Westminster Hall

Tuesday 1st September 2026

(began 2 weeks ago)

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11:37
None Portrait Speaker 2
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I will give way.
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11:38
None Portrait Speaker 8
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On that point.
11:39
None Portrait Speaker 2
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I will give way.
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11:40
None Portrait Speaker 2
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I thank the honourable member for her contribution. I think she's absolutely right. We have two banking hubs in my constituency, which came in before the rules were were tightened. And and people have said to me that they even those banking hubs aren't providing all the services that they need. You know, I think if we're looking at a 21st century banking offer for rural Britain, we have to say that a banking hub is the obvious solution rather than a branch from every single bank.

But that banking hub has to be competent and capable of offering all the services that people need. So five years ago, the rules for receiving a banking hub were much broader, and Dartmouth got in just in time. The current criteria for banking hubs are far too narrow. In September 2024, the Financial Conduct Authority substantially tightened the rules, placing the focus solely on access to cash and the current criteria completely discounts all other reasons that you might need to use a bank.

It also doesn't take account of poor public transport, older than average population that we have discussed, and it ignores the fact that banks do so much more than just give out cash. So I'm urging the government to expand the rules for granting a banking hub. I have met with the Economic Secretary to the Treasury, and I know that she shares my view that the current criteria are far too narrow. And I heard the former Prime minister tell the chamber that a banking hub can be rolled out wherever a community needs one.

But the policy that Linc adheres to does not reflect that. So it has to be changed if necessary. We need legislation to make the banks listen. The simply has to be a better minimum service coverage of banking hubs across the UK. So many MPs are campaigning for them. This is clearly a country wide problem and we know the banks can afford it. So for once, this is not a question of finding the money or funding.

They can afford it. The Financial Services and Markets Act, passed in 2023 under the conservative government, gave the Financial Conduct Authority powers to protect cash access, but astonishingly, it did not extend those powers to protecting wider banking services. It limited it to cash. Labour tabled amendments back then, which would extend the power to protect banking services, but these were not taken up by the conservative government. Now in government, Labour have been very slow to do what they pushed for in opposition, so I urge the government to rediscover their passion for protecting banking services by amending the Financial Services and Markets Bill, which is currently making its way through the other place to ensure face to face banking services receive the same protections as access to cash, whether that be via banking hubs, as should be the case in Totnes or via other means.

By increasing the provision in post offices and as the Post Office is in trouble these days and we know that branches of post offices are closing, surely there has to be a solution that encompasses all of it to make these places viable. Liberal Democrat peers in the House of Lords have tabled an amendment to the Bill, the Financial Services and Markets Bill, which I wholeheartedly support, and it would require the Treasury to consider whether assessments following bank closures should extend beyond access to cash to evaluate local community needs for essential in-person banking services when making regulations.

And the answer is yes, absolutely it should, because banking is about more than just getting cash out of a hole in the wall, and I hope the government will adopt this amendment. I also look forward to hearing the outcome of the government's Access to Banking Services review, which is due to be published shortly. I'm sure it will lay bare the evidence of the real world impact of bank branch closures, and demonstrate that the government must go further in ensuring people can access banking services, because having a bank account and being able to access a range of banking services is a necessity in modern society.

It's not a luxury. The government must rebalance things in favour of our high streets and our communities, and put an end to the favorable treatment for big banks who repeatedly cut their services with absolutely no regard for the impact on people's lives. People who are their customers. Enough . Now it's time the government took action to protect and restore face to face banking services across rural areas. Thank you.
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11:44
None Portrait Speaker 10
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Thank you. And it's a pleasure to serve under your chairmanship. And welcome back everybody from the summer holidays. So first let me thank the honourable lady, the member for South Devon, for securing this important debate. Let me focus my remarks on what the loss of the services mean for rural communities, such as in Bury St Edmunds and Stowmarket. Let's imagine an old resident living in Ixworth Stanton or one of the smaller villages surrounding our two market towns.

A payment appears that they don't recognize on their statement. They're worried that they might have been scammed. They want to speak to somebody they trust, show them the letter that they've received and understand what to do next. Now, for somebody living in a city or a town, that's a short walk to the nearest branch. But if you're in rural Suffolk, it means a lift relying on an infrequent bus service or paying for a taxi, only to discover perhaps, that the bank has closed.

That's the reality behind every announcement of another bank closure. So we hear that customers are moving online. Indeed, I see that Revolut is now the biggest, fastest growing bank in the country and has no branches. But the fact that most people use an app doesn't mean that everybody can. And it certainly doesn't mean that every banking problem can be solved through. There are moments when people need to talk to somebody. This is particularly important in my constituency of Bury St Edmunds and Stowmarket, where we have large numbers of elderly residents.

So when the bank closes, the impact spreads across everywhere, and the planned closure of the Halifax branch in bury is just another reminder of the services that we cannot take for granted. So I am happy that the government has a manifesto commitment to work with the banking industry to deliver 350 banking hubs by the end of the Parliament. Banking hubs are a sensible, sensible alternative. They give customers access to cash and an opportunity to speak privately with representatives of their bank.

However, it's important that rural communities must be properly considered when deciding where these hubs are located. Residents in rural Suffolk should not receive a second class service simply because of where they live.
11:46
None Portrait Speaker 11
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Thank you chair. I thank my neighbour for bringing this important subject to the house. Like her, I've seen many of these problems in my constituency in Dudley. We've had a number of problems. Every major bank has left the town and most importantly, there are a number of smaller villages around that town. So places like East Budleigh, Colaton, Raleigh, and there's about 6500 people that, that that that town supports, yet we have no access to cash whatsoever.

When you compile on the fact that this is a tourist economy. So people come down during the summer and there is no money for tourists to, to, to access. And we've had it multiple times now where people have gone to try and take money out from the from the cash machine on the side of Tesco and the money simply runs out. This is not good enough for a place that relies on these on these tourists coming down. We've also seen a very similar problem in Exmouth.

So our post office is closing down. Now we have one bank remaining and this is one of the largest towns in Devon. This is just not acceptable. And if you look at the demographics then we have a largely elderly constituency. People who have mobility issues and access to transport isn't the same that you would find in London or Manchester or bigger cities. This is something that needs to be sorted out rapidly. We've had strong calls for a banking hub.

We've been trying to work with link now for the past year, and we've been rejected twice. And from what we've seen, they don't incorporate those geographical and those demographic issues that I've just raised. So can I call on the minister to really strongly reassess the criteria that link using to make sure that constituencies like mine are not left out?
11:48
None Portrait Speaker 12
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Thank you. It's an honour to serve under your chairmanship, Mr. Wishart. It's an. Whilst I welcome the many improvements that the digital experience has seen over the last decade, I am concerned that these changes are moving services further away from the most vulnerable and from remote constituencies where digital connectivity is is very poor. So I thank the member from South Devon for securing this debate.

In my remote coastal constituency of Camborne-redruth and Hayle, the furthest southerly Labour constituency in the country, we've seen 85% of bank and building society closures. We have just four branches left, two of which are due for closure in a month's time, and one of the remaining two is only open on Mondays. As has been said, we must appreciate that online banking is far less accessible for older people, the vulnerable and the disabled, and it's not a silver bullet for charities and small businesses that receive and need to deposit cash.

So I welcome the roll out of the banking hubs in my constituency, and I look forward to the opening of the first permanent hub in Camborne in coming weeks. We also have temporary hubs in Redruth and Hayle, and a deposit machine in Perranporth. Planning permission has gone in for a permanent hub in Redruth, which I hope progresses smoothly. I welcome the government's review and urge the Minister to ensure that rural and remote coastal communities are, for once, at the heart of government thinking.

As we consider what further action might be necessary to prioritise digital connectivity in remote, rural and coastal constituencies, and to secure permanent banking provision in places such as Reduced and Hayle.
11:50
None Portrait Speaker 1
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Steph Aquarone.
11:50
None Portrait Speaker 13
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Making sure people can still get access to cash and speak to someone from their bank has been one of my longest running campaigns in my time working for residents of North Norfolk. I remember well the trip that Tim Adams, council leader and I took to action in London to see one of the first banking hubs in action back in 2023. There are only seven in the whole country then, and I'm glad to report that there are now three in my constituency alone, but I will still be campaigning in the coming months to secure services in both Stalham and Hoveton, which are without any high street banks, and there are clusters of thousands of people in the villages in my constituency left underserved because the current criteria does not guarantee access to services for those villages.

We've heard from many hon. Members here already today, in constituencies like North Norfolk, there is still a reliance on physical banking and the benefits of handling financial matters with a friendly face in person. One constituent from one of these broads villages told me she considers herself to be fairly digitally able, but she does find herself anxious about online banking . When large sums or important transactions are at stake. Banks need to accept that this is a perfectly reasonable position and deliver that reassurance for their customers.

Access to non-digital alternatives should be a right, not a privilege. It's about providing security and comfort for those for whom the digital world is not their native one. And it's not just about age. It's important also for those for whom digital access is a challenge in our rural areas. Now, I know that the answer to many of the questions we raise here today will be wait for the access to banking review.

I want to be able to look my constituents in the face and tell them that this will make a meaningful difference to them. So if the minister won't give us an early hint today, all I ask for from her is the reassurance that rural communities like North Norfolk will be well served by the findings of this review, and the concerns that we've raised today on their behalf are being heard and acted upon.
11:52
None Portrait Speaker 1
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Jill Morris.
11:52
None Portrait Speaker 4
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Thank you, sir, under your chair. I congratulate the member for securing such a vital and important debate. We're obviously talking about a largely defensive issue defending cash access to our communities, defending bank banking services that our communities need. But we need to be having a far more broad ranging one about what government can be doing proactively to bring banking services to more rural communities, because a banking hub, months after a community has lost a bank branch, will only give access to some of the services that have been lost.

Now, access to cash is great if that's your only need. But what a banking hub can never do is provide the kind of support that people might need, no matter where they live. I'm thinking about things like delegated power of attorney, thinking about some of the additional support that young entrepreneurs need to bring jobs and investment into rural areas that towns like Haltwhistle in my constituency are crying out for. It's a town that has not received support nearly enough from the Keystone Cops at Northumberland County Council.

I want to particularly focus on Haltwhistle in my remarks, given the time available. We've been trying to get better banking services in that town since I was elected. It was the subject of the first speeches I gave as the MP for my constituency, but it consistently fails to meet the test that had been described to me. The guidelines for a banking hub. There is some access to cash through ATMs at the supermarkets or through the Post Office's services with partner banks, but those aren't enough.

Those ATMs are often out of order. The post offices do not meet the needs, particularly the local business community, and particularly concerned about the damage that the lack of cash access does because of the impact on the business community. It doesn't just discourage entrepreneurs from setting up in the area, it also forces people to use online giants . In a town that is particularly old, 6,030% of the population are over the age of 65, but it's a dispersed community that is serving not just the town of Haltwhistle, but Featherstone, Milk Ridge and Gilsland and Greenhead.

I'd like to invite the Minister to come up to meet with some of the Haltwhistle businesses that have real concerns about the ongoing lack of access to cash, and to discuss how we can better support businesses in rural areas through better banking provision.
11:54
11:54
None Portrait Speaker 4
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And I congratulate the member for South Devon on securing the debate. Members will be aware that there was an adjournment debate recently that I led, and there were 19 interventions in that half hour adjournment debate on myself and the minister. Many of those members are in the debate today, and I think it demonstrates the strength and breadth of cross-party support on this issue. I think it is really important to to bear that in mind that there is huge cross-party support on this issue .

In my own constituency, I have communities that are 65 miles from the nearest bank branch. For context, that's the same distances from here to Hastings or here to Cambridge. It is an enormous distance for people. They are hours travel from a bank branch that includes people who are maybe seeking entrepreneurship advice, that maybe just a first step in setting up their own business and who to contact about it. They maybe don't know who to contact in the bank about it, but having somebody face to face in a branch that can tell them, these are the people you need to speak to, this is how you set up an account.

Just the basics, not detailed business advice, but basics of how to access that system, because the risk of falling over at the first hurdle otherwise, and I would restate the point that was made about people who are maybe unsure about digital services or maybe are attempting to use apps, but need a bit of advice, or if they do something on the app and then think, oh, I'm not sure I've done that right, they need the opportunity to go into a bank.

If they suffer a bereavement and the, you know, they're really just looking for that face to face contact and reassurance that things will be sorted out on joint bank accounts, then these are the critical points in their life. And finally, many of us will have been at things like Highland Games, agricultural shows. Charities have loads and loads and loads of raffles. They collect loads and loads of cash, and for people in my constituency that is hours of travel to go and bank that cash.

Thank you. Patricia
11:56
None Portrait Speaker 1
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Ferguson.
11:56
None Portrait Speaker 14
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To serve under your chairmanship, and I congratulate the honourable member for securing today's important debate. I represent a very urban constituency, but I also chair the Scottish Affairs Committee, and we have been looking at this issue as part of an inquiry into Scotland's high streets. I do not have to tell you, Mr. Wishart, that many Scottish communities are rural and or remote. And it's also important to note that Scotland's population is also older relative to the UK average and in many cases in many areas, access to reliable internet at a decent speed is extremely poor if it exists at all.

So these factors are clearly very significant. But the Herald newspaper reported earlier this summer that 3 in 4 bank branches in Scotland have now closed in the last decade, and for remote and rural areas, that means, as we've heard, lengthy journeys, unreliable travel connections to access alternative branches, often for people who cannot easily move to online banking. We have heard from members whose constituents are travelling more than 100 miles to get to the nearest bank, to access the kinds of service that they used to be able to get locally.

UK finance responded to our concerns by noting that only 2% of the UK population rely exclusively on in-person branches to do their banking, but they were unable to provide us with an equivalent figure specifically for rural Scotland, and we would also disappointed at their very poor understanding of how much further.
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12:00
None Portrait Speaker 1
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Aphra Brandreth.
12:00
None Portrait Speaker 16
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Thank you. It's a pleasure to serve under your chairmanship. In my decision to the South and Eddisbury, there is not a single bank branch. This is a particular challenge for rural communities because it's not just bank branches that we lack. Public transport is also extremely limited and in some areas non-existent. And whilst many people are comfortable using digital banking, we should not assume that everyone can simply move online.

For older residents and those less confident with technology, the loss of face to face provision can be particularly challenging and in rural areas, poor broadband and unreliable mobile coverage only compound the problem. Indeed, there is a real irony in increasingly telling people to rely on digital banking in precisely those communities where the digital infrastructure can be the least reliable chair. Alongside the social impact, there is also an economic impact. Many small businesses still handle significant amounts of cash and need practical ways to deposit takings, obtain change and manage their finances.

Having to travel long distances to do so means lost working hours and additional costs, as well as greater security risks. Of course, I recognise that banking habits are changing and that alternative provision has an important role to play, but those alternatives only work if they exist and are accessible and sustainable. We're seeing post offices also under pressure, with local branches closing in villages including Malpas and Kelsall. It's important that access to banking is measured not simply by the distance to the nearest bank branch, but by whether people can genuinely access banking services, taking a holistic approach that ensures rural communities like mine are not expected to simply make do but are properly supported.

Thank you Crichton.
12:02
None Portrait Speaker 17
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Thank you, Mr. Chair. A pleasure to serve under your chairmanship. Thank the honourable member for South Devon for raising this important issue and welcome members back from a long summer. First, a holiday confession. I spent a week in Spain without touching a euro or a cent. Not that I made my partner pay for everything. I just used the digital app and on my return there was that quaint item in the post, a cheque which I banked yesterday using a digital app.

The truth is, we are using banks less and less and handling cash less and less. But that does not mean that communities like mine in the Western Isles do not need banking services. The Bank of Scotland branch in Benbecula, in Highland constituency, closed its doors this summer following the closure of a branch in Harris and in the port town of Lochmaddy, and these bring concerns for banking services across the island and in other parts of rural Scotland.

Because my constituents cannot simply drive to the nearest bank because it is across the sea, on the mainland and in passing can I pay tribute to the mobile banking services? The bank van still being provided by the RBS in the islands and other parts of Scotland, and of course, the closure of bank services have profound effects on islands because. Another truth, Mr. Chair, is that my communities, particularly in Uist, face a stark depopulation crisis, with an ageing population and economically active families being pushed away by unaffordable housing, lack of childcare, lack of connectivity, digital and physical, with failing ferries and unaffordable airfreight and without correction.

We will not just lose people, we will lose these communities and banking services, as well as housing and a growing economy, have to be part of the jigsaw of retaining populations. And in cash heavy local economies, the loss of any branch is important and that is why I welcome the banking service review, but remind ministers that they must move quickly and make sure that one size does not fit all, because for areas like mine, rural and island areas, we rely on these vital services and the rules that a banking hub 10,000 population.

My population in Uist is 4500. We need flexibility. We must make sure that one size does not fit all in this banking review. Thank you.
12:04
None Portrait Speaker 1
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Adrian Ramsey.
12:04
None Portrait Speaker 18
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Thank you, Mr. Richardson. It's a pleasure to serve with you in the chair. I want to talk about my experience in my constituency of Waveney Valley in Harleston. We have a temporary banking hub that's been operating for some time, and I've been working with the community to press for a permanent location to be confirmed, but it's taking some time to do so. While in Halesworth, the last remaining banking presence closed in December 2025, leaving the market town without a bank.

Then the Post office closed around the same time and whilst we've secured a temporary post office, we've not yet got a permanent post office back on the high Street while in I. The market town has no bank branches and was without a post office for two years, and it took a huge amount of work from green councillors to secure the return of a post office thanks to a local shopkeeper taking it on. But the market town of Bungay perhaps illustrates the biggest problem here.

The town once had branches of HSBC, Barclays, NatWest and Lloyds. They have all gone. Link concluded that Bungay does not meet a banking hub requirements because cash facilities remain available, but access to cash is not the same as access to banking and the personalised support that staff, branches or banking hubs provide. Link also said that a banking hub would not be granted for Bungay because there's one in Harleston, but in rural communities, getting from one market town to another is not always easy.

So I want to ask the minister, as the government reviews access to banking services, will she look at whether communities such as Bungay can qualify for banking hubs, where there's a clear demand for face to face services, even if cash withdrawals are accessible? Can links assessment criteria be updated to reflect this, and can the bureaucratic obstacles to getting replacement post offices and banking hubs be reduced? Chair, we have heard clearly from members across the House how crucial banking services are, particularly to rural communities, avoiding isolation and sharing.

Our market towns can flourish and I hope government policies will make this easier.
12:06
None Portrait Speaker 1
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Jeremy.
12:06
None Portrait Speaker 19
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Thank you very much, Mr. Bouchard. Thank the honourable member for South Devon for securing this important debate, and it's a very pertinent debate for the whole of my south west Norfolk constituency, but particularly so for Thetford, where towards the end of last year we lost the last two banks in our town centre. These closures coincided with the loss of our town centre post office, the fourth largest settlement in Norfolk, a town of nearly 3000 people and many surrounding villages that rely on it as a service centre.

Now left without a single bank and without a post office. And I am appalled that Post Office Limited allowed our town centre Post office to close last November, claiming a new one was imminent, only for there to be no provision. Nearly a year later. And with the last two banks and the main post office closing, it is no wonder that retailers told me that last Christmas the footfall was significantly down in Thetford and consequently sales were bleak.

A temporary banking hub did follow, although there was a gap in services and a lot of confusion due to limited publicity and has time has dragged on, it has become clear that what I regard as temporary is not the same as what Cash access UK regard as temporary, as we are still in the temporary banking hub nearly a year later, with no date set for the permanent site to be open. And of course, the temporary service and even the permanent service does not come with like for like services.

We do not have Saturday banking access, for example, and there is no external ATM, no like for like replacement like we had with a fully functioning bank. And when I challenged that decision about the ATM, I was told that review indicated there was sufficient coverage. I was highly amused. Sufficient coverage included the ATM located in the local bingo hall, which is only accessible to members only when the bingo is open, which you have to pay to get into, and then you have to pay to use the ATM.

We must have like for like services when closing closures of branches are happening.
12:08
None Portrait Speaker 1
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Mr. Graham Stuart.
12:08
None Portrait Speaker 20
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Thank you. Mr.. It's a pleasure to serve under your chairmanship. I congratulate the honourable member for South Devon for securing this debate, and the timing is fantastic. We've got a dynamic minister at the despatch box. We've got a government review imminent, a response to that from Richard Lloyd, and we will have the opportunity, I think, to listen to this cross-party call for a change to be made. The conservative government recognised the need for cash after a review into that and legislated for it, making sure that we could do that.

The introduction of banking hubs and eventually cash hubs is all part of that as well, and I'm very proud of what the conservative government did there. But as the hon. Member set out and everyone else has supported since face to face banking as an important part too. But I really do hope and expect that we can move forward in the right way and look at getting the balance right between being overly prescriptive to the banking industry, while setting out a very clear sense of direction to make sure that no one has been set out by so many members today are left behind as a result.

But it's a happy coincidence, Mr. Wishart, that we're having this debate today , because it's the day that Lloyds customers can once again deposit a check at a post office or banking hub. Mr. and Mrs. Proctor came to see me in Withernsea with a simple problem that they couldn't pay a check in to their Lloyds account at their local banking hub, which surprised me. I wrote to Lloyds about it.

Nothing came about, then came here, raised it with a chancellor. Colleagues from right across the House signed a joint letter to the chief executive of Lloyds Bank. And I'm pleased to say that today congratulations to Lloyds. They did listen. And as of this morning, people can deposit checks at those places because these issues being raised by members across the House today are important. And I trust and expect that the timing of this report, the Richard Lloyd work and the minister in her seat will mean that this will be resolved to everyone's satisfaction.
12:10
None Portrait Speaker 1
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Jonathan Davis.
12:10
None Portrait Speaker 21
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It is a pleasure to serve under your chairmanship. Mid Derbyshire has no banks left. Not only is this a source of frustration to local people and to businesses, but it really irks them because government stood with public money behind the banks at the time of the financial crisis, and now we need our banks to stand with our communities. That is why I welcome the government's commitment to delivering 350 banking hubs by 2029. In my constituency has one of those banking hubs, and it's been a huge success at reports over 1500 customer interactions a week.

And residents tell me that it's been a lifeline. The evidence is clear. There's huge demand for banking services. I had to experience that recently when I was sent a cheque, which was a peculiar shape, perhaps designed specifically so I wouldn't deposit it. It wouldn't be scanned by the app. So I had to make a trip into the bank. But I do appreciate more of us are using online services, but there is still a need for in person hubs like we have in Belper.

Also drive footfall into towns, and a vibrant high street is one of the things that creates a real sense of place, and I know how much of a priority that is for the government, but there are quite substantial places in Mid Derbyshire, such as Allestree and Spondon, which remain unserved by in-person banking, and a recent constituency survey I conducted really drew to my attention the demand local people have for such services. That's why I've written to link on several occasions to ask for a review of access to cash in those areas.

But links remit doesn't isn't broad enough to consider banking services as a whole. It only considers access to cash. So my ask to the to the government, and I've written to the Economic Secretary at the Treasury about this, is to broaden links remit so it can really look at how people access services as a whole, not just cash, but advice, guidance when they've got concerns. And that's particularly important for people in rural communities as well as those who , perhaps through disability or other factors such as internet access, cannot access online services in the way that many people have begun to do so.
12:12
None Portrait Speaker 1
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Kimberlin.
12:12
None Portrait Speaker 22
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In this debate, I'm sure many members here have had the same frustrating experience as I have had. When I meet with a bank who is planning to close its branch, they have all this data and statistics telling us about the number of people that use that branch, but they can never ask the question about how many people would use that branch if they knew that they could get access to it. And as well as that, link cannot tell me why.

Despite the measures that are in place, the access to cash percentage in my constituency continues to reduce. I think it is also important to remember that the bank branches that do exist in many of our communities are often at very much reduced hours, and the business customers in particular, express real frustration to me about that. I do not want to repeat a number of things that have been said today, but I do want to pick up on scams and vulnerable constituents.

Rural poverty is real. We all deal with it. And I do think that Citizens Advice is locally and food banks are seeing real increases in people's need of support, and I do think banks have a real responsibility to improve financial literacy. In addition to that, rural transport is non-existent, as many people have touched upon. But over the summer I did go out with a constituent who used a wheelchair. We had to take two buses to make the journey and to add to her distress, one of the buses lifts wasn't working and the whole bus had to decant whilst she was still left on the pavement.

We need to remember that it is not always easy for people to get there. Finally, if we think about back to the past, and I'm very conscious that the party that talks about broken high streets and broken Britain is not actually here at this debate today, but the bank manager was somebody that knew you. We've had a constituent had a very distressing scam with a huge, significant amount of money. I'm very confident if they'd been going into their bank branch, that bank staff would have known that person and not even prevented.

It's not about the person asking for advice, but they would have asked the right questions to prevent that scam stopping in the first place. The government needs to knows what it needs to do and hoping it gets on and does it.
12:14
None Portrait Speaker 1
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Ian Kirkham.
12:14
None Portrait Speaker 23
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It's a pleasure to serve under your chair. And thank you to the member for South Devon, who has similar issues to those that we have in Cornwall. Lloyds, the last bank in Falmouth, closed in March. Big banks have been pulling their branches out of our towns and cities at great speed post Covid. When you walk from the moor to Market Street in Falmouth, the most obviously empty, degrading buildings are the ones that used to have banks in them.

As an area of approaching 3000 in Falmouth and Penryn, plus the villages. We do have a banking hub now, which opened when Lloyds closed, but similarly to my friend in Norfolk, it's only a temporary location in the town council offices and I'm concerned it doesn't have a more permanent home. Despite numerous empty buildings in Falmouth, most of which used to be banks none had decreed suitable for a more permanent banking hub. It's one of 230 banking hubs now in the UK, and I do support the government's commitment to increase that to 350, if not more, by the end of this Parliament and hope more of them find a permanent home.

The Post Office has remained as the last bastion against this change. Up till now, customers are directed to post offices by those closing banks, but that now is changing. The franchise model the Post Office has adopted means they rely on bigger stores to run post offices. That leaves them vulnerable to high street closures. In Truro, Cornwall Capital. Our post office is closing in October because they reside inside a TJ Jones that used to be Smith's due to the Post Office insisting on finding another franchise rather than a direct store.

We have to wait for a commercial procurement process for a host company, which will leave the capital of Cornwall without a post office. We do not know for how long and then leave that post office vulnerable to the same thing happening again. The Post Office can justify this by saying there's another post office just under a mile as the crow flies, but that's a tiny shop across the dual carriageway and is in no way suitable to serve the capital city of Cornwall.
12:16
None Portrait Speaker 1
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Mr. David Mundell.
12:16
None Portrait Speaker 24
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Thank you, Mr. Pleasure, to serve under your chairmanship and I know you like good news, so I will start with some. I met with Stuart Miller, the chief executive of the Cumberland Building Society, last week, and he confirmed that the Cumberland Building Society will keep all its branches, including those in Dumfries, Lockerbie, Langholm, Annan and Gretna open indefinitely and they are already seeing an uptake from customers of other banks who have closed. And that's what's happened in my constituency, which you also know is larger than any constituency in England.

We have seen the wholesale closure of all Lloyds Bank of Scotland branches, and we only have one RBS NatWest branch left, with the branch in Biggar about to close and no real arrangement in place for what will replace it. Very poor mobile reception there as I experienced myself yesterday, and no commitment to have a free to access cash machine, the honourable gentleman raised a very important point, which I have raised with the Honourable Ladies Predecessor link.

Abide by the rules. They are a rules based organisation and therefore in Moffat in my constituency, because technically there are two other cash machines, one of which is in a shop and never has any money in it, and the other is in another location which is not open 24 over seven. We are not able to get a free to access cash machine in the centre of what is a very busy town, so that issue needs to be looked at .

As the honourable Lady and others may know, Henry Duncan founded the world's first savings bank in my constituency in 1810. It seems rather ironic now that it was easier to access banking 200 odd years ago than it is now.
12:18
None Portrait Speaker 1
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Don Pierce.
12:18
None Portrait Speaker 25
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It's a pleasure to serve under your chairmanship, and I'd like to thank the honourable member for South Devon for securing this debate. I, too, will also start with some good news, which is when the last bank in Glossop, Lloyds again, I'm afraid, closed. And in Buxton, where it was the Halifax that closed link were very good and we were able to secure banking hubs for both of those major towns. And both of them are looking for permanent homes that we expect to see later this year.

But across the middle of my constituency, the story is very different. In New Mills, there's a community bank that is only open for 5.5 hours on a Monday, and for the rest of that, of that belt, there is there is no access to banking. There are post offices in Chinley and in Whaley Bridge, but both of them have been under threat and have nearly closed, and we've only managed to hopefully touch would secure their long term futures recently.

So it's absolutely vital that my constituents have not only access to cash, which was the original impetus of this, but when talking to the people that were coming along to hear about the banking hub in Glossop and in Buxton, their big thing was actually the access to face to face banking, that ability to be able to talk to somebody about savings, to be able to take hard copy documents for so many people to be able to talk through it, it makes such a massive difference.

I very much welcome that the minister is has announced the review into access to banking, and I really look forward to the outcome of that and what I would what I would really encourage is, is looking at changing the rules of which link apply, which is actually to move away from just access to cash, but access to face to face services, because that is what our communities and we've heard today in this debate, that is what our communities are really desperate for.
12:20
12:20
None Portrait Speaker 26
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Joining this debate today to speak about an appalling bank heist. It has happened not just in one town. It is happening in rural towns across the country. It is not a vault that is being raided and it is not cash that is being snatched. It's the very banking services that support our most vulnerable, that are being taken away. Too often, people's concerns about bank branch closures are misrepresented as issues of convenience, but they are about lives and livelihoods.

And I want to offer an anecdote or two to support that. Jacques and Jacqueline Barras from Honiton have an adult daughter who has significant learning difficulties, unable to remember her pin without prompting or conduct telephone banking without a parent present, she relies on in-person banking. Virtual services are too complex and leave vulnerable adults like her dangerously exposed to online scams. I have another constituent who had a miserable experience of using a banking hub. She is in her late 70s.

My resident wanted to pay her husband's care insurance with cash and was told when at her local Lloyds Bank branch that given they were closing, she would then have to use the Post Office. The post office said they couldn't make the payment and told her to ring Lloyds Bank. After using an automated system. She gave up. She went to a banking hub and there she was reduced to tears as the helper again tried to navigate her through the Lloyds Automated Service.

I have to pay tribute to the honourable member for South Devon for calling this debate, and the figures she set out are stark. 218 branches of Lloyds closing across the country, Seaton included last year, 95. In the next year Honiton will be included in that number, £6.7 billion of pre-tax profits. This is an outrage, and the government needs to do more than just set up an independent review into access to banking services.

It needs to make sure that the most vulnerable in our society get the services they need in rural regions.
12:23
None Portrait Speaker 13
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Thank you.
12:23
None Portrait Speaker 1
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Lesley College.
12:23
None Portrait Speaker 6
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It's a pleasure to serve under your chairmanship. Now, we all know there's been a marked decline in the number of bank branches across the whole of the UK over many decades. And the main message I want to get to the minister is that the response to bank closures, I think, has focused too much on access to cash. Important as that is, and not enough on the loss of the face to face services. And my constituents in Morecambe and Lunesdale know this all too well.

We've had bank closures in Sedbergh. NatWest branch closed down in Kirkby Lonsdale earlier this year, and it hadn't even been noticed that the ATM was closing, so it took far more effort than it should have done to make sure cash access was retained. But those face to face banking services offer a lifeline for vulnerable people. Protection against fraud and protection against digital exclusion. And there are some things that are simply too complex to do over the phone or through an app.

And we've had mentioned setting up powers of attorney, delegated authority, things like that. And anyone who's lost a partner or a parent knows the complexity of dealing with grief. And there might be a mortgage to deal with, money to transfer out of a joint account, bills to continue paying from the estate. And these processes are complicated and upsetting enough without having to keep explaining the situation over and over again to a different call centre member, or spending 20 minutes listening to hold music.

Sometimes people just need to sit down with a member of staff, and rural inequalities compound this problem. Of course, people are told to travel to another branch and if anyone's tried to get around, tried to get around Morecambe and Lunesdale on the bus, they will know how challenging that is. I'll happily give way.
12:24
12:25
12:25
12:26
None Portrait Speaker 1
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Charlotte Keen.
12:26
None Portrait Speaker 28
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Thank you, Mr. Pleasure, to serve under your chairmanship. And I congratulate the honourable member for South Devon for bringing this debate. A few years ago, when dad died, I was able to go with mum to our local bank branch to deal with all the issues that come from a bereavement, but subsequently Barclays have closed that branch in Ely and they've closed their branch in Newmarket, which means that my residents of Ely and East Cambs no longer have that facility available to them.

I'm grateful that Barclays has opened a hub in Ely, but that doesn't provide all the services that a bank used to provide. I have a lot of farmers in my constituency. They need a bank branch that understands their business, understands the ebb and flow of their cash flow. And in a summer like this, one understands the extra pressures that their business is under. We heard from one member that when he came back from Spain, he was able to deposit a check online.

Community groups can't do that because they have two signatories. They have to go to a bank or a post office to deposit the checks. I heard on Sunday from someone who'd gone in to pay some cash from his community group, and the post office had refused to take the Scottish notes. Many of my Scottish colleagues will have experienced that, no doubt. So, so so that's a problem as well. And as we've heard from everyone, link just looks at access to cash.

That is not the real problem anymore. The real problem is access to that wide range of banking services. I will.
12:28
12:28
12:29
None Portrait Speaker 30
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A pleasure to serve on your ship, and a big thank you to the Honourable Lady for South Devon for raising this debate as a member for Strangford. I'm growing increasingly concerned about the effects of bank closures on vulnerable individuals in our rural communities. And why is that? It's simply because of this face to face banking is much more about much more than simply convenience. It's a local bank. Branches have long been an important point of social contact, particularly for older people, those with disabilities and those who struggle with technology.

It's a safety for young people to get sound advice on savings, and it's a place that people learn and get to know the staff and build protection for themselves. So I must stress that online banking is simply not a straightforward substitute for an in-person service. Pure bank services may reduce footfall, as people have fewer reasons to visit town centres, and impact on the high street is clear, as the MP for Strangford are largely rural, consistently have had 11 banks have closed and I'm deeply concerned about what this means for my constituents.

For the older people in my constituency, a large proportion of whom rely on cash, the loss of bank local bank services will mean significantly longer journeys to access basic financial services. And the minister, I asked the minister that more must be done to ensure those in our rural communities who are not left behind and continue to have unfettered access to essential banking services. Unfortunately, the Ards Peninsula where I live, there is no longer a single permanent bank and only a very spotty internet services, but that must be reversed.

I'd also like to thank the Nationwide Building Society, because it's not all doom and gloom who have pledged to maintain all branches until 2030. My own local branch is an example of consumer led safe banking, and I believe that we must hold Main Street banks to a higher standard. The banks must do better. Rural constituents deserve the same service as city dwellers, and the rural inequality must be addressed from this House down. For my constituency of Strangford, we need to do more.

Minister. Thank you.
12:31
12:31
12:32
12:32
None Portrait Speaker 31
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I thank my hon. Friend for her intervention, and she makes a very good point, one which I wholeheartedly agree with. But in addition to small businesses thriving because they're not able to deposit their takings, transferring money between accounts, managing fraud or getting simple advice on opening a business account has such an impact on them in rural areas and for local charities, it can mean the difference between banking the proceeds of a coffee morning and not banking them at all.

It also demonstrates the impact of the rural premium that rural communities face when living their everyday lives. Now, my constituency of Glastonbury and Somerton has felt the full consequences of the decline. Many market towns have lost all banking facilities already, and next March the Lloyds branch in Street is due to close. Now, I've collected many signatures from concerned constituents who'll be impacted by this change, and I have urged Lloyds and I will continue to urge Lloyds to reconsider their decision.

Now, I recognise that a community banking hub is expected to begin visiting street from early 2027 2027, and I welcome that effort to maintain some local presence of banking services. But let's be clear a fortnightly visit from a community banker is not a substitute for a staffed bank branch. Now, of course, banking hubs and community bankers do have an important role to play, but they must be integrated as part of the conversation around banking services, not the government's answer to it.

Now, further in Wincanton, the Coventry Building Society branch will close in nine days time, leaving the town completely without any face to face banking services. Coventry Building Society have informed their members that they will be able to deposit their cash at their nearest branch in Frome, but that's nearly a 20 mile, 20 mile away, a 14 mile round trip, and it will undoubtedly impact both rural local residents and local businesses, who will now need to make alternative arrangements.

Yes.
12:34
12:34
None Portrait Speaker 31
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He makes a very good point, and I thank him for his intervention and for people wishing to access banking services in Wincanton. Now only the Post Office remains, despite the town seeing continued growth with more homes being built. Research from the Post Office has found that 82% of consumers find it important to be able to access at least one in-person banking service . The many small, local and independent businesses that make Wincanton the lovely market town that it is will undoubtedly be inconvenienced by this.

In a rural, rural county like Somerset, a significant number of businesses are SMEs, with 78% employing less than five people. As a countryside alliance outlined in their submission to the Treasury's Call to evidence on access banking services earlier this year, cash plays an important role across much of the rural economy. Business owners in rural areas are forced to travel further to bank their takings, deposit cash and obtain change, reducing their productivity, increasing fuel costs and adding administrative burden.

When already operating on tight margins. SMEs on average deposit cash two times per month, but rural businesses may now postpone cashing in until they have more deposit to avoid the additional travel. But this makes them more vulnerable to a growing rural crime epidemic. The total cost of rural crime has been estimated by the NFU mutual at £41.5 million in 2025, and we have seen increasingly sophisticated and organised gangs operating in rural areas, Mr. Wishart.

If rural economies are to thrive, it is vital that rural businesses aren't put at a disadvantage simply due to their location. This is why the Liberal Democrats in the other place have tabled an amendment to the Financial Services and Markets Bill that will require the Treasury to act to assess alternative frameworks, including the Post Office Banking Framework, in providing access to banking and cash services. Now, in many rural areas, the Post Office network has become a lifeline and is often the only local place to access cash withdrawals, deposits and make everyday banking transition transactions during the summer recess, I was delighted to support the reopening of two post offices in my constituency.

Henstridge recently opened after local residents Lesley and Andy Scard and their neighbours, Barry and Helen Howlett, worked tirelessly to re-open the much missed and much needed community shop and post office. And in Somerton, the long awaited Post Office has returned. Based inside the stationery House, after Malcolm Adams stepped up and refurbished part of his shop to accommodate the post Office. However, many local post offices are still under threat and we've seen closures in Butleigh and Charlton Adam recently.

Now, following last year's Green Paper, the government must continue and commit to rural proofing the Post Office and look to ways in which the Post Office can drive wider access to banking . As part of the Treasury's ongoing access to banking services review because without access , investment, without adequate investment to post offices, post offices cannot replace bank branches. So will the minister commit to properly rural proofing the Post Office network , so postmasters are adequately resourced to take on the increased demand for local banking, rather than being forced to absorb the cost when they are providing such a vital service.

Mr. Wishart. Liberal Democrats are supportive of the introduction of a Fair Banking Act in the UK to help tackle financial inclusion exclusion. We have committed to the introduction of a national financial inclusion strategy that requires both the Financial Conduct Authority and the Prudential Regulation Authority to have regard for financial inclusion, such as protecting access to cash in remote areas and supporting banking hubs. But of course, bank closures are compounded by a deeper problem of digital exclusion.

Across the country, 1.7 million households have no broadband or mobile internet at home. Around 2.4 million people cannot complete a single basic task online, such as opening an internet browser, and over 5 million employed adults cannot complete essential digital tasks at work, while basic digital skills are set to become the UK's largest skills gap by 2030. And with the cost of living still biting, up to a million people have cut back or cancelled their internet packages altogether in the past year, while banks are pushing them to access their services online.

So in rural Somerset, patchy mobile, mobile signal and frustratingly slow broadband are not just an inconvenience, they are the difference between banking and not banking at all. Older and disabled residents and those with visual impairments are too often advised to download an app as if that were an appropriate solution, but instead, obviously it simply causes a further barrier. So in conclusion, rural communities are not just. They're not asking for special treatment or to be treated differently.

They are asking for a fair formula so they are not left behind. Face to face banking, a functioning post office network. A reliable and reliable connectivity are not luxuries. They are part of the basic infrastructure of rural life. So will the minister commit to rural proofing banking policy and bringing forward the National Financial inclusion strategy that genuinely supports rural communities without further delay? Because unreliable access to face to face banking stymies economic growth and drives people and businesses out of rural communities.

Somerset cannot wait, and neither can rural Britain.
12:40
None Portrait Speaker 10
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Here.
12:40
12:40
None Portrait Speaker 32
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Thank you, Mr. Wisheart, and thank you for your leadership. And can I also welcome back the Economic Secretary to the Treasury, back to her job for the second time, which is a great pleasure to have her back. Much more importantly, can I congratulate the member for South Devon for securing this important debate and also for the the fact that the 25 backbenchers who contributed to this debate illustrates just how incredibly important this subject is to all of our constituents.

And what this also illustrates is, is that the nature of banking in the UK is is evolving, and it's evolving quite fast. According to data from finder, in 2006, just under 30% of adults use online banking or online or remote banking. In 2024, that had increased to 88% of adults. So it is simply the case that fewer people are using face to face banking services. But that does not mean we should get rid of branches altogether.

Many people, as we have heard, still rely on them. So what we need is to strike the right balance, and that is a balance that allows our banking system to evolve with changing consumer habits, but whilst also protecting those who rely on traditional banking services , such as vulnerable people and local businesses. But before I go further, I think it's valuable to provide some context to this debate. According to which 6871 bank branches have closed since 2015, that is, 69% of branches closed in that period, which has also found that 56 of our constituencies from Norwich north to Mid Bedfordshire are now without a single bank branch, 101 constituencies have just one bank branch left, and this is relevant to the honourable ladies, as her constituency of South Devon fits into this category.

With the recent closure of Lloyds Bank in Totnes and as she set out, her constituents have been significantly impacted by this. But the impact of that will be especially by vulnerable people and older constituents that she serves. In the increasingly digital world we live in, it is easy to forget that many people struggle to use technology, as we've heard, as the government's own statistics suggest, 1.2 million adults in the UK are deemed to be digitally excluded. And whilst this has decreased from 6.8 million in 2017, this is still a significant number of people that will find the digital alternatives difficult to navigate.

On that point, yes.
12:42
12:42
None Portrait Speaker 32
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My hon. Friend raises another argument about whether we get rural broadband, which is another big argument, which we can have. But I think it's worth making the point that about internet connectivity, which is the point I was just coming to. I know this is much of a pain for most MPs in other constituencies, as it is in Wyre Forest. And indeed, according to the Financial Lives Survey, in 2020, four, adults living in rural areas were disproportionately more likely to report having poor or no connectivity.

But we should also remember that many of our social of our local businesses rely on face to face banking services, too. As we've heard, according to the House of Commons Library, an average small business deposits cash twice a month, withdrawals cash once a month and gets a change for their cash registers once, also once a month. It's worth bearing in mind that typically we have about 3500 businesses in our constituency, so there are an awful lot of people who rely on this.

And for example, I remember in 2015 the impact that was felt when HSBC closed the last bank in Bewdley in my constituency. People were utterly dismayed, and the post office very happily stepped in to be able to resolve that. However, since then, we've now discovered the Post Office is under threat. We're working on it, but it illustrates the point that things are changing and they're changing very quickly. But there's a there's a more subtle outcome of a sharp reduction in bank branches.

The relationship between a bank and the local economy is being dramatically reduced. This has implications on our wider economy. Local branch branch managers living in a community, providing banking services for local businesses, and understanding local economic opportunities as well as pressures, are well placed to understand the commercial value of a loan application by a local business. This is important. An application for a business loan is usually something that business owners and managers want to get in place as fast as they can, but I understand that the reality is that application for smaller business loans are now taking an average of nine months to be approved.

This is not good for our local economies. And to be fair, banks need to lend money. Each loan creates a banking asset and they're in the business of lending money. Indeed, 95% of money in circulation is as a result of banks lending money into existence through fractional reserve banking, and it is in both our banks and our economies interest that they lend. But it takes too long. But if it takes too long, others will step in.

And this can be good, but it can be bad. Private debt is gaining traction alongside private equity. Meanwhile, the smaller end of the market, unregulated local loan sorry , unregulated loan notes are central to some recent mis selling issues. Now, these are not the fault of the banks themselves, but in the lack of local banking services opens doors to alternatives. Not all properly understood, not all properly risk assessed and not all regulated.

However we can. We also do have to recognise that banks are business. Now, I don't want to be an apologist for banks, but they do provide a very important service and they have to do it in a profitable way. They have to make commercial decisions and they have to consider the amount of footfall in their branches. The take up of digital banking. Yes.
12:45
12:46
None Portrait Speaker 32
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Well, so so look, as I say, I'm not I'm not about to be an apologist for banks. And I and I'm quite keen to make sure that we get a balanced argument, which is absolutely right. I mean, there's an awful lot of money, but it's all down to a question of what is the right and proportionate response to this. But as I say, I'm not disagreeing with her fundamental point, but it needs to be looked at slightly more complicated. As I say, they do need to look at whether I'll give you an example.

In my constituency, I went into a branch of Santander not so long ago. It was a Thursday. I was banking in check. I was the fourth customer that the bank teller had seen that week. The branch was closed the following week, but it was but it was utterly dismal. And this was in the centre of centre of Kidderminster. So there are issues on banks. And actually, should they necessarily be opening branches where where you get potentially 1 or 2 customers a week coming in.

So there is a balance to be struck. But if the branch, as I say, branch isn't viable, should they necessarily hold it open? But we do have to look at the other opportunities. And this is an incredibly important point. The last conservative government, as we've heard, recognised this and was committed to retaining vital banking services. That's why we provided the system of free and convenient access to banks through post office, branch network.

And that is why we introduced protections for access to cash, and that is why we established we enabled the development of banking hubs through the Financial Services and Markets Act 2023. So I'm glad that the government has continued the positive trajectory we set out, especially through their commitment to 350 new banking hubs by 2030. But I also welcome the Independent Access to Banking Services Review, chaired by Richard Lloyd. We will be certainly interested to see the outcomes of these recommendations, but would be grateful, very grateful if the Minister could give us a clue as to when we expect him to have him report.

If the government acts decisively, it could mean that we could get support to underserved communities in good time and mitigate the impact of bank branch closures. So I don't want to hold your patience much longer, Mr. Wisheart, so I'll bring my remarks to a close. But today's debate and previous dates on this subject have shown just how much members support banking branches, especially in rural areas. They've also emphasised how many of their constituents and local businesses still rely on those services.

And this is especially true in rural areas such as South Devon. So it is vital that the government steps up to support communities lacking adequate provisions of banking services. The publication of the Access to Banking Services Review will help identify the next steps, but many people will be frustrated that the government is undertaking another review and not necessarily taking action. As a previous prime minister said, people are impatient for change and when it comes to these issues, our constituents don't want to wait much longer.

Thank you, Mr. Wizard.
12:49
12:49
None Portrait Speaker 33
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Thank you very much indeed, Mr. Wishart. And it's a pleasure to serve with you in the chair. I'm very grateful to the honourable member for South Devon for securing this debate, and I want to recognise that the honourable member has been a very consistent advocate for these matters in her constituency. Now, I was going to make the point that access to banking attracts considerable interest from across this House, but I think I hardly need to say that, given the number of honourable members that have attended today.

Indeed, the number of honourable members that have raised, even with me personally, this issue, whilst I've been whilst I've been in this role and indeed have raised this as the honourable member for South Devon has done with the former Prime Minister at the despatch box recently, but I. I shall endeavour to respond to all the points. Chair that have been raised today. I am, I fear, under pressure to do so in a dynamic fashion.

Following the remarks of the honourable member for Beverley and Holderness, I will do. I will do my best, but I am particularly grateful to all those who've shared the practical and, in some cases, the very personal circumstances of some of their constituents. That's especially important. I recognise, as has been the subject matter of this debate in rural communities, where the loss of a branch can make everyday banking much harder. That, of course, was recognised by the honourable member for South Devon in her remarks, but also the honourable member for Clwyd West, the honourable member for Bury St Edmunds and Stowmarket, the honourable member for Morecambe and Lunesdale and the honourable member for North Norfolk as well, and plenty more, I should say, besides too many to name, I think it is right to acknowledge, as indeed many honourable members have done, that the way people Bank has changed very significantly in recent years.

Many customers now benefit from the convenience and the flexibility of online and mobile banking. For many people, these changes have made managing their finances easier, more convenient and also more accessible. However, and of course, it is a vitally important. However, whilst digital services work well for many customers, we recognise that many people still need to access banking services in person. That has been set out thoughtfully and as I said in some cases very movingly by honourable members today.

This of course, includes some members of our communities who are older people who may be more vulnerable, those who may face barriers to digital banking, not least because of connectivity. As the honourable member for South Shropshire has has has made that point. The honourable member for Chester South and Eddisbury made that point very well too. And indeed, of course, many small businesses who continue to rely on face to face support and cash services.

Chair. Around 3.3 million current account holders did not bank online or through a mobile app in 2024. That is a significant number 3.3 million now. Branch closes, as indeed has been detailed in this debate, can have a very significant impact on communities, especially where transport links are limited, even on a good run. As my as the honourable member for South Devon put it, and where towns provide essential services for a much wider rural area, that is exactly why access to banking services remains important.

And as a government, we are committed to ensuring that people who need in-person banking can continue to access essential services. Now, as the honourable member for Havant, who's no longer here , recognised, access to cash is protected by Fisma Fisma 2023. But access to banking services currently not now. That is why in May, the government announced an independent review into access to banking services chaired by Richard Lloyd. This review will assess whether changes in access to in-person banking services are causing detriment.

It will measure the scale or gather evidence, I should say, on the extent of that detriment, and indeed look into which groups are affected and which groups are most affected. So that review is honourable. Members, as honourable members know, has been gathering evidence from consumers, from businesses, from from charities, from community organisations, from local authorities, from industry right across the UK. And it will consider whether current arrangements are meeting the needs of customers and communities.

That includes banking hubs and includes other alternative banking services too. Now I know that many members, not least those present in this room today, would like to see very immediate answers to these questions. What I would urge honourable members to consider, though, is that it is important that future interventions in this space are based on robust data and evidence, and a clear understanding of where exactly problems exist and who is who is affected by those problems.

That is exactly why this review, which we have put in train as a government, matters. The review. I am not making a case for review. It's really important to recognise it is not a substitute for action. It is the evidence base that will enable the government to act in the right way. And as has already been recognised in this debate and this is, chair, very, very important. The Financial Services and Markets Bill, currently before the other place, includes a power that would allow the government to take action in future to protect access to banking services.

And together, the review and the bill will mean that the government can respond swiftly and can respond proportionately to the results and the evidence in the review, I will.
12:55
12:56
12:57
12:57
None Portrait Speaker 33
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I think it's really important that it is recognised that we are considering the entirety of the geography of the United Kingdom in in exactly the way that the honourable member would hope that we would. But the point he makes goes not only to access to cash, but also access to, to, to banking services, which, as I've said, it's important that the government is taking taking action in this in this area. But, chair, just to go back to the some of the services which are now available via banking hubs, because I think it's very important to recognise this.

Customers can now get help with not only account opening and changes of address complaints, powers of attorney, but things like bereavement support, concerns around fraud and scams, things which have been raised in this debate today and also help with digital banking as well, because we recognise an industry, recognises that sometimes it is not completely intuitive the way that these digital banking services can be used and some people may need assistance in in using them. And many hubs are also piloting further improvements, including Saturday opening hours and customer liaison officers as well.

Now, chair, a number of honourable members have raised concerns about how decisions are made on the existing legislation, about where banking hubs are and indeed, where the current arrangements adequately, adequately reflect the circumstances of rural communities in particular. Now, as honourable members know, decisions regarding the location of banking hubs. They are made independently by link following that access to cash assessment and, as has been covered, link assess a range of criteria, a range of factors including population size, vulnerability, transport, transport links, local retail environment and post office facilities to.

Now I know that there is real strength of feeling, as we've said across this House, about how those criteria are applied and wider consideration of access to face to face banking services beyond access to cash alone.
13:00
13:01
13:02
13:03
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13:04
13:04
None Portrait Speaker 15
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Will the honourable.
13:04
None Portrait Speaker 14
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Lady give way?
13:04
None Portrait Speaker 27
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Yes, I will give way.
13:04
13:05
13:06
13:06
None Portrait Speaker 27
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I will give way.
13:06
13:07
13:08
13:09
13:10
None Portrait Speaker 28
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On that point.
13:10
None Portrait Speaker 27
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I will give way.
13:10
13:11
13:11
13:12
None Portrait Speaker 38
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I thank my honourable.
13:12
13:13
None Portrait Speaker 13
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The Honourable. Lady
13:13
None Portrait Speaker 5
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give way.
13:13
None Portrait Speaker 27
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I will give way. Can
13:13
13:13
None Portrait Speaker 27
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Yeah, I thank I thank my hon. Friend for that important intervention. I do agree with him entirely. This is about looking forward and investing in the future. The proposed expansion of bulb and the construction of XL z D shows that independent analysis by Arup, it would bring approximately £587 million to the UK economy through creating skilled jobs, increasing supply chains in advanced manufacturing and attracting scientific investment into the region, as well as plans for a visitors centre to showcase the North East.

Remarkable contribution to our understanding of the universe, which could attract hundreds of thousands of visitors annually. So despite the government increasing spending on R&D, I would be grateful if the minister could address a couple of questions in her response. Firstly, why is the facility in the North East facing more than double the cuts faced by those in the South? Will she set out how the department, Yukari and the Stfc assessed the relative value of investment in fundamental physics against other areas of research and development, and will she publish.

The evidence underpinning those decisions? Also, has the Minister undertaken a look at the cumulative impact of these cuts on physics as a discipline in the United Kingdom? And turning specifically to bulb, please, can the Minister explain how the government has assessed the laboratory's unique strategic position, what weight has been given to the projected economic impact of the expansion of Bulb Lab? And finally, on XL z d itself, will the Minister explicitly restate the government's interest and support in the X, z d project, a project of such international stature, it could deliver the discovery of dark matter something worthy of a Nobel Prize? Mr.

Wishart, I appreciate I've asked the minister a lot of questions, but I can assure my honourable friend that they pale in comparison to the number of questions physicists ask themselves every day. Science facilities such as Boulby are places where discoveries are made, where young people are inspired, where international partnerships are forged, and where the foundations of future industries are laid. With regards to XL, z d at Boulby, we have a once in a lifetime opportunity for the UK to make one of the biggest discoveries of our age in the search for dark matter, it offers transformational economic opportunity for the North East, strengthens our industrial strategy, our skills base and our reputation on the world stage.

I therefore urge the Minister to recognise the exceptional national value of Bulb Underground Laboratory and other UK science facilities and laboratories, and to ensure that Britain remains at the forefront of scientific discovery for decades to come.
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Thank you.
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The Minister give way.
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Of course.
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None Portrait Speaker 15
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I thank my hon. Friend for that important intervention and for his work in this area. I hear his reflections and his desire to see that longer term certainty. And again, we'll feed that back to the minister and, of course, to the Department, because the benefits of the investment that we can make absolutely will be felt right across the UK. Building on that previous funding that I've mentioned, and particularly for the relevance of this debate in the Yorkshire and Humber, and as a Yorkshire MP, the UK is £580 million.

Investment in 2020 324 was significant and I completely agree with my hon. Friend for Scarborough and Whitby that when we think about the science facilities, such as the long list that she mentioned and the really, really vital ones, Boulby diamond, ISIS and Jodrell Bank, which we've touched on, are not merely items on that balance sheet. And I really agree with her. They absolutely are national assets and particularly for Boulby is is unique in that respect.

It is the UK's deepest underground science facility, located more than a kilometre beneath North Yorkshire in a working mine. Its depth and the surrounding salt rock mean it is shielded from radiation, enabling world leading research in areas including dark matter and quantum technologies. And I hope to answer many of her questions throughout my speech and on research infrastructure. Our science and research ecosystem has many important research infrastructures such as this. The UK's science and technology successes are built not only on researchers making those groundbreaking discoveries or engineers developing new technologies, but on those world class R&D facilities and capabilities, the essential tools our research communities use every day, the facilities that allow us to explore the building blocks of matter, the computing systems that allow scientists to turn raw data into models of the universe, or treatments for disease, and the international collaborations to that enable us to tackle grand scientific challenges that no country can solve alone.

And it is this research infrastructure that makes UK's R&D achievements possible. These facilities are not only tools for researchers and industry, but they are also national assets, as I mentioned, and that landscape is changing rapidly. Facilities are becoming more connected and more data intensive than ever before. Researchers are increasingly collaborating across borders. The most powerful scientific instruments are often of a scale, cost and geographical reach beyond the capacity of any one nation to deliver a loan.

But to ensure that our research facilities are ready for tomorrow, we must lay the groundwork today by supporting the facilities that allow researchers and innovators to produce the most insightful and impactful research. So I'll very briefly just highlight some of the examples of the impact our facilities make to our understanding of science and the lives of people across the UK. At Harwell in Oxfordshire, the diamond Light source, as we've heard from colleagues, is the UK's National synchrotron, currently undergoing a £500 million upgrade.

Diamond generates intense beams of X-rays, allowing research to examine materials in extraordinary detail. This enables discovery and innovation in fields ranging from medicines and battery technology to advanced manufacturing and aerospace, including for companies like Rolls-Royce. We're also a leading partner in major international facilities, sharing the costs and benefits in scientific endeavors that no country, as I've said, could undertake alone includes. Two our investment and the commitment that we have as a government to this sector.

The Square Kilometre Array Observatory, headquartered in the UK at Jodrell Bank that I will come to in just a second. But we are investing more than £300 million over ten years to build the world's largest radio telescope, enabling scientists to study the cosmos with unparalleled sensitivity from the first stars and galaxies to signs of life beyond earth.
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None Portrait Speaker 34
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Of course, that would be a pleasure and an honor to do so. And I really want to reiterate that Bowlby will remain an internationally significant research facility and will continue to support a range of world leading underground science and provide that highly skilled employment in the region with the potential to play an even larger role in the UK's scientific future. We've mentioned around the challenges towards the operational budget at Bowlby, and my hon. Friend highlighted those in her opening speech.

Ukri has also announced funding that will sustain the UK's continuing engagement in the international Excel Z dark matter experiment, which I know she also mentioned. Beyond the current £7.8 million Infrastructure Fund grant, which ends in 2027. But Bowlby will remain well placed to pursue future funding opportunities alongside its outstanding significant work. And I thank colleagues again for being here today in the gallery to support the debate. I want to offer those reassurances that Ukri and Stfc are engaging directly with facilities, laboratories, partners, staff and trade unions throughout the implementation of the saving plan.

As I know, my hon. Friend mentioned including any potential workforce implications. But to be clear, no staff exits are expected this financial year and formal processes will follow where needed. The UK has an extraordinary scientific heritage, but our task today is not merely to celebrate past achievements, but to ensure that the next generation of discoveries and the innovations they will enable happen here too. The government will achieve this goal not just through record investment in public R&D, but through responsible stewardship of our national assets.

That international cooperation, and also taking the difficult decisions necessary to ensure that we have a portfolio of research facilities that are fit for the future. Because the future of British science will depend not only on the brilliance of our researchers, but on the strength of the infrastructure that supports them. I thank all colleagues for being here today to support this debate.
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None Portrait Speaker 1
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The question is that the House has considered the future of science facilities and laboratories. As many as that opinion say aye of the contrary. No. I think the ayes have it. The ayes have it. Order, order! Before turning to today's topic for debate, can I congratulate my right hon. Friend the member for Northampton North on her reappointment as Economic Secretary to the Treasury, her first spell.

She was a formidable advocate for UK financial and professional services, and so I think we are all very fortunate that we have her back for a second act and I wish her well in in the time ahead. Today, Mr. Twigg, I want to make a positive case for the future of the UK's financial services sector and why it should lie at the very heart of the UK's. This government's strategy for backing Britain's wealth creators.

Standing behind the entrepreneur with a bright idea and making sure that we channel capital toward the innovators and builders who will drive growth in every part of this country, while also ensuring that the sector provides people with the tools, wherever they live and whatever their circumstances, to participate fully in a modern economy and a modern society through a bank account that works, and that they can access savings and investments that build real financial security and insurance that protects families, homes and businesses.

When life throws its inevitable curveballs at them. With financial and professional services employing around 1 in 13 workers across the UK, two thirds of them outside of London. This is no longer a niche interest in the UK or even a City of London story alone. It is a genuine national endeavour. Now, when I meet people across the Buckingham and Bletchley constituency that I represent here in Parliament, from the small business owners to the families, or that I meet on the doorstep, or to the staff at Bank or Santander UK, both of whom have their headquarters in Milton Keynes serving customers the length and breadth of Britain.

I see the same thing, a national industry built for all of us. And so in the time available, I want to set out five challenges opportunities facing the sectors in the years ahead. First, the need to go even further in mobilising a greater share of domestic capital toward toward domestic assets, in particular, high growth businesses, especially those aligned with the industrial strategy eight sectors and infrastructure. I welcome the former Chancellor's Mansion House speech in July, and the progress that this government has made against the Financial Services Growth and Competitiveness Strategy, one year after its publication and building on the progress made by its predecessor government.

And we've seen £28 billion of equity capital raised in London since the start of last year. A pension schemes Act passed in the last parliamentary session, which is expected to deliver an additional £29,000 in pension savings over an average career, and eight firms now authorised to provide targeted support to savers , benefiting around 18 million consumers. Our constituents over the coming decade. This is welcome progress in turning the overly cautious British saver into the responsible investor, but I believe that we can go and must go even further in unlocking our largest pools of pension, insurance and retail capital.

Now, when we were debating the Pension Schemes Act earlier this year, the case against mandating UK investment rested on two grounds. First, the principle that government shouldn't tell institutions or individuals where and how to invest, and secondly, that if a UK investments were good enough, then funds would already be backing them. Yet what I think this argument missed is the trend towards passive global indexing that we've seen over the last few decades, which has mechanically reduced UK allocations to around 4%, regardless of the underlying fundamentals.

And I suspect without further intervention trend, that will see declining even further in the years ahead. And this risks creating a self-reinforcing cycle of declining investment in British companies by funds, regardless of where they're domiciled, depriving UK plc of domestic patient capital, which will ultimately weaken our public equity markets and the strength of the London Stock Exchange. I would encourage the government to look again in light of this, at how it can actively incentivise our largest pools of domestic capital.

For instance, we could build on the Pension Schemes Act. We could, by requiring default pension funds to adopt a UK weighted approach to listed equity, the UK equities making up, say, 20 to 25% of listed holdings in order for them to continue enjoying the various tax reliefs on offer, but giving funds and individual savers full agency to opt out. This could, according to the new financial think tank, unlock as much as £75 billion of additional investment into UK companies.

And I'm aware that that's an idea that's held by a number of right, honourable and honourable members in this House and also by members of the House of Lords. We could also scale up the British Business Banks British Growth Partnership towards the scale that France is. TB initiative has, while giving the British Business Bank and the National Wealth Fund complementary mandates to crowding capital for the larger funding rounds and supporting supporting UK scale ups, something that the right hon.

Friend the Prime Minister has just mentioned in his statement in the House of Commons chamber, with the British Business Bank focusing on scale up companies and serious B2C and the National Wealth Fund acting as a direct investor in later stage companies. And finally, we should maintain our focus on unlocking some some proportion of the £600 billion of retail capital currently held in cash ISAs or other savings accounts. And with the right mix of financial education, a simpler Isa product framework, tax incentives and crucially accessible investment research, we can ease access to capital for growing domestic companies while also enabling British people to own a greater share in our economic and our economy's future success.

I will happily give way.
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None Portrait Speaker 1
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Thank you, Mr. Twigg. I thank the honourable gentleman for his intervention. I will have to confess I haven't read the opposition party's full, full recommendations in this regard. I think the government is clear that the Financial Ombudsman does need reform and it's not working for the sector itself, for consumers and for the UK's international competitiveness. I think anyway, be it through through the proposals that the opposition party may put forward or indeed that the government is considering through the Financial Services and Markets Bill, that will, I think, be debated in the House of Commons chamber in October, then I would very much support that and recognise that the downsides that he's that he's identified in his in his intervention.

So I thank him for that. With regards to retail capital, I know the Economic Secretary will know my views already, and I really think this is an excellent opportunity in the months ahead and certainly in the run up to the budget in October, for the UK to establish a long term retail investment strategy, which is co-designed by industry, by government, civil society and regulators as a the best mechanism to realise the full potential of UK investors savings.

The second challenge that I want to turn to lies in how we manage artificial intelligence, which I became very familiar with when I was parliamentary private Secretary at the at Dcit and the broader digital revolution in financial services. Distributed ledger technology, or DLT for short and tokenization, have an ever increasing influence on the international financial ecosystem. The UK should be continuing to act as a leader, a global leader and embrace that change now so that regulators, industry investors and consumers alike can benefit from lower costs, wider access to capital and deliver a more efficient industry and a more and enjoy the benefits of more productive investment.

But that does require, at the same time, us to fully build the infrastructure, the regulatory framework and the market confidence that allows innovators to scale safely and responsibly. And I welcomed Chris Woollard's first report as the UK's wholesale digital markets champion. I think his report was an important marked an important step in delivering the government's wholesale financial markets digital strategy. But we now need to shift up a gear, and I would focus on two immediate priorities.

First, the government should publish a clear roadmap for DLT enabled capital markets. The market, the UK financial markets and global financial markets more broadly needs certainty about the sequence of reforms. The regulatory framework that the UK proposes to put forward, and also how new infrastructure will connect with the systems that are already in use by market participants. And second, we should use digital, the digital gilt, to build momentum across the market by setting a clear timetable for regular benchmark scale digital sovereign bond issuance, so that we are properly mainstreaming UK government debt in the financial market system.

On artificial intelligence. It is right as it is across the economy and across society, that AI will transform and can transform productivity, investment management, fraud detection and customer service. But at the same time, with those opportunities , there also bring new and unfamiliar risks from automated decision making that lead to unintended consequences, cyber attacks by belligerent forces, and operational disruption due to a greater dependence by industry on a smaller number of technology providers.

It was with that in mind that I was proud in May to partner with community trade union, which I should. I should disclose that I'm a member of to launch its responsible AI charter for financial services, with Zurich as its first signatory in May, setting out the practical principles for ensuring that AI is adopted responsibly, transparently, transparently and with people at the very heart of its deployment. I would also note that the Bank of England's recent work makes clear how quickly the risks lie.

I just identified are growing and I think that is why we must maintain urgent momentum on implementing the financial services AI adoption plan. The third challenge that I want to address very briefly concerns the clean energy transition. I won't discuss the benefits or otherwise of which energy sources we may like to to prioritise, but in my view, net zero cannot be delivered by public investment alone, however committed and rightly so, the government is to that mission.

Long term patient private capital has a crucial role to play to in supporting tomorrow's energy infrastructure from onshore and offshore wind and grid upgrades to next generation nuclear power. But in order for this capital to be committed effectively, I would welcome an annual published pipeline of investable clean energy projects that firms and asset owners alike can plan and deploy investment at scale and pace. That our net zero commitments demand. Of course, Edward McCarthy.
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Madam,
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Sir, I thank my hon.
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Anderson.
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Thank you, Mr. Speaker. I couldn't agree more with my hon. Friend. His intervention. He has been a since entering Parliament in 2004. He's been a leading voice in Parliament for the role that co-operatives and mutuals can play in the broader ecosystem for UK financial services, and he will know very well that this government is committed to doubling the size of the co-operative and mutual sector, and I think financial services should play a big role in helping us deliver on that agenda.

I started my career working to support the development of credit unions and and cdfis community development finance institutions, which as many of the similar economic and social objectives of building societies, the cops, mutuals and. They have a. My, my conviction is just as strong as it was 15 years ago that they have a really important role not to replace or be or be a substitute for mainstream mainstream high street banks, but to be part of that integrated financial ecosystem that he that he suggests that he explained.

And I know that I think the UK has a lot to learn from other countries such as Germany, Canada and Australia, about how we best do that in a in a sustainable, in a sustainable way. But I think the government already has quite a strong record to be proud of from last November's financial inclusion strategy to the commitment to rolling out 350 banking hubs across the UK. And I know my own constituents in Buckingham and the surrounding rural communities very much value ours greatly, which was opened just before I was elected in 2024 and expanding the reach of the Help to Save scheme to over 3 million people through Universal Credit .

On the financial inclusion strategy specifically, while it is no doubt a thoughtful and incredibly considered well-considered strategy, I would encourage the government to go even further and prepare clear, measurable performance indicators against all six pillars of that strategy, be it so we can see in a year or in five years how far the UK has advanced in in progressing and making UK financially more inclusive or otherwise, so that the government, industry, regulators and civil society can best identify where the barriers to inclusion continue to lie.

And fifth, and finally, because I'm very conscious that I've spoken for almost 20 minutes, is on skills, skills gaps within the financial services sector. Specifically, if left unaddressed, not only threatens the sector's productivity and the future global competitiveness of the sector, but also its collective ability. Most importantly, I think, to innovate, grow and best serve our constituents who are ultimately the customers of these companies. And I commend the Financial Services Skills Compact, which I understand that my latest research is now signed up by more than 20 firms covering over a quarter of a million employees.

But while industry led initiatives like these are crucial and important and valuable, the government has an essential role to play as well. And I think two things would strengthen that quite essential private public partnership. First, government can be much more ambitious in using the flexibility of the growth and skills levy to fund dedicated conversion pathways into financial services for adults outside of London, perhaps matched by employer funded bootcamps in our regional clusters be that Bournemouth, Edinburgh, Leeds or Belfast, the talent pipeline should grow where the jobs are already existing and already growing, and second, government and industry, through the Financial Services Skills Commission, should build a shared live map of regional skills of regional skills gaps that would allow apprenticeship places, training, investment and further education or further education funding to target the specific shortages that each region faces, rather than relying on a slightly arbitrary national formula that takes no account of where the sector actually needs people.

So, Mr. Twigg, those are just a few of my summer observations on the future of UK financial services. But the underlying driver and the rationale for them is, is ultimately the same. It starts from a familiar place that the UK already has a lot of the ingredients that allow it to be a global leader. In so many parts of financial services, but if we are to stay ahead of the great other great global financial centres, be that New York, Frankfurt, Singapore or Hong Kong, we do need government and and Parliament working together with industry to provide the right regulatory framework, the spirit of innovation and commitment to making our constituents money work better for them so that the financial services sector itself can then further strengthen the UK's economic, energy, industrial and national security and sovereignty.

So I very much look forward to the contributions from across the House this afternoon. And of course, I'll be happy to meet the Economic Secretary later this autumn to discuss any of the points that I've raised, if that would be helpful to.
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None Portrait Speaker 4
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The question is that this House has considered the future of UK financial services. Sir Jeremy Hunt, thank you. It's a pleasure to speak under your chairmanship, Mr. Twigg and I speak today as chairman of the Financial Services All party group, and I refer honourable members to my entry in the Register of Interests, where I accept speaking engagements from financial services companies. I want to thank the honourable member for Buckingham and Bletchley for not just for securing this debate, but also for an excellent opening speech.

He has a background in the city in in the Stock exchange and working for the City of London Corporation, which I think is probably unusual in his own party. And I actually want to thank him for deploying the expertise that he has, because it's incredibly important for UK financial services that the world sees that there are experts in financial services on all sides of the House. So I particularly welcome his comments today. I want to welcome the Economic Secretary to the Treasury back to her role that she did previously with great distinction, and she has always engaged extremely constructively when it comes to the interests of the city and financial services.

So I know her return to that post was was widely welcomed. And also, it's a pleasure to be speaking alongside my honourable and old friend from Wyre Forest, who himself has a background in the London Stock Exchange. After the financial crisis in 2008, Mr. Twigg Financial Services had a pretty bad name. The government had to put up around £1 trillion to support the sector. Chief executives of banks made very ill judged decisions to continue paying themselves large bonuses at a time when the rest of the country was suffering and the country did suffer a longer and deeper recession at that time as a result of our exposure to the financial services sector, which is much greater than our peers.

And so we learned many painful lessons in that period, as well as the financial crisis. The sector also had to deal with the loss of passporting rights that happened post-Brexit. And yet, despite those body blows, this sector employs 2.5 million people. That's actually more than at the time of Brexit. And two thirds of the jobs are outside London. It's worth around 11% of our national output. It generates more than £110 billion in tax revenues, which is more than any other single sector.

Put another way, it funds more than half the cost of running the NHS. So whatever your interest in financial services, from a fiscal perspective alone, it simply cannot be ignored. And it is also thriving today in very challenging circumstances. The city think tank Z yen tracks the competitiveness of global financial service hubs. In 2020, London trailed New York. Now it has caught back up.

It remains the world's premier centre for foreign exchange and specialist insurance. It helps make the UK the world's second largest services exporter. And when I was chancellor, I introduced the Edinburgh and Mansion House reforms to support this really important sector. Regulations, including listing rules, have been simplified and the mighty task of making our pension fund industry fit for purpose was started. This government, to its credit, has built on those reforms with the Leeds reforms, the Pension Schemes Act and the forthcoming Financial Services and Markets Bill.

All of which is extremely welcome. But as the honourable member for Buckingham and Bletchley said, other competitors are not standing still and with smart policies, our financial services sector could do even more for growth in the UK. Easy access to finance alongside having the most respected universities in the world outside the United States, has helped create, for example, the world's third largest tech ecosystem in the center of artificial intelligence. The UK has the potential to be the world's next Silicon Valley, and if we get there, easy access to finance will play a major role in making that possible.

So what needs to happen next? The first thing is to do no harm, in particular, to do no harm with additional taxes in October's budget that could potentially damage the sector. Uniquely, the UK already charges higher corporation tax to banks. Total bank taxes are around 45% here, compared to 32% in Dublin and 28% in New York. Now I totally understand the temptation. Finances are extremely tight and the banks have few friends, but international capital is mobile.

Hiking taxes further will mean the sector ultimately generates less tax revenue, not more for the Chancellor. The second thing we need to do is to make regulation in UK financial services more proportionate. Consumer protection really matters, but you can't eliminate all risk, which is what sometimes our regulators appear to be trying to do. Compliance now costs the sector over £39 billion a year, around 13% of operating costs. We should aim to at least halve that using the new international competitiveness and growth objectives, which should be applied by the FCA to authorisation, supervision or enforcement decisions.

The third, as the. Yes. Very happy to give way to the Honourable Cathy.
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None Portrait Speaker 4
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Well, can I put on record my thanks to the honourable lady for her role in helping to salvage Barings, which which was something I didn't know before. And actually, I think she is absolutely right to raise that issue. I think there's no doubt, and I don't say this in any party political way, because I think my party pretty much supported it at the time. But in the run up to the financial crisis, regulation was not as tight as it needed to be.

And that was one of the reasons why we ended up having such an expensive rescue missions for the banks, which we had to do. And I think since then, regulation has made UK financial services sector much more secure. I think that the PRA and the sector as a whole is very resilient, and I remember at the most my most difficult moments as Chancellor, one of the most reassuring things that happened was that governor of the Bank of England said to me, this sector is solid.

You don't have to worry. We are in a much, much better state than we were in 2008. But I do think it's gone slightly too far in the other direction. Sometimes you can overcorrect and particularly when it comes to consumer risk, there is a danger. Actually, you end up restricting consumer choice because you are being overly restrictive in the products that banks can offer and financial services companies can offer. So it's this is not to say that we want a free for all, but it is just to say that in terms of competitiveness, we need to keep a weather eye on the relative burdens of our own regulatory regime compared to those in other places.

I want to echo what the honourable gentleman said about AI tokenization and digital identity, because the UK legal system is widely respected and this is actually an area where good regulation can attract a lot of investment, we really could be leaders in this area. London should be the world's most trusted centre for tokenized wholesale finance, with clear rules for tokenized securities, custody, settlement, digital money and market infrastructure. We also need to speed up the consolidation of the pension industry, not least as the honourable gentleman said, to encourage more investment in UK infrastructure, UK equities, UK tech start ups where the returns for pensioners, if it's done in a sensible, controlled way as part of a balanced investment strategy, would be much higher than they currently are and that would start to stem the tide of British unicorns, of whom we have more than Tokyo, Paris and Berlin put together, but who invariably at the moment tend to go to New York when they want to IPO rather than doing it in the UK.

The fifth thing we could do is to encourage more saving. If we're going to really transform the way this country grows, we need to have an investment led growth strategy, not just a consumption led growth strategy and copying. Although it's painful for me to say this, copying the Aussies in terms of their pension system so that we scrap this crazy system where you have multiple pension pots for every job that you do, and doing what they do in Australia, where you have one pension pot that follows you around for your whole life, but with the freedom to change the pension provider whenever you want to, that would make saving much simpler.

It would mean you could go into an app on your phone, and you could immediately see the value of your pension pot, and it would encourage people to top up their pension pots if they're able to, because of an inheritance or whatever. And the impact of doing that in Australia has been that there are many. They save more, they get better returns, and there is much fiercer competition to attract those savings in the domestic pension fund industry.

And finally, and I know I'm speaking everyone here today will agree with this, but I think it needs to be said that it is imperative, whatever the pressures, to keep Britain open to the world, our advantage has always been our openness. We're at our strongest when we connect global capital, trusted law, deep markets and world class professional services all together. And that means the painful, often boring but absolutely vital work of negotiating trade deals, securing digital market access, agreeing mutual recognition deals and making sure we have proper mobility for talent.

I am really grateful for the Minister for coming today, and I would just ask her, in her response to briefly address the following questions. First of all, when he is considering measures for the budget, will the Chancellor keep the competitiveness of the city and financial services central to his considerations? Will the government undertake a review of the UK's international tax competitiveness, particularly when it comes to financial services? Will she set out some specific steps the FCA and PRA can take to deliver their competitiveness and growth objectives? What further reforms will the government bring forward to help London become the world's leading centre for tokenized finance? What progress has been made in further unlocking pension fund investment into productive UK assets? What further action will the government take to improve access to finance for SMEs and scale ups, which has been a particular issue in the period since the financial crisis? And finally, does the Minister agree that maintaining the UK's position as a leading global financial centre should be treated as a core element of the UK's growth strategy? Because the prize, if it is, is absolutely enormous, city UK say that we could add £53 billion to our additional annual output by 2035.

That's the entire output of the life sciences sector. It would generate about £22 billion of extra tax revenues around the entire budget for the police or for the Department of Transport. So the opportunity is huge. The question is whether we have the political will to get there by going further and faster.
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None Portrait Speaker 6
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Thank you. It's a pleasure to serve under your chair, Mr. Twigg, and I want to congratulate my friend, the member for Buckingham and Bletchley for securing this important debate today. He is a distinguished advocate for the financial services sector, and I want to reiterate the points which he made around unlocking cash on deposit in ISAs and making it work harder for savers, but also for British businesses. That was a challenge the previous Chancellor of the Exchequer was keen to support, and one I want to stress again as we look to this autumn's budget now, my contribution today will make a slightly different point from that of my hon.

Friend, before entering this House, I also spent my career in financial services, first for a brief stint in commercial banking and then for a long time as a specialist tackling financial crime. I saw first hand both the strengths of our world leading financial sector and the vulnerabilities that can be exploited by those seeking to abuse them. And that experience taught me a simple lesson, that the future of financial services in this country has to be a clean one, a successful city, a successful financial services sector that works for everyone up and down the length of this country, and ultimately, a successful British economy, is not built on turning a blind eye to dirty money.

It is built on trust, on transparency and on integrity. And as chair of the Appg on Anti-Corruption and responsible Tax, I regularly engage with UK finance, the City of London compliance professionals and senior representatives from across financial services. The message I hear repeatedly is that businesses do not want weaker regulation. They want smarter regulation, a point alluded to by the right hon. Member for Godalming and Ash in his contribution just before me, that should mean regulation, which works to prevent bad faith actors, which maintains the integrity of our economy, and one which investors and competitors from further afield look to us with envy.

A secure financial system is inherently more investable. Investors seek certainty. They seek strong institutions. They seek robust enforcement of the rule of law. And this Labour government has made significant strides building yes on the platform provided by the 2023 Economic Crime and Corporate Transparency Act. So it would be remiss of me not to thank the government for the publication of its anti corruption and fraud strategies over the last 12 months, and I welcome the Treasury's move to consolidate the fragmented , anti-money laundering professional body supervisors under the FCA via the forthcoming Financial Services and Markets Bill.

However, to really capitalise on the opportunities available, I'd like the government to commit to two core deliverables as part of its wider approach to economic crime one better regulatory enforcement and two better transparency on enforcement. The FCA will need to be adequately supported to fulfil its new regulatory obligations. Now, the reality is that enforcement pays itself many times over across the wider landscape. Indeed, HMRC compliance work has generated around £22 for every £1 spent on compliance staff.

These are extraordinary returns on investment and we should view spending on economic crime enforcement not as a cost but as an investment in Britain's prosperity and security. Now, of course, we are in a difficult period for the public finances, which is why we should look carefully at how financial penalties themselves are used for firms which don't abide by the rules. Between 2016 and 2015, the FCA secured more than £1 billion in regulatory and criminal fines.

Yet significant sums are ultimately returned through rebate mechanisms, rather than being used to strengthen the enforcement capabilities that generated those penalties in the first place. And so there is a strong case for allowing the FCA to retain a greater proportion of anti-money laundering fines to meet its enforcement costs, particularly as it takes on significant new supervisory responsibilities. So I would like to welcome the Economic Secretary to the Treasury to her place. She knows I'm a long term advocate for establishing an economic crime fighting fund, allowing a proportion of enforcement receipts to be reinvested into the agencies responsible for protecting our financial system.

The financial sector itself rightly pays its way via the economic crime levy. So what about the criminals? Let's make them pay two. At present, billions of pounds have been raised through economic crime, fines and enforcement activity. Yet frontline agencies continue to face resource pressures. A sustainable, multiyear funding model would allow the likes of the FCA, the National Crime Agency or the SFO to further invest in specialist expertise to build capability and plan strategically for the long term.

Indeed, the Financial Action Task Force are already in town ahead of next year's mutual evaluation review, where they'll be marking the UK's homework on enforcement against economic crime. So I'd welcome the Minister's initial reflections on whether existing schemes like the Asset Recovery Incentivisation scheme are performing as hoped, and whether we might expect to see some reform to police funding in the forthcoming economic crime plan. I appreciate that might not all fall squarely within the minister's brief, but I know she has taken a keen interest in these matters previously, and has a strong grasp of the cross-cutting nature of these issues across Whitehall.

Now, on the second point, that of transparency, equitable growth, clean growth can be achieved by reducing the compliance costs faced by legitimate firms, freeing up capital which could be more productively invested elsewhere. A major reason for those costs is the continued difficulty of identifying the true owners of companies hidden behind opaque offshore structures, as I saw first hand in my previous career. That's why I've long argued that the UK's overseas territories must finally implement meaningful and accessible public registers of beneficial ownership, as we have in this country via companies House.

Every hour spent by compliance teams, untangling complex offshore ownership chains is an hour not spent supporting customers, financing businesses or driving growth. Every duplicated check increases costs for legitimate firms while benefiting those who rely upon secrecy. Public registers of beneficial ownership would make KYC checks faster, cheaper and more accurate. They would reduce duplication, lower compliance costs and strengthen confidence in our financial system. That would help ensure that honest firms are not left carrying the burden created by hidden ownership structures and dirty money.

Now, I won't relitigate past debates on this issue, but I do want to place on record, once again my wholehearted desire to see all British overseas territories, particularly the Cayman and British Virgin Islands, finally fulfil long made promises by throwing open their books. Dirty money is not just a financial crime problem, it's a threat to economic growth. It distorts markets. It undermines trust, it damages fair competition, and it weakens our institutions. I want a future for financial services sector that is competitive because it is trusted, successful because it is transparent and prosperous because it's clean.

And I will do everything in my power to support this government to achieve that objective.
17:11
None Portrait Speaker 2
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Thank you, chair, and thank you to the member for Buckingham. Bletchley, not only for bringing this debate, but bringing this great experience to it. And I hope to build on his comments about encouraging the government to build the momentum of the pension reforms that they've recently introduced. The UK investment system holds 6 trillion worth of investable capital, mostly via pensions and life insurance schemes, and so there can be no doubt at all that the financial services sector will be key to to growth when it returns to this country properly.

But access to that same capital I just described has become a problem. We hear it all the time from businesses, and so that can only be a systemic failure. And central to this problem is the UK's allocation of its pension funds, which has collapsed. It's been noted already, but from levels of around 50% back in the 90s to around an average of just 4% now. And some of that is explainable, right? Some of that is inevitable.

As capital markets went global and people diversified their portfolios, we was always going to see a decline from those heights of around 50%. But the UK sits below the global average of allocation. Around 13% is the global average, whilst we're at 4%. And so the UK does have a specific problem that it needs to address. And we have to ask us how do we how do we get here? And I think the root of it is a certain naivety in the way that we've applied laissez faire economics.

Now, as a liberal, I support free and open trade with the world, but with a very narrow interpretation of what free and open has meant. I think we've marginalised the state's role. We've removed it from the role of shaping the conditions for UK businesses to thrive to the periphery. And we've been so hands off that we've allowed our economy to be dominated by a handful of actors who have accrued pretty unchecked power in a fairly anti-competitive manner.

And I would like to point to an example of this, which is the proportion of our pension funds that passively invest into big global indexes, an example being MSCI World Index, where they allocate more of British pension savings to Apple than they do the entire UK economy, around 5% to Apple, about 3.8% to the UK. And what does this mean in practice? It means that when those brilliant UK tech start ups want to scale and they're seeking out capital, there are only option really is to be sold out to one of those big US competitors that pension savers in the UK are funding.

And so the cycle continues. Where Britain fails to scale its businesses to the level required. I believe that Britain needs to be more streetwise and needs to be a bit more hands on. We need to redesign our system so that, yes, it can still take advantage of global capital markets, but it's. But it's clever about the way it incentivizes and actively supports the growth of the UK economy. Now, one way I believe that we could do this is as the new capital consensus project, of which I am a member suggests, is to.

Is to rightsize some of our defined benefit pension funds so that they are big enough to actively manage funds, identify and invest in those opportunities that exist across Britain, not so big that they find those kind of regional opportunities more hassle than are worth, but also not so small that they choose to just passively manage their funds in a way that I've just described. And at the moment, we have around 5500 small defined benefit pension funds, and they each charge, yes, low, low fees for a fair return.

But I ask, at what cost is that fair return? Is it really good value to get 8% plus for the individual saver, if the country around them is in decline, shouldn't the real test of value be about not only the individual's return, but the societal return as well? Because after all, this is the country that they seek to live and retire in. So I would encourage the government to build on the progress it's made with the pension reform so far, and look more broadly at investment funds across the sector.

I believe that if we can right size some of those pension funds to incentivize them to identify and invest in UK businesses, things will be delivered not only for those savers but for the country as a whole.
17:15
None Portrait Speaker 4
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Shannon.
17:15
None Portrait Speaker 7
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Mr. Chairman, always a pleasure to serve on your chairmanship. A big thank you to the honourable gentleman for Buckingham and Bletchley for setting the scene incredibly well, and for highlighting a very vital debate on the future of our financial services sector. I want to begin by thanking the honourable member for bringing this matter to the floor of the House, because if there's one thing that affects every single household in the City of London, right across the beautiful shores of Strangford Lough, it is the stability, the accessibility and the integrity of our financial systems.

I want to also see the minister in her place again, the Honourable Lady for Northampton North. I think we're level pegging for many times. We can speak in Westminster Hall and we're just we're both at the touchline. But if there are any managers to stay for the for the third one, then she'll find herself equal with me. Can I thank her for all her answers this morning, and also in anticipation of her answers for the passion she has for the subject matter.

I mean it sincerely, because I think we are all encouraged by our knowledge and by her helpfulness in trying to answer the questions that we pose when we talk about the future of financial services. The pundits in the media often look straight at the glass towers of London. They look at fintech, they look at AI, they look at the complex global trading systems. Now, I'm a proud unionist, and I want the City of London to remain the pre-eminent financial powerhouse of the world as it is and as it should be, because that benefits us all.

It brings billions to the Treasury, and a strong city means a strong United Kingdom of Great Britain and Northern Ireland. The honourable member for Peterborough, who's just left, referred to nationwide and his intervention earlier on. And he mentioned about nationwide. And I just want to say I said it this morning, but nationwide in Newtownards, the branch there is committed to working with the community. They're committed to 2030 to stay in the town and we hopefully will put will make that commitment even further.

Beyond that, the reason why it's I mean, I've been in and out of it. I'm not a member of it. I'm not a stakeholder. I'm not a customer, but I am I am in it. I noticed the large numbers of people who come in and all, and I understand that nationwide is filling in where sometimes the banks fall short. Mr. chairman, my main concern, and indeed the common concern of my party, that the EP is what the future of financial services look like for the working man and for the working woman.

And that's what I want to focus on. It's a bit of a squeeze on the middle class and the ordinary families who are trying to navigate volatile inflation and changing economic climates. If financial services are to have a future, a successful future across the whole of this United Kingdom of Great Britain and Northern Ireland, we must ensure that they are built on three fundamental pillars on financial inclusion, on regulatory fairness for small businesses, and on waiving integrity.

As banks look to a digital future, they are shutting physical branches at an alarming rate. This is something we discussed in this place this morning, so it's well and good to say everything is on the app, on your mobile phone. But what about the elderly constituents in Portaferry and my constituency of Strangford, who relies on the face to face chat to manage their life savings and has to travel to Newtownards some 22 or 23 miles up the road as there's no bank in the Ards Peninsula.

What about the young people trying to understand credit and mortgage products ? Without an accessible high street presence, the future of banking cannot be one that locks out the vulnerable, the elderly or those with. Without reliable internet, we must protect physical access to cash and. We must also look after consumer support. There is, I believe, Mr. Chairman, a duty to protect our small and medium enterprises. SMEs are small charities or family run shops in the knowledge.

We are very privileged and very honoured to have so many family run shops where there are, where. Whether they are agri businesses or local hospitality venues, they are the backbone of our economy. Certainly they are in my constituency of Strangford, the future regulatory framework of the Financial Conduct Authority must be tailored to protect these businesses from hidden credit liabilities and predatory lending practices. I thank the honourable gentleman for Buckingham and Bletchley referred to this in a previous debate in Westminster Hall.

I remember it well. We need a financial system that acts as a springboard for entrepreneurship, providing firm, clear foundations of support rather than wrapping our local shopkeepers in suffocating red tape. Finally, the future must be defined by absolute transparency and a transformation of corporate culture. Trust in our financial institutions was severely damaged in the past, and as the FCA continues its work on transforming culture with financial services, we must demand that the big banks treat customers with the respect that they deserve.

Every pound looked after by a financial institution is a pound earned by hard work, and there must be no question of dishonesty or systematic unfairness. The United Kingdom's financial services sector has a bright future. I believe it has, and all my heart, but only if it remembers its core purpose. And that's to serve the people. As we, as MPs serve the people we are elected to serve. They should also serve the people that we represent.

So let's ensure that as we innovate, we build a system that levels up every corner of our nation, our our great nation, the United Kingdom of Great Britain and Northern Ireland, preserves our high streets, supports our small businesses, and protects the hard earned money of the working class families who are the backbone of this country. Thank you.
17:21
None Portrait Speaker 8
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The spokesperson.
17:22
None Portrait Speaker 9
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Thank you, Mr. Speaker. It's a pleasure to serve under your chair, and I thank the member for Buckingham and Bletchley for bringing this very important debate and for making it a large enough subject for us all to pick and choose, because it's hard to cover such a such an enormous range, but much appreciated and for such good points made. And I thank the Minister for returning to her role and look forward to working with her in it. So that's great.

I also refer members to my register of interests and my ownership stake in BDA partners, the business I founded back in 1996, which focuses on Asian mergers and acquisitions in which I have no management role. Everybody here believes that our financial services sector is a strategically important national asset and a key competitive advantage for our economy. We all want the sector to continue to thrive, boosting businesses, jobs and growth all across the UK.

And we all want Britain's financial and professional services industry to remain a possibly the leading such services cluster globally. These services make us a trade superpower. We benefit from our unique combination of language, law and location. We have strong institutions and dynamic markets. We are the world's second largest destination for fintech investment after the US, and we are material player in the AI space. These are huge strengths that we must continue to build on, but we must also be clear about the challenges.

Our financial services sector has lost ground on a relative basis. On a global basis, other economies are rapidly growing, innovating and investing and preparing for the future. We have no cause for complacency. We need to be ambitious and take decisions now, which will help the UK over the short, medium and long term. post-Brexit, the city has continued to be an excellent location to base a global financial services basis business.

However, our departure from the EU has substantially weakened our financial services industry, both in terms of the UK serving as the centre of European finance and a slower growing UK economy has not provided the traditional tailwind that it previously did. UK financial services remains a bright spot, but it would be a whole lot brighter if we were inside the EU's single market. And don't take that just for me. The city UK notes that even though overall services trade has held up, exports of financial services have declined 5.9%, likely at least in part due to the impact of Brexit frictions.

If the government is serious about growth, it needs to fix this. We should be pursuing a growth and defence partnership with with Europe, including both joining the single market and the customs union. This would be revolutionary for the future of the UK financial services sector. It would tear down the barriers to trade in services which we have erected, which are still holding back our financial sector and particular joining the single market would secure again passporting rights for the sector, reducing costs and administration burdens and enabling financial firms to offer services across the whole of the EU without requiring further authorisations.

In the shorter term, the government should move quickly to immediately improve financial services cooperation with Europe. For example, the government should be making the most of the UK, EU Financial Regulatory Forum to secure a deal on the mutual recognition of professional qualifications. Building on the dialogue that was agreed at the UK EU reset last May and we must finally see the UK, EU Youth Mobility Scheme through to implementation, which was agreed in principle last year.

Secondly, if the government is going to boost financial services and seriously compete with the US, it must look at the business landscape as a whole. We need far more ambition to boost UK plc, especially our high growth, high tech businesses, and pull every available lever to encourage capital formation. So how can we do this? Traditionally, the UK has been a fantastic harbor for international capital on the back of a cast iron reputation for strong, fair regulation which safeguards investor rights.

We need to ensure that our regulators continue to live up to that benchmark. I think that's a question today. The same goes for competition. The Competition Markets Authority needs to be using its powers under the Dmcc act, the Digital Markets Competition and Consumers Act from 2024 to demonstrate that it has the will to enforce both quickly and effectively against strong players as well as weaker ones. And it should be working closely with its EU counterpart, where applicable, to magnify its impact.

And this isn't just kind of floating in the ether. This matters to to people across my constituency and Witney because it brings down costs. Everybody talks about the cost of living. It's like if we allow people to control markets so there is no competition, the costs go up and everybody feels that in their pockets, and it is really important to draw that link. And so having that CMA move fast at scale, at speed matters. We also need to fix how we support business innovation.

R&D tax reliefs are a powerful tool, but too often are undermined by uncertainty, delays and a compliance first mindset. A more liberal pro-innovation approach should move towards an expert led pre-clearance system for R&D tax reliefs. We could have upfront assessments by scientists and engineers, people who understand the technology rather than retrospective scrutiny for compliance by compliance teams. Models in countries like the Netherlands show this can work effectively. It provides certainty to the founders, reduces disputes and ensures support is directed towards genuine innovation.

But we must also look at reducing regulation where it's not required. As mentioned by my Right Honourable colleague. For example. Why? Why is the regulatory burden on the VC industry so much higher in the UK than it is in the US, both in terms of time, which is absolutely as critical as cost? How about the UK taking an approach of using exempt reporting advisers, as they do in the US? Focus on professional investors to more effectively balance regulation to the levels of risk.

Many have talked about AI and I'm going to do so to. Any discussion on the future of financial services has to take this into account. And earlier today, the Bank of England governor, Andrew Bailey, published an open letter warning G20 finance ministers that artificial intelligence could pose a major cyber security risk to financial systems. Writing in his capacity as chair of the International Financial Stability Board, Andrew Bailey said the potential impact of frontier AI is, and I quote, the most immediate concern for the global financial system, financial institutions, market infrastructure and technology providers all need to again,
17:29
None Portrait Speaker 10
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Providers all need to again, quote again, strengthen vulnerability management response and recovery capabilities and prepare for more severe scenarios involving simultaneous disruption across multiple firms or shared technology dependencies. These risks are inherently international, and many jurisdictions still lack the systems to these risks. And frankly, I think we do, too. So the UK government must take AI security a top, as a top priority to safeguard not just UK financial services, but also the international financial markets on which we all depend.

I would therefore be grateful to the Minister if she could set out what steps the government has taken to promote the safe and responsible deployment of AI internationally, and how the cybersecurity of the financial system is being strengthened. Lastly, the other technological revolution that will shape the future of financial services is that of digital asset stablecoins and cryptocurrency. A few days ago, we saw the Treasury give the Bank of England a new objective of supporting payment systems innovation.

This is welcome and having the right regulatory conditions in place to make the most of the digital innovations is critical, but we need more clarity from the government about how it intends to balance the opportunities and risks brought forward by new digital assets. One key question is what stance it intends to take on stablecoins and a central bank, digital currency or digital pound. The global stablecoin ecosystem is now dominated by two US dollar pegged issuers, Tether and Circle, which together account for around 90% of the market.

The UK's own GBP British stablecoin is for the House of Lords committee's own assessment. Nascent. Many, therefore worry that the digital financial infrastructure of the future is likely to default to dollar denominated instruments issued by foreign private firms. I urge the minister to address these concerns clearly, and to set out how this government plans to make the most of the opportunities presented by this new technology, whilst safeguarding against the risks and, crucially, whether there is or will be a timeline for a decision jointly with the Bank of England on this point.

Thank you.
17:31
None Portrait Speaker 8
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Shadow Minister. Thank you very much, Mr. Speaker. It's a pleasure to serve under your stewardship. And can I start by thanking the honourable member for Buckingham Bletchley, for securing this debate? He he speaks with great authority, and it's refreshing to hear a positive vision of the financial services sector, especially given his experience working with the London Stock Exchange Group. He raised a number of points, some of which I'll be dealing with in my speech.

But he raised a couple of very interesting points, which are very related. The first was he was talking about the lack of growth capital and and the fact that we weren't seeing a huge amount of money being invested, perhaps by UK pension funds into, into the UK and that where companies are looking for growth capital, they seem to want to go to a place like America where they can do better. He also talked about the undervaluation of the UK stock market and this all has part of that problem.

But he also talked about clean energy and how clean energy provides a fantastic opportunity for investors to invest in long term patient capital. And it's interesting, during the course of the pension schemes bill, one of the complaints that was thrown up by a very, very large annuity asset manager was that they very much wanted to invest into the equity of wind farms, where you have a predictable income because of the contracts for difference. But the pension schemes regulator wouldn't allow them to do it because they had to be invested into bonds, which had a more liquid market.

And there are one of the problems that we have is whilst we completely support the mansion House compact, the mansion House accord, one of the problems is there's too much stuff getting in the way and what we're trying to work with the government on this one. We had long debates during the course of the passage of the pension schemes. Bill is trying to work out not just how we can get more money being forced into the UK equity market, but how we can clear away the tag that is getting in the way of investments.

And this comes very much to the point about regulation and the regulatory environment. I'll discuss some more of his points as I work through my speech, but I'll go into the sort of the main thrust of my speech. But I did want to get that point over early on, as we've heard from the member from Godalming and Ash, the financial services sector matters hugely to the UK and has often been described as the engine room of our economy, and it's for two good reasons.

The first, of course, is that the banking sector provides the plumbing that gives gets finance around our economy, making sure that money is where it is accumulated through wealth is then distributed to those people who need it. And the second is because of the international position that we have. Financial services sector generates 11% of national economic output. It contributes £12 in every hundred pounds of tax paid. It pays for a lot of the NHS, as we've heard it makes, as we heard something over 3% of all jobs in the UK.

But as we've heard, 2.5 million people are employed in the financial services sector. We have the most unicorns in Europe. It's the second largest asset management sector globally. It's the third largest insurance market globally, and it's the fifth largest domestic domestic banking market globally. So we could go on. But the point is that the UK is a world leader in financial services. Absolutely a world leader. And we need to continue to be that world leader.

And indeed it's vital that we get this right. It's worth comparing the London to to New York. New York is the biggest financial services sector in the world. Our biggest financial services centre in the world. And London is the second biggest. But in New York, 80% of that turnover in that financial services sector is driven by the domestic market of America and just 20% international. Those numbers are reversed.

In the UK, 80% of the activity is international. For the UK, international competitiveness is four times as important for us as it is for those in America. So we recognise that in the Conservative Party. That's why the leader of the opposition has promised to deliver a new economic revolution and to create the conditions that allow the financial services sector to innovate and to take risks and to be an economic powerhouse. So before discussing the future of UK financial services, though, we need to understand the past.

The City of London has been innovating and leading the way for a few hundred years now, the Knights Templar, issuing receipts to Crusaders for their gold, created the first ever banknotes in the 17th century. Jonathan's coffee House honourable member will be familiar with. It was the first to advertise share prices. From there, the London Stock Exchange grew, setting the model for equity ownership the world over. Similarly, Lloyd's coffee house created the insurance market that we see today by continually innovating.

The UK led the way for centuries, and it's vital that the UK continues that spirit of innovation in order to maintain its international lead. However, while we've enjoyed much success over the years, the recent city report by the recent report by the city UK and PwC has shown that growth over the past decade has stalled. Technologies such as artificial intelligence and DLT are fundamentally rewiring financial market infrastructure, and it's absolutely vital that the UK keeps up with the pace of change.

Financial services firms are ready to do that, but they need policy makers to create the right conditions and then get out of the way, allow them to innovate and allow them to take advantage of this. So this brings me on to what we need to do to unlock the future of UK financial services. Firstly, we need to look at the level of regulation in the UK. Now, whilst it's important to recognise that the UK's regulatory and legal frameworks make us an attractive destination, that's really important.

Our rule of law is vital to this. We believe the UK has gone too far and that regulation has become too burdensome. Research from the city UK suggests that the cost of regulatory compliance across the financial services sector now exceeds £33.9 billion. That represents, as we've heard before, over 13% of firms annual average operating costs. But it's quite an interesting number that I think was presented to the Treasury Select Committee by Nationwide Building Society, where they estimated that as a result of overregulation by the regulators and over compliance by their own internal compliance department, their lending book was £35 billion smaller than it would otherwise have been had they been complying with the original rules and regulations, as were laid forward.

£35 billion is an awful lot of money taken out of the economy, getting stuck in one building society, merely the biggest one. But nonetheless, it's an important measure that we need to consider. And this money could have been better spent across the whole of the wider sector. But more worryingly, it has affected our international reputation. The comments of the CEO of Marsh McLennan said that it cost six times more to comply with regulation in the UK than any other country they operate in, and that doesn't foster an attractive business environment and something does need to change.

That's why we announced recently three policies that would reduce the regulatory burden. First is the removal of the ring fencing on banks. Second is the reduction of capital requirements in bank capital requirements. And the third is a replacement of the Financial Ombudsman Service with a financial adjudication service. Yes. Of course.
17:38
17:39
None Portrait Speaker 8
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Yes, I can and I can. From the point of view of being on both the Treasury Select Committee from 2010 to 2016, when we were looking at creating the FCA and the PRA, but actually more relevant to this, when we were when I was on the Parliamentary Commission for Banking Standards, and we were the report that actually recommended that we introduced the Davies review, which was bringing ring fencing in. And the honourable member may remember that at the time there was a review in the European Union where they were looking at ring fencing and the subtle differences between our ring fencing and their ring fencing was that we would we would put a.

It was described as a, as a, as a cage for tigers in Europe and putting a fence around the deer park in the UK. So our retail banks were ring fenced. But the problem is, what we've found is that it's become increasingly complex to operate it. And the Europeans didn't bring it in. So what it's meant is that the resolution regime on banks, and we recently had the Recapitalisation Act that went bank recapitalisation bill that went through was looking at this actually means we've now got an awful lot of other stuff, which is in place where we don't necessarily need to have the ring fencing.

The problem with ring fencing is you end up with a cliff edge where you where your customers are traversing from the ring fence bank into the, into the, into the commercial and the, and the investment bank where it becomes very, very difficult. And there's one bank only which has managed to satisfy itself that it's okay. And they set that ring fence limit at £100 million worth of turnover. All other banks have been at the lower end, which is close to the 5 or £10 million turnover.

So it has on this point about international competitiveness, it means that it's costing us more and becoming less competitive internationally by having the ring fencing regime, which other countries did not adopt. And when we did adopt it, we were the first mover on this, but we weren't followed into it. And this is the key point, is the international competitiveness point and the bank resolution. And there are the sort of Admiral Bailey and bonds, all of this kind of stuff.

So there's a lot of stuff out there which makes up for that which has been brought in since the financial crisis. It's just it looks like we have too much. I hope that answers this question. And I've got a lot of speech, which I've now covered actually by those points. But our analysis shows that the annual cost to the UK's banking sector of ring fencing alone is £1.5 billion. And at the same time, reports from industry have been clear that ring fencing is duplicative, duplicative and isn't responsible for post-crisis improvements and the the independent review of ring fencing and proprietary trading said in 2022.

The reduction in the implicit government guarantee and progress in ending too big to fail was not found to be attributable to ring fencing. Now, we do understand the government is looking at this, and they're looking to reform ring fencing regime through the Financial Services and Markets Bill and the the EST and I will be spending a lot of time over the coming months going through the minutiae of banks balance sheets. And frankly, I find it fascinating.

I hope she does too. But but however, like most of the bill, whilst welcome, we feel the government isn't fully utilising the opportunities that the bill will provide. And they could go much further. As I say, I won't delve into too much of the details because we have got a long time to go through all of this, but I hope the honourable member for Buckingham and Bletchley will throw his weight behind the Financial services Bill when it comes to the House of Commons.

Second point on taxation. If we were to unlock the future of UK financial services, the other area we have to look at is the level of taxation. In a world where capital, talent and business activity are highly mobile, highly mobile, the UK needs to remain an attractive place to do business, and this is especially important given the international nature of the UK's markets. While our competitors like the US have a high domestic focus, as I say, the UK is the exact opposite and the London Stock Exchange Group have found that over 4/5 of of revenues of FTSE companies, for example sorry FTSE 100 constituents now stem from outside the UK.

But despite this, data from across the industry has shown that the UK is an outlier when it comes to the level of taxation on our financial services sector. So if you take the banks as an example from UK finance and PwC in 2025, they suggested that the total suggests the total tax rate in London on banks is 46.5%. That compares with other financial centres like Amsterdam, Frankfurt, Dublin and New York, and we're significantly higher, as you have already heard.

And in fact, if you compare us to New York to to the US, we're actually paying 60% higher tax on banks in the UK than they are in the US. And another example would be the insurance sector. And there's data from the Abi shows their membership saw an increase in their total tax contribution of 70, an increase of 77% between 2014 and 2024. An analysis suggests that this has been mainly driven by increases in insurance premium tax.
17:43
17:44
17:44
17:44
17:44
None Portrait Speaker 12
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Thank you very much, Mr. Twig, and it's a pleasure to serve with you. With you in the chair. I'm not sure either of my descendants want to serve in this chamber yet. To the to the point made by the shadow est, Mr. Abbott. But there we are. I'd like to thank my hon. Friend the member for Buckingham and Bletchley for securing this debate , and for his consistent advocacy about the importance of financial services to the United Kingdom.

I have to say, I am not sure I needed any convincing, actually, about that about that importance. But even in the really short time that I've had since returning to this brief, I've seen that importance first hand. So in Leeds, which is home to an incredibly vibrant financial services cluster, in conversations that I've had with debt advice organisations about the difference that timely support can make to those in difficulty. And in Bournemouth, where I met with degree apprentices and those at the beginning of their careers, those who are building the sector's future, those very few engagements, just in those that I've mentioned, reinforced to me just how much a thriving financial services sector matters to communities right across this country.

Look, and I wholly appreciate the contributions of all honourable members to this debate, whether or not they wear their financial services experience on their sleeve or they seek to hide it, whatever, whatever experience they have. It's been it's been a very informed debate. My hon. My right hon. Friend the member for Leeds West and Pudsey, to whom I pay tribute, put financial services at the heart of this government's growth agenda and launched our ten year strategy for the sector.

And the new Chancellor has been equally clear about its importance. Within days of taking office. Taking office, he went to Bloomberg and reiterated his support for the central importance of our financial services sector, which I think, at least in large part, answers one of the questions put to me by the right hon. Member for Godalming and Ash. The remainder of his questions I shall seek to answer as well, and I look forward to continuing to support the Chancellor as we continue to deliver on the financial on the government's financial services strategy, and in doing so, I recognise the the challenges, but also the opportunities in the five areas that my hon.

Friend has identified as central to the future of financial services. I'll take each of those themes in turn. I thank my hon. Friend for his continued advocacy in favor of strengthening UK capital markets and ensuring these long standing strengths support long term investment in the British economy. He is right to recognise the progress that has already been made through the Financial Services Strategy. The government has taken decisive action to increase investment, to improve outcomes for savers and to support growing British businesses.

We have delivered the Pension Schemes Act, established a framework to monitor delivery of the mansion House, accord, enabled targeted support for consumers and launched measures to help build a stronger retail investment culture, which I will come back to mobilising. More domestic capital must go hand in hand with ensuring that firms can access the right finance at the right time. Innovative businesses need clear funding pathways from start up right the way through to scale up and into public markets if they're to invest, expand and create jobs , and of course, remain headquartered in the UK.

That is exactly why we're strengthening funding pathways at every stage of business growth. The expanded British Business Bank is helping to address market gaps and crowding investment, while the National Wealth Fund is mobilising investment into the sectors and the sectors and infrastructure that will drive long term economic growth. We also recognise the particular challenge of later stage funding, so our reforms are intended to support a more diverse range of funding sources and connect high growth firms with the capital that they need to scale domestically and internationally.

Strong capital markets are absolutely central to that objective. The UK, of course, has deep markets. We have global expertise and a position as Europe's leading investment hub. But we must ensure, and there is absolutely no complacency to answer the honourable member's point, there's absolutely no complacency in my saying that we must ensure our markets consistently deliver what companies need and make the UK the best place for firms to start, scale and stay.

Pisces provides a stepping stone from private to public markets. The first major auctions honourable members may have taken note of recently. The first major auction saw Wave and Money Box sell more than 100 million of shares. Between them, we've removed barriers to secondary fundraisings. We've improved market liquidity and eased accounting and reporting requirements for the smallest companies. Because listing must be the beginning of a company's growth story, not the end. Alongside these reforms, we're encouraging pension funds to diversify, and I acknowledge the passionate case made by the honourable member for Carshalton and Wallington, supporting investment in private markets and helping savers access better information and guidance.

Trustees and fund managers must, of course, remain responsible for decisions made in the best interests of their members and customers. Sustainable success will come from making UK assets an attractive investment proposition. Now on retail investment, I said I would come back to this. I share my honourable friends view that too much capital remains in low yield savings, when it could be working harder for individuals and for the wider economy. We're therefore helping people understand the opportunities and risks of investing and giving them, giving them access to appropriate guidance and support.

We've been working closely to with the Bank of England, to increase the ability of the financial system to support economic growth, which, of course, relates to another of the questions put to me by the right hon. Member for Godalming and Ash in relation to financing for financing for SMEs, but Mr. Twigg. Taken together, these measures join up the full investment chain, so mobilising more domestic savings, directing capital towards productive assets, widening access to finance for growing businesses and ensuring that UK capital markets help businesses grow and grow global companies here now.

Secondly, I'm very grateful to my honourable friend for pointing out the opportunities presented by the digitalisation of financial markets. Now, this is something that I am particularly passionate about. The Shadow EST talked about the importance of innovation to financial services, something that I will talk about almost on an hourly basis in this in this job, the UK is a global leader in financial services because we have consistently embraced innovation. I won't go decade by decade from the coffee houses that set up on the banks of the Thames.

And I should say at this point, it's fantastic to have leaders in the insurance industry listening, listening to this debate from from the back. That is the importance of innovation and why we have to remain. We have to consistently innovate because it's key to our global competitiveness and indeed , the future of our financial services industry. So our ambition is to digitalise the UK's financial markets and make the UK a world leader in tokenized finance.

And I have to say that it is reassuring and indeed encouraging to hear the right hon. Member for Godalming and Ash indicate that. I think he thinks that is a sensible ambition. We're moving to from experimentation to adoption at scale as our wholesale financial market digital strategy sets out. We appointed Chris Woollard as the government's wholesale digital markets champion. He published his first report in July. We're enabling firms to adopt tokenized securities.

So through the Digital security sandbox, where the first firm recently received permission to conduct live activity, and the regulators have committed to publishing a full cross authority roadmap on tokenization of wholesale markets later in 2026. We've committed to issuing digital, a digital sovereign debt instrument no later than quarter one 2027. Alongside this, we are modernising and optimising the foundations of our market, moving to a T plus one settlement cycle from quarter four 2027, reducing risk and improving improving efficiency.

Now, the honourable member for Witney talked about the importance of of stablecoins, and I welcome his welcoming. I think he was welcoming it of the innovation objective that we're giving to the to the Bank of England. Now, stablecoins are so important because they can enable faster and more efficient transactions. And of course, what that means is that money, which would otherwise be held up, is therefore spent by businesses on other things.

So they are so important because they can can free up capital by being an efficient means of payment. The government does want to see GBP denominated stablecoins. We've laid the regulatory regime as he is, as he is well aware, and there really is no shortage of ambition on behalf of the government when it comes to stablecoins. He is gesturing at me like I may have forgotten something. I think that means he wants me to address Cbdc, and I can tell him that work is ongoing between the government and the Treasury and the Bank in that regard, and we will be setting out next steps on that very shortly.

Mr. Twigg, many honourable members have mentioned AI. Well, AI is already delivering benefits across financial services, from improved customer services, from tackling fraud, enhancing productivity and supporting decision making. We have now an AI, an AI adoption plan, which I. I shan't rehearse, but I do want to specifically pick out the points made by the honourable member for Witney because he rightly highlighted the extremely important issue of resilience in our financial system, which, as he pointed out, is something that the governor has been speaking about recently.

I can tell him there is work going on across government, including with the regulators and indeed in international fora as well. But I hope I can reassure him that the government is taking this issue about as seriously as it is possible to to take it clean . Energy chair. My hon. Friend's third area. The UK is playing a leading role in supporting and financing the global net zero transition, something which my right hon.

Friend the member for Bristol East, I know has spoken passionately in this place about on on many, many occasions, as my hon. Friend will be aware, the UK is already one of the world's leading sustainable finance centres, and the government's focus is on how we can evolve and expand that leadership. We are delivering a number of targeted initiatives and prioritising changes that will make the greatest impact, such as the UK, such as UK sustainability reporting standards, and we're also really focused on making the UK a global hub for transition finance.

This is not only essential to meeting to meeting our global net zero goals, but it also represents a major opportunity for UK growth and investment. Mr. Twigg I'm going to speed up as I move through, but I want to mention financial inclusion in particular as something. Another aspect of this brief that I am particularly passionate about, and I'm grateful to my hon. Friend for his recognition of the financial inclusion strategy, which I intend to make a step change in how easily all of our constituents can access the financial services that they need.

He rightly recognises that the ability to open a bank account, to build a modest savings buffer to access safe and affordable credit, to secure insurance, to protect against life's shocks. Though all of those things are absolutely fundamental to participation in our economy and therefore to participation in our society as well. And the honourable member for, for for Strangford speaks very passionately about the importance of ensuring that financial services are available to all that that need them.

He speaks passionately about that. This is all why these areas are a focus of our financial inclusion strategy, with actions ranging from supporting those without a fixed address to open a bank account, to supporting our credit union sector through a 30 million transformation fund. And the indications chair that you're giving me are making me think that I should draw this to a close before I do. So let me just thank again my right hon.

Friend the member for Buckingham and Bletchley for bringing this debate today and to all honourable members for their contributions.
17:59
None Portrait Speaker 11
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To wind up.
17:59
17:59
None Portrait Speaker 4
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Yeah.
17:59
18:00
None Portrait Speaker 9
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Thank you, Mr. Twigg. It is a pleasure to serve under your chairmanship. Last week, I wrote to the Secretary of State outlining my concerns regarding the delayed decision regarding the future of local government reorganisation in Cambridgeshire and Peterborough. Thus far, we have heard little of her position regarding the criteria under which a decision would be made and how that may differ from her predecessor, whose decision it was to delay the decision in the first place.

In it, I outlined how the pregnant pause preceding this interregnum is creating uncertainty, instability and is affecting the retention of experienced council personnel, investment decisions for local businesses, and questions over the viability of local plans crucial to the success of Huntingdonshire. In Huntingdonshire, we fear a local government reorganisation stitch up in January. I asked the Prime Minister if he could offer assurances to my constituents and people across Huntingdonshire that the decision is not already a done deal and that the Democratic will of Huntingdonshire District Council will not be overridden to satisfy an unelected Labour regional office.

There are no done deals here. We are going through the proper process, he said. In March, I asked the previous Minister for local government if she could reassure me that Huntingdonshire will not be split in two. She didn't offer any and so here we are in October, September, no decision having yet been made . As we await the announcement of what we fear will be a stitched up local government reorganisation in favour of a gerrymandered pork barrel option that even their own Labour councillors in Huntingdonshire despise.
18:02
18:02
18:03
None Portrait Speaker 2
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I am troubled by the.
18:03
18:03
18:04
18:05
None Portrait Speaker 9
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I would concur with the honourable gentleman. There's absolutely an opportunity here to learn from previous mistakes and make sure that they aren't repeated when we drive this forward. In the new year, in early July, news began to leak out from the LGA annual conference that Peterborough City Council suddenly seemed to be aware that option D was going to get the nod. Word spread quickly amongst Cambridge's senior executives that option D was going to be selected.

So who was leaking that information and why was I left to announce it on ITV Anglia News, so that people could see for themselves that this process under this government was on the cusp of selecting the Labour proposed option, as has happened in local authority areas across the country. Strangely enough, the response received on Friday to a Freedom of Information Act request to Peterborough City Council wasn't able to be answered, and I eagerly await the response to my own subject access request in a few days time.

It is simply a disgrace that the government would treat Cambridgeshire residents with this level of contempt leaking. The outcome of a decision that appears to have been almost certainly predetermined, allowing those who have been given the information to achieve a head start for favoured businesses to gain a competitive advantage to affect decisions on employment, education opportunities, future investment decisions by leaking it out to a privileged few. No. I'm going to carry on the announcement by the former Secretary of State for housing, Communities and Local Government on 16th of July, therefore makes little sense on Cambridgeshire and Peterborough and West Sussex.

I'm not making announcements today because further time is required to get the decisions right. So could the Minister outline precisely what was meant when he stated that further time was required to get the decisions right? Can he state definitively how much time is required? And furthermore, can he articulate what specifically is in danger of being got wrong?
18:06
18:07
None Portrait Speaker 11
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Bt J.
18:07
18:07
None Portrait Speaker 11
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Okay.
18:07
18:08
18:08
None Portrait Speaker 14
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The honourable member.
18:08
None Portrait Speaker 9
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I'm just gonna make a little bit of progress further to this, in his letter of 16th July, somewhat contradictory, the former Secretary of State, the right hon. Member for Croydon South stated, I've decided that more time is needed to consider which option, if any, to implement at this time. In Cambridgeshire and Peterborough we now have a new old Secretary of State and can the Minister clarify whether she also requires more time in order to make a decision? Whether she does or doesn't, can she clarify when the Secretary of State plans to have made her decision by her department has held no further discussions with Huntingdonshire District Council? So what precisely is in need of further discussion that warrants a delay of two months? Could the Minister outline why there has been a delay? Could the Minister also clarify when Labour MPs were informed of the delay to a decision in Cambridgeshire and Peterborough in the first place? I would like to ask him on the record if he can clarify that his departmental colleague, the parliamentary Under-Secretary of state, Baroness Taylor, participated in a meeting with Labour MPs and councillors on Wednesday the 15th of July 2026, during which local government reorganisation in Cambridgeshire and Peterborough was discussed.

I would ask him to choose his yes or no answer to that question very carefully, lest he might later be accused of misleading the House. My position remains extant. I back a Huntingdonshire unitary authority known locally as option E. It is the option that was overwhelmingly backed by councillors from all parties across Huntingdonshire District Council. Indeed, disappointingly, the only people not to have backed it are Huntingdonshire, two other members of Parliament, and I maintain that a united front in this respect would have sent a stronger message to government.

I've led two debates in Parliament about local government reorganisation, both of which highlighted the potential issues with getting the decision wrong. The most recent recent of those, last November, gave an in depth assessment of why option D specifically was unworkable. It's almost as if I expected the government to stitch up the decision. I will reiterate the points I made then for the benefit of the minister. Option D rips Huntingdonshire in half, creating East and West Huntingdonshire.

There is a significant risk in attempting to disaggregate Huntingdonshire District Council. There is a lack of precedent and absence of lessons learned, not to mention the destruction of local identity in Huntingdonshire, already stronger than identities elsewhere in Cambridgeshire, particularly in separating Huntingdon from Godmanchester and Saint Ives, Disaggregating Huntingdonshire District Council would come with greater transition costs and affect service delivery. Peterborough is a basket case. It is estimated that 11% of Peterborough's budget is needed simply to service its own debts, with 80% needed to fulfil its statutory adult and children's social care obligations.

How on earth does it plan to run all of the other existing county and district functions on a 9% budget? Peterborough's council's debt gearing is 91% against the national benchmark of just 50% under the Chartered Institute of Public Finance and Accountancy Local authority Financial Resilience Index analysis, Peterborough is rated as high risk for its overall level of reserves, its unallocated reserves, its earmarked reserves, its interest payable or net revenue expenditure, its gross external debt, its fees and charges to service expenditure ratio, its council tax requirement or net revenue expenditure and its growth above baseline.

Huntingdonshire is not deemed to be high risk in a single one of those categories. No, I'm going to carry on. The business case itself states, as Peterborough has historically required exceptional financial support and comes from the most financially challenged position, increasing the scale doesn't necessarily provide the desired resilience. Reserves still remain low. The cost of servicing debt continues to eat into a significant proportion of the net budget, and the funding headroom is tight.

This could be mitigated by resizing services in line with available funding. Option D provides a significantly lower level of reserves, leaving it more vulnerable to shocks. Reserves of Greater Peterborough are comfortably the lowest at just 16%, which is again deemed high risk. By comparison, Huntingdonshire would be 42% unemployment. We need look no further than the percentage of Universal Credit claimants in the local authority. In Huntingdonshire, it is 2.8%, while at Peterborough 8% far and away the highest as the highest unemployment rate.

In Cambridgeshire. Greater Peterborough is also projected to have the highest prevalence of ADHD and the greatest risk of deficit escalation. At present, Huntingdonshire has the second lowest rate of HCP prevalence in Cambridgeshire. This analysis strongly suggests that the system would all but immediately collapse. Greater Peterborough will have the highest spend per resident for adult social care and for children's social care, more than double that of the other two unitaries, as well as the highest spend spend per resident and the highest percentage of homeless households, nearly double that of Greater Cambridge.

It is akin to the Berlin Wall being put up overnight, condemning one half of Huntingdonshire to eking out an existence in the bleak Peterborough Democratic Republic, or the eastern half, enjoys the trappings of a slightly better existence in the Federal Republic of Cambridgeshire. But will we in Mid Cambridgeshire any more viable than Greater Peterborough? No, it's not. A unitary authority centred upon. St Neots is the biggest town compared to Cambridge and Peterborough.

In the neighbouring Unitaries. The option D business case barely even attempts to sell the viability of Cambridgeshire, stating that it encourages reflection on ensuring the resilience of all unitaries, especially Mid Cambridgeshire. Going on to outline that targeted action can be taken to sustain its market, towns and rural communities, and that this model safeguards the rapid growth trajectories of the two city regions. It makes no effort to address the challenges that this would then leave Mid Cambridgeshire to face estates mid cambridgeshire's.

Good way.
18:13
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18:15
None Portrait Speaker 8
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From that point.
18:15
None Portrait Speaker 9
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I will take one more.
18:15
None Portrait Speaker 11
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Daniel Zeichner.
18:15
18:16
None Portrait Speaker 9
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I'm not aware. I've not seen the detail of that report. So I would be remiss of me to opine on it. But what I would say is that having read the business cases in detail, I think splitting the the the county into those three distinct regions, whilst it may look like it makes sense if we look at the travel regions for those areas, they are very distinct, and I don't think they necessarily reflect the make up of the option D business case.

It is worth highlighting that in option D proposal, the travel to work patterns and commercial activity data clearly illustrate that the movements of people within Mid Cambridgeshire is limited to within each of the three components areas of Huntingdonshire, Fenland and East Cambs. There's little in the way of movement between them, which in turn begs the question of why three distinct areas would then form a viable unitary authority. The evidence clearly shows that Huntingdonshire would benefit from being its own unitary authority, rather than splitting it in two, given there is little in the way of movement from the northern part of Huntingdonshire into Peterborough and vice versa.

When we look at option D further, we see that it does Mid Cambridgeshire no favours when we start to look at gross value added per capita. The two councils with the highest GVA per capita are Cambridge and South Cambridgeshire, which are to be combined to form Greater Cambridge. The next two highest are Peterborough and Huntingdonshire, with the wealthier half of the latter to be merged into Greater Peterborough. This leaves the two councils with the lowest GVA per capita to be combined, along with half of the next lowest, resulting in Cambridgeshire authority with GVA per capita.

That is roughly 50% of neighbouring Greater Cambridge. The lack of potential for growth in Cambridgeshire is baked in by design. If this option is the only. Is the one selected by the government. I would like to understand how Mid Cambridgeshire is supposed to wash its own face splitting. Huntingdonshire could weaken this cohesion and reduce its prominence relative to neighbouring authorities. This is a direct quote from the option D business case, which identifies the threat to Huntingdonshire alongside the lack of viability of either Greater Peterborough or Mid Cambridgeshire.

We're now in the crucial final phase prior to the final decision on the outcome of LGR in Cambridgeshire and Peterborough, and what that decision will mean for the historic county of Huntingdonshire. Will it continue or will it be consigned to history? The speaker marked Huntingdonshire Day this year, posing with Huntingdonshire flag. That may never happen again. I have outlined in this speech the concerns about the proposed changes, the manner in which those changes have been discussed in secret and between Labour Party politicians and members, and the concerns regarding their feasibility.

I've outlined why option D, the option we believe the government is most likely to select based on conversations amongst officials within Cambridgeshire or a variant thereof, does not work and leaves Huntingdonshire in a far more perilous state than it is anywhere near today I've outlined how the business case for option D itself repeatedly raises concerns about the viability of Cambridgeshire unitary authority, something that those within Huntingdonshire widely believe will fail within a few years. From a scheduling perspective, every day that goes by without a formal decision being taken on the future of local government reorganisation in Cambridgeshire and Peterborough further jeopardizes the likelihood of implementing it successfully.

It is vital that a swift and uncontroversial decision is made in order to give officers the best opportunity to facilitate the transition. If we are to realistically meet the May 2027 election timetable currently in place. I could have spoken about this for a good while longer and that much is evident. This is before discussing the effect it will have on the Local Plan, which will now likely be voted on before a decision has been taken on Project Fairfax, the defence technology cluster at RAF Wyton, for which an MoU is already in place, with the Mod a project crucial to fuelling growth in Huntingdonshire and facilitating the growth in every postcode that the new Prime Minister has pitched.

So could the Minister confirm what discussions his Department has held with the Mod regarding the impact of LGR on the feasibility of delivering Project Fairfax option E Huntingdonshire unitary authority would allow Project Fairfax to flourish. Is the option that Huntingdonshire voted for, centred around existing boundaries and established regional identity. Option E creates the institutional stability required for long term investment and growth. It ensures consistency and leadership, existing teams, partnerships, development pipelines and investor relationships.

This is the third time I've made the case for Huntingdonshire to the minister. He knows the arguments well. By now. He knows that there is no strong argument for pursuing option D at this late stage, and I hope that the Secretary of State heeds the details within this speech. That option D simply will not work, that nobody wanted it, that it weakens the direct relationship between the defined region and local government, divides the community and destroys an identity, and if nothing else, pursuing it will make his own party unelectable in Huntingdonshire for a generation.

The public deserves better, better policies that support better outcomes and a better connected to the places people live. Putting place over political party demands, collaboration and long term decision making within a stable governance structure. Those aren't my words. Those words are from the cabinet statement on rewiring the state on the 31st of July. The Prime Minister should ensure that he stays true to his word and applies his aspiration to Huntingdonshire.
18:20
None Portrait Speaker 8
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Thank you, Mr. Twigg.
18:20
None Portrait Speaker 15
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It's a pleasure to serve under your chairmanship. I'd like to start by congratulating the honourable member for Huntingdon for securing this debate on local government reorganisation in Cambridgeshire. I'm grateful for the opportunity to set out the government's approach, the progress made so far and the opportunities presented by this once in a generational reform. But before I kind of go into the main point, can I just say, and it's clear from his contributions, also the member for Cambridge and North West Cambridgeshire, the passion for local communities, and I think that's what makes our Parliament great, but also that there are quite different views sometimes on how to achieve that.

And wouldn't life be wonderful for central government if at a local level, there was a single view on what the answer to that question was, and our job was merely to say, well, thank you very much for the submission. Everyone agrees on that. It makes complete sense. Of course, that isn't the position the government finds itself in. We have to be the arbiter of many competing views. We have to receive the proposals without any predetermination, and also on the basis of which they've been submitted, and to act in good faith.

And I can assure him and other members that as a minister, I will do that with diligence and in good faith. I'll come on to the exact points later, but I don't think it's helpful to make accusations, either in this place or on social media, that seem to cast aspersions on the process, because I know locally just how passionate people are about their places, about their identity, and about the future of their local authorities. And I think it's important that we really kind of set the record straight on that.

So I'll attempt to do some of that and to answer the direct questions that the member has put. Yes.
18:22
18:22
None Portrait Speaker 15
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Well, I think we've seen that across England in the two tier areas where people have come together across party lines in many cases, and determined far better that they deal with a comprehensive proposal locally to agree on and submit to government than have it done to them via another way. And I think if there is more local organisation agreement at that level, far better for local people, far better for the decision that's made a bit later on in the process.

But I hope even where there is difference on nuance and there will be differences on some elements of this, that the core remains, that the two tier system just is not working. For too long. Too many areas have been served by complex two tier structures that divide responsibilities, that duplicate costs and blur accountability. Residents often struggle to know which council is responsible for which service and decisions to build homes or grow. Our towns and cities take longer than they ought to.

Resources can be spread too thinly, and the government's aim is simple to have clearer structures, stronger councils, quicker decisions, more homes and better services for local people. And, as the Prime Minister said, ending the two tier system of local government is a nettle that has got to be grasped. If we want to devolve more powers out of Westminster, we need a structure for local government in England that is equal across the board. Reorganization are the building blocks for devolution, and I'm really pleased with the progress that has been made so far.

Decisions have been taken in 19 of the 21 areas, and we're now working with councils to get on with the job of implementation. Now, turning to the honourable members on constituency of Huntingdon, I understand his wish for further clarity on the previous Secretary of State decision and next steps for reorganisation in Cambridgeshire and Peterborough. On the decision itself, the former Secretary of State decided that more time was needed to consider which option, if any, to implement in that area.

This is not a decision that was taken lightly, and I will say to him now that decisions on local reorganisation are something that we will consider closely, they represent a fundamental change that will affect residents for generations to come. And so it's important that we make the right decisions in the right way. We will aim to make decisions on which options, if any, to implement on or before October this year. This will still allow for elections for the new councils in May 27th, before they go live in April 28th.

I am grateful to the honourable member and other MPs and councils in Cambridgeshire and Peterborough for the efforts that they have made to date. I want to ensure to assure him and they, that we remain absolutely committed to delivering reorganisation across the area and will provide further updates shortly on reorganisation more broadly, we recognise that this is a demanding process and we would not have made the progress we've had without the hard work and the dedication of local councils and officials.

The government has announced £63 million that will be made available to support the transition across the 21 reorganised areas. As well as this, an unprecedented £900,000 transition. Support to each new unitary areas will receive up to a further £150,000 per each new unitary council to support their own leadership capacity and continue to in children's services, adult social care and in public health. This will bring the total transition funding for LGR areas to more than £1 million per unitary created.

In addition, up to £1 million of funding in total will be available to support the small number of areas with complex Fire and Rescue authority transitions building on the funding already given to Surrey.
18:26
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None Portrait Speaker 11
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Minister. Sorry.
18:26
None Portrait Speaker 15
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But I'm keen to do is not to predetermine what decision we may or may not take. It may well be that a decision leads to disaggregation in the way that he speaks to. But equally it may not. And until we get to the point of reviewing the the proposals that have been put forward, we're not in that position. But as a matter of principle, I do accept that it is different to have a new unitary authority made up of districts in their entirety, where assets and liabilities and workforce are transferred en bloc to that.

Then you have to disaggregate, because it's been split in a number of different directions. And I'll certainly take that away for for consideration. I think it's a fair point that he makes, but hopefully he acknowledges that this is a comprehensive financial support package that is about supporting local authorities and really not to lose fact sight, that this is a real opportunity, not just for reorganisation and for more efficient services and a clear line of sight on responsibility, but for devolution and for our communities, an opportunity to give local leaders a funding the powers and capacity to drive growth, to build the homes their communities need to deliver better public services and improve the lives of the people that we serve.

And I hope, whatever the differences of opinion are , that there is at a parliamentary level, the same collaboration that I have seen at a local level, because I do see that local authorities, their councillors and their officials are working hard, recognising the direction that the government has set, many realising the advantages that will come with unitary authority, with the single mandate for their area. But importantly and hopefully all members have heard this, with a new prime minister coming from a mayor of a major city region hungry for more devolution and recognising that this country for far too long has held power, resources and decision making in this place when it should be out across the country instead.
18:28
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18:29
None Portrait Speaker 16
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It's a pleasure to serve under you as chair, Mr. Twigg, and I'm grateful to have secured this debate today. I believe what I'm about to set out is one of the most significant and least understood failures in our country's local authority waste and recycling policies. It concerns aluminium, the most valuable material in every household recycling bin in Britain. We should ask ourselves, what happens to aluminium cans that residents put out for the council to collect? What do councils do with that aluminium? Is it managed in the best possible way? And how does disposal of aluminium impact the government's critical minerals strategy? It's aluminium recycling targets and circular economy objectives.

For many years I've been collecting used aluminium from businesses in my constituency. Once I've collected enough, it goes to our local scrap merchant and I donate the money to local charities. Recycled aluminium is roughly ten times the value of mixed plastic waste, and several times the value of paper or cardboard as aluminium can be recycled indefinitely. This makes it the most valuable material that councils collect from households by a very wide margin.

I knew that a number of councils in my region, including my own, have an efficient kerbside collecting scheme and returned much of the commodity value of the aluminium collected to the council's coffers. But I wondered about the rest of the country how much aluminium is recycled each year? What happens to it once councils have collected it? Other councils getting a fair income from its commodity value. Is it recycled in the UK or sent abroad? And what, if any, are the government's regulations regarding the export of aluminium? These are some of the questions to which I wanted answers.

So earlier this year, I submitted a Freedom of Information request to over 300 councils across the UK. I asked them what happens to the aluminium collected from their residents kerbside recycling. Whilst I waited for replies, I did some further research on this subject. I discovered from the House of Commons library that about £1 billion worth of scrap aluminium is being sold abroad each year by waste management companies. Industry groups told me that manufacturers are spending about £5 billion importing reprocessed aluminium, according to the aluminium packaging recycling organisation Alipro, whom I'd like to thank for being here today.

We use around 12 billion aluminium cans every year, around 60 or 60%. Yes.
18:32
18:33
None Portrait Speaker 16
-

Desmond lady for her intervention? Yes, of course I agree. And the more that we can do to recycle everything that we potentially throw away, the better. So, so going back to the 12 billion aluminium cans per year, around 60% of them are exported for recycling, with only 40% recycled in the UK. I also learned that while we currently have a high recycling capacity here, next year, the UK will have the capacity to recycle every aluminium can used in the UK.

So by this time next year, there should be no need whatsoever for any council in this country to send its aluminium cans abroad. I shall return to this point later. Environmental groups revealed that every tonne of aluminium recycled in the UK saves 95% of the energy needed to produce primary aluminium of equal importance. Recycling in the UK avoids the carbon emissions of shipping material to smelters in China, India, the USA, Thailand and Greece.

I mentioned these companies sorry countries because according to the manufacturers trade body make UK aluminium industry analyst Al Circle, that's where 84% of our aluminium scrap ends up. Exports of aluminium to the USA are particularly worrying because they've surged by almost 1,200%, from 2000 tonnes to 24,000 tonnes in just 12 months. Aluminium scrap is exempt from President Trump's tariffs on primary aluminium, so the waste management companies are profiteering by sending as much scrap aluminium there as they can.

In April, answers to my FOI requests began to arrive. The results were revealing far too many councils couldn't say where their aluminium ended up. Too many have no policy requiring their aluminium to be recycled in the UK, and I have since discovered too many councils who do have a UK recycling requirement are blissfully unaware their aluminium is being exported abroad by private waste management companies. The most shocking thing my research revealed, however, was the number of councils who don't know the value of their aluminium waste and the number receiving little or no income from the sale of this valuable commodity.

Equally alarming was the number of council leaders who refused to answer my question about income, quoting commercial sensitivity. I found those councils that understand the value of their aluminium and manage their recycling well are retaining significant amounts annually amounts of money annually. However, councils of similar sizes and demographics, sometimes using the very same waste management company, are losing money for reasons that simply make no commercial sense. If I may, I'll give you a few examples.

Cambridgeshire County Council made about 1.6 million from recycling aluminium last year. West Sussex County Council made about 1 million. Surrey County Council made £2,000. Warwickshire County Council made £500. Lancashire County Council made nothing. Kent County Council made nothing.
18:36
18:37
None Portrait Speaker 16
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Simmons thank you, Mr. Twigg. I thank my hon. Friend for his intervention. No, I would say that probably they've done absolutely nothing. It's clear. I'll give the honourable gentleman an example in a moment of where a council has changed hands. Control has changed hands, and one council has done a really, really brilliant job and there's money to be had. And frankly, when councils are up against it, trying to provide adult social care, children's social care, and frankly, every flipping pothole, it's amazing that they don't get on and tune into this.

So. County councils are not alone in this income discrepancy. It happens in unitary authorities too. So South Gloucestershire Council made £500,000. One of my own councils, North Somerset, made £400,000. But North Lincolnshire made absolutely nothing. Doncaster Borough Council made 300 000. Coventry Borough Council nothing and Leicester City Council nothing. I've an interesting example which comes from Nottingham. So the Labour led City Council made an impressive £300,000 from the sale of its aluminium reform led Nottinghamshire County Council, which serves three times the population of the city itself made absolutely nothing.

So something has gone awry there. According to the Local Government Association, aluminium cans are worth some £54 million per year to English councils. Now, if the responses I've received from my FOI questions are anything to go by, that seems to be a sizeable underestimation. I want to return to this question of commercial sensitivity. I understand that contracts between councils and waste management companies can contain some commercially sensitive terms and information.

However, the question of how much income a council earns from the sale of recyclable materials collected from its residents is surely a matter of public interest and should not be hidden behind exemptions. Residents who sort their recycling every week are entitled to know where their recycling is going, if for no other reason than it encourages them to keep recycling and to recycle more. Secrecy doesn't help anyone in this arena. The Freedom of Information Act rightly provides exemptions for genuine, commercially sensitive information, but I trust the minister will agree with me that income from aluminium recycling is hardly a trade secret.

This should be a matter of public record. Now the Minister has two councils in her constituency. Both replied to my Freedom of Information request, stating they couldn't identify income from aluminium. However, Hull City Council informed its own scrutiny committee that aluminium cans are worth £900 to £1000 a tonne and that it takes 80% of the value. East Riding Council told its committee that the revenue was 1.6 million.

So one of my questions is does the minister accept that councils which publish that information for a council committee meeting, should be more transparent with their residents and with the public? And what assurance can the minister give me that she will offer guidance to ensure councils always release this kind of information? The Local Governments Association, Wealth from Waste Review, says that councils across the country received only around 28% of the total financial value of the materials they recycle.

Waste management companies retain the remaining 72%. This disparity cannot be right. So some councils have refused to accept this financial imbalance and have resorted to the courts to receive a fair income for their waste materials. And I refer to the honourable member behind me as to his point about Kent. So I'll give an example. Buckinghamshire Council took its waste management company, FCC environment, to the High Court in June 2020 for.

The council claimed that the 75% 25% revenue share in favour of the waste management company did not reflect the council's entitlement. The High Court agreed and the council was awarded substantial funds for underpayment, going back as far as 2016. As the minister knows, FCC environment now controls the waste management of both of her councils and both of her councils have extended FCC contract through to 2030. South Ribble Borough Council is a clear example of action after political change.

Again, I refer to the honourable member behind me. When Labour took control of South Ribble, the new administration immediately terminated the waste management company's contract, brought services in-house and saved £178,000 in their first year. So where there's political will, injustices can be corrected. What I find puzzling is when local government finances are so tight, why do so many councils, lest this source of extra income slip through their fingers? I wonder how much children and adults care.

And I said, as I said earlier, potholes could be delivered with the extra income highlighted in these examples. This issue is becoming increasingly important to our councils because aluminium is fast replacing plastic and glass across a wide range of drinks and consumer goods industries are turning to aluminium more and more. It is lightweight, substantially more recyclable, and its quality isn't time sensitive in the way that plastic and glass are. Many brands also see it as increasingly a sustainability credentials, especially amongst younger consumers.

In the last few years, annual aluminium can use has expanded from a few soft drinks and craft beers into spirits, wine, coffee and water. Last year, Diageo sold over 80 million cans of Baileys alone. Marks and Spencers sold 35 million aluminium cans containing a variety of drinks, an increase of about a million on the year before and the year before that. Even the whisky industry is looking to aluminium to to replace its traditional glass, although I'm not sure what some honourable members will think about that.

I'm sure the Minister has seen my point. Year on year, right across the country, our councils residents are purchasing increasing numbers of aluminium cans. Year on year, our councils are collecting an increasing number for recycling and at the moment, waste management companies are allowed to sell increasing quantities of this precious resource abroad to the highest bidder. When she replies, I anticipate the minister will offer the Package Recovery Note system and the coming deposit return scheme as possible solutions.

Whilst I plan to seek debates on both of these later in the year, my current research tells me the Package Package Recovery note system has been plagued by fraudulent scams, opening the doors to even more aluminium exports. The minister will know that the Local Government Association claims it does not channel revenue to councils, and has called for changes. As for the deposit return scheme, despite the benefits it may bring, the government is allowing the drinks companies and supermarkets to manage it with no regulations whatsoever to restrict them from exporting as many aluminium cans as they want.

I know that when my constituents put their cans in the recycling bag or recycling bin, they consider that to be recycling. And of course, in one sense they are correct. What's become very clear from my research is that when councils hand over their waste to a private material recovery facility, most consider that is recycling. But that's not the case. All a recovery, sorry, all a recovery facility does is divide the waste into different components.

Consequently, when the aluminium comes out of such private facilities, it hasn't been recycled. In fact, it's nothing more than crushed and broken bits of aluminium. I raise this because the definition of recycling is really important because the current confusion, confusing definition of recycling allows councils to be persuaded, whether honestly or otherwise, that their aluminium is recycled and is recycled in the UK , when too often after leaving the recovery facility. Waste management companies sell it to the highest bidder abroad.

It's important the minister and her government establish some clarity on this issue. So my questions on this are. I'd like to know what the government's definition of recycling is and what are its main characteristics, and at what point in the process does the government consider items like aluminium are actually recycled? To try and answer that question for myself, I took some of my own aluminium to the largest aluminium can recycling centre in the UK.

The Novelis reprocessing plant in Warrington. I would like to take this opportunity to thank the amazing Alan Sweeney and his team at Novelis for showing me around the plant. I saw how crushed and broken aluminium cans are cleaned, melted down and cast into brand new 27 ton ingots. They're huge. I also saw the almost completed £75 million expansion of Novellus facilities, jointly funded by the government, which once operational, will will allow all the UK's used cans to be recycled here in the UK.

Each year, 8 billion cans are reprocessed in Warrington, 8 billion ready to be rolled into new aluminium cans and bottles. So for me, the question was answered right there in Warrington, aluminium is not recycled until it's reprocessed, ready to be made into a new product. Up to that point it's just scrap metal. This is a definition I believe would resonate with my constituents and indeed with all those who take the time to recycle their aluminium.

I'll return to how this all impacts the government's Critical minerals strategy and circular economy objectives. I believe there is no question it does, and it does so in a manner that makes a mockery of the government's intentions. I give the minister three very clear examples. First, the Critical Minerals Mineral Strategy categorizes aluminium as a national strategic asset central to our defence infrastructure, manufacturing base, circular economy and net zero targets.

It says the UK must secure access to such critical minerals. The amount of scrap aluminium exported abroad each year, each year abroad each year seriously undermines this. Second, one of the critical mineral strategies primary pillars is reducing exposure to volatile global markets. Yet waste management companies are given free rein by the government to export unlimited quantities of aluminium scrap into the very volatile markets, the Critical Minerals Strategy says must be avoided.

Third, circularity is central to the critical minerals strategy. As I've already pointed out, aluminium is infinitely recyclable and reprocessing uses 95% less energy than primary production. Exporting scrap aluminium breaks the circular loop, the critical mineral strategy says, is essential for resilience. All the research my team and I have conducted so far this year has led me to conclude that many of our councils have a good understanding of the commodity value of aluminium they collect from the public.

They manage it well through prudent procurement agreements and secure real value for money for their residents. But far too many fail to take the management of their way seriously. They signed contracts that simply hand everything over to waste management companies, who then profit massively from aluminium and other materials value. Far too many believe they're required. They're required. UK recycling policies are being adhered to, when in reality the truth is shrouded from them and their aluminium is being sold abroad to the highest bidder, lining the pockets of the waste management companies.

I am well aware that the responsibility for this lies not with central government, but with the leadership at local government level. Might the Prime Minister's devolution initiative help here? I urge the Minister and her government to act now, to stop to stop scrap aluminium from councils all over the UK being exported by waste management companies. What those companies are doing undermines all the government's initiatives around the critical mineral strategy and circular economy initiatives.

Aluminium, this vital commodity to our country should not be sent for recycling or reprocessing abroad, while there is capacity to do so here in the UK. So in conclusion, I ask the Minister to give me some reassurance that the government will act on this matter before our national interests are further harmed. Thank you, Mr. Twigg.
18:50
None Portrait Speaker 3
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Jim Shannon.
18:50
18:50
18:51
None Portrait Speaker 13
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Thank you, Mr. Chairman. Again, I want to thank the honourable lady for setting the scene. And she has done this House a favour. A favour in highlighting an issue that perhaps, maybe not many of us were totally aware of. I know I wasn't totally aware of it until I did some research in Northern Ireland. I know the minister have a specific request to the minister, as I always do when I when I finish this, but she speaks very directly to our environmental responsibilities, to our industrial potential, and the unique challenges faced by local authorities in Northern Ireland, which I want to speak to.

So again, I thank the honourable lady for securing this debate, because when we talk about a circular economy and we use that terminology in our last sentence, we must ensure that no part of this United Kingdom is left spinning its wheels in isolation. Mr. chairman, I must remind the House of a of a fundamental structural difference. Of course, the 11 councils in Northern Ireland, including my own superb Ards and North Down Council, are different animals compared to local authorities across Great Britain.

They don't control the schools of the roads responsible. They are different. Instead, waste management and environmental health sit at the absolute, absolute pinnacle of their front line responsibilities. So it's one of the largest single items on their balance sheets when waste policy fluctuates. Our local councils feel the shockwaves immediately. Our councils have worked hard. Mr. chairman, according to the Department of Agriculture, Environment and Rural Affairs in Northern Ireland and Northern Ireland's municipal recycling rates set proudly at some are 50%, but they're hitting a brick wall, and that wall is built out of the unique geographical and market restrictions, which I want to ask the minister.

The minister is always helpful , and I appreciate that very much when it comes to asking questions, and I know the honourable lady will come back to me with some indication of a way forward. Perhaps unlike a council in England and English Midlands that can simply took its baled aluminium onto a lorry and drive it down a motorway to a domestic smelting plant, a council in Northern Ireland faces severe market isolation. We have a smaller domestic market market, fewer local processors and a distinct lack of heavy infrastructure for secondary metal refining.

The honourable lady referred to in her contribution about the balance, and the indication was that they would be able to recycle all aluminium right here in the United Kingdom. No need to have a methodology of getting into that process. We don't have that at this moment. So to get our high value aluminium to the main UK or European markets, our authorities must contend with, and I use this word on purpose the tyranny of distance and the shipping costs.

Every single tonne of recycled metal must cross the Irish Sea. This means our local authorities are at the mercy of volatile sea freight charges, supply chain disruptions. And let's not mince words either, Mr. Chairman. The lingering regulatory frictions of the of the Windsor framework. So if a local council faces bloated logistical costs just to export its aluminium scrap to mine and smelter, the economic incentive to invest in advance sorting facilities begins to collapse.

So for us in Northern Ireland, this is chaos. It just doesn't work at all. And I think that, again, for highlighting this issue, we cannot expect Northern Ireland ratepayers to foot the bill for structural market disadvantages. So, respectfully, I said to the minister, if the government is serious about a UK wide green transition, then there also has to be targeted support. We need the government here to work with the Northern Ireland Executive to invest in local reprocessing infrastructure.

Time has a has focused this issue. But let's be clear. The people of my constituency of Strangford and across Northern Ireland want to do their bit for the planet. Our local government stands ready to deliver, but they cannot do it if they are economically stranded by a lack of market access. So let us give, Mr. Chairman, let us give Northern Ireland councils the tools, the freight backing, the infrastructure support to ensure that it can thrown into a recycling bin.

And Newtownards in my constituency has the exact same value and the exact same future as it can throw it away in London, the Midlands or across this great United Kingdom. Thank you very much.
18:55
None Portrait Speaker 3
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Lib dem spokesperson.
18:55
None Portrait Speaker 4
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Thank you, Mr. Twigg. It's an honour to serve with you and the chair today, and I congratulate my hon. Friend and constituency neighbour, the member for Wells and Mendip Hills for securing this important debate, for her excellent speech and for her continued advocacy on this issue. The Liberal Democrats are committed to delivering a circular economy where value is kept in the system, not thrown away. One that maximises the recovery, reuse, recycling and remanufacturing of products, cutting costs for consumers and businesses, reducing exposure to volatile commodity prices, protecting the environment and creating new economic opportunities.

Mr. Twigg Aluminium is one of the success stories of the circular economy and has an important role to play in this cycle. Aluminium can be recycled indefinitely without quality loss , and cans recycled back can be recycled and back on supermarket shelves within 60 days, and 75% of aluminium ever produced is still in use today. Reprocessing reprocessing aluminium uses 95% less energy and 90% less carbon than primary manufacturing. Aluminium is a critical mineral and recognised as such by both the UK government and NATO.

Reprocessing it domestically protects the broader UK supply chain, supporting defence, construction and green energy infrastructure. But the supply chain is increasingly vulnerable, with scrap aluminium being exported to Asia and the US, while our domestic reprocessing capacity has fallen. UK and EU reprocessing of UK scrap packaging fell from 83% in 2021 to 68% in 2024, and projections show further decline without policy intervention. Amid the impact of UK tariffs and instability in the Middle East.

This is despite UK capacity for reprocessing this material having increased in recent years following multi-million pound investments. Mr. Twigg Somerset's focus on improving recycling rates has been a success. Nearly 150,000 tonnes of waste was collected, 87.5 reprocessed here in the UK, over half of it within the county itself, and Somerset Waste sends its scrap steel and aluminium to reprocessing facilities within the UK. But as my honourable friend stated in opening this debate, the disparity between local authorities recycling arrangements varies widely.

Aluminium can be hugely profitable for local authorities. Somerset gains are considerable gains considerable income from their recycled aluminium, whilst others receive nothing at all. In addition, despite some councils specifically requiring their aluminium to be reprocessed in the UK, it is subsequently discovered that it has been exported to China and with the Deposit return scheme due to launch in October 2027, councils stand to lose used aluminium cans, the most valuable material in recycling bins from from kerbside collection altogether.

So we're going to lose that most important and valuable recycling material because it generates an income for councils when sold as recycling, it's really, really important. So, as my hon. Friend has outlined, transparency is really important here and it is much required. A recent poll found that the single factor most damaging public confidence in recycling is the lack of information on what happens to materials after collection. This indicates that greater traceability isn't just supported by the public.

It could drive higher recycling rates through greater public participation. Mr. Twigg Local authorities play a vital role in managing waste and reducing pollution, yet too many are being asked to deliver world class recycling services on a shoestring budget. They must be properly funded and supported to deliver high quality, consistent recycling services that maximise the value recovered from these materials. Not left to patch together a postcode lottery of provision.

The Liberal Democrats have been keen to see changes to the waste management system that encourage more recycling. But with EPR live since October 2025 and simply Recycling live since April 26th, local authorities are already having to adapt to a changed landscape. The next major shift will be the deposit return scheme from October 27th. Once most aluminium is no longer collected at the kerbside, local authorities could lose a valuable revenue stream. Furthermore, despite these changes, some residents will inevitably continue to place their aluminium in kerbside bins.

So can the minister confirm? Will local authorities be able to claim that deposit for the aluminium items that they continue to collect? Mr. aluminium Recycling sits at the intersection of our climate ambitions, our industrial strategy and our local government funding crisis. So to conclude, I'd ask the minister to address three things. Will she confirm how the deposit? How the deposit will be treated for aluminium cans left in kerbside recycling after doctors launches? Will it contribute to the local authority collection costs? Will Defra ensure local authorities are properly funded to sustain high quality recycling services through this transition, given the revenue they stand to lose? And what steps is the government taking to close the loophole that allows UK collected aluminium, including from councils with UK only reprocessing requirements to end up to end up processed overseas? And I hope that the Minister will give me some answers on this today.

Thank you chairman.
19:01
None Portrait Speaker 12
-

Thank you, Mr. Speaker. It's a pleasure to serve under your chairmanship, and I'd also like to congratulate the honourable member for Wells and Mendip Hills on securing this really important debate, and I'd like to also thank her for the considerable work that she has done to examine how aluminium is collected, recycled and ultimately processed across the country. We know that this is significant because in 2024, 287,000 tonnes of aluminium waste was generated in the UK, of which only 54.7% was recycled across different its different uses.

The aluminium industry contributes an estimated £9.4 billion to the UK economy, supporting sectors all the way from packaging to car manufacturing to energy, infrastructure and defence. And of course, the government has rightly recognised aluminium as a critical material. Aluminium, as has been referenced, is one of the most valuable materials within the household recycling stream. It is vital, therefore, that councils should have a clear understanding of what they are collecting, what the material is worth and what happens to it when it leaves leaves their possession.

If neighbouring local authorities are receiving dramatically different returns from a comparable aluminium material, why is that the case? As has been rightly pointed out, actually by the honourable member and by those that have contributed in the debate so far, it would be very interesting to understand and to know whether Defra and the Minister is looking at the scale of those different differences nationally, as the disparities have been raised throughout the debate. It is also a matter of public confidence because, rightly, residents are repeatedly encouraged to recycle, and rightly so, because they believe that what they are doing is having a positive impact on the environment.

So surely they are also entitled to know what happens in the recycling process itself. And if a council cannot say confidently where the aluminium ultimately goes, how can residents and how can elected councillors scrutinise what taxpayers are receiving and whether it is value for money? And therefore, I hope that the Minister agrees that greater transparency is needed throughout the whole system, and I would like to understand what steps the government is taking to ensure that councils have the information and the expertise that they need to properly scrutinise the process and ultimately make the right decisions.

And that leads me on to the second major issue that has been raised in this debate the sheer amount of valuable aluminium scrap leaving the United Kingdom. The figures are striking. The UK currently exports almost half the aluminium scrap it produces. At the same time, the UK spends around £5 billion importing aluminium. Make UK has warned that the rate of export that continues risks affecting future industrial resilience, and estimates that the domestic aluminium scrap sector may need to grow by around 25% every year to meet the anticipated demand from British industry.

So to be clear, the conservatives strongly believe in free trade. Aluminium scrap is traded internationally, and it would be wrong to suggest that every tonne of exported scrap represents a policy failure. But it is important to stress here that the government should not ignore the wider strategic consequences when increasingly large quantities of a material that in itself is designated as critical are leaving the country at the same time. As demand from British industry is expected to rise.

If the government designates aluminium as a critical, as it has done so because it is essential to defence, energy, car manufacturing and other key industries, it is surely reasonable to ask whether we are retaining enough of our own secondary aluminium to meet our own growing requirements, and we have British businesses investing in recycling infrastructure right here, British industries demanding more aluminium and councils are exporting large quantities of that material abroad. That cannot be right. And therefore, I would ask the minister what proportion of exported aluminium could be processed here.

What assessment has the government made of the implications of scrap aluminium exports for British industry and manufacturing? And what conversations is the Department in Defra having with the Department for Business and Trade to ensure that our recycling policy and our industrial strategy are pulling in the same direction. And that brings me on to the extended producer responsibility and packaging. There is a huge concern that the sheer cost of Labor's implementation is having a detrimental impact in the right direction.

The office for Budget Responsibility has estimated that EPR will raise around £1.6 billion a year on average over the first five years. But it also recognises that Defra is estimation from their own information. It is likely not to have a material impact on recycling rates or packaging waste volumes over that period. If businesses are being charged that much, and the cost of that is ultimately being passed on to consumers through higher prices, ministers must be able to show what improvement it is having ultimately on recycling rates in this country.

Therefore, I ask the Minister , how much more recycling will EPR actually deliver with regard to aluminium itself, and how much of that funding will result in better local authority recycling services and decision making? We cannot end up with a system where businesses pay more, consumers and families pay more. But recycling rates ultimately don't move at all. It is vital that the. For the success of EPR that these measures are open and transparent.

Britain has an extraordinary, valuable and useful material in aluminium. It can be recycled time and time again and supports industries worth billions of pounds to our economy. The government itself has designated it as critical, yet we are still exporting almost half of the aluminium scrap we generate. Local authorities do not always know where that material goes that they collect or where it ultimately ends up. Some appear to be securing dramatically better returns for their aluminium than others, and at the same time, British recycling businesses are investing in capacity and British manufacturers are increasingly needing the very aluminium they are allowing to leave this country.

That should concern ministers opposite. The previous government implemented much of the framework in place, but the challenge for the current government is now to ensure that these frameworks work effectively. If businesses are being asked to meet enormous costs through EPR, they must be able to see better recycling in return. If councils are collecting valuable material, taxpayers deserve to know where it goes and whether they are receiving proper value for it. And if aluminium is genuinely a critical resource, then government policy should reflect that reality.

We need a system that recycles more uses . That recycled material at home, not necessarily abroad, gives councils better value for money, protects businesses and consumers alike from unnecessary costs, and strengthens British industry. Ministers now need to show that they are capable of meeting that challenge.
19:08
None Portrait Speaker 3
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Mr..
19:08
None Portrait Speaker 19
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Thank you, and it's a pleasure to serve under your chairmanship, and I welcome all honourable members back. And it's good to start with a debate where there is much agreement. And I thank the honourable member for Wells and Mendip for securing this debate, and I'd like to take a moment to pay tribute to the previous Minister for nature at the Department. The member for. I'm going to try and remember where her constituency is.

I'll come to me in a moment who did so much to progress the reforms I will go on to mention, including the deposit return scheme, which has a clear relevance to today's debate and will play a vital role in increasing the capture of drinks containers and improve the quality of material collected for recycling and reduce litter. And I am a huge supporter of the deposit return scheme and I will continue the work and her legacy. And I would also like to recognise a long standing interest of the honourable member for Wells and Mendip Hills on this particular issue, and I was reading about how she's been collecting aluminium cans herself, using that for local charity.

I think that's a brilliant idea. What a nice way to sort of reduce litter in a local area and raise money for charity. And of course, my hon. Friend the member for Coventry East. And we should think about the principles such as materials being used as valuable resources. And I wholeheartedly agree with that. And I also agree with the comments the lady was making about fraud in the system.

She'll be aware that only a couple of weeks ago, there was a big announcement from the Prime Minister on waste crime and how we're going to crack down more on waste crime. I went to go visit Kidlington, which looks a heck of a lot better than it did previously. All nicely cleared up. So she's right to talk about fraud and how we can increase transparency in the system, how we can look at registration. There was a consultation on reforming the packaging recycling system earlier on in the year.

That's looking at changes just to address those issues that she mentioned. Now really there are two issues. It seems to me when it comes to recycling, one is how do we collect more of the things that we should be recycling and not putting them into landfill? And then the other issue, which I'm particularly passionate about, is how do we recycle more of those here in the United Kingdom? We have a throwaway culture still here in the UK.

We throw away so much of the stuff that can be reused and recycled. And if we think about and has been highlighted here, the huge value of what we put into our bins and into our councils. Now, one of the previous members, the member for Tunbridge Wells, mentioned the problems he's having in his own constituency, in his own council, not recognising the value of what they're actually throwing away. And of course, there are many reforms we can do here in government, but there's not much we can do about incompetence.

But our recycling rate at the moment is kind of stalled between 42 and 44% for years. Apart from, I have to mention in Hull City Council, where we actually recycle 51% of everything we collect, and considering the area and the demographic we have and the challenges that we have. And I could spend the whole debate talking about flats and recycling, but I won't. But, you know, the challenges that we have is hugely, hugely important. And I completely agree with all the comments made by honourable members that every tonne of aluminium that we capture is a tonne.

That needs to be said if we don't recycle it dug out of the ground somewhere, sent across the world somehow. I mean, it makes complete and utter sense to recycle more of what we have here in the UK, because not only is it good for the environment, it's also good for industry, it's good for the Prime Minister's ambition on the reindustrialisation of our country and creating jobs in different areas, in bringing back manufacturing and expanding our manufacturing base. I mean, what is there not to love about doing all these kinds of things? Which is why, you know, I'm quite passionate about it and I'm so delighted to now have this on within my brief.

Now, the honourable member asked about some councils that are losing out for aluminium recycling. Of course, there's as she knows from all the in-depth research that she's done on this, they have different contracts, they have different agreements, etc. and I can raise that directly with the Mhclg minister to see what can be done. More on transparency from different point of view. We do publish a monthly market overview so councils can see what the market prices of aluminium, because that's obviously something that Defra has.

But I'll have to speak to Mhclg ministers about how they can encourage councils to share it. Now, I would have thought I would have thought from my own personal point of view that they would want to, because if they think the neighbouring council is getting a better deal than they are, surely they would want to do that? Of course.
19:13
19:14
None Portrait Speaker 19
-

Absolutely. We need to keep building on the reforms that we've introduced and make things more simple and more transparent for everyone. And I completely take the point as well, that was made that if local people have faith, you know, if you're living in an area nearby aluminium recycling factory, you're going to be really incentivised to recycle all your aluminium. So, and I will raise the point with, as I say, with you and the minister around, how can we encourage councils to be be more transparent about this? And before I sort of move on to the next part, I just want to address the points from my hon.

Friend the member for Strangford, who raised a serious issue, and I think it's great that they're recycling 50%. That's really that's really impressive. But I absolutely recognise the point he's making around the ease of which that can be recycled. And if they're collecting the material, how quickly they can recycle this. So Defra officials are going to work with and meet with officials in Northern Ireland on the implementation of the deposit return scheme and obviously see how we can support them to be as successful, if not more successful than than here on the mainland.

Lots of people raise concerns around exports and what are we doing about exports now? Of course, legitimate exports of waste for recovery are permitted when they comply with domestic and international controls. Reprocessing and exporters must be accredited by the relevant regulator. You've heard me mention about the package recovery note reforms as well. And where the UK cannot recycle materials economically, exports help those materials be recycled rather than sending them to landfill or incineration, which is the worst of all worlds, and the new fit and proper person test for operators, together with monthly reporting requirements, further strengthens oversight of this part of the market.

However, I will say again, my personal feeling is I would love to see more of it recycled here in the UK.
19:16
19:16
None Portrait Speaker 19
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Well, absolutely. Our aim is for 65% of municipal waste to be recycled. And for aluminium packaging, we're looking for 67%. And she mentions Novelis, which is the leading leading aluminium producer and recycler. And that has committed, I think, as she was alluding to, 65, £66.5 million to upgrading its aluminium recycling plant, one of the things that we're hearing is actually the changes we're doing through the deposit return scheme, which means higher quality collection of aluminium because of the way the deposit deposit return scheme works, mean that they are looking more to expand and to do a lot more, which I think is fantastic because it's creating highly skilled jobs in these areas.

And some of the other reforms I've mentioned already extending producer responsibility, simple recycling , deposit return scheme, all of these together, those three different reforms. Industry estimates that they will underpin £10 billion of investment in recycling, new sorting and processing facilities and create 25,000 jobs. That's jobs here in the UK, UK jobs for people in this area, in creating and supporting growth in every postcode, which is exactly what the Prime Minister is talking about. And I think that is something that is really quite exciting, and that is because of those three reforms that have been introduced by this government.

And aluminium demonstrates exactly why the transition to a circular economy is not some academic theory, but something that matters to us all. Capturing this valuable resource gives us the opportunity to reduce waste, lower emissions, strengthen industrial supply chains, good for local authorities, good for manufacturers, good for economic growth, good for reindustrialisation of this country , and bringing together stakeholders from steel, aluminium and critical mineral sectors. The government has created under my predecessors, the Metals Circularity Group, to look at how we can create high quality scrap because obviously that matters a lot as well.

So to close, I thank the honourable lady for this. It's great to kick the year off with something that we all agree and all pushing in the same direction, which is how can we recycle more and how can we recycle more? Here in the UK, our existing circular industry already delivers tens of billions of pounds in economic value and hundreds of thousands of jobs. But I know there's more potential that we can unlock. If we get it right.

We can build something durable, a circular economy that turns yesterday's rubbish in tomorrow's raw material that delivers growth, resilience and jobs in every corner of this country. In fact, growth in every postcode, to borrow a phrase from the new PM. So that is the outcome I'm focusing on delivering for every council, for every corner of this country. . I want
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None Portrait Speaker 3
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to wind up.
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