Banking Bill

I do not think that the hon. Gentleman's new clause makes that particularly clear. He is referring to the principle of pre-funding, which he addresses more directly in amendment No. 5, which would remove from the Bill the clause that amends the Financial Services and Markets Act to allow the introduction of pre-funding. Before dealing with the points that he has just made, may I stress again that the Government have absolutely no plans to introduce pre-funding for the FSCS at this time. We can see, as can everyone, that it would not be right to impose additional financial burdens on banks and building societies at a time of great financial stress. However, there are important arguments in favour of pre-funding. Recent events have highlighted the way in which pre-funding could allow for spreading the costs of bank failure over a longer period of time, and reduce the extent to which firms have to contribute after such failure, when financial stress may be greater. Pre-funding can also mean that the failed firm will contribute to the costs of failure on the ““polluter pays”” principle, or, as I said before, according to the principle of companies consuming their own smoke. None of those are arguments for introducing pre-funding now, but when times get better, we believe that it will be right to consider the case for it again. All that clause 164 does is to allow that to happen. There will be time for consultation and debate, and parliamentary approval will be required through the affirmative resolution procedure. The introduction of pre-funding will not be hidden away in any respect—quite the reverse, in fact, as we would want an open debate on the issue. I am a bit disappointed that the hon. Gentleman has suggested that he wants to press his proposal to a Division before hearing the Government's response, but I suspect that this is quite a well-worn path that we have trodden in Committee. He needs to reflect on the comments made by the hon. Member for South-East Cornwall (Mr. Breed) and on how the general public will see the issue. To say, as a matter of principle, that the official Opposition are against pre-funding is tantamount in the public's eyes to saying, ““Conservatives do not think that banks should pay up front in the event of a future bail-out.”” The hon. Member for Fareham argued in Committee that banks should pay after an event over a very long period on an interest-free basis.