Banking (Special Provisions) Bill

Part of the debate – in the House of Lords at 2:51 pm on 21st February 2008.

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Photo of Lord Eatwell Lord Eatwell Labour 2:51 pm, 21st February 2008

On the issue that has just been raised, I think that the noble Lord, Lord Baker, and, indeed, the noble Lord, Lord Naseby, forget that the banking sector in the UK is supported and underwritten by the lender of last resort—the facilities of the Bank of England—and by the fact that major banks in this country are deemed too big to fail. Therefore, the competitive advantage derived by Northern Rock is much smaller than has been suggested by the exaggerated claims that we have heard from Members on the other side of the Committee. That is one reason why this amendment is unnecessary.

The other reason why it is unnecessary is that we have competent competition authorities in the OFT and in the European authorities who will be observing what is done in the UK banking sector and will operate according to their normal procedures. There is no need to gold-plate those procedures in the way that seems to be proposed here.

However, there is one issue that the Official Opposition could helpfully address. When Johnson Matthey was nationalised by the Conservative Government in 1984, it was exempted from taxation, thus acquiring a remarkable competitive advantage over all the firms with which it then subsequently competed in the 10 years that it remained in public ownership. Perhaps the Official Opposition will explain why they offered that extraordinary competitive advantage at that time, and are so over-excited about what is virtually no competitive advantage at this time.