The economic/financial crisis emerged during Parliament’s summer recess, although of course the roots go much further back. Some peers have beeen grumbling in the tea rooms that Parliament should have been recalled at least to debate this historic event, with potentially far-reaching political consequences. The most recent Finance Act authorised the Government to take decisions about the crisis and in particular the responses of the Bank of England – so there was no duty to recall Parliament.
Nevertheless, since the return to work on 6 October there have been constant questions from the opposition parties, the crossbenchers, as well as from Labour peers for a proper debate, if not two, to allow views and solutions to be expressed. I was approached by two peers and as a consequence wrote a letter to the newly appointed Leader of the House (a hugely sympathetic peer, Baroness Royall, who genuinely wishes to accommodate the House) asking for a debate. My reasons for putting pressure on the Government include the fact that there are in the House several peers with almost unparalled experience in commercial and investment banking, Treasury matters, International financial institutions and, of course world-renowned (pace Bedd Gelert) economists. These experts not only have views but also constructive suggestions which the Government might wish to hear?
A debate has now been agreed in principle although the Government still has to find a slot – more difficult than it may seem because traditionally in the run up to the Queen’s Speech at the State Opening of Parliament (cheduled for 3rd December) there is a rush to get outstanding Government business through. As I’ve said previously there are still contentious bills to be agreed.
However, we the crossbenchers are forcing the pace somewhat by putting forward a relatively short debate on reform of international financial institutions such as the IMF and the World Bank, questioning their fitness for purpose in the new economic climate. This debate, to be led by Lord Bilimoria, will take place next Thursday 30 October and with any luck will be the first of more before the end of this session.
There are now a number of Moral Hazards:
Banks are free to trade without undue government interference. Nevertheless pressure will still exist for them to offer loans contrary to what is required by their new risk models. The danger is that they will be forced to act recklessly with their newfound funding.
Loans from other governments are in demand globally; will the interest on these loans be the only price to be paid? Will there be a political one too?
Debt was underpinned by property and is now underpinned by national GDP and economic success. How will this be achieved to secure further borrowing?
Is there any incentive for opposition parties to win a general election when the money has run out and the electorate are angry and bewildered? The outgoing government may see many of its executives loose their seats. Would they have wanted to return to Parliament to answer those awkward questions of why it happened?
An apathetic electorate is awakening from a stupor and is asking questions of those who represent them. How will they be heard and will they speak softly?