Banking (Special Provisions) Bill

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 bank's 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.