Financial Services and Markets Bill [HL]

Lord Tunnicliffe Excerpts

2nd reading
Monday 8th June 2026 Lords Chamber

[Lord Tunnicliffe (Lab)]

My Lords, for 14 years, I was the most junior opposition Treasury spokesman. A slight problem with that is I was occasionally—in fact, more than occasionally—the most senior opposition Treasury spokesman, largely because there was only one of me. Settling into being a Back-Bencher, I glanced at what was coming ahead and decided I had a duty to participate in this debate and learn. I have looked at the Bill and concluded it is what I am going to call “motherhood”. That is not to belittle it, but part by part by part, it attacks individual problems and proposes solutions. We will be very good at that; we will work at it; and we will, I hope, get a good result.

The only bits that hit my eyes were Clauses 39 and 40 on ring-fencing. The global financial crisis in 2008-09 was right at the beginning of my career as an ill-informed Front-Bencher. I have been through virtually all the Bills—I think only the noble Baroness and I have been there so consistently, although there was of course also the noble Baroness, Lady Kramer. We had the global financial crisis in 2008-09, and we really must remember that. It has been mentioned that there will be another one; we do not know what it is, but we should think about how we are prepared for it. I could not agree more with that.

In the 2008-09 financial crisis, the world teetered on the edge of financial chaos. It was solved by a lot of people, but I am particularly proud of Alistair Darling and Gordon Brown for what they did in those weeks when we really did not know what would happen next. After the crisis, we created the Independent Commission on Banking, the Vickers commission, which reported in September 2011 and proposed ring-fencing. I must say that the consensus view on our side was of a good report, a good commission and great people, and the output produced general approval, including from me.

In anticipation of this debate, and looking at ring-fencing as the most significant point that it would touch on, I decided to read a few reports. I read the Ring-fencing and Proprietary Trading Independent Review by Keith Skeoch. It is a fascinating document, which was published in March 2022. The Treasury produced A Smarter Ring-fencing Regime in November 2024 and Safeguarding Stability, Enabling Growth in May 2026. I am afraid I concluded that the ring-fencing regime was doing little good and, in many parts, harm. It has been overtaken in the area of protection by The Bank of England’s Approach to Resolution, of October 2017.

I became fascinated by this resolution stuff—funny things happen to you in old age—and managed to get somebody in the Bank of England, the official who is in charge of resolution, to give me a series of seminars on the telephone. He was a bit suspicious, so he said he had to have his solicitor with him throughout the conversation. I feel I understood it, and I think the claim made in some of these reports is this: all the good that ring-fencing produces is covered by the resolution regime, but the resolution regime, at the end of the day, takes years in preparation, as various banks are persuaded to take particular actions to make them more robust in a crisis. But it actually happens in about 60 hours over a weekend. It is a very elegant process, and they have enormous powers.

I feel that there is a strong case for a relook at ring-fencing, recognising that the resolution regime gives all the protection. We must not lose sight of what we were trying to do. We were trying to avoid the “too large to fail” dilemma. The resolution regime does that. It does not do it for just ring-fenced banks; it does it for all banks. It achieves almost certainly the minimum cost to the public purse—normally, no cost to the public purse. It prevents systemic impacts.

The reason I am making this so short is because the only Bill that goes into the details last about 40 minutes and I did not think this was the time of night to start on it. I simply say that I hope I will be able to find a way, I hope even some support, to produce amendments to the Bill so that we have a proper discussion that looks at whether ring-fencing is still fit for purpose and the extent to which the resolution regime can take over much of its work. The rest of its work, if any, can be distributed within the regime. We can take away the detailed problems that are all over the place in its application, which is a negative to the system, and remove the fact that there are two regulators, which is always a bad thing, especially when one is going to take over at the last minute, as the Bank of England has the power to do in the resolution regime.

Steel Industry

Lord Tunnicliffe Excerpts

2nd reading
Saturday 12th April 2025 Lords Chamber

[Lord Tunnicliffe (Lab)]

My Lords, I rise to totally support the Government and to congratulate them on their draft Bill. I think the actions of the Government have changed the tone of the debate. The role of government is being redefined. There is an acceptance that government is in the business of involvement in industry, where it is necessary. I suspect that, in coming to the conclusions, some sacred cows within government have been, if not slaughtered, certainly put under some new pressures.

There is much debate about jobs. If the initiative that is being taken was about jobs and jobs alone, I am afraid I would be less sure. I suspect that, as a jobs exercise, we would discover the cost per job saved to be rather high, and that rather high price would be a bad precedent. But I support the strategic case. It is impossible to imagine a period in our history since the Second World War where the world has been more unstable. I remember the Cuban crisis—I was a student at the time. It was dodgy, but it was clear, in a sense, that men—and it was men in those days—of a serious conscience would at the end of the day find a solution, and they did. That is not at all clear now. We have all sorts of unstable characters in the mix and we could be a victim of that instability.

When peace breaks out, demand for steel will escalate. The world is in a destructive state: in war zone after war zone there will be a requirement for reconstruction, infrastructure, growth and repair. The demand for steel will escalate in these circumstances. Defence spending will require much more specialist steels. Supply is uncertain, both in areas of specialism and overall. It is wholly credible that the world could run out of steel and, if steel fails, the results for this country would be catastrophic. I believe the Government should press on with this legislation, and I accept the point made by my noble friend Lord Reid that, in the longer term, it will almost certainly lead to nationalisation.

I would certainly encourage the Government to beware the concept of partnership. Partnership is an unusual phenomenon at the level of a steelworks. Both parties need the same objective. A private sector partner that has the size and capability to be a useful partner has got there through the good old-fashioned market objectives of maximising shareholder value. Rather sadly, in this day and age, that is short-term shareholder value. The state is entering a difficult process of maximising the public good. That is what it is there for and I strongly recommend that it does not try to do it in a confusing partnership situation.