Financial Services Bill

Why does the noble Lord think that under the structure there will be a chain of command of three equals? When I have finished describing how it is intended to work, I will indicate—and it is also described in the Bill—where authority lies. His model, to which I imagine he, as a loyal Back-Bencher, and his Front Bench subscribe, also has divided command. Who is meant to be the decision-taker under the Conservative model? Is it the Governor of the Bank of England or the Chancellor of the Exchequer? Within the framework put forward by the Opposition, is there not a bifurcation of function and therefore the potential for collision of command? The noble Baroness shakes her head, but she is going to resolve that situation in the same way that we are with regard to the tripartite position; namely, it will be essential that the structure is open and accountable, and the three will have to work together in terms of effective co-operation. Of course, each organisation will have a single command and clearly defined responsibilities, but we are guaranteeing that we will set out in the framework of the Bill the constraints of partnership required to resolve that issue. There will be a need to work together—something that manifestly failed with regard to the FSA and the other organisations during the build-up to the last financial crisis. I was going on to indicate that the third dimension that we are concerned about is accountability. The annual report on the council by the Treasury will enable full parliamentary scrutiny each year of the progress by, and work of, the council. That will underpin the structure in an open and accountable way and help to produce the remedies to the situation that obtained in the past. Within this framework I also want to emphasise that, even under the model that has been put forward by the Opposition this evening, the crucial issue will still be the exercise of judgment. It will not be the institutional structure that is crucial but the judgment to which it gives effect. We maintain that the FSA still has a valuable and important role to play within the structure—a role greatly advanced by the framework that the Bill creates in relation to all three institutions. The Bill creates a much more formal structure. It establishes a Council for Financial Stability to replace the standing committee and its membership is clear: the Governor of the Bank of England, the chairman of the FSA and the Chancellor as chair. Within that framework and following our White Paper, the Bill indicates the lessons which needed to be learnt from the crisis which we have all been through and which has been so painful for the economy and for our people. Building on that, we will create a structure which, in Clauses 1 to 4 of the Bill, is absolutely crucial and which I defend, advocate and propose.