Backing Business to Create Economic Growth

John Glen Excerpts

Monday 18th May 2026 Commons Chamber

[Peter Kyle]

I am grateful to the hon. Gentleman for giving me the opportunity to point out that, in my Department, the overall net regulatory burden is reducing, not expanding. I will not stand in front of the Tories and apologise for giving new rights to workers that are fit for the age we are living in. Over their entire 14 years in office the Tories failed to make sure that people have protections and rights at work that are fit for the age we are living in. We can move forward with growth in the economy that takes forward businesses and the people who work in them. That is to be celebrated, not condemned like the Tories are doing.

[John Glen (Salisbury) (Con)]

The right hon. Gentleman is, quite reasonably, setting out his assertions about where he wants the Government to go, but does he not see the irony? After all the events of last week, the cost of borrowing in the UK is higher than that of many of our competitors, and all business leaders say they feel the instability. The right hon. Gentleman’s words will not ring very true for people who seriously wonder about the Government’s future direction, with putative leadership contenders talking about fundamental changes in direction and different fiscal rules.

[Peter Kyle]

The right hon. Member mentions irony; this is from the party that gave us the Liz Truss mini-Budget, which wreaked havoc on our economy. Mortgage rates went up for every mortgage holder across the country, with inflation peaking at 12%, yet the Conservatives talk about instability. The country still lives with the instability that they wreaked on it.

Our major expansion of DRIVE35 is channelling investment into batteries, electric motors and power electronics—part of the biggest Government investment in the British car industry since the second world war. “Invest”, “modernise” and “protect” are the watchwords for the new industrialisation of Britain through our biggest industries, our biggest sectors and our boldest companies.

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[John Glen (Salisbury) (Con)]

I congratulate the Chief Secretary to the Treasury, the hon. and learned Member for Northampton North (Lucy Rigby), on her elevation to her new position. The subject that I want to focus on—the enhancing financial services Bill—makes me reflect on the fact that I was in office as Economic Secretary for 1,640 days and, since then, we have had seven Economic Secretaries. I fully concede that several were from my party, but it is regrettable that there is not a degree of continuity in that role, because one of the most fundamental challenges facing the financial services sector, which is so important to securing enduring growth, is having Ministers who are able to maintain a relationship with the regulators and work through what, contrary to the way our politics is conducted these days, are quite complicated and delicate changes to regulation, capital requirements, and the way in which the consumer interacts with banks and financial services. I think it is deeply regrettable that that has come to pass.

However, I welcome some of the legislative measures put before us in the King’s Speech, such as the changes to the senior managers regime, removing the degree of certification necessary; the streamlining, essentially, of the functions of the Payment Systems Regulator into the Financial Conduct Authority; the re-anchoring of the Financial Ombudsman Service into the FCA, removing a degree of arbitrage existing in the marketplace; and adjustments to the ringfencing regime. Those are good things, and I am sure that we on the Treasury Committee and across this House will examine the detail of them.

I want to make three other points, if I may, about some of the challenges we face in the economy and financial services. First, we have to own the trade-offs that exist between financial stability and lending capacity. Post 2008, we made a number of decisions as a country to secure stability on an enduring basis, and we have now become too reluctant to recognise that the world is a completely different place. The question this House needs to answer in 2026 is whether the same calibration remains appropriate, and whether the proposals in the enhancing financial services Bill—for example, on ringfencing—go far enough. Are we used to holding on to a framework that protects and apparently gives stability, but which is in fact stopping significant tranches of capital being available to grow businesses and grow the economy?

The second area with which I am very preoccupied is the consumer duty. In the other place, the Lords Financial Services Regulation Committee published a report last year, called “Growing pains”, which explicitly identified the consumer duty’s lack of clarity as a source of

“regulatory penalty on investment in UK businesses”.

We must ask whether the time has come when responsibility for where to invest and how to invest should lie more with the individual consumer. We are advancing this notion that somehow we in this place can define all the checks and balances, which we delegate to the regulator, and the moment something goes wrong, we expect that regulator to step in and to offer compensation. The emphasis should now be on reforming the Consumer Credit Act 1974—I think the Government are announcing that today—but that has been taking too long. It was first mooted when I was a Minister several years ago, and we have to be real about the reset that needs to happen as we redefine the level of responsibility that individuals take when investing.

Thirdly, I welcome the regulating for growth Bill’s sandbox measures. They are welcome as a concept in bringing in innovative businesses, in which this country continues to be very strong in financial services. However, we must be real about the fact that the area is dominated by large firms, and the new Economic Secretary will need to work with the regulators to see how we can bring firms in at an earlier stage, so that smaller firms, which may have achieved only a few million in seed round investment, can access the acceleration through that considerable regulatory burden.

Let me finish by making a few other observations about the state of the economy. All Governments intend to do the right thing. The narrative of this Government in their first year was, “We need to reset and bring stability, and from that growth can come.” But when I speak to businesses in my constituency and beyond, I hear that the burdens of the increases in national insurance and the national living wage, the uncertainty around fiscal events, and what happened with regulation have had a material impact. It is not enough to suggest that somehow small retail and hospitality businesses are not where future growth in the economy as a whole is going to come from. That says something about the level of confidence the man on the high street feels about where the Government and the economy are going.

I fear, from widespread reports—notwithstanding today’s welcome news from the IMF, if it proves to be true—that the overall consensus is that the burden of taxation on business and wealth creators has reached a level where people will not invest in this country. Unless the Government grasp that fundamental truth, we will be in a spiral. Every few months there might be a little bit of hope with the adjustment of a prediction, but the fundamental trajectory of confidence in the British economy is just not there. That is reflected in the cost of borrowing which, whether we like it or not, is the markets’ fundamental measure of confidence in the economy’s future, at a time of high borrowing.

I always try to take a constructive view, as I have today. I pointed to the significant positive things in the enhancing financial services Bill, and I welcome other elements in the regulatory growth legislation. But let us have some fundamental honesty about where we are now, notwithstanding all the mistakes that the Governments I was part of may have made. We are where we are now, and we have to be real about the challenges we face to secure enduring confidence and growth in this country.