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Lord McIntosh of Haringey: These are very serious matters. The potential circumstances which these amendments seek to address deserve careful consideration.
At present, there are no problems in the electricity and gas sector, but it is important to cater for the most serious eventualities which might not be readily foreseen. That is the essence of the amendments. I recognise where they come from.
The amendments follow the special administration regimes which have been put in place in other sectors. The noble Lord, Lord Borrie, mentioned water and railways. These are substantial pieces of legislation. They are legislation about water and railways, rather than about insolvency. That is as it should be, given the importance and complexity of the subject matter.
I know that Ofgem wants to see such legislation developed in the electricity and gas network area. But we have also received representations from other interested parties that such legislation should not be developed in a rush and without proper consultation with all interested parties. I am concerned that, without advance consultation, one consequence of the amendments may be that they would have an unintended impactpotentially an adverse impacton the ability of energy network companies to raise finance in the future.
I can assure the noble Lord, Lord Borrie, that the Government fully recognise the crucial service provided by the gas and electricity network operators and the broad sense of what the amendments seek to achieve. However, we need to take account of the particular circumstances of the gas and electricity networks and the interests of all of the parties involved.
So we should not launch into new provisions without a full understanding of the implications and consequences for all of the parties. That could be achieved only by careful development of proposals, and consultation to refine those proposals. That has not been undertaken, and I have to say that I do not believe that it should be undertaken in the context of this Bill. I was asked specifically whether it could be carried out in the two-month interval before Report. My answer has to be that I cannot imagine how it could be, particularly given that the two months are August and September.
But the points have been well made and the department will examine them thoroughly with all the interested parties. Depending on the results of that examination, we shall proceed to consult on them in the interests of future, appropriate, legislation.
Lord Borrie: I am bound to express some disappointment with my noble friend's comments. As I indicated, the Government were quite firm two or three years ago that this kind of provision should be introduced. From what my noble friend has said, it appears that nothing has been done within government departments. In the meantime, it is clear, as he said, that consultation is needed to ensure that we introduce the right statutory provisions. But it is disappointing that he suggests that there is not enough time to deal with the matter before Report. I shall consult with my advisers at Ofgem. For the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 339 to 346 not moved.]
Clause 246 [Prohibition of appointment of administrative receiver]:
Lord Hunt of Wirral moved Amendment No. 347:
The noble Lord said: I am grateful to have an opportunity to speak to this amendment, and link with it the previously misplaced Amendment No. 337 and also Amendment No. 353.
We are dealing here with capital markets. As we are aware, structured capital markets transactions can take many forms. It is essential, if these markets are not to be disrupted, that within the spirit and purpose of the capital markets exemption, that appropriate transactions are exempt from the prohibition on appointment of an administrative receiver.
The current wording of paragraph 1(1)(a) of Schedule 2A, relating to the definition of a capital market arrangement for the purpose of the exception to the appointment of an administrative receiver, focuses on the security structure in relation to such arrangement. Unfortunately, only one type of security structure is included. There are a number of other types which are frequently used in the structured finance markets which should also be exempt to ensure that transactions with that type of security structure are also exempt.
I could go into much greater detail, but it may be helpful if I reverse roles and say that I shall write in more detail to the Minister. I recognise that this is an important issue. A number of structures come within the exemption, but the Bill currently covers only one of them. It would be unfortunate if the Bill provided for some types of finance techniques dealing with special purpose vehiclesSPVsbut not others when there appear to be no sound policy or political reasons for the distinction. I shall give the Minister every opportunity to respond now or, if he wishes, when I have let him have much greater detail on the amendments with diagrams to illustrate my point. I beg to move.
Lord McIntosh of Haringey: I could save the noble Lord trouble by offering that he can e-mail me instead of writing and can include the diagrams as attachments if he likes. I shall forward them to the relevant officials for response. That would be helpful to have.
I shall respond to the amendments to see whether that helps. When Amendment No. 347 came up in the Commons, Melanie Johnson, the Minister for Competition, Consumers and Markets, gave an unequivocal assurance that the power will not be exercised in such a way that it applies to any floating charge created before new Section 72A comes into force. I can confirm that and give an unequivocal assurance that we shall not legislate retrospectively, which is what the amendment is about.
The issue covered by Amendment No. 337 has been raised in many meetings between officials and the City of London Law Society. I have heard everything that has been said about the fact that paragraph 1(1)(a) of Schedule 18 does not cover this or that type of arrangement. It was never our intention to make that sub-paragraph the entirety of the exception provision. That is why sub-paragraphs (1)(b), (1)(c) and (1)(d) exist. The exception provisions in paragraph 1 are for all sorts of different structures within the capital
markets. We see no reason to believe that it will not be possible to ensure that an arrangement falls within its provisions.We spent considerable time and thought ensuring that the exceptions are not drafted so broadly as to encourage avoidance by lending agreements that they were not intended to cover, but they are very flexible. We have no doubt that City advisers will be able to structure arrangements that should rightly be within the exceptions to take advantage of them.
Finally, we do not object to the wording used in Amendment No. 353, we just do not believe that it is necessary. We think that the amendment is striving to ensure that an investment that falls within the exemption provisions is a capital market investment, whether it is traded on a UK or a foreign market. We do not think the amendment is necessary because the paragraph also includes the term "traded". As used in this paragraph, "traded" is defined as "admitted to trading", which has a wider meaning than "listed" and is relevant not just to EU markets but to those outside the EU. We have confined "listed" to its use in the Financial Services and Markets Act 2000listed on the London Stock Exchange. "Admitted to trading" is a generic term that simply means that the securities may be traded on whatever market is specified.
Lord Hunt of Wirral: My e-mail will now be even longer. I also look forward to e-mailing the Minister with diagrams. We shall no doubt return to this matter at a later stage. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey moved Amendment No. 348:
The noble Lord said: In moving Amendment No. 348, I shall also speak to Amendments Nos. 349, 350, 351, 352 and 361. These amendments are on an issue that was raised very eloquently on Second Reading by the noble Lords, Lord Best and Lord Joffe, and the noble Baroness, Lady Maddock, among others. The issue has also been raised with the department by various interested parties which are concerned with the protection and survival of registered social landlords, as are we.
We are grateful for the helpful and informative meetings that have taken place between officials and representatives from all parts of the social housing sector. Following those discussions, we recognised that both the Housing Act 1996, which covers England and Wales, and the Housing (Scotland) Act 2001 provide for a moratorium period which provides an alternative means to facilitate rescues, and a stay on unilateral action by lenders when registered social landlords are in financial difficulty. These provisions reply to housing associations which are registered social landlords within the meaning of the Act. These amendments exclude such organisations from both the prohibition on appointment of administrative receiver
of companies and the enabling power extending administration to industrial and provident societies. They cover England, Wales and Scotland, and I hope that it will be agreed that they cover the points raised on Second Reading. I beg to move.
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