The hon. Gentleman makes exactly the point I am in the process of making, but he does it more simply, and I thank him for that. That is the key point about the ring fence. The utility aspects of banking, which are operating the payment system and taking deposits, should be so constructed within an entity that when a bank fails—I say when, not if, because there will be another bank failure and our purpose is to try to make it easier for banks to be resolved so there is less likelihood of taxpayer intervention, meaning that the bank will be more likely to be allowed to go under and that bankers will be likely to be more prudent—the ring fence enables that while protecting the ordinary depositor and the payment systems.
This is a long and complicated subject, as I learned over many hours, and the flow of capital from the lady who puts some money into the bank to the company that needs it to expand and grow the economy is necessarily complex. One must therefore be careful—[Interruption.] I know that other hon. Members want to speak and I promised that my remarks would be brief, so before I get a beady eye from you, Mr Deputy Speaker, I ask the hon. Member for Luton North (Kelvin Hopkins) to let me move on.
The critical point, which I completely accept, is that the compromise we came to is the ring fence. The compromise holds good, however, only if the ring fence works properly. Our conclusion was that it would not work if it were not reinforced, and the term “electrified” was coined. The point made by the right hon. Member for Wolverhampton South East was that if one has at one’s disposal the ability to do something—the armoury, call it what you will—those who are engaged in the activity will check whether they are being looked at before they engage in it. It is the modern equivalent of
the Governor’s eyebrow. If we do not have that, we will simply have a lot of regulation that might lead not to a successful conclusion but to a long dialogue that leads nowhere between the regulator, the Treasury and the institution. People must believe that when the weapon, whatever it is, is deployed, it will have a consequence. That is the essential point.
In conclusion, I think all members of the parliamentary commission came to a unanimous view. We started from different viewpoints and with different concepts, but we agreed—all five from this House, all five from the other place: all 10 of us together—that to give effect to the ring fence it needed to be reinforced. We thought it could be done in this way and my hon. Friend the Member for Chichester has laid out the arguments perfectly.