Clive Jones

The Liberal Democrats are supportive of the Bill, because the last thing taxpayers need to worry about are the consequences of an under-regulated banking sector. I have brought amendment 3 back from Committee, because the size of banks eligible for the new mechanism has been a key debate through the Bill’s passage. The Minister has regularly set out that the Bill’s stated aim is to enhance the resolution regime, so that we can respond to the failure of small banks. However, the Bill does not restrict the regime to small or medium-sized banks. If applied to large banks, it would create high costs for banks and customers. The costs would persist for many years, adding a significant long-term burden on the banking sector and consumers. Amendment 3 would ensure that the Bill does not apply to banks that have reached the end-state minimum requirement for own funds and eligible liabilities—put more simply, the largest UK banks. That would mean that only small and medium-sized banks could be supported by the mechanism. That would protect consumers and the banking sector from unnecessary financial burden. Amendment 4 has also been brought back from Committee. It would place a further objective on the Bank of England to consider the competitiveness and growth of the market before directing the recapitalisation of a failing small bank through a levy on the banking sector. We believe that further consideration of the effect on the competitiveness and growth of the market is important before directing the recapitalisation of failing small banks. To conclude, I would be grateful if the Minister could expand on the remarks made in Committee and explain how precisely the amendment would complicate the process of managing a bank failure.