05/11/2015 House of Commons

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

lot of other things the government should look at before it looked at

cutting tax credits, not least the benefits and pensions received by

pensioners and has reminded us that if -- inflation is 0%. Your pension

goes up by 2.5%. That is unsustainable. The government should

be looking at that kind of thing, winter fuel payments are given to

every pensioner. Even millionaire pensioners. Lu despite that the

government has stopped giving child benefit to families, still living

winter fuel payments to the richest pensioners. There are other ways in

which the government could be finding the welfare.

There are other things that should have been cut first but other things

the government has to be looking at that it should be doing to give

people a better and more affordable cost of living. The cost of living

comes about through taxes, the fact that the wrist in this country they

are huge amount of their disposable income on VAT on fuel duty on

alcohol duty. Housing in this country is incredibly expensive

because planning restrictions result and not enough homes being built

which leaves the price is more expensive, so things the government

itself should be doing at the outset to improve the cost of living for

everybody. Your suggestions? The point where you start to lose

your tax credits and still deliver his fiscal objectives. Was it ever

acceptable to have taxpayers and the government topping up people's

income as a principle, with that at ?30 billion per year? At the time I

brought them then, the alternative was to put up child benefit quite

sharply and have a higher minimum wage, quite distinctly higher

minimum wage. That was not politically acceptable.

This could include different arrangements for handling luggage,

beyond that we were working with the Egyptians and the airlines to put in

place long-term sustainable measures to ensure our fights remain safe. We

very much hope it would be possible to declare that it is safe to fly to

the resort and resume normal flight operations in due course. That is

why my right honourable friend the Foreign Secretary announced

yesterday evening that the government was now advising against

all but essential travel by air to or from this particular airport. All

UK operated flights to and from the airport have now been suspended.

We're working with the Egyptians to assess where necessary to improve

the security of the airport. Over 900,000 British nationals visit

Egypt every year and most visits are trouble-free. We are grateful for

the continuing efforts of the Egyptian authorities to work

together with us on these vitally important as. This is a difficult

situation for travellers and their families. I would like to thank the

airlines for their support during this difficult time and to the

holiday-makers for their patients. In parallel specialist teams will be

working intensively with the Egyptian authorities to allow a

normal schedule of operations to recommence. The decision to suspend

flights is very serious indeed and has not been taken lightly but the

safety and security of the travelling public is of course the

government's highest priority. I recognise it as stressful time for

British tourists but we haven't changed the travel threat for the

resort itself. People should keep in touch with their tour operators, we

have consular staff on the ground providing assistance, aviation

security experts on the ground and have arrangements to bring them home

safely in due course. The airlines are working with us to bring their

passengers home, no UK bound aircraft will take off until it is

safe to do so and we don't expect flights to leave today but we do

hope to have flights leaving tomorrow.

I'm grateful to the Secretary of State for his statement. I echo the

condolences he articulated and I know those sentiments will be shared

by the whole house. I would also like to place on record the

opposition's support for the action taken by the government yesterday.

There can be no question in these circumstances that the safety of

British citizens must be the highest priority. I understand that the

Secretary of State is constrained in the information he can provide to

the house today. His colleagues in other departments will update the

house on those matters. Given that the government believes that the

Metro Jet flight may have been deliberately targeted, will he

reassure the house on how he reached the conclusion that there was no

threat in the wider Sharm el Sheikh resort. Will the secretary of state

also update the house on when he expects the security review of Sharm

el Sheikh airport to conclude. Can he give further information on the

possible new long-term measures he referred to in his statement? It is

thought that up to 20,000 British nationals are in Sharm el Sheikh,

does the government have its own estimate? What consular support the

government providing two nationals currently in Egypt and will he make

sure that consular services are made available outside the resort? What

steps is his department is taking to make sure that updates are provided

by tour operators and airlines. Given the cross departmental work

involved, what arrangements will be put in place to provide individuals

with a simple process for seeking official assistance and will he

clarify how members of this house can most effectively raise their

constituents's cases with the government? Can I find the

honourable lady for the general support that has been given by the

opposition. She's absolutely right to say that this is not decision

that is taken lightly and was taken after very careful consideration of

the details of the government that had the received. As far as the

numbers that she asked about, it is estimated 20,000 in the Sharm el

Sheikh area but that is not an accurate figure, some people will

not be there on package holidays and the like. We have got a consulate

team that is being expanded at the airport and available to give the

sort of information that she would like. There are the contact details

of the Foreign Office which are available to all members of

parliament, she asked how we would keep the house updated, I will give

further consideration to that, I hope to see some flights leaving

tomorrow. That will not include people flying out to Sharm el

Sheikh, it will be people being brought back home and the

implications and safety measures that we take is something that we

are in discussion with the airlines at this very moment and those

meetings are ongoing, I will look at ways of keeping her in touch and

other colleagues as well. Having once had to witness my young

son's teddy bear having possibly to be slipped open at airport

security, one understands that levels of security can vary

according to perceived level of threat. Doesn't this terrible

tragedy need to remind us that a common standard level of security

has to apply across all the airports of the world so that whoever you

are, from whichever country travelling to or from, you know what

the standard is, what to expect and to ensure that it is applied. I

completely agree with my right honourable friend, in an ideal world

that would be essential, what I can see is that of course we are

reviewing the security as far as our security inspectors are concerned at

a number of locations and we will continue to do that, as we have done

in the past, that is very much an important part of our job and I also

think it is for those countries to understand that it is in

everybody's interests that we have as much security as is necessary at

all the airport around the world. Can I thank the transport minister

for statement and at the condolences from these benches to his statement

of condolences. There have been conflicting reports of the number of

tourists affected in Sharm el Sheikh and the surrounding area, can the

transport minister confirmed the number of people that he believes

are affected and this is a very concerning time, information will be

the key, with many people getting their information from websites can

we get an assurance of the consular support on the ground that will be

provided with practical support. One final point, many resorts are far

from Sharm el Sheikh and our security measures on bus transfers

being put into place? Yes to most of the questions which the honourable

gentleman good to me. The Foreign Office have deployed people and will

deploy more people today to the airport. Working with the tour

operators as well. I understand what he says about websites giving

information and social media giving information, which can sometimes be

misleading, sometimes the information being put out has not

been correct, so it is important for people to check with their tour

operator, check with the officials that are there from the Foreign

Office and we are working to ensure everybody gets home when they wish

to do so. I welcomed the statement by my right

honourable friend and I don't believe the British government have

any other alternative to take the action that was taken, he knows it

is pointed effect the economy of Egypt, would he agree with me that

these enhanced security measures that will be put in place will serve

to boost confidence amongst tourists, tour operators and

airlines that Sharm el Sheikh is a safe place to go and can I ask if we

are putting in British security advisers to help the Egyptian

authorities, can I make one plea that the air accident investigation

Branch based in my constituency proposed to help the Russians and

the French in their analysis of the wreckage of this aircraft because of

the beings they have had with the 747 at Lockerbie seems to be highly

relevant to this investigation. The Prime Minister and the Foreign

Secretary will be meeting the president of Egypt and these are

issues that they will be discussing during the course of that meeting

today. As far as his comments about the work, I agree with him about the

expertise. There are certain rules as far as international

investigations are concerned as far as aviation and accidents. , I will

certainly offer any help and assistance I could offer. This is an

horrendous situation and I hope we will be kept informed of future

developments, the secretary of state has taken the correct decisions in

these awful circumstances. Can he give us an absolute assurance that

he is receiving full cooperation from all the parties involved and

are there any international lessons to draw from international

arrangements and protect British passengers flying home from

flights? I would say to the honourable lady, I'm grateful for

the support she has shown me. There has been excellent cooperation that

we have received right across the hall of the domestic government as

she would expect, but also the cooperation we are receiving from

the Egyptian government as well, who are dealing with this with the

seriousness that it requires. Can I welcomed the candour and

transparency that the Secretary of State has been able to give in his

statement and the actions taken. As my honourable friend for Aldershot

pointed out, this series implications the Egyptian tourist

industry and some of the Egyptian sensitivity that we have experienced

relates to that significant potential damage to their

interests, but could my right honourable friend impress upon his

Egyptian opposite numbers at the same candour and transparency in

this investigation is the quickest way to restore confidence that

people can travel to Sharm el Sheikh rather than resorting to cover-up. I

agree with my honourable friend, there is no desire on anybody yet in

part to cover up because there are other people, the Irish are involved

in the investigation because that is where the plane was registered. It

has parallels from Tunisia and travel advice was that people should

not travel there. These are hugely popular destinations, a million

British tourists visit Tunisia Sharm el Sheikh. It was a Russian plane

with Russian citizens, he hasn't mentioned what Russia is doing, this

is a big opportunity for Russia and the states and Great Britain to work

together to try to find out what happened and to deal with those

responsible. What the honourable member says is a

good observation. It is the Prime Minister's intention to speak to

Vladimir Putin this afternoon, that call will take place, but he is

right that people who try to do this to aircraft put all governments

under a huge amount of stress and The result remains open, we are

working as quickly as possible to make sure that we can reassure

ourselves about the security at the airport, and one that is done we

will be able to say more. I share the concern of all of the

holiday-makers whose holidays have been ruined by what has happened,

and also share the concerns about the wider implications of this and

other aviation incidents and therefore ask the Secretary of

State, what assessment this government is making of the risks

from and such as this on flights over the UK and those flying over

built-up areas? Of course we keep all threats and any threats that we

hear, we taken very indeed, one of the reasons we have a high levels of

security that we do have at British airports, from experience we have

known that people have tried to smuggle bombs onto planes. Cannot

thank the Secretary of State for taking action to insure the safety

of British nationals and can we agree that we have a standard of

security which we would expect from all international airports across

the world? As far as airports across the whole of the United Kingdom are

concerned, not just the United Kingdom, but there is a number of

countries, all countries, take security is a very high priority,

and I think what we have got to do is, where perhaps we seek it

sometimes failing or not up to the standards we want, point that out

and hope that actions are taken, if actions are not taken, the

government has no alternative but to take action. I echo the words of

condolences to the Russian families affected by this and words of

solidarity for the British passengers currently stranded. The

Financial Times has reported that a UK military team is going to be

deployed there. Is the Secretary of State able to say whether that team

is in place and whether they are checking all UK bound planes and

whether they will be able to stay there as long as is required,

We have deployed people from several different departments, not just

transport and Foreign Office, we are not short of deploying awareness,

the kind of officials and professional advice that we need.

The long-term aim is to re-establish.

Can I commend the government for taking the very difficult decision

that his ensure that no British citizens are placed in danger.

Many people who have their holidays booked in charmer Shaik, fully

intending to travel there once the flights resume, but they do have a

concern, and I wonder if the secretary of state could tell the

house what is the situation going to be with their insurance and travel

insurance, whether recent events will invalidate it or anything like

that. -- Sharm el-Sheikh. People have got to speak with air travel

operators and tour operators, it is quite clear, the advice that we have

set down, we do not believe that any of flights from the United Kingdom

should go to Sharm el-Sheikh. We obviously keep that advice regularly

under review. What support if any is the government offering people in

the United Kingdom who have family and friends and loved ones stuck in

this dreadful crisis? Obviously we are trying to help. There is

helpline is available, and tour operators as well. At first aim and

direction is to help those stuck in Sharm el-Sheikh. Innovations are

open, they are not down. Do not these tragic events underline the

importance of being able to counter terrorism both by sea, in the air,

and on land, and the importance of being able to intercept electronic

indications in order to keep British citizens safe. It is one of

paramount importance to any governments. To be able to get

information. That protects and ensures the safety of British

citizens, and that is something that all members of the government from

the Prime Minister down take very seriously indeed. Quite rightly the

focus is on Sharm el-Sheikh and the airport there but now we know that

it is suspected that Isis is targeting aviation, is there going

to be a review of security at British airports? We are always

reviewing safety at British airports, that is something that

does not stop, anybody who goes to an airport will sometimes complain

about the level of intrusiveness that is there in those airports, but

of course, we keep security under review, as I say, this particular

case is where we were not satisfied about some of the way in which the

security procedures were being carried out. I commend the

government for putting British citizens first in terms of their

safety by stopping flights from Sharm el-Sheikh to and from after

the Russian air incident, can he say little bit more about what advice he

is giving to airports like Gatwick Airport in my constituency and the

airport operators that fly from there such as easyJet, Thompson, and

others, to the region, so they can better help passengers. The two

airlines that my honourable friend has just mentioned, easyJet and

Thompson, were in the Department for Transport talking to us, going

through the arrangements that we need to put into operation. -- put

into operation, they are in contact. They have been extremely helpful and

at this stage I would like to place on record my thanks to the airlines

for how quickly they have responded to the situation we found ourselves

in yesterday. What work will be undertaken by the Secretary of

State's department to make sure that the advice given to UK citizens will

be fact -based, or does he believe that a more precautionary approach

is required in this instance, will the signals shift? I think, what I

would say, we do not give this advice without due cause to do so.

And we will consider all different streams of information that we get.

And feed that into our decision-making process. Of that,

the honourable lady can be certain, these decisions are not taken

lightly, they worry people in the results and worry the families of

people not in results but here. It is right that we take them if we

think it is necessary to do so. May associate myself with the sympathy

expressed by my right honourable friend and also thank him and his

colleagues for the action taken. Earlier he talked about pointing out

cracks in security at airports around the world, which I think is

extremely important, but will he also commit to work with friends and

allies around the world, where we see cracks, proactively to take

action rather than to wait for these tragic incidents to happen before

action is taken? I think what I would say to my honourable friend,

he is absolutely right in the point that he makes, and I have no doubt

as to the importance of these particular countries. I can say to

him that we do do that, we are in constant talks with ambassadors and

the like, and in turn with the government in that particular

country as well. If we have concerns, it is right that we

flagged them up. The action taken today by the Secretary of State

relates only to flights to Sharm el-Sheikh, can the Secretary of

State confirm to the house that other airports in Egypt are meeting

the standards that we would expect of them, perhaps if only to give

reassurance to the hundreds of thousands of tourists that still

wants to go there? The answer to that question is yes, but obviously

we are looking at security at all airports where we have any concerns,

but he is absolutely right. The information and the warning from

yesterday was specific to one airport, and I very much hope that

we can work with the Egyptian government to make sure measures

will give us the confidence about screening and the like are

undertaken and that this will be removed as soon as possible. I'm

very grateful to the secretary of state to immediately come to the

house and explained the case in great detail, the 1 thing we can be

sure of is the British travel industry is second to none in

responding to something like this, we would not be flying to a country

if we were concerned about the security systems there. This must be

a lapse in the security. People should be reassured that we would

not allow aircraft to fly into a country where security was deemed to

be poor. Would the Secretary of State agree? Yes, I would agree with

my honourable friend, and as I said earlier on, in answer to my

honourable friend for Crawley, I would like to thank the way in which

the travel industry and the airline operators have responded in helping

bus work out the solutions that we will be doing over the next few

days, in the interim. But looking for longer-term solutions, so that

this airport can be regarded a game as one that we can remove the travel

advice that we have at the moment. -- can be regarded once again. Mr

Speaker, the secretary of state will be aware that across the UK homes

have been impacted and the offer of help and support from the First

Minister in Scotland and Scottish Parliament today, what measures have

been put in place to liaise with devolved administrations? I hope the

honourable member will accent, for the last 24 hours, we have been

heavily involved in talking to the airlines, and doing what we needed

to do immediately. Also with the fact that the Egyptian president,

actually being in the country at this time. It is about information

getting to evolve and esters. Point of order. Robert Neil. Thank

you Mr speaker, I would like to seek your guidance as to the way in which

members of this house should approach correspondence with the

Director of Public Prosecutions. Earlier today, further

correspondence was released between the right honourable member for West

Bromwich East, of whom I have given notice of my intention to raise the

point of order, and the director and the previous Director of Public

Prosecutions. My concern is this, what guidance can you give to

members of the house seeking to affect the conduct of specific woman

faces by the director or the Crown Prosecution Service, bearing in mind

the director's constitutional independence and the importance of

the Crown Prosecution Service in dealing with the statutory -based

code of conduct for Crown prosecutors. Is it therefore

appropriate to seek to ask the director to have a named senior

prosecutor removed from an investigation, to have them removed

from doing all other child sex abuse cases until an investigation has

taken place, to seek a review of all such work that has happened since

they have been in the Crown Prosecution Service, all on the

basis, I might add, of matters that were not born out by the evidence of

an investigation. Is it appropriate for members to do that in cases

where the complainant in the case, those involved, are not the right

honourable member's constituents? Very well, if it is on this matter,

I shall take the point of order and then respond to the two as a group.

Further to the point of order, because we have a special

responsibility to constituents, as members we have also got a

responsibility to act for everyone in this country, the member for West

Bromwich East was approached by a ledge victims and survivors of

sexual crimes who were unhappy with how their cases had been handled. He

acted to ensure that the proper procedures were followed, it is

right and proper that complains of this kind are dealt with properly by

the criminal justice system -- complaints. Where members of this

house can assist, they should. is first of all, I understand there

are strong feelings on this matter and sometimes feelings that are

contrary to each other and they have been articulated on the floor of the

house this morning. About that I make no complaints whatsoever. In

response to the honourable gentleman who, with his usual courtesy

notified me in advance of his attention to raise the point of

order, what I would say is this, it is not for the chair to seek to

advise members on those with whom they should or should not

communicate, that is a matter on which they can and will make their

own individual judgment. So far as the Director of Public Prosecutions

is concerned, the director will decide what course of action, if

any, to follow in response to representation written or otherwise,

from a member of Parliament. I don't doubt the good intentions of the

honourable gentleman who is a distinguished lawyer and also chair

of an important select committee in this house. I feel that it is is not

for the chair to be drawn into these matters, I hope, upon reflection,

people will feel there is a certain logic to what I'm saying.

Colleagues, make your own judgments about these matters.

As I raised in business questions, the government announced a call for

evidence on its review to the secondary ticket market with a very

tight deadline. I pressed the government on how it is publicising

this call and received a written answer from the Minister for

skills, assuring me that all main stakeholders had been alerted but I

know from conversations I have had with major stakeholders that in all

too many cases I was the one that has brought this to their attention.

Can therefore ask your advice on what steps the member can take to

investigate the substance, dare I say truth of a written answer and

what steps can be done to urge ministers to check the content of

their written answers is all too often, especially recently, it

appears answers are either questionable or far too brief to be

of any practical use to anyone. I thank the honourable lady for that

point of order, it is a well-established principle in this

house. Ministerial answers to questions should be both timely and

substantive in reference to the latter point, colleagues will

appreciate that what I am stressing is that a reply that simply says, I

hope to respond shortly is not regarded by most members as in any

way helpful. To comply with the spirit of the obligation of

ministers to reply to answers and it is important those answers should be

substantive. As the honourable lady will fully appreciate, which has no

responsible to for the content of answers. Every member is responsible

for the veracity of otherwise of what he or she says in this house,

ministers are certain responsible for the content of their answers.

What would be my advice to the honourable lady she is dissatisfied

with the answers because she thinks they are uninformative or incorrect,

my advice would be that based upon the answers that she receives, she

should table further probing and specific questions seeking to track

down the precise particulars that she wants to establish. If that is

unsuccessful, there is always the recourse of oral questions to the

relevant Secretary of State and the opportunity to apply for debates. I

have not noticed over the last ten years the honourable lady displaying

unnoticeable reluctance to explore those avenues.

There was great interest with the urgent question debate around the

subject of human rights in Egypt and we know the Prime Minister is

meeting the president of Egypt today. Would it be a breach of the

rules of this house if perhaps on Monday, or at the earliest

opportunity, the Prime Minister did not come to the house either by way

of an oral statement or a written statement set up precisely the

content of those discussions and specifically in relation to human

rights in Egypt. There will be nothing disorderly if

I understood the terminology and construction of the honourable

gentleman's enquiry. In the Prem and Mr providing such information to the

house, it is a judgment for the Prime Minister whether to make any

such statement and, of course, just as it is for the Prime Minister to

judge whether to make a statement and what form that statement should

take. Knowing the honourable gentleman's experience in the house

and the senior office of a Parliamentary kind that he has

celled, as a former deputy leader, I think he will expect that his words

will at least have been noted. The fee is thus says the fight with the

response he will pursue it with the Prime Minister. -- if he is

dissatisfied with the response. I thank all those who have taken

part in the exchanges thus far to the backbench motion on the

government's stake in the Royal Bank of Scotland and the future of UK

banking, to move the motion, I call the honourable lady.

I beg to move the motion that this house calls on the government to

consider suspending the further sale of its shares in the Royal Bank of

Scotland, whilst it looks at alternative options, believes this

should take place in the context of a wider review and should consider

the case of establishing new models of banking, including regional

banks. I would like to begin by thanking, on behalf of the house,

the backbench business committee for allowing us the opportunity to

debate the issue in the main chamber today. This is my first time leading

a debate and I'm grateful to all of my honourable friend 's from both

sides of the house they have agreed to participate today. I will keep my

speech reasonably short so that as many members as possible future they

will have a chance to speak. The selling of RBS shares as an

important issue that deserves detailed discussion and this is the

first time it has been formally debated since the Chancellor

announced his intention to begin re-privatisation at his 2015 Mansion

house speech. He made this announcement whilst providing no

opportunity for public discussion of the decision. He did not even

present the decision in Parliament the following day but rather, said

the economic Secretary to the Treasury on his behalf. The motion

signed by honourable friends on both sides of the house touches on three

things today. Firstly, for the government to consider suspending

the further sale of its shares in the Royal Bank of Scotland. Whilst

that looks at alternative options. Sufficient evidence has not been

considered to give the government mandate to rush through the of

shares. Secondly, for this to take place in the context of a wider

review of the UK's financial sector. We need to look at the implications

for our economy of the make up of the UK banking sector. It is

unusually large, unusually concentrated and uniquely lacking in

diversity. In comparison with other countries. Thirdly, the reviews

should consider the case for establishing new models of banking,

including regional banks, reforming RBS into a network of local banks

would increase financial stability. Help decentralise the economy, and

maintain local branch lending and help restore faith in the British

banking system. There is also a strong case that it would be

beneficial for the taxpayer and the economy. Certainly enough to justify

examining these options before pressing ahead with a fire sale. In

my opening speech, I want to set out firstly the errors of process behind

the cell and secondly the case to reform it, rather than selling RBS.

I call on the government to halt the sale of RBS shares until a full and

independent review of all options is conducted. As a result of the

emergency bailout package in October 20,008, the British public

effectively acquired 82% of RBS and 43% of Lloyds bank. The total cost

to taxpayers of a stake in RBS has now exceeded ?45.5 billion, the

recent sale of 5% stake in the bank has already resulted in a loss of ?1

billion. Selling the entire government stake at a similar price

would result in losses of ?13 billion or more. Almost a third of

the original bailout. The size of the expected losses and the

impossibility of meeting the Chancellor's previous assurance that

we would get our money back reinforces the case for a broader

review to establish whether this is really the best we can do. Taking

into account all the economic costs and benefits of the different

options available. In 2013 the following objectives

were set out by the Chancellor of the Exchequer, maximise the ability

of banks to support the UK economy, get the best value for money for

taxpayers and return the banks to private ownership as soon as

possible. Privatisation is hereby presented as the answer for the

first two objectives. It is presented as a foregone conclusion

rather than one of a number of options, each of which deserve

consideration. And yet a whole host of experts have suggested that we

can do better with RBS, better for the taxpayer and for the economy.

Then return to a business -- better than return to every crisis stance.

And this is not a fringe view, it has been suggested by the previous

government's own entrepreneur in residence, including others. --

among others. Yes, and, the Archbishop of Canterbury! LAUGHTER

Thank you. To quote Martin Taylor, member of the Bank of England's they

brought policy committee, I would like to have a feeling that the

government recognises there are policy options and is thinking along

those lines, rather than saying, our job is to get the business back into

the private sector. Unfortunately, the rushed nature of the cell, the

lack of evidence to support it, and the lack of discussion around it

suggests the contrary. The government decision to sell off RBS

shares in the summer without any published evidence that it is being

considered and has considered an alternative option raises important

questions about public accountability and process. It

signals a return to business as usual, and an unquestionable faith

that the private sector is the right direction for British banking. The

Chancellor argued it was the right thing to do the taxpayers and for

British businesses. And that the sale would promote financial

stability. Leading to a more competitive banking sector, and

support the interests of the wider economy. To support these claims,

the government has relied upon a 13 page report by the investment bank

Rothschild, and a 2-page letter from the Governor of the Bank of England.

Neither of these present any concrete evidence to support the

Chancellor's assertion. Opposition to the sale has been voiced by the

public, by honourable friends in the house, and independent voices in the

field. Nearly 120,000 people have signed a petition calling for an

independent review of the options for the bank's future before any

shares are sold, a survey commissioned by move your money

shows only 21% of people agree with the current conditions of share

sale. 82% agree that Royal Bank of Scotland should act in the public

interest and 67% agree that we should have a full independent

review. Many alternative options have been put forward for RBS,

breaking it up into a series of challenging banks, turning it into a

state of investment bank. Or, converting it into a network of

local or regional banks. I want to focus on the last of these, which

has been advocated among many others like the new economic foundation,

the Archbishop of Canterbury, and the former Treasury Minister, my

noble friend, the member for Wentworth. It is modelled not on an

untested economic area but on the German model, a network of local

public saving banks owned in the trust for the public benefit.

Accountable to local people, and with a mandate to support the local

economies. They are the powerhouse of small business lending in

Germany, and an important part of the success story for the German

economy. It has been proposed that RBS should be broken into 130 local

German banks, -- local banks. Similar size to what is seen in

Germany. This would be carved out of the high street operation with

investment banking and Private Angling arms being sold. Like in

Germany, they would be able to share risks and resources, to achieve

economies of scale, but crucially, each local bank would be

independent. The government is missing a golden opportunity to fix

the structural problems of UK banking, which were exposed in the

crisis. The UK has the most concentrated... I hope the

honourable lady would accent that the German banking system also had

problems during the financial crisis, it was the very Sparkasse

that help pump up the credit bubble through inappropriate lending. And

helped to cause the Eurozone crisis in its way. Your example given is a

short period of time, over a long period of time, it has been tested

to work. I beg to disagree. Just 3% of our banking system is

locally controlled, and paired to two thirds in Germany. We also

uniquely reliant upon shareholder owned banks, at the expense of other

ownership models. This lack of diversity makes us uniquely

vulnerable to financial crisis, put simply, it makes it more likely that

our banks will suffer the same problems at the same time as they

did in 2008. Breaking up RBS and localising the banking system would

make us more resilient to future shocks. Local banks provide a means

through which to rebalance the economy. The UK has the most

regionally unbalanced economy of any European country. Studies find that

local banks in other countries help prevent capital from being sucked

into big cities. They spread jobs and lending more evenly across the

country. It would also ensure that more people have access to bank

branches, where commercial banks are shut in at an increasingly rapid

rate across the country and across Europe, local banks in Europe have

privatised many good access for their customers. French local

cooperatives, for example, typically locate between 25 and 33% of their

branches in sparsely populated areas. Local banks also lend more to

the real economy, particularly small and medium-sized enterprises. This

would be of great benefit to my constituency of Edmonton and across

the country for those struggling to obtain loans. What makes this

possible is not just the bank's local focus but their ownership

structure and public interest mandate. Across Europe, banks run

for more than profit, which comes to 66% of the balance sheet to the high

street banking, compare to just 37% for commercial banks, who tend to

lend to more profitable activities, such as derivative trading. Local

banks could therefore reduce vulnerability to crisis, help

rebalance the economy and boost the real economy. The analysis suggests

that should have been done in 2008. The UK GDP could have benefited from

an immediate boost of 7.1 billion with an additional 13.5 billion over

three years. Reforming RBS is in the interest of the taxpayer, and the

economy. I want to end with a statement from the Tomlinson report,

which I think highlights the way in which selling off RBS shares

represents a wasted opportunity for significant publicly beneficial

reform in UK banking. Returning RBS and Lloyds bank to fall private

sector ownership in their current form would be a return to the

banking landscape of 2003. Possibly with even less competition. Given

the lack of any real change in the banking sector, there is nothing

that would stop 2018 being the same as 2008, unless radical action is

taken now. Without reform of any banking structures there is a real

risk that we could witness another crash. We must learn from the events

of 2008, by failing to provide evidence, justifying the sale, and

failure to consider alternative options, the government is putting

ideology above what is best for the economy and taxpayer. Lastly, I

asked the government to conduct an independent review into all times of

options, and I urge members of the house from both sides to support the

motion put forward today. The question is as on the order paper.

It is a pleasure to take part in this, we commemorate a most

significant day in the history of Parliament, although at the outset I

have not put my name to this motion, and I may abstain on it, I

understand the perspective through which the motion has been

approached. The financial crisis of 2008 did much to rock public

confidence in the UK financial sector, the collapse of several

household names in banking, it could be argued that the banks to a great

extent brought this fate upon themselves coming years of

overambitious and risky lending practices lead to cakes of bad debt,

piled up around foundations until it all blew up in incredible fashion,

and that, ladies and don't know, is the end of my joke for the afternoon

(!) LAUGHTER Although perhaps we might like to

see replicated the kind of punishment meted out on Guy Fawkes

seen in the punishment of those that led to the banking crisis. -- kegs.

We have a present situation of large state owned holdings in financial

institutions, one of which, the most notable, the World Bank of Scotland,

of which the government has a current share of 73%. INAUDIBLE

The National Audit Office issued a highly critical report in September

about how the government manages its 222 billion assets in RBS and 53

other financial institutions. Would the honourable gentleman not agree

that there should surely be a transparent portfolio approach to

the management of that asset, as recommended by the National Audit

Office, and a fair share of profits arising should be directed to those

in areas most in need, like in Wales. It is not within my remit to

say how that should be done, but if I have made some progress with the

rest of my remarks, the return of RBS to private ownership is an

important first step, but the motion does provide the opportunity to

debate some particulars of the Royal Bank of Scotland's business, and

important aspects of this are lending practices, which were

applied to and after the crash. RBS in particular has been found

wanting. I want to highlight certain negative practices that have been

shown from independent sources to have occurred at RBS which have

affected it small and medium-sized business plans, in particular one

business in my constituency, Hazel Grove, I want a place on record my

concerns in this area and I am keen to hear from my honourable friend

the Minister how these practices are to be investigated and what action

is being taken in order to restore public trust in RBS and the public

-- the banking sector more widely. The government will no doubt be

aware of the report by the businessmen, published in 2013, as

referred to by the honourable lady in her opening speech, he was

involved in the Department for Business, Innovation and Skills, the

lending practices banks were looked at, and their treatment of

businesses in distress, the report looked across several banks in

general, taking a particular in-depth interest at the RBS's

turnaround division, global restructuring group. Tomlinson

received large bodies of evidence from RBS's practices including from

business customers, the report found, " very concerning patterns of

behaviour leading to the destruction of good and viable UK businesses all

for the sake of profit rose quote. I will give way to the honourable

gentleman. -- over the sake of profit". I do agree with that

particular point that has been made, about business practices, but will

he accept that the motion is a reasonable and moderate proposal and

the contention for my honourable friend is that we should really look

at things like the Sparkasse in Germany. Bankers bonuses have been a

significant factor in driving the misbehaviour that led to the

downfall in the financial crash in 2008? Isn't it true that as far as

the German banking system goes, they are geared towards supporting jobs

and the real economy, and it would be far better approach if we did

something similar. -- and it would be a far better approach.

You Of course, bonuses should not be used towards wrongdoing.

" from the motion itself in the context of the UK financial sector.

Experiences of many businesses across the country, those among RBS

customers find themselves in circumstances in which the bank

unnecessarily engineered default to move the business out of local

management and Internet turnaround division in order to generate

revenue for fees and increase margins and devalued assets. Would

you agree with me that it is not the practice restricted to RBS. But also

to Lloyds bank as well. Does he have any observations on that?

I would agree that the practice was not restricted to RBS but in the

context of my own constituent that was with the Bank of Scotland and

I'm sure that her constituent experienced the same things. The

practices of RBS's turnaround of vision, once place in this

division, the businesses were trapped with no ability to move or

the opportunity to trade out of their position, good and honest and

otherwise successful businesses could stand by as they were sunk.

The bank could extract maximum revenue of the business and to such

an extent that it was the key contributing factor in the

business's financial deterioration. I'm struck by the comments made just

a moment ago by the honourable lady regarding Lloyds TSB, does the

member agreed me that week must learn from the bitter experience of

the merging of the Halifax Bank of Scotland with Lloyds at a

significant loss to the taxpayer and it is not enough to four taxpayer's

money down the drain by pouring money down the drain when tax

credits cuts are hitting the tourist people in the country hard. This was

not an open and transparent process, nor was it that a protein portion of

response from the process, businesses were in the dark as to

what was happening until it was far too late, most worryingly the

businesses affected were offered perfectly viable but for the action

of the bank made a contribution to the UK economy, a positive one. If

the businesses consent had more options to moving banking facilities

and there are was more transparency prior to entering the process they

would have been better protected on the banks opportunistic behaviour

which they used to manipulate the businesses financial obligations for

their own game. The oughtn't practices of the restructuring

group, if accurate, were on a generous interpretation, dubious, it

may be fair and true to say that they were unethical and scandalous.

If the findings of the report I have just summarised some shocking or

alarming, they should do, but consider just how much more so

shocking and alarming it would be for the victimised as Mrs and

business owners involved if the honest and hard-working businessmen

and women and their employees who saw their hard work and investment

offence banning years, eroded from under them, for those who lost their

businesses, their jobs and reputations and in some cases their

homes. This was the case for the business in my constituency. It was

owned by a constituent of mine. They were a medium-sized family-owned

construction firm operating out of Bromley, the engaged in mini

commercial construction contracts and with clients including large

retailers, shopping centres, several NHS sites and a host of other local

businesses. They were well recognised and respected name in the

construction industry across greater Manchester. However in 1998, they

fell victim to exactly the kind of practices I have outlined. I will

not give the house the full details of the case particularly as

ministers from the Department of than this are aware of the full

details and I have passed it onto them. It would be a benefit to house

to outline the example, when this company was forcibly moved to the

RBS by the RBS into the global restructuring group after the bank

claimed the business audit a significant debt in excess of

?700,000, my constituents acknowledges that there were some

debts with the business but it was perfectly capable of managing it and

servicing it. However the crux of the case was that although the

business balance sheet at the time showed assets of over ?1 million,

after being run through the process of the restructuring group, RBS

placed a valuation on the business at -1.1 million, a discrepancy of

over ?2 million. The upshot was that it led to the forced liquidation of

the company, costing the jobs of all the employees and forcing the

business owner to sell his own. He said the business was viable and

would still be treading everyone not for the actions of RBS or he had

been given time to switch his bank. I think of a similar situation with

small business person who borrowed a perfectly wonderful relationship

with the bank manager, the bank branch close, the bank manager went

and suddenly the loan was call them quickly, she lost her business on

the high street selling job in's calls and had to go on benefits and

had difficulties paying and the knock-on effect that has had, not

just within the sector but also with them the wider local economy. I

agree wholeheartedly with the lady's remarks and the pattern that

has been repeated across the country in different circumstances but the

same, sorry results. It is not a isolated case, it was widespread

systematic practice, but RBS has failed to resolve the case of my own

constituents and I'm sure the same can be said for many hundreds of

cases across the country. This is just about... This is about more

than numbers on the balance sheet, it is about people's lives. In

addition to raising this issue, I have written to the Minister for

small business about this case and it is obviously a cross department

or tissue covering both the Treasury and the Department for business and

I want to ask the Minister to confirm on the record that she is

aware of my constituents case and cases like it across the country and

if she can give an indication of how many small businesses it is

estimated fell victim to the RBS in a similar way. The Business Minister

has told me that both the Financial Conduct Authority and the Prudential

regulation authority have been established by Parliament with legal

powers to investigate the situation and I'm aware that Apple Mac

accountancy consultancy firms -- I'm aware that multiple accountancy

consultancy firms have been advised. The review is ongoing and I

understand it is not expected to report until the end of the year but

given that it is two years this month since the publication of the

Tomlinson report, compounded by the fact that some of these cases forced

liquidation and destruction of viable businesses are over a decade

old, this is an awfully long time to wait for justice or closure. He

would be disappointed to hear that at a meeting with RBS this morning

and was confirmed the not expecting the report until after the New

Year, so the hope of having something in our Christmas stocking

has been taken away. I am disappointed to hear the content of

that intervention. I want to ask if the government can give any

assurances as to the future timeliness from the SCA. Turning

back to the original Tomlinson report, recommendations call for

more competition to remove incentives to make short-term

decisions purely in favour of bank profit rather than the interests of

longer term customer relationships. I want to ask that when the

government expects the form bonds to the Tomlinson report and I want us

what steps the government is taking to improve the lending practices and

of RBS in light of what has happened and let's not forget the government

still owns over 70% of the bank and I want to give my honourable friend

the Minister the opportunity to give any mission to former owners of now

liquidated businesses, including my constituent, which she feels will be

appropriate as we await the reviews of type parties. The question before

the house this and says the potential sale of future further

shares in RBS and I said at the outset that this is on the orders of

direction. My question is still early to comfortable proceeding when

the long shadow still hangs over RBS's reputation and I call on the

government whilst it still holds a large controlling stake in RBS use

its position of influence to ensure these matters are fully

investigated, to deem what admission of wrongdoing is appropriate and if

necessary to facilitate compensation and the issuing of apologies to

those businesses affected by the scandal. Pending the Minister did in

response I look forward to what the government has to say.

I want to congratulate my colleague for tabling this debate. It is a

very important debate. My take on this role is -- resolution is

simple, what is there not to like? The government suspends the further

sale of shares of the Bank of Scotland and calls for a wider

review of the UK financial sector and the case for establishing new

models of banking, including regional banks. That suggests a

mixed economy in the banking sector which doesn't result in a massive

loss to the taxpayer and some suggest a bigger hit of ?14 billion

to the public purse and that doesn't seem to be an especially political

point, indeed organisations from across the whole political spectrum

have suggested turning RBS into a network of local banks. Regulators

have also suggested turning it into smaller banks. This resolution

appears both sensible and not a politically suspension. In my brief

contribution, I want to talk about alternative ownership models. As far

as I can see and it was pointed out by my colleague from Edmonton, there

is a distinct lack of evidence provided for the government's

assertion that banks would for better when located in the private

sector. I want to point out that other elements exist that other

ownership models, stakeholder banks should have a role to play in fixing

our broken banking system. My biggest departure point is this, as

far as I can see, justifying its policy on RBS, the government got a

letter from the back of it when, all the evidence suggest that commercial

organisations are more efficient, more innovative and more effective

privately owned banking system is privately owned banking system is

best able to allocate capital efficiently and competitively to

grow jobs, investment and income. That is clear and unequivocal, so

let's start with some of the basic questions, where is the evidence for

those assertions? Either the government nor the bank has provided

any and the question the Minister simply pointed by to the

government's letter and that appears to be a pretty lazy feedback. It has

not developed in terms of the talking of the future of a major

national asset, one of the UK's biggest banks with huge occasion for

our economy and our financial system and our own livelihoods. If you are

to listen to the government you would think they were sadly no

alternative to an economy dominated by large privately owned banks,

except perhaps some kind of monolithic government bureaucracy,

either big shareholder or big steak. That is simply an either or choice

but there are a range of other ownership models which work in other

countries from local savings banks and councils to local communities,

like the German model. Mutuals and state investment banks. Actually, as

far as I can see it is the UK which is the odd one out in relying

exclusively on shareholder owned banks. Research from the new

economics foundation found that two thirds of German bank deposits are

with so-called stakeholder banks, in France it is about 50%, and the

Netherlands about 40%. In the case of building societies, they also

suffered problems, we had our own equivalent in this country but they

fared no better than some of the major banks. I would simply suggest

that members opposite read a book called the new few, which was

written by Ferdinand Mount who happen to be Margaret Thatcher's

head of policy who argued for a mixed economy and the question of

mutuals, local regional banks and a wider distribution of banking

products to community such as mine in east London. It is not necessary

left-right debate and I argue this is a live debate on the right which

suggests that neutrality or abstention on this is not

necessarily going with the grain with more innovative thinking across

the right. While a boyfriend is a renowned

economist but would he not agree that even before we get into the

alternative models of banking, you do not have to be an economist to

see that if you bought something with a share price of ?5.02, in the

first case... If you buy something at one price and then sell it off

for next to nothing, the current market rate, ?3.21, it does not make

economic sense, this is from a party which prides itself on so so-called

long-term economics, it is more likely do economics. Having a

collective hit 14 billion on the taxpayer does not seem to be good,

rigorous, empirically grounded economics. I want to go back to the

question of bank deposits, 50% in the Netherlands, 40% in France, in

the UK, it is about 10%, the lowest of any developed economy. Apart from

anything else, this lack of diversity leaves us vulnerable, all

our exile in one basket, literally. -- all our aches are in one basket.

These claims simply do not stack up from the Minister. -- eggs.

Shareholder owned banks, in 2008, shareholder owned banks, commercial

banks, ruled the financial system to its needs, yes they were innovative,

they created some of the most innovative, toxic financial

instruments the world has ever seen, but much of the innovation is what

has been called socially useless, serving no real economic purpose

other than to inflate the profits of the banks who produce them, while

quietly spreading dangerous levels of risk to every corner of our

financial system. Obviously, don't take my word for this, the

Parliamentary commission on banking standards concluded that the

shareholder model itself had a large part to play in the story, in their

words, shareholders have incentives to encourage directors to pursue

higher risk profits in turn for short short-term returns. They were

criticising some four excessive conservativism. In other words, the

only model to which the government is so keen to return RBS is the same

model which help to bring down the banks in the first place. Perhaps

the honourable member can remind us that when the financial crisis took

place, who was the government and what were they doing with the

regulator? It was a Labour government and many of us were

arguing that we should not create this opportunity. You may remember

the debate around the future of the Post Office, many colleagues were

trying to articulate the case for a Postbank which could offer robust

bona fides alternatives. We have a consistent theme. It is not just a

political point scoring exercise. My honourable friend will no doubt

recall that the bank which backs the post office bank is Ulster bank,

owned by, RBS. Exactly right, so let's talk about stakeholder banks,

and look at some of the evidence. I would prefer colleagues to this

document on reforming RBS, and some of their findings, first, let's take

hold of banks likely to be better capitalised before the crisis, they

were less exposed to the activities which caused it. Corporate Id banks

suffered a percent of the total losses Susan Kurt, -- cooperative

banks. -- total losses incurred. HSBC alone was responsible for 10%

of the losses. Second, stakeholder banks were likely to keep lending

after the crisis, German public saving banks, Swiss banks and credit

unions in the US and Canada kept expanding lending to businesses

right through the crisis and resulting recession. Our own

experience with the co-operative bank has not been that happy. I was

talking about across Europe. The co-operative bank here... Never had

to be nationalised. These stakeholder banks kept the real

economy going, while commercial bank lending was crashing. In the UK we

paid the price for having deliberately dismantled these types

of banks. In the 1980s, that was through demutualisation. We left

ourselves with nothing to break the catastrophic fall in lending by the

big banks, since the crisis, we have done nothing to address this fatal

structural fall. Would you agree that government policy has helped

the larger players, in the financial pages we have seen that there is

things the government could have done to help neutrals but they have

continued to play with the big business and help them, what is the

government doing to help the mutual sector? What are they doing in terms

of building a more mixed economy more resilient and not prone to the

catastrophic attacks and the collapse in lending that we saw back

in 2008? Again, I would have thought a more resilient capitalism is

something that we can all agree is a more desirable outcome. Not just in

terms of crisis do we suffer, it is a problem for us in good economic

times as well, referring to research from MEF, twice as much is lent to

real economy as commercial banks, commercial banks invest twice as

much in derivatives. All of this might help explain why

the UK banking system is the least effective in the G-7 at supporting

the real economy, just over 20% of bank lending goes to productive

activity, Northern 60% in Germany. Fiercely, financial crises on the

other side of the same coin, -- are the other side of the same coin. The

speculatively ending will tend to blow bubbles which will inevitably

burst. I could go on and on and list other measures for which stakeholder

banking appears to be better, higher customer satisfaction, higher

deposit rates, lower loan rates, Biggar branch networks, more job

creation, suffice to say, if we want banks that put customers first,

support the economy, manage risk sensibly, we could do worse than

look to neighbours. -- European neighbours. Look at this, have a

discussion about the comparative views, the evidence underlines

public policy. I do agree with him that this is a live issue on the

right and I agree with him that I would like to see a much more

diverse banking sector, but can I bring him back to the point that was

made earlier, isn't it a real problem for him and me, those of us

that want to see a more diverse and corporative and mutual banking

sector, it is a real problem that the entire atmosphere of corporative

banking in the UK has been established by the circumstances of

our own co-operative bank? There seems to be hiding behind one

example when the whole of the evidence suggests something else, it

has indeed got a part to play in terms of creating a more resilient

model. OK, what does that mean for Royal Bank of Scotland, the

government has presented an artificial choice between Disney

says usual with taxpayer ownership and business as usual with private

ownership, this could be deemed to be outdated thinking, we need more

imagination and ambition if we are going to build a better banking

system. We need to nurture new types of bank, the kind they have in

almost every other developed economy, banks rooted in local

communities, accountable to more than quarterly profit figures,

focused on supporting real economic activity, and actually run with an

ethic of public service attached to them. Finally, and why this debate

is so obviously important, economists warned the world over

that the next financial crisis could put the economy in danger and it

could be around the corner, the stakes could not be higher. The

number of compliments paid to the Royal Bank of Scotland in this place

over the last few years has not... INAUDIBLE

I have no doubt that today's debate will be no different, I have huge

sympathy with my honourable friend from Hazel Grove, we all have

constituents with similar issues, I know I have in my constituency and

it is right that these things should be focused on and mistakes must be

learned from, but I try to take up the challenge of the honourable

gentleman from Dagenham in actually presenting an alternative viewpoint,

and addressing the subject of the debate, that I congratulate the

honourable lady from Edmonton for securing. As the register points

out, I have had some familiarity with this sector, it is appropriate

that we acknowledge the huge transformation that has happened

inside RBS over the last few years. With the courage and of my right

honourable friend, the Chancellor, they have taken serious actions,

they have dramatically shrunk their investment banks, which will be

welcomed in many parts of this house. They have sold off overseas

assets, got rid of citizens in the US, and they asked looking out the

mismanagement of the past. As far as I can see, they are investing in IT

systems to finally bring together the amalgamation of all of the banks

that form that business. With capital at 16% in RBS, I very much

hope they are now in the position we want to see them in, where they can

really drive lending into the UK economy and really support SMEs. I

am grateful, and the honourable gentleman is giving way... Setting

out a kind of alternative view that RBS has changed and been reformed.

The Libor exchange-rate ringing scandal, that happened after it was

a publicly owned bank, fundamentally has anything changed? The

risk-taking culture, does that remain? -- exchange-rate rigging

scandal. If I could say that all of the problems were precrisis, that

would be good, but they were not, I fully acknowledge that, there are

clearly issues in Demi in that culture, I sincerely hope RBS have a

grip on the culture now, what they do have a grip on, in a minute, and

I will come back to you, what they certainly have a grip on is their

corporate structure and the way they conduct business. Now far more

focused on the UK, far more focused on corporate lending, the largest

single lender, the largest support of SMEs, the largest provider of

mortgage lending, that is what we all want to see and what we wanted

to see when this mistake was taken. Thank you very much for giving way.

I am hearing you say that RBS has changed its culture, that it has

improved, but this week again, in the Times, there is an article

suggesting that they have been. Find the full suffocations over

mis-selling data that they have been giving out, I wondered to myself,

what has actually change? If they are still misbehaving, telling these

lies, in effect, surely, then, they have not reformed themselves and it

is the same as it ever has been? I have a lot of faith in the

regulatory system that the front bench has put in place over the last

five or six years. What we need to focus upon as a house is ensuring

that we have a system of regulation which will deliver results for

constituents and deliver results for the broader UK economy. I am nervous

that the motion proposed by the honourable lady would actually delay

support going into the economy, I know that it is well-intentioned but

I am concerned about that. I was serving in the Treasury when this

decision was originally taken, this state, and I know that no honourable

gentleman or lady in this place would be under any illusion that

that stake was ever taken in a leisurely manner, with a view of

getting tidy investment, the decision was taken by the party

opposite, with the best of intentions, they took the right

decision, to support the UK economy and the UK banking system at a

critical moment. What we have seen since then, and I will give way to

the honourable gentleman. Given the honourable member's experience at

the time, would he agree with me that nevertheless, there is still an

onus on the Treasury to ensure that the money paid out in acquiring RBS

is paid back in full to the taxpayer? I understand the

attraction, the honourable gentleman is an economist of fine standing,

and the point he makes is of course a simple one, which we would all

like to see the answer yes to, it is not as simple as that, the point

being made by the honourable member opposite. The value of the share is

what people are prepared to pay for it, we know what is the value of RBS

at present. A lot of actions were taken which may have been right for

the UK economy but may not have added to the value of the share

price, we are expecting RBS to act in the interests of the UK but it

may not always be right for the share price. I will give way, let me

make one final point, in rebutting the honourable general man's point.

-- honourable gentleman's point. This Rothschild report is a thorough

report, it sets out why it is that the taxpayer can expect to break

even and make a profit overall on the taxpayer's investment in the

banking system, given that at the time, back in 2009, when the party

opposite was on the Treasury bench, the Treasury was talking about 20 to

?50 billion loss, I think that is a remarkable achievement. Thank you

for letting me back in, I merely asked the question, did he feel,

given his experience, that the goal should be to maximise a return to

the taxpayer given what was there, we accept we may not get it all back

but is the goal to maximise the return to the shareholder, who is

the taxpayer? Some either times and context of the

border picture for the UK. The banking system is incredibly poured

in to our economy and what it can provide to the real economy.

During the course of the debate one of my advisers has detected me and

he said according to the IMF that the taxpayer cost of saving the

banking system was 500 billion,, has he taken into account the IMF's

translations and will we see that ?500 billion back? I'm grateful as

ever to the wisdom and insight flashing in on his machine, he has a

very attentive staff and look forward to going through the

reporting great detail and addressing that point with him. I

have interventions from all sides. It pulls in different directions. We

need an RBS bank that is being productive for the real economy and

this is where I come to the heart of the resolution. The splitting off of

Williams Anglin from RBS, long drawn out has cost billions, taken up the

huge amount of management time, with the best will in the world,

splitting of these organisations takes time and money and I'm really

concerned that it could be an unnecessary distraction to try to

fool in as many as 130. The creation of multiple banks will lead to

multiple the synergies and entities will find it much harder to find

capital markets. It could be a very costly distraction, I'm very nervous

that will not act in the interest of the broader economy. There are

advantages that flow from a very large and very well capitalised and

regulated bank being able to spread its assets across the UK.

While I wish the IPO goes well that it will forward in the New Year, I

feel investors prefer the spread of assets across classes and the whole

of the UK rather than regional entities, you have to remember the

passion in this place regarding the steel industry to recognise how the

major problem can have a ripple effect across banks locally and

cause huge problems to regional economy, my fear is that capital

markets would reflect those risks and the higher cost of capital and

scarce resources, particularly in the very areas of the country where

we all wish to see the maximum amount of lending.

We would be convinced if we knew that the amount of loans going to

small businesses since 2008 has rocketed up but instead we have seen

in very flat because quite rightly there is a sense of internal looking

in which is not to be in courage, but what incentives, what can

government policy do to make them lend to the small businesses which

keep our constituents is going? I thank the honourable lady. On the

negative side, I don't think that tackles my concern expressed that

smaller banks would have a higher cost of capital and scarce resources

making them less able to lend to small businesses, I recognise that

there is a huge crisis in confidence still in the major banks and a lot

of small businesses, the last thing they will do is ask for a loan

before the rug Paul Dunne from them. - the rug is pulled from under them.

I don't think the United States resents a useful analogy for us,

looking at Europe, the banks in Spain, regionally focused and

driven, huge investment in regional projects have been a disaster and

drop the Spanish economy crashing down. I adore which the success of

the banks in Germany. I fear that what happened to them during the

crisis is what could happen elsewhere. The inability to get

local lending projects more than the cost of capital meant the trip on

risky investments inside Europe and helping to preserve with the

Eurozone crisis and the wrong kind of bonds in the wrong kind of

markets which also inflated the credit bubble. I fear I cannot see

alternatives overseas. It is not the reason why we shouldn't do something

ourselves but I worry about this being a distraction at a time when

you want money flowing into the real economy. I would oppose this motion.

Then I congratulate my honourable friend, the member for Edmonton to

secure this debate, I totally agree with her that given the fact that

this is a major public asset with huge significance of the level of

both public and Parliamentary debate has been very limited so far and

this at least will go some way to addressing that. I will not labour

that point but I would just like to start from the perspective, the

taxpayer has a huge interest in this and as I say it, there are two

specific interests but the overlap. The first has been debated so far,

it is reconvened the money that has been invested by the taxpayer in the

bank. The second is to ensure that even if the bank is sold, that it

conducts itself in a way that would support wider community interest and

the overall economy in a way that will boost the economy and boost tax

receipts in future. The sale, as it has been mooted so far, doesn't seem

to do either. I am grateful to the new economics foundation for some of

these figures and very interesting if you look at over the year from

February 2014 to February 20 15th, RBS traded at an average of 340 9p

per share. This is way below the UK financial investments assessment of

480 2p per share needing to recoup the taxpayer's investment. Add to

that uncertainties about the costs of litigation around mis-selling

products under manipulation of the market rate and there is a big?

About what the market is doing. Failure to recoup taxpayer money

might in certain circumstances be justified if the return from the

capital receipts would contribute substantially to public finance and

the government has committed itself to use the money raised from the

sale to pay off public debt, but as things stand at the moment, interest

rates are low on that would be paid off will be modest, it is quite

reasonable for this house to ask for an exercise to be done in

calculating the amount that would be paid off as compared to the amount

that the taxpayer might get from restructuring the bank and investing

in our wider economy and the increased tax receipts that would be

generated. It is not a simple exercise but one, which given the

significance of the sale of this bank, he would reasonably expect the

government to have the forum and to put before the public and before

Parliament before justifying the decision that it makes.

Can I just make a few comments about the financial services industry in

general. Britain is a world leader and I wouldn't wish in any way to

detract from its crucial position in the economy. However, in fulfilment

of its secondary objective of underpinning growth in the rest of

the economy, it has been much less successful and lags behind many

banking services in our key international competitors. UK banks

have increasingly favoured lending to other banks and to real estate

rather than the production sectors of the economy such as construction,

manufacturing, transport, communications and retail. This was

really brought home to me by the recent events, it is ironic that we

have a government that talks about the status of our financial service

industry, Phyllis at philosophically and ideological committed to the

free market capitalist process of wealth creation and yet when we need

major investment in infrastructure and regional development, it has to

cosy up to China, the global Communist country to get that

investment. There is no clear demonstration of the

dysfunctionality of our financial services market. It is ironic that

this government is intent on privatising and that sales of

British assets to foreign governments, nationalisation is OK

as long it is foreign government not the British government. I take his

point, I think the honourable member wishes to interject. I have to say,

is not the case that the Communist China only has these assets insofar

as it has adopted the principles of a market economy of private economy

rights of private property rights and freedom to contract. I broadly

agree with his thesis but he wouldn't agree with mine that if we

had the sort of financial services industry that was focused in the

right direction it would with the matter anyway the progress they were

making. This government is privatising the reinvestment bank

which is a regional investment bank. Instead he is now about to invest ?2

billion in the Chinese lead Asian infrastructure investment bank to

provide local area funding for infrastructure in countries in Asia.

He reinforces the incoherent and inconsistency and irony of the

government's policies towards the financial sector. Should I talk a

few moments about the small, medium sized enterprises. The government

talks about rebalancing the economy, first of all from the

service industry to manufacturing and then from London and the

south-east to other regions. If you look at the economy, if you are

going to do that, it has to be through SME, they constitute 90% of

our businesses, 60% of employment and 50% of output. Of these

manufacturing, whilst it is only 12% of the total GDP, it is hugely

significant and crucial in driving productivity and also in

performance. These are key pillars of driving over economy forward. You

would reasonably look at our financial service sector to see how

it delivers to help. Finance and investment is the fuel for this

engine of growth. The problem is, that fuel is flowing in exactly the

wrong direction. Despite government schemes to boost investment loans to

small businesses, they have declined and the level of lending is highest

in London, where there is the smallest manufacturing sector and

the highest service sector and the lowest in the regions where there is

high manufacturing, if I take my own region, the West Midlands, which is

the highest region in terms of manufacturing output, the West

Midlands received 9% of investment whilst London received 20%. One of

the reasons for this which was articulated by my honourable friend

for Edmonton, it is the decline in branch banking, the overcentralised

system that we have had. The demise of local banking and the growth of

digitalisation has led to a consequential reduction of local

knowledge and insight needed to understand both local community

needs and the needs of local business. I will give way. It is

tragic that Britain yet the manufacturing is about half that of

Germany. They have used their banks properly, we haven't. We now have a

trade deficit that is enormous, submit because we cannot produce

enough for our own purposes. The opposite is true in countries in

Germany where there is a tradition of regional banking and local

engagement and long-term support for small businesses. The government

stated that policy of rebalancing the economy and boosting exports.

You would reasonably expect that they might look at the banking

system as a whole and given their ownership of RBS, to see what it

might do to address the gaps that there are within the market in order

to achieve their policy objective. Even the flagship business bank

seems to be replicating the kind of business support models that have

not worked previously. That market failure has led to, and I may add, a

very welcome growth in community finance companies and the two peer

lending, and they play an absolute vital role in providing sources of

finance is that the major highly concentrated banks in this country

would not address, and you would reasonably expect to look at the

government owning RBS, to look at the potential of RBS, to actually

support them. The alternative government policy seems to correct

market failure through the regional growth Odyssey, and some of these

have been quite successful. However, one of the most successful schemes

has been operated through community development financing is the Jewish

and is through a 60 million ITF growth. -- through the regional

growth policy. That has been a part of nearly all ITF schemes. What is

going to happen to it, there is no commitment to fund it after 2016. --

IGF. We are selling off a bank that the government controls, into the

private sector, which has no record of supporting the very areas of

business that we most need to get our economic growth. I would raise

also the issue around the British business bank commissioning a

rapport, it was meant to be reporting in time for the

comprehensive spending review. There has been a four-month delay, no

report, the sector has no idea when future funding support will be. In

order to deliver and deliver very effectively on the area of

investment for small businesses that the existing banking sector

neglects. I will just quickly summarise, we have a banking sector

brilliant at making money, but failing to use its strength for the

rest of the economy. The sector is over centralised, failing to reflect

the diversity of provision needed to meet the wider demands of the

economy. Government schemes have failed to reach full potential,

because they use the existing banking structures. And where

alternative structures exist, banks do not engage as they should. This

is a major obstacle to deliver on the government policy of export

productivity and regional growth. In this context, the government has a

window of opportunity to change this, and has an enormous investment

in a significant bank that has the potential to drive this change. This

decision as it stands at the moment is based upon political expediency

rather than the needs of the economy or the stated objections of

government policy, indeed, it contradicts government policy. I

support this motion because it is time to think again. Some lessons of

history are so well-established as to be virtual axiomatic, the

government ought not to own banks and private enterprises or not to be

bailed out by the taxpayer, but the government does own banks and they

were bailed out. The taxpayer bailout, the privatisation of profit

combined with socialisation of risk, plus conduct issues, that we know so

well, have done a great deal to undermine faith in the economy which

we know is the only way to sustain billions of people on the face of

the earth. Some of the issues which have come up today go to the heart

of how we should structure market economy. In a market economy, we

should be looking at a plurality of ownership of banks. As a teenager I

knew instinctively that the mutual model aligned interests in no way

that the shareholder model did not, and I was opposed to the

demutualisation, that carpetbagging, which went on, as it was called,

then. I may have a more theoretical grounding but we should have a more

diverse banking sector, we should have more mutuals, we should have

more co-operatives. But I also think, I should say briefly, the

systematic problems which affected the entire banking system, right

around the globe, irrespective of ownership models, is symptomatic of

far deeper problems in the in situ should. INAUDIBLE

The honourable gentleman knows that I often agree with him but not on

this point. I am an old English free trader. I have put these issues on

the record since my maiden speech. I have two long-standing misgivings

which come to a head in RBS, one is about IFR S and the effect on the

ability to see the true position, the true and fair position of banks,

and the other is about the stress test, I should say that I'm grateful

to the members of Cobden partners, I have no financial interest in

Compton partners, but it was a spin out of a centre which I co-founded

in order to try to advance the ideas which they are now working upon. --

Cogden. I have said many times that I think IFR S will enable and

encourage banks to overstate their asset values and therefore their

profits, and to understate losses -- IFRS. We compare the account of RBS

with those in the asset protection scheme, we found that we believe

that their assets were overstated, their capital was overstated by 20

billion. We had a meeting, at which that was admitted. If this is the

case, that IFRS will encourage banks to overstate capital positions to

such an extreme degree, when it comes to selling RBS, I'm not the

least convinced, that we are selling something that we truly understand

and indeed in the course of the debate, as the honourable lady was

opening the debate, and I congratulate her on it, Golden Tate

Sydney to say, if we broke up the bank into 130 pieces, it would

reveal its insolvency. I'm not asserting the insolvency of RBS but

with IRF -- with IFRS the way it is, we simply cannot know whether it is

in the position it appears to be. In such circumstances, the paying

dividends that have been proposed would be extreme unwise. Can I make

this it has been argued that we could

have strong reservations about the integrity of the numbers. I am

grateful for the honourable gentleman giving way, if his picture

is to be believed, given that we own over 70%, is it not beholden on the

government to do a proper analysis on the true value of the Bank of

Scotland. I'm grateful to the honourable gentleman, I banged on in

the last Parliament about the shortcomings of IFRS, I introduced a

bill to introduce parallel account, precisely because it is a serious

problem, I refer the house to the law of opposites, by Gordon Kerr,

published by the Adam Smith Institute, not only covering this in

some detail but also with waning how it feeds into the problem of using

derivatives, specifically, to manufacture capital out of thin air,

in order to circumvent regulatory capital rules. It is an extremely

serious problem and it may mean that the entire banking system is

positioned in a far worse place than we might otherwise have been. During

the asset protection scheme there was a lot of work done into the

balance sheets of RBS. We compare the asset protection scheme 's

accounts with those of RBS and found a 20 billion difference in capital.

When I write to you with the other details, I'll introduce you to the

who did the work, I will be glad to sit down with you and my advisers

and see what you think, I recognise and respect the vast experience you

have. I am only a humble engineer who sat in banks asking how the

system worked and found, often, they could not tell me (!) LAUGHTER

The point is this, these concerns are not ones which I make up for

myself, I have in my hand a letter from the local authority pension

fund which explains in considerable detail to the commission at the

European Union what is wrong with IFRS, and in some detail, and I

would be happy to share that with members interested. The bottom line,

I am extremely uncomfortable with the idea that we understand the true

and fair position of RBS or any other bank because of the position

of the accounting standards and in relation to RBS, that has meaningful

consequences when it comes to thinking about selling the shares

and it also has consequences we should consider when any

consideration is given to paying out dividends. The second point I wanted

to return to, Professor Kevin down's extended criticism of the

stress test, he has made the point to me, under the 2014 stress test,

RBS had a post management action ratio of capital to risk weighted

assets of 5.2%, that was sufficiently poor that the bank was

required to take further action on its capital position, and of course

now it would like to hand out dividends, it seems to me, and to

him, makes no sense. The 5.2% ratio compares to the 4.5% hurdle that the

bank used, less than 7% imposed on banks last year and much less than

the 8.5 to 11% minimum that will be imposed when bile free is fully

implement it in 2019, -- Basel three. It is because of the capital

buffer. This is rather bizarre, I think, because it appears that the

RBS did not meet the bank's own minimum requirements in the stress

tests, but it gets worse, because market events do not follow normal

distribution, there are severe problems with the risk weighted

assets measure, possibly even rendering it useless. The only

measure that makes sense is the leveraged ratio, that is the ratio

of capital to total assets. With none of this stuff about risk

weightings. Under Basel last year, the absolute minimum average ratio

was 3%, and the bank expected UK banks to meet that minimum but the

3% minimum was low, some suggest a minimum of 15% would be necessary,

survey even double that the bigger banks, these would be radical

departures. What did RBS achieve under stress tests? 2.3%. Both in

terms of IFRS, and in terms of the stress tests, I am very grateful to

the work of Cobden partners, for putting in front of us some of these

problems, I think that they are potentially extremely severe and I

would encourage the government to look again in some detail, great

detail, and would invite them to meet my colleagues, and look at what

has happened with accounting and what it means to see the true