The government’s decision to hand over tough new banking regulation controls to the Bank of England will help solve the economic crisis, Marlborough’s Tory MP and former banker Claire Perry has declared.
Taking part last night (Thursday) in a TV Newsnight debate on the fifth anniversary of the collapse of Northern Rock, she insisted that this was the right policy being enacted with new legislation by Chancellor George Osborne.
And she rejected calls for a major change in Government policy in borrowing more to boost the economy out of the present double-dip recession, which has created divisions in the Tory party.
Financial Times economist Martin Wolf, with whom Mrs Perry clashed, interjected: “The government can now borrow at the least interest rates in the entire history of the United Kingdom…and you’re telling me that it can’t borrow. That’s completely mad.”
Asked by presenter Emily Maitlis whether the government recognised now that the next generation will be worse off, Mrs Perry replied: “These are all important policy choices we have to make.”
“To go back to the Northern Rock thing again, where was the common sense in government, in the regulators when mortgages of 125 per cent of someone’s assets (were being offered), where did the policies fit, where was the reality?
“Again, you had Mr Darling (the former Labour chancellor, also on the programme) talking about wouldn’t it be lovely if we could be spending more money on fiscal stimulus…where does that money come from?”
“Is it right – and I think Martin (Wolf) is going to disagree with me, as he always does – to burden the next generation with this generation’s debt?”
“It would have been lovely to have money in the bank to do something when a financial crisis hit them but because of the policy decisions of Alistair Darling and Gordon Brown there was nothing left in the coffers, the coffers were bare.”
“So what are the policy choices now?”
“The choices are to make sure the banking industry is safe and well regulated and taxed and that people who have mis-sold pensions or fiddled the LIBOR (lending) rate are prosecuted, which they can be under the present system. And to make sure that that utility works for the benefit of all of us.”
Mrs Perry, who worked for George Osborne before being elected MP for Devizes, ignored the fact that the Tories opposed bank regulation when it was original proposed by the last Labour government.
Asked if the Conservatives had ‘completely missed what was happening when she was an advisor to Mr Osborne when Northern Rock collapsed’, Mrs Perry said the regulatory system set up by Labour failed to spot what was happening.
“This was a commonsense failing,” she added. “Northern Rock was too good to be true. It was a very small institution that grew very rapidly and had a business model that should have been flagged up as risky.”
“When the crisis hit five years ago everybody went like that (she waved her hands), nobody knew who was going to be in charge and there has been a lot of criticism of that.”
“One of the things we have done is say banking is an important thing, there is this huge need for banking services across the world, it is a very important institution for Britain. It has to be regulated better.”
