Banking Bill

I might be only 10 days into the job, but I can certainly answer the right hon. and learned Gentleman's question. The Government have no intention of politicising the lending or other decisions of the banks that have been nationalised or part nationalised. My right hon. Friend the Chancellor will make our position very clear—indeed, I think that in his earlier contribution he made the basis on which we are seeking to set up that arm's length body very clear when he referred to the Shareholder Executive and the similar circumstances in other nationalised industries. The hon. Member for Stratford-on-Avon raised an important point about lending. That has been clarified already by my right hon. Friend the Chancellor, but the hon. Gentleman was concerned that there might be a danger of lending returning to the imprudent levels of 2007. I assure him that that will not happen. As I have said, banks that use the recapitalisation scheme will be managed on a fully commercial basis by an arm's length body, but it is important to recognise that there will also be conditionality. Over the next three years, those banks will have to maintain the availability and active marketing of competitively priced lending to homeowners at 2007 levels. It is important that banks lend responsibly and meet their legal and regulatory obligations. We must not see a return to irresponsible lending practices, but it is right that we insist, as a result of our investment, that competitive mortgages are available in the market. We must also ensure that banks lend responsibly to small businesses. Recent events are affecting many countries across the world, regardless of their regulatory frameworks. That point was sometimes missed in the contributions made to the debate. This has been, and still is, a world financial crisis: I am sure that we will look to learn the lessons from it, and some of the lessons learned from previous episodes have been incorporated in the Bill. The FSA has recognised that there were regulatory failings in the case of Northern Rock, and that is why it is implementing an enhanced programme of supervision. As the Chancellor made clear in his remarks opening this debate, the FSA is also conducting reviews of other aspects of regulation, including remuneration. We will look to its findings in due course. The Government believe that the structure of current arrangements and the allocation of responsibilities within the tripartite system remain fundamentally right, and I note that that view was endorsed by the Treasury Committee. Recent developments have not changed the basic view that it makes sense to provide for a single, integrated regulator covering financial services. We must remember that, before the FSA was created, there was a dog's breakfast of regulators. One large financial services group would have to deal with any number of different regulators. I worked for a small company that was regulated by the Investment Management Regulatory Organisation, the Life Assurance and Unit Trust Regulatory Organisation and the Financial Intermediaries, Managers and Brokers Regulatory Association. I do not think that that was satisfactory. The overall structure of the present regulatory framework is the right one, but there is no doubt that it can be improved and that lessons can be learned.