Cable, Burt, Reid and Goldsworthy on the Banking Bill

• [Nov 26] Vincent Cable: 'MY party's approach to the Queen's Speech . . is that the limited time that remains in this Parliament should be used for some modest political reforms and that devoting it to the range of legislation proposed in the Queen's Speech is not justified . . '

[John Bercow (Speaker): . . Standing Order No. 33 provides that, on the last day of the debate on the motion for an address to Her Majesty, the House may also vote on a second amendment . . I have selected the amendment in the name of Mr. Nick Clegg for that purpose. The vote on that amendment will take place at the end of the debate.]

Vincent Cable (Twickenham, Liberal Democrat): My party's approach to the Queen's Speech is summarised in the amendment put forward by my party leader and my colleagues. Essentially, it is that the limited time that remains in this Parliament should be used for some modest political reforms and that devoting it to the range of legislation proposed in the Queen's Speech is not justified. However, two economic Bills-on fiscal policy and on banking-have been announced and it seems appropriate that we take the opportunity to discuss them.

I shall start with the question raised by the Conservative spokesman concerning Britain's place in the current economic crisis. It seems a good place to start: why is Britain in the worrying position of having suffered a recession that is deeper and longer than that faced by other developed countries?

Essentially, there are two reasons. One is that the consumer boom, which was based on inflated asset prices-particularly for housing-and consumer debt, was allowed to get out of control. There was a great deal of complacency about that.

The bigger reason, which the Chancellor has just given from the Dispatch Box, is that Britain is unusually dependent on the banking sector. We had a major international banking crisis; British banks' balance sheets account for roughly 4 to 5 per cent. of our gross domestic product-far in excess of the United States or most European countries. It was inevitable in those circumstances that a major banking crisis would inflict great damage on the British economy. In that sense, the Chancellor was absolutely right in his analysis. It is unfortunate that his predecessor, now the Prime Minister, went around claiming that we would get out of this recession much sooner than everyone else, because the underlying structural problems were so obvious, and the Chancellor has correctly identified them.

Let me proceed to two specific issues, one of which is the fiscal responsibility Bill. We have all had our fun with it. The Conservative spokesman had a bit of fun today, with jokes about the Chancellor being hauled off to the Tower of London, and about unenforceable legislation. I shall try to approach it in a different way, to try to understand what the Government are trying to do.

Is there a role for declaratory legislation, which sets an objective that is not intended to be enforced or cannot be enforced? Does such legislation actually have a role? The point that has been made to me, and has also been made from the Back Benches, is that such legislation has been introduced in other contexts; for example, climate change. I think all parties have signed up to targets in that context. That is a serious point.

There are two differences, however. First, setting quantitative targets that have a major impact on long-term business planning is different from setting financial targets in a rapidly moving economic world. There is a fundamental difference. The climate change targets are important, too, because they link directly to treaty obligations, so there is an argument for embedding them in the law. I accept that. It is an interesting precedent for the law being used to set good objectives that cannot be enforced. Let us apply it to the present case. Is it sensible or helpful for the Government's fiscal objectives, which I think are to halve their estimate of the structural deficit within a Parliament, to be embodied in the law?

The Government have created a dilemma for themselves. If there is a rapid economic recovery, which I know the Government hope for and some of their projections suggest will happen, the objectives are far too modest, because if there is rapid growth it will be possible to reduce the fiscal deficit more rapidly. On the other hand if, as I fear may be the case, the British economy does not recover rapidly, we shall have all kinds of impediment. The banking system will not be working properly. The monetary policy stimulus will have to be terminated within the next year or so, in all probability, so we shall not have growth. In those circumstances, the Government's modest objectives may be much more realistic. However, we do not know which of those two futures will evolve.

There is a particular difficulty with the position that the Conservative shadow Chancellor has taken. He assumes that the next Government, or this one, can somehow create rapid economic growth. Going back to the early days when the Prime Minister was in his ascendancy and the Secretary of State for Children, Schools and Families was at his side, they claimed that they had in some way changed the fundamentals of British economic growth. The rather mundane truth is that the underlying rate of economic growth in Britain has been pretty much unchanged since the Napoleonic wars. Different Governments claim that they have found a magic formula-Mrs. Thatcher did, as did the present Prime Minister-but of course they do not fundamentally change anything. Underlying growth is likely to be quite modest, in which case there will be a significant effect on what it is possible to do in terms of fiscal policy.

If we enter a period of rapid growth, the Government's aims will be too modest. There is a real danger that we shall get stuck in a slowly growing, recession-hit economy for a significant period, with high levels of unemployment. If that were the case, it would be disastrous to embark on rapid deep cuts in public spending in the short run. It would be completely inappropriate. Because we do not know what conditions will be, it seems foolish to set targets in stone in legislative form.

Does that mean that the legislation is completely pointless? No, there is a role for legislation to strengthen the fiscal framework. I am probably not too far from the Conservative spokesman in his belief that we need an additional independent element in fiscal policy, as we have in monetary policy with the Bank of England. However, my party's approach would be more modest. There is probably an argument for giving the National Audit Office a stronger role in auditing what the Government have done-not just their forecasts as at present. The NAO could make an assessment about whether the Government have delivered on their targets.

We have already had some strengthening of the legislation regarding the independence of the statistics office. That was a step forward and there is an argument for an independent audit role-an Ofsted-on fiscal policy. I agree with that, although I should not create quite such an elaborate institution as the Conservative spokesman proposes. None the less, there is a role for strengthening the institutional backbone of fiscal policy.

I switch to the other, much bigger subject: what is happening in the banking system. Over the past couple of days, we have been reminded in several ways that major problems are still unresolved. There was yesterday's Supreme Court ruling on banks imposing what many people regard as unfair charges. There were also the revelations about the so-called secret loan. Today, we have seen the pathetic report from a City insider-the Walker report, which is an absolute disgrace. Before I came to the Chamber today, I was in a television studio with Lord Myners, whose eyes were rolling in embarrassment as he tried to explain away the fact that the Government are committed to that rather pathetic and limited document.

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Graham Stuart (Beverley & Holderness, Conservative): Does the hon. Gentleman agree that although the covert lending was probably right in the circumstances, it was unethical for the Government then to lean on another bank and broker a deal under which shareholders could not be told about the covert loan? One bank merged with another with a huge loss of shareholder value. Even if we accept that the covert loan should have happened, we cannot accept mergers of institutions without openness, truth and transparency about what is really happening.

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Vincent Cable: I think that was exactly what I said yesterday in relation to Lloyds bank. Equally, I said, and meant, that it was right for the Government to support the banking system and that there was a role for covert lending. I have no difficulty with that. I just want to make it clear, as I have done many times in the past, that although I have major disagreements with the way the Government managed the economy up to the crisis and with the way they have managed the banking system since, the intervention last October was right in almost every respect. It was right to give the guarantees, to make major Government equity investment and to partially nationalise the banking system. I do not retract that in any way.

However, major problems are unresolved and the Government have been failing by not addressing them. The first-where the Conservative spokesman rightly started-is the failure of lending. As information trickles out, we are discovering that although Lloyds is broadly meeting its gross lending objective, its net lending flows are very limited indeed. NatWest and RBS are failing even to meet the limited lending objectives they were set. One noticed in the press last week that RBS was willing to cough up enormous sums to help Kraft to take over Cadbury, but that semi-nationalised bank is still unwilling to lend to very large numbers of good, solvent British companies. They have a good credit history and track record, yet they cannot get credit on reasonable terms. There is a major policy failure, which is the failure of Government representatives in United Kingdom Financial Investments Ltd to make it absolutely clear that they have an obligation to act in the national interest.

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Mark Field (Cities of London & Westminster, Conservative): Although I accept what the hon. Gentleman says, does he not feel that a fundamental problem is that huge amounts of toxic assets in our banks have still not been identified? That is the main failing. He is right to point out that it has been manifested in the lack of credit for small and medium-sized enterprises, but many people regard the unravelling of toxic assets as work that is very much in progress. It will take another two years.

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Vincent Cable: The unravelling of the toxic asset problem may take a decade, which was the experience in many other banking crises. In the meantime, there is absolutely no reason why a clear steer should not be given to the nationalised and semi-nationalised banks to maintain a lending policy that helps to sustain the British economy, but that is clearly not happening.

The second big issue, which is not being addressed properly, is the structure of the banks. The Chancellor always groans when I raise the subject with him, and comes back with his prepared line: "That's got nothing to do with the structure of the banks, and it was small, narrow banks such as Northern Rock that collapsed." I do not particularly want to turn this into a personal argument with him; I simply suggest that he reads the evidence that the Governor of the Bank of England yesterday gave to the Treasury Committee.

The Governor said exactly what we Liberal Democrats have been saying: the structure of the British banks is not sustainable, and that is a serious problem. That problem does not centre entirely on the issue of the links between the narrow banks and the so-called casino banks, but he is seriously concerned. He is absolutely right to be concerned, because some of our very large global banks, which, for the most part, happen to have large investment banking operations, are expanding, or wish to expand, on the back of the Government guarantee. We know that in future crises, that guarantee will be called, as it was in this crisis. That is not an acceptable or sustainable position.

At some point in the near future, the Government will have an obligation to intervene to break up the very large banks, so that those banks do not create such a degree of risk. I am not sufficiently expert on the banking system to be precise on how that is to be done, but it could be done in different ways. The Government must respond. I do not expect them to respond to me, but I expect them to respond to the warnings of the Governor of the Bank of England, who continues to point out that the issue is the major unresolved problem; it has not been addressed.

On the issue of bonuses and remuneration, I have read the relevant sections of the Walker report. It pretty much reiterates what was said some months ago by Lord Turner, and what was already largely agreed at the G20. The issue is implementation, and how we create a regime in which bonuses are paid predominantly in shares, rather than cash. My question for the Government is whether legislation is necessary to achieve that purpose. I am not a parliamentary draftsman or a lawyer. I was under the impression that the financial services legislation and the powers devolved to the Financial Services Authority were adequate to allow it to impose an appropriate regime on the banks. Is that the case? What legal advice available to the Government has told them that they have to come back with yet another banking Bill to introduce measures that the FSA has clearly said are absolutely necessary to maintain the stability of the system?

The Walker report became a topical issue today, particularly as it relates to transparency and disclosure. There has been a movement in the argument over the past few months. It was clear that Ministers expected and wanted the Walker report to propose full disclosure in relation to not just the generality of what they call top-end employees, but those employees' individual rewards. The Walker report has clearly backed off from making that recommendation under pressure.

I think that Lord Myners is on record as having said that he saw no problem with individual disclosure. Why should there be a problem with it? Board members of public limited companies disclose their emoluments. What is there to hide? We are not talking about private companies that are completely independent. I can well understand why an entrepreneur setting up an engineering company-a private company-might wish to protect their privacy and not declare all their income, except to the tax man, but why should that apply in the cases that we are discussing? The banks in question are ultimately guaranteed by the taxpayer, and have an obligation.

We have had an embarrassing light shone on dark corners in this House in the past few months. It has been quite painful, but I think that most people now accept that it was legitimate to shine that light, and that it is fundamentally healthy, in the long run, for there to be more transparency. That applies not just to Members of Parliament, but to other people in society, particularly those who depend on a taxpayer guarantee. The Government should have absolutely no inhibition in demanding individual disclosure. That is the central weakness of the Walker report recommendation. I note, however, that the Chancellor appears to be conceding that £1 million is perhaps a little bit too high an amount at which to set the poverty level in the City; he seems to be willing to drop that amount a little, and that is a step forward. On the question of individual disclosure, the report is, frankly, pathetically weak. Stronger action from the Government is needed.

I agree with quite a lot of the things that the Conservative shadow Chancellor said, but he has a phrase that he invented: "We're all in this together." The truth is that we are not all in this together. Some people have done extraordinarily well out of the crisis. There is enormous prosperity in parts of the country, much of it unearned and much of it lucky. At the same time, there is enormous poverty and hardship, and there are people struggling with unemployment. We need to reflect our concerns about those widening inequalities of income and wealth in the tax system, and in how we approach the regulation of remuneration.

. . • Lorely Burt (Solihull, Liberal Democrat): On the face of it, there does not appear to be a great deal for business in this Queen's Speech, so I wish to focus on business. Legislation is not always needed in order to make changes, as Peter Luff said. I trust that that proves so and that having introduced a plethora of measures, some of which have worked and some of which spectacularly have not, the Government are not resting on their laurels, thinking that we are through the worst and that everything will be all right. If the measures that they have announced had been properly implemented, business would not be suffering in the same way as it is now.

Recent talk about recovery is encouraging, but we must be realistic and recognise that businesses are still suffering and our gross domestic product is still falling, with the third quarter figure showing the decline slowing to 0.3 per cent. Mr. Bellingham cited a figure of 0.4 per cent. but I believe a revision was made yesterday-either way, the situation is bad and GDP is still declining. The level of bank lending to businesses continues to decline, with third quarter lending decreasing by £23.2 billion. The level of unemployment is still increasing, with the figure now at more than 2.5 million. Manufacturing investment has decreased by more than a quarter and construction investment has decreased by almost a third.

Despite all that, an array of business support is due to end before the recovery has been secured: the trade credit insurance top-up scheme ends on 31 December 2009, just when it might have become useful as the credit insurance market stabilises; the vehicle scrappage scheme ends in February 2010-or earlier if the Government funding is used up; the enterprise finance guarantee scheme ends on 31 March 2010; an extension on empty property rate relief ends on 1 April 2010; and first-year capital allowances of 40 per cent. end in April 2010, when we understand they will return to 20 per cent.

Although we have heard various noises from the Government about extending these schemes, no clarity has been provided. They have left it late before explaining their plans, which has left businesses with little time to prepare. The worst thing that we can do to businesses is leave them in a state of uncertainty. How can they make provisions when they have no idea of what is coming? Can the Minister tell business today which of the schemes are to be extended? The Chancellor has said "no", but he is not serving the interests of businesses by making them wait until the pre-Budget report. Despite the endless announcements about help for business, some Government actions are holding business back. Businesses face an overnight increase in business rates of up to 12.5 per cent. from April. That is a significant cost, especially for small businesses. Empty property rate relief is due to be withdrawn on the same date, encouraging unnecessary demolitions and destroying the capacity of the economy to grow in the future.

We have long said that fundamental reform of business rates is required to make them more equitable. Let us take the timing of the VAT increase as an example. Despite modest, well-argued representations from business, the Government refuse to change the timing of the VAT increase from midnight on 31 December. The Federation of Small Businesses has called for it to be deferred to 1 February to avoid the peak January sales-a sensible measure, but one that the Government are ignoring. What a happy new year message that will be to retailers.

Another example is an increase in the burden of tax. The small companies tax rate is due to increase from 21 to 22 per cent. In last year's pre-Budget report, even the Government realised the counter-productive effect of that change and deferred it from last April to next April. I hope that they will reconsider this ill-timed additional burden on small companies and that the Minister will comment on that.

I want to see a new sense of urgency in the Government, with fewer announcements and more action. The sense of urgency among businesses is palpable as they struggle to stay afloat. I do not want to be unfair-some of the Government schemes have worked, although some have not. One that has worked relatively well is the enterprise finance guarantee scheme. Will the Minister confirm what will happen to that scheme?

One scheme that has not worked is the automotive assistance scheme. Guarantees of only £400 million have been promised, compared with £2.3 billion of ostensibly available guarantees. For six months of this year, no money was forthcoming but 10,000 jobs in the automotive industry were lost. Jaguar Land Rover, in my constituency, finally decided after months of being messed around by officials that the game was not worth the candle and got financial help elsewhere. Will this scheme be quietly forgotten now? Will the Minister respond on that point, please?

The trade credit insurance scheme was most welcome when it was announced, but it has been an absolute disaster. Although the Government said that they expected a £3 billion take-up by October, only £13 million has been allocated. The conditions have been far too restrictive. Will the Government consider relaxing the criteria so that struggling companies can benefit or will they quietly forget that scheme, too?

Nigel Dodds (Belfast North, DUP): I agree entirely with what the hon. Lady is saying about the various Government schemes and the need to consider which work and which do not. Does she agree that as well as Government schemes, the banks and the financial lending institutions need to be doing a lot more? Although Government help is very welcome, more pressure needs to be put on the banks to do more for businesses, because that is what businesses are crying out for.

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Lorely Burt: I absolutely agree. My hon. Friend Dr. Cable made that point quite strongly, so I have not concentrated on the banks, but the hon. Gentleman is absolutely right.

Let me finish by looking towards the longer term. I do not want to focus merely on the difficulties and challenges that we face. This country has a legacy of innovation and enterprise that should give us confidence for the future. It is now time for the Government to get ahead of the game and to begin to support enterprise in the longer term by creating an environment in which small and large businesses can flourish side by side. I welcome some of the moves to generate wealth through the knowledge and skills of our young people, such as the creation of a cluster of university enterprise networks to harness the value of the academic knowledge that is taught in our universities to drive future entrepreneurship and long-term economic growth.

The upturn will bring some risks. In the downturns of 1980 and 1990, insolvencies rose significantly after the technical end of the recessions as businesses rebuilt their working capital on returning to growth. Will the Government make sure that they take adequate steps to prevent the destruction of jobs and livelihoods this time round?

We all know that the state of the public finances means that there are limits to the help that can be provided, but there are no limits to what the Government can do when it comes to creating a level playing field, reducing interference from Government and enabling businesses to drive forward the diverse, vibrant and sustainable economy that is the key to our future.

I and my colleagues on the Liberal Democrat Benches will do all that we can to offer support for any step that is taken to help and enhance this country's business future and prosperity.

• . . Alan Reid (Argyll & Bute, Liberal Democrat): The main theme of my speech will be a common theme today: the banks and the problems that many of their customers in small and medium-sized businesses face.

In a short space of time, the banks seem to have gone from one extreme to the other-from excessive risk-taking to excessive caution. We all have companies in our constituencies coming to us with the same story. They have a good sound business, a good track record and plenty of orders, but when they try to raise money from the banks to see themselves through the recession they are either turned down flat or, if money is offered, it is offered at a very high interest rate with a large arrangement fee and often demands for high levels of security for any loans that are offered.

Another common theme is complaints from small businesses that the cuts in the base rate are not passed on by the banks to individuals or to business customers. Getting lending moving again at reasonable interest rates is important, because although we are, I hope, starting to come out of the recession, there will still be difficult times ahead for businesses. For example, the Government's plans are to reverse the VAT cut shortly and many of the other schemes to help businesses will also come to an end.

I remind the Government that when they reduced VAT last year, two sectors did not benefit from that cut because fuel duty and alcohol duty were put up to cancel it out. Both sectors are of importance in my constituency. Fuel duty increases penalise my constituency because we must, out of necessity, drive long distances. I shall return to a theme that I have raised often in Finance Bill debates and urge the Treasury yet again to consider making use of the EU derogation that allows countries to levy lower rates of fuel duty in remote rural areas. If the Treasury could take advantage of that EU derogation and levy a lower rate of fuel duty at filling stations in the remote parts of the highlands and islands, that would contribute greatly to the local economy. It is important to remember that people in the highlands and islands face higher fuel costs as well as having to travel long distances, so the price of fuel is very important.

As far as alcohol duty is concerned, I much preferred the policy of the previous Chancellor to that of the present Chancellor. The previous Chancellor, during his long tenure in the post, had a policy of freezing the duty on spirits while allowing that on beers and wines to go up in line with inflation. The alcohol duty on spirits is far higher per unit of alcohol than that on beers and wines. Surely, if alcohol is taxed for health reasons, the only logic is that it should be taxed at the same rate per unit of alcohol. I urge the Chancellor to revert to the policy of his predecessor and freeze the duty on spirits. Whisky distilleries are major employers in my constituency, providing jobs on remote islands where other work is hard to find. I therefore hope that the Chancellor will listen to that advice.

As I said earlier, small businesses still face a difficult time. The banks that were bailed out by the taxpayer with eye-wateringly large sums of money should have a duty to help small businesses through these difficult times. Nationally owned banks should act in the national interest, and the Chancellor is the main shareholder in several banks, having a controlling interest in some and a substantial holding in others. When the Ministers sums up the debate, I hope that he will tell the House what instructions the Government have given to the banks in which they are the main shareholder.

I sincerely hope that those banks have not been told by the Government that their sole duty is to maximise their profits, and that they have also been given a duty to help solvent British businesses through the recession. I do not mean by that that they should encourage risky lending, but there are solvent companies with good prospects and good track records that need loans to help them through these difficult times. Banks with a substantial Government shareholding should consider the needs of the entire economy, and not just focus on maximising profits.

I shall give an example from my constituency that involves the Bank of Scotland, which is now part of Lloyds Banking Group and is 43 per cent. owned by the Government. The bank decided recently to withdraw all but one of the business relationship managers from its branches in my constituency, even though local managers living in the remote communities know them in a way that business management teams located in Edinburgh, for example, could never match.

One of the affected branches was on the island of Islay. The decision to remove the business manager there has caused great outrage and concern among the island's business community, which will now be served by a manager in a business team based on the mainland. I am in full agreement with the members of that community that a manager and a team based on the mainland will never understand the special circumstances of Islay's economy as well as a manager who lived there would, and I back their campaign to reinstate the post on the island.

To the bank's credit, it has amended its plans in response to the campaign, and there will now be a dedicated team for business customers in the highlands and islands. That is a welcome step forward and an improvement on the original proposals, but I still think that the mainland-based team will not have the same knowledge of Islay's economy as a manager living there would. That is an example of how banks with the taxpayer as their main shareholder should look to support local communities. I hope that Ministers will take this issue up with the Bank of Scotland and urge it to reinstate the post.

Another way for the Government to help both individuals and small businesses would be to establish a post bank, which would have 10,000 branches throughout the country. I was pleased with the announcement about the post bank that the Prime Minister made at the Labour party conference, but I have been disappointed with the slow progress since then.

Post offices are still closing, and two have shut in my constituency since the end of the planned closure programme. As well as helping individuals and small businesses with their banking, a post bank would also help to rescue the rural post office network. I hope that the Minister summing up the debate will have progress to report on the post bank proposal.

As well as supporting businesses through the recession, the Government should also be looking at investing in the infrastructure that the country needs so badly. Infrastructure investment is needed in school buildings, public transport, broadband provision, the national grid and so on. We need a mechanism for reducing the cost of capital through Government guarantees, while at the same time tapping into private savers' demands for long-term investment. That is why I support a UK national infrastructure bank, and I hope that that it is an idea that the Government will also support.

I was very disappointed by the Supreme Court decision yesterday that the banking practice of imposing unfair overdraft charges on individuals was within the law. I was disappointed that the court sided with the banks in that judgment and I hope that the Government will soon introduce legislation to outlaw those unfair charges.

I endorse what the Chairman of the Business, Innovation and Skills Committee said earlier about the need for a supermarket ombudsman. Such a post is badly needed to help small businesses and consumers, particularly in the dairy industry where there is a huge gap between the farm-gate price for milk and the price the consumer pays at the supermarket. I hope the Government will accept the Competition Commission recommendation and set up the post as soon as possible.

I look forward to the Minister's response. I hope he will tell us what instructions the Government have given the banks in which they have a major shareholding, so that banks can help British businesses through the recession, rather than simply maximising profits.

• . . Julia Goldsworthy (Falmouth & Camborne, Liberal Democrat): It is a pleasure to follow Mr. Robinson. His contribution typified our debate. We had some good, fun, political knockabout from the Front Benches, but others have debated the much wider issues that our economy faces and the impact that the headline figures for unemployment, GDP and growth have on people in our communities. I shall focus on the human impact in my constituency of the economic difficulties that we are having, not least because the national statistics do not effectively capture some of the complexities that are experienced locally. There is a lot going on behind those large figures and my concern is that the difficult experiences of people, even if they are not unemployed, do not get picked up and are not properly addressed. Too many cases have been brought to my attention in which the rash of centralised initiatives that we have seen-in many different areas, including business support, housing and employment support-may have grabbed the headlines, but have not been so good at delivery.

The first example is the small business loans fund. I asked the South West of England Regional Development Agency how many applications it had received since April, how many were currently under consideration and how many businesses had received funding. I was told that 280 applications had been received, which is not bad. Of those, 80 were still being processed and only nine had received funds, only three of which were in Cornwall. A 3 per cent. success rate is not good enough, especially when the Government's slogan is "Real help now." Perhaps it should be, "Real help in a bit, when we get round to processing the applications." Speed of response is as important as ensuring that the funds are appropriately directed, and it is clear the Government have failed many local businesses in my constituency that are trying hard to keep their heads above water.

Another example is a coffee roasting company that had hoped to expand and buy some capital equipment. It applied for a grant from the business investment fund. It was turned down by the RDA because the wages paid were not high enough at £16,500 a year. In Cornwall, we rely on small businesses and incomes are low. For many people in Cornwall, that is a decent wage, but the RDA finds it difficult to respond on the small scale of support that is needed.

The mortgage rescue scheme was yet another flagship announcement of Government support. Constituents of mine were told this time last year that they would be among the first people to benefit from the buy and rent back scheme that the Government proposed. My constituents had anticipated that when their fixed rate ended they would experience difficulties, and they did everything that they could to avoid that. They had never been in arrears and they told their mortgage company two months in advance. They were very excited by the prospect of some support that would allow them to stay in their home, even if they did not own it. They were told to stop making any contributions towards their mortgage while they were considered for the scheme, and as a result they ended up in arrears and with legal fees. In April, they were told that they were no longer eligible for the scheme, and they are now in a worse position than they would have been if they had not sought help. They are unable to remortgage because they have arrears, they have negative equity, and they are very worried that they are going to lose their house. From their point of view, the Government's intervention has made their circumstances worse, not better. I am disappointed to report that following correspondence with the Minister for Housing, they felt that his Department had failed to accept any responsibility for the role that it played in their current circumstances, which are appalling. I hope that he will consider the case again.

I do not necessarily have a problem with the need for such initiatives, because businesses and home owners need support. Publicising those initiatives has an important impact on perception, but perception only matters if it matches up with experiences on the ground. Unfortunately, the experiences of my constituents are very different from what is highlighted in press releases when the initiatives are announced.

In tackling the current economic situation, speed of response is vital. I am not sure that the Government have accepted that. I would cite not only the example I gave about the small business loan scheme but the support that people are provided with when they are looking for work. This week, I visited Working Links in Redruth, which I found extremely impressive in terms of the work it was doing to deliver the flexible new deal, providing people with highly individual support that was important in giving them confidence. However, I could not understand why an individual has to be out of work for a year before they can stand to benefit from such tailored, individualised support. Nor could I understand another aspect that would be simple to change and would address the fears of many of the people I spoke to during my visit. One of the clients said that they were worried about participating in the scheme because it involved signing off from jobseeker's allowance for two weeks while they did some work-based training and then signing on again, which could result in administrative delays and, in turn, in their being out of pocket. Simply suspending jobseeker's allowance instead of requiring people to come off it and then go back on it again would help to give people confidence that the scheme could help them. I hope that the Government will consider such simple measures.

I want to draw the House's attention to one further example from my constituency that highlights the group of people I spoke about at the beginning-those who do not register on the radar in terms of unemployment numbers but are in a very difficult situation. Two of my constituents, Mrs. Blight and Mrs. Bennetts, have worked in a factory in Falmouth for 19 years; they are long-term, full-time employees. Since 6 July this year, the entire work force has been on a three-day week instead of 40 hours a week, and their incomes have nearly halved. They approached me to ask what I could do to help. This is an extract from their e-mail:

"After making several phone calls we find we are not entitled to anything to help people in this situation. The company can continue to keep us on a 3 day week indefinitely; we cannot request redundancy because we work more than half the week, no tax credits because we do not work more than 30 hours and no job seekers allowance because we work more than 16 hours."

They are in a Catch-22 situation. They are low-income workers-basically, on the minimum wage-who are in a stable job and suffering genuine financial hardship. Again, there is no real help now for those people.

I ask the Minister to explain that situation. These people will not appear in unemployment statistics, but they are being hit hard by the current economic climate. They are the kind of people whose experiences need to be understood and properly addressed. Their circumstances are glaringly obvious at a local level, but they get lost as they are passed up the line to central Government, who are unable to respond on the scale that is needed, often on an individual or tailored basis. These people need a response and support that can be put in place quickly, and that is flexible and can change according to different needs on the ground. That can be done much more easily at a local level than from centrally driven Departments.

That is why I find the Queen's Speech so disappointing. Surely now more than ever we should have had further moves on devolving powers and spending to a more local level so that local authorities and other local agencies have the power and resource at hand to provide help where and when it is needed. Instead, we have a Bill with no mention of any localist agenda whatever. My frustration is that at the very time when we needed localism to receive support and be driven forward, it has disappeared off the agenda entirely. That is a great shame and will create great difficulties for many people experiencing financial troubles.

• . . Amendment proposed: at the end of the Question to add:

"but humbly regret that the Gracious Speech fails to provide proposals for constituents to recall hon. Members for misconduct, to provide for a code of financial conduct for candidates at the next general election so that the public can understand the financial affairs of those they are voting for, to complete the reform of the House of Lords to ensure that only people who have been democratically elected have power to make law, to reform party funding to ensure that the influence of large corporate donations is removed, to fix the length of the parliamentary term so that the date of a general election is known years in advance, to provide a Citizens' Assembly to agree a new voting system for parliamentary elections and fundamentally to review the procedures of this House to strengthen the power of backbenchers, reduce the power of the whips and ensure that the business of the House is organised transparently in a formal committee of the House."- (Mr. Burstow.)

Question put forthwith, That the amendment be made. The House divided: Ayes 64, Noes 469. Question accordingly negatived.

Main Question put and agreed to:

"Resolved, That an humble Address be presented to Her Majesty, as follows:

'Most Gracious Sovereign,

We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.

Address to be presented to Her Majesty by Members of the House who are Privy Counsellors or Members of Her Majesty's Household.'"

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