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Session 2007 - 08
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General Committee Debates
Banking Bill

Banking Bill

The Committee consisted of the following Members:

Chairmen: Mr. Roger Gale, † Mr. Jim Hood, Mr. Eric Illsley
Barlow, Ms Celia (Hove) (Lab)
Blizzard, Mr. Bob (Lord Commissioner of Her Majesty's Treasury)
Bone, Mr. Peter (Wellingborough) (Con)
Breed, Mr. Colin (South-East Cornwall) (LD)
Eagle, Angela (Exchequer Secretary to the Treasury)
Flello, Mr. Robert (Stoke-on-Trent, South) (Lab)
Gauke, Mr. David (South-West Hertfordshire) (Con)
Hoban, Mr. Mark (Fareham) (Con)
Hosie, Stewart (Dundee, East) (SNP)
Keeble, Ms Sally (Northampton, North) (Lab)
Newmark, Mr. Brooks (Braintree) (Con)
Pearson, Ian (Economic Secretary to the Treasury)
Pugh, Dr. John (Southport) (LD)
Robertson, John (Glasgow, North-West) (Lab)
Smith, Geraldine (Morecambe and Lunesdale) (Lab)
Todd, Mr. Mark (South Derbyshire) (Lab)
Viggers, Sir Peter (Gosport) (Con)
Wilson, Phil (Sedgefield) (Lab)
Alan Sandall, Mick Hillyard, Committee Clerks
† attended the Committee


Emil Levendoğlu, Team Leader, Financial Stability — Banking Reform, HM Treasury
John Footman, Executive Director, Central Services, Bank of England
Nigel Jenkinson, Executive Director, Financial Stability, Bank of England
Dr. Thomas Huertas, Director, Banking Sector, Financial Services Authority
Loretta Minghella, Chief Executive, Financial Services Compensation Scheme

Public Bill Committee

Tuesday 21 October 2008


[Mr. Jim Hood in the Chair]

Banking Bill

10.30 am
The Chairman: Before we begin, I have a few preliminary announcements. Members may, if they wish, remove their jackets during Committee meetings. Will all Members please ensure that all mobile phones, pagers and other electronic devices are turned off or on to silent mode? If something goes off while on silent mode, I ask Members to switch it off or, if they are going to answer it, to leave the Committee Room.
There is a money resolution and a Ways and Means resolution in connection with the Bill, and copies are available in the room. I remind hon. Members to give adequate notice of amendments. As a general rule, my fellow Chairmen and I do not intend to call starred amendments, including any starred amendments that may be reached during an afternoon sitting of the Committee.
First, the Committee will consider the programme motion on the amendment paper, for which debate is limited to half an hour. We will then proceed to a motion to report written evidence, and then to a motion to permit the Committee to deliberate in private in advance of the oral evidence sessions. I hope that we can deal with that formally.
Assuming that the second motion is agreed to, the Committee will move into private session. Once the Committee has deliberated, the witnesses and members of the public will be invited back into the room and our oral evidence session will commence. If the Committee agrees to the programme motion, it will hear oral evidence this morning and this afternoon. From Thursday, we will revert to the familiar process of clause-by-clause scrutiny of the Bill.
The Economic Secretary to the Treasury (Ian Pearson): I beg to move,
(1) the Committee shall (in addition to its first meeting at 10.30 a.m. on Tuesday 21st October) meet—
(a) at 4.30 p.m. on Tuesday 21st October;
(b) at 9.00 a.m. and 1.00 p.m. on Thursday 23rd October;
(c) at 10.30 a.m. and 4.30 p.m. on Tuesday 28th October;
(d) at 9.00 a.m. and 1.00 p.m. on Thursday 30th October;
(e) at 10.30 a.m. and 4.30 p.m. on Tuesday 4th November;
(f) at 9.00 a.m. and 1.00 p.m. on Thursday 6th November;
(g) at 10.30 a.m. and 4.30 p.m. on Tuesday 11th November;
(h) at 9.00 a.m. and 1.00 p.m. on Thursday 13th November;
(i) at 10.30 a.m. and 4.30 p.m. on Tuesday 18th November;
(2) the Committee shall hear oral evidence in accordance with the following
Tuesday 21st October
Until no later than 12 noon
HM Treasury
Tuesday 21st October
Until no later than 1.00 p.m.
Bank of England; Financial;
Services Authority; Financial;
Services Compensation Scheme.
Tuesday 21st October
Until no later than 5.45 p.m.
British Bankers’ Association;
Building Societies Association;
London Investment Banking Association.
Tuesday 21st October
Until no later than 7.00 p.m.
Association of British Insurers;
Investment Management Association;
Citizens Advice Bureau;
(3) proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 155 and 156; Clauses 158 to 233; Clauses 1 to 76; Clause 157; Clauses 77 to 154; Clauses 234 to 240; new Clauses; new Schedules; remaining proceedings on the Bill;
(4) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 7.00 p.m. on Tuesday 18th November.
Thank you for your helpful guidance, Mr. Hood. It is a pleasure to see you presiding over us today. I am sure that all members of the Committee will benefit from your guidance, and that of Mr. Gale, as we proceed through the scrutiny stages of the Bill. We had an encouraging Second Reading, which reflected the widespread support, on both sides of the House, for the principles and much of the content of the Bill. However, I appreciate that there are issues of detail that deserve full consideration, and I look forward to addressing those in Committee.
On 14 October, the House agreed a programme motion that provides for the Committee’s proceedings to conclude on 18 November. On 16 October the Programming Sub-Committee agreed a programme resolution for the Committee. The resolution provides for oral evidence to be presented in two sittings today. It also provides for discussions of the Bill to take parts 4 to 7 first, minus clause 157, which relates to part 1. We will then take parts 1 to 3—that is, clauses 1 to 154 plus 157; and then part 8—that is, clause 234 to clause 240, plus any new clauses and schedules.
As I explained at Second Reading, the ordering is primarily to provide additional time to bring forward drafts of some of the key documents, including the code of practice for the special resolution regime, required under clause 5. I hope that hon. Members find the arrangements set out in the resolution satisfactory.
Mr. Mark Hoban (Fareham) (Con): I welcome you to the Chair, Mr. Hood. We look forward to working under your chairmanship, and that of Mr. Gale and, for a brief spell, Mr. Illsley.
As the Minister said in his opening remarks, there was broad support for the Bill at Second Reading. There was also a commitment, on our part, to ensure that the Bill has a smooth passage through the House and the other place, to enable it to reach the statute book before the Banking (Special Provisions) Act 2008 expires in February 2009. We are grateful to the Minister for arranging the reordering of the consideration of the Bill, because we believe it is important that there is time to study the draft code of practice and the principal regulations underlying this Bill prior to the debate on part 1. It would be helpful if the Minister were to indicate when he expects the draft code and regulations to be published, because that would clearly impact on the speed of consideration in Committee.
Despite the broad support for the Bill, there are areas that we will want to probe in detail between now and 18 November. I am sure we can do that and ensure proper scrutiny of the Bill.
Dr. John Pugh (Southport) (LD): Some members of the Committee might be disappointed that the Liberal Democrats are not represented by the sage of Twickenham on this occasion. We will be led by my hon. Friend the Member for South-East Cornwall (Mr. Breed) who is unfortunately out of the country at the moment. He has appreciable experience of both retail and investment banking. We have no objection to or difficulty with the programme motion as this is an important and highly technical bit of legislation.
Many representations made by the banking industry and others recommend a holistic approach. People are concerned about what may be caught up in the code of practice or secondary legislation. I welcome the Minister’s assurances that as much as possible will be put before the Committee during its deliberations and as much inkling as possible will be given about the future secondary legislation that follows in its wake.
Question put and agreed to.
That, subject to the discretion of the Chairman, any written evidence received by the Committee shall be reported to the House for publication.—[Ian Pearson.]
The Chairman: Copies of any memorandums that the Committee receives will be available in the Committee Room.
That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—[Ian Pearson.]
10.38 am
The Committee deliberated in private.
10.56 am
On resuming—
The Chairman: We shall now hear oral evidence from the Treasury. I welcome the Minister and Mr. Levendoğlu. Minister, would you like to make a brief introductory statement, or to proceed straight to the Committee’s questions?
Ian Pearson: I should like to make a brief introductory statement. The Banking Bill to be scrutinised by the Committee is being brought forward during challenging times for financial markets and economies across the world. The Bill is one important part of a package of action and reform to improve the UK system for ensuring financial stability and protecting depositors. I am encouraged that the Bill received cross-party support on Second Reading. It was disappointing that the Leader of the official Opposition seemed to go back on that in his speech to the City on Friday, which showed a complete lack of judgment and sought to play party politics rather than act in the national interest.
Mr. Peter Bone (Wellingborough) (Con): Mr. Chairman.
The Chairman: Order. Carry on, Minister.
Ian Pearson: The measures in the Bill are designed to form a permanent reform of the UK framework. I want to emphasise that it is the result of a comprehensive process of consultation, which we could discuss in more detail, including three consultation documentations issued jointly by the Treasury, the Bank and the Financial Services Authority. We have consulted with key industry players and experts, many of whom we shall hear from later today. We have had valuable input from the House’s Select Committee on the Treasury. We want to get the reforms right.
I say from the outset that the measures in the Bill represent a proportionate and sound package for reform. However, we shall go into Committee with an open and consultative frame of mind. The Government have made the correct decision in taking the past few months to develop the legislative package, including publishing some of the key clauses in draft, for public debate and scrutiny over the summer. The Bill will provide a sound enhancement to the framework for financial stability and depositor protection. I am happy to take questions on any aspect of the Bill.
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Prepared 22 October 2008