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Banking Bill (Money)

As the Economic Secretary said, the provision has received a great deal of scrutiny. Clause 75 is essentially a Henry VIII clause, which permits the amending of primary legislation by secondary legislation. It is not surprising that that caused considerable concern in this House and the other place. There are two broad concerns. First, there is the constitutional point about parliamentary scrutiny and accountability. The second anxiety, which should not be ignored, is the practical matter of the amount of uncertainty in the Bill and the various protections that we have debated—for counterparties, for example. If the protections available to them can be amended by statutory instrument, they are less substantial than we think. That is important to confidence in the UK banking sector. Both the original clause and the current provision contain specific aspects that are worth highlighting briefly. First, there is the basic point that the clause allows secondary legislation to amend primary legislation. Secondly, there is the extent to which the clause can have retrospective effect—the Economic Secretary referred to that, and I will revert to it. Thirdly, although affirmative resolution is generally required, that is not the case if the Treasury deems it unnecessary. The protections that affirmative resolution affords therefore appear somewhat fragile. Fourthly, where we go down that route and a subsequent resolution is required from both Houses, that can be done within 28 days. That means that a recess occurring at the wrong time could cause a considerable delay. It would be perfectly possible for a change in the law to be made by a statutory instrument that would not be reviewed until some months afterwards. All those concerns have been raised at various stages of the Bill's progress and the Government have attempted to address some of them. Let me deal first with the retrospective effect, which is essentially what is driving Lords amendment 54. I note the Minister's comments about the constraints on retrospective legislation that already exist, given the terms of the Human Rights Act 1998, and the fact that he highlighted the issue of interference in property rights in particular. Retrospective legislation that interferes with property rights has to cross a number of hurdles if it is not to be vulnerable to challenge in the courts. It might be helpful to the House in getting a better understanding of how that argument works, as well as the constraints that apply to clause 75, if the Minister could give us an example. If I may assist him, in the spirit of co-operation that has characterised the Bill's progress, perhaps he could clarify whether interference in the contractual rights of senior bankers, including their right to receive a bonus, would be vulnerable to a challenge under the Human Rights Act, because that would be seen as retrospective legislation that did not meet the public interest test that he outlined. I mention that in an attempt to gain a greater understanding of the existing constraints on retrospective legislation. In Lords amendment 54 we also have an attempt to ameliorate the concerns that exist. It may be a well-spirited attempt, but it is perhaps open to some scepticism. Clause 75(3) states that the Treasury"““may make provision which has retrospective effect in so far as the Treasury consider it necessary or desirable for giving effect to the particular exercise of a power under this Act””." Lords amendment 54 would introduce the following qualification:"““in relying on this subsection the Treasury shall have regard to the fact that it is in the public interest to avoid retrospective legislation””." I would be grateful if the Minister could be a little clearer about the impact of that wording, which would presumably be helpful for the purposes of judicial review. We raised our concern in Committee that it was the Treasury alone that would consider whether such action was necessary or desirable, which seemed to be a somewhat subjective test. If I remember rightly, we proposed an amendment to the effect that the Treasury should ““reasonably”” consider such action necessary or desirable. I wonder whether the new wording makes the test more objective and therefore less vulnerable to challenge under judicial review. If the new wording does not do that, I am not quite sure what purpose it serves. If Lords amendment 54 is an attempt to raise the hurdle in the way of the Treasury using the power for retrospective purposes, we would be sympathetic to it, but we question what difference it would make. The Minister described Lords amendment 56 as an attempt to address a technical failing and ensure that clause 75 would not allow the Treasury to amend the Bill, which is a concern that I raised in Committee. We welcome that. I am grateful for the explanation of Lords amendments 55 and, in particular, 56. However, it would be helpful for the House to have some reassurance that Lords amendment 56 in no way waters down the changes that Government have made to prevent clause 75 from being used to amend primary legislation, including, therefore, some of the protections contained in the Bill. If I remember correctly, we proposed an amendment in Committee that attempted to address the concern that clause 75 could be used to amend the Bill. That amendment was rejected, but the Government then came forward with their own proposals. I wonder—I say this out of sheer curiosity; I do not know the answer—whether our amendment had the same technical flaw as the Government's amendment did. If it did not, perhaps the Government would have been better off sticking with our wording. None the less, the intention behind what the Government are seeking to achieve is welcome. We also welcome Lords amendment 57, which addresses a concern that I raised in Committee about it conceivably being possible for the Government to present order after order for an additional 28 sitting days, which would all be rejected, yet enable the change in legislation to retain its effect. The Minister rightly said that that would not be politically or constitutionally credible, although it is perfectly possible for Governments to do things that are neither. None the less, the new wording and the intention behind it are welcome.