Finance (No. 3) Bill

Lord McFall of Alcluith Excerpts

Monday 18th July 2011 Lords Chamber

[Lord McFall of Alcluith]

My Lords, I was privileged to be a member of the Finance Bill Sub-committee under the excellent chairmanship of the noble Lord, Lord MacGregor of Pulham Market. It is good to have the opportunity this evening to debate a number of those issues and put them in to a wider context.

I want to look first of all at corporation tax. One aspect examined by the committee was the road map for corporation tax. There has been a focus on whether this would make the UK economy more or less competitive. The context for this is that the Chancellor in his Budget in March announced that he would cut corporation tax by an additional 1 per cent over and above the cuts previously announced. This was a flagship measure, but to fund it, this year's Finance Bill will bring in a reduction in allowances available to firms which make significant investments.

The Government's The Plan for Growth states:

“Growth was concentrated in a few sectors of the economy and in a few regions of the country”.

I welcome that sentiment. A specific aim of the plan is,

“to encourage investment and exports as a route to a more balanced economy”.

This change to corporation tax would appear to run contrary to that aim. As the Institute for Fiscal Studies said earlier this year:

“The largest beneficiaries from the package of measures will be high-profit, low-investment firms”,

which would include, for example, financial services. Meanwhile the IFS says that cuts to capital allowance will,

“have the largest impact on those firms with capital-intensive operations”,

which include manufacturers. Major investors who are considering the UK as a site for investment are not so easily swayed by a cut in the headline rate when allowances are also being cut. This change could drive investment away from the UK and help the economy to become more focused on the financial sector by raising the effective tax rate for manufacturers.

There are also issues regarding the carbon-floor price system for energy-intensive industries. It has been suggested that this has been implemented in such a way that, according to a report by Thomson Reuters earlier this year, it will place additional costs on businesses amounting to £9.3 billion. Given that these businesses are major employers and, in many cases, major exporters, it goes against the Government’s proposals in The Plan for Growth. There has to be further scrutiny of the impact of these changes. It is important that the whole context of taxation on businesses is taken into account, not just the headline rate of corporate tax.

Oil taxation has been mentioned. This was nothing other than a hasty, politically motivated initiative with no consultation, and we have seen this before: we have seen it with Labour Governments. What happens is that when these proposals are implemented they do have long-term adverse consequences for these industries. As the Chartered Institute of Taxation has said,

“the last minute and precipitate change in Oil tax rates for an industry that is particularly dependent on long-term planning seems wrong”,

and it goes against the Government’s proposals for stable tax planning. The Government should take that issue into consideration. The sub-committee did note that the Government need to retain the flexibility to deal with immediate issues, but informal consultation should still have been possible and witnesses to the sub-committee said that this would have enabled better policy-making, so I hope the Government take that issue on board.

An issue has been mentioned regarding HMRC, which the sub-committee discussed, particularly the skills and resources available and whether it was able to carry out the Government’s new approach to tax legislation. Perhaps more importantly, the committee also heard concerns over whether HMRC was fully able to implement the legislation once it was made, given its staffing problems. By some estimates, tax evasion costs up to £1 out of every £8 that should be collected in taxation, and therefore we need a good staff. This is particularly important given the sheer complexity of legislation being proposed in this Bill—and particularly the proposals on anti-avoidance, which the sub-committee scrutinised at some length.

I welcomed the £900 million the Government have pledged to invest in HMRC to tackle tax evasion. The principle behind this is right: investing more in HMRC staff will save the taxpayer money by helping to close the tax gap. But I am concerned it is insufficient, particularly at a time when cuts have been made to HMRC’s budget; when HMRC is still attempting to absorb the loss of over 20,000 staff since 2004; and when tax legislation is becoming more complex. In the evidence sessions of the Finance Bill sub-committee one tax specialist said of HMRC that:

“a lot of very skilled people have left, that morale is very low, that people are given work that they are not being trained properly to do”.

There is both a short-term and a long-term problem here for the Government. I have raised this issue before in another place when I was Chairman of the Treasury Committee. We said then, even six years after the merger of the Inland Revenue and HM Customs and Excise took place, that the merger,

“had a knock-on effect on performance”,

and we were,

“deeply concerned about employee engagement at HMRC”.

There still exists today the danger that the Government may focus too much on creating complex anti-avoidance legislation, rather than addressing the more fundamental issue of ensuring HMRC is fully resourced to implement that.

Lastly, I turn to something that the committee did not look at: the impact on ordinary people. The flagship policy for ordinary people in this Finance Bill is the significant increase in the tax-free personal allowance for income tax and national insurance—a welcome move, as it will benefit lower income households. However, this is also an area where we need to see the changes made in a wider context, rather than focusing on a single change. For example, the rise in VAT at the beginning of this year is reported to cost the average family with two children £450 a year. That is more than 10 times the benefit that is gained by low-income families from the rise in the personal allowance. That rise in VAT also added nearly 3p to the cost of a litre of fuel—or nearly three times the amount of the reduction in fuel duty that the Government bring in with this Bill. There is a need here to ensure that we take the full context of tax changes into account, and I hope the Government will realise that.

Looking to the future, there are inauspicious signals. Next winter the Chancellor cannot blame the snow. The cuts are coming, and the pressure on wages will not abate until 2015—and that is the Governor of the Bank of England talking when he appeared before the Treasury Committee in another place. I suggest to the Government that they need to be cautious, and I leave them with this important message, given these cuts. Economic prosperity is built on a platform of social stability. If the Government forget that rule they are going to get themselves into more problems. Let us hope they heed it.

Banks: Cheques

Lord McFall of Alcluith Excerpts

Monday 6th June 2011 Lords Chamber

[Lord Sassoon]

To those noble Lords who were listening to some of my previous answers, forgive me for repeating myself: the criteria which the Payments Council itself put forward and which the previous Government welcomed back in December 2009—I echo that welcome—were that the new system had to be generally available, generally acceptable to its users and widely adopted. There also has to be, in the view of the Government, a paper-based system. Those are the criteria that have been set and we are making sure that the Payments Council sticks to them.

[Lord McFall of Alcluith]

My Lords—

[Lord Lea of Crondall]

My Lords—

--- Later in debate ---

[Lord Sassoon]

I am grateful to my noble friend for drawing attention to that issue, which is one of the important issues that the Payments Council must take into account. I am sure that it will be listening carefully to what is being said today. If anyone wants to go on to the Payments Council website, there is probably a paper-based system for submitting suggestions to it on all these matters.

[Lord McFall of Alcluith]

My Lords—

Banking: Savings Accounts

Lord McFall of Alcluith Excerpts

Monday 23rd May 2011 Lords Chamber

[Lord Sassoon]

I am grateful to my noble friend for drawing attention to the fact that the 48th series of fixed-interest and index-linked savings certificates was launched on 12 May. It is our intention to keep this series on sale for a sustained period. Of course, there is only a certain amount of availability within the targets we set for NS&I, but I am pleased that we are able to fill a gap in the savings market by putting particularly index-linked savings certificates on sale again. They are proving to be popular, but I am advised that there is still a supply of them available. Noble Lords who would like to invest in them do not need to rush out of the Chamber at this moment.

[Lord McFall of Alcluith]

My Lords, will the Minister take this opportunity to speak to the Independent Commission on Banking, the Vickers commission, and ask it to emphasise the concept of treating customers fairly so that savers feel, as the noble Baroness said in her supplementary question, that they are both getting a good deal and indeed can be seen to be getting that?

[Lord Sassoon]

My Lords, this will be the focus of some of our attention when the legislation for the new regulatory structure comes forward. Treating customers fairly in the broadest sense is a critical part of what the FSA has been working on over the past few years. As we look at the remit, particularly for the new Prudential Regulation Authority within the regulatory structure, it is important to make sure that a proper focus is placed on that strand of work going forward. No doubt your Lordships will soon have an opportunity to consider these matters.

Economy: Growth

Lord McFall of Alcluith Excerpts

Thursday 31st March 2011 Lords Chamber

[Lord McFall of Alcluith]

My Lords, I thank the noble Lord, Lord Hollick, for securing such a vital debate today and congratulate all the maiden speakers on such excellent speeches. I wish them well in their journey in the House of Lords.

Growth is essential to reducing the public debt ratio. Cutting the deficit without that being accompanied by strong growth will end up in disaster. Let us remind ourselves of the Labour Government in 1997. From 1997 until 2002, the Labour Government stuck to the Conservative spending targets and the UK net debt fell from 42 per cent of GDP to 29 per cent of GDP. They did that precisely by growing the economy, not just by cutting spending alone. There are economic growth policies consistent with debt stabilisation but the problem for this Government is that they have scared the population witless with their austerity message. “Vote for us and death tomorrow” is not a good slogan, so they will need to change. They realise now that there has to be a different mantra. They have to give people some hope and something to look forward to.

The recent Budget, as people have indicated, is a big gamble because it is taking more than £100 billion out of the economy and, at the same time, there is an ambitious 3 per cent growth target by 2015. That can be done only by investment. We need investment in our communities, our infrastructure and most of all in our people. Let us remind ourselves of the lessons of the 1980s. If the slack in the economy persists for too long unemployment becomes structural. That is why we need investment today.

The Labour Government left some good legacies for this Government—some positives on which they should build. For example, the labour market performance is better than in previous recessions, although unemployment is now going up for both young people and the population in general. Company liquidations and home repossessions are fewer than they were in previous recessions and the large depreciation in the currency has most certainly helped drive the export market. We are in an environment of historically low interest rates and it would be folly to disturb that in the present climate. We need to exploit the relative price changes and complement these policies by making use of the low interest rate environment and by complementing behavioural changes induced by the increased oil prices to promote a low carbon economy. We must also ensure that we maximise the boost to tradables by the fall, or depreciation, in the currency.

These are extraordinary times and the crisis is not yet finished, as we can see in the Republic of Ireland today. It has had its bailout but almost all Irish banks will be nationalised today as a result of it. The crisis is still working its way out in Europe—in Greece and Portugal. Given the crucial importance of the European market for our exports, the Government need to be careful in their attitude to possible future bailouts. If they do not engage in this process, that will further risk reinforcing the divisions with those both within and without the currency. There is no doubt that there will be implications for our foreign policy, which is very sensitive to the Government as we stand today.

Extraordinary times demand extraordinary measures. I would not be advocating, as others have done, an investment bank had it not been for extraordinary times. I called for the very same in a Guardian article, “Britain needs a state bank”, on 9 January 2009. Sadly, the Government at the time did not take that up, but it is very important if these objectives to growth are to be attained. If there is a European investment bank, why cannot there be a UK investment bank? If we have a network of post offices throughout the country, why cannot the post office network be used to ensure that the Government achieve their ambitious lending targets?

Today the Government are offering cheap finance. If we ensure that the debt is indexed, finance can be done at 1 per cent and we need only get money back to service the debt. Mention has already been made about the attitude of the Treasury to public investment. The HMT approach to public investment needs revisiting. Given the big gamble, the Government need to show boldness, as my noble friend Lord Hollick said, and not timidity. We need policies that are consistent with these ambitious targets and I suggest that one beneficial step would be to change the slogan from “Cuts, cuts, cuts” to “Investment, investment, investment”.

[Baroness Warsi]

My Lords, I remind the House that when the clock hits “4”, four minutes are up.

Economy: Government Policies

Lord McFall of Alcluith Excerpts

Thursday 24th March 2011 Lords Chamber

[Lord McFall of Alcluith]

My Lords, I am delighted to participate in this debate and I congratulate the noble Lord, Lord Lawson, on choosing it. Enterprise, growth and the fundamental rebuilding of the economy are very relevant. I congratulate the noble Lord, Lord Hussain, on an excellent speech and I wish him well in his future in the House. I draw the House’s attention to the Register of Lords’ Interests as I make my speech.

This Budget is fiscally neutral but it is a gamble on growth because the underlying assumption is that there will be an economic rebound to trend. In fact, we need a thumping 3 per cent growth by 2015 if we are to keep on course. We have heard the mantra, “It’s the debt, stupid”, but regarding our present situation and the growth objectives the distinctive feature is the amount of private debt which we have in the country. We have seen a conversion of private to sovereign debt within this crisis, which is why we are talking about Portugal, Ireland and other countries today. Indeed, PwC illustrated that by describing it as a debt time-bomb, where we have a £10 trillion barrier to overcome by 2015.

Some people have stated that our having a public debt is to be celebrated, in the sense that Governments have intervened to save the private sector. While we should be mindfully relieved by that, we still have to attend to the issue of “too big to fail”. If we do not attend to that, we are going to come back to a crisis in future so we have to be mighty thankful. We are going to live with these consequences for many years and ordinary people will be paying the price. They will have to pay off debt but also increase savings. I am very conscious of that as I undertake to look at occupational pensions over the next few years for the National Association of Pension Funds. There is no doubt that responsibility will be transferred to the individuals.

On enterprise, for me the economy needs a spare tyre. Adam Posen made that very point; we need it to lend to manufacturing, to small businesses and to infrastructure. We do not have that in our economy at the moment. I have been calling for a national investment bank for a number of years and I asked the previous Government about that issue. However, I noticed yesterday that Zac Goldsmith has expressed his dismay at the Government for not being bold enough on the green bank. We need to be bold on a national investment bank. The noble Lord, Lord Skidelsky, was saying in an article in the Financial Times the other day that we could have a limited fiscal commitment of £10 billion, with subscribed capital being drawn down over the next four years. That would allow the new bank to finance sufficient spend to more than offset the £87 billion of spending reductions planned before 2015. One thing I am certain of is that we need to be bold.

As the noble Lord, Lord Lawson, has noted, we need a fundamental rebalancing of the economy. If we are to make our way in the 21st century, we have to make things. We have to complement the giant, productive economies of China, India and the rest of Asia and we should not be beguiled by the arithmetical GDP figures. We need development in all areas of our country and GDP has to embrace social as well as economic criteria. We must preserve the social fabric, not rupture it. A generation of unemployed young people or a high number of unskilled people will not help finances in the long term. Having unemployment at 2.53 million at the moment, with almost 1 million young people aged 16 to 24 unemployed, is an inauspicious start.

I witnessed the destructive nature of unemployment on young people when I was a schoolteacher in Glasgow in the 1970s and 1980s. I was reminded of that at the weekend when visiting an old family friend, Mr Andrew McGroarty. He is aged 95 and has just lost his dear wife Agnes after 70 years of marriage. He is a deeply humble, gentle and spiritual man who has led an exemplary life. However, as we were talking last week he left me in no doubt with the force, the clarity and indeed the eloquence of his remarks about how socially destructive the unemployment was following the depression in the 1930s, when he was a young man. His was an authentic voice, warning of the perils of leaving families and communities to their bleak fate if the Government do not work for the common good. Those are wise words indeed. I finish by delving into history for the wise words of Lord Keynes, who said:

“I do not understand how universal bankruptcy can do any good or bring us nearer to prosperity”.

That bankruptcy is not just a financial reference; it also affects people and society.

Financial Crime: Legislation

Lord McFall of Alcluith Excerpts

Thursday 17th March 2011 Lords Chamber

[Lord McFall of Alcluith]

I thank the noble Lord. First, I congratulate the noble Baroness, Lady Williams, on such a timely and important debate on tax avoidance and fraud. I will draw attention to the importance of the debate in the context of the outlook for public finances.

There is a consensus across the House on the need to address the deficit and to make cuts. We realise that this adjustment will be painful and that the people who bear the brunt of it will not be the ones who caused the crisis but ordinary working people. The Office for Budget Responsibility estimated that half a million jobs would be lost in the public sector as a result of the cuts, and PricewaterhouseCoopers estimated that another half a million jobs would be lost as a result of private sector cuts.

Today, youth unemployment is at its highest level since 1992. At the end of last year, unemployment for those under 25 rose above 20 per cent, compared with less than 8 per cent for the general population. Youth unemployment in Germany is just 8.6 per cent at the moment, and 7.3 per cent for the general population. On top of this, working people and the vulnerable in society will be hit by cuts in their benefits and their public services, with job losses in the police, the NHS and schools already being reported. The background to this is the issue of fairness. When Amartya Sen spoke to the Treasury Committee a few years ago, he said that the link between effort and reward is how people understand a process to be fair. The word “fairness” needs to crop up continuously in our debate.

There is a concern that tax evasion is a growing problem. The current tax gap is £52 billion, according to the latest data from the Association of Revenue and Customs. That is nearly 9 per cent of the UK’s net tax revenue forecast for 2011-12. It also appears to be rising, with the latest estimate for 2008-09 showing a rise of £4 billion compared with the previous year. With that, the number of successful prosecutions by HMRC also declined by 41 per cent between 2007 and 2009. It is imperative that HMRC has the resources it needs to close that tax gap. I welcome the £917 million that the Government have pledged over the spending review period to tackle tax evasion, which aims to bring in an extra £7 billion of tax revenue. That is a recognition by the Government that investing in dedicated compliance staff at HMRC will save the taxpayer money by closing the tax gap.

The Public and Commercial Services Union, representing HMRC staff, estimates that an average member of staff dedicated to tax compliance yields £640,000 in tax revenue, net of staff costs. However, this extra funding could be more than cancelled out by cuts of £3 billion to HMRC’s budget over the same period, which could mean a loss of 10,000 staff. This also comes after efficiency savings at HMRC equivalent to 25 per cent of its budget, which has seen staffing levels fall by more than 25,000, and 200 of its offices closed since 2004. If efficiency savings mean anything they must surely mean saving money and not, in the long run, costing money. I feel that currently there is a falseness about the process.

This is also about the engagement with staff. During my chairmanship of the Treasury Committee in the other place we found that there had been a high turnover of staff in the organisation and that there was low morale among many employees. At the end of my tenure the committee was concerned that the merger of the Inland Revenue and Customs and Excise had had a knock-on effect on performance, and we were deeply concerned about employee engagement at HMRC. The current Treasury Committee has undertaken an inquiry into the performance of HMRC. In its evidence, the Chartered Institute of Taxation raised concerns about whether HMRC will be able to deliver the Government’s aim on tax compliance. The head of taxation at the Association of Chartered and Certified Accountants told the committee:

“Most people are compliant … [and] try to pay the right amount of tax at the right time”.

He went on to say that it is,

“probably the only thing that has been getting through the current problems ... It is the only reason why the Exchequer is still getting tax paid at the right time and roughly the right amounts”.

There is therefore a lot to concern us about the present situation with HMRC.

I want also to talk about offshore financial centres, because we must focus on those in ensuring that we close the tax gap. Tax havens have not only been used to avoid taxation: during the run-up to the financial crisis they helped bring about the explosion in securitisation in the financial sector. Many of us became aware of that at the time of the run on Northern Rock, when we learnt that the bank had a very large financial vehicle in Jersey. From there, Northern Rock issued securities which made up for 50 per cent of its funding. The need to re-engage with offshore financial centres is important. As my noble friend said, this issue is set against a background of trust and confidence in the system. If we do not maintain the integrity of London as a financial centre, which we all want, we will all lose in the long run.

Banking

Lord McFall of Alcluith Excerpts

Wednesday 9th February 2011 Lords Chamber

[Lord Sassoon]

I am grateful to my noble friend Lord Higgins for pointing out that at the heart of the failure of the system and the mess that this Government have had to pick up and sort out was the failure of the tripartite system of regulation, which of course we are sweeping away. Seeing the noble Lord, Lord McFall of Alcluith, opposite reminds me that he very perceptively characterised it as a Rolls-Royce system when it sat on the shelf but an old banger when it got on the ground. I wish that I had his turn of phrase, but the tripartite system was indeed at the heart of it.

As to bonuses and their linkage to performance, that is absolutely at the heart of what the Government have agreed with the banks today. I think that the critical new element is the linkage between the performance of the banks on meeting SME lending targets and the pay of the chief executive and the other senior executives who are directly responsible for that line of business. Therefore, it is a crucial point. It is well made by my noble friend and it is at the heart of this agreement.

[Lord McFall of Alcluith]

I refer the House to the Register of Lords’ Interests, as I have an interest in this area. Does the Minister not agree that there is still too much wriggle room on the issue of transparency for the banks and that one of the big issues in this crisis was the mispricing of risk? Therefore, the more people whose salaries are known—particularly, for example, traders, although I do not know whether that is taken into consideration here—the better in terms of aligning the risk. When we talk about bankers’ bonuses and anger, the Governor of the Bank of England had it right when he appeared before the Treasury Select Committee a few years ago and said that the incentive structure in banking was distorted. Do the Government not agree that we need to tackle that issue to ensure that we restore trust and confidence in the banking sector?

[Lord Sassoon]

Indeed, I completely agree with the noble Lord, Lord McFall. With regard to the Merlin agreement, the fact that the five highest-paid senior executive officers now come within the remuneration disclosure is very important. As the noble Lord will know, senior executive officers typically encompass not only those responsible for managing the key divisions but also people such as the chief financial officer and the chief risk officer, who are at the heart of controlling risk in the system. Therefore, I think that the noble Lord’s point is very well made and, as I said, the Government will consult on this issue in the forthcoming year.

Equality

Lord McFall of Alcluith Excerpts

Tuesday 8th February 2011 Lords Chamber

[Lord Sassoon]

My Lords, we took some very difficult decisions about which of the previous Government’s measures we would continue with and which we would not. The principal measure of the previous Government that we did not continue with was the full national insurance tax—the jobs tax—which would have been a significant drag on the growth prospects of this economy. Of course it was right that we should take into account the distributional effect of the total package of measures that we put through as a Government this year in the Budget and in the spending review. That is just what we have done.

[Lord McFall of Alcluith]

Is it the Government’s intention to adhere to the last Government’s ambition to eliminate child poverty completely by 2020?

[Lord Sassoon]

My Lords, this Government are committed to the Child Poverty Act 2010. I note that the previous Government struggled somewhat with their previous child poverty target; the target to halve child poverty by 2010 was widely acknowledged to have been missed. This Government are committed to the targets in the Child Poverty Act and will bring forward a strategy by the end of March 2011.

Financial Services: Shareholder Engagement

Lord McFall of Alcluith Excerpts

Wednesday 19th January 2011 Lords Chamber

Asked By

[Lord McFall of Alcluith]

To ask Her Majesty’s Government what discussions they have had with the financial services industry on shareholder engagement.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the Government are committed to improving shareholder engagement and have already taken significant steps, including the new remuneration disclosure rules, the FRC stewardship code and the revised corporate governance code. We have also issued a call for evidence on governance and short-termism. This will establish whether there are issues affecting the functioning of capital markets, including questions about shareholder engagement. Ministers and officials have had meetings with a variety of organisations as part of the process of policy development and delivery in this area.

[Lord McFall of Alcluith]

The concept of ownerless corporations was reinforced last week at the Treasury Committee when Bob Diamond admitted that there had been no engagement between institutional shareholders and Barclays regarding remuneration and risk structure. Does not this absence of stewardship and judgment only exacerbate a situation where, when companies are in trouble, the taxpayer has unlimited liability whereas the executives have very limited or no liability? Will the Government, therefore, reinvigorate the debate so that risk is understood and properly monitored to ensure that bond-holders take some of the pain, which they do not at the moment, and will there be minimum structural change to ensure that in future no bank is ever too big to fail?

[Lord Sassoon]

My Lords, the noble Lord, Lord McFall of Alcluith, ranges over some big questions there. To start with the remuneration issues, the introduction of the new FSA code of disclosure from 1 January will contribute to making shareholders better informed. My right honourable friend the Chancellor has taken note of Sir David Walker’s suggestion that there needs to be further international agreement in this area so the Chancellor has written to his EU counterparts to see what can be done to further drive forward aspects of disclosure. There is certainly a lot of activity going on there. As to some of the bigger questions about “too big to fail” and bond-holders and so on, I look forward to the light that the Independent Commission on Banking will doubtless shed on these important issues and I note that the chairman of the commission is scheduled to be making a speech in the next few days on this topic.

Banking: Bonuses

Lord McFall of Alcluith Excerpts

Tuesday 11th January 2011 Lords Chamber

[Lord Sassoon]

My Lords, all I can say is that I will listen to any ideas. I did not hear the question at the end of the four ideas put forward but I am willing to listen to all ideas from noble Lords on a whole range of topics. I am always listening but I am puzzled that when the noble Lord had so much time in government to put those ideas into operation he did not think that they were so good at the time.

[Lord McFall of Alcluith]

At the Treasury Select Committee this morning Bob Diamond is reported to have said that Barclays is in the position that it is not too big to fail. Does the Minister agree with that statement and, if so, does that mean that if any big bank in distress comes to the Government in future the taxpayer will not be on the hook?

[Lord Sassoon]

I am grateful to the noble Lord, Lord McFall of Alcluith, for reminding us that there are other challenges as well as bankers’ bonuses to be resolved. The too-big-to-fail one is absolutely at the heart of strands of ongoing work. I did not have the opportunity to listen to the whole of what Mr Diamond said to the Treasury Select Committee but I certainly believe that whether it is in the work of the Independent Commission on Banking or in the discussions that are going on in international fora, the question of how to resolve bank failures is one to which we need to continue to give considerable priority. We are reminded that the question of the structure of banking is multifaceted and we should not focus exclusively on one aspect of it.