John Maples backs windfall tax on banks and banking reform in his final Commons speech

John Maples is stepping down as Conservative MP for Stratford-upon-Avon. Here are three highlights from his final speech to the Commons, made during the Budget debate.

Banks need to re-moralise themselves: "The banks have been one of the causes of the problems we have been experiencing, but, remarkably, they seem to fail completely to appreciate how unpopular they are, the problems they have caused or the need for any adjustment in how they are regulated and how they behave. They have gone back, remarkably quickly, to what seem to me to be their bad old ways. It is absolutely right for the Government, as the guarantor of retail deposits and the lender of last resort in terms of system risk, to say, "We're never going to have this happen again... "The big point that I wish to make is that the ethics and morality of the banking business need to change. When the closed shop of English gentlemen who ran the City for a couple of hundred years was broken up 30 years ago, we got an eat-what-you-kill philosophy from the Americans instead. It is pernicious, because it encourages an individual to take a very short-term view of what he or she does, in the interests of maximising his or her own bonus. Nobody is looking after the firm or much concerned about the customer. Bankers need to start thinking about the purpose of what they do, and they need to reintroduce strong ethics to it. They need to deal with conflicts of interest over proprietary trading, and they must put the good of the customer and the organisation that they work for much higher up their agenda."

Banks should have strong internal walls between riskier and safe activities: "The Americans have suggested bringing back the Glass-Steagall division between investment banking and commercial banking-the casino and the utility. I find that a pretty attractive idea, although I worry, on the other side, that big companies need banks that can do a lot of things for them. If we are not to go the whole hog, I do not see why we cannot put banks into silos. The bank could run its mergers and acquisitions and corporate finance business in one silo, with a certain amount of capital committed to it but not putting deposits at risk. If it wanted to run a proprietary trading operation-frankly, I do not believe it should, because it would basically be betting against its customers-that should be in a separate silo. The only thing that the Government should guarantee is the retail deposits in a separate subsidiary of the banking group, and we should regulate very tightly what it did with that money. If a bank wanted to run its own internal hedge fund and lost money on that, it would lose a certain amount of capital, but it would not put the rest of the business at risk, as Lehman Brothers did."

A windfall tax on banks is a good idea: "I believe that the idea of a transaction tax on banks is terrible, as it would just get passed on to customers. However, the idea of taxing the banks' profits a bit more might be good. The reason why they are making so much money at the moment is that they can borrow it from the Bank of England for next to nothing. The argument for a windfall tax on the banks is pretty overwhelming, and if my party is in charge of these affairs in a couple of months' time, as I hope it will be, I hope that it will take that on board."

Tory MPs slam Jacqui Smith over Damian Green arrest

Home Secretary Jacqui Smith came before the House of Commons yesterday to make a statement on the Damian Green arrest. She was very much on the defensive:

"As the statement issued by Sir David Normington on 28 November made clear, he was informed by the police at about 1.45 pm on 27 November that a search was about to be conducted of the home and offices of a member of the Opposition Front Bench. Sir David was subsequently told that an arrest had been made. This was the first time that anybody in the Home Office was informed that a Member of this House was the subject of the police investigation. I have made it clear that neither I nor any other Government Minister knew until after the arrest of the hon. Member that he—or any other hon. Member—was the subject of a police investigation or was to be arrested. I hope that those who have asserted the contrary will now withdraw their claims.

Let me be clear that even if I had been informed, I believe it would have been wholly inappropriate for me to seek to intervene in the operational decisions being taken by the police. I will not do that and I should not do that."

As Quentin Letts writes in the Daily Mail, Shadow Home Secretary Dominic Grieve was ruthlessly efficient. This page has already carried his statement. One point that the Home Secretary made in response does need highlighting:

"The hon. and learned Gentleman asserted several times that “there is not the slightest evidence”. He does not know what evidence the police have. I do not know what evidence the police have—but I do know that it is wholly appropriate that the police should use their professional judgment to follow the evidence during the course of a police investigation without fear or favour."

Unfortunately for the Government, no-one is going to give them the benefit of the doubt. If no breach of national security is uncovered, they will look very foolish.

Other Tory MPs were furious too.

Continue reading "Tory MPs slam Jacqui Smith over Damian Green arrest" »

Contributions from Conservative MPs to the debate on their pay

THERESA MAY MP, Shadow Leader of the House: "I want to comment on why the issue of whether MPs vote on their pay has resonated so much with the public, and sadly, it is because many voters no longer trust politicians. They have a jaundiced view of politicians and are consistently given the view by the media that all MPs have their snouts in the trough. That is a disappointing representation on the part of the media because it damages this House, politics and our parliamentary democracy if people feel that they are not able to trust politicians. There are, of course, other ways in which trust in politicians is damaged, such as Governments not delivering on their promises, and other factors, but we should be concerned about the image of MPs portrayed by the media... The way in which MPs pay is reported in the press is an important issue. We consistently see the misreporting of the amounts of money that MPs “earn” in this House by the addition to our basic salaries of the budgets that we have to pay for our staff and in order to run our offices. Indeed, only last week The Daily Telegraph set out a table that included average staff salaries and average expenditure on offices alongside average travel expenses and the average additional costs allowance, under the heading “MPs’ Gravy Train”."

NICHOLAS WINTERTON MP: "Including time spent travelling to and from my constituency, I estimate that I spend an average of 85 hours per week on parliamentary and constituency work when the House is sitting. That is more than twice the normal working week in this country."

MARK FIELD MP: "Even if one of those independent mechanisms were properly implemented and all the concerns raised in this debate were addressed, the issue would still become a media hue and cry. Therefore, it is for us, as Members of Parliament, simply to bite the bullet and to drive forward the right sort of pay package, given that we believe in the idea of a sovereign Parliament."

DAVID MACLEAN MP: "Our work load is increasing all the time, but our hours have stayed fairly static, at 60, 70 or 80 a week. I could reduce my work load. I could, on Armistice Sunday, refuse to go to the service in Carlisle in the morning and the one in Penrith in the afternoon. I could refuse to do Saturday surgeries, and could refuse to go to council meetings on a Friday night. We could reduce our time commitment to 40 hours a week, but would that be the responsible, sensible thing to do? Would it be serving our constituents if we refused to do all the things that we have to do that take us 80 hours a week when the House is sitting and 60 hours a week when it is not?"

JOHN MAPLES MP: "A fair amount of remarks have been made about the erosion in our pay, and I do not need to reiterate those. Had the mechanism that we had agreed been followed, however, we would now be paid between £65,000 and £66,000 a year. Were we to continue to allow the erosion of our pay relative to other people, or to the public sector, that problem would sooner or later get so bad that it would have an effect on the sort of people who get into this place. If we want to fill it with people who are either fanatics or rich, that is the way to go, but it is not sensible. There are people who would do the job for nothing—I would be happy to present “Newsnight” for nothing—but whether they are the right people is a different question. It is not the right way of qualifying for a job. We certainly do not want to fill the place up, as we did until about 100 years ago, with people who have significant other sources of income."

and... "If we let the editorial writers of the Daily Mail and The Daily Telegraph set our pay, we are done for."

The decision over pay did not even go to a formal vote in the end with MPs agreeing to a sub-inflation pay rise (BBC).