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The only example that I have heard relates to ISAs, which are simple and straightforward. They have a rate of interest. However, anyone who studies the financial press, particularly at weekends, would spend the whole of the following week trying to decide which offers for savings were competitive and which were not. This matter is well beyond interest rates—people are being offered insurance, interest rates that include bonuses or rates that stop when your balance reaches £2,500. It would require a genius to determine which products were competitive and which were not. In those circumstances, I do not see how the Office of Fair Trading could sensibly, on a daily, weekly or monthly basis, produce something that would be helpful to anyone. If we could deal with this matter broadly along the lines of National Savings, the answer is already there.

Lord Eatwell: I reinforce what my noble friend Lord Desai said about the objections that noble Lords opposite are making to particular policies being pursued by Northern Rock at this time. I really do not think that it is the role of this House or the Government to attempt to micromanage what Northern Rock does. I had understood that the Official Opposition were very much in favour of the bank being managed at arm’s length. If so, surely they should not be second-guessing what particular products or behaviour the bank displays. They should accept the commitment made by my noble friend on the Front Bench that the OFT will report regularly on the impact of Northern Rock’s activities on competition in the banking industry. The OFT is an organisation that has the skills and will have the detailed information to assess the impact on competition. We are just cherry-picking here; we are not being serious. We are just making arbitrary arguments, not doing the detailed investigation and careful study of the facts that the OFT will be able to do.

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Earl Ferrers: Perhaps I can put the noble Lord, Lord Eatwell, straight on something. Those of us who have made observations from this side of the Committee are not doing so in order to micromanage or macromanage anything. We are trying to get some information out of the Government and that has not been forthcoming.

Lord Bach: I am not in a position completely to answer the questions asked by my noble friend Lord Christopher, except to point out that the objective of National Savings, which of course is run extremely prudently, is rather different from that of Northern Rock. The objective of National Savings is to raise government funding, which will certainly not be the purpose of Northern Rock.

Lord De Mauley: I thank the Minister for his assurances. However, we believe that, in view of Northern Rock’s special circumstances and guarantees and the consequent cheap finance available to it, special measures to supervise its competitiveness are required. The other reason that it is important that the new clause is in the Bill is that, otherwise, later nationalisations under precautionary provisions will be in exactly the same position. I wish to test the opinion of the Committee.

3.20 pm

On Question, Whether the said amendment (No. 9) shall be agreed to?

Their Lordships divided: Contents, 158; Not-Contents, 137.

Division No. 4


Addington, L. [Teller]
Alderdice, L.
Allenby of Megiddo, V.
Alton of Liverpool, L.
Ampthill, L.
Anelay of St Johns, B. [Teller]
Ashcroft, L.
Attlee, E.
Avebury, L.
Baker of Dorking, L.
Barker, B.
Bell, L.
Bilimoria, L.
Bonham-Carter of Yarnbury, B.
Bottomley of Nettlestone, B.
Bradshaw, L.
Bridgeman, V.
Brittan of Spennithorne, L.
Brougham and Vaux, L.
Burnett, L.
Byford, B.
Campbell of Alloway, L.
Cathcart, E.
Chadlington, L.
Chidgey, L.
Chorley, L.
Clement-Jones, L.
Colwyn, L.
Cope of Berkeley, L.
Cotter, L.
Courtown, E.
Craigavon, V.
Crathorne, L.
De Mauley, L.
Dean of Harptree, L.
Denham, L.
Dholakia, L.
Dixon-Smith, L.
D'Souza, B.
Dundee, E.
Dykes, L.
Eccles, V.
Eccles of Moulton, B.
Eden of Winton, L.
Elliott of Morpeth, L.
Elton, L.
Erroll, E.
Falkner of Margravine, B.
Feldman, L.
Ferrers, E.
Finlay of Llandaff, B.
Forsyth of Drumlean, L.
Fraser of Carmyllie, L.
Freeman, L.
Garden of Frognal, B.
Gardner of Parkes, B.
Geddes, L.
Glasgow, E.
Glenarthur, L.
Goodhart, L.
Goodlad, L.
Goschen, V.
Greengross, B.

21 Feb 2008 : Column 332

Hamilton of Epsom, L.
Hanham, B.
Harris of Richmond, B.
Hayhoe, L.
Henley, L.
Hodgson of Astley Abbotts, L.
Hogg, B.
Hooper, B.
Howe of Idlicote, B.
Howell of Guildford, L.
Hunt of Wirral, L.
Inglewood, L.
Jenkin of Roding, L.
Jones of Cheltenham, L.
Kalms, L.
Kingsland, L.
Kirkwood of Kirkhope, L.
Laing of Dunphail, L.
Laird, L.
Lamont of Lerwick, L.
Lang of Monkton, L.
Lawson of Blaby, L.
Leach of Fairford, L.
Lee of Trafford, L.
Livsey of Talgarth, L.
Lucas, L.
Luke, L.
Lyell of Markyate, L.
McAlpine of West Green, L.
McColl of Dulwich, L.
Maclennan of Rogart, L.
McNally, L.
Mancroft, L.
Marlesford, L.
Marsh, L.
Mawson, L.
Mayhew of Twysden, L.
Miller of Hendon, B.
Monson, L.
Montrose, D.
Morris of Bolton, B.
Murphy, B.
Naseby, L.
Neuberger, B.
Neville-Jones, B.
Newby, L.
Northesk, E.
Northover, B.
Norton of Louth, L.
Oakeshott of Seagrove Bay, L.
O'Cathain, B.
Park of Monmouth, B.
Patten of Barnes, L.
Pearson of Rannoch, L.
Perry of Southwark, B.
Plumb, L.
Razzall, L.
Rees, L.
Roberts of Conwy, L.
Roberts of Llandudno, L.
Roper, L.
Ryder of Wensum, L.
St. John of Bletso, L.
Sandberg, L.
Sanderson of Bowden, L.
Scott of Needham Market, B.
Seccombe, B.
Selborne, E.
Selkirk of Douglas, L.
Sharman, L.
Sharp of Guildford, B.
Shaw of Northstead, L.
Shutt of Greetland, L.
Skelmersdale, L.
Slim, V.
Steel of Aikwood, L.
Stevens of Ludgate, L.
Strathclyde, L.
Taylor of Holbeach, L.
Tebbit, L.
Tenby, V.
Teverson, L.
Thomas of Gresford, L.
Tordoff, L.
Trenchard, V.
Trimble, L.
Trumpington, B.
Tyler, L.
Verma, B.
Waldegrave of North Hill, L.
Walpole, L.
Wilcox, B.
Williams of Crosby, B.
Williamson of Horton, L.
Willoughby de Broke, L.


Acton, L.
Adams of Craigielea, B.
Adonis, L.
Afshar, B.
Ahmed, L.
Anderson of Swansea, L.
Andrews, B.
Archer of Sandwell, L.
Armstrong of Ilminster, L.
Ashton of Upholland, B. [Lord President.]
Bach, L.
Bassam of Brighton, L.
Berkeley, L.
Bernstein of Craigweil, L.
Best, L.
Bilston, L.
Boyd of Duncansby, L.
Brooke of Alverthorpe, L.
Brookman, L.
Burlison, L.
Butler-Sloss, B.
Campbell-Savours, L.
Carter of Coles, L.
Chandos, V.
Christopher, L.
Clarke of Hampstead, L.
Clinton-Davis, L.
Cohen of Pimlico, B.
Corbett of Castle Vale, L.
Crawley, B.
Cunningham of Felling, L.
Darzi of Denham, L.
Davies of Coity, L.
Davies of Oldham, L.
Dean of Thornton-le-Fylde, B.
Dearing, L.
Desai, L.
Dixon, L.
Donoughue, L.
Dubs, L.
Eatwell, L.
Elder, L.
Elystan-Morgan, L.
Evans of Parkside, L.
Evans of Temple Guiting, L.
Farrington of Ribbleton, B.
Filkin, L.
Foster of Bishop Auckland, L.
Gale, B.

21 Feb 2008 : Column 333

Golding, B.
Goudie, B.
Gould of Potternewton, B.
Graham of Edmonton, L.
Hannay of Chiswick, L.
Harries of Pentregarth, L.
Harris of Haringey, L.
Harrison, L.
Hart of Chilton, L.
Hattersley, L.
Haworth, L.
Henig, B.
Hollis of Heigham, B.
Howarth of Newport, L.
Howells of St. Davids, B.
Howie of Troon, L.
Hoyle, L.
Hughes of Woodside, L.
Irvine of Lairg, L.
Janvrin, L.
Jones, L.
Jones of Birmingham, L.
Jones of Whitchurch, B.
Jordan, L.
Judd, L.
Kerr of Kinlochard, L.
King of West Bromwich, L.
Kinnock, L.
Lea of Crondall, L.
Lipsey, L.
Lofthouse of Pontefract, L.
McDonagh, B.
Macdonald of Tradeston, L.
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
McKenzie of Luton, L.
Malloch-Brown, L.
Massey of Darwen, B.
Maxton, L.
Mitchell, L.
Moonie, L.
Morgan, L.
Morgan of Drefelin, B. [Teller]
Morris of Aberavon, L.
Morris of Handsworth, L.
Morris of Manchester, L.
Newcastle, Bp.
Ouseley, L.
Patel of Bradford, L.
Pendry, L.
Plant of Highfield, L.
Prys-Davies, L.
Quin, B.
Radice, L.
Ramsay of Cartvale, B.
Rea, L.
Rendell of Babergh, B.
Richard, L.
Ripon and Leeds, Bp.
Rooker, L.
Rosser, L.
Rowlands, L.
Royall of Blaisdon, B. [Teller]
Scotland of Asthal, B.
Simon, V.
Snape, L.
Soley, L.
Stone of Blackheath, L.
Strabolgi, L.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Thornton, B.
Tomlinson, L.
Turnbull, L.
Turner of Camden, B.
Vadera, B.
Wall of New Barnet, B.
Warwick of Undercliffe, B.
Wedderburn of Charlton, L.
West of Spithead, L.
Whitaker, B.
Whitty, L.
Wilkins, B.
Williams of Elvel, L.
Woolmer of Leeds, L.
Wright of Richmond, L.
Young of Norwood Green, L.
Young of Old Scone, B.

Resolved in the affirmative, and amendment agreed to accordingly.

3.31 pm

[Amendment No. 10 not moved.]

Clause 11 [Modification of legislation applying in relation to building societies]:

Lord Davies of Oldham moved Amendment No. 11:

The noble Lord said: I shall also speak to the other two government amendments, Amendments Nos. 12 and 13, in my name. The House will appreciate that these amendments are in response to one of the central recommendations of the Delegated Powers and Regulatory Reform Committee, which reported yesterday, that the Bill be changed to specify the enactments that may be amended by the Treasury under the clause. Another government amendment deals with another of the core recommendations of the Delegated Powers and Regulatory Reform Committee that the clause be subject to the affirmative procedure.

21 Feb 2008 : Column 334

In addition, the removal of subsection (4)(b)—the purpose of Amendment No. 13—means that the Treasury cannot use an order made under the clause to apply any enactment to building societies that otherwise would not apply. The only such enactments that we would want to apply would be certain provisions of insolvency law, but this is now dealt with by the additional reference to Sections 90 and 90A of and Schedules 15 and 15A to the Building Societies Act 1986, which deal with the application of insolvency legislation to building societies.

The narrowing of the clause as a consequence of the amendments will enable the Treasury to modify only the Building Societies Act 1986, and I hope that this meets the central concerns which the DPRRC put before the House. I therefore hope that the House will accept Amendment No. 11. I beg to move.

Lord Goodhart: I am sure that my colleagues on the Delegated Powers and Regulatory Reform Committee and I will be grateful for small mercies here. Perhaps they are medium-sized mercies rather than small ones. We certainly welcome the alterations, in particular to Clause 11, and the extension of the affirmative procedure to Clauses 5 and 7—the compensation provisions. We do of course regret that the Government have felt unable to accept the most important of our recommendations on the use of the affirmative procedure for orders made under Clauses 3, 4 and 6.

Lord Hunt of Wirral: I am very glad that the noble Lord, Lord Goodhart, spoke before me as I wanted to take the opportunity to congratulate him and his colleagues on the Delegated Powers and Regulatory Reform Committee, not only on the quality of its report but the speed with which it produced its recommendations. The Government are testing the procedures of the House to the limit, and I admire the way in which the noble Lord and his colleagues put forward some very important points.

So far as the concerns that the noble Lord has just expressed relate to other matters in the Bill, we will want to think carefully about what he has just said. However, when I first saw Clause 11, I found myself in complete agreement with the committee’s recommendation that this provision is inappropriate and should be removed from the Bill. Yet that committee gave a fallback position, with which the Government have now decided to proceed, and I very much welcome what the Minister has said.

My only other comment is that in the tremendous haste of our procedures, Amendment No. 20, to which I understand that I should speak in this group, seeks to leave out a part of the Bill but refers to “buiding” rather than building societies. That is not an attempt to set up a whole new set of friendly societies, and I apologise for the error. Nevertheless, I will not be seeking to move Amendment No. 20, or to exclude Clause 11 in view of some very helpful comments by the Minister.

On Question, amendment agreed to.

Lord Davies of Oldham moved Amendments Nos. 12 to 13:

21 Feb 2008 : Column 335

“(e) sections 90 and 90A of, and Schedules 15 and 15A to, that Act (application of companies winding up legislation and other companies insolvency legislation to building societies).”

On Question, amendments agreed to.

Clause 11, as amended, agreed to.

Clause 12 [Consequential and supplementary provision]:

Lord De Mauley moved Amendment No. 14:

The noble Lord said: I have tabled this amendment, and Amendment No. 15, to give the Minister the opportunity to explain why he has not seen fit to table amendments addressing the concerns and recommendations of the Delegated Powers and Regulatory Reform Committee regarding this clause. Its report makes it clear that the powers in this clause should be subject to the affirmative procedure, yet they are noticeably absent from the list of orders on which the Government have conceded that procedure.

The DPRRC report also considered the two paragraphs specifically mentioned in my amendments to be particularly unusual, and requested that they be adequately justified. I look forward to hearing what justification the Minister might put forward in response. In particular, I am interested to hear what “rule of law” he could imagine needing to be “disapplied” as the result of nationalising a bank or building society. Does he think that the powers in this clause will be used as a consequence of the nationalisation of Northern Rock, or are these yet more of the precautionary powers that the Government are insisting on including, while denying ever having the intention of using them? I beg to move.

Lord Davies of Oldham: The Committee will have seen from the consideration of the previous amendments, which I moved on behalf of the Government, that we took the report of the Delegated Powers Committee very seriously and examined its recommendations with great care. That is why we produced those amendments. However, as the noble Lord has indicated, we have concerns about other aspects of its recommendations, and I must resist Amendments Nos. 14 and 15.

We have taken powers because it is necessary to facilitate the smooth implementation of temporary public ownership. Amendment No. 14 proposes to remove the power of the Treasury to,

It is proposed to exercise this power in the Northern Rock transfer order. For example—the noble Lord pressed me on what the examples might be—Article 7 of the draft order, copies of which have been placed in the House, disapplies Section 24 of the Companies Act 1985 in relation to Northern Rock while it is wholly owned by the Treasury. Section 24 of the 1985 Act requires a public company limited by its shares, such as Northern Rock, to have at least two members and imposes unlimited liability on its shareholders and other persons in certain circumstances for breach of that provision.

21 Feb 2008 : Column 336

There will be only one member of Northern Rock after its transfer; namely, the Treasury Solicitor. It clearly is not in the interests of taxpayers for unlimited liability to accrue to him. This power is also to be exercised to exclude Ministers, the Treasury and the Bank of England from the application of shadow directorship provisions in the Companies Acts, the Insolvency Act 1986 and the Financial Services and Markets Act 2000. There are precedents for that in Schedule 2(15) to the Commonwealth Development Corporation Act 1999 and other Acts. It is not feasible to provide narrower powers simply because it is not possible to foresee all the circumstances in which the Bill’s different transfer powers might be used. I emphasise that the use of the powers is subject to parliamentary scrutiny and the Government would expect to explain their use of such powers in the customary way.

I hope that I have explained to Members of the Committee why the specific circumstance of Northern Rock raises particular necessities for exemption from Companies Acts and other relevant legislation. That is the basis of the Government’s position and why I am asking the noble Lord to withdraw his amendment.

Lord De Mauley: I am grateful to the Minister for his words, which I need to give further thought. While I reserve the right to come back to this point on Report, for now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 15 not moved.]

Clause 12 agreed to.

Clause 13 [Orders and regulations: general]:

Lord Davies of Oldham moved Amendment No. 16:

The noble Lord said: In speaking to Amendment No. 16, I shall consider other amendments in this group. Again, these amendments deal with issues raised by the report of the Delegated Powers and Regulatory Reform Committee. In my earlier contribution, it was remiss of me not to thank the chairman and the committee members for the very assiduous work which they discharged at very short notice to the great advantage of the House. We very much applaud that work. At Second Reading, I said that the Government would take the committee’s recommendations seriously. Its thoughtful scrutiny of delegated powers provides an important resource for this House and, I might add, for the other place where its views are equally rightly respected.

21 Feb 2008 : Column 337

I have tabled Amendments Nos. 16 and 18 in response to the committee’s important recommendations and one of the most important issues. They provide for the orders under the Bill which concerns compensation in Clauses 5, 7 and 8(6) and the use of the Bill’s powers in relation to a building society in Clause 11 should be made under the draft affirmative procedure. We have responded to the committee’s recommendations through other amendments that narrowed the scope of the power in Clause 7 in the manner advised in the report.

3.45 pm

Amendments Nos. 17 and 19 seek to go further, ensuring that all orders made under the Bill are subject to the affirmative procedure. That builds on the committee’s report, which also advises that transfer orders under Clauses 3 and 6 together with orders under Clause 4 and 12 switching off subscription rights and consequential and supplementary provisions should be made under the draft affirmative procedure.

We considered that argument carefully. We understand the concerns expressed about the scope and significance of the powers set out in the clauses. We have also considered carefully what the committee said about the speed with which, should the occasion warrant it, a draft affirmative order can be passed, and about the certainty such approval can bring. We have also noted the possibility of a dehybridisation provision and the possibility of an urgency procedure whereby in urgent cases an order can be made subject to confirmation later.

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