Clause 3

Dormant Bank and Building Society Accounts Bill [Lords] – in a Public Bill Committee at 11:15 am on 14 October 2008.

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The assets-limit condition

Amendments made: No. 12, in clause 3, page 2, line 43, after ‘bank’, insert ‘or building society’.

No. 13, in clause 3, page 2, line 46, after ‘bank’, insert ‘or building society’.—[Ian Pearson.]

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I beg to move amendment No. 2, in clause 3, page 3, line 11, leave out from ‘section’ to end of line 11 and insert

‘may not be made unless a draft of the regulations has been laid before, and approved by a resolution of, the House of Commons.’.

I will be brief. I declined to contribute to discussions on previous clauses because I thought that I would keep my powder dry for the point I make now. The £7 billion threshold is clearly controversial; a substantial body of opinion believes that there should be no threshold at all. So the amendment would require the Government to use a positive resolution if they wished to alter the threshold, rather than a negative resolution, which is the current arrangement.

Opposition parties routinely use this device in Committee to try to make the Government more accountable to Parliament, and perhaps there is something slightly ritualistic in the way that amendments are tabled to that effect. In this instance, however, a serious point is being made: it would not be appropriate—indeed, it would be a slight breach of faith—for the Government to alter the threshold in a way that substantially changed the legislation and the impact on small communities that would otherwise benefit, without proper reference to Parliament. That is the motivation behind amendment No. 2.

Unlike other amendments moved by Opposition parties, which the Government—by virtue of having the majority of members of the Committee—may wish to disregard, they might want to look more sympathetically on this proposal. Unless they have malign or hidden motives—I have no reason to believe that they have—I cannot understand why they would wish to reject the amendment.

Photo of Ian Pearson Ian Pearson Parliamentary Under-Secretary, Department for Business, Enterprise & Regulatory Reform, Economic Secretary, HM Treasury

We identified, in consultation with the industry, the £7 billion limit as a credible threshold to define small locally based institutions, and it is enshrined in clause 3. The amendment asks us to use the affirmative procedure rather than the negative power in the Bill. I say to the hon. Member for Taunton that we recognise the concerns that were expressed in the other place about the suitability of the £7 billion limit, and we have recently discussed those concerns.

There is provision in the Bill for the asset limit to be adjusted by Government order, so that it can continue appropriately to identify small and local institutions in the future, which is its purpose. The most likely reason for changing the limit would be a technical matter, such as inflationary adjustment. We therefore consider that a negative power is appropriate, given the scope of the power and the interest that it is likely to raise.

The Delegated Powers and Regulatory Reform Committee confirmed that a sufficient case had been made for the power, and it did not consider the power nor the scrutiny that we are proposing—the negative procedure—to be inappropriate. For those reasons, we believe that the hon. Gentleman’s amendment is unnecessary, and we will oppose it.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I am disappointed. I understand the point that the Minister is making: if the limit will be adjusted due to inflation or other incremental changes that take place from year to year, we do not need a full-scale discussion, but I witnessed in the Chamber last week large parts of the provisions for banking being made under terrorism legislation, so I am cautious about the Government using powers created for one reason to achieve different purposes at a later date. It is perfectly possible that the Government could reduce the threshold substantially without proper reference to Parliament. That concerns me, but I sense that I have not persuaded the majority of members of the Committee, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3, as amended, ordered to stand part of the Bill.

Clause 4 ordered to stand part of the Bill.