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Banking

My Lords, I am disappointed that the noble Lord, Lord Eatwell, recognises nothing in this Statement that moves things forward because, compared with what the previous Government did, my right honourable friend the Chancellor of the Exchequer has made enormous strides forward. Where should I start? On the question of lending, it is precisely the gross lending target that matters. The net lending target which the previous Government imposed on a couple of banks let them off the hook. It is the significant total lending for 90 per cent of the SME market that is captured by the banks in the agreement that means we can confidently say that the banks are committed to lending 15 per cent more to the SME market this year than they did last year. Through the process of these talks, the banks have got themselves from a position of looking at flat or reducing lending this year to looking at a position of increased lending. I regret that the noble Lord, Lord Eatwell, seems to have confused gross and net lending. It is the gross figure for the whole market that matters. We have linked—in a way that the previous Government did not—the achievement of those lending targets with the pay of the key decision-makers in the banks. If they do not meet the targets, it will be reflected in their pay in a way that was never done before. I turn to the business growth fund. Again, I regret that the noble Lord, Lord Eatwell, may be a little confused. He talked about loans from the fund, but it is an equity investment fund; it is absolutely additional funding to anything comparable that the banks have done before. As to the pace of build-up, the banks have today committed £1 billion in addition to the £1.5 billion that they had previously committed. They will front-load the commitment of that money, which will go with the pace of businesses that are growing and are in a position to receive the equity support. It is a significant fund. The other thing that is different about the lending targets and the agreement of this Government compared with that of its predecessor is all the qualitative measures that the banks have come up with in their task force to stimulate demand and give the confidence that SME businesses need to approach the banks to ask for the money that is now clearly available. In every dimension—by moving from partial net targets to sensible gross targets that cover 90 per cent of the market; by the linkage to pay; by capturing that market; and by the qualitative measures that are in the task force—we have come up with completely different and better measures than did the previous Government. Similarly, on the question of remuneration, the noble Lord, Lord Eatwell, talks selectively about the backward-looking and one-off disclosure requirements that were linked to the TARP. Under normal US banking requirements, no more than five executives are likely to be caught by the remuneration disclosures. What we have done—to which the noble Lord did not draw attention—is focus the disclosures on the people who are running the main lines of business. It is not a question simply of bandings, but of focusing the disclosure on the people who matter, because they are taking the key decisions. I am disappointed that the noble Lord, Lord Eatwell, appears to have spent too much time today listening to Channel 4 and reading the newspapers and not enough time concentrating on the agreement, which takes us to a completely different place from where the previous Government were. Perhaps it is regrettable that none of the noble Lords who were Ministers in the Treasury at different times under the previous Administration were here to put him right.