My Lords, in joining the welcome to the Secretary of State, I should like to go back 50 years—he went back 50 years—and describe to him my experiences in the Grand Hotel, Hartlepool, where I frequently found myself negotiating the annual wage round with the local unions. I remember that one of their strongest arguments was the need for wellington boots for their many children.
I follow the noble Lord, Lord Borrie, in his argument. He, quite significantly, used the word "takeover", and it is important for the House to remember that there is really no such thing as a pooling of interests merger—or it is very rare. In all essentials, what we are looking at is the takeover by Lloyds-TSB of HBOS. I also remember that when I was for a time a deputy chairman of the Monopolies Commission—the predecessor body to the Competition Commission—I had to behave myself very well whenever in the presence of the noble Lord, Lord Borrie, because the OFT had a certain status in relation to the Monopolies Commission.
I declare an interest. I have been for a number of years a small shareholder in Lloyds-TSB; of course, now I am a very small shareholder in Lloyds-TSB. I am a member of the Merits Committee and it might be useful if I describe the experience of that committee in considering this order.
The order was laid on
The most important point that we are asking the Secretary of State to consider is not whether we should pass this order but whether he will ever use the powers that he will be granted under it. That is the crucial question. The noble Lords, Lord Razzall and Lord Borrie, asked him to think again about whether he should exercise the powers which no doubt Parliament will grant him.
The Secretary of State said that he would take very careful note of what the Treasury, the Bank of England and the FSA had to say. I should like formally to add the OFT to that list. It is due to make a report to him at the end of next week—on
In the mean time, I offer a little thought. It is said by the Secretary of State's department that both banks want to continue with the talks. I would think that Lloyds-TSB is a lot keener than HBOS—certainly the reports indicate that. Did the HBOS leadership put up a white flag and just depart or was it pushed? It is not very clever for the leadership of HBOS to have departed. It is rather like the captain leaving the bridge when the boat is sinking.
The fundamental question then becomes: is it wise to continue with what is being proposed? If we take short-term considerations into account, Lloyds-TSB is among the stronger of the banks at this troubled time. It has some problems of its own. HBOS has, under the Halifax title, what I believe to be a very sound mortgage book. Under the Bank of Scotland, it has a lousy commercial loan book. I may be wrong about that or I may be right; I am going on analysts' reports. Past experience of takeovers is that the majority do not deliver what is promised at the time that they are proposed. In fact, the great majority deliver significantly less, and quite a large number are failures. In my view, Lloyds-TSB's ambition should give way to common sense. It should not risk its own position, and it is very much against the public interest that it should do so. We need it, and we do not need it to be tied up with a highly complicated task which may indeed prove to be insurmountable in the problems that it brings.
If we look at the matter in the longer term, I should like to think that the rescue plan for the banks—their recapitalisation—will work. I think we are all optimistic, and it is a good sign that out of the eight to which the proposals were first made, only three have taken up the opportunity. If this recapitalisation is a success, in the longer term I do not think that anybody would support a fully investigated takeover of HBOS by Lloyds-TSB. We should not just be focused on the short term. Let us hope that the solution to that is well in progress. We should still think about the longer term.