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Banking Bill

My Lords, that is so. But the noble Baroness asked how this fits in in relation to the expiry powers of the 2008 Act, so it is a fairly tall order. But I will summarise the Government’s arguments. Parts 1 to 3 are essentially designed to provide a permanent and refined replacement for the temporary powers created last year by the Banking (Special Provisions) Act, which come to an end in the near future. The Government initially used the powers to take Northern Rock into temporary public ownership. All noble Lords in the Chamber will be well aware of the fact that that Act had a sunset clause attached, which will bring its provisions to an end. I think that we can all agree on the prudence of keeping the temporary powers in the 2008 Act while the permanent legislation, this Banking Bill, was being prepared. This has been clearly demonstrated by events. Last year, while we were doing all the consultation and preparation work on this Bill, the Government had to act under the provisions of the 2008 Act with regard to Bradford & Bingley, Kaupthing Singer & Friedlander, and Heritable in order to safeguard financial stability and protect depositors and other creditors. The provisions of the Act lapse on 21 February. As I am sure that all noble Lords will agree, in the current situation of continuing financial and economic uncertainty across the world it would be extremely unwise to create a situation where the necessary powers lapsed. That is why we have sought, gained and are duly appreciative of a consensus on putting in place this permanent legislation. I place on record, as my noble friend has done on a number of occasions, our gratitude to the opposition parties for being constructive about the necessity of putting in place permanent legislation in such an important area of our national life as the financial systems. We cannot take the risk of a gap between the relevant powers of the special provisions Act and the commencement of the powers in this Bill. However, there are elements of the special resolution regime that require secondary legislation to be in place in order for them to be operable and fully effective. Over the past two days and in Committee we have explored the nature of that necessary secondary legislation. The safeguards that relate to the operation of the resolution regime are contained in secondary legislation and it is vital that it is brought into force at the same time as the power in the Bill to carry out a partial transfer. Similarly, the new insolvency regimes created by Parts 2 and 3 simply will not work unless and until regulations and rules related to the new regime created by the Bill are in place. Again, we could do ourselves the credit of having engaged in very substantial scrutiny and discussion about the Bill on those provisions. To ensure that these essential pieces of secondary legislation can if necessary be in place at short notice, these subsections of Clause 249 will allow these instruments to be put in place by the 28-day affirmative procedure instead of the draft affirmative procedure. We had a substantial debate about that earlier today and further discussion awaits us before, and no doubt during, Third Reading. I sought to assure the House earlier today that the 28-day procedure will guarantee that there will be full debate in Parliament, but I do not think we need to tread over ground we covered so extensively earlier this afternoon. This House will have the opportunity to debate these instruments in full and, as an additional safeguard, the procedure can only be used the first time these powers are exercised and only if the Treasury is also satisfied that it is necessary to do so. This is a fairly standard method of bringing forward essential secondary legislation. The Government therefore feel that their approach strikes the right balance between ensuring that these instruments are subject to full parliamentary debate and ensuring that the special resolution regime is fully operable from the date on which the key provisions of the Banking (Special Provisions) Act cease to have effect, which of course is in the very near future indeed. I also add that the Delegated Powers and Regulatory Reform Committee, which has considered the Bill in full, has not made any comment or recommendation on this approach. The noble Baroness will also know that work is ongoing on developing the safeguards and we believe we are very close to reaching agreement with the legal experts. Royal Assent is expected to be at the end of next week. We will then have until 20 February to commence Parts 1 to 3 and make the essential Statutory Instruments. We will use as much of that time as is needed to get the safeguard orders right. Of course that is a tight timetable. We always recognised in this House when the sunset clause was passed, given the nature of the anxieties that obtained then, which have been magnified so manyfold over the year with regard to the financial system, that this Bill would be extensive in its reach and would require extensive parliamentary scrutiny in a fairly compressed period. I place on record the Government’s appreciation for the co-operation of the opposition parties on this point. I hope that I can see that co-operation on this final point and that the noble Baroness will think that this is an adequate and proper defence of the broad structure of the Bill with regard to the provision for secondary legislation and that she will feel able to withdraw her last amendment.