Bank Resolution (Recapitalisation) Bill [Lords]

Debate between Emma Reynolds and Clive Jones

Report stage
Thursday 24th April 2025 Commons Chamber

[Clive Jones (Wokingham) (LD)]

The Liberal Democrats are supportive of the Bill, because the last thing taxpayers need to worry about are the consequences of an under-regulated banking sector. I have brought amendment 3 back from Committee, because the size of banks eligible for the new mechanism has been a key debate through the Bill’s passage.

The Minister has regularly set out that the Bill’s stated aim is to enhance the resolution regime, so that we can respond to the failure of small banks. However, the Bill does not restrict the regime to small or medium-sized banks. If applied to large banks, it would create high costs for banks and customers. The costs would persist for many years, adding a significant long-term burden on the banking sector and consumers. Amendment 3 would ensure that the Bill does not apply to banks that have reached the end-state minimum requirement for own funds and eligible liabilities—put more simply, the largest UK banks. That would mean that only small and medium-sized banks could be supported by the mechanism. That would protect consumers and the banking sector from unnecessary financial burden.

Amendment 4 has also been brought back from Committee. It would place a further objective on the Bank of England to consider the competitiveness and growth of the market before directing the recapitalisation of a failing small bank through a levy on the banking sector. We believe that further consideration of the effect on the competitiveness and growth of the market is important before directing the recapitalisation of failing small banks.

To conclude, I would be grateful if the Minister could expand on the remarks made in Committee and explain how precisely the amendment would complicate the process of managing a bank failure.

[The Economic Secretary to the Treasury (Emma Reynolds)]

It is always a pleasure to serve under your chairmanship, Mrs Cummins. I thank the hon. Members for Wyre Forest (Mark Garnier) and for Wokingham (Clive Jones) for their amendments and their constructive engagement throughout the Bill’s passage. The Bill will ensure that the Bank of England remains equipped with the necessary tools to effectively manage bank failures in a way that minimises risk to the taxpayer and to UK financial stability, protecting the taxpayer.

While there may be some disagreements on the finer detail of the Bill, what we have heard today, and on Second Reading and in Committee, demonstrates that there is cross-party support for the principles and overall objectives of the Bill. I thank the hon. Member for Wyre Forest and the hon. Member for Wokingham for supporting those.

The amendments cover a broad range of issues, and I will explain the Government’s position on them in turn, but first I thank my hon. Friend the Member for Hendon (David Pinto-Duschinsky) for setting out his experience of the banking crisis and stressing that the mechanism we are seeking to provide through the Bill must allow the Bank of England, in close consultation with the Treasury and other financial services regulators, to act with speed and flexibility at times of crisis. There are hours, not days, in which to make decisions during crises, and at the forefront of our minds when discussing the Bill should be that they often happen over the weekend, as happened under the previous Government with Silicon Valley Bank. I will turn to that example shortly, but I wanted to thank my hon. Friend the Member for Hendon for setting out his concerns about the amendments that would essentially stymie the effectiveness of the Bill.

I note that the shadow Minister, the hon. Member for Wyre Forest, raised a number of issues on new clause 3, on the Bill’s impact on credit unions. Some were not strictly relevant to the Bill, but I will come on to them. As he noted, the Government absolutely support credit unions. They play a vital role in providing saving products and affordable credit in local communities across the country. However, they are not in scope of the resolution regime that we are discussing, and therefore not in scope of the new recapitalisation payment mechanism introduced by the Bill. That is a benefit to the credit union sector. Indeed, it asked the Government to ensure that it was not included in the payment mechanism. Credit unions will therefore not be liable to pay towards the cost of a failure where the mechanism is used.

Oral Answers to Questions

Debate between Emma Reynolds and Clive Jones

Monday 11th November 2024 Commons Chamber

[Clive Jones (Wokingham) (LD)]

14. What estimate her Department has made of the number of pensioners eligible for Pension Credit but not claiming it.

[The Parliamentary Under-Secretary of State for Work and Pensions (Emma Reynolds)]

Estimates for pensioners who are eligible for but not receiving pension credit were published in early October. The estimates show that more than 800,000 pensioners—individual pensioners, not households—are entitled to pension credit but are not claiming it.

[Clive Jones]

As the Minister will know, the Chancellor’s cruel decision to tie winter fuel allowance to pension credit, despite knowing that the uptake of pension credit is very low, will force thousands of vulnerable pensioners to choose heating or eating this winter. With 16,577 pensioners in Wokingham expected to be affected by the cuts, will she extend the deadline to apply for pension credit and consider pledging further support to increase take-up?

[Emma Reynolds]

I refer the hon. Gentleman to my answer to my hon. Friend the Member for York Central (Rachael Maskell): the deadline remains 21 December. Thanks to the Government’s steadfast commitment to the triple lock, more than 12 million pensioners will see their pension increase by more than 4% in April next years, up to £470. Over this Parliament, they will be better off by around £1,900, thanks to the triple lock. Low-income pensioners can also apply for the warm home discount scheme and, thanks to the extension of the household support fund, local authorities can target that support on low-income pensioners. In the longer term, the warm homes plan will transform homes across the country by making them cleaner and cheaper to run.