Bank of England and Financial Services Bill [Lords]

Marcus Fysh Excerpts

Monday 1st February 2016 Commons Chamber

[Marcus Fysh (Yeovil) (Con)]

It is a bit rich for the Opposition to be talking about this as if it were some sort of a party political issue. [Interruption.] Let me explain why I said that. Everybody shares the frustration at what happened in the lead-up to the banking crisis, but we cannot get away from the fact that the Labour party played a large part in it. Even though the regulation and the powers were there, the practices were not pursued assiduously enough, which put financial stability at risk.

Financial stability is crucial. This is not really about bankers’ bonuses; it is about the fact that ordinary people suffer the most when finance fails. I must say that I have some sympathy with what the hon. Member for Bishop Auckland (Helen Goodman) said about the separation between retail banking and investment banking. When I left university, I joined the training course at the SG Warburg group. Lord Roll, a very wise old man, gave us a lecture about all of the things that had gone wrong throughout the 1930s and so on. He said that whenever the separation between retail banking and investment banking is weakened, there will be a problem, and that has really stuck with me. We must look at ways in which we can introduce more competition and put that separation back, so that there is not such a burden on regulators to use their powers. None the less, for the time being, this Bill is a useful step.

I wish to deal with this Bill in two sections. The first is to do with regulation, and the second governance. The proposed regime for senior managers is good. I do not agree with Opposition Members who say that it is a reduction in the power of the regulations. The thing about financial services is that they are ongoing. If things go wrong, a manager has a duty not just to their clients and to the system generally, but all the way along. The beauty of the measures before us is that that duty of responsibility will have to be proved, all the time, by each manager to their regulators. Importantly, that duty applies to any breach and to any manager. What was proposed previously was effectively a two-tier system: firms with a potential prudential impact would have to comply with the legislation while those in investment funds would not. That is incredibly important, especially in the modern world in which we now operate and especially since the financial crash. As banks have had to build up their capital and have been less willing to lend, a large burden of the lending and credit business has fallen on to investment funds. Under the old legislation, those aspects would not have been covered.

I am a bit concerned that the Prudential Regulation Authority—or the Prudential Regulation Committee as it becomes—does not regulate some of these investment firms that do have a potential systemic impact on the markets. I would prefer that it took a much more active look at such firms, especially the credit and derivative funds, which quite often operate with a large degree of leverage. Because of the volatility in oil prices, we have seen some of the lower grade credits in America, particularly of oil firms and gas firms, really suffering. Yields have blown out. Regulators in America, who do not want to highlight the problem, are saying to the banks, “Don’t mark these to market”. The Minister should look at that issue, because I fear there are some firms in London that are involved in similar business, and that poses a risk for us as we go forward.

Bringing the PRA in-house is a good thing. When the retail and investment banks are together, as they are now, we really need the PRA, or the PRC as it will become, to have the sharpest teeth possible and the best people working in it. The less time that it has to focus on the corporate governance of a separate company or institution, the better.

Also coming in-house will be the people who work for the authority. Let us face it, there can be a revolving door in this industry as most of the jobs in regulation do not pay as much as those in the financial markets that they have to regulate. What we want are the people with the best brains and the most application, because they have to see a way of having a lucrative career in the Bank of England, which is a great success. It will be much better to keep regulation within the Bank, rather than outside it.

Other developments on the governance front are useful, especially the oversight and tightening up of the Monetary Policy Committee. I have quite a lot of sympathy with what was said by my right hon. Friend the Member for Cities of London and Westminster (Mark Field). We do need to take a very active role in looking at what the Bank of England does and does not do. That is especially true at the moment when we are seeing bank balance sheets around the world dramatically expanded in a very experimental way. Recently, we have seen the European Central Bank and the Bank of Japan both going full tilt at the windmills of trying to create inflation. The jury is very much out on that policy. We must not forget that our own MPC made a terrible mistake back in 2005 by cutting interest rates at exactly the wrong time, which sent exactly the wrong signal to the housing markets and to the banks. It was done at a time when the creation of money was racing away. We need to be all over this in this place, both on the regulatory front and on looking at what happens in monetary policy decisions. None the less, this Bill is a first step and I commend it to the House.

Draft Small Charitable Donations Act (Amendment) Order 2015

Marcus Fysh Excerpts

Monday 7th December 2015 General Committees

[Marcus Fysh (Yeovil) (Con)]

It is great to see the draft order, which is very much the big society in action. It is excellent. I have one question about the level of the claimable amount. The Minister said that 7,200 charities claim the full amount at the moment. What percentage of charities is that, and what percentage does he imagine will be covered by the £8,000 limit? Does he have a target in mind for that through promotion of the scheme?

Oral Answers to Questions

Marcus Fysh Excerpts

Tuesday 1st December 2015 Commons Chamber

[Marcus Fysh (Yeovil) (Con)]

Does my right hon. Friend agree that local economies such as mine in Somerset have an exceptional opportunity to benefit from the devolution of business rates and all the infrastructure spending that this Government are going to conduct there?

[Greg Hands]

My hon. Friend is absolutely right. That is why it is so important that local authorities are able to keep the proceeds of growing their local business rates, if that is what they are capable of doing. I am sure my hon. Friend will play his full part in attracting more business to his constituency.

Welfare Reform and Work Bill

Marcus Fysh Excerpts

Tuesday 27th October 2015 Commons Chamber

[Hannah Bardell]

If we as parliamentarians are in this place to legislate for those we represent, let us legislate well and with compassion and good conscience. The proposals do not make good legislation. They are wrong for our society and wrong for this generation, so I ask Members to think again and vote with us.

[Marcus Fysh (Yeovil) (Con)]

I spoke the other day about how tax credit reform is part of moving to the higher wage, higher productivity, higher opportunity economy that the Government are building. I have been talking to the Chancellor behind the scenes about welfare reform for many months, and he is listening. Welfare reform is, however, an essential part of the broad package of reform that is helping to return our nation and its people to a sound financial future. The Opposition offer no alternative.

In my professional life before becoming a Member of this House, I was involved in the pensions and savings industry. I know how important saving is in building people’s future and their economic resilience. I believe that reforming national insurance contributions and entitlements is a good way to further incentivise work, deal with the hurdles to advancing at work caused by high marginal tax and benefit withdrawal, and provide scope in the budget for transitional arrangements. That could address the impact of tax credit reform on those with the lowest regular income.

Insurance businesses work by taking premiums from people and investing them over long periods, usually in dividend-paying and other shares that grow substantially in value over time to generate returns that are then available to those who need to claim on the scheme. Unfortunately, our national insurance contributions are not invested in the same way but are spent year in, year out on the claims of those using the NHS or the state pension, or are lent out to other Departments for their spending. We should add major savings reform to what we are doing, by reforming national insurance to create a genuine low-cost defined-contribution investment scheme that people can use to supplement their entitlements under the state pension system and that can be made available, under certain circumstances, ahead of retirement age. Credits could be offered to the lowest paid even if they did not meet the threshold for payment of traditional national insurance, to kick off their contributions and get them used to saving. They could also be used to supplement some payments by employers or to provide transitional funds, which could be substantial.

The investment scheme could also be available to others who wanted to make a contribution. I believe that it should be accompanied by tapering the threshold for the payment of traditional national insurance contributions, and the rate, to make the marginal incentives to work more efficient while letting people keep more of their earnings. That could be paid for by tapers on the higher limit and rate of national insurance obligations and entitlements for those on the highest incomes, particularly the entitlement eligibility of very high income retirees. I note that the principle is already established that state pension entitlement cannot pass in its entirety from spouse to spouse, and that entitlement to state pension is not an asset. I believe that that measure could make available several billion pounds.

Tax credit reform is not an option, but is essential in moving to a higher wage economy that will better provide for the future of all of us. Reform of national insurance is a neat solution that is not inconsistent with our manifesto. Nor is reform of the working tax credit system, as part of our overall package of reform.

[Tom Brake]

I support new clause 1, although it is still not entirely clear to me what the Labour party’s position is on this question. In this place Labour has tabled new clause 1, which is in effect a fatal motion, whereas in the other place Labour would only support transitional protection. I assume that the Labour party is now fully opposed to the tax credit cut.

Tax Credits

Marcus Fysh Excerpts

Tuesday 20th October 2015 Commons Chamber

[Marcus Fysh (Yeovil) (Con)]

The Conservative party is the party of jobs, opportunities and higher wages, not of borrowing for ever until we go bust. There is nothing whatever compassionate about running out of money. My right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) made some very good points, not least that, given the conditions, this is a good time for employers to deal with the subsidy that has built up.

In Australia during the crisis the Government authorised the payment of $900—about £500—as a tax credit, as an absolute emergency measure to keep the economy from going into recession, and there was an almighty argument and stink over whether that was even possible.

Gordon Brown instigated a system that spends thousands of pounds per person every year. He bumped the figure up ahead of elections time and again, and the welfare system got out of control. This was indeed a bribe, and it was made with borrowed money. That is not fair on the general taxpayer. We are the party that wants to reform this system. This is about reducing our deficit and not burdening our children. All our children will be paying for this for ever more unless we reform the system now. It is also worth remembering that the tax credit system is one of the reasons that migration from the EU has been sucked in so hard since 2005, and if we want to deal with that, we must address this issue.

This is the party of incentives. We want to make the future better and enable businesses to create jobs that will pay better wages in order to give people the opportunities they need if their families are to get on. That is why we have a major infrastructure programme in the south-west. We have heard Opposition Members ask what we are going to invest in. Well, we are investing a lot. We are going to make a major difference to people in my constituency and in the south-west. These moves will enable a much broader-based rise in wages, which I look forward to. I believe that we should incentivise people even further in the next phase, and it has been suggested a few times that we should look at the national insurance system. We could raise the national insurance threshold much further, right up to the point at which income tax is collected. That reform would make work pay even more.

Greece

Marcus Fysh Excerpts

Monday 29th June 2015 Commons Chamber

[Mr Osborne]

I do not want to go into the private discussions we had, but we said very publicly that both sides needed to reach a compromise. We did not say that this was exclusively a challenge to the Greek Government; we said that the eurozone also needed to work towards a compromise. I think it is fair to reflect on the fact that the reason we are having this statement and the reason there are capital controls and the like is the unilateral decision by the Greek Government on Friday. We respect the vote in the Greek Parliament, and of course we will respect the decision of the Greek people, but that was the change in the dynamic that happened over the past three days.

[Marcus Fysh (Yeovil) (Con)]

In order to recover, Greece needs bigger debt relief than is currently on the table and massive pro-market structural reform and support. Neither the EU, the international institutions, nor Syriza currently offer those things. This problem presents serious ongoing economic and strategic risks for us in Europe and beyond. What are our Government doing to ensure that Greece gets what it needs?

Productivity

Marcus Fysh Excerpts

Wednesday 17th June 2015 Commons Chamber

[Greg Hands]

I am going to make some more progress, because I know that others wish to speak.

[Marcus Fysh (Yeovil) (Con)]

rose—

[Greg Hands]

I will give way to my hon. Friend the Member for Yeovil (Marcus Fysh)

[Marcus Fysh]

I thank my right hon. Friend.

The A358 runs from my constituency up to the M5 and all the new jobs that will come on stream at Hinkley Point. Before the election, the Labour party planned to cancel the dualling of the road. Will my right hon. Friend confirm that that will not happen under this Government?

--- Later in debate ---

[Marcus Fysh (Yeovil) (Con)]

It is a pleasure to follow such excellent maiden speeches, not least that of my hon. Friend the Member for Hertsmere (Oliver Dowden), who gave us a wonderful tour of the massage parlours of his constituency.

The amount of value we create in our work is key to what we can expect to earn over the long term. We heard earlier this afternoon from the Secretary of State for Education how this Government are focused on getting great teaching and skills to our young people to give them the best chances in life. I support that and am keen to ensure that recent improvements on that front in my Yeovil constituency are consolidated and taken further. I want more funding for school places in my county of Somerset, too, so that we can build a better future for our children, developing their talents to their full potential.

I also support the plan for productivity mentioned earlier by the Chief Secretary to the Treasury. We have a plan for productivity, not just platitudes as espoused by the Opposition. Differences in productivity levels between G7 nations have been relatively static over time, reflecting widely different structural characteristics. There are significant measurement problems in the statistics—for example, in picking up the intangible benefits of changing technology. Productivity growth has dipped in America, too, in recent years, so it is not just a British disease, as some are trying to claim, although we should look to America as an example of an economy with higher productivity growth on average than we have managed over time.

Recessions are bad for productivity growth, as capital for investment becomes scarce, so confidence in further recovery is definitely a factor for us to encourage. We also must be careful not to restrict our service businesses while we attempt, rightly, to encourage manufacturing. Services are a huge competitive advantage that we have as a nation, and we need to get them firing on all cylinders and respect their contribution.

It is fantastic news that 2 million net new jobs have been taken up since 2010. In the past year alone, the unemployment count in my constituency has come down by 24%. That is an outstanding achievement and it shows that my constituents are finding positive answers to their questions on employment, even if there is more to do and we need always to prepare for an uncertain future. We must not be complacent and we must certainly do what we can to enable employers to make the jobs they offer more rewarding, improve the number and quality of apprenticeships, and support businesses with the right policy settings.

Of course, we can do better as a nation, and that is important to the national finances, as well as to personal pay packets. People in the south-west want to cut red tape, extend investment allowances, keep taxes low, invest in infrastructure such as the dualling of the A303 and A358, connect people with broadband, including those in rural areas, and reopen rail connections in Yeovil and Chard, to get people and their work and ideas to where they need to be.

[Simon Hoare]

My hon. Friend is absolutely right to mention broadband, an issue that affects many constituencies. Does he agree that an increase in mobile telephone signal is also very important in rural areas, to help small and medium-sized businesses?

[Marcus Fysh]

That is a very good point, and we are pursuing it in the south-west.

People are not just productivity statistics from a survey in a report. What suits one person will not necessarily suit another, and it is wrong to say that lower-paid work is necessarily bad or should not be respected. It is a good thing that all types of jobs are being created. Things are getting better in our country and we must resist talking down the great achievements and sacrifices our people have made over the testing period we are coming out of. We can all play our part to build a better future, and if we do the right thing the statistics will follow.

The Economy

Marcus Fysh Excerpts

Thursday 4th June 2015 Commons Chamber

[Marcus Fysh (Yeovil) (Con)]

Madam Deputy Speaker, many congratulations on your election, and I am glad to have caught your eye on this occasion, so as to make my maiden speech.

I am very pleased to rise today as the first Conservative since 1951 to be newly elected to serve the people of the Yeovil constituency. Therefore, this is the first of Her Majesty’s Gracious Speeches since then to be welcomed by an incoming Yeovil Conservative, a task made easier by the fact that the people of Yeovil, in making their choice, contributed to it outlining a Conservative programme.

People in my area made a decisive choice to support a future of jobs and opportunities, to continue rebuilding our national finances, and to stop burdening our young people and future generations with our mistakes and debts. Whether it is investment in defence, health, education or infrastructure to power our local growth, people understand that it cannot be done without the foundation of a strong economy and sound public finances.

My constituency sits in the middle of the narrowest part of the entrance to the south-west peninsula, on the main ancient route between London and the west country, and at a crossing of the route between Bristol and the ancient port of Weymouth. Surrounded by rich agricultural land, a series of towns and villages along these routes was fashioned from the local hamstone, giving golden warmth to travellers and inhabitants alike. The area became the natural home of successful farmers, seafarers and venturers, and it delivered a ready supply of the highest grades of flax, rope and sailcloth that powered their exploits.

In modern times, the people of Yeovil remain adventurous and resourceful. Hi-tech, modern defence industries and facilities sit beside innovative service and engineering firms, modern farms and superb tourist experiences. Hon. Members will have heard of the cutting-edge helicopters made by Westland, a great Yeovil firm that grew through Spitfire manufacture during the second world war. This year, it celebrates its 100th year, supported by a legion of smaller local suppliers.

In all parts of my constituency, in Yeovil, Crewkerne, Chard, Ilminster, South Petherton, Ilchester and all the farms and villages in between, there is a very positive spirit in all sizes of businesses and sectors. We know that with the right policies and support, we can make our area better, deliver for people in it and raise their incomes. I fully support the Government’s programme of infrastructure improvement, including the major road, rail, broadband and mobile signal projects that we are promoting in the south-west, not least the dualling of the A303 and A358, which run through my constituency, so that we can regain our place as a key regional powerhouse of economic growth in Britain, improve our productivity and enhance local people’s incomes.

My immediate predecessor, David Laws, worked hard, was polite and clear, and had a charming way, especially with older people in my constituency. He also took an interest in the young and recognised the dedication of our teachers to young people’s progress, which I also hope to do. His dry economic views smoothed the way for the formation of the coalition Government in 2010, in which he served first as Chief Secretary to the Treasury and latterly as Education Minister. His voting support for that Government and their policies was notable, and I thank him for his service.

Finally, we must reflect on why some have lost faith in our politics and try to put it right by our actions. We need in this place to be more thoughtful and humble and never to lose touch with the roots of trust of the people we represent and never stop listening to them and their hopes. To speak in this Chamber, the repository of so much human hope, past, future and present, is both thrilling and humbling. It is the Chamber’s particular part in preserving that democratic humility that we should defend above all. Our great poet, T. S. Eliot, commemorated in Westminster Abbey but resting for eternity in my constituency in a simple church in the parish of East Coker, in a poem of the same name, put it very satisfactorily: “humility is endless”.