Consumer Insurance (Disclosure and Representations) Bill [Lords]

Jim Shannon Excerpts

Tuesday 6th March 2012 Commons Chamber

[Chris Leslie]

I join the Minister in welcoming the Bill. It was prompted by a Law Commission report in the days when we had a Labour Administration. The recommendations were made back in 2009, and I am glad that the present Government have seen fit to accept them,

As I said earlier, these are incredibly important changes. They put some of the more opaque and obscure elements of common law and voluntary codes into a more statutory form, thus placing them beyond doubt. They update the law in relation to pre-contractual disclosure and clarify the rules about misrepresentation, making a distinction between consumers who, perhaps unknowingly, misrepresent their circumstances, and those who knowingly mislead insurers.

There have been circumstances in which insurers have used the opacity of the common law to take advantage of consumers who were unable to make a claim because they did not disclose a particular aspect of their lives to the insurer at the time of the contract. In some particularly insidious examples, people who had developed cancer or multiple sclerosis were unable to receive insurance payments because, although they had not known that early symptoms might develop into a more serious long-term condition, their insurers told them that they should have mentioned a tingle in their feet, or some other symptom that no one would expect to be the beginning of a more serious disease. I am glad that the Bill will close some of those loopholes.

We do not want consumers to have to have recourse only to the Financial Ombudsman Service to gain redress. The current rules are inadequate, we need the courts to be able to rely on clearer legal statute to clarify the arrangements, and the Bill achieves that. It abolishes the consumer duty to volunteer information in a more general, non-specific way. It also clarifies arrangements for group insurance, life insurance and rules on intermediaries. We therefore think this is an important Bill. I am glad we have touched on some of these important questions, including the state of the motor insurance industry and why more action needs to be taken to help consumers in that regard.

[Jim Shannon (Strangford) (DUP)]

In this Bill, has consideration been given to the differentials in prices across the United Kingdom? Northern Ireland has the highest insurance premiums in the entire United Kingdom. Is it not time to have the same competition in Northern Ireland—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We are now on Third Reading, and questions must be relevant to that stage.

Fuel Duty (Northern Ireland)

Jim Shannon Excerpts

Wednesday 22nd February 2012 Westminster Hall

[Ms Ritchie]

Thank you, Mrs Main. I thank the hon. Member for North Antrim (Ian Paisley) for his long intervention. I could not agree more—rural communities, particularly in Northern Ireland, are more deeply affected because they rely totally on car transportation. There has been insufficient investment in public means of transportation—a matter for the Northern Ireland Executive—and no doubt the Minister will take care to pass that on. We will no doubt pass that point on as individual Members of Parliament from Northern Ireland.

I will highlight specifically the problems faced by businesses and consumers in Northern Ireland, but those problems do not exist in a vacuum. We must consider the scale of the problem confronting consumers across these islands. The Automobile Association’s latest data, from industry price trackers Experian Catalist, showed that the latest average pump prices for petrol are 134p, compared with 128p a year ago, and 111p in mid-January 2010. That is within sight of the record prices witnessed last May. Indeed, the average price of diesel has just hit an all-time high at an average price of 143p. The AA reported that in Northern Ireland the price of diesel is the highest of any region in the European Union.

[Jim Shannon (Strangford) (DUP)]

Does the hon. Lady share my concerns? The fuel that comes in through the ports of Belfast and Londonderry, and is then dispersed across the whole of Northern Ireland, is the same as the fuel in Great Britain, so why is it so much dearer in Northern Ireland? It is an unfair penalty towards those in the rural community.

[Ms Ritchie]

I thank the hon. Gentleman for his intervention. I agree that it is the same fuel type, which is imported directly from the middle east and wherever it is refined before it reaches the ports of Belfast and Derry. I also agree that rural communities are more deeply affected as a result of fuel duty increases. We find little reassurance in the current global situation. Just this week, Iran suspended the sale of crude oil to the UK, and the strait of Hormuz, through which 35% of all traded oil travels, is in a state of great uncertainty. It is not my intention to turn this into a debate on Iran and the middle east, but the point remains that while we rely so heavily on imported fossil fuels we will be somewhat captive to external events. Set against that, the Treasury is not doing enough to ameliorate the consequences of these events for consumers and businesses alike.

Consumers and business are caught in a pincer between the volatile price of a critical commodity and an inflexible Treasury duty regime. With the current instability in Iran, combined with the suspension of the refinery at Coryton, we would be naive to think that there will be no more inflationary pressures on the price of petrol. While the Minister has little control over an uncertain world, I would like to know what plans she has to protect people from the worst effects of those circumstances. Put more bluntly, in the short-term the Chancellor must extend the freeze on fuel duty hikes that was announced in the autumn statement. The measures announced in the autumn statement—the deferral of the 3p increase in duty and the cancellation of the escalator—were welcome short-term measures, but they will do little to mitigate the increased long-term rise in fuel prices. According to Consumer Focus back in March 2011, the 1p reduction in fuel duty was wiped out within days by rising oil prices. There is not the feeling that the Treasury is shouldering its share of the rise in the same way that motorists and businesses are.

Rural Bank Closures

Jim Shannon Excerpts

Tuesday 21st February 2012 Westminster Hall

[Roger Williams]

In the long run, it is in the banks’ interest to ensure that they provide a comprehensive level of service to the communities that they wish to serve and services that are more accessible and more convenient. I think that it is probably the role of the Government to sit down with the bankers, as was suggested by the hon. Member for Harrow West (Mr Thomas), and set out what should be required of banks. Not all the banks were bailed out with public money as a result of the banking collapse, but all banks have benefited from Government action—quantitative easing, for instance—and just about all banks are dependent or have depended on measures that the Government have brought forward. It is time to sit down and see what can be achieved to help these communities.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on bringing this matter to Westminster Hall today. My constituency of Strangford has had two bank closures: the Ulster bank in Portaferry and the Northern bank in Balloo have closed. Two campaigns were fought, but not won. We did, however, win the campaign to save the Northern bank in Kircubbin, with community support. Does the hon. Gentleman agree that the impact of closures on elderly people is horrendous? If there are not banks close at hand, they may carry cash around with them, and many of us will be aware of a large number of people who have been robbed as a result. Banks therefore have a responsibility to elderly people and to rural communities. Perhaps the Government could work together with the banks on that. Perhaps, somewhere along the way, banks need to carry a loss leader, covering their losses in such areas through profits in other areas.

[Roger Williams]

I thank the hon. Gentleman for that intervention. Yes, I believe that there may be a role there. There is the American model of a shared bank, whereby one facility houses different banks. They share the costs and maintain a presence in the community. That may be a way forward; the Government could help with, or initiate, a pilot scheme of that type. I had intended to suggest that later.

Banking (Responsibility and Reform)

Jim Shannon Excerpts

Tuesday 7th February 2012 Commons Chamber

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

No one can seriously doubt that Britain urgently needs fundamental banking reform, but what has been done so far, since the crash of 2008-09, is timid beyond belief. Hardly any of the factors behind the crash have been effectively dealt with. Extreme light-touch regulation left too much to the markets; a vast global market was created in credit derivatives, which were not well understood but were recklessly securitised throughout the world because of their huge profitability; the selling frenzy was stoked even further by enormous bonuses, which drove the recklessness; the banking structure was so over-concentrated in the lead banks that, when disaster struck, they were judged too big to fail, with catastrophic and desperate consequences for the national budget and debt; and the business model linked speculative investment with retail deposit-taking, with the former as well as the latter protected by an implicit taxpayer guarantee.

All those problems, which were familiar to all of us, need to be dealt with, but none has been, partly because of the intransigence of the banking lobby in resisting reform, and partly because of the weakness of political supervision. That makes another crash quite likely, but if there is one we might find it much more difficult to get public support for a bail-out.

First, no significant action has been taken to curb complex financial derivatives, which were, perhaps more than any other factor, central to the collapse. Derivatives are the obvious candidate to trigger the next crisis, because they add opacity and leverage to the financial system. The obvious requirement is transparency, and in the United States that was provided by the Dodd-Frank Act, which requires that all derivatives be traded across public exchanges. We all know that in this country some highly dubious securities gained a spurious status due to the scandal of the credit-rating agencies, which were paid by the very institutions whose creditworthiness they were supposed to assess. That ought to be made illegal; better still, the function should be transferred to the public sector to ensure integrity and transparency.

Secondly, there is public outrage—even now at this late stage the Government find it difficult to accept it—at a banking system which owes its continued existence to massive Government intervention, paying itself mega-salaries and bonuses, and at the fact that 90% of investment bank profits are, in an age of austerity, directed not at strengthening balance sheets, not at shareholder dividend, not at lower fees for customers, but at gigantic personal pay-offs.

Ministers say that to do what some countries such as France are doing, with a mandatory cap and the removal of the bonus guarantee, is impractical, but there can be no doubt that, if the G20 Governments insisted on limits and made continued liquidity provisions dependent on compliance, no bank could refuse.

Thirdly, to avert financial crises, the Government have placed far too much emphasis on enhancing capital controls, and they have done so in a manner that is unlikely to be effective. At the outset of the 2008-09 financial crisis, almost all financial institutions across the globe had capital adequacy at least equal to, and in some cases even twice as much as, the minimum Basel regulatory requirements. But, despite the near-global collapse of the system under those provisions, Basel III proposed in 2010 that the core top-tier capital requirement be only 4.5% and the contingency capital requirement be only 2.5%. Of the EU's top 50 banks, 45 had already met those requirements, and Basel III does not even require them to come into force until 2019. For the Government to accept that is incredibly feeble. It is far too little, far too late and it reflects the Government’s connivance with the banks in minimising reform.

Fourthly, the Vickers commission proposals that the Government, unsurprisingly, have accepted are weak and deeply flawed. Trying to separate retail banking from investment banking with some kind of internal Chinese walls is doomed to failure because of regulatory arbitrage. Financial institutions always invent ever more sophisticated products simply to get around regulatory controls. That is the argument for a clean break between retail high-street banking and investment casino banking. That would have the key advantage of removing the implicit taxpayer guarantee, which allows financial conglomerates safely to use retail deposits for proprietary trading.

Britain arguably retains the most profoundly dysfunctional banking system of any G7 country. It came closer to collapse than any other in autumn 2008. The banking sector in this country is twice as large, relative to the rest of the economy, as in any other major EU country. It is stuffed with mega-banks that are addicted to property, mortgage lending, offshore speculation and tax evasion. Barclays Capital is only the most obvious example of that. Britain needs a much more diversified banking structure with smaller banks, in particular specialist business banks such as infrastructure banks, housing banks, green banks, creative industry banks and knowledge economy banks.

[Jim Shannon (Strangford) (DUP)]

Does the right hon. Gentleman share my concern and that of many people inside and outside this House over bank charges for the ordinary account holder? The ordinary account holder seems to pay a higher price every time, whereas those at the top of the banks get the dividends.

[Mr Meacher]

I wholly agree with the hon. Gentleman. The mega-bonuses go along with small businesses having to pay exorbitant interest charges, if they can get a loan at all. The Financial Secretary says that the Government are doing their best with RBS, but why do the Government not tell RBS what level of business lending there should be and what the conditions on it should be?

North Sea Oil and Gas

Jim Shannon Excerpts

Wednesday 25th January 2012 Commons Chamber

[Nicholas Soames (Mid Sussex) (Con)]

Thank you, Mr Speaker, for allowing this short Adjournment debate on North sea oil and gas taxation. It is a very serious and important matter. It is not one with which I have previously been concerned, but I think the Economic Secretary should know that I was invited to a briefing the other day, given by the oil industry, on the impact of taxation changes in the North sea and it excited my interest. I had always been aware of what a very substantial business it was but had no idea of how very important it is to the United Kingdom economy on the scale of employment and other matters, and I thought it right to bring the matter to the attention of the House. I am therefore, as I said, very grateful to you, Sir, for allowing the debate.

The United Kingdom is indeed fortunate to be endowed with significant resources of oil and gas. Over the years, hundreds of millions of pounds of hard-earned, always risky and sometimes very courageous investment and endeavour have allowed the nation to realise these resources, and for the British people to enjoy the substantial benefits of employment, sophisticated and high-level skills at all levels of the skill chain, tax revenues and balance of payments, and to develop a leading position in the global oil and gas supply chain—all of which has stood this country in good stead down the recent years.

Figures for 2011 show that around £16 billion was spent by the oil and gas industry on exploration, development and operations. This included £8 billion in new capital investment, an increase of 25% over 2010. I know that the Economic Secretary will agree that in anyone’s terms these are massive numbers, and thus once again make the oil and gas sector the single largest investor of all the industrial sectors in the United Kingdom.

The positive benefits of this remarkable industry are not confined to Scotland. They extend throughout the United Kingdom, supporting employment for more than 400,000 people, and those jobs are widely distributed throughout the whole country. Unsurprisingly, of course, a substantial proportion—45% in fact—are in Scotland, but that means that 55% of the jobs, which is the majority, directly benefit employment throughout the rest of the UK.

The taxes forecast to be raised from the industry in 2011-12 include some £6 billion in income tax, national insurance contributions and corporation tax paid by the supply chain companies, with an additional £11 billion from taxes on production itself. That amounts to 25% of all the corporation tax received by the Exchequer. The production of indigenous oil and gas improved the balance of payments by £35 billion in 2011, thus halving the trade deficit, and the supply chain added another £5 billion to £6 billion with exports of oilfield goods and services. Incidentally, that aspect of the industry is doing extremely well here and overseas, and it is flying the flag for Britain effectively.

At a time when Britain above all else needs growth and the energetic encouragement of inward investment, I regret to have to say to the Economic Secretary that all is not well in this crucial sector that is so important to our economy. Production declined by 17% from 2010 to 2011, which was the biggest fall seen by the industry in the past 40 years. As a result, future tax receipts will decrease rapidly without new investment. Receipts for 2011-12 have already suffered a £2.3 billion downgrade due to lower than expected production.

[Jim Shannon (Strangford) (DUP)]

I understand that the reduction in North sea oil production is due to many factors, but one of them is maintenance. There have been many maintenance programmes over the past 12 months. Is the fact that production is down, because maintenance is up, one reason why taxation is down?

[Nicholas Soames]

The hon. Gentleman raises an important point. I am sure that it is germane, but the decrease that I am highlighting is, in my judgment, due to the taxation regime.

The United Kingdom already imports around 10% of its oil and almost 40% of its gas, and such imports will increase rapidly without the benefit of new investment. The Government’s decision in March 2011 to increase tax rates on the industry, which increased the top tax rate to 81% and the corporation tax rate to 62%, is inevitably and regrettably having a chilling effect on the leading indicators of investment.

While total capital investment this year has increased to about £8 billion from £6 billion in 2010, that was largely due to development momentum from previous years. Worryingly, just nine new fields accounted for 40% of the total capital invested and all the development projects were well advanced prior to the tax increase.

The signs of lower investment in the future are already apparent. Indeed, my hon. Friend the Economic Secretary will see from the Department of Energy and Climate Change’s latest energy trends analysis a significant impact on drilling activity, with exploration wells down 50% in 2011.

It is from that exploration drilling that the future large capital investments will flow. The March 2011 tax increase reduced the value of future projects by 25% overnight. My hon. Friend knows that the future development of the North sea depends in large part on clever, technical solutions at the very forefront of what is manageable for marginally economic fields, but the increase in the tax rate has rendered many of those future fields uneconomic to develop. That serious matter for the country must be addressed.

I gather from the estimates of Oil & Gas UK, the industry’s trade body, that investment of at least £12 billion in more than 1 billion barrels of oil and gas resource will not occur without some stimulus. That is 60,000 jobs that will not be created and a loss of a benefit of £15 billion to £20 billion to the budget deficit as a result of the tax increase.

Banking Commission Report

Jim Shannon Excerpts

Monday 19th December 2011 Commons Chamber

[Mr Osborne]

The financial compensation scheme is very clear. We cover 100% of eligible deposits, up to £85,000 in a subsidiary. It is important that people are aware of that, and I think the public are more aware of it than they were three or four years ago. We want the explicit taxpayer guarantee of people’s deposits; what we do not want is the implicit taxpayer guarantee of the banks that took those deposits.

[Jim Shannon (Strangford) (DUP)]

I welcome the Chancellor’s statement. Will he confirm that the legislation will apply to mutual societies? If so, would it have prevented the crisis in the Presbyterian Mutual Society in Northern Ireland?

[Mr Osborne]

One of the things we are considering is whether there should be a de minimis exemption from the regulations for smaller banks and building societies. Vickers proposed that in the interim report, but not in the final report, so this is an area where we are looking at the interim report, rather than the final report. However, we will consult, and the views of Members from Northern Ireland and others will be welcome in that process.

The Economy

Jim Shannon Excerpts

Tuesday 6th December 2011 Commons Chamber

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

There is a paradox at the centre of the autumn statement that makes it self-defeating. The statement was widely touted as a growth Budget, but it is the opposite. The infrastructure plans relate to the medium-term future, on a three to 10-year time scale, but even if they materialise they are not the stimulus that is urgently needed now. Pension funds will certainly not invest in infrastructure unless the Government fully underwrite the risk, in which case it will be registered in the national accounts as a potential increase in expenditure and thus a rise in indebtedness. The paradox is that even to achieve that “smoke and mirrors” impression of growth the Chancellor is such a deficit fetishist that he has been obliged to tell the markets that there is no increase in spending at all, and everything has been funded by cutting spending elsewhere.

Significantly, the Chancellor has chosen to make those cuts by hitting the poorest hardest. Of the £1.2 billion child tax credit and working tax credit savings over the next year, 32%—nearly a third—will come from the poorest fifth but only 6% from the richest fifth, yet the poorest are precisely the segment of our population that is by far the most likely to spend and thus to stimulate growth. Reducing that source of growth in favour of will-o’-the-wisp infrastructure plans in the medium-term future is a pretty silly policy. It is certainly perverse and anti-growth.

The biggest problem facing Britain is not indebtedness, but the lack of aggregate demand. Everyone recognises that except our myopic Chancellor. In the 1930s, John Maynard Keynes said that if we look after unemployment, the budget will look after itself. Exactly the same thing applies today. Christine Lagarde, the head of the International Monetary Fund, warns that if all countries deleverage at the same time, it will be economic suicide. It is absurd to imagine that the markets would not accept some modest loosening of the monetary targets if it was likely to produce a serious prospect of growth; indeed, they would welcome that.

Of course we have constantly heard the Chancellor’s refrain against this argument, his canard that any increase in public expenditure will push up interest rates, threaten the precious triple A rating and cost Britain more, but he does not have to increase public borrowing to kick-start growth. There are two sources of funding that he could draw on at no risk from the markets whatsoever. One is to require the super-rich to make a fair contribution to the Exchequer at a time of crisis for the country. At present they are contributing next to nothing.

In the past year, according to the IFS, the income of the bottom 10th of the population rose by 0.1%. The income of the directors of the top FTSE 100 companies rose by 49%. That is just about 500 times as much. It is time those latter people and the financial and corporate elite of which they are such a part made a fair contribution.

[Jim Shannon (Strangford) (DUP)]

The right hon. Gentleman has clearly identified those at the top of the earnings scale, but at the bottom of the earnings scale are the long-term unemployed. Does he accept the concern of many in the House that the long-term unemployed are not looked after, and that there seems to be little regard for them?

Autumn Statement

Jim Shannon Excerpts

Tuesday 29th November 2011 Commons Chamber

[Mr Osborne]

Yes, I of course agree with my hon. Friend. Again, another success story at the moment is the car industry. I am absolutely delighted by Jaguar Land Rover’s announcement, which is a real vote of confidence in the UK—the company could have constructed that engine plant elsewhere in the world. The announcements that I have made on R and D above-the-line tax credits will also help larger companies do their R and D in Britain.

[Jim Shannon (Strangford) (DUP)]

One of the biggest problems of modern society is youth unemployment. The Chancellor said that companies would be given national insurance discounts and other incentives to recruit and train young people. What other help will they be offered for that purpose?

[Mr Osborne]

We are helping companies to train young people through our apprenticeship programme, and I am happy to be engaged in active discussion with the devolved Administration in Northern Ireland about how that help can best be delivered there.

Fuel Prices

Jim Shannon Excerpts

Tuesday 15th November 2011 Commons Chamber

[Mr Dodds]

Yes; transport is a big issue for young people, because in order to get jobs, stay in employment, get around and socialise they need to be mobile. In rural areas and poorer areas it is difficult for people to sustain that at the current price of diesel and petrol.

[Jim Shannon (Strangford) (DUP)]

We are urging people to get into work, but people who live in rural areas in Strangford and who travel to my right hon. Friend’s constituency of Belfast North will find that a two-hour round trip costs £10 a day. That is £50 a week or £250 a month, which is a large chunk out of anyone’s wage packet. Does my right hon. Friend agree that a reduction in the price of diesel and petrol would help the unemployed to get a job and would help the employed to stay in work?

[Mr Dodds]

I am grateful to my hon. Friend, who makes a good point and illustrates it with the facts. I will come on to the situation in Northern Ireland, but it is clear that a car is a necessity, not a luxury, for many people in his constituency, so he makes a valid point.

The fact is that Northern Ireland has the highest-cost fuel of any region in the United Kingdom. The Automobile Association’s October fuel price report showed that of the 12 regions of the UK, Northern Ireland was, on average, the most expensive for unleaded petrol, diesel and super-unleaded. On top of that, its energy prices more generally are among the highest in the United Kingdom. I mentioned car insurance; Northern Ireland’s car insurance premiums are by far the highest in the United Kingdom. They are, on average, 83% more expensive per person than in the rest of the United Kingdom. Earlier, someone mentioned a double whammy for their constituents; in Northern Ireland, we have a severe triple whammy when it comes to energy, fuel prices and car insurance. Those issues have to be addressed. Some will have to be addressed by the devolved Administration, and there are Ministers working on the issues, here and at home, but there are also issues that can be addressed only at the level of the Westminster Government.

I hope that this debate will contribute to focusing the Government’s mind on this serious problem. Some 83% of people in Northern Ireland go to work by car, van or minibus, compared with only 70% in the rest of the United Kingdom. That shows the rural nature of much of Northern Ireland, and the fact that we have an underdeveloped public transport network; for example, large parts of the west of the Province are not served by the railway network. Clearly, the car is therefore a necessity there, not a luxury.

--- Later in debate ---

[Sammy Wilson (East Antrim) (DUP)]

I welcome the opportunity to speak in the debate, because the price of fuel is an important concern for many of our constituents. I will start with two observations. First, I am glad that there has been little evidence today in the House of the green zealotry that drove the increase in fuel prices—a point we must not forget, because it was argued that that was a way of weaning the population off fossil fuels. Secondly, although Members have talked about the role of petrol and oil companies, let us not forget that 60% of the cost of fuel is accounted for by Government action. Therefore, this is the appropriate place to debate what can be done about it.

The Government’s record on this differs from what they said in opposition. They had many fine ideas in opposition. Indeed, in “A Fair Fuel Stabiliser” they indicated that any reform should help families when the cost of living is rising and reduce the inflationary impact on the economy—but what has the record been since they came into power? In Northern Ireland, fuel bills for families have increased by an average of £254 a year for those using diesel and £284 a year for those using petrol. The Government promised in opposition to do something for families when the cost of living was rising, but their actions have been different.

They made clear in opposition what they thought about an increase in VAT. Indeed, in an intervention in this House in 2008, a Conservative Member asked the then shadow Chancellor:

“Does my hon. Friend not agree that Labour’s plans to increase VAT to… perhaps even 19.5 per cent…. after the next election will hit hard-working families hardest? Should the Government not be ashamed of themselves?”

The answer was “absolutely”, and that the Conservatives would keep reminding the then Government of that

“every…day between now and the…election.”—[Official Report, 26 November 2008; Vol. 483, c. 741.]

The Conservatives did that, but as soon as the election was over and VAT went up to 20%, it all went quiet on the Government Benches, and we did not hear much from them about VAT hitting the poorest families hardest.

During this debate, Government Members have said, “Ah, yes, but we reduced fuel duty.” On the one hand, fuel duty was reduced; on the other, VAT was put up. The Chancellor gave, and the Chancellor took away. That is the truth for hard-working families.

[Jim Shannon]

I thank my hon. Friend for his passionate speech. As he represents a rural constituency similar to mine, has he been contacted by farming communities regarding the effect of fuel prices on food production, which affects everybody in the country? There is the price of the fuel for their machinery, but the increased fuel prices also get passed on to them in the price of fertiliser and other things that they use on the farm. Is he concerned about that, and about its impact on food prices?

[Sammy Wilson]

That just illustrates the inflationary impact of the situation, not just on individual families but throughout the economy, and the Government ought to bear it in mind as they ask themselves, “What shall we do to regenerate the economy?”

Various reasons why it is difficult to do something have been given. The first, which we have heard from Government Members, is that if we try to reduce VAT Europe will intervene. That is another reason for renegotiating our position on Europe—but leaving that aside, I note that 75% of the tax is not VAT but fuel duty, so even if there is a problem with Europe, the Government have another way of dealing with the problem.

The second reason that has been given has involved asking, “What about deficit reduction?”, but there does not seem to have been any difficulty with deficit reduction when it has come to bailing out the euro, with £12.5 billion having already been pumped into it and the Government talking about more money going to the International Monetary Fund. Indeed, as Government Members have said, the measure could almost be self-financing anyway: if, for example, it led to a rise in demand, there would be more duty; if it cut costs, more corporation tax would be paid.

--- Later in debate ---

[Tom Blenkinsop]

That is precisely the point I am making. The lack of a Government growth strategy is making it even more difficult for women to exist within or get into the labour market.

Those women and other workers, particularly in my constituency, need affordable transport, and the Chancellor’s 20% VAT rate is counter-intuitive to that requirement. The economic climate is such that growth in private sector jobs is flatlining, and such jobs are mainly part-time and low paid. The problem is that people who want to work full-time can only get part-time jobs. Part-time employment cannot fund the everyday necessity of a car, and part-time workers are increasingly reliant on a diminishing—

[Jim Shannon]

Is the hon. Gentleman aware that over the past 50 years car ownership has increased from 5% to some 51%, and that those in a lower income bracket are most affected? Does he not think that that clearly underlines the case that we need lower prices?

[Tom Blenkinsop]

Yes. We have heard today the very good arguments about the differences between rural and urban areas, but in certain rural communities in my constituency there is less than 30% car ownership, so there are also class and income issues, as well as a diminishing public transport system that is becoming more and more expensive because of Tory cuts and rising fuel prices.

Female part-time workers often visit two or three workplaces. I used to cover, as a community trade union official, Teesside Cast Products, a steelworks in Redcar. I also represented those in OCS, who worked not only as cleaners and canteen staff but elsewhere as carers on a part-time basis. One of the women I knew did a total round trip of approximately 40 miles a day between two or three work sites. Her employers frequently attempted to remove or decrease her company subsidised fuel costs through unilateral variations in terms and conditions. The Government’s attack on her tax credits and their policy of 20% VAT made it almost impossible for her to work on a day-to-day basis. If it were not for the union fighting for her terms and conditions on fuel payments from her employers, she would undoubtedly have become a Department for Work and Pensions statistic and have been downgraded into a burden on the state rather than the hard-working unionised woman I know her to be.

The Office for National Statistics has demonstrated that in 2010 the poorest 20% of households spent 3.5% of their disposable income on petrol and diesel, compared with 1.8% in the case of the richest fifth of the population. Meanwhile, in the same period, Shell’s profits more than doubled to £4.3 billion, Exxon Mobil made £6.5 billion, and BP made £3.2 billion. We must take note that the squeeze caused by the Chancellor increasing VAT from 17.5% to 20% has added 3p to the price of a litre of petrol. Diesel keeps industry, and the vital service sector that it requires, flowing, much like capital and skills. More than this, public services, including Royal Mail, such as it is—it is going to be fractured and regionalised by privatisation—police vehicle response units, ambulances, fire services and councils incur increased costs via the 3% VAT increase.

--- Later in debate ---

[Nic Dakin (Scunthorpe) (Lab)]

Let me begin by thanking the many constituents who have contacted me to express their concern about fuel prices. The debate has covered a wide range of issues. Having listened to all of it, I have concluded that there is a unanimous view throughout the House that higher fuel prices are hitting people hard at a time when household budgets are being squeezed as a result of rocketing energy prices and rising food prices. As was pointed out by the hon. Member for Harlow (Robert Halfon), whom I congratulate on securing the debate, mums, ordinary families and small businesses are being affected by the level of fuel prices. It is now clear that the Government’s decision to increase VAT to 20% in January, pushing up the price of petrol and the cost of living, was a serious mistake.

[Jim Shannon]

Does the hon. Gentleman agree that transport is the single biggest item of expenditure for most households, ranking above food, power and housing, at a time when the level of inflation is also increasing? Does he believe that a decrease of 1p, 2p, 3p or more on the forecourts would make a difference?

[Nic Dakin]

I think that a decrease on the forecourts would be very welcome to ordinary families and businesses.

The Tory tax of choice, VAT, is a regressive spending tax, and I welcome the recognition on the Government Benches that that regressiveness is damaging household incomes. New EU growth figures have been published today. They show that the UK’s economic growth is slower than that of all the other EU countries except Greece, Portugal and Cyprus. It is therefore essential that there is action now. We urgently need action to get the economy going again. That is why organisations such as the Federation of Small Businesses are supporting Labour’s five point plan for jobs, including cuts in VAT, tax breaks for small businesses that take on extra workers, and taxes on bankers’ bonuses to create 100,000 jobs for young people.

I want to focus on young people, as these fuel taxes are creating difficulties for them in getting to learn and getting to work.

Eurozone Crisis

Jim Shannon Excerpts

Tuesday 15th November 2011 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I am grateful to you, Mr Caton, for allowing me to speak. I commend the hon. Member for Basildon and Billericay (Mr Baron) for bringing this matter to the House today and giving us all a chance to express ourselves in the way that our constituents have expressed themselves to us.

I want to make it clear from the outset where my opinion lies—we need to look at the signs in front of us and then take action. Iceland was not prepared to pay back a bail-out; the Greeks were not willing, or perhaps they were not able, to make the cuts necessary to meet their payments; and now we are looking towards Italy and all the chaos that seems to be enveloping that country. For too long, we have watched other countries prosper with bail-out funding while we cut funding to schools, hospitals and infrastructure to remain solvent and to claw our way back to a sound financial footing, which are the very things that the hon. Gentleman discussed.

For too long, we have paid into the EU while watching our farmers and fishermen flounder under the weight of EU dictates. We watched other nations flaunt the rules even as we were fined £60 million in Northern Ireland for mistakes in filling in some forms. Just last week in Portavogie, which is in my constituency, I had an opportunity to speak to some fishermen. They told me that they are weighed down by bureaucracy, such as new rules on mesh sizes for nets and types of net by red tape and by monitoring, which they have to pay for themselves because the cost of policing fishing falls on the heads of fishermen.

I believe that the people want out. They see the crisis and that the house of cards is no longer simply swaying but precariously quivering with the wind of change blowing through Europe. We stood in this House last month and advocated allowing the people to have a referendum on Europe. We were denied the opportunity to have a referendum by the strong whip of the three major parties. At least my party, the Democratic Unionist party, stood strong and united in our call for a referendum. We feel that that is what the people want us to do. People must be given the opportunity to have their voices heard.

My mother had a wee statement; she had lots of wee statements, as mums always do. She said, “Don’t throw good money after bad,” but that is what is happening in Europe. How long will it continue? When will it end? Is this not the chance to leave Europe, or to change it so that it no longer resembles the red-tape-loving, common-sense-ignoring, self-serving, life-sucking drain of money that it has been for so long? Angela Merkel, the German Chancellor, has said that she wants substantial treaty change to strengthen it and to give the European Commission the chance to impose fiscal discipline on excessively indebted states in the single currency area. I am concerned that other European countries have a clear policy—a strategy—about what they want, and that they want us to be a subservient part of it. We want, and need, more. We need to be free to fish our seas and farm our lands responsibly, as we have done in the past, and we need not to be bound by restrictions placed upon us by those who are self-serving in Europe. As we struggle in this financial mire, China sits back and laughs. It is time to take control.

I have spoken before on the IMF, and I say again that the money is not for bailing out the euro, because the eurozone countries should and must bear the brunt. I stated in the House earlier this year:

“It is clear that the European financial stabilisation mechanism is not fit for purpose…On 9 May 2010, the European financial stability facility was created, and it is a special purpose vehicle agreed by 16 members of the eurozone and aimed at preserving financial stability in Europe by providing financial assistance to eurozone states in economic difficulty.”

That is very commendable, but perhaps unworkable. Furthermore:

“Thus far, we are not at all involved, but no to the euro meant no to the EFSF. The tricky part came with the notion that the facility may be combined with loans of up to €60 billion from the European financial stabilisation mechanism, which is again reliant on funds raised by the European Commission using the EU budget as collateral, and up to €250 billion from the IMF, all to secure a safety net of €750 billion.

If there is no financial operation in activity, the EFSF would close down after three years, on 30 June 2013. If there is a financial operation in activity—which of course there is—the facility would exist until its last obligation had been fully repaid. There has indeed been activity, and a good deal of it involving the EFSM, despite the fact that it should not have been involved to the extent that it had an equal if not greater share of the bail-outs. The purpose of the European financial stabilisation mechanism is to provide an emergency funding programme that is reliant on funds raised on the financial markets and guaranteed by the European Commission using the European Union budget as collateral.”—[Official Report, 24 May 2011; Vol. 528, c. 813.]

In my opinion, that has not changed, and as we look at Greece and Italy and wait to hear of the next country to fail, it is clear that despite the Prime Minister’s claim that there is no risk to the taxpayer, there is a danger that the money will not be used for the good of the United Kingdom. That is a huge risk, and it cannot be allowed.

I sincerely urge the Minister to think clearly before any more money goes into the IMF. We have been hoodwinked before to our detriment and to the financial cost of everyone in this country, and it cannot happen again. Let us not forget that we are fighting to reduce the deficit here and that we must prioritise. I commend the Prime Minister on his idea of the big society. Regardless of whether it is workable, I support the thrust of it, but it will be difficult for it ever to happen and for the benefits to be seen in the UK, never mind Europe-wide. As I stand here today representing my constituents, I state very clearly that we should not put any more of our funds into the IMF without first being certain of where the money will go, to the penny. We cannot afford to do otherwise, because the people do not want us to, and it is their money that the Government are toying with. For the first time since joining the EU, it is time to work things out to our advantage. We need to take that chance, and we need to take it now.

I support the thrust of what other hon. Members have said today, and I hope that the Minister will respond positively to our concerns as MPs and elected representatives. The concerns are genuine. The people I represent, who have put me here, are very clear: they want us out of Europe, and they want us out now.