Banking (Responsibility and Reform)

Julian Smith Excerpts

Tuesday 7th February 2012 Commons Chamber

[Mr Umunna]

I agree with my hon. Friend and I shall come to that precise point shortly.

[Julian Smith (Skipton and Ripon) (Con)]

Will the shadow Minister confirm that at that time he was an employment lawyer and was involved in structuring the compensation packages of investment houses? Does he have any regrets about how he behaved at the time?

[Mr Umunna]

I am glad that the hon. Gentleman brought up that point, because I anticipated it. First, I think it is good that Members of this House have experience in working for business. Secondly, my experience of advising different companies and financial institutions on such arrangements has convinced me that we must reform the way in which the system works—[Interruption.] I would also say to Ministers, who are crowing, that they might wish to reflect on the fact that my ultimate boss at the time when I was more deeply involved in drafting such arrangements was the senior partner of Herbert Smith, whom the Prime Minister ennobled in the first tranche of peers at the beginning of this Parliament—no doubt because of his services to the legal profession and the City of London.

As the Leader of the Opposition said last week, we are still dealing with the aftermath of the moment to which I have referred and the recession it caused. Many thousands of people lost their jobs and now face the biggest squeeze on their living standards in a generation. Thousands of robust, profitable businesses have struggled to access finance or have gone under. At this juncture, I want to tackle head on the accusation that to raise those issues and criticise the financial services sector is to be anti-business—some have even referred to it as indiscriminate business bashing. That is an utterly absurd notion given that among the most vociferous critics of our banks are the small and medium-sized businesses that make up the overwhelming majority of businesses in this country. The people making those outlandish claims of anti-business sentiment talk as though large financial institutions are the only businesses in this country. Yes, those institutions are an important part of our business community, but there is so much more to British business than big finance. Indeed, we need to rebalance our economy not to diminish our competitive edge in financial services but to grow other sectors so that we are not so reliant on that one sector.

Businesses in other sectors are struggling right now. The most recent Bank of England trends in lending show that net lending to businesses has fallen in nine out of the past 12 months and lending has fallen by more than £10 billion in the past year. A report published by the Department for Business, Innovation and Skills last week states that the stock of lending to small and medium-sized businesses declined by 6.1% in November 2011 compared with a year earlier.

It is not just that the banks are failing to get the money out of the door to successful, profitable businesses with robust business models. There has been a move away from relationship banking, where banks saw it as their duty to get to know and understand their business customers properly. Yesterday, I met a number of successful export businesses in the home counties—businesses that help us pay our way in the world. I was told by the overwhelming majority that when it came to getting help from their banks to export and expand, their banks simply did not want to know.

Some have suggested that that is all the result of increased capital requirements on the banks, but Robert Jenkins, a member of the Bank of England’s interim Financial Policy Committee, told the Treasury Committee last month:

“Making the banks safer through greater resilience in their balance sheets and more capital does not, in and of itself, prevent additional lending.”

Despite all that, people and businesses have had to watch as billions in bonuses have been paid to bankers since 2008-09. It is worth stating that we are not talking about the sums earned by the average bank employee—the cashier, say, in a local branch—but about the enormous sums paid to investment bankers and a select few senior executives in the sector. Those bonuses have continued to be paid as a matter of course, regardless of the fact that many of the institutions, all of which directly or indirectly benefited from the interventions of the Government over the past five years and continue to benefit from an implicit subsidy, have been making thousands redundant, have seen their share prices and profits falling and have been found guilty of mis-selling payment protection insurance on a grand scale. To add insult to injury, Robert Jenkins, commenting on bank balance sheets, told the Treasury Committee:

“Every £1 billion of less bonus would support £20 billion of additional small business lending.”

It is no wonder that Sir Philip Hampton, the chair of RBS, himself said last week:

“Pay has been high for too long, particularly in the banks, particularly in the investment banks".

--- Later in debate ---

[Mr Umunna]

On guaranteed bonuses, there is an element of contract in that, in terms of the arrangements between individual banks—[Interruption.] Will the hon. Gentleman listen and let me finish the point? There is an element of contract that provides for a bonus, but also an element of discretion. The fact that large bonuses were being paid out regardless of performance is, of course, what people outside Parliament object to.

[Julian Smith]

In order to create a balanced view, will the shadow business Minister confirm the tens of billions of pounds paid from those bonuses in income taxes and other taxes, such as employment taxes, during the period he is discussing?

[Mr Umunna]

Ultimately, the taxpayer had to put about £1.2 trillion into the system to support it. Juxtaposing that with the amount paid in tax by the sector, I am not sure that it comes to the same sum. I get the point that the hon. Gentleman is making. I do not deny that the financial services sector has contributed in tax receipts, but that is not outweighed by what we have had to pay out to save it from itself.

The status quo will not do. Change is essential. In November last year, Bob Diamond, chief executive of Barclays, said in his BBC “Today” business lecture that

“the single most important thing for banks and for businesses now is to focus on helping to create jobs and economic growth; and being able to do that requires us—banks in particular—to rebuild the trust that has been decimated by events of the past three years; and that rebuilding trust requires banks to be better citizens.”

I agree with Mr Diamond, but actions matter far more than words to people and businesses.

At the Business Secretary’s instigation, the Government established the Independent Commission on Banking, for which he deserves credit. If its recommendations are implemented, they will help to deliver a banking system that supports our economy’s interests in the long term. However, a number of things must happen to address the issues in the short term, not least of which is the matter of remuneration, which can be corrosive of public trust in our banks.

First, greater transparency on pay in the banking sector is needed. A good place to start would be immediate implementation of the Walker review. In 2009, Sir David Walker recommended new rules on the disclosure of bankers’ remuneration within pay bands above £1 million. In government, we legislated for that fairly modest scheme to be put in place so that irresponsible remuneration practices could be identified and rooted out. So modest were the proposals that the now Business Secretary told the House at the time that Sir David had produced

“an embarrassing mouse of a report”.—[Official Report, 30 November 2009; Vol. 501, c. 900.]

In the June 2010 Budget, the Business Secretary and his coalition partners pledged to take forward these modest proposals, but in November 2010 the Chancellor suddenly declared that he would not countenance implementation unless he could secure international agreement for the measures. In giving evidence to the Treasury Select Committee in December 2010, however, RBS’s Stephen Hester indicated that unilateral adoption of the Walker review proposals would not put the UK financial services sector at a significant disadvantage. Given the modesty of the Walker review proposals, why on earth will the Government not implement them?

Secondly, to increase accountability, we have said that an ordinary worker should be placed on the company remuneration committees setting pay. I do not understand why the Government have been so resistant to this idea. The Business Secretary has said that he is very sympathetic to the idea but has raised practical objections on the basis that there are many FTSE companies whose employees are predominantly overseas. These practical obstacles can be overcome, however, not least through technologies such as telephone and video conferencing, which in this day and age are a common feature of board meetings.

The Economy

Julian Smith Excerpts

Tuesday 6th December 2011 Commons Chamber

[Julian Smith (Skipton and Ripon) (Con)]

I want to speak about small business—in particular micro-businesses, which are usually defined as those with fewer than 10 employees—and to thank the Government for their support for such businesses.

Since coming to power, the coalition has taken some significant steps on regulation. It has introduced the one-in, one-out policy—which Labour claimed to have introduced, but never implemented—and the red tape challenge, allowing the public and businesses to say which regulations they want scrapped. The Government have taken a number of specific steps for small and micro-businesses, and have begun to draw a clear distinction between the large multinational, the mid-size company, with a human resources department and a legal department, and the small owner-manager. The Government have created exemptions from all new UK regulations until 2013, delayed legislation on the right to request training for small businesses, extended the unfair dismissal period and introduced fees for employment tribunals. All are powerful measures, giving more confidence to small business to take on staff. The autumn statement also included an announcement on protected conversations, which, for the first time in decades, will allow a small business manager to have a chat with one of his employees without the fear of litigation. Further measures, on compromise agreements and other matters, are on their way.

I am delighted that business organisations have shown their support. I urge the Government to move swiftly with those proposals, because it is worth reflecting on who they are trying to help with those measures. Often we get a kick from the left whenever an attempt is made to reduce workers’ rights, but when we talk about very small businesses or micro-businesses, we are talking about just an owner-manager—a farmer in the dales in my constituency, for instance—setting up a business and trying to take on one or two people to help run it. We are talking about people such as Chris and Rebecca Blunstone from Pateley Bridge, who set up Helping Hands earlier this year while at the same time doing two jobs each. They also have two kids, so they were working flat out. It is people such as the Blunstones whom the Government are trying to support, because small firms and start-ups created two thirds of new jobs nationally between 1998 and 2010. They are the backbone of employment across the country, in all our constituencies, and we desperately need them to succeed and take on more people.

I understand that parts of the Government want to go further with reforms for micro-businesses, particularly in employment law. I believe that those forces are right. We need to make a strong case for rolling back the dead hand of the state on the smallest businesses in our country and make the argument that, despite the risk of having exceptions in the labour market, there are huge benefits for the economy. We cannot look at each measure through the prism of an individual impact assessment; rather, it is the cumulative impact of all the reforms that we need to move forward with. That will mean making some radical decisions on policies that our party is promoting in the areas of flexible working and the right to request training, because for very small businesses such rights legislation is a real burden and a hassle. Ultimately, the owner-manager will make the right decision—to train their staff or give them time off—and certainly does not need an edict from London.

[Bob Stewart]

In my constituency the complaint from small businesses is that they want to make a profit, not spend their time doing accounts or filling in regulation forms. We have to minimise that and, if possible, try to take it right out of the whole business—if it is small enough—because one in 10 still seems to be concerned with regulations.

[Julian Smith]

My hon. Friend makes a valid point. This is a controversial area, because although the Government are making great strides in shared parental leave, for example—reforms that I support—we need to look at how Whitehall is managing the relationship with micro-businesses on issues such as maternity and parental leave.

There are some exciting initiatives that did not make it into the autumn statement, but which I urge the Government to support and small businesses to show their interest in. They include, for instance, no-fault dismissal. Deciding when to finish an employment relationship as an owner-manager running a small business is really difficult. The idea of a compensated no-fault dismissal—the equivalent of a no-fault divorce in the business world—is worth looking at.

I urge the Government to have the courage of their convictions on policies like that. I would encourage micro-businesses everywhere to follow the Government on their call for evidence, as we need to make the case that expectations about workers’ rights in small firms must be different. We need the small business owner to be confident in taking on more staff. The doers and grafters need to know that this Government are getting fully off their backs.

Oral Answers to Questions

Julian Smith Excerpts

Tuesday 1st November 2011 Commons Chamber

[Mr Gauke]

As I say, we will be updating the House with all those details shortly, but there are 1,600 or so businesses in the north-west region that are benefiting from it. I visited one of them not far from her constituency a few weeks ago which was very appreciative of the scheme. Where the scheme is available, I encourage hon. Members to highlight it to their constituents.

[Julian Smith]

May I urge the Minister to reconsider auto-enrolling new businesses on to the scheme, so that rather than their having to apply for it they are placed on it automatically?

[Mr Gauke]

We looked at auto-enrolment but one of the difficulties was the fact that it would have been years before we could have put it fully in place and we wanted to move quickly to have the scheme in operation. It is important that we highlight the scheme and make sure that publicity is available and that businesses are aware of it. The businesses that I have met that have taken up the scheme are very appreciative of it and it helps them in those difficult first few months.

Finance Bill

Julian Smith Excerpts

Tuesday 28th June 2011 Commons Chamber

[Mr Chope]

Obviously, the Treasury will always say that there is what is described as a dead-weight cost associated with such initiatives, in that people who would be paying for health insurance anyway would get the tax relief—but that is looking at only part of the issue. What I am trying to do—as is my hon. Friend the Member for Mole Valley in his new clause—is to encourage more people to come into that category, so that we grow that cohort of people. We certainly do not want to allow that cohort to be reduced, as it inevitably is when people who were on schemes provided by their employers retire and lose that provision. Taking on that burden, or responsibility, for themselves is a significant expense; my hon. Friend’s new clause would not eliminate that cost, but it would reduce it by a useful amount.

[Julian Smith (Skipton and Ripon) (Con)]

Will my hon. Friend tell us how, in the current financial situation, we could pay for any dead-weight costs? Where would the money come from?

[Mr Chope]

It is a matter of seeing what the countervailing benefits would be, because obviously, if as a result of my hon. Friend’s new clause a lot more people who are not contributing anything towards the cost of their health care started to do so, thereby reducing the burden on the NHS, the dead-weight cost that my hon. Friend the Member for Skipton and Ripon (Julian Smith) mentions would be exceeded by the overall benefits, and a reduction in the overall burden of taxation. More people who are getting health care in this country would be paying for it, or contributing to its cost, rather than relying on the state and the taxpayer to do so.

Amendment of the Law

Julian Smith Excerpts

Thursday 24th March 2011 Commons Chamber

[Julian Smith (Skipton and Ripon) (Con)]

I refer Members to my entry in the Register of Members’ Financial Interests.

I am delighted that business, as well as families, took centre stage in yesterday’s Budget. Enterprise zones will be a beacon for growth. There will be two in Yorkshire: one in Leeds and one in Sheffield.

[Mr Binley]

My hon. Friend might also be pleased to know that West Northamptonshire Development Corporation will shortly submit an application to create an enterprise zone in Northampton, which will bring 10,000 new jobs to an area that is supposed to be building 50,000 new homes over the next 15 years. Does that not show that the Budget is particularly about promoting growth, and that this is just one way to achieve that?

[Julian Smith]

My hon. Friend is absolutely right, but he will be facing stiff competition from the North Yorkshire local enterprise partnership, which will be seeking to get ahead of his proposal.

The most exciting aspect of yesterday’s Budget was the direction of travel the Chancellor set in respect of the conditions for business that he wants in Britain, because growth will ultimately be achieved through the individual efforts of business leaders, not through Government. The 2% cut in corporation tax signals to companies that Britain is once again open for business. It is now clear to every potential investor, in the UK and overseas, that this Government are committed to putting in place the best corporation tax rates in the G20 by the end of this Parliament. Overnight, global companies such as WPP have said that that will make a difference to their decisions on where to invest. That is great news.

The Budget also encourages those who want to set up a business to go for it. It contains a big nudge from the Government for people to give entrepreneurship a go. There is a golden carrot to dangle before those thinking of taking a risk: a 10% capital gains tax rate up to £10 million. The profit motive is a motivator, and the Budget clearly says, “If you believe in your business, take the risks and are successful, you will be much better off financially.” Therefore the message is, “Unless you’re a cracking singer or can dance like the Business Secretary, forget ‘The X Factor’ and ‘Strictly’; this Budget gives you a golden ticket to join start-up Britain.”

The moratorium on new legislation for small businesses with fewer than 10 employees will be a big relief for entrepreneurs, who need to be fully focused on jobs and growth rather than the latest wheeze from Whitehall. When I was a small business owner, dealing with employment law took more time than any other management responsibility. Employment laws and regulations have been piled on British business since 1997.

[Ian Lucas (Wrexham) (Lab)]

Will the hon. Gentleman give way?

[Julian Smith]

Not at the moment.

Let us be clear: employers want to get on with running their business. They want to allow their workers flexibility in their jobs and to give them training, but they also want to make decisions themselves. The changes in the Budget will provide welcome relief from administration, rules and red tape, which always come from new legislation. Opposition Members have already started putting about the myth of this being about “nasty Tories” who have no interest in equal rights. It is nothing of the sort. Labour took some good steps on employment, and we have accepted many of them, but the last Government ultimately failed to see that adding on regulation after regulation was counter-productive; they just did not know when to stop.

This Budget establishes two principles: first, that micro-business needs to be treated differently from other business, which is very important for my constituency; and, secondly, that creating jobs is more important than adding more regulations to existing ones. Everything we do should encourage business and make things easier for risk takers. Only by doing that will we get this country’s economy growing to its full potential. Jam-packed with other measures as well as the ones I have talked about, this Budget has set us firmly on the right course.

Fuel Prices

Julian Smith Excerpts

Tuesday 15th February 2011 Westminster Hall

[Miss McIntosh]

I am taken by my hon. Friend’s arguments, but we learned a lot from the smash-and-crash approach of the Labour Government, who announced that they were introducing a 1p increase due to the state of the economy and the fact that the price of oil was $149 a barrel. The Prime Minister’s response to my question showed a responsible attitude. We need a responsible, well-thought-out approach in the Budget. Then we can have pilot schemes in North Yorkshire, Cornwall, Scotland and Northern Ireland.

[Julian Smith (Skipton and Ripon) (Con)]

I support my hon. Friend’s argument. Although the Financial Secretary has said that far-flung areas of Scotland might qualify for rural pilots, North Yorkshire is the most rural county in England and must surely qualify for a pilot if the Government decide to run some.

[Miss McIntosh]

I am delighted that my hon. Friend and neighbour has put the case so eloquently. Rural communities, such as those in North Yorkshire, are suffering, and they deserve special attention.

National Insurance Contributions Bill

Julian Smith Excerpts

Thursday 13th January 2011 Commons Chamber

[Mr Hanson]

Indeed; my hon. Friend makes an extremely important point. The Minister’s objective in the Bill is to help new businesses to develop to compensate for the loss and shrinkage of public sector businesses in other parts of the country; that is his main focus. The annual report would clearly show not only where new businesses are commencing but, through other information that we will be able to glean, where businesses such as construction firms are shrinking because of cuts in public expenditure on schools, hospitals and other major capital projects. I can think of building firms in my own constituency in north Wales that depend on public sector contracts in housing, education and health for their work. As my hon. Friend says, if that sector shrinks, those employment opportunities will shrink too.

I would be interested to know how many new businesses commence, and how many people are employed in each of them, in my own area in north Wales as a result of this measure, but I will not have that information unless I table parliamentary questions.

[Julian Smith (Skipton and Ripon) (Con)]

I do not understand why one could not simply put a call through to Companies House. Why do we need a report from London about the minutiae of how British enterprise is developing as a result of this fantastic Bill?

[Mr Hanson]

We are forgoing £940 million of taxpayers’ money, in the shape of national insurance contributions, to pay for this scheme—£940 million that could be put into the Building Schools for the Future programme and hospital expenditure. I would have thought that the hon. Gentleman was interested in where and how that money was being spent and whether it was being spent effectively. The annual report would show clearly how that £940 million of forgone expenditure was being spent, and which constituencies or regions were receiving the benefit and which were not. My main focus is to ensure, from my perspective and that of my right and hon. Friends, that areas of unemployment, deprivation and high public expenditure get that resource, not areas that already have low levels of unemployment and high levels of prosperity, and do not require this level of resource.

The House is bound to consider how we expend public resources, and it is incumbent on the Government to provide that information. The Minister will have it as he monitors and receives reports on progress on projects, as I did when I was a Minister, and I do not see why he cannot publish it. Ultimately we can drag it out of him through parliamentary questions, but it would be far better for him to be transparent and open, in accordance with this proposal.

Oral Answers to Questions

Julian Smith Excerpts

Tuesday 16th November 2010 Commons Chamber

[Mr Hoban]

The problem with the child trust fund is that there was no evidence to demonstrate that it increased savings across the economy. We are faced with a difficult decision: we need to find savings to tackle the budget deficit that we inherited, and we believe that the best thing to do is to give help to families now rather than locking that money away until the children are 18.

[Julian Smith (Skipton and Ripon) (Con)]

12. What assessment he has made of the effect on the economy of recent trends in growth in the private sector.

[The Economic Secretary to the Treasury (Justine Greening)]

This Government have been determined to show that Britain is back open for business, and gross domestic product growth has been strong over the past two quarters. That growth has been driven largely by the private sector. The Office for Budget Responsibility, which this Government established, is responsible for producing independent economic and fiscal forecasts, and the Chancellor has asked the OBR to publish a new forecast on 29 November. That forecast will incorporate the OBR’s assessment of the effect on the economy of recent trends of growth in the private sector.

[Julian Smith]

Does my hon. Friend agree that the hundreds and thousands of new jobs that have been created by the private sector in recent months make the outlook pretty positive? What encouragement would she give to budding young entrepreneurs in Yorkshire in existing businesses who are thinking of taking on a new employee?

[Justine Greening]

My hon. Friend is right. In quarter two alone, private sector employment grew by 308,000. I believe that many people in the country want not just to take jobs, but to create them. I would encourage them to get on with it, and to pursue their dreams and aspirations. They will have a Government behind them who are giving them a national insurance holiday for the jobs that they will create, and who are determined to support them by keeping corporation tax rates low when they are successful.

Vulnerable People (CSR)

Julian Smith Excerpts

Tuesday 9th November 2010 Westminster Hall

[Andrew George]

Other than with people who live in uncertain accommodation—winter lets during the winter and very uncertain accommodation in the summer—I am not aware of any circumstance in which people have variations in their rents, with a landlord varying the rate of rent on the basis of the tenant’s income. My hon. Friend makes a very good point. I am afraid that the system does not allow or cater at all for seasonality in working families’ employment and income.

A further incongruous circumstance is the potential conflict between this policy and what the Minister’s colleagues in the Department for Communities and Local Government appear to be doing regarding the registered social landlord sector. The intention is to allow, and even encourage, registered social landlords to increase the rent on their properties up to a notional 80% of the market rate for a particular location. The net effect of that—it will apply, I understand, to future new dwellings and to re-lets—is to create a rather strange circumstance: on the one hand the Government appearing to want to get the housing benefit bill down, but on the other hand one of their Departments appearing to ratchet it up. Of course, a large proportion of people in social rented accommodation—60% of those living in the accommodation of one of my RSLs—are in receipt of housing benefit, and ratcheting up the benefit in those properties would result in an increase in the housing benefit bill.

There will be other strange circumstances. People who seek to downsize their properties—for example, an older person living alone who wants to move into a single-person bungalow to release a family house for a local family—will be discouraged from doing so because the re-letting situation will mean that their rent could go up significantly if they were to pursue that otherwise relatively selfless act. By pursuing a re-let—a transfer—their rental might go up and their housing benefit might not cover it.

Because of the time, I shall quickly canter through a few other issues. First, on the wider issues of welfare reform, many of us will have read in the newspapers and heard in the media over the weekend the comments of the Archbishop of Canterbury, the Chartered Institute of Housing, the National Housing Federation, the Child Poverty Action Group and Action for Children, all warning about the unintended consequences. I certainly exonerate the Minister and her colleagues from wishing to pursue an intentional policy of impoverishing vulnerable people; I think that it is entirely unintended.

[Julian Smith (Skipton and Ripon) (Con)]

I am sure that the hon. Gentleman is coming to this point, but will he talk a little about the impact on vulnerable people now and in the future of not dealing with the deficit? Will he also refer to the positive measures in the Budget for businesses in his constituency? There is the scrapping of the jobs tax, the national insurance holiday, tens of thousands taken out of tax altogether, the pupil premium and other initiatives. Surely, in any speech on this subject, all those factors have to be taken into account.

[Andrew George]

I am grateful for that intervention; I am sorry that the hon. Gentleman arrived late and therefore missed the part of my speech when I congratulated the Government on precisely those measures.

Clearly, we need to deal with the deficit, but the question of the speed and the extent is a debating point. I am not necessarily saying that the current speed and extent are wrong, but that judgment needs to be kept under review. Also, where do we find the money from? The hon. Member for Skipton and Ripon (Julian Smith) talked about the point that I am coming to; I will certainly come to a conclusion, which is that we need to question whether we have the balance right, so that those with the broadest shoulders bear the greatest burden. I am not certain we do have it right, which is why we should be taking a measured judgment on the impact of the proposals across all income ranges.

All the groups I mentioned, and many others, have been warning about the unintended consequences of some of the welfare reforms. The Chartered Institute of Housing anticipates that by 2025 most two-bedroom properties in the south will be unaffordable to those claiming housing benefit, whether or not they are working. That will force people into areas with less employment—in other words, an unintended consequence, not making work pay by forcing people into areas where they will find it much more difficult to get a job. It will also steepen the tapers, for example, by increasing the rents on social rented accommodation. As we all know, if someone takes a job or accepts higher pay, housing benefit is often withdrawn at a rate of sometimes 80p in the pound earned, and that is on top of other benefits that may be lost, such as council tax benefit. That places people in a poverty trap that discourages them from taking the very work they are keen to take up. All those factors will lead to social impacts on stability, family security, children’s education and other matters.

Other sanctions are proposed that have been mooted in the press over the weekend and will no doubt be part of the Secretary of State’s statement on Thursday. We have been presented with the prospect of unemployed people wearing tabards, picking up litter from our streets as a result of some kind of compulsion. Having worked in the voluntary sector, among others, for a while before coming to Parliament, I know that the one thing we do not need is to apply compulsion or humiliation to this matter.

It is clear that the many people I speak to in my constituency who are seeking a job are extremely keen to secure not only a job but work experience. The Government’s proposal to set up voluntary arrangements that enable people to undertake worthwhile voluntary work in their communities can only be a good thing. Unemployed people want well organised work and voluntary opportunities, and the voluntary sector want the willing, not the unwilling. At the weekend, the Disability Alliance argued that many people will be pushed into poverty by the changes to the employment and support allowance, previously called incapacity benefit. We await the outcome of that proposed change on Thursday.

Within the care sector, pressure on local authority budgets—26% cuts over three years—means that councils are routinely removing the discretion to give care support to those in moderate need. As costs, and no doubt charges, go up, the definition of “higher” and “severe” need could become more stringent. Budget pressures are likely to reduce early intervention for children, as Action for Children identified over the weekend, and the services available to the most vulnerable. There is a 20% cut in the bus operators’ grant and local authorities are already looking at cutting some services. The young and the old will be most affected by that—those without a car, and, therefore, the most vulnerable. Other cuts, such as in the education maintenance allowance, will also affect young people.

The questions remain: will those with the broadest shoulders bear the greatest burden, and will the vulnerable be protected? It is important not to forget that the gambling of the rich busted the banks, which did most to drop us in this situation. We must not allow them to get away with that while the poorest and public servants are made to pay the price; that is hardly justice. On the question of measures to get the balance right between cuts in services and benefits, and of where to obtain resources to maintain services, the banking levy, although welcome, is a relatively infinitesimal gnat bite on the banking sector, given the rate at which it is set.

[Julian Smith]

I am glad my hon. Friend has spoken about the banking levy, because the previous Government did not do that, and I presume he will give credit to the coalition for taking aggressive action on the banks, and for the three reviews on banking reform taking place over the coming year.

[Andrew George]

I again remind the hon. Gentleman that, had he been here earlier, he would have heard me mention that. I welcome the banking levy and have congratulated the coalition on it; it is a move in the right direction. However, I fear that some of the most vulnerable in society may be pushed further to the margins, and we need to keep that situation under review. Equally, we need to keep under review the question of whether the banking levy has been set at a level that retrieves from the banks the resources that we believe they should be putting back into the economy, having dropped us “in it” in the first place.

The Minister is an excellent Minister and I know she is listening to these concerns. I fear that the reforms, although well intentioned, may well miss the target: they may not necessarily push rents down in the way anticipated or protect the vulnerable, and they may fail to meet the Chancellor’s stated objective as given in his 20 October statement. A strong and self-confident Government can listen, reconsider, gracefully accept the situation, adjust and move on when things are not going quite according to their plan. In her winding-up speech, I hope the Minister will address those issues and reassure me that the Government are listening to these concerns.

--- Later in debate ---

[Chris Leslie]

As I said, the hon. Gentleman is being more than fair—perhaps a little too fair—in his analysis of the Government’s intentions. I hope that I am wrong in saying that a measure of deliberate choice is involved. However, the weekends at Chequers during which the Deputy Prime Minister and the Prime Minister pored over the political stratagems that they could devise, having linked some of the measures in the spending review together, suggest that a balancing act was going on in the Government to think about who they could hit and get away with it, rather than the human consequences. That is a difference of opinion that we will have to accept.

[Julian Smith]

rose—

[Chris Leslie]

I would like to make progress on the issue of housing benefit, but I happily give way to the hon. Gentleman.

[Julian Smith]

The comments that the hon. Gentleman made just now and at the beginning of his speech are insulting to Ministers and, certainly, to Back-Bench coalition Members.

[Chris Leslie]

I am sorry if I have hurt the hon. Gentleman’s feelings; that would be a dreadful thing to do. However, it is far worse to hit the poorest and most vulnerable people in society through the measures that he will support by walking through the Lobby. The warm words that he espouses are all very well, although so far he has not said much about vulnerability and the impact of the reforms. He is doing his job and wants to progress through his party—I wish him luck with that—but the measures that he will be supporting will be harmful, and I am sorry if he feels that that is insulting.

Let us look at some of the changes to housing benefit. As I said, housing benefit needs to be reformed, but not necessarily at the pace and with the harshness espoused by the Minister. Some of the combined, compounding changes will come in quickly, with some starting on 1 October next year. According to the Government’s own figures, the reduction from the median 50th percentile to the 30th percentile for housing benefit will affect 642,000 people. Many hon. Members, including the Minister, will be getting letters from their constituents about that. Those reforms will leave some people £39 worse off per calendar month. Some landlords might be happy to say, “That’s all right; we will bear the loss”, but others will say, “Sorry, that is unacceptable. Out you go.” What will be the consequences for homelessness? What will the pressures be on the indebtedness of individuals who are already stretched with credit card debts and so on? Will we see even greater pain at that level?

The National Housing Federation said in the newspapers today that the reforms were “brutal cutbacks.” Those are not my words, so if the hon. Member for Skipton and Ripon (Julian Smith) feels that such words are insulting, he should speak to the National Housing Federation. It said that the reforms risk the prospect of people

“falling into debt or hardship or being forced to move out of their home and away from their local community.”

That sudden drop in income and the rushed nature of reform are what the Labour party fundamentally disagrees with. Of course we accept that the deficit needs to be tackled, but we take a different view of how to do that.

Banking in Scotland

Julian Smith Excerpts

Thursday 14th October 2010 Westminster Hall

[Mr Ian Davidson (Glasgow South West) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Rosindell. Before the sitting, you set me the task of seeing whether I could mention Bermuda at some point in my speech. I am not sure how I shall manage that, but no doubt some opportunity will come up.

The debate is somewhat unusual in as much as it refers to a report produced in the previous Parliament that has been responded to by the Government in a new Parliament. Relatively few members of the Select Committee on Scottish Affairs have survived from the previous Parliament, but two, at least, are here. The new members wanted to make it clear that the report was not necessarily something they were involved with—just in case there was any blame to be distributed, and in case there was a Whip here who might in some way take offence at anything that might have been said. They are still at an age when they are in awe of the Government whipping process. I hope that they feel thoroughly cleared by that caveat.

I want to start by referring to the final recommendation from the Committee, which called on the successor Committee to continue to take the matter forward, and keep it under review and supervision. I am glad that we have today’s debate as the first step in doing that, and that the Committee has already agreed to seek further information from the banks. Once we have studied that, I hope that we shall go on to seek further information from several other organisations that we discussed previously, to see how matters have progressed since the report was produced.

This is a quite fast-moving situation. What we said in February drew on hearings that had taken place in December 2009 and in January. We reported in February and there was a Government report in July, and things are not necessarily the same now. Because of the importance of the banking industry to economic life in Scotland, we want to keep the matter under review. I understand that the Minister’s reputation does not put him among the worst of the Conservative Ministers—[Laughter.] I notice that he disputes that. I hope he will be prepared to work with us on an ongoing iterative relationship to keep the banks under review.

One of the generic problems, I suppose, of the Scottish Affairs Committee is that as a territorial Committee it is not our role to stray into general areas that are properly the remit of other Committees. Just as, in the work that we did on the forthcoming measures on the alternative vote and the changing of boundaries, we restricted ourselves to seeking advice and information from people on the aspects of the matter affecting Scotland alone, so, in the present case, we have sought not to duplicate the work of the Treasury Committee, but to restrict ourselves to considering those aspects that impinge on Scotland. We have looked, therefore, at the impact on Scotland in the context of the banking crisis.

I want to start by setting the report in the context of the banking crisis, a year or so ago. We would all, I think, accept that many of our economic difficulties now flow from the banking crisis. I remember Alex Salmond, as First Minister in Scotland, condemning the “spivs and speculators” who at that time were bringing down the Royal Bank of Scotland; unfortunately, he was not prepared to concede that the spivs and speculators involved were working for the bank at the time. I think that he was looking at the crisis that engulfed the Scottish banks as being of external origin, rather than having been to a great extent home-grown in those banks.

Those who brought down the Scottish banks were in them, working for them, gambling for them and mismanaging their money. We now have the responsibility of moving forward from that. The banks brought a crisis on themselves, but they brought it on the rest of us as well. The impact of the spending review next week will be very much influenced by that—indeed, more by that than by any other single factor.

It is undoubtedly a source of some shame to me as a Scot, and, I am sure, to many others of my Scottish colleagues, that a situation that developed at the Royal Bank of Scotland and the Bank of Scotland resulted in the need for a bail-out—a rescue—by the Bank of England. The Bank of England should perhaps more properly be referred to as the Bank of Britain in this context. It was of course founded by a Scot, and therefore we do not need to feel quite the same guilt that we might have felt had we been bailed out by an external body. Of course, the way in which the Bank of England, acting on behalf of the British Government, was able to ride to the defence and support of the Scottish banks in crisis, demonstrates yet again the strength of the Union and the importance of Scotland’s remaining in it.

We must draw a number of lessons from bank failures and the bad behaviour of banks. The main one that the Committee drew at the time in question was that banks and bankers cannot be trusted to do the right thing unless they are under constant supervision. Where the previous Government went wrong was in the fact that new Labour, who in my view were unduly keen to suck up to big money, accepted the consensus, prevalent at the time, that regulation was in principle a bad thing that should be minimised.

I make that criticism of the Government whom I supported, as a valuable lesson, I hope, to new members of the Committee, so that they will understand that it is possible to be a member of a Select Committee and on occasion to be critical of the Government. I hope that that lesson will be supported by the Minister. If Committees are to work properly, there must be occasions when even the mildest criticism of the party to which one belongs is allowed. I hope that I shall be allowed that latitude here today.

Light-touch regulation became the mantra. New Labour was pressed all around by the then Opposition—now the leading party in the Government—the Scottish National party, the CBI and the City; all of them called for less and lighter regulation, and new Labour went along with that. The bankers ran wild, the system collapsed and we are now in a situation where ordinary people are left to bear the burden. The main lesson that we should draw—I hope the Minister agrees—is that we need to move away from an emphasis on minimising the examination of banks’ conduct and on a lack of intervention when they behave in a way that is not conducive to the development of the economy and the relationships we would want within it.

External influence, and the way it needs to be controlled, is beyond the purview of the Scottish Affairs Committee. Therefore we imposed a self-denying ordinance that we would not make recommendations on those matters. I intend to stick with that approach today, although some of my colleagues who have more flexibility in the debate may want to comment.

[Julian Smith (Skipton and Ripon) (Con)]

Does the hon. Gentleman accept that the coalition Government have made some excellent steps in firming up regulation, particularly with the proposals to put the Bank of England absolutely at the centre of the new regulatory regime? I am pleased that he seems to think that a good idea.

[Mr Davidson]

Yes, I agree with the general thrust of those remarks by my colleague, who is a new member of the Scottish Affairs Committee. I am sure that the Whips Office will have noted that he is keen to draw attention to something that has been done by the Government and with which I generally agree.

The new Government have followed on from the changed policy of the previous Government, who moved away from being quite slack in terms of focusing on the work of the banks, to being much more rigorous and controlling. The new Government are continuing that process. I welcome that; there is no point trying to identify disagreements that do not exist. There are enough disagreements that do exist without suggesting that we disagree on everything. There is substantial agreement in this area and I hope that we can build on it.

During our investigations, we held 10 hearings over seven days and received 16 written reports, all of which were helpful. We also visited the Republic of Ireland. For the younger hon. Members, I should say that was in the days when there was a fashionable concept, of which little is heard now, called the arc of prosperity, which was very much discussed in Scotland.

The general idea of the arc of prosperity was that if Scotland became independent it would become like Ireland and Iceland. For some reason that I do not entirely understand, that is no longer raised by Scottish National party Members of Parliament as much as it used to be. [Interruption.] We have just been joined by a SNP Member. Let me tell the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) that the arc of prosperity is no longer raised as much as it once was, largely because it is no longer there.

--- Later in debate ---

[Mr Davidson]

It is unrealistic to expect that many in Ireland would want to return to being part of the UK, because people there felt that they wanted independence for Ireland even if it impoverished them. Many people we met recognised that, in many ways, they were becoming more of a colony of the UK now than they had been, because high streets in Ireland were run by Tesco and WH Smith, for example.

A relatively small number of Irish businesses seemed to have a presence and they no longer had influence on the UK. People there were unhappy that they no longer had control over their own currency, because, like the SNP, they wanted to—and did—join the euro, which meant that they were unable to devalue competitively in a way that might have produced a boost for their economy. There was much weeping, wailing and gnashing of teeth, as perhaps the Irish are prone to do, about that issue.

There is no doubt that the difficulties faced by the Irish Government and people were exacerbated by Ireland’s being a stand-alone economy without control over its own currency. The Irish Government have been making huge cuts in public services—cuts in wages, pensions and services—all of which were going through when we visited. Some of those might come about now, but seeing all that was helpful and constructive.

[Julian Smith]

The hon. Gentleman seems to be talking about the past. One conclusion of this report is that there is confidence in respect of financial services in Scotland, despite what happened. I believe that this debate and discussions on this topic should focus on how we can use the financial services sector, which has had huge success in Scotland, to create more jobs and private sector investment in this sector from overseas and from Scotland. I am sure that the hon. Gentleman will come on to that later.

[Mr Davidson]

I am sure that I will. However, the debate is not about the future economic development of Scotland; it is about the Committee’s report, which we produced some time ago. My role as Chair is to discuss what we covered at that time and ensure that it is all seen in context.

--- Later in debate ---

[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.

[Julian Smith]

Does the hon. Gentleman agree that it is worth making a distinction between the bash-a-banker rhetoric, which probably many of us hear in relation to the problems that our constituents are having, and the success that Scotland has had in attracting back-office roles? Those roles have nothing to do with investment banking or lending, but are based on traditional Scottish accounting talents. Thousands of jobs have been attracted from a wide range of international companies to Scotland—to Edinburgh, Dundee and Stirling—and we must pay tribute for that. We must continue to try to attract such jobs to ensure that financial services play a role in making the private sector stronger in Scotland and lessening public sector predominance.

[Mr Davidson]

I am sure that those points have been noted by all concerned, including the Minister and the relevant Whip. I want to deal with the report, however, and while such matters are fascinating, the report does not deal with them. I look forward to hearing the hon. Gentleman’s contribution to the debate, which will no doubt cover anything that anyone misses out.

Let me make it clear that the Committee believes that it is of key importance to continue the supervision of banks in Scotland, because the banks’ behaviour and their success will be essential to the growth and development of the Scottish economy. We cannot build up a small or large business sector without having banks in Scotland that are able and willing to lend, understand their markets, and behave constructively and positively. I hope that that covers the point that the hon. Gentleman was making.

We wanted to identify the extent to which lending in Scotland had declined during the economic crisis. Our report contains a series of figures and statements indicating that there was a period when lending was far too loose—the banks had been intent on shovelling money out of the door, almost irrespective of whether the business propositions were viable. We were critical of the way in which bankers often seemed to be incentivised to make loans without due regard to their viability, whether they were for property or to businesses or individuals. The report states that the pendulum then swung too far in the other direction. For a period, banks were unduly restrictive. They were prepared to lend on almost nothing and found excuses to raise charges and interest rates to make it as difficult as possible for money to go out. We have now seen a swing back and there is a degree of equilibrium, but subsequent discussions that the Committee has had have not convinced me that the banks have got it right yet.

Recently, the Committee met representatives from the computer gaming industry in Dundee, the construction and road haulage industries in Edinburgh, and the local chamber of commerce in Dundee. In every case, the story we heard was the same—the banks do not understand us. No one in the construction, road haulage or computer games industries spoke up for the banks collectively. That was interesting, and not a little worrying. Everyone who expressed a view on such matters said that they did not believe that the banks had taken adequate account of the prevailing situation, and did not have a feel for their industry at the moment. They needed loans, floating capital and so on, but the banks were not willing to play along, except at exorbitant rates.

The banks have said that they are making more money available and that part of the difficulty is that lending is going down because companies are choosing to repay debt instead of taking out new debt; but it seems to me that, to some extent, the rates that the banks charge and the conditions that they seek to apply are still inhibiting meaningful lending. The Government and the Committee should give ongoing consideration to that. We have had some responses and updates from the banks involved that seem to paint a picture that is rosier than recently, but we are still receiving feedback from those who want to borrow that the banks are not being as helpful and constructive as they might be. I hope that the Minister and the Committee will be able to work together with the Scottish Parliament to ensure that we develop a mutually advantageous liaison and relationship.

--- Later in debate ---

[Iain Stewart (Milton Keynes South) (Con)]

I am delighted to make a brief contribution to the debate. Although I represent a constituency south of the border, I retain a great affection for, and interest in, the Scottish banking system. I should declare that I retain my very first current account, which is with the Royal Bank of Scotland, and which I took out when I was in my first job. I hope that that shows that I have some interest in the debate and that what I have to say has some relevance.

The banking sector in Scotland has been a significant player in the Scottish economy for many years, and I hope that it will be for many years to come. I am relieved that, for all the problems that Scottish banks have gone through, they have avoided some of the major catastrophes that have befallen banks in Ireland and Iceland—I mention that with some trepidation because I do not want to reignite the arc of prosperity debate between the hon. Members for Glasgow South West (Mr Davidson) and, if I can get the pronunciation right, for Na h-Eileanan an Iar (Mr MacNeil)—that was not bad. I welcome the Committee’s finding that despite all the problems, Scottish banks’ reputation for excellence has not been permanently damaged. I am heartened that the Committee found that there are some signs of an upturn in the Scottish banking sector, with new investment taking place.

I want to make a specific point about the responsibility of Scottish banks, and indeed all banks, to promote good financial education among their existing customers and the population at large. I have fond memories of the time when the Royal Bank of Scotland came to my primary school in Hamilton to give us some basic lessons about how banks worked. It set up a small savings account, into which we were encouraged to deposit a small proportion of our pocket money. At a young age, that instilled in me some very basic and good lessons in sound finance. My friends might uncharitably say that I have kept those lessons with me and talk about my hesitation to contribute towards buying rounds and the like, but the lessons that I learned then were valuable.

Over the years, we have lost sight of such things. The events of the past couple of years have shown that all of us, including the Government, individuals, some businesses and the banks themselves, have lost sight of basic prudence—I seem to remember someone else using that word once in a while—which encouraged people to borrow only when it was sensible to do so and only for investment in genuine products, rather than just to fund current consumption. I want to use this opportunity to call on the banks to remember their responsibility. I am sure that they all have specific schemes in place and that they will say that they educate their customers and others in society, but I want to emphasise how important it is that they do that, that they do not lose sight of such things and that they do all they can to boost them.

I was concerned to read in the Committee’s report—the hon. Member for Glasgow South West expanded on this—of evidence that the banks are placing undue pressure on customers to take out products that might not be in their best interests and to take on more debt than is sensible. It causes me some concern that the lessons of the past few years have not been learned. I welcome the Government’s initiative to establish the consumer protection and markets authority. When the legislation to introduce the authority is introduced, a central part of its remit will be to remind the banks that they have an obligation to promote good financial education and sound financial advice so that we do not get back into a position where everyone—everyone probably is guilty of this in some respect—takes out too much debt, funding their lifestyle rather than sensible investments.

[Julian Smith]

Does my hon. Friend agree that we must also have transparency about deposit rates and good depositor information? I and other colleagues have constituents who are completely flummoxed by the way in which deposit systems work in banks, and a great deal more morality and transparency in that area would not go amiss.

[Iain Stewart]

My hon. Friend makes an important point, and I would extend it even further: any banking product should be utterly transparent so that people know what return they will get or what interest rate they will have to pay in the long term. People often get an attractive headline rate of interest for the first year or two, but then find themselves locked into a more punitive rate. As my hon. Friend says, better transparency across the board is vital, and I hope that that, too, will be a central theme of the new authority.

It has always been a central belief of mine that we have sound finance in this country, but we have lost sight of it, and I hope that the lessons have been learned by the banks and everyone else.

--- Later in debate ---

[Chris Leslie (Nottingham East) (Lab/Co-op)]

I declare an interest as a trustee of the Consumer Credit Counselling Service in Scotland. I act in a voluntary capacity, with no remuneration. The CCCS is a debt advice charity, which has been greatly active on many of the matters raised by my hon. Friends and others during this welcome debate.

The debate is about a most welcome report. As my hon. Friend the Member for Glasgow South West (Mr Davidson) said, the report, which was thorough and worth while, was published at the end of the previous Parliament. It was incredibly important, given the estimated one in 10 jobs in Scotland that are linked to the long-standing financial services industry. Jobs, of course, have subsequently been lost in Scotland, as they have elsewhere, bank branches have closed, and the whole economy has been affected by the credit crunch.

On this, my fourth day in my new role as shadow Financial Secretary, I anticipate having many debates on financial services and their impact on consumers in all corners of the country. Although I spoke far too much and at great length in my previous guise as a Back Bencher, I will take this opportunity to reiterate my default position on many of these matters and, in particular, on the three clear questions that I believe are fundamental to my new portfolio.

First, what reforms are necessary to minimise the systemic risk to a well functioning economy and society following the experience of the credit crunch? Secondly, how can we create a thriving and healthy financial services industry in the United Kingdom, including in Scotland, rebuilding it with a reputation for sustainability, solidity and trust? Thirdly, how can we ensure greater fairness for the consumers of financial services products, so that the industry operates on the basis of common sense and fair play?

It is heartening that many of the contributors to this debate not only focused on what might sometimes seem to be ethereal issues between the players in the industry, but considered matters very much from the consumer perspective, speaking of people’s encounters with issues that are central to their lives.

The report contains an excellent collection of evidence, taken over a long period, going back to November and December 2009. I am glad that my hon. Friend referred to the visits to Ireland and to evidence heard elsewhere, successfully bringing in the arc of prosperity and making important points on the changing circumstances and the erroneous arguments made by members of the Scottish National party.

Many interesting lessons on the housing market, on public sector deficit reduction and its impact on growth, on the regulation of credit rating agencies and so forth, are all brought out in the report. Perhaps most notable is the impact of the credit crunch on Scotland in respect of changes to the Royal Bank of Scotland and Halifax Bank of Scotland—HBOS—and we should not forget the difficulties that affected Dunfermline building society. The report is an eloquent exposition or post-mortem of the lessons that need to be learned from that period, and it is worth reiterating them.

[Julian Smith]

The report was eloquent. Did it make the hon. Gentleman reflect on the Labour Government’s role in what went wrong, and the lax regulatory regime that had been allowed to develop, which was the source of many of the problems for the financial services industry in Scotland?

[Chris Leslie]

Certainly we all have lessons to learn from the credit crunch. Countries across the world, including the UK, did not frame correctly the regulatory environment in which financial services operated. That is absolutely clear. However, it reminds me that we do not state often enough that it was the previous Labour Administration who saved our economy from falling over the cliff edge and into the abyss. Although the current Administration sometimes give the impression that they would not have committed the resources necessary to achieve that, I believe that any Administration of any colour would have had to take those steps. I am proud that my party did so, even though that may be the root cause of some of the deficit questions that have subsequently arisen.

Key lessons need to be learned. Too few people had proper cognisance of the true liabilities on the books of our major banks, either because of the complexity of the various products involved or because of the poor risk assessment of those financial instruments. Banks were over-reliant on the wholesale capital markets to finance their investments and lending, which created excessively leveraged positions and left the banks incapable of coping with the freezing up of the wholesale markets. In addition, the underlying market sentiment, which, like the banking practices, had existed for a long time, implied an assumption of continuous expansion, creating expectations of never-ending profitability with high-scale rewards and bonuses, which clouded the judgment of too many practitioners in the sector.

[Julian Smith]

Would the shadow Minister say that the banks were merely reflecting the zeitgeist and the leadership of the Government of the time by over-extending themselves, living beyond their means and paying far too much for their work force?

[Chris Leslie]

Much as we in politics might like to think that everything done in the political game shapes society at large, my view is that the economy and society around us—not only in this country but in the world at large—suffered from too much exuberance when it came to the allure and attraction of profitability in that sector. We should have taken a far more hard-headed approach all round. Much as I congratulate the hon. Gentleman on trying to make a party political point about the root cause of the global credit crunch, it would not be fair to pin it on one or two politicians in one or two countries. The problem was systemic and we must all learn the lessons from it; otherwise it will be repeated—and that will affect Scotland as well as the rest of the world.

HBOS was merged with Lloyds TSB to form Lloyds Banking Group, and subsequently took advantage of Government capitalisation, which led to 43% public ownership. RBS received public funds resulting in 63% public ownership, rising to about 84% with subsequent injections of new capital. Special liquidity support and a number of other instruments created circumstances where the Government were very much foisted into the driving seat of our financial services industry.

The Government set a number of conditions, and I am glad that the present Administration have maintained a number of them. They include urging the banks to maintain competitive lending to retail and business customers at 2007 levels and encouraging the banks to deal with several of the failings that they experienced, including issues of remuneration, restricting dividend payments, helping people struggling with mortgage payments and so on. Of course, experience tells us that we still need to hold the feet of the banks to the commitments drawn out of them in exchange for the resources that were given to save their very existence. We should certainly ask the Government and the Minister to what extent they are succeeding.