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, I thank the Minister for that response. He said that the Council for Financial Stability would not get involved in any such decisions and that Amendment 25 was therefore not necessary. We have pretty well established that the Council for Financial Stability does not have any real meaning, so perhaps Amendment 25 is not relevant.

However, I am less clear about Amendment 28. We know that the Government did not inform Parliament about the HBOS and RBS arrangements until the Governor of the Bank of England had informed Parliament. That clearly did not work, and the fact that the Permanent Secretary at the Treasury is acutely aware of parliamentary accountability seems not to have achieved a result that many would have found satisfactory. I am not sure whether we can leave it to Ministers of the day, as advised by their Permanent Secretaries. I shall withdraw Amendment 25, but I give notice that, in a minute or so, I shall press Amendment 28 formally.

Amendment 25 withdrawn.

Clause 3, as amended, agreed.

Clause 4 : Definitions

Amendment 26 not moved.

Clause 4 agreed.

Amendment 27 not moved.

Amendment 28

Moved by Baroness Noakes

28: After Clause 4, insert the following new Clause-

"Disclosure of financial assistance to the Bank of England

(1) Where the Treasury provides financial assistance to the Bank of England in order to facilitate actions by the Bank of England in pursuit of its financial stability objective under section 2A of the Bank of England Act 1998, the Treasury shall lay a report setting out details of the financial assistance before Parliament.

(2) A report under subsection (1) shall be laid as soon as possible after the provision of the financial assistance but may be delayed for as long as the Treasury considers that there would be a threat to the stability of the UK financial system if such a report were laid.

(3) Where the laying of a report is delayed, the Chancellor of the Exchequer shall ensure that information is given on a confidential basis to those Members of Parliament whom he considers should be informed.

(4) "Financial assistance" includes giving guarantees or indemnities and any other kind of financial assistance (actual or contingent)."

Amendment 28 agreed.

Amendment 29

Moved by Baroness Noakes

29: After Clause 4, insert the following new Clause-

"Bank of England's financial stability objective

After subsection (1) of section 2A of the Bank of England Act 1998, insert-

"(1A) In considering that objective, the Bank must have regard to-

(a) the economic and fiscal consequences for the United Kingdom of instability of the UK financial system;

(b) the effects (if any) on the growth of the economy of the United Kingdom of anything done for the purpose of meeting that objective; and

(c) the impact (if any) on the stability of the UK financial system of events or circumstances outside the United Kingdom (as well as in the United Kingdom).""