Oral Answers to Questions

Debate between George Mudie and Mark Hoban

Tuesday 26th June 2012 Commons Chamber

[Mr Hoban]

My hon. Friend makes a very important point. He is right to point out that the details of the scheme have yet to be finalised, but I take on board his comments. We will discuss this with the Bank of England. It is important that the scheme works and that it helps funding and lending to households and businesses.

[Mr George Mudie (Leeds East) (Lab)]

In view of the banks’ disgraceful behaviour on delivering the Merlin agreement, will the Minister assure the House that this new scheme will be transparent and will be published and monitored independently each month? Above all, will he assure us that every pound of additional money that goes to the banks through this scheme will mean additional lending to small businesses and households?

[Mr Hoban]

The scheme is designed to encourage lending not just to small businesses and households but across the board to all businesses. We want to make sure that when banks put collateral to the Bank of England, it is in response to their having lent more. That is absolutely vital for a scheme that encourages lending and we will make sure that we design the scheme to do so.

Banking (Responsibility and Reform)

Debate between George Mudie and Mark Hoban

Tuesday 7th February 2012 Commons Chamber

[Mr Hoban]

The hon. Gentleman should tell the businesses in his constituency to use the appeals mechanism that was introduced to enable businesses to challenge decisions by banks and ensure that they are reviewed. Since the introduction of that scheme, 40% of bank managers’ decisions have been overturned through the appeals process.

[Mr George Mudie (Leeds East) (Lab)]

When the Governor of the Bank of England appeared before the Treasury Select Committee, he deplored the banks’ refusal to meet the Merlin targets. Furthermore, he said that the Government had chosen the wrong targets, which allowed the banks to hide the fact that they were not lending properly to small businesses. Was he misleading the Committee?

[Mr Hoban]

I gave the hon. Gentleman the figures earlier. As I said, by the third quarter of last year banks had exceeded their Merlin targets for lending to businesses as a whole, and were about 10% ahead of their lending to SMEs in comparison with the same point last year.

Let me say a little more about the credit-easing measures that we are introducing. There will be a £1 billion business finance partnership to co-invest in funds that can lend directly to middle-sized businesses and further stimulate non-bank lending channels for SMEs. Those schemes capitalise on the Government’s commitment to tackling the deficit that the last Government left behind. Unlike the Opposition, we are determined to safeguard our economic stability and protect our credibility in the world market—credibility which has secured our triple A rating and kept our interest rates at record low levels, and which allows us to pursue innovative credit-easing measures to reduce costs for businesses and ensure that more money goes where it is needed.

--- Later in debate ---

[Mr Hoban]

My hon. Friend raises an important point. The reforms outlined by my right hon. Friend the Business Secretary ensure that shareholders have the information they need to act. We are also giving them the power to vote and their votes will have a binding impact on future pay plans. The pervading culture today and the sense of concern in the wider economy mean that institutional shareholders need to play their part by looking after the interests of the people who invest in their funds—the people whose pensions are dependent on good returns from their investments. Those shareholders owe an obligation to their customers to exercise their rights to determine the pay policies of boards. We need to focus on that in coming years. My predecessor, Lord Myners, talked about it a great deal. Our reforms have provided the tools and we must ensure that we use them to hold institutional shareholders to account.

[Mr Mudie]

The problem for the public is that the Minister can lecture private shareholders in private banks to use their power to limit bonuses in their banks, but Ministers, who are the owners of RBS, have not intervened and used shareholder power to get good behaviour in the bank they own. Why?

[Mr Hoban]

We have been very clear as shareholders that we expect RBS to act as the back marker on bonuses. We have been keen to ensure that it restricts cash payments to only £2,000 a year. It is not just the Government who agree with that view. In an article about RBS, the right hon. Member for Edinburgh South West (Mr Darling) pointed out that the Government should not run RBS; they should not get involved in the day-to-day business of banks but should run them at arm’s length. That was a structure set up by the previous Government and I understand that the Leader of the Opposition supported it. [Interruption.] The shadow Business Secretary says that we should change it, but he should speak to his leader. The right hon. Member for Doncaster North (Edward Miliband) clearly endorses the structures set up by the previous Government. They should sort out their internal differences—it is not as though they are brothers.

I have spoken for quite some time and others want to speak, so I shall conclude. This Government have secured the stability of our economy by tackling the dreadful deficit left behind by our predecessors. This Government have secured the stability of our financial sector with tough regulatory reforms. This Government are supporting our entrepreneurs in rebalancing our economy, away from the unsustainable and wasteful spending under the previous Government. We are securing stable interest rates through our commitment to tackle the deficit. We are reducing the bureaucratic burden on businesses by slashing red tape and overhauling planning. We are unleashing private sector ambitions by cutting corporation tax to the lowest rate in the G7 and the fifth lowest rate in the G20. We are ensuring that our most ambitious and dynamic businesses have the finance they need to lead recovery in every part of our economy and our country.

Oral Answers to Questions

Debate between George Mudie and Mark Hoban

Tuesday 8th February 2011 Commons Chamber

[Mr George Mudie (Leeds East) (Lab)]

T7. The Chancellor referred to the need for the regulator to have good judgment. Do Ministers think that the same regulator is using good judgment in all aspects of the retail and mortgage reviews?

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

The hon. Gentleman raises an important question about the continued work load of the Financial Services Authority and its work on financial services. He and I would agree that we want better consumer outcomes from retail financial services, and that means that these areas should be reviewed very carefully. However, I am also certain that the outcome of the mortgage market review should take into account the stability of the housing market.

Banking Reform

Debate between George Mudie and Mark Hoban

Thursday 17th June 2010 Commons Chamber

[Mr Hoban]

I am grateful to my hon. Friend. There have been a number of conversations with other colleagues globally about the lessons to be learned from the financial crisis and from the regulatory structures. It is interesting to talk to people in other jurisdictions about their views. Christian Noyer, the governor of the Banque de France, said in July last year:

“Indeed, one of the main lessons of the crisis may be that those countries where central banks assume banking supervision took advantage of their ability to react quickly and flexibly to emergency situations.”

Others have expressed a similar view and that is why I think that the reforms we are announcing today are in the mainstream of reforms in financial regulation—a mainstream that the Opposition seem quite happy to stay outside, yet again.

[Mr George Mudie (Leeds East) (Lab)]

I welcome the evolution of financial regulation. I think that the present system was tested and found wanting, so the movement has to be welcomed. I want to press the Minister on the subject of the Banking Commission. It was interesting that he left it out of his statement and that worries me, because I note that it will take 18 months before it reports. If that is so, it will probably miss the Queen’s Speech for the following year, which suggests that it will be three or four years before we see legislation and the much-needed changes that will deal with the banks that caused the crisis. They continue to flaunt their behaviour on bonuses and have continued to hurt small business by not lending in the last two years. Urgent action is needed, so why is there this long timetable and why was this subject missing from his statement?

[Mr Hoban]

I am grateful to the hon. Gentleman for that question. He has been a distinguished member of the Select Committee on the Treasury and has taken part in many discussions in that Committee and in Public Bill Committees when we have explored some of these issues. I sense that he is much more engaged in the need for reform than his colleagues on the Front Bench.

The Banking Commission is important and it is vital that we ensure that we learn some of the lessons that arise from the structure of the UK banking system. We have a very concentrated banking structure and three out of the four principal banks in the UK are universal banks. We need to understand what risks flow from that and how best to tackle those risks, as well as considering the impact of competition in the banking sector. The appointment yesterday of Sir John Vickers as chairman of the commission has been greeted with warm applause across the business and consumer community. There are four other commissioners— Martin Wolf, Martin Taylor, Clare Spottiswoode and Bill Winters—who are equally distinguished in their own fields. The commission will provide the opportunity for a proper debate about the structure of banking in this county—a debate in which the former Prime Minister and former Chancellor did not want to participate. We think that it is time to have that debate and when we have had it, that will help remove the uncertainty about the structure of banking in the UK.