My Lords, I am grateful to the noble Lord, Lord Eatwell, for his kind remarks about members of the banking commission who sit in this House, not least my friend the most reverend Primate the Archbishop of Canterbury, who, sadly, is not in his place today but fully intends to be so
many times in the autumn when the commission’s work will be discussed in this House in more detail. Perhaps I can partially stand in his place as we spent many years in different parts of the oil industry before entering another sort of multinational work.
We appreciate the practical themes in the Financial Services (Banking Reform) Bill and the opportunity that it provides to implement the recommendations of the Vickers report and, more recently, of the Parliamentary Commission on Banking Standards. As the Community Investment Coalition put it, the Bill provides an opportunity,
“for Britain to continue as a leading global financial centre, while at the same time protecting ordinary working people”.
I thought that that conveyed rather well the complexity of the issues with which we are dealing.
As we face up to the essential and urgent reform of a sector that should indeed play a major part in our national well-being and prosperity we are presented not only with proposals for regulation and structural change but with the broader themes of cultural change, including appropriate standards for the industry. Those who have heard the discussions on the Radio 4 programme “The Bishop and the Bankers”—it is available on iPlayer and has two more sessions to go—have been reminded that the capitalist system on which we all depend for our welfare can, in its search for efficiency and other objectives, become dehumanised and disconnected from the needs and culture of individuals. Therefore the structural proposal to ring-fence retail banks is most welcome, but only—as has been noted already today as well as in another place and by the commission—if the electric current in the fence is strong enough to ensure compliance with our intentions.
The proposal to include a competition element in the Prudential Regulation Authority is also attractive, but will it go far enough? I hope that in promoting real alternatives to the present arrangements we will keep our vision precise and technical—as I am sure many speeches today will be—but that we will also keep in view the long-term possibility of a much better arrangement for the country as a whole. As we focus both on the struggle of ordinary people to manage with what little money they have, and on the need for micro, small and medium-sized businesses to stay on their feet in competitive local and export markets, strong arguments are being made not only for a new regional bank but for more support for credit unions and other local arrangements, with the potential, particularly as regards the latter, to put an end to the corrosion of payday lending and the unacceptable effects of the poverty premium.
To get an image of what this might look like we could consider one bank which operates in this country from overseas whose philosophy originally was for the manager of a region to go to the top of a church steeple and from there to survey all that he or she could see. He or she would then be responsible for all the businesses and finance within that area. It not only provided local autonomy but located responsibility for professional decisions where they might best be made. On the retail side, it should also be noted that in Birmingham there are still 100,000 people who do not have a personal bank account. We should also want to
endorse the proposals made within these discussions that the accounts of those who have them should be portable. Portability of accounts might be made possible within the industry so that competition and client service can come together for the benefit of those who use those banks.
I have referred to coherence and comprehensiveness. I wish to add at this stage in the debate, perhaps a little earlier than we need to, the important theme which the Minister mentioned regarding the change of culture around our discussions—in the background and sometimes in the foreground—as we emerge from the immediate scandal and crisis in the industry. As noble Lords will know, there is in the industry a growing understanding of and openness towards discussion at all levels, as well as, dare I say it, a little vulnerability on these matters.
In my own area of the West Midlands, senior regional bankers from all the main banks have been prepared to meet regularly under Chatham House rules to ask difficult questions of themselves and their businesses. It is notable that one major player, which has already been mentioned this afternoon, has added to its obvious corporate values of “Client first” and “We must work together” the extraordinary line that, “We must do what is right”. That gets us into a very interesting area of culture: not just our values, behaviours and mission statements but—I would go so far as to say—what it means to be virtuous. Another global leader, in a seminar held within the past six weeks for all its world-wide risk managers, allowed the whole morning to be spent on the question, “What does society want from us?”. These are little signs of openness to a new culture that will undergo and deliver some of the practical measures that your Lordships will be discussing in the Bill and in response to the commissioners. Our own body, the Church Commissioners, is leading a discussion on what it means to have a good bank, which my friend the most reverend Primate described as living,
“with a culture that is self correcting and self learning, a culture that is more like a body than a system, and so develops the conscience, will and direction that enable the common good”.
As we help develop structures that are fit for purpose, and that might look quite different from what we have been used to, I hope they will become ethical structures. I hope that they will not just keep to easy-to-sign-up-to corporate values but go further into the deeply challenging discussions about personal virtue. Alasdair MacIntyre, the philosopher, would say that we must acknowledge robustly the belief that human life is more precious than any possessions and recognise that human solidarity is an integral part of the common good.
It is time to get back to the detail, which I will leave to the speakers who follow me. I and my colleagues on these Benches trust that the industry will wholeheartedly embrace a professional standards process, with independent leadership and all the practical things that we will talk about in the next few minutes and days; and that step by step—with any necessary amendments to the Bill and a full adoption in the autumn of the parliamentary commission’s recommendations—we will all take responsibility for achieving a healthy, vigorous, profitable and accessible but virtuous banking system.
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