Finance (No.2) Bill

I endorse the comments made by my hon. Friend the Member for Islwyn (Chris Evans). I, too, hear similar sentiments expressed on the streets throughout my constituency. Opposition Members are not under any illusion that banker-bashing, as it has been called, or reining in bonuses alone will sort out the problems with the financial services sector. It is important to reform the way it operates generally, which is why I welcome the banking commission that the Government have set up. Its terms of reference are sensible and, as a member of the Treasury Select Committee, I look forward to providing some input to that. There are legitimate questions to be answered on whether the financial services sector is doing what the Chancellor said in the emergency Budget he would require it to do. He said:"““I believe that it is fair and right that in future banks should make a more appropriate contribution, reflecting the many risks that they generate.””—[Official Report, 22 June 2010; Vol. 512, c. 175.]" That is why I welcome the new clause. We should reflect on the huge contribution that the British public have had to make to the financial services sector since September 2007 and before. Of course, some banks were taken into public ownership, including Northern Rock, Bradford & Bingley, Royal Bank of Scotland and Lloyds HBOS, but we are not talking only about the measures implemented by the previous Government on the eve of the financial crisis to nationalise or take a public stake in those banks. A package of measures was also put in place for the many other banks that were not taken into public ownership, as my hon. Friend the Member for Nottingham East (Chris Leslie) has mentioned. In addition to the special liquidity scheme, there were the inter-bank lending guarantees and the banning in 2009 of short selling practices. All those factors contributed to helping the entire sector and, as a result, those banks are still operating today. Their balance sheets are looking far healthier and, during the summer, the five biggest players in the sector reported half-year pre-tax profits of more than £15 billion. So the good times are back in the City. My hon. Friend also mentioned the predictions of the bonuses that are likely to be paid in the current round. Over the weekend, for example, we read that at RBS some £2.1 billion has been accrued to pay staff salaries, benefits and bonuses, compared with £2.2 billion a year ago, at a time when revenue has dropped from £9 billion to £6.3 billion. I am puzzled by the package of measures in the CSR Green Book that tell us that the banking sector will be required to make a greater contribution. If we look at the banking levy, for example, we see the sum of £2.5 billion being bandied about as the amount that we can expect the banks to pay. However, I have been told in an answer to a written parliamentary question that the amount coming in from them will be £1.15 billion in 2011-12, that it will be £2.32 billion in 2012-13, and that it will reach £2.5 billion only in 2013-14 before falling back to £2.4 billion in 2014-15. My right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson) has pointed out that, by the end of that four-year period, the banks will be paying less than all the parents who are giving up their entitlement to child benefit, thanks to the measures announced by the Chancellor at the Conservative party conference on 4 October. I would also be interested to hear the Minister's comments on the fact that the banking levy is to be implemented in such a way that the banks will not have to pay it on the first £20 million of taxable liabilities. It is extraordinary that they appear to be receiving a tax break before the tax has even been introduced. Will she also comment on the views expressed by the International Monetary Fund on the rate at which the levy is to be imposed? The IMF is clearly of the view that the banking industry in general has been under-taxed, and it has called for the levy to be tripled so that it could bring in at least £6 billion a year. Just think what we could do with the extra moneys! We could reinstitute the future jobs fund, for example. The IMF's proposal is quite moderate when we consider what Oxfam is proposing, however. It argues that the levy should be imposed in such a way that it raises £20 billion. That is not even being proposed by Opposition Members at present. I ask the Minister to reflect on whether the measures that appear in the CSR Green Book under the heading ““Everyone making a fair contribution”” will do as they say they will do—namely, require the banking sector to make a contribution that is proportionate to all the problems it has caused for our constituents. The Prime Minister will be attending the G20 summit in Seoul this week. Looking back at the G20 summit in April 2009, I believe that we as a country can be proud that we hosted that summit, and that it resulted in a package of measures that had a major effect on the way in which the financial services sector operates. Lord Turner introduced proposals on remuneration in the industry, which were tabled to all the G20 countries. Many of those proposals were adopted. The tax havens that had been operating around the world were clamped down on, and I believe that the banking levy was first proposed in an international context at that summit. Will the Minister tell us what leadership we can expect from the Prime Minister at Seoul this week? What measures will he argue for, and what can we expect to come out of that G20 summit that will make the financial services sector cease the reckless behaviour that led to the global financial crisis and, above all, contribute to paying down the deficit, on which the Chancellor is so fixated?