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Banking (Asset Protection Scheme)

On the last point that the hon. Gentleman made, there has been a lot of debate about whether banks should be separated, so that they organise themselves along the lines that they did in America for many years, into what he calls low-risk retail banks and, on the other hand, investment banks. I would just remind him that the first bank that got into trouble in this country was not an investment bank, but Northern Rock, which is a retail bank. The problems that have been experienced have been experienced both by banks with complex models, as well as investment banks pure and simple—indeed, many have now collapsed—and by retail banks. The regulatory system should distinguish between the two. Perhaps on another occasion there will be an opportunity to discuss what we need to do on supervision and regulation. In relation to the hon. Gentleman's broader point, about nationalisation—the one on which he takes fundamental issue with the Government—I just disagree with him. We have, as it happens, nationalised a bank already: Northern Rock. However, I have always made it clear that our long-term objective is to get that bank and the banks in which we have shareholdings operating back in the private sector. That is something that the Liberal party and he agree with. I therefore do not believe that it is in our interests to completely squeeze out the remaining part of the private shareholdings in RBS, which is what nationalisation would entail. Also, as we have 70 per cent. of the votes there, it is beyond doubt that we control the bank. It is not as though it could block a decision that we really insisted upon. It is important to strike the right balance. Even in these times, we need to look at the long-term destination of those banks. It is right that we should strike that balance, as I said earlier this morning. I just think that the hon. Gentleman is plain wrong in what he said about that.