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Banking Bill

My Lords, I am grateful to noble Lords who have spoken on this issue, which occasioned some debate in Committee. The noble Baroness has slightly shifted her position in response to the Committee stage debate, but so have the Government. She will recognise the extent to which the Government have listened to arguments about the code and will know that they have shifted their position considerably. The noble Baroness indicated that there would be no requirement for external consultation on the code. It is our exact intention that Clause 10 should be amended so that the Banking Liaison Panel will be consulted on the code and on future changes to it. That was subject to considerable debate in Committee, and again I give a clear indication of the way in which the Government have responded to the points made at that stage. I will be asking the noble Baroness to withdraw her amendment but I hope that she will appreciate that, in approaching these issues, we have listened carefully to the debates in this House and the other place. I hope she will also appreciate that we have provided opportunities for the draft code to be scrutinised. A moment ago, the noble Lord, Lord Howard, said that, if he had a pound for every practice that I indulged in when responding to amendments, he would be rich. I would also be very rich if I had a pound every time I was asked for a draft code or draft statutory instrument to be provided before concluding legislation. How often have noble Lords said, ““You’re asking us to provide for later codes or subordinate legislation but we have not seen sight of them yet””? Here we provide a draft code, which has been significantly debated in both Houses. We are also responding to the changes suggested in Committee, but yet again it is suggested that we are not moving far enough because we are not making the draft code subject to a statutory instrument. I had hoped that it would have been recognised how far the Government have moved on this concept of the code. In the previous amendment, we debated and accepted provisions that the code must set down how the special resolution objectives are to be understood and achieved, how the choice is to be made between different options, and a number of other matters at the heart of the significance of the code. We have come a very long way with Clause 5. The Government chose to put into primary legislation some of the things that may be covered by the code. We also laid the code before the House and had extensive debate on it. The code has been subject to more parliamentary scrutiny than I would dare to suggest many other codes have been. So we are not seeking to avoid scrutiny. We have gone to great lengths to ensure that we have had a proper framework for parliamentary consideration of what the code should contain. The principal reason why it should not be laid before Parliament is that it is not a statutory instrument. This is a code of practice. There are countless codes and guidelines that are not subject to parliamentary approval. A very large percentage of them were not considered when the primary legislation that established them was debated. This code is in a very different position. Let me give an illustration. The Memorandum of Understanding between Her Majesty’s Treasury, the Bank of England and the Financial Services Authority, which establishes the framework for co-operation in the field of financial stability, does not require a statutory instrument for it to come into force, yet I am sure that noble Lords will recognise the significance of that key document. Many here and in the other place take great interest in that document, but it is not appropriate for every key document to be subject to direct parliamentary approval in the way that the noble Baroness suggests that this code might be. There is another example in banking: the rules made by the Financial Services Authority. The noble Baroness said of the rules in a previous debate that this Bill confers powers that go way beyond anything in the Financial Services and Markets Act. The powers conferred by that Act are significant. To take an obvious example, it confers on the Financial Services Authority power to withdraw regulatory approval from a bank. This is a serious power but, in the case of both the Financial Services and Markets Act and the Banking Bill, the powers are conferred by primary legislation, not by rules or codes. It is therefore the primary legislation that is subject to the fullest debate, not the code or rules, which provide guidance on how the powers are to be used. Of course, it is the primary legislation that we are considering today. When the code is released, the Treasury will be under a statutory duty to lay it before Parliament. If this House seeks a debate on the code, then that will take place. Indeed, when the Government issue a new code shortly, I have no doubt that the noble Baroness will prompt such a debate, given the great significance that she has attached to the code, for which I do not criticise her. However, as I said when we considered this in Committee, the Government have shown their willingness to involve Parliament and interested parties in the formulation of the code. While we have a very clear idea of what the code will contain, we are involved in redrafting it, because we have to take on board the amendments that the Government have proposed in response to the Committee debate. This amendment would require the unusual step of seeking parliamentary approval for a technical guidance document. We do not normally ask Parliament to do that and we should not on this occasion. We have given the debate on the code a very good hearing. The Government have responded to some important points and have indicated necessary changes that will be effected to the draft code. I hope, therefore, that the noble Baroness will think that she has pressed the Government effectively in this area—I recognise the effectiveness of that pressure—and that we have responded. I hope that she will withdraw her amendment. I see that the noble Viscount, Lord Eccles, wants a word before I sit down.