Banking Bill — Committee (4th Day)

Part of the debate – in the House of Lords at 6:30 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) 6:30 pm, 20th January 2009

When Parliament is sitting, it will consider whether the position is acceptable. If Parliament rejects the order, it is inconceivable that the Government would reintroduce it in defiance of the will of Parliament, so that is not the case. The issue with regard to the continuation relates to an emergency action having been taken and Parliament not sitting within the period. Twenty-eight-day orders are not common, but they are not unknown. They exist because it is recognised that there are actions by authority that ought to be subject to early parliamentary scrutiny and concern. That is why they are limited to 28 days. The only circumstances in which there would be an extension would be if they could not be considered in that period.

I am sorry to belabour the point with the noble and learned Lord, Lord Lyell; he knows how much I respect him in these matters. We have dealt with matters with regard to the law in the past. I have never felt that my responses have been entirely satisfactory to him and I feel the same way now. However, I emphasise that we are talking about a power that can be exercised only when a particular institution is entering the special resolution regime. That is the governing position with regard to the other clauses in the Bill. We have clear strategy triggers in the Bill which set up this position. We therefore expect this provision to be exercised only in the most exceptional conditions.

I hear what the noble and learned Lord says: it goes without saying that the rule of law and democratic traditions are the best safeguard for a financial system operating in any society. However, there can be threats to a financial system which have very little to do with the law, the ethics or the ethos of that system. Things can go very badly wrong. They have gone very badly wrong in very recent experience. This Bill seeks to provide, as best we can, that such eventualities cannot recur with regard to a failing financial institution. That is the limiting framework in which these powers will be taken. I hope that he will accept the Government's good faith in this matter.