Oral Answers to Questions

Russell Brown Excerpts

Tuesday 10th March 2015 Commons Chamber

[Andrea Leadsom]

My hon. Friend is right. Under this Government we have seen over 2 million new apprenticeships, and level 2 apprenticeships are absolutely vital in giving young people a chance. Young people have shared in the success of our long-term economic plan, with the UK now having the fourth highest youth employment rate in the EU and the second highest in the G7. Very importantly, young people’s wages are also on the rise, with the latest data showing that the earnings of 18 to 21-year-olds who work full time have increased by 6% over the past three years.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

Yesterday I had an exchange with the Minister for Employment in which I made it abundantly clear that youth unemployment in my constituency continues to rise. She has said that the recent rise in youth unemployment is just “a tiny blip”. Does this Minister agree with that?

[Andrea Leadsom]

The hon. Gentleman should surely be delighted that since 2010 youth unemployment in his constituency is down by 47%, so I cannot agree with him, and that since 2010 unemployment is down by 34%. In the past 12 months, long-term unemployment is down by 38%. Surely he should be celebrating those numbers.

Financial Conduct Authority Redress Scheme

Russell Brown Excerpts

Thursday 4th December 2014 Commons Chamber

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

I congratulate the hon. Member for Aberconwy (Guto Bebb) on what can be classed as nothing less than sheer determination in continuing the battle for justice for so many businesses the length and breadth of the country.

I would like to think that we could use the words fair and equitable today, but this issue is anything but. I suspect that by the end of my speech I will have come to a point where I support the hon. Gentleman and the all-party group. We have all witnessed a lack of consistency and a deplorable lack of transparency. We look down on a situation that far too many business people have experienced, bringing them to their knees. Many have been broken. The fact that there is no appeal process is, quite frankly, unbelievable. People have been put in a “take it or leave it” situation and their plight is just not acceptable in this day and age.

The hon. Gentleman referred to the 10-year cap. This is a product that no one wanted: it was not sold to people, but forced on them. The campaigning group Bully-Banks yesterday put out a press release that sums it all up. It said that more than 90% of sales reviewed by the banks had been mis-sold. There is no argument: the banks’ conduct in selling these products was misconduct. Nothing could be clearer.

The first contact I had relating to this whole sad saga was about six years ago when a constituent came to see me. I have to admit that, not coming from a financial background, I had great difficulty in understanding what he was telling me. I have shared this experience with others in the House before. This was a guy who, along with his father, had worked for more than 20 years in the leisure park industry. Their bank, Barclays bank, had decided to set up a specific arm to offer products and loans to businesses for investment. After an approach from the bank, they decided to take out what turned out to be a hedge. After some time, they were then encouraged to change product. Some of the penalties involved with that product resulted in pressure to meet payments, and investment did not go into the business in the way they thought it would. They went from owning four leisure parks—one in my constituency and three in England —to selling them off one at a time, just to meet the bank’s demands.

Eventually, my constituent came to see me to make me aware that he was now under real pressure. I asked him whether he needed me to contact the bank, but that was the last thing he wanted. He was afraid to contact the bank and make it aware of just what a desperate plight he was in, in case it closed in on him.

[Guy Opperman]

Does the hon. Gentleman agree that the reason the FCA redress scheme needs reform is that there is no alternative? Like the hon. Gentleman’s constituents, my constituents who ran a bed and breakfast or a small and medium-sized enterprise could not go to the bank because of that fear. There is also an inability to go to law, because that would mean taking on a very large institution with deep pockets that they could not possibly hope to take on properly. The only way they can go forward is through the redress scheme, which has its deficiencies.

[Mr Brown]

I thank the hon. Gentleman for that intervention. As I continue this sorry tale, he will see that the business went into litigation on this issue.

[Steve Rotheram]

We have heard the word fear on a number of occasions in this debate. Companies such as the Flanagan Group felt fearful of what the banks might do, but fearful, too, of the reputational damage that might have occurred from an external view of the company. Does my hon. Friend think that this is an appropriate way for banks to act?

[Mr Brown]

We all believe in the role that banks have in our day-to-day lives, whether as individuals, households or businesses. We need to think there is an element of trust. What we have discovered, however, is that there has been far too much mistrust. In addition, some senior people had no idea what their banks were doing. They allowed their managers to carry on selling products, while having no idea of their complexity. One person who worked for Barclays and sold some of these products came to meet me. He was in the Penrith area and decided to come and speak to me about my constituent. He told me that on being introduced to the products, which he was about to sell to customers, he asked his seniors, “What if this or that question is asked?” He was told just to move on, because there were no answers.

The long and short of this tale is that the banks eventually moved in with a team of administrators. I approached the administrators to tell them that I thought what was going on was wrong and that if my constituent went to court he would win his case. The administrators made out that they had to carry on with the business they had been pulled in to conduct, and they went ahead with it. My constituent owed the bank £1.2 million, of which £900,000 was bank charges—an absolute disgrace. As I said to the hon. Member for Hexham (Guy Opperman), my constituent went to court and he won the case. But that matters for nothing. Gone is more than 20 years of a family working together to build a business that was going reasonably well but went badly wrong when they were encouraged to take out products that they did not really understand, and which those selling the products did not really understand either.

I want briefly to mention another, more recent, case relating to another constituent in the far west of my constituency, down in Stranraer. This is a really tragic case. People and businesses do not just have problems with the banks. There are other issues lying in hiding too and some relate to Her Majesty’s Revenue and Customs. This gentleman told me:

“For the last 6 years I have been a victim of the mis-selling of an IRHP SWAP Termed Business Loan.”

The last three years, in particular, had been very difficult. He had been fighting off the bank that had been battling with him because it would not accept that it had mis-sold him a product. I could tell from the number of occasions I met him over the last three years that this was really getting him down. It got to the stage where he had to sell off his mother’s family home of some 44 years. He had remortgaged his own home, incurred legal costs of over £8,000 and had put the family business of over 54 years standing in real jeopardy.

My constituent was eventually on the receiving end of a phone call from the bank to say that it was about to make him an offer within a two-month period, which it has now done. However, that offer of some £76,000 goes nowhere near to meeting the cost to him as a family man who had done nothing else but work morning, noon and night for such a sustained period of time that he missed his family growing up. The offer put him under real pressure. On the second last occasion he came to see me, he was seeking advice but knew in himself that he was being forced to “take it or leave it”, as I mentioned before. The advice from the bank was that this was a “full and final” offer, with no recourse to consequential losses.

Had my constituent not got involved in this loan, he would have been building up his business, but it actually suffered. He wanted to develop the business and the properties he had available for rent. All that was put on hold, however, because he was struggling to meet the bank’s regular demands. My constituent has had to go to Revenue and Customs to strike a deal, agreeing that he would pay the bulk of the VAT he owed and that between now and the end of February everything would be cleared.

[Guto Bebb]

I hope I am not being greedy in intervening, but I think it should be placed on record that the “time to pay” arrangements of HMRC have been very positive on this issue, but the consequences of the redress scheme are not as positive as expected. The “time to pay” agreements have been taken away in many cases, so there is a need for the continued support of the banks while we try to resolve the situation.

[Mr Brown]

The hon. Gentleman is absolutely right. HMRC needs to be a little more patient with our constituents and with all of us here who are trying to do what is right in standing by our constituents and making the case for them. They have come through a traumatic time and they are not out of the woods yet, so they continue to need our help. That is why I wrote to HMRC on behalf of my constituent—to offer support, saying that I was quite confident and absolutely convinced that the issue would be resolved if it would just be patient.

In conclusion, we need an appeal mechanism. Further consideration needs to be given to bringing those who were sold embedded swaps who seem to have been excluded, at least up until now, back into the system. If there is any means of acquiring someone or a small organisation that is independent of what is going on with the FCA in response to this issue, I would like to see it happen. It is right for people to get their just deserts; that is what justice means.

The Economy and Living Standards

Russell Brown Excerpts

Thursday 12th June 2014 Commons Chamber

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

To all those who have managed to find employment in the past 12 months, I say well done. To those on the Government Benches, however, I say that what we are seeing across this country is an unequal recovery. If the Treasury team look at the figures from the Office for National Statistics, they will see that the total number of hours worked each week across the UK has not increased anything like as much as it should have done, given that such a massive number of people are finding work. Those average weekly hours are being spread among more people, hence the unequal recovery across the country.

I am sick of saying that this time last year the average wage in my constituency was almost 24% beneath the national average, although thankfully the figure has fallen to just under 20%. The problems that we face were first discovered on the high streets of the United Kingdom, and if we look at those high streets today, we will see that in most communities there has been very little improvement.

The bedroom tax is costing this Government £4.8 billion more in housing benefit over the course of this Parliament, so something has gone sadly wrong. I want an explanation of what the bedroom tax was all about, because almost 400,000 more working people are now in receipt of housing benefit and trapped in a bedroom tax situation than in 2010. That is an increase of some 60% in England, 59% in Wales and 53% in Scotland. What was it all about? People have not changed houses, but they have had to pay more as they have not found suitable accommodation.

The Labour party in government will move on the living wage and we will ensure that—through public sector procurement—it will be introduced. We need to ensure that life is much better for the many families the length and breadth of this country who find it hard, and we need to ensure that we tackle the high levels of youth unemployment that depressingly still exist for some communities, in a way that will give young people in this country decent jobs, not jobs on zero-hours contracts or on two or three hours a week, which are not enough for them.

Budget Resolutions and Economic Situation

Russell Brown Excerpts

Wednesday 19th March 2014 Commons Chamber

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

It is a pleasure to follow the hon. Member for South Northamptonshire (Andrea Leadsom). She concentrated on banking, but my contribution will be somewhat more mundane, because I regret to say that far too many of my constituents have probably never even seen the inside of a bank, let alone know about the workings of a bank.

We again heard today about a drop in unemployment figures. That really has to be welcomed, but I remind the House, as I have done over a period of time, that some parts of the country are not seeing the recovery that others are experiencing. I listened intently to the Chancellor’s fantasy figures and tried to picture in my mind his portrayal of this rapidly improving economic situation across the country. I tried desperately to engage with that, and probably to be as imaginative as the Chancellor himself in entering his world, but I can tell him that far too many individuals and their families, many of them hard-working indeed, have simply not been given a chance to enter that imaginary world.

There can be no doubt—I would be the first to admit it—that thankfully, after some three years, there is a return to growth. However, the Chancellor needs to recognise that in my local authority area an increasing number of people are claiming jobseeker’s allowance. This month, yet again, we saw a further rise in unemployment on the back of last month’s rise. The figure now stands at 2,740—an increase of a further 0.1%. In May 2010, 75 young people were claiming jobseeker’s allowance for more than 12 months; that figure has almost doubled to 145. In February, youth unemployment rose to 740—an increase of 0.3% on the previous of month to 6.7%, which is 1% above the Scottish average and 1.5% above the UK average. In May 2010, the number of adults claiming jobseeker’s allowance for more than 12 months stood at 460; last month, the figure rose to over 800.

That is a tragedy for each and every one of those people. If they took time today to listen to the Budget statement, it will only have confirmed what they have probably suspected for a very long time—that the Chancellor has lost touch with those at the bottom end and does not understand the battle and the sheer struggle that still goes on for many people right across the country.

[Geraint Davies (Swansea West) (Lab/Co-op)]

My hon. Friend might be interested to know that in Swansea, 65% of people on JSA have been sanctioned. These are people on less than £72 a week. It is not that the Chancellor has lost touch with them; he is crushing them under his boot.

[Mr Brown]

My hon. Friend is right. If I have time, I want to mention an experience I had with a young couple who came to my surgery last Friday.

Earlier today, I met a representative of the Prison Officers Association from my area who was down in London taking part in a rally that had been timed to coincide with the Chancellor’s Budget speech. He explained to me that morale in the prison service is at an all-time low because of increases in serious violent attacks on prison staff, a five-year pay freeze and continuing demand for front-line staffing cuts, and an increase in pension contributions that is driving down the take-home pay of hard-working public servants. I suspect that it is not a job that many of us would relish doing. That driving down of take-home pay is coupled with working in an environment that is physical and, all too often, dangerous. These public servants are now being asked to work up to the age of 68. It is little wonder that they are angry and have taken to the streets today.

The Resolution Foundation’s report “Low Pay Britain 2013” shows that 4.8 million workers—20% of all employees—earn below the living wage, which is a massive leap from the 3.4 million in 2009 at the height of the recession. The growth of poverty has an uneven impact on particular sections of the population, and the tragedy is that young workers have been hit particularly hard: one in three 16 to 30-year-olds—2.4 million—are on low pay and are low skilled. These young people deserve better than this. Decent adults they are and will be, but they need greater chances in life. Living standards are down for far too many people, and as colleagues have said, that has been compounded by the 24 tax rises, households £1,600 a year worse off, and a reduction in tax credits.

On the positive side, I applaud the decision to reduce bingo duty to 10%. I am sure that the industry will be very much relieved at that. Like hon. Members on both sides of the House, I have visited my local bingo club, but there were fewer customers than I had ever seen before. The simple reason behind that is that people’s incomes have reduced so significantly that they simply do not have the wherewithal to spend time at the bingo hall in the way that they did for many years.

I also applaud the steps being taken to support pensioners through the relief measures in respect of savings, but again I have to say that many pensioners have no savings at all, and struggle to get by from week to week or month to month. These may be pensioner couples where one of them has been a carer for a son, daughter or elderly parent. They have struggled to get through their working life and they are now struggling in their old age.

I suspect that many energy-intensive industries will be delighted to hear of the extension of the existing compensation scheme. I have one in my constituency that has been pursuing me for answers to various questions that it had. Perhaps now that the Budget is over, I will be able to get those answers without any pre-Budget leak.

I am critical of the youth unemployment levels in my local authority area, and with some justification, but I welcome today’s announcement on apprenticeships, providing that genuine opportunities will be there for young people. I came across a young woman on a Government employment scheme working 32 hours in a retail business. When the scheme ended, the company said that she could remain with them, but that did not mean 32 hours’ work, but eight hours spread over a Saturday and Sunday. She is now out looking for a second job, and—who can tell?—perhaps a third job. It is a throwback to where we were in the early and mid-’90s.

I welcome the decision not to increase fuel duty, but as I have said on many occasions in the House, under the previous Government we saw nine years and 11 potential increases that were either suspended or not introduced at all.

The decision on the personal tax allowance will be welcome, but—here I disagree with my hon. Friend the Member for Glasgow South (Mr Harris)—many people are not even in the tax bracket, so they will see no benefit from the increase from £10,000 to £10,500.

Oral Answers to Questions

Russell Brown Excerpts

Tuesday 11th March 2014 Commons Chamber

[Danny Alexander]

We think the policy will have a significant impact. That is also the view of business organisations, which have warmly welcomed it. With the abolition of employer NICs for under-21s, it will become more than £500 cheaper to employ an under 21-year-old earning £12,000 a year, and more than £1,000 cheaper to employ an under 21-year-old earning £16,000 a year. Of course, employment is driven by a range of factors, but the wide welcome the measure has had suggests it will have a significant impact on employment.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

But surely the Minister recognises that, in areas such as mine—a rural part of Scotland like the one he represents—it is sometimes much more difficult, so the Government should make more effort to ensure that absolutely no one is left without a job opportunity.

Fairness and Inequality

Russell Brown Excerpts

Tuesday 11th February 2014 Commons Chamber

[Stephen Crabb]

I simply disagree with the hon. Lady’s argument. The Government are determined that, as the economic recovery emerges throughout the country, people on the lowest incomes should be at the front of the queue to benefit from that recovery.

We recognise that for those on the lowest pay things remain challenging. Wage levels are not where we want them to be. That is why we need a strong minimum wage. I am proud that the coalition Government have not only implemented the recommendations of the Low Pay Commission in full, but that last year we were able to go beyond its recommendations and increase the apprentice rate too. We can afford that only because we have taken difficult and responsible financial decisions.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

The Minister is exactly right. The coalition Government have taken tens of thousands of people out of paying tax, but does he agree with his Liberal Democrat colleagues, that if they raised that tax-free allowance any higher, people who are not paying tax at the moment will see no benefit from that?

[Stephen Crabb]

I have just given the House the numbers of people who are benefiting from the steps that we are taking to increase the personal allowance. With that measure and the other steps that we are taking, such as strengthening the minimum wage, we are providing real practical tools to ensure that those on the lowest incomes start to see the benefit of the economic recovery.

--- Later in debate ---

[Stephen Crabb]

I will not be tempted to support an unworkable and generalised plan that has been criticised by industry stakeholders and the people who really know about these matters. What I support are the practical steps that this Government are taking on a broad range of fronts to return money to the pockets of hard-working people and insulate the most vulnerable against the challenges that remain in our economy.

Hon. Members would not know it from the interventions of Opposition Members, but inequality surged when the Labour party was in government. It is the party that was, as the hon. Member for Carmarthen East and Dinefwr said, intensely relaxed about people getting filthy rich. This Government are determined to see inequality fall. It is under this Government that those with the broadest shoulders are facing the greatest burden. The richest members of society now pay a higher proportion of tax than they have ever done, with the richest 1% paying almost 30% of the total income tax take and the richest 5% paying almost half.

There is nothing fair about ignoring or ducking the challenge of welfare reform. If we are serious about tackling inequality, we must be serious about tackling the wasted opportunities we see before us. In Wales, 92,000 children are growing up in households where no one works, and 200,000 people in Wales are yet to work a day in their lives. That is the result not of this Government’s policies but of years of failing to stand up to the problems of dependency and the decline of work incentives. I make no apologies for the fact that it is this Government who are taking this once-in-a-generation opportunity to embrace welfare reform.

The Labour party championed welfare reform 20 years ago. Where have all the Labour party’s welfare reformers gone? Labour MPs 20 years ago were among the first to recognise the problems of dependency and the decline of work incentives that were emerging in our welfare system, but these days no one on the Opposition Benches speaks up for people caught in welfare traps. Instead, they turn poverty into a political football. They have opposed every sensible measure that we have put in place to restore fairness and opportunity to our welfare system.

[Mr Russell Brown]

rose—

--- Later in debate ---

[Mr MacNeil]

My hon. Friend is absolutely correct. Johann Lamont has a cuts commission. [Interruption.] I hear from the Labour Front Bench that she does not have a cuts commission, which is another example of how Labour Scottish Members say one thing while Labour in Scotland says another. If Labour Front Benchers want to tell us what Johann Lamont is doing—if she has told them—they are more than welcome to intervene.

[Mr Russell Brown]

Will the hon. Gentleman tell us why £1 billion has been removed from anti-poverty programmes since 2008 under his Government? Perhaps that might paint a clearer picture.

[Mr MacNeil]

I thought the hon. Gentleman was going to stand at the Dispatch Box to tell us what Johann Lamont is thinking about the cuts commission, but he failed to do that.

--- Later in debate ---

[Guto Bebb]

I will try to make a bit of progress.

The key point to remember is that those who now claim that the economic recovery has been too slow in coming are the exact same people who claimed that unemployment would increase dramatically because of the decisions taken in 2010. They are often the same voices who argued that there could be no growth without public spending, yet in Wales and in the whole of the UK we are seeing a vast increase in private sector employment. We have 1.5 million new private sector jobs, a ratio of almost 4:1 in comparison with the loss of jobs in the public sector. Wales is not an exception. Time and again when this is debated in the Welsh media, we hear people saying that the economic recovery is happening in London and the south-east. That is simply not reflected in the facts. In Wales, unemployment is falling and employment rates are increasing.

Anyone who is genuine about the opportunities necessary to reduce inequality would welcome the jobs that are being created. What we often hear from the parties on the Opposition Benches, however, is a complaint about the type of jobs being created: that they are not proper jobs and not the type of jobs we should be proud of. That is such a demeaning comment to make to people going out of their way to try to earn their living. I wonder how someone working in a Tesco or an Asda in my constituency feels when they hear a member of the Labour party demeaning a job as nothing more than shelf stacking. Such comments from a party that claims to represent labour are utterly disgraceful. I have made this point to the House previously and I will make it again.

One of the most moving things I have done as an MP was to visit a Tesco partnership store in Toxteth, in Liverpool. I can tell Members that a visit from a Conservative MP from north Wales is not something that happens very often at any store in Liverpool. The Tesco store in Toxteth was the largest inward investment into Toxteth since the riots in 1982. It was Tesco that undertook that investment. Half the staff employed at that store had been unemployed long term—for more than 18 months. The retention rate was more than 94% and the pride they showed in the fact that they were now working for a living was moving—there is no other way of describing it. I met one lady who ran the bakery section and asked whether she would ever want to move on. Her response was, “I’d have to be taken out of here in a box. It has given me my life back.”

[Mr Russell Brown]

I apologise to the hon. Gentleman—perhaps I am not in the Chamber as often as I should be—but I have yet to hear any of my colleagues condemn anyone in the retail sector. Those are valued jobs and, as the hon. Gentleman, I and many other colleagues know, working in retail is about much more than serving customers and stacking shelves.

[Guto Bebb]

I welcome that intervention from the hon. Gentleman, who clearly understands the importance of the retail sector. I was talking about comments made on radio and television by members of the Labour party. When I hear those comments I get annoyed as they refuse to acknowledge the fact that the sector provides the individuals in Tesco in Toxteth, or in various businesses in my constituency, with the opportunity to start a career, learn a skill and move on—and I would argue that people need a job to be able to move on to another job. It makes such a difference and those opportunities should not be dismissed by those who earn far too much to appreciate how important it is to earn a living, perhaps for the first time, and, in some cases, to be the first member of a family for a generation to take a job.

We need to be aware of the fact that the success we are seeing across the UK is being replicated in Wales. In a Welsh economy with relatively low levels of pay, it is even more important that we reduce the tax burden on those individuals. I have heard Opposition Members complain that although it is all very well to reduce people’s tax bills, by increasing the personal allowance tax credits have been reduced. That is not about what is right for the individuals; it represents the significant difference between the Government and Opposition. Government Members want to allow people to keep as much of their earnings as possible, because if a person goes out there and works we should tax them as little as possible. The Opposition were quite happy to tax people earning as little as £6,000 a year and recycle the money through an expensive, well-paid bureaucracy before paying it back to buy a client state. That was the dishonesty of the tax credit policy.

--- Later in debate ---

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

It is a great pleasure to follow the hon. Member for Aberconwy (Guto Bebb).

Some of the best debates that we experience in the House—on all too few occasions, it must be said—are those that mean a great deal to the people whom we represent, and at the same time manage to secure a degree of consensus. It is therefore a great shame that the Scottish National party, Plaid Cymru and the Greens have chosen to go somewhat native today. Rather than providing an opportunity for a straight vote on a commission of inquiry to put pressure on the Government, they have chosen to show their real side by playing gesture politics.

Just over four weeks ago, my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) led a Back-Bench business debate on the subject of welfare reforms and poverty. Winding up the debate for the Opposition, my hon. Friend the Member for Rhondda (Chris Bryant) made it clear that there was a need for a commission of inquiry.

[Nia Griffith]

Is my hon. Friend aware that 18 Labour Members spoke in that debate, and not a single nationalist did so? I do not blame the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), because he was on paternity leave, but is it not shocking that the nationalists should dare to suggest that Labour is not equally concerned about poverty?

[Mr Brown]

I have a copy of the report of the debate, so I am well aware of its content and of which Members contributed to it.

We may find little common ground today, but we can at least agree with the nationalist parties on the need for an inquiry into the impact of the coalition’s cuts on poverty throughout the United Kingdom.

The motion opens with the words:

“That this House notes that the United Kingdom is one of the most unequal states in the OECD, ranked 28 out of 34 countries for income inequality and the fourth most unequal country in the developed world according to some analyses”.

It is those last four words—“according to some analyses”—that present the problem. If we look at the OECD figures, we can see that the most recent ones are out of date. Definitions are provided for these figures, and statistics are also provided, but because different surveys and methodologies have been used, it is a real problem to get fully behind the figures and to determine what they are saying. In other words, statistics can prove one thing to one individual but tell a different story to another.

The coalition’s austerity measures have undoubtedly resulted in the greatest burden falling on low and middle-income families, while the richest have been given significant tax cuts to ensure that they do not feel the cold draught of the current economic climate. That is why Labour Members have consistently called for action to tackle the cost of living crisis caused by this Government. Such action would include freezing energy prices, taking real action to end exploitative zero-hours contracts, and strengthening the minimum wage now.

My right hon. Friend the Member for Morley and Outwood (Ed Balls) recently said that if Labour forms the next Government,

“we will restore the 50p top rate of tax”.

I know that that causes anxiety for Government Members, but we believe that, in tough times like these, those with the broadest shoulders should bear the greatest burden.

[Lorely Burt]

Will the hon. Gentleman tell the House for how many days the 50p rate of tax was in force during the 13 years Labour was in power?

[Mr Brown]

The hon. Lady knows as well as I do that it was a matter of days, but this also relates to the comments made by the hon. Member for Aberconwy about the impact of taxation on individuals. For most of that time, there was never a need for that higher rate of tax to be imposed. The hon. Lady knows that it was a Budget decision to raise the rate from 40p in the pound to 50p. Yes, that rate applied only for a matter of days, but the Labour Government had not felt the need to increase it at any other time.

[Alun Cairns (Vale of Glamorgan) (Con)]

Will the hon. Gentleman tell us how much he expects the 50p tax rate to raise in net gains to the Treasury, and how that squares with the comments from the Institute for Fiscal Studies about the policy?

--- Later in debate ---

[Mr Brown]

It will definitely raise more than the 40p rate raises at the moment, but the big challenge for Government Members will be whether there will be a reduction from 45p in the pound to 40p in the next Budget. Can the hon. Gentleman tell me whether that will happen?

[Alun Cairns]

I notice that the hon. Gentleman did not answer my question about the comments from the IFS. Does he accept its view that the net gain from Labour’s policy would be negligible?

[Mr Brown]

The net gain will be significant. It will be some 11% more than is currently being raised.

It is notable that there is no mention in the motion of creating a fairer tax system. The Scottish National party’s plans for independence include slashing corporation tax, but it has been unable to provide any certainty on whether it would follow Labour in introducing a 50p tax rate. In fact, the SNP Finance Secretary in the Scottish Government has resisted making the party’s tax policy clear in any way.

We now accept that the driver of inequality has been the rate at which salaries at the top have increased in recent years. Again, however, the motion makes no mention of that. It says nothing about how we are to get to grips with high pay in the UK. The Labour Opposition have accepted the recommendations of the High Pay Commission, and we have outlined three key tests that the Government must meet to show they are serious about executive pay being at such high levels. First, we want firms to publish details on the ratio of employee average salaries to executive pay, and for the Department for Business, Innovation and Skills to publish a league table showing the highest ratios. Secondly, we want to see an employee representative on the remuneration committee of every company. Finally, we would repeat Labour’s tax on bank bonuses to fund a compulsory jobs guarantee for any young person on unemployment benefits for 12 months or more. These young people are not our future—they are part of today, and they need to be employed today and well into the future. That is real action to bring about fairness in our society, but what we have heard from the Scottish National party and Plaid Cymru this afternoon often bears closer resemblance to what those on the Government Benches have been saying.

Yesterday, during a question on economic inequality, Lord Newby stated that

“according to the latest ONS statistics, income inequality in the UK is at its lowest level since 1986. The Government are committed to ensuring that all families benefit from the return of growth to the economy”.—[Official Report, House of Lords, 10 February 2014; Vol. 752, c. 408.]

That is not what far too many individuals and households are actually experiencing. Any economic recovery here in the UK is patchwork in its nature. As I have said in the Chamber previously, there are many rural localities where households are in a desperate plight, with below average earnings.

[Stephen Crabb]

Is the hon. Gentleman saying that he does not believe the statistics and that he does not believe that income inequality is dropping in the UK at the moment?

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[Mr Brown]

I am saying that a rosy picture is being painted. Some will say, “It is happening in London and the south-east”, but the Minister represents a Welsh constituency, which is rural, just as mine is. People in rural constituencies and in some urban constituencies are finding things really difficult indeed. The situation is still pretty tough and they do not recognise this rosy picture that is often painted.

Also in the other place yesterday, Lord Lawson stated that

“it is far more important to focus on making the poor richer than on making the rich poorer”.

I have to agree with that, but the Minister replied:

“we want to make sure that everybody makes a fair contribution to society and that all those in work get a fair wage for their labour. Obviously, there comes a point when taking too much tax from those right at the top becomes counterproductive.”—[Official Report, House of Lords, 10 February 2014; Vol. 752, c. 408-09.]

I would have to argue with that; those comments by the Minister tell us an awful lot about what those on the Government Benches are thinking.

Where we disagree with the text of the motion is on the words

“successive governments of all political hues have presided over an underlying trend of rising income inequality since the early 1980s”.

There can be no doubt that over the past 30 years or so there have been some particularly difficult and distressing times for many families, but during the early years after the change of government in 1997 rapid improvements were made right across the country. [Interruption.] I am not about to rewrite history; I am about to tell the Chamber what actually happened, because we tend to forget. This relates to a point made by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), because he said that if Labour were to win the next election we would be carrying out the current Government’s spending plans. When Labour came to power in 1997 we held by the tight budgetary constraints, but as a party coming from opposition to government we decided that we would spend the money in a wholly different manner. What did we do with the chance that came our way? We created employment opportunities for young unemployed and long-term unemployed people, the disabled and lone parents through the new deal, and those very chances that were given to so many people brought about a marked change when coupled with the introduction of the national minimum wage and working tax credits. It was not the answer to every woe that people had suffered under the previous Government, but it was a major step forward. For many individuals, especially women, it meant that they no longer had to try to hold down two or three jobs to make ends meet.

The motion makes reference to inequality between men and women, but fails to recognise the gains made by women under the Labour Government from 1997 to 2010. I am talking about not just the minimum wage and tax credits but extensions to child care, which allowed more women to participate in the labour market, and extensions to maternity leave, which meant that women no longer had to choose between work and family life soon after having a child.

Let me now mention one or two things that have been raised this afternoon, including the issue of food banks. Over the past 12 months, there has been a 170% increase in the number of people using food banks. Between 2010 and 2011—some two years ago—61,468 people were using food banks, compared with more than 346,000 now. Those are only the Trussell Trust figures. There are other ad hoc, less regulated, food bank systems.

The Minister mentioned welfare reform. Let me tell him, in case it has slipped his mind, that the previous Labour Government introduced three welfare reform Bills, and we maintained that those who could work should work and should be given help and support into work.

[Pete Wishart]

Where does the hon. Gentleman stand on the great “more powers” debate in the Labour party? Is he one of the boycotters, or is he an enthusiast of more powers? Would he give welfare powers to the Scottish Parliament, so that it is under Scottish people’s democratic control, or does he want to keep it with the Westminster Tories?

[Mr Brown]

I will come to that in just a moment. It is not that I need time to think. [Interruption.] Let me tell the hon. Gentleman that I am a solid believer in devolution.

We put three welfare reform Bills through the House. They were designed to ensure that those with the greatest need received benefits not just to exist but to live. We were able to recover that money by getting others into work. We were making progress on that when the banking crisis hit and turned the world upside down.

[Stephen Crabb]

The hon. Gentleman’s party may have introduced three Bills on welfare reform during its 13 years in government, but the records show that it ducked all the really difficult decisions on welfare reform. It was frit on that and, as a consequence, there are 200,000 people in Wales who have never worked a day in their lives.

[Mr Brown]

I hear what the hon. Gentleman is saying, but there is an element of him trying to rewrite history. We were making progress. I cannot say what he experienced in his constituency, but there were people in my constituency, some of whom had been out of work for a long time, were disabled, or had been seen as people who would never work, who got into employment, and that was thanks to the excellent work of the Department for Work and Pensions staff. We did make progress; it was just that it was not as much as we would have liked.

[Alun Cairns]

Can the hon. Gentleman point me to any Labour Government in the past who left office with unemployment lower than it was when they entered office?

[Mr Brown]

I will be honest with hon. Gentleman and say that I cannot give him that figure. However, I think he is trying to forget that there were almost 3 million people who were unemployed under the previous Conservative Government. We worked massively hard to reduce the levels of unemployment in this country, so much so that, as a Government, we were talking about the potential of full employment in this country, which is a long way away from where we are today.

[Alun Cairns]

rose—

[Mr Brown]

Let me just mention one or two other things. The hon. Member for Suffolk Coastal (Dr Coffey) has left the Chamber, but she spoke about paying down debt. In case the House has forgotten, when we came to power in 1997, there was 43% debt, and we paid down debt as we progressed over the years to 37%.

The hon. Member for Aberconwy spoke about taxation. I do not have a problem, as he has, with a 50p income tax rate, but I do have a problem with value added tax. Our colleagues in the SNP need to be absolutely clear and honest with the people of Scotland: if Scotland achieves independence on 18 September and becomes a full EU member state, the people of Scotland will be looking at VAT on food, children’s clothing, and books and newspapers. That is fact.

The SNP is very good—and I have heard this a couple of times this afternoon—at comparing other small nations with Scotland. It is keen to mention Sweden, and all too often it mentions Norway, but the problem is that they have Conservative Governments. I do not know if that is what it wants in an independent Scotland.

[Jacob Rees-Mogg]

Will the hon. Gentleman give way?

[Mr Brown]

I would be more than delighted to do so.

[Jacob Rees-Mogg]

I think that a Conservative Government for Scotland is being a little optimistic.

[Mr Brown]

I am absolutely delighted that I allowed the hon. Gentleman to intervene. I have no wish to see that either.

The one thing that the SNP does not tell the people of Scotland is just how high taxation is in those countries that they are keen to mention and with which they make comparisons. It cannot run away from that.

On how the devolved Governments have operated in the UK until now and their record on increasing fairness and tackling inequality, the Welsh Labour Government, even in tough times, have worked to protect the most vulnerable in Wales from the Tory Government with Jobs Growth Wales, which will create over 16,000 jobs for young people in Wales, and the £35 million boost to the pupil deprivation grant in the next year. The same cannot be said for the SNP Government in Scotland. A recent report by the Joseph Rowntree Foundation noted that cuts by the UK Government and the Scottish Government in England and Scotland have meant that the most deprived local government areas receive £100 a head less in funding. Professor Arthur Midwinter of Edinburgh university recently concluded that

“the SNP’s budget strategy adds to the austerity agenda”.

I made a similar point in an intervention, as £l billion has been removed from anti-poverty programmes since 2008. Analysis by the House of Commons Library shows that cuts to the most deprived areas in Scotland are greater than those for the least deprived.

On local government and the underfunding resulting from the council tax freeze in Scotland, this is a debate about fairness and equality, so let me share with the House what we have seen as a result of local government being badly underfunded. Some of the poorest and most vulnerable people in our communities—those who need social services or who have to pay for services—have seen an increase in the cost of services or, if those services were free, charges have been introduced. That hits the poorest and most vulnerable the hardest.

[Mr MacNeil]

How much does the hon. Gentleman want to raise council tax by and what else is on the agenda for the cuts commission of Johann Lamont?

[Mr Brown]

That really is a naive question, but it is not unexpected. I am not asking for a council tax increase; I am asking for local government in Scotland to be properly funded. It has to be properly funded. To do otherwise is a false idea, especially when it falls on the shoulders of the poorest.

If the SNP was serious about tackling inequality in Scotland, it would be using the tools of the Scottish Government, like our colleagues in Wales, to protect people from the worst of the Tories. Instead, it would rather not let Westminster, in the words of its Finance Secretary, off the hook. At no point in the debate have SNP Members explained why they think this is acceptable for the people of Scotland. I would only hope that if there are to be further contributions from their Benches, they will explain away some of the inaccuracies that they think are in my contribution.

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[Mr Mike Weir (Angus) (SNP)]

The Scottish National party’s manifesto for the 2011 Scottish Parliament elections stated:

“Scotland can never be considered truly successful until all of its citizens consider themselves to be equally valued members of society. We are determined that Scotland will constantly strive to be a more equal society.”

We said that because we believe in Scotland.

Within the UK, Scotland is unfortunately part of an increasingly unequal society, with too many trapped in poverty and prevented from reaching their full potential. As has been said, the UK ranks 28th out of 34 nations on the measure of overall inequality. OECD analysis shows that since 1975 income inequality among working-age people has increased faster in the UK than in any other country in the organisation. Academic analysis also suggests that the UK is the fourth most unequal nation of the world’s richest nations.

In a rich nation such as Scotland, it is ridiculous that in 2011-12, 710,000 people—14% of our population—lived in relative poverty. That includes 420,000 people of working age, 150,000 children and 140,000 pensioners. Despite periods of time when overall poverty has reduced, in-work poverty has remained high. Two thirds of children who live in poverty in the whole UK have at least one parent in paid work. We believe that it is absolutely unacceptable that in a nation with the wealth and resources of Scotland one in seven of our population live in poverty.

Since devolution, Scottish Administrations have sought to promote social inclusion and cohesion. Since devolution, child poverty levels in Scotland have fallen substantially, from 28% in 1999-2000 to 15% today, compared with a UK rate of 17%. That is a tremendous achievement by the Scottish Parliament. However, 200,000 more children across the UK will be pushed into relative poverty by 2016 as a result of the 1% cap on increases in benefit payments. That equates to around 15,000 children in Scotland. The Child Poverty Action Group has estimated that Scotland’s child poverty rate will increase by between 50,000 and 100,000 by 2020 as a result of the UK Government’s tax and benefits policy. That is a terrible indictment of what is happening in our country. That is why we seek independence: to tackle these problems.

With devolution, the Scottish Parliament has used its limited powers to tackle inequality. Our continuing commitment to a social wage will deliver benefits to everyone in Scotland in tough financial times. We have maintained the council tax freeze, saving the average band D taxpayer about £1,682 by 2016-17. We have kept higher education fee-free and we are keeping student debt levels the lowest in the UK. To me, that is vital. I was the first of my generation to go to university, and I was able to do so only because there were no tuition fees and I got a grant. My daughter has recently gone through university and, even with no tuition fees, it is now a very expensive process. I dread to think about what debt has been piled up on kids who are going through university now and how they are ever going to start in life, buy a house, buy a car or get married. As my hon. Friend the Member for Na h-Eileanan an Iar (Mr MacNeil) said, there is an increasing trend for children to stay at home much longer and to live in flat-shares well into their 40s, in some cases, because they simply cannot afford the price of property.

The Scottish Parliament has abolished prescription charges, making the NHS truly free at the point of need, and we are supporting concessionary bus travel for over 1.2 million of our people—over-60s, people with disabilities, and injured veterans. We have provided NHS eye examinations free for all, and we have committed to free personal nursing care, benefiting more than 77,000 older people. Labour attacked many of these things in its cuts commission. The Labour leader said they were just wee things it is not in favour of—unless, of course, it is fighting by-elections, when it tries to take credit for them.

[Mr Russell Brown]

The hon. Gentleman mentioned free prescriptions. Why am I now coming across pensioners in my constituency who are visiting their doctor and instead of being given a prescription for painkillers are told to go to the chemist and buy them over the counter?

[Mr Weir]

I have never heard of that one; perhaps the hon. Gentleman should ask the doctors why they are doing that. We have made it clear that free prescriptions are an important policy for pensioners throughout Scotland. Too often, pensioners and those with multiple prescriptions had to choose whether to buy their prescription or eat, and they do not have to make that choice any more. This is a really progressive policy, despite what his leader may say.

We are investing in skills, training and education for our young people to make sure that they all have an opportunity in life. I recently visited the Angus training group in my constituency, where tremendous work is being done to train youngsters who are leaving school and have got apprenticeships in engineering. While the Chancellor may talk about the march of the makers, we are making sure that that actually happens and there is power behind it. We are protecting the education maintenance allowance for 16 and 19-year-olds while the Westminster Government have scrapped it. These are just a few of the things that we have already done.

We are committed to ensuring, where we can, that people get paid a decent wage. Since 2011-12, the SNP Government have paid all staff covered by Scottish Government pay policy a living wage, and that includes NHS staff. No compulsory redundancy policy has been in place since 2007, helping to protect about 10,000 jobs a year. We are funding the Poverty Alliance to deliver the living wage accreditation scheme to promote the living wage and increase the number of private companies that pay it.

We have done a lot to deal with inequality in Scotland, but what holds us back so much is the fact that the Scottish Parliament has to depend on and fit within a block grant determined by Westminster that has been steadily cut in the past few years. The Chancellor has said that another £25 billion of cuts is coming round the corner, so we can only imagine what will happen to the Scottish block grant in that event.

Oral Answers to Questions

Russell Brown Excerpts

Tuesday 28th January 2014 Commons Chamber

[Nicky Morgan]

My hon. Friend is entirely right. We all know of many businesses across our constituencies, as well as households, who rely on their vehicles—their lorries and vans—to get about. By 2015, the average motorist will be saving £680 a year and the average small business with a van will be saving £1,300 a year in their fuel costs.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

Will the Minister explain to my rural constituents in a low-wage economy area why of the 10 areas where the Chief Secretary has endeavoured to get a special rural fuel discount scheme into place, eight are in Lib Dem constituencies and two are in the hon. Gentleman’s constituency? Is that some kind of coincidence?

[Nicky Morgan]

The point is that there were very strict criteria relating to pump price thresholds, cost of transporting fuel and population density. That is how the list was arrived at and that is why the hon. Gentleman’s constituency was not included.

Banking

Russell Brown Excerpts

Wednesday 15th January 2014 Commons Chamber

[Chris Leslie]

I do not think they have, although I think before the general election the Prime Minister indicated that he did not want any taxpayer-owned banks to pay out bonuses of more than £2,000. We know what happened to that proposal.

The issue goes beyond anger about bank bonus season. Serious reforms to the banking culture and the role of banking in the economy are still required. Ministers still have not grasped the role that banks ought to be playing to repair our economy. They are still out of touch on the causes of three years of economic stagnation and the reforms to the banking sector that are still needed. How much more evidence do they need? Despite the billions of pounds needed to ensure that the cash machines kept working; despite the mis-selling and ripping off consumers; despite the money laundering and sanctions busting; despite banks peddling interest rate swaps to struggling small firms; despite multi-billion losses in the disastrous London Whale scandal—London Whale was the name given to a trader—and fines of more than £1 billion for Deutsche bank in the United States for mis-selling mortgage-backed securities; and despite the rigging of LIBOR and other benchmark indices, including investigations into attempts by up to 15 banks to manipulate a £5 trillion dollar a day foreign exchange market; despite all that the Government still do not have the stomach to do what it takes to clamp down on misconduct and to finish the job.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

My hon. Friend mentions the LIBOR scandal and the mis-selling of products. May I put on record my thanks to the hon. Member for Aberconwy (Guto Bebb) for his work as chair of the all-party group on interest rate swap mis-selling?

On bonuses and reward, does my hon. Friend believe that perhaps what we should say to high earners is that there will be no more bonuses until they have sorted out the mess the Financial Conduct Authority is currently investigating, and until all the individuals and companies have had their cases considered fully and have been compensated for the mess the bankers made?

Tomlinson Report

Russell Brown Excerpts

Tuesday 17th December 2013 Westminster Hall

[Guto Bebb]

That is an issue on which the bank would have to respond, because my view is that clearly it is not fair.

I have a fourth and final example of businesses finding themselves in difficulty due to decisions taken by the bank. A company that contacted me recently had net profit of £272,000 on turnover of £3.5 million in 2008, net profit of £281,000 on turnover of £4.4 million in 2009, and net profit of £268,000 on turnover of £3.9 million in 2010. Those are all healthy figures. The company employed about 40 members of staff. In late 2010, however, an agreed overdraft facility with the bank was withdrawn, because a loan agreement under the EFG—enterprise finance guarantee—system was declined. The company was therefore put into GRG support, and the group proceeded to disallow a payment of £14,000 in corporation tax, on which basis the company found itself in difficulties and ended up going into administration. The final set of management accounts for the nine months before the company went into administration showed a net profit of £190,000. The company would argue that its difficulties were caused by the bank refusing the corporation tax payment, even though the final accounts showed a profit.

Such businesses feel extremely hard done by as a result of the way that the GRG and RBS have behaved towards them. My evidence could be described as anecdotal—I am more than happy to accept that—but it is important to emphasise that the cases highlighted in the Tomlinson report are the tip of the iceberg; they are not representative of an issue created by Lawrence Tomlinson himself. I have seen these issues in my constituency, and other Members have seen them in theirs.

Once businesses are in the GRG, the concern is that its attitude and behaviour is less than helpful. RBS argues that the whole purpose of the group is to put businesses back into health, but it is difficult to see how a business allegedly subject to cash-flow problems is helped by having an additional £250,000 in fees in a six-month period. Time and again, I have seen the fees charged by the bank go up when businesses go into the GRG, and they apparently bear no relation to the amount of work done in support of the business.

So-called independent reviews are forced on businesses by the bank, whether through a valuation, accountancy work or solicitors. Professional fees are charged to the business, but the instructions come from the bank and, often, the reports go to the bank first. We have to be concerned about that. Furthermore, the businesses often have no say whatever in who the reviewers will be. There is a question about the conflict of interest faced by those professionals: if they are being paid by a business, but instructed by the bank, surely they are conflicted in their work.

The other thing that I have seen time and again is payments by suppliers not being prioritised. There is almost never a case in which a payment to suppliers would be allowed if that took the business beyond the terms of its overdraft or facilities, and yet I have never seen a case in which charges due to the GRG have not been taken because they will take the business over its overdraft limit. That is a fair point to make, because if a business can go over its agreed limit in order to pay the bank charges, why on earth will the bank not allow a payment to a supplier if that supplier is crucial to the continuation of the business in question?

I have already mentioned a constituent of mine struck with a £4,000 weekly fee for the continuation of his banking facilities. To return to him, after three months of negotiation, the GRG agreed that it would accept £2,000 per week. There was no explanation as to why the fee was initially £4,000, or why £2,000 was now acceptable. I get the impression that the reason why it was £4,000 to start was that the bank thought that it could get away with it; the fee was subsequently £2,000, because the business put up a fight—its accountants and solicitors argued the case, as did the MP.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

Given all that, does the hon. Gentleman agree that removing the cash flow that assists in running the business when it is under pressure simply creates additional problems?

[Guto Bebb]

Absolutely. When a business is taken into the GRG in order to help with cash flow, it is difficult to envisage why there is therefore justification in imposing a £4,000 or even £2,000 per week charge for support. There is no indication of what that support entails, but it certainly does not support the cash flow—let us put it that way.

The company I mentioned was also expected to produce new accounts. It had monthly management accounts produced by its accountants, but that was not good enough for the bank, which had to have KPMG to do the work. Again, it was not good enough for the bank for the company to use its solicitors to value assets that were subsequently sold; it had to use solicitors chosen by the bank. That is oppressive behaviour by the GRG towards businesses that it is allegedly meant to be supporting.

It is important to bear in mind that when we highlight such cases, the concern is that we have examples from throughout the country, which makes the case that there is an issue here that needs to be looked at. I am pleased that the regulatory authorities are taking a look at the Tomlinson report, but I hope that they also take on board the comments made today by me and other Members on our experiences of businesses not included in the Tomlinson report. This is happening throughout the country and it needs to be highlighted.

I also want to highlight an interview with Derek Sach, the founder of the GRG, by Debtwire in October 2012, which is rather chilling to someone who is of the view that the bank ought to be there to support small businesses. He describes the steady flow of “new distressed businesses” into the GRG as an opportunity. That is a key point. If the head of the GRG considers that distressed businesses coming into his organisation are “opportunities”, his view is that the group is there not to support businesses, but to gain commercial advantage on the back of those businesses. Furthermore, if any Members present represent a shipping business, they should be concerned, because Mr Sach also emphasised that he sees significant “opportunities” in that sector, because shipping is going through a difficult period—in other words, the GRG vultures are hovering, waiting for a further supply of distressed businesses of which to take advantage.

Throughout the process, I have also seen numerous examples of instructions by the GRG not to prioritise the Crown on VAT, corporation tax or pay-as-you-earn payments. That is concerning from any high street bank, but to see such an instruction to businesses coming from a bank that was supported and saved by the taxpayer should cause serious concern to Government. I hope that the Minister will respond to that specific point.

I have a final point to make before my brief comment on Clifford Chance. The whole insolvency process is a concern. When an insolvency practitioner or administrators go into a business, the poor old creditors will often receive little in return, because the fees will take the vast majority of what is available. Hon. Members need not take my word for that, because in a recent article, James Nicholls of Nicholls & Co, an insolvency lawyer based in Birmingham, highlighted the fact that the insolvency business is complicit in what is, in my view, an abuse of small businesses. He made the point that

“we in the insolvency industry have been complicit, collaborative and have completely failed in what our true roles should be. Almost everyone in our industry has effectively been ‘bought off’ by the Banks—accountants, IPs”—

that is, insolvency practitioners—“lawyers, surveyors—everyone.” That is not my comment but a comment from somebody involved in the insolvency industry. His argument is that the industry has turned a blind eye to the behaviour of the GRG and other turnaround companies: it has been bought off by the fees and affected by the culture that has existed in the past decade.

If we are serious about supporting small businesses and supporting the growth of our economy through their development, we have to ask ourselves whether that sort of attitude towards them—seeing them as opportunities to make money rather than as businesses to be supported—is the right way forward.

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[Mr Russell Brown (Dumfries and Galloway) (Lab)]

I congratulate the hon. Member for Aberconwy (Guto Bebb). I must be honest: I had not intended to speak, but given that there are so few contributors, I want to say a little about my experiences and, more importantly, those of some of my constituents. I also congratulate the hon. Gentleman on the work he has done over a sustained period with the all-party group on interest rate swap mis-selling, which is what initially drove me towards the all-party group.

I want to tell Members about the sad experience of one of my constituents four or five years ago, although I suspect that one or two people in the room will be sick of hearing about it. The story initially confused me, and that is part of the problem: this is a complex issue, which makes it all the more difficult for a layperson to understand. As anyone who has had a constituent come to them to explain their difficulties will know, it takes considerable time to plough through what the constituent is saying, and to begin to understand the complexities of the banking system that has been operated for businesses for a considerable time. The lack of understanding that MPs will have initially, coupled with the fact that perhaps some sectors of the media do not understand the problem, means that light has not been shone on the issue in the way that it deserves to be. Stuck in the middle are businesses, which are going to the wall. As a result, people are losing their jobs. That is having an impact on family life across the length and breadth of the country.

A gentleman who was banking with Barclays bank got in touch with me about a family-run business that had been around for more than 20 years. It operated caravan parks in four parts of the UK: one was in my constituency, a couple were in the south Lake district, and one was in the Yorkshire dales. The company was encouraged, by almost a separate arm of Barclays bank, to look at investment in the business; the offer came in that guise. It was told, “We have set up a special arm of the bank to assist you; we can do some good business here and develop your business further.” The end result was the bank shifting products; it asked its client to sell one product back to it and to take out another. It ended up with three of the parks having to be sold so that the company could retain one, which continued to operate in Dumfries and Galloway for a period.

The businessman was reluctant for me to create any kind of a storm, because he could see that the first thing the bank would do was immediately move to close the business down. However, time passed and eventually administrators moved in. It all happened at and around the time of the LIBOR scandal and the involvement of The Daily Telegraph and Guardian Care Homes. That very much drew the issue into the spotlight, and as a result, I had a closer look at the case that my constituent had brought to me. I went to the administrators and said, “Quite clearly, this is a case of mis-selling. If this is mis-selling by the bank, and you are conducting business on behalf of this bank, you are doing nothing more than driving this business to the wall.” The administrators could not work quickly enough; basically, they drove the business into the ground.

That comes back to the point that the hon. Member for Aberconwy hinted at. The administrators were fine; their cheque was signed off. However, anyone else who was owed money was left waiting in the wings. The administrators and anyone dealing with the insolvency are absolutely guaranteed their money, despite the plight that many businesses are in. The shocking thing about the business that went down was that it did so owing £1.2 million, of which £900,000 was bank charges. That was punishing—crippling—and it destroyed that business. Goodness only knows how many other businesses the length and breadth of the country have experienced the same thing.

The Tomlinson report’s title is “Banks’ Lending Practices: Treatment of Businesses in distress”. Businesses in distress is one thing, but businesses being driven into distress is completely different. We heard this morning from the hon. Gentleman, and from my hon. Friend the Member for North East Derbyshire (Natascha Engel), about some experiences; I have three cases before me. One involves a gentleman whose small business—the family have a number of businesses—is some 200 yards along the street from my office in my constituency town of Dumfries. He discovered that the bank was dipping into other bank accounts—not only those that were relevant and related to his business, but those of family members. It had taken total control of all his finances. That poses a serious question mark about how banks are carrying out their business and what they are doing to people.

When my constituent contacted me, I said, “Come back to me in a couple of days”—because he was scheduled to meet the bank—“and let me know what action I need to take.” He came back saying, “It look as if they are prepared to move and assist.” The fact was that those were mere platitudes. The bank did not help him one iota, and that business, which is down the street from my constituency office, is closing down.

Another businessman who is, again, involved in caravan and camping sites has been mis-sold products. He does not have a kind word to say about the global restructuring group. His view is that the bank will quickly move to settle with him on the products that he was mis-sold. There has been an admission, but he also knows what is waiting in the wings. If he takes that early settlement, it will move in on other aspects of his business and close him down. That is no way to treat people who have probably been loyal customers of these banks for many years.

The most shocking case I have concerns a gentleman who is involved in property and is a private landlord. In the mid-1990s, his business had a value of about £300,000 to £400,000; gradually, over the years, he built that up into a business that provides jobs, of course, as well as a roof over the heads of individuals and families, and it was worth several million pounds. He then fell foul of the bank. He made me aware—he is an astute businessman—that he was always wary of the bank’s promises that what it was selling him was good for his business. The value of that business has fallen dramatically, and it may be worth somewhere in the region of £1.5 million to £2 million. However, stuck in the middle of all that are people living in homes that he is providing as a private landlord.

[Sandra Osborne]

Does my hon. Friend agree that private landlords seem to be targeted by the banks? I had a constituent in that business who was taken to a hotel in Glasgow and treated to a big presentation about how the loans could help with the business. They were not told all the facts and then ended up getting into difficulty. Does he agree that this has been a conscious effort to dupe people?

[Mr Brown]

I can only agree with my hon. Friend. I do not think there is any doubt that certain sectors have been targeted. I mentioned at the start of my contribution the caravan camping leisure sector, which Barclays had created a separate arm for, so there is no doubt there. Let us be honest: the types of businesses that can grow, even under difficult financial circumstances, appear to be targeted. There is an indication in the Tomlinson report that there have been elements, if I can put it this way, of predatory practice.

Again, I want to emphasise the point made by the hon. Member for Aberconwy: this is about businesses being told what is good for them. It is about businesses, once they get into financial difficulties, being told, “We need a report. We need someone to come in and do some work on how you’re running your business. We need valuations—and, by the way, you’ll pay for them at our behest.” The cost is not a few hundred pounds, or a couple of thousand pounds. These are significant sums of money. In any other world, we would call what the banks are doing an absolute rip-off. They actually gerrymander the valuation of businesses. That is simply not acceptable.

On the last couple of occasions on which I have attended meetings of the all-party interest rate swap mis-selling group, chaired by the hon. Member for Aberconwy, I have made this plea. The Royal Bank of Scotland—I should have declared at the beginning of my speech that I have banked with the Royal Bank of Scotland for more than 40 years; I try my best to keep on the right side of it—is 80% state controlled. We cannot release it back to where it was before the banking crisis. I have been pleading with the chair of the all-party group, and there is a Minister here this morning, so I plead with him: do not release the Royal Bank of Scotland and send it back whence it came, because we need some kind of control over this bank until some of the problems that it has caused are sorted out.

I know that the hon. Member for Aberconwy was anxious about the language that we should use in this place, despite the cover that we have, but I think that there is a culture of predatory business that is destroying businesses and, more importantly, destroying people’s lives. I apologise if I have missed a piece of work that the Select Committee on the Treasury has carried out, but I think that we need some of these people back in front of the Treasury Committee, explaining some of the charges that they are imposing on business. They are crippling business, not helping it. These big banks are organisations that we all looked at years ago, before the crash, and thought, “These are decent people that we can all do business with.” Frankly, they have been wolves in sheep’s clothing. They do this nation and the economy of this country no good whatever when they take businesses down.

Oral Answers to Questions

Russell Brown Excerpts

Tuesday 10th December 2013 Commons Chamber

[Nicky Morgan]

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

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

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

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

22. I am bitterly disappointed by the Chief Secretary’s response to my hon. Friend the Member for Edinburgh East (Sheila Gilmore). He basically said that people on low wages were being written off. [Interruption.] If the Chief Secretary checks Hansard tomorrow, he will see that. In my area, wages are 24% lower than the national average. These people do not qualify for the—

[Mr Speaker]

Is that the end of the hon. Gentleman’s question? Has he reached the end of the sentence?

[Mr Brown]

My apologies, Mr Speaker. The question to the Minister is this: what additional support can her Government give people in low-wage economy areas?