Banking

Debate between Tobias Ellwood and Chris Leslie

Wednesday 15th January 2014 Commons Chamber

[Chris Leslie (Nottingham East) (Lab/Co-op)]

I beg to move,

That this House believes that Government reforms have failed to deliver a competitive banking system which serves the interests of consumers or the needs of businesses and the British economy; is concerned that customers have limited choice and low levels of trust and confidence in the banking market; is disappointed that recent legislation has fallen short of the recommendations of the Independent Commission on Banking which called for action to diversify the sector and ensure that major new banking service providers are created; believes that banker remuneration remains unacceptably high; regrets the fact that it has taken the EU to act to rein in excessive bonuses in Britain in the absence of domestic action, but believes that the Government as a majority shareholder in RBS should not approve any request to increase the cap; and calls on the Government to prevent a return to business-as-usual in the banking sector, which continues to require real reform and competition so that the UK can earn its way out of the cost of living crisis.

Mr Deputy Speaker—[Interruption.] My apologies, Mr Speaker; I correct my first sentence. I want to explain to the House that for many of our constituents—[Interruption]—including those of the hon. Member for New Forest East (Dr Lewis), January can often be a difficult month financially, with families facing higher fuel bills and receiving credit card statements for the often very expensive Christmas period. Not everyone has such reactions to the new year, however, because for many of the luckiest bankers working in the City, January and February is party time—bonus season—when their high salaries are often dwarfed by even higher windfalls, which are enough to make a lottery winner look on in envy.

Last week, the City recruitment company Astbury Marsden reported that bonuses for the most senior staff in banking and financial services may increase by as much as 44% in this bonus season, despite all Ministers’ talk about how such payouts have been scaled back. In 2012, the financial sector paid out an eye-watering £14 billion in bonuses to top staff. At least £1.7 billion of bonuses were held back until just after that fateful day last April when the Chancellor of the Exchequer cut the top rate of tax for the richest 1%, who are those with earnings of more than £150,000 per year. Incidentally, the postponed payouts cost the public purse at least £85 million in lost taxes.

What about the rainmakers, as they are sometimes called—the most senior traders or masters of the universe? The number of UK bankers who earn more than £800,000 rose by 11% to 2,714 last year, which is more than in the rest of Europe combined. For that set of senior bankers, the compensation—a word that the banking sector sometimes uses instead of the word pay that the rest of us use—rose from £1.1 million to more than £1.6 million in 2012. That does not look like an industry that is licking its wounds; it looks like business as usual.

[Mr Tobias Ellwood (Bournemouth East) (Con)]

The shadow Chief Secretary to the Treasury seems to have glossed over the fact that City bonuses tripled in the last five years of the Labour Government. I want to ask him a more general question. Given the catastrophic role that the banking industry played in the economic downturn, why are we having only a half day’s debate on this important subject and squeezing it together with another important debate on the national minimum wage? The Treasury Committee is also meeting this afternoon to talk about these issues with the Governor and one of the deputy governors of the Bank of England. The Committee’s members will therefore not be able to participate in this debate. I wonder whether that is a reflection of the fact that Labour is not taking this matter as seriously as it should.

[Chris Leslie]

I am not sure that the hon. Gentleman has alighted on the best criticism of the fact that we are having an Opposition debate today on the failures in the banking sector. He is a bit off message because he at least admits that it was the banks that got us into the economic catastrophe in the first place. That is slightly off the script that Ministers usually use.

Cost of Living

Debate between Tobias Ellwood and Chris Leslie

Wednesday 27th November 2013 Commons Chamber

[Chris Leslie]

I want to make some progress.

For most people life is getting harder and for most people there is still no economic recovery, but that is not what they were promised. Before the election, the Prime Minister said:

“Our plans don’t involve an increase in VAT”

and

“I wouldn’t change child benefit”.

He also said that tax credits would be cut only “for families on £50,000” and that his party would

“not scrap the Education Maintenance Allowances”.

Those are the promises the Conservatives made before the general election. They famously airbrushed a poster of the Prime Minister and in their efforts to cover up their website pledges they are trying to airbrush the past.

[Mr Ellwood]

I urge the hon. Gentleman to be cautious about questioning whether this subject is being taken seriously by Government Members, because the record should note that there are more Government Members than Opposition Members present to debate this important issue. On energy, will he now concede that Labour failed to ensure that the lights will be kept on in this country by failing to invest in nuclear energy? More than six nuclear power stations have closed down. That is why energy prices have gone up—because we are not making our own energy.