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“to help the most vulnerable members of society.”
That is, in a sense, why I rise to speak.
It is clear that some of the issues that I wish to raise are Department of Trade and Industry issues, but I notice that no DTI day has been allocated in the Queen’s Speech debate. I hope, however, that the Chancellor has much influence on that and other parts of the Government, and that he will have even more in the very near future.
Regardless of what is said in the course of all the yah-boo politics, and in all the factional bids for this power or that power or for spending on this or on that, people I talk to in the part of the country that I come from and elsewhere recognise that we have had a stable and growing economy over the past decade, whereas there have been some heavy storms in other parts of the world, and there has been a difficult period for the European Union when the euro did not take off as it should have and we did not get the growth that we expected. The Chancellor has seen all of that through, as well as problems that arose in other economies, and our economy has continued to grow.
The economy in my constituency is such that people are not rushing abroad. INEOS, the largest privately owned company in the UK, has bought the olefins and derivatives business of BP and it has now committed itself to spending £60 million on what is probably the world’s largest biofuels plant, in Grangemouth. That will be a flagship venture for many others in low-carbon technologies.
Stewart Hosie: The hon. Gentleman mentions the investment in that bioplant, which is to be greatly welcomed, but obviously there were specific skills and technology in the plant in that area which it was possible to bid for, so the circumstances are slightly different from those in most parts of Scotland. Notwithstanding what he said at the beginning of his speech, does he agree that over the past 10 years the growth rate in the UK has been about 2.9 per cent., while growth in Scotland has been only about 2 per cent.? He cannot be proud of a 30 per cent. gap in growth between Scotland and the UK over the entire watch of this Government.
Michael Connarty: I have to disagree with my hon. Friend—I shall call him my hon. Friend because I know that his motives in this regard are good—because he is not correct. He must admit that Scotland is a much more attractive part of the United Kingdom to live in than most others. Although the south-east has a growing economy, there is congestion and young people working in professions such as teaching and social services and in the more minor professions, which do not pay the large wages that the City pays, cannot afford to buy a house. In Scotland, however, we have got the balance right and growth has been steady. There are people in my constituency who are in work, education or higher education and were not when the Conservatives were in power. That slow, steady growth has meant that we have not had the boom and bust in the housing market that England experienced. We should be proud of what has been achieved. I know that my hon. Friend thinks that independence for Scotland would mean a new start and that things would be completely different, but, as an economist, I disagree. The parameters of this growth are based on a United Kingdom economy, not on a small economy and country of 5 million people, most of whose large companies are located elsewhere.
What could threaten our economic stability is the confusion generated by the Conservatives. They are sending out various messages—cuts of £20 million, £30 million, or £50 million; no cuts; get out of the European Union; stay in the European Union—that could create instability. Let them adopt a grown-up approach and take the issues on board. Let us have a serious debate, unlike what we heard earlier in response to the Chancellor’s speech; that way, we might make some progress. People can see, however, that the economy is on a stable trajectory, and that it is not threatened by the confusion that marks the Conservative party’s policy.
I always remember an admonition that is credited to a much higher moral source than me. The Bible says, “If you do this to these the littlest of my children, you do this unto me.” I do not think that “littlest” means just children. People often say that that passage is about kids, but it is about those who are devoid of power, wealth or income. Correspondence that I have received shows that the Department for Work and Pensions is not willing to prevent housing departments from seizing people’s benefits to pay for housing arrears, thereby causing the downward spiral into poverty that occurs when people lose their jobs and cannot keep up their payments. Indeed, in some cases people cannot even make the relevant claim. We need to intervene and to do something about the problem. The blind, for example, cannot claim the higher rate
mobility allowance. A personal assistant of mine who suffered from retinitis pigmentosa went blind. That he could be denied higher rate mobility allowance, which would have enabled him to get around, is a joke. We are not taking this issue sufficiently seriously.
It is a question of redistribution, and in that regard I want to raise a number of issues: the national minimum wage and tips, the working time directive, the temporary workers directive, and the treatment of UK pensioners living overseas. If I have time, I shall also discuss Farepak. As Members know, I tabled a ten-minute Bill on the national minimum wage. All those whom I spoke to said that they did not know that when we add a service charge in a restaurant when paying by credit card or cheque, it does not go to the person who served us. By law, it belongs to the proprietor. The reality is that regulation 31(1)(e) of the National Minimum Wage Regulations 1999, which were passed by this Labour Government, says that any money paid through the payroll—be it a gratuity, a service charge or a cover charge—counts toward the minimum wage. I have asked the Prime Minister about this issue and spoken to the DTI and the Low Pay Commission, but they will not amend the regulation.
What really offends me is that the Inland Revenue has yet again sent out form E24 (2006)—in fact, it was incorrectly sent out as form E24 (2005)—which effectively tells employers to put such tips through the payroll, so that they can be charged to the minimum wage. It also says that if a tronc—in other words, a kitty—is paid through the payroll, that counts toward the minimum wage too. I have been to restaurants in Glasgow and in London with very expensive charges. Their menus state that there is a voluntary 12.5 per cent. charge, which goes to the workers. When I quietly asked those workers about that, they said, “Yes, it does—and it is part of, not on top of, our minimum wage.” I want this Labour Government to do something for labour—for the least well paid in this economy, who are living on the minimum wage and who often work very long hours. Their proprietors are paying their wages with their tips. It is up to this Government to show that they are a Labour Government and that they do care for “the littlest” in our society. They must change regulation 31(1)(e) and close that loophole.
Once again, we have failed to get an agreement on the working time directive at European level. The UK was told by other countries that we have to name the day when 48 hours means 48 hours. The Minister with responsibility for such issues tried to do a deal on 60 or 65 hours. It is time that our Government accepted that we are the black sheep of the family in Europe on this issue; it is we who are holding back agreement on the working time directive. It is time that they gave a date—
Mr. Charles Walker (Broxbourne) (Con): Is it really the role of the Government to tell people how long they may work?
Michael Connarty:
It is the role of the Government to protect people from exploitation and to look after their health. Such a provision works in the rest of Europe. Many Opposition Members have intervened today to tell us about what is working well in other parts of Europe. In my view, a 48-hour week is a very long week, and a 65-hour week is not acceptable. Because we did not name the day when we will implement the
48-hour regulation, we could not get agreement on the Jaeger ruling. People who have stood down from their duties but who are on call have to be paid; however, 23 of the 25 EU countries are breaking that rule because we could not reach agreement on the Jaeger ruling. We could not do so because we would not accept a date for the introduction of the 48-hour regulation.
The temporary workers directive protects people who work for agencies. Currently, British workers are being laid off and taken back on as agency workers, with no right to holidays, sickness pay or a pension, or they are being replaced by agency workers from the eight countries who joined the EU during the last round of enlargement. An agency worker is not an employee: they are not employed by the agency or by the company in question. Sixteen EU countries already have a rule that recognises that those who are “employed” by an agency are indeed that agency’s employee, and they get proper sickness benefit, holiday pay and pension. It is us, along with three other EU countries, who are holding back implementation of this directive. I do not have to tell the Minister—he used to work for the TUC—about the Warwick agreement. We—this Labour party and Government—said that we would speedily implement that agreement, but it has been held up for four years.
I was distressed to read in “Success at Work: Protecting Vulnerable Workers, Supporting Good Employers”—it is the Government’s own document—that the Government believe that the labour market’s current needs are being met, and that there is no need for further legislation in this area. How does that fit in with the Warwick agreement, which said that we would help to implement the temporary workers directive? As Chairman of the European Scrutiny Committee, I know that we are one of the four countries in the EU preventing implementation of that directive. It is time that we did something about this issue.
I turn to the treatment of UK pensioners overseas. There are 970,000 ex-pat pensioners, 520,000 of whom had their pensions frozen at the level that applied when they left the UK, or when they received their pension, if they were of pensionable age. The other 450,000 had fully contributed, fully paid-up, index-linked pensions. The situation that I am describing arises only in certain countries: Australia, Canada, Malaysia, New Zealand, South Africa, Zimbabwe and most other Commonwealth countries. People who have moved to the USA, Israel, the Philippines—people often go to such places because they are regarded as tax havens— Austria, Barbados, Belgium, Bermuda, Cyprus, the Czech Republic, Turkey and what was Yugoslavia get their uprating. However, those who have moved to the Commonwealth countries that I named do not. That is intolerable.
The complaint is that we cannot afford to pay that uprating—that it would cost £400 million per annum. According to analysis by the British Australian Pensioner Association, conducted through the Government Actuary, in 2005-06 the national insurance fund had received overpayments in excess of £4.34 billion. According to the forecast, in 2020 the surplus will be £60.64 billion.
Helen Goodman (Bishop Auckland) (Lab): Does my hon. Friend agree that when people live abroad they are no longer a burden on our health service, as they use the health and other services of other countries? That is a further saving for British public expenditure.
Michael Connarty: That is a very perceptive intervention. In a tit-for-tat response, Australia has now withdrawn its support. I have a constituent in the odd position of having lived here for some time and earned some pension, but who lived for 20 years in Australia and earned some pension there. He comes back to this country and finds that he will not receive his Australian pension because we started a tit-for-tat war with Commonwealth countries by denying pensioners the inflation uprating. If we have any morality or Labour principles, we should look after the people who paid into the national insurance system over a long lifetime of work in this country.
I have done a lot of work on the Farepak scandal and I have been advised by a senior banker from the City. I have looked at the accounts of European Home Retail and many questions arise. I note that a senior Treasury Minister has said that he does not understand why people use savings clubs like Farepak. He would not say that if he had grown up in the urban community in which I did, which had something called a menoge—a corruption of the phrase “ménage à vingt”—which was an arrangement between 20 people. My grandmother ran them. Poor people would put their money in trust to one person, and every 20 weeks they got a chance to spend it. That is how I got my school uniforms when I was younger. Those people did not trust banks and they did not feel that they would be able to go the month without spending the money on food for the family, but they had to have some form of saving for Christmas or other occasions—like the Farepak victims. People were used to trusting arrangements to which they paid their money without receiving interest. The menoges were collective, supportive clubs, and the savings clubs grew out of them.
Pete Wishart (Perth and North Perthshire) (SNP): Does the hon. Gentleman agree that the Government must show the same level of generosity and big-heartedness that many individuals and communities and some financial institutions have shown in donating to the emergency relief fund by match-funding it when it closes this week?
Michael Connarty: I totally disagree. The money lost is not the responsibility of the Government. There are some questions about the Government’s responsibility for allowing the company to continue to trade when it was clearly not even able to maintain its membership of the association that would have guaranteed people’s money. The horse bolted down the road while the Financial Services Authority’s stableman was asleep at the door. The FSA is great at introducing regulations after a crisis has occurred.
The scandal would not have happened if the Conservative Government had not abolished section 332 of the Companies Act 1948, which would have prevented the company from being able to trade— [Interruption.] Hon. Members can look it up. If that provision had not been removed, the company would not have been able to trade.
Rather than appointing Brian Pomeroy, the chair of the financial inclusion task force, to consider why people use such savings clubs, we should appoint Suzy Hall, who is recognised as the spokesperson and
organiser of the Unfairpak.co.uk campaign. She spoke at a meeting in Falkirk on Sunday, organised by the council, which I attended.
The most pressing issue is helping the Farepak victims. The suggestion by Findel plc, which bought out Farepak and Kleeneze, is that all the top 350 companies in Britain should give £50,000, which would put £17.5 million into the fund. Opposition Members who have some influence should talk to some of their friends in the City about that.
Every assistance should also be given to the inquiry by the Department of Trade and Industry. We should also have an urgent inquiry by the Treasury Committee into EHR, Farepak and Kleeneze and their banking arrangements. That inquiry should subpoena and question on camera Hugh McMillan, the head of credit risk at HBOS, Alistair Webster, the main executive, Eddie Morrison, who is responsible for relationship banking, and Peter Cummings, to whom they all report. They should be asked what happened to the money that Farepak savers put in. I put that question to Mr. O’Riordan from the bank when I met him. I asked whether that money went through EHR to keep Kleeneze running so that it could be sold off as a going concern and the money returned to HBOS. Those people must answer those questions before a Select Committee.
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I showed some latitude to the hon. Gentleman because, although the terms of the amendment are quite wide, they were being stretched a long way to include the latter part of his remarks. I say that for the benefit of the House as a whole. Hon. Members must have regard not to the Queen’s Speech as a whole, but to the amendment on the Order Paper.
6.15 pm
Michael Gove (Surrey Heath) (Con): I congratulate the hon. Member for Linlithgow and East Falkirk (Michael Connarty) on the thoughtful way in which he tackled the issue of poverty. I appreciate the way in which his personal and constituency experiences informed his comments.
With your permission, Mr. Deputy Speaker, I wish to address my remarks to an issue that the Chancellor of the Exchequer has called the central challenge for Government and his Department—the funding and financing of terrorist activity. I took the liberty earlier of checking with the Clerk to the Table Office to ensure that my comments on this subject would fall within the precincts of the amendment, and I was assured that I was at liberty to discuss some specific questions. The Chancellor also stressed in his own remarks the importance of dealing with terrorist funding and financing as part of the Treasury’s basket of responsibilities.
On 10 October, the Chancellor said that it was
“upon meeting and overcoming the challenge of global terrorism that all else we value depends”.
In his speech on that date he outlined the Treasury’s role as the lead Department for our security. He specifically mentioned that the Treasury would have
two responsibilities—interdicting terrorist financing and tackling the forces that encourage the separatism, extremism and isolation on which terrorism thrives.
In his speech, the Chancellor congratulated himself on
“the most comprehensive and expeditious asset freeze the Treasury has ever undertaken”.
But what exactly has the Treasury been able to seize from those suspected of involvement in terrorist activity? The true figure, as revealed following patient detective work by my hon. Friend the Member for Sevenoaks (Mr. Fallon), amounts to only £476,000 since 2002. That figure compares with some $200 million frozen by the American authorities. The Treasury’s effort is tiny by comparison. Its dragnet has caught minnows, not sharks. It has also had significant holes in it. As my hon. Friend the Member for Chipping Barnet (Mrs. Villiers) pointed out, Abu Hamza—now, happily, convicted of terrorist offences—whose assets were supposed to have been frozen, was able to transfer ownership of his home to his son, allowing his family to play the property market. How could Abu Hamza do that? It was because of a loophole that the Government had failed to address. The initial order, introduced in 2001, froze only funds, not assets. No change was made in that order until last month, just as the news of Abu Hamza’s situation was breaking in the newspapers. The loophole existed for four years and allowed someone convicted of terrorist offences to play the property market with public money.
Another area of profound concern was reported in The Sunday Telegraph yesterday. The European Union has stepped in to prevent the details of bank transfers being released to the US authorities when they fear that those transfers may materially affect terrorist activity. The European Union has ruled that privacy must come before security, but it will allow those same bank transfers to be scrutinised for taxation purposes. The Chancellor, in his speech on 10 October, stressed that he and Hank Paulson, the US Treasury Secretary, would take proactive steps to ensure that no regulation came between us and our security. Why are those EU regulations still in place, despite the Chancellor’s brave words? In those three specific areas, the Treasury has not dealt effectively with terrorist financing, despite the Chancellor’s putting the subject at the centre of his pattern of activities for the year.
In his speech, the Chancellor raised other real concerns about the way in which terrorism thrives as a result of the activity of extremist organisations. In a speech to the Foreign Policy Centre earlier this year, the Prime Minister pointed out that the threat that we face is not just physical but ideological. That ideological threat is rooted in the particular twisting of Islam known as Islamism, which has been propagated by organisations such as the Muslim Brotherhood. That organisation has a UK branch known as the Muslim Association of Britain, and it is the UK branch of the organisation known in the Palestinian territories as Hamas. However, there has been no effective scrutiny by the Government or the Treasury of the Muslim Association of Britain’s activities or funding.
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