Finance (No. 2) Bill

Mark Lazarowicz Excerpts

Wednesday 9th April 2014 Commons Chamber

[Catherine McKinnell]

We have a much better suggestion as to how the money that has been allocated to the marriage tax allowance can be used to support millions of taxpayers up and down the country, including families with children. So what about those families with children who are hoping in vain for any sign of support from this Government whose tax and benefit changes will result in households being, on average, £974 a year worse off by 2015 than they were in 2010? The Exchequer Secretary, who is in his place, has conceded that of Britain’s 7.8 million families with children, just 1.4 million will benefit from this policy. Yes, that is right—one in six families with children will gain from this marriage tax allowance. To put it another way, five in six families with children will not get a penny from this Government’s flagship policy to support them.

The policy does nothing for widows, widowers, lone parents, long-term co-habiting couples, the 300,000 children living with grandparents or kinship carers or for the spouse who has left their partner for good reason, perhaps because of domestic abuse. It will not help the wife who has been left to bring up the kids after the husband has run off with another woman. If her husband chooses to marry that other woman, who have the Government decided will get the reward within the tax system? It is him.

How much will the allowance be worth for those lucky married couples who will be eligible? Just how much value are Ministers putting on the role of marriage in our society? Yes, for the one in three couples who will benefit, it could be worth up to £200 a year, almost £3.85 a week. To put that into language that people on the Labour Benches might understand—that is just over one pint of beer or a one-off peak game of bingo a week! Who does the Government expect to reap the benefits from this largesse? Let us take a look at their own assessment of the equality impact, which clearly states that while

“couples will benefit as a unit...the majority...of individual gainers will be male.”

But it is not just any old majority. The Government’s own assessment indicates that a staggering 84% of individual gainers will be male.

Before last year's autumn statement, we knew that the net impact of this Chancellor’s tax and benefit changes since 2010 would hit women three times harder than men, not least as a result of his decision to give a £3 billion tax cut to the top 1% of earners in this country, 85% of whom just happen to be men. As a result of the autumn statement 2013, in which the marriage tax allowance was confirmed, that appalling record has worsened even further, such that the Chancellor’s tax and benefit strategy is now hitting women a staggering four times harder than men, raising a net £3.047 billion from men, and £11.628 billion, or 79%, from women—[Interruption.] I hear the word scandalous uttered from a sedentary position, and I quite agree.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

I am grateful to my hon. Friend for giving way and for making such powerful points. When these points are put to the Government, they always say that the financial circumstances are such that there must be cutbacks somewhere. Is it not ironic that the Government are putting forward a policy that is so badly thought out that if anyone were asked to choose a priority for public spending, this would not be it? Should we not be taking real measures to tackle problems such as the bedroom tax and the changes in universal credit, all of which will cause much more damage than any benefit that this will bring about?

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

Order. I appeal for shorter interventions. We have time, but Members cannot make a speech as an intervention.

amendment of the law

Mark Lazarowicz Excerpts

Monday 24th March 2014 Commons Chamber

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

The shortage of housing, particularly affordable housing, about which many of my hon. Friends have spoken affects Scotland as much as it does the rest of the UK. We, too, have seen a reduction in house building. Indeed, the figures for last year show a 46% drop in house building in Scotland since its peak in 2004-05. There is a great shortage of affordable housing, as I know from experience, particularly in my constituency.

Much of the responsibility for housing in Scotland is, of course, devolved. It says something about the priorities of the Scottish Government that, since the Scottish National party took power, there has been a 29% drop in the capital housing budget, but the problem is not all the responsibility of the Scottish Government. The Help to Buy scheme operates in Scotland as it does in England and Wales, and although the limit on the value of houses eligible for support under the scheme in Scotland is £400,000 rather than £600,000, it has the same fundamental deficiency in that it benefits those on higher incomes more than those on whom it should be targeted—that is, those on more average incomes, particularly first-time buyers. The other drawback of the Help to Buy scheme, as many people have pointed out, is that it is likely to stimulate another property price boom. We all know the damage that such booms have done in the past and there is every indication that the scheme is having such an effect in London at the moment.

I welcome the commitment from Labour to build 200,000 houses a year across the UK. Such a policy provides a real answer to the housing shortage, an answer that can certainly not be found in the bedroom tax, as the Government seemed to suggest today. Members who were in the Chamber earlier will have heard the Minister of State, Department for Work and Pensions, the right hon. Member for Wirral West (Esther McVey), saying that 1 million people were in social housing that was too big for their needs. Of course, many of those who are in social housing that the Government say is too big for them have no possibility of moving into smaller housing. In Edinburgh, for example, demand for one-bedroom social housing, depending on availability from week to week, can sometimes be 100 times larger than supply. That is typical of many cities across the country.

The Government know that the bedroom tax is not working. They desperately argue that the fact that there has not yet been a 100% take-up of the discretionary housing payment in some areas is evidence that the policy is working, but we all know that in many cases it has not been taken up because the addition of extra funds during the year has made it difficult to get funding out to the people who need it. I am glad that the Scottish Government, after a lot of pressure from Labour, have agreed to provide cash from their own resources effectively to end the bedroom tax in Scotland. I wish they had done so earlier, but better late than never.

If the Government want to reduce the cost of housing benefit, they should be putting the effort into providing new housing so that people do not have to depend so much on the more expensive rented sector. It is also important that the housing benefit system and the provision of housing should be integrally linked as far as possible. That is why I welcome the Scottish Labour party’s commitment, through our devolution commission, to devolve housing benefit as part of our proposals for further devolution to Scotland.

I want to spend a couple of minutes discussing the abolition of the requirement for 75% of the private pension pot to be spent on annuities or similar arrangements. As many of my colleagues have pointed out, Labour recognises the need for reform of the annuity system, but although the principle that people should have more control over the allocation of their pensions is fair, a responsible Government should recognise difficulties and problems as well. My hon. Friend the Member for Brent North (Barry Gardiner) highlighted some of them in his speech, so I shall simply observe the contrast between the Government’s proposal to remove any requirement for people to spend a certain amount of their pension fund on long-term pension provision and their approach to contributions to private pensions. All parties, including those in government, have supported auto-enrolment into pension schemes—not compulsory enrolment, of course, but a pretty strong nudge towards it—but there appears to be no wish to encourage people, other than through that device, to take steps to assure their long-term security. As proposals for changes to private pension schemes are developed, it is vital to implement measures to encourage people to ensure that they provide for their long-term security in retirement because if they do not, as many Members have pointed out, we are merely building up problems that will be faced by future Governments and will seriously affect the living standards of many who retire in years to come.

Currency in Scotland after 2014

Mark Lazarowicz Excerpts

Wednesday 12th February 2014 Westminster Hall

[Ian Murray]

My hon. Friend makes that point rather well. Let me go on to talk about something that has been mentioned already. Scotland’s relationship with the rest of the United Kingdom, in terms of having a currency union in the way that the SNP envisages, would be exactly the same relationship as the Greek Government currently have with Germany, but it is not just an issue for Scotland.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

rose—

[Mel Stride (Central Devon) (Con)]

rose—

--- Later in debate ---

[Ian Murray]

I could not have put it better myself. I look back to 2008, when hundreds of billions of pounds were poured into Scottish banks to keep the economy afloat, and to keep my constituents, many thousands of whom work in such banks in Edinburgh, in jobs. Without such action, the whole financial structure would have collapsed.

[Mark Lazarowicz]

Will my hon. Friend give way?

[Ian Murray]

I will give way one last time.

[Mark Lazarowicz]

I see that the Scottish Government’s White Paper on independence asked the question:

“What about bank bail-outs if there is another financial crisis?”

The Scottish Government responded:

“If in the future wider support from governments is required to stabilise the financial system, this would be coordinated through the governance arrangements agreed between the governments of the Sterling Area.”

In other words, they would have to rely on negotiations with the rest of the UK Government. Contrast that with the situation in the recent financial crisis when, as part of the UK, the Scottish banks were able to call on the resources of the UK.

[Ian Murray]

That is precisely the argument about pooling and sharing, and it is why the UK is such a powerful political, social and economic union. The larger and more stable economy of the UK can deal with such shocks.

Experts such as Professor MacDonald and Professor Armstrong are clear that defaulting on debt would be a reckless move with negative consequences for the people of Scotland for many years to come. That threat shows that the SNP accepts that Scotland cannot keep the pound if it leaves the UK. Defaulting on our debts as a nation has the same impact as if someone defaults on their debts as an individual, and I have already mentioned what happens if someone does not pay their bills. Our credit rating would be terrible, and we would have to pay more for absolutely everything, which would be a disaster for ordinary individuals and families up and down Scotland. Any Scot who borrows money or who has a mortgage, a credit card or catalogue payments will have to pay more. That is not scaremongering, but basic economics.

The SNP has said in its fantasy White Paper that Scotland would have to rely on the rest of the UK to collect our taxes and to pay our pensions and benefits for many years after independence until it sorted out its own systems. The SNP cannot threaten to dump the debt one minute and ask to share everything else the next. That is a recipe for crisis and disaster. How would those UK institutional systems work with a separate currency? Can the Minister tell us whether the systems used by the Department for Work and Pensions and Her Majesty’s Revenue and Customs are capable of working in a currency other than sterling? I doubt it. The White Paper is underpinned by and predicated on the pound. Perhaps it will turn into an actual white paper when it has been so heavily Tipp-exed that it contains nothing but Tipp-ex.

Scots have an international reputation for being prudent and thrifty. To default on its debts would irreparably damage Scotland. Even to threaten to default on debts has significant consequences for interest rates, borrowing and international reputation, which the National Institute of Economic and Social Research put at a minimum of 1.5%.

Pub Companies

Mark Lazarowicz Excerpts

Tuesday 21st January 2014 Commons Chamber

[Ian Murray]

My hon. Friend is right to raise that because it is indeed the case. My hon. Friend the Member for Huddersfield mentioned that too, when he said that the ties can be on wet sales, dry sales and gaming machines, and they can mean compulsory courses, compulsory training, compulsory licensing and using highly inflated contracts through the pub companies for, for example, statutory checks like electrical checks.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

My constituency has a large number of excellent pubs of distinction, and my hon. Friend may well have visited some of them from time to time. They are also major sources of employment in the area. How would the proposals in the motion assist employment in that very important sector in my constituency and others across the country?

[Ian Murray]

There is a simple formula on employment in the licensed trade: the more successful a premises is, the more people it is likely to employ. The entrepreneurial nature of people in these small businesses running licensed premises means that they tend to want to get more licensed premises and expand what they are doing, so this is very good for employment. I declare an interest again, Madam Deputy Speaker, because I have visited some of the hostelries in my hon. Friend’s constituency, some of which are rather nice, and I encourage others to do likewise.

I was talking about the double whammy of Government decisions and the tied contracts pushing up prices to the consumer, which perpetuates the demise of licensed premises. We must also consider the ever-increasing energy bills, the spiralling rates and the costs of other non-alcoholic supplies such as food, which are rising much faster than tenants are able to pass on to their customers. More has to be done to deal with all those other relationships, and I hope the Government will back Labour’s policy on both energy and business rates to enable us to bring some of those other pressures down.

National Minimum Wage

Mark Lazarowicz Excerpts

Wednesday 15th January 2014 Commons Chamber

[Vince Cable]

Indeed. Admittedly the issue of the living wage is now part of the public debate, and of course I believe that if employers are profitable they should adopt it—particularly if they are taking advantage of their work forces—but we must be clear about the fact that making the living wage mandatory, either directly or indirectly, would have enormous implications for jobs.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Will the Secretary of State give way?

[Vince Cable]

I will give way once more.

[Mark Lazarowicz]

The fact is that millions of workers are now enjoying the living wage because of the actions of local authorities—the vast majority of them Labour-controlled—and progressive employers. Rather than just saying that the living wage is a good idea, should not the Government encourage employers to adopt the living wage through specific measures, such as those suggested by Labour in the motion and in our policies generally?

[Vince Cable]

I have noticed the word “encourage” before. Ministers are being told that they should encourage employers to pay the living wage. I have thought about that: what does it actually mean? It is motherhood and apple pie on one level, but if we take it seriously, what does it mean?

If I encounter a company that is perfectly profitable, particularly if it seems to be taking advantage of its work force, of course I will urge it to pay the living wage, but many companies are on the brink of bankruptcy. Would Members urge them to increase their pay levels substantially in those circumstances? That would be extremely irresponsible. These bland phrases, although they may be superficially attractive, are potentially very dangerous.

Interest Rate Swap Derivatives

Mark Lazarowicz Excerpts

Thursday 24th October 2013 Commons Chamber

[Guto Bebb]

I could not agree more with my hon. Friend. The expectations back in 2007 were that interest rates would go down, yet there were numerous examples of bank sales teams informing businesses that they needed to protect themselves against a rising interest rate scenario—contrary to the information that the banks themselves had.

Another key call is why there is no appeal process within the redress scheme. There would be much more confidence in that scheme if there were an appeals process. I understand that the Financial Ombudsman Service offered to provide an appeals service, but the offer was rejected by the FCA. It would give some comfort without complicating issues too much if, for example, assessors working for one bank in the redress scheme were able to provide an appeals process for another bank in it. That may not be perfect, but it would help to avoid over-complicating what is already a complicated redress process and it would give businesses the confidence that there is an appeal process and that they can turn to somebody else to argue their case. We should be very concerned about having a redress scheme without any appeal process, as it goes against the principle of natural justice, while opening up the door to litigation, when the whole point of the redress scheme was supposed to be to avoid litigation.

Embedded or hidden swaps, which are currently excluded from the redress scheme, are another key issue to highlight and a matter of huge concern. If we think about it, a hidden swap is quite possibly worse because businesses were not even aware that they were also taking out with their fixed-rate loan an interest rate derivative product. The American author, James Riley once said:

“If it walks like a duck, and swims like a duck and quacks like a duck, then it must be a duck.”

The same point needs to be made about these hedging products. If the impact of an embedded swap is the same as the impact of a separate hedging product taken out with it, it is difficult to argue that the small businesses that were sold those products should be excluded because of a technicality relating to whether they are subject to the FCA regulations. I ask the Minister to respond on that specific issue.

A publican from Aberystwyth, Mansel Beechey, was sold one of these embedded products. I know Mansel very well because when I was a student in Aberystwyth, I was financially illiterate and used to cash cheques in the pub. I used to do that on a Wednesday evening and pay 50p for the privilege. On a Saturday evening, I would want to cash a cheque again, and Mansel would say, “Well, make it one for £30, and I will give you back what you gave me on Wednesday, only charging you the 50p once.” Mansel Beechey thus showed me more respect and consideration, in behaving properly towards me, than the bank that sold him the hidden swap showed to him. That business had been built up over a long period. If Mansel Beechey could show to me a degree of responsibility that had not been shown to him, there is clearly something wrong with our banking sector.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Will the hon. Gentleman give way?

[Guto Bebb]

I am afraid that I cannot take another intervention.

The issue of hidden swaps is important and needs to be addressed. We need to know why businesses to which they were mis-sold have been excluded from the redress scheme. Thousands of businesses have been mis-sold these products, banks have admitted that the products were mis-sold, and yet the redress scheme is not, as yet, performing as it should. I am not looking for a new scheme, but I am looking for changes, and much greater speed, in the scheme that we currently have; and I think that we need to address some of the exclusions, which are clearly unfair.

I became involved in this issue when a constituent of mine, Mr Colin Jones, came to see me. He claimed that he had been sold a complex product and that, as a result, his business had gone under. The last news I heard of Mr Jones was that he was homeless and living with his mother. He has lost absolutely everything, and because his business was a limited company, it is highly unlikely that even if the redress scheme highlights the fact that he was mis-sold the product and is in need of compensation, he will not benefit from that compensation personally. I think it wholly wrong for someone to lose his business not because he was a poor business man, not because he made a mistake, but because he was taken advantage of by his bank. Having listened to the trade calls, I am quite happy to say that publicly.

I am delighted to note the interest in the issue that is being expressed in the Chamber today, because I believe that businesses all over the country are looking to us to give a lead. I hope that the FCA and the banks will listen to what is being said, and I sincerely hope that the redress scheme will start to perform in the way in which it was expected to perform in January, rather than in the slow and bureaucratic way in which it has performed so far.

--- Later in debate ---

[Mark Garnier]

My hon. Friend is absolutely right in what he says. The banks made an incredibly cynical effort to persuade people to enter into these contracts where, in many instances, they should not have done so. Sometimes it was the right thing to do, and I think that many businesses will agree that they just got it wrong, but we need to look after the smaller businesses that were simply mis-sold these products.

[Mark Lazarowicz]

Do not the banks, or at least some of them, also have to be much more proactive in identifying the people who been the business victims of this practice? As we all know, whenever we have a debate such as this, more people come forward who were frightened to come forward before or who did not even realise that they were victims of these schemes. It is up to the banks to be much more proactive in identifying the cases and then trying to resolve them.

[Mark Garnier]

That is absolutely right. Part of the problem, however, is that the banks have an incentive not to get in touch with people, for obvious reasons. That relates to the second point I wish to develop. It is a technical point, but it is incredibly important in terms of why it is incentivising banks to delay technical redress for as long as they can, and it has implications for the financial stability of the banks.

We should not think of these things as stand-alone products, but should recognise them for what they are. They are not stand-alone products; there is another side of this trade. They are swaps for a reason, and it is important to understand what a swap is. Any one of our victims will have been persuaded to take out a contract with the bank that has the beneficial effect of capping interest rate payments at a certain level. That is a virtuous thing and we are all familiar with the financial planning behind the thought process, through things such as fixed-rate mortgages. But these are not fixed-rate mortgages; they are stand-alone products that relate to a loan, but are not part of that loan. Importantly, many people have paid off the loan but still have the outstanding liability on the swap. The quid pro quo of having a fixed cap on interest payments is the collar that has caused so many problems for our victims, whereby they have to pay a relatively high rate of interest in today’s terms. What is not fully understood is that this is not a simple contract with the bank, as it first appears. The bank is not taking a naked bet with its customers that, in the environment of falling interest rates, it has won. It is not receiving as profit the penalty in the increased premiums being paid in interest rates by the victim, because for a swap to actually be a swap, there is a matching trade with a third party on the other side. What the banks receive in higher interest rate payments they are paying to an opposing and third-party counterpart on the other side.

I shall now go into a bit more detail. Businesses may want to make sure that they do not pay too high an interest rate; that is why they are persuaded, rightly or wrongly, to take the swaps. However, an organisation such as a pension fund needs to guarantee its income should a severe drop in interest rates, such as we have seen, occur. It would want to take a position opposite that of the businesses, which are the victims.

The pension fund will forgo a rise in rates while winning the guaranteed floor rate that it will receive. For a business to have a rate cap at, say, 7%, it will guarantee to pay no less than 5%. For a pension fund to be guaranteed to receive a minimum payment of 5%, it would agree to receive no more than 7%. In that way, the business’s and pension fund’s interests are perfectly aligned in opposition.

As both the pension fund and business are clients of the bank, the bank does two simultaneous trades—one with the business, to cap and collar the rate payments, and the other with the pension fund, to collar and cap the interest rate receipts. The bank makes a small margin, but essentially its liability, if everything stands up, is perfectly and oppositely aligned. That is the symmetry of liability and the basis of the swap market.

Trident Alternatives Review

Mark Lazarowicz Excerpts

Wednesday 17th July 2013 Commons Chamber

[Danny Alexander]

The whole purpose of nuclear deterrents is to deter their use.

The judgment must be made about where on the ladder we believe that it is credible to stand, provided that the ability to scale up or down as threats change and the momentum of proliferation on the one hand and disarmament on the other shift. As a recognised nuclear weapon state under the non-proliferation treaty, we have an obligation to move towards a world in which nuclear weapons are no longer part of state security and defence postures. It is true that Britain has made significant steps since the cold war in disarmament terms. Some would argue that Britain has done its bit for disarmament and we have reached the minimum level possible. That argument has been deployed at every point at which we have scaled down over the past 20 years, but each time it has proven not to be true. The next step down the ladder is to reduce the salience of nuclear weapons in our defence policy itself, which means accepting that a cold-war-style continuous deterrent has become unnecessary.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

If the right hon. Gentleman accepts that the UK will have a non-continuous deterrent, it means that there will be times when the UK does not have an active deterrent. Why then did he rule out the option, at least, of not continuing with the deterrent programme at all?

[Danny Alexander]

I do not accept the premise of the hon. Gentleman’s question and I have answered the substance of it in answer to an earlier intervention.

Investing in Britain’s Future

Mark Lazarowicz Excerpts

Thursday 27th June 2013 Commons Chamber

[Danny Alexander]

I agree with the first part of what my right hon. Friend said. The massive reforms to health and social care that we announced yesterday are hugely important for the future of this country. I am proud to be part of a Government who are taking those matters forward. Much of the credit for that must go to him for the work that he did in government and for his campaigning outside government. On the latter point, I will certainly raise that matter again with Ministers at the Department of Health.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

It was quite reasonable for my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) to try to find out exactly what the Chief Secretary has announced about the A1, so I will try again. Is he making a commitment to the dualling of the A1 from Newcastle to the Scottish border? If so, when will the work start? If he is not making that commitment, what is he announcing today?

[Danny Alexander]

I am committing to undertaking the improvements that are necessary to bring that road up to a proper standard. There is clearly the need for a detailed feasibility study to consider precisely what is needed at every stage of the route. The money is set aside for that investment between now and 2020, so it will take place.

Financial Transaction Tax and Economic and Monetary Union

Mark Lazarowicz Excerpts

Tuesday 18th June 2013 Commons Chamber

[Chris Leslie]

I think that we need to have a financial transaction tax, ideally in concert with other international centres, in addition to stamp duty. That would be a sensible and modest reaction to the modern circumstances of the financial services sector. As I said to the Minister earlier, he has got to snap out of his “no can do” attitude and to wake up and realise that the public want alternatives. They want different ideas, and the financial transaction tax could offer a good way forward.

Opposition Members support the principle of a financial transaction tax with the widest global participation. London and New York City are the two largest global financial centres. Our view is that enforcement of the FTT needs both to move in concert. The Government ought to support our amendment, which is totally unobjectionable. We should not have to wait for a change of Government to move this agenda forward. We should be building those alliances, especially with the United States. That is a very important task.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

The health of the financial services industry is important not just to London and New York, but in my constituency and my city as well. Is not the crucial point that we need international negotiations and international agreement on a way forward? We are all concerned about the impact on jobs in our constituencies. I know that in my area the biggest damage to the financial services industry has been the vagaries of the market, and the uncertainty and instability. That is what we need to tackle.

[Chris Leslie]

There are others who make compelling arguments about the need for intervention on the volatility of the high frequency trades, which are clearly many steps removed from the real economy. Some of the potentially beneficial aspects of a financial transaction tax might have a part to play in that, though we must be careful about negative economic consequences. We do not want the impact that the European variant might have.

--- Later in debate ---

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

I have news for the hon. Member for North East Somerset (Jacob Rees-Mogg). Bill Gates was not an academic. Indeed, the hon. Gentleman might want to make a comparison with his own career, which his declaration of interest shows to have been in banking. He has defended that business strongly. Bill Gates is now doing something that a financial transaction tax would achieve universally, across the world. It would raise money from the speculative, gambling casino economy that the world has become and give it to those who are often mineral rich or agriculture rich but massively exploited by those of us who live on the fat of that speculation.

For me, a financial transaction tax is suitable only if it is a worldwide arrangement. It is certainly not suitable for the money-raising powers of the European Commission, yet that is what the Commission is proposing: just another mechanism for a fat, gorged organisation to take money from yet another sector of the economy. If it got rid of the common agricultural policy failures, 40% of the EU budget would be available for positive use, so perhaps the Commission should look at that, rather than at trying to get more money in from a transaction tax.

I was glad to hear my hon. Friend the Member for Nottingham East (Chris Leslie) clarifying our position on this matter, because I was worried that the drafting of our amendment did not make it 100% clear that we opposed the introduction of a European transaction tax at any time. Only in the context of advancing development worldwide can we justify the imposition of such a tax. If it is not done on that basis, it will have an adverse effect.

The hon. Member for South Northamptonshire (Andrea Leadsom), who is no longer in her place, spoke against the introduction of any kind of financial transaction tax. She did not seem to realise that, according to her argument, stamp duty, which is basically a national levy for national spend, should theoretically also be abandoned. Her argument was that any kind of financial transaction tax prevents jobs from being created. However, as we use taxation for positive purposes in most cases, there are reasons why people should pay taxes—even those fat bankers with horns on their heads whom the hon. Member for North East Somerset described.

[Mark Lazarowicz]

Before my hon. Friend moves on, I want to ask a question related to an international financial transaction tax. It appears that progress has been made on getting the UK overseas territories to be more transparent on tax. Is this not a good opportunity to encourage them also to be part of an FTT system, because we all know that a lot of the dodgy transactions take place in bank speculation in some of the countries for which we have an indirect responsibility?

[Michael Connarty]

That is part of a separate debate, but I agree that all territories controlled by any of the world’s major economies should be not just transparent, but properly taxed. Just because someone sticks a name on a door in the Cayman Islands and pays a Cayman citizen theoretically to be the director, there is no reason why they should not pay taxation wherever they make their money in the world. That would certainly be helpful.

Turning to economic and monetary union, the hon. Member for Stone (Mr Cash) lauded me highly, but slightly falsely. My main concern with Olli Rehn’s paper on a blueprint for a deep and genuine EMU is that it strongly suggests that countries will have their primacy removed. That is even more the case with the van Rompuy paper, “Towards a Genuine Economic and Monetary Union”. It is clear that those documents take away, in the first place, from the weakest of the 17 any right to set their own budget or any budget that has not been agreed by the Commission, and the associated penalties would further damage the economies of those countries.

My great problem with the proposals is that they are a threat to the European Union. I believe that they have become obsessed with the euro. Their documents refer again and again not to the European Union, European citizens, European Governments or European projects, but to the euro. The countries that are not keeping in line with the stability and growth pact are a threat to the euro, which has become the raison d’être of the European project for many people at its centre. The hon. Member for North East Somerset has described it, correctly, as a token for them to control Europe through a single body, the European Commission, in partnership, as its documents keep saying, with the European Parliament. We have no real say in this. The European Parliament legitimises what is done by the European Union. The power of the Lisbon treaty has not just tipped over; it has fallen into the abyss of the Commission-controlled EMU.

There is a negation of primacy and countries are being forced to do things in their budgets that are bad for their citizens. We are supposed to be a co-operative European Union. I voted for it in 1975 and would do so again, but I would like more tools to fight against those centralising powers.

There is also a failing austerity plan in all these countries: Greece, Italy, Portugal and Spain will be weaker economically and more impoverished and indebted at the end of this than they were at the beginning, but for what reason? What contribution will that make to the stability of a new economy? It means that the powerful countries in the north will become more powerful over the rest. I believe that when they are finished with the weaker countries, they will come for the rest of the 17 and start to control their budgets. If they had their way and if we were not outside the euro, they would be telling us that we could not do what we are doing to try to deal with our economy—not that it is being done very well in this country, because the austerity measures here parallel those demanded by the European Commission of the failing economies in the south of Europe.

I am worried that we will not have the ability in the future to ameliorate what will happen in the general European economy. That is what I mean by primacy. Not only will the primacy of those countries be destroyed; our ability to effect and do something positive for the economies of the European Union—through growth and sharing burdens, rather than through penalising and punishing countries—will be weakened.

Finally, when did the stability and growth pact not have any teeth or do anything? It was when Germany broke it again and again as it built investments in its own economy to make it what it is now: a strong, growing economy. I am worried that, as a result of the primacy that will be lost all over Europe, countries will lose the ability to reflate and build a proper economy.

Oral Answers to Questions

Mark Lazarowicz Excerpts

Tuesday 14th May 2013 Commons Chamber

[Sajid Javid]

My hon. Friend cares deeply and passionately about the pub industry, and has done great work to help, including welcoming this Government’s decision to cut beer duty for the first time in decades. He makes an important point. He will know that Ministers in the Department for Business, Innovation and Skills are looking at this issue, and I will bring it further to their attention.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

T9. The Chief Secretary was absolutely right on the question of the EU referendum Bill. He cannot speak for the Conservative party, but will he ensure that his party leader once again exercises his European veto and ensures that any such Bill does not come forward as a Government Bill and does not have Government backing?

[Danny Alexander]

The Government’s position was made very clear in the coalition agreement and was confirmed in the mid-term review document published at the beginning of this year: we wish to maintain British membership of the European Union and during this Parliament we will exercise our influence to the utmost to win the arguments in Britain’s national interest, in favour of jobs, investment and growth in this country.