Financial Services Bill

Debate between Lord Deben and Lord Eatwell

Tuesday 6th November 2012 Lords Chamber

[Lord Eatwell]

My Lords, my noble friend Lord Peston, who tabled this amendment, had to leave earlier this evening, but he asked me to move it on his behalf. I do so because it is an important and valuable amendment.

In Committee, the Government conceded the arguments made by the Treasury Select Committee and by Members in the other place that the growth and employment objective should be written into the terms of reference of the Financial Policy Committee. However, they have undermined the pursuit of this objective by the way in which it has been incorporated into the Bill. The phrase “subject to that” in proposed new Section 9C(1)(b) makes the growth and employment objective secondary to the stability objective.

Perhaps the Government are over influenced by current events here. Any Government who have presided over the economic policy of the past two-and-a-half years and continually justified their own actions with reference to levels of interest rates and financial stability will undoubtedly be motivated to downplay the growth and employment objective in the Financial Policy Committee’s considerations. However, in the longer view this is surely a mistake. Under the Bill as currently constructed, the Financial Policy Committee could cite the financial stability of a persistent recession as evidence that the objective has been met—stability, but the stability of the economic grave.

How much better that the Financial Policy Committee should take a balanced and mature view of the relationship between financial stability and growth and employment? I am confident that, if we get the right people in place, the committee will be able to take that mature view and would much better serve the overall financial stability strategy of the Bank. My noble friend’s amendment would achieve this and it deserves both serious consideration and support. I beg to move.

[Lord Deben]

I am distressed that the Minister should feel that on the previous occasion I suggested that he would be other than magnanimous, for he is always magnanimous. I speak in his support because we have to be very careful about constantly adding all the good things that we might like to have taken into account in all circumstances. Financial stability in these circumstances is exactly what we should be saying first and we refer to the other, perfectly rightly, because it is necessary. I find it incredible that any committee, in any circumstance, would get up and say it thinks it is a frightfully good idea to have the stability of total sterility. I do not understand where the noble Lord, Lord Eatwell, really thinks that anybody would come to that conclusion. This seems a totally unnecessary amendment and I hope very much that the Minister will refuse it.