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15 Oct 2008 : Column 801

Let us tackle the issue of intention. Lord Denning explained that no act is punishable if it is done involuntarily. In this context, an involuntary act—some people prefer to speak of it as automatism—means an act that is done by the muscles without any control by the mind, such as a spasm, a reflex or a compulsion. However, that does not apply to the hundreds of thousands of people up and down the country, including some of my constituents, who do not pay some of their bills unintentionally. They may not have the money or they might have lost the documents, but they do not have non-intentionality as a defence. Its main application seems to be to rape laws.

Victims in all the cases that I have referred to and which have led to the sleepwalking acquittal have told of the perpetrator being rough and violent. A rapist, whether sleepwalking or not, is a danger to the public, most often to women, and acquittal is not acceptable. It is not right that the rapist walks free. If a rape has been committed, a guilty verdict should be delivered. The judge should then decide the sentence based on consideration of the factors, but a rapist sleepwalker should be deemed a danger to women and not allowed to walk away scot-free.

I am concerned about the current legal precedent. Anybody up in court on a rape charge could get a few friends and family to claim that he sleepwalks, and he will almost certainly get off. Rape is traumatic and damaging to the victims. As well as suffering the physical assault, they also suffer emotionally, often taking on the guilt of feeling that they cannot get justice. Women often say that only after a conviction can they properly absorb the fact that the rape was not their fault. That is why the 6 per cent. rate of successful prosecutions is so appalling. There is a general feeling among women that reporting rape is a waste of time, and that the process is horrendous. There is certainly a substantial level of non-reporting. In these days of DNA testing, a successful prosecution rate of less than 6 per cent. shows a criminal justice system that is not trying.

The organisation Women Against Rape has issued a press release in support of the Bill, but it also draws attention to an even bigger loophole: the defence of belief in consent, which invariably is based on an assault on a woman victim’s sexual history. I wish that I had more time to go into it, but that is a crucial loophole that causes women to come under attack again, and it needs to be closed.

The system is also very poor in dealing with the complaints process, which is very badly administered. All of that needs to be addressed properly if rape cases are to be taken seriously in this country.

Question put and agreed to.

Bill ordered to be brought in by Harry Cohen, Mrs. Linda Riordan, Ms Dari Taylor, Siobhain McDonagh, Joan Ryan and Chris McCafferty.

Rape (Defences)

Harry Cohen accordingly presented a Bill to amend the Sexual Offences Act 2003 to prohibit the use of a defence of sleepwalking in proceedings relating to the offence of rape; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 17 October, and to be printed [Bill 153].

15 Oct 2008 : Column 802


HM Treasury

Motion made, and Question proposed,

12. 43 pm

The Financial Secretary to the Treasury (Mr. Stephen Timms): The purpose of this motion is to provide repayment of recent advances from the Contingencies Fund, and resources for the recapitalisation programme announced in recent days. It introduces an out-of-turn supplementary estimate for Her Majesty’s Treasury to allow the repayment of the £4.6 billion advanced from the Contingencies Fund on Monday 29 September relating to Bradford & Bingley, together with the £600 million advanced on Wednesday of last week relating to UK subsidiaries of Icelandic banks. It also provides for the £37 billion announced by my right hon. Friend the Chancellor on Monday of this week for bank recapitalisation.

The House knows of the current situation in the financial markets, and it knows that we have acted quickly in recent weeks to support the depositors of Bradford & Bingley, and of the two Icelandic institutions, Kaupthing Singer & Friedlander and Heritable.

Mr. Peter Bone (Wellingborough) (Con): On a small technical point, the Minister has introduced the main provision, but he has not mentioned the increase in resources. Is he sure that the increase will be enough to cover what is proposed?

Mr. Timms: Yes. As I have set out, we are doing two things under the motion: we are replenishing the Contingencies Fund, which has been used for Bradford & Bingley and the Icelandic banks, and providing the resources for the banks’ recapitalisation. I will give a little more detail about that in a moment.

In the case of Bradford & Bingley and the Icelandic banks, we took action on the advice of the Bank of England and the Financial Services Authority to secure stability in the financial system. The action that we have taken demonstrates clearly the Government’s commitment to doing whatever is necessary to ensure stability, while protecting consumers and safeguarding the interests of the taxpayer.

Sometimes, expenditure is so urgently required that it cannot wait for the voting of provision under the normal Supply procedure. That is why the Contingencies Fund was put in place. I hope that the House will agree that on the occasions when the Contingencies Fund has been used, it has clearly been appropriate to do so. The Contingencies Fund is limited by statute to 2 per cent. of the total amount released as cash from the Consolidated Fund in the previous year—that is, the total of all net cash requirements. On that basis, some £8.1 billion was available in the Contingencies Fund at the start of the financial year. The advances that we have drawn from
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that fund of £4.6 billion and £600 million leave the fund at a low level, in historical terms. That does not take account of any further call that Departments might need to make on the fund, as they sometimes do.

In the normal course of events, the Treasury would present any winter supplementary estimate in the middle of November, alongside the supplementary estimates of other Departments. The passage of the related Appropriation Act would follow in December, with Royal Assent taking place in the middle of December. Only once all stages had been completed in both Houses would the advance be repaid to replenish the Contingencies Fund. This motion allows us to restore the level of the Contingencies Fund now, so that it stands ready to be used again if required.

As the House knows, over the weekend we negotiated with the banking sector a £37 billion recapitalisation package. This supplementary estimate also provides the Treasury estimate for that spending. Clearly, at £8.1 billion, even the resources of the Contingencies Fund are insufficient for that package. We are taking this opportunity to ask Parliament’s approval for that spending, rather than waiting for the normal supplementary process in December, because expenditure may well need to be incurred before the middle of December, when Royal Assent would be obtained.

Finally, Her Majesty’s Treasury is seeking a token £1,000 increase in resources to indicate the change to the Treasury’s ambit. Elsewhere, we set out what the money can be spent on. That is perhaps the point that the hon. Member for Wellingborough (Mr. Bone) raised. It is a token amount. The remit has been expanded, as it needed to be to cover support to the financial sector of the kind that my right hon. Friend the Chancellor announced. It is normal, albeit perhaps slightly arcane, procedure to present token increases when ambits change in such a way. I commend the motion to the House.

12.48 pm

Mr. David Gauke (South-West Hertfordshire) (Con): I am grateful to the Financial Secretary to the Treasury for setting out the purposes of the motion. As he says, essentially it enables the Government to restore the money in the Contingencies Fund, following the expenditure in relation to the recapitalisation of Lloyds TSB, HBOS and the Royal Bank of Scotland, and in relation to Bradford & Bingley and the Icelandic banks.

Of course, we on the Conservative Benches support recapitalisation of the high street banks, which accounts for the majority of the funding, and we recognise the particular issues relating to the Icelandic banks and Bradford & Bingley. We have said throughout that we are keen to work on a bipartisan basis. None the less, this is a huge expenditure and it is right that we have an opportunity to scrutinise and question it.

Several of the questions that arise have not been answered as fully as they might have been, and I shall raise some of them with the Financial Secretary. I appreciate the prudence of the Government in seeking to restore the Contingencies Fund now rather than waiting until December, but it might be helpful if the House had the answers to some of our questions, so
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that we know where taxpayers’ money will go. The sums are huge—£42 billion will double the borrowing that the Government previously proposed—and we need to know how it will be accounted for. The US had lengthy debates on these matters, although we do not want a repeat of the uncertainty that they created. In any case, we work on a different basis in the UK, but it is right for the House to have an opportunity to ask some questions.

We need further clarity on the issue of the Government’s acquisition of ordinary shares. When the Chancellor made his statement on 8 October, on the banks that would qualify for the recapitalisation provided by the taxpayer, it looked as though the investment would be made through preference shares. The Chancellor set out his priorities and said that £25 billion would be used to acquire preference shares. He stressed that those would rank above ordinary shares and have better protection against future losses. It was also made clear that further capital would be made available, and I acknowledge that he recognised the possibility of the acquisition of ordinary shares. However, the Treasury memorandum made it clear that the Government will acquire £28 billion of ordinary shares in RBS, HBOS and Lloyds and £9 billion of preference shares. That is a substantial change from what was envisaged on 8 October.

On 13 October, the Chancellor explained this by saying:

between ordinary and preference shares—

He added that he was acting on proper advice. That is clearly a change in approach and it would be helpful to the House to hear an explanation of that change. Is it the fear that the deal will involve no dividends until the preference shares are paid off, so that would have an adverse effect on the share prices of banks? Or is it, as The New York Times suggested, that the banks’ memorandums and articles did not allow the issuing of enough preference shares to boost the banks’ capital ratios to the required levels? The Chancellor referred to proper advice, and it might be helpful if the House could see that advice. That change has put the taxpayer in a different, and arguably worse, position. I am willing to be pragmatic about this issue, but we need to know the reason for the switch.

Each bank is paying a 12 per cent. interest rate on preference shares. It has been argued in newspapers and elsewhere that the risk profiles of the three banks are different. Given the scale of the investment in RBS compared with Lloyds TSB, and the different risk profile, why was the same interest rate required?

Another change in approach seems to have occurred in relation to board representation. On 8 October the Chancellor said:

Now we will have five members on bank boards. I do not necessarily disagree with the proposal, but it would be helpful to know why there has been a change in approach. Will it be their role to enforce the various
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conditions imposed on the banks by the Government? How will those directors work, given that the Government are keen to have an arm’s length relationship with the banks? Will the Government directors serve on the remuneration committees, for example? The remuneration policies of banks are causing concern, but it is a particular issue for banks that are partially nationalised. We know that cash bonuses will be curbed, but I hope that the Financial Secretary can provide greater detail on the Government’s attitudes to share options for senior and not so senior bank employees.

Confusion has also arisen over lending conditions, as my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) said at Prime Minister’s questions. The Treasury statement on 13 October stated:

We recognise that the purpose of the intervention is to unfreeze the lending market, but does that mean that the Government wish to maintain the same level of borrowing as in 2007? They appear to have backed down from that and now place great stress on the word “availability”, but do they envisage that the partially nationalised banks should offer the same types of products as were offered in 2007? Will we see the return of 125 per cent. mortgages, for example? After all, 2007 was part of the age of irresponsibility—to coin a phrase. Do the Government really intend a return to those times? I suspect that it was merely spin, but it puts the Government in an awkward position. They are either guilty of spin or guilty of encouraging a return to irresponsibility. Which is it?

Mr. Bone: My hon. Friend is making a powerful speech, but is not the situation even worse? Term 6 of the share placing agreement talks of lending at “at least” the level of 2007, which suggests that the level should be even greater.

Mr. Gauke: I am grateful to my hon. Friend for pointing that out. It is further suggested that those levels should be maintained for three years. The Government are trying to retreat from that statement as quickly as they can, and the stress is being put on availability and marketing activity. However, greater clarification would be helpful. We welcome the unfreezing of the credit market as that would be helpful, but a return to 2007 levels would be grossly irresponsible.

Earlier today, the Leader of the House referred to trying to re-establish reasonable rates for lending to small businesses and households, but that is not how the policy was presented earlier this week. There is clearly some confusion, which brings into question whether the Government appreciate some of the lessons that they should have learned from 2007 and before.

On the treatment of home owners, the Treasury statement of 13 October said:

We recognise and appreciate that point, but we must bear in mind the case of Northern Rock, which has been nationalised for some time. From December 2007 to June 2008, the percentage of its properties in possession increased from 0.29 to 0.56 per cent. That is a substantial
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increase, and it is particularly striking compared with the 0.16 per cent. figure for properties in possession for mortgaged homes as a whole. Again, clarification would be helpful. Will the partly nationalised banks, and in particular their mortgage arms, take an aggressive approach to repossessions? Is it the intention that they will take a more generous approach than the market as a whole, or will they, like Northern Rock, take a more aggressive approach? Again, it would help the House if we had further details.

Earlier, I touched on the implications for the public finances of those items of expenditure, and I ask again how the Government anticipate that that expenditure will be treated. Will it be treated as borrowing, and will it be treated as part of the public sector net debt? We know that the Office for National Statistics will make a determination on that point, and it looks likely that the expenditure with regard to the high street banks will be treated in such a way. If that is the case, public sector net debt will be at around 50 per cent. of GDP, a percentage which it has not reached since 1976. Where will that leave the sustainable investment rule? We debated that matter last week in the House of Commons, and it appears that the sustainable investment rule has been blown out of the water. The Government were likely to breach the rule notwithstanding Northern Rock—if one includes Northern Rock, they are already in breach—and these particular measures. The sustainable investment rule appears to have been broken. Have the Government abandoned it? It is about time that this House knew the answer.

Have the Government made any assumptions on when the preference shares will be paid off? Have they made any assumptions on when they will be in a position to dispose of the ordinary shares? I appreciate that no precise answer can be given, but are they working on any assumptions at all? Given that we are discussing very substantial items of expenditure, how will that expenditure be accountable to this House? Will we have an opportunity to review, debate and, if necessary, vote on any progress in reducing the level of preference shares and ordinary shares? What opportunities will there be to debate particular policies pursued by banks in the light of their partial nationalisation, over and above the usual methods such as Treasury questions?

On the Icelandic banks, the supplementary estimate refers to £600 million, which relates to the payment to ING under the Transfer of Rights and Liabilities to ING Order 2008. That relates to the transfer of retail deposits of Kaupthing, Singer and Friedlander and of Heritable, as the Financial Secretary has mentioned. As far as I know—I am willing to be corrected on this point—this is the first time that this House has had sight of that figure. The Financial Secretary will correct me if I am wrong, but the figure of £600 million has certainly not been referred to very frequently. We have frequently heard about the £100 million loan—indeed, the Leader of the House referred to it earlier today—but the £600 million figure is new. If it is possible to obtain more details about what that involves and how the Government hope to get their money back—if, indeed, they hope to get their money back—we will be grateful. Equally, on the figure relating to Bradford & Bingley, more details about when and how the Government intend to get their money back would be appreciated.

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We all agree that the financial crisis is extraordinary. Some Labour Members, not many of whom are present in the Chamber today, view the measure as a triumph for the Prime Minister. We do not view it as such, although we have been prepared to work with the Prime Minister and the Government to address particular concerns. Finally the bills for the Brown boom have had to be paid. For years, the Prime Minister declared at every opportunity that there would be no more boom and bust. In an interview in the Daily Mail at the weekend, he said:

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