The Economy and Work

Roger Mullin Excerpts

Thursday 26th May 2016 Commons Chamber

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

In the few minutes available, I shall primarily address issues relating to the criminal finance Bill. In introducing the subject, I can do no better than recognise the extremely thoughtful contribution of the right hon. and learned Member for Rushcliffe (Mr Clarke) on Tuesday. In his peroration, he made these comments in referring to the Bill:

“we in this country are very bad at dealing with white-collar crime, and there is growing awareness of that. If someone wishes to rob a bank, they go to the LIBOR market; they do not put on a balaclava and pick up a shotgun—that is much less profitable… I hope I can be reassured that the Bill will tackle not just tax evasion, which is quite rightly high on the public agenda, but money laundering.”

He concluded this part of his speech by saying:

“London is still the money-laundering capital of the world.”—[Official Report, 24 May 2016; Vol. 611, c. 450.]

The right hon. and learned Gentleman rightly pointed out the nature of the challenge we face. Many of the biggest crooks are working in the City of London. This is a major challenge that we should all be willing to address. It would be commendable if the Government eventually produced a very strong Bill, but as is sometimes said in my part of the world, “I hae ma doubts”.

If people’s behaviour and motivation are so important, that raises a fundamental concern in my mind about the flawed approach to economics that seems to dominate much of current thinking. We find that Treasury civil servants and central bankers have presided over not only corrupt practices and economic failure, but intellectual failure, too. For example, their devotion to what most people know as neo-classical economics led to their failure to anticipate the largest recession since the 1930s, and revealed their powerlessness as policymakers in the face of the subsequent stagnation of output.

The penchant of the neo-classicals for putting all their eggs in the basket of simple mathematical and statistical forecasting is based on remarkably few variables, which leads them to ignore economic problems that are not easy to measure—whether they be legal or illegal. Even Mervyn King in his book “The End of Alchemy” hinted at this critique when pointing out the failure of existing models to take into account critical changes such as the political reforms in China that led to its rapid growth. I add the inability to see how attractive the City of London has become to—

[Graham Evans]

Will the hon. Gentleman give way?

[Roger Mullin]

Certainly.

[Graham Evans]

The hon. Gentleman has mentioned London on several occasions, which makes me wonder whether there are no issues with people from Edinburgh. I remind him that Sir Fred Goodwin was a Scotsman in the Royal Bank of Scotland at the time. The hon. Gentleman should not insinuate that crooks end up only in London.

[Roger Mullin]

I thank the hon. Gentleman for the extra minute, but I never implied that at all. If he had been here at the beginning of my speech and was listening to it, he might have realised that I was citing the words of the right hon. and learned Member for Rushcliffe, who was sitting in the same place on Tuesday, and it was he who raised this very issue. If the hon. Gentleman wants to take issue with the castigation of the City of London, I suggest he looks to his own colleagues rather than to me.

Time does not permit me to go into a more detailed analysis of what needs to be done, so let me make a few suggestions. I think it would be useful if we vastly strengthened support for whistleblowing to give employees within banks and financial institutions greater confidence in raising issues such as suspected money laundering and the management of illegal assets.

As I reflect on what my hon. Friend the Member for Dundee East (Stewart Hosie) said, I believe it would be wise for the Treasury to convene a commission into the simplification of the tax code. Put simply, the more complicated we construct a tax code, the easier it is for those will mal intentions to find their way into securing gains for themselves at the expense of others. I hope we get a Bill of some substance. I hope that the Government truly wish to address those vested interests that do us all so much harm.

--- Later in debate ---

[George Kerevan]

Wait for it. This afternoon, the Chancellor promised us a better markets Bill to improve competition. We on the SNP Benches are in favour of that and will give it what help we can, depending on what is in the Bill. It is a matter of record that, in the UK, we have the most monopolised banking system in the western world. Four big banks dominate, with 80% of the market share. If we want genuine competition and better markets in finance, we need to have six, eight or 10 banks of a similar size. Until we have that, there will be no better markets or better competition.

Here is a tale: the two main regulatory bodies set up by this Government and this Chancellor to ensure more competition and better markets in finance—the Competition and Markets Authority and the Financial Conduct Authority—have failed to deliver. Why is that? There is a suspicion among SNP Members, and I suspect among Government Members, that those regulators are perhaps looking over their shoulder at the Chancellor and asking themselves, “Does the Chancellor really want us to close down, intervene in or break up those banks? Maybe we are being told to say one thing and to do another.” That is why, when we look at the small print of the Bill, we will want to see whether this is just shadow boxing and a subterfuge that allows the Chancellor to get up and say, “I’m in favour of competition, but actually—shush, shush—don’t do anything about it”, or whether it will really have teeth to take on the big banks.

I want very quickly to look at some of the things that are going on. The FCA has brokered a deal with the big banks on arbitration for small businesses who have suffered mis-selling and been bankrupted. Unfortunately, the FCA has turned a blind eye to the fact that the big banks are now signing up solicitors across the UK, including in Scotland, so that those solicitors, who are on the banks’ books and waiting for work, will not take up the cases of small businesses who feel that the arbitration process has gone against them and want to take the banks to court.

[Roger Mullin]

Corrupt.

[George Kerevan]

I hear from a sedentary position the word “corrupt”. I will not use that word, but I will certainly be looking to the Chancellor and this Government to make sure, through this Bill, that such practices by the big banks are done away with.

Finally, in my constituency of East Lothian, RBS has just announced the closure of its only branch in the town of Prestonpans. That is a surprise because the population of East Lothian is growing, and we are about to have 10,000 more houses in the general area of Prestonpans. Banks do that kind of thing: they do not care about their customers. This Bill has to reverse that, and that is the test we will apply to it.