Lord Thurso backs Mervyn King’s financial demergers stance during Commons economy debate
Call to split Lloyds and make Bank of Scotland independent
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The UK Government was urged last night to undo the Lloyds TSB merger and make the Bank of Scotland independent.
Speaking in the Commons, Liberal Democrat business spokesman John Thurso asked ministers to heed Bank of England governor Mervyn King’s call for banks to be split up so none are seen as “too large to fail".
The Caithness, Sutherland and Easter Ross MP spoke during a debate on the economy.
Lord Thurso is a member of the Commons Treasury committee and a longstanding supporter of having separate high-street banks to handle consumer banking and support for smaller businesses, and merchant banks engaged in riskier commercial operations.
He said: “I would start – I encourage the Treasury to think about this – by taking Bank of Scotland out of the Lloyds group and putting competition into Scotland by making it independent. I suspect that Europe may well ask the Treasury to do that anyway.”
He said later he had repeatedly opposed the takeover of Halifax Bank of Scotland by Lloyds when the banking crisis started, and firmly believed that if its crash had occurred after the government had to mount other rescue operations later, the takeover would never have taken place.
He said a demerger of the Bank of Scotland element would meet EU concerns about market dominance, save banking jobs in Scotland, and give consumers and local business people in Scotland more choice. At the same time it would help Lloyds TSB to return to good health.
Meanwhile Lib Dem Scottish affairs spokesman Alistair Carmichael urged the government to intervene in the row between Lloyds TSB and the independent Lloyds TSB Foundation for Scotland, a charity which has warned there are seven weeks left before it will have to be wound up. He warned there would be “a massive loss to many charitable and voluntary organisations across the country if that dispute is not resolved”.
He told government business manager and deputy Labour leader Harriet Harman during questions on future business: “Surely this wasn’t what ministers had in mind when they put well over £20billion of taxpayers money into Lloyds TSB.”
Ms Harman said only that she would consult on whether to raise the matter with ministers responsible for charities in the Cabinet Office or the Treasury.
Mr Carmichael said later: “Financial assistance from the Lloyds TSB Foundation for Scotland is absolutely crucial for many charities and voluntary organisations.
“The government owns 43.5% of the Lloyds TSB Group and must accept their responsibility and sort this mess out.”
The charity closed its doors to new grant applications indefinitely earlier this week.
