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We saw that with the failure of the public-private initiative for the tube: when Metronet went bust, it walked away. The whole point of PFI was supposed to
be that the private sector would take the risk, but when the risk is called in, the private sector walks away. It left the people of London with a bill of £410 million for the failure of the private sector. The private sector was not prepared to stand up for this risk, and PFI certainly has not been value for money.
I hope that my Government will take forward the development of the post bank, and that that will be supported across the House. Less than two years ago, if anyone in this House or anywhere else had suggested that we would have nationalised banks in this country, they would have been laughed out of court. The perceived wisdom was that if we nationalise a bank, money will flee away. The truth that has been shown over the past two years is that, rather than fleeing away, the people with money want to be involved in and supported by the nationalised banks.
The basis for a post bank is therefore already in place, and I draw the Ministers attention to the report produced by the coalition for a post bank. That coalition has brought together the Federation of Small Businesses, the Communication Workers Union and the Unite trade union, the New Economics Foundation and the Public Interest Research Centre. They believe that a post bank could be built on the post office network and that it could incorporate the following principles. It would safeguard the unique and popular post office network, which we should all be committed to. It would be a key player in addressing financial exclusion. It would build in a universal banking obligation. It would also give real support to small and medium-sized enterprises.
The idea of a post bank is not new. Such banks exist all over Europe. In France, La Poste set up such a bank in January 2006. Since then it has built up 11 million accounts, and accounts for one quarter of La Postes turnover. In Italy, BancoPosta was set up in 2000; for the first time in half a century, the Italian post office came into profit in 2002 as a direct result. In Germany, although there have been problems with Deutsche Post, its bank has 14.5 million customers, making it the largest retail bank in the country. There is, therefore, a model that we can take up and adapt.
There is both a need and an appetite for transformative change in our economic and banking institutions. A Post Bank based on the Post Office network will provide a solid, trusted basis for new banking, new investment and the revival of local economies.
The Post Bank must be dramatically different from the failed commercial banking model. It must signify a departure from profit-driven, speculative banking practice and a return to locally based, sound financing. It must be inclusive, reaching out to other social and financial organisations concerned with the economic health of their communities. It must be a banking system for all the people.
A successful Post Bank would offer real, long-term financial security to individuals and businesses and provide a vital role for the Post Office commensurate with the high esteem in which it continues to be held by the British people.
Those are sound reasons for doing this now, and I suggest to the Minister that we should turn our hand to it. It would be a start towards that if the Government were to consider withdrawing or amending the Postal Services Bill. They should work with the unions and
others who have put forward alternative plans and develop the Post Office into the modern 21st century organisation that it should be, and Royal Mail along with it.
There are issues to do with the pensions of the workers at the Post Office and Royal Mail, but there are precedents here. In 1994, when the mines were privatised, the Department of Trade and Industry took on the role of the former National Coal Board. I accept that that was a different situation and the mineworkers pension scheme was in surplus, but what was different then was that nobody contributed to the mineworkers pension scheme going forward. In the current situation, we could develop the Royal Mail pension scheme with the Department for Business, Enterprise and Regulatory Reformor the Department for Business, Innovation and Skills, or whatever we are calling the business Department this weekplaying its part as the employer. This is worth looking at. If we are serious, we should sit down with the unions and do it, and at the same time develop the post bank.
I begin by sharing my concerns about how few Members are gathered here for this debate. This is one of the more important subjects for us to debate at present, but I count just one hon. Member on the Labour Benches and absolutely nobody representing the Liberal Democrats other than their Front-Bench spokesman. That is an appalling indictment, when efforts should be made to understand what is going on in the economy and to try to provide the answers that the nation wants to hear.
Tony Baldry: Is it not particularly tragic that the only Labour Back-Bench present has made a speech critical of Labour Front-Bench policies? It is pretty pathetic that the Government Whips cannot get at least one Member from their party to give a speech in support of the Governments economic policy.
Mr. Ellwood: My hon. Friend makes an important point. It is perhaps because the Government cannot get support on their own Benches that this debate has been tabled for the fag-end of the parliamentary week when many Members have dispersed to their constituencies. This debate should be held in prime parliamentary time and be given a full days hearing, so that all Members can represent their constituencies and voice their concerns. Instead, the Chamber is almost empty; we could, in fact, hold this discussion in a taxi cab. That is an embarrassment, and I am dismayed that so few Members are present. That does not take away from the quality of the speeches made, however, which I am sure will make up for the lack of numbers.
We are living in extraordinary times. We have just had some astonishing local election results, which left this dilapidated Labour party representing not one single county. We had EU elections in which the governing party scored only 15 per cent.a score Labour last saw under Michael Foot. We have also witnessed 11 Ministers resign from the Government, and, as my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) teased out in the recent debate on Europe, even the Foreign Secretary considered resigning. I do not know why he felt the need to tell everyone he had considered resigning, and I am not sure how helpful that was to the Prime Minister; the Foreign Secretary must answer that for himself.
We should bear in mind the fact that the backdrop to all this is one of the worst economic downturns we have ever seen, and it is understandable that the nation is losing its patience with the Government. There is an increasing need for a general election to be called, rather than having a Government limping on towards the final datethe endgamenext May.
It is sad that we cannot muster many Members to come here to debate properly issues such as the obscene sums that the Government are throwing in such a reckless way at the economy. Their approach will encumber every newborn child with a debt to the tune of £22,500. The reason the Government are able to cling on and the Prime Minister has not been ousted is that his weakness is overshadowed only by the weakness of those who tried to oust him. Again and again we hear the call, which I am sure the Minister will repeat, that this is a global economic downturn, so many of the problems are not vested in Britain. It is a global economic downturn, but each country is having to manage the effects in different ways, and the cause of that is the rules and regulations that are or are not in place in each country.
What happened when this Government came to power? They made the Bank of England independent, and straight away the Bank lost crucial powers to regulate the banks. That was the first schoolboy error made by this Government, and it led to the level of borrowing getting out of control; banks were lending people sums that they could not afford, in ways that they did not understand. We hear again and again from the Prime Minister that the situation in the United States is to blame for the downturn in our economy. Perhaps some aspects of the situation there can be blamedwhat happened to Fannie Mae, Freddie Mac and the sub-prime marketbut it was not the Americans who were allowing Bradford & Bingley to offer 125 per cent. mortgages. That was very much a British issue, which happened under the tutelage of this Government. It went unrectified, and that is why we have the current levels of debt.
The Government then say that they have the answers and that other countries are copying them. Perhaps the hon. Member for Twickenham (Dr. Cable), who speaks for the Lib Dems, will wish to expand on that. The coupon rate at which we lent to our banks was about 12 per cent. How can the Government, the lender of last resort, possibly expect to lend money to banks in that way and then expect those banks to pass the lending on to small and medium-sized businesses at the going rate of about 1 or 2 per cent? Banks will not do that, which is why small and medium-sized businesses up and down the country are suffering because they cannot get the loans they need to see them through this very difficult period.
Another Government initiative was to reduce VAT to 15 per cent. at a time when businesses up and down the country were slicing the cost of their productsthe discounts were already 10 or 15 per cent. How was 2.5 per cent. off VAT going to help? That was a gimmick, but it is not over yet, because VAT will go back up to 17.5 per cent. Guess on which day that is due to happen? VAT will go back up when Big Ben chimes midnight on 31 December. The industry that I represent as a Front Bencherthe tourism industryis up in arms, because that is one of its busiest days. Businesses will have to run two tills that evening; they will run one up to midnight and another from midnight onwards.
Mr. Ellwood: The Minister is shaking his head. Well, some concessions have been made and those businesses have been given a couple of hours to adjust, but why on earth was that date chosen in the first place? That decision was madness, and it shows that the Government were not in touch with the very people they were trying to help.
My next concern is the top rate of income tax. The Institute for Fiscal Studies has said that the increase will gain approximately nothing in revenue. The increase was a gimmick designed to appease Labour Back Benchersthose very Members who are absent today. I was interested to hear my hon. Friend the Member for Banbury (Tony Baldry) discuss the increasing growth of Jobcentre Plus; it seems that the only place where people can get a job now is working for Jobcentre Plus, because it has grown to be one of the biggest employers for the Government. Unemployment is growingit is currently 2.3 million and the CBI expects the number of unemployed to grow to up to 3 million. That is happening simply because we did not make arrangements to contain the scale of the economic downturn in time.
In the remaining minutes available to me, I wish to discuss tourism, the portfolio that I follow. I am pleased that my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke), whose constituency includes the wonderful little village of Aldbury, where I used to live, is on the Front Bench to listen to this, because it is important that all Members, on both sides of the House, understand the relevance and importance of tourism. That is glossed over in this House on a regular basis. Tourism is our fifth biggest industry: it is worth £90 billion, 200,000 small and medium-sized businesses make up our magnificent tourism industry, and one in four new jobs is created by tourism. Yet it could be argued that tourism does well in this country in spite of the Government, not because of them. It is faring better than expected in this downturn; ironically, because people do not have money in their pockets thanks to this Government, they are forced to consider a domestic holiday, rather than go abroad. That is not an excuse for the Government to say that they are pleased with the tourism figures, because that is not how the tourism industry would have liked its figures to grow.
What this Government have done over a 10-year period is allow the infrastructure designed to support the tourism industry to get out of control. The hon. Member for Blaydon (Mr. Anderson) spoke passionately about the importance of the regional development agencies, but they have creased a confusing, overlapping and costly system that has wrecked our tourism industry. One or
two RDAs have done well to promote tourismthe north-wests RDA is one example, but that is because it does not hold on to that money centrally. Nobody has heard of the north-wests RDA or the north-easts RDA, but they have heard of Blackpool and Newcastle. Those are the brand names that need to be promoted, rather than the RDA names, which have taken all the money.
Mr. David Anderson: The reality in the north-east is that because of the work that has been done by the RDA, including the development of a campaign called Passionate people. Passionate places., the north-east has the highest growth in tourism of anywhere in the country.
Mr. Ellwood: I hope that tourism is growing by more in the north-east than anywhere else, because it gets seven times the amount of money that the south-west does, even though its tourism industry is seven times smaller; the irony there is that the money has not gone to where the tourism industries should actually be. The problem is not only in the distribution of funds, but in an overlapping of effort. It cannot be right that in Singapore there are five different offices representing and promoting tourism in different parts of the United Kingdom. That has come about simply because there is not one voice looking after English tourism, and we need to get back to that. The Conservative policy is to ensure that in this economic downturn we spend the money apportioned to tourism better, which means having a stronger voice for Visit England and a less powerful voice for the RDAs, but a stronger voice for the brand names of the areas that we actually know and love.
We should not forget that this country is the sixth most visited place in the world, which is amazing given that the whole of the UK could be fitted into one of the great lakes in Canada. Yet, as I have said, the Government do not recognise the potential for growing this business. That is reflected in what is called the tourism deficit: in 1997, the amount of money that Britons spent abroad taken away from the amount of money that overseas visitors spent in the UK gave a figure of minus £4 billion. We were spending far more money abroad than we are able to bring in, and that figure has jumped to minus £18 billion. That is how much we are losing, whereas countries such as France or Spain have a surplus, and are making money because they are able to attract people in. That is not just to do with the weather; it is to do with other aspects too.
Let us consider the UKs proportion of global tourism. In 1997 we had 6.9 per cent. of the international market, but the figure has dropped to 3.3 per cent. Those figures must be reversed if we are to get a grip on our tourism industry and what we can offer. We should celebrate our offering, because this country has things that cannot be replicated in new tourism industries in other places. Dubai and Thailand are great places to visit, but Oxford is Oxford and Brighton is Brighton. The culture offered in Britain is unique, but we need to sell it too. Another irony is that the Department for Culture, Media and Sport is one of the few Departments that could make money for the Exchequer were the Exchequer to invest in it; for every £1 spent abroad, we bring £25 back. Does
the Exchequer recognise this? I do not think so, because it has cut Visit Britains budget by 20 per cent. over the next three years.
We have a once-in-a-lifetime opportunity with the Olympic games coming here. It will be a fantastic chance to celebrate what is good in Britain, beamed to television sets with billions of watchers around the world. Not a single penny has been made available to harness that opportunity, and that is a scandal.
The Treasury has removed tax relief on second home lets. What conversations did the Minister have with the DCMS about that? It will affect the tourism industry, because fewer people will be able to afford to let out their homes for tourism purposes.
We have also seen a legal battle over VAT levels on bingo. Hon. Members who are familiar with the bingo scene will recognise that the industry has been hit by two taxesVAT and gross profits tax. Gala Coral took the Government to court and won its case that the VAT imposition was unfair, because it was being hit twice. The Government have responded by getting rid of the VAT but increasing the gross profits tax from 15 per cent. to 22 per cent. Did the Treasury consult the DCMS on that? According to answers to parliamentary questions that I have received, no consultation took place. The consequences are not just monetary. Yes, the Exchequer will lose out because bingo halls will close, but bingo is part of our community. For many of the dear old ladies who play bingo, it is their one evening out in the week. It is as much a part of the community as the post office or the pub, and the Government seem unaware of the impact that this taxation will have on the community.
I mentioned pubs, and we have also seen an increase in alcohol duties, part of a grand sweep of hikes in taxation with no recognition of the impact on the normal responsible drinker. Instead of targeting certain types of alcohol, the Government have put a burden on all pubs, and that is why some 40 pubs shut every week. That is changing the fabric of our communities, especially rural communities, where pubs can be one of the main tourist attractions.
I urge the Minister to think beyond the numbers, the bean counters and the abacuses over which they toil, and recognise the wonders and the importance of our tourism industry. All these tweaks in VAT and taxation have a knock-on impact on things that are very important to us and have been around for such a long time, and it is destroying some of them. I am passionate about tourism. I hope that I have expressed that today, and I hope that that has come across to the Minister.
Dr. Vincent Cable (Twickenham) (LD): I wish to touch on three of the themes that have emerged from our discussionthe general state of the economy, about which the Minister spoke; the budget deficit, on which the hon. Member for Banbury (Tony Baldry) focused; and the state of bank lending, on which the hon. Members for Blaydon (Mr. Anderson) and for Bournemouth, East (Mr. Ellwood) touched in different ways.
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