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

My Lords, I join in the congratulations being offered to my noble friend the Secretary of State and give him a warm welcome to this House—long overdue, in my opinion. In his long history, there was a point when my noble friend worked for me. It was a somewhat notional arrangement, as I recall, but nevertheless we were all deeply impressed by his talent, and his career since then has borne that out. As others have said, my noble friend has made an elegant speech. It is of course the tradition of this House that we make non-controversial maiden speeches. Not long ago, a speech which effectively promoted the amalgamation of two giant banks accompanied by a substantial degree of partial nationalisation would have been regarded as a touch on the controversial side, but it seems to have met with general consensus around the House and in another place. I also welcome my noble friend’s reappointment as Secretary of State in the current department. I do so because he is not only the Secretary of State for business but also the Secretary of State for consumers. I declare an interest which I have not declared in its present form in this House as yet because my new organisation, Consumer Focus, was formed by the merger of the National Consumer Council, energywatch and Postwatch only a fortnight ago. We are now the major nationally-backed consumer organisation in the country. In that context, I echo some of the concerns about the banking merger. Given the turmoil in the financial markets and the international situation about which we are all deeply concerned, it is inevitable that we should go down this road. However, once things have settled down, longer term issues in relation to individual consumers and, in particular, small businesses will arise. As the noble Lord, Lord Razzall, said, there are many flaws in the retail banking system and the banking system as a whole, but the combination of some degree of intervention by regulators, the Government’s commendable activity on financial inclusion and competition within the banking sector has extended banking and credit facilities to a swathe of the population and vastly increased their quality of life as a result. The fact that we are now merging, with government funding support, into an organisation which will control about 30 per cent of the retail banking system and about 30 per cent of mortgages must give us cause for some degree of concern. I have written to my noble friend on this issue and suggested that, from a consumer point of view, a number of concerns need to be addressed. I echo the words of my noble friends Lord Borrie and Lady Kingsmill that when things have settled down the OFT needs to have a longer-term look at the operation of competition within the banking sector. Within the mortgage sector, particularly given the equivalent turmoil in the housing sector, it is important that the OFT is specifically committed to looking at the mortgage sector in its next annual plan and at how it extends mortgages to both individual consumers and small businesses. Also in this context is a hotchpotch of different regulatory activities for what most people regard as normal banking. If you go for a loan, it is one sector; if you go for a mortgage, it is another; and if you go simply for the normal retail banking functions with a current account or a deposit account, it is a third set of regulations—the OFT, the independent banking code and the FSA. Consumer interests and consumer understanding of the situation are not necessarily best served by this confusion. Given the change in the structure and the Government’s involvement in the banking sector, this is an opportune point at which to look again at the whole structure. The noble Lord, Lord Razzall, also referred to the local situation. Clearly consumers, by and large, both business and individual, operate in their locality. If there is a restriction of competition as a result of this merger in certain localities, particularly in the more remote localities, that will be an issue which the Government and the competition authorities will have to address. I hope the OFT will also at some point, whatever the timescale, look at that dimension as well. Finally, and somewhat cheekily, I suggest that consumer institutions ought to be represented in the newly-merged bank. It would behove the management of the new bank to establish internally a proper and authoritative consumer panel representing both individual and business interests. That would give a lot of reassurance to consumers and to all parts of this House.