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Session 2007 - 08
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General Committee Debates

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

Public Bill Committee

Tuesday 11 November 2008


[Mr. Roger Gale in the Chair]

Further written evidence to be reported to the House

BAN 03 London Investment Banking Association
10.30 am
The Chairman: Good morning. In accordance with the Speaker’s statement last week, I will suspend proceedings at 11 o’clock and invite those present to stand in silence for two minutes in memory of those who have given their lives for their country in two world wars and in more recent conflicts. Should any Member not wish to participate, I would be grateful if they left the room prior to the silence and returned afterwards.

Clause 30

Property transfer instrument
Mr. David Gauke (South-West Hertfordshire) (Con): I beg to move amendment No. 128, in clause 30, page 13, line 31, after second ‘instrument’, insert ‘made under this Act’.
The Chairman: With this it will be convenient to discuss the following amendments: No. 129, in clause 30, page 13, line 33, at end insert ‘and’.
No. 130, in clause 30, page 13, line 34, leave out ‘other’.
No. 131, in clause 30, page 13, line 36, after ‘instrument,’, insert ‘or’.
No. 132, in clause 30, page 13, line 37, leave out ‘or otherwise’.
Mr. Gauke: Welcome to the Chair, Mr. Gale. Before I commence, I once again draw the Committee’s attention to my entry in the Register of Members’ Interests.
This morning we will discuss the clauses on property transfers and partial property transfers, some of the most important and controversial elements of the Bill. The issues in clauses 42 and 43 are particularly controversial and I do not intend to get embroiled in them at this stage. None the less, we have a number of comments and questions on the matters at hand. Most of our amendments are probing and aim to flush out issues relating to the relevant clauses.
The Economic Secretary to the Treasury (Ian Pearson): It is a pleasure to see you in the Chair again, Mr. Gale.
The clause makes provision for property transfer instruments. The Bank of England may make such an instrument to effect a transfer of property, rights and liabilities to a private sector purchaser or a bridge bank. A property transfer instrument may do one or both of two things. First, it may provide for the property, rights or liabilities of a specified bank to be transferred. Secondly, it may make other provision in relation to a transfer.
I appreciate the probing nature of the amendments tabled by the hon. Gentleman and I hope that I can give the clarification he seeks. Amendment No. 128 proposes that for the purposes of the clause, a property transfer instrument be defined as having been “made under this Act”. I agree that would make clear the position of the instrument; however, the status of a property transfer instrument is already implicitly so defined in the Bill as a matter of logical necessity. The amendment is thus an unnecessary addition to the drafting of the clause. The powers of the Bill can, of course, be exercised only under the Bill and, therefore, they relate specifically to the special resolution regime.
The hon. Gentleman seeks to make further changes to the provisions of subsection 1(a) and (b). In general, the amendments appear to reduce the flexibility of the provision a property transfer may make.
Amendment No. 129 would make it compulsory for a property transfer instrument to transfer property, rights and liabilities, and to make other provision relating to the transfer. That reduces flexibility. In some circumstances it may be unnecessary to make provision other than for the transfer of property, rights and liabilities. I accept that such a situation may be unlikely but it seems unnecessary to restrict flexibility in this way.
Amendment No. 130 would remove the word “other” from the first line of subsection 1(b). The drafting of the clause is intended to distinguish clearly the two types of provision that a property transfer instrument may make. First, an instrument may provide for the transfer of property, rights and liabilities. Secondly, an instrument may make other forms of provision related to the transfer, as I explained earlier. The deletion of the word “other” is thus unnecessary.
The Chairman: Order. I am sorry to interrupt the Minister. I am sure Fabian Review is somehow relevant to the Committee, but may I gently remind Members that it is not in order to read newspapers or other publications in Committee?
Mr. Gauke: I am grateful to the Minister for that response. On amendments Nos. 129 and 132, I accept his argument that greater flexibility may be necessary, albeit unlikely. It is helpful to the Committee that the Minister has elaborated on the rarity with which those powers are likely to be used.
I detected that the Minister did not have much objection to amendment No. 128, which inserts the words “made under this Act”, and that he may almost have felt that it would assist the drafting. However, I take the point about the provision already being implicit. Having heard the Minister, I am still not convinced that amendment No. 128 could not improve the Bill in a minor way, but I do not intend to divide the Committee on the matter. If the Government were inclined at a later stage to insert the wording for clarification for those unfortunate people who will not have read this debate, I should welcome it. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 30 ordered to stand part of the Bill.

Clause 31

Mr. Gauke: I beg to move amendment No. 133, in clause 31, page 14, line 6, leave out ‘or’.
The Chairman: With this it will be convenient to discuss the following amendments:
No. 134, in clause 31, page 14, line 7, leave out ‘in any other way’ and insert ‘common law’.
No. 135, in clause 31, page 14, line 12, leave out ‘(by any name)’.
Mr. Gauke: Clause 31 relates to the effect of a transfer, which we touched on in the debate initiated by my hon. Friend the Member for Wellingborough last week. He raised the issue of whether subsection (3) has effect notwithstanding EU provisions. I have no intention of repeating that argument, but there are one or two ambiguities in the clause; in particular, subsection (3) refers to the transfer taking effect
“despite any restriction any other way”.
It would be helpful if the Minister could explain what that means. The subsection also refers to contract or legislation, so presumably “in any other way” means a common law restriction. If it means more than that we would welcome clarification. Our intention, in particular with amendment No. 134, is to flush that out.
With amendment No. 135, we query whether “(by any name)” in subsection (4)(b) is necessary. It is a drafting point, but the expression does not seem to add a great deal to the interpretation of the subsection. Can the Minister explain otherwise? I shall raise one or two points in a stand part debate, but the purpose of the amendments is to seek clarity from the Minister as to the intention of the clause.
Mr. Peter Bone (Wellingborough) (Con): I speak in favour of amendment No. 134. The Government seem to have made it clear in earlier debates that one cannot use the words “in any other way” because the EU laws apply. Removing “in any other way” and inserting “common law” would mean that the Bill will do what the Government say it should do, so the amendment is most helpful for them.
The front page of the Bill states that in the view of the Chancellor of the Exchequer the provisions of the Bill
“are compatible with the Convention rights”.
However, they cannot be compatible when the purpose of the clause is to tear up normal rights because we are dealing with an exceptional circumstance. Will the Minister explain how the Chancellor came to that conclusion?
Sir Peter Viggers (Gosport) (Con): I am a bit concerned about the clause so I hope that the Minister can reassure me. The drafting is slightly casual. Substituting “in any other way” in subsection (3) with “common law” would make the clause clearer. I am not sure whether the words “contract” and “legislation” would limit the words “in any other way”. The legal term for that is eiusdem generis.
The long title of a Bill limits the amount of material in the Bill; similarly, in parliamentary terms, a parliamentary question must be followed by supplementary questions that derive from the main one. The eiusdem generis rule, if strictly applied to the Bill, would mean that the words “in any other way” would be subject to the words “contract” and “legislation”. They would not give the freedom that they appear to give the Government, but could be construed within the rules of eiusdem generis, meaning that the provisions would be subject to contract legislation.
10.45 am
On amendment No. 135, I hope that the Minister will be able to spell out for us what he anticipates that consent “by any name” will mean. If he can explain what the other names for consent may be or why the definition of consent needs to be expanded to include “by any name” it would be reassuring. If he cannot I would find it rather more disturbing. I endorse my hon. Friend’s probing amendment.
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