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Ex-Labour Treasury minister slams party for financial services ‘hysteria’

Kitty Ussher 300

Former Labour Treasury exchequer secretary Kitty Ussher has delivered a stinging critique of her party for indulging in the “politics of envy” and “hysteria” in its stance towards financial services.

Speaking at a fringe debate on producers vs predators at the Labour autumn conference in Manchester yesterday, Ussher said the current debate is “unhealthy and counter-productive”.

At last year’s Labour conference, party leader Ed Miliband argued that British business was split between “producers” that created wealth and “predators” that extracted it for no social benefit.

Arguing in favour of so-called predators, Ussher said: “I think this debate is unhealthy the way it is at the moment. Call me old fashioned but I do not think the Labour party is at its best when it is pursuing the politics of envy. I do not think it is at its best when it takes one part of our country and pits it against another part.

“When we do that they rub their hands with glee in France and Germany because they know it was not the size of the financial services sector that caused the recession. They had a deep recession too even though their banking sectors are half the size of ours. They want a bit of what we have got which is a world class financial sector.”

At this year’s conference, Labour has pledged to break-up banks if they do not implement reforms, slammed financial services’ resistance to regulation and called for a more ethical sector.

Ussher, who stepped down as a Labour MP at the last election, has called for a more balance debate.

She said: “If there is one thing that leads to policy mistakes it is an atmosphere of hysteria and that is the type of atmosphere we sometimes have here. A one-sided debate is unhealthy and counter-productive.”

Arguing in favour of producers, Stoke on Trent MP Tristram Hunt said the UK needs to rebalance its economy away from financial services and towards manufacturing.

He said: “When you look at the recent economic crisis and Britain’s debt to GDP ratios, then it did not all go wrong because the last Labour government was too profligate or because spending money on schools and hospitals made Lehman Brothers go bust. It was because our tax base became too narrow as it was predicated on the financial services industry.

“We made the mistake of not questioning the goose on how it was laying the golden egg and became reliant on the financial services sector making our economy became unbalanced. When the crash came we were not prepare for the consequences so we have to be on the side of producers.”

Evolve Financial Planning director Jason Witcombe says: “I agree with Kitty Ussher. It would be nice to have a more balanced economy but tit for tat politics does not serve any useful purpose. Constantly criticising is not constructive.”

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Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. A bit of sense from the Labour party!

    Pity it was at a fringe meeting.

  2. I certainly agree that the recent statements from Ed Mili-bland were no more than rabble rousing, but what struck me more than this was the amount of ignorance that was shown in the comments. Ignorance towards the savings and investment markets and ignorance towards the common sense of the consumer.

  3. Is it just me or does the Labour Party seem to want world-class financial services, delivered by highly qualified professionals, free of charge? I seem to see a problem with that…

  4. The politics of envy is why I don’t and wouldn’t vote labour. The conservatives at least have aspiration at the heart of what they say they do especially after maggie. I’ve tried to explain to labour supporters that taxing the rich drives them from the country but they don’t quite understand how mobile these people and their money are. Too many chavs wanting what others have earnt without wanting to do anything for it.

  5. Is it just me or does the Labour Party seem to want world-class financial services, delivered by highly qualified professionals, free of charge? Can the goverment not see a problem with that? How about MP’s work for free

  6. Kitty Ussher is a sad loss to the labour party. Would she have made these comments if she was still under the Labour whip?
    Milliband does not have a clue on financial services, or many other contemporary issues. Sadly, not sure that Osborne does either and with even barmier policy proposals coming from the Libs what chance do we have?
    Any chance UKIP?

  7. ken170647 youtube 2nd October 2012 at 10:30 am

    Isn’t this one of the MPs who had to resign over the expenses scandal?

  8. After 20 years I am about to leave the industry. The industry deserves most of the criticism that is levied at it.

    Sales managers pursue their underlings to achieve sales figures at the expense of quality good advice in the bancassurance sector. The IFA sector is riddled with many ‘sharks’ who would be better suited to selling second hand cars, than overpriced products. The DFM sector have to take the award for ‘most imaginative charges’ and would be better suited to acting as illusionists.

    Even now your august publication carries 2 articles on this page: FSA warns over action over RDR commission bans and circumventing RDR rules.

    As long is the industry attracts the type of people it does nothing will change. A certificate in ‘ethics’ means diddly squat. Only the biggest of culls of middle, senior management and commisison hounds at the coal face backerd up by rigourous enforcement and severe penalties making people personally accountable for their actions will reform the ‘cess pit’ that UK financial services has become.

    Lost the confidence of the public blame them? Can you blame them, ust look at out track record with looking after other people’s money. Pensions opt out, endowments, PPI, Structured Products, now Ucits, and NEST to come. These things just didn’t happen by themselves.

  9. Seems to be a more balanced and sensible range of comments above, than one would hear at most party conferences!

    It is the nature of political parties that they all suffer from unpalatable viewpoints at their extremes. With Labour, it is the politics of envy, and with the Conservatives, it is the desire to maintain privilege.

    Of course, neither party have a monopoly on common sense, but Labour would do well to remember that it only became electable in 1997 when it ditched its more traditional views on unions and the economy.

  10. I’m in agreement with her comments; there is now a climate of fear and mistrust stemming from the constant derision laid at the door of ‘financial services’.

    I’m not saying that there are things that have happened that shouldn’t have, but the broad brush approach that everything is a rip off, people can’t trust their advisers and everyone is out to make a quick ‘buck’ etc. etc. is causing harm.

    Whilst there are sometimes disincentives to save -such fear is simply compounding it and adding to the ‘why should I bother’ viewpoint so many have.

    I am in support of RDR (another debate entirely) and I hope that RDR will result in a profession where an advisers work is, without question, aligned to the clients objectives – hopefully this will dampen the furore (!!!). But it is worth remembering, that advice won’t be free (and that’s a journey many consumers who aren’t used to such discussions will soon be taking)…….

  11. @anonymous 10:51 I agree with some of what you said but not all.Pensions opt out were heavily. Promoted by government with enhancements for the client to opt out. IFAs were encouraged to move clients by government and providers. the figures they gave us made the opt out attractive. Endowments were a great way, a cheaper way with the prospect of receiving a possible lump sum at maturity. All the figures given to us based on past performance made the purchase method a fantastic proposition and many clients wanted it. We never said it was guaranteed and subject to performance, however financial magazines, past performance tables were flawed in that the actuaries gave us false figures. The PIA / FSA were aware of this (we wern’t) and allowed them to keep selling for up to 3 years, knowing the figures were fraudulent. They then allowed the providers to side step miss selling and made the IFA responsible. A scandle on the same scale as PPI but with the regulator in collusion. Who pays for this, the IFA and punished with RDR.

  12. Only in the UK could we see such rabble rousing and idiotic comments about our industry. These people who think we can have a world class financial services industry without a sales process for transactions are just plain daft.

    Go to America and you will see the how they treat their salespeople. They are generally revered for their success in selling products.

    We have products, Life Assurance, Pension plans, Investments, Income Protection etc etc, but we are constantly berated for selling them to consumers who in the main seek advice to protect themselves from Dying too soon, Living too long and running out of money, getting sick or disabled or just to grow their capital and provide extra income and then protect their assets from the taxman putting a great big shovel into their assets and stealing them so that politicians of every persuasion can waste the money on daft schemes.

    Whether you support RDR, accept the commission ban or not, we are in an industry in which the majority of our products needs to be sold, preferably by qualified ethical and honest advisers, but still need to be sold.

    Cars need to be sold, Houses need to be sold, Tesco sells stuff, every aspect of our economy depends on selling products, so why is financial advice and associated products any different. I used to be called a Life Assurance Salesman when I joined this industry in 1980, now I am called an IFA, but I still have to sell my expertise, advice and provide appropriate and suitable products to solve peoples problems.

    BRING back selling skills, allied with professionally qualified and ethical advisers and you will see our economy take off.

    AND what is more, Let advisers and firms make a profit, otherwise the consumers do not get the services they deserve.

    THERE, said it! Selling is not bad, it is good for the economy and the consumer.

  13. Did a good job at the Treasury where the industry actually got some common sense, a good explanation from Kitty.

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