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TOPICAL DEBATES Financial Stability

As time is short, and there are many Members here, I shall move quickly through my speech. I shall not, however, take the advice of my Newcastle colleague, my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson), who has just suggested that, if I wanted more time, I should make my speech in the next debate, when I would get 15 minutes. Of course, you would notice if I did that, Madam Deputy Speaker. I have heard what has been said in the debate, but I think that congratulations are in order. We cannot go overboard, but I think that the package that was delivered yesterday was a very good one, in both content and presentation. If we compare its content with that of the US package, we see that it is completely different, in that it is far more relevant and far more likely to be successful. Its presentation, despite being spoiled by some nonsense, to which I shall return later, involving discussions between the Opposition and officials, was very good. It has gone down very well, and the Government have certainly played their part in doing what they can in the global fight for stability. Locally, we have certainly delivered a package. As a member of the Treasury Select Committee, I did one or two interviews yesterday. The media seemed to have moved on to the next day's news—or the next hour's news—and were asking what would happen if the plan did not work. We put £400 billion into the equation, yet they still wanted to know what would happen if it did not work. The answer has been given by the Prime Minister and the Chancellor of the Exchequer: if it does not work, we will do whatever it takes. That is the only possible answer. Today, although the markets have stabilised and even gone up, the situation is still volatile. We do not know whether the plan is going to work. We can only hope. Some Members have asked about the cost of the package and how we are going to meet it, but that does not matter. We have to win this battle, because the price of losing it would be so devastating for ordinary people's standard of living, so we will do whatever it takes. This is not simply about money. It is more about money plus confidence. If confidence results from this package, that will be lovely. If it does not, another package will have to be delivered until confidence returns to the markets and we can get back to normal. I am delighted to see what is emerging as a result of the package, although it places some pressure on the Minister. When the lending facility for the special liquidity scheme was introduced by the Bank of England, and introduced in the Chamber by the Chancellor, I made the point that we were talking about creating a £100 billion facility to rescue the banks—the very people who got us into this problem. Has any part of the negotiations tied the banks not only to rescuing themselves with the money, but to ensuring that their customers—small businesses and, above all, home owners—are rescued? The answer that the Governor of the Bank of England gave to the Treasury Select Committee was that that was not his concern. The Chancellor answered that it would be improper for him to take such action. I am delighted that things have moved on, and that this larger package contains specific reference to freeing liquidity in loans, and to lending to home owners and to small and medium-sized enterprises. However, when the Minister was questioned on the package earlier, he suggested that it should do certain things. I wonder whether we can press him on this issue. I do not fancy going back to my constituency and telling people that, this week, we made £400 billion available to rescue institutions headed by people whose reckless—one could say greedy—behaviour has endangered the economy of this country and the livelihoods of most of its people. I do not fancy telling my constituents that, without also being able to say that, in moving to save the banks to stabilise the financial markets, we have obtained an explicit agreement that, as soon as possible, and in defined terms, they will start proper lending facilities. The chief executive of the British Chambers of Commerce was on television this morning: a survey of 5,000 businesses has been undertaken and every indicator is negative. Above all, we must look at the number of housing repossessions that are taking place. At first, we had a problem caused by the financial markets in the financial markets and the real challenge was to see whether we could prevent it from spreading to the real economy. It looks as though we may fail, but this is our last chance. If we have not nailed these bankers to an agreement that is explicit and that will be honoured, we will not be thanked by ordinary people watching events on television, doing their sums and looking at their household budgets and worries. I press the Minister to tell us whether all this is a hope, trickledown or something that will happen. On salaries, I cannot understand the hon. Member for Taunton (Mr. Browne), and there is real sense in questioning both parties that say that something should be done. Something will be done. There is the question of having a bit of fun and saying, ““Tell us the details,”” but it is more important that there is political will. If we say to people out there, ““We've rescued the ones who caused you these problems, but we haven't got an understanding that they will change their behaviour,”” once again we will not be forgiven. We need that political will. I hope that, for the first time, the banking and finance industry will show a bit of humility and put its own house in order, but if it does not do so I hope that we retain the consensus to do something about it. I say to the Minister and the Chancellor that this is a great package, but given the amount of money we put into those institutions I cannot understand why we did not get board representation. Lending policies are being considered and salary policies are on the table. We ought to have our representative in there to ensure that our part of the deal is delivered. I am sad that the Liberals have departed from Bank of England independence. That independence was given and supported, but when things get tough they want to take it away. The Bank of England and the Government must improve their relationships a bit, including more trust and more partnership, but taking independence away from the Bank would be a wrong step.