Banking Commission Report

Jim Shannon Excerpts

Monday 19th December 2011 Commons Chamber

[Mr Osborne]

The financial compensation scheme is very clear. We cover 100% of eligible deposits, up to £85,000 in a subsidiary. It is important that people are aware of that, and I think the public are more aware of it than they were three or four years ago. We want the explicit taxpayer guarantee of people’s deposits; what we do not want is the implicit taxpayer guarantee of the banks that took those deposits.

[Jim Shannon (Strangford) (DUP)]

I welcome the Chancellor’s statement. Will he confirm that the legislation will apply to mutual societies? If so, would it have prevented the crisis in the Presbyterian Mutual Society in Northern Ireland?

[Mr Osborne]

One of the things we are considering is whether there should be a de minimis exemption from the regulations for smaller banks and building societies. Vickers proposed that in the interim report, but not in the final report, so this is an area where we are looking at the interim report, rather than the final report. However, we will consult, and the views of Members from Northern Ireland and others will be welcome in that process.

The Economy

Jim Shannon Excerpts

Tuesday 6th December 2011 Commons Chamber

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

There is a paradox at the centre of the autumn statement that makes it self-defeating. The statement was widely touted as a growth Budget, but it is the opposite. The infrastructure plans relate to the medium-term future, on a three to 10-year time scale, but even if they materialise they are not the stimulus that is urgently needed now. Pension funds will certainly not invest in infrastructure unless the Government fully underwrite the risk, in which case it will be registered in the national accounts as a potential increase in expenditure and thus a rise in indebtedness. The paradox is that even to achieve that “smoke and mirrors” impression of growth the Chancellor is such a deficit fetishist that he has been obliged to tell the markets that there is no increase in spending at all, and everything has been funded by cutting spending elsewhere.

Significantly, the Chancellor has chosen to make those cuts by hitting the poorest hardest. Of the £1.2 billion child tax credit and working tax credit savings over the next year, 32%—nearly a third—will come from the poorest fifth but only 6% from the richest fifth, yet the poorest are precisely the segment of our population that is by far the most likely to spend and thus to stimulate growth. Reducing that source of growth in favour of will-o’-the-wisp infrastructure plans in the medium-term future is a pretty silly policy. It is certainly perverse and anti-growth.

The biggest problem facing Britain is not indebtedness, but the lack of aggregate demand. Everyone recognises that except our myopic Chancellor. In the 1930s, John Maynard Keynes said that if we look after unemployment, the budget will look after itself. Exactly the same thing applies today. Christine Lagarde, the head of the International Monetary Fund, warns that if all countries deleverage at the same time, it will be economic suicide. It is absurd to imagine that the markets would not accept some modest loosening of the monetary targets if it was likely to produce a serious prospect of growth; indeed, they would welcome that.

Of course we have constantly heard the Chancellor’s refrain against this argument, his canard that any increase in public expenditure will push up interest rates, threaten the precious triple A rating and cost Britain more, but he does not have to increase public borrowing to kick-start growth. There are two sources of funding that he could draw on at no risk from the markets whatsoever. One is to require the super-rich to make a fair contribution to the Exchequer at a time of crisis for the country. At present they are contributing next to nothing.

In the past year, according to the IFS, the income of the bottom 10th of the population rose by 0.1%. The income of the directors of the top FTSE 100 companies rose by 49%. That is just about 500 times as much. It is time those latter people and the financial and corporate elite of which they are such a part made a fair contribution.

[Jim Shannon (Strangford) (DUP)]

The right hon. Gentleman has clearly identified those at the top of the earnings scale, but at the bottom of the earnings scale are the long-term unemployed. Does he accept the concern of many in the House that the long-term unemployed are not looked after, and that there seems to be little regard for them?

Autumn Statement

Jim Shannon Excerpts

Tuesday 29th November 2011 Commons Chamber

[Mr Osborne]

Yes, I of course agree with my hon. Friend. Again, another success story at the moment is the car industry. I am absolutely delighted by Jaguar Land Rover’s announcement, which is a real vote of confidence in the UK—the company could have constructed that engine plant elsewhere in the world. The announcements that I have made on R and D above-the-line tax credits will also help larger companies do their R and D in Britain.

[Jim Shannon (Strangford) (DUP)]

One of the biggest problems of modern society is youth unemployment. The Chancellor said that companies would be given national insurance discounts and other incentives to recruit and train young people. What other help will they be offered for that purpose?

[Mr Osborne]

We are helping companies to train young people through our apprenticeship programme, and I am happy to be engaged in active discussion with the devolved Administration in Northern Ireland about how that help can best be delivered there.

Fuel Prices

Jim Shannon Excerpts

Tuesday 15th November 2011 Commons Chamber

[Mr Dodds]

Yes; transport is a big issue for young people, because in order to get jobs, stay in employment, get around and socialise they need to be mobile. In rural areas and poorer areas it is difficult for people to sustain that at the current price of diesel and petrol.

[Jim Shannon (Strangford) (DUP)]

We are urging people to get into work, but people who live in rural areas in Strangford and who travel to my right hon. Friend’s constituency of Belfast North will find that a two-hour round trip costs £10 a day. That is £50 a week or £250 a month, which is a large chunk out of anyone’s wage packet. Does my right hon. Friend agree that a reduction in the price of diesel and petrol would help the unemployed to get a job and would help the employed to stay in work?

[Mr Dodds]

I am grateful to my hon. Friend, who makes a good point and illustrates it with the facts. I will come on to the situation in Northern Ireland, but it is clear that a car is a necessity, not a luxury, for many people in his constituency, so he makes a valid point.

The fact is that Northern Ireland has the highest-cost fuel of any region in the United Kingdom. The Automobile Association’s October fuel price report showed that of the 12 regions of the UK, Northern Ireland was, on average, the most expensive for unleaded petrol, diesel and super-unleaded. On top of that, its energy prices more generally are among the highest in the United Kingdom. I mentioned car insurance; Northern Ireland’s car insurance premiums are by far the highest in the United Kingdom. They are, on average, 83% more expensive per person than in the rest of the United Kingdom. Earlier, someone mentioned a double whammy for their constituents; in Northern Ireland, we have a severe triple whammy when it comes to energy, fuel prices and car insurance. Those issues have to be addressed. Some will have to be addressed by the devolved Administration, and there are Ministers working on the issues, here and at home, but there are also issues that can be addressed only at the level of the Westminster Government.

I hope that this debate will contribute to focusing the Government’s mind on this serious problem. Some 83% of people in Northern Ireland go to work by car, van or minibus, compared with only 70% in the rest of the United Kingdom. That shows the rural nature of much of Northern Ireland, and the fact that we have an underdeveloped public transport network; for example, large parts of the west of the Province are not served by the railway network. Clearly, the car is therefore a necessity there, not a luxury.

--- Later in debate ---

[Sammy Wilson (East Antrim) (DUP)]

I welcome the opportunity to speak in the debate, because the price of fuel is an important concern for many of our constituents. I will start with two observations. First, I am glad that there has been little evidence today in the House of the green zealotry that drove the increase in fuel prices—a point we must not forget, because it was argued that that was a way of weaning the population off fossil fuels. Secondly, although Members have talked about the role of petrol and oil companies, let us not forget that 60% of the cost of fuel is accounted for by Government action. Therefore, this is the appropriate place to debate what can be done about it.

The Government’s record on this differs from what they said in opposition. They had many fine ideas in opposition. Indeed, in “A Fair Fuel Stabiliser” they indicated that any reform should help families when the cost of living is rising and reduce the inflationary impact on the economy—but what has the record been since they came into power? In Northern Ireland, fuel bills for families have increased by an average of £254 a year for those using diesel and £284 a year for those using petrol. The Government promised in opposition to do something for families when the cost of living was rising, but their actions have been different.

They made clear in opposition what they thought about an increase in VAT. Indeed, in an intervention in this House in 2008, a Conservative Member asked the then shadow Chancellor:

“Does my hon. Friend not agree that Labour’s plans to increase VAT to… perhaps even 19.5 per cent…. after the next election will hit hard-working families hardest? Should the Government not be ashamed of themselves?”

The answer was “absolutely”, and that the Conservatives would keep reminding the then Government of that

“every…day between now and the…election.”—[Official Report, 26 November 2008; Vol. 483, c. 741.]

The Conservatives did that, but as soon as the election was over and VAT went up to 20%, it all went quiet on the Government Benches, and we did not hear much from them about VAT hitting the poorest families hardest.

During this debate, Government Members have said, “Ah, yes, but we reduced fuel duty.” On the one hand, fuel duty was reduced; on the other, VAT was put up. The Chancellor gave, and the Chancellor took away. That is the truth for hard-working families.

[Jim Shannon]

I thank my hon. Friend for his passionate speech. As he represents a rural constituency similar to mine, has he been contacted by farming communities regarding the effect of fuel prices on food production, which affects everybody in the country? There is the price of the fuel for their machinery, but the increased fuel prices also get passed on to them in the price of fertiliser and other things that they use on the farm. Is he concerned about that, and about its impact on food prices?

[Sammy Wilson]

That just illustrates the inflationary impact of the situation, not just on individual families but throughout the economy, and the Government ought to bear it in mind as they ask themselves, “What shall we do to regenerate the economy?”

Various reasons why it is difficult to do something have been given. The first, which we have heard from Government Members, is that if we try to reduce VAT Europe will intervene. That is another reason for renegotiating our position on Europe—but leaving that aside, I note that 75% of the tax is not VAT but fuel duty, so even if there is a problem with Europe, the Government have another way of dealing with the problem.

The second reason that has been given has involved asking, “What about deficit reduction?”, but there does not seem to have been any difficulty with deficit reduction when it has come to bailing out the euro, with £12.5 billion having already been pumped into it and the Government talking about more money going to the International Monetary Fund. Indeed, as Government Members have said, the measure could almost be self-financing anyway: if, for example, it led to a rise in demand, there would be more duty; if it cut costs, more corporation tax would be paid.

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[Tom Blenkinsop]

That is precisely the point I am making. The lack of a Government growth strategy is making it even more difficult for women to exist within or get into the labour market.

Those women and other workers, particularly in my constituency, need affordable transport, and the Chancellor’s 20% VAT rate is counter-intuitive to that requirement. The economic climate is such that growth in private sector jobs is flatlining, and such jobs are mainly part-time and low paid. The problem is that people who want to work full-time can only get part-time jobs. Part-time employment cannot fund the everyday necessity of a car, and part-time workers are increasingly reliant on a diminishing—

[Jim Shannon]

Is the hon. Gentleman aware that over the past 50 years car ownership has increased from 5% to some 51%, and that those in a lower income bracket are most affected? Does he not think that that clearly underlines the case that we need lower prices?

[Tom Blenkinsop]

Yes. We have heard today the very good arguments about the differences between rural and urban areas, but in certain rural communities in my constituency there is less than 30% car ownership, so there are also class and income issues, as well as a diminishing public transport system that is becoming more and more expensive because of Tory cuts and rising fuel prices.

Female part-time workers often visit two or three workplaces. I used to cover, as a community trade union official, Teesside Cast Products, a steelworks in Redcar. I also represented those in OCS, who worked not only as cleaners and canteen staff but elsewhere as carers on a part-time basis. One of the women I knew did a total round trip of approximately 40 miles a day between two or three work sites. Her employers frequently attempted to remove or decrease her company subsidised fuel costs through unilateral variations in terms and conditions. The Government’s attack on her tax credits and their policy of 20% VAT made it almost impossible for her to work on a day-to-day basis. If it were not for the union fighting for her terms and conditions on fuel payments from her employers, she would undoubtedly have become a Department for Work and Pensions statistic and have been downgraded into a burden on the state rather than the hard-working unionised woman I know her to be.

The Office for National Statistics has demonstrated that in 2010 the poorest 20% of households spent 3.5% of their disposable income on petrol and diesel, compared with 1.8% in the case of the richest fifth of the population. Meanwhile, in the same period, Shell’s profits more than doubled to £4.3 billion, Exxon Mobil made £6.5 billion, and BP made £3.2 billion. We must take note that the squeeze caused by the Chancellor increasing VAT from 17.5% to 20% has added 3p to the price of a litre of petrol. Diesel keeps industry, and the vital service sector that it requires, flowing, much like capital and skills. More than this, public services, including Royal Mail, such as it is—it is going to be fractured and regionalised by privatisation—police vehicle response units, ambulances, fire services and councils incur increased costs via the 3% VAT increase.

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[Nic Dakin (Scunthorpe) (Lab)]

Let me begin by thanking the many constituents who have contacted me to express their concern about fuel prices. The debate has covered a wide range of issues. Having listened to all of it, I have concluded that there is a unanimous view throughout the House that higher fuel prices are hitting people hard at a time when household budgets are being squeezed as a result of rocketing energy prices and rising food prices. As was pointed out by the hon. Member for Harlow (Robert Halfon), whom I congratulate on securing the debate, mums, ordinary families and small businesses are being affected by the level of fuel prices. It is now clear that the Government’s decision to increase VAT to 20% in January, pushing up the price of petrol and the cost of living, was a serious mistake.

[Jim Shannon]

Does the hon. Gentleman agree that transport is the single biggest item of expenditure for most households, ranking above food, power and housing, at a time when the level of inflation is also increasing? Does he believe that a decrease of 1p, 2p, 3p or more on the forecourts would make a difference?

[Nic Dakin]

I think that a decrease on the forecourts would be very welcome to ordinary families and businesses.

The Tory tax of choice, VAT, is a regressive spending tax, and I welcome the recognition on the Government Benches that that regressiveness is damaging household incomes. New EU growth figures have been published today. They show that the UK’s economic growth is slower than that of all the other EU countries except Greece, Portugal and Cyprus. It is therefore essential that there is action now. We urgently need action to get the economy going again. That is why organisations such as the Federation of Small Businesses are supporting Labour’s five point plan for jobs, including cuts in VAT, tax breaks for small businesses that take on extra workers, and taxes on bankers’ bonuses to create 100,000 jobs for young people.

I want to focus on young people, as these fuel taxes are creating difficulties for them in getting to learn and getting to work.

Eurozone Crisis

Jim Shannon Excerpts

Tuesday 15th November 2011 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I am grateful to you, Mr Caton, for allowing me to speak. I commend the hon. Member for Basildon and Billericay (Mr Baron) for bringing this matter to the House today and giving us all a chance to express ourselves in the way that our constituents have expressed themselves to us.

I want to make it clear from the outset where my opinion lies—we need to look at the signs in front of us and then take action. Iceland was not prepared to pay back a bail-out; the Greeks were not willing, or perhaps they were not able, to make the cuts necessary to meet their payments; and now we are looking towards Italy and all the chaos that seems to be enveloping that country. For too long, we have watched other countries prosper with bail-out funding while we cut funding to schools, hospitals and infrastructure to remain solvent and to claw our way back to a sound financial footing, which are the very things that the hon. Gentleman discussed.

For too long, we have paid into the EU while watching our farmers and fishermen flounder under the weight of EU dictates. We watched other nations flaunt the rules even as we were fined £60 million in Northern Ireland for mistakes in filling in some forms. Just last week in Portavogie, which is in my constituency, I had an opportunity to speak to some fishermen. They told me that they are weighed down by bureaucracy, such as new rules on mesh sizes for nets and types of net by red tape and by monitoring, which they have to pay for themselves because the cost of policing fishing falls on the heads of fishermen.

I believe that the people want out. They see the crisis and that the house of cards is no longer simply swaying but precariously quivering with the wind of change blowing through Europe. We stood in this House last month and advocated allowing the people to have a referendum on Europe. We were denied the opportunity to have a referendum by the strong whip of the three major parties. At least my party, the Democratic Unionist party, stood strong and united in our call for a referendum. We feel that that is what the people want us to do. People must be given the opportunity to have their voices heard.

My mother had a wee statement; she had lots of wee statements, as mums always do. She said, “Don’t throw good money after bad,” but that is what is happening in Europe. How long will it continue? When will it end? Is this not the chance to leave Europe, or to change it so that it no longer resembles the red-tape-loving, common-sense-ignoring, self-serving, life-sucking drain of money that it has been for so long? Angela Merkel, the German Chancellor, has said that she wants substantial treaty change to strengthen it and to give the European Commission the chance to impose fiscal discipline on excessively indebted states in the single currency area. I am concerned that other European countries have a clear policy—a strategy—about what they want, and that they want us to be a subservient part of it. We want, and need, more. We need to be free to fish our seas and farm our lands responsibly, as we have done in the past, and we need not to be bound by restrictions placed upon us by those who are self-serving in Europe. As we struggle in this financial mire, China sits back and laughs. It is time to take control.

I have spoken before on the IMF, and I say again that the money is not for bailing out the euro, because the eurozone countries should and must bear the brunt. I stated in the House earlier this year:

“It is clear that the European financial stabilisation mechanism is not fit for purpose…On 9 May 2010, the European financial stability facility was created, and it is a special purpose vehicle agreed by 16 members of the eurozone and aimed at preserving financial stability in Europe by providing financial assistance to eurozone states in economic difficulty.”

That is very commendable, but perhaps unworkable. Furthermore:

“Thus far, we are not at all involved, but no to the euro meant no to the EFSF. The tricky part came with the notion that the facility may be combined with loans of up to €60 billion from the European financial stabilisation mechanism, which is again reliant on funds raised by the European Commission using the EU budget as collateral, and up to €250 billion from the IMF, all to secure a safety net of €750 billion.

If there is no financial operation in activity, the EFSF would close down after three years, on 30 June 2013. If there is a financial operation in activity—which of course there is—the facility would exist until its last obligation had been fully repaid. There has indeed been activity, and a good deal of it involving the EFSM, despite the fact that it should not have been involved to the extent that it had an equal if not greater share of the bail-outs. The purpose of the European financial stabilisation mechanism is to provide an emergency funding programme that is reliant on funds raised on the financial markets and guaranteed by the European Commission using the European Union budget as collateral.”—[Official Report, 24 May 2011; Vol. 528, c. 813.]

In my opinion, that has not changed, and as we look at Greece and Italy and wait to hear of the next country to fail, it is clear that despite the Prime Minister’s claim that there is no risk to the taxpayer, there is a danger that the money will not be used for the good of the United Kingdom. That is a huge risk, and it cannot be allowed.

I sincerely urge the Minister to think clearly before any more money goes into the IMF. We have been hoodwinked before to our detriment and to the financial cost of everyone in this country, and it cannot happen again. Let us not forget that we are fighting to reduce the deficit here and that we must prioritise. I commend the Prime Minister on his idea of the big society. Regardless of whether it is workable, I support the thrust of it, but it will be difficult for it ever to happen and for the benefits to be seen in the UK, never mind Europe-wide. As I stand here today representing my constituents, I state very clearly that we should not put any more of our funds into the IMF without first being certain of where the money will go, to the penny. We cannot afford to do otherwise, because the people do not want us to, and it is their money that the Government are toying with. For the first time since joining the EU, it is time to work things out to our advantage. We need to take that chance, and we need to take it now.

I support the thrust of what other hon. Members have said today, and I hope that the Minister will respond positively to our concerns as MPs and elected representatives. The concerns are genuine. The people I represent, who have put me here, are very clear: they want us out of Europe, and they want us out now.

Car Insurance (Northern Ireland)

Jim Shannon Excerpts

Wednesday 19th October 2011 Commons Chamber

[Ms Margaret Ritchie (South Down) (SDLP)]

I am pleased to have secured this debate on an issue that severely impacts on my constituents and others across Northern Ireland. I welcome the fact that the Financial Secretary to the Treasury is here to respond to the debate.

There are considerable problems in the motor insurance market at present, especially in Northern Ireland, where drivers are subject to excessively high insurance costs that are rising rapidly year on year. The problems are not unique to Northern Ireland, but they are particularly striking in our case. We have also found in our research that consumers in Northern Ireland have less choice of insurance providers, with three times fewer companies offering car insurance.

I also welcome the introduction of the Motor Insurance Regulation Bill, promoted by my right hon. Friend the Member for Blackburn (Mr Straw). My right hon. Friend, quite rightly, shone a light on troublesome referral practices and the Bill promises to make much-needed changes to the regulation of the insurance market in England and Wales. Although referrals operate in a different manner in Northern Ireland, the purpose of my speech this evening is to cast light and call for action on many of the issues that plague the operation of the car insurance industry in Northern Ireland. These issues are not entirely commensurate with those raised by my right hon. Friend in relation to England, but must be dealt with in the same direct and purposeful manner. I call on the Minister, where possible, to ensure that that is the case and to use his good influence to press the Northern Ireland Executive to act on the issue.

In August the Consumer Council for Northern Ireland launched a campaign to highlight the cost of car insurance, which I fully support. The Minister will no doubt be aware that the Office of Fair Trading subsequently agreed to undertake an investigation into the car insurance market with a specific focus on Northern Ireland. We must robustly establish why premiums have increased by a reported 40% in the 12 months to March 2011, and why insurance costs are significantly higher in Northern Ireland than in other regions. Indeed, we need not only to assess that, but to redress it. The findings must be robust and the resulting measures must have teeth.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Lady on introducing this debate on an issue that is very important to us all in Northern Ireland. The concern about the insurance premiums is clear, and one reason for those insurance premiums, and the difference in price between Northern Ireland and the UK mainland, is the Compensation Act 2006. Is the hon. Lady aware that in the past year the number of claims notified to the compensation recovery unit in Northern Ireland fell by 23%, whereas in England and Wales it rose by 17%? Is she also aware that last year some 30,000 claims for compensation were made, but that in the past year only 768 were made and their value in the county court is less than £5,000—far below the equivalent figure in England and Wales? Does she feel that, for those reasons alone, insurance premiums in Northern Ireland should be reduced? It is quite obvious that the drivers and vehicle users in Northern Ireland are being disadvantaged financially.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. That intervention was a tad long, Mr Shannon.

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[Ms Ritchie]

I thank the hon. Lady for her useful intervention.

All those facts weigh heavily against any argument that the specific demographic or topographical factors in Northern Ireland justify the increasing costs of insurance, and are extremely difficult to relate to the draconian rise in the cost of insurance premiums.

It has also been suggested, by the Association of British Insurers and others, that the legal system in Northern Ireland imposes increased costs on insurers. However, when compared with what happens in England and Wales, many of the factors in Northern Ireland would be expected to act in the opposite direction. My right hon. Friend the Member for Blackburn rightly highlighted the impact of referral fees on insurance premiums in England. It must be noted that a statutory prohibition is in force against solicitors paying referral fees in Northern Ireland. Given that the payment of referral fees to claims management companies has frequently been cited as a significant contributory factor to increasing premiums in England, its absence would be expected to drive down the costs of insurance in Northern Ireland. However, that does not appear to be the case.

I am certainly not claiming that the system in operation is perfect. Indeed, although referral fees are prohibited for solicitors, other agents, such as brokers, credit hire companies and repair garages, may receive them. Although credit hire companies offer a useful service for non-blame drivers, they also raise the cost for insurers, and we must have firm regulations to remove the potential for the exploitation of accidents or those involved in collisions. The claims advice service is an important step in doing that, and should be commended. Another factor cited as a reason for increasing insurance prices in England is the practice of “no win, no fee”. Such a regime does not operate in Northern Ireland. Indeed, the fact that any claimant would have to invest their own money, or else find a solicitor willing to fund the costs, is a powerful disincentive against speculative claimants.

[Jim Shannon]

I shall be very quick with this intervention, Mr Deputy Speaker. Does the hon. Lady think that specific consideration needs to be given to social need and the fact that Northern Ireland is clearly, as we all know, a rural community? There are special circumstances in Northern Ireland. Does she think that those should be considered as well?

[Ms Ritchie]

I take on board what the hon. Member for Strangford (Jim Shannon)—my neighbouring constituency—has said. Like him, I represent a rural constituency and am well aware of issues such as a lack of jobs, inaccessibility, and the economic burden on people. All those can place increasing burdens on people at a time when insurance premiums are increasing.

All that, taken together with the absence of referral fees for solicitors, suggests that Northern Ireland offers a legal system that should act to keep costs down and be at least as effective as the system in England and Wales, if not more so. I would like the Minister to note my concern that that is certainly not reflected in the cost of insurance. I accept that the cost of claims for minor injuries in Northern Ireland can be higher than in England and Wales, partially as a result of there being no recourse to the small claims court for such cases, but opening up the small claims court to such cases is not necessarily the remedy, as that will bring its own risks and problems. However, more needs to be done to ensure that spurious and over-inflated claims do not clog up the system and raise costs for honest motorists. We must increase the burden of medical evidence that is required before establishing cases of whiplash or other, similar injuries, not to penalise the vulnerable—those with genuine, medically verifiable injuries would in no way be affected—but to ensure that the police and medical authorities work together so that claims are paid only in cases involving genuine accidents and genuine injuries.

I have dealt at length with the figures and the legal issues, but behind the wealth of statistics are the everyday problems that the high cost of insurance represents. Those living on low incomes or in rural areas can simply no longer afford to keep a car on the road. Many young motorists and their parents in my constituency have told me of their struggles to secure affordable insurance. They are understandably concerned about the discrepancy in insurance prices between Northern Ireland and other regions in Britain. Through having to pay excessive insurance fees, households in Northern Ireland are being discriminated against. That unfair practice has been in place for too long, adversely affecting those, young and old, who depend on their cars for work, particularly in areas where public transport provision is limited.

The broader context is that the economy is suffering, with record numbers of young people out of work, and that is only exacerbated by restricting people’s use of motor vehicles. We need a dynamic, mobile work force, but making the cost of car insurance so expensive puts up a barrier to our economic success, especially for the young, among whom the unemployment rate is estimated at 18%—almost one in five cannot find a job—compared with an overall unemployment rate in Northern Ireland of 7.6%. Excessive insurance premiums adversely affect young people, preventing them from offering the skill of driving to potential employers. In these extremely challenging economic times, I would ask the Minister to consider any measures that would make insurance more affordable for young people, particularly when driving relates to their employment.

Insurance costs have a real impact on people, young and old, who need to be mobile for social and economic reasons. I hope that I have made clear the scale of the problem faced by our motorists. The insurance industry must stabilise its premiums so that hard-pressed motorists get a fair deal when they purchase their vehicle insurance. I seek assurances from the Minister that he recognises the problem and will act in unison with ministerial colleagues in the Northern Ireland Executive to address the problem in the light of any recommendations from the upcoming Office of Fair Trading report.

Day in, day out, my Northern Ireland colleagues and I face constituents who come to us about the rising cost of car insurance. I heard it again today when I participated in a BBC Northern Ireland debate. There were numerous calls from young people, as well as middle-aged to elderly people, all complaining about the lack of competition and the lack of insurance companies offering different insurance rates. However, the most abiding comments that I heard were about how people wanted insurance costs driven down so that they could drive their cars and access the employment market.

I thank you for your indulgence, Mr Deputy Speaker, and look forward to the Minister’s response.

Arch Cru Compensation Scheme

Jim Shannon Excerpts

Wednesday 19th October 2011 Westminster Hall

[Tom Greatrex]

I thank my hon. Friend, who makes an important point, which goes to the heart of this issue—the role of the FSA as the regulator and, it seems, the broker of a deal that might help to get something off its back.

It seems the FSA cannot work out what happened. It wants a line to be drawn under this issue, but thousands of unhappy people expected the regulator to prevent this abuse from happening. The FSA has said that the deal will return to investors approximately or up to 70% of their investment, and the words “up to” are quite significant. That 70% is based on the £54 million that has been returned already, £149 million from the sale of other assets, which were valued at that level at 31 March 2011, and an additional £54 million, which Capita, HSBC and BNY Mellon agreed to without accepting liability in a deal brokered by the FSA. However, that £149 million might well not be realised, especially when we consider that the asset base included Greek shipping and what have been described to me as rust-bucket ferries, as well as middle eastern property, the value of which—if there is any left at all—could have fallen, even in the short time since March, given the current economic conditions.

The question I put to the FSA—it was entirely reasonable, but the FSA was unable to answer it—was why it did not add up the asset sales and projected asset sales and subtract them from the investors’ losses to give a figure that would make the compensation up to 100% of what people invested. In that way, people could get their money back; they would not make a profit, but simply get back what they invested, based on the assurances they were given by an organisation that was regulated by the FSA when they took out their investment.

[Jim Shannon (Strangford) (DUP)]

One thing that has come to my attention through my constituents is that the FSA has given advice to investors pushing them towards independent legal advice. Some of that legal advice has led to further complications and added to the money they had already lost. Does the hon. Gentleman feel the direction the FSA pushed investors in should be addressed, given the extra heartache and money losses they have experienced as a result of seeking legal advice that has turned out to be wrong?

[Tom Greatrex]

I thank the hon. Gentleman for his intervention. I do not wish to get drawn into the background dispute between people who have paid into a class action legal fund and people involved in a different action group on behalf of investors. To be frank, I have spoken for far longer than I intended, and I want to give others the chance to get in. There are lots of complicated issues, and I want to focus on the compensation scheme before I draw my remarks to a conclusion. I hope the hon. Gentleman will forgive me.

The approach I have suggested would simply enable people to get their money back—to get up to 100%. This case has been described as one of the worst investment scandals of recent years. There was a similar scandal under the FSA’s predecessor, the Investment Management Regulatory Organisation, and the name Peter Young will mean something to many people here. The relationships and problems involved were broadly similar, but following the suspension of the fund in question in 1996, IMRO achieved a settlement whereby people got their money back. The deal was funded by Morgan Grenfell, which was broadly in the same position as Capita.

That settlement was agreed three months after suspension. Although IMRO took action against the chief executive of the fund manager, the offer was not paid until January 1999—two years and four months after suspension. In the case of Arch Cru, however, it is now two years and eight months since suspension, and only now are letters starting to go out to people with the payment offer—I understand that they are going out now or will be going out in the next couple of weeks. Why was the FSA unable to get close to the resolution achieved by its predecessor as regulator in a similar time frame? Why is up to 70% acceptable to the FSA, when IMRO managed to get 100%?

Fourthly, there is the issue of ensuring that these events do not happen again. Something needs to change if these things are not to happen again, and people who invest their retirement nest eggs or lump sums on the basis of being told that a fund invests cautiously are not to lose their money, not to have to battle through the press to get a hearing, not to have to get a debate in Parliament so that issues can be aired and not to experience the stress, anxiety and rank unfairness of losing their money in a high-risk gamble they were told was a cautious investment.

In this regard, the FSA is about to be replaced by the Financial Conduct Authority, and the relevant proposals are beginning their pre-legislative scrutiny. What will be put in place to enable the FCA to prevent something similar from happening again? All of us, including the Government, have an opportunity to get the proposals right, and that is why these issues are a matter for the Minister and the Government. The Minister and the Treasury correspondence unit have been clear that this affair is a matter for the regulator, not them, but when the ACD fails, the regulator admits it did not know what was happening because of the structure of an investment vehicle, and the basis of a payment offer is so woefully inadequate, these things become a matter for the Minister; it becomes the Government’s responsibility to prevent or minimise the risk of such things ever happening again.

It also becomes a matter of my constituents and those of other Members present being entitled to information, but the FSA and others are not releasing much information. That is why I am putting the questions to the Minister today. Does he believe that Capita fulfilled its role effectively? Does he accept that the FSA has been hampered in fulfilling its role as regulator by its structure? Does he understand that in not providing information, there is suspicion among the investors? Does he realise that on that basis, up to 70% is just not good enough? Does he now know that the FCA needs to be bolstered for the future? Given all the above, will he now ensure that there is a section 14 investigation into what went on with Arch Cru?

I have spoken for far longer than I had intended, so I will conclude. It is easy, when looking into the matter, as I have done over the past few weeks, to get into the details and get lost in the technicalities and minutiae of the regulatory regime, and in the reputations of blue-chip companies, the statements of their chief executives and other individuals, and even the reputations of some of those in high-profile positions in the investment fund. Ultimately, the matter is about people—people such as my constituent Mr Pringle of Cambuslang, whom I have been in correspondence with. He e-mailed me yesterday and asked me to include a final point in the debate, which I will conclude on. He said that

“my wife…and I invested all our pension money with the Cru in this ‘Low Risk’ venture. Being pension money we obviously did not want any high risk ventures that would put our money at risk…We are extremely disappointed in the FSA’s attitude towards this case, by saying that they think Capita’s offer is ‘Fair and Reasonable’. Not in any way is their offer ‘Fair and Reasonable’. Investing in Greek Shipping is not ‘Low Risk’!”

That is the crux of the issue. That is why it is a matter for the Government as well as the regulator, and that is why the Minister needs to respond to the debate this morning.

Jobs and Growth

Jim Shannon Excerpts

Wednesday 12th October 2011 Commons Chamber

[Emma Reynolds (Wolverhampton North East) (Lab)]

It is a great pleasure to speak in this debate. Today’s shocking unemployment figures are only the latest confirmation that the Government’s economic policy is in tatters. When they came to power last May, the economy was growing and unemployment was falling. Only 16 months later there is a growth crisis in our country. Growth is flatlining. Unemployment is rising and is at its highest level since 1994. Youth unemployment is rising and is at its highest level since records began. Women’s unemployment is rising and is at its highest level since 1988. In my constituency the claimant rate has increased by 10% over the past year and we have an unemployment rate that is double the national average.

What do the Government say? They try to blame the eurozone. That is a completely fatuous claim, because unemployment in the eurozone and in the US is falling. The fatuous comparison with Greece really makes me angry, because Greece’s debt-to-GDP ratio has been double ours for quite some time and over 100% since the early ’90s. The truth is that the Government’s economic policy is politically motivated. Let us face it: the Chancellor is their chief political strategist and his calculation last year was to get the pain out of the way early in this Parliament so that he could offer some sweeteners towards the end, when the economy will hopefully be growing again, so that they can try to win a majority and will not have to tolerate the Lib Dems in government. Their plan is hurting, but it is not working.

The Government’s political motivation and their ideological commitment to a much smaller state is blinding them to the reality that their policies are actually making it more difficult to cut the deficit. They are now set to borrow £46 billion more than they planned. They have created a vicious circle, with massive public sector job cuts, fewer people paying taxes, more people claiming jobseeker’s allowance, less revenue in Government coffers and therefore higher than expected borrowing. They should face up to the fact that these deep cuts are self-defeating.

It is not just the Labour party that is telling the Government that their economic policy is dangerously wrong. Businesses, commentators and economists are lining up to urge them to develop a credible plan for growth. Even the Conservative Chair of the Treasury Committee, the hon. Member for Chichester (Mr Tyrie), who is not in his place, has criticised the Government for lacking a growth plan. He recently said that the

“piecemeal policies for growth need radical improvement. In places it is inconsistent, even incoherent.”

In fact, the Tory leadership was so worried about his forthright opinions that he was literally bundled into a private room for a quiet chat after the Prime Minister’s speech to his party conference. The Chancellor’s good friend, the managing director of the International Monetary Fund, Christine Lagarde, has also warned that the Government should be prepared to change course if the economy is headed for weak growth and high unemployment. Surely that is exactly where we are now.

[Jim Shannon (Strangford) (DUP)]

The Opposition’s motion recognises the need for a one-year cut in VAT on home improvements. Does the hon. Lady feel that such an initiative, by its own nature, will motivate the construction industry, give opportunities to apprentices in particular and ensure that the economy grows, rather than stagnates?

[Emma Reynolds]

I could not agree more, and I was just moving on to the interdependence between the public and private sectors, which the Government seem to be totally unaware of. According to an independent study, at least 2.3 million private sector jobs are now at risk from public spending cuts. Some parts of the country are being hit harder than others. Oxford Economics forecasts that in the west midlands, between 2010 and 2016, 310,000 jobs are at risk in private sector firms that are directly or indirectly reliant on public sector spending. That is on top of a net loss of 50,000 public sector jobs across the west midlands.

The victims of this Government’s policy are mostly the young and women. Young people are the future of our country. For the first time in decades, parents are pessimistic about their children’s futures, wanting them to do better than they did but fearing that their opportunities will be worse than their own.

It is time for the Chancellor to put aside his original political strategy of getting the pain in early in this Parliament and admit that his economic plan is not working. He needs to change direction. There is an alternative. Of course we need to reduce the deficit, but with deep and fast cuts, his plan is not working. Without economic growth, it will not be possible to bring the deficit down.

Road Fuel Duties

Jim Shannon Excerpts

Tuesday 13th September 2011 Westminster Hall

[Mr Donohoe]

We will have to wait for the Economic Secretary’s response on that point. As an Opposition Member, I am not in a position to give any assurances.

We must consider the problems with the Government’s approach. Although they have frozen fuel tax duty for the next couple of years, we must take into account the fact that the freeze will be more than offset by the rise in inflation. As petrol is always an easy revenue raiser, it is widely expected that the Government will make up their losses, leaving the consumer no better off in the long term.

I will highlight three areas of concern. The first is environmental, the second is economic and the third involves the social impact of the road fuel duty. The removal of the duty differential will affect the green economy. The UK Sustainable Biodiesel Alliance has raised concerns about the Government’s decision to remove the 20p duty differential for biodiesel produced from used cooking oil by April 2012. I ask the Economic Secretary to consider that loss more closely. It does not stack up against the Government’s views on the green economy. Many see the impact of the removal of the duty differential for biodiesel as a disastrous blow for the growth of the green economy. Just outside my constituency is the company Stagecoach, which runs buses on biodiesel. It is highly successful, and particularly popular with youngsters, but it will come to an end if the differential is not maintained. Will the Minister clarify why on earth the Government, whom we have heard are the greenest Government ever, continue to consider it?

On the economic side, we risk the demise of the independent fuel sector. Retail Motor Industry Petrol told me that MRH, the UK’s largest independent forecourt operator, has highlighted the unfair pricing practices used against it by both hypermarket chains and oil companies. That is a concern. In addition, the four big supermarket chains are struggling with their own retail this year due to the downturn, which in turn is placing greater pressure on and compounding the problems of independent retailers.

Such relentless competition has been going on for some years. It is responsible for the closure of around 400 independent forecourts, and it continues. It will lead to a sparse population of fuel retailers, obliging motorists to drive great distances to top up their tanks, which is not sustainable. More than 6,000 garages have closed since 1998, which is a problem, as anybody knows who travels off motorways. Particularly in more rural areas, as I have seen at first hand, running out of fuel because there are no petrol or diesel stations is always a danger.

[Jim Shannon (Strangford) (DUP)]

The hon. Gentleman has outlined the issues relating to road fuel duty and mentioned garages running short. Does he share my concern—I suspect that he does—that it is not only about garages running short but about elderly people in our community? This winter, they will be asking themselves, “Should we use oil, electric, coal or gas?”, but they will be stuck with oil and the cost that that entails. Does he not feel that the Government should consider what help they can give elderly people to ensure that this winter will not be a hard one?

[Mr Donohoe]

The blasé slogan “Either eat or heat” is becoming a reality faced by many of my constituents, particularly the elderly. The hon. Gentleman is right. It is a major concern, and it should concern the Government.

To return to the economic point, the industry should look into the fact that some oil providers supply their own forecourts with fuel at one price while selling the same fuel to a second retailer down the road at a higher cost. Something must be done about that. Anyone who travels two miles along the road from Prestwick to Ayr in my constituency can see it at first hand. Prices at forecourts using the same supplier vary 6p from one end to the other, which should not be allowed. Two-tier pricing is becoming a joke.

--- Later in debate ---

[Mr Donohoe]

I thank my hon. Friend for that intervention. I am sure that the Economic Secretary will address that issue when she sums up, along with the points made by other hon. Members.

My third point concerns the social and economic consequences of the situation. Everybody can see that many kinds of damage have been done to consumers and businesses, particularly small businesses. As I have mentioned, the erosion in the number of forecourts is obvious, particularly in rural areas, and it will lead to fuel deserts in many parts of the UK. A vital immunity for low-income families, pensioners and the disabled has been lost. Journeys to fill fuel tanks are longer, increasing carbon emissions needlessly. Consumer choice has been reduced. There are fewer facilities for HGV and van users, as supermarkets do not cater for them. The impact on the UK’s ability to cope with emergencies has also been massive. Perhaps most importantly, jobs and job opportunities are being lost.

[Jim Shannon]

As the hon. Gentleman will be aware, an e-petition is circulating that has some 62,000 signatures at the moment. If it gets 100,000 signatures, we can debate the matter in the House of Commons. Does he not feel that he should encourage people to sign it so that the matter can be debated at length in the House, as it needs to be?

--- Later in debate ---

[Mr Reid]

The Chairman asked for limited interventions and I have already given way to the hon. Gentleman.

I have accepted the Government’s view that we must have an islands pilot first, but after that I would certainly press for it to be extended to remote areas of the mainland.

[Jim Shannon]

The hon. Gentleman refers to the mainland; obviously, I am very keen for the same opportunities to exist for the people of Northern Ireland. Will he address that issue and does he agree that Northern Ireland also needs to have a similar pilot scheme, because the prices there are equal to those in the western islands of Scotland?

[Mr Reid]

I agree with the hon. Gentleman. From the perspective of a Scottish island, the mainland is the mainland of Great Britain, but I accept that there is another part of the United Kingdom. I am not sure whether calling it the mainland is the correct way to refer to it or not.

[Jim Shannon]

As Margaret Thatcher said, we are more British than Finchley.

[Mr Reid]

We are straying into another debate here. I think we will stick to fuel duty, which is probably a lot less contentious.

Operating a rural filling station is clearly not a profitable business these days, and we heard from the hon. Member for Central Ayrshire about how many have closed. In my constituency, I can point to 10 that have closed since I became an MP in 2001, and that is fairly typical of the country as a whole. On the Kintyre peninsula, only three of the five filling stations that the area had at the beginning of the year are still open. Two have closed this year, which is causing real concerns on the peninsula. As the hon. Gentleman who opened the debate pointed out, people are therefore driving longer distances to fill up their tanks and the choices available to rural motorists have been reduced. Action to help rural motorists is certainly badly needed.

There was a time when it could be argued that high fuel taxation was needed to discourage people from polluting the environment, but market forces have already achieved that. Nobody drives for the fun of it these days unless they literally have money to burn and, of course, anyone in such a position would not be deterred by high fuel duty anyway. High fuel duty has played its part in discouraging people from using their cars when public transport alternatives were available but, of course, in a rural area those alternatives are not often available. The price of fuel is already very high and the Government should not be considering putting duty up any further.

I was delighted when the Government abandoned Labour’s fuel duty escalator in the Budget, introduced the fuel duty stabiliser instead and brought down the fuel duty because the price was so high. The Government have scheduled a fuel duty increase for January as it was hoped at the time of the Budget that prices would have decreased by then, although they show no sign of doing so. If prices are still at this level in January, I hope that the Government will not press ahead with the increase.

My final point, which was also touched on by the hon. Member for Central Ayrshire, is about what exactly is causing the high price of fuel. The hon. Member for Coventry South (Mr Cunningham) referred to oil companies storing fuel rather than putting it on to the market. I want to ask the Government whether any collective action can be taken internationally—for example, through the G20—to bring the price of fuel down. The price of fuel adds to the price of everything in a rural area, so anything that the Government can do to bring the price down would be greatly appreciated by my constituents and all hon. Members who represent a rural constituency.

--- Later in debate ---

[Mr MacNeil]

I have some sympathy for what the hon. Gentleman says, and I will come on to distribution in a second, but we have played the patient game long enough. I think it was Martin Luther King who said that it was not the time for the “tranquilising drug of gradualism”. This is a time for action. At £1.50 and £1.57 a litre, people are hurting and hurting badly.

I am aware that I have taken six or seven minutes, Mr Hancock, and that others want to speak. I would finally like to mention fuel distribution. I have asked the Secretary of State for Scotland, the right hon. Member for Berwickshire, Roxburgh and Selkirk (Michael Moore), about distribution from refineries to retailers, and he has assured me that he is looking into the issue.

[Jim Shannon]

On distribution, I would like to underline how the issue affects Northern Ireland. The same oil that comes into Belfast goes out all over the whole of the province and the prices vary incredibly. Does the hon. Gentleman feel that there is a need to address how oil companies distribute fuel across the whole of Northern Ireland and the United Kingdom?

Summer Adjournment

Jim Shannon Excerpts

Tuesday 19th July 2011 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I wish to speak about something that is a great boost for the countryside—rural country sports and the benefits that they bring to the countryside and to the economy. In the time it takes me to load two cartridges into my over and under shotgun and shoot the pheasant on the far side of the Chamber, my time will be up because I have only four minutes.

Eighty thousand people participate in country sports in Northern Ireland, contributing £45 million to the local economy in the past year. Some 480,000 people are involved in country sports across the whole of the United Kingdom, with the equivalent of some 70,000 jobs in primary and secondary roles. They contribute some £2 billion each year in goods and services and some £6 billion in the whole UK economy. The role of country sports is critical. Shooting, in particular, is important to the management of two thirds of the rural land area. Two million hectares are actively managed for conservation as a result of shooting. It is recorded that shoot providers spend some £250 million a year on conservation. Indeed, shooters spend some 2.7 million days on conservation—the equivalent of 12,000 full-time jobs.

There are 17 hunting packs in Northern Ireland and some 325 registered hunts across the whole of the United Kingdom. Eight hundred people in Northern Ireland are involved in hunts, and some 45,000 people are so involved in the rest of the UK. The benefits are clear—they come from the farriers, the veterinary surgeons, the feed merchants, the insurance companies, the saddleries, the horse box people and horse lorry suppliers.

Point-to-points have been described as

“the lifeblood of the racing industry in Ireland”,

and they clearly are. They contribute some £5.3 million to the economy, and on the UK mainland they do even better than that. Point-to-points are a good opportunity for horses to graduate to national hunt racing—ultimately, to the Cheltenham gold cup. One example of that would be the aptly named Looks Like Trouble, who was born and bred in Northern Ireland. This is clearly how champions are created. The overseas interest in the horse industry is also of great importance, and a great many people can see the benefits of that.

Shooting takes care of almost 1 million hectares in Northern Ireland, with £10 million spent on habitat improvement and wildlife management, and some 640 jobs created in Northern Ireland and some 12,000 jobs across the whole of the United Kingdom—Scotland, Wales and England. It can do better, and I believe it will. Some 150,000 people regularly shoot clay pigeons. There are about 1,000 shooting clubs in the United Kingdom, and the benefits and spin-offs that they bring are very important for the industry and the sector.

Angling in Northern Ireland is worth about £40 million. Some 420 angling destinations in Northern Ireland are open to tourists, and Northern Ireland is one of the best places in Europe to fish. We have some 800 jobs in angling in Northern Ireland, and by 2015 there will be 2,000. In relation to antisocial behaviour, of 660 youths in England who took part in a police angling scheme, 98% are still fishing and not one has reoffended. There is clearly a lesson to be learned from that. Casting for Recovery, a unique charity specially designed for women who have or have had breast cancer, uses angling to promote mental and physical healing.

Time has not permitted me fully to express the benefits of country sports to the economy, but I hope that I have managed to highlight the great spin-offs that come from this thriving industry. Perhaps Members have seen it as being more than what they thought earlier on. Now I will go and collect that pheasant on the far side of the Chamber.