The job of the Treasury Select Committee
is only half complete
Wednesday, 11 February 2009
The grand Parliamentary inquisition of four of Britain's most prominent
failed bankers yesterday might not have delivered the merciless evisceration
many in the country had been hoping for, but it at least succeeded in getting
Sir Fred Goodwin, Sir Tom McKillop, Andy Hornby and Lord Stevenson to offer a
public account of themselves.
The apology that the former heads of the Royal Bank of Scotland and the
Halifax Bank of Scotland delivered at the outset of the hearing was a study in
ambiguity. The bankers were sorry for "the turn of events" and for "all the
distress" caused, but not, it seems, for their own conduct. Their real failure,
they argued, was one of omission rather than commission: they failed to
anticipate that the flow of credit in the world financial system would come to
an abrupt stop.
The Treasury Select Committee, to its credit, did not let them get away with
that generous interpretation of their failings. MPs on these committees often
adopt a scatter-gun approach to the interrogation procedure of witnesses. This
time they were well briefed and reasonably well co-ordinated. And it became
apparent over the course of the hearing that this quartet of bankers simply lost
control of their businesses.
The admission extracted from Mr Hornby that "the bonus system has proved to be
wrong" provides an important contribution to the present public debate about
bankers' remuneration. It is much harder to justify such payments if the head of
a failed bank believes they were a factor in his institution's downfall.
Yet an even bigger test for MPs on the Treasury Committee will come today when
John Varley, the chief executive of Barclays, and Stephen Hester, brought in to
manage the stricken RBS, come before them. For all the attention the inquisition
of Sir Fred and Mr Hornby attracted, they are essentially yesterday's men. Those
in the hot seat today are still players.
Mr Varley, in particular, needs to answer some tough questions, both about the
manner in which he has run his bank in recent years and about how he intends to
run it going forward. The committee needs to find out why Barclays chose to
eschew the Government capital on offer last October, preferring instead to raise
more expensive funding from the Middle East. There is a widespread belief in the
financial world that the motivation was to avoid any Government interference in
the bank's remuneration practices.
There is also some scepticism in the City over Barclays' methods of valuing its
assets. Can Mr Varley guarantee that there will be no nasty surprises in store
for shareholders? There is a clear public interest in getting an answer to this.
If Barclays' attempt to go without state support does end in disaster, the
Government would have to clean up the mess. Barclays is, in that dreaded phrase,
"too big to fail".
Mr Hester cannot be called to account for the woeful past performance of RBS.
But there is a good deal to ask him about the bank's future, not least the
question of whether he is running the bank primarily in the interests of its
remaining private shareholders, or the taxpayer, which now owns a majority of
MPs must also demand an explanation from both men of why they are still planning
to pay their staff bonuses despite the fact that the share price of their
respective institutions has collapsed. The Treasury committee made a decent
start yesterday. But this inquisition is far from over.
THE LABOUR MP Betty Boothroyd was elected as the first woman
Speaker of the House of Commons yesterday with the help of 74 Conservative MPs
who supported her in preference to Peter Brooke, the former Northern Ireland
Miss Boothroyd, 62, won the contest with a 372-238 vote a majority of 134 on an
amendment proposing that her name be substituted for that of Mr Brooke. The
amended motion was then carried without a further vote.
MPs on all sides stood and flouted Commons tradition by applauding as she was
pulled to the chair with the traditional show of reluctance. Mr Brooke was one
of the first to congratulate her.
She becomes the 155th Speaker and the first since the war to be chosen from the
ranks of the Opposition party. Her calls of “Order, order” will make hers one of
the best known voices in the land.
Victory for Miss Boothroyd was assured by her record in the chair as deputy
Speaker and popularity across the House, the Conservatives’ failure to agree
among themselves on a single candidate, and fears among some MPs that Mr Brooke
might not be enough of a “backbenchers’ man”. Accepting nomination, she said:
“For me, the Commons has never been just a career. It’s my life.”
When MPs had applauded her to the chair she said, clearly moved: “Before I take
the chair I wish to thank the House for the very great honour it has bestowed on
me. I pray that I shall justify its confidence.”
"He loved England with the passionate enthusiasm which
Pericles felt for Athens and he trusted the House of Commons as no one else."
These words used of the heroic Sir John Eliot who withstood Charles l can be
applied with a strict appropriateness to Sir Winston Churchill. They do not
present the sum of the qualities of the prime minister, the orator, the
historian, and biographer who has now surrendered the seals of office to the
But they are laurels he would value as highly as any. His country has been his
religion: and country means the empire and Commonwealth.
His trust in the Commons has been absolute. But he has done more than trust. He
has had reverence and affection, and it has endured through the 50 years and
over that he has been a member. He has not long been happy away from it. His
love has been for the theatre of party conflict in which the claims of tolerance
are operative and differences of opinion do not exclude friendly personal
As for trusting the house, no more shining examples could be found than his
conduct during the war. Hardly a day passed when he was in London but he was in
his place. In the darkest hours he was never afraid to tell it the blackest
truth. His addiction to the secret session was another aspect of this trust. His
faith permitted him to speak words in private to 600 members that he could not
in public, confident there would be no disclosure.
At no time when the conduct of the war came under criticism was he prepared to
go on without obtaining a vote of confidence. No prime minister in war could
have deferred more to the house. Lloyd George at the height of his power
developed that touch of caesarism tempting to a war prime minister and for
periods disdained to attend the house.
Sir Winston's immunity from any thing savouring of the autocrat ought never to
be forgotten, for he was exposed to greater temptation to play the role. So
great was the country's gratitude that he might have arrogated to himself powers
beyond any other prime minister.
He has also been the most human of our prime ministers. None has been more
serious about public issues but none has had such a zest for the battle. Lloyd
George was also a great fighter, but he had not Sir Winston's enjoyment in the
tussle. This native pugnacity — probably derived from his father — has gone with
magnanimous warmth, with the artist's capacity to see himself with humorous
detachment in the heat of the engagement
From our parliamentary correspondent,
Given Mr. Aneurin Bevan's case on the National Health Service Act and the
great advantage he had of opening to-day's Commons debate, the rest followed
inevitably - a brilliant performance which sent the Labour benches wild with
He sat down at the end of it to one of those long, sustained cheers that parties
in the House of Commons reserve for an unusual gladiatorial triumph. What could
not be foreseen was whether Mr. Bevan was going to play from strength a
conciliatory card. The House was not left in doubt - conciliation was decidedly
not his line.
He had decided to attack the B.M.A. without mercy. They were a small body of
raucous-voiced politically poisoned people who had misrepresented the medical
profession as they had misrepresented the National Health Act. They were
"organising sabotage" of an Act of Parliament.
They had always been reactionary. They resisted Lloyd George years ago. They had
fallen foul of Mr. Ernest Brown and Mr. Willink just as much as they had of him
(Mr. Bevan). The Labour benches cheered him furiously again and again as the
invective mounted. Mr. R. A. Butler, who followed him, remarked that Mr. Bevan's
speech had done nothing to promote a settlement. That may be so. But (this) will
largely depend on whether Mr. Bevan's obvious tactic succeeds - that is, to
discredit the B.M.A. in the eyes of the bulk of the doctors.
One concession Mr. Bevan made. He is to set up a legal committee to consider the
effect of the Act on partnership agreements, and is prepared to introduce an
amending bill. Mr. Butler also drew a noteworthy statement from Mr. Bevan on the
basic salary. Mr. Butler put it that the doctors' great stumbling-block is the
fear that the basic salary will be extended to make it a whole-time State
salaried service. He suggested that if the Minister could reassure the doctors
on that point it would help enormously. Mr. Bevan obliged at once with the
statement that there is no intention of introducing a full-time basic salary.
The temperature of the debate frequently ran high. Once [Mr Bevan] interrupted
Mr. Butler to tell him that he was leaving "a trail of slime behind him". Mr.
Butler struggled manfully to cope with his adversary, but was not too happy
Once he raised the Conservatives to great enthusiasm by retorting on Mr. Bevan
that nobody knew more about fishing in the squalid waters of politics than the
The mere announcement to our readers that the house of lords,
the house of commons, and all their various offices, have become a prey to the
unsparing element will awaken feelings in which sorrow, astonishment, and doubt
will be singularly mingled.
At half-past five in the evening, a friend of ours passed
between the houses of parliament and the Abbey, when all was still. Yet within a
short hour, the interior of the house of lords was filled with one vast flame,
casting its lurid glare far over the horizon, spreading over the silent Thames a
vast sheet of crimson that seemed to smother the more feeble rays of the rising
moon - bringing out the stately and majestic towers of the abbey in strong
relief against the deep blue western sky, playing with seemingly wayward and
fantastic scintillations on the inimitable fretwork of the Seventh Harry's
The flames first shewed themselves about half-past six o'clock. They burst forth
in the centre of the lords, and burnt with such fury that in less than half an
hour, the whole interior presented one entire mass of fire.
By half-past seven o'clock the engines were brought to play upon the building
both from the river and the land side, but the flames had by this time acquired
such a predominance that the quantity of water thrown upon them produced no
In less than a hour the entire roof of the house of lords had fallen in. The
firemen now abandoned all hopes of saving any part of this portion of the
building, and their efforts were wholly directed towards the house of commons,
and the preservation of Westminster Hall, which for the beauty of its
architecture, and its close connection with some of the most important events of
our country's history is equally admired and estimated by the antiquarian, the
man of science, and the citizen.
For some time their efforts were successful, but not so ultimately. The wind
veered somewhat towards the west, thus throwing the flames immediately upon the
house of commons, the angle of which abutting upon the house of lords, caught
fire, and the roof ignited, the woodwork of which being old and dry, the flames
spread with the rapidity of wild fire.
In a very short time indeed, the whole of the roof fell in with a tremendous
crash, emitting millions of sparks and flakes of fire. This appearance, combined
with the sound resembling a piece of heavy ordnance, induced the assembled
multitude to believe that an explosion of gunfire had taken place. The scene of
confusion which followed baffled the power of description.