Oral Answers to Questions

Bim Afolami Excerpts

Tuesday 6th February 2024 Commons Chamber

[Mr Laurence Robertson (Tewkesbury) (Con)]

5. What steps he is taking to help support homeowners with mortgages.

[The Economic Secretary to the Treasury (Bim Afolami)]

As the House knows, the path to lower interest rates is through lower inflation, which is why the Government are fully committed to supporting the Bank of England to get inflation back down to its 2% target. If mortgage borrowers fall into financial difficulty, our mortgage charter, which covers about 90% of the market, includes new flexibilities to help customers manage their repayments, on top of the Financial Conduct Authority’s rules on how lenders must treat borrowers.

[Mr Robertson]

Given that a lot of mortgage payers are suffering because of the rapid hike in interest rates, will the Government continue to talk to the Bank of England and mortgage lenders to see what can be done to bring interest rates down? That would help most people.

[Bim Afolami]

I completely agree on the absolute need to drive mortgage rates down, which is why we are supporting the Bank of England’s independent remit to bring interest rates down. We are also ensuring that we do not do things to make inflation worse, such as adding £28 billion to Government borrowing, which would increase inflation.

[Marion Fellows (Motherwell and Wishaw) (SNP)]

The rate for a two-year fixed mortgage remains more than double the level of December 2021. More than 900,000 borrowers are set to see their monthly payments rise by £500 or even £1,000 a month. Government Ministers are having to resign because of increasing mortgage payments. How does the Chancellor expect people in Scotland to cope with increased mortgage rates if his Ministers cannot?

[Bim Afolami]

I would say two things in response to the hon. Lady. First, the best thing we can do is to help people with the cost of living, not increase their taxes, as the SNP in Scotland proposes, and to maintain—[Interruption.] I will not get bored of saying this. Secondly, we maintain our support for the Bank of England driving inflation down. We have more than halved it. We will continue to do that, and interest rates will come right down.

[Christine Jardine (Edinburgh West) (LD)]

6. What recent assessment he has made of the implications for his policies of economic growth forecasts for 2024 and 2025.

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[Rushanara Ali (Bethnal Green and Bow) (Lab)]

10. What recent assessment he has made of the potential impact of changes in mortgage interest rates during this Parliament on household disposable income.

[The Economic Secretary to the Treasury (Bim Afolami)]

Mortgage interest rates have fallen by more than 100 basis points from their peak in the summer. None the less, the Government have prioritised support for households that are vulnerable to cost of living pressures. We have introduced one of Europe’s largest support packages, and it is partly thanks to those measures that real incomes have proved more resilient than was anticipated. In the third quarter of 2023, real household disposable income per person was just 0.5% lower than in Q4 2019, versus the Office for Budget Responsibility’s autumn statement 2023 forecast that it would be almost 3% lower.

[Rushanara Ali]

I thank the Minister for his answer, but since his party’s disastrous mini-Budget fiasco under the previous Prime Minister, food prices have soared, extreme damage has been done to the economy and mortgages have skyrocketed. Every month 200,000 people are having to remortgage, the average monthly rate has risen by £240, and 1.6 million people will have to remortgage this year. Overall, after 14 years of a Conservative Government, people are more than £10,000 less well off than they were on pre-2010 trends. Is it not time that the Chancellor and his ministerial team looked again at the possibility of additional support for those who are facing mortgage and other financial distress? The Chancellor is frowning, but it is time that he took further action to support people in distress.

[Bim Afolami]

This Government have introduced one of Europe’s largest support packages, worth more than £100 billion during 2022 to 2025. That is an average of £3,700 per household. The point about mortgage rates is that they went up everywhere across the world, to a higher level than ours in many jurisdictions such as the United States. I have already mentioned the work that we have done on the mortgage charter, helping hundreds of thousands of people to manage their mortgages, but the critical thing that we need to do is bring inflation down. She needs to talk to her shadow Chancellor and the shadow Treasury team about their plans, which would make inflation higher.

[Mr Speaker]

Order. I am not sure that “she” is a good word to use to other Members.

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[Bob Blackman (Harrow East) (Con)]

14. What steps his Department is taking to support growth in the financial services sector.

[The Economic Secretary to the Treasury (Bim Afolami)]

The Government are taking ambitious steps to grow the UK’s world-leading financial services sector, with widespread industry support. To take one example, reforms to Solvency II will help to spur a vibrant, innovative and internationally competitive insurance sector. The reforms will unlock £100 billion-worth of productive investment to grow the economy in every constituency over the next 10 years.

[Bob Blackman]

I thank my hon. Friend for his answer but, clearly, to grow the financial services industry, investors must have confidence that their money is safe. I have written to him about the Woodford equity scandal, of which there are many thousands of victims across the country. The Financial Conduct Authority refused to intervene, so will he now intervene and take action to ensure that the investors get at least a large part of their money back?

[Bim Afolami]

I thank my hon. Friend for his question, for writing to me and for standing up for the rights of his constituents. It is important the House knows that over 90% of investors voted to accept the scheme of arrangement. It is now up to the court to decide whether to approve it, and I therefore will not comment on it any further. I am happy to be in constant dialogue with him on this matter, as on many others.

[Jim Shannon (Strangford) (DUP)]

As the Minister knows, the Northern Ireland Assembly sits for the first time today to make a change for Northern Ireland. We would very much like to be part of the financial services sector, so what can he and the Government do to support the Northern Ireland Assembly in relation to the financial services sector, and to ensure that we in Northern Ireland can be part of this great country of the United Kingdom of Great Britain and Northern Ireland? Always better together.

[Bim Afolami]

I strongly echo the hon. Gentleman’s sentiments. I am very happy to engage with him and his colleagues from Northern Ireland to see what more I can do in the Treasury to work with him and, indeed, the Northern Ireland Executive, particularly to encourage our financial services institutions to invest more in Northern Ireland. I am very happy to discuss ways in which we can do that.

[Daniel Zeichner (Cambridge) (Lab)]

16. What recent fiscal steps he has taken to help tackle regional economic inequalities.

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[Bob Blackman (Harrow East) (Con)]

T4.   In 2011, the Government quite rightly set up the fund to compensate victims of the Equitable Life scandal. Notwithstanding the fact that the Government did not give them enough money, we know that the fund will not be fully spent on the people being compensated. Will my right hon. Friend ensure the fund is used for the benefit of the people who suffered in the scandal, rather than being returned to the Treasury?

[The Economic Secretary to the Treasury (Bim Afolami)]

I thank my hon. Friend for his question and I will write to him with the specifics of the answer.

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

T2. Many of my constituents whose lives have been destroyed by the loan charge scandal feel the central injustice is that the Government are focused on pursuing the victims rather than the companies responsible. They were dismayed to read recent allegations that individuals linked to such companies have donated hundreds of thousands of pounds to the Conservative party. Will the Chancellor confirm why exactly the Government are ignoring the providers and operators of the schemes? How many have been prosecuted specifically for their involvement in disguised remuneration, and not for other misdemeanours?

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[Richard Fuller (North East Bedfordshire) (Con)]

Last July, following a debanking scandal, I wrote to the Economic Secretary to the Treasury about the risks of implementing so-called diversity, equity and inclusion policies. Far from being inclusive, their implementation has often been divisive, yet Labour put such policies at the heart of its financing and growth strategy just last week. Will my hon. Friend assure us that he will give clear direction to the Prudential Regulation Authority and the Financial Conduct Authority to avoid all the risks of so-called DEI policies?

[Bim Afolami]

I thank my hon. Friend for his question. I am studying those policies carefully. I am concerned about certain aspects of what is proposed, and I will be discussing the matter with the PRA and the FCA to make sure that we have sensible policies on this matter.

[Peter Dowd (Bootle) (Lab)]

T7. At the autumn statement, the Chancellor announced that he would explore selling off the Government’s remaining stake in NatWest this year. As it stands, does he anticipate that this will result in a better or worse return for taxpayers, compared with the previous sales?

[Bim Afolami]

I thank the hon. Gentleman for his question. Indeed, the Chancellor announced at the autumn statement last year that, over the next 12 months, the Government will consider selling shares in NatWest. That is all subject to value-for-money concerns and other matters, as he will appreciate, and it is market sensitive. Of course value for money will be at the heart of any consideration of the sale of shares, and the House will be kept fully informed over the coming weeks and months.

[Martin Vickers (Cleethorpes) (Con)]

My right hon. Friend and his colleagues will be aware of the challenges that businesses and households face in coastal communities. As the Budget approaches, may I urge him to be ever mindful of how we maintain the vitality of the economies in our coastal areas?