Banking (Special Provisions) Bill

Part of the debate – in the House of Lords at 11:45 am on 21st February 2008.

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Photo of Lord Bilimoria Lord Bilimoria Crossbench 11:45 am, 21st February 2008

I want to make a point which has been overlooked time and again: the fact that a Government have injected £25 billion to rescue any organisation is almost unprecedented in the world. The magnitude is staggering. It has never been done for any other bank, let alone for any other industry. Leaving aside the £100 billion for which, theoretically, the Government and the public are at risk, let me start with the £25 billion. This was a unique situation which required action. We realised yesterday that we are in a Hobson's choice position and are being forced into nationalisation—which people reluctantly have to accept at this stage—but why have an open door to be able to nationalise from now onwards?

If a similar situation were to occur again tomorrow, serious alarm bells should ring that would require far more than the legislation that is being rushed through right now. I said yesterday that what is required—and I believe the Minister and the Government agree—is a complete revamp of banking regulation, supervision and governance. Whether that is to bring back what the noble Lord, Lord Lawson, referred to yesterday—the board of governance, the board of directors of the banks or whatever—we need the best for this country to ensure that we keep our openness and our standing as one of the leading global financial centres in the world. That is the important part. If it is going to take a month for such legislation to go through—I do not think we should rush it—we should not leave the door open for another Northern Rock situation to take place and have this Bill.

I agree that there is no reason to discriminate between building societies and banks, but building societies require matters to be looked at slightly differently and it would be unwise to lump them in with the banks.