My Lords, the House is indebted to my noble friend Lord Myners not only for securing this extremely timely debate on such an important and pressing subject but for identifying the issues raised in the Vickers report and seeking to put them into context, including issues that perhaps Vickers addressed more marginally, if at all. I am grateful that this theme was taken up, most significantly by the noble Lord, Lord May, who illuminated the debate with his analysis of the problems of systems and how we need to address ourselves to the totality. He was followed by my noble friend Lord Plant who was keen to emphasise that bankers should act with a sense of morality to enable our country to be better served than it has been in the recent past.
First, I wish to concentrate on some basics, as did a number of noble Lords. I am not going to follow the noble Lord, Lord Griffiths, my noble friend Lord Liddle, or, I think, the noble Lord, Lord Newby, who got involved in an evaluation of the report that gave rise to an academic nomination of its success rate. I am not going to give it an academic grade. I am going to say that as far as the Opposition is concerned the report is extremely useful in clarifying some significant issues. We are sufficiently in support of its cardinal points, particularly about ring-fencing, which is a tough and radical proposal and causes anxieties, which have been reflected by my noble friend Lord Davies of Abersoch and the noble Viscount, Lord Trenchard, about the care we need to take. I am very grateful for the noble Viscount's contribution. We recognise the care with which we need to follow these measures.
We also need to put that into the context of what the country demands. It of course demands some security as rapidly as possible against the horrors that have been visited upon our fellow citizens as a result of the banking crisis of recent years, and the economic and financial crisis that is the consequence of it. That is why we support the report, but we are somewhat concerned about the timescale of implementation that the Government appear to be sympathetic to. I agree entirely with noble Lords who have emphasised this in this debate. It was begun by my noble friend Lord Myners, but others have supported the need for us to take legislative action as rapidly as we can. We all recognise that some fresh legislation will be necessary and that that will take some time, but the fact that we have a financial services Bill under some consideration by Parliament surely provides an option for early action to lay some of the groundwork on implementing some of the key features of the report.
I appreciate the aspects of the debate that have emphasised the degree of additional competition sought in the report. We share the anxieties that the FSA is not in fact being charged with quite the same proactive role to encourage competition as the earlier report presaged. Nevertheless, there is no doubt that it is important that we see the emergence of competitive banks in such a way as to, first, make us less dependent on the growth of the mega few and, secondly, provide greater choice for the consumer. It is clearly a reflection of a long-standing position in the community that the numbers of people who change their bank accounts-their current accounts-each year in Britain is a mere 6 per cent, which is less than in almost any other advanced country. That is a reflection of the fact that the consumer sees no overt advantages in competition between the retail banks, which we want to encourage. This report indicates a route down which that could be pursued. We want greater competition between retail banks.
However, we are also concerned about investment banks. For instance, it seems that the effective charges put on equity underwriting fees have increased enormously over the past 25 years-again a reflection of the rather closed circle in which these decisions and opportunities are expressed, rather than in a more open system. Of course we appreciate that the tougher capital standards that will be required will make demands upon the banking system, but the earlier we approach these issues the less the danger that ordinary members of the public will bear these costs, whether they are individual account holders or small or medium-sized businesses seeking to borrow at reasonably competitive rates.
This is of cardinal importance for business. Thus far, the Government have replied overwhelmingly, in all responses on the question of increased investment and opportunities for credit by banks to businesses, on the Merlin project. Clearly, the Merlin project is a failure. The amount of lending under that framework is falling year by year, at a time when it is so clear that we need to rebuild our small and medium-sized businesses in this country.
Finally, my noble friend Lord Myners broadened the context of the report by emphasising the international dimension. That theme has been picked up on several sides. I recognise the points made about the importance of ensuring that London is internationally competitive. I was very grateful for those contributions, which emphasised the significance of the finance sector to our economy.
It is clear that if we are to make progress on the effective structure of British banks, we need to appreciate the international context within which they work. That is why so much work needs to be done in the international sphere. If there is a criticism that I would want to express in a debate that has been largely free of party politics, while at the same time seeking to deal with the inherent nature of the problem that confronts us all, it is that the Chancellor ought to be more active in the international councils that set out to deal with international crises in circumstances in which we all recognise that we cannot solve the problem just on a British basis. However, the report, if implemented by the Government as rapidly as possible, can go a considerable way to creating security for our banking system and remedy the abuses of the past.