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Banking Bill

My Lords, I am grateful to my noble friend Lord Eatwell for putting before the House a considered set of proposals in which he has clearly invested a great deal of time and thought. His amendments form a coherent package with the purpose of making the Financial Stability Committee into a joint committee of the Bank and the FSA, with further Treasury membership. I respectfully maintain, however, that the model of a joint committee that my noble friend suggests, while being internally coherent, would have an entirely different function from the role which the Government intend the Financial Stability Committee to play. My noble friend has given a strong account of his proposed model. If the House will allow, I will take this opportunity to explain again why the Government are setting up the Financial Stability Committee and why I believe the model set out in the Bill is the correct one. I should first mention that the Governor of the Bank of England wrote to me towards the end of last week. I can assure noble Lords that the governor is a man of such independence that the idea that he would be directed by a Minister to write a letter is clearly both outrageous and implausible. He has set out his thoughts on our extensive discussions about these issues and I shall refer to some of his comments in due course. The noble Baroness, Lady Noakes, my noble friend Lord Eatwell and the noble Lord, Lord Newby, have received copies of the letter, and I have arranged for a further copy to be placed in the Library of the House. In Committee, the noble Baroness, Lady Noakes, and the noble Lord, Lord Higgins, asked whether it was necessary to establish the Financial Stability Committee in primary legislation, a question which has again been asked today by my noble friend Lord Eatwell, the noble Lord, Lord Newby, and the noble Baroness, Lady Noakes. The answer, of course, is no. The court already has the power to set up new committees, whether they consist of internal committees such as the already existing Financial Stability Board or sub-committees of the court such as the Transactions Committee. I take this opportunity to mention that the noble Lord, Lord Higgins, has expressed his regret that he cannot be in his place for this debate on Report. I should like to point out to noble Lords that his absence arises because he is attending a ceremony in The Hague to mark the distinguished services of Lady Higgins, the excellent Judge Rosalyn Higgins, as President of the International Court of Justice, which she has served with enormous distinction. I am sure that all Members of the House will send our best wishes and congratulations.