Mr Peter Hain (Neath) (Lab): Why does the Chancellor think he is so right, and Keynes wrong?
Mr Osborne: We have drawn on the best economic evidence that the recovery from a banking crisis of the severity that we went through is long and protracted, but we have to de-lever as an economy and try to fix our banking system. That is what I set out at the Mansion House. We also have to have a credible fiscal policy in order to allow monetary policy to be loose. I think that is the best economic approach.
Mr Peter Hain (Neath) (Lab): Does the Chancellor accept that public confidence in his Government, the Crown Prosecution Service and the police will be totally destroyed if no prosecution results for the bankers who rigged the LIBOR rate? Whatever the specifics of banking legislation, an offence has been committed—conspiracy to defraud—and that is what the police should be investigating in a criminal investigation.
Mr Osborne: The Serious Fraud Office is absolutely independent of Government, but it will be in no doubt that this House and the Government want to ensure that the law is properly enforced and that if there are legal avenues that it can explore, it should use them. We must accept that the Financial Services Authority, which is also a prosecuting authority in respect of financial crime, does not feel that it was given enough powers to undertake a criminal prosecution, as Lord Turner has said very clearly. That is why I want to give the regulators the powers they need. Instead of spending two or three years getting to that point—a long public inquiry would take a year or two, after which the Government would go away, consult, publish a White Paper and introduce legislation, and it would be 2015 or 2016 before we did anything—I propose that we use the Financial Services Bill that is already before the House and next year’s banking Bill to put things right.