Budget Resolutions and Economic Situation

Debate between Geraint Davies and Mark Hoban

Wednesday 18th March 2015 Commons Chamber

[Mr Hoban]

That demonstrates the challenges we face to get the pace right. One thing we should be absolutely clear about is the importance of sticking to the course. There are three reasons why it is important to stick to the course of reducing the deficit and reducing debt. It is inherently unfair for future generations to bear the cost of debt we have built up.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Will the hon. Gentleman give way?

[Mr Hoban]

Let the hon. Gentleman answer this question: is it really fair for our children and grandchildren to pay the cost of debts we have built up? Let him answer that question.

[Geraint Davies]

Does the hon. Gentleman agree that since 2010 debt as a share of GDP has grown from 55% to 80%, and that the Tories have borrowed more in five years than we did in 13 years even though we had to bail out the banks? Is that not a complete failure of economic management?

Jobs and Social Security

Debate between Geraint Davies and Mark Hoban

Wednesday 28th November 2012 Commons Chamber

[Mr Hoban]

I will not give way; the hon. Lady had her chance earlier.

The last labour market survey showed that 80% of people in part-time work wanted part-time work—it is right for them to do so. It is the right route back into employment for many people.

The right hon. Member for Tottenham (Mr Lammy)—

[Geraint Davies]

rose—

[Mr Hoban]

Let me address the right hon. Member for Tottenham, who was critical of apprenticeships in retail. How many of our supermarket bosses started off on the shop floor? We should not close down any route to advancement. He also criticised apprenticeships in administration. For many people, a job in an office is a route out of poverty. He should welcome opportunities to broaden the range of skills that are available to people.

I should tell the hon. Member for Wansbeck (Ian Lavery) that I get fed up with people talking down the north-east. I was born and bred in the north-east, and I went there a couple of weeks ago. Let us look at what has happened there. Employment is up by 40,000. People are talking about the need for more skills. There are big challenges in the north-east, but he does his region no service by talking down its people. While I am at it, let me say that he talked about the work capability assessment. Let me remind him that his Government introduced it. This Government are reforming it to ensure that it is the right policy and that it gets people into work and off a lifetime condemned to inactivity.

Financial Services Bill

Debate between Geraint Davies and Mark Hoban

Tuesday 22nd May 2012 Commons Chamber

[Geraint Davies]

This is about having the reliable and consistent measurement of data in order to measure the effectiveness of policies, rather than having to rely on looking at the website of whatever trade association we are talking about. That is the essence of this amendment and it is why I support it.

The hon. Member for Stone (Mr Cash) mentioned the Rochdale pioneers, and I am glad that he did so. At that time, the idea of co-operation, co-operatives and mutuals was forged very much in the fire of unbridled capitalism and an economic Darwinism that I know some hon. Members would like to see return in the so-called “spontaneous order” of things. In that unbridled free market, the weaker members of society were being crushed, and a collective, mutual ownership emerged, through mutual societies and co-operatives, that enabled normal people to share risks, benefits and ownership, and to reinvest surpluses in their mutual. That is why those organisations grew, and I am very proud consistently to a have supported them.

One of the questions that arises is: why has there been a slight falling away of mutuals over the past few decades? Partly it has been because the Conservatives pushed demutualisation to get quick profits for their friends, who are involved in the capitalist system to make quick profits. Then, in 2008, we have this tsunami and suddenly people wake up in the debris of this chaos realising that some of the surviving organisations are mutuals, and they rightly ask why that is. The answer, of course, is that the focus of mutuals—their raison d’être—is not about just reaching out to maximise profitability and taking irresponsible risks; it is about delivering services for their members, who have equal shares. As a result, the time of mutuals is back.

This is a time of enormous global financial turmoil. We all know about the risks from the sovereign debt of Greece, Spain and elsewhere, and the knock-on impacts of that. We also face a great deal of risk from German banks and other financial institutions that do not have the inherent solidity and risk management of the co-operative system. If the Government are serious about this, now is the time to move forward. The coalition Government have said that they will move forward, but they cannot even be bothered to measure the market share and the number of mutuals. So how seriously can we take them? The answer, self-evidently, is: not seriously at all. The top management consultancy McKinsey has the mantra, “If you can’t measure it, you can’t manage it.” That company knows that that is self-evidently the case, but we are saying here, “We don’t really want to manage it. We won’t measure it. It does not really matter.” That is what is coming across, and it is a great shame that it is.

Labour Members are saying, “Let’s paint a picture of how things are changing. Let’s try to use that to make progress and to actively encourage credit unions, housing co-operatives and so on.” Such organisations tend, by their very nature, to be locally owned, with local benefits for local people. That contrasts with the situation described by the hon. Member for Stone, whereby a member of the Royal Bank of Scotland may find that Santander has suddenly sent them part of their bill, and they wonder why that is and whether there is a risk from the Spanish contagion, linked into the Greek risk. Somebody was mentioning that sort of situation to me the other day, and of course it arises because of the global nature of these organisations.

People want the security and assurance of knowing that they can go to local co-operatives and be offered loans if they save, whereas they would be excluded from high street banks, which would say, “You’re too poor. We can’t give you an overdraft”, but if people were in a credit union they could get one. A lot of this is about risk management and stability, but it is also about ethics. We know that mutuals—the Co-op in particular—are trying to promote fair trade, sustainability and so on. If we are serious about encouraging risk management, and a better and fairer future for all our communities with mutuals, we should be serious about pushing forward the top line of this amendment—that to manage it, we should measure it. I very much hope that the Minister will accept this modest amendment.

[Mr Hoban]

We have had a wide-ranging debate on mutuality, and it has acted as a peg for discussion. As is clear from this evening’s contributions, we all recognise the strength of the mutual sector, its importance in providing choice and diversity, and the benefits it brings. A couple of times, however, Opposition Members seemed to elevate mutuals into semi-religious institutions. Let us be realistic about some of the issues that mutuals faced during the crisis. Some mutuals had to be bailed out by others, and the first use by the previous Government of the special resolution regime was on the Dunfermline building society. A number of mutuals strayed from their core business model, which had consequences.

One hon. Member—I think it was the hon. Member for Harrow West (Mr Thomas), who is no longer in his place—referred to mutuals supporting their branch network. I recall that one of the first Adjournment debates I replied to as a Minister was as a consequence of Nationwide closing a number of branches in south-east London. All mutuals face commercial pressures, which needs to be acknowledged.

[Geraint Davies]

What the Minister says is true, but does he accept that there is a differential outcome and that, on balance, because of the lower-risk structure, the mutuals do better than conventional capitalist banks?

[Mr Hoban]

It depends on risk management and the business model that mutuals follow. There is a different set of constraints around building societies, which helps to ensure their stability, but that does not mean that they are immune from some of the mistakes that have caused failure in the past.

The clear intention of the Bill—we discussed this at length in Committee—is to ensure that regulation does not discriminate against mutuality, or indeed any other type of ownership, simply because it diverges from the norm of public or private ownership. I believe that the Bill delivers that result. For example, in clause 22, new section 138K requires the Prudential Regulatory Authority and Financial Conduct Authority to analyse the impact of the proposed rules on mutual societies. This will help to build up a base of impartial evidence to allow the regulators to continue to assess whether mutuals are being treated appropriately within the regulatory system. It is important that regulators think through very carefully the impact that their rules will have, particularly on mutuals.

Oral Answers to Questions

Debate between Geraint Davies and Mark Hoban

Tuesday 24th January 2012 Commons Chamber

[Mr Hoban]

My hon. Friend should bear in mind that the deficit on traded goods between the UK and the EU is £43.9 billion but that the deficit outside the EU is even larger at £54.7 billion. We should be encouraging businesses across the UK to invest more and to export more to places in the EU, as well as to Brazil, Russia, India and China. I encourage him to talk to businesses in his constituency and encourage them to export more to close that gap.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Does the Minister accept that, unlike some other EU members, we have flexible exchange rates, flexible interest rates, market access and very limited exposure to the euro bail-out? Is it not time that we invested in a growth strategy to take advantage of those opportunities and build Britain so that it is strong again, getting rid of the deficit to growth and not cutting?

[Mr Hoban]

The key thing is to have a credible fiscal and economic policy. The Conservative party and this Government have that credible economic policy, whereas the Labour party has no idea where it wants to take the economy. The measures we are taking to tackle the deficit which keep interests rates low are providing the biggest benefit we can give to businesses to help them grow in future.

European Budgets 2014 to 2020

Debate between Geraint Davies and Mark Hoban

Tuesday 8th November 2011 Commons Chamber

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

I beg to move,

That this House takes note of European Union Documents Nos. 12478/11 and Addenda 1 and 2, 12474/11, 12480/11, 12483/11, 12475/11 and Addenda 1 to 3, and 12484/11, relating to the Commission’s proposal on the next Multiannual Financial Framework (MFF), 2014-20; agrees with the Government, that at a time of ongoing economic fragility in Europe and tight constraints on domestic public spending, the Commission’s proposal for very substantial spending increases compared with current spend is unacceptable, unrealistic, too large and incompatible with the tough decisions being taken in the UK and in countries across Europe to bring deficits under control and stimulate economic growth, that the next MFF must see significant improvements in the financial management of EU resources by the Commission and by Member States and in the value for money of spend and that the proposed changes to the UK abatement and new taxes to fund the EU budget are completely unacceptable and an unwelcome distraction from the pressing issues that the EU needs to address; and supports the Government’s ongoing efforts to reduce the Commission’s proposed budget.

Yesterday, the Prime Minister made a statement to the House following the G20 meeting in Cannes regarding the ongoing crisis in the euro area. As his statement made clear, it is vital that the euro area sticks to the deal agreed to two weeks ago by the European Heads of Government to resolve the ongoing crisis. A resolution to that crisis is vital to UK, European and global economic interests. It is equally important that, over the longer term, the euro area and the wider EU take the necessary steps to tackle the deficits that are the root cause of the crisis.

The ongoing instability in the euro area vindicates this Government’s decision to get ahead of the curve, cut our deficit and impose strict fiscal discipline on our budget. It is vital that EU member states demonstrate the same resolve, and we welcome commitments by Italy and Spain, among others, to do so. However, the European Commission must also lead from the front in a drive to impose financial discipline across the EU institutions. That is why it is unacceptable for the Commission to propose a 4.9% increase in the annual budget for 2012. The UK and the European Council have agreed that we could not approve such an increase at a time when member states are facing tough decisions to impose fiscal discipline and consolidation. We will be taking a firm stand on the 2012 budget when we meet in the budget ECOFIN later this month.

Let me turn now to the principal subject of today’s debate: the multi-annual financial framework that sets out how much the Commission wants to spend in 2014 to 2020 and how it will fund it. The Commission’s proposals seek to increase both its revenue and its spending. It wants new taxes to expand the Brussels coffers, and proposes inflation-busting spending increases. That is simply not acceptable. The answer is not to raise more and spend more; it is to control spending. The best way to restrain EU annual budgets is to set—

[Geraint Davies (Swansea West) (Lab/Co-op)]

On a point of clarification, the Minister mentioned inflation-busting increases, but am I right in thinking that what is being proposed is a 5% cash increase in the ceiling over the seven-year period? If so, that would be less than the rate of inflation in real terms, and therefore not an inflation-busting increase.

--- Later in debate ---

[Mr Hoban]

The most recent rate of inflation in the EU was about 2%, so clearly a 5% increase would be in excess of the rate of inflation, and therefore an inflation-busting—

[Geraint Davies]

rose—

[Mr Hoban]

No, let me continue.

The best way to restrain EU annual budgets is to set tough multi-annual framework ceilings. That is why, at the European Council in October 2010, member states agreed that the

“forthcoming Multiannual Financial Framework must reflect consolidation efforts being made by Member States to bring deficit and debt onto a more sustainable path”.

Rather than following that path, however, the Commission has meekly bowed to pressure from the European Parliament to increase the budget, thereby returning to the extravagance and irresponsible spending that sowed the seeds of the current global economic crisis. Just as we cannot accept the Commission’s 2012 budget, we also cannot accept the Commission’s proposal, as set out on 29 June, to increase the multi-annual framework budget for 2014 to 2020 by 11%. Such an increase is incompatible with the tough decisions being taken in the United Kingdom and in countries across Europe to cut spending.

Instead of consolidation, the Commission proposes expansion. It has ignored the calls made in December last year by the UK, France and Germany for a real-terms freeze in spending. The Commission claims to have done as we have asked, but let me make it absolutely clear to the House that it has not. On average, the spend in each year of the next framework would be about €14 billion higher than it is today.

Oral Answers to Questions

Debate between Geraint Davies and Mark Hoban

Tuesday 1st November 2011 Commons Chamber

[Geraint Davies (Swansea West) (Lab/Co-op)]

Is it not accepted now by the international community that the announcement by the Chancellor a year ago that he would cut half a million public sector jobs led directly to a reduction in consumer demand, and that it has reduced private sector investment and growth and led to an increase in deficit predictions?

[Mr Hoban]

The hon. Gentleman should recognise that the action that this Government have taken has earned the endorsement of the IMF and the OECD. That is why we have the low interest rates the economy needs. The Opposition talk about a plan B, but that would actually increase the budget deficit and the interest rates that this country would have to pay.

Banking Reform

Debate between Geraint Davies and Mark Hoban

Thursday 17th June 2010 Commons Chamber

[Mr Hoban]

The hon. Gentleman makes an important point about the qualifications of non-executive directors. That is why the FSA has already instituted a process of interviewing senior members of staff and directors, before their appointment to boards or positions of responsibility, to ensure that the qualifications and experience that they bring to those important roles is checked.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Is the Minister seriously contending that had these arrangements already been in place, the financial crisis would not have occurred? If he is not making that absurd suggestion, will he accept that he cannot promise that such a financial crisis will not occur again with these arrangements in place?

[Mr Hoban]

It is clear that if the Bank of England had not lost its power to monitor and act upon the level of debt in the economy, it might have been in a position to consider what was happening in the housing market, to consider the role that Northern Rock played in fuelling the asset-price bubble and to take action to cool that down. The only person who tried to rule out boom and bust in the past was the right hon. Member for Kirkcaldy and Cowdenbeath.