Brown: it is right for Crosby to resign
Updated on 11 February 2009
The Prime Minister tells MPs at prime minister's questions that it is "right" for Sir James Crosby to resign, as he again ignored David Cameron's requests for him to apologise for the economic downturn.
Brown v Cameron
Labour's Khalid Mahmood (Birmingham Perry Bar) started prime minister's questions by raised the resignation of former HBOS chief executive Sir James Crosby as deputy chairman of the Financial Services Authority, saying his constituents were "fed up with irresponsibility from the bankers" and mistakes which were costing the country millions.
Mr Brown told him: "It is right that we investigate serious allegations that are made about the banking system.
"These are serious but contested allegations. In relation to Sir James, these are allegations that he will wish to defend. So it is right that he has stepped down as vice-chairman of the FSA.
"It is important that the FSA show at this time that it is operating to the best standards possible.
"The Walker review that has been set up will look at exactly these matters, of risk management, remuneration and the performance of boards.
"I believe the system of regulation in this country can and will be improved."
Mr Cameron said: "Let's be clear about what has happened. In the last half hour Sir James, the man who ran HBOS and who the Prime Minister singled out to regulate our banks and to advise our Government, has resigned over allegations that he sacked the whistleblower who knew his bank was taking unacceptable risks.
"Does the prime minister accept that it was a serious error of judgment on his part to appoint him in the first place?"
Mr Brown said allegations brought before the treasury select committee were independently investigated by KPMG in 2005.
"The allegations made by Mr Moore [the sacked whistleblower] were found not to be substantiated.
"However, it is right that when serious allegations are made they are properly investigated.
"No doubt the treasury select committee will want to look at them. No doubt the Conservative party will want to wait to see how that investigation takes place.
"The Walker committee will look at every aspect of banking regulation, which we know can be improved.
"The unfortunate thing is that every time we call for more regulation the Conservative party has called for less."
Mr Cameron said: "The prime minister talks about the KPMG investigation. But it was after that investigation this bank virtually went bust.
"Taxpayers have poured billions of pounds into this bank and not only was Sir James appointed as one of the top regulators in the country - and I have to say knighted by the prime minister for his services - the prime minister have been relying on him for economic advice."
Mr Cameron went on: "Sir James was the man who was going to sort out the mortgage market.
"Will the prime minister confirm that as well as standing down from the FSA, Sir James is no longer one of his advisors?"
Mr Brown replied: "Sir James Crosby did two reports - one for the Chancellor on mortgages and one for me, when I was Chancellor, on security issues.
"He has completed these reports. He is no longer an economic adviser of the Government and has only been so in the context of doing two reports.
"We are facing very big issues in the economy at the moment and I think the way the Conservative party wants to trivialise them does no merit to the Conservative party."
"Sir James Crosby has had the decency to resign. Why can't the prime minister have the decency to admit he got something wrong?"David Cameron, Conservative leader
Mr Cameron retorted: "There is nothing trivial about asking the prime minister about the man he appointed to regulate the banks. Why can't the prime minister just admit for once that he made an error of judgment?
"Isn't this part of the prime minister's problem. Sir James Crosby has had the decency to resign. Why can't the prime minister have the decency to admit he got something wrong?
"No apology about boom and bust. No apology about Britain being better prepared. Even the bankers have apologised. When is the prime minister going to?
"Wasn't it a misjudgment to appoint Sir James to all those roles?"
Mr Brown replied saying: "Yesterday he heard the four leaders of the two major banks that were brought to the point of collapse, apologising for what they had done.
"If we had not stepped in to save the banks, I would have had to apologise for not taking the action that was necessary. But we took the right action."
Mr Brown said the Tories had opposed all the action taken by the Government over the last year.
"On Northern Rock, we nationalised a year ago, they opposed the measure. On the fiscal stimulus, where every other country in the world is acting, he opposed the measures we took.
"I think he has got to answer to the House himself for what he have got wrong," he told the Opposition leader.
Mr Cameron said it had been the right judgment to vote against the Government's VAT cut.
"The prime minister says these banks collapsing was nothing to do with him. But let's look at the judgments he made as Chancellor.
"Who gave us the biggest budget deficit in the developed world? He did. Who left us the most personally indebted country in the world? He did. Who set up the regulatory system that has failed? He did.
"The prime minister and the Chancellor have told us repeatedly that the economy will start to grow again at the beginning of July.
"The Schools Secretary [Ed Balls], the man who was the prime minister's chief economic adviser at the treasury for so many years, says, and I quote, 'we are heading for the worst recession in 100 years'. Does the prime minister agree with him?"
"In the decisions he has made on the global financial crisis, they have been wrong, wrong and wrong every single time."Gordon Brown, prime minister
Mr Brown sidestepped the question, saying: "Let's look at the judgements he mentioned."
"On VAT, the governor of the Bank of England and the Institute of Fiscal Studies have just said it was the right decision to make. There is more money in people's pockets as a result of it.
"It's only the Conservative Party that have always put up VAT that believe that the answer can never be to reduce it.
"We've introduced a loan guarantee scheme for business that is £1bn. We've introduced a Bank of England facility, that will start on Friday, that is £50bn. 56,000 companies have already benefited from the schemes we have brought in.
"If we had taken the advice of the Conservative Party no money would have been used. As Barack Obama said only yesterday - doing nothing is not an option."
Mr Cameron said the Dutch had criticised the VAT cut as "not a very wise thing to do," while the Germans had said the debt would take a generation to pay off, and the French president "said the prime minister is, and I quote, ruining the British economy and he won't be repeating Gordon Brown's mistakes"
"What 'mistakes' was he referring to?"
Mr Brown taunted Mr Cameron about shadow business secretary and pro-European Ken Clarke's views on the VAT cut.
"The one pro-European you didn't mention who supported the VAT rise was the shadow, shadow chancellor.
"It is remarkable that at the point where we need an injection of resources most into the economy, the Conservative party is setting its face against ordinary families in this country having £20 more a month in their pockets.
"The people of this country will remember they opposed the VAT cut, they opposed the rise in pensions, opposed the rise in child benefit, they opposed the extra billions that we are spending on public investment and they did so in circumstances where they know we have one of the lowest public debts of major countries in the world."
Mr Cameron said the Prime Minister could not get his facts right. "We have the biggest budget deficit of any country outside Egypt, Pakistan and Hungary.
"[Ken Clarke] voted against the VAT cut in this house.
"He told us the other day you were like Titian aged 90. The fact is Titian died at 86" he added to Tory laughter.
"What we can see in the government's response to this recession, they have appointed the wrong people, they have made the wrong decisions, they can't give us a straight answer about the mess we are in.
"They never apologise for anything. Now everyone can see the price that's being paid by thousands of businesses going bust and people being made unemployed, up and down our country.
"Isn't it clear that incompetence plus arrogance equals two million unemployed."
Mr Brown quoted Mr Cameron at the Conservative conference: " 'Everybody knows that businesses need deregulation. Who is standing in the way, the great regulator Gordon Brown'.
"He then went on to say we had to deregulate the wealth creators. At this point when he is now calling for more regulation, perhaps he would be honest enough to admit that he was calling for the last few years for total deregulation in many of the systems in this country.
"As far as judgment is concerned, his judgment on Northern Rock was to let it collapse, his judgment on regulation is to deregulate as much as possible, his judgment on the fiscal stimulus is do nothing.
"In the decisions he has made on the global financial crisis, they have been wrong, wrong and wrong every single time."
Brown v Clegg
During Prime Minister's question time, Mr Clegg said: "Since the Queen's Speech a few months ago, the Government has been churning out, on average, three new announcements each and every day.
"Can he tell me how many of these new initiatives are actually being put into practice?"
Mr Brown replied: "More than 50,000 companies are benefiting from the measures that we have taken.
"These are measures that include the new enterprise scheme, they are measures that include the working capital scheme that is being opened in the next few days, and these are measures that also include what we have done with the Inland Revenue and others to help people with costs at this time.
"So I hope he will agree that not only are we helping businesses in this country, but we are also helping people when they become unemployed, because we have put in an extra £500 million only in the last few weeks to help them.
"The final thing I think he will see is that the help we are giving to people with their mortgages is designed to keep the problem of mortgage arrears and mortgage repossessions down."
But Mr Clegg urged the Prime Minister to look at some of his "big announcements".
"He said you would get the banks lending again - they aren't. He said you would get tough on bankers' bonuses, yet he's are letting them keep millions in bonuses in return for a cynical apology.
"He said he would create 100,000 new jobs yet with unemployment today standing at almost two million and rising, our young people of today are going to be tomorrow's jobless generation."
And referring to the Conservatives, he said: "It's bad enough being a do nothing party. Isn't it even worse being a say anything, do nothing Prime Minister?"
Mr Brown said the problem with bank lending was the loss of credit from foreign banks and non-banking institutions.
"Half of the lending to mortgages and half of the lending to businesses came from that source - when that source leave us - the Irish, American and other banks have left the country or have run down the capacity - the existing banks have to do more.
"I can tell him that they are lending more than they were - the banks that we have an interest in - but the problem is that we have got to build out of a gap in capacity that existed because of the loss of foreign lending.
"So I hope he will understand that that is what is happening at the moment, and we are trying to sign lending agreements with the banks.
"As for his other allegations, if I had taken his advice, we would have made the wrong decisions."
