Draft European Union Budget
Debate between Mark Hoban and David Nuttall(11 years, 10 months ago)
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Mr Hoban
The hon. Gentleman may say “Ah”, but the reality is that when his party was in office it gave away the rebate and allowed a spending increase that permitted the EU budget to rise by another 11% this year. I do not think the Labour party’s record in government is anything that the Opposition should be proud of or crowing about.
Mr David Nuttall (Bury North) (Con)
Perhaps I can help the Minister. In 2010, I asked about the cost to the UK taxpayer of the reduction in rebate negotiated by the previous Government and was told that the full cost, now that the rebate is fully phased in, is £2 billion a year. Will he confirm that?
Bank of England (Appointment of Governor) Bill
Debate between Mark Hoban and David Nuttall(11 years, 10 months ago)
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Mr Hoban
In its quality, too. The hon. Gentleman should acknowledge that.
Among the many facts that my hon. Friend gave, I have to correct one or two. He said that only nine banks could still issue notes in Scotland and Northern Ireland, but in fact it is only seven. The Bank Charter Act 1844 was the beginning of the move towards the Bank of England’s note issue monopoly, after which no new banks were permitted to issue notes and the stock of notes could not be increased. I am sorry that my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) is no longer in his place, because the last bank to issue notes was one called Fox, Fowler and Company, which was based in Somerset. Sticking to tradition is a feature of what my hon. Friend does, so perhaps that is not a surprise to him.
Mr Nuttall
We have heard from several Back Benchers, but is the Financial Secretary as disappointed as I am that we have not heard the views of any of our coalition colleagues the Liberal Democrats?
Mr Hoban
I hate to say it, but I thought my hon. Friend was uncharacteristically uncharitable about our hon. Friends the Liberal Democrats. Perhaps they did not get the three e-mails that I got from the hon. Member for Hayes and Harlington imploring me to be here today. I answered that call, and I am sorry that more Members on his side of the argument did not do so.
Oral Answers to Questions
Debate between Mark Hoban and David Nuttall(11 years, 10 months ago)
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Mr David Nuttall (Bury North) (Con)
7. What recent assessment he has made of the effect of EU regulations on economic growth.
The Financial Secretary to the Treasury (Mr Mark Hoban)
The Government are taking action to reduce the burden of EU regulation on UK business. At Budget 2011, the “Plan for Growth” announced a comprehensive package for tackling EU regulation. The Government estimate that the cost of European regulations to the UK has varied from 27% to 60% of the total UK regulatory cost since October 2009.
Mr Nuttall
I am grateful to the Minister for that reply. Although British businesses will welcome the fact that the United Kingdom is not in the eurozone, and will not suffer from the loss of sovereignty and the new regulations that fiscal union would mean, they are nevertheless burdened by EU-imposed red tape, which means that it is much harder for them to compete successfully for new contracts against companies from outside the EU, which are not subject to such regulations. May I urge him urgently to conduct an investigation into and an assessment of the extent to which that is holding back the British economy?
Mr Hoban
My hon. Friend makes an important point, and that is why we are taking action through the “Plan for Growth”. We want the Commission to publish an annual audit of the cumulative cost of all planned EU regulations, but assessments are not enough in themselves, which is why as a consequence of lobbying by this Government the EU has introduced an exemption for micro-businesses and is looking at lifting the burden of regulation on the small and medium-sized businesses that are key drivers of growth in our economy.
Section 5 of the European Communities (Amendment) Act 1993
Debate between Mark Hoban and David Nuttall(12 years ago)
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Mr David Nuttall (Bury North) (Con)
As always, it is a great pleasure to follow the hon. Member for Luton North (Kelvin Hopkins). He referred to the fact that only a few Conservative Members voted with the then Labour Opposition on the Maastricht treaty—I rather suspect that I may have been one of them at that time.
May I correct the hon. Gentleman on one matter, however? He referred to our sending the Red Book. I wish that it were so, but we are not sending the Red Book; instead we are sending the 210 pages of the “2011-12 Convergence Programme for the United Kingdom, submitted in line with the Stability and Growth Pact”. It is a specially produced document. As last year, I oppose the submission of this convergence document to the European Union.
No doubt by contrast to the previous speaker, I entirely accept that the Government are pursuing a sensible economic policy that is designed to enable this country to start to live within its means once more. Of course there is a debate to be had in the House about whether taxation is at the right level in certain areas or whether public expenditure should be reduced further and faster, but those matters are not what this debate is about. It is specifically about whether the Government assessment of our economic position should be approved
“for the purposes of section 5 of the European Communities (Amendment) Act 1993”,
which requires this country to submit an assessment every year of how well we are progressing on convergence. I object to that, as, I suspect, do many millions of my fellow Britons.
I wish to raise three questions about this convergence. First, what are we supposed to be converging with? Is it the eurozone? It probably is, and I certainly suspect that that is what the Eurocrats want us to do, but why on earth would anyone want to converge with the eurozone at present? It has a failing currency and is based on a failed idea that is continuing to survive in its current form only thanks to bail-out after bail-out and the failure of European leaders in Brussels to wake up and accept the reality that, as any sensible independent commentator can see, it is folly to try to tie together the economies of different countries with such widely divergent characteristics. Such a plan is doomed to fail.
Secondly, who are we supposed to be converging with? Surely not the struggling economies of southern Europe. Things are still going very badly wrong across the eurozone, as we saw only yesterday with the collapse of the Dutch Government because of the fall-out from the eurozone crisis. In addition, there are the economic data: first-quarter GDP shrank by a further 0.4% in Spain, and the eurozone’s own composite purchasing managers index—a useful measure of progress in the eurozone—has slumped to 47.4 in April, down dramatically from March’s 49.1, and we must note that any index figure of less than 50 means contraction. That collapse was both in services, down from 49.2 to 47.9, and in manufacturing, down from 47.7 to 45.0. Even the mighty German economy is being affected by the struggling eurozone. Its overall purchasing managers index figure is down to 50.9, with even German manufacturing at a 33-month low of 46.3. It is clear, therefore, that despite all the bail-outs and the firewalls and the new IMF fund that has just been created, the eurozone remains mired in deep crisis, and I submit that we do not want to converge with it.
Thirdly—and perhaps most importantly—why are we converging? Has anybody bothered to ask the British people if they want to be converging with the countries of the eurozone? We ought to be pursuing the policies that are right for this country, regardless of what the unelected bureaucrats in Brussels think.
Mr Nuttall
I am most grateful, as I am sure are all Members, for that confirmation from the Minister. That answer raises the following question, however. No doubt many officials at the Treasury have been engaged in the preparation of this convergence document, spending many hours of precious time and energy on it, but why? What a complete waste of time! As was ascertained last year, anybody who is interested in this information could glean all of it from the internet, without any need to move any paper about. This is a complete, gigantic waste of time. It is a giant, paper-shuffling exercise.
Eurozone Crisis
Debate between Mark Hoban and David Nuttall(12 years, 6 months ago)
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Mr David Nuttall (Bury North) (Con)
Does the Minister agree that the International Monetary Fund should not be expected to do what the European Central Bank is incapable of doing simply because of a lack of political will on the part of eurozone countries?
Regulatory and Banking Reform
Debate between Mark Hoban and David Nuttall(12 years, 11 months ago)
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Mr Hoban
The Bank of England and the FSA published a couple of weeks ago a document setting out the new regulatory approach that the PRA will set. They were clear that, rather than waiting for a bubble to burst and for problems to emerge, they will intervene earlier to force firms to take action to correct problems, and that shift in style—from waiting for a problem to happen to trying to pre-empt its creation—is absolutely vital. We are reliant on the judgment and the discretion of the regulators in following through that new regulatory approach, but rather than waiting until it is all too late, as happened in so many different examples over the past 10 years, giving the regulator the power to intervene early will have a significant benefit on outcomes for our constituents.
Mr David Nuttall (Bury North) (Con)
I welcome the Minister’s statement. Does he agree that the best way to protect consumers is to have a fully functioning and competitive free market, and that the best way for the free market to work efficiently is, ultimately, for all companies, including banks, to be allowed to fail?
Mr Hoban
My hon. Friend makes an important point, which goes back to the point that my hon. Friend the Member for Wycombe (Steve Baker) made about exit from the financial system. That is why it is important that resolution tools are in place to enable firms to be wound up in an orderly fashion, rather than being reliant on taxpayers’ money to keep them going.
Section 5 of the European Communities (Amendment) Act 1993
Debate between Mark Hoban and David Nuttall(13 years ago)
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Mr Hoban
We are not subject to sanctions as a consequence of our opt-out from the single currency. I made that point when we had a debate last year on economic governance, and it continues to be the case now.
The information we are supplying to the Commission in the convergence programme document that we are debating tonight is the first to be provided under the new European semester arrangements. People were concerned that the Commission would receive information before Parliament, but the information provided to the Commission in the document is already public and much of it was provided when the Chancellor made his Budget statement in March.
Mr David Nuttall (Bury North) (Con)
Will the Minister confirm that all the information in the convergence programme document is in the public domain and available to anyone outside the House who wants to gain access to it without the document’s publication?
Mr Hoban
Indeed. If my hon. Friend has studied this carefully, as I am sure he has, he will recognise that large chunks of it are familiar from the Red Book. Of course, chapters 6 onwards are taken from the Office for Budget Responsibility’s economic and fiscal outlook. This information is in the public domain and Parliament has had sight of it before its presentation to the European Commission.
Independent Financial Advisers
Debate between Mark Hoban and David Nuttall(13 years, 7 months ago)
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Mr Hoban
That is an interesting point, but my hon. Friend should bear in mind that with some products, which might be long term, it can be some time before an issue emerges. If people buy a product in their 30s—a pension product, for example—they might only find out in their 60s that they had been mis-sold something. There is a real issue about looking at complaints records in that way.
The retail distribution review aims to address the structural problems in the distribution of retail financial products, such as conflicts of interest, transparency and professional standards. Although the RDR is the responsibility of the FSA, I fully support its aims—all colleagues should support those objectives. I hope that the RDR will lead to increased confidence, simplicity and clarity in the financial advice sector.
On professionalism, hon. Members are familiar with the fact that the rules seek to ensure that all financial advisers adhere to common professional standards, including an increased minimum qualification level, effective maintenance of knowledge and subscription to a code of ethics. The current minimum financial adviser qualification is at the same level as a diploma in shift management offered by McDonald’s. We should all reflect on that for a moment: the products being sold by IFAs are infinitely more complex and more long-lasting in their effect than a Big Mac.
The rules aim to improve trust and the service offered to consumers. Consumers will have confidence that their financial adviser is up to the job. Investment advice will be seen as a professional activity, financial advisers will have a new status and fresh talent will be attracted to the industry. The FSA reports that, rather than being put off by studying, many financial advisers are going on to obtain more advanced qualifications than those required by the RDR. One of my constituents, who is an IFA, has said that when the FSA raised the minimum bar he wanted to go even further, to demonstrate that his qualifications, knowledge and technical expertise went beyond those of his peers. The FSA also noted that take-up for financial planning degree courses has increased.
I know that many financial advisers have concerns about meeting the increased qualification standards required by the RDR, but almost half of advisers already meet the required level, with two years to go before the RDR is introduced.
Many financial advisers feel that the new rules should be “grandfathered,” so that those advisers with experience are exempt. However, how do we know how good those advisers are? Someone might have been in the industry for some time, but is that necessarily a guarantee of the technical expertise and quality of advice?
Mr Hoban
I only have seven minutes left and my hon. Friend the Member for West Worcestershire gave way quite a lot, so I would like to make some progress.
The existing qualification requirements for advisers focus mainly on knowledge, whereas the new higher level is primarily about understanding and applying that knowledge, which are core skills for every adviser to demonstrate. The result is a level playing field where consumers can have confidence that their adviser meets a required standard.
IFAs are not the only people who have an interest in this debate. The consumer group Which? welcomes the FSA’s increased standard, as it does not feel that the current qualification level is sufficient.
Advisers are required to maintain competence under the FSA’s current rules as part of their approval conditions, and so those advisers that have actively engaged in maintaining competence by keeping up to date with market developments should not have to commit a significant amount of time to study. Continuing professional development can be used to fill any gaps between existing and revised examination standards, and financial advisers can opt to undertake an alternative basis of assessment, instead of a traditional written qualification. That addresses one of the points made by my hon. Friend the Member for West Worcestershire, about how someone who is slightly long in the tooth, as I am, might not be as exam-ready as someone straight out of university. The alternative assessment might well help advisers in such a situation.
On adviser charging, at present financial advisers earn different amounts of money as commission payments, depending on which particular firm they recommend a product from and on what product they recommend. That creates a potential conflict of interest which can be damaging to consumers and undermines trust in the investment industry. The RDR rules on adviser charging are designed to tackle the risk, as well as the perception that commission paid by product providers might bias advice.
FSA consumer research also found that only half of respondents understood how the value of their product would be affected by commission. To add to that, in October 2007, Which? conducted a survey of IFAs and found that 82% of advisers failed to explain the document on the key facts about the costs or to have a meaningful discussion with their client about how advice would be paid for. There is a big issue to be addressed—getting people to understand how they are paying for advice at the moment—and IFAs have a role to play.
It should be noted that consumers already pay for advice, through the commission structure in their product. We are not doing anything new by ensuring that consumers know how much advice costs. It is important that consumers understand the value that good financial advice can add and that we create a much more transparent market in which advisers compete on cost and quality. That is a good outcome for consumers.
My hon. Friend mentioned how banks reward employees for pushing certain products—I understand her point—and the FSA is to look into how the reward structures of in-house sales staff in banks affect their performance.
On ability to pay for advice, we need to bear in mind that not enough people are in receipt of financial advice. That is one of the reasons why our party, in opposition and now as part of the coalition Government, has been able to support the Consumer Financial Education Body, the introduction of a social responsibility levy on the financial services sector and the funding of a free national advice service, which will help people review their financial affairs regularly, plan ahead and ensure that they hold appropriate products. Such measures will help to tackle some of the advice gap. I hope that the industry will work in partnership with the CFEB and the Government to ensure access to financial advice.
A number of my hon. Friends raised the issue of the disproportionate impact of RDR on small firms. I appreciate that concern. Smaller IFA firms, in remote areas in particular, will feel the impact, and they are more likely to struggle to meet the challenges of the RDR proposal, unlike the larger IFA firms and the banks, and instead might decide to exit the market. However, the RDR will apply to all advisers in the retail investment market, not just to IFAs.
Although the change will bring challenges in the short term, it is important that we see the advice sector grow and strengthen in the long term. New and existing firms can increase supply in the long term to meet that demand, and indeed the FSA has found that a larger proportion of the costs of the RDR will be borne by larger firms.
In respect of the costs being passed on to the consumer, it is true that with the RDR come implementation costs. The Oxera research commissioned by the FSA found that such costs could translate into higher prices placed on consumers in the short term. However, over the longer term, it concluded that the higher prices could be competed away through increased transparency of prices, encouraging consumers to shop around.
I could respond to many more issues. I will write to my hon. Friend the Member for West Worcestershire on RDR and tax issues.
We all want to ensure that consumers have access to good-quality advice, delivered in a transparent and professional way, so that people understand what they are buying and have paid for. I believe that that will be taking a major step forward in improving the financial outcomes for our constituents.