05/11/2015

:00:00. > :00:00.wrong thing to do? I wouldn't have started from here. Lu there are a

:00:00. > :00:00.lot of other things the government should look at before it looked at

:00:07. > :00:12.cutting tax credits, not least the benefits and pensions received by

:00:13. > :00:19.pensioners and has reminded us that if -- inflation is 0%. Your pension

:00:20. > :00:21.goes up by 2.5%. That is unsustainable. The government should

:00:22. > :00:24.be looking at that kind of thing, winter fuel payments are given to

:00:25. > :00:29.every pensioner. Even millionaire pensioners. Lu despite that the

:00:30. > :00:34.government has stopped giving child benefit to families, still living

:00:35. > :00:36.winter fuel payments to the richest pensioners. There are other ways in

:00:37. > :00:44.which the government could be finding the welfare.

:00:45. > :00:48.There are other things that should have been cut first but other things

:00:49. > :00:53.the government has to be looking at that it should be doing to give

:00:54. > :01:06.people a better and more affordable cost of living. The cost of living

:01:07. > :01:11.comes about through taxes, the fact that the wrist in this country they

:01:12. > :01:16.are huge amount of their disposable income on VAT on fuel duty on

:01:17. > :01:18.alcohol duty. Housing in this country is incredibly expensive

:01:19. > :01:22.because planning restrictions result and not enough homes being built

:01:23. > :01:27.which leaves the price is more expensive, so things the government

:01:28. > :01:28.itself should be doing at the outset to improve the cost of living for

:01:29. > :01:48.everybody. Your suggestions? The point where you start to lose

:01:49. > :01:57.your tax credits and still deliver his fiscal objectives. Was it ever

:01:58. > :02:01.acceptable to have taxpayers and the government topping up people's

:02:02. > :02:08.income as a principle, with that at ?30 billion per year? At the time I

:02:09. > :02:14.brought them then, the alternative was to put up child benefit quite

:02:15. > :02:18.sharply and have a higher minimum wage, quite distinctly higher

:02:19. > :02:23.minimum wage. That was not politically acceptable.

:02:24. > :02:28.This could include different arrangements for handling luggage,

:02:29. > :02:33.beyond that we were working with the Egyptians and the airlines to put in

:02:34. > :02:37.place long-term sustainable measures to ensure our fights remain safe. We

:02:38. > :02:42.very much hope it would be possible to declare that it is safe to fly to

:02:43. > :02:47.the resort and resume normal flight operations in due course. That is

:02:48. > :02:48.why my right honourable friend the Foreign Secretary announced

:02:49. > :02:54.yesterday evening that the government was now advising against

:02:55. > :02:59.all but essential travel by air to or from this particular airport. All

:03:00. > :03:04.UK operated flights to and from the airport have now been suspended.

:03:05. > :03:10.We're working with the Egyptians to assess where necessary to improve

:03:11. > :03:19.the security of the airport. Over 900,000 British nationals visit

:03:20. > :03:22.Egypt every year and most visits are trouble-free. We are grateful for

:03:23. > :03:26.the continuing efforts of the Egyptian authorities to work

:03:27. > :03:39.together with us on these vitally important as. This is a difficult

:03:40. > :03:42.situation for travellers and their families. I would like to thank the

:03:43. > :03:45.airlines for their support during this difficult time and to the

:03:46. > :03:51.holiday-makers for their patients. In parallel specialist teams will be

:03:52. > :03:54.working intensively with the Egyptian authorities to allow a

:03:55. > :04:01.normal schedule of operations to recommence. The decision to suspend

:04:02. > :04:04.flights is very serious indeed and has not been taken lightly but the

:04:05. > :04:19.safety and security of the travelling public is of course the

:04:20. > :04:26.government's highest priority. I recognise it as stressful time for

:04:27. > :04:31.British tourists but we haven't changed the travel threat for the

:04:32. > :04:37.resort itself. People should keep in touch with their tour operators, we

:04:38. > :04:40.have consular staff on the ground providing assistance, aviation

:04:41. > :04:44.security experts on the ground and have arrangements to bring them home

:04:45. > :04:49.safely in due course. The airlines are working with us to bring their

:04:50. > :04:53.passengers home, no UK bound aircraft will take off until it is

:04:54. > :04:55.safe to do so and we don't expect flights to leave today but we do

:04:56. > :05:00.hope to have flights leaving tomorrow.

:05:01. > :05:10.I'm grateful to the Secretary of State for his statement. I echo the

:05:11. > :05:13.condolences he articulated and I know those sentiments will be shared

:05:14. > :05:18.by the whole house. I would also like to place on record the

:05:19. > :05:23.opposition's support for the action taken by the government yesterday.

:05:24. > :05:26.There can be no question in these circumstances that the safety of

:05:27. > :05:32.British citizens must be the highest priority. I understand that the

:05:33. > :05:36.Secretary of State is constrained in the information he can provide to

:05:37. > :05:43.the house today. His colleagues in other departments will update the

:05:44. > :05:45.house on those matters. Given that the government believes that the

:05:46. > :05:50.Metro Jet flight may have been deliberately targeted, will he

:05:51. > :05:54.reassure the house on how he reached the conclusion that there was no

:05:55. > :06:00.threat in the wider Sharm el Sheikh resort. Will the secretary of state

:06:01. > :06:05.also update the house on when he expects the security review of Sharm

:06:06. > :06:08.el Sheikh airport to conclude. Can he give further information on the

:06:09. > :06:18.possible new long-term measures he referred to in his statement? It is

:06:19. > :06:21.thought that up to 20,000 British nationals are in Sharm el Sheikh,

:06:22. > :06:26.does the government have its own estimate? What consular support the

:06:27. > :06:31.government providing two nationals currently in Egypt and will he make

:06:32. > :06:38.sure that consular services are made available outside the resort? What

:06:39. > :06:46.steps is his department is taking to make sure that updates are provided

:06:47. > :06:48.by tour operators and airlines. Given the cross departmental work

:06:49. > :06:51.involved, what arrangements will be put in place to provide individuals

:06:52. > :06:57.with a simple process for seeking official assistance and will he

:06:58. > :06:59.clarify how members of this house can most effectively raise their

:07:00. > :07:04.constituents's cases with the government? Can I find the

:07:05. > :07:09.honourable lady for the general support that has been given by the

:07:10. > :07:13.opposition. She's absolutely right to say that this is not decision

:07:14. > :07:18.that is taken lightly and was taken after very careful consideration of

:07:19. > :07:22.the details of the government that had the received. As far as the

:07:23. > :07:28.numbers that she asked about, it is estimated 20,000 in the Sharm el

:07:29. > :07:31.Sheikh area but that is not an accurate figure, some people will

:07:32. > :07:41.not be there on package holidays and the like. We have got a consulate

:07:42. > :07:44.team that is being expanded at the airport and available to give the

:07:45. > :07:48.sort of information that she would like. There are the contact details

:07:49. > :07:50.of the Foreign Office which are available to all members of

:07:51. > :07:54.parliament, she asked how we would keep the house updated, I will give

:07:55. > :08:01.further consideration to that, I hope to see some flights leaving

:08:02. > :08:03.tomorrow. That will not include people flying out to Sharm el

:08:04. > :08:08.Sheikh, it will be people being brought back home and the

:08:09. > :08:12.implications and safety measures that we take is something that we

:08:13. > :08:15.are in discussion with the airlines at this very moment and those

:08:16. > :08:18.meetings are ongoing, I will look at ways of keeping her in touch and

:08:19. > :08:32.other colleagues as well. Having once had to witness my young

:08:33. > :08:35.son's teddy bear having possibly to be slipped open at airport

:08:36. > :08:41.security, one understands that levels of security can vary

:08:42. > :08:47.according to perceived level of threat. Doesn't this terrible

:08:48. > :08:51.tragedy need to remind us that a common standard level of security

:08:52. > :08:55.has to apply across all the airports of the world so that whoever you

:08:56. > :09:00.are, from whichever country travelling to or from, you know what

:09:01. > :09:06.the standard is, what to expect and to ensure that it is applied. I

:09:07. > :09:09.completely agree with my right honourable friend, in an ideal world

:09:10. > :09:14.that would be essential, what I can see is that of course we are

:09:15. > :09:18.reviewing the security as far as our security inspectors are concerned at

:09:19. > :09:22.a number of locations and we will continue to do that, as we have done

:09:23. > :09:26.in the past, that is very much an important part of our job and I also

:09:27. > :09:29.think it is for those countries to understand that it is in

:09:30. > :09:31.everybody's interests that we have as much security as is necessary at

:09:32. > :09:41.all the airport around the world. Can I thank the transport minister

:09:42. > :09:46.for statement and at the condolences from these benches to his statement

:09:47. > :09:50.of condolences. There have been conflicting reports of the number of

:09:51. > :09:54.tourists affected in Sharm el Sheikh and the surrounding area, can the

:09:55. > :09:59.transport minister confirmed the number of people that he believes

:10:00. > :10:03.are affected and this is a very concerning time, information will be

:10:04. > :10:07.the key, with many people getting their information from websites can

:10:08. > :10:13.we get an assurance of the consular support on the ground that will be

:10:14. > :10:22.provided with practical support. One final point, many resorts are far

:10:23. > :10:27.from Sharm el Sheikh and our security measures on bus transfers

:10:28. > :10:33.being put into place? Yes to most of the questions which the honourable

:10:34. > :10:36.gentleman good to me. The Foreign Office have deployed people and will

:10:37. > :10:42.deploy more people today to the airport. Working with the tour

:10:43. > :10:46.operators as well. I understand what he says about websites giving

:10:47. > :10:51.information and social media giving information, which can sometimes be

:10:52. > :10:55.misleading, sometimes the information being put out has not

:10:56. > :10:58.been correct, so it is important for people to check with their tour

:10:59. > :11:04.operator, check with the officials that are there from the Foreign

:11:05. > :11:05.Office and we are working to ensure everybody gets home when they wish

:11:06. > :11:13.to do so. I welcomed the statement by my right

:11:14. > :11:19.honourable friend and I don't believe the British government have

:11:20. > :11:23.any other alternative to take the action that was taken, he knows it

:11:24. > :11:26.is pointed effect the economy of Egypt, would he agree with me that

:11:27. > :11:32.these enhanced security measures that will be put in place will serve

:11:33. > :11:34.to boost confidence amongst tourists, tour operators and

:11:35. > :11:37.airlines that Sharm el Sheikh is a safe place to go and can I ask if we

:11:38. > :11:42.are putting in British security advisers to help the Egyptian

:11:43. > :11:52.authorities, can I make one plea that the air accident investigation

:11:53. > :11:55.Branch based in my constituency proposed to help the Russians and

:11:56. > :12:00.the French in their analysis of the wreckage of this aircraft because of

:12:01. > :12:08.the beings they have had with the 747 at Lockerbie seems to be highly

:12:09. > :12:10.relevant to this investigation. The Prime Minister and the Foreign

:12:11. > :12:14.Secretary will be meeting the president of Egypt and these are

:12:15. > :12:21.issues that they will be discussing during the course of that meeting

:12:22. > :12:27.today. As far as his comments about the work, I agree with him about the

:12:28. > :12:33.expertise. There are certain rules as far as international

:12:34. > :12:41.investigations are concerned as far as aviation and accidents. , I will

:12:42. > :12:49.certainly offer any help and assistance I could offer. This is an

:12:50. > :12:52.horrendous situation and I hope we will be kept informed of future

:12:53. > :12:57.developments, the secretary of state has taken the correct decisions in

:12:58. > :13:01.these awful circumstances. Can he give us an absolute assurance that

:13:02. > :13:06.he is receiving full cooperation from all the parties involved and

:13:07. > :13:11.are there any international lessons to draw from international

:13:12. > :13:16.arrangements and protect British passengers flying home from

:13:17. > :13:27.flights? I would say to the honourable lady, I'm grateful for

:13:28. > :13:31.the support she has shown me. There has been excellent cooperation that

:13:32. > :13:37.we have received right across the hall of the domestic government as

:13:38. > :13:40.she would expect, but also the cooperation we are receiving from

:13:41. > :13:48.the Egyptian government as well, who are dealing with this with the

:13:49. > :13:51.seriousness that it requires. Can I welcomed the candour and

:13:52. > :13:57.transparency that the Secretary of State has been able to give in his

:13:58. > :14:00.statement and the actions taken. As my honourable friend for Aldershot

:14:01. > :14:05.pointed out, this series implications the Egyptian tourist

:14:06. > :14:11.industry and some of the Egyptian sensitivity that we have experienced

:14:12. > :14:14.relates to that significant potential damage to their

:14:15. > :14:19.interests, but could my right honourable friend impress upon his

:14:20. > :14:21.Egyptian opposite numbers at the same candour and transparency in

:14:22. > :14:26.this investigation is the quickest way to restore confidence that

:14:27. > :14:32.people can travel to Sharm el Sheikh rather than resorting to cover-up. I

:14:33. > :14:39.agree with my honourable friend, there is no desire on anybody yet in

:14:40. > :14:43.part to cover up because there are other people, the Irish are involved

:14:44. > :15:04.in the investigation because that is where the plane was registered. It

:15:05. > :15:10.has parallels from Tunisia and travel advice was that people should

:15:11. > :15:13.not travel there. These are hugely popular destinations, a million

:15:14. > :15:20.British tourists visit Tunisia Sharm el Sheikh. It was a Russian plane

:15:21. > :15:25.with Russian citizens, he hasn't mentioned what Russia is doing, this

:15:26. > :15:28.is a big opportunity for Russia and the states and Great Britain to work

:15:29. > :15:30.together to try to find out what happened and to deal with those

:15:31. > :15:42.responsible. What the honourable member says is a

:15:43. > :15:44.good observation. It is the Prime Minister's intention to speak to

:15:45. > :15:49.Vladimir Putin this afternoon, that call will take place, but he is

:15:50. > :15:52.right that people who try to do this to aircraft put all governments

:15:53. > :16:55.under a huge amount of stress and The result remains open, we are

:16:56. > :18:00.working as quickly as possible to make sure that we can reassure

:18:01. > :18:05.ourselves about the security at the airport, and one that is done we

:18:06. > :18:08.will be able to say more. I share the concern of all of the

:18:09. > :18:11.holiday-makers whose holidays have been ruined by what has happened,

:18:12. > :18:13.and also share the concerns about the wider implications of this and

:18:14. > :18:15.other aviation incidents and therefore ask the Secretary of

:18:16. > :18:20.State, what assessment this government is making of the risks

:18:21. > :18:25.from and such as this on flights over the UK and those flying over

:18:26. > :18:28.built-up areas? Of course we keep all threats and any threats that we

:18:29. > :18:31.hear, we taken very indeed, one of the reasons we have a high levels of

:18:32. > :18:33.security that we do have at British airports, from experience we have

:18:34. > :18:36.known that people have tried to smuggle bombs onto planes. Cannot

:18:37. > :18:38.thank the Secretary of State for taking action to insure the safety

:18:39. > :18:41.of British nationals and can we agree that we have a standard of

:18:42. > :18:43.security which we would expect from all international airports across

:18:44. > :18:45.the world? As far as airports across the whole of the United Kingdom are

:18:46. > :18:48.concerned, not just the United Kingdom, but there is a number of

:18:49. > :18:51.countries, all countries, take security is a very high priority,

:18:52. > :18:53.and I think what we have got to do is, where perhaps we seek it

:18:54. > :18:56.sometimes failing or not up to the standards we want, point that out

:18:57. > :18:58.and hope that actions are taken, if actions are not taken, the

:18:59. > :19:00.government has no alternative but to take action. I echo the words of

:19:01. > :19:02.condolences to the Russian families affected by this and words of

:19:03. > :19:04.solidarity for the British passengers currently stranded. The

:19:05. > :19:07.Financial Times has reported that a UK military team is going to be

:19:08. > :19:10.deployed there. Is the Secretary of State able to say whether that team

:19:11. > :19:12.is in place and whether they are checking all UK bound planes and

:19:13. > :19:14.whether they will be able to stay there as long as is required,

:19:15. > :19:20.We have deployed people from several different departments, not just

:19:21. > :19:26.transport and Foreign Office, we are not short of deploying awareness,

:19:27. > :19:33.the kind of officials and professional advice that we need.

:19:34. > :19:40.The long-term aim is to re-establish.

:19:41. > :19:46.Can I commend the government for taking the very difficult decision

:19:47. > :19:55.that his ensure that no British citizens are placed in danger.

:19:56. > :19:59.Many people who have their holidays booked in charmer Shaik, fully

:20:00. > :20:04.intending to travel there once the flights resume, but they do have a

:20:05. > :20:09.concern, and I wonder if the secretary of state could tell the

:20:10. > :20:13.house what is the situation going to be with their insurance and travel

:20:14. > :20:22.insurance, whether recent events will invalidate it or anything like

:20:23. > :20:26.that. -- Sharm el-Sheikh. People have got to speak with air travel

:20:27. > :20:30.operators and tour operators, it is quite clear, the advice that we have

:20:31. > :20:41.set down, we do not believe that any of flights from the United Kingdom

:20:42. > :20:49.should go to Sharm el-Sheikh. We obviously keep that advice regularly

:20:50. > :20:52.under review. What support if any is the government offering people in

:20:53. > :21:00.the United Kingdom who have family and friends and loved ones stuck in

:21:01. > :21:06.this dreadful crisis? Obviously we are trying to help. There is

:21:07. > :21:13.helpline is available, and tour operators as well. At first aim and

:21:14. > :21:22.direction is to help those stuck in Sharm el-Sheikh. Innovations are

:21:23. > :21:26.open, they are not down. Do not these tragic events underline the

:21:27. > :21:33.importance of being able to counter terrorism both by sea, in the air,

:21:34. > :21:37.and on land, and the importance of being able to intercept electronic

:21:38. > :21:45.indications in order to keep British citizens safe. It is one of

:21:46. > :21:52.paramount importance to any governments. To be able to get

:21:53. > :21:56.information. That protects and ensures the safety of British

:21:57. > :22:01.citizens, and that is something that all members of the government from

:22:02. > :22:10.the Prime Minister down take very seriously indeed. Quite rightly the

:22:11. > :22:14.focus is on Sharm el-Sheikh and the airport there but now we know that

:22:15. > :22:17.it is suspected that Isis is targeting aviation, is there going

:22:18. > :22:27.to be a review of security at British airports? We are always

:22:28. > :22:31.reviewing safety at British airports, that is something that

:22:32. > :22:34.does not stop, anybody who goes to an airport will sometimes complain

:22:35. > :22:40.about the level of intrusiveness that is there in those airports, but

:22:41. > :22:45.of course, we keep security under review, as I say, this particular

:22:46. > :22:49.case is where we were not satisfied about some of the way in which the

:22:50. > :22:56.security procedures were being carried out. I commend the

:22:57. > :23:00.government for putting British citizens first in terms of their

:23:01. > :23:06.safety by stopping flights from Sharm el-Sheikh to and from after

:23:07. > :23:13.the Russian air incident, can he say little bit more about what advice he

:23:14. > :23:16.is giving to airports like Gatwick Airport in my constituency and the

:23:17. > :23:21.airport operators that fly from there such as easyJet, Thompson, and

:23:22. > :23:27.others, to the region, so they can better help passengers. The two

:23:28. > :23:34.airlines that my honourable friend has just mentioned, easyJet and

:23:35. > :23:37.Thompson, were in the Department for Transport talking to us, going

:23:38. > :23:47.through the arrangements that we need to put into operation. -- put

:23:48. > :23:50.into operation, they are in contact. They have been extremely helpful and

:23:51. > :23:53.at this stage I would like to place on record my thanks to the airlines

:23:54. > :24:04.for how quickly they have responded to the situation we found ourselves

:24:05. > :24:07.in yesterday. What work will be undertaken by the Secretary of

:24:08. > :24:11.State's department to make sure that the advice given to UK citizens will

:24:12. > :24:15.be fact -based, or does he believe that a more precautionary approach

:24:16. > :24:27.is required in this instance, will the signals shift? I think, what I

:24:28. > :24:33.would say, we do not give this advice without due cause to do so.

:24:34. > :24:39.And we will consider all different streams of information that we get.

:24:40. > :24:44.And feed that into our decision-making process. Of that,

:24:45. > :24:48.the honourable lady can be certain, these decisions are not taken

:24:49. > :24:52.lightly, they worry people in the results and worry the families of

:24:53. > :25:02.people not in results but here. It is right that we take them if we

:25:03. > :25:05.think it is necessary to do so. May associate myself with the sympathy

:25:06. > :25:08.expressed by my right honourable friend and also thank him and his

:25:09. > :25:13.colleagues for the action taken. Earlier he talked about pointing out

:25:14. > :25:18.cracks in security at airports around the world, which I think is

:25:19. > :25:21.extremely important, but will he also commit to work with friends and

:25:22. > :25:26.allies around the world, where we see cracks, proactively to take

:25:27. > :25:32.action rather than to wait for these tragic incidents to happen before

:25:33. > :25:36.action is taken? I think what I would say to my honourable friend,

:25:37. > :25:41.he is absolutely right in the point that he makes, and I have no doubt

:25:42. > :25:48.as to the importance of these particular countries. I can say to

:25:49. > :25:53.him that we do do that, we are in constant talks with ambassadors and

:25:54. > :25:56.the like, and in turn with the government in that particular

:25:57. > :26:02.country as well. If we have concerns, it is right that we

:26:03. > :26:06.flagged them up. The action taken today by the Secretary of State

:26:07. > :26:10.relates only to flights to Sharm el-Sheikh, can the Secretary of

:26:11. > :26:14.State confirm to the house that other airports in Egypt are meeting

:26:15. > :26:18.the standards that we would expect of them, perhaps if only to give

:26:19. > :26:23.reassurance to the hundreds of thousands of tourists that still

:26:24. > :26:28.wants to go there? The answer to that question is yes, but obviously

:26:29. > :26:33.we are looking at security at all airports where we have any concerns,

:26:34. > :26:37.but he is absolutely right. The information and the warning from

:26:38. > :26:40.yesterday was specific to one airport, and I very much hope that

:26:41. > :26:45.we can work with the Egyptian government to make sure measures

:26:46. > :26:48.will give us the confidence about screening and the like are

:26:49. > :26:56.undertaken and that this will be removed as soon as possible. I'm

:26:57. > :27:02.very grateful to the secretary of state to immediately come to the

:27:03. > :27:05.house and explained the case in great detail, the 1 thing we can be

:27:06. > :27:10.sure of is the British travel industry is second to none in

:27:11. > :27:13.responding to something like this, we would not be flying to a country

:27:14. > :27:18.if we were concerned about the security systems there. This must be

:27:19. > :27:22.a lapse in the security. People should be reassured that we would

:27:23. > :27:27.not allow aircraft to fly into a country where security was deemed to

:27:28. > :27:34.be poor. Would the Secretary of State agree? Yes, I would agree with

:27:35. > :27:37.my honourable friend, and as I said earlier on, in answer to my

:27:38. > :27:40.honourable friend for Crawley, I would like to thank the way in which

:27:41. > :27:47.the travel industry and the airline operators have responded in helping

:27:48. > :27:51.bus work out the solutions that we will be doing over the next few

:27:52. > :27:57.days, in the interim. But looking for longer-term solutions, so that

:27:58. > :28:01.this airport can be regarded a game as one that we can remove the travel

:28:02. > :28:07.advice that we have at the moment. -- can be regarded once again. Mr

:28:08. > :28:13.Speaker, the secretary of state will be aware that across the UK homes

:28:14. > :28:16.have been impacted and the offer of help and support from the First

:28:17. > :28:21.Minister in Scotland and Scottish Parliament today, what measures have

:28:22. > :28:27.been put in place to liaise with devolved administrations? I hope the

:28:28. > :28:32.honourable member will accent, for the last 24 hours, we have been

:28:33. > :28:36.heavily involved in talking to the airlines, and doing what we needed

:28:37. > :28:39.to do immediately. Also with the fact that the Egyptian president,

:28:40. > :28:44.actually being in the country at this time. It is about information

:28:45. > :29:06.getting to evolve and esters. Point of order. Robert Neil. Thank

:29:07. > :29:10.you Mr speaker, I would like to seek your guidance as to the way in which

:29:11. > :29:14.members of this house should approach correspondence with the

:29:15. > :29:17.Director of Public Prosecutions. Earlier today, further

:29:18. > :29:20.correspondence was released between the right honourable member for West

:29:21. > :29:25.Bromwich East, of whom I have given notice of my intention to raise the

:29:26. > :29:28.point of order, and the director and the previous Director of Public

:29:29. > :29:38.Prosecutions. My concern is this, what guidance can you give to

:29:39. > :29:41.members of the house seeking to affect the conduct of specific woman

:29:42. > :29:46.faces by the director or the Crown Prosecution Service, bearing in mind

:29:47. > :29:50.the director's constitutional independence and the importance of

:29:51. > :29:53.the Crown Prosecution Service in dealing with the statutory -based

:29:54. > :29:58.code of conduct for Crown prosecutors. Is it therefore

:29:59. > :30:02.appropriate to seek to ask the director to have a named senior

:30:03. > :30:05.prosecutor removed from an investigation, to have them removed

:30:06. > :30:10.from doing all other child sex abuse cases until an investigation has

:30:11. > :30:13.taken place, to seek a review of all such work that has happened since

:30:14. > :30:18.they have been in the Crown Prosecution Service, all on the

:30:19. > :30:24.basis, I might add, of matters that were not born out by the evidence of

:30:25. > :30:27.an investigation. Is it appropriate for members to do that in cases

:30:28. > :30:34.where the complainant in the case, those involved, are not the right

:30:35. > :30:38.honourable member's constituents? Very well, if it is on this matter,

:30:39. > :30:44.I shall take the point of order and then respond to the two as a group.

:30:45. > :30:47.Further to the point of order, because we have a special

:30:48. > :30:50.responsibility to constituents, as members we have also got a

:30:51. > :30:54.responsibility to act for everyone in this country, the member for West

:30:55. > :30:57.Bromwich East was approached by a ledge victims and survivors of

:30:58. > :31:01.sexual crimes who were unhappy with how their cases had been handled. He

:31:02. > :31:05.acted to ensure that the proper procedures were followed, it is

:31:06. > :31:11.right and proper that complains of this kind are dealt with properly by

:31:12. > :31:12.the criminal justice system -- complaints. Where members of this

:31:13. > :31:24.house can assist, they should. is first of all, I understand there

:31:25. > :31:29.are strong feelings on this matter and sometimes feelings that are

:31:30. > :31:34.contrary to each other and they have been articulated on the floor of the

:31:35. > :31:41.house this morning. About that I make no complaints whatsoever. In

:31:42. > :31:45.response to the honourable gentleman who, with his usual courtesy

:31:46. > :31:49.notified me in advance of his attention to raise the point of

:31:50. > :31:58.order, what I would say is this, it is not for the chair to seek to

:31:59. > :32:01.advise members on those with whom they should or should not

:32:02. > :32:10.communicate, that is a matter on which they can and will make their

:32:11. > :32:15.own individual judgment. So far as the Director of Public Prosecutions

:32:16. > :32:20.is concerned, the director will decide what course of action, if

:32:21. > :32:27.any, to follow in response to representation written or otherwise,

:32:28. > :32:30.from a member of Parliament. I don't doubt the good intentions of the

:32:31. > :32:35.honourable gentleman who is a distinguished lawyer and also chair

:32:36. > :32:42.of an important select committee in this house. I feel that it is is not

:32:43. > :32:46.for the chair to be drawn into these matters, I hope, upon reflection,

:32:47. > :32:50.people will feel there is a certain logic to what I'm saying.

:32:51. > :33:00.Colleagues, make your own judgments about these matters.

:33:01. > :33:07.As I raised in business questions, the government announced a call for

:33:08. > :33:11.evidence on its review to the secondary ticket market with a very

:33:12. > :33:14.tight deadline. I pressed the government on how it is publicising

:33:15. > :33:19.this call and received a written answer from the Minister for

:33:20. > :33:21.skills, assuring me that all main stakeholders had been alerted but I

:33:22. > :33:25.know from conversations I have had with major stakeholders that in all

:33:26. > :33:30.too many cases I was the one that has brought this to their attention.

:33:31. > :33:35.Can therefore ask your advice on what steps the member can take to

:33:36. > :33:41.investigate the substance, dare I say truth of a written answer and

:33:42. > :33:45.what steps can be done to urge ministers to check the content of

:33:46. > :33:49.their written answers is all too often, especially recently, it

:33:50. > :33:55.appears answers are either questionable or far too brief to be

:33:56. > :33:59.of any practical use to anyone. I thank the honourable lady for that

:34:00. > :34:02.point of order, it is a well-established principle in this

:34:03. > :34:08.house. Ministerial answers to questions should be both timely and

:34:09. > :34:12.substantive in reference to the latter point, colleagues will

:34:13. > :34:20.appreciate that what I am stressing is that a reply that simply says, I

:34:21. > :34:26.hope to respond shortly is not regarded by most members as in any

:34:27. > :34:29.way helpful. To comply with the spirit of the obligation of

:34:30. > :34:33.ministers to reply to answers and it is important those answers should be

:34:34. > :34:39.substantive. As the honourable lady will fully appreciate, which has no

:34:40. > :34:44.responsible to for the content of answers. Every member is responsible

:34:45. > :34:48.for the veracity of otherwise of what he or she says in this house,

:34:49. > :34:52.ministers are certain responsible for the content of their answers.

:34:53. > :35:00.What would be my advice to the honourable lady she is dissatisfied

:35:01. > :35:03.with the answers because she thinks they are uninformative or incorrect,

:35:04. > :35:08.my advice would be that based upon the answers that she receives, she

:35:09. > :35:17.should table further probing and specific questions seeking to track

:35:18. > :35:26.down the precise particulars that she wants to establish. If that is

:35:27. > :35:29.unsuccessful, there is always the recourse of oral questions to the

:35:30. > :35:35.relevant Secretary of State and the opportunity to apply for debates. I

:35:36. > :35:40.have not noticed over the last ten years the honourable lady displaying

:35:41. > :35:45.unnoticeable reluctance to explore those avenues.

:35:46. > :35:51.There was great interest with the urgent question debate around the

:35:52. > :35:56.subject of human rights in Egypt and we know the Prime Minister is

:35:57. > :36:01.meeting the president of Egypt today. Would it be a breach of the

:36:02. > :36:05.rules of this house if perhaps on Monday, or at the earliest

:36:06. > :36:08.opportunity, the Prime Minister did not come to the house either by way

:36:09. > :36:12.of an oral statement or a written statement set up precisely the

:36:13. > :36:13.content of those discussions and specifically in relation to human

:36:14. > :36:24.rights in Egypt. There will be nothing disorderly if

:36:25. > :36:29.I understood the terminology and construction of the honourable

:36:30. > :36:32.gentleman's enquiry. In the Prem and Mr providing such information to the

:36:33. > :36:36.house, it is a judgment for the Prime Minister whether to make any

:36:37. > :36:41.such statement and, of course, just as it is for the Prime Minister to

:36:42. > :36:50.judge whether to make a statement and what form that statement should

:36:51. > :36:54.take. Knowing the honourable gentleman's experience in the house

:36:55. > :36:58.and the senior office of a Parliamentary kind that he has

:36:59. > :37:04.celled, as a former deputy leader, I think he will expect that his words

:37:05. > :37:07.will at least have been noted. The fee is thus says the fight with the

:37:08. > :37:11.response he will pursue it with the Prime Minister. -- if he is

:37:12. > :37:18.dissatisfied with the response. I thank all those who have taken

:37:19. > :37:23.part in the exchanges thus far to the backbench motion on the

:37:24. > :37:31.government's stake in the Royal Bank of Scotland and the future of UK

:37:32. > :37:36.banking, to move the motion, I call the honourable lady.

:37:37. > :37:41.I beg to move the motion that this house calls on the government to

:37:42. > :37:46.consider suspending the further sale of its shares in the Royal Bank of

:37:47. > :37:49.Scotland, whilst it looks at alternative options, believes this

:37:50. > :37:56.should take place in the context of a wider review and should consider

:37:57. > :38:00.the case of establishing new models of banking, including regional

:38:01. > :38:05.banks. I would like to begin by thanking, on behalf of the house,

:38:06. > :38:07.the backbench business committee for allowing us the opportunity to

:38:08. > :38:13.debate the issue in the main chamber today. This is my first time leading

:38:14. > :38:16.a debate and I'm grateful to all of my honourable friend 's from both

:38:17. > :38:22.sides of the house they have agreed to participate today. I will keep my

:38:23. > :38:27.speech reasonably short so that as many members as possible future they

:38:28. > :38:29.will have a chance to speak. The selling of RBS shares as an

:38:30. > :38:34.important issue that deserves detailed discussion and this is the

:38:35. > :38:41.first time it has been formally debated since the Chancellor

:38:42. > :38:47.announced his intention to begin re-privatisation at his 2015 Mansion

:38:48. > :38:50.house speech. He made this announcement whilst providing no

:38:51. > :38:54.opportunity for public discussion of the decision. He did not even

:38:55. > :38:59.present the decision in Parliament the following day but rather, said

:39:00. > :39:05.the economic Secretary to the Treasury on his behalf. The motion

:39:06. > :39:12.signed by honourable friends on both sides of the house touches on three

:39:13. > :39:15.things today. Firstly, for the government to consider suspending

:39:16. > :39:20.the further sale of its shares in the Royal Bank of Scotland. Whilst

:39:21. > :39:23.that looks at alternative options. Sufficient evidence has not been

:39:24. > :39:28.considered to give the government mandate to rush through the of

:39:29. > :39:34.shares. Secondly, for this to take place in the context of a wider

:39:35. > :39:39.review of the UK's financial sector. We need to look at the implications

:39:40. > :39:47.for our economy of the make up of the UK banking sector. It is

:39:48. > :39:50.unusually large, unusually concentrated and uniquely lacking in

:39:51. > :39:55.diversity. In comparison with other countries. Thirdly, the reviews

:39:56. > :40:00.should consider the case for establishing new models of banking,

:40:01. > :40:07.including regional banks, reforming RBS into a network of local banks

:40:08. > :40:14.would increase financial stability. Help decentralise the economy, and

:40:15. > :40:18.maintain local branch lending and help restore faith in the British

:40:19. > :40:23.banking system. There is also a strong case that it would be

:40:24. > :40:28.beneficial for the taxpayer and the economy. Certainly enough to justify

:40:29. > :40:34.examining these options before pressing ahead with a fire sale. In

:40:35. > :40:37.my opening speech, I want to set out firstly the errors of process behind

:40:38. > :40:43.the cell and secondly the case to reform it, rather than selling RBS.

:40:44. > :40:47.I call on the government to halt the sale of RBS shares until a full and

:40:48. > :40:54.independent review of all options is conducted. As a result of the

:40:55. > :40:59.emergency bailout package in October 20,008, the British public

:41:00. > :41:05.effectively acquired 82% of RBS and 43% of Lloyds bank. The total cost

:41:06. > :41:12.to taxpayers of a stake in RBS has now exceeded ?45.5 billion, the

:41:13. > :41:16.recent sale of 5% stake in the bank has already resulted in a loss of ?1

:41:17. > :41:20.billion. Selling the entire government stake at a similar price

:41:21. > :41:27.would result in losses of ?13 billion or more. Almost a third of

:41:28. > :41:29.the original bailout. The size of the expected losses and the

:41:30. > :41:34.impossibility of meeting the Chancellor's previous assurance that

:41:35. > :41:38.we would get our money back reinforces the case for a broader

:41:39. > :41:44.review to establish whether this is really the best we can do. Taking

:41:45. > :41:45.into account all the economic costs and benefits of the different

:41:46. > :41:58.options available. In 2013 the following objectives

:41:59. > :42:01.were set out by the Chancellor of the Exchequer, maximise the ability

:42:02. > :42:07.of banks to support the UK economy, get the best value for money for

:42:08. > :42:11.taxpayers and return the banks to private ownership as soon as

:42:12. > :42:16.possible. Privatisation is hereby presented as the answer for the

:42:17. > :42:21.first two objectives. It is presented as a foregone conclusion

:42:22. > :42:25.rather than one of a number of options, each of which deserve

:42:26. > :42:30.consideration. And yet a whole host of experts have suggested that we

:42:31. > :42:37.can do better with RBS, better for the taxpayer and for the economy.

:42:38. > :42:42.Then return to a business -- better than return to every crisis stance.

:42:43. > :42:49.And this is not a fringe view, it has been suggested by the previous

:42:50. > :42:55.government's own entrepreneur in residence, including others. --

:42:56. > :43:00.among others. Yes, and, the Archbishop of Canterbury! LAUGHTER

:43:01. > :43:05.Thank you. To quote Martin Taylor, member of the Bank of England's they

:43:06. > :43:08.brought policy committee, I would like to have a feeling that the

:43:09. > :43:12.government recognises there are policy options and is thinking along

:43:13. > :43:17.those lines, rather than saying, our job is to get the business back into

:43:18. > :43:24.the private sector. Unfortunately, the rushed nature of the cell, the

:43:25. > :43:27.lack of evidence to support it, and the lack of discussion around it

:43:28. > :43:31.suggests the contrary. The government decision to sell off RBS

:43:32. > :43:35.shares in the summer without any published evidence that it is being

:43:36. > :43:39.considered and has considered an alternative option raises important

:43:40. > :43:44.questions about public accountability and process. It

:43:45. > :43:48.signals a return to business as usual, and an unquestionable faith

:43:49. > :43:53.that the private sector is the right direction for British banking. The

:43:54. > :44:00.Chancellor argued it was the right thing to do the taxpayers and for

:44:01. > :44:04.British businesses. And that the sale would promote financial

:44:05. > :44:07.stability. Leading to a more competitive banking sector, and

:44:08. > :44:11.support the interests of the wider economy. To support these claims,

:44:12. > :44:17.the government has relied upon a 13 page report by the investment bank

:44:18. > :44:22.Rothschild, and a 2-page letter from the Governor of the Bank of England.

:44:23. > :44:28.Neither of these present any concrete evidence to support the

:44:29. > :44:33.Chancellor's assertion. Opposition to the sale has been voiced by the

:44:34. > :44:40.public, by honourable friends in the house, and independent voices in the

:44:41. > :44:43.field. Nearly 120,000 people have signed a petition calling for an

:44:44. > :44:48.independent review of the options for the bank's future before any

:44:49. > :44:53.shares are sold, a survey commissioned by move your money

:44:54. > :44:59.shows only 21% of people agree with the current conditions of share

:45:00. > :45:04.sale. 82% agree that Royal Bank of Scotland should act in the public

:45:05. > :45:07.interest and 67% agree that we should have a full independent

:45:08. > :45:12.review. Many alternative options have been put forward for RBS,

:45:13. > :45:19.breaking it up into a series of challenging banks, turning it into a

:45:20. > :45:24.state of investment bank. Or, converting it into a network of

:45:25. > :45:30.local or regional banks. I want to focus on the last of these, which

:45:31. > :45:41.has been advocated among many others like the new economic foundation,

:45:42. > :45:45.the Archbishop of Canterbury, and the former Treasury Minister, my

:45:46. > :45:51.noble friend, the member for Wentworth. It is modelled not on an

:45:52. > :45:57.untested economic area but on the German model, a network of local

:45:58. > :46:02.public saving banks owned in the trust for the public benefit.

:46:03. > :46:08.Accountable to local people, and with a mandate to support the local

:46:09. > :46:11.economies. They are the powerhouse of small business lending in

:46:12. > :46:17.Germany, and an important part of the success story for the German

:46:18. > :46:23.economy. It has been proposed that RBS should be broken into 130 local

:46:24. > :46:30.German banks, -- local banks. Similar size to what is seen in

:46:31. > :46:34.Germany. This would be carved out of the high street operation with

:46:35. > :46:40.investment banking and Private Angling arms being sold. Like in

:46:41. > :46:45.Germany, they would be able to share risks and resources, to achieve

:46:46. > :46:51.economies of scale, but crucially, each local bank would be

:46:52. > :46:56.independent. The government is missing a golden opportunity to fix

:46:57. > :47:01.the structural problems of UK banking, which were exposed in the

:47:02. > :47:09.crisis. The UK has the most concentrated... I hope the

:47:10. > :47:12.honourable lady would accent that the German banking system also had

:47:13. > :47:19.problems during the financial crisis, it was the very Sparkasse

:47:20. > :47:25.that help pump up the credit bubble through inappropriate lending. And

:47:26. > :47:33.helped to cause the Eurozone crisis in its way. Your example given is a

:47:34. > :47:34.short period of time, over a long period of time, it has been tested

:47:35. > :47:48.to work. I beg to disagree. Just 3% of our banking system is

:47:49. > :47:52.locally controlled, and paired to two thirds in Germany. We also

:47:53. > :47:59.uniquely reliant upon shareholder owned banks, at the expense of other

:48:00. > :48:03.ownership models. This lack of diversity makes us uniquely

:48:04. > :48:06.vulnerable to financial crisis, put simply, it makes it more likely that

:48:07. > :48:13.our banks will suffer the same problems at the same time as they

:48:14. > :48:16.did in 2008. Breaking up RBS and localising the banking system would

:48:17. > :48:22.make us more resilient to future shocks. Local banks provide a means

:48:23. > :48:27.through which to rebalance the economy. The UK has the most

:48:28. > :48:35.regionally unbalanced economy of any European country. Studies find that

:48:36. > :48:37.local banks in other countries help prevent capital from being sucked

:48:38. > :48:43.into big cities. They spread jobs and lending more evenly across the

:48:44. > :48:47.country. It would also ensure that more people have access to bank

:48:48. > :48:51.branches, where commercial banks are shut in at an increasingly rapid

:48:52. > :48:56.rate across the country and across Europe, local banks in Europe have

:48:57. > :49:03.privatised many good access for their customers. French local

:49:04. > :49:08.cooperatives, for example, typically locate between 25 and 33% of their

:49:09. > :49:16.branches in sparsely populated areas. Local banks also lend more to

:49:17. > :49:21.the real economy, particularly small and medium-sized enterprises. This

:49:22. > :49:24.would be of great benefit to my constituency of Edmonton and across

:49:25. > :49:30.the country for those struggling to obtain loans. What makes this

:49:31. > :49:32.possible is not just the bank's local focus but their ownership

:49:33. > :49:41.structure and public interest mandate. Across Europe, banks run

:49:42. > :49:45.for more than profit, which comes to 66% of the balance sheet to the high

:49:46. > :49:51.street banking, compare to just 37% for commercial banks, who tend to

:49:52. > :49:57.lend to more profitable activities, such as derivative trading. Local

:49:58. > :50:00.banks could therefore reduce vulnerability to crisis, help

:50:01. > :50:10.rebalance the economy and boost the real economy. The analysis suggests

:50:11. > :50:16.that should have been done in 2008. The UK GDP could have benefited from

:50:17. > :50:25.an immediate boost of 7.1 billion with an additional 13.5 billion over

:50:26. > :50:30.three years. Reforming RBS is in the interest of the taxpayer, and the

:50:31. > :50:34.economy. I want to end with a statement from the Tomlinson report,

:50:35. > :50:40.which I think highlights the way in which selling off RBS shares

:50:41. > :50:45.represents a wasted opportunity for significant publicly beneficial

:50:46. > :50:49.reform in UK banking. Returning RBS and Lloyds bank to fall private

:50:50. > :50:55.sector ownership in their current form would be a return to the

:50:56. > :51:02.banking landscape of 2003. Possibly with even less competition. Given

:51:03. > :51:09.the lack of any real change in the banking sector, there is nothing

:51:10. > :51:13.that would stop 2018 being the same as 2008, unless radical action is

:51:14. > :51:17.taken now. Without reform of any banking structures there is a real

:51:18. > :51:24.risk that we could witness another crash. We must learn from the events

:51:25. > :51:29.of 2008, by failing to provide evidence, justifying the sale, and

:51:30. > :51:33.failure to consider alternative options, the government is putting

:51:34. > :51:41.ideology above what is best for the economy and taxpayer. Lastly, I

:51:42. > :51:45.asked the government to conduct an independent review into all times of

:51:46. > :51:52.options, and I urge members of the house from both sides to support the

:51:53. > :52:00.motion put forward today. The question is as on the order paper.

:52:01. > :52:07.It is a pleasure to take part in this, we commemorate a most

:52:08. > :52:11.significant day in the history of Parliament, although at the outset I

:52:12. > :52:15.have not put my name to this motion, and I may abstain on it, I

:52:16. > :52:19.understand the perspective through which the motion has been

:52:20. > :52:24.approached. The financial crisis of 2008 did much to rock public

:52:25. > :52:27.confidence in the UK financial sector, the collapse of several

:52:28. > :52:30.household names in banking, it could be argued that the banks to a great

:52:31. > :52:33.extent brought this fate upon themselves coming years of

:52:34. > :52:43.overambitious and risky lending practices lead to cakes of bad debt,

:52:44. > :52:51.piled up around foundations until it all blew up in incredible fashion,

:52:52. > :52:57.and that, ladies and don't know, is the end of my joke for the afternoon

:52:58. > :53:02.(!) LAUGHTER Although perhaps we might like to

:53:03. > :53:06.see replicated the kind of punishment meted out on Guy Fawkes

:53:07. > :53:13.seen in the punishment of those that led to the banking crisis. -- kegs.

:53:14. > :53:16.We have a present situation of large state owned holdings in financial

:53:17. > :53:20.institutions, one of which, the most notable, the World Bank of Scotland,

:53:21. > :53:28.of which the government has a current share of 73%. INAUDIBLE

:53:29. > :53:34.The National Audit Office issued a highly critical report in September

:53:35. > :53:41.about how the government manages its 222 billion assets in RBS and 53

:53:42. > :53:46.other financial institutions. Would the honourable gentleman not agree

:53:47. > :53:49.that there should surely be a transparent portfolio approach to

:53:50. > :53:53.the management of that asset, as recommended by the National Audit

:53:54. > :54:00.Office, and a fair share of profits arising should be directed to those

:54:01. > :54:12.in areas most in need, like in Wales. It is not within my remit to

:54:13. > :54:16.say how that should be done, but if I have made some progress with the

:54:17. > :54:20.rest of my remarks, the return of RBS to private ownership is an

:54:21. > :54:25.important first step, but the motion does provide the opportunity to

:54:26. > :54:29.debate some particulars of the Royal Bank of Scotland's business, and

:54:30. > :54:35.important aspects of this are lending practices, which were

:54:36. > :54:39.applied to and after the crash. RBS in particular has been found

:54:40. > :54:42.wanting. I want to highlight certain negative practices that have been

:54:43. > :54:47.shown from independent sources to have occurred at RBS which have

:54:48. > :54:51.affected it small and medium-sized business plans, in particular one

:54:52. > :54:55.business in my constituency, Hazel Grove, I want a place on record my

:54:56. > :54:58.concerns in this area and I am keen to hear from my honourable friend

:54:59. > :55:02.the Minister how these practices are to be investigated and what action

:55:03. > :55:08.is being taken in order to restore public trust in RBS and the public

:55:09. > :55:11.-- the banking sector more widely. The government will no doubt be

:55:12. > :55:18.aware of the report by the businessmen, published in 2013, as

:55:19. > :55:24.referred to by the honourable lady in her opening speech, he was

:55:25. > :55:29.involved in the Department for Business, Innovation and Skills, the

:55:30. > :55:31.lending practices banks were looked at, and their treatment of

:55:32. > :55:34.businesses in distress, the report looked across several banks in

:55:35. > :55:38.general, taking a particular in-depth interest at the RBS's

:55:39. > :55:45.turnaround division, global restructuring group. Tomlinson

:55:46. > :55:48.received large bodies of evidence from RBS's practices including from

:55:49. > :55:54.business customers, the report found, " very concerning patterns of

:55:55. > :55:59.behaviour leading to the destruction of good and viable UK businesses all

:56:00. > :56:02.for the sake of profit rose quote. I will give way to the honourable

:56:03. > :56:08.gentleman. -- over the sake of profit". I do agree with that

:56:09. > :56:13.particular point that has been made, about business practices, but will

:56:14. > :56:20.he accept that the motion is a reasonable and moderate proposal and

:56:21. > :56:26.the contention for my honourable friend is that we should really look

:56:27. > :56:29.at things like the Sparkasse in Germany. Bankers bonuses have been a

:56:30. > :56:33.significant factor in driving the misbehaviour that led to the

:56:34. > :56:37.downfall in the financial crash in 2008? Isn't it true that as far as

:56:38. > :56:43.the German banking system goes, they are geared towards supporting jobs

:56:44. > :56:49.and the real economy, and it would be far better approach if we did

:56:50. > :57:01.something similar. -- and it would be a far better approach.

:57:02. > :57:08.You Of course, bonuses should not be used towards wrongdoing.

:57:09. > :57:19." from the motion itself in the context of the UK financial sector.

:57:20. > :57:24.Experiences of many businesses across the country, those among RBS

:57:25. > :57:27.customers find themselves in circumstances in which the bank

:57:28. > :57:31.unnecessarily engineered default to move the business out of local

:57:32. > :57:34.management and Internet turnaround division in order to generate

:57:35. > :57:44.revenue for fees and increase margins and devalued assets. Would

:57:45. > :57:55.you agree with me that it is not the practice restricted to RBS. But also

:57:56. > :57:59.to Lloyds bank as well. Does he have any observations on that?

:58:00. > :58:06.I would agree that the practice was not restricted to RBS but in the

:58:07. > :58:09.context of my own constituent that was with the Bank of Scotland and

:58:10. > :58:17.I'm sure that her constituent experienced the same things. The

:58:18. > :58:20.practices of RBS's turnaround of vision, once place in this

:58:21. > :58:23.division, the businesses were trapped with no ability to move or

:58:24. > :58:28.the opportunity to trade out of their position, good and honest and

:58:29. > :58:35.otherwise successful businesses could stand by as they were sunk.

:58:36. > :58:40.The bank could extract maximum revenue of the business and to such

:58:41. > :58:47.an extent that it was the key contributing factor in the

:58:48. > :58:53.business's financial deterioration. I'm struck by the comments made just

:58:54. > :58:57.a moment ago by the honourable lady regarding Lloyds TSB, does the

:58:58. > :59:00.member agreed me that week must learn from the bitter experience of

:59:01. > :59:08.the merging of the Halifax Bank of Scotland with Lloyds at a

:59:09. > :59:15.significant loss to the taxpayer and it is not enough to four taxpayer's

:59:16. > :59:28.money down the drain by pouring money down the drain when tax

:59:29. > :59:32.credits cuts are hitting the tourist people in the country hard. This was

:59:33. > :59:36.not an open and transparent process, nor was it that a protein portion of

:59:37. > :59:41.response from the process, businesses were in the dark as to

:59:42. > :59:44.what was happening until it was far too late, most worryingly the

:59:45. > :59:50.businesses affected were offered perfectly viable but for the action

:59:51. > :59:55.of the bank made a contribution to the UK economy, a positive one. If

:59:56. > :59:59.the businesses consent had more options to moving banking facilities

:00:00. > :00:01.and there are was more transparency prior to entering the process they

:00:02. > :00:07.would have been better protected on the banks opportunistic behaviour

:00:08. > :00:11.which they used to manipulate the businesses financial obligations for

:00:12. > :00:15.their own game. The oughtn't practices of the restructuring

:00:16. > :00:20.group, if accurate, were on a generous interpretation, dubious, it

:00:21. > :00:24.may be fair and true to say that they were unethical and scandalous.

:00:25. > :00:28.If the findings of the report I have just summarised some shocking or

:00:29. > :00:31.alarming, they should do, but consider just how much more so

:00:32. > :00:36.shocking and alarming it would be for the victimised as Mrs and

:00:37. > :00:39.business owners involved if the honest and hard-working businessmen

:00:40. > :00:43.and women and their employees who saw their hard work and investment

:00:44. > :00:46.offence banning years, eroded from under them, for those who lost their

:00:47. > :00:51.businesses, their jobs and reputations and in some cases their

:00:52. > :00:58.homes. This was the case for the business in my constituency. It was

:00:59. > :01:02.owned by a constituent of mine. They were a medium-sized family-owned

:01:03. > :01:06.construction firm operating out of Bromley, the engaged in mini

:01:07. > :01:11.commercial construction contracts and with clients including large

:01:12. > :01:16.retailers, shopping centres, several NHS sites and a host of other local

:01:17. > :01:20.businesses. They were well recognised and respected name in the

:01:21. > :01:26.construction industry across greater Manchester. However in 1998, they

:01:27. > :01:30.fell victim to exactly the kind of practices I have outlined. I will

:01:31. > :01:33.not give the house the full details of the case particularly as

:01:34. > :01:36.ministers from the Department of than this are aware of the full

:01:37. > :01:41.details and I have passed it onto them. It would be a benefit to house

:01:42. > :01:46.to outline the example, when this company was forcibly moved to the

:01:47. > :01:48.RBS by the RBS into the global restructuring group after the bank

:01:49. > :01:54.claimed the business audit a significant debt in excess of

:01:55. > :01:58.?700,000, my constituents acknowledges that there were some

:01:59. > :02:02.debts with the business but it was perfectly capable of managing it and

:02:03. > :02:05.servicing it. However the crux of the case was that although the

:02:06. > :02:10.business balance sheet at the time showed assets of over ?1 million,

:02:11. > :02:16.after being run through the process of the restructuring group, RBS

:02:17. > :02:20.placed a valuation on the business at -1.1 million, a discrepancy of

:02:21. > :02:26.over ?2 million. The upshot was that it led to the forced liquidation of

:02:27. > :02:29.the company, costing the jobs of all the employees and forcing the

:02:30. > :02:31.business owner to sell his own. He said the business was viable and

:02:32. > :02:38.would still be treading everyone not for the actions of RBS or he had

:02:39. > :02:46.been given time to switch his bank. I think of a similar situation with

:02:47. > :02:48.small business person who borrowed a perfectly wonderful relationship

:02:49. > :02:52.with the bank manager, the bank branch close, the bank manager went

:02:53. > :02:55.and suddenly the loan was call them quickly, she lost her business on

:02:56. > :02:59.the high street selling job in's calls and had to go on benefits and

:03:00. > :03:04.had difficulties paying and the knock-on effect that has had, not

:03:05. > :03:09.just within the sector but also with them the wider local economy. I

:03:10. > :03:14.agree wholeheartedly with the lady's remarks and the pattern that

:03:15. > :03:22.has been repeated across the country in different circumstances but the

:03:23. > :03:27.same, sorry results. It is not a isolated case, it was widespread

:03:28. > :03:32.systematic practice, but RBS has failed to resolve the case of my own

:03:33. > :03:38.constituents and I'm sure the same can be said for many hundreds of

:03:39. > :03:46.cases across the country. This is just about... This is about more

:03:47. > :03:54.than numbers on the balance sheet, it is about people's lives. In

:03:55. > :04:00.addition to raising this issue, I have written to the Minister for

:04:01. > :04:02.small business about this case and it is obviously a cross department

:04:03. > :04:06.or tissue covering both the Treasury and the Department for business and

:04:07. > :04:10.I want to ask the Minister to confirm on the record that she is

:04:11. > :04:14.aware of my constituents case and cases like it across the country and

:04:15. > :04:19.if she can give an indication of how many small businesses it is

:04:20. > :04:22.estimated fell victim to the RBS in a similar way. The Business Minister

:04:23. > :04:27.has told me that both the Financial Conduct Authority and the Prudential

:04:28. > :04:30.regulation authority have been established by Parliament with legal

:04:31. > :04:35.powers to investigate the situation and I'm aware that Apple Mac

:04:36. > :04:41.accountancy consultancy firms -- I'm aware that multiple accountancy

:04:42. > :04:46.consultancy firms have been advised. The review is ongoing and I

:04:47. > :04:50.understand it is not expected to report until the end of the year but

:04:51. > :04:53.given that it is two years this month since the publication of the

:04:54. > :04:57.Tomlinson report, compounded by the fact that some of these cases forced

:04:58. > :05:02.liquidation and destruction of viable businesses are over a decade

:05:03. > :05:11.old, this is an awfully long time to wait for justice or closure. He

:05:12. > :05:14.would be disappointed to hear that at a meeting with RBS this morning

:05:15. > :05:18.and was confirmed the not expecting the report until after the New

:05:19. > :05:23.Year, so the hope of having something in our Christmas stocking

:05:24. > :05:28.has been taken away. I am disappointed to hear the content of

:05:29. > :05:32.that intervention. I want to ask if the government can give any

:05:33. > :05:37.assurances as to the future timeliness from the SCA. Turning

:05:38. > :05:41.back to the original Tomlinson report, recommendations call for

:05:42. > :05:44.more competition to remove incentives to make short-term

:05:45. > :05:49.decisions purely in favour of bank profit rather than the interests of

:05:50. > :05:53.longer term customer relationships. I want to ask that when the

:05:54. > :05:58.government expects the form bonds to the Tomlinson report and I want us

:05:59. > :06:03.what steps the government is taking to improve the lending practices and

:06:04. > :06:08.of RBS in light of what has happened and let's not forget the government

:06:09. > :06:12.still owns over 70% of the bank and I want to give my honourable friend

:06:13. > :06:18.the Minister the opportunity to give any mission to former owners of now

:06:19. > :06:22.liquidated businesses, including my constituent, which she feels will be

:06:23. > :06:27.appropriate as we await the reviews of type parties. The question before

:06:28. > :06:32.the house this and says the potential sale of future further

:06:33. > :06:38.shares in RBS and I said at the outset that this is on the orders of

:06:39. > :06:41.direction. My question is still early to comfortable proceeding when

:06:42. > :06:45.the long shadow still hangs over RBS's reputation and I call on the

:06:46. > :06:50.government whilst it still holds a large controlling stake in RBS use

:06:51. > :06:53.its position of influence to ensure these matters are fully

:06:54. > :06:58.investigated, to deem what admission of wrongdoing is appropriate and if

:06:59. > :07:02.necessary to facilitate compensation and the issuing of apologies to

:07:03. > :07:08.those businesses affected by the scandal. Pending the Minister did in

:07:09. > :07:16.response I look forward to what the government has to say.

:07:17. > :07:26.I want to congratulate my colleague for tabling this debate. It is a

:07:27. > :07:34.very important debate. My take on this role is -- resolution is

:07:35. > :07:36.simple, what is there not to like? The government suspends the further

:07:37. > :07:39.sale of shares of the Bank of Scotland and calls for a wider

:07:40. > :07:42.review of the UK financial sector and the case for establishing new

:07:43. > :07:47.models of banking, including regional banks. That suggests a

:07:48. > :07:50.mixed economy in the banking sector which doesn't result in a massive

:07:51. > :07:54.loss to the taxpayer and some suggest a bigger hit of ?14 billion

:07:55. > :07:59.to the public purse and that doesn't seem to be an especially political

:08:00. > :08:03.point, indeed organisations from across the whole political spectrum

:08:04. > :08:11.have suggested turning RBS into a network of local banks. Regulators

:08:12. > :08:17.have also suggested turning it into smaller banks. This resolution

:08:18. > :08:25.appears both sensible and not a politically suspension. In my brief

:08:26. > :08:31.contribution, I want to talk about alternative ownership models. As far

:08:32. > :08:33.as I can see and it was pointed out by my colleague from Edmonton, there

:08:34. > :08:37.is a distinct lack of evidence provided for the government's

:08:38. > :08:40.assertion that banks would for better when located in the private

:08:41. > :08:45.sector. I want to point out that other elements exist that other

:08:46. > :08:49.ownership models, stakeholder banks should have a role to play in fixing

:08:50. > :08:54.our broken banking system. My biggest departure point is this, as

:08:55. > :09:00.far as I can see, justifying its policy on RBS, the government got a

:09:01. > :09:03.letter from the back of it when, all the evidence suggest that commercial

:09:04. > :09:07.organisations are more efficient, more innovative and more effective

:09:08. > :09:13.privately owned banking system is privately owned banking system is

:09:14. > :09:15.best able to allocate capital efficiently and competitively to

:09:16. > :09:19.grow jobs, investment and income. That is clear and unequivocal, so

:09:20. > :09:22.let's start with some of the basic questions, where is the evidence for

:09:23. > :09:27.those assertions? Either the government nor the bank has provided

:09:28. > :09:29.any and the question the Minister simply pointed by to the

:09:30. > :09:35.government's letter and that appears to be a pretty lazy feedback. It has

:09:36. > :09:39.not developed in terms of the talking of the future of a major

:09:40. > :09:44.national asset, one of the UK's biggest banks with huge occasion for

:09:45. > :09:49.our economy and our financial system and our own livelihoods. If you are

:09:50. > :09:53.to listen to the government you would think they were sadly no

:09:54. > :09:56.alternative to an economy dominated by large privately owned banks,

:09:57. > :10:01.except perhaps some kind of monolithic government bureaucracy,

:10:02. > :10:05.either big shareholder or big steak. That is simply an either or choice

:10:06. > :10:08.but there are a range of other ownership models which work in other

:10:09. > :10:14.countries from local savings banks and councils to local communities,

:10:15. > :10:19.like the German model. Mutuals and state investment banks. Actually, as

:10:20. > :10:22.far as I can see it is the UK which is the odd one out in relying

:10:23. > :10:27.exclusively on shareholder owned banks. Research from the new

:10:28. > :10:32.economics foundation found that two thirds of German bank deposits are

:10:33. > :10:39.with so-called stakeholder banks, in France it is about 50%, and the

:10:40. > :10:43.Netherlands about 40%. In the case of building societies, they also

:10:44. > :10:46.suffered problems, we had our own equivalent in this country but they

:10:47. > :10:54.fared no better than some of the major banks. I would simply suggest

:10:55. > :10:58.that members opposite read a book called the new few, which was

:10:59. > :11:05.written by Ferdinand Mount who happen to be Margaret Thatcher's

:11:06. > :11:11.head of policy who argued for a mixed economy and the question of

:11:12. > :11:14.mutuals, local regional banks and a wider distribution of banking

:11:15. > :11:19.products to community such as mine in east London. It is not necessary

:11:20. > :11:26.left-right debate and I argue this is a live debate on the right which

:11:27. > :11:29.suggests that neutrality or abstention on this is not

:11:30. > :11:30.necessarily going with the grain with more innovative thinking across

:11:31. > :11:38.the right. While a boyfriend is a renowned

:11:39. > :11:41.economist but would he not agree that even before we get into the

:11:42. > :11:46.alternative models of banking, you do not have to be an economist to

:11:47. > :11:57.see that if you bought something with a share price of ?5.02, in the

:11:58. > :12:03.first case... If you buy something at one price and then sell it off

:12:04. > :12:08.for next to nothing, the current market rate, ?3.21, it does not make

:12:09. > :12:14.economic sense, this is from a party which prides itself on so so-called

:12:15. > :12:19.long-term economics, it is more likely do economics. Having a

:12:20. > :12:23.collective hit 14 billion on the taxpayer does not seem to be good,

:12:24. > :12:30.rigorous, empirically grounded economics. I want to go back to the

:12:31. > :12:35.question of bank deposits, 50% in the Netherlands, 40% in France, in

:12:36. > :12:38.the UK, it is about 10%, the lowest of any developed economy. Apart from

:12:39. > :12:45.anything else, this lack of diversity leaves us vulnerable, all

:12:46. > :12:52.our exile in one basket, literally. -- all our aches are in one basket.

:12:53. > :12:57.These claims simply do not stack up from the Minister. -- eggs.

:12:58. > :13:01.Shareholder owned banks, in 2008, shareholder owned banks, commercial

:13:02. > :13:06.banks, ruled the financial system to its needs, yes they were innovative,

:13:07. > :13:09.they created some of the most innovative, toxic financial

:13:10. > :13:15.instruments the world has ever seen, but much of the innovation is what

:13:16. > :13:17.has been called socially useless, serving no real economic purpose

:13:18. > :13:21.other than to inflate the profits of the banks who produce them, while

:13:22. > :13:25.quietly spreading dangerous levels of risk to every corner of our

:13:26. > :13:30.financial system. Obviously, don't take my word for this, the

:13:31. > :13:32.Parliamentary commission on banking standards concluded that the

:13:33. > :13:37.shareholder model itself had a large part to play in the story, in their

:13:38. > :13:42.words, shareholders have incentives to encourage directors to pursue

:13:43. > :13:49.higher risk profits in turn for short short-term returns. They were

:13:50. > :13:53.criticising some four excessive conservativism. In other words, the

:13:54. > :13:58.only model to which the government is so keen to return RBS is the same

:13:59. > :14:02.model which help to bring down the banks in the first place. Perhaps

:14:03. > :14:06.the honourable member can remind us that when the financial crisis took

:14:07. > :14:10.place, who was the government and what were they doing with the

:14:11. > :14:12.regulator? It was a Labour government and many of us were

:14:13. > :14:17.arguing that we should not create this opportunity. You may remember

:14:18. > :14:20.the debate around the future of the Post Office, many colleagues were

:14:21. > :14:29.trying to articulate the case for a Postbank which could offer robust

:14:30. > :14:36.bona fides alternatives. We have a consistent theme. It is not just a

:14:37. > :14:39.political point scoring exercise. My honourable friend will no doubt

:14:40. > :14:47.recall that the bank which backs the post office bank is Ulster bank,

:14:48. > :14:51.owned by, RBS. Exactly right, so let's talk about stakeholder banks,

:14:52. > :14:56.and look at some of the evidence. I would prefer colleagues to this

:14:57. > :15:02.document on reforming RBS, and some of their findings, first, let's take

:15:03. > :15:05.hold of banks likely to be better capitalised before the crisis, they

:15:06. > :15:10.were less exposed to the activities which caused it. Corporate Id banks

:15:11. > :15:18.suffered a percent of the total losses Susan Kurt, -- cooperative

:15:19. > :15:22.banks. -- total losses incurred. HSBC alone was responsible for 10%

:15:23. > :15:27.of the losses. Second, stakeholder banks were likely to keep lending

:15:28. > :15:32.after the crisis, German public saving banks, Swiss banks and credit

:15:33. > :15:36.unions in the US and Canada kept expanding lending to businesses

:15:37. > :15:42.right through the crisis and resulting recession. Our own

:15:43. > :15:47.experience with the co-operative bank has not been that happy. I was

:15:48. > :15:55.talking about across Europe. The co-operative bank here... Never had

:15:56. > :15:58.to be nationalised. These stakeholder banks kept the real

:15:59. > :16:03.economy going, while commercial bank lending was crashing. In the UK we

:16:04. > :16:08.paid the price for having deliberately dismantled these types

:16:09. > :16:13.of banks. In the 1980s, that was through demutualisation. We left

:16:14. > :16:17.ourselves with nothing to break the catastrophic fall in lending by the

:16:18. > :16:24.big banks, since the crisis, we have done nothing to address this fatal

:16:25. > :16:30.structural fall. Would you agree that government policy has helped

:16:31. > :16:35.the larger players, in the financial pages we have seen that there is

:16:36. > :16:37.things the government could have done to help neutrals but they have

:16:38. > :16:42.continued to play with the big business and help them, what is the

:16:43. > :16:47.government doing to help the mutual sector? What are they doing in terms

:16:48. > :16:52.of building a more mixed economy more resilient and not prone to the

:16:53. > :16:58.catastrophic attacks and the collapse in lending that we saw back

:16:59. > :17:01.in 2008? Again, I would have thought a more resilient capitalism is

:17:02. > :17:06.something that we can all agree is a more desirable outcome. Not just in

:17:07. > :17:11.terms of crisis do we suffer, it is a problem for us in good economic

:17:12. > :17:21.times as well, referring to research from MEF, twice as much is lent to

:17:22. > :17:24.real economy as commercial banks, commercial banks invest twice as

:17:25. > :17:45.much in derivatives. All of this might help explain why

:17:46. > :17:49.the UK banking system is the least effective in the G-7 at supporting

:17:50. > :17:55.the real economy, just over 20% of bank lending goes to productive

:17:56. > :17:58.activity, Northern 60% in Germany. Fiercely, financial crises on the

:17:59. > :18:04.other side of the same coin, -- are the other side of the same coin. The

:18:05. > :18:07.speculatively ending will tend to blow bubbles which will inevitably

:18:08. > :18:12.burst. I could go on and on and list other measures for which stakeholder

:18:13. > :18:15.banking appears to be better, higher customer satisfaction, higher

:18:16. > :18:21.deposit rates, lower loan rates, Biggar branch networks, more job

:18:22. > :18:25.creation, suffice to say, if we want banks that put customers first,

:18:26. > :18:30.support the economy, manage risk sensibly, we could do worse than

:18:31. > :18:35.look to neighbours. -- European neighbours. Look at this, have a

:18:36. > :18:41.discussion about the comparative views, the evidence underlines

:18:42. > :18:44.public policy. I do agree with him that this is a live issue on the

:18:45. > :18:48.right and I agree with him that I would like to see a much more

:18:49. > :18:52.diverse banking sector, but can I bring him back to the point that was

:18:53. > :18:57.made earlier, isn't it a real problem for him and me, those of us

:18:58. > :19:00.that want to see a more diverse and corporative and mutual banking

:19:01. > :19:03.sector, it is a real problem that the entire atmosphere of corporative

:19:04. > :19:08.banking in the UK has been established by the circumstances of

:19:09. > :19:11.our own co-operative bank? There seems to be hiding behind one

:19:12. > :19:15.example when the whole of the evidence suggests something else, it

:19:16. > :19:22.has indeed got a part to play in terms of creating a more resilient

:19:23. > :19:24.model. OK, what does that mean for Royal Bank of Scotland, the

:19:25. > :19:28.government has presented an artificial choice between Disney

:19:29. > :19:32.says usual with taxpayer ownership and business as usual with private

:19:33. > :19:36.ownership, this could be deemed to be outdated thinking, we need more

:19:37. > :19:40.imagination and ambition if we are going to build a better banking

:19:41. > :19:44.system. We need to nurture new types of bank, the kind they have in

:19:45. > :19:48.almost every other developed economy, banks rooted in local

:19:49. > :19:52.communities, accountable to more than quarterly profit figures,

:19:53. > :19:55.focused on supporting real economic activity, and actually run with an

:19:56. > :20:00.ethic of public service attached to them. Finally, and why this debate

:20:01. > :20:04.is so obviously important, economists warned the world over

:20:05. > :20:09.that the next financial crisis could put the economy in danger and it

:20:10. > :20:16.could be around the corner, the stakes could not be higher. The

:20:17. > :20:21.number of compliments paid to the Royal Bank of Scotland in this place

:20:22. > :20:25.over the last few years has not... INAUDIBLE

:20:26. > :20:28.I have no doubt that today's debate will be no different, I have huge

:20:29. > :20:34.sympathy with my honourable friend from Hazel Grove, we all have

:20:35. > :20:40.constituents with similar issues, I know I have in my constituency and

:20:41. > :20:44.it is right that these things should be focused on and mistakes must be

:20:45. > :20:48.learned from, but I try to take up the challenge of the honourable

:20:49. > :20:52.gentleman from Dagenham in actually presenting an alternative viewpoint,

:20:53. > :20:55.and addressing the subject of the debate, that I congratulate the

:20:56. > :20:59.honourable lady from Edmonton for securing. As the register points

:21:00. > :21:03.out, I have had some familiarity with this sector, it is appropriate

:21:04. > :21:08.that we acknowledge the huge transformation that has happened

:21:09. > :21:14.inside RBS over the last few years. With the courage and of my right

:21:15. > :21:18.honourable friend, the Chancellor, they have taken serious actions,

:21:19. > :21:22.they have dramatically shrunk their investment banks, which will be

:21:23. > :21:28.welcomed in many parts of this house. They have sold off overseas

:21:29. > :21:32.assets, got rid of citizens in the US, and they asked looking out the

:21:33. > :21:36.mismanagement of the past. As far as I can see, they are investing in IT

:21:37. > :21:41.systems to finally bring together the amalgamation of all of the banks

:21:42. > :21:46.that form that business. With capital at 16% in RBS, I very much

:21:47. > :21:52.hope they are now in the position we want to see them in, where they can

:21:53. > :21:59.really drive lending into the UK economy and really support SMEs. I

:22:00. > :22:05.am grateful, and the honourable gentleman is giving way... Setting

:22:06. > :22:10.out a kind of alternative view that RBS has changed and been reformed.

:22:11. > :22:17.The Libor exchange-rate ringing scandal, that happened after it was

:22:18. > :22:21.a publicly owned bank, fundamentally has anything changed? The

:22:22. > :22:31.risk-taking culture, does that remain? -- exchange-rate rigging

:22:32. > :22:36.scandal. If I could say that all of the problems were precrisis, that

:22:37. > :22:39.would be good, but they were not, I fully acknowledge that, there are

:22:40. > :22:42.clearly issues in Demi in that culture, I sincerely hope RBS have a

:22:43. > :22:47.grip on the culture now, what they do have a grip on, in a minute, and

:22:48. > :22:51.I will come back to you, what they certainly have a grip on is their

:22:52. > :22:55.corporate structure and the way they conduct business. Now far more

:22:56. > :23:00.focused on the UK, far more focused on corporate lending, the largest

:23:01. > :23:04.single lender, the largest support of SMEs, the largest provider of

:23:05. > :23:11.mortgage lending, that is what we all want to see and what we wanted

:23:12. > :23:15.to see when this mistake was taken. Thank you very much for giving way.

:23:16. > :23:20.I am hearing you say that RBS has changed its culture, that it has

:23:21. > :23:23.improved, but this week again, in the Times, there is an article

:23:24. > :23:27.suggesting that they have been. Find the full suffocations over

:23:28. > :23:33.mis-selling data that they have been giving out, I wondered to myself,

:23:34. > :23:40.what has actually change? If they are still misbehaving, telling these

:23:41. > :23:45.lies, in effect, surely, then, they have not reformed themselves and it

:23:46. > :23:48.is the same as it ever has been? I have a lot of faith in the

:23:49. > :23:53.regulatory system that the front bench has put in place over the last

:23:54. > :23:58.five or six years. What we need to focus upon as a house is ensuring

:23:59. > :24:02.that we have a system of regulation which will deliver results for

:24:03. > :24:07.constituents and deliver results for the broader UK economy. I am nervous

:24:08. > :24:11.that the motion proposed by the honourable lady would actually delay

:24:12. > :24:15.support going into the economy, I know that it is well-intentioned but

:24:16. > :24:21.I am concerned about that. I was serving in the Treasury when this

:24:22. > :24:25.decision was originally taken, this state, and I know that no honourable

:24:26. > :24:29.gentleman or lady in this place would be under any illusion that

:24:30. > :24:34.that stake was ever taken in a leisurely manner, with a view of

:24:35. > :24:36.getting tidy investment, the decision was taken by the party

:24:37. > :24:41.opposite, with the best of intentions, they took the right

:24:42. > :24:45.decision, to support the UK economy and the UK banking system at a

:24:46. > :24:52.critical moment. What we have seen since then, and I will give way to

:24:53. > :24:56.the honourable gentleman. Given the honourable member's experience at

:24:57. > :25:00.the time, would he agree with me that nevertheless, there is still an

:25:01. > :25:04.onus on the Treasury to ensure that the money paid out in acquiring RBS

:25:05. > :25:11.is paid back in full to the taxpayer? I understand the

:25:12. > :25:15.attraction, the honourable gentleman is an economist of fine standing,

:25:16. > :25:20.and the point he makes is of course a simple one, which we would all

:25:21. > :25:25.like to see the answer yes to, it is not as simple as that, the point

:25:26. > :25:30.being made by the honourable member opposite. The value of the share is

:25:31. > :25:35.what people are prepared to pay for it, we know what is the value of RBS

:25:36. > :25:40.at present. A lot of actions were taken which may have been right for

:25:41. > :25:45.the UK economy but may not have added to the value of the share

:25:46. > :25:48.price, we are expecting RBS to act in the interests of the UK but it

:25:49. > :25:53.may not always be right for the share price. I will give way, let me

:25:54. > :26:01.make one final point, in rebutting the honourable general man's point.

:26:02. > :26:07.-- honourable gentleman's point. This Rothschild report is a thorough

:26:08. > :26:11.report, it sets out why it is that the taxpayer can expect to break

:26:12. > :26:16.even and make a profit overall on the taxpayer's investment in the

:26:17. > :26:21.banking system, given that at the time, back in 2009, when the party

:26:22. > :26:26.opposite was on the Treasury bench, the Treasury was talking about 20 to

:26:27. > :26:32.?50 billion loss, I think that is a remarkable achievement. Thank you

:26:33. > :26:37.for letting me back in, I merely asked the question, did he feel,

:26:38. > :26:41.given his experience, that the goal should be to maximise a return to

:26:42. > :26:45.the taxpayer given what was there, we accept we may not get it all back

:26:46. > :26:46.but is the goal to maximise the return to the shareholder, who is

:26:47. > :27:02.the taxpayer? Some either times and context of the

:27:03. > :27:05.border picture for the UK. The banking system is incredibly poured

:27:06. > :27:16.in to our economy and what it can provide to the real economy.

:27:17. > :27:25.During the course of the debate one of my advisers has detected me and

:27:26. > :27:31.he said according to the IMF that the taxpayer cost of saving the

:27:32. > :27:36.banking system was 500 billion,, has he taken into account the IMF's

:27:37. > :27:42.translations and will we see that ?500 billion back? I'm grateful as

:27:43. > :27:50.ever to the wisdom and insight flashing in on his machine, he has a

:27:51. > :27:52.very attentive staff and look forward to going through the

:27:53. > :28:06.reporting great detail and addressing that point with him. I

:28:07. > :28:11.have interventions from all sides. It pulls in different directions. We

:28:12. > :28:15.need an RBS bank that is being productive for the real economy and

:28:16. > :28:22.this is where I come to the heart of the resolution. The splitting off of

:28:23. > :28:26.Williams Anglin from RBS, long drawn out has cost billions, taken up the

:28:27. > :28:28.huge amount of management time, with the best will in the world,

:28:29. > :28:32.splitting of these organisations takes time and money and I'm really

:28:33. > :28:43.concerned that it could be an unnecessary distraction to try to

:28:44. > :28:49.fool in as many as 130. The creation of multiple banks will lead to

:28:50. > :28:55.multiple the synergies and entities will find it much harder to find

:28:56. > :28:58.capital markets. It could be a very costly distraction, I'm very nervous

:28:59. > :29:03.that will not act in the interest of the broader economy. There are

:29:04. > :29:08.advantages that flow from a very large and very well capitalised and

:29:09. > :29:14.regulated bank being able to spread its assets across the UK.

:29:15. > :29:25.While I wish the IPO goes well that it will forward in the New Year, I

:29:26. > :29:29.feel investors prefer the spread of assets across classes and the whole

:29:30. > :29:32.of the UK rather than regional entities, you have to remember the

:29:33. > :29:36.passion in this place regarding the steel industry to recognise how the

:29:37. > :29:42.major problem can have a ripple effect across banks locally and

:29:43. > :29:45.cause huge problems to regional economy, my fear is that capital

:29:46. > :29:49.markets would reflect those risks and the higher cost of capital and

:29:50. > :29:53.scarce resources, particularly in the very areas of the country where

:29:54. > :29:57.we all wish to see the maximum amount of lending.

:29:58. > :30:03.We would be convinced if we knew that the amount of loans going to

:30:04. > :30:07.small businesses since 2008 has rocketed up but instead we have seen

:30:08. > :30:14.in very flat because quite rightly there is a sense of internal looking

:30:15. > :30:19.in which is not to be in courage, but what incentives, what can

:30:20. > :30:25.government policy do to make them lend to the small businesses which

:30:26. > :30:30.keep our constituents is going? I thank the honourable lady. On the

:30:31. > :30:35.negative side, I don't think that tackles my concern expressed that

:30:36. > :30:38.smaller banks would have a higher cost of capital and scarce resources

:30:39. > :30:46.making them less able to lend to small businesses, I recognise that

:30:47. > :30:50.there is a huge crisis in confidence still in the major banks and a lot

:30:51. > :30:58.of small businesses, the last thing they will do is ask for a loan

:30:59. > :31:08.before the rug Paul Dunne from them. - the rug is pulled from under them.

:31:09. > :31:13.I don't think the United States resents a useful analogy for us,

:31:14. > :31:18.looking at Europe, the banks in Spain, regionally focused and

:31:19. > :31:22.driven, huge investment in regional projects have been a disaster and

:31:23. > :31:30.drop the Spanish economy crashing down. I adore which the success of

:31:31. > :31:35.the banks in Germany. I fear that what happened to them during the

:31:36. > :31:40.crisis is what could happen elsewhere. The inability to get

:31:41. > :31:49.local lending projects more than the cost of capital meant the trip on

:31:50. > :31:54.risky investments inside Europe and helping to preserve with the

:31:55. > :31:57.Eurozone crisis and the wrong kind of bonds in the wrong kind of

:31:58. > :32:05.markets which also inflated the credit bubble. I fear I cannot see

:32:06. > :32:07.alternatives overseas. It is not the reason why we shouldn't do something

:32:08. > :32:12.ourselves but I worry about this being a distraction at a time when

:32:13. > :32:21.you want money flowing into the real economy. I would oppose this motion.

:32:22. > :32:27.Then I congratulate my honourable friend, the member for Edmonton to

:32:28. > :32:33.secure this debate, I totally agree with her that given the fact that

:32:34. > :32:38.this is a major public asset with huge significance of the level of

:32:39. > :32:43.both public and Parliamentary debate has been very limited so far and

:32:44. > :32:48.this at least will go some way to addressing that. I will not labour

:32:49. > :32:55.that point but I would just like to start from the perspective, the

:32:56. > :33:03.taxpayer has a huge interest in this and as I say it, there are two

:33:04. > :33:07.specific interests but the overlap. The first has been debated so far,

:33:08. > :33:15.it is reconvened the money that has been invested by the taxpayer in the

:33:16. > :33:21.bank. The second is to ensure that even if the bank is sold, that it

:33:22. > :33:27.conducts itself in a way that would support wider community interest and

:33:28. > :33:34.the overall economy in a way that will boost the economy and boost tax

:33:35. > :33:41.receipts in future. The sale, as it has been mooted so far, doesn't seem

:33:42. > :33:45.to do either. I am grateful to the new economics foundation for some of

:33:46. > :33:52.these figures and very interesting if you look at over the year from

:33:53. > :34:00.February 2014 to February 20 15th, RBS traded at an average of 340 9p

:34:01. > :34:08.per share. This is way below the UK financial investments assessment of

:34:09. > :34:14.480 2p per share needing to recoup the taxpayer's investment. Add to

:34:15. > :34:20.that uncertainties about the costs of litigation around mis-selling

:34:21. > :34:26.products under manipulation of the market rate and there is a big?

:34:27. > :34:33.About what the market is doing. Failure to recoup taxpayer money

:34:34. > :34:38.might in certain circumstances be justified if the return from the

:34:39. > :34:43.capital receipts would contribute substantially to public finance and

:34:44. > :34:49.the government has committed itself to use the money raised from the

:34:50. > :34:57.sale to pay off public debt, but as things stand at the moment, interest

:34:58. > :35:04.rates are low on that would be paid off will be modest, it is quite

:35:05. > :35:10.reasonable for this house to ask for an exercise to be done in

:35:11. > :35:16.calculating the amount that would be paid off as compared to the amount

:35:17. > :35:22.that the taxpayer might get from restructuring the bank and investing

:35:23. > :35:27.in our wider economy and the increased tax receipts that would be

:35:28. > :35:30.generated. It is not a simple exercise but one, which given the

:35:31. > :35:38.significance of the sale of this bank, he would reasonably expect the

:35:39. > :35:40.government to have the forum and to put before the public and before

:35:41. > :35:45.Parliament before justifying the decision that it makes.

:35:46. > :35:54.Can I just make a few comments about the financial services industry in

:35:55. > :35:58.general. Britain is a world leader and I wouldn't wish in any way to

:35:59. > :36:06.detract from its crucial position in the economy. However, in fulfilment

:36:07. > :36:12.of its secondary objective of underpinning growth in the rest of

:36:13. > :36:20.the economy, it has been much less successful and lags behind many

:36:21. > :36:26.banking services in our key international competitors. UK banks

:36:27. > :36:31.have increasingly favoured lending to other banks and to real estate

:36:32. > :36:37.rather than the production sectors of the economy such as construction,

:36:38. > :36:44.manufacturing, transport, communications and retail. This was

:36:45. > :36:50.really brought home to me by the recent events, it is ironic that we

:36:51. > :36:56.have a government that talks about the status of our financial service

:36:57. > :36:59.industry, Phyllis at philosophically and ideological committed to the

:37:00. > :37:03.free market capitalist process of wealth creation and yet when we need

:37:04. > :37:15.major investment in infrastructure and regional development, it has to

:37:16. > :37:22.cosy up to China, the global Communist country to get that

:37:23. > :37:23.investment. There is no clear demonstration of the

:37:24. > :37:31.dysfunctionality of our financial services market. It is ironic that

:37:32. > :37:35.this government is intent on privatising and that sales of

:37:36. > :37:38.British assets to foreign governments, nationalisation is OK

:37:39. > :37:45.as long it is foreign government not the British government. I take his

:37:46. > :37:51.point, I think the honourable member wishes to interject. I have to say,

:37:52. > :37:57.is not the case that the Communist China only has these assets insofar

:37:58. > :38:00.as it has adopted the principles of a market economy of private economy

:38:01. > :38:05.rights of private property rights and freedom to contract. I broadly

:38:06. > :38:11.agree with his thesis but he wouldn't agree with mine that if we

:38:12. > :38:14.had the sort of financial services industry that was focused in the

:38:15. > :38:29.right direction it would with the matter anyway the progress they were

:38:30. > :38:36.making. This government is privatising the reinvestment bank

:38:37. > :38:43.which is a regional investment bank. Instead he is now about to invest ?2

:38:44. > :38:52.billion in the Chinese lead Asian infrastructure investment bank to

:38:53. > :38:59.provide local area funding for infrastructure in countries in Asia.

:39:00. > :39:02.He reinforces the incoherent and inconsistency and irony of the

:39:03. > :39:10.government's policies towards the financial sector. Should I talk a

:39:11. > :39:16.few moments about the small, medium sized enterprises. The government

:39:17. > :39:19.talks about rebalancing the economy, first of all from the

:39:20. > :39:26.service industry to manufacturing and then from London and the

:39:27. > :39:30.south-east to other regions. If you look at the economy, if you are

:39:31. > :39:36.going to do that, it has to be through SME, they constitute 90% of

:39:37. > :39:42.our businesses, 60% of employment and 50% of output. Of these

:39:43. > :39:49.manufacturing, whilst it is only 12% of the total GDP, it is hugely

:39:50. > :39:54.significant and crucial in driving productivity and also in

:39:55. > :39:59.performance. These are key pillars of driving over economy forward. You

:40:00. > :40:09.would reasonably look at our financial service sector to see how

:40:10. > :40:13.it delivers to help. Finance and investment is the fuel for this

:40:14. > :40:19.engine of growth. The problem is, that fuel is flowing in exactly the

:40:20. > :40:24.wrong direction. Despite government schemes to boost investment loans to

:40:25. > :40:29.small businesses, they have declined and the level of lending is highest

:40:30. > :40:33.in London, where there is the smallest manufacturing sector and

:40:34. > :40:37.the highest service sector and the lowest in the regions where there is

:40:38. > :40:43.high manufacturing, if I take my own region, the West Midlands, which is

:40:44. > :40:48.the highest region in terms of manufacturing output, the West

:40:49. > :40:53.Midlands received 9% of investment whilst London received 20%. One of

:40:54. > :40:59.the reasons for this which was articulated by my honourable friend

:41:00. > :41:04.for Edmonton, it is the decline in branch banking, the overcentralised

:41:05. > :41:10.system that we have had. The demise of local banking and the growth of

:41:11. > :41:15.digitalisation has led to a consequential reduction of local

:41:16. > :41:20.knowledge and insight needed to understand both local community

:41:21. > :41:28.needs and the needs of local business. I will give way. It is

:41:29. > :41:31.tragic that Britain yet the manufacturing is about half that of

:41:32. > :41:37.Germany. They have used their banks properly, we haven't. We now have a

:41:38. > :41:45.trade deficit that is enormous, submit because we cannot produce

:41:46. > :41:50.enough for our own purposes. The opposite is true in countries in

:41:51. > :41:54.Germany where there is a tradition of regional banking and local

:41:55. > :41:59.engagement and long-term support for small businesses. The government

:42:00. > :42:08.stated that policy of rebalancing the economy and boosting exports.

:42:09. > :42:13.You would reasonably expect that they might look at the banking

:42:14. > :42:19.system as a whole and given their ownership of RBS, to see what it

:42:20. > :42:21.might do to address the gaps that there are within the market in order

:42:22. > :42:32.to achieve their policy objective. Even the flagship business bank

:42:33. > :42:36.seems to be replicating the kind of business support models that have

:42:37. > :42:41.not worked previously. That market failure has led to, and I may add, a

:42:42. > :42:48.very welcome growth in community finance companies and the two peer

:42:49. > :42:53.lending, and they play an absolute vital role in providing sources of

:42:54. > :43:00.finance is that the major highly concentrated banks in this country

:43:01. > :43:04.would not address, and you would reasonably expect to look at the

:43:05. > :43:12.government owning RBS, to look at the potential of RBS, to actually

:43:13. > :43:17.support them. The alternative government policy seems to correct

:43:18. > :43:21.market failure through the regional growth Odyssey, and some of these

:43:22. > :43:28.have been quite successful. However, one of the most successful schemes

:43:29. > :43:33.has been operated through community development financing is the Jewish

:43:34. > :43:40.and is through a 60 million ITF growth. -- through the regional

:43:41. > :43:44.growth policy. That has been a part of nearly all ITF schemes. What is

:43:45. > :43:49.going to happen to it, there is no commitment to fund it after 2016. --

:43:50. > :43:52.IGF. We are selling off a bank that the government controls, into the

:43:53. > :43:57.private sector, which has no record of supporting the very areas of

:43:58. > :44:10.business that we most need to get our economic growth. I would raise

:44:11. > :44:21.also the issue around the British business bank commissioning a

:44:22. > :44:28.rapport, it was meant to be reporting in time for the

:44:29. > :44:34.comprehensive spending review. There has been a four-month delay, no

:44:35. > :44:41.report, the sector has no idea when future funding support will be. In

:44:42. > :44:45.order to deliver and deliver very effectively on the area of

:44:46. > :44:56.investment for small businesses that the existing banking sector

:44:57. > :45:02.neglects. I will just quickly summarise, we have a banking sector

:45:03. > :45:05.brilliant at making money, but failing to use its strength for the

:45:06. > :45:10.rest of the economy. The sector is over centralised, failing to reflect

:45:11. > :45:15.the diversity of provision needed to meet the wider demands of the

:45:16. > :45:20.economy. Government schemes have failed to reach full potential,

:45:21. > :45:25.because they use the existing banking structures. And where

:45:26. > :45:31.alternative structures exist, banks do not engage as they should. This

:45:32. > :45:37.is a major obstacle to deliver on the government policy of export

:45:38. > :45:46.productivity and regional growth. In this context, the government has a

:45:47. > :45:51.window of opportunity to change this, and has an enormous investment

:45:52. > :46:00.in a significant bank that has the potential to drive this change. This

:46:01. > :46:03.decision as it stands at the moment is based upon political expediency

:46:04. > :46:07.rather than the needs of the economy or the stated objections of

:46:08. > :46:16.government policy, indeed, it contradicts government policy. I

:46:17. > :46:25.support this motion because it is time to think again. Some lessons of

:46:26. > :46:28.history are so well-established as to be virtual axiomatic, the

:46:29. > :46:32.government ought not to own banks and private enterprises or not to be

:46:33. > :46:38.bailed out by the taxpayer, but the government does own banks and they

:46:39. > :46:41.were bailed out. The taxpayer bailout, the privatisation of profit

:46:42. > :46:46.combined with socialisation of risk, plus conduct issues, that we know so

:46:47. > :46:49.well, have done a great deal to undermine faith in the economy which

:46:50. > :46:54.we know is the only way to sustain billions of people on the face of

:46:55. > :46:57.the earth. Some of the issues which have come up today go to the heart

:46:58. > :47:03.of how we should structure market economy. In a market economy, we

:47:04. > :47:17.should be looking at a plurality of ownership of banks. As a teenager I

:47:18. > :47:21.knew instinctively that the mutual model aligned interests in no way

:47:22. > :47:23.that the shareholder model did not, and I was opposed to the

:47:24. > :47:31.demutualisation, that carpetbagging, which went on, as it was called,

:47:32. > :47:34.then. I may have a more theoretical grounding but we should have a more

:47:35. > :47:39.diverse banking sector, we should have more mutuals, we should have

:47:40. > :47:43.more co-operatives. But I also think, I should say briefly, the

:47:44. > :47:47.systematic problems which affected the entire banking system, right

:47:48. > :47:51.around the globe, irrespective of ownership models, is symptomatic of

:47:52. > :48:22.far deeper problems in the in situ should. INAUDIBLE

:48:23. > :48:26.The honourable gentleman knows that I often agree with him but not on

:48:27. > :48:33.this point. I am an old English free trader. I have put these issues on

:48:34. > :48:40.the record since my maiden speech. I have two long-standing misgivings

:48:41. > :48:43.which come to a head in RBS, one is about IFR S and the effect on the

:48:44. > :48:47.ability to see the true position, the true and fair position of banks,

:48:48. > :48:54.and the other is about the stress test, I should say that I'm grateful

:48:55. > :48:58.to the members of Cobden partners, I have no financial interest in

:48:59. > :49:02.Compton partners, but it was a spin out of a centre which I co-founded

:49:03. > :49:09.in order to try to advance the ideas which they are now working upon. --

:49:10. > :49:14.Cogden. I have said many times that I think IFR S will enable and

:49:15. > :49:17.encourage banks to overstate their asset values and therefore their

:49:18. > :49:26.profits, and to understate losses -- IFRS. We compare the account of RBS

:49:27. > :49:29.with those in the asset protection scheme, we found that we believe

:49:30. > :49:34.that their assets were overstated, their capital was overstated by 20

:49:35. > :49:40.billion. We had a meeting, at which that was admitted. If this is the

:49:41. > :49:43.case, that IFRS will encourage banks to overstate capital positions to

:49:44. > :49:47.such an extreme degree, when it comes to selling RBS, I'm not the

:49:48. > :49:51.least convinced, that we are selling something that we truly understand

:49:52. > :49:53.and indeed in the course of the debate, as the honourable lady was

:49:54. > :49:58.opening the debate, and I congratulate her on it, Golden Tate

:49:59. > :50:03.Sydney to say, if we broke up the bank into 130 pieces, it would

:50:04. > :50:09.reveal its insolvency. I'm not asserting the insolvency of RBS but

:50:10. > :50:13.with IRF -- with IFRS the way it is, we simply cannot know whether it is

:50:14. > :50:16.in the position it appears to be. In such circumstances, the paying

:50:17. > :50:26.dividends that have been proposed would be extreme unwise. Can I make

:50:27. > :50:44.this it has been argued that we could

:50:45. > :50:57.have strong reservations about the integrity of the numbers. I am

:50:58. > :51:03.grateful for the honourable gentleman giving way, if his picture

:51:04. > :51:08.is to be believed, given that we own over 70%, is it not beholden on the

:51:09. > :51:11.government to do a proper analysis on the true value of the Bank of

:51:12. > :51:15.Scotland. I'm grateful to the honourable gentleman, I banged on in

:51:16. > :51:20.the last Parliament about the shortcomings of IFRS, I introduced a

:51:21. > :51:24.bill to introduce parallel account, precisely because it is a serious

:51:25. > :51:28.problem, I refer the house to the law of opposites, by Gordon Kerr,

:51:29. > :51:31.published by the Adam Smith Institute, not only covering this in

:51:32. > :51:35.some detail but also with waning how it feeds into the problem of using

:51:36. > :51:40.derivatives, specifically, to manufacture capital out of thin air,

:51:41. > :51:45.in order to circumvent regulatory capital rules. It is an extremely

:51:46. > :51:47.serious problem and it may mean that the entire banking system is

:51:48. > :51:58.positioned in a far worse place than we might otherwise have been. During

:51:59. > :52:05.the asset protection scheme there was a lot of work done into the

:52:06. > :52:08.balance sheets of RBS. We compare the asset protection scheme 's

:52:09. > :52:13.accounts with those of RBS and found a 20 billion difference in capital.

:52:14. > :52:16.When I write to you with the other details, I'll introduce you to the

:52:17. > :52:20.who did the work, I will be glad to sit down with you and my advisers

:52:21. > :52:24.and see what you think, I recognise and respect the vast experience you

:52:25. > :52:29.have. I am only a humble engineer who sat in banks asking how the

:52:30. > :52:33.system worked and found, often, they could not tell me (!) LAUGHTER

:52:34. > :52:37.The point is this, these concerns are not ones which I make up for

:52:38. > :52:42.myself, I have in my hand a letter from the local authority pension

:52:43. > :52:45.fund which explains in considerable detail to the commission at the

:52:46. > :52:49.European Union what is wrong with IFRS, and in some detail, and I

:52:50. > :52:53.would be happy to share that with members interested. The bottom line,

:52:54. > :52:59.I am extremely uncomfortable with the idea that we understand the true

:53:00. > :53:05.and fair position of RBS or any other bank because of the position

:53:06. > :53:09.of the accounting standards and in relation to RBS, that has meaningful

:53:10. > :53:13.consequences when it comes to thinking about selling the shares

:53:14. > :53:15.and it also has consequences we should consider when any

:53:16. > :53:21.consideration is given to paying out dividends. The second point I wanted

:53:22. > :53:25.to return to, Professor Kevin down's extended criticism of the

:53:26. > :53:32.stress test, he has made the point to me, under the 2014 stress test,

:53:33. > :53:36.RBS had a post management action ratio of capital to risk weighted

:53:37. > :53:39.assets of 5.2%, that was sufficiently poor that the bank was

:53:40. > :53:43.required to take further action on its capital position, and of course

:53:44. > :53:49.now it would like to hand out dividends, it seems to me, and to

:53:50. > :53:55.him, makes no sense. The 5.2% ratio compares to the 4.5% hurdle that the

:53:56. > :53:59.bank used, less than 7% imposed on banks last year and much less than

:54:00. > :54:07.the 8.5 to 11% minimum that will be imposed when bile free is fully

:54:08. > :54:12.implement it in 2019, -- Basel three. It is because of the capital

:54:13. > :54:15.buffer. This is rather bizarre, I think, because it appears that the

:54:16. > :54:19.RBS did not meet the bank's own minimum requirements in the stress

:54:20. > :54:22.tests, but it gets worse, because market events do not follow normal

:54:23. > :54:26.distribution, there are severe problems with the risk weighted

:54:27. > :54:29.assets measure, possibly even rendering it useless. The only

:54:30. > :54:36.measure that makes sense is the leveraged ratio, that is the ratio

:54:37. > :54:39.of capital to total assets. With none of this stuff about risk

:54:40. > :54:46.weightings. Under Basel last year, the absolute minimum average ratio

:54:47. > :54:51.was 3%, and the bank expected UK banks to meet that minimum but the

:54:52. > :54:55.3% minimum was low, some suggest a minimum of 15% would be necessary,

:54:56. > :54:58.survey even double that the bigger banks, these would be radical

:54:59. > :55:06.departures. What did RBS achieve under stress tests? 2.3%. Both in

:55:07. > :55:11.terms of IFRS, and in terms of the stress tests, I am very grateful to

:55:12. > :55:17.the work of Cobden partners, for putting in front of us some of these

:55:18. > :55:20.problems, I think that they are potentially extremely severe and I

:55:21. > :55:25.would encourage the government to look again in some detail, great

:55:26. > :55:28.detail, and would invite them to meet my colleagues, and look at what

:55:29. > :55:32.has happened with accounting and what it means to see the true

:55:33. > :55:35.position of banks, what it means for the incentivised Asian of structures

:55:36. > :55:36.which subsequently we find are of no social value earlier. -- incentive

:55:37. > :55:58.is Asian structures. -- incentivised -- -- incentivasation. I think the

:55:59. > :56:02.challenge is to provide diverse banks out of RBS and the condition

:56:03. > :56:04.it is in is probably insurmountable but I certainly would welcome

:56:05. > :56:08.government policy action to encourage mutuals and co-operatives

:56:09. > :56:12.and above all in this context I would encourage the government to

:56:13. > :56:18.take all possible steps to establish the true position of RBS by

:56:19. > :56:28.combatants of the investigating the flaws which are now well set out.

:56:29. > :56:33.Madam Deputy Speaker, it is a pleasure to be called in this

:56:34. > :56:38.debate. I should declare that I am an ex-banker, one reformed, and now

:56:39. > :56:44.just a humble crofter on the Isle of Skye! Thank you to my honourable

:56:45. > :56:48.friend! I am grateful to the member for Edmonton in bringing this debate

:56:49. > :56:52.today. They think it is an important debate that we are having in the

:56:53. > :56:57.House of Commons, and I would certainly commend the member for

:56:58. > :57:00.Whickham who has just spoken. He has great detail on the issues

:57:01. > :57:04.surrounding the Royal Bank of Scotland. We keep hearing from the

:57:05. > :57:09.Government about its long-term economic plan to have any kind of

:57:10. > :57:13.effective economic plan we need to have an effective banking centre,

:57:14. > :57:15.one that is fit for purpose and one that is engaging in appropriate and

:57:16. > :57:22.responsible consumer and business lending. It is in this regard that

:57:23. > :57:26.we pay attention to what is happening to the money supply and in

:57:27. > :57:30.particular the definition of broad money at round four. The figures

:57:31. > :57:37.brought by the Bank of England to the end of 2015 are cause for

:57:38. > :57:41.concern. Money supply actually fell by although I will concede that this

:57:42. > :57:45.was largely as a resulting fall in wholesale deposits. What is what is

:57:46. > :57:52.worrying is that lending fell by 0.1%. There is, Madam Deputy

:57:53. > :57:55.Speaker, concern about the availability of bank lending for

:57:56. > :58:01.consumers and businesses and that it is running below a rate that is

:58:02. > :58:05.sustainable and also below the rate of sustainable economic growth.

:58:06. > :58:09.There is also concerned about the kind of lending and the interaction

:58:10. > :58:12.with savers, as many speakers have already said. We need to encourage

:58:13. > :58:15.industrial and commercial investments that focuses on

:58:16. > :58:19.innovation and skills, dividing up wages and living standards and

:58:20. > :58:24.having a lesser focus on consumer debt. In Scotland, Scottish

:58:25. > :58:26.Enterprise has a limited but successful investment bank and we

:58:27. > :58:31.need to look at supporting and growing this model elsewhere in the

:58:32. > :58:38.UK. We all understand... I will happily give way. I am grateful to

:58:39. > :58:43.be called a friend of the honourable gentleman! I accept the point the

:58:44. > :58:47.honourable gentleman is just making in respect of the types of lending

:58:48. > :58:51.taking place. I wonder if he shares my concern that many banking

:58:52. > :58:57.decisions, the bankers enjoy having an asset they can grab hold of, a

:58:58. > :59:01.House, something they can see and touch. I am wondering if this comes

:59:02. > :59:05.down to the heart of training inside the banks, being comfortable about

:59:06. > :59:10.the new technologies and innovations that are coming. They need to

:59:11. > :59:13.understand exactly that flow of money coming forward. I am grateful

:59:14. > :59:17.for the intervention and question and I actually agree with the

:59:18. > :59:21.honourable gentleman. I could probably bang on over a considerable

:59:22. > :59:24.period of time about it. I think he is right that the banks that are

:59:25. > :59:36.engaging and lending to the business community have got to have an

:59:37. > :59:38.understanding of the businesses they are lending to. Too often it is done

:59:39. > :59:41.by matrix, spreadsheets, ticking boxes, and not a clear understanding

:59:42. > :59:46.of where growth opportunities are. We need to have acceptable skills

:59:47. > :59:50.and understanding of whether growth opportunities are for the economy.

:59:51. > :59:54.We need to align the interests of the Government, the country, the

:59:55. > :59:57.banks, if we are to deliver long-term and sustainable growth for

:59:58. > :00:05.this economy. I will happily give way. One of the issues with the

:00:06. > :00:10.investment bank within Scottish Enterprise, and in Wales there is a

:00:11. > :00:13.similar institution, they try not to have rates of interest, so could you

:00:14. > :00:21.talk about the interest rates charged by the similar organisation

:00:22. > :00:26.in Scotland? I am not aware of the interest rates charged. The interest

:00:27. > :00:29.rates charged. The investment is constrained by the access to capital

:00:30. > :00:31.that it has and I hate to make the point to the House that if we had

:00:32. > :00:37.more powers in the House, that it more powers in the House, that it

:00:38. > :00:42.would increase our ability to properly fund the investment bank.

:00:43. > :00:46.We all understand the importance of improving capital ratios and

:00:47. > :00:51.sustaining the banking platform, but there has also been choking off of

:00:52. > :00:54.credit to businesses and consumers, restraining our ability to grow the

:00:55. > :00:59.economy. The need for this is clear but it is right to ask how widely

:01:00. > :01:05.the society has benefited from the Bank of England's 375 billion asset

:01:06. > :01:10.purchase scheme. Quantitative easing demonstrably helped the banks but it

:01:11. > :01:21.has not fed through to help the wider economy. If we can contrast

:01:22. > :01:28.this with the pre-crash period of 2006-2008, N4 was increasing at an

:01:29. > :01:31.angle of 15%. We are today living with the consequences of that

:01:32. > :01:35.failure and that is why we are having this debate today. The issue

:01:36. > :01:39.of banks being too big to fail and the dislocation that took place in

:01:40. > :01:43.our economy as a result of the financial crisis created a situation

:01:44. > :01:47.that the public were rightly angry at the behaviour of those

:01:48. > :01:52.responsible. We cannot and must never return to the circumstances

:01:53. > :01:57.that led to the crisis. None of this, of course, Madam Deputy

:01:58. > :02:01.Speaker, was unprecedented. We had a significant banking crisis in the UK

:02:02. > :02:05.in the 1870s, which took a long time to recover from and which led to

:02:06. > :02:12.substantial change at the time. In the US, we had the classic serial

:02:13. > :02:15.act put in place in, which prohibited banks participating in

:02:16. > :02:18.commercial banking after the excesses of the 1920s and

:02:19. > :02:24.legislation remained in place until repealed under President Clinton.

:02:25. > :02:30.That act was therefore very good reasons and I think it has added to

:02:31. > :02:35.the toxic cocktail that led to the financial crisis of 2008. It is

:02:36. > :02:38.right in this context to debate what should be the relationship between

:02:39. > :02:42.commercial and investment banking. We seem to have settled on ring

:02:43. > :02:45.fencing as a solution to the challenges here. I understand why

:02:46. > :02:52.many have supported this and perhaps it is something that may be worthy

:02:53. > :02:55.of ongoing debate. It was not just investment banking that was the

:02:56. > :02:59.source of financial exuberance that brought the economy to its knees. It

:03:00. > :03:04.is worth remembering that Northern Rock was the first failure in this

:03:05. > :03:08.country, a bank with no exposure to investment banking. As was the case

:03:09. > :03:13.elsewhere, it was simply bad practice and indeed malpractice that

:03:14. > :03:17.was the issue here. We need to pose the question, is it necessary or

:03:18. > :03:21.appropriate for a commercial bank like the Royal Bank of Scotland to

:03:22. > :03:25.engage in an investment banking business? There is no question that

:03:26. > :03:30.we need a thriving investment banking industry in this country. It

:03:31. > :03:35.remains today a source of jobs and wealth. The critical question is

:03:36. > :03:41.whether it is appropriate for High Street banks. On the 13th of

:03:42. > :03:48.October... I will give way. I am pleased that he referred to the

:03:49. > :03:53.1870s banking crisis. I was amused following the intervention from the

:03:54. > :03:58.honourable gentleman, because banks only then had to produce reports at

:03:59. > :04:01.all. Before then it was regarded as a bad thing to do because people

:04:02. > :04:06.might not trust them if they had to put in what their assets were. Exact

:04:07. > :04:10.point that the honourable gentleman was just tackling, in the case of

:04:11. > :04:16.the Royal Bank of Scotland and the investment banking arm, would he see

:04:17. > :04:20.it as appropriate for an commercial bank to provide investment banking

:04:21. > :04:25.to its corporate clients? There are many things, like foreign exchange,

:04:26. > :04:29.providing support for exports, dividing derivatives, which are not

:04:30. > :04:35.always a bad thing. There may be synergy there and I would be

:04:36. > :04:38.interested in his remarks on that. I am grateful for the question and

:04:39. > :04:41.there is an issue of definition, and what you define as investment

:04:42. > :04:45.banking. Of course the RBS clients would require some of those

:04:46. > :04:54.facilities. What I would say to the honourable member for Horsham, let

:04:55. > :04:59.me use the example of a BBC News article, would Barclays make another

:05:00. > :05:02.push into casino banking? We can debate and discuss the frailties

:05:03. > :05:06.that are still there at RBS and what it have to do to improve its balance

:05:07. > :05:09.sheet, but the real worry is that when banks are in a better position

:05:10. > :05:13.than they are today, when the balance sheets are strengthened,

:05:14. > :05:18.what would stop the Royal Bank of Scotland, even in a ring fenced

:05:19. > :05:22.scenario, from putting capital into investment banking? That is the

:05:23. > :05:27.problem. The seduction of the charms of investment banking, which we know

:05:28. > :05:40.in the last two to three decades has led to investment banks going and we

:05:41. > :05:43.have to be very careful of that and debate it in the best way that we as

:05:44. > :05:46.Parliament can do, making sure there is effective regulation. I recall

:05:47. > :05:49.from my time at NatWest that we can sweet talk about as being a dream

:05:50. > :05:53.player with just one more heave, accompanied by several hundreds of

:05:54. > :06:01.billions of capital. Thank you! It never worked. It was a fantasy. It

:06:02. > :06:04.could be a fantasy for many more in the years to come. We do not need

:06:05. > :06:09.High Street banks to become casino banks and if necessary we need

:06:10. > :06:14.legislation to enforce this. Lessons must be learned and no more can the

:06:15. > :06:19.country be held to ransom. I am conscious that others want to speak

:06:20. > :06:22.so let me turn to RBS specifically. I want to see RBS back in private

:06:23. > :06:27.hands but not at any price and as the motion sets out, there ought to

:06:28. > :06:31.be a wider review of the UK financial sector. Adam Deputy

:06:32. > :06:35.Speaker, we collectively own RBS and we have a duty of stewardship to

:06:36. > :06:42.make sure it is fit for purpose for the decades to come. There needs to

:06:43. > :06:46.be a debate on this before the Treasury unwinds our position. We

:06:47. > :06:50.have a duty, having failed RBS out, to get the best value for the

:06:51. > :06:57.taxpayer and I am delighted to support the motion. Thank you. It is

:06:58. > :07:01.a pleasure to follow the honourable gentleman and I associate myself

:07:02. > :07:04.with his final comments about RBS. I think this is an important debate

:07:05. > :07:11.and I congratulate the honourable member from Edmonton for securing

:07:12. > :07:15.the debate. I put my name to it because I felt it was worthy of

:07:16. > :07:19.debate in the House. But because I am ideological opposed to seeing

:07:20. > :07:23.banks in private ownership. I would probably be of the view that banks

:07:24. > :07:26.should be in private hands. I think it is very important that we look at

:07:27. > :07:31.this issue in depth and in the round, and that we look at the track

:07:32. > :07:34.record of RBS and what we want from it to make sure that we make the

:07:35. > :07:39.right decision in relation to this issue. I would also like to refer to

:07:40. > :07:42.the speech made by my honourable friend the member for Horsham, who I

:07:43. > :07:46.think in the context of this debate today was very brave to come in here

:07:47. > :07:51.and argue the case for RBS going straight into private hands at this

:07:52. > :07:55.point. But some point I would like to make. I do not share his

:07:56. > :08:05.confidence in the regulator. After four hours with the FSA again this

:08:06. > :08:09.week, I cannot share his confidence. -- the FCA. There is a

:08:10. > :08:13.credibility gap in terms of trust with the public and also with the

:08:14. > :08:18.small-business community before we can bring them back into a situation

:08:19. > :08:21.where they can act in a similar manner to the way they did in the

:08:22. > :08:25.past. I would be delighted to say that the culture in RBS had

:08:26. > :08:29.completely changed. I am utterly convinced that in RBS there are

:08:30. > :08:32.individuals making huge strides to change the culture of the

:08:33. > :08:37.organisation. But am I convinced that all the bad eggs have been

:08:38. > :08:41.removed and all possibilities of actions that are detrimental to

:08:42. > :08:48.small businesses within RBS have been removed? Unfortunately the

:08:49. > :08:52.answer is no. I will give way. RBS made mistakes in the fast and is

:08:53. > :08:55.still making mistakes, largely in public ownership, in relation to the

:08:56. > :09:03.funding of small businesses and branch closures. Does he not think

:09:04. > :09:06.that should be part of the solution, that before it is returned to the

:09:07. > :09:09.private sector, if that is going to happen, that they should prove they

:09:10. > :09:14.can run themselves competently in that way in the interest of their

:09:15. > :09:17.customers? I certainly think there is a need to look in detail at the

:09:18. > :09:21.way they are performing and question to be asked about the culture within

:09:22. > :09:24.RBS, and I think there were questions raised by the banking

:09:25. > :09:29.commission need to be looked at and it is also important to state that

:09:30. > :09:32.this is not a left -right argument in political terms. There are think

:09:33. > :09:35.tanks on the right politically who also think we should look again at

:09:36. > :09:39.the model that we have banking in the UK. There were strong agreement

:09:40. > :09:45.with the honourable member for Wycombe when he stated that the loss

:09:46. > :09:48.of the mutuals in the 90s a mistake for the structure of the United

:09:49. > :09:51.Kingdom. I argue this is not a left - right argument. It is about

:09:52. > :09:56.getting things right and trying to make sure that we deliver a better

:09:57. > :09:59.banking system as a result of intervention in the market, which

:10:00. > :10:03.was not something that we had wanted to do. I think it is important to

:10:04. > :10:11.state that that intervention in the market was much wider than making a

:10:12. > :10:14.profit for the taxpayer. It was about making sure the economy of the

:10:15. > :10:22.UK was protected at a difficult point in time. Of course I will give

:10:23. > :10:27.way. The one thing that perhaps has not been done yet or mention yet is

:10:28. > :10:33.the position of Ulster By customers. The DUP went to meet the chief

:10:34. > :10:35.executive officer of the bank when the computer glitch first happened

:10:36. > :10:41.and people had no access to money for a number of days. Not only did

:10:42. > :10:46.it happen once, it has happened up to four times. Ulster By customers

:10:47. > :10:51.in Northern Ireland have had no access to their banks whatsoever

:10:52. > :10:55.over days, over weekends, no credit cards, no money. Shouldn't they sort

:10:56. > :10:59.out their system as well and make sure they have a system that works

:11:00. > :11:04.and that customers have a quality service that they deserve? I

:11:05. > :11:09.certainly am aware of the problems that Ulster Bank, not only with

:11:10. > :11:11.computer glitches but about behaviour in the past which was

:11:12. > :11:15.undoubtedly questionable, so I associate myself with those

:11:16. > :11:18.comments. It is important to state that when the honourable members in

:11:19. > :11:23.this debate talk about the need to sell RBS shares at a profit, it is

:11:24. > :11:27.important to put the context on that, which is that the intervention

:11:28. > :11:31.was not just about making a profit, because it was an intervention to

:11:32. > :11:35.protect the economy of the United Kingdom and give people confidence

:11:36. > :11:41.in the financial system that we have. We do need to address some of

:11:42. > :11:44.the concerns specific to RBS. I speak in this capacity as being the

:11:45. > :11:47.former chair of the all-party Parliamentary group on the

:11:48. > :11:55.mis-selling of trade communities, which has been renamed much more

:11:56. > :11:59.snappily. I would be delighted if I never had to speak about RBS again

:12:00. > :12:02.in my entire life. I would be delighted if I did not have to talk

:12:03. > :12:08.about the mis-selling of financial products with small businesses ever

:12:09. > :12:13.again and yet again I have been with the FCS for several hours, in a

:12:14. > :12:17.small meetings business with RBS, and several meetings with RBS staff

:12:18. > :12:20.about articles that appeared in the present during the week. The point I

:12:21. > :12:23.would make is that there are still issues that need to be resolved and

:12:24. > :12:27.I think the Treasury needs to be confident. The Treasury needs to

:12:28. > :12:30.have confidence that when they are talking about moving RBS back into

:12:31. > :12:33.the private sector that they are doing so with a full grasp of the

:12:34. > :12:43.problems that RBS still face. Excellent Treasury Select Committee

:12:44. > :12:46.report into small business banking and finance for small businesses has

:12:47. > :12:55.not yet received a response from the Treasury. No response has been

:12:56. > :12:59.forthcoming yet. That report makes critical comments of RBS, as well as

:13:00. > :13:03.others, and potential liability still faced by RBS among others. I

:13:04. > :13:07.am at a loss as to why the decision has been taken to return RBS to

:13:08. > :13:10.private hands when the Treasury has not even responded to the concerns

:13:11. > :13:15.raised by the Treasury Select Committee. That is the issue that I

:13:16. > :13:21.would like to see addressed. Of course I shall give way. Would he

:13:22. > :13:25.agree that when looking at procedures and rules for

:13:26. > :13:29.transferring the bank into private hands, we should also be looking at

:13:30. > :13:35.provision for making sure there is the opportunity, that there is the

:13:36. > :13:41.need to take criminal prosecutions forward, people behaving criminally

:13:42. > :13:45.with assets like the Royal Bank. If there is criminal behaviour taking

:13:46. > :13:52.place, the nose action should take place. The banking issue will not be

:13:53. > :13:56.resolved in the eyes of the British public until somebody has gone to

:13:57. > :13:59.jail, it has been said, I am not in the interest of sending innocent

:14:00. > :14:03.people to prison, but if there is criminal acts, then they should be

:14:04. > :14:13.identified and pursued just as any other that is and would be pursued.

:14:14. > :14:17.Would you agree that there needs to be provisions put in place,

:14:18. > :14:24.regulations. If people take the kind of actions were people's jobs are

:14:25. > :14:27.put at risk, high livelihoods put at risk, because of people making

:14:28. > :14:30.decisions at banks, that that should be part of the new regular to

:14:31. > :14:36.reprocess that we take forward in this country. I would be careful to

:14:37. > :14:40.offer opinion on that issue, because I would not want the issue of risk

:14:41. > :14:45.to become something that is criminalised. Risk is inherent in

:14:46. > :14:50.business, small -- all businesses understand that, if there is any

:14:51. > :14:53.clear effort to manipulate the situation, and that is a different

:14:54. > :14:56.set of circumstances. Risk is inherent, most businesses would

:14:57. > :15:01.understand that when they take a loan from the bank, ask the bank for

:15:02. > :15:04.financial support, there is a risk involved if they are unable to repay

:15:05. > :15:09.the money. I would like to see the definition and the details before I

:15:10. > :15:13.pass further opinion. In relation to RBS, the concerns I still have have

:15:14. > :15:18.been touched upon by my honourable friend, the member for Hastings, it

:15:19. > :15:24.is very timely that we mention the issue of this group, of course, it

:15:25. > :15:27.is an organisation I have come across several times in relation to

:15:28. > :15:30.the work I have done as a constituency MP and it is a name

:15:31. > :15:36.that has come forward on numerous occasions in relation to businesses

:15:37. > :15:43.distressed by the mis-selling of banks interest products. I was

:15:44. > :15:47.fortunate enough to secure a debate in Westminster in the last

:15:48. > :15:50.Parliament on this issue, when I was Frankie disappointed with the

:15:51. > :15:56.response not only of my front bench but also on the opposition front

:15:57. > :16:05.bench relation to allegations made. The response to the report made by

:16:06. > :16:09.Clifford chance can be fairly described as a report focusing upon

:16:10. > :16:13.a very narrow field of work. I would not say that we should dismiss that

:16:14. > :16:18.work, but I would certainly say that the narrow definition of work they

:16:19. > :16:23.were given by RBS does question whether their report is indicative

:16:24. > :16:28.of a greater problem with the restructuring of the group, of more

:16:29. > :16:33.concern, fact that the FCA have decided to instigate a report into

:16:34. > :16:37.the activities of the restructuring group, it is of more concern that it

:16:38. > :16:40.would appear to be the case that that report has once again been

:16:41. > :16:45.delayed. I have a significant concern that in relation to the

:16:46. > :16:48.types of money -- sums of money at stake and the allegations of

:16:49. > :16:51.misbehaviour within the global restructuring group within RBS, I

:16:52. > :16:55.think there is a genuine question as to whether the government should be

:16:56. > :16:57.returning shares to the public sector when we do not even

:16:58. > :17:01.understand if there will be significant liabilities arising out

:17:02. > :17:06.of the report commission. I have not been particularly humdrum entry of

:17:07. > :17:12.the FCA so far, what it is important to say that that report is being

:17:13. > :17:17.prepared, my understanding is that report has highlighted some areas of

:17:18. > :17:25.significant concern, and it is very odd to see the government proposing

:17:26. > :17:28.the sale of RBS shares, without firstly being aware of the potential

:17:29. > :17:35.liabilities that arise from that report, from that expected report.

:17:36. > :17:38.My own view is that there is much more to investigate, I am glad that

:17:39. > :17:44.the FCA have finally concluded that is worth doing, but I think that we

:17:45. > :17:47.should be very careful and aware, as a government, that there could be

:17:48. > :17:53.issues arising from that report, which will have a significant impact

:17:54. > :17:56.on the position and the received wisdom of the decision to move

:17:57. > :18:00.forward to return RBS to the private sector. I leave that word of warning

:18:01. > :18:05.that the minister and I am delighted if she can comment, if she has a

:18:06. > :18:11.timescale, that is better than the 1 heard this morning, then I would be

:18:12. > :18:14.very pleased to hear that. I cannot fail to turn to the issue of the

:18:15. > :18:20.sale of interest rate hedging projects. Again, I had a meeting

:18:21. > :18:23.with a member of the RBS we dressed team, who I consider to be

:18:24. > :18:31.honourable, hard-working, trying to do his best. Try to protect the

:18:32. > :18:35.interests of the banks. I accept that when you enter into a financial

:18:36. > :18:40.transaction, you do accept a degree of risk but also you expect the bank

:18:41. > :18:46.to work on your behalf, not against you, you expect the bank to have

:18:47. > :18:49.your best interests at heart, rather than someone like a commission

:18:50. > :18:53.receiving salesman. When somebody who works for the bank in that

:18:54. > :18:57.capacity, taken very seriously, I understand that they are doing their

:18:58. > :19:00.best to deal with a complex situation, but I do think the review

:19:01. > :19:04.in relation to all the banks affected but in relation to RBS,

:19:05. > :19:11.does still leave grounds for concern. First of all, well over 50%

:19:12. > :19:18.of all riveted sales included in the FCA scheme were sold by RBS, so

:19:19. > :19:22.there is a huge potential liability there, if the review is shown to be

:19:23. > :19:24.inadequate. One of the concerns I do have is that the FCA, in their

:19:25. > :19:35.response to the Treasury, have stated quite clearly that they have

:19:36. > :19:46.minded to undertake a review. Once legal action has been completed. If

:19:47. > :19:49.they are concerned about them recommendation, I am surprised that

:19:50. > :19:54.the FCA say that they are not willing to look at the issue until

:19:55. > :19:57.all investigations have been completed, because it does mean the

:19:58. > :20:00.regulator is abdicating responsibility to the courts, and

:20:01. > :20:03.you have got to remember that the whole point of setting this up was

:20:04. > :20:17.to avoid the need for small businesses without financial

:20:18. > :20:20.resource to declare to the courts, because they seem to do not have the

:20:21. > :20:23.money to do that. I'm concerned that the MCA seem to be saying that there

:20:24. > :20:26.is a need to review their own skin but will not do that until all court

:20:27. > :20:28.cases are completed. -- FCA. If the FCA are sharing or at least

:20:29. > :20:31.admitting the need to acknowledge the needs of the Treasury Select

:20:32. > :20:33.Committee, returning RBS to the marketplace without being aware of

:20:34. > :20:38.the potential liabilities from the scheme being found to be less than

:20:39. > :20:41.perfect, to be kind. I think that within RBS in particular it should

:20:42. > :20:47.be noted that the number of cases which have resulted in a swap for a

:20:48. > :20:50.swap outcome, they find that you have been sold a toxic product but

:20:51. > :20:56.they conclude that you would have ended up buying a product like that

:20:57. > :21:03.anyhow, I think the fact that RBS has significantly greater percentage

:21:04. > :21:08.of their products being a swap for a swap is a concern, and the condition

:21:09. > :21:12.of sanction used by RBS in order to ensure that small businesses brought

:21:13. > :21:16.this protection, I'm concerned that those conditions of sanctions, which

:21:17. > :21:21.I think are questionable, are being used to justify the finding that

:21:22. > :21:27.there was illegitimate condition of lending associated with the --

:21:28. > :21:31.loans. This is not to excuse the other banks involved but I think RBS

:21:32. > :21:35.in particular still have questions to answer, not a question the

:21:36. > :21:41.integrity of the team doing the work on behalf of RBS but I think they

:21:42. > :21:45.are in line upon their -- they are relying upon their paperwork and

:21:46. > :21:49.legal uses which are questionable and concerning and those concerns

:21:50. > :21:55.are shared by the Treasury Select Committee, it is my opinion that

:21:56. > :22:01.they should be shared by others as well. In elation to the stories in

:22:02. > :22:05.the newspapers, the allegations of documents being. It... I think it is

:22:06. > :22:10.important to take those allegations with a degree of caution. Because,

:22:11. > :22:14.those need to be tested, they need to be looked at. I think that some

:22:15. > :22:20.of the information I have seen about the discrepancies between the

:22:21. > :22:23.paperwork made available from the reviews, and other paperwork already

:22:24. > :22:28.supplied to small businesses, undoubtedly raise questions. I have

:22:29. > :22:32.been fortunate enough to have been subjected to several for our

:22:33. > :22:38.presentations (!) highlighting discrepancies between the transcript

:22:39. > :22:42.of telephone calls held by RBS in comparison with the recorded

:22:43. > :22:46.transcript held by the business. I would grant you, when making a

:22:47. > :22:50.transcript of a telephone call, it will not be perfect. But when you

:22:51. > :22:57.have a difference between the RBS version, 94 words long, and the

:22:58. > :23:02.business version, 594 words longer... ! ... You have got to

:23:03. > :23:07.question whether that is a mistake or whether something worse is going

:23:08. > :23:11.on. These are very serious issues which must be looked at, in the same

:23:12. > :23:15.way that I have seen e-mails where sentences, half a sentence has

:23:16. > :23:19.disappeared, and in the middle of a sentence, a Has appeared, turning

:23:20. > :23:22.the meaning of the sentence on its head. The stakes do happen when

:23:23. > :23:27.information is transcribed but I'm not aware of mistakes happening

:23:28. > :23:33.where information disappears and capital letters appear. These

:23:34. > :23:36.allegations are rich creamy concerning, they are allegations,

:23:37. > :23:39.they must be looked at carefully, RBS have agreed that they are

:23:40. > :23:44.serious issues which must be looked at all stop I am confident that in

:23:45. > :23:47.many cases, RBS will be able to explain why these discrepancies have

:23:48. > :23:52.occurred. I sincerely hope they will be able to do that, because the

:23:53. > :23:55.thought that information kept by the banks about small business in this

:23:56. > :23:59.country has been fabricated is truly shocking. Again, these are issues

:24:00. > :24:02.which must be looked at and considered, and I come back to the

:24:03. > :24:08.main point, RBS was brought into governmental control in order to

:24:09. > :24:12.save RBS from itself, in a will to make sure that the UK financial

:24:13. > :24:16.sector was protected, and more importantly, to protect the citizens

:24:17. > :24:19.of this country from what could have been a much worse outcome for the

:24:20. > :24:24.financial sector. I think that in addition to ensuring that RBS is

:24:25. > :24:27.back to financial health, we have an obligation to make sure that the

:24:28. > :24:31.behaviour within RBS has also been rectified. I still think there is a

:24:32. > :24:40.question about their behaviour, and while that? -- and while that

:24:41. > :24:44.question market system i think we should be more careful about rbs to

:24:45. > :24:53.the private sector. can i thank the member of the set -- and i think the

:24:54. > :25:05.member opposite for the very detailed analysis. -- and while that

:25:06. > :25:10.question mark of the system i think that we should be more careful. very

:25:11. > :25:15.slim pickings in my own speech today because so much has been said

:25:16. > :25:19.already. first i want to take a step back, and remind ourselves of the

:25:20. > :25:23.bigger picture of the role that rbs plays and has played in our

:25:24. > :25:28.financial system, and just how high the stakes are when it comes to

:25:29. > :25:33.sorting out our banking system. we should not forget why we own rbs. in

:25:34. > :25:38.the first place. this is a bank whose reckless profiteering and

:25:39. > :25:43.pursuit of growth at any cost put the uk economy to its need is, in

:25:44. > :25:49.2009 made the biggest loss in a uk corporate history, after tax payers

:25:50. > :25:54.pay the high price for its hubris. the ill-fated takeover of abn amro

:25:55. > :25:58.has become a byword for corporate overreaching and the former ceo,

:25:59. > :26:02.fred the shred goodwyn, has become a byword for greed and

:26:03. > :26:06.irresponsibility. it is somewhat ironic that the poster child for the

:26:07. > :26:10.failings of privately owned banks has now become the poster child for

:26:11. > :26:14.the government pot ideological insistence that banks are better run

:26:15. > :26:18.in the private sector. the bank 's own track record hardly bears out.

:26:19. > :26:22.-- government's ideological insistence. they would have us

:26:23. > :26:26.believe that there is no real alternative to breed privatisation

:26:27. > :26:29.and anyone who says otherwise is a 70s throwback who simply wants to

:26:30. > :26:35.keep rbs in its current form for ever, as we have heard from other

:26:36. > :26:42.honourable members in this debate, there are plenty of alternatives.

:26:43. > :26:47.Keeping RBS in public hands does not mean running at all from Whitehall.

:26:48. > :26:52.It could mean transforming it into a network of local banks, are cut and

:26:53. > :26:56.accountable to local communities, running the public interest and not

:26:57. > :27:01.in the interest of a narrow view. Banks which simply don't engage in

:27:02. > :27:07.the kind of speculative and risky activities that caused the global

:27:08. > :27:10.financial crisis in the first place. But instead, are mandated to stick

:27:11. > :27:14.providing capital is the sound providing capital is the sound

:27:15. > :27:18.businesses and providing an consensus to local people. Whether

:27:19. > :27:22.we look at overseas to the thriving local public interest banks in

:27:23. > :27:27.countries like Germany, Switzerland, Japan or closer to home proposals of

:27:28. > :27:30.firebrand radicals like Nigel Lawson, the Archbishop of Canterbury

:27:31. > :27:35.and Budget money. There is no shortage of ideas which comes with

:27:36. > :27:40.structural reform of RBS. It is lacking the political will on the

:27:41. > :27:45.Government benches for serious change. Indeed, the most worrying

:27:46. > :27:49.thing about the committee's attitude to RBS is the broader direction of

:27:50. > :27:52.travel it represents. We are essentially being told to move along

:27:53. > :27:56.now. There is nothing to see here. We fixed the problem that led to the

:27:57. > :28:00.crisis and it can never happen again but it is safe now to return back to

:28:01. > :28:08.business as usual. That was evident from the Met the CrackBerry manner

:28:09. > :28:13.in which the sale was announced. -- the manner.

:28:14. > :28:16.There is been quite dramatic changes in the regulatory environment and

:28:17. > :28:20.what we would not return to thousand three, the ring fencing that has

:28:21. > :28:24.been put in place, the extra capital, and RBS now has a capital

:28:25. > :28:26.base of 16%, would the honourable judgment except that have been

:28:27. > :28:33.improvements in that respect? Point that I made earlier which is

:28:34. > :28:37.that RBS is again back and possibly about to be investigated for yet

:28:38. > :28:43.more Ford doesn't actually encourage me to think that those changes have

:28:44. > :28:47.been deep enough. -- fraud. This was evident from the very manner in

:28:48. > :28:53.which the sale of RBS was announced, not in parliament but to a wide

:28:54. > :28:58.dinner of city grandees. In a speech which also promised the city and new

:28:59. > :29:02.settlement on financial regulation. And now it's touching to see what

:29:03. > :29:06.the new settlement looks like. The Government caving into economic

:29:07. > :29:10.blackmail from the likes of HSBC who threatened to move their

:29:11. > :29:13.headquarters unless the key crisis measures such as the bank levy and

:29:14. > :29:17.the ring fence between retail and investment banking were watered

:29:18. > :29:20.down. Which think comes to your point. With the competition

:29:21. > :29:23.authorities ruling out action to break up the banks, even though they

:29:24. > :29:28.acknowledge their customers are getting a raw deal and with rumours

:29:29. > :29:33.that the Chancellor personally arranged the sacking of Martin

:29:34. > :29:38.Weekley, head of the Financial Conduct Authority with a reputation

:29:39. > :29:41.for being out on bank misconduct. Some commentators have even

:29:42. > :29:46.suggested that the governments desire for a quick sale of RBS is

:29:47. > :29:49.partly responsible for this magnanimous attitude towards the big

:29:50. > :29:52.banks. The Government does not want to do anything which could damage

:29:53. > :29:58.the bank's share price in the short-term. If true, this would be

:29:59. > :30:02.incredibly short-sighted. We are effectively trading the chance to

:30:03. > :30:08.build a genuinely save the banking system in our haste to return to the

:30:09. > :30:12.precrisis state. Some excellent points. Would he

:30:13. > :30:16.agree that this Government and coalition missed an opportunity with

:30:17. > :30:21.RBS being mainly in the public sector to try and act responsibly? I

:30:22. > :30:29.have an organisation which is run from my constituency that represents

:30:30. > :30:34.consumers and complaints of consumers but in his partner in the

:30:35. > :30:36.banking sector will do what local people want.

:30:37. > :30:41.I agree entirely. Does you will listening to this debate that it is

:30:42. > :30:44.not the interest of consumers that the Government is acting on behalf

:30:45. > :30:51.of it is the interest of bested banking interests and that is what

:30:52. > :30:56.the priority here is. We seem to be back to the pre-2008 mentality that

:30:57. > :31:00.banks should be given whatever they want and they can have economic

:31:01. > :31:03.growth is built on a house price bubble fuelled by an oversized

:31:04. > :31:08.banking system without worrying too much about rebalancing our economy

:31:09. > :31:14.towards manufacturing, about what we will do when the whole house of

:31:15. > :31:20.cards inevitably collapses. But ordinary people like Andi Gibbs in

:31:21. > :31:26.my constituency who owned a business pre-crash, he was in effect mis-sold

:31:27. > :31:31.products by RBS who then came and he ended up with GR GUI, Inverness

:31:32. > :31:37.geology. He not only lost his business but he lost his home, his

:31:38. > :31:41.wife, his family and his mental health. This is the price that we

:31:42. > :31:44.pay, that people pay, when we don't get the banking system right. And

:31:45. > :31:48.this is ecstatic opportunity now that we happily must not squander to

:31:49. > :31:54.get this right. -- this is a fantastic opportunity.

:31:55. > :31:57.The point I made earlier was about provision for consequences where

:31:58. > :32:03.people take action, where people in houses and businesses suffer through

:32:04. > :32:06.malpractice that you are describing. Would the honourable gentleman agree

:32:07. > :32:11.that now was the time to look at regulations by those consequences

:32:12. > :32:13.are put in place for people who take those actions?

:32:14. > :32:17.I think the honourable member makes an excellent point and yes I think

:32:18. > :32:22.we should be looking quite closely at the retribution that should be

:32:23. > :32:25.dished out and doled out to those who, in effect, ruin people's lives.

:32:26. > :32:30.I think it is right and proper. Successive attempts to persuade

:32:31. > :32:35.banks to lend more to small businesses have small in the fallen

:32:36. > :32:40.flat. It is actually been abused by RBS Excel to exploit its

:32:41. > :32:43.small-business customers. It could hardly be a clear illustration of

:32:44. > :32:48.that fact that we have failed to get to the drug causes of the problems

:32:49. > :32:53.root causes. The Chancellor and root causes. The Chancellor and

:32:54. > :32:56.banks may not want to move on and forget about the crash of the

:32:57. > :32:58.British people have not forgotten. Whether it is missed selling of PPI,

:32:59. > :33:01.reading of the foreign exchange reading of the foreign exchange

:33:02. > :33:05.markets, I don't see that banks have markets, I don't see that banks have

:33:06. > :33:10.really changed. The warning signs for another crash a building. We may

:33:11. > :33:12.economy is better prepared than it economy is better prepared than it

:33:13. > :33:14.was the last time around. The bank was the last time around.

:33:15. > :33:19.of International settlements recently warned that we're living in

:33:20. > :33:22.a world in which debt levels are too high, productivity growth too weak

:33:23. > :33:27.and financial risk to threatening. In the UK household debt is rising

:33:28. > :33:30.again, with the Office for Budget Responsibility predicting that by

:33:31. > :33:36.the end of this Parliament, it will be higher than it was in 2008. Just

:33:37. > :33:39.last week EBS warned that the London housing market is the most

:33:40. > :33:44.overvalued in the world and is an bubble risk territory. Another web,

:33:45. > :33:49.the so-called recovery is not a sustainable one based on higher

:33:50. > :33:54.wages, higher productivity and creating new jobs. Instead it has

:33:55. > :33:58.been driven by consumer spending, propped up by ever-growing household

:33:59. > :34:04.debt, fuelled by a banking system that still finds it more profitable

:34:05. > :34:07.to inflate house prices than to lend to businesses. Having successfully

:34:08. > :34:12.rebranded the crisis caused by too much private debt as a crisis caused

:34:13. > :34:17.by too much public debt, the public is now residing over eight debt

:34:18. > :34:23.bubble that threatens to do exactly the same as happened in 2008. Maybe

:34:24. > :34:27.instead of continuing to rely on the same institutions that got us into

:34:28. > :34:31.promoting new types of banks with promoting new types of banks with

:34:32. > :34:35.ownership structures and business models that clearly distinction from

:34:36. > :34:37.the status quo. Banks that are not beholden to the needs to McFly 's

:34:38. > :34:44.profits but have a social mission and can genuinely put customers and

:34:45. > :34:49.the economy first. Our stake in RBS gives us a unique opportunity to do

:34:50. > :34:55.this. When the history of this period is written, will be current

:34:56. > :34:58.Government be remembered as one that learned the right lesson from the

:34:59. > :35:04.crash or one that turned a blind eye and squandered the opportunity to

:35:05. > :35:08.build a better baggy system? Before I call the next honourable

:35:09. > :35:12.member we had plenty of time for this debate this afternoon therefore

:35:13. > :35:18.I did not even suggest a time limit. Thinking that most members would

:35:19. > :35:22.take approximately ten minutes, but some people in taking a lot of

:35:23. > :35:24.interventions and having a lively debate have taken considerably

:35:25. > :35:31.longer. So now I don't want to have to put on a time limit at this point

:35:32. > :35:36.on a Thursday afternoon, but it would be greatly appreciated if

:35:37. > :35:40.members would take 7-8 minutes or less because then everybody who

:35:41. > :35:44.wishes to speak and wishes to speak in the next debate will have an

:35:45. > :35:48.opportunity to do so. Graham Morris. Thank you very much

:35:49. > :35:53.Madam Deputy Speaker. I would also like to thank my honourable friend

:35:54. > :35:57.the member for Edmonton for bringing this debate on the backbench

:35:58. > :36:02.business committee for allowing the time for what I believe is a very

:36:03. > :36:08.important debate to take place. I rise in support of the motion and in

:36:09. > :36:13.the risk of speaking late in these debates, as a number of us know, but

:36:14. > :36:18.perhaps everything has been said. Not everyone has said it. But I will

:36:19. > :36:24.try and pick out a few points in particular in relation to where we

:36:25. > :36:31.are and what the benefits are of looking at a real alternative to

:36:32. > :36:35.another privately owned bank. As we know from previous contributions and

:36:36. > :36:39.I think from the experience of what has happened and I think from the

:36:40. > :36:45.experience of what has happened in our system brought our broader

:36:46. > :36:51.economy to the brink of collapse. Indeed, we were days away from the

:36:52. > :36:55.banks closing their doors and the ATM machines, the cash machines,

:36:56. > :37:05.running out of money. And this was caused not by any other reason, not

:37:06. > :37:10.by a profligate Labour Government, but by eight under regulated

:37:11. > :37:13.financial and banking sector with no concept of social responsibility.

:37:14. > :37:19.Who took reckless gambles with our economy and lost. I might say one of

:37:20. > :37:26.the contributions from the Government benches which I think

:37:27. > :37:30.generally has been very positive and I've been quite surprised at how

:37:31. > :37:34.open they are to the ideas put forward an emotion which of the

:37:35. > :37:39.desert reasonable one, as to the things that have moved on. RBS in

:37:40. > :37:43.particular has been subject to major changes which means it is a

:37:44. > :37:49.different entity but my thought on that is that as long as we have a

:37:50. > :37:56.bonus culture where the bankers are financially incentivised, with the

:37:57. > :38:00.prospect of receiving huge bonuses, more than ordinary working man or

:38:01. > :38:04.woman could accumulate in the whole of their working lives, for a single

:38:05. > :38:10.deal, as long as that system are still in place, the bankers will

:38:11. > :38:17.continue to take chances, to gamble, to fall foul of libel schemes and

:38:18. > :38:21.the selling schemes. The need to change fundamentally that culture

:38:22. > :38:26.and we do have another duality here to do that and create an alternative

:38:27. > :38:36.system. We know that the bailout at the height of the crisis cost the UK

:38:37. > :38:40.Government ?1.1 trillion. Actually more than that. And we've heard from

:38:41. > :38:49.other contributions that the cost in relation to the RBS and taxpayer

:38:50. > :38:55.funded rescue package, was in excess of ?45.5 billion and the estimates

:38:56. > :39:01.of the privatisation proposals that are currently being put forward by

:39:02. > :39:06.the Chancellor is that it will cost the public 13 and a half billion

:39:07. > :39:10.pounds, quite a considerable sum. I think whole of Parliament, not just

:39:11. > :39:16.the opposition benches, should be affronted at the way this has been

:39:17. > :39:22.done. The announcement made not just to the House of Commons, but made to

:39:23. > :39:28.a speech at the bank house in the City of London. I think that is an

:39:29. > :39:32.affront to democracy. We should uphold the executive to account and

:39:33. > :39:35.I think we should have had a full debate on Government time on this

:39:36. > :39:39.issue but nevertheless, I do think we should look at some of the

:39:40. > :39:50.alternatives. What are the downsides there been from the activities of

:39:51. > :39:55.RBS? The number of branch closures. 165 of them in the last year. A

:39:56. > :40:00.number of them in my constituency. We know about the libel scandal and

:40:01. > :40:06.the more recent scandals referred to my honourable friend, the member for

:40:07. > :40:11.Norwich South, but they're also been indicated undermining viable small

:40:12. > :40:17.businesses, as referred to the honourable member for Hazel Grove.

:40:18. > :40:24.These arm quite scandalous in terms of the consequences in the real

:40:25. > :40:31.economy. In 2010, following the general election, the Government, I

:40:32. > :40:35.believe, use the financial crisis as a way of justifying policies of

:40:36. > :40:41.austerity, moving the focus which should have been on the banking

:40:42. > :40:45.sector learning lessons from that, changing the political narrative,

:40:46. > :40:51.which the Prime Minister and Chancellor did very successfully,

:40:52. > :40:57.onto and away from the banks and onto the need, apparently, to impose

:40:58. > :41:02.austerity. An economic crisis in the bank and financial sector was used

:41:03. > :41:08.to introduce a series of policies in which everyone was blamed for the

:41:09. > :41:12.Mac from a big sector workers, the vulnerable, the sick and disabled,

:41:13. > :41:16.investing in our future with building our schools and hospitals,

:41:17. > :41:22.increasing the numbers of doctors and police officers, teachers and

:41:23. > :41:27.nurses, have now been turned profligate spending. I am proud of

:41:28. > :41:31.Labour's record and I'm never going to apologise for investing in the

:41:32. > :41:37.foundations and building blocks of a just and fair and decent society.

:41:38. > :41:41.And I think, if we had a banking system that worked for the real

:41:42. > :41:47.economy, then we do actually have an opportunity to do that, by putting

:41:48. > :41:53.an alternative in the way in which we look at how we take forward RBS I

:41:54. > :41:58.would implore the Chancellor of the Exchequer to reshape our anchoring

:41:59. > :42:05.system and would ask him to consider the alternative, not someday return

:42:06. > :42:12.RBS to the same London centric privately owned commercial bank

:42:13. > :42:14.which mimics the existing bank and culture and services that already

:42:15. > :42:19.exist in the United Kingdom. We don't want a state-owned bank run

:42:20. > :42:29.from Whitehall. There are alternatives put forward

:42:30. > :42:34.by various honourable members, including the Member for Dagenham. A

:42:35. > :42:39.real alternative would be to use our stake in RBS to create a local

:42:40. > :42:45.stakeholder banking network. That would be tasked with supporting

:42:46. > :42:49.small and medium-sized enterprises, rebalancing our economy. It shoot

:42:50. > :42:54.have a public service mandate. I actually went and had a walk through

:42:55. > :42:59.the City of London at the end of the recess and saw some of the fine

:43:00. > :43:04.buildings with the images of industry, of iron works, of

:43:05. > :43:13.engineering, of railway investments. We've lost that public service

:43:14. > :43:18.ethos. Instead an idea of just driving investment banking on,

:43:19. > :43:23.speculating in mortgages overseas, and this drive to double digit

:43:24. > :43:28.profit, which has undermined jobs in the real economy. There should be a

:43:29. > :43:32.specific duty to a particular locality, not a duty to maximise

:43:33. > :43:38.profits, but to optimise returns to a range of stake holders, including

:43:39. > :43:42.customers and the local economy. This approach would actually

:43:43. > :43:48.complement the Government's stated devolution agenda. It would provide

:43:49. > :43:51.the regions with the financial power they need to support SMEs, that

:43:52. > :43:55.would deliver the economic growth and the new jobs we need to

:43:56. > :44:00.rebalance the economy. We should learn the lessons of the financial

:44:01. > :44:06.crisis. The large commercial bank withdrew credit from our economy and

:44:07. > :44:10.lending to the non-financial corporate, that's to manufacturing,

:44:11. > :44:18.construction, retail for example, they fell by 25% in the five years

:44:19. > :44:23.from August 2008. In Germany where they experienced a similar collapse

:44:24. > :44:30.in lending from commercial banks, their well established local banking

:44:31. > :44:34.network referred to by other colleagues, the local co-operative

:44:35. > :44:40.banks, increased lending to domestic enterprises and the self employed

:44:41. > :44:45.over the same period by between 16-25%. I appreciate time is short,

:44:46. > :44:52.so I would like to make a few points in conclusion. The concentration of

:44:53. > :44:56.large too big to fail commercial banks leaves the UK uniquely exposed

:44:57. > :45:01.to another financial collapse. Returning RBS to this system would

:45:02. > :45:05.increase not decrease the risk to our economy. At the very least the

:45:06. > :45:09.Government should consider the merits of the stakeholder model as a

:45:10. > :45:14.driver of growth as well as creating a more stable banking system which

:45:15. > :45:21.can protect the real economy from future shocks. The Chancellor should

:45:22. > :45:24.not pursue a rushed policy of privatisation, which risks leaving

:45:25. > :45:29.the taxpayer worse off. Not only through incurring a loss following

:45:30. > :45:32.the sale of the remaining shares but worse still, continuing with an

:45:33. > :45:38.unreformed banking system that there condemn us once again to repeat the

:45:39. > :45:43.mistakes of the past. I move to support the motion. THE DEPUTY

:45:44. > :45:50.SPEAKER: Order. It clearly doesn't work to ask members to please speak

:45:51. > :45:54.briefly. I often say it's a test of oratory, the shorter your speech,

:45:55. > :45:59.the more effective it can be. Let's try again with Mr Douglas Carswell.

:46:00. > :46:03.Thank you Madam Deputy Speaker,ly take your advice and only speak for

:46:04. > :46:08.a couple of minutes. THE DEPUTY SPEAKER: Order. If the honourable

:46:09. > :46:13.gentleman had only just come in, I would not be calling him to speak,

:46:14. > :46:18.and it is very kind of the honourable lady to offer advice from

:46:19. > :46:25.a sedentary position, but it's not appropriate. I congratulate the

:46:26. > :46:32.honourable member for Edmonton on securing the debate. He spoke

:46:33. > :46:36.eloquently, well done. I cannot support this motion. The German

:46:37. > :46:42.regional banking mod only, of which much has been said, could well be

:46:43. > :46:47.the future. But I'm not sure that even Germany will necessarily have a

:46:48. > :46:51.German model of banking in 20 years' time. Equally, new technology might

:46:52. > :46:57.mean that we are able to do many things that banks currently do,

:46:58. > :47:02.using platforms that don't come with the costly bonuses and buildings

:47:03. > :47:09.attached that the banks have. I do favour very much the idea in this

:47:10. > :47:14.motion of a new model of banking. Since 2007 there's not been

:47:15. > :47:19.significant reform. There's been almost nothing done to rein in the

:47:20. > :47:24.worse excesses of fractional reserve banking. And the ability to conjure

:47:25. > :47:29.credit out of nothing which first of all creates chronic mall investment

:47:30. > :47:34.and credit bums in the wider economy, but also which makes banks

:47:35. > :47:38.intrinsically unstable and in need of bail-outs, bail-outs incidentally

:47:39. > :47:46.which I have consistently opposed. In a paper I wrote, and I don't

:47:47. > :47:50.intend to re-Harris the arguments, I outlined the new model of banking I

:47:51. > :47:54.would like to see. That have consensus has failed and has been

:47:55. > :47:57.seen to have failed I think we shall need change. I do not believe that

:47:58. > :48:09.nationalisation of the banking system or the money supply is the

:48:10. > :48:13.answer. I think that claims that we need more retail bank as they are

:48:14. > :48:17.supposedly a safer bet than investment banks need to be taken

:48:18. > :48:25.with a large pinch of salt, given that Northern Rock, a retail bank,

:48:26. > :48:28.failed. I suspect we'll see dramatic change in financial intermediaries

:48:29. > :48:34.and dramatic change in the nature of money itself. At the heart of the

:48:35. > :48:39.capitalist system wed have a system of capital allocation that doesn't

:48:40. > :48:45.use the pricing mechanism to allocate capital. That inconsistency

:48:46. > :48:49.can't last longer. We today to break up the cosy cartel presided over by

:48:50. > :48:53.central banks. We need to unwind quantitative easing, a subsidy to

:48:54. > :48:56.bankers. I think this will come about not as a result of

:48:57. > :49:00.politicians, not as a result of House of Commons motions or

:49:01. > :49:05.ministerial insights but technological change. Holding on the

:49:06. > :49:09.RBS shares will do nothing but hold up the changes that market forces

:49:10. > :49:18.need to bring about. Thank you. THE DEPUTY SPEAKER: Helen goodman. Thank

:49:19. > :49:22.you, I'm pleased to follow the honourable gentleman, who was

:49:23. > :49:26.administerably brisk. The timing and price of the sale which the

:49:27. > :49:32.Chancellor of the Exchequer has chosen means a loss to taxpayers the

:49:33. > :49:38.estimated by his own advisers at ?7 billion. The taxpayer has been given

:49:39. > :49:45.no justification for this and I believe the NAO should look into it.

:49:46. > :49:48.I have written today to the Comptroller and Auditor General.

:49:49. > :49:52.Before sale the Governor wrote a two-page letter to the Chancellor of

:49:53. > :49:55.the Exchequer which said sell the shares would promote financial

:49:56. > :50:01.stability a more competitive banking sect or and the interest of the

:50:02. > :50:07.wider economy. The Chancellor has relied heavily on this. I asked the

:50:08. > :50:14.Governor about it on 20th October at the Treasury Select Committee. He

:50:15. > :50:17.said, twice, the timing and valuation for the taxpayer are

:50:18. > :50:23.entirely decisions for the Government. He also told us that his

:50:24. > :50:29.letter was based on analysis by the Bank of England, but he refused

:50:30. > :50:36.point blank to disclose this analysis. I would like to know today

:50:37. > :50:41.whether this analysis was passed to the Treasury. Madam Deputy Speaker,

:50:42. > :50:46.I find this failure to disclose totally unacceptable. I hope the

:50:47. > :50:51.Comptroller and Auditor General will be able to recover the information

:50:52. > :50:56.when he assesses the value for money of this share sale. The Rothschilds

:50:57. > :51:03.document, which is one of the thinnest and weakest papers I have

:51:04. > :51:10.ever seen, at no point quantifies the benefits to the public of the

:51:11. > :51:14.sale. Therefore, of course it may be that there are some benefits to

:51:15. > :51:19.financial stability and the banking sector which are worth something.

:51:20. > :51:27.But how much? We should be told how much. I put it to the House this

:51:28. > :51:30.afternoon, Ministers have been lobbyied by their banker friends and

:51:31. > :51:35.funderses in the City and this is why they are selling off the shares

:51:36. > :51:42.cheap, rewarding their Cronies and cheating the taxpayer. Sentdsly, the

:51:43. > :51:46.Government has said repeatedly that they want to improve behaviour at

:51:47. > :51:51.the banks and in statement to the House in February, Ministers

:51:52. > :51:59.repeatedly told us that tax evasion promoted by the banks via Swiss

:52:00. > :52:03.accounts is a thing of the past. RBS has 404 country subsidiaries located

:52:04. > :52:18.in tax havens. Evidence under covered by the Guardian but not yet

:52:19. > :52:26.published in in relation to Coutts, a subsidiary of RBS, has continued.

:52:27. > :52:32.They meat a senior manager of the bank, the manager offered to park

:52:33. > :52:39.undeclared money and help move a potential customer to Switzerland in

:52:40. > :52:45.order to avoid tax. During the meeting the executive was recorded

:52:46. > :52:49.saying he would accept a deposit worth 8 million Swiss Franks on

:52:50. > :52:52.which tax had potentially been evaded, accept funds without

:52:53. > :52:56.ensuring the money was not the proceeds of a crime, help a client

:52:57. > :53:00.pay as little tax as is legal. Help a client move to Switzerland to

:53:01. > :53:07.avoid tax. This executive is a British national who ran a private

:53:08. > :53:12.bank team at Coutts International head office in Zurich. He was

:53:13. > :53:18.recorded saying basically tax authorities are your enemy.

:53:19. > :53:24.Furthermore, these facilities, these opportunities were advertised in a

:53:25. > :53:32.brochure by Coutts and they were, until the Guardian got in touch with

:53:33. > :53:36.them, on Coutts' website. So, although under Swiss law tax evasion

:53:37. > :53:40.is not a crime and there is no obligation to report it to the

:53:41. > :53:46.authorities, in England it is illegal for a banker to deal with

:53:47. > :53:52.money they know or suspect to be the proceeds of a crime. When the head

:53:53. > :53:57.of the UK financial investment came to the Treasury committee I asked

:53:58. > :54:03.him about this as well. I asked him if he had concerns about Coutts. He

:54:04. > :54:08.said yes, we do, and went on to say that the controversial practices

:54:09. > :54:13.were one of the reasons for selling Coutts International. He also said

:54:14. > :54:17.he had kept Treasury Ministers regulatory informed of ever contact

:54:18. > :54:24.item they found out about, so it would appear that once Treasury

:54:25. > :54:30.Ministers were told instead of attacking these malpractices and

:54:31. > :54:33.stopping them from taking place in Coutts, the Government decided to

:54:34. > :54:38.wash their hands of it by selling the shares. Taxpayers will want to

:54:39. > :54:43.know when were Ministers told about this tax evasion? What did they do?

:54:44. > :54:49.What estimate was made of the tax losses? Did the Treasury Ministers

:54:50. > :54:54.or Treasury officials the alert HMRC to the practice in order to recoup

:54:55. > :54:58.the lost tax revenues. Why did the Minister tell the House that the era

:54:59. > :55:05.of mass market avoidance schemes was over? And can we have a systemic

:55:06. > :55:10.review of the 404 RBS subsidiaries located in tax havens? I submit that

:55:11. > :55:18.until we have answers to these questions there should be no further

:55:19. > :55:22.sale of RBS shares. Thank you Madam Deputy Speaker, can I congratulate

:55:23. > :55:27.the Member for Edmonton on winning this debate, and pay tribute to the

:55:28. > :55:32.ordinary people across the UK who work for Royal Bank of Scotland and

:55:33. > :55:37.who for many years have delivered a fantastic service in banks. They are

:55:38. > :55:44.part of the community and very often their diligence and hard work is not

:55:45. > :55:48.recognised or rewarded. The difficulty I identify is with Royal

:55:49. > :55:53.Bank of Scotland's business model, encouraged by the UK Government and

:55:54. > :55:57.which is seen access and standards of customer service plum net the

:55:58. > :56:02.last three or four years in particular. I would like to set that

:56:03. > :56:07.in context and highlight three examples of branch closures in this

:56:08. > :56:12.constituency of Caithness, Sutherland and Easter Ross. The

:56:13. > :56:18.Royal Bank of Scotland has closed the branch in Invergordon recently,

:56:19. > :56:22.this is a town in Rothshire with heavy industry and a growing tourism

:56:23. > :56:26.sector. The loss of the bank is creating cash shortages and business

:56:27. > :56:31.turnovers are starting to fall. The impacts is obvious. The bank's

:56:32. > :56:36.customers are having to travel to other towns, where they ten conduct

:56:37. > :56:38.their shopping, pay their bills, undertake other aspects of their

:56:39. > :56:47.business. This is enormously challenging to

:56:48. > :56:53.the local economy in Invergordon. The RBS has closed a different

:56:54. > :56:59.branch in might is that you and see that serves as a mast geographical

:57:00. > :57:06.area and is very busy with tourism and customers there are now having

:57:07. > :57:10.to undertake 110 mile round trips to access their next nearest bank.

:57:11. > :57:18.Businesses are also having to travel to and from ten miles to bank cash.

:57:19. > :57:23.The RBS has also closed another branch which was arguably the centre

:57:24. > :57:27.of the town and a focal point for the community. Customers there are

:57:28. > :57:34.now having to travel over 40 miles to access the nearest bank which is

:57:35. > :57:37.in Wick and again whilst there they conduct their shopping and other

:57:38. > :57:43.aspects of business which has a negative impact on local economies.

:57:44. > :57:47.Each of these communities feels aggrieved because of the way these

:57:48. > :57:55.branches were closed with little meaningful consultation and are now

:57:56. > :58:02.ruined. Banks are crucial to our local economies. The strong share of

:58:03. > :58:05.banking in the UK is failing our communities particularly those

:58:06. > :58:09.communities and oral areas. Empirical evidence exists to

:58:10. > :58:16.demonstrate that the business model currently lamented by RBS under the

:58:17. > :58:20.banks, including the Bank of Scotland, is hurting small

:58:21. > :58:27.businesses. And threatening viability of high streets. Thousands

:58:28. > :58:31.of people in my constituency feel bitterly disappointed and let down

:58:32. > :58:36.by the Royal Bank of Scotland and by the UK Government's approach to the

:58:37. > :58:40.banking crisis more generally. The correspondence that I've had with

:58:41. > :58:43.the Treasury and with the Department for Business, Innovation and Skills,

:58:44. > :58:49.evidence little interest in the part of the UK Government in challenging

:58:50. > :58:52.the business model of Royal Bank of Scotland, branch closures in

:58:53. > :58:56.particular, and the Treasury has declined to use its influence as the

:58:57. > :59:02.major shareholder to establish a more positive outcome. Royal Bank

:59:03. > :59:09.now claims that it has shifted from a global bank to a UK focused bank

:59:10. > :59:15.with a strategy of wielding stronger banks. My constituency seat neither

:59:16. > :59:19.a UK brokers nor a stronger bank, in fact many now have no banker Paul

:59:20. > :59:28.and feel the stinky disadvantage. That techno banked all. The UK is

:59:29. > :59:31.now virtually unique in not having a local or stakeholder banking sector.

:59:32. > :59:39.The UK is now distinctive in having created a banking sector where

:59:40. > :59:42.people, and in my constituency and elsewhere, are left dependent on

:59:43. > :59:47.large commercial banks with nothing left to plug the gap when these

:59:48. > :59:52.banks retreat. It is remarkably poor disco planning. The UK Government's

:59:53. > :59:56.steak and Royal Bank of Scotland gave it an opportunity to address

:59:57. > :00:01.the structural problems observable in the banking sector and guarantees

:00:02. > :00:08.the guarantee communities access to banking services in the future. Many

:00:09. > :00:13.organisations have all published proposals to use the UK

:00:14. > :00:18.Government's steak in RBS to create a network of local banks. It is

:00:19. > :00:22.increasingly clear that the UK taxpayer will never recover its

:00:23. > :00:29.investment through the re-privatisation of RBS. In fact,

:00:30. > :00:35.the likely loss to be realised is currently estimated to be around ?13

:00:36. > :00:41.billion, which is one third of the original taxpayer bailout. The UK

:00:42. > :00:46.Government must then, as any sensible Government should, and

:00:47. > :00:50.would, look for alternative options. The UK Government could develop a

:00:51. > :00:54.local banking model based on Germany's system which we've heard

:00:55. > :00:59.about already. This could create 130 new local banks in England and

:01:00. > :01:05.panels could be devolved to Northern Ireland, Scotland and Wales to allow

:01:06. > :01:10.those nations to restructure their banking sectors. The UK Government

:01:11. > :01:15.could transform RBS and NatWest into a model of best practice. Based on

:01:16. > :01:20.the performance of internationally comparing bull local banking

:01:21. > :01:25.networks a programme of localisation could have boosted the economy in

:01:26. > :01:30.2008 by seven 1p and delivered additional benefits of over ?30

:01:31. > :01:36.billion over the last three years. It is not too late. I urge the

:01:37. > :01:42.Minister to be brave, innovative and ambitious. Order a full review of

:01:43. > :01:48.options for Royal Bank of Scotland T4 selling off any more shares at

:01:49. > :01:52.knock-down prices. The current programme of bank closures is

:01:53. > :01:58.helping nobody looks very likely to become worse. Consider, how local

:01:59. > :02:02.economies could be enhanced through development of a stakeholder bank

:02:03. > :02:09.and how communities can be assisted to grow, prosper and develop.

:02:10. > :02:13.Consider specifically please, how the Northern Ireland assembly, the

:02:14. > :02:18.Scottish Parliament, and the wealth the Welsh assembly, could lead a

:02:19. > :02:22.revitalised banking sector which is responsive to local colonies not

:02:23. > :02:25.corporate interest. I have reservations about the timing of

:02:26. > :02:29.speed in which the UK Government plans to sell its remaining stake in

:02:30. > :02:33.the Royal Bank of Scotland. The reduction of the Treasury

:02:34. > :02:40.shareholdings in the bank without structural reform will ultimately

:02:41. > :02:43.lead to a return to business as usual and a missed opportunity to

:02:44. > :02:50.learn the lessons of the crisis, ensuring more customers, taxpayers

:02:51. > :02:54.protection. Structural reforms should be demanded as a condition of

:02:55. > :03:01.sale. Should the cell proceed it is vital that the taxpayer receives the

:03:02. > :03:08.full ?45.8 billion paid by the previous Government in 2008. The

:03:09. > :03:18.public must get every single penny back. I support this notion.

:03:19. > :03:24.Would the SNP spokesperson like to speak?

:03:25. > :03:30.Could I associate myself with all the other members who have spoken in

:03:31. > :03:34.banking and congratulating the member for Edmonton for securing

:03:35. > :03:40.this debate? I think the advantage of having the debate is that we have

:03:41. > :03:45.moved the agenda forward rather than looking back. We have castigated, we

:03:46. > :03:48.have held RBS to account, and I think the Minister should take into

:03:49. > :03:51.account that members from all sides of the house wants to move the

:03:52. > :03:59.banking agenda forward. We have spent in Treasury committee and in

:04:00. > :04:03.this house, separate years trying to refashion the regulatory machinery.

:04:04. > :04:05.In fact, the new regulatory machinery still to come into force

:04:06. > :04:10.and it will be another two years before most will be enforced and

:04:11. > :04:18.four years before to is operational. In which case we'll be beyond the

:04:19. > :04:21.decade in trying to solve the problems of 2007. And when we get

:04:22. > :04:26.there, we will already discover the fact that the economy and problems

:04:27. > :04:31.that move forward. And think the advantage of the debate today is

:04:32. > :04:37.that we have tried to start moving the agenda beyond 2007. The

:04:38. > :04:43.Government should do that. Even though the motion is in very general

:04:44. > :04:47.terms, it is expressing the will of the house that we need to look

:04:48. > :04:50.forward to how we can make the banking system more responsive

:04:51. > :04:57.rather than just protecting itself from replicating the previous

:04:58. > :05:04.bubble. Can I say that I want to associate myself with the words of

:05:05. > :05:11.my honourable friend from Walsham and my friend from Kate Ness and

:05:12. > :05:16.Sutherland. In criticising the strategy pursued by various

:05:17. > :05:22.managements of RBS over the years, hopefully largely in the past, we

:05:23. > :05:29.should never extend that to a criticism of the work that is being

:05:30. > :05:34.done by the ordinary workers in the branches and in the call centres. As

:05:35. > :05:38.they have struggled to cope with the crisis of 2007 eight and the various

:05:39. > :05:47.forms of reconstruction that have gone on. Can remind members of the

:05:48. > :05:52.house that RBS implement was around 200,000 at the time it was taken

:05:53. > :05:56.into public ownership or stop it is now that's 92,000. So there is now

:05:57. > :06:04.that's 92,000. Surveys in if we want further change and remodel RBS, it

:06:05. > :06:08.can only be done... Thank you. I'm grateful to my

:06:09. > :06:11.honourable friend for way I do think it is interesting that he is

:06:12. > :06:14.referring to the challenges that some of the staff have based at

:06:15. > :06:19.Royal Bank of Scotland and they're fully deserving of our support. With

:06:20. > :06:22.the honourable member agree that we should reflect on the employees of

:06:23. > :06:27.RBS and other banks who were encouraged by their management to

:06:28. > :06:35.own shares before the crisis and Day, among others, have suffered

:06:36. > :06:38.terribly? My honourable friend makes a very

:06:39. > :06:43.good point that there is no wall between the customer and the

:06:44. > :06:46.rank-and-file star of RBS. They are also customers and shareholders and

:06:47. > :06:51.they have also suffered. That brings us to where we go next. I think that

:06:52. > :06:59.members of this house would not stand in the way in all returning

:07:00. > :07:05.RBS to privatisation. She must not use that as a definition of our

:07:06. > :07:08.differences of opinion. The Government wants support to return

:07:09. > :07:11.to private ownership and the rest of us are demanding that it stays in

:07:12. > :07:18.the public. That is not the issue. The issue is that in public

:07:19. > :07:22.ownership the emphasis placed by the Treasury and various Treasury agents

:07:23. > :07:26.through to the bank, there is generations of management and RBS,

:07:27. > :07:33.the key goal given to RBS management was to pay down the level of debt,

:07:34. > :07:38.to pay down the balance sheet, to reduce the balance sheet. Now, in

:07:39. > :07:46.the period in which that was done, RBS has reduced its balance sheet by

:07:47. > :07:49.something like ?1.3 trillion. To put that into numbers people can

:07:50. > :07:53.understand, that is the equivalent of the entire balance sheet of

:07:54. > :07:58.Lloyd's plus the entire balance sheet of standard Charter. To do

:07:59. > :08:02.that has required the management of RBS to focus only on the internal.

:08:03. > :08:10.And all of the weaknesses that have been identified by members, and I

:08:11. > :08:16.agree with all that, the central weaknesses of RBS management are not

:08:17. > :08:22.the customer. And some I say to the Minister, and I think this is key,

:08:23. > :08:29.it will crystallise the debate. In choosing when and how to send RBS

:08:30. > :08:34.back to private ownership, the test has not to be, do we get all our

:08:35. > :08:37.money back? Is the Treasury satisfied? Has the balance sheet

:08:38. > :08:43.been paid under a certain amount? The test has to be the impact on the

:08:44. > :08:47.customer and whether RBS has returned to a customer led focus. I

:08:48. > :08:57.actually think that the present Chief Executive and his key staff

:08:58. > :09:00.are struggling to do that. I think since the senior management was

:09:01. > :09:09.changed to years ago there has been a refocusing. The game the reason

:09:10. > :09:12.for the change in the Chief Executive to years ago was because

:09:13. > :09:15.the then Chief Executive has disagreed with the pace at which he

:09:16. > :09:19.was being put under and the pressure he was put under to get the bank

:09:20. > :09:23.ready for privatisation. For privatisation. And he was saying,

:09:24. > :09:26.no, we need to restructure and getting the bank ready to meet the

:09:27. > :09:32.needs of the customer. That is a test. The test is not ideological,

:09:33. > :09:38.RB in favour of private or public ownership? The text is the banking

:09:39. > :09:41.only be privatised and moved forward when it is capable of winning back

:09:42. > :09:47.its customers and its customers's confidence. That brings us back to

:09:48. > :09:56.the issue of small businesses. The fundamental break with RBS's

:09:57. > :10:01.customers has been the loss of faith of its small-business customers. And

:10:02. > :10:09.that does not change. We've had a number of examples. Whether or not

:10:10. > :10:15.RBS was ultimately culpable to the restructuring in driving viable

:10:16. > :10:20.businesses to the wall, that is what RBS's customers feel happened. Until

:10:21. > :10:24.that is resolved then the bank is never going to become a bank that we

:10:25. > :10:29.all want that can actually drive the economy forward. So I think the

:10:30. > :10:33.Government has to be very careful about how it approaches

:10:34. > :10:37.privatisation. In case it actually further breaks the confidence of

:10:38. > :10:45.small businesses. We know that in April -- August, in the first wave

:10:46. > :10:51.privatisation, it produced bad headlines yet again. I personally

:10:52. > :10:56.think there was evidence of short selling. Sadly the Government lost

:10:57. > :11:01.more than the Treasury lost more money than they needed to in trying

:11:02. > :11:07.to sell off those shares. But it brought for the bad headlines that

:11:08. > :11:14.can be allowed to happen again. I would say this in trying to sum up

:11:15. > :11:21.that it will not be easy to them, at the in the game, after separate

:11:22. > :11:26.years of constant restructuring, it will not be easy to start again and

:11:27. > :11:30.ask RBS management and RBS staff to have a whole new business model. We

:11:31. > :11:39.might come to that but I wouldn't have a word of. If you look out the

:11:40. > :11:44.long and sorry history of the attempt to strive off Williams and

:11:45. > :11:48.the linen, which is a disastrous thing, then you will see that you

:11:49. > :11:51.cannot just wave a magic wand and break-up RBS into a dozen or

:11:52. > :11:59.whatever regional banks. We maybe have to look at the need to create

:12:00. > :12:01.regional and state. But a simple waving of the magic wand to break-up

:12:02. > :12:16.RBS may be more difficult. Williams and Glyn wasn't a

:12:17. > :12:22.stand-alone bank. It was a brand, where the bank was integrated into

:12:23. > :12:27.RBS, hiving off again, it is taking so long that the original investor,

:12:28. > :12:32.Santander, walked away. RBS management has been forced into

:12:33. > :12:38.enter into what I think is a very bizarre arrangement with the Corsair

:12:39. > :12:44.Group. That's an interesting word for the partner that RBS has joined

:12:45. > :12:51.with in order to bring capital into Williams and Glyn when floated off.

:12:52. > :12:56.I think in the end if Williams and Glyn is floated off RBS will make no

:12:57. > :13:00.money from that operation, and so the taxpayer and the Treasury won't

:13:01. > :13:05.get any money back. I think the Corsair Group, if you know about

:13:06. > :13:09.this American group, they have a long history of consolidation in the

:13:10. > :13:15.banking world and I don't think it will be long before Williams and

:13:16. > :13:20.Glyn is bought by somebody else so that the Corsair Group makes a

:13:21. > :13:26.return on its money. I'm being chided by Madam Deputy Speaker, so

:13:27. > :13:31.let me briefly say I want to off some practical and quick

:13:32. > :13:38.suggestions. I think if we are to draw the existing challenge of

:13:39. > :13:41.banks... On that point? I want to make some brief practical points,

:13:42. > :13:47.Madam Deputy Speaker. I think the Government has to rethink the issue

:13:48. > :13:51.of extending the new bank surcharge equally to the smaller banks and

:13:52. > :13:57.mutuals to the same extent as the larger banks. If we want to extend

:13:58. > :14:01.the stakeholder section we need to reduce the bank surcharge on that

:14:02. > :14:05.sector. I think there was a growing issue which we haven't mentioned

:14:06. > :14:09.today which is beginning to emerge in the banking community of access

:14:10. > :14:15.to the interlink payment system which binds together all of the

:14:16. > :14:20.banksment interlink payments system, which your cash-line machine, which

:14:21. > :14:25.Standing Orders are paid for, when you flash our card in the shop and

:14:26. > :14:28.make a payment, there is an electronic system commonly owned by

:14:29. > :14:32.the big embankment it is difficult for the smaller banks and new

:14:33. > :14:38.challenger banks and stakeholder banks to access that. We need to

:14:39. > :14:49.open that um. Finally can I say we need to open up the pricing

:14:50. > :14:55.structure for the, so that SMEs can see what it is costing them to run

:14:56. > :14:59.contracts with the bank. We are offering from all sides of the House

:15:00. > :15:04.a suggestion to the Government, to rush to judgment, let's think what

:15:05. > :15:08.we are doing and have a customer-led focus for RBS not simply look at

:15:09. > :15:13.what the Treasury wants to get back. Thank you Madam Deputy Speaker, I

:15:14. > :15:17.congratulate my honourable friend the member for Edmonton on securing

:15:18. > :15:21.this debate and thank the Backbench Business Committee for giving

:15:22. > :15:25.members time to discuss this in chamber. I'm pleased so many have

:15:26. > :15:32.taken part. It is a pleasure to join the Minister and to respond for the

:15:33. > :15:35.opposition frontbench for the first time on this important and topical

:15:36. > :15:38.debate. Today we discussed a proposal which asked the Government

:15:39. > :15:43.to consider suspending the further sale of its shares in RBS while

:15:44. > :15:48.conducting a review of the UK's financial sector and the case for

:15:49. > :15:52.new banking models. A very simple motion and one that on this side of

:15:53. > :15:57.the House we all support. This discussion on RBS, the causes and

:15:58. > :16:02.consequences of its bail-outs, and now the Chancellor's ongoing plans

:16:03. > :16:05.to sell it off, with a cost to the taxpayer that results from that, has

:16:06. > :16:09.been an excellent opportunity to discuss the future of RBS and of

:16:10. > :16:13.British banking as a whole. New models and structures that may be of

:16:14. > :16:18.benefit to the British economy and the Government must engage in this

:16:19. > :16:22.debate. As my honourable friend the Member for Dagenham and Rainham set

:16:23. > :16:27.out earlier. We on this side of the House want to see a thriving and

:16:28. > :16:30.dynamic banking sector which will best deliver for the economy and the

:16:31. > :16:34.electorate as a whole. Labour in Government took the decision to bail

:16:35. > :16:39.out RBS. It was a big decision. A ?45 billion decision, but it was the

:16:40. > :16:43.right decision following the clam ittous situation in RBS that my

:16:44. > :16:47.honourable friend the Member for Norwich south outlined earlier. It

:16:48. > :16:52.was justified, this decision, according to the National Audit

:16:53. > :16:55.Office, and at a price backed by the Institute for Fiscal Studies. But

:16:56. > :16:59.the scale of the bail-out, the money invested on behalf of the taxpayer,

:17:00. > :17:05.means we cannot take a simple decision so lightly to return to

:17:06. > :17:09.business as usual. The Chancellor argued in his mansion House speech

:17:10. > :17:14.this year that the easiest path for the politician to put off the

:17:15. > :17:18.decision. I believe it is he who has taken the easy decision. Exactly! To

:17:19. > :17:24.return as I say to business as usual. As a former shadow Chancellor

:17:25. > :17:26.my honourable friend the Member for Nottingham East said at the time

:17:27. > :17:31.taxpayers who bailed out the bank will want their money back. He also

:17:32. > :17:35.said the Chancellor needs to justify his haste in selling off a chunk of

:17:36. > :17:39.RBS. Both of these points still stand. The taxpayers will still want

:17:40. > :17:44.their money back and the Chancellor still needs to justify his haste. So

:17:45. > :17:49.let us be clear. We can't afford to get this wrong. And the evidence

:17:50. > :17:54.presented to us in the media this morning and by my honourable friend

:17:55. > :17:58.the Member for Edmonton in a poll shows the public think the

:17:59. > :18:03.Government are getting it wrong. 82% of those polled agree that with our

:18:04. > :18:08.own interest, the majority shareholder in RBS, it shoot operate

:18:09. > :18:10.in the public interest. 58% believe the bank should be restructured to

:18:11. > :18:16.serve local economies throughout the UK. So it is incumbent on the

:18:17. > :18:22.Minister... I want to give the Minister as much time to answer as

:18:23. > :18:25.possible, so it is incumbent on the Chancellor to say why they are

:18:26. > :18:29.moving ahead with this sale and what evidence does he have that this is

:18:30. > :18:33.the right thing to do? This is the first opportunity for a full

:18:34. > :18:36.parliamentary debate on the decision of the Chancellor to privatise RBS

:18:37. > :18:40.since his announcement to the City in June. The Minister did make a

:18:41. > :18:43.statement the following day but it was clearly something of an

:18:44. > :18:52.afterthought to inform the House. As my honourable friend the Member for

:18:53. > :18:56.Easington spelt out earlier. At the mansion House the Chancellor

:18:57. > :19:02.announced a share sale even if it meant a financial loss to the

:19:03. > :19:07.taxpayer. The there's been a loss of ?1 million and some calculations

:19:08. > :19:12.suggest the total loss could be around ?13 billion, almost a third

:19:13. > :19:16.of the ?35.5 billion total cost of the bail-out. The Government has

:19:17. > :19:20.provided no real evidence of why RBS should be returned to the private

:19:21. > :19:27.sector in his previous form or why it shoot happen now. Mention has

:19:28. > :19:32.been made of a 13 page report and the two-page meter from the Bank of

:19:33. > :19:34.England. The report's authors stressed they haven't sought to

:19:35. > :19:39.address whether the Government should sell its stake in RBS but

:19:40. > :19:42.rather when it should do so. In other words the review didn't

:19:43. > :19:49.consider the full range of policy options. Exactly. So can the

:19:50. > :19:53.Minister elaborate on how moving RBS shares from public to private

:19:54. > :19:57.ownership which promote stability and whether the relevant Bank of

:19:58. > :20:02.England committee has endorsed this view? Will the Minister publish any

:20:03. > :20:06.evidence in support of this view? It is welcome that the chair of the

:20:07. > :20:11.Treasury Select Committee asked to see the advice provide I by UKFI to

:20:12. > :20:15.ensure that the taxpayer is getting good value from this

:20:16. > :20:25.Government-owned company. I support that call and I ask the Minister

:20:26. > :20:30.today, is the timing in the interest of customers? Or is he trying to

:20:31. > :20:37.make his borrowing figures look better? Is this decision based on

:20:38. > :20:42.idealogical decisions or one on advice? Can he show how he arrived

:20:43. > :20:47.at this decision, and if the Minister has evidence will he share

:20:48. > :20:51.it with members of this House. I wish to turn to alternative models

:20:52. > :20:56.and structures for RBS and the future of British banking, to ask

:20:57. > :20:59.the Government to consider a full review of UK banking, that questions

:21:00. > :21:03.how financial institutions have operated both before and since the

:21:04. > :21:08.crash. And what other models we may want to consider that could diverse

:21:09. > :21:11.fight the sector and deliver for the country by strengthening the

:21:12. > :21:20.economy. There's been much needed discussion on banking practice and

:21:21. > :21:25.reform over the past five years. Lawrence Tom inson's report, Sir

:21:26. > :21:27.John Victorias' Independent Commission on Banking, the

:21:28. > :21:32.Parliamentary Commission on Banking Standards and the work of the

:21:33. > :21:36.Treasury committee itself, with the honourable leadership of the Member

:21:37. > :21:40.for Mitch ster. But given how badly things went wrong and the problems

:21:41. > :21:45.that still exist with the bank is how can we do it better? We need to

:21:46. > :21:48.know what only why RBS failed but whether it is now delivering for the

:21:49. > :21:54.British economy? And if it is not, how can we do it better? Labour was

:21:55. > :21:58.right to bail out RBS but how has it operated since the Government became

:21:59. > :22:04.the majority shareholder? RBS has been bailed out but there are still

:22:05. > :22:10.major problems with its operation as the Member for Aberconwy indicated.

:22:11. > :22:15.It has cut over 30,000 staff since 2008, often back room staff on

:22:16. > :22:21.around ?20,000 a year. It is closing branches faster than any other bank.

:22:22. > :22:26.90 close yours this year. The Tomlinson Report said in 2011 that

:22:27. > :22:29.returning RBS and Lloyds to full radio private sector ownership in

:22:30. > :22:34.their current form would be a return to the banking landscape of 2003,

:22:35. > :22:39.possibly with even less competition. Given the lack of any real change in

:22:40. > :22:44.the banking sector there is nothing that will stop 2018 being the same

:22:45. > :22:51.as 2008 unless radical action is taken now. Not my words but of the

:22:52. > :22:57.Tomlinson Report. The Andrew Large report found that the bank was

:22:58. > :23:04.failing SMEs. A perception has risen among some SME Haas RBS is unwilling

:23:05. > :23:08.to lend. I want to touch on how RBS has been treating businesses. This

:23:09. > :23:12.House will recall the backbench business debate last year on the

:23:13. > :23:15.Financial Conduct Authority redress scheme in which honourable members

:23:16. > :23:19.raised serious concerns facing businesses. For example my

:23:20. > :23:22.honourable friend the Member for Liverpool Walton stated that the

:23:23. > :23:26.only thing that's consistent and transparent is that the bank that

:23:27. > :23:32.caused the financial crash are profiting from selling products such

:23:33. > :23:37.as interest rate-hedging products bought by the Flanagan Group and

:23:38. > :23:43.caused it great difficulty. My honourable friend the Member for

:23:44. > :23:49.Newcastle under line talked about DW Motorcycles, which in his words has

:23:50. > :23:55.been badly let down by RBS but has finally escaped the clutches of RBS.

:23:56. > :23:59.The Member for Newcastle under line talked about small businesses who

:24:00. > :24:03.feel bullied by their banks. Information I have seen this week

:24:04. > :24:05.shows that the serious concerns of businesses like Flanagans and others

:24:06. > :24:10.haven't gone away. Given this, I would like to take the opportunity

:24:11. > :24:15.of this debate to ask the Minister if she will meet with me, concerned

:24:16. > :24:19.MPs such as the Member for Liverpool Walton and businesses such as the

:24:20. > :24:24.Flanagan Group to discuss the behaviour of RBS and want can be

:24:25. > :24:29.done to resolve the situation. That leads me as I approach to end to the

:24:30. > :24:33.question put so well by my honourable friend for West Bromwich

:24:34. > :24:37.West and whether or not selling RBS in its current form represents good

:24:38. > :24:40.long-term value for the taxpayer, taking into account all the economic

:24:41. > :24:47.costs and benefits. Is the Minister aware of those who are saying the

:24:48. > :24:52.low price of RBS shares represents a believe among market participants

:24:53. > :24:55.that reforms to guarantee its future financial health isn't concluded? Is

:24:56. > :24:58.the Minister satisfied that all necessary steps have been taken to

:24:59. > :25:05.return RBS to a state where it will not be in trouble again? Is it the

:25:06. > :25:10.case that the economy is best served solely by private shareholder

:25:11. > :25:15.banking or is there a case or a diversified sector which includes

:25:16. > :25:17.publicly owned, mutuals, co-operatives, social enterprises

:25:18. > :25:22.and regionalised banking in with so many questions yet to be answered it

:25:23. > :25:26.is right to we engage with a wider review of the UK's financial sector

:25:27. > :25:32.which considers the case for establishing new models of banking

:25:33. > :25:35.which may better serve our economy. In conclusion, there are many

:25:36. > :25:39.alternatives, there've been proposals from a number of quarters

:25:40. > :25:45.that RBS be broken up to deliver regional banks in the Tomlinson

:25:46. > :25:47.Report, by the commit economics foundation, Civitas and others

:25:48. > :25:52.mentioned by members. There's a discussion to be had on how regional

:25:53. > :25:56.banks may help rebalance the economy and perhaps the Chancellor took the

:25:57. > :26:00.opportunity while visiting Germany to look into that. It is our

:26:01. > :26:04.responsibility to map out the best way forward for UK banking to ensure

:26:05. > :26:08.at this time delivers for both the electorate and the economy as a

:26:09. > :26:11.whole. This means suspending a sales of shares in RBS which gives away

:26:12. > :26:16.taxpayers' money to private shareholders. It is incumbent upon

:26:17. > :26:22.the Chancellor to ex-la why he thinks this is the right thing to

:26:23. > :26:26.do. This means engaging with a real review and alternative models that

:26:27. > :26:32.will deliver a diversified and more resilient economy. How we treat RBS

:26:33. > :26:36.now will demonstrate whether we have learnt the lessons of the crisis...

:26:37. > :26:40.THE DEPUTY SPEAKER: I hope he is reaching the conclusion of his

:26:41. > :26:43.conclusion. We are way over time. If he could finish now, I will be very

:26:44. > :26:53.grateful. We want to see a thriving and a

:26:54. > :26:55.numbing banking sector that will best deliver for the economy and

:26:56. > :26:59.electorate as a whole. We don't accept the case has been made to

:27:00. > :27:03.sell off now at a significant loss to the taxpayer that is why we do

:27:04. > :27:07.support a full, independent review of all the options before any

:27:08. > :27:13.further shares are sold and we encourage MPs to support this

:27:14. > :27:16.motion. I hope that you will indulge me with

:27:17. > :27:20.a little bit of time to respond to what I think has been a very

:27:21. > :27:24.thoughtful and very well subscribed debate which has really focused on

:27:25. > :27:29.the future of the banking system in this country. And I would like to

:27:30. > :27:36.start by congratulating the noble lady, the member Fred Minton,

:27:37. > :27:40.forbidding forward this motion. -- member for Edmonton. I think the 15

:27:41. > :27:44.contributions we have heard today in the debate highlight the importance

:27:45. > :27:49.and impact of our banking sector and how integral it is to our long-term

:27:50. > :27:53.economic plans. I can assure the house today that a key element of

:27:54. > :27:59.our long-term economic plan is a strong, healthy and more competitive

:28:00. > :28:02.and more diverse banking sector. When the Labour Government acquired

:28:03. > :28:07.RBS it was the single largest bank bailouts in the world. But over ?45

:28:08. > :28:12.billion. The price that they paid is of course a matter of historic and

:28:13. > :28:16.public record. And this was only ever intended as a temporary pilot

:28:17. > :28:23.has Asian. In order to restore financial stability to our banking

:28:24. > :28:27.system. -- as a temporary privatisation. Gordon Brown stated

:28:28. > :28:30.that the Government will not be a permanent investor. Over time we

:28:31. > :28:36.intended to dispose of these investments in an orderly way.

:28:37. > :28:41.RBS's very different now to what it was then. It has been restructured

:28:42. > :28:44.to focus on banking in the UK. It has shrunk its investment bank

:28:45. > :28:49.editors recently completed the disposal of its US business

:28:50. > :28:54.citizens. The creation, by carving out the RBS branches in England and

:28:55. > :29:00.Wales, and the NatWest branches in Scotland, of the historic brand,

:29:01. > :29:05.will mean 314 Challenger branches. More than twice as many as the

:29:06. > :29:10.honourable lady for Edmonton recommends. But seven years on,

:29:11. > :29:18.despite starting the process of selling shares in the summer, the UK

:29:19. > :29:24.Government still own 70% of RBS. And easiest thing to do would be to

:29:25. > :29:28.leave RBS in state hands, to duck the difficult questions. But in fact

:29:29. > :29:33.no one in today's debate argue that the situation we inherited into

:29:34. > :29:36.thousand ten with a large chunks of failing banks in taxpayer hands, is

:29:37. > :29:41.a situation that we should maintain forever. The right thing to do for

:29:42. > :29:46.the strength of the economy and for taxpayers is to start selling off

:29:47. > :29:49.our stake as part of a phased disposal programme. That is but a

:29:50. > :29:53.long-term economic plan to bring down the national debt and secure a

:29:54. > :29:57.brighter future for hard working people across the country. As the

:29:58. > :30:03.honourable lady who was not here will call, in June 2013 the

:30:04. > :30:06.parliamentary commission on banking standards led by the honourable

:30:07. > :30:09.member for Chichester, considered the various options for dealing with

:30:10. > :30:14.the legacy of RBS as part of its wider review into the banking

:30:15. > :30:16.sector, including a radical restructuring of RBS and the

:30:17. > :30:20.creation of the number of regional banks. The option was dismissed by

:30:21. > :30:24.the commission which noted how difficult, expensive and time

:30:25. > :30:29.visiting it can be to separate integrated activities of a bank.

:30:30. > :30:32.However, the PC BS did recommend that the Government undertake a

:30:33. > :30:36.review into the option of splitting RBS into a good bank and the bad

:30:37. > :30:40.bank and we acted on this. In November 2013, following the

:30:41. > :30:44.publication of our findings, RBS set out plans for the creation of an

:30:45. > :30:48.internal bad bank and RBS has now set out its new study due to focus

:30:49. > :30:54.on is called British business. As I have mentioned, it committed to sell

:30:55. > :30:57.off more of its overseas business, simplifies operations, Schroders

:30:58. > :31:00.investment bank and use the additional capital to support the

:31:01. > :31:04.British economy. By the summer of this year the strong progress RBS

:31:05. > :31:10.have made in implementing that ran had led us to a clear decision

:31:11. > :31:13.point. That is why in July the Chancellor sought the advice of the

:31:14. > :31:16.Governor of the Bank of England regarding the Government's

:31:17. > :31:20.shareholding. It was the governor's view that public ownership has

:31:21. > :31:26.largely served its purpose. And that it is in the public interest in the

:31:27. > :31:30.Government to begin to return RBS to private ownership. He went on to say

:31:31. > :31:33.that there could be considerable net cost to taxpayers of further

:31:34. > :31:37.delaying the start of the sale. And that continued public ownership

:31:38. > :31:42.without a foreseeable end point runs risks including limiting RBS's

:31:43. > :31:47.future strategic options and continuing the perception that

:31:48. > :31:50.taxpayers their responsibility for RBS's losses. The governor added

:31:51. > :31:54.that their Bank of England believes that the interest of the people of

:31:55. > :31:59.the United Kingdom are best served by a vibrant, resilient and

:32:00. > :32:02.privately owned banking sector. And that a phased return of RBS to

:32:03. > :32:08.private ownership will promote ability and more competitive banking

:32:09. > :32:11.sectors and is in the interest of the wider economy. A lot of speakers

:32:12. > :32:16.today have mentioned competition and choice. I want to make a viewpoint

:32:17. > :32:22.about that. Because the financial services sector is now fundamentally

:32:23. > :32:26.stronger thanks to the reforms this Government has taken. A central part

:32:27. > :32:30.of these reforms has been about injecting extra competition and

:32:31. > :32:33.choice into the banking sector and specifically helping new challenger

:32:34. > :32:40.banks to enter the market. I have mentioned already RBS process of

:32:41. > :32:45.their besting a new challenger banks but this is in addition to creating

:32:46. > :32:49.and other aids challenger banks during the last Parliament including

:32:50. > :32:52.TSB and metro, not to mention virgin money and Tesco bank. During this

:32:53. > :32:58.election campaign be committed to ensuring that would be just been new

:32:59. > :33:01.banks getting banking licences over the life of this Parliament. So

:33:02. > :33:06.we're also very much promoting competition between banks by

:33:07. > :33:09.boosting and helping to deliver the current account switch servers. We

:33:10. > :33:14.really put competition at the heart of the regular Tory system. In the

:33:15. > :33:18.interest of time I'm going to respond to a few of the points that

:33:19. > :33:23.were made during the course of the debate. Specifically about the

:33:24. > :33:27.SCA's reported to the Tomlinson review that was mentioned by a

:33:28. > :33:32.number of colleagues including the member for Hazel Grove, Aberconwy.

:33:33. > :33:38.My understanding is that report should be published between now and

:33:39. > :33:43.the end of the year. But I will obviously keep Parliament informed

:33:44. > :33:47.if I hear differently. From our colleagues at the SCA. A number of

:33:48. > :33:52.colleagues spoke favourably about the German banking system. It should

:33:53. > :33:55.be worth noting though that impact the German banking system also

:33:56. > :33:59.required ?70 billion of capital injection as well ?100 billion of

:34:00. > :34:07.guarantees during the financial crash. A number of colleagues also

:34:08. > :34:12.mentioned a range of other important points, specifically I can reassure

:34:13. > :34:16.the honourable member for Oscar that ring fencing is an important part of

:34:17. > :34:24.strengthening the regular jury system to separate the actions of

:34:25. > :34:30.banks. And a number of colleagues also mentioned, and the honourable

:34:31. > :34:33.member mentioned, the bonus culture. And he will know that of course that

:34:34. > :34:37.was rampant under the last Labour Government and has been brought very

:34:38. > :34:41.much under control during the life of the last Government and continues

:34:42. > :34:45.under this one. And she also said that we don't all want a state-owned

:34:46. > :34:52.bank run from Whitehall. I can only agree with the honourable member.

:34:53. > :34:57.The honourable member mentioned some important points about the branches

:34:58. > :35:01.in his very large and very rural constituency and I have a great deal

:35:02. > :35:05.of sympathy for the points that he made and I also pay tribute to the

:35:06. > :35:08.staff and pensioners of the Royal Bank of Scotland of which he has 105

:35:09. > :35:12.and pensioners of the Royal Bank of Scotland of which he has 105 in his

:35:13. > :35:15.about the specific towns that he mentioned but I think it is probably

:35:16. > :35:20.better about right to the honourable gentleman in the interest of time.

:35:21. > :35:24.So, yes, this debate today was very much on the future of the banking

:35:25. > :35:29.system, but the importance of having a strong, healthy and diverse and

:35:30. > :35:34.competitive range of choices for customers and for businesses. Of our

:35:35. > :35:40.banking sector. In the interest of time will recognise the importance

:35:41. > :35:44.of the issues raised in today 's motion, are extremely serious, the

:35:45. > :35:46.Government cannot support the proposals as written for. They run

:35:47. > :35:51.contrary to all the evidence that has been presented to us. Instead we

:35:52. > :35:57.will continue to put in place, long-term economic plan, one which

:35:58. > :36:00.is bringing stability and competition UK banking sector and

:36:01. > :36:08.delivering a better deal for hard working people the country. --

:36:09. > :36:26.across the country. The question is the notion that the

:36:27. > :36:33.motion as on the order paper. Vote. Before I call the member could I

:36:34. > :36:38.just point out we have very limited time because of the length of the

:36:39. > :36:48.previous debate. I am suggesting I'm not putting a time limit on but if

:36:49. > :36:51.the motion can take ten minutes and everyone else five minutes including

:36:52. > :36:57.interventions, we will get through before five o'clock and with

:36:58. > :37:00.that... I will fight to try keep to your

:37:01. > :37:05.structures. I beg to move the motion is listed on the order paper. I'm

:37:06. > :37:13.grateful for the opportunity to speak about the school and barbaric

:37:14. > :37:16.trade and dog meat. Thank you to the backbench business committee. Can I

:37:17. > :37:23.also congratulate my honourable friend for the work that he did was

:37:24. > :37:27.securing this debate? And indeed, many members of this house in the

:37:28. > :37:31.last Parliament and current parliament and can I pay tribute to

:37:32. > :37:37.organisations such as Humane Society International, Royal protection for

:37:38. > :37:40.cats and dogs in the meat trade, to name but a few. And to be

:37:41. > :37:45.celebrities and public because of giving their time and support. It is

:37:46. > :37:48.impossible to say how many dogs are consumed in the dog meat trade each

:37:49. > :37:54.year but Humane Society International estimates that around

:37:55. > :37:59.20 million RQ within China, 2 million in South Korea and 5 million

:38:00. > :38:04.in Vietnam. Many dogs sourced from neighbouring countries.

:38:05. > :38:07.Would my honourable friend agree that in order to tackle this problem

:38:08. > :38:13.there are two aspects to it. The first is to persuade some countries

:38:14. > :38:16.to make dog meat trade illegal. In those countries where it is already

:38:17. > :38:19.illegal to try to put pressure on them to enforce the law is the

:38:20. > :38:23.already have. Absolutely. I wholeheartedly endorse

:38:24. > :38:26.what my honourable friend has said. As much as I find it revolting even

:38:27. > :38:29.the thought of eating a companion animal I find it revolting even the

:38:30. > :38:33.thought of eating a companion animal I'm not seeking to add the law just

:38:34. > :38:39.because I'd like. This is not the humane slaughter of for meat. It is

:38:40. > :38:43.a process in which animals are taken from their homes, often family pets

:38:44. > :38:46.are stolen, they are housed and transported in disgusting conditions

:38:47. > :38:48.in which they can often barely move and killed in the most

:38:49. > :38:54.excruciatingly cruel and painful ways. I want anyone listening to

:38:55. > :38:57.this debate over the coming 50 minutes or so that many of the

:38:58. > :39:00.things they will you will be upsetting the stabbing, deeply

:39:01. > :39:03.upsetting and disturbing. Indeed, a quick search on the Internet

:39:04. > :39:07.provides some of the most graphic and horrifying images of cruelty to

:39:08. > :39:11.animals you're ever likely to see. The methods used to kill the animals

:39:12. > :39:16.defy belief and perhaps most sickeningly in order to produce the

:39:17. > :39:20.most tender meat they believe it should contain a huge amount of

:39:21. > :39:25.adrenaline and so the dog should be fearful at the moment it is true. It

:39:26. > :39:29.is common for bludgeoning to be used, for it to be hanged or Q tips

:39:30. > :39:34.or in some cases for the dog to be thrown fully conscious into a drum

:39:35. > :39:40.of boiling water, anything that ensures the maximum suffering of the

:39:41. > :39:45.animal before to sport. I'm grateful. He should be commended

:39:46. > :39:47.for shining a light of what is international barbarism within the

:39:48. > :39:52.dog meat trade. With the honourable member agree that it would be a

:39:53. > :39:55.missed opportunity did not have a level of introspection on the amount

:39:56. > :40:01.of cruelty and barbarism that exists here in UK with animals, dog

:40:02. > :40:04.baiting, badger baiting, dogfighting or indeed as my honourable friend

:40:05. > :40:13.has recently highlighted, the puppy farm trade between Northern Ireland

:40:14. > :40:18.and his in Scotland. We had a debate on the puppy trade

:40:19. > :40:20.and we certainly do need to get around house in order but equally

:40:21. > :40:25.what we do in this country is appalling but quite frankly if we're

:40:26. > :40:30.comparing it what goes on elsewhere, ours is bad enough but

:40:31. > :40:40.there's takes it to hold deeper depths of despairing discussed. I

:40:41. > :40:48.will. -- despair and discussed. I congratulate my honourable friend.

:40:49. > :40:54.There are abuses that one stop does my honourable friend think that we

:40:55. > :40:58.can do a lot to ensure those countries actually do begin to

:40:59. > :41:03.curtail these factors? I will return to that point as part

:41:04. > :41:09.of my speech. I am conscious only have a few more minutes left. The

:41:10. > :41:17.cruel and inhuman conditions, the way that these dogs are treated,

:41:18. > :41:21.when it takes place the conditions are without exception filthy and the

:41:22. > :41:24.dogs and the poorest of health watching their fellow animals die.

:41:25. > :41:26.Investigations have shown a large number of dogs in these facilities

:41:27. > :41:32.were wearing collars suggesting doxepin stolen not bred for the

:41:33. > :41:35.purpose of meat. It is likely that those animals killed at official

:41:36. > :41:40.slaughterhouses represent just a small percentage of those killed.

:41:41. > :42:01.The vast majority occurs and more and sanitary condition.

:42:02. > :42:06.Families will often slaughter dogs at home and those petrified bridges

:42:07. > :42:12.will be tighter cars and dragged along, barely alive. These dogs are

:42:13. > :42:16.not farmed in any sense that a sane farmer would recognise. You must

:42:17. > :42:23.report suggests that rather than raise dogs for consumption gangs go

:42:24. > :42:33.round stealing valuable family pets. Dogs have been found in vans of a

:42:34. > :42:38.thousand dogs and their only concern pack as many dogs into the trucks as

:42:39. > :42:43.possible. It is hard to describe the horrors that these animals face from

:42:44. > :42:49.overcrowding and lack of food and water and beer Lisa surviving in the

:42:50. > :42:58.roadways. The thieves often poison dogs in to store them and do this in

:42:59. > :43:04.order to steal them and sell them to hotels etc. They have no qualms

:43:05. > :43:11.about turning the poison darts and the animals. In some areas of China

:43:12. > :43:16.up to 70% of the jurors have lost a dog with a majority believing that

:43:17. > :43:23.the dog had been taken by a gang. If the sickening cruelty was not enough

:43:24. > :43:26.then perhaps they are helpless should persuade them. So unregulated

:43:27. > :43:35.as the dog meat industry is that there is a huge rescue to human

:43:36. > :43:39.beings from cholera and rabies. The World Health Organisation has

:43:40. > :43:51.received his concerns about eating dog meat. On about 60% of high risk

:43:52. > :43:56.group said in collated the dog against rabies. Investigations have

:43:57. > :44:00.uncovered a complete lack of pop vaccination brooding wreckers for

:44:01. > :44:03.those dogs that have even the most rudimentary breeding facilities with

:44:04. > :44:06.no quarantine and nothing at all really other than to maximise

:44:07. > :44:13.profit. It is very hard reading but I recommend the report commissioned

:44:14. > :44:18.by Animal Asia which makes clear the truth behind the industry. It shows

:44:19. > :44:20.a number of farms boosting dog meat is far lower than other ties with

:44:21. > :44:26.many dog breeding companies referring to the same few companies

:44:27. > :44:32.so does not really exist in terms of farming. To quote the report, the

:44:33. > :44:37.companies are claimed to brooding razor and dogs are seen as a source

:44:38. > :44:42.of trustworthy dog meat by the public not a single dogs from the