Bernard Jenkin
Main Page: Bernard Jenkin (Conservative - Harwich and North Essex)Department Debates - View all Bernard Jenkin's debates with the HM Treasury
(12 years, 11 months ago)
Commons ChamberI talk to UKFI all the time, and one of the things I talk about is ensuring that the banks in which we have a public ownership of shares are meeting their Merlin lending targets. I congratulate Lloyds, which has changed its operations and advertising campaigns and has tried to encourage small business lending. The hon. Gentleman talks about targets, but again there is complete amnesia about the fact that Labour were in government about 18 months ago. The Labour Government introduced net lending targets, which he wants us to introduce, abandoned them after 12 months, after those targets were completely missed, and then said in the House of Commons that they would introduce gross lending targets for two banks, RBS and Lloyds. We have not just stuck with the methodology that they developed, but have extended it to the entire banking system. Before they criticise those trying to clear up the mess, Labour should remember what they did in office.
I welcome my right hon. Friend’s comment that we should not confuse the interests of bank shareholders with those of taxpayers. Should we not also remind ourselves, however, that unless the shareholders are doing well, the bank balance sheets will not be doing well, and ultimately small business borrowers will not be doing well? He is winning the argument on the reforms, but will he reassure the House that he is mindful of the cost of capital of banks? By raising business costs for banks, we would be in danger not only of driving them offshore, but of raising the costs of capital for UK business.
Of course, that is the difficult balance that we all must get right. The challenge is to ensure that banks can lend well, as people have been asking them to, while at the same time ensuring that they have a greater cushion should things go wrong. In his report, one of the things that John Vickers points to is that if a bank is ring-fenced, its retail deposits are more likely to be used to support retail lending than to support an investment bank’s activities. He thinks that the ring fence could positively enhance lending opportunities for ring-fenced banks.