Emma Reynolds MP: speeches

Speeches

• 1 Jul 2025 · Supporting Economic Growth · Hansard source

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  Defence companies are an incredibly important part of the economy, and the hon. Member will know that we are increasing defence spending to up to 2.6% by the end of this Parliament. It has only ever reached those levels before under a Labour Government.

• 25 Jun 2025 · Access to Banking Hubs: Hertfordshire · Hansard source

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  The hon. Gentleman brings me to the meat of my speech, which I must move on to, as I do not have very long left. I always get lulled into a false sense of security in Westminster Hall, where I think I have quite a long time to speak. I made the position very clear on the Floor of the House a couple of weeks ago, when we had a similar debate. The hon. Gentleman will know that under the previous Government’s Financial Services and Markets Act 2023, Parliament legislated to protect reasonable access to cash. Specifically, Parliament gave the Financial Conduct Authority new powers to ensure that communities could both withdraw and deposit cash, but that governs only access to cash; it did not include access to in-person banking. The hon. Member asked about the Link criteria, an issue that has been raised in previous debates. The Government do not have the power to amend the assessment criteria. Any decisions on changes to Link’s criteria for access to banking services are an independent matter for Link. As he will know, the set-up of banking hubs is a voluntary initiative by the banks. I visited a very good banking hub in Buckingham that has different community bankers coming in every day of the week, which works extremely well. The hon. Member for South West Hertfordshire and others asked whether we are minded to change this situation. We continue to monitor it, and we have heard lots of concerns expressed today. I continue to meet hon. Members, and I have another session next week for those who, if they have not met with me, would like to. Currently, however, the Government are not minded to change the legislation. I am soon to meet John Howells, the chief executive of Link, and I have listened to the concerns of hon. Members, particularly those with rural constituencies, including the hon. Member for Berwickshire, Roxburgh and Selkirk. I think that Link should take into account his point about the different rules for what is rural and what is urban. I am running very low on time, and I am conscious that the hon. Member for South West Hertfordshire should be allowed a brief wind-up. I promise to respond in writing to some of the questions asked about the Post Office in the debate.

• 25 Jun 2025 · Access to Banking Hubs: Hertfordshire · Hansard source

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  The hon. Gentleman will have to excuse me; I cannot offer letters of support. If I were to do that, there would be a number of letters that I would be writing. The Link assessment is independent and is what the previous Government set up and legislated for, in terms of access to cash. I will come on to that in a moment, if that is okay, and give him some more clarification on that. We need to recognise that the landscape for retail banking has changed significantly in recent years, turbo-charged by the pandemic. For example, last year we had 93% of people with current accounts access their bank online or via a mobile app. That obviously does not include the nan of the hon. Member for Broxbourne, who I have heard about on numerous occasions, but there are lots of people who access their banking in that manner. There has also been a shift among older customers, with 83% of those aged over 75 now using online or mobile banking, compared with just 27% in 2017. That is a marked shift. We know, however, that there are vulnerable groups, such as the elderly and people with disabilities, who very much appreciate and value in-person banking. Branches can act as anchors in a local community and are very important to small businesses, as several hon. Members mentioned, not least the hon. Member for South West Hertfordshire. When a high street branch closes, particularly the last branch on the high street, it can be a real blow to an area, especially where the alternatives are limited. That is why the Government, when we were in opposition and formulating our manifesto, secured the industry’s commitment to roll out 350 banking hubs—that is in totality. I say to the hon. Member for St Albans that that is not a limit, and actually, we are quite far along that journey. We have 230 that have already been agreed, and more than 170 are open. That includes 108 that have been open since the general election, and we are not even a year into our Government. We promised 350 by the end of the Parliament, but we are running much more quickly than that. I hope that we will surpass 350 by the end of the Parliament.

• 5 Jun 2025 · Bank Closures and Banking Hubs · Hansard source

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  I do not have very long left, I am afraid. The hon. Member for Aberdeen North (Kirsty Blackman) and my hon. Friend the Member for Weston-super-Mare rightly stressed the importance of these services in urban areas as well. I will not go through all of them, but we heard lots of really good speeches on both sides of the House and a surprising degree of consensus, which is not always the case. It is interesting to see the right hon. Member for Tatton (Esther McVey) and my hon. Friend the Member for Blyth and Ashington so closely aligned, which is not something I expected. Through the Financial Services and Markets Act 2023, the last Government legislated to protect reasonable access to cash, giving the Financial Conduct Authority new powers to ensure that communities could both withdraw and deposit cash. The Government recognise that the ability to access cash and in-person banking support remains essential for many, particularly in rural areas and for vulnerable people, which is why we have secured the industry’s commitment to roll out 350 banking hubs by the end of this Parliament, ensuring that access to face-to-face banking is protected. Over 220 have been agreed, and more than 160 are open. Banking hubs are a voluntary initiative by banks as part of meeting their access to cash obligations, as legislated for in FSMA. Many Members have asked the Government to demand that Link reviews its assessment procedure, but it is worth reminding colleagues that the process for deciding where hubs are needed is independently determined by Link, the operator of the UK’s largest ATM network. The Government are not minded to review the legislation passed by the previous Government. A number of Members—including the hon. Member for Dumfries and Galloway, who mentioned this to me yesterday as well—talked about ATMs’ lack of reliability. I have done a little bit of work on that, and Link assures me that it takes a hard line with its members over the functionality of ATMs. However, I urge Members to raise these issues with me, so that I can raise them with Link. I am soon to meet John Howells, the chief executive of Link, and I will feed back the concerns that Members have raised today about how Link applies its criteria. I know that this is not necessarily the conclusion to the speech that Members were hoping for, but we think it is important that local communities have access to cash and banking services, which is why our Government are committed to rolling out 350 banking hubs across the country.

• 4 Jun 2025 · Draft Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025 · Hansard source

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  I beg to move, That the Committee has considered the draft Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025. As ever, it is a pleasure to serve under your chairmanship, Mr Mundell. I am grateful for the Committee’s time this afternoon. Financial services fulfil a vital role for people and businesses across the UK. The Government are committed to ensuring high standards of both consumer protection and financial inclusion. The regulations form part of that commitment by strengthening protections for customers, including individual consumers, businesses and charities, when their bank accounts or other payment services are terminated by their provider. While terminations of services are generally considered commercial decisions, customers must be treated fairly. Concerns have been raised in that area over recent years, including concerns about services being terminated on the basis of customers’ lawful beliefs and political opinions. The Government are unequivocal that customers should not see payment services terminated on grounds relating to their lawful freedom of expression. There are clear protections in law that already prohibit providers from discriminating against UK consumers based on protected characteristics and their lawful beliefs and political opinions. However, in other areas, existing legislation does not always provide appropriate protection and is not sufficiently clear. Currently, payments legislation contains no obligation on providers to explain why they are terminating services, and the existing two-month notice period is not always long enough, meaning that customers do not have the information and time they need to understand providers’ decisions, rectify issues or make a complaint. The statutory instrument before us today addresses those issues. It would increase the amount of notice that providers must give to at least 90 days and introduce a new requirement that customers be given an explanation that is sufficiently detailed and specific for them to understand why the contract for their payment service is being terminated. Providers would also be required to advise customers on how they can make a complaint to their provider and on any right they may have to take their complaint to the Financial Ombudsman Service. The SI clarifies ambiguities in existing legislation to ensure that the new rules are applied consistently. There are some exceptions to the new requirements in the SI, as Members will see, mainly so that providers can continue to meet their other legal requirements. The strengthened rules would take effect from 28 April 2026 and apply to the termination of payment services contracts that are concluded for an indefinite period and entered into on or after that date. The regulations would make crucial changes that would ensure that customers are treated fairly while respecting providers’ rights to make commercial decisions. The reforms will increase transparency, ensuring that customers understand providers’ decisions and have the time and information they need to bring a complaint or find an alternative provider. I thank the Committee for its attention and welcome any questions from the shadow Minister or other Members.

• 4 Jun 2025 · Draft Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025 · Hansard source

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  It started so well—I am slightly confused by the hon. Gentleman. On one hand he says it is as though nothing changed, and did we need a general election to get to this point? On the other hand he calls into question the provisions of the SI and what impact they might have. I will come to his questions in turn. First, there has been a big change since the election. I was not here in the last Parliament, so there has been a welcome change from my point of view and on the Labour side of the House, where we have a quite hefty majority, in case he had not noticed. The reforms were consulted on and thought about in the last Government—the hon. Gentleman was right to make that point. We consider, as did the previous incumbents in my role and the Conservatives in government, that the current notice period of 60 days is simply not adequate for customers who have their accounts closed to either make a complaint or seek an alternative provision, and that is bad for individual customers, but particularly bad for businesses. As he set out, it is crucial that businesses and individual customers have access to bank accounts. We do not think, although I can write to him with more evidence, that this measure will make banks more reluctant to open bank accounts in the first place. The balance that we are striking in this statutory instrument is on the one hand enhanced consumer protection and on the other hand ensuring that we do not place unnecessary and disproportionate burdens on banks and other providers—it is not just about banks; it is about other payment providers, too. We have not included a statutory review clause, but that does not mean that we cannot review the legislation. We do not judge that this provision will make banks more reluctant to open bank accounts for people in the first place. The shadow Minister asked more broadly about access to banking services, which is something that we are monitoring. As he said, that is crucial to both the operation of a business and customers. In our financial inclusion strategy, we are looking at access to banking and the relationship between financial exclusion and digital exclusion. We are doing broader work in this area to understand not only the root causes from providers but why individuals have perhaps had their accounts closed and not sought alternative provision. We are doing broader work on financial provision, as the hon. Gentleman knows, and we will produce a strategy by the end of the year on this vital issue. I know that many of my hon. Friends will welcome that, as well as other Members across the House, because financial inclusion is something that we all care about and this Government are very committed to. I believe that I have answered all the questions.

• 20 May 2025 · Topical Questions · Hansard source

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  We are in weekly touch with the Financial Conduct Authority, which regulates mortgages, and under this Government we have seen four interest rate cuts since the election, which is bringing mortgage rates down for hard-working people across the country.

• 20 May 2025 · Topical Questions · Hansard source

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  As I said in my previous answer, we have secured the commitment of the industry to open 350 banking hubs by the end of this Parliament. The FCA keeps the access to cash rules under review. As legislated for under the last Government, it has the power to make rules to ensure that there is access to cash across the country.

• 14 May 2025 · Draft Pension Fund Clearing Obligation Exemption (Amendment) Regulations 2025 · Hansard source

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  I thank both hon. Members. As I expected, the shadow Minister agrees with the policy of the previous Government. He asked a couple of questions, and I will take them in the wrong order. The shadow Minister is right that there is a very slight difference between ruling clearing out completely and making the exemption permanent, but the outcome, which is what we are focusing on, is exactly the same. We have said that we will keep the policy under review if we need to, but overall we think that a permanent exemption gives the industry a lot more certainty than having to roll the exemption over every couple of years. I hope that that gives him some comfort. In a way, the shadow Minister has answered his own question on divergence from the EU. Our pension systems and the UK defined-benefit market are structurally different from those in other jurisdictions such as the US and the European Union, so we think it entirely appropriate to take a different decision on this issue. The Government are committed to maintaining our high standards of regulation and financial services, including adhering to relevant international standards where appropriate, but we do not think that this will create a divergence that is worrying in any way. I completely concur with the hon. Member for St Albans that the focus should be on pension outcomes. Maintaining the exemption over time will give certainty to those in the industry, so that they can invest, over the longer term, in assets that will produce returns for their members and therefore pay out the defined-benefit pensions that they are contractually obliged to provide for their members. I hope that I have answered all the Committee’s questions. Question put and agreed to.

• 7 May 2025 · Defence Sector Financing · Hansard source

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  It is a great pleasure to serve under your chairmanship, Sir Edward. I congratulate my hon. Friend the Member for York Outer (Mr Charters) on securing this debate. I also thank the Chair of the Defence Committee, my hon. Friend the Member for Slough (Mr Dhesi), and the hon. Member for Strangford (Jim Shannon) for their contributions. I am going to embarrass a few people now. I thank my hon. Friend the Member for Wolverhampton North East (Mrs Brackenridge), who is one of my successors in a seat I represented between 2010 and 2019. It was great to hear about the success of Collins Aerospace, which is in that constituency. I also thank my hon. Friends the Members for Stockton North (Chris McDonald) and for Hampstead and Highgate (Tulip Siddiq), as well as the right hon. Member for North East Cambridgeshire (Steve Barclay), for their interventions. Today’s discussion and the fantastic speech from my hon. Friend the Member for York Outer have highlighted the complexities and challenges we face in ensuring that our defence sector is robust enough to protect our national security and support our growth mission, which is the No. 1 mission of this Government. In recent years, the world has been reshaped by global geopolitical instability, including Russia’s aggression and its illegal invasion of Ukraine—a war on our continent—as well as increasing threats from malign actors. This, combined with the challenging economic and fiscal context, makes it essential that we address the barriers to finance in the defence sector, so I thank my hon. Friend again for securing this debate in Westminster Hall. National security is the first duty of the Government, as highlighted in our plan for change. We have demonstrated our commitment in recent announcements, such as the Prime Minister committing to reach defence spending of 2.5% of GDP from April 2027. As he said at Prime Minister’s questions today, the last time the UK reached that level of spending was under the last Labour Government. Our ambition is to reach 3% of GDP in the next Parliament, as economic and fiscal conditions allow. Given that uplift in defence spending and the challenging fiscal and economic context we find ourselves in, this Government want to ensure that the defence sector contributes to achieving our No. 1 mission of economic growth. The Chancellor reiterated that message at the spring statement, when she announced a package of defence and growth-focused measures. That included the creation of a new organisation, UK Defence Innovation, with the explicit aim of supporting the scale-up of SMEs, start-ups and non-traditional defence suppliers, enabling them to grow and thrive, fostering an innovative defence tech ecosystem and crowding in private capital. As has been discussed in this excellent debate, we have been made aware of a number of financing issues in the defence sector, and I will come on to them shortly. I will first respond to the final part of the speech made by my hon. Friend the Member for York Outer, on the proposals for a multilateral defence bank. I thank him for drawing our attention to these proposals, and I thank Rob Murray, the founder of the multilateral Defence, Security and Resilience bank, who has been liaising with the Government and championing this proposal. We recognise the issues that my hon. Friend raised today. We are looking carefully at the proposals and actively discussing with our allies a range of multilateral options. My hon. Friend the Member for Hampstead and Highgate mentioned the EU, and I should say that we are looking forward to the UK-EU leaders’ summit on 19 May. We welcome the EU’s efforts to bolster Europe’s defence, including the ambitions set out in the ReArm Europe package and the defence White Paper. We have been clear that we are keen to work with EU allies on common challenges to our shared security. The Chancellor discussed this with counterparts at the G20 in February, and we are discussing the shared challenges with our European partners. I cannot comment in detail on those discussions at this time, but we will continue to work together with our European allies on this incredibly important issue. My hon. Friend the Member for York Outer talked about some of the spillover effects, and I assure him that the Treasury and the MOD are keen to maximise spillovers and synergies between the civil and military sectors for both economic growth and military reasons. We are considering how to maximise these benefits as we develop the defence industrial strategy. My hon. Friend mentioned a number of issues to do with defence companies’ access to finance, and I welcome the recent meeting he held with our hon. Friend the Member for Aldershot (Alex Baker) at Guildhall in the City. I know that my right hon. Friend the Minister for Defence Procurement and Industry was present at that meeting, as were representatives of the defence sector and a number of trade associations representing the City and financial services. My hon. Friend the Member for York Outer brings to this House a great wealth of experience in financial services, from both a firm and a regulatory perspective, so he will know that decisions regarding the provision of financial services to businesses are a commercial matter; banks and insurers need to make an assessment of the relevant risks and conduct appropriate due diligence. However, we are very clear that no company should be denied access to financial services purely on the basis that it works in defence. I encourage all defence firms to read the very helpful guidance published by UK Finance and ADA Group. It is excellent to see the trade associations coming together, working from the different perspectives of the defence sector and finance, to produce that guidance.

• 7 May 2025 · Defence Sector Financing · Hansard source

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  We have been clear that there is no contradiction between ESG considerations and investment in defence, and that investing in our defence industry is a way to protect our democracy and borders, and to work in solidarity with our European neighbours. I will write to the hon. Gentleman about the specifics, but I know that various accusations have been levelled at some of the companies he mentions and others. We need to be very careful about that. I heard what the hon. Member for Strangford said about our own pension funds. There is huge potential in our pensions industry. We should ensure that that industry is in a position to leverage the great returns that can come from defence companies, but there is a lot of muddying the waters around certain firms and what they are doing. I do not want to name particular companies, but I am happy to discuss it with the hon. Gentleman in detail after the debate. Aspersions have been cast against certain companies managing pension funds that are not absolutely accurate when it comes to ESG. A lot of things are piled under the ESG banner. We are very keen that opaque ESG ratings should not impede the attractiveness of the defence sector. I am running out of time. I believe that the Member who moved the motion replies?

• 7 May 2025 · Defence Sector Financing · Hansard source

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  I have a bit more time then. My hon. Friend the Member for York Outer talked about access to finance for defence companies with regard to bank accounts. That is a commercial decision. He also mentioned access to credit, loans and cash flow, where we know defence SMEs often face challenges. We want to work across the Government, with SMEs in the defence sector and with the main players in financial services to ensure that we bring down some of the barriers to finance. My hon. Friend suggested a Government-backed growth guarantee scheme, and made a strong, thoughtful and compelling case for that. With other interventions, that is being considered as part of the defence industrial strategy. I look forward to working with my hon. Friend and other Members with a keen interest in this vital sector. We want to see a thriving UK defence sector, with both large defence firms and SMEs in the supply chain, that provides security for the United Kingdom and helps to deliver the economic growth that the country needs to raise living standards across the country. Question put and agreed to.

• 24 Apr 2025 · Bank Resolution (Recapitalisation) Bill [Lords] · Hansard source

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  Perhaps my hon. Friend and I could have a discussion outside the Chamber so that I can better understand his question. The mechanism in the Bill is about what happens when the resolution regime is triggered. Four different conditions have to be met for that to happen. The Bill seeks to continue the work that the Opposition started to take forward when they were in government before the election about what we do in cases like that of Silicon Valley Bank. In that case, there was not any recourse to public funds, but this is about how we protect the taxpayer in a scenario where there is. Perhaps we can have a discussion about bank branch closures, which is obviously of great concern to Members across the House. I appreciate that amendment 3, tabled by the hon. Member for Wokingham, aims to introduce an additional safeguard by permitting the Bank of England to use its new power on the largest banks only if the Treasury permits that through regulations. He talked about that in his speech. However, there may be risks associated with that approach, particularly if the Bank of England needed to take a decision at pace in a crisis. Indeed, my hon. Friend the Member for Hendon was in the Treasury when many such situations arose. [ Interruption. ] Well, let us not rake over the history. We discussed some of these issues in Committee. As the shadow Minister suggested, we are trying to avoid a window of uncertainty during which a statutory instrument would be laid. The Bank of England, working in close partnership and consultation with the Treasury and the other financial services regulators, needs to be able to act swiftly and decisively—often over the weekend. I ask hon. Members, and the hon. Member for Wokingham in particular, to cast our minds back to the weekend when Silicon Valley Bank UK was failing. The Bill derives from the lessons learned from that event. What we saw from that incident is how quickly the authorities—the Bank of England in consultation with the Treasury, the PRA and the FCA—must move to find a solution before markets open and resolve a failing firm in a way that protects financial stability, depositors and the taxpayer. That has to be at the forefront of our minds when we are thinking about the amendments. Amendment 3 could add a further stage to that process, whereby the Treasury must lay regulations to enable the Bank of England to act. That may well—it is most likely that it would—hamper those efforts to implement a solution swiftly to achieve those objectives. Had Silicon Valley Bank UK been caught by such requirements, that certainly would have made achieving the solution by Monday morning, before the markets opened, much more challenging. Again, the priority is to protect the depositors and to protect financial stability. Overall, the Government firmly believe that it is better to leave flexibility for the Bank, noting the safeguards in place that I have already mentioned. On the basis of those points, I hope that hon. Members will be persuaded to support the Government’s position on this matter; I know that it is an issue of some contention. Amendment 4, also in the name of the hon. Member for Wokingham, is on whether the Bank of England should have a growth and competitiveness objective when exercising its new power—another topic that we have discussed previously during the Bill’s passage. Growth and competitiveness are fundamental priorities for the Government, and as I stated in Committee, a disorderly bank failure could pose a serious risk to the growth and competitiveness of the sector and to the UK economy. The Bill seeks to mitigate that risk. Bearing that in mind, the Government do not believe that they should impose a requirement on the Bank of England to consider growth and competitiveness when it is taking urgent crisis management action in relation to an individual distressed or failing firm. At such a time, the situation that it would have to manage would be challenging enough without an additional broad objective of that kind. The resolution objectives set out in the Banking Act 2009 already provide a solid basis on which it must make its decisions, including protecting financial stability, protecting covered depositors and protecting the taxpayer. As my hon. Friend the Member for Hendon reminded us, the Bank of England, in close partnership with the Treasury and the other financial services regulators, needs to act with speed and flexibility to maintain financial stability. Those considerations are very different from those that the PRA and the FCA make in their policymaking roles. The Government strongly support the existence of their secondary objective on facilitating growth and competitiveness. I note and accept that there is a broader question about how the Bank of England can support growth and competitiveness, but this is a complex matter, and one that is well beyond the scope of the Bill. We will be resisting the amendment for those reasons. Finally— [ Interruption. ] I see that our debate has attracted quite a lot of discussion around the edges; if I could hear myself think, it would be nice. I turn briefly to amendment 2, tabled by the shadow Minister. First, I reiterate that the Government have made clear their strong commitment to support the mutual sector, and I reassure him that we take our commitment in the manifesto to double the size of the mutual and co-operative sector very seriously. Many hon. Members on the Government Benches who serve as Labour and Co-operative MPs have a great interest in this matter, as has been demonstrated. I also direct the shadow Minister—to be fair, he referred to a couple of them—to the package of measures that the Chancellor set out at Mansion House, which included the consultation on the potential to reform common bonds for credit unions in Great Britain. The Chancellor asked the Financial Conduct Authority and the Prudential Regulation Authority to produce a report on the mutuals landscape by the end of the year. She also welcomed the establishment of an industry-led mutual and co-operative business council, the first meeting of which I attended earlier this year.

• 22 Apr 2025 · Retail Investment · Hansard source

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  I have heard the hon. Lady’s representation, and I am sure that people in the Treasury hear that representation. I would mention to her more broadly that we have committed to one fiscal event a year, rather than the two or three that we might have seen from the previous Government—we might have got a third one in September, had we not had an early election. I hope that gives her some reassurance. The hon. Member for Wyre Forest mentioned the issue of building societies, which he also raised with me in the House in Treasury questions. I am in close touch with the building societies and will be speaking at their conference in Birmingham—he might be too, as a west midlands MP; I do not know. I can reassure him that we are in close engagement with them and that we understand and appreciate the valuable role that they play in providing mortgages and other financial assistance to their members. Many of us in this place will be members of and have investments in different building societies.

• 8 Apr 2025 · Investment: Regulatory Policies · Hansard source

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  We have heard from UK businesses that our regulatory system often holds back growth and investment. We recently published a regulation action plan, and committed to cutting the administrative costs of regulation for businesses by 25% by the end of this Parliament. We are going further, faster than ever before to streamline regulation and make Britain the best place in the world to do business.

• 11 Feb 2025 · Bank Resolution (Recapitalisation) Bill [ Lords ] (First sitting) · Hansard source

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  Growth and competitiveness are fundamental priorities for this Government. Financial and economic stability are essential for growth and lie at the heart of the Bill. Risks to financial stability arising from bank failures, and the disruption they cause to continuity of critical services, can be seriously detrimental to growth and competitiveness. It is an obvious point, but one of the principal ways in which the authorities can impact economic growth is by maintaining financial stability. Amendment 4, tabled by the hon. Member for Wokingham, seeks to ensure that the Bank of England considers competitiveness and growth when using the new mechanism in the Bill. It does so by introducing a new objective that the Bank of England would need to consider alongside the special resolution objectives. This objective would be to facilitate the international competitiveness and growth of the UK economy, subject to aligning with relevant international standards. The Government resist the amendment because we believe that, while well-intentioned, it may have profound consequences. I should start by noting that the aim of the Bill is to enhance the resolution regime, but in a way that avoids making more fundamental changes to the regime and the way in which the Bank of England exercises its resolution powers. As I said to the hon. Member for Dorking and Horley previously, this is more of a significant tweak than an overhaul, which it certainly is not. That is because the Government consider that, broadly, the regime works well, as demonstrated by the successful resolution of Silicon Valley Bank UK. The Government believe that attaching a new objective such as this to the use of the mechanism in the Bill could complicate matters for the Bank of England in using the mechanism alongside its stabilisation powers. This is the key argument: we know that, when managing a firm failure, the Bank of England may need to take a decision at pace in a highly complex and uncertain environment. That is distinct from the regular policymaking of the Prudential Regulation Authority and the Financial Conduct Authority, which of course have a secondary growth and competitiveness objective—for which there is cross-party support—but one that is applicable in the context of their general rule-making and policymaking roles. It would be quite different to say that this objective should apply to the Bank of England when taking urgent crisis management action in relation to an individual distressed or failing firm. That reflects the different nature of the decisions that regulators take compared with the resolution authority, which has to act quickly and decisively in a crisis. It is therefore important that the Bank of England, as the resolution authority, has a clear and unambiguous basis on which to make such decisions. The Government believe that the special resolution objectives already provide that. As Members will appreciate, it is important to strike the right balance between ensuring that the Bank of England can respond quickly and flexibly to a firm failure, and that any impacts on growth and competitiveness are properly considered. The Government believe that the existing framework strikes the right balance. I would add that the question around how the Bank of England and others support growth and competitiveness is a complex matter, and it is not one that the Government believe should be, or can be, addressed in the Bill. I hope that I have provided a helpful explanation of the Government’s view on this issue, and I respectfully ask that the hon. Member for Wokingham withdraws his amendment.

• 11 Feb 2025 · Bank Resolution (Recapitalisation) Bill [ Lords ] (First sitting) · Hansard source

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  Clauses 2, 3 and 5 relate to the reporting and accountability requirements on the Bank of England when it uses the recapitalisation mechanism. The Government added these clauses to the Bill in the other place, reflecting the understandable concerns raised about how the Bank of England will be held to account when using the new mechanism. Together, they aim to ensure that there is effective transparency and scrutiny when the mechanism is used, helping to provide important assurances following a resolution to the Chancellor, Parliament, industry and the public. Clause 2 requires the Bank of England to report to the Chancellor following its use of the mechanism. These reports must relate both to the exercise of the mechanism and the stabilisation option it is used in connection with. The “final report” produced by the Bank of England is intended to be a comprehensive account of the use of the mechanism, with the content and timing of the report to be specified by the Treasury. As alluded to in the published draft updates to the Bank of England’s code of practice, the Government expect such final reports to include a number of important points: first, an explanation of the choice to use the new mechanism; secondly, how the resolution conditions and objectives were considered and given regard to; thirdly, an assessment of the costs of using the mechanism compared with placing the firm into insolvency; and finally, an explanation of why any ancillary costs were considered reasonable and necessary. Clause 2 also requires the Bank of England to produce an interim report within three months of using the mechanism, if the final report has not been provided within that period. This guarantees that scrutiny of the Bank of England’s actions takes place in short order after a resolution involving the mechanism. The Chancellor will be required to lay any reports before Parliament, ensuring that there is appropriate transparency and accountability regarding the use of the mechanism. The Chancellor, however, will have the discretion to omit certain information from such reports when they are published if doing so is deemed to be in the public interest—for example, if reports contain commercially confidential information, or if disclosure could potentially frustrate an ongoing resolution process. Clause 3 requires the Bank of England to notify the Chairs of the Treasury Committee of this House and the Financial Services Regulation Committee of the other place as soon as is reasonably practicable after the recapitalisation mechanism has been used. This means that Parliament will be engaged promptly following the use of the mechanism. Finally, clause 5 requires the Government’s code of practice, which sets out how the resolution regime is expected to work in practice, to include guidance on the contents of the reports of the Bank of England, which it is required to produce under clause 2. Clause 5 places an important obligation on the Treasury to ensure that there is transparency over what the Bank of England should expect to include in such reports. At this point, I note that the Government published draft updates to the code of practice, which set out the sorts of things that are expected to be included in reports by the Bank of England. For example, reports would be expected to include an explanation of the choice to use the recapitalisation mechanism, as well as an assessment of the costs of using the mechanism compared with putting the failing firm into insolvency. The Government will issue a full update to the code of conduct in line with the provisions in the Bill that are coming into force. As mentioned at the start, these clauses provide important clarity for the Bank of England, industry and Parliament on the accountability mechanisms that apply when the recapitalisation mechanism is used. I therefore commend clauses 2, 3 and 5 to the Committee.

• 11 Feb 2025 · Bank Resolution (Recapitalisation) Bill [ Lords ] (First sitting) · Hansard source

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  It is a pleasure to serve under your chairmanship for the first time, but I am sure not the last, Ms Jardine. Government amendment 1 ensures that the Bank of England will have the flexibility to use the mechanism provided in this Bill in a broad range of circumstances. It does that by removing the provision added in the other place that prevents the Bank of England from using the new mechanism in relation to firms that have been directed to hold additional loss-absorbing resources, also known as MREL, or minimum requirement for own funds and eligible liabilities. I will also speak to amendment 3, tabled by the hon. Member for Wokingham, which aims to ensure that the mechanism is used only for small banks. I appreciate that this issue is of interest to many hon. Members, as we discussed it on Second Reading, and also to those in the other place, where it was debated. However, the Government’s position on the matter is clear: as I set out on Second Reading, the intention is for the mechanism to be used primarily to support the resolution of smaller banks. The Government reaffirmed that position in their draft updates to the code of practice to which the Bank of England must have regard when using its resolution powers, and in the written statement that my predecessor, my hon. Friend the Member for Hampstead and Highgate (Tulip Siddiq), made to the House on 15 October 2024. The Government appreciate the intent of the amendment passed in the other place and of amendment 3, and are conscious of the intent to preserve flexibility to use the mechanism on firms transitioning towards holding their full allocation of MREL. I also appreciate the remaining key concern that, without restriction on the scope of the mechanism, the Bank of England could use it on the largest banks. I make it absolutely clear that that is not the Government’s primary policy intention. The Bank of England should always, first and foremost, rely on a firm’s MREL resources, ensuring that its shareholders and investors bear the losses, rather than turning to this mechanism. However, having considered the matter carefully, the Government believe that it is still not desirable to limit the mechanism’s scope in the Bill. That would in effect hardwire in legislation the principle that the mechanism is unavailable for larger banks, and it is that hardwiring that the Government are concerned about. As we have seen and experienced, bank failures are highly unpredictable. The Government’s concern is that if the legislation is overly restrictive, that might mean that the mechanism is unavailable in the very unlikely circumstances of large bank failures in which public funds may still be exposed. We must remember, in relation to this Bill, that the primary objective is to protect the taxpayer. The Government consider it important that the mechanism’s use is not overly constrained in the legislation, ensuring that it provides comprehensive protection for public funds—that is, the taxpayer. To explain the Government’s thinking on this issue in more detail, I will make three points. First, there may be very limited circumstances in which the flexibility to use the mechanism on larger firms would help to protect public funds. The largest and most complex firms are required to hold additional resources to be bailed in—known as MREL—which aim to provide a robust level of self-insurance for larger firms. The Bill’s mechanism can be used only where a firm is transferred to a buyer or a bridge bank upon failure—something that is not envisaged for a large bank, which is expected to be bailed in instead. To take the points together, large banks should therefore have sufficient of their own resources to meet their recapitalisation costs, and the mechanism is unlikely to be available for use on large banks, even with the scope in the Bill remaining broad. However, it is theoretically possible that circumstances could emerge for which a larger bank is not sufficiently resourced, although these are highly unlikely. One example would be if the firm were subject to a large redress claim, resulting in a higher recapitalisation amount than envisaged. Another example would be if the market value of the firm’s assets changed over time. That could result in more losses than expected at the point of failure—again, resulting in a higher amount of recapitalisation. Those examples, however unlikely they may be, show that there is a clear benefit in having the flexibility to source additional resources from the mechanism, having already written down the firm’s available MREL. Restricting the scope in the Bill would prevent the mechanism from being available in these types of scenario, leaving public funds and therefore the taxpayer exposed instead. Secondly, I reiterate that the Bank of England would first look to write down or otherwise expose to loss available MREL and would then consider use of the mechanism only if a sale to a buyer or transfer to a bridge bank were needed. Funds from industry are therefore not expected to be used to cover a large bank’s full recapitalisation amount. Instead, they are expected to be needed only for an additional shortfall over and above that which the firm’s resources could fulfil and once these resources have been written down or exposed to loss. Use of the mechanism would simply be a “top-up” to achieve recapitalisation, rather than covering all of a firm’s recapitalisation costs. Thirdly and finally, the Government agree with the intent behind amendment 3, in that it is important for there to be sufficient safeguards to prevent any inappropriate use of the new mechanism on larger firms. I reassure the hon. Member for Wokingham that a range of safeguards is already in place, which the Government believe provide the necessary checks and balances. For example, the Treasury is involved in the exercise of any resolution powers through being consulted about whether conditions for resolution have been met. The Treasury would also need to approve any resolution action with implications for public funds. If the Bank of England requested a large sum from the financial services compensation scheme, which it could not provide through its own resources, it would have implications for public funds, as the financial services compensation scheme would need to borrow from the Treasury. This means that, in practice, Treasury consent would be required if the Bank of England had requested a large sum. The Bill also includes some important mechanisms to ensure transparency and parliamentary scrutiny. For example, the Bill now requires the Bank of England to report to the Chancellor on the use of the new mechanism, and it requires the Chancellor to lay those reports in Parliament. The Bill also requires the Bank of England to notify the Chairs of the relevant parliamentary Committees—namely, the Treasury Committee and the House of Lords Financial Services Regulation Committee—following the use of the mechanism. Those measures will ensure that Parliament can scrutinise the Bank of England’s actions in relation to the new mechanism. They were added to the Bill during the debate in the other place. I hope that my explanations go some way to providing reassurance that the Government’s approach is the right one, and that ultimately, flexibility in the legislation is better for economic and financial stability, and for limiting the risk to public funds, which is what the Bill is all about. As a result, I hope that hon. Members can support the Government’s amendment, and I ask the hon. Member for Wokingham not to press his amendment.

• 30 Jan 2025 · Finance Bill (Fourth sitting) · Hansard source

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  I hope the clause will not be controversial, although we are always surprised by Opposition Members. The clause will make changes to ensure that various errors and omissions in three pieces of legislation are corrected. I will go through them in turn. First, subsection (1) will amend paragraph (d) of section 151I(1)—that is a confusing number—of the Taxation of Chargeable Gains Act 1992, which defines “financial inclusion” for the purposes of legislation on the provision of alternative finance in chapter 4. That definition includes persons who are authorised to provide credit. Authorisation of such persons was previously the responsibility of the Office of Fair Trading, but moved to the Financial Conduct Authority. To reflect that change in responsibility, the definition of financial institution was amended in both the Income Tax Act 2007 and the Corporation Tax Act 2009. However, the mirror legislation found in the Taxation of Chargeable Gains Act 1992 was overlooked, and subsection (1) will make similar changes to the Act to ensure that the definition of financial institution is consistent across the relevant capital gains tax, income tax and corporation tax legislation. Secondly, subsection (2) corrects the procedure for making regulations under part 14A of the Corporation Tax Act 2009. The current wording requires regulations to be made by statutory instrument, subject to annulment by either House of Parliament. That is incorrect, as financial regulations are a reserved matter for the House of Commons only. The clause corrects the error by requiring regulations to be laid before the Commons only—take back control. Lastly, subsection (3) corrects a typographical error in section 4 of the Taxation (Post-transition Period) Act 2020, concerning excise duty on the removal of goods to Northern Ireland. The correction removes a reference to section 42 of the Finance (No. 2) Act 2023, and inserts the correct reference to section 47 of that Act. In summary, the changes made by clause 84 will ensure that legislation accurately reflects the policy intent, and remove possible confusion for readers.

• 23 Jan 2025 · High Streets: Autumn Budget 2024 · Hansard source

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  Ministers are always happy to hear from hon. Members. I suggest that the hon. Member writes to the Exchequer Secretary to the Treasury with that feedback. I should note that this is not my policy area; the Exchequer Secretary is visiting small businesses as we speak, so I am standing in for him, but I am sure that he will welcome that feedback from the hon. Lady. I have listened carefully to the hon. Member for Harpenden and Berkhamsted and tried to note down all her questions, but if I do not get to all of them, I am happy to write to her after the debate; I hope that is helpful. She asked whether there were any mitigations, and I think she asked us to cancel some of the plans in the Budget. I am afraid that I cannot give her that assurance. The changes to national insurance will come into force on 1 April. As I said, we had to make difficult decisions, and that was one of the most difficult. The hon. Member asked whether we were meeting small businesses. The Exchequer Secretary is meeting a range of small businesses, as are Treasury officials, before formulating our plan to reform business rates, which I will talk about briefly. She asked questions about inheritance tax; I will write to her on that, to ensure she gets the right answer. She also asked about local government. I was not entirely sure about the question, so perhaps we can clarify that, and I will write to her on that as well. Turning in more detail to the hon. Member’s points about national insurance, one of the toughest decisions we took in the Budget was to raise the rate of employer national insurance contributions from 13.8% to 15%, but we recognised the need to protect the smallest businesses. The Federation of Small Businesses asked us specifically about that, which is why we have more than doubled the employment allowance to £10,500. That means that more than half of businesses with national insurance contribution liabilities will either see no change at all or be taken out of paying national insurance contributions. As I said, that was a key demand from small businesses. To support businesses, including those on the high street, the Budget honoured the manifesto commitment to not raise corporation tax; it set out the tax road map for this Parliament, in which we will not change corporation tax, which means we have the lowest rate in the G7. All that will support businesses, from restaurants to retailers, to invest. On the high street, we announced at the Budget major support for pubs; we are cutting alcohol duty on qualifying draught products, which make up approximately 60% of the alcoholic drinks sold in pubs. That represents an overall reduction in duty bills of over £85 million a year, and is equivalent to a 1p duty reduction on a typical pint. The hon. Member raised concerns about the business rate system; let me address those in more detail. We very much believe that for too long, the business rates system has placed an unfair burden on high-street retail, hospitality and leisure businesses, as she mentioned. To support those sectors, we intend to introduce permanently lower tax rates for retail, hospitality and leisure properties with rateable values of less than £500,000 from 2026-27. That will allow us to provide stability after the ongoing uncertainty of the one-year retail and hospitality leisure relief, which has been extended year by year since the pandemic. That tax cut will be sustainably funded not by increases in taxes on working people, which we promised not to introduce, but through a higher tax rate on the most valuable 1% of business properties in the country. That will capture the majority of large distribution warehouses, including those used by online giants, as well as other out-of-town businesses that draw footfall away from high streets. Those business rates reforms provide the certainty that businesses need to invest while protecting the public finances. The Government have already introduced to the House primary legislation that will provide the underpinning of those reforms, and the exact rates for the new multipliers will be confirmed later this year in the autumn Budget.

• 22 Jan 2025 · Bank Resolution (Recapitalisation) Bill [Lords] · Hansard source

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  I beg to move, That the Bill be now read a Second time. The Bank Resolution (Recapitalisation) Bill will enhance the UK’s resolution regime by giving the Bank of England a more flexible toolkit to respond to bank failures. The Bill creates a recapitalisation mechanism that ensures that certain costs of managing the failure of banking institutions do not fall to the taxpayer. It strengthens protections for public funds and financial stability, while supporting the competitiveness and growth of the UK financial sector by avoiding placing new up-front costs on the banking sector. It is therefore an important Bill that underpins this Government’s vision to promote growth and economic stability. The policy in the Bill builds on the proposals set out in consultation by the previous Government. I thank the previous Government—I do not always do that, by the way—for the work they did with the Bank of England on the consultation and on the resolution of Silicon Valley Bank UK, back in March 2023. The Bill provides the Bank of England with greater flexibility to manage the failure of small banks, and thereby embeds lessons learned from the volatility in the UK banking sector in 2023, notably that arising from the failure of SVB UK. I hope, given their origins, that these proposals will be welcomed by hon. Members from across the House. The resolution regime was created by the Banking Act 2009 in the wake of the global financial crisis. It provides the Bank of England with a set of tools to manage the failure of financial institutions in a way that limits risks to financial stability, public funds and the UK economy. The regime was introduced in recognition of the global consensus that reforms were needed to end “too big to fail” and to ensure that, where necessary, financial institutions can be supported to fail in an orderly fashion. This regime has been developed and steadily added to by a series of successive governments over the past decade. That work has given the UK a robust regime that reflects relevant international standards and supports the UK’s role and reputation as a leader in financial regulation, enhancing confidence in our financial system and making the UK a more secure and attractive place in which to invest. The resolution regime was last used to resolve Silicon Valley Bank UK, the UK subsidiary of the US firm that collapsed in March 2023. The Bank of England used its transfer powers under the Banking Act 2009 to effect the sale of Silicon Valley Bank UK to HSBC. That delivered good outcomes for financial stability, customers and taxpayers. All the bank’s customers were able to continue accessing their bank accounts and other facilities, and all deposits remained safe, secure and accessible. The Bank of England achieved the continuity of banking services, and maintained public confidence in the stability of the UK financial system. The case of Silicon Valley Bank UK demonstrated the effectiveness and robustness of the resolution regime. However, as would be appropriate following any bank failure, the Treasury, the Bank of England and their international counterparts reflected carefully following this period of banking sector volatility, and following that reflection, the Government concluded that there was a case for a targeted enhancement to give the Bank of England greater flexibility to manage the failure of smaller banks such as Silicon Valley Bank UK. At this point, I should explain that the Bank of England generally expects to place failing small banks into insolvency under the bank insolvency procedure, because their failures are not generally expected to meet the conditions that must be satisfied for the Bank of England to exercise its resolution powers. One of those conditions is that winding up the bank would not achieve the resolution objectives to the same extent as they would be achieved through the use of the resolution powers. Those objectives include protecting UK financial stability, covered depositors and public funds. When a failing firm enters insolvency, its eligible depositors are paid out up to £85,000 each within seven days by the Financial Services Compensation Scheme, with higher limits for temporary high balances. This compensation is funded initially through a levy on the banking sector, and then, to the extent possible, recovered from the estate of the failed firm. As was seen in the case of the Silicon Valley Bank, it is the Government’s view that in some cases of small bank failure, the public interest and resolution objectives are better served by the use of the resolution powers than by placing the firm into insolvency. Smaller banks are not required to hold additional funds and liabilities that could be bailed in during a resolution, so in a case in which a small bank does need to be resolved, additional capital may be required to support a successful resolution. For example, funds may be required for the bank in resolution to meet the minimum capital requirements for authorisation, or to sustain market confidence. At present, these recapitalisation costs have to be borne by public funds. The Government believe that that situation should be avoided to protect taxpayers from bearing those costs, and I hope that the Opposition agree; we shall see very shortly. To that end, the Bill aims to strengthen the protections for public funds when a small bank is placed into resolution. Overall, this is a prudent set of reforms to ensure that the resolution regime continues to effectively limit risks to financial stability and, indeed, to taxpayers. The Bill does not make widespread changes to a regime that is working well, and it is important to emphasise that the bank insolvency procedure will continue to play an important role in managing the failure of small banks. That said, the Bill reflects the Government’s belief that a targeted set of changes is needed to ensure that, if necessary, existing resolution powers can be applied to small banks to achieve good outcomes for financial stability, while also protecting taxpayers. It achieves that by introducing a new recapitalisation mechanism, which allows the Bank of England to use funds provided by the banking sector to cover certain costs associated with resolving a failing banking institution. The Bill does four main things. First, it expands the statutory functions of the Financial Services Compensation Scheme, giving the Bank of England the power to require the FSCS to provide it with funds to be used to support the resolution of a failing bank. Secondly, it allows the FSCS to recover the funds provided to the Bank by charging levies on the banking sector. This mirrors the arrangements for funding payouts to covered depositors in insolvency, with the exception of the treatment of credit unions, to which I will return. Thirdly, the Bill gives the Bank of England an express ability to require a bank in resolution to issue new shares, facilitating the use of industry funds to meet a failing bank’s recapitalisation costs. Finally, following constructive debate in the other place, the Bill sets out a number of accountability measures that apply when the Bank of England uses the recapitalisation mechanism. The Bill consists of eight clauses to deliver those key components. Clause 1 inserts a new section into the Financial Services and Markets Act 2000, which introduces the new mechanism. It allows the Bank of England to require the Financial Services Compensation Scheme to provide the Bank with funds when using its resolution powers to transfer a failing firm to a private sector purchaser or bridge bank. It sets out what these funds can be used for, namely to cover the costs of recapitalising the firm and the expenses of the Bank of England or “relevant persons” in taking the resolution action. “Relevant persons”, for this purpose, means the Treasury, or a bridge bank or asset management vehicle operated by the Bank of England. The clause also allows the Financial Services Compensation Scheme to recover the funds provided through levies. Clause 2 sets out the reporting requirements for the Bank of England when it uses the recapitalisation mechanism, added to the Bill by the Government in the other place. The Bank must report to the Chancellor on the use of the recapitalisation mechanism and the stabilisation option that it was used in connection with. The Treasury can specify the content and timing of these reports, although if a final report is not produced within three months, the Bank of England must produce an interim report within that three-month period. The Chancellor must lay all reports before Parliament, although the clause allows discretion to omit any information that it would not be in the public interest to publish. Clause 3, added by the Government in the other place, requires the Bank of England to notify the Chairs of the relevant parliamentary Committees in this House and the other place—the Treasury Committee in the House of Commons, and the Financial Services Regulations Committee in the House of Lords—as soon as reasonably practicable after using the mechanism. Clause 4 requires the Bank of England to reimburse the Financial Services Compensation Scheme for any funds it provides that were not needed. Clause 5, also added by the Government in the other place, states that the Treasury must include guidance on the contents of reports on use of the mechanism in the code of practice, a statutory document that the Treasury must publish and to which the Bank of England must have regard, which explains how the resolution regime is intended to work in practice. Clauses 6 and 7 make several consequential amendments to reflect the introduction of the new mechanism. Clause 6 primarily ensures that existing provisions relating to the Financial Services Compensation Scheme apply to the new mechanism in the same way. The most substantive provision specifies that the FSCS cannot levy credit unions to recoup funds provided under this mechanism, and was added to the Bill before its introduction to Parliament in response to valid concerns raised by industry. In clause 7, which contains mostly technical consequential amendments, the most substantive change gives the Bank of England the power to require a failing firm to issue new shares. That will make it easier for the Bank of England to use the funds provided by the FSCS to recapitalise the firm, by using the funds to buy the new shares. Clause 8 deals with procedural matters, including the provision that the Treasury may make regulations to commence the provisions in the Bill. I am grateful to the Financial Secretary to the Treasury for shepherding the Bill through its successful passage in the other place. As I have mentioned, the Government made a number of amendments to the Bill in the other place following constructive debate, feedback and engagement. They include the insertion of the requirements for the Bank of England to report to the Treasury and notify parliamentary committees. The Government also amended the Bill to ensure that there was clarity over whose expenses could be covered by funds provided through the mechanism. In addition, the Government published a number of important documents during the early stages of the Bill’s passage, including a draft update to their code of practice setting out how the mechanism is expected to be used in practice. There remains one area of the Bill that will require the attention of this House, namely the question of the scope of the mechanism—that is, which firms the Bank of England can use the mechanism on to support their failure. This was heavily debated in the other place, and reflects concerns about the risk of the mechanism being used on a wide range of firms, with the potential for large levies as a consequence. Those concerns led to an amendment to the Bill, intended to exclude from the scope of the mechanism those banks that already hold the full set of equity and debt resources—the so-called MREL, or minimum requirement for own funds and eligible liabilities—necessary to manage their own failure. The intent was to limit the scope to banks that are not required to hold additional capital resources, or banks that have not yet raised the full amount of additional resources to fully support their own failure. As I have alluded to, the Government note and appreciate the concerns being raised on this point, but as the Financial Secretary to the Treasury made clear during the Bill’s passage in the other place, the Government are clear that this Bill is primarily intended for smaller banks. My predecessor made a written statement to the House on 15 October to reiterate this policy position. However, after careful reflection, the Government continue to believe that some flexibility should remain in the legislation on this point, in order to avoid constraining the Bank of England’s ability to use the mechanism in a highly uncertain crisis scenario. Narrowing the scope would constrain the Bank of England’s optionality, particularly where it might be necessary to supplement the bail-in of a firm’s own resources with additional capital resources. I note that this is considered an unlikely outcome, rather than a central case. Nevertheless, the Government consider it important to avoid constraining that optionality, given that the alternative may be to use public funds. Ultimately, we want to protect the taxpayer. The Government will therefore table an amendment in Committee to remove the constraint on the scope of the application of the new mechanism. More broadly, I want to express my gratitude to the banking sector, with which the Government have engaged proactively and constructively both before and since the Bill was introduced. The Government appreciate the feedback from industry, and we have reflected on it carefully to ensure that the Bill delivers a proportionate reform. As alluded to earlier, in response to feedback from industry, the Government carved out credit unions from levy contributions to recoup funds provided by the financial services compensation scheme under the recapitalisation mechanism. That was deemed appropriate because credit unions are out of scope of the resolution powers. It would therefore be disproportionate to require them to contribute towards costs under the mechanism. The Government have also sought to provide reassurances to industry on the impact of this Bill. For example, by modelling the mechanism on the existing funding framework for depositor payouts, industry will be liable to pay levies only after the point of failure, avoiding new up-front costs to firms. Alongside the Bill, the Government also published a cost-benefit analysis that sets out our general expectation that lifetime costs for levy payers will generally be lower under the mechanism outlined in the Bill, compared with insolvency. I note again the draft updates to the code of practice, which the Government have published to provide additional transparency to industry and Parliament on how the mechanism is expected to be used in practice.

• 21 Jan 2025 · Topical Questions · Hansard source

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  It is our view that it is absolutely right that the Bank of England has operational independence. That is in line with international standards and what is happening in jurisdictions around the world, including in the United States and the eurozone.

• 20 Jan 2025 · Draft Silicon Valley Bank UK Limited Compensation Scheme Order 2024 · Hansard source

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  I beg to move, That the Committee has considered the draft Silicon Valley Bank UK Limited Compensation Scheme Order 2024. It is a pleasure to serve under your chairmanship, Mrs Harris. The draft order relates to the 2023 resolution of Silicon Valley Bank UK. It confirms that the former shareholder of SVB UK, which was the Silicon Valley Bank US parent entity, is not entitled to compensation following the transfer of the bank’s shares to HSBC UK Bank plc. The order has already been approved in the House of Lords. In early March 2023, SVB UK experienced severe financial distress, resulting in rapid deposit outflows. That crisis, originating from its US parent entity, quickly spread to its UK subsidiary. By Friday 10 March, the Bank of England, acting as the resolution authority, declared its intention to place SVB UK into a bank insolvency procedure, absent any meaningful new information. Over the subsequent weekend, a private sector purchaser was identified. On Monday 13 March, the Bank of England exercised its power under the Banking Act 2009 to transfer the shares of SVB UK to HSBC UK Bank plc. The action was taken following consultation, with the Prudential Regulation Authority, the Financial Conduct Authority, His Majesty’s Treasury and the Bank of England reaching the judgment that the resolution conditions set out in the Banking Act had been met. The Banking Act requires HM Treasury to make a compensation scheme order when the private sector purchaser power is exercised. This order is a mechanism to establish in law what compensation, if any, is due to former shareholders of the resolved firm. The Bank of England undertook a provisional valuation when placing SVB UK into resolution. That valuation found that SVB UK’s shareholder would not have made any recoveries had the firm been placed into a bank insolvency procedure. The shares had no value at the point that the firm was transferred and therefore no compensation is due to SVB UK’s former shareholder. The Bank of England then commissioned an independent valuation of SVB UK, which confirmed that no compensation is due to the previous shareholder of SVB UK. The order before us today confirms in law the findings of those valuations: that the former shareholder of SVB UK is not due any compensation. I thank all staff of the PRA and the Bank of England’s resolution directorate for the swift and effective action they took regarding SVB UK, and indeed officials and Ministers at HM Treasury at the time. They worked tirelessly over the course of that weekend to deliver a solution that protected financial stability and achieved the objectives of the special resolution regime. The resolution of SVB UK shows that the UK’s resolution regime works well, as well as the importance of the UK having the necessary tools to handle bank failures effectively. The transfer of the firm to HSBC UK was a good result for SVB UK’s customers, who retained access to their money and the banking services they relied on; for taxpayers, with the firm being stabilised without any use of taxpayer support; and indeed for the UK economy, with the UK’s vibrant technology and innovation sector protected from severe disruption. The compensation scheme order for SVB UK is a necessary step to formalise and conclude the resolution process, and to confirm that no compensation is due to the former shareholder. This decision is based on thorough valuations and adheres to the legal framework established by the Banking Act 2009. I thank the Committee for its attention and welcome any questions that the shadow Minister or other hon. Members may have regarding this matter.

• 16 Dec 2024 · Inflation: Pensioner Living Standards · Hansard source

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  Due to the Government’s steadfast commitment to the triple lock, pensioners will see an above-inflation increase of 4.1% in their state pension next year, which means that they will be up to £470 better off—and, over the course of this Parliament, over £1,900 better off.

• 16 Dec 2024 · Inflation: Pensioner Living Standards · Hansard source

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  We will not reconsider that decision, because as a result of the £22 billion black hole that we inherited from the Conservative party, we have had to take tough decisions in a very tight fiscal environment. However, my hon. Friend has given me the opportunity to remind people that they have until Saturday to make a pension credit claim, which can be backdated and will passport them to winter fuel payments and other related benefits.