Parliamentary Debates (Hansard)
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Tuesday Volume 565 25 June 2013 No. 23 HOUSE OF COMMONS OFFICIAL REPORT PARLIAMENTARY DEBATES (HANSARD) Tuesday 25 June 2013 £5·00 © Parliamentary Copyright House of Commons 2013 This publication may be reproduced under the terms of the Open Parliament licence, which is published at www.parliament.uk/site-information/copyright/. 143 25 JUNE 2013 144 Mr Osborne: Gross lending to businesses is up under House of Commons the scheme, but I am happy to agree with the hon. Gentleman that there is an issue—let us be honest, there Tuesday 25 June 2013 has been an issue since 2008-09—with the contraction of bank lending to businesses in our communities. That is why we are taking further steps in two respects. First, The House met at half-past Eleven o’clock with the Bank of England, we are extending the scope of the funding for lending scheme. It has proved very effective at getting mortgage rates down, and now we PRAYERS need to reduce the rates for small businesses. Secondly, we are sorting out the Royal Bank of Scotland, which is [MR SPEAKER in the Chair] the largest lender to small businesses in our country. BUSINESS BEFORE QUESTIONS Mark Tami: The Government claim to have established a business investment bank. How is it doing, and how many businesses has it actually lent money to? LONDON LOCAL AUTHORITIES AND TRANSPORT FOR LONDON (NO.2)BILL [LORDS] Mr Osborne: The business bank, which was established Consideration of Bill, as amended, opposed and deferred last year, is now making loans to the funds that will lend until Tuesday 2 July (Standing Order No. 20). to small businesses, creating non-bank lending channels. [Interruption.] There was no business bank under the HERTFORDSHIRE COUNTY COUNCIL (FILMING ON Labour Government. I will tell the House what we had HIGHWAYS)BILL [LORDS] (BYORDER) instead: we had a socking great banking crash under the Second Reading opposed and deferred until Tuesday 2 Labour Government, and the person sitting opposite, July (Standing Order No. 20). the shadow Chancellor, was City Minister when it happened. We are cleaning up the mess from one of the biggest financial crises in the country’s history by ensuring that Oral Answers to Questions it never happens again. Sir Peter Tapsell (Louth and Horncastle) (Con): May I say to my right hon. Friend that after a lifetime as a TREASURY stockbroker and fund manager, my instinct, as bond yields rise all over the world, is that we are heading for The Chancellor of the Exchequer was asked— another banking crisis that will certainly choke off the already inadequate lending of banks to small businesses? Bank Lending May I put on the record my dismay that he has not yet committed himself to the total separation of investment from commercial banks, which I have been urging on 1. Simon Danczuk (Rochdale) (Lab): What recent him ever since he became Chancellor? I am absolutely assessment he has made of the effect on economic growth convinced that if we do not go back to something of the level of bank lending to businesses. [161218] approaching Glass-Steagall, it will be an absolute disaster 11. Mark Tami (Alyn and Deeside) (Lab): What when the next banking crisis hits us. recent assessment he has made of the effect on economic growth of the level of bank lending to businesses. Mr Osborne: Of course, I respect my right hon. [161228] Friend’s experience. A powerful argument has been made that we should completely separate and split up The Chancellor of the Exchequer (Mr George Osborne): retail banks from investment banks. We asked John The Government are committed to creating a banking Vickers to convene a commission to look at this specific system that supports the British economy, rather than subject, and he came forward with proposals to ring-fence being supported by it. Two months ago, the Government retail banking, as he thought that that would be a better and the Bank of England extended the funding for approach. We also set up a cross-party parliamentary lending scheme, with a particular focus on small business commission to consider the ring fence, and it thinks lending. Last week, the Office of Fair Trading announced that the ring fence is the best approach. It made a its review into how to make that lending more competitive, specific recommendation that we should give the regulator and at the Mansion House, I announced a plan for the power to split up a bank that had refused to comply taxpayer shareholdings in RBS and Lloyds that will with the ring fence, and we are giving the regulator— return these banks fully to the private sector, get value [Interruption.] The shadow Chancellor shakes his head, for the taxpayer and support the economy. but again not one of these things was done when he was City Minister. Let me say to him again, because he Simon Danczuk: Last Monday, I met businesses at obviously does not understand, that we are giving the Greater Manchester chamber of commerce and heard regulator a specific power to split retail from investment how banks were often failing them, thereby having an banking in a bank that is ignoring the ring fence. I think adverse impact on business performance. Does the that that is the right way forward. Chancellor accept that bank lending to businesses has fallen over the past year and that the Government’s Mr Andrew Tyrie (Chichester) (Con): In the Treasury funding for lending scheme has totally failed businesses Committee this morning, the Governor of the Bank of in Greater Manchester and the United Kingdom? England expressed considerable concern that unacceptable 145 Oral Answers25 JUNE 2013 Oral Answers 146 pressure had been brought to bear on the Prudential us to get on with this. If we had created a public inquiry, Regulation Authority from within Government, both as Labour recommended, it would only just be getting from No. 10 and from No. 11, at the behest of the banks, going now. Instead, Parliament has done what it is putting at risk the regulator’s independence. Will the supposed to do, which is to investigate a problem and Chancellor reassure the House that he knew nothing provide recommendations, and we are going to debate about this, that he was not personally involved, that he those recommendations here. will investigate the allegation that others did bring unacceptable pressure to bear, and that he will report to Pensions Triple Lock Parliament? 2. Jason McCartney (Colne Valley) (Con): What Mr Osborne: Of course, if there is unacceptable assessment he has made of the effect of the pensions pressure, I absolutely say that that is not acceptable—if triple lock on pensioners. [161219] that is the right way to put it. The PRA, which we created, is completely independent and it has made its The Chief Secretary to the Treasury (Danny Alexander): independent decisions on capital in our banks. We The triple lock means that the level of the full basic also have the Financial Policy Committee, which again state pension is now £6.85 a week higher than it would is completely independent and able to make these have been if it had been uprated only by earnings since recommendations. We empower our regulators to do 2011-12. That equates to about £356 a year. The average their job. Of course, banks, consumer groups and anyone person reaching state pension age in 2013 with a full else can make their case, but this is ultimately an independent basic state pension can expect to receive an additional body, an independent regulator, that makes the judgment. £12,000 in basic state pension over their retirement, That is the system we have created. thanks to the triple lock. Catherine McKinnell (Newcastle upon Tyne North) Jason McCartney: Can my right hon. Friend confirm (Lab): The whole House agrees that we need to see more that the triple lock will prevent a repeat of the disgraceful lending to small businesses and a return of RBS and situation in which pensioners received a pension increase Lloyds to the private sector so that taxpayers can get of only 75p? their money back, yet two weeks since the Chancellor helped to remove Stephen Hester from RBS, the taxpayers’ Danny Alexander: I certainly can confirm that. Putting stake in the bank has fallen in value by £4 billion. Was in a floor of a 2.5% increase in the basic state pension that part of the plan? will prevent that disgraceful situation, and I can tell my hon. Friend that, thanks to the triple lock, the basic Mr Osborne: In case the hon. Lady had not noticed, state pension now represents a higher share of average stock markets around the world are down. Bank stocks earnings than at any time since 1992. are down— Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co- Ed Balls (Morley and Outwood) (Lab/Co-op): And op): Let me be clear that we on the Opposition Benches RBS? do support the triple lock on pensions. However, at a time when our NHS and social care are under such Mr Osborne: RBS: the world’s largest bail-out, under pressure, why do the Government think it is a priority a Government who completely failed to regulate it. to continue to pay the winter fuel allowance to the How dare the right hon. Gentleman have the audacity richest 5% of pensioners? to come here and complain about the Royal Bank of Scotland? We are fixing the problems in the Royal Bank Danny Alexander: The hon. Lady says that Opposition of Scotland.