LIBOR (FSA Investigation)

Viscount Thurso Excerpts

Monday 2nd July 2012 Commons Chamber

[Mr Osborne]

It is for the House of Commons and the House of Lords to pass a motion, so ultimately it is a matter for the House.

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

At the heart of this matter is a culture that has seen bankers go from trusted advisers to salesmen and clients go from valued clients to marks. Given that culture, is it not right that the Committee be asked to interview the Vickers commission again to see whether, in its view, ring-fencing is adequate following these events?

[Mr Osborne]

It would be entirely up to the Committee to call whomever it would want to call, and it might well want to speak to John Vickers, who has enormous expertise in this area.

LIBOR (FSA Investigation)

Viscount Thurso Excerpts

Thursday 28th June 2012 Commons Chamber

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. A lot of Members want to speak and I want to get everybody in, but we need brevity in both questions and answers.

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

This ruling surely confirms that the financial markets, as many of us suspected, have been neither free nor fair, but rather a sewer of systemically amoral dishonesty. Is not the case for separation of retail banking from merchant banking now so overwhelming as to be unanswerable?

[Mr Osborne]

I agree with my hon. Friend that we should separate retail banking from investment banking, but the best way to do that is through the ring-fence as proposed by John Vickers. We asked him and his distinguished commission to look at the structure of banks, and explicitly to consider the option that some had proposed of completely separating retail and investment banking. The commission considered and rejected that option, and instead proposed an approach that it thought would be stronger for financial stability, and particularly for the stability of retail banking. That is the ring-fence approach, for which we will now legislate.

Oral Answers to Questions

Viscount Thurso Excerpts

Tuesday 6th March 2012 Commons Chamber

[Mr Osborne]

I completely understand the concern about excessive and very high interest charges, which have been a problem for many years. I think it is better to tackle the specific abuses. The Government are conducting a review of the cost of credit to consumers, but by tackling very specific abuses such as the roll-over of loans and the use of continuous authority, we think we are getting to the really hard cases and abuses that we want to see ended. I have to say—this was certainly the view of the previous Government, too—that although it could be worth looking at, simply introducing a cap might have the effect of pushing a lot of people into a completely unregulated black economy. I am not sure that any of us would want to see that.

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

I remind the Chancellor of the excellent suggestions in the Treasury Committee’s report on the objectives of the successor body to the FSA, as they would certainly help consumers. Will he take the opportunity provided by the current legislation to give effect to those recommendations?

[Mr Osborne]

As I have set out before, we have listened carefully to the Treasury Committee and made all sorts of amendments to the Bill to take account of its recommendations, including changing the FCA’s remit to include competition. The Joint Committee chaired by my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) also proposed similar recommendations. We have listened to Parliament; thanks to those suggestions, we have made changes that we think will improve the Bill; and the Bill is now before the House and soon to be debated.

Oral Answers to Questions

Viscount Thurso Excerpts

Tuesday 24th January 2012 Commons Chamber

[Mr Hoban]

As the hon. Gentleman will know, the responsibility for commercial decisions is a matter for the management of RBS and Lloyds. He has flagged up a concern, and if he brings forward details of those matters, I will raise them with the chief executives concerned.

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

Following on from that question. Given that banks can lend only if they have capital and that 80% of financial transactions take place within the financial services industry, so that only 20% result in an end user, can the Minister say what steps the Government are taking to look at the marginal utility of the financial services industry, or what Lord Turner described as its “social usefulness”?

[Mr Hoban]

My hon. Friend makes an important point. It is vital that banks and other participants in the financial services sector play their full role in supporting growth across the economy and meeting the aspirations of families across the country. It is vital when banks are faced with difficult decisions about how to use their capital that they should focus their efforts on securing lending and boosting economic growth.

Civil List

Viscount Thurso Excerpts

Thursday 30th June 2011 Commons Chamber

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

Much of what I wish to say has already been said. I congratulate the Chancellor on what seems to be the beginnings of an elegant solution to a difficult problem. I wish to make three quick points for him. First, on the matter of principle, it is extremely important that the process does not become a formula that is reviewed annually which puts the whole of the household's finances into play on an annual basis. Whatever method is used for the calculations, it must be robust enough, as the previous debates that the shadow Chancellor cited made clear, to allow the dignity of the Crown across a period of time. That is an important principle.

Secondly, as other Members have suggested, we should consider exactly what we mean by the profit, because students of the Crown Estate’s annual finances will know that that is a highly variable figure, depending on the point at which we decide to look. It depends on whether it is the operating profit and whether there are movements in surpluses. There is one number that we might look at, which is not necessarily a profit but relates most closely to what might be regarded as the surplus cash within the Crown Estate: the annual remittance to the Treasury, which last year was £200 million or so. That is the figure that the Crown Estate remits to the Treasury, having considered what it wishes to withhold for future investment and having regard to the various discrepancies that come in the statement of total recognised gains and losses. The Chancellor might wish to look at that percentage, rather than a particular profit figure, and perhaps it could be made clear whether the grant is intended to be supplemental to that £200 million or part of it.

My final point relates to the Chancellor’s comment on the potential income from marine renewable energy, including wind, tidal and wave energy. It is rather curious that that sits within the Crown Estate at all. If we look at the precedent of the Forestry Commission, which was created in 1919, and to which the Crown Estate forests were transferred in 1923, we will see that it might be worth considering whether the marine estate should be transferred in its entirely out of the Crown Estate and possibly given to all the local authorities on the coast that could benefit from what is going on. That might be an interesting way of giving a direct benefit to local authorities on the coast, where marine energy could form the bedrock of a future economy, without having to trouble the Chancellor. I leave that little thought with him and again congratulate him on what looks like the beginnings of a very elegant solution to an old problem.

--- Later in debate ---

[Michael Ellis]

I see that that idea is getting agreement.

[John Thurso]

The hon. Gentleman has tempted me. Part of the 1760 settlement was that the Crown no longer had to pay for the Army. Would it be equitable for it to take back the Crown Estate and the entire Ministry of Defence Budget?

[Michael Ellis]

Now my hon. Friend is tempting me.

It is important to bear in mind, as Professor Vernon Bogdanor has stated in one of his treatises on subject—“The Monarchy and the Constitution”, I think—that it costs about the same to run the royal family as it does to run the Driver and Vehicle Licensing Agency in Swansea. I venture to suggest that the royal family attract far greater support from the British public than most institutions.

The issues at stake are important, and they are: fairness, accountability and transparency, and the necessary flexibility, which has not been built into the system to this point. As my right hon. Friend the Chancellor of the Exchequer has pointed out, the previous system, although not that old, was quite frankly archaic, bureaucratic and burdensome. It was also inflexible, so that if money was saved in one department—for example, in travel arrangements—it could not be spent on, say, repairing a leaking roof. The previous arrangements were unnecessarily bureaucratic, and they urgently needed reform to save taxpayers’ money and to save time. They also needed to be more accountable and transparent, which is what these necessary reforms will achieve.

If we take the trouble to look at how the money is spent, we see, for example, that £400,000 is spent on communications. I venture to suggest that much of that money is spent on communication with members of the public who write in to the palaces, and on other necessary duties, such as inviting to garden parties the tens of thousands of people—and it is, in fact, tens of thousands—who enjoy and appreciate visiting the royal households by invitation every year. This money is not spent on trifles; it is spent for the general public’s enjoyment.

The same thing goes for the palaces. Much of the expenditure goes on the maintenance of royal palaces. I venture to suggest that not even the few republican diehards whom we might find in this House would propose that the royal palaces be knocked down after the abolition of the monarchy and car parks built in their stead. Even in the absence of a monarchy—may God forfend—those palaces would have to be maintained. They might be museums or something similar, but they would still need the maintenance that they need now. In fact, they have been allowed to fall into a state of disrepair because of the lack of funds, which only makes it more expensive to repair them.

I also support the modernising arrangements as they relate to the Duchy of Cornwall. That is welcome, because in future the heir to the royal house will be able to secure funds and revenue from the Duchy of Cornwall without necessarily being male—that is, without being the Duke of Cornwall. That is important and follows other reforms, in the tradition of the Demise of the Crown Act 1901. Formerly, offices of the state were cancelled on the demise of the Crown. However, the various Acts that Parliament has seen fit to pass over the past 100 years or so have meant that such positions—ministerial positions, judicial appointments and the like—could continue. My right hon. Friend the Chancellor of the Exchequer’s further reform, making it necessary only for an Order in Council after the completion of one reign and the beginning of another, simply follows in that historic tradition.

I commend these measures, and I support them in full. I congratulate the Chancellor on bringing them forward, and I invite Members of this House to consider supporting Her Majesty in her 60th jubilee gift, which the House is currently considering.

Amendment of the Law

Viscount Thurso Excerpts

Wednesday 23rd March 2011 Commons Chamber

[Alison McGovern (Wirral South) (Lab)]

It is an honour to participate in the debate in which my hon. Friend the Member for Barnsley Central (Dan Jarvis) made his maiden speech. He made a really excellent contribution.

I want to comment on two aspects of the Chancellor’s statement: first, on inflation and the cost of living that people in Wirral and elsewhere are facing; secondly, on young people and employment. On inflation and the cost of living, we all need to acknowledge the global pressures that are causing price increases in the shops. Those pressures, including what is happening in the middle east and the price of food and other basic materials, make it more important that we get our policy right domestically. We have recently seen CPI inflation rise to 4.4% and RPI inflation rise to 5.5% in the UK, yet inflation for the EU as a whole is 2.8%. This picture of increased prices must also be taken into consideration in the context of our constituents whose wages are being held down. People have not seen an increase in their pay packets, but they are seeing price increases in the shops.

What is causing this inflation? I am well aware of the structure for setting interest rates and controlling price increases, and I look to the Governor of the Bank of England for an explanation as to why inflation has moved away from the targets. He says that

“three factors can account for the current high level of inflation: the rise in VAT relative to a year ago, the continuing consequences of the fall in sterling in late 2007 and 2008, and recent increases in commodity prices”.

He cites the Tory tax hike as having played a part in building inflation. My worry is not just about inflation this year, however; it is about people’s expectations of building inflation and the permanent hit that they will have on families.

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

Will the hon. Lady give way?

[Alison McGovern]

I will not, if the hon. Gentleman does not mind; I am conscious that other Members want to speak.

Labour rightly instigated a temporary reduction in the rate of VAT to help us through the downturn, but I am now worried because the Tory-led Government have implemented a permanent hike in the prices that ordinary people in my constituency face in the shops. That is clearly having a huge impact on our economy and threatening future growth, as has been illustrated by the reduction in the growth forecast.

On the increase in commodity prices which has also caused inflation, the Chancellor said in his statement that the UK would seek to have an impact on those prices through the G20. It is therefore incumbent on Ministers to explain how they are going to engage with our international partners to achieve that. There is no doubt that those worldwide events are having an impact on the streets of Bromborough, Bebbington, Heswall and New Ferry in my constituency, and I would like to know what action the Government are going to take in that regard.

I shall deal briefly with young people and employment. I know that Members across the House care about the issue, but we need to bring some words of caution to the debate. The Chancellor rightly reserved extra funds for the future training of apprentices, but money reserved does not equal apprentices hired. Other factors are necessary for getting young people into employment. The first, business confidence, is vital: businesses must have the confidence to invest. I refer hon. Members to what I said about the in-built inflationary expectations in the economy and what they might do to investment. It is a matter of great concern. A second necessary factor is growth, and it is worrying to see growth forecasts revised downwards. The Chancellor might have said that this was a Budget for growth, but I feel that it was all words and very little action. A final necessary factor is a change in culture, whereby businesses feel that it is their role to bring on the next generation. The current generation at work should be allowed to share their skills in the informal setting of the workplace to bring on the next generation.

I highlight, as always, the role of my own local authority. Wirral has shown great leadership in the sphere of encouraging small and medium-sized businesses to take on apprentices. However, the local authority cuts, which have been much greater in our area than in others, have put Wirral’s ability to play this role in jeopardy. The Government need to think about how they will bring about this change of culture in practice rather than simply reserve the funds and say they are there if business wants to take them.

Finally, I fear that Britain is seeing the end of any interventionist role for the Government. I feel strongly that the future jobs fund was an excellent answer to youth unemployment, but the Government have withdrawn from it. They say they are reserving funds for apprentices, but they are doing little more than that to encourage businesses to invest. We are also seeing inflationary pressures on the cost of living, which the Governor of the Bank of England relates to the rise in VAT. This is a price hike that hard-pressed families in Wirral and elsewhere can little afford. On those two issues that I have prioritised, I would like to see Ministers taking much more action.

Oral Answers to Questions

Viscount Thurso Excerpts

Tuesday 22nd March 2011 Commons Chamber

[Danny Alexander]

I certainly think that our Government have got their priorities right when it comes to lifting the burden of income tax on low-income workers. The increase in the personal allowance by £1,000, which will come into effect in April this year, will ensure that 880,000 low-income workers will no longer pay income tax. Furthermore, 23 million basic rate taxpayers will see a tax cut of £200 next year.

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

Has my right hon. Friend considered the letter sent to him by the chair of the tourism group of the Sutherland Partnership, which outlined the importance of tourism for employment in the area and the barriers that VAT is creating, particularly in relation to road fuel? Is there anything that the Government can do to mitigate that effect?

[Danny Alexander]

I have seen that letter and, as a fellow highland MP, I am fully aware of the impact that high fuel prices have on families and individuals. We have already taken steps to deliver a 5p duty discount to island communities, and I hope that we will be able to do what we can tomorrow, but that will be a matter for the Chancellor to announce in the Budget statement.

Fuel Costs

Viscount Thurso Excerpts

Monday 7th February 2011 Commons Chamber

[Stewart Hosie]

My hon. Friend touches on an important point. It has been mentioned already that car ownership is normally a sign of wealth and affluence, but in remote, rural and sparsely populated areas, people on almost every level of income, including those on low and modest wages, require a car. That results in their spending a disproportionate amount of their net disposable income on fuel.

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

A further point that the hon. Gentleman will recall from the many debates that we have had on this subject is that people in my constituency and elsewhere who earn below the average wage often cannot afford to buy good, modern cars. Their cars are therefore much more costly to run. That is part of the triple whammy that I remember talking about six or seven years ago.

[Stewart Hosie]

There are whammies after whammies, and the hon. Gentleman is right to say that the use of a car can be a necessity, and that people have to buy whatever they can afford. Also, if the roads are not quite as good as they ought to be in remote and rural areas, that can pose its own problems, especially in winter.

There are three key issues in this debate. The first is the lack of choice, which is very important. The second, which I hope urban Members will recognise, is the fact that the average mileage per year travelled simply to access essential services in rural areas is 8,794 miles. The comparator in urban areas is 5,200 miles. So the people in rural areas have no choice, and the distances that they have to travel are far greater. On top of that, the third factor is the price of fuel.

I am grateful to the BBC, which reported on 22 January that the RAC Foundation had found that some filling stations in Orkney were charging £1.50 a litre, which is £6.82 a gallon. An increase of only 4p or 5p per litre would result in the £7 gallon, which, because people have no choice, they would have to pay in order to travel the greater distances necessary in rural areas to access the services that most of us take for granted.

The time for talk and promises on fuel is over. There is now an absolute necessity for the Government—both bits of them—to deliver on their promises. We need to put the stabilisers on rocketing fuel prices now, before the brakes are slammed down on any chance of economic growth.

--- Later in debate ---

[Robert Halfon]

rose—

[John Thurso]

rose—

[Justine Greening]

I will give way to my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso), because he tried to intervene earlier.

[John Thurso]

I think I heard the Minister quote from a letter from members of the SNP saying that they had thought of the derogation first. In fact, it was first raised in the House of Commons in 2000 by my predecessor in the constituency, now Lord Maclennan. I fleshed it out in a debate that I held in Westminster Hall in 2001, and I think I have raised it every year since then. Given that the matter was raised over a period of 12 years, is it not commendable that this Government have done more in six months than the last Government did in those 12 years?

--- Later in debate ---

[Dr Whiteford]

rose—

[John Thurso]

rose—

[Kerry McCarthy]

I want to conclude now. I have taken quite a lot of interventions, and hon. Members will have the opportunity to pose as many questions as they like in their own speeches.

Finally, I ask the Economic Secretary to confirm several things. Has the Conservative party dropped the fuel duty stabiliser policy in the light of the OBR’s fairly clear and damning verdict on its practicability? Is the policy now restricted to the rural derogation, and what time scale does she think would be appropriate for its introduction? It will take some time to get it through the EU, and considerably longer to roll it out to the UK as a whole. In the meantime, is she actively considering the impact of the VAT increase on fuel prices? That is hitting people now, and not an issue for the future.

--- Later in debate ---

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

There are two issues in the debate, which I would like to try to disaggregate. One is the high premium paid in rural areas and the specific circumstances that apply to it. The other is the general high cost of fuel in the country. Let me deal with the two separately.

Briefly, the derogation for rural areas exists because there is a premium to be paid in those areas. Many Members have provided the arguments, so I will not go over them all again. However, I would point out that it exists not simply because there is a premium. I have researched the issue over many years, so I can tell hon. Members that I have often found that a certain petrol station in Sloane avenue is in the top three or four for prices. That shows that it is not simply a matter of high prices; the problem is that there is high price, a premium and a lack of public transport, coupled with the other deprivation typically seen in the more remote rural areas. It is not high prices alone, but the combination of all those factors that counts.

Secondly, as a number of hon. Members mentioned, I wrote a paper on this subject and it dealt with all the elements that cause worry—imperfectly, I am sure, but the hon. Member for Wallasey (Ms Eagle), who was the Exchequer Secretary at the time, took it seriously and her officials looked at it, so it was reasonable enough. I would like to think that the imperfections contained in that scheme are currently being ironed out and that we will shortly know what the Government intend to put forward.

I want to deal more fully with the other question of the generally high price of fuel. I commend to anyone who has not yet had a chance to read it the note produced for this debate by the Library. Among other things, it contains some very interesting facts. For example, it points out that for a number of years, the cost of motoring has actually gone down in this country in real terms, whereas the cost of public transport has by comparison gone up. One of my successors as Liberal Democrat transport spokesman often used to point that out.

It is also interesting to look at the percentage of tax take. The total has varied from a high of about 89% at one point in the ’90s down to the high mid-50s and now back up to 63%. The tax take in real terms today is about equivalent to that of 1997-98. We need to get our facts right and look at the issue in perspective.

We need to take account of some of the external factors. They must include the fluctuation in the oil price, which has once more hit $100 a barrel. A number of economists believe that that is merely a resumption of the upward trend that existed before the recession. It is entirely possible that the price will rise further, in which event we shall have to deal with the consequences of a high fuel price for our economy.

I congratulate the Government on giving thought to the introduction of a fuel stabiliser, although I have some doubts about the practicalities. There is only one thing worse than a stabiliser that works, and that is a stabiliser that does not work, so if we are to have one, let us ensure that it works. However, we might consider how the Government could, as it were, be removed from the equation. There are a number of possibilities, and I should like my hon. Friend the Minister to investigate them.

The first possibility involves VAT. When the last Government reduced it to 15% they also increased duty by 2p, and that remained when VAT rose again. Thus a relationship was established between VAT and duty. I suggest that the reverse should apply: that VAT on fuel should be 5%, in line with VAT on heating fuel, and that the duty should be altered to an amount that the Government considered appropriate. That would remove the variability that comes from the market. It would not affect the Treasury, and it would not have some of the deficiencies of the stabiliser. It is an imperfect mechanism, but it would be of some small comfort to know that when the price at the pump rose, it would be largely a result of what the oil companies were doing rather than what the Government were doing.

[Albert Owen]

I agree with the principle of a stabiliser. However, the Government talk of having “inherited” the duty increase. In 1997, the Labour Government inherited a Conservative proposal to raise VAT on domestic fuel and then “disinherited” it. Is the hon. Gentleman suggesting, as I am, that the Conservatives should “disinherit” the duty increase? That would help people in his area and in mine.

[John Thurso]

I am, in fact, presenting the Minister with a novel suggestion which I hope he will consider in the Treasury, and which might benefit us all.

Let me make another point about the current regime. I happened to note that if the escalator were introduced, it would be based on the retail prices index. Perhaps the Minister would consider basing it on the consumer prices index, which would be in line with the rest of Government thinking.

Finally, let me express a view on an issue that I studied in some detail when I was my party’s transport spokesman. I believe that the whole way in which we tax fuel is wrong. In my opinion we should not tax it at all, but should adopt a proper method of variable road user charging. Through that mechanism, we could both raise the amount of money that we wish to raise and incorporate all the fairness that we seek. It would require those who are most able to find alternatives, and who use the most congested roads, to pay the most, while allowing those with the most need—most of whom live in the least congested areas—to pay the least, and it has been suggested by most academics in the field of transport.

I have a funny feeling, Madam Deputy Speaker, that when I first raised the issue of road user charging in a Westminster Hall debate in 2001, it was you who responded from the Dispatch Box. I hope that the Government will seriously consider introducing such a system, because it would enable us to escape from the groundhog day of the fuel duty debate which comes round at least once a year, and adopt a sensible method of charging for road use that would be both green and economically efficient.

Oral Answers to Questions

Viscount Thurso Excerpts

Tuesday 16th November 2010 Commons Chamber

[Mr Osborne]

One does wonder where the hon. Gentleman has been for the past couple of years. We are picking up the pieces of the biggest banking crash of our lifetimes, caused by the poor regulation of the previous Government. Since coming to office, we have announced major changes in regulation, putting the Bank of England in charge—which we still do not know whether the Opposition support—and a permanent bank levy, which was opposed by every single Labour Member during the general election. We are determined to sort out the problems left to us by the previous Government.

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

The enterprise finance guarantee scheme was specifically designed to help small businesses to get bank finance. It has not worked, and many companies feel that it has not assisted them. What is my right hon. Friend doing to ensure that the scheme plays a full part in helping companies to get finance?

[Mr Osborne]

The first thing that I would say to my hon. Friend is that, of all the schemes that we inherited, this was the one that we thought had the most chance of improvement and was worth investing in. The other schemes had almost no take-up, but this one did. We were able to provide some additional money for it in the Budget, in the form of £200 million to support additional lending. We are also introducing changes to the way the schemes work, so that there will be a limit of 20 business days that all major lenders taking part in the enterprise finance guarantee scheme will have to comply with, so that people are not left on the hook waiting for an answer.

Finance Bill

Viscount Thurso Excerpts

Tuesday 6th July 2010 Commons Chamber

[Danny Alexander]

As I understand it, the House of Commons analysis does not include the impact of all the measures in the Budget. VAT is paid much more in cash terms––that has been accepted by the Institute for Fiscal Studies––so it is paid more by the wealthiest. The analysis that we should rely on is that which is presented in the Budget because it shows that the distributional impact of the Budget measures hits those on highest incomes hardest. That is the relevant measure and the one that I intend to draw attention to.

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

I commend my right hon. Friend on the fairness that he has ensured runs right through the Budget, especially in respect of pensioners, but may I draw his attention to one small potential unfairness that may have crept in? Pensioners who are on a modest works pension and the state pension will pay £100 more in tax this year than they did last year because of the difference in the thresholds. I am sure that this was inadvertent. Will he look again at that particular issue?

[Danny Alexander]

I am grateful for that intervention. I am sure that my hon. Friend will have the chance to raise that point either in Committee or on the Floor of the House when the Bill is considered.