Skip to main content

Royal Bank of Scotland

Volume 564: debated on Thursday 13 June 2013

Yesterday, RBS announced that the group chief executive, Stephen Hester, will step down from his position later this year. The decision was taken in the context of moving from the rescue phase to the next phase, and of focusing RBS on becoming a UK bank that provides greater support to the British economy, helping businesses and job creation here, and which can return to the private sector in a way that ensures value for the taxpayer.

As we commend Stephen Hester for the job he has done, it is worth considering how far RBS has come since the onset of the financial crisis. When Stephen Hester took over, the bank was on the edge of collapse with a broken culture, and posed a huge risk to financial stability. It had been bailed out by the British taxpayer at a cost of more than £45 billion. He brought it back from the brink, and since then has worked hard to make RBS a safer and stronger bank that is better able to support its customers.

RBS has changed substantially over the past few years. It exited the asset protection scheme last year, and non-core assets have been run down from about £258 billion in 2008 to £53 billion now; total assets of RBS investment banking operations are down from around £500 billion to £288 billion; short-term borrowing is down by more than £250 billion; its core loan-to-deposit ratio is now below 100%, which means that the core bank is funded entirely by deposits; and the core tier 1 capital ratio has more than doubled. The size and complexity of RBS has been significantly reduced, with a far greater focus on serving its UK customers. Entire business lines have been exited, and there has been a dramatic simplification, rationalisation and de-risking of the bank’s business model. That is an impressive list of achievements, and is one of the largest corporate restructurings in history. Stephen Hester has made an important contribution to Britain’s recovery from the financial crisis. I am sure that all hon. Members would like to join me in congratulating him on all he has done and achieved during his time at the bank. It is reassuring that he is staying on to ensure a smooth transition to his successor.

RBS has outlined the details of Stephen Hester’s leaving package. This is a matter for the RBS board, but I want the House to be fully aware of the terms of this package. At the point of Stephen Hester’s departure, and in line with his contractual obligations, he will receive a payment in lieu of notice representing one year’s salary and benefits. This amounts to £1.6 million. He will not receive a bonus for 2013. At the board’s discretion, Stephen Hester will keep his unvested long-term investment plan, or LTIP, awards. These will be reduced significantly through pro-rating for time of service. These awards are also subject to assessment against published performance conditions at the end of the respective performance period. Following this pro-rating and performance assessment, RBS estimates that the value of the LTIPs would be approximately £3 million at their current share price. In addition, the number of shares that Stephen Hester can receive is capped at 65% of the total, which would be just over £4 million at today’s share price. These payments are in line with his contractual terms, and the share awards will reflect payment for performance up to the point of his departure.

During his five-year term in office, Stephen Hester received one bonus out of a possible five. I also wanted to let the House know that Stephen Hester’s leaving package is expected to be worth about one third of the maximum he could have received under the contract that was agreed in 2008 by the previous Government.

RBS is now moving from the rescue phase to the next phase, which involves focusing on becoming a UK bank that provides greater support to the British economy and is prepared for its return to the private sector. The Government have always been clear about wanting RBS to become a more focused retail and commercial bank that is focused on supporting the British economy and has a much smaller international investment banking arm. RBS has already made progress towards this goal.

I expect the Parliamentary Commission on Banking Standards, which was established last year, to report soon, but let me briefly remind everyone of what the Government have already achieved in the financial sector. First, we have introduced a brand new watchdog with powers to keep our banks safe, so that they do not bring down the economy. In April, the Financial Services Authority was abolished and the Bank of England is now in charge of keeping our financial system safe, with the transfer of responsibility for prudential regulation to a new subsidiary of the Bank, the Prudential Regulation Authority. With the authority that comes from its history and the new powers we have given it, the Bank of England is empowered to protect our financial system. We have also created a strong new conduct regulator, the Financial Conduct Authority, to ensure that London and the UK have the best and most open, transparently policed markets in the world.

Secondly, we are taking legislation through Parliament to introduce a law, following the recommendations of Sir John Vickers and his Commission, that will for the first time ever erect a ring fence around a major retail bank, so that its essential operations will continue even if the whole bank fails. This will protect the high street and the taxpayer from the mistakes of the dealing floor. Following the recommendations of the Parliamentary Commission on Banking Standards, we will be making further changes on Report to further strengthen the ring-fencing regime and electrify the ring fence.

The third area of the Government’s focus has been to engender a change in the culture and ethics of the banking industry itself. As members of the House know, we asked the Parliamentary Commission to look at how to improve the professional standards and culture of the banking sector. As I mentioned, its work is coming to an end and I expect it to report soon.

Fourthly, we will give customers the most powerful weapon of all: choice, which is the most powerful tool we have to improve markets and customer service, reward good companies and penalise poor ones. We have made a start with the sale of Northern Rock to Virgin Money and we are seeing new banks, such as Metro Bank, on our high streets. This year we are taking a huge step towards making it easier for customers to move if they can get a better deal elsewhere. From this September, every customer of every bank in Britain will be able to switch their bank account from their existing bank to another one within seven days. This is real progress.

We are still mopping up the huge economic mess we inherited from the Labour party. We will not take economic recovery for granted and will continue to deliver our clear plan to deal with the problems that it left behind. [Interruption.] I thought that would get them excited, Madam Deputy Speaker. RBS has been brought back from the brink, and now is the time to move on from the rescue phase and focus on RBS being a UK bank that provides greater support to the British economy, a bank that helps businesses here, a bank that helps job creation here and a bank that can return to the private sector in a way that ensures value for money for the taxpayer.

The Opposition are very surprised that the Chancellor of the Exchequer has not come to the House of Commons today to respond to growing speculation that he has already decided the fate of the Royal Bank of Scotland. The Government’s handling of this matter has already caused widespread concern. Stephen Hester did an important job starting the process of turning RBS around, but clearly there is a long way still to go, as he has said himself, so I want to ask the Minister about the four key points on which we need urgent clarification.

First, on the departure of the chief executive, did Stephen Hester go voluntarily or was he pushed? What role did the Chancellor have in prompting his departure? When did the Chancellor set out to the chairman and the board his desire that Stephen Hester should go and is there now any role for United Kingdom Financial Investments, or has it been circumvented in the discussion on the chief executive’s role? Can the Minister explain why they got rid of the current chief executive before finding a successor? Was that really a sensible thing to do? Why have they left such uncertainty? Is the 6% fall in RBS’s share price this morning, wiping off nearly £2 billion from the value of the taxpayers’ stake, a reflection of this confusion? Can the Minister clarify reports this morning that the chairman of RBS has indicated that he will also leave if and when a new chief executive is found?

Secondly, did the chairman, Sir Philip Hampton, let the cat out of the bag when he admitted to journalists last night that the Chancellor wants a sale by the end of 2014? Sir Philip said:

“The acceleration of considering succession for a CEO role arises largely from the Treasury’s determination...where it can be returned to the private sector by the end of 2014”.

Will the Minister tell us now what the Chancellor told the chairman and the board? Is it just a coincidence that the end of 2014 would fit neatly into the Chancellor’s pre-election political timetable? Should the time scales not be driven by the best interests of the taxpayer and the British economy instead?

Thirdly, are the public wrong to suspect that this generous severance payment for Stephen Hester is just a foretaste of the wider loss that will be made for the taxpayer if they rush headlong into a pre-election fire sale? Given that Stephen Hester said yesterday that he was confident that RBS was capable of being worth more than the £45 billion the taxpayer originally paid, why is the Chancellor rushing to prove him wrong? Stephen Hester told the BBC last night that RBS was capable of being worth more than what the Government paid for the shares. Does the Minister agree? If not, why not?

Fourthly, can the Minister explain why it is sensible to intervene in the executive management of RBS rather than have an orderly process of repairing the bank and thoroughly considering the full range of future options for this institution—a process that has incredible ramifications for our whole economy? We look forward to the report from the cross-party Parliamentary Commission on Banking Standards and any views it might have on this, but rather than this shambolic and uncertain approach, surely we need a clear, methodical process and a detailed exploration of how the shape and structure of RBS can best serve our economy in the longer term.

Finally, why has the Chancellor not come to Parliament to set out what is obviously a change of policy? No disrespect to the Minister, but it is his boss we need to hear from today. Should not the Chancellor set out his plans first to this House and not to the Mansion House?

I thank the hon. Gentleman for his comments. I will start with his final question, if I may. He asked why the Chancellor is not here. That is because I am here; I thought the hon. Gentleman would be pleased to see me. I could well ask him where his boss, the shadow Chancellor, is. If this is such an important issue for the Opposition, the shadow Chancellor might have turned up.

I was also hoping that I might get an apology from the hon. Gentleman and some recognition that the only reason we are here discussing this topic today is the previous Government’s failure to regulate our banking system, which led to more than £45 billion of taxpayers’ money being injected into bailing out a bank—the world’s largest banking bail-out.

Let me turn to the hon. Gentleman’s four questions. First, he asked about the sequence or the terms of Stephen Hester’s departure. I am pleased to confirm to him that the Chancellor has not been directly involved in meeting with Stephen Hester prior to the announcement —[Interruption.] He has not met with Stephen Hester prior to the announcement of his departure on this issue. This is a decision for RBS and its board. They have made the decision jointly with Stephen Hester and come to a voluntary agreement. The chairman of RBS, Sir Philip Hampton, asked to meet the Chancellor last week—at Philip Hampton’s request—to inform the Chancellor of the board’s decision, and that is what I would expect, given that the shareholder is the majority owner of the bank.

The hon. Gentleman also referred to the succession plans and asked whether it would have been better to find a successor in the first place. If he has looked carefully at the plans, he will note that Stephen Hester has agreed to stay on until a successor has been found or, at the very latest, until the end of this year. RBS has already begun its search process. I am confident that it will find a successor in time, but it is reassuring, as I said in my statement, that Stephen Hester is staying on in the meantime to help to smooth the process of finding his successor.

The hon. Gentleman also referred to the share price of RBS this morning. He will note that—I think I am right in saying—almost every major bank’s share price is down this morning. The stock market is down in general this morning. I suggest that the change in the RBS share price might also be a reflection of global stock markets, particularly Asian stock markets and markets in Tokyo, which, as it happens, also fell by 6% overnight.

Next the hon. Gentleman asked about the eventual sale of the bank and RBS’s comments about preparing the bank for its future return to the private sector. There should be nothing surprising about RBS having an ambition that the bank should be returned to the private sector. That is perfectly reasonable and perfectly normal. As for the Government’s plans, we have always made it absolutely clear that we have no target price when we are thinking about the return of RBS. We have no fixed timetable, and that includes the general election. Our major concern is to ensure, as the hon. Gentleman said himself, that when RBS is returned to the private sector, that is done with due regard to getting the best value possible for the taxpayer.

The hon. Gentleman also asked whether the value of the shares had been destroyed. I thought that was a bit rich, coming from him. He forces me to remind the House that when the previous Government carried out their bail-out following their failed policies and paid more than £45 billion for a stake in RBS, they overpaid by £12 billion above the share price. That amount was written off by the taxpayer at that moment, but that is something else for which we have not had an apology.

If I understood the hon. Gentleman’s last question correctly, he asked whether the Government had intervened in the decision-making process of the executive management. As I have said, those decisions are rightly made by RBS’s board. The Government’s shareholding is held through UKFI on an arm’s length basis. UKFI represents the interests of the taxpayer on RBS’s board. I remind the House that that arm’s length arrangement was deliberately set up by the previous Government; we have rightly kept it in place. UKFI reports periodically to the Treasury and provides advice, and we always take that into account when making our own decisions.

The early work on RBS’s recovery needed an investment banker, and Stephen Hester has done a difficult job extremely well. He deserves all our thanks, and I hope that the whole House agrees with that. Does the Minister agree that, whatever further reforms of RBS are now implemented, arguing about the past—about the past price or about party politics—is not what the country wants to hear or what the economy needs in the months ahead? What we now need, as soon as possible, is an RBS that can fully support the hundreds of thousands of people who are trying to make a living in small businesses up and down the country but who cannot get the support that they need. They need an RBS that is fully functioning for the first time in many years.

I thank my hon. Friend, the Chairman of the Treasury Select Committee and of the Parliamentary Commission on Banking Standards, for his comments. He is absolutely right to praise the work of Stephen Hester and I agree wholeheartedly with his views on what Stephen Hester has achieved in his five years at the bank. Perhaps my hon. Friend had his work with the Parliamentary Commission in mind when he asked his second question. The approach must be bipartisan and we must keep the interests of RBS and the economy as a whole uppermost in our minds.

I agree that Stephen Hester did a good job in reducing the size of the bank’s balance sheet and beginning to turn the bank around, but that job was not complete at the time of his enforced departure. Will the Minister tell us more about the implications of this timing and strategy for returning the bank to the private sector? May I also tell him that, whatever else the Parliamentary Commission on Banking Standards has to say about this, if he was looking for a permission slip for a quick sale at a knock-down price, he will be disappointed?

It might help the right hon. Gentleman if I tell him that Stephen Hester himself has said in the past 24 hours that, for him, privatisation was the “end of a journey”, and that the board was looking for someone who would see it as the beginning of a journey. He has said that, for that reason, he understands the board’s decision. This is a voluntary agreement and a mutual decision between Stephen Hester and the board. The RBS board has said in its statement that it is looking forward to having a bank that is more focused on UK business and on the inevitable privatisation process.

A substantial proportion of the Minister’s statement dealt with setting out the generous remuneration and exit package that Mr Hester will receive. I am rather more interested in the package that British citizens will receive when the bank is returned to the private sector in order to recompense them for the different ways in which they have paid for the £45 billion bail-out. Will the Minister confirm that UKFI and the Treasury are seriously examining the idea, which I first promoted in March 2011, that all British citizens should be able to profit from the uplift in the share price when the bank is returned to the private sector?

My hon. Friend is right to emphasise the absolute importance of getting the best value for the taxpayer when RBS is eventually returned to the private sector. There are many ways of doing that, and there is an open public debate on the ideas. At this point, however, it is right for me to say that while I welcome open debate, the Government are looking at the options very carefully, and we will set out a way forward after the Parliamentary Commission on Banking Standards has issued its final report.

I thank the Minister for his statement and for early sight of it, and add my thanks to those of others for what Stephen Hester has done so far for the bank. RBS is planning a £175 million investment in the retail bank in Scotland and it also plans to maintain it as a global centre for mobile banking and a global payments hub. When Stephen Hester is replaced and the bank is finally returned to the private sector, will the Minister use whatever influence the Government have to ensure that those investments and those plans are maintained for the sake of jobs both in the bank and in those businesses that depend on the bank for support?

The hon. Gentleman will be aware from the RBS statement yesterday that one reason why it has taken this step is that it believes, as do the Government, that RBS should become more focused on British business and British jobs. If the hon. Gentleman agrees with me that Scotland should vote next year to stay in Britain, that will certainly help the situation, making sure that when RBS talks about Britain, it is talking about the Britain we know today.

Does my hon. Friend agree that Stephen Hester, who happens to be one of my constituents, was given a pretty poisoned chalice by the last Labour Chancellor when Fred Goodwin stepped down and that he has actually done an extremely good job in rescuing RBS and bringing it back from the brink? What I think most of my constituents are concerned about now is whether RBS is going to be a bank for small and medium-sized businesses, a bank for middle England and a bank for market towns such as Banbury and Bicester, helping to get SMEs and the economy moving and going forward.

I share the concerns that my hon. Friend has articulated. He will have noticed from my speech that I said RBS under Stephen Hester has made huge progress in becoming focused on lending to British businesses. I am confident that, because of the plans that have been set in place, that will become even more prominent in RBS’s strategy.

The Minister has said quite a bit about the end of the rescue phase, but absolutely nothing about the strategy for selling RBS back into the private sector. I remind him that the Government own 82% of the shares. There have been persistent rumours in the press about the creation of a good bank/bad bank. Will the Minister confirm or deny whether that is actively being considered, and if it is, how in those circumstances will he continue, as he stated in his statement, to protect the taxpayers’ interests?

The Chancellor has made it clear in very recent statements that he wants to wait for the report from the Parliamentary Commission on Banking Standards. It is a very important report, and we as a Government want to listen and take it seriously. After the report is completed, we will set out our plans for how we see the state banking sector going forward.

As someone who has worked in ABN AMRO and RBS, I pay real tribute to Stephen Hester, who I think was an outstanding chief executive who took the helm and leadership of RBS at the most difficult time in banking history. I am disappointed that he is leaving and I wish him every success in the future. I want to pay tribute, too, as should the House, to the staff of RBS. As we move towards privatisation, let us focus on looking at competition in the banking sector, which will deliver a much better customer service for us all.

That is exactly what I was talking about when I touched on the issue of choice in my statement. The introduction of seven-day switching, which will come into force in September, will help to engender the kind of competition that we want to see.

The Minister’s statement underlined what a shambles this is, and also made it clear that there might not be a new appointment for some time. My specific question is this, however. When my hon. Friend the Member for Nottingham East (Chris Leslie) asked about the Chancellor’s involvement, the Minister said that the Chancellor had had no direct involvement. May I ask whether he had any indirect involvement? Let me help the Minister to answer that question. Was the Chancellor asked by any member of the ministerial team or by civil servants in Whitehall, or by people in the Royal Bank of Scotland, for his view on whether this was the right decision?

As I have said, such decisions are for the board of RBS, which is a commercial organisation. As we all know, however, because it is a commercial organisation in which the state is the majority shareholder, with the state’s interests represented through UKFI, when RBS makes a major decision it will inform the Government.

May I pursue the question asked by the hon. Member for Halton (Derek Twigg)? I am not entirely sure why the Minister made his statement. If this was a completely independent decision, what new Government policy has been announced today?

The Government decided that a statement should be made today because the issue is important to the population at large. Given the Government’s stake of over 80% in RBS, and given that the last Government pumped in £45 billion, I think it important for the Government to set out their strategy on RBS.

This time last year, RBS was subject to a major technical problem. As a result, one of its constituent parts, Ulster bank in Northern Ireland, lost some customers, and many customers did not benefit from full transparency. Only recently, I was told by the Financial Conduct Authority that it could not obtain answers. Will privatisation be the next stage in the rescue package?

The hon. Lady has made a good point overall about the importance of RBS’s operations in Northern Ireland and also in the Republic, which involve lending to both small businesses and consumers. RBS takes those operations seriously, and I know that it has been thinking carefully about how it can improve them further.

Given Stephen Hester’s excellent career—he had previously spent two years at Abbey National and four years at British Land—and given that he has remained in such an important and high-pressure job for five years, it seems to me entirely reasonable for him to leave after completing the first phase of a major restructuring process, and to hand the business on to a chief executive who is more experienced in long-term matters.

As always, my hon. Friend has made a very good point. I agree with him that Stephen Hester has done a commendable job. Five years is a perfectly normal period for anyone to remain as chief executive of a major corporation, and that sentiment was reflected in Stephen Hester’s own comments since the announcement of his departure.

Will the Minister answer one really important question about this very major change? Two banks ran into difficulties, RBS and HBOS—many of my constituents worked for HBOS—but those two banks were not run into the buffers by politicians; they were run into ruin by the group of unscrupulous, immoral bankers who ran the companies, and it was not politicians but auditors and those in the accountancy profession who never flagged that up. Let us get the record straight. Let us be honest with the British people. Let us also be honest and say “You have just sacked this banker for your own purposes.”

The hon. Gentleman is right about being honest, of course, and in the interests of honesty, it is important to point something out. Since he seems to have suggested that the previous Government played no role in the failure of RBS and that it was just a failure of poor banking, let me remind him of what the then shadow Chancellor, my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley), said in 1997 when the then Government planned to change the regulatory system. He said:

“The process of setting up the FSA may cause regulators to take their eye off the ball, while spivs and crooks have a field day.”—[Official Report, 11 November 1997; Vol. 300, c. 732.]

While RBS has clearly had a turbulent past and taxpayers rightly want their money back, is not the really important point that RBS has gone from a bust bank under the last Government to a normal bank now, and that it has actually made a profit of over £800 million in the first three months of this year, and that business lending is up in the first quarter to over £13 billion, almost £8 billion of which was to small businesses?

My hon. Friend is absolutely right. RBS has ended what I referred to as the rescue phase. Stephen Hester successfully brought the bank back from the brink and has started to refocus it, and the new strategy that RBS has set out will focus it even more on lending to UK businesses and households?

The decisions made about RBS’s future represent a huge impact on the public finances, so where is the Chancellor?

May I add to the tributes to Stephen Hester? He was very responsive to MPs’ letters and he was also very good at briefing Members of Parliament. May I also pay tribute to RBS staff, however, who across the country and worldwide have been working in very difficult circumstances, and may I urge the Minister to make sure that in this transition period towards privatisation a lot of focus is put on them?

I agree. We have talked about Stephen Hester and the role he has played in bringing the bank back from the brink, but that would not have been possible without the dedicated staff that RBS has had, and we must never forget the contribution they have made in repairing the bank.

It is clear from the Minister’s statement that the Chancellor has sacked the chief executive. Can the Minister assure the House that there is no gagging clause in the chief executive’s contract when he leaves with his package of £5 million that will stop him setting out his own views on when RBS should be sold?

I do not know whether the hon. Gentleman was listening to the statement I made. If he was, he would realise that the RBS board made this decision.

As the Minister knows, I think the sooner the Government get out of the banking business, the better. There has been a lot of discussion today about the price at which they should do that. What has the Minister been able to discover about the due diligence that was done on the price the Government paid to buy RBS shares in the first place?

My hon. Friend raises a good point, and it is actually quite easy to find out—although I do not think the previous Government wanted to advertise it, and nor do I think the current Opposition want us to continue highlighting it—that when RBS was bailed out, the then Government overpaid by over £12 billion and wrote that off at that time. They did the same in the interventions in Lloyds bank and Northern Rock, and, as we know, all this was a direct result of the previous Government’s failure to regulate our banking and financial system properly.

The Minister referred in his statement to the regulatory role of the new Prudential Regulation Authority. What mechanisms have the Government and the Bank of England put in place to ensure that the PRA does not suffer from the “revolving door” disease, which afflicted its predecessor, the FSA?

The hon. Gentleman raises a good point. That was a problem at the previous regulator, the FSA. When the PRA was set up, its head, Andrew Bailey, prioritised the issue, making sure that he hires the best people and that they are rewarded accordingly, to make sure they can do a good job in looking after the interests of the taxpayer.

Given that the taxpayer had to buy the bank and, shamefully, was forced to overpay by £12 billion, may I urge the Minister not only to privatise it as soon as possible, but to consider people’s shares, so that the taxpayers who paid for it have something to show for it?

I remind my hon. Friend of something I said earlier, which is that we are looking at future plans for the state-owned banking sector but think it prudent to wait for the report from the Parliamentary Commission on Banking Standards; however, I will take his representation on board.

One can tell when this Government have something to hide: the Chancellor runs for cover and a junior Minister is sent out to make a statement and deny absolutely everything—rather unconvincingly, if I may say so. Does the Economic Secretary not understand that my constituents are still spitting with fury about the fact that they are paying the price for the mistakes made by bankers? If the dash for cash, which he has been touting around the Committee Rooms and the City of London for the past few weeks, goes ahead, yet again, bankers will make more money, brokers will make more money, and the taxpayer will lose out.

If I remember correctly, the hon. Gentleman was a member of the previous Government, not just a Government Back Bencher, so he was involved in decision making and presumably supported the action that the then Government took on banking regulation. I wonder whether he held those views back in 2007, just before the collapse of the British banking system, when the then Chancellor said in his Mansion House speech:

“I congratulate you Lord Mayor and the City of London on these remarkable achievements, an era that history will record as the beginning of a new golden age for the City of London.”

Will the Economic Secretary reconfirm that Stephen Hester’s exit package, while undoubtedly generous, is just one third of the amount that he could have got under the contract signed by the last Labour Government? Also, given that Her Majesty’s Government hold, on behalf of all our constituents, 80% of the bank, will he ensure that the terms of the contract for the new chief executive reflect Stephen Hester’s actual remuneration and not the theoretical remuneration put in place by the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown)?

My hon. Friend makes a good point. I can confirm that, under the terms to which the previous Government signed up in 2008, when Stephen Hester was appointed, his exit package could have been three times greater. That again highlights the Labour party’s utter confusion on this issue.

The Minister spoke of the importance of RBS becoming a bank that provides greater support to the British economy. I could not agree more, but rather than flog it off, would not a more effective way to achieve that aim be to maintain the bank in the public sector and to direct investment into projects that will genuinely benefit the public and the economy—into small businesses, affordable housing and home insulation—which will also create hundreds of thousands of local jobs?

Respectfully, I have to disagree with the hon. Lady. I think the Government have no long-term role in owning any part of the banking sector.

This announcement has already helped to wipe £2 billion off taxpayer-held share value, so will the Economic Secretary consider a staged sale of RBS, in chunks, to maximise the return? Will he also consider keeping a residual shareholding, to maintain influence so that the ambition we all share can be met that RBS continues to focus on small and medium-sized enterprises, rather than runs off, as it has before, in ways that are not in the interests of the British economy?

First, the hon. Gentleman should know that share prices go up and down, often with the general direction of the market. If he is really concerned about shareholder value, presumably he was against all the changes that the Government he supported made during their time in office, which led to the true destruction of taxpayers’ money. The Government believe that the strategy RBS has set out and made clear yesterday—a bank that is more focused on the UK economy and working with British business, with a smaller investment bank—is the right one, as is the strategy of getting a CEO who can see that process through for the next few years. We think that that will lead to value creation.