Critical Benchmarks (References and Administrators’ Liability) Bill [Lords]

Debate between Bob Stewart and John Glen

2nd reading
Thursday 18th November 2021 Commons Chamber

[John Glen]

I cannot give the hon. Gentleman a precise figure. However, in my remarks now and further on, I will give an explanation of those that are excluded and therefore necessitate the creation of this synthetic rate. If he would just bear with me, I will get to the point, and he should feel free to intervene subsequently if he is not satisfied.

The Bill builds on the provisions of the Financial Services Act 2021, as I mentioned a moment ago. This provided the FCA with the powers to effectively oversee the cessation of a critical benchmark in a manner that protects consumers and minimises disruption to financial markets. If I may, I would like to take a few minutes to put the Bill into context.

LIBOR seeks to measure the cost that banks pay to borrow from each other in different currencies and over various time periods. It is calculated using data submitted by a panel of large banks to LIBOR’s administrator, which is the ICE Benchmark Administration. It is referenced in approximately $300 trillion of contracts globally. It is used in a huge volume and variety of contracts, including in derivatives markets, mortgages, consumer loans, structured products, money market instruments and fixed income products. For example, a simple loan contract may say that the interest payable is LIBOR plus 2%. In this example, LIBOR represents the cost to the lender of getting access to the money to lend it out, and the 2% represents the additional risk to the lender associated with making the loan.

Back in 2012, it emerged that LIBOR was being manipulated for financial gain. Following the subsequent Wheatley review, LIBOR came under the regulatory jurisdiction of the FCA in 2013. That led to significant improvements to the regulation and governance of LIBOR. However, in 2014 the G20’s Financial Stability Board, known as the FSB—not to be confused with the Federation of Small Businesses—declared that the continued use of such rates, including LIBOR, represented a potentially serious source of systemic risk. The FSB said that financial markets should voluntarily transition towards the use of more robust and sustainable alternatives. It reached that conclusion due to the structural decline in banks borrowing from each other through the unsecured wholesale lending market. That has meant in turn that LIBOR has become more and more reliant on expert judgments, rather than based on real transaction data. In other words, the market that this systemically important benchmark seeks to measure increasingly no longer exists, which underscores the fundamental need to transition away from LIBOR.

Since the FSB’s recommendation, the Government, the FCA and the Bank of England have worked together to support a market-led transition away from use of the LIBOR benchmark. Primarily, they have encouraged contract holders voluntarily to move to robust alternatives, in accordance with guidance from the FCA and the Bank of England, before the end of the year. At the end of the year, LIBOR’s panel banks will stop making the submissions to the administrator on which LIBOR is based. At that point it will therefore become unrepresentative, and the administrator will cease publishing in any setting where the FCA has not required continued publication using the synthetic methodology. The vast majority of contracts are expected to have transitioned away from LIBOR before that happens. For example, it is estimated that 97% of all sterling LIBOR referencing derivatives will have transitioned by the end of the year.

Despite extensive work and progress, there remains a category of contracts that face significant contractual barriers to moving away from LIBOR by the end of the year, and measures in the Financial Services Act 2021 sought to provide a safety net for those so-called tough legacy contracts. Through the Act, the Government granted the FCA powers to designate a critical benchmark as unrepresentative, if it determines that the benchmark is, or is at risk of becoming, unrepresentative—in other words, that it no longer accurately represents what it seeks to measure—and that it is not possible or desirable to restore its representativeness. The Act also provided the FCA with powers to compel the administrator of such a designated benchmark to continue to publish it for a temporary period of up to 10 years, to prohibit new use of the benchmark, and to require the administrator to change how the benchmark is calculated.

[Bob Stewart (Beckenham) (Con)]

I thank my very good friend the Minister for allowing me to intervene. He understands all this, and I understand some of it, but not much. I speak, however, as someone who is concerned. If we are moving away from LIBOR, is such a move likely to result in a greater cost to those who wish to borrow money?

Coronavirus: Employment Support

Debate between Bob Stewart and John Glen

Thursday 19th March 2020 Commons Chamber

[John Glen]

The hon. Gentleman is absolutely right. It is important that the Government do whatever it takes in these circumstances. He raises a number of specific points. He will be familiar with the changes we have made in terms of access to statutory sick pay and eligibility starting much sooner; that commenced from 13 March. He will be aware that, to make that easier, there is now no need to have a GP note. He makes number of points on universal credit and changing the eligibility there. Advances are available online; the minimum income floor has been temporarily released. He also makes a number of points about freelancers and the self-employed, which the Government are clear about.

The hon. Gentleman mentioned the universal basic income. The Government are looking at that, but the question whether it will help the most affected most urgently is one we have to consider. Many of us in this House, for example, would not require such support. We have to ensure that we target it at the most vulnerable.

[Bob Stewart (Beckenham) (Con)]

I have had a lot of emails on this subject, so may I ask the Minister again how the Government are going to support freelancers and the self-employed? They are desperately worried.

[John Glen]

My hon. and gallant Friend is right to raise that. We have changed the rules on access to employment support allowance and sick pay. It will depend on individual circumstances. We have also released funds to local authorities for hardship relief. Further advice on that will be given tomorrow by the Ministry of Housing, Communities and Local Government.

Lloyds, HBOS and the Cranston Review

Debate between Bob Stewart and John Glen

Tuesday 4th February 2020 Westminster Hall

[The Economic Secretary to the Treasury (John Glen)]

It is a pleasure to serve under your chairmanship again, Mr Hollobone. I, too, pay tribute to my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake). Obviously, in this role, I have shadow Ministers shadowing my every move, but I also have my hon. Friend, who has spoken up very effectively on these issues over the past 25 months. We have had a constructive dialogue on many matters, and I look forward to addressing the points he and others have made in my response.

It has been just over a year since I announced that Lloyds would commission a review into the Griggs compensation scheme, which is another stepping stone in Lloyds’ journey to right the wrongs of the past and rebuild trust with their business customers. From the outset, I was clear that if the findings of the review were to hold up to scrutiny, the person overseeing it must be truly independent. I was therefore delighted by the appointment of Sir Ross Cranston, a former Labour Member of Parliament who was Solicitor General between 1998 and 2001 and is a professor of law at the London School of Economics, a Queen’s counsel, and a retired High Court judge. I met him on two occasions to check on progress, between May and when purdah commenced. That was not to influence him regarding the particular conduct, but to encourage him to look at this issue as thoroughly as possible.

Sir Ross found that the Griggs compensation scheme had serious shortcomings, as has been expressed fully in this debate, and that it did not achieve the stated purpose of delivering fair and reasonable compensation offers. Assessments of direct and consequential loss were too adversarial and legalistic, which was unfair and unreasonable for the customers it was designed to support. Sir Ross also found several other inconsistencies, along with a general lack of clarity underpinning the scheme, while the bank’s failure to communicate with customers in a transparent manner caused further unnecessary confusion.

Sir Ross found that some elements of the compensation scheme were good. For example, Lloyds provided generous legal assistance and wrote off some customer debts, as well as paying substantial distress and inconvenience redress. Nevertheless, the overriding conclusions were hugely disappointing, and Sir Ross has made it clear that Lloyds has more work to do to achieve the stated aims of its original compensation scheme.

The most substantial of Sir Ross’s recommendations is that customer claims for direct and consequential loss must be reassessed, and Lloyds is working with customers and relevant parties to agree the details of this process. I know that representatives of Lloyds have been mentioned in this debate, and I have been given assurances that they are eager to get on with things. That could be through the new Business Banking Resolution Service, which has been referred to in today’s debate, or through an equivalent scheme that is committed to achieving the same rigorous outcomes. Either way, it is pretty clear to me that these cases must be considered by an independent body in a transparent manner.

There has been work on this issue by the all-party parliamentary group on fair business, with support from Heather Buchanan, who was mentioned earlier, and the SME Alliance. I also know that Sir Ross Cranston himself is engaged in this process, which must continue, and must be thorough and rigorous.

Sir Ross has also recommended that Lloyds make payments to cover the debts of customers who repaid or refinanced loans, as well as releasing customers from certain aspects of their settlement agreements. It is vital that Lloyds now implements the recommendations as quickly as possible and continues to support customers as they navigate this process. I will follow progress closely and I expect to be regularly updated; I have made that clear.

I turn now to some of the points made by hon. Members throughout the debate this afternoon. The hon. Member for Gower (Tonia Antoniazzi), who is no longer in her place, asked whether all reviews should be tested against Sir Ross’s methodology. I will just say this: I think that all banks have a responsibility to reflect on the findings of the Cranston review and consider whether their own redress schemes achieved fair and reasonable outcomes for customers. Obviously, people have different interpretations, but the Cranston review is a wake-up call to banks to examine whether the appropriate transparent processes have been followed. That should happen now.

[Bob Stewart]

Will the Minister give way?

[John Glen]

I will just make my next point, then I will give way to my hon. Friend.

My hon. Friend the Member for Thirsk and Malton asked about the appropriateness of the Financial Conduct Authority carrying out a review under the senior managers and certification regime. As he will know, the FCA is operationally independent of Government and it is for the FCA to consider whether there is sufficient evidence for such an investigation.

I know that we have spoken previously about Dame Linda Dobbs’s investigation, which has been ongoing for a considerable amount of time. That really needs to come to a conclusion; we need to see the results of that investigation. However, I cannot say more than that, because it is a matter for the FCA to consider. Now I am very happy to give way to my hon. Friend the Member for Beckenham (Bob Stewart).

[Bob Stewart]

I thank the Minister for giving way; he is an honourable and decent man. However, what shocks me most about all of this is that some banks are not acting decently and honourably. That really worries me; they should do that naturally. They are a bastion of our society, just as business is.

[John Glen]

My hon. Friend makes a powerful point, which goes to the core of this matter. The Cranston review points to the fact that we now have a higher bar of expectations in terms of how these redress schemes should be operated in a transparent way. He has spoken in this debate and previously about the distress that has been caused to his constituents, and many other Members have also made points during this debate.

The wider banking industry has a responsibility to reflect on the review’s findings and act accordingly, so I welcome the banking industry’s commitment to creating a new scheme to address unresolved historic complaints from small and medium-sized enterprises that have not been through a formal independent process, and to address future complaints made by slightly larger SMEs that are just outside the remit of the Financial Ombudsman Service.

Business Banking Fraud

Debate between Bob Stewart and John Glen

Tuesday 9th October 2018 Westminster Hall

[The Economic Secretary to the Treasury (John Glen)]

It is a pleasure to serve under your chairmanship, Mr Robertson. This has been the fourth such debate since I was appointed on 9 January. In each of those debates we have had a number of passionate contributions from Members across the Chamber. Today has been the same. We have had 10 speeches, each of which has contained compelling evidence of a situation where banks have failed small businesses. We must be honest and true to the reality of the experiences of the many people who have come to the House today to challenge me, as the Government’s representative in this area, over what can be done to achieve proper redress.

I pay tribute to my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) for his campaigning on the matter and to my hon. Friend the Member for Hazel Grove (Mr Wragg), who set out powerfully the case that justice needs to be blind, that it needs to be done and that it needs to be seen to be done.

My deliberations will reach a conclusion imminently; I have not been putting the matter off. As has been discussed, a series of pieces of work are being undertaken, two of which will report in the next few weeks, and I will then make a judgment about the best way forward. Financial sector fraud has had a severe impact on SMEs—we heard today about several individual cases in which lives have been destroyed and families ruined. This is not a subject that I treat lightly; I have been very focused on it over the past nine months.

[Bob Stewart]

The Minister is a decent and honourable man. Will he please, please concentrate very hard on getting redress for the people who have lost so much money and so much of their lifestyle?

[John Glen]

I am very grateful to my hon. and gallant Friend for his contributions, which I shall address in a moment. I will also set out some of the changes that have taken place, but let me say from the outset that the cases that have been raised today all demonstrate that, whatever mechanisms we have implemented—from the tripartite regulation of banks and the financial system to the redress schemes of recent years—the banks need to deal with the very real legacy of this issue. Simon Walker’s review for UK Finance must listen to what has been said today about that legacy, which will not go away unless the banks face up to and take responsibility for what happened in the past.

Tackling fraud is a Government priority. I want to reflect on a new theme raised today: access to justice and the mechanisms by which it is delivered. The decision to investigate a crime rests solely with law enforcement; I cannot make it myself. Like any Member of Parliament, I can refer a crime to the relevant chief constable, but they will take account of available resources and the likely eventual outcome. It is the chief officer of the local force who is ultimately responsible for such operational decisions, and it is the responsibility of police and crime commissioners to set the budget for local forces, which the chief officer must take into account. Forces can apply for special grant funding to help meet the cost of unexpected events, but I know from conversations with my hon. Friend the Member for Thirsk and Malton that there is sometimes a gap between the costs covered and the actual costs accrued. These are real matters that need to be addressed.

RBS Global Restructuring Group and SMEs

Debate between Bob Stewart and John Glen

Thursday 18th January 2018 Commons Chamber

[The Economic Secretary to the Treasury (John Glen)]

It is a privilege to stand at the Dispatch Box in my new role as Economic Secretary to the Treasury. I think we all feel the privilege of being Members of this House, but listening to today’s debate I also feel a great responsibility—to respond fully to the many serious examples that have been given of how the banking sector, and this group in particular, has failed so many of our constituents. I want to make it clear that in doing this job and in addressing the issues that have been raised today, I will stop at nothing in making improvements.

I begin by thanking the hon. Member for Norwich South (Clive Lewis) and the right hon. Member for North Norfolk (Norman Lamb) for initiating the debate, and the Backbench Business Committee for granting it. I also thank my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) for his work in the all-party parliamentary group on fair business banking.

What we all care about—it has been made very clear in today’s debate—is that businesses form the lifeblood of our economy and they need a reliable mechanism to deal with disputes with banks. I am vividly aware of that, because I grew up not in a bank but in a small business. I know the risks, the anxieties, the sleepless nights, the pressures on family life and the lack of assurance over salary, so I understand that the experiences of small businesses and their relationships with banks really matter. The Government have always maintained a commitment to support and engage with businesses both small and large, and that commitment will continue unfettered.

The Government recognise that access to finance, which is the crux of the debate, is necessary for businesses to grow organically. We have a strong record of supporting businesses large and small, for instance, through measures in the Budget. The competitive tax regime—corporation tax was cut from 28% to 19%, the lowest rate in the G20—is a significant part of that, but what is really important is that businesses have access to money at a reasonable cost, with reasonable assurances on the terms of securing those funds.

A fantastic range of evidence has been presented to us today. We heard about Mr Smith’s engineering business in Bridgend and Mr Topping’s business in Hazel Grove. We heard vivid personal testimony from my hon. Friend the Member for Dumfries and Galloway (Mr Jack). My hon. Friend the Member for Thirsk and Malton gave the striking example of a monthly interest rate payment that rose, almost inexplicably, from £6,000 to £17,000 a month, leading to catastrophic losses. The hon. Member for Rutherglen and Hamilton West (Ged Killen) gave examples that went back eight years. There were further examples from the hon. Member for City of Chester (Christian Matheson) and my hon. Friend the Member for Stirling (Stephen Kerr), the hon. Member for Glasgow North (Patrick Grady), who spoke about Mr Mitchell, the hon. Member for Poplar and Limehouse (Jim Fitzpatrick), and the hon. Member for Ogmore (Chris Elmore), who mentioned Mr Richards. In those cases, tortuous processes were necessary to secure redress or a meaningful dialogue leading to an outcome. My hon. Friend the Member for Eastleigh (Mims Davies) has told me about the Sayers family, who have also suffered. We heard further powerful testimony from the hon. Member for Strangford (Jim Shannon), who used uncharacteristically strong language—legitimately so.

I too have been contacted by constituents and I have been saddened to hear the stories of many former RBS customers. The Financial Conduct Authority is reviewing the situation; it has said that it is considering the matters arising from the report it commissioned and considering whether there is any basis for further action within its powers. It would not be appropriate for me to comment further at this precise time, but I will say that although, on day seven of my job, I have not yet met the head of the FCA, this will be the first topic that I will be raising with him.

[Bob Stewart]

Will the Minister give way?

[John Glen]

I do not want to give way too many times, but I will give way to my hon. Friend.

[Bob Stewart]

First, I congratulate the Prime Minister on having the extremely good sense to appoint such a wonderful new Minister—a great friend, and someone who is really going to sort this problem out. May I ask on behalf of everyone present for the Government to be onside to ensure that the people who have lost so much are recompensed properly? We are not talking just about the future; we are taking about dealing with the past.

[John Glen]

I thank my hon. Friend for his kind words. Of course we need to reach a stage where we have some answers. We need to know what went wrong, and we need to secure an outcome that is acceptable to our constituents.

It is important to recognise the fundamental need for financial providers to act in accordance with the rules of the FCA and the spirit of its principles. When they do not act in accordance with those principles, we need to have confidence in the mechanisms that exist to resolve disputes.

First World War Servicemen: Memorial Plaques

Debate between Bob Stewart and John Glen

Friday 20th October 2017 Commons Chamber

[John Glen]

I am grateful to my hon. Friend for her intervention. She has made the case for the importance of local museums all over the country, and the enormous impact that they can have as communities seek to do the right thing by those who came before them and remember appropriately the sacrifices that were made.

It is very difficult to categorise the appeal of the plaques to their owners 100 years on from the war. Indeed, the Passchendaele centenary has shown us how varied are the connections that people feel to the fallen of the first world war, not only through direct family relationships but through associations based in their local communities, or connections through a school, regimental club or society. While it is not appropriate for the Government to consider collecting plaques that are no longer in the hands of the families of those who lost their lives during the war, a number of other options are open to those who possess a plaque or wish to find out more about how to commemorate an individual.

As my hon. Friends mentioned, local, regimental or corps museums associated with the place where the person commemorated lived, or was born, may have an interest in the plaques, or, indeed, in any other items relating to the first world war and its aftermath. They may also have further information about that person and his or her experience of the war. Local museums may be seen to have a stronger claim to the acquisition of such items, and are often well placed to exhibit them in their local context. That, I think, brings more meaning to the community that the individual came from.

[Bob Stewart (Beckenham) (Con)]

Families now remember their fallen by dedicating a corner of their living room to the young man, or young woman, who is lost. They have the helmet, the hat, the belt and the medal. The medal usually has the young person’s name on it, written around the ring. The families generally have the letter of condolence as well. Families whom I have visited, because the people whom they have lost were under my command when they were killed, have had one of these pennies in the room. That brings family history to life, because, from the first world war to the present, it shows the family connection. It is wonderful to see that.

[John Glen]

I thank my hon, and gallant Friend for what he has said. Whenever I think of him, I think of his service and the sacrifices made by him and by those alongside him. Once again, he has made a very important point.

There are also two invaluable online resources that help to commemorate those who fell. They provide more information about the person commemorated, and give those in possession of a plaque the option to make their information publicly available. The Imperial War Museum’s Lives of the First World War project is a permanent digital memorial which records the stories of individuals from across Britain and the Commonwealth who served in uniform and worked on the home front. The website currently has more than 7.5 million individual life stories and more than 120,000 registered members. The site offers the opportunity to add details of medals and service to an individual’s record, as well as photographs of items, thereby creating a permanent digital memorial of their first world war story.

A notable example is Isaac Rosenberg, the artist and poet. His online life story on the site includes pictures of Isaac and his gravestone, as well as an image of the next-of-kin memorial plaque received by his family. He served as a private in the 1st Battalion, King’s Own Royal Lancaster Regiment, where his experiences inspired some of his finest work. He was killed during the German spring offensive near Arras on 1 April 1918, but is remembered to this day.

The Royal British Legion also has its Every One Remembered database, which aims to ensure that by next year every man and woman from across the Commonwealth who fell during the first world war is remembered individually by those living today. This shows us that, while the way that people commemorate may have changed thanks to technology, the desire to remember the fallen is undiminished.

In the aftermath of the war, in addition to the memorial plaques, the fallen were recorded on many memorials up and down the country, and indeed across the world. As part of the Government’s centenary programme, there are many ways that communities can find out more about these memorials. I invite all hon. Members to encourage their constituents to explore the funding and training available and to get involved in recording and preserving them.

The war memorial portal project has seen the Imperial War Museum, Heritage England and other partners develop a new portal called ukwarmemorials.org, which hosts information on all UK war memorials and signposts routes for advice and funding. The portal has the most up-to-date advice on conserving and repairing memorials, and will continue to grow over the coming year. The site also contains information about other work that Historic England, the Imperial War Museum, the War Memorials Trust and Civic Voice are undertaking as part of the centenary programme to record and conserve memorials. To date, Historic England has added 1,860 memorials to the heritage list for England and expects to have listed 2,500 by the end of the centenary. Supporting this, Civic Voice has run over 180 workshops to train communities to survey and record the status of local memorials. I suggest that hon. Members recommend the site to any constituents with an interest in local memorials.

The War Memorials Trust, which provides a programme of grants to help to repair and conserve memorials, has to date made over 360 repair grants across the country, totalling some £1.4 million. It is also worth recognising the work of the Department for Communities and Local Government and the Victoria Cross commemorative paving stones project, which my hon. Friend the Member for Morecambe and Lunesdale alluded to. This project aims to commemorate each of the 627 men who won the Victoria Cross during the first world war by placing a commemorative stone in the town or village of their birth or, in the case of those born overseas, at the National Memorial Arboretum. The stones will be a visible reminder of the heroic contribution made by local people, as my hon. Friend referred to so eloquently.

In a debate on memorials to the fallen of the first world war, it is also appropriate to commend the work of the Commonwealth War Graves Commission. Its Menin Gate memorial and Tyne Cot cemetery recently hosted some of the Government-led events to commemorate the centenary of Passchendaele, the third battle of Ypres. However, it should be remembered that there are nearly 300,000 war graves in the UK from the first world war and other conflicts at 13,000 locations—details of local sites can be found on the CWGC website.

As we look ahead to the significant centenaries of 2018, the Government will of course be doing all we can to draw attention to different aspects of commemoration, and to the ways in which we remember our war dead. As part of that, we will of course do our utmost to ensure that the public are informed of the options open to them if they are in possession of memorial plaques, or indeed of any other personal items, and of how they can use them and resources such as Lives of the First World War to explore their own family and local history.

The memorial plaques and the many other memorials to the fallen of the first world war are a constant reminder of the huge sacrifice made by a whole generation 100 years ago, and I hope that through our commemoration programme, and by working with our partners on innovative ways of commemoration, we can ensure that future generations never forget those who fell.

Question put and agreed to.

Defence Expenditure (NATO Target) Bill

Debate between Bob Stewart and John Glen

Friday 23rd October 2015 Commons Chamber

[Bob Stewart]

In which case I take back the word “fallacious”; I trust everything that my hon. Friend says.

It was our Prime Minister who convinced fellow NATO members to commit to a target of 2% of GNP at last year’s NATO summit. He was absolutely right. We have now committed ourselves to keeping to that figure, at least for the immediate future. Personally, particularly in the current very dangerous international climate, I would prefer us to spend far more than that on defence. Everyone in this House knows our first and primary duty as Members of Parliament: the defence of our country.

[John Glen]

I want to focus on the principle of setting targets. It seems to me that if we pass this Bill, we have to consider where that stops. The Government have also made commitments on the NHS and education budgets. Would my hon. Friend be inclined to support minimum percentages of expenditure in other Departments? This seems a dangerous road to go down. We should be free to make the case that he has just made: to spend whatever is necessary to meet the challenges that we face in the world.

[Bob Stewart]

I thank my very hon. Friend for that point. My view is that there should be no ring-fencing whatever: Governments should govern and decide what is right. What is right for defence is probably more than we are paying at the moment. The fact is that we have ring-fenced other Departments and international aid, but we have not ring-fenced the first duty of government. That is why the 2% minimum target is so important.

That is a good way to end, actually. I will shut up and sit down.