LIBOR (FSA Investigation)

Debate between George Osborne and Lord Johnson of Marylebone

Monday 2nd July 2012 Commons Chamber

[Mr Osborne]

I can confirm to the hon. Gentleman that the Committee will not be restricted in any way. It will call whomever it wants. I suggested—but this, of course, will be a matter for the House—that it should call people to give evidence under oath. [Interruption.] As we are getting a question from an Opposition Front Bencher, let me say that the Committee will also be able to call former Government Ministers.

[Joseph Johnson (Orpington) (Con)]

The shadow Chancellor seemed to suggest that the Chancellor was passing the buck to the Bank of England, and that the Bank was somehow conniving in LIBOR lying. Will the Chancellor confirm that the Financial Services Authority, in its investigation, found no evidence to suggest that the Bank of England at any point encouraged banks to low-ball their LIBOR rate?

[Mr Osborne]

The FSA’s report is very clear about the interaction between the Bank of England and Barclays. Paragraph 176 says:

“No instruction for Barclays to lower its LIBOR submissions was given”

during the telephone conversation that caused the press interest.

IMF

Debate between George Osborne and Lord Johnson of Marylebone

Monday 23rd April 2012 Commons Chamber

[Joseph Johnson (Orpington) (Con)]

My right hon. Friend rightly says that a well funded IMF and a bigger eurozone bail-out fund cannot be the whole solution to the eurozone crisis. Does he believe now that the overriding priority must be steps towards debt mutualisation and the structural reforms to address the underlying competitiveness issues that are at the heart of the crisis?

[Mr Osborne]

I absolutely believe that eurozone countries need structural reforms. This country needs structural reforms. The things that we have proposed to Parliament on welfare, education, planning and the like, are all part of reforms to make our country more competitive. We have not been talking about our economy here, but we came into government with the highest budget deficit of the lot and some real competitiveness problems. On mutualised debt, over a year ago, I said that I thought that the logic led the eurozone towards euro bonds. I have put that on the record, but ultimately that is a decision for the eurozone.

Autumn Statement

Debate between George Osborne and Lord Johnson of Marylebone

Tuesday 29th November 2011 Commons Chamber

[Mr Osborne]

First, we are today asking the independent pay bodies—which I think everyone in this House supports—to look at more local pay. That is the start of this process. Secondly, we increased capital allowances for short-life assets in the previous Budget. On the enterprise zones and the 100% relief that I have announced, there were specific proposals from the enterprise zones that I mentioned to attract new manufacturing and business into the zones. We are conscious that we want to avoid displacement activities, so we have given those capital allowances not to all enterprise zones, but to the enterprise zones that we think have the most compelling plans to create new businesses, and I hope that the hon. Gentleman would welcome that.

[Joseph Johnson (Orpington) (Con)]

Hard-working commuters and others in Orpington who depend on Southeastern trains have for years been hit by a fare increase regime of RPI plus 3%. May I therefore welcome my right hon. Friend’s decision to cap rail increases at RPI plus 1%, which will provide hard-working families with much needed support in these difficult times?

[Mr Osborne]

I welcome my hon. Friend’s support. I hope that this measure will help people living in Orpington who commute into London to work and that it will really enable us to help local people at this difficult time with their costs of living.

Eurozone Crisis

Debate between George Osborne and Lord Johnson of Marylebone

Thursday 27th October 2011 Commons Chamber

[Mr Osborne]

We think 50% is a very good number. We had in mind somewhere around 50%, and we wondered whether that would be achievable. One of the pleasant surprises of last night was that it was achieved. It is only a headline agreement, and as the former Chancellor said earlier, it absolutely needs to be put into practice now if this deal is to mean anything. I think it is best for me to stick to talking just about Greece.

[Joseph Johnson (Orpington) (Con)]

RBS shares have jumped 7% this morning in response to the eurozone statement. Does the Chancellor share the markets’ view that British banks are sufficiently capitalised to withstand not just the haircut to Greek debt, but any other eventualities that might arise in the eurozone over the next few months?

[Mr Osborne]

Yes, I am confident about that, which is also something that the Bank of England and the Financial Services Authority monitor carefully. The important thing about the test that the European Banking Authority applied was that it not only required banks to hold 9% core tier 1, but marked to market their sovereign debt exposures, which is something that the eurozone resisted for the last year and a half. Of course, the market has priced in some haircuts—to continue the barbershop analogy—of other sovereign debts. That does not mean that I think they will happen; they are what the market thinks will happen. The fact that we have now tested our banks against those marked to market on sovereign debt gives us confidence that the banking system in Britain can withstand whatever is thrown its way in the next couple of months.

Eurozone

Debate between George Osborne and Lord Johnson of Marylebone

Monday 10th October 2011 Commons Chamber

[Mr Osborne]

As I said, we have already extended the loan guarantees that we inherited. We have concluded a deal with all the high street banks—not just the two that were nationalised under our predecessors—to get an increase in SME lending. We want to go further, however, and we will set out the full details in the autumn statement, when the hon. Lady will, no doubt, be present to ask me a question.

[Joseph Johnson (Orpington) (Con)]

Can the Chancellor confirm that Moody’s downgrades of 14 UK banks on Friday reflected the planned and progressive withdrawal of state support for the banking system and a reduction of the likelihood of further taxpayer bail-outs for the UK banks, rather than any weakening of the UK banking system per se?

[Mr Osborne]

Yes, I can confirm that. Moody’s was explicit in saying that that was not a reflection of financial conditions in the UK or the financial strength of the Government. Rather, it was a recognition of the fact that the current Government are trying to move away from the taxpayer either implicitly or explicitly standing behind our largest banks. That is sensible policy, and I hope it commands support on the Opposition Benches.

Oral Answers to Questions

Debate between George Osborne and Lord Johnson of Marylebone

Tuesday 10th May 2011 Commons Chamber

[Mr Osborne]

Let me write to the hon. Gentleman on the specific issue of the Santander loan and the application to the European funds. I take this opportunity to congratulate the Scottish National party on its victory in the Scottish parliamentary elections and say that we respect their outcome. As he knows, my right hon. Friend the Prime Minister contacted the Scottish First Minister to congratulate him personally. I hope that we can work together in the next few months and years to deliver what we both want to see, which is jobs and prosperity in Scotland.

[Joseph Johnson (Orpington) (Con)]

T9. US Treasury Secretary, Timothy Geithner, recently praised the Government’s fiscal reduction plans, saying that the Chancellor had locked the coalition Government into a set of reforms that were “very good”. What lessons has he drawn from this powerful endorsement?

Loans to Ireland Bill

Debate between George Osborne and Lord Johnson of Marylebone

Wednesday 15th December 2010 Commons Chamber

[Mr Osborne]

My hon. Friend will be very focused on what I am about to say, so if he does not mind I shall make a little progress, and then I shall be happy to take an intervention.

Let me turn briefly to the arrangements for a permanent stability mechanism for eurozone economies. The European Council this week is expected to discuss the matter. Both the Prime Minister and I are very clear that when it comes to putting in place a permanent mechanism, the UK is not part of the eurozone and so will not be part of that mechanism. The president of the euro group has accepted that the UK will not be part of the permanent stability mechanism, and that the European financial stability mechanism, which the previous Government agreed in May and of which we are part, will cease to exist when that permanent eurozone mechanism is put in place.

We will seek to bring to an end the use of the mechanism established in May for the resolution of sovereign debt problems. It was established under article 122 of the Lisbon treaty and originally intended to provide support for member states following natural disasters. European Finance Ministers, including my predecessor, chose to apply that article in May to deal with the eurozone crisis at that time, but that temporary solution should not become a permanent way of doing things, and the time has now come for the eurozone to put in place its own mechanism for dealing with the imbalances in the eurozone. That needs to be part of a comprehensive solution whereby countries address their own problems more decisively, including in their banking systems. We in Britain have shown the way.

[Joseph Johnson (Orpington) (Con)]

The Chancellor speaks of a comprehensive solution. Does he recognise that we face not only a crisis of liquidity in Portugal, Greece and Ireland, which we are assisting bilaterally, but a crisis of solvency? The solvency crisis will require us to address not just Irish bank restructuring, but Ireland’s sovereign debt—it is impossible to distinguish the two, given that the Irish state has guaranteed all the Irish banking system’s liabilities—and the solvency of other peripheral eurozone economies. We are helping with financing, but we have not yet addressed the fundamental solvency of those peripheral countries.

Financial Assistance (Ireland)

Debate between George Osborne and Lord Johnson of Marylebone

Monday 22nd November 2010 Commons Chamber

[Mr Osborne]

An absolute precondition of growth, as we can see in Ireland, is stability, and there is no stability if people put a question mark over a country’s ability to fund itself. One reason why the international assistance package is being put in place is to take the sovereign out of the debt markets for the next couple of years. Quite frankly, the decisions we took in May, in June and last month were absolutely necessary to restore international confidence in Britain’s ability to deal with its deficit and to restore some sanity to its public finances. I find it slightly bizarre, having now had this argument for about a year with Labour Members, that they continue to pursue the belief that we could stick with a set of fiscal plans that no one regarded as credible.

[Joseph Johnson (Orpington) (Con)]

Could the Chancellor say whether he thinks Ireland’s move to tap international financial assistance will reduce or increase the risk of contagion for other euro area sovereigns and their banking systems? What assessment has he made of the risk posed by countries such as Portugal, Italy and Spain to the UK?

[Mr Osborne]

I hope my hon. Friend will allow me not to engage in speculation about any other country at the moment. The package today shows the willingness of the international community, the IMF and so on to help countries that get themselves into trouble, whether they are in Europe or anywhere else in the world.