Finance (No. 4) Bill

Claire Perry Excerpts

Monday 16th April 2012 Commons Chamber

[Jacob Rees-Mogg]

My hon. Friend is absolutely spot-on, because every single socialist Government this country has ever had have always left the country in a financial mess, as they believe that by squeezing the rich until the pips squeak they can get more revenue, when history shows that they cannot.

The success of the Government’s fiscal plan is shown day in, day out by the bond market. Interest rates on our 10-year gilts are just about 2%. When we look abroad—when we look to the continent—we see how quickly those rates can deteriorate for countries in which the markets lose confidence. The greatest tribute to this Government’s economic policy is what has been happening in the bond market.

We must thank our Liberal friends for another great measure in this Finance Bill: the raising of thresholds. That has, quite rightly, been adopted by Conservatives. It is sensible that people should not pay tax when they are on benefits. The higher the threshold can be raised so that we avoid this merry-go-round of tax and benefits, the better.

[Claire Perry (Devizes) (Con)]

I thank my hon. Friend for making that point about thresholds. Does he share my pleasure in the fact that the majority of people benefiting from that threshold being raised are women, many of them working part time?

[Jacob Rees-Mogg]

That is a tremendously important point, because we have heard some complaints that couples, where both are working, are particular beneficiaries. But I think that that is great; I think that where the husband and wife are both going out to work, one of them is a relatively low earner and the whole family income benefits, that is good for men, women and probably their children, too. So this is absolutely the right policy.

In addition, we have cut corporation tax, a pro-business policy. We saw how well Ireland did by cutting corporation tax—[[Hon. Members: “It went bust!”] The reason Ireland went bust was not its low corporation tax. The reason Ireland went bust was because it joined the euro, a policy of which a lot of Labour Members were all in favour. Ireland’s corporation tax was behind it becoming a very successful economy and attracting companies to go there to do business. We want to do the same and I am glad that the Government have so much ambition to continue reducing corporation tax, to the benefit of the nation.

When we look at these great and bold things that have been done—getting the deficit under control, lowering the top rate of tax, raising thresholds and lowering corporation tax—we see that big, important measures have been taken. Yet what is the Budget criticised for? What is the Finance Bill criticised for? The answer is pasties. I have to say that the VAT levels charged are required to raise revenue and they include all sorts of funny things and they exclude some odd ones, too. Many of us will remember all the fuss there was about whether Jaffa cakes were cakes or biscuits, and whether, as a cake, they were exempt or whether, as a biscuit, they had VAT paid on them.

Oral Answers to Questions

Claire Perry Excerpts

Tuesday 6th March 2012 Commons Chamber

[Danny Alexander]

The hon. Lady will recognise that, during the pay freeze of last year and the coming year, we have provided a £250 pay increase for those earning less than £21,000 a year. The pay review bodies have been asked to provide advice in relation to the future pay remit, but she should also recognise that the increase in the income tax personal allowance, which will come through this April, will be worth £126 this coming year to precisely the people she is talking about. I hope she welcomes that.

[Claire Perry (Devizes) (Con)]

Does the Minister share my absolute incredulity at hearing the Opposition talk about the cost of child care, given that it went up 50% during their term in office? Will he tell us how much this Government are spending to help hard-pressed parents with the burgeoning costs of child care?

Financial Services Bill

Claire Perry Excerpts

Monday 6th February 2012 Commons Chamber

[The Chancellor of the Exchequer (Mr George Osborne)]

I beg to move, That the Bill be now read a Second time.

It is a pleasure to move Second Reading of the Bill. It is the product of many years of thinking, policy work in opposition, extensive consultation in government and impressive pre-legislative scrutiny in Parliament. I want to thank at the start the Joint Committee on the draft Financial Services Bill, which has made it a better piece of legislation, the Treasury Committee for challenging us to develop clearer lines of accountability in the Bill and the Treasury’s own Bill team, who have worked so hard for the past 20 months to produce the Bill before us.

The genesis of the Bill is obvious—the biggest failure of economic management and banking regulation in our country’s history. Its purpose is clear as well—to dismantle the disastrous tripartite system created 14 years ago and replace it with a structure of financial oversight that supports successful, competitive financial services while protecting the British taxpayer from the risk that those services run.

Of course, the Bill is not the complete answer to what went so spectacularly wrong. It should be seen alongside the Basel reforms to capital and liquidity, the living wills and resolution regimes that have been developed and the reforms to the structure of banking proposed by the Vickers commission. It is not by itself a sufficient response to the mistakes of the past, but it is absolutely necessary.

Let us remember what happened. Over the last decade before the crash, Britain experienced the biggest increase in debt of any major economy in the world. The total of household, corporate, financial and public sector debt in the UK reached a staggering 500% of gross domestic product. Our banks became the most leveraged in the world, and whether it was Northern Rock’s 120% mortgages secured on wholesale funding, Halifax Bank of Scotland’s catastrophic commercial property deals or the Royal Bank of Scotland’s reckless decision to buy ABN AMRO after the markets had frozen, such things did not attract the intervention or, it seemed, the concern of Britain’s tripartite regulatory system.

That system had been established as a by-product of the decision by the new Labour Government to give the Bank of England independent control of monetary policy. Without warning to the Bank, or anyone else, that institution was stripped of its historic responsibility for regulating the banking system, which was given to a new Financial Services Authority. It was a fateful decision, and one that we now know very nearly prompted the resignation of the then Governor of the Bank, the late Eddie George.

The comment 14 years ago by the Conservatives’ then shadow Chancellor, my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley), during the passage of the Bank of England Bill, which created the tripartite system, was remarkably prescient. If he does not remember it, I will remind him of what he told the House. He warned that

“with the removal of banking control to the Financial Services Authority…it is difficult to see how and whether the Bank remains, as it surely must, responsible for ensuring the liquidity of the banking system and preventing systemic collapse.”—[Official Report, 11 November 1997; Vol. 300, c. 731.]

He was spot on. However, at the time he and the Opposition whom he led through the Division Lobby were lone voices.

Fourteen years later, the general consensus is clear. There were fundamental flaws in the tripartite system right from the start, which are today painfully apparent to the whole world. The first and most serious flaw was that no one in the tripartite system saw it as their job to monitor risks across the whole financial system. The Bank of England focused increasingly on its monetary policy responsibilities; the FSA looked at individual firms, but was more focused on tick-box regulation of individual products than on the prudential health of whole businesses, let alone the financial system; and the Treasury took the fatal decision to run down its financial services division, turning the whole area into an under-resourced backwater in the Department.

The tripartite committee did not meet once in an entire decade, so no one was looking at the whole system or at the staggering build-up of debt in the economy and leverage in the banking system. As Lord Turner said in his review of the regulatory response to the banking crisis:

“The failure to do this analysis and to take action on it was one of the crucial failures of the years running up to the financial crisis.”

[Claire Perry (Devizes) (Con)]

As my right hon. Friend is setting out what is essentially a political failure, will he enlighten the House on whether the report on one of the great victims of that failure—RBS—names any Members of Parliament as being specifically involved in the problem?

[Mr Osborne]

As my hon. Friend is aware—

--- Later in debate ---

[Mr Osborne]

The right hon. Gentleman is perfectly entitled to that view, but it is not shared by the Select Committees that have considered the matter, including during the previous Parliament; it is not a view shared in the work by the FSA on what went wrong and the failure to conduct macro-prudential analysis; and it is not a view shared by almost everyone who has looked at the failures of the British regulatory system during the period in question. He is perfectly entitled to his view—I am not surprised that he holds it, given that he was responsible for creating the system—but if it is his view, he should have the courage to vote against our proposals to dismantle it.

[Claire Perry]

Nor was the view of the right hon. Member for Morley and Outwood (Ed Balls) that of the Governor of the Bank of England, who said:

“All we can do at present…is to write our Financial Stability Report and give speeches.”

The Bank was completely emasculated by the right hon. Gentleman's reforms.

[Mr Osborne]

My hon. Friend reminds me that in the Mansion House speech in 2009, I think, the Governor, appointed by the previous Government, said that the Bank was being asked to do things that it had not been given the powers and tools to do. It was a striking speech—I cannot remember whether the right hon. Gentleman was there—but the difference between the views expressed by the Chancellor and the Bank Governor in the space of one evening was striking.

I will now go through the details of the Bill and see whether it commands all-party support. I shall go through what we are doing to address the flaws that I have identified in the existing system. First, we are going to establish a new macro-prudential authority in the Bank of England to monitor overall risk and levels of debt in the financial system. Secondly, we are making the Bank of England the single point of accountability for financial stability, ensuring that there is a decisive answer to the question, “Who is in charge?” Thirdly, the Bill ensures that in a crisis, when taxpayers’ money is at stake, the power to act sits with the Chancellor of the day, accountable to Parliament. Fourthly, the legislation creates a strong conduct regulator that is able to give its undivided attention to promoting competition and protecting consumers. Let me take each in turn, and in some detail.

First, the responsibility to monitor risks across the system falls to the new Financial Policy Committee in the Bank of England, established by clause 3 and entrusted with responsibility for the stability of the whole system. Its job will be to identify bubbles as they develop, spot dangerous interconnections, warn about poorly understood financial instruments and take action to stop excessive levels of debt building up before it is too late.

Tax Avoidance (Public Servants)

Claire Perry Excerpts

Thursday 2nd February 2012 Commons Chamber

[Danny Alexander]

I think a better way to characterise what is going on in the economy at the moment is that the whole country is being made to pay for the mistakes made by the previous Government. I have already set out the action that we taking. An urgent review is taking place, both in Departments and through the Treasury, which I put in place because I take such matters incredibly seriously. That review is of a piece with the enormously wide range of action to tackle tax avoidance and tax evasion that has been put in place by this Government. As just one example, the high net worth individuals unit was not put in place by the previous Government until they had been in office for 12 years. That was 12 years of inaction on tax avoidance in that part of the population. Contrast that with the record of this Government and we see a coalition Government who view making sure that everyone pays their fair share of tax with the utmost seriousness.

[Claire Perry (Devizes) (Con)]

I think there is a word, Sir, for the mock indignation on the Opposition Benches, but as I was reprimanded for anti-parliamentary language previously, I will not say it today. Will my right hon. Friend please set out what specifically we are doing about tax avoidance in foreign domiciles, which is an equally important issue?

[Danny Alexander]

rose—

Youth Unemployment and Bank Bonuses

Claire Perry Excerpts

Monday 23rd January 2012 Commons Chamber

[Rachel Reeves]

I agree with my hon. Friend. We have to look only at the forecasts from, for example, the independent OBR, which says that unemployment will continue to rise this year, or at the OECD numbers, which say that unemployment will continue to rise into 2013. That is the reality.

I am sure we will hear the Chief Secretary to the Treasury and others defend the Government’s inaction and talk about their various half-baked and half-hearted solutions. We look forward to hearing a report on the progress of those initiatives, and in particular what difference the Government expect them to make to future unemployment. As I have said, the OBR has said that there is no reason for it to revise its unemployment projections as a result of the Government’s measures.

The Government’s response is inadequate for the scale of the challenge. When the Prime Minister was challenged last week on his performance on unemployment, all he could do was admit with regret that youth unemployment is a problem. However, the Opposition are asking the Government not simply to acknowledge they have a problem—we all know that—but to do something about it. The Prime Minister says he takes responsibility for everything that happens in our economy, but taking responsibility means taking action.

[Claire Perry (Devizes) (Con)]

Unemployment in my constituency is creeping upwards and long-term unemployment is coming down, but in both my constituency and the hon. Lady’s constituency apprenticeship starts are increasing at an incredibly rapid rate. Can she and I agree on one thing: that the best way to get young people into work is to get them such opportunities with the private sector, and relentlessly to support them, as this Government are doing?

[Rachel Reeves]

I expect the hon. Lady’s constituents, like mine, regret that the Government cancelled the future jobs fund, which was helping young people back into work. Since that cancellation, long-term youth unemployment in her constituency has gone up not just by a little bit, but by 36%. That is the reality that her constituents face day in, day out.

I hope we will not hear the usual hand-wringing—although I might have to give up that hope—or the usual shoulder-shrugging or blame-shifting. The jobs crisis is not a fact of life or a force of nature, and the Government cannot play the innocent bystander, as they have tried to do. The jobs crisis is a result of the choices they have made. They chose to cut too far and too fast; to abolish employment programmes that were working; and to destroy job opportunities in both public and private sectors.

--- Later in debate ---

[Danny Alexander]

I am going to make some progress, and I will give way again shortly.

Across the wider economy we are doing everything we can to foster renewed prosperity, create new jobs across the UK and return the country to sustainable growth. Whether we are talking about regulation, the planning system, reducing corporate taxation, our investment in infrastructure or the tax cuts that we are delivering for low-income workers, we are putting forward ambitious plans—plans that we need in these difficult times.

[Claire Perry]

rose—

[Danny Alexander]

I will give way in a moment.

We have plans that will help to foster a recovery led by our private sector, by entrepreneurs and by exporters, creating the kind of growth that the Opposition failed to deliver in over a decade in government. We face the monumental task of dealing with their legacy of unsustainable spending and debt-fuelled consumption, which left the coalition the task of dealing with the largest peacetime deficit on record.

--- Later in debate ---

[Danny Alexander]

I will give way in a moment.

The Opposition do not seem to realise that tackling that deficit is the vital precondition to sustainable growth. It is only by tackling the deficit that we can provide the certainty, stability and low interest rates that are critical to a recovery. The past 18 months have seen sovereign debt downgrades across the Europe, bail-outs of the weakest Eurozone economies, and countries racing to consolidate at the behest of the bond markets.

[Claire Perry]

I should like to bring a local business perspective to the debate. I had dinner last week with a group of people representing small businesses in the Wiltshire area, all of whom said that their businesses looked reasonable and they were thinking about hiring. Most importantly, they said that they had benefited enormously from the economic stability that the Government had created. Has my right hon. Friend heard anything from the Opposition that amounts to a coherent economic policy, or are they simply offering a wish list of chops and changes, and opposing for opposition’s sake?

[Danny Alexander]

I have heard nothing coherent from the Opposition, and I have heard nothing from the business community in this country but support for our policies to deal with the deficit and restore this country’s economic credibility. The coalition has never shirked its responsibility to take tough and sometimes unpopular decisions to tackle the deficit and pull the country out of the hole that the previous Government dug. Because we did not delay, and because we took action to get ahead of the curve, we can cut the deficit on our own terms and shelter the UK from the debt storm that has engulfed our nearest neighbours.

Autumn Statement

Claire Perry Excerpts

Tuesday 29th November 2011 Commons Chamber

[Mr Osborne]

As I said, we are not cutting tax credits, but uprating the child tax credit. The hon. Lady should have listened to what I had to say.

[Claire Perry (Devizes) (Con)]

I am confused and am hoping that the Chancellor can help me to sort something out. On page 82 of its document, the OBR states that it has cut its forecast for European growth to 0.5%. On another page, it states that it has cut the British forecast to 0.7%. Under the shadow Chancellor’s quack-onomics theory, interest rates should therefore be higher in Britain than in the eurozone, but they are not. Can the Chancellor explain why?

[Mr Osborne]

Because we have earned credibility for this country. That is what this Government have done. That has not been an easy thing to do, but it has brought our borrowing costs down while other countries’ borrowing costs have gone up. When this Government came to office, the interest rates in Italy were lower than the interest rates in Britain. They have gone up in Italy and come down in Britain. Of course, we now have the new Labour party policy, which is that it wants to see higher interest rates. I am not sure that the Labour Back Benchers have fully realised what a completely stupid policy that really is.

Fuel Prices

Claire Perry Excerpts

Tuesday 15th November 2011 Commons Chamber

[Mr Dodds]

I am grateful to my hon. Friend, who makes a good point and illustrates it with the facts. I will come on to the situation in Northern Ireland, but it is clear that a car is a necessity, not a luxury, for many people in his constituency, so he makes a valid point.

The fact is that Northern Ireland has the highest-cost fuel of any region in the United Kingdom. The Automobile Association’s October fuel price report showed that of the 12 regions of the UK, Northern Ireland was, on average, the most expensive for unleaded petrol, diesel and super-unleaded. On top of that, its energy prices more generally are among the highest in the United Kingdom. I mentioned car insurance; Northern Ireland’s car insurance premiums are by far the highest in the United Kingdom. They are, on average, 83% more expensive per person than in the rest of the United Kingdom. Earlier, someone mentioned a double whammy for their constituents; in Northern Ireland, we have a severe triple whammy when it comes to energy, fuel prices and car insurance. Those issues have to be addressed. Some will have to be addressed by the devolved Administration, and there are Ministers working on the issues, here and at home, but there are also issues that can be addressed only at the level of the Westminster Government.

I hope that this debate will contribute to focusing the Government’s mind on this serious problem. Some 83% of people in Northern Ireland go to work by car, van or minibus, compared with only 70% in the rest of the United Kingdom. That shows the rural nature of much of Northern Ireland, and the fact that we have an underdeveloped public transport network; for example, large parts of the west of the Province are not served by the railway network. Clearly, the car is therefore a necessity there, not a luxury.

[Claire Perry (Devizes) (Con)]

The right hon. Gentleman and I normally talk about pig farming, but on this occasion, we can talk about the fact that in our very rural areas—particularly in my constituency of Devizes—the issue is the lack of competition among petrol stations and heating oil providers. None of us is on a grid; we are all reliant on heating oil. My area has similarities, in microcosm, with the right hon. Gentleman’s area.

[Mr Dodds]

Absolutely. We in Northern Ireland have a higher dependence on off-grid energy supplies than other places in the United Kingdom, but there are many similarities. We in Northern Ireland have a unique situation: we share a land border with the Irish Republic. As the per-litre price for petrol is, on average, 5p cheaper in the Irish Republic—15p a litre cheaper for diesel—we have the problem of fuel smuggling, which costs the Exchequer about £200 million to £300 million a year. One way to deal with that is for the Serious Organised Crime Agency and others to be tougher in tackling the problem, but there also needs to be an extension of the rural fuel pilots to Northern Ireland. That would not only reduce the cost of petrol and diesel and boost the economy, but increase the tax take for the Revenue. That has been clearly shown.

People in my constituency tell me all the time that they are appalled by massive oil company profits; BP had profits of £3.2 billion in the second quarter of this year. They want those profits passed on to people in difficulties. They are appalled by the difference in petrol prices across the Province. They cannot understand why supermarkets—I will mention supermarkets—in my constituency charge one price in one area and another elsewhere, simply because they can get away with it. People in my constituency want the planned fuel duty increases for next year to be scrapped to boost the economy, reduce costs and boost the tax take, which is only at 66% today, compared with 81% in 2001-02; that shows that the current policy of ramping up tax and fuel duty increases is not working for the Government. People in my constituency want the measure of inflation used to upgrade fuel prices changed from the retail prices index to the consumer prices index, which is used for everything else.

Eurozone Crisis

Claire Perry Excerpts

Thursday 3rd November 2011 Commons Chamber

[Mr Hoban]

That is a slightly bizarre question from the hon. Gentleman, from whom we expect better. We are engaged in the debates in Europe. We need to make sure we stand up for Britain’s interests in Europe, which is why we are keen that areas of vital national economic interest—such as financial services, the single market and competition—are dealt with by all 27 member states rather than just the eurozone countries.

[Claire Perry (Devizes) (Con)]

I am sure that my hon. Friend is aware that there are only 52 shopping days left before Christmas, so for ordinary Greek families now is a terrible time to be facing such economic uncertainty. Does he agree that Governments must live within their means and deliver stable financial policies for their people?

[Mr Hoban]

My hon. Friend is absolutely right. Fiscally prudent policies that tackle the deficit and get interest rates lower must be implemented across the eurozone, so countries enable their economies to grow.

Oral Answers to Questions

Claire Perry Excerpts

Tuesday 1st November 2011 Commons Chamber

[Miss Smith]

I have a number of things to say to the hon. Lady, none of which would include any personal questions, of course.

I can assure the hon. Lady that the Government are reducing the deficit fairly, and I would point out in particular that we are taking 1.1 million of the lowest-paid workers out of tax entirely, and the majority of them are women. She will welcome that as much as I do. Furthermore, she should know that unemployment rose to its level of 30% under her party’s Government.[Official Report, 3 November 2011, Vol. 534, c. 6MC.]

[Claire Perry (Devizes) (Con)]

Does my hon. Friend also agree that one of the most important steps this Government have taken is to exempt from the pay freeze the lowest-paid workers in the public sector, 80% of whom are women?

[Miss Smith]

I certainly do welcome that, and it is important to combine that with taking women out of income tax, as I have already mentioned.

Eurozone

Claire Perry Excerpts

Monday 10th October 2011 Commons Chamber

[Mr Osborne]

As the hon. Gentleman will understand, that has been kept under close surveillance at the Treasury—certainly for as long as I have been Chancellor, and no doubt before. We are well aware of the exposure of UK banks to the eurozone peripherals. However, we have satisfied ourselves that even with those exposures—as I said, the FSA has made much of the information public—banks such as RBS are well capitalised and liquid and do not have the kinds of problems that some banks on the continent have.

[Claire Perry (Devizes) (Con)]

It is my belief that the fiscal activism of this Government has created headroom for the next round of quantitative easing. Will the Chancellor tell us what he thinks would have happened if we had carried on spending under the plans of the previous Government and whether there would have been any room at all for a further round of QE?

[Mr Osborne]

My hon. Friend is right to call it fiscal activism, because one has to step in and take difficult decisions, which the Opposition have ducked, to get the deficit under control, to have a credible plan and to allow monetary policy greater freedom of manoeuvre. We are monetary activists while being fiscally responsible and that is the right approach. The alternative advocated by the Opposition is a big increase in interest rates—[Interruption.] Let me let hon. Members into a little secret. The Chancellor does not set the interest rates. They are set not only by the Bank of England but by the markets and if we abandoned our plan and suffered the credit downgrade that the shadow Chancellor is, in effect, advocating, interest rates would go up, families would face higher mortgage bills, people would lose their homes, businesses would go bust and jobs would be lost. That is not a path we will go down.