(10 years, 5 months ago)
Westminster HallWestminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The hon. Gentleman makes an important point. Undoubtedly, in the past, footballers could often be treated poorly by their clubs and had few of the rights that would normally be expected in the workplace. I am certain that no one would want to go back to such a situation, but I will come to how the financial guarantees work to encourage greater risk taking and irresponsibility with the finances of the game, with a direct consequence and knock-on effect for the insolvency of clubs.
Did my hon. Friend just say that under the football creditors rule, football creditors take precedence over the taxman? If so, can he think of any other industry or sporting activity in this country of which that is also true?
My hon. Friend makes an extremely important point. The taxman lost his preferred creditor status in 2003. An informal arrangement exists between HMRC and football, and I will come to that, but the taxman is not a preferred creditor. The only preferred unsecured creditors are people within the game of football, who must be compensated in full under the rules of the Premier League and Football League. Other creditors get only pence in the pound. For example, when Crystal Palace went into insolvency, football creditors were paid in full, but non-football creditors received 2p in the pound. When Plymouth Argyle went into administration, again, football creditors were paid in full, but non-football creditors received less than 1p in the pound in compensation for the debts that they were owed.
The hon. Lady makes an extremely good point. It does enormous damage to the credibility and reputation of football. That point was made by Niall Quinn, a former player and club chairman of great distinction, when he gave evidence to the Select Committee. How can it be right that in a community where a club has gone through insolvency, a small business that prints match programmes or paints the stadium receives none of the money that it is owed, while watching a player paid tens of thousands of pounds a week drive out of the gates to the ground in a smart car, having received every penny he was owed? It makes no sense at all. It is seen as a massive injustice and, given the huge amounts of money within the game of football, it cannot be justified in any way for football to reserve preferred status for its own creditors.
The Select Committee called in its 2011 report and its follow-up report in 2013 for the football creditors rule to be scrapped. Numerous debates have been raised in the House about both the generalities of football governance and finance, and specific cases relating to clubs such as Coventry and Leeds. Members have raised their concerns about such clubs in particular. Often in those debates, we have been reassured that the Government’s view is that the rule is one whose time has come, that we should move on and that we should not allow it to continue. I secured this debate to ask the Government where they stand on the football creditors rule.
I am grateful that the Minister with responsibility for consumer affairs, the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Cardiff Central (Jenny Willott) is here to answer the debate. Often, when we have had such debates, the Minister responding has not been the Minister responsible for insolvency laws in this country. Today we have the insolvency Minister here to answer the debate.
I absolutely share my hon. Friend’s view. He is making a powerful case, and it is doubly good to hear it from someone educated in Hereford, a city whose football club is in some difficulty due to the imbalance between the money sloshing around at the top of the game and the meagre pickings at the middle and lower end.
The issue I want to raise with my hon. Friend is the Government’s position. When I asked the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Maidstone and The Weald (Mrs Grant), who is Minister with responsibility for sport, she responded:
“The Financial Fair Play rules now introduced across football which, combined with compliance checks…aim to improve financial management and stability...Legislation remains an option if the football authorities do not demonstrate that they can reform their own governance of the game. The Government’s position on the football creditors rule is clear.”—[Official Report, 27 February 2014; Vol. 576, c. 495W.]
I put it to him that, whatever the Government’s position is, it is not “clear”, and that that answer did not particularly clarify it.
(10 years, 6 months ago)
Commons ChamberFirst, may I express my gratitude for the first part of the hon. Gentleman’s question? As to the second part, he should be aware that in 2013 the focus on London changed and that only one in five of the new private sector jobs was created in London. Indeed, over the course of this Parliament employment is up in every region and nation of the United Kingdom.
14. If he will extend eligibility for child benefit and tax credits to the households of young people who are undertaking apprenticeships.
The Government continue to support apprenticeships by funding 16-to-18 apprenticeships for every employer who wants to offer them and every young person who secures a place, and by promoting the uptake of apprenticeships among employers and implementing reforms to drive up apprenticeship quality. When a young person takes up an apprenticeship, they are classed as in employment with training. From that point, benefits for the young person paid to their parents cease.
I thank my hon. Friend for that reply. The number starting apprenticeships in my constituency has almost doubled from 630 in 2009 to 1,100 last year. Will the Minister join me in congratulating all those apprentices and their employers? Does he share my view that this is one more sign that the Government’s long-term economic plan is working?
I entirely agree with my hon. Friend. His experience in Hereford in not unique: the number of apprenticeship starts across the nation has gone up by 82% in the course of the past three years. He is absolutely right to describe that as part of a long-term economic plan.
We are not proposing a cap within a cap, as the hon. Gentleman puts it, but we are proposing a welfare cap. We have set out the details of the benefits and the annually managed expenditure that will be part of the cap, but we will announce further details about the level of it at fiscal events later this year.
T9. Next week I shall be hosting an event to celebrate independent retailers, cafés and pubs in the city of Hereford, in particular Hat Trick, La Madeleine and The Barrels. I greatly welcome today’s excellent economic news. Does the Chancellor share my view that low taxes are a vital means of helping and encouraging small businesses to grow and create jobs?
It sounds very tough, campaigning in Hereford.
I thank my hon. Friend for bringing those businesses to the attention of the House, and congratulate him on the support that he has given to the economic policies that are helping them to grow. He is absolutely right: we must continue to support firms of that kind. High street shops, pubs, cafés and the like will, of course, benefit from the £1,000 rate relief which will be introduced this spring, and which will be a huge help to all—or most—of the businesses on the high streets of Hereford.
(10 years, 7 months ago)
Commons ChamberThat is exactly the issue that we are debating.
For all the sophistry and smoke-and-mirrors attempts by Ministers, including the Prime Minister earlier today, to give the impression that they are taking action on bonuses, we know that they confront a key decision because of the new Europe-wide decision to limit bonuses. However they try to spin their way out of it, they will have to confront that decision. It is a matter of national embarrassment that UK policy on bankers bonuses was not led by the UK Treasury. Now that we have a bonus ratio in statute, albeit from the European Union, surely the Minister will not cast his shareholder vote, on behalf of the taxpayer, to allow state-owned banks to shell out bonuses that are above the level of their salaries.
It is deplorable that this debate has been scheduled during a Treasury Committee hearing. As a member of that Committee, I have seen over the past few months and years the attempts to clear up the appalling wreckage that was left in 2010. Is it not true that under the last Government, this country ran a budget deficit of 3% at the top of the economic cycle and that we had the highest levels in recorded history of personal and household debt?
There they go again, denying that the banks had any responsibility whatever for the global financial crisis. Obviously, it was Labour’s investment in schools and hospitals that caused the devastation in dozens of countries worldwide and recession across—[Interruption.]
My hon. Friend puts his finger on the point, which is that most of our constituents would say that bonuses are supposed to be for good or excellent performance and not just part of the run-of-the-mill, ordinary pay they receive regardless of whether they do well, make losses or get involved in all sorts of problems and difficulties. That is part of the problem with the culture in the banking sector, with which, frankly, the legislation introduced by the Government has so far just not dealt with.
Perhaps the hon. Gentleman could update the House later on what cap on bonuses was set by the previous Prime Minister, or the one before that. Does he not accept that the past few years, as he has just demonstrated with his recitation of scandals, was a period of the most lax supervision? It was under the previous Government that the Bank of England allowed these dreadful evils to take place. That is why it has made such a difference introducing the new senior persons regime, the new authorised persons regime and all the other changes, as well as the new definition of competition in legislation.
The hon. Gentleman and I differ in our analysis of what happened—I will explain why in a moment—and that says a lot about where we need to take policy. I do not believe that we have finished the job of banking reform, which seems to be the impression we are getting from the Government Front Bench. He and I might agree that more is needed—I will talk a bit about that in a moment—but stopping short of those reforms will not prevent another bank failure or protect the interests of normal customers and society so that they, not the high remuneration of those senior bankers, come first.
The hon. Gentleman will know that inequality surged under the previous Government and has come down under this Government. In fact, the rich pay a higher proportion of tax than they have ever paid, with the top 1% of earners paying almost 30% of income tax for the first time and the top 5% paying almost half of the total income tax take. The Government are proud of making sure that the rich make a fair contribution to public finances.
My hon. Friend is making an extremely powerful case, but may I remind him of the central fact of the past 15 years? The banks had the same level of leverage for 40 years, until 2007, after which it went up by two and a half times. It was that explosion of leverage, under Labour, that destroyed the banking system both in this country and internationally.
As always, my hon. Friend is spot on. Because of the changes that Labour made in the regulatory system, no one knew what was going on, and if they did, they were absolutely powerless to act, especially those in the Bank of England. That is the legacy of the last Government.
Let me now say something that the Labour party seems to be scared of saying. We need well-run successful banks in this country. We need the services that they provide. We need the loans that they give to small businesses, and the mortgages that they offer to home owners. We need the jobs that they produce—more than 450,000 throughout this country, and more than two thirds of those are outside London. We, as a Government, also need the huge taxes that the financial sector and its employees pay—some £60 billion last year—so that we can run our schools and hospitals.
Was it not the previous Prime Minister who said, “We will do for Great Britain what we have done for the City of London”, and is it not a disaster that he said and did that?
(10 years, 8 months ago)
Commons ChamberThe hon. Gentleman has clearly learned nothing. Does he realise that his energy policy is a complete con, that energy companies have already said that they would have to freeze investment, and that they would put prices up beforehand and afterwards? The Government are absolutely on the side of hard-working families and their household budgets, and we are putting £50 in their pockets now.
Is not the point that the average income of the bottom third of the population stopped growing in real terms in 2003?
Under Labour. Therefore, it is a matter of catch-up before the Government can get the economy back on track.
My hon. Friend is right to say that wages and salaries suffered their fastest drop between 2007 and 2009, and that drop started in 2004, as the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) has already admitted. Interestingly, the shadow Chief Secretary to the Treasury could not answer the question about whether Labour’s calculation of wages and household disposable income includes the tax changes we have made, and therefore does not reflect the fact that we are putting more money into people’s pockets.
(10 years, 8 months ago)
Commons ChamberUrgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
I am grateful to the hon. Gentleman for welcoming the steps that we are taking on the Wylfa power station and on offshore wind. My right hon. Friend the Secretary of State for Energy and Climate Change has changed our party’s approach to the issue, which I think was the right and realistic recognition of our energy needs in future. With regard to port development, it might be better if the hon. Gentleman met a representative of the Department for Transport, but if that is unsuccessful, I would be glad to meet him.
The greatest catastrophe in infrastructure procurement over the past 20 years was the private finance initiative under Labour. My investigations this week have shown a pattern of poor construction and inadequate maintenance at Hereford hospital on the part of the PFI contractors, and that relates to fire compartmentation, hospital ventilation, infection control, the emergency alarm system and maternity. That has been damaging to patient and staff safety and gave no incentive within the contracts to save money. Will my right hon. Friend reassure the House that the evils of PFI under Labour will never be repeated in this new round of investments and that the apparently systematic pattern of delaying and thwarting necessary remedial actions will never be part of the plans that he has laid before the House?
My hon. Friend has played a very important role in scrutinising and making public many of the most appalling features of PFI under the previous regime, and I congratulate him on that work. As he will know, a few months back, we announced the new private finance 2 model, which strips out an awful lot of the things that he is concerned about. We are also engaged in a detailed cost review of PFI projects to try to make sure that, where we can, we reduce cost pressures, as we did successfully with the Romford hospital PFI.
(11 years, 3 months ago)
Commons ChamberFirst, I hope the right hon. Lady will join me in commending the work done by my hon. Friend the Member for Warwick and Leamington (Chris White) to ensure that the 2012 Act reached the statute book. I also commend her for her work to promote and help its passage. However, I do not recognise her comment that jobs and growth have been elusive. We have seen 1.25 million jobs created in the past three years: one of the fastest rates of private job creation ever. Returning to her main point, it is important that social impact is taken into account in public procurement. The Treasury takes that very seriously, and we expect other Departments to do so too.
Will my hon. Friend join me in congratulating Hereford Futures on its new construction project in Hereford, which precisely targets drawing in local labour and local firms for the reasons of social value that the right hon. Member for Salford and Eccles (Hazel Blears) mentioned?
Yes, I join my hon. Friend in commending Hereford Futures. It is just the kind of procurement we want in promoting social impact.
(11 years, 5 months ago)
Commons ChamberMy hon. Friend is spot on. A bank’s leverage is the ratio of its assets to its equity capital. Its equity is equal to the value of its assets minus the value of its liabilities. A higher leverage ratio magnifies returns because any growth in the assets will be proportionally greater if equity is thin. The corollary, however, is that any losses are also magnified if leverage is greater. Such a bank’s equity can be wiped out by a smaller shock than would wipe out the equity of a less leveraged institution.
Vickers recommended a 25:1 leverage ratio for systemically important banks—in other words, 4% of equity capital—but the Chancellor has dismissed that proposal. The parliamentary commission says that it is “not convinced” by the Government’s decision to reject Vickers’ recommendation to limit leverage in that way, and that it
“considers it essential that the ring-fence should be supported by a higher leverage ratio, and would expect the leverage ratio to be set substantially higher than the 3% minimum required under Basel III.”
Will the hon. Gentleman explain why the average leverage ratio for the banking system, which had been 20 times for the 40 years before 2000, went up to 50 times in the seven years between 2000 and 2007, according to the Independent Commission on Banking? Might that have had something to do with the present shadow Chancellor being the Minister for the City at the time?
No. With hindsight it is clear that we need a tough leverage ratio, and I think the hon. Gentleman’s question implies that he accepts that leverage is an important part of the regulatory toolkit. That is why it is wrong that the Bill ignores the recommendations of Vickers, in particular, but I am afraid that the Chancellor seems to have dismissed the recommendations of not only Vickers but the parliamentary commission on this issue. It is not good enough that the Government are leaving this matter out of the Bill, perhaps assuming that the European Union will somehow address it in the next eight or nine years.
Even the incoming Governor of the Bank of England, Mark Carney, pointed to the value of a higher leverage ratio as a backstop for a risk-based capital regime when he gave evidence to the Treasury Select Committee. There are ways of overcoming the impact of such a measure on a minority of non-plc institutions—I know that some of the bigger building societies, in particular, have expressed their concerns about a crude leverage ratio approach—but that is not a reason not to put a safeguard in place. At the very least, the Government ought to accept the parliamentary commission’s proposal for an annual assessment to be carried out by the Bank of England of the progress of the work to improve risk weightings and the work towards the leverage ratio.
Let me put the question to the hon. Gentleman in another way. Does he regard it as slightly ironic that he is now pushing for a leverage ratio that is roughly half the ratio that the Labour Government allowed to occur five years ago?
We have to learn the lessons of that global financial crisis, one of which is that leverage has come to the fore as a way of illustrating the over-extended nature of the banking system. I am glad that consensus is breaking out across the Chamber on this point. As the hon. Gentleman knows, he and I have almost been in concert in voting on a variety of amendments, some of which have been inspired by his very own articles. I therefore look forward to him joining us in the Division Lobby—if it comes to that—on the question of the leverage ratio.
Not at the moment.
We need improvements in the standards and the culture of our banking sector, and Ministers ought to have allowed enough time for them to be discussed in Committee. We will table amendments providing for the establishment of a professional standards body to enhance the approved-persons process. There needs to be a clearer complaints procedure, and a stronger facility for failing banks to be struck off. We need clarity in regard to the professional qualifications and competences that are expected, especially in the wholesale sector, and a code of conduct that is monitored and enforced effectively and applies not just to significant influences in the banking sector but to all bank employees. We need safeguards to secure the independence of board directors overseeing ring-fenced banking activities. The commission has very reasonably recommended a “sibling” rather than a “parent-child” corporate ownership structure.
I am trying to follow the hon. Gentleman’s argument, but it has become fatuous. The fact is that the banking system had a leverage ratio of 20 times in 2000, as it had had on 40 previous occasions. Deregulation under the last Government but one had nothing to do with this financial crisis, which was caused by an increase in leverage—an explosion of leverage—under the Labour Government between 2000 and 2007. It is in the Vickers report.
If the hon. Gentleman’s analysis is correct, he will no doubt join us in the Division Lobby to institute the recommendations on leverage from the parliamentary commission. Is that his intention? Will he join us in supporting our amendments? I will give way to him if he wishes to answer that question, but I do not think he does. That is a shame, because I know that he feels strongly about these matters, but I can detect the gagging influence of the Treasury Whip as he texts the message “Be careful: Jesse Norman is on his feet again.” Forgive me, Mr Deputy Speaker, I meant to say the hon. Gentleman. The alert has gone out that rebellion is in the air.
We need more protections to deal with standards and culture, and we need to make sure that whistleblowers in the banking sector are given protection. We also need to set up a financial crime unit within the Serious Fraud Office, using some of the resources that are flowing from the fines. We probably also need to deal with the statute of limitations issue, going beyond the three years to give the regulators additional powers.
(11 years, 6 months ago)
Commons ChamberUrgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Of course, I congratulate Swansea on its victory in the Capital One cup.
We have to take difficult decisions on things like welfare, but we are helping people to have incentives to be in work, helping people who are in work and supporting people by, for example, increasing the personal allowance and taking the lowest-paid out of tax altogether. I would hope that the hon. Gentleman supports that.
The Chancellor has rightly drawn attention to the effect of deleveraging. May I remind him that the average leverage ratio for the banks in the 40 years between 1960 and 2000 was 20 times, and that between 2000 and 2007 it rose to 50 times? Will he remind us which party was in government at that time and who was the Minister for the City?
We are now looking, through the Basel agreement, at a leverage ratio as a back-stop to regulation in this country, and of course we have the Financial Services (Banking Reform) Bill coming through Parliament better to protect and regulate our financial services. My hon. Friend is quite right to remind us of who was the City Minister when the City blew up.
(11 years, 6 months ago)
Commons ChamberIt is an inconvenient truth to the hon. Gentleman that public investment as a percentage of GDP is higher on average in this Parliament than under the entire last Labour Government. That is because this Government are making the difficult choices on welfare, which Labour Members oppose, to save money and reduce the deficit, and to spend more, for example, on roads than they did during their period in office. That is the right priority for the taxpayer.
Can the Chancellor confirm that Labour’s last Budget planned to cut capital spending by 50%?
Yes I can. Again, it is an inconvenient truth that we are spending billions of pounds more on capital spending than was setout in the Budget that half of them opposite, who were in Parliament before the last election, voted for. We are making those choices: they oppose everything because they have nothing to offer in this place.
(11 years, 9 months ago)
Commons Chamber4. What assessment he has made of the fiscal implications of the Government’s proposed employee-owner scheme.
6. What recent representations he has received from businesses on the fiscal implications of employee ownership.
The Government expect that the scheme will cost up to £100 million in 2017-18. The initial estimate will be refined following the Department for Business, Innovation and Skills consultation on the implementation of the new employee-owner status, which involves engagement with business and others and will close on 8 November. The annual breakdown of the estimated Exchequer cost of the policy will then be published at the autumn statement once it has been certified by the Office for Budget Responsibility.
Studies have shown that employee-owned companies grow as fast as limited companies, are more resilient and better at creating and keeping jobs, and have higher levels of staff well-being and fairer pay, which means that they are proven to create social value. As well as removing current tax incentives, will the Government consider a new capital gains tax relief for businesses sold into employee ownership?
My hon. Friend will be aware of the Nuttall review, which reported last week. The Treasury is also considering its role in helping employee ownership to support growth as well as options to remove barriers, including tax barriers. That work is being considered in the run-up to the autumn statement.