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Treasury Questions

19th January 2016

Harriett Baldwin answers MPs’ questions on issues including the Financial Conduct Authority review of banking culture and the living wage.

Banking Culture Review

2. Dr Rupa Huq (Ealing Central and Acton) (Lab): What discussions he has had with the Financial Conduct Authority on its decision to end its review of banking culture. [903100]

13. Jo Stevens (Cardiff Central) (Lab): What discussions he has had with the Financial Conduct Authority on its decision to end its review of banking culture. [903111]

The Economic Secretary to the Treasury (Harriett Baldwin): The Financial Conduct Authority is an independent regulator. No Treasury Minister or official had any discussions with the FCA before it took the decision to discontinue the review.

Dr Huq: Given that the popular image of bankers right now is probably on a par with used car salesmen or MPs even, does the Minister not agree with the hon. Member for Wyre Forest (Mark Garnier) that to abort the review now, which could have looked at regulating challenger banks as well as historical mis-selling, is a missed opportunity?

Harriett Baldwin: I find it hard to take lectures from the Labour party on regulating the financial sector. In fact, since my right hon. Friend became Chancellor, we have set up the Financial Conduct Authority and moved on from the failed regulatory system under the Labour Government. We made it a criminal offence to manipulate the UK’s key benchmark, we brought in the toughest rules on bankers’ pay of any financial centre and we are bringing in a new criminal offence so that senior managers whose reckless decisions bring down banks can face up to seven years in jail.

Jo Stevens: With the terrible impact of bad banking practices highlighted in the Tomlinson report, particularly in commercial lending to small businesses, still unresolved for one of my constituents, does the Minister agree that both the public and small businesses still have significant concerns about the behaviour of many individuals within the banking sector?

Harriett Baldwin: I completely agree with the hon. Lady that we need to see the highest levels of conduct from the banking sector. We also need to continue to take steps in terms of our long-term economic plan to secure access to funding for small businesses. That is why we have taken steps to back peer-to-peer lending and extended funding for lending for another two years. We continue to benefit from record low interest rates thanks to our prudent economic management.

Mark Garnier (Wyre Forest) (Con): There has been speculation that the Treasury has influenced the decision by the Financial Conduct Authority. While I think that such speculation is certainly fanciful, it is important to remind the House that the FCA was set up in 2012 as an independent organisation. Does my hon. Friend agree that one way we could underpin the independence of the FCA would be to adopt a similar process to the one we have with the Office for Budget Responsibility, whereby the Treasury Committee can have power of veto over the appointment of the chief executive?

Harriett Baldwin: My hon. Friend, who is a very constructive and engaged member of the Treasury Committee, will have the opportunity to ask questions of the acting chief executive and the chair of the FCA on Wednesday. I agree that it is very useful for such a Committee to have pre-appointment hearings with any executive of the FCA.

Andrew Bridgen (North West Leicestershire) (Con): The Symphony interbank communications software, which allows for the permanent deletion of emails, advertises itself as being able to save banks billions of pounds in fines. Will the Minister join my campaign, in conjunction with the Business Secretary, to ensure that the FCA retains the encryption codes for the Symphony software system for seven years, as happens in America?

Harriett Baldwin: My hon. Friend asks a salient question. The FCA is investigating this matter, and he will be aware that new rules—the markets in financial instruments directive II—will require firms to keep information for a considerable period, but this is the subject of ongoing discussions.

23.[903122] Tom Brake (Carshalton and Wallington) (LD): Will the Minister agree that one of the biggest problems with the banking culture is that banks are too big to fail, and will she consider the issue of diversity in the sector, including, for instance, new lending platforms and market disruptors? In particular, will she consider new primary duties on the FCA to consider the issue of diversity?

Harriett Baldwin: I am sure the right hon. Gentleman will welcome the announcement we are expecting on Wednesday from the Bank of England, the FCA and the Prudential Regulation Authority about their working together to back innovation in the financial sector. A key part of our long-term economic plan is to back competition in the banking sector, which is why I am pleased there were eight new entrants to the banking sector in the last Parliament. In this Parliament, we are aiming for 15.

Richard Burgon (Leeds East) (Lab): Mr Speaker,

“interventions by HM Treasury and other bodies have raised questions…regarding the board’s independence”—

not my words but those of an FCA-commissioned external report on the FCA board published last week. How will the Chancellor demonstrate that the appointment of the new chief executive will not be yet another example of an overreaching Chancellor trying to get his own way?

Harriett Baldwin: It was good of the hon. Gentleman to turn up for Treasury questions this time—I guess there was not a Stop the War march or a picket line to join today. I can assure him that the Treasury has the power to appoint both the board and the chief executive and to set its remit, but from then on it has operational independence.

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Departmental Pay: Living Wage

6. Alison Thewliss (Glasgow Central) (SNP): How many staff in his Department earn less than £7.85 per hour. [903104]

The Economic Secretary to the Treasury (Harriett Baldwin): None.

Alison Thewliss: I thank the Minister for that answer, but does she not agree that it is important to pay the real living wage, which is £9.40 an hour in London and £8.25 in the rest of the United Kingdom? It is paid by the Scottish Government and by more than 400 employers in Scotland, so it is fair to all employees, particularly those under 25.

Harriett Baldwin: I am glad the hon. Lady welcomes the fact that, from April this year, all employees in the United Kingdom who are over 25 will receive a significant pay rise. That is thanks to the strength of employment throughout the United Kingdom, which in turn is thanks to our long-term economic plan.

Rishi Sunak (Richmond (Yorks)) (Con): According to my calculations, someone who earns £7.85 an hour today will benefit from rises in the personal tax allowance and the national living wage, and, by the end of this Parliament, will be more than £1,500 better off. Does my right hon. Friend agree that that proves that this Government are committed to making work pay?

Harriett Baldwin: My hon. Friend makes an excellent point. In fact, it has been stated that not only will 2.5 million people benefit directly from the change in the national living wage in April, but up to 6 million whose salaries are very close to that hourly rate will benefit as well.

Mr Jim Cunningham (Coventry South) (Lab): When will the Chancellor, and in particular the Minister, give public sector workers a decent pay rise that reflects some of the jobs that they do for us?

Harriett Baldwin: We believe that every worker in the country will benefit from the change in the national living wage, which is an important part of the long-term economic plan, but, as the hon. Gentleman will know, this year public sector workers received pay rises that were above inflation.

Mr Ranil Jayawardena (North East Hampshire) (Con): The Minister has made important comments about the principle of making work pay. Will she give further consideration to extending the married couples’ tax allowance, so that more families can keep more of what they earn?

Harriett Baldwin: I will take that as a Budget submission.

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Illegal Money Lending

14. Nick Smith (Blaenau Gwent) (Lab): What his plans are for future funding of illegal money lending teams. [903113]

The Economic Secretary to the Treasury (Harriett Baldwin): The Government are exploring options to ensure that the England and Wales illegal money lending teams have the funding they need to ensure that consumers continue to be protected from illegal loan sharks, and are confident of transitional arrangements being agreed.

Nick Smith: Too many of my constituents are victims of loan sharks. The illegal money lending team has helped nearly 24,000 victims across the country, yet the Government have treated the service with disdain. Will the cuts to this vital team and to local employment standards not make the poorest more vulnerable?

Harriett Baldwin: Far from agreeing with the hon. Gentleman, I must say that the Government are finding ways to put the team on a sustainable basis to continue the valuable work it does to protect people from illegal money lending.

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Topical Questions

Nigel Huddleston (Mid Worcestershire) (Con): What efforts are the Government making to widen access to basic bank accounts?

The Economic Secretary to the Treasury (Harriett Baldwin): I am delighted to tell my constituency neighbour that at the end of last year we announced that all the major banks are now able to offer a basic bank account to customers who require one.

T6. [903095] Margaret Greenwood (Wirral West) (Lab): Many of my constituents who watch “Coronation Street” will be following the story of Tyrone Dobbs’ struggle with debt with keen interest. Unsecured lending reached a record high last year, with more than 3 million people in problem debt. The Government promised a review of what breathing space creditors should give to people who are engaged with a debt charity or agency, so that their debts do not continue to spiral out of control while they are working to resolve them. The review was due by the end of 2015. When do the Government now plan to announce it?

Harriett Baldwin: In answer to earlier questions I referred to the importance that we place on the team that will tackle illegal money lending. We have continued to support funding for debt advice, including through excellent organisations such as Christians Against Poverty, StepChange and Citizens Advice, to help individuals such as those mentioned by the hon. Lady.

James Berry (Kingston and Surbiton) (Con): On Friday I visited Barclays bank in Kingston to hear about the fantastic Barclays life skills course, which teaches young people financial literacy, among other things. I can see some candidates for the course here today. Does the Minister agree that by making financial education more accessible, we can ensure that the financial sector itself supports young people and people throughout every stage of their lives?

Harriett Baldwin: I am delighted that my hon. Friend found his visit to Barclays in his constituency to be so helpful. I know that he, too, will welcome the fact that since 2014 financial education has been part of the national curriculum.

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Mr Robin Walker (Worcester) (Con): Credit unions can play a vital role in improving financial inclusion and creating a stronger savings culture. As I know from my work with the all-party credit unions group, they have support in all parts of this House. With the opportunity of the World Council of Credit Unions coming to the UK—to Northern Ireland—later this year, will the Chancellor commit to making sure that we continue to build on the work of the credit union expansion programme and back this vital group?

Harriett Baldwin: My other constituency neighbour is a fine advocate for the excellent credit unions industry. As he will know, we have backed the industry with £38 million of investment through the credit union expansion project, and we will continue to seek ways to back credit unions.

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Alison McGovern (Wirral South) (Lab): May I return the City Minister to the issue of the cancelled FCA inquiry into banking culture? The Parliamentary Commission on Banking Standards chaired by the right hon. Member for Chichester (Mr Tyrie) pointed to the “Murder on the Orient Express” excuse where everyone was partly responsible but no one was really to blame. The Minister said before that Ministers had no role in the cancellation of that inquiry. Will she say, yes or no, whether any civil servants did?

Harriett Baldwin: No.

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