Financial Stability

Again, I am grateful to the hon. Gentleman for what he has said. I am very glad that he has welcomed the action taken by the Bank of England to cut interest rates to 4½ per cent. I hope that he will recall that, when he pressed me two days ago to intervene and take away the Bank of England's independence, I said that I thought that the remit was adequate to allow it to do what was right—and so it seems to have turned out. I am grateful to the hon. Gentleman for his welcome. I am sure that the whole House and the whole country will welcome the reduction in interest rates, and I hope that banks will ensure that people benefit from it as soon as they can. I agree that one of the reasons why we put in place today's intervention is that we need to be mindful of the fact that if we did nothing, the effects would spread into the wider economy. This measure, and others that we have taken and will take in the future, will try to deal with that. The hon. Gentleman referred to our announcement about housing. He is quite right: I want to see that through. The hon. Gentleman asked about agreements following my announcement today. The Government will obviously have to reach an agreement with individual banks, and those discussions need to take place. He asked what teeth there were. May I give him one example? As he knows, banks in the UK are regulated by the FSA. If it imposes a regulatory requirement—for example, following a code on remuneration, rewards or bonuses—the regulated banks have no alternative but to comply. That is the whole point of a regulatory system. The hon. Gentleman asked about the Icelandic banks, and the hon. Member for Tatton (Mr. Osborne), who speaks for the Conservatives, also raised the question of councils. What we can do is make sure that we look after the retail depositors—the ordinary men and women who put in their money, and might not have fully appreciated that Icesave is a branch of a foreign bank and not incorporated in the UK. I understand the position of local authorities, but they are in a slightly different situation, in that they are a more informed investor. However, as I said earlier, the situation is evolving; we are trying to sort the matter out with the Icelandic Government. I have had conversations with Icelandic Ministers—both the Prime Minister and the Finance Minister. In addition, one of my ministerial colleagues hopes to speak to the Icelandic Finance Minister again today. On the point about the Justice Secretary, I have spoken to my right hon. Friend about the points relating to repossessions—not just today—and I am sure he will pursue the matter.