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Banking Bill

I shall intervene at this point rather than in a clause stand part debate, because the debate has ranged far and wide on this clause. My problem with it is that the Bill was intended to deal with what you might call ordinary times. Of course, banks have frequently failed, but not very close together. In the past 100 years, there have been a considerable number of bank failures, and I think we all agree that there should be a better scheme for dealing with infrequently failing banks. However, the Bill is in front of us at a time of crisis, which is colouring our view. I read the Treasury’s memorandum to the Delegated Powers and Regulatory Reform Committee, all the while bearing in mind that the Treasury is a minimalist department that says the least that it can reasonably say to make its point. It does not say as much as it might be thinking. On this occasion, however, it wrote two and a half pages, which is a pretty long presentation. I think we would all agree with it when it says very firmly in the two and a half pages that sometimes the unexpected happens. The question then is how you structure an appropriate response. As has been said in this debate, the examples given in the two and a half pages are, frankly, unconvincing, because Northern Rock and Bradford & Bingley were both cited. However, the Treasury found its way through both of those without the benefit of a Clause 75, so we could repeat the terms of the 2008 Act and not get into Clause 75. There is the possibility that it might need to do something that meant that the ombudsman’s powers to protect consumers were not prejudiced by a failing bank and the orders that followed. Then there is the disapplication of the 2006 Act to bridge banks. Bridge banks are the most significant feature of this Bill, and I should have thought that the possibilities that relate to bridge banks would have been thought through. My noble friend quoted the point made by the Delegated Powers and Regulatory Reform Committee. In making that comment, I think the committee was also conscious that a Bill that was originally intended for ordinary times was being brought forward in a time of crisis. The crisis has led to alternative actions. I suppose that if the Act existed, the FSA might have decided that the Royal Bank of Scotland should be taken into the special resolution regime. Is it really likely that at any time when there is a major problem, as there is today, the powers in Clause 75 would be confidently used? Surely, as has happened, another solution would be found in times of crisis. The case for this very wide power is unconvincing, and I firmly believe that the Treasury could find its way, as could the Bank of England, without the benefit of this clause. It might take a little more due diligence in each case, and possibly slightly more time, but I am sure that it would find its way through without the benefit of this clause, which should be withdrawn.