Bankers’ Bonuses and the Banking Industry

Debate between Cathy Jamieson and Richard Fuller

Wednesday 25th February 2015 Commons Chamber

[Cathy Jamieson]

I am now becoming a bit confused about what Conservative Members are arguing for here. Do they want more or less regulation? [Interruption.] Did I hear someone say both? The important issue here is to ensure that regulation is fit for purpose, and that we do not simply have more of the same when we talk about new entrants into the banking system.

[Richard Fuller (Bedford) (Con)]

Let me help to clarify the matter for the hon. Lady. The point that she was trying to make is that having an enormous amount of regulation can be ineffective and bureaucratic, but, equally, having too little regulation will not work. What we need is effective regulation. One of the most effective aspects of regulation, when it comes to changing behaviour, is the potential for criminal prosecution of those who do wrong. That is not mentioned in her motion. Will she address that during her speech?

[Cathy Jamieson]

I thank the hon. Gentleman for giving some clarity. He is absolutely right that regulation is part of the process, but we also need a culture change and an attitudinal change. He is correct to identify the lack of prosecutions. Although that is not mentioned specifically in the motion, I recommend that he reads Labour’s document, which takes account of that point. Our agenda is not entirely punitive, because it is driven by economic imperatives. We all know that the performance of the banking sector is vital to the health of Britain’s economy. It employs more than 1 million people, each of whom has an important role to play in advising businesses and consumers, and helping them to manage their money, invest wisely and plan for the future. Without the banks, consumers would be unable to save and borrow. Businesses would not have access to the patient finance that they need if they are to grow and to create high-quality, well-paid jobs.

Too often in recent years, many banks have fallen short of the very high standards that we expect of them; that is a view shared across the House. In many instances, they have not acted with trust and they have not acted fairly. At times, they have acted recklessly and unethically. Instead of helping their customers, they have exploited them.

Banks and their employees operate in a high-skilled environment, dealing with sophisticated financial instruments that are often beyond the ken of the average consumer and small business owner. Rather than using that knowledge to guide and advise consumers, they have, in some instances, abused that knowledge to exploit them. In investment, consumer and business banking, banks have betrayed the trust of customers and undermined the integrity of the industry. In doing so, they have totted up some truly colossal sums in fines.

Indeed, 2014 was a record year for fines in the City of London, culminating in the £1.1 billion fine levied by the Financial Conduct Authority on five banks, including HSBC and the Royal Bank of Scotland, for their part in the forex fixing scandal. In recent times, four UK banks—Barclays, HSBC, RBS and Lloyds—have also paid £1.5 billion in compensation for mis-selling interest rate hedging products. Other recent scandals include LIBOR fixing and the mis-selling of payment protection insurance.

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[Cathy Jamieson]

No, I am going to finish the point that I began.

Bonuses are a reward for exceptional performance in other industries, so that should be the case in the banking sector as well. However, despite the scandals that have emerged over the past year, most recently at HSBC, it looks as though this year’s round of bank bonuses will once again be very generous.

There needs to be more accountability in banking, and pay must be more closely aligned with long-term performance, so a Labour Government will embark on a serious and far-reaching programme of reform in the banking sector. We will reintroduce our successful tax on bankers’ bonuses, which generated over £3 billion in 2010, and act to ensure that this tax incorporates role-based pay or any other payments made by banks in an attempt to circumvent the EU bonus cap.

[Richard Fuller]

Will the hon. Lady give way?

[Mr Marcus Jones (Nuneaton) (Con)]

Will the hon. Lady give way?

Financial Services (Banking Reform) Bill

Debate between Cathy Jamieson and Richard Fuller

Monday 8th July 2013 Commons Chamber

[Cathy Jamieson]

The hon. Gentleman makes a useful and probing point—I wish I had had the opportunity to probe the Government’s proposals in the same way. The point is to look at patterns of behaviour and conduct. The important thing is that this change or anything that the Government introduce should be robust and should stack up. That is why I was particularly keen to know how the Minister sees this issue being taken forward. However, I recognise that there is a wider context, so if he could respond by giving me some assurances on this issue, I would probably be tempted not to press new clause 7 to a vote.

Let me briefly mention new clause 11, which deals with criminal sanctions. New clause 11 was also inspired by the work of the Banking Commission. It would require the Government to bring forward proposals for the new offence of reckless misconduct in the management of a bank covering the people licensed under the senior persons regime and would seek civil recovery of money from people found guilty of the offence. Although that might be controversial in some areas, it is important. I welcome the fact that the Government now seem to be moving on this, and I await the detail with interest. It is vital that bankers are held to account for their actions. That is important not just for any action after a future crisis, but as a deterrent, should any bank executives be tempted to take unnecessary or reckless risks.

[Richard Fuller]

I do not wish at this moment to be unduly partisan, but could the hon. Lady advise us on the evolution of the Opposition’s thinking? Was the imposition of criminal sanctions for the reckless management of banks discussed in the previous Government?

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[Cathy Jamieson]

I am sure the hon. Gentleman will not be surprised to learn that I am not going to go into the detail of that case. He has had a career in the banking sector dealing with such issues, and he will be as aware as I am that looking at one case in isolation is sometimes not the best way to appreciate the overall picture. The overall picture is what I am interested in, and why I specifically mentioned LIBOR, because it is already a criminal offence to attempt to fix that rate. We need to seek to ensure that the SFO has the resources necessary to tackle this and to prevent any further scandals.

We have tabled new clause 13 to give Parliament a chance, once again, further down the line to discuss the creation of a new agency, and we hope it would send a firm message to those tempted to engage in criminal conduct. I hope that the Minister may be able to say something more on that in his response. He did not seem to be persuaded in Committee of the need for a new unit or even a subdivision. My recollection is that he took that view, “Its all fraud and there is no need to have a specific unit or part of an organisation dealing with it.”

I think I have covered a number of issues relating to these proposals. Once again, it is important to put on the record the fact that although we have had the opportunity to raise some of these issues in Committee and this evening, it is unfortunate that on Report we are not going to be able to scrutinise the detail of some of the new clauses—it is fair for us to assume that they might have been tabled at this stage. I seek the Minister’s further reassurance that we are going to get the important detail of how he intends to proceed, that we will see as much as is possible of the draft new clauses and legislation as things are taken forward, and that we will have an appropriate opportunity to discuss all that further in this place.

[Richard Fuller]

I am very grateful for the opportunity to catch your eye, Madam Deputy Speaker. I wish to discuss the proposals in this group, particularly new clauses 11 and 2. I am not a member of the Treasury Committee, I was not a member of the Parliamentary Commission on Banking Standards and I was not even on the Public Bill Committee, so I hope that other hon. Members will permit me to make a few perhaps less-informed commentaries about these proposals on conduct and remuneration, and the issues they raise, and perhaps come at this from a different perspective.

May I start by thanking the commission for its work on this issue and, in particular, my hon. Friend the Member for Wyre Forest (Mark Garnier), who made an extraordinarily strong contribution? Collectively, they have a much greater claim than Goldman Sachs to have been doing God’s work on financial services. I thank the Government and congratulate them on their speedy response to the recommendations. I also thank the Minister for allowing us to see the document ahead of today’s debate.

I remember the evening when the membership of the commission was established. It was a late evening, and quite warm. It might have been 10.30 pm, 11 pm or even later and hon. Members were keen to get back to their duties in responding to their constituents. I got up to speak with some trepidation, as hon. Members were hoping that the membership would go through on the nod, to make the point that for my constituents in Bedford and Kempston the commission would fail in its duty if, as a result of its actions, nobody went to jail. It is in that spirit that I want to comment on the new clauses today.

Finance Bill

Debate between Cathy Jamieson and Richard Fuller

Monday 1st July 2013 Commons Chamber

[Cathy Jamieson]

I find it astonishing that Government Members never seem to take any responsibility for what is going on under their watch. Under their watch, the deficit has not come down as much as they promised, borrowing is higher than planned, and the Government have failed to get growth back into the economy.

[Richard Fuller (Bedford) (Con)]

The hon. Lady made some important and passionate points about the impact of being worse off every year by £800, which is a big amount of money for many of my constituents. Given that we have just broadly agreed public expenditure figures for the next Parliament, does she feel that if this is a point of principle it is beholden on her to answer the question posed by my hon. Friend the Member for Nuneaton (Mr Jones) about whether a Labour Government would stick to their principles in the next election?

[Cathy Jamieson]

I can say to the hon. Gentleman that yes, we would stick to principles of fairness and equality, and we would not seek to advantage those who already have the highest incomes at the expense of those on lower incomes. Once again, I repeat what a number of Labour Members have said: at this point we do not know in what shape the economy will be two years from now, and as a responsible Opposition we intend to look in detail at where spend would be best put in the years ahead.

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[Cathy Jamieson]

I always listen with interest to what the hon. Gentleman has to say, and I know from his contributions in the House and in Public Bill Committees that from time to time he scrutinises the Government fairly thoroughly. There is a difference between saying that the overall spending limit put on by the Government will be our starting point, and accepting their approach in full, which is not what the shadow Chancellor has said, of course. He has made it clear that we would look at that overall spend and see how we could allot resources more fairly.

Despite the fact that the Government tried to make much of fairness in the spending review, let us look at the millionaires who will benefit from the tax cut. First, 643 bankers earn more than £1 million and the combined tax cut will be worth £34.6 million to them—[Interruption.] There is a lot of grumbling and other muttering from a sedentary position by Government Members. If they wish to speak, they will be able to do so later.

My constituents want to know how the Government can justify that tax cut for millionaires at a time when those on middle and low incomes are being squeezed so hard. I can understand why the public are angry and why they do not feel that the Government are acting fairly. They see many people on massive salaries that ordinary people can only dream of and working in the very same banks that were bailed out by the taxpayer now receiving a handout from the coalition. People do find that difficult to understand. That is why our amendment would require the Chancellor to consider the effect that the tax cut will have on the level of bonuses in the financial sector. That is what the taxpayer—ordinary people trying to make ends meet when their living standards are being reduced—wants to know.

[Richard Fuller]

The hon. Lady makes a good point about the impact on bonuses. Does she welcome the recommendation from the Parliamentary Commission on Banking Standards, which the Prime Minister has accepted, which will change from very short-term bonuses to long-term ones? Would not that mitigate some of the very real concerns that she has mentioned?

[Cathy Jamieson]

I am glad that the hon. Gentleman recognises the points that I have made. He will, of course, be aware of some of the discussion that took place in Committee on the Finance Bill and the Financial Services (Banking Reform) Bill. It is unfortunate that the Government chose not to accept our amendments to those Bills, and so far we have not seen legislation to enact the change that he mentions. I look forward with interest to further debates on that subject at a later date.

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[Cathy Jamieson]

I look forward to the hon. Gentleman’s contribution in our future debates about the possibility of a mansion tax and a reduction to a 10p rate. I always listen with interest to what he has to say, but on this occasion I have to say to him that the first year of the new rate is not a real basis for estimating the revenue raised, or likely to be raised, by the 50p rate.

The Government should be tackling tax avoidance. We all want to see that, and we will be debating it more when we discuss later clauses.

[Richard Fuller]

rose—

[Cathy Jamieson]

I will give way to the hon. Gentleman, as I know he takes this issue very seriously.

[Richard Fuller]

I wish to take the hon. Lady back to the impact of the bankers bonus tax on getting young people back to work, because I do not think she had the numbers to hand. May I just indulge you with some statistics, in order to help the Opposition, Mr Speaker? Last year, the bankers’ bonus total was £5.2 billion. There are 61,000 young people who have been out of work for more than a year. Much of that £5.2 billion would have been paid to taxpayers who are not UK-resident—they will work for a UK bank but not be resident here—but let us assume that it is all paid to UK residents. An increase in the rate from 45% to 50%, as the Opposition are proposing, would yield £260 million a year—the equivalent of £4,500 per young person out of work. Is the basis of her argument that £4,500 is enough to employ a young person who has been out of work for more than a year?

[Cathy Jamieson]

I thank the hon. Gentleman for his information; I gave way to him because I know he takes these issues seriously. As with a range of other issues, we would have to look—if the bankers bonus tax was brought in—at the circumstances at the time and how best to get young people into employment. Other hon. Members will have heard me speak about this issue before, but I can tell the House that we believe young people and those who have been out of work for two years ought to accept that there will be a compulsory jobs guarantee. From speaking to a number of small businesses and some of the larger ones, I know they believe that a range of things could be done to encourage them, as local companies and national companies, to take on young people and get them into employment.

Where the Government have done things that we think are helpful, for example, in relation to national insurance contributions, we have supported them. As has been said, we do not accept that the move away from the future jobs fund was the correct thing to do.

Beer Duty Escalator

Debate between Cathy Jamieson and Richard Fuller

Tuesday 5th March 2013 Westminster Hall

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship this morning, Mr Caton. I thank the hon. Member for Nuneaton (Mr Jones) for securing this important debate. As a number of hon. Members have suggested, there is a certain sense of déjà vu, given the number of debates that there have been on the issue, but the timing of this debate, ahead of the Budget, is critical.

I stress at the outset that a number of my hon. Friends have let me know that they would have liked to participate in this debate, but they were not able to do so because of other parliamentary business or commitments that they had already made. I hope that we can continue with the generous spirit in which the debate has been conducted, and focus on a number of issues that Members on both sides of the House would like the Minister to answer—although that is not to say that I will not make some reference to the previous Government’s position or press the Minister on some questions that I think all of us would like to be answered.

It is important to recognise, as many hon. Members have, the organisations that have briefed Members and allowed them to make visits and listen to representatives of the industry in their constituencies. Those organisations include the British Beer and Pub Association, the Society of Independent Brewers, the all-party groups on beer and on pubs and the Campaign for Real Ale. I have worked closely with CAMRA in my constituency; I had the joy of judging one of the beer competitions at a local real ale festival, for which I thank the local CAMRA organisation. We also heard about representations made by the TaxPayers Alliance and The Sun.

I always enjoy such debates, because they allow us to have, as one hon. Member suggested, not just a brewery bingo, but a pub bingo. They give us a list of places to visit when we travel around the UK when not involved in parliamentary business.

A number of hon. Members have talked about the importance of the wider brewing industry and of manufacturing. There is also, of course, the bottling sector, from which representations have also been received. We have discussed small and medium-sized enterprises, micro-breweries, the rural economy, and the focus of the pub trade as a base for the local community. The hon. Member for Montgomeryshire (Glyn Davies) recognised the impact on elderly people and the important social role that pubs play in the community. We also heard about the charitable events and the various activities that pub goers regularly get involved in.

In his opening speech, the hon. Member for Nuneaton praised the Minister as a listening Minister. He recognised the need to deal with the deficit and welcomed, as I have, some of the actions taken on fuel duty. He urged the Minister, as other hon. Members did, to assess whether the escalator was disproportionate. I will return to that issue with some specific comments for the Minister to consider.

My hon. Friend the Member for Stoke-on-Trent North (Joan Walley) talked about responsible drinking, which is important. Like her, I spent some time working in the voluntary sector before becoming a Member of Parliament. I have worked in a project that dealt with homeless people with drinking problems. I have also spent some time, when I was a social work student, working at a drinking problems unit in a psychiatric hospital. I have seen the difficulties and problems that emerge when people get involved in problem drinking. One theme that has come out from the discussion is the importance of the pub sector in providing a different ethos, culture and way for people to consume alcohol enjoyably and responsibly. We are all concerned to ensure that that continues.

Whatever regimes are put in place—this is where there is a VAT issue—to support responsible drinking, we all want to ensure that supermarkets are not given an unfair advantage over the pub sector. A number of hon. Members have talked about that. Regarding VAT, I do not think my hon. Friend the Member for Nottingham South (Lilian Greenwood) intended to make a hugely party political point—perhaps a slightly party political point. This important issue needs to be addressed.

The Opposition believe that the Government made a mistake in 2011 in increasing VAT, which had an impact not only on the pub trade, but more widely on families and businesses around the country. That rise, which was equivalent to a 12% increase in tax for the industry, was in the same year that the coalition introduced the biggest ever pence per pint increase in beer duty.

[Richard Fuller]

We all know that the last Labour Government left a crippling deficit for this coalition Government—I am being slightly party political—who have had to clear up the mess that they left behind. The escalator increases taxes on working people who enjoy a pint. Does the hon. Lady think that it was a mistake in principle for the last Labour Government to introduce that to our taxation system?

National Lottery Reform

Debate between Cathy Jamieson and Richard Fuller

Thursday 22nd July 2010 Westminster Hall

[Richard Fuller (Bedford) (Con)]

I am indebted to you, Mr Benton, and to the Minister for the opportunity to debate the national lottery and the Big Lottery Fund.

Although I will focus my remarks mainly on issues relating to social enterprise, I would also like to pick up on a critique that was made of my hon. Friends the Liberal Democrats, suggesting that they had not noticed that there was a financial crisis. Those of us who witnessed the extraordinary sense of denial about the financial crisis in the last Government regard that as a somewhat breathtaking criticism. Perhaps a few minutes in front of the mirror might be worth while for Labour Members. Such comments undermine some of the good points they were making, particularly the exhortation regarding the importance to charities and social and voluntary organisations of long-term planning—something that was particularly absent in the latter months of the last Government.

Before looking at social enterprise and the implications of the statements that have been made today, I want to ask the Minister whether as part of his review of the lottery since 1994—I think he mentioned small tweaks on the tiller—he intends to look at some of the concerns about the impact of the national lottery on gambling. In particular, will he look at the regressive nature of the lottery in taking money from people on low incomes and its general impact on encouraging people to gamble? Those are not necessarily substantive points for the review he mentioned today, but it would be helpful for hon. Members to know whether such matters will be part of it.

In my comments on social enterprises, I am informed by and indebted to the Social Enterprise Coalition and to Michele Rigby. Michele runs Social Enterprise East of England, which is based in my constituency. I would appreciate the Minister’s response to a couple of questions. The first relates to regulation and registration. There are concerns that too tight a focus, particularly on charitable purposes, will have the unintended consequence of rendering a number of social enterprises unable to undertake the very important work that many hon. Members on both sides of the House want them to continue.

In a recent survey, 62,000 social enterprises were listed. Many of us might think that the number is much more substantial, but there are certainly 62,000. If I may, I shall give the Minister the relevant numbers in case he does not have them to hand. The maths does not add up to 100%, because of double registration, but 37% were listed as registered charities, 59% as companies limited by guarantee, 17% as community interest companies, 12% as industrial and provident societies or co-operatives, and 9% came under other forms of registration.

Can the Minister provide some assurance that as we look to the ways in which the big society’s remit is written, social enterprises that are not listed as registered charities will not be excluded purely on that basis? As the organisations are regulated in a number of different ways, it will be important to consider that as well. Those registered under a trust deed or a charitable constitution are, I think, registered and overseen by the Charity Commission.

[Cathy Jamieson]

Given the hon. Gentleman’s support for the social enterprise and co-operative sector, which I welcome, does he agree that it would be somewhat iniquitous if independent, private schools, which have charitable status, were able to apply for some of the funding when some of the very organisations that he describes would not be able to do so?

[Richard Fuller]

The hon. Lady makes a very wise point, from her point of view. In my constituency, there are splendid independent schools, which are fully involved in their charitable endeavours and do not see a conflict between the two, but see them as mutually reinforcing.

I was making a point about the registration of social enterprises. I think that companies limited by guarantee are regulated by Companies House, and community interest companies obviously have their own regulator, so will the Minister be kind enough to confirm that in the regulation of social enterprises, that will not be listed as the sole reason for their exclusion under the new rules? That would provide a lot of reassurance to many of the organisations that we are talking about.

My next point is about the important principle of additionality, which now applies in a very different economic circumstance for our country. At a time of retrenchments and necessary deficit reduction measures, it is easy to call that principle into question. That would be unfortunate. However, there are some potential tensions between the principle of additionality and the other goal—promoting the big society—part of which I have addressed through the registration of social enterprises. If we want the big society taken from a vision to a reality, we shall have to rely on the vibrancy of our social enterprises and small community groups and their ability to step up and achieve the things that we are talking about. There is a fierce urgency about enabling those organisations to have the capacity in place to do that. The hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) made a very good point about that, which I shall turn to in a minute.

As the Minister rightly said, the issues about disbursement are correctly at arm’s length. We would not like political interference in that, but can he give me some idea of whether there will be any review of the guidance to disbursement organisations, so that the overall ambitions that we all share, of seeing a more vibrant civil society and social society, are not affected because of the urgency of the times in which we are living?

My next point is about capacity building versus short-termism. In many of our constituencies, there will be charities and non-profit organisations that have been delighted to receive funding from various sources—not just national lottery schemes, but other sources. For 18 months or two years, they can start to live their dream and build their future, but then they are cut off precisely when they are starting to get traction. One concern about the programmes under the previous Government was that a solution was never found—presumably because it is extraordinarily difficult to find one—to overcome that problem.

Capacity building in social enterprises is more important now than it has ever been. We shall be relying on social enterprises to take on many more responsibilities than they may have anticipated, to achieve many of our social goals. In the review, will the Minister consider carefully how lottery funding can focus on capacity building? There have been very sensible recommendations from a number of Members, particularly the hon. Member for Kilmarnock and Loudoun, about low-cost applications. Making applications really is a bugbear in terms of an organisation’s capacity to apply and the cost of applying. There should also be more encouragement for multi-year funding of social enterprises and charities, because with that effort in place, there will be a much better long-term impact in our communities from the good works that are the objective of the national lottery fund.