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(1A) No order under subsection (1) shall be made in respect of the property, rights and liabilities of a building society..
The amendment continues the theme of the previous amendment to which I spoke. The Bill has been presented to the House as an emergency measure to deal with a special situationthe nationalisation of the Northern Rock bank. For clarity, Mrs. Heal, I advise the House that later we will also vote against the proposition that clause 11 should stand part of the Bill, but with amendment No. 12A our aim is to remove references to building societies from the legislation.
It may be that there is a very good case for making some changes to the regime governing building societies. We have already had a discussion about that this evening. There may be a case for applying a regime along the lines of clause 6 in future to building societies, but there is no case to be made for including provisions relating to building societies in a Bill whose purpose is to nationalise a bank, which, by definition, is not a building society. Therefore, we seek in the amendment to leave intact all the provisions of clause 6 as they relate to banks, such as the possibility of transferring assets, liabilities, properties and rights from a bank to a company owned or controlled by the Bank of England or the Treasury in order to facilitate the partial nationalisation of a bank, which is a power that the Government say that they need. We seek to introduce into subsection (1)(a) the additional words in amendment 12A to ensure that the powers in clause 6 cannot be applied to a building society.
If the Bill is emergency legislation, it does not need to apply to a building society. There is no immediate and pressing need to have such a provision applying to a building society. We cannot allow the Government to include in a sort of omnibus, portfolio approach any power that they think they might need in a supposedly emergency Bill to deal with a specific situation.
We have reached clause 6 in the space of an hour. It is already apparent to the House that no proper scrutiny of the provisions in the Bill is possible. The timetable means that it has not been possible for Ministers properly to consider the amendments tabled by the Oppositionto sleep on them, to consult widely on them and perhaps to decide that some of them have merit. So we get a blanket, defensive blocking mechanism, quite understandably, to amendments that Ministers have seen only a couple of hours ago. This is not the way we can agree to proceed to deal with provisions that are not explicitly needed for the immediate purpose in handthe nationalisation of Northern Rock.
If the Minister wants the provisions relating to building societies, she should put them in a Bill that will go through the House in the normal way, with proper scrutiny, so that we can debate with her their purpose and she can explain what she needs them for, and so that we can bring to bear the views and opinions of experts and interested parties outside the House and consider them properly. The provisions are not needed in this Bill tonight, so I urge her to agree that building societies should be excluded from the scope of clause 6.
Dr. Cable: I have agreed with all the amendments tabled so far by the Conservatives as ways of strengthening the legislation, but I disagree with this amendment. There are perfectly good reasons why building societies should be put in a position comparable to that of banks. I was not aware until this Bill came along that building societies were not in the same position as banks and could not access lender of last resort facilities in the same way as banks. That has just come to light, but if it is the situation, it seems entirely reasonable to address it.
The argument that the hon. Member for Runnymede and Weybridge (Mr. Hammond) made was, Why dont we think about all this in the bigger scheme of things with the intervention powers? However, we are
not talking about omnibus powers of nationalisation. We are talking about situations that could well arise in the next few weeks or months in which a building society, as one understood that Barclays did in the autumn, could go to the Bank of England for liquidity support. We are in difficult circumstances, and it seems right that those powers should be available now both to protect the interests of the building society sector and to maintain a level playing field between banks and building societies, which surely we want to do.
Mr. Hammond: I may have confused the hon. Gentleman by speaking about clause 11, which introduces lender of last resort powers for building societies. Clause 6 deals with the nationalisation of the assets and rights, but not shares, of banks and building societies. Amendment No. 12A was tabled to avoid the possibility of the nationalisation of building societies assets, property rights and liabilities.
The Exchequer Secretary to the Treasury (Angela Eagle): Clause 6 gives the Treasury power to transfer property rights and liabilities of deposit takers when one of the conditions in clause 2 is satisfied. Amendment No. 12A would remove building societies from the ambit of the clause. There are two issues to re-emphasise. First, as Opposition Members will know, clauses 3 and 6 are subject to a sunset clause. Secondly, on the proportionality of the powers, I had hoped that Opposition Members would bear in mind the high hurdles that will have to be jumped before there can be any kind of intervention under clause 2. The issue should be considered in that context.
Clause 6 is the only power in the Bill that would allow the Treasury to take a building society into public ownership or transfer it to another private body. The power in clause 3 to transfer shares and securities would not work for building societies, because building society shares are essentially deposits held by their saving members. Acquiring them would therefore not transfer ownership of the society in the same way that the transfer of a banks shares would. However, the Government believe that the power in clause 6 should be exercisable in respect of building societies.
The Bill provides the powers on an interim basis, so that we can deal with any further problems that may emerge in the next 12 months. In the current climate, it is not inconceivable that a building society may run into difficulties, although I should make it clear that none has; it is important to emphasise that we do not have a particular building society in mind. That is partly why we are introducing the powers in clause 11, to which hon. Members have already referred, to allow the Bank of England to give certain financial assistance to building societies if they get into trouble. Extending clause 6 to building societies ensures that all interim measures available for banks are available for building societies. We think that that is prudent in the interim period. I emphasise that it is a precautionary step, but as hon. Members have suggested, we are consulting on longer-term proposals for banking reform. We will come back to the issue in the fullness of time, as part of that consultation.
Mr. Peter Bone (Wellingborough) (Con): Does the Minister think that there is a danger that including building societies will send markets the signal that there might be risks for building societies? If there is no risk, why include building societies in the first place?
Angela Eagle: I did not say that there is no risk; there is risk all around at the moment, given what is happening in the global credit crunch. There are risks that that could affect institutions other than banks. What I did say is that we do not have in mind any particular building society that is in difficulty at the moment. I wanted to emphasise that point, so as not to set alarm bells ringing. However, in the interim period, while we are considering banking reform more generally, we think that it is prudent to introduce the precautionary powers in clause 6 and clause 11, which we shall come to later.
Mr. Mark Field (Cities of London and Westminster) (Con): Will the Minister tell us what the lender of last resort arrangements are for building societies, and what it is about those arrangements that makes it so essential that building societies be included in clause 6?
Angela Eagle: That is a debate that would be more accurately held under clause 11 when we come to those specific powers. I am happy to deal with the issues then. I expect that I would be called to order if I extended the debate to clause 11.
Mr. Hammond: No, I am afraid I shall have to disappoint the hon. Lady. Her explanation is not good enough. The legislation was billed as emergency legislation to deal with a specific and pressing problempressing enough that the Chancellor had to make an announcement about it on a Sunday afternoon. It is a huge relief to hon. Members that the Minister does not have any particular building society in mind. I expect that it is a huge relief to the Clerks as well, as we may have had to decide that this was a hybrid Bill after all if she had a particular building society in mind.
The point that the hon. Lady has failed to address is this: the House is being asked to set aside its normal procedures for scrutiny of legislation. The Opposition parties and outside experts and interests are being asked to forgo the usual opportunity to make their representations and present their case during a proper Committee stage of a Bill. It is not good enough for the Government to sweep up all sorts of powers that they think they might possibly need one day, although they do not have in mind a specific example of that need, and put them into a Bill which they then ask the House to pass in a single day without the opportunity for proper scrutiny.
We would be very happy to look at the case for introducing the kind of powers that the Minister describes in relation to building societies in general, but what the House, the media and the great British public expected when they heard the announcement on Sunday of emergency legislation to nationalise Northern Rock was a narrowly focused Bill for the announced purpose
of nationalising Northern Rock. Patently, such a Bill does not need a provision that deals with building societies.
Angela Eagle: I do not want the hon. Gentleman to caricature my position too much. This is not a wide-ranging provision that will remain on the statute book for ever. He will admit that clause 6 is one of the sunset clauses and that these are focused powers in very specific and unusual circumstances, so it does not go quite as wide as he is trying to make out. I hope he will recognise that. I tried to put my remarks in that context when I spoke about including building societies.
At least the hon. Gentleman ought to recognise that the circumstances are unusual, that there are high hurdles to get over in clause 2, and the provisions are quite focused. I made a point of saying that this was an interim solution while we were examining the longer-term issues of banking reform, which he and the House know we will return to later in the Session, after due consideration and consultation with all the outside forces that he mentioned.
Mr. Hammond: The hon. Lady is right that the powers are time-limited, with a years life. They are quite specific powers, but they are not specific to dealing with the Northern Rock situation, which is what all of us thought we were coming to the House today to do. We have been surprised and the commentators will be surprised by the breadth of the Bill, which was widely expected to be a specific, tailored measure to deal with Northern Rock. We do not think it reasonable to ask the House to approve anything that is not absolutely necessary today in this compressed one-day consideration of the Bill, which clearly will not allow full scrutiny line by line.
As I said in my initial remarks earlier this afternoon, that is bound to lead to a situation where the other place or, as is perhaps more likely in the end, the courts will have to resolve many issues that we have been unable to pick up and deal with during this afternoons deliberations. Goodness knows, even in a Bill that receives proper scrutiny in Committee, we invariably findthis is particularly the case with complicated Finance Billsthat the Government have to come back the following year in order to deal with problems, omissions and technical drafting failures that have occurred, or with loopholes that have been uncovered in the courts. What we are discussing tonight is not the type of measure that we should address under this emergency procedure, unless it were explicitly needed for the purpose of the principal business in hand todaythe nationalisation of Northern Rock. That nationalisation does not require any powers in relation to building societies. I will therefore press the matter to a Division. I ask my right hon. and hon. Friends to support the amendment.
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