Ulster Bank

Baroness Kingsmill Excerpts

Thursday 5th July 2012 Lords Chamber

[Lord Sassoon]

My Lords, my noble friend makes a very good point. I do not know what arrangements are being made because, again, it is going to be principally affecting employees of the devolved Administration. But I will take that issue back. I am sure it is being thought about by my colleagues in Government but I will remind them of it.

[Baroness Kingsmill]

My Lords, does not the chaos and total mess in the RBS-owned banks at the moment, which is affecting so many retail customers, just emphasise a lack of investment in back-office systems and computers in these retail banks, disadvantaging a large number of customers, at a time when we have been focusing far too much attention on what has been going on in the casino banks?

[Lord Sassoon]

My Lords, I do not know the cause of this significant failure. The noble Baroness may be right but, as I said, the FSA expects RBS to provide it with a complete account of the issues. I welcome the fact that the chief executive of RBS, Stephen Hester, has made a commitment to a full and detailed investigation overseen by independent experts and publication of those findings. In due course, we will know what the explanation is.

Queen’s Speech

Baroness Kingsmill Excerpts

Wednesday 16th May 2012 Lords Chamber

[Lord Razzall]

The noble Lord, Lord King, does not want me to go too far so I will rein that back. As noble Lords will be aware, we have not necessarily been uncritical of a number of government policies and plans. However, on these Benches we stand four-square behind the coalition on the necessity of bringing the deficit down. Now is not the time to spook financial markets. We have to look only at what is happening in the eurozone, particularly Greece, Spain and Portugal, to realise the incalculable cost to our economy if we were to lose market confidence. Look at our current borrowing rates. I think we are now selling our gilt-edged securities at a lower level than we have in modern economic history. That is a huge benefit to our public expenditure and we need to retain the confidence of the markets.

Taking the noble Baroness’s point about there being nothing in the gracious Speech about growth—

[Baroness Kingsmill]

I wonder whether the noble Lord thinks that the confidence of the markets is rather more important than the confidence of the electorate. It seems to me that throughout Europe the confidence of the electorate is being severely tested by the politics of austerity.

[Lord Razzall]

One of the advantages of the Fixed-term Parliaments Act is that it will take three years to discover the answer to the noble Baroness’s question. As regards the provisions about growth—it is a common criticism of the gracious Speech—I say to the noble Baroness, Lady Royall, that you do not legislate for growth; you create an economic climate in which growth can occur.

I have every confidence that the coalition Government’s policy is rather like the swan: above the water it is serenely swimming forward to reassure markets, while under the water it is paddling like mad in an effort to promote growth and hoping that the markets do not notice. There are a number of growth initiatives of which I know that my party is proud; for example, the creation of the green investment bank, the regional growth fund and the pension infrastructure platform to invest in UK infrastructure. Of course, there are more subtle ways in which the Secretary of State for BIS has been trying to encourage growth. It is significant that today, for the first time since 1976, we can announce a trade surplus in the sale of motor vehicles. As a betting person—who is usually successful—I suspect that we will have some good news on Ellesmere Port. All sorts of initiatives are happening.

If we are to go for growth, the role of the banks is critical. The immediate problem, which is a statement of the obvious, is that the banking system is being required to do three things simultaneously. The banks are being asked to maintain and increase lending to the SME sector. At the same time, over the next two or three years, they will have to provide billions of pounds to refinance the borrowing of major companies that fall. They are also being asked to increase their capital base to meet the regulatory requirements. Even Solomon would struggle to meet those simultaneous requirements, which is one of the reasons why we have the problems that we do.

Everyone says that there is not enough lending to the SME sector, which is undoubtedly correct. The noble Lord, Lord Sugar, came to your Lordships’ House and told us that any SME company which wanted a loan could always get one, and if it could not its financial plan was wrong. What world does he live in? The jury is clearly out on Project Merlin. The FSB says that a significant percentage of loans requested by the SME sector are not being granted. If we take the anecdotal evidence of the way in which some banks are behaving, we should look at what Barclays and NatWest did to Clinton Cards. They sold a £35 million loan book to American Greetings, which was the major supplier to Clintons. Immediately, American Greetings foreclosed on the loan and at least 8,500 employees are in danger of losing their jobs. Is that the way in which responsible banking should operate?

As regulation of banking returns to the Bank of England, the Bank must emphasise that effective regulation is crucial. First, the current system makes it difficult for new entrants either to compete with major retail banks or to introduce innovative new models, such as community banking on the American model. I suspect that my noble friend Lady Kramer will refer to that. Secondly, we need to think seriously about how the economy can rebalance as growth returns, away from financial services. The Vickers report looked at how we regulate banking in the context of risk to the taxpayer but the next task for future regulators is how to ensure that, as the economy recovers, the financial sector does not retain its bias in the British economy.

Inflation

Baroness Kingsmill Excerpts

Wednesday 19th January 2011 Lords Chamber

[Lord Sassoon]

My Lords, I am very happy to confirm that the Government have every confidence in the MPC. They regard its independence as a cornerstone in making sure that the Chancellor’s inflation target is hit as far as it is in the power of the MPC to achieve it. That is what it is asked to do and there is absolutely no interference. As I have explained before, a representative of Her Majesty’s Treasury does indeed attend MPC meetings—not in any way to interfere with the independent deliberations of the MPC but to make sure that the committee is aware of relevant Treasury policy decisions, such as what is coming out of budgets. That is all I can say.

[Baroness Kingsmill]

My Lords, what impact on inflation does the Minister think the recent increase in VAT will have?

[Lord Sassoon]

My Lords, first, the recent relatively high levels of inflation reflect, among other things, the previous Government returning the rate of VAT to 17.5 per cent, so that number is included and it is one of the factors behind the rise in inflation in December. As to the effect on inflation of the increase of the standard rate from 17.5 to 20 per cent, that depends on how much of the increase is passed on to consumers, and we will wait to see on that. However, because the rise to 17.5 per cent will come out of the inflation numbers, it will partially offset the effect of the increase that comes in in January.

Finance and Insurance Market: Underwriting Fees

Baroness Kingsmill Excerpts

Wednesday 12th January 2011 Lords Chamber

[Lord Sassoon]

My Lords, as I have already said, it is expected that the Office of Fair Trading will report later this month, so we do not have long to wait. We should consider what the appropriate action is to take after my ministerial colleagues have had a chance to consider the recommendations of the OFT report. However, I hear what my noble friend says.

[Baroness Kingsmill]

My Lords, I wonder whether the Minister is aware that when I was deputy chairman of the Competition Commission I conducted an inquiry into precisely this issue. This marketplace is notoriously uncompetitive and it is only as a result of constant vigilance that we can keep everyone on the straight and narrow in this area. I hope very much that the Minister will agree with me that the Competition Commission is possibly the best place to resolve these issues and that it will do so—

[Noble Lords]

Question!

--- Later in debate ---

[Baroness Kingsmill]

I have asked a question. Does the Minister agree with me that it will do so by the best possible method; that is, by conducting the inquiry with a panel of peers?

[Lord Sassoon]

My Lords, I am obviously interested to hear from the noble Baroness who has great experience in these matters. However, as she well knows, a range of outcomes could emerge from the OFT market study. Those could include enforcement action taken by the OFT through a market investigation reference to the Competition Commission, recommendations to government to change law or regulation, voluntary action by industry players or, indeed, a clean bill of health. We should wait to see what the OFT recommends.