Professional Standards in the Banking Industry

Andrew Love Excerpts

Thursday 5th July 2012 Commons Chamber

[The Leader of the House of Commons (Sir George Young)]

The debate got off to a difficult start and those watching it might have been driven to the conclusion that this was not the forum for a rational debate about the ethics and conduct of banking. Of course, the Government motion proposes a joint parliamentary inquiry, and those who have served on Select Committees and Joint Committees know that such inquiries are conducted in a far calmer atmosphere than the rather heated beginning of our debate, particularly if they are tempered by the presence of those from another place. My hon. Friend the Member for Harwich and North Essex (Mr Jenkin) made that point in his compelling speech.

I hope that Opposition Members read, if they did not listen to, the speech from my hon. Friend the Member for Chichester (Mr Tyrie), who has said that he is ready to serve as Chair of the Committee if it goes ahead. He made it absolutely clear that he was not interested in a witch hunt, that his inquiry would be forward looking, that the objective would be to get banking in better shape quickly and that he wanted a broad-based inquiry including participation from Opposition Members. I hope that Opposition Members will be reassured by his speech.

My hon. Friend also asked for an assurance about resources from the Treasury. In his statement on Monday, my right hon. Friend the Chancellor made it clear that the Treasury would be happy to give resources to the Committee.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

Will the Leader of the House give way?

[Sir George Young]

Let me make a little more progress.

I am also grateful to my right hon. Friend the Member for Haltemprice and Howden (Mr Davis). In a thoughtful speech, he made the point that the gap between the two forms of inquiry was narrower than many had implied, particularly so far as powers were concerned. He also reinforced the imperative of reaching a unanimous conclusion, which often happens with Select Committees of the House. Indeed, he drew on his own experience on the Public Accounts Committee. My right hon. Friend cast some doubt on the December target, but my hon. Friend the Member for Chichester seemed content with it.

I hope that Opposition Members will listen to what the hon. Member for Dundee East (Stewart Hosie) said. He is a signatory to motion 2 on the Order Paper and made it clear that if that motion was not carried he would not oppose motion 3. That is the right approach if we are to resolve the issue this afternoon.

I am grateful, too, to my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso), who made the point that the gap between the two sides was not quite as wide as the rhetoric at the beginning of our debate implied. He underlined the urgency of making progress, particularly if we are to catch the legislative train that is going through the House in this Session.

The right hon. Member for Oldham West and Royton (Mr Meacher) asked why the Government were against the inquiry proposed by the Opposition. My right hon. Friend the Chancellor set out in his speech the timetable for public inquiries and that was one reason why we did not think that that was the right way forward.

My hon. Friend the Member for Rochester and Strood (Mark Reckless) made an interesting speech explaining the difference in culture that had occurred in the City, a point also made by my hon. Friend the Member for Macclesfield (David Rutley), who was put off a career in the City by being asked the question, “How greedy are you?” One only has to look at him to realise that the answer is not at all, as he has the figure of a pipe-cleaner.

My hon. Friend the Member for Witham (Priti Patel) spoke on behalf of the thousands of people who work in banking who were not responsible in any way for what has occurred but whose reputations are now tarnished by the actions of a minority. She spoke on behalf of the hard-working majority in our banking services and supported the parliamentary inquiry.

Many of the contributions underlined powerfully the need for urgent action to put out the fires that are threatening to engulf one of our leading financial institutions and to prevent further wrongdoing at the heart of banking. Banking employs more than 1 million people, and it generates £63 billion in Exchequer revenues and 8.9% of our gross domestic product.

I do not think that there is any disagreement between the Government and the Opposition on what we need to do, which is to sustain a strong, vibrant, transparent and more accountable financial sector in the UK that commands international confidence. Although we are united on the direction of travel, there are clearly differences on the choice of vehicle and its speed. We favour a cross-party Joint Committee of both Houses that is accountable to Parliament; in operation before the summer recess; equipped to navigate the legal minefield of criminal investigations; and well positioned to produce recommendations that can be implemented through legislation that can be introduced in this Session. The Opposition, as we have heard, prefer a more costly public inquiry led by a judge and run by Queen’s Counsel and other lawyers that would coincide with and perhaps undermine other regulatory proceedings operating on a time scale that cannot easily be controlled.

Those who support the first motion should listen to what the former Cabinet Secretary Lord O’Donnell said in the debate in the upper House on Tuesday:

“I was involved very much in setting up the Leveson inquiry, and my experience of judge-led inquiries is that you have to be incredibly careful about tying them down to specific issues and timetables.”

That is what the Opposition are seeking to do. He continued:

“What people have said they want from this specific inquiry means that it will grow bigger and take longer or that it will be incredibly superficial”.

Lord O’Donnell was not alone in expressing those concerns. Two other former Cabinet Secretaries voted against the Opposition’s proposals, and even Lord Eatwell, the Labour Treasury spokesman said:

“I am supportive of the idea of a Joint Committee moving forward to deal with the specific implications and consequences of the LIBOR element—what Mr Tyrie refers to as the ring-fence proposals.”—[Official Report, House of Lords, 3 July 2012; Vol. 738, c. 617-623.]

Some hon. Members have claimed that a parliamentary Committee will be unable to rise above the political fray. However, we all realise that a Committee report pushed through on party lines will quickly be devalued. Others have suggested that a parliamentary Committee would lack the inquisitive force of an inquiry barrister. I want to make it absolutely clear that a Joint Committee will have what it needs to carry out an inquiry including, if it wants them, resources for counsel. If we establish a Joint Committee we are fortunate to have more than 1,000 Members in both Houses with the necessary expertise to hold an inquiry. The advantage of a parliamentary Committee is that it is in a position to ensure that the recommendations are carried forward—something that we cannot have with a judge-led inquiry.

A number of my hon. Friends have made the point that today’s debate has not just been about the conduct of the banks. To a lesser extent it has been about the capacity, reputation and relevance of parliamentary institutions to rise to the challenge. I have to say to those who resist a parliamentary inquiry that I have more confidence in the ability of Parliament and its Committees to rise to the challenges that confront us this afternoon than all those who say we are the wrong people to do this.

The hon. Member for Wallasey (Ms Eagle) did not make clear—and neither did the shadow Chancellor—whether, if motion 2 is defeated and motion 3 is carried, the Opposition will participate in the inquiry. I very much hope that if motion 2 is defeated the whole House will support motion 3. I hope that all parties will nominate those with the qualities needed, of whom there are many throughout both Houses, to the Joint Committee, and I hope that we can show the country that we have the ability and self-confidence to discharge the responsibilities placed on us and address the central issue at stake today—restoring confidence in the UK’s banking industry.

Question put.