Tomlinson Report

Debate between Toby Perkins and Sandra Osborne

Tuesday 17th December 2013 Westminster Hall

[Toby Perkins (Chesterfield) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Roger, as we discuss a subject that is vitally important for small business owners across the country. As someone who was a small business owner before coming into this place, I like nothing more than the opportunity to reflect on what is happening with small businesses and, of course, the vital relationship between small businesses and their banks.

I congratulate the hon. Member for Aberconwy (Guto Bebb) on securing the debate. Everyone in the House will know how much of his parliamentary energy he has dedicated to the cause of small business redress, most notably through his campaigning on the interest rate swaps issue—an issue about which he and the Opposition share many concerns.

This debate and this report go to the heart of several big questions that Government and society need to address. What are banks for? Whom should they serve? What is the role for Government in that relationship? Where does the balance lie for banks in protecting their own interests and those of their customers when a conflict is seen to exist? A key question is not whether there has been any wrongdoing, but whether, as has been alleged in the Tomlinson report, there has been systematic fraud by Britain’s largest bank. We need to be clear that that is what Tomlinson is suggesting in his report. It is an incredibly powerful and potentially huge allegation from someone who sits at the heart of Government as an entrepreneur in residence at the Department for Business, Innovation and Skills.

The report also poses questions about how a responsible Government should balance the need to expose wrongdoing and scrutinise questionable practices, which has come across loud and clear in this debate, with the need for a measured and considered approach to evidence gathering, particularly when the allegations are as serious as those made in the Tomlinson report. The report is clear in its call for a change in the culture of British banking. Indeed, Tomlinson echoes concerns and remedies that the Opposition have already called for.

Mr Tomlinson is a much respected entrepreneur who has won admiration from across the business sector for his own business success as a British manufacturing success story, but he is involved in a long-running and bitter dispute with RBS. Given the way in which his report changed between the original draft that was sent to RBS and its subsequent publication, many people feel disquiet about the independence of the report and the strength of the evidence base that led to a report as hard-hitting and potentially damaging to UK plc as this one.

As my hon. Friend the Member for Streatham (Mr Umunna) has said and few will disagree, there were many things wrong with banking practices and many causes for concern about the way in which the relationship between businesses and the banks has been conducted in recent years and continues to be conducted today. That was why my hon. Friend publicly called for those guilty of LIBOR rigging to face jail, and why Labour has led the way in calling for decisive action on the mis-selling of interest rate swaps. We have been very much with the hon. Member for Aberconwy on that. We have been resolute in calling for speedier action to bring about closure and settlement for companies that were mis-sold products, and concerned at the way in which the Financial Conduct Authority has failed to ensure that the banks complied with timetables that they had promised to adhere to. At this stage, I would like to place on the record my admiration for the work done by Bully-Banks to highlight some of these issues and to ensure that the matter is kept under the glare of public scrutiny. Indeed, as we meet today, banks have paid out less than 3% of the amount that they have set aside for compensating the victims of that scandal.

Those concerns were also why Labour tabled an amendment to what was then the Financial Services Bill that would require Ministers to bring forward proposals to help firms to pursue collective redress against the mis-selling of swaps, which the Government combined on to vote down.

[Sandra Osborne]

Does my hon. Friend agree that tailored business loans, which are currently not included in the review, should be considered as well?

[Toby Perkins]

I think that many important points have been raised during the debate and that is certainly one of them.

We share the disappointment at the continued excesses in bank bonuses and the failure of the Government’s bank bonus levy to yield the returns that it promised. After all, we are having this debate just a day after publication of a survey showing that managing directors at banks in London are expecting a 44% rise in bonuses for 2013.

I turn now to some of the contributions made by hon. Members to the debate. Unsurprisingly, the hon. Member for Aberconwy made a series of significant contributions to the debate that he initiated. It was interesting that he reflected on the fact that Tomlinson had spoken to the all-party group on interest rate swaps. I was surprised to discover that during this process, Tomlinson never spoke to RBS and never gave it an opportunity to put the allegations that he was making in an alternative light.

The hon. Gentleman refused to take the bait that I generously offered him to say that the behaviour highlighted in the Tomlinson report would have verged on the illegal. I think that he understates the case. Tomlinson is fairly unequivocal. He is clearly alleging systematic fraud on the part of Britain’s largest bank—in effect, it is feathering its own nest by bringing down businesses that without the intervention of the bank would have survived and thrived.