agrees with the Prime Minister, so is the Chief Secretary suggesting that the Prime Minister’s position is ridiculous?
Caroline Lucas (Brighton, Pavilion) (Green)
I want to shift the terms of the debate. I do not want to pursue the fallacy of an independent deterrent, although let us be very clear that it is a fallacy: our so-called nuclear deterrent is not independent—we would need agreement from the US to do almost anything with it—and there is not very much evidence that it is a deterrent, either.
Caroline Lucas
I want to make some progress.
Rather than pursuing that particular argument, I want to argue that it is now time to shift the emphasis of the defence debate and that the best deterrence of all is to work with other nations to solve global threats such as fossil fuel-induced climate disruption, transnational trafficking of weapons and drugs, and the poverty and desperation that fuel conflict, hunger and violence around the world.
That is why it is deeply worrying and, indeed, the height of irresponsibility that both the 2010 strategic defence and security review and this review of an alternative to Trident have not explored the full range of options. The Prime Minister trumpeted the review as “neutral” and “factual”, but I would argue that it is biased and empty of essential facts. That means that there is a risk that any parliamentary votes taken in 2016 will be ill-informed and hung up on a cold war era that has long gone.
The decision that should be taken is one based on what would genuinely contribute most to the security of the British people. There is a real argument that says that by not replacing Trident we could improve national security and allow the Ministry of Defence to spend the more than £100 billion saved over the lifetime of any successor nuclear weapon system on an appropriate response to the real security threats and challenges of the 21st century. The 2010 national security strategy identified these as organised crime, cyber-warfare, pandemics and, of course, climate change. Scientists, former US Presidents and, indeed, former UK Prime Ministers, among others, have all agreed that climate change is in fact the greatest threat facing humankind, and every pound spent on Trident is a pound not spent on more appropriate responses to the real dangers linked to climate change.
If that is the case, let us explore how that money could have been better spent. The £80 billion to £100 billion price tag for Trident could have been spent on energy efficiency, energy conservation and renewable energy, all of which represent an investment in a positive future and the opportunity to be world leaders in an area of rapidly advancing technology, as opposed to a cold war past. Just £16 billion would insulate the 16 million homes in Britain that are currently uninsulated, saving 4% of UK carbon emissions and helping to prevent 20,000 annual cold-related deaths, and £30 billion would provide 3,500 offshore turbines, supplying 15% of UK electricity use. Crucially, positive investment in a greener future would make us more secure by reducing the impacts of climate change and ending our dependence on foreign oil—a key root cause of global terrorism.
The national security strategy also highlights the ongoing need to tackle terrorism, but as Tony Blair himself said in October 2005:
“I do not think that anyone pretends that the independent nuclear deterrent is a defence against terrorism”.—[Official Report, 19 October 2005; Vol. 437, c. 841.]
A group of senior military officers, including the former head of the armed forces, Field Marshall Lord Bramall, reached much the same conclusion in a letter to The Times in 2009:
“Nuclear weapons have shown themselves to be completely useless as a deterrent to the threats and scale of the violence we currently face or are likely to face, particularly international terrorism.”
As one commentator has recently put it,
“confronting the threats of today with nuclear weapons is as archaic as attempting to fight tanks with a blade attached to the barrel of a rifle would have been 70 years ago.”
The bottom line is that the UK does not need Trident; nor can we afford it. An independent and strategic assessment of risk does not justify spending tens of billions of pounds on Trident when we have, for example, troops on the front line who are not getting the equipment they need. Alternatively, and in this time of austerity, we might also question whether or not the initial estimated £25 billion could pay instead for 60,000 newly qualified nurses or 60,000 new secondary school teachers for the next 10 years. That is why I say that to use the amount of money suggested on a project that will make Britain and the world less, not more, safe is politically irresponsible, morally bankrupt and economically obscene.
Moreover, this Government, like the last, have committed themselves under the non-proliferation treaty to
“make special efforts to establish the necessary framework to achieve and maintain a world without nuclear weapons.”
The UK committed to multilateral disarmament when it signed the NPT in 1968 and agreed to negotiate the elimination of all nuclear weapons. So far, Britain has not played a particularly constructive role in that process.
Caroline Lucas
Let me give an example. When 132 states gathered in Oslo in early 2013 to discuss the humanitarian impact of nuclear weapons, the British Government were not even there. Replacing the Trident system means committing the UK to maintaining an arsenal of nuclear weapons for decades to come. Expert opinion indicates that that is not in line with the UK’s obligations as an NPT signatory to pursue negotiations in good faith on nuclear disarmament.
Mr Jones
I cannot answer for the present Government, but it is a matter of fact that the last Labour Government reduced the number of warheads and got rid of the WE177 freefall bomb, so it is not true to say that the Labour Government did not make moves to reduce our nuclear weapons arsenal.
Caroline Lucas
What I said was that Britain has so far not played a particularly constructive role in the process. I have described what happened in Oslo earlier this year. Irrespective of the firepower, the message that we are sending to other states is that the way to be secure is to get more nuclear weapons. That is likely to make us less safe, not more safe. I do not know how we will be able to argue that Iran should not get nuclear weapons, as I deeply hope it will not, if we are perceived to be enhancing our nuclear weapons.
Caroline Lucas
No I will not, because I have more to say.
Moral and diplomatic leadership is required in multilateral disarmament initiatives such as the global nuclear abolition treaty and the UN’s proposed weapons of mass destruction free zone in the middle east. How can the UK participate constructively in multilateral negotiations on a treaty to ban and eliminate nuclear weapons when it is perceived to be doing the opposite at home?
Moreover, if we keep and upgrade our nuclear weapons, we will send a signal to countries in the rest of the world that they should go out and get nuclear weapons as well. Remaining nuclear-armed for at least another half century will encourage other states to take the nuclear road and ensure that we face the very threats in decades to come that we least want to see. As Kofi Annan has put it:
“The more that those states that already have”
nuclear weapons
“increase their arsenals, or insist that such weapons are essential to their national security, the more other states feel that they too must have them for their security.”
The more countries there are that have nuclear weapons, the more risk there is that they will be used. We cannot preach non-proliferation to countries such as Iran and expect it with any conviction while we are perceived to be maintaining and increasing our own arsenal. It is a very odd insurance policy that makes us less safe, not more. For those who are worried about our status in the international community if we do not have Trident to sit astride, Dr Hans Blix, the former UN weapons inspector, points out:
“Japan and Germany seem respected even without nuclear weapons.”
In conclusion, the economics, the evidence and the ethics all point in one direction. What happens next is a game changer, because any decision about the future of Trident will shape the future that we face. I believe that we need to show leadership and courage. We are on the brink of committing a huge amount of money to a system that might well make us less safe, not more. The signal that it will send to the international community is that the way to be safe is to acquire more nuclear weapons. As more countries do that, our own security will be further undermined. That is why we ought to use this historic opportunity to begin seriously the effort of disarmament by not replacing Trident and by using the money in a far more creative way.
Sir Gerald Howarth
It does, but, if I may, I will come on to my hon. Friend’s point in a moment.
My second point is that, yes, the deterrent has worked and it worked during the cold war. The argument is that the cold war has ended and so we no longer need the deterrent. However, as my right hon. Friend the Member for North Somerset (Dr Fox) said, we cannot predict what threats we might face in the next 30 or 40 years. While there appears today to be no immediate nuclear threat to our country, we know that other countries either have, or intend to acquire, a nuclear capability, and that there are approximately 17,000 nuclear weapons in existence.
The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne)
It is a great pleasure to follow the hon. Member for West Dunbartonshire (Gemma Doyle), who spoke with great good humour, particularly in demolishing some of the arguments of the isolationists on this issue.
This has been a most unusual debate on a most a critical subject of the utmost importance to the first duty of Government: defence of the realm. It is unusual, as it reflects a challenge of governing in coalition. This debate in Government time was opened by a Government Minister, my right hon. Friend the Chief Secretary—for whom I have considerable respect, for his day job—who supports one position, and is being closed by another Government Minister who is about to advocate an alternative view.
This difference of view was, of course, anticipated when the coalition came into office. The coalition agreement of May 2010 said:
“We will maintain Britain’s nuclear deterrent, and have agreed that the renewal of Trident should be scrutinised to ensure value for money. Liberal Democrats will continue to make the case for alternatives.”
Later, in the 2010 strategic defence and security review, the Government’s commitment to maintaining a continuous submarine-based deterrent was confirmed and the work of replacing the existing submarines was begun. Yesterday, the Cabinet Office published an unclassified version of the review into Trident alternatives, so the Government have now delivered on their commitment set out in the coalition agreement.
This debate has been remarkable, too, for the quality of contributions from right hon. and hon. Members. Before addressing some of the points raised, I want to make clear a few points of my own.
The UK’s nuclear deterrent exists to prevent, at the extreme, any threat to our national existence or nuclear blackmail from a nuclear-armed state against the UK homeland or our vital interests. We hope never to use nuclear weapons, but to deliver deterrent effect under all foreseeable circumstances. Our ability to do so must be credible and assured at all times, and this depends on there being no doubt in the mind of a potential adversary about our ability and determination to employ our nuclear weapons, if necessary. This has been the judgment of successive Governments since the nuclear age began.
Although I recognise that the cold war is over, I do not recognise the argument advocated by the hon. Member for North Devon (Sir Nick Harvey)—that this allows us to drop our guard against threats that might emerge over the next 50 years. This debate is not about our security today; it is about the security of our children and our children’s children.
No one may like it—least of all the hon. Member for Brighton, Pavilion (Caroline Lucas)—but there remain 17,000 nuclear weapons around the world. Russia is spending $650 billion over 10 years to modernise its armed forces, including upgrading the readiness of its nuclear systems. We live in a time of unprecedented acceleration in the development of nuclear technology and the desire among nations in unstable regions of the world to procure nuclear capability.
Mr Dunne
I am afraid I do not have time.
Iran has a well-established ballistic missile programme, is looking to extend its range and is close to being capable of developing a nuclear weapon. North Korea has proven nuclear capability and has tested ballistic missiles with increasing range. Only last week, a ship destined for North Korea with missile parts on it was intercepted in the Panama canal. This is a very uncertain world. I for one do not have the confidence to forsake a capability that has served this nation so well these past nearly 50 years in maintaining the security of the nation.
The maintenance of the UK’s deterrent in the face of the clear threat during the cold war and the uncertainties of today’s world has been possible only because of the dedication of those who have worked tirelessly to provide it. I am sure the whole House, regardless of Members’ views on the issue, will join me in paying tribute to the crews of our submarines and their families, and all the men and women, both military and civilian, who are engaged in providing our deterrent. I also wish to take the opportunity to congratulate them on the successful conclusion a few weeks ago of the 100th patrol undertaken by the Vanguard class of submarine under Operation Relentless—a significant achievement and a testament to the commitment, professionalism and skill of all those involved.
As my hon. Friends the Members for Plymouth, Sutton and Devonport (Oliver Colvile) and for Basildon and Billericay (Mr Baron) have requested, I pay tribute to the service of the veterans of British nuclear test programmes whose contribution ensured that the United Kingdom has been equipped with an appropriate deterrent over the past 45 years.
During tonight’s debate, many Members on both sides of the House have commented on the purpose of the Trident alternatives review. That is worth revisiting, because of the context that it provides for the debate and the conclusions of the review.
The Liberal Democrats’ opposition to the renewal of our nuclear deterrent based on the Trident system is well known. In 2007, they voted against the then Government’s decision, set out in the 2006 White Paper, to maintain our nuclear deterrent by building a new class of submarines. In 2009, the leader of the Liberal Democrats said
“we should admit that we neither need nor can afford to replace Trident.”—[Official Report, 1 July 2009; Vol. 495, c. 297.]
In their 2010 general election manifesto, the Liberal Democrats said that they would
“rule out the like-for-like replacement of the Trident nuclear weapons...it is unaffordable, and Britain's security would be better served by alternatives”.
The Chief Secretary has just confirmed that, as the author of the manifesto, he wrote those words. So the Liberal Democrats’ position was very clear: there would be no replacement of Trident, but they would explore alternative nuclear deterrent systems. As I have said, that position was reflected in the coalition’s programme for government.
I have to say that I feel some sympathy for my right hon. Friend the Chief Secretary. It was no doubt an uncomfortable moment for him when he realised during the course of the review that he would have to come to the House and report that, in fact, there were no cheaper alternatives to our Trident system after all. It must have been even more uncomfortable for him to realise that, instead of being able to stand at the Dispatch Box and make the case for some sort of cruise-missile based system—which, by the way, would offer a far less credible deterrent than Trident—he would have to execute a major U-turn, and accept Trident.
Of course, having been forced by the facts to accept the Trident system for party political reasons—to try to maintain some sort of differentiation on nuclear weapons, and to appease the disarmament wing of the Liberal Democrat membership—the Chief Secretary is now advocating a breaking of the posture that has been the foundation of our deterrence for the past 45 years: continuous-at-sea deterrence.
The Chief Secretary said a good deal about the parameters of the review and the conclusions that it drew, but he missed one vital point of which I am sure the House will want to be aware. Members will no doubt have spotted that paragraph 4 of the Executive Summary of the document states that the review
“does not produce a comparison of like-for-like capability.”
There is a very simple reason for that. The review demonstrates that no alternative system has a capability that is comparable to our continuous-at-sea submarine-based deterrent with Trident missiles. The two former Secretaries of State for Defence, my right hon. Friend the Member for North Somerset (Dr Fox) and the right hon. Member for Coventry North East (Mr Ainsworth), are perhaps better placed than any other Members who have spoken today, given their own reviews, to see that that is clearly the case.
Having listened carefully to the Chief Secretary’s speech and to contributions from the only other Liberal Democrat Member who was prepared to support this position today, I am still completely at a loss as to what the Liberal Democrats’ policy on Trident actually is. After a two-year review that was specifically designed to help them to come up with a policy, they still have not decided whether they are in favour of two or three submarines. At the start of the week, they briefed the national newspapers that they would come out in favour of just two successor submarines. One newspaper reported:
“Mr Alexander has concluded there is no practical alternative to Trident…but he will detail alternatives for downgrading it, making clear the leadership’s preference is for a two-submarine replacement.”
Yesterday, however, it was revealed that the Trident alternatives review did not even examine the option of replacing the current fleet of four Vanguard submarines with just two successor boats. Why not? Because at the outset, when the Liberal Democrats had the opportunity to raise the issues that they wished to be considered in the review, they did not do so. What a shambles. Only the Liberal Democrats could hold a two-year review, brief the newspapers that they are in favour of an option that was not even in the review and then, when the review is published, refuse to confirm whether they are in favour of it or not.
This Government recognise the need to provide our nation’s security in the most efficient and effective way possible. We need a credible deterrence posture, and CASD alone provides that. I welcome the clear confirmation tonight from the official Opposition Front-Bench team of its new commitment to a continuous-at-sea deterrent, which it expects to be delivered by a minimum effective deployment. That was not its position last week, but it is now. If this change in posture or clarification of the official Opposition—
Financial Services (Banking Reform) Bill
Caroline Lucas Excerpts(11 years, 5 months ago)
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Chris Leslie
And not just towards London, as a lot of the major banks have had their appetites whetted to make big profits by focusing on overseas. That disconnect with locality has been part of the problem. One issue for debate—on another day, perhaps—is the idea of having a regional banking network. The German Sparkassen system has a geographic mandate that requires those banks to do business within a particular locality. That is a dynamic for making sure there is a direct relationship between the banker and the customer, particularly for small businesses, but on a retail basis as well. That is a very good idea whose time has probably come.
Caroline Lucas (Brighton, Pavilion) (Green)
May I interpret the hon. Gentleman’s warm words to mean that Labour would support my new clause 15 if there were a vote on it?
Chris Leslie
Well, personally I prefer our new clause 10, but that is a good try by the hon. Lady. She has raised this issue in the spirit of trying to generate consensus on it, but I hope that in the limited time available to us we focus on the principle of making sure we get those commitments from the Government, which we all want in order to help get this transparency about what is happening in localities, as well as making sure we look at the state-owned assets and think about how they might be applicable to a regional banking network.
Government amendment 5 looks at some issues to do with competition, although they are mostly to do with the nature of ring-fencing and changes that might happen to the ownership of ring-fencing. I want to ask the Minister a question about the tensions between some of the objectives in the Bill. Government amendment 5 inserts a new requirement to consider competition issues, which seems to be slightly in tension with the existing provision to make sure there is no significant adverse effect from changing the ring-fencing arrangements. Can he clarify that that tension is resolvable, and confirm that the duty to consider competition will take effect subject to clause 4(3)?
On Government new clause 1 and new schedule 1, can the Minister help us by talking about the practical implications of the amendment to the Companies Act 1985 omitting disclosures to the regulators, done for the purposes of helping them fulfil their functions under part VI of the Financial Services and Markets Act 2000? In particular, this appears to stop such disclosures being exempt from section 449 of the Companies Act, which criminalises disclosure of information obtained in certain circumstances. What is the reasoning behind that change? Also, paragraph 2 of new schedule 1 amends section 376 of FISMA, changing “PRA-authorised” bodies to “PRA-regulated” bodies. Is that a significant change? Are there any bodies that are classed as PRA-regulated but which are not PRA-authorised? If so, which are they?
Our new clause 12 addresses the portability of bank accounts. I know that the hon. Member for South Northamptonshire (Andrea Leadsom) has been very active on this, and that she has tabled similar amendments. She has been vocal in favour of some of these changes, and has tabled a sensible set of proposals. I hope she would agree that we are mirroring each other on this question.
Our new clause 12 would mandate the Chancellor to publish a report on the adequacy of the current account redirection service and on a possible change in the law to compel all ring-fenced banks to introduce a current account redirection service that might include portability. The banks themselves have made proposals for a seven-day switching arrangement from this September. The Minister claimed in the Government’s response that they had secured that commitment, but that might be a little bit of exaggeration and spin; I suspect that the banks were heading in that direction, but I will let him off on this occasion. This all comes down to whether that seven-day switching will radically transform the convenience for the customer. It is all very well saying that there will be a year or so when some transactions from the existing current account will automatically be made into the new account, but I do not understand why that provision has been time-limited. Some people will forget that that provision expires after a certain number of months.
Andrea Leadsom
Yes. The hon. Gentleman is absolutely right, and he has certainly been a keen supporter of bank number portability, as have many hon. Members in the Chamber today. The payments regulator that the Government are consulting on is the first step to achieving transparency. The next step is empowering that regulator to do something to enforce bank number portability when it finds, as I am sure that it will, that to date there has been a completely deliberate attempt to restrict competition in the banking system.
The big banks have said that bank account number portability would cost an absolute fortune, yet the technology already exists. Some people have asked whether it would not be an enormous risk to data integrity if the consumer’s bank account number, sort code and payments instructions were held by VocaLink, but in reality, all the consumer’s details are held by the bank, which passes them all on to VocaLink, so there are double risks to data integrity at the moment. Holding those account details in VocaLink would reduce, rather than increase, the risk.
People also say that other banks cannot access VocaLink’s payments infrastructure directly, because all the banks that clear direct have mutually to underwrite each other’s payments. The smaller challenger banks cannot possibly afford to underwrite the payments of the bigger banks. However, we could easily solve that; already, in various exchanges, banks pre-fund payments. If a bank’s balance were too low, and it was running short of cash with which to meet its outgoing payments, it would be called, intra-day, for more cash. That problem is easily solvable, and the reason why it has not been solved is that that is simply not in the big banks’ interests.
It has also been said that the proposal would surely be incredibly complicated from an IT point of view, but VocaLink has already set up bank accounts for the Department for Work and Pensions, because a lot of the Department’s benefits customers do not have bank accounts. VocaLink is already able to manage customer account details for DWP customers, so the technology already exists. I simply do not accept the idea that there would be eye-watering costs. Chief executives of big banks have literally said it would cost trillions—absolutely vast sums—but I challenge them to provide any scrap of evidence that shows that is the case, and that their refusal is not down to their desire to restrict access to new players.
The advantages of bank account number portability are, of course, the elimination of barriers to entry, and increased competition as a result. One of the big problems for new entrants is that it is so difficult to gain customer share, because people will not move bank accounts. With bank account number portability, if I, as a customer, was sick and tired of my bank, I could move tomorrow, the day after, and the day after that, if I was not getting good service, and it would not be any skin off my nose; it would be perfectly easy to do, and it would be the banks’ problem. That would be an enormous change in the competitive environment.
Likewise, there would be far greater consumer choice. Bank account number portability would encourage the likes of Tesco Bank and Marks & Spencer Financial Services—any big, multinational conglomerate—to go into the money business; it would become yet another product line. That in itself would eliminate some of the problems of “too big to fail”, because there would be many more smaller players, which would have many product lines, and therefore would not have all their eggs in one basket.
For small businesses the change would be revolutionary. At present one of the biggest problems for small businesses is that the big banks require that as well as their company accounts, small business people have their personal accounts and mortgage with the same big bank and do all their foreign exchange, overdraft, loans and other transactions through that bank. It is incredibly difficult for a small business to move accounts because of the complexity of all their suppliers and all the people they are trying to trade with. The barriers to entry for them are perhaps even greater than they are for us as individuals. Again, being able to take their bank account number with them would change the position dramatically.
Another huge advantage that is not often talked about is that since the 1990s, when I was running Barclays bank’s team, an enormous consolidation has taken place. There used to be 44 big banks in the UK; there are now about 22 banks of any size. The consolidation meant that during the 1990s many banks took over other banks, broker- dealers, small fund managers and so on, so they have an enormous number of legacy systems. They have managed to string them together over the years, but bank fraud in this country alone is huge. Changing the payment system would dramatically reduce the incidence of bank fraud. Intellect, the IT trade body, has said that the change could reduce the incidence of bank fraud by up to £30 billion a year.
Finally, another key advantage of bank account number portability is resolution. Andy Haldane, the Deputy Governor of the Bank of England, has gone on record as saying that it would be the solution when the day comes that a big bank fails again. We have, of course, put in as many steps as we can. Basel III will make great strides towards ensuring that banks cannot fail again. We have created our new regulators. We have ensured that banks have proper leverage and proper capital. All those measures are designed to ensure that banks cannot fail again, but we know that banks will always fail. That is the reality in a western developed market economy such as ours. We saw only too recently the problems with Northern Rock, when people were desperate to take their money out. The answer to resolution is for the Bank of England to be able to say, “You have failed. We are now taking all your accounts and putting them with survivor banks.”
There is a huge amount going for bank account number portability, above and beyond the seven-day switching process. My new clause calls for the Government to ensure, within 12 months of Royal Assent, a full cost-benefit analysis of bank account number portability. Should the findings be that this is a good idea, and should it produce the kind of benefits that I have just described, the regulator should be empowered to implement bank account number portability. I welcome the Government’s assurances that they will move in that direction. On that basis I will not press my new clause to a Division, but I urge the Government to keep up the momentum and ensure that before too long we have full account number portability.
Caroline Lucas
Thank you, Madam Deputy Speaker, for the opportunity to speak to my new clause 15. It is a modest proposal for a full Government consultation on the potential for local stakeholder banks to be carried out before we sell off RBS or any other taxpayer-owned banking assets.
I was interested to hear the Minister mention yesterday his trip to Germany and how he saw in the pages of the Handelsblatt a big headline saying, “City of shame”, referring to the City of London. I agree that this is a stark illustration of the impact of financial mismanagement and of our current banking system on people’s views of the City. However, although I also agree that this highlights the need for improved standards in banking, I think it highlights, too, the need for a radical reappraisal of ownership and accountability structures, if we want to have a banking system that we can be proud of, not ashamed of.
I hope that during the Minister’s trip to Germany he also found time to look at the savings banks, the Sparkassen, that we have spoken about this afternoon and which make up about one third of the German banking system. They are run commercially with dual financial and social objectives, to make a profit and to support the local economy. Professional bankers take responsibility for day-to-day running of the banks and if they make incompetent lending decisions, they are more likely to get sacked than their counterparts in giant commercial banks. Local stakeholders, including local politicians, business leaders, employees and customer representatives, sit on a supervisory board. That is just one example of the sort of local stakeholder bank that my new clause seeks to promote.
The New Economics Foundation analysed data from 65 countries where such alternatives thrive. They include co-operative banks, credit unions, community development finance institutions and public interest saving banks. The common characteristic is the goal of creating value for stakeholders, not just for shareholders, and some exciting and incredibly positive trends emerge. First, a greater focus on the needs of customers, including more competitive products, better service and longer-term lending; secondly, provision for customers who are currently under-served by regular banks; thirdly, a boost to local economic development through lending to small and medium-sized businesses, preventing capital drain from the regions and maintaining branch networks; and finally, a positive impact on financial stability through less volatile returns, high levels of capital, prudent balance sheets and expansion of credit provision after the financial crash.
Jonathan Edwards
To what extent has the hon. Lady been influenced by the system in the US, where there is a strong network of local credit unions, that provide an economic function for the local business community, not merely banking for the poor?
Caroline Lucas
The hon. Gentleman cites one of the few examples in the United States and its economic system that I would want to emulate. Credit unions set an interesting example that we could learn from.
Although I welcome the findings of the Parliamentary Commission on Banking Standards, I worry that the commission was somewhat seduced by the assumption that RBS should be returned to the private sector in one form or another, without a sufficiently full and proper examination of the merits of publicly-owned alternatives. It is important to underline that “publicly-owned” does not mean state-run. The German public saving banks are managed by bankers, not politicians, but they are run to serve the interests of the local economy and of citizens, rather than those of remote shareholders. Managers are held much more accountable for incompetent lending than are private sector managers who drove their businesses to bankruptcy while exploiting their customers with mis-sold products.
It is important to understand also that local stakeholder banks are not unprofessional. The banks studied by the New Economics Foundation make a solid profit to ensure their own viability, and their first priority is always to make sure that the loan is repaid. Because they are not trying to make 22% return on equity, which is RBS’s current profitability on UK retail business, they are quite happy with 8%, so they can afford to meet their social purpose. If the Government are serious about becoming a champion of SMEs and regional prosperity, at the very least they need to look into the pros and cons of a network of regional banks.
What if best value for the British taxpayer is the long-term ownership of a successful bank or banks that support the British economy? An obsession with privatisation on either side of the House should not blind us to that possibility. My amendment simply proposes a full examination of various forms of local stakeholder banks to ensure that we take decisions about the future shape of RBS and our banking sector more widely on the basis of practical economics and evidence, not just ideology.
I support new clause 10 that was tabled by the Labour Opposition. Sub-paragraph (iii) refers to
“the impact of any sale on the creation of a regional banking network.”
What I set out in new clause 15 is exactly the kind of positive impacts that we would want to see. Rather than simply guarding against negative impacts on any regional banking network, I would like to see us actively, explicitly and energetically promoting the alternative of greater local and regional banking. I hope very much that there might be some chance that the Minister will look favourably upon my new clause.
Greg Clark
I do not know whether the hon. Gentleman will be reassured or alarmed to learn that I had not left the subject of regional banking just yet. Indeed, I want to come to the precise subject he has just raised.
The Prudential Regulation Authority’s changed procedures were referred to—by, I think, my hon. Friend the Member for Wyre Forest. It is now possible to license new entrants, who could require up to 80% less capital up front than previously. That means that the time is now ripe for new banks in the regions to be established. The hon. Member for Brighton, Pavilion, in her new clause 15, and the hon. Member for Edmonton (Mr Love) refer to CDFIs—community development finance institutions. Some £60 million of wholesale funding for CDFIs is available through the regional growth fund. Tax relief up to 25% is already available on investments made by individuals and companies into CDFIs. Of course I will talk to my hon. Friend the Exchequer Secretary and carry forward the hon. Gentleman’s representation for further changes, but a significant set of advantages is available. Similarly, the more flexible rules for credit unions that have been introduced and the £38 million of funding for this movement have also created greater opportunities.
Caroline Lucas
Does the Minister accept that constraints on the amounts that larger credit unions—such as the East Sussex Credit Union, which I know well—are allowed to accept in deposits or are allowed to lend are stopping them fulfilling their potential? Will he look at that again?
Greg Clark
I am happy to take that forward. The hon. Lady will be aware that we have liberalised the rules for credit unions, but if problems are being caused, not least in East Sussex, I would be happy if she dropped me a line or came to see me.
We have great enthusiasm for the proposals that the hon. Lady makes, but what is required is not a study, but action. I make this commitment to her, and to any hon. Member who is interested in helping to establish a new regional bank in their area, that I will help them to do so. I hope that they will allow me to do that.
New clause 10 would require the Government to lay a report before Parliament before selling any banking assets. All hon. Members are aware of what the Chancellor said in his Mansion House speech about the next steps for Lloyds and RBS. For Lloyds, the Government are actively considering the options for how its shareholding can be returned to the private sector. Value for money for the taxpayer will be the overriding consideration, and there is no pre-determined time scale. Indeed, the disposal process may involve multiple stages over time, rather than a single moment.
For RBS, share sales are some way off. In line with the recommendation of the Parliamentary Commission on Banking Standards, the Chancellor has announced a review, to conclude in the autumn, into whether a bad bank should be set up for risky assets from RBS. Following the criteria suggested in the commission’s report, the review will assess whether creating a bad bank would accelerate the path back to private ownership, deliver benefits for the wider economy and be in the interest of taxpayers.
As I have mentioned, the OFT is looking specifically at the impact that new challenger banks created by the Lloyds and RBS divestments will have on competition in small business banking. UK Financial Investments has a remit to provide value for money in executing its requirement to devise the means of selling the Government’s shareholdings in the banks, and, in doing so, to pay due regard to maintaining financial stability and to act in a way that promotes competition. In doing so, UKFI and the Treasury must follow the value-for-money principles set out in the Green Book, and they will be accountable, through the Accounting Officer, to the National Audit Office and the Public Accounts Committee, as well as to the House and the Treasury Select Committee.
Financial Services (Banking Reform) Bill
Caroline Lucas Excerpts(11 years, 5 months ago)
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Greg Clark
It delights me to hear the hon. Gentleman refer to today’s publication; it confirms what I thought and hoped, which was that the publication would inform the debate. I think that tomorrow we will come on to clauses that deal with precisely those matters.
Caroline Lucas (Brighton, Pavilion) (Green)
Does the Minister understand the disappointment of those, including me, who believe that the proposals do not go far enough, and that we should look at full legal separation of investment and retail banking, and not just ring-fencing? If we do not, we risk sending a message to the public that politicians still have a surprisingly high degree of trust in the very banks and bankers who caused so much harm to our economy.
Greg Clark
I do not agree with that. We will come on to talk about what the commission referred to as the electrification of the ring fence, and whether it is appropriate to have a power to break up the whole system, so I will address that in a second, if I may. Amendments 6 to 10 concern that electrification of the ring fence, to use the memorable phrase of my hon. Friend the Member for Chichester—or, I dare say, the whole commission.
Chris Leslie
My hon. Friend is 100% correct, and we have made our point; I now want to move on to issues of substance. There is a lack of time and we have to finish debating this group of amendments by 7 o’clock. It is ridiculous that the commission spent hours on these matters but only a tiny amount of time has been allocated to debating them today.
Government amendments 1 to 4 seem to be generally welcome with regard to the extension of the regulatory perimeter and the definitions of the Financial Conduct Authority and the Prudential Regulation Authority. It is intriguing that amendment 4 centres on clarifying the definition of “failure”. It is very tempting to ask if they know what failure is, especially given their weak response to the parliamentary commission today, but I will move swiftly on.
Government amendments 7 to 10 also seem to be fairly unobjectionable, although there appears to be a drafting error in amendment 8. Why has the Minister decided that the proposed subsection (3) should be inserted ahead of subsection (2) of FSMA? Something seems to be amiss, but that is only a minor point.
More importantly, will the Minister talk about the tribunal to which a lot of the issues will be referred? What sort of tribunal will it be and where will it be situated? Will its work add to the functions of an existing tribunal? That is a small point, but I would be grateful if the Minister would address it.
Government amendments 11 to 13 seem to focus on drafting issues. I cannot really see what will be achieved by changing “subsidiary” to “body”, but I do not have anything to say about those smaller, drafting amendments.
The first main issue of substance relates to our amendment 17 on the need for a thorough review process of the ring-fencing of retail banks, such that it augments what ought to be the electrification of the ring fence. We suggested this in Committee and it was a clear recommendation of the commission. It would be better to have a proper and independent review of the adequacy of ring-fencing every two years. We think that a more robust review process would be better than the Government’s PRA-led approach. It would be inadequate for the regulators to lead the process. We need a broader and more substantial review process to ensure successive ring-fencing.
Ultimately, as the commission itself has said, the jury is out on whether ring-fencing will work. It is fine in theory, but in order to keep a close eye on things—especially as these issues fall out of the media spotlight, as they inevitably will in the years to come—we must have a process in place that makes sure that we test, watch and scrutinise what happens.
The commission was right to be disappointed with the Government’s response. It noted that
“the Government did not accept our recommendation on potential ‘electrification’ with respect to the sector as a whole. As our First Report noted, crucial doubts remain about whether all the intended reforms can be put in place and, even if they are, whether this will be enough to prevent the Government from having to step in next time a crisis hits. In particular, we identified the possibility that the partial separation of a ring-fence may prove insufficient.”
That is why we feel that a more rigorous and thorough review process that involves the commissioning of independent members to produce, together with the Chair of the Treasury Committee, a report for Parliament would be far more effective. I do not want to take words out of the mouth of the hon. Member for Chichester, but he is right to say that if we leave it to the PRA to do this job and do not have a proper and more thorough process, there is a danger that the regulators will simply end up marking their own exam paper.
Caroline Lucas
Following the logic of what the hon. Gentleman is saying, does he not agree that a better way of restoring public faith in banks and, indeed, in politicians would be to legislate firmly now for the full legal separation of retail and investment banking? Even if that is not what a large number of financial institutions want, would it not be better for the taxpayer and the public?
Chris Leslie
We have tabled an amendment, which I shall discuss shortly, suggesting a clear back-stop power for the full separation of retail and investment banking across the board, in case ring-fencing does not work. We believe that we should give ring-fencing a chance, but it is important to note that the jury is still out on whether it will work. We just do not know. The Bill gives us the opportunity to ensure, as the commission recommended, that nobody has any truck with breaches of the ring fence. That must be the case both on a firm-by-firm basis for specific institutions and banks and for the sector as a whole.
Spending Review
Caroline Lucas Excerpts(11 years, 5 months ago)
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Caroline Lucas (Brighton, Pavilion) (Green)
Given the news this week that the Government’s flagship green deal is failing in terms of both the planned jobs and its environmental targets, why will the Chancellor not introduce a big, bold investment in green infrastructure and home insulation in particular, to get people into jobs, get tax revenues up, reduce benefits and give hope to the millions of young people around the country today?
Mr Osborne
We have introduced investment. We have increased investment in renewable energy, so that a record amount is now going in. My right hon. Friend the Chief Secretary to the Treasury will set out the strike prices this week, which will give long-term investors the certainty needed to increase renewable energy investment.
Royal Bank of Scotland
Caroline Lucas Excerpts(11 years, 6 months ago)
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Caroline Lucas (Brighton, Pavilion) (Green)
The Minister spoke of the importance of RBS becoming a bank that provides greater support to the British economy. I could not agree more, but rather than flog it off, would not a more effective way to achieve that aim be to maintain the bank in the public sector and to direct investment into projects that will genuinely benefit the public and the economy—into small businesses, affordable housing and home insulation—which will also create hundreds of thousands of local jobs?
Sajid Javid
Respectfully, I have to disagree with the hon. Lady. I think the Government have no long-term role in owning any part of the banking sector.
Oral Answers to Questions
Caroline Lucas Excerpts(11 years, 7 months ago)
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Danny Alexander
I strongly welcome that report. The Government have already introduced a package of measures, including start-up loans to support new small businesses. Lord Young has presented his findings to the Government and we will respond in due course.
Caroline Lucas (Brighton, Pavilion) (Green)
Given the increasing evidence, such as last month’s Carbon Tracker report, showing that so-called unburnable carbon assets pose a serious risk to the financial system, will the Minister look seriously at the proposal that companies should be required to disclose the carbon emissions potential of their fossil fuel assets?
Greg Clark
The first requirement is to assess the risk that the hon. Lady has described, and it is for the Bank of England to consider the systemic consequences. Should the Financial Policy Committee of the Bank of England conclude that investment in high-carbon assets poses a risk, it would have to report and explain that risk in its financial stability report.
Finance (No. 2) Bill
Caroline Lucas Excerpts(11 years, 8 months ago)
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Mr Meacher
I have already mentioned two that have had a great deal of publicity—Google and Amazon—but there are many, many others. Only a very narrow and small proportion of the most “aggressive”—the Chancellor’s phrase—or abusive tax-avoidance schemes would be caught. What worries me is the impression given that everything else is somehow okay with the Government. I think that is a very unwise position to adopt.
Briefly, the third advantage of GAntiP is that the incentive for accountants, lawyers and bankers to sell tax-avoidance schemes would be curtailed. That would be a thoroughly good thing, because they and their clients would know that most of those schemes would fail in future.
Lastly, my fourth advantage might be the single most important one. GAntiP really could help to change the rancid culture in British society today whereby the top 1%—whether it be super-rich individuals or the big corporations—are widely perceived to be ripping off the honest remainder of the population.
Caroline Lucas
That is very kind of the right hon. Gentleman, who is making a compelling case. Does he agree that it would be helpful to have a clear commitment from the Opposition Front-Bench team that, if it were to form the next Government, it would introduce the sort of principle that he describes so compellingly? For all the reasons the right hon. Gentleman has outlined, the principle is simpler, it provides greater certainty and it will catch far more of the kind of things we are trying to rule out than the rule approach that we have at the moment.
Mr Meacher
As always, the hon. Lady has a similar mindset to mine. That is what I hope, too. Discussions are, of course, going on within the party, and we are yet to hear from my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) who speaks from the Front Bench. I am certainly very keen to try to ensure that before the general election, for all the reasons I have given, the Labour party signs up to GAntiP. I am thus pleased to commend to the Committee new clauses 7 to 16.
Cyprus
Caroline Lucas Excerpts(11 years, 9 months ago)
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Greg Clark
The Defence Secretary and the Foreign Secretary have given a voluntary commitment to making sure that we do right by our armed forces, and their intentions are absolutely clear—that we should not be putting at a disadvantage the men and women who serve our country overseas, in this case in Cyprus.
Caroline Lucas (Brighton, Pavilion) (Green)
I am a bit surprised by the lack of moral outrage from the Minister on behalf of the people who live in Cyprus. He calls the measures vigorous and exacting, but are they not actually immoral and unfair? Will he simply say that it is wrong for the Cypriot authorities to pilfer the savings of ordinary people living in Cyprus?
Greg Clark
Not having been part of the negotiations, it is difficult for any Member of this House to know what the alternative was. The elected representatives of the Cypriot Government clearly accepted what was proposed in contemplation of a fate that they considered to be worse, which was the collapse of the Cypriot banking system. This is a situation that none of us wants to be in. Thank goodness that in this country, as a result of being outside the eurozone and having introduced discipline into our finances, we are not going to be.
Tax Fairness
Caroline Lucas Excerpts(11 years, 9 months ago)
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Chris Leslie
I want to make some progress. I will give way in a moment.
The divide between the richest and the least well off is getting broader, not narrower, and the situation is getting worse. The Government are cutting taxes for one group this year—the very richest in society—with 13,000 people earning £1 million a year getting a tax cut. That is astonishing. Could any other policy better typify the twisted logic of trickle-down economics than that one?
Caroline Lucas (Brighton, Pavilion) (Green)
I welcome the mansion tax as a step towards equality, but why will the Opposition not go further and tackle the absurdity of our council tax rates still being based on 1991 rates? A house valued at £1 million in 1991 pays only 0.3% of its worth, while a house valued at £40,000 pays 2.4%, which is eight times more. Does the hon. Gentleman agree that that is unfair and should be tackled?
Chris Leslie
It is important to listen to the Liberal Democrats’ proposal for a mansion tax. They believe that £2 billion could be raised in that way from properties worth £2 million or more to help those on low and middle incomes. In our view, any such revenue should fund the reintroduction of a 10p starting rate of income tax.
I would say to hon. Members, and particularly to Conservative Members who are struggling with the state of the current economic policy, that there are independent authorities and budget watchdogs to correct them when they wrongly assert that growth will not be affected by the cuts and the tax rises and that they are paying down the national debt, but they cannot pull the wool over the eyes of the public, who know what fairness is and who know that the choices made so far have been deeply unfair.
Chris Leslie
I hope that my hon. Friend is not accusing the Liberal Democrats of consistency in their inconsistency—that would be a step too far.
Caroline Lucas
The hon. Gentleman is talking about courage, so I wonder how far the official Opposition’s courage will go. Some £4.5 trillion is kept by the top 10% of wealthiest households, so the £2 billion that would be raised by a mansion tax, although welcome, is a tiny amount and would hardly bridge the chasm between the super-rich and the poorest. Given that, would the official Opposition support a genuine wealth tax?
Chris Leslie
I would be very interested to see the hon. Lady’s proposition, but I do not think it is necessary to go for that general approach that she takes. I say that because there are targeted ways in which we could try to build consensus on a property tax for high-value properties over £2 million and then use the revenue to help the vast majority of lower-income and middle-income families. That is the proposition before us today.
Mr Gauke
Let us be clear. One of the weaknesses in the tax system that we inherited was the fact that people were able to walk around the paying of stamp duty. On very valuable properties, it was all too easy for people to arrange their affairs thorough corporate vehicles and not pay stamp duty. In the last Budget this Government introduced measures that will deal with that enveloping and deal with one of the unfairnesses in our tax system. One of the ways in which we are going to do that, as well as a high stamp duty charge for properties held in corporate vehicles, is to bring in an annual residential property tax. That is focused only on properties worth more than £2 million held by a corporate vehicle. It would apply to only 6,000 properties, we estimate. It is a very narrowly focused policy that will enable us to deal with an area of avoidance that was allowed to carry on for far too long under Labour.
Caroline Lucas
As a tax that is much harder to evade or avoid, there is the land value tax. That is supported by one half of the coalition and by the OECD and the IMF. The IFS has said that the case for a land value tax is overwhelming because it is much fairer. Given that that is the case, can the Minister explain why his Government will not even do some basic research into it, as my private Member’s Bill requested?
Mr Gauke
We are left with the same issues of complexity of valuation across the board, and the issues of the asset-rich, cash poor. That is why my part of the coalition is not keen to proceed with that matter, but it is worth pointing out that we are raising more money from property. There is a stamp duty land tax of 7% on residential properties costing £2 million or more, a policy that is easy to administer and will not impact on existing home owners.
On the mansion tax, we have made no secret of the fact that the two parties disagree. If we did not disagree on some things, we would be one party, not two. But in the circumstances that we are in, it has been perfectly possible for two parties to work together in a sensible and mature way and to reach agreement on a host of measures that have made our tax system fairer, easier to understand and competitive. We heard much from the hon. Member for Nottingham East to the effect that we should do more to help low-income workers. May I just remind him and the House of the progress that we have made in raising the personal allowance? In 2010, someone on £6,500 was paying income tax at 20%. From next month, someone has to earn £9,440 before paying any income tax at all. Our measures on the personal allowance have provided a huge tax cut for millions of people and will take more than 2.2 million of the lowest earners out of income tax altogether. In fact, over the course of this Parliament, someone working full time on the national minimum wage will have seen their income tax bill cut in half.
Let us contrast our record with that of our predecessors. Let us remember that when the right hon. and absent Member for Kirkcaldy and Cowdenbeath (Mr Brown) did his last Budget, rather than cut taxes for the working poor, he increased them. People talk about the scrapping of the 10p rate, but Labour did not scrap it, they doubled it. They turned it into a 20p rate. For example, someone earning £9,000 a year in 2007 would have heard a Labour Chancellor stand up and announce that a Labour Government were going to increase their income tax bill by more than £200. Last year, someone on £9,000 a year would have heard a Conservative Chancellor stand up and announce that a coalition Government were going to take them out of income tax altogether. Our constituents on £9,000 a year will soon be paying no income tax at all, saving more than £500 since the coalition came to power. Labour turned a 10p rate of income tax into a 20p rate. This coalition has turned a 20p rate into a 0p rate.