‘Damp Squib’? Treasury hits back after Edinburgh Reforms slammed by MPs
The Treasury has hit back at an assessment of its landmark Edinburgh Reforms for the City, which were today labelled a “damp squib” in a scathing attack by an influential group of MPs.
One year on after Jeremy Hunt announced the reform package, the Treasury Select Committee, led by Tory MP Harriet Baldwin, “question[ed] the validity” of some of the reforms set out by Hunt and said they had had little impact on the economy so far.
“The Edinburgh Reforms were given considerable fanfare last December but, 12 months on, the lack of progress or economic impact has left them feeling like a damp squib,” Baldwin said in a statement today.
Ministers sent a progress update on the implementation of the changes to the committee and said 21 of the 31 reforms laid out last year been completed.
However, Baldwin’s group said that six of the actions marked as “delivered” by the government are not yet complete, and a further six measures “should not be considered as reforms” as they include actions like publishing a document or welcoming a consultation.
The group said it is also “sceptical as to the value of some changes” that it “deemed to have no economic impact”.
“We welcome many of the changes as logical and sensible measures,” Baldwin added. “We do, though, question the validity of claims that welcoming consultations, establishing reviews or publishing documents should be considered reforms.”
Among Hunt’s package of reforms were plans to reform the so-called ring-fencing regime for banks that separates their consumer and investment banking divisions, and change the remit of regulators to include growth and international competitiveness.
Ring-fencing reform is not expected until next year but the remit of regulators has already been changed by the government.
Ten of its work streams remain uncompleted by its own assessment, including delivering the secondary capital markets review and reforming securitisation regulation.
City minister Bim Afolami hit back at the criticism and said while he had “great respect” for Harriet Baldwin, he did not think she was being “entirely fair”.
“Yes, there are some reforms that are smaller, that relate to, for example, getting rid of the burdens that some firms have when they’re doing derivatives trading,” he told City A.M. in an interview.
“But there are much bigger ones. For example, the publication of the remit letter for the regulators on growth and international competitiveness. That is a huge deal.”
However, the criticism of the reforms may strike a blow to Tory efforts to woo the City ahead of the election this year.
Afolami said that judging the reforms on a year-long basis was misguided as they were intended to boost the City’s standing in the long term.
“The impact of them really is going to have to be measured over the medium-long term,” he said. “We didn’t do all this to get a short term benefit.”
A source close to the Treasury labelled the committee’s attack as “‘nonsense” and said it had been among the parties trying to block the reforms.
“For the Treasury Select Committee to downplay this ambitious programme of reforms is a bit rich given they opposed many of them, said that the government was moving too far, too fast and have themselves contributed to the post-2008 culture of criticising risk takers and wealth creators in the financial services,” the person told Morning Wire