Financial Services (Banking Reform) Bill

Mark Reckless Excerpts

Monday 11th March 2013 Commons Chamber

[Chris Leslie]

Conservatives have a tendency to try and rewrite history, but this really takes the biscuit. If the Minister is seriously saying that he would have preferred to have stayed with a non-statutory regulatory arrangement, which was the option available, he should stand up and admit it. He often asks where the apologies are, but we have accepted that we should have adopted a more prudential approach to regulation than the arrangements in the Financial Services and Markets Act 2000. It is now equally important, however, that Conservative Members recognise that regulation is a good thing, that we need regulation of the financial services sector and that they were wrong to prefer a self-regulatory, non-statutory environment. Until they do that, they will never really confront the demons that still exist within the Conservative party’s philosophy.

[Mark Reckless (Rochester and Strood) (Con)]

Surely, the argument is not about whether regulation is good or bad, but that the tripartite regulation was completely incoherent and led to a mess in the banking sector and the consequent recession that we are all paying for now.

[Chris Leslie]

I do not know whether the hon. Gentleman is telling the full story of what he truly believes about regulation. To listen to Conservative Members today one would think they were all keen market regulators. Perhaps the Conservative party has transformed—the Cameronian vision we have all been waiting for—but, as I understand it, it still regrets the regulatory encroachment on to the market in these matters.

Infrastructure

Mark Reckless Excerpts

Tuesday 12th February 2013 Commons Chamber

[Mark Reckless (Rochester and Strood) (Con)]

Given the new time limit and the scope of the Government’s activities in the infrastructure field, I shall limit my remarks to the rail sector.

It is pleasure to follow the right hon. Member for Greenwich and Woolwich (Mr Raynsford). I must say, however, that the second most absurd comment in his speech—after the one about the Thames estuary airport—was when he invited the Minister to recognise that HS1 was the achievement of the last Labour Government. I thought he was about to make an appeal by saying that infrastructure was a long-term thing and that both parties had been involved in it, but no. Perhaps even more striking was the comment of the hon. Member for Corby (Andy Sawford), when he said that we had Lord Prescott to thank for the preservation of the wonderful façade of St Pancras station. That might have been news to the late Sir John Betjeman.

HS1 certainly has better branding than the channel tunnel rail link, and I congratulate Labour Members on that, but the Channel Tunnel Rail Link Act was passed in 1996, and it included outline planning permission. The then Government decided as part of that to have the station at Ebbsfleet, and very serious redevelopment in north Kent flowed from that. HS1 cuts through my constituency and there was significant opposition to it at the time. To a degree, the community’s view of it has settled down; certainly the noise and interference from those trains has not been as great as I feared. We have very significant benefits from having Ebbsfleet, and the right hon. Member for Greenwich and Woolwich should recognise the cross-party impetus that was behind HS1.

As for HS2, Opposition Members have spoken of it as it were just some little add-on. We have heard that great things are being done in Brazil; some project worth about £5 billion has been mentioned. However, the scope, scale and ambition of the HS2 project, and the vision shown by the Chancellor in driving forward that project from his time in opposition until now—despite the state of the public finances that we were left—are hugely impressive. That £35 billion project is basically inventing a high-speed rail network for this country.

Opposition Members complain that trains will not stop in certain places or will not go to others, but the fact is that even places that will not be on the new line and will not be given new stations will gain significant benefits from HS2. I am thinking particularly of the link that will go all the way to Wigan, the link that will go almost as far as York, and the link that will allow trains to come on from Crewe. All those will provide huge benefits for Newcastle, Liverpool and Scotland, which, as with the cities actually on the network, will see substantial reductions in travel times. The Government deserve to be given a measure of credit by Opposition Members for pushing ahead with HS2, particularly given the finances with which we were left.

I am happy to give credit to the Opposition when it comes to Crossrail, and I was pleased to hear the right hon. Gentleman give credit to us for keeping it. I think that particular credit is due to us in view of the financial circumstances in which we have proceeded with Crossrail. If he will do me the courtesy of allowing me to visit his constituency on 27 February, I look forward to seeing the handover of the Woolwich station box to Crossrail. Berkeley has done an excellent job, and it will be a real gain for his area and for south-east London in general. I am an Eltham boy of old myself. I also think that there will be huge benefits for north Kent. Crossrail will go through Woolwich to Abbey Wood, and the connections with Dartford, Gravesend and the Medway towns will be much improved.

A Crossrail spur from Stratford to Stansted could serve as a tribute to, and be a legacy of, the current Government. We are seeking to have infrastructure projects that can be proceeded with quickly. The Davies commission is due to report in 2015, but an interim report is expected this year, which will consider how existing runway capacity in the south-east can be better used. The single best answer to that must be Stansted, because it has one runway which is only half used. It has the capacity for a further 18 million passenger movements per year, but it does not have good links with central London. If we had the Crossrail spur, it would.

The former aviation Minister Steve Norris is doing fantastic work in promoting that idea. He proposes a six-mile tunnel from Stratford to Fairlop Waters, and for the railway to run along the M11 all the way to Stansted. As a result, the journey from Stansted to Liverpool Street would take only 23 minutes, and it would take only half an hour to travel to the west end or to Ebbsfleet. What a legacy for the Government that would be! What better way could we find of kick-starting the construction industry? I would expect the Liberal Democrats to support it: they may not want any new runways ever to be built in the south-east, but at least they believe in improved rail connections, and they are working with the Conservatives to deliver that.

I hope that Treasury Ministers will allow Steve Norris, and perhaps my hon. Friend the Member for Richmond Park (Zac Goldsmith) and me, to put the case to them. I think that it would be more than a short-term—perhaps a longer-term—solution to the aviation issue.

[Mrs Main]

My hon. Friend is advancing a powerful argument for the joined-up thinking that I stressed in my speech. I hope that he continues with it, because the more we can marry areas that want development with the benefits that result from it, the better the position will be for all concerned.

[Mark Reckless]

I think that the Stansted Crossrail spur could provide an answer to that, from not just a local but a regional and a national perspective.

I was sorry to learn that my hon. Friend, for whom I have great respect, was encountering a difficulty in regard to the freight terminal that is planned for the lovely area of Radlett. In my constituency, the infrastructure is being put where we want it. Only last month, the Government announced that we were to be given a brand-new railway station in Rochester, which will be built exactly where we want regeneration to happen, in the area around Rochester Riverside. It will hugely assist us in making the case to developers, and in encouraging people to visit and to move to Rochester. It will improve the transport times to London, it will be immediately open to the whole of Rochester high street, and it will link the high street with the regeneration area. This Government have worked very closely with Medway council, through Network Rail, to get this announcement and to get these funds, for which I am very grateful.

[Mrs Main]

That is exactly the point I was making about Sundon quarry. That area wants the regeneration, while St Albans, thankfully, does not need it. I believe that these projects should take place where they are needed.

[Mark Reckless]

I agree. I am a localist in these matters. I had the privilege to serve under the Financial Secretary when he ran the Conservative party’s policy unit, and he probably did more than any single person in our party to push that localist agenda. What he has achieved in planning, and in getting agreement for a planning system that boosts the economy and regeneration in this country yet allows local needs to be reflected and gives proper powers to the local democratically elected councillors, has been exemplary. The more we can work to get the economy moving through investment in infrastructure where both communities and the nation want it, the better.

I ask the Financial Secretary to take this agenda forward and to look in particular at giving a further boost to the economy with an extension of Crossrail. I urge him to ensure that the Treasury, as well as the Department for Transport, looks at the case that has been made for a Crossrail spur from Stratford to Stansted.

Public Service Pensions Bill

Mark Reckless Excerpts

Tuesday 4th December 2012 Commons Chamber

[Chris Leslie]

I do not deny the important role that is played by the professions listed in the Bill. What I am saying is that it is not as simple as saying that all other professions should therefore be exempt from considerations about the physicality of their endeavours. One could argue that prison officers, being a sort of uniformed service, have cause to have such protections. My point is that it is inconsistent and unfair to make exceptions for some workers in physical roles and not others. It is by no means clear that 60 is the appropriate age for all firefighters, police and Army personnel, when some of them undertake such demanding physical activity. There is no room in the Bill to make further exceptions to the state pension age link or to respond to any review that makes recommendations about the appropriate retirement age for firefighters, the police or Army personnel. Members who served on the Committee will recall that we cited the working longer review in the national health service, which was set up by Government Members. There is also an ongoing review of the working age in the fire service.

[Mark Reckless (Rochester and Strood) (Con)]

Is the hon. Gentleman’s argument on the basis of physicality collapsing? As my hon. Friend the Member for Bedford (Richard Fuller) said, three professions routinely place themselves in danger much more significantly than other professions. They currently have significantly lower pension ages, so it would be hugely unfair, a cliff edge and very disproportionate, to seek to increase their pension age to 65 or 68 as in other professions.

[Chris Leslie]

That is why amendment 16, which I urge the hon. Gentleman to look at, does not prescribe different pension ages for different categories of worker. We are looking only to give power to the Secretary of State, who

“may by order specify following the publication of a scheme specific capability review”,

to allow disapplication in relation to categories of public service worker for provisions in clause 9(1).

If reviews are ongoing—the Government have undertaken the working longer review in the national health service, and the fire service review—we must ensure almost as an issue of drafting that any conclusions of those reviews can be enacted and reflected in legislation, if the Secretary of State agrees. That is the extent of the amendment; it would simply ensure that if there are technical reviews of the capability of certain classes of employee, the Government will be able to create exemptions from any arrangement. That is why the amendment is narrowly defined. I accept there is a theoretical or philosophical argument about risk and physicality, but to return to the practicalities of our arrangements, we must look at how the legislation is drafted. That is our duty as a loyal Opposition.

--- Later in debate ---

[Mike Freer]

The hon. Gentleman makes a good point. I do not rule out the possibility where there is empirical evidence that people’s ability to work and progress is affected by the physicality of that profession. One difficulty is that those in some of the roles described in the Bill will have limited opportunities to move into other less physical roles. That is another consideration. If there are roles in the NHS where the physicality affects people’s ability to perform that role and where no other avenues are available to them, that is a fair point, but in most roles there will be opportunities to move into less physically demanding roles. Unfortunately, in the armed forces, police and fire service, there are limited opportunities to move out of front-line roles. It is the House’s duty to protect those who protect us.

[Mark Reckless]

People are living longer and many, albeit not all, are remaining fitter for longer. It is suggested that we amend the Bill to enlarge those categories in the public sector, but what about those in the private sector—people who work in private sector nurseries, for example—who face exactly the same issues as the hon. Member for Sefton Central (Bill Esterson) just raised?

[Mike Freer]

My hon. Friend makes a good point, but if he revisits some of the private sector schemes, he will find that they rely on actuarial and physical evidence provided by various medical boards, and that the retirement age in certain private sector schemes already reflects the physical demands of certain roles. In an intervention, I mentioned, rather light-heartedly, people such as steeplejacks and jockeys, but there are other roles whose physical demands are reflected in certain private sector pension schemes, which already have mechanisms in place.

Multiannual Financial Framework

Mark Reckless Excerpts

Wednesday 31st October 2012 Commons Chamber

[Mark Reckless (Rochester and Strood) (Con)]

We simply cannot afford to agree an inflationary increase to the EU. This country has 13% less income than it had just five years ago, and we are seeing 20% reductions to domestic spending. According to the House of Commons Library, if an inflationary increase is agreed, next year it will amount to £290 million, every penny of which we will have to borrow. Hon. Members will have spoken to constituents on different issues, and police officers have been to my surgery. They understand that their pay is frozen, although they are less happy about changes to their pay and conditions and about not getting their increments, but they do not understand why other elements of the budget, particularly the EU, should be guaranteed inflationary increases, let alone inflationary increases all the way through to 2020.

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

I have the utmost respect for my hon. Friend. Does he have the utmost respect for Opposition Members who voted time and time again to give away our powers and our money to the EU but now propose to wrap themselves in the Eurosceptic flag and walk through the Lobby with him this afternoon?

[Mark Reckless]

No, I do not. Sometimes people do the right thing for the wrong reasons, but if even the Labour party is now arguing for a real-terms cut in the EU budget, I hope that Conservatives will do likewise.

As well as my police officers, my local council, Medway council, of which I was a member, passed a motion asking Members of Parliament representing that area to vote for a cut in the EU budget. It wrote:

“The Council notes, with indignation, that whilst Medway is facing a massive…reduction in its financial settlement…the UK’s contribution to the European Union is”

getting a massive rise. It continued:

“This Council believes the EU should be treated the same as the other tiers of government and in these austere times should share responsibility…for public spending reductions.”

It argues that that would allow it to protect local services. I could not agree more.

[Dr Sarah Wollaston (Totnes) (Con)]

I am proud to represent a part of Torbay. How will I turn to residents in Brixham in my constituency, who suffered an 11% cut in formula grant last year and are suffering a 6.7% cut this year, and justify our taking the savings that they are making and handing them over to Europe?

[Mark Reckless]

Many hon. Members will be asking themselves the same question.

We heard from the Financial Secretary what these EU officials are paid. The Prime Minister went to Brussels a week or two ago and said that one in six EU officials earned more than €100,000. He might have understated his case, because we need to compare like with like. Not only do they earn more than €100,000 but they pay a special, incredibly low tax rate that applies only to people who work for the EU. They get an enormous expatriate allowance that shoves on another €15,000 to €20,000. They get a huge housing allowance. And, while a group of people in this country are about to lose child benefit of about £85 a month, EU officials get paid, tax free, another €300 per month per child. They contribute virtually nothing to their pension contributions. Under the arrangement we have in this country, any time a public official earns more than the Prime Minister—£142,500—that has to be signed off by the Chief Secretary to the Treasury. If we had to sign off every time an EU official was, in effect, getting the same take-home pay there as the Prime Minister’s salary here, that would apply to more than 5,000 European Union officials, or more than one in six. The Chief Secretary would be doing nothing but signing off those requests.

Today we have an opportunity to debate and vote on the multiannual financial framework—the long-term budget. This comes round once every seven years. It requires unanimity among member states and primary legislation in this House to implement it.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

Does the hon. Gentleman agree that, despite the agitation among Government Members, the real issue is not the objective—there is a general consensus on the need for cuts to the budget—but the weakness of the Prime Minister in being unable to negotiate and having to threaten a veto?

[Mark Reckless]

No, and that is not a sensible point at all, because we have a one-off opportunity. It is this House that ultimately votes, so if any Government Members feel uncomfortable—not because of who I will be following through the Lobby, but because of who may be following me, in support of my Conservative amendment—I say to them: if we send the Prime Minister to Brussels telling him that it is acceptable to agree an inflationary increase, he may come back to this House having agreed that inflationary increase. We will then have to vote on primary legislation, in Committee and on Report, for that inflationary increase for the EU budget, all the way to 2020. If Members do not want that, they should vote today for my amendment.

The other strong argument for the amendment is this. Some people say, “We’re not going to get a real-terms cut,” but we will certainly not get one if we do not even try. If we use the veto, that is not a bad place to be; in many ways, it is better than where we would be with an agreed inflationary increase. There are two strong reasons for that. First, either we operate within a multiannual financial framework under the old, frozen ceilings carried forward, or we agree new ceilings going up by inflation, allowing higher budgets in future. Each of those budgets is always negotiated under qualified majority voting annually; the question is, where we have unanimity and where we need legislation, do we allow inflationary higher limits to 2020 or not?

[Mr Brooks Newmark (Braintree) (Con)]

Will my hon. Friend give way?

[Mark Reckless]

If my hon. Friend does not mind, I shall continue, as others may like to come in

The second point is that if there is no agreement on a new MFF, the process of money being transferred from the budget towards the new member states will not continue. What happened, in that disgraceful decision in 2005 when Labour gave away the rebate, is that a process was put in place whereby the new member states do not pay towards our rebate in the way that the old member states do. If the Prime Minister vetoes an MFF package, that process of money shifting to new member states will be suspended; therefore, the process by which the rebate is given away will, at least for that period, be stopped, which is a significant gain for Britain. If there is an inflationary increase, as the Government propose, we will be looking at a net contribution going from £9.2 billion last year to £13.6 billion at the end of the process. We simply cannot afford that.

The European Commission put out its own press release, which asked the question: “What will happen if a new MFF is not agreed?” The press release states that failure to agree a new MFF

“would considerably complicate the adoption of new programmes. And in the absence of new legal bases, including their indicative financial envelopes, no commitments could be made…those multiannual spending programmes…the 2014 budget would probably only cover the agricultural payments and the payments on outstanding commitments,”

and that organisations

“benefiting from EU-funds…would face severe drawbacks.”

If hon. Members are prepared to vote through primary legislation—later, when we get that chance—and if they are happy with an inflationary increase in the EU budget, plus everything else that will happen because of the continued loss of the rebate if that is agreed, they should vote for the Government motion. If hon. Members think that the European Union has too much money and that its budget is too large and needs to be cut, they should support my amendment.

--- Later in debate ---

[Mr Cash]

The hon. Gentleman is right. I do not think this is just a cynical move, even though there is an element of that. As I find when I go to meetings with those in the presidency, there is a recognition: they know they cannot go on spending money that is not there. That is the truth. That is all this argument is really about. It is about the big landscape of whether, like Mr Micawber, we can just hope something will turn up. It will not; it has to be built through real growth policies.

Unfortunately, the report the European Commission produced only a few months ago shows it has not got a clue how to generate that growth. I was also deeply disturbed to see that the amazing report by the European Parliament calling for all these increases was welcomed by the vice-president of the European Commission, Maroš Šefcovic. He said the MFF was “an investment budget” for delivering growth in “the entire EU.” He condemns himself outright simply by endorsing the 150 pages of unadulterated rubbish that came out of the European Parliament in its interim report.

[Mark Reckless]

Even for those in the House who are genuine Keynesians, if our goal is to stimulate the economy is it possible to think of a worse way to spend money than the way the MFF sets out for the EU?

[Mr Cash]

I absolutely agree. The real problem is that their answer is to give more money to the public sector and to ventures and projects that, as the Court of Auditors report shows, increasingly fail. The trouble is that the European project is a failing project.

They will not recognise that, so what are they doing? They are saying, “We are going to go off and have a federal Europe.” Well, let them have it. They can have their federal Europe if they want, but we, in this country, cannot possibly be part of it—that is unthinkable. The Prime Minister knows it is unthinkable, and my genuine belief is that he will come to discover that it would be better to veto this and to ensure it does not go through, because he has already been presented with the crossroads. The crossroads was presented by Mr Barroso, and the crossroads is being presented by the other member states. There is no turning back. We therefore have to say no. We say no to this, we say no to the illegal banking regulations that we have just been looking at and we will be saying no to the proposals for any new treaty. If we are prepared to put our money where our mouth is and actually say that we will not accept this, we will be serving the national interest.

Public Service Pensions Bill

Mark Reckless Excerpts

Monday 29th October 2012 Commons Chamber

[Jackie Doyle-Price]

I completely agree with my hon. Friend. It is important that we bite the bullet now and lay the foundations for future security. If we delay, we will be asking for more contributions from taxpayers and workers themselves, so it makes perfect sense to deal with the problem. We cannot postpone the inevitable, and Government Members are not prepared to do so.

I am sure that many Members will have received representations on these issues. Most of those that I have received have come from police officers who are worried about the changes. Most public sector employees have recognised that the terms under which they were paying into their pensions were not sustainable in the longer term, not least because they have seen what happened to the pension provision of their friends and family members in the private sector. People in the private sector would have to contribute more than a third of their salary each year to get an equivalent pension, so I am not surprised that only a third of public sector workers voted to strike over this issue last November.

[Mark Reckless (Rochester and Strood) (Con)]

I understand that the public schemes are generally generous in comparison with those in the private sector, but does my hon. Friend have a view on the relative generosity of the police scheme, on which we have received a lot of representations? The police clearly have quite a high pension, but they pay a large amount in. Is it fair that they have had to pay so much more than civil servants, for example, whose contribution is much smaller?

[Jackie Doyle-Price]

My hon. Friend makes a good point. We will benefit from an examination of the individual schemes in Committee. My hon. Friend the Member for Bromley and Chislehurst (Robert Neill) made several good points about the financial sustainability of the local government scheme compared with others. We need to look at what we expect of all our public servants in the round, and the issues raised about the police are quite persuasive. We need to look in detail at what we are proposing not just for public sector workers as a group, but for individual worker groups. We also need to remind public sector workers who are witnessing the debate that their accrued rights are protected, and that there will be protection for those who are within 10 years of retirement.

The Bill will deliver sustainable public service pensions. It will almost halve the cost to taxpayers, and it will rightly ensure that public sector workers continue to receive the best available pensions. It provides a good deal for the taxpayer and for public servants, and I am happy to support it.

--- Later in debate ---

[John McDonnell]

Let me quote the Treasury, which has said that the cost of the unfunded public sector schemes—I am particularly interested in the civil service one—as

“a share of GDP was 1% in 2007-08 and was projected to rise to only 1.2% in 2057.”

Only 18 months ago, the National Audit Office produced the report, “The cost of public service pensions”, and showed that

“when projections of liability are based on earnings, the total annual payments from the civil service pension scheme will be largely stable over the next 50 years.”

So no, I do not accept that analysis, and neither did the Treasury at the time.

I oppose the Bill. Members of my Front-Bench team will abstain tonight, I believe, because they hope they can amend the Bill. The Bill is unamendable to make it acceptable to me. Therefore I oppose it and I wish to have the opportunity to vote on the Bill if I can. If that means walking through the Lobby on my own, I will. I will find a teller somewhere, I hope.

The Bill is extremely damaging to the well-being and living standards of ordinary working-class people. We know that. My hon. Friend the Member for North Ayrshire and Arran (Katy Clark) quoted the definitive piece of work, an independent analysis from the Pensions Policy Institute, which is a charity funded by the Nuffield Foundation to undertake the research. It confirmed that the Bill means that pension benefits will be cut by a third. My hon. Friend the Member for Leeds West (Rachel Reeves) referred to the shift from RPI to CPI, which was a further 11% cut. What the cuts in pension benefits mean is exactly as others have said—a reduction in participation that will ultimately threaten the viability of the schemes. Perhaps that is what the Bill is about—the degradation of the schemes so that they will eventually be replaced by the private sector.

Let me deal with the issue of private sector pensions, which is dragged out on every occasion. It is a rewriting of history. Let us go back to the 1980s and 1990s. The state pension was undermined by the Thatcher Government when they broke the link between earnings and pensions. That also undermined the earnings-related element of the state pension. They encouraged people to enter private sector schemes but, as we heard, they allowed many employers to take pension holidays, not for one or two years but for long periods. Eventually that undermined the schemes and a number of them in my constituency were wound up almost overnight.

Individuals were urged to enter into their own arrangements, which they did, only to be fleeced on their endowment policies and other mechanisms. Previous Governments, particularly in the 1980s and 1990s, destroyed private sector pensions and now this Government are moving on to destroy public sector pensions in the same way.

[Mark Reckless]

I do not want to let this point go—the hon. Gentleman’s claim that somehow Baroness Thatcher broke the link with earnings. Between 1974 and 1979 Labour claimed to link earnings and pensions, but for much of that time wages went up by less than prices, and for five months of the highest inflation in that period they were not linked at all, giving pensioners a very bad deal.

[John McDonnell]

Under legislation promoted by Thatcher, the House in 1981 broke the link. That undermined in the long term the value of the state pension—it is irrefutable—and then undermined the earnings-related portion of it.

[Mark Reckless]

Will the hon. Gentleman allow me to refute that? For the first two years of the Thatcher period, there was a link. The only other period in which there was purported to be a link was under the previous Labour Government. For much of the Thatcher period there was no link and wages went up by less than prices.

[John McDonnell]

There was always a link with earnings or inflation, and pensions went up accordingly. Why did the previous Government not replace it? I sought on every Budget to enable that to happen and I wish we had done so.

Infrastructure (Financial Assistance) Bill

Mark Reckless Excerpts

Monday 15th October 2012 Commons Chamber

[Chris Leslie]

It is important to recognise that we want the benefits of any financial assistance to be felt in the UK economy. I shall deal with the details of the amendments in a moment. We believe that the scheme should focus on stimulating growth within these shores, and prioritising resources for infrastructure within the United Kingdom is the right approach. The Minister will undoubtedly point out that, as part of the guarantees under the scheme that the Government announced in July, a £5 billion export refinancing facility was introduced to underwrite the lending commitments of foreign buyers of UK exports. Of course we believe that export credit guarantees can be legitimate and helpful to construction exports, but in times of UK recession, our priorities should lie squarely here at home.

Incidentally, if there is such a great demand for the services of the Export Credits Guarantee Department—which is part of the Department for Business, Innovation and Skills—why does it appear to have underspent its existing budget in the past year? That does not suggest that there is a need to divert resources from domestic infrastructure into bankrolling foreign firms any more than is currently the case. The latest research shows that infrastructure spending within the UK will be of far greater benefit to our economy.

Indeed, the IMF had discussions last week about the multipliers. I do not want to go into too much technical detail, but the Office for Budget Responsibility used a fiscal multiplier of 0.5, which meant that Ministers thought that each pound they cut from public expenditure and capital investment would reduce economic output by only 50p. However, after examining the records of many countries that have embraced austerity since the financial crisis, the IMF reckons that the true multiplier is between 0.9 and 1.7. That has led the TUC to reveal that if the real multiplier is 1.3—somewhere in the middle of the IMF’s range—the OBR has underestimated the impact of the cuts by a cumulative £76 billion, more than 8% of gross domestic product, over five years. Instead of shaving less than 1% off economic growth during this financial year, austerity has potentially depressed it by more than 2%, which helps to explain why the economy has plunged into this double-dip recession. It is self-evident that providing financial assistance to infrastructure projects in the UK will provide a much greater stimulus to the British economy than giving financial assistance to projects abroad. Projects in the UK will boost employment in Britain; providing assistance to overseas projects will not.

Conservative Governments have a dubious record when it comes to underwriting foreign construction schemes. I am referring not only to the most recent, and much vaunted, export enterprise finance guarantee scheme, which assisted only five firms and has now folded because it was such a flop. I am also thinking of historic occasions such as that relating to the Pergau dam in Malaysia, which involved a too-close relationship between the aid being given to a foreign country and the trade that was taking place, particularly in relation to arms exports. It is very important that we learn the lessons from past failures when it comes to finance for foreign infrastructure schemes, and we particularly need to start prioritising schemes here in the UK.

[Mark Reckless (Rochester and Strood) (Con)]

It is important for the hon. Gentleman to follow through the logic of his comments when it comes to funding for the European Investment Bank, for instance, or substantial increases in funds flowing to support projects elsewhere in the EU. Is that something that he and his hon. Friends would like to do something about?

[Chris Leslie]

We definitely need more scrutiny of the resources committed through the European Union to some of the schemes abroad, but as I understand it, this Bill will not substitute for the investment that the UK taxpayer makes to the European Investment Bank and elsewhere. This is about underwriting private projects that will, hopefully, bring benefit to our economy more broadly. Our view is that we should focus our prime attention on the economic needs here within the UK.

Draft European Union Budget

Mark Reckless Excerpts

Thursday 12th July 2012 Commons Chamber

[Keith Vaz (Leicester East) (Lab)]

I want to start with a small Euro whinge about the time available to discuss these important matters. When we discuss European affairs, it is important that we have more than one and a half hours. I have great respect for the Front-Bench spokesmen, but they took more than 45 minutes to put their cases, leaving very little time for those knowledgeable Back Benchers—I do not include myself; I would never want to praise myself—who want to make a contribution on these important matters.

It is a pleasure to follow the hon. Member for Daventry (Chris Heaton-Harris), who is obviously extremely knowledgeable about these issues, having sat on the budget committee of the European Parliament for many years before claiming asylum here in Westminster. I am sure that we should listen carefully to what he says about how the process operates. I would also be keen to see a copy of the DVD showing what goes on inside the EU that my hon. Friend the Member for Vauxhall (Kate Hoey) offered to Members. I have not received a copy—perhaps the UK Independence party MEP decided to send it only to some Members.

I want to say three quick things, because I know that other Members want to contribute. The first, concerning migration issues, is directly relevant to the EU home affairs agenda. I would like to know from the Minister, if not today then certainly in writing, what part of the budget will be ring-fenced to help countries such as Greece to deal with the serious migration problems at their borders. I see that the hon. Member for Rochester and Strood (Mark Reckless) is here. The Home Affairs Committee visited Fylakio, on the border of Greece and Turkey, where we saw the detention centres in which many of these refugees and asylum seekers live. The conditions were appalling, and we were told that more than 100,000 people crossed the border between Greece and Turkey every year.

Obviously we would like an improvement in the living conditions of those who arrive in Greece, but more than that we would like to prevent these illegal migrants from coming into Greece in the first place. As Members will know, the destination of choice for those 100,000 people who cross the border into the EU is not Greece. They are only kept in detention for six months, and they then travel to Athens and end up in northern and western Europe, particularly the United Kingdom and Scandinavian countries.

We know that Greece is having huge problems, but I would like an assurance that some of the money in the budget will be ring-fenced for issues of concern to this country. If we are to deal with illegal migration, it is much better to do so at the far borders of the EU, rather than allowing it to be a problem for us here, with all the issues and political controversies that it raises when we debate it. Is any of that budget to be ring-fenced?

[Mark Reckless (Rochester and Strood) (Con)]

I wonder whether the Chairman of the Select Committee on Home Affairs recalls that when we went to Greece we came across a young lady from Latin America who had almost accidentally got caught up in the Greek illegal immigration system. She was desperate to go back, but the EU funds could not be used for that purpose, however much we made the case to the European Commission representative there. In the end, we had to get assistance from the Norwegian Government, whose funds did not require domestic Greek matching funds. Should we therefore not also deal with that issue?

[Keith Vaz]

That is absolutely right. I do remember that young lady. She made a beeline for the hon. Gentleman—he was single at the time, I think, and—

[Mark Reckless]

I must clarify the position: I believe it was my hon. Friend the Member for Hertsmere (Mr Clappison) for whom she made a beeline.

[Keith Vaz]

We did not give notice of that allegation, so we had better not pursue it. However, the hon. Gentleman is right: the issue he raises is another area that can be looked at as a possible means of dealing with this important subject.

The second issue—[Interruption.] My hon. Friend the Member for Glasgow South West (Mr Davidson) keeps reminding me that I said I would speak for three minutes, and my time is now almost up. Let me therefore ask the Minister to look at the cost of enlargement. I am a great supporter of enlargement. When I was Minister for Europe, my job was to go to the European Union, as Tony Blair told me to, and ensure that we became best friends with all the countries in eastern Europe that sought to come into the European Union, and that is what I sought to do. I am therefore very much in favour of enlargement, but I am a bit worried by some of the figures for the cost of it. Croatia has been promised €150 million, while Turkey, which is not even a member, has been given €3 billion. We all support Turkish membership, but I am worried about all the money that is going to candidate countries and the possibility that we do not know precisely what is happening to it.

Professional Standards in the Banking Industry

Mark Reckless Excerpts

Thursday 5th July 2012 Commons Chamber

[Clive Efford]

My hon. Friend has made the point, and in the interests of brevity I will leave it there for the Government to comment on.

The Attorney-General is wrong to say that we cannot set up an inquiry such as the one the Opposition are calling for today while a criminal investigation is taking place. At least two criminal investigations are going on while the Leveson inquiry is taking place.

We have been here before. On 4 September 2010, the News of the World issued the following statement:

“We reject absolutely any suggestion there was a widespread culture of wrongdoing at the News of the World.”

We all know what that meant. The then editor of the News of the World, Colin Myler, told the Press Complaints Commission in August 2009 that

“Our internal inquiries have found no evidence of involvement by News of the World staff other than Clive Goodman in phone-message interception”.

Let us compare that with Mr Diamond’s comment in his letter accepting the invitation to appear before the Treasury Committee:

“This inappropriate conduct was limited to a small number of people relative to the size of Barclays trading operations, and the authorities found no evidence that anyone more senior than the immediate desk supervisors was aware of the requests by traders, at the time that they were made.”

We heard exactly the same sort of defences being made against the Leveson inquiry being set up, suggesting that this was a small matter that needed to be investigated. This is too deep an issue to investigate through a Joint Committee of this House or a Select Committee.

I am instinctively supportive of the idea that we should set up such Committees, but fundamental reform of this House of Commons would be required for us to carry out such an inquiry. Back Benchers would need to be able to conduct business independently of the Executive. We do not have the structures to deal with an issue such as this. We would also have to change the culture of this place. Back Benchers would have to have a duty to the public, rather than to our respective Front Benchers.

[Mark Reckless (Rochester and Strood) (Con)]

Will the hon. Gentleman give way?

--- Later in debate ---

[Mark Reckless (Rochester and Strood) (Con)]

In 1993, I joined Warburg’s as UK economist. One of the first things I recall is visiting the chairman of the bank, Sir David Scholey, in his office with my entry cohort. He said to us that what the bank had that mattered most was its reputation, that capital would always flow to good ideas and that if we did not have great amounts of capital, that was not a problem because we had our client relationships. He said that we must always remember to put our clients’ interests first, never our own.

My first boss was George Magnus, the chief economist at Warburg’s, who is still active. I remember him saying to me that we should never talk our book, and that we were there to be objective. He said that we should never be particularly proud if we got something right or concerned if we got something wrong, but that we should be proud of the integrity of our way of thinking. When I was given a bonus, I expressed gratitude. The culture had not yet become that we should look upset in the hope of more next time.

Only when I went to do an MBA at Columbia university in New York did I realise that the fact that I had become a rated analyst was of personal value to me and that I could perhaps have gone to another bank and got more money. When I came back from America, the position here had changed. We had the regulatory system of the FSA, and I was more involved in advising retail banks.

One case that I worked on for a substantial time was that of a retail bank merging with an insurance firm. It was clear to me that to treat customers fairly in merging the compliance function, as I was tasked to do, we had to focus on how that insurer might sell products to the bank’s customers. There was nothing wrong with that per se—that, along with stripping out cost, was the rationale for the merger—but it clearly brought risks, and we needed a function that would stop inappropriate sales to customers for whom they were not correct. Yet the main issues in dealing with the FSA were a turf war between the bank and the insurance regulator and a vast amount of time spent on box-ticking compliance. The question is not just whether the system is over-regulated or under-regulated, it is about the quality of the regulation.

I then became a lawyer—I am both a qualified barrister and a solicitor—when I worked on bank recapitalisations and FSA litigation. I served as a judicial assistant to the vice-president of the Court of Appeal. The motion asks for a judge-led inquiry. I have enormous respect for our senior judiciary, but they have almost entirely been judges and lawyers—they have not worked in financial services industries and are not, as hon. Members are, representative of wider society.

On LIBOR, two separate things happened with Barclays. First, there was market abuse—we will see what happens in respect of other banks. Because the two mid-quartiles of LIBOR were measured, it was thought there could be no gain by giving a low or high response, but there was collusion by so many players that there was market abuse, and the FSA was asleep on the job.

I would encourage hon. Members to think about the second Barclays aspect in terms of the perspective of the time. The British Bankers Association says that LIBOR

“is not necessarily based on actual transactions”.

Banks are asked a question:

“At what rate could you borrow funds, were you to do so by asking for and then accepting inter-bank offers in a reasonable market size”?

We should note that the question refers to “offers” rather than “an offer”, but the BBA goes on to say:

“Therefore, submissions are based upon the lowest perceived rate at which a bank could”

borrow. It also says that “reasonable market size” is not defined and that

“it would have to be constantly monitored and in the current conditions would have to be changed very frequently.”

Whitehall was therefore using Barclays reports for a purpose for which they were not designed. It was looking not at LIBOR, but at one particular bank’s reports, which were quite possibly compiled by a junior person, in an incredibly difficult market position. Therefore, if Barclays reported a higher rate than other banks, it might be that it had different perceptions of “reasonable market size”, or it might not ask the offered rates because the market had frozen. Which banks were asked and how are those considerations to be reported? The banks are not being asked: “What are your bid and offer rates?” They are being asked: “What do you perceive one of your competitors might offer you were you to ask?” In the context of the financial crisis, that is potentially different from the market abuse I have described.

We should also consider the UK in the international context. We have a huge banking industry in this country. If a regulator says that much of it is socially useless, people might reply, “Yes, but the employment and prosperity of many people in the country depend on it.” How do we clear it up so we can offer a market and export our financial services to the world sustainably and in a way that will keep our reputation? Hon. Members can rail and bash the bankers for the bust we are suffering—that is quite fair and proper—but we must accept that the bankers also gave us our boom. Our borrowing and extra spending was based on candyfloss, and on a boom that the bankers created. They are as responsible for what we enjoyed in the boom as they are for the bust.

[Mr Jenkin]

Is my hon. Friend saying that wrong regulation rather than under-regulation robs the system of discipline, and that we want a more capitalist, self-disciplined system rather than more bad regulation?

[Mark Reckless]

Elements of such regulation have been backed, but we must look at the quality of regulation. We can have a market system in which people are clear what the regulation is, or a system in which the Government run regulation and bail everyone out, making the taxpayer responsible. We were betwixt those two separate models. Some parts of the market but not others were regulated, and people put stress and reliance on LIBOR that it was never designed for, which led to much of the problem.

We cannot take what the regulators say as Gospel. Many say that Barclays accepted that the Bank of England and Paul Tucker had not told it to lower the rate. Barclays was let off tens of millions in fines because the regulators agreed that, but the regulators have a vested interest—people might ask why they were asleep on the job in the earlier phase, and what LIBOR was doing in 2008-09. Hon. Members should consider what reliance Ministers or officials at that time put on LIBOR—we should ask what LIBOR said about Barclays, why the Government were trying to push Barclays into a bail-out it was trying to resist, and why there was such reliance on that rate.

[Mr Jenkin]

My hon. Friend is making a very interesting speech. Is he saying that because it was widely known that the Government were prepared to rescue the banks, the self-discipline that liability for bankruptcy provides in a banking system was abandoned and the whole market was distorted?

[Mark Reckless]

For the calculation of LIBOR, I wonder whether it had been abandoned for RBS and Lloyds HBOS—as it became—while Barclays continued operating in a market context. The BBA now says that banks have to quote on the basis of an unsecured, unregulated, non-Government-supported rate, but I do not know whether that was the definition it gave at the time. That would have been a concern.

In conclusion, Members of Parliament, representing their constituents, have the necessary range of experience to have a reckoning, as a society and a nation, with what has happened with our banks, to assess the costs, as well as the benefits that we enjoyed, and to consider how to move on and put the matter behind us. I know, from my experience on the Home Affairs Committee, that we can have a non-partisan Committee that can reach across. We have people with the necessary experience and independence of mind. We can get together a group of people to come up with a report that downplays partisanship, to find out what went wrong and to learn the lessons for the future.

--- Later in debate ---

[Ms Angela Eagle (Wallasey) (Lab)]

Today’s debate—especially the beginning of it—makes the case more eloquently than I ever could for a forensic, judge-led inquiry, free from charges of partisan political game-playing of the type in which the Prime Minister and, even more disgracefully, the Chancellor have engaged since last Monday. Anyone genuinely wishing for cross-party agreement on the approach to be taken in an inquiry into this incredibly important industry would not have conducted themselves as they have since last Monday. However, since then we have had a more nuanced and calm debate, which I was not expecting after the beginning we had. I am glad that temperatures have cooled.

As I said last week when news of the LIBOR fixing scandal first broke, the potentially criminal behaviour that has been uncovered at Barclays is truly shocking. We also know that other banks are certainly involved, and that investigations are currently being conducted by regulators across three continents. This should not be an occasion for petty party-political points scoring, therefore; it should be a matter of the utmost concern on both sides of the House. Our constituents want us to concentrate on getting to the bottom of this and putting it right, and that is what this debate should be about.

Today, we have a choice between a Government motion proposing a tightly drawn, limited parliamentary inquiry and a motion, supported by all the Opposition parties, proposing an independent, forensic, two-part, judge-led inquiry, with the first part reporting by the end of 2012 on the scandal surrounding LIBOR, and the second part reporting within a year, looking at the wider issues of culture and practices in the banking industry.

The House must today consider whether the scale of misconduct in the banking industry justifies a judicial inquiry, rather than a quick parliamentary examination. In deciding which approach is more appropriate, we need to consider the following questions. Are there issues of culture and practices across the industry that need to be forensically examined? Does the scale of misconduct in the banking industry threaten the future prosperity of the UK if problems are brushed under the carpet and the situation quickly returns to business as usual? Is the culture of multi-million pound bonuses for bankers as a reward for high-risk, complex trading—a culture that took root in the 1980s—something we should worry about? A moment’s consideration reveals that the answer to all those questions is yes.

[Mark Reckless]

rose—

[Ms Eagle]

I will give way to the hon. Gentleman, but I ask him to remember that I only have 10 minutes.

[Mark Reckless]

The Opposition motion says we need a judge to examine forensically the culture of banking. Is the culture of banking really susceptible to legal analysis in that way?

[Ms Eagle]

With expert advice, certainly. That is therefore the approach we must choose.

The banking industry does not want a judicial inquiry; it wants—a multi-billion pound—business as usual. We saw that in its response to the Vickers commission on reform. Top banking executives lobbied hard to protect the status quo, and the Chancellor caved in, but the British people want a judicial inquiry, because they are sick to death of bankers taking mega-bonuses while refusing to lend to small business—we have heard about some instances of that—or to support struggling households. They are angry that greed and irresponsibility in the banking sector led to the credit crunch and they are angry about the real suffering it has inflicted. They want change, not the status quo. They do not want business as usual.

Child Benefit

Mark Reckless Excerpts

Tuesday 22nd May 2012 Westminster Hall

[Mr Chope]

The hon. Lady makes a good point. There are two issues running in parallel. One difficulty for those of us proposing the community charge was to explain how it was fair that a duke and a dustman should pay the same amount. That difficulty ran through the public debate. At the same time, we went into great detail about exemptions for particular groups of people and an administratively burdensome system of rebates, which created a lot of fresh cliff edges, with people feeling that they had been treated unfairly. I fear that that is exactly what is happening with this ill-conceived proposal.

[Mark Reckless (Rochester and Strood) (Con)]

The difference between the community charge and the abolition of the 10p tax rate by the previous Government and the present issue is that, at some point, taxpayers received a bill for a sum, making it clear that they had to pay it. The alternative, if this is not to become a slow-burn issue, is that come January, taxpayers will be unaware that they have to give up their child benefit or unaware of what their partner earns, so they will simply not pay or will be followed up by the Revenue and there will be mass non-compliance involving people who are unaware, or at least say that they are.

[Mr Chope]

My hon. Friend makes a good point. I am grateful to him for reminding us about the 10p tax rate, because that introduces a bit of political balance into this debate. It is not just the coalition Government, or the previous Conservative Government, who can get on the wrong side of such issues, both in respect of the principle and of the detail. We need an answer to the question of why the single-parent earner on £60,000 loses the equivalent of all her child benefit, while next door the two-earner couple on up to £100,000, with their incomes spread equally between the earners, keep their child benefit. Will there be an answer to that question? Perhaps the Minister would like to intervene. Unless we get answers to those fundamental questions, it will be difficult for us to sell the concept to our constituents.

Finance (No. 4) Bill

Mark Reckless Excerpts

Thursday 19th April 2012 Commons Chamber

[Mark Reckless (Rochester and Strood) (Con)]

Yesterday, the Prime Minister pointed at the Opposition Benches and said Labour MPs would be voting to give themselves a benefit, yet just after the Budget the Leader of the Opposition said to the Cabinet that they were getting rid of the 50p top rate of income tax to help themselves. Can we not all accept that we on the Government Benches are getting rid of the 50p rate to try to improve the economy, and Labour Members are trying to protect universal benefits and the welfare state as they have understood it?

[Cathy Jamieson]

I was hoping that the hon. Gentleman was going to respond to my point about children, but that is obviously not the case.

It is expected that the revised proposal will affect about 1.2 million families. Some 790,000 couples and 30,000 lone parents will lose the full amount of their child benefit. A further 330,000 couples and 20,000 lone parents will lose a proportion of their child benefit. The average loss will be about £1,300.

When these proposals were first announced, I tabled a parliamentary question asking for an estimate—not an exact figure—of the number of people earning between £50,000 and £60,000 who are in receipt of child benefit in each parliamentary constituency. I received the answer two days ago. It was short and simple: this information is “not available.” Surely that is exactly the sort of information that should be available in advance of such proposals being made to help MPs judge the impact of Government policies on their constituencies.

--- Later in debate ---

[Mr Jackson]

My hon. Friend makes a valid point and I accept her argument, but we need to look at this proposal within the context of the wider proposals in the Budget. We are rightly reducing the top rate of tax and corporation tax, so for those in the upper 20% income range we have introduced fiscal policies through which we seek to support entrepreneurship and business, supporting those higher-rate earners. We are also proud to be taking a substantial number of poorly paid working people out of tax. My concern is that we are not extending those same tax breaks to the squeezed middle and it is a very important message that we are sending. I accept that the Chancellor has tackled the specific issue of the cliff-edge effect, but he has not done enough to secure my vote in terms of the discrepancy regarding the one taxpayer in a two-person household.

[Mark Reckless]

A rather larger category than that mentioned by my hon. Friend the Member for West Worcestershire (Harriett Baldwin) is the very minimum of £62 million a year—and I suspect much more—that is paid to children who are resident elsewhere in the European Union where costs are much cheaper, many of whom have never even visited the UK.

[Mr Jackson]

My hon. Friend makes an extremely apposite point. If we really are all in this together, it beggars belief for my constituents and his that we are talking about looking after the interests of people on low or median incomes but are remitting abroad, within the European Union, anything between £40 million and £75 million in various benefits for people and families who do not even live in this country.

It would not be fair not to mention that the Chancellor has sought to ameliorate the concerns that various Members across the House have expressed about this policy and I give him due credit for that. Unfortunately, however, I think this policy will go badly wrong and will have a specific impact on aspirational, ambitious families and will breach the basic tenet of universality in child benefit. For that reason, I cannot and will not vote for it.

--- Later in debate ---

[Mr Gauke]

We are somewhat short of time. There are two reasons why we may not be able to do the measure justice. First, the Opposition tabled an urgent question, which took an hour out of our debate—[Interruption.] They may groan, but they did. We had agreed that there would be no statements today to allow us to have a proper amount of time. Secondly, the Opposition included in the debate both the clause and the schedule. They need only have put the clause in for us to have the debate. As a consequence, the schedule will not be scrutinised in the Public Bill Committee.

Clause 8 introduces a tax charge on a child benefit recipient or their partner if their income is above £50,000. The changes that we are introducing in the Bill ensure a balance between reducing the cost to the Exchequer of child benefit and ensuring that those on low incomes are not affected. Opposition Members like to forget that the reason why we are making very difficult decisions is the state of the public finances that we inherited. We must ensure that the measures that we take are both fair and reasonable. It is only right and proper that we ask those with the broadest shoulders to bear the greatest burden. That is why the measure and others announced by my right hon. Friend the Chancellor at the Budget—

[Mark Reckless]

The Minister said that the charge would apply if “their” income was above £50,000. That would be correct if he accepted the amendment of my hon. Friend the Member for Christchurch (Mr Chope). But actually it applies if his or her income is above £50,000. But on “their” income, they can carry on up to £100,000 as long as the amount is split equally between them.

[Mr Gauke]

The focus on doing this through the tax system and on having one taxpayer above a certain threshold enables us to avoid the position whereby we would have to put every child benefit claimant through the tax credit system and apply a means-tested system to 8 million different cases, creating a substantially greater administrative struggle for both Government and many individuals. That is why we have taken that particular point.