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Mike Penning (Hemel Hempstead) (Con): On a point of order, Mr. Speaker. You kindly granted an Adjournment debate in Westminster Hall for 90 minutes this morning on the important subject of the further education funding crisis. I wonder whether you are aware that no Minister was present for the start of that debate, that there was no Parliamentary Private Secretary either, and that the officials arrived 20 minutes late. Is there any way that this sort of insult to the House, with no Minister present for the start of the debate, can be addressed in future?
Mr. Speaker: I am not very happy about the report that the hon. Gentleman has made, and I must look into it. Ministers should always be courteous to the House and ensure that they turn up for debates. We all have to be good timekeepers in this House, and there is no reason why Ministers should not be good timekeepers.
Mr. Stewart Jackson (Peterborough) (Con): On a point of order, Mr. Speaker. In answer to a parliamentary question in March, the Minister for Housing told me that since 1 January, 180 households were being helped under the mortgage rescue scheme and that
500 applications have been made, resulting in approximately 180 cases meeting the eligibility criteria.[ Official Report, 12 March 2009; Vol. 489, c. 747W.]
Subsequently, we learn this month from departmental figures that between January and March this year just one family across the whole country has been assisted in that way. Do Ministers have a responsibility in this regard, and is it incumbent on them to give truthful and accurate answers to parliamentary questions?
Anne Main (St. Albans) (Con): Further to the point of order raised by my hon. Friend the Member for Hemel Hempstead (Mike Penning), Mr. Speaker. In an excellent debate, I was extremely surprised, as were other hon. Members, to hear in response to a probing question from my hon. Friend the Member for South Holland and The Deepings (Mr. Hayes) that officials in the Department for Children, Schools and Families were aware of the Learning and Skills Council funding debacle, but that the Minister for Schools and Learners was unaware of it for a month. Surely we should have a statement and a debate on the Floor of the House.
Daniel Kawczynski (Shrewsbury and Atcham) (Con): On a point of order, Mr. Speaker. The parliamentary ombudsman, Mrs. Abraham, has issued a section 10(3) report in respect of the Governments response to her original report on Equitable Life. As you will know, Mr. Speaker, that is almost an unprecedented step for her, which she has taken because of the anger that she feels over the Governments lamentable response. Is there anything that you could do to ensure that the parliamentary ombudsmans voice is heard in this matter?
That leave be given to bring in a Bill to regulate the recovery of the defaulted sovereign debt of developing countries; and for connected purposes.
This small Bill touches on some of the big issues of our times: the unbridled profiteering of some financial institutions; the pressing need for regulation of the excesses of those institutions; and the gulf between their massive wealth and the desperate poverty of millions of people in developing countries. The Bill aims to put some simple regulations in place to stem the worst of the abuses by the vulture funds that profiteer from the debts of some of the poorest people in the world.
The economic crisis has already highlighted the flaws in the global financial system, which we all recognise is in need of reform. It has revealed widespread under-regulation of various financial market actors, including hedge funds and other investors. There is agreement across the House that regulation that is too light touch has not served us well, and that more controls are needed to ensure the standards of probity that we expect in the UK as a world centre for financial services. That includes the regulation of hedge funds, and just this week there have been proposals from Europe in that regard. This Bill, therefore, is being proposed against the background of the Governments commitment to act to regulate financial services.
Another aspect of the background to the Bill is the Governments outstanding commitment to dealing with developing country debt, which is greatly undermined by the activities of the so-called vulture funds. The Bill is aimed directly at those companies and funds that buy up defaulted sovereign debt at highly discounted prices, then try to recover the full amount, plus costs and fees, through the courtsoften, unfortunately, through the UK courts.
The funds are often based in tax havens and are secretive, and it is the secrecy as well as the profiteering that this Bill seeks to address. One of the most notorious cases is that of Donegal International Ltd, which set its sights on Zambia. An excellent investigative report by the BBCs Newsnight programme revealed the full extent of the scandal.
Zambia was provided with a loan to buy some tractors, but by the 1990s it was unable to pay the money back. The country was in the process of trying to find a settlement with the creditors for the debts, but the fund purchased the debt for the knockdown price of $3.3 million in 1999. It proceeded to pursue Zambia through the UK courts for the full amount of the debt, plus interest and fees, demanding an astonishing $55 million in total. The courts awarded a total of $15.5 million, more than five times what the fund had paid for the debtmoney that could have been used to train doctors, nurses and teachers, or to build hospitals. A big chunk of it, enough to pay for 30,000 primary school places, ended up in the hands of a secretive, unaccountable private fund.
That is not an isolated case. A current example involves the Democratic Republic of the Congo and a company called FG Hemisphere, which has been awarded $100 million against an original claim of $44.1 million. In addition, Argentina is being pursued through the UK courts for $285 million. Such activity undermines UK and international efforts to reduce the unsustainable debts of developing countries.
Our Government have been at the forefront of driving through the cancellation of the debts of some of the poorest countries. We have contributed to the programme of debt reduction for 35 countries, 29 of them in Africa, providing a total of $51 billion in debt relief.
Debt relief and cancellation have allowed the release of funds for spending on social projects in the countries involved. Thousands of new schools and classrooms have been built as a result, and there has been investment in water systems, teachers, health care projects and many other programmes. Many of Zambias creditors, including the UK, agreed to cancel its debts on the understanding that the funds would be used to reduce poverty among the very poor, and not to provide a huge and completely undeserved payday for the very rich.
Thanks to the Jubilee Debt Campaign and the Newsnight exposé, some action was taken by the UK and other countries to reduce the risk of sovereign debts falling into the hands of vulture funds. Agreement was reached with the World Bank to help poor countries buy back their commercial debts at a discount. In addition, the board of the Africa Development Bank agreed to endorse the establishment of an independent legal support facility to advise countries on how best to tackle vulture fund activity. However, the global economic downturn has produced more debt problems in the developing world; hence the need for this Bill.
The Bill has four main provisions. First, it would stop the excessive profiteering by preventing financial institutions and companies from buying up developing countries debts at cut-rate prices, then suing the countrys Government through the UK courts for the full original amount of the debt. The Bill would limit the maximum recovery amount to the sum paid by the financial institution, plus a simple rate of interest and charges specified in the Bill.
Secondly, the Bill would introduce accountability. It makes provision for controls on recovery actions and introduces reporting requirements. The financial institutionsthe vultureswould have to get permission from the UK courts before starting recovery proceedings in the UK for any amount of defaulted debt from a developing country. In addition, the vulture would have to ensure that a copy of the application went to the UK Government and to the UK representative of the developing countrys Government.
Thirdly, the Bill would ensure greater transparency. It would shine a light on the vultures and require the financial institutions to disclose the beneficiaries of the recovery proceedings. It has been completely impossible to get information about this in the past. We have been unable to find out who has benefited from some of these huge undertakings involving recovery actions pursued through the UK courts.
Fourthly, the Bill would help to combat corruption. It contains anti-corruption measures that would require a vulture fund to declare any payments or gifts given by it or its colleagues to the developing countrys Government.
I would like to pay particular tribute to the colleagues in the House who were active in putting their names forward to support the Bill. I would also like to thank the Jubilee Debt Campaign, which first brought this subject to light, and which has worked tirelessly to keep debt at the heart of the international debate on poverty and economic justice. I would also like to thank the Clerks in our Public Bill Office, who did a phenomenal job of drafting the Bill. Similar legislation is being introduced in the US Congress, and I hope that the special relationship that exists between our two countries will extend to dealing with this very unacceptable face of capitalism.
Over the past months, we have all been appalled by some of the extraordinary greed in the financial sectorFred Goodwins pension springs to mind, among other thingsbut the impact of these vulture funds on developing countries is far worse than anything that we see here in the UK. About two thirds of Zambias 12 million people live on less than $1 a day. They are truly the poor of this world. The amount of money that one single vulture fund tried to get from that country would have been enough to keep all those very poor people going for five daysa full working week. That level of profiteering is well in excess of anything that we have seen in the UK, and it is wrong that this country, which has such a proud record on international aid and debt relief, should be used as a haven for secretive and exploitative funds operating without scrutiny or regulation.
After I have presented the Bill today, we will be discussing in our debate on the Finance Bill the impact of the excesses of the banking system on our own economy. My Bill deals with the consequences of those profits on some of the poorest people in the world, and I hope that the House will give me permission to introduce it.
That Ms Sally Keeble, Sir Gerald Kaufman, Hilary Armstrong, Mr. Peter Lilley, Andrew Stunell, Mr. Andy Reed, Tom Brake, Mr. David Drew, John Austin, Mr. David S. Borrow, Mark Lazarowicz and John Bercow present the Bill.
This years Finance Bill comes as the world economy is shrinking for the first time in peacetime since 1932. It is the first time ever that five of the biggest banks in the world have had to be rescued by their national Governments. That is the scale of the international challenge we are facing.
This Finance Bill provides for vital measures to support the economy this year and to help British families and businesses through the more difficult times. It also provides for help to support the long-term prosperity of Britain and to ensure that public finances are sustainable for the future. Those two objectives are fundamentally linked, but the main Opposition party, astonishingly, seems to oppose both of them.
If we do not take action now to get our economy moving and growing, it will cost us more in the long run. We need to take action now to support businesses and families to help them through the downturn. If we do not provide real help now, recession will last longer and run deeper, reducing the tax revenues we get from growing businesses. It will increase the amount we have to spend on unemployment and it will push our borrowing and our debt up higher and cost us all more in the long run. That is why the best way to get borrowing down in the future is to support growth in our economy now.
Stewart Hosie (Dundee, East) (SNP): I agree entirely, as I think that cutting budgets in the teeth of recession is very foolish and that fiscal stimulus is essential as monetary policy alone is not enough. Why, then, is the Chief Secretary cutting £500 million from the Scottish budget next year, when everybody knows that the UK and the world economy will still be in recession? Why are her Government taking such a foolish measure, which runs against her own argument?
Yvette Cooper: The hon. Gentleman knows that that is simply not the case. In fact, we are increasing the Scottish Executives budget by more than £2 billion over the next few years. We expect the Scottish Executive to make efficiency savings in 2010-11. Indeed, if the Scottish Executive set the same efficiency targets that Welsh, Northern Ireland and English Departments have setof around 3 per cent., instead of the 2 per cent. set by the Scottish Executivethe additional efficiency savings could be used to support the economy in Scotland as well as across the rest of the country.
The Bill provides for a series of measuresmany of them temporary, many of them funded by short-term increases in borrowing as part of the fiscal stimulus that the Government have outlinedto help the economy right now. Clause 9 thus legislates for the temporary VAT reduction to 15 per cent. to run until the end of this calendar year.
Mr. Tobias Ellwood (Bournemouth, East) (Con):
The right hon. Lady will be aware that VAT is due to go back up to 17.5 per cent. on 31 December. I do not
know what she will do on that evening, but many retail outlets and establishments will be open, so it is not a great time suddenly to change VAT levels from 15 per cent. to 17.5 per cent. For the benefit of our tourism and services industry, I plead with the Chief Secretary to move the date from 31 December to, say, 3 January, which is a Sunday.
Yvette Cooper: Her Majestys Revenue and Customs has said that it will continue to discuss with businesses how to ensure that the change happens smoothly. It is right to ensure that this VAT reduction is only temporary, as it is part of our fiscal stimulus. The hon. Gentleman is wrong to oppose the temporary reduction in the VAT rate, which applies across the country, because the cut is equivalent to putting £12 billion into the pockets of consumers and businesses that would otherwise have been taken in tax. It is about putting money into peoples pockets and into the economy when it is most needed.
The VAT reduction last November was worthwhile. It gave £8-10 billion directly to consumers and as a result helped small businesses in particular.
Mr. Ellwood: I am grateful for the Chief Secretarys generosity in giving way again, but she has been here longer than I have, and she is aware of the conventions of the House. If she wants us to answer the questions, let her party call a general election, and we shall be delighted to do so.
Let me return the Chief Secretary to my original question, which has nothing to do with Tesco other than the fact that Tesco is likely to be open on the evening of 31 December, at the end of the year. Please will she consider moving the date on which the VAT rate is returned to 17.5 per cent. to 3 January? That is a simple question. Will she answer it directly, rather than taking us down another alley?
Yvette Cooper: The hon. Gentleman should accept that if he wishes to take part in debates in the House, he needs to be able to defend his own views rather than merely asking questions about other peoples. That, in the end, is what parliamentary debate is all about.
Yvette Cooper: Of course people will have different views about the right date on which to change the rate. We have specified a date to give businesses certainty, so that they can plan. The most important thing that businesses need [Interruption.]
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