Financial Services Bill

Brian Binley Excerpts

Monday 6th February 2012 Commons Chamber

[Ed Balls]

The Chancellor does not listen. He wants to play this game so much that he does not hear. I agree with the increase in his powers. He is right to take them, but he cannot use them unless the Governor comes to him and says, “I fear a crisis may be building,” having made a judgment about moral hazard outwith the views of the heads of the PRA, the FCA and the FPC.

In the structure set out in the Bill, the statutory office holders will be formally kept out of the room under the Chancellor’s own memorandum of understanding, which is foolish. I understand why it has happened—it will be easier to negotiate. In all the years when previous Chancellors wanted clarity, it was hard to negotiate. However, negotiating the wrong clarity in a way that keeps information away from the Chancellor is not stabilising and in the public interest but destabilising, opaque and against the public interest. The Chancellor should take some advice from people who have seen that not working and ensure that he hears the views of the people to whom he is giving statutory responsibility in the Bill. That is my very strong advice, and I hope he will listen to it.

[Mr Brian Binley (Northampton South) (Con)]

The shadow Chancellor is telling us something illuminating—that if a Chancellor does not want to listen, no system will have any impact at all. Under the last Government, siren voices started in 2002, and the then Chancellor refused to listen. We had a systemic deficit problem, and again he did not want to listen. The shadow Chancellor has been through all this, so would he advise the current Chancellor to listen more than the last Chancellor did during the crisis?

[Ed Balls]

My very clear advice to the Chancellor is that when he gives people a clear statutory responsibility for a particular function and legislates for three deputy governors who are the heads of individual agencies, he should also design his crisis resolution and decision-making procedures so that his experts are in the room and he can hear the array of their views. The idea that it is better for the Chancellor to require the Bank to resolve such issues internally and come to him with one voice—one Governor, one decision maker—is a flawed structure of regulation. The point, however, is that that is not what the Bill intends. It intends for the FCA and PRA to be important institutions, in which case the Chancellor should get them in the room.