Eurozone

Debate between Lord Bilimoria and Lord Sassoon

Monday 9th July 2012 Lords Chamber

[Lord Sassoon]

I am grateful to my noble friend for confirming the success of the recent European Council, a Council which confirmed among other things that the single market had to be considered in the context of fiscal union, which brought important parts of the new EU patent court to London, and which considered a raft of other growth-related matters.

[Lord Bilimoria]

My Lords, will the Minister confirm that the Government keep pushing the eurozone countries to go in for more fiscal and monetary union and yet do not seem to accept that that cannot take place unless there is a sovereign union in the way that there is in the United States of America or a country such as India? Why do the Government not accept that, and why do they keep encouraging the eurozone countries to pursue more and more fiscal and monetary integration?

[Lord Sassoon]

My Lords, I am pleased to say that no encouragement is now needed from the UK. The paper by the four presidents—the presidents of the European Council, the European Commission, the European Central Bank and the Eurogroup—set out what they believed to be appropriate in relation to fiscal and monetary union. That work will continue and the UK is participating in the discussions in and around those reports. We are being fully supportive of those efforts.

Banking Reform

Debate between Lord Bilimoria and Lord Sassoon

Thursday 14th June 2012 Lords Chamber

[Lord Bilimoria]

My Lords, building on what the noble Lord, Lord Eatwell, has just said, if we look back at the financial crisis, the FSA was asleep on the job, and that is being addressed by the Financial Services Bill. There is no question about that. The organisations that have got away scot free in the banking reform and the Financial Services Bill are the credit rating agencies, which were so much to blame globally for the crisis, the credit crunch and the great recession. Will the Minister address that point? Secondly, does he agree that it is surely a question of balance? Have we got the balance right with the banking reforms? There is no question that the good point about the big bang is that it opened up the economy, but the negative is that it is probably too open and not regulated enough. Are we going too far here? Quite frankly, this looks like Groundhog Day to me. We have been here before in 1933 with the Glass-Steagall Act. What lessons have been learnt from that? Have we not learnt?

[Lord Sassoon]

The noble Lord, Lord Bilimoria, makes a very good point about the credit rating agencies. The Bill is about the structure of banking. Credit rating agency regulation is now essentially in the hands of the European Commission. The appropriate sub-committee of your Lordships’ European Union Committee produced an excellent report, which we debated recently, on this subject. Yes, we must keep the subject of credit ratings under discussion, but the competence is not primarily here, and it is not the subject of the Statement we are addressing.

On the lessons of history, Glass-Steagall and so on, this is a different model from the Glass-Steagall model and from the model that the US is implementing at the moment. The commission talked to a very wide range of people and, I am sure, studied the history very carefully. In the knowledge of the current and historical international precedents, that was its fundamental judgment about the high but flexible ring-fence. I believe it has come up with something that takes all those lessons on board, is appropriate for what we need now and is not going to impact significantly on the necessary driver for growth in this country, which is keeping credit flowing this year, next year and the year after.

Debt

Debate between Lord Bilimoria and Lord Sassoon

Tuesday 29th May 2012 Lords Chamber

[Lord Sassoon]

My noble friend is right to point out quickly the confusion that many of us occasionally suffer on the difference between debt and deficit. Of course, the two things are different.

[Lord Bilimoria]

My Lords, does the Minister agree that one of the main reasons for the financial crisis and the great recession was the record level of low interest rates—we were talking of 5%? Now, for three years, interest rates have been 10 times lower than that. Do the Government want to help money to flow through? Lending needs to increase to small businesses and it is not happening at the moment. Secondly, could the Minister summarise the Government’s strategy and prognosis for the interaction between debt, deficit, interest rates and inflation?

[Lord Sassoon]

My Lords, I think we shall need a little longer on the latter part of the question. The noble Lord, Lord Bilimoria, raises an important point in that the first thing we have to do is to ensure that interest rates are kept low. I need hardly remind the House that 10-year interest rates, as of last night, were at almost record lows at 1.75%. We want to see the benefit of those low interest rates flow through to businesses, which is why, among other things, we have the national loan guarantee scheme. In the time of the noble Lord, Lord Barnett, there was not 3% inflation but it peaked at 26.9% and interest rates were more than 10%. That is why I know he is sympathetic to the challenge we have and why my right honourable friend the Chancellor is doing such a fantastic job in these difficult headwinds.

Economy: Quantitative Easing

Debate between Lord Bilimoria and Lord Sassoon

Monday 19th March 2012 Lords Chamber

[Lord Sassoon]

My Lords, I reiterate that the MPC has operational control and freedom here. The Government, on behalf of the taxpayer, indemnifies the Bank against losses, so of course any increase in the limit of the asset purchase facility has to be authorised by the Treasury. As to what people’s quotes might be, I know that I get into trouble if I start questioning whether the noble Lord, Lord Barnett, has correctly quoted my right honourable friend. I am sure that he did, but in completely different circumstances. The situation now is that we have tight fiscal policy. Against that discipline, the monetary policy of the Bank of England can be conducted with confidence. Tight fiscal discipline and loose money is the policy prescription. I suspect that that was not the policy prescription when my right honourable friend made that quote.

[Lord Bilimoria]

My Lords, can the Minister tell us of the effect of QE in helping lending flow through to SMEs? We hear about feast and famine with regard to lending to SMEs. Has QE really helped in banks lending to SMEs?

Economy: Capital Expenditure

Debate between Lord Bilimoria and Lord Sassoon

Tuesday 4th October 2011 Lords Chamber

[Lord Sassoon]

My Lords, as the noble Lord, Lord Barnett, knows very well, we have set up the Office of Budget Responsibility to keep track of all the forecast numbers and we will get its update later in the autumn. The critical point is, as my right honourable friend the Prime Minister said at the weekend, we are spending over £3 trillion of public money in four years and we are not going to wreck what we now have in a very low interest-rate environment for the sake of spending a few more billion. We will stick to our spending plans.

[Lord Bilimoria]

My Lords, does the Minister agree that although we need to cut public expenditure there is a very strong case for increasing capital expenditure in these austere times to create jobs and, as the noble Lord, Lord Barnett said, to create growth? Furthermore, will the Government explain what they are doing to incentivise and facilitate the private sector to invest in infrastructure once again to create jobs and desperately needed growth?

[Lord Sassoon]

I very much agree with the noble Lord. That is why in the spending review last autumn we increased the amount of capital spend every year, up to £2.3 billion extra in the final year of the period. That is why we are spending £30 billion on transport—one of the most economically enhancing areas of spend and more than was spent in the previous four years. In the private sector, we are ruthlessly attacking the planning system that is so costly and so time-consuming when people want to put infrastructure in. That is why we are making sure that all the market structures, such as in energy, are conducive to the new infrastructure spend we need. That is why we are looking at the whole area of regulation around infrastructure, because I completely agree with him—70 per cent of the economic infrastructure is going to come from the private sector and we are working to make sure that that money flows.

EU: Credit Rating Agencies

Debate between Lord Bilimoria and Lord Sassoon

Monday 3rd October 2011 Lords Chamber

[Lord Sassoon]

My Lords, there are quite a number of points wrapped up in that question. The first point to recognise is that the credit rating agencies plainly got it wrong when it came to the structured products which were at the heart of the financial crisis. On the other hand, their record in other respects during the financial crisis, and particularly the sovereign debt crisis, has been reasonably good, and all the evidence shows that. Having said that, I completely agree with the noble Lord that competition is very much what the Government would like to see, but the way to introduce competition is absolutely not to have any publicly funded or publicly sponsored credit rating agency. Indeed, Mr Barroso himself recognised this recently by opposing any suggestion of a European publicly funded agency. I agree with the noble Lord that we want to see competition, but not through setting up a government sponsored agency.

[Lord Bilimoria]

My Lords, to follow on from the noble Lord, Lord Foulkes, surely the Minister agrees that these credit rating agencies were instrumental in causing the credit crunch and financial crisis by rating what ended up being worse than junk bond instruments as triple-A? They were allowed to get away with being funded by the people they were reporting on. Is there moral hazard with the banks? This is moral hypocrisy. Is enough being done to address it?

[Lord Sassoon]

My Lords, I have already said that the credit rating agencies got it completely wrong when it came to the rating of structured products. As a result of that, there have already been two regulations, so-called CRA1 and CRA2, out of Europe since the crisis and a third set of proposals is expected in November this year. The first two sets of proposals address the matters which the noble Lord raises. There is now a system of registration. There are new regulations around conflicts and how to handle them, as well as around transparency and disclosure. I agree that the issues he raises are serious, but they are very much the ones which the European regulations have addressed.

Finance: Off-exchange Trading Venues

Debate between Lord Bilimoria and Lord Sassoon

Monday 18th July 2011 Lords Chamber

[Lord Sassoon]

My Lords, I am no great expert on dark matter and black holes, but I think the distinguishing point about dark pools is that they are a venue for trading that enables confidential orders to be submitted and matched using a reference point that comes from a transparent market. As soon as the trade is done, the details are reported publicly. Therefore, there is confidential trading and then full reporting, which is the critical feature of the market. Various platforms are available for the market, which accounts for something of the order of 7 per cent of UK and European equity trading. It is not a dominant part of the market by any means, but it is one that we are watching.

[Lord Bilimoria]

My Lords, one of the best moves in the mid-1990s was the creation of the alternative investment market, AIM, which has been a great success. I was a director of an AIM company that is now a FTSE 250 company. However, the biggest problem with AIM was always liquidity. Liquidity is an also issue outside the FTSE 250 on the main market. Can the Government do something to improve liquidity? Should more be done or are they happy with the situation?

[Lord Sassoon]

My Lords, I certainly agree that mechanisms that help liquidity such as dark pools, which are run by investment banks, multilateral trading facilities or independent operators, are indeed aids to liquidity if they form a proper part of the market. The proponents of high-frequency trading, too, cite them as an aid to liquidity. I completely agree with the noble Lord, Lord Bilimoria, that the last thing we want for example the European Commission to do is to restrict sensible increases in liquidity in our markets without looking at the evidence base that needs to be assembled.

Oil Prices

Debate between Lord Bilimoria and Lord Sassoon

Wednesday 8th June 2011 Lords Chamber

[Lord Sassoon]

My Lords, I am very happy to confirm that this Government are entirely comfortable with the structure around the MPC and have complete confidence in the governor. I could go on. I have quotes from 40 years ago. I was going to use quotes from 30 years ago but if the noble Lord would prefer me not to use them on this occasion I will not do so. However, his words of wisdom are always my guide.

[Lord Bilimoria]

My Lords, I agree with the Bank of England in keeping interest rates low to support the economy but on the other hand we have rampant inflation: food inflation is 5 per cent; wheat has gone to 70 per cent; corn is 100 per cent. The consumer is being squeezed because we have wage deflation. Does the Minister agree that the Government are between a rock and a hard place? In that situation, should not the Government consider reducing taxes to help the consumer and encourage growth?

[Lord Sassoon]

My Lords, I completely agree with the figures given by the noble Lord for the very considerable increases in commodity prices over the past year. Those are, of course, driven by global factors, but they impact very severely on consumers and businesses in this country. That much I agree with. He referred to low interest rates. This is absolutely critical. We have almost record low interest rates on our 10-year gilts at the moment—3.33 per cent, I think, last night. That is a recognition of the confidence that the Government have in the underlying fiscal policy but it also reinforces that the Government’s contribution is to make sure that we continue to have a prudent view on public finances and do not deviate from the course that we set for reducing the fiscal deficit that we inherited.

IMF and World Bank: Appointment Procedures

Debate between Lord Bilimoria and Lord Sassoon

Wednesday 1st December 2010 Lords Chamber

[Lord Sassoon]

My Lords, I pay tribute to the noble Lord for the distinguished part that he played as chief economist at the World Bank and I therefore listen very carefully to what he has to say. I can confirm that this longstanding, informal agreement whereby the managing director of the IMF was always a European and the World Bank was always to be headed by a US citizen is well past its sell-by date. As I said, we support open and transparent appointments based on merit and in that context, while it is right and appropriate that good candidates from wherever should come forward, the UK’s position is emphatically that appointments should be made regardless of nationality or, indeed, of gender.

[Lord Bilimoria]

My Lords, does the Minister agree that waiting for the appointment of the head of the World Bank is like waiting for white smoke to emerge from the building? We know that the Americans fund the World Bank more than anyone else, but, in spite of that, is it right that the President of the United States, behind closed doors, should have the right to appoint the head of the World Bank in today’s world? With the IMF, why should it be a European? Why can it not be, as the noble Lord, Lord Stern, said, someone such as our mutual friend, Montek Singh Ahluwalia, the deputy head of the Planning Commission in India?

[Lord Sassoon]

My Lords, I will not repeat my previous answers but I draw attention to part of my first Answer. Processes for search, selection and appointment are being worked up by the IMF and the World Bank. I suggest that any candidates that noble Lords think are appropriate for the appointment should apply in due course.

Comprehensive Spending Review

Debate between Lord Bilimoria and Lord Sassoon

Wednesday 20th October 2010 Lords Chamber

[Lord Bilimoria]

My Lords, the Minister has confirmed that public expenditure will go up in actual terms. Historically, 40 per cent was deemed to be the sensible level of public spending expressed as a percentage of GDP and a sensible balance between the private sector and the public sector. Is the Government’s aim to get back to that 40 per cent figure on a regular basis? In this environment, one would need to do that anyway regardless of the budget deficit. In that sense, I welcome the reductions in the welfare budget, which were badly overdue. Although spending on the National Health Service has been ring-fenced, the efficiency savings there are also very welcome and I think that the whole public would agree with them. However, in the coalition Government’s spirit of the transparency, the Chief Secretary revealed to us yesterday that 500,000 jobs would be lost in the public sector, a figure that the Minister has confirmed today. How confident are the Government of those jobs being replaced in the private sector? How confident are they that they have done enough to stimulate growth in the private sector, particularly against a backdrop of increased capital gains tax and higher rates of tax in every area? How difficult will it be?

[Lord Sassoon]

My Lords, I am grateful to the noble Lord, Lord Bilimoria, for drawing our attention to the important question of the balance between the public and the private sectors, which had got completely out of kilter under the previous Government. I repeat that this is not just an exercise in cutting back expenditure, necessary and unavoidable though that is; it also entails a critical rebalancing of the public and the private parts of the economy. What we have announced today will take the public sector part of the economy back towards that 40 per cent figure. In answer to the question about the absorption of the inevitable job losses in the public sector, I draw the noble Lord’s attention to the fact that, in the past quarter alone, the private sector generated 178,000 new jobs. That was in one quarter, so we should be confident, when the Office for Budget Responsibility believes that overall employment in the economy will rise year by year, that that indeed will be the case and that the inevitable reduction in public sector jobs will be more than absorbed.

Bank of England: Economic Forecast

Debate between Lord Bilimoria and Lord Sassoon

Wednesday 6th October 2010 Lords Chamber

[Lord Sassoon]

My Lords, for the avoidance of doubt, the “he” that the noble Lord refers to was the Governor speaking at the TUC conference, not me. There is a considerable question about the path to recovery, but what is noticeable about the Bank of England’s August inflation report is that it clearly states that there is a reduced downside risk to future growth as a result of the fiscal measures taken in the Budget that have reduced the chances of a sharp rise in long-term interest rates. That is one of the findings of the Bank of England that underpin confidence in the steady growth path on which this economy is now set.

[Lord Bilimoria]

My Lords, does the Minister agree that the general view is that the Bank of England’s economic forecasts are too optimistic? In August 2008, when the recession officially started, it said that growth would stay flat, but we achieved a 6.6 per cent decline. Today, it says that growth is going to be over 3 per cent when the OBR and the CBI are closer to 2 per cent. We hear that the Bank of England has new super economic forecasting computers. Does the Minister think that by the economists changing their crystal balls, the leopards are going to change their spots?

[Lord Sassoon]

My Lords, forecasting is not an exact science, which is why, among other things, the Treasury looks at a wide range of forecasts. Indeed, the Treasury publishes regularly the whole range of forecasts that are out in the market. The Bank of England, to its credit, annually reviews its own record in forecasting. The noble Lord may look, if he has not done so already, at a detailed analysis, which is in the August inflation report, of exactly how well the Bank of England’s previous record of forecasting has gone.

Debt Management Office

Debate between Lord Bilimoria and Lord Sassoon

Tuesday 20th July 2010 Lords Chamber

[Lord Sassoon]

My noble friend Lord Higgins raises an important question. I think that it is part of a wider debate at the moment about the responsibilities and levers which central banks have, including, among others, the linkages between the conduct of monetary and financial stability policy. As noble Lords are aware, we are not shy of making structural changes where they appear to be justified, as we are doing by moving banking supervision back into the Bank of England.

That said, I believe that the arguments for minimising conflicts of interest by separating debt management and monetary policy objectives and accountabilities are persuasive. The IMF has maintained the position that countries should have such separation and it has become international best practice among our peer-group countries, including France and Germany.

[Lord Bilimoria]

My Lords, the Americans passed the Glass-Steagall Act in 1933, which was to reform their banking sector. That was repealed only in 1980 and now they have just passed the Dodd-Frank Act. Will the Minister explain the pros and cons of this Government’s proposed banking and financial sector reform compared with the American Dodd-Frank Act?

[Lord Sassoon]

My Lords, there are some big questions. I will try to bring the question asked by the noble Lord, Lord Bilimoria, back to the Debt Management Office and the Bank of England, which will make it more manageable. In the context of a fragile banking system, it is very important that the objectives on monetary policy of the Bank of England, including its ability which it exercised up to £200 billion to use quantitative easing as a way of fulfilling its monetary policy objective, are kept separated from the equally critical role of the Debt Management Office. Thanks to the deficit left to us by the previous Government, it had to issue more than £200 billion of debt last year, which compares with £8 billion in 1998-99. They both have challenging objectives and separation in that sense is very important.

Wealth

Debate between Lord Bilimoria and Lord Sassoon

Monday 5th July 2010 Lords Chamber

[Lord Sassoon]

I am grateful to the noble Lord for asking what action was taken during the period of the Labour Government to reduce wealth inequality, because I can give him the statistics. The HMRC survey showed that the top 10 per cent of households in 1997 owned 54 per cent of the wealth; in 2005, they still owned 54 per cent of the wealth. The Gini coefficient, which your Lordships will be aware measures the dispersal of wealth, had risen marginally from 69 per cent in 1997 to 70 per cent in 2005. That probably shows that whatever action was taken had no appreciable effect.

[Lord Bilimoria]

My Lords, does the Minister agree that the question should be not how much wealth does the richest 10 per cent hold, but how much wealth does the richest 10 per cent generate for this economy? What are the Government doing about the worry of driving away some of the most talented people through the 50 per cent rate of tax, the non-dom levy and increased CGT? Surely we should be attracting more wealth creation. On the other hand, with regard to the question before about the previous Government and reducing child poverty, is it not shocking that we should have child poverty in one of the wealthiest nations in the world?

[Lord Sassoon]

My Lords, I am grateful to the noble Lord, Lord Bilimoria, because he enables me to say yet again how important it is that wealth generation is created and that the balance of the economy is switched from overdependence on the public sector and debt to dependence on the private sector and equity. That is why he did not mention—but I will—the reduction in corporation tax, the fact that CGT did not go up anything like as much as people had feared and a number of other measures in the Budget. He is right to draw attention to child poverty because the previous Government failed to meet their target of halving it by 2010.

Economy: Growth

Debate between Lord Bilimoria and Lord Sassoon

Tuesday 22nd June 2010 Lords Chamber

[Lord Sassoon]

My Lords, I have given the total employment numbers, which will rise in every year of the forecast period. The issue of jobs in the public sector, and indeed in the private sector, has to be put in the context of the enormous deficit-reduction programme that we have. For example, by the end of this period, on the new projections resulting from my right honourable friend’s Budget today, there will be an annual saving of £4 billion in interest payments alone by the end of the period, so you can see how that will translate into increased jobs in the public and private sectors.

[Lord Bilimoria]

My Lords, I am sure that the Minister would agree, as many do, that cuts are essential. Are the Government worried that increasing tax rises could hamper growth and lead to a double-dip recession? Do they genuinely believe that they are doing enough to generate the growth, particularly among SMEs, that is desperately required?

[Lord Sassoon]

My Lords, I thank the noble Lord, Lord Bilimoria, for reinforcing again the importance of growth. I stress that the overall Budget package includes a substantial number of measures that are intended to encourage growth by taking nearly a million people out of tax at the bottom end of the income scale and therefore encouraging them into jobs; by substantial reversals of the previous Government’s package on national insurance contributions; by having a regional element to the holiday on national insurance for young businesses; by ensuring that the capital gains tax provisions are sensitive to the needs of entrepreneurship; and, fundamentally, by reducing the corporation tax burden on companies through our reform of corporation tax, which will enable us to have the most competitive corporation tax regimes in the developed economies.

Financial Services Regulation

Debate between Lord Bilimoria and Lord Sassoon

Wednesday 16th June 2010 Lords Chamber

[Lord Sassoon]

I thank the noble Lord, Lord Myners, although I think that he may have forgotten that he is no longer on the Front Bench. He raises a lot of points. I find it remarkable that, on a day when the Chancellor of the Exchequer has made an historic Statement about restoring the role of the Bank of England, the noble Lord seeks to denigrate my right honourable friend’s announcement. This is a remarkable and important Statement, putting the Bank of England back to where it should have been, from where it was removed in 1997. Let us remember that.

Among other things, the noble Lord says that the report of the banking commission will be too late. It will not be too late, but, of course, this work should have started months ago. The previous Government would brook no discussion of the structure of banking, notwithstanding some very clear steers, not least from the report of the Select Committee on Economic Affairs of your Lordships’ House, Banking Supervision and Regulation. I think that the noble Lord, Lord Eatwell, was even a member of the committee and the sub-committee that worked on the report. The report, dated 2 June 2009, states that,

“the tripartite authorities in the United Kingdom … failed to maintain financial stability and were found wanting in dealing with the crisis”.

Among other things, it goes on to state:

“The Committee recommends that the Government”—

that is, the Government in June 2009—

“should as a matter of priority revisit the tripartite supervisory system in the United Kingdom”.

So it ill behoves the former Minister, the noble Lord, Lord Myners, to say that things are too late.

As to questions of reporting, it will be up to the banking commission to decide what it will do by way of interim reports.

[Lord Bilimoria]

My Lords, does the Minister agree that the formation of the independent Monetary Policy Committee was actually a very good move by the previous Chancellor and has provided both a proactive and a reactive ability to set interest rates? Will he therefore reassure us that the structure and remit of that committee is not going to be tampered with? On the other hand, we know—and the Statement reaffirms—that the tripartite system was an absolute disaster. It was a happy merry-go-round between the FSA, the Treasury and the Bank of England in the good times which then became a disastrous “blame-go-round”. With regard to speed, referred to by the noble Lords, Lord Eatwell and Lord Myners, does the Minister remember that when the Northern Rock Bill went through this House, it was pointed out that in 2006 the FSA had noticed that Northern Rock was a problem and had marked it for review in 2009. That is how disastrous the FSA’s role was in this situation, so speed is of the essence. Can the Minister assure us that the measures set out in the Statement will be put in place quickly?

On the role of the Governor of the Bank of England, whether he is chairman and chief executive put together, the reality is that every senior banker I have spoken to in the past has said that whenever the Governor of the Bank of England called, they would jump, react and listen—and it worked. I am delighted to hear that powers of supervision are to be granted back to the Bank of England. My only worry is that it will not be like the commission and take place in September 2011. Will the Minister reassure us that these powers are going to be repatriated to the Governor of the Bank of England quickly?

[Lord Sassoon]

I am grateful to the noble Lord, Lord Bilimoria, for those comments. I can confirm that the MPC has indeed served the country well and that there are no plans to change its remit. I also agree that the word “disaster” is entirely appropriate and that the FSA got itself into a mindset in which there was far too much of a box-ticking approach and too little consideration for the big picture. But to be fair to the authority, when the whole question of Northern Rock blew up, it did then go on to make a candid, frank and rapid assessment of what went wrong.

I note the noble Lord’s point about the need for speed, and I think we should come back to that after my honourable friend the Financial Secretary to the Treasury has set out further details of the institutional arrangements.

Individual Savings Accounts

Debate between Lord Bilimoria and Lord Sassoon

Wednesday 9th June 2010 Lords Chamber

[Lord Sassoon]

I agree with the noble Lord that there are 1,250 companies on AIM, but of those about 750—60 per cent—have a market capitalisation of less than £25 million. I also remind your Lordships that the purpose of the ISA was to hold mainstream products, so there is a tension between the very many smaller companies on AIM and the fundamental purpose of an ISA. The Government have a number of schemes for assisting the capital raising of smaller and medium-sized companies. I have not seen any evidence that it would be materially easier for those companies, albeit that there clearly would be some effect at the margin, if AIM shares were included in ISAs.

[Lord Bilimoria]

Does the Minister, whom I congratulate on his appointment, recognise that this is an anomaly? AIM was set up, I think, under a Conservative Government in the 1990s to encourage investment into small and medium-sized enterprises, into growing companies. Surely the Government realise that we have to encourage that investment. Why should this be disallowed? AIM is a recognised exchange run by the London Stock Exchange. Do the Government not want to encourage investment when growth is desperately needed in the economy?

[Lord Sassoon]

As has already been pointed out, AIM has been enormously successful, with 1,250 companies listed. The money raised on AIM has helped more than 3,100 companies. Since the start of the market £67 billion has been raised at admission and through further fundraising, which includes more than £16 billion raised by 1,800 smaller UK companies. AIM has been very successful in helping the financing of the smaller and growing market.