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HM Treasury

I strongly support bank recapitalisation. We therefore have no choice but to support the estimate. Before I go on to discuss that, I want to allude to an issue raised in the debate on the Banking Bill yesterday. A number of people, including the press, have raised with me the allegation of the hon. Member for South Derbyshire (Mr. Todd), who I see in his place, that my article in The Times of 3 October was in some way connected with secret briefings that had allegedly taken place between the shadow Chancellor and the Governor of the Bank of England. When I heard about the issue this morning, I was at first flattered that someone had taken the trouble to read my article, but I have now realised that, given the calls that I have had, I cannot let the matter rest. The hon. Member for South Derbyshire suggested that my article was derived directly from the briefing, and I am told that he has not been the only one to make the point, as a number of press briefings to the same effect have come to my attention. I want to make it clear that the allegation is complete nonsense. I had no knowledge of any secret briefings between the shadow Chancellor and the Bank, although I have subsequently learned that a meeting did take place on 3 October, at which the Treasury was also present. Nor did I have any such conversation with the Governor. I know him well, but in recent months I have had no conversation with him or with any Bank of England officials. I wrote the first draft of my article in mid-September, immediately after the decision taken by Paulson to let Lehman go bust. In view of that decision, I concluded that a general collapse in trust between banks about each other's solvency was very likely and that bank recapitalisation would probably be an essential part of the solution. I discussed the article with The Times quite early on and a first draft was sent well before the 3 October meeting—at least a week before would be my guess, although I have not yet checked it with the newspaper. It is true that I rang the shadow Chancellor's office on several occasions during the week of 22 September to put the case for bank recapitalisation and I also sent him a copy of my article a few days prior to its publication. Those are the facts and, judging by the briefings going around, there seems, frankly, to be a bit of paranoia going on.