Administration and expenditure of the Chancellor's departments, 2008-09 - Treasury Contents

Examination of Witnesses (Questions 388 - 399)



  Q388  Chairman: Ministers, welcome back to the Sub-Committee. Would you identify yourself formally for the shorthand writer, please.

  Sarah McCarthy-Fry: Sarah McCarthy-Fry, Exchequer Secretary to the Treasury.

  Mr Timms: Stephen Timms, Financial Secretary.

  Q388  Chairman: We have had an extraordinary year in the Treasury, with the issues of financial stability. Have you in fact had to divert resources from other projects to deal with those challenges?

  Sarah McCarthy-Fry: There is always going to be a balance. Obviously we have had to prioritise our resources, and there has inevitably been a priority, a focus, on stabilising the banking system, but we have tried not to let the bread-and-butter issues go. We are keeping them on track, but inevitably there has been a prioritisation on the banking stability side.

  Q389  Chairman: Would you be able to reassure us that you have not in fact stopped any of your lower priority activities? Or have some simply had to be put in abeyance?

  Sarah McCarthy-Fry: We are trying to keep them ticking over. Obviously we are trying to balance the whole thing, but, as I said, inevitably we have had to prioritise.

  Q390  Chairman: The Permanent Secretary, for example, told us that he personally had had less time to devote to the child poverty agenda because of the time he had had to spend on financial stability. Has that applied to ministers as well?

  Mr Timms: I do not think it applies to me, no. I have spent quite a lot of time dealing with child poverty, not least, of course, on the Bill, which has recently completed its committee stage. In terms of ministerial commitment, I would not have been able to identify a negative impact from the difficulties that we have seen.

  Q391  Chairman: Which of the associated bodies that report to you do you think will have most call on your time in the year ahead?

  Sarah McCarthy-Fry: What do you mean by associated bodies?

  Q392  Chairman: I mean the bodies that we look at, like the Royal Mint, OGC, GAD, DMO and so on.

  Sarah McCarthy-Fry: Which ones will have most call on ministerial time?

  Q393  Chairman: For you, yes.

  Sarah McCarthy-Fry: For me personally?

  Q394  Chairman: Yes, for you personally.

  Sarah McCarthy-Fry: For me personally, probably OGC, I would think, and the Royal Mint as we go through the vesting process and see that through.

  Q395  Chairman: Those would be the two that would take most of your time.

  Sarah McCarthy-Fry: I would think so, yes.

  Q396  Chairman: Mr Timms?

  Mr Timms: For me, inevitably it will be Her Majesty's Revenue and Customs, which at any time takes up a large proportion of the Financial Secretary's time. That is much the biggest.

  Chairman: Good. Thank you.

  Q397  Sir Peter Viggers: When the Permanent Secretary to the Treasury appeared before this Committee on 11 November, Members of the Committee probed about the relationship between the Treasury and UKFI, and the Permanent Secretary said he would write a note to us to explain precisely the way in which we had interacted with UKFI. In fact, the note is very sophisticated but it does the opposite of explaining exactly how the relationship works. Can you please explain the extent to which you are able to control the activities of the banks in which you have majority shareholdings?

  Sarah McCarthy-Fry: I will probably say that it is not our role to control the banks' activities. That is what we have passed to UKFI. We obviously have agreed objectives with UKFI. We have established a corporate governance structure for them; we have agreed a business plan; and we have agreed the reporting mechanisms. There are quarterly shareholder meetings held between the CEO of UKFI and senior Treasury officials, and those are forward-looking, risk-based analyses of progress against business plan and investment mandate. A performance monitoring framework is under development and that will be coming forward. As you know, UKFI produces audited financial statements annually. The first one was produced up to the end of March 2009, and it was laid before Parliament in July, I believe.

  Q398  Sir Peter Viggers: To take a specific example and an obvious one, how does the dialogue go about bonuses?

  Sarah McCarthy-Fry: Those are discussions that are held as part of the quarterly shareholder meetings.

  Q399  Sir Peter Viggers: To what extent are UKFI and the Treasury constrained in their ability to share advice and information?

  Sarah McCarthy-Fry: They are both very aware of their legal obligations and having to take that separation, but where information can be shared it definitely is.

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