Madam Deputy Speaker (Caroline Nokes) Mr Speaker is very
disappointed that the Chancellor of the Exchequer has not come to
the House in person to update us on last Thursday's Mansion House
speech, which included important new policy announcements on a
range of issues, including the consolidation of local government
pension funds. I am sure that Members would have welcomed the
opportunity to question the Chancellor personally on it. Mr Speaker
is very sorry that the...Request free
trial
Madam Deputy Speaker ()
Mr Speaker is very disappointed that the Chancellor of the
Exchequer has not come to the House in person to update us on
last Thursday's Mansion House speech, which included important
new policy announcements on a range of issues, including the
consolidation of local government pension funds. I am sure that
Members would have welcomed the opportunity to question the
Chancellor personally on it. Mr Speaker is very sorry that the
Chancellor has not seen fit to come here herself.
The Economic Secretary to the Treasury ()
I apologise on behalf of the Chancellor for the fact that she
could not be here. If there are any specific questions for her, I
will ensure that she knows what they are, and that she personally
writes to Members.
With permission, Madam Deputy Speaker, I will update the House on
the Government's work to support the growth of the UK economy.
The financial services sector is the jewel in the crown of the UK
economy, as I am sure everyone across the House will agree. It is
one of our largest and most successful sectors, employing 1.2
million people and making up 9% of gross value added, and the UK
is the second largest exporter of financial services in the G7.
On Thursday night at Mansion House, the Chancellor placed the
sector at the heart of the Government's growth mission and,
building on the economic stability and public investment that the
Budget provided earlier this year, she set out a plan for
investment and reform of the sector.
The plan builds on the rapid work that the Government have
already done to support the growth of the sector. One week into
office, the Government welcomed the biggest changes in the UK's
listings regime in more than three decades; in our first month we
launched the landmark pensions review and in September we
delivered the final stage of the post-crisis capital reforms for
banks, working closely with the Bank of England, strengthening
our banking system while also protecting lending to the wider
economy.
The package that the Chancellor set out at Mansion House builds
on those steps, beginning with a commitment to develop a
comprehensive plan to grow our financial services sector. In
spring next year, the Government will publish the first ever
financial services growth and competitiveness strategy, giving
the financial services sector the confidence it needs to invest
in the long term by setting out our plans for the sector over the
next 10 years. Published alongside our modern industrial
strategy, it will be clear-eyed about our strengths, proposing
five priority growth opportunities: fintech, sustainable finance,
asset management and wholesale services, insurance and
reinsurance markets, and capital markets, co-designed with voices
across the financial services sector.
From the base of long-term stability, the Chancellor also laid
the foundations for getting even more investment into our
country. The Government have already confirmed our plans to
capitalise our flagship investment vehicle, the National Wealth
Fund, to invest in the industries of the future. To support
investment in our green industries, the Chancellor's speech
confirmed the Government's next steps to deliver a world-leading
sustainable finance framework.
The Chancellor also set out our plans in another key area that I
know has generated interest across the House: pension funds. The
UK has one of the largest pension markets in the world, but
pension capital is often not used enough to drive investment and
growth in our economy. Thanks to the excellent work taken forward
by the Under-Secretary of State for Work and Pensions, my hon.
Friend the Member for Wycombe (), the Chancellor announced
the interim report of the pensions investment review. The report
sets out our plans to harness the collective size of our pension
funds to create larger pools of capital for investment,
supporting pension funds to invest at scale. To do that, we will
deliver a significant consolidation of the defined contribution
market and the Local Government Pension Scheme in England and
Wales, providing better outcomes for savers while supporting
investment for growth. Indeed, we could unlock around £80
billion-worth for investment in private equity and infrastructure
through those actions alone, according to domestic and
international comparisons.
Alongside economic stability and higher levels of investment, the
Chancellor's Mansion House speech put reform at the heart of the
Government's growth agenda. The Government's approach to
regulation is a core part of that. Across our economy, we will
upgrade our regulatory regime, reviewing the guidance we give to
the Competition and Markets Authority and other major regulators
to underline the importance of growth. That includes our
financial services regulators. While it was right that successive
Governments made regulatory changes after the global financial
crisis to ensure that regulation kept pace with the global
economy of the time, it is also important that we learn lessons
from the past. Those changes have resulted in a system that
sought to eliminate risk taking, and in some cases they have had
unintended consequences that we as a new Government must now
address.
Regulation has costs as well as benefits. It has costs for firms
when they are spending large sums on compliance and not using
that money to innovate and to grow, and it can have costs for
consumers, for example by restricting access to financial advice
that could help them to plan for the future. While maintaining
important consumer protections and upholding international
standards of regulation, we therefore feel that now is the moment
to rebalance our approach and take forward the next stage of
reforms needed to drive growth, competitiveness and investment.
To support that aim, the Government issued new growth-focused
remit letters to the financial services regulators to make clear
that the Chancellor and I fully expect them to support the
Government's missions on economic growth.
The Financial Ombudsman Service plays a vital role for consumers
in getting redress. That will not change, but reform is needed to
create a sure environment. We will work closely with the
Financial Conduct Authority and the FOS to develop a new
agreement between the two institutions, with clear expectations
on how they co-operate, including on historic market practice and
mass redress events. The Government welcome the call for input
that asks for views on how to improve the rules governing how the
FOS operates.
The Government's ambitions for reform are much wider than
regulation. Building on our work to improve the UK's listing
regimes, we are unlocking funding for our capital markets and
legislating to establish, by 2025, PISCES—the private
intermittent securities and capital exchange system—which is an
innovative new stock market to support companies to scale and
grow. We are also supporting innovation in the financial services
sector by launching a pilot to deliver a digital gilt instrument
using distributed ledger technology, as my written statement sets
out.
Insurance markets are pivotal to supporting growth and creating
resilience by helping us to manage risk. The Government have
launched a consultation on captive insurance, where a new
approach could cement the UK's position as a leading financial
services centre.
As the House will know, this Government prioritise the growth of
the mutuals sector. We have launched a call for evidence on the
credit union common bond, asking regulators to report on their
mutuals landscape to support their growth, and welcoming the
establishment of an industry-led mutual and co-operative business
council.
The Chancellor also published the national payments vision to set
out the Government's ambition for this vital sector, ensuring
that our approach to regulation allows firms to grow and
innovate, and including decisive action to progress open banking
and to support our fantastic fintech businesses.
Finally, we are working with tech platforms and telco networks to
reduce the scale of fraud originating on their platforms. The
Chancellor, the Home Secretary, and the Secretary of State for
Science, Innovation and Technology, have written to leading tech
and telecom companies, calling on them to go further and faster,
with clear action to reduce the level of fraudulent activity that
exploits their platforms and networks. We will be monitoring that
closely in the coming months.
This is a significant package to support the growth of the
financial services sector and invest in the wider economy. I have
heard lots of murmuring from Opposition Members while I have been
speaking, which I hope shows their approval for our overall
package. I look forward to working across the House to deliver
these important reforms from the first Labour Mansion House
speech in 14 years.
Madam Deputy Speaker ()
I call the shadow Minister.
5.32pm
(Wyre Forest) (Con)
I thank the Minister for advance sight of her statement, and I
congratulate the Chancellor, via the Economic Secretary, on her
maiden speech to Mansion House. It has gone down broadly very
well, and we are pleased that she recognises the City for what it
is. The Minister rightly points out that the UK hosts a
competitive and global financial centre, but changes to
regulation must not be burdensome, and they must be worked
through properly with the industry. When and where the Government
take steps to enhance the performance of that sector, they can be
guaranteed of our support. As the Chancellor mentioned in her
Mansion House speech, in a generous tribute to her predecessor,
much of the regulation reform discussed today was started under a
Conservative Chancellor. I therefore wish to put on record
recognition for my right hon. Friend the Member for Godalming and
Ash () and the work he did in that
area.
Before I turn to the substance of the statement, inevitably I
will talk about the Budget. It is worth reminding the House of
the most pressing parts of the Chancellor's Budget, which she
left out of her Mansion House speech. In her speech she mentioned
the word growth no fewer than 41 times, but we have to look at
the facts. When the Conservatives left government, we had the
fastest growing economy in the G7, but now growth has halved. The
Chancellor's increase in national insurance means that businesses
are picking up the tab to pay for Labour's open tap on spending.
She will no doubt have read the letter sent to her by 200
hospitality businesses, highlighting job losses across their
sector and a wider range of sectors. Despite all her talk about
growth, business groups and economists agree that Labour's
approach to the Budget is choking the momentum of our economy.
Britain deserves a Government who back growth, empower investment
and deliver prosperity. I hope that the Minister today will admit
to the British public that while she talks about growth, her
party's plans to grow the economy fall short of an economic
growth agenda.
On the substance of the reforms that the Minster has outlined
today, we believe that the objectives that the Chancellor is
attempting to achieve with her Mansion House reforms are broadly
the right ones. First, it goes without saying that delivery of
the reforms that the Conservatives started in government is to be
welcomed, including the focus on growth; my right hon. Friend the
Member for Godalming and Ash () legislated to ensure that
financial services and markets regulation has a secondary growth
duty. It is regrettable that the Government could not publish the
final version of the pension investment review or the pension
Bill in time to accompany this statement.
As I turn to my questions, I should make it abundantly clear to
the Minister and the House that these reforms must remain focused
on delivering the best deal for pension savers. While additional
investment is welcome, the pension market should not be treated
as a Government cash cow for public investment if it loses sight
of the paramount objective of delivering a secure return for
savers. It is true that unlocking greater investment and
delivering greater returns for pension savers can come
together—both can happen at the same time—but I must push for the
publication of the finer details of this policy. The emphasis
must still be on pension savers. While greater investment and
greater returns can come together, security in retirement is what
the pension industry is all about.
Work to reconcile those two aims was furthered by my right hon.
Friend the Member for Godalming and Ash when he announced reforms
earlier this year, which included requiring pension funds to
publicly disclose how much they invest in UK businesses compared
with those overseas, and disallowing schemes that performed
poorly for savers from taking on new business from employers. Can
the Minister confirm that those reforms remain Government policy,
and that nothing she is announcing today changes those policy
strands?
Can the Minister set out a timeframe for the proposed mega-funds?
Some 86 local authority pension funds will be consolidated into
just eight. What are the criteria on which the Government have
chosen eight? Why not one, 10 or 15? The Government note that the
local government pension scheme in England and Wales has
“assets…split across 86 different administering authorities…with
local government officials and councillors managing each
fund.”
Can the Minister clarify whether each of the 86 local government
pension funds will have a stake in each of the eight mega-funds,
or will they each be allocated to just one mega-fund, thereby
possibly distorting the risk profile of that pension fund?
The Government state that the consolidation into a handful of
mega-funds will enable the funds to invest more in assets such as
infrastructure. Can the Minster confirm whether the
“infrastructure” that the Government mention in their press
release refers to both public and private infrastructure
projects? On the topic of infrastructure, what is the expected
return on Government-owned infrastructure projects? Will
pensioners ever be mandated to take lower returns to support the
Government's investment objectives? The Minister with
responsibility for pensions, the hon. Member for Wycombe (), who is in her place, gave
rise to some ambiguity about whether there will be mandating of
pension fund investment in Government projects in her Financial
Times article this morning. Furthermore, will the trustees
overseeing these mega-funds be restricted by the Government as to
what they can invest in, or will they be free to choose their
investment and risk profiles?
The Government also state:
“A new independent review process will be established to ensure
each of the 86 Administering Authorities is fit for purpose.”
Can the Minister give any further detail on that review? Who will
be running it, for how long will it be running, and what is
considered “fit for purpose”? How many of these funds would have
to be considered not fit for purpose for the Government to
reconsider the number of mega-funds?
To conclude, we support what the Government are trying to do with
their reforms, many of which are ours, but questions remain about
the detail of the policy. We will scrutinise the detail of the
legislation when published. I finish as I started—by saying that
the Government are talking about investment and growth, but have
just delivered a Budget that downgrades growth and crowds out
business investment. Those things are not compatible, and we urge
the Government to put forward a workable plan for growth. They
must not rely solely on the financial services sector to bail
them out.
I thank the Opposition spokesperson for his comments. I think he
welcomed the news, although I am not quite sure. He spoke a lot
about the ex-Chancellor, the right hon. Member for Godalming and
Ash (), who did a lot of work in this
space. I remind the House that the ex-Chancellor said that there
was
“Much to welcome in the Chancellor's Mansion House speech
today.”
The Opposition have said that these are “broadly” good reforms; I
thought I would remind the Opposition spokesperson of that. I
also remind him that we are not interested in sticking-plaster
politics. We have a long-term vision for the economy, which is
why we are looking at using the national wealth fund and the
industrial strategy to ensure that we grow the economy.
I will answer a few of the hon. Gentleman's questions, but if I
do not get to all his pension questions, the Minister with
responsibility for pensions is happy to meet him. I point out
that our public services are crumbling, and that we inherited a
£22 billion fiscal black hole from the previous Government. We
had to make difficult choices to fix the foundations of the
country and restore desperately needed economic stability in
order to allow businesses to thrive. He pointed out that
hospitality businesses were contacting him. More than half of
employers will see either a cut to or no change in their national
insurance bills. To support the hospitality industry, we are
permanently cutting business rates for retail, hospitality and
leisure from 2026. That comes alongside a 40% relief on business
rate bills next year for thousands of premises.
We are committed to delivering economic growth by boosting
investment and rebuilding Britain, which is exactly what our
Budget did. The interim report of the pensions investment review,
which the hon. Gentleman had a lot of questions about, put
forward proposals to drive scale and consolidation in the defined
contribution workplace market. The Local Government Pension
Scheme is still consulting. The final version will come out in
spring next year, but as I said, the Minister for pensions is
happy to speak to him. There is international industry consensus
that the scale and consolidation benefit investment and savers,
and that these measures could unlock around £80 billion of
productive investment.
On the hon. Gentleman's questions about the reforms taking
autonomy away from local authorities, under the proposals in the
consultation, each administrating authority would retain control
over the most impactful decisions by setting their investment
objectives and strategic asset allocation. The consultation
proposes that implementation of the chosen strategy be delegated
to investment experts in the asset pool, who are best placed to
execute the investment objectives to meet the desired investment
outcomes. I hope that reassures him that we will not take
autonomy away from the authorities.
The hon. Gentleman talked about the overall package of boosting
UK economic growth and benefiting pension scheme members. The
objectives are complementary. Driving consolidation and tackling
waste in the pension system ensures that schemes can achieve the
necessary economies of scale and efficiencies to pursue
diversified investment strategies. I reassure him that assets
such as infrastructure and private equity are seen as part of the
balanced portfolio, and can enhance savers' returns. They will
boost economic growth, so he does not need to worry about that,
and we will benefit the communities where pension savers
live.
The hon. Gentleman spoke a lot about what the previous Government
did. They talked a lot about pensions, but they actually never
did anything. We have shown in the first few months of a new
Labour Government that we mean business, and we have our action
ready to go. By next spring, he will see the full details in the
Bill.
Madam Deputy Speaker ()
I call the Chair of the Treasury Committee, Dame .
Dame (Hackney South and Shoreditch) (Lab/Co-op)
I draw the House's attention to the fact that a family member
works for Allied Irish Bank, and to the fact that I am a trustee
of a pension fund.
I want to ask my hon. Friend about the remit letter for the
Financial Conduct Authority. Just as the pushmi-pullyu in “Dr
Dolittle” did not know which way to go, there is a danger that if
we try to pursue the secondary objective while protecting
consumers, consumers could lose out. Could she set out clearly
how she expects the FCA to ensure that it maintains its approach
of protecting consumers? Could she pick up on the comment from
the hon. Member for Wyre Forest () about whether there will be
any move to mandate pension funds to invest in UK
infrastructure?
I thank my hon. Friend for that question. On pension funds, we
are not looking at taking that action right now, but I will let
her know when we take further action. On the remit letters, we
are committed to financial inclusion and to ensuring that
consumers are looked after. That is why, in their remit letters,
I have asked regulators to have regard to that, and why I have
made it clear that our top priority is to promote growth and
international competitiveness. The laser focus, in the remit
letters, is on growth, but they are not intended to encompass the
entire scope of the Government's vision for the sector. She
should be in no doubt that consumer outcomes are top of our
agenda. I have made that clear in every meeting I have had with
the regulators.
Madam Deputy Speaker
I call Liberal Democrat spokesperson .
(St Albans) (LD)
We welcome any reforms that will provide an effective route to
growth without putting undue pressure on people's savings, so we
look forward to seeing more details from the Government. In the
meantime, I press Ministers on their broader goal of getting
investment in innovation. Constituents in St Albans report that
their small and medium-sized enterprises have invested in
innovation. They have successfully applied for research and
development tax credits, only for His Majesty's Revenue and
Customs to claw them back. It is right that HMRC tackles errors
and fraud, but thanks to Conservative inaction, it is now widely
accepted that a number of SMEs are seeing their valid claims
rejected or withdrawn, while others are simply not applying for
the tax credits at all. Will the Minister please conduct an
urgent review of HMRC's approach, with a particular focus on
whether it is undermining the growth and innovation of the SME
sector?
I thank the hon. Lady for her comments. I will pass them on to
the Financial Secretary to the Treasury, who will look into the
matter. I am worried to hear what she says about SMEs; she is
absolutely right that they are the heart and soul of our
economy—we should be looking into that. I will ensure that he
writes to her, but if she needs a further meeting, I am sure he
will meet her.
Ms (Walthamstow) (Lab/Co-op)
Members from across the House have long called for financial
regulation of “buy now, pay later” companies. Because of the
delay in regulating those companies, a third of people seeking
debt advice do so because of them. The Woolard report in 2021
identified the urgency of the FCA regulating the industry as soon
as possible. I welcome the Government's commitment to regulating
them, but I am bemused, as many are, as to why it will take until
2026 for the regulations to take effect and for our constituents
to be protected. Everybody knows that regulation needs to happen,
and what the regulations are, and the FCA has been waiting since
2021 to do it—so why are we giving these legal loan sharks two
Christmases-worth of presents, and allowing them to exploit our
vulnerable constituents in this cost of living crisis?
I thank my hon. Friend for her question. She has done an enormous
amount of work in this area, and I applaud her for that. She was
instrumental in the Government taking our initial steps to
regulate the “buy now, pay later” sector. There is a need for
“buy now, pay later” during a cost of living crisis, and people
will access those companies' products, but I have brought this
under FCA control so far, and have regulated to ensure that it is
safer, and that people do not store up a huge amount of debt that
they cannot pay back. The consultation is open until 29 November,
and I ask her to urge others to feed into it to ensure that we
get this policy right; that was not done by the previous
Government. I will bring forward legislation as quickly as
possible, but I thought it was important to hear what people and
the industry had to say, because we want to regulate properly.
She is being patient, and I ask her to be a bit more patient; our
intention is to make the sector as well regulated as possible
under the FCA.
(Salisbury) (Con)
I warmly welcome much of what was announced last week—the work on
listings, mutuals and the remit refresh—but I say to the hon.
Lady and the Minister for pensions that there is considerable
reticence in the pensions industry when it comes to many of the
drivers of change highlighted last week. We need a complete
cultural shift and change in appetite from those who lead the
pensions industry. I urge her to keep under review the fiscal
incentives, and the transparency and accountability rules, so
that we can see the performance gap that results from not making
some of these changes. I look sympathetically on the aspirations
that she has set out today, and I wish her well as she moves
forward with these critical changes, which should have a lot of
support from across the House.
I know that the right hon. Member did a huge amount of work in
the financial services sector while he was in office. The civil
servants still talk about how amazing he was—much to my dismay
sometimes! We agree that there needs to be a change in appetite
in this place. Transparency is top of the list, as the Minister
for Pensions just whispered in my ear. We thank the right hon.
Member for his constructive approach on the review, and urge him
to tell the people he knows in the sector to respond to and feed
in to the consultation.
Ms (East Thanet) (Lab)
The Minister will know that investment in our energy system is
vital to our mission of being a clean energy superpower, creating
jobs and cheaper, cleaner and more secure home-grown energy to
power our economy. What is she doing to ensure that financial
service regulators support the Government's mission while
upholding high industry standards?
I know that my hon. Friend takes a keen interest in this area—she
been talking about it for the 25 years that I have known her. We
agree that it is important. The FCA and the PRA are required to
have regard to the UK's net zero emissions target, as set out in
the Climate Change Act 2008. The Mansion House speech set out the
Government's next steps to deliver a world-leading sustainable
finance framework. That will be a huge part of our financial
services strategy, as part of the industrial strategy, next
spring. I urge her to consult and feed in on that.
(Hazel Grove) (LD)
I speak as a former trustee of a local authority pension fund.
Much of the correspondence that I received from pension fund
members was not about the returns that they received, but about
the investments they were in but could not choose to come out of
because it was a defined benefits scheme. I appreciate that the
review is ongoing, but can the Minister confirm that any review
will consider retaining the autonomy of local authorities in
deciding not to invest—whether in companies, countries or
sectors—for environmental, social and governance reasons?
The consultation is ongoing, but I repeat that each administering
authority will retain control over impactful decisions by setting
out investment objectives and strategic asset allocation, and
they will have control over their pooled assets. The Minister for
Pensions will be happy to meet the hon. Lady should she wish to
discuss that further. As the hon. Lady said herself, the
consultation is ongoing, so she may wish to wait until after it
is complete.
(Vauxhall and Camberwell
Green) (Lab/Co-op)
I declare an interest as a proud Labour and Co-operative MP. It
was great to see the Chancellor outline the ambition to grow the
co-op and mutual sector and to see regulators come forward in
that work. Is there a timeframe for that process? As the Minister
said, to ensure the growth of the UK economy, we need rich and
diverse growth in the mutual and co-operative sector as well.
As my hon. Friend said, she stood on a ticket as a Labour and
Co-operative Member of Parliament, and she has done a lot of work
in that area. Last week, the Chancellor set out multiple new
measures to unlock the full potential of the mutual sector, as we
outlined in our manifesto. That included publishing a call for
evidence and reforming the credit union common bond, and asking
the PRA and the FCA to report on the current mutual landscape by
the end of 2025.
Dame (West Worcestershire)
(Con)
I declare an interest as a trustee of the parliamentary pension
scheme. There is a lot to welcome in the Chancellor's Mansion
House speech, a lot of which was taken from the Mansion House and
Edinburgh reforms of the previous Chancellor. I particularly
welcome the increase in access to financial advice that the
Minister has said she is taking forward. Can the Minister confirm
the end of the senior managers regime in the City, which I
believe was in the Chancellor's speech, and if that is the case,
how does she plan to take it forward and will it require primary
legislation?
The Government will consult on replacing the certification
regime, and will seek the views of industry and all interested
stakeholders in doing so. We are working closely with the PRA and
the FCA on that. If the hon. Lady meant certification of the
senior managers regime, we are keeping that under review at the
moment, but it was not mentioned in the way that she thinks it
was.
(Livingston) (Lab)
Before the election, Labour set out plans to grow the mutual
sector in our “Financing Growth” report, which was welcomed
across the sector. In fact, my local credit union, the Caledonian
Credit Union, welcomed the report—I declare an interest, because
I am now a member of that credit union after I visited. I welcome
the setting up of the mutuals and co-operative business council.
Will the Minister explain how that will drive growth in the
sector?
As my hon. Friend knows, the Mansion House speech set out
multiple new measures to unlock the full potential of the mutual
sector. As he says, we welcome the establishment of an industry
mutuals and co-operative business council, alongside our delivery
of legislation to support the building societies sector last
month. We want to ensure, through those measures, that the sector
can grow, and to support inclusive growth across the UK. In the
few months that I have held this position, the main complaint in
the mutual and co-operative sector seems to be that it is
difficult to operate within the current regulatory framework, as
it is not set up to support mutuals and co-ops in the way it
supports other businesses, so I am looking at that. I am very
happy to continue that conversation, but this is about
considering the regulatory framework to ensure that it is for fit
for purpose in doubling the mutual sector, which was a commitment
in our manifesto.
(Great Yarmouth) (Reform)
In her Mansion House speech, the Chancellor announced that we
would change the emphasis of regulation from risk to growth. The
FCA and PRA have effectively regulated the London market into
terminal decline, embedding Stonewall philosophy and diversity,
equity and inclusion into financial regulation, starting with the
Financial Services and Markets Act 2000. That was followed by the
markets in financial instruments directives I and II, which
imported EU regulation into the London market, prioritising a
European bank lending model over our equity capital market
tradition. Given that regulators cannot regulate for growth, the
only solution is to disband the FCA and PRA, and return to the
light-touch regulation under the Bank of England that secured
London's position as a vibrant capital market until 2000. Could
the Minister explain with clarity the Government's strategy of
regulating for growth, which appears to me to be an oxymoron?
Our regulators do a very good job, and we are lucky to have them,
but we will hold them to account. When the Chancellor talked
about risk taking, she was saying that the post-financial crisis
regulatory changes created a system that sought to eliminate
risk, but which has gone too far and led to unintended
consequences. For example, the certification regime has helped to
improve standards and accountability, but some elements have
become overly costly and administratively burdensome. That is
what we are looking at. Getting rid of the regulators is not the
way to grow the economy. Holding them to account, and considering
how we increase risk taking in our system, is the way in which
this Government will approach things.
(Cumbernauld and
Kirkintilloch) (Lab)
As a long-term member of the NHS Scotland credit union, I know
the importance of having community and workplace-based savings
and lending provision, which is much more accessible for people
on low incomes than buy now, pay later. However, it has become
much more challenging for the sector to operate beyond the common
bond. What is the Minister doing to ensure that credit unions are
able not only to compete with the wider financial sector, but to
thrive in those circumstances?
I absolutely share my hon. Friend's enthusiasm for credit
unions—I have visited those in my constituency several times and
know what good work they do. We have made clear our strong
support for the mutual sector. We recognise the value that credit
unions bring to their members in local communities, including in
her constituency. The Chancellor launched a call for evidence on
reforming the credit union common bond during the Mansion House
speech last week. We want to understand whether reform is needed
in that space to help credit unions to grow substantially. Once
we have completed the call for evidence, we will consider how
much of that reform we can take forward as a Labour
Government.
(Kingswinford and South
Staffordshire) (Con)
The Pensions Minister will be all too aware of the ongoing
problems facing members of the west midlands pension fund, one of
the country's largest public sector pension funds. Why does the
Economic Secretary think that the Chancellor's eight mega-funds
will provide a better service than the west midlands pension fund
in investing those people's pensions?
We will build on the success of the pools that already exist. If
the hon. Gentleman is not satisfied with my answer, the Minister
for Pensions is happy to meet with him.
(Stoke-on-Trent Central)
(Lab/Co-op)
Much like my hon. Friend the Member for Vauxhall and Camberwell
Green (), I am a proud member of
the Co-operative party, so to have so much co-operative and
mutual content in the Mansion House speech, the new co-operative
and mutual business council in particular, was music to my ears.
Will the Minister say a little more about how she anticipates
that Ministers will interact with the new business council? Will
her Treasury colleagues consider new financial instruments to
help co-operatives and mutuals meet the growth that they know is
available to them?
I know that my hon. Friend is an active member of the
co-operative and mutuals movement. The Government have already
taken the first step, with two statutory instruments laid on 14
October. We are committed to progressing the remaining changes to
the Building Societies Act 1986 following Royal Assent of the
Building Societies Act 1986 (Amendment) Act 2024. I will look at
further SIs to try to further the work here, but I want to
support the industry-led council, and I welcome the opportunity
to work with it and discuss and test policy proposals with
representatives and experts from across the sector. I know that
view is shared across the Treasury, including by the Chancellor,
who asked about it this morning in our ministerial meeting.
Dr (South West Wiltshire)
(Con)
Investing in small pension funds is boring, because it is
risk-averse, safe for beneficiaries and principally concentrated
in this country. While investment in UK start-ups and tech
through venture capital and other vehicles is to be warmly
welcomed, if it happens, there is nevertheless a very real risk
that funds will simply be invested overseas, and the Canada
experience suggests that that may very well be the case. What
assessment has the Treasury made of the extent to which the small
pension funds that the Minister envisaged being amalgamated will
simply have their capital and investments lodged overseas in the
tech and start-up companies of other countries and deprive our
own of the same?
We are looking at a diverse portfolio of assets, and the pension
funds mentioned by the right hon. Gentleman have already pooled
and are investing in the UK.
(Bournemouth East) (Lab)
Bournemouth is a wonderful place to represent for lots of
reasons; one very good reason is the presence of a large finance
sector. We have JP Morgan and Nationwide building society, which
I was pleased to visit recently and hear from about its
aspirations. Over the last 14 years, that sector on the south
coast has been starved, so what steps will the Minister and this
Government will take to support coastal finance hubs? Moreover, I
recognise that her diary will be quite booked up, but can I
invite her to come to Bournemouth and meet with representatives
of those firms? If she does, I am happy to buy her an ice
cream.
My hon. Friend will know that I can never resist an ice cream, so
I probably will visit after all. Places such as JP Morgan, which
employs 4,000 people in the financial services industry, are
vital to us. One of the things that the Chancellor's speech built
on was the significant steps that the Government are already
taking to enhance the competitiveness of our financial services
sector. We want to look at the biggest changes to the UK's
listings regime in more than three decades and—my hon. Friend
will be familiar with this—deliver the final stages of the
post-crisis capital reforms to banks. With our financial services
growth and competitiveness strategy, which I hope my hon. Friend
will write to us on, we want to give the industry certainty and
the confidence to invest. That is the main thing that the
financial services sector wants right now, and people in
Bournemouth will probably agree with that. I look forward to that
ice cream.
(Strangford) (DUP)
I thank the Minister for her statement. We must welcome the news
that London edges closer to New York as a financial hub. However,
the Minister is aware that growth happens only if we attract
investment. I believe that the decision to pool pension funds
into larger investment vehicles is a bold one, yet the Chancellor
must ensure that guarantees are in place, so that the mega-pool
of pensions does not go down the drain, and that guardrails are
in place to safeguard the nation's pension pots.
I reassure the hon. Gentleman that boosting return for savers is
at the very heart of this agenda, which is why we are pursuing
this pensions review. We want these reforms to increase security
and boost people's pension pots, and we want to unlock about £80
billion of productive investment. The Government's reforms are
already in the pension schemes Bill, and they could boost a
typical defined contribution saver's lifetime pension pot by
£11,000. I do not want the hon. Gentleman to worry, because we
have our eye on how to protect pensioners and savers.
(Mansfield) (Lab)
In my constituency of Mansfield, our member-owned mutual
organisation, Mansfield building society, provides essential
banking services. It is a significant local employer and invests
in projects to support my community. What is the Minister doing
to unlock the full potential of the sector and organisations such
as Mansfield building society?
I have already mentioned our first step with the two SIs laid on
14 October, which try to modernise the Building Societies Act,
and I am happy to send my hon. Friend further information on
that.
The main thing we will do is carefully consider the findings of
the Law Commission reviews to understand whether reform of the
legislation is needed to ensure that businesses are better
supported and grow more in the future. The response to the calls
for evidence will be carefully considered by myself and others,
and any potential reform will require formal consultation. I want
to make sure that my hon. Friend knows that at the top of our
agenda is trying to unlock the full potential of this important
sector after 14 years of that not having happened.
(Hendon) (Lab)
I thank my hon. Friend the Minister for sharing her statement and
welcome the support that it has gathered from across the House.
However, I noted that the right hon. Member for South West
Wiltshire (Dr Murrison) mentioned concern about pensions. Members
will, of course, remember that it was the Conservatives who
caused chaos in the markets with their mini-Budget, putting all
our pensions at risk. What will the Government do to ensure
financial stability and make sure that there can be no repeat of
the chaos that they caused?
My hon. Friend knows this area well, having worked in the
Treasury in a former life. We will absolutely make sure that we
avoid the mistakes of a certain and work very closely with the TPR and the FCA to
deliver all our reforms and ensure that we do not make any
decisions that shake the stability of the economy, because we
want to have a stable financial services sector and a stable
economy to encourage investment and ultimately deliver on our
growth mission.
(Portsmouth North) (Lab)
Portsmouth people welcome the national wealth fund, the
industrial strategy and the Chancellor's Mansion House speech, as
well as the stability that it offers our country and its
much-needed economic growth. Does the Minister agree, though,
that consumer protection is a vital issue that we must ensure
does not get lost in our growth strategy? Will she say what the
Government are doing on this agenda to ensure that?
Consumer protection is at the heart of anything that we do in
financial services. As well as being a Minister, I am a
constituency MP; every time I have one of my surgeries, I hear
about people who have been either a victim of fraud or taken out
a buy now, pay later product without realising the
consequences.
We want to give enhanced consumer protections to people through
the Financial Ombudsman Service, but we are very aware that it
needs to be reformed, which is why the Chancellor mentioned it
over and over in her speech. We plan to introduce legislation on
that as soon as possible, because we want to deliver better
protection for millions of consumers after years of uncertainty.
I am also making progress on financial inclusion at the moment,
and I can send my hon. Friend more information on that if she
wants. We are setting up a financial inclusion committee, which
is meeting next week, and I am happy to let my hon. Friend know
what we are doing in that to protect consumers.
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