RBS — House of Lords, 2015-06-11
Topic: Domestic Commerce
Thomas Ashton (Conservative, Centre-right): My Lords, with the leave of the House, I will now repeat a Statement made by my honourable friend the Economic Secretary in another place. The Statement is as follows "With permission, Mr Speaker, I would like to make a Statement regarding the Chancellor’s speech at the Mansion House last night First, on the Royal Bank of Scotland, the £45 billion that the previous Government put into RBS represents the single largest bank bailout in the world. This bank employs over 60,000 people in Britain and provides over a quarter of all the small business lending in Britain. Its problems and slow recovery have been one of the biggest drags on our economy, as many smaller firms know all too painfully. The restructuring of RBS and the work that Ross McEwan and his team have done since have brought us to a decision point This Government were not responsible for the bailout of RBS, or the price paid then for shares bought by the taxpayer, but we are responsible for getting the best deal now for the taxpayer and doing whatever we can to support the British economy. As the Chancellor set out, there is no doubt that starting to sell the Government’s stake in RBS is the right thing to do on both counts That is not just our judgment—it is the judgment of the Governor of the Bank of England, whose views the Chancellor sought and whose letter on the issue we published last night. In the governor’s words: ‘It is in the public interest for the government to begin now to return RBS to private ownership’ He goes on to say that this, ‘would promote financial stability, a more competitive banking sector, and the interests of the wider economy’ Indeed, he adds, ‘there could be considerable net costs to taxpayers of further delaying the start of a sale’ It is also the conclusion of the independent review which we commissioned from Rothschild and also published last night. It says that beginning sales now and increasing the free float will improve the marketability of our remaining stake, and it means we can expect to see larger sales on better terms in the future. But only if we start now This independent report confirms that if we take into account all the sales we have authorised of our bank assets, and the fees we have received, at the current valuation taxpayers can expect to make £14 billion more than they paid out. So in the coming months we will begin to sell our stake in RBS. It is the right thing to do for British businesses, British taxpayers and the British economy. When we take all the bank interventions in total—Lloyds, Northern Rock and scheme fees—we are making sure that taxpayers get back billions more than they were forced to put in Of course, given the size of our stake in RBS, the sales will take some years and will likely involve all types of investors. With such a complex investment case, we have to start with institutions but, as the Chancellor said, there is no reason why ordinary investors—in other words, members of the public—should not take part in due course Turning to Royal Mail, as the Chancellor set out last night, the first sale of our remaining stake has begun. The Government have today sold half of the 30% stake they retained in Royal Mail plc, at a price of 500p per share. This sale has raised £750 million, and that money can be used to reduce public debt We have said that we will dispose of all our shares in Royal Mail in this Parliament. We will continue to review the options in light of our stated sale objectives, but there is no rigid timetable. Value for the taxpayer remains the priority The Chancellor also announced last night that the Government intend to gift up to 1% of the shares of the company to Royal Mail’s UK employees. This is in recognition of their work in turning Royal Mail around Finally, the Fair and Effective Markets Review yesterday published its final report. It sets out 21 recommendations to help restore trust in the wholesale fixed-income, currency and commodity markets The review was established by the Chancellor of the Exchequer and the Governor of the Bank of England in June 2014 to help to restore trust in those markets in the wake of a number of recent high-profile abuses. It is centred on four principles. First, individuals must be held to account for their own conduct. Secondly, firms must take greater collective responsibility for market practices. Thirdly, regulators should close gaps in regulatory coverage and broaden the regime holding senior management to account. Fourthly, given the global nature of these markets, co-ordinated international action should be taken wherever possible to improve fairness and effectiveness As the Chancellor set out in his Mansion House speech last night, there is no trade-off between high standards of conduct and competitiveness. Implementing the reforms set out in this review will ensure trust in our markets and strengthen London’s global leadership position This Government have a long-term plan to make the UK economy the most prosperous of all the world’s major economies in the coming generation, and for that prosperity to be shared widely across our one nation. The steps we are announcing are a key part of achieving a new settlement for our public finances and for our financial services industry, and will help us secure that bright future for all. I commend this Statement to the House" My Lords, that concludes the Statement.