Financial Services Bill — Committee (2nd Day) (Continued)

Part of the debate – in the House of Lords at 8:33 pm on 15th March 2010.

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Photo of Baroness Noakes Baroness Noakes - Shadow Minister, Shadow Minister 8:33 pm, 15th March 2010

My Lords, in moving Amendment 25, I will speak also to Amendment 28. Amendment 25 adds a new subsection to Clause 3. Amendment 28 adds a new clause after Clause 4. They both concern informing Parliament about financial support. Both focus on financial assistance.

Noble Lords may know that the inspiration for the amendments came from the late disclosure of the emergency loans of £62 billion given to HBOS and RBS in October 2008 by the Bank of England. The Treasury indemnified the Bank as this was clearly way beyond the capacity of the Bank's own balance sheet. This was made public only when the Governor of the Bank of England revealed it during evidence to the Treasury Select Committee in another place in November last year. The Chancellor of the Exchequer was then forced to make a Statement to another place setting out the facts. It was revealed not only that these extraordinary loans were kept secret for over a year from shareholders and Parliament but also that the Chancellor had not even informed the chairman of the Public Accounts Committee or the Treasury Select Committee on a confidential basis. This brings me to my two amendments.

Amendment 25 is concerned with the annual report and the minutes of the Council for Financial Stability. In any case of financial assistance, once the conditions of secrecy set out in Clause 3(5) and Clause 4(3) cease to exist, a report should be laid before Parliament. This report would obviously contain the information redacted from the minutes and the annual report.

Amendment 28 concentrates on financial assistance to the Bank of England, which would be the normal route for such assistance. This lays on the Treasury the basic obligation to report to Parliament. That report should be made as soon as possible but may be delayed if there is a threat to financial stability. There is no need for a commercial confidentiality let-out here. Parliament must be told if taxpayers' money is being put at risk unless there is a reason at the national level to withhold such information. Importantly, the amendment provides that, if such a report is delayed, there is a positive obligation on the Chancellor to inform Members of Parliament on a confidential basis. It is for him to determine which Members of Parliament that should be. This is the area where the Chancellor badly let Parliament down in relation to RBS and HBOS last year. We must not allow that to happen again.

These amendments overlap to some extent, but I hope that together they demonstrate the range of concerns that should be addressed in this Bill in response to the serious concerns arising from the non-disclosure of the RBS and HBOS arrangements. I beg to move.