Oral Answers to Questions
Debate between Greg Clark and Andrea Leadsom(4 years, 6 months ago)
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Greg Clark (Tunbridge Wells) (Ind)
I welcome the Secretary of State to the Dispatch Box and hope that she will have distinguished tenure at this important time. She will know that the recommendations of the independent review of the Financial Reporting Council, conducted by Sir John Kingman, were widely endorsed and are urgently required. I was concerned that the statutory implementation of those recommendations was not included in the Queen’s Speech. Can she assure me that she is not going to miss a golden opportunity to make these reforms and give a big boost to our standing in the world?
Andrea Leadsom
First, let me pay tribute to my right hon. Friend, my predecessor, who did a fantastic job in this Department. I am delighted to stand by the position that he took as Secretary of State: it is the Government’s plan to legislate for a new regulator with stronger powers, replacing the FRC, as soon as parliamentary time allows. We are planning to progress this work in the first quarter of next year, once we have received Sir Donald Brydon’s review of the quality and effectiveness of audit.
Oral Answers to Questions
Debate between Greg Clark and Andrea Leadsom(10 years, 5 months ago)
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Greg Clark
That is obviously a matter for the Welsh Assembly Government. However, with local elections coming up next year, I encourage all Members to publicise the existence of this fund, which meets the additional costs that anyone with disabilities may incur in standing for election—for example, with difficulties in using public transport. The fund is there to enable them to take up their democratic right to stand for office in a way that does not disadvantage them. I hope that more people will access this fund which is available for that purpose.
Andrea Leadsom (South Northamptonshire) (Con)
7. What recent discussions he has had with his ministerial colleagues on improving social mobility.
Financial Transaction Tax and Economic and Monetary Union
Debate between Greg Clark and Andrea Leadsom(10 years, 10 months ago)
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Greg Clark
I am grateful to the hon. Gentleman for his kind words, but when we have a chance to participate in and lead international gatherings, we must decide where our negotiating capital or authority can best be deployed. The Prime Minister decided, correctly in my view, to pursue tax transparency at international level, through our leadership of the G8 and in other forums. I think that the hon. Gentleman, who is as fair-minded as he considers me to be, would be churlish not to acknowledge the considerable breakthrough achieved by the Prime Minister in recent months, and by the Chancellor before him in Mexico, in respect of tax transparency. I believe that that is an example of the palpable progress that even the Opposition should applaud.
Andrea Leadsom (South Northamptonshire) (Con)
In the context of transparency, does the Financial Secretary agree that creating an unlevel playing field in which some countries participate and others do not, which is what this financial transaction tax will do, could fall foul of the second markets in financial instruments directive, which requires best execution in all transactions? In an essentially international if not global business like financial services, might not those wishing to conduct transactions on behalf of their customers struggle with the idea of using a jurisdiction that had imposed an unlevel financial transaction tax?
Greg Clark
My hon. Friend is right. This runs contrary to the whole direction of the reform that we have been promoting and think it essential for the EU to promote, namely movement towards a single market in which operating across borders becomes progressively easier and more transparent. I do not think it sensible to do what the hon. Member for Nottingham East would prefer to do, which is make a global financial transaction tax a greater priority than what we are achieving in terms of tax policy, at a time when we are making great progress.
Nor would it be right to leave out of the motion the reference to the UK’s legal challenge to the current proposed FTT, which it is widely acknowledged would hit British pensioners—we know the Opposition have them in their sights at the moment—and which is the whole basis of this Committee’s scrutiny of the proposal.
Greg Clark
I agree. It is not only the London economy that would be damaged; the whole European economy would be damaged, too. That cannot be in the interests of EU members, but members are, of course, sovereign and can make their own decisions, provided that that does not interfere with our competences and rights.
Andrea Leadsom
The hon. Member for Nottingham East (Chris Leslie) says, “Ah, the Financial Secretary is against it all together!” However, the European Commission itself has done an assessment that shows how extraordinarily costly this will be in terms of jobs and revenues to the member states who introduce it.
Greg Clark
That is absolutely right, although one of the unsatisfactory aspects of the FTT proposal is that it has been frustrating trying to obtain an accurate view of its impact from the Commission. Not enough analysis has been conducted. We know that the original estimate of the impact was a reduction in EU GDP of 1.76% and a loss of half a million jobs across the EU. Mysteriously, those figures have changed, but we have had no rigorous explanation for that.
In the limited time available to us today, I should address the other documents that are the subject of this debate, in particular the one on economic and monetary union. Late last year, the European Commission published its blueprint for a deeper EMU, and the President of the European Commission provided a report called “Towards a Genuine Economic and Monetary Union”. Those reports put forward ideas for possible steps to a more integrated euro area. They are of particular concern to the European Scrutiny Committee, chaired by my hon. Friend the Member for Stone (Mr Cash), and I am sure he will want to speak about the implications for the primacy of this House and this Parliament.
So far these are not formal proposals but contributions to a wider debate in Europe about what may be needed to bring long-term stability to the euro area. I am sure that further documents will be referred to the Committee and we will have the opportunity to debate them in this House, but I want to emphasise very clearly that the UK will not be part of these arrangements, and although leaders at the December 2012 European Council agreed on a more limited work programme than that set out in these reports, they do raise important questions that need to be addressed.
The European Council December 2012 conclusions were very clear that any new steps towards strengthening economic governance would need to be accompanied by further steps towards stronger legitimacy and accountability. The European Parliament has a role at the EU level as further integration of policy making and greater pooling of competences take place among the euro-area countries, but this does not mean the European Parliament has primacy over national Parliaments, whose role is absolutely essential and inviolate.
As my right hon. Friend the Prime Minister said in this House on 12 December in his post-Council statement —and in response to my hon. Friend the Member for Stone, I think—we believe that national Parliaments are closest to people across the EU and that is why they should be at the heart of providing democratic legitimacy within the EU.
Financial Services (Banking Reform) Bill
Debate between Greg Clark and Andrea Leadsom(11 years, 1 month ago)
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Greg Clark
I do not disagree with the hon. Gentleman’s analysis. A higher leverage ratio is important. However, we have reflected the view of the Vickers commission that a higher leverage ratio is not necessarily required immediately. It is our intention to bring it in following the review in 2017. That is a reasonable time frame. I repeat that it is our intention that there should be a backstop ratio.
The final major difference between the Bill and what was recommended by the parliamentary commission is that it does not include proposals on how creditors, rather than taxpayers, will be expected to bear the costs in the event of a bank failure. We are working with other European countries to develop a credible and effective bail-in tool as part of the European recovery and resolution directive, reflecting the recommendations of the global Financial Stability Board.
The Irish presidency of the EU has set out plans to make rapid progress towards concluding the recovery and resolution directive. The RRD is due to come into force in 2015 and the bail-in tool by 2018. Given that progress, we have not included clauses on the matter in the Bill, but if agreement cannot be reached, which we do not expect to happen, we will consider tabling amendments later in the Bill’s passage to allow the UK to act alone.
Andrea Leadsom (South Northamptonshire) (Con)
Does my right hon. Friend agree with me and Andy Haldane that bank account number portability could make a positive contribution to the prospects of easy resolution in the event of a future bank failure?
Greg Clark
My hon. Friend is a passionate advocate of that, and I think that what I will say about it will please her. I hope that she will be able to contribute to the debates on it in the weeks ahead.
The Government intend to go further on the matter of competition than was suggested in the reports of the two commissions. I strongly believe that the concentrated nature of the UK banking industry is unacceptable. I want to see far greater possibility, and indeed reality, of entry into the market by new banks and building societies. One of the barriers to that has been access to the UK payments system. Potential challengers have to win the permission of incumbents to be able to use the system. The Government will therefore shortly consult on a proposal to make access to the payments system regulated, to ensure that it is available on fair, reasonable and non-discriminatory terms. Subject to the findings of the consultation, the Government will consider tabling amendments to the Bill to give the regulator the necessary powers. I think that would address my hon. Friend’s ambitions.
Banking Reform
Debate between Greg Clark and Andrea Leadsom(11 years, 3 months ago)
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Greg Clark
The hon. Gentleman raises a very important point. I met the Federation of Small Businesses and the Bully-Banks organisation and I conveyed their concerns to the FSA, which the hon. Gentleman knows is set up to be the independent regulator. I think most people were relieved that the FSA proposals of last week will result in compensation for the affected businesses within a rapid time frame. What happened is totally unacceptable, and is another feature of the scandalous decline in reputation that the banks have suffered. Small businesses in particular have a right to regard their bank manager as someone who acts in their interests, rather than someone who flogs them dodgy products that they do not need in the first place. That is a breach of trust in banking. I am absolutely insistent that the FSA should conclude this process, giving full recompense to those who have been mis-sold products.
Andrea Leadsom (South Northamptonshire) (Con)
The retail ring fence is a good idea, but the real game-changer for banking will be the introduction of full bank account number portability, because it will break open the oligopoly banks. Does my right hon. Friend agree that it is also important for the Payments Council no longer to be controlled by the big banks? Breaking open competition and introducing new challenger banks is of key importance.
Greg Clark
I thank my hon. Friend for the effort that she has devoted to promoting this agenda. It seems to me that if there is to be genuine competition, people should have a choice of banks, and it should be easy, not difficult, for them to make changes. I hope that the work that my hon. Friend is doing will be reflected in the policies that we are enshrining in the Bill, and I look forward to detailed discussions with her about how that may be possible.
Oral Answers to Questions
Debate between Greg Clark and Andrea Leadsom(11 years, 3 months ago)
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Greg Clark
The hon. Lady should reflect on the fact that the fall in unemployment in the north-east of nearly 25% is greater than that in any region in the country. She should be celebrating the turnaround in the north-eastern economy to which she and I have been aspiring for many years.
Andrea Leadsom (South Northamptonshire) (Con)
To go with the enterprise taking place in Northamptonshire, may I urge colleagues throughout the House to consider having an apprentice in their own office? I have had apprentices for two years now, both of whom were school leavers from Northamptonshire schools. They do a brilliant job and there are all sorts of facilities available to support that.
Greg Clark
If the apprentices that work in my hon. Friend’s office contribute to her own productivity and innovation in policy production, she is a standing example of the success of the scheme.
Oral Answers to Questions
Debate between Greg Clark and Andrea Leadsom(11 years, 4 months ago)
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The Financial Secretary to the Treasury (Greg Clark)
The hon. Lady is absolutely right that one of the real problems in banking over recent years was that the people who had a trusted relationship with their customers saw them as sales targets rather than as people to be helped. That needs to change. The Financial Conduct Authority is very clear that these kinds of incentives have to go.
Andrea Leadsom (South Northamptonshire) (Con)
I congratulate my right hon. Friend the City Minister on reassuring us that he intends to require the Prudential Regulatory Authority and the FCA to promote new bank competition. Does he agree that full account portability could offer the biggest game changer for bank competition, and that an amendment to the draft Financial Services (Banking Reform) Bill could achieve that?
Greg Clark
I am grateful to my hon. Friend for her question and for her campaigning on this issue. My hon. Friend the Economic Secretary and I will meet her to discuss her proposals. The draft Bill responds to the Vickers report. He said that if portability reforms were not adequate we could take further steps, so we have a vehicle to do so.
Financial Services Bill
Debate between Greg Clark and Andrea Leadsom(11 years, 4 months ago)
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Andrea Leadsom (South Northamptonshire) (Con)
I want to speak briefly on Lords amendments 25 and 36, both of which deal with the issue of competition in respect of the new regulators: the Prudential Regulation Authority that will supervise the banking sector and the Financial Conduct Authority that will supervise business conduct in the banking sector. I seek reassurance from the Minister that having regard to the quality and level of competition in the marketplace will be sufficient to drive a radical improvement in respect of the new challenger banks.
As the Minister knows, the five oligopoly banks in the UK currently have over 80% of all small and medium-sized enterprise bank accounts and personal current accounts. That means access to finance is very limited in respect of choice and types of finance, and as bank balance sheets are currently in a difficult position, it is extraordinarily hard for small businesses to get hold of the financing they need to grow, which in turn will help our economy to recover. So the Bill gives us a once-in-a-lifetime opportunity to ensure that the regulators are, in future, incentivised to ensure not only that banks do not fail, but that we encourage new entrants to the market. At the moment, many would-be bankers find that they are set enormous hurdles, such as having to set up a dealing room just to provide evidence of their ability to do so, yet at the end of an enormous obstacle course the FSA tells them that they cannot have a banking licence. What we cannot have in the future is the PRA and the FCA combining to make it as difficult or more difficult to encourage new entrants into the market. So I hope that the Minister will set out how the regulators of the future will not only tolerate, but encourage new competition.
Greg Clark
This excellent debate has covered a number of issues that colleagues from all parts of the House feel passionately about, and correctly so because they are of huge importance to all our constituents, especially the most vulnerable in our society.
In the short time available, I wish to address some of the points that have been made directly by hon. Members. The shadow spokesman, the hon. Member for Nottingham East (Chris Leslie), asked how the powers would be exercised by the Financial Conduct Authority. The powers come directly from the FCA’s remit, and he will be aware that the Bill establishes a far-reaching consumer protection objective. The overall objective is
“securing an appropriate degree of protection for consumers.”
The Bill goes into detail to require the FCA to consider the following: the different degree of risk to be tolerated by different types of consumers; the different needs of different types of consumers for the provision of information; and the general principle that those providing financial services should be expected to provide consumers with a level of care appropriate to their needs. I think that colleagues would recognise that this is a far-reaching objective which gives quite general powers to protect consumers, and it is right that that should be so.
The hon. Gentleman mentioned basic bank accounts, on which some progress continues to be made. There is no universal legal right to a basic bank account, but the industry guidance still stands. It states that if a consumer asks to open a basic bank account and meets the qualifying criteria, the firm should offer them an account and that banks can refuse to open an account for a customer only where the customer has a history of fraud or is an undischarged bankrupt. Those provisions continue.
Oral Answers to Questions
Debate between Greg Clark and Andrea Leadsom(11 years, 6 months ago)
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Andrea Leadsom (South Northamptonshire) (Con)
16. What recent steps he has taken to reform banking and to redirect banking fines to the public purse.
The Financial Secretary to the Treasury (Greg Clark)
The draft Banking Reform Bill outlining fundamental reforms to the banking sector was published last month and is undergoing pre-legislative scrutiny. We have tabled amendments to the Financial Services Bill which provide for fine revenues net of enforcement costs to go to the public purse in future. The Bill is being debated today in the House of Lords. Some £35 million of those fines received so far this year will be used to support armed forces charities.
Andrea Leadsom
Does the Minister agree that one of the best ways to ensure good practice in future is through more transparency and competition in the banking sector? Does he further agree that full bank account portability could be a great way to achieve that?
Greg Clark
I do agree that we need much more competition in the banking industry, and account portability can play a major role in advancing that. The Vickers commission looked at it, and my hon. Friend has been very vigorous in proposing ways in which she thinks it can be implemented. My hon. Friend the Economic Secretary and I will meet her to discuss how we can advance these proposals.
Oral Answers to Questions
Debate between Greg Clark and Andrea Leadsom(11 years, 7 months ago)
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Andrea Leadsom (South Northamptonshire) (Con)
I congratulate the Financial Secretary on his new post. Would he be willing—when the dust settles, and in the wake of the LIBOR scandal—to look again with fresh eyes at the possibilities of full bank account portability, which could be a game-changer for British banking, and try to get our economy going again once and for all?
The Financial Secretary to the Treasury (Greg Clark)
My hon. Friend is a distinguished member of the Treasury Committee. The Independent Commission on Banking has considered the matter, and has made some proposals for easier transfer between accounts. It has said that that should be under review, but I shall be happy to meet my hon. Friend, and I understand the case that she is making.
Oral Answers to Questions
Debate between Greg Clark and Andrea Leadsom
Andrea Leadsom (South Northamptonshire) (Con)
8. What discussions he has had with the Secretary of State for Transport on whether a precedent exists for a property bond to be established for homeowners whose properties are affected by High Speed 2.
The Minister of State, Department for Communities and Local Government (Greg Clark)
The Government’s approach to compensation for property owners was set out in the HS2 document, “Review of Property Issues”, which was published on 12 January by the Secretary of State for Transport, who, together with colleagues, was consulted in the usual way before publication.
Andrea Leadsom
I thank my right hon. Friend for his answer. Does he agree that as there have already been two years of property blight, which potentially remains until 2026, whereby people are unable to sell their houses normally, it might be necessary to consider a property bond to normalise the property market? Will he reassure me that if that were the case, his Department would not veto such a decision on the grounds that it might create a precedent for other national infrastructure projects?
Greg Clark
My hon. Friend, who is a great campaigner on this issue, knows from the answer that the Transport Secretary gave her in the previous session of oral questions that my right hon. Friend recognises the impact that the plans for HS2 are having on residents along the route of the line and has given an assurance that she will make sure that the package is fair to all those residents.
Localism Bill
Debate between Greg Clark and Andrea Leadsom(12 years, 11 months ago)
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Greg Clark
We have a national system for consenting to major infrastructure projects. I have had meetings with Welsh Assembly Ministers on that and no doubt we will have meetings following the election of the new Assembly. I am very happy to meet the hon. Gentleman and Ministers from the Welsh Assembly Government to discuss that point.
As Members know, the main features of the Bill are to establish a general power of competence for local government, to increase opportunities for members of the public to participate directly in local democracy, especially via referendums, to vest in communities new rights to challenge the way in which services are provided and to own assets of importance to their communities, to reform the planning system to remove the regional tier, to permit neighbourhood planning and to establish a new duty to co-operate at the strategic level. We have clarified the functioning of local democracy in London with a degree of consent, as was pointed out earlier today, and we have introduced new flexibilities into the housing system so as to house people more reliably.
At the beginning of our deliberations, on Second Reading and in Committee, I gave a commitment to respond positively to constructive debate and I hope that the House believes I have done so. An hon. Member was kind enough to mention yesterday that I have taken a listening approach, and I expect that to continue when the Bill goes to another place. I have not regarded my task as being simply to carry the Bill through Committee unamended and without influence from the House, and that continues to be my view as it progresses through Parliament.
Thanks to our proceedings in Committee and in the past couple of days we have introduced safeguards over the use of the general power of competence and we have strengthened the duty to co-operate. We have substantially improved the provisions on neighbourhood planning to make them more open and more representative and allow them to cross neighbourhood boundaries. Those are some examples of the progress that we have been able to make.
In a centralised system it is necessary, however paradoxical it may seem, for the centre to lead on localist reform. It does not happen without a positive programme, but the centre should do so in a spirit of co-operation. I will disclose to the shadow Chancellor, who I know is fond of his dividing lines, that the discussions that I have had with the Opposition Front-Bench team have been very constructive. Even where we have not been able to agree totally, we have been able to reach a better understanding of each other’s position and to make improvements as a result.
I had hoped that that might be reflected in both sides being able to support the Bill tonight. We will see in a few minutes, but I am led to believe that that might not be the case, and I regret that. Although we may disagree on some of the particular measures to implement the vision of localism, I think localism is a cause whose time has come. It attracts support from across the political divide. What unites us in this place on localism is greater than our points of difference, which the House of Lords will no doubt continue to pursue.
Greg Clark
I will not, because I made a commitment that Members would be free to go to our late colleague’s funeral.
It is a shame that, although the Opposition say they support localism, they have hit upon an ingenious solution to oppose it in practice, which is to seize on any instance in which central Government intervene to pass down power and to focus on that intervention, rather than on the transfer of power which is its purpose. But the blindingly obvious fact is that the Bill is overwhelmingly decentralising. It favours the local over the central. Like the movement en masse on a Thursday afternoon of Members from this place to their constituencies, so the effect of the Bill is to see power leave Westminster and go where it is better vested, in local communities, and to give them their head.
This is a significant Bill. I hope we will make continued progress in the House of Lords. I believe that we will look back in 10, 20 or 50 years and see today as a turning point. The tide of centralisation has turned, not just because of the Government’s decentralising measures, but because communities across the country are demanding change. That change is already under way. The Bill will speed up the process and establish it in law. For its part in that change, I commend the Bill to the House.