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Banking Bill

My noble friend’s brief must have been written by several hands, such is the number of inconsistencies and confusion within it. I shall point out a number of them. We were told that the committee would be unworkable because it would blur the arrangements between the Bank and the FSA, yet we were told at the same time that the tripartite committee, which is so important and influential, somehow manages not to blur these responsibilities between the Bank and the FSA. However, this tripartite committee will do just the things that I have suggested for the proposed committee. The tripartite committee must therefore be doing a blurring good job, as indeed it would seem to have been doing over the past three years, such has been its ineffectiveness until its more recent and much more successful endeavours. I was also told that the non-executive members would not understand the culture and nature of the different institutions. However, in reply to the noble Baroness, Lady Noakes, the Minister said that it was tremendously important to have directors shared between the two institutions so that they understood their culture and effectiveness. Do we want that understanding, or do we not? Perhaps the noble Lord could let us know. The Minister started by saying that a joint committee could not support the Bank of England in its tasks. Surely what we have here is a sub-committee of the Court of the Bank of England itself. It is an internal, restrictive, introverted organisation, rather than one which reaches out to the information set that it needs to operate, which is in the hands of the Financial Services Authority. On the contrary, I suggest that it is the joint committee which I have proposed that would indeed support the Bank of England with the information that it needs to achieve its goals. My noble friend also referred tangentially to the Financial Services Authority and the Financial Services and Markets Act. He was not a Member of your Lordships’ House when that Act was passed. If he had been, he would have heard me moving amendments that required incorporation of the phrase ““financial stability”” into the objectives of the Financial Services Authority, amendments which the Government rejected because financial stability was the task not of the Financial Services Authority but of the Bank of England. There are also some peculiar points in the Government’s proposals which should have some attention if, perhaps, there is redrafting to be done for Report stage. For example, there is this reference to voting. This is clearly a cut-and-paste job from the Monetary Policy Committee. The Monetary Policy Committee has a clear objective, a defined role and a specific decision to make, on which it must vote. However, the committee, if this is to be a truly effective financial stability committee, will be involved in far more wide-ranging and far more nuanced discussions on the nature of legislation that has to be brought forward. The notion of voting is rather outside any of the likely processes of operations of such a committee. Finally, the Minister said that the committee would not fulfil the Government’s objectives. The Government’s objectives are so confused and obscure that I am not surprised that my proposed committee would not meet them. I hope my committee has some clarity with respect to its objectives. Indeed, I finish simply by asking: why is this clause here at all? It would be perfectly possible for the Court of the Bank of England to create this sub-committee under its own rules of operation. Why do we need primary legislation to establish this sub-committee? Surely, if this sub-committee is to be really effective, and if we are going to take financial stability seriously, financial stability has to be incorporated into the operating ethics of the Financial Services Authority, and the information systems of the Financial Services Authority have to be incorporated into the financial stability decision-making of the Bank of England. That is what my amendments were designed to do. I am very disappointed by the Minister’s response, since it seemed not even to take seriously the issues that I put forward, which are entirely relevant to the financial stability objectives of the Bill. I reserve my position to consider what I want to do.