John McDonnell
MP for Hayes and Harlington · Labour · United Kingdom
“It is not a laughing matter—I am sorry for interrupting the flow of the discussion. It would be useful if the review looked at NATS’s long-term investment plans, particularly since its partial privatisation in 2001, which I opposed. I thank the Minister for meeting Unite this morning and thanking the workers, who have worked so hard.”
“On a number of occasions, I have raised the case of Lee Cheuk-yan, who many Labour Members will remember was the general secretary of the Hong Kong Confederation of Trade Unions and founder of the Labour party in Hong Kong. He was detained during the democracy movement five years ago.”
“I thank the Minister for his statement. NATS used to be in my constituency and then moved down to Swanwick. Of course, with Heathrow in my constituency, I receive—as I mentioned yesterday—a large amount of correspondence from a whole range of other MPs’ constituents, who think I am responsible for Heathrow airport.”
“I fully agree, and let me also say that wheelchair compensation is significant in this legislation. Most of us have dealt with cases like that. Going back to accountability in the process, a number of different organisations have provided us with notes on the legislation.”
“I apologise to my right hon. Friend; I should have checked this before the debate. The proposed new section 61G refers to priorities and objectives of the Secretary of State, which include a requirement for the Secretary of State to issue a document setting out those priorities and objectives for the CAA.”
“At the moment, when people in my constituency are faced with these problems, they do not know where to go; it is as simple as that. Finally, the debate that we will have on Heathrow expansion and the new policy statement will be interesting, given that we do not know what the flight paths will be. If I was a constituent of my hon.”
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“In the absence of evidence to the contrary, we can only assume that the charter still holds. That means Departments and other public agencies are operating under the old rules; they are still implementing planned spending cuts and still holding back investment decisions. It is essential for the wellbeing of this country that the House repeals the updated charter, because as it stands the charter still requires achieving a surplus, which we all know is impossible to achieve, as I believe the Prime Minister admitted today.”
“Of course. That is why we support a fiscal charter approach and have produced a realistic one—fiscal charters must be realistic. If the Government set targets and then miss the three that they set themselves, that undermines the credibility of the Government’s economic policy making. The only hope of rescuing the existing charter is by activating its knockout clause, which the Chancellor referred to in an earlier speech. To remind hon. Members, if growth has been below 1%, is below 1% or is forecast by the OBR to be below 1% on a rolling four-quarter by four-quarter basis, the charter’s targets can be suspended. The problem is that the OBR recently announced that it will not release new projections until later this year, so we remain in the dark about whether the charter targets are still in operation.”
“As always, my hon. Friend is spot on. We are on the same page as almost every organisation that has an interest in the economy in this country: the CBI; the Federation of Small Businesses; the British Chambers of Commerce; and the TUC. All of them are saying exactly as he has said.”
“The problem with the hon. Gentleman’s contention is that we were told the way to control welfare spending was to introduce a welfare cap, and this was part of the charter. The Government have now breached that charter consistently and are forecast to breach it in every year throughout their Administration. The point I am making is that the fiscal charter is almost redundant now, because it is so ineffective. Housing benefit did rocket, but the way to control welfare is by building council homes again, so we are not pouring money into the pockets of private rented landlords.”
“The Chancellor must now take the necessary steps to give himself the freedom to invest in the economy, without being bound by a surplus rule he has conceded is likely to be ditched in the autumn in any case.”
“Let me just press on; I commit to coming back to the hon. Gentleman. Madam Deputy Speaker might get a bit hot if I continue to take too many interventions. Households and businesses up and down the country need clarity and guidance, and it would be irresponsible to leave them without guidance as to the Government’s actions until the autumn. Waiting until October is a luxury this economy cannot afford, and Britain is on hold until the Chancellor makes his plans clear. Unfortunately, this is only the latest consequence of a shocking lack of planning by the Government for the eventuality of a leave vote. The then Chancellor said back in March that a credible blueprint was completely missing from the leave campaign, but a blueprint of any kind seemed to be missing from the entirety of the Government.”
“It would be useful to know today whether the successor Chancellor is planning to be similarly generous to large corporations and whether the reduction to 15% is still part of the Government’s plans.”
“I say to Conservative Members that it is important now that we recognise the decisions that have to be made as soon as possible, particularly on the surplus rule. We already know about the black hole in March’s Budget brought about by the Government’s U-turn on personal independence payments, but following the leave vote, the former Chancellor also announced plans to reduce corporation tax to below 15%. That is a significant fiscal announcement. According to the ready reckoner of Her Majesty’s Revenue and Customs, by the time it takes full effect it could mean an enormous additional £4 billion giveaway by the Treasury. This is money that could otherwise be spent on public services.”
“I will have to watch my language, Madam Deputy Speaker. Let me say to the hon. Gentleman that when someone is going to crack a joke in this place—I know this because I have failed so often—it is best that they get the script right. As for Labour Members, the message has come across in every debate we have had, consistently since September, including today, that this is about the difference between having a fiscal charter that allows us to invest and one that does not. It is as simple as that. I respect his views and I have listened to his contributions in the past, but on this issue I believe that even those on his own side are beginning to move. Britain is on hold until the Chancellor makes his plans, because, unfortunately, as I said, this is not the only consequence of the lack of planning.”
“I will come on to that, but I have to say that there are some concerns about the sale of British assets, and I am simply echoing what the Prime Minister herself said only a few weeks ago.”
“I am sure that those on the Treasury Bench were listening to that. The Chancellor has a long list of issues that he needs to address to give some certainty, certainly if we are to see long-term investment in such things. I share my hon. Friend’s views: there is too much uncertainty with regard to a whole range of taxation and support initiatives from the Government. To be frank, it is jeopardising jobs as well as the future of our planet.”
“I announced on Monday that the Labour party supports a large programme of investment and will support the Government in a large programme of investment.”
“After the leave vote, more forecasters have cut their growth forecast. The IMF has joined them. Yesterday it revised down its prognosis for next year from 2.1% to 0.8%. With the current account deficit having hit record highs in the past year—in the most recent figures, it stands at 6.5%—our plan for the future cannot just be to fund that indefinitely with more overseas sales, such as that of ARM. We hope that the Chancellor will heed those who are calling for a much needed and eminently affordable change of direction. It is a tragedy for this country that the Conservatives have only noticed that there is an alternative as a result of the leave vote, which I fear they helped to bring about.”
“I repeat that it is essential that, as a minimum, there is a guarantee from the Government soon to protect these funds in some form on an equivalent level. There is an alternative; there has always been an alternative. Members of the Government Front-Bench team now see it, in part. Opposition Members have said so for some time. There is an alternative based upon investing in the future, growing the economy and allowing fiscal policy to work hand in hand with monetary policy. Professor Mariana Mazzucato has argued for the need for long-term, patient investment. We support that. It is true that the sale of ARM Holdings to SoftBank indicates that there is potential for new industries and innovation, but that potential needs long-term financing, which includes Government investment in infrastructure and research.”
“The OECD agrees, but until the OBR gives permission to suspend the surplus rule, the Chancellor is constrained by his own rules. The Government’s current plans for public sector net investment for the rest of this Parliament are for it to fall in each year, from £36.4 billion this year to £32.1 billion in 2019-20. Of course, we do not expect a full Budget now, but the least we need is a commitment to recognise the changed times that we are living in. The uncertainty about public investment comes on top of uncertainty about the structural funds for regions—which are set to lose up to £10 billion if we leave the EU—and further uncertainty for those reliant on projects funded by the European Investment Bank.”
“Let me just remind Members what the report said: the incomes of young people are still 7% below where they were before the financial crisis, and the incomes of those in their 30s, 40s and 50s have remained stagnant. Andy Haldane, the chief economist at the Bank of England, has spoken about a “lost decade” for earnings. McKinsey reports that four fifths of households have seen either no improvement or falling earnings. That is what we have to show for the year of fiscal rules from the former Chancellor. There is a consensus now across the country, from the TUC to the CBI, that investment is needed. Earlier this year the IMF told the Government that it had no objections on the grounds of fiscal responsibility to the Government undertaking more investment.”
“The Secretary of State for Communities and Local Government called for tax cuts across the board and spoke about a Growing Britain fund, funded by more borrowing. The new Prime Minister repeated today the need to abandon the surplus target—perhaps to let it slip. The Secretary of State for Environment, Food and Rural Affairs spoke about the need for “prosperity, not austerity”. We welcome all those conversions to our line of argument, but none of this can be achieved within the confines of the charter as it now stands until the Office for Budget Responsibility advises otherwise. We saw the consequences of the policies based on the old fiscal framework yesterday in a report from the independent Institute for Fiscal Studies.”
“I think the argument is sound. Until we obtain a fiscal rule that reflects the reality of our economy and our future, we will not return to the dynamism that is needed to restore growth and to ensure that we have wages and jobs that are beneficial to the community overall rather than the low paid and insecure work that we have at the moment. Let me press on, because I do not want to strain your patience, Madam Deputy Speaker. It is not just Members on these Benches who believe that the fiscal rules adopted by the Government are not fit for purpose. The former Secretary of State for Work and Pensions, the right hon. Member for Preseli Pembrokeshire (Stephen Crabb), called for a £100 billion infrastructure fund to invest in schools and housing.”
“We are winning that argument. The problem is now that we need decisive change from Government with regard to the fiscal rule; otherwise Britain will remain on hold.”
“Good try. Initially last year I thought the fiscal charter was so ludicrous that I was just going to rubbish it or ignore it. Then, as people remember, I made a U-turn because I thought we could defeat it, because we had virtually all the Labour party and others demonstrating that it was ludicrous. We predicted that every target set in the fiscal charter would be missed, and we were right. The Labour party is an anti-austerity party. We will campaign against austerity, but more importantly now, we are campaigning for a long-term future plan of investment. I think we are winning the argument right across the piece. As I said, from partners in industry and across the political parties—even in the Conservative party now, as we saw in the leadership campaign—there are voices calling for hundreds of billions of pounds of investment.”
“Many voted to leave on the basis that they and their towns and regions felt left behind as a result of seven years of austerity, which have brought about high levels of poverty, lack of investment, and low-paid jobs and insecure jobs. As a result, I think there was an expression of anger in the referendum about a whole range of issues. People were saying to the Government, “We’re not satisfied with your performance, we’re not satisfied with the way we are being governed and we want change.””
“Friend the Member for Coventry South (Mr Cunningham) said, was the impact of austerity on people’s daily lives, which is caused by the adherence to a fiscal rule that we now know is virtually bankrupt and having counter- productive implications for our economy by holding back the investment that many people—even on the Government side—now feel is needed.”
“Let us be clear, because it is best not to exaggerate people’s positions. I think the response on immigration was a response to the concerns people had about the undercutting of wages, the pressure on public services and so on. That is why, on the development of the free movement of people, we have always argued—particularly from the Opposition side—that we should ensure there are sufficient controls, but also mechanisms to prevent the undermining of wages. That is why the last Labour Government—I praise them for this—set up a fund to alleviate the pressure on public services. I think a whole batch of grievances was wrapped up in the vote, and we have to learn from that. One of the key grievances, as my hon.”
“Would the hon. and learned Lady allow me to finish? I have taken several interventions, and she will be able to speak. [ Interruption. ] Oh, go on.”
“In March, we saw the fastest unravelling of a Budget almost in living history. Now, the entire fiscal approach, as underpinned by the current charter, has collapsed in almost a year. The Government’s economic credibility faces nothing less than a catastrophe unless they rise to the challenge. We cannot wait for the OBR to report in due course that there has been a negative shock and that the targets are suspended. To be frank, the mandate as it stands is shredded and must go. There is no credible option left to the Chancellor but to undo what should never have been done, to put right his predecessor’s mistakes, to repeal the charter and to support this motion, bringing forward an alternative that provides the basis for the stabilisation of the UK economy and the provision, above all else, for long-term investment in growth.”
“If it was operating now, we would be abiding by it, and we would be investing for the future. Let me press on to the end. We hope the Chancellor will heed those who call for a much needed and eminently affordable change in direction. It is a tragedy for this country that the Conservative party has come to notice that alternative only as a result of the leave vote. As I said, I announced on Monday that we would support a large programme of investment to help to ensure that the potential of our economy is met. We proposed a national investment bank, which would help to boost investment across the country, ensuring that no community is left behind. In conclusion, Labour will do all it can to ensure that the price of any negative shocks from the leave vote will not be paid by working people in any part of the country.”
“However, we also make the point that when conventional monetary policy is hampered by the lower bound to interest rates, the rules will be suspended in order that fiscal policy can then work, but we have suggested that the Monetary Policy Committee should be the determinant of that. Why is that more flexible than the existing rule? It is because, as we have seen, the Office for Budget Responsibility, for example, is not going to report until the autumn, but the Monetary Policy Committee meets monthly, so that will give us more flexibility. In our credibility rule, we also said that the OBR would be responsible to Parliament, with a clear mandate to blow the whistle on any Government breaching those rules, so that gives an element of independence. It is a fiscal rule, but a credible one.”
“Let me outline Labour’s fiscal credibility rule, which we set out a number of months ago. We said that we would have a forward-looking target to achieve a cyclically adjusted current balance by the end of a rolling five-year forecast period. Why? Because that gives us the flexibility to adjust to shocks such as the one we have seen. Capital expenditure would be excluded from the deficit target in order that the Government can invest for higher growth. The contentious issue last September was that the then Chancellor included capital investment in the overall fiscal rule, which held back investment, and that is why we have seen the figures for Government investment falling. Debt as a proportion of potential GDP would be lower at the end of each five-year Parliament than at the start. Again, that gives an element of discipline.”
“I, too, welcome the Chancellor to his position, and I welcome his whole team. It is a deserved promotion for the Chief Secretary, whom I believe I promoted only a month ago in a speech to the House. EU funding for the regions comes to £10 billion a year. At the recent Local Government Association conference, councillors from all parties expressed their concern over the potential loss of these structural funds. Will the Chief Secretary clarify whether he plans to make funding provision equivalent to that received through the EU structural funds in the event of the UK leaving the EU?”
“I am grateful for that, but may I ask the Chief Secretary that, in the interests of local government stability, that statement is made sooner rather than later? The vote to leave also affects the UK’s access to European Investment Bank funds, which last year came to £6.5 billion across the country. With business investment falling even before the vote to leave, and with Government investment scheduled to fall until the end of this Parliament, what action is the Chancellor taking to ensure that Britain retains its stake in the European Investment Bank?”
“The Chancellor will, I hope, have seen the research published by the Institute for Fiscal Studies this morning. It shows that young people in work are still earning 7% less than before the crisis, while older workers have seen no improvement in their earnings for seven years. Will the Chancellor take this opportunity to put an end to what is becoming a lost decade of austerity, deliver the public investment that can provide well-paid, secure jobs across the country and scrap the anachronistic fiscal rule?”
“(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on proposals regarding the Government’s surplus target and plans to further cut corporation tax.”
“In the interests of the country, will he now commit to adopting a fiscal approach that allows the flexibility to invest while maintaining fiscal discipline, as the Opposition and now some on his own side are urging?”
“Despite year-on-year reductions in the headline rate to the lowest rate in the G7, business investment remains low by G7 standards and has now fallen for two consecutive quarters. Businesses are sitting on a cash pile of at least £500 billion yet are failing to invest. What assessment has the Chancellor made that a dramatic reduction in the corporation tax rate will have the desired effect on business investment, given the absence of evidence so far? Finally, we know that the circumstances after the leave vote will be trying and that major forecasters now anticipate the UK possibly entering a recession over the next year. The Chancellor’s fiscal approach has failed and has been steadily abandoned.”
“Regarding the planned cuts to the headline rate of corporation tax, the news has not been well-received by our international partners. Pascal Lamy of the World Trade Organisation has accused the Chancellor of “tax dumping”. He also highlights the risk to future negotiations with the EU. I want to raise three critical questions on this issue. The Chancellor’s Budget this year suggested that his one percentage point reduction in the headline corporation tax rate will reduce expected revenues by about £1 billion. Does the Chancellor still hold to that estimate? How will the Chancellor pay for any losses in tax revenues from the proposed corporation tax cuts? Who will pay? The evidence from existing cuts to corporation tax is not favourable.”
“Does he now agree with Labour Members, and the Secretary of State for Work and Pensions, that a major programme of Government investment is urgently needed? Does he agree with the Home Secretary’s decision not to give a guarantee to existing EU nationals living and working in this country? What will be the economic effects of that? Will he therefore give a more detailed statement to the House on the economic consequences of this decision? The Chancellor has promised that, while seeking to boost investment, he will be maintaining “the consolidation that we put in place last year.” May I ask him for some clarification on this point? Is he now ruling out any further or additional consolidation in light of the leave vote?”
“Rather than ad hoc announcements, we need a framework for economic decision making. Previously, the Government sought to do that with the fiscal charter, which was passed into law last autumn despite Labour opposition. May I ask the Chancellor now, since he is no longer pursuing the fiscal surplus target, if the charter is also to be abandoned? Will he be putting a motion to repeal the law before this House? Will he be seeking to place a new fiscal rule on a similar basis in legislation? The Chancellor has announced today that he will redouble his efforts to invest in the northern powerhouse. Of course the details of that are to be decided, but will he tell the House when he expects to have a detailed programme of investment? What scale of investment should we expect? What areas, and how focused will that investment be?”
“I would like to thank the Chancellor for his response. I think it is important that, as in the Opposition day debate last week, we set the tone of our response at the level of the national interest and take care to avoid making any statements that would adversely impact on fragile markets. I have to say, however, that a lack of planning for a leave vote is becoming evident across all policy areas. Instead of a clear plan of action, we have so far had a series of ad hoc statements and announcements, including the grateful abandonment of the “Brexit Budget”, which was to increase the sharply the level of austerity being applied. The fiscal surplus target has been abandoned and today the Chancellor has announced planned reductions in the headline rate of corporation tax.”
“The Federation of Small Businesses has said that it expects “the publication of the CMA’s final report to include specific remedies for the problems caused by bank branch closures.” I welcome that intervention by the FSB and hope the Minister will say something about the role of the CMA’s review in addressing the issue. I thank all Members for their contributions. This is an urgent matter that needs addressing in many of our constituencies. I look forward to the publication of the review and hope to hear the Government commit to taking serious steps to address the decline in bank branch numbers and in access to banking overall.”
“Move Your Money also wants rigorous public interest assessments before the closure of a branch, so that closure decisions are genuinely influenced by community need and likely impact, and a requirement for banks meaningfully to consult local communities in advance of closures rather than simply informing them of the decision after it has been taken. I would welcome the Minister’s views on those ideas, as I know she has taken a personal interest in the matter for some time. What role is the Competition and Markets Authority playing in addressing the lack of competition as bank branches close? The retail banking review is meant to be addressing that issue.”
“Member for Paisley and Renfrewshire North (Gavin Newlands) again described his local campaign and how it was ignored by the bank. The hon. Member for East Renfrewshire (Kirsten Oswald) gave examples of the wave of closures that are taking place. As she said, the challenger banks have been identified as a solution, but are no real solution, with few results in many areas. Her example of the Airdrie Savings bank shows us how banks can be stable and provide a service over generations. We have heard a lot today about the protocol designed to protect local banking provision. It clearly is not working effectively. Advocates from Move Your Money have urged improvements to the protocol, including forcing banks to have transparent data on branch closure locations and dates, to allow greater scrutiny of their impact.”
“I am sure that Mr Ross McEwan has heard about the need for an urgent meeting. My hon. Friend the Member for Islwyn (Chris Evans) comes from the banking industry himself and knows what it is like. He emphasised a key issue that we are all experiencing now, which is just how vulnerable people are to loan sharks and doorstep lenders when a local bank closes, and the danger that poses. He quite passionately described his campaign on HSBC, the petition he launched and the bungled way in which banks handle closures, by not listening to people. He also called for the next step to be taken for credit unions. I agree with his call for Government assistance to help credit unions take that step up to become local community banks; they have great potential for that. The hon.”
“As he said, there are cashpoints, but what happens when they dry up and what impact does that have on the local economy? He also gave the example of New Quay to show how local businesses can be hampered. Like many hon. Members, he called for fair play in this matter. The hon. Member for East Lothian (George Kerevan) demonstrated that, as several hon. Members have said, there is a lack of consultation when there is a closure. He emphasised the RBS case, and described the “arrogance” of the banks. I agree with that description, which many of us have experienced. It looks as though RBS is funding its £1.2 billion computer system by closing local banks. I agree that we now need to explore the idea of a universal banking obligation, so that we can address those issues.”
“Member for Inverclyde (Ronnie Cowan) drew attention to the issue of mobile banks, but also to their drawbacks: they are not very accessible for some people, and are not the ideal solution. He emphasised the impact that the withdrawal of local bank services can have on the local economy. In his usual eloquent way, my hon. Friend the Member for Ynys Môn (Albert Owen) demonstrated the unfairness of the situation. The national banks have received significant sums of taxpayers’ money to support them, but by carrying out such closures, they are not acting responsibly. The hon. Member for Ceredigion drew attention to what it is like to live in a rural area when a bank closes, given the impact that that can have, and to the issue of physical access.”
“Friend the Member for Harrow West (Mr Thomas) has done sterling work over the years in arguing for the development of co-operative banking and credit unions. He drew attention to the lack of affordable credit overall and to the role of the responsible finance movement, which has done excellent work. Credit unions are critical to our society now, particularly in areas that are experiencing deprivation. He also argued for co-operation, and gave the example of how back-room facilities could be co-ordinated to support the development of credit unions. He commended the 2015 Demos report—I urge hon. Members to read it—which looked at the case for a network of local independent banks across the UK, particularly in relation to their role in lending to SMEs. The hon.”
“He also drew attention to what happens, as many of us have experienced, when a bank pulls out—the empty shopfronts and the degeneration of the high street overall. As he said, the post office is an alternative, but interestingly enough, the post office has also closed in his area, as it has in many others. My hon. Friend the Member for Clwyd South (Susan Elan Jones) proposed the introduction of a novel piece of legislation. I found that fascinating, and we must come back to it another time. She, too, made a bid for a community banking hub. She spoke about the role of mobile banks, but emphasised that they are effective only if they visit frequently and are open for long enough. My hon.”
“He highlighted the fact that even the bank he bought his first suit to get a job in has been closed. Interestingly, he emphasised the situation in his constituency, where the riots took place. I know the sterling work he has done to try to regenerate the high street and get businesses and shops back to the area—only to have some of that work undermined by the closure of the local bank. He also emphasised the issue of how footfall is calculated, which was highlighted by several hon. Members. The hon. Member for Brecon and Radnorshire (Chris Davies) emphasised this issue with regard to rural services, and identified the fact that mobile services can prove effective as a solution in some areas.”
“It would be interesting to look at Congress’s Community Reinvestment Act because it includes the safety net that many hon. Members have suggested as a possible future solution. He emphasised the issue for small businesses, and highlighted the work done by one of the most effective lobbying organisations in this country, the Federation of Small Businesses. I have to say that I agree with him that if there is a transfer of services to the post office, banks must surrender full functionality if post offices are to be effective. As he said, it is a case of “Either stay or go, but pass on that facility.” Understandably, my right hon. Friend the Member for Tottenham (Mr Lammy) is not in his place at the moment. I know that he is busy on other matters—as are many others.”
“He has thrown down the gauntlet for a pilot in his constituency, as have other hon. Friends; they are clearly bidding for the process. That is a creative way forward. I agree that until banks respond in some way, they should stop advertising themselves as some sort of local friend. The hon. Member for Wells made an interesting speech. May I ask him to pass on my congratulations to the residents of Glastonbury on their creative demonstration of the black horse funeral? I thought that it was an extremely effective way of highlighting what has happened in the area, whether it affects the sale of crystals, joss sticks or anything else. It was very helpful that the hon. Gentleman raised the issue of the protocols not actually working or doing what they are supposed to do.”
“As constituency MPs, we want to know that in our local communities, individuals and businesses can access the personal finance or business banking services that they require. From today’s exceedingly interesting debate, we have discovered that people and businesses increasingly cannot access those services. My hon. Friend the Member for City of Chester explained that banking is changing—the use of apps and so on can be more convenient—but that the closures are restricting access to banking facilities for individuals and communities. He emphasised that, as the Reuters report states, these closures are hitting hard in low-income areas, and that the cutting is going too fast and too far. I agree with him, and I welcome his creative proposal for local banking hubs.”