Oral Answers to Questions
Debate between Mark Hoban and John Bercow(11 years, 5 months ago)
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Jobseekers (Back to Work Schemes) Bill (Allocation of Time)
Debate between Mark Hoban and John Bercow(11 years, 8 months ago)
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Mr Hoban
The hon. Lady makes a helpful point, but the legal position is as follows. If the Supreme Court does not give us leave to appeal, the regulations will be quashed, and we would have to repay sanctions to claimants who had not participated in schemes to help them back into work. The Bill is therefore needed. Hon. Members may have received briefings from third parties saying that that was not the case, but I can assure her and others that it is.
The Department has applied for permission for leave to appeal to the Supreme Court, but there is no guarantee that that will be granted. We therefore need to expedite the Bill so that we are not in a position where we have to repay benefit sanctions to people who have neither participated nor accepted the help that we have offered them.
Mr Speaker
I take it that the Minister has concluded his remarks. He cannot be accused of doing so with a fanfare of trumpets, but we are grateful to him for moving the motion.
Oral Answers to Questions
Debate between Mark Hoban and John Bercow(11 years, 10 months ago)
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Stephen Timms (East Ham) (Lab)
Ministers often say that they have stopped people on Government schemes appearing in the labour market statistics as “in employment”. But recent analysis shows that of the claimed 500,000 increase in employment over the past 12 months, 214,000 people are in fact on Government schemes and mostly still claiming JSA. What is going on?
Mr Speaker
The question is exclusively on Easington, but the right hon. Gentleman has made his own point with delphic confidence.
Mr Hoban
What is happening—and it happened under the previous Government—is that these figures are drawn up in line with international rules. I agree with him that it is inappropriate, and that is why I wrote several months ago to the Office for National Statistics to ask it to change that. Only one in 20 of the additional jobs created since the general election are down to Government schemes, and the right hon. Gentleman should be commending the number of private sector jobs being created that have helped people get back into work. That is why we have record numbers of people in work.
Atos Work Capability Assessments
Debate between Mark Hoban and John Bercow(11 years, 11 months ago)
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Mr Speaker
Order. The Minister is most courteously attending to the issues, and he refers to three or four minutes. I know that he will be leaving at least two, if not three, minutes for the right hon. Member for Oldham West and Royton (Mr Meacher) to wind up at the end. I think that we are clear on that.
Northern Rock
Debate between Mark Hoban and John Bercow(13 years ago)
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The Financial Secretary to the Treasury (Mr Mark Hoban)
With permission, Mr Speaker, I would like to make a statement about Northern Rock. As the House will be aware, on 15 June this year the Chancellor of the Exchequer announced that Northern Rock had been put up for sale. Last week, he announced that he had agreed the sale of Northern Rock plc to Virgin Money. I am grateful for the chance to update Parliament on those events.
As hon. Members will be aware, the collapse of Northern Rock four years ago foreshadowed a crisis that was to engulf the global financial system. The queues of people outside branches of Northern Rock—the first run on a British bank in more than a century—remain to this day a lasting image of the crisis. It was a sorry result of the inadequate regulation and irresponsible banking that the previous Government presided over, and it was a crisis that led to a range of Government interventions in the financial sector. The sale of Northern Rock to Virgin Money is an important step towards normalising the Government’s role in the financial sector and getting the Government out of the business of running the banks.
The deal with Virgin Money is expected to be completed on 1 January 2012, pending European Commission merger clearance and Financial Services Authority approval. Let me reassure the House that the sale route represents the best value for money for the taxpayer. United Kingdom Financial Investments and its independent advisers looked exhaustively at all potential exits, including stand-alone remutualisation, combination with an existing mutual and initial public offering, but ultimately advised that a sale would generate the best value for money for the taxpayer.
Furthermore, under the terms of the state aid agreement entered into by the previous Government, we have to transfer control of Northern Rock to a new owner by the end of 2013. That limits the window for getting Northern Rock plc back into the private sector. Combined with the fact that the bank is likely to be loss-making well into 2012, a sale to Virgin Money now is the best option measured against taxpayer value for money. We have also carefully assessed the impact of the sale on competition and financial stability.
Let me set out the details of the deal. The cash elements are as follows. Virgin will make a cash payment of £747 million to the Treasury on completion, which is expected to be on 1 January, conditional on regulatory approvals. We also expect about a further £50 million once we know the actual final net asset value of Northern Rock plc at the end of 2011. In addition to the cash payment, the Government will hold a capital instrument in Virgin Money, with a par value of £150 million and paying interest at 10.5%. Furthermore, we have ensured that the taxpayer will get a share of any upside. In the event of a profitable sale or initial public offering by Virgin Money, an additional cash consideration of between £50 million and £80 million will be paid to the Government.
By way of comparison, our shareholding in Northern Rock is valued at £1.2 billion on the Treasury’s balance sheet, because the previous Government injected £1.4 billion of capital into the loss-making bank at the start of 2010. By the end of this year, that value will have decreased further due to the losses that Northern Rock currently makes. Despite all that, we have sold Northern Rock plc at a price-to-book multiple of about 0.8. Given that other UK banking stocks are trading at multiples of around 0.5, that is a good outcome for the taxpayer. Of course, when we consider the final position we will need to look at both Northern Rock Asset Management and Northern Rock plc to see the final outcome for the taxpayer.
This is also a good deal for the economy of the north-east, with the potential to create new growth and new jobs in the area. Virgin Money has committed to there being no further compulsory redundancies beyond those already announced for at least three years. It will also make Newcastle the operational headquarters of the new, combined business. It will retain the total number of existing branches, with the highest concentration in the north-east, and with plans to expand as the business grows.
We are pleased that Virgin Money has also committed to extending the current financial agreement with the Northern Rock Foundation to the end of 2013. We all know that the Northern Rock Foundation plays a vital role in tackling disadvantage in the north-east and Cumbria. Virgin has also committed to exploring how Virgin Money Giving and the foundation could work together in the future.
This deal will create almost immediately a new, credible competitor in our retail banking sector, thus increasing choice for consumers. The Government are clear that more competition is needed in the banking sector. A competitive banking sector ensures that the economy benefits from banking products and services at efficient prices. Competition is also a spur to innovation and economic growth, but choice has diminished in recent years as a number of high street banks and building societies have disappeared or merged. As set out in this Government’s coalition agreement, we are committed to promoting competition in the banking sector and to the return to the private sector of the Government-held stakes in banks, of which this measure is a key part.
The Virgin brand has a strong reputation for growth and innovation and I am confident that its entry into retail banking will provide a real challenge and improve diversity in the banking sector. I want to be clear that for current Northern Rock customers, it is business as usual. They will not need to take any action as a result of the announcement. Virgin Money also plans to offer personal current accounts and small business banking products in due course.
I know some would have liked to see Northern Rock re-mutualised, but no final bids were made by mutuals and no workable plans for stand-alone mutualisation were put forward. None the less, the Government remain committed to promoting mutuals, which is why we are working with the mutuals sector to support its ambitions and ensure that it is not disadvantaged compared to bigger established banks—all to foster diversity and create a more competitive banking industry.
Of course, the sale of Northern Rock is only one step to a new banking sector—it is not simply a return to business as usual. The last crisis cost the taxpayer billions of pounds, and we cannot afford to repeat that. That is why this Government are pursuing ambitious reform of the financial sector at home and abroad, ensuring that we embed a competitive, successful but secure financial sector, and one that supports growth across the entire economy without jeopardising its stability; why we are fundamentally reforming the failed tripartite system, entrenching a much greater and much-needed focus on macro and system-level risks; why we are leading the international agenda for full implementation of the Basel III standards, to ensure that our banks are resilient to ongoing market turbulence; why we support in principle the recommendations of the Independent Commission on Banking to ring-fence better-capitalised high street banks, reduce taxpayer exposure through powers of bail-in, and increase competition in banking; and why we have secured commitments from the UK’s biggest banks to provide £190 billion of new credit to businesses across the country this year, lending £76 billion to small and medium-sized enterprises this year alone, which is £10 billion more than banks lent to them last year.
The sale of Northern Rock to Virgin Money is an important milestone in this Government’s efforts to return state-owned banks to the private sector. It represents good value for the taxpayer and provides an economic boost to the north-east region. For consumers across the board, it means greater diversity and choice in financial services.
I firmly believe that Virgin Money will have a hugely beneficial impact on the banking landscape in the years to come, providing better outcomes for customers and businesses. Of course, this is only one step towards a reformed banking landscape. The Government will continue to work hard to remedy the regulatory failures of the last decade, to promote a more competitive sector, and to ensure that we embed a stable and successful financial system that serves and not jeopardises the economy. I commend this statement to the House.
Mr Speaker
I apologise to the hon. Gentleman for inadvertently demoting him. I had been advised that this statement was to be made by the Exchequer Secretary to the Treasury, but I realise that the hon. Gentleman is a still more senior man, serving the Government as Financial Secretary.
Mr Hoban
I think that there is a better guarantee of jobs under the current proposal than there would have been if Northern Rock had continued as it was. The problem with Northern Rock was that its cost base exceeded the business that it was writing, and that posed a long-term—[Interruption.]
Mr Speaker
Order. As I said to the hon. Member for Reading West (Alok Sharma), I understand that there are very strong feelings and effects on constituencies on these occasions, but the hon. Member for Blyth Valley (Mr Campbell) must not chant a chorus from a sedentary position—or even, for that matter, from a standing position. We are grateful to him for his views when he is called to speak.
Matthew Hancock (West Suffolk) (Con)
Is not the argument that we should hold on to Northern Rock for a few more years in the hope that the price will go up just a punt on the stock market, and is that not exactly the sort of attitude that got us into this mess in the first place?
Mr Speaker
Order. The relationship between that question and the matter under consideration is, at best, tangential, but I am sure it is not beyond the intellectual compass of the Financial Secretary to address it.
Mr Hoban
I was, indeed, intrigued about the role Northern Rock might play in bailing out the eurozone economies. It is essential that action is taken in the eurozone to tackle the fundamental problems it faces. The banking system must be recapitalised, the fiscal crisis in Greece and a number of other member states must be resolved, and a firewall must be put in place to ensure that the turbulence in the eurozone comes to an end. We are all working towards achieving that, and it is in our long-term interests to do so. The fact that we were able to dispose of Northern Rock against that backdrop is a good sign of what is happening here in the UK.
European Budgets 2014 to 2020
Debate between Mark Hoban and John Bercow(13 years, 1 month ago)
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Mr Hoban
Let me finish a couple of sentences and then I will give way.
Tackling financial mismanagement in the EU can help meet spending commitments, so our message on spending is clear. There should be a real-terms freeze on spending, a focus on the amounts actually spent, not plans dreamt up over five years ago when the world was different. Let us tackle waste and financial mismanagement across the EU. I give way to my hon. Friend the Member for South Northamptonshire (Andrea Leadsom).
Mr Speaker
Order. Before the Minister gives way to the hon. Lady, I emphasise that, of course it is in the gift of the Minister to give way as he thinks fit, but the total time for the debate on this matter is only one and a half hours, and it would be a pity if Back Benchers were disappointed. I am sure that the Minister will tailor his remarks and his giving way accordingly.
Oral Answers to Questions
Debate between Mark Hoban and John Bercow(13 years, 1 month ago)
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Mr Speaker
Order. The Minister has said enough, and he has said it about another party’s policy. We need to move on.
Geraint Davies (Swansea West) (Lab/Co-op)
Is it not accepted now by the international community that the announcement by the Chancellor a year ago that he would cut half a million public sector jobs led directly to a reduction in consumer demand, and that it has reduced private sector investment and growth and led to an increase in deficit predictions?
Oral Answers to Questions
Debate between Mark Hoban and John Bercow(13 years, 5 months ago)
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Mr Speaker
Order. The hon. Gentleman refers to letters but the question is about the rate of job creation in the private sector; I think the hon. Gentleman meant to say that.
European Summit
Debate between Mark Hoban and John Bercow(13 years, 8 months ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
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Mr Hoban
My hon. Friend forgets that we have already agreed with our European partners that the European stability mechanism will replace the temporary structures that were put in place, and of course we should not forget that we are part of the EFSM as a consequence of decisions made by the previous Government, not this Government.
Mr Denis MacShane (Rotherham) (Lab)
Obrigado, Mr Speaker.
The plain fact is that Portugal is our oldest ally. It is in trouble and we should help. When Margaret Thatcher brought the rebate back, she was questioned by a Eurosceptic on the Labour Benches who asked, “Why are you allowing more money to go from the British taxpayer to all these new countries?” She replied: “We should help Portugal”. We should do the same tonight. I hope that our Prime Minister will remember our longest, oldest friendship with any European country, and ignore the Eurosceptic waffle from those sitting behind the Front Bench.
Oral Answers to Questions
Debate between Mark Hoban and John Bercow(13 years, 8 months ago)
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Mr Speaker
Order. We are asking about current policy, and some of these questions are simply—[Interruption.] Order. We have got the gist.
Mr Hoban
My hon. and learned Friend is absolutely right, and a number of organisations, both at home and abroad, have criticised the lack of ambition of the previous Chancellor’s plans. That is why the Obama Administration, the International Monetary Fund, the OECD, the Institute for Fiscal Studies, the CBI, the Governor of the Bank of England, 35 leaders of British businesses, the European Commission, the World Bank, three major credit rating agencies and the world’s biggest bond trader have been backing our plans—the only person the shadow Chancellor can find to back his is The Guardian.
Independent Financial Advisers (Regulation)
Debate between Mark Hoban and John Bercow(14 years ago)
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Mr Hoban
I have about nine minutes to respond to quite a long debate in which a number of points have been made, and I want to take the opportunity to address some of those issues.
Let me put on the record the importance that I place on independent financial advisers. They play a key role in helping people make financial product purchases and financial choices. High-quality, independent financial advice is vital in ensuring that people are encouraged to save and plan for the future and make the most out of their money. I have used independent financial advisers and been happy with the service I have received, because they have provided me with good-quality advice.
I cannot overstate the detriment to consumers from poor and biased advice. Indeed, the FSA estimates the detriment to consumers from inappropriate advice to be £200 million per annum, and it thinks that the figure could be significantly higher. Consumer detriment has led organisations such as Which? and the consumer panel that advises the FSA to support the measures in the retail distribution review. We need to get that balance right and to address some of the issues that undermine consumer trust in the IFA sector, and the FSA has sought to do so through the RDR.
I have become very conscious—in particular, over the past six or seven months as a Minister—of the financial services sector’s increasing complexity, and consumers must be confident that IFAs are fully up to date and that their advice is underpinned by good technical knowledge. There can be few hon. Members who do not support that stance or recognise the benefits that increased professionalism can bring. Indeed, the FSA finds a clear link between increased qualifications for financial advisers and improved consumer outcomes. Under its reforms, consumers will be confident that their adviser has a minimum level of understanding and expertise that is maintained each year through continuing professional development.
We should also recognise that a number of IFAs already comply with those standards. Just under half of IFAs already hold the required qualification and, indeed, many go beyond QCF level 4. Some 89% of advisers already meet the required hours each year for CPD, and we need to recognise the progress that has been made since examinations were introduced in 2008.
I recognise the strength of the debate about grandfathering, and it is an important debate to have, but we need to think about how much experience is sufficient for people to be grandfathers, and about how we can ensure that that experience covers the range of products necessary to provide whole-of-market, independent advice. We ask people to advise on a range of products, such as pensions, insurance bonds and ISAs, and they need such technical knowledge to do so. Consumers are entitled to know that their adviser has a high standard of technical knowledge, and a minimum qualification standard should deliver that.
The increase in standards will not discriminate against those who have kept up to date with market developments, and they should not have to commit a significant amount of time to study. As I have said, 90% of advisers already undertake the required number of hours for continuing professional development, and I think that over the next two years the measure can be used to fill any gaps between existing and revised standards. As a consequence of lobbying by the IFA community, the FSA has relaxed the regulations, so there will be non-exam-based alternative assessments, rather than formal written exams. That is an important move forward that the FSA has already made, but high standards of technical knowledge will be crucial to help IFAs navigate their clients through the increasingly complex choices that they have to make.
I want to touch on the issue of adviser charging. I am strongly committed to increased transparency in financial services; it is important that consumers—whatever they are buying, be it advice or a product—understand the charges and the returns that they are likely to get. That underpins a whole range of work that we are doing at the moment in the Treasury.
Currently, financial advisers can earn different amounts as commission payments, depending on which product they recommend and from which provider. How much they earn is not always transparent; indeed, Which? found that 82% of advisers failed either to explain the “key facts of cost” document or have a meaningful discussion with their clients about how their advice would be paid for. It is important that remuneration arrangements for advisers work in the best interests of consumers and promote independence of advice.
A number of IFAs have already moved away from commission to a fee-based approach. I know that AIFA, the trade association for IFAs, is helping IFAs change their business model. I do not doubt the integrity of the vast majority of advisers, but no one can doubt the financial detriment caused to consumers as a consequence of mis-selling scandals of the past. Following the FSA’s pensions review in 2002, 1.7 million consumers received compensation totalling £11.8 billion due to pension mis-selling alone.
Advisers should welcome changes in remuneration as a clear way of building consumer trust in the sector. Consumers already pay for advice, as commission is deducted from their premiums or initial investments. Advice is not free; that money comes out of the contribution that consumers make to their pensions, their investment bonds or their savings for the future. However, it is important that both the cost and the value of advice is clear to consumers. These reforms will provide clarity on price and service and that will promote competition. Just as we want transparency on interest rates paid on ISAs to promote competition among ISA providers, I believe that transparency on IFAs’ remuneration will also promote competition and provide a better understanding of the value of advice. It will increase consumers’ confidence in that area.
We want to broaden the range of advice available. A number of hon. Members have raised the annual financial health check that CFEB is going to organise. Let me be clear. The cost of that will be borne by a social responsibility levy that will be paid by institutions from Goldman Sachs through to the high street insurance broker. The cost will not be borne by independent financial advisers alone. The biggest firms, such as Goldman Sachs or Barclays, will make the biggest contributions, and they will make a far bigger contribution than IFAs. Furthermore, consumer credit organisations have also been brought into the scope of this; they will also have to pay their share towards the annual financial health check. It is important that the burden should be shared.
European Union Economic Governance
Debate between Mark Hoban and John Bercow(14 years, 1 month ago)
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Mr Speaker
Order. Before the hon. Gentleman intervenes, I note that the Minister has been on his feet for 21 minutes and has attended most assiduously to a number of interventions, and that is perfectly in order. However, I emphasise that there is an hour and a half for this debate, and a substantial number of Back-Bench Members have indicated to me that they wish to speak. It would be a very sad and unsatisfactory state of affairs if contributions from those on the Front Bench were to exceed in total those from Back Benchers. On that basis, I feel sure that the Minister, who is an adroit fellow, will be bringing his remarks to a close ere long.
Mr Hoban
I thank you, Mr Speaker, for that encouragement and guidance, and I apologise for being generous in taking interventions. Let me make rapid progress.
On the issue of sanctions, the same principle applies for those eurozone countries that are in breach of the stability and growth pact excess deficit procedures. In the run-up to the crisis, there was a lack of fiscal discipline, for those inside and outside the euro. Despite the existence of the stability and growth pact and the excess deficit procedure, the eurozone was still undermined by a failure to exert fiscal discipline, and a number of member states in the eurozone have to take tough action to tackle the deficit.
To avoid a recurrence, the Commission and member states in the eurozone have sought to reduce the discretion on the application of the sanction process. The position reached by eurozone countries is set out in the taskforce report. Again, it is worth reminding the House that the sanctions regime does not apply to the UK by virtue of protocol 15 of the current treaty.
Economic Governance (EU)
Debate between Mark Hoban and John Bercow(14 years, 1 month ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
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This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Speaker
Order. The hon. Gentleman must not get too excited: he will have his opportunity. I have granted him his chance, and he should not worry: we will come to him in due course.
The Financial Secretary to the Treasury (Mr Mark Hoban)
I am very grateful for the opportunity to update the House on the conclusion of the taskforce on strengthening the economic governance of the European Union, and to report on the UK’s position on the taskforce. In particular, I wish to restate that the UK is exempt from the current and future sanctions regime.
Heads of State and Heads of Government commissioned the President of the European Council, Herman Van Rompuy, to produce a report on EU economic governance and report back to the October Economic Council. Mr Van Rompuy chaired a taskforce meeting consisting of EU Finance Ministers, and the Chancellor represented the UK on the taskforce. The report has been agreed by the taskforce, and the European Council is expected to endorse it tomorrow. Copies of the report, along with the Chancellor’s submission to the taskforce, have been placed in the Library of the House this morning.
The report concludes that the EU should take steps to reinforce fiscal discipline and that the euro area in particular must face tougher surveillance of its fiscal policies, with sanctions for non-compliance with the pact where appropriate. It also recommends measures to improve EU-level co-ordination of macro-economic policies. That will ensure that any harmful macro-economic imbalances between member states can be identified and corrective action taken. Finally, the report notes that there should be a permanent crisis resolution mechanism for the euro area. The UK supports its conclusions.
A strong and stable euro area is firmly in the UK’s own economic interests, given the high level of UK exports to those countries and our close economic ties. In the years before the crisis, fiscal discipline was absent, and not just in states in the eurozone. High levels of debt have exacerbated the problems that some member states face during the economic downturn. The taskforce recommends that there should be greater focus on member states’ public debt levels in future, and the Government agree with that approach.
I am pleased to note that the report explicitly states that sanctions cannot be applied to the UK under the stability and growth pact. Domestic fiscal frameworks play a crucial role in ensuring that member states act responsibly. EU surveillance is useful, but as the House knows, national Parliaments and national institutions must hold Governments to account for their economic and budgetary policies.
Let us be absolutely clear: yes, we want to see a strong and stable eurozone. That is in our interests just as much as those of our neighbours. The UK has led the way on economic governance. Multi-year budgets and independent statistics and forecasting have already been introduced, and we have a clear fiscal mandate to eliminate our structural deficit. We are leading the eurozone, and our high standards have already received international endorsement. We will examine any proposals to help the eurozone overcome its problems.
However, as the Prime Minister has just said, we will not agree to any changes to EU treaties that move more powers from this country to the EU. The UK’s exemption from the sanctions proposal will be explicit, and there will be no shift of sovereignty from Westminster to Brussels. The report makes that clear, agreeing that
“strengthened enforcement measures need to be implemented for all EU Member States, except the UK as a consequence of Protocol 15 of the Treaty”.
While we are looking at problems in the EU, I should like to say that we have serious concerns about the proposed size of the 2011 EU budget. I was shocked to see that on the day of the spending review, the vast majority of Labour MEPs voted against a freeze in the EU budget. When countries across Europe are taking tough decisions to put their public finances in order, it would be wrong—unjust, even—to have a 6% rise in next year’s EU budget, as has been suggested. We cannot accept that and will fight it hard. We are protecting British interests in the EU and doing what is right for our country and our people, and the Prime Minister will update the House next week.
Mr Speaker
I reserve judgment at this stage as to whether the expression “duff over” constitutes parliamentary language, but the hon. Member for Wellingborough (Mr Bone) has got away with it on this occasion.
Equitable Life (Payments) Bill
Debate between Mark Hoban and John Bercow(14 years, 3 months ago)
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Mr Speaker
Order. Let the Minister develop the point. He will give way when he is ready. There is much competition on that front.
Mr Hoban
Before Opposition Members get to their feet, they should think about what happened over the past decade. The bill for the taxpayer would have been much less if rather than waiting till now, the matter had been resolved under the last Government. They had 10 years to resolve it. Nothing happened until the present Government took power.
Oral Answers to Questions
Debate between Mark Hoban and John Bercow(14 years, 5 months ago)
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Gordon Banks
I thank the Financial Secretary for his response, but does he share my concern that the change in capital gains tax will mean a reduction in businesses in the private housing rental sector, and with it, as predicted by Rightmove, a growth in rents and a shrinkage in the number of houses for rent? If so, what is he going to do about it?
Mr Hoban
I have not been promoted, Mr Speaker.
The changes to capital gains tax that we have introduced will ensure that the right tax regime is in place and that it is fair and responsible. The hon. Gentleman ought to remember, of course, that the capital gains tax rate for second homes prior to the Budget was 24%. It has now gone up to 28% for those paying higher rate taxes, but those on basic rate taxes will be paying only 18%.