45 minutes to approve £1,000,000,000,000?

Yesterday the media’s attention was on the Treasury Committee’s cross examination of the failed bankers, men who have lost their job because they lost their shareholders and now taxpayers so much money. It was never going to be a very informative session. Their apologies will not pay any of the bills.

Meanwhile in the Commons chamber itself something far more important was happening. The government sought approval for unlimited sums of money to be spent on propping up or nationalising any bank or similar financial institution they choose.

We were given just 45 minutes of time to discuss this item, which was not nearly enough. I did manage to speak, but under time pressure because other colleagues wished to talk as well. The Minister introducing it said very little in his introduction. It was a Money resolution, but he gave us no figures at all of how much money might be involved or what we might be buying for it.

I pointed out to the House that if you added up all the loans, guarantees, share purchases and other financial provisions the government has made or promised in recent months to banks, it comes to around £1 trillion of cash and guarantees (£1,000,000,000,000). It was the largest sum ever sought from Parliament. It is larger than the government’s version of total current liabilities of the UK government.

The Minister did not deny it could be £1 trillion. He did not leap to his feet with an official figure, or even suggest I was exaggerating when he came to sum up the debate. Once again I might have been too prudent in my calculation!

Worse still, the measure confirmed this government’s belief in nationalising very large banks. I reminded the House that we now preside over a large bank with a medium sized government attached. The government’s version of the state’s balance sheet has it that total state liabilities are under £1 trillion. The share purchases at RBS add a whopping £2 trillion to the liabilities on that balance sheet (and we hope they add to the assets a similar amount). RBS puts at risk more than three times the annual tax revenue of the state. As we saw last year, it can in a single year lose almost as much as the annual defence budget.

My colleagues Richard Shepherd and William Cash called a division on this spending. It went through with a minority of MPs voting for the government.

The Commons needs to sharpen its act on holding the government to account on spending. Each item under the banking packages should be given proper time for debate and a vote if MPs wish. The government would do better if these issues were scrutinised more. It is a disgrace that I am prevented from tabling many of the sensible questions we need to ask on the risks and costs of running RBS. Now the government itself says it is crawling all over the remuneration and bonuses of that bank, it is high time they agreed to answer some questions on it. After all, we now have more money at risk in RBS than in the state’s annual budget. It is high time we were able to hold them to account for it.

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24 Comments

  1. Posted February 11, 2009 at 8:23 am | Permalink

    This is manifestly now a scorched earth policy and nothing else…

    • Donitz
      Posted February 12, 2009 at 3:59 pm | Permalink

      £16,666 for every man, woman, and child in the UK.

      *This figure does not include the illegal immigrants.

  2. Colin D.
    Posted February 11, 2009 at 8:31 am | Permalink

    They say that 80% of our laws come from Brussels so I would have thought that there would be ever increasing spare time in Parliament with MPs wondering how to occupy themselves. Then we see pictures from the chamber of important debates and there seems to be hardly anyone in the chamber. What are MPs doing? Do they not care anymore? And now John tells us only 45 minutes could be found to discuss mind boggling sums of money for bail outs.
    How easy it was to find plenty time to discuss fox hunting and how little time to discuss matters that could ruin the country, our pensions and savings.
    Those who care about this country are either ignored or have their concerns trivialised. There is no moral integrity, basic common sense or fair play by this government. I despair for our future.

  3. Simon D
    Posted February 11, 2009 at 11:01 am | Permalink

    We now have a broken constitution and parliamentary arrangements in both Houses which are not fit for purpose. What is the point of having a payroll of over 600 MPs and a similar number of Peers (plus Mickey Mouse assemblies in Edinburgh and Cardiff) if there is nothing much for MPs to do other than play a role as amateur social workers in their constituencies. Why, for example, do we need over 600 MPs when the US, with five times the population, manages with 425 in its lower house and 100 in the Senate.

    If and when the next Conservative government is elected the repair of our wretched, outdated constitutional framework should be an urgent priority. If the EU (the senior partner) and the UK Government (the junior partner) are now running a banking system with a country attached to it the reform is even more urgent.

    You are right to draw attention to the inability of MPs to have much say on one of the most important matters to come before the House in decades. We are no longer a democratic country.

    I watched the coverage of auto-da-fe at the Commons yesterday. The wretched bankers admitted they failed to clock the crisis. But what was the Government doing? We were ruled by the greatest Chancellor and Prime Minister of modern times who had conquered boom and bust. He failed to warn the banks of what was coming. Why were the Government’s failures not called to account and why did the Committee Chairman not give a grovelling apology for the catastrophic inability of the Government, the Bank of England and the FSA to see what was coming.

    • Acorn
      Posted February 12, 2009 at 9:47 am | Permalink

      Well said Simon. I rarely mention this but do you not think that we should separate the election of our Executive (Cabinet) from that of our Legislature (Parliament). We will leave the Judiciary till later, along with a written constitution and a bill of rights.

      It would be vary similar to the US system. We would elect a Prime Minister who would appoint his own Cabinet and Junior Ministers. Probably considerably less than the 119 we have now. (Remember they all have to have an “initiative(s)” to make their mark on the greasy pole of party politics.) None of the ministers would be an MP. They would be from anywhere. They would serve at the PMs pleasure; they go when he goes.

      Elect one MP for each Borough; District; Metro-District and Unitary Council in England (an English Parliament) thats about 353 MPs. Add in 32 MPs for Scotland; 22 for Wales (one per Unitary Council) and say, 13 for N. Ireland (one per two NI unitary councils). That’s a UK Parliament of about 420. These are the “voice of the people”.

      To give the local government machine a proper voice at national level, make the Lords a fully elected senate on a similar basis to the Commons. That’s a reduction of over half on the current number of “lords”; currently 743.

      All Bills would have to pass in both houses, including the finance ones, which the current Lords can’t reject.

      Discuss; marks will be given for initiative. Let’s face it, anything would work better than what we have now.

  4. Chris
    Posted February 11, 2009 at 11:53 am | Permalink

    Sadly the only surprise here is that you had a chance to debate this at all, however briefly.

  5. Acorn
    Posted February 11, 2009 at 12:06 pm | Permalink

    That was a truly amazing session of our so called Parliament yesterday. You would have thought that the House would have been full for such a mega spending resolution.

    JR. In the user guide it says that a Bill must have a “money resolution” (new spending) passed before it can go into its Committee Stage. I got the impression that this Banking Bill had already been in committee. Is that correct?

    Having watched the farce unfold; the money resolution; the programme motion and the Bill debate; I still do not have a clue what the taxpayer liability is.

    Your interventions asked all the questions I wanted to ask the Minister. You had to feel sorry for the Economic Secretary, no sign of his superiors; Chief Secretary; Chancellor or Prime Minister.

    Reply: I think they needed a wider Money resokution to cover all the things they want to get up to.

  6. Waramess
    Posted February 11, 2009 at 12:28 pm | Permalink

    Just like Timothy Geithner they are making it up as they go along. Worse still they will cite the Geithner non-plan as a commendation.

    They will screw up for sure and it is no suprise that they will resist responsible debate; wouldn’t you if you really had no idea what you were doing?

    Even their Keynesian friends have started to abandon ship with such elevated names as Buiter, Wadhwani and DeAnne Julius publicly breaking ranks.

    They will continue with their silliness until the economy is in ruins and the best policy now is to become absolutely no part of it.

    Not long until the next election.

  7. Rock Kicker
    Posted February 11, 2009 at 12:29 pm | Permalink

    Well, Mr Redwood, it is your job to hold them to account – yours and every other elected representative of the people of this country, and I suggest that you do so sooner rather than later.

    As I am currently between jobs (long holiday, not unemployed), I spend the vast majority of the day out and about, and I meet a lot of people – ordinary people – and they’re angry.

    Mention the word, “revolution” to them and most common response is, “not a bad idea” or, “long overdue”.

    It’s not any one particular reason, and most people find it hard to pin down exactly why they think this way, but they know that something is seriously wrong with this country.

    What will it take? The right man/woman to lead them? Some new restriction on our liberty? Sold into slavery by our own country for £1,000,000,000,000?

    I have a great deal of respect for you, Mr Redwood, and I can think of a few others who don’t fill me with contempt (D. Carswell, F. Field, D. Davis and D. Hannan), but unless you stand up for the people of this country, you may well find yourself redundant.

    Reply: that was what I did with my voice and my vote yesterday

  8. chris southern
    Posted February 11, 2009 at 1:24 pm | Permalink

    It’s no suprise that it’s a labour goverment doing it’s best to nationalize the banks (control the banks and you control a nation.) Heads rolling to help cover up what has realy gone on, and a failure to admit any mistakes.
    They are taking the UK into economic slavery, but that’s what champaign socialists always want, for the workers (those they claim to represent) to be endeted to the state from birth till death.

    I can see a lot more people leaving the UK before the next general election, as the next goverment is going to have it’s hands tied by the finincial incompetance of this goverment and it’s EU masters.

  9. Posted February 11, 2009 at 1:50 pm | Permalink

    For years of Gordon Brown trumpeted the end to boom and bust as he gloried in the unrivalled prosperity his ‘prudence’ had ushered in for the UK. Our problem today is not just that he began to believe his own publicity; so, as yesterday’s Treasury select comittee demonstrated, did the leaders of our our principal banks. Now we have the credit crunch which has been joined by reccession with a full blown economic depression becoming more likely by the day. The really scary part is that we are now beginning to hear talk of ‘quantitive easing’ which is a euphemism for the deliberate debasement of the currency to get us out of the mess we’re in. So much for prudence.

  10. Blank Xavier
    Posted February 11, 2009 at 1:53 pm | Permalink

    The Parliamentary implications of this are event more even profound than the spending.

    If the Government is effectively avoiding debate of its policy, then we are moving away from being a Democracy. We retain elections, but between those moments every four years when we can vote, the Government appears to have effectively become a one-party State, for the opposition has been silenced.

  11. arisaig
    Posted February 11, 2009 at 2:23 pm | Permalink

    Does this really mean that Brown, Darling et al have upped the limit on the nations credit card yet again with the public focus elsewhere, and almost no media coverage of what they have done that I can find??

    Surely the Tory party can get more coverage of what is going on…it is truly terrifying for the future of all of us that these lunatics are running the asylum. How long before Sir Fred, Sir Tom and the others are replaced on the naughty step by Brown and his team?

    If its not a depression it must be suicide!

  12. Posted February 11, 2009 at 2:36 pm | Permalink

    If this government has created a liability for all tax payers of £1trillion and the personal debt of the country is £1trillion then would it not be better to give the money to the taxpayer and let them pay off their debts.

    Those reciving the money will have to put it into their banks and building societies. The banks and building societies would have enough cash to start lending to businesses and house buyers.

    There would be a greater demand for Products and services because everyone would have credit again and people would be able to buy houses. Everyone would get more confident and the country would start moving forward. Seems logical to me and would be fun spending my bit!

    • Adrian Peirson
      Posted February 13, 2009 at 2:50 am | Permalink

      That’s far too simple, add five more layers of complexity onto it and Gordon might go for it.

  13. Chuck Unsworth
    Posted February 11, 2009 at 7:48 pm | Permalink

    I belkieve that the Government truly does not have the slightest idea of the real state of affairs. The fact that the Minister is/wasa incapable of advising or contradicting is sufficient evidence. They have, simply, lost all grip on reality and all comprehension as to what it is they (and now we) are actually facing in terms of borrowing.

    Balls was right to consider a fifteen year time-scale. My guess is that it will be more like twenty-five years.

  14. THE ESSEX BOYS
    Posted February 11, 2009 at 9:49 pm | Permalink

    Simon Heffer sometimes goes way over the top but he got it right in today’s Telegraph in a critique of Westminster culture…

    “Parliament is almost entirely bereft of people who know what is going on, and who have something intelligent to propose about it. Those who do – the Redwoods or Fallons – are regarded as dangerous mavericks, even by their own sides”

    Contributors here know we hold JR in high regard but let’s hear it for Michael Fallon who unfailingly is the sharpest knife in the Select Committee drawer and the natural successor to John McFall if DC & Co continue to ignore his competence and incisiveness.

  15. Ian Jones
    Posted February 11, 2009 at 11:56 pm | Permalink

    Can you please tell me if the Govt is really legally liable for the 2tn of liabilities on RBS books?
    In my view they legally control RBS through share ownership which means RBS is a (public) limited company. Therefore, as they have control they account for RBS by consolidating the entity in the control entities books i..e the Govt. However, unless the liabilities contracts include that the holding company has to cover the liabilities (unlikely since they would refer to RBS controlling entity) then legally the Govt can enforce the limited liability of the company.

    Not sure how the other side might feel and as per another comment it could result in WW3!

  16. mike stallard
    Posted February 11, 2009 at 11:58 pm | Permalink

    I look every day at Labour List. On it there is a lot of anger about the greedy bankers. This is reflected in the Independent, the BBC and the Times. All of these are quoted in Labour List. John Prescott has also organised a petition on line for people to sign up to stop the bankers getting bonuses. Theis is under the heading “WUNCH OF BANKERS”, which I quite liked.
    I honestly think that the Left do not realise what is at stake. I think they just see it as a capitalist rip off by bankers crying crocodile tears. I do not see any reference to how they are going to run the banks or any form of answer to the questions which our host placed above.
    It could be that they just see the banks as milch cows, there for providing free money.
    That could well account for the shortness of the debate and the fact that no senior politician turned out to beg for the trillion pounds. I do not think – and this is a guess – that a lot of Labour MPs turned out either, did they?
    I suggest that, for the Labour Party, this matter is a non issue.

  17. Michael
    Posted February 12, 2009 at 7:14 am | Permalink

    Why did the media miss this story?

    How deep have they got their heads in the sand?

  18. jim
    Posted February 12, 2009 at 11:50 am | Permalink

    I suppose it sums up what has happened to Parliament, it has been completely emasculated.
    It looks like we are very close to economic collapse now, as the BoE says it is about to go down the Zimbabwe route, it can’t be long before the dollar follows.
    This will probably be the spark to get people onto the streets, where it all ends is anybody’s guess.

  19. Adrian Peirson
    Posted February 13, 2009 at 2:54 am | Permalink

    In a Nutshell, Parliament is Giving the Nations wealth away to the Offshore Banking Cartels which are the Real Govt, Western civilisation will collapse and from the Ashes will arise the New Feudalistic World Order Gordon Keeps going on about.

    http://www.infowars.com/infowars.asx

  20. Adrian Peirson
    Posted February 13, 2009 at 3:29 am | Permalink

    Instead of borrowing £1Trillion’s worth of these worthless bits of legal tender let’s print them ourselves, free of charge.
    It’s worthless paper, Stop borrowing it and Print it ourselves.
    No ‘loan’ to pay back.

    http://www.youtube.com/watch?v=JAzagrai-0M&NR=1

  21. Posted March 20, 2009 at 3:07 am | Permalink

    Well said, finally a good report on this stuff

  • About John Redwood

    John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College, and has a DPhil from All Souls, Oxford. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.
    Published and promoted by Thomas Puddy for John Redwood, both of 30 Rose Street Wokingham RG40 1XU
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