Banking

Debate between Chris Leslie and Sheila Gilmore

Wednesday 15th January 2014 Commons Chamber

[Chris Leslie]

The hon. Gentleman and I differ in our analysis of what happened—I will explain why in a moment—and that says a lot about where we need to take policy. I do not believe that we have finished the job of banking reform, which seems to be the impression we are getting from the Government Front Bench. He and I might agree that more is needed—I will talk a bit about that in a moment—but stopping short of those reforms will not prevent another bank failure or protect the interests of normal customers and society so that they, not the high remuneration of those senior bankers, come first.

[Sheila Gilmore (Edinburgh East) (Lab)]

Does my hon. Friend share my incredulity that the Conservative party, which in opposition accused the then Government of over-regulation, should now suggest it was previously in favour of more regulation?

[Chris Leslie]

There is a touch of revisionism from Government Members, but perhaps that is a bit generous; their attempt to rewrite history is breathtaking. I have no doubt that when the Minister speaks my hon. Friends will hear a complacent desire just to move on from banking reform and a desperation to make party political points about the history of the banking crisis. They will try, with all their might, to pretend that it was Labour’s spending on schools and hospitals that caused a global recession in dozens of countries worldwide, but my hon. Friends will not hear from him about how the banks must still be made to pay for their egregious and scandalous abuses and over-leveraged trades in sub-prime mortgage securities.

All sense that the banks must be held accountable for the state we are in has been airbrushed from the Government’s narrative, because they want to blame their political opponents rather than upset their corporate friends. Perhaps the Minister likes to turn a blind eye, in the knowledge that it really was the banks that were responsible for the global financial crisis, or perhaps he has now genuinely convinced himself that it was primarily the fault of Governments and that the banks were only a little bit to blame. Either way, they have the wrong analysis, which explains why they have the wrong policies. By failing to tackle the root causes of recent economic devastation and the deficit that built up as a result, they are maintaining the risk that banks could once again turn to the taxpayer to bail them out, should they fail again. Never again must the taxpayer pick up the losses for the reckless behaviour of banks, and never again must our economy and public services be thrown into such turmoil because of the negligence and monumental greed of banking executives and traders.

Cost of Living

Debate between Chris Leslie and Sheila Gilmore

Wednesday 27th November 2013 Commons Chamber

[Chris Leslie]

The trouble for the hon. Gentleman is that an awful lot of Conservative councils have metaphorically stuck two fingers up to the Secretary of State for Communities and Local Government and, indeed, the Chancellor by deciding to increase council tax because the Government’s approach to local government finance has squeezed services. Even Conservative councils and authorities are finding themselves in a position where they are raising council tax.

[Sheila Gilmore (Edinburgh East) (Lab)]

The Social Mobility and Child Poverty Commission has stated that the fiscal consolidation has been regressive. Does my hon. Friend think that that should be taken into account?

[Kwasi Kwarteng (Spelthorne) (Con)]

It has worked.

Finance Bill

Debate between Chris Leslie and Sheila Gilmore

Monday 1st July 2013 Commons Chamber

[Chris Leslie]

Obviously I believe every word that the Exchequer Secretary utters, because it would be unparliamentary to do otherwise, Madam Deputy Speaker, but I am asking for just a little bit more from him. I just want to see the detail that the Treasury has produced on the mansion tax proposition. It would be entirely possible for him to put that in the public domain. I am sure that even Liberal Democrats would like to see it and would find it of interest, as would other hon. Members.

[Sheila Gilmore]

Does my hon. Friend agree that we seem to have got involved in a debate that is certainly not the debate that the Deputy Prime Minister was engaged in as recently as February when he talked about the advantages of a 1% levy on properties over £2 million or the possibility of extending council tax bands? It seems a bit strange that he was in favour of that and, presumably, his hon. Friends are in favour of it. Perhaps that is what we should really be talking about.

[Chris Leslie]

On 24 February the Deputy Prime Minister said:

“Victor Hugo observed that it is near impossible to resist an idea once its time is come…He was again proved right as calls for a mansion tax, first proposed by the Liberal Democrats in 2009, gathered new momentum…I offer certainty: the mansion tax, or a version of it, will happen.”

We all know that when he is determined to get these things through, he is a very persuasive individual.

In clause 97—on page 57 at about line 27, for those who are interested—there is a table of the amount chargeable under the mansion tax for homes owned by companies, which is, in essence, what the Government are proposing. For properties worth between £2 million and £5 million, the annual chargeable amount would be £15,000 a year; for those worth between £5 million and £10 million, it would be £35,000; for those worth between £10 million and £20 million, it would be £70,000; and for those worth more than £20 million, it would be £140,000. That is the Government’s half-hearted attempt at a mansion tax. Thankfully, we have it in black and white—well, black and green—in this Bill. We tabled the new clause because we would like to see equivalent detail on how a mansion tax would work on a range of different widths of the 10p tax rate band, and then we can make a judgment about what change it is reasonable and prudent to implement.

My hon. Friends are right to start to focus on the other part of the pantomime horse. I am sure that the Liberal Democrats are sometimes in the lead on these issues in the coalition. They are in a very precarious position on the mansion tax. Having advocated it for so long, they have consistently found ways and means to vote against it whenever it has been presented to the House. I do not know whether the Liberal Democrat present in the Chamber, the hon. Member for Eastleigh (Mike Thornton), wants to say how he is going to vote today, but I live in hope. In a spirit of cross-party consensus, I hope that he will agree with his noble Friend Lord Ashdown, who warned those in his party before the last time they changed their minds on this issue that it would be “weird” for fellow Liberal Democrats to vote against such things. The Business Secretary said:

“It depends entirely on how they phrase it. If it is purely a statement of support for the principle of the mansion tax I’m sure my colleagues would want to support it.”

That was like the version of the amendment that we tabled previously. We did not get very far with it on that occasion, so this time we have tried a proposal that explicitly talks about passing on the revenue to those who need it most of all through the 10p rate of income tax.

The proposal has not been plucked from the air. Other jurisdictions have equivalent property charges at certain levels. I gather that in New York City, which is hardly a bastion of socialism, owners of properties worth more than $3 million—roughly £2 million—can find that they need to pay the equivalent of £22,000 a year under their form of mansion tax. The Treasury’s own documents have blown apart the argument that the Exchequer Secretary used to deploy, which was “This stuff isn’t workable; it would mean mass revaluations of council tax.” All those things have been pushed to one side as the Government propose their brand-new tax—the annual tax on enveloped dwellings. That is clear as the light of day. It has four bands, which suggests that it is entirely feasible.

The documentation on ATED states:

“The aim of the new annual charge is both to deter avoidance and to ensure the owners of high value residential property pay their fair share of tax.”

We can all go along with that. The document continues:

“The interest to which the charge will apply will be the freehold or leasehold interest”.

So far, so good. It also notes that the annual charge will be applied separately to the freehold and the leasehold and that the value of the property interest

“which will be relevant for the annual charge”

will be its value on 1 April 2012.

--- Later in debate ---

[Sheila Gilmore]

We had certainly always understood that the Liberals supported a mansion tax, but every time the opportunity comes up to consider it, vote on it or even speak about it, they seem conspicuously absent.

The differences between London and the rest of the country, on property prices and other issues, are a serious matter. The gap is increasing, and we should all be seriously concerned about the impact of that on the whole UK. It has happened during nearly all previous recessions, after which Governments of all parties have sought to restore some balance and encourage economic growth in places outside the south-east. We always seem to be running to stand still. The situation is serious, and we should consider it.

Jobs and people are being sucked southwards in quite a big way, and local government finance now works in such a way that there are huge differences. In many areas, for example the north-east of England, the loss of public sector jobs and income for local government means that there are no jobs for people who have just qualified as teachers, for instance. All the jobs are in the south-east. We should be worried about that. We should not wait for three, five or 10 years and then say that we have to do something to redress the balance.

Property taxes do have significant advantages over income taxes. We hear a lot about the mobility of income. One argument that has always been made against raising income tax rates—it was made against the 50p tax rate when it was introduced and has been made in favour of reducing it—has been that people will leave the country or not come here. It has been argued that, faced with that tax, people will simply move elsewhere and we will not attract people here. The one advantage of a property tax—it has been an advantage of council tax and its predecessor the rates—is that it is much harder to evade or avoid, because the property is actually there. There is a significant place in our fiscal balance for property taxation.

[Chris Leslie]

My hon. Friend is making a powerful point about the mansion tax. Has she followed the Government’s argument on clauses 97 and beyond, which are about the annual tax on enveloped dwellings? Has she noticed over the past hour that Government Members have not made a single argument against the administration and operation of a mansion tax? All that they can come up with is particular cases and arguments about how many properties will be affected. The administration of a mansion tax would not involve changes to council tax or other such matters. The annual charge could be used as a broad foundation of a mansion tax.

[Sheila Gilmore]

I thank my hon. Friend for that helpful steer towards the point that it might not be as difficult as some people assert to implement something of that kind. The advantage of property taxation is that it is more solid than income taxation, as we have clearly seen. Worryingly, the biggest reason some people give for why the 50p tax rate does not raise as much as they thought it would is that people were able to move income forward and back. Income is quite mobile.

Finance (No. 2) Bill

Debate between Chris Leslie and Sheila Gilmore

Wednesday 17th April 2013 Commons Chamber

[Sheila Gilmore (Edinburgh East) (Lab)]

In many parts of the country, although perhaps not in London, the property value being suggested is extremely high. Instead of concentrating on people in the lower income bracket looking for property of lower value, the scheme will be open to people who arguably do not need help to get on to the housing ladder.

[Chris Leslie]

It comes down to whether the Government have designed the scheme adequately. Is it best to have a broad-brush approach, or should we be targeting help at those who need it most? The Opposition favour the latter.

Financial Services Bill

Debate between Chris Leslie and Sheila Gilmore

Monday 10th December 2012 Commons Chamber

[Chris Leslie]

There is a large number of amendments in this group, that focus on consumer credit and the best interests of consumers. I want to concentrate on two in particular—Lords amendments 25 and 78.

Lords amendment 25 was extracted from the Government and we are glad that they gave way on it. The amendment will henceforth make it clear that the new Financial Conduct Authority will have a requirement to ensure basic access to financial services particularly in deprived areas and neighbourhoods where some of our banks and financial institutions do not necessarily think that they can make millions and millions of pounds. That is the hope placed on the shoulders of the FCA. The key question is whether the regulator will roll up its sleeves and use the full extent of the powers that the Bill should provide. I, for one, will be seeking a very early meeting with the new chief executive of the FCA to extract commitments on how it intends to use the new powers.

It should not have taken months of persuading and cajoling Treasury Ministers for them to accede to the changes. Perhaps it was the fresh air provided by the new broom, the Financial Secretary to the Treasury, sweeping clean with perhaps more of an open mind than his predecessor on some of these issues. If that is the case, I commend him for it. We need to begin to look at the detail, so I have a series of questions for him, starting with Lords amendment 25.

There are already what some people call lending deserts. In some communities, bank branches are not as readily available as they are in other, more affluent areas. In some deprived areas of the country, it is hard for consumers to access affordable credit. The key word—affordability—is of course now well known. If people want to be completely ripped off, they can pay for high-cost credit, often on a very short-term basis, with immense interest rate charges that can accumulate and get them into severe jeopardy. That will lead to further financial exclusion if they cannot keep up with the repayments, and to them being trapped in a spiral of poverty.

It is important to hold the big five banks to account. As large institutions, they are not just private companies with no obligations beyond and above those that rest on the shoulders of any other private company. In this day and age, they are a social utility and have a duty to the community to ensure that all parts of the country have access to basic banking facilities. The work of the financial inclusion taskforce, under the previous Administration, sought to ensure that basic bank account facilities were available. With the onset of universal credit in April 2014, it will be even more important for everybody to understand and have access to those facilities. However, I am increasingly worried about the fragile deal put together under the previous Administration to support and extend those basic services. There are signs of a creeping onset of charges. As banks come out from the era where the taxpayer was essentially keeping them going, they are now starting to look to the consumer to extract more charges. I do not want a situation where banks get together and think about introducing basic charges on current accounts, especially for those who are taking care to ensure that they are in credit. There are worrying signs that that might be in the air. Even the regulators have started to say, “Well, let’s start charging a little bit for in-credit current accounts. It might be a way of ensuring we don’t have to charge such high costs for unauthorised overdrafts.”

[Sheila Gilmore (Edinburgh East) (Lab)]

My hon. Friend talks about regulating to ensure that these bank accounts remain available. Sometimes, if people find themselves being charged for an account, they simply give up, because it is too expensive, and sometimes they cannot open another account, because they have got into difficulty. That has been the experience in the past few years. I hope that the regulators will be alive to those issues.

Public Service Pensions Bill

Debate between Chris Leslie and Sheila Gilmore

Tuesday 4th December 2012 Commons Chamber

[Chris Leslie]

Even though the quality of the scheme has been eroded, as we saw with the unilateral imposition of the average 3% increase in employee contributions—that might even have been before Lord Hutton reported—they are still good defined benefit schemes and we encourage public sector members to stay in them. We have debated our concerns elsewhere over whether the viability of the schemes will be jeopardised by employees being deterred from joining or deciding to opt out. However, we encourage members to stay in the schemes. Unfortunately, the 3% additional contribution is not part of this legislation, so it would be outwith the scope of the Bill to table amendments on that or to debate it. That is a great shame.

It is important that annual benefit statements include not only the employee’s contribution, but the employer’s contribution, as set out in the new clause. If the defined benefit schemes are good, there is no reason not to have that level of clarity and transparency. I have no problem with accepting that that should be part of the information that is given to scheme members. I hope that the Minister will accept that.

New clause 3 is one of the most important proposals in this group. The Government promised to implement what is known as the new fair deal, which is one of the most important aspects of the agreement that was reached in the negotiations between the employee side and Government or employer side of the scheme. The new fair deal would ensure that all public service workers who were compulsorily transferred to an independent contractor, be it a private company, a charity or another third sector body, would be entitled to remain an active member of their public service pension scheme. That is a basic requirement and it was a core part of the agreement. We were glad that the Government committed to it.

The Chief Secretary to the Treasury confirmed the Government’s commitment to the new fair deal in a written statement in July, which stated that

“the Government have reviewed the fair deal policy and agreed to maintain the overall approach, but deliver this by offering access to public service pension schemes for transferring staff. When implemented, this means that all staff whose employment is compulsorily transferred from the public service under TUPE, including subsequent TUPE transfers, to independent providers of public services will retain membership of their current employer’s pension arrangements.”—[Official Report, 4 July 2012; Vol. 547, c. 54WS.]

That is an improvement on the current fair deal arrangements, which ensure that outsourced staff receive broadly comparable arrangements to those under the public service schemes. The Government’s promise to implement the new fair deal was central to the rationale and at the heart of why many public service workers agreed to support the new proposed pensions reform, even though aspects of it were detrimental to them.

[Sheila Gilmore (Edinburgh East) (Lab)]

A few months ago in the Open Public Services White Paper, the Government expressed enthusiasm for transferring services to voluntary organisations and social enterprise—we have not heard so much about that recently. If that is to work, however, is it not particularly important to have the proposed provision on pensions?

[Chris Leslie]

Many public service workers whose services have been transferred to independent providers, whether they have been outsourced, find themselves in the voluntary sector or wherever, still want to ensure that their deferred wages—that is what pensions are—will be protected in a particular way. That was a positive development in the negotiations, but to what extent has such protection found its way into the Bill? That is why the Opposition are concerned and have tabled new clause 3.

Financial Services Bill

Debate between Chris Leslie and Sheila Gilmore

Monday 23rd April 2012 Commons Chamber

[Chris Leslie]

It is entirely hypothetical. Of course we cannot do that at this stage, but there might be circumstances. I will remember the hon. Gentleman’s intervention for the many years that he will be in Parliament for when the time comes, if it comes, that he disagrees with a particular outcome of a regulation as it affects his constituents.

Amendment 35 talks about the impact of many of the changes within the regulatory system on consumers, particularly those on lower incomes. We believe that the FCA should have enshrined in its objectives a commitment to consider how easily consumers are able to find products that are appropriate to their income, and more broadly, products that provide value for money. In difficult times as incomes are squeezed it is right that consumers feel that they have a regulator that is on their side. If we are creating a genuine consumer champion in the FCA, it is important that it has a set of objectives and values that reflect that, particularly for those on the lowest income. It is a similar argument to that made in the previous group of amendments in respect of the Money Advice Service. We have seen excessive overdraft charges, high interest rates, and charges for hidden services. Those require a genuine consumer champion and this amendment would help to create that.

Amendment 36 would also shift the balance in favour of the consumer. It would introduce what is known as a fiduciary duty of care by authorised persons, by financial services providers, towards the consumers who are their clients. “Fiduciary” means holding in trust, holding in good faith, a concept that would help to rebuild confidence among the public in financial services. There is a serious lack of trust at present that is bad for consumers, providers and society at large. The Bill contains no explicit obligation on firms to avoid conflicts of interest, nor to profit at consumers’ expense without their knowledge and consent, nor to have undivided loyalties and duties of confidentiality to the customer. The pre-legislative scrutiny Committee commented on many of these aspects and recommended that some action be taken. Although the FSA has recently had its treating customers fairly initiative, we do not think that that is enough. We believe that a fiduciary duty of care is necessary, especially in the light of some of the major concerns of mis-selling scandals and the need to learn lessons from those.

Amendments 33 and 34 relate to the costs and expense of establishing the FCA and PRA, splitting the FSA into those component parts. I apologise for rattling through these. We have to minimise unnecessary additional expenses incurred, because ultimately the consumers will pay. The FSA’s budget for 2013-14 has gone up by 15.6%. I accept that the new regulatory system will have some costs involved in that, but the majority of those costs are operational and not necessarily related to the principles of regulation involved. It was a bit of a joke to see in the White Paper the Government say that the running costs under the new arrangements should not be “materially different” in real terms and aggregate from the current FSA. That will not happen. We are talking about extremely significant extra costs.

We suggest that the memorandum between these organisations should contain an estimate of the annual costs involved in administering the FCA and PRA, and compare those to the estimated costs of the administration of the FSA. That is a bit of a crude way of getting a cost comparator, but I would be interested in seeing it. Similarly, amendment 34 talks about minimising the

“unnecessary additional expenses that might be incurred by virtue of the separate administration of the FCA and the PRA, and to maximise any common administrative savings achievable through close co-ordination.”

The PRA is moving to plush offices in Moorgate, leaving vacant space at Canary Wharf, a lease that expires way down the line in 2018. There is a sense in which there is a bit of empire building going on at the Bank of England, which will be responsible for the PRA. The Threadneedle street empire is growing strongly.

[Sheila Gilmore]

Will my hon. Friend also give some thought to those organisations that will be dual regulated and the additional costs that might be incurred?

[Chris Leslie]

That is why it is important that at the very least they have information, and some level of accountability, about the likely costs of this tangle of regulatory structures for them. The Association of British Insurers has voiced its concerns about the costs of the new regulatory system and it is important that we at least know from the Minister exactly what those costs will be. He skirted around the issue in Committee. Even when I asked the cost of the new building for the PRA next to Threadneedle street he said that that might be commercial in confidence. If he can help us with that I will be grateful.

The hon. Member for Chichester also spoke about publication of the minutes of the Bank of England’s court of directors. Amendment 27 seeks to introduce exactly the same for the FCA. If the FCA is to be a consumer champion, at the very least consumers should be able to see what is being discussed, who—potentially—is discussing it and, most importantly, what the nature is of the dialectic and discussions going on in its board. The Financial Secretary said in Committee that that will be a matter for the FCA, even though he could not really argue against the transparency principle, but he did promise that he would think about it. I saw a chink of light at the time and thought that publication of the FCA’s minutes was a simple concession that we might get in the Bill. I hope that he has had a chance to reflect on that.

Amendment 39 relates to the relationship between the new regulators and the European supervisory arrangements. We might think that all these decisions on regulating credit, businesses and financial services are for us to take domestically in the UK, but I am afraid that 80% of the regulatory decisions are in fact taken in Brussels by the European Commission. Commissioner Barnier has his pipeline of proposals, which is very much the driving force behind the regulatory arrangements. Some of those are good changes, but nevertheless many people feel that the UK’s domestic regulators are there merely to transpose what is decided further up the chain, and that is of concern. Therefore, we want the regulators to be fit for purpose and able properly to influence and steer some of the policy decisions that are taken in Brussels.