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Banking Bill (Money)

The Minister introduced the money resolution as though it were merely a matter of course and something that should go through without much debate. However, the Bill changed significantly in the House of Lords, which widened the scope of financial assistance beyond what is to be given to banks or other financial institutions. Later, we will discuss the effect that those amendments could have on banks or other financial institutions, on the economy as a whole and on particular industries or sectors, and on actual or potential customers of banks or other financial institutions. Those are broad amendments. They cover a number of packages of aid announced by the Government in recent months. It is important to put on record the estimated cost of those packages, so that the House can understand the scale of the liability that the taxpayer could take on as a consequence of those amendments and the money resolution being agreed to this afternoon. In the other place, it was said that the changes required to the Bill would give legislative cover for: the first bank bail-out; the equity and preference share investments in the Royal Bank of Scotland, as well as in Lloyds TSB and HBOS, now Lloyds Banking Group; the credit guarantee scheme; the asset-backed securities scheme proposed by Sir James Crosby in his report, which was presented to the Chancellor at the time of the pre-Budget report; the £50 billion asset purchase facility, a scheme that authorises the Bank of England to buy commercial papers; and the asset protection scheme, the details of which we still do not know, although it will ensure a portfolio of bank assets in return for a fee. There were reports at the weekend that there could be up to £400 billion-worth of eligible assets in that scheme. We could add the schemes announced by the other Department that the Minister represents, the Department for Business, Enterprise and Regulatory Reform. They include: the £10 billion working capital scheme, set up to secure £20 billion of short-term bank lending to companies in the small and medium-sized enterprises sector; the £1.3 billion enterprise finance guarantee scheme; the £1.3 billion that is to be unlocked from the European Investment Bank as part of a package of aid to the motor industry; and £1 billion of direct lending to the motor industry. A large financial commitment is emerging as a consequence of the amendments made in the other place.