Enterprise Act 2002 (Specification of Additional Section 58 Consideration) Order 2008

My Lords, like the noble Lord, Lord Hunt of Wirral, I congratulate the new Minister on his appointment and on his elegant and eloquent maiden speech. I am sure that the Minister appreciates that he cannot avoid his reputation, which precedes him here. Indeed, such was his reputation when I made my maiden speech 11 years ago—at a time when it was rumoured that he had instructed every Labour Member of Parliament to wear a pager on which to receive his instructions—that I was considerably embarrassed when my pager went off in the middle of my speech. I was even more embarrassed when someone from the far reaches of the Cross Benches loudly shouted: ““Oh my God, he’s got Peter Mandelson on the phone!””. No one has commented on the welcome that the Minister received from the civil servants in the department upon his return after 10 years. It is very much an indication of the respect in which they held him at the time and which they obviously continue to hold. He has to be congratulated on that as well. I agree with almost everything that the noble Lord, Lord Hunt of Wirral, said. There is a concern that the world has moved on, in terms of HBOS/Lloyds, since the order was first mooted. Had the order been brought in immediately after the announcement of the HBOS/Lloyds merger, the concerns now being expressed in this House and elsewhere would not have arisen. With the share-price variations of the two companies, we do not know whether the merger will take place. Assuming that it does, it will be in circumstances in which the Government will have taken a significant stake in both banks. That poses a problem for the Government, but it also gives them leverage to deal with a number of the competition and consumer issues causing concern. It is not as if the banking industry has been noted for its non-competitive business practices. As the consumer organisations have drawn to everyone’s attention, over the years the banks have been in serious difficulties over practices such as ATM charging; the mechanics of the clearing system, whereby no one quite knows what happens to their money after it leaves one bank account and before it appears in another; and unfair overdraft charging, on which the banks have often been criticised. The merger is not taking place in what is, prima facie, a competitive environment. Two major high street banks—which on some reports will have 30 to 40 per cent of UK current account business—are being put together in a way which would never have been allowed were it not for the current circumstances of the economy. The noble Lord, Lord Hunt of Wirral, raised a number of the concerns that consumers, consumers’ organisations and noble Lords will inevitably have. Due to their increased power with the banks, the Government have the opportunity to insist on rigorous conditions. For example, will they attempt to impose on the merged bank a similar restriction on the proportion of retail deposits that it can have? It is understood that such a requirement was imposed on Northern Rock, so that it could not have more than 1.5 per cent of the aggregate retail deposits in the UK. As a result, the week before last Northern Rock had to close many accounts because of a danger of breaching the 1.5 per cent threshold. Will the Government impose a similar requirement on this bank? What will the Government do where there is a branch of Lloyds and of HBOS in the same street or the same town? Will closures be required? Will there be a restriction on the number of closures? Theoretically, these banks are competing with each other. What will be the Government’s position on closures? Which? is concerned that the two banks will be allowed to maintain separate banking licences, thereby triggering separate calculations for purposes of deposit protection. If someone has £50,000 deposited with Lloyds and £50,000 with HBOS, will they have £50,000 protection for each deposit following the merger, or will they lose the protection in one of the banks? This is an important moment for the Government and for regulation of the banking sector. This order will go through—only a lunatic would attempt to vote against it at this sensitive time—but the Government should at least look very hard at what undertakings they can extract in the HBOS/Lloyds merger in order to provide proper protection for the consumer.