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Banking Bill

My Lords, this amendment would insert a new subsection into Clause 13, which deals with the Treasury’s so-called temporary public ownership power. In Committee, when we debated an amendment that sought to define the likely duration of ““temporary”” as three years, we established that, at best, ““temporary”” was a statement of intent rather than a matter limiting the use of the option. As the House will know, nationalisation in all its guises is not the preference of my party, but we can just about live with it if it is genuinely meant to be temporary. That is why I decided to pursue the definition. I was convinced by our debate in Committee that to specify any time limit, even in the form of my Committee amendment, which was framed in terms of expectation, would convey the wrong sense. However, at the end of the debate, I remained concerned that there was no mechanism for holding the Government to account on the non-permanence of the option, if that is what it turned out to be. Our debate crystallised the issue for me as being not exact timing but the Government sticking to their word that the power would be used for temporary ownership. There are currently two banks in temporary ownership following the use of the powers in the 2008 Act. In neither case is it clear what timescales are involved. There was no clarity at the time of nationalisation and there is no more clarity now. In the case of Northern Rock, there was a business plan that involved a rapid return of government debt, though no clear plan for the return of the bank to the private sector. More recently, the debt rundown strategy has been superseded by Northern Rock returning to mortgage lending, although it is not clear whether that is a commercial strategy or a policy of soft mortgage lending to support the housing market. In the case of Bradford & Bingley, we know nothing whatsoever, as no business plan has yet emerged for the rump of the mortgage business. There is no exit plan, at least in the public domain, for either of them. Amendment 18 would merely require the Treasury to state in the order taking a bank into public ownership its estimate—no higher than that—of the duration of public ownership. That estimate would naturally form the basis of the Treasury’s subsequent accountability to Parliament. If there are many such orders—we hope that there will not be—we may build up a pattern over time about how clever the Treasury is at seeing the exit point from public ownership. In individual cases, we could see whether the Treasury knew enough about what it was taking on in these banks and about how quickly it could turn a bank around. The next group of amendments deals with the accountability of banks while they are in the temporary public ownership category. This amendment deals with the rather different issue of the accountability of the Treasury for that ownership in fact being temporary. I beg to move.