PMQs: Nick tackles Gordon on the bank bail-out

by Stephen Tall on January 21, 2009

After last week’s pretty subdued start to the new Parliamentary term at Prime Minister’s Questions, there was a return to the more boisterous rough ‘n’ tumble which passes for debate in this farcical weekly charade in the interests of holding the Government publicly to account.

As is well-established, the actual content of PMQs is pretty irrelevant (which is just as well, because it’s pretty non-existent) – for the media and the Westminster village performance is all. And measured by that criterion, I thought all three party leaders could take some pleasure in how they did.

As recession reality begins to hit home, the Government’s response to it was, unsurprisingly, the dominant theme. Gordon Brown tried to slam home two messages: that Labour is doing all it can; and that the Tories would do nothing. And for once he managed to upstage Mr Cameron with a couple of slick, well-delivered one-liners:

The one thing that President Obama did not say in his speech yesterday was, “Fellow Americans, let’s do nothing.”

and, gesturing to Ken Clarke, restored to the Tory front-bench:

[the Leader of the Opposition] has the benefit now of a new shadow shadow Chancellor to help him on his way

Though that did set up Mr Cameron’s best-scripted line of the day: “The difference between this former Chancellor [Mr Clarke] and that former Chancellor [Mr Brown] is that this one left a golden legacy and that one wrecked it.”

But, for me, the Prime Minister’s most impressive answer was not the rehearsed bon mots, but his graceful acknowledgement that the Government’s recapitalisation of the banks is in trouble, but that it was the best, the only, policy on the table, and it was (eventually) supported (half-heartedly) by the Tories themselves:

I was very grateful for the support that the Opposition party gave to the recapitalisation of the banks three months ago. I suppose that I should not be surprised that the minute there is a difficulty, it withdraws its support from the right proposal. The recapitalisation of the banks was the right thing to do. The right hon. Gentleman has no other policy that would replace that policy.

To my ears, the phraseology sounded very Tony Blair. Why? Because its more-in-sorrow-than-in-anger tone is just the right way to deflate Mr Cameron’s tendency towards shrill point-scoring. It also has the merit of being the truth, a powerful weapon which Mr Brown all too often neglects.

In his two allotted questions, Nick Clegg pressed two issues – first, that the Government’s response is too ambiguous to work, and secondly that it’s time for full, temporary nationalisation of the weakest banks.

To be honest, I didn’t think this was one of Nick’s best days at PMQs (although generally I think he’s a strong performer there, unfairly maligned by media hacks). To me, his questions seemed a little vague, with no examples to back them up. However, I’ve heard Nick’s sound-bite-ettes used on a number of news programmes this afternoon, while the PMQs questions he asks which I do like seem to sink without trace as far as the media’s concerned. And though I suspect this says at least as much about the poor quality of political reporting as it does about my judgement, I’m happy to concede that, in this instance at least, what matters is what works.

You can catch up with the video of PMQs here via the BBC website, the audio here via the Guardian, or read the Hansard transcript of Nick’s exchanges below:

Mr. Nick Clegg (Sheffield, Hallam) (LD): I should like to add my own expressions of sympathy and condolence to the family and friends of Captain Tom Sawyer, Marine Danny Winter and Corporal Richard Robinson, all of whom tragically lost their lives in Helmand province this last week. I should also like to join in welcoming the inauguration of President Obama, and I especially welcome his early announcement of the suspension of all military tribunals at Guantanamo Bay.
The British economy is now standing at the edge of a cliff. It is clear that international markets believe that many of our banks are effectively broke, and that is pushing confidence in the pound and in the Government’s finances to an all-time low. Will the Prime Minister accept that his announcements and half-measures have created confusion and uncertainty, when the country desperately needs clarity and certainty at this very dangerous time?

The Prime Minister: I shall just repeat what Richard Lambert, the head of the CBI, said. He said that these measures
“if fully implemented…should stem a further downward recessionary spiral and provide a stable economic platform on which the UK can trade through this difficult period.”
The right hon. Gentleman has to understand that we have done three things. The first is that we have recapitalised the banks to stop them collapsing. We have done that not to help bankers but to ensure that people who rely on the banks, and who have their savings in them, can be secure.
The second thing that we have done is give real help to families and businesses through this difficult period, when it is right that the Government should intervene; only the Conservative party seems to oppose that. The third thing that we have done is take measures to extend lending to businesses and families. Lending to businesses now takes the form of the Bank of England being in a position to lend to non-bank institutions and to lend directly to companies through the corporate bond market. We have created the asset insurance scheme so that we can give more certainty for the future about how we will deal with the problem of assets. All those things are done so that the banks can be stronger to extend lending. I believe that that the right hon. Gentleman will find that other countries around the world are doing the same.

Mr. Clegg: I am grateful to the Prime Minister for his reply, but does he not see the extreme danger in any remaining ambiguity in the Government’s response? Does he not agree with me, and the Chair of the Treasury Committee, that that must now mean the full, if temporary, nationalisation of our weakest banks without any further delay?

The Prime Minister: The issue is the extension of lending; that is the issue before us. The agreements that we have signed with the banks already are, I believe, agreements that are being honoured at the moment. I have to say to him that the problems is that when the banking crisis started, foreign banks that were operating in Britain reduced their capacity in Britain. Non-banking institutions that were lending in Britain for mortgages and companies reduced their capacity, so even if the Royal Bank of Scotland, Lloyds TSB, Barclays or those other banks increased the capacity substantially, we would have suffered a loss, just as every other country has suffered a loss of foreign capacity. That is the problem that we are trying to deal with. The problem is the resumption of lending; that is still the problem that has to be dealt with, whatever the status of the banks.