Budget Resolutions and Economic Situation

Guy Opperman Excerpts

Thursday 21st March 2013 Commons Chamber

[Vince Cable]

The right hon. Gentleman does not know, and I do not yet know, what the final outcome of this massive scheme will be. To be lectured with righteous indignation by the people who created a massive property bubble that destroyed this country’s economy and wiped out enormous gains in people’s living standards is the most gross hypocrisy.

Let me turn to some of the other issues that the shadow Chancellor raised.

[Guy Opperman (Hexham) (Con)]

The shadow Chancellor took us on an interesting history tour of former Chancellors. Does the Business Secretary recall who it was who advocated light-touch banking regulation, sold our gold and uttered the famous phrase, “No more boom and bust”?

[Vince Cable]

Yes, I think we do. That bears repetition and the hon. Gentleman has done it very well.

--- Later in debate ---

[Guy Opperman (Hexham) (Con)]

The good constituents of Hexham will welcome action on fuel duty, support for the victims of Equitable Life, action on increased infrastructure, tax-free child care, decreases in corporation tax, support for business and the raising of the personal allowance up to £10,000 by 2014, which will take millions more low-paid people out of tax altogether.

The action on fuel duty is the most important thing to the people of Hexham and Northumberland. There is a stark contrast between a Labour Government who raised fuel duty 10 times in 13 years and this Government who have managed, even in these difficult times, either to keep it flat or to reduce it. I listened to the speech by the hon. Member for Dumfries and Galloway (Mr Brown), with whom I have debated fuel duty on many occasions, and it was as if I lived on a different planet, certainly not the one on which the previous Prime Minister increased fuel taxes. The reality is that the hon. Gentleman and I have the same sorts of constituents and this Government are looking after them with regard to what is the most important issue to them, namely fuel. The previous Government kept raising fuel prices. They were woeful.

[Mr Russell Brown]

All I will say, as I have told the hon. Gentleman before, is that the previous Government—this is a fact—froze or abandoned potential increases on 13 occasions over nine years.

[Guy Opperman]

There may have been plenty of times when the previous Government chose not to raise prices, but they did increase them on 10 occasions, and those with long memories in Northumberland and in Scotland remember that. [Interruption.] Opposition Members may chunter, but that is the bottom line.

The full acceptance of the Heseltine report was particularly welcomed in the north-east. It was specifically called for by the north-east chamber of commerce and has been welcomed by business. Exports from the north-east are up, jobs have improved dramatically since May 2010, and the number of apprentices has doubled. There has been a dramatic improvement. The Corus plant was shut by the previous Government—it was the titanic industrial issue in the build up to the 2010 election—but reopened by this coalition Government.

This Budget comes at a time of self-examination in the north-east. The January declaration and Lord Adonis’s review of the north-east, which I am contributing to and support wholeheartedly, are making a real difference to understanding how the region can improve itself. That is an example of proper self-examination from a detached standpoint.

Bank lending is another important issue. I welcome the Business Secretary’s statement on developments on the business bank and the fact that the Opposition have finally begun to realise that local community banking is a good idea. Sadly, when I invited the shadow Minister, the hon. Member for Hartlepool (Mr Wright), to support my campaign for local community banks in a debate on manufacturing on 24 November 2011, he declined to do so, and the point was raised with him again on the same day the following year. The proof of the pudding lies in the fact that, during an April 2012 debate on the Financial Services Bill, the Labour party voted against clauses in favour of greater competition for local banks, greater ease of entry and greater ability to open a local bank. Why would Labour Members vote against greater competition and a local community bank that makes money for the community, with profits going back to the community? It is illogical in the extreme.

I welcome the fact that the Labour party has finally come on board and accepted that local community banking is a good thing. It has taken a while and I hope that Labour Members will back up what they are saying in public with votes in support of greater competition for local people. It is vital that our campaign for local community banks continues. The work done by the Financial Services Authority is to its credit. It has made it much easier to set up a community bank.

[Neil Parish]

I agree with my hon. Friend about bank lending. Does he agree that getting greater competition locally is essential so that businesses can get better rates of interest and better deals with banks?

[Guy Opperman]

That is entirely the case. As we all know, 75% of bank lending in this country comes from the big banks and few smaller community banks are supported. The decline in local lending is definitely affecting SMEs.

There were four challenges to the creation of new local banks. First, there was a lack of legislation to facilitate such changes. We passed that legislation in the Financial Services Act 2012. The second challenge was the length and complexity of the authorisation process. That has been reduced through our work with the FSA, so it is now much easier to set up a smaller bank, whether it is a bank established by an industrialist to back a local community or an infrastructure bank like Cambridge & Counties bank or Hampshire Trust.

Thirdly, the level of capital that new banks were required to hold used to be very high. They were effectively judged exactly as Barclays would be judged. That has also changed. The FSA has made it very clear, as I have demonstrated in this House by reading out letters to me from the FSA, that it requires lower amounts of capital on an ongoing basis from smaller entrants to the market. Finally, the scale and complexity of the infrastructure was proving to be a burden. That is also being addressed.

The future must surely be local community banks, run by somebody from the local community, investing in that local community. A gradual disaster took place under successive Governments over the past 25 to 30 years, whereby local community banks were divorced from the ability to make decisions locally. Community banks could make a decent amount of profit and return it, when a certain percentage is reached, to the community.

I am delighted to say that on 7 June, the FSA, the Prudential Regulation Authority, the Financial Secretary to the Treasury and various other people will be coming to Newcastle for a debate on how we will take regional banking forward in this country. I urge all interested parties to come.