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Let us hope that the legislation will make it clear that the Government will not become the lender of last resort without the condition that the board of management are dismissed. We shall focus on that issue when we consider the legislation. Again, however, important wider issues are not being discussed, such as the need to ensure that banks adhere to fair and responsible lending practices; the implementation of the recommendations of the Cruickshank report; and a more detailed look at the tripartite relationship between the Financial Services Authority, the Bank of England and the Treasury. The FSA needs real teeth; the Northern Rock affair has undermined its authority.
The risk of moral hazard, which was raised by the Bank of England, must be addressed, and the Treasury and the Chancellor must show decisiveness. Will the Chancellor admit that his hesitation in announcing deposit insurance for savers added to the numbers we saw queuing to withdraw their funds from Northern Rock? The Chancellors actions on that issue do not inspire confidence. Much of the action in the aftermath of those events has been unsatisfactory, not least todays refusal by the Prime Minister and the Chancellor to be open about the value of loans that are being offered to Northern Rock, or the question of whether any interest will be written off. There is a huge question of whether that constitutes state aid. I welcome the Chancellors announcement that he will bring forward clearer proposals, but given that public money is involved, it is in the public interest for information to be made available.
On the pensions Bill, we are concerned that the consensus is in danger of falling apart. The Liberal Democrats proposed the idea of personal accounts several years ago, and we want them to be a success, but that means addressing crucial issues, which means requiring the Government to change their position. We do not want to give up on the idea that consensus is possible, but the Government must accept that that requires give as well as take. At the moment, the consensus is undermined by the Governments failure to address the backdrop to the pensions proposals.
Turner made it clear in his report that his proposals had to be adopted as a package, not cherry-picked. However, as the right hon. Member for Birkenhead (Mr. Field) said in the aftermath of the Turner report, the Governments proposals appear designed to get them through the next seven days, rather than the next seven decades.
The Secretary of State for Work and Pensions (Mr. Peter Hain): The hon. Lady said that there should be give and take, and referred to Lord Turner. He supports the Bill in its entirety, as do the entire pensions industry, the CBI and many others. I am grateful for her colleagues contribution to the issue, but what does she mean by give and take?
I am pleased that the right hon. Gentleman has intervened. We have concerns about three areas, in which we feel that some of the points highlighted by Turner have not been comprehensively adopted. First, Turner made some clear remarks on
means-testing. We are concerned that the continuation of means-testing will undermine confidence in personal accounts.
People will be right to question the point of investing savings in a personal account when all that will achieve is simply lifting them just over the threshold that will entitle them to, for example, other means-tested benefits. They will ask, Are we saving for ourselves, or to save money for the Government? By 2050, 45 per cent. of pensioners will still be dependent on means-testing. That is a crucial weakness, which my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) will pursue when dealing with the measure.
The second point ties into a wider issue about ensuring that people can access high quality, generic financial advice. It will not be worth some peoples while to invest in a personal account because they have significant personal debts. It would not be financially rational for them to invest in the long-term when they have significant debts that are at a higher rate of interest. They need to be able to access advice, and we are worried that the proposals that we have seen so far do not include a package to deal with that.
We are also worried about the delay in the restoration of the link with earnings, which will result in continuing means-testing and undermining the incentive to save. The Conservative response to all that is inadequate to say the least. It is all very well saying that people can get their money back if it is not worth their while to contribute. However, who will make that judgment? Would not those people prefer to have the money when they earned it rather than having to wait until they retire for a rebate? It seems as though the point is being missed. I hope that there will be constructive dialogue on tackling some of those issues.
Rob Marris: The hon. Lady began her speech by talking about other parties stealing her ideas and then went on to say that wider issues require consideration and that we need to examine this, that and the other in more detail. She is scattering ideas, not policies. Policies need to be juxtaposed and have some consistency. They also need credibility. She reminds me of the famous sketch with Eric Morecambe and André PrevinIll play the notes but not necessarily in the right order. Her vision seems to extend only as far as seeing the pianonot even to playing a single policy note.
Julia Goldsworthy: Our pensions policy is a classic example of vision: a citizens pension and restoring the link with earnings as soon as possible rather than delaying it for a long time into the future. The policy will ensure that people in Britain have real certainty about their future.
It concerns me that the Prime Minister was up to more of his usual tricks in the Queens Speech. What is often paraded as simplification hits peoples pockets. Subjects that we will consider in this Sessions finance Billa cut in the basic rate, funded by abolition of the starting rate; changes to capital allowances for small businesses dressed up as simplificationappeared in the last Budget. However, they are incomplete. We have seen only part of the proposals, with a promise of more later. Capital gains tax simplification happens to raise significant amounts of money.
The Chancellor said that one of the points that the Conservatives had missed in their remarks on the Queens Speech was the environment and green taxation. He then proceeded not to mention it again for the rest of his speech. It is interesting to note that some work is being done on the proposals in the pre-Budget report. I understand that they are set to raise £500 million. However, the Treasury gave no indication of the exact mechanisms that will be put in place to achieve that. Again, it all seems very short-term.
Julia Goldsworthy: We have a series of proposals that are readily accessible on the partys website. However, we are currently dealing with the legislative programme that the Queens Speech outlines and I am trying to limit my remarks to that.
All the proposals raise billions of pounds but nothing indicates a clear simplification programme. The cuts hardly increase fairness, and there is no clear statement of simplification or that it will be made on a tax-neutral basis. That does not inspire confidence.
The national insurance contributions Bill is another example of what I have described. Again, we support the principle because it makes sense for national insurance contributions and income tax thresholds to align, but there are cost implications for the amount of tax that people pay. Why could not the Treasury be up front about that? Why could not the Treasury be explicit and demonstrate that the policy is designed to make the tax system fairer and simpler, rather than being an underhand way in which to raise revenue.
Mr. Peter Bone (Wellingborough) (Con): I have listened to the hon. Ladys comments with great interest. However, the Liberal party tabled an amendment that has not been mentioned. When did the Liberal party decide that its contents were a good idea? What is its importance?
Julia Goldsworthy: The amendment was mentioned in the foreign affairs debate. If the hon. Gentleman was present, he will realise that it was discussed in some detail. Todays debate is about the economy and pensions. Obviously, we will have the opportunity to discuss the matter at great length when we debate the constitutional reform treaty. The amendment will be pressed this evening, after that of the official Opposition.
We agree with the Government about some matters. For example, we believe that the measure on dormant bank and building society accounts makes sense. However, again, I wish that the Government had done more to make their thinking explicit. Although we agree with the principle that the money should be made available for youth projects, I am worried that it has accrued over a long time and that, if it is treated as revenue, it will not go as far as or help the projects in the way in which it should. Clearly, those issues will have to be ironed out, even though we support the principle.
I am most concerned about the Governments silence on an issue about which they have consulted widely and about which reports have been written, but as yet, no action has been taken. It is a tax that everyone pays
every year, is not related to the ability to pay, and increases consistently at a rate above inflation. If the Prime Minister wants to demonstrate vision, he could do so by taking a comprehensive look at the council tax because the position of local councils is becoming increasingly unsustainable.
The Chancellor mentioned in his pre-Budget report the fact that he was expecting the council tax to increase by up to 5 per cent. in the next three years. That rate is significantly above inflation. Today, the Conservatives let the Prime Minister and the Chancellor off the hook because they have no ideas on the matter. They have written off every other idea. For a moment yesterday, when I listened to the radio, I got excited. I thought the Conservatives might have something substantial and interesting to say. I should have known better. Even one of their council leaders when referring to the new big idea on referendums on council tax increase could say nothing better than Its a start.
The Tories for their part lack almost as much bottle as Labour. Cameron clearly suffers the same Treasury capture by George Osborne as Blair did by Brown. Yesterday he unveiled his localist big idea and it was a mouse, reviving Michael Heseltines 1981 local plebiscites on tax levies above a centrally capped limit.
Local government can hold referendums on whatever and whenever it wants. All that does is centralise funding; it does nothing to localise funding. It does nothing to tackle problems that the Lyons report clearly identified. We need clearer action. It looks as though it is down to the Liberal Democrats to provide that vision and we are happy to do so.
Stewart Hosie: I am listening carefully to the hon. Ladys comments about council tax. Do I take it that her colleagues in Scotland will back the Scottish Governments Budget today to freeze the council tax as part of the move towards implementing a local income tax?
Our axe the tax proposals to get rid of council tax and replace it with a local income tax are part of a package, as are our pensions proposals. We have a vision of a tax system that is fairer and simpler, and a pensions system where people know what to expect. In both cases, the packages are fully worked through and designed to inspire confidence, not arouse suspicion or generate confusion.
Such vision is sadly lacking from Conservative and Labour Members, as demonstrated by their remarks today. The sad thing for the Prime Minister is that he had vision once. The proposal to make the Bank of England independent, which was put forward when he was first Chancellor, and which we supported, demonstrated that. However, now the Prime Minister is Old Mother Hubbardhe goes to the cupboard only to find it bare. The world today is a very different place. As a country, we must face up to a new economic outlook. Mechanisms are needed to deal with instability in the housing market and the looming
problem of large numbers of people who may not be able to maintain their mortgage and risk losing their home.
Mechanisms are needed to translate the Chancellors homilies about responsible and old-fashioned lending into practice. Those mechanisms require vision from the Government. Instead, they are just hanging on, waiting desperately for good news. The Conservatives are happy to wait with them because when there is no good news, they seem to think that simply saying I told you so is sufficient. Liberal Democrats know that they are both wrong.
Mr. Michael Meacher (Oldham, West and Royton) (Lab): The Queens Speech has far too readily been dismissed as lacking any forward movement. I strongly disagree. It is good that after two decades of neglect of social housing, amidst the triumphalist ideology of private ownership, the national scandal of huge unmet housing need is at last being addressed. Extending flexible working to millions more people is an important contribution to personal freedom and to achieving a better work-life balance for a nation that has the longest working hours in Europe. It is also surely an important ambition to make training and education mandatory for all under-18s, because the low qualifications with which so many of our children and young people leave school are one of the major factors holding them and the nation back.
Lorely Burt: I am grateful to the right hon. Gentleman for giving way so early in his speech. He mentioned flexible working, and I introduced a Bill in the previous Session to do exactly the same thing that the Government now propose. Although we welcome the fact that flexible working is being introduced in interim stages, does he agree that we should consider this as part of a long-term strategy to ensure that all workers in the United Kingdom have the right to request flexible working?
Mr. Meacher: I think that that is implied. A better work-life balance, not just for women but for men, too, is gravely lacking in this country and that is one of our biggest drawbacks. I repeat that we have by far the longest working hours, so I welcome what is proposed and I accept the vision that the hon. Lady described.
The Government need some commanding themes by which their distinctive vision can be clearly understood. I want to propose three. The first is democratisation, which my right hon. Friend the Prime Minister adumbrated in his first statement to Parliament, and extremely welcome it was too. However, democratisation must stretch a great deal further than giving Parliament a right to vote before the country goes to war, as I think he realises. Parliament needs real new powers on a much broader front. Some examples include powers to elect Select
Committee members and ratify Cabinet nominations made by the Prime Ministerthat is not a particularly traumatic proposal, because something similar already happens with congressional hearings in the United States. Other examples are the power to approve the membership and terms of reference of committees of inquiry proposed by the Prime Minister and the power to set up our own parliamentary commissions to investigate particular issuesa recent example about which I feel strongly is extraordinary renditionwhen the Government refuse to do so.
However, it is not just in Parliament that there is a democratic deficit. An even bigger one now exists outside. Over the past 30 years power has become so centralised and the regulatory authorities gradually so enfeebled that, so far from corporate power being regulated, the biggest businesses have increasingly co-opted the powers of the state for their own commercial ends. Let me give a few recent examples: the current loosening of controls over power station, airport and incinerator developments, which are part of the Queens Speech; the failure to regulate unhealthy food advertising because of objections from the food industry, despite the growing obesity epidemic; the notorious withdrawal of the Serious Fraud Office investigation into allegations of corruption against BAE Systems; and the relaxation of the gaming laws to permit a flood of gambling casinos.
It sometimes seems as though accountability has all but vanished, at least in some parts of this country. Perhaps the most telling example, which has already been discussed at length today, is Northern Rock. The crisis is now costing £23 billion in loans from the taxpayer, plus, I understand, a £2 billion interest chargealmost equal to the entire annual defence budgetand yet nobody is held responsible. The Bank of England, the Financial Services Authority and the Treasury are all blaming each other. What action is being taken, and by whom, to face up to the fundamental mistakes that led up to the crisis, including the reckless lending practices of the chief executive of Northern Rock and the flawed structure of regulation put in place a decade ago?
The question has to be asked: why was Northern Rock not temporarily taken into public ownershipnot back into public ownership; it was never in public ownershipas was done in the secondary banking crisis in 1974, in order to avoid a run on the bank and retain depositors confidence without such a colossal haemorrhage of public funds? The answer, which says something significant about the structure of power in our country, is that the neo-liberal agenda of deregulation, privatisation and unfettered markets is, unaccountably, still being imposed above everything else, even at phenomenal cost to the taxpayer, so that public ownership is not seriously mooted as an alternative.
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