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Banking Bill

I remind the House of my business interest recorded in the register. I, too, welcome the Bill, and I do so for two reasons. First, it begins to put the Bank of England back at the centre of our financial system, which the Treasury Committee recommended in its major report on the Northern Rock crisis. Some of the Committee's recommendations have found their way into the Bill; for example, streamlining the court of directors and giving the Bank more explicit power over financial stability. I hope that the Government will follow up those changes by giving the new deputy governor, Paul Tucker—whose appointment I welcome—the resources he needs to rebuild the Bank's ability to understand what is happening in the banking markets and to monitor the financial system much more thoroughly. That is an important and long overdue change. Those powers and that ability should never have been taken away from the Bank of England. Secondly, the Bill makes improvements to depositor protection, as the hon. Member for South-East Cornwall (Mr. Breed) said. I am not quite clear how the arrangements that the Economic Secretary proposes will be superseded by what was agreed in Brussels earlier this month. Perhaps the hon. Gentleman could clarify that. If he does not have time to answer me today, perhaps he could write to me. I understand that there will be an overarching European Union framework for the number of days before depositors are fully refunded, which may be even more leisurely than the arrangements canvassed in the UK. I should be grateful for some clarity. We hear constant references to temporary public ownership. What is missing from the Bill is any understanding that the arrangements being made for the ownership or part-ownership of five of our major banks will not be temporary; they will be with us for a very long time. Further legislation may be required, but I should have liked the Government to make an attempt in the Bill to set out some rules about how those public stakes are to be managed—my hon. Friend the Member for Fareham (Mr. Hoban) referred to that point. We have heard that the shareholding is to be directed by UK Financial Investments, which is to be set up as an arm's length body, but it is not clear whether the company will require statutory approval. It is not clear how UKFI will be accountable, although I certainly hope that it will be accountable to the Select Committee. We should all understand that, although the Government keep calling this stuff temporary, it is likely to be with us for a long time, so issues such as competition policy—suspended for the nationalisation of the two Scottish banks—will need to be readdressed if we are ever again to have sufficient and proper competition in the banking system. I have now twice said—on 17 October and during the Queen's Speech debate—that the various measures produced to tackle the financial crisis have been necessary but are not yet sufficient. More will need to be done to get banking flowing again so that money can reach our home owners and businesses. I welcome the extension of the credit guarantee scheme earlier this week and the Treasury's admission that it will last for five years, not three—nothing temporary about that. It could be a very permanent feature of our financial landscape. However, I suspect and fear that even those measures will not be sufficient and the Government may have to revisit some of the features of that desperately short weekend when the Scottish banks were nationalised. Of course, the due diligence was rushed, as I have already pointed out, but some of the terms set out over that weekend may have to be looked at again, because the money and the credit are not yet flowing, which everybody wants to happen. That said, I welcome the Bill and hope that it makes it to the statute book in reasonable time, although even if it gets there in February, it will still be 18 months after the collapse of Northern Rock, which is fairly leisurely progress for a legislature that should have responded much more quickly and an Executive who are constantly behind the curve. However, I welcome the passage of the Bill today.