Committee (2nd Day)

Part of Banking Bill – in the House of Lords at 6:45 pm on 14th January 2009.

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Photo of Lord Borrie Lord Borrie Labour 6:45 pm, 14th January 2009

My noble friend Lady Turner of Camden has spoken with some eloquence on this matter. It is of considerable interest to the Committee that she has raised the whole subject. In the course of the debate on the previous amendment, the Minister spoke with some eloquence too on the responsibility of those who are directors of banks. I hope that I have not misunderstood him when I say that the impression he gave me was that in his view the responsibility of the directors of banks is of a somewhat higher grade than the responsibility of company directors generally. It seems to me that my noble friend Lady Turner of Camden has made a very strong point in talking about the value of having a public interest voice in the discussion of the remuneration of executive directors.

We all have experience, whether with banks or other companies, of the way in which remuneration is dealt with whereby even the independent, non-executive directors who are supposed to keep a special eye on the remuneration of executive directors are themselves executive directors of other companies and therefore are somewhat disinclined to vote down the proposed executive directors' remuneration in those companies where they are merely non-executives.

This detail of this amendment would ensure that, in circumstances that the Treasury thought appropriate, and having consulted the Financial Services Authority and so on, an appointment could be made of a non-executive director who would have the special role of keeping an eye on the remuneration of executive directors and of trying to ensure that remuneration packages were not as excessive as some have been in the past. Because of being involved in the debates on this Bill today and yesterday, it strikes me that the Government's ground for opposing this amendment may be that, even when they have part ownership of a bank, they wish to keep at arms length and not get involved with detail, certainly not the detail of the remuneration of executive directors. That may be the basis for an objection to the amendment.

There is tremendous public interest in remuneration. There has been much public sentiment on this issue in the past six to 12 months when the directors and boards of so many banks have failed in the kind of responsibilities that the Minister was talking about in the debate on the previous amendment. There is a much clearer view now among the general public that the public interest should be maintained at a high level. When other Ministers were in charge, not so very long ago but before the crisis in banking, I recall Questions being asked in this House of the noble Lord, Lord Jones of Birmingham, whom we were delighted to see earlier this afternoon. His present role seems much more suited to him than being a Minister in Her Majesty's Government. When he was a Minister, he stated that any questioning of unduly high remuneration in banks or other companies was quite wrong, that this was a matter for the companies alone and that any suggestion that it should be otherwise was a bad idea. I hope that that view is not so commonly held in government circles today.

I also hope that the Minister will support this modest amendment, which allows the Treasury so much flexibility in addressing the particular circumstances of any bank. The amendment proposes a remuneration committee in exceptional circumstances. I hope that Ministers will realise that it is a valuable change to the Bill.