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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 ratespeople 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 arms 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 Rocks 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.
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 Rocks 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.
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.
In addition, the removal of subsection (4)(b)the purpose of Amendment No. 13means 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 7the 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 committees 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.
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.
It is proposed to exercise this power in the Northern Rock transfer order. For examplethe noble Lord pressed me on what the examples might beArticle 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.
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 Bills 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 Governments 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.
(2A) A statutory instrument which contains an order under section 5, 7, 8(6) or 11 (whether alone or with other provision) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.
(2B) If a statutory instrument to which subsection (2A) applies would, apart from this subsection, be treated as a hybrid instrument for the purposes of the Standing Orders of either House of Parliament, it is to proceed in that House as if it were not such an instrument.
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 committees 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.
I have tabled Amendments Nos. 16 and 18 in response to the committees 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 Bills powers in relation to a building society in Clause 11 should be made under the draft affirmative procedure. We have responded to the committees recommendations through other amendments that narrowed the scope of the power in Clause 7 in the manner advised in the report.
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 committees 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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