Short Money

Lord Tyrie Excerpts

Tuesday 23rd February 2016 Commons Chamber

[John Penrose]

I thank the right hon. Gentleman for his kind comments about me, and as a member of the Whips Office with him in the last Government, I reciprocate, of course. He is right that there are other ways of cutting the cost of politics. For example, we have in front of us proposals to reduce the total number of MPs in this House. I would not, therefore, want to limit what we plan to do just to Short money, but we should not let that be the enemy of doing the right thing on this issue either. Therefore, it is essential that we proceed with these proposals, and I hope we can rely on the right hon. Gentleman’s support.

[Mr Andrew Tyrie (Chichester) (Con)]

Having had a hand in the creation of the policy development grant, and having argued vigorously for Short money increases when the Conservative party was in opposition, I will have to look carefully before arguing for anything other than that this decision to make such a substantial cut needs to be reconsidered. It certainly seems unacceptable that it is being introduced in one year. Everybody understands the need for financial stringency, and for this House to takes its share of reductions, but could the Minister at least look at whether this reduction can be phased? Could he also carefully examine the point that has been made about special advisers, whose numbers have grown enormously? The Labour Government bequeathed about 80, and the coalition Government got up to about 110, although the number has been reduced a little recently. Still, those numbers are very large. Those people do provide a lot of political assistance to the Government, and there is—although not a symmetry—a relationship between the two numbers. Looking at Short money in isolation would be a mistake.

[John Penrose]

May I start by reassuring my right hon. Friend that we are talking not about a cut, but about a slower rise? The cost of Short money has already risen by 50% since 2010, which is a significant amount. We are talking about reducing the rise, which, if nothing were done, would continue to ratchet up between now and the end of the Parliament. I would also say to him that the total salary bill for Spads is still lower than the total cost of Government funding for policy development grants, Short money and other areas of expenditure. Therefore, while I agree that the two things are not directly comparable, there is some symmetry. I hope he is reassured by the fact that the Spad salary bill is much lower overall than the bill for the total funding of Opposition parties.

Bank of England and Financial Services Bill [Lords]

Lord Tyrie Excerpts

Monday 1st February 2016 Commons Chamber

[Harriett Baldwin]

As the hon. Gentleman knows, the measures in the 2013 Act are due to come into force on 7 March this year. The position in relation to the reverse burden of proof is becoming increasingly clear. Andrew Bailey said in his evidence to the Treasury Committee, of which the hon. Gentleman is a member:

“I support the change, because what the change does is it turns the process round and puts the judgment back on to us”

—that is, the regulator.

“I would rather it does that than have us heading down this tick-box regime with legal questions around it over human rights.

I do not want to come back or have one of my successors come back to you in the future and have to say, ‘I am sorry; we could not use this regime in the way that was intended, because it was always a bit doubtful that we could make it stick’. It is far better we come at this point to you and say, ‘I do not think this has a sufficient probability of being effective’.”

I could supply further quotations, from members of the Parliamentary Commission on Banking Standards in the other place, but I must make fairly rapid progress now.

[Mr Andrew Tyrie (Chichester) (Con)]

Will the Minister give way on that point?

[Harriett Baldwin]

I will give way to the Chair of the Select Committee on that point.

[Mr Tyrie]

It surprised a number of members of the Committee when both the Prudential Regulation Authority and the Financial Conduct Authority told us that they supported the removal of the reverse burden of proof. I think that many of us would be in a different place had they not given that evidence.

The Minister has just placed great emphasis on the need for the senior managers and certification regime. Has she asked the regulators for a report on progress in its implementation? If so, will she tell us what it said and put it in the public domain? I have to say, on the basis of what we have heard, that progress is inadequate.

[Harriett Baldwin]

I appreciate my right hon. Friend’s contribution, because he has been examining the issue for longer than most. He will know of the points that were made about this topic in the other place. The regime is due to come into force on 7 March 2016, which is pretty soon. The rolling out of the implementation will focus on the larger organisations first, but the Committee and, I am sure, the Treasury will want it to apply in particular to the large, systemically important firms by 7 March.

The third element of the Bill relates to the extension of the important new freedoms that the Government are granting to allow people to take control of their retirement savings. It will help to ensure that consumers who will be able to sell their annuity incomes through the secondary market in annuities are sufficiently supported. There are two key measures. The first will extend the Pension Wise guidance to those who, from April 2017, will be eligible to sell their annuity incomes through the secondary market in annuities. That will include the offer of guidance to those who have a right to an income under the annuity, such as any dependants and beneficiaries as well as the primary annuity holder.

The second measure will require the FCA to make rules to ensure that specified firms check that individuals with annuities above a threshold value have received appropriate financial advice. On 19 January, the Chancellor set out the Government’s intention to legislate to place a new duty on the FCA to cap excessive early exit charges. I should like to take this opportunity to announce that that new duty will be introduced as a Government amendment in Committee.

--- Later in debate ---

[Mr Andrew Tyrie (Chichester) (Con)]

I fear that I may disappoint you slightly in that regard, Madam Deputy Speaker, but I will do my very best—unless you were giving an instruction from the Chair.

First, I want to find a point of agreement. I strongly agree that there is still widespread mistrust of the banks. A great deal of damage has been done, and it is agreed that there is a lot more work to do to sort it out, but there is a lot more work for the banks to do as well, to demonstrate that they are worthy of trust. The recent conduct scandals and the IT failures are just two examples of how much further we have to go.

Rather than talk in great detail about each clause of the Bill, I thought it might be helpful to take advantage of this Second Reading debate to say something more generally about the progress we have made on regulation. Last time a banking Bill was brought before Parliament—in 2012—it legislated for the ring fence. On behalf of the Treasury Committee, I asked the Government to think again, describing the Bill as “defective”, with parts of it being “virtually useless”. They listened to what the Committee said and changed the Bill, and adequate electrification of the ring fence is now part of the legislation.

This time, there is no need for a fundamental rethink. This Bill goes very much in the right direction. It brings the Bank of England more up to date as an institution, and in doing so it should greatly improve the scope for making it accountable to Parliament and the public. In 2011, the Committee published a report on these matters, and a high proportion of the proposals in this Bill originate or have roots in that report.

This is the sixth piece of legislation the House has been asked to look at in response to the financial crisis. As I said, before examining the specific measures, it is helpful to keep all this in perspective. Banking supervision has been rethought and fundamentally reconstructed three times in the past 30 years—that is a heck of a lot in a historical perspective. The Bank of England initially resisted most of these changes. First, it resisted the creation of the Board of Banking Supervision in the wake of Johnson Matthey. Then, in 1998, it complained that it had not been consulted about the creation of the new supervisory body, the Financial Services Authority. On that occasion, perhaps it was right. Gordon Brown’s creation of the FSA separated banking supervision from central banking and brought in a new “light touch” approach to supervision embodied in the principle, “We’ll make some clear rules, and if you comply with them we won’t interfere.” That all sounded very reasonable, but it left far too much scope for irresponsible buccaneers to pursue reckless business strategies, sometimes egged on by myopic shareholders.

At the same time, the Bank decided to define its role much more narrowly and concentrate on its new responsibility for monetary policy. In doing so, it was seduced by the benign economic conditions at the time, which it called “the great moderation”. Just as bad, it was reassured by the audited but nevertheless misleading and, in some cases, useless accounts of the big banks. The Treasury Committee is trying to do something about inadequate auditing right now. The Bank neglected its financial stability responsibilities right through the period up until 2007, and it failed to rise to the challenge when liquidity seized up in that year.

Perhaps worst of all, the statutory responsibilities of the FSA and the Bank created a large supervisory gap. Nobody paid enough attention to the banking system as a whole, even when it was known, for example, that the banks were becoming excessively reliant on wholesale deposits for funding. In principle, the gap was to be filled by the so-called tripartite, backed by a memorandum of understanding. In practice, the tripartite was considered an irrelevant backwater by all three parties involved, and we later learned that the heads of the three bodies never met prior to the crisis. Parliament was largely asleep on the job; we were all looking through a glass darkly. Some raised voices of concern, including Vince Cable, who is no longer a Member, and, on several occasions, my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley). For what it is worth, I argued vigorously that the tripartite was an accident waiting to happen and that the Government were neglecting systemic risk. Those were all partial warnings; there was nobody with a comprehensive picture.

The multiple failures of 2007-08 were not just the result of bad supervisory arrangements aggravated by a complacent Government and a sleepy Parliament. Nearly everybody who had responsibility in the field failed—and to some degree, in my view, they are still failing—including directors, managers, credit risk analysts and auditors. Shareholder discipline, in particular, was and is still lacking.

Limited liability brings a limited sense of responsibility, but it implies an unlimited liability for taxpayers, and the bail-outs have added to moral hazard. They have made it essential that the objectives and organisation of banking supervision be fundamentally rethought. Hence we have got to where we are now—twin peaks. Put crudely, supervision is back with the banks, and the FCA is responsible for conduct. Twin peaks, and particularly ring-fencing with electrification, is and remains an experiment. Experiments need particular care, and that means a particular responsibility for Parliament to keep an eye on it.

A number of issues already present themselves for attention. For example, it is becoming clear that prudential risk management is about not just adequate capital on the balance sheet, but proper conduct of business. The shocking treatment meted out to customers has triggered massive fines. UK banks have paid about £30 billion in fines in redress since 2009. In theory, those fines should be enough to wake up even the sleepiest shareholder, but so far they have not done so, or certainly not enough. The systemic implications of conduct risk also make it essential that the Bank of England and the FCA be better co-ordinated than they were in the days of the calamitous tripartite. Parliament needs to keep a close eye on that.

Most important of all, the Bank has huge new powers, some of which are enhanced by the Bill. How it runs itself can no longer be left to the Bank; it is a matter of considerable public importance. That is why the Treasury Committee has been pressing for years that the Bank should abandon the style of governance that Alistair Darling memorably characterised, whether fairly or not, as the

“court of The Sun King.”

It needs a modern board, one fit for the 21st century.

That is where the Bill comes in: it does a good deal of the statutory heavy lifting required to enable a modern board to be created. Its main effect is to rationalise the demarcation between the Bank court and the Bank executives, which previously contained some curious anomalies that were created after 2007-08 by on-the-hoof policy making by both Governments.

The Prudential Regulation Authority will no longer be a subsidiary of the Bank, but part of the Bank. The Financial Policy Committee will no longer be a sub-committee of court, and the oversight of the executive will be the responsibility of the court itself, rather than a sub-committee. Even though it was not called a sub-committee, it was, in fact, a sub-committee, and a weaker committee than the court.

The Bill also provides for the appointment of another deputy governor. I would say in passing that, over the 300 years that the Bank has been around, it has managed to rub along quite well with one deputy governor. In 1998, it acquired a second one, then the Financial Services Act 2012 gave it a third, and now we are told that it needs a fourth. I just wonder how many this old lady really needs.

It is greatly to the credit of the current Governor and deputy governors that they have grasped the importance of being required to explain themselves in greater depth before Parliament. The Bank’s initial resistance to the Treasury Committee’s 2011 proposals, now embodied in the Bill, have largely evaporated. It has grasped the fact that with accountability can come enhanced authority. Far from weakening the Bank’s effectiveness, scrutiny and explanation can enhance it.

The Bill also provides for the Comptroller and Auditor General to have, for the first time, a role in the audit of the Bank’s accounts. That sounds sensible at first blush, and it was an easy win for the Chancellor on Budget day, but I think it flatters to deceive and we certainly should not expect too much of it. The National Audit Office lacks the expertise to do that kind of work, and I think it is already trying to rectify that by hiring some people, so there is an extra public expenditure cost involved.

I am sure the NAO can learn the skills, but there is a bigger risk: it is essential that the Comptroller and Auditor General should not be induced, whether by accident or design, to bring pressure on the Bank in a way that could adversely affect the decision making of the three policy making committees, or their funding. That is not an idle concern. After 1997, I am told, with the changes that had been made and the transfer of supervision to the FSA, the Bank was encouraged by the Treasury to save money. Foolishly, the Bank cut back the amount that it spent on financial stability, and lost some of its institutional experience of financial crashes—high-quality people—as a result. An idea that might have looked like good value for money at the time turned out, in retrospect, to be a big mistake. I hope that the NAO treads carefully, strong value-for-money man though I am.

There is a risk that the over-mighty Governor problem will be reinforced by the removal of the PRA’s subsidiary status. The independence of the PRA—or the Prudential Regulation Committee, as it will now be—is essential. A single point of systemic risk, in the Governor, has been created and will remain. Parliament will need to keep alert to protect the PRA’s independence.

On that score, I believe that more transparency could help. I have a proposal off my own bat, not on behalf of the Committee; I have not yet discussed it with Committee colleagues. The PRA could consider making more of its rulings available, not only to the managers of companies affected but to shareholders—they are the people who are supposed to be responsible for these companies’ affairs. That would mean making that information public. At the same time, it would reveal, and provide an opportunity to challenge, the PRA’s reasons for its rulings. I have said that that should be considered; there is a lot more to think through before it can be done.

In the meantime, the PRA appears to be accepting a related and more modest proposal from the Treasury Committee, which relates to banking competition. It is well known that challenger banks, which are new in the market, can be impeded by onerous capital requirements. A few weeks ago, I wrote to the chief executive of the PRA to suggest that the average of capital requirements of established banks be published, together with the average of capital requirements of challengers, so that a comparison could be made between the two. I am pleased to say that the PRA is looking into that.

At the heart of the Bill is the strengthening of the court. A strong board is needed to ensure that the policy committees are doing what they should be doing, and it will need to be forthcoming when the Treasury Committee asks for technical and other support for our scrutiny work. When we need information, reports and, occasionally, investigations, we will expect the court to be co-operative.

Before I sum up, I will raise one relatively minor issue that has not been touched on. The court, despite our request, has not been renamed the board of the Bank of England. That is a mistake. What is in a name? I am a strong supporter of most traditions, except when they get in the way of good outcomes, and this one is on the cusp, at best. Perhaps the Chancellor, who likes 18th-century history, has been too swept up in 18th-century court politics and cannot bear to lose the name, but I think that it is time it went.

With six relatively new pieces of legislation to implement, some time should pass to allow their effectiveness to be established. A lot of legwork will be required from supervisors and regulators to implement them all. A couple of quick examples will suffice. First, regulators have not reached the point where they can allow a bank to fail, and they have told us as much in evidence. What does that mean? It means that the taxpayer could still be at risk. Secondly, several banks still seem too big to manage. That poses a threat to financial stability and increases the risk of misconduct. The proposals of the banking commission were designed to address that problem directly. Detailed implementation towards certification, in particular, has been pretty sluggish so far. I am concerned that the Minister is not pressing more vigorously to make sure that certification and the senior managers regime will be fully implemented and to time.

I would like to end with a broad observation. With all this legislation, we are making some huge demands on the Bank and the FCA, and we may be close to the point of regulatory and supervisory overload. By that, I mean that the Government and Parliament could be raising expectations of what they can achieve to a point where they will never be perceived to have succeeded. We need to ask just how much national regulation can achieve in an open financial world. The truth is: perhaps not that much, and certainly less than many people think. We probably cannot stop the next financial crisis. The best we can hope for is to delay it, to reduce its impact by developing somewhat stronger institutions, including financial institutions, and to give us a better prospect that regulators are a bit more alert and prepared than they were in 2007-08.

In the long run, competition must take more of the regulatory strain. In markets for most products and services, customers can vote with their feet and barriers to market entry are tolerably low. Businesses with weak balance sheets or poor customer standards go to the wall. Neither of those is yet the case in banking. We are a long way from the point where competition can be a full substitute even for conduct regulation in banks, and the contagion risk inherent in the banking system would make supervisory withdrawal and reliance on market disciplines even more hazardous. Until competition is much stronger and market discipline more of a restraint, there will be no substitute for a strong and sometimes interventionist Bank of England and an effective conduct regulator.

Overall, although with some weaknesses, the Bill takes a step in the right direction—the direction of strengthening that framework—which is why I will vote for it on Second Reading.

[Several hon. Members rose—]

HMRC and Google (Settlement)

Lord Tyrie Excerpts

Monday 25th January 2016 Commons Chamber

[Mr Gauke]

I welcome the progress the Government have made over the past six years in ensuring that large companies pay more tax. At a time when we have been cutting the rate of corporation tax, corporation tax receipts, excluding North sea oil, have remained buoyant, partly because we have been more effective than ever at collecting tax from large companies. HMRC’s operational capability in this area has been strengthened—by the way, HMRC staff numbers are going up, not down, this year.

The shadow Chancellor mentioned the 3% figure. That is the very reason I drew attention to how corporation tax is worked out. It is worked out on the basis not of sales profits in a country, but of the economic activity and assets held in a country, and there would be severe dangers to moving in the direction of basing it on sales profits. He is right that every taxpayer should be treated fairly and has to pay the rate determined by the law; there is no lower, special rate for Google or any other taxpayer in this country.

We are collecting more tax, which is evidence of the steps we have taken, in both the BEPS process and the diverted profits tax, forcing companies to change their behaviour. That should be welcomed around the House. The real threat to collecting tax revenue from big businesses would be the anti-business policies of the Labour party.

[Mr Andrew Tyrie (Chichester) (Con)]

Last week, the Treasury Select Committee agreed the terms of reference for an inquiry into, among other things, problems with the corporate tax base. Does the Minister agree that Google might be a symptom but is probably not the cause of these problems; that those lie with the immense complexity of the tax system, which is rendered more problematic by the globalisation of tax liability; and that therefore fundamental reform of the corporate tax base probably now needs to be considered?

[Mr Gauke]

My right hon. Friend raises an important point. Our international tax system is based largely on that set up in the 1920s, but the world has moved on and the way multinational companies operate has changed significantly. That is why, some years ago, led by my right hon. Friends the Prime Minister and the Chancellor, we encouraged the OECD to establish the BEPS project. We are now seeing the first signs that that is working—that companies are changing their behaviour and the tax system is becoming better suited to the modern world.

Oral Answers to Questions

Lord Tyrie Excerpts

Tuesday 19th January 2016 Commons Chamber

[Mr Osborne]

Of course the redundancies that have been announced at Tata Steel and elsewhere in the steel industry are a real matter of regret. We are providing all the support we can to the families who are affected and helping them to get into work. We are backing the steel industry by responding to its requests that we cut energy bill costs—that policy comes into effect today; that we change the rules around procurement so that companies and the Government buy British steel; and that we take action internationally against cheap imports from China. Not one of those things was done when there was a Labour Government, and during that period the number of steel jobs in this country fell by 50%. We will not take lectures from the Labour party, but we will back our steel industry.

[Mr Andrew Tyrie (Chichester) (Con)]

Does the Chancellor think that the stamp duty surcharge that was announced in the autumn statement for the buy-to-let market will inhibit or advance labour mobility?

[Mr Osborne]

I think that it will help to promote home ownership, because it will mean that there is a more level playing field between an owner-occupier who wants to buy a house, a first-time buying family and a buy-to-let landlord. There is nothing wrong with people investing in property, but there should be a level playing field so that we reverse the decline in home ownership in our country.

Oral Answers to Questions

Lord Tyrie Excerpts

Tuesday 1st December 2015 Commons Chamber

[Mr Osborne]

I am very happy to give consideration to that. We are operating within the maximum flexibility that we believe the European Union rules allows us on this. Any postcode that possibly qualified we put forward for the scheme we introduced in the last Parliament, but I am happy to look at specific cases in Northern Ireland to see if they qualify, too.

[Mr Andrew Tyrie (Chichester) (Con)]

The Chancellor said the apprenticeship levy is a levy, but of course what many businesses see is a 0.5% tax on employment collected through PAYE. Does the Chancellor think that is compatible with the tax lock? While he is answering that question, will he also say what estimate he has made of the cost of the apprenticeship levy to the public sector, which I cannot find anywhere in the Red Book?

Spending Review and Autumn Statement

Lord Tyrie Excerpts

Wednesday 25th November 2015 Commons Chamber

[Mr Osborne]

I want to thank the right hon. Gentleman, who has made sensible and constructive interventions in this debate over recent weeks. The members of his Select Committee also took their task very seriously. Over this Parliament, tax credits are largely being phased out as we move to the new simpler—and better, in my view—universal credit. People will be protected during the transition to universal credit. As he says, we are at the same time reducing the proportion of people’s income that will come from welfare payments because more of it will come from the wages paid by their employers. I do not think we should be supporting and subsidising low pay through the tax credit system in the way we have in the past. In the phasing out of tax credits, the introduction of universal credit and the reforms announced in the summer Budget, including limiting support to families with up to two children, we are creating a fairer welfare system that is fair to the taxpayer.

[Mr Andrew Tyrie (Chichester) (Con)]

A key judgment that the Chancellor has had to make is how much to cut the deficit. With the euro crisis unresolved, the Chinese economy more fragile, the middle east unstable and the US likely to raise rates shortly, does he agree that, given all those risks, it would be not only imprudent but extremely dangerous not to reduce the deficit now, while we have the opportunity to do so? We can never rely on forecasts. Will he confirm that the OBR’s sensitivity analysis towards the back of its report, which I have had a chance to look at only briefly, demonstrates clearly that any future downturn in the public finances would require further retrenchment and that it is therefore absolutely essential we take every opportunity to tighten the finances now, while we have the chance?

[Mr Osborne]

My right hon. Friend is absolutely right. As an economy, we have been growing faster than most of the advanced economies of the world. In that situation, not getting the deficit and the debt falling is really signalling to the world that we are never, ever going to try to bring public finances under control. As it is, we have debt falling in every year of this forecast, and it is lower than the forecast in the Budget. The deficit is also falling and overall borrowing is lower in this forecast than in the one I produced in the summer Budget. We take these steps to pay down our debts. Our national debt, at 80% of national income, is uncomfortably high. It does not necessarily, therefore, give us all the flexibility we would want if we were to be hit by some kind of external shock and is all the more reason for us to use the better times to pay down the debt.

Oral Answers to Questions

Lord Tyrie Excerpts

Tuesday 27th October 2015 Commons Chamber

[Mr Speaker]

I call Naz Shah. She is not here.

[Mr Andrew Tyrie (Chichester) (Con)]

Does the Chancellor agree that whatever our views may be in this House on the tax credit dispute, in overturning the settled will of the elected Chamber, the unelected Lords has exercised the powers of a Chamber of Parliament in the tax area, whereas for at least 100 years it has been well established that it has, and should have, only the legitimacy of a consultative assembly?

[Mr Osborne]

The Chair of the Treasury Committee makes an important point. Of course, on only five occasions in recent decades has the House of Lords blocked or rejected a statutory instrument, but never on a financial matter. We heard a whole range of opinions yesterday—from Lord Butler, the former Cabinet Secretary, to constitutional experts such as Vernon Bogdanor—telling us that this was unprecedented. We are going to have to address it—the Prime Minister has made that very clear. That is what we have to do to make sure that the elected House of Commons is responsible for the tax-and-spend decisions that affect the people of this country.

Oral Answers to Questions

Lord Tyrie Excerpts

Tuesday 21st July 2015 Commons Chamber

[Mr Speaker]

Chancellor, sit down, man! I told you to sit down, so sit down! Mr Andrew Tyrie.

[Mr Andrew Tyrie (Chichester) (Con)]

I am sorry about that, Mr Speaker. I thought that the Chancellor was just getting into gear.

Growth will, of course, depend partly on what the Bank of England does. Over the past five years, the Chancellor and Parliament have granted the Bank huge new powers over not only monetary but, in particular, financial policy, which directly affect millions of people. Does that not make the reforms of the way in which the Bank runs itself that the Chancellor will propose, along with greater accountability for its new board—for which the Treasury Committee, among others, has been pressing for a long time—all the more essential?

[Mr Osborne]

I pay tribute to the work that was done during the last Parliament by the Treasury Committee, some of whose members are still in their posts, and I again congratulate my right hon. Friend on remaining Chair of that Committee. Today we are publishing the consultation document on the new Bank of England Bill, which will come before Parliament in due course. The Bill follows the reforms announced by the Governor of the Bank, which built on the work done by the Treasury Committee and others. It will ensure that a modern Bank of England is able to exercise the leadership that is required for the delivery of economic and financial stability. Moreover, for the first time—this is crucial, and I think that Parliament will appreciate it—the Bank will be open to the advice of the National Audit Office, and the value for money that that can deliver.

Greece

Lord Tyrie Excerpts

Monday 6th July 2015 Commons Chamber

[Mr Osborne]

I thank the hon. Gentleman for his remarks and his questions, which were sensibly put. I agree that what we want is an orderly way forward, and the risk is a disorderly financial situation in Greece. I have spoken to several of my counterparts, including, as I have just said, the head of the Eurogroup and the managing director of the IMF; the Prime Minister has spoken to the German Chancellor and others. The simple fact is that the eurozone is waiting for the Greek Government to make a new proposal. They have requested a new programme, and they are expecting to receive the details of that request at the eurozone meeting that will be held tomorrow, but we should not underestimate the importance of the Franco-German summit tonight to see what general approach the eurozone will take to this situation.

Greece is now in arrears, so the IMF cannot actually make any payments under the terms under which it has always operated. The IMF would in any case have to operate alongside the eurozone, as it has made very clear.

The UK is monitoring developments in the four branches of the Greek banks and the one subsidiary that we talked about. That subsidiary is regulated by the Prudential Regulation Authority, but the Bank of England is also keeping a close eye on those four branches.

The hon. Gentleman asked about the bank deposit regulation and the insurance we offer. It is an EU directive that sets that rate in euros. The pound has strengthened and we actually achieved a bit of flexibility in the way the directive operates by delaying the change we need to make to the end of this year, to give plenty of time for people to become aware of the change and so that they know how much of their deposits will be protected.

We are in contact with the various tour operators, which are generally well organised to deal with various situations that might occur in holiday destinations. As I said, we have taken the precaution of increasing the consular staff—not just in Athens, but on the islands where we have a consular presence.

The blunt truth is that there are two timetables at the moment, and it is not clear how they will become aligned. The first timetable is political—the meetings that need to take place, the eurozone working together to find a common position and the proposal from the Greeks. All that looks like it will take some time. At the same time, the other timetable is the situation in the financial system in Greece—that, of course, is operating at a much faster pace. The challenge for the eurozone and for Greece is to bring those two timetables together and find an orderly solution.

[Mr Andrew Tyrie (Chichester) (Con)]

I realise that the Chancellor will want to be somewhat guarded in his reply, but how far can he go towards agreeing that Greece probably cannot recover at current euro exchange rates and almost certainly will not be able to repay all its debts, so the best course now—for Greece and the eurozone—would be to encourage Greece to recreate its own currency and for the eurozone to take all the necessary steps to prevent contagion?

[Mr Osborne]

Just as when people try to tell us what currency we should adopt we do not take too kindly to it, we should respect the decision of the Greek Government and people about the currency that they want to use. Clearly the Greek Government are saying that they want to remain in the euro. The tension, which has been there all along, is between that desire to remain in the euro and the conditions of membership that the other members of the eurozone are placing on them. That is the dilemma that has not yet been resolved.

Oral Answers to Questions

Lord Tyrie Excerpts

Tuesday 16th June 2015 Commons Chamber

[Mr Andrew Tyrie (Chichester) (Con)]

The Bank of England may be operationally independent, but does the Chancellor agree that Parliament and the Treasury Committee are likely to see the Bank as having a duty to share its thinking, at least as far as it affects its statutory objectives of monetary and financial stability, on the impact of the UK’s membership of the EU?

[Mr Osborne]

I certainly do not presume to tell the yet-to-be-formed Treasury Committee how to go about its business, but I would be very surprised if it did not want to have sessions on this vital issue of Britain’s future membership of the European Union. It is of course within its power to ask the Bank’s Governor and indeed other members of the Bank of England to attend; they do attend regularly. It would be very surprising if the Bank of England was not engaged in these crucial economic and financial issues. That is part of its statutory responsibilities, and I think we would all be disappointed if it was not engaged.