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Banking Bill (Money)

Clause 75 has been the subject of much debate in both Houses. Indeed, it is fair to say that the provision has been forensically scrutinised, and I believe that the Government have made the case for the power to change law. In both Houses, the Government tabled significant amendments to address the concerns that the Opposition raised. I believe that if this House accepts the amendments that were made in the Lords, we will put our seal of approval on a clause that is tightly defined and limited, and has been subject to the fullest discussion. Let me briefly outline the subjects on which the Government have moved to meet the concerns of both Houses. First, we tabled an amendment in this place to ensure that the Bill could not be used to modify the Bill, or the secondary legislation made under it. As hon. Members know, the purpose was to make it clear that the Government would not amend the safeguards that are being established in secondary legislation. We wanted to provide legal certainty. Unfortunately, there was a technical problem with the amendment, which we corrected in the other place through amendments 55 and 56. Let me make it clear that those corrections do not undermine the principle of safeguarding the Bill's provisions and any standing secondary legislation under it, especially the partial transfers safeguards. Secondly, the Government have addressed concerns that were expressed about parliamentary procedure. The other place repeatedly emphasised that Parliament must be allowed to play its essential role of holding the Executive to account. I am sure that all hon. Members agree with that. The challenge that the Government face is enabling parliamentary scrutiny without compromising the authorities' ability to use the stabilisation options swiftly and effectively, and without jeopardising the possibility of an effective bank resolution. The clause recognises that by making the exercise of the power subject to the draft affirmative procedure, unless action needs to be taken urgently. To cater for cases in which urgent action is necessary, the Treasury may—only when it considers it necessary—make orders under the 28-day procedure. However, a particular concern in the other place was that, if Parliament struck an order down, the Government could reintroduce the same order ad infinitum. Of course, that was not our intention—indeed, it would be neither politically nor constitutionally credible. The Government do not believe that the clause could have been interpreted to permit that. However, to meet the concerns that have been expressed, the Government tabled amendment 57, which expressly requires any new order to be drafted ““in new terms””. That means that there must be a material difference between any new order and the original order laid before Parliament. In addition, of course, we expect the Government, in introducing any new order, to reflect on the concerns of Parliament. For the sake of consistency, amendments 94 and 97 make similar provision throughout the Bill. There will be no opportunity for the Government to avoid parliamentary scrutiny. The amendments were welcomed in the other place, and I hope that they will be welcomed here. Thirdly, the Government have addressed retrospection. The other place tried to ascertain exactly how the retrospective power under clause 75 would be used. As the Constitution Committee noted, retrospective legislation is not unprecedented, but must have a strong public interest justification. The debate in the other place coalesced around subsection (3), which provides that the Treasury may use the power if it considers it ““necessary”” or ““desirable”” to give effect to a particular exercise of a power under part 1. The constraint on the power—the ““necessary or desirable”” test—is not, of course, the only limit on the use of retrospection. The power exists not in a vacuum, but in a highly developed public law framework. It is important to recognise the range of constraints on the use of the power and that not all of them appear in the Bill—they do not need to do so. First, there are the convention rights. Article 7 is an absolute bar on the retrospective imposition of criminal offences, or increase in penalties. The use of the retrospective power may also engage article 1 of the first protocol—the right to the peaceful enjoyment of property. Retrospective interference with property rights needs especially careful justification, whereby the action must be proportionate to the public interest pursued. The range of cases in which it will be compatible with convention rights to interfere retrospectively with property rights protected by article 1 of the first protocol is limited. Secondly, there is the Government's duty to act reasonably. What ““reasonably”” means in practice will depend on the context. The more unusual or potentially unfair the proposed course of action, the greater the justification that will be required. The third constraint on the exercise of retrospective powers is the Government's respect for the rule of law and legal certainty. The Government take seriously their duty to act fairly and appropriately, and will always do that. However, we recognise that those public law constraints may not be enough to provide sufficient certainty. That is why we have gone further, to add something material to the range of existing constraints, and to avoid the potential for casting doubt on the existing safeguards provided by public law. The Government therefore tabled an amendment to delineate the power more carefully in response to the concerns that were raised. Amendment 54 does that by positively affirming the public interest in avoiding retrospection. In particular, it addresses the concern that the retrospective power could be deployed on a whim. It does that by retaining the words ““or desirable””, while making it absolutely clear that the flexibility inherent in the desirability test is not a licence to act lightly. Indeed, we are setting out that it is generally in the public interest to avoid retrospection, and that there must therefore be a countervailing specific public interest for the exercise of a retrospective power under the clause. Throughout, the Government's only immovable position has been that we cannot amend the power to the extent that it becomes unusable. As we have done throughout our proceedings on the measure, we have sought to achieve a compromise. The amendments demonstrate how the Government have responded to the constructive debate that has taken place. I believe that they are credit to the approach of this House and the other place, and I commend them to the House.