My Lords, when you speak in the position that I do, you have spent all afternoon rather nervously adjusting your tie, feeling insecure, wondering whether anyone will say what you are going to say and then panicking because you are not quite sure yourself what you are going to say. Automatically, one should take a theme.
I had a birthday last week, and I have passed the average age of Peers in this House. That is quite an interesting thought. Also, I have been in this House longer than anyone else speaking today. I had a flood at home, and the modem that connects me to the parliamentary intranet went dead, so out of all the information that I had researched for what I was going to say today, all I could find were my former speeches on the economy, which came to a total of five hours since 1971.
I have a great respect for Front Benches and for the noble Lord, Lord Davies of Oldham. When, before the Recess, I asked him what the Government meant when they talked about boom and bust, he was rather like a first division goalkeeper on an ice hockey pitch. He answered very nicely but said nothing; it confirmed to me that what we get mostly from Governments is what I call useless information. "Useless" does not mean that something has no use; it is less use than anything you can think of at the time.
Today, we have a new Minister. He is a man I have known of. I have listened to him in the past and have great respect for him, but he was given a most useless brief. I do not mean that it was of no use, but it was so useless that it was hopeless. That does not mean no hope; it means less hope than anything else you could think of. At the end, as noble Lords know, you either wind down or you wind them up. I was always told that you are not allowed to have notes or read a speech, because noble Lords shout, "Reading, reading, reading". I will try to stop exactly at seven minutes. I do not have enough to say, so I can bang on a bit.
I wish to go back to banks and banking. I started my life in industry in asbestos, which was not the best thing to do. I finally moved into the banking business, which was also not the best thing to do. I had written reports on trade and went to work at one of the accepting houses, Singer & Friedlander. We had just become an accepting house—the last one after Warburg. When Siggy Warburg became a member of the accepting house, was there any point, anyway? Warburg never had people to lunch. I am the only person who has ever been to lunch twice with Warburg. When he decided that the house needed to talk to the outside world, he had two lunches every day.
I learnt that in accepting houses—I was later with Samuel Montagu—your assets went up and down in the lift every day, but you had the Bank of England behind you. Of course, we in Samuel Montagu were owned by Midland Bank. What was the difference between an accepting house and a clearing bank? The accepting house had the Bank of England behind it, but the clearing banks were undoubted. That meant that the Bank of England had the clearing banks behind them. Occasionally, when I was on the committee of London clearing banks, I would have to go to meeting after meeting. You learnt the trick that to get to the Bank of England sometimes when it was raining, if you talked to your friends who had offices, you could go in through the back door and out of the front door without carrying an umbrella and you did not get wet, until the new Stock Exchange was built and the swirl of water around soaked you through.
What we did with the Bank of England was fairly simple. We all knew that it was an unwritten rule that you could not lend more than 17 to 20 times your share capital in reserves. To put it another way, if you lose or write off £1 million, you reduce your lending by £20 million. If you lose £100 million, you write off even more until you cannot lend. You were not allowed to sell credit. You had customers, whereas accepting houses had clients—a subtle difference that I have never managed to understand. The point was that, in general, there were not enough people to have bank accounts. Only a third of people held bank accounts because the clearing banks deemed that only a third of people should have an account. You looked after your esteemed customer and had an unwritten rule, "Know thy customer". That was an important factor. The building societies should never have been allowed to be banks.
I will not go on too much about this. I wish to return to an issue that was not raised. We do have a crisis, and if I were a seer or a prophet I suppose I would say, "As it was written in the stars, so it came to pass, and the people were sore afraid". The one question that bothers me is: what is our economy based on? The Government have announced that it is house building. I was a director of a big construction company for a long time. We had to close it down because we lost too much money building hospitals and we could not build houses profitably. Then it was built on public expenditure. The new aircraft carrier provides only 10,000 jobs, and what is its economic value when it is finished? I fully believe in the Navy. The Government then said that the economy was based on financial services. Which business in the world has collapsed more severely than any other? It is the financial services. What are we left with?
There is worse than that. I was always involved in trade, which meant that I sat below the salt. My family would not explain to people what I did. Instead, they said, "He is something in the City", when I was nowhere near it. I sold things around the world. The worry is that we now have a balance of payments crisis. The deficit on visibles or goods this year will be more than £100 billion—that is my estimate, because the Government are late in producing the Pink Book. There is a surplus on services, which are mainly financial services, because we are losing balance-of-payments problems on tourism and so on. We therefore have an overall deficit of around £50 billion, which is the same amount as we have chucked into the banks. That is pretty worrying. The only future for this country lies in being international. It depends on international trade. If the Government would get off their high horse and join people such as me below the salt, we would have no problem.