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Silicon Valley Bank

Volume 729: debated on Monday 13 March 2023

With your permission, Mr Speaker, I will make a statement on the steps His Majesty’s Government have taken to limit risks to our tech and life sciences sector.

Following the rapid deterioration of Silicon Valley Bank, and working in concert with the Bank of England, early this morning we facilitated the purchase of the UK subsidiary of Silicon Valley Bank by HSBC. Serving 39 million customers globally, and headquartered and listed here in the UK, HSBC is Europe’s largest bank. Those affected are now secure in the knowledge that their deposits are protected and that they can bank as normal. Customers should not notice any changes, while the wider UK banking system remains safe, sound and well capitalised.

Using stabilisation powers granted by the Banking Act 2009, which afforded us the ability to safely manage the failure of banks, we have forestalled disruption in the tech sector and supported confidence in the UK financial system. The resolution action was taken by the Bank of England in consultation with HM Treasury, using its powers to transfer the UK business of SVB to a private sector purchaser. As required by the Act, the Bank of England consulted the Treasury, the Prudential Regulation Authority and the Financial Conduct Authority on its assessment that all required conditions for that transaction had been met.

We have been able to achieve this outcome—the best possible outcome—in short order without any taxpayer money or Government guarantees. There has been no bail-out, and the actions taken are a win for customers, taxpayers and the banking system. The transfer of SVB UK to a buyer has allowed the Treasury to limit the risk to public funds by ensuring that shareholders and creditors, rather than depositors, bear losses. To help achieve that result, the Bank of England has made a related instrument bringing about a mandatory reduction of capital instruments in SVB UK, restoring it to viability. It is my view that in this situation, the system worked as we would hope.

In order to ensure that the sale could proceed, the Government are using their powers under the Banking Act to provide HSBC with an exception to certain ringfencing requirements. That was crucial to ensuring that a successful transaction could be executed, that the bank has the liquidity it needs, and that deposits and public funds are protected.

The outcome will provide security for some of the UK’s most innovative, fast-growing firms. The UK’s tech and life sciences sectors are world leading, hundreds of thousands of people are employed in them, and they make a very substantial contribution to the economy as a whole. My right hon. Friends the Prime Minister and the Chancellor have been clear throughout that we will look after our high-tech sectors, and that is what we have done. The Bank of England has confirmed that, as a result of the swift, decisive action we have taken, depositors will be able to access their accounts. It is worth reiterating that, as the Governor has said, the wider UK banking system remains safe, sound and well capitalised.

In concluding, I place on record my sincere thanks to my fellow Ministers across Whitehall, to officials at the Treasury and to regulators. They worked tirelessly through the weekend to grip the situation, to deliver this solution and to prevent real jeopardy to hundreds of the UK’s most innovative companies.

I thank the Minister for giving me advance sight of his statement today. Labour welcomes the announcement by HSBC that it will be buying the UK arm of Silicon Valley Bank, or SVB UK, in a rescue deal. As the shadow Chancellor, my right hon. Friend the Member for Leeds West (Rachel Reeves), said over the weekend, the UK life sciences and tech sectors play an indispensable role in driving growth and innovation across the economy.

Now that those who bank with SVB UK have some certainty, the Government should examine how we got here in the first place. For example, when SVB UK was granted a separate banking licence last year, what assessment did the Treasury and Bank of England make of the significant liquidity risks arising from its deposit base being a small number of high-value corporate deposits?

The effects of the collapse of SVB are still being felt across the UK market and the Minister said in his statement that HSBC’s purchase of SVB has “supported confidence” in the UK financial system. What assessment has he made of the fact that London’s FTSE 100 was down today, while the UK bank index fell by almost 5% this morning and by more than 10% over the weekend? What will the disruptions in the banking sector mean for confidence, the wider economy and the ability of high-growth companies to access the credit that they need to thrive?

The Minister also said that disruption in the tech sector has been “forestalled”, but what reassurance can he provide today that, under HSBC’s ownership, the bank will continue to be able to support early-stage tech and life sciences businesses in the UK? He also said that HSBC has been given an exemption from certain ring-fencing requirements. Will that be a permanent exemption?

Perhaps the most important question, I am sure the Minister will agree, is this: how can we avoid this happening again? With inflation at record levels, the Bank of England has had to take steps to tackle rising prices, but Ministers must make an assessment of the risk that sharp changes to UK interest rates might pose to our financial system. It is time for the Government to launch a systemic review of the risks that sharply rising interest rates pose to the UK financial sector, and I hope the Chancellor will return to the House having made that assessment.

Finally, the events of this weekend further underline the importance of ensuring that UK start-ups have access to the patient capital that they need to grow, as proposed by the Labour party’s start-up review. I hope that the Minister will return to the House soon to update us with a broader assessment of the risks to the financial sector arising from sharply increasing rates, and with a plan to address the longer-term problems holding back growth and the provision of patient capital to our growing businesses.

I think concealed within that was grudging support, and I am sure that the hon. Lady would like to add her voice to those of so many in the sector who have welcomed this announcement today, which provides the important confidence and stability that are needed. She raised the point that SVB UK has a separate banking licence, and it is precisely because of that mechanism that our regulators and the Treasury have been able to take the action we have taken over the weekend.

I think the hon. Lady understands the disruption and volatility in the sector, but she should be reassured that the Governor of the Bank of England has confirmed that this is not indicative of systemic risk. I can confirm that, in order that the Silicon Valley Bank, now within HSBC, can provide the broad range of services that our life sciences and tech sector value so much, the exemption from the ring-fencing requirements will be permanent.

The hon. Lady asked about a systemic review. Of course, these are always opportunities for us to learn and look again, but, as I said in my opening remarks, the system has worked as intended.

Finally, and with the greatest of respect, we on the Conservative side of the House need no lessons on patient capital. We are unlocking capital for our important tech and life sciences. Only last week, the Under-Secretary of State for Pensions, my hon. Friend the Member for Sevenoaks (Laura Trott), brought to this House regulations to remove the charge cap and to allow our pension funds to invest in some of the fastest-growing sectors of our economy.

May I put on the record my gratitude to the Minister, his colleagues and officials, and to people at the Bank and in the City in general, who have obviously worked flat out all weekend to deliver what turns out to be the best possible outcome in these difficult circumstances?

On the importance of the sector to the UK economy, did the Minister and the Bank treat this situation any differently because of the sector in which SVB was operating, or would they have tried for the same sort of solution for a bank in any sector? Was the Minister as concerned as I was about reports that investors required the firms that they were funding to put money into the bank as a condition for investment? Finally, given that other banks have collapsed in the US—other small banks, including one that specialised in crypto—does he think that crypto is in any way contributing to financial instability?

I thank my hon. Friend, one of my predecessors and the Chair of the Select Committee, for her support and comments. The degree of concentration in a particular sector is unusual—it was an unusual feature. The business model of Silicon Valley Bank in the UK was different from that in the US, partly because of the tight regulations that we have here. For that reason, I have not seen any evidence that the banking of crypto-asset companies was something that contributed. Rather, once the Fed had taken its action, we saw the impact on the bank here. That is why it was right for the Bank to act to give us the space to protect that bank and to achieve the outcome that we announced this morning.

One of the key lessons of the 2008-09 financial crash was that the conduct of business and liquidity issues could very quickly morph into systemic risk with contagion across a variety of transmission channels, so I very much welcome the speedy way in which the SVB UK issue was resolved over the weekend. However, that bank’s business model—and it is not alone—involved it holding a large number of low-interest-bearing bonds at a time of rising bond yields. It was required to sell those at a loss, which exacerbated the liquidity problems that it had. Would it not be prudent now to ensure that our regulators have another look at UK banks to ensure that comparable low-interest-bearing assets are stringently priced and marked to market to ensure that tier 1 capital is just that, and of sufficient quantity and quality that any liquidity problem does not morph into an insolvency and system risk problem?

I thank the right hon. Gentleman for his recognition of the speed and decisiveness with which the whole Government have come together, worked together and acted to deliver this outcome—that is kind of him and it is appreciated. If I may, we should not conflate some of what we read about the balance sheet in the US with the regulated balance sheet in the UK, which was a separately regulated balance sheet. Again, on the business model in the UK and the backing, and the bonds and collateral that were being held, I am not aware that their forced sale, and the losses on it, were a contributory factor. The reality is that we saw a withdrawal of deposits. The Bank had the ability, because of the relatively ringfenced balance sheet, to protect the bank and take the necessary action. Had the Bank not done so, we could have been in a very different situation, so we were right to act as we did.

I strongly welcome the decisive intervention that has been described, which has saved many UK tech businesses and jobs. Will my hon. Friend consider how the responsiveness of UK regulation, which was demonstrated overnight, combined with the strength of the City of London and our tech sector, provides an opportunity to attract more businesses to do their financing in the UK and means that they do not need to go overseas to get the financing that they require to start up and grow?

My right hon. Friend, who does such good work for the science and technology community through his Committee, is absolutely right. The technology and life sciences sectors want our Government to be joined up and decisive, and to remove unnecessary regulations, while still operating in a high-quality regulated environment. We now have the opportunity to go a lot further—to deliver the Edinburgh reforms and to combine our aspirations to be a science superpower with the ferocious financing strength that we have here in the United Kingdom.

I commend the quick and effective action. However, although the collapse of SVB in America was partly due to liquidity issues, there is also the issue of the changes that were made to the threshold at which banks are considered systemically risky, which increased from $50 billion to $250 billion. That meant that SVB could continue in America without the very focused regulation that might have spotted this problem earlier. Does the Minister think that the Edinburgh reforms present any similar risks, and will he say a little about the exemption from ringfencing that he announced today for HSBC? Is he content that that does not present any risks either?

I must be very careful not to comment on matters as they relate to the United States. SVB UK was a separate bank. It was regulated here, and it was as a result of that regulation, and the fact that we have taken back control of our financial regulatory rulebook, that we were able to act so decisively. The hon. Lady will forgive me if I do not talk about matters in the United States.

In respect of ringfencing, it was the view of the Bank of England and the Treasury, in the circumstances and to protect public funds, that to provide a permanent exemption for what is a very small part of the much larger HSBC—I think less than 1% of its pro forma clients on an enlarged basis will be former Silicon Valley Bank clients—was appropriate. I do not think it puts inappropriate levels of risk in the system. By streamlining the rulebook, and by bringing back control and dispensing it to UK regulators, with accountability to Parliament—she will know about that through her membership of the Treasury Committee—I think we can have better regulation and deliver better outcomes for the sector.

I congratulate my hon. Friend and all who were involved in the rescue. It was vital that we acted urgently to prevent the fear and the risk of contagion that were apparent over the weekend. Does he feel that the fact that SVB UK was a separately ringfenced bank and that ringfencing is a UK-specific regulation brought to bear any protection for SVB UK? He will recall only too well, as I do, that Lehman sucked capital out of the UK when it was in dire straits, which to a large extent caused the ultimate contagion. Will ringfencing continue to protect the UK banking sector as we go forward, even through the Edinburgh reforms?

My right hon. Friend speaks with great authority on these matters, and I can give her that assurance. It was constituted as a subsidiary in the UK, it had its own separate balance sheet and it was regulated as such. Because of that fact, the Bank was able to make the decisive intervention it did. There were assets within the subsidiary to which we were ultimately able to restore viability by successfully finding, over the weekend, a very large bank—Europe’s largest bank—to step in and buy, and to put its balance sheet behind, this entity.

While we are all full of admiration, particularly for all our officials who worked through the weekend to make this happen, I am afraid I find the statement a bit long on self-congratulation and a bit short on explanation. What questions has the Minister asked about why this happened? Why were all these companies banking with this particular bank and what cultural aspects were there to the case? What do we need to uncover that will be important for the sustainability of both banking and technological firms in the future?

It is not uncommon for banks to have a particular specialism. Labour Members have worked to bring forward regulations that will help us have more credit unions, which tend to have a geographical concentration, and there are agricultural banks and other wholesale banks, so it is not of itself an unusual feature. In this case, we were able to take action precisely because of the UK regulatory structures and the interventions we can make. We will learn any lessons, but this is a Government who are on the side of technology companies and the life sciences, and we have been proud to deliver this outcome—this important certainty—and to remove the jeopardy they otherwise faced at the opening of business this morning.

It would not be right for me to answer on behalf of the Bank of England, if my right hon. Friend will forgive me. We have an independent regulator that looks at these matters. The Treasury Committee regularly takes evidence from the Bank of England, and I am sure it will do so in future.

I am sure that many firms across the United Kingdom will welcome, and breathe a sigh of relief at, the decision that was made over the weekend. However, this was done in haste. I ask the Minister: what kind of due diligence was done by HSBC when arranging this takeover, and is he sure that we are not walking into a situation similar to what we had with Lloyds and HBOS in 2008, when a quick decision led to a domino effect in the banking system and resulted in bail-outs by the taxpayer?

I cannot speak for the due diligence that was done for HSBC, but it has got itself comfortable with it. We should also understand the relative scale of HSBC, which is an extraordinarily well-regulated, global and diverse bank. My understanding is that if we add all of the important clients of Silicon Valley Bank UK, which we had in the front of our mind as we sought to act over the weekend—if I may say so, we make no apology for acting in haste, because haste was absolutely the required procedure in this particular case—they would in their entirety be less than 1% of the overall client base of HSBC. With respect, I do not think that was the case in the examples to which the right hon. Member referred.

The sighs of relief across South Cambridgeshire this morning were so loud that they were almost deafening. Dozens of my technology companies, which had been in contact with me over the weekend, thought they were going to be wiped out this morning, but they can now operate as normal because of the decisive action by the Government. I very much congratulate the Minister, the Bank of England and the Treasury on that action.

I have also had questions about whether this is a sign that all the reforms of the financial system in the wake of the global financial crisis have failed or are failing. Does my hon. Friend the Minister agree that this is not a sign of the reforms failing, but a sign that they are working, and that without the reforms we would not be able to do a rescue in this way? Can he also confirm that the reforms that are coming through—the Edinburgh reforms—will not make future collapses more likely, or future rescues more difficult?

My hon. Friend knows a great deal about the sector, and it is due to past reforms that we were able to take this decisive action. Parliament has given—in extremis, and with the agreement of the Bank of England, the PRA, the FCA and the Treasury—sweeping powers to enable this sort of transaction to happen at great pace. Let me be clear that it is the shareholders and creditors of the bank, not depositors or the taxpayer, who have lost. In the system that we have, that is the right outcome, and I am pleased we were able to achieve it.

The Edinburgh reforms are designed to give this country the ability to continue to grow and to be internationally competitive with other markets, while adhering to the highest quality regulatory standards, and with the UK at the absolute cornerstone of organisations such as the Financial Stability Board. They will not put any more jeopardy into the financial system. Indeed, having good healthy businesses that grow and are profitable is the best way to avoid jeopardy.

First pension funds and liability driven investments, now the collapse of SVB UK. Is it not time for a systematic review of the risks that sharply rising interest rates pose to the UK financial sector?

With the greatest of respect to the hon. Lady, the issue here was a subsidiary of a US bank, and I will not be commenting on US policy, interest rates or anything else from this Dispatch Box. The important fact is that we were able to restore the bank to viability and, over a small number of hours and days, to find a successful buyer. We did that because of the strength of the UK regulatory system, and because of the conviction of this Prime Minister and this Chancellor that this is a critical sector, and one of the ways that we will continue to grow the UK economy.

I pay tribute to the exemplary orchestration of all the different stakeholders and decision makers that the Minister led over the weekend. It is helpful to distinguish between decisions taken by the American Government and by ours in respect of this bank. The American taxpayer is guaranteeing the deposits of SVB account holders there; in our case, another bank has bought them and the taxpayer is safe. I pay tribute to the Government for that. I appreciate that the Minister cannot comment on American policy, but in the hypothetical instance of another bank in the UK failing, or another sector getting into trouble, will he give an indication of his thinking on whether the taxpayer would ever need to step in? Will he guarantee that that will not happen?

I am not going to offer my hon. Friend that guarantee, as that would not be prudent or the right thing to do. I can guarantee that this Government will do everything possible to reconcile the needs of protecting customers, protecting financial stability and protecting the taxpayer. It is of great note that we were able to do that in this transaction, and if such an issue were ever unfortunately to reoccur, all our energy would be devoted to precisely the same ends.

I very much welcome the purchase of Silicon Valley Bank UK by HSBC this morning, not least because I am a former employee of a company that had exposure to the bank on both sides of the Atlantic and whose chief executive officer was one of the signatories to the letter sent to the Chancellor on Saturday. Statements were made by the UK bank on Thursday and Friday, and if depositors had relied on the assertions made in those statements, and if the purchase had not gone through this morning, those depositors would have incurred losses. Will the Minister confirm whether that constitutes a breach of the regulations? If it does, will there be any sanctions for people identified as having committed those breaches?

I am delighted that the hon. Lady’s constituents benefit from the certainty. It was a terrible weekend for everybody who was a depositor or who was in some way dependent on SVB UK. That is why it was so important that we not just achieved this outcome and that the regulatory structure and laws laid down by Parliament allowed us to do so, but that we were able to act decisively. I welcome the fact that another great British bank, HSBC, has stepped in, and I wish it and all the employees well.

It would be inappropriate for me to comment on particular things that were said. Fortunately, we are in the position that every depositor has been made whole, and therefore that issue does not arise.

I massively congratulate my hon. Friend and His Majesty’s Government on this news. I spent three years of my life pushing the post-crash banking recovery and resolution frameworks through Europe, so I can absolutely confirm that the fact that there are now powers in so many countries to rapidly resolve failing banks without the need for taxpayers’ money is in very large part due to the outstanding global leadership of the post-crash Conservative UK Government and the actions of the now Governor of the Bank of England. Can my hon. Friend confirm that going forward, the Government will ensure that our financial services regulators not only work to reduce systemic risk, but back our financial services sector in its efforts to invest in our country and help our economy grow?

I can absolutely give my right hon. Friend that assurance. In doing so, let me also pay tribute to her work as a Member of the European Parliament between 2009 and 2017, when she led on banking reform.

The Minister said that SVB UK was a subsidiary of the American bank, but in this country a separate banking licence was given to SVB UK. May I therefore push him on the risk assessment around liquidity? When the banking licence was given, what risk assessment was conducted, particularly given the concentration of a small number of corporates in the deposits to SVB UK?

That is, with respect, the whole point: it was a separate subsidiary. It did have a separate banking licence here and it did participate in the regulators’ stress tests here. There is risk in any financial system. What this House and our diligent regulators are focused on is achieving the right balance of risk. From time to time there will—as there was with the failure of the bank in the US—be factors that lead to challenges in any risk-based system, notwithstanding the good work by the regulators and the stress tests having been applied.

I draw the attention of the House to my historical entries in the Register of Members’ Financial Interests as an adviser to a technology venture fund and as a board member of a number of portfolio companies, many of which will have had financing arrangements with Silicon Valley Bank, HSBC and other financial institutions.

On behalf of the technology businesses in Bedfordshire, I add my thanks to the Minister and his team for their swift response over the weekend. He will be aware, however, of general concerns about global liquidity for the technology sector. What is his assessment of how the SVB experience at home and abroad may exacerbate those and test the resilience of the UK tech sector? Although HSBC is a great bank—indeed, I am a customer of HSBC—Silicon Valley Bank succeeded over many years precisely because it was so closely attenuated to the needs of early stage and growth stage businesses. Will my hon. Friend consider what steps he can take to encourage the emergence of new challenger banks to repeat the successes and avoid the failures of SVB in the UK?

As my hon. Friend knows, the Government are seeking to support challenger banks to make sure we have a vibrant and competitive sector. That includes looking at issues such as the level of MREL—minimum requirement for own funds and eligible liabilities—and making sure that we have proportionate banking regulation that is relevant to the risk involved. He makes important points about the culture and capabilities of SVB UK, which is why it was so important that we had to very swiftly find it a home. I have spoken today to the chief executive of HSBC, as well as to the former chief executive of SVB UK. They are both enormously excited about the future. They see this as a platform for mutual growth, taking our brilliant life sciences and technology businesses international and to a new scale. The Government will not rest until we have mobilised capital to turn us into that science superpower.

The Minister said, “The system worked.” Certainly, it was a huge relief that the estimated 50% of the UK tech sector that banked with SVB UK could today pay their suppliers and staff. However, surely that highlights the lack of diversity of capital available to the UK tech sector, and our dependence on the US. In the last two years, Silicon Valley Bank’s deposits tripled, but its exposure to Treasuries, and therefore to interest rate rises, went up ninefold. Is the Minister seriously saying that no one on this side of the Atlantic should have noticed that, and that it had no impact on what happened?

The hon. Member talks about dependence on the US, but if that is her concern she should welcome this deal wholeheartedly, because we have taken a former subsidiary of a US business and made it part of a thriving and successful UK business.

I draw attention to my entry in the Register of Members’ Financial Interests.

Bravo to the Minister and, in particular, the resolutions team at the Bank of England, who have been honing their skills for many years and finally got the chance to put them to use. Further to the question from my constituency neighbour, my hon. Friend the Member for Devizes (Danny Kruger), does the Minister understand the relief felt by many that the taxpayer, once again, has not been asked to step in and, in effect, nationalise private sector losses? Does he agree that for a capitalist economy to function, even in the most painful of circumstances, it has to be allowed to do what it does best—recycle distressed assets?

My right hon. Friend is quite right to talk about risk and capital systems’ proficiency at recycling capital to productive uses. That is also an enormous focus of this Government and is why our No. 1 priority was to seek to make a private sector transfer of the bank if we could, to protect the taxpayer while also protecting customers and the solvency of the financial system. I am glad that we were able to achieve this outcome. We will continue to do so by having fit-for-purpose regulations in this space.

Does the Minister agree that the collapse of Silicon Valley Bank highlights the dangers associated with deregulation in the banking sector—something that the UK Government have continually touted as one of the benefits of Brexit?

I do not accept that for one minute. We are only just bringing forward the deregulation. The Financial Services and Markets Bill is not even on the statute book. The regulations that affected this situation are precisely the same regulations that we have inherited from Brussels.

It is when we act in haste that we need to think about the long-term consequences of the regulatory actions taken. I join others in the House in commending the Treasury, wider Government and the Bank of England. The Minister said that HSBC has been given a waiver on certain ringfencing rules. I ask this as someone who, before arriving at the House, worked at HSBC on ringfencing in detail and many other things: will the Minister explain that waiver in more detail? More importantly, will that waiver on ringfencing apply more widely to other banks caught by ringfencing regulations?

As my hon. Friend well knows, the Government are undertaking a review of ringfencing. There is a call for evidence on how we could reform that, following the work of Sir Keith Skeoch into how we mesh the ringfencing arrangements put in place back in 2008 with the more modern resolution arrangements. We will learn the lessons that we can from this but, as I said at the beginning, in this case we have been able to achieve an outcome that has protected customers, the taxpayers and the financial system.

I, too, had many representations over the weekend from early stage tech companies in and around Cambridge, and they will be much relieved by the news today. To echo the point made by the hon. Member for North East Bedfordshire (Richard Fuller), the reason they banked with SVB was its close understanding of their particular needs. What guarantee can we have that HSBC will be able to replicate that?

How this bank is run going forward is a matter for HSBC. However, HSBC is a prodigiously successful global institution that has bought SVB on the back of a desire to grow and support that sector, and it sees that this Government are firmly on the side of that sector. We see the aspiration and the opportunity now that we have taken back control from Brussels, and we are going to make an enormous success out of our tech and life sciences sectors; we are on their side.

I welcome the Minister’s statement, and I congratulate him and all those who have worked to resolve this matter so quickly. The collapse of Silicon Valley Bank will have left its customers worried about managing their cashflows; obviously, cashflow problems cause the majority of businesses to fail. In his statement, he mentioned that customers would continue to have access to their deposits. Will that be seamless and continue right away, so that business continuity is safeguarded?

I thank my hon. Friend and I again pay tribute to the hardworking officials from the Treasury and the regulators, and to my colleagues across Government, who pulled together rapidly to deliver this solution. There may be teething issues as the integration takes place, but having spoken to HSBC and the management of SVB UK, they are open for business today and serving their clients. That is the outcome that the Prime Minister and Chancellor were absolutely right to seek in time for this morning’s opening of business.

I would like to press the Minister on his answer to my hon. Friend the Member for Richmond Park (Sarah Olney). At least two tech companies in my constituency were almost affected; I am grateful to the Economic Secretary for acknowledging my urgent letters over the weekend. One of those companies, based in St Albans, moved £200,000 from its US account to its UK account based, in part, on the statements made about SVB being an independent entity, regulated in the UK—statements that bank made to try to give the reassurance that it would not be affected. However, it then did become affected. Will the Minister clarify whether SVB would or should have known that those statements were either incorrect or misleading? If he is not prepared to comment on that particular example, will he commit to a process to look into that issue? Does he believe that there should be consequences in future for banks that make incorrect and misleading statements that put companies at risk?

As I said to the hon. Member for Richmond Park (Sarah Olney), I do not think it is appropriate that I make comments from the Dispatch Box about the veracity or otherwise of statements made by an individual; I hope the hon. Lady respects that. It is, of course, right that anyone in a position of leadership in business takes responsibility and acts in good faith. Although there may well be lessons to be learned in time, the important point is that her constituents and their companies are able to operate, have access to their deposits and continue to do their work of growing important sectors of the economy. I hope the whole House will welcome that.

Congratulations to the Chancellor, the Minister and all those involved in resolving this problem, which tech companies in Gloucester and Gloucestershire will greatly appreciate. Does the Minister agree that this shows the importance of having Europe’s largest bank, the Hongkong and Shanghai Banking Corporation, regulated and headquartered here in London, and that this also shows that this Government will always support business? Lastly, since the Chancellor extended start-up loans in September, will my hon. Friend confirm that this Government have effectively helped create and sustain 33,000 new businesses?

My hon. Friend is absolutely right. Our actions demonstrate that we are on the side of business. We mean it when we say that we want to make the UK the best place to start, grow and run a business, and, I will add, to list a business, because he is quite right that HSBC is an enormously successful global business that is headquartered in the UK and proudly listed on the UK stock exchange.

In the light of recent events and the risk of contagion, can the Minister spell out exactly what action he is taking to ensure that we do not see a contraction in the availability of credit to these specialist, fast-growing companies? What more will he do to facilitate access to appropriate credit to help our groundbreaking tech industries to develop?

It is a core focus for the Government to ensure that our scaling-up businesses get access not just to credit, but to capital at every level through their life: the Prime Minister has made that a core priority. That is why we are bringing forward many reforms that will open up capital markets to growing businesses, and it is why we will continue to look at reforming packets of trapped capital, whether that be in respect of insurers, through the reform of solvency II, or through looking again at pension arrangements to make sure that savers and potential future pensioners can benefit from the wonderful opportunities from emerging businesses in the tech and life sciences sector.

If SVB UK had not been bought, there would have been a huge impact on the most high-tech jobs in our economy, and indeed on the jobs of the future. I pay tribute to the Minister, the whole Government and the Bank of England for their work over the weekend. I also thank the Minister for engaging with me. Does he agree that because of the outsize impact that the failure of SVB might have had, it is all the more important that the Government look at what made SVB so appealing to these vital jobs and at how we do more of it where it is right and less if it is dangerous?

I completely agree. My hon. Friend knows a great deal about the subject, which reflects his background; he is absolutely right.

I thank the Minister for his statement. The Government are to be commended for the speed with which they have acted; it is indeed good news. I very much welcome the purchase of SVB by HSBC, which looks set to protect UK investors and start-ups alike, but what further assurances can the Minister give this House about what the 3,500 British customers will receive in terms of the long-term plan? How long is the Government’s commitment to steadying the ship?

The Government are always committed to steadying the ship. That is why we take a prudent approach to running the economy and why the Prime Minister’s priorities are to reduce inflation, to pay down debt and to grow. To grow requires capital. That is why we have a long-term commitment to good regulation, which will minimise the prospect of events like this happening again. It is also why, with the expertise on the Government Benches, we are so focused on ensuring that we have the right ecosystem to allow our brilliant entrepreneurs, our scientists and our innovators the fertile capital with which to grow to their potential.

For transparency, I draw hon. Members’ attention to my former career in the City, as per my entry in the Register of Members’ Financial Interests. I welcome the swift and decisive action by His Majesty’s Government in solving this issue and in reducing the risk of potential contagion to the wider economy. Will my hon. Friend ensure that sufficient regulatory work is taking place to stress-test the liquidity of UK banks and the Government bond markets, given the clear risk highlighted by this case and by the leverage in recent liability-driven investment cases?

Yes, I can give my hon. Friend and the House that commitment. We will learn lessons if there are lessons that need to be learned, but we should not look past the fact that today we have protected customers, protected the taxpayer and protected the security of the financial system. That is so important to our businesses. Many, many people will go home from work today much more confident, with the jeopardy of the weekend having been removed as a result of the decisive action that this Government have taken.

I thank the Minister for his statement and for responding to questions for more than three quarters of an hour.