Banking Bill

When the Chancellor took an intervention from me at the start of this debate, he was kind enough to remind the House that I am an Edinburgh MP, as he is. I make no apologies for the fact that my starting point in this speech, as in the speech that I made during the discussions held last week, is the interests of the many thousands of my constituents who are directly employed by some of the banks affected, and the many thousands more in Edinburgh and the surrounding areas who are indirectly affected because of the nature of their employment. The other Edinburgh MPs and I probably represent a greater concentration of people affected by the situation than MPs representing any other area in the country. Obviously, we are all extremely concerned about future employment in our city, as well as in the country as a whole. It is worth emphasising that the picture is not all bad by any means, even in the financial services sector, whether in Edinburgh or elsewhere. In Edinburgh, there are many thousands working in insurance, or working for banks other than those concerned and for other businesses in the financial sector. The strengths that led companies to establish headquarters in Edinburgh and elsewhere in Scotland are still there, and can be built on in future strategies to retain existing jobs and attract new employment. Nevertheless, there are undoubtedly a lot of worried people in Edinburgh and elsewhere, including my constituents, and it is important that we do what we can to provide them with reassurance based on an understanding and belief that we are going in the right direction. Clearly, I support the Bill and the measures that were taken last week, and one of the advantages of both is that they provide an opportunity to address problems on a longer-term basis. They remove the risk of a sudden fire sale of one of the major banks based in Edinburgh; obviously, that could quickly have a serious effect on jobs in that city. Of course, people still have understandable concerns about where they will be financially in a few months' or years' time—about what their job prospects will be, and about what that will mean for their standard of living. That is clearly an issue of concern to me, and to all Members across the country who are in a similar situation. I want to highlight an issue that I mentioned in debate last week. Unfortunately, my right hon. Friend the Financial Secretary to the Treasury was unable to respond to my question on the subject when he replied to that debate. When conditions are set, and when negotiations take place between the Government, the regulators and the banks that will receive assistance, what kind of consideration will be given to those who work in the industry, whether in Edinburgh, Halifax or the City of London? Not everyone employed in the City of London is a fat cat, and those people need to be remembered, too. I want to reassure hon. Members on either side of the Chamber who might think that I am suggesting detailed regulation of the employment practices of the banks in which the Government have taken a major share. I am not suggesting that; it would clearly be ridiculous and have a number of damaging consequences, not least for the banks. If, however, we are to take account of the need to provide continuing finance for the mortgage market and for small businesses—I support that—it is fair to take account, too, of the interests of those who work in the industry. The Government should recognise that, and try to raise the issue in discussions in the coming days, weeks and months. I accept that that raises the wider issue of how the Government will respond to pressure to intervene in more and more ways in how the banks in which they have a major stake operate. I do not, at this stage, want to suggest the kind of relationship that should exist, but the question highlights the fact that it is important to address the issue—not now, but sooner rather than later—of exactly what this period of partial nationalisation means for the way in which the banking sector will operate. I am thinking particularly of the banks in which the Government will have a major stake. The Government will come under all kinds of pressure to respond to particular actions taken by those banks. The Government would do themselves a lot of good if they set the ground rules fairly early on. We would then know what might happen during the period—a lengthy period, I suspect—in which the Government have a substantial stake in the banking industry. Like my right hon. Friend the Chancellor, I certainly hope that there will not be a high level of involvement for as long a time as some people might suggest, but it will certainly be a substantial involvement for some time to come. That highlights the need to address, not now but fairly soon, the more general question of what the strategy is for the UK's entire banking sector. What are we going to do under the new state of affairs? Where do we see things going in the years ahead? A number of hon. Members have already highlighted the questions that are raised by the prospect of banking activity being concentrated in ever fewer banks. The issue of consumer interest has been raised, and the reduction in competition. Again, in Scotland, at least in the short to medium term, the vast majority of banking provision is likely to be in the hands of banks on which the state has a major impact. That will apply in other parts of the country, too. What about the issue of stability in future? What happens if, some years hence, there are fewer but larger banks, and there is a threat to one of them? How do we react to that situation? These are real issues that need to be addressed and thought about so that a strategy can be worked through. What is the role of the mutual sector? There is concern that what is happening now may lead to pressures and further diminution of the mutual sector. This is the time to promote the sector and encourage it to grow and expand. Why, for example, does it seem to be assumed that Northern Rock will gradually be run down and sold off in its entirety? Why not use that as a basis for re-establishing Northern Rock as a mutual—a building society—solidly based in north-east England, with the remit to provide an opportunity for people to save and buy houses on a sensible basis? The same could be said of Scotland. I do not believe that those who suggest that the HBOS-Lloyds TSB merger should not go ahead are doing the interests of Scotland any good at all. Even the speculation over the past day or so about that arrangement highlights what would probably happen if that deal were to fall by the wayside. There would be severe consequences for HBOS if the deal were to collapse, so it is important that it should go ahead. In the long term, what are the possibilities of creating some separate Scottish institution to deal with the building society end of business, so to speak? Perhaps TSB could be resurrected as a separate mutual from parts of businesses that were brought together under HBOS-Lloyds TSB, with similar arrangements for other parts of the country. Such thinking may seem radical, but after the past few days all options, solutions and new directions should be on the agenda. Challenges can also be opportunities, and there are certainly plenty of opportunities, and plenty of challenges, to do some new thinking and to come up with solutions that may not have been conceivable a few weeks ago but which we can now discuss as a means of addressing some of the wider economic needs of the country, as well as the short-term emergency situation in which the Government have rightly intervened. Finally, I shall say a few words about international agreements, the talk about a new Bretton Woods, and new international arrangements to stabilise financial markets across the world. That is essential. I recognise and welcome the steps taken by the Prime Minister and the Chancellor. It is sad that we have not had even grudging acknowledgement of that from those on the Opposition Front Benches. Instead, we have heard attempts to do down what has been achieved. The fact that at last over the past few days the world has moved to stabilise the situation, we hope, is in no small part due to the leadership shown by the UK Government and by the Prime Minister and the Chancellor in particular. Let us not forget other international agreements, discussions and arrangements that are not going forward so quickly or so apparently successfully—the agreements on international debt relief and on international aid, on which the United Kingdom has taken the lead and has been complying with its commitments, whereas other countries have been falling behind in carrying out what they said they would do in agreements made over the past few years. Let us not allow the interests and concerns of some of the poorest in the world to be forgotten in the discussions and debates about the international financial system. Those are the people who would lose more than any of us from the type of collapse that we hope has been prevented. They are the people who could lose out because of a failure to meet the commitments entered into a few years ago. Let us make sure that those international agreements are also kept on the agenda, as well as the arrangements and agreements needed to stabilise the financial sector.