In 1997, financial services earned £45 billion for the United Kingdom, and last year the figure was £94 billion—twice as much. Net exports have risen from £11 billion to £19 billion and financial services, once 6 per cent. of the economy, are now 8.5 per cent. of our economy. With the new City task force we will continue to found our policy for competitiveness on thinking globally, investing in skills, a competitive business and light-touch regulatory environment, and, most of all, doing nothing to put economic stability at risk.
The City is set for another bumper year of growth, due in no small measure to the stability and low-inflation environment of the wider economy. Will my right hon. Friend reject any unfunded tax cuts as putting that stability at risk, and what more can he do to enhance the role of the City in the world economy?
In 1997, 280 billion shares were traded in the City of London: last year, the figure was 900 billion. That shows that the City is responding to the global challenges in a way that we can be proud of. What we will not do is put stability at risk by irresponsible, unfunded and reckless tax cuts, as proposed by the Opposition. The policy we will not follow, as suggested in the new competitiveness economic policy group document published last night—it is interesting what one can read on the Conservatives’ website—is to abolish consumer protection for mortgages, pensions, insurance and credit cards. We will not return to the pension mis-selling that we have spent years getting away from.
I hope that the hon. Gentleman will agree with the Government—we propose new legislation on the issue—that nothing should interfere with the right of the City to be regulated by the Financial Services Authority. Rather than Governments deciding who should own what, we must put in place the proper regulatory mechanisms that insist that whoever owns industries, services and, in this case, the stock exchange in London, it is regulated in London by the FSA. I hope that we will have all-party support for the Bill that my hon. Friend the Economic Secretary will introduce.
In the nine years since we took office, of the companies that have located either their national, regional or international headquarters, it is true to say that 398 have located in London and the United Kingdom, 63 in Paris, fewer in Germany and the Netherlands and 30 in Ireland. Opposition Members who wish to suggest that the success of Ireland is somehow comparable with the success of London should think again. London has doubled the amount of trading and financial services work. It will continue to thrive because we will think globally, but we will not put it at risk by an irresponsible funding of tax cuts that we cannot afford, and which would put at risk the very public services, infrastructure and skills on which the City and the rest of the British economy depend.
Is the Chancellor aware that the City’s big fear now is that big bang is being followed by big bureaucracy? On the very day that he had City leaders in last week for a bit of spin and one of his fake smiles, he forced through this House new legislation compelling companies to reveal their most sensitive commercial information. Is not the City right to judge him by his actions, rather than by his words?
The hon. Gentleman, who should know something about this, should look at the facts about the performance of the City and the British economy. Perhaps he might read the comments from the chairman of the New York stock exchange, who said that London is getting business for two reasons: one, it does not have the heavy touch regulatory environment of the United States of America; and, two, it has proved itself to be competitive in so many areas. I contend—and the hon. Gentleman should think about this—that the stability of our economy and the future of the City of London would be put at risk by getting the balance wrong between tax, spending and borrowing. That is why we will not accept the unfunded, irresponsible and reckless commitments being made by the Conservative party.
I declare an interest, as I chair the all-party group on private equity and venture capital. The City of London is the centre of the world when it comes to private equity, with 52 per cent. of the European market. That is principally due to the unprecedentedly supportive environment that this Chancellor and this Labour Government have created and put in place over the past 10 years. In the context of the Financial Services Authority’s—[Interruption.]
It is clear that the Opposition do not like hearing the good news about the achievements of the British economy. Six previous shadow Chancellors have dined out on the idea that the City of London and our whole economy were about to move into recession, so I shall give the House the benefit of the latest foreign direct investment figures. In 2005, inward investment into the UK amounted to £164 billion—twice the level in France, five times the level in Germany, eight times the level in Italy, and 50 per cent. more than in the US. The Opposition should congratulate the Government on their success, not try to claim failure.
What the Chancellor did not mention is that we are celebrating this week the 20th anniversary of the big bang, which he opposed at the time but now presumably welcomes. The City is not celebrating the damage that he has done to the pensions industry with his tax and regulatory regime. Labour’s first pensions Minister was the right hon. Member for Birkenhead (Mr. Field), who has said:
“when Labour came to office we had one of the strongest pension provisions in Europe and now we…have some of the weakest”.
I know that the Chancellor does not do humility, but does he accept any blame for what has gone wrong?
I notice that the hon. Gentleman is not defending his £4.7 billion tax cut proposal. After all the publicity that he sought last week, I should have thought that he would at least explain how that would be funded. As for pensions, let me read out the policy that we will not follow:
“In financial services we should allow people to buy and sell products that are not regulated if they have signed to do so”.
That is the new Conservative economic policy—[Interruption.]
Order. In the past I have allowed the Prime Minister and the Chancellor, and their Opposition shadows, some leeway, but the right hon. Gentleman cannot dwell on Conservative party policy. [Interruption.] The hon. Member for Wallasey (Angela Eagle) is looking at me, so I shall tell her why. The reason is that Ministers are responsible for the Government, not for the Opposition. She has been in the House long enough to know that.
No one believes what the Chancellor says about his own policies, let alone ours. [Interruption.] Excellent! The Chancellor has thrown his copy of our document at me. I thank him very much, as I am glad that he is reading such things. Nor, by the way, should anyone pay any attention to the ludicrous claims from the Economic Secretary to the Treasury, but I make one request to the Chancellor—please put him on television more often.
I return now to the matter of the City and pensions. The Chancellor may ignore Labour’s first pensions Minister, but he cannot ignore the facts. His pensions tax has reduced the value of people’s pensions by £100 billion, and his pensions regulations have forced 60,000 pensions schemes to close. Does he accept what his own party says—that he has made serious mistakes in the handling of pensions? If he cannot accept that, surely the current Secretary of State for Work and Pensions is right: the Chancellor will make an “effing awful” Prime Minister?
It is very interesting that the shadow Chancellor has made the question of whether pensions are properly regulated in this country the central issue. The difference between us is that we want proper regulation to protect individual pensioners, whereas the Opposition have proposed a plan that would deregulate and abolish consumer protection for pensioners. Until Conservative Members look at the plans that their own group is pursuing and find out what damage would be done to the regulation of pensions, they will be living in a dream world about what their policy proposals are going to be. We will insist on the proper regulation of pensions. We have introduced compensation for people who were deprived of their pensions. We have introduced a new Pension Protection Fund board to ensure that there is proper protection for pensions. We have a new pensions Green Paper to ensure that protection. Most importantly, we will not as unfortunately happened under the Conservative Government, or put the stability of the economy at risk, and that will be foremost in resisting irresponsible and unaffordable tax cuts.