Oral Answers to Questions

Debate between Douglas Carswell and John Bercow

Thursday 2nd March 2017 Commons Chamber

[Mr Speaker]

Order. We are behind time. May I gently hint to colleagues that there are opportunities for others lower down the Order Paper to come in on Mr Carswell’s question if they wish?

[Mr Douglas Carswell (Clacton) (UKIP)]

11. What her policy is on the self-regulation of the UK fishing industry after the UK leaves the EU.

Oral Answers to Questions

Debate between Douglas Carswell and John Bercow

Wednesday 29th June 2016 Commons Chamber

[Mr Douglas Carswell (Clacton) (UKIP)]

Q5. I thank the Prime Minister for giving us last week’s great exercise in democracy—[Interruption.]

[Mr Speaker]

Order. The hon. Gentleman will be heard. It is about us and this place, and he will be heard.

[Mr Carswell]

We on the leave side should recognise that although we won, it was a narrow mandate and plenty of decent, patriotic people voted for remain. Does the Prime Minister agree that both sides now need to come together to achieve a new post-EU national consensus, whereby we have close links with our friends and allies in Europe and beyond, while reclaiming our sovereignty?

Outcome of the EU Referendum

Debate between Douglas Carswell and John Bercow

Monday 27th June 2016 Commons Chamber

[Mr Speaker]

I am keen to accommodate colleagues, but there is a premium on brevity—to be exemplified, as always, by Mr Douglas Carswell.

[Mr Douglas Carswell (Clacton) (UKIP)]

I applaud the Prime Minister and I welcome his statement. Now that withdrawal from the European Union is the policy of Her Majesty’s Government, will the Prime Minister confirm that some of the architects of the vote leave campaign, not just the Europhile mandarins, will be involved in the work of the new Cabinet Office unit?

Oral Answers to Questions

Debate between Douglas Carswell and John Bercow

Monday 16th November 2015 Commons Chamber

[Mr Speaker]

How fortunate that the Minister of State has contributed! I should have been greatly saddened, and the House not inconsiderably impoverished, if a Home Office questions had passed without an intervention from the right hon. Gentleman.

[Mr Douglas Carswell (Clacton) (UKIP)]

Is the Home Secretary confident, given the limited budget, that the security services have the resources they need to keep us safe?

Financial Services Industry

Debate between Douglas Carswell and John Bercow

Wednesday 4th March 2015 Commons Chamber

[Douglas Carswell (Clacton) (UKIP)]

I am grateful to the Minister for taking part in this debate, following the previous long and onerous one.

This issue is desperately important: the need for more competition in financial services is urgent. Choice and competition are always and everywhere a good thing. They drive up standards, force innovation and always manage to give customers better value. In many areas of our lives, we take choice and competition for granted—we assume that they happen naturally—but I simply do not think that there is enough choice and competition when it comes to financial services. In fact, financial services in this country have in many respects become something of a cartel, in which the different provider interests do not have any incentive to give the customer what they want, or to innovate and do better.

Historically, there has been a great loss of diversity in the financial industry in this country. We have a handful of banks in the UK today, but my researcher tells me that there are 417 savings banks in Germany. There has been a steady process of centralisation over the past few generations. Within living memory, cities such as Leeds and Norwich were financial centres in their own right; today, London predominates. We used to have many more types of governance structure in banks and financial institutions, with many more credit unions, partnership banks, friendly societies and old-style building societies. Banking is now dominated by big corporate plcs, which is a model that detaches management from ownership. Today, 77% of the current account market is dominated by the big four banks.

It is interesting to ask whether that is a natural process that has happened because of market-driven consolidation. I think it is a consequence of a regulatory system that has created and enforced homogeneity not just of providers but of products. It is has led to a system in which compliance is elevated above the need for customer service. I cannot help noticing that growth in many financial institutions and businesses has happened through acquisition, rather than through increasing the number of happy customers.

It is worth asking whether regulation has proved to be a barrier to entry in financial services. We commonly hear the complaint that people with money to invest are looking for a way to save it with a good rate of interest, and at the same time it is often said that businesses complain that they cannot get credit. In a normal market, the former would be put together with the latter and those who want to lend at a competitive rate of return would lend to those who want to borrow. Might it be that something about the regulatory system in this country is preventing that from happening?

The old Financial Services Authority issued some 6,000 pages of regulation between its inception and the financial crash. It is fair to say that the new regulators are carrying on with the blizzard of regulations. There are thousands of pages of compliance. Ultimately, I suspect that that is an attempt to restrain the worst excesses of some aspects of fractional reserve banking and to mitigate risk by decree or fiat. I wonder whether one consequence of that regulation is that it prevents us having new competitors, a broader spectrum of products and a broader range of providers.

It is no surprise that Metro bank, which I believe is the first new high street bank to open in this country in a generation, is so customer focused. We need to do far more to ensure that there are more banking start-ups. I will go on to elaborate on what I mean by that. We need to do more to ensure that regulation encourages banking innovation. We must allow the changes that the internet will bring about in banking to happen and ensure that regulation does not inhibit those natural, organic changes.

I am full of praise for the Minister’s magnificent idea in her former incarnation about allowing greater portability of bank accounts. I strongly support that. It is a wonderful scheme. I would love to hear a bit more about it. To put it a different way, since 2008, the percentage of personal current account holders who switch banks has grown. I would love to hear the Minister talk about ways in which we can encourage that. I am not certain what the correct percentage ought to be in a properly competitive market, but I imagine that it would be a good deal more than the current 3%. In any properly competitive market, there ought to be quite a high level of customer turnover. Should it be closer to 5% or 10%? I would love to hear the answer.

I would also love to hear whether the Minister has any sympathy with the idea that the regulatory system needs to encourage more banks to enter the market. The Prudential Regulation Authority has responsibility for that, but is it making it easier for start-ups—the equivalents of Metro bank and Handelsbanken—to come into the market? Are we making sure that capital requirements, although important, do not inhibit change?

On a slightly different note, I would love to hear whether we could review the regulatory system not only to allow new banks, but to allow new kinds of banking. We are all familiar with the idea that we can use our mobile phones to pay for things. That would have seemed like science fiction or magic 20 years ago and perhaps even 10 years ago. Similarly, might we not be able to have banking without banks—without those costly institutions that require big buildings and big bonuses? Might it not be possible to have banking through a company like O2, Google or Facebook? Those organisations have a huge customer base and know a great deal about their customers. Could we have a regulatory system that would allow a Google, a Facebook or an O2 to get a banking licence if they wanted to? It is key that if a company like that wants to acquire a banking licence, we make sure it is able to do so.

I fear that the regulatory system we have is very good at preventing new competition. That is one reason why the existing players tend to have such a close, symbiotic relationship with the regulator. There tends to be a revolving door between the regulator and the big corporate banks. I fear that corporate gigantism is a product of corporatist regulation. The regulatory system that we have is very prescriptive and detailed. It talks not simply about the outcome, but about the process that needs to be followed. I am not sure that that is a good way of regulating financial services. We must bear it in mind that Northern Rock was a highly regulated institution. The model in this country encourages financial institutions to create large compliance departments and to acquire armies of compliance officers, but those people often fail to ask the most basic questions about reserve ratios.

In financial services there is an inevitable correlation between risk and reward, and rather like the laws of gravity, if we try to create a regulatory system that defies the correlation between risk and reward, ultimately it will become unstuck. The basis for the investment industry is that correlation between risk and reward, yet I fear—particularly in the fund management industry—that some regulators try in effect to stipulate the investment mix, which has a big impact on that correlation between risk and reward.

The Building Societies Association and the Association of Financial Mutuals have made sensible suggestions about various aspects of our regulation, and interestingly they seem to recognise that our regulatory system prevents competition—it favours big corporate plcs and established players, and it does not help the mutual funds. They have come up with proposals to remove restrictive barriers to raising capital from mutuals, to change the regulation system that favours big corporate plcs, and to encourage market diversity. I would love to hear whether the Minister has sympathy with those ideas, and if so what we could try to change. The Competition and Markets Authority sounds like a wonderful idea—it is a wonderful name: who could be against it? It investigates cases where competition rules have been breached, and rightly so. Might it be, however, that Government regulation and Government fiat is doing more to restrict competition than any of the providers?

At various times in recent years there have been instances of alleged mis-selling in the financial sector, and people have been sold products on the basis of misinformation or facts that they regarded as misinformation. A constituent of mine was recently involved in the interest rate swap mis-selling scandal. That is not the first incident, and I fear it will not be the last. Every time there is an incident of mis-selling in the financial industry in this country, we ask about changing the rules and regulations, and rightly so, but we should not lose sight of the fact that the best regulator ought to be choice and competition. Happy customers ought to ensure that mis-selling does not happen, and behaviour that leads to mis-selling will be much less likely in a market focused on customer satisfaction, rather than simply compliance. We should not ask, “Are we able to do this?”, but “Does the customer want us to do this?”

I am afraid it is impossible for us to consider competition in the financial industry without considering the EU dimension—it is a sad reflection of how hollowed out our democracy has become that Ministers can really only reiterate the EU’s position on many of these issues. A couple of weeks ago Lord Hill issued a Green Paper on the capital markets union—another incident of further integration—and the Juncker Commission is pushing for standardisation in European capital markets. On the face of it, the aim is noble and it is a good ambition to remove the systemic risk in European capital markets. However, I fear that it has led to an alphabet soup of regulation in the form of the European system of financial supervision, and to unintended consequences. I will therefore touch on three rules that I think introduce such unintended consequences.

The first is the solvency II directive, which was enacted in January this year and regulates insurance companies across the EU. It is important for the House to understand that the insurance model ought to be an inherently stable model in the financial industry. It is no coincidence that during the financial crisis insurance companies tended to be pretty stable, which is because they tend to have a steady flow of income from premiums. Solvency II has the effect of imposing capital requirements on insurance firms, which would favour investment in sovereign bonds over corporate debt. I fear that would mean that there was less capital for companies—less choice, less competition and more homogenous products in the EU.

The second directive having unintended consequences is the markets and financial instruments directive II. Again, it aims to reduce risk, but as so often when one tries to remove the correlation between risk and reward through fiat, all sorts of unintended consequences are created. I fear that this will hinder the allocation of capital in markets in Europe. It will hinder the innovation in financial products.

The name of the alternative investment fund managers directive implies that left to their own devices there would be alternatives. I think the directive would inhibit the development of alternatives: the development of choice and competition in the financial markets. It would make it more likely that there would be homogeneity in the marketplace. I would be interested to hear if the Minister thinks that EU rules will help or hinder the development of competition in UK financial markets.

In conclusion, in most aspects of our lives we take choice and competition for granted. We take it for granted when we go shopping, when we buy groceries and shop around for holidays and entertainment. It is that choice and competition that I think makes life better, that improves standards and makes the world today so much better than it was a generation ago. We need to extend choice and competition into the financial markets too, and into financial services. Ever since the financial crisis, free market popular capitalism has been given a bad name. Free market capitalism needs to be given a good name again.

One key to doing that is to recognise that sometimes in financial services in this country there has been a cartel. One does not have to be Russell Brand or a leftist to recognise that there is a cartel in the financial services industry. We need to respond to that by breaking open the cartel, by allowing choice and competition and, in doing so, giving free market capitalism, the honest market and the financial services sector in this country a good name again.

I am sure the Minister agrees with me on this and I will be fascinated to hear what she thinks we need to do to ensure that we have proper choice and proper competition in our financial services industry once again.

[Mr Speaker]

I call the Minister.

Oral Answers to Questions

Debate between Douglas Carswell and John Bercow

Tuesday 4th June 2013 Commons Chamber

[Mr Douglas Carswell (Clacton) (Con)]

In order to tackle some of these concerns, the suggestion has been made that we should have a right of recall. Will the Minister confirm that a right of recall would include a recall ballot, so that instead of leaving it to a committee of grandees in Westminster to decide an MP’s future, constituents would have the chance for a final say?

[Mr Speaker]

That is very wide, but we will have a brief reply from the Minister and then move on.

Oral Answers to Questions

Debate between Douglas Carswell and John Bercow

Wednesday 18th April 2012 Commons Chamber

[Mr Douglas Carswell (Clacton) (Con)]

A few weeks—[Interruption.]

[Mr Speaker]

Order. Let us have some order in the House. I want to hear Mr Douglas Carswell.

[Mr Carswell]

A few weeks ago in this House, I asked the Prime Minister to what extent he believed that the Whitehall machine—the Sir Humphrey factor—was frustrating reform. He assured us that it was not. According to the Financial Times, in Malaysia last week the PM said:

“I can tell you, as Prime Minister, it”—

“Yes Minister”—

“is true to life.”

Can he tell us what has happened to make him change his mind?

Oral Answers to Questions

Debate between Douglas Carswell and John Bercow

Wednesday 26th October 2011 Commons Chamber

[Mr Speaker]

I call Mr Barry Sheerman. He is not here.

[Mr Douglas Carswell (Clacton) (Con)]

4. What assessment he has made of the effectiveness of budget support aid provided to Uganda.

Currency and Banknotes (Amendment)

Debate between Douglas Carswell and John Bercow

Tuesday 6th September 2011 Commons Chamber

[Mr Douglas Carswell (Clacton) (Con)]

I beg to move,

That leave be given to bring in a Bill to amend the Currency and Banknotes Act 1954 to allow banknotes in addition to those issued by the Bank of England to be legal tender; and for connected purposes.

[Interruption.]

[Mr Speaker]

Order. I am trying to be helpful to the hon. Gentleman and I apologise for interrupting him, but I appeal to Members who are leaving the Chamber please to do so quickly and quietly, extending the same courtesy to the hon. Gentleman as they would want to be extended to them in comparable circumstances.

[Mr Carswell]

Thank you, Mr Speaker.

My Bill would amend the Currency and Banknotes Act 1954 to enable a range of different currencies to be used as legal tender in Britain. The idea comes from a 1989 Treasury paper when John Major was Chancellor. What the Treasury proposed as theoretically possible 22 years ago, the internet now makes practically achievable.

The internet has given people unprecedented choice. We have access to a greater range of music, financial services, groceries and books than ever before, so why do we have legal tender laws that create a monopoly currency? Thanks to eBay and Amazon, it is possible to buy and sell hundreds of thousands of items at the click of a mouse. It is even possible to do so using whichever currency we please. By making a range of different currencies legal tender in the UK, my Bill would enable people to go a step further. People could buy things, store wealth and pay taxes in a range of different currencies too. Families would be able to plan their financial future without having to do so using a currency that is set to halve in value in the next 14 years. Businesses concerned about rising prices could protect themselves.

We would not need to carry multiple currencies about us in a multi-currency country. Non-cash payments, which since 2004 have exceeded cash payments, mean it would be as easy as using a debit or Oyster card. The 40 years since the collapse of Bretton Woods have been a grand currency experiment. People in Britain might have been using pounds as the unit of currency for centuries, but for the past 40 years the pound has been a fiat—or paper only—currency. Until 1971, the British state could not simply print as much money as it liked, but since then, a mere 40 years ago, the year that I was born, the number of pounds in circulation—the money supply—has been directed by Government and by the state. With a fiat pound, there has been no external constraint limiting the amount of money in circulation besides the self-restraint of the British state.

Government turns out not to be very good at restraining Government. UK money supply has grown from £31 billion in 1971 to more than £1,700 billion today—many times faster than the economy. For 40 years, monetarists have argued with those who claim that they follow Keynes about the rate at which the money supply should be increased. There has been much debate about which branch of the state should take the decision. Should it be Ministers, who are accountable to this House, or experts sitting in the Bank of England? Monetarists or Keynesians, the Monetary Policy Committee or Ministers: so long as it has been left to Government to manage our currency, our currency has been debauched. State officials proved to be no better at managing a nationalised currency than they are at running nationalised airlines or telephone lines.

Just as a broken clock manages to tell the correct time twice a day, our monetary managers have got the settings right on occasion. More often, however, we end up hearing how the state planners lacked the benefit of hindsight. Perhaps we should stop expecting planners to get anything right.

Our paper-only currency system emerged out of the 1960s and 1970s. Like many ideas that grew out of that technocratic age—such as urban tower blocks, child-centred education or DDT pesticide—what seemed terribly modern, forward-looking, progressive and scientific turned out to be a disaster. A small but growing number of academics now see the west’s unfolding financial crisis not simply as a banking problem. It was not simply caused by inadequate capital ratios or too much short selling. Instead, they see it as a fundamental failure of this fiat currency experiment.

A credit balloon was created by reckless management of the money supply. Using inflation, Governments were able to whittle away their debts. Monetary management favoured the debtor over the saver and the consumer over the producer. Monetary policy has encouraged us to over-consume and under-produce, to over-borrow and to save too little. In the space of a generation, fiat money has seen Government grow and the productive sectors of the economy shrink.

Under my proposal, we would no longer be forced to live under such a destructive regime. If the Bank of England keeps printing off more money—more quantitative easing, more loose monetary policy—there may be a fall in the value of its currency, but not necessarily in the value of the currency that the rest of us choose to use. At the click of a mouse, people and businesses would have an alternative. Incidentally, our ability to opt out as individuals and businesses from the MPC’s monetary monopoly might encourage it to stop taking liberties with our currency.

On both sides of the House Members recognise that choice and competition safeguard the interests of the consumer and the citizen. We do not think twice about people being able to tune into different radio and television stations or choose between different hospitals for medical treatment. One day, I hope that Britain will become a multi-currency country.

My proposal for competing currencies is not a new idea. It was the policy of the Conservative Administration in 1989. An excellent Treasury paper presented to this very House suggested competing currencies as an alternative to the European single currency. Perhaps the euro, which we mercifully kept out of, is the ultimate paper-only currency. It is not even backed by the fiat of a single state authority. It is, perhaps, the fiat currency to end all fiat currencies, although perhaps not in quite the way that the architects of economic and monetary union expected. If, as seems possible, the euro breaks up, we should revert to and revisit the ideas in that Treasury paper. By adopting competing currencies, Britain could save herself by her exertions, and save European economies by her example.

Replacing the monopoly of one failed fiat currency with multiple competing currencies would allow euro members the least painful means of extricating themselves from the monetary monster that holds them captive. With choice and competition, all Europeans might be free from the monetary mismanagement that always comes from on high.

Oral Answers to Questions

Debate between Douglas Carswell and John Bercow

Monday 20th June 2011 Commons Chamber

[Mr Speaker]

We are obliged to the Secretary of State, I am sure.

[Mr Douglas Carswell (Clacton) (Con)]

19. What steps he is taking to increase the fiscal autonomy of local authorities.

Oral Answers to Questions

Debate between Douglas Carswell and John Bercow

Monday 15th November 2010 Commons Chamber

[Mr Speaker]

Order. I just emphasise at this point that we must now return to questions and answers. That is what we need and that is what the public expect.

[Mr Douglas Carswell (Clacton) (Con)]

5. What recent assessment he has made of standards of attainment in secondary schools in (a) Clacton constituency and (b) England; and if he will make a statement.