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Banking Bill

Debate on whether Clause 75 should stand part of the Bill. This clause, as I am sure we have all realised by now, should not stand part of the Bill for two good reasons. The practical one is that it will create serious difficulties for the banking industry. We may dislike the banking industry but it has been, and remains, a contributor to the economy of this country. I spoke about the problems that this clause will create for the banking industry when we debated previous amendments. The second reason, which we have already touched on, is constitutional. I have spoken to various amendments to Clause 75 but the truth is that the clause should not be in the Bill. However difficult it may be to cope with a serious banking failure, and however much flexibility might be required for that purpose, that is insufficient reason for surrendering the ability of Parliament to call the Executive to account. In spite of what the Minister has said about the powers being very narrow and specific, they are not, as my noble and learned friend Lord Lyell pointed out. At the risk of repeating myself, let me explain why there is a movement of power from Parliament to the Executive. Subsection (1) of Clause 75 allows any law, except this one, to be amended for the purpose of enabling the powers in Part 1 of the Bill to be used effectively. The definition of ““amend”” is set out in subsection (4). If one examines the special resolution objectives, for which these powers are to be used, one finds that it does not take much imagination for those objectives to be interpreted broadly enough to allow an unacceptably wide range of laws to be changed. For example, Clause 4(5) provides that objective 2 is to protect and enhance public confidence in the banking system. That means that if there were media speculation and comment on the state of the banking industry or the state of an individual bank, it would be feasible to use this legislation to introduce press and television censorship. Your Lordships may think that this is a little far-fetched, but it is perfectly possible. That is just one example of what could be done under this legislation. There are many occasions, as I commented when speaking to Amendment 125, where the law has been broadly interpreted to suit government requirements. I am sure that your Lordships can think of many instances where the Government have used their power in a way not thought of when particular legislation was introduced. Subsection (3) of Clause 75, as we have already discussed, allows for retrospective legislation. The difficulty that the clause creates for banks has already been pointed out but, again, it is possible to interpret the clause very broadly. The law in Great Britain gives citizens the ability to go about their business, secure in the knowledge that there is a clear set of rules on what is allowed and what is not. They have the protection of the rule of law, as my noble and learned friend pointed out. In a democratic society, it is unthinkable that this certainty of where one stands within the law can be removed at will. Subsection (8), as we have already discussed, enables Parliament to be completely ignored when the power is used to amend the law and to change it retrospectively. I remind your Lordships that subsection (8)(b) effects this by allowing 28 days for an order to be approved by Parliament; if the order lapses, subsection (8) allows a new order to be made. The Minister said that if the order were rejected by Parliament, it would be unlikely to be re-presented. That does not mean to say that the Government could not allow the order to lapse and then simply introduce it again so that, by stringing a number of 28-day periods together, they could ignore the views of Parliament. Subsection (8)(c) states that, even if an order is disapproved of by Parliament, nothing is invalidated that was done under it. Together, subsections (1), (3) and (8) enable the Government to ignore Parliament completely—subsection (1) by allowing the law to be amended, subsection (3) by allowing retrospective change of the law, subsection (8) by allowing orders to be made at will and subsection (8)(c) by allowing for the force of the law to apply to an order even if it lapses. But it is for Parliament to approve legislation; it is not for the Executive to change Parliament’s decisions at will and without its approval. However much flexibility is required to deal with banking stability, that does not justify sacrificing the supremacy of Parliament and all that that can entail. In any event, if a serious problem arose, there is nothing to prevent Parliament from being recalled, as my noble friend Lord Forsyth suggested. To say that it is difficult and expensive to recall Parliament and that, for that reason, one should surrender democracy, is absurd. The Northern Rock legislation was pushed through both Houses far more quickly than any deal formalising a bank coming into the special resolution regime could possibly be signed, sealed and delivered. Clause 75 turns upside down centuries of effort and sacrifice to create a free society governed by the rule of law and the democratic process. Even by the standards of this Government in recent years, Clause 75 is appalling. It is shocking that it has even been introduced to Parliament.