Commercial Financial Dispute Resolution Platform

Richard Arkless Excerpts

Thursday 15th December 2016 Commons Chamber

[John Howell (Henley) (Con)]

It is a great pleasure to follow the hon. Member for East Lothian (George Kerevan). I congratulate him and I congratulate the Backbench Business Committee on granting the debate. I rise to speak as chairman of the all-party group on alternative dispute resolution. We are about to embark, in tandem with the hon. Gentleman’s all-party group, on an inquiry into precisely what he has proposed in the debate. We will be looking at the sort of dispute resolution that could be put into place for these sort of disputes.

I want to concentrate on the part of the motion that refers to the creation of

“not ad hoc compensation schemes, but a long-term, effective and timely dispute resolution mechanism”

that can be used to help solve these sort of issues. The hon. Member for East Lothian has set out admirably the reason for doing that, but I would say that the dispute mechanism already exists in the form of the alternative dispute resolution regime. I shall say more about that.

Businesses, including small and medium-sized enterprises, are left with no option except prohibitively expensive appearances in court. One of the great advantages that the alternative dispute resolution system brings is the potential to reduce the costs involved. This is not something that is strange to the financial services sector. A large number of commercial sectors automatically include alternative dispute resolution clauses within their commercial contracts.

The all-party group held a meeting on this recently, where we went through subject by subject, looking at how ADR could be incorporated within the system and used more often. We looked at the commercial area in quite substantial detail. One of the great things we were able to do was to bring together quite a disparate body of people who operate in the ADR field to see whether there were some common threads between them in approaching disputes such as those the hon. Gentleman mentioned and taking them forward.

The good news is that there was quite a lot of agreement about what we were aiming for, even though some of the methods of getting there were slightly different. For us, ADR includes arbitration, mediation, adjudication, expert determination, dispute boards and online dispute resolution. We also looked at examples to see how those elements could be—some already are—incorporated by financial services sectors in their contracts. The good news is that these were already being incorporated into contracts, so what we needed to do was to put pressure on the sectors to include them as a matter of course in their contracts, because that would help to solve these disputes.

[Richard Arkless (Dumfries and Galloway) (SNP)]

Will the hon. Gentleman clarify which sectors of the financial services he is referring to? Is it the retail sector or the business-to-business sector that is incorporating ADR? I have not seen many commercial contracts with ADR clauses in them from the banks.

[John Howell]

From memory, I think it was the business-to-business sector primarily, but there is absolutely no reason why it cannot include the business-to-retail sector as well. There is a great deal of ability for individuals to bring quite complex cases in a way that does not involve going to the courts, as I shall explain.

We are running out of time, so I shall deal with the issue right now. We all know that trying to bring a case to court is a very expensive business. It requires extremely expensive lawyers. What the arbitration or mediation process holds out is the ability for an individual to sit in arbitration and mediation between people in order to bring the dispute to a much earlier resolution. It could be said that this does not take away the need for a court to be involved, which is absolutely true, because the awards of the arbitration panel or the mediator have to be enforced by the courts. However, that is a long-stop for the ADR process, and I think we will see it being brought into play more infrequently.

Of course, Lord Justice Briggs has commented that he would prefer to see “alternative dispute resolutions” not called that—he wants the “alternative” taken out so that they are called “dispute resolutions”. I think that fits well with our own view of things. The other side is the issue of time and stress involved in taking forward cases within this sort of framework. It is absolutely true that the arbitration and mediation process takes away a lot of the stress of appearing in court and allows these sort of issues to be settled in a much more friendly way.

I look forward to the work that our two all-party groups will do on this issue. I think that the framework is already there, and I think we need to encourage banks to include clauses within their commercial contracts so that we can get back to ADR becoming the standard mechanism for resolving disputes, rather than using the internal complaints procedures of the companies as the starting point and the ending point of much of the discussion that takes place on these issues. On that note, I am happy to allow another Member to continue the debate.

--- Later in debate ---

[Richard Arkless (Dumfries and Galloway) (SNP)]

I add my thanks to my hon. Friend the Member for East Lothian (George Kerevan) for securing this very important debate, which has caused a number of Members to be contacted by constituents who own small businesses and have been fleeced and mis-sold the most awful and inappropriate hedging products, leading not only to economic disaster but, as many have said, mental health problems; there have also been other effects on health and wellbeing. My hon. Friend made an excellent speech, as always. He set the tone of the debate perfectly by saying that this is a time to move beyond individual cases. Clearly, we all have these cases, but he meant that we need to look beyond discussing them and see whether we can come to some form of permanent solution.

[Calum Kerr (Berwickshire, Roxburgh and Selkirk) (SNP)]

I commend my hon. Friends for turning up in numbers. I am sure that everybody across the House has constituents deeply impacted by this, and it is disappointing, despite Christmas and all, that the House is so poorly attended. Will my hon. Friend join me in praising the work of Richard Samuel, who back in May, when we first looked at this idea, drew the parallel that we have been discussing? Will he commend my hon. Friends for bringing forward—I hope that the Government will see this for what it is—proactive suggestions as to how we improve things? Yes, we rage against the system, but we are trying to be proactive and work with the Government to improve the world for small businesses.

[Richard Arkless]

I entirely agree. My hon. Friend puts his point passionately and very well. It is time for mourning to stop and for solutions to be found.

My hon. Friend the Member for East Lothian made an incredibly important point about the link between low productivity levels in the UK and the threat and the pressure that small and medium-sized enterprises have been under, particularly since 2007-08. There is no smoke without fire. I am convinced, having listened to him, of the causal link between the problems that we are discussing and low productivity of SMEs.

I was particularly struck by my hon. Friend’s comments about arrangements between solicitors’ practices and large banks. I declare an interest of sorts, in that I was a practising solicitor who was seconded to a large financial services organisation. How it works is very peculiar. I was given to the bank for free by my firm, and the bank created a so-called value account. My salary was set into this value account, which triggered work for my firm. We can see the problem that SMEs have in trying to find highly reputable, highly skilled corporate lawyers; they are all working for firms that have these links with the banks. These firms do not bite the hand that feeds them; they need this work. That is another manifestation of the complete inequality of arms between SMEs and large financial services organisations. My hon. Friend was right to say that banks’ terms and conditions—the secret terms of the contract—have evolved over the years, further exacerbating the inequality of arms.

My colleague on the Justice Committee, the hon. Member for Henley (John Howell), made a very interesting point—I was grateful to him for taking my intervention—about alternative dispute resolution clauses in contracts. While I would clearly welcome ADR clauses in all these types of commercial contracts, I am slightly confused, because I have never seen them in the case of these hedging products. As to asking banks to incorporate these clauses voluntarily, it stands to reason that the commercial risk will drive whether they are included. We are talking about risky derivatives. Have we ever seen ADR clauses in hedging product contracts? If not, I have no idea how we could persuade the banks to incorporate them voluntarily, given the risk.

[John Howell]

The point that I was trying to make was that it is not just the commercial circumstances that will force the inclusion of ADR clauses, but the way in which we make ADR known as a group of activities that can help.

[Richard Arkless]

In that sense I completely agree. The hon. Gentleman is right to point out that ADR, as a concept, exists; we are asking not for a new beast to be created, but for an ADR forum to be specifically linked to the contracts and disputes under discussion. However, I am cynical about banks’ motivation in putting the clauses in particularly risky contracts.

The right hon. Member for Delyn (Mr Hanson), who is also a colleague of mine on the Justice Committee, made a typically powerful speech in which he drilled home the perverse fact that the banks under discussion are in public ownership. Essentially, public funds are being used to push businesses against the wall and asset-strip them, which has consequences. It is very hard to accept that that is being funded by our taxpayers’ money. The right hon. Gentleman made that point extremely well.

The hon. Member for Wycombe (Mr Baker) touched on a stark irony when he referred to the old banking system in Scotland and the rest of the UK. I wholeheartedly agree with him that strict joint and several liability incentivised a good culture and good practice, but the pendulum has swung entirely in the other direction. I will come on to discuss the crux of the issue, which is banking culture, but he made that point well.

[Hannah Bardell]

On culture, a number of people dealt with my constituent over many months, and he felt that the culture being driven by the bank was not for the majority. We want to believe that most people who work in the banking sector are good people, but the culture being driven from the top of those organisations means that staff end up moving and are deeply dissatisfied at not being able to serve customers properly.

[Richard Arkless]

My hon. Friend will be unsurprised to hear that I completely agree with her. My experience is that, although many good people work in banks and we should not tar them all with the same brush, which we are inevitably tempted to do, banks see businesses and individuals in the retail sector as units to extract revenue from. Unless banking returns to being an ethical practice of looking after people’s interests, as opposed to extracting revenue, we will not make the vital cultural change necessary to sort out the issue.

I was particularly struck by what my hon. Friend the Member for Coatbridge, Chryston and Bellshill (Philip Boswell) said: even before a contention is raised, there is a reluctance to complain. Banks feel the inequality of arms before we even get to the courts or a dispute resolution system. I think that is a consequence of the public perception of the inequality of arms, and it has produced a fear factor. Clearly, an ADR system would go a long way to reducing that fear factor among SMEs.

That point was corroborated by the vice-chair of the all-party group on fair business banking, my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr). He also made a good point about the Financial Ombudsman Service and inconsistencies in the adjudication of retail banking issues. During my time at a bank, I had many dealings with the FOS, and I assure Members that it was possible to put to it two cases with exactly the same facts and circumstances and get two completely different results.

The right hon. Member for North Norfolk (Norman Lamb) made an excellent and powerful speech, from which I took two points. The first was the effect on mental health and wellbeing, which is often forgotten about; we are not just talking about economic consequences. The second was whistleblowing, which was picked up by my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin). The right hon. Member for North Norfolk will be pleased to hear that we intend to table two amendments to the Criminal Finance Bill. One will seek protection for whistleblowers, and the other will ask for a banking culture review. I would be grateful if he would consider them with his colleagues and perhaps support them in due course.

My hon. Friend the Member for Edinburgh West (Michelle Thomson) wowed this Chamber last week—I think that deserves a mention—and I do not think that any of us could have failed to be struck by her reference to the Komodo dragon. She attacked the underlying culture in banks and said how predatory they can be.

My hon. Friend the Member for East Renfrewshire (Kirsten Oswald) made an excellent speech. I was particularly struck by her example—not a commercial case, but a retail case—of an ordinary individual whom the bank are accusing of going to another branch with identification and withdrawing money. Surely the complaints process could look at the closed circuit television and the FOS could be more inquisitorial in assessing the case. I hope that that message will go out.

When I worked for a bank and a retail customer threatened to take a matter to the FOS, we were told very clearly that that incurred a cost to the bank. I forget the exact figure, but it was between £400 and £600. When it got to that point, a quick calculation was made, and if the case could be settled at less than £600, that was what happened and the bank was not dragged through the FOS. That just demonstrates that we are units to extract revenue from, and nothing more.

I agree with my hon. Friend the Member for Aberdeen South (Callum McCaig), who was the first to say that the ADR system in itself will not fix the entire problem. He was absolutely right to mention culture. On RBS’s approach, he was told that this was water off a duck’s back, and that is absolutely true: these are actuarial, commercial calculations. The human cost is completely negated. A calculation is made of liability and potential cost, and the bank will take whichever is lower.

That concludes my summary. If I missed out any colleagues, I apologise. I agree that it would be a good idea to ease access to justice for SMEs that have contentious issues with large banks. That would make it cheaper and easier, and it would certainly help to equalise the inequality of arms. However, whether a case is considered by the FOS, a small claims court, a fast-track court, the Supreme Court, the Court of Appeal or an ADR, it is the same case, with the same contract and the same terms and conditions, that will be considered from court to court, and if all those dispute resolution vehicles do their job, they ought to come to the same conclusion. Although that would be a welcome step, we need to go beyond that and look at the reasons the organisations were sold the products in the first place. That points to the culture perpetuated by the banks. If we can fix the culture and the over-aggressive mis-selling of products that businesses and retail customers simply do not understand, we will not end up in a situation where we need an ADR. Although I welcome the proposal, we need to change the culture in order to make a real difference.

Concentrix

Richard Arkless Excerpts

Wednesday 26th October 2016 Commons Chamber

[Rebecca Long Bailey]

My hon. Friend makes a powerful point; he is 100% correct. This is not simply a case of rapping Concentrix on the back of the hand. These contractual failings have caused real human suffering, and the Government need to address them urgently.

[Richard Arkless (Dumfries and Galloway) (SNP)]

Is the hon. Lady aware of the spikes in such claims that she talks about arising in the week before conference recess and in the days following, when Concentrix was stripped of the contract? We all know what is happening here: drilling down into the contract to avoid exit penalties. Will the Government shed any light on that?

[Rebecca Long Bailey]

I hope that the Minister will address the hon. Gentleman’s question in her speech because we all want to hear the answer.

Several provisions in the contract relate to payment by delivery. The head of the National Audit Office stated in June 2015:

“While its supporters argue that, by its nature, Payment by Results offers value for money, these contracts are hard to get right, which generates risk and cost for commissioners…the increased risk and cost may be justified, but this requires credible evidence. Without such evidence, commissioners may be using this mechanism in circumstances to which it is ill-suited, to the detriment of value for money.”

Under schedule A6.1 of the contract, HMRC required Concentrix to deliver, over the duration of the contract, some £1.03 billion in savings in annually managed expenditure. I appreciate that the contract used estimates to forecast potential savings, but given the model, how could anyone have been certain about the position without a crystal ball? In answer to parliamentary questions, it was revealed that total savings in annual managed expenditure were £2.3 million in 2014-15, £122.3 million in 2015-16, and £159.5 million in 2016-17, to mid-August 2016.

House of Lords Reform and Size of the House of Commons

Richard Arkless Excerpts

Wednesday 19th October 2016 Commons Chamber

[Dr Eilidh Whiteford]

Will the right hon. Gentleman give way?

[Richard Arkless (Dumfries and Galloway) (SNP)]

Will the right hon. Gentleman give way?

[Michael Gove]

No.

We are not hearing about the NHS because there is an NHS crisis in Scotland. The SNP lost a vote in the Scottish Parliament not long ago as a result of its mishandling of the NHS in Scotland. Recently, efforts to ensure adequate recruitment of general practitioners in Scotland failed. Why are we not hearing about education from the SNP? [Interruption.] Just a minute. We are not hearing about education from the SNP because recently, and humiliatingly—

[Richard Arkless]

On a point of order, Mr Deputy Speaker.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I do hope it is a point of order, Mr Arkless.

[Richard Arkless]

I am curious about the right hon. Gentleman’s assertions, Mr Deputy Speaker. The wording of the motion on the Order Paper is clear and I ask you kindly to bring him into line to discuss it.

[Mr Deputy Speaker]

I will make a better suggestion. I will decide who is in order and when. I would not waste any more time on interventions, however, as we are struggling for time and I want to ensure that everyone gets equal time.

Quantitative Easing

Richard Arkless Excerpts

Thursday 15th September 2016 Commons Chamber

Motion lapsed (Standing Order No. 9(3)).

[Richard Arkless (Dumfries and Galloway) (SNP)]

On a point of order, Mr Deputy Speaker. I apologise for the late notice of my point of order, but it is about a situation that has been developing this afternoon. Dozens of my constituents have approached me this afternoon having had their tax credits withdrawn arbitrarily by Her Majesty’s Revenue and Customs through the Concentrix contract. HMRC has designated a team of people to deal with these issues, which are apparently UK-wide. It takes a 45-minute call to deal with one case. I have dozens of constituents this evening who literally have no money to feed themselves or get the kids out of the door tomorrow morning. I am very concerned that the House is rising at this point and I will not be able to bring these matters to the attention of the Department for Work and Pensions or the House today, tomorrow or on Monday, to cajole some action to get this fixed. There are people who are literally about to starve and the House is about to disappear on recess. Is there anything that you could offer me by way of advice?

[Mr Deputy Speaker]

One thing I would say is that you have got it on the record. I think that Ministers are listening and they have got the point. This issue has been debated this week on a couple of occasions; in fact, there was an urgent question on it yesterday. There are still Ministers here, and I would have thought that the message will be going straight back to HMRC. I think there has been an indication from the Minister to say, “Let’s have a conversation,” so if nothing else, at least you have made progress in making him aware now.

Economic Value of Golf

Richard Arkless Excerpts

Wednesday 13th April 2016 Commons Chamber

[Karl MᶜCartney]

I shall come on to some of the other options for people who want to play golf in their retirement.

All that shows why golf adds such value to our economy, to employment, to our environment, and to our public health. I felt that it was important to secure this debate because I wanted to ensure that golf received the recognition that it deserves, and also to build on the recent re-formation of the new all-party parliamentary group for golf—an important new step. For far too long, golf has only been recognised in both Houses by the Parliamentary Golf Society, an august and traditional body whose role, it seems to some, has been to help traditional parliamentarians to play 19 holes together rather than celebrating the positive impact of the game throughout the nation. Some of us who came up against that closed shop in the last Parliament decided to reinvigorate the APPG with the simple aim of promoting participation in golf across the ages and sexes. Our European neighbours see ladies’ and girls’ participation rates that are double ours in the UK, and we want to close that gap. Golf can be, and is, a game to be enjoyed by all the family.

The first priority of the APPG is participation, but hand in hand with that goes an aim that is just as important—the aim to change the perception of golf. This great sport is for all ages, and we want to encourage young girls and boys to try it, whatever their background and wherever they live, and to continue to play throughout their lives with their friends and families. Who knows? It may not be a further 20 years before we see another British winner of the US Masters.

Some great work has been done by England Golf and its new chief executive, Nick Pink, by the Golf Trust and by others. All four home unions have specific projects in inner-city areas, including the national Get Into Golf campaign and help for those with disabilities to take part in the sport. In the neighbouring constituency of my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips), Lincoln Golf Centre recently launched a project to help people with dementia to play and continue to play golf, which is happily hosted by Brian Logan and supported by Anthony Blackburn, founder of Golf In Society. Before Easter I was invited to meet players and their families, friends and carers, some of whom enjoyed a morning of respite while their husbands, wives, friends or partners enjoyed some golf.

The end of April marks the start of national golf month, which I am sure the whole House will support. On Wednesday 27 April there will be an event on Speaker’s Green to promote participation in golf. My right hon. Friend the Minister has been invited, and I am sure that you, Madam Deputy Speaker—as a member of the all-party parliamentary group—and all my colleagues throughout the House would enjoy taking part.

The conclusion of the report demonstrates that golf is of considerable importance to the economic contribution of sport within the UK economy.

[Richard Arkless (Dumfries and Galloway) (SNP)]

I am interested in investment in golf tourism, and the results of that and of direct spending in constituencies. In my constituency, we have 30 courses. A £10,000 investment by Visit Scotland and the local council has led to almost £500,000 of indirect and direct revenues. Should we not be using this debate—I am sure the hon. Gentleman will agree—to put pressure on tourist boards and local authorities to put more money into attracting golf visitors to the UK, because the bang for our buck there is clearly higher than it would be elsewhere?

[Karl MᶜCartney]

I thank the hon. Gentleman for that intervention. I agree with virtually all the points he made. The many disparate and far-reaching organisations within golf need to work with those outside the sport to ensure that it achieves the participation level that it should, at various levels.

The conclusion of the report demonstrates that golf is of considerable importance to the economic contribution of sport in the UK economy. At the heart of the industry is a thriving club sector. However, the sport’s presence in tourism, hospitality, construction, equipment, clothing, betting and events are all notable areas of golf’s economic impact, as is its contribution to taxation.

The report provides a replicable economic baseline for the golf industry, against which the future development of the sport can be measured. With golf making its return to the Olympic Games at Rio later this year and the economy on an upward growth path, the economic and sporting conditions are favourable for the UK golf industry to develop further. So I am looking forward to hearing the response from my right hon. Friend the Minister, including his acceptance, I hope, of my invitation to him for a round of golf this summer at either Bexleyheath or Barnehurst golf clubs in his constituency, which have obviously noted his renowned sporting prowess.

I thank the House for its attention.

Financial Conduct Authority

Richard Arkless Excerpts

Monday 1st February 2016 Commons Chamber

[Richard Arkless (Dumfries and Galloway) (SNP)]

The hon. Gentleman is making a compelling case and I echo his sentiments. My constituent, Victor Singh, owns a property company in exactly the same position. His fear is that the report is being delayed by RBS as a tactic to delay the litigation and reach a more favourable position for the bank. Does the hon. Gentleman agree that the House should use this debate to call on the FCA to publish that report as soon as possible so that the litigants can have a fair hearing?

[William Wragg]

I thank the hon. Gentleman for that timely intervention. I agree with him to the extent that I hope the voice of the House this evening will be heard loud and clear, and that the FCA will proceed with a degree of alacrity that it has so far not shown.

Madam Deputy—Mr Deputy Speaker. Forgive me—I have been thrown off course. I will not use a football analogy, I promise.

The FCA review is ongoing. We were promised it at the end of the year. Now we are told that it will be published as soon as possible. For the businesses and people who have suffered as a result of malpractice in the banks—the malpractice that the FCA is charged with investigating and putting a stop to—I think we owe them better than that. Although I am sure the FCA and its partner investigators are conducting a deep and thorough review, and there are no doubt many dozens of filing cabinets full of evidence through which to sift, two years should be long enough to present at least some preliminary findings. This two-year wait is compounded by the fact that these cases of forced liquidation and destruction of viable businesses were historic and often over a decade old. That is an awfully long time to wait for justice or closure, particularly for individuals who have had their livelihoods destroyed.

The FCA, and also the Government, should be aware of the negative impact this is having directly on the individuals involved, and also on the image and reputation of the FCA. So can the Government give an assurance today about when the FCA will conclude this review? What steps are they taking to ensure that it is delivered promptly?

In my closing remarks, I want to turn to the role the FCA has to play more widely in clean-up and reform of our banking sector. Notwithstanding the issue I have just discussed, I am not one of those who readily engage in the increasingly popular pastime of banker bashing. I believe instead that we should be proud and supportive of our financial sector, not just in the City of London, but in regional financial hubs, such as Bristol, Edinburgh, and of course Manchester, where many of my constituents work.

Our financial services sector, which leads the world in its success, innovation, and efficiency, should also lead the world in regulation, fairness and propriety. We need a sector with more competition to remove incentives to make short-term decisions purely in favour of bank profit, rather than in the interests of longer-term customer relationships. The Tomlinson report makes it clear that institutional attitude was one of the core reasons that RBS’s restructuring group acted as it did, and that needs to change. The Financial Conduct Authority is responsible for ensuring that the top management of banks instil the right culture and standards of conduct in their institutions and that this remains a priority. The FCA surely faces a difficult task in this regard, and it is a task that I do not envy, but I urge it to show its mettle.

Tax Credits

Richard Arkless Excerpts

Thursday 29th October 2015 Commons Chamber

[Bob Blackman]

That is not quite what I said. I mentioned the welfare system and said that we had a series of different welfare benefits. Whatever the problem was, the Labour Government set up a new benefit, whether a tax credit or another arrangement. During a period of relatively high employment they failed to deal with the fundamental issue, which, as the hon. Gentleman rightly points out, is low wages.

This debate was billed as the last chance to review what the Government are proposing before it became fact, but events in the other place mean that we are now in a position to make alternative proposals. Contributions this afternoon will therefore be helpful to the Chancellor in deciding what to bring forward in his autumn statement. Clearly, we have to strike a balance. The Conservative party manifesto laid out that we were going to save £12 billion in welfare. The challenge is therefore to come forward with alternative proposals on how welfare savings of £12 billion will be found. Some £4 billion of savings are envisaged from this change.

I start with sympathy for the people affected. When we reduce people’s benefits, they will always complain. When we increase the tax threshold so that they pay less tax, they will be quite happy and will not complain. When their wages are increased, they will not complain. But if we take benefits away, they will squeal. We clearly must look at the effect on individuals in the round. We must have the utmost sympathy for those people who are working full time and have no alternative but to receive tax credits to top up their wages. What can they do? They suffer a loss of income, and that will have an impact on their families. Therefore, the first thing I would like the Chancellor to do is examine the measures so that people in full-time work suffer no impact whatsoever, because this is grossly unfair on them.

Equally, we face a challenge in both the public and private sectors. Over time the Government have quite rightly reduced business taxation to encourage businesses to grow and to locate within the United Kingdom. That has got to be good news, because it has created jobs. However, they have also kept wages artificially low, and that has to change. Therefore, I greatly support the principle of a living wage, but clearly it is far too low at the moment. We need to see it increase dramatically so that work pays, instead of relying on the taxpayer to subsidise work in private industry, which cannot be right. I hope that the Government will look at that, in particular, so that we can encourage businesses to pay their staff more for the work they do. That has to be the right way to demonstrate that work should always pay.

We hear constant criticism from the Labour party about the creation of large numbers of part-time jobs in this country. One of the reasons for that is the fact that a large number of people know that if they take on a part-time job, perhaps working 16 hours a week, they will still have access to a large range of benefits. That is a lifestyle choice.

[Richard Arkless (Dumfries and Galloway) (SNP)]

Will the hon. Gentleman give way?

[Bob Blackman]

I will not give way again.

That is a lifestyle choice that people make. What we can see is that Government proposals and Government restrictions on taxation and benefits change people’s habits, so what we have to do is enable people—

--- Later in debate ---

[Richard Arkless (Dumfries and Galloway) (SNP)]

I welcome the Chancellor’s announcement that he made on Tuesday to bring measures forward to mitigate the changes to tax credits. I suppose the question on all our lips is how far his inclination to mitigate will stretch—will he mitigate for some or all? My message to the Chancellor is very clear: changes must be offset in full; tax credits should be tapered so that people do not lose out; the changes should be phased in; and the so-called package of changes must increase incomes at the same rate as tax credits are tapered off.

It is easy to admit that I have some sympathy with the principle. I think every sensible Member would agree that work should pay—of course it should. I would much prefer it if the cost of subsidising poor wages were borne by business. In an ideal world, the Government would not need to prop up wages, but we do not live in that ideal world at the present moment. The economy is not in that position. The Government had intended to put the cart firmly before the horse.

As a cynic, I do not believe that the Chancellor’s statement had compassion at its heart. For me, it was driven by fear—fear of losing power in the phoney constitutional war now started with the other place.

[Brendan O'Hara]

I agree with my hon. Friend that the second Chamber has forced the Chancellor’s hand, but does he agree with me that its intervention does not legitimise the constitutional absurdity of an unelected, unaccountable and ever-growing legislature at the end of the corridor?

[Richard Arkless]

Members will not be surprised to learn that I agree completely with my hon. Friend’s statement. The fact that the other place has seen sense on one particular issue does not legitimise the mess, in my view, that the other place represents. The Chancellor’s statement the other day was predicated as much on the fact that the other place was an unelected Chamber that had stuck its nose into financial matters as on anything else. If anything, that corroborates our view that the other place should go.

Our urge to change these proposals comes from compassion: from putting ourselves back in the shoes in which many of us walked not so long ago; from figuring out what ordinary people in our constituencies would lose; and from finding that completely and utterly unacceptable. We were elected to this place to protect vulnerable people, not to punish them.

I was going to use this time to talk about some of my constituents in detail, and to explain precisely how the tax credit changes could destroy their lives. I was going to tell the House about Katy and her son Olly, and I will tell the House a little bit about them. They will lose more than £100 a month from a budget that is already impossibly tight. That could mean that Katy and Olly may no longer be able to go on mountain bike trips at weekends. Katy tells me that she will move from fresh to frozen food. Katy has no support network for Olly. She has no choice but to work part time. Her sister Nikki recently passed away, and when Olly is not at school, she must be available to be with him. She already works all the hours that are available to her. She has absolutely nowhere to go with this.

I was going to tell the House about Jenny, who is a self-employed child minder. Her partner is also self-employed. They will lose about £130 a month. Jenny worries that her customers who are receiving tax credits will no longer be able to use her service. She told me that she literally lies awake at night wondering what this place is going to do to destroy her life.

I was going to tell the House more about Jenny and Katy, and about some others, but then I realised that those stories would only have an impact if they were listened to by Conservative Members who displayed some compassion. It is true that most of the speeches that we have heard today have moved into the realms of compassion, and I welcome that, but it is the compassion of the 300 Conservative Members who are not present that really concerns me.

Instead of considering how the cuts will affect Katy and Jenny, perhaps Conservative Members should consider how the cuts will affect them, as Members of Parliament. What have they to fear? One of the first changes that they may notice—and all us of may notice them in our constituencies—is that our high streets start to struggle even more than they are now. High streets are already struggling in my constituency, and the removal of £4.4 billion from people’s pockets—these are not internet bargain hunters; they are people who shop in our high streets—will compound an already precarious situation. If we remove the disposable income from the very people who shop in our high streets, the failure of small businesses will inevitably follow. We must prepare for more charity shops.

Members may begin to notice that the police in their local areas are busier than they used to be, and they may wonder why the number of instances of crime has increased. It will be because desperate people—young people with no hope; people who have been disfranchised from their communities and the Government—often turn to crime. If we can mitigate these changes in full, it may well be cost-effective.

Over the course of the next Parliament, Members may notice that the performance of their local schools is beginning to drop. They may see those schools falling down the league tables, and they may wonder why that is happening. It will be happening because hungry children do not learn well. Katy is beginning to worry about Olly’s education because of the proposed cuts.

Inevitably, the food budget will be the first thing that struggling families will cut, and that will have an immediate impact on the educational achievements of children in all our constituencies. How many Conservative Members—how many absent Conservative Members—enjoy dining out? Quite a few, I suspect. It is nice to have a range of different restaurants to choose from. Well, they should enjoy those restaurants while they can, because they, too, will be under threat.

The hospitality industry, in which I was brought up—in a rural area—depends entirely on a thriving local economy to sustain it. Many of the people whom we welcome to Dumfries and Galloway when they go there on holiday are people from the rest of the United Kingdom who cannot afford to go abroad: people who are receiving tax credits. The holiday will be one of the first culls from the annual budget.

Do I need to continue? Make no mistake: these tax credit cuts will have an impact on the absent Tory MPs as well. If the Government cannot mitigate the cuts in full, they will be responsible for the demise of all our communities. Those in Tory constituencies will not thank them, and I doubt that they will re-elect them. I look forward to hearing how the Government will mitigate, in full, the wide and far-reaching effects of these unnecessary and wholly ideological cuts.