Lord Bilimoria
Main Page: Lord Bilimoria (Crossbench - Life peer)
Lord Sassoon
I thank the noble Lord, Lord Myners, although I think that he may have forgotten that he is no longer on the Front Bench. He raises a lot of points. I find it remarkable that, on a day when the Chancellor of the Exchequer has made an historic Statement about restoring the role of the Bank of England, the noble Lord seeks to denigrate my right honourable friend’s announcement. This is a remarkable and important Statement, putting the Bank of England back to where it should have been, from where it was removed in 1997. Let us remember that.
Among other things, the noble Lord says that the report of the banking commission will be too late. It will not be too late, but, of course, this work should have started months ago. The previous Government would brook no discussion of the structure of banking, notwithstanding some very clear steers, not least from the report of the Select Committee on Economic Affairs of your Lordships’ House, Banking Supervision and Regulation. I think that the noble Lord, Lord Eatwell, was even a member of the committee and the sub-committee that worked on the report. The report, dated 2 June 2009, states that,
“the tripartite authorities in the United Kingdom … failed to maintain financial stability and were found wanting in dealing with the crisis”.
Among other things, it goes on to state:
“The Committee recommends that the Government”—
that is, the Government in June 2009—
“should as a matter of priority revisit the tripartite supervisory system in the United Kingdom”.
So it ill behoves the former Minister, the noble Lord, Lord Myners, to say that things are too late.
As to questions of reporting, it will be up to the banking commission to decide what it will do by way of interim reports.
Lord Bilimoria
My Lords, does the Minister agree that the formation of the independent Monetary Policy Committee was actually a very good move by the previous Chancellor and has provided both a proactive and a reactive ability to set interest rates? Will he therefore reassure us that the structure and remit of that committee is not going to be tampered with? On the other hand, we know—and the Statement reaffirms—that the tripartite system was an absolute disaster. It was a happy merry-go-round between the FSA, the Treasury and the Bank of England in the good times which then became a disastrous “blame-go-round”. With regard to speed, referred to by the noble Lords, Lord Eatwell and Lord Myners, does the Minister remember that when the Northern Rock Bill went through this House, it was pointed out that in 2006 the FSA had noticed that Northern Rock was a problem and had marked it for review in 2009. That is how disastrous the FSA’s role was in this situation, so speed is of the essence. Can the Minister assure us that the measures set out in the Statement will be put in place quickly?
On the role of the Governor of the Bank of England, whether he is chairman and chief executive put together, the reality is that every senior banker I have spoken to in the past has said that whenever the Governor of the Bank of England called, they would jump, react and listen—and it worked. I am delighted to hear that powers of supervision are to be granted back to the Bank of England. My only worry is that it will not be like the commission and take place in September 2011. Will the Minister reassure us that these powers are going to be repatriated to the Governor of the Bank of England quickly?
Lord Sassoon
I am grateful to the noble Lord, Lord Bilimoria, for those comments. I can confirm that the MPC has indeed served the country well and that there are no plans to change its remit. I also agree that the word “disaster” is entirely appropriate and that the FSA got itself into a mindset in which there was far too much of a box-ticking approach and too little consideration for the big picture. But to be fair to the authority, when the whole question of Northern Rock blew up, it did then go on to make a candid, frank and rapid assessment of what went wrong.
I note the noble Lord’s point about the need for speed, and I think we should come back to that after my honourable friend the Financial Secretary to the Treasury has set out further details of the institutional arrangements.