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Financial Services Bill

My Lords, I congratulate the noble Lord, Lord Hamilton of Epsom, on finding such an ingenious way of bringing to our debates today and into the purview of this Bill a subject which, slightly surprisingly in my view, dominated the Second Reading debate. Most of the features of the Bill were not debated at all at Second Reading. The question of banks being too big to fail and what you do about it was what most noble Lords spent most time discussing. The Committee will be aware that from the start we on these Benches have been grappling with that issue and have been very sympathetic to the concept of breaking up the banks or separating the utility functions and the more risky functions. Therefore, I was extremely pleased when a succession of noble Lords with a tremendous amount of experience in the City discussed both the in-principle arguments for breaking up the banks and the feasibility of doing so. When this issue is being debated, one of the main arguments of the noble Lord, Lord Myners, and the Government is that it cannot be done and that it is all too complicated because the banks are all integrated and you cannot split them without the whole system collapsing. When we discussed this at Second Reading, the argument was not about that but it was between the noble Lord, Lord Lawson, who argued that you had to split them formally, and the noble Lord, Lord Blackwell, who said that you could achieve the same principle by having two or more subsidiaries within the same holding company. It seems to us that all those issues are vital in determining the future of the banking system in this country. With the current Government, there is no appetite to discuss these issues. Therefore, it seems to us that to have in the Bill a requirement that these issues be revisited, given that they are actively being discussed virtually everywhere in the world, is an extremely good way of putting the matter back on the Government’s agenda. Therefore, we support the amendment.