Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.Donate to our crowdfunder
May I make a point that could be made in relation to either clause 201 or clause 202? Clause 201 states that the banknote regulations must be made through the affirmative procedure, which we welcome, but clause 202 states that the Bank of England may make banknote rules. In those circumstances, there will be no direct parliamentary scrutiny, and I query whether the affirmative resolution procedure will prove to be as useful as it at first appears. The Minister has provided us with an early draft of the banknote regulations, but am I right to think that Parliament might not have an opportunity to scrutinise those rules?
I am confident that the regulations and the rules will cover matters such as standard size, security features and the weight of notes. I know that the banks have been lobbying hard regarding concerns that they had in the early stages of consultation. Will the Minister confirmwe will cheer if she doesthat the Government do not intend to have a single note of each denomination? Will they continue to allow limited edition notes, which are valuable for many reasons, to be issued, as long as they meet all the rules and regulations that will cover all notes?
The framework governing the issue of Scottish and Northern Irish banknotes is set out in the primary legislation. The detail of the provisions in part 6 are, as the hon. Member for South-West Hertfordshire said, to be captured in regulations that will be subject to the affirmative resolution procedure. A draft set of the regulations has been provided to the Committee to assist our debates. Further, there is provision for making banknote regulations that contain details about the treatment, holding and issuing of banknotes by authorised banks. As hon. Members will see when we debate clause 203, the regulations will require authorised banks to have backing assets. They will also contain detailed provisions on important issues such as how backing assets may be held, how they may be treated in an insolvency, and how reports about them should be made by authorised banks.
I welcome hon. Members comments on the draft regulations, but I ask them to bear in mind that they are in draft form. I sent them to the Committee merely to illuminate debate on the relevant clauses. They are not totally baked and out of the oven, but are to some extent a work in progress; some of them need further work before they can be consulted on.
The draft regulations contain detailed provisions relating to, among other things, the conditions attached to approved or designated locations or agents, the proportion of backing assets to be held in a particular form or location and the scope of the banknote rules. Those rules are intendedthis brings us to a question that the hon. Member for South-West Hertfordshire askedto be even more detailed in relation to how the regulations work. In essence, the banknote rules are even more detailed and rely and hang on the statutory instrumentsthe secondary legislationthat we will pass, which is why I do not agree with the hon. Gentlemans worry that somehow the banknote rules will avoid parliamentary scrutiny. The regulations will be passed by this House in affirmative form and voted on. The banknote rules will then iterate even more detail about how the Bank of England will fulfil its obligations in that respect.
The regime needs flexibility to adapt to changes and developments in banknote issuance that might occur in future. The authorities might also have to act quickly by making regulations or rules to ensure that the integrity of the currency is maintained at all times. The idea of the balance between secondary legislation and the banknote rules will again focus first and foremost on protecting noteholders in order to ensure that confidence is not lost in any of the currency. Banknote rules mainly make provision as specified in the banknote regulations; they cannot do things that are not connected to the regulations that will be debated and voted on in this House.
In answer to the perfectly reasonable question about limited edition notes asked by the hon. Member for Dundee, East, I can confirm that it will still be possible to issue limited edition notes. With those reassurances, I hope that hon. Members will agree that clause 201 stand part of the Bill.