Trident Alternatives Review

Stephen Lloyd Excerpts

Wednesday 17th July 2013 Commons Chamber

[Mr Jones]

Thank you, Madam Deputy Speaker. I await the examination of the report by the right hon. and learned Member for North East Fife and his justification of his comments over the past few years on this subject.

The standards that we set in this area are important not just in terms of cost. I know that the Opposition and the Government are conscious of the need to ensure that we not only get value for money, but we have a—

[Stephen Lloyd (Eastbourne) (LD)]

Will the hon. Gentleman give way?

[Mr Jones]

Oh, go on then.

[Stephen Lloyd]

I thank the hon. Gentleman for giving way. Given that he is suggesting that we should retain a like-for-like deterrent, what cuts to conventional services is the Labour party proposing? Would it cut the destroyers or the joint strike aircraft?

[Mr Jones]

Oh my God! Sorry, Madam Deputy Speaker, but I am getting a bit frustrated with these people who clearly do not know what they are talking about. If the hon. Gentleman looks at the equipment programme, he will see that the deterrent is in there now. He and his colleagues are peddling the nonsense that we can have either Trident or something else in the defence budget. Is he suggesting that if we cut Trident, the money would be ring-fenced for defence? That would be the first time that the Liberal Democrats have been proactive in support of defence matters.

The alternatives review has discredited the alternatives completely and exposed the reckless policy of the Liberal Democrats on this issue. We await the clear examination of their policy at the Liberal Democrat party conference, where they will no doubt look both ways—portraying themselves as unilateralists while at the same time arguing that they are strong on the nuclear defence of this country.

Tax Fairness

Stephen Lloyd Excerpts

Tuesday 12th March 2013 Commons Chamber

[Stephen Williams]

The Business Secretary is never wrong; he is a very wise man. I do not see any great difference between what he said and what I said on the record several times yesterday and over the weekend. We know what we mean by a tax for low and middle-income earners. We know what Labour Members mean as well—a reintroduction of the 10p tax rate, and that is why we disagree with them.

[Stephen Lloyd (Eastbourne) (LD)]

Will my hon. Friend give way?

[Stephen Williams]

I cannot give way again because I have now lost all my concessions.

The reason the Business Secretary—our shadow Chancellor, as he then was—proposed a mansion tax towards the end of 2009 was that property wealth in our country is woefully under-taxed. Our only property tax is council tax. In England, the top council tax band, band H, is twice the rate of the broadest band, band D, and three times that of the basic band, band A. That means, in effect, that in our only property tax the rate for a £10 million mansion is only three times the rate for a bedsit. That is clearly a ludicrous way to tax property. The band H top rate is only £320,000. Let us take as an example the royal London borough of Kensington and Chelsea, just along from where we are now. A £90 million mansion—I can see no other way to describe a £90 million house—in Kensington Palace gardens pays council tax of £2,151. That is the top rate of council tax that can possibly be paid in the London borough of Kensington and Chelsea—exactly the same as the rate for a small flat in that borough. That is a nonsensical property tax. That is why my party, the Liberal Democrats, backs the introduction of a mansion tax on properties with a value of over £2 million, with an annual levy of 1% on the excess over £2 million. That means that someone who had a £2.1 million mansion would pay mansion tax of £1,000 tax a year, while someone with a £3 million mansion would pay mansion tax of £10,000 a year.

The Minister and several other Members have asked what would happen to people who are asset-rich but income-poor. We have always had a very simple answer to that. In those cases, the tax would be rolled up and would crystallise once the property was sold and then be met from the sale price. That is a very simple concept for a very simple tax. We have also said that it should be a national tax, not a local tax. We have not hypothecated it to any particular tax measure, and we have not tied it to the reintroduction of a 10p tax rate as the Opposition have, which is why we do not support their motion. However, it could take us to the final milestone of getting to the £10,000 income tax-free threshold that I am reasonably confident will be announced very shortly. It could certainly contribute to getting the Liberal Democrats to where we wish to go next—that is, to making sure that every adult on the national minimum wage, which is currently £12,071, should not be caught in the income tax net. We may be able to make progress towards that in the latter days of this coalition, but it will certainly be in the Liberal Democrat manifesto in 2015; we are completely clear about that.

Labour Members have linked their mansion tax proposal—at least the concept, as they have not fleshed out what it really is—to the reintroduction of the 10p tax rate. I think it is fair to have a little look at Labour’s record on the 10p tax rate. I love Budget debates, and I have been in the House for all of them in the eight years that I have been an MP. In March 2007, I was sitting just where the hon. Member for Stockton North (Alex Cunningham) is sat on the Opposition Benches as I listened to last Budget speech of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) in which he announced the abolition of the 10p tax rate. That was met on the then Government Benches with wild cheers and waving of Order Papers because it was to finance a cut in the basic rate of tax from 22% to 20%. Why was that being done? What was so crucial about its timing? As we know, the then Chancellor was heir apparent to the then Prime Minister, Tony Blair. He thought that there was going to be an autumn 2007 general election and that an income tax cut for better-off people in society, financed by the poorest, whom he assumed would always vote Labour, seemed like a good piece of populist politics—but it backfired and blew up in his face. Six years on, we are asked to believe that Labour wants to make good for that mistake.

There was another tax change in 2007 that does not get much attention. A lot of Labour Members here today were not Members of the House at that time, so I will forgive them for not remembering, but perhaps someone else on the Labour Benches wants to remind us of the other tax change that the former Prime Minister introduced in 2007. I see that there are no volunteers, so I will tell the House, because I can see that Members are now in suspense: it was a doubling of the inheritance tax threshold from £325,000 to £650,000 in a double-income household. That is Labour’s record in government: tax cuts for the wealthy. We know that they were completely discombobulated by the then shadow Chancellor’s announcement to the Conservative party conference of a cut in inheritance tax and were keen to match it.

I am sure that Labour Members love reading Polly Toynbee’s column every week and that it is compulsory reading at the breakfast table in Labour households and in the Tea Room. In her column in The Guardian this morning dear Polly said:

“Labour barely dared breathe on the riches that soared upwards on their watch.”

I could not agree more. At the time of its abolition, the 10p tax rate taxed incomes under £7,455 at 10%, but since taking office we have taken such incomes out of tax altogether. Surely it is better to be taxed at 0% than at 10%, so the coalition has been much fairer to people on low incomes.

That is not all that the coalition has done. We have restricted pension tax relief. Up to May 2010 under Labour someone could put more than £250,000 a year into their pension pot, whereas this year under the coalition the figure is only £40,000. We raised capital gains tax from 18% to 28% and stamp duty on properties worth more than £2 million to 7%. We might not have been able to persuade our coalition partners on an annual mansion tax, but we have persuaded them on a mansion duty when properties of that value are acquired.

We have done more to tackle avoidance. We set up an affluence unit in Her Majesty’s Revenue and Customs, which will examine in detail the affairs of 500,000 of the most wealthy people, and placed a 15% charge on domestic properties bought via a company—a classic example of avoidance that the previous Government did little to block, just as they did not block and, indeed, voted against disguised remuneration when we proposed to tackle it in one of our first Finance Bills.

We have been through many Opposition days, both in government and in opposition. When the votes are counted at 10 past 4, very little will have changed. What are the origins of this motion? We know that it is based on a policy stolen from the Liberal Democrats. I understand the right hon. Member for South Shields (David Miliband) also proposed it in his leadership bid, so one brother steals from the other as well as from the Liberal Democrats. This is pantomime politics, but nobody is laughing.

Corporate Tax Avoidance

Stephen Lloyd Excerpts

Monday 7th January 2013 Commons Chamber

[Stephen Lloyd (Eastbourne) (LD)]

I pay tribute to my hon. Friend the Member for Redcar (Ian Swales) for securing this debate. I am well aware that many of the companies mentioned today have not broken the law, but they have broken the spirit of the law. We know that, HMRC knows that and, most important, the public know that. Companies such as Amazon, which has been mentioned frequently this evening, and which paid a tax rate of just 2.4% in 2011, have outraged the British public in recent months, and rightly so. These companies have used the vast resources at their disposal to bypass the tax system, while taking a great deal of money and profit from their UK customers. At a time of such tough worldwide economic circumstances, that is nothing but an insult to the hard-working individuals and businesses who pay their fair share of tax, who understand that we all need to contribute, and who appreciate that, whatever the partisan nay-sayers may say, we are all in this together, because that is the only way that we will get through our desperately indebted situation. Some companies understand that, and some do not.

Let me read a brief quote from two companies’ corporate social responsibility promises on their websites; the companies are in the same sector. The first company says it

“will be accurate and truthful in representing business transactions to government agencies.”

Some hon. Members may have already identified that this CSR missive is from Starbucks. Did it understand that we all need to contribute? Of course not. The whole country probably now knows that since 1998, despite expanding at an incredible rate to almost 800 stores UK-wide, the parent company paid just £8.6 million in tax over that whole period, having racked up more than £3 billion in sales. It said that was because the company failed to make a profit. That not only absolutely beggars belief, but insults the British public, for one very simple reason: many Starbucks stores are franchises, which means that such rapid expansion could only have happened because the parent company promised, and delivered, real profits to the independent franchise owners.

Starbucks has not so much been failing to tell the truth to us or to its franchisees as telling a whopper of such magnitude that it is almost funny. Its clearly nonsensical distance from reality could become a catch phrase equivalent to Baldrick’s “I have a cunning plan”—a great catch phrase which we all know because it is so completely disconnected from reality, similar to Starbucks’ “Trust me, we only made £8.5 million profit over 14 years, while expanding to every high street in the United Kingdom,” except, of course, that it is not funny. It is contemptuous of its franchisees, the public, the taxpayer and its suppliers. The behaviour of Starbucks and other such companies represents the contemptuous face of global capitalism—a pernicious, ugly underbelly beneath the glossy, shiny exterior.

We all know, and it has been discussed this evening by numerous colleagues across the Chamber, that the rules around globalisation mean that companies can switch accounts from country to country to hide their real profitability from the tax man. This makes it difficult for HMRC to challenge the corporate giants, but there is an upside to the whole tawdry affair, and it has been mentioned this evening: the public have the power, and did they not show it with their boycotting of Starbucks coffee shops? I pay tribute to the previous speaker, my hon. Friend the Member for Bristol West (Stephen Williams), who played such a key role in the boycott of Starbucks. In a very short time his campaign had well over 10,000 members of the public determined to call Starbucks to account, and they did—a fantastic effort all round.

I would not want anyone in the Chamber to think that I am anti-business. Nothing could be further from the truth. In my constituency, Eastbourne, my No. 1 priority since the general election has been growing the town’s economy, because to me it is all about jobs and communities, be they local or national. That makes companies which avoid tax through legal loopholes even worse. Their lack of any sense of community integrity or community responsibility means that they do not pay their way.

I am not here just to condemn, so here is an excerpt from my second company’s vision: “We understand the need to incorporate environmental, social, ethical and consumer concerns into the heart of our business operations”. Who is that? Same industry, similar scale and, one could say, similar vision; the difference is the tax take. The second company has paid £34 million in tax over the past two years, compared with Starbucks’ grand total, as I said earlier, of £8.6 million over 14 years. Starbucks paid one quarter of the amount over a period seven times longer. That is deplorable. Hats off to Costa Coffee, which is the second company. It paid its dues, so it deserves the recognition.

The public have power if they choose to use it. Another example is a company called Fruit of the Loom, a clothing manufacturer which summarily decided a few years ago to close a factory in Honduras and sack all the employees, after the 1,200 workers there formed a union. A boycott of the company’s products took off in the US and subsequently the UK. This initiative cost the company dear, not just in reputation but on the bottom line. After $50 million in lost trade it saw the light, reopened the factory and gave the reinstated workers $2.5 million dollars in compensation. That is what I call people power.

The Government’s additional investment in specialists in HMRC will increase the tax take significantly over the next few years. In the final year it will be £9 billion more than a couple of years ago. In addition, we should name and shame. I disagree with one of my colleagues who said earlier that we need to be careful about going down that road. I agree with those Opposition Members who said that we need to name and shame and harness the power of the public. The public are ready for that and they have the power. I believe fundamentally that tax avoidance is immoral. It may not be against the law, but it is wrong.

Jobs and Growth

Stephen Lloyd Excerpts

Thursday 17th May 2012 Commons Chamber

[Margaret Hodge (Barking) (Lab)]

Today’s debate on jobs and growth is of huge importance not only to the constituents of Redcar but to those in Barking and Dagenham in my constituency. All too often, particularly in this Chamber, people believe that London’s streets are paved with gold, and that there is little poverty or joblessness in the capital. All too often, again in this Chamber, people believe that the challenges facing Londoners are concentrated in the inner boroughs. Sadly, and with a strong sense of anger and frustration, I must tell the House that the reality for families in Barking and Dagenham demonstrates that those beliefs are not only misguided but just plain wrong.

Any set of statistics will demonstrate a high level of joblessness in my constituency and, under this Government’s legislative programme, there is little hope for the future. A datablog published by The Guardian shows that Barking and Dagenham is ranked eighth out of 326 local authorities for long-term unemployment, and 11th for child poverty. If we look at the latest unemployment figures, we see that the unemployment rate in my constituency, across all people of working age, is almost double the national average, and that the number of people on jobseeker’s allowance for 12 months or more has doubled in the past year.

Growth and jobs are vital for my constituents, yet they have become the victims of the Government’s stubbornly blinkered and highly ideological approach to the economy. This involves putting tax cuts for the rich before job creation for the poor, putting deficit reduction before poverty reduction and putting the interests of the few before the well-being of the many. Without active Government intervention, my constituents will find it harder than most to find the jobs that they need to pull themselves out of poverty. Almost 60% of 19-year-olds do not have a level 3 qualification, nearly half the people of working age who are out of work have no qualifications at all, and one in four of my constituents work in the public sector. Faced with cuts in public sector jobs, cuts in training and employment opportunities, a failed growth strategy, little business investment and miserable levels of bank lending, the future for them is bleak.

As Chair of the Public Accounts Committee, I also know that when the Government talk about private sector job creation, the reality is something else. Many of the new private sector jobs are simply public sector jobs that have been transferred to the private sector as a result of the Government’s privatisation programme. We have only to look at the Audit Commission, at the privatisation of the Work programme and of prisons, and at private contractors providing health care to NHS patients to see that many of the so-called new private sector jobs are jobs funded by the public purse. That is scarcely a surge in private sector growth.

The Government claim that they are running the biggest-ever welfare-to-work programme with the Work programme. Let us inject a bit of reality into that claim. I shall look at the Work programme both as a constituency MP and as Chair of the Public Accounts Committee. I have always been an optimist, but I have grave concerns about whether this will be an effective value-for-money programme. Ministers claim that it is value for money because it is paid by results, but surely the programme’s purpose is to get people into work, not to cut the welfare-to-work budget. If we end up spending less, we will do so by achieving less. A detailed look at the programme shows that one in four of those referred will get a job anyway, with public money being spent both on the attachment fee and on the placement. Unemployment is much higher, so referrals are greater and more money is going to private providers, but with fewer people placed in a job.

[Stephen Lloyd (Eastbourne) (LD)]

The right hon. Lady talks about value for money, but does she not agree that the prime providers of the Work programme will be paid only if, first, they get people into jobs and, secondly, they sustain those people in jobs for two years, which will provide the bulk of the money. That sounds like good value to me. Does she disagree?

[Margaret Hodge]

I have two points on that. First, it is not good value if people do not get into work, which is the whole purpose of the programme, and, secondly, one in four of those who get into work would have done so anyway without any intervention at all. Given the black box nature of the programme, we will not know whether people have actually been given support. All the indications I have seen suggest that that is highly unlikely. We are beginning to get evidence to show that the more difficult cases are being parked, simply because all the money is focused on those most likely to get into work.

Amendment of the Law

Stephen Lloyd Excerpts

Monday 26th March 2012 Commons Chamber

[Graeme Morrice (Livingston) (Lab)]

I thank you, Mr Deputy Speaker, and my hon. Friend the Member for East Lothian (Fiona O’Donnell).

Over the past few days, I have been speaking to people in my constituency about the Budget, gauging their opinion and gathering their views. Everybody I spoke to was clear that, once again, the Tories have shown their true colours with a classic Tory Budget under which millions will pay more so that millionaires can pay less. That is evidenced by the facts, as we have heard throughout this debate, with 14,000 millionaires receiving a tax cut worth more than £40,000 a year, while 4.4 million pensioners lose an average of £83 a year.

It is a classic Tory Budget, but with a difference—it was possible only thanks to the support of the Liberal Democrats. Those same Lib Dems publicly opposed any change to the 50p rate of income tax until just a few weeks ago; those same Lib Dems, before the last general election, repeatedly stated their opposition to immediate public spending cuts, only to support a Budget reduction of more than £6 billion within two weeks of forming the coalition; and, lest we forget, those same Lib Dems promised not to raise VAT and then raised it. The Opposition will not forget the sycophantic sight of Lib Dem Members waving their Order Papers in glee last Wednesday at a George Osborne Budget—yes, a George Osborne Budget. I am sure the country will not forget that sickening display at the local elections in six weeks’ time. We can safely say that any lingering uncertainties about the Liberal Democrats’ wholesale abandonment of their progressive roots have finally been laid to rest by this Budget. British Liberal Democracy RIP.

[Stephen Lloyd (Eastbourne) (LD)]

Does the hon. Gentleman agree that the Liberal Democrat policy of increasing the personal tax allowance to £10,000 by 2015, which was in our manifesto, is not only being delivered but being delivered quicker than that? It will take 2 million of the poorest people out of paying tax altogether.

[Graeme Morrice]

I have been told that I am not getting an extra minute, so I will just press on with my speech.

I want to say a few words about the 50p tax rate and about the granny tax, which has angered many people in my constituency, before finishing with the Government’s failure on jobs and growth.

The 50p rate raised about £1 billion in its first year, and its continuation could have been used to cut fuel duty, about which many of my constituents have written to me, to reverse the Government’s damaging cuts to tax credits or to help reduce the deficit. Instead, the Chancellor has chosen to give the richest 1% of earners a huge payout. People on middle and low incomes are already being squeezed by rising fuel, energy and food prices, and now their tax credits and child benefit are being cut. Yet again, the Government have made the wrong choice and proved how totally out of touch they are.

Amendment of the Law

Stephen Lloyd Excerpts

Thursday 22nd March 2012 Commons Chamber

[Andrew Miller]

So when I go to Ann’s pasty shop, I’ll be all right, will I?

The Lib Dems are supposed to be strong on matters related to solar power. This morning, the chief executive of the Solar Trade Association said:

“We cannot understand why solar has been singled out for rough treatment on Capital Allowances when it is a popular technology which will soon reach grid parity and provide businesses with a real alternative to dependence on fossil fuels.”

Again, the Liberals have bought into something that is totally contrary to their own policy position. At the same time, the Budget gave a tax cut to the very richest people in our country, with just 14,000 people earning £1 million or more getting a Budget boost of over £40,000 each year. No wonder the Centre for Policy Studies, which is advised by the Minister for Universities and Science, among others, says that the Budget amounted to small-scale tinkering, regional handouts, and a rearranging of the deckchairs. To be fair to the Minister, there is a lot that I do not agree with in the CPS’s press release. Nevertheless, the Government have chosen to cut taxes for 300,000 people earning over £150,000—the richest 1%. How can that be the priority now?

The Chancellor looked quite smug when he sat down yesterday, but I bet he did not feel so smug when he read today’s papers.

[Stephen Lloyd (Eastbourne) (LD)]

I had the pleasure of sitting in the Chamber yesterday to hear the Chancellor and the Leader of the Opposition, and then some of the later speeches. There was a lot of noise going backwards and forwards about the veracity of the figures on how much will be raised from the different wealth taxes. It is not that I do not trust Labour Members, but last night I thought that I would go and check the figures on Channel 4 FactCheck, which I think we all recognise is very accurate, and it confirmed independently that it estimated that five times more money would be raised from the very wealthy as a result of the various taxes.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I hope that the hon. Gentleman is going to save something for his speech. I remind him that interventions are meant to be short.

Amendment of the Law

Stephen Lloyd Excerpts

Wednesday 21st March 2012 Commons Chamber

[Gavin Williamson]

I thank the hon. Gentleman for making those comments. It is fascinating that the International Monetary Fund has predicted that Britain will grow faster than Germany and France. It is true that the eurozone has had a negative impact on this country, but people see us as a country that is well run, with a Chancellor who is committed to making business growth happen. That is why we will grow faster than Germany and France. I am sure that the hon. Gentleman will welcome that.

I will move on briefly to families. It is often said that raising the personal allowance is a Liberal Democrat idea. Members will be shocked to hear that the matter was raised with me many times during the general election campaign. I told people that if I was elected as their Member of Parliament, I would do all that I could to ensure that personal allowances increased so that the lowest-paid—

[Stephen Lloyd (Eastbourne) (LD)]

Will the hon. Gentleman give way?

[Gavin Williamson]

I will make some progress, thank you. I told people that I would try to ensure that we made progress on raising the personal allowances for everyone in this country, including the lowest-paid. I am particularly proud to see that the Chancellor has done that, and I am quite sure that every coalition Member will warmly welcome it.

I wish briefly to touch on one thing I would very much have liked the Chancellor to do, which is to tackle the issue of the beer duty escalator. In the Strangers Bar, one of the finest ales, Enville ale, is currently on sale as one of the guest ales. I encourage everyone to ensure that they have a pint of Enville ale, a fine beer but one from which I am quite sure we would raise just as much duty if we got rid of the beer duty escalator. I put in a plea for that, and it would be very much appreciated.

I welcome the news that we are going to have a national centre for aerodynamics. Again, that will support manufacturing, but let us ensure that it is in South Staffordshire. We have an aerospace industry that is highly dynamic and—

First-time Buyers

Stephen Lloyd Excerpts

Wednesday 14th March 2012 Westminster Hall

[Steve Brine]

I thank my hon. Friend, who argues passionately for rural housing in his constituency. The changes that the coalition Government are bringing in—the neighbourhood plans that will be part of the localism agenda, which will work with the council’s local plan—are critical in achieving local buy-in to add stock sensitively and to increase supply in rural areas. That is not to impose, but to enable local planning, through the neighbourhood plan process, to increase supply, so that local people who have grown up in villages can afford to stay in them. That is critical. The new rules that the Government are bringing in, on local allocation, mean that we can make local homes for local people a reality. I know that my hon. Friend will press for that on behalf of the people he represents.

We know from figures from the Department for Communities and Local Government that between 2000 and 2007 the average UK house price more than doubled, from £106,000 to £214,000. For many first-time buyers, particularly those unable to access finance from the bank of mum and dad—a term that I suspect we shall return to over the next 90 minutes—those high prices have either delayed or ended hopes of owning bricks and mortar. In Winchester, the mean house price in the third quarter of 2011 was £368,500, whereas the mean price for England in the same period was just £245,000. The problem is particularly acute in my constituency.

It is a widely accepted fact of economic reality that house prices are high partly because housing is in relatively short supply in this country. As for the future, I know, having listened to Communities and Local Government questions on Monday, that the Government do not like to make forecasts of house building; but they must surely look carefully at what has happened in the past. In 2007, there were 178,000 housing starts, but by 2009—the last full year of the previous Government—that figure had crashed to just over 78,000. In 2011, the first full year of the coalition Government, it had risen to just over 98,000—a rise of 25%—but we are still clearly well short of where we want and need to be. Building more new, affordable homes should clearly be a priority. I hope, for all our sakes, that the new incentive-led, plan-led approach combined with policies such as the new homes bonus and genuine local buy-in through neighbourhood plans will make a significant difference.

As I have said many times in my constituency and in the Chamber, the stick approach to increasing supply has failed. Under the previous Government, house building fell to its lowest level since the 1920s. My aspiration for the new system of localism is simple: local authorities will step up to the plate and stop looking to London for their orders and work with local communities to deliver the homes that their area needs.

When I talk to people in my constituency—I am sure that Members from across the House will recognise this point—it is clear that they recognise the facts; they understand that we need to build new homes because they know that the people who are looking for those homes and who are locked out of the system are their children and their grandchildren. My children are aged four and one, so they are obviously a long way from owning their own home. None the less, that is what I want for them one day—actually at 5 o’clock this morning, I felt that it would be a good idea right now. I want them to be able to stay near mum and dad, perhaps not too near, but relatively near.

People in Winchester do not want housing estates forced on them that are so big that they can be spotted from the lunar surface, and that are without the support services a community needs when it accepts 200 or even 2,000 new homes. They want to be involved. When we involve people, we find that they take the right decision for their community. That is what localism is about; nothing more and nothing less.

I welcome the coalition’s plan to release public sector land with the capacity for up to 100,000 new homes, and the £400 million that the Treasury has put into the get Britain building fund to support firms in need of development finance. I look forward to hearing more from the Minister about her aspirations in that respect.

Although the housing shortage and high prices have conspired against first-time buyers, undoubtedly the biggest obstacle is the size of the deposit that is required before a mortgage can even be considered. The Council of Mortgage Lenders has estimated that the average deposit for a first-time buyer now stands at more than £26,000. That represents 79% of the average annual income from which the mortgage is paid.

A constituent wrote to me last month:

“All the mortgage providers we have spoken to have offered 5% deposit mortgages but these come with massive consequences, such as interest rates which would make monthly payments the same as one of our monthly salaries, or a family member/friend who would invest £35,000 for three years to stand behind the loan. I don’t know about you, but we don’t know anyone who could spare £35,000 that they wouldn’t touch for 3 years, do you, Steve?”

No, Steve doesn’t, and that is the problem; I wish I did.

As the credit crunch took hold in 2007, liquidity dried up and more restrictive lending took hold. Thus, even though house prices have started to fall slightly in recent years in some areas, challenging funding criteria have meant that ever larger deposits are required, making the dream of home ownership for many first-time buyers nothing more than a remote fantasy. Add to that the rising costs of living and job uncertainty, and the picture can appear bleak for aspiring home owners.

In preparing my remarks for this morning’s debate, I asked myself whether we had a Government who were prepared to wash their hands of these young people. Do we have a Government who prefer to walk on by, on the other side of the street, and consign a generation of young people to a life living with mum and dad, which can have benefits; sofa-surfing, which does not have benefits; renting in the social or private sector, which works for many; or even, in extreme cases, homelessness? If I thought for one moment that this Government took that view and wanted to turn their back on young people, I would be their fiercest critic and we would be having a very different debate today. Yes, there are limits to what Government can do, especially with a national debt the size that we have, but there are a number of actions that can be taken to boost Britain’s housing market and to assist first-time buyers in getting a foothold on the first rung of the property ladder.

The most important step the Government have taken to support greater home ownership is their commitment to ensuring that interest rates are kept as low as possible for as long as possible. They are getting to work on tackling the national structural deficit. It is a factor that is easily overlooked, but without a credible plan to put the public finances on a stable footing, the inevitable higher interest rates that would result would also lead to higher monthly mortgage payments and increased repossessions. That key point should never be understated.

As well as maintaining the conditions necessary to secure a low interest base rate, the Government have introduced a range of initiatives designed to support prospective first-time buyers to own their own home. With the sort of timing that I could not have planned for—for the record I did not—two key announcements were made this week. The NewBuy guarantee scheme tackles the deposit problem head on, and I am pleased to see that it is led by the Home Builders Federation and the Council of Mortgage Lenders.

At the launch this week, the executive chairman of the Home Builders Federation said:

“NewBuy will help thousands of people to meet their aspirations to buy a new home, freeing up the housing market and helping first-time buyers and those unable to take the next step on the ladder.”

Paul Smee, the director general of the Council of Mortgage Lenders said:

“These mortgages will help creditworthy borrowers. It is good news for home-buyers and potentially good news for jobs and the wider economy too.”

Mortgage applicants are typically required to give a deposit of between 15% and 20% at the moment, whereas NewBuy makes it possible for first-time buyers and existing home owners to get a mortgage on a new-build property with only a 5% deposit, without all the strings that my constituent told me about earlier. With that new deal, instead of having to save a deposit of between £30,000 and £40,000, first-time buyers will now need only £10,000. The scheme indemnifies lenders against a limited amount of any future losses, opening up mortgage lending and stimulating demand for newly built houses and flats.

Only new homes built by house builders signed up to the scheme will qualify, but I am told that most of the major and many of the smaller builders are in the process of registering. Yesterday, I was encouraging Radian Housing to be part of the scheme, and it told me that it already was, which was excellent news.

Under the scheme, individual home builders will partner up with one or more mortgage lenders who will offer loans of between 90% and 95% on their properties. Let me stress that NewBuy has nothing to do with sub-prime lending, when mortgages were given to people who could not afford the repayments. Mortgages of 95% operated perfectly well in this country for many decades, and the criteria for lending are now much stricter. Nobody will get a mortgage who is not able to pay for it.

[Stephen Lloyd (Eastbourne) (LD)]

My hon. Friend is making an important point because there have been one or two concerns about that issue. Will he confirm that the Financial Services Authority will be watching this extremely closely? The scheme has been through a rigorous regulatory route, and there should be no concerns about comparisons with some of the sub-prime activity.

[Steve Brine]

Yes, the FSA is monitoring the situation very carefully. There are some new lenders coming on to the market who are keen to step up to the plate, and the FSA is treating them with all the due care and diligence that we would expect. I know that as chair of the all-party parliamentary group on Citizens Advice, my hon. Friend takes a great interest in the matter, and I thank him for coming along this morning.

Nobody will get a mortgage who is not able to pay for it, not only at today’s low interest rates but at interest rates that will possibly rise at some future point. NewBuy is most welcome.

Financial Services Bill

Stephen Lloyd Excerpts

Monday 6th February 2012 Commons Chamber

[Stephen Gilbert]

My hon. Friend is quite right; that is a welcome step forward, although there are some bits that still need to be tidied up. I shall come to those later.

It is particularly welcome that the FCA will have a super-complaint power. This will allow Citizens Advice and other consumer bodies to use their evidence of widespread consumer harm to make complaints on behalf of all consumers, including those who might not know how to complain, and those who do not understand that their rights have been infringed. To make this new era of consumer protection effective, however, the Bill should require the FCA to respond quickly and effectively to super-complaints concerning widespread consumer harm, and I ask the Minister to consider what improvements could be made to the Bill in that regard when it goes into Committee.

As we know, the Bill sets out a framework for moving the regulation of consumer credit lending to the FCA. That, too, is welcome. But it is vital that not only lenders but debt collectors, brokers, debt managers and retail lenders that sell insurance products are regulated by a single, strong regulator. I believe that the responsibility for all that regulation should go to the FCA. In recent years, we have seen a succession of widespread consumer problems with financial products and services, including the mis-selling of payment protection insurance, poor lending and arrears collection practices in sub-prime mortgage markets, unacceptable debt collection practices by major credit providers, irresponsible lending of unsecured credit, and the ongoing saga of bank charges. It is clear that a change in the way in which consumer credit is regulated is necessary to protect consumers better in the future. I am looking at the hon. Member for Walthamstow as I say that.

Under the Consumer Credit Act 2006, the Office of Fair Trading has too little power or policy autonomy to respond quickly to emerging consumer harm, particularly when it concerns new products, services and business practices. That makes it easy for firms engaged in bad practices to target vulnerable consumers. It also undermines attempts by the sector to police itself, and makes the task of regulatory enforcement much harder. The level of financial penalties is also too low to act as a deterrent.

The OFT does not have the power or resources proactively to supervise regulated firms, or to identify and stop bad practice at an early stage. OFT guidance does not have the quality of rules, the breach of which could lead to a sanction, so enforcement is also slow. In respect of payday lending problems, for example, the OFT appears unable to make a specific rule limiting the number of times a loan is rolled over, or binding provisions on how a payday loan firm should ensure that it is lending responsibly, or to require a firm to deal with borrowers in financial difficulty in a specific way.

The Consumer Credit Act conduct regime is highly enforcement focused. There are few powers to pre-empt causes of consumer harm, or even to require firms to compensate consumers who have suffered harm. I think that all Members would agree that the consumer credit market needs a regulator that can regulate products and prevent consumer harm before it becomes widespread.

[Stephen Lloyd (Eastbourne) (LD)]

I strongly agree with the direction of travel that my hon. Friend is taking, but does he acknowledge that there is a slightly slanted argument on this matter, because the APR on bank overdrafts that have not been arranged is often far higher than that charged by the better known and perhaps more reputable payday loan companies?

[Stephen Gilbert]

I am grateful to my hon. Friend for making that point. I believe that all financial services should be underpinned by two principles: one is transparency, in that the consumer needs to know what they are getting; the other is that interest needs to be proportional to the length of time and the amount borrowed. I am sure that the record will reflect what my hon. Friend has added to the debate.

Transferring responsibility for consumer credit regulation to the FCA will also have the advantage of providing one umbrella regulator for credit, insurance, broking and debt management. It is vital that we do not allow a two-tier system to develop, with mainstream credit being regulated through the FCA and a reduced number of licensable firms being regulated under the CCA by a small successor to the OFT with lesser powers and diminishing resources. I am therefore pleased to see the direction of travel that the Government are taking on this matter.

My second point relates to the Prudential Regulatory Authority and the FCA. It seems anomalous to give the PRA a veto over the FCA. This could have the effect of putting the prudential strength of banks above consumer protection. The Bill might allow the PRA to veto the FCA taking action against a party for market abuse. If the PRA were to veto the FCA’s taking action to protect consumers, it would have to tell the Treasury that it had done so, but it could also prevent the Treasury from informing Parliament. In my view, that provision needs to be reversed.

Turning to the need for the United Kingdom to maintain effective representation abroad, it is clear that the proposed new supervisory bodies will need to co-ordinate in order effectively to represent our national interests at European and international levels, including with the new European supervisory authorities. The financial services industry, the Government and the UK regulatory authorities all have an important role to play in representing the UK in international discussions on financial regulation.

The Financial Services Authority and other UK regulatory bodies have a strong record of constructive engagement with, and influence in, European and other international bodies. Indeed, to give the House just two examples, the former head of the FSA’s international division now leads the European Securities and Markets Authority, and the Governor of the Bank of England has a leading role on the European Systemic Risk Board and on the governing committees of the Bank for International Settlements. The International Monetary Fund’s recent report on the future of regulation in the UK has also said that the effective international co-ordination of the UK’s position is important.

I therefore welcome the Government’s recent statement that they accept the case for a committee on international co-ordination, and I want to underline to the Minister the need to get that right. There will not be a perfect match between the scope of the responsibilities of the new UK bodies and those of European and other international groups, so there is a requirement for co-ordination between different UK bodies to represent the British interest effectively. The proposed measures in the Bill will oblige the new UK regulatory bodies—Her Majesty’s Treasury, the Bank of England, the PRA and the FCA—to sign a statutory memorandum of understanding and to work together.

I believe that TheCityUK was right to say that effective international co-ordination is so important to the broader UK economy, as well as to the financial sector, that a dedicated group or committee should be appointed to give sufficient priority, resources and responsibility to mobilising the UK’s European and international representation. It proposes the formation of an international co-ordination committee with specific responsibility for leading the UK’s representation on European and international committees. I commend that approach to the House.

I welcome the Bill, but I ask Ministers to look again at the balance of power between the FCA and the PRA, at the inclusion of all CCA activities within the remit of the FCA, and, above all, at the need to ensure that the United Kingdom retains a strong and coherent voice externally.

Fuel Prices

Stephen Lloyd Excerpts

Tuesday 15th November 2011 Commons Chamber

[Fiona Bruce (Congleton) (Con)]

The high cost of fuel is impacting detrimentally on families, pensioners and businesses in my constituency, comprising as it does rural areas interspersed with market towns. I want to concentrate particularly on the small businesses in my constituency and the impact it is having on them.

In my constituency there are just a handful of large businesses, the largest of which employs just over 500 people, but there are 4,000 small businesses, which are therefore the engine of the local economy. For most of them, car travel and other vehicle travel is not an option but a necessity. As someone who has run a small business for 20 years, I know the reality behind the phrase “living on the margins”. That is a constant reality for many small businesses today. Because transport costs are a substantial component of their outgoings, fuel price rises have eroded those margins to almost unsustainable levels.

[Stephen Lloyd (Eastbourne) (LD)]

I share my hon. Friend’s concern about small businesses, and I recently found a statistic of which she may not be aware. Over the past year the UK’s 4.8 million small and medium-sized businesses have paid over £260 million more for fuel than they did only 12 months ago. Does she agree that sometimes the price of fuel becomes a step too far for small businesses?

[Fiona Bruce]

I entirely agree. Small businesses are being forced into an impossible predicament. Do they transfer the increased costs to their customers, do they lose their customers, or do they sacrifice the making of any profit just to keep going, which is not sustainable in the long term?