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Banking Bill

The amendment derives from a fear on my part that the drafters of the Bill have overlooked an important condition introduced in the Insolvency Act 1986, which will interact very badly with the recently passed Pensions Act 2008. Under Section 1(3) of Part II of the 1986 Act, for the first time, in contrast with all previous insolvency legislation, the directors of a company which was challenged as to solvency were obliged not to accept insolvency until they had explored all possible avenues for its correction. Severe penalties would fall on them if they did not do so. As matters stand, it would be a reasonable assumption that any bank getting into dialogue with the Government with a view to a rescue was following that path and taking reasonable steps to avoid insolvency. If those discussions prospered, and the insolvency was avoided by the bank being embraced by the Government’s rescue arrangements, that bank would not have gone into insolvency. If the pension scheme was afterwards set adrift and not continued in the direct protection and ownership of the company and the Government, it would not qualify for inclusion in the Government’s pension protection plan. I am sure that that is an unintended consequence. All I am looking for in this probing amendment is an assurance from the Government that they will amend this clause to ensure that, whatever happens, a pension scheme that is bereft and set adrift as a result of being embraced by the Government’s nationalisation programme is itself either looked after or passed into the care of the pension protection plan. I beg to move.