---

Banking Bill

Amendment 35 35: Clause 13, page 7, line 25, at end insert— ““( ) The Treasury shall report to Parliament on an annual basis on the activities of each bank which is taken into temporary public ownership for as long as the bank remains in public ownership.”” The amendment adds a new subsection to Clause 13. This is a probing amendment for the Committee. The parliamentary accountability of banks that are in some kind of limbo within the special resolution regime troubles me, and, on reflection, the amendment itself is not sufficient to allay my concerns. I shall, therefore, take the opportunity to raise issues that have not been dealt with in the Bill that are relevant to dealing with the accountability of failed banks more generally. Under Clause 80, the Bank of England has to report to the Chancellor each year on the activities of a bridge bank, and that report must be laid before Parliament. However, in the Bill there is no equivalent provision for reporting to Parliament in respect of banks taken into public ownership. My amendment is intended to be a mirror of the Clause 80 provisions and repeats the annual report formulation in Clause 80, but I should like the Minister to explain why it is appropriate for Parliament to be kept informed about the affairs of a bridge bank only on an annual basis. Parliament should be kept informed about bridge banks and those in temporary public ownership on a more regular basis than annually. In each case, the status is not intended to be permanent, and Parliament should receive information at a frequency that is appropriate to the temporary or transient status. I can quite see that organisations that become a permanent part of the public sector—which is not, I believe, what is intended—might report annually, because that is what most public sector bodies do, but not these temporary creatures. My noble friend Lord Eccles, when he opposed the Question that Clause 12 stand part of the Bill, said that if a bridge bank was not held for a whole year, there would be no report at all to Parliament. That could equally be a criticism of my amendment, which is another reason why it is a probing amendment for today. I looked at the code of practice for further help, but received very little. Paragraph 98 refers to the reporting arrangements for bridge banks, and paragraph 99 states: "““As and when appropriate, the Chancellor of the Exchequer shall report to Parliament about the activities of the bank””." I am not entirely clear whether paragraph 99 is intended to refer to a bridge bank or a temporary public ownership bank. Either way, leaving it to the Chancellor’s discretion is at the very least a discourtesy to Parliament, and I believe that we need to see much clearer rules, preferably set out in this statute. When the Minister replies, I invite him also to cover the position of the banks that have been acquired under the Banking (Special Provisions) Act 2008. I believe that that Act contains no reporting requirements and, to that extent, it is deficient. That Act is about to expire and it seems to me that this Bill should therefore cover the parliamentary accountability of the banks in public ownership when this legislation takes over from the previous Act. More recently, we have also had a case of a controlling interest in the Royal Bank of Scotland, and I should be interested to know how information about that bank will flow to Parliament. In addition, the Government have set up UK Financial Investments as a holding vehicle for their growing banking conglomerate business. Although that seems sensible, it raises questions about that body’s accountability to Parliament. I am sure that the Government did not need a statute to set up UK Financial Investments but that does not excuse them from regularising the accountability of such a body at the first natural opportunity, and it seems to me that the first natural opportunity that presents itself is this Bill. I accept that all these banks need to be run on commercial lines and that they should not be subjected to minute inquiry or interference—something that applies as much to government as it does to Parliament. However, very large sums of public money have been invested in these bodies, directly and indirectly, and more stands contingently behind them. Indeed, if the powers of the Bill were used, more public money would be involved. These bodies are not simply the playthings of the Executive; Parliament has a right to information and a duty to keep these bodies under review in terms of information flows to Parliament. Therefore, it is right and proper that there is a defined regime of information flows so that Parliament can be clear about what it is entitled to receive. It seems to me that the Bill is a good place to start, although it is deficient because not only does it not deal with the situations created by the Bill but it does not deal with the situations created by last year’s Act either. I beg to move.