Conclusions and recommendations
Reporting contingent liabilities to Parliament
1. The Treasury clearly
breached its own well established guidance to all parts of the
public sector when it failed to inform the Chairman of this Committee
and the Chairman of the PAC of the guarantee given to the Bank
of England in respect of Emergency Liquidity Assistance. (Paragraph
7)
2. Sir Nicholas's
evidence was exceptionally frank, and is to be commended. Given
the events surrounding the failure of Northern Rock, the extreme
urgency of the situation, and the Bank of England's view that
"secrecy was of the utmost importance", we can understand
why the Chancellor decided that absolute secrecy was paramount,
and why Sir Nicholas considered that decision proper. Nonetheless,
in our view, the decision was overly influenced by the assumption
that disclosure of the liability would have to be in writing.
We welcome the Chancellor's proposal that if such extreme circumstances
arise in future the Chairmen should be briefed orally, and regret
that this was not done when the indemnity for Emergency Liquidity
Assistance was extended. In future, we expect Committee Chairmen
to be briefed properly, whatever the circumstances. (Paragraph
14)
|
