Amendments to Law (Resolution of Dunfermline Building Society) Order 2009

My Lords, the Minister will be pleased that I do not have quite as much to say on this order as on the previous two that we debated, but he will also be aware that I asked for this order to be debated separately from them, specifically because of it being made under the Section 75 powers that were the subject of much attention during the passage of the 2009 Banking Bill, not only in your Lordships’ House but in the other place. Indeed, while Clause 75 was amended during the passage of the Bill, many remained uncomfortable at the end with the powers in that clause. During that passage, we constantly pressed the Minister for examples of why the retrospective element was necessary, in particular in Clause 75; we never had a satisfactory answer. When I saw this order, my reaction was twofold. First, if the Treasury could come up with over six pages of usage of the Section 75 power only two months after the passing of the Act, why during the passage of the Bill could it not have articulated more clearly what the power was there for? Did the Treasury not know then how it was going to use the power, or did it withhold from Parliament its intention on how to use it? Neither possibility would reflect well on the Treasury or on the Government. The Minister has referred to my honourable friend Mr Mark Hoban pressing the Minister in another place on why the Banking Act was not used for many of the issues that are dealt with in this order. With respect, those questions were not answered, either then or today. The exemption from the Freedom of Information Act, or the issue about shadow directors, for example, have not suddenly popped up in the case of the Dunfermline Building Society. They were identified when Northern Rock was nationalised and when Bradford & Bingley was processed, but it seems that no satisfactory answer has been given on why they were not dealt with in what became the Act. Now that we are getting quite used to nationalising things, why do we have to use Section 75 all the time to change the law for things that appear to be routine? The Minister said that this shows why we needed the retrospective element of Section 75. However, as I see it, the only degree of retrospection is between 9.45 am and 8 am on 30 March. I am puzzled why the Government, first, did not articulate why they needed the power of retrospection when they took Section 75 of the Act; and, secondly, why that was necessary for one hour and 45 minutes. When the orders were made under the Banking (Special Provisions) Act 2008, which has no power of retrospection—that is in respect of Northern Rock and Bradford & Bingley—they did not have a problem about one hour and 45 minutes needing a special power for retrospection. Therefore, I am mystified as to why that is necessary. Will the Minister confirm the precise retrospective effect of the order, as that is not made clear either in the order or in the Explanatory Notes? Having taken the power to retrospectively take the law, I feel that it is incumbent on the Treasury when it uses the power which contains that element of retrospection—and when it solemnly recites in the order that it is both necessary and desirable to have retrospective effect and that the Treasury has had regard to the fact that it is in the public interest to avoid retrospective legislation, which is in Section 75—to go beyond those recitations and say what degree of retrospection has been taken and why it has been taken. Perhaps it is really only one hour and 45 minutes, in which case the matter can be dealt with straightforwardly. I hope that the Minister will agree that it is right, if such orders come forward in future, that the retrospective element and the reason for that element of retrospection should be clearly identified. I raise one issue of substance in relation to the order. It concerns the pension aspects, which are dealt with at paragraph 5. The Minister has partly explained this issue, which was also raised by my honourable friend in another place yesterday. Why were the powers in Section 71 of the Banking Act not used in relation to the property transfer instrument? When we considered the Bill, we were led to believe that the widely drawn Section 71 was there to deal with all consequential pension matters. That power is specifically for dealing with consequential pension matters. We were also assured during our consideration of the Bill that there was no intention to use the power in Section 71 to affect the accrued rights of members. We now find that Section 75 has been used to deal with the pension issue, but it achieves a result that strands those members within the defined benefit scheme. It may be that employees will move over to a group pension plan, but their defined benefit scheme and any liability in there which is not funded has been stranded. Related to that, will the Minister explain why the staff and, indeed, any deferred pensioners of the Dunfermline Building Society have been treated more harshly than those of Northern Rock and Bradford & Bingley? The effect of what the Government have done is that if there is a shortfall the scheme will end up in the Pension Protection Fund; and the consequences of that are that pensioners will get less than they would otherwise have got. That has not happened with either Northern Rock or Bradford & Bingley, as I understand it, where pensioners and employees with pension rights were protected. The Minister claimed credit for protecting the retail depositors. Is it now the Government’s intention that depositors will be protected to a greater extent than employees in relation to their pension rights? A definitive statement from the Government on that would be helpful. Lastly, the order refers to the property transfer instrument which the Bank of England issued in respect of the Dunfermline Building Society. A footnote to the order refers to this being published on the Bank’s website, but, as the Minister will recall, in response to amendments that I tabled, the Government tabled amendments at the Report stage of the Banking Bill so that the Treasury also has to lay a copy of the property transfer instrument before Parliament. When that was done? I searched the Parliament website, but could find no relevant reference. I hope that the Minister can tell me that it has been done and when it was done, so perhaps I can locate it within the parliamentary system. Will the Minister also agree that when dealing with orders coming before Parliament it would be helpful to give a parliamentary reference, rather than one on an external website, since we now have the procedure in the Act to ensure that these instruments are laid before Parliament?