Amendment of the law

I am not sure whether it is the immediate effect of the Budget or that the House authorities have decided to turn up the air conditioning, but I have been freezing for three and a half hours. I am glad that I am now able to exercise a little—to get moving, and start the blood circulating around my body. I do not know whether I am alone in this, but I do not like to think about the stars and the planets. It tends to hurt my head if I think about things that are beyond my comprehension, and I think that that was the Chancellor's general approach today. He preferred to talk about the minutiae. He spurted out figures, one after another. In one section of his speech, when he was talking about banks and percentages, we heard about percentages of 59, 68, 74, 78 and 79, and sums of £175 billion and £173 billion. He then mumbled some generalisations about the future, but he avoided talking about the big picture. I think that it was the hon. Member for Esher and Walton (Mr. Taylor) who asked what was the vision for the Budget, and he was spot on. If people are to buy into the pain that we will experience, they need to know what is the promise—the pledge—for the future, but there was nothing for them to grab other than a series of individual announcements. I welcomed some of them: the announcement on carbon capture, about which I shall say more shortly, was excellent. However, there was no big vision. There was nothing for people to grab hold of and consider to be worth going through pain for. One of the biggest financial stimuli—although I am not sure whether the Chancellor classed it as a financial stimulus—was for Jobcentre Plus. While I think it worthy to invest more money to retrain and support people, I do not recall the Chancellor tramping around the world trying to secure the support of other countries for that sort of financial stimulus. I am not sure whether we have been given the Budget that we have been promised over the past few weeks. I believe that this is a Budget of missed opportunities. The big debate on which the Prime Minister likes to try to make us focus deals with whether we are to have the do-nothing approach of the Tories or the all-action approach of the Labour party. It would be nice if it were as simple as that, but in the case of a financial stimulus it is what you do that counts. I want to try to create something new out of this crisis. I do not want to patch up the old; I want to create something of which we can be proud. The hon. Member for Nottingham, South (Alan Simpson) made some good points when he described, very knowledgeably, the experiences of South Korea. I think that we should try to build something of that kind. I am particularly disappointed because a manufacturer in my constituency is having to lay people off because the train maker Bombardier and the bus maker Alexander in Falkirk have laid people off, having not secured the orders that were promised in the general furore following the initial financial crisis. I think that the fact that people who were employed to manufacture buses and trains are being laid off at a time when we are trying to create a new environmental economy is an indication that the Government may have got it wrong. In Dunfermline, the break-up of the Dunfermline building society has been a traumatic experience over the past two weeks. I am pleased that the Scottish Affairs Committee has agreed to conduct an inquiry into the breaking up of Scotland's largest mutual society. I want the Committee to take evidence from a range of people, not just the directors, the management and the Financial Services Authority. I think that the Prime Minister should consider giving evidence. He should do so because when he was Chancellor he did not impose the appropriate financial regulatory machinery that would have prevented these catastrophic mistakes from being made within the society. Although it is quite a small society in UK terms, it is a symbolic institution and it is right on his doorstep. He will feel pressure locally, therefore, and he might want to seek the opportunity to explain what his role was in the demise of the society. There are some related issues. I was hoping that we might get some more radical reform of the Financial Services Compensation Scheme, because the balance between risk and value in how the levy is allocated is currently completely out of kilter. There is not the appropriate recognition of institutions that are relatively safe in their outlook, and they are therefore penalised in the same way as the reckless. I was hoping a reform would be announced today, but, alas, that did not happen. The second issue is the capital requirement. Lord Turner has advocated a flexible capital requirement for institutions, which should lend from 7 per cent. in the good times to 4 per cent. in the more difficult times. Unfortunately, the Financial Services Authority currently imposes a requirement of 8 per cent. across the board, which penalises a lot of organisations and institutions that are doing a very good job in very trying circumstances. Since the beginning of the year, I have visited about 100 businesses in my constituency. Going around them is a very interesting experience, because we often think they are one big homogenous mass and that everybody is suffering right across the board, but that is not true. Some businesses are actually doing quite well. They are smart businesses that are adapting to the circumstances. They might be operating in the "make do" area—fixing fridges or cars, perhaps. They are doing quite well; they are recruiting people and they are quite optimistic. I must add, however, that there were a lot of empty units as I travelled around the industrial estates, so there were others who were not able to speak for themselves. Nevertheless, we should acknowledge that despite the trying circumstances some businesses are doing quite well, and we should not kid ourselves that they are one big homogenous mass. We should reflect on that when devising policy, because we need to have appropriate mechanisms in place to support the businesses that are doing well—despite the best efforts of the Government, I would add. Bank lending is an issue. The Red Book contains some figures about how much the banks are committed to lending over the next year: £25 billion for RBS, £14 billion for Lloyds, and £5 billion for Northern Rock—and I am sure there are others. The trouble is, however, that it is all very well committing, but the conditions and the commercial requirements that are in place are crucial. We need to have arrangements that recognise valuable businesses. Lots of people have come to me—I am sure this has happened to other Members, too—who are incredibly frustrated that they are unable to squeeze any money out of the banks and other institutions. They have good business prospects, they employ quality people and they know how to run businesses, but they still cannot get the money out. It is not that they get a flat rejection; what they get are delays and barriers—they might be asked to return to their bank with yet another requirement—and eventually they just give up. I met someone on Saturday who was incredibly frustrated. He was a smart guy with a great business opportunity, but he is not managing to go ahead with it simply because the banks were not prepared to lend him the money he needed. This is partly to do with the skills of the people who work in the banks. In the past they were salesmen grabbing every opportunity they possibly could, but now they are being told to hold back, and they think, "I'm not going to be the first person to say to my manager that I want to make a slightly more risky loan than others might recommend even though I think it's a great opportunity." We need to ensure that we have quality people within these institutions who can assess whether a business is a good opportunity.