Committee (1st Day)

Part of the debate – in the House of Lords at 3:45 pm on 13th January 2009.

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Photo of Baroness Noakes Baroness Noakes Shadow Minister, Treasury 3:45 pm, 13th January 2009

I thank all noble Lords who have spoken in this important debate, which covered not only the topic covered by the amendments but also the larger issue of whether the Bill covers all the things that need to be in the Government's repertoire in order for them to handle banking crises. The Minister chided me for saying that the Bill was not about dealing with the causes of the current crisis. Of course not, but it should be about reflecting what we have learnt since the beginning of the financial crisis and the things that we need to do to deal with it. That was the purpose of bringing together the asset freezing provisions in one place—I will come to some others later. In that way the Government, having brought forward this Bill to make provision on banking—although it is largely about failing banking—have a clear expression of what can happen in different circumstances.

The Minister said that if we put these provisions in the Bill, it would be more likely that branches would be set up elsewhere. I take the point of the noble Lord, Lord Eatwell, that we do not want branches anyway, but assuming that we do, we already have the provisions in the 2001 Act. If we rephrase those specifically, we might actually reassure people coming to do business here rather than frightening them away. They should already be frightened away by the 2001 Act.

The Minister gave us a little lesson on what a branch was and seemed to imply that the amendment's drafting did not take account of that. I tried extremely hard not to draft it in terms of branches but in terms of foreign banks; that was one of the things that I learnt a long time ago. But one is always open to criticism when drafting amendments.

The noble Lord quoted my noble friend Lady Neville-Jones in the context of counterterrorism. I warn him not to quote my noble friends out of context. I can say with considerable confidence that she was speaking only of counterterrorism, not of the use of powers contained in counterterrorism-based legislation in other circumstances. So we can put that to one side.

The Government's position has not changed since the report from the privy counsellors, led by my noble friend Lord Newton, back in 2003. The Government do not accept the point; they think that under the guise of counterterrorism—or anti-terrorism, as it then was—they can draft very wide powers, give the Bill a Long Title and then use it for everything. Their attitude is, "We originally meant this to apply to organised crime, but if we just call it crime, we can use the powers for anything". That is one approach to legislation, and it is clearly the Government's, but we do not think that it is responsible. That is what the Newton report highlighted. We should pull out those very unusual powers—the Minister said that they were to be used only in exceptional circumstances—and put them in their proper context. That is the problem with the 2001 Act; it is there to be interpreted as time goes on. That is why it is unsatisfactory suddenly to lift a power from other legislation and use it in the context of the banking crisis. The Minister said that it was not appropriate to put these provisions in this Bill because it is a banking Bill. Of course it is appropriate, because we are talking about a banking issue. That is what my amendments were specifically designed to do.

However, the Minister said that the Government had not shifted from their position of liking broad legislation which they can pull out whenever they want rather than tailoring it to specific circumstances as was recommended by the Newton report. It is clear that we shall have to reflect further on that position. It weakens the Banking Bill's ability to reflect the full range of issues that, we know from experience, are likely to come up in relation to banking crises. To that extent, the Government's attitude weakens the Bill. I shall reflect further on what the Minister said, but, for today, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Amendments 2 and 3 not moved.

Amendment 4

Moved by Baroness Noakes

4: Clause 1, page 2, line 2, at end insert—

"( ) If there is any conflict between the roles of the Bank of England, the Treasury and the FSA, or if there is any disagreement between all or any of them as to their roles or responsibilities, the view of the Treasury shall prevail."