Oral question asked in the House of Lords, by Lord Barnett (Labour). It was answered on Wednesday, 11 March 2009.

Banking: Corporate Governance

Question: My Lords, I thank my noble friend for his Answer and for an answer that he gave yesterday, when he explained an equation: MV=PY. I am sure that that pleased everyone in the House and that they thoroughly understood what he was talking about. May I put a simpler equation to him? If the banks, which are supposed to be lending and have been promised to lend, equal all the money that has gone in, rightly, to try to help them to do so, but they still do not lend, will my noble friend assure us that his policy of an arm’s-length relationship with the banks will change and that he will scrap that arm’s-length policy, or at least moderate it, and see that they do lend?

Answer: My Lords, I thank my noble friend for his question. He brings considerable experience to these issues and I always welcome his questions, as indeed I welcome those of the noble Lord, Lord Higgins; they are a truly impressive duo. The negotiated lending commitments with the Lloyds Banking Group and the Royal Bank of Scotland have reached totals of £48 billion of new and additional loan commitments. After careful scrutiny of the plans of those banks and assurances from them on the basis of their economic forecasts for the next 12 to 24 months, and having regard to prudent lending criteria that they are entirely achievable goals, those banks will report to the Treasury on a monthly basis, and we will submit an annual report to Parliament on those lending commitments. All parties entered into them on the basis that they believed they were achievable.

Secondary information

Type: Oral question
Reference: 708 c1165
Session: 2008-09
Oral question type: 1st Supplementary
Chamber / Committee: House of Lords chamber
Related items: Banking: Forecasts
Monday, 20 April 2009
Written questions
House of Lords
Subjects: Banks Government assistance Loans Treasury Royal Bank of Scotland Lloyds Banking Group Directors Corporate Governance of UK Banking Industry Review Corporate governance
Link: View this Oral question on www.publications.parliament.uk