§ 7.47 p.m.
§ Lord McIntosh of Haringeyrose to move, That the draft order laid before the House on 27th April be approved [31st Report from the Joint Committee].
The noble Lord said: My Lords, this order is an important step in ensuring that the Bank has the necessary information to carry out its monetary policy functions. It follows from Section 17 of the Bank of England Act, which gives the Bank the power to obtain the information necessary for the purposes of its monetary policy functions from the types of undertakings listed in Section 17(3) of the Act. Up to now the Bank has collected information relating to monetary policy matters on a voluntary basis. As the Act gives the Bank a statutory monetary policy objective, it is appropriate to put the Bank's collection of information on a statutory basis.
The Bank will also continue to collect supervisory information from banks for the FSA, as provided for in Section 27 of the Act. The order does not cover the information collected on behalf of the FSA, only information the Bank requires for its monetary policy functions.
The order relates to what type of information is to be collected. It is to be made under Section 17(4) of the Act, which enables the Treasury to define by order which financial affairs are relevant for the purposes of the Bank's information gathering powers. The range of information defined in the order reflects the most recent review of monetary and financial statistics by the Bank, published last year. As such, the range of information to be collected reflects current practice.
The Treasury, in preparing this order, has consulted with the Bank, the Office of National Statistics and other interested parties. The order reflects these responses. The response to consultation was published on 22nd April 1998.
Most respondents to consultation welcomed the move to a statutory basis for the Bank's collection of information for monetary policy purposes. They agreed that as it largely reflected existing practice, it should not imply any increase in costs.
1153 The Government are concerned to ensure that the costs of supplying statistical information be kept to a minimum, consistent with meeting the information needs of the Bank. The Bank's code of practice for statistics also commits it to place the minimum load necessary on data suppliers and to keep data suppliers' costs to a minimum. I beg to move.
Moved, That the draft order laid before the House on 27th April be approved [31st Report from the Joint Committee].—(Lord McIntosh of Haringey.)
The Earl of CourtownMy Lords, I thank the noble Lord for his description of the order and congratulate him on it after a rather long afternoon.
This order gives the Bank enormously wide power to demand details of every transaction entered into by any bank or building society in this country. The Bank could, for instance, demand to know the interest rate applicable to any overdraft applied to any borrowing by every individual or company which has a facility with an institution. If the Bank insisted on knowing this information it would cost the relevant institution a vast amount of money to provide it.
To assist in the formulation of monetary policy, the Bank cannot possibly need all the information which this instrument will allow it to collect. However, as the Minister has repeatedly assured us that it is the Government's intention to keep the cost to the institutions to a minimum, we hope that he will in turn persuade the Bank that it needs only a small fraction of the information for which it could ask.
We have asked the British Bankers' Association and the Building Societies Association to monitor the costs of complying with this instrument and will raise the subject again if it transpires that the Bank is ever unreasonable in its demands and the cost to the industry is, therefore, excessive.
§ Lord McIntosh of HaringeyMy Lords, I am grateful to learn from the noble Earl that the British Bankers' Association and the Building Societies Association will be monitoring the cost of collecting this information. That will be helpful to us in considering any future changes that may be necessary. I have to say to him that nothing here is being demanded which is not itself necessary. It may sound extensive, but it only reflects current practice. They are not being asked for any more than they are asked for on a voluntary basis and supplying in that way at the moment.
The noble Earl referred to getting information about individual accounts. Of course, that is strictly true, but it is all provided on a completely confidential basis. There is no fear of any disclosure of information about individual accounts. I thank the noble Earl for his response.
§ On Question, Motion agreed to.