Finance (No. 2) Bill

Debate between Chris Leslie and David Rutley

Tuesday 1st April 2014 Commons Chamber

[Chris Leslie]

For all the Government’s talk of a balanced, sustainable recovery, we see no action. Most of our constituents and most businesses would recognise that supply and demand have to be part of the picture. Everybody recognises that except, it seems, for the Chancellor and Chief Secretary, who do not recognise the fundamental problem in their approach.

There needed to be tough decisions, such as the 50p rate, in the Bill to make sure that there was fairness in dealing with the deficit and that we tackled the Government’s failure to keep their promise about balancing the books. That has not come to fruition. We need to help with business rates; we should be cutting them rather than simply focusing help on 2% of companies.

The Government are not ensuring a sustainable and balanced recovery. Consumers are having to dip into their savings at an alarming and increasing rate. The OBR even predicts that growth may well slow in future, when those savings run out. Exports are not predicted to contribute a thing to the economy for the next five years and nothing in the Budget tackles the country’s productivity crisis that has emerged in recent years.

Instead, the Exchequer Secretary and Chief Secretary have convinced themselves that cutting public services and raising taxes have helped economic growth. They believe their own propaganda about expansionary fiscal contraction, which was the philosophy of the right in British politics. It used to be the opposite of the Liberal Democrats’ view, but of course they have now bought into the concept.

[David Rutley (Macclesfield) (Con)]

The hon. Gentleman does not want to take this point from Government Front Benchers, but I have just been to the annual conference of the British Chambers of Commerce and it is absolutely delighted by the Bill and the Budget, which will help its businesses across the country. Will the hon. Gentleman join it in welcoming the Bill?

[Chris Leslie]

No, because the Bill could be significantly improved. I have given a number of ways in which it should be doing more for small businesses, for fairness in society and for the hon. Gentleman’s constituents. I think he will pay the price when the election arrives. He is under the impression that fiscal contraction is how growth materialises, but he needs to realise that growth is coming despite, not because of, the Government. I am afraid that they have still not learned that lesson.

The Conservatives and Liberal Democrats are desperate for people not to spot their broken promise on borrowing and the deficit. Three years of economic stagnation will leave the next Government with a budget deficit of £75 billion. It is astonishing that in his Budget speech, the Chancellor had the nerve to stand there and say:

“as a nation we are getting on top of our debts”—[Official Report, 19 March 2014; Vol. 577, c. 781.]

The Government have added a third to the national debt, which now stands at £1.2 trillion. What a nerve the Chancellor showed! He promised to stop adding to the national debt, but has borrowed more in the past four years than the last Government did in 13 years.

The Bill is bereft of the measures that we need to make sure that the recovery is sustained and shared by all. It has nothing new to tackle long-term youth unemployment, nothing to secure an energy price freeze and nothing to bring forward real help now for working parents who need extended child care. It has nothing new on infrastructure investment, which is still lagging behind, and nothing to address the wages crisis that leaves the typical person £1,600 worse off than in 2010. The Bill is not just a missed opportunity; it is so wide of the mark that it misses the point altogether. It is designed to help Ministers limp from here to election day. It falls short and is not good enough.

We would urge Ministers to go back to the drawing board, but it is increasingly clear that they do not even have a drawing board. I urge my hon. Friends to support the reasoned amendment. We will try our hardest to secure improvements to the Bill in Committee. This is a minor Finance Bill from a Government out of ideas. They delayed the Queen’s Speech because they do not have enough to put in it. The Bill should address the cost of living pressures faced by the majority and it should set a long-term ambition for a recovery built to last and felt by all. The country deserves a better Finance Bill than this.

Finance (No. 2) Bill

Debate between Chris Leslie and David Rutley

Monday 15th April 2013 Commons Chamber

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

The Minister’s job was clearly to drill down into the technical details, rather than focus on the big picture of the Budget and the Finance Bill. [Interruption.] There is heckling already. It would have been nice to see a bit of life from the Minister during the debate. How to draw the sting from a Finance Bill? Send for the Exchequer Secretary. It is true that he is less provocative than the Chief Secretary to the Treasury; I will give him that.

It is true that the Government wanted to kill off any interest in the Bill and put it on the back burner. Towards the end the Minister tried to arouse the enthusiasm of his colleagues on the Back Benches for the Bill by saying that it was about building a fairer society and energising Britain, but it is not a Bill for building a fairer society or energising business. It is not a Bill for the economy. It is not about what is best for the country at all. It is a Bill totally designed around what the Chancellor thinks is best for him. As the weight of evidence mounts that his plan is failing, he flails around desperately to justify his strategy, casting around constantly to blame everyone and everything else for the fact that everything is going so badly wrong.

The Bill gives us a glimpse of just how desperate things must be getting inside the Treasury. For the Treasury team, it is all about the politics, but what about the economics? Let us be clear. There is no positive impact on economic growth from the Bill. The Government’s own Office for Budget Responsibility on page 46 of its report on the Budget states that it will have

“no impact on the level of GDP at the end of the forecast horizon.”

The OBR also says that

“these measures reduce GDP growth”

in 2013. After all that effort by the Chancellor, culminating in the Budget and this weighty Finance Bill, what is the impact on economic growth in this calendar year? It is negative.

It is no wonder that the Treasury’s plans and the OBR forecasts are on a slippery slope, constantly and continuously downgrading their projections for the economy while upgrading the size of the deficit. Those grandiose plans and supposedly tough decisions that the Chancellor set out three years ago have seen economic growth of just 0.8%, compared with the 5.3% that they forecast and promised at the time. All the while, our international competitors are moving forward, leaving us behind. Only two other G20 countries have grown more slowly than the UK since the 2010 spending review—Japan and Italy.

[David Rutley (Macclesfield) (Con)]

Will the hon. Gentleman give way?

[Chris Leslie]

Let us not forget the double-dip recession, together with the shrinking economy in the last quarter for which figures are available.

I give way on the double-dip recession.

[David Rutley]

I thank the hon. Gentleman for giving way. I am pleased to see that he has departed from the vaudeville act that we normally see from the shadow Chancellor, and instead adopted the posture of Eeyore. Has he failed to notice that the IMF has projected that the growth in the UK for this year and next will be greater than that in both France and Germany?

[Chris Leslie]

I am sorry if I am upsetting the hon. Gentleman by having to emphasise some of the things that are going wrong in the Government’s plan, but somebody has to wake up the Back Benchers after the scintillating comments that were made from the Government Front Bench. If the hon. Gentleman thinks he has the capability to stand up and defend his Government’s record on economic growth, we would all be impressed. He must surely accept that it has been a massive and total failure and a disappointment which has not only hurt all our constituents, but has made the public finances far worse than the Government were predicting.

The Government said that they wanted to rebalance the UK economy, but look at the latest trade statistics, which showed our trade deficit increasing by £1 billion between January and February, with the balance of payments deficit for our country now at £36 billion. Despite the depreciation of sterling, our exports are shrinking, and despite the problems in the eurozone, our exports to other non-eurozone countries, such as the United States, are getting worse as well, and all that from the Chancellor who two years ago promised he would deliver

“a Britain carried aloft by the march of the makers.”

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[David Rutley]

The enterprise allowance, for example, enables—

[Chris Leslie]

It is not this year.

[David Rutley]

It will be coming forward.

[Chris Leslie]

When?

[David Rutley]

In 2014. [Interruption.] We have to take a stepped approach to rectify the changes Labour put through. The allowance is important and will be welcomed, and the other measures we are taking on the supply side, such as the reduction in corporation tax, will all help to create a platform for economic growth.

Financial Services Bill

Debate between Chris Leslie and David Rutley

Tuesday 22nd May 2012 Commons Chamber

[David Rutley (Macclesfield) (Con)]

The part of the Bill before us is mainly about transferring powers between the FSA, the FCA and the Prudential Regulatory Authority, and adding new powers, so I am not sure that it sits very well with the hon. Gentleman’s amendment. Will he explain in more detail why legislative measures are required when such objectives can be measured in other ways?

[Chris Leslie]

We are trying to ensure that the Government fundamentally address the question. These provisions give the Minister and the Treasury the power to make by order amendments to many of the rules, statutory instruments and suchlike that affect mutual societies. We think that they should have the capability to measure progress on mutuality in order to help to smooth progress towards fulfilling the coalition’s pledge.

Given that we have before us a financial services Bill, our constituents would expect us to be talking about firm and defined measures to make progress on diversifying the financial services sector. Unfortunately, they would be disappointed by the Treasury’s progress on that. The Treasury website has a very scant, short set of paragraphs stating the coalition agreement’s desire to promote mutuals. It says:

“The Treasury is developing policy and delivering legislative changes to…meet this aim.”

That is basically it—a statement but no substance. I want the Minister to tell us what progress is being made in fulfilling that objective. It is not good enough merely to talk about consolidating existing rules or legislation and wrapping that up as though the Law Commission’s recommendations somehow fulfil Government promises. We want to see more action.

Financial Services Bill

Debate between Chris Leslie and David Rutley

Monday 23rd April 2012 Commons Chamber

[Chris Leslie]

We are doing this because the hon. Gentleman and I are here to represent our constituents, some of whom will be on variable rate mortgages in these circumstances. All we are saying is that we want all the banks to warn of the potential impact of rate changes across a range of scenarios. It is about helping customers anticipate what might be around the corner. It is as simple as that. The banks will give all sorts of reasons for increasing their standard variable rates. For example, they claim that costs make it difficult and often cite the special liquidity scheme, which is now beginning to taper off so the taxpayer safety net is beginning to come away, but taking more and more from consumers is in many ways unfair. I think that Lloyds bank recently borrowed many billions from the European Central Bank as part of its long-term refinancing option, so there is cheap money available wholesale for the banks. We have to keep an eye out for the way they sometimes seek to make an excessive profit off the backs of ordinary mortgage customers.

[David Rutley (Macclesfield) (Con)]

I appreciate the rationale that the hon. Gentleman is putting forward and that he is trying to protect customers, but I have to agree with my hon. Friend the Member for Vale of Glamorgan (Alun Cairns) on the impracticality of the proposal. There now seems to be a tendency to make proposals on single products, but the Bill is about financial stability in the round, which we are trying to achieve, so is he seeking to introduce a similar forewarning system for savers on fixed incomes, who find interest rate changes equally worrying?

[Chris Leslie]

There might well be a case for that, but we are talking about people’s homes and the roofs over their heads. Repossessions can seriously hurt people, especially if they were unable to anticipate the situation because of a shock or unpredicted changes to their interest rates. As I have said, this point in the cycle is the right time to make this sort of change. It is about preparedness and information for home owners, and I feel strongly that we ought to have that in statute. If the Minister does not agree, this is certainly one of the issues on which we want to test the will of the House.

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[David Rutley]

There is a sense of déjà vu, as the Bill Committee spent a lot of time debating this measure. The hon. Gentleman talks about what he perceives is the present Government’s blind spot, but the previous Government’s was clearly a regulatory system that was woefully inadequate to cope with the challenges that came its way and was found wanting. What the Bill aims to address is financial stability and to make it a core focus. Why does he want to diffuse the focus at a time when the key element we have to tackle is financial stability? Government policy more generally tackles what he wants.

[Chris Leslie]

This goes back to the odd statement from the Minister in Committee, when he said it would be wrong for the Bank of England and the FPC to be asked to have regard to the impact of its decision on economic growth and employment. I ask the hon. Gentleman to pause and reflect on what he is saying, which is that it is not the Bank’s and the FPC’s job to think about jobs and growth. If he goes to his electorate and says that that is what he is legislating for, I doubt he will get much of a response, but it is important. The FPC will be a vital player in our economy. The Monetary Policy Committee has this objective in its remit; it seems only reasonable to have it mirrored in the Financial Policy Committee’s remit.

This attitude, which we called the Fareham doctrine of compartmentalism, that it is for the Treasury alone to think about jobs and growth—that it would be wrong and somehow dangerous for the Bank of England to think about such issues too—is an extremely dangerous way to think about this vital and extremely powerful institution. The Chair of the Treasury Committee said that, in certain ways, the Governor of the Bank of England could become even more powerful than the Chancellor of the Exchequer. I want all the players in our economy to be thinking about the impact of their decisions on our constituents, their employment prospects, their business prospects and the prospects of growth.

I think the amendment should be made. It is exceptionally important, and I feel strongly that we should press the matter. In a sense, it is similar to amendment 24. In the Bill, we enter new verbal territory with descriptions of how policy will be made. I know that many Members are intimately familiar with macro-prudential regulation, but essentially, it is that suite of rules and powers that the Bank of England and the FPC will be able to use to intervene in their systemic oversight of the economy as a whole. We suggest simply that every time the Bank of England produces a financial stability report it should give an assessment of the impact that each of the new macro-prudential measures will have on employment and growth—a simple assessment of their impact on the real economy. As the Bill stands, there is no requirement on the Bank of England, when exercising those massive powers, to provide that assessment. As the House knows, in many policy areas, we require frequent regulatory impact assessments to be made; this is a parallel requirement. We want the Bank of England properly to analyse the impact of the measures.

Let me give hon. Members some examples, so that they understand what macro-prudential regulation is. It is about setting maximum leverage ratios; sectoral capital requirements; rules on the terms of or the conditions on a loan, either to businesses or to consumers; loan-to-value ratios and loan-to-income ratios in mortgages; haircuts on secured finances or derivative transactions; disclosure requirements; and minimum credit card repayment levels. All those things are of real and great concern to our constituents. If the FPC and the Bank are able to assess the impact of their policies on credit availability, they should also be able to assess and analyse their impact on jobs and growth. Amendment 24 would achieve that.

Finance (No. 3) Bill

Debate between Chris Leslie and David Rutley

Tuesday 5th July 2011 Commons Chamber

[Chris Leslie]

An excellent statistic from my hon. Friend. We are often told that the reason we cannot take any action is that complex descriptor “regulatory arbitrage”. It is a term that belies what it actually means—people fleeing the country, usually because they want to pay lower taxes. Actually, there are good reasons for the financial services sector to stay and thrive in this country, and they are not just about tax and regulation. They are not always financial reasons. We have Greenwich mean time, and we have a great rule of law that can ensure that businesses succeed and thrive. I believe that that is ample for our financial services sector to be rejuvenated and sustainable. The talk of “regulatory arbitrage” is in many cases the last refuge of the scoundrel.

The Government are letting the banks off the hook. They are taking a light-touch approach on taxing the banks by failing to repeat the banker bonus tax that the previous Labour Government levied, which brought in £3.5 billion.

[David Rutley (Macclesfield) (Con)]

Is the hon. Gentleman not aware that this Government’s banking levy raises £2.5 billion, compared with the £2.3 billion one-off net yield of the bonus tax that the previous Government levied? The bank levy is a proactive statement by this Government—action that will lead to the raising of more than £10 billion over the course of this Parliament.

[Chris Leslie]

The problem is that we should have not either/or, but both. The bank levy and the banker bonus tax would be a fair contribution from the banking sector—[Interruption.] The Minister disagrees, but that is his opinion. The OBR says that the yield of a bonus tax could be £3.5 billion, but even a conservative estimate of, say, £2 billion would mean significant money that could eat into youth unemployment.

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[David Rutley]

Might not the Government’s position have something to do with the fact that the International Monetary Fund does not endorse a financial transaction tax and that there is a stronger case for an activities tax? Should the hon. Gentleman not consider that more fully?

[Chris Leslie]

I know that the Government have such a close relationship with the IMF that they take their policy lead from it on almost every issue, but I am sure that they can think for themselves on this issue. Given that there was discussion at the G20 about exploring many of those things, I would have thought that the Government ought to keep the issue on the table and under review because it has potential, as most hon. Members seem to recognise.