Oral Answers to Questions

Debate between Sajid Javid and Lord Mann

Monday 17th July 2017 Commons Chamber

[John Mann (Bassetlaw) (Lab)]

Will the inquiry into electoral conduct take full cognisance of the superb all-party report written by the previous Deputy Speaker, Natascha Engel, which has, sadly, been rebuffed by successive leaders of parties on both sides of the House?

[Sajid Javid]

I assure the hon. Gentleman that the inquiry, which was announced by the Prime Minister and will be led by the Committee on Standards in Public Life, should take account of all information. We heard during last week’s debate how many hon. Members and candidates suffered racism and other forms of abuse during the general election. I also suffered that. I am sure that everyone in this House agrees that racism has no place in our society.

Neighbourhood Planning Bill

Debate between Sajid Javid and Lord Mann

2nd reading: House of Commons & Money resolution: House of Commons
Monday 10th October 2016 Commons Chamber

[Sajid Javid]

My right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) has spoken passionately about this issue before. I listened to him then and I have just listened to him again, and I will of course reflect on what he has said. I am sure he will understand that it would not be appropriate for me to talk about a specific planning application, but I will reflect on what he has just shared with the House.

The Housing and Planning Act reforms to speed up and simplify the process came into force just a few days ago, and the Bill will strengthen the process still further. It will make it easier to update a neighbourhood plan as local circumstances change. It will give communities confidence that advanced neighbourhood plans will be given proper consideration in planning decisions, and it will give neighbourhood plans full legal effect at an earlier stage.

Of course, there is no point giving control to communities if they do not know that they have it or lack the skills to use it. So the Bill will also require planning authorities to publish their policies for giving advice or assistance to neighbourhood planning groups. It will also allow the Secretary of State to require planning authorities to keep those policies up to date. These provisions will make the neighbourhood planning process fit for the future. They will make it more accessible for everyone, and they will ensure that neighbourhood plans are fully respected by decision makers.

[John Mann (Bassetlaw) (Lab)]

Should the Bill become an Act, will there be any circumstances in which a local authority can overrule a neighbourhood development plan that has been duly endorsed by said authority?

[Sajid Javid]

The hon. Gentleman may be aware that for a neighbourhood plan to become effective it needs to be adopted. It will be looked at by the inspector and a local referendum will be held. As I mentioned earlier, some 240 plans have gone through that process and, when that happens, they need to be given due weight in the consideration of planning decisions.

[John Mann]

I thank the Secretary of State for giving way again. He will know that Bassetlaw has more local plans in process and agreed than anywhere else, so we do know a little bit about them. If he is saying that a local council or the Secretary of State can decide to overrule a local community that has been through a huge, state-funded consultation, had a referendum and decided where the housing will go, what is the point?

[Sajid Javid]

The hon. Gentleman will know that once a neighbourhood plan is adopted, it becomes statutory and is taken into account when planning decisions are made. It is not a question of a local authority overruling a neighbourhood plan; once it is adopted, it is part of the local plan, so they are part of the same package, when it comes to making those decisions. Local authorities do not have the right to overrule a plan once it has been adopted.

Local and neighbourhood plans are vital tools for delivering new planning permissions. If we are to tackle the housing deficit, it is crucial that shovels hit the ground as soon as possible once permission has been granted for a development. There are a number of reasons why that does not always happen. One is because too many planning authorities impose too many pre-commencement conditions that unreasonably hold up the start of construction.

Of course, conditions can play a vital role. They ensure that important issues such as flood mitigation and archaeological investigation are undertaken at the right time. That is not going to change, but pre-commencement conditions should not be allowed to become unreasonable barriers to building. Not only do they delay the delivery of much-needed houses, but they create cash-flow issues for builders—something that is particularly problematic for smaller builders and new entrants to the market. To tackle this, the Bill reflects best practice by stopping pre-commencement conditions being imposed without the written agreement of the applicant. It will also create a power to restrict the use of certain other types of planning conditions that do not meet the well-established policy tests in the national planning policy framework. We are currently seeking views on both measures in a consultation paper published by my Department last month.

Finance (No. 2) Bill

Debate between Sajid Javid and Lord Mann

Wednesday 17th April 2013 Commons Chamber

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

I thank all Members for their contributions. This has been a thoughtful and engaging debate.

Both new clauses are about housing. New clause 1 would require the Government, within three months of Royal Assent, to provide a report to Parliament on how the tax system supports those seeking to purchase a second new home and how the Government plan to prevent it. New clause 5 suggests introducing a mansion tax on properties worth more than £2 million, with a view to using the revenue to fund a tax cut for those on low or middle incomes.

The Government oppose both new clauses. I will elaborate on the reasons, but first allow me to make a few points about the significant steps the Government have already taken and about our overall housing strategy, as many issues relating to it were raised this afternoon. I shall also respond to some of the other issues that were raised.

The new clauses centre on the housing measures in the Budget. The Government announced a major new package to support new development and affordable housing, alongside reforms to the planning system. The measures included the Help to Buy equity loan scheme and the Help to Buy mortgage guarantee scheme. They will give a much needed boost to housing supply, and equip those who aspire to own their home with the tools to do so.

[John Mann]

Would the Minister accept that, with the affordable housing levy the Government have brought in on single properties, those who build their own home now face a minimum £40,000 tax per property? In Hertfordshire, it is £187,000. That will kill off aspiration for those who wish to build their own home.

Financial Services (Banking Reform) Bill

Debate between Sajid Javid and Lord Mann

Monday 11th March 2013 Commons Chamber

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

This has been a thoughtful and considered debate, led by my hon. Friend the Member for Chichester (Mr Tyrie) and his colleagues on the Parliamentary Commission on Banking Standards. I take this opportunity to thank my hon. Friend for his leadership of the parliamentary commission and to thank all the Members of the House and in the other place who have made contributions to that commission.

I congratulate the hon. Member for Eastleigh (Mike Thornton) on an excellent maiden speech, and I welcome him to the House. I, too, spent quite a bit of time in Eastleigh over the past few weeks. I do not think I helped him get to the House, but now that he is here I congratulate him and wish him the very best. From what I heard today, I think he will make a fantastic contribution. Thank you.

We heard a number of pertinent and considered contributions from both sides of the Chamber, and I am pleased to see widespread support throughout the House for the measures that the Government have put forward in the Bill. The support from the Opposition Benches for so many measures is an admission, at least from some Opposition Members, that they got it wrong during their time in office, and that, as my right hon. Friend the Chancellor has said, when the fire alarm was ringing, nobody was listening. That was a point well made by my hon. Friends the Members for Carlisle (John Stevenson) and for North East Cambridgeshire (Stephen Barclay).

Nearly six years ago, we experienced the first run on a high street bank in over 100 years. Five years ago, the previous Government were forced to bail out both RBS and Lloyds, as well as to provide billions in support to the financial system. It was the worst financial crisis in a generation. It happened on their watch and it left this Government with a huge mess to clear up and with the task of restoring trust in the banking system and ensuring that taxpayers are unlikely ever again to have to step in to bail out banks. That is exactly what the Bill is designed to achieve. Ring-fencing will ensure that core services continue to be provided if a bank gets into trouble, and it will ensure that it is those who lend to banks and benefit in the good times who take losses when there are bad times.

This is a crucial Bill for the future of banking in this country, and its seriousness has been reflected today by the Members who contributed—15 right hon. and hon. Members, and the Father of the House, my right hon. Friend the Member for Louth and Horncastle (Sir Peter Tapsell), who made a superb contribution. I will attempt to respond to as many of the issues they raised as possible.

As my right hon. Friend the Chancellor has stated before, we have built a strong consensus around ring-fencing as the right structural reform, and others are following our lead. The proposals of Governor Liikanen and the high-level expert group draw heavily on this Government’s proposals and are entirely compatible with the Bill put forward by this Government. A number of Members, including my hon. Friends the Members for Chichester and for Caithness, Sutherland and Easter Ross (John Thurso), and the right hon. Members for Wolverhampton South East (Mr McFadden) and for Oldham West and Royton (Mr Meacher), raised the issue of the “electrification” of the ring-fence, as proposed by the parliamentary commission and accepted by the Government.

It seems clear that the House is in broad agreement with this important addition to the Bill. The Government agree that a power to require an individual group to separate could be a powerful deterrent against attempts to game the ring fence. This power would strengthen the ring fence. The Government will therefore table an amendment while the Bill is before this House to provide for the regulator to have the power, subject to Treasury approval, to require a group to separate.

On a related issue, several hon. Members have raised the proposal of the parliamentary commission that the Bill provide for sector-wide separation to be triggered at some, as yet undetermined, point in the future. The Government do not accept that proposal. The parliamentary commission is, in effect, asking the House to legislate two parallel policies: ring-fencing and full separation. That is despite the conclusion of the ICB, which rejected full separation in favour of ring-fencing, and despite the parliamentary commission producing no evidence in favour of sector-wide separation as an alternative. Indeed, the parliamentary commission accepts that there is no compelling case at present for full separation. That is why it recommends an independent review at some point in the future to consider whether full separation should be implemented.

However, ring-fencing has already been endorsed by a thorough independent review, which undertook public consultation, extensive scrutiny and cost-benefit analysis lasting nearly three years before rejecting full separation. The parliamentary commission’s proposal to legislate for an alternative policy in case we change our view would, in the Government’s opinion, be bad law-making. If in the future a Government were to believe that ring-fencing was no longer appropriate, which they would be perfectly entitled to do, they should conduct a thorough analysis of the evidence, consider the arguments for and against, including perhaps by commissioning an independent review. If they concluded that a different approach was necessary, they should bring forward legislation for Parliament to consider in the light of all the facts.

Several Members referred to the Volcker rule, including my hon. Friend the Member for Wyre Forest (Mark Garnier). While some may support such a measure, after 18 months of consideration, Sir John Vickers did not recommend that the ring fence be supplemented by a ban on proprietary trading. When the parliamentary commission asked him whether a Volcker rule should be introduced on top of his ring fence, he warned that the complexity of such a rule could, by distracting regulators’ focus, actually undermine the ring fence. On top of that, in Europe, Governor Liikanen and his high- level expert group noted how difficult it could be to distinguish between market making and proprietary trading. They also worried about pushing proprietary trading into the shadow banking sector, instead choosing to keep it within the regulated banking sphere. This Government are minded to agree with such an appraisal, and do not therefore see the benefit of a Volcker rule on top of ring-fencing.

We have heard some interesting views on the leverage ratio. Let me be clear. The Government strongly support a robust leverage ratio and are pushing hard for full implementation of the Basel III leverage ratio in the EU via the capital requirements directive. The ICB and the parliamentary commission have both proposed that we increase the minimum leverage ratio above the 3% international standard set out in Basel III. The Government strongly support the idea of a minimum leverage ratio as a backstop to risk-weighted capital requirements. But a higher leverage ratio would become a front-stop, the primary capital constraint on low-risk institutions, including building societies—a point made by the hon. Member for Bassetlaw (John Mann)—and one that could reduce essential lending to households. A front-stop leverage ratio would also create perverse incentives for these institutions to risk-up, because a leverage ratio does not distinguish between the safest assets, such as UK gilts, and the most risky assets. I do not think any hon. Member would like to see policies encouraging our safest banks and building societies, including those that weathered the last crisis quite well, to become more risky. So the Government are not persuaded by the arguments for a higher leverage ratio.

We have also had a number of interesting interventions on primary loss absorbing capacity requirements, not least from the Chairman of the parliamentary commission. The Government are committed to ensuring that banks have the means to absorb losses should they get into trouble, and that those losses fall on those best able to assess the risk that they are taking. The Government agree that the ICB recommendation that ring-fenced banks, and UK-headquartered globally systemically important banks, should be subject to new PLAC standards. That will be 17% of risk-weighted assets for the largest banks. That extra capacity to absorb losses will improve resilience against shocks and mean that, if a bank does fail, it can be resolved without recourse to bank bail-outs.

Some Members questioned who would decide whether banks should issue primary loss absorbing capacity against their overseas activities. The parliamentary commission recognised that the Treasury should have a role in shaping how the regulator applies primary loss absorbing requirements. That is because such decisions will be inextricably bound to the key Treasury objectives of protecting public finances and supporting long-term growth. The Government therefore believe that there is strong merit in the FSA’s suggestion that PLAC instruments and decisions should be made in the context of a firm’s resolution strategy. We will therefore make provision during the passage of the Bill to give effect to that.

Members have also mentioned bail-ins, which were discussed at some length by the right hon. Member for Wolverhampton South East. Bail-in is an important statutory tool that helps to ensure that creditors, rather than taxpayers, expect to bear the costs in the event of bank failure. It is a particularly important tool for systemically important banks, where the impact of insolvency on the wider economy is large.

To ensure that UK banks are not disadvantaged relative to international competitors, and because the task of resolving large cross-border banks is complex and requires close co-operation, it is important that the UK works with other countries to design a consistent bank bail-in tool that can work in relation to the resolution of cross-border institutions. We are therefore working closely with our European partners to develop a credible and effective bail-in tool as part of the European recovery and resolution directive. We are pleased that the Irish presidency has set out its intention to make rapid progress towards conclusion of the RRD. However, if agreement cannot be reached—we expect that it can—we will consider tabling amendments at a later stage in the Bill’s passage to allow the UK to act alone.

We heard many thoughtful interventions on competition matters. We heard from my hon. Friends the Members for Wyre Forest, for Cities of London and Westminster (Mark Field), for Wycombe (Steve Baker) and for South Northamptonshire (Andrea Leadsom). The Government are committed to making changes to encourage greater competition in the banking sector. Many of those do not require legislation to take effect, and we have already acted in a number of ways. The FCA is now tasked, through the Financial Services Act 2012, with a competition objective, as Sir John Vickers, the former head of the Office of Fair Trading, recommended.

While discussing competition, we also heard from a number of Members on what might be called alternative structures for banking. The hon. Member for Bassetlaw suggested that we move to the Chinese model, and the hon. Member for Hayes and Harlington (John McDonnell) suggested that we nationalise the entire banking sector. However well intentioned those proposals, I think that they are wholly misguided.

[John Mann]

It ill befits the Minister, when an hon. Member makes a point on three occasions, not to manage to listen to it. Perhaps he would care to consider the point I made: I dismissed the Chinese model and recommended the German model.

[Sajid Javid]

Well, let us talk about the German model. As someone who worked for a German bank for 10 years, I think I might know a little more about the German model than the hon. Gentleman does. The German model was the one that had to nationalise Commerzbank and other banks in the regional sector, and the largest bank in Germany was not without its own problems, such as the LIBOR scandal. He suggests the German model, but I do not really understand what the difference is.

[John Mann]

The difference between the German model and the model the Minister has at the moment is that the German model is lending to business.

[Sajid Javid]

I think that the hon. Gentleman needs to do some homework on the German model.

Let me turn to switching. The Vickers commission made a number of recommendations on competition, one of which was for a seven-day switching service. That will go live in September this year. It will be free to use and will come with a guarantee to protect customers against financial loss in the event of any errors occurring during the switching process. A number of Members, not least my hon. Friend the Member for South Northamptonshire, made interesting points on full account number portability. The Government have always kept an open mind in that debate, arguing that the seven-day switching service should be allowed a good run. If it does not deliver the expected consumer benefits, more radical options will of course be looked at, including full account number portability.

The structural reforms proposed in the Bill will of course aid competition. As the Bank of England’s executive director for financial stability, Anthony Haldane, said to the parliamentary commission, one of the biggest challenges we face on competition concerns is that banks are perceived as being too big to fail. The banking sector reforms made through the measures in this Bill are designed to address precisely that issue.