Pat McFadden
MP for Wolverhampton South East · Labour · United Kingdom
“In his review Alan Milburn considered that issue and said that, “the UK’s NEET crisis is much more long-term and deep-seated than any decisions taken in the last few years.” As I said earlier, 400,000 more people are in work this year than last year, and the number of young people in employment is up since the election.”
“Since our last DWP questions, both Alan Milburn and the Pensions Commission have published their respective interim reports on young people and on the current state of saving for retirement. I look forward to receiving their final reports later in the year.”
“As Alan Milburn pointed out in his recent report, the UK’s NEET crisis is much more long-term and deep-seated than any decisions taken in the last few years. There are 400,000 more people in work than last year. The number of young people in employment is up by 74,000 since the election.”
“I thank the right hon. Gentleman and send him commiserations for whatever has left him reliant on his crutches today. I am happy to congratulate the businesses he mentioned in his constituency. He raises a serious point: it is important not only to come up with the right policy, but to make it simple for businesses to use.”
“My hon. Friend is right, and I thank Cardiff football club for being a partner. We are supporting nearly 1 million young people and creating up to half a million opportunities for jobs and training.”
“We are making strong progress on expanding youth hubs, with around 130 already in operation across Great Britain. In March, I announced the locations that we want to open in this year, and I have just announced a further 180 locations for the following two years.”
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“Against that background, it makes no sense at all to restrict the policy armoury that this Bill establishes to respond to the undermining of the system by taking powers that will affect only individual banking groups and not the sector as a whole. As the hon. Member for Chichester said about our recommendation on new criminal offences, some of those powers may never need to be used, but their existence on the statute book should focus the minds of those running these major organisations.”
“Institutions involved in banking are not islands cut off from one another. They lend money to one another. They engage in the same practices. Their culture is often shared. They place similar bets. When one falls, it often has the capacity to drag others down with it, as we learned to our great cost. The same is true of the standards and culture questions we examined in such detail after Christmas. The LIBOR fixing was the straw that broke the camel’s back in terms of the establishment of the commission, but that did not just happen within one bank. Groups of traders within banks were co-operating with one another to rig the interest rates, and groups of traders across different banks were co-operating with one another to rig the interest rates.”
“No convincing reason has been given for accepting one and rejecting the other. The Government have today tried to make a virtue of issuing a response to the banking commission’s final report which says they broadly support its conclusions, yet in terms of the legislation before us the Government are continuing to reject a major recommendation of our first report, and as we have teased out of the Minister, even in the document published at lunchtime, they are rejecting recommendations on UKFI and regional banking. We may learn about others, too. On the question of backstop powers to enforce separation in respect of either individual groups or the sector as a whole, one of the clearest lessons from the banking crisis of 2007-08 was how interconnected the banking system is.”
“I specifically want to talk about amendments 17 and 18 in the name of the shadow Chancellor and his shadow Treasury team colleagues; and amendment (a) to Government amendment 6 and amendment 19 in the name of the hon. Member for Chichester. The banking commission’s first report, issued before Christmas, focused on ring-fencing and separation. It made two principal recommendations in respect of what has become known as electrification of the ring fence, which is the power to go further than the ring fence and enforce full separation between investment and retail banking. The first of those proposed powers was in respect of individual institutions, and it was accepted by the Government, at least in name. The second power was in relation to the sector as a whole, and it was not accepted by the Government.”
“I do not propose to follow the hon. Member for Chichester (Mr Tyrie) by making a wide-ranging speech on the recommendations of the banking commission’s final report, as he has set them out perfectly adequately. However, I do want to say that I do not think the Minister has served himself or this discussion well by publishing the Government’s conclusions at lunchtime today, and then coming along and making a de facto statement of new policy, thereby simply compounding the sense of frustration in this House about the adequacy of the procedures for discussing these issues. Instead of going over all of that in great detail, however, I want to concentrate on the amendments before us, and on the discussion of ring-fencing and separation.”
“It is why I support a more general power, to be held by the Government, to allow broader separation if the ring-fencing reforms do not work. That is what amendments 17 and 18 are designed to achieve and they are very much in line with the recommendations of the commission’s first report.”
“These reforms should be implemented and they can make a difference, but if we think we have fully resolved the problems of this huge sector, we will be guilty of complacency and possibly kidding ourselves. The problem of too big to fail is still there. Our recommendations will make a difference but we also need powerful weapons, even if their use is unlikely, to enforce good standards and to make those running banks think long and hard about the consequences before they decide to test or game the system in any situation in future. That is why I think my hon. Friend the Member for Nottingham East (Chris Leslie) is right to say that a periodic review of ring-fencing and how it is operating is a good idea.”
“To return to the issue of the power to separate in respect of one institution or the sector as a whole, my overall reflection, having served on the commission for the past year is that, although its recommendations should be supported, even if we take all the steps set out—even if we put a new system of regulation in place, including the twin peaks system, even if we have the ring-fencing powers on structure that are in this Bill, and even if we faithfully implement the standards and culture recommendations to which the hon. Member for Chichester referred—it would still be rash to come to the conclusion that we had fully resolved the problems of too big to fail or too complex to manage.”
“The hon. Gentleman makes a very good point. Without wishing to pursue this analogy too far, the difference between a gun in the locker and the nuclear deterrent is that it is conceivable we would use the gun in the locker, but less so the nuclear deterrent. I am therefore not entirely sure which of the two commission members has got this quite right, but deterrence is certainly part of the effect we are looking for.”
“There are other ways for banks to improve their capital ratios than simply by reducing lending. They could, for example, look at the proportion that they give out in remuneration every year; that could make a difference to their capital ratios. Over the past decade or two, vast amounts of money have been paid out in remuneration that could have improved capital ratios without having any effect at all on lending. Let us not fall for the argument that we can either have banks that lend, or safe banks, but we cannot have both. It would be wrong of us to fall into that false dichotomy. We should aim for banks that are both safe and have the ability to lend.”
“In all the debate about ring-fencing, separation and so on, what has perhaps been under-discussed is the fact that not enough attention has been paid to leverage—a basic measure of banks’ safety or resilience against future risks and very important in respect of banks’ ability to absorb losses. One of the features consistently pointed out, both to the Treasury Committee and the Parliamentary Commission on Banking Standards, was that in the run-up to the crisis banks were hugely over-leveraged. That meant that their capacity to absorb and deal with problems when they came was minimal. Our banks still have very high gearing today. The banks lobby hard on the issue. I counsel caution on the basic trade-off that has been raised about lending and leverage.”
“I will not detain the Chamber for long; I just want to make a few points. The argument is really about complexity versus simplicity in how banks are regulated. One of the points that my hon. Friend the Member for Nottingham East (Chris Leslie) is trying to bring out is the inadequacy of the over-complex Basel regulations, which have allowed banks to game the system and say they had hugely different capital ratios on similar classes of assets in different institutions. The truth is that the Basel system is so complex that it does not give confidence about the safety of our banks. That is why this debate about leverage is so important.”
“I thank my hon. Friend for his energy in securing today’s debate. In the cases he outlines, does he agree that the complexity of modern global banking should not be used as an excuse for ignorance by those charged with the stewardship of the banks, and that we should put in place regulatory—and if necessary criminal—sanctions to ensure that responsibility cannot be evaded on the basis of professed ignorance? Responsibility for running large global complex organisations must be taken by those in charge.”
“Will the Minister and her officials look into this to see how many other young women are in that position and whether changes can be made to reduce the number of young women who have had such a reaction or even stop it altogether?”
“I congratulate the hon. Gentleman on securing the debate. If the Minister and the Department are considering reviewing the vaccine in the light of his speech, may I ask the Minister whether she will also consider another aspect of this—that is, the number of young women who have had a severe adverse reaction to the vaccine? My constituent, Stacey Jones, received the vaccine five years ago and since then she has struggled with memory loss, loss of concentration, mood swings and a need for continuing treatment by the neurology department at the Queen Elizabeth hospital in Birmingham. Does the Minister accept that it cannot be an acceptable price to pay for what might be an otherwise beneficial vaccine programme if some young women undergo such a severe reaction?”
“Given that the Chancellor appears unwilling to give us the answer that dare not speak its name on last year’s borrowing, I will ask him about the time available to debate the recommendations of the Parliamentary Commission on Banking Standards. A number of those recommendations require legislation before they can be given effect. The Government have allocated only one day on Report for the banking Bill. Although I respect their lordships, surely it should be the elected House that is given a chance to debate the recommendations. Will he reconsider and allow two days on Report?”
“I agree that Stephen Hester did a good job in reducing the size of the bank’s balance sheet and beginning to turn the bank around, but that job was not complete at the time of his enforced departure. Will the Minister tell us more about the implications of this timing and strategy for returning the bank to the private sector? May I also tell him that, whatever else the Parliamentary Commission on Banking Standards has to say about this, if he was looking for a permission slip for a quick sale at a knock-down price, he will be disappointed?”
“The A and E department at Wolverhampton’s New Cross hospital recently saw a record 365 patients in one day. Those pressures will increase with the downgrading of Mid Staffordshire hospital. Does the Secretary of State agree that it will be deeply unfair to patients in both Wolverhampton and Staffordshire if the added burden on Wolverhampton’s New Cross A and E department is not met with increased resources from him, in terms of size and staff, to cope with the increased pressures?”
“The scale of the suffering outlined in the Foreign Secretary’s statement is truly appalling. May I ask him to say a little more about the evidence of the regime’s use of chemical weapons, and about the impact that that evidence is having on discussions about possible arms supplies to the opposition, both within Europe and with the United States?”
“A moment or two ago the Chancellor said that if the renegotiation that the Prime Minister has set out on produced fundamental change, he would vote to stay in the EU. What will his position be if the renegotiation does not produce much change? That is what happened the last time this was tried in the 1970s. Not much change is not exactly an unlikely prospect, given the attitude of other European member states so far to the Government’s stance.”
“Now the Conservatives have only been in power in coalition for two or three years.” No wonder President Obama had to warn the Prime Minister this week that the UK’s influence is greater when we are engaged with and in the European Union. The notion that we can swap membership of the European Union for some other transatlantic embrace is confounded by that warning, which I hope is heard on the Government Benches.”
“The amendment has attracted more and more signatures, and as it has done so, the Prime Minister’s professed relaxation has become greater and greater—presumably, by 7 o’clock tonight he will be completely asleep. His relaxation is not strength but weakness, and it fools no one. It is not only about the Back Benchers; while he is in the United States arguing for a European-American trade agreement, his own Cabinet Ministers are touring the studios to say that they would vote to come out of the European Union. It all feels very familiar, and it is little wonder that John Major’s former press secretary said this week that “there are some parallels with the back end of John Major’s premiership. One of the differences is, that was when the Conservatives had been in power for 17 or 18 years.”
“In fact, the Government seem to have given up and are waiting desperately for the new Governor of the Bank of England to secure the economic growth that they have so signally failed to secure. The Queen’s Speech seems to be more about positioning and fear of the UK Independence party than about genuinely dealing with the country’s economic problems. UKIP, however, is a movement against the political establishment as a whole. It is based on a vision of the United Kingdom as it used to be, not as it is or how it will be. I have to say to Government Members that they cannot fight nostalgia with policy or positioning; the only way to answer nostalgia is to offer a better tomorrow, rather than having an argument about a better yesterday. The Queen’s Speech has been completely overtaken by the argument about Europe.”
“The central question since the financial crash has been how to secure recovery in tough economic times. When the election took place, economic growth had been restored and unemployment was falling, but since then we have seen precious little growth, and unemployment is rising once again. Dealing with that should have been the central purpose of this Queen’s Speech and this debate. There are measures in the Queen’s Speech—some worth while—to help small businesses to recruit new employees, which we called for, and to extend apprenticeships, which were significantly expanded during our time in government. However, one is left with the impression that although some of the measures may be worth while, as a whole they are not equal to the depth and durability of our economic problems.”
“When today’s Prime Minister is asked what he wants from the renegotiation, the only specific he mentions is the working time directive. The working time directive was already renegotiated in the previous Parliament. We dealt with the on-call issue and the preservation of the UK’s opt-out. The important thing about that is that it was done without threatening to leave the European Union. If that is all that the Prime Minister can come up with, no one will believe it. Of course the European Union needs reform. It needs to be more flexible and less rigid and it needs to concentrate more on growth and jobs. The Prime Minister has a far greater chance of achieving those goals if he is not threatening to leave at the same time. This is a broader argument about our vision of the UK. Is it to be engaged or is it to retreat into nostalgia?”
“The tactics will not work in the short term; they will simply increase the Government’s pain. Instead of stopping banging on about Europe, the Tories are back to doing little else. That is because too many people on the Government Benches care more about this than about the country’s economic problems or about being in government. The centrepiece of the Prime Minister’s strategy is renegotiation. We have been here before, too. Harold Wilson had exactly the same strategy in the 1970s—renegotiate, then hold a referendum. He put the conclusions to the House in March 1975. To those who have not read them, I recommend that they do so. They will find plenty about beef, butter and sugar, but nothing about fundamentally altered terms of membership.”
“We then come to the draft Bill. There was no talk of that beforehand, no suggestion of it in the Queen’s Speech. It is a panic response to the amendment, a failed attempt to buy off tonight’s rebels. This tells us so much about how the Government operate—short-term tactics, not long-term strategy. However, the tactics fail to buy off the rebels, who are simply emboldened and come back for more. Even this afternoon we have heard people saying, “2017 is not soon enough. We need the referendum now.” The truth is that whether the Bill is a private Member’s Bill or a Government Bill in this Parliament, no Parliament can bind the next Parliament. The time to put legislation forward to have a referendum is before the Government want the referendum, not four or five years in advance.”
“On the subject of the Government’s tactics over the rushed, panicked publication of this referendum Bill, does my hon. Friend agree that today’s debate shows that the tactic has already failed because during the debate the people who wanted this were already asking the Government to go further by having the referendum this side of the general election rather than after the next one?”
“Does the Minister agree that it was politically unwise for the Treasury to brief that it hoped the Parliamentary Commission on Banking Standards would endorse its politically motivated attacks on the previous Chancellor’s bail-out of the Royal Bank of Scotland? Does he further agree that the uppermost criterion for the reprivatisation of RBS must be the interests of the taxpayers who bailed it out, rather than any political or electoral timetable?”
“We can see the impact of the community on the cultural and economic life of the city of Wolverhampton.”
“Thousands of people take part in the nagar kirtan—the parade—which goes through the streets of my constituency, in a very well organised and joyful celebration of the Sikh faith. Our city will probably be for ever associated with Enoch Powell, but the story of the community and our history since he spoke shows that he was wrong: the Sikh community in Wolverhampton is a success and Wolverhampton’s multi-faith, multi-religious community is a success. We have proved that such successes can be achieved, provided there is commitment all round, and a great many people can take credit for that success. Walking down Dudley road in my constituency, I can see its physical evidence. I can walk past sari shops and Bollywood films for hire. I can eat the finest Punjabi food. I can walk into the new Lakshmi restaurant—a great investment by Major Singh.”
“The national story of course goes back much further that that, as we have heard, with brave Sikh service in two world wars. For those early immigrants in Wolverhampton, life was not easy. They were often packed into crowded living conditions, separated from family and friends and doing heavy physical work. They sometimes met with friendship and good experiences, but they also sometimes met with discrimination, perhaps even hostility and certainly a lack of understanding. That has changed a lot over time, and the community today is a very successful and established part of city life. There are many gurdwaras in my constituency and throughout the city. The annual Vaisakhi celebration is a major part of its cultural life.”
“It is a pleasure to take part in the debate under your chairmanship, Mr Owen. I have not brought my sgian dubh, but I will make a few points in the debate. According to the recent census, the city I represent, Wolverhampton, has 22,000 Sikhs—the second biggest concentration of those who are of the Sikh faith in the country. Most of the Sikh community in Wolverhampton have their family roots around the city of Jalandhar in Punjab, which I have had the honour of visiting. I also had the honour of visiting the Golden Temple some years ago—a truly humbling and profound experience that I will never forget. The story of Sikhism in Wolverhampton begins in earnest with the generation who came in the 1950s and ’60s to work in places such as Bilston steel and other heavy engineering works.”
“If we take a wider lesson from today’s debate, it should be that what a community such as the Sikhs, who are fantastic, enterprising and educationally aspirational, with values of faith, family and community, has brought to the UK shows that immigration can be a positive part of our national story, and I hope it is in the future.”
“It is also a tribute to cities such as Wolverhampton and to our country that a community such as the Sikhs and many others over the years can come to the UK, make a new life, put down roots and be part of the country’s success. My own parents came from Donegal in the Republic of Ireland in the 1950s, and the huge Irish community in Scotland has also been successful. It is a tribute to the UK that we have been open to that over the years. Far too often today, the debate about immigration is couched in terms of limits, dangers and negative stories about what people can bring to our shores.”
“If there is a lesson in that, it is that positive engagement with the EU, rather that withdrawal or turning up so late that we cannot influence the debate, produces results. The community is a success in the UK, but it sometimes has a strange relationship with India. As my hon. Friend the Member for Hayes and Harlington (John McDonnell) said, that in large part stems from the events of 1984, when many Sikhs lost their lives. The pain of that experience and the lasting sense of injustice among the Sikh community are very real. There is a lasting desire for greater transparency and honesty in the story of what happened. If the community’s relationship with India is strained, its relationship with the UK has been a good one. That is a tribute to the Sikh community and its efforts.”
“I acknowledge the good efforts of the Department for Transport in working with the European Union and other Governments to reach a successful conclusion. The result is that the European Commission now says that swab and wand technology used in UK airports can be used throughout the Community. I am a strong believer in good, tough, strong security at our airports. My Sikh constituents agree that it is essential, but if we can achieve it in a way that respects people’s faith, so much the better, particularly because freedom of movement is a founding principle of the EU. The UK Government’s engagement with the issue has produced a far better result than we saw on bank bonuses and other issues.”
“I wonder what the majority will be at the next election. The voters will decide. The community is a success in Wolverhampton and around the country, but we should not pretend that there are no issues in the community or challenges for it. Public health issues, which are not confined to the Sikh community, certainly affect it. People are sometimes reluctant to face up to hidden illnesses, including mental illness. There is always the challenge of freedom and greater independence for our younger generation, who ask for more choice and more decision-making power than perhaps their parents and grandparents enjoyed. We have heard about searches of turbans—the dastar—at airports, about which a great many Members on both sides of the House campaigned, as did Sikh organisations.”
“We are pressed for time, but I want to remind my hon. Friend and the House that I will be happy again to host the House of Commons Vaisakhi celebrations on 22 April, to which all right hon. and hon. Members are most cordially invited.”
“I am afraid that I want to press the Minister further on the same point. He said that the Government would ensure that there was full consideration in this House of further recommendations from the Parliamentary Commission on Banking Standards, yet the timetabling motion that he will move later says: “Proceedings in the Public Bill Committee shall…be brought to a conclusion on Thursday 18 April”. That is before the date of the parliamentary commission’s final report. How meaningful will be his commitment to full consideration of those proposals, given that he is rushing the Bill through Committee before the commission, which I remind the House was set up by the Chancellor, has even issued its final report?”
“I suggest to the Minister that he has just ducked the British dilemma that he set out at the beginning of his speech by saying on the one hand that we have a huge financial services sector, but on the other hand that we are going to go at the speed of the slowest ship out of Basel on the capital and leverage rules. Is not the proper response to having a huge financial services sector relative to our economy to ensure that we have adequate rules to protect the UK taxpayer, rather than always going for the lowest common denominator internationally on such standards?”
“My hon. Friend said, I think, that the timetable was inappropriate. Does he agree that it may also be unwise, given that if the amendments are moved in the other place, the first three speakers in that debate are likely to be the former Conservative Chancellor, the former Chair of the Treasury Committee, and the Archbishop of Canterbury?”
“The approach that we should take to this British dilemma is to say, yes, the industry is valuable and important, but because of its very size we believe in the need for particular measures in the UK to insulate us from wider damage. Simply to stress the size of the industry and to ask for it to be left alone whenever someone comes up with a regulatory proposal is, to put it in the language that bankers would understand, a one-way trade, and a one-way trade is not good enough. We need a two-way trade that protects the interests of taxpayers too.”
“But there is another view, which I would like to advance in this debate, that the very size of the industry in relation to the UK economy places a responsibility on us to ensure that that size does not damage the interests of UK taxpayers or the real economy. We have seen through the crisis that occurred several years ago precisely how damaging failure in that industry can be to the wider economy. I do not have to remind the House about the results of that failure in terms of the bail-outs, the deficits and the decisions about tax and spending, the consequences of which our constituents are living with today and will be living with for many years to come.”
“I would like to begin where the Minister began, with this issue of the British dilemma: the relationship between the size of our financial services industry and the rest of our economy. It is right that it is a very big UK industry. It is a big contributor to taxes, as the Minister said, and it is a major employer. It has a cluster of expertise around it, including law, accountancy, and consultancy services, which are also important contributors to our exports. There are two views that we can take because of that importance. One is the view, sometimes canvassed, that because of its size we cannot touch it, or only in a minimal way, because if we harm this huge industry it will go to Singapore or the United States; it will go somewhere.”
“One of the reasons for having this debate is that when the crisis hit in 2007-08 there was no proper resolution mechanism or bail-out regime in place to ensure that bondholders, rather than taxpayers, were on the hook for bank failure. We are having this debate precisely because we did not have the tools in place in legislation to deal with the global crisis when it unfolded. As I have said, what we need is a two-way trade.”
“It is precisely because problems in the industry are often widespread that there is a strong case for taking a reserve power to enforce separation on the sector as a whole, in the event that the sector tries to get around the intention of the Bill.”
“The first was the reserve power to separate individual banks should they try to burrow under, climb over, erode or get through—or any other metaphor that has been used—the fence, and the Government have accepted that recommendation. The second was to have a wider power to enforce separation on the sector as a whole. That second power would be needed precisely because problems in the sector do not come in the neatly wrapped form of one institution. As we saw in 2007-08, contagion is a fact of life in banking; the weakness of one can quickly affect others. Cultural problems in one part of the sector also spread quickly.”
“It is important to understand that the point of ring-fencing, as recommended by the Vickers commission, is not to ensure that no retail bank can ever fail—that is impossible—but to make failure, if it does occur, more manageable by insulating the risks and focusing the resolution effort on the essential services that the Government judge it in the public interest to protect: people’s savings, the payments service and simple consumer and SME lending. It would be going too far, and it would be far too rash, to say that that solves the “too big to fail” problem. However, ring-fencing ought to reduce the risks of future failure to taxpayers and the wider economy. As the hon. Member for Chichester (Mr Tyrie) has said, the parliamentary commission, on which I serve, made two proposals in relation to structural separation.”
“If the hon. Gentleman believes that the tools were in place, I must refer him to the Chancellor, who is constantly saying that his predecessor, my right hon. Friend the Member for Edinburgh South West (Mr Darling), had no alternative when the crisis hit in 2008. Let me turn to the Bill and some of the issues before us today. There is broad agreement on the need for some kind of structural separation between retail and investment banking.”