Mr.
Bone: My recollection was that the Minister also argued
that if we did not do that, the European convention on human rights and
the rights of the directors under contract law would be infringed. I
agreed with the Minister then and did not press the point, but the
Government now appear to have a hidden
agenda.
Mr.
Gauke: I am grateful to my hon. Friend for making that
point. Are we to end up with a situation where the only protection
available for directors is the ECHR or will there be a place for
Parliament to debate those matters
too?
Mr.
Todd: I must admit that I did not interpret the
Minister’s remarks as meaning that contract law would be set
aside by the executive action of the Bank. I, too,
would be alarmed if it was suggested that the normal protections offered
by a contract should be dispensed with at the fiat of government. I
particularly welcomed the Minister’s suggestion that the clause
required further scrutiny by those who wished to provide greater
certainty in the matter. I am not persuaded by the hon.
Gentleman’s argument that we should dispense with the clause and
its principles in its entirety. The Minister made a persuasive case
that there were areas of doubt and uncertainty to which we might need
to respond, and that it would be more efficient to do so in that way.
However, I take the hon. Gentleman’s point on the narrow
issue.
Mr.
Gauke: On the narrow issue, perhaps we will all need to
reread precisely what the Minister said.
Mr.
Gauke: Indeed. Let us put it this way: there is no reason,
as far as I can see, why clause 65 could not be used to dispense with
those contractual rights. The Minister’s remarks merely
highlight why we are concerned about the clause. The hon. Member for
South Derbyshire is clearly uncomfortable with the way in which the
clause could be used. We will read Hansard to see whether the
Minister said that it is one possibility that the Government are
already considering .
Ms
Keeble: The hon. Gentleman talked about clause
4. Could he comment on the substantial protections provided under
clauses 7, 8 and 9 in terms of the exercise of powers? There are the
objectives, the exercise of powers and the further assurances that my
hon. Friend the Minister gave about going back and looking at some
important qualifications. That would seem to provide the assurances
that are needed. He also said that he will come back with amendments at
a later stage, which would seem to deal with the one area of doubt
that was left.
Mr.
Gauke: I take the hon. Lady’s point about
clauses 7, 8 and 9, but this is overall a Bill that retains
a reasonable degree of flexibility for the Government. My point is that
regardless of clauses 7, 8 or 9, the test as to whether the law can be
changed is still a very weak one. That is the objection to subsection
(1).
I welcome the
Minister’s statement that the clause will not be used to amend
the Bill and so I certainly will not press for a Division on amendment
No. 157 because it does not go nearly far enough. Given that statement,
however, why cannot we see that carve-out in the Bill? I hope that the
Minister will consider tabling an amendment to that effect. If he does
not, I suspect that we might, because it is an important
point.
With regard
to amendment No. 121 and the ticking clock, I am touched by the
Minister’s faith in business managers’ ability to ensure
that controversial matters are debated and voted on as promptly and
prominently as possible. I take his point that such debate need not
always happen at the end of the 28 days, but the fact is that that is
what the legislation says. It could happen so it is a weak argument to
say, “Well, maybe it won’t.” It does not say it
must happen 28 days after the order has been made; it says up to 28
days. For those reasons, I am inclined to press amendment No. 121 to a
vote.
I welcome the
remarks, to which the hon. Member for South Derbyshire alluded, about
the fact that the expert liaison group will be consulted and so on, but
overall I did not feel that much comfort was provided to outside bodies
or that the issue of uncertainty was addressed. It remains a concern.
If one speaks to any lawyer or outside body in the field, they are
worried about the breadth of the provisions. That is why we have
attempted to amend the clause to narrow it down. Even those who, like
the hon. Member for South Derbyshire, are persuaded that clause 65 is
necessary might agree that we can at least try to restrict it to
provide a little more comfort.
For those
reasons, I intend to press amendments Nos. 119, 155, 120 and
121 to a Division. Members on the Conservative Benches remain deeply
concerned about clause 65, and we will be voting against it at stand
part.
Question
put, That the amendment be made:—
The
Committee divided: Ayes 6, Noes
9.
Division
No.
4] Question
accordingly negatived.
Amendment
proposed: No. 155, in clause 65, page 32, line 15, leave out
subsection (3).—[Mr.
Gauke.] Question
put, That the amendment be
made:— The
Committee divided: Ayes 6, Noes
9.
Division
No.
5] Question
accordingly negatived.
Ian
Pearson: I beg to move amendment No. 12, in
clause 65, page 32, line 22,
leave out subsection
(5).
The
Chairman: With this it will be convenient to discuss the
following: Government amendments Nos. 13 to
16. Government
new clause
5—“Enactment”.
Ian
Pearson: This is a technical amendment. The group
comprises one new clause and several consequential amendments to
clauses 65, 109, 122, 143 and 154. The technical amendments extend the
meaning of “enactment”, where referred to in the Bill, to
include Acts of the Scottish Parliament and instruments made under
them, Northern Ireland legislation and subordinate legislation. Without
express provision for the inclusion of Acts of the Scottish Parliament
or instruments made under those Acts, any reference to an enactment in
the Bill would not include them, which would restrict the effect of the
legislative provisions of the Bill in Scotland and could limit the
authorities’ ability to deal with Scottish
banks. Clauses
65, 109, 122, 143 and 154, as drafted, contain wording to extend the
meaning of “enactment” for those specific clauses.
However, new clause 5 will apply to the entire Bill, so the various
subsections defining a reference to an enactment will be redundant.
Therefore, amendments Nos. 12 to 16 make consequential amendments to
remove those references. The amendments are straightforwardly technical
and I commend them to the
Committee.
Stewart
Hosie: I have a quick question for the Minister.
Obviously, in general terms, it is unsatisfactory for the UK Government
to be able, almost by fiat, to overturn or change the decisions taken
in another legislature. However, in the emergency situations of a
failing bank and for the delivery of the special regime for a failing
bank, particularly in a short period, it is probably important. I am
conscious, having taken advice, that there is no particular opposition
in principle, so long as the Minister can confirm that any primary or
secondary legislation in Scotland that would be changed would be solely
for the purposes of, or in consequence of, the Bill and in
the delivery of the special regime for a failed bank. If I
can have that guarantee, I would have no difficulties at all with the
new clause and the
amendments.
Ian
Pearson: I can certainly give the hon. Gentleman the
assurance that he seeks. That is exactly the
intention. Amendment
agreed
to. Motion
made, and Question put, That the clause, as amended, stand
part of the
Bill:— The
Committee divided: Ayes 9, Noes
5.
Division
No.
6] Question
accordingly agreed to.
Clause 65,
as amended, ordered to stand part of the
Bill.
10.15
am
Clause
66International
obligation notice:
general Question
proposed, That the clause stand part of the
Bill.
Mr.
Gauke: I have a quick question about clause
66(1), which
states: “The
Bank of England may not exercise a stabilisation power in respect of a
bank if the Treasury notify the Bank that the exercise would be likely
to contravene an international obligation of the United
Kingdom.” I
would be grateful if the Minister explained the purpose of the
subsection. What interests me is that it is perfectly possible that the
Bank of England and the Treasury will have conflicting views about
international obligations. Indeed, there may be evidence to suggest
that such a tension existed over actions taken with regard to Northern
Rock last year. I put this question to the Bank of England at an
earlier stage of proceedings in Committee—does the Treasury
anticipate that it will make decisions about international obligations?
Will it be possible for the Bank of England to take a view not to
exercise a stabilisation power because it believes that to do so would
contravene an international obligation, even though the Treasury does
not hold that view? In other words, will the test of international
obligations be assessed by the Treasury alone, and if the Treasury is
satisfied, the Bank may exercise its stabilisation powers? Or will both
the Bank and the Treasury take a view, and if either institution is of
the view that international obligations will preclude the use of
stabilisation powers, will those powers not be
used?
Ian
Pearson: On a number of occasions, we have discussed the
right balance of responsibilities between the authorities: the Bank of
England, the Treasury and the Financial Services Authority. That
division of responsibilities has been supported by stakeholders. The
authorities have worked and will continue to work closely together in
all those circumstances. We believe that Her Majesty’s Treasury
should have the leading role when it comes to international
obligations. The role of each authority in the SRR is clear: the FSA
will assess whether a firm should enter the SRR, the Bank of England
will operate the SRR and the Treasury will deal with public finances
and the overall public interest and exercise the stabilisation option
to take a bank into temporary public ownership, taking into account
international obligations. One would expect Government to do that. That
is not to say that we will not have close dialogue with the Bank of
England on matters that relate to areas in which it has an interest,
but it is right and proper that the Treasury takes the lead in those
circumstances.
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