Cost of Living

Toby Perkins Excerpts

Wednesday 27th November 2013 Commons Chamber

[Chris Leslie]

Thank you, Mr Deputy Speaker.

[Toby Perkins (Chesterfield) (Lab)]

My hon. Friend is being incredibly generous in taking interventions. May I encourage him to continue taking them, because every time he does so he utterly destroys the weak arguments made by Government Members? Does my hon. Friend recognise, like the 5,000 people who signed the “freeze that bill” petition in Chesterfield, that the Conservative party has nothing to say on energy prices because it is utterly beholden to the very energy companies that are impoverishing my constituents?

[Chris Leslie]

My hon. Friend is correct. The Government are afraid of the energy companies. We are not yet sure why they are so afraid to stand up to the big six, but it is clear that the Chancellor’s solution of simply shifting £100 or so off an energy bill and on to the taxes of all our constituents will not convince people that they have the answers. The switch is so obvious it can be seen in the dark. It is a palliative that merely shunts the costs from a bill payer to a taxpayer. It fails to tackle the root cause of the problem, which, as my hon. Friend has said, is the excessive profiteering of the utility companies. Government Members are going to have to try a lot better than that next week.

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[Sajid Javid]

I will comment on that because it reflects the hard work of the people of Burnley and their local MP. Why are people facing challenges up and down the country? The reason is simple and can be summed up in just three words: the Labour party.

[Toby Perkins]

The Minister asks why people are suffering a cost of living crisis, and he referred previously to Labour’s recession. Labour’s recession was over by the time he became a Member of Parliament, and it was a recession caused by the bankers. Will he remind the House what he was doing when Labour’s recession finished?

[Sajid Javid]

What I can do is remind the hon. Gentleman what was going on in his constituency during Labour’s recession. During Labour’s last term, unemployment in his constituency increased by 56%. So far, under this Government it has declined by 26%, which I think he would welcome.

Oral Answers to Questions

Toby Perkins Excerpts

Tuesday 5th November 2013 Commons Chamber

[Mr Osborne]

I completely agree with my hon. Friend that unless we have a credibly economic plan to grow the economy, deal with public finances and support business rather than tax it, we will get the reaction the shadow Chancellor got from the CBI, whose members said that the hairs on the backs of their necks stood up as they listened to all the terrible things that a Labour Government would do to them. The truth is that we are fixing the economic mess the shadow Chancellor left behind, and that is the best way to improve people’s living standards.

[Toby Perkins (Chesterfield) (Lab)]

T2. The Chancellor was warned that his cuts would choke off the growth that had returned to the UK economy when he took the job in 2010. Of course we welcome the fact that Britain is finally returning to growth, but does he not realise that if he had taken the advice of my right hon. Friend the Member for Morley and Outwood (Ed Balls) earlier, we would not have had three wasted years, the average working person would not be £1,500 worse off, and the talents and potential of 1 million young people would not have been laid to waste?

[Mr Osborne]

I remind the hon. Gentleman that the shadow Chancellor said that our economic policies would choke off the recovery in the spring of this year—the very moment when the recovery was under way. When will a Labour MP welcome the fact that our GDP has grown by 0.8% and unemployment is coming down? When will Labour acknowledge that it is our economic plan that is delivering that?

Spending Review

Toby Perkins Excerpts

Wednesday 26th June 2013 Commons Chamber

[Mr Osborne]

I can give my hon. Friend the absolutely clear commitment that we will bring forward the proposals to recognise marriage in the tax system—the proposals we set out in our manifesto that are provided for in the coalition agreement—in due course.

[Toby Perkins (Chesterfield) (Lab)]

The Chancellor has told us today that he is going to bring forward infrastructure spending, but of course we have heard it all before. We reflect on a record of complete failure on infrastructure spending, whereby the money he announces does not actually get delivered. Why should we have any more confidence that what we have heard today will be any more successful than what he has brought to us previously from that Dispatch Box?

[Mr Osborne]

Because the road schemes that we committed to at this Dispatch Box got their planning permission, or are getting it, and the construction is starting. Some of those road schemes have been completed. The same is true with the schools and all the other pieces of infrastructure. One of our big problems was the complete absence when we came into office of a bunch of plans that were ready to go and had planning permission. We have had to do all that. I am all for speeding up Whitehall and the planning process, but I seem to remember that the Labour party voted against the planning reforms. So when we try to make those changes, which the former Chancellor was good enough to acknowledge are needed because of all the problems that previous Governments have had, actually he has opposed them.

Banking Reform

Toby Perkins Excerpts

Monday 4th February 2013 Commons Chamber

[Greg Clark]

We agree with my hon. Friend, and that will form part of the Bill.

[Toby Perkins (Chesterfield) (Lab)]

The Minister is absolutely right to say that the reputation of our banks has never been lower. We hope that we will start to see the important changes we need. One reason for that reputation is the experience that many small businesses had with interest rate swap agreements. While many welcome the FSA announcement on that, there are still some concerns about whether people will really consider that they have had justice at the end of the process. Will the Minister confirm what representations he has made to the FSA about what it should find during the deliberations, and will he give us any assurances that the interest rate swap problems we have had in the past will not reappear in future?

[Greg Clark]

The hon. Gentleman raises a very important point. I met the Federation of Small Businesses and the Bully-Banks organisation and I conveyed their concerns to the FSA, which the hon. Gentleman knows is set up to be the independent regulator. I think most people were relieved that the FSA proposals of last week will result in compensation for the affected businesses within a rapid time frame. What happened is totally unacceptable, and is another feature of the scandalous decline in reputation that the banks have suffered. Small businesses in particular have a right to regard their bank manager as someone who acts in their interests, rather than someone who flogs them dodgy products that they do not need in the first place. That is a breach of trust in banking. I am absolutely insistent that the FSA should conclude this process, giving full recompense to those who have been mis-sold products.

Autumn Statement

Toby Perkins Excerpts

Wednesday 5th December 2012 Commons Chamber

[Mr Osborne]

In my statement, I had to choose just a couple of hon. Members who have brought that issue to my attention, but I should put it on record that my hon. Friend was one of those who came to see me to campaign for action on empty property rate relief to mitigate the damage that it has done to some of our cities and towns since its introduction by the previous Labour Government. The 18-month grace period will help the construction of new commercial premises, and I congratulate him on the work he has done on behalf of his constituents to bring that about.

[Toby Perkins (Chesterfield) (Lab)]

The Chancellor has taken on a ghastly, ghostly, deathly pallor that suggests he knows that he has been rumbled. The money from the 4G mobile auction has not come in yet. When it comes in, he can spend it on whatever he likes, but he cannot offset it against borrowing before it has come in. Why does he not come clean and admit that borrowing has gone up and the rest of it is just a con?

Oral Answers to Questions

Toby Perkins Excerpts

Tuesday 6th March 2012 Commons Chamber

[Mr Osborne]

The personal allowance is increasing from April. We inherited a personal allowance that was £6,475. It is going to be £8,105 in April. That will take 1.1 million people out of tax and deliver a tax cut to 23 million or so basic rate taxpayers. I say to my hon. Friend, to my colleagues in the Conservative party and to my colleagues in the Liberal Democrat party that this is a coalition policy. It was part of the coalition agreement. It was in the Liberal Democrat manifesto, but I am also proud that it is a Conservative Chancellor who is implementing it.

[Toby Perkins (Chesterfield) (Lab)]

T4. If the Chancellor had cut less than the Darling plan and at the same time was borrowing less, we would be calling him a genius. What word would he use to describe somebody who has achieved the opposite?

[Mr Osborne]

I did not really understand what the hon. Gentleman was saying. He seemed to suggest that we should be cutting less than the Darling plan, so the Opposition are now abandoning even the deficit reduction plan that they claimed to have when they were last in government. It just shows how all over the place they are.

Living Standards

Toby Perkins Excerpts

Monday 5th March 2012 Commons Chamber

[Rachel Reeves]

My hon. Friend is right when she sticks up for the people of Stoke, who, like many of our constituents, will be hard hit by the changes, which do nothing to encourage people to go back to work, and instead encourage people to stay on the dole, because they will be better off on benefits than in work.

[Toby Perkins (Chesterfield) (Lab)]

I hope I can add some weight to what my hon. Friend is saying. I was contacted by a local small business owner in my constituency—Keith Bannister, who runs Harley’s pub, which people in Staveley will all be aware of. He told me that three women on his payroll are threatened with the loss of their tax credits. They have told him that they will have to give up work if that happens, but he knows that if he increases the hours of two of them, he will have to lay off the third. It just does not make sense, does it?

[Rachel Reeves]

It would be better if he was advising the Treasury, rather than the people who are currently doing it, because that is absolutely right, and it gets to the heart of the problem.

Indeed, that seems symptomatic of a wider problem with this Government: rushing out announcements to generate headlines before the costs have been counted; dreaming up the next big idea, when they should be focusing on the impact of their policies in the real world. We heard over the weekend that the Prime Minister had lost his blue-skies thinker. However, it might not be such a bad thing, because in tough times such as these, our constituents need a Government with their feet on the ground, not with their head in the clouds. I hope that this debate gives the Government a much needed reality check, because it is not too late to change course and protect hard-pressed families from further hardship and strain, inflicted on them by this Government.

It is the job of this House to ensure that our constituents’ voices are heard and their struggles taken into account, and that the impact of Government policies on their lives is fully understood. Labour Members hear every day from our constituents, and from the people we talk to around the country, about how hard it is to make enough money to pay the bills, find work or keep businesses afloat. It is not too late for the Chancellor to correct the mistakes that he is making with child benefit and working tax credits. I urge the Government to commit now to an urgent review of the child benefit changes and to use the money from a crackdown on stamp duty avoidance to cancel the damaging cut to working tax credits.

There is still time to listen to the families who will be hit by the restrictions on working tax credits, 78% of whom said in a survey for USDAW—the Union of Shop, Distributive and Allied Workers—that they would be unable to find the additional hours needed to keep their tax credits. There is still time to listen to the many families hit by the change who cannot work extra hours because they have disabled children or other caring responsibilities. The Government have refused to exempt those families where one parent is a full-time carer. There is still time to listen to the Child Poverty Action Group, which warns that the change will

“cause a surge in child poverty of hundreds of thousands”.

There is still time to listen to the children’s charities and organisations speaking up for hard-pressed families—including Barnardo’s, Carers UK, Citizens Advice, the National Children’s Bureau and Working Families—which today wrote to the Prime Minister urging him to think again. There is still time to listen to one woman—Mary, from Belfast—who said:

“I can’t get my employer to give me the extra hours I need to qualify. There are people in my work who have had to take redundancy or cut their hours from 36…to 12 hours a week…Where does he think we are going to pluck the extra hours from? It’s a joke.”

Frankly, Mary is right.

On child benefit, there is still time to listen to the Institute for Fiscal Studies, which says that the Government’s proposals will

“create a bizarre and economically damaging set of incentives”.

There is still time to listen to the hon. Member for Christchurch (Mr Chope), who said that the Government’s plans would lead to

“a lot of unfairness and injustice”.

He is right. There is also still time to listen to the hon. Member for Peterborough (Mr Jackson), who said that the Government’s policy was “barmy, tokenistic and unfair”. He, too, is right. I look forward to both of them, and others on the Government Benches, joining us in the Lobby this evening to tell the Government what they think of their policies.

All day, we have been getting smoke signals and spin from the Government. The Deputy Prime Minister says that they are thinking again, yet the Secretary of State for Justice says that they are not. Who is right? I look forward to getting an answer on what the Government’s policy on tax credits and child benefit actually is. It is a shame that no member of the Cabinet is in the Chamber tonight to give that answer and to talk about Government policy.

With 16 days to go until the Budget, the families that are about to be hit by the changes need certainty and commitments. The motion gives Members on both sides of the House an opportunity to dispel any doubts about the seriousness of our commitment to families and to fairness, and to show that we have listened to our constituents and our consciences. We have an opportunity this evening to stand up for fairness in tough times and to vote to protect family incomes by supporting the motion.

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[Glenda Jackson (Hampstead and Kilburn) (Lab)]

rose—

[Toby Perkins]

rose—

[Mr Gauke]

I want to make a bit more progress.

That is also why we increased the child tax credit by £135, in line with inflation, which means that, by this April, it will have increased by £390 since May 2010. It is telling that the Opposition motion makes no mention of this Government’s plans to increase the personal allowance, no doubt because their last contribution to the debate on income tax for the low paid was the 10p debacle.

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[Mr Gauke]

Thank you, Madam Deputy Speaker.

Increasing the working hour requirements for a couple is entirely fair. It is absolutely right that a couple with children should put in more hours than a lone parent before receiving working tax credits. This also creates a clear work incentive signal to potential second earners who could benefit from working tax credits if they moved into work or increased their hours.

[Toby Perkins]

The Minister referred to universal credit. Is not one of the most foolish parts of this policy the fact that it will be out of date within 18 months or so in any case? This will potentially mean a lot of people deciding to get out of work, but it will be superseded by the policy on universal credit. Why not just wait until universal credit comes in?

[Mr Gauke]

I come back to the point I made previously. With the difficult financial situation we inherited, we needed to take steps, and one of them was to increase the threshold for a couple from 16 to 24 hours. That seems perfectly reasonable and fair in the context of a 16-hour requirement for lone parents.

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[Stephen Williams (Bristol West) (LD)]

We have debated many Opposition motions on the economy and public finances in the past 20 months, and this one is little different from the many others that I have discussed—I have spoken in all these debates. We are asked to focus on the needs of hard-pressed families—we are hardly likely to disagree with that—and on pensioners, but the whole tenor of this motion, like all the others that have gone before it, is that the coalition Government should do more for some people and should reverse the planned changes that they have set in train. So despite the U-turns that the shadow Chancellor and the Leader of the Opposition have made in recent weeks on the need to cut the deficit, we are exactly where we have been before on all other Opposition days. We are back with uncosted proposals somehow to make us all believe that tackling the deficit can be a painless and, indeed, invisible process of fiscal rebalancing. It is as if public finances can be restored to health by magic, with no tax rises and no expenditure cuts—it simply is not credible.

[Toby Perkins]

The hon. Gentleman mentions the importance of tackling the deficit, but he will recognise that by 2013 this policy will be out of date because of the incoming universal credit. What is the point of putting 200,000 people through tremendous pain for the sake of 18 months? When the Government review their books in 2015 that figure will have entirely disappeared, so why not wait until the universal credit has come in and sort the system out at that point?

[Stephen Williams]

I thank the hon. Gentleman for his intervention and I think he made the same point to the Minister. The coalition Government have a five-year programme of reform, which includes cutting the deficit as well as long-lasting reform of our entire welfare state, which has evolved over a long period of time. Many of the reforms, whether they are on the universal credit, pensions or other parts of the welfare state, are designed to last for a generation whereas the deficit reduction measures are, of course, short-term measures, painful as they might sometimes be. I acknowledge that for many households and some families what this Government are having to do—not because we choose to do it, but because we have to do it—causes discomfort.

What matters most to all households is putting our public finances and our economy back on track. That gives our country fiscal credibility and allows our Government, businesses and households to borrow and invest at affordable rates.

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[Toby Perkins (Chesterfield) (Lab)]

This debate is an example of how the Government’s thirst for cuts—any cuts—has blinded them to the basic foolishness of the policies that they are pursuing. Even when their cuts are demonstrably ineffective, counter-productive and unfair, they plough ahead with them because they cannot countenance any alternative. The hon. Member for Bedford (Richard Fuller) has just said that it would be unfair to pass on the deficit to future generations, but the Government are, by their own admission, borrowing £158 billion more because of their failure to get growth into our economy. The question is not whether we have a deficit; it is about the best way to pay it off.

Anyone who understands anything about this Government will recognise that deficit reduction is their primary priority. However, their proposed changes to working tax credit will not move them one penny piece closer to that objective. There are 335 Chesterfield families, and 635 children, who will lose up to £4,000. There are 1,305 people in my constituency alone—working families who are trying to play by the rules and do their bit—who are having the rug pulled out from under their feet. Yet this policy, which will have a huge impact on working families across Britain, will be defunct by 2013, when universal credit comes in. It will therefore not move the Government any nearer to their target of eradicating the deficit by 2016, or 2017—whatever the moving goalpost.

More working people will be forced to give up work and to rely on benefit, which is the polar opposite of what the Minister wants to achieve. These changes will lead to parents being £728 a year better off out of work than staying in work without the tax credits. Why would a Government who support marriage and the family introduce harsh fiscal measures that are likely to put more pressure on those families who stay together? The Union of Shop, Distributive and Allied Workers has stated that 78% of its 410,000 members working in retail cannot get extra hours at work.

The Government’s policy of cutting child benefit for higher rate taxpayers is entirely chaotic, as has been exposed by several Members. If two members of the same family earn £42,000 each, that family will keep its child benefit, but a single parent on £43,000 will lose theirs. About 170,000 families could increase their net income if an individual in the family managed to lower their pre-tax income to just below the higher rate tax threshold. The policy creates a perverse disincentive to success, and it is wholly anti-aspirational. It is unbelievable that a Conservative Government should introduce such a policy.

In the few moments that I have left, I should also like to make the case for the principle of universality in the system. Beveridge’s principle for the welfare state was that it should be a contributory system. Of course, some will receive more than others, based on their need. That is absolutely right, but the idea that we are all entitled to basic support such as child benefit, the state pension and the winter fuel allowance is a good one. At a time of ever-increasing resentment from those who pay taxes towards those who get benefits, stoked up by the Government and some of their friends in the right-wing media, we should all be fighting hard to protect the universal principle.

The Chancellor recognises that people on £43,000 a year earn more than the average, and he therefore thinks that people will perceive them to be loaded. Let me tell him that someone on that income with three children and living in a four-bedroom house is not loaded. They have to watch what they spend. They worry about the cost of fuel and about their energy bills. They see prices going up while their income stagnates. The Chancellor is making a huge mistake if he does not recognise that. We are debating the policies of a Government who have failed to get growth back into the economy and who are bringing forward illogical proposals that will make the situation worse.

Rural Bank Closures

Toby Perkins Excerpts

Tuesday 21st February 2012 Westminster Hall

[Roger Williams]

The hon. Gentleman makes a very good point, because public transport in rural areas is difficult at the best of times. Requiring people to travel distances of 9 miles or, in an example from my constituency, 14 miles makes it very difficult for people to obtain the advice and support that they need in making financial decisions. There have also been a number of closures by HSBC in Wales. The closures in Llandysul, in Ceredigion, and in Llanrhaeadr-ym-Mochnant in Powys, in the constituency of my hon. Friend the Member for Montgomeryshire (Glyn Davies), have been among six closures in Wales since September. I think that there has been a total of 17 closures across Wales by HSBC since 2009, although I should add that not all of those have been in rural areas.

However, this debate has not been called to highlight cases in my constituency or to single out HSBC. A recent report from the Campaign for Community Banking Services produced a breakdown by region and country of the number of communities dependent on one or two banks, together with a report on the situation for individual banks. The latter revealed the halving of HSBC’s share of one-bank communities in England and Wales to 10% as it continues significantly to reduce its network coverage. Perhaps the case of Presteigne and other closures explain why there is no mention of HSBC’s popular slogan, “The world’s local bank”, in its January 2012 television advertising campaign.

Figures from last year show that since 1990, 44% of all banks, including converted building societies, have been closed. That equates to 7,555 fewer retail banking branches nationwide. That has left the UK with only 190 bank and building society branches per million inhabitants, which is very poor in comparison with the 940 branches per million inhabitants in Spain, 560 per million in Italy and 470 per million in Germany. There is a better geographical spread throughout those countries and they have retained far more locally owned branches. Granted, they generally make modest charges for operating personal as well as business accounts, but at least they have the face-to-face services that so many people still want.

The report of the Independent Commission on Banking, the recommendations of which the Government have pledged to implement in full, stresses the need for a challenger bank and increased competition in high street banking. The German model, for example, provides for excellent competition and a much more community-focused approach. Lowering the barriers to entry and facilitating greater competition could allow for banks specialising in lending to small and medium-sized enterprises, as the Federation of Small Businesses has suggested, for banks that have a more local or community focus or perhaps even for banks that specialise in providing facilities for groups that are normally hard to reach, such as rural communities.

2011 showed no sign of a slowdown in the number of closures. A Campaign for Community Banking Services report that came out earlier this month showed that the number of rural communities with only two banks remaining is 446.

[Toby Perkins (Chesterfield) (Lab)]

I congratulate the hon. Gentleman on securing the debate. He has been a consistent campaigner on this issue. He is setting out how, since he brought the issue to this Chamber in March 2011, the level of bank closures has continued apace. Is he aware of any improvements on the ground as a result of Government intervention—Government policies—since March 2011, or is the lack of any such improvements the reason for his bringing the issue to the Chamber again?

[Roger Williams]

I thank the hon. Gentleman for that intervention, but I think that I have made it clear that although I believe that the Government can take a degree of initiative in this field, it is really the responsibility of individual banks or banks as a whole to ensure that they are able to service these vulnerable communities, because they owe a debt of loyalty to them.

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[Toby Perkins (Chesterfield) (Lab)]

Thank you very much, Mr Brady, for allowing me to speak. Unlike the hon. Member for Montgomeryshire (Glyn Davies), I believe that this is the first time that I have had the pleasure of attending a debate that you are chairing, but my excitement is none the less for that. I have obviously not been in the right place before.

This has been a good and important debate, and there have been some really important contributions. I congratulate the hon. Member for Brecon and Radnorshire (Roger Williams) on securing another Westminster Hall debate on rural bank closures. The issue is just as relevant and urgent—if not more so—as it was when he secured a debate on it back in March 2011.

The importance of this issue is shown in part by the number of different organisations that contacted me in advance of it to express their views on the problems that rural bank closures are causing their membership and their areas of interest. Those organisations include the Forum of Private Business, the Campaign for Community Banking Services, the Post Bank Coalition, the Federation of Small Businesses and the Countryside Alliance. As I say, they all contacted me to express the difficulties that this issue was causing their members. The Countryside Alliance briefing nicely laid out the fact that access to money and finance in rural areas has never been more acutely limited. It said:

“20 per cent of the population live and work in rural areas and yet only 12 per cent of bank branches and 10 per cent of cash machines are located there.”

What we are seeing is a population shift towards rural communities but at the same time a hollowing-out of services within rural areas. The briefing continues:

“Around 200,000 people living in rural England do not have access to a bank account of any kind. Even before any further bank closures, more than 930,000 households in rural areas live below the Government’s official poverty line and as many as 300,000 people living in the countryside do not have bank accounts.”

There is a broad issue about services in rural communities generally and a specific issue about the role of banking in our society. There is a challenge for the Government in terms of how they can stand up for Britain’s small and medium-sized enterprises. Although those issues are not new, they are becoming more serious, as has been stated in several contributions to the debate. A variety of cogent points were made by Members, to which I will refer.

The hon. Member for Brecon and Radnorshire laid out the importance of exploring the idea of community banks. I look forward to the Government’s response. The Government must take responsibility for co-ordinating and pressing the banks to deliver their public service responsibilities. He also laid out the potential value that there might be in the role of shared banks, which we want to see explored in a lot more detail. My right hon. Friend the Member for Torfaen (Paul Murphy) expressed in graphic detail the devastating impact of the closure of the HSBC bank in Blaenavon, which affects small businesses, the elderly and the community. A cash point is needed there, even if the bank disappears. That point was also made by other hon. Members.

The hon. Member for Montgomeryshire expressed the importance of supporting local businesses and how their presence retains young talent within our rural communities. A difficulty occurs when young people go away to university and do not come back to their own communities, resulting in a hollowing-out of talent in local rural areas. He described how it is often a death knell for village and community life when a bank closes. That is an important point.

My hon. Friend the Member for Harrow West (Mr Thomas) captured the mood of the debate with his call for a summit of the major banks and for the Government to get a summit together. We have seen the NHS summit this week. Perhaps the next summit will include invitations to the people who do not agree with the Government. Notwithstanding that, his idea was seized upon by other hon. Members as having merit. He spoke about the impact of the last bank closing in north Harrow in his constituency. He said that the summit should call for a commitment by the major banks to stick to the principles of the last bank agreement, so that when we are down to the final bank in a constituency, they stick to the commitment to retain it as a public service.

My hon. Friend the Member for Vale of Clwyd (Chris Ruane) supported the call for a summit. He asked for an analysis of the number of bank closures to ensure that we have important information. It is vital for banks to raise their reputation and standing. They can have an impact on our broader community and economy. We need to sense that we are all in it together and that banks realise and recognise their responsibilities.

The hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart) also supported the call for a summit. He said that it needs to be expanded and should not just be about rural banking closures. He wants it to hold banks to account for their failure to lend to small businesses, and I would entirely support that. He also made the point that this is not just about the banks that go last, because they are the ones that stayed longest. We should also be looking at the banks that go before. We should recognise that banks have business decisions to make every day, but when they become the last bank in the community, there is also the public service issue. When members of the community can access shared banking services and tolerate only one bank in their village—in the town in the case of Blaenavon—it has a dramatic effect when that last one goes.

The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) talked about the impact on small businesses. My hon. Friend the Member for Scunthorpe (Nic Dakin) mentioned the fact that the bank is often a key pillar of the community. That leads me to the broader issue of rural services. Local banks and post offices are the lifeblood of a community in rural areas. They impact on everything, from people’s sense of place and community to the capacity of small businesses to be run there, offering local employment prospects. They impact on tourism in some rural areas. We are seeing an increase in the number of people living in rural communities, yet a retraction in the services actually provided. That then has an impact on the ability of elderly and disabled people to engage in society in the way that we would expect—something that people who have easier access to transport or who live in urban communities take for granted.

The coalition agreement promised a post office bank. I am sorry that the Government have decided to renege on that promise. It was an idea floated by the previous Government. It was in the Labour party manifesto. We thought that it had been taken up by the new Administration when it was mentioned in the coalition agreement. The idea for a post office bank, in which post office facilities were used for some basic financial services, especially in rural areas, has, to the disappointment of many organisations, apparently been ditched.

Alongside the importance of rural services is the issue of what we expect from banks. Banks are both businesses and public services. When the banking crisis struck, the taxpayer provided support in a way that we have not done with numerous other industries. Many other industries, businesses and large firms have been allowed to go to the wall, but the banks were saved by the taxpayer, because we recognised the importance of the banking sector to our communities and, of course, to the business community. We recognised the possible impact on our communities. That role is acknowledged by the banks. It is one of the reasons why the last bank in town commitment is so important.

Evidence from the coalition of community banking services has shown the gradual reduction in rural banking services and the extent to which the number of dual bank communities has reduced, often because banks do not want to be the last bank in town and then come under more pressure than they would if another bank closed. So the suggestion made by the Minister in March 2011 that increased competition in the mainstream banking sector would be a solution is entirely disingenuous. It is an important issue to do with some of the other inadequacies in our banking environment, but once we get to the last bank in town, the decision about keeping it open is often one in which commercial considerations overtake the public service considerations, so the idea that an increase in competition will lead to an increase in the number of banks staying open in such areas is an unlikely one.

Banks are closing because banks have over many years been engaged in a long-term process of centralisation and cost reduction, and small local branches simply do not sell enough financial services products to keep them open. Communities that have invested in a bank, borrowed from a bank and been customers in that bank for many years often find that their loyalty is not returned when the branch is no longer commercially successful. So this is an issue of equality for people on low incomes, and it is an issue about how we support our elderly and disabled people, as well as how we support our small businesses. There is a greater role than ever before for debt advice. The advice sector is hollowing out and centralising in the face of cuts to the voluntary and local government sectors. That could push impoverished people towards payday loans and illegal loan sharks, as well as reducing the access to quality financial advice for elderly and disabled people who are not able to travel 10 or 15 miles to the nearest bank.

There must be a greater role within our banking sector for credit unions and mutuals, and I am interested to know what more the Government can do to promote them. Alongside the failure on rural commitments, as the hon. Member for Carmarthen East and Dinefwr said, is a failure on access to finance for small and medium-sized enterprises. That is recognised right across our business community. One of the biggest single drags on our economic recovery is the failure to make finance accessible to small businesses, owing to the banking sector’s retrenchment and the failure of the Project Merlin agreement, particularly for small businesses. The Government need to do a great deal more on that.

We all recognise that if we are to have a private sector-led recovery, SMEs will play a significant role in delivering growth within our economy. Members will have been as shocked as I was to learn the extent of the current Government’s failure in a YouGov poll yesterday, showing that a quarter of small business owners expect to close within the next two years.

At a time like this, when small businesses are under the cosh more than ever, we must recognise the banking sector’s role in supporting those businesses. Often, such businesses deal in cash and need daily access to bank services. There are clearly security implications for small businesses that cannot cash in their takings daily, as well as efficiency implications. A small business owner who must close early to drive 10 or 15 miles to take their money to the nearest bank will make less profit. At a time when small businesses need all the help that they can get, the Government and the banking sector should be doing a whole lot more. Hon. Members mentioned the importance of the local business relationship between banks and their business customers as well as their individual customers.

I should like to hear the Minister’s comments on the proposal made today for a summit. I should also like to hear what more can be done to take forward the inter-bank agency agreement model, which has been important in enabling businesses to share bank branch services. What does she think of today’s proposal by the Forum of Private Business that banks should share premises?

This debate involves the broad issue of services in rural communities, the specific role of banking in our society and a challenge to the Government to stand up for Britain’s small businesses. We recognise that rural communities exist in a variety of ways, but if they are to be sustainable communities and not just places where people live, services are crucial. That is why this debate is so important. I welcome the contributions made by all Members and look forward to learning more about what the Government will do to address this serious issue.

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[Miss Smith]

I am afraid that that would not be something that the Government could introduce, as the Government do not run banks. Regarding the banks in which the Government are the majority shareholder, they are run at arm’s length, as all hon. Members know, but I hope that my words will serve as a small measure of encouragement. It is a positive idea that could and should be looked at by banks themselves.

Regarding what the Government are doing to promote access to financial services, we are taking a number of important actions to help consumers access the services that they need. We are strongly committed to promoting a diverse financial services sector that serves the needs of the wider economy, which is the one of themes of today’s debate.

To start with, we need to encourage access to savings products. The Financial Secretary to the Treasury announced last week that the Government have launched a steering group to design a range of simple financial products, which will help new participants enter financial markets to provide straightforward and easy-to-understand products. I am sure that all hon. Members present today will welcome that.

I reiterate that we want the industry to take a lead in designing simple products, because we want the products to be viable commercial propositions for customers that will stand the test of time. There is an opportunity for industry to innovate properly, which may include mobile or shared services, and to develop a range of simple products that—again we return to the key point—meet their customers’ needs.

[Toby Perkins]

Will the Minister give way?

[Miss Smith]

I am about to respond to the hon. Gentleman’s points, so if he will allow me to continue with my comments, I will do so later.

I think we have all acknowledged in today’s debate that the needs for access to finance go far wider than banks and building societies. The Government strongly believe that credit unions can act as alternatives to banks and building societies in providing affordable financial services to people who may not otherwise be able to access them. The Government are providing additional support to such institutions through the Department for Work and Pensions, which I know hon. Members will welcome. The results of some of its feasibility studies will be published in due course. That forms just one part of the Government’s efforts to promote a diverse and competitive financial services sector, on which I am sure the hon. Member for Chesterfield (Toby Perkins) will have something to say.

[Toby Perkins]

I am delighted to hear that there is an interest in credit unions, and the Minister is absolutely right to say that they can play an important part.

Regarding the substantive issues that have been raised today, Members will be forgiven for thinking that they are walking away from the debate with little sense that the Government are doing much about the issue. What we are hearing is that such decisions are for the banking sector. Regarding the main thrust of the debate, which is about customer service and public service responsibilities of the bank, I think Members will leave with the sense that there is little pressure from the Government to get banks to face up to their responsibility and recognise the broader economic impact if we do not sort the issue out. I think we need to see a far greater sense of urgency and action from the Government on the issue.

[Miss Smith]

The hon. Gentleman will in that case be pleased to hear me move straight on to the next section of my speech, which deals exactly with what the Government are doing this very day in Committee: acting on the part of the financial system for which they have responsibility, which is to talk about financial conduct and competition in financial services. The key to the hon. Gentleman’s question is in his own words. There are two things at stake: customer service and public service. Banks and commercial institutions must be responsible for customer service, and I will now turn to some aspects for which the Government can reasonably be said to be responsible.

It is essential that consumers are able to apply competitive pressure and to understand where they can hold their bank to account and how the broader market operates. Customers should be able to vote with their feet and to switch their custom to banks that provide the best products for them, including access to a branch. The Government are therefore committed to fostering diversity and promoting competition in the banking sector. To that end, the Government have accepted in principle the competition recommendations of the Independent Commission on Banking, which was mentioned earlier in the debate. The Government will now consider the proposals in more detail.

In line with those recommendations, I am pleased to note that the banking industry has already made some commitments, such as introducing a faster and safer switching service to ensure that customers can switch within seven days. Along with the more enhanced transparency measures that are already being implemented in the personal current account market, including making charges clearer and providing annual statements of charges to each customer, the new service will make it easier for customers to exercise what they have to do, which is vote with their feet if they feel that their bank is not meeting their needs.

To ensure that consumers are adequately protected in accessing financial services, the Government are also reforming the regulation of financial services. I remind the House that as part of the Financial Services Bill that is being discussed in Committee as we speak, the Government are creating a new and dedicated conduct of business regulator, the financial conduct authority. Also, the Office of Fair Trading has already committed to reviewing the personal current account market in 2012, about which I hope my hon. Friend the Member for Suffolk Coastal (Dr Coffey) will read later.

It is clear that customer service is at stake here, and there is public interest in how rural communities can best be supported. However, it is also clear that the issue spans a substantial regulatory and non-regulatory agenda, and the Government are pursuing that. The landscape is changing rapidly, just as customers’ needs are changing, and the financial services sector will need to change to take account of that. It is vital that the sector continues to meet the needs of ordinary consumers, including those who prefer to access banking services via a branch.

Once again, I thank the hon. Member for Brecon and Radnorshire for his continued work on the issue. Clearly, we all share appreciation of that. I would also like to thank all the others who have contributed today. The Treasury will continue to take the issue into account as it pursues the wider financial inclusion agenda.

Youth Unemployment and Bank Bonuses

Toby Perkins Excerpts

Monday 23rd January 2012 Commons Chamber

[Rachel Reeves]

The hon. Gentleman might be aware of the global financial crisis that took place. Between 1997 and the start of the financial crisis, unemployment and youth unemployment were falling in my constituency and nationally, and at the time of the last general election unemployment was falling. Now, it is rising.

Government Members are in denial about what is happening. The reality is that, over the past year, long- term youth unemployment has more than doubled. It is a reality that the Opposition recognise and would do something about, whereas Government Members ignore it.

[Toby Perkins (Chesterfield) (Lab)]

Is it not clear that what we have heard in the first moment or two of this debate is Conservative Members saying, “It’s all right, everything’s going great”? We have record youth unemployment, and all we hear from Government Members is laughter and complacency.

[Rachel Reeves]

I think many of our constituents watching this debate will say exactly that. The Government are in denial. Youth unemployment is at a record high, and Government Members say, “There’s not a problem. We don’t need to do anything about it. Everything is fine.” That is not the reality for our constituents.

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[Danny Alexander]

Hold on. I will give way to the former Foreign Secretary, but let me make just a little progress.

We are already providing more apprenticeship places than any previous Government, with an increase of 400,000 in the last year and a commitment to 1.2 million over the entire spending review period. That is at least 250,000 more than the previous Government’s commitment, although the shadow Chief Secretary seems to oppose that increase. As announced in the autumn statement, we are also launching a new £1 billion youth contract to help get young people into work, so that they can learn a trade and get equipped for their future career. Starting this spring, the youth contract will support up to 500,000 young people into education and employment opportunities. The youth contract wage subsidy is targeted at employers in the private sector, creating sustainable private sector jobs for the long term.

[Toby Perkins]

The Chief Secretary talks about the previous Government’s record, but I feel as if I am listening to a broken record, because when we are here to debate a motion about this Government’s policies, all we hear is him harking back to the last Government. Will he come up with something constructive about what he is going to do for the millions of people who are unemployed and looking to him for some guidance?

[Danny Alexander]

I fear that the hon. Gentleman was planning his question so carefully that he did not listen to my remarks about apprenticeships or the youth contract, which is a vast improvement on the wasteful future jobs fund, which offered subsidies almost three times as high as the youth contract and funded too many temporary jobs in the public sector. In fact, almost 50% of participants in that scheme were claiming benefits again within eight months of starting a future jobs fund job.

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[Danny Alexander]

I cannot give the hon. Lady that information—[Hon. Members: “Ah!”] I welcome her to her place and congratulate her on her election. In due course the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling) will provide that information. I can tell her, however, that Work programme providers are making a difference across the country, helping people to come off all sorts of benefits and acquire the necessary skills and support to get back into work.

[Toby Perkins]

rose—

[Meg Hillier]

rose—

--- Later in debate ---

[Toby Perkins]

Will the right hon. Gentleman give way?

[Danny Alexander]

No, I will not.

I mentioned the Financial Policy Committee of the Bank of England and its comments. That is why the FSA will scrutinise all proposed bonuses to make sure that they are not paid at the expense of rebuilding capital. There has already been some progress, with levels of bonus payment down significantly. Hon. Members should consider how far they have fallen. When the shadow Chancellor was a City Minister in the Treasury, bonus levels were £11.6 billion, whereas last year they were almost half that, at £6.7 billion. We fully expect them to fall further this year.

Autumn Statement

Toby Perkins Excerpts

Tuesday 29th November 2011 Commons Chamber

[Mr Osborne]

The seed enterprise investment scheme will provide 50% tax relief for all who invest in a qualifying start-up, even if they do not pay the 50% rate of income tax. The investment can be up to £100,000, although of course it can be much less. The companies involved can receive a maximum of £150,000. Those who have a capital gain can invest up to £100,000 of it in the scheme, and the amount will be tax-free for the next financial year. The scheme is aimed at small as well as slightly larger investors, and is designed to help start-up companies to obtain the finance they need.

[Toby Perkins (Chesterfield) (Lab)]

The last Chancellor to see interest rates go through the roof was not a Labour Chancellor, but the one who was advised by this Chancellor’s right hon. Friend the Prime Minister. If the Chancellor seriously thinks that the current level of interest rates is a sign of his success, will he consider any increase in interest rates to be a sign of failure?

[Mr Osborne]

We are doing all we can to keep our country safe in a debt storm. We need only look at the Italian bond auction today to see the market rates that Italy is paying. We are currently, in a debt crisis, borrowing money more cheaply than Germany. That represents a vote of confidence in the deficit plan of the United Kingdom.