Economic Growth

Mike Thornton Excerpts

Wednesday 15th May 2013 Commons Chamber

[Mike Thornton (Eastleigh) (LD)]

May I say that just a few months ago I could only have dreamt that I would be able to follow such a distinguished and respected Member of the House as the hon. Member for Coventry North West (Mr Robinson)?

Hon. Members will be glad to know that I will be brief—I will also talk about something other than our coalition partner’s internal difficulties over Europe. My e-mail inbox—like, I imagine, everyone else’s—is filled with demands that we spend more on the health service, education, defence and so on. However, to be able to do so in the current budgetary situation requires the economy to grow faster than spending. Otherwise, the resultant increase in debt would act like a massive anchor on a ship, bringing the SS Great Britain to a shuddering halt and leaving it vulnerable to the international winds and tides of financial misfortune.

I want to consider five fundamental issues which I think the coalition is addressing. They are: jobs, jobs, jobs, jobs and jobs. Let me deal first with jobs in our small and medium-sized businesses. We are putting in place £2,000 for each business to help them to take on new staff. They include businesses as diverse as SPI Lasers, Oswald Bailey and La Fenice in my constituency. We are looking at helping young people to get jobs. Already, 1.2 million apprenticeships have started. In Eastleigh, that has meant a 65% increase in apprenticeships since we came to power.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

The hon. Gentleman will be aware that the unemployment figures came out today and that long-term youth unemployment is now more than double what it was when his Deputy Prime Minister introduced the Youth Contract. Does he think the Youth Contract is therefore working?

[Mike Thornton]

The Youth Contract still has a few months to go, but I think we can see that it has already been effective, and the March figures demonstrate a return to increasing employment and a reduction in unemployment. What is more, part of our work on apprenticeships is about preventing abuse of apprenticeships. We are setting out a definition of what an apprenticeship is, which will be a significant help in enabling businesses to take on more apprentices.

We have also seen an increase in jobs in manufacturing, with our continuing commitment to green energy and £5 billion of extra investment in science and high-tech. The electricity market reform alone could support as many as 250,000 jobs in that sector. Then there are jobs in the regions. I am lucky to have a very low rate of unemployment in my constituency, but a £2.6 billion investment in our regions is spurring economic growth in all our constituencies, not just mine. Finally, there are jobs through design. By making it easier for businesses to protect their designs, intellectual property rights will spur further investment in this British success story.

What do all those schemes mean? They mean more jobs, and more jobs mean a better life for millions of people, which I am sure all of us in this House would like to see. They also mean more revenue for the Government—more funds for the NHS, the disabled and our schools. What is more, the Lib Dem initiative to increase the tax allowance to £10,000—and, hopefully, onwards and upwards—means more take-home pay for every single one of those new employees. If that is what Liberal Democrats can achieve when they are in government as part of a coalition, just imagine what we could achieve with a Lib Dem majority in this place. [Laughter.] If Members want to hear, I will tell them what: a stronger economy and a fairer society, so that everyone can get on.

Finance (No. 2) Bill

Mike Thornton Excerpts

Wednesday 17th April 2013 Commons Chamber

[Chris Leslie]

As I was saying, Barclays has talked about confronting some of the necessary culture changes. It commissioned the Salz report after its involvement in the LIBOR scandal and the fines it received as a result, yet still that oil tanker of bonuses continued to float on, even in that particularly difficult year.

[Mike Thornton (Eastleigh) (LD)]

I sympathise, obviously, with the point about the overpayment of bonuses. I have three quick questions. First, how does the hon. Gentleman propose to prevent the banks from passing on the cost to their customers? Secondly, at what level of bonus would the tax start? I hope it would not affect ordinary retail staff earning their £50 bonus. And thirdly —no two will do!

[Chris Leslie]

Well, that is still more than we normally get in one intervention. You are very generous in the Chair, Mr Amess. I do not think there was any evidence of the bonus tax being passed on to customers before, because regulation can ensure constraints on how the remuneration pool works. The Bank of England itself, through the Financial Policy Committee, is now sending the strong message that banks should stop prioritising that bonus pool and level of compensation. The world has changed, and the banks have to recognise that their behaviour also has to change.

We want specifically to target the highest-paid individuals in the banks, not the clerks or ordinary staff. The tax would be aimed at large, discretionary bonuses above £25,000, which continue to be paid out even in the state-owned banking sector. RBS and NatWest paid out bonuses worth £607 million in 2012, despite making a £5 billion loss. Of course, it was the Prime Minister who promised to ensure that any state-owned bank did not pay out a bonus of more than £2,000.

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[Mike Thornton]

The hon. Gentleman is discussing banks paying this tax. Why limit it to banks? Many other organisations, such as hedge funds and insurance companies, pay very large bonuses. I understand that at one point, we perhaps needed to punish them; by why not tax extra anyone that has a bonus of £25,000 or above?

[Chris Leslie]

Perhaps the hon. Gentleman will have a chapter in the pamphlet that the hon. Member for Bristol West (Stephen Williams) is writing; we would all be interested to read it. [Interruption.] From a sedentary position, I am offered a signed copy of that pamphlet. We are all interested in political memorabilia, and it would certainly be an historic document.

We wanted to retain the 50p top rate of income tax for this year. It should not have been cut, and we think that doing so is unfair. I know—well, I think I know—that in their heart of hearts, the Liberal Democrats do not really agree with the cut, which will of course apply to those earning £150,000 or more. We have to recognise the special responsibility that banks and banking executives have to wider society, given the massive cost to the taxpayer of the banking crisis and the resulting deficit, the consequences of which many of our constituents are still suffering. We still have not got justice for what happened in 2008, which is one reason why we think it important to take this step now.

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[Alison Seabeck]

That is exactly my point. Has the Prime Minister been given duff information? If he has, that is pretty shocking. Ministers should take responsibility if that is the case.

I come back again to my point. The amendment is calling for a review, which is absolutely right. The hon. Member for Bristol West (Stephen Williams), who spoke in the previous debate, is not in his place, but I hope that this time the Liberal Democrats will not pursue the line taken by the hon. Gentleman, which was that it is unreasonable for the Treasury to carry out a review—of a mansion tax, in the context of the previous debate. He seemed to have forgotten that the Government are carrying out a review, at taxpayers’ expense, into the future of Trident. Obviously, that is basically a review for future Lib Dem policy. As I said, it is a shame that the hon. Gentleman is not here, because there was a bit of a contradiction between the two positions from the Liberal Democrats.

In Plymouth and the rest of the south-west, we are still lagging behind the rest of the country when it comes to finding the full-time jobs that young people desperately need. The number of unemployed is still higher than in 2010 and the number of long-term unemployed is growing. Although the Government keep telling us that more people are employed—the mantra has come from them again today—their figures hide the simple fact of the contrast with the position in 2008.

Then, when people were asked whether they felt they were working excessive hours, the answer came back as a resounding yes; people felt that they were working more hours than was reasonable. Now that figure is different—in large numbers, people are seeking more hours to work. It is estimated that there is a shortfall of 20 million working hours, which equates to a real unemployment figure that runs closer to 3 million. Questions have also been asked of people who work part-time and want to work full-time. The number who want to switch from part-time to full-time is 1.5 million—that is just in the three months running up to February.

There is clearly a problem. People are working part-time; indeed, some are trying to hold down two or three part-time jobs, as was evidenced during a street surgery that I held in Whitleigh a couple of weeks ago. Some people have used their redundancy money to set up as self-employed, and those figures are slightly skewing the evidence on what is happening on the ground. Some people have been transferred from the public sector to the private sector, often on reduced hours. That shift partly explains the rise in the number of jobs in the private sector; they are not new jobs but simply transferred jobs.

The tax proposal in the new clause would fund a job for every young person who had been out of work for a year or more. That number is up, year on year, by 37%. They would have to take up that job or risk losing their benefits. This is no soft touch but a serious attempt to give hope to young people and to help them get a foot on the ladder and contribute to society. Unemployment among young people is higher in this country under this coalition Government than it was at any time under Labour. The number of people claiming jobseeker’s allowance in my constituency remains above the national and regional average. Reinstating Labour’s bank bonus is therefore the right thing to do.

[Mike Thornton]

The hon. Lady seems to be saying that one of the problems is that there are no jobs in the economy while at the same time proposing a policy to find jobs for people—jobs that are presumably not there. How does she reconcile talking about finding a job for somebody with saying there are no jobs?

[Alison Seabeck]

The hon. Gentleman has completely misconstrued my remarks.

We need to invest to grow jobs. We need to grow our economy, and as we do that, there will be more jobs. People want to work, but the evidence is that the jobs are not there. People are having to work part-time, even to have multiple part-time jobs, in order to keep body and soul together. We need an economy that is growing, and we are not getting that from this Government. We need Labour’s bank bonus to invest in jobs, to tackle unemployment across the country, and to help young people.

amendment of the law

Mike Thornton Excerpts

Monday 25th March 2013 Commons Chamber

[Mr Jim Cunningham (Coventry South) (Lab)]

Listening to Government Members this evening, one would think that there was no economic situation in 2008, but in fact it started in America because of the irresponsibility of the bankers—not only in this country, but in America. It is also worth reminding the House, when the Government try to blame those on the Labour Benches, that in his last four or five weeks as President, George Bush pumped billions into the American economy, because he realised right away that the fault lay with the American banks.

I remind Members, too, of the catastrophe associated with Lehman Brothers, with Fannie Mae and Freddie Mac, for example. We need to remind the Government of those aspects because the Government were very light, to say the least, when it came to dealing with the bankers who caused the problem in the first place. What they have tried to do is to blame the previous Government for things that they never understood at the time. I remember that when we were in government, their solution to the problem was “Oh, well, we have too much red tape and we must cut it”. I do not remember any Members now on the Government Benches providing any solutions whatever at the time, yet they are pretty good at coming here and trying to blame us for a situation that their friends, the bankers, caused in the first place.

[Mike Thornton (Eastleigh) (LD)]

Under whose regulatory system did those failures take place?

[Mr Cunningham]

It was the previous Conservative Government, and that has never been acknowledged, so the hon. Gentleman should not rewrite history.

Another interesting aspect of the present economic situation is that local government has taken the brunt—33.3%—of the cuts. People talk about growth, without realising that it is only through local government that growth will happen. It is worth noting that in the west midlands, for example, unemployment is probably the highest in the country with about 8.5% unemployed, while for young people up and down the country it is as high as 21%. Given those levels of youth unemployment over which this Chancellor is presiding, I think it is offensive when he talks about aspiration and the aspiration nation. The UK has the third worst level of youth unemployment in the developed world; of the OECD countries, only Spain and Greece have higher levels. Since the recession started, the UK has experienced the fastest rise in youth unemployment of the G8 countries.

Speaking about aspiration, the Chancellor is dividing people into “aspirants” who aspire to prosperity and others. It is as though he does not know or does not care that there is a national lack of job opportunities available to young people. It is simply disgraceful for the Chancellor to talk about aspiration when one in five young people leaving school might not find work. The Government need an extensive programme to create jobs for young people and should support them in finding those jobs and training them.

Let me deal with manufacturing. I have often spoken about the west midlands and its success in manufacturing, and I strongly believe that the manufacturing sector can drive local economies and boost growth. I was therefore alarmed at the Budget’s lack of discussion of manufacturing industry. The Chancellor’s only mention of it was his claim that for the first time in 40 years we are manufacturing for export more cars than we import. Well, that started under the Labour Government and certainly not under the present Government. The Government try to take the credit for the success of Jaguar Land Rover, but Labour Members know that the previous Labour Government supported that industry.

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[Mike Thornton (Eastleigh) (LD)]

I want to talk about three things: mortgages and how we support them, how local authorities can help and what can be done on commercial lending.

We should strip out all the fancy schemes. I talked to some of the people I used to work with at Simply Finance, and apparently there are about 100 viable 90% loan-to-value schemes. The situation is not quite as bad as it was in the past, but the credit-scoring system for those mortgages tends to be so severe that only about 10% of applicants ever get a mortgage. My only concern about our new scheme is that we should make absolutely sure that it results in people being able to borrow money, rather than having their application turned down. The Opposition believe that the scheme will provide second homes for millionaires. I agree with the Secretary of State that that can be sorted out easily.

If mortgage schemes work, they increase demand, but if demand goes up without an increase in supply, prices will increase. I am sure that is not the intention. We need to develop and build houses. To ensure appropriate development while protecting our country’s green spaces, we must innovate. At Eastleigh borough council we work with developers to purchase properties that would not otherwise be bought. We then rent them out. It would be a real help if the Government could lift the borrowing cap on councils building new homes to rent, which would supply an economic boost and provide affordable homes. In places such as Eastleigh, 30% of every new development is reserved for affordable housing. We have 5,830 people on the housing list, so it is vital that we do something about it.

To achieve a significant increase in house building, we need to reverse the banks’ failure to fund it properly, especially for small and medium-sized builders. Before 2007, the inability of banks to assess the true risks resulted in massive losses. Now the situation is reversed. It is the same old story; the banks go from one extreme to another.

We need to co-ordinate our housing policies, our commercial and mortgage lending policies and our planning policies. There is no point in keeping them separate. Banks, local government and builders are all part of the same whole. I am confident that this Liberal Democrat-Conservative coalition can act accordingly, but we need to find a way for us all to work together.

Financial Services (Banking Reform) Bill

Mike Thornton Excerpts

Monday 11th March 2013 Commons Chamber

[Mike Thornton (Eastleigh) (LD)]

Thank you, Mr Speaker, for allowing me to make my maiden speech during this important debate.

Being able to represent the people of my own local area here in the Chamber, with its history and traditions, is an immense privilege and honour. I begin by paying thanks to all those who helped me during the by-election. I thank the whole Liberal Democrat campaign team, whether local, from our headquarters or from around the country, for their tireless work, efficiency and constant cheerfulness, especially considering the weather. Most importantly, I thank the voters of Eastleigh, who have put their faith in me. My first duty is, and always will be, to the members of my constituency, whoever they vote for.

I am surprised, overwhelmed and extremely grateful for the incredibly warm welcome that I have received from you, Mr Speaker, from hon. Members of all parties and from the staff of the House. I must say, I am still trying to absorb all the help and advice they have given me, and I am not exactly sure who has given me what, I am afraid.

Let me pay tribute to my immediate predecessor, Christopher Huhne, whose contributions must not be overshadowed by recent events. He was a dedicated constituency MP, and throughout the constituency I have met thousands of people who are extremely grateful for the help that he has given them. Furthermore, let us not forget his outstanding service as Secretary of State for Energy and Climate Change, driving our transition to a green economy while playing an internationally recognised role in combating climate change.

I was delighted to campaign with Lord Chidgey, the previous Member of Parliament for Eastleigh, a man held in such high regard by my constituents that when I was walking around and knocking on doors with him, after putting thousands and thousands of photos of myself through people’s doors and having been on television and in the newspapers, what did they say when they saw us? “Who’s that chap with Lord Chidgey?” If I can be as well remembered as he is, I will feel that I have done a good job.

Although many hon. Members may feel that they already know my constituency after pounding its streets recently, I ask them to please indulge me by letting me talk a little bit about it. Before there was Eastleigh there was Bishopstoke, which just happens to be where I live, and I have served as a councillor there for the past six years. Bishopstoke was mentioned in the Domesday Book, and it was to Bishopstoke junction that London and South Western Railway moved its railway works and employees lock, stock and barrel in 1891. Indeed, it was the company that proceeded to change the name of the station and the surrounding area to Eastleigh. Bishopstoke has never forgiven it.

As the years passed, Eastleigh developed as a bustling railway town with a strong industrial identity and a skilled work force. Aside from the railway, Eastleigh played a major role in the development of Britain’s aero industry, and it was at Southampton airport, formerly Eastleigh aerodrome, that the Spitfire was designed and built. Of course, local people remember with much pride and some sadness that its designer, Reginald Mitchell, foreseeing the awful shadow of war, defied his doctors and literally worked himself to death to ensure that the Spitfire would be ready in time to defend our country against the evil of the Nazis.

I am pleased to say that that proud tradition of manufacturing and engineering continues in Eastleigh —at the rail site now operated by Knights Industries, at GE Aviation Systems in Hamble and through the development of high-tech industries including SPL Lasers and Lubetech in Hedge End and Prysmian in Eastleigh town, which I believe our Prime Minister visited during the campaign. These firms demonstrate that the key to a sustainable and balanced economy is to embrace both the old and the new. Eastleigh is fortunate to have a much lower rate of unemployment and youth unemployment than the national average. Indeed, both have dropped recently. Of course, this week is national apprenticeship week, and I celebrate the fact that more than 28,000 apprenticeships have been created across Hampshire since 2010, many of them helped by Eastleigh college, which has a superb reputation.

In Eastleigh new businesses are opening at an increasing rate, with more than 100 starting up last year due to the support and far-sighted approach of our borough council led by Keith House. Despite that success, however, and having spoken to businesses both as a candidate and previously in my professional role, I have found that business after business is struggling to obtain financial support from our banks to enable it to grow and expand its work force. The Business Secretary has worked tirelessly to improve that situation; I am confident he is succeeding but the banks seem too slow to respond. The funding for lending scheme is a superb initiative, but many banks seem to believe that its purpose is to enable them to lend to people they would ordinarily have lent money to, just at a lower interest rate. As Mark Twain said:

“A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.”

We have seen the start of alternatives such as the extraordinary Bank of Dave, other peer-to-peer lenders, and new banks starting up with a fresh approach. Our traditional banking sector needs to wake up before it finds that its customers have gone elsewhere and that it has joined the penny farthing as an historical curiosity.

Moving on, one of the great privileges of this job is the opportunity to work with local people—the unsung heroes of the voluntary sector. Such people have been labouring away tirelessly in their own local communities, often without much credit and probably no money. From unpaid parish councillors to street pastors, local groups such as the Pilands Wood community association have transformed the area and created an extraordinary sense of community. I would like to mention all the volunteer organisations that contribute so much, such as One Community, Churches Together in Eastleigh, Eastleigh Basics Bank, Acts of Random Kindness—which I recommend to everybody—and Open Sight. I could go on, and I am sorry for not mentioning all the groups, but I would go well past my 12-minute allocation of time.

My constituency is blessed with some of the best schools and colleges in the country. The Deputy Prime Minister and I were privileged to see the extraordinary partnership between Hamble community sports college and the Dynamo school of gymnastics that delivered an Olympic-class gymnasium. I am eternally grateful for the support that my daughter received from superb teachers and staff at Stoke Park infants and junior schools and Wyvern technology college. Wildern, Crestwood and Toynbee schools have superb reputations, and I believe we have been honoured today by a visit from Eastleigh’s own outstanding Barton Peveril sixth-form college. I also want to mention that a friend of mine who taught at that college is sitting in the Gallery now.

I will leave the House with a parting thought about how fortunate I am to be able to step outside my front door and in minutes be in the beauty of Stoke Park woods or walking down the Lloyd to the water meadows, while at the same time being a 15-minute walk from Eastleigh town with its variety of shops and restaurants.

I thank you, Mr Speaker, for giving me the opportunity to speak, and I thank hon. Members for listening with such courtesy. I suspect that next time I am called I will not be heard in quite such a manner. I look forward to serving my constituency, this House and my country for many years, and consider it an honour and a privilege to be here.