Perhaps I may say something about this. As the noble Lord, Lord Turnbull, mentioned, we retrenched on this in discussions on earlier groups. This is something to which I attach great importance. The noble Baroness, Lady Cohen, said that the commission had got it all wrong, that ring-fencing could not possibly work and that there would have to be complete separation. I agree with her—and this is no surprise. I was speaking out for complete separation long before almost anybody else I can think of, certainly in this country. For five years I have been writing and speaking on this: before the parliamentary commission and before the Vickers report. It remains my view that this is most unlikely to work, partly for reasons that the noble Baroness gave and partly for others.
Of course, as the noble Lord, Lord McFall, pointed out, we on the commission decided that it would be sensible to have a unanimous report. There was no majority on the commission—and certainly not unanimity—for complete separation. Therefore, we proposed what we proposed. One thing we proposed, which is what this group of amendments is about, was a route to complete separation. This is what the amendment is about: a process by which, if it is seen, and events prove, that the noble Baroness and I are correct, along with many others who think the same, this procedure, which the Government at the present time refuse to accept—something I regret—is a way in which we might get there.
When I asked the Minister what the great advantages were of universal banking, from which we should in no way depart, his main argument was that diversity was a form of strength. I am old enough to remember when industrial conglomerates were extremely popular. In the late Lord Hanson’s group, and others, there were a whole lot of disparate industries in the same holding company, and the argument was that this diversity was a form of strength. In fact, of course, it was a disaster and nobody argues the case for industrial conglomerates any more.
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However, at least with industrial conglomerates there is the discipline of the marketplace and you can allow companies to fail. The problem in banking is that the conglomerates are much more serious. You get the problem of “too big to fail”. Indeed, it is not just too big to fail, but too complex to fail and, as we have seen, too big and too complex to manage. That problem has proved to be right at the heart of this. My noble friend the Minister is saying, “Forget about all that, let us make them even bigger and even more complex”. I am afraid that he has not convinced me. In certain special circumstances there may be some slight advantage in having linkages of this kind, as there were with the conglomerates. However, the balance is overwhelmingly on the other side of the ledger. It is a huge disadvantage and a huge risk for the economy, which we should not entertain.
The Government have also said—I do not know whether the Minister is going to say this now but a government spokesman has said it in the past, and I think that the Treasury said it in its response to our commission’s report—that maybe you are right and we should go this way, although their heart is not in it. It should be new primary legislation and not a power under this Act, which, as the noble Lord, Lord Turnbull said, can be exercised only with the agreement of the Treasury and the Government who are responsible to Parliament. We are not saying that an independent committee can decide any more than the Vickers committee could decide. It had to be accepted by the Government of the day. If you say that this has to be new primary legislation the reality is that it will be too much hassle. There will never be time for the primary legislation and it simply will not happen. It is an integral part of the logic behind this Bill. That is why it should be in this Bill and why the noble Lord, Lord Turnbull, is absolutely right.
There are in a sense two separate issues. There is the issue—which we were all concerned about and to which reference has been made during the debate on earlier groups of amendments—of the intense ingenuity of investment bankers, in particular, who may find ways round it and also the success in lobbying. Maybe we need to introduce something—at a later stage maybe; it is too late to do it today—to implement on the statute book the recommendation of the parliamentary commission about lobbying in paragraph 262 of its summary of conclusions. If you look again at what happened in the United States, intensive lobbying led to a weakening of the Glass-Steagall legislation, and British banks are just as able to do it as American ones.
However, it is not just a question of finding clever ways round or lobbying in this instance by particular banks but also, as has been widely pointed out, that the whole structure may not work. If it does not, we have to go for industry-wide separation and that is what this is about. I am not going to talk now about proprietary trading, because we are going to come to it later, but as the issue has been raised I will just mention it now even though it is not really relevant to this group. Proprietary trading has been separated out in the United States. We made recommendations about that too in an earlier report. The final report was not an attempt to sum up everything: we did it in tranches.
This comes back to the question of culture. Maybe I am old-fashioned but I regard one of the essential elements of banking culture to be service to clients. As the whole essence of proprietary trading is that there is no client, the culture of service to clients cannot possibly exist. It is totally alien and the banks are literally in it for themselves. That is a separate issue. The important thing now is that there should be a route to complete separation if too much ingenuity is shown, if there is too much successful lobbying or if the whole system is shown to be flawed, which I suspect will be the case for a number of reasons which noble Lords have already mentioned. We will abandon this route at our peril. I fear that if we do, we will deeply regret it in the future.