HL Deb 09 November 1989 vol 512 cc1071-4

272A The Lord Williams of Elvel to move, That this House do disagree with the Commons in their Amendment No. 272.

Lord Williams of Elvel

My Lords, I beg to move Amendment No. 272A. The noble Lord, Lord Trefgarne, said quite rightly that we had debated the powers granted by Parliament to the Secretary of State to alter enactments and anything else in any way that he feels fit. Here we have a particularly flagrant example. I should like to give the House a quotation from the new clause. It states: The Secretary of State may by regulations make such further provision as appears to him necessary or expedient for the purposes of this Part". That deals with insolvency. The new clause continues: Provision may, in particular, be made … for integrating the provisions of this Part with the general law of insolvency … and for adapting the provisions of this Part in their application to overseas investment exchanges and clearing houses". In other words, the Secretary of State can simply junk all that we have before us in Part VII and say, "I have decided on something rather different. I have decided to integrate it with the general law of insolvency because Part VII violates the general law of insolvency of pari passu"., He can say, "I am now going back to pari passu". He can make regulations which change the primary legislation simply by fiat that to which we object.

I should have thought that by now, having gone through all the procedures and having had all the consultations, the Government would come with a clear statement about what they want in changes in insolvency legislation. They came and said, "We want to violate the pari passu principle. We want to do that particularly in respect of market contracts and market charges". Fair enough. We have argued that in Committee, on Report and in another place. It has been decided.

Now we go back and say that the Secretary of State may cancel all that. I believe that the House should think most carefully before accepting the provision.

Moved, That the House do disagree with the Commons in the Amendment No. 272. —(Lord Williams of Elvel.)

Lord Trefgarne

My Lords, I apologise if I moved Amendment No. 272 in a slightly inarticulate fashion. I now respond to Amendment No. 272A. I recognise the strong feelings which the noble Lord, Lord Williams, and other noble Lords hold about the matter. Nevertheless, I hope that at this stage of the Bill we can avoid a further debate on the principle. I shall explain why we believe that it is necessary to take the powers conferred by the new clause and inserted by Amendment No. 272.

As I am sure your Lordships will agree, Part VII of the Bill deals with complex matters. Insolvency law is complex, as are market procedures. The part must cater for a variety of different markets with different procedures. The markets are constantly developing and changing to meet the requirements of their users and new competitive challenges. The subject with which we aredealing— that is, default —is one where thankfully there is little practical experience to draw upon.

In the circumstances, it is essential that we provide a good deal of flexibility within the legislation to cope with different cases and future developments. Thus, we have from the outset had a number of powers to make regulations in the part. I believe that the noble Lord, Lord Williams, recognised at an earlier stage that some flexibility was needed in provisions of this kind.

In the course of our consultations on the part it has become clear that there are further matters not covered by the existing powers where modification or adaptation may be needed to deal either with particular cases or future developments. Two examples are given in the new clause but others may occur. For example, Schedule 16 sets out quite detailed requirements in relation to default rules for recognised investment exchanges and clearing houses. The provisions are structured in the light of the market systems as we know them today.

We have concluded that it would be unwise not to leave scope for modification to accommodate new structures which might be more appropriate to the needs of the markets in a few years' time. The terms of the power follow the approach with the powers to modify insolvency law in Clauses 129 and 143 which have been in the part from the outset. The main difference is that the power may be exercised in relation to any of the provisions in the part as opposed to just the insolvency law provisions.

I hope that with that explanation the noble Lord will not press his objection.

The noble Lord asked in particular about the breadth of the power which we propose. I respond particularly to that matter. The power is expressed as one to make what further provision appears necessary or expedient for the purposes of the part. Those are set out in Clause 125 and relate to safeguarding the operating of certain financial markets. I believe that that makes clear enough the limited parameters within which this power may be exercised. I hope that the noble Lord will not press his objections.

Lord Williams of Elvel

My Lords, I am most grateful to the noble Lord for his response. He has not persuaded me but has reiterated the arguments in favour of a regulation-making power for the Secretary of State for the purposes of this part. At this late stage of the Bill, I cannot do very much about that other than divide the House, which would be rather pointless. Therefore, I have to accept that if the Government want to give any future Secretary of State wide powers to regulate this part of the Companies Bill, which deals with insolvency, and simply change the whole enactment, then they can do that. I am very reluctant to abandon this matter and I propose to press my amendment.

9.46 p.m.

On Question, Whether this House do disagree with the Commons in their Amendment No. 272?

Their Lordships divided:

DIVISION NO. 1
CONTENTS
Airedale, L. Pitt of Hampstead, L.
Carter, L. [Teller] Russell, E.
Hacking, L. Seear, B.
Ogmore, L. [Teller] Williams of Elvel, L.
NOT-CONTENTS
Ampthill, L. Hooper, B.
Arran, E. Lindsey and Abingdon, E
Belstead, L. Long, V. [Teller]
Caithness, E. Morris, L.
Denham, L. [Teller] Polwarth, L.
Elliot of Harwood, B. Reay, L.
Elton, L. Trefgarne, L.
Fraser of Carmyllie, L. Trumpington, B.
Henley, L. Ullswater, V.
Hives, L.

9.54 p.m.

The Deputy Speaker (Lord Ampthill)

My Lords, there have voted: Contents, 8; Not-Contents, 19. As it appears that fewer than 30 Lords have voted, in accordance with Standing Order No. 55 I declare the Question is not decided, and further proceedings on the Bill stand adjourned.