Parliamentary Commission on Banking Standards

Debate between Peter Bone and Lord Mann

Monday 16th July 2012 Commons Chamber

[John Mann]

My hon. Friend makes the point that I have been stressing—that we do not know and cannot predict them, but we know that there will be a lot more scandals emerging, as we are only seeing the tip of the iceberg at present. [Interruption.] I appreciate that this is not good listening for those hon. Members trying to work out how to respond to this, but if this House is to set up arbitrary ad hoc committees at random every time there is a problem, it will potentially undermine itself. Which Select Committee will be next to give away some of its powers to an ad hoc committee? Is this the appropriate way to determine such matters?

If some of the powers set out in the motion were reinforced not just in respect of the Treasury Select Committee but of other Select Committees, that would reinforce the scrutiny of this House over what goes on both in government and in the country, so there are some good proposals here. The good proposals, however, are bespoke to this particular Commission—for example, the ability to call in a QC and the ability to take evidence on oath. If they are good enough for this new Commission, they should be made available to any Select Committee looking at any issue. The House is ducking this problem.

[Mr Peter Bone (Wellingborough) (Con)]

I think the hon. Gentleman is making some powerful and important points. Does he share my surprise that the Treasury Select Committee was not given this role? He is absolutely right: these powers should be given to all Select Committees to make Parliament more powerful.

[John Mann]

I take the hon. Gentleman’s point and I agree with him, but I do not intend to go through all the previous debate on this issue—interesting though it would be to do so—because I am sticking to the detail of what is in front of us, however badly worded it is. There is, however, clearly a case for saying that if the Treasury Committee had been allowed to carry on this work, it could have done so as effectively as this Joint Committee. I am sure that the five Members from the House of Lords who are as yet unknown and unnamed will bring great wisdom to this Joint Committee, but if the House of Lords wants to look into matters, it can look into them. This is the elected Chamber, and for this elected Chamber to hand over some of these powers of scrutiny to an unelected Chamber seems a retrograde step, which will come back to haunt us in future.

Once a precedent has been established and it suits the Government, it is likely to happen again—and this was a Government initiative. I am rather surprised that the Opposition Front-Bench team, perhaps looking forward to being in government themselves, have been seduced into accepting this way of undermining the historic, developed and improving role of this House to scrutinise. That, I think, is partly what is at stake here, if this becomes the way of doing business in this House.

I do not see how a Select Committee, denuded of half its members, can in any way work as effectively as a Select Committee operating with all its members. That is the reality of what will happen, and we need to be aware of the unintended consequences that might come from a potential eurozone crisis and other problems emanating from Europe that conflict across the work of this Joint Committee—and are wrongly not referred to within it—because proposals from Brussels are, rightly or wrongly, a fundamental part of the equation, affecting decisions made by this House and by the banking industry in this country and across the world. That aspect has been ducked by the creation of the Commission, which will create unhealthy confusion in the debate.

What should have happened? The remit given to the investigation, which should have been carried out by the Treasury Committee, should have been far broader—[Interruption.] An hon. Gentleman says “Boring” from a sedentary position, but this is not boring. For example, seven investment banks colluded to rig the price of the Kraft takeover of Cadbury’s. That is the real scandal that underpins the profits in investment banking. In some areas, there is ferocious competition, but in the vast majority of investment banking, there is no competition whatever. That is the scandal that created the culture that led to the LIBOR rigging. An investment bank called in by a company to advise on a sale or takeover has so much knowledge of the workings of the company that it has the ability to manipulate the market to determine how things will go. That is the fundamental weakness in the system of investment banking. The implications for British manufacturing and manufacturing elsewhere in the world—