Budget Resolutions
Debate between Kevin Hollinrake and Drew Hendry(6 years ago)
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Drew Hendry
I shall give way in a moment, because I did promise to, but it will have to be very brief. I want to come to a conclusion soon.
The solar industry has been battered by this Government, and now must be the time to reverse the plans to end the solar power export tariff for solar homes, small businesses and community energy projects. Ending that would be pernicious. The Government appear willing to pour unlimited amounts of public money into only one policy, however: they are obsessed with new nuclear.
Reports suggest that the Tory Government will pump £6 billion-worth of equity and about £9 billion of debt support into the failing Wyfla project, where project costs are trailed at about £20 billion. Both that and the huge white elephant that is Hinckley C have strike prices significantly higher than those for offshore wind. The National Audit Office and the Public Accounts Committee warnings about value for money must be acknowledged. The public will be paying for those projects for decades to come, through higher bills. There was nothing in this Budget for the victims of green deal mis-selling.
Kevin Hollinrake
The hon. Gentleman is keen to ask this Government what they are going to do, but what are his Government going to do about the historically slow growth rates in Scotland? Scotland is still growing 30% more slowly than the rest of the UK. Why is he not asking his own Government to deal with those issues?
Drew Hendry
The hon. Gentleman says nothing about productivity levels in Scotland, which continually outstrip those of the UK.
The Institute of Directors and the SNP made a demand for a small and medium-sized enterprises support line to help them deal with Brexit. The Chancellor also failed to deliver that. Meanwhile, in Scotland, the Scottish Government help business with a £96 million investment to deliver the most attractive business rates package throughout the nations of the UK. Already, more than 100,000 businesses in Scotland pay no rates at all through the small business bonus scheme. Significantly, the Scottish Government are setting aside resources of £340 million to provide capitalisation for the Scottish national investment bank.
I wanted to talk about much more, but I shall cut a lot out to aid the process today. Before I finish, however, I want to cover the fair treatment of workers. Westminster has failed to end wage discrimination and give young people the real living wage. Young people are used to being short-changed by this Tory Government, as are those whose rights are infringed by the gig economy and unpaid work trials. In the SNP, we believe that a fair day’s work should result in a fair day’s pay.
Contrast the Chancellor’s failure with the success of the Scottish Government’s real living wage accreditation scheme, which ensures that more than 1,000 employers now pay the real living wage and that, as a result, nearly 82% of workers in Scotland are earning it—the highest level in the nations of the UK. Imagine what more we could do if we had the power in Scotland to do so. In the meantime, the UK Government must stop ducking their responsibilities on pay. These measures are not only about doing the right and fair thing; they aid the economy by increasing productivity and boosting revenue through tax takes to spend on services. If the Government will not live up to their responsibilities for fair pay, fair conditions and young people, we should have the power in Scotland to do so ourselves.
I shall end on two things. First, in city deals around Scotland, the UK Government have fallen nearly £400 million short of the Scottish Government’s investment—so much for the 50:50 partnership. The Chancellor came up £50 million short on the Tay region deal and failed to confirm 100% coverage of Scotland, as promised by the Chief Secretary to the Treasury—good at making promises, bad at keeping them. But of course that is nothing new. We saw that in the highlands with the Inverness and Highland city region deal, where the UK Government put in only about 20% of the funding—their £53 million dwarfed by the Scottish Government’s £135 million.
Healthy economies need healthy communities. This week’s Budget had one massive failure. That was the failure to deal effectively with the problem that is universal credit. It should have been halted, fixed and properly funded. Instead, like everything else, it only got lip service. After five and a half years, since the pilot to full roll-out in the highlands, we have seen the misery that people have had to endure. Despite all the begging, cajoling, demanding and asking of Government to listen, they failed to do so. They have made promises to people that they were unwilling to keep. It is about time that the Government took responsibility and sorted that out.
Banking Sector Failures
Debate between Kevin Hollinrake and Drew Hendry(6 years, 4 months ago)
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Drew Hendry
In typical passionate fashion, the hon. Gentleman makes a strong point. He is right that more politicians should be angry about this, and not just the hon. Members in this room or in the debates we have had recently in the Chamber. This is a critical matter that many more hon. Members should be focused on and concerned about. The hon. Member for East Lothian talked about the Government’s role, and I will come on to agree with some of the things he said and add my own comments. The disgrace of the Global Restructuring Group, which has been well rehearsed many times, is a vicious application of sharp practice by the GRG—although there were others, of course, and it was not alone in that.
The hon. Gentleman talked eloquently about the lost businesses, marriages and homes, and the people who have been stripped of their dignity and, in some cases, even pushed toward suicide. He made some positive proposals for the legal rights of SMEs, which were repeated by other hon. Members. He also said, tellingly—this is important for people—that the victims are not going away. This is not going to disappear just because the banks want it to; it will continue to be brought up.
The hon. Member for Stirling talked about entrepreneurs, and he is right. Entrepreneurs are important around the nations of the UK as those who take the risks—that is what it means. Anybody who has been in business knows that entrepreneurs often have to take risks that go beyond the norm, putting houses and property on the line, and in certain circumstances putting their family on the line—as we have heard in the context of the unfortunate outcomes—to take opportunities in business. He talked about fostering energy and ambition, which is exactly what banking should do. In some cases it does, and I will come back to some of that later, but I agree that it has proved to be frighteningly easy to erase businesses through technical breaches. That has been one of the biggest complaints.
The hon. Gentleman highlighted the sneaky practice of banks using insolvency practitioners to do their dirty work. He spoke about RBS GRG’s asset stripping and loading up on the profits from that, as well as its brutal application by RBS and other banks. We can all pinpoint a constituent who has been hammered by these things, and the hon. Gentleman spoke eloquently about his constituent John’s business being stolen from him. A common theme from all the contributions was the health effects on such people, including stress, anxiety and even heart problems, with families being almost torn apart. Similar to the line about victims not going away—I mean that in a positive way—he talked about the human cost, and he asked the Minister directly for clear action to ensure that justice is served. I will come back with some asks for the Minister as well.
The hon. Member for Beckenham (Bob Stewart) spoke passionately, and rightly so. I do not say that in a glib way; he is right to be passionate and outspoken. He talked about people being terrorised by GRG and Dunbar bank, about people’s life’s work being taken away from them and the fact that there is one-way loyalty. Isn’t that true? In all of the cases we have heard about, that has been the situation—it has been a one-way street. Some of the banks have been predatory; there is no other way to put it.
The hon. Gentleman also talked about small and medium-sized enterprises being unable to match the legal armies of the banks. That is a vital observation, because after the banks carried out this sharp practice—we do not know, but some may still be doing some of this without it coming to light—there was no real recourse. People do not have the ability to tackle it. By the nature of the problem, they do not have the money to access the rights for action. He pointed out that the Financial Ombudsman Service, as it sits, is not fit for purpose for SMEs. The hon. Gentleman said that small business is the life and blood of his nation, and I think that is even more acute in Scotland, where small businesses are even more central to the economy, as was mentioned.
I pay tribute to the hon. Member for Thirsk and Malton (Kevin Hollinrake) for his work. He made a point that I want to stress: banks provide vital services for businesses. When we criticise the people working in the banks, we talk about a fairly small number of key decision makers. We must appreciate that an army of people work in the banks who are good, hard-working, dedicated and honest people of great integrity who help people in their communities and in the wider business sector. I know that there is agreement around the room on that, but it is important to underline it.
As I said, banks provide vital services. When banks operate in the way they should, it is fantastic. When they operate in the ways we have seen, particularly with some of the decisions made at a corporate level over the past few years, it is absolutely destructive and no good at all.
Kevin Hollinrake
The hon. Gentleman makes an excellent point about people working in those banks who have integrity. Through our work on the all-party parliamentary group, we met people at a senior level who were appalled at what happened within GRG. The second phase of the FCA investigation should now take place, to name individuals and find out who was ultimately responsible. However, it is not apparent that a thorough investigation and questioning of such people, who could provide evidence on exactly what happened, is taking place. It needs be shown that it is.
Drew Hendry
This is becoming a habit, but I completely agree with the hon. Gentleman. I have cut my notes a wee bit shorter, but the point I was going to make was exactly that: the sell-off of assets does not make any financial sense in the longer term. If we believe that the vans are going to stay—that requires a stretch of the imagination—they still have to employ people and incur costs. When we hear figures of x million pounds, that sounds like a lot of money to some people, and in some contexts it is a lot of money, but in terms of the scale of the bank, it is a tiny drop in the ocean, so again, I agree with the hon. Gentleman.
As I said, I will turn to the treatment meted out by RBS’s Global Restructuring Group. In the aftermath of the financial crisis, it behaved in a completely unacceptable and disgraceful manner. I concur with hon. Members that it is also a disgrace that the UK authorities have failed to intervene. Following the credit crunch, GRG took control of 16,000 SME customers with £65 billion of assets in Project Dash for Cash. Following allegations of malfeasance, GRG was reportedly disbanded in August 2014. More than 12,000 companies were pushed into the bank’s controversial “turnaround” division; and between 2007 and 2012, the value of loans to customers in GRG increased fivefold to more than £65 billion. With the threat of foreclosure of loans, the banks seized control of customer assets cheaply from businesses that they claimed were failing even though they had not defaulted on any loan repayments.
When we state the situation as simply as that, we wonder how it can be the case, yet as we have heard, time and again it was. We have said this before in the main Chamber and other debates, but it is absolutely shocking that bank managers were able to increase their bonuses by identifying customers who could be squeezed in what RBS itself, in a 2008 email, called “Project Dash for Cash”. The leaked document disclosed that the taxpayers’ bank ran down businesses as part of a premeditated strategy to cut lending and bolster profits. People should be in jail for doing that.
RBS is not alone in being embroiled in this scandal. Several other banks, including Clydesdale, were caught in similar scandals.
Kevin Hollinrake
The hon. Gentleman makes a very good point about the financial interest and financial benefit that some of the executives saw. He may be aware that Nathan Bostock, who was one of the senior executives at GRG and is now at Santander, where I understand he earns £4.6 million a year, is still getting a bonus from RBS—in terms of deferred bonuses—of £1.8 million this year. Despite what has happened at GRG and the fact that it came about as a result of the priorities of the management, that person still earns millions of pounds in the financial services industry.
Drew Hendry
That was a stunning intervention. This is not just about people getting away with it; it is about people being rewarded for it and continuing to be rewarded for it. In any other place, this would be a great national scandal, of huge proportions. The fact that not so many people know about it is still a real problem for the way we are operating across the nations of the UK.
As I said, RBS was not alone. Clydesdale bank was caught in similar scandals. National Australia bank, former parent to the Clydesdale and Yorkshire banks, will be forced to cover £406 million of PPI provision, under a divestment agreement. NAB was forced to save £1.7 billion for UK banking sector costs. Nearly 70,000 small firms, 8,372 of them Clydesdale bank customers, took out what were called tailored business loans, which means that they are not eligible for compensation.
The Tomlinson report had already shown the damning practices conducted by GRG, saying that it
“artificially distresses an otherwise viable business”.
The report stated:
“Once in this part of the bank, the business is trapped with no ability to move or opportunity to trade out of the position—they are forced to stand by and watch an otherwise successful business be sunk by the decisions of the bank.”
We have heard testimony on that from other hon. Members around the Chamber.
I could say a lot more; I have a lot more to say, but I am wary of my voice dragging on through the debate. I have considerably more to input, but I will move on to the Scottish National party’s point of view. We demand that the UK Government create a permanent commercial financial dispute resolution platform to alleviate the situation for victims of mis-selling. We believe, as other hon. Members do, that the current system of commercial dealings with the regulator and litigation processes around mis-selling is, to say the least, inadequate. It is vital that every victim of mis-selling is given fair and equal access to justice.
We believe that asking the victims of mis-selling to take on the banks in court is not only immoral, but financially unworkable. The independent review process has been accused, as we have heard, of lacking in checks and balances. The role of the independent reviewer was to oversee cases, to ensure they are fair. Customers criticised the process, however, for the unaccountability of the reviewer, who would often fail to disclose the information that had been provided to them by the banks.
We call on the FCA and the UK Government to do all in their power to ensure that businesses, particularly small businesses, are informed about what they could be asked to sign up to and, critically, the consequences of doing so. It is time—the Minister has heard this from around the Chamber—for the UK Government and the FCA to step up to the plate to ensure that businesses get fair treatment and access to affordable justice.
The compensation scheme set up by RBS is simply not good enough. Given that many of the complaints were that sound businesses were being ruined, many company owners were also looking for compensation for consequential loss, rather than simply the fees they paid, which put them out of business. There is a separate consequential loss complaint scheme. By its nature, it is more complex and the calculation of loss is far more difficult. There are still questions, however, about the effectiveness of an ad hoc voluntary company compensation scheme.
We look to the UK Government to pick up where the FCA has failed and produce a comprehensive review into banking culture to ensure that history does not repeat itself for those customers. The SNP condemns the FCA’s decision to scrap its review on banking culture barely months after it was announced in 2015. It is vital that the Government take the necessary steps to ensure that the banking culture does not slip into pre-financial crash habits.
We fervently opposed the UK Government’s decision to scrap the reverse burden of proof, which had been recommended by the Parliamentary Commission on Banking Standards, and call for it to be reinstated in legislation.
There are many other points I could make, but I want to draw my remarks to a conclusion so that others can speak. I want to underline the key points I have made. It is a disgrace that the UK Government have failed to use their influence from their 70% stake in RBS to represent Scottish communities and reverse the devastating branch closure programme. The Royal Bank of Scotland has failed to consult adequately on closing Scottish branches, with no clarity on the required performance of the 10 given a reprieve, which seem to be set up to fail. The treatment displayed by the Royal Bank of Scotland’s Global Restructuring Group to SMEs in the aftermath of the financial crisis was completely unacceptable. It is a disgrace that the UK authorities have failed to intervene.
The Government must now create a new, permanent commercial financial dispute resolution platform, to alleviate the suffering of victims of mis-selling. The UK Government must pick up where the FCA has failed and produce a comprehensive review into banking culture to ensure that history does not repeat itself. I add, as a parting shot, that leaving the European single market will also be disastrous for the financial services industry.