Pre-Budget Report

I completely agree that we need to ensure that what we say in public is translated in practice into real action. That brings me on to inter-bank lending. As my right hon. Friend the Chairman of the Treasury Committee has pointed out so forcefully, there is a risk that what is right for any single bank in isolation is not right for the banking system. I urge the Chancellor to consider very seriously the proposals laid out in the Crosby report yesterday. Any proposal, whether it is for a new state institution or is a Crosby proposal, will have to pass some fundamental tests. Do we really want the market in mortgage-backed securities to be resurrected at a time when the mortgage-backed security market has dried up? Would it potentially bias one form of lending against another? How does it fit with the credit guarantee schemes and will it make them more likely to work, or will it crowd out those proposals? We should act together to try to get the banks to start lending to each other. We are in serious times that demand serious solutions. I urge my right hon. Friend the Chancellor to take any action that he thinks is appropriate.