Finance (No. 2) Bill

Guy Opperman Excerpts

Wednesday 9th April 2014 Commons Chamber

[Cathy Jamieson]

I am sure that, like me, my hon. Friend meets young people every day who are desperate to get into employment, and understands absolutely what additional funding would do to help that happen. Like many other Members, I organised a jobs and employment fair in my constituency recently, and it was humbling to see the number of young people standing outside the hall queuing up before it opened in the morning in the hope of obtaining an interview and the opportunity to put themselves forward to the employers who were there either for an apprenticeship or even for part-time work—anything to get them off the dole queues. If we look at what we could do through this bankers bonus tax to support those young people, I think it is clear that is well worth introducing.

Unlike the Government, we are not willing to sit back and do nothing while ordinary people are struggling with the cost of living crisis. That is why we are calling on the Chancellor to publish a report on the feasibility of reintroducing the bank payroll tax and using the proceeds generated to fund what we have called a compulsory jobs guarantee.

It is important to stress a point I made earlier: under the scheme we are proposing every young person out of work for more than 12 months would be guaranteed a job, and they would take that up or they would lose benefits. So there is both the carrot and the stick, because we think that is important.

[Guy Opperman (Hexham) (Con)]

I have been listening to the hon. Lady’s argument and so I took the trouble to check the JSA claimant levels for her constituency: the number of 18 to 24-year-old JSA claimants is down 20.7% and claims of duration of over 12 months—the long term—are down 12.1%. Surely that disproves her argument that the figures are going up:

[Cathy Jamieson]

I note that the hon. Gentleman did not quote the long-term youth unemployment rate for my constituency. He is looking at the overall long-term unemployment rates, and in my constituency, which I have lived in for most of my life, I have seen what has happened in relation to people who have been unable to secure permanent full-time employment. I have seen the young people who have been unable to get the apprenticeships they so desperately want. I also know, from work I did in the past—I did have a life before I came into the hallowed halls of this place—with young vulnerable people, the importance of trying to support them into employment. I know, too, that many young people right across the UK are in the same situation: they are desperate to get into employment; they need the help to get there; they need us to be on their side. I therefore cannot for the life of me understand why those on the Government Benches would want to vote against bringing forward a report to look at this in more detail.

[Guy Opperman]

rose—

[Cathy Jamieson]

Perhaps the hon. Gentleman can explain to me why he does not support the idea of bringing forward this report.

[Guy Opperman]

Does the hon. Lady not accept that things like traineeships, which are the greatest passport into apprenticeships and jobs, are the true best way in which to train up our young men and women so they can then obtain the jobs and apprenticeships she is so laudably seeking?

[Cathy Jamieson]

I have no difficulty with the idea of getting young people into any form of education, employment, traineeship and so on, but we have to ensure that that is available to the young people who are out of work for a lengthy period as a priority, because we know that the longer young people are away from the jobs market, the more difficult it is for them to get back in, and I do not see that the hon. Gentleman’s point is in any way incompatible with the idea of bringing forward a report to look in more detail at how this could work and how the funding would be used.

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[Mr Gauke]

My point to the hon. Gentleman is that the Government must reduce the deficit and APD is a valuable source of revenue. One cannot look at the effects of APD in isolation; one must look at the overall effects on the economy. We have taken measures in the Bill to reduce the burden of APD, but it is worth noting that airports in Scotland and Wales, and regional airports elsewhere in the UK, have been doing well in recent months.

[Guy Opperman]

I wish to praise Newcastle airport, which has welcomed the changes to APD. It is pleased that officials are indicating that the regional air connectivity fund will extend to airports beyond the 3 million passenger mark to those with upwards of 5 million passengers in certain circumstances. Does the Minister agree that that is a further example of the Government assisting regional airports and allowing them to grow as we know they can?

[Mr Gauke]

I am grateful to my hon. Friend because he brings me to my next point. I agree with him. The Government recognise the importance of aviation connectivity for all parts of the UK—for example, domestic flights are not subject to VAT. As he says, we are extending the scope of the regional air connectivity fund to include start-up aid for new routes from regional airports, and increasing funding to £20 million a year. Clearly, exactly how that works is a matter for the Department for Transport, but I welcome the fact that the Government are consulting the regional airports to see whether those that have more than 3 million passengers per year can receive extra support. That includes Newcastle airport, which has 4.4 million passengers. One could also mention East Midlands International, Liverpool John Lennon, Belfast International, Aberdeen, London City and Leeds Bradford, all of which have more than 3 million passengers a year. We are trying to do what we can to ensure that those airports can gain support from the connectivity fund.

[Mr Gauke]

The hon. Lady is being uncharacteristically glass half empty. We have announced an expansion of the connectivity fund. We have said that we are seeking to take that beyond airports that have more than 3 million passengers per annum. As it happens, the Department for Transport is consulting on and developing guidelines for accessing support, and the results will be published in the summer. I am sure that the hon. Lady is as keen as my hon. Friend the Member for Hexham (Guy Opperman) to ensure that the best happens for Newcastle airport.

[Guy Opperman]

It is surely a relevant factor that the Budget was only a few weeks ago and the guidance on which we are consulting was published by the European Commission only at the end of February. One could hardly have done it any earlier.

Finance (No. 2) Bill

Guy Opperman Excerpts

Tuesday 1st April 2014 Commons Chamber

[Danny Alexander]

The hon. Gentleman is wilfully misinterpreting what the welfare cap is about. If he had listened to my speech summing up the debate on the welfare cap last week, he would have discovered that the cap was a means of ensuring transparency and accountability to the House in relation to increases in welfare expenditure. In the past, welfare increases were smuggled through the forecasts without proper transparency and scrutiny. The reforms will ensure that, when expenditure is forecast to breach the cap, the Minister responsible will have to come to the House and explain why the breach is happening and what he or she intends to do about it. That could include introducing measures to reduce expenditure; it could also include an increase in the cap, if that is regarded desirable. Given that the hon. Gentleman’s party seems to believe that, under independence, it would be possible for taxes to fall and for expenditure to rise without the chickens coming home to roost, it is not surprising that it should oppose measures to increase accountability to this House on expenditure. The result of the vote last week showed, however, that the House as a whole welcomes the opportunity to hold the Government to greater account for expenditure increases in that area.

[Guy Opperman (Hexham) (Con)]

My right hon. Friend has set out some of the policies in the Budget, but he has not yet mentioned the school funding reform that was introduced before the Budget by the Minister for Schools, my right hon. Friend the Member for Yeovil (Mr Laws) and which will be implemented by the Finance Bill. Does the Chief Secretary to the Treasury agree that those changes, brought about as a result of the F40 fairer funding campaign, will have a seismic effect in many counties up and down the country?

[Danny Alexander]

The measures that my right hon. Friend the Schools Minister has introduced are not actually in the Finance Bill, and I hope that their impact will not be seismic in the literal sense, but I agree with my hon. Friend that they will make a serious difference to schools in his area and in other historically underfunded areas of England that have been campaigning for a long time for a fairer level of funding in their schools. I am glad to hear that my hon. Friend welcomes those measures.

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[Danny Alexander]

I certainly do bear that in mind. No party in this House—certainly not mine—is proposing any change to, for example, the tax-free lump sum arrangements, which is an important part of how the policy that my hon. Friend describes is delivered. Some people would equally well say that it would be unfair for someone to receive tax relief at 40% on the way in, but only pay tax at 20% on the way out. There are a whole range of issues that require a wider debate. In this Parliament, the coalition Government have set out some reforms for pensions tax relief. We have no intention of going further than the reforms that we have already made and I think that the annual and lifetime limits are the right ways to address this.

[Guy Opperman]

I am most grateful to my right hon. Friend for giving way a second time. He has not touched on the regions yet, so I wanted to ask him whether he is aware that the Budget was welcomed by the North East chamber of commerce at a time when job numbers are improving, apprenticeships have almost doubled and the rise in the personal allowance, which is going through this week, will see a further 14,000 people taken out of income tax.

[Danny Alexander]

I had not intended to mention the regions, but I am glad that my hon. Friend has given me the opportunity to do so. His point is absolutely right: the action we have taken and the economic plan the coalition has seen through, through thick and thin—the tax reductions for individuals, motorists and so on, the measures to support investment in important sectors, such as energy and offshore renewables, and the support for exporters—are creating jobs and prosperity up and down the country including, I am delighted to hear, in his area.

I was outlining the immediate changes to pensions flexibility that we are legislating for in the Bill. Taken together, the reforms that I listed mean that more than 400,000 people will be able to access their pension more flexibly in 2014-15. We are making these changes because this Government believe that those who have worked hard and saved sensibly are in the best position to decide for themselves how to provide for their own retirement.

In conclusion, as I am conscious that many Members wish to speak in the debate, the Finance Bill is ambitious, fair, liberal and deals with the biggest issues facing the finances of British people. It takes further steps to deliver long-term sustainable economic growth and to complete the biggest liberalisation of our pension system in nearly a century. It takes the first £10,000 of people’s earnings out of tax altogether and, as such, is a Bill that echoes my objective, and that of my party, of building a stronger economy in a fairer society in which every person has the best chance to get on in life. I commend the Bill to the House.

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[Chris Leslie]

Trying to get inside the heads of the Liberal Democrats could take quite a long time. The Chief Secretary is enjoying being at close quarters with the Conservative party a little bit too much. The Conservatives have captured him—it is called capture bonding. Sometimes he even starts to view the abuse or the lack of it as rewarding. That is not coalition; that is Stockholm syndrome.

[Guy Opperman]

May I return to the issue of the regions? Does the hon. Gentleman agree or disagree with the interpretation of the north-east chamber of commerce and the Trinity Mirror-owned Newcastle Journal, which welcomed the broad thrust of the Budget’s job-creating policies, its help for small and medium-sized firms and apprenticeships, reform of air passenger duty and general relief for energy-intensive industries?

[Chris Leslie]

We should be cutting business rates for small and medium-sized enterprises. I am very surprised that the Government are focusing their help predominantly on the 2% of the largest multinationals—the big firms—and not doing, in my view, sufficient for that 98% of British business, the small and medium-sized enterprises. They will be the backbone of a recovery and we have to do much more to support them.

It is a shame that in the Bill the Government are choosing to go to that 20% rate in April 2015. We could instead use that resource and focus it on the multiplicity of small firms. They should be getting a cut in business rates. We calculate that it would deliver an average tax cut of at least £400 for 1.5 million properties through the business rates system, benefiting small and medium-sized enterprises, which after all are the backbone of the economy. They provide the dynamism to get the growth going, which we so desperately need.

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[Chris Leslie]

That is a very interesting explanation. There is a shift in policy, which is to let certain banks off the hook when it comes to the bank levy. Perhaps the hon. Gentleman is right and that is a strategy. I have given the Minister an opportunity to explain what exactly the Government’s plan is, but he will not put it on the record. We will have to explore that in more depth in Committee.

While we are on the financial services sector, let us look at what the Government are doing in clause 107, which relates to stamp duty reserve tax. My hon. Friends might begin to wonder what that is all about, especially when we say that it is known as the schedule 19 charge, which refers to the 1999 Finance Bill. Many people think, “Oh well, we’ll see what comes of these taxes.” But the schedule 19 charge, set out in clause 107 of this Bill, seeks—this is the priority of these Conservative and crypto-Conservative Members—to give a tax cut of £145 million to the investment management industry by abolishing stamp duty reserve tax. At the same time, my hon. Friends’ constituents are having to cope with the bedroom tax, extra council tax charges and the VAT increase. Despite the hardships they are facing, the priority of the Chief Secretary and the Exchequer Secretary is to give away £145 million by abolishing stamp duty reserve tax. I know that they have been lobbied heavily on that.

We will oppose that change, because we think that the Government should be using that resource to help scrap the bedroom tax, if indeed it is raising any money—I have my doubts about that. The National Housing Federation states that it might well be costing more than the Government planned. We certainly should not be giving away that money, especially at a time when the investment management industry, which holds £5.4 trillion in collective funds, increased its holdings by about 7% in 2013. I do not think that £145 million is an unreasonable sum to ask from a sector that has been doing very well in recent years. We should be making sure that we pursue a fair policy and so will oppose that clause.

We then come to the Bill’s tax avoidance measures. We know that the Government have a bad record on that—[Interruption.] Well, they do. The oh-so-successful Exchequer Secretary, who cannot even manage to get the amounts of money he promised from the banks, cannot manage to get from the Swiss the £5 billion he promises through the Swiss tax deal. The Chief Secretary stood up a moment ago and said that he would get only £1.7 billion. We had a deal with the Liechtenstein Government, which we projected would bring in £2 billion; in fact, it has brought in £2.5 billion. When we have tax deals with tax havens, they work. However, when the Exchequer Secretary gets his fingers on these things, it is amazing how it all goes wrong—it is his reverse Midas touch.

The Government have fallen into bad habits in pencilling into the Red Book projections of revenues from the avoidance measures that involve what the OBR calls particularly uncertain assumptions. The Government are, of course, quick to spend the projected money; Paul Johnson from the Institute for Fiscal Studies calls such moves the Chancellor’s manoeuvres, always relying on revenues that are by nature uncertain. It is important that we scrutinise whether the supposed tax avoidance deals will deliver what the Government say.

Rather than the measures in the Bill, we need action to deliver starter jobs, guaranteed for the long-term unemployed. The number of young people out of work for a year or more has doubled and we need compulsory starter jobs for those who have suffered unemployment, which is a scourge not just on society but on their career prospects. We need action on child care. Free child care should be extended from 15 to 25 hours, paid for through a proper collection of the bank levy.

We need a help to build scheme to counter-balance the Help to Buy scheme. There is a serious risk—as the Chief Secretary knows, even the Governor of the Bank of England has concerns about these things—of a lop-sided recovery unless we match the boosting of demand with the boosting of supply. A help to build scheme particularly focused on ensuring that small and medium-sized construction companies can do better is one way to make a big difference.

[Guy Opperman]

Is the hon. Gentleman aware that in the north-east, the Help to Buy scheme is absolutely transforming the housing market? In Humbles Wood in Prudhoe, a housing development in my area, 90% of new purchases have been through Help to Buy. That must be good news that the hon. Gentleman wants to welcome.

[Chris Leslie]

We do not oppose the Help to Buy scheme unless it is not accompanied by a help to build scheme. The supply of housing is key. Housing policy must revolve around affordability. We now have the lowest level of house building since the 1920s; the Government cannot just turn a blind eye to that problem. Affordability has to be at the heart of our approach. It is all very well helping people on to ever-higher mortgages chasing ever higher prices, but unless something is done to supply new buildings, we will not deal with the problem of affordability.

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[Guy Opperman (Hexham) (Con)]

Growth up, unemployment down, inflation down and, certainly in my region and constituency, a very positive response to the Budget. The North East chamber of commerce held an event, to which I went with the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) 10 days ago, to assess and review the Budget. The response was overwhelmingly positive. I accept that it is only a chamber of commerce, as some Members have said—the hon. Member for North Durham (Mr Jones) was rather disparaging about the North East chamber of commerce—but it has 3,000 members, all of whom are SMEs and businesses in the north-east. They said:

“The NECC is pleased to see recognition of some of its key priorities in the Budget and that these figures demonstrate that increased business confidence, as reflected by the NECC quarterly economic survey, is manifesting into real growth and jobs.”

I welcome the fact that the jobs situation is improving in the north-east. [Interruption.] As always, it is good to hear the hon. Member for North Durham chuntering from a sedentary position. His speech was one of those where the glass was either half full or half empty. From HS2, Adonis and the job situation, the glass was evidently definitely half empty, but the figures—these are not my figures, I hasten to add, but the House of Commons unemployment by constituency JSA figures—indicate that in North Durham the number of JSA claimants is down 21.8%. The 18 to 24 claimants are down 22.4%, the 50 and over claimants are down 14.8% and the claims of 12 months duration are down 13.3%.

[Mr Kevan Jones]

The hon. Gentleman is looking at claims rather than unemployment, which is the important thing. That is the point my hon. Friend the Member for Edinburgh East (Sheila Gilmore) made. He should talk to people who are not on the claimant count and people who are being sanctioned by the Government. The idea that claimant count is a reflection of economic activity in North Durham is complete nonsense.

[Guy Opperman]

Let us try to be nuanced about this. We all accept that there are isolated examples of genuine distress and difficulties of the kind that the hon. Gentleman describes. No one disputes that; such circumstances exist in all our constituencies. However, as the hon. Gentleman knows, I spend more of my time in Newcastle than in Hexham—

[Mr Jones]

I am sure that they are pleased in Hexham.

[Guy Opperman]

The claimant counts in Newcastle are down as well, as are the claimant counts in virtually every constituency in the north-east. Suggesting that individual examples take care of all 21% is fatuous.

[Mr Jones]

Will the hon. Gentleman give way?

[Guy Opperman]

Not at this stage. I want to make some progress. I had the great pleasure of listening to the hon. Gentleman for 42 minutes—

[Mr Jones]

Good!

[Guy Opperman]

And, sadly, I shall not be burdening him with 42 minutes myself.

[The Lord Commissioner of Her Majesty's Treasury (Mr David Evennett)]

Hear, hear.

[Guy Opperman]

It is great to be applauded by one’s Whip.

Let us look at the bottom line. Corporation tax is down from 28% to 21%, and employment allowance will reduce employers’ national insurance bills by up to £2,000. Anyone who visits any high street in any town or village in the country will find that that is a massively popular policy, and anyone who wanders into the premises of any small and medium-sized enterprise will find that everyone there is talking about it. Larger businesses will benefit particularly from the doubling of the annual investment allowance, and nearly every business will pay no tax up front when it invests in the future. That is fantastic.

The north-east is the only region in the country with a positive balance of payments. We export more than we import. I welcome the fact that manufacturing is being turned around and being supported by this Government, after struggling under the last Government. The number of apprenticeships is doubling in our area, and the number of traineeships is also increasing. I cannot stress strongly enough the difference that traineeships are making in the brave new world in which we are living.

I visited a company called Release Potential, which is in Stocksfield, in my constituency, and which is giving young people the opportunity of becoming trainees. Once they have done that, they have a much better chance of securing apprenticeships and jobs. We should be supporting that, and, as always, encouraging employers to take on apprentices and trainees. I should make a declaration at this point: I am the first Member of Parliament to hire, train, retain and, now, employ an MP’s apprentice. She is not an apprentice MP; she is an office manager, although some people often say that she would do a better job as an MP. The honest truth is that if I can do that when running a small business with a relatively low budget and very few staff—as all MPs do—I see no reason why other SMEs cannot do the same.

What else is there to welcome in this outstanding Budget? [Laughter.] Labour Members laugh from a sedentary position, as they always do, but Newcastle airport has sought a change in the air passenger duty rules for ages. When I went to see the Chancellor, he listened to my representations and to those of Members from Manchester and Bristol, and I am grateful to him for that. The changes in APD rates, including the abolition of the two highest rates, will be fantastically helpful, and—again—will be welcomed by the chambers of commerce, not just in my constituency but throughout the country. Anyone who travels on an international route to try to promote trade overseas will welcome it.

As chair of the all-party parliamentary group for air ambulances, I should declare an interest in the subject. I also made use of one or two air ambulances when I was a very bad jockey and required their assistance. For many years, since the presentation of a petition signed by 155,000 people—and the Hexham Courant’s small but very weighty petition—we have been trying to get rid of VAT on the fuel used by air ambulances. In the north-east, the Great North air ambulance service led the campaign, and is a massive beneficiary of it. The cut announced in the Budget will save air ambulances a huge amount. It will allow more missions to be flown, and there is no doubt that lives will be saved. There is immense support for the measure in all the air ambulance services in the country,

The Chancellor said in his Budget statement:

“I will continue to direct the use of the LIBOR fines to our military charities and our emergency service charities”,

but added that he would also

“extend that support to our search and rescue…and provide £10 million of support to our scouts, guides, cadets and St John Ambulance.”

His intention was best expressed by this simple expression:

“1…want the fines paid by those who have demonstrated the worst values to support those who demonstrate the best of British values.” —[Official Report, 19 March 2014; Vol. 577, c. 786.]

That is absolutely outstanding, and offers support to all the individual charitable and voluntary organisations that are the bedrock of our communities.

There were also announcements on school funding. Anyone who, like me, has taken part in the F40 fair funding campaign will greatly welcome the announcement from the Minister for Schools, and the support from the Treasury. F40 budgets will be increased, be it in Northumberland, Durham or in other rural areas. The consultation going forward is an outstanding and important contribution. If we can change the way our schools are funded, they will have a genuine possibility of surviving.

I could talk about fuel duty, which, as we all know, the previous Government raised remorselessly—well over a dozen times. I am pleased to say that the Chancellor, with great difficulty and in very difficult times, has managed to cancel the fuel duty escalator that the previous Government sought to include in future Budgets.

I have some outstanding breweries in my constituency, such as the Hadrian Border Brewery, Allendale and Matfen. I can assure you, Madam Deputy Speaker, that when you holiday in God’s own county of Northumberland, you will want to visit the various beer festivals that will take place there this summer, where the further reduction in beer duty will be welcomed. That reduction supports not just the person who wants a pint of bitter, but the brewers, because it allows them to invest and to create jobs. It provides genuine support for businesses that struggled desperately under the previous Government, and they are extremely grateful.

On housing—unlike the hon. Member for North Durham, I am having to condense my 42-minute speech into approximately 10 minutes—those who visit Humbles Wood, in Prudhoe, in my constituency, which is a new-build housing estate, will find that 85% to 90% of all purchases there are made with Help to Buy. It has utterly transformed the ability of a relatively low-paid local community in one of the smallest towns in my constituency to access housing. It is a massive help, and not just there. To answer the point made earlier by the hon. Gentleman, when I spoke to the various estate agents in West road, Newcastle, they too reported the massive difference that Help to Buy has made in what is—

[Mr Kevan Jones]

Will the hon. Gentleman give way?

[Guy Opperman]

One last time, just to give the hon. Gentleman an extra minute or so.

[Mr Jones]

I am sorry that the hon. Gentleman spends so much time in Newcastle, rather than Hexham, which I agree is a beautiful constituency. The figures for average house prices in the north-east show that they are still worth £5,000 less than they were in 2008.

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[Guy Opperman]

Surely the hon. Gentleman must acknowledge that it was because of all the difficulties created by the crash engineered by his beloved former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), and it was not possible to get bank and mortgage finance. Help to Buy has massively changed that.

I turn briefly to pensions. While I was canvassing last weekend, a gentleman on the doorstep said:

“It’s my money. I saved it. Why do I have to give it away in tax and charges for low returns?”

There is no question but that annuities have been a source of criticism for a very long time.

The reality is that the public do not believe that Labour has any credibility when it comes to maintaining the welfare cap, which I debated last weekend with the hon. Member for Easington (Grahame M. Morris), who is not in his place. They simply do not believe Labour on welfare, which wants to keep spending in any way it can, regardless of the ability to pay the bills.

Much has been said about poverty and the low paid. Last Friday, I was pleased and proud to hold the first living wage summit, with the Living Wage Foundation, in Newcastle. It was attended by a large number of local businesses, including the Rowntree Foundation, Traidcraft, KPMG, Northern Doctors and Mike Joslin, all of whom came together as accredited living wage employers. There are only 20 such employers in the north-east, whereas there are approximately 600 around the rest of the country. The representative of the Northern TUC was there, as were representatives of individual businesses and of the North East chamber of commerce. Anyone who came to the event last Friday would have been satisfied that we were taking real action, and that companies that are voluntarily committing to paying the living wage are supporting their employees. Many people at that event told me that this was a Budget we should be proud of. They said that it was a Budget for growth, for jobs and for the north-east. It is a Budget that will be widely welcomed across the country.

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[Ian Mearns]

I could not agree more.

Again, on employment, we have to wonder whether the Prime Minister and Chancellor are on the same planet as we inhabit in the north-east of England. Whereas unemployment figures for the UK are hovering around the 7% mark, unemployment in the north-east has only just dipped below 10%. That is the claimant count figure; it is not the count of people who are economically inactive, which is a much greater figure for a region such as the north-east of England. I baulk at the complacency from Government Members in the face of that, because it is having a dramatic impact on people’s lives.

[Guy Opperman]

I accept that there is a difference between the two types of job measurement, but let me give the hon. Gentleman the figures for Gateshead: the number of jobseeker’s allowance claimants is down by 21%, the total change over 12 months in the number of claimants aged 50 and over is a reduction of 13.5%; and the 12-month change in the number of claimants aged 18 to 24 is a decrease of 26.8%.

[Ian Mearns]

Those figures are interesting. It has to be said that economies such as the north-east of England look at the JSA figures and see that they have removed from them people sanctioned because of their benefits. The last estimate I saw was that almost 1 million people on JSA were in receipt of a sanction in the last counting period. In addition, some 600,000 people, on a conservative estimate, are now employed on zero-hours contracts. Our regional economy suffers from not only unemployment, but significant amounts of under-employment.

Despite the Government pledge to ensure that it is always worth working, it will be those in work who will most feel the squeeze of this Government’s policies. Average weekly earnings and gross disposable income in the north-east are the lowest of any English region. According to the latest Real Life Reform report, which has been conducted by the Northern Housing Consortium, the average spend on fuel among the study subjects has risen by 8.5% since only December and by more than 30% just since last September, and is now at an average of £32.62 per household per week in that study, which is of people on very low and modest incomes.

The Chancellor has made much of his personal allowance increase, but the Government continue to ignore the negative impact of their 24 tax rises between 2010 and 2015. I am not a natural bedfellow of the TaxPayers Alliance, but it believes that there have been 254 tax rises, particularly the hike in VAT in January 2011 from 17.5% to 20%. Even the Prime Minister accepts that VAT rises impact on the poorest, and he always knew that they would. On 5 January 2011, he said:

“If you look at the effect”—

of VAT—

“as compared with people’s income then, yes, it is regressive.”

In Exeter in 2009, the right hon. Gentleman, as the then leader of the Opposition, said of VAT:

“You could try, as you say, to put it on VAT, sales tax, but again if you look at the effect of sales tax, it's very regressive, it hits the poorest the hardest. It does, I absolutely promise you.”

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[Shabana Mahmood (Birmingham, Ladywood) (Lab)]

We have had an interesting debate today, which has made stark the difference between the Opposition’s priorities and those of Government Members. The Finance Bill is thick and heavy, but it is pretty light on content that is relevant to the working person on a modest income.

My hon. Friends have made some powerful and persuasive speeches highlighting precisely that point. My hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson) spoke with passion about how her region was suffering as a result of the Government’s polices, and drew attention to the imbalance in the recovery that they have delivered. My hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) spoke in particular about business rates and the success of the jobs growth programme being run by the Welsh Labour Government, whom this Government like to bash at any opportunity, but who are having some real success on jobs in Wales.

My hon. Friend the Member for Bolton West (Julie Hilling) made a particularly powerful point. She reminded the House that the Chancellor said that this is a Budget for makers, doers and savers, but she said that it has nothing in it for those who are making do.

My hon. Friend also reminded us of the tragedy of zero-hours contracts. She gave a powerful example of a constituent who was sanctioned under DWP rules for leaving a job that gave him zero hours of work. It was a tragedy for the individual concerned, but it also shows how iniquitous the rules are in practice.

[Guy Opperman]

Is there anything the hon. Lady welcomes in the Budget, whether the raising of the income tax threshold, the extension of apprenticeships, the support for the high street or the work done to support manufacturing? Does she not welcome any of those things amidst this sea of opposition?

[Shabana Mahmood]

I very much welcome the Government’s U-turn on investment allowances, which we warned were a mistake in 2010. It is really good that the Chancellor has finally decided at the tail end of this Parliament to put right that bad decision.

My hon. Friend the Member for Glasgow North East (Mr Bain) reminded the House of two anniversaries: 15 years ago today the national minimum wage came into effect; and a year ago today the Government introduced the bedroom tax. That is a clear example of the big differences in the values and priorities of those on the Opposition and on the Government side. My hon. Friend the Member for North Durham (Mr Jones) spoke for some time, although not at his usual length, about the things that are missing from the Bill. He focused on the detail of the pension changes, which we will scrutinise, especially in relation to social care costs, which he was right to highlight.

My hon. Friend the Member for Edinburgh East (Sheila Gilmore) spoke of how some savers will benefit as a result of the Government’s measures, but for many people saving is a luxury that is far out of reach. My hon. Friend the Member for Gateshead (Ian Mearns) reminded the House of the imbalance of the recovery and how the north-east continues to suffer. He also made a point that no one made today in relation to the local government cuts, which are only just starting to bite and will further embed the regional imbalance in our country.

People are looking to this Government to take action to help them in the here and now. I am talking about the people who elected us to make decisions on their behalf. Those people are, on average, £1,600 a year worse off since this Government came to power. They will be worse off in 2015 than they were in 2010. Even if we take into account the combined effect of tax and benefit changes, they will still be £900 a year worse off. For those Government Members who are not sure what that really means, I will explain that £1,600 is about half the cost of the uniform required for membership of the Bullingdon club. For residents of inner-city Birmingham, which I represent, it is about three months’ rent.

Those people are working harder and harder for less and less, and they are looking for help in the here and now to make sure that at the end of the working week or month they have earned enough money to pay the rent, put food on the table and clothe their family. But this Finance Bill contains no such help. The fact that people are worse off and have to spend more on everyday essentials seems not to exist, according to the Bill. It is as if all Government Front Benchers have been caught in some kind of existential trance: if they cannot see or feel the cost of living crisis, it cannot exist; even if it exists, it cannot be communicated to others; and even if it can be communicated, it simply cannot be understood.

The people who are £1,600 a year a worse off need help in the here and now. This Bill could have done that; it does not. This Government could have done that; they did not. Where was the action to help working parents and families? We know that nursery costs have gone up by 30% since 2010. A parent working full time on the living wage with one child in nursery care will not see a penny of income until the beginning of the third week of the month. That is truly shocking. What do the Government offer? They offer help after the next general election, but nothing in this Bill. Why did they not take the opportunity in part 2 of the Bill to raise more money from the bank levy to fund an expansion of free child care for working parents of three and four-year olds from the current 15 hours to 25 hours? That would be real help. We will scrutinise the detail of the relevant clauses in Committee.

In opening, my hon. Friend the shadow Chief Secretary to the Treasury referred to an article from The Daily Telegraph, which is not often helpful to the Opposition. However, it has recently reported concerns that the Government’s planned changes to the bank levy might amount to a tax cut for the banks. The Government are not shouting that from the rooftops, but there are suggestions that some banks will pay £300 million less. We will need to see the detail and to press the Minister on that point in Committee.

It is a real embarrassment for the Exchequer Secretary that his projections on how much the bank levy would raise were so far off. Earlier, he ducked the opportunity to explain that; I would happily give way to him now if he were willing to explain, but he does not want to. No matter—we will return to the matter at length when we are locked together in a Committee room debating these issues.

On Government changes that might end up helping the banks pay less, I should also mention the small matter of the schedule 19 charge. In fairly impenetrable and hidden-away language, the Government seem to have given a £145 million tax cut for investment managers, whose industry is, frankly, doing rather well at the moment. It could have been asked to forgo that tax cut, given that the poorest and most vulnerable in our society continue to suffer. That shows the Government’s priorities.

Charter for Budget Responsibility

Guy Opperman Excerpts

Wednesday 26th March 2014 Commons Chamber

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

When this Government came to office in 2010, they faced immediate and terrifying problems. Listening to some of the contributions from Opposition Members, that seems to have been forgotten. The prudence of the policies that have been pursued by the Government over the past four years has done much to make us forget what we knew at the time—that this country had been brought to the brink of bankruptcy by a Labour Government who, in their 13 years in office, borrowed more money than all their predecessors put together since the foundation of the Bank of England.

If we are never again to repeat the mistakes of the past, we must not forget where this country found itself in 2010, as we should not forget that the authors of the crisis that this country faced are now sitting on the Opposition Front Bench and who would again be king, notwithstanding their clear demonstration in their handling of the British economy in their time in office, that they are unfit to hold it.

[Guy Opperman (Hexham) (Con)]

Given that the Opposition have opposed every budgetary and welfare cut throughout this Parliament thus far, why should we ask the public to believe them now, particularly given what the shadow team say in private?

[Stephen Phillips]

I do not know what the shadow Chancellor and his Treasury shadow team say in private. I do know that when I talk to people in my constituency, they have not forgotten that the authors of the troubles that we found ourselves in and that we are still recovering from and will be for a considerable time are those who again want to hold the reins of power.

Budget Resolutions and Economic Situation

Guy Opperman Excerpts

Wednesday 19th March 2014 Commons Chamber

[Ian Lucas (Wrexham) (Lab)]

It is a real pleasure to follow the right hon. Member for Chesham and Amersham (Mrs Gillan). As always, she has made a powerful case on behalf of her constituents.

In 2010, the Chancellor had what he called an emergency Budget. There was in fact no emergency. His predecessor’s Budget had already set out the deficit reduction strategy, and that policy was largely supported at the time by the Liberal Democrats. However, the present Chancellor—supported by the Liberal Democrats, who preferred Government to consistency of policy—made a choice and promised in 2010 that he would eliminate the deficit by 2015. On his own terms, he has failed. Today’s Budget is a confirmation of that central fact.

In 2010, when the economy needed stimulus and support, this Government provided neither. Instead, we and our constituents have endured four years of mistaken economic policy, which has resulted in most of the people I represent being £1,600 a year worse off than they were in 2010. Yet the Chancellor stood at the Dispatch Box today and expected plaudits. Following the delayed return of growth in the economy, the Government parties exude an air of complacency, but that is at variance with the views of most of the country and certainly of most of the people I represent in Wrexham.

The Government imposed substantial increases in VAT in 2010, contrary to the assurances given before the general election by both parties. The immediate result was that money was taken out of local economies and paid directly to the Government, suppressing demand in the retail and construction sectors. The long-term result has been a reduction in business activity. Lack of demand locally has been exacerbated by the failure of investment in local business. This Government’s failure to tackle the issue of business investment endures to this day, and is a consequence of their fundamental failure to implement meaningful reform of the banking sector. We heard nothing about that today.

In the early months of this Government, they talked a good game. They even set up an inquiry into high pay, although only in the public sector, not in the private sector. They have done nothing about the issue, however. We hear the occasional bleat from the Secretary of State for Business, Innovation and Skills, but the coalition Government have done nothing.

Again and again, Wrexham businesses tell me about the failure of the banks to provide adequate investment. Based as the banks are in the square mile, and focused as they are on financial services, that is not surprising. Why should those institutions understand the modern manufacturing and retail economy that is Wrexham, when none of their meaningful decisions is made by those who live in our community or have any knowledge of it?

[Guy Opperman (Hexham) (Con)]

rose—

[Ian Lucas]

I will give way to the hon. Gentleman; I know that he takes an interest in this subject.

[Guy Opperman]

The hon. Gentleman must surely accept that it was a mistake for Labour to vote against the provisions in the Financial Services Bill on 23 April 2012. Those provisions would have introduced greater competition, greater choice and a greater degree of local banking.

[Ian Lucas]

The fundamental mistake was the demutualisation of organisations such as Northern Rock by the Conservative Government in 1986 and the years thereafter. The hon. Gentleman should be arguing against such decisions, so that we can start creating institutions like local building societies again.

Our current banking system is not the only model of banking. In Germany, the Sparkassen model was affected much less than most economies by the 2007 recession. Local banks known as Sparkassen operate within geographically restricted areas and provide both retail and business banking there. Notwithstanding the existence of ordinary multinational banks, over 20% of ordinary local residents choose to invest in their local Sparkassen.

I welcome what the Chancellor said today about ISAs, but I believe that people would invest in local banks and institutions that supported the local economy and created jobs for young people. We want to see that happening, which is why we support the development of regional banks. Ever since the Conservative Government started to demutualise in the 1980s, destroying institutions such as Northern Rock, the Leeds Permanent building society and the Halifax building society, the move has been ever more towards centralising investment by the banks in this country. Local economies have suffered as a result.

Business investment has not recovered since 2007, and the City still dominates the economy. The growth that we are seeing in the UK is growth of the kind that led to the problem in the first place. We can all see the train coming down the track. We know what kind of a recovery this is, and we need to do something about it. The people I represent are not benefiting from the recovery at all. Women in my constituency are still earning less than they were in 2010, and men there have also seen a reduction in their incomes since that time.

--- Later in debate ---

[David Mowat]

I have not had a chance to read the report. According to the Red Book, the cost of that allowance will be £1.2 billion next year, an awful lot of money. I will not respond to the hon. Lady’s point about growth, because my point was that the Chancellor has introduced medium-term structural measures into the economy, which is a responsible approach.

The fourth test is whether this is a radical and reforming Budget. The measures on pensions, ISAs and particularly annuities are genuinely reforming, genuinely radical and potentially genuinely transformative.

I want to talk a bit about all those things, but first I want to say something about the support the Chancellor has been able to give the Foundation for Peace—the peace centre in Warrington. There was an issue to address, as it was funded from the lottery and that funding will run out in April. The work the centre does for victims, both of the troubles in Northern Ireland and of 7/7, was under threat, and the support that has now been given will fix that. It is also true—I know Colin and Wendy Parry agree with this—that the funding must be put on a sustainable basis, as the centre needs to do more projects over time with the Home Office and the Foreign Office and all that goes with that.

[Guy Opperman]

I totally endorse what my hon. Friend said. Does he also welcome the use of the LIBOR funds to support the scouts, girl guides and emergency services, and the waiving of the VAT for air ambulances, which is much welcomed after a long campaign in this House?

[David Mowat]

I support that, and I just reiterate the words the Chancellor used: those who have the worst values in our society are being used to fund those who have the best values in our society. That just about sums it up.

Oral Answers to Questions

Guy Opperman Excerpts

Tuesday 11th March 2014 Commons Chamber

[Nicky Morgan]

That is a matter for the Chancellor. The hon. Gentleman will appreciate that the Government regularly receive a range of representations on fuel duty. We hear what he and many other campaigners, not only on fuel duty but on many other issues, have been asking for.

[Guy Opperman (Hexham) (Con)]

20. I want to address the point about the rural fuel duty cut. We have been beneficiaries in Northumberland, as one of the two constituencies not necessarily in Scotland. I can state the reason simply: merely look at a map and identify the fact that the least amount of people are there.

[Nicky Morgan]

I thank my hon. Friend for his question. I am delighted that his constituents will benefit from the rural fuel rebate scheme, which means that, as I said, his constituents will have more money to spend on themselves and their families in other ways.

Currency in Scotland after 2014

Guy Opperman Excerpts

Wednesday 12th February 2014 Westminster Hall

[Mrs Linda Riordan (in the Chair)]

Order.

[Guy Opperman (Hexham) (Con)]

Will the hon. Gentleman give way?

[Ian Murray]

Let me make some progress, then I will give way. The attitude you have just seen from the nationalists in the Chamber, Mrs Riordan, sums up exactly the argument we are having. When challenged on legitimate questions about legitimate issues to do with people’s jobs and the economy of this country, all they can do is shout, “Scaremongering”, and shout down the people who are asking those legitimate questions.

This is not just a technical or political issue; it is also a significant issue for the Scottish public. I say to the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) that I am sure the attitudes of the Welsh are exactly the same. The recent Scottish social attitudes survey said that 79% want to keep the pound with only 11% wanting their own currency—no doubt the Greens and the chair of the yes campaign are included in that 11%—and 7% want Alex Salmond’s previous obsession, which was the euro.

The First Minister has gone from saying that the pound is,

“a millstone round Scotland’s neck”

to making it the currency of choice for the SNP, but not all the yes camp believe that that is right. The SNP’s own fiscal commission was not even in favour of an informal monetary or currency union.

[Guy Opperman]

I congratulate the hon. Gentleman on securing the debate. On the specific issue of jobs—I am speaking as an MP whose area has a border that divides Scotland and England—my local businesses, the North East chamber of commerce and the local authorities have all indicated that there would be a negative impact on jobs, growth and the development of our respective economies in Scotland and England were the referendum to go ahead. Does the hon. Gentleman agree that that point, as always, is totally ignored by the Scottish nationalists?

[Ian Murray]

I am grateful for that intervention. That point is ignored because it is convenient for the nationalists to ignore it. They do not care about the rest of the United Kingdom. They do not care about businesses and employment across the rest of the United Kingdom. [Interruption.] If they did, they would put their efforts into ensuring that that worked for businesses and for employment across the United Kingdom, rather than being obsessed with the constitution.

I will try to make significant progress. There is a banking museum in the old HBOS headquarters on the mound in Edinburgh. It says that people think of money today as banknotes and coins, but that the currency used to be things such as tea, shells and even feathers. That has been used in the past. We may need to go back to that, because people need to know what the money will be in their pockets. We cannot run a modern economy on empty ginger bottles. Incidentally, people can press their own coins at the museum. There is a little press that kids can use to press their own coins. Perhaps that will become the Scottish Government’s plan B when they have to decide to print their own coins.

This is too important an issue for the SNP and the yes campaign not to be honest with the Scottish people and businesses about the way forward. The overwhelming weight of opinion is now against a currency union. It is little wonder, as any agreement would mean that our interest rates would be set by a foreign bank and include strict instructions on how much Scotland could tax and spend. Scotland would have no control at all over monetary policy. It would also mean the loss of our UK central bank, which acts as the lender of last resort. The Secretary of State for Business, Innovation and Skills raised the lender of last resort issue last week in relation to the large Scottish financial institutions perhaps being forced to move south to be by the central bank, for the reasons that I highlighted earlier, from the crisis in 2008.

--- Later in debate ---

[Guy Opperman (Hexham) (Con)]

I congratulate the hon. Member for Edinburgh South (Ian Murray) on a very impressive speech. This is an issue of finance, but also of the heart. As with all matters of finance and long-term matters of the heart, pragmatism and practicality must hold sway. Listening to SNP Members chuntering—when they are not on their mobile phones—and not listening to the debate, one is struck by the fact that their basic argument is that they want to have their cake, eat it and then still call the cake Scottish, not British. Last autumn, when I was campaigning with the Better Together campaign—a cross-party campaign that is doing a fantastic job—one Scot put the situation to me in this way: “The prospect of an affair is always more glamorous than the work of saving a marriage.” I suggest that that is the situation in which the Scottish people now find themselves.

I strongly support the desire of the Scottish people to be together as part of the United Kingdom.

--- Later in debate ---

[Mrs Linda Riordan (in the Chair)]

The Member in charge of the debate gets as long as they want for their first speech, and then the time allotted is down to the number of Members who wish to speak. Rather a lot of Members wish to speak in this debate.

[Guy Opperman]

I speak as a Brit, a mongrel Englishman, a lover of Scotland and an MP whose constituency borders Scotland. Were there to be Scottish independence, I have no doubt that tourism and trade would continue, but it would be naive not to accept that trade on a cross-border basis would unquestionably be affected. That is not some Conservative Member of Parliament speaking; that is the opinion of the chambers of commerce, local authorities and business groups I have spoken to on both sides of the border.

Some of the key questions have been raised by the hon. Member for Edinburgh South, but I have some others. On what basis would Scotland get to keep the pound? Would it be used informally, just as some Latin American countries, Greece and Montenegro use other currencies? Why should the Bank of England take notice of Scotland in setting monetary policy? Why should the Governor travel to Edinburgh and be interrogated by Scottish MPs in such an event? After independence, surely the Governor would owe his appointment entirely to a rest-of-UK appointment system? At that stage, would the First Minister come to London seeking an audience to negotiate? The arguments that have been put forward are, respectfully speaking, a farce.

I also suggest that, when one goes through Mark Carney’s speech and looks at the currency options, it would seem that the SNP proposes to keep the pound as part of a formal sterling currency union agreed with the rest of the UK. However, the SNP seems not to have contemplated the fact that that would involve giving up huge amounts, as Mark Carney made very clear, as well as requiring the agreement of all other parties. The SNP seeks independence but would require and accept greater control by a third party.

[Mr Robert Buckland (South Swindon) (Con)]

Does my hon. Friend agree that the phrase “sterling area” used in the Scottish Government White Paper is wholly misleading? The sterling area that used to exist with the Commonwealth and Ireland was all about pegging exchange rates; the SNP actually wants full currency union, with all the concomitant controls that that would require.

[Guy Opperman]

I entirely endorse my hon. Friend’s point. I looked at the Scottish Government White Paper, and it states that

“a monetary framework will require a fiscal sustainability agreement between Scotland and the rest of the UK”—

that is, if independence goes ahead—

“which will apply to both governments and cover overall net borrowing and debt. Given Scotland’s healthier financial position”,

after independence, presumably,

“we anticipate that Scotland will be in a strong position to deliver this.”

With respect, that is complete comedy.

[Mark Garnier (Wyre Forest) (Con)]

My hon. Friend is raising some important points. Does he agree that trust in the institutions that used the currency in an independent Scotland would be a necessary part of currency union? That raises significant questions about the regulation imposed in Scotland. Is the SNP proposing that the Financial Conduct Authority continue to be the prime regulator for such institutions? If so, how does it propose that the regulator will have proper oversight so that we can trust such institutions not to fail?

[Guy Opperman]

The arguments on fiscal regulation might appear dry and unexciting, particularly when addressed in the press, but they are utterly key to the future prosperity not only of the whole existing United Kingdom, but especially of Scotland if it were to become independent. Such aspects of fiscal regulation as my hon. Friend mentioned—how a bank would function; how a currency would be managed; what sort of interest rates would be managed; who is in charge of such matters—are totally unaddressed by the SNP. Frankly, they must be addressed if anyone is to have any faith in the SNP’s fiscal approach to the argument.

[Mel Stride]

My hon. Friend is making a powerful case. Does he agree that full currency union could have a devastating impact on the financial services sector in Scotland as banks migrate south to get the protection of the Bank of England as the lender of last resort?

[Guy Opperman]

I have no doubt that that would be the case.

I am mindful of your instructions, Mrs Riordan, so I must finish. If keeping the pound would not be possible as part of a formal sterling currency union; if the SNP no longer wishes to join the euro, which one can see; and if there is no prospect of an independent country with border control—my constituents are somewhat concerned that there might be a rerun of Hadrian’s wall—where are we? We will have a new Scottish currency. The expression that is used is “sterlingisation.” In its briefing on an independent Scottish currency, not part of a fiscal union, the House of Commons Library—I can assure the hon. Member for Perth and North Perthshire (Pete Wishart) that it certainly is independent—states that such a

“policy is often used by countries which have a poor economic record.”

I could not have put it better myself. It is the currency situation in Greece, Panama, El Salvador and Montenegro; it is not what we should be pursing.

Banking

Guy Opperman Excerpts

Wednesday 15th January 2014 Commons Chamber

[Chris Leslie]

Government Members will have to confront this issue, because it is a decision they will to have to take. Those traders and executives were former colleagues of the Financial Secretary to the Treasury, who was one of the senior bankers at Deutsche bank. Perhaps he can tell us whether, when he was a banker before the election, his bonus was more or less than 100% of his salary. Perhaps he can fill us in with that bit of history.

In our motion, we have made the point about instructing United Kingdom Financial Investments Ltd and making sure that it acts accordingly and turns down this proposal if bonuses come to more than 100% of salaries. That is not fair. Most of the people watching this debate will think, “Well, it would be nice to get any bonus at all. The same amount as my pay? Crikey, that would be phenomenal, but twice the amount of pay is totally unacceptable.” The Chancellor and the Minister will have to confront the anger of the public on this issue if they fail this test.

[Guy Opperman (Hexham) (Con)]

The motion mentions the requirement for greater competition. The hon. Gentleman will be aware that the dozens of challenger banks that have sprung up under this Government since 2010—

[Ian Lucas]

Nonsense!

[Guy Opperman]

I can definitely assure the hon. Gentleman that that is absolutely correct and that many are coming forward. Does the hon. Member for Nottingham East (Chris Leslie) regret voting in April 2012 against greater competition in the banking sector?

[Chris Leslie]

I am not quite sure what planet the hon. Gentleman is living on, but we have been consistently tabling amendments to financial services legislation to encourage more competition and to have an inquiry into retail banking competition. At every stage, the Government have refused to go down that route.

--- Later in debate ---

[Sajid Javid]

That is exactly what we have not done. We have accepted the central recommendations of the Vickers commission.

We have not just been working to prevent a repeat of the crisis. Many Members on both sides of the House have been rightly appalled by the revelations of poor behaviour on the part of some in the industry, such as payment protection insurance, interest rate swap mis-selling, and LIBOR manipulation. Those practices were going on right under the noses of Labour Treasury Ministers, including the current shadow Chancellor, who did nothing at all to stop it.

[Guy Opperman]

My hon. Friend attended the local banking conference that I organised shortly before Christmas. Does he agree that “challenger banks” such as Aldermore, Virgin, Metro, and even the Bank of Salford—which is run by Labour and Unite, and is excellent—are a key element in the greater competition that we need in order to reinvent the banking market in this country?

[Sajid Javid]

My hon. Friend’s intervention gives me an opportunity to commend him for his initiative to promote regional banks. He is absolutely right in his assessment.

We also set up the Parliamentary Commission on Banking Standards, chaired by my hon. Friend the Member for Chichester (Mr Tyrie). As a result of the commission’s work, we amended the banking reform Act in order to implement its recommendations on holding bankers to account more effectively for poor behaviour. If a bank were in future to enter resolution because of reckless mismanagement, senior bankers could face a prison term of up to seven years.

--- Later in debate ---

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

This has been a timely debate and I say that advisedly, having listened to the complacent, provocative and characteristically tribalistic knockabout from the Financial Secretary, which seemed to me to be almost totally devoid of any new, serious content.

The record of the banks over the past five years has been so riddled with abuse of power, criminal malfeasance, reckless speculation, pervasive mis-selling of financial products, facilitation of contrived tax avoidance on an industrial scale, the rigging of the LIBOR and Euribor interest rate benchmarks, a growing and dangerous development of a shadow banking system, and continued dalliance with the exotic financial derivatives which precipitated the worldwide crash of 2008-9 in the first place that, when combined with the fact that there has been very little fundamental reform so far, there must be a serious risk of another financial cataclysm in the foreseeable future.

The central fact about banking power in Britain today is that 85% of the public’s money in the retail market is controlled by just five big banks, which can—and do—use that money without any accountability to the public interest. The total gross spending of the banking sector reached £7 trillion—five times GDP—in mid-2011. Although it has somewhat reduced today, it still exceeds total Government spending by a factor of almost 10:1. That means that this tiny banking clique commands more spending power to control the UK economy than the entire machinery of Government.

How does it use that power? The most striking fact about the British economy over the past five years—we all know this—is that the banks’ lending to industry has largely been negative for most of that time, while at the same time the banks have continued with their indulgence in property, overseas speculation, tax avoidance and risky derivatives. In the light of that, it surely is the case that the power of this dominant clique of the top UK banks, which has been so badly misused against the public interest, has to be broken up.

[Guy Opperman]

Will the right hon. Gentleman give way?

[Mr Meacher]

I have no time to give way.

By being too big to fail, the banks exacerbate moral hazard, because the knowledge of the explicit taxpayer guarantee encourages excessive risk taking and recklessness. They have failed in their pre-eminent duty to keep adequate funding flowing to UK business, and through their size and weight they choke off competition and new entrants to the market. Initially, that should be brought about by a clean break between retail and investment banking. The Vickers alternative of Chinese walls—separating the two functions within a single, still-integrated structure—is flawed owing to the fact that the City will in no time circumvent it through regulatory arbitrage.

Beyond that initial break, I believe there are strong grounds for further disbandment, which several of my hon. Friends have mentioned, in order to pave the way for what Britain really needs at this time, which is regional banks such as the Sparkassen banks in the German Mittelstand and specialist banks concentrating on infrastructure development, the knowledge and information industries, investment for a low-carbon economy, small businesses and so on.

The fact is that the finance sector is always the most dangerous component in a capitalist economy, particularly in the deregulated version imposed in the 1980s, and it is surely clear that nothing like enough has yet been done to give assurances to the economy and to taxpayers that we are now protected against the depredations of the finance sector.

The truth is that the big banks knowingly gamed the system for so long in order to expand their balance sheets ever faster and with ever lower capital ratios, based on the bogus claim that their lending was then less risky. They even deliberately invented the colossal credit default swaps market as an asset class in order to enable the hedge funds to speculate against collateralised debt obligations, and they gained regulators and investors alike, using their vast lobbying power to create the relaxed regulatory environment which, of course, is at the root of all of this.

That lobbying power—probably the most formidable in Britain—is still being used ferociously to chip away at any, or every, new proposed regulation at both domestic and EU levels. As a result, capital ratios are still too low; the proposal to raise them is wrongly being delayed until 2018-19 to fit in with Basel III; the use of offshoring and tax havens has hardly been reduced at all; lending to UK industry remains deplorably low; the shadow banking system has not been effectively tackled; and managerial oversight will not be enforced until the Tyrie commission proposal, which is a good one, to hold individual directors and executives to account by disqualification or a custodial sentence is implemented.

My last point concerns the control of the money supply. The banks have, in effect, seized control of the money supply. They have become major generators of unsustainable asset bubbles, which is a source of great instability to the economy and of enormous cost to the taxpayer. They control 97% of domestic credit creation and have used their virtual monopoly over it to feed successive property booms and speculative foreign ventures while allocating—this is the key point—just 8% of the nation’s resources to UK productive investment in the form of manufacturing, communications and distribution.

The case for bringing back control of the money supply to public hands—as was always the case in this country until the 1980s—is crucial, partly to prevent the skewed allocation of national funding excessively towards mortgaged property; partly to rebalance the economy from finance to manufacturing when our balance of payments on traded goods is currently running at a deficit of more than £100 billion every year, which is frankly unsustainable; and partly to channel a huge amount more of our resources into real, productive investment, without which Britain will never recover its global competitive position.

The banks have massively let down this country and they continue to do so. The extensive restructuring of the financial sector is critical for the future of this country, and that requires far deeper reform than the present Government are trying to get away with.

--- Later in debate ---

[Guy Opperman (Hexham) (Con)]

Greater competition, the desire for local banks and the Labour policy to close regional voluntaries are the issues of this debate. I have held two local banking conferences over the past six months—one in Gateshead on 6 June and the other in London in December—and they were attended by in excess of 350 people from various organisations, banks, accountancy firms and start-ups. It was very striking that, contrary to what the right hon. Member for Oldham West and Royton (Mr Meacher) has recounted, there was a tremendous desire for a large number of new banks, and that is in fact the reality.

I have met the likes of Metro, Aldermore, Handelsbanken, obviously Virgin, Cambridge and Counties—it was set up out of a local authority pension fund—and the Hampshire bank. A fantastic bank has been put forward by the Unite union, on behalf of Labour, in Salford, and it is doing wonderful work. I have met Alex, who is the linchpin of that. He is a fantastic lad, who is doing great stuff to try to transform how that local community bank provides services to the local community of Salford.

I therefore disagree with the doom and gloom approach about there being no competition or new entrants. Certainly, when I meet those from the Financial Services Authority and the Prudential Regulation Authority, including Sam Woods and all the individuals involved with the regulators, they tell me that they have had in excess of 25 separate pre-applications that they are now considering.

On 23 April 2012, when we debated local banks and the need for greater competition—this is my seventh speech on local banking in the House in the past three and a half years—the Labour party chose to vote to delete clause 5 of the Financial Services Bill, which was designed to create greater ease for new entrants to enter the market and related to how far competition can encourage innovation. I welcome the fact that the Opposition seem to have changed their policy and would now like more competition, but the proof of the pudding is always in the eating, is it not?

An announcement has been briefed to Nick Robinson of the BBC that the Labour party, if it gets into government, will ultimately close regional and local branches. As my hon. Friend the Member for Winchester (Steve Brine) made clear when he questioned the shadow chief Secretary, the hon. Member for Nottingham East (Chris Leslie), that would have a massive impact on our local communities.

I am certainly trying to have more bank branches opened in my area. I am negotiating with my credit union to see how far it can do that. Similarly, I am trying to create new banks in the north-east. As my hon. Friend the Member for Redcar (Ian Swales) has made clear, there is great scope for new entrants to do so. The very fact that the big five are so complacent and have had so many problems, gives new entrants an opportunity, which is certainly being exploited by all those we have spoken about today.

In that context, I want briefly to touch on two matters—credit unions and the Church, neither of which have been discussed. It would be a failure of this debate if it did not deal with both of them. All of us should support our credit unions. I am certainly wholeheartedly behind the Northumberland credit union. We must acknowledge that even though this Government have done more to give credit unions greater clout, power and ability to lend, credit unions are still incapable of filling the banking void and overcoming the current difficulties.

The only way forward is the creation of local community banks built on a credit union. I can give the House at least three examples. I have already mentioned the bank in Salford, which is the former Salford credit union. The Glasgow credit union is probably the biggest and most successful in the country: it is effectively a bank in all but name. Finally, I have the Prince Bishops community bank in Durham, which is the former Stanley credit union. All are very successful and have great potential. We need to follow such examples.

To touch briefly on the Church, I welcome the fact that Justin Welby is the new Archbishop of Canterbury. It is savage irony that 500 years have had to pass for us to have the new type of God’s banker, who is encouraging the Church to become involved in banking. It can only be good if the clergy move from being reactive to poverty and social deprivation—to their great credit, they are amazingly good at reacting in that way—to being proactive.

I suggest that the Church has a role, acting with their credit unions and local community banks, effectively to become the offshoots and outlets of those community banks. After all, all the vicars that we, as constituency MPs, know and deal with know which people are in great social deprivation, going to the food bank or having problems with high-cost credit and need debt advice. There is massive scope for the Church to take a greater role by dovetailing churches with credit unions and community banks. I welcome the fact that the Church has chosen to buy branches of Williams and Glyn’s bank, and is setting something up so that we can go forward. If we can do that and become more proactive in our local communities, a huge amount can be done.

In seven days’ time, I will meet my Northumberland credit union in Hexham to discuss how we can promote the idea of taking the credit union, building it up and creating a larger bank to make the situation so much better. If we do that, we will have in our regions and communities a bank that we can trust, with a proper brand name and identity, and one that is part of the community, rather than something based in London or Frankfurt and completely divorced from that community. That is the problem that we all face and have identified and, to their great credit, that is the problem that the Government have made great efforts to address.

In the interests of brevity, I will draw to a close, but I very much urge all parties to make sure that they get behind local community banks. We have not always done so, but we should do so in the future.

National Minimum Wage

Guy Opperman Excerpts

Wednesday 15th January 2014 Commons Chamber

[Rachel Reeves]

My hon. Friend is absolutely right. Many councils, including mine in Leeds and his in Coventry, have been hard hit by the cuts to the local authority grant, which are affecting some of the services that the most vulnerable people rely on.

[Guy Opperman (Hexham) (Con)]

Can we get to the nuts and bolts of policy? Will the hon. Lady give the House an assurance that policies such as the petrol duty freeze and the council tax freeze—[Interruption] I am sorry, but the hon. Member for Rhondda (Chris Bryant) is chuntering so much that it is hard to hear him—would be continued under a Labour Government were they to be elected?

[Rachel Reeves]

I suggest that Government Members look at what we are debating: the national minimum wage. I know they do not want to talk about it, because they did not support it in the first place, but it would be nice if they could talk about its impact on their constituencies. However, I think we may have to wait for another occasion.

We have a Government who opposed the national minimum wage when it was introduced and who are not enforcing the legislation properly today. Thanks to an investigation by the independent Centre for London, we know that as many as 300,000 workers are being paid less than the minimum wage. We have reports of workers having the costs of uniforms, accommodation, transport or training illegally deducted from their pay packets. We have shocking accounts of working conditions for some people in sectors such as elderly care which hurt not only employees but vulnerable people who need a reliable and good-quality service from people who are paid a decent wage. There are stories of legal loopholes being used to bring in migrant workers who are, as my hon. Friend the Member for Stockton North (Alex Cunningham) said, forced to work at exploitative rates of pay that also undercut and undermine the pay and conditions of all workers.

Despite that, the number of enforcement cases opened or registered has fallen in every year of this Tory-led Government, and it is now at less than half the level it was in the last year of the Labour Government. Since this Government came into office, just two prosecutions have been brought for non-payment of the minimum wage. They have repeatedly said that they will name and shame firms that are flouting the legislation, but they have not named a single one.

Financial Services (Banking Reform) Bill

Guy Opperman Excerpts

Wednesday 11th December 2013 Commons Chamber

[Emily Thornberry]

With respect, I am even more confused than before. What is the point of bringing in an offence that will change the behaviour of bankers, but will not, by itself, defend the banks? As I understand it, if the behaviour that we seek to stop is reckless banking, the reason that it should be criminalised is in order to stop banks failing and the financial system crashing.

There are other difficulties with this offence, which include recklessly to take a decision or to fail to prevent the taking of a decision that results in the failure of a bank. That sets a high threshold and, as has already been pointed out, it is not clear who, of those who may have behaved in a reckless way in our banks and who may have brought down the banking system before, would have been prosecuted. The Minister has not been able to assist us as to who might have been prosecuted under the offence. [Interruption.] It is unfortunate that the Minister is distracted at the moment, but the point I am making is important, and I hope that he will be in a position to address it.

It is difficult to prove that aspect of the offence, and prosecuting it would be a risky undertaking for the prosecuting authorities who will be expected to invest public money in prosecuting such matters. There is no point in putting something in legislation that can be discussed on doorsteps but will never be used to prosecute. We have seen the Serious Fraud Office struggle with high-profile, high-risk prosecutions. Too often such prosecutions end in shambles because of the behaviour of the Government, which have cut the SFO’s funding from £53 million in 2008 to £30 million by the end of this Parliament. Differences can be made to the behaviour not only of banks but of businesses generally. May I just add that of course I support Labour’s position on a stringent licensing regime for bankers, the imposition of a fiduciary duty of care on financial-sector staff for clients and customers and its call for a dedicated financial crime unit. In a moment, I will move on to what will work better, but before I do that, I give way.

[Guy Opperman (Hexham) (Con)]

Let me take the hon. Lady back to her last point on prosecutions. I speak as a former prosecutor of serious fraud work, although not for the SFO. Either there is the 51% test of prima facie evidence at the start of the case, or there is not. How the case then ends up, once the matter has been examined by a jury, is a matter for a jury and occasionally a judge. She is being a little harsh on the SFO, which is doing a fantastic job under very difficult circumstances.

[Emily Thornberry]

I am more than happy to put it on the record that I am a critical friend of the Serious Fraud Office. Sometimes the emphasis is more on the word critical, especially after what we have seen in the newspapers today, with the crash of yet another serious fraud case because the SFO asked an agent, which clearly had a conflict of duty, to do its investigation. That is yet another mistake that the SFO has made. If we want the SFO to turn a corner, we need to do more than show good will. This Bill provided us with an opportunity to change things. It is unfortunate that more attention was not paid to changing corporate liability.

I listened carefully to what the hon. Member for Chichester (Mr Tyrie) said in his contribution, and I undertake to send him, as a Christmas present, Labour’s policy paper in relation to fraud. If we can change corporate liability to ensure that if an individual within an organisation behaves in a way that is dishonest and to the advantage of the larger organisation, we can prosecute the organisation, unless it can show, in the same way that it can under the Bribery Act 2010, that it has in place controls over its staff, it would have an impact on our banking system. If I may say so respectfully, introducing such legislation will have a greater impact than the measures proposed in this Bill. If we were to introduce a different form of corporate liability, we could increase the fines hugely, and that money could be ploughed back into the Serious Fraud Office. Then we would have an organisation of which people in the City of London would be afraid. They would be prepared in most circumstances to come to an agreement with the SFO to have a deferred prosecution agreement.

DPAs will not ever exist under the status quo. The DPA legislation has been passed but, as I understand it, no one has come forward to say that their company has been doing wrong, that they want to admit that, that they will pay a fine, that they will change their ways, that they want auditors to come and see how they are behaving and that they will point out the individuals who have been behaving in a criminal way. I respectfully submit that that is how to change the culture. That is how we ought to be working and I look forward to discussing it with the hon. Member for Chichester once he has read the Christmas present I intend to send him. If elected in 2015, Labour intends to introduce its own economic crime Act, and I hope that we will take the issues further and develop them. Obviously, I would be interested to hear the hon. Gentleman’s reactions.

National Infrastructure Plan

Guy Opperman Excerpts

Wednesday 4th December 2013 Commons Chamber

[Danny Alexander]

I certainly agree that the Department for Transport is working very hard to deliver a large number of projects. I am grateful that that is recognised by at least one Opposition Member. As I said in my remarks, we need to make sure that local views are listened to as part of feasibility studies. I am sorry if the hon. Gentleman has had difficulties in getting across such views, and I will certainly pass that point on to colleagues in the Department for Transport. I wholeheartedly agree with him about the importance of trans-Pennine connectivity. That is why we initiated the feasibility study in the first place, and I hope that he will welcome its proposals when they are made.

[Guy Opperman (Hexham) (Con)]

A clear timetable and a change from the Labour Government’s failure to address the problems of the A1 and the A19, as well as rail projects, will be very welcome in the north-east. My right hon. Friend has visited Northumberland, and he knows that some truly rural areas have no broadband whatever. Will he expound in a little more detail how communities such as mine, which has no broadband and no possibility of getting it under the present schemes, can access the extra funding?

[Danny Alexander]

My hon. Friend draws attention to a very serious problem. Like him, I represent a large rural constituency, so I am very aware of these issues. Back in June, I announced additional funding to extend the target for the proportion of the population with access to superfast broadband. Today, we are announcing a small fund to stimulate innovation to find the best and cheapest technological solutions for getting superfast broadband to absolutely everybody, no matter how far they live from an exchange. We will get as far as we can towards that objective. If my hon. Friend has any ideas or if innovative companies in his constituency have any thoughts about that, I would be glad for them to contribute to the process.