Clause 6

Dormant Bank and Building Society Accounts Bill [Lords] – in a Public Bill Committee at 12:00 pm on 14 October 2008.

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Parliamentary accountability of reclaim fund

Question proposed, That the clause stand part of the Bill.

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

As I made clear earlier, we want the reclaim fund to operate in a transparent way. Our amendments show that we have listened to the debate and that we seek to reinforce transparency. We did that with Government amendments Nos. 21 to 25, which require the fund to publish the information referred to in clause 6 as soon as possible after the end of each financial year. That information will be available for all to see, including hon. Members. I hope that that satisfies any concerns that there will not be full transparency and scrutiny of the reclaim fund. However, requiring the reclaim fund to lay its annual accounts and reports before Parliament would be inappropriate and out of keeping with the Bill.

I shall briefly restate why clause 6 is unnecessary and why I oppose it standing part of the Bill. Representations have been made that the reclaim fund should be regarded as a public sector body as a result of the Treasury’s direction-making power, which has been discussed, and that that justifies additional parliamentary scrutiny. We have already debated those points, but I want to re-emphasise the fact that the reclaim fund is not a public sector body; it is a private company operating under company law.

As I have said, we do not envisage using the direction-making power to interfere in the day-to-day running of the reclaim fund and the management of its money. The FSA is responsible for regulating the reclaim fund for prudential purposes.

For the reasons I have outlined, the improvements in transparency made by Government amendments Nos. 21 to 25 and the explanations we have given about why we envisage using the direction-making power only in exceptional circumstances mean that a requirement for the reclaim fund to put its annual report and accounts before Parliament would be excessive and unnecessary. That is why I recommend hon. Members not to support clause 6.

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

Given the consensus that we reached on the previous amendments, I do not have a problem with the removal of the clause, but removing subsection (2)(a) would be a retrograde step. That subsection requires the Treasury to

“lay before each House of Parliament...any directions issued to a reclaim fund under section 5(4) of this Act”.

The Government won the point about whether the positive method for directions should be followed, but now not only will there be no parliamentary scrutiny, but there will be no obligation on the Treasury to publish such directions, which makes the situation even worse.

If we remove the clause in its entirety, no one will know what directions the Treasury has published. The directions might be used in pressing emergencies—to use the Minister’s words—but it would be helpful if we knew when they had been issued to the reclaim fund. I am sure that this is an over-hasty deletion by the Government, not a deliberate step to keep directions shrouded in secrecy.

Photo of Ian Pearson Ian Pearson Parliamentary Under-Secretary, Department for Business, Enterprise & Regulatory Reform, Economic Secretary, HM Treasury 12:15, 14 October 2008

I welcome the hon. Gentleman’s support for removing clause 6. If there is a problem with subsection (2)(a), I will undertake to return to the matter on Report. It is not the Government’s intention to be secretive in any way in the wholly unexpected circumstance that we might exercise a power of direction; on the contrary, we would want to ensure that we act transparently. We have debated whether that should be through an affirmative or negative procedure, perhaps because of the requirement for urgency. I will come back to that later should it be necessary or if there is any lack of clarity or transparency.

Question put and negatived.

Clauses 7 to 10 ordered to stand part of the Bill.