Financial Services Bill

Lord Kerr of Kinlochard Excerpts

Tuesday 3rd July 2012 Lords Chamber

We on this side of the House fully understand that a public inquiry may lead to some criticism of the policies adopted by previous Governments, including Governments formed by the party of which I am a member. We will just have to take that on the chin. This matter is too important to allow such issues to be decisive. We must learn from what has happened, and the way to learn is to have the fullest information possible. That is why an independent judicial inquiry is necessary. I beg to move.

[Lord Kerr of Kinlochard]

Given that the noble Lord has explained that the public inquiry he seeks is not an alternative to the Tyrie inquiry, can he confirm that the Opposition will be co-operating in full with the Joint Committee to be set up under Mr Tyrie?

[Lord Eatwell]

I certainly think that Mr Tyrie and the Treasury Committee can and will pursue their activities in their normal way, including perhaps the pursuit of this particular inquiry. As to the future policy of the Opposition on the organisation of that inquiry, we are trying to achieve the best possible outcome. I see the best possible outcome as a three-dimensional one.

--- Later in debate ---

Finally, I will draw a different analogy with the Leveson inquiry from that drawn by the noble Lord, Lord Carlile. The Prime Minister was absolutely right to set it up. I do not think much of most of what he has done, but that was a very positive achievement that will stand to his credit in the historical record. The experience of the last few months has been that a judicial inquiry is able to get to grips with problems in a very sophisticated and substantial industry. The media and communications industry is about as substantial and complex as the financial services industry. No doubt there are lawyers who are making money out of the inquiry, as they would out of any judicial inquiry. However, that is not inhibiting Lord Justice Leveson from doing a good job, or the public from feeling that the job that must be done in relation to the media industry is being done effectively. We want the same kind of credibility with the inquiry into the financial services industry that is obviously necessary.

[Lord Kerr of Kinlochard]

My Lords, like the noble Lord, Lord Neill, I hope that the noble Lord, Lord Eatwell, will withdraw his amendment. His three-dimensional answer to my question made it impossible for me to support it, because I fear that he is taking a hostage. The most important thing that must be done is to establish quickly how we can ensure that the fixing of LIBOR cannot happen again. That is the crucial operational thing to do. I agree with those who say that this is an international scandal. I agree that around the world, people know about this. There are plenty of other scandals in the banking system that must be addressed, such as the mis-selling scandal and questions of remuneration and bonuses. There is plenty of time for a study of the culture of the banking and financial services industry. That is important but not urgent. What is urgent is to do something operational now.

I understand from the Prime Minister’s Statement that the Wheatley report will be published this summer. That fits very well with the Tyrie exercise, which will finish this autumn and can establish what happened. It should not go into areas of criminality. What was said by the noble Lord, Lord Carlile of Berriew, was fully justified; I would not go down the special prosecutor route but would follow the advice of the noble Lord, Lord Howard. We need a quick operational inquiry to establish how to make sure that this shocking thing—this poisoning of the water supply that is a scandal around the world—is put right and cannot damage London, and borrowers and lenders, any more.

I will say one further thing to remedy an omission in our discussions, and those of the other place, yesterday. I am confident that Mr Agius is an honourable man. It is a pity that no tribute was paid yesterday to the way in which he immediately accepted responsibility and felt that the buck must stop with him.

I was reminded of the noble Lord, Lord Carrington. Nobody thought he was responsible directly, hands on, and involved in the loss of the Falklands. I do not believe for a moment, and I do not believe that anybody in this Chamber believes, that Marcus Agius was in any way involved in fixing the LIBOR rate, yet he undoubtedly did the right thing, and it is important that that should be put on the record. It makes a striking contrast to the behaviour of some others in public life these days. I advise anyone intrigued by this reference to read a remarkable speech made on Friday on the Steel Bill by the noble Lord, Lord Fowler, referring to another Member of the present Government.

[Baroness Kramer]

My Lords, I want to associate myself with the words we have just heard from the noble Lord, Lord Kerr, on the importance of acting quickly. I speak as someone who has spent most of her career in banking, working with clients on transactions that involve the LIBOR rate and I understand the significance of the issues we have discussed in this House.

As others have said, this is not just a UK issue. The earliest that any inquiry, as proposed by the noble Lord, Lord Eatwell, could begin would be the autumn, so we are looking at something like a two-year inquiry. I am not sure that he understands—