Tuesday Volume 502 15 December 2009 No. 16 HOUSE OF COMMONS OFFICIAL REPORT PARLIAMENTARY DEBATES (HANSARD) Tuesday 15 December 2009 £5·00 © Parliamentary Copyright House of Commons 2009 This publication may be reproduced under the terms of the Parliamentary Click-Use Licence, available online through the Office of Public Sector Information website at www.opsi.gov.uk/click-use/ Enquiries to the Office of Public Sector Information, Kew, Richmond, Surrey TW9 4DU; e-mail: [email protected] 781 15 DECEMBER 2009 782 House of Commons Mr. Speaker: Order. We need to speed up. Dr. Tony Wright (Cannock Chase) (Lab): May I ask Tuesday 15 December 2009 my hon. Friend about speculative share trading in Cadbury? The City Minister, Lord Myners, said recently that he thought that it had become far too easy for British The House met at half-past Two o’clock companies to be taken over. Does my hon. Friend agree, and if so, what can be done in Cadbury’s case? PRAYERS Ian Pearson: I do not think that it would be appropriate to comment on individual cases. The UK has a long- [MR.SPEAKER in the Chair] established regime of open markets and a stock market, and all publicly listed companies are for sale; that is the nature of listing. I am confident that Cadbury is a well-run company. It is putting up a strong defence, and Oral Answers to Questions it will be up to shareholders to decide how they want to vote and support it. Budget 2009 TREASURY 2. Derek Twigg (Halton) (Lab): What recent The Chancellor of the Exchequer was asked— assessment he has made of the effect on the economy of the fiscal measures to help businesses he announced High Frequency Share Trading in Budget 2009. [306841] 6. Gordon Banks (Ochil and South Perthshire) (Lab): 1. Susan Kramer (Richmond Park) (LD): If he will What recent assessment he has made of the effect on make an assessment of the merits of regulating the the economy of the fiscal measures to help businesses practice of high frequency share trading; and if he will he announced in Budget 2009. [306847] make a statement. [306840] The Chancellor of the Exchequer (Mr. Alistair Darling): The Economic Secretary to the Treasury (Ian Pearson): A substantial amount of targeted support has been High frequency trading practices and the firms that use provided by the Government to help businesses through them are subject to existing regulation, which includes the recession. provisions covering behaviour and market conduct. The Financial Services Authority will take action if those Derek Twigg: How would a flat tax, as advocated by provisions are breached, and it continues to assess the some Opposition Members, help the recovery? risks from changing market practices, in consultation with other securities regulators. Mr. Darling: I have never seen the attraction of a flat tax at the best of times. It would mean that people at the Susan Kramer: The Minister will be well aware that top end of the income scale would pay rather less than nanosecond ownership of shares fundamentally changes those at the bottom, and at this time, of all times, there the relationship between the shareholder and the board ought to be fairness. Of course, I do not think that a flat of directors, and therefore corporate governance. However, tax would help businesses at all. The targeted measures small firms that are, in a sense, not suitable for high that we are putting in place, such as giving businesses frequency share trading will find it more difficult to time to pay their tax, allowing them to carry back their raise equity capital, and such trading is related to a lot losses and the reduction in VAT, are helping—and will of activity that takes place off the exchanges in so-called help—business. dark pools. Does he not think that this at least deserves some detailed scrutiny and review before we walk into Gordon Banks: Will my right hon. Friend tell the another disaster involving instruments that we do not House the estimated sum that will be retained by small understand? businesses in the UK as a result of freezing the level of small companies’ corporation tax? Ian Pearson: I agree with the hon. Lady that this needs detailed scrutiny and review. She might be aware Mr. Darling: I think that I said in my statement on of the paper that the Treasury issued on Friday entitled the pre-Budget report that about 850,000 firms had “Risk, reward and responsibility: the financial sector benefited from that measure. It is important that we do and society”, which discusses a number of these issues. I everything we can to help small businesses, because am not sure that I agree with her point about liquidity after all, they employ a great number of people and will, and small companies, because there is evidence that hopefully, grow into larger businesses. high frequency trading is an important way of ensuring that there is additional liquidity. She will be aware, Mr. Michael Fallon (Sevenoaks) (Con): Is not the however, that the Committee of European Securities reality that businesses in our constituencies still cannot Regulators will be giving advice to the Commission access the credit that they need, and that all this newly next year on the review of the markets in financial printed money is being siphoned off into purchasing instruments directive, which will certainly include the gilts to finance the extra borrowing that is a direct result issue of high frequency trading and the nature of the of the Chancellor’s failure to come up with a proper changing equity market. fiscal plan to reduce the deficit? 783 Oral Answers15 DECEMBER 2009 Oral Answers 784 Mr. Darling: No. I believe that the quantitative easing Mr. George Osborne (Tatton) (Con): Businesses need measures taken by the Monetary Policy Committee of a credible plan from the Government to deal with the the Bank of England are helping the process of recovery. fiscal deficit. The universal reaction last week from The hon. Gentleman has a point, however, about every single business organisation was that that plan bank lending. As I have said before, the stock of lending does not exist. One important step that the Chancellor is broadly similar to what it was before the crisis. In could take today is to be honest about the real-terms cut addition, the banks in which we have major shareholdings in departmental spending that the figures that he announced —RBS and Lloyds—have lent an additional £50 billion. last week imply. Will he confirm what Treasury officials At the same time, however, there has been a repayment told the Treasury Committee this morning and give us, of lending by other businesses, which is why the net in the Chamber now, the projections for departmental figure looks so low. As I said last week, it is necessary spending that he refused to give last week? that the deficit be reduced, and we will halve it over a four-year period once recovery has been established—but Mr. Darling: First, we have set out a plan to cut it is important to ensure that we get that recovery borrowing by half over a four-year period. I understand established. the hon. Gentleman’s view, which is shared by some others as well, that we could go further and faster. Stewart Hosie (Dundee, East) (SNP): This recession However, I believe that attempting to do what we are is longer and deeper than either of the recessions of the doing in a period one year shorter than that would 1980s and 1990s. Unemployment and youth unemployment result in taking £26 billion more out of our economy. are higher than they were in 1997, so the decision to add That would be damaging to our economy and very an additional national insurance burden for employers damaging to our future prospects, which is why I do not seems to make no sense, as it will weaken businesses’ think that his policy on this matter is right. ability to create jobs. Does the Chancellor not agree Secondly, in relation to departmental spending, I said with the chamber of commerce in his home town of in the pre-Budget report last week that I wanted to ensure Edinburgh that that makes no sense, and that he should that we could protect front-line services in the NHS and have been incentivising job creation, not penalising it? in schools, and make sure that we had sufficient police on the beat. I made that clear, but I also made it clear Mr. Darling: We have introduced a number of measures that I was not going to fix individual departmental to help people get into work, and there are 2.5 million expenditure limits for each Department at this stage, more people in work now than there were in 1997. Also, because there is still a lot of uncertainty around. We already unemployment would have been much higher if we had have spending for the next year; that remains my position. followed the course of action taken in the 1990s and the 1980s. The measures that we are taking are working, Mr. Osborne: I do not think that the Chancellor can and they are making sure that we are getting people be aware of the universal reaction to his PBR statement back into work much more quickly than was the case in last week. The international markets believe that there the past. Most people find work within six months, and is “no coherent plan” in the UK, that our sovereign many get back into work in a much shorter period.