Budget Resolutions
Debate between Stella Creasy and Lord Tyrie
Mr Tyrie
My hon. Friend has made his point, and he may well be right. I never talk about cider for long in the House of Commons because, whatever I say, I have always found that it results in a great deal of correspondence. I will avoid cider altogether.
I end on a couple of larger points about the backdrop to the Budget. The Chancellor is having to deal with two big risks. First among those, and by far the biggest, is the risk to the economic prosperity of our constituents and the stability of the west from the resurgence of economic nationalism. There is a bit of that in Britain and a great deal more elsewhere in the world. Protectionism has been on the rise for some time, and it is already affecting global growth. It is worth bearing in mind that global growth has been anaemic over the past five years compared with the average of the past 30 years, and that includes the effects of the financial crash. There is a big difference between those two numbers.
Global trade growth has been even weaker. Global trade is now declining as a share of world economic activity, and we should all be concerned about that. The link between prosperity and trade does not seem to have registered with President Trump, at least not yet. He has withdrawn from the Trans-Pacific Partnership, and the Transatlantic Trade and Investment Partnership looks to be in trouble. He has called the World Trade Organisation “a disaster,” and he is threatening to withdraw from that, too. But not the Prime Minister. She has made it clear that Britain should be the firmest advocate for free trade anywhere in the world, and she is right. If it were all to go wrong and we were to return to full-blooded protectionism, we would not have to look into a crystal ball; we could read the book of the 1930s.
Mr Tyrie
I will end with a word or two about Brexit, but I will not comment on the exchange rate except to say that devaluation makes the country poorer, but devaluations can come and go. We need to look at it as a shock absorber that the market has put in place as a consequence of the Brexit decision and in a much more long-term framework rather than judging it, as we are now, so soon after the event. Brexit does pose the risk of a trade shock.
Mr Tyrie
If the hon. Lady will forgive me, I would rather wind up. I am sure she will want to make her own speech in a moment.
There certainly will be a trade shock if we revert to WTO rules, so I am pleased that the Prime Minister has made it clear that she is working for what she calls a “bold and ambitious” deal with the EU. Deep engagement, political and economic, from outside the EU almost certainly commands a majority in the House and in the country; cutting off Britain almost certainly does not. Hopefully all parties to the negotiations grasp the importance of securing a deal, but wanting a comprehensive deal and getting one in what will amount to 18 months of negotiations are not the same thing. Getting one will be a massive undertaking. Businesses know that, which is why many of them will not wait around to find out whether there will be a deal; they will protect themselves. They will start to move economic activity out before 2019 and the supply chains will start to adjust, too—to the UK’s detriment.
I shall make one further point. There is a straightforward way to safeguard the UK from the risk I have just described, and the UK must ask for it in the negotiations. It almost certainly requires only qualified majority voting, and it is available under article 50 of the treaty. The UK should make it clear, now, that after leaving the EU—that is, having repealed the European Communities Act 1972 —the UK’s first requirement is that a standstill on the implementation of the detailed terms of any deal should be put in place. That is a crucial ingredient to bring stability and certainty during the negotiations.
When the Conservatives first came into power in 2010, there was a 10% budget deficit, ballooning public debt and the second-lowest growth in the G7. That all amounted to a massive challenge. Now, the public finances are stronger—only after six years of hard work—but the two risks to which I have alluded could amount to a cocktail scarcely less difficult to handle, particularly if mistakes are made. The Chancellor has told us that he has taken a cautious approach by steadily reducing borrowing; I strongly support him in that, and he has my strong support to persist, even if he hits heavy weather.
Financial Services (Banking Reform) Bill
Debate between Stella Creasy and Lord Tyrie(10 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Tyrie
On payday loans, I only want to make two very quick points. First, we need to be very careful that EU regulation does not drive a coach and horses through anything we might try to do domestically. I also want to reinforce the point that it is extremely important not to displace what we may disapprove of in the formal sector into the informal sector of very nasty loan shark practices. This will require a great deal of supervision and care.
Mr Tyrie
If the hon. Lady will forgive me, I will not, because I promised the Chair that I will speak for only three minutes. The hon. Lady will have an opportunity to make her own speech in a moment, and she has been a doughty campaigner on this subject for some time.
I want to speak briefly about part 5 of the Bill, which is the part that creates the payments regulator. This implements a recommendation the Treasury Committee made two years ago. It is worth explaining the origins of our recommendations.
The Payments Council—which is dominated by the banks and other firms involved in the payments system—decided in 2011 to abolish the cheque, without providing any explanation of how it would provide an adequate replacement. That was a profound mistake, and the Committee decided to investigate. The justification for that decision looked pretty threadbare and the abolition also carried a considerable consumer detriment both for charities and for a lot of people who use cheques. I did 20 radio and TV interviews on this subject after the report was published. I asked each of the interviewers whether they had a chequebook; 19 of them said they did and they very much wanted to keep it. I think that brings home the value of cheques. This does not affect only the elderly; quite a large group of people want to keep some kind of paper-based transaction system for the time being.
Under pressure the Payments Council did a U-turn and cheques have been retained. The Treasury Committee also looked at how such a crass decision could have been taken in the first place. We concluded that the explanation lay with the structure of the Payments Council itself. Frankly, it has been little more than a poodle of the industry, and it certainly could not reasonably claim to act on behalf of consumers. A reasonable case can be made, however, that it is a monopoly controller of a crucial banking service. We recommended that that responsibility for the payments system be brought within the ambit of regulation, and we gave an outline of how that should be achieved. Amendments 63 to 134 would implement that central recommendation of our report. It is now up to Parliament to ensure that the FCA is much more responsive to the needs of consumers and competition, on this and a good number of other issues, than was its predecessor. I warmly welcome this part of the Bill.