§ 1.44 p.m.
§ The Under-Secretary of State for Trade (Mr. Clinton Davis)
I beg to move,That the draft Protection of Depositors (Accounts) (Amendment) Regulations 1978, which were laid before this House on 6th July, be approved.I must say at the outset that I shall be extremely interested to hear the next contribution from the hon. Member for Hertfordshire, South (Mr. Parkinson). Having heard his last contribution, it would not surprise me if the main burden of his remarks proved to relate to merchant shipping and aviation.
The Protection of Depositors Act 1963 imposes various requirements on those who take deposits at interest, but it does not extend to the clearing banks and the building societies, which are regulated separately. One of the Act's requirements covers the provision of detailed accounts, by which depositors can gauge the financial standing of deposit-takers. The Protection of Depositors (Accounts) Regulations 1976 contain the detailed requirements and subsume certain accounts requirements in the Companies Acts.
The Companies Act 1976 altered or superseded certain clauses in earlier Companies Acts which are referred to in the Protection of Depositors (Accounts) Regulations. In the light of this, the references in the regulations need to be brought into line with the Companies Act 1976. That is all that the regulations in the statutory instrument set out to do. In no way do they alter the substance of the accounts requirements.
§ 1.47 p.m.
§ Mr. Tim Renton (Mid-Sussex)
I was interested to hear the hon. Member's description of these regulations. A feature of them which must strike anyone reading them is that, apart from their title and the note at the end, it is possible to read them without having the slightest idea what they are about. To that extent, this is quite a remarkable document.
In his famous work seeking greater clarity in legislation, my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) stressed the 1074 necessity of trying to avoid legislation by reference. Regulations of this sort, which are obviously important in that they seek to protect depositors, are a very good example of what my right hon. and learned Friend had in mind when he wrote so strongly against legislation by reference.
I am concerned that for the person who is to be protected by the regulations or the person who is taking deposits to whom the regulations refer, there should now be such a lack of clarity in the relevant legislation that misunderstanding and incomprehension can follow.
The Under-Secretary of State will remember our debates on the Companies Bill in 1976. At that time, I and others of my hon. Friends spoke about what we regarded as the very unclear parliamentary drafting in that legislation.
These regulations change the previous regulations of 1976 to bring them into line with the same ill-drafted Companies Act of 1976. I remind the Under-Secretary of State that section 3 of the Companies Act 1976, which alters accounting reference periods, was a provision about which we had some debate when we considered the legislation in Committee. The Opposition said that it was extremely obscure.
Section 3(1) provides:Subject to subsection (3) below, at any time after the end of a period which was an accounting reference period of a company by virtue of section 2 above or this section the company may give notice in the prescribed form to the registrar of companies specifying a date in the calendar year ('the new accounting reference date') on which that accounting reference period ('the previous accounting reference period') and each subsequent accounting reference period of the company is to be treated as coming or (as the case may require) as having come to an end.To my mind, that extremely obscure section is now being made relevant to these extremely obscure regulations.
We must all be worried about the lack of clarity which is coming more and more into our law, especially our company law. We must face the fact that on this and other matters we are dealing with interim measures that are simply stopping up the increasing gaps in company law, without bringing forward any fundamental changes to deal with those gaps.
1075 Two years ago the Under-Secretary told us strongly and passionately that the Companies Act 1976 was only an interim measure and that we should see a major Companies Bill in a later Session. I remember saying at the time that I very much doubted that, and the Under-Secretary told me that I was wrong. Now, two years later, at the end of a Session, at the end of a Government, there is still no Companies Bill. It is a matter of great regret that the Government got caught up in the toils of the Scotland Bill and the Wales Bill and failed to bring forward a Companies Bill to which they had committed themselves so absolutely, and which they mentioned in the Queen's Speech at the beginning of this Session.
There is a considerable lack of clarity in the legislation to which this regulation refers. It is proper that we should be debating it on the day after the publication of the Department of Trade's White Paper incorporating a draft Bill on changes in company law. This is just the draft Bill that the Government would have sought to bring forward if they had not got bogged down in devolution.
I am very worried that the same lack of clarity appears to pervade certain sections of this new draft Companies Bill in the White Paper. The Under-Secretary shakes his head. He will probably say that this is not relevant to today's debate, but we have not debated company law for more than two years—
§ Mr. Deputy Speaker (Mr. Bryant Godman Irvine)
Order. I hope that the hon. Member will not try to debate it today.
§ Mr. Renton
No, Mr. Deputy Speaker. I merely want to enlarge for a moment or two on the lack of clarity in this instance. The Under-Secretary should look at the draftsmanship of these regulations and of the draft Bill that his Department is bringing forward. I refer to clause 57(5)—
§ Mr. Deputy Speaker
Order. I think the hon. Gentleman would be better employed in directing his attention to the statutory instrument.
§ Mr. Renton
I am simply saying that this lack of clarity which permeates the draft legislation published yesterday on insider trading is a matter of great con- 1076 cern to all those who are affected by company law and the draft regulations that we are debating.
I hope that the Under-Secretary will take up this point. Obviously I hope that he will not be in office to bring forward any more company legislation, but if he is, I hope he will meet the Government's commitments and cease to have interim measures. I hope that he will bring forward properly drafted legislation to fill the gaps that are becoming increasingly evident in company law.
§ 1.52 p.m.
§ Mr. Cecil Parkinson (Hertfordshire, South)
I remember when I had been in the House only three weeks I was told of a mythical academy for new Back Benchers. This academy gave lessons about speaking on nothing at short notice and staying in order in the process. The passing-out test was supposed to be that an hon Member walked through the Members' Lobby, picked up a statutory instrument that he had never seen before and then made a 10-minute speech on it. If he could do that, he graduated from the academy.
When I look at this legislation I feel that this is the sort of measure that would fail most people. However, my hon. Friend the Member for Mid-Sussex (Mr. Renton) made an interesting, relevant and important speech on it. There is a lack of clarity in the legislation and in much of the rest of companies legislation as well. These regulations which we are amending today were sold to the Standing Committee only on the basis that the Government knew that they were an interim answer.
But the only time available two years ago was to modify the Protection of Depositors Act a little, which came as a response to the London and County Securities report. Now we have further amending regulations to amend that unsatisfactory set of regulations.
What happened to the White Paper "Supervision of Deposit-taking Institutions"? We seem to commission Select Committees to produce White Papers day after day. This White Paper was actually presented to the House on 3rd August 1976. It has never been debated by Parliament. What has happened? Has any work been done on the Committee's proposals? Shall we ever see a result from 1077 that worthwhile White Paper? What has been happening since the Companies Act 1976?
These regulations effectively bring in the 1976 provisions on company accounts and group accounts. They provide that all accounts presented under the Protection of Depositors (Accounts) Act must be in accordance with the 1976 Act. That Act. has been in existence for two years. Have companies been presenting their accounts in compliance with the 1976 Act or in compliance with Acts that have superseded that Act in the intervening period? Why, after two years of having this gap, is it necessary to plug it now?
§ 1.58 p.m.
§ Mr. Clinton Davis
The hon. Member for Hertfordshire, South (Mr. Parkinson) referred to an interesting academy from which he and his hon. Friend the Member for Mid-Sussex (Mr. Renton) must have graduated, not just with honours but with doctorates of philosophy—the academy of irrelevance.
I understand the desire of the hon. Member for Mid-Sussex to embark on a major debate under the heading of this statutory instrument, but it is difficult to do that and remain in order. No doubt he will have an opportunity to do so on the Consolidated Fund Bill at 5.30 a.m., when we shall all listen to him with interest. However, I shall try to ensure that my hon. Friend, the other junior Minister at the Department of Trade, replies to that debate.
The main point that the hon. Member made was that there was a lack of clarity in the statutory instrument. Reading it, I think that it is a model of clarity. I will not read it aloud because that might tend to destroy my argument. The point about this statutory instrument is that it is not a matter of substance. As I said in my speech, it simply cross-references where it is necessary to cross reference.
I do not believe that those involved in this area will be exposed to any peculiar difficulties such as those which the hon. Member for Mid-Sussex mentioned. In this situation I do not think it would be possible to do anything but cross-reference where one is faced with this particular problem. Therefore, I do not think that that is a point of substance.
1078 I was asked whether the legislation was lacking in clarity. I suppose that the hon. Gentleman's attack above all was directed at the Parliamentary draftsman. I think that there is some substance in what he said, because I have joined with him in criticisms of that kind in the past. But it is not always very easy, when one has technical legislation, to express it in easily comprehensible terms. I think that the hon. Gentleman knows of this problem. The Parliamentary draftsman does strive to overcome it, sometimes not with the greatest possible degree of success. But I do not believe that that relates to this problem.
The hon. Gentleman will have to seize another opportunity to embark upon his wider criticisms of the Companies Act 1976, as he will have to in relation to the major Companies Bill. I am sure that the hon. Gentleman will have been delighted to have read the White Paper published yesterday, to which a major Companies Bill is annexed.
I should add that I believe that the hon. Gentleman should be less selective than he was in his criticisms. I recommend that he reads the Industrial Relations Act of his own Government's time and also the European Communities Bill, which that Administration did not deign to amend in one material particular at all.
I now come to the other professor, the hon. Member for Hertfordshire, South. He asked about a White Paper, which has nothing directly to do with my Department. It is a matter for the Treasury, and no doubt the hon. Gentleman will raise the matter with a Treasury Minister.
§ Mr. Parkinson
I was in fact quoting from a speech which the Minister himself made when he introduced the regulations explaining that he felt that this particular White Paper would result in legislation which he implied would be the responsibility of the Department of Trade. I reckon that the Minister should not slide away from this but should try to give us an answer or else not refer to it next time he makes a speech upstairs.
§ Mr. Davis
The hon. Gentleman cannot dictate to me the speeches that I shall be making as a Minister over the next five years. That is a rather irresponsible argument. The hon. Gentleman is right. 1079 There was some debate—I do not remember the particular context of it—in which this question arose. I sought to respond to it. But what I am saying is that it is a Treasury responsibility and I believe that the legislation, the stage that it has reached and so on, is a matter for Treasury Ministers. I am not briefed this afternoon to deal with it, and I cannot.
I was asked whether companies have been presenting accounts pursuant to the 1976 Act or based on previous legislation. My understanding is that it is based upon the 1976 Act. I hope that that clarifies the position, and I have every confidence that the regulations will now be commended by this enormously well-attended House.
§ Question put and agreed to.
That the draft Protection of Depositors (Accounts) (Amendment) Regulations 1978, which were laid before this House on 6th July, be approved.