Examination of Witnesses (Questions 388
- 399)
TUESDAY 8 DECEMBER 2009
RT HON
STEPHEN TIMMS
MP AND SARAH
MCCARTHY-FRY
MP
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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