Banking Reform

George Mudie Excerpts

Thursday 17th June 2010 Commons Chamber

[Mr Hoban]

I am grateful to my hon. Friend. There have been a number of conversations with other colleagues globally about the lessons to be learned from the financial crisis and from the regulatory structures. It is interesting to talk to people in other jurisdictions about their views. Christian Noyer, the governor of the Banque de France, said in July last year:

“Indeed, one of the main lessons of the crisis may be that those countries where central banks assume banking supervision took advantage of their ability to react quickly and flexibly to emergency situations.”

Others have expressed a similar view and that is why I think that the reforms we are announcing today are in the mainstream of reforms in financial regulation—a mainstream that the Opposition seem quite happy to stay outside, yet again.

[Mr George Mudie (Leeds East) (Lab)]

I welcome the evolution of financial regulation. I think that the present system was tested and found wanting, so the movement has to be welcomed. I want to press the Minister on the subject of the Banking Commission. It was interesting that he left it out of his statement and that worries me, because I note that it will take 18 months before it reports. If that is so, it will probably miss the Queen’s Speech for the following year, which suggests that it will be three or four years before we see legislation and the much-needed changes that will deal with the banks that caused the crisis. They continue to flaunt their behaviour on bonuses and have continued to hurt small business by not lending in the last two years. Urgent action is needed, so why is there this long timetable and why was this subject missing from his statement?

[Mr Hoban]

I am grateful to the hon. Gentleman for that question. He has been a distinguished member of the Select Committee on the Treasury and has taken part in many discussions in that Committee and in Public Bill Committees when we have explored some of these issues. I sense that he is much more engaged in the need for reform than his colleagues on the Front Bench.

The Banking Commission is important and it is vital that we ensure that we learn some of the lessons that arise from the structure of the UK banking system. We have a very concentrated banking structure and three out of the four principal banks in the UK are universal banks. We need to understand what risks flow from that and how best to tackle those risks, as well as considering the impact of competition in the banking sector. The appointment yesterday of Sir John Vickers as chairman of the commission has been greeted with warm applause across the business and consumer community. There are four other commissioners— Martin Wolf, Martin Taylor, Clare Spottiswoode and Bill Winters—who are equally distinguished in their own fields. The commission will provide the opportunity for a proper debate about the structure of banking in this county—a debate in which the former Prime Minister and former Chancellor did not want to participate. We think that it is time to have that debate and when we have had it, that will help remove the uncertainty about the structure of banking in the UK.