RBS — House of Lords, 2015-06-11
Topic: Macroeconomics
Bryan Davies (Labour, Centre-left): My Lords, I am grateful to the Minister for repeating the Statement. He could have spared us the reference to the long-term economic plan, which seems to vary and inflate almost from day to day in terms of the length of time that it occupies and the objectives that are set for it I am pleased that the Statement recognises that the taxpayers who bailed out RBS during the global financial crisis want value for their money and are somewhat suspicious of any rush to sell. That is why they will be suspicious of the Government’s actions at this time. RBS is still restructuring its business and it is very difficult to see the outcome. It is still awaiting a US settlement for the mis-selling of subprime mortgages. In case noble Lords have forgotten, the global crisis started with subprime mortgages in the United States. Banks started to collapse long before a Labour Government were ever considered to have overspent as the basis for the global crisis. I hope that we will have no references to that in this short debate on the Statement The Chancellor said two years ago that he would countenance the sale of RBS only when, "the bank is fully able to support our economy and when we get good value" Does the Minister really think that these tests have been met? While we have always supported the eventual return of RBS to the private sector, it is surely essential that the Treasury gets back as much money as possible to help pay down the national debt, and therefore to limit the impact on the wider population of the costs involved. RBS of course had to be bailed out with great urgency but it does not have to be sold off at the same speed. It is not the case that the Governor of the Bank of England is telling Ministers that the price is right now. He makes it very clear in his letter that questions of valuation are entirely for the Government; it is their judgment which is, rightly, at stake On the specifics, can the Minister clarify exactly what the Government accept as a break-even share price for the bank? A potential £7.2 billion loss might be understating things because the Rothschild calculation, which is the basis for that figure, has netted off the fees that the Government have received from the bank since 2008 When it comes to Lloyds, the Treasury has already pledged that shares sold through the Government’s trading plan will not be sold for less than 73.6p—the price the Government paid for them. That is the red line for Lloyds. What is the equivalent red line for this premature sell-off? Why cannot the Minister give us more detail about precisely when the sale will commence? What impact does he predict that that will have overall on the debt reduction It is important that we do not allow the Government to state that RBS losses can be put against the gains that will potentially be made in other areas such as Lloyds. RBS was purchased by the public in dire circumstances and taxpayers have every right to insist that the Government get their money back. But we are not too confident that the Government can do this; we saw their recent effort regarding the first part of the sale of Royal Mail, and look what a mess they made of that, with a loss for the public purse Finally, it may be noted that the Chancellor made his statement to the banking community last night, and the Minister repeated constantly in his contribution what the Chancellor said to the bankers. They are an important section of the community, but I do not think it does this Government any credit when Parliament is treated in such a mean fashion: when a junior Minister—a junior Minister—speaks in the other place and a Whip speaks in this place. Much as I have regard for the talents of the noble Lord who is addressing us, he will recognise that this Statement deserved a Treasury Minister speaking here, and that the Chancellor ought to have spoken in the other place earlier today.