The hon. Gentleman makes a very good point. Without wishing to pursue this analogy too far, the difference between a gun in the locker and the nuclear deterrent is that it is conceivable we would use the gun in the locker, but less so the nuclear deterrent. I am therefore not entirely sure which of the two commission members has got this quite right, but deterrence is certainly part of the effect we are looking for.
To return to the issue of the power to separate in respect of one institution or the sector as a whole, my overall reflection, having served on the commission for the past year is that, although its recommendations should be supported, even if we take all the steps set out—even if we put a new system of regulation in place, including the twin peaks system, even if we have the ring-fencing powers on structure that are in this Bill, and even if we faithfully implement the standards and
culture recommendations to which the hon. Member for Chichester referred—it would still be rash to come to the conclusion that we had fully resolved the problems of too big to fail or too complex to manage. These reforms should be implemented and they can make a difference, but if we think we have fully resolved the problems of this huge sector, we will be guilty of complacency and possibly kidding ourselves. The problem of too big to fail is still there.
Our recommendations will make a difference but we also need powerful weapons, even if their use is unlikely, to enforce good standards and to make those running banks think long and hard about the consequences before they decide to test or game the system in any situation in future. That is why I think my hon. Friend the Member for Nottingham East (Chris Leslie) is right to say that a periodic review of ring-fencing and how it is operating is a good idea. It is why I support a more general power, to be held by the Government, to allow broader separation if the ring-fencing reforms do not work. That is what amendments 17 and 18 are designed to achieve and they are very much in line with the recommendations of the commission’s first report.
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I should also say that there is nothing partisan or party political about the amendments, and the Government do not need to be over-defensive when discussing them. All that my hon. Friend has been guilty of is trying faithfully to reflect in his amendments the work of the cross-party commission. So I encourage the Minister to respond with an open mind and not to think that it will reflect badly on the Government if they change their minds at this stage or have a second thought. I do not think this situation is like that, given the cross-party nature of the work led by the hon. Member for Chichester.
I wish to say a word or two about the hon. Gentleman’s amendment 19 and amendment (a) to Government amendment 6. That is about the separation of individual groups, and there are two visions of how that should be done. The Government’s vision, as set out in amendment 6, has too many barriers and will take too long. Hon. Members will have been shocked at the notion that an in-principle decision could be made to act and things still would not be complete six years later. The amendment gives the appearance of accepting a recommendation to electrify the ring fence but does not give the reality. The Minister’s electrified ring fence would not shock a mouse, let alone a powerful, well-resourced, well-financed industry that is used to lobbying, used to gaming the system and used to getting its own way. So he should give careful and positive consideration to the amendments tabled by the hon. Member for Chichester.
The Minister said in his opening remarks, “Of course we will look at this. We will look at the wording and so on again.” I hope that the hon. Member for Chichester does not accept too readily such assurances, which can mean little in the long run. I hope he does not sell himself too cheaply when he decides later this evening whether to put his amendments to the vote, because, as he set out, there is a vast difference between deciding to go down this road in fairly sharp order and waiting six years. There is a big difference, in terms of both the bureaucracy and the number of hoops to be jumped through if one is serious about this, between the hon. Gentleman’s amendment and the elongated approach set out in Government amendment 6. There is a big
difference between the Minister’s approach and that set out by the hon. Member for Chichester. We need more than warm words that the Government might think about this a little more in future. I hope that the hon. Gentleman will insist on a bit more than that before deciding not to press his amendments later this evening.
In conclusion, we are dealing with a very important part of this discussion; it is stage two of these reforms, if we regard the regulatory changes as stage one. The commission believed that there was a relationship between structure and culture, and that is at the heart of the amendments. The recommendations for electrification aimed to reinforce that relationship to stop the kind of gaming of the system that has happened in that past and to make sure that the intention of the Bill is faithfully reflected in practice. That intention is well worth supporting.