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
(Morning)
[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.
Amendments
Nos. 128 to 131 are minor amendments. The intention is to seek further
clarity on the clause and in particular on the definition of
“property transfer instrument”. It appears that a
property transfer instrument must be made under clauses 10 and 11.
However, the
drafting of clause 30 retains a degree of ambiguity and does not state
explicitly that such an instrument must be made under clauses 10 or 11.
The argument has been put to us that the wording of the clause could
apply to a transfer of property not through this legislation, but
through an agreement between parties. I do not think that is the
intention, and I have no desire to press the amendments as long as the
Minister gives us some assurance about those concerns. We shall be
grateful for his
response.
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?
Ian
Pearson: Amendments Nos. 131 and 132 reduce flexibility.
The changes remove the potential for a property transfer instrument to
make provision in relation to property, rights or liabilities that have
not been transferred
by property transfer instrument. Such flexibility may be beneficial. I
remind the Committee that for a property transfer instrument to be
made, the general and specific conditions of SRR intervention must be
satisfied. Only in those circumstances may the Bank of England make a
property transfer instrument. The Government consider that once that
test has been met, it is right that the authorities have the
appropriate powers to resolve the bank. That could involve a situation
where a consensual transfer can be agreed but needs to be supported by
stabilisation powers—for instance, to make provision for
continuity or in relation to default event provisions, as we shall
discuss. Such flexibility is provided by the words that the amendment
seeks to excise from the Bill. Although we accept that the situations
where that may be possible are rare, as the provision would be a less
invasive exercise of statutory powers we consider it appropriate to
have that flexibility. I hope that I have satisfied the hon. Member for
South-West Hertfordshire about our intentions regarding the
clause.
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
Effect
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 arising...in 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.
