Asked by: Lord Patten (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the number of adults in England and Wales who cannot acquire or deposit cash due to a lack of access to debit cards or the internet.
Answered by Baroness Penn
To ensure access to cash is protected, the government is currently taking legislation through Parliament as part of the Financial Services and Markets Bill. Following a public consultation, the Bill will establish the Financial Conduct Authority (FCA) as the lead regulator for access to cash and provide it with appropriate powers to seek to ensure reasonable provision of withdrawal and deposit facilities. In exercising its powers, the FCA must have regard to any local deficiencies in the provision of cash access that it has identified and considers to be significant. The government’s view is that this will allow for consideration of local circumstances in all parts of the UK, and will help ensure the most vulnerable are protected. Further details about the Bill can be found on the Parliament website.
This Bill builds on the government’s longstanding commitment to safeguard financial inclusion across the UK, including via the provision of basic bank accounts. Existing legislation requires the nine largest personal current account providers in the UK to provide basic bank accounts, so customers are equipped with a bank card and can access banking and payment services.
The FCA has a considerable evidence base on cash provision and use across the UK. Analysis that was published by the FCA in February 2020 found that 5.4 million people are still reliant on cash. Meanwhile, the FCA’s analysis shows that, as of the end of 2021, over 95% of the population are within two kilometres of a free-to-use cash access point, such as a free-to-use ATM, bank branch or Post Office branch.
Finally, Treasury Ministers and officials have meetings with a wide variety of organisations in the public and private sectors as part of the process of policy development and delivery. Details of ministerial and permanent secretary meetings with external organisations on departmental business are published on a quarterly basis and are available on the gov.uk website.
Asked by: Lord Patten (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government, further to the Written Answer by Viscount Younger of Leckie on 27 October (HL2608), what are the major vulnerabilities in the non-bank sector in the UK that they have identified over the last five years.
Answered by Baroness Penn
The Bank of England’s Financial Policy Committee (FPC) is responsible for identifying, monitoring, and taking action to address systemic risks and improve the resilience of the UK financial system, including for non-banks. In March 2020, HM Treasury asked the FPC to conduct a detailed assessment of the risk oversight and mitigation systems for non-banks, which was published in July 2021.
The Bank and FPC have undertaken significant other analysis of the non-bank system including reviews into the involvement of non-banks in March 2020 dash for cash pressures and liquidity management practises in funds. The non-bank sector is frequently covered in the FPC’s bi-annual financial stability reports with the next report scheduled for December 2022.
Bank and FPC reporting has highlighted that vulnerabilities or activities within non-banks can amplify and transmit shocks to the wider financial system. For example they have previously highlighted, large increases in margin requirements, excessive fund redemptions, or a forced unwinding of leveraged positions as actions which can all create liquidity pressures within non-banks. These pressures can then be passed onto the wider system through actions such as large asset sales, redemptions from other funds, or through counterparty default risks. Additionally, the supply of market liquidity often retreats during stress events reducing the market’s ability to absorb these without adverse effects.
The FPC report published in July 2021 also noted that gaps in data availability, including between jurisdictions, can constrain the ability of regulators to monitor the sector and for market participants to efficiently price in risk.
HM Treasury agrees with the characterisation of risks in the non-bank sector by the FPC and its report supports recent work by international bodies such as the Financial Stability Board (FSB). The FSB has recently published its 2022 progress report to the G20 on its work to enhance the resilience of non-bank financial intermediation. Maintaining a global approach to the non-bank sector is important given the international nature of the financial system.
As members of the FSB, HM Treasury and UK regulators have worked with international partners to identify and address vulnerabilities in non-bank financial intermediaries over the past two years and will continue to do so in 2023. This has included workstreams on money market funds and open-ended funds to date, with work planned to improve the resilience of margin practices and non-bank leverage.
Asked by: Lord Patten (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the current oversight and supervision of the shadow banking sector within the UK and its dependencies.
Answered by Viscount Younger of Leckie - Shadow Minister (Work and Pensions)
Shadow banks, also referred to as non-banks, form a significant and important part of the financial system. The Financial Stability Board (FSB) estimates non-banks covered 48% of total global financial assets as of 2020.
The Bank of England’s Financial Policy Committee (FPC) is responsible for identifying, monitoring, and taking action to address systemic risks and improve the resilience of the UK financial system, including for non-banks. The FPC undertakes regular monitoring of the non-bank sector, as well as more periodic detailed assessments and stress testing. For example, in 2021 they published an assessment of the resilience of market-based finance (which encapsulates non-banks) highlighting existing vulnerabilities within the system. The Prudential Regulation Authority (PRA) regulates insurers in the UK for prudential purposes. The Financial Conduct Authority (FCA) is responsible for the prudential regulation of authorised non-bank financial firms not supervised by the PRA and is the conduct regulator.
Maintaining a global approach to the non-bank sector is important given the international nature of the financial system. Through the FSB, HM Treasury and UK financial regulators are working closely with international partners to develop global approaches to address vulnerabilities in the non-bank sector.
On 12 October 2022, the FPC published its most recent assessment on the outlook for UK financial stability. The FPC welcomed the Bank of England’s temporary and targeted intervention in response to recent financial stability risk, and emphasised the importance of the domestic and international non-bank work to address vulnerabilities.
Regulation and supervision of the non-bank sector and wider financial system in the Crown Dependencies is conducted by their relevant regulators.
Asked by: Lord Patten (Conservative - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the ability of (1) inhabitants, and (2) tourists, to withdraw cash whilst in the Isles of Scilly archipelago.
Answered by Baroness Penn
The Government recognises that cash remains an important part of daily life for millions of people across the UK, and remains committed to legislating to protect access to cash.
UK Finance’s UK Payment Markets report publishes figures annually on cash use in the UK. Cash remained the second most frequently used payment method in the UK as of 2020, representing almost a fifth (17%) of all total payments made. This is a reduction from 56% a decade earlier and 23% in 2019.
The Financial Conduct Authority (FCA) publishes data on access to cash coverage across the UK. As of the third quarter of 2021, the FCA reported that nearly 96% of the UK population are within 2km of a free-to-use cash access point.
The Government intends to introduce legislation on cash access as part of the Financial Services and Markets Bill when Parliamentary time allows. The Government recently published a summary of responses to the Access to Cash consultation, setting out the Government’s planned approach to legislating for access to cash. The Government’s planned legislation will ensure that people can continue to use cash in their day-to-day lives, and that local businesses can continue accepting cash.
Asked by: Lord Patten (Conservative - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what estimate they have made of the number of people who use cash in transactions; and whether this number is (1) increasing, or (2) decreasing.
Answered by Baroness Penn
The Government recognises that cash remains an important part of daily life for millions of people across the UK, and remains committed to legislating to protect access to cash.
UK Finance’s UK Payment Markets report publishes figures annually on cash use in the UK. Cash remained the second most frequently used payment method in the UK as of 2020, representing almost a fifth (17%) of all total payments made. This is a reduction from 56% a decade earlier and 23% in 2019.
The Financial Conduct Authority (FCA) publishes data on access to cash coverage across the UK. As of the third quarter of 2021, the FCA reported that nearly 96% of the UK population are within 2km of a free-to-use cash access point.
The Government intends to introduce legislation on cash access as part of the Financial Services and Markets Bill when Parliamentary time allows. The Government recently published a summary of responses to the Access to Cash consultation, setting out the Government’s planned approach to legislating for access to cash. The Government’s planned legislation will ensure that people can continue to use cash in their day-to-day lives, and that local businesses can continue accepting cash.
Asked by: Lord Patten (Conservative - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the amount of Russian foreign exchange reserves that are held frozen in the UK.
Answered by Baroness Penn
The Russian government is unable to access any of their foreign exchange reserves held in the UK due to the measures the UK government have put in place that prevent UK persons from providing financial services for the purposes of foreign exchange and asset management to the Russian Ministry of Finance or Russia's Central Bank.
No formal assessment has been made of the quantum of Russian foreign exchange reserves.
Asked by: Lord Patten (Conservative - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment, if any, they have made of the relationship between labour shortages in the UK and levels of economic productivity.
Answered by Lord Agnew of Oulton
Labour shortages are a global issue with increases in vacancy levels across advanced economies. In the UK, there are now over 360,000 more vacancies than prior to the pandemic (three months to October 2021 compared to three months to February 2020).
The long-term effects of the pandemic, including current labour shortages, on productivity levels are highly uncertain. The government has implemented polices that aim to reduce long-term economic scarring by protecting jobs and livelihoods.
In their most recent forecast the OBR revised down their estimate of long-term scarring from the pandemic. The OBR noted that ”Government schemes to sustain viable jobs and support household incomes through the pandemic have proved remarkably successful.”
Asked by: Lord Patten (Conservative - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what steps they plan to take to communicate to the taxpayer the economic costs of public sector pensions.
Answered by Lord Agnew of Oulton
Public service pensions are a crucial part of the total remuneration package for public sector workers, this includes the current OBR estimate of a £1.9 bn Exchequer top-up payment for 2020-21 and £1.89 tn in liabilities. The Government pays close attention to the cost of public service pensions to the taxpayer, forecasts of which are regularly published by the OBR on a cashflow basis in its Economic and Fiscal Outlook[1] and Fiscal Sustainability Report[2]. Information on long-term public service pension liabilities can be found in the Whole of Government Accounts[3].
[1] https://obr.uk/efo/economic-and-fiscal-outlook-march-2021/
[2] https://obr.uk/fsr/fiscal-sustainability-report-july-2018/
[3] https://www.gov.uk/government/publications/whole-of-government-accounts-2018-2019
Asked by: Lord Patten (Conservative - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what plans they have to raise the issue of debt relief for the world's poorest nations during any forthcoming meetings of the G20.
Answered by Lord Agnew of Oulton
HM Government is concerned that the COVID-19 pandemic has exacerbated the debt vulnerabilities low-income developing countries, which were already at worrying levels before the crisis.
While the UK cancelled most of our low-income developing country debt under the Heavily Indebted Poor Countries (HIPC) Initiative, the Chancellor joined his G20 counterparts to commit to a temporary suspension on debt service repayments from the 77 poorest countries under the debt service suspension initiative (DSSI). Through the DSSI, official creditors will provide up to US$12bn of cash flow relief to help countries respond to the health and economic impacts of COVID-19.
The Chancellor raised the DSSI with his G20 counterparts this month to ensure full and transparent implementation and to announce a UK contribution to the African Legal Service Facility to empower borrowers to engage with their commercial creditors. The DSSI provides the breathing room for countries to respond to the crisis and for the international community to determine what further support may needed for countries on a case-by-case basis. If debts do require restructuring, the UK will work with the Paris Club of official creditors, IMF, and WBG to support equitable debt reductions and long-term sustainable growth.
Asked by: Lord Patten (Conservative - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the economic resilience of the Isles of Scilly.
Answered by Lord Agnew of Oulton
We recognise that every region and community, including the Isles of Scilly, will be feeling the impacts of this crisis and we are working to monitor the impact of Covid-19 on local communities across the United Kingdom.
The Government has provided an unprecedented national package of support; supporting businesses, protecting jobs, and providing our public services with the resources they need to cope with the current economic emergency. These measures are helping the most vulnerable people and business across all parts of the country.
We are working closely with local areas to make sure that individuals and businesses in all regions are directed to the right support during this difficult period.