Building Societies (Financial Assistance) Order 2008

As usual, I am grateful to the two noble Lords who have spoken, and I shall do my best to answer their questions. However, there is a hare being set to run that ought not to be released. No building society is in trouble. We are not bringing forward this order because of any anxiety or emergency. Indeed, I do not see that I can be chided by the noble Baroness on the one hand for being a little tardy in bringing forward the order, while on the other hand she is suggesting that it has been prompted by anxieties that a building society will need to avail itself of these provisions, and that is why the order is before us at all. Neither of those positions is sustainable. The Government said during the passage of the Banking (Special Provisions) Act that it provided for us also to address protection for building societies in circumstances about which we all know. The noble Baroness has been kind enough to keep her remarks about Northern Rock to the absolute minimum, so I shall produce my riposte in minimalist terms. The Government acted effectively under that Act against a background where, we all recognise, the credit crunch is producing an enormous crisis for the financial sector. The Government have put in place the necessary protections against outstanding difficulties for institutions, of which Northern Rock was clearly one that required immediate action. That is not so with other banks, nor with building societies. The Government made a facility available to the banks to increase liquidity—a position that did not draw much criticism from elsewhere. When we passed the Act, we said that we would extend its provisions on access to credit from the Bank of England to the building society sector. Did we consult? We did not go through a widespread public consultation, because it was a specific objective derivative from the Act, but we did talk to the Building Societies Association. That is why, in my opening speech, I was able to indicate its support for the order. We have brought the measure forward at the proper point. I might be a little more concerned about the timing if I did not think that the noble Baroness had advanced a totally contradictory position on it. It is either too early or too late; that is dear old Morton’s fork, by which I am bound to be impaled on one spike on the other. I do not think that Morton’s fork exists here; this is a proper derivative from the Act that we introduced in January, which received Royal Assent in February. We have brought forward an order that the main representative body of the societies affected is entirely happy with. Neither on timing, nor on the nature of the consultation, are the Government open to criticism. It is clear—as we recognised in the passing of the Act—that the building societies have a different legal framework. We had to have due regard to that, and we are producing an order that responds to it. I take criticism in good part, because I know that it is always constructive criticism from the noble Lord and, even more so, from the noble Baroness, but I am not going to let the canard flourish—I started off with a hare running, so I am getting my animal and bird metaphors mixed—that this is an emergency provision just before some institution declares that it is in great difficulty. Not so; this is an orderly process that we had foreseen and a protective process. It is necessary, as I was forced to declare to the House earlier today in answer to a Question, because there is an international crisis in the financial sector unprecedented since the Great Depression. We are all facing challenges of whether our legal and institutional provision can cope with the difficulties. I reassure the Committee that this is a modest building block in that necessary rampart of support addressed to the building societies, and there is nothing more sinister in it. As for where we are with regard to the banking Bill, the noble Lord, Lord Newby, always shows enormous enthusiasm for any proposal from the Government and wants to see it in the light of day as rapidly as possible; and I would like on many occasions to meet his enthusiasm. He will recognise, like the noble Baroness, that it is a significant Bill, which involves enormous amounts of preparation and consultation. We never said as a definitive statement when the legislation would see the light of day. We indicated that it was necessary for us to go beyond the emergency position in the Act passed in February to a more substantial position for the whole financial sector. It is a significant undertaking against a challenging background, and noble Lords will have to contain their impatience a little. The Government intend that the Bill will be produced this year. I cannot be any more precise about the timing. If I am chided about the absence of consultation on an order that is derived from an Act that everyone recognised, having been passed through both Houses of Parliament in two days, probably deserved the status of an emergency measure, I am certainly not going to be chided about the length of consultation time before we produce the banking Bill.