Cyprus
Margot James Excerpts(11 years, 4 months ago)
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Greg Clark
I am sure that our constituents in this country will be relieved and reassured that we are not part of these arrangements and not exposed to the consequences of the failure that is sought to be averted in Cyprus.
Margot James (Stourbridge) (Con)
This is a truly shocking development, impacting very unfairly on savers who are already feeling the impact of the very low interest rates brought about by quantitative easing; it is acting as a real disincentive to save for one’s older age. I congratulate my right hon. Friend on protecting members of the armed forces, but will he clarify his intentions for British pensioners, having put on hold pension payments? Can anything more be done to reassure British pensioners living in Cyprus that they will not be affected?
Greg Clark
It is open to British pensioners to have their pension paid into another account. They can nominate that account from now on through the Department for Work and Pensions’ website. Their pensions are safe; we will make sure of that. The Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), will update the House. Once the details of the final package become known, in so far as they have implications for the payment of pensions, we will update the House.
Autumn Statement
Margot James Excerpts(11 years, 7 months ago)
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Mr Osborne
We inherited a desperately difficult economic situation, where the economy had contracted by 6%. The hon. Lady talks about GDP forecasts. The Labour Government presided over a 6% contraction in the economy. We are dealing with those problems. As I say, she and her colleagues would have more force if they could answer two questions. Will they reverse the 50p tax cut? They will not say that. Will they vote against the welfare uprating Bill? Once they give us answers to those two questions, perhaps we will start listening to what they have to say.
Margot James (Stourbridge) (Con)
I warmly welcome the 25% increase in the budget for UK Trade & Investment and the £1.5 billion uplift for export finance facilities, which is much needed by businesses trying to fill orders from abroad. My right hon. Friend also commended the Heseltine review and said that he would respond more fully in the new year. When he does that, may I draw his attention to Lord Heseltine’s recommendations that we increase tactics to improve foreign direct investment by targeting the leading multinational investors more fully and more widely throughout Government?
Mr Osborne
I know my hon. Friend speaks with great knowledge on these subjects and she chairs the all-party group on trade and investment. We have provided a 25% increase in UKTI’s budget. We are seeking to strengthen the capacity of overseas chambers. It is not just about exports from this country; it is also about attracting investment into this country, and we want Britain to remain the No. 1 destination for foreign direct investment in Europe.
Public Service Pensions Bill
Margot James Excerpts(11 years, 8 months ago)
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Rachel Reeves
My hon. Friend is entirely right. The average public sector pension in payment is under £6,000 a year, and it is considerably less for women who work in the public sector, so we are not talking about huge pensions in the vast majority of cases. Instead, we are talking about modest pensions to which people have contributed throughout their working lives.
We support in principle the main measures in the Bill, however, so we will not oppose it on Second Reading, but we will work in Committee to improve it, in order to ensure that it underpins, rather than undermines, the progress made in negotiations. We will seek to ensure it facilitates a smooth and stable transition to new scheme designs, entrenching good standards of governance, transparency, administration and consultation, thereby allowing those who give their working lives to serving the public to save for their retirement with confidence, while establishing a workable system for managing change and controlling costs to the taxpayer.
The Government and public service employees do need to find ways of adjusting to the welcome fact that people are living longer. In government, Labour had agreed and established a framework for negotiating reform and the “cap and share” mechanism to manage long-term costs, and it was always clear that this would mean increases in contributions and, as the population lives longer, a rise in retirement ages.
We have always said that the Hutton report provided a useful starting point for negotiations. Lord Hutton was right to suggest that career average schemes could be fairer than final salary schemes, and we think his proposal that public service pension ages should rise with the state pension age is right in principle. Lord Hutton also stressed the need to approach these issues in a careful and balanced way, however, with particular care for the affordability of any additional contributions for lower paid public service workers, and for avoiding fuelling a race to the bottom on pension provision. Reform needs to be fair to taxpayers and public service employees, as well as being genuinely sustainable for the long term, and that would be endangered by a search for quick cash savings or the playing of political games.
The vast majority of public service workers retire on very modest pensions. The average public service pension in payment is less than £6,000 a year, and even less for women. Tearing up decent public service pension schemes, or imposing punitive and unaffordable contribution increases, would be entirely counter-productive if that resulted in lower saving and inadequate retirement incomes.
Margot James (Stourbridge) (Con)
Does the hon. Lady not accept that the Government have made great strides in protecting low-paid public sector workers in response to Lord Hutton’s report, so that anyone earning £15,000 or less will not have to make any increased contribution at all, and for those earning less than £21,000 the increase will be capped at 1.5%? Surely that is the evidence she requires?
Rachel Reeves
That is simply not true. There are 800,000 part-time public service workers earning less than £15,000 a year, 90% of them women, and their pension contributions will rise by, in some cases, 50% or more because their full-time equivalent salary takes them above the minimum salary threshold.
Instead of building on our reforms, the Government have ripped them up. They have made it much harder to make progress by seeking to impose, prior to any negotiations, a steep 3% rise in contributions and a permanent switch in the indexation of future pension income from RPI to CPI. The “cap and share” arrangements agreed and established by the last Labour Government provided the mechanism for delivering the adjustments as needed, but the current Government chose to undermine that agreement and instead announced a 3% increase in contributions in the October spending review without any discussion or negotiation with employers or employees.
Robert Neill
We need to look with care at the evidence, but that does not mean that we should keep the current generous—I use that word with care—retirement age. Firefighters work very hard, but the nature of jobs changes, and there is a case to be made—I put it no stronger than that—that the job of a firefighter is less physical than it was in some respects, because of the amount of technology and kit that they happily have to assist them. There is also a case to be made that increasing health levels in the population should not be taken out of account.
Equally, although I take on board the point raised by the hon. Member for North Ayrshire and Arran, it is realistic to accept that there are generally fewer “light duty” jobs in the fire service than in the police service. That is because fire authorities generally operate within a lean and flat structure, and there are fewer civilian-style jobs to which people can be moved. We must take all those important considerations on board, which is why the report was commissioned.
Margot James
My hon. Friend speaks with considerable authority on the firefighters’ situation, but is he as surprised as I was to hear that increases in longevity have meant that the average policewoman now spends more of her life drawing her pension than she did earning it, which is surely unsustainable? That situation will pertain to male police officers in a few years’ time if nothing is done about the retirement age.
Robert Neill
I take on board my hon. Friend’s point, and we must be realistic in all areas of this discussion. Longevity creates a pressure on the scheme, as well as providing greater life opportunities for people who have retired. It is, in part, a result of greater fitness and better health among the population, which can—among other things—enable people to work for longer. That applies in pretty much every other kind of activity, and we cannot regard any scheme as exempt. I accept, however, that there are particular pressures on firefighters, although I suggest to the House that the Government’s proposals recognise that and provide a sensible and evidence-based mechanism for dealing with it.
Finance (No. 4) Bill
Margot James Excerpts(12 years, 3 months ago)
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Dr Whiteford
I shall not take another intervention; I am trying to conclude my remarks.
The Government had a chance to regain the confidence of pensioners after a long hiatus and much erosion of the position of pensioners over a number of decades, but they have squandered that opportunity. They are sneaking through these proposals in the fine print, claiming that they are for simplification. That undermines whatever confidence pensioners had left in them. On the streets of my constituency, people have been angry to see that what has been given with one hand as a modest increase in the state pension has been taken away from their occupational pension with the other hand.
We are leaving pensioners without any real incentive to save. We are not going to tackle the challenges of our changing demographics with that kind of attitude because people will question whether it is worth their while putting money aside for their retirement. I do not think that is a way forward, and I hope the Government will step back from this very regressive measure.
Margot James (Stourbridge) (Con)
I welcome the Budget, which has been a Budget for enterprise and growth, and I would defend the reduction in the top rate of tax, which seems to be the Opposition’s main bone of contention. I think older people have a stake in the future of our economy just as great as everybody else. There is no doubt in my mind that the introduction of that 50p top rate of tax by the last Government—right in the last throes of the last Government—was extremely damaging to our country’s image as a place of business, growth and prosperity. I am glad that the Chancellor has taken the brave step of reversing it in part.
Katy Clark
The hon. Lady will be aware that the income of the very rich has increased by 20% over the last two years since her Government came to power. Politics is, of course, a question of choices. Does she not think that our choice should be to try to get money from those people rather than from pensioners on modest incomes?
Margot James
I thank the hon. Lady for her intervention. I notice that she cited the last two years over which the incomes of the very wealthy have increased, but she might equally well have quoted the last 12 years of the Labour Government, during which I believe top earners did extremely well. It is a question of choices, and I feel that the Chancellor has made the right choice. In fact, it is a set of choices: it is not just a choice between one thing and another. I think it essential for this country not to be out of kilter with the rest of the world in terms of its top rate of income tax.
Margot James
I wanted to begin by setting the scene and explaining why I thought that the Budget represented a step forward, but as the debate is actually about the age-related allowance, I will make a bit of progress on that subject now.
Mark Field
I thank my hon. Friend. I entirely agree with what she said about the importance of promoting enterprise.
It was suggested earlier that 14,000 millionaires would benefit from the tax reduction. I am not sure how Labour Members arrived at that figure, but surely the notion that all our problems could somehow be solved if the rich paid their way is the nub of the issue. Given the relative scarcity of rich people in comparison with the vast majority of the electorate and as a proportion of the United Kingdom’s population of over 60 million, it is an absolute myth that we could solve all our problems by imposing heavy taxes on bankers and other rich people.
Margot James
I thank my hon. Friend for his intervention, which prompts me to remind the House that the top 1% of wealthy people in this country account for 30% of tax revenues. As my hon. Friend has pointed out, they constitute a very small segment of the population, and I think that if they are required to contribute any more than a third of the total, many will choose to go overseas where they will be taxed less.
Margot James
I want to make some progress on the main subject of the debate, which is the freezing of tax allowances, but first let me make a couple of other points. Labour Members did not mention that the other thing that the Budget has rightly done is take many people out of tax altogether by increasing tax allowances. I believe that that has benefited up to 24 million.
All this must be seen in the context of deficit reduction. There have been exchanges across the Chamber about parties’ manifestos. I stood on a manifesto that was all about getting some sense back into the public finances and reducing the outrageous deficit that was bequeathed to the current Government. The Chancellor’s central strategy to deal with that deficit involves 80% of spending cuts and 20% of revenue raising. Given that the Opposition oppose virtually all the spending cuts, would reduce VAT, and are proposing not to freeze older people’s allowances, we can only conclude that they are not serious about reducing the deficit, and in that regard they are grossly out of step with public opinion.
Fiona O'Donnell
Perhaps the hon. Lady will make the progress to which she referred and will begin to deal with the issue that represents the substance of today’s debate. May I ask her whether she made representations to the Chancellor before the Budget, asking him to freeze the age-related allowance?
Margot James
I did not make representations to the Chancellor on a matter as technical as the one that we are discussing. Having dealt with that point, I will now proceed to discuss the freezing of older people’s allowances.
I consider the term “granny tax”, coined by the media and exploited by the Labour party, to be very pejorative. As was pointed out by my hon. Friend the Member for West Worcestershire (Harriett Baldwin), it is also very inaccurate, as 60% of those who will be subject to the freeze are men. Moreover, this is not a new tax, although some sections of the media presented it as such. I do not see how the freezing of an allowance can possibly constitute a new tax.
It is unrealistic to suppose that older people should be immune from the need to contribute to reducing the deficit. My hon. Friend the Member for Ipswich (Ben Gummer) made that point very eloquently. Let me add a statistic of my own: the number of people aged 65 and over is expected to rise by 65% in the next 25 years to 16.4 million. Some of the measures that were introduced so many decades ago to the benefit of older people simply cannot be sustained in the current period of rapid demographic change.
Robert Flello
I would argue that pensioners are not at all immune to the effects of the Government’s policies, whether in terms of their cost of living or their access to the NHS, and almost all the pensioners I speak to also argue that. As a result of the allowance freeze, pensioners are paying more because their allowances are not increasing in line with inflation. They are being hit with a tax, therefore, and what really sticks in their craw is that they are being asked to pay this extra money at a time when it appears to them that millionaires are paying less.
Margot James
I thank the hon. Gentleman for his comments, but I should not take any more interventions as other Members wish to speak.
Mark Field
It cannot be bad that a U-turn should come so quickly. Seriously, however, I wanted to make the point that there are some very poor pensioners in my constituency—it is more socially mixed than many colleagues might imagine—and they are suffering greatly. However, the message I get from many of my pensioner constituents is that they worry for their grandchildren. They worry about their opportunities and about the difficulties they will face in getting on the housing ladder and in having the quality of life that their grandparents perhaps took for granted. Many of my pensioner constituents understand my hon. Friend’s point that the burden of getting the deficit down must be shared across the generations.
Margot James
My hon. Friend has, in part, responded to the point made by the hon. Member for Stoke-on-Trent South (Robert Flello), and I was going to say that some 5 million older people will not be affected by this measure. We can split hairs on this issue, but I accept that the measure does amount to an additional payment. However, although the allowance freeze results in an increase in tax payable, it does so only by an average of £84 a year. I accept that that is not nothing, but it is a relatively small sum. The measure is raising so much money for the Exchequer by dint of the fact that so many people are in receipt of state pensions. The pain, as it were, can therefore be shared by many, and the resulting amount per person is very small. I apologise for the fact that I shall not take any more interventions, but so many other Members still want to speak.
To address the other point made by the hon. Member for Stoke-on-Trent South, the Government have a good record in protecting people on pensions. We have restored the earnings link. The Labour party had 13 years in which to restore the link, and Barbara Castle called for that every year until her death. We have done it. We have also secured it with the triple lock.
The hon. Member for Leeds West (Rachel Reeves) was ungenerous in arguing that we appeared to be proud of the inflation rate. If she had remained in the Chamber, I would have told her that that inflation has largely been driven by increased oil and commodity prices, which Governments have no control over. It is to the credit of this Government that they were brave enough to say, “We will increase the state pension by either 2.5%, the rate of inflation or the rate of earnings, whichever is the greater.”
Margot James
I am sorry, but I will not take any more interventions.
As a result of that Government pledge, there will be no cash losers from this allowance freeze. We have protected universal benefits, with the single exception of not renewing the temporary increase of £100 in the winter fuel payments. We have protected all the other universal benefits, however, as we promised to do. Some 600,000 of the poorest pensioners have received a warm home discount of £120 extra to help with their fuel bills. We have also frozen council tax for two years running. Council tax has been a bone of contention among older people, many of whom have been hit hard by increases in it over the past decade. We have also protected, and increased slightly, the budget for the NHS. As we all know, older people account for more of that expenditure than any other group and they will benefit disproportionately from the NHS budget increase.
I have already made the point that freezing this allowance will entail a cost of, on average, £84 a year. I accept that that is not a derisory amount for someone living on an income of just over £10,000 a year. However, 5 million pensioners will not be affected by this measure. In fact, the Joseph Rowntree Foundation, an organisation that Labour Members sometimes cite, has said that the media coverage has lost all perspective on this matter, stating that
“you would think it’s doomsday for older people…I’m not sure. I think we’re losing perspective on phasing out the Age-Related Allowances”.
It makes a number of good arguments as to why it takes that view.
In conclusion, I must say that I have received very few critical letters on this subject from pensioners. The vast majority of older people in my constituency are more concerned with the prospects for their grandchildren; the average age of a new home buyer is now 38. They might not have read “The Pinch” by my right hon. Friend the Minister for Universities and Science, which was published two years ago, but he pointed out, among many other things, that those in the generation born after 1970 are the first not to be able to look forward to a better standard of living than their parents. That point is felt keenly by many older people in my constituency. Although they cannot easily increase their income, they accept that their grandchildren are facing a different future from the one they faced. Unlike the Labour party, they know that the alternative to facing down this deficit, with everyone making a contribution to that strategy, is the further impoverishment of their grandchildren, and that is not a price that they are willing to pay.
Graeme Morrice
I am conscious of the time, Mr Bone, so I will keep my speech short. May I start by congratulating my hon. Friend the Member for Leeds West (Rachel Reeves) on her excellent introductory speech? What she said clearly reflects the views of Labour Members.
The Chancellor’s granny tax is certainly the aspect of the Budget that has caused the most anger among my constituents. As we now know, the Chancellor’s plans, which were buried in the Budget smallprint and described as a “tax simplification”, will mean that 4.4 million pensioners who pay income tax will lose an average of £83 per year next April, with people who turn 65 next year set to lose the most, at up to £322. This measure will affect pensioners on modest incomes of between £10,500 and nearly £30,000, with pensioners on incomes above the higher threshold being unaffected by the change. The pensioners in my constituency I have spoken to about the granny tax are really angry about the Chancellor’s decision to hit them in this way. It seems obvious to them that it cannot be right that while putting up taxes for pensioners, the Government are giving the rich a tax cut. My constituents simply cannot understand why, after they have worked hard all their lives, the Chancellor is now targeting those on low and middle incomes in retirement in order to fund a tax cut for millionaires. As one constituent put it to me recently,
“I sincerely hope you and your colleagues do not support this granny tax and you fight for all our pensioners who worked all our lives to help this country. I am 71 years old and thought I had seen it all, but this is the pits, so do your job and kick this out.”
Amendment of the Law
Margot James Excerpts(12 years, 4 months ago)
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Margot James (Stourbridge) (Con)
This is a Budget for long-term growth set out in extremely difficult economic conditions. The lowering of the corporation tax main rate to 24% and of the small profits rate to 20% will give us one the lowest rates of corporation tax in the OECD. Combined with the reduction in the top rate of income tax to 45p, that presents the UK as a lower tax country that rewards enterprise and will attract the sort of investment we saw just last week from Nissan and GlaxoSmithKline.
There has been much talk recently of the need for an industrial strategy. Lord Heseltine wrote in The Times today on this subject. Industrial strategy got a bad name in Britain because of the damage that such policies wreaked in the ’60s and ’70s, but the world is a different place now, and I believe that the risks of getting industrial policy wrong are much reduced. The quality and extent of real-time information on the performance and prospects of different sectors of the economy is far superior to what it was. Multinational companies have replaced nationalised industries. As large employers, they are far more mobile, and the UK is now in competition, for export markets and inward investment, with many more countries falling over themselves to be open for business. The status of Singapore, with its state-of-the-art education system and infrastructure built around the needs of global companies, such as GSK, has shown that it is capable of becoming a science hub for the whole of south-east Asia in less than 20 years. That is an example of what the UK is up against.
I was delighted, therefore, that my right hon. Friend the Chancellor announced new finance packages in the Budget to promote trade and exports. Until recently, UK Export Finance, formerly the Export Credits Guarantee Department, was focused on larger companies, mostly in the defence and aerospace sectors. That changed with last year’s relaunch, and the organisation, now known as UK Export Finance, has a brief to support smaller companies. Export insurance policy is being widened to cover all products and services, including contract bond support for small and medium-sized enterprises, and it is vital that we now promote awareness of these new services among medium-sized companies in our constituencies.
We are making huge progress in this regard. The west midlands saw the largest increase in the number of exporters in the final quarter of 2011 compared with a year earlier. That followed a number of months in which the west midlands had experienced decreases in the number of exports. The improvement is most welcome. It is excellent that so many local firms are looking to sell to new markets outside the EU. Some 55% of west midlands exports are now going to non-EU countries. That must extend beyond the BRICs, as outlined by my hon. Friend the Member for Wolverhampton South West (Paul Uppal), to the next 11 countries, such as Bangladesh and Nigeria, which have huge growth rates. I am delighted that many companies in the west midlands and the black country are taking advantage of those opportunities.
Budget Leak Inquiry
Margot James Excerpts(12 years, 4 months ago)
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Mr Gauke
I know that the hon. Lady speaks with great knowledge on this issue. I agree that it is very important that sensitive information is protected and can assure her that, on the one potentially sensitive area of stamp duty, the Treasury was not involved. If something is announced in the morning, even if it comes into effect at midnight, people still have the opportunity to exchange contracts in the interim period, as indeed was the case when previous Governments raised stamp duty.
Margot James (Stourbridge) (Con)
I was an avid reader of pre-Budget commentary in the newspapers and found that there was plenty of new content in the Chancellor’s presentation yesterday that had not been covered at all and plenty that the media had got wrong. Is this not a complete waste of parliamentary time, and will my hon. Friend ensure that none of his official time is wasted in the pursuit of this phantom leak?
Oral Answers to Questions
Margot James Excerpts(12 years, 4 months ago)
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Miss Smith
I would be sure that the hon. Gentlemen’s constituent in that case took a clear look around at the opportunities available throughout the economy. I refer him to my previous response, which is that vacancies were up in the three months to January 2012. There are jobs out there: hon. Members need only to hear, for example, this morning’s announcement from Nissan—somewhere near the hon. Gentleman’s constituency—to know that there is work available.
Margot James (Stourbridge) (Con)
Is my hon. Friend aware that, according to the Office for National Statistics, there are currently 476,000 job vacancies? It should be possible for a couple, between them, to find an extra eight hours’ work. Does she agree?
Miss Smith
I do agree with my hon. Friend. As I have said already, it is a question of fairness. This measure asks a couple to do what a lone parent has always had to do, and I think that is fair.
Banking (Responsibility and Reform)
Margot James Excerpts(12 years, 5 months ago)
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Mr Hoban
I had hoped that the hon. Gentleman would come up with some ideas, yet he took a rather lengthy intervention to demonstrate that Labour has no ideas about what to do. Let me set out some of the structural measures we are taking to tackle the supply of debt and equity finance to businesses, and SMEs in particular. We are continuing the enterprise capital funds, and we are simplifying and refocusing the venture capital trusts and enterprise investment scheme to encourage more equity investment in start-ups.
Margot James (Stourbridge) (Con)
The issue of lending to small and medium-sized businesses is much more complex than the hon. Member for Streatham (Mr Umunna) suggested. Some months ago I spent a day at Barclays SME sector lending centre in Birmingham. It is clear that many small businesses are focusing on paying down their existing debts, building up reserves, and using their existing overdraft facilities at around the 50% mark. Does my hon. Friend not agree that that is one of the causes of the problem?
Mr Hoban
Indeed. My hon. Friend has made an important point which should be noted by the Opposition. Net lending takes into account not just banks’ gross lending but decisions that businesses make to pay down their debt, and that is what we are seeing. We are seeing businesses deleverage in the same way as banks are deleveraging. I do not know whether the Labour party believes that banks should stop businesses paying down their debt in order to force up the net lending figures.
Mr Meacher
I wholly agree with the hon. Gentleman. The mega-bonuses go along with small businesses having to pay exorbitant interest charges, if they can get a loan at all. The Financial Secretary says that the Government are doing their best with RBS, but why do the Government not tell RBS what level of business lending there should be and what the conditions on it should be?
Margot James
In fact, RBS has a reasonably good record of lending to small and medium-sized enterprises. It just missed its Merlin targets. It launched a new product at the end of last year for businesses with low fixed interest rates, no early repayment charges and no fees for the first three months. It is above the market average for small business loans. Some 40% of all SME loans are from RBS, which is—
Mr Speaker
Order. I say gently to the hon. Lady that interventions must be brief. There is substantial pressure on time and I would like to accommodate Members.
Mr Jones
My hon. Friend makes a very important point and I hope that some of my comments later will enthuse her about my stance on that issue.
Not many people would disagree that we need to move from irresponsible banking practice to responsible but successful banking, from poor Government regulation to effective regulation, from bailing out the banks to getting taxpayers’ money back, from the state ownership of banks to putting them back into private ownership, and from the state guaranteeing banks to ensuring that they stand on their own two feet and are not too big to fail. We need to draw some important distinctions when we consider such matters. There is a distinction between taxpayer-owned banks and private banks and we also need to take into account the taxpayer guarantee. When we consider irresponsible bankers—who now seem to be epitomised by Fred Goodwin, who should not be singled out but seems to be taking the brunt of the blame for all the irresponsibility in the banking industry—there should be a distinction between their type of banking and the more responsible banking that many are trying to promote.
One person who was brought in to try to promote more responsible banking and to get RBS back on its feet was Stephen Hester. He came in and took on a job, and although we might all agree or disagree with the definition of the success that he was tasked with bringing about, the fact is that he was given that definition—I think by the Labour party, when it was in government—and now Labour seems to want to move the goalposts and change the definition of success or failure within his remit.
Margot James
Despite the fact that the opening speech from the Opposition spokesman was couched in such reasonable terms, did my hon. Friend see the shadow Chief Secretary to the Treasury on “Newsnight”, remarking that Stephen Hester’s bonus was a reward for failure? Does my hon. Friend not agree that that is a gross distortion of the reality? He will agree, I have no doubt, that Stephen Hester has brought many more benefits to RBS.
Margot James (Stourbridge) (Con)
In opening the debate, the shadow Business Secretary stressed the importance of a strong financial sector and called for a new culture, given the high pay and excessive bonuses that we have seen. Many of us on the Government Benches agreed with what he said in that direction and with the overall tone that he struck. He was asked how much money had been given away in bonuses under the last Government. According to my figures, £66 billion was paid out in bank bonuses under the last Government. Much of that was encouraged by the last Government, for the massive tax revenues that it generated, with more than 50% coming back to the Exchequer.
Much has been made of the linkage between businesses and bank lending, but I would dispute that. We need to see much more lending to small businesses, but, as I explained in an intervention, the reason for the current lending issues is not just that the banks will not lend. Opposition Members do businesses a disservice by continuing to promulgate the myth that banks will not lend, because one reason that businesses are reluctant to approach banks is that they think they will be rejected. We must not engage in too much rhetoric, accusing the banks of not lending, when RBS, for example, grants 85% of the loan applications that it receives from small and medium-sized enterprises.
Mr Umunna
First, I accept that the reason there is not as much lending to SMEs as one would expect is not just because of the banks, but because of people’s confidence in the economy—one might argue that the Government’s policies have had an effect on that. Secondly, I pointedly made it clear in my speech that it is not just a question of the banks not getting the money out of the door to robust, profitable businesses; rather, it is a question of their relationship with their business customers in this day and age. Often, people are put on the phone to some person in a regional office who knows nothing about their business and is therefore not in a position to assess the risk properly.
Margot James
First, on the causes of why businesses are not seeking loans to invest, that has much more to do with the eurozone crisis and the global economy in general. For any company seeking to export, there is a general nervousness across the world—not just in the west, but in China and the far east. Secondly, I agree with the hon. Gentleman about banks losing a lot of skills over the past 10 to 20 years in managing their business customers, but I see signs of change. I visited Barclays in Birmingham a couple of months ago, and I sensed the real commitment, along with an upgrading of skills, that that bank—to name one—is making to its business customers.
Steve Brine
I am listening carefully to my hon. Friend’s speech. Further to her discussion with the shadow Business Secretary, there are new entrants to the high street lending market, which I think, without name-checking them and giving them the publicity, will shake up the “Computer says no” culture. [Hon. Members: “Name them.”] Virgin Money is coming on to the high street, and it will shake up that culture. Sometimes we are in danger of talking about just the traditional high street banks and lenders, when there are new entrants coming into the market that will really shake things up and change things.
Margot James
I thank my hon. Friend for that excellent intervention. Indeed, I attended a Virgin-sponsored event last week at which its youth capital fund was launched, to try to get money available for young entrepreneurs as seed finance, so I very much agree with his point.
The Opposition want us to raise taxes—again—to fund a youth unemployment initiative, but I strongly object to the motion. We cannot do enough for youth unemployment—I agree with that. It is an absolute scourge in my constituency, so I am pleased about the new proposals we are seeing, with the youth contract getting £1 billion in funding, which will create 410,000 work opportunities for our young people. We are also seeing record numbers of apprenticeships across the country. I would therefore argue that the Government are doing all they can to support young people back into work, which I absolutely agree is a challenge facing us all.
I want to speak on behalf of taxpayer interests, because we all own a stake in two of our high street banks. I also want to talk a bit about the protection of our tax revenues, as well as employment in the financial services sector, because I fear that by raising yet another tax on bonuses—on employment, essentially—we are jeopardising that investment. The shadow Business Secretary is the acceptable face, perhaps, of the Opposition, but many other Opposition Members, including the shadow Chief Secretary, the hon. Member for Leeds West (Rachel Reeves), alighted on one individual—Stephen Hester—a couple of weeks ago, repeating the mantra that “It’s all about rewards for failure.” The record really ought to be set straight when it comes to RBS. She should not judge the performance of that company just on the share price, and she is peddling a half-truth when she does so. She should look at the repair of the company’s balance sheet and the extensive disposal programme undertaken by RBS, which is on track despite incredibly difficult market conditions. The capital ratios have been improved, with SME lending by the bank making up 40% of total bank SME lending, which is higher than its market share. This country and its taxpayers would be dealt a mighty blow if the chief executive, Stephen Hester, were to react to the terrible publicity that he has had to endure by leaving that taxpayer-owned bank. Who do the Opposition think would want to take his place, after all that has happened?
On the question of the bonus tax—I shall choose my words carefully—I feel that taxes are plenty high enough already. The Opposition are proposing to raise them even higher, however. On any employment income at the level of bank bonuses, the higher rate tax of 50% applies. With employers’ national insurance and a degree of personal national insurance on top of that, the effective tax rate on some of those bonuses is already more than 60%. Let us not forget, too, that under the Government’s proposals, everything in a state-owned bank bonus apart from £2,000 in cash has to be deferred and taken in shares. If the individual then sells their shares, that will incur capital gains tax at the increased rate of 28%.
I shall finish by issuing a warning to Members on both sides of the House. In the days of the last-but-one Labour Government, under whom I grew up in the 1970s, the top marginal rate of tax was 98%. Do the Opposition really want to take us back to those times, during which enterprise was absolutely stifled?
Youth Unemployment and Bank Bonuses
Margot James Excerpts(12 years, 6 months ago)
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Rachel Reeves
In the 1980s and early 1990s, unemployment reached 3 million. Was that because Conservative Governments were clearing up a Labour mess? Really? I think it was because of the policies that Conservative Governments always pursue—policies that hurt young people and put more people out of work. That is the reality of Conservative Governments.
Labour Members are not complacent. We do not say that it is inevitable, that it has got to happen and that 3 million unemployed is a price worth paying. Labour Members are not prepared to give up on young people and we urge the Government not to give up on them, either.
In the coalition agreement, the Government said that a fundamental goal would be to
“sustain the recovery and to protect jobs.”
Before the election, the Prime Minister told voters that jobs would be his top priority. He said:
“I understand if you leave people unemployed, and short term unemployment becomes long term, then it becomes a lifetime of unemployment. It’s a waste of life. I must stop it happening.”
He was right then, but he does nothing now. The Deputy Prime Minister said earlier this month that
“supporting people into work is my priority for 2012”.
He is right, yet he does nothing.
We must—and we will—hold the Government to their promises because we cannot allow the next generation to be denied the chance of expanded opportunities that has always been the promise of Britain.
Margot James (Stourbridge) (Con)
Will the hon. Lady acknowledge that long-term youth unemployment is falling—and, indeed, has fallen by 5%? Will she also acknowledge that half a million new jobs have been created in the private sector in the past year? Currently, there are 90,000 vacancies in retail, 44,000 in hospitality and 11,000 in construction. What matters is that the Government, through the Work programme and so many other interventions, are maximising the skills and training for young people to get them into work.
Rachel Reeves
In the hon. Lady’s constituency, long-term youth unemployment has gone up by 25% in the past few months. I do not know what she says to her constituents—“There’s loads of jobs out there. Just go and get one”? More people are chasing jobs than there are jobs available. That is because the Government are pushing more and more people out of work. I am sorry that the hon. Lady does not know the numbers for her constituency, but we know.
Autumn Statement
Margot James Excerpts(12 years, 7 months ago)
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Mr Osborne
I think the hon. Gentleman will find that it is half of the last Labour Cabinet who are working in the City at the moment.
If the hon. Gentleman is so passionate about this issue, why did he not press the Government he supported for 13 years to introduce a bank levy? On public sector pay, the shadow Chancellor was completely silent about whether the Labour party supported 1% average increases after the freeze ends. No doubt we will find out more about that later this afternoon.
Margot James (Stourbridge) (Con)
The Black Country chamber of commerce reports that 400 new businesses started in our region this year, 170 with help from the Government. I particularly welcome the national loan guarantee scheme. Does my right hon. Friend anticipate that that scheme might support business start-ups?
Mr Osborne
I think it will help new businesses borrow, but of course we have also announced today the seed enterprise investment scheme, a new scheme that will specifically help start-up businesses. It will give 50% income tax relief to anyone who invests up to £100,000 in a new company. Also, for one year only, we are allowing people to put capital tax-free gains of up to £100,000 into the scheme. It is all about trying to get investment into new companies such as the ones in the black country that my hon. Friend talks about.