National Minimum Wage

Debate between Vince Cable and Jim Sheridan

Wednesday 15th January 2014 Commons Chamber

[Jim Sheridan]

I thank the Secretary of State for giving way. The national minimum wage is exactly what it says on the tin: a minimum wage. Does he accept the overwhelming evidence that union-organised work forces are paid more and have better conditions than non-union-organised workplaces?

[Vince Cable]

In general, that is the case. However, my experience, from talking regularly to trade unions and employers, is that most of our trade unions, certainly in the private sector, are extremely pragmatic and flexible on wages—indeed, that is one of the reasons why we have had relatively low unemployment. They deserve some credit for that.

Budget Resolutions and Economic Situation

Debate between Vince Cable and Jim Sheridan

Thursday 21st March 2013 Commons Chamber

[Vince Cable]

Why did the Labour party not do that when it was in government? Why was its first proposal for stabilising the budget to cut capital spending, including on affordable housing? If the hon. Gentleman had read the Budget, he would have discovered that, in addition to the housing policies that will affect private mortgages, it included a significant increase in support for affordable housing in the social sector.

The second long-term change relates to money and banking. One of the big features of the post-crisis economies has been the way in which Governments have had to pursue fiscal consolidation—because of the inheritance they received, and ours was worse than most—alongside supportive monetary policy. I made my maiden speech in 1997 in support of the then Chancellor when he made the Bank of England operationally independent. That was an important and good reform. But we have realised over the years that the world has changed. Inflation took no account of the massive asset bubbles that grew up, and the regime was not prepared for the collapse of the financial system and the difficulties we have had rectifying it. That is why it is right that, following on from the very successful, improvised monetary policies that we have experienced, the Chancellor is now consulting on a changed regime, which will be more flexible and take account of the level of unemployment, the level of nominal GDP and other variables that are crucial to long-term growth.

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

In the past, the Secretary of State has rightly criticised the banks and bankers for their contribution to the serious financial difficulties we are in. Can he therefore clarify whether he agrees with the Chancellor that bankers’ bonuses should be capped?

[Vince Cable]

There already are regulations that affect bankers’ bonuses, which we introduced long before the European Parliament and which firmly cap the amount of bonuses that can be paid out in cash, as opposed to stock, which is not redeemable in the short run. That reform has already been made in order to stabilise the banking system.

I agree that the banking crisis did enormous damage. As someone who has probably spent more time thinking and writing about it than most people in the House, I acknowledge that I have underestimated the damage that was done by the collapse of the banking system, especially the crippled, semi-state owned banks—to such an extent that even if we now ordered those banks to lend more, they would be institutionally incapable of doing so. What we have realised is that there are two problems. The first is the problem that has arisen from the banking collapse itself and the de-leveraging that followed it. The other is the fact that over a decade ago the bankers stripped out their capacity for local relationship banking. Effectively, they looted their banks and denuded them of the capacity to engage in sensible business lending. Of course, that was anticipated in the Cruickshank report, which the Labour Government ignored, but it has done serious damage that makes it difficult to revive conventional business lending. We are trying a series of initiatives to do that.

On Friday, a new tranche of money will be made available for non-bank lending. Today, we had the advanced manufacturing supply chain initiative, which is helping to fund our supply chains. I put in the Library this morning a written ministerial reply on the business bank, which gives a time profile for how that new institution will support challenger banks and new forms of wholesale financing in the banking sector. The Chancellor’s speech yesterday included a positive initiative on equity capital and helping to relieve some of the burdens on companies going to the alternative investment market on the equity side.

--- Later in debate ---

[Vince Cable]

There is a demand in the economy. When the Government come forward with proposals to stimulate demand, as they did in the housing sector, the Opposition jump up and criticise them.

[Jim Sheridan]

If press reports are to be believed, a banker is about to receive a £17.5 million bonus. If that is correct, what has the cap been set at?