PMQs: Nick tackles Gordon on bank lending and bonuses

UPDATE: Anyone dropping in here from the BBC’s liveblog of PMQs, hello and welcome, but please go here instead. You will immediately notice what the hard-pressed Beeb livebloggers did not – that this post is last week’s PMQs report.

Even more shouty plonkerism than usual at PMQs today if such is possible, perhaps partly because Brown and Cameron were reasonably evenly matched. Clegg was heard with comparative quiet for once – it has occurred to me before that a bad day for Cameron often seems to coincide with a good day for Clegg. Perhaps it’s a function of psychology, that if Cameron hasn’t provided particularly effective opposition, Clegg feels more able to.

He asked how the government intended to force the banks to make good on the things they promised in return for recapitalisation – an end to the bonus culture, and increased lending to small businesses. All MPs, Clegg said, knew that small businesses in their constituencies were “receiving emails from their banks that virtually closed them down overnight”. The Prime Minister, to my great surprise, did not once mention Winter Fuel Payments in his answer. He referred to various existing government schemes for funding small businesses, confirming the now total merging of state and private sector in the collective hive mind of Labour.

Clegg’s second question was a reiteration of the first, but I think put the case more effectively with a reference to Brown’s “strutting” on the world stage of the G20 meeting, showing off his plan – which at home simply wasn’t working. If the Prime Minister would not force banks to lend to small businesses, would he at least set up a new commercial bank to lend businesses money directly – a reference to the “government bank” proposal that received some press this morning. Brown simply reiterated that his plan was working. No real change in the answer, except that Brown referred to the fact that Barclays had elected not to pay board bonuses (something which I gather was whispered to him on the front bench while Clegg was asking his second question) – a disingenuous point since Clegg wasn’t asking about just board bonuses.

This was what I would call a safe PMQs for Clegg. He didn’t tackle the tax issue in the bullish way James Graham suggested, and in fact refrained from tackling it at all. In starting a groove on any other issue of a similar depth to the one he has developed on tax cuts, he is hampered by the two question constraint. At least two questions on the same subject week after week can be slowly forged into a narrative – and the challenge is then to control it.

But when Clegg starts a new pet topic, Brown can get away with essentially providing the same answer to both questions, in a way that he can’t quite get away with providing the same answer to six questions from Cameron. I understand why Clegg sticks closely to one theme for both questions – he’s going for impact rather than scattergun – but even so it takes us a hellishly long time to get anywhere near a good PMQs narrative with two questions a week.

The full questions were as follows:

Mr. Nick Clegg (Sheffield, Hallam) (LD): I would like to return to the bank bail-out plan. We supported that action because we were told that there would be strings attached—that the banks would be forced to lend. Yet every Member of this House will have heard about local companies receiving e-mails from their banks forcing them out of business overnight. What concrete evidence does the Prime Minister have to show that his bail-out plan is working?

The Prime Minister: The first thing to do was to provide liquidity to the banking system. The second thing to do was to recapitalise the banks so that they would not collapse. Some of these banks would not be in existence today had we not taken the action that we did to recapitalise them. I am pleased that the right hon. Gentleman supported us on this. The next thing to do is
to secure the funding that is necessary for small businesses and for mortgages. We have expanded the small firms loan guarantee scheme, and we have arranged for £4 billion of funding from Europe. We are meeting banks and building societies almost every second day to consider the technical issues and other reasons why the lending has not happened in some cases, and we are ready to take further measures if necessary. I hope that he agrees that if we take further measures, that may cost money as well as costing the banks changes in the way that they operate, and I hope that he will support us when we do it.

Mr. Clegg: That was an extraordinarily complacent reaction when thousands of jobs are at risk. We all know that the Prime Minister likes to strut his stuff on the world stage telling everybody that his plan is better than their plan, but his plan is not working where it counts—here at home. The bankers cannot believe their luck. They have got billions of pounds of taxpayers’ money, they can keep their bonuses, and they do not have to lend to companies. If he is too weak to get tough on the banks, will he instead consider ways of lending serious money directly to businesses?

The Prime Minister: First, they have not, under our scheme, taken their bonuses as members of the boards. Barclays announced just yesterday that they will not take those bonuses. We are having some success, and I hope that we will have more success, in persuading the executives of these companies to take full responsibility. As for the resumption of lending, every country in the world is facing this problem, and we are all looking at what we can do. What has happened—let us be honest—is that we have gone from a period where banks were prepared to take any risk to one where they are averse to risk, and we have got to turn that round. That means that we are going to have to build confidence in the future of the financial system. Some of the measures we have already taken, but I hope that the right hon. Gentleman will support the further measures that we will take.

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