§ 4. Mr. Campbell-Savours
asked the Chancellor of the Exchequer when he expects to receive the report into the affairs of Johnson Matthey Banking.
§ 6. Mr. Skinner
asked the Chancellor of the Exchequer what recent discussions he has had with banks and other institutions regarding the Johnson Matthey Bankers rescue; and if he will make a statement.
§ The Economic Secretary to the Treasury (Mr. Ian Stewart)
My right hon. Friend expects to receive the results of the review of banking supervision at about the end of next month.
§ Mr. Campbell-Savours
Is it not clear that, despite official bank monitoring, this bank made some stupid loans, often completely unsecured, which are now having to be covered by the indemnity guarantee arrangements? As it has been proven that a relationship existed between some of those who were lending and some of the borrowers, which must have had some bearing on the terms of which the borrowings were made, why has not the City fraud squad been brought in to carry out a full and detailed investigation so that justice in this case can be seen to be done? The public demand that justice is done in this matter.
§ Mr. Stewart
It is clear that Johnson Matthey Bankers indulged in some extremely unwise and imprudent lending. I am advised that investigations to date do not suggest that the collapse was due to fraud.
§ Mr. Skinner
Is it not time that we had a law that applied to everybody, not one for City crooks who operate in the casino economy and another for the rest of the population? Is it not a fact that this bank not only engaged in lending money to people who were organising lavish parties in the City and trips abroad, but that its activities have resulted in the taxpayer having to pay at least £75 million to bail it out? Does the hon. Gentleman agree that the report on the subject, which has been sat on since February, should be revealed to the public at large so that every taxpayer who has had to help bail out this uneconomic unit, Johnson Matthey Bankers, has an opportunity to see all the sordid details involved in the case? Is he aware that Mrs. Thatcher — [HON. MEMBERS: "Order."]—the Prime Minister has had a letter from me for a month asking for the report to be published but has refused to answer it? It is time that the Government came clean—[HON. MEMBERS: "Too long."]—about all their friends in the City.
§ Mr. Stewart
I am afraid that I cannot respond to the hon. Gentleman's correspondence with other members of the Government. As for the various points that he raised in his supplementary question—
Mr. Deputy Speaker
Order. The hon. Member for Bolsover (Mr. Skinner) asked a supplementary question and should be prepared to listen to the answer. I am trying to hear what the Minister has to say. Mr. Stewart.
§ Mr. Stewart
The hon. Member for Bolsover (Mr. Skinner) misunderstands the position in relation to the taxpayers' money, to which he referred frequently during his supplementary question. The decision to rescue Johnson Matthey was made by the Bank of England, and voted money has not been involved in that. There is an agreement for an indemnity between the Bank of England and the commercial banks. The report to which he referred was commissioned by the Governor of the Bank of England, who has felt that it should not be published because it contains commercially confidential information.
§ Mr. Meadowcroft
On what criteria does the Minister support hailing out banking inthis way and according preferential treatment to its errors? On what criteria does he support the cover-up of the report, which details the reason why public money needs to be spent in this way?
§ Mr. Stewart
I have already answered the question about public money. That is a decision for the Bank of England. The Governor made it clear at the time that Johnson Matthey Bankers was saved from liquidation because of the potential impact on the gold market. It is not for me to make a judgment about decisions which the Governor might make in hypothetical circumstances about other institutions. In this case, that was the basis on which the Governor made his decision.
§ Mr. Blair
Do not the public have a right to know exactly what took place in relation to Johnson Matthey, so that they can pass judgment on the Bank of England's decision to bail the bank out? In saying that public money is not involved, the Minister is making a wholly artificial distinction between the funds of the Bank of England and taxpayers' money. In answer to the question of my hon. Friend the Member for Workington (Mr. Campbell-Savours), the Minister has just accepted that Johnson Matthey engaged in imprudent banking practice. When are we to be told the details of that imprudent banking practice?
§ Mr. Stewart
I am not drawing an artificial distinction about public money. On the question of information about what is happening, investigations are still under way. I cannot yet say what information can be made available or in what way.
In announcing to the House in December the establishment of the review of banking supervision my 978 right hon. Friend made it plain that he would report or it to the House as early as possible, and would report on any prospective changes in legislation.