Financial Services and Markets Bill

Kate Osamor Excerpts

2nd reading
Wednesday 7th September 2022 Commons Chamber

[Kate Osamor (Edmonton) (Lab/Co-op)]

Thank you for calling me to speak in this very important debate, Madam Deputy Speaker, and I associate myself with the remarks of my hon. Friends the Members for Hampstead and Kilburn (Tulip Siddiq) and for Feltham and Heston (Seema Malhotra). I welcome the Government introducing measures to protect access to cash, and I will use my speech to express my constituents’ concerns about that.

In Edmonton, between 2018 and 2021, a third of our free-to-use ATMs disappeared. I receive correspondence from my constituents telling me how the closure of banks and the lack of free ATMs is putting a strain on them. The importance of using cash on a regular basis is that it remains, for millions of people, simply the best way to budget effectively. Those facing digital exclusion or physical impediments, who are disproportionately elderly, will continue using cash.

I am not alone in saying this. The “Financial Lives 2020” survey found that around 2.4 million people aged 65 and over in the UK relied on cash to a great extent in their day-to-day life, representing around one in five—21%—of all older people. Also, small and medium-sized businesses, such as hairdressers, barbers and nail shops, survive off regular, frequent small cash transactions. I think about the small businesses in Edmonton, such as the nail salon or my hairdresser, Debbie’s, who did my hair for me—[Interruption.] Thank you. These businesses only take cash from customers. Small and medium-sized businesses simply cannot afford to run a card machine. Common charges include transaction fees of between 1% and 3% a sale, authorisation fees of between 1p and 3p a sale and merchant service fees of between 0.25% and 0.35%. Edmonton is one of the most cash-dependent areas in the country.

I welcome the measures to empower the Financial Conduct Authority to ensure that designated bodies must continue to provide “reasonable access” to cash, as I do the powers to potentially stop the closure of certain cash access points if there is no alternative nearby. However, to truly address this looming issue, we must acknowledge that attachment to cash has been much stronger in more deprived communities. Along with age, that is the greatest factor in its continued use.

Admittedly, rates of withdrawing cash have fallen off a cliff in wealthier constituencies, but during the covid crisis, cash withdrawals fell by only a quarter in less affluent areas. That figure would only increase if the free ATMs that have been removed were all replaced, but not with pay-to use machines. With a regular fee of £1.75 just to withdraw cash from a pay-to-use machine, it is a luxury that many cannot afford, yet the Bill makes no clear commitment to protect free-to-use over pay-to-use machines. The latter understandably have much lower usage rates. I hope that the newly appointed Chancellor will instruct the Treasury to differentiate between them clearly in its cash access policy.

We are also still waiting for the Government to define the meaning of “access to cash”. Without a clear maximum geographical distance between cash machines, we risk sleepwalking into a situation where cash deserts are commonplace. Also missing from the Bill is a provision to ensure that there is sustainable funding for free-to-use machines, which has seen serious strain recently. Providers must be compensated for providing this vital public service. Currently, we risk reaching a threshold whereby huge numbers of free ATMs become uneconomical and are forced to close. The funding model should also consider the demographics and economic deprivation in any area, which bears a strong relation to the need for cash access.

The Bill could be an important step in determining safeguards on access to cash in the long term, but sadly what we see is a narrow set of proposals with a lot of detail still unconfirmed. In the meantime, there should be a pause on removing free-to-use ATMs. Otherwise, more of my constituents will be further excluded.

Oral Answers to Questions

Kate Osamor Excerpts

Tuesday 7th December 2021 Commons Chamber

[Rachel Hopkins (Luton South) (Lab)]

2. What recent steps he has taken to help reduce economic inequality.

[Kate Osamor (Edmonton) (Lab/Co-op)]

3. What recent steps he has taken to help reduce economic inequality.

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

10. What recent steps he has taken to help reduce economic inequality.

--- Later in debate ---

[Rishi Sunak]

Income inequality on the last published statistics is lower than it was in 2010. There are also fewer people living in absolute poverty. With regard to national insurance, we took a decision to fund the NHS in a progressive manner to clear the backlog and usher in reforms to the social care system that will benefit everyone in this country. As for banks, I am not sure whether the hon. Lady has seen that the rate of corporation tax that banks will pay is going up from 27% to 28% while the rest of the UK corporate base will pay 25%. It is right that the banks pay a fair contribution to our coffers, but we should also recognise that financial services is a fantastic UK asset that employs 1 million people, two thirds of whom are outside of London and the south-east.

[Kate Osamor]

Although discussions about regional inequality between the north and south in the UK are important, this must not be reduced to a simple and misleading binary. My area of Edmonton, north London, has an unemployment rate of 9.7%, almost double the national average. Will the Chancellor assure the House that he will provide the investment that London needs, starting by providing the funding that Transport for London requires to maintain its services, particularly the bus services, on which lower-income Londoners are disproportionately reliant and which face 20% reductions without support?

[Rishi Sunak]

If Londoners are worrying about the state of their transport system and who is responsible for it, I think we all know, and those problems were there before coronavirus. What we are responsible for is making sure that people have access to high-quality work, and I reassure the hon. Lady that we are investing in our plan for jobs right across the country. I have visited jobcentres in London. We are helping to get people into work and helping them to get the skills they need. I hope that I can work with her local area to bring that unemployment rate down.

Covid-19: Government Support

Kate Osamor Excerpts

Wednesday 7th July 2021 Westminster Hall

[Kate Osamor (Edmonton) (Lab/Co-op) [V]]

I am grateful to serve under your chairship for the second time in one day, Mr Mundell. I congratulate the hon. Member for Midlothian (Owen Thompson) on securing this debate.

In March last year, the Chancellor declared that the Government would do whatever it takes to support the country through the covid-19 crisis. While the furlough scheme, which the trade unions were central in establishing, and other financial support have provided a lifeline for millions, sadly far too many individuals and small businesses have still been excluded. I have countless constituents, most commonly the self-employed or owners of small businesses, contact my office saying they have gone a year without receiving any financial support, despite not operating at anywhere near their normal capacities. Time and again, the Government have ignored those excluded from financial support. To be clear, any policy that seeks to ensure financial security while tackling the pandemic must include, above all else, listening to the voices and experiences of people such as my constituents, and addressing their concerns.

When the Minister sums up, will he consider the following two proposals? First, will the Government expand the eligibility requirements for the fifth grant of the self-employment income support scheme. Millions of self-employed people have faced considerable hardship, which has left many of them in serious debt and poverty, struggling to make ends meet with little or no income. There are more than 1 million people who receive less than 50% of their income from self-employment or who have profits in excess of £50,000. They must receive a reprieve after facing uncertainty and financial insecurity for more than a year.

Secondly, the Minister cannot use the lifting of restrictions to wash his hands of offering financial support through this crisis. Some businesses will still be severely hampered despite the planned lifting of almost all restrictions. I am largely thinking of those in the aviation and travel sector, including an independent travel agent in my constituency. Sectors such as these may need long-term, targeted and tailored financial support to survive.

I will draw my remarks to a close. The pandemic disrupted many businesses, but the support offered by the Treasury failed to meet the needs of those small and medium-sized enterprises, including in my constituency, that no doubt will have, or have already had, no choice but to close, through no fault of their own.

Covid-19: Ethnic Minority Disparities

Kate Osamor Excerpts

Monday 1st March 2021 Commons Chamber

[Kemi Badenoch]

Yes, I can confirm that to my hon. Friend. The Government are looking at the most vulnerable and those who need our protection, not just in the context of covid-19, but more widely. To tackle unfairness in our society, we are looking at how we can open up opportunities to everyone, no matter their class, ethnicity or background. It is not a case of choosing one group over another. We want equality for everyone, everywhere. The work that we will do in the Government Equalities Office following the report from the Commission on Race and Ethnic Disparities will continue to address the structural issues that I know many Members are concerned about.

[Kate Osamor (Edmonton) (Lab/Co-op) [V]]

Given the greater risk factors that mean that black women are four times more likely to die in childbirth than white women, what accountability mechanisms has the Minister put in place to monitor and evaluate the success of the pilot schemes to address the inequalities mentioned in the report? How will she guarantee that these pilots can be rolled out across the country, so that maternal mortality does not become a postcode lottery for black women?

[Kemi Badenoch]

I thank the hon. Lady for her question. I know that Health Ministers are taking this issue seriously; it is something that cuts across our briefs. I have taken a particular interest because of my own experience of having three children within the maternal health sector. Following a joint ministerial roundtable in September 2020, the race disparity unit, which reports to me, has been supporting the Department of Health and Social Care in driving positive actions in maternity services to improve outcomes for ethnic minority women. That includes the recently launched NHS campaign “Help us help you”, which informs pregnant women about the importance of attending check-ups, and provides reassurance that the NHS is there to see them safely, because covid has affected the way that maternity works in the NHS. We are hoping that as we continue to unlock and come out of this, things will go back to normal.

Oral Answers to Questions

Kate Osamor Excerpts

Tuesday 20th October 2020 Commons Chamber

[Jesse Norman]

[Kate Osamor (Edmonton) (Lab/Co-op)]

[The Chief Secretary to the Treasury (Steve Barclay)]

[Kate Osamor [V]]

[Steve Barclay]

Oral Answers to Questions

Kate Osamor Excerpts

Tuesday 7th July 2020 Commons Chamber

[Rishi Sunak]

I know that my hon. Friend is a proud champion of his local theatre, the Lyceum in Crewe, and that he has warmly welcomed our announcement. The Culture Secretary and his team will be here just after Question Time. We share his ambition to ensure that the support reaches all relevant institutions as quickly as is prudently possible.

[Kate Osamor (Edmonton) (Lab/Co-op) [V]]

Credit unions are known for offering those on low incomes alternative access to credit. However, due to covid-19, during April and May North London Credit Union in Enfield was hard hit and has seen an 87.5% fall in the number of loans issued. Will the Chancellor use his summer statement to announce financial support for credit unions, which are challenged with branch closures and possible bankruptcy?

[Jesse Norman]

I entirely agree with the hon. Lady about the importance of credit unions. I am a member of Money Box Credit Union in Hereford and can vouch for their importance, especially for people on low incomes. She makes a very valid point, and it is one that we will continue to consider as we move forward.

Budget Resolutions and Economic Situation

Kate Osamor Excerpts

Tuesday 22nd March 2016 Commons Chamber

[Kate Osamor (Edmonton) (Lab/Co-op)]

I would like to focus my speech on the announcements in the Budget that all schools will be forced to become academies by 2020. This will lead to a fundamental shift in the way education is managed in this country, turning education into a business. I am concerned that, like most businesses, it will benefit the richer, and leave behind those who most need educational reform. This is a concern echoed by the public. More than 100,000 people have signed a petition to hold a public inquiry and a referendum on turning all schools into academies.

I have a history of campaigning against forced academisation. Before becoming an MP, I campaigned against forced academisation in Haringey. The experience taught me how much community support there is for the state sector in Britain, and how much people care about their schools having the right priorities for their children. Forced academisation is a costly exercise. The timing of this move appears highly questionable. At a time when councils, especially Labour-run councils, are having their budgets cut by 79%, and when they are having to make severe cuts to valuable front-line services, money spent on forced academisation seems like a political exercise, rather than money well spent.

Roy Perry, chairman of the Local Government Association’s children and young people board, stated:

“With mixed evidence about academisation improving standards and when public spending is facing significant cuts imposing academisation on schools regardless of local opinion cannot be an appropriate use of public money.”

This policy was not in the Conservative manifesto. There needs to be proper debate and scrutiny, looking into the cost and how the policy will affect local communities.

Academies do not solve the big problems facing our schools—problems of a shortage of teachers, a shortage of head teachers, and increasing class sizes. Until we look at all those aspects, we should not proceed with academisation.

Oral Answers to Questions

Kate Osamor Excerpts

Tuesday 19th January 2016 Commons Chamber

[Mr Speaker]

We must move on—demand always exceeds supply.

[Kate Osamor (Edmonton) (Lab/Co-op)]

On a point of order, Mr Speaker.

[Mr Speaker]

Points of order come after urgent questions, so I will await the hon. Lady’s inquiry with interest.

Royal Bank of Scotland

Kate Osamor Excerpts

Thursday 5th November 2015 Commons Chamber

[Kate Osamor (Edmonton) (Lab/Co-op)]

I beg to move,

That this House calls on the Government to consider suspending the further sale of its shares in the Royal Bank of Scotland whilst it looks at alternative options; and believes that this should take place in the context of a wider review of the UK’s financial sector and that such a review should consider the case for establishing new models of banking, including regional banks.

On behalf of the House, I thank the Backbench Business Committee for allowing us the opportunity to debate this issue in the main Chamber today. This is the first time that I have led a debate, and I am grateful to all hon. Members from both sides of the House who have agreed to participate in it today. I will keep my speech reasonably short so that as many Members as possible will have a chance to speak.

The selling of RBS shares is an important issue that deserves detailed discussion, and this is the first time that it has been formally debated since the Chancellor announced his intention to begin reprivatisation at his June 2015 Mansion House speech. He provided no opportunity for public discussion of the decision; he did not even present the decision himself in Parliament the following day, but rather sent the Economic Secretary to the Treasury on his behalf.

Today’s motion, signed by hon. Members on both sides of the House, touches on three themes. First, the Government should consider suspending the further sale of their shares in the Royal Bank of Scotland while they look at alternative options. Not enough evidence has been considered to give the Government a mandate to rush through the sale of shares. Secondly, such a review should take place in the context of a wider review of the UK’s financial sector. We need to look at the implications for our economy of the make-up of the UK banking sector, which is unusually large, unusually concentrated and uniquely lacking in diversity in comparison with other countries.

Thirdly, the review should consider the case for establishing new models of banking, including regional banks. Reforming RBS into a network of local banks would increase financial stability, help decentralise the economy, boost lending for small and medium-sized enterprises, maintain local branch lending and help restore faith in British banking. There is also a strong case for saying that such a move would be beneficial to the taxpayer and the economy—certainly enough to justify examining this option before pressing ahead with a fire sale.

In this opening speech, I want to set out the errors of process behind the sale, and the case for reforming rather than selling RBS. I call on the Government to halt the sale of RBS shares until a full and independent review of all the options has been conducted. As a result of the emergency bail-out package in October 2008, the British public effectively acquired 82% of RBS and 43% of Lloyds. The total cost to taxpayers of our stake in RBS has now exceeded £45.5 billion. The recent sale of a 5% stake in the bank has already resulted in a loss of £1 billion. Selling the entire Government stake at a similar price would result in losses of £13 billion or more—almost a third of the original bail-out.

The size of the expected losses, and the impossibility of meeting the Chancellor’s previous assurance that we would get our money back, reinforce the case for a broader review to establish whether this is really the best that we can do, taking into account all the economic costs and benefits of the different options available.

In 2013, the Chancellor of the Exchequer set out the following objectives for the future: maximise the ability of the banks to support the UK economy; get the best value for money for the taxpayer; and return the banks to private ownership as soon as possible. Privatisation is presented as the answer to the first two objectives and as a foregone conclusion rather than one of a number of options, each of which deserve consideration. A whole host of experts have suggested that we can do better with RBS—better for the taxpayer and the economy—than return to the pre-crisis business as usual. That is not a fringe view; it is a view expressed by the Parliamentary Commission on Banking Standards, the former Secretary of State for Business, Innovation and Skills and the previous Government’s own entrepreneur in residence.

[Grahame M. Morris (Easington) (Lab)]

rose—

[Kate Osamor]

May I make some progress?

Martin Taylor, a member of the Bank of England’s federal policy committee, said:

“I would like to have a feeling that the Government recognises there are policy options and is thinking along those lines rather than saying our job is to get the business back into the private sector.”

Unfortunately, the rushed nature of the sale, the lack of evidence provided to support it and the lack of discussion surrounding it suggests that the contrary is the case.

The Government’s decision to sell off RBS shares in the summer without any published evidence that they have considered alternative options raises important questions about public accountability and process. It signals a return to business as usual and an unquestioning faith that the private sector is the right direction for British banking.

The Chancellor argued that it was the

“right thing to do for the taxpayer and for British businesses”

and that the sale

“would promote financial stability, lead to a more competitive banking sector, and support the interests of the wider economy.”

To support those claims, the Government have relied on a 13-page report by the investment bank, Rothschild, and a two-page letter from the Governor of the Bank of England. Neither of those presents any concrete evidence to support the Chancellor’s assertion. Opposition to the sale has been voiced by the public, hon. Members and independent voices in the field. Nearly 120,000 people have signed a petition calling for an independent review of the options for the bank’s future before any shares are sold.

A survey commissioned by Move Your Money shows that only 21% of people agree with the current conditions of the share sale; 82% agree that RBS should act in the public interest and 67% agree that we should have a full independent review. Many alternative options have been put forward for RBS, including breaking it up into a series of challenger banks, turning it into a state investment bank and converting it into a network of local or regional banks.

I want to focus on the last of those options, which has been advocated by, among others, the New Economics Foundation, the Archbishop of Canterbury, Civitas, Respublica and the former Treasury Minister, my right hon. Friend the Member for Wentworth and Dearne (John Healey). It is modelled not on an untested economic theory but on the German Sparkassen, a network of local public savings banks owned in trust for the public benefit, accountable to local people and with a mandate to support their local economies. The Sparkassen are the powerhouse of small business lending in Germany and are an important part of the success story of the German economy.

The NEF has proposed that RBS could be broken into 130 local banks based on local authority areas, of a similar size to the Sparkassen. They would be carved out of the bank’s high street operations, with its investment banking and private banking arms being sold. Like the Sparkassen, they would be able to share risks and resources to achieve economies of scale but, crucially, each local bank would be independent. By refusing to consider this option, the Government are missing a golden opportunity to fix the structural problems of UK banking that were exposed in the crisis.

[Jeremy Quin (Horsham) (Con)]

I hope that the hon. Lady would accept that the German banking system also had its problems during the financial crisis. The Sparkassen to which she refers were often lending very inappropriately, which helped to pump up the credit bubble, and they were investing in southern Europe in a way that helped to cause the eurozone crisis.

[Kate Osamor]

The hon. Gentleman’s example covers what happened in a short period of time. Over a long period, the system has been tested and has worked, so I beg to disagree.

The UK has the most concentrated and homogenous banking sector in the developed world. Just 3% of our banking system is locally controlled, compared with two thirds of that in Germany. We are also uniquely reliant on shareholder-owned banks at the expense of other ownership models. This lack of diversity makes us uniquely vulnerable to financial crises. To put it simply, it makes it more likely that our banks will all suffer the same problems at the same time, as they did in 2008.

Breaking up RBS and localising our banking system would make us more resilient to future shocks. Local banks also provide a means through which we can rebalance the economy, as the UK has the most regionally unbalanced economy of any European country. Studies find that local banks in other countries help prevent capital from being sucked into big cities, and spread jobs and lending more evenly across the country. This change would also ensure that more people had access to bank branches. Whereas commercial banks are shutting at an increasingly rapid rate across the country and in Europe, local banks in Europe have prioritised maintaining good access for their customers.

Local French co-operatives, for example, typically locate between 25% and 33% of their branches in sparsely populated areas. Local banks also lend more to the real economy, particularly small and medium-sized enterprises. That would greatly benefit my constituency of Edmonton and those across the country who struggle to obtain loans. That is made possible not just by the banks’ local focus but by their ownership structure and public interest mandate. Across Europe, banks run for more than profit devote 66% of their balance sheets to high street banking, compared with just 37% for commercial banks, which tend to lend for more profitable activities, such as derivatives trading. Local banks could therefore reduce our vulnerability to crisis, help rebalance the economy and boost the real economy. Analysis from the NEF suggests that that should have been done in 2008, as UK GDP could have benefited from an immediate boost of £7.1 billion, with an additional £30.5 billion over three years. Reforming RBS is in the interests of the taxpayer and the economy.

I want to end with a statement from the Tomlinson report, which highlights how selling off RBS shares represents a wasted opportunity for significant publicly beneficial reform in UK banking:

“Returning RBS and Lloyds to full private sector ownership in their current form would be a return to the banking landscape of 2003, possibly with even less competition…Given the lack of any real change in the banking sector, there is nothing that will stop 2018 being the same as 2008 unless radical action is taken now.”

Without reform of any banking structures, there is a risk we could witness another crash.

We must learn from the events of 2008. By failing to provide evidence justifying the sale and to consider alternative options, the Government are putting ideology above what is best for the economy and the taxpayer. I ask the Government to conduct an independent review of all the alternative options and urge Members on both sides of the House to support the motion.

Tax Credits

Kate Osamor Excerpts

Thursday 29th October 2015 Commons Chamber

[Kate Osamor (Edmonton) (Lab/Co-op)]

I thank my right hon. Friend the Member for Birkenhead (Frank Field) for securing this important debate. When I voiced my opposition to the cuts to tax credits back in July, I spoke of how they would hit the poorest the hardest. I spoke of how in my constituency 72% of people receive tax credits and over 42% of children live in relative poverty, so Members can well imagine how worried I am for those constituents, who I am sure are watching now.

The latest analysis from the Resolution Foundation projects that over 200,000 more children will be in poverty by 2016 if these unbelievable, wrong and—I cannot even get the words out, because I am very upset about this. This is going to affect the people I represent. The Government have done nothing to assess the impact of the cuts on children. Indeed, the changing definition of child poverty in the Welfare Reform and Work Bill totally fails to capture the true extent of child poverty. To be clear, two thirds of children in poverty live in households where women and men go to work. The situation for Edmonton, which is ranked as the constituency with the sixth highest level of child poverty, is critical.

The impact of tax credit cuts will be felt not only by the poorest constituencies, such as mine, but by constituencies across the country. The Institute for Fiscal Studies has shown that nearly 3.2 million working families on benefits or tax credits stand to gain, on average, only £200 a year from the so-called national living wage, whereas they stand to lose over £750 a year as a result of tax credit cuts. Also, the personal tax allowance does nothing to help the low-paid—those earning less than £10,000.

The value of free childcare to tax credit recipients is very limited. The measure has not been thought out. I have discussed it with the National Association of Head Teachers, whose members are worried about the intake and whether they will be able to expand to take on more children. This needs to be thought out as well.

To paint the reforms as a valid replacement rather than a necessary accompaniment to tax credits is quite untrue. The Government have broken their election promise. They are betraying the very people they claim to represent. I call on the Government to reverse the cuts to tax credits. The evidence is against them—we have heard it from Members in all parts of the House. It is plain that the changes will not work. They will not work because so many people will be living in poverty. I am sure that that is not what this Government are here to do, and if it is, they need to think again.

We need to think about our constituents and the surgeries we all sit in. I say to Government Members: listen hard to those who come to tell you how worried they are—how they do not know how they are going to survive, or how they are going to look after their children. We saw on “Question Time” a woman in tears, crying as she said she had voted for you and you let her down. It is time to stand with the people you claim to represent. Let me put it straight: if you push ahead with these plans—these disgraceful plans—you will only show those people who want to go out to work that it does not pay to go out to work. You need to look and think deeply about the decision to take these cuts forwards.