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Safety Deposit Current Accounts Bill [HL]

My Lords, I am grateful to all who have spoken. It is clear that the banking system has been shrouded in mystery for far too long and that it has some very serious structural faults which need addressing. Like the rest of the House, I thoroughly enjoyed what my noble friend Lord Ferrers said about the woman going into Barclays Bank. All I can say to my noble friend is that had she gone into Northern Rock in the middle of the crisis, it would have turned round to her and said, ““No, you can’t have your £40,000 back because you’re an unsecured creditor””. That is the point of this Bill. Indeed, that is what Northern Rock did do to people who tried to withdraw their money. The noble Lord, Lord Razzall, rightly said that the current situation is beginning to lift the veil on the secrecy of banking and many of the problems. I am grateful to him for saying that the Bill addresses a fundamental point. It tries to do exactly that, but it is only a small point. However, I take issue with his remark that I am trying to change the banking system as it has existed for the last 500 or so years. I disagree because the banking system changed dramatically in 1971 when the link with the gold standard changed. When President Nixon changed that, he changed, either deliberately or inadvertently, the whole way in which the banks operated. I go back to the figures that I mentioned earlier. The money supply in 1971—which is why I referred to that date—was £31 billion, but it has now shot up to £1,700 billion. That would not have happened under the old banking system. So it is really only in the last 30 or 40 years that the banking system has evolved into what we accept and take for granted today, which so many think should not be looked at with a severely critical eye. I also take issue with the noble Lord’s remark that I am forcing a change in the way that we operate commercially and in how the banks operate. I am not forcing a change; I am merely offering choice to the depositor. If the depositor does not take up the option, that is fine, but at least there will be an option which there is not at the moment. I am grateful to my noble friend Lady Noakes for her serious look at this. I say to her what I have just said to the noble Lord, Lord Razzall. She said that there is no clamour from the public for safety deposit accounts, as the Government now seem to be guaranteeing all deposits. I agree that there is no clamour, but the Government should not be guaranteeing all deposits. All I am asking is for the option to be offered and for the depositor to have choice. I congratulate the Minister. There is no finer exponent of the straight dead bat on the government Front Bench. He is head and shoulders above the rest, whom he makes look like No. 8 big sloggers at the end. He is a fine talent. However, I disagree with him that it is the role of the banks to lend money. That was not their original role—which was to store and distribute money safely at the depositors’ request. They became lenders later and we have all got used to that. My little Bill tries to put back a little bit of the banks’ original role. I agree with him that the safety deposit account is not a savings account; it was not supposed to be. If somebody wants to save, there are other ways of doing so. I encourage and welcome the idea that we should increase our savings. All I am trying to do is give safety to unsecured creditors. The Minister also said that there is no reason why the banks should not offer these accounts now. Of course, there is not in theory but, as he so rightly said in the first half of his speech, it is not in their interest to do so. It is in their interest to lend money, not to store it safely. I am grateful for what he said about the banking problems that we all face and about the consultation that has just taken place. He also said that something more substantial than this Bill is needed. I agree with him totally. A whole new approach to banking is needed if we are to retain confidence in the banking system and stop the very worrying trend of the increase in the money supply which the most reverend Primate the Archbishop of Canterbury will discuss in a moment in relation to debt. Debt is the huge concern behind all this and, given the uncontrolled money supply that we have had for the last 30 to 40 years, our children and grandchildren will face a potentially horrendous situation. I am grateful to all those who took part in the debate. On Question, Bill read a second time, and committed to a Committee of the Whole House.