UK and Welsh Governments (Finance)

Glyn Davies Excerpts

Tuesday 11th September 2012 Westminster Hall

[Hywel Williams]

My hon. Friend makes a very pertinent point. The question was asked of me in preparation for this debate whether one set of discussions needed to be concluded before the other set of discussions could be concluded. Do we not need to wait until the questions about responsibility are decided before we decide what the financial settlement is? My hon. Friend makes a very good point. What I am looking for in this debate is some answers from the Minister, who perhaps can enlighten us. My understanding is that, with the intergovernmental discussions, no communiqués are issued. Ministerial statements have lacked detail. Freedom of information requests have been refused or severely curtailed. Written questions have produced stonewalling answers. There is little information in the public domain and there is no schedule for reporting as there is with the Silk commission.

Therefore, as I said, my aim in today’s debate is simply to obtain some information on who is involved in the meetings, what is happening, what progress they have made, when they will conclude and how they will be reported. The debate is an opportunity for the Government and, indirectly, their interlocutor in Wales to report back to the Welsh people in their favourite forum—Parliament here in London—so here is an open goal for the new Minister.

Let me set out the headings of the matters that I would like the Minister to address. The primary aim of the discussions, as I understand them, is to consider the conclusions reached by the Holtham commission about the block funding grant for Wales—the so-called and now much-criticised Barnett formula. I say “now much-criticised”, as the Barnett formula had no stauncher defenders than members of the previous Administration, who repeatedly referred to it as

“a good deal for Wales”—

that is, until they were no longer in government. Then it was all awful.

The Holtham commission, as we well know, found that the Barnett formula was “not fit for purpose”. There was agreement with that in a variety of other reports issued at the same time from the House of Lords, the House of Commons and the Calman commission and in discourse between political parties and the various parts of Welsh civil society. That is because Barnett is unrelated to the relative needs of each of the devolved Administrations. Instead, it depends on the spending decisions made by individual Departments in England, so the amount of money spent in Wales depends on the amount spent in England. More than that, the formula is intended to converge with the English average, irrespective of whether that helps the people of Wales. That was the initial intention at least—a converging formula.

The amount of money that we get is decided not according to our needs, but according to the formula; and the gap between the amount of money that we need and the amount available is growing. The Holtham commission estimated, conservatively, that there was a gap of about £400 million between the amount of funding that Wales receives and its relative needs. However, those figures are now several years out of date, as well as being based on spending estimates rather than the final budget. More recent estimates by our colleague, Dr Eurfyl ap Gwilym, suggest that the difference in 2010-11 could have been as high as £680 million, not £400 million.

My worry, therefore, as far as the discussions are concerned, is that if we accept the much-touted suggestion of a Barnett floor to prevent further convergence, we will lock ourselves into the existing inequality. The Barnett floor might actually become a Barnett ceiling. The question for us today and for the people of Wales is at what level that might be set. Would it be at 112% of need, 113% or 114%, as Holtham suggested? The answers to those questions are crucial.

[Glyn Davies (Montgomeryshire) (Con)]

Members of all parties are concerned about the operation of the Barnett formula. I have always taken the view that we cannot deal with the situation in Wales without dealing with the situation in Scotland, because there is a huge overpayment to Scotland. Does the hon. Gentleman accept that the only way of resolving the issue is to deal with Scotland and Wales at the same time?

[Hywel Williams]

I will give a plain answer to a plain question: the Barnett formula should be reformed and we should do whatever it takes to reform it. My concern, as a Welsh MP, is the effect on Wales, and the effect on Wales is very damaging. That is the point. That is why I want answers from the Minister.

Time is catching up with me, so I will press on. We would also like the Minister to report on the housing revenue account subsidy, which my hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) has brought up repeatedly. According to a freedom of information request, though they may not realise it, council house tenants in Wales have donated more than £1 billion to the Treasury since devolution began. This year, the estimate is that £73 million will be returned. There is no such scheme in Scotland or Northern Ireland—it never existed—and the scheme in England, which had major changes made to it anyway about 10 years ago, has been scrapped. In answer to a written question, the former Secretary of State confirmed that it would be part of the bilateral discussions, so, I again ask the Minister, what is happening or—to coin a phrase—what’s occurring?

The role of the Welsh Government and their borrowing powers is the third issue on which I want to question the Minister. That was supposed to be part of the bilateral discussions, and the Silk commission is examining it as well. The Welsh Government have limited borrowing powers. The right to borrow to invest would make a significant difference. I know that what I am going to say will not find favour on the Government side of the Chamber: if we were to follow Keynesian principles for public sector investment, when the private sector would not do so, borrowing powers could be hugely significant for the Welsh Government. They could make investment decisions for themselves.

Does it not seem odd to people outside this place that the Welsh Government do not have borrowing powers, but local authorities do? The next strand of government down has such powers, but not the national strand in Wales. We, in Plaid Cymru, believe that significant borrowing powers should be devolved to the Welsh Government. Borrowing limits should be based on an assessment of sustainability and affordability—two principles that I am sure will find favour with the Minister. We are not advocating a spending spree. The Welsh Government should be entitled to set an annual borrowing limit for themselves, which they consider affordable. We also believe that the Welsh Government should be free to issue bonds or obtain commercial funding, as well as use the services of the Treasury’s Debt Management Office. That would enable the Welsh Government to decide which borrowing mechanism best suited their requirements. What progress can the Minister report?

As part of the Holtham discussion on borrowing powers, it was recommended that the Welsh Government have unfettered access to end-year flexibility funds—the money left over at the end of the year. It was a matter of great disappointment to, I am sure, all Welsh MPs—well, nearly all—that an unspent £386 million voted to the Welsh Government by Parliament was clawed back by the new Government in 2010. A huge amount of money disappeared down the M4, again. Previous end-year flexibility reserves were invested in projects such as the strategic capital investment framework. The money has been well used. By removing that £386 million of end-year flexibility, the UK Government in effect removed a significant sum of money from the poorest part of the British state. It would have been useful for job creation, keeping people in work and a host of priorities that all Members share.

There we are. I look to the Minister for answers. There is a new Cabinet, and a chance for a new openness and new dialogue with the people of Wales, or possibly not—let us see.

Interest Rate Swap Products

Glyn Davies Excerpts

Thursday 21st June 2012 Commons Chamber

[Guto Bebb]

Thank you for your guidance, Madam Deputy Speaker. I will refrain from taking any more interventions and finish my comments.

The figures from Bully-Banks illustrate the fact that businesses feel that they have been mis-sold such products. The final figure from Bully-Banks that is worth mentioning is that 75% of its members claim that the swap product was a condition of the loan agreement that they entered into. Some Members might say that the way forward is therefore for individual businesses to take legal action on that basis, but I have concerns about that. A solicitor said to me yesterday that the problem in England and Wales is that the law is far too bank-friendly. There is a concern that in many cases businesses that take legal action face costly cases before the banks finally settle and put in place a gagging order. It is also a concern that small businesses should be expected to fund their own cases when they are already in crisis

[Glyn Davies (Montgomeryshire) (Con)]

Will my hon. Friend take an intervention?

[Guto Bebb]

I will not take another intervention, due to the guidance from Madam Deputy Speaker.

Small businesses that have to take legal action also face the risk of losing the support of their banks. There are examples of loans being called in or overdraft facilities being taken away from businesses that are taking action. I therefore do not think that the way forward is necessarily to expect individual businesses to take action against the banks, unless we can have some certainty that the banks will not act in that way.

The scale of the problem is significantly greater than we have accepted to date. Today the Law Society Gazette gives the figure of about 4,000 businesses affected, with about £1 billion-worth of potential claims. In my view that figure is probably an underestimate, so the scale of the problem should be taken seriously.

Let me state what I am calling for from this debate. It is very easy to have a debate in which we all highlight our concerns about individual businesses and our belief that the banks have behaved badly, but this House has a responsibility to try to offer a solution. We need to encourage the Financial Services Authority to move more quickly to a resolution of this issue. It needs to inform the banks that, for example, they have an obligation and a responsibility to act fairly with their clients. We also need some transparency from the banks about the exact size of the problem. We know, for example, that between 2006 and 2010 the banks engaged in significant amounts of swaps. Some of them might have been completely legitimate, but quite a few were sold to small businesses.

Those small businesses are feeling under pressure from their banks, so my specific request today is for the Minister to call on the FSA to give written assurances that the banks will not adversely treat any business that makes a complaint. We live in a country governed by law. If a business wants to make a complaint, it should not be subject to undue pressure from its bank. In the same way, if a complaint has been made to a bank or the FSA, the bank should refrain from foreclosing on that business. Those are my short-term requests for the Minister. In the long term, I think it is crucial—

--- Later in debate ---

[Emma Reynolds (Wolverhampton North East) (Lab)]

I, too, would like to applaud the hon. Member for Aberconwy (Guto Bebb) for delivering such a fantastic speech. I want to tell the House about a similar case in my constituency. It is the case of Guardian Care Homes, and it has already been mentioned by my right hon. Friend the Member for Wentworth and Dearne (John Healey). The company’s headquarters are in my constituency, but it employs about 900 staff in 30 care homes across the country. Small and medium-sized enterprises such as these need to be supported, rather than exploited.

I recently met members of the senior management at Guardian Care Homes, and I was shocked by what they told me. In 2007, they were sold two interest rate swap products, which were taken out against existing loans that had been taken out to improve the business model and to improve the care homes. They also said that the bank that sold them the products told them that this was a condition of getting the original loans, and that the products would protect them against interest rate rises. They were not informed of the dangers and financial implications of interest rate falls, however. According to Guardian Care Homes, the bank did not at any point during the sale of those swaps fulfil its obligation to explain that such costs could be incurred.

Guardian Care Homes also discovered that the swaps that had been sold to them vastly exceeded the original terms of the loans, by 10 and 15 years respectively, which made things incredibly difficult for the company in the long term. An independent study of this specific case recently described the bank’s behaviour as reckless, and a complaint has been made against the bank. It beggars belief that banks were requiring SMEs to take these products alongside loans, and I look forward to hearing the Minister’s response to these points today.

Even if the case involving the company in my constituency had been a one-off, it would have been extremely worrying, but there appear to be hundreds, if not thousands, of SMEs in the same situation. I am sure that we shall hear of cases in other right hon. and hon. Members’ constituencies later. Anecdotal evidence from SMEs suggests that, in many cases, swaps were bought without the companies having received any legal advice on their nature. The banks have a duty when selling financial products to ensure that the products and the risks involved are identified to businesses, and that there should be no coercion involved. I have written to the bank in question and requested that no punitive measures be taken against the company in my constituency while the complaint is ongoing.

[Glyn Davies]

The scale of this problem is far greater than we are being told. I have two examples in which the people I have spoken to are not going to take action. They have other clients and they are afraid to take action because they fear that they will be punished and that future relationships could be damaged. This is a huge problem, and we are seeing only part of it.

[Emma Reynolds]

I totally agree with the hon. Gentleman. I would very much like to hear from the Minister today whether the Government have a grasp of the scale of the problem, as it is certainly significant.

Hot Takeaway Food (VAT)

Glyn Davies Excerpts

Wednesday 23rd May 2012 Westminster Hall

[Nigel Mills]

Absolutely. I thank my hon. Friend for the intervention. The last thing that we want to do is to encourage people to buy horrible cheap food with only processed ingredients. That is much less healthy for us than buying proper quality stuff. I therefore have some sympathy for my hon. Friend the Minister in his predicament. It would be useful if he could set out what has tipped the Treasury over the edge into making the change. Was it a case of having to get the train home and thinking, “I’m a bit hungry. It’s been a long day in the Treasury. I can’t face the Chancellor’s bowl of jelly. I’ll have something from the station on my way. If I go to McDonald’s and buy a burger, I pay VAT, but if I go to that nice-looking pasty stand, which seems to be selling only hot pasties, for some reason there is no VAT”? Is that the contrast that tipped him over the edge or is it the fact that supermarkets are selling things that clearly should be VATable but they are manipulating their way around that? Is that what tipped the Treasury over the edge? It would be interesting to know.

[Glyn Davies (Montgomeryshire) (Con)]

I am grateful to my hon. Friend for taking my intervention, particularly as I missed the first part of the debate. He is very generous. Since I have been an MP, I have been approached several times by fish and chip shop owners. Perhaps unusually for an MP, they are the only approaches I have had—and I have had a lot—complaining bitterly about unfair competition, because people are selling pasties and using a microwave to heat them up after they have been sold. I understand exactly why people are concerned, but if we are challenging the whole concept of VAT on pasties, we need an answer—I certainly need one—on that issue.

[Nigel Mills]

I am grateful to my hon. Friend for that intervention. The point I was trying to make was about a craft baker on the high street who is not trying to be a takeaway in disguise for VAT planning, which is in contrast to what looks like something trying to be a takeaway, but is in fact something different. That is perhaps one of the things that has tipped the Treasury over the line. It would be interesting to know what mischief it is trying to fix. Which bad guys are we tackling? I honestly suspect that the bad guys are not the high street craft bakers who will be dragged into this. Their staff will be in a horrible situation.

I went to a couple of bakers in my constituency to see what the measure will mean. The sausage rolls are out of the oven and slowly cooling down in the very much non-heated—I was careful to check—displays in the shop. I guess that if they have been there for 20 minutes, they will still be hot, and therefore there might be VAT. If they have been there for 30 minutes, they might be on the border. If they have been there for 40 minutes, perhaps they are cold enough for no VAT. I have a horrible picture of the member of staff having to poke their finger into my sausage roll to check whether the one they are selling me is cool enough not to charge VAT on or still too hot.

There is a practical issue of how the shops will know day to day that the products sat cooling have cooled long enough for me to get a 20% discount, or have not cooled so the customer has to pay VAT. I suspect that such shops will put VAT on everything and put the prices up by 20%, and they will get a nice windfall for the bits that they can convince the Revenue are not VAT-able. In practice, they will not want to charge separate prices depending on whether someone buys a product marginally above or below the ambient temperature. That would be an unfeasible and rather strange situation for everyone to get into.

Finance (No. 4) Bill

Glyn Davies Excerpts

Wednesday 18th April 2012 Commons Chamber

[Mr Graham Stuart (Beverley and Holderness) (Con)]

It is my pleasure to follow the other speakers. Like all those who have spoken so far, apart from those on the Front Bench, I shall speak to new clause 6 and the proposal that the Finance Bill should set out that this House will not approve, in a future statutory instrument, the imposition of VAT on static caravans. So much has already been said, but I must point out that my constituency contains ABI, a major manufacturer in the heart of Beverley; companies in the immediate area that are part of the supply chain; and a series of parks along the Holderness coast that depend for their profits on the sales of static homes, as we discover when we speak to the owners.

The Treasury’s assessment of the impact of introducing the VAT is that there would be a 30% reduction in sales. When we think about the employers in the various constituencies in Hull, in my constituency and in those of my right hon. Friends the Members for Haltemprice and Howden (Mr Davis) and for East Yorkshire (Mr Knight), we find that so many companies are involved. More than 90% of the production of static caravans in the UK is concentrated in east Yorkshire and, as has just been said, so successful is this industry in the UK that nearly all the caravans that are bought and installed in the UK are built there. So my constituency has a great concentration of all those who may suffer from a 30% reduction in demand—manufacturers and all the people who work in that area, suppliers, and the parks themselves.

[Glyn Davies (Montgomeryshire) (Con)]

I associate myself with the concern that my hon. Friend is showing and that many of my constituents also show. Does he share my concern about the disruption around the introduction date that will be caused to the manufacturing side of the industry? Does he share my hope that in the intervening period Ministers will examine ways in which they can limit that disruption?

[Mr Stuart]

I am grateful to my hon. Friend for his intervention, but I am not looking for Ministers to limit that disruption; I am looking for them to remove that disruption altogether. However, he is right to mention the date. We are talking about a major manufacturing business. We are talking about businesses with 700 staff involved in tooling up, buying in the resources and planning their production, yet we are facing the introduction of this VAT on 1 October. Let us imagine the impact on the supply chain; imagine the impact on ordering; imagine the eddies of people looking to beat the deadline and at the same time destock to make sure that they do not hold stock on 1 October when whatever product they have will be 20% more expensive and potentially unsaleable.

Amendment of the Law

Glyn Davies Excerpts

Monday 26th March 2012 Commons Chamber

[Glyn Davies (Montgomeryshire) (Con)]

I congratulate the Under-Secretary of State for Culture, Olympics, Media and Sport, my hon. Friend the Member for Wantage (Mr Vaizey), who is not in his place, on putting growth in the creative industries at the very heart of the Budget. It is a hugely beneficial development.

I will speak very much from a Welsh perspective. The Budget that the Chancellor presented to the House is of course concerned with the UK economy, but since devolution and the establishment of Governments in Scotland, Wales and Northern Ireland, differences have emerged. There are differences in our perspective on the Budget and its impact, and I will focus on the three significant announcements on tax, two of which have been wholly welcomed by my constituents, and one, the age-related taxation for pensioners, to which there has been a mixed response. I hope to address that later.

First, and in my view most fundamentally in the Budget, there is the raising of the income tax allowance. When this Government came into power, the threshold was below £7,000, and now it is heading towards £10,000. This year we took a massive step towards that, with an increase of about 14%, which is a huge jump and will make a huge difference. The measure is particularly welcome in Wales and, certainly, in rural Wales, the area that I represent, because that is where wages are comparatively low. The impact of raising the tax-free allowance is rather bigger in low-wage areas than in other areas, so it is to be hugely welcomed, and to be welcomed throughout the House.

The second fundamental step in the Budget is the one we are taking to make Britain open for business. At its heart is the level of corporation tax, and the Government’s strategy throughout this Parliament is to reduce it from 28p to 22p. This year we have accelerated that process with a 2p reduction, and, as my hon. Friend the Member for Dudley South (Chris Kelly) said very clearly, that sends out the message that Britain is open for business. It was terrific to see the GlaxoSmithKline announcement coming so soon after the Budget, and of course there are various reasons why it was made, including 1,000 jobs and £500 million of investment, but one narrative that the company used was the competitiveness that this Government want to introduce to British business.

[Jonathan Edwards]

Does the hon. Gentleman agree with me and his party’s own economic commission in Wales that what we really need is differential rates of corporation tax throughout the British state, so that investment is directed at the poorest parts, rather than concentrated down here in the south-east?

[Glyn Davies]

I do not believe that that is the right way for us to go at this stage. There is an ongoing discussion about the issue in Northern Ireland, but we have not yet reached the stage of devolving taxation. We are talking about the issue, but we will have to see where we get to.

The central part of my speech is about how we can build on the UK Government’s business-friendly approach, and about the way in which the Welsh Government and the Government here can work together to build on it. We can do so in several ways and in a close, constructive partnership.

First, this Budget introduces capital allowances in enterprise zones, work on which has already taken place in Wales, and one area where the measure will be introduced is Deeside, where the Welsh Government have already suggested it might lead to 5,000 new jobs. We want to see that happen and to build on it in other parts of Wales, and by working together we can do so.

Secondly, there is the commitment to pursue railway electrification. Electrification to Cardiff has already been confirmed, and the crucial next step is electrification of the valleys lines, but only if the Welsh Government and the Government here work together on that objective will we reach that target. It is absolutely vital that we do so.

Thirdly, there is broadband and the super-connectivity of Cardiff. Cardiff, the capital of Wales, is a hugely vibrant city, and when I was there last weekend, as Wales defeated France and won the Grand Slam, I found the sheer vibrancy of the city something to behold. We need to recognise that we have a wonderful capital city in Cardiff, and we can build on that, but we can do so only by the two Governments working together and building on the business-friendly climate that the Government here have put in place.

Last of all in this part of my speech, on the enterprise loans to small and medium-sized enterprises which are being promoted, the Welsh Government have Finance Wales, and it has many characteristics of a bank. If we combine Finance Wales and the various initiatives being taken at Westminster, we can make a dramatic difference in the development of small and medium-sized enterprises in Wales.

Finally, there is an issue with age-related pensions, and inevitably, if we raise the personal income tax threshold at the massively accelerated rate that we are doing, the two taxes will eventually merge. It is a difficult issue, which we have all had to think about, but the Government have been right to take that step.

Budget Leak Inquiry

Glyn Davies Excerpts

Thursday 22nd March 2012 Commons Chamber

[Mr Gauke]

All Budget decisions were agreed by the Government as a whole, and the quad was heavily involved at all stages in that. People in a coalition will always make their arguments and set out their case, and some of that will be done in private, some of it in public, but it is a far more orderly process of Budget policy making than we have seen for many years.

[Glyn Davies (Montgomeryshire) (Con)]

In the context of coalition government, there will inevitably be much pre-Budget discussion and much greater media coverage. Does my hon. Friend agree that such coverage is bound sometimes to be right, and that it is ridiculous to interpret it as leaks?

[Mr Gauke]

I refer my hon. Friend to, for example, the 50p debate, which the hon. Member for Nottingham East (Chris Leslie) mentioned. In the days before the Budget there were five different versions of what was going to happen. One turned out to be correct and four turned out to be incorrect.

Pay and Consultants (Public Sector)

Glyn Davies Excerpts

Tuesday 13th March 2012 Westminster Hall

[Mr Slaughter]

It must be accurate—it is in The Daily Telegraph.

The PCS union quantifies the amount spent by Government on consultants at more than £1 billion; I think that that amount is based on figures from the National Audit Office. Before Government Members jump up and down, I accept that the figure paid to consultants has been too high for too long, but that is not any reason for not addressing the issue.

The PCS union says that, when hundreds of thousands of jobs are being cut in the public sector and its members on low pay are being forced to take pay cuts, it is not right that, for example, the Ministry of Justice—an organisation with which I am reasonably familiar—spent £43 million on consultants between May and November 2011. The Legal Aid, Sentencing and Punishment of Offenders Bill, or LASPO, is currently being mauled in the House of Lords, particularly about the issue of social welfare legal aid. If that figure of £43 million were annualised, the cost of consultants to the MOJ would effectively pay for the entire cuts in social welfare legal aid. So, all the agonising about cuts to citizens advice bureaux, law centres and to the funding for disabled people seeking advice on welfare benefits, housing or whatever would be unnecessary, if only the Lord Chancellor and Secretary of State for Justice could address his habit for consultants.

[Glyn Davies (Montgomeryshire) (Con)]

I thank the hon. Gentleman for allowing me to intervene, and I must say that I have a lot of sympathy with the general principle of some of the things that he has said this morning, but not with everything he has said. Is his opposition to the public sector’s use of consultants completely based on principle, even if such use of consultants adds to efficiency and does not cost any more money? Even if those situations existed, which in some cases I believe they do, would the hon. Gentleman still oppose the use of consultants just on principle?

[Mr Slaughter]

There is a definition of consultants that I will give—it is not the PCS definition, which I think is plagiarised anyway:

“People who borrow your watch, tell you what time it is and then walk off with it.”

The definition that I will use is:

“People who do a specific task, which is needed, usually for a short period of time, and which is a particular piece of expertise that is being bought in.”

What we are talking about this morning is—in very many cases—absolutely not that, and I will now give the hon. Gentleman an example. I hope that it is not a typical example, but it is certainly a very shocking example.

I will give way once more.

Living Standards

Glyn Davies Excerpts

Monday 5th March 2012 Commons Chamber

[Rachel Reeves]

Like my hon. Friend, many of us will have spoken to constituents in jobs whose hours vary—for instance, those working in retail or call centres, or those working as cleaners. However, at the moment, their hours are varying in one direction: downwards, because employers are cutting hours and cutting staff.

In addition to the changes to working tax credits, next January more than 1.5 million families will lose every single penny of their child benefit. The Government are saying, “Well, we’re only cutting child benefit for rich families.” However, if they talked to working families, they would realise that many families are heavily reliant on a single earner, because there is only one parent or because one parent is staying at home to bring up the kids. Those families are being hard hit by the changes.

[Glyn Davies (Montgomeryshire) (Con)]

I am listening to the hon. Lady’s speech carefully, and she has made several references to the crises in various parts of our society. The greatest crisis facing the Government, I hope she would agree, is the debt crisis, a huge contribution to which was made by the previous Government. We would all appreciate it if the hon. Lady told us whether the response to the issue being raised today is simply to add to that debt crisis or to find some other way of dealing with it.

Rural Bank Closures

Glyn Davies Excerpts

Tuesday 21st February 2012 Westminster Hall

[Glyn Davies (Montgomeryshire) (Con)]

I have been a Member of the House for almost two years now, Mr Brady, and you have chaired a huge proportion of the proceedings in which I have taken part. It has always been a pleasure.

I, too, congratulate the hon. Member for Brecon and Radnorshire (Roger Williams) on securing today’s debate. He represents a neighbouring constituency to mine, and they are two of the most rural in Britain. One reason I did not prepare a speech for today was that I knew that I would only be repetitive. I could have filched the hon. Gentleman’s speech, and said pretty much the same, because our experiences are so similar. However, I want briefly to associate myself with the issue that he has raised, and with his remarks. All that I need to change is his references to Presteigne—although I represented it for eight years as a regional member in the National Assembly for Wales, so I know the town well. The point is that very few changes would need to be made in the speech to make it apply to my constituency and, I am sure, rural constituencies across Britain.

The hon. Member for Brecon and Radnorshire and I have worked together for many years on the issues in question, on the Development Board for Rural Wales, and in other contexts. Nearly all that work would come under the general heading of the defence and promotion of rural services. The way in which society has moved in the past half century has put enormous pressure on rural services, and that is a huge threat. Protecting and retaining those services has been incredibly difficult, and we shall not be able to retain and protect them all. However, that work has been a big part of my life, and of the hon. Gentleman’s life.

One of the reasons I have become so engaged with the issue in question is that I decided as a young man that I enjoyed living in the middle of Montgomeryshire and would never live anywhere else. I deeply love the place. All my fellow students from Llanfair Caereinion high school left the area to find work—we did not have any—and even at a young age I became very engaged in seeking to retain and develop our economy, as the key to providing employment that would encourage people to stay. There has been huge pressure across rural services, and the banks issue must be considered within that whole bracket. Rural schools close, because as families have fewer children there is pressure on them, and many village schools are closing. That is still happening and will continue; but what we do will affect the rate of closure. The same is happening with hospital services. Increased specialisation in skills and treatments means it is not possible to retain all rural hospitals. Some of them are closing, and, even more importantly, some of the services available in them are moving away. Transport is another serious issue, because of the acquisition of cars. There is not the same level of rural public transport that there used to be. I do not mean any criticism of the Welsh Government, but the grant for rural transport has been substantially reduced this year. The retention of transport links is strongly connected to the retention of banks; significant reductions are being made, with the result that services will be reduced.

Financial services are a key part of life today, whether those are provided by banks, building societies or post offices. People in rural areas, and perhaps in particular the elderly and the most vulnerable, who are not familiar with the internet or sometimes do not have access to it—because clearly broadband is not as effective in rural areas as it is in the areas now becoming used to it—do not have access to financial services. Yet the bank is crucial. When the last bank closes that is a death knell in the village. We must do all we can to retain those services where it is possible.

[Julian Sturdy (York Outer) (Con)]

My hon. Friend is making a powerful argument about local rural services. Shops are also suffering, because if cash points in villages are lost and people cannot get access to the cash, they do not spend it locally. That has an impact on local shops and on tourism in rural areas.

[Glyn Davies]

That is right. As we reduce spending power, every service goes. Each one affects the others.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I just want to highlight what has happened in Aldeburgh, where HSBC pulled out—its only communication with the wider community was a poster in the window. Retailers responded by offering cashback. Does my hon. Friend agree that the subject in question is a very suitable one for the Office of Fair Trading to look into? After its study of oil supplies it is examining other issues affecting rural communities; access to financial services could be its next topic.

[Glyn Davies]

I thank my hon. Friend for that sensible suggestion. There have, indeed, been other suggestions from hon. Members, including one about a summit, which also seems sensible to me. I am sure that more will be made, and I look forward to the Ministers’s response to the debate, to find out where the Government are going with the issue. There is a responsibility on the Government to serve everyone in this country. They have, rightly, worked closely with business and banks to ensure that money is available to business, for the creation of employment. That is currently a huge Government policy issue.

Access to services for our rural areas is also a huge issue. It is not a new issue; it has been there all of my life. The coalition Government have taken a serious and responsible approach to post offices. We need the same discussion and pressure on our banks. If a summit is the answer, that is the way we should go.

The responsibility rests with the banks. The current view of banks is very much influenced by the debate about bonuses and very high salaries. There is a view among the poorest in our society that there is a lot of money available in banks—I know that that is not necessarily the case—so that when they see their banks being closed or their banking hours being reduced for a relatively small saving, as is happening in Llanidloes and Montgomery, they cannot understand it. The banks are disengaged from a major section of the community. The Government must ensure that the banks understand that they have a responsibility not just to the bottom line but to deliver services.

Youth Unemployment and Bank Bonuses

Glyn Davies Excerpts

Monday 23rd January 2012 Commons Chamber

[Geraint Davies]

I am not opposing having to make savings and cuts. I am saying that the key is growth. As a business man in Swansea said to me, “It would be no good laying off my workers and selling my tools if I was making a loss; I would need to grow my sales while making savings.” That is the focus. That is why there is a five-point plan focused on national insurance for the building industry, on VAT for extra consumption, and on taxing banker bonuses to generate jobs and infrastructure growth.

In addition, we need a credible growth strategy focused on the growth opportunities in the global economy, namely the emerging consumer markets in India, China and south America. What are we doing to re-engineer our financial markets, our modern manufacturing, and our services, so that they are tailored to those markets? What will we do about getting capital opportunities from surplus-rich countries such as China, or oil-rich countries, so that they invest in our infrastructure? What are we doing to skill ourselves up for future markets? Those questions do not seem to be being asked or answered tonight.

In Swansea, I am talking with prospective manufacturers from India about linking up with the university and providing a manufacturing base to build on the cutting-edge life science research taking place there. I am talking with possible investors about investing in manufacturing facilities. There are companies such as Tata near Swansea, which are already investing in the modern manufacturing of steel, which will have six layers and can create its own energy and heat, so there are new global opportunities. This debate has been completely focused on who will cut most, when. That is going nowhere. We cannot cut ourselves out of this economic problem. We have to grow, invest and reposition our industry.

[Glyn Davies (Montgomeryshire) (Con)]

I should like to give the hon. Gentleman another chance to support the Opposition’s policy of acknowledging both that they support the cuts programme introduced by the Government and that they made quite a few mistakes when they were in government.

[Geraint Davies]

We need a balance of savings—certainly not cuts against our productive capacity—with the main focus on growth and jobs, as has always been the case. The shadow Chancellor said that he cannot predict the future—he does not have a crystal ball—and in three years’ time, with the situation ruined by a Government who have destroyed industry and opportunity, it is likely that we will face an even worse situation, so promises cannot be made about reinstating things subject to Government cuts. The key point is that unless we have a growth strategy, as Barack Obama is trying to do—and Europe is trying to reskill in a global environment —we have no hope, given the Government mantra that all that they can do to save business is cut, cut, cut. All that that leads to is the death of industry. I shall leave it there, and let us focus on growth.