house of lords official report - United Kingdom Parliament

1061 Sri Lanka
[17 JUNE 2009]
Banks: Lending
1062
Lord Brett: My Lords, the noble Lord raises important
questions. Through our high commission in Colombo,
we are taking the opportunity to co-ordinate our
efforts with international bodies, first, to look at the
humanitarian situation but, beyond that, to look at
the development of that country, which will depend
on the international financial institutions that are
being asked to provide assistance. In the political
sense, it has to be for Sri Lankans to come together
with the will to sit down and find a political solution.
If they do that, I am sure that they will find no lack of
international contributors to assist both the political
and economic processes.
Baroness Rawlings: My Lords, what contact have
Her Majesty’s Government had with the Chinese
Government regarding their support for the Sri Lankan
Government on the Tamil question?
Lord Brett: My Lords, I thank the noble Baroness
for her question. I confess that, while of course I have
studied my voluminous brief for many hours, I could
spend 10 minutes trying to find the answer without
having a clue where to find it, because I do not think
that it is there. We have an ongoing dialogue with the
Chinese Government on many issues and this is one of
them. I will take her question on board and seek to
provide an answer.
Baroness Howarth of Breckland: My Lords, how
will the aid be monitored in relation to those refugees
who will be taken out of the camps and repatriated? I
ask this particularly knowing that many women and
children in those camps have been both physically and
sexually abused and will need very careful therapeutic
and tending help, as well as all the practical help that
they need. There is a worry about how that will be
monitored through the system.
Lord Brett: My Lords, the first responsibility for
that will, of course, fall to the Government of Sri
Lanka, but the noble Baroness is absolutely right in
saying that it is important to ensure that it is provided.
The presence of the United Kingdom and such
international non-governmental organisations as the
International Red Cross will assist in that. I am sure
that the United Kingdom Government will do everything
that they can to ensure that such monitoring takes
place.
Banks: Lending
Question
3.15 pm
Asked By Lord Barnett
To ask Her Majesty’s Government what further
discussions they have had with banks regarding
their lending to businesses and house buyers.
The Financial Services Secretary to the Treasury
(Lord Myners): My Lords, at the 2008 Pre-Budget
Report the Government announced the creation of a
new lending panel which meets regularly to monitor
lending to businesses and households. The lending
panel is supported by the home finance forum, the
consumer finance forum and the small business finance
forum, which consider mortgage lending, consumer
credit and lending to businesses. In addition to these
meetings, Ministers and officials meet a wide range of
stakeholders, including financial institutions, to discuss
matters relating to the economy, including lending.
Lord Barnett: My Lords, I thank my noble friend
for that Answer. Does he agree with what the Deputy
Governor of the Bank of England said last week? It is
worth quoting. He said that unless banks increase
their lending,
“recovery might end up being anaemic, at best”.
Also last week, the Prime Minister said that the banks
have agreed to lend an additional £70 billion above
what they had lent the previous year. But those are
promises. In practice, there is ample evidence that the
banks are still not lending as they should. I am sure
that my noble friend is aware that in the case even of
small business loan guarantee schemes, matching funds
are required. In housing, where the banks previously
lent 125 per cent, they are now—when prices are
lower—demanding at least 40 per cent. Is the panel
doing anything about that? After all, at the moment,
all that we have are promises. What action do the
Government or the lending panel agree to take in the
event of the promises not being kept?
Lord Myners: My Lords, I agree with Mr Paul
Tucker’s comments. It is essential that the availability
of credit is increased to support lending and economic
activity, and that indeed is happening. It is happening
particularly for larger companies, which are being
supported by the capital markets through equity raising
and bonds, but also for smaller businesses. The
Government have done a considerable amount in this
respect to encourage the process. The lending agreements
that we have with Lloyds bank and Royal Bank of
Scotland commit those institutions to lending an extra
£14 billion and £25 billion this year. HSBC has committed
to lend an extra £15 billion, Barclays an extra £11 billion
and Northern Rock up to an extra £5 billion. These
agreements with those banks that have entered into
the extended credit guarantee scheme and the asset
protection scheme are legally enforceable. They are
monitored on a monthly basis and I regularly meet the
chief executives of banks. The week before last I met
the chief executive of HSBC; last week I met the
Abbey National and this week the Co-operative and
Nationwide.
Lord Forsyth of Drumlean: My Lords, does the
Minister not recognise that the Government’s own
plans to raise some £900 billion in the gilt markets will
inevitably force up interest rates, adding to the burdens
on those businesses that are able to obtain loans, and
therefore reduce the speed of recovery?
Lord Myners: My Lords, I am afraid that the noble
Lord misdirects himself. If he looks at the evidence, he
will see it suggests that there is considerable confidence
in the gilt-edged market. I now have direct responsibility
within the Treasury for the Debt Management Office,
a very professional unit that continues to fund our
needs and requirements in an entirely practical way
which is not damaging to interest rates. Therefore, we
are not squeezing out the availability of funds to
business and to private sector borrowers.