New Covent Garden Market

Teresa Pearce Excerpts

Tuesday 2nd July 2019 Westminster Hall

[Chris Heaton-Harris]

I agree. I thank the hon. Lady for her contribution and the way she represents the market in this place. I regularly speak to various of my old friends—I think they are friends; lots of them were customers or people I bought things from, so perhaps they are business associates—and I know that she is a very good representative of the market who talks to the tenants a great deal and represents their concerns wisely.

We are squeezing a big, successful business into a smaller space. The market had a massive footprint, and when I was trading there a lot of it was not used effectively, so it is possible to understand some sort of consolidation, but the scale we are talking about now makes that an interesting prospect. At a time when the turnover of the businesses in the market is growing, it seems odd to reduce the market’s footprint. Although the tenants are not over-happy with the overall reduction in size, they have tried their best to make it work. Various pieces of land have already been sold off, and in some instances they are sold on again. The market area is to be reduced even more. Among other changes, the temporary flower market site will be incorporated into the main site. In essence, we are squeezing a quart into a pint pot and hoping that the businesses inside the pot do not get squeezed.

Over the years, the tenants have repeatedly raised concerns through their association that the proposed end-state configuration of the market that the authority is now engaged in building will not be able to operate successfully because the proposed layout and footprint simply will not accommodate the vehicle movements needed for the market to operate effectively and efficiently. The tenants of the market are very knowledgeable—and, indeed, vocal—about how the business of the market works, and their opinions about whether what is proposed will work should carry significant weight. They have retained the services of a specialist transport consultant, who advises that there are significant failings in the transport analysis and planning undertaken by the market authority. The Minister is well aware that the market authority is a public body that has a statutory duty to provide functioning market facilities and prevent traffic congestion on the market land.

The market authority is currently redeveloping the market under a contract entered into with the developer, Vinci and St Modwen Properties, in 2015. The developer commenced the main works in October 2018. Since then, an independent logistics consultant, instructed by the tenants association, has confirmed that, as designed, the market will not be operationally viable in parking and loading/unloading terms, and will therefore constrain the businesses it contains. The market authority has allowed the developer to start the construction works, but there are problems, because the tenants say that that has happened without the authority having taken the tenants’ logistics consultant’s advice about the design, and without its waiting to see the final report prepared by Arup, a logistics consultant instructed by the developer, which confirmed that the new market, as presently designed, would not be operationally viable. Arup’s final report said that to make it viable certain measures identified in a list contained in that report would need to be adopted. I am told that Arup had been asked by the market authority to use transport data that was known to be out of date and inaccurate when assessing the viability of the options, but it still came to that quite drastic conclusion.

The market authority has power under its contract with the developer to require changes to be made to the design of the market, but it has yet to decide to follow up Arup’s advice. Instead, the developer presses on with the works as they stand. I wonder whether my hon. Friend the Minister is comfortable with that decision. I also wonder whether the Department for Environment, Food and Rural Affairs has been provided with a report from a logistics consultant—or any report—confirming that, contrary to the view of either the tenants association’s logistics consultant or Arup itself, the current design will be operationally viable. If so, would it be possible for the tenants to see it, to give them some comfort that these changes will work?

This is where my old life as a tenant of the market comes into its own, because battles over rent were legendary back in the day when I worked in the market: in April this year, the market authority sent notices to terminate the tenancies of market tenants and threatened, in a letter from its solicitors, that if tenants did not immediately agree to give up their statutory right to apply for a new tenancy and agree to vacate their units at the expiry of the notice, they would not be offered tenancy of a unit in the newly developed market and would have to depart the market instead.

[Teresa Pearce (Erith and Thamesmead) (Lab)]

It is my understanding that one of the key roles of the Covent Garden Market Authority is to nurture good relations with tenants. How do such actions nurture good relations?

[Chris Heaton-Harris]

I know that changes at the top of the market authority have been welcomed by the tenants, and that much better conversations are being had now than have been had for many a year, but I do not believe that this is an appropriate way for a public authority to behave.

Additionally, the new draft leases issued by the Covent Garden Market Authority are removing the rights of the wholesale tenants to operate in the critical and traditional way on the bit of the market that everybody loves so much, the buyers walk or trading floor, turning that essential space into a corridor rather than a market. I can honestly tell the Minister that removing that space will almost completely remove the heart, soul and character of the market.

In the new leases, the market authority has also changed the rent negotiation process and general service charge calculations, as it has now declared that it is in fact a commercial landlord. Those actions will inevitably result in many of the smaller companies based at the market closing as the site becomes unaffordable.

Since the whole process started, there have been vast changes in how the market operates. Goods are now mostly chilled instead of being stored at ambient temperatures, and businesses’ being able to unload big lorries, repick orders and deliver in quick time continues to reduce the number of large vehicle movements required on London’s roads. However, that makes the traffic studies more important than most people believe. There is yet to be a traffic study conducted that says the future design of this important food distribution hub for London will work; indeed, all those that have been done, or at least those that are in the public domain, say that it will not. If it does not work, the market will eventually die. All the catering outlets, restaurants and food businesses currently served by the market will not go away; they will simply be catered for by businesses that travel many more miles to get into London, further adding traffic and pollution in this great city of ours.

I do not think we can ignore the facts, stand back and allow the developer and the market authority to build a market that is functionally inoperable. Action must be taken. I hope that the Government have given due consideration to the effect on tenants, businesses and the wider economy if the market were to go into decline or fail altogether. There is no need for that to happen.

I would like to think that the Minister, whose knowledge of and commitment to solving these issues is both impressive and welcome, will continue to ask those on all sides of this debate to come together to find a mutually agreeable and workable solution—all sides meaning the market authority, the tenants, the developer and the Department itself. This needs to be sorted before millions of pounds are wasted in court and one of the most vibrant parts of London’s market culture possibly ceases to be.

2019 Loan Charge

Teresa Pearce Excerpts

Tuesday 20th November 2018 Westminster Hall

[Mr Baker]

I entirely agree with my hon. Friend. Toward the end of my remarks I will come on to the solutions that I propose, but I entirely agree with him that if any company insisted on people engaging in these arrangements it certainly should share the responsibility for what they did.

[Teresa Pearce (Erith and Thamesmead) (Lab)]

Will the hon. Gentleman give way?

[Mr Baker]

I will take one or two more interventions, and then I will move on. It is not quite like being a Minister, but very nearly.

[Teresa Pearce]

The hon. Gentleman is being very generous with his time and I thank him for securing this debate. On that last point, my constituent was a civil servant for 37 years. In 2010, his team was TUPE-ed from the Ministry of Defence to Hewlett-Packard. He retired in 2013. In 2014, they asked him back to oversee a Ministry of Defence contract, but refused to take him back on pay-as-you-earn and said they would only do it through one of these vehicles. Should my constituent not have had some comfort from the fact that this was an MOD contract? Surely the Government and Government Departments should look at who they are contracting with, to ensure that a man such as this, in his retirement years, is not stung by this charge?

Housing and Planning Bill (First sitting)

Teresa Pearce Excerpts

Tuesday 10th November 2015 Public Bill Committees

[The Chair]

In the two minutes left to us, Teresa Pearce.

[Teresa Pearce (Erith and Thamesmead) (Lab)]

Given what is in the Bill about starter homes, do you think the Mayor’s housing zone bids that have already been successful will need to be revisited? Secondly, where housing associations are undertaking the build—their tenants now have the right to buy—because of the quality that needs to be in a housing zone bid, some of those properties will cost more to build than the market value. Is it your understanding that they will be recompensed the full cost or just the difference between market value and the sale price?

Richard Blakeway: Taking your first point about the relationship between starter homes and housing zones, once starter homes are introduced formally they will be incorporated within housing zones—

[Teresa Pearce]

Q 26 Will they be revisited?

Richard Blakeway: Well, there is no reason why that would undermine the ability of the housing zones to deliver. It is also important to set out that a number of housing zones already have schemes that have planning permission and will therefore just continue. On your second point in relation to the value of the stock and replacement value, that needs to be looked at, but there should not be that many instances in London where that is the case.

[The Chair]

Mr Blakeway, may I thank you very much on behalf of the Committee for coming to give evidence? It is very useful indeed. We will now move on to the next witnesses.

Examination of Witnesses

Mayor Sir Steve Bullock, Councillor Martin Tett, Councillor Phil Glanville and Councillor Philippa Roe gave evidence.

--- Later in debate ---

[Kevin Hollinrake]

Q 81 But the principle is that it is inappropriate for taxpayers to subsidise someone who can live in market-value housing. Do you accept that principle?

Sinéad Butters: Yes. Absolutely.

[Teresa Pearce]

Q 82 Mr Orr, on the voluntary deal, your organisation and the G15 will work very closely. It is my understanding that the G15 opposes the forced sale of vacant high-value council homes. Is that the position of the National Housing Federation?

David Orr: Just to be clear, the G15 are all members of the National Housing Federation, so we are all part of the same group, as is PlaceShapers. The deal that we have done with the Government is one that says that if the Government provide funding for a discount we will organise the sales. It is the job of the Government, under that voluntary arrangement, to find the finances to fund that. We have never proposed the sale of high-value council stock as a means of paying for it—that is a proposal that came from the Government—and we have not and will not endorse the proposal.

[Teresa Pearce]

Q 83 So you are in the same position as the wider federation of the G15?

David Orr: As a wider federation, what we have been trying very clearly to do is to locate the responsibility for the decision where it lies, which is with the Government. It is not a decision for us, and it is not a proposal we have ever sought or have ever endorsed, and we have no plans to do so.

Sinéad Butters: Similarly, we pride ourselves on our strong relations as community-based housing associations, and therefore we do not endorse the sale of high-value council homes in order to fund this.

[Maria Caulfield (Lewes) (Con)]

Q 84 If I understand it correctly, you both say that you agree that those who earn more should pay more, and I think you have both said that housing associations should have the discretion to set rates, but I understand that there is already provision to set higher rents for those who earn £60,000 or more. How many associations use that provision at the moment and, for those that do not, why not?

David Orr: Very few of them do, partly because there are very few people in those circumstances and partly because housing associations do not always know because they do not have a particular obligation to require that information from their tenants. We do not have very detailed data. Also, it is partly because it is very administratively complex to impose such things.

My view is that we should not think about this in terms of specifically focusing on individual households. We should offer different products at different prices in different parts of the housing market, among which people have the opportunity to choose. Our housing market is not nearly varied enough, and housing associations are an integral part of providing more variety and different pricing in different parts of the market.

I also think that we need to be smarter about how we turn things from a threat into an offer if someone is a tenant of a housing association and their income increases. Rather than pay-to-stay, I would much rather the housing association was in a position to say, “If your income is increasing, we would be happy to sell you a small equity share in the property that you live in.” That has the same effect of providing cash that the housing association can use, and the tenant gets an active benefit from it rather than just paying a higher rent. We have to be much more creative about how we look at all of this and how we change that relationship. In order to do that—to echo what Sinéad was saying—housing associations have to be much more free to run and manage their own businesses. This is a theme that we will be coming to all the time.

Oral Answers to Questions

Teresa Pearce Excerpts

Tuesday 21st July 2015 Commons Chamber

[Greg Hands]

I thank my hon. Friend for that question. The Government have opened up the bidding round for new enterprise zones, and are encouraging LEPs to work with towns and rural areas to develop new sites. The bidding round is open to all LEPs across England, but only those sites with strong commercial propositions and value-for-money cases will be accepted.

[Teresa Pearce (Erith and Thamesmead) (Lab)]

5. What estimate he has made of the number of people who will receive a net reduction in income as a result of the policies on tax credits announced in the summer Budget 2015.

[The Exchequer Secretary to the Treasury (Damian Hinds)]

The Government want to move from a low-wage, high-tax, high-welfare society to a higher-wage, lower-tax, less welfare-reliant society. That means more emphasis on support to hard-working families on low incomes by reducing income tax, increasing the personal allowance, increasing wages and topping up low wages through tax credits.

[Teresa Pearce]

Many large, profit-making employers currently pay low wages and enjoy a state subsidy of their staff costs via the tax credit system. What ideas and options did the Treasury team consider for clawing back that subsidy from the employers before it decided to take it from the low paid?

[Damian Hinds]

The hon. Lady highlights an important point and agrees, I think, with the analysis of Alistair Darling who said that an unintended consequence of the tax credit system was that it would end up making that subsidy in this way. We are introducing the national living wage. For someone working full-time, that will be worth £5,200 more in cash terms by the end of the Parliament.

Autumn Statement

Teresa Pearce Excerpts

Wednesday 3rd December 2014 Commons Chamber

[Mr Osborne]

I certainly give my hon. Friend that assurance. He is a doughty champion for Cleethorpes and its strong road and rail links. He has raised train services with me and I am looking at that, as is the Transport Secretary. We are determined to provide a great service to the people he represents, and ensure that they travel in comfort. Today’s announcement about replacing outdated Pacer trains with new, modern trains will be welcomed across the north of England.

[Teresa Pearce (Erith and Thamesmead) (Lab)]

The Chancellor spoke about fiscal discipline and welfare reduction, yet it seems that the Office for Budget Responsibility might not agree. Its “Blue Book” shows that the bill for housing benefit for people not on jobseeker’s alliance will rise year on year. More worryingly, despite repeated assurances from the Work and Pensions Secretary in this House that universal credit is on time and on budget, the OBR has reviewed all the evidence and states that there remains “considerable uncertainty” around its delivery, and “broader uncertainties” over the eventual cost. In whom does the Chancellor have more faith: the OBR or the Secretary of State for Work and Pensions?

[Mr Osborne]

Universal credit is a change to our welfare system that makes sure that it always pays to work. I pay tribute to my right hon. Friend the Work and Pensions Secretary because he is pioneering what I think are important far-reaching changes to the incentives in our country that encourage work and support people in work. We have introduced a welfare cap. That is a brand new mechanism for controlling welfare spending, including identifying pressures such as rising housing benefit bills that were completely ignored in the past by the Labour Government. If a Government are not prepared to address increases in one benefit with reductions or measures on other benefits, they are required to come before the House and ask for a vote because they have reached the cap. We have not done that because we are within the cap, as the OBR report confirms.

Autumn Statement

Teresa Pearce Excerpts

Thursday 5th December 2013 Commons Chamber

[Mr Osborne]

Plymouth council absolutely should freeze council tax. I commend my hon. Friend and his constituents for their campaign to make that happen. We have not included local government in the additional savings we have asked Whitehall for today, precisely so that councils can deliver a council tax freeze. If his council does not deliver a council tax freeze, he can ask Labour why it is putting up the cost of living for his constituents.

[Teresa Pearce (Erith and Thamesmead) (Lab)]

There is a housing crisis in London at the moment. The autumn statement says that house prices grew by 9.4% in the first nine months of this year—and that is before Help to Buy comes in, which nearly all forecasters believe will increase prices further. Does the Chancellor believe that spiralling house prices are good for the economy?

[Mr Osborne]

I made a point in my statement of saying that we want stable house prices and that we need more homes to be built. I know that that is what the Mayor of London also believes. We have taken steps to give the Bank of England powers to deal with asset bubbles as they develop. That, of course, did not happen five or six years ago, much to our cost. Specifically on the cost of London housing, the early Help to Buy statistics suggest that most of the families who have taken it up are from outside London and the south-east, and are buying properties worth on average £160,000. Help to Buy is therefore helping exactly those we want it to help: aspirational families who can afford a mortgage but cannot currently afford the very large deposit that the problems in our banking system have demanded of them.

Oral Answers to Questions

Teresa Pearce Excerpts

Tuesday 12th March 2013 Commons Chamber

[The Economic Secretary to the Treasury (Sajid Javid)]

I thank my hon. Friend for that question. Like us, Barnardo’s is interested in reducing child poverty and understands that that is done by creating jobs. The private sector has created 1.2 million jobs over the past two years, which is more than were created during the last 10 years of the previous Government.

[Teresa Pearce (Erith and Thamesmead) (Lab)]

T6. Owing to the changes to child benefit for families with a higher-rate earner, as from 7 March, 370,000 parents have opted not to receive child benefit. Will the Chancellor say how many of those 370,000 parents are stay-at-home mums who will lose their national insurance credit to their state pension, which is linked to the receipt of child benefit? Were they advised before they made that decision?

[Mr Gauke]

As far as contributions to the state pension are concerned, the change will have no effect whatsoever on any of those who opt out. The system will not be affected by the change and the hon. Lady can be assured that that is not an issue. I also point out that all households affected by the high income charge on child benefit are in the top 15% to 20% in terms of earnings. It is right for the Government to take some difficult decisions to reduce the deficit.

Oral Answers to Questions

Teresa Pearce Excerpts

Tuesday 11th December 2012 Commons Chamber

[Mr Osborne]

Mr Speaker, 152,000 customers have been affected. These are people with loans of less than £25,000. The cost to UK Asset Resolution is estimated at £270 million. UK Asset Resolution has ordered a full inquiry into what happened in 2008, and we will come to the House with more information when we have it. I wanted to bring this news to the House at the very first opportunity, and I find it pretty extraordinary that the Opposition do not want the public to hear it.

[Teresa Pearce (Erith and Thamesmead) (Lab)]

T7. New research from Which?—[Interruption.]

[Mr Speaker]

Order. Whatever discontent there may be on either side of the House about this matter, it would be a courtesy to hear Teresa Pearce.

[Teresa Pearce]

Thank you, Mr Speaker.

New research from Which? reveals that nearly half of front-line bank staff believe that pressure selling still dominates the culture of banking. Will the Minister join me in calling for banking remuneration and incentive structures to be changed to reward ethics and service, rather than aggressive selling targets, in order to help to change the culture of banking?

[The Financial Secretary to the Treasury (Greg Clark)]

The hon. Lady is absolutely right that one of the real problems in banking over recent years was that the people who had a trusted relationship with their customers saw them as sales targets rather than as people to be helped. That needs to change. The Financial Conduct Authority is very clear that these kinds of incentives have to go.

Banking Competition

Teresa Pearce Excerpts

Thursday 12th July 2012 Westminster Hall

[Teresa Pearce (Erith and Thamesmead) (Lab)]

Some of the points that I was going to make have already been raised by my fellow member of the Treasury Committee, the hon. Member for South Northamptonshire (Andrea Leadsom). I was glad to add my support to the application for the debate, because it is important to my constituents.

I represent Thamesmead and Erith. Thamesmead is an estate built by the Greater London council in the 1960s. There are 45,000 people living there and not a single bank in the whole of Thamesmead. I have met all the major banks to ask whether they would be wiling to open a branch or have a mobile bank—anything, really—but they have all said no because it would not be economic for them. They have no thought for the customers there—mainly basic bank account holders, some of whom cannot even use one of the few ATMs there. People in my constituency have to take two bus rides to draw their own hard-earned money out of an ATM without incurring a charge. The service is simply not good enough.

Markets are supposed to operate on the principle of the virtuous circle. I doubt whether anybody in the country at the moment thinks that that applies to the banking market. Well-informed consumers are supposed to drive a competitive business to deliver what people want, and that is simply not happening in my area or many other areas. Banks are not delivering what my local small businesses want or what my local bank account holders want—they are just not delivering at all.

The market is supposed to respond to customer need and customer power, but at the moment, consumers do not seem to have any real choice or power. When people come to me and say that they have a problem with their bank, and I ask if they have tried another bank, they say, “They all seem to be owned by each other; what difference will it make?” There is no consumer choice. It is a market, but not a proper market, because it does not operate as any other market would.

[Cathy Jamieson]

I know that my hon. Friend cares passionately about people’s exclusion from financial services. Would she agree that part of the problem is that it is not easy for people who are in debt or do not have high incomes to switch? Going to another bank is fine if they have money, but it is not easy at all if they are trying to pay off an overdraft or loan.

--- Later in debate ---

[Teresa Pearce]

That is completely right. Debt is a big issue in my constituency, and I believe that that is why there is no particular interest in opening a branch, which would alleviate some of that debt through giving advice. That said, the staff in a branch of Barclays, which was a Woolwich, in my constituency have taken it upon themselves to try to help their customers. If they see people coming in and just paying off the minimum amount on their credit card for three months in a row, they sit them down, talk to them and explain that they are not paying off the debt. The people in that branch do a fantastic job. I feel sorry that they do not find saying, “I work for Barclays” something to be proud of at the moment. We should be thinking of the people who work in such branches and call centres in the current environment.

[Mr Thomas]

North Harrow, in my constituency, sounds a little like Thamesmead in that it does not have a bank branch. It has a post office through which personal banking customers of Lloyds can access services, but there is no equivalent for small businesses in north Harrow. Given our anecdotal experience of areas of the country that are unbanked, does my hon. Friend think there would be benefits from full disclosure by the banks of what and where they lend by postcode? We could then have proper understanding of which areas are unbanked and a proper debate about how to respond to that gap in the financial market.

[Teresa Pearce]

That is an excellent idea. There are very few things in society that do not benefit from transparency; the more we know, the more we can make a judgment. We should all press for it.

The hon. Member for South Northamptonshire mentioned that people are more likely to get divorced than switch their bank account, which is certainly the case in my experience. Only 36% of consumers have ever switched their bank account, and 45% of marriages are expected to end in divorce. I have been with the same bank since I left school, but it has changed, because it has been taken over repeatedly. That is a common experience. Lots of us will have sat in an office with a friend or spoken to a family member who has tried to switch bank accounts and heard the catalogue of horrors that ensued—from mortgages not paid to bounced direct debits.

As we heard today, the hesitancy to embrace bank account portability is a big barrier to customers being able to exercise choice. The seven-day switching programme is good step forward, but we should be working towards full bank account portability in the long term. I ask the Government to commit today to undertaking a full and comprehensive cost-benefit analysis of account number portability to start that process. Years ago, it was not easy to transfer a mobile phone number from one provider to another—in fact, the mobile phone companies told us that it was impossible. As consumer pressure grew and more providers entered the market, it became very possible, and now is common and simple to do. I see no reason why banks accounts cannot go down the same road. It would make a big difference to consumer behaviour—43% of consumers say that they would be more likely to switch their current account if they could keep the same number.

Even after the banking crisis, our banks are still too big to fail. It is not a proper market when the huge rewards are taken by some, but the risk is always sold on further down the line to other people, ultimately ending with the taxpayer. With only one new high street bank launched in over 100 years, it is pretty obvious that there is no true competition. Increasingly, new entrants need to be backed by one of the big five banks—as with the Marks and Spencer bank, which is backed by HSBC—or to have benefited from Government sell-offs, such as Virgin’s acquisition of Northern Rock.

The big banks are represented on standards-setting bodies, such as the Payments Council, which sets the level of access. There is clearly not a lot of incentive for them to lower the barriers to access for new entrants and thereby decrease their market share. That is why the Government should step in and establish a framework with increased competition and customer experience in mind. To increase competition, it is important to increase not only the number but the diversity of organisations operating, so that consumers have real choice.

Many of us will have read in the papers this week that there is a big consumer push towards ethical alternatives after the recent banking scandals: Charity bank, which lends its savers’ money to charity, has had a 200% increase in depositors; the Ecology bank has had a 266% jump in applications; and there has been a 51% increase in applications at Triodos, a Bristol-based sustainable bank. Credit unions also report week-on-week increases of at least 20% and up to 300%.

Building societies and credit unions obviously have an important role to play in constituencies such as mine. Unlike banks, they are accountable to their members, who are also their customers. There is no discrepancy between the aims of the shareholders and the customers, because they are one and the same. Building societies and credit unions are a true service industry, not a self-serving industry. There is usually a big culture difference in the way they operate in comparison to banks. Most markedly, they are free from the pursuit of short-term returns for shareholders that has contributed to risky behaviour in the big banks and in turn threatened the stability of banking system as a whole.

What we are seeing with the banking crisis is the result of the demutualisation agenda kick-started in the 1980s and peaking in 1997, when a host of building societies became banks, including Woolwich building society, which is a mere mile from my constituency. The Woolwich was founded in 1847 as one of the first permanent building societies. It had a proud local tradition—it was a major employer and an asset to its community. Ultimately, it demutualised and was eventually taken over by Barclays. People used to say, “I’m with the Woolwich.” They were proud to be so, but I do not think they say, “I’m with Barclays and I’m proud to be.”

During the demutualisation period, the investment banks toured the boardrooms of the building societies, putting the case for demutualisation, often making large fees as advisers in the eventual takeover. The end result is that there are now five big banks—Lloyds, the Royal Bank of Scotland, HSBC, Santander and Barclays—with a disproportionate market share. They have an estimated market share of 85% of the personal current account market and 67% of the mortgage market.

When I was writing my speech, I thought back to when I was young, which was a long time ago, and to when the Greater London council used to give mortgages to homebuyers. The GLC was one of the two biggest mortgage lenders in London at the time. Getting a mortgage from the GLC was a great incentive for local people. They felt a sense of ownership of the GLC, and the GLC had invested in their homes, which created a stable society. They did not have what we now have in parts of London—rogue landlords profiteering from renting out terrible accommodation. Giving people a stake in something makes them better citizens. It is a shame we do not have the same model now.

Taxpayers have ploughed enormous sums of money into rescuing the banking system. Northern Rock, RBS and Lloyds TSB have received direct bail-outs, and all banks have benefited from some form of public subsidy, especially quantitative easing and deposit guarantees. The publicly funded support of the taxpayer does not appear to have translated into banks acting in the public interest. In fact, it appears that in some areas of banking, few lessons have been learned, and the banks’ existing priorities and practices seem to be a return to business as usual.

UK banks also hold 85% of the business banking market. In other countries, the picture is different. In the US, there are some 15,000 banks and credit unions operating in the market. In Germany, there is a network of 431 locally controlled banks with public interest criteria in their governing constitutions. Change, therefore, is possible. With the political will and the right Government intervention, it could take place.

Earlier this year, the chief executive at the Office of Fair Trading said:

“For too long banks have needed pressure, often sustained, from regulators and enforcers to introduce the things they should have already been doing.”

In a relatively short period of time, we have ended up with banks taking over each other, leaving just five major banks, and with the deputy governor of the Bank of England describing his own industry as a cesspit. That is a reflection not only on London as a financial centre but on the whole of the UK. The finance sector is a major employer and we should be proud of it. As this issue crosses party lines, it is important that we all put our minds to finding a solution to the problem. We have made piecemeal alterations, but we need a full-scale inquiry into the banking sector. Opening up the sector to competition is one of the major ways to achieve that aim. So far, regulation has not altered culture or behaviour. Perhaps losing profits and customers will bring about such a change in the banks.

We need Government intervention to put the experience of customers at the heart of regulation. The Labour leader and the shadow Chancellor recently made a series of proposals for a banking system that serves not just the bankers but the real economy. They include a British investment bank backed by the state to increase lending to small businesses; a code of conduct for bankers; a greater push for international changes to limit bonuses; selling off high street branches; and greater transparency. All of those proposals would be welcome steps forward.

I have a couple of ideas to float to the Minister. The big high street banks could control the clearing systems, and any new entrant would have to use those systems. As it is unrealistic to presume that a new entrant could create their own systems because of the cost of infrastructure, why not use the Bank of England to monitor and regulate the cost of accessing the clearing systems? Even better, we could make it a condition of the big banks’ banking licence.

Businesses, especially small businesses, pay higher fees to the banks. Will the Minister discuss this matter with the Minister for Housing and Local Government? We could get local authorities to set up a membership system to negotiate bank charges on behalf of local businesses. For example, some small businesses are paying around 50p per £100 cash banked, while the big supermarkets are paying around 6p per £100. Those businesses should come together and collectively borrow. A local authority could perhaps help in this regard, through the local chambers of commerce. We must look at using customer power in a way that helps customers.

I have one final thought, which I doubt the Minister will agree with. Government, both national and local, could pay all their salaries into the local credit union or similar not-for-profit institutions such as Postbank. Obviously, each individual would be free to withdraw their money and put it somewhere else once it has been paid in, but many would keep their money in the local credit union and that would provide a strong impetus for alternative retail banking. Although I doubt the Minister will agree with me, it is a possible way forward.

In conclusion, I hope that one day, the residents of Thamesmead can choose which bank to go to, rather than choosing which bus to catch to get to the nearest bank.

Oral Answers to Questions

Teresa Pearce Excerpts

Tuesday 26th June 2012 Commons Chamber

The Chancellor of the Exchequer was asked—

[Teresa Pearce (Erith and Thamesmead) (Lab)]

1. When he expects to publish the consultation document on tackling excessive card surcharges.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

8. When he expects to publish the consultation document on tackling excessive card surcharges.

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

The Department for Business, Innovation and Skills is taking forward work on excessive credit card surcharges. I understand that the consultation to seek views on how and when a ban might be applied is going on in the summer.

[Teresa Pearce]

For many years, families in my constituency have faced surcharges—sometimes 240 times the actual processing costs—when booking plane tickets. There are now charges on theatre tickets and utility bills and some funeral directors are applying them. Given the prevalence of this issue, does the Chancellor still intend to ban excessive debit and credit card charges by the end of the year?

[Mr Hoban]

The hon. Lady is absolutely right to highlight the costs imposed by this on our constituents. Our estimate was that in 2010 nearly £500 million was spent by consumers on surcharges. It is still our intention to ban them. Both consumers and businesses should be clear that after many years of inaction by our predecessors, it is this Government’s intention to ban these excessive charges.