Mark Hoban
Main Page: Mark Hoban (Conservative - Fareham)Department Debates - View all Mark Hoban's debates with the HM Treasury
(13 years, 10 months ago)
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The Financial Secretary to the Treasury (Mr Mark Hoban)
Our objective in these discussions is to create a banking industry that lends to the British economy, contributes to the Exchequer, and supports economic growth and employment. The Government are in discussions with the banks to see if a new settlement can be reached so that bonuses and remuneration policies are more transparent and levels of bonuses paid are smaller than they would otherwise have been. Alongside this, we are looking at options to ensure that banks make an appropriate contribution to local economies and communities and provide the credit required to support the economic recovery, facilitate growth and create jobs.
Vernon Coaker
Can the Minister tell the House why the Chancellor refuses to adopt Labour’s plan to repeat last year’s £3.5 billion bank bonus tax, as well as the bank levy, and use that money to help create the jobs and growth that so many of our communities badly need?
Mr Hoban
The hon. Gentleman should remember the words of the former Chancellor of the Exchequer, who said that the bank payroll tax did not work. Labour Members went into the last election ruling out a bank levy; they would not take the action that we have taken to ensure that banks pay a fair contribution to the costs they pose to the economy.
Rosie Cooper
My constituents are appalled that the general attitude of the Government seems to be to withstand all criticism and not to deal with the real problem by making bankers accountable for what they are doing and pay their fair share. We are not all in it together.
Mr Hoban
I find that quite rich coming from Labour—the party that gave Fred Goodwin his knighthood. The reality is that under our bank levy the banking sector will pay more every year than it paid in one year under the bank payroll tax. That is the action that this Government have taken to ensure that banks pay their fair contribution towards the Exchequer.
Mr Campbell
The Chancellor must think he is good when he has put hundreds of thousands of public servants on the dole, cut pensions, especially those of the police and armed forces, and cut local government finance. It has been reported in the newspapers that a banker is to receive a £9 million bonus. Why does not the Chancellor get off his backside, get into the banks, and get it sorted?
Mr Hoban
I will take no lessons from the Labour party on bank bonuses. The shadow Chancellor presided at the Treasury when big bonuses were being paid out in cash, with no clawback and no lock-up. He backed that light-touch regime in government. We have taken the tough decisions on tackling bonuses. The Opposition should be apologising, not criticising.
Sir Peter Tapsell (Louth and Horncastle) (Con)
Do Treasury Ministers agree that the real problem with bankers’ bonuses is that they are paid not out of profits, but out of revenues? Taxing banks after the bonuses have been paid merely depresses dividends, particularly for pension funds. Why are bankers’ bonuses not paid out of profits, as they always were by my very efficient stockbroking firm?
Mr Hoban
My hon. Friend makes an important point. Of course, under the old regime, there was no clawback when bonuses were paid out in cash, and no lock-up. The new code on remuneration introduced by the Financial Services Authority, which is ahead of international practice, has clear rules on deferral, requires that bonuses be clawed back for poor performance, and requires that bonuses for significantly highly paid members of staff—those who take risks—be paid out principally in shares, not in cash. That will ensure that the interests of bankers are aligned with those of shareholders.
Matthew Hancock (West Suffolk) (Con)
How much has the Minister been constrained in his dealings with the majority state-owned banks by the contracts on payments that were signed by the Labour party before the election?
Mr Hoban
My hon. Friend puts his finger on the problem. When the previous Government entered into arrangements to bail out RBS and Lloyds, they limited the period of their involvement in the bonus regime. That is why we had to take action this year and why we have engaged with banks through project Merlin to achieve restraint on bank bonuses. We will make an announcement in the next week.
Duncan Hames (Chippenham) (LD)
I congratulate the Chancellor on extracting a further £800 million from the banks this morning. Will he take this opportunity to rule out any reduction in his permanent bank levy, should it turn out to raise more money than expected?
Mr Hoban
My hon. Friend makes an important point, and I thank him on behalf of the Chancellor for his congratulations on the levy. As he recognised, the levy is a permanent feature, not a one-off tax like the previous Government’s bank payroll tax. It will raise more than the bank payroll tax did in its year in operation, on a net basis. We are committed to raising the levy from the banks over the life of this Parliament.
Chris Leslie (Nottingham East) (Lab/Co-op)
It is clear that the partial U-turn on the banking levy happened today purely by coincidence and had nothing to do with Treasury questions. Has the Minister anything else to tell the House? For example, what is he going to do about excessive bonuses? Perhaps we can coax him into another U-turn on the £1 billion corporation tax cut that he is giving the banks. If he wants to announce that at the next Treasury questions, that is fine.
Mr Hoban
I do not think that the hon. Gentleman is entirely on top of his brief on this matter. He knows that banks will pay more tax as a consequence of the levy. The tax cuts for the financial sector are far lower than the amount we will raise from the bank levy. This is a permanent measure. The previous Government failed to take action on bank levies and ruled out introducing them on a unilateral basis. This Government have gone ahead and done the right thing for the economy and for the taxpayer.
Steve Rotheram (Liverpool, Walton) (Lab)
14. What recent assessment he has made of the progress of the work of the Independent Commission on Banking.
The Financial Secretary to the Treasury (Mr Mark Hoban)
The Government set up the Independent Commission on Banking to consider reforms to the banking sector. We welcome the progress that the commission has made, and look forward to receiving its report in September 2011.
Steve Rotheram
If the banking commission recommends breaking up the big banks, will the Government judge the Vickers report on its own merits, or will they put the value of their shareholding in the nationalised banks first?
Mr Iain Wright (Hartlepool) (Lab)
16. What assessment he has made of the effects on consumer confidence of the recent increase in the basic rate of value added tax.
Steve McCabe (Birmingham, Selly Oak) (Lab)
17. What assessment he has made of the effectiveness of support and advice on financial planning and financial literacy for young people and vulnerable groups.
The Financial Secretary to the Treasury (Mr Mark Hoban)
The Consumer Financial Education Body, which is soon to be renamed the Money Advice Service, has statutory objectives to improve understanding of financial matters among the general public, and to enhance the ability of members of the public, including young people and vulnerable groups, to manage their financial affairs. CFEB is the independent body that is responsible for measuring the effectiveness of its work.
Steve McCabe
Given people’s reliance on citizens advice bureaux, is the Minister at all worried about the cuts to them, including the closure of all five in Birmingham? How will that help vulnerable people who are seeking reliable financial advice?
Mr Hoban
The Government take the issue of financial advice very seriously. That is why we have supported the establishment of CFEB, which will be funded through a levy raised on the financial services sector, which is very important. It is also important that CFEB takes forward its work and considers how to reach out to some of the most vulnerable people in society.
Mark Menzies (Fylde) (Con)
18. What recent steps he has taken to implement the Basel III framework; and if he will make a statement.
The Financial Secretary to the Treasury (Mr Mark Hoban)
The Government are taking forward work on the implementation of Basel III. The agreement will be implemented on an EU-wide basis through revisions to the capital requirements directive. Legislative proposals known as CRD 4 are expected from the European Commission before the summer. The Commission is working towards the implementation of CRD 4 in member states including the UK on 1 January 2013, with the majority of measures to be phased in by 1 January 2018.
Mark Menzies
Does my hon. Friend agree that the Government’s willingness to consider capital control and liquidity reform vastly contrasts with what took place under previous Governments?
Mr Hoban
My hon. Friend makes an important point. Of course, part of the problem was that the light-touch regime introduced by the previous Government for the regulation of the financial services sector meant that, when losses rose, banks did not have sufficient capital to absorb them. The Basel III reforms will tackle that challenge, and I hope that we will see a stronger and more sustainable financial sector.
Andrew Selous (South West Bedfordshire) (Con)
T1. If he will make a statement on his departmental responsibilities.
Mr George Mudie (Leeds East) (Lab)
T7. The Chancellor referred to the need for the regulator to have good judgment. Do Ministers think that the same regulator is using good judgment in all aspects of the retail and mortgage reviews?
The Financial Secretary to the Treasury (Mr Mark Hoban)
The hon. Gentleman raises an important question about the continued work load of the Financial Services Authority and its work on financial services. He and I would agree that we want better consumer outcomes from retail financial services, and that means that these areas should be reviewed very carefully. However, I am also certain that the outcome of the mortgage market review should take into account the stability of the housing market.
James Wharton (Stockton South) (Con)
T4. The 2010 North East Research and Information Partnership annual jobs report shows a net increase in employment in the region of about 1,300 jobs over the past year. What are the Government doing to ensure that the private sector recovery in the regions continues?
Rachel Reeves (Leeds West) (Lab)
In Leeds we will lose 11 citizens advice bureaux debt advisers next month because of the cancellation of the financial inclusion fund. Where would the Minister suggest that my constituents who are struggling with debt and excessive and escalating charges from doorstep lenders go for advice?
Mr Hoban
The hon. Lady will be aware that the financial inclusion fund, which was set up by the previous Government, was coming to a close at the end of March. Other sources of debt advice are available. For example, the Consumer Credit Counselling Service is an effective provider of advice, while the Money Advice Trust provides advice over the phone. There are sources of advice out there, but as I said in response to a question from the hon. Member for Birmingham, Selly Oak (Steve McCabe), the Consumer Finance Education Body, which was set up by the previous Government and which we proposed, will reach out to the most vulnerable people in society to ensure that they get access to high-quality advice.
Gavin Williamson (South Staffordshire) (Con)
T8. Will my right hon. Friend join me in welcoming the decision by Moog Aircraft, which is based in my constituency, to invest millions of pounds in a new site to replace its old factory, securing 400 jobs in South Staffordshire? After 13 years of Labour’s decline in manufacturing, is this not a further sign that we are now seeing a manufacturing recovery?