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Samuel Gallagher

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  1. Name: Samuel Gallagher Avatar: Alex Greenwich (NSW politician) Age: 39 (born June 13, 1982) Sex: Male Ethnicity: White Australian Marital Status: Single Sexual Orientation: Gay (out) Party: Liberal Democrat Political Outlook: A little more associated with Liberal Reform than others might be, but still adheres to the tenets of the Social Liberal Forum. Believes that climate is the defining issue of our generation. Constituency: Richmond Park Year Elected: 2016; 2019 Education: BA (Economics with Politics and International Studies), University of Melbourne, 2001; MPhil (Economics), Pembroke College, University of Oxford, 2003; MBA, Pembroke College, University of Oxford, 2004. Career: Analyst, Bank of England, 2004-2006; Civil Servant, HM Treasury, 2006-2009; Consultant, McKinsey & Co, 2009-2014; Programme Manager, Adam Smith International, 2014-2016; Fellow, Overseas Development Institute, 2017-2019. Political Career: MP for Richmond Park, 2016-2017 (defeated), 2019-present; Member of the European Parliament (London), July-December 2019. Samuel Gallagher was born to academic parents in Sydney, Australia in 1982. His mother, Kate, was Australian, while is father, Anthony, was British by nationality and "Australian by choice". He was the youngest of four children and resided in northern Sydney - a convenient location as his father taught at Macquerie University. His mother managed the longer commute to the University of New South Wales and the Garvan Institute of Medical Research. Samuel was a dual citizen from birth. As Samuel grew older and the family's finances became more strained with four growing children, Anthony left academia to work as the principal economist for Macquarie Group, an Australian investment bank. Growing up in an academic family, achieving good marks was part of the lifestyle. His success in school led to Samuel attending the University of Melbourne ("I had to get out of Sydney") to study economics, like his father, with a minor in politics and international studies. His mother was terminally disappointed that he failed to pursue a career in the sciences. He graduated with honours and earned a Rhodes Scholarship to study at the University of Oxford, where he was admitted to Pembroke College. At Oxford, Samuel continued his studies in economics, even branching into business! However, his personal highlight would be competing at part of the Oxford University Boat Club and, in 2004, being invited to trials to row for Team Australia in the Olympics. He did not make the team. Disappointed by his Olympic result, Samuel returned to the United Kingdom where he had secured a position working as an analyst with the Bank of England. He eventually left the Bank to work at the Treasury in their financial markets unit thinking it would be a "quiet, respectable place where [he] could do some good." As his three years at the Treasury panned out, it was certainly not a quiet place - though he did get to do a "some good", particularly working on an international finance portfolio and the IMF's response to the financial crisis. However, by 2009 it was time to go and he joined McKinsey & Co. as a management consultant. It was during his time at McKinsey that he became more involved in Liberal Democrat politics. Inspired by their commitment to the environment and climate action, Samuel became more and more involved with the Liberal Democrats. He was even convinced to leave his job at McKinsey to work at Adam Smith International in their climate, energy, and infrastructure practice. Saddened but resolute by the 2015 election, Samuel sought to become a Lib Dem parliamentary candidate - being selected on the fly for the Richmond Park by-election caused by Zach Goldsmith's resignation. Considering Goldsmith to be "a bit racist" and "a traitor to the ecological cause", Gallagher ran a spirited campaign and managed to best Goldsmith. He went on to lose the seat in the 2017 general election. In the doldrums, he took a position as a fellow at the Overseas Development Institute and a visiting fellow at Chatham House. However, the mayhem that was 2018-2019 saw Samuel stand for a seat in the European Parliament and, eventually, reclaim the Richmond Park seat for the Liberal Democrats. He is rumoured to have cried when Jo Swinson lost her seat. Samuel came out as gay in 2009 after leaving the Treasury, though it was a bit of an open secret since his days at Oxford. He prefers to keep his private life "as private as possible". His Hinge profile indicated that (circa 2017) he "wants children". In the meantime, he lives in his constituency with his two dogs: a Labrador retriever named Bindi and an miniature goldendoodle named Kylie. Samuel enjoys playing tennis and rowing and is an accomplished sailor, having competed in the Bermuda race and the Sydney to Hobart Yacht Race multiple times. He keeps a boat on the Isle of Wight.
  2. Mr Speaker, With leave, I should like to make a statement on Operation Telic: the United Kingdom’s combat operations in Iraq. British operations in Iraq have been, over the past five years, vital for ensuring the stability of the country. In that time, Iraq formed a democratically elected government, took steps towards reinstating essential services, and established security forces that are currently being trained and deployed across the country. However, we are certain that now is the right time for preparations for a full transfer of security responsibility to the Iraqi government in the southern region. Though we will continue to provide support, particularly as it relates to training and equipping Iraqi forces, the Iraqi government will transition to being the primary security force in the southern region. We are committed to continuing intelligence, surveillance, and reconnaissance support to Iraqi forces in the region to better enable them to conduct security operations. Mr Speaker, I can report to the House that the Government has issued orders, agreed with the Chief of the Defence Staff and commanding officer of Operation Telic, to reduce the British Army presence in Iraq to 4,000 troops by December 2008. It is our intention to move forward with further force reductions in the spring. The House will be updated on those matters in due course. Though Britain is in the process of leaving Iraq, we will not forget those who served alongside British forces in Iraq. To that end, additional civilian personnel from the HM Diplomatic Service and the Home Office will be deployed to Iraq, operating from secured British outposts and diplomatic posts, to process visas and aid in the resettlement of Iraqi interpreters and other key Iraqi personnel who supported our forces during the five years that Operation Telic has been carried out. Of course, Mr Speaker, we are critically concerned about the threat faced by our forces in Iraq during this drawdown period. To that end, the government is deploying additional unmanned aerial vehicles to Iraq in order to provide intelligence and reconnaissance assistance to British forces in Iraq, as well as additional helicopters to aid in the secure transport of our forces. Finally, Mr Speaker, in an effort to both protect our forces and create a more stable environment in southern Iraq, I am announcing Project Interceptor: a naval task force assigned to Operation Telic. Led by the HMS York and minesweeping vessels in the Persian Gulf, Project Interceptor will be an interdiction mission designed to stop the transfer of foreign weapons into Iraq via sea routes. To aid in Project Interceptor, the government has approved the deployment of multiple unmanned aerial vehicles to the region, to operate specifically to fill the needs of the Interceptor commanding officer. Project Interceptor will not be a solely British endeavour. Our American and Polish allies have agreed to commit several units that will be used to carry out inspections on quarantined ships in the port of Umm Qasr. Mr Speaker, the government remains committed to a more stable, more secure, more prosperous Iraq. We are setting forward measures to achieve that in a targeted manner. The increase in intelligence, surveillance, and reconnaissance support will see Iraqi security forces more capable of conducting operations. The deployment of additional transport and surveillance resources will ensure the security of remaining forces. The launch of Project Interceptor will be critical in slowing the flow of weapons into the southern region of Iraq. These are concrete steps that will ensure that Operation Telic is brought to a close with a credible security force in southern Iraq in place, Mr Speaker. We owe that effort to the brave men and women who have fought under the flag in Iraq. We owe that effort to the brave men and women who sacrificed their lives as part of British combat operations in Iraq. I ask that the House join me in thanking them for their service and commemorating their sacrifice. We will see it honoured. I commend this statement to the House.
  3. Addendum by the Rt Hon John Glen, Economic Secretary to the Treasury: Mr Speaker, With leave, I should like to revise and extend my remarks. At this point the government has issued guidance that guarantees can equate no more than £10 million in financing per individual business in each banks' loan book. The director of the scheme shall have the authority to waive this criteria if deemed prudent.
  4. Statement by the Rt Hon John Glen, Economic Secretary to the Treasury: Mr Speaker, With leave, I should like to make a statement on the Business Finance Guarantee Scheme established by the Treasury. One of the hallmarks of the current financial crisis is a slowdown in lending by financial institutions. Business, particularly small- and medium-sized enterprises, are acutely impacted by this restriction of credit. In an effort to increase the rate of lending and boost investment in the economy, I am announcing the Business Finance Guarantee Scheme. Under this scheme, the Treasury will provide £50 billion in guarantees to stimulate up to £67 billion in lending by financial institutions. The following structure will be applied to the scheme. The Treasury will partner with financial institutions lending to business to guarantee nearly £67 billion in new lending provided by financial institutions. Each loan shall be guaranteed at 75% of the value of the principal. This means that the Treasury will hold a maximum liability of £50 billion. Loans guaranteed in this scheme shall bear an interest rate equal to a fixed rate above the current Bank of England rate. Such a rate shall be set by the director of the scheme. We have ensured that financial institutions will only receive guarantees equal to 75% of lending to business to ensure that lending is carried out in such a way the firms receiving financing will be responsibly selected. Financial institutions will share in the risk in order to prevent reckless lending. Guaranteed loan books must be structured in such a way that, for every £5 guaranteed by the government, no less than £2 must be lended to small- and medium-sized enterprises. Participating financial institutions will be charged a commercial guarantee fee equal to 1% of their guaranteed loan book per year. For community financial institutions and small banks, this guarantee fee will be set to 0.5%. Loans issued between September 1, 2008 and February 28, 2009 shall be eligible for inclusion in this scheme. Mr Speaker, we view this scheme as being critical to improving lending in the current economic situation. Financing for business is critical to facilitating job growth and seeing business begin to grow again across the country. I commend this statement to the House.
  5. Prime Minister, First Lord of the Treasury, and Minister for the Civil Service The Rt Honourable Sarah Hastings MP Chancellor of the Exchequer and Second Lord of the Treasury and First Secretary of State The Rt Honourable Katherine West MP -- With responsibility for HM Treasury and the Department of Business, Enterprise, and Regulatory Reform Chief Secretary to the Treasury The Rt Honourable Justine Greening MP (NPC) Minister of State for Business, Innovation, and Skills The Rt Honourable Nicholas Boles MP (NPC) Secretary of State for Foreign and Commonwealth Affairs The Rt Honourable Deborah Crowther MP -- With responsibility for the Foreign and Commonwealth Office and the Department for International Development Minister of State for International Security The Rt Honourable Baroness Neville-Jones (NPC) Minister of State for International Development The Rt Honourable Edward Vaizey MP (NPC) Secretary of State for the Home Department The Rt Honourable Arthur Darlington MP -- With responsibility for the Home Office and Ministry of Justice Minister of State for Police and Security The Rt Honourable James Brokenshire MP (NPC) Lord Chancellor and Minister of State for Justice and Civil Liberties The Rt Honourable Dominic Grieve QC MP (NPC) Secretary of State for Education The Rt Honourable Theresa May MP (NPC) -- With responsibility for the Department of Children, Schools, and Families and the Department of Universities, Innovation, and Skills Secretary of State for Defence The Rt Honourable William Hague MP (NPC) -- With responsibility for the Ministry of Defence Secretary of State for Health and Social Welfare The Rt Honourable Andrew Lam MP -- With responsibility for the Department of Health and the Department of Work and Pensions Secretary of State for Infrastructure and the Environment The Rt Honourable Nicholas Hurd MP (NPC) -- With responsibility for the Department for Transport, Department of Environment, Food, and Rural Affairs, and the Department of Energy and Climate Change Secretary of State for Communities The Rt Honourable Andrew Summer MP -- With responsibility for the Department of Communities and Local Government and the Department for Culture, Media, and Sport Secretary of State for Devolution The Rt Honourable Andrew Lam MP -- With responsibility for the Northern Ireland Office, Scotland Office, and Wales Office. Chief Whip of the House of Commons and Parliamentary Secretary to the Treasury The Rt Honourable Eric Pickles MP (NPC) Leader of the House of Commons and Lord President of the Council The Rt Honourable Kenneth Clarke MP (NPC) Leader of the House of Lords and Lord Privy Seal The Earl Howe (NPC)
  6. Sarah Hastings arrives at Number 10 in her Jaguar. She is joined by her husband, Peter Hastings, and their four children. She makes her way to a microphone set up for this purpose. I have just been to Buckingham Palace where Her Majesty The Queen asked me to form a government and I accepted. Just one year ago, this government was elected on the promise that Britain can do better. That we can build better bonds between people and communities. That we can build a stronger sense of national purpose. Under Nicholas Colton’s leadership, we made enormous strides towards those goals. I applaud his firm commitment to building a big society in which all can thrive. I thank him for his service to our country. One year into this government, our job is not done. Upon taking office, we inherited a stumbling economy. Through decisive action and bold leadership, we sought to ensure economic stability: boosting our families, supporting our businesses, and investing in our communities. Yet there are still great challenges ahead. I am prepared to do whatever it takes to guide the United Kingdom through these challenges. We will work diligently to ensure financial stability, sound money, secure families, and resilient businesses. But we must also look beyond: to ensure that we build a nation strengthened by the challenges we face, a nation that is prepared to challenge, not only our ideological differences, but the economic, social, and geographic divisions that grip our homes. Breaking these divisions that deny us a big society that lifts all is paramount to our work. The economic divisions we face are plagued by a model based on uncontrolled growth in financial services and stagnation across the rest of the economy. Regulators that served the City, not the country. While a responsible City is a pillar of our economy, it must not be the only one. This government shall bring forward a moral capitalism: a capitalism that embraces true conservative values to promote enterprise, ensure responsibility, and foster free markets. A capitalism where it is the duty of businesses, unions, communities, and governments to build a big, growth-oriented society together. It is with this moral capitalism that we will tear down old social divisions to build an aspirational, entrepreneurial society: a renewed meritocracy where social mobility is a guiding value, not a catchphrase or heading for cold statistics. A meritocracy that values the dignity of work, not simply the nature of it. A meritocracy that gives every person the opportunity to succeed, no matter their background. And, of course, we can only accomplish this by renewing our communities, rebuilding the bedrock that holds our United Kingdom together. No matter what corner of the country one is in, building robust communities is critical. And too many communities have been left behind over the past ten years. We shall move vigilantly to renew “ghost towns”, to combat family breakdown, and to confront the epidemics of crime that communities face. These are long term challenges that we must confront. I shall seek to lead our nation in doing so. In serving as Prime Minister, I have a fundamental belief that we are all in this together. We shall confront the challenges that face this country together. And we shall rebuild the bonds that are tested by those challenges together as well. Yes, the challenges we face are immense. We have never faced daunting challenges and turned away. These challenges demand radical change: not just in our laws, but in building a society that empowers ordinary people. It will not be easy. But we have accomplished much in the past year. And as we move forward, we will deliver the government that our United Kingdom needs to overcome the challenges we face and change the future of our nation. Thank you. Hastings, her husband, and her children enter Number 10.
  7. Mr Speaker, I thank the Shadow Chancellor for finally showing up - well after the debate was scheduled to end. Mr Speaker, we have allowed an exemption for pension funds as institutional investors given the scale of their investment. Of course, many pension funds do not directly invest, but rather contract through other funds. Therefore, their investment would still be protected to a degree. Such is the intermediary nature of the financial system. Second, Mr Speaker, hedge funds are not fully protected against investments that perform poorly. Investors who lose money must still bear a loss, a sizable one at that. Likewise, nobody is getting paid by the government for bank investments going poorly. They will still lose money. Of course, I trust that the Shadow Chancellor does not understand financial loss. She wants workers to lose their savings, lose the value of the pound in their pocket, and she doesn't bat an eye at her shoddy economics. Third, Mr Speaker, the government has taken decisive action against banker's bonuses in the event that further intervention is required. To say that I am opposed to limiting banker's bonuses, as writ, is wrong. As I clearly stated, banks that pay bonuses in such a way that bankers are encouraged to take greater risk should be subject to greater scrutiny. One mechanism which I discussed was requiring banks that use such performance metrics to hold greater capital reserves. This, of course, reduces their ability to make risky investments - limiting market exposure.
  8. Mr Speaker, I thank the Rt Hon Member for Kingston and Surbiton for her question and for her support of the government's plan. I do, to a degree, agree with her that we need to look at our banks institutionally and as a sector. I previously outlined the need to reconsider and, to an extent, redesign the Tripartite Authorities to be more nimble and to rethink the current iteration of the Basel standards, perhaps introducing new measures such as countercyclical capital requirements. Banks, like governments, should build buffers during boom years in preparation for lean times. We must further discuss regulation of risk taking at financial institutions. I know some have focused on the idea of banning bankers' bonuses. I am concerned that such unilateral action would damage the City as a global financial centre. To that degree, it is worth working with global partners to reform regulations. Some considerations that could be on the table include enhanced capital requirements for banks that provide bonuses that encourage risk taking. These proposals are in early stages and require consultation with global stakeholders. Additionally, I trust the Rt Hon Member is familiar with reports issued by the Competition Commission regarding concentration in the retail banking and SME financing sectors. It is my belief, Mr Speaker, that we must do more to promote competition and diversity in the financial sector. The governments actions regarding the remutualisation of Northern Rock speak to our movement in that direction. In the future, I do believe we need stronger competition regulation in the financial sector. Additionally, we must look towards using a British Development Bank, which the government is consulting on, to support the emergence of challenger banks, both nationally and locally-focused, to increase competition in the financial sector. The government looks forward to reporting on proposals to strengthen the financial sector in due course. However, for now I will say that I share the Rt Hon Member's concern that we need to facilitate broader change in the sector to improve resilience and provide better services for the British people.
  9. Chancellor of the Exchequer Sarah Hastings spoke at a lunch event hosted by the Confederation of British Industry discussing government as a benefit, not a burden for British business. Thank you, Richard, for your kind welcome. It is a pleasure to be here this afternoon. The Confederation of British Industry has a proud history of advocating for British business. In times like these, those efforts are more important than ever. Many of you, rightfully, are watching financial markets with understandable expressions of concern. These are difficult times. Of course, many of you are also watching the political debate in Westminster with understandable concern. We have, in the Opposition, a Labour Party committed to an agenda that will devastate the British economy. I usually try not to speak in such terms. While I disagreed with many of the policies of the previous government, I did not believe them to be intentionally reckless. Gordon Brown’s action to remove politics from monetary policy is one that I can look back on and praise wholeheartedly. However, I have never been confronted by a party with an official policy of debasing the currency and causing a run on the pound. I imagine many of you have not either. I know I don’t need to tell you the consequences of a run on the pound. Inflation would soar. Interest rates would soar to counteract it. Businesses across the country would find it harder to secure funding. The current credit crunch would be exacerbated. The consequences, in short, would be severe. The fact that the leaders of a major political party do not understand this is beyond concerning. However, it is my pledge to you and to the people of this country that this government will work diligently, every day, to ensure the stability of our economy, our financial system, and our currency - all while working with the Bank of England as an independent partner. Of course, I shouldn’t have to tell you that the government will work to ensure economic stability. That should be understood. That is part of the basic bargain. Instead, we should be focusing solely on the turbulence in financial markets and its impact on British business. And that is what I will turn to now. On the topic of turbulence in financial markets, I have a simple message for you: the government has your back. For British business and industry, we are intent on building financial stability today, ensuring prosperity tomorrow, and securing Britain’s long term future growth. The core of building stability today is our effort to promote privately-led recapitalisation of the financial sector. Banks across the country are seeking to improve their capital position. However, turbulence in financial markets has, understandably, spooked some institutional investors. Pension funds, endowments, and the like - who would typically invest in these institutions - are being more cautious. And to them, we are saying that we have confidence in British banks. We have such confidence that we will help protect such investment. That is the right thing to do. It is the right thing to do because we know that the private sector recapitalisation is essential for strengthening capital markets. It is critical for increasing the value of investments, not crowding them out. It is the right thing to do because we do have confidence in the financial sector. And we have confidence that boosting capital will ensure its long term stability. I’ve spoken at length with my European and American colleagues on this matter. We are in agreement that recapitalisation, privately-led, is key to strengthening the resilience of the banks and improving liquidity. And liquidity, as you all know, is critical to our economy. It ensures that credit continues to flow. It allows businesses, large and small, from Ipswich to Inverness and Boston to Bristol, to grow. It is, fundamentally, essential. That is why we are taking decisive action, today, to boost capital in the financial system. Our capitalisation guarantee will leverage private capital to build a more resilient, more stable financial system today. It is our intention that, with this guarantee, British banks have the capital necessary to weather any turbulence in financial markets. To improve liquidity and lending, we are not just working to improve banks' balance sheets. We are working to get them lending again. That is why I announced a £4 billion initiative to guarantee loans to businesses in the United Kingdom. There is still an obligation to ensure that firms are commercially viable before extending credit - there is still risk for the financial sector. I still have a responsibility to the taxpayer. However, this programme represents £4 billion in credit that the government is working to inject into the economy. For many businesses across the country, this access to credit will unlock essential investments and ensure that they can continue operating. That is what support looks like for British industry. If necessary, we will do more. I will ensure that lending is available for British industry. That is my commitment to you. Our commitment to economic stability and stabilising the financial system, however, serves a larger purpose: ensuring prosperity for British industry tomorrow. In challenging times, we believe in the importance of giving industry a hand up - to help them unlock the investment that we need to get the British economy moving again. We are achieving that by dramatically expanding capital allowances for the next two years, introducing full expensing to the British economy for the first time. That means that every business that invests in our economy will get a tax break. What does this look like? For every manufacturer that wants new machinery - you will get a tax cut for investing. For every publisher that wants a new printing press - you will get a tax cut for investing. For construction companies that need new equipment and tools - you will get a tax cut for investing. This is a dramatic shift. One with the potential to be transformative for our economy. It will be transformative if businesses seize this moment. For the past ten years, government has been content to accept rapid growth in the financial sector while other sectors of the economy stagnated. That time is over. This government is committed to building a robust, strong, diversified economy. And it starts with spurring transformative investment. Of course, there are cases where we need more than just tax incentives. We need government to be a partner with industry. This is true in nascent sectors like green energy manufacturing. As we talk about a green energy transition, the government’s approach is to crowd-in investment where we can. To support the private sector in building capacity to deliver new innovations and new products in the green energy and climate change space. That is why we are delivering £500 million in financing to grow green energy manufacturing in Britain. £500 million in financing that will leverage an additional £1.5 billion in investment. That is real change. That is real commitment when it comes to building our green energy future and combating climate change. And our commitment to combating climate change will mean working closely with every person in this room. Of course, measures to help business in the short term are nothing without a long term strategy in place. A long term strategy that charts the course for Britain’s return to being a competitive economy - not an economy that has fallen from fourth place to tenth place in global competitiveness league tables, as it did under the previous government. At the core of that strategy is a pivot: a pivot that will see government think strategically about infrastructure, skills, and innovation. This government is doing that. Our strategic investment in infrastructure will see urban transport improved, with Crossrail and the Leeds metro, our railways electrified, boosting capacity, and critical relief railways constructed - easing burdens on congested lines. Our strategic investment in smart grids will revitalise our power sector and lower energy costs for businesses and households. Our strategic investment in broadband will see every business in this country able to access high speed internet - a vital forum for commerce in the 21st century. But there is, of course, more that needs to be done. That is why we are launching consultations on building a novel investment vehicle in the United Kingdom - a British Development Bank modeled on Germany’s highly successful KfW. Building a British Development Bank would lead to early public sector support for key initiatives - high speed rail, further energy grid updates, green energy projects, rail electrification - that catalyses activity and delivery. British industry would be key partners in this endeavour. Key partners and key beneficiaries once the infrastructure is built. There is an opportunity in the coming years to build an institution that will leverage private sector investment, not displace it, to transform Britain’s infrastructure and build a nation that is ready to do business. That is a central goal of this government. Likewise, despite ten years of “education, education, education” from the previous government, skills remain a fundamental weakness in the economy. The number of sixteen to eighteen year olds not in education, employment, or training rose dramatically under Labour. But this government is changing that. The Education Secretary, without a peep from Labour, is fundamentally reforming our school system: making sure our children get the education and skills that they need in a competitive world. To get more young people trained, we are bringing forward 30,000 new apprenticeships for them - buttressed by 5,000 new apprenticeships for older people. We are prioritising STEM in secondary schools, colleges, and universities by launching new investments in updating facilities. These are the actions of a government committed to making sure learners have the skills that businesses need to compete globally in the 21st century. And we will continue to push a skills driven agenda. I want to see industry at the core of that - working with government to pioneer new mechanisms of training, pioneering new opportunities to reskill workers for the jobs that are in demand today. And, of course, adjacent to skills is developing skills that are critical for competition in an innovative economy. I look forward to discussing this government’s plans on innovation in greater detail soon. However, for now, I will offer some examples of what we are doing. Our Health Innovation Fund, soon to be fully detailed by the Health Secretary, will provide catalytic investment that brings together practitioners in the NHS, innovators in the sciences, and industry partners across the country to trial and, eventually, deploy novel health technology. In the process, this fund will help us improve efficiency and outcomes in the NHS, while making the United Kingdom a hub for health technology development. That is investment in innovation that will boost a critical sector of our economy. Likewise, I’ve had fruitful conservations with the Defence Secretary about building a new culture of innovation at the Ministry of Defence. A culture of innovation that sees the Ministry working with the private sector to deliver better solutions and technologies to support our men and women serving in the armed forces. A culture of innovation that would see the growth of innovative industries that are at the centre of confronting the most pressing national security challenges that we face. That is investment in innovation for public purpose, for protecting our country, for protecting our soldiers. These are just snippets of how this government is formulating a long term strategy to transform our infrastructure, improve our skills, and invest in innovation. And we’ve been in government for less than a year. Imagine what we can accomplish by the end of our term. As I started by saying, the current environment represents a challenge for British business and industry. However, government is acting in the immediate-, medium-, and long-term to build a stable environment in which business can strive. We are launching long term plans to spur investment in infrastructure, skills, and innovation to ensure that Britain can, once again, be the most competitive environment for business in the world. That is at the core of our mission: to be a government that is a benefit to business, not a burden. Our is an agenda for achieving that. Ours is an agenda for ensuring that financial turbulence is not a cause for British decline, but an opportunity to build a new, transformed, competitive economy. I look forward to working with you all to make it a reality.
  10. The Chancellor of the Exchequer spoke at a budget event hosted by the Institute of Fiscal Studies. Thank you, Robert, for your kind invitation. It is a pleasure to be here. My intention was to start my remarks with a discussion of the macroeconomic framework in which fiscal decisions are made - particularly in today’s climate. However, the bar for a responsible discussion of the economy and public finances appears to have been lowered as of late. I suppose I’ll leave it at this: I won’t debase the currency. I won’t start a run on the pound. *makes a move almost as if she's walking away from the podium.* In all seriousness - I do agree with Ms Kinsey on one thing: people are not numbers. And the human costs of debasing the currency are profound. Aside from the fact that the Bank of England does not issue cheques, relying on a central bank to print money and distribute it is unprecedented in a modern, functioning economy. That is the monetary policy of Weimar Germany or, more recently, Zimbabwe. It is a recipe for rampant inflation, for the collapse of the value of the pound. The catastrophic effects of a run on sterling would devastate ordinary people. There is the inflationary impact, which would see the value of the pound in one’s pocket purchase less. There is the wage impact, which would see real wages decline significantly, if not precipitously. With currency in crisis, it would become easier for foreign purchasers to dominate the housing market, preventing ordinary people from buying homes. These are real consequences that working people would face. A broader discussion allows us to acknowledge that the consequences of currency destabilisation are far greater than the impact on individuals. It’s not just that the value of money diminishes rapidly: capital flees markets. The value of pension funds, savings accounts, and the like collapse. British financial institutions, already seeking to raise capital, would face exponentially greater pressure in global markets. Any illiquidity in financial markets would be exacerbated by the increased interest rates that a run on the pound necessitates. Crippled by inflation, businesses would find it even more difficult to get loans. These are economy wide effects. The cost of the Bank of England handing out checks, of reckless monetary policy, is considerable: almost beyond comprehension. Creating free money risks destroying confidence is the pound, with catastrophic consequences. A run on sterling. A cost of living crisis for normal people. A capital flight crisis. And a devastating financial crisis caused, not by illiquid assets, but by political recklessness and populist gamesmanship. This is not an abstract exercise. The Russian ruble. The Mexican peso. The Asian financial crisis. The Turkish economic crisis. The Argentine economic crisis.These are real financial crises that occurred during my professional life. They are, at their core, currency crises. Many teach us that central banks cannot just print money and hand it out. And that is what has been proposed by the Opposition. That is what they proposed in their desire to keep the cost of their plans hidden from the public. While a responsible party would admit the cost and add it to the deficit or the debt, they chose to transform monetary policy. To mask the cost of their policies, the Opposition would risk a run on the pound. How can we talk about sound public finances when that is their position? The rhetoric is that they’re doing this to help people weather the storm. The reality is different. Far from weathering the storm, they seek to make a squall into a cyclone. So let me state unequivocally the position of this government. We will work with the Bank of England to ensure the stability of the pound. We will preserve the independence of the Bank of England. We will not politicise monetary policy. And, at the same time, we will oppose every effort to politicise it. Now, I must apologise that recent developments significantly changed the introduction to my comments. I am, after all, here to talk about the work of this government to ensure the stability of the public finances. As many of you are no doubt aware, the United Kingdom faces the most significant economic challenge in recent history. This economic challenge begets a significant fiscal challenge. The two are, of course, intertwined. The fiscal challenge we are confronted with is a result of the economic policies of the past ten years. Though it was called a boom, the reality is that the economy we were handed upon taking office was a series of interlocking bubbles: financial services, housing, and public spending. Two of these are, as we now see, tightly related: the financial services boom fed the housing boom and the housing boom fed the financial services boom in a loop. These bubbles had a large impact on the public finances. When financial services boomed, tax revenues expanded significantly. Instead of putting away some of that money to prepare for an eventual slowdown in financial services growth, every last pound was funneled into expanding public services. Now, the public services are critical - but there are consequences to the fiscal decisions that we make. We are living with those consequences today. As tax revenues from banks dry up, the funds to pay for public services are no longer there. The policy of the previous government in spending everything they could means that, when faced with even the slightest wobble in the economy, the current accounts slip back into deficit. It is against this unfavourable fiscal environment that we must both restore the economy to growth and consolidate the public finances: two seemingly contradictory tasks. Yet, we are prepared to accomplish this in a sound, sensible manner. Restoring growth is the immediate, near-term priority. In coordination with my colleagues in America and Europe, the decision to stimulate was straightforward: stimulus was necessary. Stimulating early was deemed preferable to stimulating late. Simulating, with the goal of a shorter and shallower downturn, has the potential to protect the public finances, preventing the exacerbation of any stress. A shorter, shallower downturn meaning that less is spend on stabilisers and there is a smaller impact on revenues. So this government acted. We brought forward fiscally prudent, economically impactful measures. As I recently told Jeremy Paxman, our working families tax cut is far more impactful, particularly for those on low income, than a VAT tax cut. We are putting money where it is most likely to be spent. Where it will have the greatest economic impact. And, notably, where it will provide the greatest support for working people. Yet stimulus cannot be considered in a vacuum. It must be considered in the context of long-term economic policy. We are playing a long strategy with the stimulus package we brought forward. Our decision to extend full capital allowances to business frees up billions that can be invested in building stronger industries in the United Kingdom. For capital intensive industries, like manufacturing, this will be a boon. For sectors like renewable energy manufacturing, this boon will be turbocharged by our direct investment in green stimulus. It will promote growth, while diversifying the British economy. And as we discussed earlier, diversification is critical. Diversification - a stronger manufacturing sector, a stronger technology sector - will mean that the economy and the public finances are less dependent on the financial sector in the future. Fiscal policies, such as expensing, can be used to achieve this. And they are. Importantly, they will also pay for themselves over time. By replacing writing down allowances with full expensing for the next two years, we will see the cost of writing down allowances decline over the full fiscal cycle. This will produce a stimulus that is revenue neutral in the long term. When growth and value added from the investments are factored in, this will be a revenue enhancer. Additionally, we are pursuing direct fiscal stimulus, bringing forward significant capital spending on essential infrastructure, such as Crossrail, electrifying our railways, and deploying broadband across the nation. These will provide immediate stimulus, while improving the productivity of the economy in the long term. Of course, long term investment must be maintained. That is why we seek to be transformative in how we budget for investment. Bringing forward a British investment bank, modeled on the German KfW, will allow us to better leverage capital, and capital markets, to finance projects that will transform the country. More importantly, it will do so at little cost to the public finances. That is the vital importance of leverage in maintaining a healthy economy and health finances. This is the vital importance of investment in maintaining a healthy economy and health finances. I look forward to, in due course, sharing the results of our investment review with Parliament and the members of the Institute. Yet, beyond investment and stimulus, there must be a focus on the two primary levers by which the government ensures the stability of the public finances: taxation and current expenditure. These are critical to the long term stability of public finances. Maintaining a broad tax base is, of course, critical to the stability of the public finances. As we are currently experiencing with the banks, centering the public finances on a single sector is akin to building a house of cards: one wobble and the public purse is placed under immense pressure. The same logic can be applied to other forms of taxation, such as a wealth tax. France provides an instructive example. The implementation of a wealth tax led, not to a windfall in revenue, but to capital flight. And that is a real risk: incredibly wealthy people are inherently quite mobile. Building the public finances on taxes targeted at a very small segment of the population, like building them on a specific sector, is like building a house of cards: it risks rapid, devastating collapse. Of course, maintaining a broad tax base inherently involves ensuring our tax laws are enforced. That is why I have increased the resources available to Her Majesty’s Revenue and Customs to enforce our laws. Yet, I acknowledge that we can do better. The government will bring forward proposals to introduce general anti-avoidance rules and other measures to prevent those who seek to avoid paying taxes from succeeding. Ensuring that taxes are paid is a basic duty of government. We will carry out that duty diligently. Importantly, enforcing tax laws is fundamentally conservative. Conservatism is built on respect for the rule of law, on fulfilling our civic duties. It is not about looking for loopholes. It is not about special treatment. We seek to change our tax laws to build an environment for competitive capitalism, not crony capitalism. And, finally, we must look at broader taxes where they are appropriate. My inclination is, generally, to avoid taxation where we can. However, where it would serve a broader societal purpose, I am not opposed. It is a high bar to clear, but the Treasury is investigating just how we would clear it. Examples might include countercyclical levies designed to reinforce financial stability or levies charged to non-domiciled individuals who do not pay tax in the United Kingdom, but benefit from our services. I should hope to report back soon on such developments - though as I am fond of saying: budget decisions will be taken at budget. Tax policy is not the only lever we have at our disposal. Current expenditure must, constantly, be reviewed. Yes, we anticipate current expenditure declining, in the medium term, as we overcome the economic headwinds that we face and people move off benefit and into work. But looking at reduction in spending on stabilisers declining is insufficient. That is why this government has instituted a sweeping efficiency programme to save the public money. Striving for continued efficiency in government allows us to put money towards reducing the current deficit and spend more on the frontline services. We will continue to push for efficiencies in government. We owe that to the public. However, we recognise that there will need to be control of current expenditure. Particularly after the nation overcomes economic turbulence. While I am committed to increasing funding for our frontline services, I cannot say the same about administration broadly. There will come a time when spending limits are firmly enforced on the current account. That does not mean that we will not spend. It means that we will spend wisely. Spending requests from departments will have pass muster: we will not just spend for the sake of spending. An example of this is rehabilitation expenditure by the Ministry of Justice. Instead of just increasing budgets, we are introducing targeted initiatives that can be assessed for effectiveness. I commend the Home Secretary for her work on this front. We will not implement spending limits in a way that hampers our exit from challenging times. Growth will be emphasised in all that we do. And we know that fiscal consolidation, in the long term, can promote growth. Strained, high levels of borrowing raise interest rates, slowing investment. That impacts the growth of the real economy. So we must be cognisant of that. And we will be. Responsible fiscal policy that moves to stimulate the economy in the near term and consolidate the public finances in the long term is a sound solution for ensuring Britain’s return to productive growth. It is a sound solution for ensuring the stability of the public finances. That is the course this government is taking. That is the course we will take throughout the squalls ahead. And it is my mission to ensure that this government succeeds. Thank you for your time. *goes into Q&A mode with the audience*
  11. Mr Speaker, With leave, I should like to make a statement on the incentive for capitalising financial institutions put forward by the Government. Mr Speaker, I trust that everyone in this House is aware of recent turbulence in global markets. The government has diligently monitored recent developments. The rise of illiquid assets has resulted in reductions in interbank lending. It has resulted in a freezing of credit markets. And it has resulting in a global economic slowdown. And Mr Speaker, the reasons for this are clear. Credit, and its availability, is critical for economic growth. It is critical for families seeking to purchase a home. It is critical for entrepreneurs wishing to start a business. It is critical for businesses seeking to expand their operations. Nearly every facet of our lives is impacted by credit. And as a result of turbulence in financial markets, banks are not issuing credit. Following consultations with the United States, Germany, and France, there was consensus that efforts should be made to encourage private sector-led recapitalisation of key financial institutions. As a result of these consultations, the United Kingdom is introducing an incentive for the recapitalisation of British banks. Mr Speaker, this is not a decision that I take lightly. However, it is my belief that, at this time, a private sector-led recapitalisation of banks is the far preferable option for ensuring the strength of the economy. Indeed, British banks are already seeking to raise capital on private markets. The alternative, simply injecting capital into banks, creates numerous risks to the public finances and the economy writ large. First, Mr Speaker, there is the issue of shouldering risk. Under the scheme, private investors will bear a significant proportion of the risk involved. Under alternative proposals, the government would burden the entirety of the risk. This is not insignificant. The potential cost of the government's proposal is significantly lower than other proposals that were put forward. This proposal limits the exposure to the taxpayer. That is a duty of the Treasury. Second, Mr Speaker, there is the matter of market distortion. Banks being required to raise capital in private markets, in which investors shoulder significant risk, requires that banks perform in such a way as to be able to attract private capital. This creates accountability: investors will not invest in banks that they do not anticipate will improve their position. Direct government equity purchases, however, lack this market incentive and, rather, distort the marketplace. Third, Mr Speaker, there is the matter of moral hazard. A government directly invested in a financial institution has an incentive to support its position, whereas a financial institution, backed by government capital, has incentive to take further risk. This runs the risk of, as a result of the government becoming an investor, financial risk exacerbating itself. It creates a risk taking incentive: if the government does not step in, the loss on its investment would be substantial. This is not true when private investors are involved. If they wished to shore up further investment, they would do so with their funds, absorbing the risk. Governments, of course, could theoretically take a loss: however, the experience of past government involvement in industry demonstrates that this is not the case. The regulations regarding this scheme are as follows. The government will provide a guarantee for £20 billion worth of newly issued preference shares by United Kingdom-domiciled financial institutions. The exact size of the guarantee value for each institution will be negotiated between the institution and the Bank of England. Such guarantees will be limited to Tier 1 capital. In issuing these shares, institutions, in line with recent offers, are expected to offer them at a discount to the current share price. Institutions shall further be required to have an underwriter for the rights issue. Shares obtained by the underwriter shall not be guaranteed. The guarantee will cover no more than 50% of capital losses, redeemable three years following the issuance of the shares. In negotiating the guarantee amount with the Bank of England, a financial institution may request less coverage for a greater number of shares - provided that the maximum liability remains the same (ie, a bank with £1 billion worth of guarantees could have £2 billion worth of shares guaranteed at 50% of losses or £4 billion worth of shares guaranteed at 25% of losses). The guarantee shall terminate three years following the issuance of shares. For clarity, Mr Speaker, the purchaser of shares under this guarantee shall only be able to redeem the guarantee if the shares are sold three years following their purchase. If selling their shares at a loss, the guarantor shall have first right of refusal. Guaranteed shares purchased under this scheme shall be subject to a three year lock up order, preventing their sale or transfer of ownership during this time. Should an investor wish to sell or transfer ownership of the shares, they may request that the lock up order be waived. The waiver of the lock up order will invalidate the guarantee on the shares. This time frame is being put in place to ensure that investors are committed to the long term viability of these institutions, Mr Speaker. This is a scheme designed in such a way that there can be no shorting, no cut and running at the first sign of trouble. This is a scheme determined to bolster the health of Britain’s financial institutions. There is, of course, the question of warrants. We have determined that banks issuing shares guaranteed under this scheme shall be required to issue warrants equal to 10% of the guaranteed share issue, to be held in trust by the Bank of England and exercised via sale of the warrants to other investors. Mr Speaker, the logic of this is simple. If investors benefit from purchasing shares in the banks, then the public will benefit as well. If banks benefit from the government’s guarantee, then the public finances will benefit as well. Financial institutions are welcome to include additional warrant agreements as part of their share issue. Mr Speaker, the government will put into place additional safeguards in establishing this scheme. First, the government, consistent with typical practice, shall charge a fee for the guarantee, equal to 0.75% of the value of the guarantee - comparable to normal market rates. Second, the government will ringfence SDRT revenues generated from the sale of these shares for potential use if liability is accrued. Third, the government will not guarantee shares held by foreign government officials, foreign state-owned corporations - excluding pension funds, or foreign sovereign wealth funds. Mr Speaker, I know that, in the press, the Member for City of Durham has repeatedly raised concerns about hedge funds. Mr Speaker, I trust the member is familiar with the operation of hedge funds, but, should show not be, I will remind her. Hedge funds, by design, invest in highly liquid assets. As a result of the requirement that shares be held for three years in order to qualify for a guarantee, they are, by definition, illiquid. For this reason, I must express doubt as to whether hedge fund managers would be particularly interested in investing via this scheme. Mr Speaker, raising private capital is the right move at this time. It is the right move for our economy. It is the right move for the millions of workers who require access to credit. It is the right move for the British businesses that require access to credit. It is the right move for the communities across the country that require access to credit. This government is taking decisive action to ensure financial markets are strong and stable. I commend this statement to the House.
  12. Mr Deputy Speaker, Despite the misplaced criticisms of the opposition, I cannot help but commend the reality of this budget: it is the budget that Britain needs for challenging times. We are taking action - decisive action - to ensure the stability of the British economy. We are priming the economy for prosperity. We are putting in place a plan for long term investment and economic security. That is reality. Workers in this country will see a £250 tax cut - putting money back in their pockets in challenging times. Working families with children will see a minimum uplift of family benefits by £150 this year. For families with toddlers, that number rises to £400. Businesses in this country will have the opportunity to unlock over £7 billion in capital investment, turbocharging our economic recovery. Cooperatives - enterprises that invest in their workers and grant them an ownership share - will see their taxes cut under our brand new cooperative rate of tax. The members opposite talk about how this is a budget for billionaires. Mr Speaker: nothing could be further from the truth. This is a budget for pensioners, who will see their pension pots protected. This is a budget for working families, who will see their taxes cut after Labour hiked them. This is a budget for children, 300,000 of whom will be lifted out of poverty. This is a budget for our National Health Service, which is seeing capital spending restored after Labour axed it. This is a budget for small business, who will see rates frozen and new financing available during this credit crunch. Even the Leader of the Opposition, Mr Deputy Speaker, has no real criticisms of this budget. At least no criticisms that are grounded in reality. He claims that there are massive tax cuts for billionaires. That is simply not the case. We’ve slashed taxes on the low earners, Mr Speaker. The greatest beneficiary of this government’s tax cut will be minimum wage earners, who will see their take home pay increase dramatically. He claims that this budget is a handout for hedge funds. Mr Deputy Speaker, as I have already explained to the member for the City of Durham, this budget provides protection for pension funds, for savers, and for ordinary people who invest their money in mutual funds. Even his Deputy Leader, who most recently called for illegal strikes, seems to not be familiar with the contents of this budget. She claims that this government is taking from the poor to give to the rich. Mr Speaker, why then are those on lower incomes getting their most significant tax cut in years? Why are we ensuring that every working person is £250 better off? If we are taking from the poor to give to the rich, why are working families set to get a significant boost in family benefits? I’ve said it once, I’ll say it again: low earners with children are set to be an additional £150 better off. Why are we instituting the toddler top up - which will give low income families even more support during the expensive early years of life? If we are taking from the poor to give to the rich, why are we instituting a pupil premium that will see more money invested in disadvantaged schools and improving educational opportunities for children from lower income homes? It seems that the Opposition’s only strategy is to trot out the old talking points and hope for the best. Mr Deputy Speaker, I understand that the Leader of the Opposition entered this House in 1983. While he might still be fighting the battles of a quarter century, the rest of us have moved on. And I can understand why they would trot out the old talking points. They can’t face the reality that this is a budget that stands up for working families - putting more money in their pocketbooks and lifting 300,000 children out of poverty. They can’t face the reality that this budget invests in our public services - strengthening our schools and our NHS, while finding efficiencies that ensure more money is spent on front line services. They can’t face the reality that this budget delivers the greatest single downpayment in Britain’s green future - investing in environmentally friendly forms of transit, strengthening our electricity grid, and kickstarting green manufacturing across the country. Their greatest talking point is that public sector workers are only getting a pay raise three times greater than private sector workers across the country. Mr Deputy Speaker, I respect our public sector workers - that is why their pay is protected. I respect our public sector workers - which is why each and every one of them will be better off as a result of Labour’s working family tax being scrapped. That is the reality of the policies put forward by this government. The only other refrain from the Opposition benches is to spend more. Mr Deputy Speaker, it’s easy to cry “spend more” when you’re not in government. But as Chancellor, it is my job to protect the public finances. That means I cannot just look at this year. I have to think of next year. I have to think of the next five years. I have to think of the next ten, twenty years. We are stimulating the economy responsibly, with targeted measures, to achieve the maximum of benefit. And we are doing so to protect the public finances for the next year. We are working to ensure Britain’s debt remains sustainable. Because spending more and more means that borrowing becomes more expensive. And if borrowing becomes more expensive, it becomes harder to fund the public services next year. And the year after that. And so on and so forth. Not that I would expect the Opposition to recognise that. it is their fiscal policies that left us in this situation. Labour's spending splurge during the boom years left us in a state where the public finances must be managed extremely carefully during leaner times. While other governments built buffers during the boom, Labour spent any buffer we might have accumulated away. Yet you won't hear the Opposition talk about that. Of course, protecting the public finances is not just a matter of spending. It is a matter of better enforcing our tax laws. That is why I boosted funding for HMRC, so that we will be able to better enforce our tax laws and devise new schemes to crack down on tax evasion. Hardly the action of a government protecting billionaires. In fact, the member for the City of Durham listed a series of billionaires. I doubt those same billionaires will be particularly fond of me when HMRC is intervening to make sure they’re paying their taxes in full. And that, Mr Deputy Speaker, is why this budget is good for Britain. This budget is protecting working people. This budget is stabilising our financial system. This budget is lifting hundreds of thousands of children out of poverty. This budget is supporting homeowners in challenging times. This budget is helping businesses invest in Britain. This budget is investing in the communities that were left behind. This budget is turbocharging our efforts to fight climate change. This budget is protecting the public finances. It is not a budget of populist talking points. It is not a budget of class warfare rhetoric - the only type the Opposition seems to be able to engage in. It is a budget for working people. A budget for financial stability. A budget for economic recovery. This is the budget of a government that is committed to changing Britain for the better. This is the budget of a government that is committed to building a big society - one that brings people together to confront the challenges of our times. I have said that there are challenges ahead of us. But I have no doubt that we are on the right path to overcoming them. And we are determined to overcome them. Mr Deputy Speaker, this government is committed to financial stability. It is committed to prosperity. And it is committed to long-term security for the British economy. That is what we are bringing about. I commend this budget, once again, to the House.
  13. Mr Speaker, I'm glad to hear that someone on the Labour benches is supportive of capitalism. Perhaps the Member for the City of Durham should discuss that with the Leader of the Opposition, who famously wants more nationalisation: of the banks, of the trains, of the utilities, of the insurance industry, and I'm sure many more sectors. I agree with the member opposite that capitalism must be done better. That is why this government has laid out an agenda for doing so. We have pledged to bring forward legislation to strengthen competition law, ensuring reversing concerning trends in market concentration that we have witnessed over the past decade in the financial services sector and beyond. We have pledged to bring forward legislation reforming the financial regulatory system, preventing the actions that have brought us to this place. We have pledged to reform the governance of cooperatives and mutuals, making these institutions a core part of our recovery. We have committed to building an innovative Britain, investing in our universities and taking the steps necessary to increase support for start-ups. I look forward to the support of the member for the City of Durham as we bring forward these proposals. Although I don't count on it. When the government announced plans to rebuild Northern Rock as a building society, she called it a "power grab" - I guess that takes supporting mutuals off the table. When we announced plans to reforming banking regulation, she couldn't even be bothered - I guess that takes support for a better regulatory system off the table. So I won't hold out too much hope. I'd hate to be disappointed by the Labour Party once again. And today she comes before the House, seemingly to critique the government, but actually only offering her shoddy populism. I cannot say I'm surprised. Her party has not taken the turbulence in the financial sector seriously from the start. They tried to start a run on the banks. They tried to undermine confidence in the system. They haven’t offered a single, novel thought. In sort, Mr Speaker, they haven’t a clue. Mr Speaker, the member for the City of Durham talks about "helping billionaires" as if they're the only people with a stake in financial institutions. Mr Speaker, let me advise the member who else is invested in financial institutions: pension plans, insurers, charities, university endowments, mutuals, commercial banks. These are not the province of billionaires, Mr Speaker. Pension plans are vital for our pensioners. Insurers protect families from loss. Charities invest their funds and use the return for societal good. Universities use their endowments to provide bursaries, to improve education. Mutual funds provide vital financial services and investment capability to their members. In fact, Mr Speaker, these institutional investors provide a great deal of the capital invested in shares. These investors are the ones who will benefit from our recapitalisation plan. These are not billionaires, Mr Speaker. These are vital institutions. They provide critical services for our pensioners, for our communities, for our homeowners, for our students, for the less well off. They have a stake in the well-being of British banks, Mr Speaker. The member talks of the "investor class", as if she wishes to deny that the economy is built on investment and credit. Investment and credit finances the shops that make our High Street vibrant. Investment and credit make is possible for families to buy homes. Investment and credit ensures that pensions get paid out. These are fundamental realities. I should note the irony, Mr Speaker. The Labour benches are filled with members who loved the "investor class" when times were good and their taxes were paying for Labour's spending binge. Now that times are bad, Labour can't run away fast enough. And we are left to fix Labour's mess. Of course, in her statement, the member has yet to actually critique the plan being put forward. I should not be surprised. Her critique of the government's action on Northern Rock was so wild-eyed that her new boss, the Leader of the Opposition, was forced to disavow it. And the reason for that is clear: she can't argue against the economics of the proposal. She knows that the private sector taking on some risk is better than the government shouldering all of the risk. She knows, as a good capitalist does, that government over investment crowds out the value of private investment. She knows that bank recapitalisation is a fundamentally good thing. And that is why the member is not critiquing the plan. She knows that the end result is a positive one. She knows that reinforcing capital in the financial system is right. So instead, in a shallow, callous attempt for electoral support, she's playing the populist. Once again, I shouldn't be surprised - this is coming from the same party that had the Shadow Home Secretary call for unions to violate the law. The reality, Mr Speaker, is that when banks raise capital, their shares are diluted. If the government injects capital, institutional investors - granny's pension fund - lose out, their investment diminishes; as a result, granny loses out as well. But with private sector capital, there are choices. So for the pension fund that pays granny's pension, they have a choice. Let their shares be diluted and watch their £100 million investment become a £75 million investment? Or choose to invest and maintain a portion of their stake. This is a critical decision, not just for the pension fund, but for granny. If her pension fund does poorly, granny's pension payment get smaller. If they trust in the bank, they would invest. However, in the current economic climate, they might be a little jittery. With this plan, the government is protecting a portion of their investment. The government is saying that we have confidence in the underlying stability of the British financial system. The government is reducing, but not eliminating, the risk of the investment. Now, if the result is good and the bank prospers, everything is fine - times are good. But if times are theoretically bad and the bank loses 50% of its share price, there are diverging realities. In the first, the bank did not take up the share offer: their investment is now £37.5 million - granny's pension suffers a great deal. Alternatively, if the bank took up the share offer, their investment is worth £50 million and, because of the government's guarantee, its value goes up to over £56 million - granny's pension is doing better. This is the protection being offered by the government, Mr Speaker. Perhaps some wealthy people will benefit. But the majority of the benefit will go to the institutional investors who are critical to financing these institutions. Institutional investors who play a positive role in society. Institutional investors who are vital to the functioning of our economy. And the end result of recapitalisation, Mr Speaker, will be a more stable financial system. That is the goal of this government: stability. A stable financial system will see lending restored. A stable financial system will facilitate long term growth. A stable financial system will benefit communities, families, and businesses across the country. That is what this plan is designed to help facilitate. Of course, Mr Speaker, it wouldn't be a performance by the member for the City of Durham without some tugs at the heartstrings. But what I can tell the member is that the government does care about these people. The government is actively working to improve their lives. For the pensioner who's husband passed away, the government is working to ensure that the pension fund that pays part of her pension pot does not face extreme losses. The government is ensuring that her State Pension keeps pace with the cost of living. The government is ensuring that she doesn't face a Council Tax hike on her home. The government is helping to weatherise and better insulate her home to keep her fuel costs down. For the 22 year old who doesn't know how to start a company and wants to create a product, the government is expanding apprenticeships, so that he can train and get the skills and mentoring that he needs. The government is extending loan guarantees to provide financing for start ups and small business, so that he can get the access to capital to be an entrepreneur if he so chooses. The government is providing financing to Northern communities to create economic development areas via our Regional Growth Fund. The government is investing in transport in the North so that, one day, when he has his company and needs to get his goods to the market, he can. The government is investing in high-speed broadband deployment so that he has access to high-speed Internet. I could go on, Mr Speaker. I could talk about how this government is providing a pupil premium to help those in disadvantaged areas get a better eduction and improve their chances at life. I could talk about how this government is cutting taxes for low earners. I could talk about how this government is working to lift 300,000 children out of poverty. But then I had hoped to make my intervention short. So I will close by expressing my disappointment with the member opposite and with the Opposition as a whole. When challenged to critique the government, they simply failed to. They embraced the language of faux populism. They sought to use a billionaire straw man argument to block the recapitalisation of the banks. They call our plans a disaster, as if they were not the party that sought to cause a panic in our banks. As if they were not the party calling for illegal strikes. As if they are not the party that spent more time trying to tear the British economy down than build it back up. They haven't a shred of economic credibility left. Fortunately, on this side of the House, we still do. Fortunately, on this side of the House, we are working hard to stabilise the financial system. We are working hard to ensure British families can prosper. We are working hard to build a secure economic foundation for the years ahead. That is reality that the member opposite can't even begin to touch.
  14. Mr Speaker, I shall take this time to respond to the technical questions put forward by the Members for Sedgefield, Hackney North and Stoke Newington, and Brent North. Mr Speaker, the first technical question raised by the Member for Sedgefield relates to the increase in prison capacity. Mr Speaker, the previous government left our prisons horrifically overcrowded. Even with efforts to promote rehabilitation and community-oriented justice, they remain overcrowded. For that reason we are investing in additional prison places. Regarding the functioning of the extremism unit, I would refer the Member to the statement issued by the former Home Secretary on the matter. Mr Speaker, in regards to the Member for Brent North, I wish to assure him that both the Department for Energy and Climate Change and the Department of Communities and Local Government still exist. The minister responsible for them is my Rt Hon Friend the Secretary of State for Infrastructure and Environment. Finally, regarding the technical questions put forward by the Member for Hackney North and Stoke Newington. First, Mr Speaker, I must admit that I am confused by her maths. The Department for Health has received a real terms funding increase of 2% over last year. Much of this is associated with the additional provision of medical care, including increases in commissioning and increases in the budget for prescription medications. Of course, even if one does exclude spending on buildings and procurement, spending on medical care and staff increased by 1.8% in real terms. Statistics are terribly inconvenient things, Mr Speaker. But I an assure the member opposite that she is incorrect. Mr Speaker, in terms of the Health Innovation Fund, I must stress that this is a first time investment. If the fund proves successful, funding will be increased. If the fund is not successful, funding will be withdrawn and redistributed across the health system. If changes in practices are determined to have value for money, then they will be rolled out across the National Health Service. That is, after all, the point of the fund. Moreover, Mr Speaker, had the Member for Hackney North and Stoke Newington paid attention to my statement, she would know that all net efficiency savings within the NHS, including the identification of ghost patients, are to be reinvested in the NHS. If the member would refer to the written copy of the budget statement, I can assure her that it says, and I quote, "I can announce that any efficiency savings found in the NHS budget will be reinvested in the NHS." Mr Speaker, might I note that, in the future, it would be beneficial for the members opposite to pay attention during statements made to the House. They might find that many of their questions have been answered.
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