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The Economic Secretary to the Treasury (Ian Pearson): It is a pleasure, Mr. Howarth, to serve under your chairmanship. I congratulate my hon. Friend the Member for Lanark and Hamilton, East (Mr. Hood) on securing this debate. He is certainly right to say that bank lending is vital to business. Many businesses have continued to express anxieties and grievances on that question, and some of them were reflected in the interventions made on my hon. Friend.
As my hon. Friend noted, his constituent Mr. William Derek Carlyle has taken action on what he believes to be unfair practices. I listened carefully to what he
said. He made some serious allegations about bullying, intimidation, and threats to solicitors and others. I am sure that he will find other avenues through which to pursue those matters. I am sure also that Royal Bank of Scotland will have listened carefully to my hon. Friend's comments.
Mr. Hood: I did not mention the solicitors for that reason. However, if I need to mention them I shall certainly do so. Solicitors, and groups of solicitors, need to be defended against such behaviour. Lawyers must be free to represent their clients, regardless of what has happened. This case indicates that that was not so. There may be some legal questions about interfering with due process, and we may have to return to the subject.
Ian Pearson: I note what my hon. Friend says. He will be aware of the different routes through which he can progress these matters. He will appreciate that I cannot comment specifically on the particulars of the Carlyle case, because it is still subject to the court ruling. However, I hope to see a resolution of the matter-and, indeed, of other matters that have arisen.
I would like to address some of the broader issues about bank lending in the UK economy, and say something specific about RBS in response to the concerns expressed by hon. Members. I shall not dwell too much on the context, given the short time for my response, but it can be traced back to the reckless lending in which some in the global financial sector indulged in the years preceding the crisis. We have seen the first global financial crisis of the modern era, largely as a result of the emergence of the sub-prime crisis in the United States following the collapse of Lehman Brothers. Incredible action in the United Kingdom led to our substantial ownership of the Royal Bank of Scotland and the Lloyds Banking Group. We then took significant action to ensure continued lending, both to households and to businesses-the subject of the debate.
The latest Bank of England "Trends in Lending" report shows that net lending declined by £47 billion in 2009. That trend is not just relevant to the United Kingdom, but common to the United States, the eurozone and Japan. As the Bank's analysis has shown, during past recessions and financial crises, bank lending typically remained weak in the early stages of recovery. That may reflect a number of factors, including the reappraisal of risk by lenders, investors and borrowers; uncertainty about the prospects for the economy; people and businesses choosing to pay off debt and restructure their financial positions, rather than taking on more debt, which impacts on the demand for finance by households and businesses; and financial institutions restructuring to deliver higher capital levels and more conservative loan exposures. Having said that, it is absolutely important that creditworthy businesses should not suffer from constraints on the supply of lending, especially as demand recovers in the economy.
Dr. McCrea: Does the Minister accept that many banks throughout the United Kingdom are strangling small and medium-sized businesses? If they give a loan to such businesses, they impose such a premium that it is impossible for the businesses to get through this time of recession.
Ian Pearson: I want to respond to that accusation directly, because banks have received substantial taxpayer support and they must do all that they can to lend to creditworthy businesses and to support the recovery. I want to go on to give some of the available figures.
It is important that businesses have the necessary capital to invest in their factors of production, to invest in product development and to have the means to expand and grow, in particular as we-hopefully-secure the recovery. There should be opportunities for UK firms to compete successfully in the global marketplace, and barriers to finance should not prevent them from doing so.
I am dismayed that I continue to hear stories from hon. Members about companies that are not able to access the sort of funding required to help their businesses for the future. There is evidence out there that more lending is beginning to flow to businesses, which is encouraging. Surveys, such as those from the Department for Business, Innovation and Skills and the Bank lending panel, all suggest that around three quarters of businesses get finance from the first source that they approach-it is important to put that on the record.
Hon. Members will appreciate that nearly 6,000 small and medium-sized businesses have received more than £605 million so far in loans from banks through the enterprise finance guarantee, which the Government introduced. RBS is committed to lending through that scheme, as well as through the European Investment Bank discounted loan scheme, which I would recommend as a funding option for growing businesses that are looking to make capital investment, although the scheme has not been promoted nearly enough by the banks. Indeed, we as a Government could do more to promote the availability of those funds.
RBS data show that the bank is approving the vast majority of loan applications. RBS figures for 2009 show that the bank accepted 85 per cent. of all applications from SMEs. The increase in lending is of fundamental importance, but ensuring that customers are treated fairly is equally important. That issue has been raised by hon. Members, who should be aware that RBS has developed an SME customer charter. We worked alongside the bank to produce that charter, which set out the level of service that customers should expect to receive from their bank and includes features such as a 1.5 per cent. cap on overdraft and loan arrangement fees; ensuring that the price of loans or overdrafts reflects the cost of funding; a pledge to support business start-ups; and a programme of seminars to provide expert guidance.
We have taken actions, including on bank lending commitments. RBS has committed to lending £16 billion during the year ending this month and we are discussing its future lending commitments. We expect banks to continue to offer competitively priced loans, to ensure that businesses get a fair deal, but decisions about pricing or terms and conditions of loans to specific businesses remain commercial decisions for banks and building societies. It would not be right for the Government to intervene in such decisions. Any dispute between a
bank and a business should be resolved by the parties involved, initially by going through the bank's complaints procedure.
Mr. David Hamilton: Does the Minister understand that the issue does not affect new companies alone, but well-established companies with long-term relationships with the bank? There is something wrong with the bank-the Select Committee on Scottish Affairs drew the conclusion two weeks ago that the Royal Bank of Scotland has a structural problem in how it deals with such businesses. The bank is virtually blackmailing some of the businesses that it has been dealing with for years, and is foreclosing on others.
Ian Pearson: I understand the ongoing concerns. My hon. Friend is right to say that there is an issue with existing businesses but, on RBS's figures, 85 per cent. of loan applications, which includes existing businesses, are accepted at the moment.
I referred to the bank's complaints procedure, but the Financial Ombudsman Service for small businesses is available, if people are not satisfied that they have received the right and appropriate treatment through the bank's complaints procedure. Hon. Members will be aware that RBS also operates a business hotline, which assists viable businesses in accessing loans. It is designed to be a second pair of eyes for businesses whose loans are turned down first-time. The hotline number is 0800 092 3087. I understand that only two Members of Parliament so far have made use of it, but some 4,400 calls have been received from businesses. We can use the hotline in our constituency roles, to take up the cases of RBS business customers who are not getting a fair crack of the whip.
The hotline is clearly not applicable or appropriate in the circumstances to the case described by my hon. Friend the Member for Lanark and Hamilton, East, which went down the litigation route. He raised some serious allegations about the operation of the Royal Bank of Scotland. Undoubtedly, such matters will be determined by the courts. Certainly RBS is well aware of today's debate. My hon. Friend said that RBS is happy to meet him, which would be a good way for him to pursue the matter.
Overall, the Government's continuing actions are deliberately designed to address the flow of credit in the economy. We do not want to see credit constraints impeding recovery. We need to do all that we can to encourage lending. We have secured lending commitments from RBS and the Lloyds Banking Group, and we shall make further progress in that area.
Mr. Roger Gale (North Thanet) (Con): I am grateful for this opportunity to place on the official record something that has been the subject of a huge amount of correspondence and a lot of comment in other debates in the House. Before I start, it is also worth placing on the record that I intend to quote from correspondence from other Members' constituencies because I have become the focus of attention for a lot of complaint, much of which has been sent to me by e-mail. I have notified, I hope, every Member whose constituents I shall quote from to enable them to be present and to comment if they so wish. Given that that is the case, I am more than willing-I know that it may take a little time-to give way to any hon. Member who wishes to intervene. I make that plain now, and I shall seek your indulgence, Mr. Benton, if that becomes necessary.
I have close to 1,500 reasons for raising the matter of the rail service-I use the word "service" loosely-between the towns of east Kent and central London via the Kent coast, or the north Kent line. The figure 1,500 represents the number of working men and women who pay very large sums of money to commute daily from Kent to central London to their places of employment. Those are people who have become so angered by the performance of Southeastern trains and by the failure of Ministers in the Department for Transport, including one Kent Member of Parliament, properly to understand and represent their interests that they found it necessary to send to the Prime Minister a petition calling for the restoration of a timetable that was in operation before December 2009 and the reappraisal of the vehicle that is less than appropriately named High Speed 1, the Javelin service.
"A £70 million rail link from Ramsgate to London was announced this week promising journey times of less than an hour. South Thanet MP Steve Ladyman said a new company, Netrail 2000, would operate the high-speed service, which would be running by May 2002. but the sub-hour journey might not be available until 2007."
My description of this as a "pre-election smokescreen" was described as "utterly contemptible". It was not long, though, before it became apparent that Netrail 2000 was of no substance and that the ghost trains "to be built by Adtranz" had not been ordered and did not exist. The sub-hour journey from a Thanet Parkway station to London has, however, been not only a dream but a potential reality for nearly 20 years and I have myself done the Victoria to Ramsgate trip, on an engineering train, in one hour flat.
When the domestic high-speed service using the channel tunnel high-speed link was mooted, I campaigned, with others, for that high-speed service to be integrated with the domestic franchise in the fond belief that those travelling from east Kent to London would at last get the 21st century railway that they needed and deserved.
Let me make it clear that I support the provision of a high-speed service from east Kent to London. Tomorrow, the Government will make a pre-election announcement about the proposed High Speed 2 service, but it would be good to think that before HS2 is commenced the Department will complete the half-finished High Speed 1 project, carry the upgraded line and service through to a Thanet Parkway station between Minster and Cliffsend and facilitate the development of Manston airport and a truly integrated rail, sea and air transport system. That really would be an achievement of some value to the economy of east Kent.
At present, however, instead of the fast train to central London that commuters should be able to enjoy, we have been asked to applaud a train that runs fast-sometimes-from Ashford to St. Pancras at considerably increased cost, of little benefit to travellers using the Kent coastal services and at very severe detriment to the conventional routes to Victoria, Cannon Street and London Bridge that most commuters wish to use. Just as a parentheses, I heard this morning from Passenger Focus, which knows what it is talking about, that the take-up of the high-speed link to Ebbsfleet from passengers on the Kent coastline and from east Kent is just 15 per cent. I would not wish the Minister present to fall into the trap of believing that concern over the arrangements introduced in December were not anticipated. Notwithstanding the failure of consultation to take proper account of the views of the real fare-paying and travelling public, I myself raised the concerns in an Adjournment debate on 20 January 2009. I agreed that the high-speed trains might reduce travelling times from parts of Kent to St. Pancras. However, I stated:
"My constituents are going to be made to pay higher prices to travel to a station that they do not want to go to and then pay a tube fare to get back to the place where they actually want to be".
"my constituents are going to pay more for less."-[Official Report, 20 January 2009; Vol. 486, c. 715.]
Following that debate, the then Minister of State, now the Secretary of State, Lord Adonis, protested that there would be an increase in the services available to my constituents and that Southeastern fares would be capped at "RPI plus 3 per cent"-try telling that to my commuting constituents. He said that passengers from east Kent would experience benefits in savings and in journey times. He added:
"I do not believe that any passenger will be obliged to switch to a high-speed service in order to reach their preferred destination."
Following my letter of 25 February 2009, in which I challenged some of his more careless assertions, Lord Adonis replied on 12 March 2009 and acknowledged that his assessment of the number of trains from Margate to Victoria during the morning peak was erroneous. He also said:
"It is true that your constituents who currently use the direct services to London Charing Cross in the peaks will no longer be able to do so after December. However, the journey may still be made by taking a service to London Bridge and changing there."
"arrival at St. Pancras International would be more convenient for other passengers wishing to visit, for example, the British Museum, the British Library, London Zoo or Madam Tussauds."
It may have escaped his Lordship's notice, but season-ticket holders commuting to work do not spend a great deal of time visiting caged wild animals or looking at stuffed dummies. I shall deal with the detrimental leisure aspects of this issue later.
The immediate point that I wish to make to the Minister is that the problems that we are experiencing today were foreseen, forecast and ignored by both the train operating company, Govia, and the Secretary of State for Transport. In case we are in any doubt it is clearly with the Secretary of State for Transport that this buck must stop. On 16 February, in a response to a complaint from Mr. Daniel Sargent, Southeastern trains customer services officer, David Eustace, said:
"As far as the timetable is concerned, we realise that some people are disappointed with the changes that were made in December. Unfortunately, all timetables are a compromise between a service specification set by the Department for Transport (DfT) the infrastructure and rolling stock resources available".
Mr. Adam Holloway (Gravesham) (Con): The high-speed train services have been amazing and transformative in my constituency, but, of course, the normal trains are slow, dirty and very often late. Would my hon. Friend agree that there is an urgent need for bi-directional signalling at the pinch point at Rochester bridge? In my own constituency the numbers of trains stopping at Sole Street station are being severely restricted.
Mr. Gale: My hon. Friend is leading me down a path that I was not going to go down, but he has given me the opportunity to comment on an issue that is not peripheral but separate. Five years ago, representatives of Network Rail came down to Margate and examined the potential for Margate station with me. We talked about signalling on the Kent coast line. I was assured that it would be in place by 2009. Modern signalling, which allows tricks that could not otherwise be played, would allow trains on the Kent coast line to overtake. Advanced signalling and crossover points-although this sounds hairy-allow trains to be run in both directions, overtaking each other, on the two tracks. One might think that that would mean that trains would meet head-on at some point, but I am assured that that is not the case.
New signalling would also allow trains to travel much closer together, with much more signalling and therefore many more safety points on the line. The problem with the Kent coast line, as my hon. Friend and I know, is that it was built on the cheap 100 years ago. It has gradients instead of cuttings and only two passing points between Ramsgate and London. He is absolutely right to make that point. Sadly, the date has slipped. It will now be 2012 or 2014 before improvements are-literally-on track.
"On taking over the franchise in 2006 we inherited as a contractual commitment the Integrated Kent Franchise service specification, which detailed the level of service the DfT had stipulated for the Southeastern network",
"As it stands, there are unlikely to be any significant changes for when the summer timetable starts in May".
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