Lord Barnett
Main Page: Lord Barnett (Labour - Life peer)
Lord Sassoon
I thank the noble Lord, Lord Higgins, and share with him what he says about the Bank of England. It is clear that the macro-prudential toolkit will likely focus on capital liquidity and leverage, and it is for further consideration as to what other tools may be appropriate. On the other work that has been done by the Which? Commission and people in other countries, it should remind us that whether it is in the US, at the European level or by the cross-party Which? Commission here, just about everyone except the previous Government was getting on with looking at the structure of the industry. That emphasises why we should waste no time in getting on with the commission’s work now.
Lord Barnett
My Lords, no one doubts that at the time the FSA was very poor in its regulatory responsibilities, but does the noble Lord agree that not many others were much better, including the then Governor of the Bank of England? Nobody gave any serious warning of the looming crisis. Now we are told that we are to have a new quango or commission. What evidence is there that the new tools to be given to the Bank of England—tools that could readily have been given to the noble Lord, Lord Turner, and the FSA, which is already in place and seems to be doing a fair job at the moment—will mean that it does any better?
Lord Sassoon
My Lords, I should point out to the noble Lord, Lord Barnett, that the Bank of England was indeed drawing attention in its financial stability reports to the debt crisis and some of the looming debt problems, but did not have the tools to deal with it. In his Mansion House speech in June 2009, the governor himself commented that even under the partially patched up regime that the previous Government put in place,
“it is not entirely clear how the Bank would be able to discharge its new statutory responsibility if we can do no more than issue sermons and organise burials”.
It is all very well having some of the new tools in place, but they need to be in the right hands—those of someone who can bring the responsibilities together.