Oral Answers to Questions

Mark Garnier Excerpts

Tuesday 9th September 2025 Commons Chamber

[Mr Speaker]

I call the shadow Economic Secretary.

[Mark Garnier (Wyre Forest) (Con)]

I also congratulate the hon. Member on her elevation to Economic Secretary to the Treasury; I am sure she will do very well.

The UK banking sector provides a valuable service to our economy, keeping money in circulation, funding business and mortgages and all the rest of it. The financial services sector is the UK’s biggest export sector. According to UK Finance, UK banks generate around £45 billion in tax every year, but because of things like the bank levy, UK banks now pay an effective rate of around 46%, which is higher than competitors in New York, Frankfurt, Dublin and Singapore. The Chancellor of the Exchequer has managed to dig her own £30 billion black hole in the economy, but can the Minister reassure the City of London and this House that there are no plans to increase taxes on our banking and wider financial services sector in the upcoming Budget in November?

[Mr Speaker]

Order. The markets will be closed soon. I call the Minister.

Draft Markets in Financial Instruments (Miscellaneous Amendments) Regulations 2025 Draft Financial Services and Markets Act 2023 (Capital Buffers and Macro-prudential Measures) (Consequential Amendments) Regulations 2025

Mark Garnier Excerpts

Monday 8th September 2025 General Committees

[Mark Garnier (Wyre Forest) (Con)]

It is a great pleasure to speak in this incredibly dry debate about incredibly technical aspects of regulation. I am only disappointed not to see the new Economic Secretary to the Treasury make her debut today, although it is always nice to see the Chief Secretary.

[James Murray]

It’s too much excitement for day one.

[Mark Garnier]

Quite right. The hon. Gentleman’s leader is with the parliamentary Labour party right now, I think, which will be very exciting.

The regulations are technical, dry but welcome changes to the detailed firm-facing regulations and definitions in the MiFID organisational regulations and capital buffers regime. They follow the comprehensive changes to regulation and tax that the last Government introduced through the Edinburgh reforms, while helping to implement the announcements the Chancellor set out in her 2024 Mansion House speech.

We on the Conservative Benches will always support reforms that aim to make the UK financial market more competitive and growth-oriented. Our financial services are our biggest export and it is vital that we do everything we can to ensure we keep them competitive with their counterparts in Europe and the rest of the world, while at the same time ensuring the UK is a principal destination for international capital. Let me be clear that we support the considered approach being presented, which will allow us to embrace the regulatory autonomy that Brexit provides while keeping us relatively aligned to EU frameworks such as MiFID. That is important because although we need to innovate to maintain our competitive advantage, we must equally avoid trying to reinvent the wheel on financial services regulation.

I push the Minister to look at the wider regulatory burden that MiFID II has placed on UK financial firms. Many in the sector think the reporting obligations, investor protection rules and governance standards have imposed significant compliance costs and operational complexity. Although the intention is noble, we can over-regulate and we must remember that risk will always be something that we cannot remove completely. That was highlighted in a submission by UK Finance to a recent House of Lords Committee inquiry that showed that the rules have constrained the City’s ability to innovate and grow capital markets.

Although we welcome the regulations, the Government now have the freedom to go further and simplify the onerous rules MiFID II introduced. Doing so would unlock growth in our financial services sector and help us to regain ground lost to competing hubs such as New York and to emerging financial centres in the EU. Nevertheless, we have to accept that the EU is our largest trading partner, so it is right that the changes do not significantly deviate from what was in place before. As I said, the UK deviating to a new regulatory regime would not necessarily help our cause.

We also welcome the fact that the changes will help to make the UK more responsive to emerging trends and risks. That is crucial as we seek to be competitive in an ever more volatile world and it would be remiss of me not to mention that many stakeholders feel the regulatory burden placed on them by the FCA and PRA is already too high and, in some instances, unnecessary. Although the changes should not increase that burden significantly, I hope the Minister and Treasury officials will be mindful of that when making changes in the future.

All together, we broadly welcome the technical changes that the regulations introduce as they will help to streamline capital market regulation and ensure legal coherence. I was going to ask some questions, but I think in the interests of time we can probably pass on that—we do not want to keep anybody waiting. I will leave it at that.

Financial Services Reform

Mark Garnier Excerpts

Wednesday 16th July 2025 Commons Chamber

[Mark Garnier (Wyre Forest) (Con)]

I am very grateful to the Minister for advance sight of her statement. There is much in these Leeds reforms—many of which were formerly known as the Edinburgh reforms—that can be welcomed, and some of the details were laid out by the Chancellor in her Mansion House speech last night.

The Conservatives will always support reforms to our financial sector that ensure that the City of London remains a global powerhouse, but the Chancellor’s rhetoric last night about growth and stability obscures the truth of this Government’s record of delivery. Inflation is now at 3.6%—the highest in the G7—and growth has all but stalled. Despite yesterday’s fanfare for reform, the reality is that having run short on other ideas, the Government are now forced to turn once again to the City of London for inspiration—a last throw of the dice, hoping that it will provide an engine for the growth that their policies are stifling.

Last night the Chancellor described her Government as a “beacon of stability”, but let us not forget the actual legacy that was handed over to her. We enjoyed near record levels of employment. Unemployment was at historic lows, and inflation was under control. That is the stable foundation on which this Government were handed the keys, yet they now preside over instability. The Office for Budget Responsibility, the OECD and the Bank of England have all sounded the alarm that our growth prospects have collapsed. The Government claim to be cutting red tape for industry, but let us remember that their plan to make work pay would in fact burden employers with over 70 new regulations, reminiscent of the 1970s.

The Chancellor’s talk of unleashing the power of the City comes even as her party threatens to smother businesses in paperwork and expense. When it comes to proposals for financial services, the Conservatives welcome much that gives the sector confidence and clarity, but warm words must be matched by careful delivery. On reforms to the Financial Ombudsman Service, there is agreement that it should return to its impartial roots as a fast and effective dispute resolution service, not a quasi-regulator, but so many business and consumers are awaiting clarity, so can the Minister confirm whether these changes will limit the FOS’s power to make backdated legal determinations, and what impact will the reforms have on ongoing legal proceedings, such as the crucial car finance case before the Supreme Court?

Streamlining the approach of the FCA and the PRA may remove unnecessary friction, but we must ensure that this does not become window dressing while critical challenges remain. The FCA and the PRA must accept that stability in the markets is not the only way to deliver growth. Both their objectives must be aligned and equally ambitious in their drive for reform.

The Chancellor trumpeted reforms to ISAs, including new rules for long-term asset funds, which we welcome if that broadens access to higher-return assets for ordinary savers, but there is still no certainty on the future of the cash ISA. Without clarity, the Government risk undermining their own ambition to promote home ownership and inclusive investment, which again was trumpeted by the Chancellor during her Mansion House speech last night.

On capital investment policy, we welcome MREL reform, which was a change I championed during the recent passage of the Bank Resolution (Recapitalisation) Act 2025. This will help challenger banks to compete and expand lending.

We cautiously welcome the Government’s review of ringfencing rules, but will they confirm that all options are being considered, including alignment with the US and the EU, which, as the Minister knows, never implemented ringfencing rules?

More broadly, the history of the last Labour Government reminds us that good intentions are never enough. The Financial Services and Markets Act 2000, introduced by the then Chancellor, along with the tripartite system, was well conceived but badly implemented, contributing to the events of the 2008 financial crisis. It falls to this Government now to demonstrate that they will not repeat those mistakes.

Finally, at Mansion House last night the Chancellor missed a crucial opportunity to be straight with the British people and rule out further tax rises. Will the Minister guarantee that working families and businesses will not face more tax increases? Will she rule out any further surprise raids on the British taxpayer?

Britain’s financial services sector has always thrived when reforms are clear. The test of these reforms will come when the full details emerge, but ultimately growth will come only when the Chancellor realises that hard-working people and businesses across the country are the real engines of economic growth.

[Emma Reynolds]

Well, half of that was all right, I suppose. I do want to start constructively and thank the hon. Member for his welcome for some of the reforms. I will answer some of his specific questions before I come to the wider points.

On the Financial Ombudsman Service, we have set out in great detail what we will do. As he will be aware, some of the changes require primary legislation. We are proposing an absolute time limit of 10 years, but with discretion for the FCA to give longer periods in the case of products with a longer lifetime. I cannot comment on the ongoing car finance issue, which as he knows is working its way through the courts.

The hon. Member talked about the regulators’ different objectives. We have been very clear with the regulators that we expect them to embed their secondary objective to facilitate economic growth and competitiveness while obviously complying with their other objectives. He will see that in the remit letters that the Chancellor sent to the regulators at the last Mansion House speech last November.

On ISAs, I welcome what the hon. Member said about long-term asset funds, which we think will unlock great opportunities for savers. We continue to consider reform to ISAs. We would like to ensure that more people have the opportunity and confidence to invest, which is why we hope that targeted support, which will be introduced by firms by the end of this tax year—we have worked at pace on this—will really shift the dial and give people that confidence to invest.

I think the hon. Member said he was in favour of what we are doing on MREL, and I know that he agreed with the Bank Resolution (Recapitalisation) Act, which we put through the House and is coming into force today. I thank him for his support on that.

On ringfencing, we have detailed which areas we will look at. I am happy to write to him further on that, but one area, for example, is sharing resources across the ringfenced and non-ringfenced parts of banks. We want to ensure that we strike the right balance between growth and stability.

I turn to the hon. Member’s points about economic stability. I will take no lessons from the Conservatives—I hate to say it. We had inflation at 11%, people paying extremely high mortgage rates and debt rising year after year. The only thing that was stable under their Government was wages, which were flatlining.

Oral Answers to Questions

Mark Garnier Excerpts

Tuesday 1st July 2025 Commons Chamber

[Mark Garnier (Wyre Forest) (Con)]

In her Budget last year, the Chancellor tucked away about £10 billion over the next couple of years from reform to the non-dom tax regime. It is important to remember that the OBR said in its fiscal outlook that that figure was “highly uncertain”, and a high-level survey by Oxford Economics found that fully two thirds of non-doms are considering leaving the country in the next couple years as a direct result of those policies. That implies not an increase of £10 billion but a decrease of £8 billion. The Chancellor has created a fiscal black hole of £18 billion with just one policy alone. In this week of heroic U-turns from the Government Front Bench, will the Minister confirm whether they will be axing this tax? When will it finally be condemned to the history books?

[James Murray]

I am not really sure whether there was a policy suggestion in that comment or not. As the shadow Minister will know, the fiscal black hole that we had to address when we won the general election was the £22 billion black hole that the Conservatives left after their mismanagement of the economy. As I said, the Office for Budget Responsibility has confirmed that our reforms to the non-dom regime, with our removal of non-dom tax status, will raise £33.8 billion over the five years of the forecast. It is the OBR’s figures that we will trust in that regard.

Access to Banking Hubs: Hertfordshire

Mark Garnier Excerpts

Wednesday 25th June 2025 Westminster Hall

[Mark Garnier (Wyre Forest) (Con)]

It is a great pleasure to serve under your talented leadership, Sir Desmond. It is very good to be here. I also congratulate my hon. Friend the Member for South West Hertfordshire (Mr Mohindra). This may be his debut debate in Westminster Hall, but I am sure that it is the first of many. He has always been a champion for his constituency and I am surprised that he has not been here a thousand times before. As he eloquently put it in his opening remarks, banking hubs show why banking must remain at the heart of all our communities, and we should cherish the role of banks in our society.

I have long been a huge fan of the banks, having been on the banking commission, which was a great opportunity to see just how important they are. We all talk about their importance for banking local businesses and local communities, but banks perform two extraordinarily complicated functions. The first is taking money from where it has accumulated and delivering it to where it is needed—for loans for businesses and all the rest. But they also do something else—they are almost like Doctor Who in their ability to transform time. They take money that has been put on deposit overnight and turn it into a 25-year mortgage that pays for all our constituents to buy their homes and bring up their families. We must never forget how incredibly important banks are.

The previous Government recognised the importance of maintaining essential banking services as a foundation for public confidence in the sector. We provided a system of free and convenient access to banking through Post Office’s branch network. The banking framework partnership between Post Office and more than 30 of the UK’s banks and building societies means that consumers and businesses can access banking services through the Post Office network where there is not an alternative bank. Post Office now has more branches than all the banks and building societies combined. I hope the Minister agrees that the banking framework was a real success story—one of many success stories, by the way—of the previous Government.

However, we in the previous Government also recognised that post offices do not completely fill the hole left by the loss of the high street bank. That is why we also introduced banking hubs, as we have heard today, which have been a successful concept where they have been delivered. I welcome the fact that the new Government have now embraced the idea and set an ambition to deliver hubs across the country by 2030—I understood it to be 500, although the Liberal Democrat spokesperson, the hon. Member for St Albans (Daisy Cooper), said that it was 350, so it would be helpful if the Minister clarified exactly how many the Government are hoping to have.

The new hubs, whether there are 350 or 500, are a new solution to meet wider banking needs, particularly in communities where the last bank branch has closed. Members have made many eloquent points about the decline of banking services in their constituencies. In my constituency, adjacent to that of my hon. Friend the Member for South Shropshire (Stuart Anderson), Stourport-on-Severn, my second biggest town, has just one bank left—a TSB—and Bewdley, the third biggest town, now has no banks at all.

I hope the Minister will address how Members could be more involved in deciding where new banking hubs will be located—that is an important point. I am sure that all Members would like to have input and make representations to get these services in every constituency. Local knowledge and community engagement must be at the heart of these decisions. That is why Members of Parliament, as the elected representatives of these communities, must be part of that process.

Banking is rightly a commercial sector, so I would also like to hear how the Minister can encourage banks to deliver their own innovations. For instance, the multi-bank kiosk proposed by the Building Societies Association has already been piloted. With a cost of just one third of a traditional banking hub, the kiosks offer a cost-effective, building society-led solution that could work alongside banking hubs in areas that have a strong mutual presence but lack a high street bank. Will the Government support the expansion of the kiosks and encourage more private sector innovation alongside banking hubs?

I do not want to hold the room for too long, so I will draw my words to a close. Today’s debate and the recent Backbench Business debate on high street banks have shown just how much Members support high street banking services. I look forward to hearing from the Minister how the Government will support our high street banking services. Once more, I thank my hon. Friend the Member for South West Hertfordshire for the extraordinary hard work he does for his constituents.

Bank Closures and Banking Hubs

Mark Garnier Excerpts

Thursday 5th June 2025 Commons Chamber

[Mark Garnier (Wyre Forest) (Con)]

I also congratulate the hon. Member for Blyth and Ashington (Ian Lavery) and my right hon. Friend the Member for Tatton (Esther McVey) on securing this debate.

A great strength of feeling about banks has been evident in this debate, and it is important to remember the importance of banks not just to our communities but to the wider economy. Banks provide services for businesses and individuals, but they also provide two other fundamental services. First, banks and building societies take money from where it has accumulated and distribute it to where it is needed for investment in infrastructure, businesses and jobs. Secondly, banks take overnight deposits and turn them into 25-year mortgages—so that our constituents can create a home and build a family—which is quite difficult for banks to do.

The hon. Member for Blyth and Ashington made a couple of important points that I would like to address. The first was about the profits that banks make, and the second was about the policing of banks and the fact that banks apparently police themselves.

Following the 2008 financial crisis, there was obviously a huge number of problems in the banking system. The Financial Services Act 2012 created two regulators, the Financial Conduct Authority and the Prudential Regulation Authority, both of which—and particularly the PRA—are responsible for making sure that our banking system is sound. Banks need to have strong balance sheets, and to do that they need to make profits to a certain extent. I agree that some of those profits look obscene, and perhaps some banks could put some of that money back into our communities. None the less, if banks spend their money unwisely, we potentially run the risk of another banking crisis.

Along with the right hon. Member for Wolverhampton South East (Pat McFadden), I am one of only two Members left in this House who sat on the Parliamentary Commission on Banking Standards from 2013 to 2015. Our work on that commission underlines the importance of banks in modern life, about which we have heard so much today. The commission found that holding and operating a bank account is now essential to participate in society and the economy, whether it is receiving wages, paying bills or accessing benefits. But we also found that people’s views on banks are shaped by their direct experiences. The more a person knows their bank, the more likely they are to have confidence in it. That means that if banks want to retain their customers, they must provide good, wide-ranging services. An inability to access banking services risks eroding that trust and confidence, as we have heard today, especially among the most vulnerable.

[David Mundell]

Does my hon. Friend understand that people are very angry about bank closures, and about the fact they feel that the banks just do not listen to them when they go through some consultation exercise? That is why in Moffat, at 2 pm tomorrow, there will be a protest outside the closing Bank of Scotland.

[Mark Garnier]

I agree 100%. My right hon. Friend is absolutely right.

Let us be clear that the decline of our high streets and the decline of bank branches have run concurrently as behaviour has changed over the last couple of decades and retail activity has increasingly moved online. Banks are, of course, commercial entities, and their decisions to close branches are often driven by commercial imperatives, which is not necessarily what we want to hear in this debate. Falling footfall, the rise of digital banking and the need to be cost-effective are just some of those reasons.

As we have heard so often, there are now just 3,000 bank branches remaining in the UK, and that number is expected to drop even further in coming years. ATM numbers, especially free-to-use machines, have also declined. Only 14% of payments in the UK were made with cash in 2022, and withdrawals from the Link network are down 50% on pre-covid levels.

[Sir John Hayes]

The clue is in the phrase “banking service”. It is about providing a service to people. As the hon. Member for Lichfield (Dave Robertson) said, banks dignify communities too. This is about personal interactions, trust and building relationships. That is what we do when we go into a bank, and we could never do that in the same way online.

[Mark Garnier]

My right hon. Friend makes a good point. This is about face-to-face relationships, not something done through an app.

Behind the statistics I cited are real people and real communities. The digitally excluded, older people, those in poor health and people with lower financial resilience mostly rely on cash. Small businesses and rural communities are hard hit. The question for Members who want to compel banks to keep branches open is how much digital-first customers should be charged to retain loss-making branches—notwithstanding, of course, that profit question.

Of course, the answer cannot simply be to do nothing and to walk away from our responsibilities to those who are left behind. The previous Government recognised the importance of maintaining essential banking services as a foundation for public confidence in this sector. Through the post office network, we provided a system of free and convenient access to banking services, and the banking framework partnership between the Post Office and over 30 of the UK’s banks and building societies means consumers and businesses can access basic banking services through the post office network. The Post Office now has more branches than all the banks and building societies combined, and according to the Financial Conduct Authority, post office branches make up more than 66% of all branch-based cash access points in the UK. The last Government also introduced banking hubs, which we have heard a great deal about.

I am conscious of time, and I do not want to incur your wrath, Madam Deputy Speaker, so although I have a lot more to say, I think it would be prudent for me to step aside and allow the Minister to face up to the passion about this issue from Members representing their communities.

Draft Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025

Mark Garnier Excerpts

Wednesday 4th June 2025 General Committees

[Mark Garnier (Wyre Forest) (Con)]

It is a pleasure to serve under you, Mr Mundell. Congratulations on your tennis match this morning; I am glad it went well. Lawn tennis—you can’t beat it.

This SI started its life in the previous Government and has come through more or less untouched. It is almost as if the general election never happened—it is extraordinary; we seem to have swapped sides somehow. On the basis that the SI was started in the previous Government, the Opposition will support the new rules.

It is absolutely right that people and businesses have access to bank accounts. While the Farage-NatWest scandal brought the issue of debanking into the national spotlight, the statistics show that the scale of the problem is far wider. Nearly 400,000 bank accounts were closed last year, according to figures obtained by The Daily Telegraph via a freedom of information request. Many of those closures will of course have been for legitimate reasons such as financial crime, fraud or dormant accounts. For people and businesses that are impacted, often unfairly, the new rules will be very helpful. These are sensible steps that will improve transparency and give customers more time to find alternatives if their accounts are closed.

However, the deal does not include a statutory review clause, which is possibly a mistake, and there has rightly been feedback. David Hamilton, a partner at Howard Kennedy, warns:

“If customer exits are more onerous in terms of disclosures and potential FOS challenges, it may give banks pause to consider whether they want to onboard certain types of customers at all.”

In other words, there is a real risk that the banks will simply become more cautious at the account opening stage, and they could make it harder for those perceived as higher risk, such as politically exposed persons—everybody in this room—or certain business sectors, to access basic banking services at all, which brings me on to my next point.

The new rules on politically exposed persons have not yet been publicised. The Financial Conduct Authority’s consultation on the issue closed in October 2024. Its initial findings asked banks and financial institutions to do more to ensure that UK lawmakers and their families are not treated unfairly. It is essential that the new rules on debanking and PEPs are aligned and implemented at the same time to give both customers and banks clarity and consistency.

Although we support the new rules, I would like the Minister to address the following key questions. First, why has the statutory review clause not been included in this SI, given the risk of unintended consequences for account holders? Secondly, what assessment has been made of the impact on people who may now find it harder to open a bank account in the first place? Thirdly, when will the new rules on politically exposed persons be published? Will the Government commit to aligning their implementation with the debanking reforms? Also, how will the Government monitor the impact of the changes, particularly on small businesses and vulnerable customers, and what steps will be taken if there is evidence that banks are becoming more risk-averse and excluding legitimate customers from the banking system?

As I said, access to bank accounts is a basic necessity in modern Britain. Under the previous—might I say brilliant?—Government, we made it a fundamental right to have access to basic banking services. These rules are a step forward, but it is vital that we remain alert to making sure that they do not become another barrier put in place to stop businesses and consumers accessing banking services. The Minister might not have enough time to get an answer to my questions, but if she could perhaps write me a letter, that would be fantastic. As I said, we will support this measure.

[Emma Reynolds]

It started so well—I am slightly confused by the hon. Gentleman. On one hand he says it is as though nothing changed, and did we need a general election to get to this point? On the other hand he calls into question the provisions of the SI and what impact they might have. I will come to his questions in turn. First, there has been a big change since the election. I was not here in the last Parliament, so there has been a welcome change from my point of view and on the Labour side of the House, where we have a quite hefty majority, in case he had not noticed.

The reforms were consulted on and thought about in the last Government—the hon. Gentleman was right to make that point. We consider, as did the previous incumbents in my role and the Conservatives in government, that the current notice period of 60 days is simply not adequate for customers who have their accounts closed to either make a complaint or seek an alternative provision, and that is bad for individual customers, but particularly bad for businesses. As he set out, it is crucial that businesses and individual customers have access to bank accounts.

We do not think, although I can write to him with more evidence, that this measure will make banks more reluctant to open bank accounts in the first place. The balance that we are striking in this statutory instrument is on the one hand enhanced consumer protection and on the other hand ensuring that we do not place unnecessary and disproportionate burdens on banks and other providers—it is not just about banks; it is about other payment providers, too. We have not included a statutory review clause, but that does not mean that we cannot review the legislation. We do not judge that this provision will make banks more reluctant to open bank accounts for people in the first place.

The shadow Minister asked more broadly about access to banking services, which is something that we are monitoring. As he said, that is crucial to both the operation of a business and customers. In our financial inclusion strategy, we are looking at access to banking and the relationship between financial exclusion and digital exclusion. We are doing broader work in this area to understand not only the root causes from providers but why individuals have perhaps had their accounts closed and not sought alternative provision.

We are doing broader work on financial provision, as the hon. Gentleman knows, and we will produce a strategy by the end of the year on this vital issue. I know that many of my hon. Friends will welcome that, as well as other Members across the House, because financial inclusion is something that we all care about and this Government are very committed to. I believe that I have answered all the questions.

[Mark Garnier]

Not mine, perhaps.

[Emma Reynolds]

Sorry; could the hon. Gentleman remind me of the specific question?

[Mark Garnier]

It was to do with the assessment being done of the impact on politically exposed persons. When can we expect that report to come out?

[Emma Reynolds]

I thank the shadow Minister for that question. As he will know, changes were brought into force in January 2024 under the previous Government that ensured that domestic PEPs, as they are called, were not deemed to be on the same level of risk as non-domestic PEPs. That SI was introduced under the last Government and FSMA—the Financial Services and Markets Act 2023—committed to bringing forward that legislation.

It also committed the FCA to doing a review of so-called PEPs and debanking. That review concluded that banks were not necessarily taking the wrong approach, but it said that there needs to be more proportionate application of rules. Therefore, the FCA will bring forward updated guidance on this issue, and I am happy to write to the shadow Minister in more detail on the timing of that and what will be included.

Question put and agreed to.

Draft Pension Fund Clearing Obligation Exemption (Amendment) Regulations 2025

Mark Garnier Excerpts

Wednesday 14th May 2025 General Committees

[Mark Garnier (Wyre Forest) (Con)]

Yet again, we are in glorious agreement on both sides of Committee Room 9, which is rather fun. The Opposition absolutely agree with the draft regulations; as the Minister rightly says, the work was started under the last Government, and it is important that we continue to support it. However, we recognise the critical role that central clearing plays in safeguarding financial security.

The Pensions and Lifetime Savings Association, which represents schemes with more than £1.3 trillion in assets, acknowledges that there are benefits: clearing reduces counterparty risk, increases transparency and, in normal times, helps to protect members’ savings. However, the evidence from the sector and, importantly, the experience of the liability-driven investment crisis in 2022 show that mandatory clearing presents a real challenge for pension funds. Most UK schemes do not hold large cash reserves, nor should they: the money should be invested for long-term returns for their pensioners.

The need to raise cash quickly to meet central counterparty margin calls can force schemes to sell assets at precisely the wrong moment, undermining members’ returns and potentially undermining market stability. The LDI crisis in 2022 made things pretty clear; I remind hon. Members that the then Chancellor of the Exchequer and Prime Minister were sacked for creating that chaos. [Interruption.] It’s a fact of life.

In the consultation undertaken by the previous Government, many stakeholders argued that a permanent exemption is the only way to provide certainty and avoid undermining the Government’s own ambitions in the Mansion House reforms. If the exemption were removed, schemes would be forced to hold more liquid, low-return assets, including cash, which would reduce the capital available for long-term investment in the economy. I am therefore delighted to support the draft regulations, but I have a couple of questions.

First, on divergence from the European Union, the UK has opted for an indefinite exemption period, whereas the EU has allowed it to lapse, so clearing is now in place there, as it is in the US. Respondents to the call for evidence highlighted structural differences between the UK and the EU and US markets. Have the Government looked at the effect that that divergence might have on the competitiveness of the UK pension industry and on the relative stability of markets?

My second question is about the long-term intentions as to mandatory clearing. I completely understand that the motivation behind the change is to remove the two-yearly uncertainty. However, the draft regulations provide for a permanent exemption, rather than ruling out clearing in permanency. The difference is a very subtle one, but have the Government considered ruling it out rather than having a permanent exemption? As we are looking at stability for pension funds, I would be interested to hear the Government’s point of view. However, the Opposition certainly do not seek to divide the Committee on this very good policy, which was initiated by the previous Government in one of their more glorious moments.

Bank Resolution (Recapitalisation) Bill [Lords]

Mark Garnier Excerpts

Report stage
Thursday 24th April 2025 Commons Chamber

[Mark Garnier (Wyre Forest) (Con)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Judith Cummins)]

With this it will be convenient to discuss the following:

Amendment 1, in clause 1, page 1, line 20, at end insert—

“(2A) The Bank of England must not require the scheme manager to make a recapitalisation payment if it has directed the financial institution to maintain an end-state Minimum Requirement for Own Funds and Eligible Liabilities (MREL) exceeding minimum capital requirements.”

This amendment seeks to prohibit the use of FSCS funds to recapitalise large financial institutions, defined as those which have reached end-state MREL.

Amendment 3, page 1, line 22, at end insert—

“(3A) No application to the scheme manager for recapitalisation payments may be considered by the Bank of England for a financial institution which has been directed to maintain an end-state Minimum Requirement for Own Funds and Eligible Liabilities (MREL) exceeding minimum capital requirements, unless permission has been given, through regulations, by the Chancellor of the Exchequer.

(3B) Regulations made by the Chancellor of the Exchequer, subject to subsection (4), shall be made through Statutory Instrument under the negative procedure.”

This amendment would ensure financial institutions that maintain an end-state Minimum Requirement for Own Funds and Eligible Liabilities exceeding minimum capital requirements are excluded from the provisions of the Bill, unless permission has been given through regulations.

Amendment 4, page 2, line 3, at end insert—

“(5A) As a further objective to the special resolution objectives in section 4 of the Banking Act 2009, when discharging its functions in respect of the exercise of recapitalisation payments under this section, the Bank of England must observe the competitiveness and growth objective.

(5B) The competitiveness and growth objective is facilitating, subject to aligning with relevant international standards—

(a) the international competitiveness of the economy of the United Kingdom, and

(b) its growth in the medium to long term.”

This amendment would place a further objective on the Bank of England to consider the competitiveness and growth of the market before directing the recapitalisation of failing small banks through a levy on the banking sector.

Amendment 2, in clause 5, page 4, line 14, at end insert—

“(2B) The code must include guidance to the Bank of England on the exercise of its functions in relation to building societies to ensure that, in circumstances where the use of a recapitalisation power may result in demutualisation, due consideration is given to the impact of such demutualisation on members and on the mutuals sector.

(2C) In preparing the guidance required under subsection (2B), the Treasury shall consider the feasibility of selecting a purchaser from the mutuals sector as a means of avoiding demutualisation, provided such a purchaser meets the resolution objectives.”

This amendment seeks to ensure that, where possible, the selection of a purchaser from the mutuals sector is considered to avoid demutualisation, provided this aligns with the Bank's resolution objectives.

[Mark Garnier]

Before speaking to new clause 3 specifically, let me reiterate that the Opposition welcome the Government’s decision to carry over the legislation from the previous Parliament, and that the principles underpinning the Bill continue to enjoy strong cross-party support. We all want and need confidence in our banking sector, yet the failure of Silicon Valley Bank UK exposed a gap in our resolution framework for smaller banks. Unlike larger institutions, they do not hold the bail and bond mechanism known as MREL—the minimum requirement for own funds and eligible liabilities—reserves to facilitate recapitalisation in the event of a crisis. By providing the Bank of England with new tools to manage small bank failures, the Bill remains both prudent and necessary to protect financial stability and public funds.

Moving on to the amendments we have tabled on Report, I want to make it clear that our approach is constructive and focused on strengthening the Bill, not obstructing its progress. As the Bill has made progress through both Houses, our intention has been to address a series of smaller but none the less significant issues that we believe require further attention. I appreciate that this might be a conversation we can continue in today’s debate, or beyond it, and I would certainly welcome conversations with the Minister, who has been incredibly open to direct conversations in her usual pragmatic style, to further discuss these matters.

We have three measures selected for discussion today. I will speak first to new clause 3, which addresses a critical gap in the Bill’s scope: the protection of credit unions. These community-focused institutions have seen significant growth in recent years, driven in part by the eradication of predatory payday lenders, and they continue to provide a vital role in delivering affordable finance to those underserved by traditional banks.

Membership of credit unions rose from 1.89 million in 2019 to 2.14 million in 2024—an increase of more than 260,000. However, while their importance has grown, their inclusion in our resolution framework has not kept pace. The Financial Services Compensation Scheme has paid £10.1 million in compensation to credit union depositors over the past three financial years, primarily due to small-scale failures, underscoring their potential vulnerability and the need for a tailored approach as the sector expands.

The growth of credit unions is a success story, but it demands proportional safeguards. The Bill, however, excludes credit unions from its recapitalisation mechanism. While their smaller size and unique nature may differentiate them from banks, questions remain. How does the current resolution regime account for credit union failures as the sector scales up? Is there scope to develop a mechanism that protects members without imposing undue burdens on these community institutions? New clause 3 seeks clarity on this matter, requiring the Minister to produce a report outlining how the resolution framework can be adapted to protect credit unions, ensuring that their growth does not outstrip their regulatory safeguards. The vast amount of legislation for credit unions was written back in the 1970s. The previous Government made significant reforms for credit unions through amendments to the Financial Services and Markets Act, and I welcome the common bond reform consultation, which closed last month.

I know that the Government are giving the sector serious consideration, and I am sure the Minister will agree that this is not about applying bank-style rules to mutuals, but about recognising their unique role and risks. Credit unions are more than financial institutions; they are engines of financial inclusion. They often serve small, working-class communities, whom I know the Government want to support specifically. As the sector evolves, so too must our approach. We must ensure that our regulatory framework grows. I hope the Government will support this amendment, which simply seeks to look more clearly at the options available when a crisis happens.

Amendment 2 seeks to address a concern that has been raised with me by the mutual and building society sector. These institutions are not relics of the past, but vital components of our financial ecosystem. Although the first known building society was set up in 1775 by ordinary working people helping themselves to build their financial resilience and get a home of their own, they remain current today. Building societies today hold more than £360 billion in assets and provide mortgages for more than 3 million people in the UK. They represent a significant proportion of the housing market and are a trusted source of savings for millions more. They provide a clear and important diversification in our financial markets, offering a clear alternative to shareholder banks.

The Labour party stood on a clear manifesto commitment to double the size of the co-operative and mutual sector, which the Opposition agree is a very good policy. Today presents a good opportunity for Labour Members to demonstrate that commitment to the sector by enshrining in the Bill a requirement that the Bank of England consider the risk of demutualisation when using the mechanisms enshrined therein. There is a genuine fear in the building society sector that, without proper safeguards, the recapitalisation mechanism offered by the Bill could inadvertently become a back door for demutualisation. When a mutual institution faces resolution, the selection of a purchaser from the plc sector risks permanently dismantling its mutual status, undermining the very ethos that makes these institutions unique.

Our amendment would provide a proportionate solution, requiring the Bank of England to consider the impact of demutualisation on members and the sector as a whole, while also exploring the feasibility of selecting a mutual sector purchaser, if one exists and meets the resolution objectives. This is not about privileging mutuals at the expense of financial stability; it is about ensuring that the Bank’s resolution tools do not inadvertently homogenise our financial landscape. Silicon Valley Bank demonstrated the need for agile resolution frameworks, but it also highlighted the importance of preserving institutional diversity.

Mutuals and building societies often serve communities and demographics that larger banks frequently overlook. Their potential loss would leave gaps in financial inclusion and weaken the resilience of the sector. Importantly, without the millions of mortgages provided by the building society sector, particularly for first-time homeowners, Labour’s house building plans would be simply impossible.

I hope the Minister appreciates that our amendment strikes a careful balance between safeguarding financial stability and honouring our commitment to a pluralistic banking system—one where mutuals continue to thrive as a cornerstone of community-focused finance. I remind Labour Members that it will be much harder to double the size of the mutual sector if, in the event of a failure, recapitalisation defaults towards the banking sector. I hope the Government will therefore demonstrate their manifesto commitment to the mutual and co-operative sector by voting today for new clause 3 and amendment 2.

There remains genuine concern—shared across this House and reflected in the debates in the other place—over the risk of the recapitalisation mechanism being applied too broadly and potentially capturing larger banks that already hold substantial loss-absorbing resources, such as MREL. We continue to believe that the mechanism should be limited in scope and targeted at smaller banks that do not have the same capacity to manage their own failure. Amendment 1 would limit the use of the mechanism to what it was always intended to be: a mechanism for smaller banks outside the MREL regime.

I appreciate that new clauses 1 and 2 have already been ruled out of scope, but it may be worth noting a couple of points on these measures. I wish to place on the record today that the Opposition believe the time has come for a review of how we set the threshold for MREL, as well as the protection ceilings for depositors under the Financial Services Compensation Scheme. The current static nature of MREL thresholds disproportionately affects smaller and mid-sized banks, particularly challenger banks. By indexing MREL thresholds to inflation, we can ensure that the regulatory framework remains robust over time without stifling competition. These institutions often operate on tighter margins and face significant barriers in meeting rigid capital requirements, hindering their ability to scale and compete effectively with larger incumbents. While we appreciate that the Bank of England’s consultation on MREL closed earlier this year, we hope that the Government will consider these points. Threshold limits should not stay static with time.

Likewise, we welcome the Government’s recognition of the need to review the Financial Services Compensation Scheme deposit limit. The recent announcement of the increase of the deposit protection scheme from £85,000 to £110,000, although very welcome, is certainly overdue. It is worth noting that if the limit had kept pace with inflation, it would be nearly two thirds higher, at around £140,000, according to the Federation of Small Businesses. It is worth noting that only 4.6% of Silicon Valley Bank’s UK deposits were insured by the Financial Services Compensation Scheme—

[Madam Deputy Speaker (Judith Cummins)]

Order. May I just remind the hon. Gentleman that we are discussing what is in scope, rather than what is not in scope and has not been selected?

[Mark Garnier]

My apologies, Madam Deputy Speaker. These are points that we feel are worth noting, but I take your comments.

I will turn to amendment 3, tabled by the Liberal Democrats. Although we share the intent behind the amendment, which mirrors the Conservatives’ amendment on MREL limits for banks, there is a critical difference in its approach that gives us pause. Like us, the Liberal Democrats recognise that end-state MREL banks should not be the primary target of this legislation. However, their amendment introduces a requirement for a statutory instrument under the negative procedure that we believe would create more problems than it solves.

Our concern lies in the potential impracticality of this approach. Banking crises can unfold rapidly, as we saw with Silicon Valley Bank UK, where decisions were made in a matter of hours, not days. A statutory instrument subject to the negative procedure becomes law the moment the Minister signs it, which is a good thing, and it remains in law unless either House rejects it within 40 sitting days. That creates a window of uncertainty. If Members were to pray against the statutory instrument, particularly in a hung Parliament, it could trigger market instability, which is precisely what this Bill seeks to avoid, so although we agree with the principle of limiting the Bill’s scope, we worry that the mechanism could tie the hands of a future Chancellor, hindering their ability to respond swiftly and decisively in a crisis. For those reasons, we cannot support the Liberal Democrat amendment.

--- Later in debate ---

[Emma Reynolds]

We have not come to that yet; my hon. Friend can intervene on Third Reading. [Laughter.]

Taking what I was saying into account, although the Government appreciate the point raised by the sector and by the shadow Minister, we do not believe it is necessary to hardwire in legislation a requirement to update the code of practice on this matter. I understand, however, that the mutual sector feels strongly about this issue, and my officials and I will continue to engage with the sector on it. I commend to the House our position on the new clauses and amendments, which is to resist them.

[Mark Garnier]

With the leave of the House, I wish to address one or two of the points made in the debate. The hon. Member for Hendon (David Pinto-Duschinsky) is an incredibly valuable contributor to the debate because of his experience back in the days of the 2008 financial crisis. If I remember correctly, that was largely a result of the Financial Services and Markets Act 2000, which almost compounded the problem by having a tripartite regime that looked after the banking sector at the time. If I remember rightly, the Chancellor of the Exchequer at the time found it so scary that his eyebrows nearly turned white. One of the surprising things about that crisis was that just 10 years earlier we had seen the Asian banking crisis, which basically laid the groundwork for what subsequently happened in the west. Perhaps we in the west were too arrogant to believe that it could happen to us, yet it sure did.

In my role as a member of the Treasury Committee from 2010 to 2016, and on the Parliamentary Commission on Banking Standards, I looked at all these issues very extensively. It is incredibly important that we resolve the issue. As it has turned out, the Financial Services Act 2012 and the Financial Services (Banking Reform) Act 2013 have worked well in respect of some of this resolution.

On the point about LDIs and the financial crisis as a result of the Budget, we dealt with the problem pretty swiftly and pretty brutally. When one of our leaders gets it wrong, we get rid of them fairly quickly. I suggest to the Labour party that if Government Front Benchers get things wrong, it is worth cauterising the problem and moving on.

On credit unions and mutuals, we absolutely recognise the point about the mutual sector. We are not asking for demutualisation to be ruled out; we are asking for the prospect of avoiding demutualisation to be part of that very swift process. That is why we will press amendment 2 to a Division. I met the credit unions yesterday, and they are keen that the principle of new clause 3 is voted on, so we will press that as well.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the shadow Minister.

[Mark Garnier]

May I first say a hearty congratulations to the Minister on bringing through her first Bill in the new Government? She was parachuted into the job rather recently, but she has done a magnificent job, and it has been a pleasure to engage with her. We share the aim of working in the interests of the wider economy, and we have worked together on the Bill. We may differ on a few tiny details, but we agree on its overall objective.

As I mentioned on Report, I spent some time on the Parliamentary Commission on Banking Standards looking at how we can stop another banking crisis, and on the Treasury Committee doing pre-legislative work on the Financial Services Act 2012. This is an iterative and organic process. We will never be able to stop financial crises happening, but working together, we can ensure that there are no more instances of contagion flooding through the system. This Bill is extraordinarily good in following that iterative process, in order to make the banking system unsinkable, I hope—and I do not use that term lightly, as someone might have done in the film “Titanic”; this is genuinely very important.

I pay credit to the former Chancellor, my right hon. Friend the Member for Godalming and Ash (Sir Jeremy Hunt), and the former Economic Secretary to the Treasury, my hon. Friend the Member for Arundel and South Downs (Andrew Griffith), and their officials, who worked tirelessly to ensure that Silicon Valley Bank UK was transferred to HSBC over that weekend, which undoubtedly avoided wider disruption to the financial system. We are delighted that the Bill was introduced in the previous Parliament, and we welcome the Government’s decision to carry it over into this Parliament. I was about to say that our swords will cross in the coming months and years, but I do not think they will; I think we will almost certainly agree on things. We will engage with the Minister and her officials to ensure that we have a world-class financial system that is the envy of the world.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Retail Investment

Mark Garnier Excerpts

Tuesday 22nd April 2025 Westminster Hall

[Mark Garnier (Wyre Forest) (Con)]

It is a pleasure to serve under your leadership, Mrs Hobhouse, and I congratulate you on your first Westminster Hall debate as a member of the Panel of Chairs—you have handled it masterfully. I also congratulate the hon. Member for Buckingham and Bletchley (Callum Anderson) on securing this debate. He previously worked for the London stock exchange; he may be interested to know that I started my 27-year investment career as a dealer on the floor of the exchange in what we like to refer to as “the olden days”. There will be an almost unanimous outbreak of agreement across the Chamber. The hon. Member made some very important points. There is one point on which I slightly disagree, but he could basically have written my speech.

One of the things that the hon. Member mentioned is the idea of acclimatising people to the idea of investment. When I was first elected as an MP, a number of us spearheaded a campaign to get investing and financial education into the national curriculum. At the time, it was clear that too many young people were leaving school without any understanding of the basics of personal finance, let alone the potential of sensible long-term investment. Whether it is saving for a rainy day or putting away money to buy a home, making the right investment choices is absolutely vital. Retail investment should absolutely form a cornerstone of any investment strategy, but not enough people are aware of the long-term benefits of stocks and shares investment versus cash deposits.

Polling conducted by Opinium last year highlighted that fewer than half of respondents felt confident about opening a stocks and shares ISA. I have always felt that the lack of knowledge starts with the lack of the right education. Better financial education was recommended by the Parliamentary Commission on Banking Standards when I was on it over a decade ago—a long time before many Members here were elected. In 2014, I thought we had finally settled the debate about financial education in the curriculum. The national curriculum was updated to see financial education become a statutory part of it for the first time. Although it is still on the national curriculum, it has become clear that there is not enough focus on getting schools to teach it consistently. Academy schools that do not follow the curriculum have no requirement to teach financial education if they choose not to.

I thank my hon. Friend the Member for Mid Leicestershire (Mr Bedford) for recently taking up the baton. His private Member’s Bill would make financial education mandatory for all students aged five to 18, which could resolve some of the issues we are debating here.

Of course, things have moved on since my original campaign. It is clear that there is a real appetite for young people to become investors. Although the UK continues to lag behind countries like the United States when it comes to active retail investment, since the pandemic interest in investing has substantially risen among younger age groups, particularly Gen Z. That has partly been driven by cryptoasset investment, which, if I am being entirely honest, is something I find a bit odd.

Younger investors aged between 18 and 24 are more likely than older investors to invest in cryptoassets. A survey carried out by the Financial Conduct Authority showed that 46% of young investors report holding cryptocurrencies compared with just 7% of investors aged 55 to 65. They are influenced by trends they see on social media such as TikTok, with cryptocurrency influencers bragging about fabulous returns—of course, there are fabulous losses as well. The bedrock of financial education is the old adage, “If it is too good to be true, then it probably is.” I am not against investment in cryptoassets, but as any good investor knows they should be seen as part of a balanced portfolio. Any young people with an appetite for taking investment risks should know that they could be better served with investments into the stock market rather than in the volatility of cryptotrading.

I hope the Minister will outline how the Government intend to get our schools teaching financial education. Will she confirm whether the Government support the principles set out in the Financial Education Bill, which has had cross-party support?

Online trading platforms have now made it easier than ever to become an investor. Despite the easy accessibility, the FCA’s 2022 Financial Lives survey showed that while more than 15 million adults in the UK have investable assets exceeding £10,000, more than half hold at least 75% of those assets in cash. There are very good reasons to hold cash, particularly as people get towards retirement age or want to divest to buy a property or a car. It is for that reason that we believe it is important to retain the individual choice of how to use a tax-free ISA and keep its current allowance unchanged. There is another important point about cash ISAs. They provide substantial capital for building societies, which use the capital to lend on in the form of mortgages. If we reduce the amount of money that can go into cash ISA, we potentially reduce the amount of money available to the mortgage market. We need to think in a balanced way.

There are other ways to focus the minds of people, helping them to make better investment decisions, while retaining the flexibility to spend their ISA in their and their families’ best interests. The Investment Association has called for cash products to come with risk warnings, in the same way as all financial products. That could be as simple as comparing the quoted savings rates against inflation—a point the hon. Member for Buckingham and Bletchley made. In that way, an investor would know that their investment could in fact be losing money in real terms versus inflation. Just as we rightly warn investors that markets can go down as well as up, we should also be honest that holding cash, while it may feel safe, risks steadily losing value through inflation.

The Investment Association has also suggested that renaming the stocks and shares ISA the investment ISA could be a way of changing the mindset of investors. I would welcome the Minister’s thoughts on how we can highlight to investors the pitfalls of holding long-term cash. A successful hearts and minds campaign could, according to estimates from Aberdeen, unlock £3.5 trillion of capital for markets, if UK adults held as much wealth in investments as their US peers. That clearly raises another question: how do we encourage retail investment into UK stocks and shares?

If we are serious about encouraging long-term investment and wider public participation in the UK’s capital markets, we must take a hard look at stamp duty on shares—again, the hon. Member for Buckingham and Bletchley made that point. At 50 basis points, the UK has one of the highest rates of this kind of transaction tax in the developed world. We should not be taxing investment in British businesses; we should be incentivising it.

Stamp duty creates a direct disincentive to buy UK shares and disproportionately impacts those investing smaller amounts, for whom every pound counts. It also reduces the attractiveness of London as a global listing destination and adds friction to the secondary market, which ultimately feeds back into the cost of capital for UK firms. In short, stamp duty is a tax on growth, on participation and on financial inclusion. We need to ask ourselves whether that levy, introduced in a very different era, still serves a useful purpose, or whether reform could help us to unlock a stronger culture of long-term share ownership in this country. I ask the Minister to consider whether the tax could be looked at again, particularly for retail investors.

As an idea, perhaps we could also look again at how the ISA tax-free allowance could be incentivised to stay in the UK. I recently spoke to a successful investor, someone who makes full use of his £20,000 annual stocks and shares ISA allowance. As one would expect, he is shrewd with his money, putting it where he believes it will deliver the best returns. In recent years, that has meant investing primarily in the American markets, where growth has outpaced much of what has been available here in the UK. What struck me was a comment he made a little later about his gardener, who is on minimum wage. The gardener can only afford to put a tiny amount of money, if anything, each month into a cash ISA; yet through his taxes he is effectively subsidising a tax break that allows his employer to invest tax-free in overseas companies. That does not feel right, and it is another point also made by the hon. Member for Buckingham and Bletchley.

ISAs are a cornerstone of our savings culture, but if they are primarily being used to funnel capital abroad, it is time we asked ourselves whether the current system is doing what we intended it to do. Perhaps it is time to explore how we can better direct ISA investment towards British companies. I am sure the Minister will be addressing that subject in her speech.

I think we are all in wholehearted agreement on the need for more retail investment in the UK. The opportunity for investment into UK companies is substantial if we can get it right. I am sure the Minister will have a plethora of ideas—she is writing them down ferociously as I speak—and we look forward to hearing what she has to say.

--- Later in debate ---

[Emma Reynolds]

Credit unions, mutuals and co-operatives play a hugely important role in our economy and our society. That is why the Government—as my hon. Friend will know, given that she stood on the same Labour manifesto as me—promised in our manifesto to double the size of the mutuals sector, why the Chancellor asked the FCA and the Prudential Regulation Authority to look at the mutuals landscape in the Mansion House speech in November and why we have supported the establishment of the co-operatives and mutuals council—I actually went to the first meeting. As my hon. Friend said, credit unions play an important role in encouraging savings, particularly for those on low incomes. We have also launched a consultation on whether the common bond needs to be more flexible so that more people can benefit from credit unions, and that is also in train.

Coming back to the issue of ISA reform, the hon. Member for St Albans rightly said that there has been some market volatility recently. I will not comment on the day-to-day movement in markets, but I will say—I think she was also making this point—that if people are in a position where they can invest in stocks and shares in our stock market or other forms of investment, they need to take a long-term view of that. Often, that investment gives better returns than just putting something away into a cash account.

Analysis by AJ Bell from February this year suggests that someone who put away £1,000 in an average-performing cash ISA every April since their introduction in 1999 would now hold about £34,000. If their savings had instead kept up with inflation, they would now have £38,000, so that person would have lost out on £4,000. That goes to show how inflation can reduce the value of cash savings over time. In contrast, if that same individual had decided to invest in a stocks and shares ISA, they could now have around £83,000—over twice as much as their cash savings would have been. That demonstrates that if someone has the confidence and the ability—we are not talking about everybody here—to invest for the longer term, they will most likely get a better return. We need to ensure that people have the confidence and ability to engage with investing, and thus to benefit from the financial security and greater returns that investing can often provide.

My hon. Friend the Member for Vale of Glamorgan talked about people on lower incomes. On that, I will take the opportunity to say something about the help to save scheme, which is targeted at working households on low incomes. It offers a 50% Government bonus on savings of up to £50 a month over four years. The Government announced at the autumn Budget last year that the help to save scheme has been extended until April 2027. From 6 April this year, we have extended eligibility for help to save to all universal credit claimants in work as well.

The second issue raised by my hon. Friend the Member for Buckingham and Bletchley was about financial education. In fact, most hon. Members who spoke talked about its importance. One of the major barriers to investing for consumers is a lack of support to make financial decisions. We know that only 8% of adults received regulated financial advice in the 12 months to May 2022, but guidance does not often go far enough to help consumers feel confident to make a decision. We have a big advice/guidance boundary gap. Many of our constituents are therefore not getting the help they need to make their money go further. Some keep a lot of their money in savings, losing out on potential returns, and others do not regularly review their investments, or invest in products that do not meet their risk appetite.

Together with the FCA, the Government are developing a new regime called targeted support, which would allow regulated firms to provide suggestions appropriate to consumers with similar characteristics. For instance, the regime would enable firms to suggest that an individual with substantial savings could consider opening a stocks and shares ISA. It would also enable firms to suggest options for how to generate an income from an individual’s pension pot, appropriate to consumers with similar needs. The FCA will consult on the rules that will underpin targeted support in the first half of this year. Getting those reforms right will help consumers make better-informed decisions, engage in capital markets, and ultimately to be in a position to get better returns on their savings in the longer term.

My hon. Friend the Member for Buckingham and Bletchley reflected on how financial education can help level the playing field for those from less wealthy backgrounds. I really liked how he expressed in his speech the asymmetry between those who already come from a wealthy background, where this might even be discussed at the dinner table, and those in a less privileged position, who are not aware of some of the opportunities. If they are not aware, even if they were given the opportunity they would not have the confidence to take it.

In England, the independent curriculum and assessment review is considering how to ensure that he curriculum is fit for purpose. The shadow Minister, the hon. Member for Wyre Forest, talked about the importance of financial education. I cannot give him any guarantees right now, because as he will know, although we have had the interim report of the curriculum review, we are still working through some of the details. I met the Minister for School Standards to discuss this work and to make sure that my work on financial inclusion and the work of the curriculum review go hand in hand. I cannot give him any guarantees on private Member’s Bills right now, but I can take the question back to the Government Whips, who will tell me where we are. As I understand it, the private Member’s Bill on financial education that he talked about is not due to be introduced until 11 July.

We are working with the Department for Education, and the Department for Education is working across Government on how we can ensure that the curriculum review improves financial education for our young people, which I would like to see. Indeed, it was striking that in the interim review parents and pupils said that finance and budgeting was the top area they would like to see more focus on in schools; that was encouraging.

Thirdly, my hon. Friend the Member for Buckingham and Bletchley asked for action to make it easier for our citizens to engage with our capital markets. The importance of UK capital markets was mentioned by many speakers, but particularly by the hon. Member for St Albans, my hon. Friend the Member for Vale of Glamorgan and the shadow Minister. We want to make UK capital markets as attractive as possible to retail investors. Our capital markets are already among the strongest and deepest globally. I know some concerns have been raised, but more than £25 billion of equity capital was raised in London last year, more than in the next three European exchanges combined. I am keen that we do not talk ourselves down. Of course, we must recognise challenges where they arise, but we must also recognise our strengths. We are the world’s largest international bond market, with more than 16,000 active bonds traded on our markets, representing over £4.1 trillion across 55 currencies.

We want to go further to reinvigorate capital markets to ensure that they support both UK and global growth. We are currently developing a financial services growth and competitiveness strategy, and have identified capital markets, and retail participation within those markets, as a priority growth opportunity in that strategy. That strategy will come later this year, and I am sure the hon. Member for Wyre Forest will quiz me about it in the weeks and months to come.

The Government are focused on making our markets more competitive, including by supporting the FCA’s work to reform the UK’s prospectus regime to give investors access to better quality information to support their decision making, and supporting the FCA’s proposals to cut red tape for corporate bond issuance, which will encourage companies listed on stock exchanges to offer bonds in smaller sizes to improve investment opportunities for retail investors. The Government have also legislated to enable the FCA to reform the UK’s retail disclosure regime to ensure that consumers have access to the most useful information to support their investment decisions. The FCA’s consultation has just closed and the Government look forward to seeing its final rules later this year.

My hon. Friend the Member for Buckingham and Bletchley also raised the work of the industry-led digitisation taskforce, which is looking at how we can improve the system of share ownership in this country and, as part of that work, at how we can remove all paper shares. The taskforce is currently finalising its final report—my hon. Friend will have seen the interim report—and the Government look forward to receiving it, and will respond in due course.

Finally, my hon. Friend the Member for Buckingham and Bletchley called for a fundamental shift in how we think about investing in our country. He is right to say that investing should not be for just the wealthy, or those with expertise; we need to build an investment culture that enables newcomers to invest confidently and grow their financial resilience. I want to deliver that change but I know that the Government, and indeed parliamentarians, cannot deliver that shift on our own. We need to work closely with regulators and industry and, as my hon. Friend suggests, make the case to consumers for investing. I thank my hon. Friend for outlining his proposal for how we could do that.

We are thinking carefully about these matters and look forward to working with my hon. Friend and others across the House to help build the strong investment culture that we want. As part of that work, we are of course looking at international examples; the shadow Minister mentioned the importance of that. Many hon. Members will be familiar with how Americans talk a lot about their 401(k)—or so I am told—and how Australians talk a lot about their supers. A few months ago, I was talking to a financial services senior leader who told me that when she lived in Australia, her cleaner often looked at her super on her phone, and tracked the return on her investment. I would love to see that sort of inclusive, democratic access to investment opportunities in the UK. I am not being patronising—I have a fantastic cleaner too, and I would like to see her in that position. We want to ensure that people across society get these opportunities. We also want people to engage with their pensions more closely, as I have already mentioned in response to my hon. Friend the Member for Vale of Glamorgan.

If I do not get to all the questions raised by the hon. Member for Wyre Forest then I am sure that I can write to him, or we can have a discussion after the debate.

My hon. Friend the Member for Vale of Glamorgan talked about what the Government could do to promote employee share ownership. The previous Government launched a call for evidence on the save as you earn and share incentive plan schemes. The Government will use that call for evidence to consider opportunities to improve those schemes, and I thank my hon. Friend for his interest in that.

The hon. Member for St Albans talked about advertising on social media. She will know that under the Online Safety Act 2023 large internet platforms will be required to put in place systems and controls to avoid fraudulent advertising appearing on those platforms. We also welcome Ofcom’s work to bring forward codes of practice on what actions firms should be considering. However, she is right to raise the issue as a matter of concern; the Government are concerned about it.

I have answered the question from the hon. Member for Wyre Forest about the private Member’s Bill on financial education, but I am sure that he asked me other questions that I have not quite got round to; I beg his forgiveness. I also answered his question on what we can do together to ensure that people know there are risks involved with holding cash above certain levels, and about the erosion of people’s cash savings by inflation, but if he wants to repeat any of the other questions, I am happy to respond.

[Mark Garnier]

I think the Minister has covered most of my questions, but I will review and we can perhaps have a conversation later.

[Emma Reynolds]

Such great cross-party working—do not tell anyone else about it! It is really good to work with the hon. Gentleman. I remember fondly—well, not that fondly—being a shadow Minister and having very good, if different, working relationships with the Ministers who I shadowed. I very much welcome the constructive way in which he has contributed to the debate and I look forward to Thursday, when we will debate the Bank Resolution (Recapitalisation) Bill.

I thank my hon. Friend the Member for Buckingham and Bletchley for securing this debate and I also thank all the hon. Members who spoke. It has been a very constructive and interesting debate, certainly from my perspective, and I thank all hon. Members for their contributions. The Government are determined to make the UK’s retail investing environment more attractive and to boost the UK’s investment culture, and I will reflect carefully on the points raised.