83A: Page 111, line 25, at end insert the following new Clause-
“Reports(1) The Treasury shall prepare reports about any arrangements entered into which involve or may require reliance on section 225(1).
(2) A report must be prepared in respect of-
(a) the period beginning with 1st April 2009 and ending with 30th September 2009, and(b) each successive period of 6 months;but no report is required for a period in respect of which there is nothing to record.
(3) The Treasury shall lay each report before the House of Commons as soon as is reasonably practicable.
(4) A report must not-
(a) specify individual arrangements, or(b) identify, or enable the identification of, individual beneficiaries.(5) The Treasury must aim to give as much information as possible in a report, subject to subsection (4) and other considerations of public interest.”
My Lords, we have already debated this subject extensively on Report, so I shall be brief and concentrate on the amendment made in the other place in lieu of the amendment that this House agreed to on Report.
That amendment inserted a new clause to provide for greater transparency in relation to the giving of financial assistance. The clause provided for more rapid detailed reporting of financial assistance to be given to banks, financial institutions and their customers. It also provided for quarterly reporting of expenditure, and of guarantees and similar commitments that might result in expenditure, met with money provided in estimates under the authority of the Consolidated Fund clause in the Bill. The clause also provided for the same reporting arrangements for loans made from the National Loans Fund.
The Government have always been very appreciative of the concerns many people have about transparency and reporting. These are important issues for the whole Bill, not just in relation to public expenditure.
However, it is necessary to balance the desirable objective of transparency against the need for confidentiality in a number of contexts. There will be cases where actions to tackle a financial crisis, taken under the Bill or otherwise, can only be effective if it can be kept confidential.
These were precisely the concerns when the news about Northern Rock first broke. If the recipient firm were a listed company, would the provision of financial assistance by the Bank of England have to be disclosed under the FSA rules? Was it possible to work out that support had been given using the weekly Bank of England return? The clause that removes the obligation on the Bank of England to produce a weekly return was included precisely because of those concerns.
Therefore, the Government have always considered that there had to be a balance between the need for transparency and the need to protect confidentiality where it is clearly in the public interest to do so. We were concerned that the amendment made in this House did not quite get the balance right. We felt that there was too big a risk that it could be possible to identify the beneficiaries of financial assistance under some schemes, or speculate on the amounts that they could receive, and that there were risks of damaging speculation about the identity of the institutions concerned, which could be bad for confidence and even lead to the kind of situation we are all trying hard to avoid. I recognise, of course, that many noble Lords were also concerned about this issue, and that was reflected in the amendment which was approved at Report. The new clause allowed the Treasury some leeway to delay the disclosure when it is in the public interest to do so, for as long as that remains the case. However, the Government foresaw a risk that we might have to rely on that provision too often, which is potentially not only bad for transparency but could itself be a cause of the destabilising and damaging speculation of the kind we want to avoid. The Government were very aware of the strength of feeling in this House on the subject of transparency. We looked very hard at how we could provide more transparency and better reporting while minimising the risks to financial stability and market confidence.
As a result, my honourable friend the Economic Secretary tabled an amendment in lieu in the other place which was agreed to there yesterday and is now before us today. This amendment is different in some respects from the amendment made here at Report but I believe that it respects the spirit of this House’s amendment and meets the concerns I have explained. First, the amendment provides that the reports should be half-yearly rather than quarterly. In itself, this should significantly reduce the risk of identification since expenditure incurred or guarantees given over a longer period will be covered in only one report.
Secondly, the amendment will require the Treasury to ensure that individual recipients, and the amounts they had been paid or guaranteed, cannot be identified. This will usually mean aggregation. We expect that, in practice, each scheme would be reported on separately, but that, if necessary, data on schemes could be aggregated up to the level of the sponsoring department. We believe that this is line with the intention of the amendment made here but makes improvements in clarity and technical effect.
There are also some smaller points. The amendment also provides that the reports should not include the loans made from the National Loans Fund. Your Lordships will recall that the government amendment made here at Report provided for loans from the National Loans Fund, which can only be made when needed urgently to protect financial stability, subject to an ad hoc reporting procedure similar to that provided when money is taken directly from the Consolidated Fund in urgent cases. But there is no mechanism analogous to Estimates for approving loans from the National Loans Fund so there is no need to include them in any regular reports. Of course, these loans will be included in the annual accounts of the National Loans Fund in the normal way.
Finally, the amendment provides for reports to be laid only before the House of Commons. When these reports are published, copies will be available to your Lordships in the normal way. I hope your Lordships will agree that this amendment strikes the right balance between the objective of transparency and the need for the appropriate level of confidentiality. Accordingly, I beg to move that this House do agree with the amendment made in the other place.
My Lords, I thank the Minister for introducing the amendment in lieu of Lords Amendment 83. The Minister referred to the strength of opinion in the House, which was demonstrated when we divided on the issue. I am glad that the Government have again listened and that they have taken the principle of transparency to heart. A six-monthly report which omits all information in respect of expenditure prior to 1 April this year, and does not produce its first report until after 30 September this year, is disappointing. We have become accustomed to receiving half loaves as we have completed this Bill, and I am afraid that at best we again get a half loaf. I hope that the Treasury will surprise us when it produces its first report by being so open and transparent that what I have just referred to will not be missed. On that basis, we welcome the amendment in lieu.
My Lords, this is a broadly sensible compromise in our view. The Member for Fareham put it very well yesterday from the Opposition Front Bench. He said:
“When Lords amendment 83 was debated in the Lords, there was significant support from the Liberal Democrats, the Conservatives and a number of Cross Benchers. The majority of 35 in the vote on it demonstrated the strength of feeling about the welcome move to increase transparency”.—[Official Report, Commons, 10/2/08; col. 1286.]
I echo those words. I have two questions. In reply, the Minister referred to the consultation which the noble Lord, Lord Myners, is taking on and which will replace weekly reporting from the Bank of England. Can the noble Lord tell us any more about when he expects that consultation to be concluded?
Secondly, I notice that our amendment asked for the reports to be laid before both Houses of Parliament, whereas the amendment we are now being asked to support proposes that the Treasury,
“shall lay each report before the House of Commons”.
What is the reason for that change?
We are always up for a vigorous game of ping-pong when the time is right, but this is not the time or the issue.
My Lords, I wonder whether the Minister recognises just how slightly comical he looks making the argument for confidentiality in respect of this kind of information. As I understand it, an inquiry into how the information regarding Northern Rock, the Royal Bank of Scotland and the other banks which were in discussions with the Treasury got into the hands of Robert Peston and was broadcast on the BBC has still not been instituted by the Government. Nor has there been any response to the complaints from directors of financial institutions that they find out more about what is going on in respect of their institutions by reading Robert Peston’s blog on the BBC website than by entering into a dialogue with the Treasury. Given that in the other place the Government have chosen to resist my noble friend’s very sensible amendment and have come back with what she has generously described as half a loaf, it really is quite extraordinary that if the Government are standing on this principle of the importance, which I accept, of maintaining confidentiality in these matters, they have done so little to deal with the breaches of confidentiality that have occurred in the Treasury or within the government service as a whole and which did enormous damage.
My mind may be playing tricks on me, but I seem to recall that the run on the bank of Northern Rock occurred after the BBC reported that it was in discussions with the Government about obtaining finance. I also seem to recall that many pensioners and savers saw their shares in the Royal Bank of Scotland fall by more than 40 per cent in the course of a few days because the BBC reported that the clearing banks were in discussion with the Treasury. I have great respect for the Minister, and while I entirely understand his position on confidentiality, I do not understand why there has not been a proper inquiry instituted to find out how this came about. I am certain that were it to happen in the City, there would be serious repercussions and the FSA would, at the very least, conduct an inquiry.
At previous stages of our consideration of this financial crisis, I have raised this matter and been told that it was a matter for the FSA. But given the Government’s clear policy about the importance of confidentiality, can the Minister tell us why there is no inquiry, what has happened, and, if there is an inquiry that has not been announced, when we can expect to have an explanation?
My Lords, as a co-sponsor of the original amendment, I naturally welcome the fact that the other place, in its wisdom, has decided to work with the spirit of the amendment rather than resist it and leave us all hunting through myriad documents for the information to which we are entitled. Nevertheless, there are still some things that puzzle me. As the noble Lord, Lord Oakeshott, said, the amendment proposes that the report is laid only before the House of Commons. I accept that privilege in money matters is relevant where approval is required, but I do not see why this has to be claimed in relation to the provision of information.
Secondly, on the face of it, there seems to be something bizarre about the provision that the report must not identify, ever, the individual beneficiaries. Does that mean that these reports will never mention that we rescued and nationalised Northern Rock or put £20 million into the Royal Bank of Scotland? It seems rather strange. I thought that the original wording was superior to that of the Commons amendment, which says that,
“a report may omit that information until such a time as the Treasury consider that the public interest is no longer affected”.
I remember that the Minister was asked at an earlier stage—I think it was by the noble Lord, Lord Blackwell—whether companies accepting help under various schemes were required under listing rules and so on to make that information public. I wonder whether he is able to update us on that.
In my original remarks in Committee, I argued that the report required by the clause should be a vehicle for a wider report on all the measures that the Government are taking, and have already taken, to bring together those things, whether under the powers of this Bill or the powers of other Acts. Will the Minister say what consideration is being given to this, which is all the more necessary given the constraints that have been placed on the clause?
My Lords, when the Minister replies, would he be good enough to direct his attention to proposed new subsection (3), which has already been referred to by the noble Lord, Lord Oakeshott, and just now in the previous contribution? The Commons amendment says expressly:
“The Treasury shall lay each report before the House of Commons”.
That is a deliberate change from the amendment that came from this House as Amendment 83, in which the report was to be laid before both Houses. It sounds like a deliberate decision in the Commons to exclude the provision that we in this House get the report at the same time as the Commons. If that is deliberate, what are the reasons underlying it?
My Lords, the noble Lord, Lord Oakeshott of Seagrove Bay, asked about the consultation process in connection with the publication of data by the Bank of England. That consultation will not be carried out by me or by the Treasury. It will be carried out by the Bank of England. I have taken the precaution of drawing to the attention of the governor the comments that I have made in respect of that consultation. I am sure that in due course he will initiate an open process.
The noble Lords, Lord Oakeshott, Lord Turnbull and Lord Neill, have all raised questions about proposed new subsection (3) relating to reporting to the House of Commons—the other place. I am sure that others in this House are much more familiar with the protocol here than I am, but I understand that this is a matter on which there is an established procedure. It is entirely normal and respects the long-established constitutional convention that it is the Crown that requests supply and the other place which grants supply, while the role of this House is to assent to such financial provisions of the House of Commons as require statutory authorisation. Supply estimates are laid only before the other place, and it is therefore right that reports on expenditure, which could be granted through—
My Lords, I think that the Minister may have been misinformed. As the noble Lord, Lord Turnbull, who was the Cabinet Secretary and is in quite a good position to remember these things, has pointed out, there is no consent required, and therefore there is no convention that would restrict us. Presumably the amendment, had it required something that was against privilege, would have been ruled out of order by the Clerk, so this is nonsense.
My Lords, I am grateful to the noble Lord, Lord Forsyth of Drumlean, for his intervention. Of course, I respect the experience of the noble Lord, Lord Turnbull, in this respect. I understand that my noble friend the Leader of the House recently placed in the Library of the House a paper on Commons financial privilege, which she asked to be prepared by the Clerk of the Parliaments, and which deals with this issue. Importantly, the fact that the report is not laid before this House does not mean that there would be a delay in this House being informed of the report. It would be placed in the Library and Members of this House would be able to ask questions in connection with that report.
The noble Lord, Lord Forsyth, asked about confidentiality. I can only repeat the line that it is the FSA’s responsibility to initiate inquiries into any situation in which it believes there has been market abuse. The FSA is no doubt aware of the movements in a number of shares before announcements. I cannot comment on whether it has carried out or is carrying out an investigation, and if so, where it has reached. However, the authority and responsibility clearly rests with the FSA. The maintenance of confidentiality is absolutely critical in situations such as this and the leaking of information, whether to the media or to other participants in markets, can be deeply injurious. I am, therefore, very sympathetic to the sentiment that lies behind the observations of the noble Lord, Lord Forsyth.
My Lords, I apologise for interrupting the Minister again. I entirely accept that this is a matter for the FSA, although I remain bewildered as to why it has not instituted an inquiry. However, it is the Government’s responsibility to consider leaks from their departments, and there is nothing to prevent the Government carrying out a leak inquiry to find out how the information, which it seems could have been known only to the Treasury, was leaked from the Treasury. Why has there been no internal leak inquiry? Leak inquiries into quite ridiculous things have been instituted by the Prime Minister; why, on a matter as serious as this, have Ministers not exercised their responsibility to ensure confidentiality in their own departments by instituting a leak inquiry?
My Lords, I am sure that the FSA is the appropriate agency to carry out an inquiry. It has the necessary powers, skills and competencies to do so, and it would be wrong to prejudge where any leak emerged from, if, indeed, there was a leak.
Perhaps I may answer a question of the noble Baroness, Lady Noakes, in respect of the long delay before a report could first be produced to the other place in connection with this amendment. I will look into that and try to find a way of bringing forward an earlier disclosure of pre-April spending and commitments, because that is clearly the intention of the other place and, I deduce, the wish of this House.
My Lords, the Minister mentioned the Leader of the House’s memorandum on Commons financial privilege in answer to my point about why it was not also being laid in the House of Lords. Has the noble Lord actually read the document? I happened to pick it up now as I came in; it has only six pages, I have given it a speed read, and I am bound to say that I cannot see anything in it that would mean that there could not be a report. If the Minister has not read it, perhaps, when he has read it, he will write to me and let me know why he thinks that.
My Lords, I have not yet read the memorandum; I had intended to pick up a copy after I left the House. Now I absolutely will do that; I will not delay, certainly not for six months, before replying to the noble Lord.
Before we reach a decision on the Motion, I should express my appreciation to Members of the House who have worked so hard on the Bill, which is in far better shape than when it first arrived. For that we owe a debt to several Members of the House. I shall not embarrass them by naming them other than to say that the noble Baroness, Lady Noakes, and the noble Lord, Lord Newby, have been particularly engaged and have worked hard. As this is the first Bill with which I have ever been involved in putting through the House, I cannot fail to express my thanks to my noble friend Lord Davies, without whom, it will be evident to everyone in the House, I could not possibly have reached this point. I thank him and wish him well in the election for Peer of the Year tonight on Channel 4. With that, I formally ask that the Motion be agreed.