Last week 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 took place. The government sought approval for unlimited sums of money to be spent on propping up or nationalising any bank or related financial institution they choose.
We were given just 45 minutes of time to discuss this item, which was not nearly enough. I did 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 oat 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. Only 7 of us voted against the open ended commitment the government sought. More than half of all MPs abstained, leaving the government to carry it with a minority of members.
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. We could rescue the banks more cheaply and at much less risk to taxpayers. I will carry on explaining to them how they could do just that, by acting as an intelligent Central banker to the banks instead of buying shares in them.