UK Financial Services

Debate between Derek Twigg and Mark Garnier

Tuesday 1st September 2026 Westminster Hall

[Mark Garnier]

Yes, I can, from having been on the Treasury Committee from 2010 to 2016, when we looked at creating the Financial Conduct Authority and the Prudential Regulatory Authority, and, more relevantly, on the parliamentary commission on banking standards. Our report recommended that we introduce the measures in the Davies review, which was bringing ringfencing in. The hon. Member may remember that, at the time, the Liikanen review in the European Union looked at ringfences. The subtle difference between our ringfencing and theirs is that it was described as caging the tigers in Europe and as putting a fence around the deer park in the UK. Our retail banks were ringfenced. The problem we have found is that it has become increasingly complex to operate the regime, and the Europeans did not bring it in; as a result the resolution regime on banks—the recent Bank Resolution (Recapitalisation) Act 2025 looked at this—actually means that we now have an awful lot of other stuff in place and do not necessarily need the ringfencing.

The problem with ringfencing is that banks end up with a cliff edge, where their customers are traversing from the ringfenced bank to the commercial and investment banks, and it becomes very difficult. Only one bank has managed to satisfy itself that it is okay, and it has set that ringfence limit at £100 million worth of turnover; all other banks have been at the lower end, which is close to £5 million or £10 million in turnover.

It is costing us more and becoming less internationally competitive to have a ringfencing regime that other countries did not adopt. When we adopted it we were the first mover, but we were not followed. International competitiveness is the key point, as well as the bank resolution. There are MRELs, bullion bonds and a lot of stuff out there that makes up for that, brought in since the financial crisis. It just looks like we have too much. I hope that answers the question from the hon. Member for Carshalton and Wallington (Bobby Dean).

Analysis shows that the annual cost to the UK’s banking sector of ringfencing alone is £1.5 billion. At the same time, reports from industry are clear that ringfencing is duplicated and is not responsible for post-crisis improvements. In 2022, the independent review of ringfencing and proprietary trading said that

“the reduction in the implicit government guarantee and progress in ending too-big-to-fail was not found to be attributable to ring-fencing.”

We understand that the Government are looking at this, and at reforming the ringfencing regime through the Financial Services and Markets Bill. The Economic Secretary to the Treasury and I will be spending a lot of time in the coming months going through the minutiae of banks’ balance sheets—frankly, I find it fascinating; I hope she does too. However, like most of the Bill, while welcome, we feel that the Government are not fully utilising the opportunities that the Bill will provide, and that they could go much further. As I say, I will not delve into too much of the detail because we have a long time to go through all this, but I hope that the hon. Member for Buckingham and Bletchley will throw his weight behind the Financial Services and Markets Bill when it comes to the House of Commons.

I have a second point on taxation. If we are to unlock the future of UK financial services, the other area we have to look at is the level of taxation. In a world where capital, talent and business activity are highly mobile, the UK needs to remain an attractive place to do business. That is especially important given the international nature of the UK’s markets. While our competitors such as the US have a high domestic focus, the UK is the exact opposite: the London Stock Exchange Group found that more than four fifths of the revenues of FTSE 100 constituents now stem from outside the UK. Despite that, data from across the industry shows that the UK is an outlier when it comes to the level of taxation on our financial services sector.

Taking the banks as an example, data from UK Finance and PwC in 2025 suggests that the total tax rate on banks in London is 46.5%, which is significantly higher than in other financial centres such as Amsterdam, Frankfurt, Dublin and New York, as we have already heard. In fact, compared with the US, our banks are paying 60% higher tax than theirs are. Another example is the insurance sector. Data from the Association of British Insurers shows that their membership’s total tax contribution increased by 77% between 2014 and 2024. Analysis suggests that that has mainly been driven by increases in the insurance premium tax.

[Derek Twigg (in the Chair)]

Order. I am conscious of time. I assume that the shadow Minister is coming towards the ends of his comments, but I want to make sure that the Minister and Member in charge have plenty of time to respond. I will call the Minister in about a minute’s time.

[Mark Garnier]

I will draw my remarks to a close, Mr Twigg—I have been rambling on a bit. I thank the hon. Member for Buckingham and Bletchley again for his words. This has been a very intelligent and thoughtful debate. As I say, the most important point is that we have to be incredibly mindful of our international competitiveness, which is so vital for our country. It is so important that we get this right. If we fail, we may find our descendants sitting in this Chamber in 20 or 30 years’ time, wondering what on earth happened to the UK’s financial services sector. We must get it right.

Credit Unions

Debate between Derek Twigg and Mark Garnier

Wednesday 16th July 2025 Westminster Hall

[Mark Garnier (Wyre Forest) (Con)]

It is always a great pleasure to serve under you, Mr Twigg, and I apologise for nearly knocking you over on my bicycle first thing this morning.

[Derek Twigg (in the Chair)]

I forgive you.

[Mark Garnier]

Thank goodness I was called to speak after all.

I congratulate the hon. Member for Cumbernauld and Kirkintilloch (Katrina Murray) on securing this debate. It has been fascinating to listen to all the great words used to describe credit unions. We have heard them described as lifeline services, community builders and financial educators that help to get people on to the road to financial stability, and as engines of economic inclusion. There is no doubt about it: credit unions are truly remarkable institutions. At their heart, they represent, in its simplest form, how and why the financial sector drives growth. They are the first rung on the ladder in the financial system. They take the savings entrusted by members, brought together by a common bond, pool those funds and turn them into everything from very simple loans, to pay for school uniforms, as we have heard, all the way up to mortgages. Those loans often go to individuals and families who would otherwise find the doors to mainstream financial institutions closed. Credit unions’ commitment to financial inclusion and community values are an example that many parts of the wider financial sector could definitely learn from.

I am pleased to note that over the past decade, under the previous Government, credit unions have consolidated and grown. In Great Britain, the number of members rose by a third between 2014 and 2024. More than 2.3 million people are members, up from 1.5 million in 2014, so while the number of credit unions in operation has decreased, that reflects strategic mergers that have created larger, more resilient and more professional institutions. Their asset base has also expanded—it now totals nearly £5 billion in the UK—and their lending book stands at £1.83 billion as of the fourth quarter of 2024. The impact of credit unions stretches far beyond the balance sheet. Studies show that £1 invested into a credit union can translate to between £11 and £19 of value generated in the wider community, yet despite these strengths, it is clear that further growth is being held back.

A major barrier to growth is a geographical common bond, as we have heard one or two Members mention. That prevents credit unions from serving large city regions such as London, the west midlands or Greater Manchester as a single entity. I welcome the Government’s publication of a call for evidence last year on common bond reform. However, the call for evidence is unclear about the Government’s position on expanding the geographical common bond, so I would definitely welcome the Minister’s views on raising the cap from 3 million to at least 10 million people, as called for by the Building Societies Association and others. That would not only unblock the growth of credit unions in major urban areas, but allow for strategic mergers and expansions, helping the sector to respond to local need at scale.

From my own meetings with the credit union industry, I know that consolidation has improved professionalism, resilience and standards across the board. However, to truly unlock growth potential, we must enable greater investment into credit union service organisations. It is positive that the Prudential Regulation Authority recently clarified that credit unions can own these service organisations. However, further Government support, especially relaxing ownership and capital restrictions, could unleash digital transformation and help credit unions to modernise their services.

I note and appreciate that the Minister has also asked the Financial Conduct Authority and the PRA to publish a report on the mutuals landscape by the end of this year. That is a welcome intervention, but can the Minister confirm whether it will deliver a root and branch review of credit union legislation, and in particular the Credit Union Act 1979? As we have heard, credit unions in the USA, Ireland and Canada have flourished under a very different legal framework, which I hope the Government will scrutinise and learn from. I also hope the review can look at central facilities. By pooling liquidity through a central facility, credit unions could manage risk more effectively and provide an even stronger backbone for local lenders. Similarly, do the Government have appetite to allow credit unions to access Bank of England reserve accounts and the sterling monetary framework, bringing them into line with other financial institutions of a similar size?

I will draw my words to a close in a second, but first I gently remind the Minister that the Government were elected last year—quite wholeheartedly—on a pledge to double the size of the co-operative and mutual sector. It is the morning after the night before, when members of the Treasury team are no doubt nursing hangovers from a fantastic dinner last night at the Mansion House. It is notable that during the Chancellor’s Mansion House speech, which I think was very much welcomed by the City of London, the co-operative and mutual sector was not mentioned. I would be grateful if the Minister put that wrong right by addressing these points.

All the evidence suggests that credit unions are a potential growth engine for communities. By introducing a modern legal framework, progressive common bond reform and investment into service organisations, we can help this sector to continue to flourish.

Oral Answers to Questions

Debate between Derek Twigg and Mark Garnier

Thursday 23rd March 2017 Commons Chamber

[Mark Garnier]

The great.gov.uk website is a tremendous opportunity, whereby entrepreneurs, many of whom are very tech savvy, can take advantage of the opportunities that we provide through our subsidised access to global e-marketplaces. They can also access the advice we provide through the website for exactly that type of business—they are supported as well.

[Derek Twigg (Halton) (Lab)]

May I ask the Minister specifically what advice there is, and what the Government are doing, to help small businesses in that respect?

[Mark Garnier]

The Department for International Trade has available a network of international trade advisers throughout the English regions who can be contacted through local chambers of commerce and are specifically there to hand-hold individual companies that need help.