By Carolyn Churchill

Read this article on TheHerald.co.uk

The UK Government is coming under increased pressure to publish a "secret dossier" which is alleged to contain information relating to Lloyds TSB's takeover of Halifax Bank of Scotland.

Politicians from across the party divide have called for the release of all documents relating to the merger, including the confidential Treasury dossier which is thought to have been submitted in evidence during the legal challenge against the takeover.

Liberal Democrat deputy leader Vince Cable has tabled a parliamentary question asking if the "confidential dossier" which made the case for waiving competition law to allow the merger to go ahead still exists, and if its contents can now be revealed.
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Margo MacDonald, independent MSP for the Lothians, yesterday said she had submitted a freedom of information request to the Department of Business, Enterprise and Regulatory Reform, asking for copies of all communications which were produced for the hearing at the Competition Appeal Tribunal.

Mr Cable said last night: "It is important, both for taxpayers and shareholders, that we have more transparency about what actually went on when the takeover was being pushed through by the government.

"Now that the takeover has gone through and we know the extent of HBOS's losses, there would seem to be no longer any need for secrecy and that is why I am asking for this document, which was a key element of the government's case, to be made public."

Ms MacDonald said it was vital to gain access to any information which may show whether the government felt the merger was the only option available. "They have already told us that it was the only thing that could be done, so what is there that they didn't want us to hear?

"We definitely want to hear it now because we have other opinions that actually say that the merger was a bad idea."

The Merger Action Group fought the decision to waive competition law to allow the takeover to go through and took its case to a two-day hearing of the Competition Appeal Tribunal in London, but lost.

It believes the Treasury document set out why Gordon Brown and Alistair Darling thought the takeover was the only option. The group also believes that copies of the document have been destroyed.

Malcolm Fraser, an Edinburgh architect and spokesman for the action group, said members were told the contents of the dossier could be not be released to protect "UK financial security".

But he added: "There is no such thing," and argued that the release of the document would allow for "public scrutiny" and answers to questions which have been raised about whether there were alternative options.

Last week, Lord Turner, the chairman of the Financial Services Authority, appeared to suggest that HBOS could have been rescued with financial help from the UK Government, without the need of a takeover.

"There could have been a different way of directly supporting HBOS and keeping Lloyds separate," he said.

SNP Treasury spokesman Stewart Hosie MP said last night: "The UK Government's involvement in the Lloyds takeover has long aroused concern. For the dossiers used to convince the courts to be kept secret only adds to the suspicion that Gordon Brown and Alistair Darling have something to hide. That questions have been raised about the documents still even existing is equally concerning.

"The clear evidence from the FSA that there was an alternative and that the banks could have been supported as two separate entities - instead of merging their problems into one giant bad bank - throws even more doubt on government claims it was the only option."

Mr Cable's parliamentary question also asks what advice was given to Business Secretary Lord Mandelson by the FSA about the merger and what alternatives his department considered.

A spokeswoman for the Department for Business, Enterprise and Regulatory Reform said: "We've kept all the records that informed the Secretary of State's decision."

The calls for openness came as it emerged that thousands of employees of HBOS are considering legal action amid claims that they were mis-sold company share schemes.

The Accord union has appointed lawyers to investigate whether HBOS breached FSA rules in its advertising.