Royal Bank of Scotland

Chris Leslie Excerpts

Thursday 11th June 2015 Commons Chamber

[Chris Leslie (Nottingham East) (Lab/Co-op)]

I welcome the new Minister to her role, but where is the Chancellor of the Exchequer? Should he not have the courtesy to come to House of Commons and answer questions on what might be one the most important financial decisions of this Parliament? Taxpayers deserve to know more about what is going on here. Why is it that when there are difficult questions, the Chancellor always blames someone else or sends someone else?

Taxpayers who bailed out RBS during the global financial crisis want their money back and will rightly be suspicious of any rush to sell. When RBS is still restructuring the business and awaiting a US settlement for the mis-selling of subprime mortgages, would a premature sale not pose a risk for the taxpayer? The Chancellor said two years ago that he would countenance a sale of RBS only when

“the bank is fully able to support our economy and when we get good value”.

Does the Minister really think that those tests have now been met?

Although we have always supported the eventual return of RBS to the private sector, is it not essential that the Treasury get back as much money as possible to help pay down the national debt? Why the rush when the share price is so far below the break-even point? RBS had to be bailed out urgently, but it does not have to be sold off at the same speed. The Minister should not give the impression, either, that the Governor of the Bank of England is telling Ministers that the price is now right, because he makes it very clear in his letter that questions of valuation are entirely for the Government.

Before Government Members start pretending that the RBS rescue was somehow not a matter of consensus at the time, we are not going to let them re-write history. The truth is that the Chancellor did not oppose the urgent rescue of RBS at the market price back in 2008. The National Audit Office says that the rescue price was “justified” and the Institute for Fiscal Studies says it was

“not obviously unfavourable to taxpayers”.

They know full well what the consequences would have been if the bank had gone under.

On the specifics, will the Minister clarify for the record exactly what the Government accept the break-even share price for the bank to be? The figure of a potential £7.2 billion loss might be understating things, because the Rothschild calculation she mentioned nets off the fees the Government have received from the bank since 2008.

On Lloyds, the Treasury has already pledged that shares sold through the Government’s trading plan will not be sold for less than 73.6p—the price the Government paid for them. What is the equivalent red line below which the Treasury would not sell an RBS share? Why can the Minister not give us more detail about precisely when the sale will commence and what impact she predicts it will have on debt reduction?

As for the extremely dodgy claim that if we roll everything together, stand on one leg and squint a bit, losses at RBS do not really look that bad after all, is not that a bit like saying, “I’ve sold the house and lost a fortune, but don’t worry because I got a great deal on the car”? Come off it! The Government cannot pretend they are not making a loss on RBS just because they are making a gain on completely separate assets elsewhere. At a time when the Chancellor is reportedly on the brink of axing £5 billion from tax credits for children of working parents, should not the Government be far more careful not to lose billions more by rushing a sale on RBS? Everyone knows that when it comes to getting value for money, they have poor form: just look at the fire sale of Royal Mail.

We have to ask what the real reasons for this hasty sell-off are. We saw in the March Budget that the Chancellor rushed forward asset sales in order to just about meet the Treasury’s debt target. Is he repeating the same thing before the emergency Budget, regardless of the best price for the taxpayer? Or perhaps this is the Chancellor trying to prove his ideological credentials as part of his leadership bid, to impress all those new Conservative Back Benchers. Taxpayers need to know that there are sound reasons for this and that he is not doing it just to suit himself. We have a hidden Chancellor and a hidden agenda. It is now for the Government to justify the claim that they are putting taxpayers’ interests first.

[Harriett Baldwin]

Clearly, the Chancellor is not dodging any difficult questions because I did not hear any difficult questions from the hon. Gentleman. It is a bit rich that the new shadow Chancellor has chosen to make his first attack on the Government’s economic policy by drawing attention to his party’s woeful track record on bank regulation and by publicly disagreeing with the advice of the Governor of the Bank of England.

Last week the hon. Gentleman told this Chamber:

“I have had plenty of time to reflect on the result of the general election. Obviously, we are disappointed with it and we will review our policies accordingly”.—[Official Report, 4 June 2015; Vol. 596, c. 789.]

Clearly, that reflection does not include apologising for the lax regulation of our banking sector or realising that the British people do not want a Government who are committed to borrowing more, spending more and nationalising more. Above all, the hon. Gentleman’s reflection clearly does not include recognising that his mentors, Gordon Brown and Ed Balls, paid a high price for their intervention in the Royal Bank of Scotland. I will take no lectures on economic competence from an Opposition party that in office sold off the country’s gold reserves at an all-time low, crashed the banking system and the economy, and left us with the biggest peacetime deficit in our nation’s history.

I will answer the hon. Gentleman’s questions. He asked whether the Government will publish a break-even share price for RBS. I do not know whether he is Mystic Meg, but I do not know exactly at what price the sales will be made. The hon. Gentleman will have seen the Rothschild report that we have published today. Under his Government, it was forecast in 2009 that the bank interventions would result in a total loss of between £20 billion and £50 billion. We have turned the economy and the banking sector around, and as of this week the Rothschild report estimates that the overall sum total of the interventions will benefit the taxpayer by £14 billion.