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Tsb (Scotland) Sale (Judgment)

Volume 86: debated on Wednesday 13 November 1985

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3.33 pm

[by private notice] asked the Chancellor of the Exchequer if he will make a statement on the consequences of the ruling by a Scottish judge yesterday that the assets of the TSB (Scotland) belong to the depositors and what course of action the Treasury intends to take on the matter.

We are now carefully but urgently considering Lord Davidson's judgment and opinion, which have only just become available and raise complex legal issues. The Trustee Savings Banks Bill, now the Trustee Savings Banks Act 1985, would not have been presented to the House if the Government had not received firm legal advice, which was reflected in last December's White Paper. It remains the Government's expectation that we shall wish to lodge formal notice of appeal as soon as practicable.

May I take it from the Minister's reply that the Government now regret having embarked on this legislation, supposedly as honest brokers for the TSB central board? Does the Minister accept that he now has a duty to tell the TSB to take no further action about the flotation of the sale until the outcome of any pending appeal is known? Finally, how far are the Government prepared to go with taxpayers' money over litigation? Is this matter to be taken as high as the House of Lords? What does the Minister think about the relative sparsity of Scottish Law Lords in that formidable body?

After the recent remarks about the Scottish judiciary, I hesitate to enter further into that field. The hon. Gentleman asked about the actions of the TSB. Clearly, the TSB will have to take into account the current judgment and anything further which transpires in the course of this case. I should like to clear up one misapprehension that was expressed about the decision announced yesterday. The Government have never planned to receive any of the proceeds of a flotation of the TSBs. It has no impact on the privatisation programme and will not be a sale of Government-owned assets. It is a matter for the TSB and no doubt it will consider the implications most carefully.

In view of the onus on the Government to encourage best practice in financial regulations, not least in City affairs, would it not be better if the Government, while the appeal is pending, were to ask the TSB to cease advertising the prospectus—or at least the fact that the offer is about to be made?

I am sure the TSB will take note of what my hon. Friend has said. It is not for me to instruct the TSB what to do. I am sure it is aware of the sensitivities and the implications involved.

Has the Minister taken on board the fact that Lord Davidson stressed the mutual nature of the society and the consequent rights of depositors? All the questions to the Minister so far have stressed that it would be quite improper, pending an appeal, for any prospectus of the sale of the assets to be issued. In view of that, can the Government exercise an influence to ensure that this will not happen?

As I understand it, Lord Davidson did not say that the depositors were members of the banks. Nevertheless, he said that in his view ownership was vested in the depositors. Clearly, the opinion itself raises complex legal issues that we will have to consider most carefully. I do not imagine that the TSB will want to make any hasty judgment or move on that, particularly with regard to flotation, which is not imminent in the immediate future anyway.

I declare an interest; I am a depositor. [HON. MEMBERS: "How much?"] I still have ls lld in the Haymarket Savings Bank. Can the Minister assist me in the following matter? My right hon. Friend the Prime Minister said that the Government will heed the opinion of the Scottish courts. I do not quite know what is meant by the Scottish courts. Although the House of Lords is the last court of redress in a civil action, I am sure the Minister will appreciate that in the House of Lords there are only two Scottish Law Lords, one of whom is the Lord Advocate, who presumably gave the advice that the TSB did not belong to depositors, and the other of whom is a depositor. Is the House of Lords considered to be a Scottish court? If it is, what are the Government going to do about that little difficulty?

We certainly have not reached that stage. My hon. Friend will recall that my right hon. Friend the Prime Minister reminded the House yesterday that the Government have a right to all the legal remedies available. But if, as we would expect, the Government proceed with an appeal, it will go to the Inner House, which is the Scottish Court of Appeal, and not at that stage to the House of Lords.

Is not the effect of Lord Davidson's judgment that, if the Act is proceeded with, this will be a case of privatisation without compensation? In view of the extremely arrogant reaction of the TSB, which says that it will proceed regardless of the court judgment, will the Minister make it clear to the TSB that there can be no question of its trying to go ahead as though the court judgment had not been made? Will he give us an assurance that the Government will not name a vesting day until the legal position has been clarified?

I appreciate the point which the right hon. Gentleman makes. During the passage of the Bill, I made it clear several times that, although the flotation was a matter for the TSBs, before then the Government had to vest the assets and name a vesting day under the Act. We have no intention of doing so in the near future.

Is it not flouting the law to allow the TSB to go ahead? Will the Minister asnwer the question that was put to him, first, by my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen) and, secondly, by my right hon. Friend the Member for Glasgow, Govan (Mr. Millan)?

It is for the TSBs to prepare for any aspect of their future, whether that be reorganisation of their internal company structure or preparations for a flotation which they hope will take place. I have already told the House that the Government are required to name a vesting day before that happens. I also said that vesting will not occur in the near future. It depends upon a range of matters quite apart from the legal aspect. At this stage, vesting is not at issue, but the Government will take into account any judgements of the court as well as undertakings from the TSBs before they consider vesting.

Since the hon. Gentleman is a Treasury Minister, may I ask him why the Treasury told the media yesterday that an appeal would be lodged, while the Prime Minister was busy telling me and the House that the Government wished to read and reflect upon the judgment?

I will explain that point to the right hon. Gentleman. The way in which he has raised the matter is slightly misleading, although I am sure he did not mean it to be so. What happened was that, at the close of the hearing, counsel for the Treasury said that it would expect to appeal. That is the normal courtesy at the end of a hearing. It is not the same as lodging a formal notice of appeal. My right hon. Friend the Prime Minister said yesterday that we wished carefully to consider the judgment, which is what we are doing and will do. We have not yet drawn up a formal notice of appeal. The comments made expressed our expectation that we would appeal, but no press statement such as the right hon. Gentleman describes was made.

Is it not strange to hear Labour Members of Parliament advising the Government to obey the judgment of the courts when only a few months ago, during the miners' strike, they were not at all sure whether they should support the courts?

Can the Minister clarify what he is saying about the vesting day procedure and the possible tabling of an order? Did he not say this afternoon that the legal judgment and a possible appeal by the Treasury will not be the only factors taken into account when the Government decide whether to name a vesting day? Does that not show, despite his apparent reverence for the Scottish legal system, a considerable irreverence for the law and the judgment—it is not an opinion, as he described it this afternoon—that was given in Edinburgh yesterday?

No, Sir. With respect to the hon. Gentleman, it does not suggest that. I said in July that we would consider our subsequent action in the light of any judgment. I am happy to re-emphasise that today. I did not say that the Government would disregard the judgments of the Scottish court in favour of other considerations. I said only that considerations other than the legal ones have not been resolved, and that we are nowhere near the stage when it would be appropriate to vest. The question of immediate vesting has not yet arisen.

Is it not the case that the Government should never have gone ahead with the sale without determining the ownership of the TSB? Is not the hon. Gentleman aware that, during the passage of the Bill, the Labour party raised the ownership point time and again? Should not the Government have tested this in the courts first? What has changed since Conservative spokesmen said in the House seven years ago that the TSB was part of the mutual banking sector? What new advice has the hon. Gentleman had since then?

Is not this flotation the equivalent of the housekeeper selling off the family silver without checking whether the family owned it? Is it not a fact that the Government are now so eager to privatise anything in sight that they will even privatise businesses that do not belong to them?

Will the hon. Gentleman make the position on the flotation clear? The Financial Times reported today:
"the Government intends to press ahead with the flotation of the TSB in February regardless of yesterday's setback in the Scottish courts."
Will the hon. Gentleman make it clear that the Government will not take the action before vesting that they need to take to allow the flotation to go ahead? Will he also make it clear that the Government will await the final decision of the courts before doing anything that would facilitate the flotation?

Is it not clear—[Interruption]—that this is yet another embarrassment for the Government, as a result of which the courts have had to step in to protect the small man against the actions of this Tory Government?

It is a great pity that the hon. Lady prepared her questions before she listened to my answers to the questions asked of me today. Even if she believes everything that she reads in the press, she should perhaps consider what is said in the House by Ministers before she puts too much weight on the press reports.

I began by saying that the Government were not pressing ahead with these matters. If certain newspapers say so, that is their responsibility, not mine. The Government are not placing any pressure or responsibility on the TSBs to proceed—that is a matter for them. I have said, and I shall repeat, that before any action is taken by the Government, we shall take full account of any decision by the courts as well as many other matters, including not only the points that I have already mentioned but the fact of what is potentially within the scope of the existing Trustee Savings Banks Act.

I think that the right hon. Gentleman's point of order refers to this matter, in which case I shall take it.

Yesterday, when the issue of the TSB was even more immediate and relevant than it is today, my hon. Friend the Member for Dundee, East (Mr. Wilson) applied for a private notice question today—

Order. The right hon. Gentleman knows the conventions about these matters. The names of those who have applied for a private notice question are never mentioned in the Chamber.

Yes, Sir. I tried to raise this matter earlier on, but you overruled me, Mr. Speaker. In my respectful submission, you have allowed a flagrant breach of the sub judice rule to take place in allowing this matter to be discussed when the Government have announced, both formally and informally, that an appeal is pending from this decision. May I refer you—

Order. I can help the hon. Gentleman immediately; I understand that the Government have not given formal notice of appeal. Such points of order take up time.

Further to that point of order, Mr. Speaker. You have not heard my submission, so how can you possibly rule on it?

I distinctly heard the hon. Gentleman say that the matter was sub judice. I am saying that it is not.

Will you hear me, Sir? There is a point which would be of interest to the House generally, and on which your guidance is sought. The rule is set out clearly on page 429 of Erskine May and I am sure that you know it by heart. It states clearly that if a notice of appeal is given, the matter is sub judice. A notice of appeal being given does not simply mean that the notice is filed with the court; it can be done in one of three ways: by notice to the court in a document, by the leave of the judge who delivered the original verdict, or by asking leave of the Scottish equivalent of the Court of Appeal. From the Minister's statement and answers, I understand that the Government are considering an appeal to the Scottish equivalent of the Court of Appeal. From the realities, not the technicalities of the matter—judges look at the realities now, not the technicalities—it is common sense that an appeal is about to be lodged. If so—

Order. I must stop the hon. Gentleman, because he is confounding his case. He may be right in saying that an appeal is about to be lodged, but the point is that it has not been lodged, and the matter is not sub judice. That is enough of that.