Charles Walker We live in an age of historically low interest rates. They have not been this low for hundreds of years, if ever. At this time in our economic crisis, low interest rates are absolutely what we need. They are a very good thing, but who are they benefiting the most? I am not convinced that they are feeding through to mortgage holders and home owners. I am certainly not convinced that they are feeding through to businesses. The LIBOR rate is now just a fraction over 0.5 per cent. That means that banks are borrowing money at 0.5 per cent. interest, but they are lending it out to young people who want to take out mortgages—not extravagant mortgages; just three times their earnings—at 5.5 per cent. That represents a 1,000 per cent. gross profit. If a business wants a loan, it might have to pay 11 per cent. interest, which represents a 2,000 per cent. gross profit for the bank. Most businesses would be lucky to make a gross profit of 12 to 15 per cent. The interest on a credit card could represent 3,000 to 4,000 times what the bank is borrowing the money for. Banks are using that money to strengthen their balance sheets, and perhaps that is not a particularly bad thing, because we want strong, vibrant banks. My concern, however, is that the benefits of low interest rates are not being shared around fairly. My right hon. Friend the Member for Wokingham (Mr. Redwood) said in his excellent speech that we had a shortage of competition in the banking sector, and I agree with him. He are also pointed out that we are facing the prospect of banks that are propped up by the taxpayer paying out enormous bonuses. In essence, they are paying out taxpayers' money. I have a warning for the Government and the political class: the public—the electorate—will not stand for that at a time when many people in normal, ordinary jobs and earning normal, ordinary salaries in the private sector are seeing their take-home pay go down as a result of pay freezes or, often, pay cuts. They will not stand for it at a time when politicians are talking about public sector pay freezes, not for the fat cats who run quangos or who are at the very top of the Departments but for the people earning £18,000 or £19,000 a year. We have to accept that the people who will be bearing the real pain in the years ahead will just not accept bankers rewarding themselves with enormous bonuses. I do not think that the plans for regulating bonuses will work. I do not think that we can regulate bonuses. I suppose that we could try to do it through the tax system. We could have a windfall tax on banks' profits. We could have special taxes on the bonuses awarded to bankers. I sincerely hope, however, that we do not reach that stage, because I do not think that that is what is needed. I urge the banks please to exercise some emotional intelligence in the years ahead and recognise that many decent people will suffer as a result of their—the banks'— excesses over the past decade. That is my plea and my warning to banks. I never want to be in this place debating legislation to impose a windfall tax, which goes against almost everything that I believe in, but the ball is very much in the banks' court. They need to give this matter some very sober reflection. Let me deal with a couple of other issues that have not been much touched on. I believe in equality and in a flexible labour market, but I also believe in innovation. I want to see many more women in senior jobs feeling that they can have a family. What we know—it is a fact—is that many companies, despite equality legislation being in place, are put off hiring women of child-bearing age. I think that that is a great mistake, but it is a reality. We in this place need to come up with an innovative solution to help companies to make the right decision. I believe that we should look at having national insurance holidays, so that when a company hires a temporary worker to replace a female worker on maternity leave, the company will get a national insurance holiday. I think that that would be an incentive— it may not be a game-breaking incentive, but it may be an innovative way of ensuring that more companies make the right decision when it comes to hiring women, and do not penalise those women who want to have children. I conclude my very short post-recess, post-hibernation speech with a quick critique of the welfare system. I am very proud of this country's welfare system, which I think marks us out as a civilised country, but I am very concerned that at times it may not be fair. Many Members—in fact all Members—will have been visited at their constituency surgeries by constituents who might have paid national insurance for 20 or 30 years, but when they are made redundant, the benefit system barely reflects it. Their benefits may compare not too favourably with those of someone who has chosen a life on benefits as a career option. I make this plea to all political parties: let us take a look at this issue. When people have a track record of paying national insurance contributions—not indefinitely, but certainly for a few months, perhaps a year—let us reflect that track record of contribution and responsibility in the payments we make to them. Being unemployed should not be a punishment or a cause for shame. We owe it to these people to be more innovative in the way we approach welfare and how we look after those people who are in between jobs, but desperate to work. I have spoken for eight minutes, Madam Deputy Speaker, and I shall now sit down to let others have a turn. — from debate entitled “Economic Recovery and Welfare” The three speeches/headings immediately before
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