The Economy

Debate between Chris Leslie and George Mudie

Wednesday 26th November 2014 Commons Chamber

[Mr George Mudie (Leeds East) (Lab)]

My hon. Friend the shadow Minister says that the debt has not started dropping. Will he confirm that when we left power, it was £750 billion, whereas today it is in the region of £1.4 trillion?

[Chris Leslie]

The Prime Minister likes to say—the Tories have said it in party political broadcasts and keep repeating it—that the national debt is somehow falling. The national debt has got larger and larger—[Interruption.] No, let me correct the hon. Member for Wyre Forest (Mark Garnier)—there is a difference between the national debt and the deficit. The national debt has got higher and higher and higher. My hon. Friend the Member for Leeds East (Mr Mudie) was right to say that it now stands at more than £1.4 trillion. He knows that the Prime Minister and the Chancellor have added more to the national debt in their four and a half years in power than the previous Administration did in 13 years.

Financial Services Bill

Debate between Chris Leslie and George Mudie

Monday 10th December 2012 Commons Chamber

[Chris Leslie]

Indeed, and I am grateful to my hon. Friend for taking the time to participate in this debate. A string of amendments that we will discuss later cover consumer credit and the interests of consumers, and we will talk about ease of access to financial services when we consider them. He is right, as the Bank of England is a key player in this regard.

That point neatly takes me on to our amendment (a) to Lords amendment 16. It tries to ensure that under the new arrangements the Bank of England—in particular, the new powerful committee that is being established, called the Financial Policy Committee—will, when it explains the decisions it is taking, also have to include an assessment of the impact of its decisions on economic growth. I know that the whole question of jobs and growth is somewhat of a blind spot for Treasury Ministers, but notwithstanding their rather peculiar inability to see the importance of these issues, we feel that it is important to put that requirement in the Bill.

We are delighted and overjoyed that the Government finally relented and granted a concession in the other place, after months of labour in Committee in this place, by agreeing to Lords amendment 10. It was a major victory for the Opposition when the Government were forced to change the Bill to ensure that the FPC would not only contribute to the financial stability objective but, subject to that, support the economic policies of Her Majesty’s Government, including their objectives for growth and employment. That concession was made because of the amendments we tabled and the evidence heard in Committee from a wide number of organisations, including the British Bankers Association, the CBI, the London stock exchange and others. They all said in submissions to Parliament that the new regulators should have regard to growth, so we are glad that the FPC has that general backstop requirement on its shoulders. However, we do not think it goes far enough.

As I said earlier, the powers the Bank of England will take—that rather opaquely described set of macro-prudential tools—will be very wide ranging. Each time it pulls one of those levers, each time it makes a particular decision, it should explain the impact of that change. The Bank of England will be able to affect a number of key areas. Perhaps the Minister will tell us when the draft order at the back of the Treasury’s consultation document is likely to find its way on to the Floor of the House for debate, because I know that a number of hon. Members will be interested in that.

The Bank will have powers called counter-cyclical capital buffers. I know that the Treasury Bench has a difficulty with the concept of counter-cyclicality, but it essentially means that banks will be required to build up capital when times are rather exuberant and things are going well in the economy, but to unwind those capital buffers in a downturn. The Bank will say that there should be sectoral capital requirements. In other words, the FPC can make the residential mortgage sector have a certain amount of capital or structure its business in a particular way. The commercial property sector will have to do the same. This is a Bank of England decision, not the result of parliamentary or legislative changes. Consumer credit decisions will be made. If my hon. Friends have constituents who pay off their credit card, perhaps currently a 2% or 5% minimum repayment on a monthly basis, at the flick of a switch the Bank of England will be able to say, “No, you have to pay off 10% each month,” or perhaps even more. That is the sort of power that the Bank of England will have.

[Mr George Mudie (Leeds East) (Lab)]

The situation with mortgages will be similar. I am certain that the FSA’s and the Bank’s insistence on a higher deposit will harm the construction industry. The average price of a two or three-bedroom house is £160,000, and 10% of that is £16,000 and 20% £32,000. We are getting more and more tales of young couples who simply cannot get on to the housing ladder because they are paying excessive rents and cannot save that deposit.

Finance Bill

Debate between Chris Leslie and George Mudie

Thursday 15th July 2010 Commons Chamber

[Chris Leslie]

My hon. Friend is entirely correct. It is important that we ensure that all our liabilities are properly covered, so that the cost of our individual failings or mishaps does not fall on the general taxpayer. Responsible individuals have to insure themselves.

[Mr George Mudie (Leeds East) (Lab)]

My hon. Friend says that people do not shop around. Does he agree that any process of shopping around is not helped by the way in which insurance companies sign people up to policies on standing orders with small print that allows that policy to be renewed without consulting the customer? Even if the customer wishes to change their policy because of a large increase in their premiums, they can discover that the small print means that they have to let the policy run because they are required to give notice.

[Chris Leslie]

That particularly pernicious practice merits much closer scrutiny. I do not know whether it is allowed to happen because of a legal loophole. People face dangers when they sign up to unending direct debits, especially if they have been attracted to an insurance policy because of a discounted initial arrangement but then discover that the payments have been ramped up. By the time they realise, from their bank statement or whatever, that the cost is so much more, it is too late to exit from the policy. I hope that any practices that tie customers in to such policies unnecessarily can be stopped.

Insurance premium tax was, of course, a Conservative initiative, introduced back in 1993, I think. We are all concerned about the deficit and revenues, so reluctantly we all have to accept the tax as part and parcel of our general revenue stream, but it is worth pausing to reflect on the impact of the charge on the behaviour of customers who want to take out insurance. Of course, there are different effects for different types of insurance. The amendments highlight both ends of the scale.

I am not sure that I share the sympathy for amendment 18 on private health insurance, because the general public already effectively pay for health cover through the tax that they pay towards the NHS; that is far and away the best health insurance that all of us could want. If we are all part of that, and pool our resources effectively, we ensure a better quality of health care for ourselves. I hear the points made by Government Members, who say that private health insurance removes the burden from the NHS, but if we are all part of the system together, and make sure that we all take part in it, we have a better collective service.