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Lord Beaumont of Whitley: My Lords, we all owe an enormous debt to the noble Baroness, Lady Nicol, for bringing forward the Bill and to those in another place who took it through its stages there. Some criticism has been levelled at the habit of taking Bills off-the-shelf from ministries and passing them through as Private Members' Bills. However, I think there is justification for it in this case. It is true that we would like to have seen many changes to the Bill. We would like to have seen it considerably strengthened. If noble Lords saw the recent television programme about conditions in quarantine, they would want to have seen the Bill strengthened in various ways, including, as the noble Baroness said, by allowing owners to have vets of their own choosing to see their animals.
With those reservations, and in the hope, which the noble Baroness has expressed, that the Government when they produce the regulations will make them considerably tougher than the present ones, we very much support the Bill and welcome the work that has been put into it.
Lord Hoyle: My Lords, I thank my noble friend Lady Nicol for introducing the Bill and for the way she has argued her case. At the moment, Ministers have no clear legal basis for laying down legal standards for animals kept in quarantine premises. The Channel 4 programme "Undercover Britain" of 5th May illustrated again the need for legislation to cover this area. I can assure my noble friends that I have noted all the points made. The Government will seize the opportunity presented by the Bill to make meaningful and effective secondary legislation.
I was asked about independent veterinary surgeons visiting the premises. The issue was raised a number of times during the proceedings on the Bill in your Lordships' House and when it was considered in another
We support the Bill and we believe that its net effects will be totally beneficial. All the points made will be noted and the Government will seize the opportunity to strengthen the order when it comes about.
The noble Lord said: My Lords, this order is an important step in ensuring that the Bank has the necessary information to carry out its monetary policy functions. It follows from Section 17 of the Bank of England Act, which gives the Bank the power to obtain the information necessary for the purposes of its monetary policy functions from the types of undertakings listed in Section 17(3) of the Act. Up to now the Bank has collected information relating to monetary policy matters on a voluntary basis. As the Act gives the Bank a statutory monetary policy objective, it is appropriate to put the Bank's collection of information on a statutory basis.
The Bank will also continue to collect supervisory information from banks for the FSA, as provided for in Section 27 of the Act. The order does not cover the information collected on behalf of the FSA, only information the Bank requires for its monetary policy functions.
The order relates to what type of information is to be collected. It is to be made under Section 17(4) of the Act, which enables the Treasury to define by order which financial affairs are relevant for the purposes of the Bank's information gathering powers. The range of information defined in the order reflects the most recent review of monetary and financial statistics by the Bank, published last year. As such, the range of information to be collected reflects current practice.
The Treasury, in preparing this order, has consulted with the Bank, the Office of National Statistics and other interested parties. The order reflects these responses. The response to consultation was published on 22nd April 1998.
Most respondents to consultation welcomed the move to a statutory basis for the Bank's collection of information for monetary policy purposes. They agreed that as it largely reflected existing practice, it should not imply any increase in costs.
The Government are concerned to ensure that the costs of supplying statistical information be kept to a minimum, consistent with meeting the information needs of the Bank. The Bank's code of practice for statistics also commits it to place the minimum load necessary on data suppliers and to keep data suppliers' costs to a minimum. I beg to move.
This order gives the Bank enormously wide power to demand details of every transaction entered into by any bank or building society in this country. The Bank could, for instance, demand to know the interest rate applicable to any overdraft applied to any borrowing by every individual or company which has a facility with an institution. If the Bank insisted on knowing this information it would cost the relevant institution a vast amount of money to provide it.
To assist in the formulation of monetary policy, the Bank cannot possibly need all the information which this instrument will allow it to collect. However, as the Minister has repeatedly assured us that it is the Government's intention to keep the cost to the institutions to a minimum, we hope that he will in turn persuade the Bank that it needs only a small fraction of the information for which it could ask.
We have asked the British Bankers' Association and the Building Societies Association to monitor the costs of complying with this instrument and will raise the subject again if it transpires that the Bank is ever unreasonable in its demands and the cost to the industry is, therefore, excessive.
Lord McIntosh of Haringey: My Lords, I am grateful to learn from the noble Earl that the British Bankers' Association and the Building Societies Association will be monitoring the cost of collecting this information. That will be helpful to us in considering any future changes that may be necessary. I have to say to him that nothing here is being demanded which is not itself necessary. It may sound extensive, but it only reflects current practice. They are not being asked for any more than they are asked for on a voluntary basis and supplying in that way at the moment.
The noble Earl referred to getting information about individual accounts. Of course, that is strictly true, but it is all provided on a completely confidential basis. There is no fear of any disclosure of information about individual accounts. I thank the noble Earl for his response.
The noble Lord said: My Lords, this order sets out the bands and ratios that will be used to calculate the cash ratio deposits that credit institutions will deposit with the Bank of England. These cash ratio deposits provide one source of funding for the Bank. This system has worked well for many years.
We have again consulted widely on our proposals. We issued a consultation document on 25th November 1997 and published the Government's response to consultation on 20th April 1998. There were 19 responses. The responses argued for a substantial cut in the CRD burden and some proposed in addition a "sunset clause", or review of the scheme within five years. Responses also argued that CRDs should not fund a dividend to the Treasury and that the Bank should be made more accountable, with better disclosure of costs.
The responses also favoured a banding approach, with a zero band, rather than a threshold approach, in order to avoid a steep marginal rate at the threshold. There was less consensus on the actual values of the bands and ratios. A number of institutions favoured a low threshold with a flat rate, but there was also support for multiple bands with a greater weighting relative to size.
At the outset of this consultation process the Government said that their intention was that the total burden of the statutory CRD scheme on credit institutions in aggregate should be no greater than it was at that time and preferably lower. It was also important to make the statutory CRD scheme transparent so that the Bank was accountable to the institutions placing deposits with it; and now, having completed the consultation process, we intend to establish a clear set of principles as a basis for the scheme and transparent arrangements for their application. These are that CRDs should be set at a level designed to cover the Bank's unrecovered running costs associated with monetary policy and financial stability, with the Bank's free reserves remaining broadly constant in real terms over time.
Under the old non-statutory scheme, banks with eligible liabilities of less than £10 million were not required to place CRDs with the Bank. Banks over the threshold had to keep on deposit at the Bank 0.35 per cent., reduced to 0.25 per cent. on 1st April, of all their eligible liabilities. Under the new statutory scheme this order proposes that the initial CRD ratios should be zero on eligible liabilities up to £400 million and 0.15 per cent. on eligible liabilities over £400 million. We are also committed to keeping these bands and ratios under review and to review the scheme within five years.
The Government's decisions on the scheme reflect the responses to consultation, taking into account the impact of the likely new charging regime of the Financial Services Authority and also the desire for administrative simplicity and clarity.
The new ratio represents a significant reduction in the aggregate burden, even after taking into account the charges of the Financial Services Authority, cutting the total burden from around £165 million at last year's level of deposits to less than £130 million this year--a cut of almost one-quarter. I beg to move.
Moved, That the draft order laid before the House on 27th April be approved [31st Report from the Joint Committee].--(Lord McIntosh of Haringey.)
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