Ian
Pearson: As I was trying to explain, the purpose of the
amendment is to reflect the circumstances if there was a sale through
an auction process, because a market rate would have been determined.
Once a price has been established, it seems a highly artificial
exercise to have to go through the process of appointing someone. It
seems odd, after the price has been decided, that an independent valuer
should come to a different judgment about the price and determine the
compensation due to transfers as part of the process of selling the
institution.
The hon.
Gentleman is encouraging me to think about whether “may”
might be used in other cases that have no auction process and where
there is no clearly identified price.
Ian
Pearson: In response, the only indication why we would not
want to go down the independent valuer route at the heart of the clause
would be if an auction process or a similar mechanism had clearly and
demonstrably provided an agreed market rate. However, there are
safeguards. If people felt that there were particular problems with the
route that we had adopted, they would obviously have legal remedies and
a right of appeal against the compensation
order.
Dr.
Pugh: I accept some of the Minister’s remarks. I
know what he intends. However, the legislation as framed could permit
other activities than the benign acceptance of the consequences of an
auction. Assurances given under the clause or elsewhere in the Bill
would probably not be sufficient to eradicate that possibility. It may
be a slim possibility, but it still exists in
legislation.
Ian
Pearson: To conclude, I hope that I have given assurances
about the Government’s intentions on how the clause, if amended,
would be used. However, I shall reflect on the matter and if more needs
to be done to clarify things I shall endeavour to come back at a later
stage.
Mr.
Gauke: I want to speak about the independent valuer. My
comments may be more appropriate to clause stand part, but if I raise
the issue now we may not need a clause stand part debate.
The role of
the independent valuer will be important. On occasion, it is possible
that some political pressure may put on the valuer. I can imagine
circumstances in which our constituents wrote to us to raise concerns
about the valuer, so independence is clearly important, as is the
perception of independence.
The
Government have given some indication of how independence is to be
maintained, based on the limited grounds on which an independent valuer
can operate. Will the Minister give us a little guidance on
the type and status of the person the Government will be
looking for to fill that position? Will he give us more information
about the role of the appointing person? Subsection (3)(a)
refers to the Treasury making arrangements
“to identify a
number of possible independent valuers, one of whom is to be selected
by the appointing
person”. Will
the Minister give us a little more detail about the “appointing
person”?
Ian
Pearson: I do not think it possible at this stage to
debate a job description for the independent valuer. Suffice it to say
that they will be people with sufficient experience to make the
judgments required of them in the circumstances. As for the appointment
of an independent “appointing person”, I shall check with
officials but I would be surprised if it was made under anything other
than the normal public appointments process, following the normal rules
that the Government apply in those circumstances. Should the position
be different, I will revert to the
Committee. Amendment
agreed
to. Amendment
made: No. 107, in clause 49, page 22, line 25,
at end insert ‘; and subsections (2) to (5)
apply to an order which includes provision for an independent
valuer.’.—[Ian
Pearson.] Clause
49, as amended, ordered to stand part of the
Bill.
Clause
50Independent
valuer:
supplemental Question
proposed, That the clause stand part of the
Bill. 5.45
pm
Dr.
Pugh: On the face of it, the clause seems innocuous. It
simply says, “supplemental”. However, when I studied it I
had some concerns, which I need the Minister to clear up before I can
be completely happy with the clause. Although the clause is
supplementary, it is wide-ranging. I draw attention to the fact that
the independent valuer can publish and disclose
information—which we would expect—but can also withhold
information. Yet, subsection (8)
states: “Records
of an independent valuer are public records for the purpose of the
Public Records Act
1958.” I
am not sufficiently learned in the law to know whether that makes an
exemption from a freedom of information request. I could imagine that
if in certain circumstances a valuer was deemed to withhold crucial and
important information, more than one interested party would wish to get
hold of that information. They might have a right to do so,
particularly if the information concerned the disbursement of an ailing
bank and resources being allocated in one direction or another. The
clause appears to create that sort of exemption and make it immune from
any legal challenge, so that if people want information that an
independent valuer has, primary legislation says that he has the right
to withhold it. That exemption seems to be created. It may not, as a
result of being created, be challengeable in law, but it may not be
consistent with the principles of natural
justice. My
other concern is more a matter of amplification. Subsection (3) states
that jurisdiction may be conferred on a court or tribunal, and
subsection (6)(b) states that there can be an appeal to a court. A
number of courts are referred to, and I would simply like to know which
courts we are thinking of—courts that exist and can be
identified, or courts to be created for the specific purpose.
I have a
similar question on subsection (3)(d), which states that at some future
date a criminal offence might be created by a statutory instrument.
That is not a most desirable way to create a criminal offence. I
imagine that the offence would be along the lines of withholding
information from an independent valuer. I wish that the Minister could
give us an inkling as to what types of offences the Treasury has in
mind. Dotted
through the clause are areas where clarification is required. Let me
rehearse them again. First, will the clause create an exemption to
freedom of information requests for information from independent
valuers? Secondly, where courts or tribunals are referred to, precisely
which are they? Are the appeal court and the court upon which
jurisdiction is conferred one and the same? Thirdly, are we creating a
new kind of misdemeanour, or the possibility of one, and if so what
will it look
like? That
is a complex and detailed set of questions. If the Minister wants to
reply in writing, that is great by me, but if he can give amplification
straight away, that will be equally
acceptable.
Mr.
Bone: Briefly, clause 50(2)(b) will allow the Treasury to
instruct an independent valuer to withhold information. The independent
valuer is there to arrive at a compensation figure. I cannot imagine
any legitimate grounds on which the Treasury should instruct an
independent valuer not to publish information used in obtaining
compensation levels for a third party. Does the Minister have any
examples of where that would apply? If not, I am not sure why it is in
the
Bill.
Ian
Pearson: I can respond to some of hon. Members’
points, but I might have to respond in writing to give further detail.
The hon. Member for Southport asked why the independent valuer will be
able to withhold information. The reason is the normal reason for which
an independent valuer might wish to do so: the information is subject
to commercial sensitivities. In that respect, article 6 of the European
convention on human rights requires only the reasons for a valuation
decision to be made public, not every single piece of
information. We
certainly recognise that there will be a degree of interest in the
independent valuer’s determination, but it is the
Government’s assessment that it would be inappropriate to
designate the independent valuer a public body for the purposes of the
Freedom of Information Act. In particular, the independent valuer does
not meet both the conditions for section 4 of that Act to apply, as he
or she will be an independent person with the sole function of
assessing compensation in accordance with the order and any contractual
arrangements and is likely to seek commercial return for the
work. Because
of the unique nature of the valuer’s function and
status—they will discharge a quasi-judicial function—the
Government do not consider it appropriate to designate the valuer a
public body. Furthermore, the application of the Freedom of Information
Act may inhibit the valuer’s ability to obtain full information
from other institutions and individuals on their relations with the
failed bank. That is why we do not think it appropriate for the
independent valuer to be subject to the Freedom of Information
Act. On
criminal offences, I am advised that the issue must relate to the
provision made under subsection (2): in other words, it must involve a
refusal to disclose information. I hope that is helpful to the hon.
Member for Southport.
On the
publication of information, the independent valuer will be able to
select documents suitable for permanent preservation as a matter of
public record. Selection takes place in two stages: when records are
passed out of active use and later when they are subject to review. At
that later stage, the independent valuer may select records worthy of
permanent preservation in the National Archives; it is for the valuer
to select which.
The clause
provides for the Treasury to make provision in an audit for the
remuneration and allowances of independent valuers, the staff of
independent valuers and appointing persons. As hon. Members will be
aware, there are a number of detailed provisions in the clause. I think
that most of them are uncontroversial, although there is naturally
Committee interest in the public disclosure matters to which I have
referred.
Question
put and agreed to.
Clause
50 ordered to stand part of the
Bill.
Clause
51Independent
valuer:
money
Ian
Pearson: I beg to move amendment No. 108, in
clause 51, page 23, line 38, leave
out
‘and’.
The
Chairman: With this it will be convenient to discuss
Government amendments Nos. 109 and
111.
Ian
Pearson: This clause provides for the Treasury to make
provision in an order for the remuneration and allowances of
independent valuers, the staff of independent valuers and appointing
persons. While
the Treasury will pay the remuneration and expenses of the independent
valuer, the Treasury must put in place a monitor to oversee the
remuneration and any allowances for the independent valuer, including
pension arrangements. As part of his or her role, the monitor may be
required to approve certain actions including the appointment of staff.
The Government amendments to this clause are intended to ensure that
the Treasury can remunerate and reimburse the expenses of the monitor
for the functions that he or she is undertaking, which I am sure the
Committee will agree is a sensible
provision. Returning
to the provisions of the clause, it also provides that independent
valuers and their staff should not be liable for damages for actions
taken in good faith. The exemption is, however, limited so the
exemption will not apply if the act or omission is ultra vires, or in
bad faith, or would prevent an award of damages under section 6(1) of
the Human Rights Act 1998 in respect of acts or omissions that are
unlawful. This is a relatively common
provision. Finally,
I wish the Committee to note that the provisions to put in place and
provide the independent valuers with powers and remuneration are to be
made by an order subject to the negative resolution procedure. Of
course, the compensation orders themselves, which will set out such
matters as valuation principles, will be subject to the draft
affirmative procedure.
I hope that
hon. Members will agree with this Government amendment to ensure that
the monitor can be remunerated. I have provided the Committee with an
explanation of the purpose and
effect.
Mr.
Gauke: We certainly will not be opposing this amendment
but I would be grateful if the Minister clarified the role of the
monitor. Will the monitor have the right of veto over specified
actions? Perhaps the Minister can elaborate on what those actions will
be.
Mr.
Bone: I was not following the Minister’s statement
as intently as I should have done. I thought he said
“negative” resolution for one of the provisions. As far
as I am aware, all the statutory instruments related to this Bill so
far have been affirmative. This, of course, means that Members have the
chance to debate them in one and half hours but they are not amendable.
A negative one—unless it is prayed against—will just go
through. I missed which one they were trying to sneak through without
any proper
scrutiny.
Ian
Pearson: We are not trying to sneak anything through. As I
explained to the Committee, the compensation orders will be subject to
the draft affirmative procedure. It is the compensation orders that are
likely to attract the most interest. The provisions to put in place and
provide the independent valuer with powers and remuneration will be
subject to the negative resolution procedure. That is the right balance
to adopt.
We have not
made express provision as to who the monitor would be but it is our
intention that he or she should be an independent person with relevant
experience. They could be a civil servant; they could come from the
Audit Commission; they could be undertaking the task on a commercial
basis. We would want to look at who was most appropriate depending on
the circumstances. To clarify, the monitor cannot veto action but can
and will be expected to provide an independent audit and report to the
Treasury on expenses. I hope that the Government amendments will be
supported. Amendment
agreed
to. Amendment
made: No. 109, in clause 51, page 23, line 39, at
end insert ‘, and— (d)
monitors.’.—[Ian
Pearson.] Clause
51, as amended, ordered to stand part of the
Bill.
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