David Ward
Main Page: David Ward (Liberal Democrat - Bradford East)Department Debates - View all David Ward's debates with the HM Treasury
Finance (No. 3) Bill
David Ward Excerpts(13 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Nic Dakin
My hon. Friend makes an interesting and valid point, but amendment 9 proposes specifically that:
“The Chancellor shall review the bank levy and publish a report, before 31 December 2011, on—
(a) the Government’s analysis behind the rate and threshold chosen for the bank levy;
(b) the adequacy of the bank levy in the context of other reforms to the wider banking system; and
(c) the total tax revenues expected from banks across all categories of taxation in each year from 2011-12 to 2016-17.’.”
That is what we are debating today, although my hon. Friend makes a good point.
Mr David Ward (Bradford East) (LD)
On the hon. Gentleman’s point about the mandate, presumably if Labour had got 3% or 4% more in the vote and a majority of 60 or 70 seats on 35%, he would have considered that to be a mandate to do whatever Labour wanted to do?
The Temporary Chair (Mr James Gray)
Order. That has absolutely nothing to do with the amendment we are discussing.
Nic Dakin
Thank you, Mr Gray, although I think that the hon. Gentleman was reminding me of the part in my speech in which I referred to mandates, as it was important to reiterate that the Government have no mandate for the NHS reorganisation, for police cuts, for the VAT rise, for abolishing the future jobs fund or for trebling tuition fees, and they certainly have no mandate for cutting too fast and too deep. However, they do have a mandate for listening to the amendment we are considering today on the bank levy. There absolutely is a mandate for the bank levy.
Nic Dakin
I thank the hon. Gentleman for his intervention. We are arguing that because of the fragility of the recovery, it is time to repeat the bank bonus tax. The Government should make their decisions now when they are not constrained. The decision now should be to repeat the bank bonus tax and increase the bank levy year on year, rather than leaving it static. That is what this review of the bank levy would allow us to establish, and that would produce an additional income, he will be pleased to hear, of at least £2 billion in each year of this Administration. That additional £2 billion could be used by the Government on behalf of the British people, the taxpayers and, indeed, the shareholders of these companies.
Stella Creasy
My hon. Friend is absolutely correct. This is born out of my frustration at the fact that the Government have so far refused even to contemplate taking action. I hope that this time round the Treasury team will seriously consider how the bank levy could be used to effect such action. The concept of adequacy in the amendment offers us an opportunity to ask whether the bank levy is being levied in a way that deals with high-cost credit and its impact. This debate has been about the appropriate level of the levy and its impact on banks, and I would argue that it could be extended to an appropriate levy on high-cost credit industries. We could then look at the way in which such companies pass on their costs to consumers who are particularly struggling in the economic conditions that we face. As Debt on our Doorstep points out, the fixed costs of lending in the home credit industry represent about 15% of revenues, yet the cost of borrowing from such companies is £82 in collection charges for every £100 lent. It is therefore no surprise that their profits have gone up by 40% in the past year as the lack of regulation in the industry allows them to run riot in our local communities.
There is broad agreement on the need to act on the impact of these companies, and the clause could be amended and applied in such a way as to enable that to happen. Citizens Advice has argued that the Government should not use the need for regulation of the financial sector as a cover for failing to act in these markets, as has the Centre for Responsible Credit—and as have many Ministers. I urge Ministers to talk to colleagues who, prior to 2010, advocated caps on the cost of interest rates. The Minister with responsibility for consumer affairs was very supportive at that time, but he seems to have changed his mind. [Interruption.] I agree entirely with the suggestion that perhaps that is yet another broken promise. We are talking about the 5 million to 7 million people in our communities who are affected by not being able to access mainstream credit and who are forced to use such companies. The bank levy gives us the opportunity to send a strong message to those companies that the way in which they act is deleterious to our communities and to our economy as more people are stuck in debt.
Mr Ward
We have heard numerous calls for the additional bank levy that the hon. Lady supports, involving a couple of million pounds, I understand. The hon. Member for Ilford South (Mike Gapes) wanted it spent on the Building Schools for the Future programme, which would have blown the full amount. Does she support its use for BSF or would she like it all to be allocated to the very important cause that she is propounding?
Mr Jones
My hon. Friend makes a very good point. One of this Government’s favourite soundbites is that “We are all in it together”, but it is quite clear that we are not all in it together. When bankers are claiming bonuses such as the ones we know certain individuals have got, it is just mind boggling to think about what could be done with the money.
Mr Ward
It is useful to have on record your opposition to the reduction in corporation tax, which will enable the companies concerned to employ many of the people about whom you have been talking. However, what really interests me is why, when the Government are monitoring every single day the repayment of loans to the banks, the effect of the tax levy and its adequacy, banks’ lending to businesses—which was mentioned by the hon. Member for Denton and Reddish (Andrew Gwynne), who is sitting next to you—and the strengthening of the banks’ balance sheets, you are prepared to wait—
The Temporary Chairman (Dr William McCrea)
Order. Let me draw the hon. Gentleman’s attention to the fact that “you” refers to the Chair, and that I am not participating in the debate.
Mr Jones
I would answer the question if it were not so stupid. If the hon. Gentleman believes that the review would be delayed for too long, why does he not table an amendment demanding that it be produced immediately? I am happy to give way to him if he wishes to intervene again.
Mr Ward
If you are interested—if the hon. Gentleman is interested—in any of this, he need only table some written parliamentary questions. He could obtain answers to all of them without amending the Bill. This is absolute nonsense. The hon. Gentleman is prepared to wait eight months for answers that he could obtain in response to a written question.
Mr Jones
If the hon. Gentleman believes that it is possible to obtain all the answers that he requires by means of parliamentary questions, that demonstrates his naivety. Having been in the House for nearly 10 years and having, as a Minister, spent many hours trying to avoid answering parliamentary questions, I can only say “Good luck” to him.
Let me quote from the amendment—
Mr Jones
Then let me remind the hon. Gentleman what it says. It refers to
“the Government’s analysis behind the rate and threshold chosen for the bank levy”—
we have not yet been given that analysis, a point made by my hon. Friend the Member for Nottingham East—and to
“the adequacy of the bank levy in the context of other reforms to the wider banking system”.
We have heard a good many statements on bank regulation and on how the bankers can be made to lend more responsibly, but if the hon. Gentleman thinks that he can obtain the information that he requires by means of parliamentary questions, he is a better man than I am.
Mr Jones
I am, but that is part of the scrutiny process, and so is this. If the hon. Gentleman is so interested in the banking levy and the effects of the Bill on his constituents, why does he not speak? At one point he was alone on the Liberal Democrat Benches. The Government Benches have been fairly deserted this evening: the poop deck of the Mary Celeste may have had more life in it. Members who support the proposal in the Bill should at least turn up to argue in favour of it. No doubt we will be receiving “Focus” leaflets from the Liberal Democrats—although after Thursday they may be called something different—describing how tough they have been in regulating the banking system, but it is clear that they have not.
The hon. Gentleman has until late tonight, and tomorrow, in which to contribute to the debate so that he can reproduce his contribution in his “Focus” leaflets ad nauseam, which I know the Liberal Democrats love doing. People will be able to learn about how he stood up for them against the bankers rather than just listening to the hollow words and rhetoric of the Prime Minister and the Deputy Prime Minister in the run-up to the general election. The beauty of being in government is that politicians can actually do things. I know it has come as a big shock to many Liberal Democrats that they are in a position of responsibility whereby they can actually affect the lives of ordinary people. [Interruption.] Yes, responsibility without influence, as my hon. Friend the Member for Gateshead (Ian Mearns) says from a sedentary position. As the Liberal Democrats are in government, they can follow through and make sure that the Bill deals with the people who were responsible for getting us into this mess three years ago. They also have an opportunity to tackle the excessive profits. I do not know what the average salary is in Bradford, but I am sure that £1 million is a lot of money to the people there. I know that in 1914, prior to the first world war, Bradford won the competition for being the place where the most Silver Ghosts were sold, because it was a rich mill town back then; I learned that from the predecessor of the hon. Member for Bradford East when I was working for him in a by-election many years ago. I doubt whether many Rolls-Royces are sold in Bradford nowadays, however, and the hon. Gentleman’s constituents can only dream of some of the bonuses he is supporting this afternoon.
Mr Jones
Yes. I do not particularly like giving opportunities to Liberal Democrats, but it would give them an opportunity to show that they have the teeth that the Liberal Democrat Cabinet Ministers claim they have got in this coalition, because they would be able to say to the Conservative part of the coalition that they want change—that they want, for example, to increase the levy or to make sure that the huge bonuses being paid are taxed in a different way, or to bring in regulation. Let us be honest about this, however: most Liberal Democrat Ministers have not got sharp teeth—unless they have been to the dentist in the last few weeks. In the next few days we will see the beginning of the demise of the Liberal Democrats, and, as it were, the extraction of their teeth. It will certainly be interesting to see how sharp their teeth are after Thursday.
The current Government’s bank levy should take the same amount as the Labour Government’s bank bonus measure raised, which was £3.5 billion.
Mr Ward
As repeating the same point time and again is not a problem in this Chamber, I will do what everybody else here does and repeat myself: £3.5 billion is a lot less than £10 billion, which will be the amount generated—£2.5 billion times four years—so to talk about it as a reduction is just silly.
Mr Jones
This is becoming a bit like bashing Bambi to death. The fact of the matter is that the hon. Gentleman is either being very obtuse or something else that I will not say. We are talking about £3.5 billion for each year, which would add up to more than what is being proposed. We are talking about four times £3.5 billion.
Mr Jones
That is because I have said that we should do it again. I am sorry if the hon. Gentleman does not get that. He might say that it is a one-off deal, but perhaps it is a bit like one of those once and only, one-off sales that we see on television that furniture companies have every other week. I am proposing that we repeat the levy and raise that £3.5 billion again. Does he get it now?
Mr Jones
That was too subtle for me.
The important point was made by my hon. Friend the Member for Nottingham East when he talked about what we would do with this money. As my hon. Friend the Member for Hayes and Harlington said, if the levy is seen as a tax, it is a pretty meagre tax on the banks, as it raises a small amount of money. However, the question is still about what we then do with the money. We could put it into rebuilding the economy by investing in housing and the regional economy, as has been said. The Government have allocated £1.4 billion over the next three years to projects, which is two thirds less than the £1.4 billion that the previous Labour Government invested in regional development agencies per year. In regions such as mine, the north-east, companies and individuals have to bid for that money. A banking levy could come in very useful for the investment that is being put forward.
The problem with the Conservatives—the Liberal Democrats have gone along with this—is that they have this notion of “Public sector bad, private sector good.” What they have failed to realise in regions such as the north-east is that large-scale public expenditure cuts have a huge knock-on effect on the private sector. The unemployment level is already 10.2% in the north-east, whereas it was as low as 4% under the previous Labour Government. Durham university has done a study suggesting that if 45,000 to 50,000 public sector jobs in the north-east are cut, 20,000 jobs will actually go from the private sector. Regions such as mine had no responsibility for the mess, but those responsible for it could pay for some of that reinvestment and that could be done through the banking levy.