Pre-Budget Report

I wish to make progress and deal with the bigger question, in quantitative terms, about what is happening in the banking system. The Chair of the Treasury Committee, the right hon. Member for West Dunbartonshire (John McFall), made a very effective intervention in Prime Minister's questions, reminding us of what the Governor of the Bank of England said yesterday. The Governor said that in relation to the funds that the banks already have—he was not talking about long-term commitments—they are acting in a way that, individually, makes perfect sense. The banks are conserving capital, they are hanging on and they are keeping the Government out of their affairs. They are preparing for the days when they can go back to paying dividends and bonuses. From their own self-interested, short-term point of view, their approach is entirely rational, but collectively it is suicidal. The Governor made that point very clear. Of course, there are many ways in which we can move on the flow of bank lending—we broadly support the proposal made by the Conservative shadow spokesman, and we have advocated it from these Benches—but before we talk about new institutions, why not focus on the money that is already there? That is the money that the Government have committed, much of which has not yet been taken up, and the guarantees that the Government have offered, which also have not been fully taken up. The Government cannot just walk away from this pathetic decision not to put their own representatives on the boards of the companies that are semi-nationalised. They should be on those boards and they should be setting the strategy of the banks.