It is true that we want to give ring-fencing a chance. That seems to be the broad consensus among those who have seriously considered the issue, either on the commission or elsewhere. However, it is important that we keep in our pocket the chance to do something serious and rigorous in case that plan does not work. I suppose we might call it a plan B, although I know the Government have an aversion to ever considering anything outside the narrow tram lines down which they career. It is important that we take this opportunity to put that plan in place.
That brings me to the Government’s rather pathetic, lettuce leaf-like attempt to claim that they are adopting a back-stop electrification power. I am not sure what voltage the Minister has opted for, but for the Government to claim the provision as a firm-by-firm back-stop power is an insult to back-stop powers. As my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) said, the process in Government amendment 6 will take six years should ring-fencing fail, which is a snail’s pace. I urge hon. Members to look at the various stages involved in that amendment. First, the Treasury will look to the regulator to issue not just one preliminary notice but three—the idea of three preliminary notices seems like an impossibility—all of which will have different timetables. I do not know whether three preliminaries means, “We’re coming to get you, but not quite yet.” It is like the Education Secretary, with his firm, disciplinarian hand, saying to children, “We’re going to come and get you, but we’ll
give you three preliminary notices before we do so.” The kids would be crawling all over the ring fence for months and years.
After those preliminary notices, a warning notice will be issued, followed very swiftly—not—by a decision notice. There will be at least five steps over a six-year period. “Five strikes and you might be out in six years’ time” does not strike me as an effective back-stop power for galvanising and electrifying the ring fence. If the Government recognised for six years that there was a flaw with ring-fencing but did nothing, their culpability would be almost equal to that of the banking sector. Amendment 6 could be an amendment to a misrepresentation of the people Act, and the Financial Secretary needs to take it off the table and instead consider the amendments that the Chairman of the Parliamentary Commission on Banking Standards has tabled.
This is a back-stop power in name only, and just because the Government say it is a back-stop power does not make it so. We need the ability, on a firm-by-firm basis at the very least, to take firm action to a timetable that shows flexibility and can be enacted swiftly if need be. I am afraid I tend to agree with the amendments tabled by the hon. Member for Chichester. The provision needs to be truncated and the Government must withdraw amendment 6 as it is wholly inadequate. It would have been more effective to go with amendment 19 as drafted by the commission, which was a far more effective truncated version of a back-stop power on a firm-by-firm basis. That was far clearer, the drafting was improved, and it is a mystery to me why the Government have resisted it at every stage of the process. Whether that was due to lobbying from the banks, or because they do not believe in standing up to the sector and taking on this tough issue, the weakness of the Government on this matter surprises many people.
5.45 pm