Data Transparency (Banking)

Debate between Gareth Thomas and Andrea Leadsom

Thursday 3rd July 2014 Commons Chamber

[Andrea Leadsom]

Yes, the Government are keeping the matter under review, and we will discuss exactly that with the BBA.

The hon. Gentleman expressed concern that postcode lending data do not give a full picture of lending in the UK, and suggested that a wider set of lenders and products might be included. For example, he noted that SME figures represent about 60% of the national market, covering loans and overdrafts only. Other forms of finance, such as business credit cards and asset-based finance, are not included at this stage. He is therefore right that it is important for public data to be as broad as possible, but as I have mentioned, we must bear in mind that, particularly for smaller institutions, the cost of making such disclosure might be prohibitive and might increase the costs passed on to customers and businesses. It is important to see postcode data as part of a wide range of data to which the Government, banks and businesses have access, on top of data from the Bank of England, the BBA and other surveys.

Those other surveys, including the SME Finance Monitor and the new Business Banking Insight, can also be of real importance. The latter, which the Government announced in the Budget and I launched just over a month ago, is a really useful tool for UK businesses, as it lets them see which banks are in a good place to offer them the products and services they need at the right prices and will give them a decent service in their area and their particular market.

Finally, the hon. Gentleman asked what use the Government are making of the data on bank lending and whether we have a clear strategy for tackling any credit deserts in UK communities; the hon. Member for Harrow West also raised that issue. I reassure them both that the Government regularly interrogate these data as part of our wider analysis of bank lending conditions across the UK. However, the full usefulness of the data will only really be known once we have been able to identify longer-term series and trends.

At the current time, the data do not appear to show any regional imbalances, but we will continue to monitor that. As the dataset grows and trends become more readily identifiable, we plan to make increasing use of the data. We will of course take action on the issue if we think it is needed.

[Mr Thomas]

Will the Minister give us a little more clarity on who is analysing the trends? I ask, having asked the Financial Inclusion Centre specifically to give me a sense of the bank lending data for London; its analysis suggested that there was a wide disparity among different postcodes—potentially 50% to 300% of the average per capita lending per postcode. As my hon. Friend the Member for Edmonton mentioned, my sense was that there was a need for one particular organisation to analyse those data.

[Andrea Leadsom]

As I have said, at the current time the data do not seem to show any major regional imbalances, but my officials, the Bank of England, the BBA and the banks themselves are looking at the data. If the hon. Gentleman wants to write to me on a specific point where he believes that there may be evidence of a distinct imbalance I would be delighted to look into it and respond to him. We will continue to monitor the data and ensure that as trends become more identifiable we can make more use of the data to assess potential areas where there is a lack of banking facilities.

In conclusion—

Oral Answers to Questions

Debate between Gareth Thomas and Andrea Leadsom

Tuesday 24th June 2014 Commons Chamber

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

2. What recent assessment he has made of the level of bank lending to businesses since May 2010.

[The Economic Secretary to the Treasury (Andrea Leadsom)]

The Government have introduced several measures aimed at improving all types of lending to businesses, such as the funding for lending scheme, the British Business Bank and the SME appeals process. Against this backdrop, gross lending to businesses in Q1 2014 was almost 10% higher than in the same quarter a year earlier, and 32% of SMEs that have been through the appeals process have had their initial loan rejection overturned.

[Mr Thomas]

On the Government’s watch, net lending to business is down by some £57 billion since May 2010. Does that not underline the case for further banking reform, for an expansion of the use of community development financial institutions, and for consistent disclosure of bank lending data?

[Andrea Leadsom]

The hon. Gentleman will know that the great recession in 2008-09 that the previous Government presided over left banks in an absolute mess, and it takes a very long time to recover from such a devastating position. The banks are still trying to sort out their balance sheets, and net lending has been down. It will take time to recover, but this Government are putting measures in place to create new access to finance from all sorts of different lenders. I was delighted yesterday to support the credit union movement on its 50th anniversary with a call for evidence on how we can expand that area of activity for.

Banking Competition

Debate between Gareth Thomas and Andrea Leadsom

Thursday 12th July 2012 Westminster Hall

[Andrea Leadsom]

My hon. Friend is absolutely right. We need far more diversity of financial service providers. Some of the issues I am about to discuss will address that because bringing down barriers to entry will, by definition in a capitalist society, encourage new entrants of all different sorts.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

I share the hon. Lady’s view and that of the hon. Member for East Surrey (Mr Gyimah) that more diversity in the financial markets is essential. Does she accept that it was a missed opportunity on the part of the Government to reject an amendment requiring the new regulators to have regard to promoting diversity in the financial markets?

[Andrea Leadsom]

I am not aware of the specific amendment that the hon. Gentleman is talking about. However, I certainly think that the Government will be wanting to promote diversity, and I am very much aware that they want to promote the diversity of financial service providers. I can tell him that, at a recent hearing with the Treasury Committee, the Governor of the Bank of England assured us that he, too, was very interested in promoting more competition and greater diversity. We unanimously agree on that point.

The best way to shake the banks out of their complacency is to allow new entrants into the market, bringing with them the high standards of service—including IT that works—that customers believe they should be able to take for granted. One significant step in that direction would be to break up and sell off the state-owned banks. That would create overnight potential new challenger banks in Britain, and I urge the Government to look at it again. The market concentration of the big five is appalling. Lloyds, the Royal Bank of Scotland, HSBC, Santander and Barclays have an estimated market share of 85% of the personal current account market and 67% of the mortgage market. That is a classic oligopoly, and they do behave like one. We can see all over the place barriers to entry, not least of which is the fact that those banks own, among them, the Payments Council and VocaLink—two crucial entities that enable the financial services markets to operate.