Investing in Britain’s Future

Neil Parish Excerpts

Thursday 27th June 2013 Commons Chamber

[Danny Alexander]

We set out the plans for capital investment in 2015-16 and beyond yesterday and in the Budget last time. We have set aside £50.4 billion in 2015-16. That is £3 billion more than was previously promised, which we added to at the time of the budget. Those comments are ludicrous when we have not yet heard an apology from Labour for the mess they made of the British economy.

[Neil Parish (Tiverton and Honiton) (Con)]

I welcome the Chief Secretary’s statement. Affordable flood insurance for all is essential. Also, the A303/A30, which runs from Honiton up into Somerset and Wiltshire, is absolutely essential for the visitor experience in the west country and for its businesses. One final plea is for new school buildings for Tiverton high school and a new school building for Mrs Ethelston’s primary school in Uplyme.

[Danny Alexander]

I agree wholeheartedly about the importance of the A303 and those road connections. The south-west is a vital part of our economy and needs to be properly connected to the rest of the country, and this investment will do that. With regard to the specific points on schools, I will ensure that they are brought to the attention of the Secretary of State for Education.

Financial Transaction Tax and Economic and Monetary Union

Neil Parish Excerpts

Tuesday 18th June 2013 Commons Chamber

[Greg Clark]

It would go to the country which was liable for the transaction tax that fell due there, but it would not go to this country, despite the fact that we would incur the costs of enforcing it and collecting the money. There would be no benefit whatever to the UK taxpayer. It would be unfortunate if at a time when we should be enhancing Her Majesty’s Revenue and Customs’ ability to collect taxes, we were, in effect, requiring extra resources to be expended on something that was of no benefit whatever to UK taxpayers.

[Neil Parish (Tiverton and Honiton) (Con)]

Does my hon. Friend agree that in the context of the City of London needing to be attractive for financial transactions, all this tax would do is add yet another burden? We want more people to come to the City of London and trade, not fewer, and I feel that this tax would drive people away.

[Greg Clark]

I agree. It is not only the London economy that would be damaged; the whole European economy would be damaged, too. That cannot be in the interests of EU members, but members are, of course, sovereign and can make their own decisions, provided that that does not interfere with our competences and rights.

Finance (No. 2) Bill

Neil Parish Excerpts

Thursday 18th April 2013 Commons Chamber

[Cathy Jamieson]

I thank the hon. Gentleman for his intervention. We argue that the new clause would be part of a package of measures. We have heard about other initiatives that could be brought forward, and it is important to recognise that others in industry and business are also saying that one way to stimulate the economy would be to introduce at least a temporary cut in VAT. There are serious questions to be asked about the other issues, but if we could get unanimity about this issue, it might be possible for the Government to consider it and bring forward further proposals.

In the Budget, the Government had the opportunity to change course, make the necessary changes and kick-start the economy. Sadly, however, more and more commentators are reflecting that all we got was more of the same from the downgraded Chancellor. As a result, the cost of living for people up and down the country is rising day by day. The economy is flatlining, inflation remains high and food bills are rising. Energy bills are soaring, thanks to the Government’s failure to break the stranglehold of the big six energy companies. The Office for Budget Responsibility’s most recent figures show that people will be worse off in 2015 than when the Government came to office.

The reality for people is that real wages are now £17,000 a year smaller than they were in 2010. To add to that hardship, any benefit that hard-working people might have received from the Government’s much trumpeted rise in the personal allowance has been uniformly swept aside by the raft of tax and benefit changes that the Government have made since 2010. Those changes mean that families will be an average of £891 worse off in the new financial year, according to the analysis of figures made by the independent Institute for Fiscal Studies—even more money out of the pockets of hard-working people up and down the country.

The truth is that even if those tax and benefit changes had never happened, any benefit from the rise of the personal allowance would have been wiped out by the Government’s 2011 VAT rise from 17.5% to 20% alone. Research from the TUC confirms that by the time of the next election, families of all incomes will lose more from the VAT rise than they will gain from the increase in the personal allowance and the changes to national insurance, with low-paid workers losing up to four times more per year from the Government’s increase in VAT than they will gain from the raising of the personal tax allowance to £10,000.

[Neil Parish (Tiverton and Honiton) (Con)]

I understand that times are tough, partly because we have to try to bring the economy together after the last Labour Government. The hon. Lady said that individuals are £17,000 worse off than they were. I cannot understand that. Has she added on too many noughts, or what?

[Cathy Jamieson]

I intended to say £1,700; if I said £17,000, I apologise. Obviously, Mr Hood, I need to put my spectacles on when I read the numbers. I am glad that the hon. Member for Tiverton and Honiton (Neil Parish) is accepting my apology.

[Neil Parish]

indicated assent.

[Mr Jackson]

rose—

Budget Resolutions and Economic Situation

Neil Parish Excerpts

Thursday 21st March 2013 Commons Chamber

[Neil Parish (Tiverton and Honiton) (Con)]

It is good to follow the hon. Member for Dumfries and Galloway (Mr Brown), and I agree with him that it is all about confidence. I believe that the Budget will help to produce confidence in this country, especially in my constituency, where many people are not on the highest wages. Taking people out of tax right up to nearly £10,000 is absolutely the right way to go. The previous Government spent far too much time on a complex tax system, but it is much better to take people out of tax altogether so that they know that they can earn up to a certain amount—nearly £10,000 in this case—before having to pay any tax.

It is also right to reduce national insurance contributions, particularly for small and medium-sized businesses, because they will generate the most jobs. The reduction makes it less expensive to employ people, and that is what the Budget is about. Our economy must be, and will be, more competitive, because we are in a very competitive world and we need to compete. I think that the Budget will bring that about.

I echo what many Members, particularly my hon. Friend the Member for Harrow East (Bob Blackman), have said about Equitable Life and all the people who will now be compensated for policies prior to 1992, which have not previously been compensated. Many of those people are elderly and frail, so I urge the Government to get the money to them as quickly as possible. They were hard-working people who put money away for their retirement and basically were robbed in one way or another. I really thank the Chancellor and the Government for agreeing to those payments, but they need to be made quickly.

On infrastructure, there is a wonderful road, the A30 and the A303, running east from Honiton, and it needs to be dualled—there is no doubt about it. We want to dual that road until we get into Wiltshire, where we might encounter problems with a few stones. I will not say which stones, but I think that Members probably know what they are—Stonehenge. There are all sorts of problems around there, but let us not worry about that. Let us move from Honiton up through Devon and Somerset and into Wiltshire, and let us get that road built. We need a second arterial route into the west country, because tourism is so important to us, and it is linked to agriculture and many of our other industries.

That brings me to fuel and fuel duty. My constituency is only 10 miles wide, but it is 42 miles long and covers over 400 square miles. It starts up in Exmoor and meets the sea at Seaton. My constituents live mainly in villages and hamlets. If they wait for a bus, it might never come. If it does come, it probably is not going where they want to go. I am being slightly facetious, but the point is that bus services in many rural areas do not stack up economically, however much subsidy we throw at them, so fuel and cars are not a luxury; they are an essential. Therefore, every time we raise fuel duty, we tax people’s means of getting to work. That is why I congratulate the Chancellor on freezing fuel duty. It is now 13p less than it was when Labour was in power. I am also delighted about the 1p reduction in beer duty, although I remind the Chancellor that the west country and Devon are, of course, full of cider producers, so I ask him please not to forget them.

I think that the support for home buyers, particularly first-time buyers, is a wonderful idea, because many people in my constituency are on low wages, but house prices are upwards of £220,000, so they really need help with deposits. If this Conservative-led Government are about anything, they must be about getting more people to own their own homes and look after themselves, and this support is one way of helping them to do that. I am absolutely delighted to see it happening. We inherited a huge amount of debt and we are doing our very best to reduce it. I look forward to the Budget having a very positive effect in my constituency and across the country.

--- Later in debate ---

[Guy Opperman]

There may have been plenty of times when the previous Government chose not to raise prices, but they did increase them on 10 occasions, and those with long memories in Northumberland and in Scotland remember that. [Interruption.] Opposition Members may chunter, but that is the bottom line.

The full acceptance of the Heseltine report was particularly welcomed in the north-east. It was specifically called for by the north-east chamber of commerce and has been welcomed by business. Exports from the north-east are up, jobs have improved dramatically since May 2010, and the number of apprentices has doubled. There has been a dramatic improvement. The Corus plant was shut by the previous Government—it was the titanic industrial issue in the build up to the 2010 election—but reopened by this coalition Government.

This Budget comes at a time of self-examination in the north-east. The January declaration and Lord Adonis’s review of the north-east, which I am contributing to and support wholeheartedly, are making a real difference to understanding how the region can improve itself. That is an example of proper self-examination from a detached standpoint.

Bank lending is another important issue. I welcome the Business Secretary’s statement on developments on the business bank and the fact that the Opposition have finally begun to realise that local community banking is a good idea. Sadly, when I invited the shadow Minister, the hon. Member for Hartlepool (Mr Wright), to support my campaign for local community banks in a debate on manufacturing on 24 November 2011, he declined to do so, and the point was raised with him again on the same day the following year. The proof of the pudding lies in the fact that, during an April 2012 debate on the Financial Services Bill, the Labour party voted against clauses in favour of greater competition for local banks, greater ease of entry and greater ability to open a local bank. Why would Labour Members vote against greater competition and a local community bank that makes money for the community, with profits going back to the community? It is illogical in the extreme.

I welcome the fact that the Labour party has finally come on board and accepted that local community banking is a good thing. It has taken a while and I hope that Labour Members will back up what they are saying in public with votes in support of greater competition for local people. It is vital that our campaign for local community banks continues. The work done by the Financial Services Authority is to its credit. It has made it much easier to set up a community bank.

[Neil Parish]

I agree with my hon. Friend about bank lending. Does he agree that getting greater competition locally is essential so that businesses can get better rates of interest and better deals with banks?

[Guy Opperman]

That is entirely the case. As we all know, 75% of bank lending in this country comes from the big banks and few smaller community banks are supported. The decline in local lending is definitely affecting SMEs.

There were four challenges to the creation of new local banks. First, there was a lack of legislation to facilitate such changes. We passed that legislation in the Financial Services Act 2012. The second challenge was the length and complexity of the authorisation process. That has been reduced through our work with the FSA, so it is now much easier to set up a smaller bank, whether it is a bank established by an industrialist to back a local community or an infrastructure bank like Cambridge & Counties bank or Hampshire Trust.

Thirdly, the level of capital that new banks were required to hold used to be very high. They were effectively judged exactly as Barclays would be judged. That has also changed. The FSA has made it very clear, as I have demonstrated in this House by reading out letters to me from the FSA, that it requires lower amounts of capital on an ongoing basis from smaller entrants to the market. Finally, the scale and complexity of the infrastructure was proving to be a burden. That is also being addressed.

The future must surely be local community banks, run by somebody from the local community, investing in that local community. A gradual disaster took place under successive Governments over the past 25 to 30 years, whereby local community banks were divorced from the ability to make decisions locally. Community banks could make a decent amount of profit and return it, when a certain percentage is reached, to the community.

I am delighted to say that on 7 June, the FSA, the Prudential Regulation Authority, the Financial Secretary to the Treasury and various other people will be coming to Newcastle for a debate on how we will take regional banking forward in this country. I urge all interested parties to come.

--- Later in debate ---

[Mr Iain Wright (Hartlepool) (Lab)]

I thank all hon. Members who have contributed today. By my reckoning, we have heard valuable and insightful speeches from 30 hon. Members—although, with the exception of the Business Secretary, no Liberal Democrats. All those hon. Members brought to the debate their feelings about, and analysis of, the impact that the measures in the Budget will have on families and businesses in their constituencies and across the country. We have heard about massage parlours, whip cracks and the Kama Sutra—but I shall move on.

At the start of the debate, we heard a tour de force from the shadow Chancellor, who exposed the complete confusion about the new Help to Buy scheme, suggesting that we now have a second omnishambles Budget. We are expecting a U-turn very shortly. It seems that the scheme will not help hard-pressed families get a foot on the property ladder: it is actually a bung, a spare-home subsidy for millionaires. That is not what the housing market needs, and it is certainly not what the economy needs.

We have heard that public sector net borrowing has been, with acute financial management, revised down next year by £0.1 billion. I thought that would have entailed the Treasury going round Whitehall telling Departments not to order photocopying paper this month, but it is a lot more serious than that. As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) said, we are seeing £2.2 billion moving away from the NHS. Valuable, important and often life-saving operations may not happen as a direct result of the Government’s attempts at financial management. That is an absolute disgrace.

[Neil Parish]

Will the hon. Gentleman give way?

[Mr Wright]

I am afraid that I do not have time.

I would support a comprehensive, intelligent and active industrial strategy, based on rigorous analysis and for our competitive advantage. I commend the Government on Monday’s announcement on the aerospace strategy, which is welcome, but there was precious little in the Chancellor’s statement yesterday to back up such an approach.

I was particularly concerned to read in table 2.4 of the Red Book that both resource and capital departmental expenditure limits—DEL—for the green investment bank will be cut to zero in 2014-15. Given that the CBI and others have rightly identified the low carbon sector as a potential growth area in which the UK can be a leading global player if we have the right long-term vision and targeted investment to provide certainty, the figures in the Red Book do not fill me with confidence and I would be grateful if the Minister could outline the Government’s longer term plans and investment for the green investment bank.

Similarly, I was disappointed that no mention was given in the Budget to science. The Chancellor made great play of the need for Britain to compete in the global race. I agree with him. If we are to avoid slipping behind in the international competitiveness race, we must prioritise science and technological innovation, because if we do not, our future industrial capacity will be undermined. Will the Minister outline why science was not mentioned in the Budget?

Several hon. Members, including my hon. Friend the Member for Denton and Reddish and the hon. Member for North Swindon (Justin Tomlinson), mentioned business rates and retail, and they were right to do so, because the Budget certainly did not. David McCorquodale, head of retail at KPMG, said:

“The decision to go ahead regardless and increase business rates will squeeze embattled retailers further and will not deliver the respite the retail sector needs to recover.

Retailers are now left facing a 2.6% hike to their business rates bill, a move which will add £175 million to their overheads. Amongst a backdrop of flatlining sales and continued austerity, this is not a welcome move by the Government.”

Can I ask the Minister why the Government did not help the embattled retail sector?

In today’s debate, many hon. Members, starting with the shadow Chancellor, reminded the House of what the Chancellor had promised in the run-up to the general election and in his first Budget. He set himself several key targets and tests by which his economic record, competency, judgment and capability should be judged. First, the Conservative party’s manifesto stated that the first objective would be to

“safeguard Britain’s credit rating with a credible plan to eliminate the bulk of the structural deficit over a Parliament.”

In early 2010, he backed that up by saying that

“our first Benchmark for Britain is to...cut the deficit more quickly to safeguard Britain’s credit rating.”

We all know how successful the Chancellor’s performance has been on that score. Curiously enough, there is no mention of the credit rating in the Red Book; nor was it mentioned in the Chancellor’s speech yesterday. Funnily enough, I did not hear many Government Back Benchers mention how important the credit rating is either, although my hon. Friends the Members for Birmingham, Selly Oak (Steve McCabe) and for Scunthorpe (Nic Dakin) certainly did mention it.

At the start of this Parliament, the Chancellor said that the current structural deficit would be eliminated by the end of 2014-15. Yesterday’s Red Book, however, shows that the Chancellor’s target to balance the books by the end of this Parliament will be missed by three whole years. Public sector net borrowing at the end of this Parliament is now forecast to be approximately £96 billion—five times larger than the Chancellor expected it to be in 2010. Every year, he comes to this House and has to admit that borrowing is rising, and that the time scale to cut the deficit is growing ever longer.

The Office for Budget Responsibility has said that deficit reduction has stalled. Net borrowing is higher in each year as a result of weaker economic outlook. My hon. Friend the Member for Barnsley Central (Dan Jarvis) reminded us that the Government are forecast to borrow £245 billion more than they originally planned, and my hon. Friend the Member for Luton South (Gavin Shuker) said that borrowing in the five years of this Government is higher than it was in the 13 years of the previous Labour Government. The dramatic deterioration in sentiment, even since Christmas, is striking. According to Red Book figures, the Government now expect to borrow £55.7 billion more in the next five years than they thought they would have to even three months ago.

The Chancellor assured us that, as a result of his policies, net debt would be falling as a proportion of national income by 2015. That was one of his fiscal targets. Judge me, he said, by my ability to get debt as a share of GDP down. However, the Red Book reveals the true failure of the Chancellor’s approach: net debt as a proportion of national income is not falling but rising in every single year of the rest of this Parliament and beyond, from 75.9% of national income this year, to 79.2% in 2013-14, to 82.6% in 2014-15, to 85.1% in 2015 and peaking at 85.6% in 2016-17. As the OBR states:

“As borrowing now falls more gradually, debt rises more quickly as a share of GDP.”

We are now paying more in debt interest—£51 billion a year, which is more than we spend on the defence of this country—than the £44 billion when this Government came to office. The TaxPayers Alliance, which I do not think is a friend of the Labour party, said today:

“By 2017-18, even on the OBR’s optimistic forecasts, the Coalition Government will have more than doubled the official national debt it inherited.”

The Chancellor is refusing, in the face of all the evidence, to change direction in economic policy, as my hon. Friend the Member for Barnsley Central said. On every single test of economic policy that the Chancellor has set himself and asked to be judged on, he has failed, and because of those failures families in Britain are struggling. Life is worse now and living standards are lower for ordinary families than they were three years ago, and they will be worse in 2015. The Chancellor is pursuing this course for reasons of political vanity and ideological arrogance, rather than from economic necessity. His incompetence and lack of judgment have meant that he has boxed himself in. There is nowhere for him to go with any dignity and he refuses, for reasons of pride rather than economics, to change course. As Andrew Smith, chief economist at KPMG in the UK said in response to the Budget yesterday:

“It is now clear that ambitious deficit reduction is stunting growth. Hemmed in by what is left of ‘Plan A’, today’s measures amount to little more than rearranging the deckchairs…hopes that exports and private business investment will come to the rescue depend crucially on strengthening overseas markets—something over which neither the Chancellor nor the Bank of England have any control.”

The Chancellor is fast running out of excuses. He has blamed the lack of growth in the economy on the snow, on the rain and on the sun. I am sure that the recent eruption of Mount Etna must also somehow be causing a drag on the British economy. He has blamed lack of growth on the diamond jubilee, the Olympics, the number of bank holidays and, as far as I am aware, on the fact that Girls Aloud have reformed and split up, and the Rovers Return has burned down. The excuses have got to stop. The Chancellor needs to look in the mirror.

Despite the difficult European situation, the flatlining economy is down to the Chancellor. A deficit reduction programme without a strategy for growth is no deficit reduction programme at all. Growth forecasts have halved, living standards are falling for millions of people, borrowing is soaring and control of the public finances have been kicked well into the next Parliament. The hon. Member for Bedford (Richard Fuller), for whom I have a lot of respect, has said that we should not kick the can down the road, but with this Budget that is precisely what the Chancellor is doing. He and the Government need to acknowledge their failings and change course, or, better still, make way for a team that will help fulfil the British promise, not hinder it.

Draft European Union Budget

Neil Parish Excerpts

Thursday 12th July 2012 Commons Chamber

[Mr William Cash (Stone) (Con)]

The debate is extremely important, particularly in the light of what we heard from the Foreign Secretary this morning, because it is about our relationship with the European Union. As I said in my response to the Foreign Secretary’s statement, it is fundamental that we concentrate not merely on powers, but on democratic power. The debate is about sovereignty and tax and spend, it is about how much we should contribute, and—as I said to the hon. Member for Nottingham East (Chris Leslie)—it is about the increase in functions that has led to the increase in the budget. The hon. Gentleman knows that, and we know it. The fact is that the Lisbon treaty should never have been allowed to go through. The budget question is at the heart of this, and I say no, no, no.

[Neil Parish (Tiverton and Honiton) (Con)]

My hon. Friend is absolutely right. If we want to curb the powers of the European Union we should pay it far less money, which it should spend more efficiently, and, given that Europe is facing austerity, it is entirely wrong to ask for a 6% increase.

[Mr Cash]

It is indeed. In fact, the Commission is asking for 6.8%.

I agree with the Minister that the Government have fought hard, but they have not fought well enough. Although an amendment that I tabled last year proposing no increase was accepted by Members on both sides of the House, we ended up with a 2.5% increase. I think I am right about that, although the Minister appears to disagree. As for the year that we are discussing now, we need to ensure that, if necessary, we take firmer steps in the light of the changed relationship that has resulted from these times of austerity.

I think that we should say no and ensure that the amount in question is at worst a flat increase. Furthermore, I think that we should say no to the final results. QMV does not impress me: other member states have been breaking the law all over the place, particularly Germany and France over the stability and growth pact. The whole of the fiscal compact was unlawful. It is time that we took a firmer line. We are a major net contributor to the EU budget, of which, last year, 45% was spent on policies for sustainable growth, 41% on the preservation and management of natural resources, and the rest on, for instance, “the EU as a global player” and administration. We are the second largest net contributor after Germany. The current annual budgets under the multi-annual financial framework are going in the wrong direction. We should restrain all further expenditure to the EU. We must take action on the gross payments. The gross payments, less abatement, were £12.915 billion in 2010, up from £8 billion in 2005. There is an ever-growing increase in real terms. That is unacceptable in a time of austerity.

I shall conclude by referring to a point I have already made. We must change our relationship with the EU in the way anticipated by those of us who would make the most of what the Foreign Secretary said earlier today, and we must do so sooner rather than later, and certainly before 2014. If we were to adopt a Swiss-style relationship and negotiate a proportionate drop in our net contributions, we would be able to save at least £7 billion for the British taxpayer. That is the direction we should go in. It is time that we said no, not maybe.

Interest Rate Swap Products

Neil Parish Excerpts

Thursday 21st June 2012 Commons Chamber

[Mr Gary Streeter (South West Devon) (Con)]

I, too, congratulate my hon. Friend the Member for Aberconwy (Guto Bebb) on his very powerful opening of this debate.

I wish to raise the specific case of London and Westcountry Estates Ltd, a company that owns several business parks all over the south-west and is now in administration as a direct result, I believe, of the Royal Bank of Scotland imposing on it an interest swap arrangement that was never right for its business. In brief, the background is as follows. For many years, London and Westcountry had been a premier customer of RBS. Its directors were encouraged by the bank to expand. For example, in 2006 RBS approached London and Westcountry and encouraged it to add to its portfolio a large business park in Bridgwater, and it lent the company 100% of the finance required.

In July 2008, after the banks had caused the credit crunch, RBS insisted that if the company wished to have its borrowing facility renewed, it must enter into a swap arrangement on the basis of an alleged imminent threat of rising interest rates. In fact, independent analysis has demonstrated that even in July 2008 bank insiders did not really believe that to be true; it was simply a way of selling a product to make a profit on which huge bonuses were paid.

[Neil Parish (Tiverton and Honiton) (Con)]

Is it not time for the Financial Services Authority to use its teeth to put a lot of this right? Banks have abused people’s trust and forced them into these deals as a way of creating higher interest rates for their customers, whereas we want lower interest rates.

[Mr Streeter]

My hon. Friend makes an important point. Thousands of people in this country, dozens of whom are in the Gallery, are looking to the FSA to put right some of the terrible wrongs that have been done in the past few years.

It turned out that the company of which I speak had been persuaded to enter into a swap arrangement for 10 years at a fixed rate of 6.4%. Although it had been told that the deal contained a break clause after three years, it transpired that that enabled only the bank to withdraw and not the customer. The company later learned that breaking the swap arrangement would incur a penalty that seemed to fluctuate on a daily basis but would total millions of pounds. This was not known to it at the time of signing the agreement. The way in which the swap was sold patently breached the terms of the financial regulations surrounding such transactions, as other hon. Members have said.

Interest rates subsequently plummeted in a way that nobody had forecast. We all know that if companies enter into a bad bargain, that is something they have to accept, but this was not just a bad bargain: the company was mis-sold the hedging product to further the interests of the bank, not the customer, and the detailed and complex terms were never fully explained to or understood by the directors of the company.

--- Later in debate ---

[Neil Parish]

Does my hon. Friend think that, in many cases, bank head offices put huge pressure on local managers to sell these products, which local managers actually have no knowledge about?

[Heather Wheeler]

That is becoming clearer and clearer as this debate goes on and as more and more constituents come out and tell us their stories.

Two advisers visited my constituent and went through all the advantages of an IRSA, but they did not mention any possible downsides or advise him to take specialist independent advice about the IRSA. He was also told that he could not get a loan if he did not take out the IRSA, giving my constituent very little choice over the matter and putting him under considerable pressure to accept. It has since become apparent to him that the so-called advisers were just sales people from the bank set on selling him this product, regardless of any consequence to himself or his business.

To my constituent’s knowledge, he having researched the matter, only two companies in the UK at the time were qualified to give advice, but both belonged to large City firms that would have been beyond his budget. My constituent is now left with a product that will have cost him £200,000 by the end of this year alone. I think we would agree that this is a considerable sum for a garden centre. He has had to make several redundancies, as well as personal sacrifices, to remain solvent, and his business is clearly feeling the ramifications; the turnover, which was £2.2 million at the time, has dropped, with the marketplace as it is, to below £2 million.

Furthermore, it is evident that banks are not taking claims of mis-selling seriously. Another constituent of mine, the owner of a motorcycle company, has had a long banking relationship with Lloyds. In fact, they used to use Lloyds to buy stock rather than property, and had loans from it for many, many years. It was important that they had this strong relationship with their bank, yet, since they fell into the trap of buying an IRSA, incurring huge costs, the bank appears to have little interest in dealing with the matter satisfactorily. In February, my constituent’s solicitor sent a letter of claim to Lloyds; it is now June and he is still waiting for a reply.

The situation needs investigating further. Constituents have written to me on this issue about three of the top banks—NatWest, RBS and Lloyds TSB—so the situation is far-reaching and needs to be dealt with. These heavyweight banks are effectively taking advantage of small business owners’ lack of financial expertise, bombarding them with the idea that they must enter into such agreements to get a loan. Indeed, this could be one of the biggest financial scandals to come to light since PPI. The agreements need to be made more transparent, so that people are fully aware that such products have significant break costs and are viewed as separate from the loans that the individuals concerned originally wanted to take out.

I urge the Minister to take steps wherever possible to support small and medium-sized enterprises and to ensure that where there is widespread misconduct against them, as in my constituency of South Derbyshire, appropriate action is taken to support them. I look forward to hearing her concluding remarks and hope that she will take my constituents’ cases on board.

Petrol and Diesel

Neil Parish Excerpts

Wednesday 23rd May 2012 Westminster Hall

[Neil Parish (Tiverton and Honiton) (Con)]

Will my hon. Friend give way?

[Robert Halfon]

I will in a minute. Because of where they are sitting, I am concerned that two of my colleagues, including my hon. Friend the Member for Tiverton and Honiton (Neil Parish), have joined the other side—I hope not. The Office of Fair Trading has not investigated the UK oil market since 1998, despite the fact that British petrol and diesel prices are among the highest in Europe, so we need a proper investigation.

[Neil Parish]

My hon. Friend makes a great case for a reduction in petrol and diesel prices. Oil companies, I believe, take far too much. When crude oil prices go up, they immediately put up their prices, but when the crude prices come down they take for ever to bring their own down. We need a thorough investigation into the oil companies.

[Robert Halfon]

My hon. Friend is exactly right, which is why I am arguing that the Government should force the Office of Fair Trading to launch an investigation into the uncompetitive nature of oil companies.

The third issue is the problem of local variation in petrol prices, especially in rural areas and towns such as mine. In Harlow, fuel is always 4p to 5p more expensive than it is a couple of miles down the road. I have complained to the OFT. Its letter was a classic Sir Humphrey reply, giving a lot of sympathy and a whole load of reasons why nothing could be done.

Financial Services Bill

Neil Parish Excerpts

Monday 23rd April 2012 Commons Chamber

[Yvonne Fovargue]

I do not believe that it has yet been confirmed that they will include the power to suspend a company. I would like the Minister to address that. If the FCA has that power and has the resources to act, that would help in cases where the company is breaking all the voluntary codes—it has been proved again that a voluntary code is not working. Again, however, consumers do not look to see whether such companies are regulated; they just need the money. They simply go to the nearest company—possibly the one at the top of the internet or possibly the person or company that sends them an unsolicited text. Consumers do not shop around for such loans.

Consumers need a robust regulator, and although I welcome the move from the OFT to the FCA in new clause 4, the Government need to clarify what that means for consumer protection. There needs to be a robust deterrent for firms entering the market. The bar needs to be set much higher. There also needs to be a real deterrent. I was therefore pleased to hear the Minister say that the £50,000 limit did not apply and that there could be an unlimited fine, because I believe that £50,000 will quite often be written into the business plan as a write-off. There needs to be the power and, as importantly, the resources to supervise and to stop bad practice at an early stage. Two years down the line is too late for the innocent people who have walked into the trap. We need a real consumer champion. As Which? has often said, what we want is a watchdog, not a lapdog.

[Neil Parish (Tiverton and Honiton) (Con)]

I apologise to the House for not being here at the start of the debate.

I congratulate the hon. Member for Walthamstow (Stella Creasy) on her amendment 40, because payday loans and doorstep lending are a huge problem. There are many loan sharks out there and they need to be put back in their boxes. We need serious financial health warnings about their conduct, so that our constituents have some idea of how much they are borrowing and how much they will have to repay. For instance, anyone borrowing £100 at 2000% will have to pay back up to £2,000. That needs to be clearly laid out when people are taking out such loans. As has been pointed out, APRs—annual percentage rates—are not always understood by our constituents. Therefore, if they could see exactly what they had to repay, they would be much less likely to take out such loans.

[Lorely Burt]

The point of payday lending is that it should be for a very short period. Such issues arise when there are innumerable roll-overs, as outlined by the hon. Member for Walthamstow (Stella Creasy). What we hope the industry will do and the review will achieve is either to confine roll-overs to a small number or to abolish them altogether, which would address the problem of the £2,000, which no one in this Chamber wants to see.

[Neil Parish]

The hon. Lady is absolutely right. It needs to be clearly set out when people take out a loan that such sums could be the result if they are unable to repay it. Let us consider the analogy of tobacco. We no longer allow tobacco advertising, and shops cannot even display packets of cigarettes any more, yet people can ring up Wonga on their mobile phone and take out a loan for which they will be charged 4,214% interest.

[Stella Creasy]

Does the hon. Gentleman agree that, although limiting the number of roll-overs is certainly a step in the right direction, there is a risk that it could result in what has happened in America, where such a limit has led to firms paying off someone’s loan and starting a new one in order to circumvent the regulation? We need a regulation with clear, explicit powers to act in relation to these companies in a way that they cannot shrink away from.

[Neil Parish]

That is absolutely right. Many of the people taking out these loans earn less than £15,500 a year and therefore cannot afford the loan in the first place. I have sympathy for their position, but are we really helping them by allowing them to get into the hands of loan sharks, which results in their having to pay back huge amounts of money that they simply do not have?

I have made the point before that if financial companies and loan sharks are arguing that they need to charge huge amounts of interest because people are such a high security risk, they should not be lending them the money in the first place. Let us remember the old adage about finance: these companies will lend us an umbrella when the sun is shining, but they will take it away again as soon as it starts to rain. In the circumstances that we are describing, they should never have made the loans in the first place. Citizens Advice and financial advisers often tell us about people who have got themselves into huge amounts of debt, perhaps through no fault of their own.

It needs to be made absolutely clear to people what to expect. I am not a great believer in huge amounts of regulation, but I do believe that the consumer should be able to see exactly what they are signing up to at the outset, and be made fully aware of the consequences of their actions. They often do not understand the terms if they are hidden in the small print or expressed as complicated percentages, but if they were told, “You can borrow £100, but if you don’t pay it back on time, you could end up paying £2,000 back”, it might make them sit up and think about exactly what they were borrowing. They might then choose not to do it, or to go to someone who could lend them the money at a better rate.

The Government are doing a great deal to increase the use of credit unions, and we need to do much more work on that. Perhaps we should look into ways of financing them. I have a very successful one in my constituency, and we need to build on that. Only a small percentage of people here borrow money from credit unions, unlike in Ireland, where almost 50% of people have access to such loans.

[David Mowat (Warrington South) (Con)]

My hon. Friend mentioned Wonga, and he was right to suggest that 4,000% is an absurd rate of interest. Does he have a view on the rate at which interest should be capped for a fortnight’s payday loan?

[Neil Parish]

Yes, I do. Many people in the banking sector would probably disagree, but I believe that anything over 50% is far too high. It is obscene and immoral to allow companies to go on charging vast amounts of interest—I do not care who they are—and that is why we have to take action. I am looking to the Government to do so, not only through legislation but through stating that such companies should clearly set out their rates of interest and the consequences of non-repayment, so that our constituents can take advantage of credit that is competitive and that will not ruin them.

[Sheila Gilmore]

In speaking to the new clauses and amendments in this group, the Minister appeared to say that many of them were unnecessary because the issues would be dealt with through the setting up of the Financial Conduct Authority. However, it is our role as parliamentarians to take up these issues, to state explicitly that we need to give political guidance on the matters that our constituents find important, and to discuss the work that needs to be done by the FCA. There is no reason why these measures should not be incorporated into the Bill. That is surely better than waiting for four or five years, only to discover that the problems have not been addressed because the means of doing so had not been set out as clearly as they might have been. I hope that the Government will therefore reconsider their position on this.

I am surprised at the way in which the Minister dealt with amendment 55. His objection to its proposals on legal aid and legal advice seemed to be that they would undermine the provisions of the Legal Aid, Sentencing and Punishment of Offenders Bill. Perhaps I have got this wrong, but I had understood that the justification for restricting legal aid was a financial one. We have been given the usual argument that the country is in a financial mess, we have a deficit and we have to save money on the legal aid bill, among many other things. It is therefore disappointing, when someone comes up with another way of financing legal advice for complicated cases, that that is not acceptable either. The Government therefore seem to be suggesting that granting legal aid in such cases is, in itself, a bad thing.

After all, we are not stopping litigation, and we are not preventing people with plenty of money from litigating on any issues. The ending of legal aid will simply result in considerable detriment for people who do not have the money to pay for their legal advice. It is regrettable to say that the proposals would somehow undermine the Government’s intentions. When we were debating the Legal Aid, Sentencing and Punishment of Offenders Bill, various speakers on the Government Benches said, “We would like to do these things, if we had a way of funding them.” They were not saying, “We really do not want to do these things at all.” They seemed to be saying that the measures were being brought in with some sadness, so when someone comes up with a partial solution, it is a shame that we cannot investigate it further.

Amendment 37 seeks to make it explicit that the work of the Money Advice Service should be to help those with the greatest problems who are suffering particular difficulties as a result of financial exclusion. The previous Government tried to address those problems through various formats. The present Government are suggesting that this will be done anyway, and that the service will be the same for everybody. However, that assumes that everyone is starting off on the same footing, which is not the case. Many people have limited choices and are therefore more likely to get into financial difficulties. The Money Advice Service should be giving those people a specific amount of its attention, and to spell that out in the Bill would not be unreasonable.

I listened to what the hon. Member for Solihull (Lorely Burt) said about the phasing out of debt management companies. We are not saying that such companies that operate on a commercial basis should disappear. The amendment suggests that it should not be the individual consumer who pays the up-front price for those services. There are alternatives, and some commercial companies could continue to operate if the financial organisations were to foot the bill. We shall be seeking to achieve that.

Finally, I want to say how important it has been that people have campaigned on these issues; for example, my hon. Friend the Member for Makerfield (Yvonne Fovargue) has campaigned hard on debt management companies, while my hon. Friend the Member for Walthamstow (Stella Creasy) has campaigned on high-cost credit. We are now some considerable time on from when we had a big debate in this place, with many Members attending and speaking on these issues, yet we are so little further forward.

If we look at the wording of amendment 40, it makes no specific pitch for a particular cap or how exactly to achieve the aim; it simply asks the FCA to make the rule. Further discussion and consultation will be necessary about what those rules should be, but the amendment asks the FCA to make this an important and early part of the work it does. I do not view that as at all unreasonable.

The alternatives proposed are not good enough. Financial education is fine, but when facing a difficult situation, no amount of financial education is good enough when there is so little choice. Sometimes regulation and financial education are proposed as alternatives, but I do not think they are. It would be great if people were better financially educated, but in a tight spot, that is not enough.

Finance (No. 4) Bill

Neil Parish Excerpts

Monday 16th April 2012 Commons Chamber

[Julian Sturdy]

My hon. Friend is right that any cut in fuel duty or reduction in potential rises that are coming down the line has a huge impact on the Treasury’s finances, and the money always has to be found elsewhere. However, I go back to my original point, which will have some resonance across the House: rural areas are particularly affected by high fuel prices and that has an impact on the rural economies. I ask the Exchequer Secretary to keep the matter constantly under consideration whenever he looks at increasing fuel prices.

[Neil Parish (Tiverton and Honiton) (Con)]

My hon. Friend makes a good case for reducing fuel duty, especially in rural areas. However, I also recognise that the Chancellor has only so much money and that taking people who earn up to £9,000 out of tax will help many lower-paid workers in many rural areas. That will help. We must concentrate our finance on where we can put it to best use.

[Julian Sturdy]

I agree. Raising tax thresholds will be hugely helpful, and I will speak about that later. My hon. Friend is right that the number of people we will take out of tax has sadly been a little lost in the press and media coverage of the Budget. We must champion and emphasise that policy.

I want to consider another controversial issue at a household level, which several hon. Members have already mentioned: the child benefit reforms in clause 8. In the early consultation on the proposals, I wrote to Her Majesty’s Treasury, asking for them to be reviewed. The amendments in the Budget are clearly positive developments, which brought some fairness back to the policy. My concern now is about how it will be implemented and whether the costs of administering the reduction in child benefit will be worth the benefits. I hope that more light will be shed on that in due course. I would also like to put on record again my support for transferable tax allowances as a way of increasing fairness in the system. I believe that Ministers are still examining that, and I hope that it will get due consideration.

My hon. Friend the Member for Tiverton and Honiton (Neil Parish) briefly raised the personal tax allowance changes that the Government have made. Again, I commend the Government for raising personal tax allowances faster to ensure that more of the lowest paid are lifted out of paying tax altogether. That is an excellent policy and a very Conservative principle.

The controversy about the so-called granny tax in clause 4 is understandable. I have great sympathy with those who are unhappy about the changes, but I must make a couple of points. We live in extreme times. The largest budget deficit since the second world war requires a strong Government to make decisions that they would not choose to take in other circumstances. Opposition Members can attempt to make political hay out of such decisions, but they were not charged with the responsibility of cleaning up the current mess. With an increasing state pension, the triple-lock guarantee and the protection of key benefits such as free eye tests, prescriptions, TV licences and bus travel, pensioners remain at the top of the priority list when it comes to protecting individuals from the full impact of the economic crisis.

In summary, the Bill contains a great deal of positive, forward-thinking and private sector-encouraging policies. It deals with the difficult but necessary financial decisions and judgments, which will be truly appreciated and tested only in the fullness of time, and yet the message is almost more powerful than the contents. The Bill is unashamedly proactive in building a more competitive international economy. For that reason alone, I hope hon. Members give it full backing tonight.

Amendment of the Law

Neil Parish Excerpts

Thursday 22nd March 2012 Commons Chamber

[Andrew Griffiths]

I should say that what I meant when I spoke about the Chancellor was a lack of clarity in relation to yesterday’s statement.

I have with me a private and confidential presentation—

[Neil Parish (Tiverton and Honiton) (Con)]

I welcome what my hon. Friend is saying about beer, but I am worried that he is suddenly targeting cider. There is a great amount of cider in my constituency, and I would be worried if he wanted extra tax on it.

[Andrew Griffiths]

I assure my hon. Friend that I am not targeting cider; what I want is fairness in the system.

The presentation I mentioned, which is used by the makers of Stella Cidre, clearly states the differences in duty. It says that the duty per hectolitre paid on Stella Artois, at 5% strength, is £86.60, the duty paid on Strongbow is £36.01, and that there is a difference of £50.59. At the top it says: “Why cider? Favourable duty position resulting in margin opportunity”. As a result of our taxation system, we are penalising beer. Every time somebody chooses to have a pint of cider rather than a pint of beer, the Treasury loses 50p. All we are calling for is some fairness in the system.

Last week at Prime Minister’s Questions, I asked the Deputy Prime Minister what measures he had in place for beer, and he said that he wanted to support community pubs. The best way to do that is to give beer a break. We want a fair taxation system that recognises the importance that beer, as a lower-strength drink, can have in our society. We want recognition of the efforts that brewers are making in relation to responsible drinking and reducing the alcohol by volume of their products. I commend the Government for their work on the 2.8% strength beers that were introduced recently. We recognise that the community pub is at the heart of the big society and that it has an important part to play in all our communities. I urge the Treasury to look at this again and work out what we can do to give British beer and British pubs a fair break.

--- Later in debate ---

[Mark Lazarowicz]

The measures on corporation tax will have a beneficial effect on some businesses, but not so much for the smallest businesses. I am particularly concerned about the small businesses in a fragile situation in many parts of my constituency, which does not, relatively speaking, have very high unemployment overall, although some areas do have high unemployment.

First, we need a general 2.5% reduction in VAT that would benefit all types of businesses, as well as relieving people on low incomes, in particular, from the difficulties in which they find themselves as a result of the general economic situation and the policies of this Government. We also need targeted cuts in VAT. It is extremely disappointing that yet again the Government have rejected the call, not only from Labour Members but from organisations such as the Cut the VAT Coalition, which has called for VAT on home maintenance, repair and improvement work to be cut to 5%. That would not only be a boost for the depressed construction sector but would create work for joiners, plumbers, electricians and painters, and opportunities for young unemployed people looking for their first job.

Of course, one has ask how one would pay for a temporary cut in VAT. If the argument is that the top rate of tax is being cut because it will bring in more income by encouraging economic activity—a fairly dubious argument in my view—surely temporary cuts in VAT of the kind that I and my party have argued for are much more likely to lead to an immediate increase in economic activity than the cut to the top rate that is proposed in the Budget.

[Neil Parish]

I am interested in why you say that it is dubious to cut the rate from 50% to 45%, when in 13 years of your Government, you did not put it up from 40% to 50%.

[Mr Speaker]

I am extremely grateful to the hon. Gentleman, but I am not sure why he refers to my Government. There should be no reference to my Government in these matters.

[Neil Parish]

I meant the Government of which the hon. Member for Edinburgh North and Leith (Mark Lazarowicz) was a member.

[Mr Speaker]

I am sure that that is what the hon. Gentleman meant. It would be good in future if that is what he said.