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 Lord Myners Lord Myners Parliamentary Secretary, HM Treasury 8:33 pm, 15th March 2010

Amendment 25 explicitly concerns information about financial assistance as defined in Section 257 of the Banking Act 2009. The amendment would provide for information of this nature that was discussed in a Council for Financial Stability quarterly meeting but not minuted or covered by the annual report of the council to be made public in a report to Parliament when the confidentiality concerns in Clause 3(3) no longer apply.

As I am sure the House is aware, there are already appropriate reporting mechanisms in place for financial assistance under the Banking Act 2009. It might be useful to set out these processes. First, under Section 228(6) of the Banking Act 2009, where funds for financial assistance are paid directly from the Consolidated Fund, the Treasury shall as soon as reasonably practicable lay a report before Parliament specifying the amount but not the identity of the institution to or in respect of which it is paid. This would normally take the form of a Written Ministerial Statement such as in the case of the £1.6 billion payment made under Section 228(5) in March 2009.

Secondly, under Section 229(6), where a loan for financial assistance purposes is made from the National Loans Fund, the same reporting requirement as under Section 228(6) applies. No financial assistance loans have been made from the National Loans Fund to date.

Finally, under Section 231, the Treasury is required to lay before Parliament a report about any arrangements which may involve or require reliance on Section 228(1). This will include financial assistance payments made from voted money or directly from the Consolidated Fund under the Banking Act. It will also cover guarantees and commitments entered into as financial assistance where the making of future payments could require reliance on the Banking Act. The report must not specify individual arrangements or identify, or enable the identification of, individual beneficiaries.

These arrangements provide the right framework for reporting financial assistance under Section 257 of the Banking Act. There is no need, therefore, for further reports as part of the reports made by the Council for Financial Stability on its activity, especially as the council would not itself be taking any decisions about the giving of financial assistance.

In terms of disclosure of financial assistance to the Bank of England, the Government are in discussion with the chairs of the Public Accounts Committee and Treasury Select Committee about how extremely sensitive information would be notified to Parliament in the unlikely event of additional confidentiality being needed in the future. As Sir Nicholas Macpherson, the Treasury's Permanent Secretary, indicated to the Public Accounts Committee when he appeared before it on 14 December:

"The Chancellor and indeed the official Treasury are acutely aware of the importance of parliamentary accountability".

We would work to establish an arrangement for exceptional cases, such as the assistance that the Treasury made available to provide emergency liquidity against security-not a giving of benefit, as suggested by the noble Baroness-to HBOS and the Royal Bank of Scotland.

These arrangements are in addition to the normal processes for managing public money, which require the department to notify Parliament of statutory liabilities in the form expected by the legislation and any other major non-standard liabilities using a standard form of minute. These departmental minutes describe the amount and expected duration of the proposed liability; they explain which bodies are expected to benefit and why; and they explain how the authority for any expenditure required under the liability will be sought. As well as being laid in the House 14 sitting days prior to the liability being taken on, they are copied to the chairs of both the Public Accounts Committee of another place and departmental committees. In cases of particularly large or unusual liabilities, a ministerial Statement accompanies the minute. The Government are in discussion with the chairs of the Public Accounts Committee and the Treasury Committee to agree a process that will work effectively and ensure appropriate confidentiality. That will ensure that no action places at risk the very financial stability that we are seeking to achieve. Accordingly, I invite the noble Baroness to withdraw her amendment.