Independent Banking Commission Report

Michael Fallon Excerpts

Monday 12th September 2011 Commons Chamber

[Mr Osborne]

I will not repeat what I have said about the timetable. Suffice it to say that it is what John Vickers recommended, having really thought about it. This involves a combination of getting the detail right and ensuring that the changes do not unduly damage credit supply in the short term. That is why he has recommended a longer timetable. As he pointed out at his press conference this morning, once we propose such changes and start to legislate for them, some of them will start to happen anyway as banks try to get ahead of the curve—that is certainly what happened with Basel, although they were arguably too quick to get ahead of the curve in that instance—and that is what he anticipates happening when the changes are introduced.

[Michael Fallon (Sevenoaks) (Con)]

Given the report’s emphasis not only on the size of the British banking sector but on the lack of competition within it, will the Chancellor assure the House that he will follow through on the recommendations to encourage new and challenger banks to provide the finance that our small businesses desperately need?

[Mr Osborne]

I can absolutely give my hon. Friend that assurance. The report addresses the issue of Lloyds, which is required to sell branches under European Union state aid requirements. John Vickers thinks that the key test for the Government’s handling of the Lloyds issue will be whether we have created an effective challenger bank. He thinks that any such new bank should have about 6% of the personal current account market, which is more than the state aid proposals would lead to, and that it should be properly funded. I take those recommendations very seriously.