§ 2.51 p.m.
Lord Bruce of DoningtonMy Lords, I beg leave to ask the Question standing in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government whether they intend to privatise Johnson Matthey Bankers, and if so, whether they will insist that the investment by the Bank of England of £75 million is not disposed of at less than this sum and that the £25 million loan advanced by the Bank of England, plus interest, is repaid in full.
The Chancellor of the Duchy of Lancaster and Minister for the Arts (The Earl of Gowrie)My Lords, the Bank of England have made it clear that Johnson 734 Matthey Bankers will be returned to the private sector as soon as practicable and for the best possible price.
Lord Bruce of DoningtonMy Lords, will the noble Earl answer the Question as to whether it is the intention of the Government to ensure that there is no loss falling on public funds, either directly on the Government or indirectly on the Bank of England? Also, will he answer the Question as to whether it will be insisted upon that no loss is occasioned on the sale back to the private sector of JMB?
The Earl of GowrieMy Lords, naturally I have no idea what price movements may be viable at the time. The Bank of England's own resources were involved in the rescue. These come from profits derived from the bank's own activities. They are not voted by Parliament and they are not drawn from taxes.
Lord Bruce of DoningtonMy Lords, has the noble Earl's attention been drawn to the views of The Times leader on 21st June, which stated:
In the end, the Chancellor cannot; however, avoid responsibility for politically sensitive actions of the Bank, nor, in such circumstances, maintain the fiction that the Bank's money is not public money.Will the noble Earl please answer also as to whether the guarantee given by the Bank of England, amounting to £150 million although underwritten backwards by £75 million, will form part of the public sector borrowing requirement?
The Earl of GowrieMy Lords, I usually agree with The Times, but I do not always. The fact of the matter is that my original Answer stands, and naturally it is in the interests of the Bank of England—indeed, in the interests of the Government—that the best possible price should be obtained, given the circumstances at the time.
§ Lord DiamondMy Lords, as the Question refers to the Bank of England, perhaps I may ask the noble Earl whether it is the intention of the Government to renationalise the Bank of England, so that the close co-operation between Mr. Governor and the Chancellor of the Exchequer of the day may continue. Without it, one of the country's most priceless assets—the integrity and high standing of this country's and the City's financial services—might be prejudiced.
The Earl of GowrieMy Lords, with respect to the noble Lord, Lord Diamond, the Question on the Order Paper asked whether Her Majesty's Government intended to privatise Johnson Matthey Bankers, and I answered in the context of that Question. But my right honourable friend the Chancellor has had discussions with the Governor of the Bank of England and he, like I, very much values that association. The Governor has agreed that in future rescue cases, should such be necessary, he will inform my right honourable friend of his concerns and intentions as fully and as far in advance as possible.