Inward Investment (Wales)

Guto Bebb Excerpts

Thursday 29th November 2012 Westminster Hall

[David T. C. Davies]

How times have changed, as Labour councils now seem to be very supportive of nuclear weapons and nuclear power stations. In 1981, there were no Conservative-led councils, but today there is one in my constituency, so things change for the better.

Returning to education, however, things are not changing for the better. Hon. Members will be aware of the recent OECD programme for international student assessment—PISA—report on education across numerous developed countries. Wales was not only below average for the developed world in subjects such as maths and science, but below average for the whole United Kingdom. The Committee hopes that the Welsh Assembly Government will address that situation. Speaking personally—to take off my Chair’s hat for a moment—I do not think that it will be addressed by setting up a completely separate examination system in Wales, which the Assembly is considering.

We considered the role of further and higher education, and universities are becoming increasingly prominent in investor decisions. We believe that although a lot of good work is going on between universities and industry, a great deal more can be done.

There are numerous studies about the economic benefits of good and efficient transport links. We should be concerned about the current quality of transport links in mid and north Wales, and about connectivity with the rest of Wales. We are exploring those issues in more detail in a current inquiry and our report will be published shortly.

[Guto Bebb (Aberconwy) (Con)]

Does my hon. Friend share my concern that the Welsh Assembly Government failed to make any representations for investment in the north Wales coast main line, which is the key rail infrastructure in north Wales?

[David T. C. Davies]

I am extremely concerned about that, but I welcome the announcement by the Secretary of State for Wales that a business case will be developed for the north Wales main line from Holyhead to Crewe. If the Minister has any more to say about that, we would welcome it.

I am sure that every member of every political party represented in Wales will be delighted by the coalition Government’s decision to extend electrification of the Great Western main line to Swansea and the valleys, and I am sure that the biggest supporter will be the hon. Member for Swansea West (Geraint Davies). There is much good news there.

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[Geraint Davies]

As the hon. Gentleman knows, the real rise in debt started in 2008 after the financial tsunami, and the previous Labour Government had paid back enormous amounts of debt, partly through the sale of—[Interruption.] I think I had better redirect my argument. We can rehearse those arguments again, but people realise that what I say is, in essence, a factual record of what happened.

[Guto Bebb]

Will the hon. Gentleman give way?

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[Geraint Davies]

I have seen the European version of his website—it is called “Mon mouth”. Moving swiftly forward, I give way to the hon. Member for Aberconwy.

[Guto Bebb]

On the specific point about the lack of consumer demand in the economy, we had a consumer-driven economy under the previous Labour Government—a consumer debt-driven economy, based on personal debt and Government debt. Households are now retrenching, which is one reason why there is a lack of consumer demand in the economy, but we need to rebalance the economy and not depend on further credit card-fuelled economic growth, as the previous Labour Government did.

[Geraint Davies]

We do not want a debt-driven, borrowing-driven economy—obviously not. We need people to be given the opportunities to get jobs, create wealth and pay some of that back in tax. Post-1997, we had the transfer of a situation where the previous Conservative Government—history is repeating itself, of course—saw ever fewer people in jobs, paying less tax, and they were forced to cut services and increase debt and borrowing. That changed with Labour getting Britain back to work. Later, post-2008, it was a special situation, with too much borrowing and on the back of that, sub-prime debt. I agree that the sustainable future is about working and paying our way, but it is not about cutting to such an extent that we deflate the private sector so that it cannot invest in new jobs. We need the economy going along, with investment in consumer markets and productive areas. Although there is some level of agreement, we differ slightly on our interpretation of the past.

Moving back to the future, what should the UK and Welsh Governments do to give Wales the best opportunity for economic growth? An area that we touched on in the report was UK Trade and Investment’s role, and I very much agree with the report’s recommendations. UKTI has 83 offices around the world, and they are opportunities to market Wales for inward investment and trade. The coalition Government, in their wisdom, decided to close down all the regional development agencies, so when we went to see UKTI in Berlin, Dusseldorf and so on, we asked what happens now when a German company comes along and says to UKTI, “We want to build a factory, a distillery, or whatever. Where should we go?” That used to be put on a computer platform that was drawn down by the RDAs, which would compete for that investment. As RDAs were abolished, that no longer happens, and clearly, there is an opening for Wales to move in to. Wales has great, ongoing opportunities to use UKTI to maximise the open goals that have been created by the Government taking the players off the pitch.

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[Geraint Davies]

I bet the hon. Gentleman’s wife was happy about that, with him shouting for a goal, but there we are. I wish him a long and happy marriage while watching Swansea. I thank him for that intervention, which was very welcome.

On a serious note, the Swansea brand is of course a global brand, so there is an opportunity to attach various values to it, including the fact that it is a nice family and business environment by the sea. With internet connectivity, why would people want to be in the expensive congestion of London, for instance, when they could be overlooking Swansea bay? The fact that there are sporting successes, good schools, a good health service and so on is critical to that.

I mention that point partly to move on to the regional pay issue. The Government have been considering the case for regional pay, and I will say two things about that. First, reducing the pay of people in the public services in Wales by some 20%, which is the implicit agenda, would remove even greater amounts of economic power from the consumer markets in Swansea and, again, push down the private sector; but as important or possibly more important, GPs and other public servants would think that they would be better off getting a job in Bristol, where their pay would be higher, and suddenly we would be denuded of some of the best GPs and other public servants. That would have implications for inward investors, who are being taken, for instance, from London.

Let us consider how inward investment works. UKTI promotes the UK. Someone says, “Okay, I’ll go to the UK. That sounds great in terms of stability, environment, access to Europe and everything else, but where shall I go in the UK”—that is the next decision—“and how do we have added value there?” Of course, in Wales, we have environmental opportunities. We want to increase accessibility, skills and research and development. However, if the families going there suddenly do not have the right GP or education services because of wage deflation in Wales, that will be very bad for inward investment.

[Guto Bebb]

I share many of the hon. Gentleman’s concerns in relation to regional pay. Certainly, in an area such as north Wales, part of which I represent, it is a real concern—Chester is within 45 minutes of my constituency. Was there anything specific, therefore, about people working in the Courts Service that meant that the Labour Government were quite happy to see those working in Mold paid less than those working in Chester, even though there are only 10 miles between them?

[Geraint Davies]

That is a very well rehearsed intervention—“How can you have this, that and the other?” Obviously, there is a case for London weighting, for example. There are some cases at the margin for differentials, but in the main what we do not want is suddenly to have a free market approach to regional pay, as the hon. Gentleman’s colleagues seem to want to promote. That would undermine inward investment in areas such as his own, because people would not be paid the right rate for the job.

In a global environment, regional pay becomes even less relevant. I hope that over time the average pay in Swansea will escalate quite phenomenally because of the emergence of the second campus at the university and of satellite industries—SMEs and global companies locating beside that centre of excellence and moving forward from that. I am talking about international links from Swansea university and, indeed, the other university in Swansea, Swansea Metropolitan university, which delivers the highest proportion of SMEs that last for three years or more in Wales. It is building up digital clusters in interactive technology, animation and modern manufacturing design. If we can move to a level at which the community of people around that intellectual base evolves, so that people can get a number of jobs in the same place, the average pay may go up. What does that mean for regional pay in the public sector? We might stop that through the moves that have been set out.

We have already mentioned bridge tolls. My view in a nutshell is that the Severn bridge toll is a tax stranglehold on the south Wales economy. We should eliminate the toll sooner rather than later. The reason why I want the Government to evaluate immediately whether, if they paid that toll themselves, they would get the money back in jobs, in income tax from new jobs and in benefit cuts from people going off the dole is that the toll is undermining inward investment in south Wales.

The Welsh Government recently produced a report that said that £107 million was being lost from the Welsh economy because of the tolls. I suggest that that is an underestimate. Let me give a simple example. A small builder from Newport, who wants to retile roofs and do extensions, would not go across to Bristol to look for that work now because of the toll, but if there was no toll, he or she would do so. I therefore believe that we should look at that again.

As we see other city regions, such as Manchester, emerging, it would be unbelievable for the person or the group that is leading Manchester city region to suggest a toll on the M5 to build some infrastructure. That would be unheard of. Similarly, we must look carefully at the economic impact of removing tolls. The removal of the Forth bridge toll, which was only £1, increased traffic by 13%. The Select Committee report is about what the UK and Welsh Governments can do to stimulate inward investment and growth. Getting rid of the tolls is clearly an option.

The Silk report talked about borrowing powers and so on, but frankly, the first issue to get right is ensuring that Wales has its fair share of the UK cake—though I do understand that it is a squeezed cake. We have had something like 2.5% of the transport investment in recent years, but proportionally we should get about 5%. There is a plan to spend £32 billion on High Speed 2 to connect north and south England. Our fair share would be £1.9 billion, and unless we also have a spur off the line, inward investment that would otherwise go to Wales will end up in the north of England.

Is the Silk report just a way of saying, “Actually, we’re not going to give you any more money. We don’t want to know the arguments about a fair share and Barnett and all that. If you want more money, raise it yourself from a lower tax base.”? Wales’s gross value added is about 70% of the UK average however, so it is less capable of doing that. We do not need new tax raising powers and a lot of uncertainty about the future for inward investors; we need a fair share of British investment in our services, capital investment in our transport infrastructure and to deflate the costs of entering south Wales by bridge.

I shall move swiftly on, because I know others want to speak. The tax regime leads to a tax on inward investment. One small example, which leads to a significant example, is that in recent days Tata Group has announced 900 job losses in Britain, 600 of which are in Port Talbot in the Swansea bay city region. The job losses are largely due to a fall in demand in Tata’s core markets in Europe, which accounts for two-thirds of its sales. I have had discussions with Tata, and part of its decision is about a level playing field on tax. In Britain, Tata pays 50% more tax than it would in its European operations, due to the additional carbon pricing that the coalition Government have introduced.

I worked for five years in the Environment Agency Wales on flood risk management and adapting Wales to climate change—incidentally, the Government have cut investment in those areas, despite the flooding. Although I am a great supporter of investment in green technology and a sustainable future, we need a level playing field. We cannot have a situation in which steel production moves from south Wales to South America, for example, and we end up with dirtier steel production, because taxes are too high here. We all share the same environment. The European tax regime, which has carbon taxing built in to it, is the right way forward. Adding a huge amount to UK prices, which drives down jobs and clean production in Britain, is not the way forward.

Transferable Tax Allowances

Guto Bebb Excerpts

Wednesday 28th November 2012 Westminster Hall

[Guto Bebb (Aberconwy) (Con)]

It is a pleasure to serve under your chairmanship, Mr Turner. I congratulate my hon. Friend the Member for Peterborough (Mr Jackson) on instigating this excellent debate. Most of the statistics and comments that I was planning to make have already been made by other Members, so I will not repeat them. It is important that we, as Members of Parliament, try to be true to the manifesto commitments upon which we stood. Certainly during the numerous campaign meetings that I had in my constituency, the transferable tax allowance was discussed, as was the Liberal Democrats’ policy of increasing the personal allowance. As a Government, we have invested hugely in increasing the personal allowance, but as yet there has been no move towards a transferable allowance. It is important that we get a signal, either next week or certainly before the next Budget, about such allowances.

The historical situation shows quite clearly that the situation for marriage within the tax system has changed quite dramatically over 40 years. We have gone from a situation in which the marital status of an individual was acknowledged by the tax system to a situation in which we have an individualistic tax system. We cannot complain that we have an individualistic society if we have a tax system that basically says that a stable family life has no value, and that is something that we must deal with. Historically, the figures show that the increase in taxation for a single person from the mid-1960s to 2011 has been very slight, moving from 23% to 25% of tax. Very low-income and high-income families have seen their tax burden fall, while the squeezed middle—one-earner families in particular—are penalised by the tax system, with their tax contribution doubling over a period of 40 years.

The signal being sent out by the tax system has been that stable families, or the old-fashioned 1950s family, as the Deputy Prime Minister described them, are the ones who are being penalised. Effectively, their choice is being penalised by the tax system, whereas every other choice seems to be applauded.

I wonder about the position of our Liberal Democrat colleagues, whom I defend on a regular basis because they have been very good at supporting the Conservative party on important changes on welfare reform and on dealing with the deficit. However, I have been surprised by their response to the issue of recognising marriage within the tax system. Of all parties, the Liberal Democrats look to Europe for a lead in so many areas. They should look at all the other countries in the European Union and ask themselves, “Why do they recognise marriage within the tax system and we do not?” We are alone with only Mexico in the OECD in not recognising marriage within the tax system, and I do wonder, even from the Conservative Benches, whether we should, on this occasion, take a lesson from our European partners. If they can recognise marriage within the tax system, we should try to do the same.

Again, on an international basis, it is the average-income family that is penalised in this country in comparison with other countries, and that is a message that is coming through strongly when we read the newspapers and the letters from constituents who are now seriously complaining about the impact of increased prices in the shops and the increased costs of family life. That frustration is increased by the fact that they also feel they are not being supported by the Government in any way, shape or form. Explanations for that will be given by the Treasury, but it is important to recognise that the pressures being faced by families also reflect the fact that they are not, in their view, being supported in the decisions they have made in trying to provide their families with a stable environment.

We should consider a transferable allowance. As for the costs involved, I recognise the fact that even a small contribution towards making a change would be comparatively low cost compared with the cost of increasing the personal allowance. I have supported an increase in the personal allowance, but some of the analysis that has been made of the costs involved indicates that a lot of the benefits being derived from that increase have actually gone towards those in the higher percentages of the income distribution scale. Those in the top half of the income distribution scale have benefited pro rata to a higher extent from the increase in the personal allowance than those in the lower part. Interestingly, the research being done by organisations such as CARE shows quite clearly that if we target a transferable allowance, most of the benefits would go to those in the bottom half of the income distribution scale, which is something that we should take into account. As my hon. Friend the Member for Congleton (Fiona Bruce) stated, this is a social justice issue; it is trying to ensure that if the Government are supporting people within society, then that support should be targeted at those most in need.

CARE has highlighted one big problem with our tax system, which is that we seem to view individuals in relation to their income without taking into account the costs that they face, which come from their responsibilities —whether they have dependants and whether they are a single-earner families. Again, while a transferable allowance would be a small step, it would show quite clearly that the Government value some of the choices that people make in society to ensure that their children have the best start in life. Certainly, there is some merit in the comments made by my hon. Friend the Member for Peterborough about targeting a transferable allowance initially at those with children under the age of three or those with children under the age of six. In that way, we could perhaps start the process of having a transferable tax allowance once again.

As I said, the case that has been made today is very strong. There is certainly agreement within Westminster Hall this morning that marriage is an institution that we value and that we, as a society, should put a premium on. That is in no way a condemnation of any other choice that people make, but the tax system that we have at this point in time is actually stating that it places less value on marriage than it does on other options. That is the key point. We are not asking here for marriage to have a special status; we are simply asking for marriage to be treated in a way that is appropriate and in keeping with the way that the tax system treats other options. That would send a very strong signal to society and to our constituents.

I will close by saying that I fully endorse the comments made by all the speakers so far, and I look forward to hearing the comments of the Treasury Minister.

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[Catherine McKinnell]

What is rather counter-intuitive about the arguments being put forward today is that this tax incentive, small though it is, would be targeted at the very families that are not in dire straits. Members seem to be turning their backs on children in families that are facing the difficulties they have described. Unmarried couples, including those with children, have lost out on tax credits—many have had their tax credits cut because they cannot find more hours of work—or have been hit with housing benefit cuts, but they will not benefit from these changes. If a marriage ends for circumstances entirely out of somebody’s control, or if they are widowed or have to flee the marriage because of violence, they will lose the proposed benefit, but it could still be available to the perpetrator of the domestic violence, who could get married again. Nor would this benefit be available to married couples where both partners are working, unemployed or low earners.

Hon. Members have mentioned analysis by the Institute for Fiscal Studies, but that analysis shows that this benefit will be available to only 32% of married couples. This policy is meant to recognise marriage in the tax system and to send an important signal that we value couples and the commitment people make when they are married. Do Members believe that only 32% of marriages should be valued, while the other 68% are of less value and less worthy?

[Guto Bebb]

Will the hon. Lady give way?

[Catherine McKinnell]

Unfortunately, I do not have much time. I appreciate this is an important subject, and I would like to give Members more time, but I want to finish my comments.

I strongly disagree with the hon. Member for Enfield, Southgate, who attempted to dismiss out of hand any notion that this policy recognises not marriage in general but just one type of marriage, where one partner is the breadwinner and the other stays at home. He dismissed the Deputy Prime Minister’s comments that such things are a throwback to the Edwardian era, but that is a sincere concern for many people.

I appreciate the comments of the hon. Member for Strangford (Jim Shannon) and the sincere manner in which he made them, but I disagree with him. Designing the system in a way that penalises all couples and families that do not fit in with one specific model, regardless of need, sends out a strong signal—intentionally, it would seem—that one type of family is worth more than another and that one type of parent is worth less than another. That is a very dangerous signal to send to children. It is unfair and out of touch, and is not the best way to support families in the tough times of 2012.

Welsh Language (Non-devolved Departments)

Guto Bebb Excerpts

Tuesday 20th November 2012 Westminster Hall

[Guto Bebb (Aberconwy) (Con)]

It is a pleasure to serve under your chairmanship this afternoon, Mr Howarth. I am grateful for the opportunity to discuss Welsh language provision in non-devolved areas. Before we enter into the substance of the debate, it is worth taking a quick historical overview of the development of Welsh language policy and rights in Wales. After all, it could be argued that until 1967, few rights were afforded to the Welsh language, a situation that has been tremendously transformed subsequently.

The Welsh Language Act 1967 was welcomed. It conferred upon the Welsh language and Welsh speakers certain rights that did not previously exist. My father-in-law would still say that one of his claims to fame was that he was involved in the first ever Welsh Language Society protest at Pont Trefechan back in 1963. I emphasise that there have been significant changes.

Today, I want to concentrate on the Welsh Language Act 1993, which was a tremendous and significant step forward, and on the Welsh Language (Wales) Measure 2011, which is moving the 1993 Act forward positively in many areas. However, I have some concerns that I want to articulate today, and I hope that the Minister can respond to and lay to rest some of my concerns.

The 1993 Act was a significant breakthrough for the status of the Welsh language in Wales. It was a cross-party effort, and there is no doubt that we owe a degree of gratitude to my predecessor in the Conwy constituency, Wyn Roberts, now Lord Roberts. He, with the support of the leaders and members of all political parties in Wales, ensured that that Act came into being with the support of the vast majority of the population of Wales. Far too often in the past, the language has been a divisive issue. A success of the 1993 Act was to introduce some rights for Welsh speakers without in any way creating a feeling that they were being imposed on non-Welsh speakers in Wales.

Another huge success of the 1993 Act was the creation of the Welsh Language Board. In a spirit of cross-party co-operation, it was initially chaired by Lord Elis-Thomas, a previous Member of Parliament for Meirionnydd Nant Conwy. There was a time when the board, working under the 1993 Act, moved the agenda forward quite significantly. The first concern about its future and possible changes to 1993 Act came in 2004, when a bonfire of the quangos was announced by the then Welsh Government. It was an ill-thought-through, back-of-the-envelope decision in relation to many public bodies in Wales, not least the Welsh Development Agency, the abolition of which many of us still believe was a huge mistake. Comments were made at the time that the Welsh Language Board would in due course be dissolved. That did not happen for a long time, because the legislation was far more complicated than had been envisaged. However, part of the “One Wales” agreement in 2007 was that there would be a new Welsh language Measure, which came into being in 2011.

My concern about the 2011 Measure relates not so much to the content, which I believe to be fairly reasonable and to be moving the agenda forward in reflecting the fact that we have an increasingly bilingual Wales. The number of young people in the valleys, Cardiff and south Wales who take advantage of Welsh medium education has increased dramatically, and we should welcome that. The 2011 Measure looked at and tried to respond to those changes, but there were concerns, expressed at the time by some members of the Conservative party and by members of the Welsh Language Society, that some of the changes in that Measure had been rushed through and were possibly ill considered. Whether that is fair or not, my significant concern today relates to the impact of the 2011 Measure on the operation by non-devolved Departments of their Welsh language policies and working in partnership with the Welsh Language Board.

We are aware that the provisions of the 1993 Act do not apply to Crown bodies. It was based on a process of good will and co-operation. While not all non-devolved Departments co-operated and played the game, as it were, in the way that they should have, the vast majority did. Looking at the work of the Department for Work and Pensions and of the Treasury, there are examples of good effort and good will in trying to provide services in Welsh. They were neither perfect nor always to the satisfaction of many people in Wales who would have liked those services to be of a higher standard, but Welsh language schemes were in place in those Departments, and they were monitored for compliance by the Welsh Language Board. There was a relationship between the board and the non-devolved Departments, which seemed to create some accountability and acceptance that there was, first, a need to provide services through the medium of Welsh when they were demanded and desired and, secondly, an understanding that there would be a degree of compliance to ensure that the Welsh language schemes adopted were implemented.

I speak with some experience, because before I was elected, I was, on numerous occasions, responsible for Welsh language compliance visits on behalf of the Welsh Language Board, so I express an interest in the field. One of my funniest experiences happened when I conducted an overview of the services offered by the Post Office through the medium of Welsh. One of the things that we had to undertake was a mystery customer effort to see to what extent the Post Office offered services in Welsh. I turned up in a village not far from Monmouthshire where, as agreed in the strategy adopted for the compliance report, I asked for six first-class stamps in Welsh. The postmaster immediately turned round and said, “Aha, mystery customer.” Obviously, they were quick to spot the fact that not many Welsh speakers would turn up in a post office in Monmouth.

It should also be noted that, before I was elected, I came down to London on more than one occasion to conduct a compliance report on Her Majesty’s Revenue and Customs, on the way in which the tax credit system was not succeeding in delivering Welsh language forms to people who were trying to adopt, and trying to work through the medium of Welsh when making claims. While there was non-compliance on that occasion, it reflected more on HMRC’s computer system than on its willingness to try to make the system work. I therefore bring a degree of personal experience to the table.

We had a relationship with non-devolved areas and a system of compliance and working together. A relationship was being built and developed, and it ensured that there was understanding of the need for non-devolved Departments to deliver services in Welsh.

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

I do not want to show my age, but I served on the Standing Committee that considered the 1993 Act. I confirm that Lord Roberts of Conwy played a huge part in getting that Bill through, and we need to thank him for that.

The hon. Gentleman is making a valid point. I found that, in the old days, Home Office documents, however large, were translated into Welsh. That is not the case now. If his point is that we need to get some better co-operation between our friends in Wales and the people here, I am fully with him.

[Guto Bebb]

That is the intention of this debate. It is to examine what sort of co-operation is now required and how that can be moved forward. My concern is the extent to which the Welsh Assembly, when it looks at how it can legislate, has concentrated on devolved areas, and possibly the baby was thrown out with the bath water in relation to non-devolved areas.

[Glyn Davies (Montgomeryshire) (Con)]

I thank my hon. Friend for allowing me to associate myself with an issue that I have previously raised in the Chamber. We know that we had a pretty close escape with the ballot papers for police and crime commissioners. It is vital that the commitment to bilingualism is as great here in Westminster as it is in Cardiff. That is what my hon. Friend is asking for, and I fully support what he is doing.

[Guto Bebb]

I welcome my hon. Friend’s intervention.

My specific concerns relate to the fact that I represent a constituency where about 40% of the population are first-language Welsh speakers. I would be the first to admit that not enough of those constituents who are first-language Welsh speakers demand services in Welsh, but there have been occasions since I was elected in May 2010 when I have communicated by letter with various Westminster Departments to highlight concerns about the non-provision of services through the medium of Welsh. In response, I again received examples of willingness to co-operate, but it is worrying that a Department stated in a letter quite recently that it is willing to co-operate through its Welsh language scheme and that it will consult the Welsh Language Board on how that relationship may be further developed. I wish that Department good luck, because the Welsh Language Board, as we well know, has been abolished.

[Susan Elan Jones (Clwyd South) (Lab)]

Section 43 of the Welsh Language (Wales) Measure 2011 is extremely important. Does the hon. Gentleman agree that, were the Secretary of State for Wales to give a statement of intent to do so, there would be no barrier to ensuring better Welsh language services in Whitehall Departments? Will he also join me in calling on the Secretary of State to give his section 43 consent?

[Guto Bebb]

The hon. Lady jumps ahead of me, because I will mention section 43 later in my speech, but, yes, it is an important part of the legislation.

There are concerns, because some of the services offered to the people of Wales by non-devolved Departments are crucial. We all know how important the benefits system is, and we all know the pressures faced by constituents who have to go through the Atos health care system, and for them to be able to do that in the language of their choice is important. The Department for Work and Pensions has made it categorically clear that anyone wishing to undertake such a review through the medium of Welsh can do so, but we need to ensure that we hold the Department not only to its good intentions but to its promises.

Some of the other services offered by Westminster Departments are also crucial for the recognition that the language has equal status. In that respect, I congratulate the Department for Transport, which has recently given the Driver and Vehicle Licensing Agency licensing contract to the Post Office. As I said, I have been involved in the compliance efforts of the Post Office, which is an organisation that works extremely hard to ensure a bilingual service. Having those DVLA forms available in both languages in post offices across my constituency and across the constituencies of other hon. Members is a major step forward.

Why do I raise the issue now? We are in a transitional period and are slowly moving from the Welsh language schemes that existed under the 1993 Act to the new system of standards. Obviously, for those standards to be imposed on non-devolved areas, co-operation is needed between the Secretary of State for Wales and the newly created Welsh Language Commissioner. I have concerns, because we need that co-operation to be strong, but it needs to work both ways. I am quite confident that there is good will, and that willingness to work exists in the Wales Office, but I want to ensure that that is put on record today.

As the hon. Member for Clwyd South (Susan Elan Jones) stated, one of the key points is that the 2011 Measure categorically states that the Secretary of State can ensure that there is an agreement for services to be provided by Ministers of the Crown in Welsh, where that has been discussed and developed in a co-operative fashion. I would argue, therefore, that we need to ensure that that process is addressed and articulated in the open, because transparency is always a good thing if there is some concern that that is not being provided, or that there is a lack of understanding of the requirement. The key issue is the lack of understanding of what can and what should be expected of the non-devolved Departments. I have no doubt that co-operation will be forthcoming from the Wales Office. We have seen that the intention is to work with the Welsh Language Commissioner, and I am sure that the Minister will confirm that my understanding is correct, but I will wait for his comments.

It is also crucial to state that, in addition to co-operation and agreement from the Secretary of State for Wales, we need to address the Welsh Language Commissioner being a post and an organisation created by the Assembly. We need the credibility that the Welsh Language Board used to offer as a board established by an Act of Parliament. That credibility will be forthcoming if there is a positive and strong working relationship between the commissioner and the Secretary of State for Wales. The Secretary of State for Wales should not simply sign off an order and leave it at that; there should be an ongoing process of co-operation between the Welsh Language Commissioner and the Wales Office. I ask the Minister to comment on any developments and discussions on the way in which such co-operation might happen.

If we accept the argument that there is a need for the Wales Office to be involved in the way in which the Welsh Language Commissioner and its powers are implemented in relation to the Welsh language, and I think we do, we have to ask the key question who will scrutinise that involvement. It is perfectly clear and correct that the Welsh Assembly will scrutinise the work of the Welsh Language Commissioner. That is what I expect to happen. The Welsh Language Commissioner is a body created by the Welsh Assembly, so it should be accountable to the Welsh Assembly. If the intentions behind the 2011 Measure are to be realised by co-operation and co-working between the Wales Office and the Welsh Language Commissioner, there is a question about who will scrutinise that work.

It is important that all Departments are held to account. We often hear the claim that the Wales Office has much less to do now than it did previously. This is one area where the Wales Office should be leading the charge, but there is a need for scrutiny. Have there been any discussions with, for example, my hon. Friend the Member for Monmouth (David T. C. Davies) on the possibility of the Select Committee on Welsh Affairs taking an interest in scrutinising potential co-operation between the Welsh Language Commissioner and the Wales Office? There should be accountability in the performance of any duties that affect the public. We are all clear that accountability for devolved areas will be undertaken by the Welsh Assembly, but there is a role for the Welsh Affairs Committee in monitoring the work undertaken by the Wales Office in partnership with the Welsh Language Commissioner, if that is the way forward.

I have raised my concerns because I see a disconnect between the aims of the 2011 Measure and what is happening on the ground. I do not claim that the 1993 Act was perfect, but I am concerned that the way in which it had bedded in and reached the point where it was accepted by most of the non-devolved Departments may be lost. If we lose that, it would be to the detriment of Welsh speakers in all parts of Wales, not least in my constituency.

I believe that the structures can be created in partnership between the Wales Office and the new Welsh Language Commissioner, but that has to be open and transparent, and subject to accountability through scrutiny by elected Members here in Westminster. I can see no better way of doing that than through the offices of the Welsh Affairs Committee.

I look forward to the Minister’s response.

--- Later in debate ---

[Stephen Crabb]

That is an excellent point. It is exactly the kind of point worth making when we begin the review, hopefully after the arrangements are in place for the secondee from the Welsh Language Commissioner’s office.

My hon. Friend the Member for Aberconwy said that he wanted positive and strong co-operation. I absolutely assure him that that is what we intend. My right hon. Friend the Secretary of State for Wales has a close dialogue with the Welsh Language Commissioner on matters relating to the Welsh language in general and Government services delivered in the Welsh language in particular. Indeed, the Wales Office has always maintained a good working relationship with the commissioner and her predecessor body, the Welsh Language Board. That close relationship continues as we plan the review. We can only set about the task once we know for sure what the Welsh language standards will be, but we hope to be in a position to do so as soon as the final standards are confirmed.

In conclusion, I assure hon. Members from all parties that the Government are fully committed to the Welsh language, that the Wales Office is taking the lead in ensuring adequate Welsh language provision in Government services in non-devolved areas where needed and that we will consider carefully UK Departments’ capacity to meet the new Welsh language standards.

[Guto Bebb]

I am pleased with the response that I have heard. My concerns were not that the Wales Office was not positive about the language; they had more to do with the fact that some of the provisions of the Welsh Language Act 1993 might have been lost as a result of the change to the Welsh Language (Wales) Measure 2011. Before the Minister finishes his response, will he comment on the possibility of scrutiny by the Select Committee on Welsh Affairs?

[Stephen Crabb]

It is the duty of all Select Committees to scrutinise and monitor the activities of relevant Departments, and the Welsh Affairs Committee has the role of monitoring everything that we do in the Wales Office. I do not think that it is appropriate for me or my right hon. Friend the Secretary of State to recommend or suggest to the Chairman of the Welsh Affairs Committee subjects that the Committee should investigate; that is entirely a matter for the Committee itself. However, we would naturally expect and hope that some of that scrutiny work will be done by the Committee.

My hon. Friend said that he wanted the Wales Office to lead the charge. I leave him and other hon. Members here with the assurance that we will indeed lead the charge in defending and promoting the Welsh language across non-devolved departmental areas.

Question put and agreed to.

Fuel Duty

Guto Bebb Excerpts

Monday 12th November 2012 Commons Chamber

[Sajid Javid]

My hon. Friend has done a lot of work in this area and speaks with great knowledge. He is absolutely right to point out Labour’s inaction.

[Guto Bebb (Aberconwy) (Con)]

I speak as a Member of Parliament representing a Welsh constituency. Is my hon. Friend aware that this Government made available to the Labour Administration in Cardiff money to freeze council tax in Wales, but they declined to do so?

[Sajid Javid]

That is a shocking disclosure, but what more could we expect from Labour?

Beer Duty Escalator

Guto Bebb Excerpts

Thursday 1st November 2012 Commons Chamber

[Bob Blackman]

Indeed. Pubs in my constituency have been closed down and redeveloped as flats. The loss of those extremely valuable centres results in the destruction of the whole community.

Beer has a relatively low alcohol content. Those who promote the beer duty escalator talk about the health risks related to drinking, but I am a great supporter of responsible drinking and of transferring people to beer drinking, given its relatively low alcohol content. A person would almost have to drink more beer than their capacity would allow in order to damage their health, whereas relatively small quantities of spirits can cause immense damage.

The supermarkets have not only helped to destroy local pubs; they have completely eliminated off-sales from other environments. Anyone can wander into a relatively small supermarket in my constituency today and buy six cans of beer for a fiver, but if they go across the road to the local pub, The Duck in the Pond, they will have to pay £3 for a pint. Why would anyone do anything other than buy beer from the supermarket and wander off home, or drink it on the street? This is causing real damage to the people who are providing these important facilities.

Some people call for minimum unit pricing for alcohol, and I can understand why they do so. I believe that there are huge risks involved in minimum pricing, but we have to address the supermarkets’ predatory pricing and prevent them from subsidising alcohol sales. We need to ensure that they compete fairly with local pubs, rather than ruthlessly getting customers by selling alcohol as a loss leader.

The Treasury’s own figures show that the beer duty escalator will produce only a flat level of income. If that is the case, and if the duty is going to increase year on year, that can only mean that the Treasury is forecasting reduced volumes of beer sales in this country. That can only mean more threats to our pubs and our communities, and there will be implications for other forms of alcohol as well.

[Guto Bebb (Aberconwy) (Con)]

I have three breweries in my constituency—Bragdy’r Nant, Bragdy’r Gogarth and Bragdy Conwy—and for those slow on the uptake, Bragdy is Welsh for brewery. Those businesses are paying about 50% of their turnover in tax. They recently invested in a pub in the local community, but they will not be able to do that again because so much of their turnover currently goes in tax.

[Bob Blackman]

Indeed, and the potential of local pubs to contribute to growth in the economy is threatened by the beer duty escalator.

There is an alternative. If we abolish the beer duty escalator, promote the responsible drinking of beer, as my hon. Friend the Member for Leeds North West (Greg Mulholland) mentioned, and allow the price of a pint at the pump to be reduced, that will help people to move away from irresponsible supermarket drinking back into pubs. That would mean they consumed less over a longer period and in a more sociable atmosphere, while the Treasury would get more income as those sales increased. We would therefore see a better outcome—for health, for pubs and for the Exchequer—making this a win all round. I thus urge our new Minister to have a full and proper review of how to reduce the price at the pump and dissuade the supermarkets from cross-subsidising their sales, leading to much better social interaction in our society and encouraging pubs to grow, and make sure that it continues.

My final point relates to the growth of small pubs in areas where they are taking over empty shops. I think this is a potentially serious problem, when large groups of relatively small pubs become a threat to the local environment and to local communities. It is a threat to the big traditional pubs, which have served this country so well over many years, particularly in the suburban and urban areas. Landlords of these new pubs often do not have the same sense of responsibility as the previous landlords. We need to look at the impact of that and understand why this it is happening. I look to Ministers to review the situation so that everyone can see the benefits of the great British pub and, indeed, of all the social centres that we have discussed in the debate. We must ensure a fair and reasonable deal for pubs—from the Exchequer and in competition with supermarkets.

Interest Rate Swap Products

Guto Bebb Excerpts

Thursday 21st June 2012 Commons Chamber

[Guto Bebb (Aberconwy) (Con)]

I beg to move,

That this House has considered the matter of the mis-selling of interest rate swap products to small and medium-sized businesses; notes the work undertaken by the Financial Services Authority in this respect; and calls for a prompt resolution of the matter.

I thank the Backbench Business Committee for awarding me the debate. It has received a number of fine applications for time in the main Chamber and I am grateful for the opportunity to raise the issue of the mis-selling of bank interest rate swap products. A number of colleagues have indicated their willingness and a desire to speak in the debate, so I shall try to be as concise as I can in my opening remarks.

The issue came to my attention in dealing as an MP with the hassles raised in constituency surgeries. It is a great advert for doing surgeries: we never know what will come through the door. Back in the autumn of last year, a constituent came in to talk about interest rate swaps, collars, caps and similar things. I was a self-employed business person for 15 years before I was elected to this place, and it crossed my mind that this business man who was talking about the loss of his business and his hotel and the potential loss of his house might be finding an excuse for his business failure. I am not a hard-hearted individual, but I have been in business for a long time and I have the view that there is the rule of buyer beware in transactions with banks and other financial institutions. I therefore listened to his case attentively but with a degree of scepticism, wondering whether he was looking for an excuse for what happened to him.

The more I listened, however, the more I thought that there was something that I should look into, and the crux for me came when I tried to get hold of the verbal agreement between my constituent, Mr Colin Jones, and his bank. It took us a long time to get the bank to allow us to see a transcript of the verbal agreement, and by that point I understood something about the nature of interest swap derivatives and what was meant by swaps, caps and collars. I had a degree of understanding that we were not considering a straightforward financial product.

My concern, which became apparent from the transcript, was that time and again—on four if not five occasions—during the telephone conversation that was the basis of the legal agreement the bank described the product as a fixed rate one. The bank even went so far as to say, in essence, “Mr Jones, it is basically a fixed rate product. It will protect you in the same way as a fixed rate product would protect your house.” His problems and the financial effect of his decision to sign up to that product have been extremely damaging. He was misled, given that the description of the product as akin to a fixed rate product was, to say the least, economical with the truth.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

I congratulate the hon. Gentleman on securing this debate. I apologise for being a tad late in getting to the Chamber. I assume that the person his constituent was talking to was fully qualified under the Financial Services Authority to sell that product. I have some constituency business in which, clearly, there is a real issue about the competence and qualifications of the person doing the selling. Has the hon. Gentleman come across any similar problem either in his constituency or as a result of this debate being called?

[Guto Bebb]

There have been examples of such scenarios, which have come across my desk as a result of what has now become a campaign. One of the reasons for holding the debate is to ensure that more cases come forward, because the more information we have, the easier it will be for the FSA, for example, to bring the issue to a resolution and for the banks to acknowledge that there is a problem. The hon. Lady makes an important intervention.

[Paul Uppal (Wolverhampton South West) (Con)]

I have a slight confession to make. I spent a great deal of my 20 years in business dealing with swaps, collars, caps and all sorts of financial instruments. The case highlighted by my hon. Friend of its being a fixed rate product in a sense misses the point. In general, such products were hedges—they were there to mitigate risk. A lot of customers went awry because the bank would often present the products as a loan but would gear up much more if the risk could be mitigated. Such financial products were often sold on that basis.

[Guto Bebb]

That is an important point. My comments will state clearly that those products are not necessarily wrong. The question at stake is whether the products were sold appropriately, and whether there was a degree of mis-selling. Sophisticated investors, understanding what they are doing, should have the right to enter into such agreements. My question is whether the banks should be going after businesses with turnovers of less than £200,000 a year.

[Nick de Bois (Enfield North) (Con)]

I have a constituent, whom I will not name for understandable reasons, who has suffered a loss in excess of £1.5 million as a result of such a product. Does my hon. Friend not agree that the banks have an extra responsibility, because they are often dealing with inexperienced people who, nevertheless, place a massive trust in their long-term relationship with their banks?

[Guto Bebb]

That is a key point. Time and again, businesses have told me that their relationships with banks go back 15 or 20 years, and that they believed the banks had their best interests at heart. In some situations, however, they have clearly been sold products that they did not understand, but they trusted their bank manager because they had dealt with them for so long.

Having been persuaded by Mr Jones’s transcript to look into this issue, I started asking questions, and as a result I came across the Federation of Small Businesses working hard on this issue and the organisation Bully-Banks. We have identified literally thousands of businesses that have been affected, and debates such as this are necessary to show that the House understands and cares about the problem and wants to see a resolution.

[John Healey (Wentworth and Dearne) (Lab)]

I congratulate the hon. Gentleman on his leadership of this debate. He is looking for evidence and examples, but has he come across Guardian Care Homes, a firm with two care homes in my constituency? Its problem was that the term of the swaps that it was sold far exceeded the term of the loans to which they were linked.

[Guto Bebb]

That is a key issue. In many cases, the term of the swap is longer than that of the loan, which the Financial Services Authority believes to be evidence of mis-selling.

Evidence about the background to interest rate swaps suggests that banks started to target small businesses from about 2006 onwards. The practice was probably curtailed in 2008-09, although there are a few examples of such products being sold after that. In a number of cases, banks have settled with businesses out of court. My concern is that banks have placed significant gagging orders on those businesses, which stops them explaining the terms and conditions of the settlement.

Existing regulations should have been taken into account when these products were sold. Swaps are financial derivatives covered by section 85 of the Financial Services and Markets Act 2000. They are, therefore, a regulated product and any adviser who tries to sell them has a duty to understand the needs of their customer. That is a key point. A fair, clear and not misleading explanation of the product must be provided to the customer, yet in many of the cases I have seen the information provided was far from satisfactory.

[Damian Collins (Folkestone and Hythe) (Con)]

I, too, congratulate my hon. Friend on securing this debate. Does he share my concern about the experience of Castlewood Hotels in my constituency? It was sold such a product by the bank and told that if it did not accept it, its business could be in jeopardy in future.

[Guto Bebb]

Again, that is an important point. In significant numbers of cases a swap product has been sold to a business as a condition of a loan being made available, so that the future availability of credit was dependent on the acceptance of a swap product. Obviously, a business in need of finance would be persuaded of the need to take up that product in order to receive finance, and that is a key issue.

[Mr Andrew Tyrie (Chichester) (Con)]

rose—

[Guto Bebb]

I will, of course, give way to the Chair of the Treasury Committee.

[Mr Tyrie]

I am grateful to my hon. Friend for securing this important debate. As he will know, the Committee is already looking into this matter and has written to the FSA and the Financial Ombudsman Service asking them to investigate fully and get back to us. He may not be aware, however, that we also raised this issue with the chairman of the FSA, who has promised to provide a progress report by the end of July. The Committee is extremely anxious, not least because a number of its members, including me, have seen constituents with exactly the sort of complaint my hon. Friend outlines.

[Guto Bebb]

I am aware that the FSA has promised to provide a progress report, and I sincerely hope that that will be with us before the end of July, if not sooner. My concern is that businesses are being put into administration as we speak—we have seen examples of that this week alone—and in the current economic climate we should not accept the loss of any businesses or jobs as a result of mis-selling.

[Nicky Morgan (Loughborough) (Con)]

Do we not also need to get on with it because lots of claims are time-limited? Some of my constituents have only until October this year to launch a claim, and they need to know the position of the FSA and the Financial Ombudsman Service so that they can decide whether to have recourse to the law.

[Guto Bebb]

That is an important point. As many of these products were sold from 2006 onwards, many affected businesses are now watching the clock run down on their opportunity to take action. That crucial point should resonate within the Chamber and outside.

In addition to the two duties I have mentioned, advisers must also take reasonable steps to show that the client understands the product and the risks involved. The bank must also take steps to ensure that the product is suitable. Mr Jones was sold a product by RBS. I wrote to RBS on his behalf, and was shocked that, in one transaction, I could highlight seven breaches of conduct of business sourcebook regulations. I cannot take the time to go through all seven examples, but I shall give a few. For one, RBS never sought to quantify the termination costs for the swap, which is a pretty severe piece of negligence, in my view. Neither did it take reasonable steps to ensure that it was in possession of sufficient personal financial information about Mr and Mrs Jones, which is also a big issue. It did not take reasonable steps to ensure that they understood the nature of the risks involved or provide a suitability letter. These are breaches of COBS rules and should be taken very seriously. To break seven such rules in one case raises the question: what were the banks doing?

I can highlight a number of general mis-selling examples. In some cases, businesses have been provided with a product not suitable for them and products have been described as similar to fixed rate mortgages, as I have already mentioned. There are also numerous examples of no opinion analysis being provided, meaning that a business was offered one product alone. I challenge the banks to state that that was not because of commission issues.

[Mark Tami (Alyn and Deeside) (Lab)]

That is the key. Many businesses have contacted me about that very point. It was a case of, “Take it or leave it.” Only one product was offered, and obviously people who needed finance for their businesses took it, with the dreadful consequences we have seen.

[Guto Bebb]

I agree wholeheartedly with the hon. Gentleman.

[Tessa Munt (Wells) (LD)]

That is a good point. I have a constituent, whom I will not name, who is a farmer and was offered such an arrangement completely inappropriately. He said specifically that he did not want it. None the less, his bank, Barclays, wrote to him on 6 June 2008 with a contract, which he read in detail, but on 10 June sent him the final contract, into which it had slipped two clauses that turned it into this sort of agreement. He accepts that he probably should have read the second document, but it did not indicate at all that it had changed the arrangement. That was very poor.

[Guto Bebb]

That is another example that should be taken on board in this debate.

Another example of general mis-selling already touched upon is where a swap is for a period longer than the loan. I have also seen examples of where the swap was for a sum in excess of the loan. Another crucial example is where the break cost for terminating the swap was described in one e-mail from a bank as being £9,000 but, three years later, when the customer approached the bank to break the swap, a figure of £135,000 was quoted to settle. I fail to understand how it could go from less than £10,000 to £135,000 in three years. That is another example of mis-selling. Another one worth mentioning is where the bank classified the client as a professional client and experienced derivative trader. I can assure the House that the business in question was blissfully unaware of the nature of the product it was buying, yet, for paperwork purposes, the bank had described it as a professional client rather than a retail client.

It is generally agreed that there is an issue here. The FSA accepts it is an issue. Bully-Banks, an organisation representing 350 victims, has done some work highlighting that 96% of businesses in its organisation were approached about such products by relationship managers. Businesses did not go looking for these products; they were approached with a solution to a problem that often they did not have. Some 87% of businesses surveyed by Bully-Banks were unaware that the adviser was not an adviser but a salesperson, and there was a general lack of understanding. In 95% of cases, businesses stated categorically that they entered into these agreements on the basis of advice and guidance given by their bank relationship managers.

[Steve Baker (Wycombe) (Con)]

I would like to offer my hon. Friend an explanation of why banks are doing this kind of mis-selling. In my private Member’s Bill last year on the regulation of derivatives, I explained how mark-to-market rules allowed banks to up-front unrealised cash flows to declare profit immediately on moneys that they have not received. I wonder whether the Treasury Committee will investigate whether that is a key factor in encouraging this bad business.

[Guto Bebb]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Before the hon. Gentleman rises to deal with that point, may I gently remind him that he was supposed to speak for about 10 minutes? He has been extremely generous in taking interventions, but there is a time limit for everyone else who wants to contribute, and it is getting shorter the longer he speaks.

[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—

[Madam Deputy Speaker]

Order. The hon. Gentleman was allocated 10 minutes. He has now been speaking for 20 minutes. There are about 15 Members wishing to take part in this debate, which is due to conclude at 2.30 pm. Will he please now make one more, brief remark and then resume his seat?

--- Later in debate ---

[Guto Bebb]

I was coming on to my final request, which is that in the long term we must avoid a repeat of what happened with PPI—payment protection insurance—which has created an ambulance-chasing gift for solicitors of disreputable means. We should have a system that allows such cases to be settled in a constructive manner, in agreement between the FSA, the banks and their clients.

[Hon. Members]

Hear, hear.

--- Later in debate ---

[Guto Bebb]

I thank the Minister for her update on the position of the FSA, which has moved significantly from its initial responses to my communications early this year; I respect the fact that it is moving in the right direction. However, it should be aware that Members on both sides will be looking carefully at its comments at the end of the month.

I also concur with the comments of the shadow Minister, who stated that the House can, at times, perform much better than it does at PMQs. This debate has been extremely positive. What has really pleased me is that contributions came from Members representing five political parties. There have been 14 excellent speeches and numerous contributions from Back Benchers stating that the issue is a concern across the country.

The issue has lain dormant for too long, and there is a real concern about the attitude of the banks towards the businesses. Even today, Members have said that they cannot name individual businesses because those businesses are scared of the banks’ taking action against them. That is a real concern. We need to move forward and to have transparency and openness. We need to identify the scale of the problem and the FSA needs to take a decision showing that as a regulator it has teeth and it will have an effect on the situation. I commend my motion to the House.

Question put and agreed to.

Resolved,

That this House has considered the matter of the mis-selling of interest rate swap products to small and medium-sized businesses; notes the work undertaken by the Financial Services Authority in this respect; and calls for a prompt resolution of the matter.

Jobs and Growth

Guto Bebb Excerpts

Thursday 17th May 2012 Commons Chamber

[Guto Bebb (Aberconwy) (Con)]

I had intended to speak about a number of issues in relation to the Queen’s Speech, but I will concentrate on three specific points because the time limit has been curtailed.

Before I do so, I should like to respond to a comment by the hon. Member for Linlithgow and East Falkirk (Michael Connarty), who said that the changes to public sector pensions would demand of some workers a 13% contribution towards their pensions. I entirely accept that a 13% contribution would be a significant sum of money. It is important to say, however, that our proposed changes to public sector pensions will protect those pensions. Labour Members should contrast the 13% requested in relation to public sector pensions with the equivalent contribution of about 38% that would be required of a private sector worker. I honestly believe that our proposed changes to public sector pensions will be the saviour of the system rather than its enemy, because people working in the private sector—taxpayers working extremely hard to try to pay their way—will feel increasing resentment unless there is an increased level of fairness between those in the public sector and those in the private sector.

On jobs and growth, I want to talk about two issues. First, there is a serious problem in relation to bank lending for small businesses. My constituency in north Wales is extremely dependent on small businesses—more so than on the public sector. There are not many constituencies in Wales where one can say that private sector employment is greater than public sector employment. People from those small businesses come to me time and again complaining that they are not getting support from the banking system. We have a Bill in the Queen’s Speech to deal with banking reform, but it is absolutely crucial that any changes do not make it even more difficult for small businesses to attract finance. Following on from the comments by my hon. Friend the Member for North East Cambridgeshire (Stephen Barclay), in my experience the problem has been not only a lack of long-term support from the banking system but an unwillingness even to offer short-term support.

I heard the bizarre example recently of a business in the tourism sector that employs more than 40 members of staff and that, despite the recession, has increased its turnover and its profitability by taking important steps to deal with its cost base, and yet its bank expects it to renew its overdraft facility monthly. It would be a challenge for anybody running a business that employs 40 people to plan for the future if they had to deal with their bank on the basis of a monthly renewal of their overdraft facility. The bank in that example is 94% owned by the state. I find that situation unacceptable.

When we consider the reform of the banking system, it is therefore imperative that we ensure that support is available for the small business community. In my constituency, growth will come from the small business community or it will not come at all.

Secondly, I will talk about the need to reduce regulation. I take exception to the comments of the hon. Member for Great Grimsby (Austin Mitchell), who complained that there was not enough in the Queen’s Speech. In my view, the important thing for a Government is not to legislate all the time. I assure him that nobody comes into my constituency office saying, “Please, please, we want more legislation.” What they want is for us to enact the promises that we made in the first Queen’s Speech and to deliver on behalf of the country. One thing that we said we would do for the small business community was to deliver on the burden of regulation.

In the Budget, the Chancellor made an effort to deal with some of the VAT anomalies. On the back of the two months that he has enjoyed as a result of some of the proposed changes, he might not want to visit VAT again. However, I say to him that there are anomalies in the VAT system that need to be dealt with, some of which affect the ability of small businesses to grow. The anomaly that I want him to deal with, which would boost growth in constituencies such as mine, is the way in which the VAT threshold damages businesses that aspire to grow. A small business that hits the £76,000 threshold has to get its turnover up to £100,000, otherwise it will be worse off as a result of being successful. If a small business turning over £76,000 decides not to grow because the implications for its bottom line would be bad, it will not employ more people and it will not contribute to economic growth. We need to deal with VAT anomalies, but let us start with one that is a barrier to growth.

Static Caravans (VAT)

Guto Bebb Excerpts

Thursday 26th April 2012 Commons Chamber

[Mr Stuart]

My hon. Friend is right.

[Guto Bebb (Aberconwy) (Con)]

According to the Treasury impact assessment, 750 businesses will be affected, but we estimate that 400 holiday parks will be affected in Wales alone, which would be a devastating blow for the economy of north Wales.

[Mr Stuart]

That is why I am grateful to Ministers for agreeing to listen to the evidence before reaching any definitive decision. Such a definitive decision has not been made, and I hope that when it is, it will be made in the right way.

Public Service Pensions

Guto Bebb Excerpts

Wednesday 2nd November 2011 Commons Chamber

[Danny Alexander]

I cannot give a specific example, because I do not have the necessary figures to hand, but I can say that I expect the lowest-paid people to benefit most from these arrangements. At present, those on the lowest salaries and with the flattest career paths contribute most to the pensions of the highest earners. The change to a career-average basis will ensure that many workers, particularly of the sort whom the hon. Lady has described, end up with more rather than less income in retirement. I consider that to be a right and proper reward for those people’s commitment to public service.

[Guto Bebb (Aberconwy) (Con)]

I too welcome the statement, but given that economic growth, economic development and job creation in my constituency depend on the small business community, can the Chief Secretary advise owners of small businesses how they should go about amassing a pension pot of half a million pounds before they retire?

[Danny Alexander]

It is true that in the private sector an enormous volume of contributions would be necessary to build up the pension pot that is required to fund the pensions that we are discussing today. The equivalent would be a pension pot of £600,000 or £700,000 a year. That is a measure of the Government’s recognition of the commitment that public service workers make.

Jobs and Growth

Guto Bebb Excerpts

Wednesday 12th October 2011 Commons Chamber

[Guto Bebb (Aberconwy) (Con)]

I hope that the five-minute time limit was not brought in because I was the next speaker. It is a pleasure to follow the considered comments of the hon. Member for Middlesbrough (Sir Stuart Bell). In particular, I welcome his comments about enterprise zones, which were also mentioned by my hon. Friend the Member for South Staffordshire (Gavin Williamson). The Jaguar Land Rover investment that he mentioned was bid for by Wales, too. It is a great shame that, as Tim Williams from the Welsh Automotive Forum stated, one reason why Wales lost out on that investment was the foot-dragging of the Labour Welsh Assembly Government, who refused to implement the enterprise zone process in Wales because it was a Westminster Government proposal.

The comments of the hon. Member for Middlesbrough were much more positive and balanced than those of the right hon. Member for Holborn and St Pancras (Frank Dobson), who decided to attack the credibility of bankers. He might be right, but when one is making a point in the House about the credibility of individuals, one should ask about the credibility of the shadow Chancellor, who advised the former Prime Minister to sell our gold reserves at a very low price. If we want to talk about credibility, we should remember the actions of Members on our own side as well.

This debate is about jobs and growth. I represent a constituency in north Wales where we have a significant small business community. That means that we have a lower dependency on public sector jobs in the Aberconwy constituency than in most of north Wales and most of Wales. That is not to say that the public sector is not important. I regret every single job lost in the public sector, but we have to acknowledge the fact that we must live within our means. The small business community in my part of north Wales has broadly welcomed the actions of the coalition Government. It has seen a credible approach to reducing debt, dealing with the financial crisis that we are facing, and creating a stable economic environment that will allow it to invest and create real employment opportunities for the people I represent.

However, in the context of the debate it is important to point out that there are issues that cause concern for small businesses. When I mention small businesses, I am talking about what most Members would describe as micro-businesses. In the 1980s, when we saw Wales recover so dramatically from the loss of the heavy industries, that recovery was based on the fact that Wales created more new businesses than any other part of the United Kingdom. I am certain that there are businesses in Wales that are willing to take that challenge forward, but there are issues that we need to deal with.

Those issues might not look very important to people dealing with swaps in the market in London and so forth. For example, one of the issues that small businesses in the tourism sector in my constituency resent is the VAT threshold. Most people would say, “What’s he going on about?”, but the VAT threshold is a barrier to growth. Someone setting up a small business in the tourism sector reaches a turnover level of £73,000 and faces a cliff edge—the fact that if they go on to turn over more than £73,000 a year, they are penalised by the system. Anyone who visited Llandudno this week would see cafes that have closed for the winter, bed and breakfast businesses—

[Mel Stride (Central Devon) (Con)]

My hon. Friend is making a powerful point about VAT and tourism. Does he accept that it is wrong that our tourist businesses, particularly those offering accommodation, are handicapped because VAT rates are higher in this country than in many of our continental competitors?

--- Later in debate ---

[Guto Bebb]

I am grateful for that intervention. It is my next point.

Let me finish on the subject of the threshold. When small businesses hit a turnover of £70,000, they are about to reach the point where they need to start employing staff. A system that penalises growth is something that we need to re-examine. I know that we have to do so in the context of the current financial situation, but small businesses in my constituency would be delighted if we could do something about the VAT threshold.

On the tourism sector, I am told I have more hotel beds in my constituency than the rest of Wales put together, so I am occasionally accused of pleading on behalf of the tourism sector when I say that it is a real concern that VAT rates on hotel bedrooms, for example, are being reduced to 7% or 6% in other parts of Europe, such as Ireland, Germany and France, yet in Wales we still have a 20% VAT rate. I have spoken with members of the Government about this and I have been told that we need to provide proof that a reduction in the VAT rate in the tourism sector would be beneficial.

A report that I have obtained from Deloitte indicates that if, for example, the VAT rate on hotel bedrooms was reduced from 20% to 5%, there would be an immediate cost of about £1.2 billion in the short term, but over the period of a Parliament, there would be a net benefit of £2.4 billion to the UK economy. When we recall that the Prime Minister stated that tourism should be a driver for growth in our economy and that tourism is a sector that employs people on a very large scale, we need to consider that. I would be grateful if we could receive some comment from the Treasury in due course on the issue and the need to examine it.

Finally, in the spirit of cross-party co-operation, which some Members have mentioned, the fact that Labour Front Benchers have decided to take on board the concerns of the construction sector is not a reason to dismiss the option of changing the rate of VAT charged on work to existing buildings. Many small construction companies argue that the current situation, in which there is a zero rate of VAT on new build but a 20% rate on refurbishment, is an anomaly that we must look at. There are figures that indicate that reducing VAT on refurbishment would be economically beneficial, and the fact that the Labour party has adopted it is not a reason to say no.