United Kingdom Corporate and Individual Tax and Financial Transparency Bill

Sheila Gilmore Excerpts

Friday 6th September 2013 Commons Chamber

[Jacob Rees-Mogg (North East Somerset) (Con)]

It is a pleasure to follow the right hon. Member for Oldham West and Royton (Mr Meacher), partly because I disagree with almost everything he has said, but also because it is rather refreshing that Opposition Members are willing to say it. Most of them hide their true socialist credentials, but the right hon. Gentleman is a socialist red in tooth and claw. That is admirable, because it gives us on the Conservative Benches something to get our teeth into and oppose.

I disagreed with the right hon. Gentleman from the very outset of his speech. I disagree with the way he examined the financial crisis and the blame he places. He puts it exclusively on the bankers, but it is not as simple as that. It takes two to tango—not, I must confess, something I do very often, if ever. The crisis needed people and institutions to borrow the money that the bankers were lending. It needed the regulatory system that was set up by the last Government, which took the Bank of England out of regulating the banks.

[Sheila Gilmore (Edinburgh East) (Lab)]

In criticising the lack of regulation, is the hon. Gentleman suggesting that his party leader was wrong to say in opposition that there should be less regulation?

[Jacob Rees-Mogg]

That is a complete non-sequitur. The issue is bad regulation, not too much or too little. It is perfectly logical to argue that there was too much bad regulation prior to the financial crisis and not simply think that we need more to solve the problem. I would argue that the Governor’s eyebrow is not something that can be regulated particularly effectively. No Act of Parliament, powerful though Acts of Parliament are, can determine how the Governor should raise his eyebrows or not; on the other hand, that was an effective way of regulating banking and ensuring that banks did not become overextended. Ticking boxes to comply with regulation often ensures that people obey the detail of it, but get away from the spirit. That is certainly what happened with some of the bank capital regulations prior to the financial crisis and some of the behaviour of financial institutions, which followed the letter of the law but got into a great deal of trouble. It was not that there was too much or too little regulation; it was that there was bad regulation.

I disagree with the right hon. Member for Oldham West and Royton on his understanding of the crisis, but I disagree with him even more firmly on the Government’s approach to solving it. Getting the public finances back into good order is the essential foundation for an economic recovery. The idea that the situation could have been improved by spending more each year in deficit, when tax revenues were low and the economy was weak, than we had ever spent in peacetime, is absurd. It would have just put us into a debt spiral. The United Kingdom’s credit would have declined and we would have been unable to finance our annual deficit and our cumulative debt.