Scottish and Northern Ireland Banknote Regulations 2009

My Lords, should we have consulted the general public about a position that was derived from a banking Act of 1845 concerning the question of continued circulation? I will reply to the noble Lord in a moment on the crucial question of security that has been identified with regard to banks. On the question of whether it was a good idea, it was reasonable for Her Majesty’s Government to make the presumption that in both Northern Ireland and Scotland—I am sure that my noble friend Lord Foulkes will be on his feet in a moment if I make the wrong presumption—there will be a continuing policy, and that there would have to be a jolly good reason why that policy should be abrogated and the power taken away from two parts of the United Kingdom. I do not think that there was consultation on that matter. The consultation was more about the details of the regulations that we are discussing. The consultation involved putting the issues on a website, and a copy was sent to all previous respondents on the issue, so the level best job was done to try to involve those who might be defined as being interested. I say to the noble Baroness that consultation is still going on—that is the responsibility of the Bank of England as regards the penalty policy. It is consulting the authorised banks on the matter. There is no formal requirement for the Bank to consult: it is empowered to draw up policy on its own. That is what the Act says. However, it is wise that it should consult the general public, although perhaps not in the way suggested by the noble Lord, Lord Kilclooney. It should consult those who will be directly involved. Therefore I hope that it will be appreciated that the Bank is going about its business in a purposeful way, and seeking to get the best insights possible by the way in which it works to resolve issues of penalty policy. I am not in a position to single out any specific behaviour that might trigger the maximum penalty. The noble Baroness asked me to envisage the worst case. That is always a hazardous thing when one is involved with banking behaviour, because when it comes to confidence the wish can be father to the thought if one is not careful. The Bank of England would have to consider all the relevant circumstances at the time with regard to the crucial issue of confidence. The noble Baroness cannot expect me to go into much detail on the issue, although I am always tempted by the questions that she asks and attempt to answer them as fully as I am able. The noble Lord, Lord Newby, asked me two questions. On one I can reassure him: my noble friend Lord Myners has many responsibilities but he is not going to be signing the banknotes. His second question concerned the post. I emphasise that communication will take place through all modern media—not just the post but electronic media as well. The noble Lord knows only too well that in very serious circumstances such as this you have to have proof of notification, and one form of communication will be by post. If the bank can prove that after two days it did not receive the requisite document by post, then of course there will be an extension of time; otherwise, it will be assumed that the postal services will deliver, as they are accustomed to do. As has always been the case, the policy with regard to these issues will be that, if you are not able to substantiate that the document did not arrive by post, it will be your responsibility to respond on the assumption that you received it two days after it was posted. We will not be departing from that. I do not think that the noble Lord, Lord Newby, was really asking me to fashion a policy communication based on what we all regard as temporary difficulties with the Post Office, which we hope will return to normal fairly shortly. My noble friend Lord Foulkes kindly said that he did not want to ruin my day. However, he started to do that the moment he stood up, as he was all too well aware. He could have made a much better job of looking after my interests by not asking me those questions. Nevertheless, I emphasise to him that they are important questions. He asked what would happen if a bank were broken up. The issuing rights are vested in the corporate entity that was authorised to issue notes by virtue of the 1845 legislation, and a change in the share ownership of that entity would not deprive the bank of its issuing rights. However, the right to issue notes cannot be transferred to another bank by contract; it stays with the original bank, as defined under the legislation. If his anxiety was that these rights could be readily transferred and be the responsibility of others, I can reassure him that that would not be the case. I give way to my noble friend, who I see is seeking to enhance my day again.