Alcohol Fraud

Sajid Javid Excerpts

Wednesday 17th July 2013 Written Statements

[The Economic Secretary to the Treasury (Sajid Javid)]

I can inform the House that the Government are today publishing the response to the 2012 consultation on legislative measures to tackle alcohol fraud.

Alcohol fraud is a serious problem which HMRC estimates leads to revenue losses of approximately £1.2 billion a year. It also has a detrimental impact on the legitimate businesses attempting to compete in this sector. This is why the Government consulted last year on potential measures to deal with this problem. Measures covered by the consultation included beer fiscal marks, supply chain legislation and a registration scheme for alcohol wholesalers. The consultation also explored alternatives to these options that could assist HMRC’s enforcement strategy.

The responses to the consultation highlighted the potential anti-fraud benefits but also some considerable impacts the proposed measures might have on legitimate alcohol supply chains. After fully examining the case for and against the proposed measures, the Government have decided not to proceed with beer fiscal marks or supply-chain legislation at this time.

Compelling evidence was provided on beer fiscal marks to show that, although it could be a useful tool to counter trade in illicit products, the costs of affixing stamps to goods could be significant for the UK brewing industry and particularly for legitimate importers and exporters. Therefore, the Government will not be proceeding with the introduction of beer fiscal marks at this time to allow exploration of other, less burdensome options to address alcohol fraud.

Regarding supply-chain legislation, the consultation highlighted issues regarding the practicality and cost of introducing new “track and trace” systems across the brewing industry, as well as concerns regarding the likely effectiveness of the measure. The Government do not therefore intend to legislate for this measure at this time, but wishes to continue to explore available and emerging technologies that could help to secure alcohol supply chains. The Government will also consult shortly on new proposals to strengthen due diligence obligations of excise businesses throughout the supply-chain.

The Government note the positive response across all sectors towards the option to register alcohol wholesalers and can also see that there could be benefits in authorising this part of the supply chain, which is frequently the point at which illicit products are distributed. The Government wish to consult further with relevant sectors informally over the summer of 2013 to refine the design of a registration scheme, and fully understand the costs, benefits and implications if it were introduced. This will also include seeking views on the specific powers and sanctions that would be essential if the scheme is to be effective. The outcome of this further work will inform the Government’s future decision on whether to proceed with wholesaler registration.

The consultation also considered a large number of alternative measures, including many proposed by industry. The Government intend to progress a wider programme of change to policy and enforcement to strengthen the current “Tackling Alcohol Fraud” strategy. Full details of that programme, will be published shortly but will include steps to increase collaboration with industry and between enforcement agencies; measures aimed at tightening controls in the existing excise regulatory system; dealing more robustly with those found holding or moving illicit goods, and increasing co-operation with other EU member states.

A copy of the full response to the consultation will be available online on the GOV.UKsite at:

https://www.gov.uk/government/publications?publication_filter_option=consultations.

Northern Rock (Asset Management) plc

Sajid Javid Excerpts

Monday 15th July 2013 Written Statements

[The Economic Secretary to the Treasury (Sajid Javid)]

On 11 December 2012, I informed Parliament via a written ministerial statement—Official Report, column 20WS, that UK Asset Resolution (UKAR) had identified a pool of unsecured loans in the Northern Rock Asset Management (NRAM) portfolio where the loan documentation was not compliant with Consumer Credit Act requirements.

As a result, UKAR’s board commissioned Deloitte to conduct an enquiry into the specific circumstances of the issue, and any implications for UKAR’s broader internal procedures and controls. Deloitte has concluded that the defects in CCA regulated loan letters and statements were created in 2008, before UKAR was established. The summary of the report, along with the recommendations on strengthening risk functions, is being published on UKAR’s website today. UKAR’s board has accepted all of Deloitte’s recommendations and has tasked senior management to develop an implementation plan, which the UKAR board will hold senior management to account on delivering.

The link to the report can be found here: http://www.ukar. co.uk/media-centre/press-releases/2013.

Co-operatives

Sajid Javid Excerpts

Wednesday 3rd July 2013 Westminster Hall

[The Economic Secretary to the Treasury (Sajid Javid)]

It is always a pleasure to serve under your chairmanship, Mr Hollobone, and I congratulate the hon. Member for Islwyn (Chris Evans) both on securing this very important debate and on putting forward his case so eloquently. He entered Parliament in May 2010 and he has already made an outstanding mark. I would like to respond to the issues raised by hon. Members, and I will try my best to capture them all, including some of the questions from the shadow Minister, the hon. Member for Newcastle upon Tyne North (Catherine McKinnell).

As many hon. Members will be aware, the Government’s approach to mutuals was set out in the coalition agreement, where we committed to “promote mutuals” and “foster diversity” in the UK economy. That commitment, made in the Government’s founding document, underscores the importance that we attach to the sector. I would like to talk this afternoon about the contribution that the co-operative and mutual sectors make to the economy, and, I hope, to reassure all hon. Members of our determination to support them in their efforts.

First, however, I turn to the Co-operative Group itself, as raised by the hon. Member for Islwyn and other hon. Members. As the hon. Gentleman will be aware, the Co-op is at the forefront of the mutuals sector, with more than 4,800 retail trading outlets and an annual turnover of more than £13 billion. Clearly, the Co-operative bank is an important part of the Co-operative Group. I was pleased to see last month that the group has committed to strengthening the bank’s position, including through a commitment to inject capital. It would not be appropriate for me to say more, other than that the group is rightly taking action and strengthening its banking arm through that recapitalisation.

I turn to the co-operative sector as a whole. The Government have made it clear that the co-operative sector is of great importance to the UK economy. That case was made especially well by the hon. Member for Corby (Andy Sawford). In fact, co-operatives are ingrained in our culture. As we have heard, the first recorded co-op in the world was set up in Scotland in 1761. Building on those foundations, the birth of the modern co-operative movement can be credited to the Rochdale pioneers, no less, in the mid-19th century, as we heard so well from the hon. Member for Rochdale (Simon Danczuk). He correctly said that I am a Rochdale boy, and it is something that fills me with great pride. There are people in this world who do not know where Rochdale is—however shocking that sounds—but when they are told that it is the home of the co-operative movement, they immediately recognise the town’s importance. I am sure that the hon. Gentleman would agree.

From those humble beginnings, a thriving co-operative sector has blossomed. The UK now has more than 6,000 independent co-ops, and there is a co-op in every single postcode area. Those organisations provide valuable services across a wide variety of industries, including agriculture, finance and energy production. However, we should also remember that although co-operatives focus on serving their members, they are also businesses. The co-op sector in the UK had an overall turnover of well over £36 billion in 2012, which is why, in line with the Government’s commitment to promote mutuals, we have taken steps to support the sector and to enable it to thrive further.

Last January, my right hon. Friend the Prime Minister announced the co-operatives consolidation Bill, which will be introduced to Parliament in December this year. Although the Bill will not contain any new legislation, it will put all co-op legislation in one place, reducing complexity and making it easier for new co-operatives to be set up. I know that that will be welcomed by the co-operative movement.

In addition, we will consult very shortly on a further package of measures to support the co-op sector, including making insolvency procedures available to co-ops, so that a troubled co-op has more chance of being rescued. The hon. Member for Rutherglen and Hamilton West (Tom Greatrex) rightly raised the issue of football supporters’ trusts. As he will know, the Football Association is concerned about the inability of those trusts to go into administration. The changes that we propose in the consultation will hopefully help to satisfy that requirement, and help that sector of mutuals—football supporters’ trusts and others—to thrive further. We will also consult on raising the amount of withdrawable share capital that an individual member can invest in one society, so that co-ops can more easily raise capital from their members.

A very important subsection of co-ops, as we heard, is the credit union sector, which provides a mutually owned option for customers looking to save, take out loans, or, in some cases, to get current accounts and even mortgages. We have heard many Members today speak about the sector eloquently, including the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), the hon. Member for Islwyn, and the hon. Member for Walthamstow (Stella Creasy).

We have taken a number of specific measures to support the sector. Most visibly, the Department for Work and Pensions co-ordinated a recent feasibility study to examine the future of credit unions. It was announced only last week that the Government will take forward the study’s findings. That includes the Department for Work and Pensions making a further investment of up to £38 million over the next three years in credit unions, with the aim of supporting the credit union sector to provide sustainable financial services for up to 1 million additional people.

The feasibility study also proposed raising the maximum interest rate that a credit union can charge to 3% a month. The Government have announced that we will take that proposal forward, and it will apply from April 2014. That will enable credit unions to break even on the low-value, short-term loans that are the most expensive to issue, and to become more stable over the long term. That will be an alternative, as we have heard from some hon. Members today, to other avenues for borrowing for short-term loans, such as payday loans.

[Stella Creasy]

It is fantastic to hear the Minister supporting credit unions doing short-term lending. If he recognises that credit unions can do short-term lending at capped rates, why does he not think that payday lenders could lend at capped rates and introduce a cap on the cost of credit?

[Sajid Javid]

The hon. Lady will know that we have rightly given the power to an independent regulator to set capped rates, if it thinks that is appropriate in future. That is the correct way to deal with the issue.

In the interests of time, I must plough on. If we are to consider the wider mutuals sector, we should also consider building societies, which remain another key focus for the Government. We set out our approach to applying the recommendations of the Independent Commission on Banking on building societies in “The future of building societies” consultation paper. The consultation closed last year, and we are now considering how best to treat building societies in line with our aims. We will set out our proposed approach in due course.

Several other questions were asked, and before I conclude, I will try to answer some of them as best I can. A number of hon. Members raised the issue of co-ops in the energy sector. The Department of Energy and Climate Change published a call for evidence on community energy in June 2013, and it will publish a community energy strategy for autumn 2013. That highlights the Government’s commitment to supporting community energy projects.

A number of hon. Members raised the issue of housing. I agree that the co-operative sector has an important role to play in housing, particularly because, between 1997 and 2010, we saw a decline in social housing in our country of more than 421,000 units. I think that the co-operative sector can make a contribution to turning that around, and it will benefit from Government funds that have already been made available, in particular, for affordable housing.

The hon. Member for Islwyn raised the issue of Northern Rock. We believe that the sale was in the best interests of the taxpayer, securing the long-term future of Northern Rock plc and increasing competition in the banking sector. The decision to proceed with the sale was based on the advice that the Government received from United Kingdom Financial Investments Ltd and independent advisers, having considered all bids and all other potential options.

Finally, in the interests of time, I will just address one more issue about the use of the name “co-op”, which was a good point made by the hon. Member for Rochdale. That is something, as he rightly identified, that is being looked at by the Department for Business, Innovation and Skills. I am aware that very strong representations have been made to the Secretary of State for Business, Innovation and Skills, not least by Ed Mayo of Co-operatives UK. The Business Secretary has committed to looking into the matter further and to making an announcement shortly.

In conclusion, I reiterate the Government’s support for the co-operative sector, and I thank all hon. Members who have taken part in today’s debate, especially the hon. Member for Islwyn for making his case so well.

[Mr Philip Hollobone (in the Chair)]

Order. All good things must come to an end. I thank all hon. Members who took part in the debate and I ask those who are not staying for the next debate to leave quickly and quietly, because we are moving on to the important topic of selective licensing of landlords on the basis of poor housing standards.

Gift Aid

Sajid Javid Excerpts

Wednesday 3rd July 2013 Written Statements

[The Economic Secretary to the Treasury (Sajid Javid)]

Following the announcement at Budget 2013 that the Government are looking to improve the way gift aid works on digital donations, HM Treasury is today publishing a consultation document—“Gift Aid and Digital Giving”. This document focuses on how to increase the level of gift aid take up on digital donations, such as those made online or by text message, as well as other improvements to gift aid.

This Government recognise the important work of charities in our society and have improved the support charities receive through the tax system with a variety of reliefs. Gift aid alone was worth over £1 billion to charities last year, and with the rapid growth in digital donations, the Government want to ensure that gift aid take up remains high.

The consultation seeks views on how intermediaries might collect gift aid on behalf of charities and how the wording of the gift aid declaration might be improved. It also invites thoughts on a database of universal gift aid declarations and wider improvements to gift aid.

The consultation closes on Friday 20 September 2013.

Recession (Standards of Living)

Sajid Javid Excerpts

Tuesday 2nd July 2013 Westminster Hall

[The Economic Secretary to the Treasury (Sajid Javid)]

It is always a pleasure to serve under your chairmanship, Mr Walker. I congratulate the hon. Member for Coventry South (Mr Cunningham) on securing this important debate and presenting his case so eloquently. I also thank the hon. Member for Coventry North West (Mr Robinson) for his contribution. I will try to respond to the points raised by both hon. Gentleman.

It is fair to say that we all want to see the UK economy performing strongly. It is also fair to say, probably, that although the hon. Member for Coventry South and I agree on that objective, we differ in our views on how best to achieve those goals. I will do my best to respond to the points raised, but it is only right to point out that when the hon. Gentleman came up with the title for the debate, on the effects of the recession on the cost of living, he must have been referring to the most recent recession, which was the one that took place under the previous Government. As we saw last week, the latest figures from the Office for National Statistics show that not only was that the most recent recession, but it was far deeper than originally thought. Originally, it was thought to be a 6.3% contraction in GDP, which would in itself have been the deepest peacetime contraction in GDP in this country, but it turns out to be even deeper, at 7.2%. No doubt it would have hurt many families throughout the country. This Government are trying to help those families with the cost of living and other issues, and trying to repair the damage done by the previous Government.

Let me talk about some actions that we have taken and the results of those. First, there is a lot to discuss about overall economic policy, but the main point is the deficit—the hon. Member for Coventry North West mentioned it—which is down by a third. We still have a long way to go, but our policies on the deficit have brought economic credibility, which has lowered interest rates to a near record level. In fact, interest rates on Government debt are almost half what they were when this Government first came to office. That has a direct impact on the cost of living for families, most notably through their mortgage bills. If interest rates rose by just 1%, the average mortgage bill for a family would rise by almost £1,000 a year.

It is right to mention the impact on employment of our economic policies. As we heard in a statement from the Chancellor last week, we were told by the shadow Chancellor and many others that our policies would lead to record rates of unemployment. Some left-wing economists were even predicting that unemployment could reach the record level of 5 million. In fact, the opposite has happened. The private sector has created more than 1.3 million net new jobs in the last three years and employment reached the highest level in history.

We will continue to build on the measures that we have taken, such as, for example, our cuts in corporation tax, which will from next year make ours the lowest corporation tax rate in the G20. Our employment allowance scheme will make it even cheaper for companies to hire employees. I think that we can all agree that more paid employment is one of the best ways to deal with cost-of-living challenges. Of course, we have to do more. We have to do things that put money in people’s pockets and we have focused on that.

I do not have enough time to mention all the measures, but I will focus on three or four key measures that will, I hope, reassure the hon. Gentleman that we are helping families across the country.

Our changes to the tax-free personal allowance, which will rise to a record £10,000 a year by April 2014, are putting almost £700 per annum into the pockets of the basic rate taxpayer. Anyone who enjoyed the 10% tax rate under the previous Government is now effectively paying a 0% tax rate. Anyone working full time on the national minimum wage will find that their tax bill has more than halved because of that single measure.

We have also frozen council tax for up to five years—the term of this Parliament—which will save the typical household some £600 over the period. We have frozen fuel duty, which the previous Government planned to raise year-on-year by inflation plus the escalator. As a result, fuel prices today are 13p a litre lower than they would have been had we continued with the plans that we inherited.

[Mr Robinson]

The Government have done, or are going to do, a number of interesting things, but is not the bottom line that living standards have fallen? Perhaps the Minister will tell us when living standards are scheduled to improve, rather than another empty, completely impossible Treasury promise. If living standards do not improve, we shall face the first occasion since 1931—that was the last real recession—when a Government have sought a new mandate with living standards lower than they were at the beginning of their term.

[Sajid Javid]

I would take the hon. Gentleman a bit more seriously if he respected the fact that the policies of the Government whom he supported are the reason that so many people face such challenging conditions on the cost of living. We are doing everything we can to address the damage that was done: the deepest recession in post-war history, the biggest budget deficit of any major industrialised country and the largest banking bail-out the world has ever seen. That was our inheritance, and he would get a lot more respect if he accepted that the policies of the previous Government were damaging and are the single most important reason why people are facing such challenges in relation to the cost of living.

In the time remaining, I will address a few points raised by the hon. Member for Coventry South. He was right to mention payday loans. There is evidence that some families, despite the action we have taken, are turning to payday lenders to meet their monthly bills, but he also rightly recognises that the Government are taking a lot of action, both on their own and with the regulators. As he knows, the Office of Fair Trading has been responsible for regulation in the sector until now. We have introduced a step change to that regulation, which will now be under the Financial Conduct Authority. The FCA will be a lot more pervasive, and it is a regulator with teeth. Payday lenders will feel the hand of the regulator on their shoulder. Yesterday, I attended a summit set up by the Government with lenders, charities and other interested groups, and the head of the FCA made it clear that he will not hesitate to take action. He has broad powers if he sees further evidence of consumer detriment.

Finally, distribution and fairness have also been mentioned. Before 2010, the richest 20% of society contributed about three and a half times as much in tax as they received in public spending; that has now increased to about four times as much. In fact, in every year of this Parliament, the rich will pay a greater proportion of income tax revenues than they did in any one of the 13 years under the last Labour Government. We have taken steps to ensure that the most vulnerable groups on low incomes are protected against the effects of the economic circumstances. For example, pensioners have seen above-inflation increases to their state pension, and the introduction of universal credit will make 3 million households better off, the majority of which will come from the bottom two fifths of the income scale.

I once again congratulate the hon. Gentleman on securing this debate. He obviously and quite rightly feels strongly about the issue, which I respect. As I said at the start, we might have different views on how to address the issue, but I fully respect that it is very important to him and his constituents. I assure him that we understand the financial pressures that hard-working families are facing, and I also assure him that we are taking what we believe are the right steps to help.

Finance Bill

Sajid Javid Excerpts

Tuesday 2nd July 2013 Commons Chamber

[Catherine McKinnell]

These are technical amendments tabled in response to concerns about the operation of the share incentive plans in section 498 and schedule 2 to the Income Tax (Earnings and Pensions) Act 2003. The amendments will clarify save-as-you-earn option schemes. We support the clarification of the rules that apply when general offers take place.

Amendment 8 agreed to.

Amendments made: 9, page 144, line 45, after ‘“(7)’, insert—

‘For the purposes of sub-paragraph (5) it does not matter if the general offer is made to different shareholders by different means.

(8) ’.

Amendment 10, page 146, line 20, at end insert—

“(3DA) In subsection (3D)(a) the reference to the issued ordinary share capital of the relevant company does not include any capital already held by the person making the offer or a person connected with that person and in subsection (3D)(b) the reference to the shares in the relevant company does not include any shares already held by the person making the offer or a person connected with that person.

(3DB) For the purposes of subsection (3D)(a) and (b) it does not matter if the general offer is made to different shareholders by different means.’.

Amendment 11, page 147, line 16, at end insert—

‘(1A) After sub-paragraph (3) insert—

(3A) In sub-paragraph (3)(a) the reference to the issued ordinary share capital of the company does not include any capital already held by the person making the offer or a person connected with that person and in sub-paragraph (3)(b) the reference to the shares in the company does not include any shares already held by the person making the offer or a person connected with that person.

(3B) For the purposes of sub-paragraph (3)(a) and (b) it does not matter if the general offer is made to different shareholders by different means.”

(1B) A SAYE option scheme approved before the day on which this Act is passed which contains provision under paragraph 37(1) of Schedule 3 to ITEPA 2003 by reference to paragraph 37(2) has effect with any modifications needed to reflect the amendment made by sub-paragraph (1A).’.

Amendment 12, page 147, line 37, leave out sub-paragraph (1) and insert—

‘(1) In Part 7 of Schedule 3 (exercise of share options) paragraph 38 (exchange of options on company reorganisation) is amended as follows.

(1A) In sub-paragraph (2)(c)—

(a) after “982” insert “or 983 to 985”, and

(b) after “shareholder” insert “etc”.

(1B) After sub-paragraph (2) insert—

“(2A) In sub-paragraph (2)(a)(i) the reference to the issued ordinary share capital of the scheme company does not include any capital already held by the person making the offer or a person connected with that person and in sub-paragraph (2)(a)(ii) the reference to the shares in the scheme company does not include any shares already held by the person making the offer or a person connected with that person.

(2B) For the purposes of sub-paragraph (2)(a)(i) and (ii) it does not matter if the general offer is made to different shareholders by different means.”’

Amendment 13, page 149, line 34, at end insert—

“(2HA) In subsection (2H)(a) the reference to the issued ordinary share capital of the relevant company does not include any capital already held by the person making the offer or a person connected with that person and in subsection (2H)(b) the reference to the shares in the relevant company does not include any shares already held by the person making the offer or a person connected with that person.

(2HB) For the purposes of subsection (2H)(a) and (b) it does not matter if the general offer is made to different shareholders by different means.’.

Amendment 14, page 150, line 31, at end insert—

“(3A) In sub-paragraph (3)(a) the reference to the issued ordinary share capital of the company does not include any capital already held by the person making the offer or a person connected with that person and in sub-paragraph (3)(b) the reference to the shares in the company does not include any shares already held by the person making the offer or a person connected with that person.

(3B) For the purposes of sub-paragraph (3)(a) and (b) it does not matter if the general offer is made to different shareholders by different means.’.

Amendment 15, page 151, line 6, leave out sub-paragraph (1) and insert—

‘(1) In Part 6 of Schedule 4 (exercise of share options) paragraph 26 (exchange of options on company reorganisation) is amended as follows.

(1A) In sub-paragraph (2)(c)—

(a) after “982” insert “or 983 to 985”, and

(b) after “shareholder” insert “etc”.

(1B) After sub-paragraph (2) insert—

“(2A) In sub-paragraph (2)(a)(i) the reference to the issued ordinary share capital of the scheme company does not include any capital already held by the person making the offer or a person connected with that person and in sub-paragraph (2)(a)(ii) the reference to the shares in the scheme company does not include any shares already held by the person making the offer or a person connected with that person.

(2B) For the purposes of sub-paragraph (2)(a)(i) and (ii) it does not matter if the general offer is made to different shareholders by different means.”’.

Amendment 16, page 151, line 13, at end insert—

‘Enterprise management incentives

30A (1) In Part 6 of Schedule 5 (company reorganisations) in paragraph 39 (introduction) after sub-paragraph (3) insert—

“(4) In sub-paragraph (2)(a)(i) the reference to the issued share capital of the company does not include any capital already held by the person making the offer or a person connected with that person and in sub-paragraph (2)(a)(ii) the reference to the shares in the company does not include any shares already held by the person making the offer or a person connected with that person.

(5) For the purposes of sub-paragraph (2)(a)(i) and (ii) it does not matter if the general offer is made to different shareholders by different means.”

(2) The amendment made by this paragraph comes into force on such day as the Treasury may by order appoint.’.—(Mr Gauke.)

Schedule 9

Qualifying Insurance Policies

[The Economic Secretary to the Treasury (Sajid Javid)]

I beg to move amendment 17, page 205, line 7, after ‘(g)’, insert ‘or (4A)’.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

Government amendments 18 to 29.

Amendment 52, page 213, line 2, at end insert—

‘(aa) the policy has an annual premium of £3,600 or less.’.

Amendment 53, page 213, line 2, at end insert—

‘(ab) the policy is subject to capital gains tax.’.

[Sajid Javid]

Amendments 17 to 29 make a number of technical changes to schedule 9 and clause 25 to ensure that the qualifying insurance policy regime works as intended. Let me set out some brief background to these changes. The qualifying policy regime was introduced in 1968 to preserve pre-existing tax treatment for traditional moderate value, long-term, regular premium savings policies that contain a significant element of life insurance.

No upper limit was set for the investment premiums that could be paid into a QP, which allowed individuals to obtain unlimited relief from higher rates of income tax. In the 2012 Budget, the Government announced a restriction to the tax relief available for QPs. Clause 25 and schedule 9 introduce an annual premium limit of £3,600 on qualifying life insurance policies. This restriction limits the amount of premiums payable into QPs for an individual to no more than £3,600 in any 12-month period, with effect from 6 April 2013.

This measure supports the Government’s objective of promoting fairness in the tax system by ensuring that tax reliefs for QPs are correctly targeted. Consultation since the Bill was introduced has continued and identified the need for Government amendments to clause 25 to deal with points of detail in 13 areas. None of these represents a change of policy; as I have said, they are technical adjustments to ensure that the rules operate effectively and as intended. The amendments have been discussed with industry representatives and have benefited from the comments received.

Let me briefly explain the amendments in slightly more detail. The purpose of the changes is to provide flexibility to deal with potential future exclusions from the non-assignment rule and potential future exclusions from the circumstances under which beneficiaries must make statements, to extend the period by which an individual must first make a statement and to clarify what information an insurer must provide and obtain from a policy beneficiary and what an insurer must provide to HMRC. In addition, a number of amendments make minor corrections or consequential changes to the more material changes that I have described.

If I may, Mr Deputy Speaker, I will speak to amendments 52 and 53, standing in the name of my hon. Friend the Member for West Worcestershire (Harriett Baldwin), at the end of the debate.

[Harriett Baldwin]

I rise to speak to amendments 52 and 53, standing in my name and the names of my hon. Friends the Members for City of Chester (Stephen Mosley) and for Finchley and Golders Green (Mike Freer).

I tabled these amendments to schedule 9 after being alerted recently to the consequences of the proposed changes to the life insurance qualifying policy regime for a small business in Malvern in my constituency, which is a market maker in traded endowment policies. The business provides a price at which it will both buy and sell an endowment policy, which creates welcome liquidity in these financial instruments. The firm has been recognised for its work with a Queen’s export award for industry.

The Association of Policy Market Makers estimates that the traded endowment policy market involves about 7,000 policies a year, out of the 20 million policies outstanding, and has a value estimated at approximately £150 million. The reasons why someone might want to sell an endowment policy vary. The most significant reason —accounting for 20%—is poor investment performance, although someone might be selling their house or trying to get some equity release. People sell endowment policies when they want to reduce their mortgage or improve their home—perhaps at retirement or when they lose their jobs, are bereaved or are getting divorced. Someone might want to buy a second-hand endowment policy to get a better rate of return than cash without a stock market risk. Endowment policies are also popular products with people with lump sums—such as victims of accidents who receive large payouts—because they have capital protection at maturity and tend to be priced to beat inflation.

The market is in natural decline, as endowment policies are no longer very popular and the existing 20 million policies have a finite end date. Nevertheless, there are thought to be seven such small businesses in the UK, employing about 200 people, including in the constituencies of my hon. Friends the Members for City of Chester and for Finchley and Golders Green. These firms worry that they will be put out of business by the change of tax treatment for these policies contained in schedule 9.

--- Later in debate ---

I hope that by considering my amendments the Government will find a way to restrict the tax relief on new policies in the future—while still allowing the secondary market in existing qualifying policies to continue—and continue to allow those capital gains tax revenues for the Exchequer. I appreciate that we are talking about a small, specialised secondary market—I was not aware that it existed until 10 days ago. I also appreciate that the industry was not able to feed into the consultation at the end of the year—it was not alerted to the potential change—but it has now fed into the process, via the business in my constituency. I hope that by giving serious consideration to my amendments—and, I hope, accepting them—the Government will allow the industry and the endowment policy market to die of natural causes in due course, as the policies mature, rather than killing it off suddenly with the Bill.

[Sajid Javid]

Allow me now to turn to amendments 52 and 53, in the name of my hon. Friend the Member for West Worcestershire (Harriett Baldwin). I recognise that she speaks from experience and in support of concerns raised by her constituents. I have listened very carefully to those points, and I welcome the opportunity to debate this issue. In providing some additional background to the annual premium limit, I hope that she will be reassured by the safeguards that we have introduced—and the reasons for introducing them—and will consider not pressing her amendments. Amendments 52 and 53 ask that the Government exclude assignments that make a policy non-qualifying where either the policy has an annual premium of £3,600 or less, or the policy is subject to capital gains tax.

Let me respond to some of the points raised by my hon. Friend. She commented that seven small businesses selling second-hand endowment policies could close as a result of the change to the tax treatment of qualifying policies. We recognise that these policies are likely to sell for less on the market where the purchaser is an individual who is a higher or additional rate taxpayer, due to the income tax charge when the policy matures. Let me reassure her that there is currently no bar to the sale of non-qualifying policies on the market and that research from the industry shows that non-qualifying policies are currently sold in the market. We envisage that this market might actually increase as a result of fewer QPs being available for sale.

Let me reassure the House that any adverse impact of the tax changes will be limited to those purchasers who are higher or additional rate taxpayers. Where a second-hand endowment policy is bought by a corporate investor or a basic rate taxpayer, there will be no impact on the tax position of the buyer when the policy matures. As a result, the loss of QP status will not make these policies any less attractive for those investors.

My hon. Friend made a point about capital gains. Previously, the purchaser of a traded endowment policy would have been liable to tax under the capital gains tax regime. That tax treatment was based on the maturity proceeds, less what the purchaser paid to acquire and maintain the policy. Capital gains tax treatment was more favourable, in that no additional tax would be payable unless the gains exceeded the annual exempt amount. In practice, it is likely that higher or additional rate taxpayers structured their affairs so as to ensure that little or no capital gains tax would be payable by using their full annual exempt allowance for a tax year. For 2013-14, that amount is £10,900. There is an additional safeguard for basic rate taxpayers who fall into the higher tax bracket as a result of the policy maturing. If that happens, the individual will get top-slicing relief, which reduces any additional tax payable. The relief is not available if the taxpayer is already a higher or additional rate taxpayer when the policy matures.

My hon. Friend has stated that her amendments would set the same annual premium limit for traded endowment policies as that set for new policies and existing policies. The annual premium limit of £3,600 applies to each individual rather than to a single policy. The effect of amendment 52 would be to exclude a policy from the limit if it had an annual premium payable of £3,600 or less. Purchasers of traded endowment policies will already have an annual premium limit of £3,600 applying to their own policies. As a result of that amendment, they would also be able to acquire as many traded endowment policies as they could afford, so long as each of those policies had premiums payable under the threshold. That would put an individual who had taken out a qualifying policy from the outset at a disadvantage to an individual who later acquired a policy. Amendment 52 would not result in a level and fair playing field. Rather, it would inadvertently create an unfair advantage for purchasers of these traded endowment policies.

My hon. Friend understandably referred to the restrictions on assignments for consideration, which are an essential part of the policy. The aim of our measure is to help to promote fairness in the tax system by limiting the tax relief available to higher rate and additional rate taxpayers. Without this restriction, individuals in a financial position to purchase traded endowment policies would be able to acquire qualifying policies without limit, while everyone else would be subject to the £3,600 annual premium limit. That would put an individual who had taken out a qualifying policy from the outset at a disadvantage to an individual who later acquired a policy, which would be unfair and inconsistent.

My hon. Friend considers that there is an element of retrospection about applying the annual premium limit to any QPs existing before 6 April 2013. Let me reassure her that there is no element of retrospection. The sale of a traded endowment policy on or after 6 April 2013 is treated no differently from an individual varying an existing policy after that date either to change the term or to vary the annual premiums payable. In all those cases, an individual will have made a conscious decision with regard to an existing product in full knowledge of the tax consequences resulting from that decision. The Government’s position is therefore that it would be unfair, inconsistent and disproportionate to allow all pre-6 April 2013 policies to remain qualifying following assignment to maintain the secondary traded endowment market.

The Government have listened to my hon. Friend’s concerns, however. As a result of the representations made, we would like to remind her that amendment 19 proposes giving HMRC a power to deal, in regulations, with any additional circumstances for which exclusion may be appropriate. I will ask officials to meet my hon. Friend’s constituents and to work with the industry to ensure that the annual premium limit remains proportionate as it beds in. I want to reassure her that if the evidence shows that the impact of the annual premium limit would prematurely bring to an end the traded endowment market, as she fears, the Government would consider using their power in amendment 19 to address the matter in a proportionate way, following discussions with interested parties. I hope that that provides her with a degree of reassurance that the Government are listening, and I respectfully ask her not to press her amendments to a vote.

These important technical changes enjoy the broad support of the life insurance industry. They will provide a more effective and more proportionate regime for the operation of the annual premium limit on QPs, and help to ensure that tax reliefs for QPs are appropriately given. I therefore commend Government amendments 17 to 29 to the House.

Amendment 17 agreed to.

Amendments made: 18, page 206, line 32, after ‘(g)’, insert ‘or (4A)’.

Amendment 19, page 213, line 25, at end insert—

“(4A) The Commissioners for Her Majesty’s Revenue and Customs may by regulations provide that sub-paragraph (2) does not apply if prescribed conditions are met in relation to the assignment.

“Prescribed” means prescribed by the regulations.

(4B) Regulations under sub-paragraph (4A) may—

(a) make different provision for different cases or circumstances, and

(b) contain incidental, supplementary, consequential, transitional, transitory or saving provision.’.

Amendment 20, page 213, line 27, after ‘(3)’, insert ‘or (4A)’.

Amendment 21, page 213, line 48, after ‘(g)’, insert ‘or (4A)’.

Amendment 22, page 214, line 33, at end insert—

“(6A) The Commissioners for Her Majesty’s Revenue and Customs may by regulations provide that an individual is not required to comply with sub-paragraph (2) if prescribed conditions are met.

“Prescribed” means prescribed by the regulations.

(6B) Accordingly, if by virtue of regulations under sub-paragraph (6A) an individual is not required to comply with sub-paragraph (2), sub-paragraph (3) does not apply because that individual does not comply with sub-paragraph (2).’.

Amendment 23, page 214, line 42, leave out ‘Finance Act 2013 is passed’ and insert—

‘first regulations under paragraph (c) below come into force’.

Amendment 24, page 215, line 12, at end insert—

“(8A) Sub-paragraph (8B) applies in relation to a policy if the obligations under the policy of its issuer are at any time the obligations of another person (“the transferee”) to whom there has been a transfer of the whole or any part of a business previously carried on by the issuer.

(8B) In relation to that time, in sub-paragraph (2) the reference to the issuer of the policy is to be read as a reference to the transferee.’.

Amendment 25, page 215, line 13, after ‘sub-paragraph’ insert ‘(6A) or’.

Amendment 26, page 221, line 38, leave out from ‘regulations’ to end of line 9 on page 222 and insert ‘—

(a) requiring relevant persons—

(i) to provide prescribed information to persons who apply for the issue of qualifying policies or who are, or may be, required to make statements under paragraph B3(2) of Schedule 15;

(ii) to provide to an officer of Revenue and Customs prescribed information about qualifying policies which have been issued by them or in relation to which they are or have been a relevant transferee;

(b) making such provision (not falling within paragraph (a)) as the Commissioners think fit for securing that an officer of Revenue and Customs is able—

(i) to ascertain whether there has been or is likely to be any contravention of the requirements of the regulations or of paragraph B3(2) of Schedule 15;

(ii) to verify any information provided to an officer of Revenue and Customs as required by the regulations.’.

Amendment 27, page 222, line 10, leave out ‘(2)’ and insert ‘(1)(b)’.

Amendment 28, page 222, leave out lines 20 and 21.

Amendment 29, page 222, leave out lines 29 and 30 and insert—

‘“relevant person” means a person—

(a) who issues, or has issued, qualifying policies, or

(b) who is, or has been, a relevant transferee in relation to qualifying policies.

(6) For the purposes of this section a person (“X”) is at any time a “relevant transferee” in relation to a qualifying policy if the obligations under the policy of its issuer are at that time the obligations of X as a result of there having been a transfer to X of the whole or any part of a business previously carried on by the issuer.”’.—(Sajid Javid.)

Schedule 34

Treatment of liabilities for inheritance tax purposes

Amendments made: 35, page 424, line 36, leave out ‘subsection (2) or (3)’ and insert ‘subsections (2) to (3A)’.

Amendment 36, page 424, line 38, leave out ‘excluded property’ and insert ‘property mentioned in subsection (1)’.

Amendment 37, page 425, leave out lines 11 to 14 and insert—

‘(3) The liability may be taken into account up to an amount equal to the value of such of the property mentioned in subsection (1) as—

(a) has not been disposed of, and

(b) is no longer excluded property.

(3A) To the extent that any remaining liability is greater than the value of such of the property mentioned in subsection (1) as—

(a) has not been disposed of, and

(b) is still excluded property,

it may be taken into account, but only so far as the remaining liability is not greater than that value for any of the reasons mentioned in subsection (3D).

(3B) Subsection (3C) applies where—

(a) a liability or any part of a liability is attributable to financing (directly or indirectly)—

(i) the acquisition of property that was not excluded property, or

(ii) the maintenance, or an enhancement, of the value of such property, and

(b) the property or part of the property—

(i) has not been disposed of, and

(ii) has become excluded property.

(3C) The liability or (as the case may be) the part may only be taken into account to the extent that it exceeds the value of the property, or the part of the property, that has become excluded property, but only so far as it does not exceed that value for any of the reasons mentioned in subsection (3D).

(3D) The reasons are—’.

Amendment 38, page 425, line 19, leave out ‘excluded’.

Amendment 39, page 425, line 20, leave out ‘subsection (3)(a)’ and insert ‘this section’.

Amendment 40, page 425, line 23, at end insert—

‘“remaining liability” means the liability mentioned in subsection (1) so far as subsections (2) and (3) do not permit it to be taken into account;’.

Amendment 41, page 426, leave out lines 12 to 19.

Amendment 42, page 426, line 37, at end insert—

‘(7A) Subject to subsection (7B), to the extent that a liability is, in accordance with this section, taken to reduce value in determining the value transferred by a chargeable transfer, that liability is not then to be taken into account in determining the value transferred by any subsequent transfer of value by the same transferor.

(7B) Subsection (7A) does not prevent a liability from being taken into account by reason only that the liability has previously been taken into account in determining the amount on which tax is chargeable under section 64.

(7C) For the purposes of subsections (1) to (4) and (7A), references to a transfer of value or chargeable transfer include references to an occasion on which tax is chargeable under Chapter 3 of Part 3 (apart from section 79) and—

(a) references to the value transferred by a transfer of value or chargeable transfer include references to the amount on which tax is then chargeable, and

(b) references to the transferor include references to the trustees of the settlement concerned.’.

Amendment 43, page 426, line 45, after ‘162A(1)’, insert ‘or (3B)’.

Amendment 44, page 427, line 13, after ‘162A(1)’, insert ‘or (3B)’.

Amendment 45, page 427, line 22, after ‘estate’, insert—

‘or from excluded property owned by the person immediately before death’.

Amendment 46, page 427, leave out lines 32 to 34 and insert—

‘(b) securing a tax advantage is not the main purpose, or one of the main purposes, of leaving the liability or part undischarged, and’.

Amendment 47, page 427, line 42, at end insert—

‘( ) Where, by virtue of this section, a liability is not taken into account in determining the value of a person’s estate immediately before death, the liability is also not to be taken into account in determining the extent to which the estate of any spouse or civil partner of the person is increased for the purposes of section 18.’.

Amendment 48, page 427, line 43, leave out from ‘(2)(b)’ to end of line 46.

Amendment 49, page 428, line 9, after ‘162A(1)’, insert ‘or (3B)’.

Amendment 50, page 428, line 19, leave out ‘The’ and insert—

‘(1) Subject to sub-paragraph (2), the’.

Amendment 51, page 428, line 21, at end insert—

‘(2) Section 162B of IHTA 1984 (inserted by paragraph 3) only has effect in relation to liabilities incurred on or after 6 April 2013.

(3) For the purposes of sub-paragraph (2), where a liability is incurred under an agreement—

(a) if the agreement was varied so that the liability could be incurred under it, the liability is to be treated as having been incurred on the date of the variation, and

(b) in any other case, the liability is to be treated as having been incurred on the date the agreement was made.’. —(Sajid Javid.)

New Clause 10

Impact of the Spending Round 2013 on tax revenue

‘The Chancellor shall publish, within six months of Royal Assent, a review of the impact on revenue from rates and measures in this Act, resulting from the Spending Round 2013. He shall place a copy of the Review in the House of Commons Library.’.—(Catherine McKinnell.)

Brought up, and read the First time.

[Catherine McKinnell]

I beg to move, That the clause be read a Second time.

The Opposition’s new clause 10 challenges the Chancellor to publish, within six months of Royal Assent, a review of the impact of last week’s spending review announcements on tax receipts. Should the Government agree to undertake such a review, as we hope they will, we suspect that its conclusions would be pretty short, given the Chancellor’s comprehensive failure to deliver the economic boost that this country so desperately needs. It was a dead duck of a spending review, and it was even more disappointing, given the context in which it was made. The Chancellor did not want to come to the House to announce a spending review last week, but he was forced to announce a further £11.5 billion of spending cuts in 2015-6. Why? Because his economic plan has utterly and categorically failed.

ISA Qualifying Investments

Sajid Javid Excerpts

Monday 1st July 2013 Written Statements

[The Economic Secretary to the Treasury (Sajid Javid)]

On 13 March the Government published a consultation on including shares traded on small and medium-sized enterprise equity markets within ISA qualifying investments. This consultation sought views on the Government’s proposed method of implementing this policy.

Following the consultation, the Government today publish their response. The majority of respondents to the consultation broadly agreed with the Government’s proposal, although some suggested alternative approaches. The Government have carefully considered all the responses. On balance, they believe that their proposed approach remains the most appropriate: their reasons are set out in the summary of responses.

The Government therefore intend to introduce the necessary legislation before summer recess to amend the ISA regulations in line with the consultation proposal. They will be amended to expand the range of ISA qualifying investments to include company shares admitted to trading on a recognised stock exchange in the European economic area. This will meet the main objective of allowing company shares on SME equity markets into the scope of ISA qualifying investments.

I am placing copies of the summary of responses in the Libraries of both Houses.

Oral Answers to Questions

Sajid Javid Excerpts

Tuesday 25th June 2013 Commons Chamber

[Andrew George (St Ives) (LD)]

10. What progress he has made on implementing the housing market measures announced in Budget 2013.

[The Economic Secretary to the Treasury (Sajid Javid)]

The Government have made excellent progress in implementing the measures. For example, the Help to Buy equity loan scheme has helped 4,000 individuals and families reserve a new build home already and the Help to Buy mortgage guarantee scheme will be in place by January 2014.

[Andrew George]

In high house price and low wage areas such as mine, where four times more properties are sold to second home buyers than to first-time buyers, intermediate market solutions—shared equity and affordable homes with section 106 planning restrictions—are often the only way for local families to get a toe on the housing ladder, yet the equity loan scheme does not have the rules to enable them to take advantage of it. Will the Government reconsider the rules to help local people in such circumstances?

[Sajid Javid]

My hon. Friend is right to raise that issue. He will have upmost in his mind the fact that under Labour, house building fell to its lowest levels since the 1920s. The Government are supporting hard-working households who have saved but who do not have a large deposit from the bank of mum and dad to help in buying their own home. The Help to Buy equity loan scheme he mentioned will help 74,000 families and has already helped 4,000. My hon. Friend will be pleased to know that 20% of the £1.8 billion of additional funding we have promised for affordable homes will go to shared ownership.

[John Cryer (Leyton and Wanstead) (Lab)]

Will the Help to Buy scheme help to increase the supply of housing? I am not talking about buying capacity; will it specifically increase the supply of housing?

[Sajid Javid]

The short answer is that it most certainly will, and it has been welcomed by the Home Builders Federation. I am pleased that the hon. Gentleman is now concerned about the issue. House building fell to its lowest levels since the 1920s under the previous Government. The number of affordable homes decreased by 421,000 over 13 years and local authority waiting lists almost doubled from 1 million to 1.8 million under Labour—a shameful record.

[Ian Mearns (Gateshead) (Lab)]

12. What recent estimate he has made of the rate of increase of average earnings compared to the rate of consumer price inflation.

[The Economic Secretary to the Treasury (Sajid Javid)]

The best way to deal with today’s cost of living challenges is to have paid employment. In 2012, the number of people employed in the UK has risen faster than most of our competitors, including the US, France, Germany and Japan. As a result, household income has risen by 2.1% more than consumer prices over the past year.

[Ian Mearns]

Despite what the Minister has just said, the Office for Budget Responsibility says that living standards for many will be lower in 2015 than they were in 2010. Is it not the case that, while the rich and super-rich benefit from tax cuts, working people and their families are worse off? Is not the truth that we are not all in it together?

[Sajid Javid]

No, certainly not. I am pleased that the hon. Gentleman is concerned about this issue. The hon. Gentleman became a Member of Parliament in 2010, and he will know that in the last term of the stewardship of the previous Government, his constituency saw paid employment fall, and unemployment rise by a staggering 67%. Paid employment is the best way to raise living standards, and 1.3 million new private sector jobs have been created in the past three years. More people are in employment than at any other time in the history of this country.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

On living costs and standards, can my hon. Friend tell me how much more my constituents would have to pay to fill a tank with petrol if we had adopted the previous Government’s fuel price rises?

[Sajid Javid]

My hon. Friend highlights an important point. We scrapped Labour’s fuel duty escalator; we have frozen their escalator. Petrol prices are 13p per litre lower than if we had kept the policies of the previous Government.

[Huw Irranca-Davies (Ogmore) (Lab)]

Does the Minister see any correlation between wages being £1,300 a year less than they were at the time of the election and the number of people who are in work turning up at food banks?

[Sajid Javid]

What I see is jobs being created in the private sector at a record rate in this country—1.3 million jobs in the past three years; a faster rate of job creation than any other G7 country last year. If the hon. Gentleman really cared about his constituents, he would welcome that.

[Charlie Elphicke (Dover) (Con)]

What has the effect been of Government policies not just on petrol but on keeping interest rates low, freezing council tax, cutting income tax and helping pensioners?

[Sajid Javid]

My hon. Friend has raised the issue of interest rates. If we had not had a credible policy to deal with the record budget deficit that the previous Government left behind, interest rates would be a lot higher. In fact, in the last Budget delivered by them, interest payments on Government debt would have been £30 billion higher in this Parliament. If interest rates were just 1% higher, mortgages would rise by almost £1,000 a year for the average household.

[John Pugh (Southport) (LD)]

13. What assessment he has made of the role of community budgets in improving the efficiency of public expenditure; and if he will make a statement.

--- Later in debate ---

[Sir Bob Russell (Colchester) (LD)]

It is the Government’s policy that, to cover cutting the Army to its smallest size since the battle of Waterloo, people should be encouraged to join the reserves. Leading by example, will the Chancellor of the Exchequer say how many members of his staff have joined the Territorial Army since January this year?

[The Economic Secretary to the Treasury (Sajid Javid)]

I can tell the hon. Gentleman that the answer is none. He is passionate about the issue, which he has raised before. I can also confirm that the Treasury implements the policy of the Government—to make sure that all reservists who request a 10-day special leave on a paid basis get it.

[Stephen Timms (East Ham) (Lab)]

On infrastructure investment, there is widespread disquiet—including in the National Audit Office, it seems—about the management of the Government’s broadband investment programme. Does the Chancellor agree that it is essential to harness competition effectively in delivering infrastructure investment?

Royal Bank of Scotland

Sajid Javid Excerpts

Thursday 13th June 2013 Commons Chamber

[The Economic Secretary to the Treasury (Sajid Javid)]

Yesterday, RBS announced that the group chief executive, Stephen Hester, will step down from his position later this year. The decision was taken in the context of moving from the rescue phase to the next phase, and of focusing RBS on becoming a UK bank that provides greater support to the British economy, helping businesses and job creation here, and which can return to the private sector in a way that ensures value for the taxpayer.

As we commend Stephen Hester for the job he has done, it is worth considering how far RBS has come since the onset of the financial crisis. When Stephen Hester took over, the bank was on the edge of collapse with a broken culture, and posed a huge risk to financial stability. It had been bailed out by the British taxpayer at a cost of more than £45 billion. He brought it back from the brink, and since then has worked hard to make RBS a safer and stronger bank that is better able to support its customers.

RBS has changed substantially over the past few years. It exited the asset protection scheme last year, and non-core assets have been run down from about £258 billion in 2008 to £53 billion now; total assets of RBS investment banking operations are down from around £500 billion to £288 billion; short-term borrowing is down by more than £250 billion; its core loan-to-deposit ratio is now below 100%, which means that the core bank is funded entirely by deposits; and the core tier 1 capital ratio has more than doubled. The size and complexity of RBS has been significantly reduced, with a far greater focus on serving its UK customers. Entire business lines have been exited, and there has been a dramatic simplification, rationalisation and de-risking of the bank’s business model. That is an impressive list of achievements, and is one of the largest corporate restructurings in history. Stephen Hester has made an important contribution to Britain’s recovery from the financial crisis. I am sure that all hon. Members would like to join me in congratulating him on all he has done and achieved during his time at the bank. It is reassuring that he is staying on to ensure a smooth transition to his successor.

RBS has outlined the details of Stephen Hester’s leaving package. This is a matter for the RBS board, but I want the House to be fully aware of the terms of this package. At the point of Stephen Hester’s departure, and in line with his contractual obligations, he will receive a payment in lieu of notice representing one year’s salary and benefits. This amounts to £1.6 million. He will not receive a bonus for 2013. At the board’s discretion, Stephen Hester will keep his unvested long-term investment plan, or LTIP, awards. These will be reduced significantly through pro-rating for time of service. These awards are also subject to assessment against published performance conditions at the end of the respective performance period. Following this pro-rating and performance assessment, RBS estimates that the value of the LTIPs would be approximately £3 million at their current share price. In addition, the number of shares that Stephen Hester can receive is capped at 65% of the total, which would be just over £4 million at today’s share price. These payments are in line with his contractual terms, and the share awards will reflect payment for performance up to the point of his departure.

During his five-year term in office, Stephen Hester received one bonus out of a possible five. I also wanted to let the House know that Stephen Hester’s leaving package is expected to be worth about one third of the maximum he could have received under the contract that was agreed in 2008 by the previous Government.

RBS is now moving from the rescue phase to the next phase, which involves focusing on becoming a UK bank that provides greater support to the British economy and is prepared for its return to the private sector. The Government have always been clear about wanting RBS to become a more focused retail and commercial bank that is focused on supporting the British economy and has a much smaller international investment banking arm. RBS has already made progress towards this goal.

I expect the Parliamentary Commission on Banking Standards, which was established last year, to report soon, but let me briefly remind everyone of what the Government have already achieved in the financial sector. First, we have introduced a brand new watchdog with powers to keep our banks safe, so that they do not bring down the economy. In April, the Financial Services Authority was abolished and the Bank of England is now in charge of keeping our financial system safe, with the transfer of responsibility for prudential regulation to a new subsidiary of the Bank, the Prudential Regulation Authority. With the authority that comes from its history and the new powers we have given it, the Bank of England is empowered to protect our financial system. We have also created a strong new conduct regulator, the Financial Conduct Authority, to ensure that London and the UK have the best and most open, transparently policed markets in the world.

Secondly, we are taking legislation through Parliament to introduce a law, following the recommendations of Sir John Vickers and his Commission, that will for the first time ever erect a ring fence around a major retail bank, so that its essential operations will continue even if the whole bank fails. This will protect the high street and the taxpayer from the mistakes of the dealing floor. Following the recommendations of the Parliamentary Commission on Banking Standards, we will be making further changes on Report to further strengthen the ring-fencing regime and electrify the ring fence.

The third area of the Government’s focus has been to engender a change in the culture and ethics of the banking industry itself. As members of the House know, we asked the Parliamentary Commission to look at how to improve the professional standards and culture of the banking sector. As I mentioned, its work is coming to an end and I expect it to report soon.

Fourthly, we will give customers the most powerful weapon of all: choice, which is the most powerful tool we have to improve markets and customer service, reward good companies and penalise poor ones. We have made a start with the sale of Northern Rock to Virgin Money and we are seeing new banks, such as Metro Bank, on our high streets. This year we are taking a huge step towards making it easier for customers to move if they can get a better deal elsewhere. From this September, every customer of every bank in Britain will be able to switch their bank account from their existing bank to another one within seven days. This is real progress.

We are still mopping up the huge economic mess we inherited from the Labour party. We will not take economic recovery for granted and will continue to deliver our clear plan to deal with the problems that it left behind. [Interruption.] I thought that would get them excited, Madam Deputy Speaker. RBS has been brought back from the brink, and now is the time to move on from the rescue phase and focus on RBS being a UK bank that provides greater support to the British economy, a bank that helps businesses here, a bank that helps job creation here and a bank that can return to the private sector in a way that ensures value for money for the taxpayer.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

The Opposition are very surprised that the Chancellor of the Exchequer has not come to the House of Commons today to respond to growing speculation that he has already decided the fate of the Royal Bank of Scotland. The Government’s handling of this matter has already caused widespread concern. Stephen Hester did an important job starting the process of turning RBS around, but clearly there is a long way still to go, as he has said himself, so I want to ask the Minister about the four key points on which we need urgent clarification.

First, on the departure of the chief executive, did Stephen Hester go voluntarily or was he pushed? What role did the Chancellor have in prompting his departure? When did the Chancellor set out to the chairman and the board his desire that Stephen Hester should go and is there now any role for United Kingdom Financial Investments, or has it been circumvented in the discussion on the chief executive’s role? Can the Minister explain why they got rid of the current chief executive before finding a successor? Was that really a sensible thing to do? Why have they left such uncertainty? Is the 6% fall in RBS’s share price this morning, wiping off nearly £2 billion from the value of the taxpayers’ stake, a reflection of this confusion? Can the Minister clarify reports this morning that the chairman of RBS has indicated that he will also leave if and when a new chief executive is found?

Secondly, did the chairman, Sir Philip Hampton, let the cat out of the bag when he admitted to journalists last night that the Chancellor wants a sale by the end of 2014? Sir Philip said:

“The acceleration of considering succession for a CEO role arises largely from the Treasury’s determination...where it can be returned to the private sector by the end of 2014”.

Will the Minister tell us now what the Chancellor told the chairman and the board? Is it just a coincidence that the end of 2014 would fit neatly into the Chancellor’s pre-election political timetable? Should the time scales not be driven by the best interests of the taxpayer and the British economy instead?

Thirdly, are the public wrong to suspect that this generous severance payment for Stephen Hester is just a foretaste of the wider loss that will be made for the taxpayer if they rush headlong into a pre-election fire sale? Given that Stephen Hester said yesterday that he was confident that RBS was capable of being worth more than the £45 billion the taxpayer originally paid, why is the Chancellor rushing to prove him wrong? Stephen Hester told the BBC last night that RBS was capable of being worth more than what the Government paid for the shares. Does the Minister agree? If not, why not?

Fourthly, can the Minister explain why it is sensible to intervene in the executive management of RBS rather than have an orderly process of repairing the bank and thoroughly considering the full range of future options for this institution—a process that has incredible ramifications for our whole economy? We look forward to the report from the cross-party Parliamentary Commission on Banking Standards and any views it might have on this, but rather than this shambolic and uncertain approach, surely we need a clear, methodical process and a detailed exploration of how the shape and structure of RBS can best serve our economy in the longer term.

Finally, why has the Chancellor not come to Parliament to set out what is obviously a change of policy? No disrespect to the Minister, but it is his boss we need to hear from today. Should not the Chancellor set out his plans first to this House and not to the Mansion House?

[Sajid Javid]

I thank the hon. Gentleman for his comments. I will start with his final question, if I may. He asked why the Chancellor is not here. That is because I am here; I thought the hon. Gentleman would be pleased to see me. I could well ask him where his boss, the shadow Chancellor, is. If this is such an important issue for the Opposition, the shadow Chancellor might have turned up.

I was also hoping that I might get an apology from the hon. Gentleman and some recognition that the only reason we are here discussing this topic today is the previous Government’s failure to regulate our banking system, which led to more than £45 billion of taxpayers’ money being injected into bailing out a bank—the world’s largest banking bail-out.

Let me turn to the hon. Gentleman’s four questions. First, he asked about the sequence or the terms of Stephen Hester’s departure. I am pleased to confirm to him that the Chancellor has not been directly involved in meeting with Stephen Hester prior to the announcement —[Interruption.] He has not met with Stephen Hester prior to the announcement of his departure on this issue. This is a decision for RBS and its board. They have made the decision jointly with Stephen Hester and come to a voluntary agreement. The chairman of RBS, Sir Philip Hampton, asked to meet the Chancellor last week—at Philip Hampton’s request—to inform the Chancellor of the board’s decision, and that is what I would expect, given that the shareholder is the majority owner of the bank.

The hon. Gentleman also referred to the succession plans and asked whether it would have been better to find a successor in the first place. If he has looked carefully at the plans, he will note that Stephen Hester has agreed to stay on until a successor has been found or, at the very latest, until the end of this year. RBS has already begun its search process. I am confident that it will find a successor in time, but it is reassuring, as I said in my statement, that Stephen Hester is staying on in the meantime to help to smooth the process of finding his successor.

The hon. Gentleman also referred to the share price of RBS this morning. He will note that—I think I am right in saying—almost every major bank’s share price is down this morning. The stock market is down in general this morning. I suggest that the change in the RBS share price might also be a reflection of global stock markets, particularly Asian stock markets and markets in Tokyo, which, as it happens, also fell by 6% overnight.

Next the hon. Gentleman asked about the eventual sale of the bank and RBS’s comments about preparing the bank for its future return to the private sector. There should be nothing surprising about RBS having an ambition that the bank should be returned to the private sector. That is perfectly reasonable and perfectly normal. As for the Government’s plans, we have always made it absolutely clear that we have no target price when we are thinking about the return of RBS. We have no fixed timetable, and that includes the general election. Our major concern is to ensure, as the hon. Gentleman said himself, that when RBS is returned to the private sector, that is done with due regard to getting the best value possible for the taxpayer.

The hon. Gentleman also asked whether the value of the shares had been destroyed. I thought that was a bit rich, coming from him. He forces me to remind the House that when the previous Government carried out their bail-out following their failed policies and paid more than £45 billion for a stake in RBS, they overpaid by £12 billion above the share price. That amount was written off by the taxpayer at that moment, but that is something else for which we have not had an apology.

If I understood the hon. Gentleman’s last question correctly, he asked whether the Government had intervened in the decision-making process of the executive management. As I have said, those decisions are rightly made by RBS’s board. The Government’s shareholding is held through UKFI on an arm’s length basis. UKFI represents the interests of the taxpayer on RBS’s board. I remind the House that that arm’s length arrangement was deliberately set up by the previous Government; we have rightly kept it in place. UKFI reports periodically to the Treasury and provides advice, and we always take that into account when making our own decisions.

[Mr Andrew Tyrie (Chichester) (Con)]

The early work on RBS’s recovery needed an investment banker, and Stephen Hester has done a difficult job extremely well. He deserves all our thanks, and I hope that the whole House agrees with that. Does the Minister agree that, whatever further reforms of RBS are now implemented, arguing about the past—about the past price or about party politics—is not what the country wants to hear or what the economy needs in the months ahead? What we now need, as soon as possible, is an RBS that can fully support the hundreds of thousands of people who are trying to make a living in small businesses up and down the country but who cannot get the support that they need. They need an RBS that is fully functioning for the first time in many years.

[Sajid Javid]

I thank my hon. Friend, the Chairman of the Treasury Select Committee and of the Parliamentary Commission on Banking Standards, for his comments. He is absolutely right to praise the work of Stephen Hester and I agree wholeheartedly with his views on what Stephen Hester has achieved in his five years at the bank. Perhaps my hon. Friend had his work with the Parliamentary Commission in mind when he asked his second question. The approach must be bipartisan and we must keep the interests of RBS and the economy as a whole uppermost in our minds.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

I agree that Stephen Hester did a good job in reducing the size of the bank’s balance sheet and beginning to turn the bank around, but that job was not complete at the time of his enforced departure. Will the Minister tell us more about the implications of this timing and strategy for returning the bank to the private sector? May I also tell him that, whatever else the Parliamentary Commission on Banking Standards has to say about this, if he was looking for a permission slip for a quick sale at a knock-down price, he will be disappointed?

[Sajid Javid]

It might help the right hon. Gentleman if I tell him that Stephen Hester himself has said in the past 24 hours that, for him, privatisation was the “end of a journey”, and that the board was looking for someone who would see it as the beginning of a journey. He has said that, for that reason, he understands the board’s decision. This is a voluntary agreement and a mutual decision between Stephen Hester and the board. The RBS board has said in its statement that it is looking forward to having a bank that is more focused on UK business and on the inevitable privatisation process.

[Stephen Williams (Bristol West) (LD)]

A substantial proportion of the Minister’s statement dealt with setting out the generous remuneration and exit package that Mr Hester will receive. I am rather more interested in the package that British citizens will receive when the bank is returned to the private sector in order to recompense them for the different ways in which they have paid for the £45 billion bail-out. Will the Minister confirm that UKFI and the Treasury are seriously examining the idea, which I first promoted in March 2011, that all British citizens should be able to profit from the uplift in the share price when the bank is returned to the private sector?

[Sajid Javid]

My hon. Friend is right to emphasise the absolute importance of getting the best value for the taxpayer when RBS is eventually returned to the private sector. There are many ways of doing that, and there is an open public debate on the ideas. At this point, however, it is right for me to say that while I welcome open debate, the Government are looking at the options very carefully, and we will set out a way forward after the Parliamentary Commission on Banking Standards has issued its final report.

[Stewart Hosie (Dundee East) (SNP)]

I thank the Minister for his statement and for early sight of it, and add my thanks to those of others for what Stephen Hester has done so far for the bank. RBS is planning a £175 million investment in the retail bank in Scotland and it also plans to maintain it as a global centre for mobile banking and a global payments hub. When Stephen Hester is replaced and the bank is finally returned to the private sector, will the Minister use whatever influence the Government have to ensure that those investments and those plans are maintained for the sake of jobs both in the bank and in those businesses that depend on the bank for support?

--- Later in debate ---

[Sajid Javid]

The hon. Gentleman will be aware from the RBS statement yesterday that one reason why it has taken this step is that it believes, as do the Government, that RBS should become more focused on British business and British jobs. If the hon. Gentleman agrees with me that Scotland should vote next year to stay in Britain, that will certainly help the situation, making sure that when RBS talks about Britain, it is talking about the Britain we know today.

[Sir Tony Baldry (Banbury) (Con)]

Does my hon. Friend agree that Stephen Hester, who happens to be one of my constituents, was given a pretty poisoned chalice by the last Labour Chancellor when Fred Goodwin stepped down and that he has actually done an extremely good job in rescuing RBS and bringing it back from the brink? What I think most of my constituents are concerned about now is whether RBS is going to be a bank for small and medium-sized businesses, a bank for middle England and a bank for market towns such as Banbury and Bicester, helping to get SMEs and the economy moving and going forward.

[Sajid Javid]

I share the concerns that my hon. Friend has articulated. He will have noticed from my speech that I said RBS under Stephen Hester has made huge progress in becoming focused on lending to British businesses. I am confident that, because of the plans that have been set in place, that will become even more prominent in RBS’s strategy.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

The Minister has said quite a bit about the end of the rescue phase, but absolutely nothing about the strategy for selling RBS back into the private sector. I remind him that the Government own 82% of the shares. There have been persistent rumours in the press about the creation of a good bank/bad bank. Will the Minister confirm or deny whether that is actively being considered, and if it is, how in those circumstances will he continue, as he stated in his statement, to protect the taxpayers’ interests?

[Sajid Javid]

The Chancellor has made it clear in very recent statements that he wants to wait for the report from the Parliamentary Commission on Banking Standards. It is a very important report, and we as a Government want to listen and take it seriously. After the report is completed, we will set out our plans for how we see the state banking sector going forward.

[Mary Macleod (Brentford and Isleworth) (Con)]

As someone who has worked in ABN AMRO and RBS, I pay real tribute to Stephen Hester, who I think was an outstanding chief executive who took the helm and leadership of RBS at the most difficult time in banking history. I am disappointed that he is leaving and I wish him every success in the future. I want to pay tribute, too, as should the House, to the staff of RBS. As we move towards privatisation, let us focus on looking at competition in the banking sector, which will deliver a much better customer service for us all.

[Sajid Javid]

That is exactly what I was talking about when I touched on the issue of choice in my statement. The introduction of seven-day switching, which will come into force in September, will help to engender the kind of competition that we want to see.

[Derek Twigg (Halton) (Lab)]

The Minister’s statement underlined what a shambles this is, and also made it clear that there might not be a new appointment for some time. My specific question is this, however. When my hon. Friend the Member for Nottingham East (Chris Leslie) asked about the Chancellor’s involvement, the Minister said that the Chancellor had had no direct involvement. May I ask whether he had any indirect involvement? Let me help the Minister to answer that question. Was the Chancellor asked by any member of the ministerial team or by civil servants in Whitehall, or by people in the Royal Bank of Scotland, for his view on whether this was the right decision?

[Sajid Javid]

As I have said, such decisions are for the board of RBS, which is a commercial organisation. As we all know, however, because it is a commercial organisation in which the state is the majority shareholder, with the state’s interests represented through UKFI, when RBS makes a major decision it will inform the Government.

[Mr Peter Bone (Wellingborough) (Con)]

May I pursue the question asked by the hon. Member for Halton (Derek Twigg)? I am not entirely sure why the Minister made his statement. If this was a completely independent decision, what new Government policy has been announced today?

[Sajid Javid]

The Government decided that a statement should be made today because the issue is important to the population at large. Given the Government’s stake of over 80% in RBS, and given that the last Government pumped in £45 billion, I think it important for the Government to set out their strategy on RBS.

[Ms Margaret Ritchie (South Down) (SDLP)]

This time last year, RBS was subject to a major technical problem. As a result, one of its constituent parts, Ulster bank in Northern Ireland, lost some customers, and many customers did not benefit from full transparency. Only recently, I was told by the Financial Conduct Authority that it could not obtain answers. Will privatisation be the next stage in the rescue package?

[Sajid Javid]

The hon. Lady has made a good point overall about the importance of RBS’s operations in Northern Ireland and also in the Republic, which involve lending to both small businesses and consumers. RBS takes those operations seriously, and I know that it has been thinking carefully about how it can improve them further.

[Richard Harrington (Watford) (Con)]

Given Stephen Hester’s excellent career—he had previously spent two years at Abbey National and four years at British Land—and given that he has remained in such an important and high-pressure job for five years, it seems to me entirely reasonable for him to leave after completing the first phase of a major restructuring process, and to hand the business on to a chief executive who is more experienced in long-term matters.

[Sajid Javid]

As always, my hon. Friend has made a very good point. I agree with him that Stephen Hester has done a commendable job. Five years is a perfectly normal period for anyone to remain as chief executive of a major corporation, and that sentiment was reflected in Stephen Hester’s own comments since the announcement of his departure.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Will the Minister answer one really important question about this very major change? Two banks ran into difficulties, RBS and HBOS—many of my constituents worked for HBOS—but those two banks were not run into the buffers by politicians; they were run into ruin by the group of unscrupulous, immoral bankers who ran the companies, and it was not politicians but auditors and those in the accountancy profession who never flagged that up. Let us get the record straight. Let us be honest with the British people. Let us also be honest and say “You have just sacked this banker for your own purposes.”

[Sajid Javid]

The hon. Gentleman is right about being honest, of course, and in the interests of honesty, it is important to point something out. Since he seems to have suggested that the previous Government played no role in the failure of RBS and that it was just a failure of poor banking, let me remind him of what the then shadow Chancellor, my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley), said in 1997 when the then Government planned to change the regulatory system. He said:

“The process of setting up the FSA may cause regulators to take their eye off the ball, while spivs and crooks have a field day.”—[Official Report, 11 November 1997; Vol. 300, c. 732.]

[Andrew Selous (South West Bedfordshire) (Con)]

While RBS has clearly had a turbulent past and taxpayers rightly want their money back, is not the really important point that RBS has gone from a bust bank under the last Government to a normal bank now, and that it has actually made a profit of over £800 million in the first three months of this year, and that business lending is up in the first quarter to over £13 billion, almost £8 billion of which was to small businesses?

[Sajid Javid]

My hon. Friend is absolutely right. RBS has ended what I referred to as the rescue phase. Stephen Hester successfully brought the bank back from the brink and has started to refocus it, and the new strategy that RBS has set out will focus it even more on lending to UK businesses and households?

[Alison McGovern (Wirral South) (Lab)]

The decisions made about RBS’s future represent a huge impact on the public finances, so where is the Chancellor?

[Sajid Javid]

I answered that question earlier.

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

May I add to the tributes to Stephen Hester? He was very responsive to MPs’ letters and he was also very good at briefing Members of Parliament. May I also pay tribute to RBS staff, however, who across the country and worldwide have been working in very difficult circumstances, and may I urge the Minister to make sure that in this transition period towards privatisation a lot of focus is put on them?

[Sajid Javid]

I agree. We have talked about Stephen Hester and the role he has played in bringing the bank back from the brink, but that would not have been possible without the dedicated staff that RBS has had, and we must never forget the contribution they have made in repairing the bank.

[Mr Dave Watts (St Helens North) (Lab)]

It is clear from the Minister’s statement that the Chancellor has sacked the chief executive. Can the Minister assure the House that there is no gagging clause in the chief executive’s contract when he leaves with his package of £5 million that will stop him setting out his own views on when RBS should be sold?

[Sajid Javid]

I do not know whether the hon. Gentleman was listening to the statement I made. If he was, he would realise that the RBS board made this decision.

[Harriett Baldwin (West Worcestershire) (Con)]

As the Minister knows, I think the sooner the Government get out of the banking business, the better. There has been a lot of discussion today about the price at which they should do that. What has the Minister been able to discover about the due diligence that was done on the price the Government paid to buy RBS shares in the first place?

[Sajid Javid]

My hon. Friend raises a good point, and it is actually quite easy to find out—although I do not think the previous Government wanted to advertise it, and nor do I think the current Opposition want us to continue highlighting it—that when RBS was bailed out, the then Government overpaid by over £12 billion and wrote that off at that time. They did the same in the interventions in Lloyds bank and Northern Rock, and, as we know, all this was a direct result of the previous Government’s failure to regulate our banking and financial system properly.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

The Minister referred in his statement to the regulatory role of the new Prudential Regulation Authority. What mechanisms have the Government and the Bank of England put in place to ensure that the PRA does not suffer from the “revolving door” disease, which afflicted its predecessor, the FSA?

[Sajid Javid]

The hon. Gentleman raises a good point. That was a problem at the previous regulator, the FSA. When the PRA was set up, its head, Andrew Bailey, prioritised the issue, making sure that he hires the best people and that they are rewarded accordingly, to make sure they can do a good job in looking after the interests of the taxpayer.

[Charlie Elphicke (Dover) (Con)]

Given that the taxpayer had to buy the bank and, shamefully, was forced to overpay by £12 billion, may I urge the Minister not only to privatise it as soon as possible, but to consider people’s shares, so that the taxpayers who paid for it have something to show for it?

[Sajid Javid]

I remind my hon. Friend of something I said earlier, which is that we are looking at future plans for the state-owned banking sector but think it prudent to wait for the report from the Parliamentary Commission on Banking Standards; however, I will take his representation on board.

[Chris Bryant (Rhondda) (Lab)]

One can tell when this Government have something to hide: the Chancellor runs for cover and a junior Minister is sent out to make a statement and deny absolutely everything—rather unconvincingly, if I may say so. Does the Economic Secretary not understand that my constituents are still spitting with fury about the fact that they are paying the price for the mistakes made by bankers? If the dash for cash, which he has been touting around the Committee Rooms and the City of London for the past few weeks, goes ahead, yet again, bankers will make more money, brokers will make more money, and the taxpayer will lose out.

[Sajid Javid]

If I remember correctly, the hon. Gentleman was a member of the previous Government, not just a Government Back Bencher, so he was involved in decision making and presumably supported the action that the then Government took on banking regulation. I wonder whether he held those views back in 2007, just before the collapse of the British banking system, when the then Chancellor said in his Mansion House speech:

“I congratulate you Lord Mayor and the City of London on these remarkable achievements, an era that history will record as the beginning of a new golden age for the City of London.”

[Mr Philip Hollobone (Kettering) (Con)]

Will the Economic Secretary reconfirm that Stephen Hester’s exit package, while undoubtedly generous, is just one third of the amount that he could have got under the contract signed by the last Labour Government? Also, given that Her Majesty’s Government hold, on behalf of all our constituents, 80% of the bank, will he ensure that the terms of the contract for the new chief executive reflect Stephen Hester’s actual remuneration and not the theoretical remuneration put in place by the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown)?

[Sajid Javid]

My hon. Friend makes a good point. I can confirm that, under the terms to which the previous Government signed up in 2008, when Stephen Hester was appointed, his exit package could have been three times greater. That again highlights the Labour party’s utter confusion on this issue.

[Caroline Lucas (Brighton, Pavilion) (Green)]

The Minister spoke of the importance of RBS becoming a bank that provides greater support to the British economy. I could not agree more, but rather than flog it off, would not a more effective way to achieve that aim be to maintain the bank in the public sector and to direct investment into projects that will genuinely benefit the public and the economy—into small businesses, affordable housing and home insulation—which will also create hundreds of thousands of local jobs?

[Sajid Javid]

Respectfully, I have to disagree with the hon. Lady. I think the Government have no long-term role in owning any part of the banking sector.

[Madam Deputy Speaker (Dawn Primarolo)]

Last but not least, I call Geraint Davies.

[Geraint Davies (Swansea West) (Lab/Co-op)]

This announcement has already helped to wipe £2 billion off taxpayer-held share value, so will the Economic Secretary consider a staged sale of RBS, in chunks, to maximise the return? Will he also consider keeping a residual shareholding, to maintain influence so that the ambition we all share can be met that RBS continues to focus on small and medium-sized enterprises, rather than runs off, as it has before, in ways that are not in the interests of the British economy?

[Sajid Javid]

First, the hon. Gentleman should know that share prices go up and down, often with the general direction of the market. If he is really concerned about shareholder value, presumably he was against all the changes that the Government he supported made during their time in office, which led to the true destruction of taxpayers’ money. The Government believe that the strategy RBS has set out and made clear yesterday—a bank that is more focused on the UK economy and working with British business, with a smaller investment bank—is the right one, as is the strategy of getting a CEO who can see that process through for the next few years. We think that that will lead to value creation.

Asset Protection Agency

Sajid Javid Excerpts

Wednesday 12th June 2013 Written Statements

[The Economic Secretary to the Treasury (Sajid Javid)]

The annual report and accounts for the Asset Protection Agency (APA) has today been laid before Parliament.

The report contains commentary on key developments in relation to the APA and the asset protection scheme (APS) and the annual accounts over the period from 1 April 2012 to 31 October 2012.

The APA closed on 31 October 2012, following the Royal Bank of Scotland’s (RBS) exit from the APS on 18 October 2012.