Data Ethics Commission
Debate between Lord Davies of Oldham and Lord Ashton of Hyde(6 years, 10 months ago)
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Lord Ashton of Hyde
The best way is to get international agreement. It was discussed—
Lord Ashton of Hyde
I think it has been discussed in many multinational organisations—including the EU, I completely agree. One point of the data protection Bill is to try to get equivalence in data flow across borders after Brexit, but the point that the noble Lord makes is right: it is not always easy but we have to lead the way to show that an ethical regime is the way forward.
European Union: Regeneration Funding
Debate between Lord Davies of Oldham and Lord Ashton of Hyde
Lord Ashton of Hyde
I am not sure I recognise the figure, but of course the Government remain committed to the NHS.
Lord Davies of Oldham (Lab)
My Lords, I congratulate the noble Lord on taking on additional responsibilities for the Government—it will be a fast learning curve. Can we be clear that many of the most economically deprived areas of this country are faced with the potential withdrawal of very significant grants from the European Union and that such a withdrawal will be catastrophic for them, unless this Government set out to drop the previous preoccupation with the deficit and get on with investing to ensure that there is growth in these areas? Will the Minister indicate that he sees that as a major priority in his role?
Lord Ashton of Hyde
I thank the noble Lord and look forward to being asked lots of questions by him in future. I am pleased to say that I completely agree with him. This vote does not change the fact that infrastructure is a key government priority. That was demonstrated in the 2016 Budget, when we accelerated the commitment to invest more than £100 billion in infrastructure. In the last Parliament, the average annual investment was 17% higher than in the preceding one.
HMRC: Call Waiting Times
Debate between Lord Davies of Oldham and Lord Ashton of Hyde
Lord Ashton of Hyde
The introduction of online services was one of the problems that caused the waiting times. That is now working well. We have the largest number of online self-assessment forms ever, at January this year, and the largest number of on-time assessments. Progress is being made. As far as the estate is concerned, the noble Baroness is absolutely right: HMRC intends to make savings in the order of £100 million per year by reducing the estate down to about 17 offices—I cannot quite remember how many there are now. That is well in progress and will provide a better opportunity for the staff, who will have more opportunities within one large area. Some of the offices before, it must be remembered, had only 10 staff in them.
Lord Davies of Oldham (Lab)
My Lords, the Minister has done his best to put a gloss on an appalling situation. The National Audit Office made quite clear the deficiencies of the Inland Revenue over recent years. The Minister says that things are now improving. How is it, therefore, that in the most recent poll of 600 people who spoke to an adviser, 63% of them waited for more than half an hour? Have the Government set out to reduce the number of civil servants operating in this department, and are they doing it all to fulfil their dogma of the smaller state, transferring the costs from the Treasury to the individual citizen?
Lord Ashton of Hyde
My Lords, the noble Lord might like to know that the number of staff increased by 4% last year.
Tobacco: Illicit Trade
Debate between Lord Davies of Oldham and Lord Ashton of Hyde
Lord Ashton of Hyde
Yes, my Lords, the Government wish to ratify the protocol as soon as they can. They continue to work towards ratification of the protocol, although many measures are already in place—for example, a register of tobacco manufacturers. They have recently consulted on the requirements of Article 6 of the protocol on the mandatory licensing of tobacco machinery and the possible licensing of the supply chain.
Lord Davies of Oldham (Lab)
My Lords, the House will be grateful to the Minister for the reassuring replies that he has given to the questions addressed this afternoon. Can he also assure the House that, in developing a strategy on this, he will consult our fellow members of the European Union? They will also have clear ideas on how to keep the tobacco industry at arm’s length over such an important issue. Will that continue over a considerable period of time?
Lord Ashton of Hyde
My Lords, the Government will certainly consult their European partners. The whole point about dealing with smuggling and illicit trade is that it is a cross-border matter, and therefore it is essential that there is a pan-European agreement on how to deal with it. The Government certainly intend to continue doing that.
Bank of England and Financial Services Bill [HL]
Debate between Lord Davies of Oldham and Lord Ashton of Hyde(8 years ago)
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Lord Davies of Oldham (Lab)
My Lords, we have come a considerable distance from what was in the original draft of the Bill that came before us on the role of the National Audit Office. Quite rightly, the Government have responded to the very strong opinion of this House that the proposals in the Bill were far from satisfactory, and we are grateful to them for the extent to which they have moved on these issues. This House played a significant role in identifying the real difficulties in their original Bill for the National Audit Office being remotely able to carry out its proper duty in assessing whether on all occasions the Bank of England was providing value for money.
The noble Lord, Lord Higgins, has moved across an important boundary in indicating that the NAO ought also to look at issues of policy regarding the Bank, which we know the Bank is resistant to. The Government still maintain that position, although we sought to press that here and my colleagues in the Commons were interested in the issue as well, not least if issues cropped up under freedom of information queries, where the role of the NAO in relation to the Bank would inevitably be limited under the proposal.
Nevertheless, the Government have moved a considerable distance on this matter. We are pleased to say that although not all our proposals, here and in the other place, were accepted by the Government, we nevertheless feel that significant progress has been made in that the NAO has been able to draw up with the Bank of England a memorandum of understanding on how these issues are to be tackled in future. We appreciate the fact that the Government have moved a considerable way from their original proposals to a much more satisfactory position, although I will listen with great interest to the Minister’s response to the noble Lord, Lord Higgins.
Lord Ashton of Hyde
My Lords, I am grateful to my noble friend Lord Higgins and the noble Lord, Lord Davies, for their comments and for their support for these amendments. My noble friend’s views on the governor’s role in giving forward views are well known; he has expressed them before in debate on the Bill. We have listened to his views but they are not specifically a part of this Bill. On the question of whether “Bank company” includes the asset purchase facility and therefore allows the NAO to make value-for-money reviews, the answer is yes. Amendment 3 is the amendment that deals with that.
I am glad that the noble Lord, Lord Davies, has acknowledged that we have been in listening mode and that we have moved. We are always happy to listen to sensible suggestions, and I am grateful for his acknowledgement of that.
Health and Social Care: Funding
Debate between Lord Davies of Oldham and Lord Ashton of Hyde
Lord Davies of Oldham (Lab)
My Lords, does the Minister accept that the percentage of GDP that the United Kingdom spends on health is much lower than that of comparable countries and that therefore the crisis in the National Health Service needs addressing? Is he aware that, against this crisis background, the Government are asking for a further £22 billion in efficiency savings and yet 53% of hospital trusts say that it will prove impossible to meet the caps on agency staff? We are facing a crisis and the Government are unprepared to face up to it.
Lord Ashton of Hyde
My Lords, on the OECD figures, the United Kingdom’s spending is slightly below the OECD average, but it all depends on the denominator and that depends on how high GDP is. However, it is not, as the noble Lord puts it, a lot lower; it is slightly below average for the OECD. On the £22 billion of savings, that was the NHS’s own plan. The Chancellor accepted that and agreed to fund it and in fact produced an extra £2 billion this year as a down payment.
Taxpayer Confidentiality
Debate between Lord Davies of Oldham and Lord Ashton of Hyde
Lord Ashton of Hyde
I do not need the Minister who is sitting next to me to believe that what the noble Lord has said is correct. The fact is that HMRC has a principle of confidentiality. It is obliged under a law passed by the Labour Government in 2005 to respect confidentiality. The only time that it is able to divulge information is when it has statutory authority to do so as passed by Parliament.
Lord Davies of Oldham (Lab)
My Lords, is it not incumbent on the Government to recognise that the public are losing patience with the fact that large companies, in particular multinationals, are getting away with paying minuscule amounts of tax in relation to their turnover in the United Kingdom? This issue needs to be tackled. Surely the Government should be addressing why HMRC was unable to get more than £130 million out of Google over a decade when the company had a turnover of more than £4 billion in any one year. As we know, Google is not the only case. Starbucks and of course Amazon were brought to book by public response, when the public set about boycotting those businesses as they were being so unfair. The Government must recognise that just hiding behind the doctrine of confidentiality will not do and that the tax authorities have to be much more efficient than they have been in the past.
Lord Ashton of Hyde
I do not think that it is true to say that the tax authorities are hiding behind the doctrine. The doctrine of confidentiality that the noble Lord mentioned was passed by a Labour Government under the 2005 Act. As for Google, which is not the subject of this Question, the noble Lord should know, if he does not know already, that the tax that Google paid was based on taxable profits, not on turnover.
Taxation: Avoidance and Evasion
Debate between Lord Davies of Oldham and Lord Ashton of Hyde
Lord Ashton of Hyde
I answered exactly that question a few weeks ago, and I am happy to point out that HMRC has recruited 3,000 new staff into customer service roles on flexible working patterns to address just that point. This will provide 1,800 additional people working on telephone helplines outside normal office hours, when many customers choose to call. More than 900 people from across HMRC have also been moved into these posts. I think everyone agrees that the previous service was substandard, but it is improving.
Lord Davies of Oldham (Lab)
My Lords, I, too, sympathise with the Minister but of course, this same trick was played in the Commons. Junior Ministers responded to the issues there, as here, instead of those who are meant to take the decisions. The Minister has just confessed to the House that he does not have a clear line to answer the Question that was posed to him, but the rest of the country is quite clear that the deal struck with Google is an outrageous one. Can the Minister therefore answer this question? The United States is signed up to the OECD precepts, as is the Chancellor, so how come the US can tax major companies with considerable success and get the percentage of tax it expects, when in the United Kingdom, multinationals in particular pay an absolutely derisory rate of corporation tax?
Lord Ashton of Hyde
I am grateful for the sympathy of the noble Baroness and the noble Lord but I do not think that I need it today. The fact is that HMRC has taxed the full amount of UK taxable profits at the statutory corporation rate. One of the reasons why this country is attracting inward foreign investment is that it has a rule of law and treats people according to the rules.
Gross Value Added
Debate between Lord Davies of Oldham and Lord Ashton of Hyde(8 years, 4 months ago)
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Lord Ashton of Hyde
I believe that my noble friend has raised this point before. I am not sure that I can make much more progress, except to say that the Government have started a due diligence process on this project. But it is very important to work out the cost-benefit analysis of tidal lagoon energy. This is an ongoing process. It is important that we understand the costs of this project and the technology in detail, particularly in the broader context of energy needs and prices, and availability.
Lord Davies of Oldham (Lab)
My Lords, the Minister said that the Chancellor was a modest man. Well, he certainly used to boast about the fact that he was going to achieve a balanced economy in terms of manufacture and finance, as well as regional balance. Since 2009, London’s economy has grown by 20.9% but in one region—Yorkshire and Humberside—the figure is 12.8%. What on earth have the Government got to boast about in achievements in that area, particularly when, for the first time in a decade, wealth inequality in this country has increased? Is it not clear, in this the seventh year of the long-term economic plan, that this Government are utterly incapable of creating fairer growth across the economy and ensuring that all citizens participate to some extent in improving conditions?
Lord Ashton of Hyde
The noble Lord should not decry the fact that gross value added wealth creation takes place in the south-east and London: that is obviously a good thing for the country. However, we do want to make sure that that same growth applies to the regions. He is right that it is less in the regions of England and the devolved Administrations than in London, which is bigger by far than the rest of the regions. Of course, we do have a comprehensive plan to rebalance the economy and strengthen every part of the UK. It involves major investment in transport infrastructure, science and skills, and support for local businesses. We have set up the National Infrastructure Commission, for example, which will spend £100 million in this Parliament, of which £61 million will be on transport.
VAT: Evasion
Debate between Lord Davies of Oldham and Lord Ashton of Hyde
Lord Ashton of Hyde
My Lords, HMRC certainly engages with other businesses, in particular with online businesses, and has dedicated customer relationship managers. A meeting with the top online retailers at a very senior level took place only last month. HMRC has dedicated 25% of its customs and international trade operational resource to this problem and has set up a national task force to deal with it.
Lord Davies of Oldham (Lab)
My Lords, ever since 2010, when this Chancellor came into office, I have been astonished that ideology has triumphed over rationality and that the Government, while purporting to have a campaign against tax evasion, are slashing the staff numbers in the Inland Revenue. Can the Minister give an assurance today that the drastic cuts proposed for the Inland Revenue will not result in the dismissal of any staff whose returns to the Revenue are greater than the costs of their employment?
Lord Ashton of Hyde
My Lords, in the spending review the Chancellor confirmed that HMRC is making savings of 18% in its own budget through efficiencies. Of course, in this digital age we do not need taxpayers to pay for paper processing or 170 separate tax offices. However, the Government are reinvesting £1.3 billion of their savings in HMRC to transform it into one of the most digitally advanced tax administrations in the world.
Bank of England and Financial Services Bill [HL]
Debate between Lord Davies of Oldham and Lord Ashton of Hyde(8 years, 5 months ago)
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Lord Davies of Oldham
My Lords, I was going to make almost exactly the same contribution and my question was exactly along those lines, so I am happy to endorse what the noble Baroness, Lady Kramer, said and look forward to the Minister’s response.
Lord Ashton of Hyde
My Lords, I am very grateful to both the noble Baroness and the noble Lord, Lord Davies. I can only repeat what I said before. I accept the weight and the implications of what I have said.
Lord Ashton of Hyde
My Lords, this may not be quite so interesting. Clause 26 will introduce a power into the Financial Services and Markets Act 2000 for the Treasury to make regulations relating to transformer vehicles. Transformer vehicles are used for risk mitigation purposes, particularly in connection with insurance-linked securities business.
Lloyd’s is an important part of the London insurance market. The clause enables the regulatory arrangements of Lloyd’s to be updated, should that be needed to facilitate the Lloyd’s market adapting to insurance-linked securities business and the use of transformer vehicles. If this requires amendments to the Lloyd’s Acts, or makes other provision unique to Lloyd’s, new subsection (10) ensures that the regulations will not be treated as a hybrid instrument, so that amendments are not delayed in Parliament by the hybrid procedure.
During Committee stage, the Delegated Powers Committee considered this clause and reported that the power conferred was,
“adequately explained and justified in the memorandum”.
However, the committee raised a concern about the disapplication of the hybrid procedure, particularly in relation to regulations conferring functions on the Council of Lloyd’s. The committee pointed out that the purpose of the hybrid procedure is to protect private interests and recommended that the clause be amended,
“so that the power in subsection (6)(c) may not be exercised without the consent of the Council of Lloyd’s”.
The Government have considered this recommendation carefully and agree with the committee’s recommendation. Therefore, this amendment qualifies the power in new subsection (6)(c) to make regulations relating to Lloyd’s so that the power can be exercised only with the consent of the Council of Lloyd’s. I beg to move.
Lord Davies of Oldham
My Lords, the Government received good advice from the Delegated Powers Committee. I am surprised that they deliberated for a period before reaching the right conclusion—that is, agreeing with the committee.
Lord Ashton of Hyde
My Lords, the amendments in this group are being made to correct an error made in the National Savings Regulations 2015. Those regulations revoked a number of statutory instruments with effect from 6 April 2015. By mistake, these included the Financial Services and Markets Act 2000 (Consequential Amendments and Repeals) Order 2001, which I will refer to as the 2001 order.
The 2001 order, which was revoked, was used to make most of the consequential amendments and repeals that were required to give effect to the Financial Services and Markets Act 2000. It amended a range of primary and secondary legislation, including the Companies Acts, the Bank of England Act 1998, the Building Societies Act 1986, the Pensions Acts and other legislation related to financial services.
In some cases, the amendments made by the 2001 order have been superseded by subsequent legislative developments, but in many cases they are still necessary, and the repeal of the instrument making them has left the law in a state of considerable uncertainty.
The only way in which this regrettable uncertainty can be cured is for the revocation of the 2001 order to be cancelled out. That is what the amendments do. Amendment 27 provides that this revocation shall be taken as never having had effect. This amendment would have retrospective effect. We do not believe anyone would be adversely affected by the amendment. On the contrary, the law will be assumed to be as it was in force before the accidental revocation of the 2001 order. This amendment will restore the law to what it is presumed to be.
To sum up, the 2001 order was and still is necessary. It was accidentally revoked in the National Savings Regulations 2015. The amendment is cancelling that relocation ab initio so that the 2001 order will still be in force.
The second amendment, Amendment 30, will ensure that the first amendment is brought into force on Royal Assent. This ensures that we can restore legal certainty as soon as possible and limits the degree of retrospection involved.
I beg to move.
Lord Davies of Oldham
My Lords, I have seen some responses of a technical nature from Governments in the past which have brought some wry amusement, but I think the noble Lord has hit a new high on this occasion.
According to my notes, and I hope I am reflecting exactly what he said, to ensure legal certainty, the revocation is treated as never having had effect. We are getting to the end of this part of the Bill—and probably not before time.
Bank of England and Financial Services Bill [HL]
Debate between Lord Davies of Oldham and Lord Ashton of Hyde(8 years, 6 months ago)
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Lord Ashton of Hyde
My Lords, government Amendments 27 and 28 make some minor and technical changes to the Financial Services and Markets Act 2000 in relation to the regulation of consumer credit. The Government fundamentally reformed consumer credit regulation, transferring responsibility from the Office of Fair Trading to the Financial Conduct Authority on 1 April 2014.
The FCA regime is already having a substantial positive impact and is helping to deliver the Government’s vision for an effective and sustainable consumer credit market which is able to meet consumers’ needs. The amendments considered today are, as I have already said, technical in nature. They concern the application of provisions relating to the enforceability of agreements.
Amendment 27 amends subsections (4) and (5) of Section 26A of the Financial Services and Markets Act 2000, which concern the enforcement of credit agreements by persons acting on behalf of the lender, either by administering the agreement or by collecting debts under the agreement. This amendment makes it clear that a consumer credit agreement may be enforced by anyone who is able to carry on a credit-related regulated activity lawfully under the Financial Services and Markets Act 2000. This includes firms that are exempt from the need to have FCA authorisation to carry out these activities either because the firm has an individual exemption or because it is entitled to an exemption as a member of a designated professional body. It also includes appointed representatives of authorised persons.
The current provision requires the person to have a relevant permission under the Act. The amendment clarifies that this is not limited to persons who are directly authorised by the FCA but also includes persons who are exempt from needing authorisation either by virtue of a specific exemption or because they are appointed representatives or members of a designated professional body. In such cases, the person does not need FCA authorisation, provided that, in the case of an appointed representative, another firm with the relevant debt collecting or debt administration permission takes responsibility, as principal, for their activities and compliance with FCA regulations. In the case of designated professional bodies, if the FCA has approved the professional body’s rules under Part 20 of FISMA, and these cover debt collecting or debt administration, then members of the body can carry on those activities without needing direct authorisation from the FCA, provided that they do not engage in regulated activities which are outside the scope of the Part 20 permission. It was always the Government’s intention that subsections (4) and (5) of Section 26A should cover such persons, but the amendment puts this beyond doubt.
Government Amendment 28 amends Section 27 of FSMA, which deals with agreements made through unauthorised persons. Subsection (1) of Section 27 provides that an agreement made by an authorised person carrying on a regulated activity is unenforceable where it is made in consequence of something said or done by a third party in circumstances where that third party should have had, but did not have, permission. In the case of consumer credit and hire agreements, this could potentially cover any credit broker in what could be a long chain of multiple brokers, even if the provider is not aware of the particular third party or their involvement in the transaction.
This is in contrast to the position under the Consumer Credit Act 1974 prior to the transfer of regulation from the OFT to the FCA. Section 149 of that Act, which was repealed as part of the transfer, limited unenforceability to situations where the introducing broker was unlicensed and it was immaterial whether any other broker in the chain was unlicensed. The amendment would ensure that Section 27 is proportionate for consumer credit lenders and consumer hire providers in the context of the consumer credit market, where chains of credit brokers are often involved in bringing together the consumer and the lender.
Specifically, the amendment would ensure that this applies only if the provider knows—before the agreement is made—that the third party, such as a credit broker, had some involvement in the making of the agreement or in matters preparatory to its making. In such cases, if the broker is acting in breach of the general prohibition, the agreement will be unenforceable against the consumer, as is currently the case. However, if the provider is unaware of the broker’s involvement, the fact that it did not have permission when it should have done would not in itself make the agreement unenforceable.
The Government believe that this strikes the right balance between protecting consumers and ensuring that burdens on firms are reasonable and proportionate. I beg to move.
Lord Davies of Oldham
My Lords, we consulted the Financial Services Consumer Panel on these amendments, and it confirmed that they were entirely technical. As I always take the panel’s advice, I think they are technical and agree with the Minister.
Lord Ashton of Hyde
My Lords, Amendment 29 introduces a power into the Financial Services and Markets Act 2000 for the Treasury to make regulations relating to transformer vehicles. Transformer vehicles are used for risk-mitigation purposes, particularly in the insurance and reinsurance industry. The Government plan to use this power to implement a new framework for insurance-linked securities business.
In an insurance-linked securities transaction, an insurer contracts with an entity specifically established to take on insurance risk. These entities come within the definition of “transformer vehicles” in the amendment. The insurer transfers risk to the transformer vehicle and the vehicle raises collateral to cover that risk by issuing securities to capital market investors. The vehicles exist solely to transform risk into capital market instruments and to compensate the insurer should the insured event take place. Investors receive a return from the premiums paid by the insurer and the collateral is returned to investors if the insured event does not take place. Unlike conventional reinsurers, ILS transactions do not pool risk. The transformer vehicle takes on a specific risk and typically holds collateral that is at least equal to the risk transferred. This key safeguard will be a firm requirement in the UK framework. The framework will ensure that insurers can rely on the protection they arrange through ILS deals.
Insurance-linked securities are now an important and growing part of the global specialist reinsurance market. By enabling insurers to access the capital markets as an alternative way of reinsuring risk, this business has brought additional capacity to parts of the reinsurance market. But despite the importance of London as a global insurance hub, that growth has taken place elsewhere. In London Matters, a report by the London Market Group on the competitiveness of the London insurance market, the UK’s out-of-date regulatory framework for insurance-linked securities was highlighted as inhibiting London’s ability to compete as a reinsurance hub.
Therefore, the March 2015 Budget announced that the Treasury, the PRA and the FCA would work closely with the London market to develop a more effective framework for insurance-linked securities business. The London market established the insurance-linked securities task force, which is working with the Treasury and the financial regulators to design a fit-for-purpose regime. Work is ongoing, but it is clear that the Financial Services and Markets Act needs to be amended to provide for the introduction of detailed regulations which will implement the new framework. In particular, the Government intend to use the power to create a bespoke corporate structure for transformer vehicles which assume risk from insurers and reinsurers. This will ensure that these vehicles are robust and managed in a way so that they can meet their obligations to insurers and investors. Given that this is a rapidly evolving market, the power will enable the Treasury and financial regulators to keep the regulatory framework up to date.
The clause enables the regulatory arrangements of Lloyd’s of London to be updated, should that be needed to facilitate the Lloyd’s market adapting to ILS business or the use of transformer vehicles. If this requires amendments to the Lloyd’s Acts then the regulations concerned will be dehybridised, so that the amendments are not delayed in Parliament by the hybrid procedure. I am grateful to the Delegated Powers Committee for its report on this clause, which recommends that the clause be amended to ensure that the consent of the council of Lloyd’s is needed before the FCA or PRA can be enabled to require the council to carry out functions on their behalf. I fully understand that the committee would want to be reassured that those affected by the use of a dehybridising provision are afforded an alternative protection. The Government will therefore give careful consideration to the committee’s report.
Although the Government’s current plan is to introduce a framework focused on the insurance industry, it is possible that the use of transformer vehicles by non-insurance entities, for example a company seeking to mitigate the longevity risk associated with an employee pension scheme, may become more common in the future. The power provides the flexibility for regulation to keep pace with such market developments, should that be required.
Finally, I am pleased to say that the London Market Group, which represents London’s insurers and reinsurers, has welcomed this first step in implementing a new framework for ILS business. I beg to move.
Lord Davies of Oldham
My Lords, it is third time unlucky for the Government because we do not consider these amendments to be entirely technical and they contain some aspects on which we seek clarification. The Minister has already recognised the significance of the report by the Delegated Powers and Regulatory Reform Committee, which I know will be studied with care. I make the assumption that the Government will come back before or on Report with a clear response to the committee’s conclusions. If the Government do not act on them then I can assure the Minister that we will, as the committee was quite clear that it thought there should be an amendment to the legislation.
The noble Lord, Lord Ashton, has already indicated the extent to which the Government have looked at the issue in relation to the council of Lloyd’s. I therefore hope that we will have clarity on this matter on Report. We will of course look at his remarks today with the greatest care. I give the obvious indication that while we will not object to these amendments at this stage, we will be coming back to this issue and, more accurately, we hope that the Government will be coming back to it as well.
Lord Ashton of Hyde
My Lords, I note what the noble Lord has said and, as I said before, we are considering this carefully. As I think I indicated, we accept what the Delegated Powers and Regulatory Reform Committee has said. We are looking carefully at this and a response will be forthcoming before Report.
Lord Davies of Oldham
My Lords, I congratulate the noble Lord, Lord Naseby, both on his amendment, for which he has secured widespread support, including from this Bench, and on the way in which he detailed the key arguments behind it, which I know the Government will take seriously. It is somewhat unnecessary for me to fill in any of the interstices that the noble Lord, Lord Naseby, may have left—which were not many—because the noble Baroness, Lady Kramer, has certainly emphasised the significant point, which is that British banking needs to be a good deal more diverse than it is at present.
After all, the Competition and Markets Authority disclosed its findings last month from its review of competition in the retail banking market and found—predictably—that the four largest banks had long dominated the British scene, stifling competition that would give consumers and businesses a better deal. We all know the limited success that has been obtained by the various reforms to make the switching of accounts easier. The British people, I am afraid, are somewhat inured to minor blandishments when it comes to their bank accounts, so there is a need for much more imaginary thought at the centre on how we can make our financial provision more diverse.
We have support from the Treasury Select Committee. The chair, Andrew Tyrie, has written to the CMA to ask it to report back before the Budget in March next year regarding the 8% surcharge on bank profits. He wants to know what impact that has had on the big four and what implications it has for the wider banking sector. It is clearly the case, he believes, that one size does not fit all. That phrase has obtained throughout this short debate and is one to which I entirely subscribe. The Minister will be all too well aware that the Building Societies Association has made it clear that the problems encountered by financial mutuals in recent years almost certainly would have been fewer if there had been greater diversity in the sector.
I think that the case for this amendment has been made strongly. No doubt the noble Lord will be withdrawing it on this occasion but the purpose of this debate is to give the Government the chance to show a constructive response to what we all recognise is a real issue with regard to British banking. The noble Baroness, Lady Kramer, cited the German position. Is it not somewhat extraordinary that even under the so-called northern powerhouse, our great cities do not have individual banks? They no longer have individual building societies, either. That says something about the structure of finance in this country, which surely the Government should address in the context of a Bill about the most significant banking structure of them all—the Bank of England.
Lord Ashton of Hyde
My Lords, I am grateful to noble Lords who contributed to the debate. I have listened carefully to the interesting points, particularly on banking diversity and availability, especially for SMEs, made by the noble Baroness, Lady Kramer, and the noble Lord, Lord Davies, but I will concentrate on the amendment in hand.
I am glad to say that noble Lords are pushing at an open door—or, at least, one that is slightly ajar. This amendment would add a duty to the PRA to consider diversity of ownership model and size alongside its competition objectives. For the FCA, the amendment would add diversity of ownership model and size to the list of factors to which it may have regard as part of its competition objective.
Financial Services: Competition
Debate between Lord Davies of Oldham and Lord Ashton of Hyde
Lord Ashton of Hyde
My Lords, the Government are certainly anxious to have a proper regulatory system and will of course do whatever they can to make sure that we do not have regulatory chaos.
Lord Davies of Oldham (Lab)
But, my Lords, the Government’s efforts to improve competition in the banking industry are lamentable. Two years ago, they introduced measures to encourage banks to offer more information to account customers, and the result is that only 3% of customers change their accounts in any year. It is quite clear that something more significant needs to be done and the Government need to take action to improve competition against a background where 77% of current accounts and 85% of SMEs are with the big four banks. I remind the House that two of those banks were bailed out only a few years ago.
Lord Ashton of Hyde
My Lords, the switching service which the Government introduced has enabled 2.1 million customers to switch. We agree that that should be increased, but the noble Lord omitted to mention that the CMA report out this morning stated that the switching service is functioning reasonably well. Of course, we understand that switching accounts can only improve competition. We fully support the CMA’s provisional report and await its final report next spring, when we hope that it will have some sensible and useful recommendations.
Debt Management Advice
Debate between Lord Davies of Oldham and Lord Ashton of Hyde
Lord Ashton of Hyde
As I just said to the House, the FCA is looking at this. We are not in a position to instruct the FCA on what to do, but there are actions that can be taken on unsolicited calls that I can go into if noble Lords want.
Lord Davies of Oldham (Lab)
My Lords, on the broader issues of debt, will the Minister confirm that household debt is on course to reach a new level of 183% of GDP by 2020? That is above any level that it reached under 13 years of the last Labour Administration. Is it not clear that this faltering economic recovery that the Chancellor boasts about is being backed by household debt, with serious consequences in the longer run for the economy and for all households?
Lord Ashton of Hyde
My Lords, the noble Lord opposite has decided not to mention that household debt as a proportion of income has fallen to 145% in Q1 of 2015—down from a peak of 169% in 2008 under the Labour Government. We accept the forecast that household debt will rise by 2020, but this is driven by households investing in financial and housing assets. At the moment, three-quarters of debt is secured by property.
EU Budget: UK Contribution
Debate between Lord Davies of Oldham and Lord Ashton of Hyde
Lord Davies of Oldham (Lab)
My Lords, we on this side of the House had assumed that the Minister was displaying his own erudition as there is no official in the Box to check on this, so he is on his own. What steps are the Government taking to keep Parliament and the British people informed on the progress of negotiations? The Labour Party of course voted for a reduction in real terms to the current 2014 to 2020 budget, but ahead of the referendum it is quite clear that we need to discuss fully both in Parliament and with the British people directly how the EU budget is constructed and how the money is spent.
Lord Ashton of Hyde
My Lords, I acknowledge that the party opposite did support the new MFF, and I acknowledge the support given by the noble Lord personally to that well-attended debate on 8 July with one speaker. In terms of how we will keep Parliament informed, the Prime Minister made a Statement that was repeated in this House about his renegotiations and the outcome of the Council, and he did say that the issue would be addressed at the Council in December. I would expect the Prime Minister to make a further Statement following that EU Council, which is what he normally does. In addition, not only the European Scrutiny Committee of the House of Commons but the Select Committee of this House will scrutinise the budget, as they always do.
Greece
Debate between Lord Davies of Oldham and Lord Ashton of Hyde
Lord Ashton of Hyde
I am absolutely not going to tell the Greek Government how to deal with their economic situation. It is certainly not my place.
Lord Davies of Oldham (Lab)
My Lords, if Her Majesty’s Government can play only a limited role in the resolution of the crisis, at least they can do something on behalf of British citizens in Greece and those intending to go to Greece. The Minister gave a very limited answer on Monday to the question of whether our embassy in Greece would be strengthened and help given to those who are bound to find things difficult in getting money from the stricken Greek banks.
Lord Ashton of Hyde
I mentioned on Monday that we will increase the resources available if necessary, and the Foreign Secretary had agreed that. The Foreign and Commonwealth Office has updated its travel advice and we stand by to do everything we need to do to help British citizens go to Greece and enjoy their holidays. We think that it is good for Greece that they continue to do so.
Royal Bank of Scotland
Debate between Lord Davies of Oldham and Lord Ashton of Hyde(8 years, 10 months ago)
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Lord Ashton of Hyde
My Lords, it was never the intention of the Government to be a permanent investor in the UK banking sector. At a national level, both RBS and Lloyds are already in the process of divesting part of their UK banking businesses. The Government do not believe that the case for breaking up the core operations of any bank in which the Government have a stake into regional entities meets the objectives of maximising the bank’s ability to support the British economy, getting the best value for the taxpayer or facilitating a return to private ownership. The cost of reorganisation would be attributable to the banks and, as a result, would be fully borne by the taxpayer. The significant issue is the trade-off between the costs, which are certain and significant, and the benefits, which are uncertain.
Lord Davies of Oldham (Lab)
But, my Lords, as the Minister has just indicated, the bank is involved in restructuring at present and is still awaiting a judgment in the United States on the mis-selling of subprime mortgages—which takes us back a little while. How can the Government think in terms of having an early timetable for the selling off of this bank? The bank is now trading a long way below the price that the Government paid for it in 2008. Will that not mean that there will be a distinct and significant loss to the taxpayer?
Lord Ashton of Hyde
My Lords, I made no criticism of the Labour Government when they bailed out RBS and made no criticism of the average price that they paid. But of course it is part of the mathematics of selling the bank for a loss that they paid 502p. As to the present price and whether it is being discounted, it is true that there is a law suit from the FHFA in the United States, but our independent advice is that the current share price fully reflects the concerns about any future law suits in that regard.
Economic and Social Inequality
Debate between Lord Davies of Oldham and Lord Ashton of Hyde(8 years, 11 months ago)
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Lord Davies of Oldham (Lab)
My Lords, my noble friend Lord Howarth mentioned the IMF report. The report rejects the trickle-down effect, rejects the idea that increased inequality makes economies more dynamic and counsels that the best way to stimulate economies is to support the worst-off 20% in any country, and—wait for it—the other aspect would be to increase the strength of trade unions. What is the ministerial response to this report?