Banking
Emily Thornberry Excerpts(10 years, 10 months ago)
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Chris Leslie
The hon. Gentleman makes a fair point. This morning the Chancellor gave his rationale for disagreeing with the European banker bonus cap. It is a shame that he did not take a lead in trying to construct something of his own to rein in this culture. After all, we would have had a repeat of the banker bonus tax. The Chancellor’s argument is, “Oh well, this is just going to move it all on to pay and on to ordinary salaries.” Surely one of the lessons of the banking crisis is that the excessive, short-termist risk and reward bonus culture was driving dysfunctional behaviour that got us into the mess in the first place. Frankly, I am sure those bankers will try to find all sorts of little dodges and weaves to get around the rules, but we have to make the system more transparent and we need to move towards a remuneration arrangement that is much more about sustainability, stability, professionalism and serving the customers. It would be foolish for the Government to try to sue Brussels on this point and hold out against public opinion, which has had enough of this excessive behaviour.
Emily Thornberry (Islington South and Finsbury) (Lab)
I wonder whether my hon. Friend can help the House. Have the Government ever given any indication on what they believe the upper limit should be on bankers’ pay?
Chris Leslie
I do not think they have, although I think before the general election the Prime Minister indicated that he did not want any taxpayer-owned banks to pay out bonuses of more than £2,000. We know what happened to that proposal.
The issue goes beyond anger about bank bonus season. Serious reforms to the banking culture and the role of banking in the economy are still required. Ministers still have not grasped the role that banks ought to be playing to repair our economy. They are still out of touch on the causes of three years of economic stagnation and the reforms to the banking sector that are still needed. How much more evidence do they need? Despite the billions of pounds needed to ensure that the cash machines kept working; despite the mis-selling and ripping off consumers; despite the money laundering and sanctions busting; despite banks peddling interest rate swaps to struggling small firms; despite multi-billion losses in the disastrous London Whale scandal—London Whale was the name given to a trader—and fines of more than £1 billion for Deutsche bank in the United States for mis-selling mortgage-backed securities; and despite the rigging of LIBOR and other benchmark indices, including investigations into attempts by up to 15 banks to manipulate a £5 trillion dollar a day foreign exchange market; despite all that the Government still do not have the stomach to do what it takes to clamp down on misconduct and to finish the job.
Sajid Javid
I will come on to it. The hon. Gentleman raised the two issues of banking competition and remuneration and I want to cover them.
I was very pleased that the hon. Gentleman talked passionately about the importance of competition. It is a shame that the previous Government did absolutely nothing to encourage it for 13 years. It is worth reminding the Chamber that when the last Government took office there were at least 10 major UK banks, but over their 13 years of incompetence they continued to permit and manage banking takeovers which shrank the number of market players and left the big banks to dominate.
Greater competition in banking is good for people and businesses and the economy. That is why we are implementing the recommendations of the Independent Commission on Banking for improving competition; indeed, we are going further. We are addressing the issue of too big to fail through ring-fencing, meaning that big banks will no longer get a competitive advantage from this implicit guarantee. We have put competition at the heart of financial services regulation by giving the Financial Conduct Authority a formal competition objective as well as making provision for a secondary competition objective for the Prudential Regulation Authority. We are also making sure that the FCA has the right tools to get the job done on competition by giving it concurrent competition powers.
While competition dropped under Labour’s stewardship, it is increasing under ours. As we have heard, since the crisis Metro Bank, Virgin Money and the new TSB brand have entered the market. Indeed, RBS also announced recently that it has teamed up with investors, including the Church Commissioners, to launch a 300-branch challenger bank, Williams & Glyn’s, focused on small businesses.
In fact our financial regulators are currently in talks with 22 potential new bank applicants because of the steps we have taken to promote banking competition. On top of that we are creating a new payment systems regulator so that smaller banks and others can access the payment systems fairly and more transparently, and we have secured a seven-day current account switching service to make sure that people have the confidence to change accounts. There are further innovations coming on cheque imaging and mobile payments. This is a Government who are bringing competition back to banking.
On bankers’ pay, we understand the depth of public anger but we will not take any lectures from the Labour party. While bonuses continued to increase year after year on its watch, even after 2007, they are now down 85% from their peak in 2008. Since 2010 we have been leading the way on tackling unacceptable pay practices. First, we have introduced rules that require significant parts of bonuses to be deferred and paid in shares, which means there is now a much better alignment of pay with risk and performance. While we make sure that only good performance can be rewarded, we are also making sure that poor performance can be punished by introducing measures that mean firms have clawback policies to reduce or revoke pay retrospectively.
Those steps are having an impact. The 2012 bonus pools at almost all major banks have declined massively since this Government came to office. The truth is that while Labour talks about clamping down, this Government get on with the job.
Emily Thornberry
If the public are watching this debate, they may well want to ask the question I shall ask now, and I hope we get an answer. Do the Government have a view on the maximum amount a banker should be given by way of either a salary or a bonus, and does the Minister agree with the bonuses currently being given out by Chase Manhattan bank?
Sajid Javid
First, I am not sure even whether the Opposition have a view on what the right level of bonuses is. Also, I am not sure about Chase Manhattan bank because it does not exist any more as far as I know.
Financial Services (Banking Reform) Bill
Emily Thornberry Excerpts(10 years, 11 months ago)
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Emily Thornberry (Islington South and Finsbury) (Lab)
With hindsight, will the hon. Gentleman help the House and say whether Fred Goodwin would have been prosecuted under that provision?
Sajid Javid
It is possible, although it is difficult to answer that question specifically as it would depend on the legal process, as anticipated in the Bill. As I progress with my remarks, the hon. Lady will see the kind of actions that can lead to prosecution.
Sajid Javid
My hon. Friend has explained well the reasoning behind the recommendation from the PCBS—which, of course, he was part of—and the deterrent effect this change could have should not be underestimated.
Emily Thornberry
I thank the Minister for giving way again; he is helpful in giving me the time because I am genuinely confused about this. If the proposed legislation is to have a deterrent effect and deter the sort of behaviour that was seen before the banking crash, had it been in place at the time, presumably people would have been prosecuted. All I want to know is: which people, and can the Minister give the House some examples?
Sajid Javid
As I discuss the issue I will provide more information on how the measure could work, and perhaps the hon. Lady will judge for herself, given the situation she has in mind, whether the measure would have acted as a deterrent, and whether a prosecution could have taken place.
Sajid Javid
I completely agree with the hon. Gentleman and I think we all hope that the new criminal sanction will not actually have to be used because the offence will act as a genuine deterrent against such recklessness.
Emily Thornberry
If I were a senior banker to whom this law applied, what would affect my decision on whether to behave recklessly? Would it be the thought, “If I do this, there’s a risk my bank and the whole financial system will crash around my ears and I will be seen as personally responsible”, or would it be the possibility of being prosecuted under this new legislation?
Sajid Javid
Both cases would be a deterrent. A key point of the change to criminal sanctions is that they would apply if a senior manager took part in any reckless action—there is a very strong test, as we have just heard—that led to the failure of a bank. It would not be appropriate to perform a legal analysis of what has happened in the past because we do not have the full facts before us, but if a board full of senior managers makes a decision on, let us say, a potential acquisition and they fail to carry out proper due diligence or they deliberately ignore certain risk factors, and that eventually leads to a failure and collapse of that bank, that will be an example of the situation that the new offence tries to capture. It is reasonable to say that, as those senior managers will be aware of the new criminal sanction, which did not exist before, it will bear on their minds when they make those important decisions. The Government amendments in this group will improve standards and the culture in banking.
Cathy Jamieson
My hon. Friend makes a valuable point. It would have stood us in good stead had we had such an opportunity. I have only been a Member of Parliament for a relatively short time, and others will have much more experience, but it seems to me unusual to have so many amendments at this stage of a Bill. External bodies have made significant representations at this stage, which is also unusual and shows the strength of feeling about the issue of banking and its culture. It also shows that people have been thinking about how to future-proof the Bill, not simply to repair damage done in the past, but to ensure that we do all we can for the future. Some people may feel that this has been a tick-box exercise and a part of the process that does not matter as much, and it is rather sad if that has been the case.
We know that we have a huge amount more to do. Only today we have seen the latest news about Lloyds bank being fined again. It is also fair to say that as the weeks and months have unfolded during the Bill’s passage, we have seen various situations emerge. I have written to the Minister on the recent issues on forex, and we have also had the sad events at the Co-operative bank and the outcome of investigations into the LIBOR rigging. Those all show that more issues may arise that will have to be dealt with properly, and we want to ensure that the legislation we put in place is able to do that.
Emily Thornberry
Is my hon. Friend satisfied with the definition of senior bankers as those who would be liable to be prosecuted? Is it sufficiently clear and is it felt that it covers those people who really would be directing proceedings?
Cathy Jamieson
My hon. Friend makes another interesting point. She has already raised the likelihood of criminal proceedings, and in that context the Minister made comparisons with other legislation. I was concerned about the comparison with legislation on corporate manslaughter, which my hon. Friend obviously knows a considerable amount about. We have to ensure that definitions are as tight as possible, so that things do not slip through the net at a later stage. I hope the Minister will be able to provide clarity on those concerns.
We wish to ensure that Lords amendment 41, on professional standards, stays in the Bill. Earlier this year, the Government committed to implementing the main recommendations of the Parliamentary Commission on Banking Standards. Those recommendations included the creation of the new criminal offence of reckless misconduct by senior bankers. We want to ensure that that is as tight as possible. As the Minister outlined, the Government also agreed to introduce a new two-tier authorisation process for bank staff.
Our concern is that the Government have consistently failed to go far enough on the professional standards required of bankers. When the Bill was first introduced, Ministers resisted, on three separate occasions, Opposition attempts to put tougher professional standards in the Bill. Introducing the proposal at an early stage would have allowed us the opportunity to debate and finesse it, if required. At that stage, we included proposals for an annual health check on senior bankers. Indeed, Labour first pushed for a licensing regime with an annual validation of competence during the Committee stage of the Financial Services Bill in March 2012, so we have been pressing this case for a lengthy period of time.
Lords amendment 41 states that there needs to be
“minimum thresholds of competence including integrity, professional qualifications, continuous professional development and adherence to a recognised code of conduct.”
The recognised code of conduct is important. The then Minister, the hon. Member for Fareham (Mr Hoban), opposed the amendment, saying:
“I…argue very strongly that the amendment is not necessary. In fact, it could have unintended consequences.”––[Official Report, Financial Services Public Bill Committee, 1 March 2012; c. 235.]
I cannot recall what those unintended consequences he feared were. Given that the Government have now seen fit to change their view, I am sure they no longer have those concerns.
A similar amendment was tabled again in April 2013 to this Bill and once again it was voted down by the Government. We on this side of the House never give up: if we think something is the right thing to do, we will come back and come back again. We tabled the same amendment again in July 2013, and again the Government failed to support it. We tabled the amendments because we believe that the persons we are talking about must have adequate standards of competence and integrity. The debate on managing the process and legislating for it may seem technical, but it is important for people in the real world to know that we are trying to introduce reforms. There has been a degree of discussion across the House, and I accept that, but people need to know that we are trying to introduce reforms that complement the attempts to change the culture of the banking sector.
Mr Tyrie
I have pressed the Bank of England on that issue with my Treasury Select Committee hat on. A subsequent exchange of letters between the Governor and the Chancellor makes it pretty clear that by the end of next year the issue will be resolved and responsibility will lie with the Bank. Indeed, I think that for anything else to happen, given that exchange of letters, would be considered extraordinary, unless the review came up with some major obstacle that no one had previously spotted.
Another important assurance has been given in respect of so-called special measures. We proposed the establishment of an intermediate tool between enforcement at one end of the spectrum and day-to-day supervision at the other, which regulators could use to keep an eye on banks and help to improve standards. The Americans have something of the kind, which is known as a memorandum of understanding. The Government said that the statutory underpinning that we proposed would not be necessary, but the regulators have now announced that they will produce a full and detailed guidance note after consultation, which will set out how the new tool will be created and administered.
Emily Thornberry
I am listening with great interest to the hon. Gentleman. As he may know, the United States operates a regime called the deferred prosecution agreement, under which an institution accepts that it has committed an offence and agrees to pay a large fine on the understanding that it will not be prosecuted. Part of the deal is that the institution must allow auditors in, and must change its behaviour. Is there a similarity between the DPA structure and the structure the hon. Gentleman is describing?
Mr Tyrie
In some cases, the “deal”, as the hon. Lady called it, is accompanied by a memorandum of understanding, in order to achieve exactly the result that we intend by means of special measures. However, the primary purpose of special measures is to provide a tool that need not lead to escalation and full enforcement. That is a step back from the example given by the hon. Lady.
We were also assured that there would be a review of the system of enforcement decision making, which is currently very unsatisfactory. We had proposed that the regulatory decisions committee should be separated further from the enforcement division of the Financial Conduct Authority and given statutory autonomy in relation to its decisions. The Government did not accept that proposal, but they did accept the need for the issue to be re-examined and the need for a fresh and independent pair of eyes to look at each enforcement action before it proceeds, and a review is now to be carried out.
The important issue of remuneration was raised, later in her remarks, by the hon. Member for Kilmarnock and Loudoun. The PRA has committed itself to aligning the maturity of the rewards for bankers with the maturity of the risks that they have incurred. That is crucial. It is the collecting and taking of bonuses in return for the creation and selling of a new financial instrument or tool when, although the full risks will not mature for many years, the individuals concerned have had the money in advance that has created so many misaligned incentives and so much poor behaviour. Those individuals need to know, even several years later, that there may be a clawback, or, better still in most cases, that their bonuses are deferred. They need to know that the product had better be robust enough to survive the test of time before they start selling it.
Let me now mention a few measures that the commission did not succeed in inserting in the Bill. I shall not describe any of them in detail—although I note that when I have tried to deal briefly with the measures that I have described so far, Members have intervened to ask me about a number of them.
Both the Select Committee and the commission concluded that the governance of the Bank of England was still in a mess, and would have to be sorted out. The Bank of England still has no board worthy of the name, and the cross-cutting lines of responsibility and accountability between various new institutions are, to put it mildly, very confused. One of the most senior people in the Bank told me recently that he thought the situation was like the Schleswig-Holstein question: the former Governor probably understood it, and one other guy had forgotten it—and the third was this person himself, whose name I had better not reveal on the Floor of the House.
We also failed to achieve change with our proposal to abolish United Kingdom Financial Investments Ltd. UKFI has been exposed as a fig leaf: it seems to be of very little practical use. The Labour Government’s intention in introducing it was good, but when the Government want to intervene directly in the activities of institutions they simply do so, and UKFI does not seem to be performing the “buffer” function that was intended for it.
We argued that the regulator should have a duty to compensate whistleblowers who had been disadvantaged by their firms. There are still risks, at least perceived risks, for whistleblowers, which will tend to deter them. It is a remarkable feature of the current crisis that there has been so little whistleblowing, and I am not yet convinced that we have managed to sort the matter out.
Mr Tyrie
I think the banks have discovered that the scale of the damage done by the revelations and the scale of the fines that are now being imposed are systemic in implication for their institutions and that has shaken them up a lot. But I do think the culture at the top of our banks is changing. The task of our legislation is to entrench that change for a generation. We have had this crisis. The horse has bolted. What we have got to do now is devise a stable door that can keep the next horse in.
Emily Thornberry
The hon. Gentleman mentions LIBOR. In respect in particular of fraud, does he agree that if an individual working within an institution is behaving dishonestly for the benefit of that institution, the institution itself should be liable? If the law were to be changed to allow that, there really would be institutional change.
Ian Swales
I will keep my remarks relatively brief. Neither of the two major parties has too much to crow about in this area, because the regulatory system is a product of both their Governments over time. However, at least this is one area where the Leader of the Opposition and the shadow Chancellor have said sorry for something they have left behind.
I am pleased with the work done by the Banking Commission, and I pay tribute to my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) and my colleague Baroness Kramer for the work they have done on it. I am delighted that the Government have, perhaps kicking and screaming, at last agreed to adopt the vast majority of the proposals. I am particularly delighted that the Bill puts in place powerful measures on ring-fencing, as the Liberal Democrats have been arguing for that for years. Not only was it in our 2010 manifesto, but it was on the front page, so I am pleased to see it happening.
The background to this is clear: taxpayers should not be held to ransom by these giant organisations, particularly for high-risk activities—casino banking, as it is sometimes called. We must also remember that a lot of these institutions are highly international, so the UK taxpayer is having to stand behind organisations that have a lot of activities overseas—that, too, does not seem right. So it is good that all these measures are being introduced.
We have seen banks that used to be on the side of customers, both individuals and businesses, increasingly behave very much on the side only of themselves. We have seen scandals involving payment protection insurance, LIBOR, foreign exchange and interest rate swaps, which is the one I particularly wish to highlight. I made a speech on that a few weeks ago in this House. I said that the banks appeared to be moving at a tortoise-like pace when we were not having debates and suddenly acted like hares for a few days when we did have them. I can report that they have become tortoises again since that debate a few weeks ago. Constituents of mine who were expecting repayments in very quick time are still waiting, so I hope the Minister will keep the pressure on, although that is not strictly relevant to today’s debate. We have also seen the Co-op bank scandal and predatory activity by banks in the corporate restructuring area—that is the current scandal and I am sure we have a lot more to hear about it.
The Government have been acting on matters such as transaction levies, and making sure that fines for institutions leave the industry and do not just go around in a magic circle. The current round of fines is being used to help pay for the military covenant, which has to be a great idea. The Secretary of State for Business, Innovation and Skills, my right hon. Friend the Member for Twickenham (Vince Cable) is trying, although it is sometimes a lonely furrow, to do something about high pay: shareholders are being given binding votes on their company’s pay policy; companies are being forced to publish single figures for executive deals; and companies are being encouraged to inject more diversity by hiring non-executives from a broader pool of academics, public servants and lawyers. So, to a limited extent, the Government are trying to do something about that.
I particularly wish to discuss Lords amendment 41, which deals with professional standards. A joke doing the rounds when the banking crash happened named the four chairs of the big banks and asked which of them and Terry Wogan had a banking qualification. Of course, the answer is Terry Wogan and none of the others. That illustrates that for too long we have had under-qualified people in important positions. The hon. Member for Bolton South East (Yasmin Qureshi), who is not in her place, was talking about the legal, medical, pharmaceutical and accountancy professions, which have professional standards of the type she would like to see. However, it is important to note that those standards are not set and regulated in this place; they are set by the professions themselves, which have a huge vested interest in ensuring their own high reputation. Those professions also carry out much more specific and autonomous work in terms of knowing whether an individual has transgressed or not. It is much more difficult in large organisations with long decisions chains to say who is actually responsible for each individual activity. However, I urge the banking profession to think a lot more about how it can enhance its reputation, which, let us face it, is pretty much at rock bottom at the moment. It should think, “How can we have professional standards which are enforced? How can we ensure that people are kept up to date with continuing professional development and that people will be struck off?” However, that is increasingly a role for professional bodies such as the Chartered Banker Institute to be thinking about; it is not something for legislation in this place.
I welcome the work of the Banking Commission and the Government’s response to it. I welcome the extra powers that regulators are going to have as a result of this legislation, but the onus is on them to use those powers. I would like the Minister to say, at some point during today’s debate, how we are going to scrutinise the regulators to make sure that they use their new powers to their full extent.
Emily Thornberry
It has been said that one of the great innovations of this Bill is the introduction of the offence of reckless banking. It is not beyond our imagination to think that in 2015 the measure will be promoted on many a doorstep by people who perhaps do not fully understand what it is that is being introduced. It is one of those proposed offences that promises a great deal, but delivers very little indeed. There is nothing like it in existence in English law, and I will go on to explain why that is in a moment.
Emily Thornberry
There are other things that can be done, and I shall briefly touch on some of them. May I begin with the difficulties that exist in relation to this offence? Under the Bill, it would be an offence for a senior manager recklessly to take a decision. I appreciate that some of the additional 175 pages that have been added to the 35-page Bill have been to backfill exactly what a senior manager is and how they will be defined. That is clearly an improvement, and it is unfortunate that it was even suggested that the Bill would be sufficient in its original form. One must remember that even if a definition of senior manager is now one with which we can all be happy, there have been banks that have been brought down by people other than senior managers. Nick Leeson from Barings bank comes to mind, as does the £2 billion that was lost to UBS by Kweku Adoboli.
Mark Garnier
I am fascinated that the hon. Lady chooses to use Nick Leeson as an example, because he went to jail, in Singapore, for four years.
Emily Thornberry
The point is that he was not a senior manager and he brought down a bank. This measure will not solve the problem of banks being brought down. An offence of reckless banking that will apply only to senior managers is not by itself sufficient, which is why I want to go on to say what I think should be done instead.
Mr Tyrie
I think the hon. Lady is misunderstanding the intentions of each bit of legislative change. The primary purpose of this measure is to change bankers’ behaviour. It is not primarily to protect banks from being brought down. That task lies with ring-fencing and a range of other proposals, particularly with all the structures being constructed around bail-in and resolution. It does not lie with the criminal offence.
Emily Thornberry
With respect, I am even more confused than before. What is the point of bringing in an offence that will change the behaviour of bankers, but will not, by itself, defend the banks? As I understand it, if the behaviour that we seek to stop is reckless banking, the reason that it should be criminalised is in order to stop banks failing and the financial system crashing.
There are other difficulties with this offence, which include recklessly to take a decision or to fail to prevent the taking of a decision that results in the failure of a bank. That sets a high threshold and, as has already been pointed out, it is not clear who, of those who may have behaved in a reckless way in our banks and who may have brought down the banking system before, would have been prosecuted. The Minister has not been able to assist us as to who might have been prosecuted under the offence. [Interruption.] It is unfortunate that the Minister is distracted at the moment, but the point I am making is important, and I hope that he will be in a position to address it.
It is difficult to prove that aspect of the offence, and prosecuting it would be a risky undertaking for the prosecuting authorities who will be expected to invest public money in prosecuting such matters. There is no point in putting something in legislation that can be discussed on doorsteps but will never be used to prosecute. We have seen the Serious Fraud Office struggle with high-profile, high-risk prosecutions. Too often such prosecutions end in shambles because of the behaviour of the Government, which have cut the SFO’s funding from £53 million in 2008 to £30 million by the end of this Parliament. Differences can be made to the behaviour not only of banks but of businesses generally. May I just add that of course I support Labour’s position on a stringent licensing regime for bankers, the imposition of a fiduciary duty of care on financial-sector staff for clients and customers and its call for a dedicated financial crime unit. In a moment, I will move on to what will work better, but before I do that, I give way.
Guy Opperman (Hexham) (Con)
Let me take the hon. Lady back to her last point on prosecutions. I speak as a former prosecutor of serious fraud work, although not for the SFO. Either there is the 51% test of prima facie evidence at the start of the case, or there is not. How the case then ends up, once the matter has been examined by a jury, is a matter for a jury and occasionally a judge. She is being a little harsh on the SFO, which is doing a fantastic job under very difficult circumstances.
Emily Thornberry
I am more than happy to put it on the record that I am a critical friend of the Serious Fraud Office. Sometimes the emphasis is more on the word critical, especially after what we have seen in the newspapers today, with the crash of yet another serious fraud case because the SFO asked an agent, which clearly had a conflict of duty, to do its investigation. That is yet another mistake that the SFO has made. If we want the SFO to turn a corner, we need to do more than show good will. This Bill provided us with an opportunity to change things. It is unfortunate that more attention was not paid to changing corporate liability.
I listened carefully to what the hon. Member for Chichester (Mr Tyrie) said in his contribution, and I undertake to send him, as a Christmas present, Labour’s policy paper in relation to fraud. If we can change corporate liability to ensure that if an individual within an organisation behaves in a way that is dishonest and to the advantage of the larger organisation, we can prosecute the organisation, unless it can show, in the same way that it can under the Bribery Act 2010, that it has in place controls over its staff, it would have an impact on our banking system. If I may say so respectfully, introducing such legislation will have a greater impact than the measures proposed in this Bill. If we were to introduce a different form of corporate liability, we could increase the fines hugely, and that money could be ploughed back into the Serious Fraud Office. Then we would have an organisation of which people in the City of London would be afraid. They would be prepared in most circumstances to come to an agreement with the SFO to have a deferred prosecution agreement.
DPAs will not ever exist under the status quo. The DPA legislation has been passed but, as I understand it, no one has come forward to say that their company has been doing wrong, that they want to admit that, that they will pay a fine, that they will change their ways, that they want auditors to come and see how they are behaving and that they will point out the individuals who have been behaving in a criminal way. I respectfully submit that that is how to change the culture. That is how we ought to be working and I look forward to discussing it with the hon. Member for Chichester once he has read the Christmas present I intend to send him. If elected in 2015, Labour intends to introduce its own economic crime Act, and I hope that we will take the issues further and develop them. Obviously, I would be interested to hear the hon. Gentleman’s reactions.
Mark Garnier
I intend to talk principally about Lords amendment 41, but before I do so let me echo the comments made by the Chairman of the Parliamentary Commission on Banking Standards, my hon. Friend the Member for Chichester (Mr Tyrie), at the beginning of the debate. He said that he was grateful to the Government for moving such a long way along the road towards the commission’s recommendations. That is a tribute to the organisation that he chaired extraordinarily well for about 18 months and that came up with such sound proposals. It was a great honour for me to be part of that process. It also says a huge amount for the Government that they have taken great heed of what the commission said and have moved a great deal further towards implementing the proposals.
On Lords amendment 41, I suspect that there is not too much of a difference of opinion in the House about what we are trying to achieve through the Bill—that is, a change in the culture of banks. I take slight issue with the hon. Member for Islington South and Finsbury (Emily Thornberry), because it is not just about preventing banks from collapsing. It is about getting better standards and better service for consumers. Many constituents will complain about their treatment by banks and that has nothing to do with criminal matters; it is simply about the culture and how certain people address other people in their everyday lives. We want to drive that out and to ensure that the banking culture is one of which we can be proud and which consumers can trust enormously.
Women and the Cost of Living
Emily Thornberry Excerpts(11 years ago)
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Gloria De Piero
Absolutely. That is why we have pledged to tackle the abuse of zero-hours contracts. Flouting of the minimum wage is also a particular problem in the care sector.
Emily Thornberry (Islington South and Finsbury) (Lab)
My hon. Friend is making a powerful speech, and I congratulate her on it.
A high proportion of children who live in poverty in my constituency have unemployed parents, and a high proportion have only one parent. The cheapest full-time nursery place costs more than £160 a week; it takes the vast majority of a weekly minimum wage to pay for that alone, before paying rent. This is the Britain that the Government have given us.
Gloria De Piero
I have nothing to add to what my hon. Friend has said. She has put it perfectly.
The next Labour Government will offer a simple deal to employers: 32p off tax on every pound that they spend on paying workers the living wage during our first year in office. Tackling the cost-of-living crisis means taking action to increase wages and keep the benefit bill down.
Living Standards
Emily Thornberry Excerpts(11 years, 2 months ago)
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Rachel Reeves
The shadow Chancellor said in his conference speech two years ago that VAT should be reduced from 20% to 17.5% as an emergency measure to stimulate the economy. The reality is that since then the economy has flatlined and we have continued to argue for that, but he has also said that as the economy slowly begins to move into recovery mode—we hope that the growth over the past two quarters will continue—the emphasis should move to infrastructure investment. Were we in government today, our priority would be the £10 billion of infrastructure investment that the International Monetary Fund has called for.
Emily Thornberry (Islington South and Finsbury) (Lab)
May I bring my hon. Friend back to the real-life situations that real people face? Is she aware that in Islington the cheapest subsidised place for full-time child care costs £164 a week? The minimum wage is £212 a week and the London living wage is £272. Is that reality not why it is so hard for so many people in Britain today to make ends meet?
Greg Clark
It is 20 months before the election and the Labour party cannot say whether it would keep or reverse the rise in VAT.
The Labour party established the beer duty escalator, the council tax escalator, the fuel duty escalator and the biggest escalator of them all—the deficit escalator. The deficit trebled in its last two terms in office and that all has to be repaid by the hard-working people of this country. The facts are stark: the deficit that we inherited equates to about £6,000 per household every year. Of course it is painful to find an average of £6,000 per household in revenues and savings, but that is the effect of the previous Government’s profligacy.
Greg Clark
I will give way to the hon. Member for Islington South and Finsbury (Emily Thornberry) because she has been patient.
Emily Thornberry
I wonder whether I might drag the right hon. Gentleman back from the political knockabout to the realities of life. A point was made earlier about the number of working people who are now dependent on housing benefit. Is he aware that the cheapest four-bedroom flat to rent on Rightmove yesterday cost £440 a week? Given that the minimum wage is £212 a week, how can people live?
Greg Clark
Where has the hon. Lady been for the past three years? We have reformed the planning system. Since the national planning policy framework was adopted, which I had something to do with, planning permissions for new homes have risen by 22%. That is the action that is required if the problems that she identifies are to be solved.
The Labour motion talks about the standard of living, but no Government in living memory have done more to scupper the standard of living of ordinary working people in this country than the last Labour Government.
Alison McGovern (Wirral South) (Lab)
I respect the hon. Member for Croydon Central (Gavin Barwell), but with respect, I understand that Croydon put its council tax up because of a lack of Government funds. Although we would all like to see living-wage councils, we need to recognise the extreme pressure that local authorities are under because of this Government’s ferocious cuts to them.
On skills and education, which I shall come to later, I agree with my hon. Friend the Member for Wigan (Lisa Nandy) on the need for a history lesson. It is absolutely right that we focus on the needs of young people. However, Government Members in this debate somehow seem to have forgotten that a previous Labour Chancellor of the Exchequer had to rescue modern apprenticeships from the history books in order to give this country a proper industrial skills policy again. I am glad that Government Members support that and that it has been kept going, such that young people will still have the chance to get an apprenticeship in this country, but let us not pretend that we did not suffer all those years until 2003, when that proper industrial skills policy was put back.
On the broader question of living standards, if the Government think that they are out of the woods with this recovery or that all our problems are solved, then good luck to them. I ask the Minister just to speak to a few people on low and middle incomes in Merseyside, as he has already kindly agreed to do the next time he is there. I really do not think that those people are feeling better off at all. They do not feel better off, and they are not better off. In fact, I think that the Chancellor might quietly agree with me on that. Before the summer, I asked him at Treasury questions:
“Does the Chancellor believe that since he came to office the average British family is better off after inflation, yes or no?”
I was hoping for a straightforward answer from him. Instead, I got this:
“I think that they have better economic prospects than they did under the previous Government.”—[Official Report, 26 June 2013; Vol. 565, c. 333.]
Alison McGovern
Quite right! Jam tomorrow, but never jam today. People in the Wirral will certainly not put up with that, and I doubt that anyone in the rest of the country will either.
I have spent much of the summer talking to people about zero-hours contracts. They are a growing issue for my constituents and others. My hon. Friend the Member for Liverpool, Wavertree (Luciana Berger), my right hon. Friend the Member for Knowsley (Mr Howarth) and I have conducted a survey in order to listen to people with experience of such contracts. Given the stories that we heard from people who simply did not know what their wage packet was going to contain at the end of each week or month, I simply cannot accept the argument that any job is better than no job. That is like saying that it is better to work for £1 an hour than to have no job at all. I cannot accept that argument. I cannot accept an economy that is devoid of standards.
This is not a proper recovery. Unless it reaches those on low and middle incomes, we shall not see the kind of economic recovery that we need. Instead, we shall see the kind of hysteresis and waste of talent that my hon. Friend the Member for Wigan has described. Zero-hours contracts affect young people; they are a blight on their prospects. Those people need a chance to build their skills so that they have the potential to have a good career. Will the Minister answer these questions? What will he do if the number of hours worked per person in the economy does not increase? What will he do if people are still underemployed in a year’s time? How will he address their need to increase their pay packet so that they can afford the prices in the shops?
On inflation, I repeat that I still cannot quite believe the Prime Minister’s response at Prime Minister’s questions today to the question about school uniforms. I remember only too well the situation in my own family. There were three of us, and September was an expensive time. My mum used to worry that we had grown. If the Prime Minister has not experienced that, or heard about it from families in his own constituency, let me tell him that it was extremely stressful. Unfortunately, the previous Governor of the Bank of England was forced to write to the Chancellor of the Exchequer citing the VAT increase as part of the cause of the inflation that we have experienced. So, although I accept the points that have been made about the global situation, the Government’s policy has not exactly helped to bring down prices.
Emily Thornberry (Islington South and Finsbury) (Lab)
It is a great pleasure to follow my hon. Friend the Member for Wirral South (Alison McGovern) and the hon. Member for Croydon Central (Gavin Barwell), who have both made thoughtful contributions to the debate. It is a great shame that more Members are not present on the Government Benches. We seem to be running out of speakers rather early, which speaks volumes.
The Conservative Government seem quite happy to crow at great length about how well the economy is doing, but they seem to take very little interest in the question of living standards. They crow about how well the economy is doing, we hear a great deal of briefing on the subject and we endure a great deal at Prime Minister’s questions, but the truth is that no one believes them. That is because people’s lives do not reflect a growth in the economy. For ordinary people, life is getting harder, not better. People do not believe that next year is going to be better than this year; they believe that it is going to be harder. And I am afraid that, at the moment, it looks as though they are right.
That is partly because services are being cut. It is partly because people are having to queue to see their GP. It is also harder for older people to get social care or to see a consultant. After-school clubs are being cut, youth groups are being closed and there are restricted hours for day centres. Life is also more difficult for people because they no longer have access to the kinds of services that they have been taking for granted, which are being cut by the Government. Primarily, however, life is harder because people feel that their wages and benefits are not keeping up with inflation. The reason for that is that they are not: they are not keeping up by a long chalk.
Those people who are lucky enough to be in work are often not working sufficient hours. They might be working for their poverty, but they are not earning enough to be able to rely on their own wages. They also have to rely on benefits and tax credits. Many of those on low wages who work full time also have to rely on benefits and tax credits, especially in areas such as the one I represent. In central London, it is simply not possible to live on the average wage without relying on benefits to help to pay the rent and to help with child care costs.
Much has been said about what a great idea universal credit is, and about how we should have one level of benefits for everyone across the country, including those in central London. No allowance is made for the fact that rents and child care costs are so much higher in areas such as this. People on average wages in central London rely on benefits too. That is the truth, and if universal credit is introduced in the way the Government propose, I do not know what is going to happen to those people.
Charlie Elphicke
I appreciate that the hon. Lady is making a sincere and heartfelt speech, but the difficulty is that every prescription from Labour involves more spending and more welfare. The effect of that would be to drive up interest rates, which would harm the recovery and harm the job creation that could lead to increased wages and a strengthened recovery. The polls show that that is not a prescription that this country finds credible.
Emily Thornberry
The hon. Gentleman raises a point that divides us completely. Those of us on the Labour Benches believe in investing money in housing, for example. I have just mentioned the huge rents that people have to pay, and how difficult it is for people on average wages to live in London without relying on housing benefit. If we could build more houses in central London and the south-east, house prices would not be as high as they are now and people would not need to rely on benefits in the way that they do. That makes sense. If we build homes, we also provide jobs and infrastructure, lower our dependence on housing benefit and lower housing prices generally. We will offer hope and opportunity for the next generation. I have no idea why the Government will not do this, but they are refusing to invest properly. We will need a new Government before that happens.
Ben Gummer
There is absolutely no difference between us on whether there is pressure on living standards, as it is completely obvious to all Members that there is. Where there is a difference relates to prescriptions. The hon. Lady rightly talks about housing demand in the south-east, but she knows perfectly well that, even if we start building tens of thousands of houses in the south-east this year, it will take many years before it feeds into reductions in rent. What prescriptions—costed prescriptions —could the hon. Lady and her Front-Bench team bring forward now to ease living standards?
Emily Thornberry
I am sure that the hon. Gentleman, who I know takes this issue very seriously, will have seen the policy development happening in the Labour party and the seriousness with which we are putting this issue as a front-and- centre policy for us as a future Government. We know the difference that that will make to the economy. When it comes to investing money, this is what we should invest it in. I fully support our Front-Bench team on this and I believe it is the right thing for this Government to do. In the end it would save us a great deal.
I do not believe that we can just build tens of thousands of homes. We need to get out there and start building seriously. We need to start building now and, frankly, I think it is disgraceful that, given the recession that we are having to endure, this Government have, I believe, the worst house building record of any Government since the 1920s. That is outrageous. This was not the original purpose of my speech but since the hon. Member for Ipswich (Ben Gummer) has touched this particular nerve—I apologise for giving it to him with both barrels—I simply cannot see the sense in the Government’s current policy of putting their fingers in their ears and saying “La, la, la, la, la, la, la.” and thinking that this problem will somehow go away. It will not go away. The only way to solve our housing crisis is to build more housing.
Returning to my original brief, those in part-time work do not earn enough money to be able to afford a good standard of living and that applies even to some of those in full-time work, so some have to rely on benefits. We have seen that 60% of new jobs since the last election are in the low-paid sectors of our economy—retail and residential. Between 1997 and 2010, 25% of the new jobs established were in those sectors. Why is this difference occurring? A Resolution Foundation study has shown that 4.8 million Britons—20% of all employees—earn below the living wage, which is a leap from 3.4 million, or 14%, at the height of the recession. Why is that happening? Why have those on average wages lost an average of £1,500 a year?
It is happening because our economy is unfair and unbalanced. What are the Government going to do about it? How are they going to address the problem? They cannot simply keep sailing on and hope that things are going to be all right. Things are not going to be all right. The evidence shows that there will continue to be people who just manage to grab on to work by their fingertips, but not by enough for them to be able to sustain themselves and their families. Even those in full-time work, particularly in areas such as London and the south-east, cannot afford to live without being supported by benefits. In the end, this is unsustainable; we must raise wages in real terms.
I hold a women’s listening panel every year. This year, it is on 13 September at St Mary’s hall in Upper street, and all my female constituents are welcome. I carried out a survey last year and 89% of the constituents who replied said that their income had gone down in the previous year; 32% said their rent had gone up and 70% said it was difficult for them to make ends meet because of their food and fuel bills. They particularly mentioned the expense of child care in Islington. The problem is not just the obvious and manifest cost of rent. The cost of child care—£164 a week—is so expensive as to make it impossible for someone on the minimum wage of £212 a week to put a child into full-time child care. These things do not make sense.
There are many single parents in my constituency who want to get into work, but who simply cannot make ends meet when it comes to getting to work, placing their children in child care, being able to pay the rent and being able to pay their way. This is the trap that so many people find themselves in, and there has to be an answer to it. Even getting someone to pick the children up after school and look after them for a few hours until the person finishes work can cost £92. How can that be all right for someone on the minimum wage of £212 a week? It does not make sense; it does not add up.
Those who live on benefits and do not work at all—those on jobseeker’s allowance—have, of course, seen a rise in their income of 70p a week. I do not know whether the Exchequer Secretary has ever spoken to anyone who lives on jobseeker’s allowance and gone through with them how they spend their £70.70 a week? If so, he would know how difficult it is for them to make ends meet at the moment. It seems to me that we have heard a great deal of political knockabout today when what we should be doing is listening to real people out there and how they live their real lives. I invite the Minister and his boss to come to my women’s listening panel. I will not tell the women that they are Tories, so they will be safe, and we will finesse the fact that they are the only men in the room. They should listen to what is said, listen to these women’s stories of how they are trying to make ends meet in these difficult times. Year in, year out, it gets worse and more difficult for them. The Minister may talk about the economy getting better, but he should listen to what is going on in real life.
Fiona O’Donnell (East Lothian) (Lab)
It is a pleasure to follow my hon. Friend the Member for Swansea West (Geraint Davies), and I will try to irritate Government Members less. Given his track record, it will, I think, be impossible to irritate them any more.
I am particularly pleased today to welcome back my hon. Friend the Member for Leeds West (Rachel Reeves), the shadow Chief Secretary. It is great to see her back. Only the hon. Member for Spelthorne (Kwasi Kwarteng) could describe maternity leave as a long enjoyable break. That takes being out of touch to a new level.
I am pleased that so many Opposition colleagues have focused on the impact of falling living standards and access to employment on women in particular. I am sure that all Members will have received from Asda today the Asda Mumdex, and I am sure that my hon. Friend, as a first-time mum herself, will be very disappointed to see that first-time mums reported to that survey that they are twice as worried about financial pressures than about their own health.
Such stories do not talk in statistics, percentages and GDP, but they show the real impact of the economic crisis on people’s lives and on what that is doing to families. People often say that a happy mother is a happy family. A happy father is pretty important in that picture, as is a same-sex partner or, as will soon be the case, a same-sex wife or same-sex husband. We need to examine the human cost of this crisis and what it is doing to a generation of children growing up.
I am sorry that we have not heard much today from Government Members about investing to reduce child poverty. What are they going to do about that? They are happy defending their own record and attacking ours, but I suspect that our constituents want to hear, in the 37th month in which their income has dropped in real terms, what the Government are going to do about it. All sorts of barriers are involved here. We all know that employment is a means to improve the well-being—the income—of a household, but that will not always be so.
The other figure in today’s Asda Mumdex that stands out is that 74% of mothers say that they do not think that it would be financially worth their while going back to work because of the cost of child care. The Government really need to address that if they are serious about helping mothers back to work. I am looking forward to going to my local Asda store in Dunbar on Friday to sit down with a panel of mothers and listen. My hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) has also recommended to the Minister that he does the same. The Government need to sit down with mothers, as do we all, to hear the stories of how this economic situation is having an impact on their lives.
I was pleased that at today’s Prime Minister’s questions my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) raised the issue of school uniforms, which has arisen again. It resonates with many of us because of our memories of knowing that pressure. Last year, I was horrified to hear the story of people from the high-street payday lender, The Cash Store, standing outside a primary school in my constituency giving balloons to children. Fliers had been put up around the area beside the school saying, “Need a school uniform. Come to us.” That is shocking. This week, we have heard about Wonga’s profits for the quarter. We talk about “legal loan sharks”, and that is the right term for them, because they are predators. They sniff poverty in the way that a shark sniffs out blood, and then they home in and profit from that poverty.
I am not saying that I want to make this debate completely about payday lending and regulation—of course there is a need for people who have no assets to have access to credit—but the Government must try to get a grip on this area. The debt charity StepChange has seen a dramatic increase in the number of my constituents seeking help with debt because of problems with payday lenders—the figure went up from 10% to 28%. So I appeal to the Government to do more; they are so concerned about debt—rightly—but why are they not more concerned about unsustainable debts that so many of our constituents are taking on? [Interruption.] I thought someone wanted to intervene, but it was just another Government Member leaving the Chamber.
Emily Thornberry
Would my hon. Friend like to join me in noting that only four Government Members are in the Chamber—a Whip, a Front Bencher and two on the second row—whereas a large number of Opposition Members wish to speak?
Fiona O’Donnell
I am grateful to my hon. Friend for that remark. I am afraid that I have just been very unkind and tweeted that not only were there only three Government Members—I think it was—in the Chamber, but the Opposition Whip had fallen asleep. [Interruption.] I should have said that the person sitting in the place usually occupied by the Government Whip has fallen asleep—I say that for the benefit of Hansard.
Fuel bills are a huge problem for families, having risen by £300. The Prime Minister promised this country that he would do something about excessive rises in energy prices, and he has not made good on that promise. The Government parties ask what we did about the energy companies, and I am proud to share the fact that in my sock drawer at home I have a pledge card from the 1997 general election. One thing that Labour did was to use its windfall tax on the privatised utilities to invest in creating jobs. That is the difference between Government Members and Labour Members.
Corporate Structures and Financial Crime
Emily Thornberry Excerpts(11 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Emily Thornberry (Islington South and Finsbury) (Lab)
In beginning this debate, my hon. Friend the Member for Bassetlaw (John Mann) pointed out that the responsibilities of the two Front Benchers relate to different Departments. The reason why I am speaking on behalf of the Opposition is that it is our view that too many of the matters under discussion are crimes, should be crimes, should be prosecuted and are not being prosecuted at the moment. My presence underlines the emphasis that the Opposition put on that.
We welcome the fact that tax evasion was on the agenda at the G8 and the Prime Minister is right that we need to pierce the corporate veil. Lack of transparency enables criminals to hide behind shell companies and launder the proceeds of crime. In our view, however, the Prime Minister left the heavy lobbying until too late and the international commitment to breaking down corporate secrecy was weak. In fact, as my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) has said, it was feeble. The G8 members only agreed to consider national registries of the beneficial ownership of companies, which, to be frank, is very little commitment at all.
What is the Government’s commitment to that registry? Will it be public? The hon. Member for Banbury (Sir Tony Baldry) has said that the Prime Minister is on record as saying that he wants it to be public, but what does that mean? Will it be rigorous?
Every legal entity is ultimately controlled by a natural person—somebody who lives and breathes and who can go to jail if they do things wrong. Will there be a requirement that the information registered on beneficial ownership always includes a natural person? What penalties will there be for failing to supply the required information? Will there be an obligation to record the owner of bearer shares where the owner is not registered and the issuing firm does not track subsequent transfers of ownership? Will there be an obligation for companies that use nominee directors to reveal on whose behalf those directors are working?
We are told that the Government are reviewing all of this, but it seems to me that there is plenty of wiggle room. Will there be an obligation on the part of the registry to carry out due diligence on the information it receives? In practical terms, will Companies House have the resources to do that? Past studies have revealed that Companies House has not even had sufficient resources to routinely check company directors against a list of disqualified persons.
Will Her Majesty’s Revenue and Customs have the resources to investigate? HMRC currently faces £2 billion of funding cuts this Parliament, leading to a further 10,000 job cuts. Will the Crown Prosecution Service, also cut by more than 27%, have the resources to prosecute? Will the Government strengthen the regulation of corporate service providers that set up sham companies and straw-men directors? We do not know. Will we be told, and if so, when?
What we do know is that a future Labour Government will bring an end to the era of tax smoke and mirrors. As the shadow Chancellor, my right hon. Friend the Member for Morley and Outwood (Ed Balls), and the shadow Exchequer Secretary, my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell), have set out in Labour’s policy review on corporate tax, the Government should ensure that HMRC has the power, resources and capacity it needs. They should also explore how their general anti-abuse rule can be strengthened. The Government should also deliver internationally agreed reporting rules so that large multinational companies have to publish the key pieces of information that people need to assess the amount of tax they pay.
We also need to look at the channels through which the laundered money goes. Of the 17 banks analysed by the FCA, half were found not to have proper processes to prevent money laundering. Four of those were UK banks. I was disappointed that the FCA did not name those banks and have written to it asking it to do so.
Many Members have referred to last year’s US Senate report, which found that HSBC had been used to launder the money of Mexican drug lords. It called HSBC a conduit for
“drug kingpins and rogue nations”.
The US Department of Justice fined HSBC £1.25 billion for money laundering. I am not aware that the UK authorities have taken any action on that, beyond requiring an improved monitoring regime. Of course, the chairman of HSBC at the time became the Minister for Trade and Investment in this Government and continued to be so until recently.
Whether it is LIBOR rigging, money laundering or sanctions evasion, the UK has been slow to investigate British banks. When it has punished them, the fines have been dwarfed by those imposed by the US. For example, Barclays was fined £101 million in the US for LIBOR rigging, whereas the Financial Services Authority in the UK fined it £60 million and the Serious Fraud Office is still investigating. The SFO prosecuted only 20 cases last year and convicted 14 individuals. In the past two years there has not been a single corporate prosecution.
Emily Thornberry
I am getting to that. I am grateful to my right hon. Friend.
Is it any wonder that KPMG has just reported that in the UK, fraud cases totalling more than £500 million were recorded in the first half of 2013, which is up by more than a quarter on the previous year?
We need a change of culture in our law enforcement agencies. We must equip them with the tools and resources that they need to get on the front foot. Under English law, companies are criminally liable only if it can be proved that a director was personally involved in the wrongdoing. That is an extremely high threshold—a problem to which the hon. Member for Wells (Tessa Munt) referred.
There is a good case for holding companies vicariously liable for their employees’ economic crimes, unless they can demonstrate that they had adequate compliance procedures. The last Labour Government did that in relation to bribery with the Bribery Act 2010. We want to build on that, but this Government want to water it down. They say, for some reason, that rules against bribery are red tape. That stopping people bribing one another can be seen as red tape is beyond belief.
If we change the law on corporate responsibility, we may see an increase in the number of companies that are prosecuted, so we must have a penalty structure that is worthy of receiving them. The highest fraud fine to result from an SFO prosecution is £2.2 million. The highest fine clinched by the US Department of Justice is larger than $3 billion. Why do we not introduce a system in which sentences are based on a percentage of the company’s turnover over the past three years?
Although the SFO’s problems are not entirely down to under-resourcing, resources are important because these crimes are expensive to investigate. Last year, the SFO’s budget was £34 million, compared with £40 million in 2009-10. In 2014-15, it will fall to only £30 million. It is so short of money that it has to go cap in hand to the Treasury whenever it wants to take over a major prosecution. That at least gives the impression that the Chancellor has a secret veto on whether fraud investigations take place.
The US approach of topping up the funds of fraud prosecutors is much more appealing. Where possible, confiscated assets are returned to the victims. The proceeds from the many cases in which the victims cannot be traced are poured into a central fund. Each year, teams of prosecutors bid for a portion of that fund for asset tracing and law enforcement investigations. We have the beginnings of such a system in the UK. We could extend that and put large fines or at least part of them into the pool as well. In these austere times, we need to explore such alternative means of funding.
Stephen Barclay (North East Cambridgeshire) (Con)
The hon. Lady is eloquently describing the failure of the tripartite regulatory regime that her Government put in place. She is correct that the fines in the UK are a fraction of those in the US. A further failure is that the fines have rewarded other banks. This Government have ensured that the fines that are paid do not reduce the levy so that banks no longer profit from the wrongdoing of other banks. That was the regime that her Government put in place.
Emily Thornberry
I am grateful to the hon. Gentleman, but in the time I have available, I would like to look to the future and consider the best method that we have for solving the current problems. I am happy to talk to him at some length outside the debate, because I am committed to the issue and will be interested to hear his point of view.
It seems to me that one good way in which the assets in question can be used, instead of lowering the levy, is to put them into a pool that prosecutors can use in future. That would help to pump up what we are doing. That seems to be a way forward, and I am putting it before the House today to get some sensible responses.
Emily Thornberry
Unfortunately I am running out of time, but I would like to hear from the hon. and learned Gentleman briefly.
Sir Edward Garnier
The hon. Lady urged us to look to the future. Does she agree that one thing that we need to consider with reasonable urgency is an alteration in how corporate criminal liability is described in law? At the moment, we have the Victorian “directing mind” principle, which is not really appropriate for vast international companies. Does she agree that we need to Americanise the system—
Madam Deputy Speaker
Thank you, Sir Edward, but you are continuing the debate. Your point is on the record, but we are now eating into the Minister’s time. I understand that he does not mind, so I call Emily Thornberry to conclude her speech.
Emily Thornberry
I am grateful to the hon. and learned Member for Harborough (Sir Edward Garnier) and appreciate his expertise in the matter, but I actually did say that immediately before he came into the Chamber. I am glad that there is now cross-party agreement, and I urge him to ensure that his party’s Front Benchers adopt my ideas. Now is the time to move on in relation to fraud, and I believe that companies should be held liable for the fraudulent activity of individuals, building on the Bribery Act. That is a way forward, and if we can agree on it, then great—let’s do it.
If the Government are committed to a crackdown on crime, why have they left it to Labour to amend the Financial Services (Banking Reform) Bill, which will come before the House again on Monday? Why have they not tabled amendments? We understood that the Prime Minister was committed to introducing a crime of reckless management of a financial institution, so why have the Government not tabled such an amendment? Why do we need to do it? It seems odd. We are concerned that, although the Prime Minister is happy to make pledges when everyone is watching, he hopes that when nobody is noticing he can carry on and do nothing.
It seems to us that an offence of reckless banking needs to do more than deliver symbolic sacrifices after the event. We need managers to be held liable if they turn a blind eye to those who are committing crime. They should have a responsibility to monitor what happens. No single person brings a bank to its knees and no single person should be responsible for UBS, Société Générale or Barings, whatever some may want us to believe. There are further people who are also responsible, and we need to ensure that the law allows for other people to be prosecuted. Nowhere is that more apparent than in the Government’s record on basic economic crime such as the failure to ensure that people are paid the minimum wage. In the past three years, only two bosses have been prosecuted for that, and workplace inspections have halved in the past 12 months. It seems to us that it is about time the Government started taking seriously economic crime of all types, including people not being paid a basic wage.
Economic Growth
Emily Thornberry Excerpts(11 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Emily Thornberry (Islington South and Finsbury) (Lab)
I should like to begin by belatedly congratulating the hon. Member for Eastleigh (Mike Thornton) on his election to the House. I also congratulate him on his constant optimism. For the sake of the record in Hansard, I must point out how very lonely he must be on the Liberal Democrat Benches. He is largely by himself over there.
So, here we are after three years of the coalition Government. The early growth that they inherited has been strangled, and the economy is flatlining. We have terrible rates of unemployment, particularly among the young, for whom long-term unemployment continues to increase. Many of those youngsters have no hope. Living standards are being squeezed, and it is more and more difficult for people to make ends meet. Business confidence is dying, and investment is declining as a result.
The country is crying out for a change and for the Government to do something. People were looking forward to a Queen’s Speech that would show that the Government were prepared to do something, but Her Majesty might as well have stayed at home. The measures in it do not address our economic crisis at all. I am not saying that there is nothing in it for us to welcome. Reform of the Independent Police Complaints Commission is long overdue. We have yet to see what it will involve, but I hope that the commission will be improved. I also hope that a proposal for a register of struck-off police officers will be included in the legislation. I even welcome some of the changes to the Dangerous Dogs Act 1991.
Apart from that, it is hard to see how this Queen’s Speech will help the country. We need a new plan to tackle the lack of jobs and growth, but it offers us nothing. Do the Government really believe that the draft deregulation Bill will get the economy going again? Do they believe that by snipping away at red tape they will encourage the private sector to rise up like the Incredible Hulk and get the economy working? I do not think that they really believe that. They cannot believe that that is going to save the economy. Surely they do not believe that they can just sit back and do nothing. In circumstances such as these, it is surely the responsibility of the Government to take a lead, but I am afraid that the Chancellor of the Exchequer gives every sign of being a man who has decided that he cannot afford the loss of face that would inevitably accompany a change of course. He cannot afford to expend so much political capital on doing something new, and we are all paying the price as a result.
Henry Smith (Crawley) (Con)
I take it that the hon. Lady is suggesting some sort of plan B, as offered by her party. Does she feel that the socialist model that has been pursued by President Hollande in France over the past year has led to success in that economy, given that it has now entered a triple-dip recession, compared with the growth in the UK economy?
Emily Thornberry
The difficulty is that, by carrying on regardless, this Government are killing the economy. I do not have time to go through my bundle of suggestions put forward by various economists, but Paul Krugman has said that the Government’s austerity plan is “fundamentally mad”. I was hoping to have time to read out more such views, but there is not time.
I would like, however, to use the few minutes that I have to give the Government some advice. They might listen—you never know! How about looking into housing? For example, £30 billion spent on infrastructure investment in housing—particularly affordable housing and social housing for rent—would represent 2% of GDP. The International Monetary Fund has said that the fiscal multiplier resulting from such investment could be between 0.9% and 1.7%, which could boost growth by 2.6% of GDP. That would be a short-term boost, but the TUC recently commissioned the National Institute of Economic and Social Research to look at the effect of such investment over the longer term. That research showed that such investment would continue, three to four years on, to have a positive effect on debt and GDP.
This is not just about the economy; it is also about fairness. We know that there is not enough housing. We know that people need jobs and training, and that our youngsters need something to do. They need hope. Investment in housing would provide all those things. This Government are building the smallest amount of housing of any Government; they have the worst peacetime record of doing that of any Government since the 1920s. Council house waiting lists continue to grow. If the Government continue at this rate, it will take until 2129 to build enough housing to meet the current need.
Of course, we know that the Government want to cut back on the benefit bill. They say it is wise to introduce a blanket cap without thinking about how some areas that have a desperate housing crisis will have much higher housing costs. My constituency provides a very good example. If a family of five is living in a three-bedroom house in the private sector in my constituency and someone is unlucky enough to become unemployed, the rent would be £400 a week. The question I wanted to ask the Chancellor earlier—unfortunately, he did not allow me to intervene—was this. If the rent is £400 a week and the cap is £500, what does such a family of five do? Does it live on £100 a week or not pay the rent instead? If the rent is not paid, does that mean the family is intentionally homeless, and if it does, does the council have to re-house the family? If the council does have to re-house them, but there is not enough social housing, where does the family go? Where would the Government suggest these people go? Perhaps they would go to Dover or to some of the marginal seats in outer London. Unfortunately, the Government have no idea of where these people should go. The tragedy of the debate so far is that there has not been enough emphasis on fairness.
The Economy
Emily Thornberry Excerpts(11 years, 11 months ago)
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Danny Alexander
The OBR has forecast that unemployment will be slightly higher next year and then fall in subsequent years. It also forecasts a rise in employment over that period. If the hon. Lady is looking for variances between reality and the OBR’s previous forecasts, it is fair to say that unemployment is now considerably lower than the OBR forecast a year ago. I hope that she welcomes that fact.
It is true that the OBR has lowered its growth forecasts and that the recovery is slower than we would have liked, but we are on the right road and the announcements that we made last week will help the country to make further progress along it. I should add that the OBR does not attribute the slower growth to the Government’s fiscal policy, but to external pressures from the eurozone and other parts of the world, and to the long-term impact of the financial crisis, especially on our banking system. If the Labour party wants to accept the OBR’s figures, it also needs to accept its analysis.
As the House knows, savings had to be found and we have decided to reduce departmental resource budgets by 1% next year and 2% the year after. We are confident that that will not impact heavily on front-line services. For example, according to the recently published “Digital Efficiency Report”, if all Departments continued to move their transactional services online and became digital by default, we could save £1.2 billion over the next two years. If all Departments moved to the property occupation benchmark of 10 square metres per person, they could save a further £300 million each year.
Emily Thornberry (Islington South and Finsbury) (Lab)
Does the right hon. Gentleman agree with the following analysis? Two and a half years ago, he asked for five years to balance the books, but without a plan for jobs and growth, he needs another five years. He still does not have a plan for jobs and growth, so it will always be five years.
Danny Alexander
No, I do not agree with the hon. Lady’s analysis.
There are still savings to be made in day-to-day administration costs. I am confident that the civil service can continue to produce more for less and provide excellent value for money to the public.
The welfare system makes up more than £200 billion of public spending and cannot be immune from the effort to deal with the deficit. As a result of the financial pressures that we are facing, we have had to take the difficult decision that we can uprate working-age benefits by only 1% in the coming three years. That figure represents a rise each year, but it will be below the rate of inflation. It is not as high as some may have expected, but it is what the country can afford. That is a tough choice, but an even-handed one, and it avoids some of the more punitive proposals that have been floated in recent months.
Most benefit claimants would love to work and are trying their best to find a job. However, we need to recognise that in-work incomes have risen at half the rate of benefits since the financial crisis. Those who are in work will be better off thanks to our income tax cuts. When we are increasing public sector pay by only 1%, it would simply not be fair to increase the benefits of those who are out of work at a higher rate than those we employ to work for us.
Even while making those cuts, we have taken steps to protect those who are most in need. That is why disability living allowance and other benefits specifically for the most disabled and their carers will continue to increase in line with inflation. It is also why the basic state pension will increase by 2.5% next April, which is higher than either earnings or prices, honouring our commitment to the triple lock. The application of the triple lock means that there will be a better rise in the basic state pension than pensioners have seen before. Pensioners will see a cash increase of £2.70 a week in the basic state pension in 2013-14.
While we are protecting those in need, it is only right that we ask the most from those who earn the most. That is why the higher rate threshold for personal income tax will also be uprated by only 1% in 2014-15 and 2015-16. It is also why the annual allowance for pensions tax relief will be reduced from £50,000 to £40,000, and the lifetime allowance from £1.5 million to £1.25 million. That will raise more than £1 billion a year by the end of the period and is something for which I, for one, have argued for quite some time. The savings from Whitehall, welfare and the wealthy, and the targeted tax rises, are helping to cut the deficit in the medium term and to boost growth now.
Our capital spending plan will see £5 billion switched from current spending to investment in infrastructure, providing a better connected UK on roads, on rails and online. We will provide £350 million for the regional growth fund, enabling it to continue its success in creating jobs throughout the country. We are rolling out rural broadband across the country and have announced £50 million for the second wave of super-connected cities across the UK from Portsmouth to Perth, via Newport and Northern Ireland.
We have announced funding for a number of road building and maintenance projects. We will be dualling the A30 in Cornwall—an improvement that has long been campaigned for, not least by my hon. Friend the Member for North Cornwall (Dan Rogerson), who is in his place. I congratulate him on his efforts. We will also bring the A1 up to motorway standard all the way to Newcastle. I have been made aware of the need to improve that road north of Newcastle, not least by my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith), and have asked my right hon. Friend the Secretary of State for Transport to work up plans for potential improvements north of Newcastle.
The capital projects will not only create jobs in the short term, but crucially will raise the quality of the country’s infrastructure and our growth potential in the medium term. Labour Members may be interested to know that during the previous Government’s time in office, we fell from eighth to 33rd in the global league table for the quality of infrastructure. That is not good enough and is why John Cridland of the CBI said last week that it is
“absolutely right to shift the focus from current to capital spending to boost jobs today and the UK’s competitiveness tomorrow.”
As colleagues will know, our plans will mean that as a share of the economy, the investment that the Government are putting forward in this Parliament is greater than the average over Labour’s period in office. These investments, not just in roads, but in schools, colleges and flood defences, can only serve to help our businesses in the future.
Danny Alexander
No, because it was not there. That was one of a number of difficult choices that we as a Government have had to make to clean up the mess in the British economy that was left by the hon. Gentleman and his colleagues.
Danny Alexander
I will give way once more to the hon. Lady and then I will make some progress
Emily Thornberry
Am I right in remembering—I think it was on page 14 of the Liberal Democrat manifesto—a pledge to cut 7,000 tax inspectors?
Danny Alexander
The hon. Lady will know that HMRC has had to make efficiency savings along with the rest of the Government. It had to make savings when the Labour party was in office and it continues to have to do that. We have increased investment specifically in the part of HMRC focused on tackling tax avoidance and evasion—an area that saw underinvestment during Labour’s time in office. As a result, 2,000 extra specialist tax inspectors—[Interruption.] My hon. Friend the Exchequer Secretary to the Treasury brings me up to date and tells me that the figure is 2,500. Those inspectors are specifically focused on tackling tax avoidance in the affluence unit and those units that focus on offshore companies and all other tax avoidance schemes, and on implementing the anti-avoidance rule.
Danny Alexander
A range of goods is included in the consumer prices index of inflation, which the Office for National Statistics constructs—it is an independent body and is responsible for constructing those baskets of goods. Some items go up in price faster than others. We are doing what we can and what the country can afford, but our priority must be to get this country back to a position in which we can pay our way in the world. Nothing would hurt the poorest in society more than losing control of our public finances, which I suspect would happen if the Labour party ever again gained the reins of power.
The quad discussed introducing a mansion tax, but a fair tax on homes worth more than £2 million was not agreed. However, the good news is that we have established a sensible, workable plan for raising additional revenues from the highest-value properties. If that does not happen in this Government’s term of office, it will be in the Liberal Democrat manifesto for the next election.
Danny Alexander
I am grateful for the hon. Lady’s support—I take support from wherever it comes these days.
The Government have taken sensible further steps to restrict pensions tax relief. The decisions the Government are taking are not easy, but as a country we must live within our means. The scale of the problems this country faces means that the period of fiscal restraint must continue for longer. That is why the Government will shortly set out spending plans for the financial year 2015-16. I will carry out a spending round in the first six months of next year to set those budgets and ensure that we continue to build a sensible long-term plan for the country’s finances. We will need to find an extra £10 billion of savings from Departments in the spending round. That will mean more difficult choices, but they are also responsible choices as the coalition continues to work to restore stability to the UK economy.
We have heard this afternoon and in Question Time that some criticise the autumn statement. The division in British politics is very clear. Government Members live in the real world. We understand that times are tough and that there is no endless supply of money, and recognise that the right and responsible action is to take the difficult decisions to ensure we can live within our means. Labour Members appear to live in a fantasy world. They still believe that they ended boom and bust, despite the events of the past five years. They still refuse to apologise for the mess they created and fail to be honest with the British people about the tough decisions that any party in government would have to take.
It will come as no surprise to hon. Members that I will not take advice from the Labour party, which wrecked our economy because it allowed the country to become too dependent on revenues from the City of London and paid too little attention to the rest of the country. Labour insulted pensioners up and down the country by increasing the basic state pension by 75p, and insulted 5 million of the lowest-paid workers by increasing their income tax bill with the abolition of the 10p rate.
Emily Thornberry (Islington South and Finsbury) (Lab)
The autumn statement showed that this Government’s handling of the economy has been a profound failure. It shows what happens when a Government do not have any plan for jobs and growth. If they do not have a plan for jobs and growth, they come back after two and a half years and say, “Actually, we need another five years,” and if they still do not have a plan for jobs and growth, they will come back after another two and a half years and again say they need another five years, and so it will go on, because borrowing is up and debt is up and economic growth is down. The Government have wasted two and a half years. People simply do not buy it any more. The Business Secretary said that the Government’s credibility hinges on whether or not they eliminate the deficit. After the autumn statement it is clear that the credibility of this Government, supported by the Liberal Democrats, is in tatters.
I want to talk about the poor, because my poor constituents believe they are being punished for the failure of this Government and their reckless welfare reform. I also want to talk about the rich and how they are being let off the hook—again, that is because of the Government’s failure to make sure we collect all the tax we are owed. Why did the Government, when they first came into office, cut the number of tax inspectors by 7,000? The ambition was to cut the number of tax inspectors to an all-time low of 56,100. I remember that I wrote to the Chancellor in November 2010 saying that that would be counter-productive. When the Government are cutting the staff who prevent tax avoidance and evasion, how can my constituents believe that tackling it is a priority? Indeed, in answer to a parliamentary question, the Government admitted that every new tax inspector brings an additional £600,000 a year into the Exchequer.
The Exchequer Secretary to the Treasury (Mr David Gauke)
indicated dissent.
Emily Thornberry
The Economic Secretary shakes his head, but I am just quoting what was said in the Government’s answer to a parliamentary question. He is welcome to intervene if he wishes to correct me.
Mr Gauke
As the hon. Lady has invited me to make this point, I will do so. If someone looks at the number of people working for Her Majesty’s Revenue and Customs in enforcement and compliance—not the other areas; there are a lot of processing jobs—they find that under the previous Government’s plans it fell by 9,000, whereas under this Government’s plans it will increase by 2,500.
Emily Thornberry
The fact is that 7,000 jobs have gone under this Government’s plans, and the gap between what we collect and what we are owed is estimated to be £35 billion, which is twice the housing benefit bill. Independent research commissioned by the Public and Commercial Services Union reckoned that the real figure was more like £120 billion, which is six and a half times the housing benefit bill. Whatever the true sum, the fact is that without a sufficient number of tax inspectors we cannot ensure that the rules apply to everyone. Everyone should pay tax; it should not just be for the little people. Paying one’s taxes should not be some sort of charitable gesture, and I have little understanding as to why it was seen as appropriate for this Government to continue to cut back on tax inspectors. If we are to have rules, they need to be applied. The Exchequer Secretary says that there were many processing jobs, but presumably people in that job need to make sure that the sums add up, that everything has been claimed that should have been claimed and that everything has been paid that should have been paid. Without that essential processing we will never know whether or not tax avoidance has been taking place—this is not just about major companies; it happens throughout the system. At a time like this, we need to make sure that everyone plays by the rules. If everyone does that and if the rules apply to us all and we have a fair society, we have the very one nation that Labour Members have been talking about.
Of course, the rules also apply to those who claim benefits and of course if someone can work, they must work. That is what unites this whole House. What does not unite this House is the language used by Government Front Benchers—the language of “scroungers”. Such language is simply offensive, as the highly eloquent maiden speech by my new hon. Friend the Member for Middlesbrough (Andy McDonald) so well set out. Such language is a smokescreen that covers up a great deal of what this Government are actually doing. Although they talk about scroungers and those who stay in bed, keep the curtains closed and do not go out to work—the remarks are highly offensive—they do not address the issue, which is that many, many people who are out of work want to work, but the fact of the matter is that people cannot go from welfare into work if the work is not there.
Furthermore, many of the changes that this Government are making and announced in the autumn statement will affect those very people who work. I want to go on to address the issue of not just those who are poor and not working, but that of those who are working in my constituency and are dependent on benefits. Sometimes I feel as though I live in a different world where Government Members believe that only those who are out of work claim benefits. In fact, many people who work depend on benefits. Surely that is a conundrum. Many people meet me on the street and say, “How can the welfare benefit bill be going up if a million additional people have got work?” The truth is self-evident. Many people who are now working work part-time or are self-employed rely on housing benefit and tax credits, the very things that the Minister will be cutting as a result of the autumn statement. Let us use the terms that he uses, such as the strivers. Those very strivers are having their support system cut away by this Government. Even in the hon. Gentleman’s offensive terms, that cannot be justified.
I want to talk specifically about housing benefit because the issue affects my constituents particularly. I hear Government Members say, “Why should it be that people on average earnings receive less than people on benefits?” That has a certain ring to it and I know that the Conservatives are out of touch, but surely some of them must know someone who rents a flat and who understands that housing benefit goes not to the tenant, but to the landlord. It is because rents have gone up so much in London and the south-east that the housing benefit bill continues to rise. In the past two years, private rents in London have gone up by 25%, according to London Councils. In those circumstances, how can it be justified to attack housing benefit, to put an arbitrary cap on housing benefit, or to believe that housing benefit should be the same level in London as it is anywhere else in the country? How can that be fair?
It is not the fault of my poor constituents that their rent is high. It is the fault of my Government and of Conservative Governments who did not build enough housing. There was a time when Conservative and Labour Governments used to compete with each other as to how much affordable housing they could build. In the 1970s, four fifths of the housing budget was spent on building new homes and one fifth on housing benefit. Now it is completely turned on its head and we continue to pay the price of failure. We must build more housing and we must not simply dance on a pin, analysing what affordable housing means.
The Minister represents a party that defines affordable housing as costing 80% of market rent. He and his party should get some sort of George Orwellian prize for double-speak. Eighty per cent. of market rent in my constituency could not be afforded by ordinary people in my constituency. I went on to the Rightmove website this morning and looked at the prices of three-bedroom flats in my constituency. Does the hon. Gentleman know how much the rent for a bog-standard three-bedroom flat in my constituency would be? Four hundred pounds a week. How much is the housing benefit cap? Three hundred and forty pounds a week. There was only one flat on Rightmove that was under the amount of the cap so how can people in my constituency, who will be subjected to the housing benefit cap, afford to continue to live in Islington?
There is an argument that the poor should not be living in Islington, but I respectfully disagree. My constituency should be a mixed constituency and should have rich and poor. Generations of poor people who live in my constituency should be allowed to continue to live there. Furthermore, the housing benefit cap is one atrocious measure that this Government have introduced, but we wait for the next, which is universal credit. There will be a cap of £500 a week for a four-bedroom flat in my constituency. There were 69 that were under the £400 current housing benefit—
Jobs and Growth
Emily Thornberry Excerpts(12 years, 6 months ago)
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Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
I am grateful to follow the hon. Member for Glasgow North (Ann McKechin). She mentioned an industrial policy, which we are of course looking at, but the problem she must face is that Lord Mandelson’s industrial policy came far too late. The north-west experienced 13 years in which her Government allowed the gap between north and south to increase, and it increased according to any survey chosen. Ultimately, the only investment that came into the north-west was rapid public sector investment in either construction—the so-called affordable housing that turned out to be one or two-bedroom flats, not real houses for families—or an ever-expanding regional development agency that could do nothing about the expansion of London and the south-east, when compared against the contribution of the north-west or any other region. I am pleased that this Government, through part of the Queen’s Speech, are consolidating the missing links and dealing with the failure to invest in infrastructure over 13 years.
Emily Thornberry (Islington South and Finsbury) (Lab)
Will the hon. Gentleman give way?
Eric Ollerenshaw
I would love to, but I have less than three minutes. I am sorry.
This Government are committed to: an M6 link road around Lancaster, which has been on the stocks since 1948 but nothing was done about it in 13 years of the Labour Government; the northern hub investment, which will improve connectively between the northern cities and enable them to compete; and investment in broadband through Broadband Delivery UK. People talk about superfast broadband, but a third of my constituents do not have access to normal broadband, and that is the failure of real investment over the past 13 years. I believe that the Government are now doing something about that and that things are happening to build that environment and infrastructure so that the north can compete like any other region of the country. Labour Members talk about a lack of vision, but the vision came from the coalition in the very first months. The commitment from my right hon. Friend the Chancellor was that we deal with the deficit but, at the same time, attempt to restructure and rebalance the country not only between sectors, but between regions. That is the vision of the coalition.
Emily Thornberry (Islington South and Finsbury) (Lab)
When I speak as a representative of Islington South and Finsbury, I feel that I always have to begin by dispelling myths. People know about our cappuccino bars and our Georgian squares, but they do not necessarily know that 44% of my constituents live in social housing, or that my constituency has the second worst child poverty rate in the country. The very rich and the very poor live in Islington. We live cheek by jowl, and we like it that way. The recession has affected all of us, but some much more than others.
One thing unites people, however, no matter what their background. I have spoken to women, including aspirant Somali mothers, a middle-class mother whose child has just left Oxbridge, and a woman whose child has just left school, and we are all really scared for the next generation. Although we have brought up our children as best we can and put everything into equipping them for the world as perfectly as we can, we are really scared that, when we push them out into the world, the world will say, “No, sorry. We don’t need you. We might be interested in your little brother or sister one day, but you have entered the world of work at the wrong time. Come back in four or five years’ time.” What will happen to those kids in the meantime if we do nothing about unemployment among young people?
In Islington, we have had a massive increase in long-term unemployment among 18 to 24-year-olds, and I know that that has been replicated across the country. In Islington, it has gone up by 88% in the past year. I hear Government Members say, “Well, of course it is because they haven’t got the right qualifications”, or “It’s because the Labour Government didn’t educate them well enough”, but it does not matter what qualifications a young person has now; they simply cannot get a job. There is a generation now who are finding it exceedingly difficult. The hon. Member for Gloucester (Richard Graham) shakes his head, but if he were to advertise for an unpaid internship in his office, I suspect he would get at least 300 applicants from youngsters desperate to get employment. The problem is nothing to do with young people not being sufficiently educated; it is because the recession, which hits all of us, hits our children, teenagers and those in their early 20s the hardest. The older generation and Members here who represent our communities have a duty to do something about it. Frankly, the complacency of Government Members, to which I have had to listen over the past five and a half hours, is quite astounding.
I see in his place the Secretary of State for Work and Pensions, and I hope he will listen to what I have to say about other groups of people. I know the Conservatives say they are on the side of those who work hard and do the right thing. I know they want to change this country so that once again it rewards people who work hard, want to get on and play by the rules. The Conservatives want to represent the strivers, the builders, the family raisers, the community builders. Good, so would Conservative Members please consider the working poor in my constituency, who are being adversely affected by cuts to working tax credits, the housing benefit cap and universal credit? I hope the Secretary of State understands that they are badly affected by the price of housing and the extraordinary price they have to pay for rent. We must do something about that. Unless and until that is done, it will be impossible to have a mixed community in which people will be able to work at all levels.
Oral Answers to Questions
Emily Thornberry Excerpts(13 years, 5 months ago)
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Emily Thornberry (Islington South and Finsbury) (Lab)
1. What assessment he has made of potential trends in the level of debt as a proportion of gross domestic product to 2014-15.
Mrs Linda Riordan (Halifax) (Lab/Co-op)
6. What assessment he has made of potential trends in the level of debt as a proportion of gross domestic product to 2014-15.
The Chancellor of the Exchequer (Mr George Osborne)
This Government inherited plans that had Government debt rising as a share of GDP in 2014-15. Thanks to the credible plan that we have put in place, debt is now forecast to be falling in that year.
Emily Thornberry
Would the Chancellor of the Exchequer like to take this opportunity to explain why the Office for Budget Responsibility now says that the Government will need to borrow £46 billion more than was estimated a few months ago? Would he also like to take this opportunity to accept that, by cutting too far and too fast, we will fall into a vicious circle that will make it more difficult to pay off the deficit in the long term?
Mr Osborne
The public finance figures are out today, and they show that the British economy and the British Government are on track to reduce the budget deficit, as we forecast in the Budget. On a day like this, in a week like this, for the Opposition to suggest that we should abandon our credible deficit reduction plan shows how out of touch they are with what is going on in the world today.