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Banking Bill

Moving on from the composition and positioning of the Financial Stability Committee, I come to its role. I also speak to the other four amendments in the group, which are probing amendments to new Section 2B of the Bank of England Act 1998, which would be inserted by Clause 228. New Section 2B(2) has a mix of functions ranging from making recommendations to giving advice on the use of the stabilisation powers—although it does not say to whom advice is to be given—and the monitoring of the use of those powers, as well as the monitoring of the Bank’s interbank payments systems regulation. It is really something of a ragbag. For the purposes of today’s debate, Amendments 186, 188 and 189 have merely changed those three proposed provisions concerning recommendations to the court or the unspecific giving of advice, as set out in paragraphs (a) to (c) of new Section 2B(2), into provisions of decision-making. An alternative, overlapping amendment deletes both subsections (2)(b) and (2)(c) of new Section 2B. I am unclear to whom advice should be given and on what basis so I have deleted them for lack of clarity. If the committee is chaired by the governor and both the deputy governors are on it, it is difficult to see to whom the committee will give advice. Where is that advice going to be given? I have deleted those two paragraphs on that basis. The amendments do not avoid a problem with the current draft which has the committee both monitoring the use of the stabilisation powers in subsection (2)(d) of new section 2B and also advising on their use in new subsection (2)(c). This seems to create an unnecessary conflict. Amendment 190 would delete new subsection (2)(d) on the basis that the committee cannot do both. An alternative may be to give the committee responsibility to monitor all of the functions mentioned in new Section 2B(2). This links to the question of who sits on the Financial Stability Committee and how much time they are expected to spend on it. We debated this on the previous group of amendments. What precedents has the Treasury drawn from in devising the Financial Stability Committee? I remind the Committee that the Treasury does not have a good track record in corporate governance innovation. It was the Treasury that invented the non-executive committee in the 1998 Act. Almost as soon as the Act had passed, the court was devising ways to work as normally as possible whatever the Act said, culminating in the 2003 decision for the chairman of the non-executive committee to chair the court on a de facto basis. This Bill unwinds quite a bit of the 1998 experiment and we should remember that. I beg to move.