Chancellor ‘looking at’ powers to overrule financial regulators

Nadhim Zahawi has said the Government is considering taking more power to intervene in financial regulators’ decisions in a post-Brexit overhaul to regulation.

In his first speech as Chancellor, Mr Zahawi said he was still undecided on the move, which could cause tension with the independent Bank of England.

He said the Government will introduce the Financial Services and Markets Bill on Wednesday, a “landmark piece of legislation” that would revoke retained EU law on financial services.

Mr Zahawi, in a speech to the City, said: “There’s been some speculation about the Government taking further powers to intervene in financial regulation, in the public interest.

“That is something we’re looking at and I’m keeping an open mind.

“But I can confirm that it’s not in the Bill tomorrow, because I want time to consider all the arguments before making such an important decision.”

Mr Zahawi said the country should be “confident” the Government can get a handle on inflation as the cost-of-living pressure on households continues to bite.

He promised that the Government is dealing with the “task at hand”.

The recently installed Chancellor, fresh from his own ill-fated bid to become Tory leader, delivered the speech as the remaining candidates to replace Boris Johnson clash over proposed tax cuts.

His priorities for the coming months, he said, will be to control inflation, create the conditions for a private sector recovery and a “post-Brexit vision” for the financial services industry.

“That means delivering sound public finances, carefully designed to avoid adding to inflationary pressures, while still providing help for households with the worst impacts of inflation,” he said.

“Where we can, we must also ease the supply constraints that are so often the underlying cause of higher inflation.

“The country should feel confident that we can, and we will, get inflation back under control.”

Seizing the opportunities created by Brexit also dominated the speech and Mr Zahawi said: “Our objective is clear: to keep the UK the most open, inclusive, welcoming, competitive, safe, and transparent place to do financial services business, in the world.”

He also committed to repealing “hundreds of pieces of retained EU law”.

The Financial Services and Markets Bill “enables us to reform Solvency II”, he said, giving “UK insurers more flexibility to invest in long-term assets like infrastructure” and increasing “the competitiveness of our capital markets”.

Mr Zahawi alluded to the “tears and the tantrums” in the Tory leadership race, and joked that he knew how Love Island contestants knocked out in the early rounds felt.

He stressed that, despite the “short-term uncertainty” caused by Mr Johnson’s resignation as Tory leader, the work of the Government continues, pledging “stability, reassurance and continuity”.

“We are steadying the ship. We are stabilising the economy. We are getting on with the task at hand,” he said.

“I know where the best ideas, the most sustainable growth, the new jobs, the higher wages, are going to come from. It’s from the wealth creators and risk takers.

“So how do we get that growth? It’s by unleashing the power of enterprise – to allow businesses to invest, innovate, and create jobs.”

But Tulip Siddiq MP, Labour’s shadow economic secretary to the Treasury, accused the Chancellor of offering “woolly” promises.

She said: “As Labour has long set out, what we need is long-term plan to build a stronger, more secure economy.

“But instead, the Tories have spent the last two years raising taxes on working people 15 times, and now spend every waking minute indulging in unfunded fantasy economics.

“It has been six years since the Brexit vote, and the Government still has nothing to offer the City other than rhetoric, empty promises and desperate threats to undermine the independence of our world-leading financial services regulators.

“Labour will provide the City and our economy with the certainty and ambition it needs to thrive.”