This week’s return to Westminster after the long summer recess was always going to be eventful but few MP’s could have predicted they would return to arguably the most severe financial crisis since the 1930’s.

Just as in 1933, the current banking crisis began in America and like 75 years ago when the US Government had to step in and pass the “Glass –Steagall Act” to save Wall Street so President Bush proposed a similar measure.

Indeed whilst we sat back in amazement to see the world’s richest nation almost brought to its knees by what could only be described as a mixture of corporate greed and incompetence many said ‘it won’t happen here!’. After two attempts both Congress and the Senate passed a bill to purchase US bad debts for some $700 billion and the UK sighed with relief.

That relief was short lived as the disease which affected Wall Street came with a vengeance to Threadneedle Street. Would our Prime Minister and his Chancellor be up to the task of returning stability to our banking system or would we see the unthinkable – high street banks going under with all that would mean to individuals and to local business?

The tension at Westminster was palpable.

Monday saw confusion and obfuscation as Governments across Europe seems incapable of getting their act together. The Irish were condemned by the Germans for breaking rank and protecting all savers money (thank goodness said my aunt as she had only recently moved money from the mattress to the bank!); the Germans then appeared to follow suit as one of their banks came under pressure; the French sought help from the Spanish as the Belgians continued making chocolates! So much for ‘entente cordiale’!

By Tuesday matters were getting worse. Some MP’s were returning to their constituencies, not to prepare for government but to remove their savings to safer places. Meanwhile all eyes were on Brown and Darling – when would they act? Did they have a plan? Would it work?

Advice came thick and fast from every financial commentator, most of whom did not seem to grasp the irony that to a man (usually men) they had failed to warn anyone of the banking apocalypse that had descended. By the evening the Westminster village had worked itself into a tantrum. ‘When will the Government stop dithering and act?”

By late evening the announcement came. Like Baldrick of Black Adder fame – Chancellor Darling had a cunning plan which he would announce at 9.00am on Wednesday to the City. That meant of course he would brief all the broadsheets for their first editions and the rest of the media. Such is the way of confidentiality these days.

The plan was big, bold, brave and some said it might even work – praise indeed for a Prime Minister and Chancellor who a week earlier were about to be turfed out of office by their own colleagues!

At noon on Wednesday, in true Hollywood style both ‘Sheriff’ Brown and ‘Marshall’ Darling appeared in the Commons to announce what was a truly remarkable response to the current crisis. The immediate cut in interest rates of 0.5% was overshadowed by the sheer size and nature of the rescue plan. No less than £500 billion was involved – some £10,000 for every man and woman in the UK.

By the time the trusty duo sat down with near universal praise ringing in their ears – I as a tax payer had become part owner of all our major banks – even one in Iceland. Gordon Brown had hailed the deal as “Extraordinary times for bold and far reaching solutions” and he was right. Whether the solutions will work or whether he has been bold enough only time will tell.

However in the space of a few hours the political norms that guide politics at Westminster were turned upside down. Here was a Labour Government part nationalising the banking system with support from both Conservatives and Liberal Democrats. At the same time George Osborne was attacking City ‘fat cats’ and demanding greater government control over boardroom pay – as Darling defending the market and refused to meddle in board room affairs. Quite what Dennis Skinner and his far left comrades made of it all I do not know!

I could not remember a more dramatic time in the Commons since I became an MP. To see history repeat itself after 75 years was uncanny; to see political norms reversed was uncanny; let us hope that we have all learnt a lesson from this crisis.

After all the price many have had to pay for the incompetence and greed of the city slickers on both sides of the Atlantic must not be repeated.

Phil Willis MP

Harrogate and Knaresborough
Chair of Innovation, Universities, Science and Skills Select Committee

October 2008
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