Banking in Scotland

Jim McGovern Excerpts

Thursday 14th October 2010 Westminster Hall

[Mr Davidson]

If people just mention the arc of prosperity the nationalists tend to become somewhat overexcited. I understand that and accept that it was my responsibility. I will try not to say anything else that might prove unduly provocative.

Visiting Ireland was interesting because—

[Jim McGovern (Dundee West) (Lab)]

Will my hon. Friend give way?

[Mr Davidson]

I hope my hon. Friend is not too excited.

[Jim McGovern]

I will try not to be.

Charges of €50 to visit a general practitioner, €85 per month prescription charges, 25% VAT, 50% income tax and £8 for a pint of beer, which is hard for some people to swallow, are all characteristics of small European countries regularly used as examples by the separatists who want to take Scotland out of the UK.

[Mr Davidson]

Indeed, all that is true. However, I am in danger of becoming diverted. Far be it from me to allow that to happen. I look forward to hearing exchanges on such matters later.

Our visit to Ireland was helpful and constructive. I want to put on the record that we were pleased that all those whom we met were prepared to be perfectly open with us and that they put everything that we asked for in front of us. That made the trip more interesting, enjoyable and educational than it might otherwise have been.

It is clear that in Ireland there was a sort of crony capitalism, where everybody not only knew each other, but lent each other money. The housing prices in particular rocketed upwards to such an extent that when the crash came the central bank was not able to bail out those who found themselves in difficulty in quite the same way that we in the UK were able to. Scotland had the great advantage of being part of the Union and therefore the Bank of England was able to bail out the Bank of Scotland and the Royal Bank of Scotland.

--- Later in debate ---

[Mr Davidson]

Indeed, Mr Rosindell, I was led astray by bad boys.

I was asked about conclusion 3. The Committee stated in its report:

“We welcome the optimism of those working in the financial services sector who believe that the reputation of that sector in Scotland has not been permanently damaged by the difficulties experienced by two of Scotland’s, and the UK’s, largest banks. We are reassured that the quality of the location, the lower costs and the depth and diversity of its labour pool remain attractive to global corporations.”

That is particularly welcome in view of one of the Committee’s anxieties. We asked everyone we saw whether they believed at that time—the hearings took place in December 2009 and January 2010—that the financial crisis that had arisen from the activities of those working for the Bank of Scotland and the Royal Bank of Scotland would have a long-term impact on the finance industry in Scotland. It was reassuring and supportive of what we were seeking to do to have a clear view from virtually everyone we spoke to that there was no doubt about that. A few people had some doubts, but we subsequently spoke to some of them informally and were reassured that they believed that the waters had calmed and that the Scottish finance industry, although shaken, had not been brought tumbling to the ground. I am glad to see the Government’s response to that conclusion, which is:

“The Government will continue to work with the Scottish Government to ensure that the financial services and banking sectors remain strong in the future.”

I hope that they are also prepared to continue working with the Scottish Affairs Committee, as well, to ensure that, as we monitor, we try to pull things together as far as possible.

[Jim McGovern]

Unfortunately, I must leave shortly, but I wonder whether my hon. Friend and other hon. Members have had the same experience as I have had. I was elected in 2005, and hold a surgery every week. Generally, the people coming to my surgeries had problems with tax, pensions, immigration, visas and so on, but in the past year or so, more and more members of the local business community have come to my surgeries complaining about how they are treated by the banks. Is that a common experience?

[Mr Davidson]

I have certainly had more people coming to my surgeries to talk about how they are being treated by the banks. I am also aware from money advice centres, Citizens Advice and other advice centres in my area that since the banking crisis the number of people complaining about how the banks have dealt with them has risen considerably. One is never entirely sure whether that is because the issues have been given more publicity—what we hear in our surgeries is not necessarily an objective assessment—but it is noticeable that the numbers have risen substantially, and I understand that that is a common experience.