Richard Harrington replaces Altmann as pensions minister

Watford MP Richard Harrington has been appointed as a replacement for pensions minister Ros Altmann.

His official title is parliamentary under secretary of state at the Department for Work and Pensions.

However, a DWP spokesman confirms he will be known as the pensions minister. It is not yet clear whether his brief will differ from Altmann’s.

The spokesman says: “Pensions remain a key priority for the Government and the important work to bring in the new state pension, roll-out automatic enrolment and safeguard the pension freedoms will continue under our new minister for pensions.”

An MP since 2010, Harrington was a member of the international development committee, general secretary of the all party Kashmir group and vice chairman of the all party film group.

Altmann is warning the move appears to downgrade the role of pensions minister.

Last week, Portsmouth North MP Penny Mordaunt was appointed minister of state for the DWP. It is believed she will be responsible for disability policy.

Altmann left her post at the weekend, however it is unclear whether she was sacked or resigned.

Her role was complicated because as a member of the House of Lords she could not sit in the Commons.

In a letter to the Prime Minister she said: “I am at heart a policy expert, rather than a politician.”

She also set out a series of priorities for her successor to tackle as the UK enters “uncharted waters”.

These include an overhaul of pensions tax relief, though not a move to the TEE model, a major review of the defined benefit system, and “fair treatment for women” affected by changes to the state pension age.

 

Lloyds retail share sale could be scrapped under new Chancellor

he new Government could be about to speed up the return of Lloyds Banking Group to private ownership while at the same time scrapping George Osborne’s plan for a retail share sale.

The Telegraph reports Chancellor Philip Hammond not be prepared to wait for Lloyds’ share price to rise above 73.6p, the level the shares were at when the bank was bailed out during the financial crisis.

Osborne’s proposal to offer retail investors a discount in the bank’s shares as part of a pre-election sweetener is also expected to be shelved.

The Treasury has so far received £16bn from Lloyds share sales, and needs to get to £20bn to recoup the cost of the bailout.

But banking sources have told the newspaper the Treasury could break even overall by selling the shares above 54p. Post-Brexit the bank has been trading around the 55p mark.

The Treasury could choose to drip-feed Lloyds shares onto the market when they are trading above 54p, or agree a larger sale to institutions.

One source said the 73.6p target “was a George Osborne/David Cameron idea, [Mr Hammond] could scrap it, a couple of governments on from the bailout.”

The Treasury, UK Financial Investments, which manages the Government’s banking stakes, and Lloyds declined to comment.

Eurozone banks hit by bad debts

Investment in the eurozone remains far below pre-crisis levels, partly due to problems in the banks, the Organisation for Economic Co-operation and Development (OECD) has said.

Bad debts at the banks are making them less willing to lend.

The OECD says many legacies of the area’s financial crisis are unresolved and major new problems have emerged.

Europe has, however, made “important progress” to recover from a double dip recession.

The eurozone’s economy has now been growing without interruption for three years. But it has not been strong growth, and it has been supported by what are called (perhaps euphemistically) the unconventional policies of the European Central Bank – extremely low, even negative interest rates and quantitative easing.

In its regular health check on the eurozone economy, the OECD notes that investment is far below 2007 levels, unlike the United States.

The reasons include weak demand – businesses will always be reluctant to invest if they are concerned that they may struggle to sell the goods and services they produce with the new investment.

But there are also some financial factors holding back investment. In some countries businesses are still burdened with high levels of debt.

The banks are struggling with high levels of “non-performing loans” – where borrowers are behind with their repayments. That tends to makes the banks more wary of new lending.

Two countries stand out as having particularly acute problems in this area – Greece and Italy, although they are not alone.

On one measure, the Italian banks look in even worse shape than their counterparts in Greece, the country whose economy has been most severely hit by the eurozone financial crisis.

The Italian banks have a higher level of non-performing loans compared to their capital, which is a financial buffer that is used to absorb losses, including losses due to problem borrowers.

Italy’s banks are seen as a serious weak link in the eurozone. The country’s economy has started growing again, but it remains 8.5% smaller than it was before the international financial crisis.

Italy’s government also has a problem with a persistently rising debt burden, behind only Greece in the eurozone. That in turn makes it a struggle for the government to bail out its banks, if they need it.

Indeed the OECD report warns about “the still large potential for negative feedback loops between banks and their sovereigns”, although it doesn’t name Italy specifically in that context.

The eurozone’s banking union was intended to address that problem. The OECD says it needs to be completed. In particular the OECD says there should be more by way of eurozone-wide financial backstops – for a fund to deal with failing banks and for insurance to protect depositors if their bank goes bust.

These ideas are not popular in some eurozone countries, especially Germany where there seen as by many as a case of Germany underwriting the banks in other eurozone nations.

The wider message from the OECD report is that the eurozone may be out of immediate danger, but it is not in robust health.