---

Banking in Scotland

Much as we in politics might like to think that everything done in the political game shapes society at large, my view is that the economy and society around us—not only in this country but in the world at large—suffered from too much exuberance when it came to the allure and attraction of profitability in that sector. We should have taken a far more hard-headed approach all round. Much as I congratulate the hon. Gentleman on trying to make a party political point about the root cause of the global credit crunch, it would not be fair to pin it on one or two politicians in one or two countries. The problem was systemic and we must all learn the lessons from it; otherwise it will be repeated—and that will affect Scotland as well as the rest of the world. HBOS was merged with Lloyds TSB to form Lloyds Banking Group, and subsequently took advantage of Government capitalisation, which led to 43% public ownership. RBS received public funds resulting in 63% public ownership, rising to about 84% with subsequent injections of new capital. Special liquidity support and a number of other instruments created circumstances where the Government were very much foisted into the driving seat of our financial services industry. The Government set a number of conditions, and I am glad that the present Administration have maintained a number of them. They include urging the banks to maintain competitive lending to retail and business customers at 2007 levels and encouraging the banks to deal with several of the failings that they experienced, including issues of remuneration, restricting dividend payments, helping people struggling with mortgage payments and so on. Of course, experience tells us that we still need to hold the feet of the banks to the commitments drawn out of them in exchange for the resources that were given to save their very existence. We should certainly ask the Government and the Minister to what extent they are succeeding.