Independent Commission on Banking

Lord Forsyth of Drumlean Excerpts

Monday 12th September 2011 Lords Chamber

[Lord Sassoon]

My Lords, I regret that I may fail to satisfy my noble friend Lord Higgins in my answers. On his first point about the design of the ring-fence, and whether there are loopholes, the commission has been quite clear in relation to one or two major structural elements of the ring-fence. It has recommended that discretion should be allowed to the banks as to whether the lending business to large industrial companies should be on one side of it or the other. That will be the first of a number of detailed issues that need to be looked at in the design work. I would not wish to pre-empt that work, other than noting that my noble friend’s question of loopholes and how they might come about will be, I am sure, very much in the minds of those doing the detailed work.

On the speed of implementation, I do think it is important—as it was with the Basel III work, and the European directive that flows with it—that the banking industry, taxpayers and all those who deal with the banks have a clear understanding of what the end position will be. There is a separate question as to what the appropriate implementation timetable will be. I am sure that the commissioners thought very carefully about this when they put forward the date of 2019. I repeat that—as my noble friend will know—it is the same date as the Basel implementation. I am sure they thought about that very hard.

[Lord Forsyth of Drumlean]

My Lords, I draw the House’s attention to my entry on the register as a director of MBNK, which is seeking to establish a new bank.

I congratulate my noble friend and the Chancellor on the way in which they have gripped this difficult subject, by appointing the Vickers commission, which has done an outstanding job. Some of us may not agree with all of the report, but it is a careful and sensible analysis. Some people have argued that this will damage the competitiveness of the City of London, but does my noble friend not agree that the City of London will benefit from having certainty? The fact that the Chancellor has the courage to take this on will help with the process and help our competitiveness.

I suggest that if my noble friend is thinking of giving a Christmas present to the noble Lord, Lord Davies of Oldham, he might buy him a copy of the right honourable Alistair Darling’s memoirs, in which he will find why it is not a good idea to look to the previous Government’s behaviour in this area. May I remind the House that it was the previous Government who gave Sir Fred Goodwin his knighthood for services to banking?

[Lord Sassoon]

I am very grateful to my noble friend Lord Forsyth for welcoming this report. It is a fine piece of work that has been done under a lot of time pressure. The commissioners have developed the analysis very considerably from their interim report, and I share my noble friend’s conclusion that by coming out now with these reforms to strengthen our banking system, we will place our banks and the City of London in an even better position to compete globally, as the Government want them to be able to do.