Oral Answers to Questions

Mark Garnier Excerpts

Tuesday 4th March 2025 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Mark Garnier (Wyre Forest) (Con)]

The City of London has been a leader of innovation in the world of finance and savings for a few hundred years now, and it has been successful because it has always seized opportunities and innovation when presented. In that spirit, we are pleased that the Chancellor in her Mansion House speech embraced the concept of securities tokenisation, but we now find that the catalyst for this innovation in the UK—a pilot for the digital gilt instrument known as DIGIT—has found itself in a two-year black hole. Innovation is not something that can hang around for two years, so will the Minister give assurances that she will do everything she can to deliver DIGIT as soon as possible?

[Emma Reynolds]

That sounds like a criticism of the previous Government. I can reassure the hon. Gentleman that we are committed to innovation and to DIGIT.

Bank Resolution (Recapitalisation) Bill [Lords]

Mark Garnier Excerpts

2nd reading
Wednesday 22nd January 2025 Commons Chamber

[Mark Garnier (Wyre Forest) (Con)]

I welcome the new Minister to her place. I think this is her first Bill that she has taken through as Economic Secretary and, interestingly, she is absolutely right. This is one of the frequent occasions on which we will agree on pretty much everything. This Bill was obviously written by the previous Government who, I think we all agree, delivered 14 years of strong and stable government.

Broadly speaking, we will not disagree on this Bill. As the Minister set out in her opening speech, this legislation was born out of the learnings of the failure of Silicon Valley Bank. The failure came out of the US parent company, with a contagion that quickly spread to its UK subsidiary. Although the Bank of England had initially planned to use insolvency procedures, HSBC emerged as a buyer thanks to the tireless work over the course of a weekend in March 2023, and much credit must be given to the former Chancellor of the Exchequer, my right hon. Friend the Member for Godalming and Ash (Jeremy Hunt), and the former Economic Secretary to the Treasury, my hon. Friend the Member for Arundel and South Downs (Andrew Griffith). They secured an outcome that has not cost the taxpayer any money at all, and which protected millions of pounds’ worth of customer deposits, primarily in the tech sector. The bank’s customers would face an uncertain financial future were it not for that intervention, so I am sure that the House will join me in commending the action that was taken by the previous Government.

The failure and subsequent transfer of Silicon Valley Bank UK shows how robust our post-2009 banking reforms have become. The Bank of England has used its resolution powers only three times since 2009, and this was the first time since the Southsea Mortgage and Investment Company failed in 2011. It is fair to say that the process worked absolutely as it should have done: the transfer of Silicon Valley Bank UK to HSBC was done in an orderly manner, there was no wider contagion in the banking sector, and withdrawals and panic did not spread to other banks. In short, it demonstrated why the UK is such a financial centre of excellence, and we must continue to champion that point.

However, we can continue to uphold our world-leading reputation only if we review and learn from when the system is stressed in real life. In some ways, we were very fortunate. HSBC was the only credible bidder for Silicon Valley Bank that did not require financial support or guarantees from the Government or the Bank of England. In addition, HSBC’s level of capital and liquidity resources greatly reduced the risk to public funds, delivered stability and boosted market confidence. However, had HSBC not come forward, the only option for the Bank of England was the bank insolvency procedure. This Bill comes out of the subsequent root-and-branch review, and it went for industry consultation under the previous Government. I thank the current Government for supporting it.

The Opposition recognise that some banks may fail due to issues outside their control and should have pathways to continue as a going concern if transferred to another entity, and it is right that the Bank of England has more tools in its arsenal to support the financial system. We are therefore delighted to support the Bill—it is one that we started. As it made progress in the other House, it benefited from considerable scrutiny from noble peers. The successful amendments and new clauses enhanced the Bill and will significantly improve transparency.

This was a point addressed by my right hon. Friend the Member for North West Hampshire (Kit Malthouse) during the Delegated Legislation Committee on Monday, which finalised the transfer of Silicon Valley Bank UK to HSBC with no compensation to shareholders. He rightly raised some of the unanswered questions on what changed the Bank of England’s decision between announcing that the Silicon Valley Bank UK was going into insolvency procedures on the Friday and being transferred under resolution by the Monday. These additional transparency arrangements will ensure that colleagues in this House remain confident in the independence of the Bank of England. Will the Minister confirm that the Government intend to support those amendments in this House? I would be amazed if he said no, actually.

I will move on to what could be the crux of any potential disagreement. When this Bill was introduced in the other place, there was no limit to the scope of this regime. We can safely categorise our banks into three different groups. First, there are the large-scale institutional banks that have reached the end-state minimum requirement for own funds and eligible liabilities, or MREL, as it is known. Secondly, there are the challenger banks such as Monzo and Starling that are working towards end-state MREL. Finally, there are the smaller banks that do not meet the threshold for MREL, such as Silicon Valley Bank.

The Banking Act 2009 provides a robust framework for dealing with banks that have achieved end-state MREL status, and while there is a sensible argument for saying the new mechanism could provide top-up funding for banks working towards end-state MREL, it is not fair or reasonable to expect the mechanism to be used for the largest banks. The consequences of such a decision could be extremely costly for banks and their customers, and if an institutional bank failed and this mechanism were used to facilitate a transfer, our fear is that there could be a recapitalisation requirement that was many times the annual cap of the financial services compensation scheme. The only decision left to the FSCS would therefore be to borrow from the national loans fund via the Treasury. The ex-post levy set out in this legislation would therefore be charged not only in the year in which the levy was first implemented but potentially for many years thereafter. MREL requirements should ensure the safety of our largest institutions. Bank directors should be ensuring sound compliance of MREL, not taking comfort in the fact that they can fall back on to an ex-post levy of the banking sector in times of trouble.

The Opposition took reassurance from a policy statement that the mechanism would be used for the largest banks only in exceptional circumstances. However, this still left the key question as to why the legislation allowed large-scale banks to trigger the mechanism. In her opening speech, the Minister referred exactly to this. Baroness Vere’s amendment makes it clear that this mechanism cannot be used on the largest banks—those that have achieved end-state MREL. That amendment was opposed by the Government in the other place. I was hoping that the Minister would update the House today on the Government position and she has done that, but we may want to talk about this at greater length. Concerns were also rightly raised by peers that this mechanism, and using resolution to transfer failing banks, should not become the default position of the Bank of England, which is important.

Ultimately, banks are businesses. They have shareholders that bear the responsibility and the burden of risk, and we should not create a system where banks can always expect to fall back on industry-funded life support. The code of practice, alongside this Bill, rightly states that using the insolvency procedure should be the default position. I would welcome the Minister’s comments on whether there could be further need for that to be strengthened in the legislation.

The introduction of this mechanism is another example of a banking industry in strong health. In 2007, it was the taxpayer bailing out the banks. Now we have a system whereby the industry is expected to cover the cost of a failing bank. This raises questions as to whether the Government need to review how we can make the UK banking sector more internationally competitive—we have had an informal chat about this.

Let us take the bank levy as an example. It was introduced for three main reasons. First, it was introduced to help repay the cost of the banking bail-out, and it has raised something in the region of £25 billion since it was first introduced. Second, the bank levy acted as a kind of insurance premium in case the post-financial crisis stability of the banking sector were to falter and fall and there needed to be another bail-out. Finally, it was almost a quasi-punishment to the banking system for the failures that led to the financial crisis. It was there to reassure unhappy shareholders that there were consequences for a sector in which there was bad practice. If we add up the total cost to the UK taxpayer of the financial crisis, it was £137 billion, according to the House of Commons Library, as of 2023. That has been reduced to £33 billion now, so there still is some outstanding cost.

On top of the bank levy, other post-2009 reforms include much more stringent ringfencing and capital requirements. That might not be a subject for this debate, and I am not calling for the bank levy to be abolished, but I would certainly welcome the Minister’s comments on whether there could be scope to review the international competitiveness of the banking sector alongside the Chancellor’s growth agenda. The international competitiveness of the City of London should be an absolute priority for this Government—I believe that it is—yet according to UK Finance’s 2024 banking sector tax report, produced by PwC, UK banks face the highest tax contribution since the study started a decade ago.

In terms of international competitiveness, according to PwC, the total tax burden of a model bank operating in the UK is currently 45.8%. That is significantly higher than our competitors in Frankfurt at 38.6%, in New York at 27.9%, or in Dublin at 28.8%. The City, as I am sure Ministers and the whole House will agree, is an extraordinary asset for this country. For a Government who are seeking a growth agenda, the City is the oil in the engine of that economic growth.

Banks do a very important job, and it is a job of significant social and economic importance. Banks take money from where it has accumulated and distribute it to where it is needed for investment. This is crucial to fairness across our economy and delivering growth. They transfer overnight deposits into 25-year mortgages that provide hope and opportunity for people to bring up their families in safety. So we should not demonise banks, and we must remember that shareholder returns on bank investments are as important as shareholder liability in the event of a failure. We must ensure that there is a good return, given the fact that bank shareholders bear the ultimate risk of losing everything.

This Bill is a shining example of the fact that the banks and regulators are now in a position to keep their industry in order. As I said at the start of this speech, I believe that there is cross-party support for the Bill, and I look forward to working with the Government as these reforms progress through the House. They are magnificent, because of course they came from the previous Government, but I thank the Ministers for continuing with them in the spirit with which they were intended.

--- Later in debate ---

[Mark Garnier]

It gives me great pleasure to wind up this debate, with the leave of the House, on behalf of the Opposition.

First, I thank the handful of Members present, who have made very helpful contributions. The hon. Member for Newcastle-under-Lyme (Adam Jogee) rightly asked questions on behalf of his constituents. He asked whether they will be under the cosh if a bank goes bust again—they should not be, under this legislation—and what banks will do to generate economic growth in his area. The Liberal Democrat spokesman, the hon. Member for St Albans (Daisy Cooper), rightly raised a point about the legislation being extended to and used for the larger banks, which is not its intention. As ever, my right hon. Friend the Member for North West Hampshire (Kit Malthouse) has brought an intelligent scepticism to the question of what could happen with this legislation, and has demonstrated why Parliament is such a brilliant place, with intelligent people like him scrutinising what goes on.

I also welcome the Parliamentary Secretary to the Treasury. He has had a glittering career, and has done extraordinarily well in his meteoric rise to Minister in not one but two Government Departments in his first Parliament. He is double-hatting already; he is a clever chap. We have come across each other in the past.

I will not take too much of the House’s time, as I was on my feet just a few minutes ago, but I would like to come back to three points that I hope the Minister will address. The first is the amendment to the Bill; the Economic Secretary to the Treasury made the point that the Government do not want to support that amendment. This may come up later, and we may have more conversations about it. Secondly, does the Parliamentary Secretary to the Treasury feel that the Bank of England’s code of practice provides enough reassurance that the bank insolvency procedure remains the default option for failing smaller banks? Finally, how does he weigh up continued use of the bank levy and regulation of our banking system against the Chancellor’s growth agenda? I appreciate, however, that that is beyond the scope of the Bill.

As I said in my opening remarks, the Bill retains surprisingly strong cross-party support. It is a good thing for the Bank of England to have more tools at its disposal during periods of heightened stress, and the version of the Bill before us today—the version amended in the other place—is more robust than it started out. We look forward to getting clarity from the newly appointed shadow Minister. [Hon. Members: “The Minister.”] My apologies—it will be a few years before that. I congratulate the newly appointed Minister on his appointment.

Oral Answers to Questions

Mark Garnier Excerpts

Tuesday 21st January 2025 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Mark Garnier (Wyre Forest) (Con)]

The Chancellor makes reference to the PWC report, but half of the survey in that report was done before the Budget. The Chancellor and I spent a very happy three years sitting next to each other at the Treasury Committee, and she was incredibly good at demanding straight answers from the witnesses that came in front of the Committee. She has already been asked questions about the fact that the fiscal headroom is only £10 billion and the increase in the cost of borrowing is now going to go through the roof so, at some point, she will have to raise taxes, cut investment or increase debt. Which will it be?

[Rachel Reeves]

The headroom in our Budget was larger than the headroom that we inherited from the previous Government, so we have put aside more money for changes in economic prospects. The OBR has not yet done its forecast, which will take a whole variety of factors into account, and we will make decisions based on that. I have been really clear that our fiscal rules are non-negotiable because, unlike the Conservatives, we are determined to meet the fiscal rules, not break them time and again.

Draft Silicon Valley Bank UK Limited Compensation Scheme Order 2024

Mark Garnier Excerpts

Monday 20th January 2025 General Committees

[Mark Garnier (Wyre Forest) (Con)]

It is a great pleasure to be standing opposite—albeit in opposition—the newly promoted Minister. I look forward to spending an entire week locking horns with her.

Let me start by saying that it is fantastic that we have seen some very swift action. It just goes to show that the Banking Act 2009 has worked extraordinarily well, and how efficiently the previous Government did when it came to resolving this financial problem. A huge amount of work was done by a number of people in the previous Government, including the Treasury Committee, which looked at the Financial Services Act 2012, and the Parliamentary Commission on Banking Standards, which looked at the Financial Services (Banking Reform) Act 2013. A huge amount has gone on and it is reassuring to see that when something does go wrong, the system cuts in incredibly quickly and resolves the situation very well. The Minister and I will be talking directly about bank resolution on Wednesday; it is incredibly important that we work together on this, and I think we are probably in broad agreement.

This order raises an incredibly important point about shareholders—the people who take the ultimate risk in any sort of business. Shareholders are at the bottom of the list of people who are compensated in the event of the winding-up of any privately owned institution. That is the right thing—at the end of the day, private shareholders need to take that risk—but we need to remember that they are taking the ultimate risk in any business. We in this place sometimes beat them up, because we do not necessarily like to see them make too much money, but part of the risk-reward ratio of the current system is that shareholders take a lot of risk; we should not attack them for taking good returns, given the fact that they can lose every penny of their money. The other point about shareholders is that they provide an incredibly useful service in the governance of any institution: making sure that something like this situation should not happen. There was a single shareholder in this case, but multiple shareholders do provide good scrutiny, and we need to address the tone with which we talk about them.

The instrument is absolutely right, and the Opposition recognise that the system is working extraordinarily well. We will certainly not oppose the order; it is very good that we are finally delivering the last part of the resolution. I have no more to add.

Draft Financial Services and Markets Act 2023 (Addition of Relevant Enactments) Regulations 2024

Mark Garnier Excerpts

Monday 9th December 2024 General Committees

[Mark Garnier (Wyre Forest) (Con)]

I think this is the fourth or fifth time that the Minister and I have met across a Committee room, and yet again I do not think we are going to have any problems at all. At the last of our meetings in one of these rooms, I asked her a number of questions, and I am incredibly grateful to her and her office for getting back to me so quickly. I think that illustrates the very good working relationship between the Opposition and the Government in this respect.

The Opposition are delighted with all these measures. I was struggling to work out some complicated questions in order to make the Minister work for her office, but the only one I could come up with is on the timeline. She made reference to some further statutory instruments that will be introduced, and it would be very helpful if we had an idea of the timeline for when the process will be completed.

Aside from that, we are very happy to support the draft regulations and I thank the Minister very much for all those acronyms—I am learning more and more each time we meet.

Draft Building Societies Act 1986 (Modifications) Order 2024

Mark Garnier Excerpts

Monday 9th December 2024 General Committees

[Mark Garnier (Wyre Forest) (Con)]

This Committee may go on record as one of the swiftest yet!

It makes perfect sense to modify the Building Societies Act 1986 to bring it in line with the Companies Act 2006. We have no objection to the order. It is possible that it may only affect one building society, but none the less it would be fairly old-fashioned to have two separate sets of rules depending on which type of business we are discussing. We are behind the order, which makes a huge amount of sense. I will not take any more of the Committee’s time.

Question put and agreed to.

Draft Financial Services and Markets Act 2000 (Ombudsman Scheme) (Fees) Regulations 2024

Mark Garnier Excerpts

Monday 25th November 2024 General Committees

[Mark Garnier (Wyre Forest) (Con)]

I think the Minister and I are going to have an outbreak of unanimity in just about everything we do; we have yet to find something we disagree on. Members will be aware that this legislation was originally due to be implemented in May, but we got caught up in a bit of a general election, which unfortunately did not go quite so well for us. The Opposition therefore fully support the instrument, as Members would imagine.

The Minister made a good point about why the regulations are incredibly important: there are far too many people gaming the system. To support what she was saying, banks incur a great deal of costs as a result, and those costs are inevitably reflected on to consumers; so although it sounds in the first instance like the claims management companies are doing everybody a favour, they are actually increasing the cost of financial services for absolutely everybody. We are therefore wholly supportive of this instrument.

I have a couple of questions. To make sure the instrument does not affect some people badly, can the Minister set out how the Treasury proposes to monitor the changes to ensure that they go according to plan and that, where there is a two-tier system, vulnerable people do not unwittingly find themselves not represented if they use a claims management company?

My other question is on a technicality, and the Minister may not know the answer. The first 10 claims are free of charge for professional representatives. After that, claims cost £250, reduced to £75 if they are successful. Can claims management companies put in class actions—for example, a claim for 1,000 people 10 times—hoping to get a lot of people covered, and thereby potentially increasing the return they could get for each claim, since it is a class action rather than an individual claim, or is the intention that each claim will be an individual case, rather than a group of cases? If the Minister does not know the answer to that now, she should feel free to write to me.

We have absolutely no intention of opposing the instrument. It is a fantastic piece of legislation, brought in by the previous Government, and it is good to see that it has survived the general election, unlike the Minister who signed it off in the first place.

Draft Collective Investment Schemes (Temporary Recognition) and Central Counterparties (Transitional Provision) (Amendment) Regulations 2024 Draft Insurance Distribution (Regulated Activities and Miscellaneous Amendments) Regulations 2024

Mark Garnier Excerpts

Tuesday 19th November 2024 General Committees

[Mark Garnier (Wyre Forest) (Con)]

Thank you, Mr Efford, for chairing these proceedings.

I thank the Minister for going into quite a lot of detail on what is highly technical stuff. The Opposition welcome the changes. They continue the important work started by the previous Government to ensure that our legislative framework is fit for purpose after Brexit. Removing redundant EU references and aligning our investment fund regulations with UK priorities, we are streamlining oversight and maintaining stability in our financial markets. More of interest to the industry will be the clarity given in extending the temporary marketing permissions regime before the roll-out of the overseas funds regime.

As I said, we absolutely welcome the changes; but I do have a couple of questions, the first of which is on the application process for the funds. We are introducing landing slots for UCITS funds transitioning from the TMPR to the OFR. What steps are the Government taking to ensure that fund operators are fully prepared and supported to meet the deadlines to avoid any disruptions?

The other thing that is important for the future of the City and the growth agenda of the City is reciprocal access. While this is all about allowing access for European operators to come into the UK post Brexit—this may be a wider point to do with the growth agenda—what measures will the Government be taking to try to get reciprocal access for UK products to be marketed in the European Union?

Aside from those two questions, we are very happy with this move and will be supporting these measures.

Financial Services: Mansion House Speech

Mark Garnier Excerpts

Monday 18th November 2024 Commons Chamber

[Mark Garnier (Wyre Forest) (Con)]

I thank the Minister for advance sight of her statement, and I congratulate the Chancellor, via the Economic Secretary, on her maiden speech to Mansion House. It has gone down broadly very well, and we are pleased that she recognises the City for what it is. The Minister rightly points out that the UK hosts a competitive and global financial centre, but changes to regulation must not be burdensome, and they must be worked through properly with the industry. When and where the Government take steps to enhance the performance of that sector, they can be guaranteed of our support. As the Chancellor mentioned in her Mansion House speech, in a generous tribute to her predecessor, much of the regulation reform discussed today was started under a Conservative Chancellor. I therefore wish to put on record recognition for my right hon. Friend the Member for Godalming and Ash (Jeremy Hunt) and the work he did in that area.

Before I turn to the substance of the statement, inevitably I will talk about the Budget. It is worth reminding the House of the most pressing parts of the Chancellor’s Budget, which she left out of her Mansion House speech. In her speech she mentioned the word growth no fewer than 41 times, but we have to look at the facts. When the Conservatives left government, we had the fastest growing economy in the G7, but now growth has halved. The Chancellor’s increase in national insurance means that businesses are picking up the tab to pay for Labour’s open tap on spending. She will no doubt have read the letter sent to her by 200 hospitality businesses, highlighting job losses across their sector and a wider range of sectors. Despite all her talk about growth, business groups and economists agree that Labour’s approach to the Budget is choking the momentum of our economy. Britain deserves a Government who back growth, empower investment and deliver prosperity. I hope that the Minister today will admit to the British public that while she talks about growth, her party’s plans to grow the economy fall short of an economic growth agenda.

On the substance of the reforms that the Minster has outlined today, we believe that the objectives that the Chancellor is attempting to achieve with her Mansion House reforms are broadly the right ones. First, it goes without saying that delivery of the reforms that the Conservatives started in government is to be welcomed, including the focus on growth; my right hon. Friend the Member for Godalming and Ash (Jeremy Hunt) legislated to ensure that financial services and markets regulation has a secondary growth duty. It is regrettable that the Government could not publish the final version of the pension investment review or the pension Bill in time to accompany this statement.

As I turn to my questions, I should make it abundantly clear to the Minister and the House that these reforms must remain focused on delivering the best deal for pension savers. While additional investment is welcome, the pension market should not be treated as a Government cash cow for public investment if it loses sight of the paramount objective of delivering a secure return for savers. It is true that unlocking greater investment and delivering greater returns for pension savers can come together—both can happen at the same time—but I must push for the publication of the finer details of this policy. The emphasis must still be on pension savers. While greater investment and greater returns can come together, security in retirement is what the pension industry is all about.

Work to reconcile those two aims was furthered by my right hon. Friend the Member for Godalming and Ash when he announced reforms earlier this year, which included requiring pension funds to publicly disclose how much they invest in UK businesses compared with those overseas, and disallowing schemes that performed poorly for savers from taking on new business from employers. Can the Minister confirm that those reforms remain Government policy, and that nothing she is announcing today changes those policy strands?

Can the Minister set out a timeframe for the proposed mega-funds? Some 86 local authority pension funds will be consolidated into just eight. What are the criteria on which the Government have chosen eight? Why not one, 10 or 15? The Government note that the local government pension scheme in England and Wales has

“assets…split across 86 different administering authorities…with local government officials and councillors managing each fund.”

Can the Minister clarify whether each of the 86 local government pension funds will have a stake in each of the eight mega-funds, or will they each be allocated to just one mega-fund, thereby possibly distorting the risk profile of that pension fund?

The Government state that the consolidation into a handful of mega-funds will enable the funds to invest more in assets such as infrastructure. Can the Minster confirm whether the “infrastructure” that the Government mention in their press release refers to both public and private infrastructure projects? On the topic of infrastructure, what is the expected return on Government-owned infrastructure projects? Will pensioners ever be mandated to take lower returns to support the Government’s investment objectives? The Minister with responsibility for pensions, the hon. Member for Wycombe (Emma Reynolds), who is in her place, gave rise to some ambiguity about whether there will be mandating of pension fund investment in Government projects in her Financial Times article this morning. Furthermore, will the trustees overseeing these mega-funds be restricted by the Government as to what they can invest in, or will they be free to choose their investment and risk profiles?

The Government also state:

“A new independent review process will be established to ensure each of the 86 Administering Authorities is fit for purpose.”

Can the Minister give any further detail on that review? Who will be running it, for how long will it be running, and what is considered “fit for purpose”? How many of these funds would have to be considered not fit for purpose for the Government to reconsider the number of mega-funds?

To conclude, we support what the Government are trying to do with their reforms, many of which are ours, but questions remain about the detail of the policy. We will scrutinise the detail of the legislation when published. I finish as I started—by saying that the Government are talking about investment and growth, but have just delivered a Budget that downgrades growth and crowds out business investment. Those things are not compatible, and we urge the Government to put forward a workable plan for growth. They must not rely solely on the financial services sector to bail them out.

[Tulip Siddiq]

I thank the Opposition spokesperson for his comments. I think he welcomed the news, although I am not quite sure. He spoke a lot about the ex-Chancellor, the right hon. Member for Godalming and Ash (Jeremy Hunt), who did a lot of work in this space. I remind the House that the ex-Chancellor said that there was

“Much to welcome in the Chancellor’s Mansion House speech today.”

The Opposition have said that these are “broadly” good reforms; I thought I would remind the Opposition spokesperson of that. I also remind him that we are not interested in sticking-plaster politics. We have a long-term vision for the economy, which is why we are looking at using the national wealth fund and the industrial strategy to ensure that we grow the economy.

I will answer a few of the hon. Gentleman’s questions, but if I do not get to all his pension questions, the Minister with responsibility for pensions is happy to meet him. I point out that our public services are crumbling, and that we inherited a £22 billion fiscal black hole from the previous Government. We had to make difficult choices to fix the foundations of the country and restore desperately needed economic stability in order to allow businesses to thrive. He pointed out that hospitality businesses were contacting him. More than half of employers will see either a cut to or no change in their national insurance bills. To support the hospitality industry, we are permanently cutting business rates for retail, hospitality and leisure from 2026. That comes alongside a 40% relief on business rate bills next year for thousands of premises.

We are committed to delivering economic growth by boosting investment and rebuilding Britain, which is exactly what our Budget did. The interim report of the pensions investment review, which the hon. Gentleman had a lot of questions about, put forward proposals to drive scale and consolidation in the defined contribution workplace market. The Local Government Pension Scheme is still consulting. The final version will come out in spring next year, but as I said, the Minister for pensions is happy to speak to him. There is international industry consensus that the scale and consolidation benefit investment and savers, and that these measures could unlock around £80 billion of productive investment.

On the hon. Gentleman’s questions about the reforms taking autonomy away from local authorities, under the proposals in the consultation, each administrating authority would retain control over the most impactful decisions by setting their investment objectives and strategic asset allocation. The consultation proposes that implementation of the chosen strategy be delegated to investment experts in the asset pool, who are best placed to execute the investment objectives to meet the desired investment outcomes. I hope that reassures him that we will not take autonomy away from the authorities.

The hon. Gentleman talked about the overall package of boosting UK economic growth and benefiting pension scheme members. The objectives are complementary. Driving consolidation and tackling waste in the pension system ensures that schemes can achieve the necessary economies of scale and efficiencies to pursue diversified investment strategies. I reassure him that assets such as infrastructure and private equity are seen as part of the balanced portfolio, and can enhance savers’ returns. They will boost economic growth, so he does not need to worry about that, and we will benefit the communities where pension savers live.

The hon. Gentleman spoke a lot about what the previous Government did. They talked a lot about pensions, but they actually never did anything. We have shown in the first few months of a new Labour Government that we mean business, and we have our action ready to go. By next spring, he will see the full details in the Bill.

Draft Local Loans (Increase of Limit) Order 2024

Mark Garnier Excerpts

Wednesday 13th November 2024 General Committees

[Mark Garnier (Wyre Forest) (Con)]

It is exciting—fantastic—for me to start my new job as a shadow Treasury Minister on something so utterly uncontroversial. Obviously, we will support this; there is no question about that. But I would like to make a couple of points.

It is interesting to see that the Public Works Loan Board amount, on a year-by-year basis, has now gone up to pre-pandemic levels, and that we have come back up quite quickly. It is also worth bearing in mind that that was around the time when the new rules were introduced about prudence; it will be interesting to see whether there is any explanation as to why that has happened now. It could be perfectly harmless, but it is important for monitoring.

I have three principal questions. First, the Minister mentioned the rules that were brought in. Can the Government confirm that they will remain committed to those new rules? That is very important. They were there to avoid speculative investment, and we want the money to be properly used to benefit local communities, albeit at a commercial rate of return. It is important to make sure that speculation does not come into this, so can he confirm that?

Will the Government also confirm that they intend to closely monitor how councils are borrowing? That is important because some well-meaning district councils may make some slightly unwise decisions. What metrics will the Government use to make sure that local authorities are borrowing prudently in accordance with the rules, so that we can understand how that is being monitored? Finally, what steps are being taken to manage debts effectively, ensuring that they do not hinder future potential borrowing requirements or place tighter strain on local authorities that may or may not be struggling with tight budgets for one reason or another?

We are keen to support the order; it is a perfectly reasonable thing and it is important for us to support our local authorities. Some are incredibly innovative and a lot of the money is used to support local communities at a commercial rate of return. We see nothing wrong with that, but I will be grateful if the Minister can help me with those questions. It looks as if we may be finished within five minutes.