§ 3.22 p.m.
§ Lord Morris asked Her Majesty's Government:
§ Whether they intend to use their powers under the Banking Acts to establish the level of profits made by the clearing banks between 11th and 25th September 1992.
§ Lord HeskethMy Lords—
§ Lord PestonMy Lords, perhaps the noble Lord will allow me to intervene because we have at least 10 minutes to pursue the matter and I should like to ask at least one question. I am surprised that the noble Earl said that it is not in the public interest. I am advised that the Banking Acts do not give the Government any powers whatsoever to intervene in the matter or to ask for such information unless it is believed that speculators acted corruptly. Can the noble Earl confirm that that is the case?
The Earl of CaithnessMy Lords, the Bank of England may obtain information from authorised institutions under the Banking Act 1987 where that is necessary for the performance of its functions under that Act. If there is a public interest in doing so the Government may obtain confidential supervisory information from the bank. That is why I said that it is not in the public interest.
§ Lord PestonMy Lords, is it not important to get this right? As I understand it, the Banking Act enables the Government to intervene if it is a matter of protecting depositors. Unless there is any implication that the speculation in this matter in some way damaged depositors—and I should have thought that the reverse was true—the Government have no locus standi in the matter anyway. In other words, whatever one may feel is wrong in this state of affairs—and a great deal is wrong—the Government can play no role in discovering the information. Is that not correct?
The Earl of CaithnessNo, my Lords. I have already mentioned one way in which the Government can act. The noble Lord will also be aware that under Section 4(1) of the Act the Treasury also has a general power of direction.
§ Lord Williams of ElvelMy Lords, if there is a general power of direction would it not be the case 643 that, if there is serious speculation against the currency by banks authorised under the Banking Act, the Government have a public interest in ascertaining what gross revenues—rather than profits, which are difficult to ascertain—those authorised banks cashed in in speculating against the pound sterling in the days mentioned?
The Earl of CaithnessMy Lords, I should have thought in view of the noble Lord's background that he would have been one of those who wished to see the financial centre of the world—London—working as it should in a proper market. Of course the Inland Revenue will be very interested to see the final results of the banks.
Lord MorrisMy Lords, can we not give some comfort to those who find it puzzling that, while Her Majesty's Government, presumably in the national interest, were busily emptying the coffers of the nation's reserves of foreign currency in support of sterling, the money changers at the same time were doing the reverse and taking no consideration of the national interest, being interested only in short-term profit?
The Earl of CaithnessMy Lords, the Government were right to take the action which they did. However, in a free market, and a market the size of London—which is the largest foreign exchange market—in order to achieve what my noble friend wants one would have to go significantly further than the clearing banks as mentioned in the Question on the Order Paper. It might interest the House to know that there are more than 500 foreign banks from 72 countries based in London.
§ Lord Stoddart of SwindonMy Lords, does the noble Earl agree that those who urged caution about joining the ERM have been vindicated?
Lord Bruce of DoningtonMy Lords, does the noble Earl agree, in view of the exchanges that have taken place across the Chamber, that those provisions in the Treaty of Maastricht which provide for so-called independent bankers to have control over our national affairs are, to say the least of it, slightly dubious?
The Earl of CaithnessMy Lords, the noble Lord will be comforted to know that soon, I believe, he will have the opportunity to discuss that point in detail.
§ Lord Williams of ElvelMy Lords, I yield to nobody in desiring London to be the financial centre at least of Europe if not the world. However, will the noble Earl explain how the Inland Revenue, which he mentioned will be interested in the profits that have been made, will identify the profits? If it can identify the profits, will the noble Earl say so?
§ The Countess of MarMy Lords, will the noble Earl say how Her Majesty's Government define the public 644 interest? It is apparent from conversations I have had over the past few weeks that the public are very interested in how much the banks have made.
The Earl of CaithnessMy Lords, the question of how much the banks have made is a commercial matter for the banks. It is a matter which the Inland Revenue will want to look at at the end of the financial year.