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Banking Bill

This group of amendments relates to Clause 36, which makes provision for continuity in a property transfer. Clause 36 makes provision to preserve the continuity of a failing bank’s arrangements, and hence is essential to ensure that a business can continue operating after the transfer. This is particularly important in the case of property transfers, when banking business is transferred from one company to another. An example of why this sort of provision is needed can be given. A transfer of banking business from bank X to bank Y may involve the transfer of mortgages. The mortgage documentation will refer to bank X, and not to bank Y. This power can be exercised to ensure continuity. For example, in the example I have given, under subsection (1) of the clause, bank Y can be treated as the same person in law as a bank X or, under subsection (5), references to bank X can be modified so as to refer to bank Y. In particular, it may be important under a property transfer to ensure the transfer of employees to the transferee. Amendment 62 seeks to remove subsection (4) of the clause, which provides that a property transfer instrument may make provision about the continuity of employment. The purpose of this subsection is to ensure that the authorities can make relevant provision in order to provide, by instrument or order, that employees can be transferred with the business so that it can continue to operate effectively. The expertise and corporate knowledge of the employees may be of great importance to the continued operation of the business. This provision would allow, for example, employment service at the transferor failing bank to be treated as an employment service at the transferee, to preserve employment rights which arise after a stipulated period of service. But let me be clear: this is not the same power, or even a similar power, to that which we debated earlier in the context of the directors of failing banks. In particular, the power does not allow general variations to be made to the contracts of employees; for example, to change their salary or to alter such entitlements as they may have in the event of redundancy. So noble Lords need have no concern that these powers will be used adversely to affect the interests of employees in a failing bank. Provision in relation to employment is likely to be important to the effectiveness of any property transfer. Therefore, I hope the noble Baroness will feel able to withdraw her amendment. The noble Baroness asked a specific question on why employer requirements were not applied to share transfers. The provisions on continuity of employment are not relevant to share transfers. The employer, the legal person who is the bank, remains the same on the share transfer. I shall now turn to Amendment 63. The noble Baroness explained when introducing these amendments that they were probing, but she was withering in her analysis of this clause and the questions she raised about it. So much so that I have been reconsidering the case for keeping subsection (7), particularly in view of Clause 74, which provides that the Treasury may make provision in regulations, "““about the fiscal consequences of the exercise of a stabilisation power””." I very much appreciate the points she made. I have also reached the conclusion that subsection (7) is no longer needed and that provision for tax should be made through the detailed powers in Clause 74. Accordingly, I am delighted to accept the amendment. I am, of course, very grateful to the Opposition Front Bench and the Liberal Democrat leadership in their constructive approach to the work of the Committee. I hope that this small gesture might be taken as recognition of their sterling service in making their case.