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Banking Bill

I have tabled Amendments 173F and 174AA as amendments to the Government’s Amendments 173E and 174A, as the Minister has explained. I also have Amendments 174 and 174C in this group. In addition to speaking to my amendments, I shall be raising some questions on the amendments to which the Minister has just spoken. The Minister’s Amendment 173C allows an unspecified Secretary of State to give financial assistance in the extraordinarily wide terms now allowed by new subsection (1A), introduced by Amendment 173E. Presumably, this covers all Secretaries of State, so the power is very wide indeed. More broadly, it is conventional for the Government to seek specific statutory cover for expenditure rather than rely on the Appropriation Act. To that extent, both Clause 225 and the government amendments are in line with that expectation. What is not expected is that the statutory power should be taken in a wholly unconstrained way, which is what the clause allows, particularly after the Government’s amendments. In another place there was a discussion about whether Clause 225 should be restricted to some kind of financial stability context. Expenditure in paragraph (a) of subsection (1) is so constrained because of the references to Parts 1 to 3 of the Bill but neither paragraph (b) nor paragraph (c) has any words restricting it. My Amendment 174, which was tabled before the Minister tabled his later amendments, sought to limit the use of those powers in paragraphs (b) and (c) on the same basis as the Bank of England would use its stabilisation powers as set out in Clause 8. In relation to the use of these powers the Minister said to the Public Bill Committee in another place: "““Obviously there has to be a systemic risk””.—[Official Report, Commons, 30/10/08; col. 209.]" The Bill does not say this and I believe that the Minister has given a description this evening in his introduction which runs counter to the assurance given in another place. I ask the Minister to address this point specifically in his response. Is he saying that what the Minister said to the Committee in another place now no longer holds? The Council of Mortgage Lenders has expressed concerns about the workability of the homeowner mortgage support scheme that the Government intend to use this new broad power for, to give financial assistance. The CML believes that there should be proper parliamentary scrutiny for the scheme, accompanied by a proper regulatory impact statement. This will not happen if this clause is used to legitimise that scheme. In effect, the Treasury will do whatever it wants to do, completely outwith the scrutiny of Parliament. We can see that in these difficult times the Government may need to bring forward various schemes which are designed to support individuals and businesses. We are not sure that the Bill is the right place for this, but on balance we accept that the public interest is served by ensuring that the schemes that the Government have recently announced are put on a proper footing to proceed. Accordingly we do not seek to oppose Amendments 173E and 174A, but my Amendments 173F and 174AA, as the Minister explained, seek to limit their use to two years. This is very limited sunsetting and not like the general sunsetting of this Bill to which the Minister referred, which we do not support. The two years mentioned in my amendments are intended to allow the Government to do whatever is necessary and give enough time for more specific statutory authorities to be put in place if, for any reason, expenditure needs to continue on a more permanent footing. The Minister gave an example of potentially needing to continue payments outside a two-year period. We understand that it would be appropriate to have the power now but a more specific version of the power should be placed in an appropriate statute if there were a long-term requirement for expenditure, rather than seeking to hide it within something which was originally designed for financial stability and systemic risk. We also have a concern with one aspect of Amendment 174B. We obviously have no problem with allowing for emergency access to the Consolidated Fund but we firmly believe in transparency and parliamentary accountability and we were genuinely astonished at the contents of new subsection (6) to Clause 225, which seems to allow the Treasury to completely dispense with a notification to Parliament if the Consolidated Fund is raided under Clause 225. Can the Minister say whether there is any precedent for this power to keep Parliament in the dark on a permanent basis? I could not recall one. Amendment 174C is slightly different. The power in Clause 225 refers to giving financial assistance to a bank or other financial institution and Clause 227 allows the Treasury to say what is or is not a financial institution. There is no apparent requirement for the institution treated as a financial institution to have any connection with finance or banking. Can the Minister say whether the Treasury could use Clause 227 to specify, say, that Jaguar Land Rover or Corus was a financial institution in order to give it some financial assistance? Indeed, can the Minister say what an ““institution”” is? Its use in statute appears to be confined to charities, higher education and criminal justice, apart from uses in connection with ““financial institution”” or ““credit institution””, and it does not appear to have been used hitherto as synonymous with ““person””, which is what one might have expected. My Amendment 174C concentrates on parliamentary procedure and says that the order-making power should be subject to the affirmative procedure if this power in Clause 227 is capable of designating almost any kind of organisation as a financial institution. That is an extremely wide power and emphasises how very broad Clause 225 could be made. For that reason we wish to seek the affirmative procedure as opposed to the negative procedure in relation to any relevant order made under Clause 227.