Amendment of the Law

Robin Walker Excerpts

Thursday 20th March 2014 Commons Chamber

[Mr Robin Walker (Worcester) (Con)]

Will the hon. Gentleman address the issue of 1.3 million private sector jobs created?

[Mr Robinson]

I will come to that in a moment, although the hon. Gentleman may have been here when I intervened on the Secretary of State on that precise point.

Let us examine the borrowing record, as borrowing should have been central to all this. Because we have been able to have more investment and more exports—capital investment and exports—we should have growth, which would reduce the borrowing. In fact, over the four-year period, with us now entering the five-year period, we are going to borrow nearly £200 billion—the figure is £190 billion—more than we projected. We were to reduce borrowing as a percentage of GDP, but even in the next two years—years 5 and 6—it is projected to go up as a percentage of GDP. As for balancing the budget, that has been pushed out by a further two years. This is not a plan that has succeeded; it is a plan that has failed in almost every respect.

There is one exception—the hon. Gentleman referred to it and I also challenged the Secretary of State precisely on it during his speech: the employment record, particularly in the private sector, is remarkably and surprisingly good. I do not want to get into how many jobs are part-time, zero-hours contracts and so on. The fact is that the labour market has shown itself to be much more retentive of labour and productive of labour than we expected. For anybody in this House or in the Government, or on any of the other projections indicated from any sector, the performance is quite encouraging, except in one crucial respect: it suggests that, given where output is relative to employment, we have suffered a dramatic loss—probably for the long term, for all we know—in the productive capacity of the economy and in the productivity of our labour force. Unless that can somehow be rebuilt—there is nothing at all in the Budget to address that point—we are in for a much longer and slower recovery than we could have achieved. That is a big disappointment. The Secretary of State analysed it willingly, but the Office for Budget Responsibility itself says, “There’s nothing here that’s going to make any difference to the forecast we made a year or so ago.”

In other words, we have done nothing and are proposing to do nothing, to address the central issue of the productive capacity of the economy, which would underpin, sustain and increase our recovery rather than hold it back. There is nothing in the Budget that will improve that. Of course there are a couple of measures that we welcome, including the increase in capital allowances. I never understood why they were cut in the first year. We viciously opposed it at the time. We also approve of the improvement in export financing. However, there again, the Chancellor and the Government have form on those issues. They introduced two similar export financing schemes, one of which was strangled at birth and the other helped just five firms. I hope the Government are serious this time. We do not want to see imaginative and quite substantial measures being choked off by the bureaucrats.

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[Mr Robin Walker (Worcester) (Con)]

The hon. Member for Plymouth, Moor View (Alison Seabeck) has just mentioned her father’s election address, and I am reminded of my father’s election addresses about how Conservatives had to clear up the mess that Labour left behind.

Like many Members across the House, I am passionately focused on employment. We needed the Budget to encourage business investment and help the recovery, which is gaining pace, to deliver more and higher-quality jobs. The hon. Member for Coventry North West (Mr Robinson) made an interesting point about ensuring that those jobs deliver greater productive capacity, and I agree with him that we need to do that.

The claimant count in my constituency of Worcester is down from 2,545 immediately before the election—and from a peak of 2,700 under Labour—to around 1,900 now. Youth unemployment peaked at 800 under Labour and is now below 500. That is much better, but there is no room for complacency. In fact, we have seen some small rises in unemployment in recent months, which I abhor. I have said that we need this Budget to deliver investment in jobs.

When I talk to local businesses, especially manufacturers, about what they need if they are to invest in jobs, they tell me that they need support to invest in plant and machinery, which can raise the productive output of each job. We have seen that support in this Budget. They also want support for research and development that will anchor manufacturing jobs in this country, including the jobs at Yamazaki Mazak, which has its European research headquarters in Worcester. They need help with the cost of employment, and this Budget has introduced the implementation of the employment allowance, which will provide a huge boost to businesses large and small in regard to the number of people they can employ.

It is interesting that, at the start of this Government, we got rid of Labour’s jobs tax—an increase in the cost of national insurance for every business and employer—and that, as we come towards the end of this Government, we are taking a further step forward in the form of the employment allowance. It will provide a real incentive to take young people on, and taking people under 21 out of national insurance will help more young people to get into the businesses of the future.

Crucially, we need to drive forward the skills agenda. Many of the engineering businesses in my constituency—including Yamazaki Mazak and Worcester Bosch—are great supporters of apprenticeships. Many small and medium-sized enterprises are also beginning to take on apprentices. I am glad to see in the Budget the £85 million extension of support for SMEs to take on apprentices, and to see the £20 million increased funding for degree level apprenticeships. The Business, Innovation and Skills Committee, on which I am proud to serve, has challenged the Government to deliver on both quality and quantity for apprenticeships, and so far they have an excellent record on both.

I must mention some of the spending measures in the Budget that could directly benefit Worcester. The £20 million cathedral fund will be very welcome in many of our county towns, and the horse race betting levy extension will support Worcester race course. The cathedral and the race course are two vital landmarks in the city, and I am delighted that both could benefit from the Budget. The extra £140 million of flood funding is also extremely welcome for reasons that will be all too obvious to anyone who has watched television in recent months. It is also great news that we have seen progress on the question of VAT for air ambulances. That is a huge achievement following campaigning by many Members. I would now like to see progress on the question of VAT for hospices.

The Budget did not mention delivering fairer funding for schools, although the Chancellor did mention it in his autumn statement. We also had a statement on it last week, and a huge step forward has been taken on that issue for the first time in decades. This is a cross-party campaign in which many hon. Friends and hon. Members from across the House have taken part.

[Christopher Pincher]

My hon. Friend is right to say that the Campaign for Fairer Funding for Education is a great cause, and I congratulate him on championing it. Does he agree, however, that in so far as the fairer funding has been spread around the country, it seems to have overlooked Staffordshire?

[Mr Walker]

I do agree with my hon. Friend, whose intervention has given me the extra time I need to make the point that, for many years, that campaign was led by the former Member for Stafford, David Kidney, who spoke passionately about the issue. I have said to the Education Secretary and others that it would be unfortunate if Staffordshire were passed over in this regard, but £350 million represents a big step forward for the lowest-funded authorities and, by my calculations and those of f40—the Campaign for Fairer Funding in Education—Staffordshire is among those lowest-funded authorities and deserves help.

The Financial Secretary to the Treasury, my hon. Friend the Member for Bromsgrove (Sajid Javid) is on the Front Bench today, and he is a Worcestershire colleague. I am delighted that Worcestershire will be receiving £5 million to help schools that have been underfunded for a long time. The long-term economic plan to take our country forward must focus on skills and on preparing young people for the future. Fair funding for education is a vital part of that, and I am grateful for the enormous support that colleagues have given me during this campaign. Indeed, most of my colleagues sitting on these Benches at the moment have supported the campaign and spoken passionately about it. I am grateful that it is a cross-party campaign, and one that we have been able to take forward significantly this year, and in this Budget. This is a Budget for jobs and for the future, and it allows us to take a significant step forward in achieving fairness for our country.

Holiday Pricing

Robin Walker Excerpts

Monday 24th February 2014 Westminster Hall

[Lorely Burt]

What is “special” and what is “exceptional” is a semantic point. I remind the House of what the hon. Member for Leeds East (Mr Mudie) said about allowing head teachers to use their common sense about the family circumstances of each child in their care. They should have more autonomy. It seems slightly ironic to me that, while the coalition Government try to repatriate to schools powers over the curriculum, management and control, we are in the present case removing discretion from them. That does not seem right.

[Mr Robin Walker (Worcester) (Con)]

Does the hon. Lady accept that there is discretion for head teachers to define what counts as special? Several of my constituents who contacted me about the debate said that they wanted to take their children out in circumstances that would be educational for them—to see other cultures and go to places that could help to inform their education. Does she accept that special circumstances might include those cases, and that it should be at the discretion of head teachers to make that interpretation under the regulations?

[Lorely Burt]

I do, indeed, and I do not think that anyone is better qualified than the head teacher to make those decisions. It is clear from hon. Members’ comments that some head teachers are cowed by the definition of exceptional circumstances. Guidance from the Minister on that would help them.

On the statistical evidence, the measures in question are a sledgehammer to crack a nut. Before the rules changed, authorised family holidays accounted for 7.5% of all absences in primary schools, which works out at 0.4% of all sessions missed. This has been mentioned before, but the figure goes down to 2.5% when a child goes to secondary school, because parents recognise the additional importance of their children’s education as they progress—that translates into 0.1% of all sessions missed. Are those therefore the families whom we should be penalising?

Absence for family holidays is lower among those who are the parents of persistently absent pupils. That is another thought—the family holiday parents are not the same as the irresponsible parents who allow their children not to attend school. We need to have some sense of proportion.

In conclusion, will my hon. Friend the Minister provide some kind of definition of “exceptional”? Can more precise, balanced and sensible advice be given to guide head teachers in their decision making? Finally, I find myself in agreement with the hon. Member for Leeds East that heads know their pupils and how to exercise common sense, so can we ensure that the guidance given to head teachers reflects the sensible responsibility that we give them in so many other areas of running school life?

Pub Companies

Robin Walker Excerpts

Tuesday 21st January 2014 Commons Chamber

[Vince Cable]

I cannot really add to what I have already said. The hon. Gentleman knows that we are following a process. I am conscious of the legislative timetable, and he will remember—indeed it is the whole purpose of this debate—that the Government did not consult in an open-ended way over this question; we consulted on a specific proposal to introduce statutory regulation, and that is what we are responding to. Although I am conscious of the legislative timetable, I will not give a specific date on which this report will be concluded.

[Mr Robin Walker (Worcester) (Con)]

As a member of the Select Committee, I urge the Secretary of State to take action as soon as possible, but I do understand the need to listen to the consultation. A moment ago, he mentioned some of the broad campaigning that has gone into this matter, and the organisation Fair Deal For Your Local, which I support. Does he agree that it is unfair of Opposition Members to suggest that this Government have done nothing for pubs when we have paid attention to the important campaign to end the unfair and job-destroying beer duty escalator?

[Vince Cable]

Indeed. I will go on to talk about some of the things that the Government have done to help the pub industry, the most important of which is the tax measure. The combination of the 1p cut and the abolition of the escalator is the equivalent of 4p on a pint. There have also been various other measures to support community pubs, of which my hon. Friend will be well aware.

Debt Advice (FCA Levy)

Robin Walker Excerpts

Tuesday 21st January 2014 Westminster Hall

[Mr Robin Walker (Worcester) (Con)]

It is a pleasure, Mr Hollobone, to speak under your chairmanship. I am grateful to the Backbench Business Committee for allowing one of its first Tuesday morning debates in Westminster Hall to be about this important issue. Following last night’s positive cross-party debate on the recent report on the payday loan sector by the Select Committee on Business, Innovation and Skills, this debate allows us to expand on a vital and timely matter, which was subject to a key recommendation in that report.

I particularly welcome the cross-party support for this debate from the Chair of the Select Committee, from its Labour members, including the hon. Members for Sheffield Central (Paul Blomfield) and for Glasgow North (Ann McKechin), from my Liberal Democrat colleagues, my hon. Friends the Members for Edinburgh West (Mike Crockart) and for Chippenham (Duncan Hames), and from a good number of Conservative colleagues, both on and not on the Select Committee. It is good to see my hon. Friends the Members for Gosport (Caroline Dinenage), for East Hampshire (Damian Hinds) and for North Swindon (Justin Tomlinson) here to contribute to today’s debate.

This debate is timely because, over the next year, the payday lending sector and other high-cost lenders will begin to be regulated by the Financial Conduct Authority and to pay the levy that it raises to cover the costs of regulation and to fund the Money Advice Service—and, through that, the provision of free debt advice services.

Hon. Members will be as surprised as I was to note that, until now, the highest-cost lenders have not had to make the same contribution to free debt advice services as their competitors in the banks and the credit unions. That has been unjustifiable, but I am glad that, thanks to changes made by the Government and the FCA, such lenders will shortly be making at least that contribution in future. However, there is concern that if the machinery of regulation and the levy remain as they stand, and no guidance is provided, the opportunity for those lenders to contribute additional resource to free debt advice services might be missed.

Another reason why this debate comes at a crucial time is that the Money Advice Service is negotiating with free debt advice services over their future three-year plans and budgets. Almost all hon. Members will benefit from the important work that the likes of the citizens advice bureaux do in our constituencies, and will recognise the enormous value to constituents of being able to access free, timely and impartial debt advice. I value highly the work of Worcester CAB, Worcester Housing and Benefits Advice Centre and other small debt advice charities such as Two Pennies Money Advice and Christians Against Poverty. I am grateful to all those organisations, as well as to national charities such as StepChange, for their work with constituents and for the information they provided to inform this and other debates.

A key way in which the free debt advice sector is funded is through the Money Advice Service and that, in turn, is funded through the FCA’s levy. The problem was discovered by a cross-party group of MPs who have been working together on these issues; I am grateful to the hon. Members for Sheffield Central, for Glasgow North and for Makerfield (Yvonne Fovargue), and to my hon. Friend the Member for East Hampshire, for sharing their meetings in this regard.

Understandably, the FCA sees itself as a collection organisation for the levy, with powers to agree what is put to it, but not to set the terms of the levy or measure the demand for debt advice services. Meanwhile, the Money Advice Service has been under pressure to show that it is delivering value for money and running efficiently, and its representatives have told me and other hon. Members that it has no current plans to ask for an increased budget in the years to come. If things remain as they are, we could miss the opportunity offered by the fact that new organisations will be paying the levy and contributing at last to the budget for free financial advice; their contributions could be cancelled out by a levelling down of the charges to other financial institutions.

I recognise that some colleagues, and even the Treasury Committee, are worried about the cost of regulation encompassed in the current levy, and I do not want to rule out a reduction in the contribution to the levy of other financial organisations. I have no reason to object to any such changes, but I want to ensure that they are not made at the cost of funding valuable and necessary support for free financial advice.

I also recognise that there is a legitimate debate about the role of the Money Advice Service, and that it has been the subject of reports by the National Audit Office and the Treasury Committee. The latter recommended a full independent review of its work and questioned whether it should continue at all. However, today’s debate is not the avenue for taking forward that particular discussion. If we accept that the Money Advice Service is the established channel for allocating funds to the free debt advice sector and that its negotiations with free debt advice providers are likely to set the limits of lenders’ financial contributions to the sector, we must show political leadership in calling for those limits to be raised.

I would like the proceeds of the levy for debt advice to be allocated among an even wider group of organisations, including some of the smaller players in the voluntary free debt advice sector, alongside the major providers, but that is also an argument for another time. I note that the National Association of Citizens Advice Bureaux confirms in its briefing that the six lead organisations work with more than 240 smaller organisations to deliver free debt advice.

In previous debates on high-cost credit, I have advocated the advantages of a levy on the highest-cost lenders to create a competitive advantage for more affordable lenders such as credit unions. I have pointed out that if such a levy were related to the rates of interest charged and the extent to which they go beyond the existing cap on credit union lending, that could create a virtuous circle whereby the growth of the high-cost lending market would fund ever greater provision of debt advice or the availability of more debt advice might direct borrowers to cheaper forms of debt, such as credit unions. I still believe strongly that such a system is desirable, but I recognise that it is not what we currently have. As a pragmatist, I want to make the system that we have work better.

Charities such as StepChange have made a clear case that the high-cost lending industry in general, and payday lenders in particular, are contributing to the growth in demand for free debt advice. As the BIS Committee report reflected, tens of thousands of people have been put into severe financial difficulty by taking out loans that turned out to be unaffordable for them. They are in addition to the hundreds of thousands who struggle to meet their obligations and the millions for whom short-term, high-cost loans might not be the best financial choice.

StepChange and citizens advice bureaux have reported rising numbers of people seeking advice as a result of getting into trouble with payday loans. The latter reported that the number doubled in the last year alone, and the former referred to a sevenfold increase over five years. Citizens advice bureaux highlighted that, in the last four years, there has been a tenfold increase in the proportion of clients receiving casework help with multiple debts that included a payday loan debt. They also reported many problems with people taking out multiple payday loans, and I hope that the speedy introduction of real-time data sharing and action on rollovers will address that.

However, we should not believe that, just because regulatory action is being taken on some of the most pressing issues of high-cost credit, all the problems will go away. Research by the Money Advice Service shows that 8.8 million people in the UK are over-indebted and, of those, 1.9 million are considering seeking advice. Although levels of household indebtedness have come down from a peak during the last Government, they remain well above long-term averages.

The evidence of the last few years is that demand for short-term, high-cost products is here to stay, and that consumers put a greater premium on ease of access than on price in many transactions. That point was well made in yesterday’s debate. There is a vital role for the free debt advice sector in ensuring that consumers understand the true cost of the financial decisions they are taking. The FCA’s current guidelines include recommendations for greater signposting to free debt advice services. Such signposting, although welcome, is likely to create more demand on a sector already under financial pressure.

I do not intend to go into a long discussion of the financial and fiscal difficulties that the Government inherited, but one consequence has inevitably been pressure on the direct and indirect funding of free debt advice services. Whatever our political views on that—those are likely to differ from one side of the House to the other—hon. Members of all parties should welcome an opportunity to secure funding for these very important services at no cost to the taxpayer and at no risk of being removed by political necessity further down the line.

Securing greater funding through the FCA levy would achieve that aim. In its recent report, the BIS Committee recommended:

“When payday loans come under the authority of the FCA, they will be subject to a levy. This must be additional to the existing levy and not used to off-set the level of payments by other financial organisations. We recommend that the levy paid by payday lenders is ring-fenced by the Money Advice Service solely for the funding of front-line debt advice services.”

Similarly, the briefing that StepChange kindly prepared for this debate concludes:

“StepChange Debt Charity believes the inclusion of payday lenders and other consumer credit firms as levy payers should be used to significantly boost funding for free debt advice. It should not be used to level down the total payments other financial services organisations have to make. The OFT says around a third of payday loans lead to repayment problems, suggesting the strain lenders place on debt advice is exceptionally high. StepChange Debt Charity believes the contribution different financial services firms make to debt advice should be based on the level of detriment they cause as well as the firm’s size. Payday lenders cause a disproportionate level of consumer harm relative to the amounts they lend; relative to turnover, they should therefore pay more towards debt advice.”

In succinct terms, the briefing from Citizens Advice concluded:

“The additional contributions from payday loan companies should result in an increase in the funding available for debt advice.”

I know that the Minister, my hon. Friend and Worcestershire colleague, is a sensible and reasonable man. Rising Treasury star though he undoubtedly is, I realise that not all aspects of the debate fall within his diktat, although I hope that he can reassure the Chamber today that the Government will look carefully at the issue. Huge progress has been made on the regulation of high-cost lending in recent months and the Minister can take a great deal of credit for important decisions that have been taken to date, as a result of which many more lenders will be paying the FCA’s levy and the bizarre anomaly of their not contributing while credit unions did is at last being dealt with. I hope the Minister will agree that we should take the opportunity to ensure that the free debt advice industry is properly and adequately funded and that institutions that drive up demand for its services make a proper contribution to the costs.

The FCA is a regulator and independent of the Government and the Money Advice Service is an arm’s-length organisation designed to deliver support to the free financial advice sector. Both have made strides in improving their approach to high-cost lending but the danger is that, without clear guidance about the will of the House, they could miss an opportunity to go further. As things stand, neither has a mandate to match the resources made available to the free debt advice sector to the growth in demand for its help.

It is also worth our noting the Low commission’s recommendation to increase substantially the funding made available for free financial advice. The measure that I have been discussing is one of the means by which that can be achieved. I hope that today’s debate will help to provide much needed guidance and that the Money Advice Service will consider taking the opportunity of having new contributors to the levy, to increase the resources that it passes on to the free debt advice sector.

I am grateful for your chairmanship, Mr Hollobone, and to the Backbench Business Committee for allowing the debate. I look forward to the Minister’s comments on how we can best address the important issue to the advantage of all involved.

[Several hon. Members]

rose—

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[Cathy Jamieson]

The hon. Lady makes an important point, and the issue of financial education was raised in the debate in the main Chamber last night. Financial education is important because there are people who have literacy and numeracy problems, which are often picked up at the point that they come for advice. They may not have felt able to tell people before then, but the problem becomes very apparent in a face-to-face meeting with advice workers, who can perhaps assist them to get help and support.

More broadly, financial education in schools is, of course, valuable; I have said that many times. It is the right thing to provide, but if it is only seen as something to be provided in schools that is not enough. There are key points in people’s lives when there is the opportunity to introduce them to different forms of financial education.

[Mr Robin Walker]

As the hon. Lady points out, financial education in schools is very valuable, but it is not the whole solution. Recently I visited a community primary school in my constituency where the local anti-loan sharking team were holding an assembly, which was entirely funded by money confiscated from illegal loan sharks. That is one example of how good work can be funded with no direct cost to the taxpayer and is this debate not another example of that, whereby we can help to fund the good work of debt advice charities and the rest of the sector without any cost to the Exchequer or the taxpayer?

[Cathy Jamieson]

Again, the hon. Gentleman makes a valid point. It reminds me of a previous career, when I was in another Parliament and worked closely with the predecessor of my hon. Friend the Member for Makerfield on tackling some of the illegal loan sharks and trying to ensure that they were brought to justice.

Of course, it is important that we consider everything we can do to establish the principle—I think it was referred to as “the polluter pays” principle—whereby the people who cause the problem have a social responsibility and, in this context, a financial responsibility to provide some of the funding to pay for the resources we need to tackle the problem.

My hon. Friend the Member for Glasgow North (Ann McKechin) asked if there has been a lack of discussion between MAS and the FCA. Again, I hope that the Minister can enlighten us on that issue, perhaps giving us some more information about the involvement of the two organisations. Also, can he say whether or not he can ensure at this crucial stage that all the organisations are brought together for further discussion? I am almost hesitant to say this again, but, as I have already said, there is sometimes a danger that people involved on the Treasury side would perhaps look in isolation at this issue; they would look at the money flows, the funding streams and so on, without necessarily looking at the people involved. In this context, it is very important to look at the people involved.

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[Sajid Javid]

I agree that demand seems to be growing, and evidence on that is emerging. It might help the hon. Gentleman if I move on to how MAS determines its budgets for money advice and debt advice, and how it has to take demand into account.

[Mr Robin Walker]

As the Minister will be aware, the Treasury Committee, among others, pressed MAS to justify the efficiency with which it delivers those services, and it was right to do so—I am the last person to object to that. Does he agree that it is important that MAS does not take from that the message that the only way to justify itself is by keeping its budget flat or spending less money? Delivering a greater service and providing more money to debt advice services would also be a sign of efficiency, so a message that MAS could take from this debate is that there is support for it providing a better service, and potentially more money, to the free debt advice industry.

[Sajid Javid]

I completely agree with my hon. Friend. He will know that I gave evidence to the Treasury Committee’s inquiry on MAS last year in my previous role as Economic Secretary. I said that the Government would have a full review of MAS during this Parliament, and over the coming weeks and months, I will set out how that review will take place. The review will consider some of the issues he raises.

Payday Loan Companies

Robin Walker Excerpts

Monday 20th January 2014 Commons Chamber

[Mr Robin Walker (Worcester) (Con)]

It is a pleasure to follow what I thought was an excellent speech by the hon. Member for Belfast East (Naomi Long). I am pleased that the Backbench Business Committee has requested this debate about an important report and a subject in which I have taken an interest for a long time. I first spoke about this issue in a Backbench Business Committee debate, and it is particularly appropriate that this subject should have received time for debate, given the essential role played by Back Benchers of all parties in driving forward the debate on high-cost credit and the regulation of the payday loan industry—a role that has been acknowledged by the Government in the past.

I congratulate the Chair of the Business, Innovation and Skills Committee, the hon. Member for West Bromwich West (Mr Bailey) on the report we are discussing and on his powerful speech in opening the debate. He made the point about television advertising extremely well, and one of the most memorable moments in evidence to the Committee was when Martin Lewis made his passionate case about grooming by payday lenders.

Over the past year a number of steps have been taken, which will be welcomed across the House, to tighten and improve the regulatory regime for high-cost lenders, to mandate a cap on the cost they can charge their customers, and to protect consumers. The FCA provided a helpful briefing for today’s debate that enumerates many of the improvements it intends to introduce, and given the rapid growth of the industry since 2008, such action is not only welcome but necessary. Nevertheless, there remains a high degree of concern about the prevalence and ease of access to very high-cost loans, and a good deal of evidence that they are causing real problems to many of our constituents.

When the Select Committee took evidence from payday lenders, they were at pains to point out that the number of people driven to default was only a small proportion of the total number who use such loans. That may be the case, but given the enormous scale of the industry, that small proportion represents a significant number of people whose lives have been profoundly affected for the worse, whose credit ratings may have been destroyed, and who will have been left permanently worse off and—as the hon. Member for Glasgow North (Ann McKechin) pointed out—sometimes unable to get a mortgage as a result of short-term credit. I therefore speak for all members of the Committee when I say that we feel that we need to go further in regulating the sector.

The report sets out some important points, and I wanted to focus on two: real-time data sharing and the importance of the FCA levy to fund free debt advice. For real-time data sharing, and taking on board the point made by my hon. Friend the Member for East Hampshire (Damian Hinds) that it is not a total solution, affordability is key, and it can play an important role in ensuring that payday lenders better assess affordability in the future. Representatives of the industry who gave evidence to the Committee went to great lengths to argue that they apply strenuous and rigorous affordability tests, but we also heard a great deal of evidence to the contrary. Perhaps one of the most illustrative points was the example cited by my hon. Friend the Member for Edinburgh West (Mike Crockart) about Bo Peep applying for a payday loan—an extraordinary story.

Charities such as Citizens Advice and StepChange were able to demonstrate too many cases where the same person was able to take out irrational numbers of loans from different providers, and the evidence both on defaults and roll-overs suggests that affordability is still not properly assessed. Although the spokesman for Wonga argued that the proportion of its debts written off had been overstated in some media coverage, he admitted that there was £77 million of bad loans, which represented almost 10% of lending by that company, or 300,000 customers. In another answer he suggested that only 3% of customers got into financial difficulties and could not afford to repay, but even if we take that 3% as a fair assessment, we would be talking about tens of thousands of people.

I think that real-time data sharing—unglamorous and perhaps wonkish as it is—is one of the keys to making the short-term credit industry work better and more fairly. Not only would it mean that existing lenders could avoid giving loans to those who might already be overcommitted elsewhere, but it would allow new entrants to the market to lend at a better rate, increasing competition and providing a real alternative to some of the sky-high costs out there in the market. That is because they would be able to avoid lending to people with large numbers of outstanding short-term loans, and thereby reduce their default rates. I have met potential market entrants who believe that if a proper system of real-time data sharing were available they could offer short-term loans at not much more than the roughly 39% APR allowed to credit unions.

The industry has suggested that it is in favour of such a system. Callcredit, one of the main players in the credit reference agency sector, has recently announced that it is piloting a data sharing scheme. That is to be welcomed, but there are a number of concerns with that voluntary approach. One credit reference working on its own with its clients will be unable to provide an accurate picture of the whole market. Its suggestion is an improvement, in that it reduces the interval between filings on lending, but it is not a real-time system. There is still a chance that customers could apply for one loan after another in a short time interval, and that lenders will be unaware of the loans outstanding at the time of their lending decisions.

More seriously, as long as credit reference agencies continue to provide lending data to their paying customers only, and as long as they compete on which agency has the best client list, there will be gaps in the picture of the market they can present. There is no guarantee that that voluntary approach will make lenders or the FCA aware of all the loans an individual has outstanding at any moment in time. Unless there is a firm agreement for all the credit reference agencies to work together and share their data, which is inimical to their reason for being and their way of doing business, some form of Government or regulatory intervention will be necessary.

I was pleased that both the regulator and the Minister, in their evidence to the Committee’s inquiry, expressed a willingness to intervene should it become necessary to do so, and I welcome the recognition they gave to the importance of real-time data sharing, but I reiterate the question I asked then: what time line will they set before taking action to mandate real-time data sharing? The Committee’s report suggests a deadline of July 2014 for the FCA to step in if the industry has not delivered. Notwithstanding the decision of Callcredit, I believe that that is likely to be necessary.

I do not want to give an exhaustive list of the Committee’s recommendations, which I support, but hon. Members who have followed debates on payday lending will know that the funding of the free debt advice service through the FCA levy is dear to my heart. There is a great deal of evidence that the high-cost credit sector is driving demand for free debt advice services. I have previously advocated a levy on their charges to help to finance the sector. The current mechanism is the FCA levy. I want to put in a quick advertisement to hon. Members in the Chamber. Tomorrow morning, we will have a debate in Westminster Hall. I do not want to put all my arguments on the levy tonight, but I hope many in the Chamber will join me in advocating the case, as the Committee has recommended, for the additional levy for payday lenders to be passported to the free debt advice sector. That will be crucial in making the sector work better.

I pay tribute to hon. Members on both sides of the House who have worked on this issue. My hon. Friend the Member for North Swindon (Justin Tomlinson) has worked on improving financial education; the hon. Member for Sheffield Central (Paul Blomfield) has run a cross-party campaign; my hon. Friend the Member for East Hampshire (Damian Hinds) has done important work on credit unions; and the hon. Member for Makerfield (Yvonne Fovargue) has worked with Citizens Advice and the debt advice sector. By working together, hon. Members have achieved good things, and we can go much further.

Sixth-Form Colleges (VAT)

Robin Walker Excerpts

Tuesday 17th December 2013 Westminster Hall

[Mr Graham Stuart (Beverley and Holderness) (Con)]

Thank you very much, Mr Bayley, for calling me to speak. It is a great pleasure to serve under your chairmanship, and to confirm that both the Minister and the hon. Member for Wigan (Lisa Nandy), who secured the debate, had agreed to my speaking in it. I am sorry if I should also have informed you, Mr Bayley, but I think my bureaucratic resources ran out after contacting the Minister and the hon. Member.

Given the short time available, I will try to keep my comments brief. In October, I wrote a letter to the Secretary of State for Education. It is a shame, notwithstanding the great respect that I have for my hon. Friend the Exchequer Secretary to the Treasury, who is a deeply distinguished member of the Government, that we do not have a Minister from the Department for Education here to answer questions about what is essentially an education matter. That letter was co-signed by 73 MPs from across the House, and it made the point that the unfair treatment of sixth-form colleges as far as VAT goes made no sense and was, in fact, untenable. The good news is that the Government agreed, fundamentally, that they could not defend that treatment. The bad news is that they do not plan to do anything about it. That is a shame, because Government policy is to create a level playing field for 16 to 19 provision, and they are right to do so. If anyone wants to play party politics, I will point out that the Opposition were wrong to leave the position uneven when they were in power. However, the Government have set out their aim, but now they are not fulfilling it. They have moved in that direction, but there is a real opportunity to take action on this issue. In the overall scheme of things, it would not be that expensive to do so; for sixth-form colleges, it is estimated that it would cost no more than £30 million.

There are reasons why sixth-form colleges could be treated differently from further education colleges, if one wanted a stepped programme. To say, “This is wrong, but we can only afford to rectify some of it, so we will rectify none of it” is illogical. It would be better to do the right thing by sixth-form colleges, not least because, as has been said, they are the most successful 16 to 19 providers that we have. If the Government’s education policy is about anything, it is about raising standards across the board and, of course, closing the gap between rich and poor. Well, guess which the most successful institutions are in the 16 to 19 sector at doing both those things? You’ve got it—sixth-form colleges.

I have no sixth-form colleges in my constituency; I am not banging a constituency drum here. The sixth forms in my local schools will probably be cross with me for speaking up for sixth-form colleges so often. However, the whole point of the Education Committee is that we look at the evidence and try to work out what is the best thing to do. Well, guess what? Sixth-form colleges are peculiarly successful in addressing the Government’s two key aims on education, so it makes no sense to penalise them in the way that is happening now.

The VAT penalty that sixth-form colleges face is worth an average of £250,000 per college, and as has been said, the problem is worsened because, unlike other institutions, they cannot cross-subsidise. If that money were to be provided to sixth-form colleges, it would help them to save courses that are being lost, including less popular courses such as further maths. Ministers are quite right to identify the need to encourage science, technology, engineering and maths subjects. Sixth-form colleges can play a positive part in doing that, if they are provided with the wherewithal to do so.

[Mr Robin Walker (Worcester) (Con)]

I am grateful to the Chairman of the Education Committee for giving way; he is making a very strong speech. He talked about investment in STEM subjects. Worcester sixth-form college has received money from the Government to invest in a new science centre. However, does he agree that that money would go further if we were able to take action on VAT for colleges?

[Mr Stuart]

I absolutely agree with my hon. Friend, and I think there are feelings across the House on this subject. I said that I would keep my remarks brief, so perhaps I will bring them to a close. The big point is that sixth-form colleges have for years consistently been the most successful providers at delivering the Government’s key educational aims for 16 to 19-year-olds, but time and again, they appear to be on the front line of cuts in funding. That cannot make sense, in terms of having a rational, coherent approach to this issue.

National Infrastructure Plan

Robin Walker Excerpts

Wednesday 4th December 2013 Commons Chamber

[Danny Alexander]

I am very glad that the hon. Lady has given me the chance to talk about affordable housing, because I can refer to the fact that the number of affordable houses in this country fell by 421,000 during Labour’s time in office. We now have the largest annual house building programme for affordable homes through housing associations for two decades. I would have hoped that she would welcome rather than criticise that.

[Mr Robin Walker (Worcester) (Con)]

The coalition Government are delivering progress on new nuclear and transport infrastructure where the Labour Government utterly failed during their time in office. On the transport front, I particularly welcome the inclusion of the Birmingham airport runway extension—it will be completed in 2014, according to the document—which will provide direct links between the engine room of the British economy in the midlands and China and far east, where we are drumming up so much business.

[Danny Alexander]

My hon. Friend is absolutely right to highlight the runway extension at Birmingham airport. A year or so ago, with my hon. Friend the Member for Solihull (Lorely Burt), I had the privilege to visit that fantastic project, which will open up access to a much wider range of destinations from Birmingham airport, and that is a good thing for the whole country.

Finance (No. 2) Bill

Robin Walker Excerpts

Thursday 18th April 2013 Commons Chamber

In order for the Chancellor to make a properly informed decision on this vital issue next year, we need a proper assessment of the impact of the cut, as well as an analysis of how much the Treasury would gain if the additional rate were returned to 50% in 2014-15. The Chancellor, who claims to find tax avoidance “morally repugnant”, announced his millionaires’ tax cut in Budget 2012 on the grounds that the behavioural response to the 50p rate introduced by Labour was larger than expected. In other words, because some wealthy people found neat ways to avoid paying the top rate, the Chancellor has, in effect, rewarded them with a tax cut. It would be interesting to see his assessment of the behavioural response to his announcement in view of the extensive media coverage of bankers deferring their bonuses until this financial year in order to gain from the lower top rate, but given his apparent continued determination to fight European plans to cut bankers’ bonuses, I will not hold my breath.

[Mr Robin Walker (Worcester) (Con)]

The hon. Lady is asking for an analysis of what the change in tax rate would do to the Government’s revenues. That is exactly what the previous Labour Government failed to deliver when they made their change. Does she not regret the fact that the Labour Government, in their 13 years in power, continued to levy a top rate of 40% and then made their change to the top rate so late in the day that it failed to raise any additional revenue either under their Government or, because they had not undertaken such a behavioural study of what might happen, under the Government who followed?

[Catherine McKinnell]

I do not follow the hon. Gentleman’s logic that that justifies a non-assessment at this stage. He knows very well that there has been a huge intake from the 50p tax rate which this Government fail to acknowledge. He also knows that we suffered a catastrophic international financial crisis in 2008 to which the Labour Government responded by ensuring that those who could bear it most would take the highest burden, therefore introducing the 50p tax rate. This Government took the first opportunity to abolish it, without even allowing enough time for proper analysis of its effect to take place.

--- Later in debate ---

[Albert Owen]

As a member of the Energy and Climate Change Committee, I understand the difficulties. I realise that one of the major problems—the price of crude oil and gas—is external and that we could have a wider debate about that, but I am talking specifically about the need to boost the domestic economy.

Small businesses tell me that high street names are folding, first, because they have tight margins, and secondly because, although footfall might be steady, people are spending less money. The 2.5% increase in VAT is making a real difference and taking money out of people’s pockets. I support raising personal income tax thresholds as a way of helping the low-paid, but it can have no impact if cancelled out by a VAT increase. That is what business tells us. A small business leader in my area makes a little joke about the Chancellor: every time that that business leader goes out with his wife, daughter and son-in-law, he has to take the Chancellor with him, because one-fifth of the bill is shared with him. That is not a good state of affairs. If business people are starting to think like that, it means that confidence has been eroded. One way of providing the necessary boost to confidence in the domestic market would be to reduce VAT temporarily.

Those are not just my words; they were also the words of the Prime Minister before the general election, when he said that VAT was a regressive tax, which it is. I am in full agreement with him. The Deputy Prime Minister—there are not many Liberal Democrats here today—said that putting up VAT during a recession would be a bombshell for the economy, yet that is exactly what the Government have done. I have argued consistently for keeping VAT, which is a regressive tax, as low as possible in order to stimulate the economy.

[Mr Robin Walker]

I admire the hon. Gentleman’s consistency, but does he accept that this was a matter of debate during the general election because the then Labour Chancellor was clearly preparing to raise VAT to 20%, as he has subsequently admitted? It is wrong to imply that his party has been as consistent as him.

[Albert Owen]

That argument is completely wrong. It might be Conservative central office’s take on it. The previous Chancellor suggested a VAT rise, but was outvoted by the Cabinet. He was just one individual. The current Prime Minister, however, was clear that he would not put it up, but then did. The hon. Gentleman cannot accuse the previous Chancellor of making an argument and then blame the last Government for not listening to him. It was the leader of the Conservative party, now the Prime Minister, who turned circles on this issue.

This regressive taxation hits the most vulnerable in our society. According to the Office for National Statistics, 9.7% of the money the poorest 20% spend goes on VAT, and they spend more on VATable goods than the richest 20%, for whom that figure is 5.8%. It is an unfair tax, as well as one that takes money out of the economy.

The Conservatives have been consistent in shifting from direct to indirect personal taxation. It was Anthony Barber who introduced VAT, at 10% I think, and a later Chancellor, in 1979, who raised it from 8% to 15%, which had a negative effect for many years. In 1984, it went up to 17.5%. As I said, in opposition, the Conservatives said that they would not do this, yet it was one of the first things they did. They are not getting the revenue yield they expected, because the economy is in such dire straits—it is stagnating, in many ways. My hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) talked about wage freezes and other impacts of Government policy. With a policy of reducing VAT, the Government could actually do something, instead of blaming the previous Government, the European Union or other external factors. Here is an opportunity for them to use one of the levers of power at their disposal.

I hope that the Liberal Democrats will support us. They have made such a big issue of it in the past. There is only one Liberal Democrat here today, the hon. Member for Eastleigh (Mike Thornton), but I would be happy to take an intervention from him, if he feels as strongly as his party did—not him personally—before the general election. It is a big issue. I talk to small businesses, and they tell me that the rate of VAT is having a negative impact on their businesses. Everyone in the House wants to stimulate the economy, and here is a way of doing it relatively quickly.

There is evidence that along with other measures—it cannot be seen in isolation—the previous Government’s VAT reduction from 17.5% to 15% actually helped the economy at a difficult time. The car scrappage and other short-term schemes were also introduced to boost the economy. The Government should be considering those sorts of things, rather than just blaming others. The economy is at a difficult juncture. Unemployment is rising again, after temporarily falling: 2.54 million people are on the dole—that is mass unemployment—and are not spending. Helping them, with their small incomes, by reducing VAT would have a big impact on the economy. The way forward is to create more jobs and get them back to work.

The Government have said—I am sure that the Minister will clarify this matter—that it is not possible to reduce VAT, but that is not the case. I have heard them mention on numerous occasions a mechanism by which Europe can prevent them from reducing VAT, but it could be done as a temporary measure. There are also many variations, zero-rating exemptions and concessions that could be applied to VAT.

--- Later in debate ---

I am conscious of the time. Other hon. Members want to speak and we want to hear the Minister’s response. I ask the Minister and those on the Government Benches to recognise the amendment as a straightforward request for a report to be provided. If the Government are confident about what they are doing and if they have nothing to hide or to fear and they want to produce such a report, we of course will work with them on that. Sadly, I have my doubts whether that offer will be accepted but I am always open to being surprised by the Minister, and I look forward to hearing that, for once, he will accept our mild-mannered, straightforward amendment and commit to producing the report.

[Mr Robin Walker]

It is a pleasure to take part in this debate and to speak about one of the most important and beneficial changes announced in the Budget. In dealing with the clause stand part element of the debate, I intend to talk about the level of the basic rate of income tax and, more importantly, the increase in the threshold, which, as the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) said, are directly linked.

I would first like to clarify one point, having been contacted by a very concerned constituent who had heard that the basic rate for the top level of tax was being reduced to £32,000 and, as she earns £35,000, was worried that she will suddenly become a 40% taxpayer. It is important to clarify that the basic rate thresholds are set on top of the threshold for paying income tax and that no one is being asked to pay the 40p higher rate until they earn £41,450.

[Stewart Hosie]

Of course, that is only part of the story, because the threshold before one pays 40% has gone down from £37,500 to £32,000, a reduction of over £5,000, while the 20% threshold has gone from £6,500 to £10,000, which is an increase of only £3,500. In fact, 670,000 more people are now paying the 40p rate than were doing so three years ago, so many more people now fall within a tax band that used to be only for the rich.

[Mr Walker]

I take the hon. Gentleman’s point. I had thought that his party was in favour of progressive taxation. Certainly, I believe that raising the income tax threshold and taking many people out of tax is one of the coalition Government’s great achievements. It was a Liberal Democrat policy at the general election, and on this occasion I will admit that they had an excellent idea.

The coalition Government are right to recognise that it is vital to make work pay and that that cannot be done through welfare reforms alone. By also ensuring that people can keep more of the money they earn, we will stimulate the economy, reward work and alter the balance between dependency and opportunity.

I am delighted that Ministers have been able to bring forward planned changes to the income tax threshold by a year so that workers at the lower end of the wage spectrum will not have to wait until 2015 to pay less tax. As a result of the changes announced in the Budget, more than 34,000 people in Worcester will receive a tax cut and 3,370 people who would have been paying income tax in 2010 will pay none at all. That will not only reward those people, but directly stimulate our local economy—we have heard from Labour Members about the importance of people having money in their pockets to spend in the shops. In four years, the threshold at which people have to pay tax will have been raised by 50%, which is good news for millions of part-time workers who have been taken out of the tax system altogether and full-time workers on average earnings who benefit from a reduced burden of income tax.

The Opposition have downplayed those changes and focused on changes to tax credits to argue that some working families will be worse off. In doing so, they show a profound misunderstanding of the pride people take in the money they earn and their desire to support themselves. It is far better for the individual and their family to earn their money, keep the fruits of their labour and be able to spend it as they see fit than for it to be taken away and for the individual to be dependent on the faceless benignity of an all-knowing state that might choose to hand a proportion of it back—might—but that, if Labour ever gets control of the Treasury again, might find itself without the means to do so.

To listen to some of the speeches we have heard from the Opposition over the past few weeks, one might be forgiven for believing that the tax credits system, as it currently stands, was a vital part of Attlee’s welfare state and a bastion of the post-war consensus; it is not and it was not. In its current form, it is the creation not of a Beveridge or a Bevan, but of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), who so rarely graces the House with his presence. I am glad that that complex system, which takes money away from working people to feed it through the Government sausage machine and re-allocate some of it, is to be rolled into universal credit and reformed to ensure that work will always pay.

It is far better to remove the tax from thousands of hard-working people in my constituency, and millions across the country, so that they can keep the money they have earned for their needs, their homes and their families. If we are to support families, it is far better, as the right hon. Member for Birkenhead (Mr Field) has argued, to use public money to invest in early intervention than to use it to prop up a complex system of credits that fails properly to support work and has always failed to reach millions of the people who, in theory, are eligible for it.

The fact that the Government are increasing the tax threshold shows that we are rewarding work at the same time as simplifying the tax system. The fact that we have been able to bring forward those changes shows that there is a sense of urgency about delivering an unalloyed public benefit, which many Labour Members have supported today.

I would argue that the same sense of urgency should be brought to the issue of child care support for working families. The Prime Minister set out exciting policies on that before the Budget but my constituents are being asked to wait until 2015 for the support. I have heard from many constituents who are delighted to hear that it will be available through the tax system but are then devastated to realise that by the time it is implemented, their children will have grown out of the eligibility criteria.

If a thing is worth doing, it is worth doing now. I urge the bright and brilliant men and women of the Treasury to bend their backs to the task of bringing those valuable initiatives forward in the shortest possible time. While they are at it, I urge them to consider a proper transferable married person’s tax allowance to support the family.

I welcome many initiatives in the Budget and I hope that the Chair will not rule me out of order if I touch briefly on a few of the others that will make a real difference to people in Worcester. Freezing once again the duty on fuel is more than welcome and much appreciated. Removing the much loathed beer duty escalator will raise a toast in many of Worcester’s pubs. The employment allowance will help more small businesses to create vitally needed jobs.

Returning to my opening remarks and the matter under consideration, I make one suggestion for the future, and I sincerely hope that Treasury Ministers can take it on board. Raising the income tax threshold is and has been the right thing to do, and it remains so. It is wonderful that we have brought forward to 2014 the date at which the threshold will reach the magic number of £10,000. However, today we should open a debate about that number. The figure of £10,000 was not worked out by economists or in careful consultation with employers and workers, nor was it based on any reflection of financial reality; it was drawn up as a manifesto promise in a party conference on the eve of an election.

In my view, the Conservative party missed out by not making that promise ourselves. Today we should start to consider the level at which the threshold for income tax should be set in the future. I believe that it should be the same as the earnings of a full-time worker on the minimum wage.

[Stephen Williams]

I was hoping that my hon. Friend would make that point. He has already acknowledged the Liberal Democrat pledge on the £10,000 threshold at the last election. We have already decided that at the next general election we are going to link the income tax threshold to the national minimum wage, which is currently £12,071. If my hon. Friend is about to say that he endorses the Liberal Democrat position at the next general election, I will welcome that.

[Mr Walker]

I will certainly urge my party to adopt a similar position. Raising the threshold to £11,500 or £12,000 in future Budgets would help millions more people and provide further stimulus. That, along with other policies that my party supports, and which the Liberal Democrats do not always support, such as keeping a freeze on council tax, could make a real difference. Raising the threshold would extend the legacy of that valuable change and do even more to make work pay. I urge Ministers to consider it for the future and commend them on the difficult job that they are doing well.

[Sheila Gilmore]

The hon. Member for Worcester (Mr Walker) has perpetuated some of the myths about some of the last Government’s policies. For example, he suggested that it would be better to put money into early intervention—presumably, that would involve paying things such as tax credits. Of course, it was not an either/or.

Anyone looking at the setting up of Sure Start and all the reports that were done on the importance of early intervention would see that we did not think, as is sometimes suggested, that the only solution to deprivation, child poverty and so on was simply to put money in. Money is part of the issue, but we certainly did not see things in terms of either/or. All the people up and down the country who have seen reductions in Sure Start services, for example, see that now it is not only not either/or—in many cases, it is neither/nor.

It is all very well for the Government to say, “We’re leaving you your own money so that is fine,” but the bottom line is that people have less money in their pockets. What has been suggested is a give-away in income tax is more than balanced, for many low-paid workers, by the reduction in tax credits and other provision. What matters to those people is how much they have to spend. Saying, “Oh, it’s wonderful that you’re getting to keep your own money” is no use. They cannot necessarily buy the things that they need.

The situation with child care is similar. The hon. Member for Worcester was right to say that the Government measure on that is not coming in right now; moreover, many people have already seen a cut in help. Child care tax credits were cut by the Government for many low-paid working families, so it has already happened.

The tax credits system was particularly beneficial for single parents, over 350,000 of whom went into employment as a direct result. There are serious concerns about universal credit as the answer to all this, particularly for single parents. Gingerbread and other organisations representing single parents have pointed out that their position could be worse under universal credit.

Autumn Statement

Robin Walker Excerpts

Wednesday 5th December 2012 Commons Chamber

[Mr Osborne]

I think we have roughly the same pallor, from looking at the hon. Gentleman. We have been completely transparent. We have published the OBR forecasts. They are independent and people will look at them and draw their own conclusion, which is that under Labour borrowing went up and up whereas under this Government the deficit has come down.

[Mr Robin Walker (Worcester) (Con)]

The claimant count in Worcester today is 500 lower than it was in 2010, when the city had a Labour MP, and youth unemployment is 150 lower. In that context, may I welcome the Chancellor’s early response to the Heseltine review? Extra money for LEPs, the regional growth fund, the increase in capital allowance and investment in infrastructure should mean that that good progress can continue.

[Mr Osborne]

I am delighted that there has been that good news in my hon. Friend’s constituency and I hope that with the new investment allowance for businesses in his area there will be more jobs. He is right to say that the Heseltine review also asks big questions of us as a Parliament about how we spend money locally and whether we should create a single pot for which LEPs could make bids. I have announced that we want to proceed in that direction and we will have much more to say about it when we have our spending review.

Inward Investment (Wales)

Robin Walker Excerpts

Thursday 29th November 2012 Westminster Hall

[Geraint Davies]

We do not want a debt-driven, borrowing-driven economy—obviously not. We need people to be given the opportunities to get jobs, create wealth and pay some of that back in tax. Post-1997, we had the transfer of a situation where the previous Conservative Government—history is repeating itself, of course—saw ever fewer people in jobs, paying less tax, and they were forced to cut services and increase debt and borrowing. That changed with Labour getting Britain back to work. Later, post-2008, it was a special situation, with too much borrowing and on the back of that, sub-prime debt. I agree that the sustainable future is about working and paying our way, but it is not about cutting to such an extent that we deflate the private sector so that it cannot invest in new jobs. We need the economy going along, with investment in consumer markets and productive areas. Although there is some level of agreement, we differ slightly on our interpretation of the past.

Moving back to the future, what should the UK and Welsh Governments do to give Wales the best opportunity for economic growth? An area that we touched on in the report was UK Trade and Investment’s role, and I very much agree with the report’s recommendations. UKTI has 83 offices around the world, and they are opportunities to market Wales for inward investment and trade. The coalition Government, in their wisdom, decided to close down all the regional development agencies, so when we went to see UKTI in Berlin, Dusseldorf and so on, we asked what happens now when a German company comes along and says to UKTI, “We want to build a factory, a distillery, or whatever. Where should we go?” That used to be put on a computer platform that was drawn down by the RDAs, which would compete for that investment. As RDAs were abolished, that no longer happens, and clearly, there is an opening for Wales to move in to. Wales has great, ongoing opportunities to use UKTI to maximise the open goals that have been created by the Government taking the players off the pitch.

[Mr Robin Walker (Worcester) (Con)]

I am grateful to the hon. Gentleman for giving way. As he will recall, when we travelled to Brussels as part of the Committee’s investigation—I thoroughly enjoyed working with him on the report—we were shocked when we heard from both UKTI in Brussels and from representatives of the Welsh Government there that they did not see their job as being to work with UKTI and to market Welsh opportunities. Indeed, UKTI said, despite what he has just said about RDAs, that it was getting attention more regularly from some English regions than they were from organisations promoting Wales. I am sure that he would agree that that situation ought to change.

[Geraint Davies]

I am grateful for that intervention. When we saw the Welsh Government office in Brussels, it made its top three priorities clear. The first, as it is in Brussels, was policy in the EU, and in particular where it impacts on Wales—the common agricultural policy, and the rest of it. The second was grants and funding opportunities. Convergence funding has provided billions of pounds of investment in Wales, and that must be a key priority. We have seen it throughout Wales: recently, at Swansea university, £60 million from the European Investment Bank was invested in the second campus, and the £20 million in convergence funding for that is vital. Its third priority was the profile of Wales—to brand Wales. Those are key issues.

As the hon. Gentleman pointed out, we asked whether a fourth priority should be inward investment and trade. I agree that it should, and the response we received was that the office would be happy to work with UKTI. My understanding is that we are moving down that track. The report is helpful in encouraging co-operation with UKTI, which has 83 offices, while Wales has much fewer. However, where Wales does have them, it should work in co-operation.

On the Welsh brand, I understand that the Welsh Government are now looking at a new marketing strategy, which again, I very much welcome. There are big opportunities to push forward the Welsh identity, and I think that castles should be considered. If Members will indulge me for a moment, having a background in multinational companies and global brands, the castles around Wales symbolise romance, history, culture, strengths and endurance, which are all qualities of Wales. It is all part of inward investment and tourism. The dragon tends to be slightly overwhelmed by the Chinese dragon, but there is hope yet. [Interruption.] Okay, let’s keep the dragon—sorry about that.

Moving forward, it is not only about castles; it is about having a unique, clear identity for Wales in the global marketplace. The report referred to the success of the Welsh Development Agency. Some feel that if that brand still existed, it might be able to be re-harnessed in some respect. The report also suggests that we work in co-operation with private sector practitioners on the ground. The report’s basis was to get entrepreneurs, inward investors, multinationals, academics and an array of people in the economic community to give their view on what we should do, and we should be open-minded about taking advice as the global environment changes.

The report is obviously a place in time, and a similar report will be needed downstream, because clearly, things are changing, and the role of the public and private sectors is important in providing the instruments for success in future. Few people know, when they look at some of the great global successes, such as the Apple iPhone, that some of the technology—the touch-screen and voice sensitivities—was delivered by the public sector, by a scientific foundation in the United States. Apple then took that and made it a global brand. Some people seem to think, “Oh well, it’s the private sector. They know what they are doing,” but fundamental science and innovation is vital for commercial success. The issue is to have that link between the academic, and research and development, going through to commercial success.

I mention that because it is mentioned in our report and it is alive and well in our great city of Swansea—in Swansea university, in the first instance. People there are changing the rules. Within Swansea university, instead of having a silo situation, with the engineering department here, medicine there and so on, they mix it up so that the engineers are in with the medics. In terms of life sciences, development of nanoproducts and so on, they are working with inward investors in producing global brands. They have the support of Rolls-Royce, BP and others in relation to the development of a second campus worth £200 million. As I mentioned, the investment in that from Europe has been critical. Those coalition Members—in particular, the Tories, of course—who say yah-boo to the Europeans need to realise that a joined-up approach whereby we are working together to have a strong Europe and a strong Wales within Britain within Europe is vital for the future. We cannot retrench to become fish and chip shop Britain, as many on the Conservative Benches would like to see us.