Lord Jones of Birmingham would be the first to admit that he is no politician. A successful, charismatic and straight-talking businessman, yes, but without allegiance to any party or indeed with no need to win elections.
It was with this in mind that questions were asked about how long he would last when he joined Gordon Brown’s Government. We know now that Lord Jones will be standing down soon as Trade Minister, but he is clearly not going to leave without imparting a few home truths.
His denunciation yesterday of plans by the Irish government to guarantee bank deposits in the present financial crisis, regardless of the amount involved, and his announcement that Britain would not follow suit brought some welcome common sense to an increasingly bizarre turn of events. It is highly unlikely that the Irish government could find enough money to compensate investors if all of the country’s banks folded – certainly the UK Government could not come anywhere close to delivering on a commitment to underwrite all bank accounts.
And even if, in the realms of fantasy, every financial institution in the country collapsed, the Government would be in no position to help because the entire fabric of the free market system and of our way of life would have collapsed also.
Naturally, if Lord Jones had a politician’s instinct, he might not have been so frank. When governments across Europe and in America scrabble to say they will guarantee people’s savings they do so not in any practical sense of ever being able to deliver on their promises but solely to shore up confidence in the banking system. Here in Britain, the spectre of Northern Rock being brought down by queues of depositors demanding their money chilled the hearts of MPs and ministers who determined that such a thing should not happen again.
Lord Jones also makes a pertinent point about the dangers of scapegoating the entire financial services industry over the credit crunch. This is something that has also been picked up by Gordon Brown and David Cameron who both see the dangers of panic-inspired legislation to control the activities of banks and other institutions. The last thing the battered banking sector needs at the moment is knee-jerk Government regulation that will stand in the way of progress when economic recovery finally arrives.