Banking: Quantitative Easing

Lord Lawson of Blaby Excerpts

Monday 10th October 2011 Lords Chamber

[Lord Sassoon]

My Lords, I think we risk straying from the Question. I know that, in a masterly wheeze, words about QE were added to this Question late in the day by the noble Lord, Lord Barnett. I think that quantitative easing is one of many questions relevant to the sale of bank shares but a relatively small consideration in present circumstances. Given that the Question is about the sale of bank shares, this is one of many factors that is relevant.

[Lord Lawson of Blaby]

My Lords, although privatisation of RBS and the Lloyds Banking Group—ideally after separating completely the retail and investment operations of the two groups—is clearly some way off, does my noble friend recognise that the immediate need is for the Government to adopt a much more hands-on relationship with them than hitherto to ensure an adequate flow of lending to small businesses?

[Lord Sassoon]

I very much agree with my noble friend that the immediate priority is not so much consideration of the sale of the banks—UKFI will continue to monitor that closely—but to keep credit flowing. In relation to that, the Merlin agreement is critical. We treat the management of RBS and Lloyds on an arm’s-length basis, but we will ensure, as we have, that we have an agreement with all the major banks to increase lending on what it was last year and what it otherwise would have been. The third quarterly numbers will be released under the Merlin agreement shortly.