Promised city reforms to boost economic growth were ‘wet excuses’, MPs say

The government’s promises to introduce sweeping reforms to the City of London to boost Britain’s economic growth were a “wet excuse” that offered little substance, MPs have said.

Chancellor Jeremy Hunt’s claims that most of Edinburgh’s reforms aimed at strengthening the UK’s financial sector and making the country an open and attractive place for business and consumers have failed, Parliament’s Treasury Select Committee has heard.

The committee rejected the Chancellor’s claim that he had implemented 21 of the 31 reforms. They found that six of the 21 reforms were incomplete, and six should not have been considered reforms at all.

He added that the Treasury had rightly considered updating financial services rules, which needed to be reformed and repealed to boost growth, but questioned the results.

In her report, she noted that some of the promises made during reforms in Edinburgh a year ago represented preparatory work rather than full-fledged reform and should be treated as such.

The committee said ministers must prioritize reforms that will have the greatest impact on UK economic growth and prevent harm to consumers and businesses.

Harriet Baldwin, the committee’s Conservative chair, said: “Edinburgh’s reforms attracted a lot of attention last December, but 12 months later they look like rubbish with no progress or economic impact.”

A separate report from the National Audit Office (NAO) said the regulator, the Financial Conduct Authority (FCA), may be slow to identify problems in the sector and take regulatory action.

The NAO said the FCA needed to improve its ability to use data.

Gareth Davies, head of the NAO, said: “The FCA needs to complete its work to optimize its use of data and assess whether it is achieving its intended results and whether it is able to focus resources where they can have the greatest impact.” It must also be clear which of the long list of activities he controls internally are his priorities.”

Meg Hillier, chair of the influential Public Accounts Committee, said: “The FCA regulates almost 50,000 financial services providers and financial markets.

“The government has made major changes to the financial services regulatory framework and the FCA has suffered from previous regulatory failures.” The FCA is taking action to respond to these challenges and improve its ability to adapt to change as an organization.

“However, the FCA’s current public reporting is complex and makes it difficult for stakeholders, including the public, to assess whether it is addressing these issues.”