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The Economy

I read that bit because I anticipated such an intervention. Turner says, and he is absolutely right, that regulation should remain nationally based. There is clearly scope for more effective European co-operation; the hon. Gentleman may remember the chaos that resulted from the Irish breaking free last autumn, with separate guarantees on banks. Surely he will acknowledge that there are some things the Europeans have to do together, albeit within a fundamentally national regulatory system. Two major conclusions come out of the Turner report, one of which has already been mentioned. There is now general acceptance that the regulation of banks and bank lending has to operate on a counter-cyclical basis. The Conservative shadow Chancellor repeated that, and he is right; it is an important policy development. If he were more generous, he would acknowledge that my party was saying that five or six years ago, but none the less, we are on the same page, and that is the correct way forward. The other major issue that Turner is ambiguous about, unfortunately, is the much more important question of splitting banks so that the British Government and the taxpayer are not responsible for global banks, many of which have a large "casino" operation, as it was called by the Governor of the Bank of England. It is striking that it is not just distinguished Conservative Foreign Ministers and Chairmen of Select Committees who are arguing for a British version of what was called the Glass-Steagall approach; crucially, the Governor of the Bank of England has waded in, saying that that must happen. The only person on the record as opposing it is the Prime Minister, and I sincerely hope that the Government will take a fresh look at the matter.