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Banking Bill

My Lords, the purpose of Clause 227 is to provide statutory cover for expenditure incurred under Parts 1 to 3 of the Bill, or in giving financial assistance more generally to benefit financial institutions and their customers, in order to enable the Government’s response to the current difficult economic climate to be taken forward expeditiously. The purpose of subsection (2) is to provide that essentially routine statutory coverage for expenditure for schemes that might be operated by the Treasury or other departments, but which are not directed solely at assisting banks or other financial institutions. One would normally include this provision in legislation brought in by the appropriate government department. However, these are extraordinary times and the Government have had to move with urgency to bring forward measures, such as the homeowner mortgage support scheme or the working capital scheme, to deal with the situation. That does not mean that the Bill is not about banks and financial institutions. Clause 227 is still primarily about providing statutory cover for the provision of financial assistance in connection with the SRR, or to banks or financial institutions. Financial assistance provided to banks and financial institutions may also benefit other persons; for example, the customers of banks, a particular industry or part of the economy, or the economy as a whole. Schemes such as the homeowner mortgage support scheme are a good example of this. The scheme provides assistance to banks, but allows them to adopt a more flexible approach to homeowners struggling to make their mortgage repayments. Thus it also assists homeowners. Without subsection (2), there would be doubt about whether mixed schemes of this kind, which facilitate the bank or financial institution in carrying on its business and which also assist third parties, are covered by the provision. Amendment 75 would limit the scope of such schemes to two years. It would mean that, on the expiry of the subsection, a narrower, technical approach to the provision of financial assistance to banks and financial institutions would have to be taken. Each scheme would have to be closely analysed to determine the ““real”” beneficiaries of any assistance. I do not see merit in this approach. I appreciate the concerns behind the amendment. I recognise also that the noble Baroness, Lady Noakes, has sought to address one concern I raised about a similar amendment that she put forward in Committee. I was concerned that a sunset provision in this clause might mean that guarantee schemes might never get off the ground. This new amendment seeks to address that point, and for that I express my gratitude. However, I still have concerns about how the amendment would operate in practice. As I understand it, the intention is to ensure that obligations entered into before the sunset period expires can be met afterwards, so that schemes initiated before the sunset period expires can continue to run. However, what would happen if, after the expiry of the sunset period, the terms of an existing scheme had to be modified? Would the provision cease to apply? That might depend on the nature and scale of the modifications. A careful analysis would be needed to determine whether this was still the ““same”” obligation entered into before the sunset period expired, or whether the modifications to the scheme were so substantial that the obligation had become a ““new”” obligation, not covered by the provision. Such an approach could be difficult to operate, and risk preventing sensible and appropriate modifications to existing schemes. These are extraordinary times, and the Government must take action, often with unusual haste. I hope, as I am sure does every other Member of the House, that these schemes will not be needed after two years, or will not need to be changed after that time. However, I do not want to promise that at this stage. As I said in Committee, fixing a time limit now would be an unnecessary and unwise hostage to fortune. I hope, therefore, that the noble Baroness, Lady Noakes, will agree to withdraw Amendment 75.