Yorkshire Bank

Oral Answers to Questions — Treasury – in the House of Commons at 11:30 am on 5th November 2013.

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Photo of David Mowat David Mowat Conservative, Warrington South 11:30 am, 5th November 2013

What representations he has received on Yorkshire bank and lending to small and medium-sized businesses.

Photo of Sajid Javid Sajid Javid The Financial Secretary to the Treasury

All meetings between external organisations and Treasury Ministers are published on the Government’s website. However, it is not the Treasury’s practice to provide details of all representations Ministers receive. Lending to small and medium-sized businesses is an important issue, and I can assure my hon. Friend that it receives the Government’s highest attention.

Photo of David Mowat David Mowat Conservative, Warrington South

I thank the Financial Secretary for that answer. He might be aware that two years ago the owners of Yorkshire bank announced their intention to downsize in the UK and invest more money in Asia. Since then they have aggressively reduced the size of their UK loan book, despite assurances made to small businesses. That has affected many businesses across the country, including Arley Homes in my constituency, which has been forced into administration, with the loss of many jobs. Is there more we can do to make them behave responsibly?

Photo of Sajid Javid Sajid Javid The Financial Secretary to the Treasury

I know that my hon. Friend raised this issue with my predecessor on behalf of his constituents, and he was absolutely right to do so. The way in which a bank structures its business is a commercial decision, as I am sure he appreciates, so I am unable to comment on it. However, if a bank decides to restructure its business in a certain way, I would expect it to pay due regard to the interests of all its customers and to treat them fairly.

Photo of Bill Esterson Bill Esterson Labour, Sefton Central

Small businesses in my constituency used to borrow from Yorkshire bank, and many have told me that they never missed a repayment, but now the bank simply will not lend to them, despite excellent credit histories. Why are the banks refusing to lend to small businesses that have a strong history of repayment?

Photo of Sajid Javid Sajid Javid The Financial Secretary to the Treasury

May I give the hon. Gentleman some advice on how he can help small businesses in his constituency and elsewhere? The SME appeals process that the Government set up with the banking sector has been very successful, with 40% of businesses that appeal finding it overturned. He can help to advertise that, as the Government will be doing shortly to banks.

Photo of Philip Davies Philip Davies Conservative, Shipley

The point of capitalism is that people who take risks should be rewarded when they are successful and should lose money when they fail. Yorkshire bank has been among the worst for penalising its good customers to try to make up for its own losses. That is an abuse of capitalism. I hope that the Minister will take steps to ensure that Yorkshire bank treats its customers fairly, because in too many cases it has been treating them terribly unfairly.

Photo of Sajid Javid Sajid Javid The Financial Secretary to the Treasury

My hon. Friend has made a number of representations on this issue, and he is right to do so. As I have said, we want all banks to treat their customers fairly, and the Government are absolutely committed to that.

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee, Chair, Housing, Communities and Local Government Committee

I agree with the comments made by David Mowat. Following an article I wrote for the Yorkshire Post, I have received dozens of complaints about Yorkshire bank from small businesses, particularly about being locked into tailored business loans with very high interest rates and very high redemption clauses and payments to get out of them. Will the Minister look at involving the Financial Conduct Authority to see if there could be an investigation into what has been going on?

Photo of Sajid Javid Sajid Javid The Financial Secretary to the Treasury

I believe that my predecessor raised this issue with the FCA, but I would be more than happy to do so again.