Finance (No. 2) Bill

James Cartlidge Excerpts

Committee: 1st sitting: House of Commons
Monday 18th December 2017 Commons Chamber

[Mel Stride]

The hon. Gentleman raises an interesting idea, but I would argue that that is already effectively in practice in the form of the post office: post offices are able to deal with the customers of the major banks, to take cash, and to offer banking services—albeit not the full range, but certainly the most basic and most important to local communities—and, as I said earlier, there are more than 11,500 of them across the UK.

[James Cartlidge (South Suffolk) (Con)]

All of us who represent rural constituencies are concerned about the issue of access to bank branches and closures, but does that not mean that there is an extra onus on providing access to fast broadband in rural areas so that people can access online banking? To that end, should we not welcome the announcement in The Sunday Times that there will be further help this week for speeding up broadband in the most hard-to-reach rural areas?

[Mel Stride]

My hon. Friend raises an important point about connectivity, particularly in rural areas, including in constituencies such as mine where making sure there is good broadband is often one way of reducing sparsity and people being cut off from each other, and that is why we have invested so heavily in that area.

These changes are expected to increase the additional tax contribution from banks by more than £4.6 billion over the current forecast period to 2022-23.

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[Peter Dowd]

I think that the shadow Chancellor is more interested in Groucho Marx than Karl Marx, quite frankly.

[James Cartlidge]

It is very kind of the hon. Gentleman to take so many interventions on the trot. [Laughter.] This is not a minor issue. Let us not forget that Marxism destroyed the economy of half our continent. I very much admire the hon. Gentleman, but he did mention ideology in the first place. It is therefore not only in order for me to raise the question in his terms, but pertinent. Is he a Marxist—or is he perhaps a Leninist, a Bolshevist, or an adherent of one of the various other isms?

[The Temporary Chair (Sir Roger Gale)]

Order. It may be in order in the hon. Gentleman’s terms, but it is not in order in my terms. I should like to return to the bank levy.

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[Peter Dowd]

My hon. Friend is right. Conservatives always try to take the credit. They take responsibility for the good things and no responsibility for the bad things—it is the way they are made.

The banking levy was not designed to ensure that the banks received enormous and unprecedented bail-outs from the taxpayer, such as the £76 billion of shares the Government purchased in RBS and Lloyds. It was designed to make them pay their fair share. In fact, the very concept of a levy was developed at the G20 summit in Pittsburgh in 2009. It was championed by the previous Labour Government, who subsequently introduced the bankers’ bonus tax. In the coalition’s 2011 austerity Budget, the Government decided to dump the bankers’ bonus tax and adopted the bank levy. At the time, Labour made it clear that the levy threshold was far too low in comparison with the money that would be raised if the Government stuck with Labour’s bonus tax. Instead, Ministers wilted under pressure from the banks and set the levy at a puny £2.6 billion.

[James Cartlidge]

The hon. Gentleman is talking about where the bank levy came from. I remind the Committee that it was actually Geoffrey Howe who introduced a deposit levy in a Budget in the early ’80s as part of his stabilisation of the financial system inherited from a previous Labour Government.

[Peter Dowd]

I thank the hon. Gentleman for that history lesson.

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[Peter Dowd]

There are many, many calls on the taxpayer, and that is one of them. The Government would do well to pay attention to the exhortations of the hon. Gentleman.

[James Cartlidge]

rose—

[Peter Dowd]

I am more than happy to give way in relation to corporation tax, but it is important that I maintain the theme of the austerity project. It has not led us to prosperity. It has delivered misery for this country, yet the Government stick to the same old rules: tax breaks for wealthy bankers and cuts for the rest of us. It is like a stuck record.

[James Cartlidge]

I am sure that, coming from where he does, the hon. Gentleman takes a close interest in the Republic of Ireland, a country he has not mentioned. Is he aware that, by keeping its corporation tax rate low, it has revolutionised its economy and become an export tiger, and that that has been a key factor in helping it to recover from the crash?

[Peter Dowd]

Huge amounts of support from the European Union have revolutionised the Irish economy. My forebears came from Ireland, but I do not think even the Irish would compare themselves as a small country of 3.5 million people or thereabouts with the United Kingdom with its 60 million—this is chalk and cheese. The hon. Gentleman will appreciate that that is a ridiculous comparison to make in the debate.

Our amendment will finally help to demonstrate the true cost to the public purse of the Government’s favourable approach to some. In that way, we can understand exactly what the cost in revenue is. This should be all the evidence the Government need to change course—things simply are not working. Productivity is low, inflation is up, wages are stagnating, public services are in absolute decline and the NHS is under strain, as is social care, yet the Government just do not get it. They seem to think that we live in Shangri-la, but, unfortunately, we do not. We know that the Conservative party relies on support from vested interests for its own survival, but the question we must ask ourselves is: should the survival of a clapped out, atrophying, self-centred, out-of-touch, diminished Tory party take precedence over the needs of children? I know the answer, so I will simply leave Conservative Members to answer it in the silence and solitude of their own consciences.

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[Stephen Kerr]

I was about to describe the level playing field as I see it. The Bill will remove any disincentive there might have been for banks to base themselves in the UK, which is important. I remind all Members of the reputation that our country and particularly the City has. I think we would all agree that the City is the financial capital of the world.

With respect to the bank levy, the banks’ contribution must go beyond the paying of taxes, as outlined in the Bill. Given the banking sector’s behaviour—I referred to the comments by the hon. Member for Bootle about saints and sinners earlier, but I am generalising now—the banking industry does have a responsibility to make a fairer contribution to society, which is what the measures taken by the Government since 2010 and 2015 have made happen.

Let me mention in passing the Financial Conduct Authority’s report on the Royal Bank of Scotland and its treatment of small and medium-sized business customers.

[James Cartlidge]

I do not want to distract my hon. Friend from his excellent speech, but he referred earlier to the former First Minister, Alex Salmond; does he recall the encouragement that Mr Salmond gave to RBS with respect to ABN AMRO and anything related to that purchase, which many people thought at the time was a risky investment?

[Stephen Kerr]

I have a very bright recollection of that. There is a famous document that shows the First Minister wrote to the chief executive of RBS and added at the end some personal notes that went above and beyond encouragement.

Given recent history, it is right that the banks make a more-than-fair contribution, and that is what they have been doing. I return to the FCA’s report on the RBS and its treatment of small and medium-sized business customers. I refer specifically to the conduct of RBS’s global restructuring group, about which the FCA’s report makes depressing reading. When I looked at the report, I lost count of the number of times the words “inadequate”, “inappropriate”, “systematic” and “failure” were linked repeatedly to a wide range of RBS’s activities, and particularly the global restructuring group’s conduct towards small and medium-sized businesses. The words I highlighted were appended to the description of how the group laid charges and managed loans and communications and to the description of its valuation practices. There is also the fact that the complaint procedures were completely ignored.

Many Members from all parties will know of examples of how the systematic failings in RBS’s global restructuring group affected constituents and their businesses. My constituency is no different. I am mindful of ongoing investigations involving cases in my constituency and have no desire to jeopardise their progress as I address the issue of bank levies. I shall simply say that from the cases I have seen there remain many unanswered questions that RBS needs to address.

Many Members present will be aware of RBS and the Bank of Scotland having closed their bank branches.

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[James Cartlidge]

My hon. Friend reminds us that, what with Royal Bank of Scotland and Bank of Scotland, there is clearly a theme among these great institutions that failed. Has he considered the fact that the bank levy is one function of a system in which ultimately the lender of last resort is the most important function? That system would simply not exist had Scotland gone independent and been left with massive liabilities to pick up. It would not have been able to cope.

[Stephen Kerr]

My hon. Friend makes a first-class point. He provides me with an opportunity to remind the House that, thankfully, in September 2014, Scotland had the good sense to vote overwhelmingly to remain part of the United Kingdom. Part of the reason for that was, I am sure, the lessons we had learned as a country from our experiences between 2007 and 2009, particularly the recklessness of the Scottish National party Government and the First Minister at the time, Alex Salmond, in the way he conducted himself with respect to RBS.

Just so that the hon. Member for Glasgow North (Patrick Grady) is aware, I am talking about the bank levy in relation to bank closures. It is my firm belief that having bank branches in communities is part of the covenant between the public and their financial institutions, but that covenant that is clearly broken. People should expect the banking sector to keep businesses going with cash flow, loans, financial planning and so forth. People should also expect that bank branches are close by and serve the communities in which they live. Earlier, the hon. Member for Liverpool, Walton (Dan Carden) reminded us that high street banking is particularly important for people in our constituencies who are elderly or whose mobility is challenged in other ways.

In Bannockburn, Dunblane, Bridge of Allan and the Springkerse estate in Stirling, RBS and the Bank of Scotland are leaving communities without adequate access to banking. It is important to state these things in the context of our consideration of the bank levy.

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[Kirsty Blackman (Aberdeen North) (SNP)]

You will be delighted to know, Sir Roger, that I will be talking about the bank levy and the new clauses that have been tabled both by the Opposition and by our party. I wish to start by saying that I have rarely been more embarrassed to be part of this House than I am this evening. This debate followed hot on the heels of a statement on bullying and harassment and we ended up in a situation in which there was a ping-pong between Government Back Benchers and the Opposition Front-Bench team. It just was not acceptable. I appreciate the fact, Sir Roger, that you intervened and brought Members back to the matter under discussion.

[James Cartlidge]

Will the hon. Lady give way?

[Kirsty Blackman]

No, I will not give way.

The other concern about the tone of this debate thus far is that it has basically been a history lesson. Both sides have been talking about the history and how we have ended up in this situation. Very few people have spoken at any length about the future and about how the bank levy in the future will affect the tax take of the Treasury, as well has how it could be made to be more fair and ensure that we redistribute taxes and wealth in a positive way.

The SNP has a manifesto commitment to support the reversal of the reduction in the bank levy. We stand by that commitment and have been consistent in our views on that. We have also been consistent in supporting the introduction of a tax on bankers’ bonuses.

I am pleased with the way in which Labour’s new clause 1 has been written; there is a lot to commend it to the Committee. The suggestion of looking at the effects on revenue of the bank levy compared to the bank payroll tax is utterly sensible. It strikes me that this information should be in the public domain, so that we can all talk from a position of knowledge about the actual effects that this has had, rather than the projected effect that the Treasury thought it would have when it was first put in place or even thinks it might have now. It is totally reasonable for us to ask for a review of these things.

We would be able to go further and ask for more drastic changes if the Government had proposed an amendment of the law resolution, which would allow us to be more flexible in tabling amendments. As I think I have said before—if not, I am quite happy to say it now—the fact that the Conservative Government are not proposing an amendment of the law resolution means that future Labour Governments will be likely to do the same thing, so this creates a situation whereby the House is less transparent and there is less Opposition scrutiny. It would be much better for all parties if there was an amendment of the law resolution.

New clause 1 states that the proposed review would consider

“the effectiveness of the levy in reflecting risks to the financial system and the wider UK economy arising from the banking sector”.

That is key. Despite all that has happened since the financial crash, there are concerns about ensuring that banks continue to make less risky propositions and continue to be safe places for people to put their money. It is reasonable to look at the bank levy in the context of discouraging risky behaviour by banks, and the reference to the incoming revenue is key.

New clause 11, tabled by the SNP, would deal with two things: inclusive growth and equality. We will hear an awful lot in the debate tomorrow about equality, and this should apply across all measures. The review proposed in our new clause would consider whether reducing the bank levy would disproportionately affect, for example, people of a certain gender or people who are not wealthy. People who work for banks are more likely to be male and wealthy. Therefore, reducing the bank levy is more likely to support them than it is to support groups that are disadvantaged in the first place.

We in the SNP have been absolutely clear and consistent in our support of inclusive growth. We have also been clear that things such as quantitative easing—certainly since the first round of QE—do very little to support those people at the bottom of the pile or to inject money into the real economy, but actually have a disproportionate effect in organisations such as those in the FTSE 100. We will keep being clear that inclusive growth is important, which is why we have proposed progressive options for taxation. Particularly in this place, it is difficult to get any sensible answers from the Government about how their proposals will affect people across the spectrum. That is not necessarily because the Government have not done the work; they may have done the work, but they are unwilling to publish it. They do not produce comprehensive reviews of how the tax takes have changed as a result of the changes they have made to the tax system.

Hon. Members will be unsurprised to hear me calling again for the Government to be more transparent, but that is what I am doing. I will also be very clear that we are keen to support new clause 1 if Labour decides to push it to a vote.

[James Cartlidge]

It is a pleasure, as always, to follow the hon. Member for Aberdeen North (Kirsty Blackman). Interestingly, she mentioned inclusive growth, to which I will return shortly. It is also a pleasure to follow my hon. Friend the Member for Stirling (Stephen Kerr), whose speech was a real tour de force. The hon. Member for Aberdeen North criticised him for not talking about the future and dwelling on the past. Actually, he was talking about the present—the challenges facing his constituency today, in the here and now. The bank levy is incredibly important because it is all about the future prosperity of those constituents, so I very much welcome my hon. Friend’s comments.

Interestingly, the Opposition’s new clause 3 gives us a good way of looking at the bank levy as it stands. Subsection (2) of new clause 3, which would affect schedule 9—the schedule that contains the details about the bank levy—states:

“No later than 31 October 2020, the Chancellor of the Exchequer shall lay before the House of Commons an account of the effects of the proposed changes in Part 1 of Schedule 9—(a) on the public revenue, (b) in reflecting risks to the financial system and the wider UK economy arising from the banking sector, and (c) in encouraging banks to move away from riskier funding models.”

I accept that those three points are incredibly germane. In fact, let us not wait until 31 October 2020. Let us stand here now and think about how a review would fit under Labour’s very own new clause.

Look at subsection (2)(a) of new clause 3, which is about the impact “on the public revenue”. What do we see? Well, the banking sector paid 58% more tax in 2016-17 than in 2009-10. That is under a Conservative Government. The average amount paid by the banks every year since 2010 has been 13% higher than under Labour. In 2016, the Government introduced an additional tax on banks—the 8% corporation tax surcharge, which we have been discussing—which will raise nearly £9 billion by 2022.

[Sandy Martin]

rose—

[James Cartlidge]

I give way to my Suffolk colleague.

[Sandy Martin]

In 2009-10, the banks were recovering from the worst position they had been in since the 1930s. In many cases, they went under and needed Government support to get out. Does the hon. Gentleman accept that it would therefore have been extraordinary if the banks were not making more profit in 2016-17 than they were in 2009-10, that that is the reason why there is more take from the bank levy than there was in 2009-10, and that it is not simply because the Conservatives have reduced the amount of it?

[James Cartlidge]

I consider the hon. Gentleman to be a friend because we work together in Suffolk as MPs; we are always happy to do that. I will be coming to the issue of the crash and the way in which the banks went back to the 1930s, as he puts it, because I experienced that myself.

[Stephen McPartland]

Is my hon. Friend aware that the total tax take from banks now is 6% higher than it was in the year before the financial crash?

[James Cartlidge]

My hon. Friend makes an excellent intervention and provides the rebuttal for me. The key point is that more tax is being raised now than before the crash.

My point is that were we to apply now the test of the impact on the public revenue under Labour’s very own review as proposed in new clause 3, we could only come to one conclusion, which is that all the taxes we have put in place on the banking sector—not just the bank levy—have been raising significantly more revenue. The rising revenue has contributed to paying off the deficit and supporting UK public services. [Interruption.] The shadow Minister, the hon. Member for Bootle (Peter Dowd), is shaking his head. I am happy for him to intervene and tell me that we are not raising more tax from the banks. He was very generous in giving way to me, but it appears that he is not going to intervene.

Subsection (2)(b) of new clause 3 states that the review that Labour would introduce of the bank levy would look at

“reflecting risks to the financial system and the wider UK economy arising from the banking sector”.

I always find it amusing to see a Labour amendment—particularly from this Labour party—talking about risks to the financial system; indeed, I think the shadow Chancellor himself has referred to Labour as a risk to the financial system. One wonders whether, in its own review, Labour will be modelling what the impact of a run on the pound—let alone a run on the banks—would be on the banking system. I certainly think it would be most profound.

The hon. Member for Aberdeen North said we are going back in time, but of course we have to go back, because the bank levy was born out of what happened in 2008. The bank levy came from the crash, which has had very many wider impacts, but particularly on this aspect of our tax system.

Let us remember the real bank levy—the real cost to the public. The cost of the bail-out of the banks was £850 billion. That was the figure the National Audit Office published in 2009 while there was still a Labour Government. That consisted of all kinds of costs. There was £107 million for City advisers—that’s right, a Labour Government spent over £100 million on City advisers. There was £76 billion to buy shares in RBS and Lloyds. There was £250 billion to guarantee wholesale borrowing to strengthen liquidity. There were many more hundreds of billions of such costs, including hundreds of billions for the Bank of England to insure itself in providing liquidity. People forget that. When we talk about the cost of the bail-out, we are not talking just about buying shares in the banks; this huge amount of subsequent activity that took place ultimately has to be accounted for, and it is borne by the whole of our economy and all our taxpayers.

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[Gareth Snell]

I am very interested to hear the hon. Gentleman give us his rhetoric about history. What, at the time, were the suggestions from the Conservative party in terms of dealing with the impending crash? Anecdotally, I know that chief execs of banks were talking about money running out at cashpoints. What would the Conservative party have done differently in 2008 from what happened under the Labour Government?

[James Cartlidge]

I would say three things. First, the hon. Gentleman talked earlier about the shadow Chancellor, but I have to go back and quote the City Minister at the time—Ed Balls—who said in 2006:

“nothing should be done to put at risk a light-touch, risk-based regulatory regime”.

[Gareth Snell]

If we are going to trade quotes across the Chamber, the then Member for Witney, who was the leader of the Conservative party at the time, said:

“I want to give you…less regulation.”

If we are talking about regulation and the state of the banks at the time, the Conservative party is as culpable as anybody else.

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[James Cartlidge]

I am happy to have that debate. I will tell the hon. Gentleman what I said. I started a mortgage broking company in 2004—we have expanded since then, and I should declare that I still have interests in that business. I wrote an article for The Guardian in 2004 about the next general election. [Interruption.] Just a closet Marxist. At the time, the big issue being talked about was public services, but I said—this was in 2004—that the big risk we were not talking about was consumer debt. I knew that because, having just started a business in that area, I was stunned by what was happening in mortgage finance, which, of course, was the type of borrowing that laid the seeds for our destruction in 2008.

[Sandy Martin]

May I tell the hon. Gentleman how prescient he was in 2004? He was clearly right. Does he have the same concern about the rising level of private debt now?

[James Cartlidge]

The hon. Gentleman makes a very good point, and I will come back to that once I have set out the context of my remarks. The key point is this: there are some concerns, but in a growing economy, consumer debt will tend to rise, so we have to separate out that which is perfectly acceptable and that which may give cause for concern. I will come back to that point, but it is very fair.

In respect of proposed subsection (2)(b) of the Labour new clause, which talks about

“reflecting risks to the financial system”,

we conclude by reminding ourselves that it was the very explosion of the financial system that created the need for this bank levy. As I say, we have to debate the past—why we are here in the first place and where this all came from—and the fact that we are on a journey. The reason this tax is being tapered off is that the banking sector is once again becoming profitable, and we are allowing it to flourish again as a free enterprise-based banking system, but, of course, in the context of very strict regulation and a prudential regime.

Let me go back to the point about personal experience. It amazes me when members of the Labour party stand up and, like Pontius Pilate, wash their hands of the huge impact of that crash. At the time, many of us approached the regulator—the Financial Services Authority—which Gordon Brown launched early in the first Parliament after Labour won in 1997. He claimed that that would avoid future financial crises. We must remember that and have accountability.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Will the hon. Gentleman be reasonable or fair enough to acknowledge that while it is entirely possible to say that the system of regulation on the eve of the financial crisis was not adequate— no one is making the case that it was—surely it is illogical and ridiculous to suggest that the Conservatives would have been doing anything different. After all, the banks themselves were not aware of the level of risk they had undertaken, so it was no surprise that the regulator did not appreciate it. One cannot claim that the Conservatives advocated anything different from the overarching framework of regulation that existed at the time.

[James Cartlidge]

I entirely disagree. The absolute root cause of it all was not saving enough and having a bad culture of over-reliance on debt. I well remember that back in ’98 and ’99 when Francis Maude was the shadow Chancellor, he kept saying, with regard to the low savings ratio, “We are storing up problems for the future.” At every Budget, no matter how high Labour was in the polls, our shadow Chancellors and shadow spokesmen—people like Howard Flight—would say that the savings ratio was way too low and we were storing up problems for the future. We did warn, we did say it, and we were ignored.

[Alison McGovern (Wirral South) (Lab)]

The hon. Gentleman is making the case that people borrowed too much because they were somehow feckless or immoral. [Interruption.] He mentioned the poor savings culture in this country and said that people were unable to save. Actually, is it not the case that the picture has worsened since then, because the simple fact is that wages have been held down and people are now unable to save? How has his party in government fared on the issue that he has raised?

[James Cartlidge]

I never talked about fecklessness or being immoral. I was talking about the economic fact that the savings ratio was dangerously low throughout much of the Labour Government’s time in office, and they were warned about it. Labour Members are saying that we never said anything, and that simply is not true.

The hon. Lady seems to think that Labour had good policies on debt. I remember when someone could get a self-certified mortgage, with no proof of income, on an annual percentage rate relating to bad credit, so they could have a history of failing to pay debt. Not only that, but it was interest-only, so they were not even repaying the capital. There was a whole menu of different types of sub-prime such as light-adverse, medium-adverse or heavy-adverse. As I have said before, basically the question was, “Do you have a pulse?”, and then one got a mortgage.

[Peter Dowd]

Will the hon. Gentleman simply acknowledge that in August 2007 the Conservatives had a policy of significantly more deregulation, including of the banks, and that was ratified by the Tory shadow Cabinet at the time?

[James Cartlidge]

I do not accept that. Those mortgages were being advanced. The FSA knew about them and the Government knew about them. The fact is that when you are in charge of the financial system, you have a responsibility to act in a prudent manner. The Governor of the Bank of England always says, “Your duty is to take the punchbowl away when the party gets started.” The problem was that when the party got started under the new Labour Government in terms of debt and borrowing too much, they did not take the punchbowl away—they came out with a new round of tequila slammers, and when that was not enough, they brought out the Jägerbombs, until in 2008 we had the biggest hangover in our history, with the crashing of our economy on the back of the most reckless oversight of financial regulation that this country has ever seen.

[Mr Mark Prisk (Hertford and Stortford) (Con)]

My hon. Friend is making a very strong case. However, he is relatively new to this place. May I remind him, and the Committee, that when I was on the Opposition Benches for 10 years, the then Labour Chancellor of the Exchequer told us that he had abolished boom and bust? That is the political context in which Labour ruined the economy.

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[James Cartlidge]

My hon. Friend is absolutely right. The types of borrowing that I have talked about were the reality, but what have we done since? It is no longer possible to get self-certified mortgages. It is very difficult—almost impossible—to get interest-only mortgages as a residential purchaser.

[Kirsty Blackman]

Will the hon. Gentleman give way?

[James Cartlidge]

The hon. Lady did not give way to me, but because I believe in inclusive growth and equality, I will give way to her.

[Kirsty Blackman]

The hon. Gentleman is making a very sensible case about the issues there were with mortgages before, but there are currently issues with consumer credit. The Bank of England has raised concerns about, for example, the card credit that people are taking out, and the fact that half of households have less than £100 in savings. When is he going to take the punchbowl away?

[James Cartlidge]

I did say that I would come to the current position on credit. I want to finish on the analysis of the three tenets in new clause 22 under which Labour says that we should consider how the bank levy has worked. According to subsection (2)(c), we should look at it in terms of

“encouraging banks to move away from riskier funding models.”

It is quite amusing to see a Labour new clause that contains the phrase

“encouraging banks to move away”.

My colleagues will appreciate that the whole point of reforming the bank levy is not to encourage banks to move away, but to encourage them to stay here and create wealth and jobs. Let us not forget that in all the figures we have heard about, we have not heard the key one. Banks contribute £116 billion of value added to our economy, not including any of the tax take.

[Peter Dowd]

We have talked about the rewriting of history. The Shadow Cabinet at the time—we are talking about what happened at the time—said:

“We need to make it more difficult for ministers to regulate, and we need to give the critics of regulation more opportunity to make their case against specific new proposals.”

The Conservatives’ direction of travel at that time was towards not more regulation, but less. Does the hon. Gentleman acknowledge that at all?

[James Cartlidge]

All the financial plans of that shadow Government would have been about fiscal prudence, and the context would have been completely different. The Labour Government crashed the economy on every single front, which is why we are where we are today.

There is one final point I want to make. We had a wide-ranging discussion earlier about Marxism, which I thought particularly intriguing. We have to decide, as a country, whether we want to be a flourishing free enterprise economy or a centrally commanded one in which everything remains in, or is taken into, the public sector. When the banks were nationalised, they were bailed out on the basis of rescuing the economy from an extreme threat that could have left us resorting to barter. The point is that we have put the banks on a stable footing so that they can flourish again and become competitive businesses. The bank levy, to me, is about striking a balance but having a competitive financial services sector to drive our exports and growth, and that is why I will be voting to support it.

[Karin Smyth]

We have had an interesting, if not very factually correct, history lesson this evening. I want to bring us back to the question of how we spend £4.7 billion of taxpayers’ money, and the political choices that the Conservative party are making in this Finance Bill. Politics is about priorities, and I would like to talk, as the hon. Member for Aberdeen North (Kirsty Blackman) suggested we should, about the future and how we might spend the money differently. For my constituents in Bristol South, and, I think, for the country, the biggest issue in the Budget is productivity. I would like to think that we could use that money for something better, such as technical qualifications, to help to reduce the skills gap in my constituency.

Of all the constituencies in the country, mine sends the smallest number of young people into higher education, and only 24% have a level 4 qualification. For a city that contains two universities and has two more close by, that is scandalous. Because of that, I have followed the apprenticeship levy very closely and supported the Government in its introduction, but the figures are hugely disappointing. Large employers are using the levy to train current executives, and small employers simply do not know how to navigate the system. That has led to the 62% drop-off in apprenticeship starts since last July. It is outrageous that in the Budget, the Chancellor could only give a nod to the apprenticeship levy by saying that he would keep an eye on it, at the same time as deciding to grant the banks a tax giveaway of £4.7 billion.

T-levels have had very little debate in this House since they were announced in October, and they are mentioned only in passing in the Budget. I welcome the Government’s approach to trying to improve technical education as an alternative to the academic option, because it could really help social mobility in my constituency and those of many other hon. Members. The Government have said that T-levels were

“the most ambitious post-16 education reform since the introduction of A-levels”,

but if they are, the current signs are very worrying. Let us compare that £4.7 billion with the sums of money that the Government have committed to T-levels: £60 million in 2018-19, £445 million in 2021-22 and £500 million every year afterwards to ensure that the supposedly hugely ambitious T-levels are a success. However, while the overall investment is welcome, it pales into a rather small figure compared with the other sums we are talking about.