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House of Commons

Wednesday 29 October 2008

The House met at half-past Eleven o’clock


[Mr. Speaker in the Chair]

Oral Answers to Questions


The Secretary of State was asked—

Post Office Card Account

1. Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): What recent discussions he has had with the Secretary of State for Work and Pensions on the future of the Post Office card account in Scotland. [229804]

The Parliamentary Under-Secretary of State for Scotland (Ann McKechin): My right hon. Friend the Secretary of State and I have regular discussions with ministerial colleagues on a range of issues.

Danny Alexander: The contract for the new Post Office card account should be awarded to the Post Office because of its unrivalled geographical reach. If towns and villages across Scotland lose their post offices, they will often lose their shop, their only source of pensions and cash, and vital support for vulnerable people in those communities. Will the Minister make the Government understand that to take the Post Office card account away from the Post Office would be a betrayal of those communities?

Ann McKechin: I can understand the hon. Gentleman’s concerns, but as he will appreciate, we are currently undergoing a tendering process and it would not be appropriate for me to comment on that process, which we hope will complete later this year. I remind him that 27 bank or building society accounts can already be accessed through the post office network. We are committed to the idea that the universal access criterion must have priority.

John McFall (West Dunbartonshire) (Lab/Co-op): The Minister will realise that it is crucial that the Post Office is put on a sound financial footing. For the next four or five years, POCA must be instrumental in ensuring that that is the case. Otherwise, sub-postmasters will voluntarily close post offices and we will find that our financial inclusion targets will not be met as a result. Will the Minister keep those comments in mind when she is discussing the issue with her ministerial colleagues?

Ann McKechin: My right hon. Friend has a strong record of supporting financial inclusion and I certainly take his comments on board. The fact that we have spent nearly £2 billion on the post office network since
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1999 and are committed to a further £1.7 billion up to 2011 shows that we want to ensure that there is a strong, sustainable post office network that will be maintained not only now but beyond 2011.

Mr. Mike Weir (Angus) (SNP): Is the Minister aware of the letter written by George Thomson, the general secretary of the National Federation of SubPostmasters, to the Prime Minister, the Secretary of State for Work and Pensions and the Secretary of State for Business, Enterprise and Regulatory Reform, which sets out huge concerns about the delays in making a decision on POCA? POCA is important for sub-post offices, and the letter says that 10 per cent. of their income comes directly from POCA. The post offices are also the last financial institution in many of our villages following the withdrawal of the banks, which are receiving huge sums of Government money. Will the Minister impress on the Secretary of State for Work and Pensions the importance of a quick decision in favour of the Post Office?

Mr. Speaker: Order. Let us have supplementary questions, not speeches.

Ann McKechin: The hon. Gentleman rightly indicates that the need to maintain universal access, particularly in rural areas, is important. That is why we have maintained a strong rural network: 95 per cent. of the rural population must be within 3 miles of a post office. However, it is also important that we have a sustainable network. The markets are changing and so are people’s shopping habits. That is why we are awaiting not just the tender process, which is required under EU law, but the Hooper review, which will point us in the direction that we must follow to ensure that we have a sustainable universal access network.

Mr. Ben Wallace (Lancaster and Wyre) (Con): May I welcome the Secretary of State and the Minister to their offices? I want to place on record my appreciation of the Minister’s predecessor, the hon. Member for Inverclyde (David Cairns). He was a helpful and able Minister, and I shall certainly miss him.

At this time, our post offices need certainty, stability and an indication that they have a financial future. The Government’s deadline to receive those bids finished in March and for eight months we have had no announcements. If the Post Office loses this contract, the real losers will be our rural communities and dozens of post offices up and down the country. Is it not the case that the delay in the announcement and the very scheduling of the Glenrothes by-election at the same time as the presidential elections have nothing to do with the good people of Fife and everything to do with saving the political skin of the Prime Minister?

Ann McKechin: I thank the hon. Gentleman for his warm remarks of introduction and welcome, but I think that he got beyond himself. Last week, the Secretary of State for Work and Pensions firmly rejected any suggestion that there was any coincidence between the tender process and the by-election. The tender process is a complex legal issue that requires appropriate time and consideration. It is inappropriate for any Minister to interfere with or comment on that process. Unlike the Opposition, who wish to slash public spending, we
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have shown firm public commitment to the post office network throughout our tenure in government. The fact that we have invested £3.7 billion in that network is plain proof of that fact.

Banking Sector

2. Mr. Henry Bellingham (North-West Norfolk) (Con): When he next expects to meet the First Minister to discuss the future of Scotland's banking system. [229805]

3. Mr. Peter Bone (Wellingborough) (Con): What recent discussions he has had with the First Minister on the operation of the banking sector in Scotland. [229806]

The Secretary of State for Scotland (Mr. Jim Murphy): I am in regular contact with the First Minister and discuss a variety of issues. The Scottish banking system is now well placed to combat these difficult times after the significant intervention by this Government to stabilise the market.

Mr. Bellingham: May I congratulate the Secretary of State on his appointment? Does he recall that the First Minister said earlier in the year that an independent Scotland could look forward to an “arc of prosperity” based on Ireland, Iceland and Scandinavia and underpinned by Scotland’s “world class” banks? Will he remind the First Minister in a telephone call today that the Scottish banks would not exist today if the UK Government had not moved quickly, and if they had not been underpinned by English taxpayers in our constituencies? Will he also remind him that it is time for him to abandon completely his misguided campaign—

Mr. Speaker: Order. When there are long speeches instead of supplementary questions, other Back Benchers are going to be squeezed out.

Mr. Murphy: I wish to thank the hon. Gentleman for his warm welcome for my appointment, and to place on record again my appreciation of the work done by my predecessor, my right hon. Friend the Member for Kilmarnock and Loudoun (Des Browne).

Although this is my first time at the Dispatch Box as Secretary of State for Scotland, I know very well that I am not accountable for the words, deeds or actions for Scotland’s First Minister. However, I am aware that he has compared Scotland to Iceland, Ireland and Norway. Of course, Iceland is now bankrupt as a country, Ireland faces an austerity budget— [ Interruption. ] I hear an hon. Gentlemen shouting, “Tell us about Norway!” Well, the Norwegian Foreign Minister has today told us all about Norway, and said that the Scottish National party must stop making vacuous comparisons between Norway and Scotland.

Finally, the hon. Member for North-West Norfolk (Mr. Bellingham) talked about English taxpayers subsidising Scottish banks, but he will be aware from his insight into his own constituency that the Royal Bank of Scotland-NatWest has four branches in his area, and HBOS has one. This is an international problem that needs international solutions. It affects all our constituencies, including his own.

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Mr. Bone: I congratulate the right hon. Gentleman on his well deserved appointment. He has moved from defending an indefensible Union to upholding a vital Union. Does he agree that the Scottish banking sector has fared better in this financial crisis because Scotland is part of the UK than it would have done had Scotland been independent?

Mr. Murphy: I absolutely agree. The UK has invested £37 billion in Scotland’s banking sector, and that is greater than the entire Scottish Government budget. The entire cost of the investment package is estimated at £100 billion, which is more than the annual budget for the whole of Scotland. I disagree, of course, with the hon. Gentleman’s earlier comment. We spent many long months debating whether the UK would be better off outside the EU, but I think we all now agree that Scotland is better off in the UK.

Dr. Gavin Strang (Edinburgh, East) (Lab): May I thank my right hon. Friend for his active involvement in the banking crisis? Does he agree that the futures of the Royal Bank of Scotland and Halifax Bank of Scotland are of huge significance to Edinburgh, the south-east of Scotland and to the Scottish economy as a whole? Will he continue to work with the Prime Minister and the Chancellor to support the banking system and above all to sustain as many financial sector jobs as possible in Scotland for the long term?

Mr. Murphy: My right hon. Friend has a long history of campaigning on these issues, and he has taken a close interest in the current difficulties faced by Scottish banks and banks throughout the UK. I look forward to discussing these matters with him in further detail over the weeks ahead. Unfortunately, however, some people involved in international banking and banking institutions in the UK took reckless decisions that put at risk other people’s savings and mortgages. While risk is an essential part of a market, taking irresponsible risks with other people’s well-being must come to an end.

Mr. Jim Hood (Lanark and Hamilton, East) (Lab): May I first congratulate my right hon. Friend on his new appointment as Secretary of State for Scotland? I am delighted to see him at the Dispatch Box. Does he agree that the Scottish banking situation is so important that we cannot just leave it to Adjournment debates in the House of Commons? Will he therefore have a word with the Leader of the House to have a Scottish Grand Committee called as quickly as possible, so that we can discuss the matter?

Mr. Murphy: Serious times call for serious measures. Where I can, I try to say clearly that as Secretary of State for Scotland I will work with anyone who is working on behalf of Scotland, which is why I convened the first ever gathering of CBI Scotland, the Scottish Trades Union Congress and the First Minister to demonstrate that, where we can, we should be working together. That is the approach that I shall take every day in this job.

We have to look for additional ways to discuss the problems facing Scottish banks, and if my hon. Friend thinks that calling the Scottish Grand Committee is part of the solution, I look forward to his making that case. I would of course have no hesitation in appearing before the Scottish Grand Committee.

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Mr. Alistair Carmichael (Orkney and Shetland) (LD): On behalf of my party, I welcome the Secretary of State and his Under-Secretary to their new positions and pay tribute to their predecessors. They left the Government in different circumstances, but they gave distinguished service to the Government in their time and I very much hope that they will continue to be part of Scotland’s political debate.

Has the Secretary of State seen reports in The Scotsman today, indicating new interest in parts of the HBOS group, namely from Clerical Medical and Insight Investment? Does he accept that that is a further alteration to the situation that pertained when the takeover by Lloyds TSB was first mooted and, accordingly, that it requires to be looked at again seriously? In that context, will he urge his right hon. Friend Lord Mandelson to publish the Office of Fair Trading report so that if we are to abandon competitiveness in the banking sector we at least know why?

Mr. Murphy: We wish to see stability in the banking system in Scotland, throughout the United Kingdom and much more widely. Part of that stability would guarantee security for savers, investors, mortgage holders, staff and small businesses across the UK. The argument that HBOS’s business model would not be able to survive the current economic climate has been well rehearsed, but the fact is that only one concrete offer is on the table. That is an issue for the boards of the two banks and the shareholders—it is not for the Government to dictate—but although there is press speculation about other bids, there is only one firm bid on the table at the moment.

Mrs. Anne McGuire (Stirling) (Lab): I, too, add my congratulations to my right hon. Friend on his new position as a full-time Secretary of State for Scotland.

I do not want us to underestimate the importance of the comments made by the Norwegian Foreign Minister, reported in today’s press. When my right hon. Friend next meets the First Minister, will he raise those comments and expose the credibility of the First Minister’s arguments? Perhaps he will go one step further and say not only that it is economically unsound to make those comparisons but that it is economically illiterate.

Mr. Murphy: My hon. Friend is absolutely correct. On behalf of everyone on our side of the House, I pay tribute to her for her brilliant work over nine years as a member of the Government in various posts. She is right to draw attention again to the comments of the First Minister. In his first speech as First Minister, he said:

It is no wonder that many commentators now talk about an arc of insolvency—the SNP vision of a North sea bubble has well and truly burst.

David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con): I begin by welcoming the right hon. Gentleman to his new role. It is particularly welcome on the Conservative Benches that there is once again a stand-alone Secretary of State for Scotland. Scotland’s interests cannot be adequately represented in the Cabinet along with those of the armed forces or any other nation or region of the United Kingdom.

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May I also welcome the Under-Secretary of State for Scotland, and briefly pay tribute to the two predecessors at the Department? The right hon. Member for Kilmarnock and Loudoun (Des Browne) played a pivotal role in the establishment of the Calman commission, which will benefit all the people of Scotland. The hon. Member for Inverclyde (David Cairns) lost his job for speaking the truth, and he is not the first Member of this House to have done so. In that vein, I share the Secretary of State’s views about the irresponsibility of the First Minister’s comments on the “arc of prosperity”, but does the Secretary of State agree that the Prime Minister was equally irresponsible to claim that boom and bust had been abolished? Did that not contribute to the devastating effect of the credit crunch on the Scottish banks?

Mr. Murphy: I thank the hon. Gentleman again for putting on record his appreciation for the work of my predecessor, and for his kind words of welcome to my hon. Friend the Under-Secretary and me. The fact is that Scotland is stronger in the United Kingdom at times of difficulty, and more prosperous in the United Kingdom at times of economic prosperity. I disagree with the hon. Gentleman’s assessment of the Prime Minister’s contribution. The fact is that the UK is showing the world

The shadow Secretary of State guffaws at that comment, but those are not my words; a gentleman called Paul Krugman, the winner of the Nobel prize for economics, made those comments earlier in the week. Whose economic judgment should I accept—that of the hon. Gentleman or that of a winner of the Nobel prize for economics? I will let the House make that judgment for itself.

Economic Situation

4. Sandra Osborne (Ayr, Carrick and Cumnock) (Lab): What recent discussions he has held with Scottish Executive Ministers on the condition of the economy in Scotland. [229807]

The Secretary of State for Scotland (Mr. Jim Murphy): I called a meeting last week with the Scottish Government, the Scottish Trades Union Congress and CBI Scotland to discuss the pressures in the Scottish economy. I also sit full time on the UK Government’s National Economic Council.

Sandra Osborne: I am grateful for the fact that one of the Secretary of State’s first acts in his new post was to agree to come to Ayrshire to discuss with local businesses their concerns about the current financial situation. In his recent discussions with the First Minister, the CBI and the STUC, did they discuss support for those who have recently become unemployed, not just in the financial services sector but in places such as the coalfield area in my constituency, which suffered mass unemployment during the dark Tory years?

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