Tuesday Volume 579 29 April 2014 No. 154 HOUSE OF COMMONS OFFICIAL REPORT PARLIAMENTARY DEBATES (HANSARD) Tuesday 29 April 2014 £5·00 © Parliamentary Copyright House of Commons 2014 This publication may be reproduced under the terms of the Open Parliament licence, which is published at www.parliament.uk/site-information/copyright/. 679 29 APRIL 2014 680 Mr Osborne: Absolutely, Mr Speaker: having heard House of Commons all the bad economic news in the previous Parliament, I thought Parliament would want to hear some good Tuesday 29 April 2014 economic news. The reduction in fuel duty is one of the number of steps we have taken to support the British economy and families. As my hon. Friend says, we have The House met at half-past Eleven o’clock just published a study that shows that the reduction and freeze in fuel duty has the potential to increase GDP by 0.5%. As Conservatives, we understand that lower taxes PRAYERS mean higher economic growth. [MR SPEAKER in the Chair] Mr Andrew Tyrie (Chichester) (Con): The whole House will welcome the fact that we now have a policy to drive down costs on hard-pressed motorists, who have found BUSINESS BEFORE QUESTIONS it very tough in recent years. Can we take it from the Government that that reflects a wider shift in policy and TRANSPORT FOR LONDON BILL [LORDS] (BY ORDER) that they are seeking to bear down on other energy Second Reading opposed and deferred until Tuesday 6 May input costs, including those of fossil fuels, in order to (Standing Order No. 20). help hard-pressed consumers and encourage British competitiveness? Mr Osborne: We need to have competitive energy Oral Answers to Questions prices while at the same time building a sustainable energy mix. The major £7 billion package in the Budget to help with the cost of energy for manufacturers has been welcomed not just by the big energy-intensive TREASURY industries, but by many small business and, of course, families. The Chancellor of the Exchequer was asked— Bank Bonuses Fuel Duty 2. Angela Smith (Penistone and Stocksbridge) (Lab): What recent representations he has made to the European 1. Jeremy Lefroy (Stafford) (Con): What assessment Union on the proposed cap on bank bonuses. [903709] he has made of the effect of freezing fuel duty on the price of petrol. [903708] The Economic Secretary to the Treasury (Andrea Leadsom): In September, the Government launched a The Chancellor of the Exchequer (Mr George Osborne): legal challenge to the bonus cap provisions agreed under This Government will freeze fuel duty for the rest of EU capital requirements directive 4. We feel that those this Parliament. As a result, petrol will cost a full rules were rushed through without any assessment of 20p per litre less than if we had stuck with the previous their impact and that they will undermine the progress Government’s hated fuel duty escalator. We can afford we have made to try to align remuneration with risk by to do this because we have got a grip on the public pushing bankers’ fixed pay up rather than down. finances. The House will also want to know that today we Angela Smith: The Chancellor has chosen to prevent learned that GDP grew by 0.8% in the first quarter of the Royal Bank of Scotland from paying bonuses to this year. That is 3.1% over the year and today’s figures employees that are worth more than two times their show that Britain is coming back. We cannot take that salary, but he has not done the same with Lloyds. Will for granted. We have to go on working through our the Minister explain why what is good enough for RBS long-term economic plan, but for the first time in a is not good enough for Lloyds? decade all three main sectors of the economy— manufacturing, services and construction—have grown Andrea Leadsom: RBS has made a good start on its by at least 3% in the past year. return to growth under Ross McEwan. It now has a The impact of the great recession is still being felt, good strategy to be the best small and medium-sized but the foundations— enterprise bank in Britain, but it still has a very long way to go. Therefore, we felt, and United Kingdom Mr Speaker: Order. The Chancellor will resume his Financial Investments Ltd agreed, that the right think seat. The answer was not just too long—it was far too to do was to not allow RBS to do what other private long. sector banks have done, which is to go for the maximum of 2:1 in terms of bonus to salary. Lloyds, on the other Jeremy Lefroy: I welcome today’s growth figures, hand, is much further along the road to recover, so it which reflect the hard work of the people of the United was fine to allow it, in line with other private banks, to Kingdom and mean more jobs and more economic go ahead with that 2:1 plan. security. Based on the dynamic modelling my right hon. Friend has done, what contribution have his decisions Mr Julian Brazier (Canterbury) (Con): May I say to cut and freeze fuel duty made to that economic how good it is to see my hon. Friend in her new growth? position? I welcome her answer. Does she agree that the 681 Oral Answers29 APRIL 2014 Oral Answers 682 best way to tackle widespread concern about excessive Andrea Leadsom: The legal challenge is in line with bonuses is through opening the banks up to proper all legal challenges of this sort. To protect the British shareholder inspection and answerability, as we are financial services sector, it is very important to try to gradually doing? challenge the proposal. There has been a House of Commons European Scrutiny Committee report on the Andrea Leadsom: Yes, my hon. Friend is absolutely cost of similar legal challenges. It is not excessive—it is right. One of the priorities of this Government has £25,000 to £35,000, or of that order—but the point is been to ensure proper scrutiny of directors’ pay and that we in this Government are trying to align risk and remuneration, so the changes in the Prudential Regulation reward, which is absolutely crucial for the success of the Authority guidelines introduced last year, strengthening financial services sector. improvements made by the Labour Government, are designed to do just that—to put us at the forefront of Saving scrutiny and transparency in pay for banking. Mr George Mudie (Leeds East) (Lab): May I offer my 3. Graham Evans (Weaver Vale) (Con): What recent congratulations to the hon. Lady on her much-deserved steps he has taken to make saving more flexible. promotion? The whole House welcomed the Chancellor’s [903710] intervention to stop loss-making RBS pay these bonuses to its investment bankers. However, it has now emerged The Chancellor of the Exchequer (Mr George Osborne): that RBS intends to pay that money as allowances. This Government believe that people who have worked What is the Government’s intention on this matter? hard and saved hard through their lives should be trusted Andrea Leadsom: May I first thank the hon. Gentleman with their own pension savings in retirement. That is for his congratulations and say how very much I enjoyed why, following the Budget, we have already given people working with him for several years on the Treasury much greater access to their pension savings and why, Committee? As with many Opposition Members, there from next April, they will have complete freedom of has been a lot of agreement between us on issues of access to their defined contribution scheme. competition and minimising pay.With regard to allowances, the key point to remember is that bonuses at RBS are Graham Evans: This year’s Budget exposed some down 68% overall since 2009. The figure we want to focus people’s innate belief that those who have worked hard on is the restriction in pay and bonuses across that and saved all their lives could not be trusted with their bank. own money. Will my right hon. Friend the Chancellor reassure savers in Weaver Vale that he rejects such Chris Leslie (Nottingham East) (Lab/Co-op): I, too, patronising views, and will he update the House on his genuinely welcome the hon. Lady to her post and the plans to let people choose how to spend their own Prime Minister’s decision to appoint her to the Chancellor’s money and to make savings far more flexible? Department. May I ask her to be very clear on this particular point? The Chancellor of the Exchequer is Mr Osborne: I absolutely agree with my hon. Friend. using the EU bank bonus cap legislation in respect of The fact that the Labour party had nothing to say in RBS, but at the same time the Government are mounting response reflects the muddled approach: it did not a legal challenge against that legislation. Will she clear support the measure, but it did not know what to do up some of the confusion? She alluded to whether it with a popular Budget proposal. We are absolutely was a UKFI decision, and it was reported that the clear that we reject the patronising view, pursued by the Deputy Prime Minister apparently waded in to override previous Government, that the state knows better than the Chancellor. Was the Deputy Prime Minister at odds individuals how to spend their money. Trusting people, with the Chancellor, or was the Chancellor just at odds reducing taxes, supporting savers—that is this Government’s with himself? approach.