Financial Markets

Once again, I thank the Chancellor for his statement. Given that the banking system has been on the verge of collapse, rescuing the banks and stepping in is the only option available to the country. We said that recapitalisation might be necessary, and we continue to offer to work constructively with the Government on solving this financial crisis and on the Banking Bill tomorrow. But, of course, the scale of what the taxpayer is on the hook for is only just starting to dawn on the British people: this is the biggest bail out in the world so far, paid for by the biggest increase in debt by any peacetime Government and funded by the £11,000 of extra borrowing that will now be heaped on every family in the country. The British people are therefore in no mood to celebrate. They want to know how their taxpayer money will be protected, how quickly they can get it back and how on earth they ended up footing the bill for this painful end to the age of irresponsibility. On the details of the deal, why, over the past week, does the Chancellor seem to have gone from favouring taking preference stock to deciding also to take huge ordinary share stakes in some banks? I know that last week he told us that he was ““prepared to consider”” underwriting share issues, but why has that now become the main option? What is his realistic assessment of how much of that shareholder offering will be taken up by existing shareholders and other private investors, rather than by the Government? Will he confirm that the preference shares he talks about do not come with warrants to give taxpayers more of the upside? Will he explain that? The Chancellor also seems to have rethought his position on taking seats on the boards of the banks we now part-own. Last week, at the Dispatch Box, he said:"““In relation to Government nominees sitting in boardrooms, I never thought that a particularly useful course of action to follow””.—[Official Report, 8 October 2008; Vol. 480, c. 286.]" He has just told us that he is appointing five members to two different bank boards. Why does he now believe that that is a useful course of action? I happen to agree that it is, but I want to know why—[Interruption.]