Financial Conduct Authority

Gary Streeter Excerpts

Monday 1st February 2016 Commons Chamber

[Mr Gary Streeter (South West Devon) (Con)]

I congratulate my hon. Friend the Member for Aberconwy (Guto Bebb) on securing this debate and on his tenacity in pursuing this issue. I fully support the motion. I am not at all happy with the FCA’s performance in resolving the swap issue. I have had experience of several constituency cases that have revealed a very slow process with insufficient redress, and the independent review process appears to be anything but independent. So I have no confidence at all in this FCA scheme.

This interest rate swap mis-selling scandal is one of the greatest scandals in recent decades, but because it is complicated and because it primarily affects businesses and not consumers, it has received insufficient attention from the Government and from the media. At the same time as this has been in play, the Government have been more concerned about the survival of the banking system in its entirety and about getting the nationalised banks ready for re-privatisation as quickly as possible. I can understand that, but it is perhaps for those reasons that they have not been robust enough with the FCA, whose oversight of this mis-selling has been weak, toothless and anaemic from the very beginning. This has been mis-selling on an industrial scale and we have hardly got to grips with it at all.

Several of our constituents have lost their livelihoods and businesses as a direct result of bank wrongdoing. I believe that many of the senior banking executives who were behind this scandal should now be doing time in prison, but sadly that is not the case. One of the major shortcomings of the FCA scheme is the exclusion of so-called sophisticated borrowers, based on the size of lending and the size of the company. That was always nonsense. The swaps became so complicated that even the people inflicting them on their customers did not understand them. A former colleague at my old law firm, Clifford Chance, confided in me a few years ago that these arrangements were so complicated that even the lawyers drafting them did not always understand them. Setting up a system that assumed that companies over a certain size, which were perhaps good at making and selling widgets or at providing commercial premises, could get their minds around some of these swaps is nonsense, especially as many swaps were sold with no paperwork at the time and were simply done over the phone or in meetings, and often under tremendous pressure.

As I mentioned to the House when we first discussed these issues, a company called London and Westcountry Estates Limited in my constituency was the victim of a swap mis-selling by the Royal Bank of Scotland, one of the worst perpetrators of this scandal. Matters went from bad to worse, as the company’s debt was sold off by RBS to a third party company, Isobel, which then promptly placed the company into administration. I intend to raise that sorry saga with the House on a separate occasion; it goes beyond the scope of this debate, but, inch by inch, detail by detail, that story needs to be told, and it was all done with taxpayers’ money.

The family behind that constituency company were brilliant at buying old commercial premises and converting them into small units to let on flexible terms to small businesses—the very thing we want to encourage in our economy—but they had no understanding of complex financial instruments. When they first asked me to help some years ago, it took me, with my brilliant first-class degree in law—I knew I should say that, as nobody else would—and 15 years’ experience as a corporate lawyer, days to get my head around the swap they had been sold, which was completely inappropriate for their business. How on earth were they supposed to understand it? But because they were, ludicrously, deemed “sophisticated borrowers”, they were excluded from the FCA scheme and are having to resort to litigation to get justice. I believe they will win and win heavily, but it should not be necessary and it sickens me that RBS is defending this litigation with taxpayers’ money—that just does not seem right at all. I also believe that the RBS executives responsible for selling these swaps and for placing the company into administration, even though it never missed a monthly or quarterly debt repayment, should be prosecuted under criminal law and face whatever charge the criminal law throws at them. I intend to pursue that when the outcome of the court case is known next year and the full facts are exposed.

It is well known that I am a loyal supporter of this Government, as are you, Mr Deputy Speaker, I know. Who could not be?

[Daniel Kawczynski]

Does my hon. Friend agree that the swaps—the derivatives—were deliberately made to be so complicated that our constituents would have no opportunity to understand them?

[Mr Streeter]

I suspect that that is the case—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. May I just remind everybody that the Chair certainly will not be favouring any Government, for or against?

[Mr Streeter]

We all knew that, Mr Deputy Speaker.

It is perfectly possible that the swaps were designed to be so complicated that they could not be understood. Primarily, they were designed in a way as to make the selling bank vast sums of commission, and it was all done in the name of commercial greed. Nobody minds a profit, but this went well beyond that. Although I am a loyal supporter of this Government, we have an FCA compensation scheme that is pitiful and, as a result, we are in danger of letting our constituents down. However, it is not too late for the Government to get a grip on the FCA and sort this matter out.

European Union (Finance) Bill

Gary Streeter Excerpts

Tuesday 23rd June 2015 Commons Chamber

Question proposed, That the clause stand part of the Bill.

[The Temporary Chair (Mr Gary Streeter)]

With this it will be convenient to discuss the following:

Amendment 1, in clause 2, page 1, line 18, leave out subsection (3).

This amendment removes the automatic coming into force of the Act two months after it is passed, which would be incompatible with any of the new Clauses.

Clause 2 stand part.

New clause 1—Report on level of EU budget spending—

“(1) This Act shall come into force on such day as the Treasury shall by order specify.

(2) The day specified in the order made under subsection (1) shall not be earlier than 14 days after the date on which the condition has been satisfied.

(3) The condition referred to in subsection (2) is that the Treasury shall have laid before both Houses of Parliament a copy of a communication sent by the Treasury to the European Commission requesting a review by the European Commission of the basis of appropriations for the European Union budget, and in particular—

(a) a comparative analysis of commitment or payment as the basis for appropriations, and

(b) a study of whether alternative arrangements might offer in the longer term improved value and enhanced budgetary control.”

The Clause requires Ministers to seek a European Commission study of whether alternative approaches to funding EU activities would offer better value for money and improved budgetary control.

New clause 2—Reform of priorities within the EU budget—

“(1) This Act shall come into force on such day as the Treasury shall by order specify.

(2) The day specified in the order made under subsection (1) shall not be earlier than 14 days after the date on which the condition has been satisfied.

(3) The condition referred to in subsection (2) is that the Secretary of State shall have laid before both Houses of Parliament a copy of a communication sent by the Secretary of State to the President of the European Council requesting a fundamental review by the Council of Ministers to be completed before 31 December 2015 of budget priorities, waste and inefficiency within the European Union budget.”

The Clause requires Ministers to seek a Council of Ministers review of budget priorities, waste and inefficiency within the EU budget to be completed by the end of 2015.

New clause 3—Accountability and transparency—

“(1) This Act shall come into force on such day as the Treasury shall by order specify.

(2) The day specified in the order made under subsection (1) shall not be earlier than 14 days after the date on which the condition has been satisfied.

(3) The condition referred to in subsection (2) is that the Secretary of State shall have laid before both Houses of Parliament a copy of a communication sent by the Secretary of State to the President of the European Commission inviting officials to provide the relevant European affairs select committee in each House of Parliament with details of the draft European budget for each financial year before the draft European budget is agreed in the Council of Ministers.”

The Clause would require Ministers to invite European Commission budget representatives to provide details of the draft European budget to the House of Commons European Scrutiny Committee and the House of Lords European Union Committee each year before the EU budget is agreed.

Office for Budget Responsibility (Manifesto Audits)

Gary Streeter Excerpts

Wednesday 25th June 2014 Commons Chamber

[Mr Gary Streeter (South West Devon) (Con)]

I want to bring a different point of view to this debate, and a point of principle. I am against this motion in principle, and I hope to clearly set out why. First, however, may I gently say that if I were compiling a list of colleagues in this House who had the skills-mix to bring together a cross-party consensus, I am not sure the shadow Chancellor would be top of my list, in the same way as I would not want to invite King Herod to babysit my children. [Interruption.] I apologise if that is a little harsh, but that idea did not ring true on the Government Benches.

This debate is about restoring the British electorate’s lost credibility and trust in the political classes, and certainly after our disastrous decision—as I now see it—in 2003 to go to war on a false premise, and after the expenses scandal of 2009, there is no doubt that credibility and trust do need to be restored. I have to say that I do not think this motion is the way to do it, however, because we will never restore trust in ourselves if we are constantly contracting-out to a third party our credibility and integrity. If we are not careful, we will simply become elected go-betweens buying in ideas and policies from independent sources. We have to build up a track record of trustworthiness in our own right.

The message the motion sends to the British electorate is that we do not trust ourselves in the run-up to next May’s elections to tell them the truth about our financial plans. That is what we are saying; the message we are sending out is that we do not trust ourselves. If we do not trust ourselves to send out a message of credibility and integrity, why on earth should we expect the electorate to have any trust in us? We may have access to the finest brains in the country, who can help to shape our spending plans; none the less, we still cannot be trusted to ensure that those plans are accurate, so we have to get them independently verified. The motion edges us towards accepting that nobody can ever trust a politician on anything without independent verification. I do not want to go there. That is a very slippery slope that I do not want to go down.

The trouble with subcontracting out to independent organisations is that it undermines the very essence of our democracy: accountability. If my electorate do not like me, they can remove me. They might well do so next May—we will see—but at least I am accountable to them. I am afraid that the OBR is not accountable to them. So the answer to the lack of trust in British politics is not to subcontract out our veracity. The answer—it will take a lot of hard work—is simply to tell the truth and stick with it; to make promises and keep them; to check our figures again and again before we set them out, and to make sure they are accurate.

[Mr George Mudie (Leeds East) (Lab)]

I am listening intently to the hon. Gentleman. He is saying that the House should not subcontract out; is he saying the same of the Government? If he is saying to the Opposition parties that the OBR cannot vet economic policies, presumably, the same goes for the Government. Is he confirming, therefore, that he would do away with the OBR?

[Mr Streeter]

I was about to make the point that I hope the OBR will be only a temporary institution. I am probably the only person who thinks that. I was first elected to this House in 1992—not a million years after when the hon. Gentleman was first elected—and my recollection is that, 22 years ago, Treasury figures were trusted and taken almost as gospel. I am not pinning the blame on any particular Government, but the history of certain previous Governments massaging figures and forecasts and announcing the same money over and over again as though it was new money has completely undermined confidence in Treasury forecasts and credibility. Of course, we have also had the 2007-08 crash.

There is no doubt that the OBR has helped to restore confidence in and the credibility of Treasury figures, not among our electorate, most of whom have never heard of it—they would not know what it was if it hit them in the face—but among opinion-formers and commentators. However, I hope that it is a temporary solution and that we can in due course work our way back to good old-fashioned professional Treasury trustworthiness, like welcoming back an old friend.

The second reason why I will oppose the motion is that doing this right now would probably mess up the OBR. Changing its mandate would undermine the important work it is already carrying out. Other experienced groups—the Institute for Fiscal Studies and the Institute of Economic Affairs—pore over our manifestos in the run-up to an election, and they will communicate their findings to the electorate, as they always have done. Why not ask this question? Why stop at the OBR and our financial plans? If we are to subcontract out our veracity, why stop there? Why not ask the Electoral Commission to verify our constitutional proposals? Why not invite NHS England to review our health policies? Why not invite the United Nations to oversee the section in our manifestos on foreign policy? Where will all this end? There is no point in continuing down this road, unless we are saying that although we are elected to do a certain job—to take decisions and to make ourselves accountable to the electorate for the promises we make and the decisions we take—we do not wish to do it any longer.

If I am saying that this is not the right way to restore lost confidence and trust, what is? Most of us recognise over our lifetimes that when a reputation is lost, it takes a long time to put it right and a long period of penance. But there is no short-cut: it is about doing the right thing and sticking with it. In our case, it is about saying one thing and doing it: delivering on our promises, testing our figures before we release them—transparency is the key to this—and collectively showing our workings and not just the end policy. There is no short-cut. We have to slog our way back to respectability.

I understand the reasons behind the motion, but I really believe that it is ill-conceived and would not help us to restore credibility and lost trust and confidence among the British electorate.

Football Clubs (Insolvency)

Gary Streeter Excerpts

Tuesday 18th March 2014 Westminster Hall

[Mr Gary Streeter (in the Chair)]

Order. That was a very long intervention.

[Damian Collins]

Mr Streeter, you are of course right, but it was an intervention made with such great force and we enjoyed it so much that we were happy to listen to it. My hon. Friend makes an important point. The Government have consistently criticised the football creditors rule, and indeed HMRC brought a legal action against the Football League to try to prevent the rule from being used, but failed. The Government and the sports Minister have consistently said that the Government are prepared to use legislation to intervene if the football authorities will not demonstrate their own desire for progress and action. I believe that the time has come for an update on that situation and for a consideration of how legislation could be used to prevent the football creditors rule being used in insolvency cases. There may be a debate to be had about the role of Government interfering in the organisation of sports and sporting bodies in this country, but this issue is clearly one of fairness that relates to insolvency law and the specialist rules that football has created for itself to protect its own interests at the cost of the community.

When the Football League gave evidence to the Select Committee, its representative said that the league could find no moral justification for the existence of the football creditors rule. That continues to be the case. It is there by regret, but the time has come for it to be removed. When the High Court considered the case that HMRC brought against the Football League, Judge Richards said that although he was unable to find in favour of HMRC and against the Football League with regard to the football creditors rule, the judgment should not in any way be regarded as an endorsement of the rule.

I will now say a little about how the football creditors rule works in effect, and how I think we can get rid of it through legislation. All football clubs are required by the football authorities to honour their debts to other football clubs in full. When a club goes into administration, the football authorities use their control of the prize money and particularly the broadcasting money that is owed to the club—it is due only if the club completes the season. Effectively, when a club goes into administration, the Football League and the Premier League can use that money, which they control, to settle football debts on behalf of the club, and the club’s administrator does not have the power to gain access to that money. The Football League and the Premier League also reserve the right to remove the club’s golden share, which it requires to participate in football competitions. The removal of that golden share would effectively make the club worthless and the threat of its removal is one that the Football League and the Premier League can use to ensure that football debts are honoured in full.

If the football authorities refuse to give up the football creditors rule voluntarily, legislation has a role—we should amend insolvency legislation. We should put the administrator in sole charge of the assets of the club, including the golden share and prize money that should reasonably be expected to be owed to it during the season. The administrator can use all that money to settle the club’s unsecured debts equally and fairly—both football debts and non-football debts.

--- Later in debate ---

[Justin Tomlinson]

I thank my hon. Friend for that.

In conclusion, there are huge amounts of good will towards sport and football, whether that comes from supporters or suppliers. We need to do whatever we can to ensure that they are equipped with knowledge, so that things can be remedied as quickly and swiftly as possible when they go wrong. That is absolutely vital for our local communities.

[Mr Gary Streeter (in the Chair)]

An injury-time strike by Marcus Jones.

Interest Rate Swap Derivatives

Gary Streeter Excerpts

Thursday 24th October 2013 Commons Chamber

[Mr Gary Streeter (South West Devon) (Con)]

I had a very interesting meeting two weeks ago with senior regional managers of HSBC, who told me that the bank is transforming its culture by removing from individual managers any sales targets: no more pressure from on high and no more commission on individual products sold to a customer. If that is right, then that is significant news. That is how it was when I started my illustrious legal career in 1978: bank managers could be trusted and they were on our side.

Last night, a few colleagues and I met senior figures from the Royal Bank of Scotland in the west country, as well as the managing director of RBS corporate for the UK, Chris Sullivan. They were at pains to tell us how RBS is changing its culture, removing from managers the pressure to sell products to customers and instead offering a service to help customers succeed and grow.

[Mr David Burrowes (Enfield, Southgate) (Con)]

While progress is welcome, not least just before a parliamentary debate, does my hon. Friend recognise that people have been the victims of dishonest and probably fraudulent sales, and are now victims of a process that is characterised by delay and inaction by the Financial Conduct Authority? It is also far too dependent on parliamentary pressure. Can we look forward to reassurance from the Minister that there will be leadership and a timetabled delivery of compensation before it is too late?

[Mr Streeter]

I completely agree with my hon. Friend. I am expecting robust leadership from those on the Front Bench at the end of the debate, because our constituents have waited far too long.

The shift in culture is to be welcomed, but the point I made last night and make again today is that if the banks want to decontaminate their brand—that is what they are really talking about—it is not enough to change the way they do business today; they have to deal with the past. They have to put right the wrongs of the past and compensate those who have been hurt by wholesale mis-selling of products before 2009.

The realisation by the banks—or some of them—that they need to change their culture is fundamental to our debate today on interest rates swaps. The banks not doing what was right for customers and not being on their side—instead selling them products they did not request, could not understand and were not in their interest simply to rack up commission for the bank and its managers—is the cause of the problems we are discussing today. A shift in culture is welcome, but the banks must deal with the problems of the past.

That was certainly the case for my constituents, Mike and Di Hockin, erstwhile owners of London and Westcountry Estates Ltd, a company owning several business parks across the south-west, which is now, after a lifetime’s work and through no fault of their own, in administration. In July 2008, RBS insisted that if the company wished to have its borrowing facility renewed it must enter into a swap arrangement on the alleged imminent threat of rising interest rates. My constituents are experts in property, not finance. They were given no alternative by RBS, so they signed up to a three-year loan and a 10-year swap arrangement. How does that work? It turns out that they had been persuaded to enter into a swap arrangement for 10 years at a rate of 6.4%. Although they had been told that the deal contained a break clause after three years, it transpired that this would enable the bank only to withdraw, not the customer. They later learned that breaking the swap arrangement would incur a penalty that seemed to fluctuate on a daily basis, but would be millions of pounds. None of this was known to them at the time of signing the agreement. I submit that this is a clear case of mis-selling.

It got worse. The loan was bundled up with a number of other troubled loans and sold on by RBS to a new company, Isabel Assetco Ltd, which was 25% owned by a US venture capital company called Blackstone and 75% owned by RBS. This £1.36 billion deal was made at a 30% discount and funded with £550 million from RBS. A bank owned by the taxpayer transferred my constituents’ company’s debt at a discount to a third party company, lending it taxpayers’ money to do so, so the new company could set about dismantling the business that my taxpaying constituents had spent years building up. That is an absolute disgrace.

None of this would have happened but for the mis-sold swap. That the company was put into administration unnecessarily needs to be investigated. Several of my hon. Friends have talked about criminal sanctions for the bankers who make such decisions. I add my support to that call. The people who knowingly make such decisions deserve to be investigated and penalised. I have no doubt that RBS is liable in law to compensate my constituents for their losses. However, because of the administration involved, that will be a complex journey. I intend to help them to succeed, no matter how long it takes.

Talk from bank bosses is cheap. Anthony Jenkins, the new chief executive of Barclays, says that it has learnt its lesson and will put things right. However, in another constituency case, involving a company established in south Devon in 1925, the financial ombudsman determined seven weeks ago that Barclays had mis-sold a swap to the company and ordered it to put the company back in the same position it would have been in if the swap had never been sold. Imagine the disappointment on the part of my constituents when Barclays responded just yesterday by indicating that it accepts only a tiny part of the judgment and intends to fight the rest—so much for the fine words from the chief executive of Barclays. Has Barclays really listened, learned and changed? It does not seem so.

I welcome the fact that there seems to be a cultural shift on the ground in some of our leading banks. This will eventually lead to public confidence being restored, which is very important. Dealing with customers differently today, however, is not enough. The banks have to deal with the past and only then can their reputations be fully restored, as we all want them to be. The UK needs a vibrant and trusted banking sector. Chris Sullivan, the RBS UK corporate managing director, insisted last night that this was his intention. He assured me that every case of mis-selling, including that of London and Westcountry Estates Ltd, is being investigated, and that if mis-selling is established it will compensate. I want to say on the record that I am prepared to take him at his word, but need to see the process speeded up.

As a taxpayer, I hope we will be able to sell off RBS one day, but I ask the Minister to make it clear to RBS that it cannot go forward with any flotation until it has compensated properly all the small and medium-sized enterprises it has dragged down through mis-selling. The message is clear: the banks have done wrong. Let them deal with the past and compensate their customers rapidly and fairly. Then, and only then, can we welcome a new dawn of helpful banking.

Oral Answers to Questions

Gary Streeter Excerpts

Tuesday 6th November 2012 Commons Chamber

[Danny Alexander]

I am answering the question, which relates to the proceeds of the auction. We are using other policies, rather than the proceeds of the auction, to support this objective.

[Mr Gary Streeter (South West Devon) (Con)]

Rather than spending money we do not yet have, would it not be better for the Department to continue to work with the Department for Communities and Local Government and others in unlocking major housing schemes which have become stuck in recent years, such as the proposed new town of Sherford in my constituency? Is that not a better way of building affordable homes and boosting the economy?

[Mr Speaker]

Order. The hon. Gentleman is a very experienced Member. The question is about using the revenue from the auction —

[Mr Streeter]

I am talking about affordable housing.

[Mr Speaker]

Order. That is the term of—[Interruption.] Order. No assistance is required from the hon. Gentleman. He will accept my ruling and he can like it or lump it.

Interest Rate Swap Products

Gary Streeter Excerpts

Thursday 21st June 2012 Commons Chamber

[Mr Gary Streeter (South West Devon) (Con)]

I, too, congratulate my hon. Friend the Member for Aberconwy (Guto Bebb) on his very powerful opening of this debate.

I wish to raise the specific case of London and Westcountry Estates Ltd, a company that owns several business parks all over the south-west and is now in administration as a direct result, I believe, of the Royal Bank of Scotland imposing on it an interest swap arrangement that was never right for its business. In brief, the background is as follows. For many years, London and Westcountry had been a premier customer of RBS. Its directors were encouraged by the bank to expand. For example, in 2006 RBS approached London and Westcountry and encouraged it to add to its portfolio a large business park in Bridgwater, and it lent the company 100% of the finance required.

In July 2008, after the banks had caused the credit crunch, RBS insisted that if the company wished to have its borrowing facility renewed, it must enter into a swap arrangement on the basis of an alleged imminent threat of rising interest rates. In fact, independent analysis has demonstrated that even in July 2008 bank insiders did not really believe that to be true; it was simply a way of selling a product to make a profit on which huge bonuses were paid.

[Neil Parish (Tiverton and Honiton) (Con)]

Is it not time for the Financial Services Authority to use its teeth to put a lot of this right? Banks have abused people’s trust and forced them into these deals as a way of creating higher interest rates for their customers, whereas we want lower interest rates.

[Mr Streeter]

My hon. Friend makes an important point. Thousands of people in this country, dozens of whom are in the Gallery, are looking to the FSA to put right some of the terrible wrongs that have been done in the past few years.

It turned out that the company of which I speak had been persuaded to enter into a swap arrangement for 10 years at a fixed rate of 6.4%. Although it had been told that the deal contained a break clause after three years, it transpired that that enabled only the bank to withdraw and not the customer. The company later learned that breaking the swap arrangement would incur a penalty that seemed to fluctuate on a daily basis but would total millions of pounds. This was not known to it at the time of signing the agreement. The way in which the swap was sold patently breached the terms of the financial regulations surrounding such transactions, as other hon. Members have said.

Interest rates subsequently plummeted in a way that nobody had forecast. We all know that if companies enter into a bad bargain, that is something they have to accept, but this was not just a bad bargain: the company was mis-sold the hedging product to further the interests of the bank, not the customer, and the detailed and complex terms were never fully explained to or understood by the directors of the company.

[Jake Berry (Rossendale and Darwen) (Con)]

The case that my hon. Friend describes is extremely similar to one that I am involved in, which also involves RBS. The company concerned has now gone into administration and the directors have exited. Does he agree that the long-term implication of a company becoming impaired when the bank has taken a haircut, as it were, is that when those involved try to set up businesses subsequently they are unable to borrow from the banks, with or without an interest rate swap, so there is a generational effect on business?

[Mr Streeter]

I completely agree that the effects of this mis-selling scandal will ripple down through the generations.

Interestingly, on several occasions London and Westcountry tried to ascertain how much profit the treasury branch of RBS made on entering into the swap arrangement, but that has never been disclosed. Once the recession began to bite and values of commercial properties plummeted, companies such as London and Westcountry began to struggle. A significant variation in the company’s loan-to-value calculation meant that it was in technical default of its loan agreement. It was worse placed than many companies because its interest rate was pegged at 6.4%. When the borrowing facilities fell to be renewed in 2011, RBS insisted that the interest rate would rise still further to 7.5%—a figure that it knew to be unsustainable. Sadly, the story does not end there.

In 2011, I became involved in trying to negotiate with RBS to find a solution to the difficulties. Not once throughout that time did the company default on any interest payments to the bank. Indeed, the company got its act together, reduced its overheads and increased its profitability. However, because of the loan-to-value challenges and because the RBS board had made a strategic decision to withdraw from commercial property, the London and Westcountry loan was bundled up with other troubled loans and sold by RBS to a new company, Isobel Assetco Ltd, 25% of which is owned by Blackstone, the US venture capital company, and 75% by RBS. That removed the potential bad debt from the RBS balance sheet. However, that £1.36 billion deal was done at a 30% discount, meaning that it was funded to the amount of £550 million by RBS or, indeed, by the taxpayer.

It seemed to us that RBS was dragging its feet in trying to resolve matters with London and Westcountry, while we were negotiating in good faith. The company was seeking to refinance its business with another bank, but RBS insisted on full repayment of the loans, plus the swap penalty of about £13 million. It simply would not budge. We subsequently found out why: that debt had been earmarked for the Blackstone transaction, and RBS had no interest in resolving it sensibly with London and Westcountry. RBS would not give London and Westcountry any discount, but it gave Blackstone a 30% discount. For a bank that is owned by the taxpayer, that is an utter disgrace.

It was like going from the frying pan into the fire. The hard-nosed American venture capitalists were not remotely interested in the company’s welfare, nor in its strategic importance to the south-west. They were interested only in making as much money as possible from the deal. Within weeks, despite my protestations and those of other Members of Parliament from the region, London and Westcountry was placed into a completely unnecessary administration. Its business parks are now being flogged off one by one at a fraction of their true worth.

We have a credit crisis triggered by the corporate greed of our investment banks; we have inappropriate swap arrangements sold to companies simply to make a fat bonus for bankers; and, in the case of London and Westcountry, we have an off-balance sheet sale to a US loan shark, funded by the taxpayer, resulting in the almost immediate administration of a successful company and asset stripping on a breathtaking scale.

I think that swap mis-selling will become as big a scandal as the mis-selling of payment protection insurance. We all know that banks must make a profit, but this was not about profit; it was about greed, pure and simple. I hope that the family behind London and Westcountry will successfully sue RBS for many millions of pounds. I will do all that I can to help them. As a taxpayer, I hope that we will be able to sell RBS one day, but the bank should certainly be making provision on its balance sheet for many millions of pounds in future claims for swap mis-selling.

I hope that the FSA investigation concludes that in the mis-selling of swaps, our banks have once again behaved disgracefully, and that they should compensate all their victims. That is the important thing. I hope that the individual bankers—and in the case of London and Westcountry, senior members of Blackstone—feel thoroughly ashamed of their disgraceful conduct and unbridled greed. I also hope that Ministers will hold the directors of state-owned banks to account and recognise that although the Government are keen to sell the banks, issues of justice and compensation must be dealt with first.

Child Benefit

Gary Streeter Excerpts

Tuesday 22nd May 2012 Westminster Hall

[Mr Gary Streeter (in the Chair)]

There is obviously a lot of interest in this important debate. I have the power to impose a time limit, but I will not do so from the outset—let us see how we get on. However, a little self-restraint by colleagues would be most appreciated.

[Roberta Blackman-Woods (City of Durham) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Streeter. I thank Gingerbread, the Child Poverty Action Group, the Institute of Chartered Accountants in England and Wales and the House of Commons Library for producing excellent briefings for today’s debate.

Eleanor Rathbone, the great advocate for family allowances, which we now know as child benefit, entered politics in 1909. It is extraordinary that, more than a century later, we have once again had to secure a debate in Parliament to champion the basic principles of child benefit. There have been threats to child benefit before, but since 1945 when family allowances legislation was introduced—a watered-down version of the child support that Eleanor Rathbone and others had campaigned for—only the coalition Government have introduced legislation for the demise of the principle of universality that underpins child benefit.

Not everyone on the Government side is happy with the proposed changes, as demonstrated by the lack, bar one or two, of any Back Benchers on the Government side who wish to take part in this debate. In an earlier debate, the hon. Member for Christchurch (Mr Chope) pointed out that the Government’s proposals ask those on higher incomes with families to contribute more, while those on higher incomes without children are not asked to contribute more. I do not see how that can be fair. I do not usually quote from the hon. Gentleman, especially in agreement, but he has hit the nail on the head.

I would like to concentrate on two issues: the destruction by the Government of the universal principle, and the unfairness and unworkability of the proposed changes. The principle long established and supported on a cross-party basis is that society as a whole should contribute towards the upbringing of children, because we all share in the benefits of a properly supported future generation. Arguing for family allowances, Eleanor Rathbone captured that exactly:

“Children are not simply a private luxury. They are an asset to the community”.

The logic of accepting that view is that in a properly functioning society transfers are made to families with children—not away from them to pay for tax cuts to millionaires.

Her Majesty’s Revenue and Customs recently put out a press statement on the proposed changes, which told us that the Government’s plans for changing child benefit are legal. I have been in the House for a number of years and I am not familiar with Government Departments telling us that policy changes are legal. I can only imagine that it must reflect a measure of concern about the Government’s incompetence that Departments have taken to doing so. My concern, however, is not about the legality of the proposed changes, but that they are wrong and should not happen.

The CPAG has summarised the benefits of child allowances. They achieve horizontal distribution between families, from those without children to those with children, life-cycle redistribution—most people have children at some point and we want to help whenever families are most pressed—and intergenerational redistribution, and they place a value on all children. For those reasons and many others, the benefit should be kept in its universal form. The changes are grossly unfair and probably unworkable.

The ICAEW has branded the legislation seriously flawed in principle and in practice. It points to many problems and I will highlight a few. HMRC will be using the tax system to claw back from one individual a benefit paid to the other, which could be extremely difficult as families in similar situations will be treated differently. Despite the introduction of the taper, the changes could still lead to a huge disincentive for individuals to earn more. The worst aspect of the proposed changes is that a family with a single earner who has an income of more than £60,000 is significantly worse off through the withdrawal of the benefit, while two-earner couples with incomes of up to £50,000 each will not lose the benefit.

Oral Answers to Questions

Gary Streeter Excerpts

Tuesday 1st November 2011 Commons Chamber

[Mr Osborne]

Tackling tax evasion and avoidance—to which the question refers—will help us to reduce both the deficit and the debt. We have the fiscal mandate and the debt target. That has been independently verified by the Office for Budget Responsibility—which is in marked contrast to the situation when the right hon. Gentleman was in the Cabinet—and on 29 November it will provide its update.

[Mr Gary Streeter (South West Devon) (Con)]

Although we are all in favour of dealing with tax avoidance and evasion, are not some of the heavy-handed tactics used by HMRC to collect tax, including the imposition of late-payment penalties under the Labour Government, helping to stifle some growth in small and medium-sized businesses? Will the Chancellor examine the position to ensure that HMRC is being fair?

[Mr Osborne]

Of course we always want HMRC to approach things in a proportionate manner, and it certainly handles large companies and their tax bills better than it did several years ago. However, we must collect the tax that is owed. That is a very important principle at any time, and it is particularly important at a time when we are all having to make difficult decisions in our attempts to reduce the budget deficit. We will not tolerate tax evasion, and we do apply penalties to people who do not pay their tax on time.

Summer Adjournment

Gary Streeter Excerpts

Tuesday 19th July 2011 Commons Chamber

[Mr Gary Streeter (South West Devon) (Con)]

Before the House rises for the summer recess, I would like to draw attention to the importance of speech therapy and communication aids for profoundly disabled young people, and to raise a query about care home costs.

I am privileged to have in my constituency, in Ivybridge, the Dame Hannah Rogers Trust, which for over 220 years has provided education, therapy, care and respite for children and young people with profound physical disabilities. It is a genuine centre of excellence and has been rated as outstanding by Ofsted since 2006. A few weeks ago, I attended one of its special assemblies, which was designed to promote a greater understanding of the importance of electronic communication aids for people who have no other way of communicating. A number of dignitaries and members of the press were invited, along with parents and friends of the students.

During the time together at the assembly, we were given a presentation by a young man called Ben, whose sole method of communicating is by pushing a yellow button with his cheek to select certain words and phrases from his computer. In a very powerful presentation lasting about 15 minutes, he sat in his wheelchair in front of the whole assembly and told us, with a large screen behind him to illustrate his computerised words, about his family, his likes and dislikes; about his life. He told us that when we spoke to him we should look at him and not at his carer, and that when we asked him a question we should be patient when waiting for his response. I will never forget those words of guidance.

Ben did something else: he told us a joke—in front of all those people, using just his cheek, his yellow button, and his computer. I was so impressed that I promised him that I would share it with the House of Commons, and here it is: “I say, I say, I say, why did the fish blush?” “I don’t know,” came the reply, “Why did the fish blush?” “Because he saw the sea weed!” As you can imagine, the assembly dissolved into laughter. I am sure the House agrees that that would be a pretty good joke at any time, in any place, but for it to be delivered by a fine young man facing so many challenges, in a school assembly, with dignitaries and press present, was quite remarkable. I went up to him afterwards and told him that his presentation was awesome. I pay tribute to Ben, to his family and to his carers. I acknowledge the wonderful work done by Nicola Blundell, the speech therapist at the school, and her team, and of course to Dame Hannah Rogers Trust itself for so many years of astonishing service and dedication.

I intend to return to my second issue, which relates to the cost of residential and nursing care, in the autumn, but I wish to put down a marker at this early stage. It was recently drawn to my attention that local authorities are operating one set of charges for residential homes run by themselves and another, much lower, set for care homes run in the independent sector. I have taken these issues up with councils in my area and wish to share my findings with the House. In one local authority area, the going rate for a person entering one of its council-run care homes is £630 per week, while in independent homes in the same area the going rate is £429 per week—a differential of £200 per person per week. A similar disparity appears in neighbouring authorities.

My immediate reaction was to wonder why it is possible to have such a discrepancy. I have visited many care homes in the private sector and the public sector over the years, as we all have, and I would certainly not say that local authority care homes are necessarily superior. I took up the discrepancy with the council and received an interesting response:

“the £630 per week cost of in house services includes nationally agreed terms and conditions for local authority employees to include pensions, absenteeism, sickness and leave entitlements. This makes it difficult to compare rates with the independent sector.”

I do not agree with that. The Minister needs to look into this—no doubt he can do so in his thorough review following the Dilnot report on the costs of residential care—as it is something that possibly needs to be changed.