| Previous Section | Index | Home Page |
Mr. Michael Howard (Folkestone and Hythe): I thank the Chancellor for affording me some advance notice of the statement and the large report that he has published today. However, may I also register my protest at the fact that this statement did not appear on the annunciator until seven minutes past 12, giving hon. Members only 23 minutes' notice that the Chancellor intended to make a statement today, whereas this morning's newspapers and news broadcasts were full of speculation that he may well make such a statement. The other statement that is to be made today was announced on the annunciator at 11 o'clock this morning.
There was absolutely no reason why this statement should not have appeared on the annunciator at the same time. It is typical of the contempt that the Chancellor shows for the House every time he comes before it. I hope he will not suggest that there is any question of market sensitivity, because, as I said, the newspapers and news broadcasts this morning were full of speculation that such a statement might be made and, anyway, I would expect the Chancellor to know by now that the markets can do in 23 minutes what they can do in an hour and a half.
Can the Chancellor confirm that the Government received the report of the Competition Commission five months ago? Can he explain to the House the reasons for the delay in publishing it? Was that delay entirely due to the widely reported in-fighting between the Treasury and the Department of Trade and Industry, or were there other factors and, if so, what were they? Would it not have been very much better had the Government published the commission's report when they received it, so that there could have been consultation on its recommendations before the Government made their decision?
On the substance of the statement, of course I entirely agree with the Chancellor that the best protection that can be given to the consumer, including the consumer of banking services, is competition. Is it not the case that since the commission began its inquiry, there has been a welcome and not insignificant enhancement of competition in this sector, with the entry of HBOS, Abbey National and the National Australia group into this sector of the market? Can he clarify whether the recommendations made by the commission, which he has accepted, will apply to all the banks in this sector, including new entrants, or only to the biggest four banks, which, as he said, cover 86 per cent. of the market?
More widely, would not the greatest contribution that the Chancellor could make to enhance competition in the provision of banking services be to work for the relaxation of the provisions of the UCITS directive, which inhibit the development of money market funds in this country, along the lines of the measures that have been so successful in the United States?
I accept, nevertheless, that when competition is not working effectively, it is right that action should be taken to improve it. I, too, would accept most of the recommendations of the Competition Commission. There are some that require further consideration than can be given in half an hour, and we shall give them that consideration. For the most part, however—although not in every respect—it would appear that the Competition Commission has arrived at some sensible proposals, and the Chancellor is right to accept them.
Will the Chancellor tell us a little more about some of the recommendations? For example, he says that he accepts the commission's recommendation that banks be required to investigate
- "the feasibility, costs and benefits of a national scheme for sharing branches"
Does not the Chancellor recognise, as he stands here today posing as the champion of small business, that he and his Government have done enormous damage to the small business sector in this country by the piles of regulation that they have imposed on small business—4,642 last year alone: one for every 25 minutes of every working day in the year? Is that not the main factor that is impairing the ability of small business to prosper? Is not the Chancellor failing completely to take any action to remedy it?
Mr. Brown: If the shadow Chancellor supports us on the competition measures that we are putting forward today, he should have been able to tell us that he supported the switching of accounts, the portable credit histories, the changes in the British banking code and the transitional remedies. He noticeably refused to do so. If he is not prepared to support those measures, he will find himself at odds not only with the small business organisations of this country—including the Federation of Small Businesses—but with the Competition Commission.
It was the Conservative party that said, in 2001:
- "Competitions decisions are best left to independent regulators and the competition authorities."
On the question of the publication of the competition report, it was received in October. We then put it to the Director General of Fair Trading for advice, and also asked Sir Bryan Carsberg to work on it. We have considered all the recommendations in detail. There have never been so many recommendations in one report on banking as there are in this report, and we have considered them all carefully. I think that the House would prefer that we proceeded in that way on this matter.
Equally, as for a statement to the House on this matter, the right hon. and learned Gentleman himself was the Minister responsible for the City and financial services in the 1980s. No monopolies and mergers statement was brought before the House. We are bringing a statement before the House in a way that has never been done before. I also have to tell the shadow Chancellor, who is a barrister, that we have had to satisfy all the legal technicalities involved in the publication of the report, which also goes to the Stock Exchange—[Interruption.]—none of it has appeared in the press—and which also has to go to the banks themselves.
There now follows a period during which the banks will be approached by the Director General of Fair Trading on the basis of the undertakings relating both to the transitional and to the other remedies. He will then report to the Secretary of State for Trade and Industry and to me.
The shadow Chancellor asked about the changes that had taken place, with a number of companies announcing that they wanted to enter the market for small business. That, as he will discover, is dealt with in both the Competition Commission's report and in what we have received from the Director General of Fair Trading. The report says
- "We do not believe that"
- "will have sufficient impact on competition within the next two to three years to ensure that the incidence of excessive prices for banking services . . . of the four largest clearing groups in England and Wales . . . would disappear in a reasonable period of time."
- "lack of competition has permitted and would continue to permit overcharging of SMEs for these services."
I hope that, just as after a time consensus was reached on the independence of the Bank of England and acceptance of its interest rate decisions, consensus can now be reached on the independent competition
authorities. I hope that after some reflection the Conservative party will agree not only that competition is right in general, but that the specific remedies that have been recommended are necessary if we are to do our best by the 3.5 million small businesses in this country.
Mr. John McFall (Dumbarton): The Select Committee on the Treasury will welcome the report. In the next month or so, we shall be inviting the banks to give evidence on what they have done since the Cruickshank report.
Is it not the case, however, that too many small businesses are still being charged as much as 250 to 300 times more than is justifiable? Is it not the case that not enough small-scale risk capital is available, and very little venture capital? Those problems must be tackled if we are to achieve our twin aims of more jobs and more productivity. Does my right hon. Friend agree that the banks will have to go on playing their part and come to terms with their wider role, responsibility and duties to the communities from which they derive their funds?
Mr. Brown: I thank my hon. Friend for his comments, and welcome the work that his Select Committee is doing on banking.
The banks—I pay tribute to them—are working with us on the creation of venture capital funds in the regions and the high-unemployment communities. Britain is now more advanced than other countries in terms of its development of its venture capital industry in the regions, and I hope that the banks will continue to work with us to solve the problem of the venture capital funding gap in some high-unemployment areas.
Let me refer to some of the general measures. As I have said, there are 3.5 million small businesses in the country. It is estimated that they were overcharged by some £725 million in 1998-2000, although that depends on the interest rate that was prevalent at the time. Both the transitional and the long-term remedies take account of the problem. I hope that the banks will work with us to find a solution to what most Members on both sides of the House would agree has been a perennial difficulty for small businesses in all our constituencies, some of which contain 3,000, 4,000 or even 5,000 of them—many very small indeed. We are in a position to make progress, and I hope there will be consensus on the report's findings.
| Next Section
| Index | Home Page |