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Landsbanki Freezing Order 2008

My Lords, I join in the welcome to the noble Lord, Lord Myners. I speak as a member of the Merits Committee. We considered the first order on 15 October, reported on it and then considered the second order immediately after it was laid. We reported: "““By means of this Order, the UK Government are taking action to ensure that Landsbanki assets are not transferred from the UK until the position of UK creditors becomes more clear””." At the same time, a Statement was made in the House by the Chancellor of the Exchequer, which stated: "““I am taking steps today to freeze assets of Landsbanki in the UK until the position becomes clearer””." When we reported to the House, we felt that we were not in a position to give any detailed advice. I had personally hoped that by today—three weeks after the first order was laid—the position would have become somewhat clearer. Although I welcome the opening explanation of why the orders were laid, whatever we may think of the rights and wrongs of that, I regret that so far we have not been brought adequately up to date with what has happened. I do not want to repeat a lot of the things that other noble Lords have said, but the gearing between the United Kingdom and Iceland should not be forgotten. There are 60 million people in the United Kingdom and 300,000 in Iceland. Her Majesty's Government, in dealing with this matter, should remember that. As it happens, Iceland has the highest rate of literacy probably in the developed world—higher than we have here. Also, up until now, it has had a per capita income about the same as the United Kingdom. However, the resentment notably referred to by the noble Lord, Lord Campbell-Savours, has amounted to a diplomatic problem that should be solved. I wish to interpolate here that I do not have any issue about the use of the Anti-terrorism, Crime and Security Act 2001. It was looked at and it is entirely correct that that Act can be used. However, 10 per cent of the population of Iceland presented a signed petition to the Icelandic Government, which stated: "““Gordon Brown unjustifiably used the Anti-terrorism, Crime and Security Act of 2001 against the people of Iceland for his own short-term political gain. This has turned a grave situation into a national disaster ... Hour by hour ... the actions of the British government are indiscriminately obliterating Icelandic interests””." That should be set against the background of what was said in the beginning by the Chancellor of the Exchequer and in the explanation of the statutory instrument—that our Government would seek to solve this problem as quickly and positively as they could, because it was a grave problem. Finally, the Minister referred to the International Monetary Fund’s report of 4 July this year. I want to read out its conclusions, but before I do that I want to say that the International Monetary Fund looked at Iceland's situation every year. In 2007, it issued what, if you read it carefully, was a Gypsy's warning that things could not go on in Iceland the way they were then going. In July of this year, it said: "““Outlook … Economic activity is expected to slow significantly from unsustainably high levels””," and, "““Looking forward, policies will have the difficult task to facilitate an orderly rebalancing process, while mitigating risks by shoring up confidence. Close coordination between monetary and fiscal policies, along with actions to address financial sector vulnerabilities, will be key in this respect””." Interpreting this bureaucratic language, it means that Iceland was facing a serious economic and banking crisis. The Treasury must have known that—that has already been referred to in this debate. What was Her Majesty’s Treasury advising British depositors with Icelandic banks from 2007, contemporaneously with the Northern Rock issue, through to July of this year—90 days before the instrument freezing the assets was laid? I emphasise that we have some responsibility for helping to resolve this issue. As members of the IMF, I hope that we are welcoming the $2.1 billion standby facility which has already been approved by the staff of the IMF, from which $833 million can be drawn immediately, given board approval.