Previous Section Back to Table of Contents Lords Hansard Home Page

My amendments do not mandate the disclosure of recipients, but they do not allow the emergency procedure to be used as a cover for anonymity when the public interest is not at stake. It seems to me that it is only the public interest that the Government can pray in aid for nondisclosure. I hope that the Minister will see that as reasonable. I beg to move.

Lord Turnbull: My Lords, there is a general principle about which I am unclear. We seem to be in a position where the amount of expenditure will be disclosed but the recipient will not. We have to ask ourselves whether that should always be the case. If a bank in trouble is assisted by the authorities, but in the mean time goes, for example, to find people who can raise capital and it puts the deficit in its capital to rights and repays the assistance, one could take the view that that should never be revealed. The fact that someone borrowed from the bank could be revealed but you would never say which bank it was. Alternatively, should we follow the principle that, as soon as it is possible to say that it would not damage the bank or plunge it back into the problem that it had faced originally, its identity should be disclosed?

I can remember in the early 1990s, when I was at the Treasury, having discussions with the then Governor, the noble Lord, Lord George, and I think the agreement was that when assistance was given by the Bank—they were much smaller banks in those days than we are now talking about—the amount or the identity would not be revealed immediately, but that it would appear in the first annual report of the bank which appeared after six months. However, I cannot remember whether only the amount of the assistance was revealed in the annual report or the name as well. There may be two distinct, subsequent announcements: first, that a scheme has been used and the amount and, secondly—this is what I am seeking guidance on—that a particular bank received help. I suppose the case for doing that would be wanting to judge whether the bank's judgment was correct. The bank may have survived but it may have been rather a foolish thing to have done. Are we entitled to know? Is that as much as Parliament is entitled to know or will we stick, as we have now in Clause 227, and add the requirements in the following clauses on the National Loans Fund that only the amount and the fact of some help is to be revealed?

Lord Blackwell: My Lords, in responding to these amendments, I wonder whether the Minister could clarify the relationship between any report from the Treasury, with or without this amendment, and the disclosure requirements likely to be on the board of the company which receives the assistance. I should have thought that any such assistance would be a market-sensitive fact which would normally have to be disclosed anyway, assuming it is a public listed company. How would any information which the Government put into the public domain relate to the obligations on the directors and the timing difference between those matters?

Lord Myners: My Lords, the purpose of Clause 227 is to give statutory cover for public expenditure in support of various schemes which the Government

3 Feb 2009 : Column 596

consider necessary in these extraordinary times. Subsections (1) and (2) are fairly routine parts of the Bill. Clause 227(5) is less ordinary. It allows for direct access to the Consolidated Fund in urgent cases.

This subsection is unusual, but it is not unprecedented. First, there are already what are called Consolidated Fund standing services provided for in Acts of Parliament. A Consolidated Fund standing service is a service where the money to finance the service can be taken directly from the Consolidated Fund rather than being voted first in supply estimates. There is also provision in some Acts for direct access to the Consolidated Fund to meet government commitments where estimates provision is not available. A good example is the Export and Investment Guarantees Act 1991. But direct access to the Consolidated Fund for expenditure does not mean that it is not subject to proper control, reporting or accounting. No payment may be made out of the Consolidated Fund without the prior approval of the Comptroller and Auditor-General. The amounts paid out will, suitably aggregated, appear in the annual accounts of the Consolidated Fund. There will be National Audit Office scrutiny and the Treasury will have to answer to the Public Accounts Committee in the normal way.

Turning now to Amendments 76 and 78, subsections (6) and (7) of Clause 227 provide for reporting of expenditure to which the special provisions in subsection (5) apply. Your Lordships were concerned about aspects of these provisions and I specifically promised the noble Lords, Lord Higgins and Lord Turnbull, that I would look at the issue of anonymity again. We have done so, but we have come to the conclusion that the provisions of Clause 227(6) need to be retained.

I fully appreciate, not least as a Treasury Minister, that it is not ideal for anyone concerned with public finances to be told that one cannot be informed about what happened with public money. The plain fact is that some of the schemes or arrangements could not operate or would never be taken up by institutions concerned if there was any chance that their identity might become known. There may be cases where knowledge of public support could precipitate the kind of crisis we were seeking to prevent.

I say to the noble Lord, Lord Turnbull, that I believe that that applies even in cases where, after assistance was received, the amounts were fully repaid. The disclosure of that fact would raise questions about the structure, efficacy, governance, risk controls, and so on, of the recipient institution. There may also be instances where it is essential to keep payments under a guarantee or similar commitment confidential. As well as a need to be able to delay or dispense with a report on grounds of public interest, we must be able to assure participants in some schemes that we can keep confidential their participation and any payments we have made under any guarantees or similar financial commitments entered into for their benefit.

The noble Lord, Lord Turnbull, also asked about disclosure in the Bank’s annual report. To the best of my recollection, the Bank's annual report now discloses that no financial assistance has been provided since a certain date. Obviously, that may well change in the Bank’s next annual report. I am speaking here on the

3 Feb 2009 : Column 597

basis of my recollection as a member of the Audit Committee of the Court of the Bank of England, but my experience is somewhat out of date, and I was not sitting in court when the last set of annual reports and accounts were approved, because I had taken leave of absence. If I am incorrect in my explanation, I will write to the noble Lord.

The noble Lord, Lord Blackwell, asked about the obligations that would fall on the directors of a bank if the bank was a public company under listing regimes. I would rather give him a very precise and correct answer, so rather than anticipate the answer, which I am tempted to do, I prefer to take guidance and will write to the noble Lord and copy my reply to others who have spoken to the amendment. I fully accept the point that he makes: if there were an obligation to disclose under the listing requirement, part of the argument in favour of anonymity here would be undermined for public companies.

To close, we have, therefore, to keep the anonymity provisions in Clause 227(6), and I am afraid that the Government cannot accept Amendments 76 and 78 , tabled by the noble Baroness, Lady Noakes. I hope that in the light of that explanation she will feel able to withdraw the amendment.

Baroness Noakes: My Lords, these are difficult issues. Obviously, there is a great desire for transparency and public knowledge but, on the other hand, I recognise that there are necessary issues of confidentiality. There has been some discussion of what was done with the Bank of England's accounts. From my recollection, since the disclosure rules for the Bank of England were changed, there had not, until last year, been an issue of new financial assistance. You have to go back quite a long way to find the last one, although that, too, is from memory, going back even further than the Minister's memory.

These are difficult issues, and I shall not press my amendment. I do not say that I am convinced by the Minister's response, but I concede that there is a case to be made. I beg leave to withdraw the amendment.

Amendment 76 withdrawn.

Amendments 77 to 79 not moved.

Clause 228 : National Loans Fund

Amendment 80

Moved by Lord Davies of Oldham

80: Clause 228, page 115, line 43, at end insert—

“(6) Where money is paid in reliance on subsection (1) the Treasury shall as soon as is reasonably practicable lay a report before Parliament specifying the amount paid (but not the identity of the institution to or in respect of which it is paid).

(7) If the Treasury think it necessary on public interest grounds, they may delay or dispense with a report under subsection (6).”

Lord Davies of Oldham: My Lords, the amendment concerns transparency in payments from the National Loans Fund. Transparency about some of the powers

3 Feb 2009 : Column 598

provided in the clauses has been the subject of a great deal of debate both in Committee and today. We undertook in Committee to look at points made and reflect further. The amendment is our response to those Committee debates.

I shall have a little more to say on the subject of transparency in general when we come to Amendment 81, and why the Government believe it to be unnecessary, but let me concentrate first on the merits of the government amendment.

It is important to understand that the financial provisions in Clauses 227 and 228 fulfil a largely routine function in providing statutory cover for public expenditure. One consequence is that they automatically attract the standard arrangements for control, reporting and accounting of public expenditure.

Clause 227 attracts those mechanisms that apply to expenditure from the Consolidated Fund, whether voted in Estimates or taken directly as a standing service. Clause 228 automatically attracts the normal machinery for the control, reporting and accounting for payments from the National Loans Fund. For example, no expenditure on loans may be paid out of the National Loans Fund without the approval of the Comptroller and Auditor-General under the National Loans Act 1968. All loans from the National Loans Fund are included in the annual accounts of the fund.

The National Loans Fund can only make loans, so Clause 228 could never replace the emergency provisions in Clause 227(5), but it serves a similar purpose in that loans can also be made from Votes—provided, of course, that the necessary Estimates cover has been obtained, or that the resources can be taken from the Contingencies Fund.

So the Government felt, on reflection, that the same kind of reporting arrangements as apply for the urgent payments under Clause 227(5) should be made for individual emergency loans under Clause 228. Amendment 80 does that with the same kind of anonymity and public interest conditions as Clauses 227(6) and (7) provide.

There are already in place well-established arrangements for accounting and reporting which will cope with most of what may happen under Clauses 227 and 228 in the normal way. The additional reporting arrangements that the Government now propose will ensure that emergency payments from the National Loans Fund will have the same reporting arrangements as those that Clause 227 provides for emergency payments, direct from the Consolidated Fund.

Accordingly, I beg to move.

Amendment 80 agreed.

Amendment 81

Moved by Baroness Noakes

81: After Clause 228, insert the following new Clause—

“Transparency: financial assistance

(1) The Treasury shall prepare and lay before each House of Parliament a quarterly report in respect of—

(a) financial assistance paid out under section 227(1);

(b) loans made under section 226;

3 Feb 2009 : Column 599

(c) guarantees, indemnities or similar arrangements which may result in amounts being paid out under section 227(1).

(2) The Treasury shall ensure that the report contains sufficient detail to enable Parliament to understand the actual and potential commitment of public money to financial assistance and the Treasury may summarise the individual items which fall to be disclosed in a report in whatever way they consider appropriate in order to assist Parliament in that regard.

(3) If the Treasury consider that certain information should not be disclosed in a report on public interest grounds, a report may omit that information until such time as the Treasury consider that the public interest is no longer affected.”

Baroness Noakes: My Lords, Amendment 81, in my name and that of my the noble Lord, Lord Turnbull, introduces a new clause after Clause 228 which, put simply, provides for transparency and reporting to Parliament about the uses of both Clauses 227 and 228.

We debated in Committee a longer and more detailed version of the amendment, and the Minister said that he would take the issue away to look at it. All he has produced is a little bit of extra reporting set out in Amendment 80, to which we have just agreed. I declined to group the amendment with Amendment 80, because they operate at quite different levels and I did not want the House to think that they were in some sense the same approach to transparency, because they are not.

We noted in Committee that one thing that is not well reported to Parliament is commitments as well as cash. My amendment seeks to capture commitments as well as cash outflows. The latest schemes introduced by the Government to stave off the recession have typically involved guarantees rather than cash. Where and how can Parliament keep an eye on how much contingent liability is being racked up for the future? The answer is probably the annual resource accounts of the Treasury. As the recent report of the Treasury Select Committee in another place noted, the information that is contained in those accounts is painfully inadequate, and of course is not timely.

My amendment calls for a quarterly report to Parliament, so that Parliament can track the build-up of both cash and commitments under the various financial assistance schemes that now exist under the very wide powers that together Clauses 227 and 228 comprise. In Committee, the Minister queried whether it was appropriate for the Treasury to report on other departments’ financial assistance. That is not a real point. The powers can only be used with the consent of the Treasury, and of course, we are entitled to look to the Treasury to pull together relevant pan-government financial analysis. That is one of the things the Treasury is there for. I should also note that my amendment has the usual let-out on public interest grounds for as long as the public interest may be affected, so there should be no question of having to disclosed information that is of a sensitive nature.

In sum, this is a perfectly reasonable amendment that has the needs of parliamentary accountability at its heart. I beg to move.

6 pm

Lord Turnbull: My Lords, the noble Baroness, Lady Noakes, has justified this amendment, the primary purpose being to ensure proper parliamentary accountability of the way the powers provided in this

3 Feb 2009 : Column 600

Bill are exercised. It also provides, as she has said, a pragmatic solution to the issue of whether market intervention should be kept confidential—that is, that information may be withheld, but should be released once there is no danger of exacerbating the problem that the authorities are trying to solve.

In addition to the parliamentary requirement, there is a more general requirement. The Treasury and the Bank are using a wide variety of techniques to counter the current problems. There is a special liquidity scheme, equity stakes in banks, preference shares, guarantees of inter-bank lending, risk sharing for lending into companies, refinancing of mortgages, lending which substitutes for bank lending, insurance of so-called toxic assets and, possibly in the future, purchase of such assets.

Different interventions are being injected at different points in the process. Some may be in money markets, some direct into banks and some towards their credit-starved customers. Some assistance may be provided under the powers of this Bill, some under other powers, some under the Appropriation Act, and as the previous two clauses show, there are different channels through which they can be financed. One’s head spins in the face of all this.

I think there is a strong need for a regular report which would take the provisions of this clause as its kernel, but would actually go beyond it. It would bring together all the different ways in which the Government and the Bank are responding to the financial crisis. It should identify each scheme under a consistent nomenclature; when it was announced; how much has been committed; how much has been drawn; what guarantees have been offered; any losses crystallised to date; the powers used; and the source of the funding.

Above all, it must be clear and simple. Regrettably, the Pre-Budget Report and the Budget documents have become virtually unusable. They are rather like those cumulation songs, such as the “Twelve Days of Christmas”, or “Ten Green Bottles”, when not only are this year’s actions reported, but all the previous years’ actions are repeated until the document becomes ever bigger. The latest version should simply be compared with those produced 10 years ago.

This amendment provides the foundation of such a report, and that is why I, too, am happy to support it.

Lord Newby: My Lords, I support the noble Lords who have spoken in favour of this amendment. One of the problems about the situation we are in now, which the Government’s provisions do not solve, is that there is a whole raft of statements, a whole raft of commitments, and it is very difficult to bring them all together and get a sense of what they are at any one time, and also, how they are growing. The great advantage of this amendment is that it produces a series so you can see from one quarter to the next how the situation is changing. In terms of getting a sense of the overall level of government commitment, it is far superior to the provisions that the Government have placed so far in the Bill.

Viscount Eccles: My Lords, in my copy of the amendments, subsection (1)(b) states,

I think that must be a misprint for “228”.

3 Feb 2009 : Column 601

Lord Davies of Oldham: My Lords, I am happy to say that it is not my amendment, so someone else must address it. Just for once, I leave the noble Viscount’s keen scrutiny of the Bill to the tender mercies of the noble Baroness when she gets her chance to reply.

We have already said a lot on the matter of transparency in relation to those parts of the Bill which provide for financial assistance to be made, but I think I need to spell out why the Government are opposed to Amendment 81.

We live in extraordinary times and this Bill is intended to deal with the consequences of extraordinary events. Some of the powers in the Bill are, therefore, themselves rather extraordinary. We have had attention drawn to that during the course of the debate this afternoon. The House is of course concerned about the scope of these powers and about the provision for parliamentary control and oversight of their use. The Government would have expected nothing less and we appreciate the importance of responding to these concerns.

However, not every power or provision in the Bill is extraordinary. Some are quite ordinary—even routine—and that is true of parts of Clauses 227 and 228, as we have discussed at length in the preceding debates. For example, Clause 227(1) is essentially a standard provision included in all Bills that might involve public expenditure. It gives the proper coverage for the use of the annual Supply Estimates to provide the funds for government departments to carry out their programmes. This provision is to be found in countless Acts of Parliament already on the statute book. And Clause 227(1) attracts all the normal apparatus of Parliamentary control, reporting and accountability for the expenditure concerned.

No money, therefore, will be spent on any of the schemes covered by subsection (1)—or for that matter subsection (2)—unless the necessary Estimates have been approved in the normal way by the House of Commons and incorporated in an Appropriation Act or a Consolidated Fund Act, or unless funds have been taken from the Contingencies Fund in line with other long-standing arrangements. Or—and this is where a reference to some non-routine provisions must be made—it has been necessary to use the provisions in subsection (5), which provide the Treasury with direct access to the Consolidated Fund in cases of urgency.

But there is more. No funds can be issued from the Consolidated Fund, even after an Estimate has been passed, without the approval of the Comptroller and Auditor-General under the Exchequer and Audit Departments Act 1866.

Where Estimates are involved, of course, expenditure will always be fully within normal departmental accounting systems. It will be included in departmental resource accounts and subject to National Audit Office scrutiny and audit. The schemes will be discussed in departmental reports, and scrutinised by departmental select committees and the Public Accounts Committee in another place. All of this apparatus will be attracted routinely and automatically by the departmental spending decisions, by the Estimates and by the statutory cover for those Estimates which Clause 227(1) and (2) provide.

As I said a few minutes ago, Clause 228 automatically attracts the normal machinery of parliamentary accountability. The Government do not feel, therefore,

3 Feb 2009 : Column 602

that there is any need for additional reporting of the expenditure covered by these clauses which the amendment proposes. Subsection (1)(c) of the proposed new clause opens up the issue of guarantees or any other form of contingent liability, which do not, as I explained in Committee, give rise to any expenditure when they are given. They give rise to expenditure only when they are called. So the normal mechanisms for reporting expenditure, which I have just described, do not bite on guarantees when they are given.

Next Section Back to Table of Contents Lords Hansard Home Page