Currency in Scotland after 2014

Michael McCann Excerpts

Wednesday 12th February 2014 Westminster Hall

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Riordan. I follow the hon. Member for Dundee East (Stewart Hosie) from the Scottish National party, and I hope that, in the words of Bill Clinton, he will feel our pain in Scotland. This is the level of debate that we have to put up with day in, day out in the separation campaign. It is full of bluster, assertion and very little detail.

In the short time available, I want to pose the argument in the language that the ordinary man and woman on the street understand. We face the biggest decision we will ever make on 18 September 2014, and I had high hopes that the debate would deal with all the big issues. A business man—a friend of mine in my constituency—told me about a meeting that he had with the SNP treasurer in charge of finances for the campaigning. He asked the SNP treasurer how he would deal with the big issues such as currency, and he replied that they would make lots of promises, spend money before the campaign and that hopefully that would get them through. I did not believe that statement, but I do now, because I have read the Scottish Government White Paper. It contains no facts and no detail and threatens the future of my country.

We should also realise that the people who support a separate Scotland are largely cultural nationalists who believe that, irrespective of the economic damage that separation would do, Scotland must be a separate nation. I do not have a gripe with people who believe in that particular brand of nationalism, but the rest of the people are Jerry Maguire individuals—if I can use that term—when it comes to the debate, because they want someone to show them the money. They want someone to say they will be better off if Scotland separates and is not part of the UK.

After last week’s debate about the future of the UK, I would put the debate into three different boxes: first, things that we know will not change; secondly, things that we know will change; and thirdly, things that we will have to negotiate on. The SNP is trying to put as many issues as possible out of the negotiation box and into the “will not change” box. That is why we will keep the Queen, although MSP Christine Grahame wants Annie Lennox to be the Head of State in Scotland.

[Ian Paisley (North Antrim) (DUP)]

The unintended consequences that the hon. Gentleman raised were touched upon last week in a speech by the leader of Sinn Fein when he said that the United Kingdom hangs by a string. Is that not a very worrying statement that shows how important the referendum is for everyone in the United Kingdom?

[Mr McCann]

Absolutely. We have been in this Union for 307 years. It has served us well, and I want to make sure that it continues after 18 September 2014. We have loads of statements about what will not change and all the contradictions: we have the Queen and we have NATO; we want to be a member of NATO, but we do not want nuclear weapons. We had the fiasco over Europe: we will waltz in—presumably a Vienna waltz—and we will keep our rebate, and be delighted when everyone welcomes us in as a member of the European Union.

[Ann McKechin]

My hon. Friend will be aware that the Scottish Government said that universities in Scotland will be better off under separation, but the EU education commissioner has confirmed today that their proposed policy on tuition fees for students in the rest of the United Kingdom is illegal. Does my hon. Friend believe that yet again they have been proven unsuccessful?

[Mr McCann]

Absolutely. It is a significant nail in the case for separation. All those things make a mockery of the debate, because people in Scotland want a truly open and honest debate with all the big issues discussed, flaws and all, but we do not get it. It reminds me of the quote from Groucho Marx, who said:

“I don’t want to belong to any club that will accept me as a member.”

Alex Salmond says that he has to set the rules before he decides to join the NATO, European Union or currency clubs. In terms of what happens in the street and what people talk about, we should simply retrace our steps in the currency debate.

Alex Salmond’s first position on the euro made a lot of sense when he presented it, because we would leave the United Kingdom, become a separate state, apply for membership of the EU, and, as part of applying for membership as a new state, we would have to accept the euro as our currency. However, as we know—my hon. Friend the Member for Edinburgh South (Ian Murray) exposed the argument cruelly—the debate on the euro currency caved in when the crisis came. The arguments have been well set out by my hon. Friend. The SNP then brought us back to the pound as our currency, which, as has been mentioned, Alex Salmond had described as a millstone round Scotland’s neck.

If Scots vote for independence, there will be massive uncertainty, because negotiations will be required on all those issues. At the moment, we have the pound as our currency. The Bank of England is our lender of last resort, which means that when we pool and share risk, interest rates will be the same in Land’s End as in John O’Groats. We know that the SNP proposed that we have the currency of a foreign state and we know that there will be no political and fiscal union, so, in the event of separation, Scotland then becomes—this is really important for the man and woman on the streets of Scotland—a higher risk. As a result, our interest rates will increase, which means that we will have to spend more money on mortgages, loans, and credit cards. The cultural nationalists will accept that, because they will pay any price for separation, but most canny Scots will not.

Oral Answers to Questions

Michael McCann Excerpts

Tuesday 14th May 2013 Commons Chamber

[Danny Alexander]

I wholeheartedly agree with my hon. Friend. The Youth Contract, which was launched in April, supports 500,000 young people into employment through a range of measures, including an in-work subsidy and access to work experience. Alongside the 1 million apprenticeships that my right hon. Friend the Secretary of State for Business, Innovation and Skills is starting during this Parliament, the Youth Contract offers a range of new opportunities for young people, which are necessary in getting more young people into work, which the House agrees is vital for the country.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

Q3. What estimate he has made of the value of the reduction in the additional rate of income tax to 45% to a person earning £1 million a year.

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

The cost of reducing the additional rate of income tax to 45% is estimated at around £100 million per year. That is set out in table 2.2 of Budget 2013. We have not broken down the impacts of income ranges because a significant behavioural response is associated with the additional rate of income tax. The behavioural response is estimated in aggregate and reflected in the costing.

[Mr McCann]

I am grateful for the Minister’s answer, but I can give him the answer to the question I asked: millionaires will get a cut of £42,000 under this Government’s policies. Does he think it right that those in receipt of tax credits are making a bigger financial contribution to the country’s coffers than millionaires?

[Mr Gauke]

Of course that is not true. As the Institute for Fiscal Studies has shown, the biggest contribution to reducing the deficit is coming from the wealthiest 10%. The hon. Gentleman might also wish to ask himself why, when his party was in office, it had a top rate of income tax of 40% for all but 36 days out of 4,758.

Oral Answers to Questions

Michael McCann Excerpts

Tuesday 12th March 2013 Commons Chamber

[Greg Clark]

All of the above.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

T7. My weekend surgeries were dominated by constituents facing backdated payment demands from Her Majesty’s Revenue and Customs, despite the fact that they had discharged their responsibilities and had been assured that their tax affairs were in order. Does the Minister think it is right to put people through financial stress and misery because of HMRC mistakes and staff cuts?

[Mr Gauke]

There was an issue regarding end-of-year reconciliation, which is an errant part of the pay-as-you-earn system. When we came into office, 17 million cases needed to be dealt with. I think that backlog is about to be cleared—we have made great progress. We are reforming the PAYE system so that tax will be collected at the right rate at the right time, and much more accurately than in the past.

Her Majesty’s Revenue and Customs (Nurseries)

Michael McCann Excerpts

Monday 15th October 2012 Commons Chamber

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

I applied for this debate before Parliament adjourned for the conference recess, and my application was triggered by the decision by Her Majesty’s Revenue and Customs to close eight in-house nurseries on its estate, without any debate, consultation or negotiation. Things have moved on significantly during the intervening period, but many old and new questions remain unanswered so this debate remains pertinent and necessary.

I know that the Minister is committed to child care. On 17 October 2011, he told the House that the Government’s strategy on child care and work involved

“encouraging parents into work by promoting safe, good quality child care and providing incentives and wider options to encourage more employers to support child care provisions for their staff.”—[Official Report, 17 October 2011; Vol. 533, c. 686W.]

I fear, however, that the Government’s commitment has not cascaded down to senior civil servants in HMRC, and I will explain why by providing a whistle-stop tour of events.

In late August, HMRC advised that it had unilaterally decided to close eight nurseries that were part of a relationship between HMRC, Mapeley Estates Ltd, which owns some of the HMRC estate, and Bright Horizons, the actual nursery provider. As hon. Members will understand, my immediate concern was for the welfare of the 86 families whose children attended the custom-built nursery inside HMRC East Kilbride in my constituency. In my mind’s eye, I imagined that HMRC would have done its homework, and that I would be presented with incontrovertible evidence that the nursery was grossly inefficient, or that the number of children using the facility was too low to sustain in-house provision.

It was, therefore, with some trepidation that I wrote to HMRC to find out its reasons for the proposed closures. I received a response from Mr Mike Falvey, the chief people officer at HMRC, who—for reasons that will become obvious—probably holds the most inappropriate job title in the civil service. In his letter dated 5 September, Mr Falvey explained that the current contract between Bright Horizons and Mapeley originally ran for five years, but had been extended twice and could not be extended again. He advised that a further contract needed to be retendered, which HMRC had chosen not to do.

[Jonathan Evans (Cardiff North) (Con)]

I congratulate the hon. Gentleman on securing this debate. Early in the process he describes, he and I discussed this matter, primarily because my constituents were also affected and were involved in some of the changes. Does the hon. Gentleman think that the period of notice given was truly appalling—three months to locate young children elsewhere—and that inadequate thought was given by HMRC about how it should try to help a commercial solution?

[Mr McCann]

I agree entirely with the hon. Gentleman, and I think he will be even more appalled as I continue with my remarks. Not only did Mr Falvey advise that a future contract needed to be re-tendered—something HMRC had chosen not to do—he further advised that there were only eight nurseries for more than 300 HMRC offices, and that HMRC did not provide the same child care service for all staff. Finally, he advised that the number of parents using the nurseries was declining and, most importantly, that only a third of spaces were taken by children of HMRC staff.

There was only one problem: none of that information—provided by a civil servant who is paid more than the Prime Minister—was accurate. I found out several weeks later that the deal between Mapeley and Bright Horizons—the hon. Gentleman might want to listen carefully to this point—contained a provision for an extension of an additional year, to November 2013, which was never disclosed to me by civil servants. I also found out that, even if the eight in-house nurseries run by Bright Horizons were closed by HMRC, it would still have in-house nurseries, including a large one in the constituency of my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown). Finally—I consider this to be the pièce de résistance—I found out that 63 of the 86 children at the nursery in my constituency were the children of HMRC staff.

[Lilian Greenwood (Nottingham South) (Lab)]

My hon. Friend sets out a powerful case. I understand that the nursery at Castle Meadow in my constituency currently has a 76% occupancy rate, that more than half of its users are HMRC staff, and that its outdoor play area has only recently been upgraded. Does he agree that that calls into question the account hon. Members have been given of a service in decline?

[Mr McCann]

My hon. Friend is absolutely correct. It also calls into question the decision taken—the account I was given was riddled with similar inaccuracies.

Armed with the knowledge that the HMRC rationale for the closure in my constituency was fallacious, I called Mr Falvey and explained that the arguments he had presented were plain wrong. I asked whether, in the light of reality, he would agree to my modest request to review the decision in full or in part. The chief people officer refused point blank to do so. To digress ever so slightly, it is not difficult to see why HMRC came 36th out of 37 Government Departments last year in the industrial relations league table. Perhaps it is going for 37th place this year.

After that setback, I contacted the Minister’s office to arrange to discuss the matter, feeling strongly that senior civil servants could not dismiss the concerns of elected Members of Parliament in such a shoddy manner, particularly as their decision to shut the nurseries was obviously based in full or in part on erroneous information. Alas, the Minister refused to meet me, claiming that the issue I wanted to discuss was operational. No further explanation was provided by his private office.

When hon. Members are running out of cards to play, politics can be frustrating. However, if you do not mind an “It’s a Knockout” analogy, Mr Speaker, I played my joker and applied for an Adjournment debate just before hon. Members packed up and left for the recess. Whatever gods exist, be they mortal or otherwise, my debate topic was picked for this evening. However, I did not want to wait until this evening—I wanted a resolution—and had a duty to look after my constituents and their children, so I once again pressed HMRC and set up a call with Lin Homer, chief executive of HMRC. Miss Homer was previously chief executive of the UK Border Agency and permanent secretary at the Department for Transport, where she worked on the west coast main line contract.

I spent 45 minutes on the telephone with Miss Homer on 21 September, only to find that the reason HMRC wanted to close nurseries had nothing to do with the reasons set out in Mr Falvey’s 5 September letter. I was advised for the first time that the decision was being made to rationalise the HMRC estate to save money on rent.

[Greg Mulholland (Leeds North West) (LD)]

I thank the hon. Gentleman for giving way, for co-ordinating the letter and for showing leadership. Does he agree that one strange thing with regard to the estate is that the buildings will remain empty? That is another reason why the closures need to be looked at again, and why there should be a moratorium on them until we get the real facts so we can make a proper decision.

[Mr McCann]

I agree entirely with the hon. Gentleman— I shall expand on that in a moment.

I was advised for the first time that the decision to rationalise the HMRC estate was based on saving money on rent. Despite my reasonable request for a review and my suggestion on how to keep the nurseries open under new arrangements, Miss Homer confirmed that the closures would go ahead regardless.

The new information did not make any difference to the nursery in my constituency and others, as hon. Members have said. I shall suspend disbelief to explain why. The nursery contract is between Mapeley Estates and Bright Horizons. HMRC provides the space for free as part of its now-defunct commitment to family-friendly policies. It planned to shut the nursery in my constituency and leave 86 families—63 of them HMRC families—searching for new child care provision. What was to happen to the vacant space in East Kilbride, on which the taxpayer would continue to pay rent? Absolutely nothing. HMRC would continue to pay the full rent to Mapeley until at least 2015, the only difference being that a wonderful, fully equipped, custom-built nursery would lie empty, gathering cobwebs. Mr Speaker, you could not make it up.

In view of the new information, I made a further request to meet the Minister, and this time my request was granted. Lo and behold, a decision has now been made to keep the nursery in my constituency, and another in Cardiff, open.

[Jonathan Ashworth (Leicester South) (Lab)]

I pay tribute to my hon. Friend’s tenacity in pursuing this issue and I am, of course, delighted that the nurseries in East Kilbride and Cardiff will remain open. But the one in Leicester’s Saxon house will not remain open, even though it is oversubscribed and there are 15 staff on maternity leave who will want to use the nursery when they return to work. Does he agree with the hon. Member for Leeds North West (Greg Mulholland) that the Minister should announce a moratorium on these closures, otherwise children will face upheaval and staff will be made redundant?

--- Later in debate ---

[Mr McCann]

I agree entirely, and the rest of my contribution will explain why that is something that the Minister should actively consider.

The decision to keep two nurseries open was confirmed to me when I met the Minister and chief executive on 3 October. I have some remaining issues that I wish the Minister to address. The first is the package offered by HMRC to keep East Kilbride and Cardiff open. It is based on my original proposition to Lin Homer, offered on 21 September, that the accommodation could and should be utilised as a nursery until at least 2015, under new arrangements. However, that offer was made in ignorance of the knowledge that a clause already existed that would enable the eight nurseries to remain open for a further year, to November 2013. I therefore make a formal request to the Minister this evening to review the package offered on the grounds that his civil servants apparently did not know that the clause to extend the lease existed. This new information should allow all the nurseries to operate for a further year on the current terms and conditions.

My second request to the Minister relates to the behaviour of his senior civil servants. On 5 September, for different reasons, I asked the Minister of State in the Cabinet Office, at Cabinet Office questions, for a review of the civil service code. The Minister of State advised that the Minister for the Cabinet Office and Paymaster General had recently issued the first steps in the civil service reform programme, which sought to enlarge the area of accountability for senior civil servants. Mike Falvey, HMRC’s chief people officer, provided me with false information about why HMRC proposed to shut the eight nurseries. HMRC has denied that it had knowledge of the clause between Mapeley and Bright Horizons to extend the life of all eight nurseries for a further year, although that denial fits uneasily with the chronological order of events, which would have us believe that Bright Horizons attended a meeting in May 2012, was told that the nurseries would be shut in November 2012, and nobody mentioned the extension clause. I find that difficult to believe.

In any event, the chief executive presided over this debacle until 3 October, when there was a damascene-like change of heart, curiously coinciding with my meeting that day with the Minister. Does the Minister deem the actions of his civil servants to be incompetence or an attempt to mislead a Member or Members of Parliament? If it is incompetence, what is the Minister going to do about it? If it was an attempt to mislead, what is he going to do about it? I represented civil servants of all ranks as a full-time trade union official for most of my working life. Had a junior civil servant shown the same degree of incompetence or provided false information to a senior civil servant, they could have expected the sharp end of a capability or disciplinary process and, more often than not in my experience, that would have led to dismissal. Senior civil servants cannot be insulated or protected from the consequences of their behaviour. People expect their parliamentarians, acting on their behalf, to be given accurate information by Departments when it is requested, especially about decisions that have been made.

This debacle was presided over by two of the Minister’s most senior civil servants, and I have concluded that had it not been for the backing of the Public and Commercial Services Union, which represents HMRC staff, and the campaign in my area led by the families and children to keep their nursery open, and—I am utterly convinced—had this Adjournment debate not taken place, given its ability to shed light on the fundamentally flawed process that HMRC has followed, the nurseries thus far reprieved would not have been reprieved.

It is necessary that all the nurseries involved now be given the same reprieve. I am most grateful, therefore, that the procedures of the House of Commons have come to the rescue, and so too are the 86 families in my constituency. That said, those same 86 families, and countless others, were left in limbo, worried and put under tremendous stress over their children’s future child care arrangements. That matter cannot be swept under the carpet, so I hope and expect that the Minister will answer the direct questions that I have put to him.

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

I start by congratulating the hon. Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann) on securing this debate and acknowledging his efforts to pursue this issue on behalf of his constituents. I know of the equally determined efforts of my hon. Friend the Member for Cardiff North (Jonathan Evans) to represent his constituents, and I also acknowledge the other hon. Members who contributed this evening.

As we are all aware, HMRC’s core purpose is to collect tax and distribute benefits. That is what it was set up to do and where its efforts and resources need to go. Of course, it also has a duty to be a responsible employer to its staff, and I appreciate that the decision to close eight on-site nurseries has been controversial, but this provides an example of the difficult balance that public services often need to strike between their public obligations and their responsibilities to their own staff.

As alluded to by the hon. Member for East Kilbride, Strathaven and Lesmahagow, I am not responsible for the day-to-day management decisions of HMRC, which is a non-ministerial Department, but I am the Minister to whom it is accountable for its core duties, which is why I am responding tonight. For the record, I think that HMRC’s management decision was broadly the right one, although I agree that its execution of that decision could have been better handled and has caused regrettable upset and uncertainty among the parents of the children in the eight nurseries.

The hon. Member for East Kilbride, Strathaven and Lesmahagow, my hon. Friend the Member for Cardiff North and other hon. Members have made several important points, and I will deal with them, but it is important to understand why HMRC made the decision it made. As I understand it, the on-site nurseries were originally set up in a small number of locations where Her Majesty’s Customs and Excise and the Inland Revenue were experiencing recruitment difficulties among younger workers. The nurseries helped them to attract and retain parents of young children, at a time when there was no other provision for child care in HMRC’s legacy organisations.

Over the years, the number of these nurseries has declined, and across the eight nurseries that we are discussing, which are run by the private nursery provider, Bright Horizons, there has been a decline in both the take-up of places overall and in the proportion of places used by HMRC staff—I shall return to that point later. In fact, across all eight nurseries, only just over one third of places are currently taken up by HMRC employees. I recognise, however, that this was not the case in East Kilbride and Cardiff, where more than half the spaces were taken up by the children of HMRC staff, as was also the case with the Nottingham site.

HMRC made an operational decision, however, to end and not re-tender the contract for these nurseries, for perfectly understandable reasons. First, in line with Government objectives, HMRC’s estates strategy is to reduce the size of its footprint and either to hand back unwanted space to its landlord or to make more productive use of the estate that it retains.

[Mr McCann]

Will the Minister explain why it is Government policy to waste taxpayers’ money by giving up space that they would then have to continue to pay rent on and leaving custom-built nurseries lying empty when they can be utilised by staff?

[Mr Gauke]

The hon. Gentleman rightly said that we had a meeting about this matter; indeed, Lin Homer was present for that meeting. He should therefore be aware that Lin Homer repeatedly said that it was possible that the site in East Kilbride could be used for other purposes before 2015.

[Mr McCann]

That is not true.

[Mr Gauke]

That is what the hon. Gentleman was told repeatedly in that meeting, but if he is accusing me of saying an untruth or saying that Lin Homer did not say that, I would be grateful to hear it.

[Mr McCann]

I will be absolutely clear: I have given the Minister evidence that I have been given completely misleading information by civil servants in HMRC that was not true from day one. I am further saying to him that the space in East Kilbride will be empty until 2015. That was confirmed to me in a telephone conversation by the chief executive, Lin Homer, on 21 September.

[Mr Gauke]

We are talking about a somewhat hypothetical situation because, as the hon. Gentleman well knows, the site will remain used as a nursery. However, I have to tell him that Lin Homer corrected him on a number of occasions in the meeting we had. She did not say that the site was not going to be used until 2015; what she said was that there were no immediate plans for reuse, although she was not ruling out reuse of the site before 2015, which is a fairly substantial distinction. That is what the hon. Gentleman was told. If he did not understand it, that is regrettable, but that is what he was told repeatedly in that meeting.

To continue, in the 18 months to October 2012, HMRC closed 140 buildings and rationalised a further 44. That has resulted in nearly £47 million of savings annually and reduced HMRC’s estate by around 193,000 square metres—about 16% of its total estate over that period. The spaces left when the nurseries close will be used for HMRC’s core purpose. Retaining space for on-site nurseries simply does not fit into that strategy.

Secondly, given the low nursery occupancy by HMRC staff, the justification for HMRC retaining the eight nurseries is no longer as strong as it was. That is particularly true now that HMRC, like other public sector employers, provides child care vouchers to all eligible staff, which they can use to pay for child care in any nursery they choose. The vouchers cover staff in more than 300 HMRC offices, which is far more than the eight affected by the closure of the nurseries. In making the decision not to re-tender the contract with Bright Horizons, HMRC researched the local areas and was confident that other nurseries had spaces at prices comparable to, and often lower than, those for the places in the Bright Horizons nurseries.

Thirdly, and most importantly in my view, HMRC was providing space to the private sector nursery provider free of both rent and utility bills. I do not believe it is sustainable for a Department, in effect, to provide a direct subsidy to a profitable private company. During these times of austerity, public bodies have a duty to make more productive use of the resources that they are paying for. I believe that HMRC’s decision was the right and responsible one, but I also think it could have gone about it better.

We have heard the criticism that HMRC did not provide sufficient notice to parents. I agree that more notice would have been preferable, but HMRC was honouring the contract between the estates provider and Bright Horizons, and the contracts between Bright Horizons and the parents, which were for three months’ notice. HMRC, in effect, gave Bright Horizons six months’ warning that the contract would end in November 2012, but Bright Horizons chose not to tell parents earlier than the three months’ notice provided for in their contracts. HMRC could have told its own parents earlier, but it might then have been liable for compensation claims from Bright Horizons.

The hon. Member for East Kilbride, Strathaven and Lesmahagow has made public statements to the effect that HMRC deliberately gave short notice in order to curtail debate. That allegation is inaccurate and unfair. HMRC was, as hon. Members would expect of a public body, seeking to honour the terms of legal contracts. It is also important to observe that Bright Horizons was given time to seek alternative accommodation for its nurseries, but that it made a commercial decision not to relocate and instead to close these eight nurseries. That was not HMRC’s decision: it was down to Bright Horizons. However, it is perfectly understandable, bearing in mind that it would have needed to pay market rent for other properties and that the take-up of places was, I understand, declining.

We have heard questions about why HMRC did not extend the contracts for another year or two, or at least extend contracts in the nurseries with high HMRC occupancy. This was a single contract for all eight nurseries, so it was not possible, within the contract, to extend any individual nursery alone. It was a question of all or none. Also, at the time that the decision was taken, HMRC honestly believed that the contract could not be extended. This was not a contract directly with HMRC, but one between Bright Horizons and HMRC’s landlord, Mapeley. HMRC was not party to all the details. In fact, it later transpired that HMRC’s original belief was incorrect, and that the contract could have been extended by another year for all eight nurseries. But, in any event, at no point did Bright Horizons ask for an extension to the contract, when HMRC opened discussions with it in May 2012.

It is highly regrettable that HMRC did not have all the correct information, but that does not alter the reasons for it wanting to end the on-site nursery provision. Nor does it mean, as the hon. Member for East Kilbride, Strathaven and Lesmahagow has alleged, that a senior HMRC official deliberately misled him. I simply do not see any evidence to support that allegation.

[Mr McCann]

Time is evaporating fast, and I do not want the Minister to finish without having time to answer my direct questions. However, on the point that he has just made, I was provided with reasons on 5 September by Mike Falvey, the chief people officer, yet when I spoke to Lin Homer on 21 September, a completely different reason was given. Can the Minister explain that? Will he also answer the two questions that I put to him in my speech?

[Mr Gauke]

Let me make as much progress as possible. I believe that the letter that the hon. Gentleman received in early September was based on a genuine understanding by HMRC of what the situation was. It related to a contract between Mapeley and Bright Horizons. In his subsequent conversation with the chief executive of HMRC, however, she set out more fully the context and the reasons for making the decision.

I want to turn to the hon. Gentleman’s suggestion that HMRC cannot reuse the nursery space for any other purpose. That is simply not correct. What HMRC cannot and should not do is commit, long term, to giving part of its estate over to nursery provision when it needs the flexibility to use that estate for its core purpose, and when it cannot do that, to negotiate giving it back to its landlord.

Things have moved on since this Adjournment debate was granted, and I think that HMRC has reached a better outcome. It has shown itself to be responsive to staff concerns and to the representations from the hon. Member for East Kilbride, Strathaven and Lesmahagow and my hon. Friend the Member for Cardiff North. When staff asked HMRC to consider transitional support, it swiftly put a package of such support in place, including some short-term financial relief for parents facing higher nursery costs and flexible working arrangements to allow parents to search for and settle their children into a new nursery.

HMRC also reopened discussions with Bright Horizons and asked it to consider whether it would enter into a different commercial arrangement at the three nurseries at which HMRC staff accounted for at least half of nursery places, under new contracts. I am pleased that Bright Horizons has agreed to a new and separate temporary lease in East Kilbride and in Cardiff, but it has made it clear that it does not see a commercial case for the third site, in Nottingham. The new lease for East Kilbride and Cardiff will run until August 2015, at which point Bright Horizons would need to relocate the nurseries if it wished to continue. HMRC will not end the lease before that time, although Bright Horizons will be able to close or relocate the nurseries at any point before August 2015, provided that it gives HMRC four months’ notice. That is more than the customary three months’ notice.

I know that this arrangement does not cover all the sites affected, but I believe that it is a sensible outcome. It provides a reasonable package of support for parents affected at all eight nursery sites, and two and a half years’ more nursery provision at Cardiff and East Kilbride. The long-term outcome is the same—

Amendment of the Law

Michael McCann Excerpts

Monday 26th March 2012 Commons Chamber

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

I am very grateful for this chance to speak, Mr Deputy Speaker, as I was beginning to lose the power in my legs from sitting for so long.

I get the feeling that a collective amnesia is setting in on the Government side of the Chamber. I thought that after the weekend the realisation would have sunk in that the Chancellor’s Budget took twice as much from pensioners as it did from the rich, but apparently it has not. As a result of the Budget, 4 million pensioners will face a real cut in their income. The rebuttal line I heard yesterday on television programmes from Tory central office was that there is no need to worry because a record increase in pensions is coming along. That piece of spin fails dramatically, however, when one considers that the rise is driven by high inflation. That is why the £5.30 increase will be introduced. That cancels out the benefit and leaves us with 4 million pensioners facing a cut in their income and paying for the cut in the 50p tax rate.

The most difficult part about the Budget is the Chancellor’s lack of humility and stubborn refusal to accept that his economic policy is just plain wrong. The Chief Secretary to the Treasury is here, so I hope that he can take this message back. If we look back at the figures in the March 2011 Budget, we see that the Chancellor said he was going to borrow £146 billion that year and forecast borrowing levels for the next six years. In this Budget he revealed that he is going to borrow £126 billion this year and again put forward his forecast for how much would be needed. All those forecasts were upgraded, which leads us to a situation in which this Government are going to borrow a further £150 billion-plus to feed their economic policies. If that is the Tories’ idea of clearing up a mess, I would not like to see them mucking things up. I must tell hon. Members that in the first draft of this speech the language was slightly different.

The situation brings to mind Winston Churchill’s words, which are particularly appropriate. He said that a politician needs

“the ability to foretell what is going to happen tomorrow, next week, next month and next year. And to have the ability afterwards to explain why it didn’t happen.”

Our Chancellor cannot even do that. Last week, he had the brass neck—a Scottish coalfield term—to boast that this year’s borrowing would be £126 billion and would be £1 billion lower than the forecast in autumn 2011. What he failed to tell us was that on the original Budget figures it was £4 billion more than he originally thought he was going to have to borrow. The Tory Budget is a straitjacket for a flawed economic policy. Unemployment is up, borrowing is up and growth is down. We have only to look across the pond to see a different economic model working. The United States of America has taken a different approach to its economic problems and is succeeding with more than double the growth that we expect to see this year.

I am doing a lot of pruning here to keep within the four minutes, Mr Deputy Speaker, but let me finish with what will be my abiding memory of last week’s Budget—the sight of Liberal Democrats cheering wildly at the Chancellor’s tax cuts. A few weeks ago they sat with their heads bowed and then walked through the Lobby to vote through a Welfare Reform Bill that contained cuts in benefits to cancer patients. They must be very proud. In the words of the American actor, writer and comedian Albert Brooks,

“It is better to be known by six people for something you’re proud of than to be known by 60 million for something you’re not.”

For that reason, I will be voting against the Budget tonight.

Banking (Responsibility and Reform)

Michael McCann Excerpts

Tuesday 7th February 2012 Commons Chamber

[Mr Hoban]

My hon. Friend makes a very important point. For too long businesses have been dependent on banks for their finance. We need to broaden the range of sources of finance that is available to business. This model works well elsewhere in the world. There has clearly been a market failure here, and our business finance partnership is aimed at tackling that failure. There are people out there who are willing to bring forward ideas to enable more investment to go into small and medium-sized businesses.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

While we think about how to address these problems and encourage alternative forms of finance in the future, what will we do about the small businesses that are going bust now because they are not getting access to finance and do not have the time to go through what is a bureaucratic appeals process?

[Mr Hoban]

The challenge is to ensure that banks are ready to lend and have the resources to do so. Project Merlin has delivered that. It is a more ambitious programme of ensuring the flow of credit to the economy than the previous Government tried or the current Opposition have even thought about.

The credit easing schemes we have proposed are supported by businesses throughout the country, as well as by the CBI, the British Chambers of Commerce and the Federation of Small Businesses. These schemes, coupled with our reforms to the financial sector, will ensure that the UK banking sector continues to provide the fuel for a private sector recovery.

After the excesses of the last decade, it is clear that we can build a sustainable financial sector and a sound economy only by reforming the regulation and structure of banks. Yesterday the House held the Second Reading debate on the Financial Services Bill, at which the shadow Chancellor, the right hon. Member for Morley and Outwood (Ed Balls), found himself in the awkward position of being forced to defend the failed tripartite system of regulation that he designed. He did not strike the same contrite note that the shadow Business Secretary has struck today. The Bill debated last night abandons the dysfunctional tripartite system and returns micro and macro-prudential regulation to the Bank of England, making the Bank the single point of accountability for financial stability. It also creates a new and strong conduct regulator to promote competition and protect consumers. Through these changes, along with the Basel reforms, living wills and new resolution regimes, and the reforms to the structure of banking from the Vickers report, we are remedying what the Chancellor called

“the biggest failure of economic management and banking regulation in our country’s history.”—[Official Report, 6 February 2012; Vol. 540, c. 43.]

That failure was, of course, presided over by the Labour party.

We need to build a foundation for the sustainable flow of lending to households and businesses across the country, and we must take a lead in building a financial sector that is based on the principles of responsibility, prudence and sustainability. In fulfilling that commitment, we must act on bank remuneration in order to tackle excessive and irresponsible levels of pay.

--- Later in debate ---

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

I rise to support the motion. I will begin with the obvious point, which my hon. Friend the Member for Streatham (Mr Umunna) also made, that however poorly some of our banks behaved, they are an essential part of our infrastructure and will be an essential driver of ensuring that our economy improves. The question, however, is whether we relied on them too much, which has to be answered with a resounding yes. When the crash came, we not only had to bail out some of the banks that had become too large to fail but lost a huge percentage of our revenue.

A wry smile comes across my face when I see Government Members’ crocodile tears for manufacturing industries, because I remember the period from 1979 to 1997, when I was a young man, when a lot of them were responsible for the demise of manufacturing. That ensured that my late father lost his job in heavy engineering and never got back into it.

Although RBS has become a byword for profligacy, we have to recognise that other banks, such as Barclays, did not request or need a bail-out. We know that we live in difficult times, but today the National Australia bank announced a review of its Clydesdale bank and Yorkshire bank. Combined, they employ 8,500 people in this country and have two UK networks, and the NAB is to re-evaluate its UK wing. Cameron Clyne, the NAB’s chief executive, said in his statement:

“It is clear that the UK economy is likely to experience a much longer period of subdued growth with the ongoing sovereign debt crisis in the Euro-zone and the continuing austerity program by the UK government.”

Perhaps the Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk), can respond to that point later.

Government Members take great glee in complaining about what they describe as the mess that was left behind, despite the fact that we are nearly two years into their time in government and even though the urgent action that we in the UK took led the world. However, they should remember the saying, “What goes around comes around.” The chief executive of the NAB was actually saying that their economic policies are contributing to the problems that it is facing, because the Government are concentrating on austerity measures, not the growth of the economy. I hope that the Minister will respond to that point instead of jumping over it as the Minister did.

Although I recognise that the banks make a significant contribution to our economy, their reward structure and behaviour have been brought into sharp focus in the past four years. Based on the experience of businesses in my constituency, banks went from a Viv Nicholson “Spend, spend, spend” policy on lending to a Steptoe and Son penny-pinching policy. The businesses in my constituency with which I have been involved tell me that RBS wants to charge them exorbitant interest rates for safe, copper-bottomed business deals and has put itself first instead of looking after small and medium-sized enterprises.

Most outrageously—Ministers should take note of this—RBS stands accused of deliberately putting in place conditions to put businesses out of business, so that it can reclaim their assets at the cheapest price possible. That is an outrageous way for a bank to do business when the economy is in such difficulty. We need to ensure that we keep people in employment so that they can contribute to the wider good.

The remuneration situation is even more bizarre. When my colleagues were speaking earlier, I heard some chuntering among Government Members about the fact that business people who get large bonuses pay their taxes. There are many millions of our constituents who also pay their taxes, and I bet they wish they were getting the remuneration packages that are being given out in RBS.

As a former trade union official, I have negotiated more pay deals than I care to remember. In the civil service, in the early days of performance-related pay, the reward structure was changed from plain salary to salary plus a performance-related element. Irrespective of which bargaining unit I was dealing with, I always asked how performance would be defined and what an individual would have to do to get that additional payment. In 26 years as a lay and then full-time trade union officer, I never got a straight answer to that question. A job is a job, and someone is paid a salary to do it, but in response to that question I was given platitudes such as “We’ll give it to someone who puts in an effort above and beyond the norm”, and “We’ll reward exceptional performance.” However, when we tried to dig a little deeper into what those words meant, answer came there none.

We have to remind ourselves that the salary package that people such as Stephen Hester get is pretty significant in the first place. We therefore need to know the definition of exceptional work that brings a bonus. That needs to be clearly outlined and transparent.

[David Mowat]

I am a little bit puzzled by the hon. Gentleman’s argument and that of the Labour Front Benchers on bankers’ bonuses and salaries. Are they against bankers’ salaries only, or all very high salaries? He mentioned Stephen Hester, but Carlos Tevez earns five times as much. Why is the Labour party not honest enough to say that it wants higher taxes instead of just focusing on bankers?

[Mr McCann]

The crucial point that has come through in this debate is that RBS is owned by the public. Up until last week, when Stephen Hester did the right thing and announced that he was not going to accept the bonus, Government Members remained silent. Ministers said that it was up to him, if my memory serves me correctly—if the Minister wants to intervene, I will be happy to allow him to do so. The Prime Minister said that it was up to Stephen Hester. In relation to Carlos Tevez, I am not a Manchester City fan, so I will leave that issue alone. I have enough problems with Glasgow Celtic football club without worrying about Manchester City.

[David Mowat]

The hon. Gentleman seems to make a distinction between entities that are state-owned and those that are not. Is he therefore saying that if Hester worked for a non-state-owned entity, the hon. Gentleman would be quite happy with his bonus package? That seems to be the implication of his answer.

[Mr McCann]

There must be responsibility across every business, whether it is private or public. I am not a communist—the hon. Gentleman will be delighted to know that. I do not suggest that we move to the Cuban model and are all paid the same for doing different jobs, as I recognise that people have different contributions to make and should be paid different salaries for doing so. Often, examples that go to the extreme, such as those about footballers, and that go into other systems of capitalism in the country in which they work do not take the debate much further forward. My analogy is between the civil service and the Royal Bank of Scotland, as the civil service is in the public sector as is the Royal Bank of Scotland, because we own the largest share in it. The difficulty we had in defining performance-related pay in the civil service reads across, it strikes me, to the difficulty we have in defining performance-related pay in the Royal Bank of Scotland.

[Ben Gummer (Ipswich) (Con)]

Will the hon. Gentleman give way?

[Mr McCann]

I think I have been generous enough in giving way, and other Members want to speak.

On bankers’ bonuses, it appears that when the behaviour being rewarded is non-productive—the Royal Bank of Scotland and other banks have not met their Merlin targets and, in each of the past 12 months, they have not met their targets for lending to SMEs—it is surely a case of the emperor’s new clothes. Bankers’ bonuses cannot be based on an opaque set of rules. They are a travesty, a charade and the practice should be outlawed not only in RBS but in other organisations that cannot properly define a performance-related pay system. The era of these unacceptable bankers’ bonuses must come to an end, as we need a direct relationship between reward and performance. Most importantly, the Royal Bank of Scotland has an economic duty to lend to small and medium-sized enterprises to ensure that the economy of our country starts to improve. On that note, I commend the motion and I will support it tonight.

Banking Commission Report

Michael McCann Excerpts

Monday 19th December 2011 Commons Chamber

[Mr Osborne]

I do not think that it will discourage corporate lending, nor do I think that it will make the UK any less attractive as a location for the headquarters of global banks. We addressed that issue explicitly in our response. Because the principal proposals and additional national requirements are directed at UK retail banking, I do not think that it will change people’s view of the UK as an attractive place to locate their financial services, whether it be in the City of London or elsewhere.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

I welcome the Chancellor’s conversion on bank regulation. I remind him that there are more bankers and former bankers behind him than there are behind me. [Interruption.] I mean on all the Benches behind me. Why can he not bring forward the 2019 timetable? That is what my constituents want to know.

[Mr Osborne]

The 2019 timetable was recommended by John Vickers in the report. People should be clear that that is the backstop. That is the final day when everything has to be implemented. In particular, if the additional capital requirements were implemented today, it might have an impact on the economy that we would not want to see. The ring-fencing legislation will be in place by the end of the Parliament and banks will be expected to comply with it as soon as is practically possible. The competition requirements will be in place by 2013. When it comes to jibes about who is working in the financial services, I seem to remember that a number of former Labour Prime Ministers are now quite lucratively paid in the financial services.

Fuel Prices

Michael McCann Excerpts

Tuesday 15th November 2011 Commons Chamber

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

I, too, welcome this debate, which gives Members the opportunity to discuss an issue that is close to our constituents’ pockets. Like many others, my constituency is a mixture of the urban and the rural, and everyone is feeling the pressure at the pumps. Today’s motion was necessary to create the opportunity for this debate, but sadly it omits some crucial aspects. I am disappointed that the amendment in the name of my hon. Friend the Member for St Helens North (Mr Watts) was not selected, because it would have filled the debate with all the pertinent issues that we need to discuss.

During the speech by the hon. Member for Harlow (Robert Halfon), his bipartisan mask slipped as he made certain political points about the motion. My constituents want to know how the Government plan to tackle the high cost of fuel now. They also want to hear the longer-term plan to enable the country to become less dependent on petrol and diesel. The hon. Gentleman purports to be a champion of the consumer’s cause, but although this debate partly covers the issue, important facts have been left out and the bigger story remains untold.

John Peel said:

“I never make stupid mistakes. Only very, very clever ones.”

I wonder whether the hon. Gentleman has indulged in John Peel’s rhetoric in the motion. It contains faint praise for the Government’s austerity programme, yet that programme is a significant part of the problem, rather than part of the solution, because it goes too far and too fast. Also, there is no mention whatever of the whopping 20p a gallon on the price of fuel following the latest VAT rise.

[Gareth Johnson (Dartford) (Con)]

Is the hon. Gentleman aware that the Labour Government increased the cost of petrol no fewer than 12 times? We would not be having this debate if that had not happened.

[Mr McCann]

I am grateful to the hon. Gentleman for giving me an additional minute. I remind him that it was a Conservative Government who introduced the fuel duty escalator.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

On that point, I was looking at the AA website this morning and comparing unleaded fuel prices in my region of the north between May 2006 and May 2010. Over that four-year period, the price increased by 24.2p, yet in just one year between May 2010 and May 2011, we have seen a 16p jump. That is two thirds of the increase that we saw under four years of a Labour Government.

[Mr McCann]

That gives us the real picture. I shall say more about that in a moment.

My constituents know that the price of oil is linked to the complexities of production, of exchange rates and of international stability, and that interference in one or more of those factors can cause prices to spiral out of control. They lose comprehension, however, when they see little evidence of price reductions when those factors are reversed. I remember well that in 2008 the price of oil was $147 a barrel and the price of unleaded in my town was £1.15. Yesterday, the price of oil was $114 a barrel, and the price of petrol £1.35.

[Mr Watts]

Will my hon. Friend give way?

[Mr McCann]

I have already taken a couple of interventions. If my hon. Friend does not mind, I want to allow a couple of other Members to get in.

We need some answers from the Minister to explain the phenomenon that I have just outlined, because the public just do not understand it. If this debate is to have any credibility, it also needs to address some other issues. I do not believe the hon. Member for Harlow’s simplistic proposal that reduced prices will bring in more income. If he believes that we need to reduce fuel duty, he must tell us where the resulting cuts would be made. Or would he advocate increasing other indirect taxation, or direct taxation, to fill the gap?

[Robert Halfon]

I thank the hon. Gentleman for giving way, and for signing the motion. As I mentioned earlier, the AA has proved that the Treasury is getting £1 billion less in revenue because of the high cost of petrol. People are unable to afford to drive their cars, and the Treasury is therefore losing money. If we cut taxes, more money will go into the Treasury.

[Mr McCann]

That is the same explanation that the hon. Gentleman offered before, but I still do not understand it. I signed the motion because it was the only way of getting an opportunity to discuss this issue, which is important for our constituents. I would have preferred that the amendment tabled by my hon. Friend the Member for St Helens North—[Interruption.] Well, the hon. Member for Harlow is going to have to tell us how he proposes to fill the gap if fuel duty is cut. And if he believes that the gap does not need to be filled and that we should be taxed less, he will have to tell us what public services would suffer as a result.

A former Member of this House was once described as a vacuum surrounded by charisma. I think we all hope that, at the end of the day, this debate will not become a vacuum surrounded by synthetic anger.

--- Later in debate ---

[Mr Walker]

My hon. Friend brilliantly pre-empts my next point. I was going to say that most business users also use diesel, which, as my hon. Friend the Member for Romsey and Southampton North (Caroline Nokes) pointed out, is an important issue. One concern I particularly wanted to raise is the fact that diesel in this country is so much more expensive than anywhere else in Europe. I am told that this is not simply a matter of taxation as the rates of fuel duty are set equally for unleaded petrol and for diesel, but of refining capacity, which the hon. Member for Ynys Môn (Albert Owen), who is no longer in his place, also mentioned. Also relevant is the fact that North sea oil has traditionally been better suited for the production of unleaded petrol than for diesel. However, it does seem extraordinary that one can drive across most of Europe seeing prices for diesel consistently lower than those for unleaded, only to arrive in this country and find that there is a 7p differential in the other direction. In fact, we are one of the few countries that treats diesel and unleaded exactly the same for tax purposes, and many others, including France and Spain, tax diesel much less than we do.

Perhaps I should declare an interest at this point as the driver of a rather battered Y-registration diesel Golf with more than 150,000 miles on the clock, but my prime interest is that diesel tends to be the fuel of choice for business users and the freight and haulage industries. Its cost and the extent of taxation on it thus have a more direct impact on our economy and on prices in the shops than does unleaded petrol. Given the importance of diesel to business and the economy, will the Minister give special consideration to steps that could be taken to encourage the closure or reversal of that price differential, whether it be directly through fuel duty or indirectly through encouraging investment in refining capacity.

Like others, including my hon. Friend the Member for Wyre Forest (Mark Garnier), I am very concerned at the wide geographical price differentials within the UK. Although many have argued that this is a matter of rural sparsity and have put the case for a rural fuel derogation, which I accept, I want to put the case for urban centres such as Worcester that find themselves paying a higher price for fuel than their neighbours or competitors.

[Mr McCann]

Is the hon. Gentleman against a free market in the fuel industry?

[Mr Walker]

I was just coming on to that, but I am very much in favour of the free market and want to encourage competition.

A glance at petrolprices.com shows the average price for diesel in Worcester yesterday was 142p compared to 139p in Cheltenham or 140p in Birmingham—two cities that it sits between. For the lowest priced unleaded, however, the differential increases from that 2p or 3p to a staggering 5p, with Worcester drivers paying 134p compared to 129p in Birmingham or Cheltenham. My constituents regularly raise concerns about that. They fear that there is insufficient competition affecting prices in Worcester. I realise that it is not the Minister’s job to set prices everywhere in the country, but I would appreciate a reassurance from her that the Government are determined to see active competition between retailers, and are doing all they can to stimulate it.

Other Members have mentioned supermarkets. I have been led to believe by constituents that Tesco and Sainsbury have changed their policies, and that rather than trying to be the lowest-price retailers of petrol in any given area, they now aim to sell at the average price for the area. Their purpose may be to prevent accusations of predatory pricing, but this is a very counter-productive way of doing that. I hope that the arrival of a new Asda store in Worcester next year will increase competition in the area.

Like many other Members, I am worried about the fact that constituents who need their cars to travel to work, and businesses in my constituency that need to use road transport, are paying too much for their fuel, and that too much of that cost consists of tax. I welcome the steps that the Government have already taken to protect our economy from the previous Government’s planned increases, the fact that fuel is 6p cheaper now than it would have been otherwise, and the Chancellor’s declaration that he wants to

“put fuel into the tank of the British economy.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]

I believe that it has never been more important to do so, and I commend the motion to the House.

--- Later in debate ---

[Sheila Gilmore (Edinburgh East) (Lab)]

Like the hon. Member for Truro and Falmouth (Sarah Newton), I want to talk about some of the issues that affect people in my constituency. I feel a little out of place in this debate: so many Members from rural constituencies have talked about either the rural idyll or the rural hell that I feel, as I represent an urban constituency, that I should perhaps not venture into the discussion. However, fuel prices do of course affect urban as well as rural areas.

I wish to develop points about issues such as community transport, which is essential for a lot of elderly people to be able get to activities such as lunch clubs, and to get out of their own homes instead of being housebound. The local organisation in my area is struggling because of the reductions in grants, which are a result of local government cuts. Its core funding, which allows it to be run and administered, has been cut, and at the same time fuel prices are increasing. If it increased its charges to the organisations that use it, that would just bounce the problem on to another set of voluntary organisations—the ones that provide lunch clubs and other activities.

[Mr McCann]

Does my hon. Friend accept that as well as the austerity cuts in the United Kingdom Parliament, with the Government going too far, too fast, which is having a disproportionate effect, the Scottish National party Administration in Scotland are making unsustainable spending decisions? They are placing the burden on local government, which in turn has to make tough decisions about local spending.

--- Later in debate ---

[Nigel Mills (Amber Valley) (Con)]

I congratulate my hon. Friend the Member for Harlow (Robert Halfon) on his tireless campaigning to secure this debate. I think it was back in February that I last spoke in a debate on fuel prices. Indeed, it should be a tradition that we debate fuel prices two or three weeks before every Budget or the autumn statement. The last debate was a great success, because shortly afterwards the Government scrapped the 5p rise and introduced a 1p cut. We hope that our new Minister will follow that trend and that the next 3p rise will be scrapped, with perhaps even a small cut made to encourage people.

The price of fuel is one of the topics we debate where so many of our constituents feel the pain personally, either as individuals or in the businesses they run.

[Mr McCann]

It is nice of the hon. Gentleman to give way, because he will remember that I followed him when he made his maiden speech in the House. Does he think that his constituents are feeling the pinch of the increase in fuel prices attributed to the VAT increase that his Conservative and Liberal Democrat coalition introduced?

[Nigel Mills]

I am tempted to say that I will give way again to the hon. Gentleman if he will tell us whether he voted against the VAT rise. We have heard a great deal of concern expressed today about the VAT rise, but it is surprising that those feelings are so strong, given that most Members did not vote against it. We have often said that we had to introduce that increase in part to fix the mess that Labour left for us. If the hon. Gentleman wants to take away that £12 billion or £13 billion of tax revenue, he will have to find a way of replacing it. I shall return to the question of fuel prices before I run out of time.

The point has been well made that this issue is all-pervasive, in that fuel costs affect everything that we buy. Today the headlines are telling us that inflation has fallen to 5%. Who on earth would have thought that we would be reading such headlines? The last thing that the Government want to do is put up fuel prices, which would affect everything that we buy, thereby pushing up inflation again.

Crown Currency Exchange

Michael McCann Excerpts

Tuesday 7th December 2010 Commons Chamber

[Tessa Munt (Wells) (LD)]

Thank you, Mr. Speaker. I particularly thank the Minister for attending this evening to reply to this debate on the failure of Crown Currency Exchange. This is a matter that particularly concerns my constituents, Nick and Larissa Fry from Axbridge, and I also speak on behalf of a retired bank manager from Holcombe in the neighbouring constituency of the Deputy Leader of the House, my hon. Friend the Member for Somerton and Frome (Mr Heath).

The problem as far as I understand it is that companies such as Crown Currency Exchange are registered with the Financial Services Authority, but the legislation governing its activities looks at the size of the company, not at what it is doing. Crown Currency Exchange appears to have been behaving a bit like a high street bank or foreign currency exchange, and was registered as a small payments institution. As I understand it, it was meant to operate under an average of €3 million a month, but it appears from the administrator’s report that for the last 10 months the trading average was at about €10 million a month.

The legislation appears to exclude 547 small payments institutions in particular, from all of the many thousands of companies that are registered with the FSA. I want particularly to draw the House’s attention to the FSA website, which states that the FSA’s general duties

“in so far as reasonably possible”

are that it should provide

“market confidence, public awareness, protection of consumers and a reduction of financial crime.”

It appears that in this particular case it has failed on all four counts. The FSA also says that it is

“the regulator of all providers of financial services in the UK”,

and for that reason alone it is within certainly a retired bank manager’s understanding, my original understanding and the understanding of most people that these companies are in some way controlled by the FSA.

Crown Currency Exchange displayed on its website, besides the FSA logo, that of Her Majesty’s Revenue and Customs, which was clearly for money-laundering purposes. People are therefore entitled to feel that there should have been some sort of cover for the activities that that company undertook.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

A number of my constituents who have been involved with CCE have also contacted me. Is it not equally despicable that the company sought to suggest that the lucrative exchange rates for the US dollar that it was actively advertising were the result of orders that had been cancelled, which allowed it to offer these fabulous terms, when in actual fact it had no currency, and it simply wanted to bring cash flow in to continue trading? Is that not a major concern that should have been picked up by the FSA?

[Tessa Munt]

That is quite correct. It certainly seems that on several occasions a number of people brought these problems to the attention of the FSA. One of whom was Robin Haynes, the managing director of Currency Index Ltd. He raised concerns about Crown Currency Exchange with the FSA in March 2009 and September 2010. He raised his concerns with HMRC in September 2010 and with Barclays, Crown Currency Exchange’s bankers, in May 2009. None of those appears to have been acted on.

There is also the case of a whistleblower who reported his concerns to the companies investigations branch of the Insolvency Service on 20 August 2009, but again nothing appeared to happen. It seems that none of those bodies is able to investigate a company until it has done something completely awful to its customers.

Autumn Forecast

Michael McCann Excerpts

Monday 29th November 2010 Commons Chamber

[Mr Osborne]

We are looking at two specific things. One is the controlled foreign companies regime. This is what we believe will help encourage large multinationals to choose the UK as a place to put their headquarters, rather than in Holland or Belgium, for example, where some companies have chosen to go. In a world in which companies can increasingly choose where to locate and countries are being aggressive in trying to attract their location, these tax measures will make us one of the most competitive places in the world for a company to locate its headquarters. On the patent box and the lower corporation tax rate for intellectual property, of course the GSK announcement is just one of many, I hope, from companies that depend on intellectual property and patents to power their business. Again, that will make us very competitive versus other countries.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

The OBR confirmed today that we will borrow £1 billion less. Last week, we decided to make a £7 billion loan to the Republic of Ireland, yet apparently we could not afford to make an £80 million loan to Sheffield Forgemasters. Is that not proof, if any were required, that the Chancellor has deliberately talked down the British economy and, more importantly, that these policies are damaging the British economy?

[Mr Osborne]

I think that is one that was prepared earlier. UK growth is forecast to be higher than that of Germany, France, many other European countries or the United States of America. It is also the case that the OBR is forecasting the creation of a million jobs. When it comes to the sovereign loan to Ireland, that is of a totally different nature from industrial support. It will be set out in the terms that I bring before the House of Commons. It is £3.25 billion, rather than the number that the hon. Gentleman gave.