Rebalancing the UK Economy

Anne Marie Morris Excerpts

Wednesday 3rd November 2010 Westminster Hall

[Mr Field]

I would not disagree with my hon. Friend in any way. It is the rhetoric, I think, of some policy makers, both in the present, but particularly in the past, that could have applied something of a barrier to that very ideal goal.

Rather than openly confronting some of those issues post-crisis, the implicit and perhaps all too easy assumption has been that, had the banking sector not collapsed through the profligacy and greed of some its employees and key players, we might have continued as we had before. There is also an assumption that to solve our current problems we need simply to return to what used to be the strength of a couple of generations ago—rebalancing the economy towards making things. The intensity of the rhetoric that has built up around the role of banks in the economy is such that politicians and even bankers themselves have often been unwilling to stand up for the sector.

Alas, that rhetoric has not subsided as time has passed. In fact, it is likely to intensify in the months ahead as the cuts bite and questions are asked about how and why Government money can be found to prop up the banks and pay out what I suspect will be another bumper round of bonuses this year while public sector jobs and services, as well as benefits, face the axe.

In response, Governments approach the financial services sector as something to be outwardly chastened, while they privately recognise its importance to the wider economy and rely on the continued income and jobs that it provides. In public, banks are told to lend to inherently risky start-ups—small businesses and first-time buyers. They are berated for trying to take the collateral that small business owners will often have tied up in their own property. At the same time, however, banks are told—indeed, they are required—to meet stringent new capital requirements. The new £2 billion bank levy is announced with a fanfare and the 50% income tax rate remains in place, yet the Treasury quietly acknowledges that it cannot put further pressure on balance sheets while storms are still gathering in the eurozone, which I think will be one of the big stories in the months ahead.

[Anne Marie Morris (Newton Abbot) (Con)]

This is a very interesting and timely debate about financial services. I declare an interest as a former City lawyer. I note with interest that you say financial services include lawyers, accountants and so on. Given that your concern is about publicity, do you agree that sometimes it is what some of the professional services have done themselves that has given rise to those problems? Furthermore, do you agree that, although it is not so much a City phenomenon as one related to smaller firms, the “no win, no fee” approach that law firms have adopted—as I say, it is usually adopted by smaller firms—has not really helped the cause of financial services?

[Mr Field]

As someone who is also from the “former lawyer” fraternity—I worked for a City law firm and I know that my hon. Friend worked for another City law firm over the years—I agree. There are elements of the ethics of business that concern me; I have never been a wide-eyed supporter of everything that has been done in the context of the City. Equally, it is important to recognise the City’s importance if this country is to get off its knees.

We witness, to an extent, the public baying for more blood after the banks have posted healthy profits, due, of course, to a combination of low interest rates, a lack of competition and a cut in corporation tax, yet the public are bemused when Government restrictions lead to increased bank charges for consumers.

Equitable Life (Payments) Bill

Anne Marie Morris Excerpts

Tuesday 14th September 2010 Commons Chamber

[Anne Marie Morris (Newton Abbot) (Con)]

I think I speak for Members on the Government Benches in refuting a number of statements made by the hon. Member for Derby North (Chris Williamson). It is not entirely correct to say that we have been dragging our feet. Compared with what the Opposition did in government, we have made considerable progress, which has been well documented. As for the hon. Gentleman’s contention about the state of the kitty, it is a wonderful idea to think that, when in opposition, we knew what was in the piggy bank. When we arrived and cracked open the piggy bank, it was very empty.

Equitable Life is a tragic episode and we in government have a huge responsibility to everybody in this country to get the outcome right. This is an issue not just of money, but of human tragedy. Like other Members, I pay tribute to EMAG. It has been phenomenal in persistently putting forward the cause of its members. I am pleased to say that it has helped a number of constituents in Newton Abbot make their case very powerfully.

Across the House, we all agree that compensation must and will be paid, but, as a number of Members have mentioned, there are two key issues. First, how are we to calculate the loss? Secondly, what framework can we put in place to ensure that when the loss has been calculated people are properly compensated? Tonight, many of the contributions have been about money, and fewer about the framework. I pay credit to the Financial Secretary for the thought that has been put into smoothing the way, once the figures have been sorted out, to ensure that that framework is in place.

The fact that we will be able to give tax exemptions is important. If people received payouts, only to be hit by a big bill from the tax man, that would be unacceptable. I am pleased that there is a provision to disregard from means-tested benefits the amounts that are ultimately paid out. That is to be commended.

On the loss, however, we must calculate two things, the first of which is the relative loss. Given that so many tortuous arguments have been put by so many people, it is important that we have time to get the calculation right. I should like the Financial Secretary to confirm that no fixed amount or limit will be set tonight, and that the money resolution will be left without any amount or limit.

On the calculation of that relative loss, I, like several colleagues, commend to the Government the ombudsman’s recommendations, which are absolutely on point. I am sure that the independent commission will give them a favourable run, too, but I share the concerns of Government Members about Chadwick’s proposals, which seem to have missed the point. If we calculate the ultimate payment on that basis, we will not do justice or live up to the pledges that we all made in good faith at the election.

[Guto Bebb (Aberconwy) (Con)]

I am grateful for the opportunity to follow on from that point. A constituent of mine has argued that the Equitable Life saga questions the credibility of both the legal and financial systems, and I tend to agree, but in the same way I do feel very strongly that if we base the compensation scheme on Chadwick’s proposals, there will be a question mark over the credibility of many Members who made commitments during the general election campaign, including, dare I say it, many Government Members. Does my hon. Friend agree?

[Anne Marie Morris]

I thank my hon. Friend for that charming intervention and most certainly agree. He makes a very good point.

Having worked out the right figure to pay, we must consider the second issue with regard to loss: how much money is it right, fair and proper to deduct when we get to the spending review? We have an obligation not just to Equitable Life members, but to the taxpayers of this country. I wish we were not where we are, but the piggy bank was empty. Nevertheless, I absolutely agree with previous speakers, because, if Front Benchers come out with the figure of 10%, I for one will be horrified, as that is not adequate compensation. We must be very careful to look at those figures in great detail and at the concept of fairness: what is the fair and right thing to do?

Finally, I am delighted that we are moving ahead with the issue quickly, because one concern of mine is that some of my constituents are now in their late 70s, so we need to sort this out for them, their children and their grandchildren. I am therefore pleased that we shall do so quickly, at the front end of next year.

[Several hon. Members]

rose—