Money Creation and Society

Debate between Lord Goldsmith of Richmond Park and Angus Brendan MacNeil

Thursday 20th November 2014 Commons Chamber

[Zac Goldsmith]

I certainly agree with the sentiment expressed. I am excited by the challengers, but I do not believe that it is enough. Competition has to be good because it minimises risk. I know that my hon. Friend the Economic Secretary has dwelt on and looked at this issue in great detail.

Even fractional reserve banking is only the start of the story. I will not repeat in detail what we have already heard, but banks themselves create money. They do so by making advances, and with every advance they make a deposit. That is very poorly understood by people outside and inside the House. It has conferred extraordinary power on the banks. Necessarily, naturally and understandably, banks will use and have used that power in their own interests. It has also created extraordinary risk and, unfortunately, because of the size and interconnectedness of the banks, the risk is on us. That is why I am so excited by the challengers that my hon. Friend has just described. As I have said, that is happening on the fringe: it is right on the edge. It is extraordinary to imagine that at the height of the collapse the banks held just £1.25 for every £100 they had lent out. We are in a very precarious situation.

When I was much younger, I listened to a discussion, most of which I did not understand, between my father and people who were asking for his advice. He was a man with a pretty good track record on anticipating turbulence in the world economy. He was asked when the next crash would happen, and he said, “The last person you should ask is an economist or a business man. You need to ask a psychiatrist, because so much of it involves confidence.” The point was proven just a few years ago.

The banking system and the wider economy have become extraordinarily unhinged or detached from reality. I would like to elaborate on the extraordinary situation in which it is possible to imagine economic growth even as the last of the world’s great ecosystems or the last of the great forests are coming down. The economy is no longer linked to the reality of the natural world from which all goods originally derive. That is probably a debate for another time, however, so I will not dwell on it.

[Mr MacNeil]

The hon. Gentleman is making a good point that we should remember. It was brought home to me by Icelandic publisher Bjorn Jonasson, who pointed out that we are not in a situation where volcanoes have blown up or there have been huge national disasters, famines or catastrophes brought on by war; as a couple of the hon. Gentleman’s colleagues have said, this is about a system failure within the rules, and it is worth keeping that in mind. Although there is much gloom in relation to the banking system, in many ways that should at the same time give us some hope.

[Zac Goldsmith]

The hon. Gentleman is right, but a growing number of commentators and voices are anticipating a much larger crash than anything we have seen in the past few years. I will not add to or detract from the credence of such statements, but it is possible to imagine how such a collapse might happen, certainly in the ecological system. We are talking about the banking system, but the two systems are not entirely separate.

We had a wake-up call before the election just a few years ago. My concern is that we have not actually woken up. It seems to me that we have not introduced any significant or meaningful reforms that go to the heart of the problems we are discussing. We have been tinkering on the edges. I do not believe that Parliament has been as closely involved in the process as it should be, partly because of the ignorance that I described at the beginning of my speech.

I want to put on the record my support for the establishment of a meaningful monetary commission or some equivalent in which we can examine the pros and cons of shifting from a fractional reserve banking system to something closer to a full reserve banking system, as some hon. Members have said. We need to understand the pros and cons of such a move, how possible it is, and who wins and who loses. I do not think that many people fully know the answers.

We need to look at quantitative easing. I think that hon. Members on both sides of the House have accepted that it is not objective. Some believe that it is good and others believe that it is bad, but no one believes that it is objective. If the majority view is that quantitative easing is necessary, we need to ask this question: why not inject those funds into the real economy—into housing and energy projects of the kind that Opposition Members have spoken about—rather than using the mechanism in a way that clearly benefits only very few people within the world of financial and banking wizardry that we are discussing?

The issues need to be explored. The time has come to establish a monetary commission and for Parliament to become much more engaged. This debate is a very small step in that direction, and I am very grateful to its sponsors. I wish more Members were in the Chamber—I had intended to listen, not to speak—but, unfortunately, there have not been many speakers. This is a beginning, however, and I hope that we will have many more such debates.

Recall of MPs Bill

Debate between Lord Goldsmith of Richmond Park and Angus Brendan MacNeil

Tuesday 21st October 2014 Commons Chamber

[Zac Goldsmith]

That is interesting. I have been bombarded. I even received a letter this morning that said, “Dear Zac Goldsmith, we very much hope that you will support Zac Goldsmith’s amendments.” I take my hon. Friend’s point, but as is shown by all the surveys on this issue, of which there have been a great many over the past few months, if this proposal is put to members of the public, it is something that they support.

The amendments that my colleagues and I will table in due course are based on a Bill that was put together by my right hon. Friend the Member for Haltemprice and Howden (Mr Davis), which was crowdsourced. Some 40,000 people, many of whom were members of 38 Degrees and other organisations, went through it line by line and fed in their comments. It has engaged a large number of people. I cannot think of another Bill that has been subjected to that level of crowdsourcing.

[Mr MacNeil]

The hon. Gentleman made me think of some of the lines in the Bill when he mentioned the hon. Member for Bolsover (Mr Skinner). It states that

“the period specified is a period of at least 21 sitting days”.

It does not state that they must be 21 consecutive sitting days. It might help the Government if they go back and look at that.

[Zac Goldsmith]

That is a good point that I had not picked up on. The hon. Gentleman made the valid and reasonable point in an earlier intervention that there would be enormous pressure from the media, social media and members of the public for 21 days to become the norm, regardless of the offence.

This shabby pretence of a reform needs to be profoundly amended. With the help of a considerable number of colleagues, I hope to do so in Committee. The goal will be to put voters in charge, but with enough checks and balances to prevent any possibility of abuse. We will attempt to remove the Government’s trigger and replace it with a system that allows voters to initiate the process. In response to the intervention of my hon. Friend the Member for Ealing Central and Acton (Angie Bray), the protection will be in the threshold. It must be low enough to make recall possible, but high enough to ensure that it happens only when it absolutely should.

Under our proposals, there would be three simple stages. If 5% of the local electorate signed a notice of intent to recall during a one-month period, the returning officer would announce a formal recall petition. The purpose of the 5% provision is simply to show the returning officer that there is an appetite for the formal petition process. It is the least formal part of the process and is designed to prevent the initiation of recall by a few angry cranks in the constituency, which every constituency has.

--- Later in debate ---

[Mr MacNeil]

The hon. Gentleman might be correct in some of that, but we do live in an imperfect world. All I would say to him is that this removes many of the imperfections and is an improvement on the current situation.

[Zac Goldsmith]

The hon. Gentleman is making a brilliant speech, and I agree with I think everything he has just said.

The points about moneyed interests are arguments against all elections, not just recalls. It would be possible for the Koch brothers to influence any election, not just recalls. That is another problem we need to address: there are arguments to be had about regulating the process so that that cannot happen. These arguments are not about recall; they are about democracy.

[Mr MacNeil]

I think there is a debate going on around me here about the influence of money in politics, and hopefully we are not quite in the same scenario as the United States of America in that respect, although it would be wrong to say that the influence of money is negligible in politics at whatever level, including general elections, by-elections or, perhaps, recall elections.

Some Members have argued that a general election is a form of recall, but I dispute that. Should a Member face recall, they will be facing recall on one point, with the eyes of the country, and particularly of their constituency, on the cause of the recall. In a general election Members come face to face with other candidates, as they would in a recall election, but the issues of the day can sweep a candidate into winning a seat. We have often seen over the last number of elections that some candidates have won to their own surprise; it is clearly not the candidate who has been elected personally, but instead it is support for their party or the issue of the day that has taken them to victory. Therefore a by-election or general election is not a recall election.

One of the most concerning aspects of the recall measures before us is the Government’s wording of clause 1(3), which mentions an MP who

“has, after becoming an MP, been convicted in the United Kingdom of an offence and sentenced or ordered to be imprisoned or detained”.

The word “detained” leaves us with quite a difficult situation. According to House of Commons notes, during this Parliament at least four sitting MPs have been detained by the police but not prosecuted. I will not name them because they do not deserve that. The detaining and imprisoning of people could, under the Government’s mechanisms, enable 10% to push for a by-election, and that would be wrong.

We must, I think, conduct a thorough experiment. Not many of us would like to imagine that we live in a country in which we have politically motivated arrests and people being detained because of mistaken identity—the measure does not even allow for the possibility of mistaken identity. Let us imagine that the detention was heavy-handed and wrong. Imagine too that the system was taken as a gold standard and used in other places. We could have a situation in which different standards in a different time and place would allow somebody to be detained, which could lead to a 10% trigger to an election, and that could be taken as a benchmark across the world. It is difficult to see how people could withstand the pressure of that.

Phone Hacking

Debate between Lord Goldsmith of Richmond Park and Angus Brendan MacNeil

Wednesday 6th July 2011 Commons Chamber

[Zac Goldsmith (Richmond Park) (Con)]

I warmly congratulate the hon. Member for Rhondda (Chris Bryant) on securing this hugely important debate, which has already led to something of a breakthrough. The whole House should be grateful to him for his contribution.

I shall speak briefly but firmly in support of the motion. I was encouraged by the words of the Attorney-General earlier. This scandal has escalated dramatically. At first, it involved just the odd celebrity, and then a few members of their wider families. Then it emerged that members of staff employed by those celebrities had been hacked, some of whom lost their jobs because they were falsely accused of leaking information to the press. When absolutely pushed, the public said that they were uncomfortable with this news, but there was no outcry. That was because the many media commentators soothed them, saying, “It’s just celebrities. They know what they signed up for, and this is what it’s all about. It’s tittle-tattle.” We were told that the hacking was distasteful, but if we interfered with the press, we would never see any exposure of corruption, fraud or hypocrisy.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

The hon. Gentleman has alluded to the continual drip, drip of further revelations. Given what has happened, does he agree that by this stage, anyone who has been hacked should at least be informed of that fact?

[Zac Goldsmith]

I agree with the hon. Gentleman 100%, and I suspect that everyone else does, too.

The revelations have continued, and in the past few days we have seen what appears to be almost a tsunami. We have heard the details involving the families of the tragic Soham girls, and the sickening details relating to Milly Dowler. I will not repeat them. We have also heard about the victims of 7/7. Those are all innocent people who never chose to be in the public limelight.

I suspect that, as the right hon. Member for Cardiff South and Penarth (Alun Michael) implied, this is the tip of the iceberg. We have no idea how big that iceberg is, which is why we need a full public inquiry. On its own, this scandal justifies such an inquiry. We have seen the abuse of position and power on an awesome scale. The blurred lines that we have allowed to exist for the press, to allow them to do what we need them to do, have been well and truly stretched. We have seen systemic abuse of almost unprecedented power. There is nothing noble in what those newspapers have been doing.

We cannot see this matter on its own, however, because the corporation has not acted on its own. Revelations last night, although they have yet to be proven, showed that a former editor provided authorisation for payments to the police. This demonstrates that the company was not acting on its own, and what can generously be described as a sloppy investigation by the police suggests that that collaboration ran very deep indeed. There can be few things more important to members of the public in this country than an ability to trust the police. Tragically, however, what began as a conspiracy theory is now looking less and less like a theory.

This does not even end with the police. As MPs, we depend on the media. We like to be liked by them; we need to be liked by them. We depend on the media, and that applies still more to Governments. It is an unavoidable observation that Parliament has behaved with extraordinary cowardice for many years, with a few very honourable exceptions, whom I shall identify. They are the hon. Members for Rhondda and for West Bromwich East (Mr Watson) in particular, but they are not alone. Collectively, however, we have turned a blind eye. It is only with this latest sordid twist, the shameful behaviour of the News of the World in relation to Milly Dowler and the subsequent outpouring of public rage, that Parliament has finally found its—what is the correct term?—backbone, and taken a stand. Well, it is better late than never.

Rupert Murdoch is clearly a very talented business man and possibly even a genius, but his organisation has grown too powerful and it has abused its power. It has systematically corrupted the police and, in my view, has gelded this Parliament, to our shame.

Fisheries

Debate between Lord Goldsmith of Richmond Park and Angus Brendan MacNeil

Thursday 12th May 2011 Commons Chamber

[Zac Goldsmith]

I recognise the hon. Gentleman’s point, and in fact the motion suggests a

“derogation only for species proven to have a high survival rate on discarding”,

so that would include the type of catch that he mentions.

In addition to the pilots in our own waters, a discard ban has been operating since 1987 in Norway, where over-quota or unwanted species are landed for a guaranteed minimum value and sold to the fishmeal industry, with the proceeds used to reinvest in and support the fishing industry. To make a discard ban easier, we will have to do everything we can to help fishermen access and use more selective gear so that they can avoid the unwanted fish in the first place.

Consumers also have a clear role. A significant percentage of fish are discarded because there is no market for them, and the Government can boost that market through their vast procurement programme. We spend £2 billion each year on food for the wider public sector, and that is an obvious tool that the Government can use. However, there are obviously limits to what a Government can do to shape a fashion, and it is worth mentioning non-Government initiatives such as “Hugh’s Mackerel Mission”, which is intended to help stimulate new markets for less popular species. It is a valuable campaign, and I urge Members to support it.

Discards are the most visible flaw in the CFP regime, but they are only part of the problem. In addition, the motion calls for radical decentralisation, and I wish briefly to focus on that. One of the key demands from our fishing communities, and in particular from the under-10 metre fleet, is that we assert our control over what are wrongly described as our sovereign waters—the 12 nautical miles surrounding our coastline. I say “wrongly” because whereas the British Government can legally impose whatever rules and regulations they want within those waters, from six to 12 miles out those rules will apply only to British vessels. It is clear that higher standards are a good thing, but only if they are fair and we have an even playing field. That is categorically not the case in our waters.

For example, in 2004 the UK banned pair-trawling for bass within 12 miles of the south-west coast of England, to protect dolphins and porpoises. Although our own fishermen adhered to the law, the ban did absolutely nothing to prevent French and Spanish trawlers from continuing to catch bass in those waters, which was both wrong and unfair. If those rights for foreign vessels are to be retained, it seems to me that they should come with an absolute and non-negotiable obligation to adhere to our own rules. That is why the motion demands, among other things, that any reforms of the CFP must

“enable the UK to introduce higher standards of management and conservation in respect of all vessels fishing within its territorial waters”.

That is an absolutely fundamental issue. If we reassert our control over those waters we will not only provide welcome relief for our smaller boats against the onslaught of the factory fishing vessels, but we will be able to establish an intelligent, ecosystem-based management system and ensure the health of our fisheries indefinitely.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Does the hon. Gentleman feel that it was a mistake almost 40 years ago when the fishing grounds were used as a bargaining chip for entering the European Economic Community, as it then was? What will he do to ensure that his Government reverse that and give us 200-mile control rather than 12-mile control?

[Zac Goldsmith]

The hon. Gentleman has anticipated my concluding remarks, so I will ask him to hold on for a few moments.

If we were able to reassert control over our waters, we would also be able to set the rules on science. With the active involvement of those who depend more than anyone else on the viability and health of our marine environment—the fishermen themselves—we would be able to get the policy right. That would also allow us to do something even more important—to recognise in law and in our regulatory regime, finally, the difference between smaller, traditional fishing vessels and their giant industrial competitors. It is an absolute mystery to me why successive Governments have always chosen to view the latter, the so-called fishing lobby, as the true voice of fishermen.

More than three quarters of the UK fleet is made up of vessels of 10 metres and under, which represent about 65% of full-time employment. Under the previous Administration, the 5,000 or so 10-metre and under vessels were given just 4% of the national quota, compared with the staggering 96% that was given to bigger boats, which number fewer than 1,500. It is staggeringly unfair, and if we were able to organise ourselves in the way that we chose within those 12 miles, we would be able to recognise the madness of that system in law.

It is an obvious observation that the smaller vessels are restricted in where they can go and what damage they can do, simply because of their size. The tools that they use do not compare with those available to the industrial factory fishing vessels, some of which have lines that would stretch from Parliament to Brighton, and purse seine nets that are big enough to swallow two millennium domes—which is a nice thought in some respects.

Whereas the interests of the smaller fishing communities are necessarily aligned with conservationists and consumers, the tools of destruction used by the mega-trawlers are fundamentally incompatible with any kind of sustainable future. That has finally been recognised at EU level, in word if not in deed. The new EU Fisheries Commissioner, Maria Damanaki, has said:

“We…believe, based on scientific information, that small-scale fisheries are more sustainable and have a lower environmental footprint…Small-scale fisheries are also…more friendly to employment, and this is a key issue. We also recognise that small-scale fisheries are very important for the survival of coastal communities, for their identity, culture, history and way of life.”

Hear, hear to that, but let us see that finally translated into law. It is time for a clear and forceful policy distinction between the interests of the small-scale, more traditional fisherman, and large-scale operations.