Draft Northern Ireland Banknote (Designation of Authorised Bank) Regulations 2020

John Glen Excerpts

Wednesday 24th June 2020 General Committees

[The Chair]

Anyone who wishes to remove their jacket may do so.

[The Economic Secretary to the Treasury (John Glen)]

I beg to move,

That the Committee has considered the draft Northern Ireland Banknote (Designation of Authorised Bank) Regulations 2020.

It is a pleasure to serve under your chairmanship, Mr Mundell. In a rather unique arrangement, the UK is one of a handful of countries where commercial banks are authorised to issue banknotes alongside the central bank. Currently, seven banks are permitted to issue commercial banknotes in the UK: four in Northern Ireland and three in Scotland. That represents a tradition with cultural importance that the Government support.

One of the issuing banks in Northern Ireland, Ulster Bank, is part of the Royal Bank of Scotland Group and a direct subsidiary of NatWest bank. As part of a planned restructure, RBS Group will remove Ulster Bank’s banking licence later this year and transfer it to the NatWest legal entity. This instrument has been laid before the Committee to ensure that Ulster Bank-branded banknotes can continue to be issued.

As is required by the Banking Act 2009, the instrument will transfer the authority of issuance from Ulster Bank to NatWest, with the consent of the Bank of England. It is a routine procedure and it has been carried out before: in 2017, the authority to issue RBS-branded banknotes in Scotland was transferred between two entities of the RBS Group. Importantly, the major stakeholders in the change, RBS Group and the Bank of England, have remained in contact with the Government throughout the process and are supportive of the measures before the Committee.

In summary, the instrument ensures that banknotes already printed or issued by Ulster Bank will remain valid once this structural change to RBS Group has taken place. Furthermore, once the authority for these notes has been transferred to NatWest, it will be able to print and issue banknotes with Ulster Bank branding. This instrument ensures that all those holding Ulster Bank banknotes can remain confident in their value. I hope colleagues will join me in supporting these regulations. I commend them to the Committee.

--- Later in debate ---

[John Glen]

I would be very happy to address the points made by the right hon. Member for Wolverhampton South East, and then the more substantive points made by the hon. Member for North Antrim. As the right hon. Member for Wolverhampton South East says, this is essentially an administrative change, and there will be no change in the validity of the notes in question. I am glad that he was not tempted to discuss the value of the pound. I can confirm that in taking any measures, we always take account of the interests of the whole of the United Kingdom; that principle will always guide the Chancellor and Ministers in the Treasury.

Among the range of issues that the hon. Member for North Antrim raised was the question of a review. There are no plans for a review. He cites the issue of commercial advantage. It is for individual banks to determine the design of a note; typically, they pick designs that are non-controversial. As he pointed out clearly, Northern Ireland’s countryside and economy have enormous merits and offer powerful symbols for a bank.

On the wider issue of access to cash, some real challenges have been thrown up by the covid experience, and we are working on them. We have clearly set out our intention to legislate, and there is a live UK Finance and LINK scheme looking at access to cash. I am pleased to confirm that Danske Bank, Ulster Bank and the Bank of Ireland have been involved in the provision of bounce-back loans. They have been active participants in conversations with the Chancellor and me.

The Government have no say whatever on the artwork featured on notes. On promoting the notes as currency that can be used in London, the Association of Commercial Banknote Issuers has a marketing endeavour to promote different types of notes. Northern Ireland bank notes are legal currency and usable, but sometimes people are not familiar with them. There is nothing the Government can do about that.

As I have set out, this statutory instrument will ensure that the long-standing practice of commercial note issuance in Northern Ireland continues under the Ulster Bank brand. The SI makes a routine procedural change, but it represents an important process in maintaining the public’s confidence in the value of the notes they hold, which is an important aspect of the economy. I hope that the Committee has found this afternoon’s sitting informative, and that it will support the regulations.

Question put and agreed to.