(13 years, 8 months ago)
Commons ChamberThe debate might be in danger of becoming a love-in. [Interruption.] Thank you very much. The hon. Member for Devizes (Claire Perry) was making an open-arms gesture, but I do not know whether I want to go down that route. If détente breaks out, I for one will be delighted. I have been contacted by a number of individuals and groups who have significant concerns about the impact of the retail distribution review.
The review purports to set new parameters for this important sector of our economy, and regulation is at its heart. The chief executive of the Financial Services Authority characterised the review under three main headings, which the hon. Member for Wyre Forest (Mark Garnier) set out—the need for a transparent and fair charging system, greater clarity on the type of advice offered, and a better qualification framework for advisers. I have no quarrel with the first two points. We may differ a little about the content.
It is right that IFAs must disclose their charging structures to clients up front and in writing, so that the client has the information in good time, before the advice process starts. It is right that the IFA must also agree and disclose the total charges that the client will incur as soon as those are known. It is right that, from 1 January 2013, IFAs will be able to make an ongoing charge only where they provide an ongoing service. It is also right that from 1 January 2013, product providers will no longer be able to offer commission on their products, and advisers will no longer be able to receive commission set by product providers. That is just hiding the charges within the commission. The major concern on which I think all participants in the debate agree, however, is the concern of constituents who have contacted me regarding the so-called better qualifications for those who work in the market.
One should not automatically be afraid of higher qualifications for individuals who work in this important sector, but the quality of the debate has not been helped by the tactless, ill-informed and unwise comments of the Financial Secretary to the Treasury, who caused great anger among IFAs during a debate in Westminster Hall, when he compared the current level 3 minimum qualification for advisers to that of a McDonald’s shift worker.
Does the hon. Gentleman agree that, by focusing so narrowly on qualifications, we miss one of the most important things in any investment industry—experience and a track record? By narrowly defining what we think of as the appropriate qualifications, we completely ignore the experience that many IFAs bring to their positions. They will be forced out by such regulation.
I agree entirely, and I shall address that point a little later. It is why my constituents and I were so angered by the comparison of the current level 3 minimum qualification to that of a McDonald’s shift worker. It is, indeed, an insult to the many of thousands of people who work for that company—a company whose products, looking around the Chamber this evening, I am sure a few people have sampled.
The hon. Gentleman is concerned about the QCF—qualifications and credit framework—level 4 qualification, but is he not concerned also about the impact of the measure on the need for continuing professional development outlined in the RDR, and the fact that it is likely to disadvantage small operators who will not be able to rely on the critical mass of a large organisation when taking time off—probably about a week every year—to conduct CPD?
I agree entirely. The measure will impact on small businesses, not the big part of the sector, and that is why the Financial Secretary should have been mindful of the commitments people have to make to gain qualifications in the sector. One IFA, in particular, heard the Minister’s comments and blogged:
“I’ve just spent 70 hours revision to pass RO1. Nobody has paid me for my lost time. Nobody has asked me 1 of the 100 questions in the exam for the last 22 years. This guy”—
the Financial Secretary—
“needs to get in the real world.”
That leads me to my main contention: the proposals and timetable to increase the qualifications needed to participate in this sector of the economy are not sensible. Exams and qualifications in the sector are not new, but the proposal to introduce new rules that effectively force people to re-sit exams without taking account of their experience or, most importantly, clean regulatory record is patently unfair. Moreover, the sector will not be able to absorb the cost of revalidation; instead, as other contributors have said, it will be passed on to the customer in the shape of higher fees.
Others have also mentioned that many professional groups in the United Kingdom are not asked to revalidate, so I seriously wonder why we are trying to isolate this particular sector. Why, as other hon. Members have asked, do we want to take away that valuable experience from that important part of the economy?
Our time is limited, and there is a limit of six minutes on each contribution, but I too want to mention one individual who has contacted me in the lead-up to the debate. He is an old friend of mine, a next-door neighbour, and it is important that we bring our experiences to the House when we discuss such issues. Jim Hunter sells financial products, and he contacted me, but he did not complain about the need for transparency, fairness or greater clarity. In fact, having done business with Jim, I know that he had all those ingredients many years ago. Indeed, I am sure that many people who have contacted hon. Members are in exactly the same boat.
Jim was talking to a colleague recently at a meeting. The gentleman is 60 years old, with more than 30 years’ experience in the industry, and if he sat the proposed exams he would be 63 before he finished them. Jim explained that that person would be lost to the industry and have to retire before his time, because he would not study at that time of his life. There are many people like that, trying to make a living for themselves in difficult times, and that ability to earn a living in this important part of our economy will effectively be taken away from them without any real benefit to the economy itself.
Does the hon. Gentleman agree that, although the RDR was introduced with every good intention, further work should be suspended until there has been a full cost-benefit analysis of its impact on the IFA community and, indeed, on consumers?
I do not think that that point is unreasonable at all, and it could be taken on board.
One point has not been mentioned in the debate, but it is an important one to make in the last minute of my speech. The final thing that my constituent said to me is that many IFAs work on trust. That trust takes a long time to build up with individuals. If you take that experience out of the sector, the trust will go. People will be uncomfortable about going to new IFAs because they will have to rebuild the trust all over again. We should be mindful of that.
The RDR is an important piece of work and it is important that we get it right. For that reason, I urge the Minister and members of the Select Committee to take the comments away, recognise the need for common sense to prevail and work with the industry to come to a common-sense solution.
(13 years, 9 months ago)
Commons ChamberMy hon. Friend makes an important point and the FSA’s mortgage market review is seeking to learn some of the lessons from how the mortgage market was regulated before the financial crisis and some of the problems that that regulation created. What I think is important is that the FSA should consider very carefully the impact on home ownership and particularly on those people who are looking to move shortly.
T8. May I give those on the Treasury Front Bench the opportunity to answer the question on child benefit that they failed to answer earlier? How do they justify taking child benefit off a single-earning family on £45,000 and allowing a family that earns £80,000 to retain child benefit? An answer this time would be appreciated.
As the hon. Gentleman knows—and as the whole House knows—the justification for the measure that we took was to ensure that the cost of the spending review fell equally across the population so that those with the broadest shoulders would bear a greater share of the burden. In those circumstances, it is right that child benefit should be taken away from families with higher rate taxpayers. I would have thought that the Opposition would support that, not oppose it.
(13 years, 10 months ago)
Commons ChamberI think that I would get myself into a lot of legal hot water if I were to do that, but let me make a couple of observations. First, all involved in planning decisions, whether at local, area or national level, should take into account the need for the economic investment that the British economy must have over the coming years and give that due consideration. Secondly, we have found additional money for offshore wind technology investment, including manufacturing at port sites, which was one of the issues the trade unions raised with me as a particular priority. Finally, both my hon. Friend and our hon. Friend the Member for Beverley and Holderness (Mr Stuart) have been very persistent in asking for a Treasury review of the Humber bridge tolls—in which no doubt the shadow Chancellor takes an interest, too—and there will be a Treasury-led review of the tolls, but I am not going to prejudge its outcome.
The Department for International Development operates within my constituency, and many people will welcome today’s commitment by the Government to spend 0.7% of GDP on international development. However, can the Chancellor tell me how much of that budget will be assigned to works previously delivered and paid for by other Government Departments, agencies and non-departmental public bodies?
There is a very substantial increase, of about 37%, in DFID’s budget. There are parts of international development work that the Foreign and Commonwealth Office carries out too—conflict stabilisation and the like. It is, of course, perfectly within the rules set on the UN commitment, which are internationally policed and so we cannot fudge them, and perfectly reasonable to count that expenditure towards the 0.7% target. However, the large bulk will be delivered through DFID, whose budget has a substantial increase. I suggest that it is a task for this House—all parties—to ensure that that development aid is well spent on the poorest people and on conflict prevention.
(13 years, 10 months ago)
Commons ChamberI welcome the new shadow Treasury team to their roles. Obviously, I have had experience of debating with the hon. Member for Wallasey (Ms Eagle), the new shadow Chief Secretary to the Treasury. I look forward to continuing those debates, and to debating with the new members of the team.
We have had an interesting and wide-ranging debate. I pay tribute to the maiden speech by my hon. Friend the Member for Skipton and Ripon (Julian Smith), who follows in the footsteps of a fantastic predecessor. He described a constituency that I know, and he is right to say that it is absolutely beautiful. He is very lucky to represent it, and I am sure that he will do a great job in his new role.
Let me turn to the Finance (No. 2) Bill. Obviously, its clauses have a lower profile than many of the measures announced in the emergency Budget, but they are nevertheless important for the smooth running of the tax system. That is why the previous Government were also keen to see many of the measures put on to the statute book.
Let us be clear about why we are debating the Bill in the autumn, and not earlier in the year. As we have heard from my hon. Friends the Members for Mid Norfolk (George Freeman) and for Dover (Charlie Elphicke), and from many others, when the coalition Government came to power, we faced an economic challenge of an unprecedented scale. In fact, urgent action was needed, and we responded with the emergency Budget. The shadow Chief Secretary to the Treasury and the hon. Member for Nottingham East (Chris Leslie), who responded to the debate, seem to have developed some form of amnesia when it comes to the content of the emergency Budget and why it was required. It is impossible to exaggerate the seriousness of the situation that we inherited, or the risks to Britain if we had continued on the course that they proposed. There were almost 2.5 million people unemployed; yet again, a Labour Government left office with unemployment higher than when they came in. We inherited the largest budget deficit in the G20, and a fiscal legacy that had us spending £4 for every £3 that we raised in taxation.
We had to take action to restore the credibility of the UK economy, to allow the recovery to take hold, and to ensure that future growth was sustainable and not driven by an ever-growing burden of debt. That is why we introduced a short Finance Bill in the summer—to maintain economic stability, calm market fears and put in place a credible plan to deal with the record deficit. That plan is supported by the International Monetary Fund, the OECD, the CBI, the Bank of England and countless other organisations that clearly have a greater grasp of the deep dangers that face our economy than the Labour party does.
There was an opportunity today for the Opposition to start participating in the debate on the most important challenge facing our country—how to get our economy back on track. I was interested to hear whether they have a plan, now that they have a new leader. The answer is that they do not. The debate touched briefly on the subject of tax avoidance, but the Opposition have developed a brand new form of tax avoidance. They try to avoid talking about tax and spend altogether or having any plan to deal with it.
In my constituency over the past 13 years 17 new high schools and more than 50 new primary schools have been built. Does the hon. Lady condemn that investment?
The hon. Gentleman should direct his question at his colleagues, who had planned the capital cuts that he no doubt hates so much. If he comes and looks at other schools, he will see that his Government left schools such as my own Elliott school in Putney in an appalling state. I do not think he has an answer to that.
We heard a number of contributions from Opposition Members. The hon. Member for Wallasey offered no alternative to the plan set out by the Government. The hon. Member for Scunthorpe (Nic Dakin) spoke about scrapping the package that we presented in the emergency Budget to support business. We heard from the hon. Member for Wirral South (Alison McGovern), who apparently welcomed the Bill and wanted investment, but was against the cuts in corporation tax that we introduced. We heard from the hon. Members for Islwyn (Chris Evans), for Sefton Central (Bill Esterson), for Edinburgh East (Sheila Gilmore), and for Bassetlaw (John Mann) who were all against taking action to sort out the economy. At least the hon. Member for Bassetlaw acknowledged that his party has a gaping chasm in its economic policy. Until the Opposition fill that, they will have no credibility.
(14 years, 2 months ago)
Commons ChamberI have been in the Chamber since then, but I thank my hon. Friend very much for that intervention, which brings home the credibility and respect that the Government are already earning in the international capital markets.
The deepest truth is that for all their talk, the previous Government never properly addressed the fundamental drivers of economic growth. Far from it being the case that this Government lack a growth strategy, the previous Government’s strategy over the past 13 years was not sufficient to ensure decent economic growth. The four booms that I have described washed through the economy, leaving us without a world-class infrastructure or adequate broadband coverage, but with a legacy of educational underachievement, low productivity and low innovation—nothing like the energy, competitiveness and entrepreneurship that we need.
The hon. Gentleman refers to four booms, the first of which was in public investment. Does he think that the public investment that my local authority made—investment that saw new hospitals built, along with 45 new primary schools and 17 new high schools, and which was funded by the Labour Government—was wrong, when Members from his party were supporting it at the time?
I absolutely accept that a lot of that public investment was very well taken and important. I would not demur from that at all, but there is a huge difference between building buildings and building schools. It is noticeable that levels of educational achievement have not kept pace with the staggering amount of money that was spent under the previous Government. If we had paid more attention to institutions and standards, we would now have a higher quality educational sector.
The cancelled comprehensive spending review was not a thing of great honour or glory for the previous Government. It is noticeable that the Office for Budget Responsibility has downgraded its long-term growth forecasts for this country from the trend rates that we have supposedly enjoyed historically over the past 20 years. That is to say that, instead of the growth rates we should have expected—rates of 2.25%, 2.5% or perhaps even 2.75%—we are now expecting a long-term growth rate of 2.1%. That is the tangible quantification of the lack of success of the investment over the past 13 years, so let us hear no more of Labour’s growth strategy, and let us welcome this Government’s willingness—already recognised in the capital markets—to take this massive task in hand.