Written questions by Garnier.

What assessment her Department has made of the potential merits of adopting the common domain model standard in the Digital Gilt Instrument programme; and if she will make an assessment of the potential impact of doing so on the (a) interoperability, (b) automation and (c) transparency of that programme.

In April the government issued a market engagement notice for the pilot digital gilt instrument (DIGIT) to understand both the current landscape of services available or in development in the UK and what potential investors want to see from a DIGIT issuance. This included questions aimed at understanding how important interoperability and other design features would be for meeting the project’s objective to catalyse the growth and adoption of DLT in UK financial markets. The department is in the process of analysing responses to inform the design of DIGIT ahead of issuing an invitation to tender in the coming months.

What steps her Department is taking to ensure that the (a) development and (b) delivery of the Digital Gilt Instrument programme supports UK-based firms; and if she will make an assessment of the potential impact of that programme on (i) domestic innovation and (ii) sovereign capability in digital financial infrastructure.

The Government is taking forward its digital gilt instrument (DIGIT) pilot which will be issued onto a platform within the Digital Securities Sandbox (DSS). Eligibility for the DSS requires that firms must be legally established in the UK, and therefore DIGIT will be issued onto a UK based DLT platform.With this pilot, the Government has two key aims: to explore how distributed ledger technology (DLT) can be applied across the lifecycle of the debt issuance process; and catalyse the development of DLT in UK financial markets. The department is making ongoing assessments to design and deliver DIGIT in support of these aims.In April the government issued a market engagement notice for the pilot digital gilt instrument (DIGIT) to understand both the current landscape of services available or in development in the UK and what potential investors want to see from a DIGIT issuance. This included questions for industry as to how DIGIT could be developed and delivered in such a way as to meet these objectives, which the department is currently analysing and incorporating into its ongoing assessments.

Whether her Department is taking steps to align the Digital Gilt Instrument programme with (a) the common domain model and (b) other international standards.

In April the government issued a market engagement notice for the pilot digital gilt instrument (DIGIT) to understand both the current landscape of services available or in development in the UK and what potential investors want to see from a DIGIT issuance. This included questions aimed at understanding how important interoperability would be for meeting the project’s objective to catalyse the growth and adoption of DLT in UK financial markets. The department is in the process of analysing responses to inform the design of DIGIT ahead of issuing an invitation to tender in the coming months.

What discussions her Department has had with institutional market participants on the adoption of (a) tokenised sovereign instruments and (b) associated standards.

My team regularly engages with the sector on issues relating to tokenisation in UK financial markets. In addition, we have had further discussions with participants in relation to our digital gilt instrument (DIGIT) pilot. The Government is taking forward its DIGIT pilot which will be issued onto a digital securities platform within the digital securities sandbox (DSS). In April, the government issued a market engagement notice and is currently analysing responses ahead of launching an invitation to tender in the coming months. Following the deadline for responses, my team has held constructive discussions with a range of industry groups and participants who responded and attended an industry roundtable hosted by UK Finance. This engagement with the market has provided valuable information to inform how a DIGIT pilot can help catalyse the adoption of DLT across UK financial markets. The Government remains committed to working with the sector on tokenisation and the pilot DIGIT issuance, to effectively catalyse the adoption of DLT in UK financial markets.

What steps her Department is taking with the Financial Conduct Authority to help ensure that digital sovereign instruments issued by the Digital Securities Sandbox are fully interoperable with existing (a) financial infrastructure and (b) secondary markets.

The Government is taking forward its digital gilt instrument (DIGIT) pilot which will be issued onto a digital securities platform within the Digital Securities Sandbox (DSS). With this pilot, the Government is seeking to explore how distributed ledger technology (DLT) can be applied across the lifecycle of the debt issuance process and catalyse the development of DLT in UK financial markets. In April the government issued a market engagement notice, to understand both the current landscape of services available or in development in the UK and what potential investors want to see from a DIGIT issuance. This included questions aimed at understanding how important both secondary market trading and interoperability with existing market infrastructure were for the sector. The department is currently analysing responses ahead of launching an invitation to tender in the coming months. The department is working closely with regulators, including the FCA, to ensure that DIGIT is successful in meeting its objective to catalyse the growth and adoption of DLT in UK financial markets.

Whether she has had recent discussions with the Secretary of State for Business and Trade on (a) potential changes to the threshold at which the Soft Drinks Industry Levy starts and (b) the potential impact of that levy on (i) the economy and (ii) her fiscal policy.

His Majesty’s Treasury engages with the Department for Business and Trade at ministerial and official level on a range of issues. The Soft Drinks Industry Levy (SDIL) is central to the Government’s strategy for reducing rates of obesity, and helping to secure the fit and healthy population that is essential for a thriving economy. After SDIL was announced, the average sugar content of soft drinks in scope of the levy fell 46% between 2015 and 2020. These positive health outcomes have been achieved without a negative impact on soft drink sales, with sales of drinks subject to the levy increasing by 21% over the same period. The Government is currently consulting on proposals to strengthen SDIL.Any changes to the levy will be announced at a future fiscal event, with costings certified by the Office of Budget Responsibility as standard.

Whether she plans to bring forward legislative proposals to regulate open banking under the Data (Use and Access) Act 2025.

The National Payments Vision, published in November, set out the government’s ambitious plans for the next phase of Open Banking, building on the UK’s leadership in this area. This includes steps towards delivering seamless, Open Banking enabled, account-to-account payments.The government intends to use powers in the ‘Data (Use and Access) Act’ to put in place a long-term regulatory framework for Open Banking. This will also secure the foundations for Open Finance, by establishing the necessary oversight functions within the FCA to regulate ‘Smart Data’ schemes.

Whether she plans to consult on bringing forward legislative proposals to introduce open finance under the Data (Use and Access) Act 2025.

The National Payments Vision, published in November, set out the government’s ambitious plans for the next phase of Open Banking, building on the UK’s leadership in this area. This includes steps towards delivering seamless, Open Banking enabled, account-to-account payments.The government intends to use powers in the ‘Data (Use and Access) Act’ to put in place a long-term regulatory framework for Open Banking. This will also secure the foundations for Open Finance, by establishing the necessary oversight functions within the FCA to regulate ‘Smart Data’ schemes.

What assessment her Department has made of Fujitsu’s suitability to bid for the Trader Support Service, in the context of the failures of the Horizon system.

All of our contract opportunities are publicly available through Contracts Finder and/or Find A Tender Service and are available to any economic operator that is able to meet the requirements of the procurement in compliance with the Public Contracts Regulations 2015.

Whether qualifying stablecoin issuers will be subject to (a) capital and (b) liquidity requirements under the provisions in the draft Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025.

The Government’s forthcoming regime for cryptoassets will provide the Financial Conduct Authority with the necessary powers for effective regulation of cryptoassets, including the ability to set prudential capital and liquidity requirements for UK stablecoin issuers and other regulated cryptoasset service providers.

Whether she is making an assessment through the Pensions Investment Review of the potential merits of mandating pension fund providers to invest in British stocks and shares.

The Interim Report of the Pensions Investment Review was published in November 2024 and included a number of proposals to reform the UK pension system, delivering fewer, larger pension schemes or ‘megafunds’ better able to deliver for savers and better positioned to invest productively. Throughout the review process, we have taken the approach of working with the pensions industry to improve saver outcomes and increase investment in UK markets. The final report of the Pensions Investment Review will be published in the coming weeks, ahead of the introduction of the Pension Schemes Bill during this parliamentary session.

What assessment she has made of the readiness of the Financial Conduct Authority to (a) implement and (b) enforce the proposed regulatory regime for cryptoassets by the proposed commencement date.

HM Treasury has engaged closely with the Financial Conduct Authority in developing the future financial services regulatory regime for cryptoassets and the FCA published its discussion paper shortly after HM Treasury published its draft legislation. The FCA has also published a roadmap setting out their preparation in advance of the regime going live.

Whether she plans to make an assessment of the potential impact of new regulated activities for cryptoassets on (a) UK-based and (b) overseas firms offering services to UK consumers.

HM Treasury will publish a full impact assessment alongside its final legislation.

What information her Department holds on usage of the Lifetime ISA by region; and if she will make an assessment of the potential impact of the Lifetime ISA price cap on prospective first-time buyers in each region.

At the request of the Treasury Select Committee, HMRC recently released regional data on the Lifetime ISA.HMRC Letter to Treasury Select Committee Data from the latest UK House Price Index shows that while the average price paid by first-time buyers has increased, it is still below the LISA property price cap in all regions of the UK except for London, where the average price paid is affected by boroughs with very high property values. The Government keeps all aspects of savings tax policy under review.

What recent discussions she has had with the Prudential Regulation Authority on the potential merits of changes to the Financial Services Compensation Scheme deposit protection limit.

Eligible deposits held by UK banks, building societies and credit unions that are authorised by the Prudential Regulation Authority (PRA) are protected by the Financial Services Compensation Scheme up to £85,000. The PRA sets this limit and is required to independently review the limit every five years. On 31 March, the PRA launched a consultation on the outcome of its most recent review and proposed an inflation-based increase in this limit to £110,000. Any changes to the limit must be approved by the Treasury and the Government would carefully consider any changes proposed by the PRA following the conclusion of this consultation.

Whether her Department has made an assessment of the potential merits of increasing the the Financial Services Compensation Scheme deposit protection limit for registered businesses.

Eligible deposits held by UK banks, building societies and credit unions that are authorised by the Prudential Regulation Authority (PRA) are protected by the Financial Services Compensation Scheme up to £85,000. This limit is set by the PRA and applies to eligible retail accounts as well as accounts of eligible registered businesses. The PRA is required to independently review the limit every five years. On 31 March, the PRA launched a consultation on the outcome of its most recent review and proposed an inflation-based increase in this limit to £110,000. Any changes to the limit must be approved by the Treasury and the Government would carefully consider any changes proposed by the PRA following the conclusion of this consultation.

What discussions she has had with social media and telecommunication companies on reducing Authorised Push Payment Fraud on online platforms.

The government is committed to ensuring that all key sectors play their part to better protect the public and businesses from fraud. In November, building on existing pledges to prevent fraud, the Home Secretary, the Secretary of State for Science, Innovation and Technology and the Chancellor wrote to signatories of the Online Fraud Charter and Telecommunications Fraud Sector Charter calling for technology platforms and telecoms providers to go further and faster in their efforts to tackle the fraud that exploits their services. The government will publish a fraud prevention strategy in due course, which will ensure a unified and coordinated response from government, law enforcement and industry.

Whether she has made an assessment of the potential merits of updating guidance on the lifetime ISA scheme to clarify the cost of early withdrawal penalties.

The Lifetime ISA supports younger people saving for their first home or later life by offering a generous government bonus on up to £4,000 of savings each year. These funds, including the government bonus, can be used to purchase a first home up to the value of £450,000, in the case of terminal illness or from age 60. Any other withdrawals are subject to a 25% charge on the amount withdrawn. This recoups the government bonus, any interest or growth arising, and a proportion of the individual’s subscriptions to discourage such withdrawals and protect the long-term nature of the account. While the Government’s website ‘gov.uk’ already explains the rules behind the Lifetime ISA, and includes a worked example of the withdrawal charge, we will consider whether any improvements can be made to that guidance. Lifetime ISA managers also have a responsibility for ensuring that communications with their customers are clear and concise as part of consumer duty requirements. As part of that communication the manager will normally provide details of the scheme, including the rules around withdrawing funds, whether any charge applies and how that charge is calculated.

What estimate she has made of the annual cost to the Exchequer of the Lifetime ISA in terms of (a) reduced tax revenue and (b) value paid bonus payments in (i) 2024–25 and (ii) 2025–26.

The cost of the tax relief element of the Lifetime ISA is included within tax relief cost of all ISAs, which can be found in the Non-structural tax relief statistics publication, specifically table 5.16. A forecast of estimated bonus paid is published within the OBR’s Economic and fiscal outlook, in the ‘detailed forecast tables: expenditure’ table. Specifically, this can be found within the detailed table breakdown in tab 4.11, row 7. Links:https://www.gov.uk/government/statistics/main-tax-expenditures-and-structural-reliefs/non-structural-tax-relief-statistics-december-2024 https://obr.uk/efo/economic-and-fiscal-outlook-march-2025/

What discussions she has had with the mid-tier banking sector on the Bank of England’s consultation on changes to thresholds for the minimum requirement for own funds and eligible liabilities, published on 15 October 2024; and if she will meet with sector representatives to discuss how it can support the (a) growth and (b) international competitiveness of the economy.

The Bank of England sets MREL requirements independently, though the government takes a close interest in the policy and engages regularly on it both with the Bank of England and with the banking sector, including mid-tier firms. The government’s engagement has included and will continue to include consideration of the impacts of MREL policy on the UK’s economic growth and international competitiveness. In recent months, the Chancellor and I have hosted a series of forums, including with small to mid-sized quoted companies, as the government works towards developing the first Financial Services Growth and Competitiveness Strategy, which forms part of the government’s modern Industrial Strategy.