Banking Reform

Debate between Mark Field and Mark Hoban

Thursday 14th June 2012 Commons Chamber

[Mr Hoban]

What we have been clear about, following the Vickers proposals on the timing of implementation—Vickers suggested that the measures should be implemented by 2019—is that we are taking steps now to ensure that there is a framework in place, so that banks understand what the rules will be and can respond. Today’s White Paper is part of that, and we will produce a draft Bill later, which will be subject to pre-legislative scrutiny as well. There will therefore be a transparent process to ensure that we implement the proposals. The proposals that Sir John Vickers made, such as ring-fencing, are vital to ensure the stability of the banking system and the stability of the economy.

[Mark Field (Cities of London and Westminster) (Con)]

In the 14 months since the publication of John Vickers’s interim report, which other major global financial centres have gone down the route of proposing either a ring fence along these lines or the gold-plating of capital requirements, which is also proposed, on top of Basel III, which was supposed to harmonise capital arrangements?

[Mr Hoban]

A number of countries have argued for the freedom to go further and impose higher capital surcharges—Switzerland is one and Sweden, which has introduced higher capital surcharges, is another. It is our responsibility to ensure that we protect the stability of the UK economy and the interests of the taxpayer, and respond to the structure of the banking system in the UK. Bank balance sheets in the UK are many times larger than our economy. We are much more exposed to risk. It is therefore right that we should take actions in the UK that help to protect the economy and the taxpayer, which is why we are introducing these proposals today.

Banking (Responsibility and Reform)

Debate between Mark Field and Mark Hoban

Tuesday 7th February 2012 Commons Chamber

[Mr Hoban]

Project Merlin set lending targets for banks. At the point of the third quarter, the targets for lending to all business had been achieved and those for lending to small and medium-sized enterprises had just been missed. Project Merlin therefore has certainly achieved in respect of its goal of getting credit flowing to the economy. I agree that businesses face challenges in borrowing money. They need to have a viable plan, and we need to work more closely with businesses to ensure that the support is in place to enable them to make successful applications for bank funding.

[Mark Field]

We have a very large holding in RBS and we clearly will not be divesting ourselves of much of that holding for probably the next 10 years or so. What thought has the Minister given to using RBS, with its expertise and huge distribution network, as a mechanism for credit easing? I am sure that all Members hear from business people that these problems are not going to be solved unless we ensure that our SMEs have access to the capital that they so desperately need.

[Mr Hoban]

The national loan guarantee scheme will be open to all banks, including RBS, Lloyds, Barclays and HSBC, and we are currently taking that work forward.

Under the last Government, we witnessed the growth of the bonus culture, where bonuses could be paid in cash, in one year, and were never clawed back in the event of failure. We are changing that culture. Bonuses under the Financial Services Authority code are paid out over at least three years, in shares, not just cash, and failure can be punished by clawing back bonuses, and at both RBS and Lloyds cash bonuses will again be limited to £2,000.

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[Mr Hoban]

Well, one thing is for certain: I was not designing the contracts that gave the big payouts.

It is time that the banking sector demonstrated leadership, and the coming bonus round is another chance for it to demonstrate leadership on pay. As we empower shareholders to drive remuneration policy, the banking sector has to be at the vanguard of the debate on responsible executive pay.

[Mark Field]

The Minister is being admirably forward-looking in his speech by trying to present where we should go for the future rather than focusing too much on some of the battles of the past. One of the biggest concerns in this area is about institutional shareholders who have large stakes in FTSE 250 companies and in our banks. How are we going to embolden them to use the notional power they have as shareholders? Many of them have 5%, 6% or 7% shareholdings and could do something. What is going to ensure that there is a culture of change such that they become shareholder activists rather than shareholders who sit on their hands and their dividends year on year?

[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.

Northern Rock

Debate between Mark Field and Mark Hoban

Monday 21st November 2011 Commons Chamber

[Mr Hoban]

What this deal does is preserve jobs in the north-east. Virgin is committed to not going beyond the existing management’s plans for compulsory redundancies. The growth of Northern Rock will come off the back of how well Virgin Money does in exploiting new markets and new opportunities. I think this is a good deal for the employees of Northern Rock. That is why staff cheered when the deal was announced on Thursday at Northern Rock’s offices in Gosforth. They wanted an end to the uncertainty that has hung over the business for the past four years. We have delivered that for them.

[Mark Field (Cities of London and Westminster) (Con)]

I accept that any Government should, in the Minister’s words, be looking to “get out” of the business of banking. Presumably, the fact that we have done this deal now rather than wait until the end of 2013 is due to the expectation of a considerable deterioration in the value of all the banks, including RBS and Lloyds banking group, where we have far more significant holdings. Will the Minister give an indication of the time period during which we might be getting out of the business of those two banks?

[Mr Hoban]

The decision to dispose of Northern Rock was taken in isolation from consideration of other banks. A particular set of circumstances appeared, which enabled us to sell while providing a good deal for the taxpayer, a good deal for the future of Northern Rock and a new competitor on the high street. That is why we sold Northern Rock to Virgin Money. I think it is a good deal for everyone concerned.

Savings Accounts and Health in Pregnancy Grant Bill

Debate between Mark Field and Mark Hoban

Tuesday 26th October 2010 Commons Chamber

[Mr Hoban]

Of course the hon. Lady should really address that to her colleagues who were Treasury Ministers when the grant was introduced, as they could have chosen to target it more closely. Other grants that are available are targeted at women in the early stages of pregnancy and the Sure Start maternity grant is in place.

[Mr Mark Field (Cities of London and Westminster) (Con)]

I accept the honourable way in which a number of Labour Members have stood up and are concerned, but does this not show that once we give any benefits they are taken for granted by whoever ends up receiving them? Does the Minister recognise, and will he confirm, that the Bill deals with only a small number of the grants that could be looked at by the Treasury? We have to get this deficit down and his opening comments have made a perfectly valid point. Will he confirm that he might well have examined a considerable number of other grants in this Bill, but it deals with only a small number?

[Mr Hoban]

My hon. Friend makes an important point. The Government have had to go through this challenging spending process with care, examining both spending and welfare decisions. We have had to take decisions that are not straightforward, not easy and not ones that we would have wanted to take, but we have had to do so because of the financial problem that we inherited from our predecessors.

Let me give another example of targeted support that is available, because the hon. Member for Washington and Sunderland West (Mrs Hodgson) talked about means-tested grants. I am sure that she will be aware of the Healthy Start scheme, which is a statutory scheme providing a nutritional safety net and encouragement for breastfeeding and healthy eating to more than 500,000 pregnant women and to children under the age of four in low-income and disadvantaged families across the UK. The scheme is tied carefully because, unlike the health in pregnancy grant, it provides vouchers for people to put towards the cost of milk, fresh fruit and vegetables, and infant formula milk at 30,000 retail outlets. So measures are in place to support the groups that she is most concerned about, and it is right that that is so. The health in pregnancy grant is unfocused and untargeted.

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[Mr Hoban]

My hon. Friend makes an important point. I would say that the challenge is as follows. Other schemes are in place to help families on low incomes to deal with some of the issues around childbirth. I have talked about the vouchers that are available to help with nutrition and we have the Sure Start maternity grant, too, which is designed to help low to middle-income working families and out-of-work families to cover the one-off costs associated with having a new baby. There are measures out there, but, yes, they are restricted. The Sure Start maternity grant will apply to the first child—it is a grant of up to £500—but, of course, the problem is that the previous Government left us with a huge debt that we need to tackle and to pay back. If we put off these decisions, as the hon. Friends of the hon. Member for Leicester West (Liz Kendall) would want us to, it would be the poor who would pay the most. It would be those children who would be saddled with the debt that the previous Government left hanging around their necks.

[Mr Mark Field]

I have a two-and-a-half-year-old son, so I have had the benefit of some of these universal benefits. I must say that in these straitened economic times it makes sense for things to be targeted in a much more effective way. That is all that we are trying to do, and it is regrettable to see the way in which the Minister is being harangued by Opposition Members. We should be targeting these benefits; they should not be universal. This is entirely the right way forward.

[Mr Hoban]

My hon. Friend makes an important point. We need to look very carefully at where money is spent and ensure that it is spent wisely in pursuit of improving the life chances of children and young people. That is why, for example, our right hon. Friend the Deputy Prime Minister announced recently that we will extend to all disadvantaged two-year-olds 15 hours of free nursery care. That is a very targeted way of helping children from the most disadvantaged backgrounds to achieve their life chances. We have seen the pupil premium introduced, with £2.5 billion a year to help children from disadvantaged families. The coalition Government have set out plenty of measures that are focused on helping the most vulnerable in society. That is what we need to do in the light of this financial crisis: to target measures on those who need them the most, rather than simply opposing every cut for the sake of it, as the Opposition are trying to do.

Equitable Life

Debate between Mark Field and Mark Hoban

Thursday 22nd July 2010 Commons Chamber

[Mr Hoban]

I pay tribute to the hon. Gentleman’s excellent work as one of the joint chairmen of the all-party group. I note that the shadow Chief Secretary spoke to its members early this year, and I am happy to do the same. We have a good story to tell and I will not turn down any opportunities to tell it.

[Mr Mark Field (Cities of London and Westminster) (Con)]

Does the Financial Secretary feel bound by the 20 to 25% cap that Sir John seems to have plucked from the sky, or does he share my view that that flies entirely in the face of the transparency that the Government are trying to achieve for Equitable Life policyholders?

[Mr Hoban]

The debate is one of proportion rather than principle. In its representations on the matter, EMAG accepted that some policyholders would have stayed with Equitable Life or invested in it, despite knowing that it was not properly regulated. Indeed, several people joined Equitable Life quite late on, when its problems were well known, so there is some sense to the approach. The debate is about proportion, and I am prepared to take representations on that.

Offshore Financial Centres

Debate between Mark Field and Mark Hoban

Wednesday 21st July 2010 Westminster Hall

[Mr Field]

I am also keen to ensure that the point is made robustly about capital flows. We have had a credit crunch quite recently and we may be facing another one with all the sovereign default concerns in Europe. The free movement and liquidity provided by IFCs is key. That case needs to be made robustly at a time when others are dismissive of offshore financial centres.

[Mr Hoban]

Indeed. My hon. Friend makes an important point. Adherence to the standards makes the case that offshore financial centres should be part of the global network of financial centres and that they are valued. It is also important to ensure that when people talk about offshore financial centres, the debate is proportionate and evidence based. That is the best basis for debate in the UK, EU and G20. My hon. Friend made important points in that respect in his remarks.

The Foot review recommended that Crown dependencies and overseas territories should have to meet key international standards on tax information exchange, financial regulation, countering the financing of terrorism and anti-money laundering. The review strongly recommended that British Crown dependencies and overseas territories need to diversify their tax bases in a way that helps to secure their long-term economic sustainability. My hon. Friend made the argument that a number of territories had already done that and had withstood the financial crisis.