Chuka Umunna MP

Chuka Umunna MP, a member of the House of Commons Treasury Select Committee, has called on the government to give proper consideration to the remutualisation of Northern Rock, following the invitation to corporate finance advisers to tender to develop and execute a strategy for returning Northern Rock Plc to the private sector.

Today UKFI has issued an invitation to corporate finance advisers to advise on returning Northern Rock Plc to the private sector. The bank was taken into full public ownership on 18 February 2008 by the previous government.

Mr Umunna, who on 21 December 2010 gave a wide ranging speech in the House of Commons making the case for mutuals and specifically arguing for the remutualisation of Northern Rock, said:

“The Coalition Agreement said the government would bring forward proposals to foster diversity in financial services, create a more competitive banking industry and that it would promote mutuals.

“In view of the promises made in the Coalition Agreement it would be wrong for there to be a presumption in favour of re-privatizing Northern Rock, which UKFI’s invitation to tender suggests is the case, without proper consideration being given to remutualisation.

“If the government is serious about promoting mutuals, what better place to start than with the remutualisation of Northern Rock?”

During the 21 December 2010 debate the Minister (responding in the absence of Mark Hoban MP, the Financial Secretary to the Treasury) Robert Goodwill MP said:

“The Government will bring forward specific proposals to foster diversity and increase competition, and I am sure that that will include a role for the mutual sector.”

Mr Goodwill went on to say that Mr Hoban would write to Mr Umunna setting out the government’s position.

Chuka Umunna MP has accused Business Secretary Vince Cable of being “in government but increasingly out of power” following his failure to introduce a disclosure scheme for City pay or take further action on bonuses despite repeated promises to do so.

In May, the coalition agreement promised to “reform the banking system to avoid a repeat of the financial crisis, to promote a competitive economy, to sustain the recovery and to protect and sustain jobs” but this week it emerged that bonus payouts are set to go ahead while no deal has been reached on increasing lending to businesses.

Sir David Walker’s review of the financial services sector, set up under the previous government, recommended new rules on the disclosure of bankers’ remuneration within pay bands above £1 million in December 2009. Legislation was passed to allow this scheme to be introduced but has not been put into place by the new government.

This is despite the fact that, in its June Budget the coalition government pledged to take forward these proposals with “action to tackle unacceptable bank bonuses” including a consultation on the remuneration disclosure scheme.

Last month, during a Treasury Select Committee hearing RBS chief executive Stephen Hester told MPs that he would not oppose the introduction of a remuneration disclosure scheme and that implementing one unilaterally would not disadvantage financial services sector in the UK.

This morning, Chuka Umunna MP asked Mr Cable why despite his promises to increase transparency, no action had been taken. He said:
“On 23 November the Business Secretary said: “Transparency is key to creating confidence in any commitment from our banks to behave more responsibly on pay”.
“Yet his efforts in Cabinet to implement a City pay and bonus disclosure scheme have come to nothing. On 19 December he was still claiming: “There is much more disclosure in some other Western countries, and this is something we can do, something I can do.”

“Yet the Chancellor will not allow him to do anything. Does not the Government’s inaction on this issue demonstrate that we have a Business Secretary in office but increasingly out of power?
He went on to ask Mr Cable on whether he thought the £4 million package reportedly being received by outgoing Lloyds CEO Eric Daniels was acceptable.

Banks are set to pay out billions of pounds in bonuses after reports that the government will not be taking any further action on the issue, it has emerged.

According to research by Reuters, the profits of the UK’s top five banks soared in 2010 to £37bn and are predicted to rise to £51.7bn in 2011. The profits of taxpayer-owned Lloyds Banking Group and RBS are set to more than double in 2011 to £6.5bn and £5bn respectively. In addition, the Centre for Economics and Business Research forecasts that more than £7bn will be paid out in the current bonus season.

In May, the Conservative led government’s Coalition Agreement’s first section promised tough action on excessive remuneration in the financial services sector: “We will bring forward detailed proposals for robust action to tackle unacceptable bonuses in the financial services sector”.

In a speech on financial services given on 26 October 2009 in London Docklands, the then Shadow Chancellor George Osborne said: “It would be inexcusable for banks to pay out big bonuses to their staff, when there are so many businesses that need that cash.”

“It is time for the government to act – and act decisively. We cannot wait for the Prime Minister’s promised land of a new responsible bonus culture which looks more remote than ever.”

On 14 August 2009, Mr Osborne told The Guardian: “It is totally unacceptable for bank bonuses to be paid on the back of taxpayer guarantees. It must stop.”

Chuka Umunna MP, who sits on the Treasury Select Committee, commented:

“Ministers’ attempt to portray themselves as innocent bystanders while banks pay out millions in bonuses will simply not wash whilst the government’s austerity package begins to bite and thousands of public sector workers are being sent redundancy notices.”

“Although ministers have talked the talk on bonuses, this has not been backed up with any action apart from a timid bank levy set at an unacceptably low level and they have refused to implement a remuneration disclosure scheme to expose irresponsible City pay practices – this is despite the fact at least one major bank chief executive has indicated that such a scheme is a measure they could live with.”

“In 2009 the Chancellor said government should act in light of unacceptable bank bonuses stating that we could not wait for ‘ promised land of a responsible bonus culture’ but, now in power, he chooses to sit on his hands.”

The Metropolitan Police faces a cut of £331.3m in real terms over the next two years alone, it has emerged.

The figure for funding between financial year 2010-11 and 2012-13 comes from House of Commons Library analysis of the government’s recent announcements on police funding. While the statistics published by the government are in cash terms, this new figure shows the true impact of the cut after inflation is taken into account.

In 2012/12, Metropolitan Police funding will be cut by 7.5 per cent or £159.2m in real terms and 8.7 per cent (£172.2m) in 2012-13. Over the full four years of the spending review, police forces will see their funding cut by up to 20 per cent in real terms.

Streatham MP Chuka Umunna has recently met with local police chiefs to discuss how the funding cuts will affect the local area.

Commenting, Mr Umunna said: “The police have been making huge efficiency savings in recent years and my local officers are clear that any further cuts to police funding will directly affect frontline services.

“By imposing cuts of this speed and scale, the government has put Metropolitan Police in an impossible position. The Home Secretary has ignored warnings that this could mean thousands fewer police officers across the country.

“I am very concerned about what these cuts will mean for policing in our area and that they could undermine the fantastic progress the police have made in tackling crime and anti-social behaviour.”