(11 years, 11 months ago)
Commons ChamberWe have toughened up the regulation of consumer credit, and next year there will be a tough new consumer agency, the financial conduct authority, which we are creating in order to deal with the bad advice that is sometimes provided to families. Indeed, Martin Wheatley, its chief executive, gave an interesting speech about that last week, and about the impact of sales commissions and the like on the provision of bad advice and bad products to families. We are taking action to do that, but as I said, the worst possible thing for all those families, and everyone else in the country, would be a sharp rise in interest rates, which a loss of confidence in the Government’s fiscal policies would bring about.
10. What estimate he has made of the effect of the level of VAT on the retail sector in the last 12 months.
The Government aim to provide a climate of economic stability that will benefit all businesses. That would not be possible without a credible plan to deal with Government debt, and a VAT increase is an important component of that plan.
Since January this year, 42 retail businesses in Wales have gone to the wall. What message does the Minister have for Welsh business leaders who have called for a reduction in VAT to breath new life into the high street?
(12 years, 1 month ago)
Westminster HallWestminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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Thank you, Mr Chope, for calling me to speak. In debates such as this, I always think of the time I spent working in a bank, in the retail sector.
Last week I sat behind Bob Diamond at the Treasury Committee, and watched as he was grilled by parliamentary colleagues. It got me thinking: this man is walking away with a £2 million bonus for doing something that is categorically wrong. It made me realise why people are so angry. The worst thing, which people do not seem to understand, is that Bob Diamond will not get the dogs’ abuse that someone working behind the counter in Newbridge or in Risca will get. They will be told that they are criminals, thieves and crooks. It is the people working on the front line who will get the abuse.
What really annoys me is the current sales culture in banks. I understand that banks are private businesses and need to make money—nobody needs to intervene on me to tell me that—but they seem to be pushing their staff to the limits. For example, when I worked in a bank, I was told to stay until 7 o’clock at night to phone people who were arriving home from work to arrange sales appointments for the following day. My contract of employment ended at 5 o’clock, yet I was expected to stay until 7 o’clock, because, I was told, my bonus would be my payment for doing so.
Another frustrating thing—this annoys me when people bash bankers about their bonuses—is that, while most people who work in a bank get a bonus and often make up their money with it, they have to look on and see those in charge who have done wrong and who have affected people’s trust in bankers walk away with big bonuses. The term “bonuses” is absolutely meaningless.
People who work in banks also have a raw deal on training. When recruits turn up at a bank, they are not told anything. Many of my colleagues when I worked at a bank did not know what a clearing house automated payments system or a bankers’ automated clearing services payment was, and did not understand mortgages, yet they were being told to sell to people. The fundamental question we have to ask ourselves on the future of banking in this country is not what do we want, but what do consumers and those working in banks want? First, when people go to a bank, they do not want to be flogged products that they do not want. When I move my money between accounts every month, I do not want to be asked, “Mr Evans, have you paid off your credit card? Do you want a loan? Do you want to buy a new car?”, when all I want to do is transfer my money.
We need to get away from a culture of high-pressure sales and of computers making decisions, and get back to a culture of bankers actually offering advice. When I first joined the bank, I naively thought that it was a profession similar to that of a lawyer, but then I was told—this was 20 years ago—that people did not bother with banking exams because they were meaningless. I find that strange. When I ask the Financial Services Authority, Lloyds TSB or HSBC what they are doing to train staff so that people know that their bank manager is giving them the best possible advice, they reply, “We have in-house training,” but is such training given across the board and is it an industry standard? On education—I hope the Minister will focus on this, because nobody ever talks about it—can we find a way of returning banking to its previous status as a profession with recognised exams at an industry standard, so that everybody knows that their bank manager is giving them the best possible advice? That would be good for the banks and for the consumer.
In March, I tabled a private Member’s Bill called the Banking (Disclosure, Responsibility and Education) Bill. It was based on the Dodd-Frank Act in America, which enables each and every bank transaction to be monitored. Perhaps we would have discovered the LIBOR scandal earlier if we had been tracking everything and had an office of financial research.
The constituency represented by my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) is not like mine—mine is a valleys seat—but we have similar problems with huge amounts of debt and illegal lenders. We have organisations such as Provident Personal Credit and Shopacheck. Cash Converter has popped up on the high street and its representatives even want to meet me to discuss their social responsibilities. Many people are unbanked and it would be a good idea, as my hon. Friend the Member for Harrow West (Mr Thomas) suggested—he is not in his place—to track people by their postcode and for the banks to release a report every year stating to whom and to which demographics they are lending money, and how they are contributing to society. That way, we could introduce a rating system so that, if people wanted to change banks, they would know whether they were moving to a bank rated A, AA, B or C. Also, there would be competition between banks and they would have to “up” their game, which is something I want to see.
I support switching and agree with the hon. Member for South Northamptonshire (Andrea Leadsom) that we need to have more portability between bank accounts, but from what I can see—I will probably be attacked for this—the services offered by banks are much of a muchness. The interest rate on loans provided by different banks is usually the same—it is very low—and the differences between individual savings accounts are small, as are the interest rates on credit cards, so people do not actually move to anything better. I want to remove the barriers to entry, which many hon. Members have mentioned, and we could achieve that by considering the role of credit unions.
I represent the Co-operative party as well as Labour, and it says that the way forward is to have community banks and to introduce regulations for more credit unions. In Wales, everybody has access to a credit union, which is fantastic. A credit union is owned by members and all its profits are pumped back into lending to people. I want to see its role expanded, so that it lends not only to people but to businesses—micro-businesses and small businesses—that cannot get money elsewhere. We need to consider that.
I want to address what was a personal bugbear of mine when I worked at a bank. I have raised this issue on numerous occasions with various Ministers from the Ministry of Justice and the Department for Work and Pensions—I am now raising it with a Treasury Minister—and I hope it will be addressed. Whenever I go into banks, members of staff tell me that they have a number of very good customers who pay their bills on time and whom they want to lend to and develop a relationship with. However, when they credit score some of those customers’ accounts, it reveals bad credit information, because they have received a county court judgment. When the bank’s staff speak to them, they discover—this happened when I worked at a bank as well—that they have a bad credit rating not because they defaulted on their mortgage or on a financial product, but because they got into a dispute with a gym or a mobile phone company, which, rather than trying to resolve the issue, went straight to a county court to get a judgment against them that completely messed up their credit record.
[Philip Davies in the Chair]
I recently read Duncan Bannatyne’s book, “Anyone Can Do It”, in which he says that if someone does not pay their final payment, even if they have cancelled their contract, he would have no hesitation in taking them to court. I hope the Minister will address that issue, because it is a real one for many customers and for banks whose good customers are being cut off. If someone is in a dispute with a mobile phone company or a gym, such organisations should not be allowed to impose a CCJ and wreck their credit rating, especially if they can show that they have been in a dispute.
On the unbanked, I still have serious concerns about the basic bank account. It has been a very good innovation that has brought more people into the banking sector, but, even though it allows people to have an electron card and a bank account, it does not credit score for any products. Therefore, if someone is put through a credit-scoring process for a classic account or a traditional bank account, the credit score agency cannot be told that they have been a basic bank account holder for five years and that things have gone really well; it can only go on the information that it has. How can we manage people from the basic bank account on to mainstream banking, which is a huge issue, especially in areas such as mine? That would break down the fear that some people have of talking to their bank manager. They think that it is easier to borrow money from the woman from Provident, or Shopacheck, who visits on a Monday night. We need to tackle those issues.
Finally, I want to see the development of a mutual sector in banking. Conventional banks used £60 billion when they were bailed out, but the mutual sector did not use any money. Bradford and Bingley was a building society for 150 years, but it lasted only 10 years as a bank. We have to do more to encourage mutuality in the banking sector, and the starting point for that is a discussion about community banks and credit unions. I hope the Minister will address some of those issues.
(12 years, 2 months ago)
Commons ChamberI can confirm that, through the actions of this Government, pump prices are 10p a litre lower than they would have been under the previous Government, who had scheduled in 12 fuel duty rises while they were in office and six more for afterwards.
14. What the average waiting time for calls to Her Majesty’s Revenue and Customs helplines was in (a) the last 12 months and (b) the previous 12 months.
The average waiting time for a customer calling HMRC’s helplines in the past 12 months was four minutes and 19 seconds. In the preceding 12 months, it was four minutes and 13 seconds.
A constituent of mine has had a nightmare experience trying to get through to HMRC: he phoned several times throughout the week, but never spoke to an adviser and kept getting an engaged line. His is just one of many cases involving HMRC in my constituency office at the moment. With 10,000 HMRC staff being laid off, how do the Government hope to clamp down on tax avoidance when they obviously cannot collect taxes in the first place?
The first point to make is that the numbers of front-line staff dealing with tax avoidance and tax evasion are increasing over the course of this Parliament, in contrast with what happened during the last Parliament. There has been improvement in contact centre performance in the number of calls that get through, but more progress is needed. HMRC is deploying staff more flexibly and conducting small-scale pilots to see whether the private sector can provide additional capacity. HMRC is determined to improve performance.
(12 years, 3 months ago)
Commons ChamberIf there were a parliamentary award for the most bizarre speech of the day, I am sure that the hon. Member for City of Chester (Stephen Mosley) would earn it. We have heard that the happy days are around the corner. We have double-dip recession, but it is okay, because it was all Labour’s fault, even though the economy was growing when Labour left power. Apparently, 1 million young people unemployed is good news. Wonderful! That is not the only thing we have heard; we have also been told that stripping people of their employment rights is the way forward. Is it not funny that when they have blamed everything else, they start blaming employment rights for our problems?
I say that the major aim of a Government of any colour should be to make this country the best place to start and grow a business. Yes, I agree that a cut in corporation tax is a good way forward. I believe that cutting red tape is a good idea, too, and I look forward to seeing more concrete proposals over this Parliament. When red tape is tackled, I hope that the Government will start to talk about tax reform. When I speak to anybody who is hoping to set up their own business, they tell me that the main barrier they face is the fear of the complex tax system that they will have to tackle. It seems strange, but the more complicated the tax system, the more there is only one winner. It is not the small business man; it is the accountant. It seems odd that small businesses have to spend time form filling when they could be chasing orders. We need to realise that, however good the Government believe they are, it is ultimately people who make businesses successful.
Talking of people, and young people in particular, we are now operating in a globalised economy. Young people in Wales will not be competing with young people from the north-east, the south-west, Scotland or Ireland; they will be competing with the Chinese, Indians and Brazilians. That is why our competitive edge is all about creating a highly skilled and highly motivated work force.
I have two friends—[Interruption.] Yes, I have only two friends; I would only have to borrow 20p and I could phone them both. The two friends in question work in the training industry. One works in further education; the other works for a training company. Both come from the old school, where it was said that an apprenticeship lasted four years. What they tell me worries me. My friend in FE says that some FE colleges are subcontracting training contracts to training companies, offering so-called apprenticeships that are supposed to last for three years, but saying that people can become a qualified electrician in a year. Courses that should take three years are being done in three months. All the while, people are driving around in their high-performance Mercedes and Aston Martins—no doubt bought out of the money that they should be investing in young people. This scandal is already going on, as we saw in a BBC “Panorama” programme. It should be seriously investigated, because this seems to me to be a misuse of the word “apprenticeship”.
The word “apprentice” conjures up images of the ’60s and ’70s and of young people between the age of 16 and 21 doing full-time apprenticeships and coming out as draftsmen, toolmakers or even, for the lucky few who aspired to it, with a footballing career. The problem is that people are being called apprentices nowadays when they are nothing of the sort. Why is it that of all the apprentices in this country, one in 10 is based in the supermarket Morrisons? Are they apprentices when they are working in retail? What skills are they getting? What trade are they developing?
I am shocked that the hon. Gentleman does not feel that the sort of training people get in a supermarket like Morrisons would provide a very good basis for a whole range of jobs.
What I would say is that that is not an apprenticeship in the traditional sense. I believe that the word “apprentice” is being misused. All that is happening is that apprenticeships are taking the place of the youth training schemes that failed in the 1980s.
This is the main point that I want to make. We must formalise the process that apprentices undergo. In the 1960s a UK training industry board formalised the apprentice system, producing training manuals and setting the standard for what apprenticeships should be. Now the definition is so muddled that we do not know what apprenticeships actually are, and that is why we must take serious action now. Recently I went to Pensord, in my constituency, where Pensord Press has launched a major apprenticeship scheme. I fear that good schemes like that will be mixed up in the scandal of our not knowing what “apprenticeships” means.
When I speak to people who take on apprentices, they tell me that they meet young people who do not have the necessary skills. They do not turn up on time, they play with their mobile phones during interviews, or they do not know how to speak to people; sometimes they swear in ordinary conversation. That worries me. I could talk for a long time about it. We need to hold a serious debate in this country about how business and education can work together.
I visited Cwmcarn high school when I worked for my predecessor, and it was launching what was described as a basic skills passport. All the children in the school would be assessed for literacy, numeracy, performance and public speaking, so that when they were interviewed by employers, they would be able to say “These are my skills: this is what I have achieved during my time at school.” It is a good scheme, and it should be rolled out throughout the country.
Last Friday I went for a chat with people at the University of Wales, Newport, who talked of universities’ becoming hothouses for businesses. I have always said that we have massive academic resources in research, and that we should open up the universities for that purpose. Those people talked to me about the concept of an entrepreneurial university, drawing a parallel with teaching hospitals where the practitioners are lecturers and students must undergo internships as part of their qualifications. That could be applied to skills in areas such as computing, engineering and business. I do not know whether anyone has watched the documentary about Ayrton Senna, but that was made by a student at the university, or the BBC programme “Rhod Gilbert’s Work Experience”, produced by a company called Zipline Creative— another company formed by some of its graduates. We need to have that debate about business and education.
I prepared a longer speech, but I have only 30 seconds left, so let me say just one more thing. We must be very careful when we talk about employment rights. I was a trade union official, and I do not think that we should clamp down on people who go to tribunals with trade union representatives. It is hard enough already for someone, even with a strong case, to undergo the grievance procedure. If we take the vital right to union representation away from people we will cause trouble, and we will do nothing for competitiveness in this country.
(12 years, 6 months ago)
Commons ChamberThis Bill will amend a series of pieces of legislation. When we talk about reforming financial services, we have to think about innovation and how fast society and markets move on. When I think about the reform of financial services, I always think we should tread with caution. This Bill is very important in that it has to reform a system that has clearly failed. I worked in the financial services industry myself, many years ago, and when I want to judge a Bill such as this one, I think of three tests on financial education, financial inclusion and disclosure.
On the first test, it is highly important that we bring about not only statutory financial education in schools but a duty on banks to provide some sort of financial education. I use an example from my own life. Many years ago, when I first had my student grant, in the days when we had student grants, long before student loans, I remember jumping off the train with a cheque for £500 in my hands, almost shaking with nerves about what to do with it. I went straight into the first bank I saw, the name of which I shall not mention—I do not want to embarrass it, as I have not been a great customer. The bank opened a student account for me, gave me a £50 voucher to spend in Burton, with which I bought a pair of jeans, and gave me a magic bank card, which meant I could go anywhere I wanted and buy anything. I could go to the bar or a clothes shop and have all these wonderful goods. By about December of that year, I had a letter through the post saying, “Mr Evans, we’d like to talk to you about your unauthorised overdraft charges”.
When I worked, the same things seemed to be going on. There were people even in their 40s and 50s who did not understand that when they wrote a cheque it would come out of their bank account. They would ask me, “Mr Evans, how am I spending this money when I’m using my card?” I think that banks ought to have some fiduciary care for their customers and ensure that people understand what they are taking out. Things should be simple and understandable.
I want to make a second point about financial education. When people talk about financial education they mention consumers and people at the bottom end of the scale who get services from the bank, but when I was working in banks I often found that people who called themselves bankers did not understand the banking system. They did not understand what a clearing house was, what a CHAPS, or clearing house automated payment system, payment was or what a BACS, or a banker’s automated clearing services, payment was. I was very nervous about the fact that those people were serving people and selling them products but did not seem to understand how the banking system worked. When I spoke to management about that, they said, “Years ago, we had banking exams and this was a profession, but they have fallen by the wayside now as we have moved towards a sales model.” I have some sympathy with the banks, because they are not benevolent institutions—they have to make profits and sell their products—but consumers need to have confidence that the person selling to them understands what they are talking about.
That leads me to another point about consumer protection. Consumers need to understand the products they are being sold. I can think of many occasions on which people were sold products that they did not understand. For example, banks’ financial advisers said to people about bonds, “Oh, it’s okay—a bond is just a savings account, but you do not have a bank card to draw out on it and you have to keep it there for five years.” When people found out that bonds were being invested in risky ventures such as the dotcom boom, which eventually went pop, the banks had a number of complaints about that. It is very important that people understand what they are being sold and that everything is clear.
I also think there should be some framework for the sellers. I remember when the financial planning certificate came about. The very first paper asked, “If somebody came into the bank and wanted to protect their family if they died, what would you sell them—A: life insurance, B: general insurance, or C: send them home?” That is quite simple and there is no knowledge in knowing that they must be sold life insurance. It is important that we have some sort of framework.
The most important part of the Bill, which does not go far enough, concerns disclosure. In America there is the Dodd-Frank Act, which says that every financial transaction made in the US has to be documented through an office of financial research. I would like to see that added to the Bill at some point. It comes to this: the financial crisis happened as a result of myriad problems—we cannot pinpoint one—but one weakness in the system was that we did not know about financial transactions.
I will give two examples. First, Barclays wanted to buy Lehman Brothers. The board said yes, but the regulator, which had so much on its plate, said no. Then Lehman Brothers went bust and was no more. Four years later, the bank and the regulator still do not have access to that information. Secondly, RBS, which has been mentioned a lot today, said to the regulator and to its board in March 2007, “We do not have any toxic debt or bad-book mortgages.” Yet it was later found to have £1.7 billion of bad-book lending. It, too, went bust. It is therefore important that we have some sort of financial audit, which would have an advantage for the consumer, as we would know how many bad basic bank accounts we have and who the banks are lending to. It would also help with community lending.
I will digress a little, if you will allow me, Mr Deputy Speaker. I have a personal bugbear with the basic bank account. It was brought about for financial inclusion, and it is important that everyone has access to financial products, but my experience of the basic bank account when I worked in the bank was that often the people with that account were on benefits or moving jobs. When it came to lending, they found that they did not credit score and often sellers were not interested, because those people did not credit score for credit cards, bank loans or any other financial products. They were then simply left to their own devices and often fell into the hands of payday lenders and legal loan sharks, as my hon. Friend the Member for Walthamstow (Stella Creasy) has mentioned.
I believe that through the FCA we have a chance to bring about financial inclusion audits and to map where each financial transaction takes place. It would be very dangerous to say that a financial crisis will never happen again, but I hope that we can put things in place to ensure that, if it does happen again, it might not be as bad as it was this time. The US has the tool, so why can we not have it?
(12 years, 8 months ago)
Commons ChamberWe have heard the name of John Maynard Keynes again in this debate. My favourite Keynes quotation is the one in which he says that there comes a time when every Government have to indulge in “ruthless truth-telling”, and it is time that this House stopped acting like Nero when Rome was burning.
We stand on the edge of the abyss, and we have a eurozone crisis that is not being solved. Nothing seems to be happening. Greece is on the point of defaulting, it could exit the euro and it could be quickly followed by Spain, Portugal and, even, Italy. Yes, we might say, “We’re not in the euro: we’re little Britain; they can’t touch us,” but the key thing is that their bonds are held by British banks, and British banks will have to bail them out once again.
We have to ask ourselves, “Are we going to stand back and allow ourselves to sleepwalk into another financial crisis, or are we going to heed the warnings and do something about it?” Last week, when we had the autumn statement, the headlines were that the OBR had downgraded its forecasts, but what worried me more than anything, and what was not said anywhere or by anybody in the House, was that the OBR could not quantify what a crisis in the eurozone would do to the British economy. The best economists in the Bank of England could not even quantify or say what disaster might befall us if there were a euro crisis, and to me that is very concerning.
There comes a time with every Government when they have to put ideology aside. When Labour nationalised the banks, it did not do so because of ideology; nationalisation was 30 years ago and belonged to the past. It did so because nationalisation was a necessity and a practicality, so now, as we face the crisis in the eurozone, we have to put ideology aside, see what the practicalities are and put them into practice. It calls for the type of bravery that is rarely seen in this House, but, if we had to nationalise the Bank of England and bail out the high street banks again, we would be saying to our constituents, “If you have the dream and the hope of setting up a business, it ain’t gonna happen, because the banks are going to be even more cautious about lending to you,” and, “If you have a mortgage, you’re not going to be able to move it on to a lower interest rate, because the banks are not going to take that risk again.”
The problem is that, with every crisis, every politician will stand up and say, “Oh, it’s never gonna happen again. It won’t happen on my watch.” Even the Chancellor has said, “It won’t happen again. No, not while I’m Chancellor—no it can’t,” but the truth is that it can, because we have not learned the lessons of the previous financial crisis.
In my speech, I wanted to analyse the legislation that affects banking, so I looked, researched and went to the Library, but I could not find any. There was none at all, so we are facing another crisis with the same banking practices and with a Government unwilling to do anything.
One thing on which I agree with Keynes is that, “During a recession you do not raise taxes.” But what have the Government gone and done? They have put VAT up. It is all very well saying, “We’re going to create jobs,” but, if someone needs to drive to work and they are paying £1.33 for petrol and £1.41 for diesel, they might find it difficult to do so. If they are shopping and find that the price of their shopping basket has increased by 5% in the past year, they might not be able to afford food. Those are the decisions that people face.
I wish I had more time, but I will say this: the Government have an opportunity to do something. We need to look at skills and education, and to have a grown-up, adult conversation, asking, “Why are our young people leaving school not equipped to go into work?” I talk to people in my constituency with apprenticeship schemes, and they say that the kids are not prepared, so let us have an adult conversation and ask, “Why are they not prepared? What is wrong with the education system?”
The final point that we need to look at is tax reform. It is all very well the Government giving people a 1p cut in corporation tax, but when I speak to the small business man I find the thing that concerns him more is red tape. He asks me, “When I have a micro-business, why do I have to employ an accountant? Why can’t I have a simplistic tax form to fill in?” I wish I had more time to develop those arguments, Madam Deputy Speaker, but I will sit down now.
(12 years, 9 months ago)
Commons ChamberAt the moment, Virgin Money operates primarily in the retail financial services field. It offers a range of products to personal customers. However, it has said that it will look to provide a range of products to small businesses in the future and we would welcome that increased competition in that key area.
Will the Minister please explain how using £240 million of Northern Rock’s own capital somehow represents a good deal for the bank and for consumers?
As I have already made very clear, Virgin Money is paying £747 million to the taxpayer, and other proceeds of sale will come our way. Our view is that this is far and away the best deal on the table. It is the best deal when it comes to value for money for the taxpayer, it is the best deal for consumers and the best deal for the north-east. I am sorry that the hon. Gentleman has not sought to welcome this opportunity to give the people of the north-east and those who work at Northern Rock some new hope for their future.
(12 years, 10 months ago)
Commons ChamberIt is a pleasure to be called to speak in the debate, and a pleasure to follow the hon. Member for Wycombe (Steve Baker). As a history graduate, I have enjoyed the history lessons during this afternoon’s debate. I enjoyed the intervention from the hon. Member for Monmouth (David T. C. Davies), telling me all about the ’40s, ’60s and ’70s. I have heard many Members tell me what happened under a Labour Government long before I was born, but it seems to me that we have always bounced back to the same point: those on the Tory Benches say that it is all Labour’s fault, while we say that it is all the Tories’ fault. The truth is, where is that getting us?
In my constituency, 2,000 people are claiming jobseeker’s allowance. Some 40% of those are under the age of 24. Behind those figures, there are real human tragedies: kids leaving school believing that there is no hope for the future other than being driven—let us hope not—into the hands of drug dealers or becoming involved in crime; the hard-working father who comes home one night and says to his family, “I’ve been made redundant after 20 years,” and his wife who worries; the single parent who is bringing up children on her own and who has just lost her job. What does she do? It is all very well quoting statistics and figures, but what can we do for those people?
Unemployment is not a price worth paying. For me, anybody losing their job is a total tragedy. That is why the motion is so important: we should use bankers’ bonuses to create youth jobs and do something to help people, not after being out of work for six months, as the Prime Minister said in his speech, but from day one. I remember when I was a trade union official and jobs were going as, unfortunately, they were being offshored. A scheme was created so that when people were made redundant the company matched half their redundancy to be used for training. Some people decided to become driving instructors, whereas others in the Solent decided to become ship builders, and so on. It interested them and that was what they wanted to do. I want some incentive in the tax system for companies that make people redundant to use similar ideas.
I am sorry, I cannot take an intervention because other people want to speak, although I would love to give way to the hon. Gentleman.
As I was saying, when a person is unemployed—I do not know how many people in the Chamber have been unemployed—it is soul destroying. It reduces confidence and, in the worst cases, it brings about depression. If anybody wants to see a microcosm of the economy, they should walk down the local high street. There is nothing more sad and depressing than seeing the butcher, the baker and even the candlestick maker all boarded up. Nothing says more clearly that the economy is not working.
So what can we do? We could reduce VAT on a temporary basis to encourage people to come back to the high street, but we could do more than that. We could encourage local authorities to reduce their business rates so that people can stay in their businesses and we could encourage communities to come in so that these places are not boarded up. Above all, we could ask authorities to start providing free car parking. That might be a bit more simplistic than the credit swaps we have heard about, but I am concerned.
I am going to say something quite shocking which is not in vogue at the moment. This afternoon, I spoke to Lloyds TSB and I thought, “It's all very well to bash the banks”—and we should bash those who have been responsible—"but we have to make an assertion and realise that only one part of the banking industry failed." It was not the retail banker or the cashier in Blackwood High street or Newbridge, who serves their community; it was the bankers in the City, and that part should be reformed. However, we have to be very careful when we talk about reform. We cannot introduce regulation that hinders financial innovation. That would be impossible, and I am very concerned about that.
We have to ask ourselves how we are going to encourage manufacturing when we do not encourage banks. I will be honest: I have been one of the banks’ biggest critics, but at the moment we are asking them to do something that is almost impossible—we are asking them to save money and lend at the same time. How will they do that? I do not know, but tonight I will walk through the Lobby and support the motion, because I genuinely believe that we need to do something to promote growth.
(13 years, 2 months ago)
Commons ChamberIt is always a pleasure to follow the hon. Member for Gloucester (Richard Graham), whose constituency always brings back happy memories for me—we like to visit friends there.
One thing that I have noticed in this debate is that there has been a lot of rewriting of history on the Government Benches. Straight away, all we have heard is, “Labour got it wrong in 13 years of government.” Well, if Labour got it wrong, why were those who are now on the Government Benches so quiet? We did not hear a word. We did not hear them say anything. In fact, in September 2007, a month before Northern Rock went down the plughole, the then shadow Chancellor said, “We’re going to follow Labour’s spending commitments for the next few years.”
I am grateful to the hon. Gentleman for giving way, but the conclusion that Labour got it wrong was demonstrated 12 months ago in the last general election.
Why did I bother giving way? That is another complacent attitude.
When the Government talk about deficit denial, they miss the point completely. There seem to be two theories. If we follow the Chancellor’s logic, cutting the deficit by £112 billion will encourage the private sector to create jobs. The private sector is going to come to the rescue and all those people who worked in the public sector will get jobs in the private sector. Wonderful—if it works. The other theory is that the Chancellor’s taking £112 billion out of the economy is doing nothing for consumer confidence. When I talk to the shopkeepers on the high street in Blackwood, they say, “The cuts haven’t even bitten yet, Mr Evans, but we are already feeling the pinch.” I am worried about that.
We talk about short-termism, and there seems to be no realisation that the policies to cut the deficit that we put in place today will have ramifications down the generations. There has been a lot of talk about the ’80s. I know that Conservative Members like to worship at the altar of Baroness Thatcher, but when I say that name to anyone in the valleys, they think of two things: fear and hurt. We have had problems with Scottish Power putting its prices up, affecting the most vulnerable in society, but we could do absolutely nothing about it because everything was sold for short-term gain. In 1992, I remember talking to a friend down the pub, and he was in tears. He had gone for a job as a grass cutter and when I asked him what was wrong, he told me that he had not got the job because there had been 60 applicants. “I’m not good enough to cut grass”, he said.
Now, those people have children of their own, and they are worried, too. Figures released in June show that one third of jobseeker’s allowance claimants in my constituency are young people under the age of 24, and I am seriously worried that we are going to have another lost generation. People talk about all this anger against the Labour party, but the only anger I have heard is against the banks. Privately, those on the Government Benches will admit that it was the bankers who did it, but for reasons of political point scoring and advantage, they would rather say that it was the Labour Government who did it—[Interruption.] That is the truth.
Does the hon. Gentleman acknowledge that Tony Blair said in his memoirs that it was the Labour Government who did it?
No, he did not. This debate would be far more honest if we said that it was the banks. This is like the sword of Damocles hanging over our heads. The banking sector is too large. We have too many large banks. I welcome some of what the Chancellor has said about this—he said that there needs to be ring-fencing between the banks’ retail and investment operations—but if we do not break those banks up and just one of the big six goes under, the economy will be back in trouble. However, we have sent the banks a message that we would send to no other business. We have said to them, “What you’re doing is okay. However you run your businesses, we will bail you out.”
I am listening to the hon. Gentleman trying to blame everything on the banks. The question is, who designed the regulation of the banks?
We have heard about the FSA, and we have admitted that that did not work, but before that, there was self-regulation. There was no attempt to tie them down, and there is still no such attempt. When the Minister responds to the debate, we need to hear from her what the future of the banks will be. We need to know that.
This is the problem that I have with the entire debate. People say, “It was the Labour Government overspending”, but faced with the same problem of the banks going under, what would the present Chancellor have done? He would have done one of two things. Since his road to Damascus experience, he wants to cut everything, and following that logic, he would have done nothing. The economy would have gone under, and everyone with a mortgage would have been written off. Alternatively, bearing in mind his mates in the City, I suspect that he would have bailed the banks out just like we did. He would have been faced with a deficit, just like we were. We never hear anything about the future of those banks from Members on the Government Benches.
Conservative Members seem to forget what the Prime Minister said. In speech to the CBI, he said that the Government were sticking to Labour’s spending totals. Just weeks before the collapse of Northern Rock and for several months after it, he said to the Institute of Directors that if it wanted lower taxation and less regulation, he would—
Order. I think that the hon. Gentleman has got the point.
I thank my hon. Friend. After the debacle of the intervention by the hon. Member for Vale of Glamorgan (Alun Cairns), she proves that we have some sensible voices in Wales.
Let me comment on the blasé attitude that these policies are going to work. That is what Government Members say, but what if they do not? I suspect the Chancellor would say, “Not my fault, guv. It was the snow.” It could be hailstones next time or perhaps it will even be too sunny. I imagine that his plan B is quantitative easing. It is all very well printing money, but the key to it is spending. We have to prove to people—[Interruption.] I mean consumer spending—we will speak about the other issue tomorrow. We need to give people the confidence to spend in our shops and ensure that people are in jobs.
This is not particularly my field, but when the hon. Gentleman says that the key to it is spending, I have to ask “With what?”, as there is nothing left.
That is just a PR question. As I say, consumer spending is about giving people the confidence to spend their wages in the high streets so that shops can thrive. That is what it is about: consumer confidence is down. I support the motion. Let us cut VAT and bring a bit of confidence to the high street. Let us get Britain back on track.
(13 years, 2 months ago)
Commons ChamberI can certainly confirm that we will not repeat that mistake. We have all seen the document entitled, “We’ve spent all this money, but what have we got for it?” It is very important that this country maintains the spending plans we set out in the spending review, in order to deliver the deficit reduction that this country needs to establish confidence in our economy.
7. What assessment he has made of trends in bank lending to small businesses in the first quarter of 2011.
Under Project Merlin, the banks loaned a total of £47.3 billion to UK businesses in the first quarter of 2011, including £16.8 billion to small and medium-sized enterprises. The Government are encouraged that banks are broadly on target to meet their overall commitments. However, it is disappointing that banks are behind schedule on SME loans, and they clearly need to do much more work to deliver on their commitments.
A number of small businesses in Islwyn tell me they have experienced an increase in the overall interest rate charged by banks, despite the base rate being at an all-time low. What are the Government doing to address that?
We must ensure that banks signal to businesses that they are open for business and that they have the capacity to lend to businesses. That is why we work with the banks to deliver Project Merlin, but, as I have said, there is more work for the banks to do to ensure they lend to small businesses, and we will continue to hold them to account on that.