Bank Resolution (Recapitalisation) Bill [Lords]: New Clause 3

Bank Resolution (Recapitalisation) Bill [Lords]: New Clause 3 House of Commons, 24 April 2025

What happened: The House of Commons voted on whether to add New Clause 3 to the Bank Resolution (Recapitalisation) Bill, a piece of legislation originating in the House of Lords that sets out how the Bank of England can use funds from the banking industry to recapitalise (restore the financial footing of) a failing bank. The new clause, put forward by opposition MPs, would have imposed additional requirements or restrictions on that recapitalisation process. The motion was defeated by 212 votes to 88.

Why it matters: The Bank Resolution (Recapitalisation) Bill establishes a mechanism by which the costs of rescuing a failing bank can be met by levying the wider banking sector rather than drawing on public funds. New Clause 3 sought to strengthen the safeguards around this process, potentially adding oversight requirements or tighter conditions on how the power is used. Its defeat means the government's existing framework remains intact, without the additional layer of scrutiny or restriction the opposition proposed. The outcome affects how future bank failures are managed and who ultimately bears the costs, with implications for financial stability, the banking industry and taxpayer exposure.

The politics: The vote divided almost entirely along party lines. All 212 votes against the new clause came from Labour and Labour and Co-operative Party MPs, while all 88 votes in favour came from Conservative, Liberal Democrat and smaller party MPs including Plaid Cymru, the Greens, the Ulster Unionist Party, the Democratic Unionist Party and three independents. There were no notable rebels on either side. The result reflects the government's commanding majority in the Commons and its determination to pass the bill without amendment at this stage.