Banking Bill

10th February 2009

Brooks Newmark calls for more transparency in Government-provided financial assistance and supports a House of Lords amendment requiring a quarterly report.



Mr. Brooks Newmark (Braintree) (Con): I am surprised that the Government are opposing the Lords amendment that would require a quarterly report on financial assistance. Our proposal in the Lords amendment is very much in accord with democratic values and the kind of practice that many of us see in the private sector when we report to our shareholders. The Government talk about normal mechanisms, but these are not normal times. As the Children's Minister himself has said, this is the most serious recession in 100 years. Even the Prime Minister thinks that we are already in a depression, but perhaps that is just his own state of mind.

Taxpayers have a right to know what liabilities the Government-and, in turn, taxpayers-have. Those liabilities should be made clear to the public, whether we call them on-balance sheet liabilities, off-balance sheet liabilities or contingent liabilities. Unfortunately, however, this is part of the Government's pattern of hiding the real state of their finances. According to recent figures from the Office for National Statistics, net debt is about £697 billion, or 47 per cent. of gross domestic product. To put that in normal terms, it represents £25,000 per household. The reality, however, is that the Government are hiding about another £1.2 trillion off-balance sheet, primarily in public sector pension liabilities. So taxpayers actually owe more than £75,000 per household-

Madam Deputy Speaker: Order. The hon. Gentleman has had a degree of latitude, but he is now going wide of the amendments under discussion.

Mr. Newmark: I appreciate your guidance, Madam Deputy Speaker. I was trying to point out the importance of the need for greater transparency by highlighting a pattern of a lack of transparency. However, I will return directly to the subject of the debate. As the hon. Member for Dundee, East (Stewart Hosie) and others have said, taxpayers have a right to know what their exposure is. That is the point that I was trying to make. If we are to maintain the trust of taxpayers, we must be as open and transparent with them as we can. Quarterly reporting on what we are doing with their money does not seem to represent an undue burden in these extraordinary times.



Mr. Newmark: Does my right hon. Friend share my concern that the Government do not know the answer because they have not had the time to do their own due diligence on the exact amount of risk to which they are exposing the country and taxpayers? That is why we are now on our second bail-out, and my concern is that we may end up having a third two or three months down the road.

Mr. Redwood: I quite agree. I do not know whether the figure of £37 billion is retrospective, or whether the Economic Secretary thinks it was voted for under some other provision. We know, however, that £37 billion of equity capital was put into banks just a few months ago. The money changed hands only comparatively recently because it took quite a long time to get the approvals and do the final detailed negotiation. In the case of RBS, we believe that £20 billion went in one week, and the following week it announced it had lost the lot and a bit more besides. Again, call me old-fashioned, but I do not feel I got a lot of value out of that £20 billion, and I wonder why the Government put it in in the way they did, why they did not ask a few questions about the future results before they chose a price to put in new share capital, or why they put in new share capital at all, instead of using guarantees and short-term cash loans, which would have been quite sufficient.


Mr. Newmark: Does my hon. Friend share my concern that the Economic Secretary is mute on the matter because he does not know the figure?

Mr. Bone: I am grateful for the intervention because I intend to be brief to allow the Economic Secretary time to say at least something about the matter. Perhaps he has no idea about the figure, but he has got to do better. He must come to the Dispatch Box and explain the money resolution in greater detail, otherwise I will not support it. I know that that creates some difficulty for my hon. Friend the Member for Fareham (Mr. Hoban). He made many of the points that hon. Members of all parties have raised, but he wants to get the Bill through, as we all do. However, if we continue to allow the Government to railroad Parliament, they will be encouraged to do it again and again.


Mr. Newmark: I acknowledge the sensitivity with which the Minister is trying to approach the issue, and I agree that in normal times semi-annual reporting would probably make sense, but these are extraordinary times. I almost agree with my hon. Friend the Member for Sevenoaks (Mr. Fallon) that there should be monthly reporting, but given the fast-moving times and the vast amount of taxpayers' money put at risk, I feel that quarterly reporting represents a fair compromise. Surely it makes sense. Six months is a huge amount of time, given the dynamics of the financial markets today.

Ian Pearson: I think the hon. Gentleman was in the Chamber to hear my opening remarks, when I outlined the Government's reasons for reaching their view on the six-month period. I have not changed my mind during the course of this short debate-I still think that six months is appropriate-but we have taken on board the spirit of the Lords amendment. We have always sought to adopt a general spirit of bipartisanship and compromise-



Banking Bill (Money)

Mr. Brooks Newmark (Braintree) (Con): Building on the point that my hon. Friend the Member for Stone (Mr. Cash) was making-

John Bercow: The thesis!

Mr. Newmark: It was not a thesis, but it was a very good point about contingent liabilities. Equity accounting rules say that if the Government own more than 50 per cent. of a bank or any institution, they should consolidate not just a portion-that is, 70 per cent. of the debt-but 100 per cent. of the debt. Does my hon. Friend agree that if we want transparency, the Government should consolidate 100 per cent. of the debt of anything that they own over 50 per cent.?

Mr. Hoban: My hon. Friend, who has made a great study of the state of Government finances and their on and off-balance sheet liabilities, tempts me down a course which, if he does not mind, I shall not tread at this point. He makes an important point about the extent to which the Government may wish to recognise the liabilities. We are speaking of the liabilities of not just one bank. The Government have nationalised two banks-Northern Rock and Bradford & Bingley-so their liabilities will need to be taken into account as well. In the interests of transparency, we have heard nothing about the condition of Bradford & Bingley since it was nationalised at the end of September. That will be referred to later, in the debate on Lords amendment 83.


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