Clause 143
Banking Bill
11:15 am

David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)

With regard to my previous question as to whether clause 65 might be used to amend the Company Directors Disqualification Act 1986, I was half expecting the Minister to say no because it would be done under clause 143, which appears to be another Henry VIII clause that enables the Treasury to change primary legislation by order. I have no intention of repeating all the arguments of a constitutional nature that we used about clause 65. I think clause 65 is much more important in that respect as it raises issues of uncertainty in important areas.

Clause 143 is more tightly drawn, but it is worth asking what the Government have in mind. What sorts of orders can be made under these powers? Why are we not trying to address them specifically in the course of the Bill’s proceedings? Do the Government have concerns about using statutory instruments to amend Acts, given that the level of scrutiny is much lower? I acknowledge that the affirmative resolution procedure applies but do the Government have no concerns in this area? Why is the clause necessary and where may it apply?

Ian Pearson (Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform; Dudley South, Labour)

The clause provides a power for amendments to insolvency legislation to be applied to the bank insolvency procedure and provides a power to apply or amend insolvency provisions. We need that power because the bank administration procedure is complex and the existing UK insolvency regime is very sophisticated. Having the power to make such amendments ensures that the Government have a suitably limited power to ensure bank administration can continue to function effectively. Any changes needed will of course, as the hon. Gentleman notes, be subject to full parliamentary scrutiny through the affirmative resolution procedure.

Peter Bone (Wellingborough, Conservative)

The Minister has been very generous in giving way throughout the Committee. I understand the thrust of what he wants. We are talking about uncharted waters so things may need to be changed, but the problem with an affirmative statutory instrument is that it cannot be amended—the whole thing is either accepted or rejected. That is a problem for scrutiny. If an important issue is raised and we want to change the primary legislation, no one can amend it.

Ian Pearson (Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform; Dudley South, Labour)

I understand the hon. Gentleman’s point and I want to reassure the Committee that a lot of work has gone into producing part 3 of the Bill, including extensive consultation. We believe that we have an effective piece of legislation. This is a complex area and things change. There may need to be some minor adjustments to ensure that the bank administration procedure continues to be effective. In such cases, a statutory instrument is normally appropriate. The approach for the bank administration procedure is the same as for the bank insolvency procedure in part 2, where clause 109 provides the same powers in relation to bank insolvency procedure.

The hon. Member for South-West Hertfordshire talked about the powers under clause 65. Without going back to that debate, I remind him that the power to modify legislation in clause 65 is only when it can make the SRR powers more effective. It is a limited power and the powers in clause 143 are certainly very limited.

John Pugh (Shadow Minister, Treasury; Southport, Liberal Democrat)

The Minister has mentioned amending, modifying, altering and tweaking, but clause 143 specifically says, “provide for an enactment”, which means that, in a sense, novel legislation will be produced, as well as tweaking and altering existing legislation. What does the Treasury have it in mind to provide in the fullness of time?

Ian Pearson (Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform; Dudley South, Labour)

As I said, the legislation in part 3 is effective as it stands. I do not have specific examples of where we want to improve the legislation at the moment; if I did, I would have included them in the Bill. When we make legislation, it is right that we have the opportunity to amend it in the future, if circumstances require it, without having completely new primary legislation. That is really what clauses 143 and 109 do for bank insolvency procedures. They provide for specific amendments to insolvency law, and the Secretary of State for Business, Enterprise and Regulatory Reform shares the powers because of his insolvency responsibilities. It would not  be appropriate to use clause 65 for that purpose, which is why we need the powers in clause 143, as well as those in clause 109.