Banking (Special Provisions) Bill

I have limitless patience; the question I have to judge is the patience of the Committee. We are considering specific amendments but a range of other issues have been raised within that framework. Many of them have been raised before, and I have sought to respond to them. Perhaps I may now address myself to the questions. I have no further reply to the noble Lord, Lord Forsyth, on the position last September. As the Chancellor made clear in another place and I have repeated, there was never a significant development regarding a bid for the Government to consider. The issue is therefore extraneous to the Bill, which is about how to deal with the present situation of Northern Rock. The noble Lord, Lord De Mauley, deserves a reply on his two amendments. There was some concern when the amendment was put forward in the other place that a full year would not be needed for the process we are undertaking. Of course we recognise that concern, so it may be helpful if I set out why a full year is desirable. But first, to avoid any misunderstanding, I must make it clear that the sunset clause applies only to the powers to make transfer orders under Clauses 3 and 6. It does not apply to the powers to make compensation orders in Clauses 5 and 7 or to the other powers of the Bill. In addition, Clause 2(9) provides that transfer orders will continue in force even when the powers in Clauses 3 and 6 have expired. However, the powers in Clauses 3 and 6 may have to be used more than once in any particular case. So, following the initial order, further orders may be made under these clauses where, for example, provision must be made in connection with or in consequence of the transfer, or to deal with new matters or issues affecting the transfer. It is too soon to say whether further orders may be needed in relation to Northern Rock. We would not wish to take the risk that we will need to make consequential provision after the one-month time limit has expired. That is why we need time in relation to Northern Rock. As the Committee will recognise, the Bill is drafted in general terms, and I have explained the two reasons for this generality. The first, of course, is to avoid the issue of hybridity—an issue which raises very real difficulties about the timescale in which any measure should be passed, when everyone recognises the urgency of dealing with Northern Rock. The second aspect of the timescale is that, as I sought to make clear yesterday, the Government are seeking to produce a significant Bill that will encompass permanent solutions to the issues of banking reform. We have had extensive consultations on that because it is an issue of the greatest import. The Government published a consultation document on the reforms at the end of last month and we will introduce a Bill in the present Session. That Bill is not likely to achieve Royal Assent for many months. In the mean time, we have to address significant issues about regulation of the banking system. The other amendment in the group probes why the Government believe that the Bill and Clause 6 in particular should apply to building societies. Clause 6 gives the Treasury the power to transfer the property rights and liabilities of deposit-taking institutions to companies owned by the Treasury or the Bank of England or a private third-sector party where one of the strict conditions in Clause 2 is satisfied. I address that point to the noble Earl, Lord Ferrers. He will appreciate that very strict conditions have to be met under Clause 2 before the provisions are triggered. That is why they relate to Northern Rock and only to Northern Rock. They would only apply to any other financial institution if we faced the direst crisis with it.