Prime Minister's question asked in the House of Commons, by Harry Cohen (Labour). It was answered on Wednesday, 11 March 2009 on behalf of the Prime Minister.

Engagements

Question: Why do the Government think that banks are best run in private hands? Why do they favour a return to private investment banks rather than a state investment bank? If banks are too big to go bankrupt, surely it is in the public interest that they are run properly, rather than have public ownership of their private bad debt.

Answer: I know that my hon. Friend has not come to these views just in the last few months, but has held them for some time. For the first time, we have insisted that banks give us a quantitative figure for the amount of lending that they will do. This is essentially a lending agreement between Government and the banks that requires the banks to do a particular amount of lending. The Royal Bank of Scotland, in which we have more than 80 per cent. of shares, has agreed to £25 billion of extra lending this year and next year; Halifax Bank of Scotland Lloyds TSB has agreed to £14 billion of extra lending on top of its previous commitment; Northern Rock has agreed to £9 billion. This is an example of how, having learned the lessons of the last few years, we are determined to insist that the banks do their duty by the public.

Secondary information