Bank Resolution (Recapitalisation) Bill [Lords]

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2nd reading
Wednesday 22nd January 2025 Commons Chamber

[Emma Reynolds]

My hon. Friend flatters me. It is not that easy to explain in simple terms, but I will do my best. Essentially, if a small bank is in trouble, it is better for it not to go into insolvency but instead to go through resolution to protect its depositors. In the case of SVB, only 14% of deposits were covered by the financial services compensation scheme, because the scheme only covers deposits up to the £85,000 threshold. Had public funds been required to facilitate the sale of SVB to another purchaser—in this case it was HSBC, but it could have been another institution—it would have had recourse to public funds. We are seeking to avoid a situation in which taxpayers in all our constituencies are on the hook for the failures of small banks. Where a bank has high-quality assets, which was the case for SVB, we can avoid the insolvency situation and pay out to depositors who have deposits above the £85,000 threshold. That resolution would be funded by the financial services compensation scheme and ultimately the banks, which contribute to the scheme through a levy. I hope that answer helps my hon. Friend—I am sorry that it was a bit long.

Stability is at the heart of the Government’s agenda for economic growth, because when we do not have economic and financial stability, it is working people who pay the price. We have to bear in mind what we are seeking to do, which is ultimately to protect the interests of the taxpayer and to ensure that we do not have to have recourse to public funds.

[Sir Ashley Fox (Bridgwater) (Con)]

I welcome this Bill, but can the Minister assure the House that, at all times, the aim of the Government is to minimise the liability of the taxpayer? Where losses have to be sustained, they should be borne first by the shareholders, secondly by the bondholders and perhaps thirdly, and regretfully, by the deposit holders. That should be the order in which losses are sustained.

[Emma Reynolds]

I agree with the hon. Gentleman, who puts it very well. He will know that there was a different order in the case of Credit Suisse, but the then Government said at the time that that would not be their order of priority. We are seeking to protect the taxpayer in this Bill, and he is right: had there been a cost associated with the transfer of SVB, it would have fallen first to those people before falling to the taxpayer. If we pass this legislation, for which I hope there is cross-party support, we will avoid that eventuality, because if we follow the order of priority and get to the financial services compensation scheme, the cost will be paid through a levy on the banks in that scheme. I thank the hon. Gentleman for his question.

The resolution regime is a critical source of stability when banks fail, because it ensures that public funds and taxpayer money are protected. This Bill delivers a proportionate and targeted enhancement to the resolution regime to ensure that it continues to provide that important stability. As I said at the start of this debate, it is therefore an important Bill that underpins the Government’s vision for economic growth, and I commend it to the House.

Oral Answers to Questions

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Tuesday 21st January 2025 Commons Chamber

[Sir Desmond Swayne (New Forest West) (Con)]

17. What assessment she has made of the potential impact of the autumn Budget 2024 on levels of debt interest spending.

[Sir Ashley Fox (Bridgwater) (Con)]

19. What assessment she has made of the potential impact of the autumn Budget 2024 on levels of debt interest spending.

[The Chancellor of the Exchequer (Rachel Reeves)]

When we entered office, debt was at highs not seen since the 1960s. My commitment to the fiscal rules is non-negotiable, and we will drive debt down to a sustainable level. There have been movements in global financial markets, and the UK is not immune. The Office for Budget Responsibility will produce a forecast in the usual way, and I will respond with a statement to Parliament on 26 March. I will not be giving a running commentary on that forecast.

--- Later in debate ---

[Rachel Reeves]

Let me have a go. There have undoubtedly been moves in global financial markets this year, and the UK is not immune to those movements. The OBR has not yet started its forecast. It will update that in due course, and I will make a statement on 26 March.

[Sir Ashley Fox]

Since coming to office, the Chancellor has increased taxes by £40 billion and borrowing by £30 billion and her Employment Rights Bill has increased the costs of employers by a further £5 billion. Does she accept that her decisions have led to a loss of confidence in the British economy and an increase in our borrowing costs?

[Rachel Reeves]

I do not think the borrowing costs in every major country in the world can be explained by the decisions made by this Government. As I said to the hon. Member for Hinckley and Bosworth (Dr Evans) last week, the hon. Gentleman has to get real. There have been global movements in financial markets that have affected the United Kingdom, but if he looks at the PWC report from yesterday, the most recent report on market confidence, global CEOs see the UK as the second best place in the world to invest, after the US.

Finance Bill

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Committee of the whole House
Wednesday 11th December 2024 Commons Chamber

[James Wild]

No, I won’t at this stage.

There are more than 100,000 pupils with special educational needs and disabilities in independent schools who do not have education, health and care plans, so they will be subject to this tax. That could make it unaffordable for the parents of those children to send them to the school that they think is best placed to look after them. There will be demand in places where there is not capacity as a result. A number of local authorities have pointed that out. That will just make the problems that councils face with their SEND budgets worse, despite the record amounts we have put into high needs.

[Sir Ashley Fox (Bridgwater) (Con)]

Does my hon. Friend agree that this disastrous education tax risks having a severe impact on those children and pupils with SEND in independent schools? It will force children with SEND out of independent schools as fees become unaffordable for their parents and it risks overwhelming the state provision, as there is not sufficient state provision at the moment.

[James Wild]

Absolutely. My hon. Friend makes the point very well. The knock-on impact and the damage to those children’s education will be considerable.

More than 40% of independent schools are small schools. They are at the heart of their local communities. They do not have big endowments. They operate on wafer-thin margins and simply cannot absorb changes of this magnitude, so it is likely that those schools will cut bursary places that exist due to this new tax that puts their viability at risk.

Oral Answers to Questions

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Tuesday 29th October 2024 Commons Chamber

[The Economic Secretary to the Treasury (Tulip Siddiq)]

The proposed regulations will drive high standards of conduct among “buy now, pay later” firms, ensuring that consumers receive clear information and have access to strong protections. Our proposals will also allow the Financial Conduct Authority to require “buy now, pay later” firms to carry out affordability checks, ensuring that firms lend only to borrowers who can afford to repay.

[Sir Ashley Fox (Bridgwater) (Con)]

During the last election campaign, Labour candidates across Somerset said that a Labour Government would cut energy bills by £300. Will the Chancellor set out the timescale for fulfilling that promise?

[Rachel Reeves]

I thank the hon. Gentleman for his question, and I note the number of Labour MPs we now have in Somerset and across the south-west of England. We will set out more detail in the Budget tomorrow, but our commitment to investing in home-grown energy will boost our energy security, create good jobs here in Britain and begin to reduce people’s bills, as will our programme to better insulate homes, which the previous Government failed to do.

Winter Fuel Payment

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Tuesday 10th September 2024 Commons Chamber

[Sir Ashley Fox (Bridgwater) (Con)]

I speak on behalf of 19,300 pensioners in my constituency who are set to lose their winter fuel allowance. Some 23% of my constituents are aged 65 or over, which is well above the national average. Many retired people in my constituency have done the right thing: they have worked all their lives, paid their national insurance stamp, and now have a small private pension and modest savings. It is because they have done the right thing that many of those pensioners are not eligible to claim pension credit. This Government are choosing to punish them for the prudent and conscientious choices they made through their working lives by withdrawing this important means of support.

Labour justified the decision to cut the winter fuel allowance by talking about its alleged poor economic inheritance. Let us take a moment to clear up some facts. In 2010, the budget deficit was about 11% of GDP at £157 billion. Today, it is about 4% of GDP. In 2010, unemployment was about 8%, and today it has halved and is about 4%. In May 2010, inflation was 3.4%. Today it is 2%. This is not the worst economic inheritance since the war.

[Patrick Spencer]

I am sure my hon. Friend will agree when I say that the economic inheritance that the Government received is incredible, considering that we had to deal with the covid pandemic crisis as well as the Russian invasion of Ukraine. That put huge pressure on our economy.

[Sir Ashley Fox]

My hon. Friend makes an important point. It just emphasises the fact that when the Chancellor says that it is a tough decision that has to be made, she is actually making a political choice. She has chosen to give train drivers earning £60,000 a year a pay rise of 15%. She has chosen to cut the income of retired people with a pension of £15,000 a year. That was her choice, and the British people will judge her and the Labour party on it.

Oral Answers to Questions

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Tuesday 3rd September 2024 Commons Chamber

[The Exchequer Secretary to the Treasury (James Murray)]

As Ministers, we greatly value and respect trade unions and the work of trade union representatives in supporting their members. While it is not appropriate for me to comment on individual cases, I will look into this matter further and respond to my hon. Friend in due course.

[Sir Ashley Fox (Bridgwater) (Con)]

The Chancellor’s decision to cut the winter fuel payment is forecast to save £1.5 billion. Can she advise the House what other options she considered for making savings in the Department for Work and Pensions budget before deciding to make this cut?

[Rachel Reeves]

The black hole we inherited was £22 billion. We announced in the statement on 29 July £5.5 billion of savings to reduce the size of that black hole, but the hon. Gentleman can see there is still work to be done and we will be setting out further measures in the Budget on 30 October to get a grip of the public finances.