Oral Answers to Questions

Ian Murray Excerpts

Tuesday 29th April 2014 Commons Chamber

[Mr Gauke]

My hon. Friend is right. The reality is that this Government are raising more from the richest. We are doing it in a more effective and efficient way, and the 50p rate failed on its own terms.

[Ian Murray (Edinburgh South) (Lab)]

Will the Minister tell the House and the country today that his Government rule out any more substantial tax cuts for the richest before the next general election?

[Mr Gauke]

What this Government will do is continue to stick to a long-term economic plan that ensures that we are competitive, that we reduce the deficit and that we put in place the conditions for sustainable growth.

Currency in Scotland after 2014

Ian Murray Excerpts

Wednesday 12th February 2014 Westminster Hall

[Ian Murray (Edinburgh South) (Lab)]

It is a great pleasure to serve under your chairmanship for the first time, Mrs Riordan, for a very important debate. Over the past couple of weeks, we have seen a watershed in the referendum debate in Scotland. The Governor of the Bank of England’s non-partisan and technical intervention on the currency has been critical in debunking the false assertions that the Scottish National party has been peddling about keeping and using the pound. I will come back to those revelations later and to some of the latest news on that issue.

We can sum up the Governor’s intervention by reflecting on a quote from renowned economist Keynes:

“He who controls the currency controls the country”.

And which eminent economist said that a country without its own currency is a country not only without a steering wheel, but also without brakes? No, it was not Keynes, Adam Smith, or even Marx, but the lesser-known SNP Education Secretary, Mike Russell. There is little doubt that the Governor was saying exactly that when he stated:

“It is no coincidence that effective currency unions tend to have centralised fiscal authorities whose spending is a sizeable share of GDP.”

He went on to say:

“In short, a durable, successful currency union requires some ceding of national sovereignty.”

The central message of the Governor’s speech, of course, was that currency union requires fiscal, economic and political union to avoid financial crisis.

[Graeme Morrice (Livingston) (Lab)]

I congratulate my hon. Friend on securing this important debate. As he will know, the Select Committee on Scottish Affairs, of which I am a member, has conducted an inquiry into the consequences of Scottish separatism. Last week, we were taking evidence from a number of eminent academics. One in particular, Professor MacDonald of the university of Glasgow, who is an expert in economics, said, in the context of price shocks regarding Scottish oil production:

“If you had a separate currency, your exchange rate would take up the adjustment, but, of course, if you are part of a monetary union, you won’t have that…That, for me, is one of the key deciding issues as to why, whatever we want to call it, a currency union or a monetary union would not work.”

Does my hon. Friend agree with that assessment?

[Ian Murray]

I do, and I think that is the assessment that many economists, academics and politicians have been making over the past few weeks. The Governor of the Bank of England made the very same assessment, and the Scottish Affairs Committee deserves great credit for the amount of work they are putting in on the issue.

Let me go back to the central message of the Governor’s speech. He said that currency union requires fiscal, economic and political union to avoid financial crisis. It is precisely that fiscal, economic and political union that the SNP seeks to dismantle with its obsession with independence. When the First Minister met the Governor of the Bank of England a few weeks ago, there was one person in that room who would control Scotland’s fiscal, monetary and spending policies in a currency union after independence, and it was not the First Minister.

A key test that the Governor set for any currency union is that a centralised fiscal authority would need to control about 25% of that fiscal union’s GDP. That is about 50% of the spending in Scotland. The SNP immediately responded by saying that they would have 100% control over taxes and spending in an independent Scotland, so by default, it is the SNP that has ruled out a currency union by completely ignoring the central warning of the Governor’s full analysis.

We do not have to look too far back into history to see that the Governor was correct. The euro created sovereign debt crises, financial fragmentation and large divergences in economic performance. That clearly illustrates the risks and challenges of creating and maintaining a formal currency union across different states with differing economies.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

People in my constituency have said that they should be entitled to a say on the terms on which an independent Scotland might continue to use the pound, for the very reason that they fear that, if the conditions are not sufficiently strict, they could end up with a Greek euro situation, with workers in one country paying to prop up the financial circumstances in another. Does my hon. Friend agree that people in Selly Oak, and indeed, in England, have a point on that?

[Ian Murray]

My hon. Friend has hit the nail on the head. A currency union is a question not only for Scotland, but for the rest of the United Kingdom, because the stabilisers that require a currency union would be stabilisers that England or the rest of the United Kingdom would have to use, as well as Scotland. It is a question for the rest of the United Kingdom, and that is a very valuable intervention from my hon. Friend, who is from an English constituency. [Interruption.] I can hear SNP Members chuntering, “Scaremongering”. Well, I hope that they go back and tell their constituents that the SNP disregards what they are saying as scaremongering rather than as raising legitimate issues about the currency and jobs.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Will the hon. Gentleman give way?

[Ian Murray]

I will make some progress, then I will give way. I was talking about the euro. Let us reflect on what is happening now with the euro area: it is seeking very significant steps to expand the sharing of risks and pooling of resources to create a more homogenous currency union to make it work properly—exactly what the UK in its current state now provides for the pound sterling.

I know that the First Minister said that we should ignore experts, but John Cridland, the director general of the CBI, emphasised last week:

“As the Governor highlighted, successful currency unions need strong fiscal agreements and a banking union, with common supervisory standards and resolution mechanisms. The negative effects”—

this point is critical—

“of not having these structures in place have been starkly illustrated by the Eurozone crisis.”

There is a very positive case for staying with the United Kingdom as part of this currency debate and I would like to run through three points that are particularly relevant to the currency and the economy.

First, Scotland benefits from being part of the UK economy, which is the third largest economy in Europe and the sixth largest in the world. Being part of the larger, more diverse UK economy brings strength, stability and security, not only to Scotland’s finances, but to those of the United Kingdom.

Secondly, being part of the UK offers us protection from financial shocks. During the financial crisis, banks based in Scotland took advantage of the protection offered to UK banks. Since 2007, the UK has committed £1.2 trillion to bailing out the banks. At its peak, the Edinburgh-based Royal Bank of Scotland received £254 billion in support from the UK Government. That pooling and sharing is critical.

Thirdly, the rest of the UK is Scotland’s biggest trading partner. Scottish businesses buy and sell more products and services from the rest of the UK than every other country in the world combined. In 2010, 70% of Scotland’s exported goods and services went to England, Wales and Northern Ireland, accounting for a massive 35% of Scottish GDP. Likewise, 70% of Scotland’s imports are estimated to come from the rest of the United Kingdom.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Turning that argument on its head, based on the very ill-thought-out and ill-judged comments of the Chancellor of the Exchequer overnight, what assessment has been made by the no campaign, the Treasury and the Labour party of the impact on Welsh jobs should Scotland not be allowed to use sterling as currency? [Interruption.]

[Ian Murray]

I did not quite catch the end of what the hon. Gentleman said about Welsh jobs—[Interruption.] The impact on Welsh jobs would be the impact described by my hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe). Losing Scotland from a single currency in the United Kingdom is very dangerous indeed—[Interruption.]

[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.

[Lindsay Roy (Glenrothes) (Lab)]

Would keeping the pound not make Scotland a neo-colonised state?

--- Later in debate ---

[Ian Murray]

My hon. Friend makes that point rather well. Let me go on to talk about something that has been mentioned already. Scotland’s relationship with the rest of the United Kingdom, in terms of having a currency union in the way that the SNP envisages, would be exactly the same relationship as the Greek Government currently have with Germany, but it is not just an issue for Scotland.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

rose—

[Mel Stride (Central Devon) (Con)]

rose—

[Ian Murray]

Let me make a little progress. I know that other hon. Members want to speak, but I will allow hon. Members to intervene.

It is not just an issue for Scotland. The rest of the UK—this is an important point, which other hon. Members have made in interventions—would have to agree. It appears from speculation in the press today—perhaps the Treasury Minister can indicate whether it is speculation—that there will not be an agreement on currency union, as it is undeliverable. If an agreement is not possible or is ruled out by the Treasury, what will be the Scottish Government’s plan B? [Interruption.] The nationalists are chuntering away about what they would do. I am happy to take an intervention if they want to tell the people of Scotland now what the Scottish nationalists’ plan B is for the currency should Scotland vote yes for independence. [Interruption.]

[Mr MacNeil]

I am very glad that the hon. Gentleman has given way; he promised to give way. Has he informed the people of England of what his policy would mean for them if he managed to go hand in hand with Osborne and keep Scotland out of sterling? What would it mean for the balance of payments? What would it mean for the value of sterling? What would be the price of holidays for English people going abroad without Scotland’s contribution to sterling? The hon. Gentleman knows full well that Labour keeping Scotland out of sterling would make things far more expensive for English people.

[Ian Murray]

I apologise to everyone in the debate. I allowed the hon. Member for the Western Isles to intervene to tell us what the SNP’s plan B is, and he chuntered on about something to do with holidays that I could barely hear because his colleagues were chuntering over him. I have no idea what he said. [Interruption.]

[Mrs Linda Riordan (in the Chair)]

Order. The hon. Gentleman must be heard. The other hon. Members will get the same respect under my chairmanship.

[Ian Murray]

Thank you, Mrs Riordan. I will give the nationalists one more opportunity if they want to intervene to tell us what the SNP’s plan B would be should people vote yes for an independent Scotland and there is no currency union. No?

[Mr MacNeil]

rose—

[Ian Murray]

Go on. Tell us what plan B will be.

[Mr MacNeil]

The hon. Gentleman did not hear because of the chuntering beside him, but the point is that we know full well what we are doing—we are keeping sterling. But if his policy was—[Laughter.] If his policy was put in place, what would happen to people in England as the balance of payments worsened and sterling weakened? Imports would be more expensive. Holidays would be more expensive. Labour’s policy is irresponsible to the people of England as it is to the people of Wales.

[Ian Murray]

Mrs Riordan, I apologise again for wasting another intervention through the nationalists not telling us what plan B would be. Let me tell them what the currency will be in England and Wales. It will be the pound sterling. That is what they will keep.

[Anas Sarwar (Glasgow Central) (Lab)]

The former deputy leader of the SNP, Jim Sillars, said that the SNP’s currency union plans were “stupidity on stilts”. After listening to the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), does my hon. Friend think that Mr Sillars might have been speaking about him?

[Ian Murray]

My hon. Friend is absolutely right: it is stupidity on stilts. Economist after economist, academic after academic, politician after politician and business after business has said that the SNP’s currency union plans are completely barking on stilts.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

Is not the former deputy leader of the SNP on to something? The fundamental fact is that if the Scottish National party wishes to keep the economic and social union, there also has to be a political union; otherwise democracy is lost. Does my hon. Friend agree?

[Ian Murray]

I absolutely agree, because what the SNP wishes to do is cherry-pick what it wishes to have in an independent Scotland. It cannot have the economic and social union without having that political union. Let us just reflect on a hypothetical situation in which Scotland either is an independent country or has its own currency. After the eurozone crisis of 2008 and beyond, it would probably be in negotiations with the UK Treasury to get more of a fiscal pact and more of a monetary union to ensure that those stabilisers were in place to ensure that it did not happen again.

Let me go back to where I was—challenging the SNP on whether it had a plan B. It is quite clear that it has barely a plan A, and it will not tell us what its plan B is. The Scottish people deserve to know before they go to the polls. It is clear that leaving the UK means losing the security of the pound. The yes camp cannot even tell us what money we would have in our pockets. How can they ask us to vote to leave the United Kingdom?

The pound is one of the most trusted and secure currencies in the world. The eurozone crisis has shown us how important it is to have a strong and stable currency, and this is not just about what money is in your pocket; it is about what it will buy you. Losing the pound means more expensive mortgages, more expensive credit card bills and more expensive car loans. Anyone who banks, anyone who saves and anyone who borrows will be hit with higher bills.

[Ann McKechin (Glasgow North) (Lab)]

I congratulate my hon. Friend on the debate. He will be aware that the Deputy First Minister has indicated in the broadcast media today that the Scottish Government are now minded to default on their debt in the event of a yes vote. Can my hon. Friend give any indication of what he thinks the interest rates would be on our residents’ mortgages or on debts and savings if such a scenario occurred?

[Ian Murray]

That is a very timely intervention, because there is no doubt about this. Everyone in this room, everyone watching this debate and everyone in Scotland and the rest of the United Kingdom will know what happens when people do not pay their bills. When people default on their bills, they end up in a situation whereby the bills get higher. Interest and credit get higher and more difficult to get. Indeed, they are punished for ever more with an incredibly bad credit rating. In the context of an economy and a country, that is devastating for jobs and public services at the very least.

[Mel Stride]

Will the hon. Gentleman give way?

[Ian Murray]

I will give way once more, but I do need to move on.

[Mel Stride]

The hon. Gentleman rightly highlights the problem of any two countries that go into a currency union and therefore have to get their budgets, spend and tax agreed between them, which in itself will be deeply problematic with an independent Scotland under SNP leadership certainly, but will he also recognise that the situation is even worse than that? In the event that, in that situation, Scotland overspent, it would in effect be down to London to decide that it was going to have to row back on that expenditure and cut expenditure north of the border.

[Ian Murray]

I am grateful for that intervention. Again, I can only emphasise what the Governor of the Bank of England said. It was a non-partisan speech; it was a technical speech about currency unions and that was the point that he made: those monetary, fiscal and spending stabilisers have to be in place; otherwise a currency union does not work.

What about business? We sell twice as much to the rest of the UK as we do to the rest of the world combined. Losing the pound would mean that every time a Scottish company sold to or bought from somewhere down south, they would incur the cost of exchanging money. That would result in higher prices for us all, as the supermarket bosses—again, we have been told by the First Minister to ignore them—warned us last week. We should listen to business. In a strong criticism of the SNP White Paper, the Institute of Chartered Accountants of Scotland has warned that there is

“a high degree of uncertainty as to what the currency of an independent Scotland will be.”

ICAS states that no alternatives have been set out in case the negotiations are unsuccessful, and warns:

“The choice of currency will have a very significant impact across the pensions sector, the economy and the country generally, and this will inevitably remain as a major uncertainty for the time being.”

We should listen to that warning from Scotland’s accountants. The SNP must tell us what currency it would use instead. Will it set up an unproven currency or rush to join the euro?

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

I congratulate my hon. Friend on securing this important debate on a matter that has got my constituents, and probably his, worried. Not so long ago, the nats wanted to join the euro; indeed, that was a slogan of theirs. It is very strange—it is a consequence of all that has happened in mainland Europe—they are now trying to hitch up to the pound, which would also be a foreign currency.

[Ian Murray]

My hon. Friend hits the nail on the head. The SNP has ditched its euro credentials and its wish to join the euro in favour of a currency union with the United Kingdom that it is already in. I believe its slogan was “independence in Europe” but it now seems to be “independence in the UK with the pound.” Will it rush to adopt the euro—indeed, will Scotland actually be in the EU—or will it join the only other two countries in the world that tie their currency informally to another? This is a great quiz question: which countries are those? The answer is Panama and El Salvador, which use the dollar. [Interruption.] I can hear the hon. Member for Perth and North Perthshire (Pete Wishart) chuntering, “Greece”, and that is exactly the point that I have been making.

The First Minister and Deputy First Minister of Scotland this morning made the unedifying assertion that Scotland will default on its debt if no currency union is forthcoming. That ill-thought-through, toys-out-of-the-pram threat is a recipe for economic crisis and political conflict. It is reckless and irresponsible, to say the least.

[Fiona O'Donnell (East Lothian) (Lab)]

My hon. Friend is making an amazing speech. Is not that statement—that throwing of the toys out of the pram—proof that the SNP would be incapable of conducting normal relationships with the rest of the UK post independence?

[Ian Murray]

My hon. Friend is absolutely right. A currency union requires some kind of political co-ordination to ensure that the stabilisers make the currency work. What better political stability could we have than being the United Kingdom, with a strong Scottish Parliament as part of that overall economic and political framework?

[Mr William Bain (Glasgow North East) (Lab)]

I apologise for missing the start of the debate; I have just come from a debate on a statutory instrument that affects my constituency. My hon. Friend is making a powerful contribution. According to the International Monetary Fund, none of the 64 largest economies in the world operates without a central bank. Does he agree that if Scotland were forced into the position, which was denounced by the SNP’s fiscal commission, of using the pound without a central bank, the consequences for business and ordinary people throughout Scotland would be devastating?

[Ian Murray]

I could not have put it better myself. I look back to 2008, when hundreds of billions of pounds were poured into Scottish banks to keep the economy afloat, and to keep my constituents, many thousands of whom work in such banks in Edinburgh, in jobs. Without such action, the whole financial structure would have collapsed.

[Mark Lazarowicz]

Will my hon. Friend give way?

[Ian Murray]

I will give way one last time.

[Mark Lazarowicz]

I see that the Scottish Government’s White Paper on independence asked the question:

“What about bank bail-outs if there is another financial crisis?”

The Scottish Government responded:

“If in the future wider support from governments is required to stabilise the financial system, this would be coordinated through the governance arrangements agreed between the governments of the Sterling Area.”

In other words, they would have to rely on negotiations with the rest of the UK Government. Contrast that with the situation in the recent financial crisis when, as part of the UK, the Scottish banks were able to call on the resources of the UK.

[Ian Murray]

That is precisely the argument about pooling and sharing, and it is why the UK is such a powerful political, social and economic union. The larger and more stable economy of the UK can deal with such shocks.

Experts such as Professor MacDonald and Professor Armstrong are clear that defaulting on debt would be a reckless move with negative consequences for the people of Scotland for many years to come. That threat shows that the SNP accepts that Scotland cannot keep the pound if it leaves the UK. Defaulting on our debts as a nation has the same impact as if someone defaults on their debts as an individual, and I have already mentioned what happens if someone does not pay their bills. Our credit rating would be terrible, and we would have to pay more for absolutely everything, which would be a disaster for ordinary individuals and families up and down Scotland. Any Scot who borrows money or who has a mortgage, a credit card or catalogue payments will have to pay more. That is not scaremongering, but basic economics.

The SNP has said in its fantasy White Paper that Scotland would have to rely on the rest of the UK to collect our taxes and to pay our pensions and benefits for many years after independence until it sorted out its own systems. The SNP cannot threaten to dump the debt one minute and ask to share everything else the next. That is a recipe for crisis and disaster. How would those UK institutional systems work with a separate currency? Can the Minister tell us whether the systems used by the Department for Work and Pensions and Her Majesty’s Revenue and Customs are capable of working in a currency other than sterling? I doubt it. The White Paper is underpinned by and predicated on the pound. Perhaps it will turn into an actual white paper when it has been so heavily Tipp-exed that it contains nothing but Tipp-ex.

Scots have an international reputation for being prudent and thrifty. To default on its debts would irreparably damage Scotland. Even to threaten to default on debts has significant consequences for interest rates, borrowing and international reputation, which the National Institute of Economic and Social Research put at a minimum of 1.5%.

[Mr MacNeil]

Will the hon. Gentleman give way?

[Ian Murray]

I will not give way again to the hon. Gentleman, because he refused to answer my last question. To summarise, losing the pound would result in a higher cost of living, with higher mortgage repayments, higher credit card and store card bills, and more costly car loans. Scotland would start out as a separate state with no credit rating, or one that had been hugely damaged by threats of default. There would be fewer jobs, because of the cost of changing money every time Scottish firms bought or sold from our biggest customer, which is the rest of the United Kingdom. There would be deeper cuts or higher taxes because the Scottish Government would pay more to borrow money, which would result in more debt and lower public spending. There would be risks to benefits and pensions as payments were converted from sterling to a different currency.

There would be risks to the economy. Without the back-up of the rest of the UK, Scottish banks would have gone under during the financial crisis, and families and businesses across the country would have lost everything. Scotland would have an unproven and weak currency with a poor credit rating and high borrowing costs. The SNP’s proposition may be summed up as this: we should go from a proven and respected single currency backed by a strong lender of last resort as part of the United Kingdom to a promise from Alex Salmond that he is simply not in a position to deliver. That is not good enough for the Scottish people or Scottish business.

I can say this afternoon without doubt, argument or contradiction that the currency of Scotland post 2014 will be the pound, but only if we stay in the United Kingdom. It is now clear that the most positive case that we can make for the Union is the pound in our pockets. We must do all we can, today and for the next seven months, to protect it for future generations.

[Mrs Linda Riordan (in the Chair)]

Order. The wind-ups will begin at 3.40 pm, and several hon. Members have indicated that they wish to speak. I would like all those who wish to speak to be able to do so, so I intend to impose an initial time limit of five minutes.

Consumer Rights Bill

Ian Murray Excerpts

Tuesday 28th January 2014 Commons Chamber

[Ian Murray (Edinburgh South) (Lab)]

I am slightly disappointed that my hon. Friend the Member for Barrow and Furness (John Woodcock) is not still in the Chamber. He said that the debate would be dull, but it has been far from dull. We have heard about the Foreign Secretary’s gym membership habits, about Obi-Wan Kenobi, about the Sith, and about the gestation period for elephants. One Member mentioned Alderaan. We have heard about Monty Python, the Arctic Monkeys, and, at the tail end of the debate, about Arnold Schwarzenegger. It has indeed been an exciting debate.

The experience of consumers is a litmus test for future economic success. When consumers are confident, they can reward good business practice and respond to innovation. When their treatment is shoddy—as it was in recent notable cases such as those involving unsafe breast implants and payment system failures in the long-drawn-out saga of payment protection insurance—goods and services can become stuck in a cycle of weak demand and low trust. The essential element of a successful economy is the ability to ensure that consumers have that confidence, and to support their role as a primary driver in making markets work effectively—as we heard from the hon. Member for Dudley South (Chris Kelly)—not just for consumers, but for producers. That in turn helps to lay the foundations for UK businesses to succeed in other markets, throughout the European Union and, indeed, throughout the world.

As a number of Members have observed, the Bill represents a welcome step towards the simplification of a complicated matrix of consumer law and the adoption of an up-to-date approach to the changing world of the consumer in these digital times. It is not difficult to demonstrate the ways in which consumers can suffer detriment. For instance, how would the Minister feel if she went into a hardware store to buy a number of handles for her garden forks and left with four candles? Such incidents should be resolved quickly and efficiently for the benefit of the consumer. [Laughter.] I thank my hon. Friends for their laughter. I cued them up for it earlier.

There must be a number of building blocks for effective consumer confidence. First, there must be a fair framework: a framework of behaviour, expectations and rules that seem to work fairly for both consumers and producers, and which encourage innovation. Secondly, there must be effective enforcement. The rules governing any exchange between consumer and producer must be enforced so that persistent malpractice does not take place in the industry or any sectors of it. Thirdly, there must be trusted advice. When people want advice or support that they can trust, it must be easy for them to find it. Fourthly, there must be simple means of redress: when things go wrong, they must be put right without difficulty.

The United Kingdom has a record of good practice in all those respects, and the Bill will improve the position further. However, although it does a good job in relation to, for example, the fair framework, Ministers appear to be ignoring other critical pieces of the jigsaw such as enforcement, advice and funding. Let me give two examples relating to enforcement. First, the changes in consumer protection provision that the Government have introduced since 2010 have been muddled, and have created uncertainty and confusion on the consumer landscape. They abolished Consumer Focus and transferred some of its resources and responsibilities to Citizens Advice, but then they did not really know what to do with Consumer Focus, so they came up with the wonderful idea of rebranding it as Consumer Futures, so that it could do pretty much the same job as it had been doing before.

Secondly—this was mentioned by my hon. Friend the Member for Blackpool South (Mr Marsden)—the Government slashed local authority funds. That has had a significant impact on trading standards, making it harder for consumers to uphold their rights and seek redress. Aggregate trading standards funding has dropped from £245 million to approximately £142 million since 2010. Hundreds of jobs have been lost in a brain drain that is estimated to amount to 15% of the total work force.

Trading standards are at the forefront of the upholding and enforcement of consumer rights, but, as the Public Accounts Committee commented last year,

“there is a creation of trading standards deserts”

owing to funding gaps. The Government now want to remove the ability of trading standards officers to make unannounced inspections. In response to that part of the Bill, the Trading Standards Institute, which has done so much wonderful work in this area, said that it

“would urge the Government to refrain from removing the power of trading standards officers to enter premises unannounced. It is an essential tool for them to use and it is vital that when complaints are made, councils can investigate and tackle the problem immediately.”

Those are just two examples of areas in which the Bill is deficient in relation to the four pillars by which we will measure its effectiveness.

I should like to comment on some of the contributions that have been made to the debate this afternoon, starting with that of the Secretary of State for Business, Innovation and Skills. We all read his comments last night about the wrong type of growth; today, he was slightly more contrite and demonstrated a more positive attitude towards the Bill. He mentioned the importance of the European Union in relation to competition policy, and talked about the clauses in the Bill that would allow collective actions on competition issues. It would be good, however, if the Government could examine an extension to the policy on collective redress. May I point the Secretary of State to the consumer investigation that the shadow Business team completed last year, which has been published on the team’s website? That could give him some ideas on the kind of collective redress arrangements that we would all like to see, and that many Members have mentioned today.

The Secretary of State was absolutely right to pay tribute to the work of the Business, Innovation and Skills Select Committee, which has strengthened the Bill and will continue to do so. The contribution from my hon. Friend the Member for West Bromwich West (Mr Bailey) highlighted some of the issues that the Government should be looking at, and I also pay tribute to the other members of the Committee for the work that they have done so far to make the Bill better.

The Secretary of State said that the digital landscape was hugely complicated; that is certainly an area of the Bill that needs clarity. Concern has been expressed that it is not flexible enough to deal with much of today’s modern technology. He also talked about measures on cross-border enforcement, which we all welcome. When local authorities take the lead on trading standards, there often seems to be a David and Goliath relationship between them and the big corporations that they have to take on. I said earlier that trading standards enforcement across the country has been decimated; we need to do something to replenish those resources.

The hon. Member for Mid Norfolk (George Freeman) rightly pointed out that this was a consolidation Bill, but it is none the less the responsibility of the House to make it as good as it can possibly be. The Bill Committee will have a huge responsibility in that regard. The hon. Gentleman mentioned some of the areas of concern, including banking, utilities and the public sector.

My hon. Friend the Member for West Bromwich West, the Chair of the powerful and effective Select Committee, highlighted the significant range of issues in the Bill, and the need to respond to changing markets. He mentioned three essential elements—clarity of pricing, clarity of contracts and clarity of redress mechanisms—and said that the Bill needs to be improved in those areas if it is to be the best that we can make it.

I agree with my hon. Friend that further debate is required on the sale of goods provisions, on the right to reject the refund tapering that can apply depending on how long someone has had a product for. I hope that the Bill Committee will examine those issues. My hon. Friend also said that he was looking forward to the debate in Committee on the digital provisions, to ascertain whether the Government had got them right and whether they were flexible enough for our modern economy. He also gave good examples of how complicated the service provision in the Bill would be. I am sure that the Committee will look closely at that.

The hon. Member for Windsor (Adam Afriyie), who is no longer in his place, was right to say that highly competitive markets were good for the economy. He also mentioned small businesses, yet they are not included in the Bill as consumers. The Federation of Small Businesses has asked for that to be remedied, and I hope that that point will be looked at in Committee. Perhaps the Minister can tell us today whether small businesses will be seen as consumers for the purposes of the Bill.

My hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) is a passionate advocate of tackling the abuses in the secondary ticketing market. She mentioned the Monty Python reunion show in her speech. My father-in-law is a massive Monty Python fan, and I decided to try to get some cheap seats for him for Christmas. The tickets went on sale at 9 o’clock on the Monday morning, yet I was able to purchase them on a secondary ticket site before the official site had opened. That shows that there must be something wrong. Those were not really secondary ticket sales, but there must have been some kind of collusion between the promoter of the event and the secondary ticket market. The Bill could be an opportunity to look at some of those things. Although that is a specific issue around secondary ticketing, the overall concept of consumer detriment from secondary sales is something that we should be looking at quite closely.

The hon. Member for South Thanet (Laura Sandys), who is sitting in a slightly different place, wants to broaden the debate, and I welcome that. Indeed, that is what my hon. Friend the Member for Walthamstow (Stella Creasy) tried to do. Although this Bill is, as my hon. Friend the Member for Barrow and Furness said, quite dry, technical and difficult in terms of the consumer landscape, it does have to be broadened out. Given that this is an opportunity to look at consumer law and the consumer landscape, it is important that we get it right. If the debate can be broadened out to some of those other markets, that is what we should be doing. I was also struck by the idea of a consumer champion to be put in across Departments in Government to ensure that consumers are at the heart of everything that is being done.

My hon. Friend the Member for Inverclyde (Mr McKenzie) was right to concentrate on the sales mechanisms of some industries and companies and on how the Bill should be used to assist consumers, particularly vulnerable ones. We are finding that constituents are increasingly coming to us with problems of nuisance calls and door-to-door selling, especially as they impact on vulnerable consumers and customers.

I was interested in the short contribution by the hon. Member for Stockton South (James Wharton). I agree that the law up to now has been deficient in terms of the digital landscape, and I hope that the Bill will be able to do something about that. Perhaps it is late in coming, but we do, none the less, welcome it. I am also pleased that he managed to speak for six minutes without banging on about Europe, which was fantastic.

The hon. Member for Dudley South talked about the importance of getting the Bill right in the digital sphere, but we have spoken about that already. The hon. Member for Foyle (Mark Durkan) endorsed the Citizens Advice briefing note—I think we all do—especially with regard to some of the simple steps that it suggests we put in the Bill to make things just that little bit easier.

Finally, the hon. Member for Strangford (Jim Shannon) raised a number of issues, particularly around the insurance industry. He mentioned the fact that some insurance premiums are not available in Northern Ireland in the way that they are across the rest of the mainland UK. It is worth emphasising something that he said at the end of his contribution, which is that we need to prevent the exploitation of the vulnerable. That should be the cornerstone of this Bill, and I do not think that anybody in the House would disagree with that.

It is also important to look at the competition in markets to give consumers confidence. Last year, Teresa Perchard from Citizens Advice said:

“Consumers have a long memory. When energy companies say ‘trust me’, to consumers, their experience says that they should expect the opposite. Consumers do not feel powerful in many markets.”

My hon. Friend the Member for Walthamstow looked at some of those markets that the Government must deal with if they do not want the Consumer Rights Bill to be irrelevant. She mentioned energy, pensions, payday loans and banking. Those are just a few of the industries that may be affected by the Bill.

Finally, let me turn to my hon. Friend the Member for Edinburgh East (Sheila Gilmore) who brings experience to this debate through the Scottish Consumer Council. She highlighted the sensible approaches in the Citizens Advice briefing, one of which must be about giving information to consumers when they are purchasing goods through stores or online. I have often been met, when reaching the till in a store, with a nice sign that says that my statutory rights are not affected. I know that that is a statutory requirement, but it is completely beyond me what it means. If we turn over till receipts from many organisations, we would find a whole plethora of legislation that a Philadelphia lawyer would find difficult to pick through never mind someone who just wants to return a pair of shoes that are either too large, too small or not to their liking. There is something in that Citizens Advice briefing that I hope the Committee will look at when it takes through this Bill. For example, there might be some simple proposals to ensure that information for consumers is clear.

There is also a substantial body of evidence that shows that businesses are not aware of the rules. Will the Minister address that in her response? What will the Government do to ensure that there is a wide understanding of the new rules among businesses as well as consumers? Yet again, the Business Innovation and Skills Committee deserves a considerable amount of credit for its detailed analysis in that particular area.

Finally, will the Minister seriously consider the research that has been mentioned, commissioned by the Federation of Small Businesses, on treating small businesses as consumers? I know that that is incredibly difficult and complex, but they are a huge pillar of the economy and much of the detriment goes not only from businesses to consumers but from businesses to businesses—indeed, the detriment tends to go from large businesses and Government Departments to small businesses. We should consider that in Committee.

Healthy, fair and competitive markets and effective methods for information sharing across providers are vital to building an economy that works for both consumers and businesses. Well-informed consumers make better customers for businesses, improved markets make better businesses for customers, and better informed citizens get better outcomes when redress is required. We will support the Bill on Second Reading but encourage the Government to improve it in Committee to ensure that the opportunity is not lost truly to make a step change in consumer rights in this country.

Pub Companies

Ian Murray Excerpts

Tuesday 21st January 2014 Commons Chamber

[Ian Murray (Edinburgh South) (Lab)]

First, may I welcome the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Cardiff Central (Jenny Willott), to her post? She has taken over the role from the hon. Member for East Dunbartonshire (Jo Swinson) whom we congratulate on the birth of her son, Andrew, and we pass on our regards to the hon. Member for Chippenham (Duncan Hames), who participated in the early part of this debate.

We have had yet another constructive debate on pub companies and their relationship with their tenants, but I cannot help but feel a significant sense of déjà vu. As my hon. Friend the Member for Chesterfield (Toby Perkins) said in opening the debate, it would not be January without his staying off the alcohol for a month—I could flippantly say that he keeps off paying for it for the other 11 months of the year—and without our having a debate on pubcos. This is the third such Opposition day debate—that is, this Opposition are using our own parliamentary time to continue to raise this important issue and keep the pressure on the Government, stressing that they are doing too little, too late and too slowly.

It is important that we should continue to re-emphasise the contribution that pubs make to our local economies and local communities. Each pub employs an average of 10 people, often young people who find it particularly hard to find work in other sectors. They provide skills in customer service, management and training. My hon. Friend the Member for Huddersfield (Mr Sheerman) is no longer in his place but he talked about training, which allows me to mention the Montpelier group in Edinburgh, which set up its own training academy for people who work in its pubs and restaurants. It deserves great commendation for the work it does on that in Edinburgh.

The role of the licensee is very difficult, as I should know—I was a licensee of a hotel and two licensed premises before becoming an MP. It is the combination of pubcos and decisions by Governments of all political persuasions that has pushed prices up for the consumer, which has subsequently undermined the competitiveness of these organisations and, indeed, other activities. We need to look at what can be done by Government.

[Mr Jim Cunningham]

I hope my hon. Friend will cover the new idea of local people buying their own pubs and setting up community pubs. Some football clubs are doing that as well. What does he think about that as a way forward?

[Ian Murray]

I think it is fantastic that communities are able to bid for pubs. It is happening in Scotland as well, under the Scottish Parliament. Indeed, I have a small vested interest in that, because I am leading a consortium of fans looking to buy Heart of Midlothian football club. Community ownership—or at least having the opportunity to go into community ownership—is the way forward for lots of industries that have a tie to the local community.

The combination of high rents and tied barrelage costs means that a pubco tenant must sell a pint at a price level that allows some reasonable profit margin. That level is well above what non-tied premises can charge, which makes the pubco tenants uncompetitive and pushes up the price for the consumer. As the hon. Member for Tewkesbury (Mr Robertson) mentioned, barrelage costs can be 50% higher in tied premises than in non-tied premises, which can distort the market in terms of how much tied premises need to charge the customer. Add to that an increase in VAT to 20% and we have a cocktail of disaster for the publican.

[Mr Donohoe]

As my hon. Friend was a pub licensee, he will know that in a tied pub it is not only beer prices that are tied but the spirits and everything else that is sold. I know that from my own experience.

[Ian Murray]

My hon. Friend is right to raise that because it is indeed the case. My hon. Friend the Member for Huddersfield mentioned that too, when he said that the ties can be on wet sales, dry sales and gaming machines, and they can mean compulsory courses, compulsory training, compulsory licensing and using highly inflated contracts through the pub companies for, for example, statutory checks like electrical checks.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

My constituency has a large number of excellent pubs of distinction, and my hon. Friend may well have visited some of them from time to time. They are also major sources of employment in the area. How would the proposals in the motion assist employment in that very important sector in my constituency and others across the country?

[Ian Murray]

There is a simple formula on employment in the licensed trade: the more successful a premises is, the more people it is likely to employ. The entrepreneurial nature of people in these small businesses running licensed premises means that they tend to want to get more licensed premises and expand what they are doing, so this is very good for employment. I declare an interest again, Madam Deputy Speaker, because I have visited some of the hostelries in my hon. Friend’s constituency, some of which are rather nice, and I encourage others to do likewise.

I was talking about the double whammy of Government decisions and the tied contracts pushing up prices to the consumer, which perpetuates the demise of licensed premises. We must also consider the ever-increasing energy bills, the spiralling rates and the costs of other non-alcoholic supplies such as food, which are rising much faster than tenants are able to pass on to their customers. More has to be done to deal with all those other relationships, and I hope the Government will back Labour’s policy on both energy and business rates to enable us to bring some of those other pressures down.

[Mark Pritchard (The Wrekin) (Con)]

It is important that we talk about the financial structures of pub companies and pubs, but does the hon. Gentleman recognise the important social function of pubs such as The Bull’s Head in Rodington, The Cock Hotel in Wellington and the Plough Inn in Shifnal, all of which are in my constituency? They have a link to CAMRA and the flexibility of being able to bring in real ales so that everyone can enjoy them in the community at the right levels.

[Ian Murray]

I am delighted that I gave the hon. Gentleman an opportunity to mention a lot of the pubs in his constituency—I hope that is reciprocated. As he rightly says, pubs provide a community benefit, and many of the premises I have frequented, and one I used to run, had the local Rotary club there raising a lot of money for charity, so the community part of the pub is very well established.

I wish to reflect on the relationship between tenants and the pubco owners of the premises, which has been mentioned. One thing I found galling when I ran one of my own premises was that our business development manager took great delight in telling us which tenants he was fining that week for buying out, which they had to do to make a small living. That kind of behaviour and culture in the pubcos highlights the problem we face. We must also address the issue of inaccurate information being provided when people are making big decisions, particularly, as my hon. Friend the Member for Chesterfield alluded to, when they are putting life savings into these premises; they have to make sure that the information they get is accurate.

[Greg Mulholland]

I thought it might be useful to intervene because I have something of an answer on the question of jobs. The research from the Federation of Small Businesses showed that the market rent only option would lead to 9,888 pubs in the UK taking on more staff, which would be worth £48 million in wages.

[Ian Murray]

I am grateful for the hon. Gentleman’s contribution. I only hope that he changes his mind and votes with us in the Lobby. It was striking that he said he would not be voting with us, given that he sent an e-mail to all Members yesterday encouraging them to do so. It is a shame that he will not change his mind, although he still has time.

Let me now deal with the remarks by the Secretary of State, whom I am delighted to see back in his place. He mentioned that he was drinking “mocktails” on his trade mission to the United Arab Emirates, and I wish him well in there. As you know, Madam Deputy Speaker, a “mocktail” is a cocktail without alcohol. The Secretary of State has invented a brand new word in today’s debate, because he has developed a “molicy”, which is a Government policy without legislation. He refused time and again to commit to bringing legislation forward in the Queen’s Speech. Why? It was because he probably does not want to bring it forward or he is being pressed not to do so. Despite making the case for urgency, he does not seem to be doing this. To continue the puns, he seems to be serving the pub trade very much a short measure in his response to this debate, .

My right hon. Friend the Member for Torfaen (Paul Murphy) rightly highlighted the numerous reports produced by the Business, Innovation and Skills Committee report, which are strewn over the Table. I can count 10 in front of us that have looked at this issue, so the Government do have a great degree of direction on which way they may wish to go. He was right to say that we have been round this issue time and again. He also talked about the considerable coalition for action that we have heard about, and we need to take cognisance of the number of people who have been looking at this matter.

The hon. Member for Norwich North (Chloe Smith) blamed the previous Labour Government for some of the problems. I was delighted when the Chair of the Select Committee, my hon. Friend the Member for West Bromwich West (Mr Bailey), highlighted that, because the conclusions of the 2009-10 report, which came out just before the general election, included the sentence:

“The industry must be aware that this is its last opportunity for self-regulated reform.”

It is clear that the reason the previous Labour Government did not take a statutory approach was that they were listening to the influential Select Committee.

My hon. Friend the Member for Plymouth, Moor View (Alison Seabeck) said that there was broad agreement on the matter in the House, but that Members and publicans become frustrated when the Government do not take the right action. My hon. Friend the Member for Clwyd South (Susan Elan Jones), despite her tour of both Norwich and Huddersfield, was sober enough to notice that there is little legislation on the Government’s current agenda and that there is time to promote this issue, and we hope that the Government will be able to do that before this Session finishes, or in the Queen’s Speech in May.

In their amendment to our motion on this subject last year, the Government said that they would create an adjudicator; they have done that already with the groceries code. This year’s amendment tends to row back from that. We cannot help but think that they are kicking the matter into the long grass, as they did with the zero-hours contracts until they were forced into action by the Opposition. The window of opportunity for a Bill before the general election is rapidly diminishing. The Government must introduce a Bill in the next Queen’s Speech; otherwise, there will be insufficient parliamentary time to pass it. Without such a Bill, we face starting the next Parliament with even more reports telling us how broken the pubco market is.

The Government must support our motion today and set in place a statutory code that allows a mandatory free-of-tie option, independent rate reviews and an independent adjudicator with teeth. That is what this House wants, what it has consistently voted for and what we are asking the Government to do. If the Government do anything else, they will yet again be seen to be failing to stand up to vested interests and to back the local pub.

National Minimum Wage

Ian Murray Excerpts

Wednesday 15th January 2014 Commons Chamber

[Ian Murray (Edinburgh South) (Lab)]

The small number of Members on the Government Benches at the tail-end of this debate highlights their commitment to the national minimum wage, and I have to say I was slightly disappointed by the Business Secretary’s response to this debate. He said he did not want a tribal debate, and then went on to give a very tribal response to the shadow Secretary of State. He also said he was delighted to have laid regulations today to increase the amount in fines that would be payable by employers if they did not abide by the national minimum wage legislation. I do wonder with my cynical nature why those regulations were laid only today yet the Prime Minister announced this policy back in November. Perhaps the Opposition’s calling for this debate has oiled the wheels.

It was unkind of the Business Secretary to say that the previous Labour Government had only one or two successes, the national minimum wage being one. Several others were shouted at him across the Dispatch Box and he responded by saying perhaps there were those things as well. However, the one thing that the Business Secretary has managed to do—his one great success and what his legacy will be—is to destroy completely the Liberal Democrats party.

I would like to acknowledge and put on record that we were perhaps slightly unkind to the Business Secretary, not realising the circumstances behind his not voting in favour of the national minimum wage, and we apologise if we got that wrong. However, that does not take away from the fact that the Liberal Democrats were against the national minimum wage when they were campaigning in the run-up to the 1997 election. They supported it in the Chamber on Second and Third Reading of the Bill, but that simply shows that they flip-flopped between what they stated in their manifesto and what they did in the House. I am sure that we have seen that before. Also, in the House of Lords they strengthened the regulations on the requirements for the Government to take enforcement action. I was disappointed by the Secretary of State’s response to this debate.

When moving the Second Reading of the National Minimum Wage Bill in December 1997, the then President of the Board of Trade, my right hon. Friend the Member for Derby South (Margaret Beckett), said that the national minimum wage was

“a clear example of how a Labour Government can and will make a real difference to the lives of people across Britain, contributing to fairness and prosperity for the many, not the few.”—[Official Report, 16 December 1997; Vol. 303, c. 173.]

How relevant that statement is today.

Fifteen years have passed, and the national minimum wage is now an economic and political fact of life for us all. It is undoubtedly one of Labour’s proudest achievements, and I wonder whether the present Prime Minister now regrets campaigning against it in the mid-1990s. The then Opposition castigated the policy as a burden on business, arguing that increasing wages at the bottom would cost more than 1 million jobs. It did nothing of the sort. We should celebrate the fact that it contributed to the ending of poverty pay and boosted living standards in this country. That was confirmed by the Low Pay Commission in 2013, when it stated that

“the research had…found few adverse effects on aggregate employment;…individual employment or unemployment probabilities; or regional employment or unemployment differences.”

The days when an employer could legally pay someone as little as £1 were brought to an end despite the vehement opposition of the Conservatives.

It was not only the Conservatives who were against the introduction of the national minimum wage. I should like to draw the attention of the House to the record of the First Minister for Scotland. When he was in this House, he abstained on Second Reading of the National Minimum Wage Bill, and the Scottish National party as a whole did not vote on Third Reading.

[Dr Whiteford]

Will the hon. Gentleman give way?

[Ian Murray]

I am afraid I do not have time to give way, although I see that when the nationalists are provoked, they tend to respond.

I want to comment on some of the contributions from both sides of the House to today’s debate. My right hon. Friend the Member for Dulwich and West Norwood (Dame Tessa Jowell) was right to say that the existence of the national minimum wage is a statement about the kind of country we are. She was also 100% right to highlight the real-life impact of low pay on individuals and families, and particularly on women with child care responsibilities, who are disproportionately affected by employers who do not abide by national minimum wage legislation.

I was quite taken by the remarks of the hon. Member for Harlow (Robert Halfon). He was right to be contrite, and to apologise for his party’s previous stance on the national minimum wage. Unfortunately, however, as recently as yesterday, the hon. Member for Esher and Walton (Mr Raab) wrote in the Evening Standard that any increase in the national minimum wage would be a

“massive jobs tax on business”.

He also described it as “oversold”, and said that this

“policy cross-dressing is more likely to confuse than impress voters”.

Perhaps the hon. Member for Harlow is a lone voice on the Conservative Benches when it comes to defending the national minimum wage in the trenches. That would be a shame.

My hon. Friend the Member for Vale of Clwyd (Chris Ruane) said that the very low-paid could not even comprehend the pay packets of the most wealthy in this country. He summed up the debate well when he said that the minimum wage was for the many and not for the few. He also reminded us that the National Minimum Wage Bill Committee sat for an unprecedented 70 hours. Anyone here who has served on Bill Committees over the past four years will realise that to do so for 70 hours involves quite an undertaking. That just shows the then Government’s commitment to getting the legislation through.

I am always delighted to hear the hon. Member for Burnley (Gordon Birtwistle) speak in the Chamber, although I never agree with a word that he says. Given that he is a Liberal Democrat, I thought he might have been a little more contrite on this subject. Let us give credit where it is due, however. He did say that he had always supported the national minimum wage and always paid it. If any of the hon. Gentleman’s employees or former employees want to get in touch to dispel that rumour, we would be willing to hear from them.

My hon. Friend the Member for Glasgow North East (Mr Bain) reminded the House of the statistic that the UK has the fifth worst levels of poverty pay in the OECD. We should be doing something about that. He also mentioned the impact of low pay on the welfare budget, and the fact that since 2010 the national minimum wage has fallen behind to the tune of 50p an hour.

The hon. Member for Elmet and Rothwell (Alec Shelbrooke), always an entertaining speaker in this House, talked about how increasing wages for the lowest paid was false and fake. I do not think the pay of the poorest in this society is false and fake, but I did enjoy his restatement of the Tories’ trickle-down policy of economics in this country. My hon. Friend the Member for Derby North (Chris Williamson) talked passionately about the need for effective enforcement and rightly said that it would take political direction to bring in the living wage. The Business Secretary did say that the Low Pay Commission should be free of political interference, but bringing in the national minimum wage and, indeed, the living wage is a political direction, and we should all be striving for that.

My hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe) was one of the hon. Members who stayed in this House all night trying to get the national minimum wage legislation through. Let us not underestimate the former right hon. and hon. Members, and those who still sit in this House, who made such effort to get this legislation through, despite the vehement opposition of many on the Opposition Benches.

My hon. Friend the Member for Corby (Andy Sawford) has done some wonderful work in his constituency since he was elected in that wonderful by-election victory, and he gave numerous examples of where workers are paid less than the national minimum wage because of unlawful deductions. He mentioned the increasing problem of the personal accident insurance that is being taken off employees; it is costing employers pennies but they are taking pounds from employees. We have to make sure that there is enforcement on such issues.

My hon. Friend the Member for North Tyneside (Mrs Glindon) is a passionate advocate for the living wage and rightly gave credit to the councils that are paying it. My local council in Edinburgh is paying above the living wage and has done since 2011, and we should encourage more councils and employers to do more. When I am at this Dispatch Box I always find that my hon. Friend the Member for Hayes and Harlington (John McDonnell) speaks last, or second last, and is curtailed in his contributions. I would like to hear an awful lot more of him speaking in this Chamber, because he deserves significant congratulations on the campaign he has run against national minimum wage exploitation; we heard some of the issues relating to the shipping industry from him.

Last, but certainly not least, my hon. Friend the Member for Blaydon (Mr Anderson) talked about why enforcement fines should go back into the enforcement industry, to make sure that we can enforce the system better and that exploitation is rooted out.

We have had a robust debate on the national minimum wage, in which I have been struck by the Government’s restatement of their policies. Indeed, they have re-announced their policy on naming and shaming more times than they have actually used it, which is surprising. We need more action from the Government on these issues, rather than the restating of policies. When the Prime Minister, no less, announced the increase in fines back in November, I am sure that the Government had no intention of rushing them through—until the Opposition called this debate. But that is not new in this House, and this Opposition will continue to press the Government to get results.

Labour will also bring in Make Work Pay contracts to encourage people to pay the living wage, and we have instigated a review led by Alan Buckle, the former deputy chairman of KPMG. He will look in detail at how to restore the value of the minimum wage; how to ensure that sectors that can afford to pay more do so; and how we can promote better the living wage. In November, the Leader of the Opposition also outlined how a future Labour Government will provide tax incentives for employers that sign up to pay the living wage—employers, employees, trade unions, the Government and the Treasury all working together to share the benefits of lifting pay for the lowest paid in this country. Those benefits can be shared for all; I think that that is the right way to go.

Labour created the national minimum wage, despite strong opposition, and it is Labour that will strengthen it for all the low-paid people around our country, moving together towards the shared goal of making work pay for all. It is Labour that will take proper sanctions against those who do not pay it. That is only fair to those who work hard, do the right thing and deserve to be paid properly. That is what we are trying to do today, and I hope that the Government will support our motion.

Interest Rate Swap Derivatives

Ian Murray Excerpts

Thursday 24th October 2013 Commons Chamber

[Ian Murray (Edinburgh South) (Lab)]

It is a great pleasure to follow the hon. Member for Ceredigion (Mr Williams). The cross-party consensus in the Chamber shows how important this issue is, and it has to be dealt with as quickly as possible.

May I add my congratulations to the hon. Member for Aberconwy (Guto Bebb) on securing this debate? I would have been delighted with his custom in my previous life as a publican. He mentioned a £30 cheque for two nights out, but that must have been at least 15 or 20 years ago if he was a student—[Interruption.] I am sorry; 25 or 30 years ago. Those must have been some parties if he was cashing £30 cheques for a night out so long ago.

We have to put this debate in context. There have been many financial scandals—not only since 2008, but even before that. This is the latest scandal in the financial services sector. We had the payment protection insurance mis-selling scandal, the manipulation of LIBOR rates by banking institutions, which has been highlighted today, and the global financial meltdown, which was caused partly by financial institutions gambling on the financial market with other people’s money. Now we have the mis-selling of interest rate swaps. It is right for the FCA to look into that, but hon. Members have rightly made the criticism that not enough is happening. The hon. Member for Ceredigion was right to highlight the fact that only 32 of the 30,000 cases have been dealt with so far.

Interest rate swaps are hugely complicated. I had a briefing from an expert on them about eight months ago, and the complex nature of how they are put together makes them impossible to understand. He was an expert, but he found it difficult to explain some of the more complex points about them.

It is worth highlighting that the banks were able to cancel the instruments in question when interest rates were going down, but the customer was unable to cancel them when interest rates were rising. Not only were sellers incentivised to sell them without much knowledge, but the financial institutions made the vast majority of the money out of them on day one, when they were sold. They sold them to the customer and made money out of the derivative part of the product, and then sold them on to a third party, who subsequently sold them on to other parties further down the tree.

[Mike Thornton (Eastleigh) (LD)]

Does the hon. Gentleman agree that one reason for the appalling mess was the unfair and incredibly pressurised target culture that senior managers at banks imposed on their staff, to the extent that people had to use unethical means to keep their job? I have particular experience of that culture.

[Ian Murray]

I am grateful for that intervention, because not only the FCA but the Government have to change the culture in the banking sector. My right hon. Friend the Member for Wolverhampton South East (Mr McFadden), who was part of the Parliamentary Commission on Banking Standards, has talked about the culture in banks and the pressure to sell complicated products. If a customer buys a product that is not properly explained, that is surely mis-selling and there should be redress.

Customers have been unable to seek redress, or to negotiate with their bank, because the banks were able to sell on the products at great profit on day one. The relationship between the customer and the bank therefore broke down, because when a customer wanted to renegotiate the contract, they were told that they would have to compensate the bank for not only the interest rate lost, but the proportion of profit that it had gained by selling the product on to a third party. The break costs were impossibly high for many people even to contemplate buying their way out of swap products. That breakdown in the relationship has got us to the position we are in today.

Many constituents have come to see me about the matter, such as Mr Dixon, who has highlighted today’s debate and the all-party group that has been set up to examine the matter. One customer of the Clydesdale Bank who contacted me after he had been mis-sold a product was in the process of losing his house. My hon. Friend the Member for North East Derbyshire (Natascha Engel) was right to talk about the impact on not just businesses, but people’s lives. There are life and death issues in some instances, because some business owners have lost their homes, livelihoods and businesses.

There has not been a proper response from banks—not just to their customers, but to Members of Parliament. I have written to banks to see whether they can assist customers in dealing with mis-selling, but I have been batted away. There has been some table tennis between the FCA, the Government, the Financial Ombudsman Service and the banks about who should take responsibility, and I hope that the Financial Secretary will put it firmly on record that the FCA should deal with the matter. It should be the point of contact for businesses, Members and banks.

Members have talked about whether the selling culture of banks made the problem worse, which I believe it did. The mis-selling also went against the policy of treating customers fairly, which most of our banks have trotted out. When customers go to meet their business development manager or anyone else in the banking sector, they are told that their problems will be dealt with and that everything possible will be done to resolve them. However, in many of the cases that my constituents have brought to me, they have not been able to seek proper redress through that relationship, and that is why we have ended up in this situation.

The House should take a stand and say that the scandal was completely and utterly unacceptable. We should encourage the banks and the FCA to resolve the problems as quickly as possible to ensure that small businesses affected by the mis-selling scandal can have redress and a proper appeals process, so that we can get them back on their feet. If small businesses are falling because of a mis-selling scandal, it is up to the House to take a stand to support them.

Banking Reform

Ian Murray Excerpts

Thursday 14th June 2012 Commons Chamber

[Mr Hoban]

My hon. Friend is right, and I think transparency plays a key role in holding the financial system to account. We need to make sure that data on lending is transparent, but we also need to focus on identifying other ways in which we can help small businesses. That is why the Government introduced the national loan guarantee scheme—to help support lending to new businesses. That scheme is working; it is making thousands of loans to small and medium-sized enterprises, which are benefiting from the lower interest rates that the scheme delivers. That is an important way to help businesses grow.

[Ian Murray (Edinburgh South) (Lab)]

Why will the Treasury not agree to Opposition requests for the Vickers commission to implement a progress report on how the Government are doing with its recommendations? Is it because the Government are trying to water them down?

[Mr Hoban]

The process we are going to go through is a very transparent one. We have published a White Paper today, setting out clearly our response—our detailed response—to John Vickers’ recommendations. As I said earlier, we are going to publish a draft Bill, which will be subjected to pre-legislative scrutiny. We are being very transparent about how we are implementing Sir John Vickers’ recommendations. I hope that the hon. Gentleman will work with us and ensure that the recommendations get through, so that we remedy the mistakes of the past.

Independent Banking Commission Report

Ian Murray Excerpts

Monday 12th September 2011 Commons Chamber

[Mr Osborne]

Yes, in short: I agree with my hon. Friend. John Vickers and his commissioners explicitly address the costs and benefits of these changes, and although they accept that there will be some additional costs, they will be more than outweighed by the broader benefits that include the benefits of having an environment in which banks are seen as more stable and the benefit to the UK economy of retail banks using their retail deposits to support retail lending.

[Ian Murray (Edinburgh South) (Lab)]

Some 100,000 jobs in Edinburgh are reliant on the financial services sector, including many tens of thousands in my constituency. How can the Chancellor reassure the House and my constituents that the banks will not pay the cost of implementing the Vickers report recommendations by cutting my constituents’ jobs?

[Mr Osborne]

Of course, one of the groups of people who are the innocent victims of what went wrong are the many people who worked in the branches of banks such as RBS and HBOS throughout the country and who lost their jobs even though they were not investment bankers working in the City of London or trading mortgage derivatives and so forth. I hope that we can now build a successful and competitive banking system that, in Scotland and elsewhere, hires people, opens branches and reverses the trend of recent years. Such groups of people have definitely been the innocent victims of what went wrong and we must do right by them.

Finance (No. 3) Bill

Ian Murray Excerpts

Tuesday 26th April 2011 Commons Chamber

[Ian Murray (Edinburgh South) (Lab)]

The hon. Member for Elmet and Rothwell (Alec Shelbrooke) has taken political propaganda to an all-time low this evening in trying to convince the Chamber that he has not eaten out on Labour’s chocolate and burgers, to use his words. That is a bit rich. None the less, I wish him well for his wedding, which is coming up shortly, and I hope that his battle with the bulge means that he will eventually fit into the dress come the big day.

I am delighted that the Chief Secretary to the Treasury is back in the Chamber, because I want to wish him a happy anniversary. It is exactly a year since the leader of the Liberal Democrats said in a TV interview with Jeremy Paxman:

“Do I think that these big, big cuts are merited or justified at a time when the economy is struggling to get to its feet? Clearly not.”

I wish the Chief Secretary a happy anniversary a year on from that bombshell from the Deputy Prime Minister. It is still the contention of Labour Members that the coalition Government are going too far, too fast, and that that approach is killing growth and causing rising unemployment in this country.

The Chancellor announced with a fanfare that this would be a Budget for growth that would add fuel to the economy. He gave his bold growth fanfare against the backdrop of the economy shrinking by 0.5% in quarter four, even though it was clearly on the road to recovery in quarters one and two of last year under the previous Government. On top of that came a huge embarrassment: the Chancellor’s trumpeted Budget for growth downgraded economic growth in every year of the economic cycle and predicted increased unemployment. The Chancellor’s own Office for Budget Responsibility concluded that the Government’s Budget for growth, which he said would “go for growth”, reduced the economic growth figures. Astonishingly, the hon. Member for North East Somerset (Jacob Rees-Mogg), who is still in his place, blames Labour and not the snow.

We cannot pay back any deficit with lower growth and more people out of work. The Government’s decisions contained in this Finance Bill do nothing to help hard-working ordinary people and families up and down the country. We have heard several times this evening about the potential decimation of the UK oil industry, which will cost yet more jobs.

[Dan Byles (North Warwickshire) (Con)]

Is the hon. Gentleman therefore opposed to the measures taken in the Budget to reduce fuel taxation on hard-working motorists?

--- Later in debate ---

[Ian Murray]

No one would ever deny that a 1p cut would help motorists, but there are certainly no petrol stations in Edinburgh South where fuel is now cheaper than it was before the Chancellor’s Budget. Indeed, money is being taken off the oil and gas industry, and billions of pounds in jobs and future research and development are being put in jeopardy for a 1p cut in fuel prices that nobody is actually seeing at the pump. The Government have to take that on board and act with ferocity.

I agree with the Minister of State, Cabinet Office, the right hon. Member for West Dorset (Mr Letwin), who let the cat out of the bag during an Environmental Audit Committee hearing just before the Easter recess. He said that prior to the Budget, the Cabinet had discussed the fact that there was

“an immediate national crisis in the form of less growth and jobs than we needed”.

The Government’s response to that crisis was to produce a Budget that would make growth and unemployment levels worse—the “Dad’s Army”, “Don’t panic, Captain Mainwaring” approach to what they claimed was a “national crisis”.

Of course we need to get the deficit down, but by cutting too far and too fast, by hitting children, women and families the hardest and by following an ideology that attacks the economic drivers of this country, the Government risk a vicious circle of perpetual slower growth and fewer people in work. With fewer people paying tax, there will be more people drawing benefits and not spending hard-earned cash. The Government have presided over a set of decisions that have resulted in a collapse in living standards not seen since the 1920s.

On the subject of living standards, the Prime Minister promised to lead the most family-friendly Government ever. The Chancellor said, “We’re all in this together,” but changes to tax and benefits this month will hit those least able to pay—ordinary, hard-working people up and down the country—the hardest.

We have been through a global financial crisis, not a recession that was made in Britain. Like every other major economy in the world, the big challenge for us is how to get the deficit down. It cannot come down while confidence is low. VAT will cost a family with children an average extra £450 this year, draining much-needed funds from tight family budgets and potentially harming consumer confidence.

Of course, from this month, there are also cuts to the amount that parents can claim for child care; the freezing of child benefit for three years; the scrapping of the baby element of child tax credit; the setting of benefits on a permanently lower path, with a real-terms cut that means less generous benefits this year and every year in future; the cutting of the second income threshold for the family element of child tax credit; and the increasing of withdrawal rates for tax credits to 41%.—and of course the Liberal Democrats’ champion policy of increasing the tax threshold at the lower level is outstripped tenfold by the VAT increase and the change from the retail prices index to the consumer prices index for uprating tax thresholds, which will erode any threshold increase over time.

The message of this Finance Bill is not growth but the fact that the Government are giving with one hand and taking away with many other hands. They have demonstrated in the Budget and the Bill how out of touch they are. They do not get the fact that hard-working people are being hit by VAT and now face cuts to tax credits and child benefit too. They do not get the fact that communities throughout the country are being damaged by cuts to local services. Even the director of the Institute for Fiscal Studies said after the Budget that

“there is an awful lot of giving with one hand...and taking away with lots and lots of other hands.”

That was an independent commentator talking about what the Government are doing.

The Government often look overseas to build up their justification for this austerity Budget and the Bill, but we have only to look at Ireland to see what too far, too fast austerity measures produce—yes, Ireland, a country that the Chancellor declared had an austerity package that was something of a success story. I suspect that no one in Ireland would agree with him now.

Let us turn, as I might be expected to do, to the Conservatives’ bedfellows on praise for Ireland, the Scottish National party. The SNP held up Ireland as the foundation for their arc of prosperity and as the economic model that an independent Scotland should follow, but look what happened! The SNP not only no longer talk of independence, but they never talk about the arc of prosperity. If Scotland were independent, our banks and our economy would have collapsed, and Scotland would be worse off than Ireland, Greece and Portugal combined.

To be fair to the SNP, not only Ireland formed its arc of prosperity policy, but Iceland too—another economy shattered by the worldwide economic crisis. The Irish austerity measures went too far and too fast, and now the Chancellor and the Chief Secretary to the Treasury never mention Ireland, and neither does the SNP—they have changed indeed.

I could go on and savage the SNP’s 4.8p local income tax proposals, but I know that that is not to do with the Bill, which I shall finish by addressing. The Bill is driven by ideology—an ideology that some have developed in exchange for ministerial Mondeos. The Bill does not improve growth or reduce unemployment, and it continues to hit families and ordinary people the hardest. It kicks away the ladder of opportunity for our country’s young people. It is hurting but certainly not working. For those reasons alone, we should not give it a Second Reading.

Amendment of the Law

Ian Murray Excerpts

Thursday 24th March 2011 Commons Chamber

[Vince Cable]

I really do not know what the right hon. Gentleman is talking about. We started by talking about excessive bonuses in one very large investment bank, and he has now extended that to the whole of the financial services sector. Of course that sector is valuable. Of course the jobs and the tax revenue are valuable, but that is not what he was talking about in his ideological dispute with his deputy leader.

Let me return to the right hon. Gentleman’s central message that the Government should abandon, or substantially modify, their fiscal strategy. I shared a platform last week at the London School of Economics with Angel Gurría of the OECD. He was asked what the Government should do. He had a simple message, which was that we should “stick with it”. He is not some pro-coalition politician or right-wing ideologue; he is the head of an organisation representing 25 Governments. Opposition Members should ask themselves—the shadow Chancellor was asked this but he neatly evaded the question—why all the major international institutions, including the International Monetary Fund, the European Commission and the G20, support the strategy that we have adopted. The reason is that they are all painfully aware that we are in an economically dangerous world in which crises of sovereign debt are not very far away.

[Ian Murray (Edinburgh South) (Lab)]

The Business Secretary is going through a list of international organisations that evidently support his plan. However, as a result of the plan, the UK will have the smallest public sector in the G7 by 2015—smaller even than that of America. Does not that tell the right hon. Gentleman, who was on our side of the argument before the election, that this is an ideological attack on public services in this country?

[Vince Cable]

I cannot see how it can be ideological to have a public sector that, by the end of this Parliament, will have a share of GDP comparable to what it was when the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) became Prime Minister. Whatever criticisms the Opposition might want to make, ideology has absolutely nothing to do with this.

The comments of the international organisations are reflected in those of the business community. The former head of the CBI has often been quoted on this, because he was critical of the Government. He had some strong criticisms, which we have taken to heart. However, it is worth remembering how he started the speech that is now so frequently quoted. He said:

“This coalition Government has been single-minded—some might even say ruthless—in its approach to spending cuts…That policy is strongly supported by business, on the grounds that sound public finances are an essential foundation for a sound economy.”

I want to deal more specifically with the suggestion that we are cutting too much too soon. The shadow Chancellor has quoted me on this, and he is quite right. I said on “Newsnight”, and I will continue to say, that there is a serious economic debate that we must constantly have on striking the right balance between not choking off recovery and not risking a financial crisis. That is the calculation that we are having to make. Our approach has been vindicated by the evidence, and the evidence is the response of the financial markets. The bond yields, which are important not just as an indicator but because they set the cost of capital for business and investment, are 3.5% for 10-year bonds, which is close to the rates in France, Germany, the Netherlands and Sweden, compared with 5.2% in Spain, 7.5% in Portugal, 9% in Ireland and 12% in Greece. That is a fair comparison with what they were a year ago when the Labour party was in power. Since then, the differential has widened by 1.5% in respect of Spain, 3.5% for Portugal and 5% for Greece and Ireland. In real terms, the cost of capital—long-term capital in this country—is now zero. The reason why that matters was summarised many years ago by John Maynard Keynes. Labour Members may revere his memory, as do some of us. During the crisis of the 1930s, Keynes wrote to Roosevelt:

“The turn of the tide in Great Britain is largely attributable to the reduction in the long-term rate of interest.”

That is the basis on which we have to take account of interest rates.

--- Later in debate ---

[Vince Cable]

That is right, and I am sure that if we reflected a little we could add further to the list.

Let me talk about employment.

[Ian Murray]

rose—

[Vince Cable]

Let me press on a little first, and then I will take an intervention.

In future, growth and jobs will come from the private sector, and in particular from small-scale business. Taken in conjunction with the trade White Paper to which I have referred, the Budget’s commitment to lower and stable corporation tax gives the strong signal that we are open for business and we warmly welcome inward investors. Growth and jobs also depend on small companies, which provided a giant proportion of the 300,000 additional jobs created in the private sector in the past six months, and they will be helped by the Budget’s extension of small company business rate relief and cuts in small company corporation tax.

--- Later in debate ---

[Ian Murray (Edinburgh South) (Lab)]

There was so much and yet so little in yesterday’s Budget that could be talked about this afternoon, but I will concentrate on the growth section.

The first line of the foreword to the Government’s document, “The Plan for Growth”, states:

“This Plan for Growth is an urgent call for action.”

At last, after almost a year of the coalition Government, they have finally realised that hard-pressed businesses and families up and down this country need an urgent call to action for growth. However, I do not see a call to action for growth in cutting public spending too deep and too fast; the highest unemployment since 1994; the highest youth unemployment since records began, with no plan to get it down; inflation on the march, with the retail prices index at its highest level in 20 years; the largest squeeze on living standards in modern times; increasing VAT to 20%, which puts more pressure on consumer confidence and further compounds business insecurity; a continued lack of liquidity in lending markets through our banks; fuel prices that are out of control; consumer confidence at its lowest level in more than 20 years; and an overwhelming, ideologically driven attack on public services. That is certainly hurting people in my constituency, but it definitely is not working. We have all that, and the real effects of the VAT increase and the public sector job losses are still to feed through to the real economy. This does not seem to me to be a call to action for growth; it is no plan for growth, or perhaps a panic plan for growth.

That point is made clearly by the Office for Budget Responsibility, the independent body set up by the Chancellor, which we debated a few days ago in this Chamber. Even after the Chancellor’s “Budget for growth”, which, to use his words, should add fuel to the economy, the OBR has reduced its growth forecast for this year and next year, as it did last year. It is surely a huge embarrassment for the Chancellor that his Budget for growth actually downgrades growth. It is extraordinary that it does, given the urgent call for growth in the Government’s own document and the Chancellor’s own words that it would be a Budget for growth. This must be a historical first.

The Chancellor has failed to realise that cutting too deep and too fast is damaging our economy. The public and private sectors are inextricably linked. Slow growth and rising unemployment will make it harder to get the deficit down. The move from 2.1% to 1.7% is a reduction. Unemployment has been revised up to 8.2%. As someone said to me at my surgery a few weeks ago, “How can you possibly pay back debt from the dole queue?” They were absolutely right.

[Martin Horwood]

In its submission to the comprehensive spending review, the hon. Gentleman’s party suggested that the cuts in unprotected Departments should be no more than 20%. What the Government actually delivered was only 19%. Does he think Labour’s proposed cuts were going too far and too fast?

[Ian Murray]

I find it surprising that the Liberal Democrats always jump to their feet during these debates and throw out statistical analysis of stuff that is, quite frankly, not true. The Liberal Democrats’ leaflets from the general election, which I still leaf through, tell me time and time again that they supported what we were doing on the economy, that the banks were all to blame, that VAT would not have to go up and that employment was the key to growth. The Secretary of State for Business, Innovation and Skills said that to Jeremy Paxman after the general election.

[Jessica Lee]

Will the hon. Gentleman give way?

[Ian Murray]

I will carry on, if the hon. Lady does not mind, because our colleagues want to contribute to the debate and our time is restricted.

What we heard yesterday was a big Budget con. My right hon. Friend the Member for Wolverhampton South East (Mr McFadden), who is not in his place at the moment, said that this Budget could not be seen in isolation from the last one. It is a continued attack on the cost of living. As has been said, the Institute for Fiscal Studies said yesterday that the Chancellor is giving with one hand but taking it back not just with the other hand, but with

“lots and lots of other hands”.

Does that not show how out of touch he is? Did he not realise that people would see the Budget con?

The Government trumpeted the increase in the tax threshold, but changed the threshold increase mechanism to the consumer prices index, which will totally offset the increase. Page 42 of the Red Book shows that the Government will hand out £1.2 billion in a tax cut but take £1 billion back over time through the change to the threshold indexation. Of course, the biggest con of all is that indirect taxes will continue to rise by the retail prices index, which of course is the highest measure of inflation.

I have not even touched on the millions of families who will lose their child benefit, or the fact that every family earning less than £26,000 a year will lose their tax credits. It is a Budget con for families. The Budget confirms that although ordinary people will be thrown a little bit of corn, there is little doubt that they will be hit the hardest by this uncaring and out-of-touch Government.

The second con that I wish to examine is the fuel con. We all welcome the 1p cut on fuel. I am not a car driver, but I appreciate how much it costs to drive. My constituents constantly tell me about the pressure on small businesses that have to fill up vans and cars. However, at 7 pm on Monday, the petrol station next to my constituency office was charging £1.28 a litre. On Tuesday night it was charging £1.30 a litre, and on Wednesday night, after the 1p decrease, it was charging £1.29 a litre. The 2.5% VAT increase makes up 3.25p of that price. That is the fuel cut con—the price is 1p down due the Chancellor’s decision, but 3.25p up to due to another decision of the same Chancellor.

As has already been asked, who is to say that oil companies will not just pass the additional tax costs back to the consumer? Oil and Gas UK has said in the past 24 hours that there will be job losses and a reduction in production in the North sea as a direct result of the Government’s policies. We are left in a quandary. Do we have more job losses and less production in the North sea, which could be catastrophic for the Scottish economy, for what might be absolutely no benefit to consumers at the pumps? The IFS said yesterday of the fair fuel stabiliser:

“If oil prices stay high but volatile, this policy will do little to stabilise pump prices.”

It is a policy that does not help hard-working families fill their cars, and may cost jobs.

According to the Government’s own figures, this Budget does nothing for growth. The Chancellor needs to think again before it is too late and he sends this country into a spiral from which it may never recover.