Chris Ruane (Vale of Clwyd) (Lab):
I represent the Vale of Clwyd, which has an area of outstanding natural beauty. One of the chief people in charge of it,
17 Dec 2012 : Column 665
Howard Sutcliffe, asked me to relay to Parliament his concerns about this issue. We have a beautiful area in the Vale of Clwyd, and the laws proposed by the Tories will diminish it.
Roberta Blackman-Woods: My hon. Friend makes the point well. The Government have given absolutely no evidence in support of this case. We noted in Committee that BT had said a number of cabinets had been delayed, but what had led to that delay was not made clear. No evidence has been provided to show that it was because local authorities were not considering economic criteria; it was simply that they did not wish their areas to be ruined by the unsightly and inappropriate siting of broadband cabinets and overhead cables.
We need to limit clause 8 so that it covers broadband only. As I said earlier, we support broadband roll-out and did much in government to facilitate it, but this Bill does not have the balance right. It is playing fast and loose with our areas of outstanding natural beauty and our national parks, and it is putting at risk the development of tourism in some of those areas. As such, this could be a profoundly anti-growth measure when it comes to developing the tourist economy in a number of areas.
A range of organisations have made a number of points to the Government, so I hope they will take this issue away and look at it again. We need to take great care with our areas of outstanding natural beauty and national parks. I am sure Government Members do not wish to have these areas cluttered up with mobile masts, overhead cables and unsightly cabinets; I am sure they would want to think again in the interest of protecting our wonderful natural environment and developing tourism sensitively in those areas.
The balance is also not right with regard to the registration of village greens. Communities need time—we accept that the period could be short so that development is not held up—to register a green once it appears in a draft plan. We want to limit the trigger-happy tendencies of the Secretary of State, so clause 15 needs to be looked at again.
If the Government are serious about using major infrastructure projects to promote growth, they must do better than the measures in the Bill. Simply allowing developers to bypass local communities in decision making will not necessarily lead to new development. We need to establish that the Planning Inspectorate system will be quicker, that there will be criteria enabling it to speed up work, and that it can be applied consistently across the country.
Business needs access to finance and markets need to grow, but strangely there is no mention of that in the Bill. Tinkering around with planning is not the solution to the need for more infrastructure or economic growth. The Town and Country Planning Association has said that the Bill
“has the potential to undermining public legitimacy without dealing with core barriers to growth which are primarily the availability of credit (both development finance and mortgage availability) and the capacity and skills of the planning service.”
That is an excellent point, but the Government have not raised such issues in the Bill or in the discussions that have accompanied it.
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The Government have also given no reason for the delay in business rate revaluation. They must provide evidence of winners and losers, because otherwise it will be suspected that the Bill was designed simply to help businesses in more prosperous areas.
Asking workers to give up substantial employment rights won over many decades in return for a few shares is simply deplorable. Despite the amendments that we have discussed today, the Bill could lead to pressure on employees to sign up. In Committee and again today, the Minister has shown no real understanding of the lengths to which people will go to save or retain their jobs, or to apply for jobs. He needs to take that on board.
During our debate on clause 25, a number of Members on both sides of the House gave examples—real examples from their constituencies—illustrating our concern about the clause. We fear that, rather than being voluntary, the arrangement that it proposes will cause many people to be persuaded to take up this new employment status—perhaps against their short-term or long-term interests—and to give away rights which, as I said earlier, have been fought for over generations, in return for a few shares. Incidentally, the shares will not necessarily have been valued. The Minister has still not made clear what will happen to them, or, indeed, to the employment rights of the people who have bought them, should the company go into liquidation.
I listened carefully to what the Minister said about amendment 59, but I heard nothing that allayed my concerns. Indeed, I heard quite the opposite. The Minister was asked to give a categorical assurance that people seeking employment through a jobcentre who refused to attend an interview because the job would require them to take up employee shares would be entitled to refuse to attend without a sanction being applied to their benefits. The Minister told us this would be assessed on a case-by-case basis. That means there must be a set of circumstances in which an individual who refuses to attend an interview for a position that will lead to their being an employee share owner will have their benefit removed.
Chris Ruane: The Minister did, indeed, say it would be judged on a case-by-case basis. He also said there would be guidelines. Does my hon. Friend know whether they have been published, and whether we can have a look at them?
Roberta Blackman-Woods: My hon. Friend makes an interesting point that I will address later. At the last count, the number of consultations underpinning this Bill had risen to four—or perhaps five—and we have had at least six sets of guidance. As far as I am aware, however, the final guidance has not yet been produced. We will wait to hear what the Minister has to say on that.
Michael Fallon: I have said that we will provide fresh guidance to decision makers to help them make consistent decisions. The current guidance is referred to as the decision makers guide. We will consult all the key stakeholders involved to make sure the new guidance properly reflects the position I have outlined and the reassurances I have given.
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Roberta Blackman-Woods: I heard what the Minister said about the guidance, but Opposition Members are looking for a categorical assurance that people who refuse to attend an interview for a job that will lead to their having to give up all their employment rights will not have their benefits stopped as a consequence. That requires a yes or no answer. If the Minister wants to make it clear that the answer is no, I will happily take an intervention from him now. As he does not rise, I think we can assume that no such assurance can be given. That shows why have so many grave concerns about clause 25.
We will certainly be voting against the Third Reading of this horrible, nasty little Bill that does little to promote growth, but risks employees’ rights and the protection of our environment, while also reducing the amount of affordable housing. The Wildlife Trusts’ comments are pertinent:
“Our primary concern is that the Bill perpetuates the myth that planning is responsible for holding back growth rather than focusing on the significant issues of financial restraint and borrowing difficulties. We believe that this approach to growth, risks putting our natural capital at risk and undermining future prosperity.”
I hope the Minister listens to the Wildlife Trusts, even if he will not listen to us. This Bill changes the basis on which planning applications are determined by breaking the trust with local communities, and thus we must vote against it.
9.28 pm
Sir Bob Russell: As the Bill’s title suggests, it is about growth and infrastructure, but, as I pointed out earlier, problems arise when we have growth without infrastructure. The rhetoric on the national stage is one thing, but the reality in individual constituencies is quite another when the Government own the land where infrastructure development is being stopped.
Let me explain the situation in respect of the northern approach road from junction 28 of the A12 to Colchester mainline station. Sections one and three have been constructed, but section two, which goes through NHS land, has not, because the NHS trust has so far failed to take it forward. I urge the Under-Secretary of State for Communities and Local Government, the hon. Member for Grantham and Stamford (Nick Boles), to visit my constituency, following on from the excellent work of the hon. Member for Bromley and Chislehurst (Robert Neill), who met members of the Myland community council to see what can be done there.
The population of the borough of Colchester has increased by 17,278 in the decade between the 2001 and 2011 censuses. That is an increase of 11%, almost double the Essex increase, and as the Minister of State suggested, the east of England is the fastest growing region in the country. To put it simply, we need infrastructure so that land elsewhere in the town is not used when that would be undesirable. By that, I mean the fields of west Mile End, which the Secretary of State has personally viewed.
In summary, observers are warning that the town’s expansion is happening too fast for its facilities and infrastructure to cope. I therefore urge Ministers to consider local examples, such as the ones I have given, to ensure that infrastructure goes in where people want it and to avoid the alternative, which is the largest housing estate in the country, with 1,600 houses, served by a cul-de-sac more than 1 mile long.
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9.31 pm
Mr Raynsford: Let me start by agreeing with the Minister of State’s opening remarks. He said that the Bill is about the Government’s priorities and I agree with him: it is about obfuscation, smoke and mirrors, waffle and self-delusion. It seeks to give the impression of activity when the Government are doing next to nothing to stimulate growth in the economy and to ensure that there is the infrastructure investment we need. It might be entitled the Growth and Infrastructure Bill, but I would be astonished if five years down the line anyone could identify a significant economic consequence for either growth or infrastructure investment.
The Bill essentially reflects Government prejudice rather than evidence. That is the biggest single charge against the Government: rather than evidence-based policy making, we have been fed a diet of prejudices about the supposed failure of the planning system, the discredited Beecroft agenda, how regulation and workers rights are somehow impeding growth and the fear of revaluation—I shall come back to that, because it is a curious question that reflects something in the Government’s psyche that they would do well to begin to think about.
Let us turn to planning first. Everyone who gave evidence to the Public Bill Committee said quite clearly—Ministers know this—that we are not getting development, housing and economic growth not because of the planning system but because of the lack of confidence and lack of lending, as well as because of the fact that people are very nervous about investing because they are uncertain about the future of the economy. That is the fundamental problem and the Government ignore it at their peril.
As everyone has heard, planning is a useful whipping boy blamed by the Government for any problems. As we listened to Ministers, we heard them changing their tune as the debate went on. They started by saying that all the planning problems were holding back growth, but by the end they were saying that only a small number of councils were not acting as well as they should. They said that the intention was to incentivise those councils and that it would not impact heavily on or affect many of them, as not many were failing. The fascinating thing about that is that when they were challenged they could not name a single such authority. The Secretary of State, who sadly is no longer in the Chamber, had a go on Second Reading, but got it spectacularly wrong, naming an authority that was not in any way failing. That is the measure of the Government; they really do not know what they are talking about. It is prejudice rather than evidence.
When we come to Beecroft, the situation is exactly the same. I have to say this to the Liberal Democrats: what a disgrace that they have gone along with the Beecroft prejudice about employee rights when their Business Secretary said that he had stopped the implementation of the Beecroft agenda. Would that he had, but he has not, and the rephrased employee ownership option—changed to shareholder ownership because the Government realised that calling it employee ownership would probably contravene the Trade Descriptions Acts—is universally condemned by people who really care about employee ownership. All the organisations who gave evidence to us—the people who have worked for years to build up employee ownership—said, “Don’t do this.” They told us that it would discredit the whole process of
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getting employees more involved in the running of their businesses and the measure was a fraudulent product that would do harm, not good.
That was the second prejudice. I have already referred to the third one—the extraordinary postponement of the business rate revaluation. Why is there somewhere in the psyche of the Conservative party a fear of revaluation? The Conservatives think it is somehow going to cause them harm. I suppose it is because the revaluation is due to take effect in 2015, and they probably think it might be bad news and that if they can halt it they might be able to turn it around. Once again, they have acted on the basis of bogus figures that no one believes. When the rating experts gave evidence—Gerald Eve, the British Property Federation and the British Council of Shopping Centres—they all said that they did not believe the figures from the Valuation Office Agency. Ministers have trotted the figures out again today—800,000 potential gainers, compared to 300,000 losers. No one believes it. When we proposed the simple amendment that the Government should publish serious estimates and consult the interested parties before taking a decision, they would not accept it. They wanted to proceed on the basis of their prejudice rather than on evidence.
In between the bookends of prejudice that characterise the Bill, there are one or two worthwhile and sensible provisions, and I welcome them. The Penfold agenda for the rationalisation of conflicting planning and consent regimes is a sensible move forward, and there are some good things in that area, but it is hard to find them with those awful, unjustified, un-evidence-based prejudices on either side of them.
It is to the Government’s credit—this is a seasonal comment as we approach Christmas—that Ministers have realised that there are some turkeys in the Bill that had to be changed. I thank the planning Minister, the Under-Secretary of State for Communities and Local Government, the hon. Member for Grantham and Stamford (Nick Boles), for agreeing to reconsider the rural exceptions policy; the Government were going to make a serious mistake, but they have backed away and I am grateful to them for that. But those are small mercies in a Bill that is fundamentally flawed and will do nothing about the two subjects that it is supposed to stimulate—growth and infrastructure—and will actually perpetuate a series of myths that do nothing for good government or development in this country.
9.38 pm
John Howell: It is a great pleasure to follow the right hon. Member for Greenwich and Woolwich (Mr Raynsford), but it will come as no surprise to the House that I do not agree one jot with what he said.
I spoke on Second Reading, I participated in the Committee and it is a pleasure to speak on Third Reading. Before that, I was intimately involved in the production of the Localism Act 2011 and the national planning policy framework, so I can assure the right hon. Gentleman that planning was no whipping boy. In “Open Source Planning” I set out a vision of how the planning system should operate and the Government have more or less faithfully fulfilled it in their reforms. Planning was not a whipping boy; it was given proper status, as it was in my Second Reading speech when
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I pointed to surveys showing the overwhelming impression among business that planning was the great preventer of development.
Both the Opposition and the LGA entirely missed the point about localism. Localism was always a double devolution. The first devolution was down to local councils, whether they were district or borough councils. The second devolution, which was just as important, was down to local people, principally through their parish and town councils, but generally to the people at large to deal with.
It is not surprising that the LGA is interested only in the first of these. It is not interested in devolving power from itself down to community groups. It is interested in retaining that power. The purpose of the Bill is to deal with district or borough councils that cannot or will not let go and complete the devolution process. Clause 1 partly deals with that aspect of localism. It is an incentive for those councils to get it right and to get their act together.
I want briefly to discuss a couple of other points. In Committee and in the earlier debates today we heard a great deal about section 106 agreements, but nothing more powerful has been said about the proposal for section 106 than that a share of nothing is still nothing. It is to the credit of my hon. Friend the planning Minister that we have pushed forward the renegotiation of section 106 in order to ensure that a share of something is something.
Similarly, let us not forget that the reason we were discussing the clauses on village greens is that they are a direct result of the Penfold review. It is a treatment of a situation in which a non-planning regime for village greens rubs up against a planning regime in neighbourhood planning and, as the right hon. Member for Hazel Grove (Andrew Stunell) made clear, in assets of community value. It is instructive that the Opposition have tried to confuse the two and not kept them separate. The village greens legislation is separate from the planning legislation. It should not be used to confound planning proposals. It is right that we have split it as we have and that we should be given credit for doing that.
There are many other aspects of the Bill that I could trespass on to, but I will give other Members a chance to speak. The Bill is a perfectly formed example of its type. It could not be more different from the description given by the right hon. Member for Greenwich and Woolwich. It is a perfectly formed Bill that we should vote for with absolute confidence.
9.43 pm
Mrs Glindon: Serving on the Bill Committee confirmed to me that all of us in the House are human, to a greater or lesser extent. I genuinely believe that the coalition Government want to see growth, but their approach is wrong.
It has already been said that this is not a Bill for growth. I am sad to hear Members on the Government Benches decry what has been said by the Local Government Association, an association that is trusted by all the councils throughout the land and their representative body. What could be more representative of our local communities and the elected bodies that represent them than that body? The Government would really have shown a commitment to growth if they had listened to the LGA’s suggestions on the Bill. It said that planning is not why no construction work is going on; the reason
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is that banks are not lending and people are not buying. That is what is stalling and stopping development. Until the Government listen, no progress can be made.
Drawing on my past as a member of a local authority planning committee—having been a councillor for 15 years, I sometimes find it hard to leave things behind—I know how committed councillors are when making planning decisions, how they can listen directly to local people and how local community groups or individuals often make representations about their planning concerns. What could be worse than, as might happen because of clause 1, a council that is deemed to be a failed council, whatever that might mean—we are still unsure about the definition—finding that its planning decisions are being taken away and swept off to either the Secretary of State or the Planning Inspectorate? How will the people who have been voted in to represent local people feel? How will local people feel when they have no right of appeal? It is that stark.
I have a further concern. The Planning Inspectorate makes household decisions within seven weeks and non- household decisions within 17 weeks, but local authorities make household decisions within eight weeks and non-household decisions within 13 weeks, and that is the case for more than 89% of councils. It seems that the majority are being punished for the failings of the few.
In relation to section 106 agreements and affordable housing, I have referred to the fact that in North Tyneside alone around 4,000 people are currently waiting for council housing. That does not include those who are hoping to buy and struggling to raise money to put down a deposit for a mortgage. I have constituents coming to me who simply cannot buy a house and cannot get affordable housing and so are looking to the council. However we define affordable housing, the need is as great, whether it is for someone looking for a house they can afford to buy or to rent. Taking away the housing element and the 106 agreements will leave those people even more desperate.
I spoke before about employee ownership, or share ownership as it is currently called. Many constituents have contacted me about that over the past week because they are so concerned about it, as well as about the rest of the Bill. They see what is wrong with it. They see how it undermines workers’ right and takes away women’s rights and carers’ rights to flexible working. I have stressed the need for training and the fact that it is not right that people will lose their right to training. Training enhances and helps companies grow in professionalism through personal development, and that can really make employers proud of their employees.
I have mentioned those three points. It is rather like someone going to confession to recite their sins for a period of time and saying, “That’s all I can remember, Father.” I am looking back at my time on the Bill Committee and in the House today, but it is not my sins that I am concerned about; it is the Government’s transgressions and what they are doing with the Bill. I hope that we reject it.
9.49 pm
Annette Brooke: I thank everybody who has been involved in the scrutiny of this Bill, particularly my right hon. Friend the Member for Hazel Grove (Andrew Stunell) and my hon. Friend the Member for Burnley (Gordon Birtwistle).
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I applaud the objectives of the Bill. We inevitably need a multi-pronged approach to achieving growth in the sort of economic climate that we are in at the moment. We have to work with the banking system to make credit available and to help first-time buyers. We need land to be available, although I do like to protect the green belt. We need the public sector land availability that my hon. Friend the Member for Colchester (Sir Bob Russell) mentioned. There is much more scope for that on the way, whether it be for infrastructure or for housing itself. We need investment from the Government, although the £10 billion contribution is most welcome, as is the direct £300 million.
Not so long ago, I was standing here arguing against regional spatial strategies. In a relatively short space of time, we have had the Localism Act 2011 and the national planning policy framework, which are really good steps forward. The Bill has brought about further debate on localism versus centralism, and it is important that we get the right balance. Today we have had some important reassurances, particularly on the designation of planning authorities, to say that there will be early intervention and support. It is very important to work with local authorities and local people, not in conflict with them. I am worried that we have not quite sorted out quantity and quality as regards planning decisions, but there is scope for more debate on that.
On section 106 agreements, we have had some reassurances about the transparency of any renegotiations and a really firm test of viability. I am also reassured by the time-limited aspect. We have all been calling for outstanding planning permissions to be implemented rather than developments going out into our green fields, so this time limit has potential. I am sure that we all care about affordable housing and mixed housing developments. We have to use all the tools at our disposal, not just in this Bill but right across Government.
I am concerned that the measures in the Bill should not be counter-productive. It will be important to have more scrutiny in the other place. It is also important that we all respond robustly and encourage others to take part in the many consultations that the hon. Member for City of Durham (Roberta Blackman-Woods) mentioned. I shall certainly be participating on behalf of the Liberal Democrats, and I hope that the listening process will continue.
9.52 pm
Simon Hughes: I thank the Under-Secretary, my hon. Friend the Member for Grantham and Stamford (Nick Boles), for what he said about making sure that we have a much more open system for assessing the viability of applications for developments with affordable housing. We have lived in a world where people in communities such as mine have gone to their local authority and developers and asked why the case has been made for a reduction in the original plan for affordable housing, and they have been told that it is all confidential and nothing can be seen. The good news that comes from today’s debate is that the process will be much more visible and transparent. That was called for by Labour Front Benchers, and it was certainly undertaken by my hon. Friend.
I encourage Ministers to consider the fact that we absolutely need to respond to the demand out there in all our constituencies and to go on looking for new
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ways of finding more affordable housing. I do not think that there is a single constituency in England where there is not a huge demand for affordable housing, and we have pressures that the Government need to work out ways of resisting. In London, we have lots of purchases from abroad of land to be used primarily for marketing abroad, not for marketing at home. Foreign investors will buy to build and then leave the properties unoccupied. That is unacceptable. It forces up prices, it reduces availability, and it may be new housing but it is not new affordable housing. As my hon. Friend the Member for Colchester (Sir Bob Russell) said, public sector land, not only in Greater London but elsewhere, is not being brought back into use.
I hope that the Department for Communities and Local Government will work with the Department for Business, Innovation and Skills to realise the benefits of house building in terms of growth and jobs. It is one of the most certain ways of getting maximum numbers of jobs and apprenticeships into the economy. I hope that the Department will also work with our colleagues in the Treasury to make sure that we have a tax regime that incentivises people to develop brownfield land, not to sit on it. Too many sites in constituencies such as mine have been sitting idle and not used for anything for too long. People want affordable housing and imagination from the Department for Communities and Local Government, but I hope that this Bill is only the beginning of a development that produces far more affordable housing under this Government than was ever developed during five years of the Labour Government.
I did not come to this place just to be critical of a Labour Government who developed far fewer council properties than any preceding Government; I want to encourage this Government to make sure that they do better than our predecessors and develop homes that meet the aspirations of my constituents, who want housing that they can afford and who do not want the only available offer to be the ridiculous costs of some of the new housing currently being built.
Question put, That the Bill be now read a Third time.
The House divided:
Ayes 273, Noes 231.
Division No. 124]
[
9.55 pm
AYES
Adams, Nigel
Afriyie, Adam
Aldous, Peter
Amess, Mr David
Andrew, Stuart
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, Norman
Baker, Steve
Baldry, Sir Tony
Baldwin, Harriett
Barclay, Stephen
Barker, rh Gregory
Baron, Mr John
Barwell, Gavin
Bebb, Guto
Beith, rh Sir Alan
Bellingham, Mr Henry
Beresford, Sir Paul
Berry, Jake
Bingham, Andrew
Birtwistle, Gordon
Blackman, Bob
Blackwood, Nicola
Blunt, Mr Crispin
Boles, Nick
Bone, Mr Peter
Bottomley, Sir Peter
Bradley, Karen
Brady, Mr Graham
Brake, rh Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Brine, Steve
Brokenshire, James
Brooke, Annette
Browne, Mr Jeremy
Bruce, rh Sir Malcolm
Buckland, Mr Robert
Burley, Mr Aidan
Burns, Conor
Burns, rh Mr Simon
Burstow, rh Paul
Burt, Lorely
Cable, rh Vince
Cairns, Alun
Campbell, rh Sir Menzies
Carmichael, rh Mr Alistair
Carmichael, Neil
Carswell, Mr Douglas
Chishti, Rehman
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Cox, Mr Geoffrey
Crabb, Stephen
Crockart, Mike
Crouch, Tracey
Davies, David T. C.
(Monmouth)
Davies, Glyn
Djanogly, Mr Jonathan
Donaldson, rh Mr Jeffrey M.
Dorrell, rh Mr Stephen
Doyle-Price, Jackie
Drax, Richard
Duddridge, James
Duncan Smith, rh Mr Iain
Dunne, Mr Philip
Ellis, Michael
Ellwood, Mr Tobias
Elphicke, Charlie
Eustice, George
Evans, Graham
Evans, Jonathan
Evennett, Mr David
Fabricant, Michael
Fallon, rh Michael
Farron, Tim
Field, Mark
Foster, rh Mr Don
Francois, rh Mr Mark
Freeman, George
Freer, Mike
Fuller, Richard
Garnier, Sir Edward
Garnier, Mark
Gauke, Mr David
George, Andrew
Gibb, Mr Nick
Gilbert, Stephen
Glen, John
Goldsmith, Zac
Goodwill, Mr Robert
Graham, Richard
Grant, Mrs Helen
Gray, Mr James
Grayling, rh Chris
Greening, rh Justine
Grieve, rh Mr Dominic
Griffiths, Andrew
Gummer, Ben
Gyimah, Mr Sam
Halfon, Robert
Hames, Duncan
Hammond, rh Mr Philip
Hammond, Stephen
Hancock, Matthew
Hands, Greg
Harper, Mr Mark
Harrington, Richard
Harris, Rebecca
Hart, Simon
Haselhurst, rh Sir Alan
Heald, Oliver
Heaton-Harris, Chris
Hemming, John
Henderson, Gordon
Hendry, Charles
Herbert, rh Nick
Hinds, Damian
Hollingbery, George
Hollobone, Mr Philip
Hopkins, Kris
Howell, John
Hughes, rh Simon
Huhne, rh Chris
Hurd, Mr Nick
Javid, Sajid
Jenkin, Mr Bernard
Johnson, Gareth
Jones, Andrew
Jones, rh Mr David
Jones, Mr Marcus
Kawczynski, Daniel
Kelly, Chris
Kennedy, rh Mr Charles
Kirby, Simon
Knight, rh Mr Greg
Laing, Mrs Eleanor
Lamb, Norman
Latham, Pauline
Laws, rh Mr David
Leadsom, Andrea
Lee, Jessica
Lee, Dr Phillip
Leech, Mr John
Lefroy, Jeremy
Leigh, Mr Edward
Letwin, rh Mr Oliver
Lewis, Brandon
Lewis, Dr Julian
Liddell-Grainger, Mr Ian
Lidington, rh Mr David
Lilley, rh Mr Peter
Lopresti, Jack
Lord, Jonathan
Luff, Peter
Macleod, Mary
Maude, rh Mr Francis
Maynard, Paul
McCartney, Jason
McCartney, Karl
McLoughlin, rh Mr Patrick
McPartland, Stephen
Menzies, Mark
Mercer, Patrick
Metcalfe, Stephen
Miller, rh Maria
Mills, Nigel
Milton, Anne
Moore, rh Michael
Morris, Anne Marie
Mosley, Stephen
Munt, Tessa
Murray, Sheryll
Murrison, Dr Andrew
Newmark, Mr Brooks
Newton, Sarah
Nokes, Caroline
Nuttall, Mr David
O'Brien, Mr Stephen
Offord, Dr Matthew
Ollerenshaw, Eric
Opperman, Guy
Ottaway, Richard
Paice, rh Sir James
Parish, Neil
Patel, Priti
Pawsey, Mark
Penrose, John
Percy, Andrew
Phillips, Stephen
Pickles, rh Mr Eric
Pincher, Christopher
Poulter, Dr Daniel
Prisk, Mr Mark
Pritchard, Mark
Pugh, John
Raab, Mr Dominic
Reckless, Mark
Redwood, rh Mr John
Rees-Mogg, Jacob
Robathan, rh Mr Andrew
Robertson, rh Hugh
Robertson, Mr Laurence
Rudd, Amber
Ruffley, Mr David
Russell, Sir Bob
Rutley, David
Sandys, Laura
Scott, Mr Lee
Selous, Andrew
Shapps, rh Grant
Shelbrooke, Alec
Shepherd, Mr Richard
Simpson, Mr Keith
Skidmore, Chris
Smith, Miss Chloe
Smith, Henry
Smith, Julian
Smith, Sir Robert
Soames, rh Nicholas
Spelman, rh Mrs Caroline
Spencer, Mr Mark
Stanley, rh Sir John
Stephenson, Andrew
Stevenson, John
Stewart, Bob
Stewart, Iain
Stewart, Rory
Streeter, Mr Gary
Stride, Mel
Stuart, Mr Graham
Stunell, rh Andrew
Sturdy, Julian
Swales, Ian
Swayne, rh Mr Desmond
Swinson, Jo
Swire, rh Mr Hugo
Syms, Mr Robert
Teather, Sarah
Thurso, John
Timpson, Mr Edward
Tomlinson, Justin
Tredinnick, David
Turner, Mr Andrew
Uppal, Paul
Vaizey, Mr Edward
Vara, Mr Shailesh
Vickers, Martin
Walker, Mr Charles
Walker, Mr Robin
Wallace, Mr Ben
Watkinson, Angela
Weatherley, Mike
Webb, Steve
Wharton, James
Wheeler, Heather
White, Chris
Whittaker, Craig
Whittingdale, Mr John
Wiggin, Bill
Williams, Mr Mark
Williams, Stephen
Williamson, Gavin
Willott, Jenny
Wollaston, Dr Sarah
Wright, Jeremy
Wright, Simon
Young, rh Sir George
Zahawi, Nadhim
Tellers for the Ayes:
Joseph Johnson
and
Mark Hunter
NOES
Abbott, Ms Diane
Abrahams, Debbie
Ainsworth, rh Mr Bob
Alexander, rh Mr Douglas
Ali, Rushanara
Anderson, Mr David
Ashworth, Jonathan
Bailey, Mr Adrian
Bain, Mr William
Balls, rh Ed
Banks, Gordon
Barron, rh Mr Kevin
Bayley, Hugh
Beckett, rh Margaret
Begg, Dame Anne
Benn, rh Hilary
Berger, Luciana
Betts, Mr Clive
Blackman-Woods, Roberta
Blenkinsop, Tom
Blomfield, Paul
Blunkett, rh Mr David
Bradshaw, rh Mr Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr Nicholas
Brown, Mr Russell
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burnham, rh Andy
Campbell, Mr Alan
Campbell, Mr Ronnie
Champion, Sarah
Chapman, Jenny
Clark, Katy
Clarke, rh Mr Tom
Coaker, Vernon
Coffey, Ann
Cooper, rh Yvette
Corbyn, Jeremy
Crausby, Mr David
Creagh, Mary
Creasy, Stella
Cruddas, Jon
Cryer, John
Cunningham, Alex
Cunningham, Mr Jim
Cunningham, Sir Tony
Curran, Margaret
Dakin, Nic
Danczuk, Simon
David, Wayne
Davidson, Mr Ian
Davies, Geraint
De Piero, Gloria
Denham, rh Mr John
Dobbin, Jim
Dobson, rh Frank
Docherty, Thomas
Donohoe, Mr Brian H.
Doran, Mr Frank
Doughty, Stephen
Dowd, Jim
Doyle, Gemma
Dromey, Jack
Dugher, Michael
Durkan, Mark
Eagle, Ms Angela
Eagle, Maria
Edwards, Jonathan
Efford, Clive
Elliott, Julie
Ellman, Mrs Louise
Engel, Natascha
Esterson, Bill
Evans, Chris
Farrelly, Paul
Field, rh Mr Frank
Fitzpatrick, Jim
Flello, Robert
Flint, rh Caroline
Flynn, Paul
Fovargue, Yvonne
Francis, Dr Hywel
Gapes, Mike
Gardiner, Barry
Gilmore, Sheila
Glass, Pat
Glindon, Mrs Mary
Godsiff, Mr Roger
Goggins, rh Paul
Goodman, Helen
Greatrex, Tom
Green, Kate
Greenwood, Lilian
Griffith, Nia
Gwynne, Andrew
Hain, rh Mr Peter
Hamilton, Mr David
Hamilton, Fabian
Hanson, rh Mr David
Harman, rh Ms Harriet
Harris, Mr Tom
Havard, Mr Dai
Healey, rh John
Hendrick, Mark
Hepburn, Mr Stephen
Hillier, Meg
Hilling, Julie
Hodge, rh Margaret
Hodgson, Mrs Sharon
Hoey, Kate
Hopkins, Kelvin
Horwood, Martin
Hunt, Tristram
Irranca-Davies, Huw
Jackson, Glenda
Jamieson, Cathy
Jarvis, Dan
Johnson, rh Alan
Johnson, Diana
Jones, Graham
Jones, Helen
Jones, Mr Kevan
Jones, Susan Elan
Kaufman, rh Sir Gerald
Keeley, Barbara
Kendall, Liz
Lammy, rh Mr David
Lavery, Ian
Lazarowicz, Mark
Leslie, Chris
Llwyd, rh Mr Elfyn
Long, Naomi
Love, Mr Andrew
Lucas, Caroline
Lucas, Ian
Mahmood, Shabana
Malhotra, Seema
Mann, John
Marsden, Mr Gordon
McCann, Mr Michael
McCarthy, Kerry
McClymont, Gregg
McDonagh, Siobhain
McDonald, Andy
McDonnell, John
McFadden, rh Mr Pat
McGovern, Alison
McGovern, Jim
McKechin, Ann
McKenzie, Mr Iain
McKinnell, Catherine
Meacher, rh Mr Michael
Meale, Sir Alan
Mearns, Ian
Miliband, rh David
Miller, Andrew
Moon, Mrs Madeleine
Morden, Jessica
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Mudie, Mr George
Munn, Meg
Murphy, rh Mr Jim
Murphy, rh Paul
Murray, Ian
Nandy, Lisa
Nash, Pamela
O'Donnell, Fiona
Osborne, Sandra
Owen, Albert
Perkins, Toby
Phillipson, Bridget
Pound, Stephen
Powell, Lucy
Qureshi, Yasmin
Raynsford, rh Mr Nick
Reed, Steve
Reeves, Rachel
Reynolds, Emma
Reynolds, Jonathan
Ritchie, Ms Margaret
Robertson, John
Robinson, Mr Geoffrey
Rotheram, Steve
Roy, Lindsay
Ruane, Chris
Ruddock, rh Dame Joan
Sarwar, Anas
Sawford, Andy
Seabeck, Alison
Shannon, Jim
Sharma, Mr Virendra
Sheerman, Mr Barry
Sheridan, Jim
Shuker, Gavin
Skinner, Mr Dennis
Smith, rh Mr Andrew
Smith, Angela
Smith, Nick
Spellar, rh Mr John
Straw, rh Mr Jack
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Mr Gerry
Tami, Mark
Thomas, Mr Gareth
Thornberry, Emily
Timms, rh Stephen
Trickett, Jon
Turner, Karl
Twigg, Derek
Twigg, Stephen
Umunna, Mr Chuka
Vaz, Valerie
Walley, Joan
Watson, Mr Tom
Watts, Mr Dave
Weir, Mr Mike
Whitehead, Dr Alan
Williams, Hywel
Williamson, Chris
Winnick, Mr David
Winterton, rh Ms Rosie
Wishart, Pete
Wood, Mike
Woodward, rh Mr Shaun
Wright, David
Wright, Mr Iain
Tellers for the Noes:
Phil Wilson
and
Heidi Alexander
Question accordingly agreed to.
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17 Dec 2012 : Column 675
17 Dec 2012 : Column 676
17 Dec 2012 : Column 677
Bill read the Third time and passed.
Business without Debate
Delegated Legislation
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Oil Tax
That the draft Qualifying Oil Fields Order 2012, which was laid before this House on 13 November, be approved.—(Mr Syms.)
Business of the House
That, in respect of the Succession to the Crown Bill, notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a second time.—(Mr Syms.)
Adjournment (February, Easter, Whitsun, Summer, Conference Recess, November and Christmas)
Motion made, and Question put forthwith (Standing Order No. 25),
That this House-
(1) at its rising on Thursday 14 February 2013, do adjourn until Monday 25 February 2013;
(2) at its rising on Tuesday 26 March 2013, do adjourn until Monday 15 April 2013;
(3) at its rising on Tuesday 21 May 2013, do adjourn until Monday 3 June 2013;
(4) at its rising on Thursday 18 July 2013, do adjourn until Monday 2 September 2013;
(5) at its rising on Friday 13 September 2013, do adjourn until Tuesday 8 October 2013;
(6) at its rising on Tuesday 12 November 2013, do adjourn until Monday 18 November 2013; and
(7) at its rising on Thursday 19 December 2013, do adjourn until Monday 6 January 2014.—(Mr Syms.)
17 Dec 2012 : Column 678
Small Business Growth (Hazel Grove)
Motion made, and Question proposed, That this House do now adjourn.—(Mr Syms.)
10.8 pm
Andrew Stunell (Hazel Grove) (LD): I am pleased to have the opportunity to bring this debate to the House. Although it relates specifically to my constituency, I am certain from the remarks I have heard from other Members over the past few months that the problem is universal, and that we could easily have another 649 such debates relating to other constituencies. The problem is that there is a huge gap between what the retail banks tell the Government is going on, what they tell Members of Parliament is going on and what they tell small and medium-sized businesses in my constituency is going on.As soon as it was known that I had secured the debate, a number of organisations got in touch with me to say words to the effect of, “Good on yer, get on with it, and there’s lots more to follow.” The British Chambers of Commerce e-mailed me to say:
“Across Britain, there is strong evidence of a serious market failure around access to finance, especially for fast-growing and newer businesses.”
“The introduction of state-backed support schemes to increase the availability of finance to SMEs has been impeded by a lack of coherence, poor roll-out, poor communication, and over-dependence on existing bank infrastructure.”
By that, the BCC means that the existing banks are being expected to deliver it.
The Federation of Small Businesses got in touch to say that as part of its quarterly economic index it asked members whether they had requested credit, and other related questions. In the third quarter of this year, 21.6% of those questioned had applied for a loan—in other words, more than a fifth of businesses—and of those 42.4% were rejected and 14.8% still await a decision. In addition, 74.7% of firms rated credit availability as quite poor or very poor, with only 6.9% rating it as good. In other words, half of those who applied had their loans rejected, and three quarters of all firms thought that credit availability was poor or very poor.
The FSB went on to tell me that it had also recently carried out a survey of its members in Hazel Grove regarding their main concerns. Approximately one third said that getting bank lending or lending from other sources was their biggest concern—a third of the businesses they polled in my constituency. It provided a quote from one of its members:
“the high street banks are not the vehicle for engaging small business due to their aggressive policies and their inability to discuss/consider risk based lending. What we need is not lots of different schemes that try to get the banks to do their job, but rather one scheme that does not involve the high street banks.”
Not everybody shares the pessimism about retail banks. I was drawn to remarks made in the newspaper City A.M. on 6 December by Anthony Browne, the chief executive of the British Bankers Association. His commentary was:
“It is time politicians wake up to the fact that, when it comes to returning the economy to growth, banks are no longer the problem–but part of the solution.”
That is why it is so important for us to have this debate and to hear the Minister’s response. There is a huge gap between the perception of the banks as they represent
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themselves to the Government and MPs—we all get monthly or quarterly newsletters from each of the big retail banks in which they point out that everything is as good as it ever possibly could be, they are trying hard and nothing is going wrong—and my constituency inbox, in which every month small and medium-sized enterprises tell me of their problems.
I want to spend a little time on four specific cases. In each case, I have spoken to the companies concerned and they are happy and ready for me to use them as examples in this debate. The first case is Isaac Hirst Fine Furniture, which I think is best described as a micro-business—it is a one-man furniture making proposition. Mr Hirst has been running it since 2011 and banks with Lloyds. At the beginning of the year, he was offered a £10,000 contract from a big company specialising in high-end commercial kitchens. He approached the bank for an overdraft to provide working capital. When he opened his account with Lloyds in 2011, he was told that he would be eligible for consideration of an overdraft after a few months. In fact, his overdraft application triggered a refusal and a robust challenge from the bank over how he got a business account in the first place, and, because of the bank’s response, his company had to turn down the contract.
The same company that had offered my constituent the £10,000 contract then offered him a £2,000 contract. He realised that cash flow could still be a problem, because he was finishing off a piece of furniture for a client in Valencia—export business, you see—so on 2 July this year he approached the bank for a short-term overdraft of £500 to help pay for the materials for the new commission, but the bank refused.
That is when I came into the picture. I took up the case and received a letter from Lloyds TSB dated 11 September that, apart from some explanatory stuff about its decision making, said:
“I’ve also asked Leigh Taylor to contact your office to arrange the meeting which was previously discussed.”
By the end of November, Leigh Taylor had not contacted me, but on the other hand I had got an invite to breakfast from Lloyds TSB and to meet Annette Barnes, whose job title was “ambassador for the north”—a suitably grand title and perhaps worth compromising my ethical position for by accepting a breakfast from her. I thought she might be at least dimly aware of the fact that I had raised a complaint about the bank’s behaviour in relation to Isaac Hirst Fine Furniture, but that turned out not to be the case—she was completely unsighted—although she said she would make some inquiries. She made them and came back saying, “Everything’s okay, I think.” Well, I am still waiting for the call from Leigh Taylor, and it is now 17 December.
I have, however, got endless briefing notes from Lloyds bank. I have a note telling me it employs 9,000 people, has got 350 branches and gives £4.9 million to charity. It sent me a “state of the economy” pack and a constituency factsheet that, among other things, tells me what the average child’s savings are in my constituency, but it has avoided telling me how many SMEs there are in my constituency, how many applications for loans it has received from SMEs in my constituency and how many have succeeded.
I would not want the House to think that I have a particular gripe about Lloyds bank, so it is right to introduce my second example, which relates to an
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engineering company in my constituency, JD Hughes, Europe’s largest manufacturer of emergency safety showers, eyebaths and decontamination equipment. A lot of its equipment goes into chemical plants and petrochemical plants so that, in the event of spillage or some other problem, workers can get immediate relief. The company’s products are used throughout industry and by civil and military authorities worldwide, including by our own fire and rescue services. They are sold directly to end users and contractors or sometimes through an international network of distributers, and they are sold through specialist safety equipment suppliers.
This case came to my attention when I attended the awarding of the Queen’s award for export given to the company by the lord lieutenant of Greater Manchester in the presence of me, as the constituency MP, and the mayor of Stockport borough. At that point, it became clear that it, too, had a quite a serious problem. Its turnover is £12 million a year, it employs 90 people and 70% of its product is exported. Some 97% of the materials it uses are UK-supplied, and a dozen or more of those companies are based in Stockport. It provides local jobs, and has a local purchasing policy but worldwide trade. However, it cannot get the money and support it needs from the banks.
JD Hughes started with RBS—we can add that to the rogue’s gallery—but it was not much use so the company switched to HSBC. That did not work so it switched to NatWest. In the course of that process it received a mysterious £250,000 cut to its overdraft, a reduction in invoice discount rate, and an offer of factoring for outstanding bills which, given that it was dealing with internationally known major corporations, was inappropriate. That cost the company £50,000 to sort out.
In July this year I am happy to report—I am sure the Minister will be pleased to note this—that the Export Credits Guarantee Department offered the company 50% for its export project. However, that must be matched by the bank, although five months later the bank has not agreed to do that. The money is there but cannot be released. JD Hughes needs an underwriting of its bond facilities but at the moment that is costing it £1 million in money held back by clients because it cannot get the bond in place. The company’s finance director estimates that it is £1 million behind where it could be in terms of turnover—the equivalent of 10 jobs. It has recently been approached by a foreign bank that is offering a better deal than any of the domestic banks. Its plea is for the banks to adopt not a no-risk but a low-risk way of evaluating propositions they receive. On Friday I met Mr Steve Sankson, the regional director at NatWest commercial banking, and to be fair he left the meeting with a clear understanding of my concerns. It remains to be seen whether that will lead to action.
My third example concerns Tribourne Catering Services, and the villain of the piece is HSBC. Tribourne recently secured a 10-year contract to run catering facilities at a newly opened private sports centre in my constituency, Woodley Sports. The company has been banking with HSBC since 1996 but to get the contract under way it is necessary for the successful catering company to equip the kitchen, which requires the purchase of capital materials. Tribourne asked for a loan of £100,000, which was refused. When it approached the bank to say, “Okay, if not £100,000, how much?” the answer was, “None at all.” When I spoke to Brenda Hopkins of
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Tribourne she said that the response may have something to do with the fact that she is now in contact with her ninth relationship manager in 16 years of banking with HSBC, although she has not heard from most of them in her time with the bank.
What does HSBC have to say about that? A letter on 13 September stated that
“in the North West region we are pleased to report that we have in the first six months of the year: agreed in excess of £657 million gross new lending to over 13,650 small and medium sized businesses—an increase on the same period last year.”
No doubt that is true; I am sure the bank would not deceive MPs in its correspondence, but it certainly missed one company in which it should have invested—another example of things that go wrong.
Fourthly, just to get a full suite of banks, let us look at Barclays. Childcare Products has had a 15-year business relationship with Barclays bank. In January 2012 there was a change of bank manager—or relationship manager as they seem to be called these days—and the boss was called into talk about his overdraft facility and how the bank could make things a bit easier for him. The company has an £18,000 overdraft facility that could be extended to £20,000 via a phone call to the bank manager. The new proposition was to turn that into a loan, with a change in interest from 8% to 14% over five years. When the company refused, nothing very much happened until it discovered that the £18,000 overdraft was reduced to £10,000 without anybody bothering to notify it.
The Federation of Small Businesses was tipped off by Childcare Products and an all-party group has considered the matter, but what did Barclays have to say to me? It wrote on 29 November to say that it is running
“a series of clinics and seminars…to encourage entrepreneurship and help businesses boost skills, overcome challenges and widen their networks.”
It has a strange way of doing that.
I have given an overview from the British Chambers of Commerce, the Federation of Small Businesses and the British Bankers Association and asked the House to judge which has got it more right in the real world. I gave examples of four different companies in my constituency that approached me—I did not seek them out—to say, “Mr Stunell, can you not do something about how the banks are treating small businesses?” All had the option and capacity to create more jobs in Hazel Grove doing productive work, and all have been blocked as a result of decisions taken on their applications.
What do I want to hear from the Minister tonight? I want to hear his assurances on the Government’s good intentions. I share them, and I know he has worked hard. I want to hear the report on progress and to know how soon we will have the business bank. I want to know whether and how soon we can channel more of the Government’s and public taxpayers’ resources through the non-retail banking sector, for which the British Chambers of Commerce has asked.
I want to ask the Minister for just one practical step. I would like him to convene a meeting at which the British Bankers Association and senior representatives of each of the banks I have named in the debate are in the same room with him as the Minister and me as the affected MP. I also want the opportunity to bring one
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or two of the people to whom I have referred into that room, so that we can short-circuit the gap between what the banks tell the House and the Government and what really happens on the ground. We must get to a point at which we get real action, instead of talking on two different planets about two different situations while jobs go begging. I am looking forward to what I know the Minister will tell me.
10.28 pm
The Economic Secretary to the Treasury (Sajid Javid): I thank my right hon. Friend the Member for Hazel Grove (Andrew Stunell) for securing this debate and for presenting his case so eloquently.
All hon. Members are keen to see successful businesses in our constituencies, whether in Hazel Grove or Bromsgrove. We recognise the importance of businesses. Whether they are small, medium or multinational, they provide jobs for our communities. Indeed, only with the help of successful British businesses will we be able to deal with the economic challenges that our country faces. I am therefore glad to have the opportunity to discuss retail banks and small businesses, and business finance more generally.
My right hon. Friend has shared some interesting case studies of the difficulties that some of his constituency companies have faced. He mentioned four companies, including Isaac Hirst Fine Furniture, JD Hughes and Tribourne Catering. I am sure he understands that it would not be appropriate for me to try to address the company issues he has, but his message comes through clearly from the illustrative examples he has picked.
I would like to start by talking about some of the action that the Government have already taken, and then to answer some of the excellent questions that my right hon. Friend has asked. The Government have taken a number of steps, and the first that they took on coming to power was to set up Project Merlin, which began in 2011. In that year, UK banks lent a total of £214 billion to British businesses. That represented a 20% increase on 2010, exceeding the lending target by £24 billion. On top of that, the national loan guarantee scheme enabled businesses to receive a 1% discount on loans, compared with the price of loans outside the scheme. As a result, over 28,000 cheaper loans, worth over £4.6 billion, have been committed to businesses. Of those loans, over £2.7 billion has already been used by businesses to help them to invest and grow.
One of the Government’s most ambitious schemes is the funding for lending scheme. Also referred to as the FLS, this joint project between the Government and the Bank of England was launched in July this year. It works by reducing banks’ funding pressures in return for increased lending to businesses and households. The FLS creates strong incentives for banks to increase lending to UK households and businesses, and as a result of the scheme, we have already seen a number of participating banks launch new and discounted SME loan products. The scheme is transparent, and the Bank of England will publish data on the amount that each bank has drawn from the scheme and how much they have lent to UK households and businesses.
Other Government measures include the enterprise finance guarantee scheme, which enables lenders to provide debt finance to small businesses that can
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demonstrate that they have capacity to repay the loan in full but do not have sufficient security. The EFG has already supported £300 million of lending in 2011-12 and, subject to demand, is due to provide over £2 billion in total over the next four years.
My right hon. Friend mentioned the newly announced business bank, which is in the process of being created. A number of the bank’s functions will be operational from spring 2013, with the institution becoming fully operational by the following autumn. The bank aims to address gaps in business finance by drawing together the Government’s existing initiatives under one roof in an integrated service to all firms, and £1 billion of additional capital has been allocated to the business bank to stimulate the market for long-term capital. At least £300 million of that will be co-invested over the next two years in channels that will diversify the sources of finance available to SMEs, such as non-bank lenders.
As my right hon. Friend has rightly pointed out, the public want to know that the money from all those schemes is finding its way from banks to businesses, so let me say a word or two about the importance of transparency. I believe that we are going further than any Government to ensure transparency in lending, especially in relation to the lending that the Government are helping to provide. The Government will be working with industry—through the British Bankers Association and other interested parties—to get a commitment from the banks that they will publish more granular data. We have agreed to work with industry to collate and publish lending data that are disaggregated by institution and presented on a postcode-level basis. The Government will take this forward as an urgent and pressing matter.
In reiterating our commitment to make progress in this area, I confirm tonight that, should our negotiations with industry fail to deliver for any reason, the Government will introduce amendments to the Banking Reform Bill to ensure that the data, in disaggregated and postcode-specific form, are published. That will enable my right hon. Friend to see exactly how much the banks are lending to small businesses in Hazel Grove. Indeed, it will allow all Members to see similarly detailed data. I hope that my right hon. Friend agrees that that will be a welcome development.
I want to say something about the appeals process, which I do not think is given enough air time and which is not as well known as it should be. It is important for businesses that fail to secure loans to be given clear and honest information about the reasons for that. In April 2011, the major UK banks established the appeals process as one of the 17 commitments of the business finance taskforce. The process allows any business with a turnover of up to £25 million that has been declined any form of lending to appeal against the decision, for
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any reason, to the participating bank concerned. If an appeal is raised, the decision will be reviewed by a second person from the bank who was not involved in the original decision. The results of the first year of the process show that in 40% of cases in which a decline was appealed against, a lending agreement with which both parties were satisfied was reached.
I am not sure whether the four companies in my right hon. Friend’s constituency have tried to use the process, but if not, I certainly recommend it. He said in his speech that he had raised the issue with some of the banks, and mentioned the “ambassador to the north” from Lloyds TSB. I hope he agrees that it is worth while for the Government to advertise the appeals process and ensure that enough people know about it. Better promotion is needed, so that every firm knows that it has somewhere to turn.
We must bear in mind, however, that banks and other lenders must make sensible decisions about whether to lend, how much to lend and on what terms to lend. Lenders consider a number of factors when making such decisions, including the cost of obtaining funds and the risk that some borrowers will default. Both these factors have been heightened by the financial crisis in the eurozone, and that may have contributed to changes in the way in which some banks have approached their lending activities. Decisions about whether to lend to specific businesses remain commercial decisions for banks to make. It is important for them to have in place the correct lending criteria, so that we do not see a return to the excessive balance sheet growth that we saw during the financial crisis.
Towards the end of his speech, my right hon. Friend suggested that a meeting could be convened between him—along with, perhaps, some representatives from his constituency—and members of the British Bankers Association, including some of the banks that he mentioned this evening. I would be more than happy to write to the BBA and try to convene such a meeting on his behalf, because I believe that it is a sensible idea. Perhaps we can take that up directly later.
The Government believe that it is important for viable businesses that want to invest and grow to have access to the finance that they require in order to do so, and we are therefore pursuing a substantial agenda. I thank my right hon. Friend again for raising this important issue. The Government are well aware that banks play a vital role in serving the economy, and I assure him that we take this issue very seriously.