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Banking Bill

My Lords, that is certainly so. I hear the noble Lord, Lord Baker, saying from a sedentary position that it is democracy. We are dealing with, effectively, emergency powers being exercised to deal with a complex and difficult financial situation that puts at risk the whole financial position. To suggest that democracy would mean the full participation of both Houses of Parliament in those deliberations would not be a question of democracy but a denial of the proper responsibility of the Executive to sort things out and then to come to Parliament and account for how they had dealt with the matter. That is democracy. If the Treasury laid an order and had to wait until it had been debated by Parliament, it would immediately become public that the named bank was in trouble. This could seriously jeopardise the resolution of the issue. For example, it could lead to a run on the bank, while the Government stand helplessly by waiting for the subsequent parliamentary approval. I do not think that the depositors in Northern Rock would have welcomed a position where the Government could give no guarantee to depositors until they had parliamentary approval. What happened was that executive action was taken, and then Parliament debated whether the Government, in the round, had exercised powers properly and to good effect. That must be the reason why we seek to defend the clause. Before I talk about the detail of Amendments 57 and 58, I will speak briefly about the 28-day procedure, the purpose of which is to allow instruments to be made and to come into force with immediate effect. It is a dramatic parliamentary procedure, but it is there because Parliament has always recognised that certain actions are necessary to be taken by the Executive which it needs to evaluate, consider and make judgments on. If the actions are not taken, the remedies cannot be applied in certain circumstances. That is the whole basis of why the 28-day procedure is different from the normal affirmative order. As we are all well aware, 28-day affirmative orders are not very common. As the House will appreciate, such an order provides for an enhanced level of parliamentary scrutiny beyond that used in the negative procedure. The order will lapse unless it is approved subsequently. In Committee, the noble Lord, Lord Newby, put forward the proposal that the Government might remove paragraphs (c) and (d) of Clause 75(8). We have considered the legal effect of removing these provisions, particularly as some noble Lords suggested that they might bring the matter back on Report. Amendment 57 first seeks to remove paragraph (c). This provision establishes that, "““the lapse of an order … does not””," in broad terms, invalidate things already, "““done under or in reliance of the order””," up to that point. This is not unprecedented. Indeed, it is a standard approach. The Statutory Instruments Act 1946 makes provision in the analogous circumstances of a negative procedure instrument being annulled by resolution of either House. The 28-day procedure allows orders to be made with immediate effect, followed by parliamentary scrutiny. The authorities could not act if there was a chance that their actions could subsequently be legally invalidated. If we removed paragraph (c) of Clause 75(8), we would not be able to use the 28-day procedure at all. Let me give an example of what it would mean if paragraph (c) were to be removed. The authorities may need to resolve a bank where a statutory impediment has been identified in relation to the transfer and it needs to be addressed by provision under this clause. First, for obvious reasons the authorities could not lay an order in draft and wait for it to be debated. This would announce to the world that they were preparing to place the bank named on the order into the special resolution regime, which would immediately prejudice the chances of making the regime effective. Secondly, without paragraph (c) the authorities could not make an order under the 28-day procedure. They would be acutely aware that should Parliament later fail to pass resolutions affirming the order, everything that had been done would be unlawful. Faced with this prospect, the authorities would not be prepared to take the risk. Again, that jeopardises the whole concept of the resolution procedure. In short, the authorities would be simply unable to take the necessary action, which in turn would jeopardise the possibility of effecting a resolution if paragraph (c) of Clause 75(8) should be removed. The Government also looked very carefully at paragraph (d) of Clause 75(8) because that, too, was substantially debated in Committee. Irrespective of the provisions of this power, as the House will be aware, it would be politically and unconstitutionally untenable for Ministers to behave as if they were repeatedly introducing the same order. I would ask the House to appreciate what the response of Members of either House would be if the Government got past the problem of dealing with legislation by a constant repetition of an order whose procedure is drafted against emergency or crisis or dramatic circumstances. Although we recognise the concern, it would not be practical to remove paragraph (d) and under the Statutory Instruments Act 1946, to which I referred earlier, a similar clarification is made in the context of negative procedure instruments. It is not realistic to think that a Government would use this procedure repeatedly. Government Amendment 59, which is supported by further government amendments, seeks to establish beyond all doubt that the Government will not bypass Parliament by repeatedly laying identical orders. For the sake of consistency, this issue is addressed throughout the Bill, which is why we have put down government Amendments 107 and 117. The Government need to retain the power to make a further order should one lapse, not least to have an opportunity to address the concerns raised by Parliament, which may not relate to every aspect of the order. It is not the purpose of the paragraph to allow identical orders to be repeatedly laid. We do not think it could be construed in that way, nor is it conceivable that the Government would act in such a matter. However, in view of the concerns expressed in the House on this point, our amendment seeks to make express what is already implicit, namely that the new order will not be the same as the old; it will not be in the same terms. I hope that it will therefore be recognised that the Government have listened to anxieties about a repetition of exactly the same order being made in the same terms. I am indicating that the Government would have to change the terms of the order to comply with this legislation. Does that mean, as far the question asked by the noble Lord, Lord Newby, is concerned, that all we will have done is change the punctuation or made such a minor change as to be of no significance? We think that the effect of requiring the order to be made in new terms will be that we are not dealing in trivia. The Government believe that this amendment sends a clear signal that, if Parliament declines to approve an order made under this proposal, Ministers will have the opportunity to make a new proposal to Parliament for approval in materially different terms—and those terms would be materially different. We do not think that the Bill should be more prescriptive on this, other than to require in very clear terms that the new order must be ““in new terms”” in comparison with the old. Accordingly, in due course I will seek to move.