Draft Bank of England and Financial Services (Consequential Amendments) Regulations 2017

Simon Kirby Excerpts

Wednesday 18th January 2017 General Committees

[The Economic Secretary to the Treasury (Simon Kirby)]

I beg to move,

That the Committee has considered the draft Bank of England and Financial Services (Consequential Amendments) Regulations 2017.

Good afternoon, Mr Flello. It is a pleasure to serve under your chairmanship. This is a technical and, I hope, straightforward and non-controversial piece of legislation. It provides for ending Prudential Regulation Authority’s status as a subsidiary of the Bank of England. It transfers the PRA’s functions to the Bank and provides that, when acting as the PRA, the Bank’s functions are to be exercised through a new Prudential Regulation Committee.

I do not want to detain hon. Members unnecessarily this afternoon. I am happy to answer questions on any specific technical point later.

--- Later in debate ---

[Simon Kirby]

I shall address the first comment made by the hon. Member for Stalybridge and Hyde about independence. The PRC will have clear statutory safeguards for its independence, including a majority of external members. He suggested that this change might be a downgrade. It is in fact the opposite—it is an upgrade that reinforces to Bank staff and the public to whom the Bank must be transparent and accountable and that the Bank is not simply an organisation dedicated to setting interest rates but one with equally important macro and microprudential responsibilities.

The hon. Gentleman mentioned that the Bank might ration resources. I hope to reassure him by saying that the use of the levy will continue to be limited to meeting the costs of the PRA’s functions. The Bank of England and Financial Services Act 2016 requires the Bank’s external auditor to state whether the Bank has complied with the requirements in the Financial Services and Markets Act 2000 in relation to the levy. The 2016 Act also requires the Bank to produce a separate statement of accounts for its PRA functions to ensure continued transparency in the use of the levy. It is interesting to note that Andrew Bailey, then the PRA chief executive, speaking to the Treasury Committee said that there is no change in terms of robustness of the accountability for the use of the levy.

I thank the hon. Gentleman for reminding us of and repeating the arguments made during the primary legislation’s progress through Parliament. I politely suggest that he is perhaps trying to shut the stable door after the horse has already bolted. This is a straightforward, technical arrangement that changes words in existing primary legislation that clarify references to the Bank and the PRA.

I note with interest the comments from the hon. Member for Kirkcaldy and Cowdenbeath. The changes are sensible. They are a final, legal tidying-up exercise to commence the provisions ending the PRA’s subsidiary status. We plan to make the change on 1 March.

Question put.