Oral Answers to Questions

Ed Miliband Excerpts

Wednesday 4th July 2012 Commons Chamber

[The Prime Minister]

My right hon. Friend makes an important point. We have to get to the bottom of what has happened and we have to do so quickly. In doing that, we should bear in mind the remarks of Richard Lambert, who ran the CBI very successfully for many years, who carried out an investigation for the Labour party and whom I respect a great deal:

“the Libor scandal means that the required changes have to be tougher…that is the argument for a short, sharp inquiry. Going back to square one would, to put it mildly, be a serious mistake. The economy cannot recover in the absence of a stable banking system: nothing can be more urgent than that.”

That is not the only consideration. We must get to the truth, but we should listen to such expert opinions as well.

[Edward Miliband (Doncaster North) (Lab)]

I join the Prime Minister in paying tribute to Guardsman Apete Tuisovurua, Guardsman Craig Roderick of 1st Battalion Welsh Guards and Warrant Officer Class 2 Leonard Thomas of the Royal Corps of Signals, who died in the most tragic of circumstances. Our hearts go out to their families and friends. I also join the Prime Minister in his remarks about the incident at RAF Lossiemouth.

The banking scandals of the last week have revealed traders cheating and the mis-selling of insurance products to small businesses, and come on top of other scandals in the banking system and the continuing multi-million-pound bonus merry-go-round. How can the Prime Minister convince people that a parliamentary inquiry is a better way of restoring people’s confidence than a full, independent, forensic and open judge-led inquiry?

[The Prime Minister]

On the substance of the issue, there is no disagreement between us. This banking scandal is appalling. It is outrageous, frankly, that home owners may have paid higher mortgage rates and small businesses may have paid higher interest rates because of spivvy and probably illegal activity in the City. People want to know that crime in our banks and financial services will be pursued and punished like crimes on our streets. As well as people being held accountable, the public want rapid action to make sure that this cannot happen again.

In my view, the most important thing about an inquiry is that it is swift and decisive, is set up as fast as possible, gets going as fast as possible, reports as fast as possible and is transparent and open at every stage. That is why I favour a public parliamentary inquiry rather than a judge-led inquiry. I want us to legislate on this, starting next year.

[Edward Miliband]

I do understand the Prime Minister’s concerns about speed, but there are concerns also that the inquiry that has been talked about is far too narrow, focused solely on the scandal of LIBOR when we know that the problems go much wider, to the culture and practices in the City. I believe, however, that there is a way forward that we could agree upon—that we have a two-part, judge-led inquiry that is instructed to report by Christmas on the scandal surrounding LIBOR, which is his timetable. The second part of the inquiry should look, over 12 months, at the much wider area of the culture and practices of the industry. That would satisfy his requirement of speed but also the necessary requirement to look at the wider culture and practices in the City. Will he agree to my proposal?

[The Prime Minister]

I always listen carefully to proposals from all parts of the House. Let me make three points in response. First, on the structure and future of banking, we set up the Vickers inquiry. It reported, and we are going to implement that inquiry, which will for the first time separate investment banking from retail banking. That is a major step forward. Secondly, the parliamentary inquiry that we are proposing is wider than the right hon. Gentleman says. It will look at the culture of banking, as my hon. Friend the Member for Chichester (Mr Tyrie) confirmed this morning.

My third point—all these points need to be considered—is that the Serious Fraud Office is still considering whether to launch a criminal investigation. While that is happening, there are dangers in opting for a judge-led inquiry, which might not be able to get under way. If we want to do this as fast as possible and get action as fast as possible, I think the way we have suggested is right. There was a vote last night in which the House of Lords voted against a public inquiry, and we have made time available on Thursday—this has not happened before—for an Opposition motion and a Government motion to be debated and voted on. Frankly, what matters more than the process is the substance and getting on with it. I hope we can accept the results on Thursday.

[Edward Miliband]

We were in exactly the same position a year ago, when the Prime Minister initially rejected the idea of a judge-led inquiry into the press scandal and then rightly changed his mind. In justifying that decision, he said:

“I don’t believe there is any better process than an inquiry led by a judge”.

He said that would happen with

“the whole thing…pursued…by a team of barristers who are expert at finding out the facts”.—[Official Report, 30 April 2012; Vol. 543, c. 1251.]

Why is it right to have that judge-led approach to the scandal in the press but wrong for the scandal in the banks?

[The Prime Minister]

I think there is a very profound difference between the circumstances of the Leveson inquiry and the circumstances of this inquiry, because of course the Leveson inquiry followed a whole series of unsuccessful and failed inquiries. On this occasion we have had a very successful inquiry by the Department of Justice in America and the Financial Services Authority, which has uncovered the wrongdoing. Now what is required is swift inquiry, swift action and swift legislation. That is what you will get from this Government.

[Edward Miliband]

I do not think the Prime Minister has understood the depths of public concern and the depths of the lack of confidence. He says both that the inquiry that he proposes can be completed within essentially four months and that it can go as wide as it likes. That is simply not realistic. I have listened to his concerns and proposed a way forward. I ask him again for a two-part inquiry, with a judge, to complete the part on LIBOR on the Chancellor’s timetable—by Christmas—and then to look at the wider issues about the culture and practices of the City, of which there are many.

[The Prime Minister]

I understand the public concern about this issue, which is why I want us to get on with it. Frankly, it is this Government who are legislating to split the banks, as Vickers suggested; who are scrapping the tripartite agreement that failed so badly under the last Government; who have introduced the bank levy so that the banks pay their taxes properly; and who have introduced the most transparent regime for pay and bonuses in any financial centre anywhere in the world. As evidence that the House of Commons is getting on with it, we are going to see Bob Diamond questioned upstairs by the Treasury Select Committee this afternoon. I say to the right hon. Gentleman that we are having a vote in the House of Commons tomorrow—a vote on his motion and a vote on the Government motion. Clearly, if the Opposition motion wins, there will be a full independent public inquiry. I urge him to say now that if the Government motion is carried, he will co-operate with a full parliamentary inquiry.

[Edward Miliband]

I do not think the Prime Minister gets it about the depth of public concern. I hope that he will reconsider his position. He says that the Government are implementing the Vickers inquiry. On a very important issue that has come out in the past two weeks—high street banks selling dodgy products to small businesses—the Vickers commission said that it should never be allowed to happen again, yet after lobbying by the banks the Government rejected this basic recommendation of Vickers. In the light of the recent scandal, with small businesses damaged, will he now U-turn and implement the Vickers recommendations in full?

[The Prime Minister]

First, I will not take a lecture on getting it from a party that was in office for 13 years when all these things took place. On his specific question about the Vickers inquiry, let me repeat that it was set up by this Government and will be implemented by this Government—something that had not happened before. Under the inquiry, complex derivatives will be included in the investment bank ring fence, not in the retail banks, which we want to make safer. But let me just say this to the right hon. Gentleman: if he wants a quick resolution, he must accept the outcome of a vote in the House of Commons. I am prepared to do that. Why is he not?

[Edward Miliband]

Mr Speaker—[Interruption.]

[Mr Speaker]

Order. Government Back Benchers who have been here for some years ought to have grasped by now that it is not the responsibility of the Leader of the Opposition to answer, so they should pipe down and try to be good boys, if they can.

[Edward Miliband]

If the Prime Minister wants a history lesson, let me repeat what he told the City of London on 28 March 2008:

“As a free-marketeer by conviction, it will not surprise you to hear me say that”

the problem “of the past decade” is “too much regulation”.

Does that not say it all about the double standards of this Prime Minister? Whenever these scandals happen, he is slow to act and he stands up for the wrong people. The question people are asking is, “Who will act in the national interest, rather than the party interest?” His is a party bankrolled by the banks. If he fails to order a judge-led inquiry, people will come to one conclusion: he simply cannot act in the national interest.

[The Prime Minister]

Everybody can see what is happening here. [Interruption.]