Independent Banking Commission Report

Nicholas Brown Excerpts

Monday 12th September 2011 Commons Chamber

[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.

[Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)]

What reassurance can the Chancellor give the House that the ring-fencing will be effective at the time when it is most likely to be tested—namely, in the run-up to another debt or liquidity crisis? I listened to his earlier answer about the investment banks putting money into the high street banks, and about that being an advantage for the proposals for ring-fencing, but I have to tell him that I do not find that wholly convincing. If the idea is to get support, he has to be able to explain to the House how this proposal will work when it is required to do so.

[Mr Osborne]

In a sense, the right hon. Gentleman is right. The proof of all the arrangements that we are putting in place, and the international arrangements, will be in the pudding—although it is not really the kind of pudding that we want, because it is a banking crisis.