Banking (Responsibility and Reform)

Anas Sarwar Excerpts

Tuesday 7th February 2012 Commons Chamber

[Mr Hoban]

The hon. Gentleman needs to reflect on what is happening in banking. I think his hon. Friend the hon. Member for Edinburgh East (Sheila Gilmore) even got as far, in last night’s debate on the Financial Services Bill, as suggesting that people should not use online banking so as to keep bank branches open. People are changing the way that they access banking and are thinking about whether they need to go into bank branches. We need to ensure that branches are there to meet needs where that is commercially viable, but there is no free lunch here. If the cost of maintaining branch networks continues to rise and insufficient numbers of people use them, the cost will be passed on to the customers who use the branches. The hon. Gentleman needs to think quite carefully about how many additional costs he wants to impose on bank customers in order to keep branch networks viable in that way.

[Anas Sarwar (Glasgow Central) (Lab)]

Is the Minister aware of today’s announcement by the Clydesdale bank about its restructuring programme, which it says is taking place as a result of the UK Government’s austerity Budget, which is causing difficulties for the bank and a difficult economic climate? It employs 2,000 people in my constituency. There are real concerns about job losses in Glasgow and about the closure of branches of that bank, which was going about its business in a meaningful way.

[Mr Hoban]

If the hon. Gentleman had been here a little earlier, he would have heard my reply to his hon. Friend the hon. Member for Edinburgh East, who asked about exactly the same problem. The reality is that there are issues facing banks in the UK, and Clydesdale needs to reflect that. The hon. Member for Edinburgh East also raised the issue of the austerity programme, but that is in place to tackle the problems the Labour Government left behind.

On corporate governance, the previous Government failed to tackle the bonus culture and failed fundamentally to reform corporate governance. The Business Secretary has announced a package of measures to tackle the disconnect between top pay and company performance. Shareholders need the information and powers to hold boards to account on pay. We will give them that and we expect them to use those powers. The Institute of Directors, the National Association of Pension Funds, the CBI and the Association of British Insurers all support the Government’s ambitions. As Otto Thoresen, the director general of the ABI, said when he wrote to bank chairmen last December,

“it can no longer be business as usual for this remuneration round”.

Across the board there is consensus that we need to tackle excessive pay and this Government are answering that, but it is not an easy task. Across the economy, and especially in the banking sector, the previous Government allowed an unjustifiable sense of bonus entitlement to grow, whether in the public or private sector. Under them, a bonus became a right, not a reward, and simply par for the course. After 13 years of Labour Government, we now have a substantial challenge ahead—dismantling the culture of excessive pay in the banking sector. We have already gone some way towards dismantling that culture, but we still have a long way to go.