Draft Bank of England and Financial Services (Conseqential 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.

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.

Oral Answers to Questions

Simon Kirby Excerpts

Tuesday 17th January 2017 Commons Chamber

[Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)]

8. Whether he has made an assessment of the potential merits of introducing additional rules to ring-fence the operations of US banks in the UK.

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

US banks operating in the UK are regulated by the Prudential Regulation Authority and the Financial Conduct Authority. The UK’s ring-fencing regime applies to all banks operating in the UK that are above the threshold of holding £25 billion of core deposits.

[Philip Boswell]

Does the Minister agree that the likely rolling back of the Dodd–Frank Act in the US, combined with the watering down of banking conduct reform, could result in deregulated American banks with high-risk lending patterns operating in the UK?

[Simon Kirby]

The UK and US financial sectors have significantly increased their resilience since the crisis, and the PRA has the powers it needs to regulate overseas firms operating in the UK to ensure the stability of the UK financial system.

[Mike Wood (Dudley South) (Con)]

What steps are the Government taking to ensure that banks meet the 2019 deadline for separating retail banking from riskier investment banking activity?

[Simon Kirby]

That is well under way and we are keeping a close eye on it.

[Clive Efford (Eltham) (Lab)]

9. What recent assessment he has made of the effect of high levels of household debt on the economy.

--- Later in debate ---

[Stuart Andrew (Pudsey) (Con)]

10. What progress has been made on improving access to online and in-branch banking for carers.

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

Banks are required to treat customers fairly and ensure that vulnerable customers have appropriate access to banking. My hon. Friend and I met recently to discuss this, and I am pleased to hear that both the Financial Conduct Authority and the British Bankers Association have offered to meet my hon. Friend to discuss it further.

[Stuart Andrew]

I am grateful to my hon. Friend for meeting my constituent Annie Dransfield, who, as a carer for her adult son, manages his finances in the hope that he will be able to live as independent a life as possible, but she has real issues trying to access his online banking. Given the increasing number of carers in the country, does my hon. Friend agree that the banking industry should do all it can for these very important customers?

[Simon Kirby]

The FCA and BBA are both looking at ways to make it easier for trusted friends or family to help people to manage their money safely, and I wish my hon. Friend luck with his meetings.

[Jim Shannon (Strangford) (DUP)]

As my brother’s appointee after he suffered severe head trauma in an accident 11 years ago, I can see many avenues by which carers’ time is taken up dealing with red tape. Will the Minister outline his view on how things such as online banking can be kept safe but made simpler for carers with regard to multiple usernames?

[Simon Kirby]

I can assure the hon. Gentleman that we have discussed this. It is the very issue that my hon. Friend the Member for Pudsey (Stuart Andrew) will be discussing with the BBA and the FCA, and the Government are keeping a close eye on it.

[Mr Stewart Jackson (Peterborough) (Con)]

11. What fiscal steps he is taking to increase housing supply in (a) Peterborough and (b) England.

--- Later in debate ---

[Huw Merriman (Bexhill and Battle) (Con)]

T8. The Halifax reports that the number of first-time buyers is at its highest since 2007 and cites Government schemes such as Help to Buy as making a major contribution. What more can the Government do to back aspiration and get more people on the housing ladder?

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

The Help to Buy scheme has helped more than 220,000 households to buy a home, including more than 180,000 first-time buyers. In the autumn statement, the Chancellor announced that the Government will invest an additional £1.4 billion in affordable housing to deliver 40,000 new homes for shared ownership, rent to buy and affordable rent, bringing the total funding of the affordable homes programme to £7.1 billion.

[Patrick Grady (Glasgow North) (SNP)]

Will the Chancellor state unequivocally the Government’s commitment to the 0.7% aid target in this and future spending rounds?

--- Later in debate ---

[Jeremy Quin (Horsham) (Con)]

Alongside other elements driving recent extremely successful purchasing managers’ index surveys were seven consecutive months of export growth. Does the Minister agree that this is a fine way to underpin our already record rates of employment?

[Simon Kirby]

I agree. The PMI surveys show significant resilience in the UK economy since the referendum. The Prime Minister recently made it clear that we will make a success of leaving the EU.

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

Given the Chief Secretary’s earlier comments about attempts to stimulate house building, can he guarantee that at the end of this Parliament the supply of rented homes will be larger than it was at the beginning?

--- Later in debate ---

[Yvonne Fovargue (Makerfield) (Lab)]

More than a year ago, the Treasury promised to consult on breathing space to assist people in debt and protect them from interest and other charges while they seek help. In view of the high levels of personal debt, will the Minister commit himself to proceeding with that as a matter of urgency?

[Simon Kirby]

I can tell the hon. Lady that we are looking closely at the issue and will see some progress in the very near future.

Leaving the EU: European Social Funding in Scotland and the UK

Simon Kirby Excerpts

Tuesday 10th January 2017 Westminster Hall

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

It is a great pleasure again to serve under your chairmanship, Mr Nuttall. I congratulate the hon. Member for Glasgow East (Natalie McGarry) on securing the debate and on her thoughtful contribution. I also thank the hon. Members for Argyll and Bute (Brendan O'Hara), for East Renfrewshire (Kirsten Oswald) and for Glasgow North West (Carol Monaghan) for their additions to the debate, which has been useful and interesting.

The European social fund was set up with the objective of creating a more cohesive society, as well as a more prosperous economy throughout the EU. Projects throughout the UK, including in Scotland, have received funding from the fund. Under the ESF programmes for 2014 to 2020, a total of €466 million was allocated to Scotland. Funding for some 123 projects has already been agreed. The previous ESF programme in Scotland saw more than 430 projects funded and completed, and more than 390,000 people supported. In England, 86% of participants said that they had, for example, developed skills required in work.

Leaving the EU means that we will want to take our own decisions about how to spend our own money, which will continue to deliver the policy objectives previously targeted by EU funding. That is the context in which we have gathered for this debate. I would like to start by saying that I recognise the concerns of the hon. Member for Glasgow East and others who have spoken so passionately in the debate. She asked for certainty. I agree that it is essential that we provide certainty for recipients of ESF funding. That is why in October my right hon. Friend the Chancellor of the Exchequer announced certain guarantees.

All European structural and investment funds projects signed before last year’s autumn statement will be guaranteed, including those funded by the ESF. That also includes those projects that will continue beyond the UK’s departure from the EU. Moreover, funding for projects signed after the autumn statement, but before we leave the EU, will also be guaranteed—that is, providing that the responsible Department is content that the projects provide strong value for money and are in line with domestic strategic priorities, which are both reasonable points.

[Carol Monaghan]

All those assurances were very welcome when they were made, but the problem remains that we have an issue beyond that. We need to look to the future. We need a guarantee of funding—a pot of funding that will still be available for further and higher education way into the next decade.

[Simon Kirby]

I recognise the hon. Lady’s point, which I will cover. It is important that we have a long-term objective, that we spend money wisely and that we get the best possible solution.

The Government will ensure that the devolved Administrations are funded to meet the commitments they have made under current EU budget allocations. Given that the administration of EU funding is devolved, it will be for the devolved Administrations to decide the criteria used to assess projects.

I would like to respond to some of the specific points made. I want to reassure the hon. Member for Glasgow East about the guarantees, to which I referred, announced by my right hon. Friend the Chancellor—specifically, to ensure that recipients of funding throughout the UK, including Scotland, will have payments guaranteed. After Brexit, they will continue to be guaranteed. They will not be frozen or clawed back during the negotiations. That is an important point. The Government have committed to consulting stakeholders to review all EU funding schemes in the round. In the meantime, the Chancellor has made two guarantees, which I have mentioned. The hon. Lady’s questions are the very types of question that we hope and anticipate stakeholders will raise in the consultation, and the Government will listen carefully to everyone’s contributions.

It is also worth putting it on record that the UK Government’s decision to focus on investment, which was announced in the recent autumn statement, will result in the Scottish Government’s capital budget being increased by some £800 million by 2021—money that can be used to boost productivity and promote growth in Scotland. Significantly, the Scotland Act 2016 also enables the Scottish Government to raise more than half of its own funding.

In conclusion, as we are all very aware, the UK will leave the EU. The Government are determined to make a success of that for all of the UK, including Scotland. We have been clear about the contribution of funding secured through the ESF, but leaving the EU means that we will want to take our own decisions about how to spend UK money. Brexit will allow us to do that. The Government will work closely with the Scottish Government to get the best possible deal for all parts of our United Kingdom. We will give the Scottish Government every opportunity to have their say as we form our negotiating strategy, and the Government will continue in the coming months to consult stakeholders to review all EU funding schemes in the round. We are very much in listening mode.

Our aim will be to ensure that any ongoing funding commitments best serve the UK’s national interest while ensuring appropriate certainty. The Scottish Government and other devolved Administrations will be fully involved. In the meantime, it remains important that recipients of ESF funding continue to implement good value projects. The coming years will present a number of opportunities, which we must grasp and maximise. I am encouraged by the commitment of those who have spoken in support of vital schemes in their constituencies, and we will continue to work closely with all partners to ensure that every part of the UK prospers.

Question put and agreed to.

Treasury

Simon Kirby Excerpts

Monday 19th December 2016 Ministerial Corrections

The following is an extract from the speech by the Economic Secretary to the Treasury on 14 December 2016.

[Simon Kirby]

Housing does raise productivity. It is a much-needed part of our economy. People need affordable homes to rent or buy. The building process, as I am sure the hon. Gentleman is aware, creates jobs and increases prosperity and productivity.

The hon. Member for Strangford mentioned a shale fund—a suggestion that others have made, too. The UK does not currently meet the criteria of a country that would benefit from a shale wealth fund: we have a high debt and a large deficit, and we do not have extensive commodity or natural resource exports. The development of the shale industry would leave a positive legacy for local communities and regions where it is based. The Government’s policy is for those communities to be able to choose to invest the funds for the long term. I thank the hon. Gentleman, as ever, for making a very thoughtful contribution that added greatly to the debate. —[Official Report, 14 December 2016, Vol. 618, c. 337WH.]

Letter of correction from Simon Kirby:

An error has been identified in my speech during the debate on the UK Sovereign Wealth Fund.

The correct wording should have been:

[Simon Kirby]

Housing does raise productivity. It is a much-needed part of our economy. People need affordable homes to rent or buy. The building process, as I am sure the hon. Gentleman is aware, creates jobs and increases prosperity and productivity.

The hon. Member for Strangford mentioned a shale fund—a suggestion that others have made, too. The UK does not currently meet the criteria of a country that would benefit from a sovereign wealth fund: we have a high debt and a large deficit, and we do not have extensive commodity or natural resource exports. The development of the shale industry would leave a positive legacy for local communities and regions where it is based. The Government’s policy is for those communities to be able to choose to invest the funds for the long term. I thank the hon. Gentleman, as ever, for making a very thoughtful contribution that added greatly to the debate.

Commercial Financial Dispute Resolution Platform

Simon Kirby Excerpts

Thursday 15th December 2016 Commons Chamber

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

I thank the hon. Member for East Lothian (George Kerevan) for securing this debate and, to be fair, for his very thoughtful and measured speech. We certainly acknowledge the importance of the issues that have been raised today.

As a former businessman, I have a great deal of sympathy with all the businesses that have been mentioned and, indeed, all the other businesses that have been treated unfairly. As has been clearly shown by the speeches today, we all care about the businesses that form the backbone of our economy. We should never forget that businesses are more than just numbers; they are people, families, employees, customers and local communities.

This Government have a very strong record of supporting large and small companies, including through our competitive tax regime and our investment in skills, research and infrastructure. Clearly, one way that businesses are able to grow and develop is through having access to finance, so we all want financial services providers to lend to our businesses and to act in the strictest accordance with the FCA’s rules. Wherever that is not the case, any affected business should be compensated appropriately.

We have already heard about the avenues that exist for SMEs in dealing with their banks—from the Financial Ombudsman Service to the FCA’s powers to require firms to establish redress schemes—but it is right to look at the interactions of small businesses with financial services providers to ensure that their dealings are fair and effective. The FCA is already doing that. It launched a discussion paper on SMEs as users of financial services in November 2015. Among other things, that looks at the remit of the FOS in providing fast and inexpensive redress for consumers and our smallest businesses. The FCA is currently analysing the responses to the discussion paper, but when its findings are published, we will consider them very closely. Let me make it clear that if they include the need to review the support for businesses in resolving financial disputes, we will look at that.

It is important for me to reflect on the specific comments made today. There have been quite a few, but I shall do my very best to cover most of them. The hon. Member for East Lothian asked about reforming insolvency law. He may be pleased to hear that the Government keep insolvency law under regular review, and we are currently considering the responses to our recent review of the corporate insolvency framework.

The hon. Gentleman mentioned Andrew Bailey. As Andrew Bailey made clear in his letter to the hon. Gentleman yesterday, the FCA is considering the treatment of small and medium-sized enterprises as users of financial services. It has yet to publish the findings from that work, but, again, if they include the need to review the support for businesses in resolving financial disputes, we will look at that.

I fully recognise the hon. Gentleman’s views about RBS, the Global Restructuring Group and its treatment of small business. I share those concerns and am keen to discuss with RBS the detail of the redress scheme it announced recently for former customers of GRG.

I thank my hon. Friend the Member for Henley (John Howell) for his support for alternative dispute resolution. We welcome businesses using alternative methods to resolve disputes.

The right hon. Member for Delyn (Mr Hanson) raised concerns about the quality of the IRHP review. The Treasury Committee has recommended that the FCA should learn lessons and the FCA has confirmed that it will do so once legal proceedings are at an end. He also mentioned access to the Financial Ombudsman Service. The FCA estimates that 97% of small businesses have access to the FOS and the Government believe the FOS plays a crucial role for small businesses.

The right hon. Gentleman asked an important question about the British Business Bank’s enterprise finance guarantee scheme. At the instigation of the British Business Bank, RBS conducted an in-depth internal investigation of its administration of the EFG. RBS put in place a plan to rectify the issues identified and has concluded remediation action with affected customers.

[Mr Hanson]

Will the Minister give way?

[Simon Kirby]

I will not give way, but perhaps we might speak afterwards. I have an awful lot of things I have to address.

My hon. Friend the Member for Wycombe (Mr Baker) asked about incentives to discourage misconduct. The Government and regulators have acted to embed personal responsibility in banking through the senior managers and certification regime. He also stated that small businesses should be treated as consumers.

[Mr Baker]

I am not sure that I did state that. I asked the Government to consider whether it would be appropriate, if I recall correctly.

[Simon Kirby]

I thank my hon. Friend for that clarification, and I apologise to the right hon. Member for Delyn for being inconsistent.

Unincorporated sole traders and small partnerships fall under the regulatory rules of the consumer credit regime. The FCA is asking how all SMEs are treated as customers of financial services, as is right and proper.

The hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) mentioned the IRHP scheme. The redress scheme was not designed to replicate the courts system, which can be lengthy and expensive, as Members have acknowledged. Independent reviewers were put in place to oversee each case.

The hon. Member for Ceredigion (Mr Williams) asked about the timeliness of the ombudsman’s decisions. I agree that the decisions should be quick. I am assured that its decisions are faster than the courts and free for complainants. However, inevitably, complex cases will take time to resolve. He also asked about the disclosure of information. Where the ombudsman considers it appropriate to accept confidential information, an edited version, summary or description will be disclosed to the other party. I agree that it is right to pay tribute to my hon. Friend the Member for Aberconwy (Guto Bebb) for keeping this issue on the agenda.

The right hon. Member for North Norfolk (Norman Lamb) asked an important question about whistleblowers. I understand that the FCA has invited the hon. Member for East Lothian to discuss whistleblowing and I am sure he would be welcome at that meeting. To be clear, the Government recognise the information and huge value that whistleblowers provide.

[Norman Lamb]

Will the Minister give way?

[Simon Kirby]

I will not give way; I am so sorry.

The right hon. Gentleman mentioned RBS and GRG. The Government recognise the seriousness of the allegations against RBS. The FCA has stated that it is carefully considering the skilled persons report and other material and it is currently assessing what further work may be needed given the report’s findings.

The hon. Member for Redcar (Anna Turley) mentioned a constituent, and I have a great deal of sympathy with the situation in which he finds himself. The Government are committed to supporting small businesses through the tax system and through a regulatory regime that balances consumer protection and growth.

The hon. Member for Edinburgh West (Michelle Thomson) asked about GRG and the Government-owned bank. I should make it clear that Her Majesty’s Government’s shareholding is managed at arm’s length from the Government on a commercial basis and that HMG did not know about GRG’s activities. As a shareholder, HMG is not informed of internal business decisions. That is an important point.

The hon. Member for East Renfrewshire (Kirsten Oswald) asked about Connaught. I recognise the difficult position of many Connaught investors and I hope that the FCA considers any lessons to be learned from that case. I understand that an investigation into the collapse of the fund is ongoing.

The hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) mentioned duty of care. I agree that the outcome is important and that culture is vital. The FCA has principles of business, including acting fairly, on which it can take action. The consumer panel has asked the FCA to look at a duty of care. I am happy to tell hon. Members that I will write to the FCA to ask for an update on its thinking and put the letter and the reply in the Library.

I thank everyone who has contributed to the debate. I will summarise the Government’s position briefly because although we certainly do note many of the issues that are raised in the motion and by hon. Members in the debate, we have also heard that there are existing avenues open to businesses that are seeking to resolve financial disputes. In the case of the smallest businesses, there is the Financial Ombudsman Service. When there are widespread issues, the FCA has the power to take specific measures to ensure redress and, of course, the usual legal process is open to businesses.

However, the FCA has work ongoing to look at the relationship between SMEs and financial services providers, and we look forward to the next steps in that work. I assure hon. Members that we will then consider the need for future steps in that context.

[George Kerevan]

I thank all Members who took part in the debate. It has been very good and I think that we have progressed matters. I will take the Minister’s reply as saying that the door is still open. We will certainly want to come through it.

I particularly thank Heather Buchanan and Fiona Sherriff, who are the brains and hard work behind the all-party group, and deserve to have their names on the record.

The next stage is to have an inquiry, which will be conducted jointly by the APPGs on fair business banking and on alternative dispute resolution, in conjunction with the Chartered Institute of Arbitrators and with the support of the Federation of Small Businesses. I hope that the Minister, if he nods his head violently enough, will give evidence at that inquiry.

[Simon Kirby]

I would be delighted.

[George Kerevan]

Thank you.

Question put and agreed to.

Resolved,

That this House notes the statement presented to the Treasury Committee on 20 July 2016 by Dr Andrew Bailey of the Financial Conduct Authority (FCA); endorses his statement that the ad hoc creation of a compensation scheme within the FCA was not entirely successful and lacked perceived authority to treat customers with fair outcomes; believes that the recent headlines and allegations in the press against RBS will lead to pressure for a similar scheme; notes that many debates in this House over the years have focused on similar subjects with different lenders; believes that what is needed is not ad hoc compensation schemes, but a long-term, effective and timely dispute resolution mechanism for both regulated and unregulated financial contracts; and calls on the FCA, the Department for Business, Energy and Industrial Strategy and the Ministry of Justice to work with the All-Party Parliamentary Group on Fair Business Banking to create a sustainable platform for commercial financial dispute resolution.

UK Sovereign Wealth Fund

Simon Kirby Excerpts

Wednesday 14th December 2016 Westminster Hall

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

It is a great pleasure to serve under your chairmanship, Mr Owen.

I start by thanking my hon. Friend the Member for Weston-super-Mare (John Penrose) for securing this debate today. The issues it raises go to the heart of the Government’s economic approach, which is to get our finances in order and to build for the long term-success of the country. I read with great interest my hon. Friend’s paper, produced with the Social Market Foundation; I might indeed consider purchasing it as a small Christmas gift. The objectives that informed his paper are all ones that I share, along with Members on both sides of the House, I am sure: to see the UK’s economy strengthen and grow sustainably in the future.

Let me start by addressing the idea of sovereign wealth funds more generally, because I agree that they can form an important part of any country’s strategy for investing in its future success. Often, they are a way for Governments to manage fiscal surpluses, foreign currency operations or balance of payments surpluses. They can indeed be an effective tool for both planning sustainable investment and managing volatility in receipts. We have seen how they can work well for countries that have large fiscal surpluses. Hon. Members have mentioned Norway’s Government pension fund; there is also Saudi Arabia’s Saudi Arabian Monetary Agency’s foreign holdings fund.

However, we are not debating today the valuable role that sovereign wealth funds play in other countries around the world; we are considering whether such a fund would be appropriate for the UK, and—importantly—appropriate at this time. As the House is fully aware, we are not in the same position as many other countries that have elected to set up such funds. The crucial point is that the UK has not run a surplus since the start of this century, although we are now committed to doing so.

We have chosen the path of a credible fiscal policy that will restore our economy for long-term health, and although we are no longer seeking to deliver that surplus in 2019-20, we remain resolved to do so, to bring our public finances into balance. That is why we have committed once again in the autumn statement to deliver the surplus: we set out our plan to make that happen as soon as possible in the next Parliament, while in the interim bringing cyclically adjusted borrowing below 2% by the end of this Parliament, and getting public sector net debt, as a share of GDP, to fall in this Parliament, too.

I share my hon. Friend’s conviction about the need for strong and sustainable public finances for the UK and I understand his interest in exploring the potential for a British sovereign wealth fund. I agree with the hon. Member for Strangford (Jim Shannon) that the country should be prepared for a rainy day—sensible advice that we should all listen to. However, given that UK debt will soon be at a 50-year high of 90.2% of GDP, our priority must be to return the public finances to balance and to get the debt falling before we can consider a sovereign wealth fund in more detail. However, although such a fund may not be an appropriate avenue for us to explore at this stage, I will touch on some of the issues that today’s consideration has raised.

One such issue has been our infrastructure. One of the key roles that a sovereign wealth fund can perform is to act as a vehicle to fund sustained investment in infrastructure. Although we may not have a sovereign wealth fund, or even a formal statutory target for the proportion of our GDP that we invest in infrastructure, the Government share my hon. Friend’s conviction about making the infrastructure investments we need that will boost our productivity and strengthen our economy. That is why we have asked the National Infrastructure Commission to make recommendations on the future infrastructure needs of the country.

Once again, I refer all Members to the commitment in the autumn statement, where we prioritised high-value investment in infrastructure and innovation. That included the new national productivity investment fund, with £23 billion of extra spending targeted at high-value projects that will deliver more opportunities and higher living standards for working people—whether that is more homes, better transport links or the 21st-century digital capacity we need.

[Ian Blackford]

The Minister is setting out why he thinks it is not relevant to set up a sovereign wealth fund today, but does he accept that there was a missed opportunity with the £340 billion bounty that came from North sea oil? That could have been used to establish an oil fund that would have delivered benefits for today and the future.

[Simon Kirby]

I often say as an MP—I suppose the same is true as a Minister—that it would be nice to have a crystal ball, a magic wand and a time machine. We are where we are, and we have to make the best decisions going forward—rather than looking back in anger, if I may quote the hon. Member for Harrow West (Mr Thomas).

The additional capital will take public sector net investment to over 4% of GDP for the rest of this Parliament, well above the average of the last 30 years; in real terms, it has been more than 50% higher on average this decade than it was under the whole period of the previous Government.

Another aspect of my hon. Friend’s excellent paper was the suggestion that a new national debt charge be carved out of income tax to help pay down the debt. He will know how much I share his conviction that we need to get debt falling, but I know he also shares the Government’s commitment to helping people who are just about managing. It is important that we build an economy that works for everyone. That is why we would not look to deliver a new income tax charge in our current position. Indeed, as part of the tax lock, we have legislated not to increase the main rates of income tax, national insurance contributions and VAT during this Parliament. Alongside that, we have prioritised an approach to taxation that supports working people, such as our increase in the tax-free personal allowance.

[John Penrose]

Just to ensure that we are all clear, I clarify that my paper supports what the Minister is describing. The proposal in my paper is that the national debt charge would not start until the budget was in balance and would only equal what we were already going to be paying in debt interest to begin with. I reassure him that I am not suggesting an undercutting or a swerving away from the fiscal rules announced in the autumn statement. Those are essential to get us to the point where the budget is in balance, as he is ably laying out at the moment.

[Simon Kirby]

I thank my hon. Friend for again demonstrating what a sensible person he is.

The hon. Member for Ross, Skye and Lochaber (Ian Blackford) asked about North sea oil and why we did not create a fund in the past. He knows full well that successive Governments made use of the revenue from North sea oil to support public finances in the years when the revenues rose. I can tell him that going forward from April 2017, his Scottish Government will have the powers to contribute to their own reserve fund if they so wish. Perhaps that is something they might consider. We all agree that investment in infrastructure is key to growing the economy. That is why the extra £23.7 billion announced in the autumn statement is important; it takes the total we are spending to £170 billion during this Parliament. That will improve productivity, increase living standards and be an essential part of our plan going forward.

[George Kerevan]

About half of the extra £23 billion that the autumn statement has put into infrastructure investment is going into housing. How does that raise productivity?

[Simon Kirby]

Housing does raise productivity. It is a much-needed part of our economy. People need affordable homes to rent or buy. The building process, as I am sure the hon. Gentleman is aware, creates jobs and increases prosperity and productivity.

The hon. Member for Strangford mentioned a shale fund—a suggestion that others have made, too. The UK does not currently meet the criteria of a country that would benefit from a shale wealth fund: we have a high debt and a large deficit, and we do not have extensive commodity or natural resource exports. The development of the shale industry would leave a positive legacy for local communities and regions where it is based. The Government’s policy is for those communities to be able to choose to invest the funds for the long term. I thank the hon. Gentleman, as ever, for making a very thoughtful contribution that added greatly to the debate. [Official Report, 19 December 2016, Vol. 618, c. 9-10MC.]

The hon. Member for Harrow West apologised for not being able to be present during my speech, and I appreciate that. He asked about lifting investment restrictions on the Crown Estate. That is an interesting idea; I will do as he asked and write back to him on that matter.

I thank the hon. Member for East Lothian (George Kerevan), as ever, for his thoughtful contribution. He mentioned inter-generational fairness. I agree that that is an important issue, but at 90% of GDP next year, our debt is just too high. That represents a burden on future generations, and it is important that we retain our focus on our priority of returning the public finances to balance and getting the debt falling. Therefore, it is not possible, and it would not currently be appropriate, for the UK to set up a sovereign wealth fund. He also mentioned taxation levels; I feel duty-bound to remind him that from tomorrow, for the first time, his party—the SNP—will be able to put up taxes in Scotland. The Scottish Government can put their money where their mouth is, if they choose to do so.

[John Penrose]

The Minister is being generous. I want to pick up on the point he has now made twice: about prioritising the reduction of the overall level of Government debt in the economy once we have eliminated the deficit. I completely applaud that, but does he accept in return that the debt denominated as gilts or as bonds is only part of the overall picture of liabilities that the Government and successive Government have loaded up? A large proportion of the total liabilities—a larger proportion than the actual debt denominated as bonds—is embedded in the state pensions and benefits system. It would be a mistake for any of us to ignore those liabilities. They are equivalent to debt, so at some point we need to face up to the costs that they include, as well as to the ones he is rightly pointing out with the bonds themselves.

[Simon Kirby]

I thank my hon. Friend for that point, and I accept that the debt is made up of a variety of different things.

I commend my hon. Friend once again for securing the debate, which has been interesting. We have discussed some significant issues for the British economy. There are many areas where he and I are in full agreement, but in closing, I would like to highlight three key aspects.

First, rebalancing our economy is necessary and important. Secondly, dealing with the deficit and getting debt falling is necessary but not sufficient to rebalance the economy. A dynamic and strong economy where growth is shared across all parts of the UK is what we need. Thirdly, on the effectiveness of sovereign wealth funds in various countries, I must repeat our conviction that setting one up is not appropriate for the UK at this point in time when our priority is to get debt falling.

Indeed, as my hon. Friend the Member for Weston-super-Mare notes in his paper, there is little point in attempting to build up such a fund when debt is at

“its current, historically high levels.”

I share my hon. Friend’s desire to live within our means —the hon. Member for Strangford used the expression “to cut our cloth accordingly”—and to secure our public finances, to get debt falling and to invest sensibly in our future success, which are all important areas that represent core priorities for the Government. Those priorities were reflected in the approach that we outlined in last month’s autumn statement: to build an economy that works for everyone.

Treasury

Simon Kirby Excerpts

Wednesday 7th December 2016 Ministerial Corrections

The following is an extract from the Fifth Delegated Legislation Committee debate on the Draft Immigration Act 2014 (Current Accounts) (Excluded Accounts and Notification Requirements) Regulations 2016

[Simon Kirby]

I need to be clear on this. The rationale and scope of the legislation is personal current accounts because that is felt to be the area where the legislation can have the most effect. Businesses of all sizes are unaffected. The only time that businesses are mentioned is that if someone has a current account that falls foul of the matching process, the banks are obliged to provide all the information about the other accounts that that individual may hold. However, it does not stop any business accounts—large or small.

[Official Report, Fifth Delegated Legislation Committee, 6 December 2016; c. 13.]

Letter of correction from Simon Kirby

An error has been identified in the closing speech of the debate in the Fifth Delegated Legislation Committee on Draft Immigration Act 2014 (Current Accounts) (Excluded Accounts and Notification Requirements) Regulations 2016.

The correct response should have been :

[Simon Kirby]

I need to be clear on this. The rationale and scope of the legislation is personal current accounts because that is felt to be the area where the legislation can have the most effect. Businesses of all sizes are unaffected. The only time that businesses are mentioned is that if someone has a current account that falls foul of the matching process, the banks are obliged to provide all the information about the other accounts that that individual may hold. However, it does not require firms to carry out an immigration check on any business accounts—large or small.

Draft Immigration Act 2014 (Current Accounts) (Excluded Accounts and Notification Requirements) Regulations 2016

Simon Kirby Excerpts

Tuesday 6th December 2016 General Committees

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

I beg to move,

That the Committee has considered the draft Immigration Act 2014 (Current Accounts) (Excluded Accounts and Notification Requirements) Regulations 2016.

It is a great pleasure to serve under your chairmanship, Mr Nuttall. Effective immigration controls require responsibility to be shared. Recognising that shared responsibility, the Immigration Act 2014 took action to limit the services available to known illegal migrants. That included prohibiting firms from opening current accounts for a disqualified person—an illegal migrant liable for removal or deportation who the Home Secretary considers should be denied access to a current account.

The Immigration Act 2016 builds on those measures, targeting already open accounts that were either opened before the 2014 Act came into force or opened legally by a person who later became disqualified because of a change in their immigration status. The 2016 Act requires firms to check details of their current account holders against the details of disqualified persons provided to them via CIFAS, a specified anti-fraud organisation. They are then required to report the results of the checks to the Home Office and, if instructed by the Home Office, to close accounts or prevent continued access to them.

The 2016 Act delegated power to the Treasury—hence my appearance here today—to make regulations that detail how the regime should work. This negative statutory instrument should be read alongside the Immigration Act 2014 (Current Accounts) (Compliance &c) Regulations 2016, which were made on 7 November. It prescribes that firms carry out quarterly immigration checks, and it sets out the Home Office’s response to notifications from firms, and a requirement for firms to inform the Home Office of steps they have taken to comply with the duty to close accounts.

I will now take each of the three main areas of the statutory instrument in turn. The first is the types of account on which firms must make immigration checks. The 2016 Act requires firms to make checks on current accounts and the statutory instrument specifies that not all current accounts are within scope of that requirement. Firms are not required to extend checks to all existing current accounts. They are required to conduct checks on existing personal current accounts only, and not on corporate or business accounts. That reflects the Government’s ongoing view that current accounts are the gateway product to other financial services and a settled life in the UK. It also takes into account existing prohibitions, which are in the 2014 Act, meaning that a disqualified person cannot evade the legislation by closing a current account and opening a business account as a sole trader or a charity.

At this point, I should confirm that the Government’s intention in relation to the term “current account” has not changed from that outlined in the debates on the 2014 regulations. My colleague, the previous Economic Secretary, set out that intention on 10 November 2014.

On notifications, if a firm makes an immigration check on a personal current account and finds a match, the bank is required to notify the Home Office using a secure Home Office portal. The statutory instrument requires firms to provide certain information in that notification, including details of any other accounts that the firm holds for the disqualified person and the balances held in them. Information about regular payments into accounts above a threshold of £200 has been included in the requirements, to allow the Home Office to identify patterns of payments that might constitute evidence of illegal working. The requirement to provide information is limited to what firms hold and can retrieve; it does not require further investigation of data not held. The Home Office will then confirm the match, based on its data, and instruct the firm on the next steps. Depending on the information provided, and the details of the disqualified person’s case, the Home Office may apply to court for a freezing order, or notify the firm that it is under a duty to close any accounts it holds for that person. The Committee might be interested to know that the Home Office is preparing a code of practice on freezing orders, which will be laid in Parliament in advance of implementation.

When a firm is notified of its duty to close accounts, the 2016 Act allows it to delay closure for a reasonable period to recover debt or to manage the effect on third parties. Firms will also be able to comply with the duty without closing an account, if they are able to take steps to prevent the account from being operated by the disqualified person. Firms are required to provide the Home Office with information about the steps they have taken to comply with the duty. Finally, the instrument enables the Financial Conduct Authority—the FCA—to monitor and enforce firms’ compliance. That mirrors the FCA’s existing role for the purposes of the 2014 Act.

The regulations come into force on 30 October 2017, with firms making their first check in the first quarter of 2018. I take this opportunity to thank firms for their constructive engagement with my officials regarding the regulations and I hope that members of the Committee will agree that they strike an appropriate balance. On the one hand, they create requirements on firms that are appropriately targeted and proportionate and, on the other, they achieve the policy intention of preventing continued access to banking services, and encourage those here illegally to leave the UK or to regularise their stay. I commend the statutory instrument to the Committee.

--- Later in debate ---

[Simon Kirby]

It has been clear this morning that Members have considered this important issue in full, and clearly there are differences of opinion. I thank members of the Committee for their points—I will do my best to respond to many of them. The hon. Member for Stalybridge and Hyde mentioned rhetoric about migrants, scapegoating of migrants, and the rights of all citizens. I want to state clearly that the UK is very much open for business: it is globally facing and outward-looking and I am sure that will continue—it is one of our great strengths.

The hon. Gentleman asked about vulnerable disqualified people. Let me be clear: those with outstanding asylum applications or appeals with not be affected, nor will those who have been granted leave to be here. That is a very important point. He asked about the accuracy of data. I can assure him that the data are subject to rigorous checks at the Home Office before they are shared with anyone. It is also important to say that this will not affect anyone’s ability, within the usual rules and with the usual checks and balances, to open a bank account. There will be no de-risking by the banks. This is a quarterly exercise, a matching exercise, and it is targeted at a group of people who have no right to remain in this country.

The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East also asked about data quality. I have said that the data are subject to rigorous checks. The current account is reported to the Home Office only if there is a clear data match. The Home Office will then carry out a secondary check, and if an individual still thinks there has been a mistake, they can contact the Home Office for remedy.

The hon. Member for Poplar and Limehouse also mentioned data quality. It is always important to get these things right, and not to make mistakes. The Home Office is developing a data quality strategy intended to improve data quality. It is also important to know that this is not about stealing people’s money. Money will be returned to the account holder in the normal manner if the balance is in credit, in line with standard bank account practice.

The hon. Member for Glasgow Central raised the possibility of families being forced out of their homes. Disqualified people are known illegal migrants who are liable for removal or deportation. They have exhausted all appeal rights, and the Home Secretary must consider that they should be denied access to banking services. Such people have no right to be in the UK. I will come to the important point made about that by my hon. Friend the Member for Totnes.

The hon. Member for Glasgow Central also asked about living expenses. If an account is simply closed, any credit balance can be returned to the account holder as usual, in line with individual banks’ terms and conditions. If an account is frozen, it will be unfrozen when the illegal migrant leaves the UK, subject to any action related to the proceeds of crime. The purpose of the provisions is to make it difficult to live a settled life in the UK in order to encourage voluntary departure, not to confiscate assets. It is not about taking money away from people.

My hon. Friend the Member for Totnes raised the concept of discretion. The Home Office can exercise discretion about who should be permitted to hold an account. It is intended that that discretion should be used in exceptional circumstances—it is possible that her case might be one of them—to avoid unduly harsh consequences for vulnerable people who face a genuine obstacle to leaving the UK.

I am not sure that I have persuaded anyone to change their mind, but this is an important issue. This balanced measure is a small part of a huge tool kit of measures and encouragements, on the other side of the coin, that I have not mentioned.

[Dr Wollaston]

I thank the Minister for his reassurance. He says that “exceptional circumstances” will refer to vulnerable people who face an obstacle to leaving the UK. Can he clarify that that could include exceptional circumstances involving child dependants?

[Simon Kirby]

My understanding is that the Home Office can consider any exceptional circumstances. If I have heard correctly, my hon. Friend’s case involved an appeal. Someone appealing a decision would not be subject to this legislation in the first case. I reiterate that only those people who have no right to remain and who have exhausted all the avenues available to them will be subject to it.

[Jim Fitzpatrick]

My point is that I have had a number of constituents over the years who have exhausted, or apparently exhausted, those avenues and been declared illegal, who have then found—to pick up on the comment made by the right hon. Member for Welwyn Hatfield—another route to challenge the decision. Sometimes they are straightforwardly delaying until such time as they can succeed; in some instances, they are not delaying, and genuinely new evidence has come to light, or an error has been identified.

The period between being declared illegal and winning that particular point of law or correcting data that the Home Office has got wrong can be years. What the Minister is saying is that during the course of those years, they will not be able to access what little money they might have in a bank account, and will rely on the charity of friends and family, churches, food banks and mosques. To reply to the point made by the hon. Member for Sittingbourne and Sheppey, we are on this planet; we just disagree with the points that he is putting forward.

[Simon Kirby]

The hon. Gentleman raises a valuable point. My understanding is that if that were the case, the Home Office would be open to argument. The instrument is a small piece of legislation in a wide range of tools. I feel obliged to mention the £140 million announced at the Conservative party conference for a controlling migration fund specifically designed to ease the pressures on public services in areas of high immigration.

My hon. Friend the Member for Sittingbourne and Sheppey raised an alternative perspective. It is about getting the balance right and providing the welcome that the UK is famous for—not putting up barriers, being outward-facing and globally-looking—while, at the same time, providing a degree of fairness when it comes to people who should not remain in this country.

[Stuart C. McDonald]

This is a genuine question. The only other issue I have with the proposed regulations is the intention to exclude a whole series of accounts from the operation of the rules, including accounts used by an individual

“for the purposes of a trade, business or profession.”

All the Minister said in that regard was that the measures are in line with earlier regulations, but I still do not quite understand the rationale for that. If that happens, surely we will be going after—for want of a better expression—the little people, whereas people with business accounts and so on are being excluded from the force of the rules altogether. I would appreciate some explanation of the rationale for that.

[Simon Kirby]

I need to be clear on this. The rationale and scope of the legislation is personal current accounts because that is felt to be the area where the legislation can have the most effect. Businesses of all sizes are unaffected. Businesses are only mentioned should someone have a current account that falls foul of the matching process, when the banks are obliged to provide all the information about the other accounts that that individual may hold. However, it does not stop any business accounts—large or small. [Official Report, Vol 618, 6 December 2016; c. 1-2MC.]

I have done my best to provide assurances on the many points made by Committee members. I know that we all share a desire for a targeted and proportionate system. I am confident that the statutory instrument represents a balanced and sensible approach to continued access to banking services by disqualified persons. I hope that hon. Members support the regulations.

Question put.

Draft Bank Recovery and Resolution Order 2016 Draft Bank of England Act 1998 (Macro-Prudential Measures) Order 2016

Simon Kirby Excerpts

Monday 5th December 2016 General Committees

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

I beg to move,

That the Committee has considered the draft Bank Recovery and Resolution Order 2016.

[The Chair]

With this it will be convenient to consider the draft Bank of England Act 1998 (Macro-prudential Measures) Order 2016.

[Simon Kirby]

It is a pleasure to serve under your chairmanship this afternoon, Mr Pritchard.

Since the financial crisis, the Government have implemented significant reforms to address the problems of the past and make the financial sector safer and more stable. In addition, these reforms have ensured that a bank failure can be managed in a way that protects the wider economy and financial sector without relying on taxpayer bail-outs. I will speak to both orders, which concern two key planks of these reforms: macro-prudential regulation and resolution.

I will begin with the Bank of England Act 1998 (Macro-prudential Measures) Order 2016. The Government have reformed our financial regulation so that risks to the whole system are identified and addressed. The Financial Policy Committee addresses macro-prudential risks through its powers to issue recommendations and, importantly, directions.

Mortgages are the single largest asset class held by UK banks, which makes them sensitive to the performance of the housing market and exposes them to direct risks when borrowers struggle to pay back their loans. Work done by the Bank of England suggests that buy-to-let mortgage lending can amplify the housing cycle. As house prices go up, buy-to-let investors are incentivised to enter the market and accrue capital gains, which pushes prices up for all homebuyers. As prices fall, buy-to-let investors are incentivised to sell their properties, which can drive prices down further.

The lessons of the recent financial crisis are still fresh in our memory, and we all know that the costs of financial instability are huge. That is why, in his Mansion House speech on 12 June 2014, the then Chancellor committed to ensuring that the FPC has

“all the weapons it needs to guard against risks in the housing market.”

In 2014, the FPC recommended that its powers of direction be expanded so that it could effectively tackle the systemic risks in the UK housing market. The Government agree with those recommendations and have, indeed, already legislated to grant the requested powers regarding owner-occupied mortgages. Today’s order will provide similar powers over buy-to-let mortgages. It will allow the FPC to direct the financial regulators—the Prudential Regulation Authority and the Financial Conduct Authority—to require regulated lenders to place limits on buy-to-let mortgage lending in relation to loan-to-value ratio and interest coverage ratio. This instrument is another step taken by this Government to ensure that our financial system is resilient and supports the wider economy.

I will now turn to the Bank Recovery and Resolution Order 2016. The UK’s special resolution regime provides the authorities with the tools to manage the failure of financial sector firms without relying on taxpayer bail-outs. The EU bank recovery and resolution directive established a common approach across the EU to the recovery and resolution of banks and drew on key aspects of the UK’s existing resolution regime. Since the transposition of the BRRD in January 2015, industry and the regulators have had time to digest the new rules, and they have uncovered a small number of areas where the UK’s special resolution regime could be improved. This order therefore makes changes to strengthen the UK’s special resolution regime so it works more smoothly and effectively. The Government have consulted extensively on the draft legislation through both public consultation and close engagement with the banking liaison panel. The changes have the support of industry.

The Bank Recovery and Resolution Order 2016 makes changes in three key areas. First, it makes amendments to allow the Bank of England or the Treasury to activate contractual default event provisions where they would assist a resolution. That will support the Bank of England’s efforts to resolve a failing firm and maintain financial stability.

Secondly, the order introduces new stand-alone early intervention powers for the PRA and the FCA, which could be used when an institution’s position is deteriorating to try to prevent it from failing or requiring resolution. The stand-alone powers, which include the power to require the removal of senior management, clarify the scope of the existing powers.

Thirdly, the order provides new backstop powers for the Bank of England to resolve branches of third-country institutions operating in the UK, independently of the third-country resolution authority. The circumstances in which those independent powers would be used are exceptional. The preference of UK authorities is for co-operation between authorities.

The order also addresses a couple of other issues. First, it introduces powers to enable the bridge bank tool to be applied through a share-transfer scheme for building societies. Secondly, it introduces powers for the Treasury and the Bank of England to recover bail-in expenses. As I said earlier, the changes will strengthen the UK’s resolution regime. I hope hon. Members will support both orders.

--- Later in debate ---

[Simon Kirby]

I thank right hon. and hon. Members for their contributions. These are important instruments and it is right that they are debated properly and that questions about them are answered properly.

The Government continue to learn the lessons of the financial crisis and take action to strengthen financial stability. The instruments will enable the authorities to take action to address and mitigate systemic risks in the UK’s housing market and to improve the functioning of its resolution regime. These powers are another important step in making the UK’s financial system resilient so that it works for everyone.

The Opposition spokesperson, the hon. Member for Stalybridge and Hyde, mentioned that oversight of the new directors could create problems. In answer, I can say that anyone chosen to act as a director in place of an existing board will have to satisfy the same standards and be approved by the regulations.

The hon. Gentleman said that the amendments were not clear and were hard to understand. The Government acknowledge the technical nature of the changes; HM Treasury’s special code of practice and the Bank of England’s guidance document should be helpful in increasing understanding, but these are technical measures and we have done our very best. He also mentioned that the requirements were unclear. The Bank of England Act requires the FPC to act proportionately, to publish guidance on how it will use the powers and to publish an explanation, including a cost-benefit analysis, when using those powers.

My right hon. Friend the Member for West Dorset asked about the difference between proposed new sections 71B and 71H and about the concept of reasonableness. The regulators will exercise their powers under section 71B reasonably, and they can be challenged if they act unreasonably. I hope that that is very clear.

The hon. Member for Kirkcaldy and Cowdenbeath mentioned risk assessment. The FPC has published two financial stability reports since the referendum, which make interesting reading.

I hope that right hon. and hon. Members on the Committee will support both measures.

Question put and agreed to.

DRAFT BANK OF ENGLAND ACT 1998 (MACRO-PRUDENTIAL MEASURES) ORDER 2016

Resolved,

That the Committee has considered the draft Bank of England Act 1998 (Macro-prudential Measures) Order 2016.—(Simon Kirby.)