Tax Avoidance (HSBC)

Kevin Brennan Excerpts

Monday 23rd February 2015 Commons Chamber

[Mr Osborne]

The hon. Gentleman says that that’s the Tory party, but, as it happens, I think my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) is referring to the newspaper accounts of the Labour leader. I am not going to get drawn into that. Of course there is a difference in law between tax avoidance and tax evasion, although the shadow Chancellor managed to mess it up in the question he put today, but I have said as well that aggressive tax avoidance is something we also need to clamp down on and stop, and we have taken many actions to do so.

[Kevin Brennan (Cardiff West) (Lab)]

The Chancellor said he was answering all the questions, but, as I heard him, he left out the second part of the question about the deal with the Swiss authorities, which was why was a deal signed which prevents the UK from actively obtaining similar information in the future. Will he tell our constituents why the Government decided to do that deal?

[Mr Osborne]

I can confirm that the agreement we have signed would not prevent us from receiving the so-called Lagarde list in exactly the way that we have been doing. Also, thanks to the Prime Minister’s leadership at the G8, we will now have an automatic exchange of information with Switzerland from 2017. That is one of the most important steps forward in tackling tax evasion. The answer is—[Interruption.] The shadow Chancellor is again not listening to the answers that he is getting across the Dispatch Box; the problem is that all his questions have been answered. The answer is that our agreement with Switzerland would not prevent us from receiving the Lagarde list.

Tax Avoidance (HSBC)

Kevin Brennan Excerpts

Monday 9th February 2015 Commons Chamber

[Mr Gauke]

My hon. Friend is more worldly than I am, perhaps, but he raises an important point. We have tried to do many things to reduce tax avoidance and evasion, but I accept that we have not been able to go back in time and stop it happening before we came to office.

[Kevin Brennan (Cardiff West) (Lab)]

Ten years ago, when the Minister’s party was in opposition, Conservative Members, including the Chancellor, were calling for less, not more, regulation of the banks and the City. Will Lord Green be at the Tory party’s black and white ball tonight for the uber-rich, and will the Minister advise Lord Green, if he has any spare cash, to donate it back to the taxpayer, instead of to the Tory party?

[Mr Gauke]

I think the hon. Gentleman has just made the point that my hon. Friend the Member for Wellingborough (Mr Bone) raised in the previous question.

Oral Answers to Questions

Kevin Brennan Excerpts

Tuesday 2nd September 2014 Commons Chamber

[Kevin Brennan (Cardiff West) (Lab)]

2. If he will take steps to allow the Office for Budget Responsibility to audit the spending plans of political parties.

[The Financial Secretary to the Treasury (Mr David Gauke)]

Autumn statement 2013 announced that, as required by legislation, the OBR is launching an external review of its publications over the course of 2014. The external review team will publish its independent report tomorrow. Following the outcome of that review, the Government will hold their own review of the OBR at the start of the next Parliament.

[Kevin Brennan]

That was very interesting but it had nothing to do with the question. The figure of £21 billion that the Chancellor mentioned in his answer to question 1 will presumably be sent now by the Minister to the OBR to be checked as to whether it is factually correct, or is the figure a political smear, as usual from the Chancellor, that he is not prepared to stand up by sending it for scrutiny to the OBR—yes or no?

[Mr Gauke]

Much of that £21 billion figure is based on the Labour party’s own announcements. I do not know why the hon. Gentleman is complaining about that. If the Labour party wants to have credibility on fiscal policy, perhaps it should stop making so many announcements of spending splurges. Our view is that the OBR is in its infancy. We want the organisation to succeed and therefore do not want to draw it into party political matters.

Oral Answers to Questions

Kevin Brennan Excerpts

Tuesday 11th March 2014 Commons Chamber

[Nicky Morgan]

Of course I agree with the actions that my right hon. Friend the Chancellor of the Exchequer took at the last Budget, and I congratulate my hon. Friend on the campaign he ran on behalf of pubs, both in his constituency and across the country. I have seen the confidence that the reduction in beer duty has given to Britain’s pubs. The public finances already assume that beer duty will rise by less than other alcohol duties this year, after we ended that beer duty escalator. As my hon. Friend will know, we keep all taxes and duties under review.

[Kevin Brennan (Cardiff West) (Lab)]

In the interests of balance, will the Minister acknowledge that although a penny off a pint through beer duty is welcome, the Chancellor’s VAT changes added 5p to the price of a pint? Will she simply acknowledge that fact, as VAT does not get mentioned by Ministers at all?

[Nicky Morgan]

I understand the point the hon. Gentleman is making, but the fact is that, given the changes introduced in last year’s Budget, the cost of a typical pint has come down. We should all be very grateful for that.

Money Transfer Accounts and Remittance Sector

Kevin Brennan Excerpts

Wednesday 22nd January 2014 Westminster Hall

[Kevin Brennan (Cardiff West) (Lab)]

Bore da, Mr Owen. For those who do not speak the language of heaven, that means good morning.

I am grateful for the opportunity to probe the Government on their steps to support money transfer accounts and the remittance sector. According to a recent blog from the Africa Research Institute, the Secretary of State for International Development has described this issue as

“one of the most important things I have dealt with in my political career”,

so is at least as important as HS2, and therefore the Government should devote at least as much effort to, and invest at least as much political capital in, trying to sort it out. At a recent meeting at Ealing town hall, she assured UK Somalis that the

“best experts on the planet are working on a solution”

and that the Prime Minister has recognised that a rapid solution is needed to a problem that he has described as “massively important”. I hope that the Minister will update us on the Government’s steps so far, clarify their position, answer frankly any questions from hon. Members and tell us about the action that will be taken to provide a rapid solution to what the Prime Minister has described as a “massively important” problem.

The problem came to a head in May 2013 when Barclays announced that it intended to close the accounts of most of its clients in the money transfer and remittance business. The decision was delayed, probably due in part to a debate in Westminster Hall in July 2013, which was ably led by my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali). She is in the Chamber today, and she has led a brilliant campaign on the matter, supported by other hon. Members in the room.

Although the decision on the closure of accounts was delayed, unfortunately that was of little use to the constituent I mentioned in the 2013 debate, Mr Anwar Ali, whose business, Trust Exchange UK Ltd, was ruined by Barclays’s decision. As I said during that debate, that business was a model of the sort of small businesses that many hon. Members on both sides of the House would like to see in their constituencies. It not only offered a service to constituents who needed to transfer money to relatives overseas, but engaged in such things as charitable work and aid projects, especially in Bangladesh.

[Paul Blomfield (Sheffield Central) (Lab)]

As my hon. Friend knows, Sheffield is fortunate in having one of the largest Somali communities outside London. That community has made strong representations to me about the issue. The specific point is that an inability to transfer money causes not just domestic and individual family distress. A survey of diaspora communities in Sheffield that I carried out showed the important contribution that remittance giving makes in supplementing aid, so the issue also involves international development. Does he agree that that makes it much more important that the Government take action?

[Kevin Brennan]

I thank my hon. Friend for giving me the opportunity to acknowledge everything he said, including the Somali community in Sheffield. His intervention also allows me to remind the Chamber that Cardiff—my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) is also in the room—has one of the oldest Somali communities in Britain, going back to the 19th century. The community plays a hugely important and positive role in the life of our great city. What my hon. Friend the Member for Sheffield Central (Paul Blomfield) said was right, and I shall say more about aid later.

[Kate Green (Stretford and Urmston) (Lab)]

I congratulate my hon. Friend on securing the debate, and I apologise that I will have to leave for a few minutes in the middle of it. Does he agree that for the Ogaden Somalis—around 500 are resident in my community—the ability to remit money back to families at home is particularly important because so many of them are suffering displacement and persecution? There is a particularly strong link with not only our moral but our economic responsibilities to those communities.

[Kevin Brennan]

My hon. Friend is absolutely right, and I am sure that that was why the International Development Secretary acknowledged, at least in words, the importance of the matter. Today we are seeking to poke the Government into quicker action than we have seen so far.

[Mike Gapes (Ilford South) (Lab/Co-op)]

In my constituency I have a large Somali community whose members send remittances to different parts of the world, as do other people. I want to supplement what my hon. Friend the Member for Sheffield Central (Paul Blomfield) said. Remittances do not just add to international development assistance because, globally, they are of greater value. If we cut them off, we will do serious damage to a number of countries and some of the poorest people in the world.

[Kevin Brennan]

If I keep taking interventions, I fear that my comments will become less fresh and novel to listeners because my hon. Friends, with their expertise on this matter, are anticipating many of my points. Nevertheless, I thank my hon. Friend for what he said.

Sadly, following the withdrawal of banking services by Barclays, my constituent, Mr Anwar Ali, had to run down his business severely, and I understand that if he is unable to find a solution to this banking problem, the business may have to close. It is one thing for large banks to refuse to lend to small businesses—we all know about that—but it is another to deny to legitimate, law-abiding small businesses the basic service of a bank account. The banks casually say that they are making a commercial decision, but to small businesses it is a commercial death sentence. Let me remind hon. Members of the importance of such remittances, especially to developing countries.

According to a United Nations Conference on Trade and Development report in 2012, in 48 of the least developed countries, remittance receipts climbed from £3.5 billion in 1990 to more than £27 billion in 2011—that figure might be much higher. In Somalia alone, the authorities said in 2012 that around one third of the country’s GDP—$2 billion—came through small money transfer agencies, and that 40% of people in Somalia depended on remittance flows.

A major multinational bank, which in recent years was heavily fined for wrongdoing, is operating in a market dominated by a small number of players of its kind and has withdrawn, mainly from small businesses, a service vital to their existence and crucial to some of the most vulnerable people in the world. It is difficult to get to the bottom of exactly why that has happened, because it has not made its reasons clear. Are they commercial reasons, as it blithely says, or are they fears about terrorism and money laundering? There is a lack of clarity about the reasons.

Anthony Jenkins, the chief executive officer of Barclays, said that it was stopping offering bank services to such business because they

“don't have the proper checks in place to spot criminal activity and could unwittingly be facilitating money laundering and finance terrorism”.

In a letter to Dahabshiil, which is one of the larger payment firms and is located, I believe, in the constituency of my hon. Friend the Member for Bethnal Green and Bow, Barclays said that the decision was

“not a negative reflection of your anti-money laundering standards, nor a belief that your business has unwittingly been a conduit for financial crime. It is, however, a commercial decision that we have taken due to the risks of the sector”.

Perhaps the Minister can explain—I know he talks to these big banks—what he thinks is behind the fact that every single major UK bank refuses to provide banking services to the sector, effectively financially excluding the firms, without considering each of them on its merits. Does he believe that that is purely commercial coincidence, or is it—[Interruption.] I wonder whether those in the civil service Box would stop talking while I am addressing the Chamber.

Does the Minister believe that that situation is a commercial coincidence, or is it another aspect of the overall lack of competition in the banking sector that the Government are failing to address? What can he tell us about the role of the National Crime Agency in this matter? In effect, the uncompetitive major banks have erected a complete barrier to the financial sector for some of its smallest members. Does the Minister think that is acceptable?

Dahabshiil was able to win an injunction against Barclays in the courts in October, so its account remains open for the time being, at least. Unfortunately, however, many other firms, including the one in my constituency, have not benefited from the development, because their accounts have already been closed by Barclays. Does the Minister believe that Barclays should offer to reopen the accounts that it closed before the court’s decision so that the account holders are able to carry on their business until the case is finally settled? Does he agree that that would be an entirely reasonable thing to do? It would allow businesses such as the one in my constituency to get on with the business that they were doing perfectly legitimately and legally beforehand so that money transfers could take place. Will he call on Barclays to reopen those accounts until the court decision is made? I understand that so far Barclays has refused to reopen those accounts, so I hope that the Minister will condemn that.

I pointed out in the 2013 debate that there seems to be a different set of rules for large banks and financial institutions, such as Barclays and Western Union, which stand to benefit from the situation. It has been proved that Western Union helped to facilitate money laundering in Mexico—it paid a fine to the Arizona state authorities in relation to that—yet it stands to inherit a lot of the business of small firms against which nothing has been proved. In recent years, almost all the large banks and institutions have been found guilty, in one way or another, of financial misdemeanours, and they have sometimes been fined—[Interruption.] I wonder whether I could ask you, Mr Owen, to appeal that those in the civil service Box do not interrupt the debate.

[Albert Owen (in the Chair)]

I am listening intently to the hon. Gentleman, who is making a very interesting contribution. Everybody is very quiet, so any noise that is heard is magnified. I ask that everyone in the room is courteous to the Member who is speaking.

[Kevin Brennan]

It is unfortunate that sound carries, Mr Owen, but it is distracting, so I am grateful for your assistance.

Those large banks and institutions not only have been fined, but have been bailed out by ordinary taxpayers to the tune of billions of pounds to stop them failing as a result of their greed. Their reward for that malfeasance has been a handout from Governments, yet these small businesses, against which much has been insinuated but nothing actually proved, have been squashed by the big banks’ refusal to allow them the facilities that they need to survive, effectively denying them the air that they need to breathe as businesses. That is an intolerable abuse, so the Government should be acting with the utmost urgency to fix it.

So far the Government have taken some steps, especially in relation to Somalia. In September they announced an action group on cross-border remittances, before announcing its terms of reference in December. However, four months after the action group was set up, why—to my knowledge, unless the Minister is going to make an announcement today—has no chair of the group been appointed and why have no meetings taken place? I understand that, as a direct result of today’s debate, a date has finally been set for the group’s first meeting, but the record so far smacks more of inaction than action. Will he tell us today who is to chair the group, and will he confirm when it will meet? We all recognise the danger of terrorism, but why has there not been more focus on helping such remittance businesses to avoid risks, rather than shutting them down when there is no evidence of wrongdoing?

[Sir Tony Baldry (Banbury) (Con)]

When the Secretary of State for International Development announced the setting up of the action group on cross-border remittances, she said, in reply to a written question from the hon. Member for Bethnal Green and Bow (Rushanara Ali), that part of its purpose would be to develop

“a safe corridor pilot to ensure the continued flow of remittances to Somalia through secure, legitimate and accessible channels.”—[Official Report, 27 November 2013; Vol. 571, c. 342W.]

The working group was given a one-year timetable. Does the hon. Member for Cardiff West (Kevin Brennan) agree that it is not unreasonable for the House to expect a complete solution to the problem and that Her Majesty’s Government should have found a way of ensuring that remittances from UK citizens can get to developing countries within, at the very latest, the one-year timetable set out by the Secretary of State?

[Kevin Brennan]

I agree with the right hon. Gentleman that it is important that we get on with it. My point is that, four months after the announcement that the action group would be set up, it has not yet met, and as far as I am aware we do not know who will chair it, unless the Minister can give us more information in his speech.

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

I want to reflect the concern on both sides of the House about the lack of urgency on the matter. We expected a great deal more progress than has been achieved so far. The sense of urgency comes from our constituents whose families are dependent on remittances. In some instances, it literally is about people’s security as a family in the long term.

[Kevin Brennan]

My hon. Friend is absolutely right. We need firmer information from the Minister about when he expects that progress will be made, so we look forward to his speech.

For example, will the Minister guarantee that the action group will meet the target date—the deadline—of April 2014 to formulate new official guidance for money services businesses and banks, especially on agreeing how to deal with money laundering and terrorism risks? Does he anticipate that that will make it easier for banks to start providing bank accounts again? Is it his intention that that should happen by April, May, June, the summer, or within the one-year deadline? What estimate has he made of how many money transfer companies have been forced out of business so far, and how many will be forced out of business in the meantime due to the lack of a bank account?

I have paid tribute to my hon. Friend the Member for Bethnal Green and Bow for her leadership on the issue, even though that has not, unfortunately, been able to save the business in my constituency. The Government must get on with finding the solution to the problem. If they do not, many decent, law-abiding small businesses, which are often located in the poorer parts of our country, will be forced out of business by the indifference of the authorities to the actions of the big banks, meaning that the livelihoods and well-being of some of the world’s poorest people in developing countries will be placed in hazard.

--- Later in debate ---

[Rushanara Ali]

There is no question but that mobile technology can help, and many have cited M-Pesa as a potential example. The reality is that such technology does not go far enough, however. Not everyone can afford a mobile phone. In countries where mobile phones are cheap and there are banking systems and proper infrastructure, it is much easier to create the possibility of mobile phone transfer, but Somalia is a long way from that and, in the short to medium term, such a solution would not be adequate. In the long term, it might be a complementary facility, and I know that the action group will want to look into that.

However, mobile transfer is no substitute, and anyone who thinks that it might be is, frankly, living on another planet. Somalia has no infrastructure, and it does not have the required banking system. There are major challenges to using mobile technology to get remittances into the country; if that were not true, we would not be having this debate.

[Kevin Brennan]

Further to that point, is my hon. Friend aware that the survey that made those claims about mobile technology was based on 1,000 people in Hargeisa? That is hardly representative of Somalia as a whole.

[Rushanara Ali]

My hon. Friend is right. The integrity of that survey has been questioned, particularly by the Somali community in Britain. The remitters felt that it did not address the seriousness of the issue and was a superficial exercise. Frankly, going only into Hargeisa is not good enough. The trusted networks that organisations such as Dahabshiil and other money transfer companies use to reach people in remote places are critical to support across the country. That is the major challenge that we must address.

Some in my constituency, and elsewhere, have pointed out that if they want to get remittance in without the proper facility, which has so far been provided by Barclays, they will have to do so via Kenya. Family members would have to leave and go to Kenya, or to Hargeisa. If they live at the other side of the country, they would have to travel many hundreds of miles to get there. It could cost hundreds of pounds to get somewhere to access the remittance.

Imagine doing such a thing even in our country, never mind in a country without roads, safety, electricity, air transport and the necessary support. Add in the cost and it makes it pointless to get the remittance that family members might be sending. Remittance amounts might be small, but they are significant in providing support. The cost of retrieving the money, however, is too high if there is no direct route via money transfer companies that can get to remote villages. If there is no proper facility, the cost of people travelling to the capital, or to another country, is too high. That is not a solution.

I know that my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) wants to speak, so I will start to conclude. I also want to hear from the Minister, and would like him to have as much time as possible to highlight the work he is doing on the issue. I know that he is working with colleagues across Departments on a solution to the problem. I hope he will have some good news.

Where do we go from here? We need strong international leadership from the UK Government. We have done that historically, so there is no reason why our Chancellor and the Secretary of State for International Development cannot lead the way. I welcome the fact that the working group involves the World Bank. If it was not for the campaign, and the pressure from the community and Members from all parties, that might not have happened. I am grateful to the Minister for rising to the challenge and recognising the significance of the issue, as well as the potential benefit for the UK if we lead the way to a solution.

There are economic benefits for us. If we can build a remittance framework to support economic development in countries in Africa, we can do more trade with such places in future. We need to be ahead of the curve. Other countries, such as China or India, are represented in Africa, while our banks are pulling people out, including the diaspora communities with strong links that could do more for our trading relationships in Africa. Remittance is the first route in for our businesses. I have seen that in countries such as India, Pakistan, Bangladesh and many others. There are potentially huge economic benefits if we create the climate within which the diaspora and minority communities can remit, trade and pave the way for our companies to follow, as has been the case in other countries.

There are longer-term benefits for the Treasury, and not only in engaging with the issue directly, coming up with an international solution and paving the way for our international partners. There are also benefits because for any country coming out of conflict without a proper banking system, or with one that has been devastated by conflict, the risks of money laundering and the financing of terrorism will be reduced if the security dimension is addressed and there are proper facilities. That is why Governments must step up. Companies such as Barclays, HSBC and others have said that they will be fined. Companies will have their motives, reasons and deep concerns about being clobbered with a big fine by US regulators. I have sympathy for that, but at that point the Government and the international community must step in to deal with the market failure. That is where I believe that our Government can play a vital role.

I am grateful to the Minister and the Chancellor for letting me know, informally, that they have had discussions on the issue. I would like to see more formal discussions at the G20 and other international summits where the issues of financial exclusion and remittance can be raised. I know that that has been done informally, but what plans does the Minister have to raise such issues more formally in the relevant forthcoming summits? On the role of other agencies, will the Minister explain how his Department is working with the Financial Conduct Authority, banks and other relevant agencies to come up with a solution? What role could the publicly owned banks play? Could we work with them to come up with an interim solution, as well as a long-term one?

I hope that the Minister will answer the questions that have already been asked, but I would also be grateful if he set out his plans for an interim solution, as well as a long-term one, before October. The time line has been set: if a negative decision is reached in October— the deadline set by the courts for Dahabshiil, the biggest provider to Somalia and Somaliland in my constituency—the vital remittance lifeline for Somalia will be removed. That is dangerous. Will the Minister be able to press on with a solution before then? If there is no long-term solution in that time frame, there must be an interim solution so that, beyond October, where there is a time lag, Dahabshiil does not face closure once again. That would be devastating to Somalia and Somaliland.

I thank colleagues from across the House for their contributions. I also thank the Save Remittance Giving campaign, of which I am very proud to be the chair, and the more than 100,000 people who supported it. I know that they will continue to campaign and to keep pressure on the Government. I hope that they continue to do so and work with their MPs, whichever party they belong to, to come up with a solution that will protect such a vital lifeline to millions of people in developing countries, especially Somalia and Somaliland.

--- Later in debate ---

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

We have had an interesting debate. I thank my hon. Friend the Member for Cardiff West (Kevin Brennan) for securing the debate. I thank all those who have participated, particularly my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali), who gave a comprehensive speech, and my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty).

I will be brief, because it is important that the Minister has the opportunity to outline fully the work that has been done since the previous debate, and I am sure my hon. Friends will want to intervene and ask him further questions. It is important to put on the record how much of an interest people have taken in this topic since the debate in July. Having read the transcripts of that debate and looked closely at the parliamentary questions and the responses since then, I suspect it is more with sorrow than with anger that people have called for this additional debate today, because, to be fair, there seemed to be a sense of hope after the previous debate that the Minister had taken on board the importance of the issue. During that debate he gave a personal account of how his own family had been affected and how he wanted to see progress made.

I am trying to be fair. All of us know that sometimes when things go into the machinery of Government, that machinery can grind somewhat more slowly than even Ministers would like. Hopefully, however, the continued voicing of concern even by the Prime Minister, the Secretary of State for International Development and so on, has shown the urgent need to tackle the problem, notwithstanding some of the other legal reasons for urgent action.

In his opening contribution, my hon. Friend the Member for Cardiff West outlined how important this issue is, not only for individuals and particular businesses but for the economy, both here and in Somalia and Somaliland. There is also the relationship between the moral issues and the economic issues, if you like: people are trying to provide assistance to individual families and to support businesses, and if that help is not provided there are dangers for the whole economy. We also heard some of the history, going back to the previous debate about the decision that Barclays took at that time and the pressure from campaigners to make Barclays change that decision.

There is an understanding on all sides that we want to do everything we can to ensure that when money is remitted or transferred it is done so legally and safely. I doubt that anyone in any part of the House does not want tough action to be taken on money laundering or any other illegality, or in situations where people are perhaps being unduly and inappropriately pressured over money. However, the point was well made in this debate, and indeed in the previous debate, that some of the smaller organisations and institutions that have been carrying out money transfers have not been found guilty of any misdemeanours or wrongdoing, unlike—as was fairly pointed out—some of our larger financial institutions, which have been involved in practices over the years that have now been brought into disrepute and, in some instances, resulted in serious fines. There are still serious questions to be asked about why there is a problem making progress on this issue. I would be interested to hear from the Minister what work has gone on in relation to the National Crime Agency and to ensure that those aspects are not inappropriately becoming barriers to progress.

I hope that the Minister can also answer the important questions put by my hon. Friends. Some months on from the original debate, during which the commitment was made to establish a working group to take work forward, I find it surprising that my hon. Friends still have to ask who is chairing that group. Has the group met? It has not met. There is now a date for a meeting, but when will it report? Will there be an interim report? What progress has been made? What discussions have taken place in an international context with, for example, the US Treasury and State Department? What discussions have taken place more widely? Are there more reports commissioned by the Government that have not been made public? What is the status of the promised discussions with the British Bankers Association? What can the Government say at this stage, notwithstanding the legal constraints on discussion of the particular issue with Barclays and the possibility of accounts being reopened?

I want the Minister to respond to those questions, although he already has a very long list of questions from my hon. Friends. One important question is about the role of the Financial Conduct Authority. Can he say a bit more about that role this morning?

Having given commitments in the previous debate, and because he obviously understands this subject from a personal perspective, I am sure that the Minister wants not only to listen today, so that he can give answers to the questions that have been put, but to ensure that a degree of urgency is injected into wherever it is in the system that the barriers to action are found. If that does not happen and if we do not have a system that is properly set up and regulated, the danger is that remittances will take place anyway, that the people involved will not be safe, and that there will be further problems down the line.

[Kevin Brennan]

My hon. Friend is talking about action by Government and Government agencies, and she mentioned the FCA. I understand from the UK Money Transmitters Association that the FCA has started contacting authorised payment institutions to confirm whether or not they have bank accounts that are suitable for safeguarding client funds, as required by the Payment Services Regulations 2009. So action is being taken, but it is action that will result in the closure of these businesses unless a solution is found.

[Cathy Jamieson]

Indeed, and I am grateful to both Oxfam, which has provided me with a briefing, and the UKMTA, which has also provided me with that information. Of course, one of the dangers is that when we begin to investigate these matters, people start to find that there are problems and rather than finding solutions to those problems, the response is, “Well, we will just make sure that it is closed down and doesn’t happen.”

--- Later in debate ---

[Sajid Javid]

First, we believe that cash couriers, if structured properly, can play a sensible and legitimate role in expanding provision for MSBs. That can work if it is done in a certain way. The action group is working to produce more guidance on how we think that can work, with the aim of making the banks more comfortable. That is why it is important to discuss the matter around the table with regulators and NGOs, which are also part of the action group. That is important not just in the context of cash couriers, but more generally.

My understanding is that the terms of reference will be published, but I will look into that further and get back to the hon. Lady with a more specific answer. My only slight hesitation is that some aspects of the discussion will be confidential and sensitive, especially those relating to money laundering and the financing of terrorists. I hope that she understands that some information will not be put in the public domain because it would not be practical or sensible to do so. Although I am keen to ensure an ongoing flow of information from the action group so that our constituents may stay updated, I do not suggest that the action group will share all the information that is put before it, or all the work that is going on at a Government level.

[Kevin Brennan]

Although the Minister is not able to order anyone to do anything, I asked him whether he agreed that Barclays ought to consider reopening the bank accounts of businesses such as the one in my constituency that were closed following our debate in July 2013, so that while the court case is being considered, those businesses may get on with the business that they have carried out legally, lawfully and without problem for many years? It would be helpful if the Minister were able to say that he feels that Barclays ought at least to consider doing that, even though I completely accept that he is not in a position to order it to do so.

[Sajid Javid]

I thank the hon. Gentleman for reminding me of his question. I understand why he raises that matter, and there are two parts to my answer. First, there is a legal dispute, and I do not think it is sensible for any Minister to give an opinion on any matter that is before our courts, which would not be helpful to either party in the dispute. Secondly—this links to my earlier point—Barclays has to make its own decisions. Barclays is a commercial organisation. It has to assess the risks of doing business as well as, as the hon. Member for Bethnal Green and Bow pointed out, the potential impact of its commercial decisions on its own reputation. I will ensure that Barclays receives the report of our proceedings so that it may have an opportunity to reflect on the words of not just the hon. Gentleman, but all hon. Members who have participated in the debate.

[Sajid Javid]

First, we all share the sense of urgency on the time scales, which is apparent from all hon. Members who have spoken today and from the Prime Minister’s communication that the hon. Gentleman read out. Naturally, it is always helpful to set targets—I referred to the target that the Somali focus group pilot would be up and running within a year—but we also have to respect that there is no advantage in setting an artificial target and saying that something should be done in six months or a year. This complex issue requires a degree of international involvement and co-ordination, so the most important thing is to ensure that we do the work urgently, but in a way that brings a long-lasting solution. While I share his sense of urgency, I hope that he respects that answer.

In answer to the second question, we will share as much information as possible with all members of the public, although of course the matter is of particular interest to certain communities in the UK. I have had meetings, for example, with representatives of the Somali community, as have a number of officials in the Treasury, DFID, the FCO and other Departments, and we will continue to have those meetings and to share as much information as possible.

Broadly speaking, the weekly meetings involve officials from all Departments, but the hon. Gentleman’s question was more specifically about the level of those officials, and I will have to find that out because I am not sure whether it is always the same officials involved and always people at the same level. Clearly there will be some commonality when the meetings take place, but I can find out more detail and share it with him.

[Kevin Brennan]

I shall intervene to allow the Minister to receive his in-flight refuelling, because we would like to know what it says.

[Sajid Javid]

I have just had a moment of inspiration, so I can share with hon. Members that the weekly meetings are between the heads of the teams in each Department, which will hopefully reassure the hon. Member for Cardiff South and Penarth (Stephen Doughty).

I hope it is clear that the Government share the concern of all hon. Members who have spoken today, and I speak from my personal perspective of understanding the importance of the remittance sector, as well as in my role as Financial Secretary. We will stay on top of the issue, engage and share as much information as we can. I congratulate the hon. Member for Cardiff West on instigating the debate, which has been a welcome opportunity for us all to share more information.

Oral Answers to Questions

Kevin Brennan Excerpts

Tuesday 10th December 2013 Commons Chamber

[Nicky Morgan]

We need to let BIS respond to the consultation—it received 7,000 responses online and more than 1,100 written responses. In the meantime, I am sure that the hon. Gentleman, like me, will welcome the fact that pubs will benefit from the national insurance contributions £2,000 allowance next year and all the moves on business rates announced last week, including the £1,000 discount, which will help pubs.

[Kevin Brennan (Cardiff West) (Lab)]

My right hon. Friend the Member for Wentworth and Dearne (John Healey) and I did a lot of work in the last Government on the pub code, and I commend the hon. Member for Leeds North West (Greg Mulholland) for his work too. Why, after all this time, are the Government still dragging their feet on a matter that adds a great deal to the price of a pint for ordinary customers struggling with the cost of living?

[Nicky Morgan]

That was a rather churlish response, given that this Government ended the beer duty escalator and cut 1p per pint earlier this year. As I have said, there have been an awful lot of responses to the consultation, and it will take time to work through them, but interestingly the figures show that slightly more free-of-tie pubs are closing than tied pubs—about 4.5% compared with 4.3%—so I suggest the hon. Gentleman waits for the Department’s response.

Money Transfer Accounts

Kevin Brennan Excerpts

Wednesday 17th July 2013 Westminster Hall

[Kevin Brennan (Cardiff West) (Lab)]

Mr Bayley, I will endeavour to get through my speech as quickly as possible, given that request from the Minister.

I thank my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) for the fantastic job she has done in leading the campaign on this issue. She has been a brilliant advocate on behalf of her constituents and those of many other Members in the room, and I thank her for that.

Last year, my hon. Friend visited my constituency, which is the neighbouring constituency to that of my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), whom I am following in the debate. She met many of my constituents who use a business in Riverside called Trust Exchange UK Ltd, which is run by Anwar Ali. It is a model of what a small business in our local communities should be—goodness knows, we need more small businesses in Wales, in particular. It is the only business of its kind in Wales. It deals with many of my constituents, my hon. Friend’s constituents and others who want to transfer money to relatives, often overseas.

I will not go through the arguments other hon. Members have given for the importance of such transfers. However, my hon. Friend the Member for Bethnal Green and Bow pointed to the huge value of this business and its importance to developing countries, with remittances representing a far larger sum than international aid. That is not something we hear much about in the press, but I hope the debate will help to highlight it, as well as the importance of remittances to the countries involved and to our constituents.

My constituent Anwar Ali approached me some time ago about this matter. I was quite shocked when he told me that, effectively, he would be put out of business by the decision by Barclays bank. His business not only provides a valuable service to my constituents but has been involved in setting up charitable work, aid projects and so on, particularly in Bangladesh, reflecting Mr Anwar Ali’s ethnic origin. It provides a service to people of all sorts of ethnicities and from all sorts of communities.

The point has been made that it is not only Barclays that is involved, and that other banks involved in the business have withdrawn before. HSBC was found guilty by the US authorities of a “blatant failure” in relation to anti-money laundering legislation, and was required to pay a record $1.9 billion fine as a result. Perhaps understandably, it has become extremely risk-averse about the sort of business we are talking about, and businesses such as Barclays have taken notice.

It seems that the principle that applies for large banks is “innocent even if proved guilty”. Being found guilty of money-laundering activity and getting a huge fine means being permitted to carry on business. Western Union, which was mentioned before and which seems to be due to benefit greatly from what is happening, paid $94 million in February 2010 to settle civil and criminal investigations by the Arizona attorney-general’s office, in relation to having turned a blind eye to the movement of illegal funds by drug cartels in Mexico. In the light of that, would not it be ironic if Western Union were to benefit from the decision to withdraw services from the small companies that provide our constituents with financial services on a small scale, and which have done everything to obey the compliance regulations, and if those local businesses were to be put out of business?

The local businesses seem to be subject to the principle that they are guilty when nothing has been proved against them—when they have done all that is legally required to comply with regulations. Small is not beautiful in this case; small is vulnerable, and small businesses are being assumed to be guilty when they have done nothing wrong—even when big businesses have been proved to have acted illegally and have been fined. Is the Minister content that small businesses that have done everything possible to comply with the law and regulations will be put out of business by the decisions of large organisations, which, leaving aside the activities that nearly brought the country to economic ruin, have often been proved to have engaged in activities outwith regulation, and have been heavily fined? If he is not content, what will he do to ensure that the Government, and in particular the Treasury, take a more active role to save those small businesses at the eleventh hour, before they are put out of business?

We have heard about the Barclays letter, and I hope that the Minister will give a positive response from the Government to the proposal for an industry round table. I hope that he will speak up for small British businesses, which have done nothing wrong.

--- Later in debate ---

[Stephen Doughty]

rose—

[Kevin Brennan]

rose—

[Sajid Javid]

I will give way first to the hon. Member for Cardiff West (Kevin Brennan).

[Kevin Brennan]

I am sure that some very good initiatives are being developed, but will the Minister be able, in his remarks this afternoon, to give any direct comfort to the businesses that hon. Members here are concerned may go out of business in the next few weeks?

[Sajid Javid]

I will, but before I respond fully, I will give way to the hon. Member for Cardiff South and Penarth (Stephen Doughty) as well.

Investing in Britain’s Future

Kevin Brennan Excerpts

Thursday 27th June 2013 Commons Chamber

[Danny Alexander]

As the hon. Gentleman will see when he looks at the document that we published today, part of the announcement states:

“Operators will commit to provide £100,000 in community benefits at exploration phase, per well-site where hydraulic fracturing occurs. They will commit to sharing their proceeds with communities, providing one per cent of revenues to communities that host them.”

[Kevin Brennan (Cardiff West) (Lab)]

May I echo the Chancellor’s praise yesterday for the Chief Secretary for the great job that he has done as the Tory election strategists’ little helper? Beneath the hilarious hyperbole in today’s statement, is not the truth, as per the Chief Secretary’s own document, that gross investment is falling by £1 billion next year—by 1.7%—or is the document wrong?

[Danny Alexander]

We set out the plans for capital investment in 2015-16 and beyond yesterday and in the Budget last time. We have set aside £50.4 billion in 2015-16. That is £3 billion more than was previously promised, which we added to at the time of the budget. Those comments are ludicrous when we have not yet heard an apology from Labour for the mess they made of the British economy.

Oral Answers to Questions

Kevin Brennan Excerpts

Tuesday 25th June 2013 Commons Chamber

[Mr Gauke]

I do agree. What we have done is quite a contrast with what was done by the last Government, who increased the amount of income tax that some low earners would have to pay by £232. Now the equivalents of those people have been taken out of income tax altogether.

[Kevin Brennan (Cardiff West) (Lab)]

If everything is better for the average family, why did the Institute for Fiscal Studies say that the average family was £891 worse off? Was the IFS wrong?

[Mr Gauke]

We do not accept those figures. What I will say is that we have been prepared to tackle the biggest deficit in our peacetime history. We have taken measures to put the public finances back on a sustainable footing, with no help from the Labour party, which has opposed every measure that we have taken to do that.

Food Banks (Wales)

Kevin Brennan Excerpts

Tuesday 12th February 2013 Westminster Hall

[Kevin Brennan (Cardiff West) (Lab)]

It is a great pleasure to serve under your chairpersonship this afternoon, Mrs Riordan. I am delighted and dismayed in equal measure to open this debate on food banks in Wales. I never thought, when I entered public life as a Cardiff councillor a long time ago, in 1991, that this topic would become a priority for discussion. I never thought I would see, in my time in public life, the rapid expansion of centres to hand out food to the people of Wales, on a scale unprecedented since the 1930s.

Of course, we from Wales have particularly strong and often bitter memories of the 1930s and of poverty. It was often said of my grandmother, Gwenllian Evans, a miner’s wife from Nantyglo, that she could spread an egg over Cardiff Arms park, such were her culinary skills of making a little go a long way. My mother, who is still alive today and living in Cwmbrân, often told me of the poverty that she grew up in, in the 1930s, in Nantyglo and the times when it was a struggle to feed the family.

[David T. C. Davies (Monmouth) (Con)]

Will the hon. Gentleman give way?

[Kevin Brennan]

I will in a moment. I am just warming up; once I have got into my stride, I will let the hon. Gentleman have a go.

It is for those reasons that I believe the provision of social security is such a strong theme in the history of Welsh politics, and that the rapid increase in food banks in Wales is particularly hard for us in Wales to take.

[David T. C. Davies]

I am grateful to the hon. Gentleman for the history lesson as to what life was like under Ramsay MacDonald in the 1930s. Returning to the present, given the hon. Gentleman’s interest in food banks, why did no Labour Member of Parliament ask any questions about them during the entire period of the previous Labour Government?

[Kevin Brennan]

It is because food banks were such a minuscule feature on the scene compared with what we see today, despite the Prime Minister’s erroneous use of statistics recently at Prime Minister’s Question Time, in an attempt to sidestep his failure to take note of the rise of food banks over a long period.

It is particularly apt to talk about the 1930s because we are reliving that period of austerity economics. The failures of, and false theories behind, austerity economics are being repeated. We might expect that from the Conservatives, but it is staggering that it is being repeated in the coalition by the party of John Maynard Keynes through its approach to the economy.

[Hywel Williams (Arfon) (PC)]

Will the hon. Gentleman concede that income inequality grew under previous Labour Governments, as it did under previous Conservative Governments?

--- Later in debate ---

[Kevin Brennan]

The hon. Gentleman will be aware of the powerful world economic forces that have been at work in the past 20 years. It has almost been like King Canute all over again, trying to hold back the forces of international capitalism over the past 20 years and trying to keep income inequality down. The previous Labour Government did possibly more than any other Labour Government in attempting to alleviate that. For example, they introduced the national minimum wage, which made a massive contribution to trying to alleviate the impact of income inequality, which, in a globalised capitalist system, is difficult to resist.

[Ian Lucas (Wrexham) (Lab)]

Last year, in Wrexham, the first food bank was set up since I first came to Parliament in 2001. This April, the richest people in Britain will get a tax cut because of this coalition Government’s policies. That is the type of ethical approach taken by this Government.

[Kevin Brennan]

Indeed. I am sure that other hon. Members will want to point out that, while this crisis is going on, the Government saw it as their priority to lower the income tax of the richest.

[David T. C. Davies]

Will the hon. Gentleman give way?

[Kevin Brennan]

I will get a bit further into my stride before I let the hon. Gentleman have another go.

It is no coincidence that the three giants behind the creation of what became known as the welfare state came from Wales: David Lloyd George, Jim Griffiths and Aneurin Bevan. It is particularly ironic that the Government presiding over a policy that is helping to trigger the rapid expansion of food poverty and food charity for the poor are a Government who include members of the successor party to Lloyd George’s Liberals.

[Hywel Williams]

But is it?

[Kevin Brennan]

The hon. Gentleman calls into question whether the Lib Dems are the successor party. That is another debate for another day. Perhaps Lib Dem members of this Government should recall the words of David Lloyd George as we debate food banks and poverty. In presenting his “people’s Budget” 104 years ago, in 1909, he said:

“This…is a war Budget. It is for raising money to wage implacable warfare against poverty...I cannot help hoping and believing that before this generation has passed away, we shall have advanced a great step towards that good time, when poverty, and the wretchedness and human degradation which always follows in its camp, will be as remote to the people of this country as the wolves which once infested its forests.”—[Official Report, 29 April 1909; Vol. 4, c. 548.]

I am afraid that under this Government, the wolves of poverty are back, along with the sharks who prey on the financial misfortunes of the poor with their high-rate loans.

[Mr Peter Hain (Neath) (Lab)]

Will my hon. Friend comment on a particular feature of the Neath food bank? Some 1,400 people in the Neath area are dependent on the food bank. Around half of those are in work. It is not solely people on benefits who are dependent on food banks; people in work are, too. The Wales Office website has still not taken down the Secretary of State’s commitment that people in work will always be better off than they would be on benefits. Those people are dependent on food banks in my constituency.

[Kevin Brennan]

Indeed. In a recent debate led by my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger), my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) mentioned that he had collected food for FareShare in Penarth. Many of the people being helped by the food bank were not the people one might expect, but people in work who were struggling to get by. The hon. Member for Monmouth (David T. C. Davies) has been keen to intervene; I note that a new food bank has opened up in Chepstow. I am sure that he will pay it a visit shortly, if he has not already done so.

In Wales, the rapid expansion of food banks is a subject that resonates and rankles. It is symptomatic of an approach by the Government that represents a shift away from the British belief in the importance of social security, founded by the three great Welsh pioneers and symbolised by the old-age pension, national insurance and the national health service, and its replacement with the alien American concept of welfare stigmatism—the demonisation of the poor and the replacement of the state’s responsibility with the vagaries of the charitable handout. The good society has been gazumped by the ill-named “big society”, in which well-meaning individuals try to patch the gaping holes created by austerity economics.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

Would it be too much to ask, on such a serious issue, that we steer away from the notion that all this started in May 2010? A food bank in west Wales, of which I am a patron, started in 2000 under the Labour Government. It is keen to stress that the argument that the hon. Gentleman is pushing is misleading.

[Kevin Brennan]

I am sure that the hon. Gentleman was not accusing me of misleading the House, because you, Mrs Riordan, would have stamped on him if he had done so. My argument is not that food banks are bad things, or that their work is bad—it is not; it is good. What is wrong is the scale of the work that they have to do because of austerity economics and the rise in the cost of living, which are direct results of this Government’s policies. The Government made the ideological choice to follow an austerity economics policy—

[Simon Hart]

Will the hon. Gentleman give way?

[Kevin Brennan]

I am still speaking.

The Government are following an austerity economics policy, rather than making the economic choice, as they could have done, to deal with the deficit in a way that would not have led to such poor growth and its consequences.

[Hywel Williams]

The hon. Gentleman may know that nine of the 23 food banks in Wales opened in the past 12 months.

[Kevin Brennan]

The hon. Gentleman has hit the nail on the head. That is what is so unfortunate about the Prime Minister’s attempt to use statistical shenanigans to disguise the fact that the real issue is the sheer number of people who now have to go to food banks. I compare that with the charitable aid that was on offer under the previous Government, and that will always be present in our society, one way or another, which is to be welcomed. It is the scale of what is being done, not what is being done, that is most important.

[Geraint Davies (Swansea West) (Lab/Co-op)]

In Swansea, tonnes and tonnes of food are being gathered every month for the food bank, and thousands of people are affected. My hon. Friend will be aware that some 30,000 people now rely on food banks in Wales. What is his projection for after April, when 40,000 people will be affected by the second-bedroom tax? Does he agree that the least well-off will be worse off and relying on food banks?

[Kevin Brennan]

I will not make a projection, but I am sure the Minister will want to do so, because, of course, he should be very concerned about the impact of the Government’s changes. No doubt he has done a considerable amount of work on the issue raised by my hon. Friend, and he will perhaps say something about it when he winds up the debate.

[Simon Hart]

This is my second and last intervention. Will the hon. Gentleman express a view on a comment made by the 17-year-old food bank in west Wales?

“Statistics are misleading because it takes time to build up referrals and to be known about. The huge increase in recent years should not be taken as being the same thing as a huge increase in need.”

Those are not my comments; they are the comments of a food bank. Will the hon. Gentleman include them in the context of his argument?

[Kevin Brennan]

Obviously other people assess the need, and not the food bank itself—the vouchers are brought along to the food bank. I cannot comment on the hon. Gentleman’s local food bank, of which I am sure he has a better knowledge than I do; I can comment on my local food bank, however. I have heard stories from other hon. Members, and I have seen evidence from across the country. He is burying his head in the sand if he does not think that the vast expansion of food banks is happening because of the impact of austerity economics, welfare benefit changes and the cost of living.

We called this debate to set the record straight on the growing use of food banks in Wales and to highlight the cost of living crisis facing hundreds of thousands of Welsh families.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

I am here to listen to the debate because I have constituents who work in Wales, and there are people from Wales who come to work in my constituency. As my right hon. Friend the Member for Neath (Mr Hain) highlighted, the issue is as much about people in work as about people out of work. Does my hon. Friend the Member for Cardiff West (Kevin Brennan) share my concern about the explosion of the issue? We have heard about the growth in the number of food banks in Wales, but nationally, a couple of hundred food banks have opened across the UK. By the end of April, 250,000 people in our country will have accessed emergency food aid. Does he not think that is a terrible indictment in 2013 in the seventh most industrialised nation in the world?

--- Later in debate ---

[Kevin Brennan]

I do, and I apologise in advance if I repeat some of those statistics later. I pay tribute to my hon. Friend’s work in Liverpool, which is sometimes wrongly referred to as the capital of north Wales, although it certainly has a strong Welsh influence. I recommend to Government Members the YouTube video that she made showing the impact of food banks and of the Government’s policies on the people in her constituency. The video is worth viewing.

The number of people relying on food banks in Wales has trebled over the past year, rising from just over 10,000 to just under 30,000. The issue is the sheer scale of numbers, not the percentage increase. The number, as hon. Members have said, is forecast to rise to 40,000 a year over the next 12 months. The growth of food bank usage in Wales is twice the UK average, which the Minister should think about.

The Government, however, will not acknowledge that the growth in food bank usage is a problem. A Downing street source recently said that food banks are for people who

“feel they need a bit of extra food”.

Let us pause for a moment to consider the casual callousness of that comment, because, like many MPs, I find myself reluctantly handing out food vouchers to my constituents from my constituency office and surgeries, and I never thought I would when I entered public life. I assure Downing street and the Prime Minister that not one of those vouchers has been issued to, nor have I ever been approached by, constituents who

“feel they need a bit of extra food”.

Constituents approach me because they are desperate and do not know how they are going to feed their children this weekend. In short, they are in a crisis and the state is not there to provide immediate assistance.

[Mrs Siân C. James (Swansea East) (Lab)]

Like me, I am sure my hon. Friend finds that, when he hands out food vouchers, not everyone who comes to him is a malingerer or a scrounger. There are people who have delayed benefit payments and are being denied the money they need to help keep their family in food and heating.

[Kevin Brennan]

My hon. Friend is absolutely right that, in many cases, the reason why people are unable to feed their family that weekend is that there is no benefit. They have fallen upon a crisis in their life and there is no immediate assistance available. They have been told they will have to wait for some considerable time, and they are unable to access a crisis loan of any kind, which is why they come to us. We are handing out vouchers so they can get some food for the weekend. That is the reality. It is not a lifestyle choice, though the tone of the comments from No. 10 Downing street suggests it is. They do not want a free box of tinned or dried food to top up their adequately stocked pantries; they are using food banks because of the cost of living crisis that is facing families across the UK.

[Luciana Berger]

My hon. Friend is generous in giving way, and I will not seek to intervene on him any further. We know from questions asked just before Christmas that neither the Prime Minister, the Deputy Prime Minister, the Chancellor nor Ministers from the Department for Work and Pensions or the Department for Environment, Food and Rural Affairs have visited a food bank. Does my hon. Friend agree that had any of those Ministers, including the Prime Minister, been to a food bank, we would not have heard those comments from No. 10?

[Kevin Brennan]

Yes, I suspect my hon. Friend is right. I am sure the Minister has visited a food bank and will say what impression it made on him. What were his feelings on visiting the food bank?

Government policies such as the Welfare Benefits Up-rating Bill, the VAT hike and the bedroom tax are making the crisis worse. I hope the Minister will distance himself from the comments we have heard from Downing street and acknowledge that Government policies are making things worse, not better, for hundreds of thousands of families across Wales.

[Guto Bebb (Aberconwy) (Con)]

There is no VAT on food, so the VAT change did not affect the price of food, which is important to remember.

[Kevin Brennan]

The hon. Gentleman is absolutely right, and I am aware of that fact, but he will find that families spend their money on things that do attract VAT, which has a direct impact on their disposable income and, therefore, on their ability to buy food.

[Albert Owen (Ynys Môn) (Lab)]

I congratulate my hon. Friend on securing this important debate. Visitors to food banks in my constituency tell me that, because they are paying VAT on other things, particularly on peripheral items such as fuel, they have less money to spend on food. That is the reason why they come into food banks for the first time. Those people are in work and often work long hours.

[Kevin Brennan]

Yes, indeed. That is a continuing process. The consumer prices index figures were released today. CPI is 2.7%, which is 1.2 percentage points above rises in income for people in work. There is an impact on everyone, including people in work. As we know, as VAT is a regressive tax, it has the greatest impact on those on the lowest incomes. Also, because their marginal propensity to consume is much higher than that of people on higher incomes, VAT is a particularly hard tax on them.

Some 90% of the food in food banks is donated, mainly by the public via supermarkets, Churches, community centres, schools and other organisations. I pay tribute to the efforts of food banks, many of which are run by the Trussell Trust, including the one in Ely in my constituency, which I have visited. They are intended as a crisis intervention for families in need. As I said in response to an intervention, the problem is not what food banks do but the scale on which they must now do it.

Food goes to distribution centres, where food bank volunteers gather, weigh, account for and issue the food. Food is issued only to recipients with vouchers, and vouchers are issued by front-line service officers trained in the assessment of need. Issuing organisations include, among others, citizens advice bureaux, Jobcentre Plus, GP surgeries, social services, housing officers and now, as I said earlier, Members of Parliament and, I suspect, Welsh Assembly Members, too.

A voucher gives just over three days’ worth of food, and vouchers are typically issued in batches of three. As we heard, the trust operates 23 food banks across Wales, nine of which opened in the last year, and four more are expected to open in Wales by Easter this year. There are now more than 270 food banks across the UK. In 2011, some 7,173 adults and 4,038 children in Wales used a food bank, and in 2012, the numbers rose to 18,721 adults and 10,328 children. The trust forecasts that the number of people relying on food banks in Wales will rise to 40,000 next year.

The trust collates information about the people using food banks. The consistent main reason cited for using a food bank, accounting for between 40% and 45% of usage, is benefit changes and delays in benefit payments. About one quarter of usage is accounted for by low-income families, and about one tenth by debt. As we have heard, food bank usage has exploded over the past two to three years. It is sad but typical that the Prime Minister recently tried to suggest that food banks expanded by a greater amount under the last Government than under this one; that abuse of statistics was skewered by Channel 4’s feature, “FactCheck”, which I recommend to hon. Members.

The trust forecasts that this year, 250,000 people across the UK will use a food bank. Hundreds of thousands of Welsh families face a cost of living crisis worsened by the Government’s policies, including welfare changes that are likely to make the crisis even worse. The Welfare Up-rating Bill alone will hit 400,000 low and middle-income households in Wales, including 170,000 families in Wales who currently receive working tax credits. It is estimated that 140,000 people in Wales will be worse off under the Government’s change to universal credit and 40,000 will be hit by the bedroom tax; I know that hon. Members are already getting a lot of traffic in their surgeries about that issue.

The Office for Budget Responsibility has shown that between 2010 and 2013, inflation will have risen by 16%, whereas average earnings will have risen by just half that, or 8%. The TUC estimates that four-year wage stagnation will cost the average worker £6,000. Wales has some of the highest energy bills in the UK, and more families are having to choose between heating and eating. As I said, the VAT hike alone added £450 a year to average household bills. Low economic growth has created fewer opportunities, and unemployment is forecast to rise in the next two years. Public sector job losses are forecast to reach 1 million by 2017. Meanwhile, in April, the Government will give more than 8,000 millionaires an average tax cut of £107,000, and the top 4,000 earners in Wales will benefit from a cut in the additional rate of income tax.

I have a few questions that I hope the Minister will answer in his response. What does he think best explains the explosion in food bank use in Wales? Is it the cost of living crisis facing Welsh families, or the notion that more people have suddenly decided that they want a bit of extra food, to quote No. 10? On the “Politics Show” this weekend, the Welsh Office Minister in the House of Lords, Baroness Randerson, said that the Government are reducing the deficit in the fairest possible way. What exactly is fair about the bedroom tax, which will hit 40,000 people in Wales while taxes are cut for millionaires? What impact does the Minister think the Welfare Up-rating Bill will have on the number of people in Wales relying on food banks? Has he made any estimate of that?

Does the Minister agree that the growing number of food banks in Wales is a symptom of the cost of living crisis facing Welsh families? Does he accept that the Government’s failure to get the economy moving is likely to have led more people to rely on food banks? What does he think the expansion of food bank usage in Wales and across the UK tells us about the success or otherwise of the Government’s policies? Does he think that the number of people in Wales who rely on food banks is likely to rise or fall over the next two years? I hope that he has made some estimate in preparation for this debate.

We never thought to see the return of the charity handout as a mass means of feeding the poor in Wales. Is the Minister proud of his Government’s big society, or ashamed of its small-minded demonisation of the poor?

--- Later in debate ---

[Mrs Siân C. James (Swansea East) (Lab)]

I am grateful to my hon. Friend the Member for Cardiff West (Kevin Brennan) for securing the debate.

In Swansea East, we have a food bank that started off covering one area of Swansea, but then had to stretch its services right across the city because of the increase in people who needed its help. I have worked closely with the food bank from day one, and I have come to know the volunteers and have seen the dedication and effort they put into their work. They are very clear about why they have to do that work: they have to fill a gap the Government have created. There are pressures on our communities and on family incomes. It is not just the unemployed we are talking about; hard-pressed, hard-working families also need help.

I give out vouchers every day, and it is frightening how many more I now have to allocate. In the beginning, my staff and I kept a stock of perhaps five bags of dried goods on hand in our storeroom, and we would hand them out if a hardship case came in. In the run-up to Christmas, however, we were going to our local food bank at Gorseinon every day, and we were bringing back bagfuls of food for people who really needed help.

When I intervened on my hon. Friend, I talked about why people come to us for help. They do not come because they fancy a change in their menu or some of the nice extras that might be in the bag, but because they have nothing left in the cupboard. That is not because they are poor copers or have not managed their income properly, but because something has happened that means they need immediate help. That is where the food bank comes in.

We have heard a lot of facts, figures and statistics about food banks in Wales and across the UK. Every week, when my staff and I sit down and talk about what happened in the preceding week, we think, “Thank goodness we can turn to the food bank.” We are not being romantic about it; going to the food bank is just a fact for many people.

[Kevin Brennan]

My hon. Friend makes an important point. Did she see the Salvation Army briefing for the debate? It said the development of the food bank movement

“may lead to a level of dependency which small community projects are simply unable to meet. This concern comes from the experience of churches in North America who find that food banks have become part of the welfare system.”

Is the point not that we are danger of going down the American route of using charity, rather than social security, which is the British way?

[Mrs James]

I thank my hon. Friend for that intervention. I agree entirely. It is a worry that there is this alternative to the benefits system. We understand all the stresses and strains in the economy, and we know that there are huge pressures and increasing demands on income, but we just cannot let people fall behind. A measure of any good society or state is how it looks after its weakest, poorest and most vulnerable. I am ashamed to say that we are not doing a good job with some of the hard-pressed people I meet.

In Swansea, the demand on food banks has increased, and not just over Christmas. In September and October, they distributed two tonnes of food, which I am sure equates to many dozens of bags. It is hard even to grasp the idea of weighing out two tonnes of food on to pallets. Thank goodness the Churches and schools were having their harvest festivals; it meant we met the demand. However, we were really concerned about Christmas. I was so concerned, and the issues raised with me were so concerning, that I went to local employers and shopkeepers and asked, “Will you donate food?” The response was magnificent, and we got the additional food. Through a concerted effort with other organisations in Swansea, we managed to help people over the Christmas period.

It is no fun if someone has not had their benefit payment, and if paying bills has taken the food out of their mouths. That is the reality: people are robbing Peter to pay Paul. Will they heat the house? Will they put food in their children’s mouths? I am worried—I hope the Minister will respond to this point—about the one in 10 people in Wales who tell us they have skipped a meal to feed other members of their family. They are not making that up, and that is a serious issue.

--- Later in debate ---

[Kevin Brennan]

On a point of order, Mrs Riordan. Is it in order for the Minister to cast aspersions on the motives of Members of this House without being willing to name them in the Chamber during the course of the debate?

[Mrs Linda Riordan (in the Chair)]

It is not for the Minister to name names.