Eurozone Crisis

Philip Hollobone Excerpts

Tuesday 15th November 2011 Westminster Hall

[Neil Carmichael]

I can certainly understand my hon. Friend’s argument, but it is worth pointing out that devaluation is not a panacea and should not be used frequently.

[Mr Philip Hollobone (Kettering) (Con)]

rose—

[Neil Carmichael]

I will take one more intervention on devaluation, or this discussion will be devalued.

[Mr Hollobone]

This country has devalued on a trade-weighted basis by 25% since the peak in 2008. If we had not had that devaluation, this country would now be inflicting on itself a far harsher austerity package and unemployment would be far higher. Without the devaluation mechanism, countries face far starker choices.

[Neil Carmichael]

This Government’s real achievement is to address the deficit. They have set out a plan that is effective and encouraging markets to understand that we are taking the appropriate action. That is one of the benefits of being outside the euro, and we should focus more on that, rather than worrying about the benefits or otherwise of devaluation. I repeat for the last time that I do not think that devaluation is a panacea that we should be pursuing.

Public Service Pensions

Philip Hollobone Excerpts

Wednesday 2nd November 2011 Commons Chamber

[Danny Alexander]

I think that it would be in the national interest to have a proper cross-party consensus on today’s proposals. The hon. Gentleman is right to highlight the increases in longevity. By linking the normal pension age to the state pension age we can ensure that the taxpayer is protected from that in future, because as longevity increases, the state pension age can be changed. That is the right way to protect pensions, rather than the previous Government’s cap and share arrangement, which would have meant complex negotiations every three years. That would have resulted in both increases in contributions and reductions in benefits every three years. By setting out this scheme now, we have one that can last for 25 years without the need for further negotiation.

[Mr Philip Hollobone (Kettering) (Con)]

In the private sector, where most people work, getting an annual pension of £10,000 typically requires a pension pot of £200,000, which would buy a very nice house in Kettering. Does the Chief Secretary share my concern that many public sector workers seem to think that private sector provision is far more generous than it actually is?

[Danny Alexander]

The hon. Gentleman is right about that, and he makes an important point. Part of the reason for setting out some of the information about pension pots today is precisely to widen public understanding of the comparison. That is not to do down public sector workers—in fact, what we are setting out today is a properly positive and generous offer to them—but we are making it clear that there is a wide gulf and we need to raise standards in the private sector too.

Oral Answers to Questions

Philip Hollobone Excerpts

Tuesday 6th September 2011 Commons Chamber

[Mr Osborne]

I took action in the Budget to cut fuel duty.

[Mr Philip Hollobone (Kettering) (Con)]

What would happen to domestic interest and mortgage rates were Britain to lose its triple A status by relaxing its financial deficit reduction targets?

[Mr Osborne]

Of course the benefit of having a credible economic policy and a credible fiscal policy is having low market interest rates. Greece today has one-year bond rates of 82% and Italy’s bond spreads have gone out in recent days. We are borrowing money at 2.3%, and that is, in part, because we have a credible economic policy. If we did not have plans to deal with the largest budget deficit in the G20, we would find ourselves in a similar position to Italy or Spain.

Oral Answers to Questions

Philip Hollobone Excerpts

Tuesday 21st June 2011 Commons Chamber

[Justine Greening]

The IFS analysis was very clear-cut that it was indeed the most well-off people in our country who were bearing the brunt of the fiscal consolidation measures. I draw the House’s attention to the need to look at the overall impact of not just the Budget 2010, but the spending review and the Budget this year. They show that the most well-off people in our country are bearing the brunt of the fiscal consolidation, whether that is measured in terms of their income or of their expenditure.

[Mr Philip Hollobone (Kettering) (Con)]

The incentives for job creation in the June 2010 and subsequent Budgets are to be welcomed, but given that for every 10 new jobs eight go to foreign-born workers, what more can be done to encourage the employment of the indigenous work force?

[Justine Greening]

As my hon. Friend knows, one of the key aspects of the Budget this year was to launch “The Plan for Growth”. A key part of that was to provide for more apprenticeships and more work experience so that we can make sure that people have the right skills that companies in this country need.

Eurozone (Contingency Plans)

Philip Hollobone Excerpts

Monday 20th June 2011 Commons Chamber

[Mr Speaker]

Order. May I remind remaining contributors that this is not a general debate on the British Government’s domestic economic policy?

[Mr Philip Hollobone (Kettering) (Con)]

Does the Minister believe that the eurozone will remain intact with all its present members?

[Mr Hoban]

I am not going to comment on whether the eurozone will remain intact. Clearly, this crisis demonstrates the huge strain that the eurozone is under. That is why it was right for us to stay out of the eurozone.

Regulatory and Banking Reform

Philip Hollobone Excerpts

Thursday 16th June 2011 Commons Chamber

[Mr Hoban]

The package of proposals that the Independent Commission on Banking is developing is aimed at tackling that. It is one of the reasons why it proposed a retail ring-fence and increased capital so that the ring-fenced retail business will continue to be strong. But we need to make sure that we have the right resolution tools in place in the event of a bank failure. I commend the previous Government for their introduction of the special resolution regime, to which I referred in my statement in the context of Southsea Mortgage and Investment Company Ltd. We need to continue to work on tools that will help us resolve a bank failure without the taxpayer having to pick up the bill. That is the position that we ought to be in.

[Mr Philip Hollobone (Kettering) (Con)]

My constituents in Kettering want to know that the household savings that they have deposited in their local high street bank are safe from financial speculation and that never again will large banking groups imperil the UK economy through unsustainable banking practices. How far does the Minister’s statement today go to reassure my constituents?

[Mr Hoban]

My statement today has demonstrated the action that we have taken over the past year to create a more stable and sustainable banking system. That should give comfort to my hon. Friend’s constituents in respect of the safety of their savings. Savers and depositors should be mindful of the limits on deposits imposed through the financial services compensation scheme, but the range of interventions that we are making, through this statement and further reforms, will ensure that we have a safer, more sustainable banking sector in the future—one that does not impose a burden on the taxpayer, but makes sure that it continues to meet the needs of businesses and households across this country.

Loans to Ireland Bill

Philip Hollobone Excerpts

Wednesday 15th December 2010 Commons Chamber

[Mr Philip Hollobone (Kettering) (Con)]

Will my right hon. Friend inform the House how that rate of interest compares with the loan he mentioned earlier that the UK Government agreed with Iceland?

[Mr Osborne]

The interest rate to Iceland is substantially lower because, frankly, needs must: I am seeking to recover money from Iceland. I am dealing with a situation that I have inherited—obviously the Iceland loan relates to events that happened under the previous Government—and I need the support of the Icelandic Parliament. The rate of interest we are charging is slightly higher than the Dutch, who have also entered into an agreement with the Icelandic Government, are seeking. People might remember the circumstances at the relevant time—there was a pretty acrimonious dispute between Iceland and the previous UK Government—and we have sought to repair broken bridges. The terms of the loan that we have come to with Iceland mean that this country will get its money back. My judgment was that other terms might have meant our not getting our money back at all and that would not have been very sensible.

--- Later in debate ---

[Alan Johnson]

We have the €60 billion fund, about which the hon. Member for Dover (Charlie Elphicke) intervened, and we have a second fund of €440 billion. I am simply pointing out—the public deserve to know this—that only 4% is coming from the larger amount and 37% from the smaller amount. I am curious about that, and we need to understand the logic of it.

[Mr Hollobone]

Is the shadow Chancellor’s point that the European Central Bank is keeping these funds to rescue Portugal, Spain and perhaps Italy in due course?

[Alan Johnson]

Maybe.

--- Later in debate ---

[Mr Chope]

I am sure that my hon. Friend is absolutely right. We are contributing to Ireland through our EU membership, so the Irish people should be very grateful.

When, on behalf of my constituents, I weigh up whether we can be pleased with how Ireland conducts its affairs, I must express renewed disappointment that Ireland caved in on the Lisbon treaty, with the consequence that this country has been landed with it.

[Mr Hollobone]

Does my hon. Friend recall Ireland’s position a few months ago, when the UK Government tried to bring the European Parliament budget under control and needed a blocking third to prevent the proposed budget increase? Where was Ireland at our time of need on that occasion?

[Mr Chope]

My hon. Friend asks a rhetorical question. The answer is that I am not sure where Ireland was at that time.

I agree with my right hon. Friend the Chancellor that we should allow the Irish to have their own domestic policy. That is why it would not be right for us to interfere with their low corporation tax policy—it should be for them to decide. However, the other side of the coin must be that we let the Irish take the consequences and accept the responsibility for what happens as a result. We cannot say, “We’re going to help pay for the consequences while not being able to influence the policy.” I find what is proposed very intellectually trying to deal with.

When we have a border—our hon. Friends from Northern Ireland have made their points about this—that low corporation tax policy makes things much more difficult. Indeed, it is possible to argue that we have lost the corporate headquarters of major international organisations from London to Dublin as a result of Ireland’s low corporation tax policy. Now we are subsidising that policy, the consequences of which are that the Irish have been unable to meet their financial obligations and are desperate for additional loans. I am not convinced that we should be getting involved with British taxpayers’ money. It would be different if we did not have an awful national debt crisis, but we do. One consequence of the Bill, if it goes through today, may be to send out a signal to our constituents that says, “Don’t worry, the debt crisis is not as bad as we’ve been telling you, because we can afford to add to that debt further by giving a soft loan to the Irish.” At the same time, we are having to argue to our constituents that we cannot put pressure on the banks to give more soft loans to businesses, even if those businesses go bust or cannot expand as a result, with all the damaging consequences for employment that that would have in our country, so I am not convinced.

--- Later in debate ---

[Mr Philip Hollobone (Kettering) (Con)]

I shall vote against the Second Reading of the Bill, I shall oppose the money resolution and I shall do my best to amend the Bill should it reach Committee because I think it is bad for the House.

What we are not talking about in this debate is whether we should lend money to Ireland or not. Instead, we are talking about whether we should double our loan to Ireland. Whether or not the Bill is passed today, this country will be lending the Republic of Ireland 3.5 billion quid, and if the Bill is passed, that loan will go up to 7 billion quid. My constituents in Kettering are saying to me, “Philip, we are having all these public sector cuts and despite the Government’s best efforts the national debt is going to double over the term of the coalition Government; what on earth are you doing lending money to the Irish Republic?”, and I share their view. Yes, we should play our part in the loans through the IMF, but we should not be entering into a secondary bilateral arrangement because the truth is not so much that we are lending money to the Irish Republic as that we are lending money to the European Central Bank. We are increasing our exposure to the eurozone at a time when it is in increasing crisis. Given that we decided a long time ago that we wanted nothing to do with the euro, that is a backward step.

Loans to Ireland Bill

Philip Hollobone Excerpts

Wednesday 15th December 2010 Commons Chamber

[Kelvin Hopkins (Luton North) (Lab)]

It is a pleasure to follow the hon. Member for Stone (Mr Cash); I very much agree with what he has been saying. He is clearly much more erudite on these matters than me, but I understand what he is saying—that today, we are making to our closest friendly neighbour country a bilateral loan which has nothing to do with the European Union and which is not part of the panoply of EU arrangements. I am happy to go along with such an arrangement.

The right hon. Member for Wokingham (Mr Redwood) has said many times that, if there are problems in the eurozone with the eurozone, they should be sorted out by the eurozone, not by countries outside the eurozone. I agree with him very strongly. This is a country that is our closest neighbour, with which we have deep, long historical relations—very friendly relations now, we are pleased to say. Indeed, I have many Irish constituents who are concerned about their country. We are making a friendly gesture to a neighbouring country—our nearest friendly neighbour—that happens to be in the eurozone, which we happen not to be.

We do not want to be in a situation where, if another country gets into difficulty, it says, “You made a loan to Ireland—you can make a loan to another country in the eurozone.” That would not be acceptable.

[Mr Hollobone]

That is exactly the danger. Under the present discussions about the permanent crisis resolution mechanism, the draft conclusions of the European Council state:

“Member States whose currency is not the euro will be associated to this work.”

So the danger is that this Bill could be a precedent for the “Loans to Portugal Bill”, the “Loans to Spain Bill” and the “Loans to Italy Bill”, which may be just round the corner.

[Kelvin Hopkins]

I thank the hon. Gentleman for his intervention. The amendments from the hon. Member for Stone will hopefully clarify the position and change the Bill to the way we would like it to be, so that it will not have implications for other members of the eurozone.

As I have said, however, if the Irish are to recover from their situation, they must remove themselves from the eurozone, re-create the punt, depreciate their currency and bring it into line with sterling, because we are their natural trading partners. Their economy and ours are the most closely integrated, and that is the sensible thing to do. I have said that before in this Chamber, and I have said it in private to senior Irish politicians on two occasions—I must say that it was not received in a very friendly way. Nevertheless, that is the logic, and even now we are looking towards a progressive deconstruction of the eurozone, partial or complete, in the not-too-distant future.

It would be better to deconstruct the eurozone in a rational and controlled way, rather than in a disastrous crash. So I hope that the eurozone members will be sensible and start to deconstruct it as practically and sensibly as they can and not allow it just to go into a massive crisis, which will benefit nobody. Even deconstructing it through country-by-country removals will cause problems, because many other countries have money in Irish and Greek banks, so it will be devalued and people will lose. Nevertheless, it is better to do that than to allow the situation to continue and the elastic eventually to break, causing the whole thing to come crashing down.

Finance Ministers’ Meeting (Ireland)

Philip Hollobone Excerpts

Wednesday 17th November 2010 Commons Chamber

[Mr Hoban]

I reiterate that no request for assistance has been received from the Irish Government.

[Mr Philip Hollobone (Kettering) (Con)]

Will my hon. Friend confirm the extent of Britain’s liability under the non-eurozone mechanism? Has he considered the possibility of renegotiating the package that the previous Government left us?

[Mr Hoban]

My hon. Friend should be aware that under the mechanism there will be no liabilities if no request for assistance has been made.

Child Trust Fund (Looked-after Children)

Philip Hollobone Excerpts

Tuesday 19th October 2010 Westminster Hall

[Justine Greening]

I talked briefly about the fact that we recognise that financial literacy and encouraging saving for children are important. She knows that we have a broader problem with saving in Britain. The savings ratio had really fallen. It was not just the Government who had unsustainable finances; many households did as well. As I said, we are considering how we can nevertheless encourage saving and encourage children to save. Obviously, we have to work within the constraints of the public finances, but that work will explore the idea of allowing parents potentially to open a tax-free account for children born after child trust fund eligibility ends. I am sure that, as part of that, we would look at the group of looked-after children, in the same way that they were part of the child trust fund scheme. For most children in Britain, the account was triggered and opened by the parents, but for looked-after children, it was the local authority that took that approach.

Any such account would not have Government contributions going into it, but potentially could have some of the other features of child trust funds. Clearly, however, if we go down that road, we need to consider the design of any account carefully. It is clear that it would not be exactly the same as the child trust fund. However, I can reassure the hon. Lady that we are trying to find our way through the problems that we face today, which are grave and must be tackled, while at the same time ensuring that on these important issues, for the longer term, we still do what we can to support these children and address the issues.

Time is moving on. I shall try to ensure that I have covered the other issues that the hon. Lady raised. She talks about social mobility and she is absolutely right. I passionately believe in social mobility. She is right to talk about ensuring that we support looked-after children and that particularly when they leave care and face all the challenges that she referred to, they get support. Certainly in England, we are very keen to consider the overall package of support for these children, and I know that my colleagues in the Department for Education are doing that.

I am certain, given the hon. Lady’s clear interest in the issue, that she will follow it up in the Scottish Parliament. Indeed, she has a long track record not just of expressing an interest, but of being involved in direct policy making in this area. It is great that that experience has been brought into the UK Parliament.

I can see time ticking on. To conclude, I again congratulate the hon. Lady on securing the debate and on her eloquent and passionate description of the needs of looked-after children. As I have explained, I agree that these children, alongside other disadvantaged children, need more support than many children. Only last week, the Deputy Prime Minister was talking about the fairness premium to ensure that we can target and help those children growing up who perhaps need the most support to make sure that they can get the opportunities that many children in this country have, but too many do not.

We are passionate about tackling disadvantage, including for looked-after children, and we want to provide that support, but as a Government—a coalition Government—we just do not think that the child trust fund is the best way to do that. Those children, including looked-after children, need support now, rather than having it locked away until they are 18. It would not have been the best use of our limited money, either for looked-after children or for others—

[Mr Philip Hollobone (in the Chair)]

Order. I thank both hon. Ladies for taking part in the debate. We now move on to the next debate.