13/05/2012 Sunday Politics East


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Here in the East: The banks whose deals are costing


businesses thousands in interest. And the coalition relaunches in


Apology for the loss of subtitles for 2004 seconds


Essex, but has the Queen's speech Hello and welcome to Sunday


Politics in the East, I'm Etholle George. Coming up:


The only way was Essex this week. All three party leaders headed for


the county in the wake of last week's local elections and before


the Queens speech, which aims to help business cut red tape.


But first let's meet our guests for this week - George Freeman, the


Conservative MP for Mid Norfolk, and Steve Morphew, the the former


Labour leader of Norwich City Council and current President of


the Norwich Labour Party. Let's begin with a quick word about


the day of action by public sector unions in protest at to changes to


their pensions? D back this action? Yes, I do. I think if they're going


to fight their anything, that is what I would expect them to fight


for. What I was pleased to see is those people who were demonstrating


saying it wasn't public sector pensions that were the problem, it


was private sector. George, I used surprised there has not been more


action? If you look at the rest of Europe there has been many more


protests. I think the reason is the public do understand across the


board that we have inherited a real mess. It is disappointing that


Steve and the Labour Party are backing these strikes. A wave of


strikes and not what this country needs. We are being as fair as we


can about how we pay of these debts. Even the private sector will wonder


what the public sector are complaining about. Many in the


private sector a way below on pension provision and has -- have


pensions nowhere near as generous as the public sector.


In the week the Queen's speech has announced a banking reform bill,


concern is growing among the business community over interest


rate swaps. They are supposed to insulate companies against interest


rate hikes, but they also prevent them from getting loans on the


current lower rates. Some businesses say they are being


crippled by interest payments after being sold a product they say they


didn't need, leaving them hundreds of thousands of pounds worse off.


Our business correspondent Richard Bond reports.


On the face of it everything's fine at Colne Valley Golf Club in Essex.


The greens are lovely and, well, green - and membership is holding


up well. But a dark cloud looms overhead. It's made it very


difficult to relax any time. You're always thinking I must get some


more money to pay the bank. dark cloud hanging over the club is


an interest rate swap. A complicated financial product


intended to provide protection from rising interest rates. But in this


case, the cause of much unhappiness. Five years ago, Jennifer Smith and


her son Tom borrowed more than a million pounds from Barclays


Capital to buy the freehold of the club. But though interest rates


have fallen to close to zero, the Smiths are stuck paying interest at


six per cent. It is costing us a fortune. �4,000 a month. It has not


helped us at all, we are not able to invest in people, in machinery.


It is made it very difficult for us. Barclays said the Smiths had


complained to the Financial Ombudsman, who had found in favour


of Barclays. The bank was satisfied it had provided enough information


to the Smiths so they could make an informed commercial decision. As


many as 2000 small firms are thought to have bought interest


swaps in this region. Had they risen and not fallen, maybe the


issue would not have been in the headlines. But there is a growing


view that these products were Miss salt. James Ducker used to sell


swaps for high street banks. He became so disillusioned he left to


set up a business advising small firms about swaps. He runs it from


his home at Willingham. I do think there was widespread mis-selling


across the country from all the banks to all sectors of businesses.


It was a massive scale. In what way with Amis sold? A essentially it


comes down to a lack of explanation of risk. If they go down, how much


do you pay? And also the breakage cost of leaving these things.


Meetings are been held with MPs to raise the issue. Evidence is also


being gathered from firms who have complained. But Mr shied of coming


for the -- most are shy of coming forward. It's almost as if they are


ashamed of having done something wrong. They don't want to be


connected with it in any way. there are many more cases out


there? We are aware of some are run into hundreds of thousands of


pounds. The banks say swaps can in certain circumstances be good for


their clients. In the case of Colne Valley, Barclays says it is


continuing to work very closely with the Smiths. Many other firms


are locked in talks with their banks to get out of what's turned


out to be a financial nightmare. Well, joining us is Paul Adcock,


who runs Adcock's Electrical, a family store in Watton, in Norfolk,


which has suffered exactly the same difficulties. Mr Adcock, tell us in


general terms about how people like you have been affected? It's really


been extremely difficult. These things were sold on the basis they


would offer us protection. The business, all businesses, would


have invested a lot. In our case, having agreed the loan, our


business manager then approached us and informed us that the bases they


predicted the interest rate would rise, because we had taken the


Sloan, suggested we should consider some sort of interest-rate


protection. That seems to be generally the pattern that is used.


In our case, we won't necessarily that concerned about it at the time.


We are plant for that outgoing amount. With due respect, what is


the difference between your situation and her family was taken


at a fixed rate mortgage, gambling, in effect, that interest rates


would change in a different direction? The difference is the


you know where you off with a mortgage and you have agreed to


have accepted that level of payment. The difference with the project


that we ended up with was it was sold on the basis that it protects


you against rising interest rates. There was very little mention of


what would happen when interest rates went down. Kenya express what


do you think of these products? Probably not on television.


Effectively, we have been sold a timebomb. At the time, it was sold


on the basis that there would be little cost attached and it wasn't


until later that the hidden costs have come to light. George, what do


you think about these? Well, I think this is a real problem. I am


working with a group of people in Parliament who are raising this and


we want the FSA to looking to it. In every case, Miss selling is a


serious accusation. But in general terms? I think the problem is this.


The banks over the last few years have become far too focused on the


billion dollar business, they have neglected and local high-street


businesses. That is a symptom of what is going on. We see it in


local branches closing. If we're going to support local businesses


growing, we need banks where that is their core business. Banks have


got relationship managers who are good people doing their best, but


the culture of banks is becoming too big and remote. Steve, isn't it


up to businesses to be more or where of projects that they are


being sold? Is in not their responsibility? There is certainly


a responsibility but the banks are supposed to be there to grow their


business. And if they are compensating -- concentrating on


making profits of dodgy deals, then they ought to be an investigation.


If businesses cannot rely on bankers, then the trust


relationship, which is essential that any sort of successful


business, just disappears. George, we heard about the banking reform


bills separating the retail arm with the domestic calm in the


Queen's Speech. Will that help? that is important. Investment


Banking, which is the derivative trading and investment products


business, and high-street banking have been emerged -- merged in


these banks. So we want barracks whose heartbeat is back on the High


Street. In America, they have 20,000 banks. We have five or six.


This reform bill begins the process of separating these banks. I been


we may well have to go further. Paul Adcock, what would you like to


see happen now? I want to understand the FAC -- the F as a


really getting their teeth into it. Lots More Business as I felt brave


enough to come forward now that it is in the media. -- many more


businesses. There are a growing number of people like ourselves, so


there is not a voice and in meeting has been organised for affected


people in Oxford next weekend. So the profile has been raised


significantly and the legal backing for the claims has increased as


well. Thank you for joining us. Following last week's devastating


result at the polls, where should the Prime Minister and his Deputy


pitch up to renew their vows, but Essex? Labour's leader also got in


on the act. All this in preparation for the highpoint of the week, the


Queen's speech, when David Cameron said he would keep his focus on the


economy. But has the government really done enough to silence its


critics? Here's Andrew Sinclair. This was the week that the


Government reconfirmed that the economy is still the most important


thing. David Cameron and Nick Clegg chose Britain's last tractor


factory in Basildon to renew their coalition vows. I'm afraid we


cannot let up on the difficult decisions we made to cut public


spending and get our deficit and debt under control. I know it's


hard, I know it's difficult, but when you have a debt problem, the


one thing you mustn't do is keep adding endlessly to that debt.


then, 24 hours later, the pomp of the state opening of parliament -


there are 15 new bills but by common consent the most important


are the ones that reduce the burdens on business: cutting red


tape, less use of employment tribunals and making it easier to


get investment. The most important priority is getting the economy


moving. Dealing with the deficit, creating jobs and creating


prosperity. So helping businesses to hire people, making it easier


for people you to hire people is positive for the economy and good


for people who are unemployed and searching for jobs. On Friday, the


the man who is partly responsible for abolishing red tape was


speaking to business leaders in Norfolk. Just about everyone in the


room complained that bureacracy was holding them back. It doesn't come


out in normal human language, does it? You have to employ people of a


legal nature to actually understand it. It is about finding what you


need to do, which is really quite difficult at times, and then the


amount of forms you need to fill in. There is no panacea by just


scrapping regulation. We don't suddenly see a great growth in the


economy. But the burden of red tape has certainly gone too far, whether


it is on employment or any other aspect of running a business.


notable things in the Queen's speech: the energy bill, which


makes the development of another sizewell more likely. And the


groceries bill will give farmers a better deal when selling to


supermarkets - but many at westminster were left disappointed


by this speech. I would have liked to see more about tackling growth,


helping families and lowering taxation, reducing petrol prices.


The issues in my constituency that people have come to teach -- talk


to me about. Energy bills, water bills, the cost of transport across


the East, and petrol as well. the last two years, the Government


has kept insisting that fixing the economy is its main priority. That


remains the case. Some Tories have said they are still frustrated by


the lack of reform. Some blame the Lib Dems, others the slope


machinery of Westminster. But they hope that the poll ratings will


improve. George, the local election results were pretty disastrous.


That performance in Basildon was a show of unity, but there was no new


substance to it, was there? disagree. I agree the election


results were bad, it was a classic mid-term drubbing from an angry


population. We have heard that phrase time and again, I'm not sure


where it's come from, but it was more than that, more than an mid-


term drubbing. No, I think it was a classic mid-term drubbing, the


electorate saying to the government, don't forget that we are in pain


and we need due to be on our side and wishing to help those of us out


here feeling the pain. I think it is important that Nick Clegg and


David Cameron went back and reminded people that its coalition


was put together to straighten the economy and deal with the debt


crisis we inherited, and to put the economy first. But in your heart of


hearts were you disappointed there was nothing new coming from


Basildon, from that show? No, not from that speech. The Queen's


Speech was the importance speech, and there are some important


measures in there. The titles are clunky and don't really tell the


full story. The banking reform bill is really important, to separate


investment banking from retell. There are some really important


stuff in there and business deregulation is really important.


Steve, we cannot spend what we don't have, can we? We have to get


the deficit down. We do, but we can do that in two ways, either by


turning the heating down and freezing to death, or we can invest


in installation and keep the place warm and he's the temperature down


while we pay for the Investment. What we're doing at the moment is


freezing to death rather than looking at how to make this work


for the future. Let's talk about specifics, these plans to talk --


to cut red tape, they are stuck in the right direction? I haven't


actually had anything of substance yet. I have heard that they will


cut red tape on a number of occasions. What I have heard in do


know about his around employment tribunals, and I think they are


frankly misleading. George, was there enough and the Queen's


Speech? I could not disagree more. We haven't seen the built yet. I


used to go back man ran up a small business. -- I used to run a small


business. What we need is a charter. We know what is happening. In this


Queen's Speech, George, was there enough? There was nothing to


promote growth, was there? there enough - you can never have


enough to promote growth and the Queen's Speech is only a list of


Bills. Business deregulation is really important. If you talk to


businesses, big businesses will tell you they are getting the


message, they know the government is serious on the deficit. You have


seen some big announcements recently about investing in big


projects. So now we must focus on small businesses, particularly


employment legislation. We have to leave it there.


Now, it's time for our weekly Could the election of a new


President in France affect nuclear plans at Sizewell? It's in the


interest to not only power brands but make returns in other countries.


That's a no then. Could the misery of travelling by train in East


Anglia be alleviated by improvements at Ely junction?


Growth is being held back because we don't have the capacity we need.


Well, maybe. Will this weeks' strike action over


public sector workers' pensions be the last?


And why the only way was Essex for not only the coalition, but for Ed


Miliband too, who came to thank Harlow for voting Labour. We are


determined to get the economy moving and to get the government to


stand up for the hard-working people of Harlow.


And as for whether all this rain has helped end the drought, well,


don't get your hopes up. It will take a summer of wet weather, and


preferably in autumn and winter of wet-weather, to get us back to


where we need to be. George, I know you are campaigning on the you


junction. What is the long-term plan? We are taking a big message


to government. If you want to grow the economy, East Anglia can give


the sustainable growth, but we can't run a 21st century economy on


19th century infrastructure. It's in our interests to enable people


living in those areas to live sustainably. Steve, I'm hoping we


can end up on a note of harmony. Would you welcome this Investment?


Absolutely, and even more between Norwich and London. The economic


case is overwhelming. We need to put the investment in. It's no use


just talking about cutting spending. There are some things we do have to


spend on, and that is infrastructure and growth.


That's all for now. You can keep in touch via our website, where you


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