Northern Rock

Debate between Paul Blomfield and Mark Hoban

Monday 21st November 2011 Commons Chamber

[Mr Hoban]

What we put in place with Virgin Money is a capital instrument which is an important part of its financing structure, and the terms of that instrument will be set in place shortly. It is important to recognise that we want to see a well capitalised bank there. The FSA will look very carefully at the structure of Northern Rock and its ownership. As I said, Virgin operated a business model whereby it has capital levels which are much greater than those of some of its peers. That is a welcome sign that Virgin takes financial stability very seriously indeed.

[Paul Blomfield (Sheffield Central) (Lab)]

Is it any wonder that Members on the Labour Benches and people more widely question the value of the deal, when the principal purchaser says that he intends to sell out within a few years at double the money?

[Mr Hoban]

That is why we have agreed as part of the deal that if Northern Rock is sold within five years, we will get a benefit from that. It is not just those on the Government Benches who agree with the deal. It is the staff at Northern Rock, the Labour leader of Newcastle city council, the national officer of Unite and others who welcome the fact that this is a vote of confidence in the ability of Northern Rock to add value to the Virgin Money brand.

Oral Answers to Questions

Debate between Paul Blomfield and Mark Hoban

Tuesday 21st June 2011 Commons Chamber

[Paul Blomfield (Sheffield Central) (Lab)]

10. What assessment he has made of the level of taxation of banks.

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

Banks operating in the UK make a significant contribution to the economy and public finances. However, as the financial crisis demonstrated, the sector also posed a potential risk to the wider economy and it is only fair for the banks to make an additional contribution to reflect that. That is why we have implemented a permanent levy on the balance sheet of banks, which will raise more than £2.5 billion each year.

[Paul Blomfield]

I thank the Minister for that reply, but will he recognise the enormous feeling throughout the country that the banks need to fulfil their responsibility for the challenges we face? Will he therefore explain the stubborn refusal of the Government to repeat last year’s bonus tax, on top of the bank levy, which would generate the revenue to build 25,000 affordable homes and create 100,000 new jobs?

[Mr Hoban]

Perhaps the hon. Gentleman should speak to the right hon. Member for Edinburgh South West (Mr Darling), who said that imposing the bank levy again simply would not work.