Oral Answers to Questions

Neil Carmichael Excerpts

Tuesday 10th December 2013 Commons Chamber

[Nicky Morgan]

I find it unbelievable that the hon. Gentleman really has the gall to stand up and ask that question. I wonder whether he agrees with his right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne), who said:

“From 2004 onwards, beneath the miraculous arc of rising average incomes, families on ‘median incomes’—millions of workers grafting as small employers, sales assistants, cashiers, construction and factory workers—were feeling the strain...people were working just as hard as ever—but were not getting on”.

That was happening under a Labour Government.

[Neil Carmichael (Stroud) (Con)]

Does the Minister agree that the real achievement of this Government has been the improvement in education, skills and the provision of engineers—among others—so that we can raise wages as a result of real growth in the economy?

[Nicky Morgan]

I entirely agree with the hon. Gentleman. As the Office for Budget Responsibility has said,

“Productivity growth is the only sustainable source of real income growth in the long term”.

If we do not have a skilled work force, employers will not come here and therefore will not be employing people, which means that we will not experience the increase in productivity that would feed through into higher wages.

Autumn Statement

Neil Carmichael Excerpts

Thursday 5th December 2013 Commons Chamber

[Neil Carmichael (Stroud) (Con)]

In contrast to Labour’s nightmare economics, the Chancellor’s statement was both realistic and encouraging, especially for the real economy. I welcome his focus on STEM—science, technology, engineering and mathematics—subjects and the need to upskill our work force and reinforce our interest in engineering and manufacturing.

[Mr Osborne]

One of today’s most significant announcements, which will not necessarily be on the front pages tomorrow, was the increase in student numbers and the lifting of the cap on aspiration. That is a major structural improvement in the British economy. Britain has fewer graduates as a proportion of population than many other comparable countries, and it is a basic tenet of economic success that we should do more in this area. We are providing additional money for STEM subjects so that they are taught properly as well.

Cost of Living

Neil Carmichael Excerpts

Wednesday 27th November 2013 Commons Chamber

[Neil Carmichael (Stroud) (Con)]

The Government have increased the number of private sector jobs by 1.4 million, and 88% of those jobs in the past six months were full time. Does that not illustrate that we are rebalancing the economy towards manufacturing and engineering, which we definitely need to do? That is part of an economic plan to recover this country from the disastrous situation in which we found ourselves in 2010.

[Sajid Javid]

I agree completely with my hon. Friend—I shall make further remarks on that in a moment.

In short, Labour left our country a lot poorer, and it still has not apologised for the damage it did, despite many opportunities, including this afternoon. The Labour Government destroyed the aspirations of millions of hard-working people up and down the country. Instead, Labour Members sneer over the Dispatch Box and oppose every single measure the Government take to clean up the mess they left behind.

Oral Answers to Questions

Neil Carmichael Excerpts

Tuesday 10th September 2013 Commons Chamber

[Mr Gauke]

On support for small businesses, HMRC has in place a time-to-pay arrangement. On the service that is provided by HMRC, it is always seeking to improve and deal with telephone calls and letters as efficiently as possible. But we have to bear in mind that the yield that HMRC is bringing in is increasing by £10 billion over the course of this Parliament. HMRC’s performance on phone calls and letters is better than it was when we came to office. It has made considerable progress and that should be acknowledged.

[Neil Carmichael (Stroud) (Con)]

15. What recent assessment he has made of the contribution to the economy made by the manufacturing sector.

[The Financial Secretary to the Treasury (Greg Clark)]

Manufacturing output grew in the most recent quarter by 0.7%, contributing to the growth of the economy as a whole. Growth was broadly based. In June, output increased in all 13 of the published manufacturing sectors, the first time that this has happened since 1992. The whole House will welcome today’s news that Jaguar Land Rover is to create a further 1,700 new jobs in the west midlands and 24,000 jobs in the supply chain.

[Neil Carmichael]

I thank the Minister very much for that answer. Does he agree that the news that manufacturing output has increased to its highest level in 20 years, as exemplified by firms such as Renishaw, Xograph and Delphi in my constituency, represents a good start to the rebalancing of the British economy?

[Greg Clark]

My hon. Friend is absolutely right. I pay tribute to him for doing his bit in an important cluster of manufacturing businesses in Stroud. He has invented and promoted the festival of manufacturing and engineering in Stroud, which will take place between 11 and 15 November, helping to give a further boost to the already successful companies in Gloucestershire.

Economic Growth

Neil Carmichael Excerpts

Wednesday 15th May 2013 Commons Chamber

[Neil Carmichael (Stroud) (Con)]

It is a great honour to follow the hon. Member for East Antrim (Sammy Wilson).

This debate is about economic growth, and quite right too. It is good that the Governor of the Bank of England has signalled that growth is on its way and that inflation is likely to decline. That is a good combination. It is absolutely right, therefore, that we should focus on monetary activism.

Another important matter to which the Gracious Speech referred was supply-side reform. We still need to achieve elements of that, and we still have two years to do so. It is at the core of rebalancing the economy, so I want to say a word or two about supply chains. We labour under an illusion in our arguments about the trade deficit if we do not understand the complexity of supply chains and their importance across Europe and the globe. It is not just the finished product that matters but the components that make it, which provide added value. The Department for Business, Innovation and Skills is looking into that matter, because if we understand supply chains we will get a better understanding of why the European Union and the single market matter to us. That situation is made clear in my constituency, where Delphi makes the diesel injectors for the engines of 40% or so of heavy trucks manufactured and used in Europe. That is an example of component parts that go towards an end product making a big difference to the economy as a whole.

I move on to trade, and first to EU-US trade. We have to have a relationship between the United States and the European Union that makes sense and promotes trade. Right now, there are far too many tariffs, both the type that we know about and hidden tariffs. We have to end that, and the Prime Minister is absolutely right to talk about doing that. That is why President Obama was helpful to him in pointing out that we may as well fix our relationship before we decide to end it. That is a simple message that we have to consider.

Germany, Italy and usually France trade more than we do with India, China and Brazil, the economies with which we need to develop relationships. We have to pose the question whether leaving the EU would help us overtake the countries that would still be in it, and the answer is no. Instead, we should consider what we can do here to improve our exports rather than worry about having an alibi and a series of excuses. It is what we do here that actually matters. That is why it is important that UK Trade & Investment, for example, is providing the right network of support for small and medium-sized enterprises. We need to ensure that some of our SMEs are big enough to penetrate the markets that I mentioned and have the right skill sets and determination. We need to start emulating Germany’s mittelstand approach to ensure that our firms are big, robust and strategic enough to tackle export markets. If we do that in a way that signifies an intention to improve our export performance, we will succeed, but it will not be because we have abandoned our partners.

Obviously we need to renegotiate our relationship with the EU, because no form of government or system of institutions should remain unchanged and unreformed. The EU is a classic example of that. However, we have to decide what our priorities in those negotiations are and what we need to achieve. For me, it should be increased competition, both within Europe and through Europe being able to compete globally. We are in a global situation, and we cannot start arguing about some sort of family dispute. The reforms have to focus on the global scale and the need to be competitive.

One area that we need to explore is energy, because we need competition and connectivity between energy producers, especially for the benefit of consumers. I would put such topics on the agenda, but we need to reform and be positive, vigorous and confident.

Finance (No. 2) Bill

Neil Carmichael Excerpts

Wednesday 17th April 2013 Commons Chamber

[Chris Leslie]

Exactly, and never let Government Members claim again that we do not have a positive approach that would get young people off the dole and back into employment. This is the route that needs to be taken, and the choice presented to the public which they can see most starkly, particularly on a day when unemployment is rising.

[Neil Carmichael (Stroud) (Con)]

rose—

[Chris Leslie]

I will not give way to the hon. Gentleman, as he has only recently come into the Chamber, but we will see—[Interruption.] Oh, go on then, as he is one of my favourites.

[Neil Carmichael]

I am grateful to the shadow Minister for giving way; I thought there was a compliment coming along there, too. Not all banks have a bonus system; Handelsbanken is a good example. If we are to have such a separation between banks, with all the difficulties that that would bring about, what would the shadow Minister say to the suggestion that his proposal is a huge complication that will cause more difficulties than it will solve?

[Chris Leslie]

I would like nothing more than for our banking sector to move to a more enlightened and responsible approach to remuneration. I would not want to see a bloated and unfair bonus arrangement continuing in perpetuity simply as a result of a function of the tax system. For the time being, we need to start to send a signal on behalf of public policy makers that the current arrangements, which have not changed sufficiently since before the financial crash or during it, continue to be difficult. The banks often say that they want catharsis and that they want to move on, and I do not want to spend the rest of my life in banking legislation, for goodness’ sake, but we are still not there and the bonus levy is part of that process.

I do not want to talk for much longer, but I want to challenge the Minister specifically on the bank levy arrangements as we are debating stand part for clauses 200 to 202. We have had six different bank levy rates and they have failed to raise the right amount. We have talked about this time and time again, and I do not want to keep coming back in our debates on the autumn statement next year or on the 2014 Budget to a similar discussion on retrospectively tweaking the bank levy. I want to hear from the Minister when he replies that he can guarantee that in this financial year £2.5 billion will be netted in by the bank levy. If he cannot guarantee that, he must admit that we must reconsider the policy, which is haemorrhaging money when it should be boosting the Exchequer far more significantly.

As I said before, parliamentary rules prevent the Opposition from tabling amendments that would tweak the bank levy upwards. There is a convention of the House that only Governments can table amendments to a Finance Bill that would increase a charge on individuals or companies. The process is incredibly frustrating, as we need to ensure that we get into the detail of how the bank levy should work and what the rates should be. For the time being, we feel that tabling amendment 2 so that we can consider a review of how a bank bonus tax could help the young unemployed, in particular, and of how to incorporate it into a bank levy that nets the amount it should is the right way forward. I commend the amendment to my hon. Friends.

--- Later in debate ---

[Geraint Davies]

Yes, and my hon. Friend makes an important point about the growing regional imbalance in the British economy. I realise that the Government have paid lip service to that issue, but if the only place to get a good job is London, that inflates costs, and young people come to London to live in squalid conditions in the hope that they can get the experience to go home at some point. There is a brain-drain as well, so this policy does not make any sense. One of the first things the Government did was to get rid of the regional development agencies. They said that they were no use and cost too much.

[Neil Carmichael]

rose—

[Geraint Davies]

I will give way in a moment.

I went to visit UK Trade & Investment, which has 83 offices around the world. Its mission is to market Britain for trade and inward investment. I was in its office in Dusseldorf and it told me that typically it would market Britain as a great place to come to—a low-tax, stable society with a platform into various markets, a skills base and great universities.

For example, a German distiller might come along and say that it wanted to set up a factory in Britain. That would go on to UKTI’s computer platform and the RDAs would then bid for it, saying, “We want that in Yorkshire” or “We want that in Lancashire” and setting out their case. Immediately after the RDAs were destroyed, there was a queue of companies looking to invest in Britain through UKTI, but there was no one to bid for that investment. It was crazy to destroy them, especially at a time when we want growth and regional balance.

The Government said the RDAs were too expensive, but now they ask why we have growing unemployment, zero growth and increased housing benefit costs in London. It is because rents are going up, we are not building houses and we do not have regional balance. Therefore, the amendment is partly about thinking of creative ways to move forward and engage the banking community in a sustainable growth plan that has a regional dimension.

[Geraint Davies]

I completely agree. There are clearly certain growth markets within the global market environment, and life sciences is one that is of great interest in Swansea, as are biotech and green technologies and all the rest of it. What the public sector can allow is a critical mass of research that benefits from economies of scale and a shared risk that would not be taken by individual operators, and that can attract inward investors. What we want is a benign partnership, as we have in Wales, with a Labour Government and local authorities working with universities, perhaps on a city-region basis, which is the future, to deliver benefits for all. That is what we want, rather than the laissez-faire approach.

I will have to bring my comments to a close in a moment, because obviously other Members wish to speak, but I promised first to give way to the hon. Member for Stroud (Neil Carmichael).

[Neil Carmichael]

I have listened carefully to the hon. Gentleman. Does he welcome the fact that in the long term Hitachi has invested £6 billion in some of the regions he has referred to, such as the north-east, where trains will be made, and in my area, where nuclear power stations will be built? He refers to “heavy lifting”. Does he not agree that through his industrial strategy the Secretary of State for Business, Innovation and Skills has introduced the aerospace centre, which will be a massive investment, essentially in the public sector, to promote the development of aviation? That will also be repeated for the automotive sector. That is precisely what he is talking about, so the Government are doing that already.

[Geraint Davies]

I certainly welcome those things. The trouble is that it is very much a U-turn—although that is fine. One moment the Government were withdrawing and saying, “We don’t have to do anything, because the market will spontaneously grow.” Then nothing was growing in the garden, so they go and put in some pot plants and that sort of thing, which is great. Hitachi is very welcome, and Tata has been mentioned. Some of those big companies, such as Tata, will make strategic investments, particularly because of the quality of the coal and the history of skills and the innovation, such as the partnership with Swansea university, where they are developing a new type of steel that has six layers, generates its own electricity and, when used to clad buildings, lowers the carbon footprint. It is the future.

With regard to aerospace, we of course have Airbus in Wales and, again, a supportive Welsh Government. Any support from the UK Government for strategic investment to boost our export and manufacturing base in modern and growing markets is very welcome. That is something we can certainly support. The more active the intervention from the Government with regard to an industrial strategy, the better. We want to see jobs, rather than people sitting on their hands—that is how the Government see it—and rather than watching bankers take loads of money for doing very little while people in Swansea and elsewhere who want to work are blamed for being unemployed but are not given a hand-up.

--- Later in debate ---

[Sammy Wilson]

The hon. Gentleman has missed my point; perhaps I did not make it very well. When the Chancellor declares what taxes he intends to levy in the Budget, that announcement is accompanied by what he intends to spend that tax revenue on. Sometimes that revenue materialises and sometimes it does not.

The only requirement that I would make of an amendment of this nature is that it does not throw out a reckless figure and say, “We will make £x billion from this provision and spend it.” The Minister was right to ask on what basis the amendment’s calculation was made, but it cannot be argued that, because there is a degree of uncertainty, this is not a good proposition. I would have been very unhappy had the amendment said, “Let’s raise the money and then we’ll see what we will do with it.” It is much easier to make an argument on the grounds of fairness: “Let’s raise the money and this is what we will do with it.” Knowing where the money comes from, the purposes for which it was being used and the purposes for which it will be used once collected would enable us to judge whether the proposition is fair. It is not possible to divorce how the money is raised from what will be done with it.

[Neil Carmichael]

Does not this line of argument represent the thin end of the wedge with regard to hypothecation? Raising taxes is a general activity and the decision on how they should be allocated for expenditure purposes has to be made on other grounds. The obvious example is the health service.

[Sammy Wilson]

I agree that a general proposition that every specific tax raised should be hypothecated for a certain purpose would be very dangerous, but this is not a general proposition; it relates to one specific case and that case has to be made.

Oral Answers to Questions

Neil Carmichael Excerpts

Tuesday 12th March 2013 Commons Chamber

[Sajid Javid]

My hon. Friend is absolutely right, and that is why the Government have increased the personal allowance, cutting taxes for the low paid, helping 24 million people in the country. In addition, we are introducing universal credit to create the right incentives to get people back into work.

[Neil Carmichael (Stroud) (Con)]

On the subject of the personal allowance, does my hon. Friend agree that that has made a huge difference to a large number of people who are less well-off? In my constituency alone, 38,000 people have benefited.

[Sajid Javid]

My hon. Friend is absolutely right. The previous Government abolished the 10p tax rate. This Government have cut taxes for the lowest paid in this country, 24 million people have benefited and 2 million people have been taken out of taxation altogether.

Tax Fairness

Neil Carmichael Excerpts

Tuesday 12th March 2013 Commons Chamber

[Mark Reckless]

rose—

[Neil Carmichael (Stroud) (Con)]

rose—

[Chris Leslie]

I want to make some progress. I will give way in a moment.

The divide between the richest and the least well off is getting broader, not narrower, and the situation is getting worse. The Government are cutting taxes for one group this year—the very richest in society—with 13,000 people earning £1 million a year getting a tax cut. That is astonishing. Could any other policy better typify the twisted logic of trickle-down economics than that one?

--- Later in debate ---

[Chris Leslie]

That is an important point. I am glad that we have the hon. Gentleman’s support on this issue. Obviously there is a difference between residential and corporate arrangements, but our motion says that we want the Treasury to bring forward proposals at the earliest possible opportunity. We have seen the proposition set out by the Liberal Democrats and used it as the basis for our motion, but let us see what further options can be drawn together. We think that it would be a good idea, for example, for the Chancellor to commission the Office for Budget Responsibility to present detailed suggestions of ways in which the arrangements might work.

[Neil Carmichael]

Will the shadow Minister remind the House exactly what the top rate of income tax was throughout most of the last Labour Government, and give us some insight into why it was at that level?

[Chris Leslie]

After the global financial crisis, we decided to introduce a 50p top rate of income tax so that those earning £150,000 and above would make a fairer contribution to society as a whole. Those people are the wealthiest 1% in society. How astonishing—how absolutely breathtaking—that in last year’s omnishambles of a Budget, the present Chancellor of the Exchequer decided to go for the right-wing trickle-down approach and cut the 50p rate to 45p. I hope that that decision will be reversed in the forthcoming Budget, in respect of which I take it that the hon. Gentleman’s intervention constituted a representation to the Chancellor.

Financial Services (Banking Reform) Bill

Neil Carmichael Excerpts

Monday 11th March 2013 Commons Chamber

[Chris Leslie]

Of course there are ways of ensuring that the building society sector can be accommodated in the leverage ratio framework. Building societies have a totally different equity structure, as my hon. Friend knows; they do not have the same equity as a plc structure. There are therefore important differences in that sector. In my view, however, it is important that all institutions, large and small, should be subject to safety requirements regarding capital loss absorbency and protection against over-extension in certain risk areas. There are ways and means of dealing with that, but I am annoyed that the Government have not seen fit to put any provisions on the leverage ratio in the Bill.

[Neil Carmichael (Stroud) (Con)]

Does that attitude not call into question the future of the Co-operative bank? What would the shadow Minister say about that?

[Chris Leslie]

I do not want any of our banks to be in a position of over-extending themselves, putting at risk either their customers or the taxpayer. It is very simple. We need to listen to the carefully thought through advice of the banking standards commission, the Vickers report and others, including the incoming Governor of the Bank of England, on these particular issues. The Government may call it the British dilemma, but it is astonishing that they always seem to be asking the European Union to come to their rescue at some point with some reform to deal with bail-in or whatever other problems happen to be around later on down the track. That is not adequate.

Let me deal with the issue of derivatives inside the ring fence, as I know that the parliamentary commission has been concerned about it. The Vickers report said that derivatives trading should not be allowed—full stop. The parliamentary commission recognised, however, that there were services on the margins where some simple derivative products might be permitted, but it added that

“allowing ring-fenced banks to sell derivatives other than as an agent creates additional prudential and conduct risks.”

I agree with the commission on that issue. We need clearer protections to prevent abuses within the ring-fenced retail banks where derivatives are sold. That was illustrated, of course, by the mis-selling of some interest rate hedging products to small and medium-sized enterprises. The danger is one of information asymmetry between customer and vendor and the fact that the trade became exceptionally lucrative for the banks. We have to move away from this era of the exploitation of the customer’s lack of knowledge, and the commission was clear about that in the three tests it set.

We have seen one of the drafts of the secondary orders, subsequent to the commission’s recommendations. It is therefore worth comparing that order with the tests that the commission has set. The commission said that there should be adequate safeguards against mis-selling, but as far as I can see, the draft order does not go into any detail about how the Prudential Regulation Authority or the Financial Conduct Authority will enforce anything new. The commission said that there should be a clear definition of simple derivatives, which will be allowed, versus complex derivatives, which will be disallowed, but the draft order seems to define simple derivatives quite widely—in other words, as instruments designed to tackle interest rate risk, exchange rate risk, default risk, liquidity risk or for dealing in assets included in the liquid assets buffer. It would be easier if the Minister set out what would not be allowed rather than what would be allowed in the ring fence.

The third test relates to limits on the proportion of a bank’s balance sheet. The commission thought that was necessary, but the draft order so far leaves out what that percentage should be. There is a space left for a figure before the percentage sign, so perhaps the Minister can give us a sense of what that proportion of the bank’s balance sheet should be. That was one of the commission’s tests, as I said, so we need to secure assurances from the Minister about the Government’s intentions. As Martin Taylor said in his evidence to the commission:

“I can’t see the point of having a fence round the chicken coop, electrifying it to keep the foxes out, and then inviting a family of tame foxes to live inside it.”

That sums up the problem quite neatly. I have already alluded to the bail-in powers. Again, it is disappointing that the Government are relying on future European directives as the means to achieve bail-in rather than building it into the Bill before us. I do not think that the frequent excuse of “We’re waiting for the European Union” will do any longer.

We need also to focus on some of the other issues that should be in the Bill today, particularly rebuilding consumer choice, financial inclusion and a diverse market. The Bill is silent on all those areas. There is nothing about challenger or new entrant banks; nothing to ensure a universal obligation on banks for basic bank account services. There is also pussyfooting around on switching of bank accounts, about which I know some Government Members are concerned. There is nothing on mutuality, despite the pledge in the coalition agreement to

“foster diversity in financial services, promote mutuals and create a more competitive banking industry”;

and nothing about a fiduciary duty of care for clients and customers. We will table amendments to ensure that high street lenders offer a basic bank account, which is particularly necessary because of the onset of universal credit. We want a report within six months addressing obstacles to new-entrant challenger banks and current account provision. We also want Parliament to have an opportunity, soon after Royal Assent, to examine the adequacy of customer switching arrangements, and we want the publication of bank data on “lending deserts”, the postcode areas where—as we are finding in our constituencies—some small and medium-sized enterprises and customers find it difficult to gain access to credit. Other tests need to be included in the Bill to fulfil the coalition’s mutuality pledge. We also want a duty to be imposed on directors of ring-fenced banks to operate prudently and to safeguard deposits, and we want them to have a fiduciary duty of care to customers throughout the financial services.

Infrastructure

Neil Carmichael Excerpts

Tuesday 12th February 2013 Commons Chamber

[Rachel Reeves]

House building was down 8% in 2012 and the think-tank Policy Exchange has warned that the Government could end up presiding over the lowest level of house building since the 1920s. That is the record of the hon. Lady’s Government—not one, I would imagine, that she is proud of.

The Prime Minister says that we are in a global race, but in reality we are hardly out of the starting blocks. The Chancellor has been told time and again—most recently by the International Monetary Fund—that if economic growth undershoots expectations, the Government should boost the economy with greater infrastructure spending. Well, growth has undershot and the economy is shrinking. Over two years, economic growth has been 15 times less than the Chancellor promised in 2010.

[Neil Carmichael (Stroud) (Con)]

Will the shadow Chief Secretary join me in thanking the Chancellor for the £45 million invested in the Stroud to Swindon railway line, work on which has just begun, and which will make a huge difference to my constituency?

[Rachel Reeves]

I wonder whether the next Government Member to intervene will congratulate the Chancellor on spending £12.8 billion less over three years than the plans he inherited from the previous Labour Government.

--- Later in debate ---

[Neil Carmichael]

rose—

[Mr Rob Wilson]

rose—

--- Later in debate ---

[Greg Clark]

Our capital revenue spending would have been determined by a visit to the International Monetary Fund if we had followed the course set by the Opposition.

In the years prior to the financial crisis the previous Government ran the biggest structural deficit in the G7. Despite the denials of the shadow Chancellor, that is a matter of record, and the fact that he refuses to acknowledge what has now been made very clear merits an apology.

One of the most enduring mysteries of the 13 years in which Labour was in office is what they did with the money. We would think that 13 years in which they spent, taxed and borrowed like no peacetime Government before would at least have left us with an infrastructure that we could have been proud of and that would have been world-beating.

[Neil Carmichael]

Does my right hon. Friend agree that the almost 30 million jobs we now have in this country will benefit enormously from the fact that we are at last getting something done about broadband, a massively important infrastructure project? We are spending a huge amount on it, and just this week I heard about how much progress we are making in Gloucestershire.

[Greg Clark]

My hon. Friend is right. Not just in our cities, but also in our rural areas, during Labour’s 13 years in office broadband went backwards relative to the rest of the world. We are now addressing that and making progress.