Banking Bill — Committee (4th Day)

Part of the debate – in the House of Lords at 4:45 pm on 20th January 2009.

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Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords) 4:45 pm, 20th January 2009

The Government are not going to make that decision. They will not apply the criteria for that; the banks will decide whether they come here or not. I should be exceedingly wary of giving enormous encouragement to holding companies that may contain failing banks. The noble Baroness seems to suggest that because we are addressing ourselves to this problem in forthright terms we are, by definition, rendering ourselves unattractive—quite the opposite. Guaranteeing the viability of the financial system is an absolute prerequisite for continued investment in this country, which is why the Government are pursuing this strategy.

On the more general points, the noble Baroness asked about the code of practice. It applies to the holding companies' powers, and the draft code will need to be updated to take account of the amendments that we are introducing. The noble Lord, Lord Newby, asked about powers given to the Bank of England. Resolutions on a holding company level have the potential to affect a large number of parties, including those not part of the financial services sector. It is likely that the public interest decision of whether to intervene will involve balancing the interests of a wide variety of persons. The noble Lord will not be surprised to hear that in a democratic society we consider that government Ministers answerable to Parliament are the best placed to make these judgments. The temporary public service option has a higher public interest test for intervention than the other stabilisation options. As the noble Baroness emphasised, we preface public ownership with the crucial word "temporary". I hear what the noble Lord, Lord Newby, says about these issues; he articulates his position with great frequency and considerable force. However, I am sure that he fully understands the Government's position vis-à-vis the Bill.

I emphasise that these government amendments are the product of the consultation that we have been able to carry out and the extra time that we have been able to devote to analysing a rapidly developing situation, against a background where the legislation needs to be delivered in a limited period. The Government have been assiduous in their consultation in the months prior to the legislation. The amendments are the product of more recent developments. I commend Amendment 116 to the Committee.