Multiannual Financial Framework

George Eustice Excerpts

Wednesday 31st October 2012 Commons Chamber

[Chris Leslie]

I want to make progress, if I may, because a lot of hon. Members want to speak.

I saw in The Guardian today that the Deputy Prime Minister has made a comment on Labour’s position. Liberal Democrats—there are none on the Treasury Bench, but some are in the Chamber—believe that Labour Members are dishonest and hypocritical simply because we want a real-terms reduction in the EU budget. Let us put to one side the fact that the Deputy Prime Minister, of all people, ought to avoid throwing those epithets. We have been clear on our position for a long period: because of the stagnating economy and the pressures on public finances, a real-terms rise in the EU budget is wrong. We have been saying that for months. The Deputy Prime Minister should figure out his own position before criticising those of us who want to stand up for the taxpayer.

I urge hon. Members to look at the amendment we tabled in the debate on 12 January, which states that the

“UK’s ability to negotiate a satisfactory European Union budget deal has been weakened by the Prime Minister’s failure to secure allies for a more prudent settlement in this qualified majority decision; and so calls on the Government to strengthen its stance so that the 2013 Budget and the forthcoming Multi-Annual Financial Framework are reduced in real terms”.

If the Government had paid attention back then, they might not be in such a weak position today.

[George Eustice (Camborne and Redruth) (Con)]

I understand the hon. Gentleman’s point on the importance of building alliances. Will he update the House on how many leaders of Labour’s EU sister parties he has spoken to in the three days since Labour announced this new policy? Do any of those socialist leaders support his position?

[Chris Leslie]

If the Minister wants to resign his seat in the negotiations, we would be more than happy to take over—we would be a great deal more successful. We are the Opposition and are not in a position to negotiate, but we are quite ready to take that role to get a better deal for the taxpayer. I only hope Ministers do so.

Interest Rate Swap Products

George Eustice Excerpts

Thursday 21st June 2012 Commons Chamber

[Mark Garnier]

That is an incredibly important point. We live in an ever-increasingly complex world, and banks are competing against each other to come up with more and more sophisticated products that appear to be user-friendly, such as simple fixed rate mortgages. But as products become more complex there are more hidden elements in the contracts that people sign, such as in the one under discussion, whereby in a completely unforeseen period of super-low interest rates, business owners have to pay what amounts to a fee to buy themselves out of the contract’s residual value.

People then get into very complex calculations to try to understand what is going on, and the economic value of, and internal rate of return on, the contract. That is when things go way above the pay grade of most people, apart from those specialists sitting in dealing rooms in Canary Wharf who really understand such stuff. So, as part of the banking review and the Financial Services Bill that is passing through Parliament, we need to look very carefully at the classification of customers and of salespersons in order to get back to the fundamental point that we have to match products to a customer’s ability to deal with them.

[George Eustice (Camborne and Redruth) (Con)]

I have seen cases in which, through a process of legal discovery, a very clear e-mail trail has shown banks wilfully deciding not to explain the disadvantages of such products and, sometimes, a complete mismatch between the length of their loans and the length of the product they were selling. Does my hon. Friend agree that this is not just about people not understanding the situation, but about an intention in many cases by people not to inform customers because they wanted the business for their own bank?

[Mark Garnier]

The hon. Member—

--- Later in debate ---

[Peter Aldous (Waveney) (Con)]

I am grateful to my hon. Friend the Member for Aberconwy (Guto Bebb) for raising this important issue and for campaigning on it with such determination.

I wish to draw attention to a case study concerning a medium-sized business in my constituency, setting out its experiences and seeking to draw some lessons from them. At this stage, the business wants to remain anonymous, as it is seeking to resolve the matter with its bank without recourse to legal action and it does not wish to prejudice those negotiations.

In 2005 the business entered an interest rate hedging transaction that ran for five years. At the outset, taking into account the immediate outlook for the economy and for interest rates, there was some logic to such an arrangement. In May 2008 the bank contacted the business, recommending and urging it to renew the arrangement for another five years, even though the agreement was not due to expire until 2010, more than two years away. During the ensuing three to four months, the customer continued to receive correspondence and telephone calls from the bank encouraging renewal.

At a meeting on 15 August 2008, the matter was discussed more fully. Subsequently, on 29 October, more than two months later, my constituent sent an e-mail to the bank advising it that he did not wish to renew the agreement. On 4 November he received a contract from the bank for signature. The bank told him it was confirmation of the verbal agreement reached on 15 August. Under pressure, not wishing to upset a business arrangement with his bank that had been in place for many years and at a time when the economic outlook was uncertain and the customer was keen to keep on good terms with the bank, he signed the agreement.

Earlier this year, my constituent decided, having sold a property, to bring the agreement to an end, so he contacted the bank to establish the cost of doing so. He was advised that that would cost more than £72,000. Up to today, the whole arrangement has cost him £162,000 in interest charges, which are predicted to have risen to £200,000—40% of the value of the loan—by the end of the arrangement in September 2015.

I have three observations on that chain of events. First, in whose interests was the bank acting? Its own or its customer’s? Why did it put pressure on him to renew the agreement when there was no need to do so for another two years, until 2010? In 2008, taking into account the outlook for interest rates and their likely future movements, there was no incentive or reason for the customer to rush to renew. It would have been much better to see what would happen over the following two years. Any independent adviser acting in the company’s best interest would have advised it to do that. In my view, the bank’s actions were dictated purely by its own self-interest rather than the best interests of its customer.

Secondly, the bank appears to have been incompetent at best, and at worst to have adopted underhand tactics in putting pressure on the customer to renew the agreement. Obviously what happened at the meeting on 15 August is subject to disagreement, but I personally accept my constituent’s version of events. Surely the best practice for the bank to have pursued would have been to take its customer through the arrangement step by step at that meeting and, if there was a verbal agreement, to produce a contract immediately and not two months later. A further meeting should have taken place, to go through the contract line by line, until the customer was fully aware of the implications before signing. The fact that the bank did not send the contract for two months, and only did so because it received an e-mail from its customer indicating that he did not wish to proceed, shows it in a very poor light.

Thirdly, there is a clear failure by the bank to provide full, independent and impartial advice that sets out the pros and cons of the transaction, in particular the cost of breaking early. If my constituent had been aware of all those factors, he would not have renewed the arrangement.

I am keen to give other hon. Members the opportunity to state their case, so I will conclude with two points. First, this whole matter needs to be addressed straightaway and given high priority by the FSA, and a framework should be put in place for cases to be investigated quickly with proven claims settled immediately. We do not want this scandal to drag on for years, because that could undermine the very businesses on which the economic recovery needs to be built.

Secondly, we need a banking system that is regulated and run in a way that prevents such conflicts of interest. In the case I have described, the bank was clearly acting in its own interest rather than that of its customer.

[George Eustice]

Does my hon. Friend agree that if banks encourage their customers to take up such products, they should not then be allowed to provide them through one of their subsidiary companies? That would be one way of creating a division.

[Peter Aldous]

I agree entirely with my hon. Friend—a dog cannot serve two masters. The two acts of advising a customer and selling a financial product must be completely separate and provided by organisations that are independent of each other and not related parties.

I support the motion and look forward to hearing from the Minister about the Government’s proposals for achieving a prompt resolution to yet another bank selling scandal.

--- Later in debate ---

[Chris Heaton-Harris (Daventry) (Con)]

Thank you for calling me to speak in the debate, Mr Deputy Speaker. I appreciate the opportunity as I did arrive late. I have come directly from the Defamation Bill Committee, but I hope that I shall not defame the banks too much as I talk about this scandal that they have been perpetrating. I shall test the Enoch Powell theory of public speaking today; if it is true, this is going to be a blinder of a speech.

I congratulate my hon. Friend the Member for Aberconwy (Guto Bebb) on securing the debate. The quality of all the contributions, raising constituency cases as I intend to do, has shown me that this scam, which has been taking place for a long time, is a massive one of ginormous scale that requires firm action as soon as possible. I also congratulate the Backbench Business Committee, which has yet again come up trumps in calling a debate that our constituents would like to hear, and that probably would not have been heard in normal circumstances under previous mandates.

I will try not to repeat the points that other Members have made, but I want to give some details about a couple of cases in my constituency. I also want to press the Minister on the matter and issue a call for action. My hon. Friend the Member for Staffordshire Moorlands (Karen Bradley) gave the House a description of the swaps. I was a small business man before I entered politics, and I can understand how those businesses were caught by this scam. The relationship that they have with their bank manager—and perhaps with their relationship manager, as we have heard—is all important, or it certainly was until these products started to be sold. It was a relationship based on friendship and trust. It was understood that products were being bought and used, but it was always felt that independent advice was being offered and that the bank would put you right all the time. That has been completely lost with the sale of these interest rate swap agreements. Something really bad happened back in 2003-04 when all this started to happen.

Two of my constituency cases are happy to be named and others are not. My constituency is full of vibrant small businesses. In one case, Mr Benyon has two companies: Oastlodge Ltd and Hallway Estates Ltd. Oastlodge had been with Lloyds bank for over 35 years, and Hallway for just over 10. In 2004, Oastlodge was taking out a large loan and was advised to take out a swap. This would have increased overall borrowing costs—the right questions were asked of the person trying to sell the product—so the company requested not to enter. In 2005, Lloyds came back with an offer for a swap where the bank would halve interest margins on all existing loans. The offer was in writing. A business man confronted with having interest loan costs halved is likely to be interested in taking up the offer. In 2006, the company was sold a further swap, on the basis of reducing the overall cost of borrowing and saving even more money.

In 2008, Oastlodge and Hallway were offered several more swaps, and one in particular was highlighted. All the benefits were listed in great detail, but none of the downsides; neither was any information provided on potential breakdown costs. It was also explained in writing that

“there would be no risk to borrowing costs trailing higher”.

The previous swap had been for 10 years; the new ones were for 20 years—far longer than the duration of the loans at the time. The swap was signed up to, with the companies knowing full well—or, at least, thinking they did—that there was a ceiling on the borrowing costs.

In 2009, the companies were informed, when their loans were up for renewal, that their lending margin was going to double. They complained that the bank was reneging on a deal, but were told that there was nothing formally agreed. The bank could, however, sell them another swap to reduce borrowing costs until 2013. They now had no choice but to enter the new swap at a cost of about £200,000 a year.

While they were making their complaint, the companies discovered that the swap was not a relationship with the bank they thought they were dealing with, as it had been sold on in the financial markets. Other Members have highlighted this. The companies took legal and financial advice but, despite having a good case, were wary of risking the extra costs of taking the bank to court. In fact, my hon. Friend the Member for Aberconwy is their last best hope, and I suspect that that is so in many other cases, too.

[George Eustice]

One problem many businesses have is that when they decide they want to take legal action against a bank, they often find that many of the law firms that might appear to be the natural ones to turn to have effectively been bought off by the banks through things called permanent retainers and through the approved panels. Some of the best litigators in the country are thus often barred from acting against the banks.

[Chris Heaton-Harris]

I did not know that, and I thank my hon. Friend for raising it.

Lloyds bank has denied any wrongdoing whatever, claiming that the margin reduction was not necessary for the duration of the swap, and it hides behind the small print that says, as we heard earlier, that any advice given was not, in fact, “advice”.

IMF

George Eustice Excerpts

Monday 23rd April 2012 Commons Chamber

[Mr Osborne]

Yes, I can confirm for my hon. Friend’s constituents in Suffolk and for people around the country that an IMF loan does not add to the debt or the deficit. We have to ask ourselves why, when people analyse the British economy, they do not add an IMF loan to the debt or deficit. It is because they understand that it is a loan that is paid back with interest and an asset that is exchanged for some of our foreign exchange reserves, not a call on public spending.

[George Eustice (Camborne and Redruth) (Con)]

I support the Chancellor’s decision, because Britain should play its part in supporting the IMF and helping to stabilise the world economy. I particularly welcome what he said about supporting countries rather than currencies, but what advice should the IMF give to a country that applies for support but whose problems are largely caused by an unsustainably high exchange rate?

[Mr Osborne]

I thank my hon. Friend for his support, which is very welcome. The problems of the countries that we are talking about lie in their lack of competitiveness, or in the case of Ireland in its banking system. The problems that they are trying to deal with have been exacerbated by the fact that they are part of a currency union and cannot devalue, although without getting into a lengthy debate I have to say that exit from the single currency would also bring them a whole set of problems. We are very clear that an IMF programme would come with robust conditions, real analysis of debt sustainability and real recommendations on structural reforms to make those economies more competitive.

Budget Resolutions and Economic Situation

George Eustice Excerpts

Friday 23rd March 2012 Commons Chamber

[George Eustice (Camborne and Redruth) (Con)]

I welcome in particular the Budget’s emphasis on business and enterprise, because we have to be clear that there are no short cuts out of the financial mess left by the previous Government. We need new businesses to set up, and existing businesses to expand and export more products, in order to create the jobs of the future.

The hon. Member for Clwyd South (Susan Elan Jones) said that there are no jobs for public sector people to go to, and that those who have been in the public sector cannot get jobs in the private sector, but we need those public sector employees to set up their own businesses, because I see a lot of talent in the public sector workers whom I meet in Cornwall. Many have experience of managing large projects, managing large teams of people, planning ahead and dealing with the public. They have many of the skills that they need to set up their own business and to create jobs for other people if they only had the confidence to do so.

I should also like to discuss the importance of supporting young people in setting up in business. I remember talking about 10 years ago to a businessman who said, “There is never a better time to start to run your own business than when you are young, when you have just left university. You should never put it off and think, ‘Well I will start up my own business later in life’; you should get on with it early.” It is therefore particularly important that we encourage enterprise at schools and get schools to engage in the various existing entrepreneurship schemes.

The announcement in the Budget to develop the idea of enterprise loans was particularly welcome, as it builds on the good work that the Government have already started with the enterprise allowances to help small businesses to set up.

Before the Budget I visited a large manufacturer in my constituency, or as large as they come in my constituency, called Teagle Machinery, based just outside Redruth. It is a fantastic success story in Cornwall: more than half of everything it produces is exported; the number of its employees has more than doubled over the past 10 years; it is winning orders in markets from Japan through to eastern Europe; and it is even now attempting to break into the market in Russia. It is an extraordinary success story, almost like Cornwall’s answer to JCB and proof that this country can still do traditional, high-quality manufacturing and engineering, and that we can be world beaters in that sector.

There are several measures in the Budget that companies such as Teagle in my constituency will welcome. There is the reduction in corporation tax, which my hon. Friend the Member for Wyre Forest (Mark Garnier) touched on. It is important that we have a business-friendly tax system here and encourage businesses that want to invest in Europe to choose the UK, and the reduction to 24% and the further planned reductions to 22% by 2014 will be incredibly welcome.

The planned national loan guarantee scheme will be a major support for smaller businesses. We all have many businesses coming to us saying that they have difficulty accessing finance at the moment, and that scheme will bring into the market £20 billion of funding that will be affordable for small businesses and give lenders the safeguards they need to make the money available. That, too, is going to be incredibly welcome.

I particularly welcome also the efforts being made to increase export finance and the funding available for it, because Teagle specifically raised that issue with me. It gets some support from UK Trade and Investment to take part in trade fairs, but it would like to do more, and this country is quite successful with exports at the moment. In the past year, our exports to India have risen by 30% and to China by 15%, and our overall exports during the past couple of years have risen by 30%. We have to build on that, because it is through exports, manufacturing and creating wealth that we will get our economy back on its feet.

The Secretary of State for Transport touched on many transport issues, and the Government’s decision to maintain investment in infrastructure is especially welcome. In my area, in particular, there is a new link between Camborne and Redruth, which will unlock the potential of derelict mining land and create 6,000 new jobs over the next 20 years, half of them in the next five years. Projects like that will also help to get our businesses back on their feet and moving forward again.

A speech about Cornwall would be incomplete if it did not touch on fuel tax. I have argued consistently, and continue to do so, that fuel tax can be a regressive tax and that it hits peripheral areas particularly hard because their products have to be transported much further. What the Government have done so far on that is particularly welcome. We must remember, as my hon. Friend the Member for Dover (Charlie Elphicke) pointed out, that fuel tax is currently 10p lower than it would have been under the Labour party’s plans, which is very welcome. I am particularly encouraged to see what has been done to take forward the idea of a fuel price stabiliser and the pilots that have continued to be rolled out in rural areas with the rural rebate, which is particularly important to areas like Cornwall.

Finally, I want to talk a little about the tax thresholds, because the increase in the threshold to £9,200 a year is a major boost to areas such as Cornwall where a large number of people are on low incomes. It will take more than 20,000 people in Cornwall out of tax altogether and 24 million people across the country will benefit. There has been some discussion about the genesis of the proposal and which party came up with the idea first. My hon. Friend the Member for Peterborough (Mr Jackson) touched on that, but I can vouch for the fact that in 2004, when I was working on policy ideas in the Conservative party, it was in fact Lord Saatchi who strongly pushed the idea of having a £10,000 threshold and taking people out of tax altogether. It is a Conservative proposal and always has been, and I am delighted that our Liberal Democrat colleagues have come around to our way of thinking.

Budget Leak Inquiry

George Eustice Excerpts

Thursday 22nd March 2012 Commons Chamber

[Mr Gauke]

My hon. Friend is absolutely right; that is in the coalition agreement. We have always said that we wanted to make progress on that, and I am delighted that we did yesterday.

[George Eustice (Camborne and Redruth) (Con)]

Does the Minister agree that it is typical of Labour Members to be obsessed by media headlines and spin when they ought to be doing what we do on the Government side of the House—make good policy?

[Mr Gauke]

My hon. Friend is absolutely right. Yesterday’s was a Budget of substance, this is a Government of substance and we will continue to get the country out of the mess that we inherited.

Fuel Prices

George Eustice Excerpts

Tuesday 15th November 2011 Commons Chamber

[George Eustice (Camborne and Redruth) (Con)]

I welcome this debate, and I congratulate my hon. Friend the Member for Harlow (Robert Halfon) on securing it. I also welcome some of the very good actions that the Government have taken to date, most notably the suspension of the fuel duty escalator, the cut in fuel duty, and the rural rebate that is being considered, which we hope will be piloted in the Isles of Scilly, not far from my constituency. I agree with the many Members who have said today that fuel tax is a regressive tax that tends to hit the poorest, and rural areas, hardest.

[Sheila Gilmore (Edinburgh East) (Lab)]

I find interesting the discovery by Government Members, including the hon. Gentleman, that taxes on spending are regressive. When that argument was about the increase in VAT, it seemed to be ignored, so has he changed his mind on VAT, too?

[George Eustice]

The issue of VAT has been covered widely by others. I would just say that I think all Government Members regret the fact that the Labour party made such a pig’s ear of running the economy that we had a £150 billion black hole in our finances.

I would like to focus on a separate but linked fact: fuel tax has a disproportionate impact on areas that are geographically peripheral. I come from Cornwall, and there is no doubt that fuel tax is a regressive tax that hits Cornish businesses far harder than businesses in the main population centres.

[Glyn Davies (Montgomeryshire) (Con)]

I am grateful to my hon. Friend for giving way, because the issue is particularly important in my constituency too. High fuel prices act as an anti-regional-development policy. Not only are they a cost on business, but they discourage business from locating in certain places. They work very much against the thread of Government policy in other areas.

[George Eustice]

I completely agree. That will be the main thrust of what I say. I was in business in Cornwall; indeed, on many occasions, I drove a lorry that took our excellent Cornish strawberries to Birmingham. The reality is that Cornwall is 300 miles away from London, and 260 miles away from Birmingham. We have to drive the best part of 100 miles just to get to the seat of my hon. Friend the Member for Totnes (Dr Wollaston). Let us look at how that translates into tax. A typical 16-tonne lorry doing a round trip to London would incur, in total, tax of £220, just on that one trip. Let us compare that with a lorry driving from Birmingham to London: the tax taken for that would be only £80. A similar operation in Cornwall has to pay three times more tax. That is unfair, and it is felt acutely by businesses in the primary sector, particularly in areas such as fishing and farming, in which Cornwall has a comparative advantage.

If we are serious about developing a regional policy, we have to help the most peripheral regions to develop industries and jobs in the sectors in which they have a comparative advantage. The irony is that places such as Cornwall have EU grants to help develop businesses in the areas where we have strengths, which include food processing, farming, and green energy. The regional growth fund has a similar purpose. We are undermining those efforts by having a regressive tax through high fuel duties. The impact is to compound the single most important disadvantage that the regions have, which is their distance from the market. As I say, that is particularly noticeable in Cornwall. Our climate gives us a comparative advantage; we grow potatoes early, and can grow cauliflowers in winter—bulky commodities that cost a lot to transport. Of course, with our marine resources, we have fishing, too.

I want to finish with a suggestion on how we might go forward. Alongside the rural rebate, which is due to be piloted, we should consider, perhaps as a strand of regional policy, some kind of rebate for businesses in peripheral regions such as Cornwall. It should not be beyond the wit of man to devise such a scheme. To be eligible, a business would have to be located in a county such as Cornwall. The rebate would be available only on fuel supplies delivered to an address in the area. As for how we would give the rebate, we have heard that most businesses that run a transport fleet would be VAT-registered, so it would be possible to have some kind of fuel duty rebate that runs alongside the VAT return. I know that none of these things is easy; it would take some work to develop the detail of such a policy, but it would be an interesting idea to look at. It could be a very powerful regional policy. In the meantime, I commend the motion to the House, because it is important that there be cross-party consensus on how to deal with the issue.

European Union Fiscal Union

George Eustice Excerpts

Wednesday 14th September 2011 Westminster Hall

[Mr Cash]

Given the growth the rates elsewhere in Europe and the complete mess that the eurocrats and other Governments—including our own—have created, allowing us to get into this parlous state, it is inconceivable that they would dare to argue that somehow or other they could operate without us. That suggestion is simply child’s play and a joke, although it has got beyond a joke because it is so serious. That seriousness might come out this afternoon, but it will certainly come out—as night follows day—over the next few months.

I have been looking into the £53 billion trade deficit. I made some further inquiries, because I wanted a breakdown, and I was given the figures yesterday. In the trade balance of £53 billion against us, £17 billion is in vehicles—cars and lorries. In other words, we have destroyed or have had destroyed our manufacturing base in car making—my hon. Friend the Member for Luton North knows that better than me—and yet our trade in commercial and other vehicles is now on a monumentally adverse basis.

Another point that I am bound to make, which is deeply concerning, concerns the consequences of the departure of one or more states from the European Union, which some advocate. Some will have read Hans-Olaf Henkel in the Financial Times the other day. He is the former head of German industry, the equivalent of the director-general of the CBI, and he said that the “biggest professional mistake” of his life was to have supported the euro process, which is an important statement from someone of his standing. He is completely against the idea of the European Union as it now is. Germany has some very important voices, because it is effectively the paymaster for the rest of Europe.

Our negative trade balance with Germany is devastating. I was in Poland the other day, and I looked at its trade figures. I suspect that a lot of people in Poland desperately want to remain within the framework of some protective system but are deeply worried about the imbalance between Germany and Poland. And so it goes on—if we look at the Greek or Spanish situations and at the bottom line, what is happening with fiscal union is also, to use an expression, the creation of a greater Germany. For practical purposes, if we examine what is said at the various meetings, no one can be in any doubt that the Germans call the shots. The Germans are benefiting enormously from the European Union for one reason, which is that they are benefiting from their investment in other countries.

In that context, I have the figures for unit labour costs, if anyone is interested. In the past 10 years, German unit labour costs have gone up by only 2%. The average of all the other member states put together has unit labour costs increasing by no less than 25%. That is worth thinking about. Not only do we have the most monumental trade balance against us with Germany, but its trade balance with the rest of Europe is monumentally in its favour, and the Germans have done that largely through what we might call their skill or commercial nous. None the less, they have managed to do it and so they make huge profits from other parts of the European Union. Let us not be taken in by the argument that, somehow or other, Germany will suddenly go walkabout. The Germans get so much out of the European Union, and Angela Merkel is making it clear that they will continue to do so, and that is one of the reasons why Germany is so committed to political union. That does not mean, however, that it is in our interest.

[George Eustice (Camborne and Redruth) (Con)]

My hon. Friend gets to the nub of the issue—whether it is realistic to expect the Germans to accept mutual liability with countries such as Greece, Spain and Portugal. It was different when they wanted to reunite Germany, and when West Germany was prepared to accept some of the liabilities of East Germany. Does he accept the difference, and that that is why going to full fiscal integration to prop up the euro is a very big decision for the Germans?

[Mr Cash]

I very much agree with that. I put that same point to the Prime Minister in the Liaison Committee last week. I asked him whether he seriously believed that Germany was going to be able to bail out the other member states. The money is simply not there. To imagine that Germany could carry the weight of the Spanish debt is, as Camilla Cavendish has said, complete cloud cuckoo land. We can see the Italian position getting increasingly out of control, while the Greek situation is beyond critical. Greece should exit the euro—that is perfectly clear—but there are desperate attempts to prevent it happening, although that is literally trying to do something impossible. One might as well believe, as Alice said in Wonderland,

“six impossible things before breakfast”,

and the truth is that one of them is the idea that Germany will be able to sustain the whole of the European Union or, indeed, that its own people will allow that. All the evidence is that there is a very serious concern that they simply cannot afford to do it and that they do not want to do it. I will not give all the instances, because they are so well reported in the newspapers and other media.

Private Finance Initiative

George Eustice Excerpts

Thursday 23rd June 2011 Westminster Hall

[Andrea Leadsom]

I think that my hon. Friends are reading my speech, because that was to be my next point. They have obviously been given advance notice. That is exactly the point: the builder, in theory, takes the risk on a project such as building a school, and the LEA only ever starts to repay the debt when the school is built and everything is in place. Theoretically, the builder takes the project risk. However, as my hon. Friend the Member for North East Cambridgeshire (Stephen Barclay) says, in reality there is bundling, and because there are sometimes unique risks to a project, often those revert to the LEA. The perceived advantages from the fact that the builder takes the project risk are therefore not always as clear cut as they might appear. In the end the major advantage has been that of not consolidating the debt on the national balance sheet.

[George Eustice (Camborne and Redruth) (Con)]

On that point, is my hon. Friend aware that, as well as being poor value for money for the taxpayer, PFI contracts have caused problems with the restructuring of certain elements of the public sector? For instance, several schools that have become academies have had all sorts of problems with their PFI contracts, causing tensions between them and the local authority. Sometimes those problems have been a block to a school’s moving to academy status.

[Andrea Leadsom]

Again, my hon. Friend takes me to my next point: the other side of the equation is the very apparent disadvantages of PFI, the primary and key one being the lack of flexibility. The reason for it is that often a special purpose vehicle sets up the project, and therefore the project is inexorably linked to its financing. For example, you may build a school and decide you want an extra classroom or two. A PFI school in the constituency of a member of the Treasury Committee built its hockey pitch 2 feet too short for internationals, so it tried to extend it by 2 feet, but therein lay a can of worms. It was impossible to do it other than at exorbitant cost, because the contract and its financing are inextricably tied together within the special purpose company. What happens, and the reason hon. Members have spoken of money being made out of the contract as it proceeds, is precisely that if you want to change the spec—which of course you do—

Budget Resolutions and Economic Situation

George Eustice Excerpts

Thursday 24th June 2010 Commons Chamber

[George Eustice (Camborne and Redruth) (Con)]

I am grateful for the opportunity to make my maiden speech. I start by congratulating my hon. Friends who have also made their maiden speeches today. I sympathise with my hon. Friend the Member for Staffordshire Moorlands (Karen Bradley) in her frustrations over bureaucracy and her impatience at the way in which Whitehall sometimes adds additional layers to the laws that we in this House set out. I also congratulate my hon. Friend the Member for Hendon (Mr Offord) and I completely agree with him about the importance of building aspiration.

I would like, too, to congratulate the hon. Member for Kingston upon Hull East (Karl Turner), who I believe has just left the Chamber, on a very articulate speech. That might be something that the constituents of Kingston upon Hull East take a while to get used to. I am grateful to the hon. Member for Eltham (Clive Efford)—he has also left the Chamber—for his colourful description of, and personal perspective on, the new coalition, although when I heard him discussing the Stockholm syndrome, I wondered whether he was talking about the process whereby Labour Members stuck with their former leader, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), for such a long time.

The seat that I represent is a three-way marginal, as was the former constituency of Camborne and Falmouth. The election left me with a majority of just 66 over my predecessor, so it has certainly lived up to its reputation again this time around.

It is a special honour for me to represent my home town. I was brought up between Camborne and Hayle, in Cornwall, and my family have lived and worked in the area for more than 400 years. When one has such deep roots in a constituency, one feels a special responsibility for its long-term future.

My predecessor, Julia Goldsworthy, was also local, and came from a well known Camborne family. I pay tribute to her work for the seat in her five years as a Member of the House. When she was elected she was the youngest MP in England and one of the youngest in the country. She was quickly promoted within the Lib Dems, and became first a health spokesman, later shadow Chief Secretary to the Treasury, and finally Communities and Local Government spokesman. She also campaigned locally, most notably on water charges and the injustice in the south-west whereby just 3% of the population are expected to carry the burden of maintaining 30% of our coastline. I, and many other Devon and Cornwall MPs, will be persistent in pushing that agenda forward and trying to find a policy solution that ends that injustice.

Camborne and Redruth is a diverse constituency. To the south is the peace and tranquillity of the Helford passage and some fantastic gardens such as Trebah and Glendurgan, with their collection of plants. To the north is the rugged splendour of the north cliffs and undoubtedly one of the best beaches in the country at Hayle, with three miles of golden sands. At its heart, however, are the three industrial towns of Camborne, Redruth and Hayle, which have made a remarkable contribution to the industrial revolution. The steam locomotive was invented there by Richard Trevithick, the famous Camborne engineer, and the first ever gas lamp was invented by William Murdoch in Redruth. Ever since, there has been a healthy rivalry and competition between those towns and not least their rugby clubs.

The loss of the mining industry and iconic engineering firms such as Holman Brothers in Camborne dealt a serious blow to the Camborne and Redruth area. I truly believe, however, that we can be pioneers again and become the international centre of excellence in renewable energy and, most importantly, wave power. Cornwall’s coastline is second to none, and we have the engineering expertise to turn ideas into industry. The wave hub project, currently under construction near Hayle, will be the first of its type anywhere in the world—the first installation that can test commercial-scale wave devices. The constituency also leads in much of the academic research work that will enable wave power to move forward, especially at the Camborne school of mines, now located at the combined universities for Cornwall at Tremough.

My No. 1 priority for the area will be economic regeneration. I was delighted to hear the Chancellor say in his Budget that he does not propose to make a further cut to total capital spending. If we want to improve our infrastructure and competitiveness and rebalance our economy, it is essential that we continue to invest in that infrastructure. He is also right, however, that we should switch the focus to creating new enterprises and businesses, and that in particular we should encourage the development of new enterprise in those regions such as mine that have perhaps been too dependent in the recent past on the public sector. There is only one way out of the current recession: through new businesses setting up and new industries being created. We need to harness a culture in which entrepreneurs are willing to get out there, take risks, have a go, and feel that they can make a difference.

Earlier, I mentioned Richard Trevithick, the most famous inventor from Cornwall. Like many pioneers, Richard Trevithick never actually made any money from his idea of building an engine, but the rest of the country did, and the world has benefited from that invention and everything that followed it. Trevithick had no regrets about what he had done. Recently, when conducting some research, I came across an interesting extract from a letter that he had written. I shall end with this quotation, because I think it makes a very valid point.

“I have been branded with folly and madness for attempting what the world calls impossibilities, and even from the great engineer, the late Mr. James Watt, who said to an eminent scientific character still living, that I deserved hanging for bringing into use the high-pressure engine. This so far has been my reward from the public; but should this be all, I shall be satisfied by the great secret pleasure and laudable pride that I feel in my own breast from having been the instrument of bringing forward and maturing new principles and new arrangements of boundless value to my country. However much I may be straitened in pecuniary circumstances, the great honour of being a useful subject can never be taken from me, which to me far exceeds riches.”

I believe that as we face the present economic challenges and try to deal with the environmental challenge of climate change, we can learn a lot from pioneers such as Richard Trevithick. What we can learn is that Government cannot simply drop all the answers. I have heard a great deal in the debate today about how Government can do everything, but they cannot. In the final analysis, we need talented individuals to come up with the solutions. The role of Government is to enable those individuals, not to try to replace their role.