Financial Services Bill

Steve Brine Excerpts

Tuesday 22nd May 2012 Commons Chamber

[Mr Hoban]

That is why the Government have embarked upon a consultation to look at ways to enhance the accountability of boards to their shareholders, looking particularly at the issue of executive pay. That is a welcome move and the Government will shortly respond formally to the responses to that consultation. I agree with the hon. Member for Nottingham East that shareholders must play a more powerful role in these issues, and in recent months they have put across their views more powerfully.

The hon. Member for Nottingham East spoke about the disclosure of voting patterns. As he mentioned, there is provision for such a power in the Companies Act 2006. The previous Government made it clear that they would use the power only if market practice did not improve. The outcome of the stewardship code has been to encourage institutional investors to vote more and to disclose that. The latest Investment Management Association survey of institutional investors shows that 66% of those surveyed now publish their voting records. That is up from 21% in 2004. Professor John Kay, in his review of equity markets and long-term decision making, is considering the issue and will report in the summer.

Let me move on to Government amendments 7 and 8 and Opposition amendment 73. Amendment 8 makes two minor technical corrections and allows firms and the Financial Ombudsman Service to make referrals to the FCA on matters of mass detriment. Amendment 7 deals with super-complaints. The new provision in the Bill for the FCA to receive super-complaints from designated consumer bodies has been widely welcomed. I am grateful for the scrutiny provided in Committee and in particular for the arguments made by the hon. Member for Makerfield (Yvonne Fovargue), who is in her place, who tabled an amendment in this connection.

It has never been the Government’s intention that the super-complaints mechanism could be made available to bodies whose purpose is to represent professional investors, but the debate in Committee highlighted the fact that the drafting would allow that. The amendment therefore revises the definition of “consumer” used in the super-complaints mechanism to exclude representatives of authorised firms.

Amendment 73 seeks to require the Government to introduce a provision allowing for collective proceedings for small and medium-sized firms and to give them access to super-complaints. The amendment has created confusion in the minds of hon. Members about the rights currently available to businesses to make complaints. Paragraph (b) of the amendment suggests that small and medium-sized businesses cannot make complaints. That is not the case, but I shall return to that.

I deal first with collective proceedings. The Government are consulting on a range of proposals to make it easier for consumers and small businesses to bring private actions in competition law, including on whether to extend to businesses the current right of consumers to bring a collective action following a breach of competition law, and whether to make it easier to bring such actions. We should take the opportunity to learn from the outcome of that consultation and reflect on what the implications might be for the financial services sector before proceeding to legislation. It would not be appropriate to legislate today in haste, without having consulted.

On access to super-complaints, the provisions in the Bill will not prevent bodies representing small and medium-sized enterprises which fit the relevant definition of consumers from making super-complaints. Within the new statutory framework the issue of what type of consumer body should have access to super-complaints is complex and will require more detailed criteria than can be set out in the Bill. These criteria will be of interest to parliamentarians and to organisations seeking to become super-complainants. I can therefore announce to the House that the Treasury will publish draft criteria for consultation later in the year.

On paragraph (b) of amendment 73 about the rights of small and medium-sized businesses to make complaints to the FSA, there has been much discussion about the mis-selling of interest rate hedges. I do not want to comment on that directly, as it is a matter for the FSA. However, I can point out that the FSA already has a powerful toolkit that can be very effective. That includes its powers to establish industry-wide or firm-specific redress schemes under section 404 of FSMA, which was recently used in the case of Arch Cru. The FSA is consulting on such an arrangement to help people who lost out as a consequence of the issues at Arch Cru.

The FCA will have the powers that the FSA already has to refer firms to enforcement, to use supervisory measures, to agree with or require a firm to undertake the necessary remedial action, including carrying out a past business review, and the payment of redress, or obtaining redress for firms through their use of their restitution powers under section 384 of FSMA. There are therefore provisions in place that will help the FSA to tackle complaints of mis-selling that businesses as well as consumers have brought to it. I hope that provides the clarity and reassurance that my hon. Friends are looking for.

My hon. Friend the Member for Warrington South (David Mowat) picked up in his interventions the confusion that amendment 73 has created. The FSA has the power to take action to help businesses which feel that they have been mis-sold products and to ensure that restitution can take place.

[Steve Brine (Winchester) (Con)]

I am listening carefully to what the Minister says, and I agree that paragraph (b) has caused some confusion and may have planted some hope that did not need to be planted in some of my constituents, who have some sympathy with amendment 73, as do I. The Minister said that the FSA or FCA has a toolkit at its disposal, and I am sure it has been listening carefully to what he has said at the Dispatch Box this afternoon. Will he consider writing to the FSA to make that crystal clear, giving clarity to Members and constituents listening to the debate today?

[Mr Hoban]

I would not say that amendment 73 sowed seeds of hope. Rather, it sowed seeds of doubt by suggesting that those powers were not available. Of course they are available. I have written to hon. Members in respect of Arch Cru and also about interest rate swaps recently, setting out the work that the FSA is doing in this regard. It is looking carefully at the sales practices of a number of institutions in respect of interest rate swaps and will take action, as appropriate. I can reassure my hon. Friends and those who take a close interest in these matters on behalf of their constituents and businesses in their constituency that the FSA has the powers that it needs to tackle these issues properly and fully and to get to the bottom of them.

Finance (No. 4) Bill

Steve Brine Excerpts

Thursday 19th April 2012 Commons Chamber

[Mr Chope]

My hon. Friend makes a really good point, which was also covered in the recent Adjournment debate on this subject, which received what I can describe only as a rather woolly response from the Exchequer Secretary to the Treasury, my hon. Friend the Member for South West Hertfordshire (Mr Gauke). He said that, basically, something was going to happen in this Parliament but the Government were not quite sure what or when. That was not good enough. We need an opportunity to look at the whole issue of transferrable tax allowances, and allowances in the tax and benefit system that recognise the family and marriage.

Returning to the issue of fairness, two people on £50,000 a year with children will not have to pay the high income child benefit charge, whereas a family with children with one person earning over £60,000 will have to pay it.

[Steve Brine (Winchester) (Con)]

On the issue of fairness, would my hon. Friend have any truck with the idea of limiting child benefit to, say, the first two or three children, regardless of the parents’ income, which would retain the universal element?

[Mr Chope]

There is a whole host of ideas going round. There was a time when no child benefit or allowance was payable for the first child, on the basis that parents should take responsibility for that child and bear the costs themselves, but, if they had any more, they could expect the state to help them. My hon. Friend’s point illustrates further the fact that this measure should have been the subject of proper consultation and draft clauses, so that we could have had a debate on it in the wider context of universal benefits. Instead, it was announced at the party conference and implemented in this way.

First-time Buyers

Steve Brine Excerpts

Wednesday 14th March 2012 Westminster Hall

[Steve Brine (Winchester) (Con)]

It is a pleasure to serve under your chairmanship, Mr Gray; this is the first time that I have done so in a leading role.

I am pleased to have secured the debate, which covers an issue that is important to me and certainly to the people I represent in Winchester and Chandler’s Ford, as well as to people across the country. I am pleased that so many of my colleagues have turned out this morning. I suspect that the postbags of many right hon. and hon. Members suggest that the topic is important to their constituents, too. The issue is about the strivers in our constituencies. I am not sure where that term came from, but it seems increasingly to be a feature of the political spectrum.

It is frequently asserted that we are a nation of home owners, as well as a nation of shopkeepers. Home owning, or striving to own one’s house, makes financial sense. It brings independence and is a source of great pride for many. It was Anthony Eden who first set out the noble vision of a nationwide property-owning democracy, and for much of the 20th century home ownership steadily increased. That was a good thing. There has been a striking increase in recent years in the number of people, particularly in the younger generation, opting to rent instead of buying, as property prices have shot up, deposit requirements have rocketed, and the economic outlook has remained uncertain. People’s aspiration, however, one day to own a property of their own remains as strong as ever.

I had an acute reminder of that yesterday, when I was proud to cut the ribbon in the Dell—not that Dell—the old Dell in Willis Waye in Kings Worthy. There are 29 brand new homes, which have been built by Homes and Community Agency partner Radian Housing, with a nice mix of shared ownership and rental, constructed to the highest standard possible, using local architects. I was fortunate enough to meet some residents yesterday, and they do not see home ownership as an unnecessary burden; they are proud as Punch to live in the Dell. I am proud that we have a positive Conservative city council in Winchester, with a forward-thinking portfolio holder in Councillor Tony Coates, and people such as my colleague Councillor Ian Tate on the planning development control committee; they have a passion to help the people we represent to realise their aspiration to own their homes.

[Mr Marcus Jones (Nuneaton) (Con)]

I congratulate my hon. Friend on securing this important debate. Opportunity for first-time buyers is extremely important to all Members, from all constituencies, so is my hon. Friend a little surprised, if not concerned, at the lack of Opposition Members here to support the debate, which affects their constituents?

[Steve Brine]

Yes. My hon. Friend tempts me. The turnout in debates in the House and Westminster Hall is a matter of fact and public record, not my judgment; that is for others. However, I thank my hon. Friend for pointing that out.

I mentioned aspiration and I shall say the word again—as, I am sure, will many of my hon. Friends. That is the starting point for me. The Government should exist to help people to realise their aspirations: not through a handout—although, yes, sometimes—but often through a hand up. The debate is unapologetically, for me, about our values. Politicians do not talk enough these days about what they believe in. It is as if ideology has become a bad word, and it is suddenly a crime to say what drives us. Of course policy making and implementation is about the head, but it must also be in equal measure about the heart. Why do we want to be in this place? Why did my party, and many hon. Members who fought seats for longer than I did to get here, work so hard to return our party to government and run the country, if not to pursue our mission? Part of that mission and why I wanted to come here was to help people to own their home. I do not accept that that is somehow to let people aim higher than they should be allowed to by the state. I know that Conservative Members utterly reject that.

[Mr Mark Williams (Ceredigion) (LD)]

Will the hon. Gentleman give way?

[Steve Brine]

Yes. Good timing.

[Mr Williams]

I congratulate the hon. Gentleman on securing the debate. Does he also accept that the question goes deeper than simply owning a house? The ramifications of denying first-time buyers the opportunity to buy property affect the community as a whole. Where I come from in west Wales the issue is that young people are moving away from our communities; they cannot educate their children in local schools, and there are other community aspects.

[Steve Brine]

Absolutely. We have often debated the future of sub-post offices, pubs and primary schools where falling rolls lead to changes and school reconfiguration. There is a need for new people to enter communities, to regenerate them. I ask hon. Members who are home owners to remember when they first walked into the first house they owned, and the excitement of that. We may remember how exciting it was as a child to play house; but that was playing house for real. I remember how exciting it was, and I want other people to experience that excitement. That is what the debate is about, which brings me back again to that word “values”.

I want to outline the scale of the current challenges to the UK housing market, and the difficulties that young families and first-time buyers experience in taking their first tentative step on to the property ladder. It is a daunting challenge. Since 2008, the number of first-time buyers has declined from a long-term average of about 500,000 a year to just 200,000. One of the key factors accounting for that is, of course, the astonishing rise in average house prices relative to earnings in the past 20 years —even taking into account the slight decline in prices in more recent years. I emphasise the word “slightly” because the situation in the part of the world that I represent may be different from that in some other constituencies.

[Andrew Bingham (High Peak) (Con)]

I congratulate my hon. Friend on obtaining this debate on an important issue that affects so many of our constituents. I am not an expert on house prices in his area, but High Peak is a particularly beautiful rural area, and consequently house prices are disproportionately high, so it is even harder for first-time buyers to get on the ladder.

[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.

[Mr Sam Gyimah (East Surrey) (Con)]

I thank my hon. Friend for organising this debate. While we are on the sub-prime crisis, is it not the case that we need to ensure that we do not have a situation in which people are borrowing 120% of their salary, which they clearly cannot afford, or self-certifying their earnings? Those aspects of mortgage lending led to the sub-prime crisis. Here, the focus must be on affordability first.

[Steve Brine]

Absolutely. Affordability is the key word. One of the key lessons that must be learned from what happened in 2007 is that affordability must be at the heart of mortgage lending. That is why I am so pleased that the Council of Mortgage Lenders is backing this scheme. Obviously, through its lenders, responsible lending will be the watchword, but affordability is critical.

NewBuy is most welcome. I have taken great care to inform many of my constituents about it already and I understand that the website NewBuy.org.uk has, unsurprisingly, been very busy in its first 48 hours. Although I welcome it, I will just make this point to the Minister. Many first-time buyers will welcome any home, and a new build ticks many boxes, but I urge her to work with colleagues at the Treasury and in the Department for Communities and Local Government to explore ways in which we can extend NewBuy to not-so-new-buys because not all mature properties are thatched cottages worth a couple of million pounds, and sometimes first-time buyers do not want to choose a new build. There is much housing stock out there that could come on to the market, especially as we change the rules on assured tenancies.

[Mr Mark Williams]

Does the hon. Gentleman welcome the initiatives taken by some local authorities to develop their own local authority mortgage schemes? My local authority, Ceredigion, is pursuing that, and it is also being pursued in Conwy—I say that to add a slightly Welsh dimension to this debate.

[Steve Brine]

I see absolutely no reason why such initiatives should not be developed; I suggest that they are a key part of localism. Perhaps I will rather unfairly pass the hon. Gentleman’s question on to the Minister, because I see no reason why a responsible local authority setting up an accredited scheme such as that could not be part of the NewBuy scheme. I thank the hon. Gentleman very much for making that point.

I turn to right to buy, which, as we know, has been relaunched this week, with all the passion and enthusiasm of its creator, the former Member for Finchley. To this day, I meet people every time that I knock on doors on the big estates of Winchester who were given the chance to join the property-owning democracy by that lady and her policy when it was introduced the first time around. I am extremely proud that my party made that possible. The subject even comes up in conversation from time to time—started and prompted by me. I am extremely proud of that policy and we should never stop saying that we are proud of it.

I am delighted that the Government are ploughing ahead with their task of reinvigorating the right-to-buy scheme, by raising the maximum discount available from the current limit of between £16,000 and £38,000 to £75,000. Every home that is sold under the scheme will be replaced by an affordable home for rent. I am sure that the Minister will want to elaborate on the fine details, but I can report to her good news from the Queen’s own land of Winchester, where the Conservative-led Winchester city council has recently confirmed plans to build the first new council homes in the district since the 1980s. Those plans have been met with great excitement by local people. With 4,500 people on the city council’s waiting list, the plans are great news and, as the city’s MP, I could not welcome them more. I pay great tribute to the work that the Treasury has done with the Department for Communities and Local Government. I believe that it is a £19 billion deal to allow authorities such as Winchester to get themselves out of the housing revenue account—the so-called “tax on tenants”. That deal is making the new policy possible.

We often hear that the Government are taking us back to the 1980s, and dare I say that that is not said in favourable terms by some Members? As a child of that decade, I can see no problem with a return to music that people can really dance to. Seriously, however, if that kind of time travel gives us back the right to buy, as well as new council homes in Winchester and across this country, I say, “Bring it on.”

Let me refer again to the new homes bonus, whereby local authorities will be financially rewarded for delivering new housing, with matched funding based on new council tax receipts. For the first time, a premium for affordable homes will be included and the next sets of allocations have already been announced. Winchester is due to receive more than £1 million in allocated funding, which I am sure will be welcomed by city councillors of all colours. May they use it wisely and to maximum effect; that would be my message to them from Westminster Hall today.

I would like to probe the Minister a little on one issue in particular before I close. In 10 days’ time, the stamp duty holiday for first-time buyers will end, so any first-time buyer who buys a home worth between £125,000 and £250,000 must pay the 1% stamp duty tax. Evidence given to me—I must say that it is from Charters estate agents in Winchester—suggests that first-time buyers are moving quickly to avoid the tax. The head of mortgages at HSBC has reported that HSBC has seen a 20% increase in approvals for first-time buyer loans in the first six weeks of the year, as first-time buyers rush to take advantage of the stamp duty holiday.

I mentioned Radian Housing earlier. It operates the HomesinHants website and it told me yesterday that that website was receiving some 78,000 hits per day in January and February of this year compared with just 67,000 hits per day in the same two months of last year. It also says that many of the inquiries that it has received are from first-time buyers, who have been encouraged to get a move on by the stamp duty holiday.

I realise that there is a view in the Government that this stamp duty holiday has not been a huge success everywhere, but I ask the Minister in her reply to the debate to expand on that issue some more. It seems logical to me, and constituents have reported as much to me as their local MP, that in some areas and in some markets, this holiday can provide a nudge to the market and free up cash for those who take the plunge to spend that extra money elsewhere in the economy. In saying that, I appreciate that the Winchester housing market is different from some other areas of the country, to put it mildly. Nevertheless, I look forward to hearing the Minister’s response.

I will make one final point that seems odd to raise in a debate about Government help for first-time buyers—about interest-free loans to help employees with the cost of a rail season ticket. To say the least, the amount available has not kept pace with fare rises on the service from Winchester and Southampton to Waterloo, for instance, and for many of my constituents this outgoing is now one of the largest that they face each month. I believe that the Government need to look urgently at the interest-free loan figure; I have tabled questions to that effect. I would welcome the Minister’s comments on that, which will probably come in writing after the debate.

In conclusion, giving people the chance to own their own home is one of the best things that a Government can do for their people. My parents’ generation saw owning a home as a rite of passage, but it is more complicated than that these days, for many of the reasons that I have outlined this morning. In my opinion, young people have every right to believe that, if they work hard, do the right thing and save, they have a Government on their side and they can get on the property ladder. I welcome the steps that the Government are taking to reinforce and, yes, to lower the bottom rung of that ladder. I look forward to hearing from my hon. Friends in the debate ahead and, of course, to the Minister’s reply in due course.

Banking (Responsibility and Reform)

Steve Brine Excerpts

Tuesday 7th February 2012 Commons Chamber

[Margot James]

First, on the causes of why businesses are not seeking loans to invest, that has much more to do with the eurozone crisis and the global economy in general. For any company seeking to export, there is a general nervousness across the world—not just in the west, but in China and the far east. Secondly, I agree with the hon. Gentleman about banks losing a lot of skills over the past 10 to 20 years in managing their business customers, but I see signs of change. I visited Barclays in Birmingham a couple of months ago, and I sensed the real commitment, along with an upgrading of skills, that that bank—to name one—is making to its business customers.

[Steve Brine (Winchester) (Con)]

Will my hon. Friend give way?

[Margot James]

I will give way one more time and then I must make progress.

[Steve Brine]

I am listening carefully to my hon. Friend’s speech. Further to her discussion with the shadow Business Secretary, there are new entrants to the high street lending market, which I think, without name-checking them and giving them the publicity, will shake up the “Computer says no” culture. [Hon. Members: “Name them.”] Virgin Money is coming on to the high street, and it will shake up that culture. Sometimes we are in danger of talking about just the traditional high street banks and lenders, when there are new entrants coming into the market that will really shake things up and change things.

[Margot James]

I thank my hon. Friend for that excellent intervention. Indeed, I attended a Virgin-sponsored event last week at which its youth capital fund was launched, to try to get money available for young entrepreneurs as seed finance, so I very much agree with his point.

The Opposition want us to raise taxes—again—to fund a youth unemployment initiative, but I strongly object to the motion. We cannot do enough for youth unemployment—I agree with that. It is an absolute scourge in my constituency, so I am pleased about the new proposals we are seeing, with the youth contract getting £1 billion in funding, which will create 410,000 work opportunities for our young people. We are also seeing record numbers of apprenticeships across the country. I would therefore argue that the Government are doing all they can to support young people back into work, which I absolutely agree is a challenge facing us all.

I want to speak on behalf of taxpayer interests, because we all own a stake in two of our high street banks. I also want to talk a bit about the protection of our tax revenues, as well as employment in the financial services sector, because I fear that by raising yet another tax on bonuses—on employment, essentially—we are jeopardising that investment. The shadow Business Secretary is the acceptable face, perhaps, of the Opposition, but many other Opposition Members, including the shadow Chief Secretary, the hon. Member for Leeds West (Rachel Reeves), alighted on one individual—Stephen Hester—a couple of weeks ago, repeating the mantra that “It’s all about rewards for failure.” The record really ought to be set straight when it comes to RBS. She should not judge the performance of that company just on the share price, and she is peddling a half-truth when she does so. She should look at the repair of the company’s balance sheet and the extensive disposal programme undertaken by RBS, which is on track despite incredibly difficult market conditions. The capital ratios have been improved, with SME lending by the bank making up 40% of total bank SME lending, which is higher than its market share. This country and its taxpayers would be dealt a mighty blow if the chief executive, Stephen Hester, were to react to the terrible publicity that he has had to endure by leaving that taxpayer-owned bank. Who do the Opposition think would want to take his place, after all that has happened?

On the question of the bonus tax—I shall choose my words carefully—I feel that taxes are plenty high enough already. The Opposition are proposing to raise them even higher, however. On any employment income at the level of bank bonuses, the higher rate tax of 50% applies. With employers’ national insurance and a degree of personal national insurance on top of that, the effective tax rate on some of those bonuses is already more than 60%. Let us not forget, too, that under the Government’s proposals, everything in a state-owned bank bonus apart from £2,000 in cash has to be deferred and taken in shares. If the individual then sells their shares, that will incur capital gains tax at the increased rate of 28%.

I shall finish by issuing a warning to Members on both sides of the House. In the days of the last-but-one Labour Government, under whom I grew up in the 1970s, the top marginal rate of tax was 98%. Do the Opposition really want to take us back to those times, during which enterprise was absolutely stifled?