Financial Services and Markets Bill

Debate between John McDonnell and Lord Grayling

Report stage
Wednesday 7th December 2022 Commons Chamber

[John McDonnell]

I entirely agree with what the hon. Member for West Worcestershire (Harriett Baldwin) has said, and I apologise for not signing her new clause; I wish I had.

I will be very brief, Madam Deputy Speaker. This is an appeal more than anything else. I am concerned about the way in which the Bill will undermine the constraints on commodity market speculation that were introduced during the financial crash of 2007-08. I was in the House before and during that crash. People remember that it was a banking crash based on the sub-prime housing market, but what is less discussed is what then happened with regard to commodity speculation. The funding shifted from housing to commodity and, in particular, food speculation, and we saw massive food price increases as a result. The price of wheat rose by 168% during that period, and the price of rice doubled. This was largely not to do with supply, which at that time was relatively stable; it was to do with commodity speculation.

We supported, on a cross-party basis, reforms to regulate the market. We gave the FCA the task of setting position limits. We also opened up the whole commodity market to greater transparency. I accept that there has been a watering-down of those regulations since then, particularly by the Trump Administration but also by signals from Ministers in the UK Government. That weakened regulation and weakened culture have opened the door to what is happening now, which is billions shifting into food commodity speculation. This is fuelling the cost of living crisis. It is not just about energy; it is now also about food prices, some of which have gone up by as much as 16%.

Of course, we cannot ignore Ukraine, climate change or the breakdown of supply chains with regard to covid, but another severe factor that is influencing this is commodity market volatility. Speculation is creating price rises, and this is making fortunes for individual speculators, but I have to say that the banks themselves are also making a killing at the moment.

I say this not as some kind of Cassandra—I was the first to raise Northern Rock in this Chamber, although others have claimed that too—but economists on both sides of the Atlantic are saying that this could be a systemic crisis unless we get to grips with it and accept that we need to strengthen, not weaken, regulation. One of the reasons I am concerned is that the Lighthouse report suggests that a lot of commodity investment is taking place by pension funds themselves. That could have an effect not only on prices but on the stability of people’s pensions.

The Government will say, “Don’t worry, we’re not scrapping the limits. We’re handing over control to the trading floors.” That is madness in itself. The trading floors have an interest in attracting traders, and the lesson of history is that they cannot be relied upon to regulate themselves. They do not worry about the interests of the whole economy. That is the job of the Government and Parliament. Also, I see no rationale for scrapping the transparency element of MiFID II. I would love to know what possible justification there could be for undermining access to more transparent information, because the markets are already opaque and this would make them worse.

A final comment from me—you will note that I am well under time, Madam Deputy Speaker—is one that I have made before. The best writer on the banking crash of 1929-30 was J. K. Galbraith, who said that, yes, we would put institutions in place to protect against a repeat of that kind of crash but one of the most significant things would be memory; people would remember what had happened. Unfortunately, I fear that we are now replicating the circumstances of 2007-08 and undermining the very regulations that we as a House put in place to protect against the food speculation, the price increases and, I have to say, the starvation that occurred as a result of that crisis. I never want to see that again. I think this is a mistake by the Government, and I hope that they will think again. I also think we might be able to bring forward some amendments in the other House that will help the Government to move along a more constructive path than the one they are on at the moment.

[Chris Grayling (Epsom and Ewell) (Con)]

I rise to focus on new clause 24, tabled in my name and with the support of a number of Members on both sides of the House. It focuses on one of the great challenges of the moment, which is how we reverse the loss of habitats and forests around the world. Deforestation in South America, Asia and, to an increasing degree, in the northern parts of the world is a real crisis for our planet. It is appropriate that we are having this debate today, the day on which the biodiversity summit begins in Montreal. It is my hope that that summit will lead to a new international agreement on tackling habitat and biodiversity loss around the world.

New clause 24 focuses on taking the battle against illegal deforestation to the next step. This Government and this House took the first important step last year in the passage of the Environment Act 2021, which introduces a requirement for those dealing in potential forest risk products in the United Kingdom to have a due diligence process in place to ensure that they are not sourcing their products from areas of illegally deforested land. That was a substantial and very positive step, and I am pleased to see that the European Union has taken a similar step this week and is perhaps going slightly further in tackling the issue of forest risk products.

But a substantial area that remains untouched both here and in many countries around the world is the question of financial services investing, whether through equities, loans or bonds, in companies that source forest-risk products. We know from the work of organisations such as Global Witness that, over the years, there have been far too many examples of banks knowingly, or sometimes unknowingly, financing the activities of companies that purchase directly from those who are illegally deforesting areas of the Amazon, for example, for beef production or soya production.

We need to extend the work we have already done on forest-risk products, and those who directly deal in them, to the financial services sector and the banks that fund companies that have the potential to participate directly or indirectly, knowingly or unknowingly, in illegal deforestation.

I hope the Government will take this on board, and I am grateful to the shadow Minister, the hon. Member for Hampstead and Kilburn (Tulip Siddiq), for her words of support. New clause 24 would replicate almost exactly what this House has already approved in the Environment Act 2021, translating it into a duty on the financial services sector to carry out similar due diligence to ensure that its work does not support illegal deforestation.

The reality is that these financial services businesses already do due diligence. No major institution simply lends or invests in a business without doing very careful due diligence on where it is putting its money, on the likely return on that investment and on the likely risks of that investment. New clause 24 would not ask them to do something wholly different from what they are already doing; it would simply require them to extend their due diligence into this area, which most institutions, at a senior level, would say is vital to all of us.

Business of the House

Debate between John McDonnell and Lord Grayling

Thursday 16th July 2015 Commons Chamber

[Chris Grayling]

My hon. Friend gives me an example that I missed out when I talked about the chaos in the Labour party. It is chaotic in opposition, chaotic in government, letting down Wales and failing to deliver the services and environment that Wales needs. It would be great to see Wales have a Conservative Government, not the current Labour Administration who have let it down year after year.

[John McDonnell (Hayes and Harlington) (Lab)]

Today the Home Secretary has published the terms of reference of the Pitchford inquiry into undercover policing. To be frank, I expected an oral statement, not a written statement, given its significance. The purpose is to investigate to what

“extent and effect undercover police operations have targeted political and social justice campaigners.”

Some months ago, we revealed in the House the extent of undercover police surveillance of trade unionists, but there is no explicit mention of trade unionists in the terms of reference, which we expected there to be. Will the Leader of the House seek clarification from the Home Secretary that trade unionists who have been under surveillance will be included in the inquiry’s terms of reference?

[Chris Grayling]

It will be up to the Home Secretary to give a detailed response to that question, and I will make sure she is aware of the hon. Gentleman’s point.

Oral Answers to Questions

Debate between John McDonnell and Lord Grayling

Tuesday 17th March 2015 Commons Chamber

[Chris Grayling]

We will continue to review the impact of benchmarking. There is no evidence that connects changes within the prison sector to the number of suicides in prisons, which has been much too high in recent months. Suicides have happened in prisons where there have been no staffing changes, as well as ones where there have been staffing changes, and in prisons where there have been good inspection reports and poor inspection reports. This is an issue in our prisons and a broader issue in society as a whole, and we must all work hard to deal with it.

[John McDonnell (Hayes and Harlington) (Lab)]

The Secretary of State did not respond to the latter part of the question from my hon. Friend the Member for Wansbeck (Ian Lavery), concerning the injunction he has threatened against the Prison Officers Association purely for convening a national executive committee meeting to discuss how to respond to the 0% pay rise. How can he justify this legal attack on the democratic rights of a trade union?

[Chris Grayling]

The hon. Gentleman will be aware that, in law, prison officers are not permitted to strike. I have done what I said I would do for the unions, which is to implement in full the recommendation of the pay review body.

Oral Answers to Questions

Debate between John McDonnell and Lord Grayling

Tuesday 9th September 2014 Commons Chamber

[Chris Grayling]

I take greater comfort from the fact that 90% of probation officers chose not to respond to their union’s survey and are getting on with the job, the excellent work they do on a day-by-day basis, and their good work to help the new systems bed in.

[John McDonnell (Hayes and Harlington) (Lab)]

I find the Secretary of State’s complacency extremely worrying. Two hundred probation officers turned up last week to lobby their MPs, all of them consistently reporting that the system is not working. The Secretary of State refused to undertake pilot schemes in advance of these reforms, but he did enact what he described as assessments called test gates. There have been three of those. The fourth was meant to start on 1 June but I believe it has not started yet. Will he publish all the information from the test gates, so that we can see what they have reported regarding the implementation of the reforms?

[Chris Grayling]

These reforms are going exactly according to plan and no test gate was due to start in June. We are on time and the teams on the ground are making good progress. I and my colleagues have visited the trust’s successor organisations, and members of my team are going out to hear what is happening on the ground. This is a nine-month process of delivering change in the public sector, before we reach the point of a change of ownership. We are trying to ensure that the new system is bedded in well, and so far I am happy with the progress being made. There is, of course, still work to be done, but good progress is being made.

Oral Answers to Questions

Debate between John McDonnell and Lord Grayling

Tuesday 1st July 2014 Commons Chamber

[Chris Grayling]

I give my hon. Friend that latter assurance absolutely categorically. Let me address the issue of offshoring. In my previous job, I said on the record that I did not want Departments that I ran to offshore UK jobs. My position on that has not changed.

[John McDonnell (Hayes and Harlington) (Lab)]

The question concerning the constituents of my hon. Friend the Member for Newport West (Paul Flynn) is not about which Government awarded the original contract to Steria; it is about whether, having wasted £56 million, a company should be rewarded with a contract double the size. Which Minister in their right mind would reward failure in that way?

[Chris Grayling]

The contract was awarded through the Cabinet Office as a result of a proper procurement process, and appropriate legal advice was taken.

Prison Overcrowding

Debate between John McDonnell and Lord Grayling

Monday 16th June 2014 Commons Chamber

[Chris Grayling]

Yes, I absolutely will. We will work on rehabilitation reforms post-prison and look to improve the level of work in prisons. We will also look to continue to expand education and training in prisons. We have, for example, set in train plans to double the amount of education in the youth estate. Those things simply did not happen under the previous Government. Labour Members accuse us of warehousing offenders, but I think they were the ones who were guilty of that.

[John McDonnell (Hayes and Harlington) (Lab)]

The Secretary of State has quoted the Prison Officers Association. He is not a man who would want to mislead or confuse the House, so may I tell him what the POA has said today? It has said:

“The decision by NOMS”—

that is, himself—

“to further ‘crowd’ the already overcrowded public sector estate by an additional 440 undermines the commitment that prisons will be safe, secure and decent”.

The POA describes that as

“the perfect storm of a rising population, a lack of staff and too few prison cells.”

Could the Secretary of State start listening to the prison officers themselves, for a change?

[Chris Grayling]

When we set about the current programme of benchmarking, I did precisely that: I listened to our staff and governors and accepted their recommendation, and I am implementing their recommendation thanks to the hard work of staff at all levels across the prison estate. The hon. Gentleman talks nonsense when he suggests I am not listening to the staff.

Rehabilitation of Offenders

Debate between John McDonnell and Lord Grayling

Thursday 9th May 2013 Commons Chamber

[Chris Grayling]

Let me reassure my hon. Friend that the length of time that people are spending in prison has been increasing, not decreasing. I agree that we need to take advantage of the opportunity to turn people’s lives around in prison. Those who say that short sentences do not work and should not happen always miss the point that 80% of the people who arrive in our prisons have been through a community sentence that has not worked. On sentencing, we have introduced extended determinate sentences, which means that people will probably spend more time in prison for serious offences than would previously have been the case.

[John McDonnell (Hayes and Harlington) (Lab)]

With such a major reform, it is important that the right hon. Gentleman takes the existing staff with him. Will he clarify what consultations will take place with the trade unions in prisons and probation services? On prisons, the redesignation of individual prisons means that there may well be a reassessment of the number of staff who are needed and of the skills and training that are required. On probation, morale is precarious and there are concerns about the failure to allocate the supervision of medium-risk prisoners because of the potential risk to the general public.

[Chris Grayling]

With a major reform such as this, it is always important to do everything that we can to take staff with us. The Under-Secretary of State for Justice, my hon. Friend the Member for Kenilworth and Southam (Jeremy Wright), who is responsible for prisons and probation, will meet the unions today. We have regular contact with staff organisations across the Department and that will continue.

I hope that probation staff will look on today’s proposals as an opportunity. I have talked about the potential for a co-operative approach in some areas, about greater professionalisation in the probation service and about a highly skilled public probation service. The strategy is not about getting rid of people who work with front-line offenders; it is about extending the system and making it more efficient so that we can provide more support to the people who need it.

Transforming Rehabilitation

Debate between John McDonnell and Lord Grayling

Wednesday 9th January 2013 Commons Chamber

[Chris Grayling]

I absolutely give that commitment. One problem has been that if prisoners who are in prison for a short time have no support after they leave, all prisons can do while they are inside is to stabilise the situation. When there is through-the-gate rehabilitation, with somebody waiting to ensure that rehab continues in the community, we have a much better chance of addressing the issues to which my hon. Friend refers.

[John McDonnell (Hayes and Harlington) (Lab)]

The probation service is staffed by highly qualified, professional, extremely dedicated and hard-working people. Medium-risk cases can be complex and serious in their consequences. The public will be concerned that the same levels of qualification and professionalism should apply to supervision. Will the Secretary of State ensure that the same level of qualifications and experience will apply to probation officers in the voluntary and private sectors?

Oral Answers to Questions

Debate between John McDonnell and Lord Grayling

Monday 23rd April 2012 Commons Chamber

[Chris Grayling]

That is of course our approach right across ESA. We do not apply a one-size-fits-all approach. Those with the potential to return to work will receive help to do so, those who will be able to return to work in due course will get support and guidance along that journey, and those who cannot be expected to work will receive long-term unconditional support in the support group. That is absolutely how the Government should seek to work.

[John McDonnell (Hayes and Harlington) (Lab)]

T7. Members throughout the House, including Ministers, have emphasised the importance of the care that must be taken in dealing with people with mental health problems as they approach their medical and capability assessments, particularly if they lose benefits. Some anecdotal evidence is emerging of suicides taking place among people who have lost benefits. Have the Government explored any of the coroners’ reports of cases in which there has been a reference to the loss of benefits as a contributory factor, and what lessons have been learned?

[Chris Grayling]

We will always examine something like that very carefully indeed when it happens. So far, my experience is that the stories are usually much more complicated, but that does not mean we are not doing the right thing. I passionately believe that we should help such people, particularly those with mental health problems. I have met people who have been out of work for years and years with chronic depression, but whom we are now beginning to help back into work. We have to be careful, and we examine such situations carefully when they arise.

Welfare Reform Bill

Debate between John McDonnell and Lord Grayling

Monday 13th June 2011 Commons Chamber

[Chris Grayling]

I am not sure whether the hon. Lady was in the Chamber a moment ago when I answered question on child care from the hon. Member for Ayr, Carrick and Cumnock (Sandra Osborne), but the former seems to be forgetting the fact that there is no job search obligation for the lone parent of a child who is below school age. A job search requirement is made only when a child is at school, and the requirement is for a willingness to accept a reasonable job offer that fits around school hours. No draconian measure is waiting to hit a lone parent as their child grows older. Our system is pretty supportive, and we have been absolutely clear that child care costs will continue to be paid through universal credit.

The hon. Member for Bridgend (Mrs Moon) must also understand that our nation’s resources are finite. We cannot just turn on the financial taps because we feel like it. We must take pragmatic decisions on what the nation can and cannot afford. We set out very clearly in our announcement last year that there is a £2 billion envelope to fund child care. Parliamentarians now need to agree how best to spend that money.

[John McDonnell (Hayes and Harlington) (Lab)]

As the Minister knows, I have supported the universal credit system for some while, but each of the proposed amendments address vulnerable people—people on free school meals, people living in near poverty or poverty, children with disabilities, and people who are sick and who incur health costs. Those real anxieties about the introduction of the new system need to be assuaged. When the Minister responds on those issues, could he at least give us some sort of time scale on which they will be addressed, so that those people can have more certainty in the run-up to the introduction of the new system?

[Chris Grayling]

The answer is that we will do it as quickly as we possibly can. We are not in the business of delaying these things. We are doing the consultation on child care now, and I hope that we will reach a resolution in a relatively short space of time. However, I want to take the time to get it right. I do not want to rush through under an artificial timetable something that is not necessary right now. We are still two and a half years away from the introduction of new claims for universal credit. We have got time to get these things right and we are trying to work with a fixed envelope of money for child care—we will talk about some of the other issues shortly. We want to take the time to look at the real costs of child care, the requirements and how we can best deploy the £2 billion available.

[John McDonnell]

I am not trying to catch the Minister out—I am trying to secure clarity on each of these issues. What is an indicative time scale for addressing those anxieties, so that people can have some prospect of being able to calculate their futures in those areas?

[Chris Grayling]

I will endeavour to answer that. On the child care issue, we are in consultation at the moment. I would hope that we will get all the responses that we are going to get by the summer and be able to take decisions quickly after that. That would be my first answer to the hon. Gentleman’s question.