Finance Bill

Iain McKenzie Excerpts

Monday 2nd July 2012 Commons Chamber

[Mr Iain McKenzie (Inverclyde) (Lab)]

My hon. Friend rightly identifies the fact that the Government have found additional money all of a sudden to fund their U-turns. Does she think that that money could have been used to create employment in areas with significant unemployment levels?

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[Sheila Gilmore]

National debt is sometimes essential. After all, I seem to recall that it was very much higher at the end of the second world war than it has been at any time since. There were reasons for that, and I believe we finished paying it down only a few years ago. Sometimes, we have debt because we have made essential or useful investment, and of course it is not the same as deficit.

[Mr McKenzie]

My hon. Friend is making a very good point. We have heard one of the comments of the new President of France, but does she think the Government will agree with his opposition to the austerity measures that have been put in place across Europe?

[Sheila Gilmore]

I do not dissent from my hon. Friend’s view. The new President’s general intention is indeed to break away from the fixation with austerity measures. That is not the same as saying that we do not want to deal with the deficit. The question is how to do that successfully and ultimately reduce borrowing.

The last Government have been misrepresented as having constantly increased the national debt. That is simply wrong. It was substantially reduced under the Labour Government, but what caused that process to go into reverse—I am not going to say it did not—was the recession and the economic stimulus that was put in to get us out of it. Our view remains that had the policies that were in force between 2008 and 2010 been continued, rather than going into a double-dip recession we would have begun to climb out of the recession.

Oral Answers to Questions

Iain McKenzie Excerpts

Tuesday 24th April 2012 Commons Chamber

[Mr Hoban]

My hon. Friend makes the important point that the pattern of youth unemployment varies across the country. It is important that the necessary support is in place to help young people looking for work, and the Work programme is likely to help 100,000 young people this year. That is just one of the practical measures we are taking to tackle the problem of youth unemployment—which, as the right hon. Member for South Shields (David Miliband) said, started under the last Labour Government.

[Mr Iain McKenzie (Inverclyde) (Lab)]

With the disgrace of having more than a million young people unemployed up and down this country, does the Minister not now regret scrapping the future jobs fund during the first few months after coming to power?

[Mr Hoban]

It was clear that the future jobs fund was not cost-effective in helping young people, and we have found that the work experience programme is 20 times more effective. We have introduced a range of measures to help young people find work. We have already talked about the increase in the number of apprenticeship places, the number of people being helped by the Work programme and the number of wage incentives in place through the youth contract. We are going to see more voluntary work taking place and more job experience. Those are the practical measures needed to tackle youth unemployment.

Finance (No. 4) Bill

Iain McKenzie Excerpts

Thursday 19th April 2012 Commons Chamber

[Brandon Lewis]

I supported the Budget a couple of weeks ago and I still do now. It is important to look at it in its entirety, and at how it fits in with other things that are going on. At the moment, an increase in personal allowance is being put in place; it will rise by £1,100 in April 2013, taking it to £9,205 in total. That is the largest real personal tax cut for the median earner in more than a decade, from which 24 million people will benefit. It will give basic rate taxpayers a real cash gain. The Government are taking 2 million low-paid workers out of tax altogether.

Let me put that increase in local context as the Member of Parliament for Great Yarmouth. It lifts an additional 75,000 people in the east of England out of income tax altogether. That will have a dramatic impact on many low earners in my constituency, which is the 54th-most deprived local authority out of 326. The average earnings in Great Yarmouth are £21,900 per annum, compared with the national average of £26,100.

[Mr Iain McKenzie (Inverclyde) (Lab)]

Does the hon. Gentleman agree that to benefit from this increase in the tax threshold one first needs to have a job? That is what most of my constituents are asking for—a job.

[Brandon Lewis]

I thank the hon. Gentleman for that intervention, which gives me a chance to highlight the good news we had this week regarding the number of people in employment. In Great Yarmouth we saw not only an increase in employment this month, which is very welcome, but an increase in the number of young people in employment. That is a testament to the work the Government are doing, and also, I hope, a sign of the improvements that are coming. It is also a testament to the opportunities put in place through the previous Budget and the work of the Department for Work and Pensions, particularly on work experience and the Work programme, which is also having an impact.

In Great Yarmouth, we also have a particularly high number of part-time and seasonal workers due to the nature of the constituency and its tourism industry. The change in personal allowance is a huge help to that sector of the local work force. It puts extra money into the pockets of hard-working families across my constituency.

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[Katy Clark]

That was done as part of a range of measures. We have been talking about a package of measures today, and what we know is that pensioners will be disproportionately affected by the range of measures that this Government are steamrollering through. I will return to that later, but the hon. Gentleman’s point also highlights the fact that the changes proposed at that time treated everybody, of all ages, in the same way. In this debate we are trying to focus on the impact on pensioners of the freeze in what is an age-related benefit. We have heard a number of contributions that have highlighted how pensioners are struggling as a result of many of the Government’s policies, as well as the economic situation we are in, which the Government are not trying to alleviate.

My hon. Friend the Member for Leeds West (Rachel Reeves) put this debate in the bigger picture by highlighting the fact that the £3 billion that the Government will save as a result of the proposed change will be used to help some of the richest people in the country. The big picture is that the richest in this country are getting richer, at a time when the living standards of those on modest or low incomes are going down. We have heard a number of attacks on the last Labour Government in this debate, but the reality is that the figures show that the living standards of those on low, modest or middle incomes went up. There was also an increase in the living standards of the wealthiest in the country, but we are now seeing the living standards of ordinary people—people on low or modest incomes—plummeting, while at the same time we see huge and escalating increases in the incomes of rich individuals and many corporations.

[Mr McKenzie]

We hear much from Government Members about the message that this Budget is sending the world—that Britain is open for business, and so on. What message does my hon. Friend think the Budget is sending to our pensioners up and down the country, and particularly those on incomes that they have worked hard for, by setting money aside and preparing for their pensions?

[Katy Clark]

The word “dignity” has been used a number of times in this debate. It is an important word, particularly given the proposed change, which has been put forward at short notice. We have had debates about pensioner income over many years in this place. We have heard a number of proposals, from parties in all parts of the House, that would change the financial position of those reaching retirement. However, a common theme has been the importance of giving as much notice as possible of any change, particularly when dealing with people’s incomes in retirement, so that people can make the changes necessary to cope with the changing world.

One of the problems with the proposed change, which will come into effect in 2013-14, is that it represents not a minor or technical change, as many Government Members have said, but quite a substantial drop in income at short notice for people on modest or medium incomes. My hon. Friend the Member for Livingston (Graeme Morrice) highlighted the impact on those who turn 65 in 2013-14, who could lose £323 a year, which represents a significant amount, not a technical change. Therefore, to answer my hon. Friend the Member for Inverclyde (Mr McKenzie), people in those income brackets will be very disappointed by the change. That is one reason I have highlighted the fact that the measure was not in the manifesto. If the Government think that it is an important part of their long-term pension reform, it should have been in the manifesto. It should have been consulted on and thought through, and a great deal more notice should have been given to the individuals affected.

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[Nigel Mills]

I think my hon. Friend is suggesting that we should view the issue in the round—the issue, that is, of how we can encourage people to fund their own retirement and achieve the decent level of income that they want in a way that is not unaffordable for the taxpayer.

[Mr McKenzie]

I suspect that at the last election the hon. Gentleman did not tell his constituents that he would impose a granny tax on them, but that he did tell them that if the Conservatives were elected they would be a fair Government. Is it fair to impose this granny tax while also giving a tax benefit to millionaires? Will he go back to his constituents and tell them that this is a fair Government, therefore?

Living Standards

Iain McKenzie Excerpts

Monday 5th March 2012 Commons Chamber

[Mr Iain McKenzie (Inverclyde) (Lab)]

It is now painfully obvious that our economy has stalled. That is evident in the soaring increase in unemployment and the even more alarming increase in youth unemployment. There is now a demand, clearly expressed by families up and down Britain, for a real plan for jobs and growth in next month’s Budget.

We also need the Government to make different choices to help families who are feeling increasingly squeezed in these tough times. If we are indeed in this together, why have the Prime Minister and the Chancellor chosen to hit hard-working families with children, who will lose an average of £4,000 a year from policies coming into effect this April? If we add to that the high cost of food, fuel, rents and so on, it seems that some are more in it than others. My constituents in Inverclyde need a Budget for jobs and growth to boost the economy—a fair Budget to ensure that families on low and middle incomes do not bear the heaviest burden in these difficult times.

I shall focus on two aspects. First, the proposed changes to eligibility for working tax credits will hit hardest many parents in part-time work. People who are responsible for at least one child and working at least 16 hours a week can get working tax credit, but from 6 April the rules for couples with at least one child change. In most cases, to qualify for working tax credit, they will need to work at least 24 hours a week jointly, with one working at least 16 hours a week. If only one of the couple works, they must work at least 24 hours a week. Working tax credit for couples to whom neither situation applies will stop from 6 April.

In my constituency, 185 households containing 365 children stand to lose out from that proposal, which will penalise parents who are working and trying to do the right thing, but who cannot increase their working hours at a time when the economy is flatlining and unemployment is rising. Few employers are currently offering an increase in part-time work hours. The change to tax credit is unfair and damaging and should be cancelled before it makes matters even worse for those hard-working parents. The Chancellor could use the hundreds of millions of pounds that the Government have said could be raised by closing a stamp duty tax avoidance loophole on properties worth more than £1 million. That would resonate as fair with my constituents and go some way to convincing them that we are in this together and paying for it equally together.

Secondly, the Government need urgently to review the planned changes to child benefit, as a result of which around 1.5 million families will effectively lose their child benefit. Surely it cannot be fair that a two-earner family on £42,000 each—a total of £84,000—will keep their child benefit, but a single-earner family on £43,000 will lose out. The Opposition support the principle of universal child benefit, but if the Government are determined to make changes, can they not be made more fairly and in a better and more workable way?

Hitting families with the two changes I have outlined will unfairly reduce their living standards. The changes were rashly and hurriedly announced last year. The feeling is that Ministers have clearly not thought through the consequences. Many thousands of parents on low and middle incomes face losing a huge proportion of that income at a time when every penny counts. Bizarrely, far from the Government making work pay, many parents could find that they are better off on benefit. That makes no economic sense at all.

Youth Unemployment and Bank Bonuses

Iain McKenzie Excerpts

Monday 23rd January 2012 Commons Chamber

[Mr Iain McKenzie (Inverclyde) (Lab)]

It will come as no surprise that I want to focus on the UK unemployment blackspot that is Scotland. Scotland’s unemployment crisis has become a national tragedy with 250,000 people out of work, and our young people are one of the hardest hit groups. The number of young people claiming jobseeker’s allowance for more than six months has soared by 93% in my constituency and unemployment in Scotland has risen by 8.6%, with some 19,000 more people out of work this year. Scotland now has higher unemployment than the rest of the UK, with 200 Scots losing their job every day. Those figures only confirm what families in my constituency already know, which is that we are facing an unemployment emergency.

[Jake Berry]

As the hon. Gentleman is addressing his concerns to unemployment in Scotland, can he confirm whether it went up or down during the last quarter?

[Mr McKenzie]

Unemployment in Scotland is suffering the double-whammy of not only the UK Government but the Scottish Government. It is obvious where the Scottish National Members are tonight—they are not in the Chamber debating unemployment in Scotland.

For my constituents and millions of hard-pressed families, reports in the news that RBS is preparing to offer a bonus of more than £1 million to its chief executive look like nothing more than huge reward for failure. That leaves my young constituents to ask only one question: what about us? So, what about them? Labour has for some time argued for a tax on bank bonuses to fund 100,000 jobs for young people. Our country needs a new plan for jobs, so the Government should adopt Labour’s five-point plan for jobs, incorporating the tax on bankers’ bonuses to fund those 100,000 jobs for young people and a temporary VAT cut to help people struggling with rising prices, and kick-start the economy.

Jobs for young people in my constituency of Inverclyde are of the utmost importance, which is why we cannot wait for the UK or Scottish Government to act and have commenced putting in place our own plans. I acknowledge the efforts made by the hon. Member for Rossendale and Darwen (Jake Berry) in going around all the businesses in his constituency and I can tell him that I will be taking up that challenge over the coming weeks and months. Unfortunately, I might not have the handsome list of businesses that I have visited to quote, which is unfortunate and will make the challenge more difficult. I, along with my Labour-controlled council and my MSP, will commit to searching for jobs and, I hope, to attracting other businesses to the constituency.

I have highlighted in the House before the Labour-led council’s brave decision to go it alone with the future jobs fund after that initiative was scrapped such a short time ago by the Government. We are uniquely successful: we were the second best-performing local authority in the country as regards the future jobs fund, putting some 500 young people a year into employment, 80% of whom remained in those jobs. That again will prove successful. Now, after clever procurement by my council, which has delivered projects under budget, we are in a position to put more funds into alleviating the disgrace of youth unemployment.

As a small council we cannot continue to finance such projects indefinitely, so we need both the UK and Scottish Governments to act now and implement plans to alleviate youth unemployment. Getting people, and especially our young people, back to work is the best way to put the UK, Scotland and Inverclyde back on the right course. As the Deputy Prime Minister said:

“I think fairness starts with doing the right thing for our young people”.

He went on to outline a £1 billion plan to provide subsidised work and training placements to thousands of young people. That initiative has all the hallmarks of a watered-down version of Labour’s future jobs fund, which the coalition scrapped after coming to power. The initiative guaranteed under-24s out of work for six months or more a job or training. The young people in my constituency need work and they need opportunities. They do not wish to live on benefits, but they still await action from this Government and the one in Edinburgh on tackling youth unemployment.

Our young people cannot take another year of failure from Government to react to the crisis. They need, they deserve and they have the right to a job. It should be the duty of all Governments to eliminate unemployment.

Arch Cru Compensation Scheme

Iain McKenzie Excerpts

Wednesday 19th October 2011 Westminster Hall

[Tom Greatrex]

The hon. Gentleman makes an important point. I want to come on to the role of the FSA as the regulator and I particularly want the Minister to respond on the potential role of the Financial Conduct Authority in the future as the FSA is wound up.

[Mr Iain McKenzie (Inverclyde) (Lab)]

Does my hon. Friend agree that Capita needs to step up to its responsibilities? What it is offering in compensation is derogatory to the people who have lost their life savings. It needs to step up to its responsibilities and offer 100% compensation.

[Tom Greatrex]

My hon. Friend makes a very important point. I want to come on to the inadequacy of the payment deal—it is not a compensation deal—on the table at present, because there are serious questions to ask about that as well.

If what I have set out was Capita’s reputation among some in the industry, it is perhaps not surprising that Capita appears not to have known about the activity of the sub-funds investing in the very high-risk activity via the Guernsey cells; that Capita appears not to have been aware of the illiquidity in the fund by 2008; and that Capita appears not to have provided a proper sign-off for the accounts. I say “appear” because we do not know for certain the detail of the failings, because the FSA, in correspondence that it has copied to Members of Parliament, says that it is unable to provide details of its investigations.

Suffice it to say that those independent financial advisers who trusted the Capita brand worked on the basis of the CF Arch Cru marketing material, which Capita would have had responsibility for signing off and copies of which I have with me. It includes material headed “Going Well” from November 2008, by which time the FSA had, we know, started looking into Arch Cru. There is also a weekly update from 9 March 2009—four days before suspension of the fund. In approving tones, it boasts of cumulative decline year to year of 2.6% compared with double digit falls in most major traditional public asset houses. It says that all its UK funds retain a top five rank in their category. Those statements were issued to financial advisers just four days before the fund was suspended.

In addition to that type of material, the chief executive of Capita Finance Managers, Chris Addenbrooke, in Investment Adviser in September 2008, said:

“We’ve got the credibility to take on the ACD”—

authorised corporate director—

“role. Our clients see that as attractive.”

Given that material and comments such as that, there is no doubt that people thought that they were investing in something that was very different from what it turned out to be. It is apparent that at the very least there were serious shortcomings in the role of Capita as the ACD.

Secondly, there is the role of the FSA. Earlier this week, I spent some time with representatives of the FSA, discussing Arch Cru, and I am grateful for their time and their engagement in seeking to answer some of my questions, but serious questions remain for the FSA to answer. It was statutorily responsible for regulating Capita Financial Managers. Why did it not know or not appear to know what was happening with Arch Cru? I also spoke to people who had previously worked for the FSA. They said that the ARROW—advanced, risk-responsive operating framework—visit was not until late 2008 and that was not atypical given the risk matrix, which would have meant that the likely ARROW visits would have taken place only every 18 months approximately. I understand and accept that this matter can be complex.

Summer Adjournment

Iain McKenzie Excerpts

Tuesday 19th July 2011 Commons Chamber

[Mr Iain McKenzie (Inverclyde) (Lab)]

Thank you, Mr Deputy Speaker, for calling me in this debate to make my maiden speech. I regard it as both a privilege and an honour to represent the constituency of Inverclyde. My constituency has been served extremely well by many accomplished individuals; however, I am only the second Member for Inverclyde to have been born in Inverclyde. The first was, of course, David Cairns.

My two immediate predecessors in my seat, which has often had its boundaries changed, were Dr Norman Godman and the late David Cairns. Dr Godman served in the House for 18 years, and his hard work and enduring commitment to the peace process in Northern Ireland earned him a great deal of respect and admiration. David Cairns was an excellent MP for Inverclyde; his parliamentary career was cut all too short by his sudden death, and I am well aware of the great respect that all parties had for David, as did the people of Inverclyde, as reflected in the large majority he held in the 2010 general election. If I can serve my constituents half as well as David, I shall be doing well indeed.

Like David, I was born, and for a time grew up, in a small part of Inverclyde. It is, I think, unique that an area of Greenock known as Broomhill should produce two MPs virtually from the same street. Back then Greenock’s population was growing, and my parents, guilty of participation in the ’60s baby boom, moved to a bigger home in the new housing being developed in the south-west of Greenock in the appropriately named Fancy Farm. Its housing was truly both modern and very fancy indeed, boasting electric underfloor heating, and even a rear door to the home.

My constituency is now composed of the towns of Greenock, Gourock and Port Glasgow, as well as the villages of Inverkip, Wemyss bay, Kilmacolm and Quarriers. We are surrounded by some of Scotland’s most stunning natural beauty. From the Lyle hill in Greenock, one can look down to Gourock’s Cardwell bay and watch the ferries head off to Argyll. Stunning views can also be enjoyed from the amazing engineering feat that is the Cut—a waterway cut into the hillside some six miles in length, with a precision gradient that offered steady and constant water power to our industries of the 19th century.

As anyone who recently visited Inverclyde in the by-election will confirm, at times it seems we do get more than our fair share of rain—an abundant energy source, water. From the Cut we can look across the Clyde and see the Gareloch, the Holy loch and Loch Long. Beyond the Rosneath peninsula lies Ben Lomond and the majestic Lomond range. To the west there is the unmistakeable figure of the Sleeping Warrior of Argyll, and to the south lies the Burns country of Ayrshire.

Our history is the history of the River Clyde—the lifeblood of my constituency. We continue to be a maritime people, either seafarers or shipbuilders, and two of our most historic sons are connected in that way. One of them, the great inventor and scientist James Watt, who captured the power of steam, was sought after by leading authorities in industry; the other, the pirate Captain Kidd, was just sought after by the authorities!

Shipbuilding was, not surprisingly, our dominant industry over the last 300 years. We built the finest ships ever to set sail. Even today, many years after shipbuilding is all but gone from my constituency, Clyde-built ships can still be seen travelling the oceans—testament to quality in design and craftsmanship. It took us a long time to recover from the devastation of the closure of our shipyards. The cruise ships that visit the deep ocean terminal in Greenock no longer carry the label “Clyde built”, but are increasing in number year on year, bringing tourists into the west of Scotland. Again, the River Clyde seems to be playing its part in—we hope—delivering a new industry, tourism.

Only two weeks ago Inverclyde welcomed the tall ships race, a four-day celebration of all things maritime, and our young people took the opportunity to volunteer to help with that great event. Indeed, some sailed on the tall ships as crew to the next port of call. We have found that they return the better for the experience, motivated and energised, and ready to contribute positively to our communities.

Inverclyde has also shown its resourcefulness and determination to apply itself to new emerging industries and technologies. The 1980s saw us pioneer the mass production of the personal computer, adapting our skills to revolutionise the speed of communication across the globe once again, as once our ships did. A Labour Secretary of State for Scotland had the good sense some 50 years ago to persuade IBM to set up a plant in Greenock. IBM Spango Valley, which lies between Greenock and Inverkip, was to write itself into history as the venue where the world was first introduced to the mass-produced personal computer. So Inverclyde embarked on a new journey building and exporting computers, earning itself the title of the export capital of Scotland. A short distance from Spango, over the hill in Larkfield, ground-breaking work on processors by National Semiconductor pioneered the way for much of today's hand-held technology.

Unfortunately, with the decline in electronics Inverclyde again finds itself in the shadow of rising unemployment. Notwithstanding the delivery of new school buildings, new housing and modern leisure facilities, unemployment stubbornly remains our biggest challenge. On average, more than 30 people are chasing every job vacancy in my constituency, and an even higher average number of young people do so. That is an appalling and depressing level of unemployment. To retain and attract population growth we need employment, and a variety of employment, giving opportunity and hope, especially to our young people.

Full employment is a great and fine principle, as enunciated in the House by Keir Hardie when he spoke of the right to a job. The people of my constituency ask for the right to work: they are social people, who truly believe in a society in which all have a job, and they believe that it is the duty of Government to deliver full employment.

The number of tourists on the last cruise ship that visited Greenock was greater than the combined number of votes—3,000—for the Government’s candidates in Inverclyde’s by-election. It would seem that the people of Inverclyde need a lot more convincing that their ship has indeed come in.