Oral Answers to Questions

Peter Tapsell Excerpts

Tuesday 25th June 2013 Commons Chamber

[Mr Osborne]

The business bank, which was established last year, is now making loans to the funds that will lend to small businesses, creating non-bank lending channels. [Interruption.] There was no business bank under the Labour Government. I will tell the House what we had instead: we had a socking great banking crash under the Labour Government, and the person sitting opposite, the shadow Chancellor, was City Minister when it happened. We are cleaning up the mess from one of the biggest financial crises in the country’s history by ensuring that it never happens again.

[Sir Peter Tapsell (Louth and Horncastle) (Con)]

May I say to my right hon. Friend that after a lifetime as a stockbroker and fund manager, my instinct, as bond yields rise all over the world, is that we are heading for another banking crisis that will certainly choke off the already inadequate lending of banks to small businesses? May I put on the record my dismay that he has not yet committed himself to the total separation of investment from commercial banks, which I have been urging on him ever since he became Chancellor? I am absolutely convinced that if we do not go back to something approaching Glass-Steagall, it will be an absolute disaster when the next banking crisis hits us.

[Mr Osborne]

Of course, I respect my right hon. Friend’s experience. A powerful argument has been made that we should completely separate and split up retail banks from investment banks. We asked John Vickers to convene a commission to look at this specific subject, and he came forward with proposals to ring-fence retail banking, as he thought that that would be a better approach. We also set up a cross-party parliamentary commission to consider the ring fence, and it thinks that the ring fence is the best approach. It made a specific recommendation that we should give the regulator the power to split up a bank that had refused to comply with the ring fence, and we are giving the regulator—[Interruption.] The shadow Chancellor shakes his head, but again not one of these things was done when he was City Minister. Let me say to him again, because he obviously does not understand, that we are giving the regulator a specific power to split retail from investment banking in a bank that is ignoring the ring fence. I think that that is the right way forward.