What Peter Lilley said about the FSA

I don't make a habit of raking over the history of ten years ago or more, but just occsionally Labour ministers should be challenged on their constant re-writing of history. Usually Labour do this so they can peddle scare stories about the Conservatives which have no more basis as a description of David Cameron's Conservatives today than the new Labour narrative of the past has to historical fact.

A good example was Question Time on Thursday night, when Labour minister Tessa Jowell made a number of wild and inaccurate allegations about the record of past Conservative governments and the comments made by past Conservative opposition spokesmen.

For instance, she said to Ken Clarke something along the lines of

When you were Chancellor there were no controls on the financial system at all.

(I've not used inverted commas because I can't swear those were the exact words she used, but that is definately the meaning of what she said.)

In fact the Bank of England was responsible for the supervision of the banking and financial system when Ken Clarke was Chancellor, and had made a much better job of it for the previous two centuries than the FSA has over the past decade.

It was also alleged that the Conservatives had not seen the present problems coming. Now, although David Cameron has apologised for the fact that the Conservatives did not warn more loudly about the problems we are now experiencing, it isn't true that we didn't give any warnings at all. I am grateful to Conservative Home and Iain Dale for pointing out what Peter Lilley said as Shadow Chancellor about Gordon Brown's decision to take banking supervision away from the Bank of England in 1997:


"With the removal of banking control to the Financial Services Authority...it is difficult to see how and whether the Bank remains, as it surely must, responsible for ensuring the liquidity of the banking system and preventing systemic collapse.

The coverage of the FSA will be huge; its objectives will be many, and potentially in conflict with one another. The range of its activities will be so diverse that no one person in it will understand them all.

The Government may, almost casually, have bitten off more than they can chew. The process of setting up the FSA may cause regulators to take their eye off the ball..."

Seems to me that Peter made a pretty good prediction of what has now happened.

Comments

dave said…
But what did anyone else say? Lilley was slightly prescient then, but the Bank of England hadn't exactly covered itself in glory. Also, the key problems recently were out of control government spending, massive asset inflation and an uncontrollable credit boom. The government could have done something about them, and the Tories could have said what needed saying about them. But in reality the Tories under Cameron just talked about how they would spend the money.

Would things really have been much different if the Tories had been in power?

Even more pertinent. what will the Tories do now?
12:20 am
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