Clegg, Rowen and Moore quiz the PM (Twickenham & Richmond Liberal Democrats)

Clegg, Rowen and Moore quiz the PM

October 22, 2009 9:38 AM

• [Oct 20] Mr. Nick Clegg (Sheffield, Hallam) (LD): IN June, and again in July, I asked the Prime Minister whether he would do the right thing and break up the biggest banks. Yesterday, the Governor of the Bank of England also repeated his view that the banks should be split up. Is the Governor wrong?

The Prime Minister: The reforms that we are bringing into the banking system will include greater competition in banking. We will have a judgment from the European Commission soon, which we are supporting, that will allow more competition in British banking. As for the restructuring of the banking system and whether there should be investment banks on one side and retail-only banks on the other, the right hon. Gentleman must remember that Northern Rock was effectively a retail bank and it collapsed. Lehman Brothers was effectively an investment bank without a retail bank and it collapsed. The difference between retail and investment banks is not the cause of the problem. The cause of the problem is that banks have been insufficiently regulated at a global level and we have to set the standards for that for the future. We will be doing that at the G20 Finance Ministers summit in a few weeks' time.

Mr. Clegg: The basic failings that let the banks bring this economy to its knees are still in place. In fact, the position is worse than it was before. The banks are increasingly operating like a cartel, they are underwritten by the taxpayer, they have fewer competitors and they are now paying themselves eye-watering bonuses while the taxpayers who bailed them out are losing their jobs. If the Prime Minister will not make up his mind about splitting up the banks, does he at least agree that as long as those banks have a blank cheque from the taxpayer it is right to consider imposing an additional tax on their profits?

The Prime Minister: I am afraid that the right hon. Gentleman is wrong on both counts, and wrong again. The basic fact is that we expect that when we have completed the restructuring of the banks the taxpayer will benefit financially from that, not lose money. His assumption that somehow we will lose money is wrong: we are determined to make money out of this. On the restructuring of the banks, competition regulations will require the competition that is necessary in the banking system.

The right hon. Gentleman says that the situation is worse than it was last year, but last year banks in Britain threatened to collapse entirely. We have restructured the banking system and we will continue to do so, so that it serves customers properly. I hope that he, unlike the Conservatives, will support our measures to stimulate the economy.

Paul Rowen MP. • . . Paul Rowen (Rochdale) (LD): Springhill hospice, in my constituency, last week celebrated its 20th anniversary. I am sure that the Prime Minister will want to join me in congratulating Margaret Geoghan and others on their work. However, hospices are struggling in the recession, due to dwindling fundraising. What additional help can the Prime Minister offer the hospice movement?

The Prime Minister: I understand the work of the hospice movement. Obviously, I have been in contact with many people who work in it, and try to help. We are trying to give the hospice movement more money to enable it to do its job, and we are looking at what more we can do in future. I thank the hon. Gentleman's constituents for the work that they do. I understand that this area of health care has not had the resources that it needs in the past and will need greater support in the future. We will do what we can to support a movement that gives dignity to people in the last years and months of their lives.

• . . Mr. Michael Moore (Berwickshire, Roxburgh and Selkirk) (LD): It is nearly 30 years since the Conservatives decided that pensioners did not deserve the same annual increase in their incomes as people who were in work. Does it not pain the Prime Minister that after 12 years of a Labour Government, pensioners are being told that it may still be six years before the earnings link is restored?

The Prime Minister: As a result of the other measures that we are taking, pensioners have received more than an earnings link would have granted them, because they have the winter allowance, free television licences, national concessionary bus travel and pension credit, and this year, even though inflation is around zero, the pension will rise by 2.5 per cent.

Richmond upon Thames Liberal Democrats: