Oral Answers to Questions

Mark Hoban Excerpts

Tuesday 16th November 2010 Commons Chamber

[Mr Chuka Umunna (Streatham) (Lab)]

8. What steps he is taking to review the regulation of credit rating agencies.

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

The coalition Government support greater regulation of credit rating agencies. The credit rating agency regulation came into force in the EU, including in the UK, on 7 December 2009. The UK authorities continue to be active in both the EU and G20 processes, including in negotiations on amending the credit rating agency regulation and in examining ways to reduce our reliance on credit ratings for regulatory and official purposes.

[Mr Umunna]

These obviously follow on from the proposals of Jacques de Larosière. One problem that has been identified with the rating agencies is the conflict of interest issue. I think that we should move to a “buyer pays” model. The other issue is a lack of competition in the credit ratings market. Michel Barnier, the EU Commissioner, has floated the idea of having an EU credit rating agency, which I think is a thoroughly good idea. Does the Minister agree?

[Mr Hoban]

Of course there are areas where more work needs to be done, and the hon. Gentleman is right that Michel Barnier has made further proposals, in a consultation paper that he published earlier this year. They included looking at the business models for credit rating agencies. However, I question whether taxpayers in Europe would feel it right that their money should be going to fund credit rating agencies.

[Andrew Bridgen (North West Leicestershire) (Con)]

Is it not a cause for cautious optimism that agencies such as Fitch, Moody’s and Standard & Poor’s have now given the UK such an excellent credit rating?

[Mr Hoban]

My hon. Friend is absolutely right, and it just goes to show that credit rating agencies do not get it wrong all the time. In May, Standard & Poor’s put the UK’s credit rating on a “negative outlook”, as a consequence of the previous Government’s policies. However, in October it said that

“the coalition parties have shown a high degree of cohesion in putting the U.K.’s public finances onto what we view to be a more sustainable footing.”

We welcome those comments.

[Philip Davies (Shipley) (Con)]

9. What recent assessment he has made of the effectiveness of the outcome of the comprehensive spending review in reducing the budget deficit.

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[Stephen Mosley (City of Chester) (Con)]

11. What steps he has taken to encourage saving since the June 2010 Budget; and if he will make a statement.

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

The Government want to build a savings culture based on the principles of freedom, fairness and responsibility, and we are committed to creating conditions for higher saving. We have already announced a number of measures, including the annual financial health check and an end to the effective requirement to purchase an annuity with tax relief pension savings at the age of 75. We will also increase the amount that can be paid into ISAs each year in line with inflation from April 2011.

[Stephen Mosley]

Recent research from Which? has highlighted the fact that savers are missing out on £12 billion a year by keeping their money in accounts that pay extremely low rates of interest. Would my hon. Friend consider encouraging banks to print the interest rate on bank statements in the same way that credit card companies have to print the rate that they charge on their statements, in order to help savers to identify whether they are getting a good deal from their bank account?

[Mr Hoban]

My hon. Friend makes an important point. We need to ensure that savers have the information that they need to enable them to shop around and find the best possible deal. ISA providers have already agreed to disclose interest rates on their statements, and the Financial Services Authority is consulting on extending that duty to other savings accounts.

[Stewart Hosie (Dundee East) (SNP)]

The Minister will be aware that the savings ratio is forecast to fall in every single year until 2015. Does this not make the decision to abolish the child trust fund—a savings plan with a 74% voluntary take-up rate—all the more short-sighted?

[Mr Hoban]

The problem with the child trust fund is that there was no evidence to demonstrate that it increased savings across the economy. We are faced with a difficult decision: we need to find savings to tackle the budget deficit that we inherited, and we believe that the best thing to do is to give help to families now rather than locking that money away until the children are 18.

[Julian Smith (Skipton and Ripon) (Con)]

12. What assessment he has made of the effect on the economy of recent trends in growth in the private sector.

--- Later in debate ---

[Mr Marcus Jones (Nuneaton) (Con)]

What steps can the Chancellor take to ensure that the Financial Services Authority’s mortgage market review proposals do not have a disproportionate effect on home buyers and the housing market, particularly at a time when we are trying to encourage growth through the private sector?

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

My hon. Friend makes an important point and the FSA’s mortgage market review is seeking to learn some of the lessons from how the mortgage market was regulated before the financial crisis and some of the problems that that regulation created. What I think is important is that the FSA should consider very carefully the impact on home ownership and particularly on those people who are looking to move shortly.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

T8. May I give those on the Treasury Front Bench the opportunity to answer the question on child benefit that they failed to answer earlier? How do they justify taking child benefit off a single-earning family on £45,000 and allowing a family that earns £80,000 to retain child benefit? An answer this time would be appreciated.