(4 years, 5 months ago)
Grand CommitteeI thank my noble friend. Of course, he is absolutely right but the point of the dashboard is that much younger people can plan their future pension income. The current procedure is to encourage people to log on to the state pension checker, where they can verify their future predicted state pension income so that, as they get into their 50s and closer to retirement, they will be able to make more meaningful financial planning. However, as my noble friend Lord Young pointed out, there are significant security concerns with the current gateway system that allows you to find out what your state pension is. Therefore, if we want the state pension to be on the dashboard, we will need a certain level of security.
The aims of the amendments are correct. We want to be able to see the state pension and a comprehensive list of pensions, but I caution against trying to go more broadly. I also caution against commercial dashboards which might use their own IT systems that lock people out of checking their pensions on other providers’ systems and which try to encourage people to merge their pensions. Indeed, we have seen that the systems of some pension providers do not always flag up the guarantees that can be very valuable for individuals. If people are being not advised but merely guided, or if it is merely information and they are not aware of the guarantees, they could lose out and have no comeback.
My Lords, I was not intending to speak to these amendments, but it has been quite an interesting debate to listen to. In some ways, I have changed my mind during the course of the debate. I found the notion of having everything all in one place, as put forward by the noble Lords, Lord Young and Lord Flight, an interesting idea. Of course, it can already be done, but for historic reasons—because I have been self-employed for most of my life, as has my husband, and we have quite a lot of pension schemes around—I am well versed on various different platforms. Yes, I do a lot of mystery shopping, as I call it, on these things. I have loaded up information and practised telling lies as well—putting in overvaluations of my house or saying what other things I have—to see how a platform projects what my income will be, so it is difficult to get right. I wonder about the house valuations that people might be tempted to put in, because there is a tendency to be optimistic when it comes to that.
In this last week, I was looking at one platform, thinking, “Where is the sell-all button for absolutely everything?” I could not do it; I had to go through several times, so I very much take the point made by the noble Baroness, Lady Drake, that you will take the path of least resistance when there is something that you think is urgent. If I can fall for that kind of wanting something to be there, others will too, but when I went through everything and had to think, “Do I really want to sell that or don’t I?”, I made different decisions from those I might have made if I had had a sell-all, transfer-all button. Given that I like to think that I know a thing or two about these things, I would rather err on the side of caution, as the noble Baroness, Lady Drake, pointed out. I do not want to interfere with people’s freedoms, but it has to be good to have a certain number of hurdles to give people a pause to think.
I tend to agree that equity release will have to be a big part of the future, and I wonder whether some of the people already taking out lump sums are thinking that way as well. Perhaps that is safer left until we can more broadly investigate what is going on there and make a rather safer and better environment, though I acknowledge that that there have been improvements that I have not tested yet.
My Lords, I will speak to the three amendments in my name in this group and respond to the others. Amendment 39 in my name, and that of my noble friend Lady Drake, would, as she indicated, prevent the powers granted under the relevant sections of this Bill from being used to extend dashboards into becoming transactional. My first question, therefore, is whether that is necessary: will transactions be permitted? The noble Earl, Lord Howe, said last Wednesday:
“We also intend all dashboards to start with a limited functionality until we better understand how individuals interact with their information. ”—[Official Report, 26/2/20; col. GC 183.]
Does that rule out transaction? I think not specifically. The excellent policy brief from the DWP says this:
“Dashboards will present simple information, without the ability to carry out transactions.”
That seems really clear: no transactions. A bit later on, however, it says:
“In future we expect that dashboards should be able to provide a greater level of functionality and information.”
So here is the rub: does functionality include transactions? Will the Minister tell the Committee plainly: is it the Government’s intention ever to allow transactions at any point on the dashboards? If not, then let us make that clear on the face of the Bill. If they do, then, as my noble friend Lady Drake said, they should have to come back to Parliament and seek further authorisation before going down that road. The reason is simple: we are being asked to authorise the establishment of a service that will be based on the compulsory release of data about the assets of some 22 million people, with no clarity about what is being created.
In the debate on the last group of amendments last week, my noble friend Lady Drake offered the Committee a short list of some of the matters not yet resolved. The Minister—the noble Earl, Lord Howe—said:
“It is not that the policy is not settled but that the implementation of the policy is not settled.”—[Official Report, 26/2/20; col. GC 190.]
Obviously, it depends where one thinks policy stops and implementation begins. If the policy is, “Have at least one dashboard with some pension information on it”, I acknowledge that the policy is settled. If it is much beyond that, we are into murkier water.
Let me add my shortlist of a few things we do not yet know. We do not know how many dashboards there will be. We do not know who will run them. We do not know what information will be provided on them or in what form. We do not know what uses of the information will be permitted. We do not know how the whole system will be governed and regulated. We do not know where liability will lie for each of the links in the chain. Without that, we do not know how complaints about failure and compensation for detriment arising at each point will be handled. We do not even know who will get to make rules for the dashboards, because the regulations provide for that to be literally anyone.
There are so many points in the information and action chain where something could go wrong: data loss or leakage; errors in data being supplied to the dashboard, by either the state, TPR-regulated schemes or FCA-regulated firms; compliance failures in displaying it inappropriately; transactions on or off screen, regulated or unregulated, where the consumer ends up with a poorer outcome than should have been the case.
Last week, the Minister defended the proposed delegated powers, saying to my friend Lady Drake that they were needed to provide momentum to the process of co-operation that would be required to develop the dashboard infrastructure. But the Constitution Committee addresses that specifically in its comments on Part 4 and the use of broad regulation-making powers. It said:
“There is a need for some of these powers in order to commence the work on pensions dashboards and facilitate the sharing of data to make them function. However, the rest of the powers could have been omitted until the policy had been prepared and sample regulations produced for consideration as part of a future bill. We have observed previously that ‘Skeleton bills inhibit parliamentary scrutiny and we find it difficult to envisage any circumstances in which their use is acceptable. The Government must provide an exceptional justification for them’”.
Can the Minister tell us what the exceptional justification is?
The case for not allowing regulations to be made under the Bill to allow transactions is overwhelming. Having thought about it over the weekend, I now think it is even stronger than when we tabled the amendments, because the debate in Committee last week surfaced more information about the Government’s plans for dashboards. We have learned that they are committed to MaPS providing a dashboard service, but we also learned that they are open to anyone who can meet the criteria running a qualifying dashboard and that they have no idea how many people that will be.
We learned that the Government think that having multiple dashboards running right from the launch would actively be a good idea because they think it would increase reach, and we learned that they are relaxed about commercial dashboards being there first and MaPS coming in, if necessary, some time later. If MaPS took a long time to get a dashboard up and running, which is not impossible, there could be years in which the only way the consumer could view the data on her own pension, the release of which the Government had mandated, would be on a commercial dashboard. I asked the Minister last week if the Government think that it is a good thing to have a public dashboard, and if so why. I ask him that again now. If he thinks it is a good thing, why are the Government relaxed about there potentially being a period of years when there is no public dashboard yet the mandated data has been released? I should be interested to hear the answer to that.
Also last week, the Minister said that accessing the information on dashboards will remain free. That is good news, but it means that, as my noble friend Lady Drake said, we need to understand the charging model of commercial dashboards. If they cannot charge you to look at it, why would they do it unless they can make money at it some other way? We need to understand what those other ways are. I do not know; I can only speculate. Are they hoping to find a way to monetise the access to data that the dashboard gives? Would that be allowed? Will they want to use the dashboard to show a consumer her various assets and encourage her to consider a more efficient way of organising them? For example, “Look, it is all spread over here. Would it not be tidier if you brought it all over in this fund over here, which—oh look?—my firm happens to run?” That way, the firm might stand to make money either from transactions or from the scheme itself. What about through advertising? Perhaps when a user logs on to her dashboard, up pops an advert that either encourages her to engage with a firm or asks, “Have you thought about equity release? Would not that be a better way of going about what you do?” Or even, as my noble friend said, there could be careful presentation of the data that seems to privilege some kinds of assets over others, depending on who is running the scheme. This is potentially a really powerful tool and we need to place some firm limits on its use until the market is much clearer.
Amendments 49 and 50, in my name, specify that regulations may require the provision of information on likely retirement income and administrative charges. I put these out as probing amendments to find out what information will be on the dashboard. What will consumers see? Without an estimate of their likely income on retirement, many consumers who do not have the skills and knowledge of the noble Baroness, Lady Bowles, may have no idea of what the size of a fund will mean in terms of an income on retirement, and without some guide they may struggle to understand that. Often, it should be possible to provide that, because for occupational DC schemes that are used for auto-enrolment, trustees must produce a chair’s statement with value-for-money assessments which include illustrations on the likely retirement income. Presumably, if schemes are doing this properly, that data can be uploaded to the dashboard.
There should also be transparency on charges, but the presentation of charges to members often does not distinguish between the many kinds of charges that can be levelled on a fund. This amendment would require the disaggregation of investment and administration charges, so individuals could readily see the administrative charges that they face on the scheme in which their savings are held. Schemes can differ a lot in their administrative efficiency, and consumers should be able to see at a glance which schemes are levying high administrative charges.
Can the Minister confirm that this information—indeed, the requirement to be on the dashboard at all—will not apply to any legacy private schemes or new private pensions not covered by auto-enrolment? That leaves out quite a chunk of the market where transparency would be particularly important because a lot of those old schemes are very inefficient, with very high charges. Do the regulations permit the Government at some point to force those schemes to come on board? If so, do the Government intend to use that power?
I understand that any dashboard developed by MaPS would have a liability model developed alongside it. I asked about the liability model and the Minister said that he would come back to it this week; I cannot remember if he is coming back to it now or later, but I look forward to hearing about it at some point today. That would be marvellous. I would also like him to answer this question: if it is to be developed alongside the MaPS dashboard, and that is delayed, will there none the less be a liability model in place before any dashboard goes live, so that we are not waiting for the public dashboard?
Amendment 57, from the noble Baroness, Lady Altmann, requires that the projected state pension on retirement be available on the dashboard. It is important that people can readily access information on the state pension, which for many of them will be a core part of their retirement income. The challenge is that it will change at different points in their life depending on choices made, working patterns, et cetera, but it seems quite hard for the DWP to mandate everyone else to provide their data, and not do it themselves. It will have to go into that space.
After the comments between the noble Baroness, Lady Altmann, and the noble Lord, Lord Young of Cookham, I am interested to hear the Minister’s response on questions of identity verification. I found his comments on the challenges of some of the services very interesting. I take her point that, if one is to get personal data, some verification process will be needed. His points about beneficiaries are important as well.
I am a little more nervous on the point about equity release. The FCA has just started to look into this market. The noble Lord, Lord Flight, said that it has cleaned itself up, and certainly some practices which were standard 10 years ago, such as negative equity, are no longer standard. However, there are still a lot of questions about this, and a number of people are concerned that we are seeing patterns of commission-driven decisions; these have raised concerns in other markets in the past. Certainly, if any noble Lord has the misfortune to find themselves self-isolating for coronavirus and watching daytime television, they may at some point see advertisements for equity release, because a lot of advertising on this is going out in different forms.
One of the main arguments for having all the bits of pension on the dashboard is that you know where they are. Most people, even if they do not have the expertise of the noble Baroness, Lady Bowles, know where their house is, are reasonably confident that it is there, have some idea of its value and could find out readily if not. I take the point about people wanting to look at the whole of their assets, but, given some of the nervousness around this market, before we dive too firmly into that area I would be interested in the Minister’s view on this—as I am in in his view on all the amendments.
My Lords, I am conscious that, in the two groups we have already discussed, we have touched quite thoroughly on the background that inspired my amendment. The Minister has explained several times that it is the intention that this legislation is flexible, that because of the ability to make regulations it can develop over time and that many of the things that noble Lords have already been pressing for are potentially in the mind of government. There was a similar discussion at an all-Peers meeting a couple of weeks ago, which several noble Lords—in particular, the noble Baroness, Lady Sherlock—were at and which inspired this probing omnibus amendment that puts together all the things we discussed in that meeting and a few more. I do not see that it in any way competes with the amendments about the content of regulations or the SCA being the dashboard regulator.
The purpose of this amendment is to discuss how to make certain that there will be joined-up, end-to-end coverage by the regulator and the regulations—or in supervision, as the noble Baroness, Lady Sherlock, expressed it. Again, I am sure that it is the intention for a lot of this to happen—there are certainly enough powers in the Bill to do it—but there is nothing yet in the Bill to make it certain. I acknowledge that things have been said but that is not the same as having something in the Bill.
It has been said that a lot of these things might develop as a result of consultations with industry groups. If industry groups decide that they do not want some of this, what happens? There needs to be a basic obligation that these things will be covered—in particular, as my amendment envisages, if we are getting to the point where we have commercial dashboards. If these things are not resolved by the time we get them—it looks as if we might be getting them anyway, not after a delay—I do not think that it is satisfactory to have nothing in the Bill.
To ensure end-to-end regulatory coverage for the process of loading information on to dashboards to the dashboard itself and for any consequential actions arising from the dashboard, my wish list, or probing list, covers: dashboard operation; information; data; advertising and revenue generation; redress mechanisms; fraud mitigation, which the Minister has already mentioned; content; presentation; assumptions; valuations; projections; risk; comparison; third-party revenue charges; and commissions and their effect on projections.
Noble Lords said on the previous group that it is difficult to have information about charges because they are done in different ways and are the be-all and end-all. That in particular is why I have said that the effect of the charges should be given because that is where you can assess them. If there are lots of different mechanisms and they can make things weaselly wordy or look wrong, they should not be able to disguise the cash effect of the charges that can be extracted. That is probably more important than saying what the charges are. I do not think that this is in conflict with anything else that has been said today.
However, what happens if there is a data breach? That might be a matter for the Information Commissioner. It might be automatic or a matter for redress by the financial ombudsman. These mechanisms are all out there. How will they join up? We want to know for certain that they will. Nothing in my amendment suggests how this must be done; it just says that it must be done.
While mentioning the FCA, we need to be clear that unless it is told categorically in legislation or regulations that something is regulated, it will not consider it as within the regulatory perimeter. As I have said previously, it regards that as a matter for government and Parliament to authorise. An example is that although the FCA covers conduct in banks—which, as we well know, are also heavily regulated by the Prudential Regulation Authority—banks can do quite a lot that, although they have that heavy regulation, falls outside the regulatory perimeter for conduct. Commercial lending is one example. People tend to trust regulated entities but then do not realise that things that do not have that supervisory and conduct backing can be done. It is necessary to dot the “i”s and cross the “t”s here.
For example, it might be that the phrase “Click here to transfer your pension” would be covered, but as the noble Baroness, Lady Altmann, hinted in her previous suggestions, would it be against the regulations to say, “Click here and buy a Maserati”? It was once suggested that that might happen with pensions freedoms. What about equity release for double glazing and conservatories, which feature heavily in the advertising about equity release? If we do not cover advertising and the FCA does not, who does? It must be covered. It cannot be left open. My amendment aims to draw attention to these matters through my list. I will obviously be interested to hear the reply.
However, when it comes to drafting regulations—again, this has relevance because the Minister has already mentioned it—there should not be too much left to the regulatory rules. They can create holes, especially after the regulator has consulted the people it is attempting to regulate. I touched on that in a debate last week, when I explained how regulators’ rules—FCA rules, to be precise—had watered down the generality of “fit and proper” as a test for behaviour. It is by no means the all-encompassing test that was originally intended; it was narrowed down by the rules of the regulator.
When it comes to pensions, I therefore want a belt-and -braces approach. As I said, I have attempted to draft something that sweeps together all the concerns in a probing, omnibus-type way; I will not go through the list because quite a lot of it has already featured in our debate today on previous amendments. I do not aim to say how it is to be done but I suggest that when there is to be a commercial dashboard, the regulations must be done for all these things. I believe that that is what the Government say they will do, but it is better to have it on a piece of paper inside the Bill. I beg to move.
My Lords, my noble friend’s amendment, among other things, speaks about advertising. The underlying question about advertising, however, is surely why allow it at all? That was touched upon by the noble Lord, Lord Vaux, and the noble Baroness, Lady Altmann. You can see the benefit, obviously, to commercial dashboard providers: another revenue stream and/or the cross-selling of their products. However, it is hard to see why the customer would want yet another advertising channel while there are already thousands—perhaps tens of thousands—of advertising channels. What really is the benefit to the consumer; or perhaps more accurately, what really is the risk-benefit balance for the consumer created by the existence of advertising on commercial dashboards? What assessment have the Government made of this risk-benefit balance? If the answer is none, perhaps they should consider doing exactly that. I am curious about whether the Government have, in fact, indicated to potential commercial dashboard providers that they will be able to run ads on their dashboards. Is there some implicit quid pro quo going on here?
My Lords, I fully appreciate that the noble Baroness is trying to ensure that consumers are properly protected and have confidence in the dashboard infrastructure. Indeed, an aspect of this is the need for robust supervision, and I share her belief that it is important to make clear who will be responsible for oversight of the different aspects of the infrastructure. I do not think that much divides the noble Baroness and me on the objective to be achieved.
I recognise the need for a strong supervisory and regulatory regime for dashboard providers. I also agree with the thoughts expressed by many noble Lords at Second Reading about a new regulated activity being key to maintaining public confidence in dashboards. As I explained earlier, we intend to do this by amending the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.This will bring the provision of a qualifying dashboard service within the regulatory remit of the Financial Conduct Authority. Unauthorised firms will neither be able to connect to the supporting infrastructure nor be able to provide a dashboard service.
Once the amendment to the order has been made, the regulatory framework for the activity will be proposed in the FCA’s public consultation on the corresponding handbook rules and guidance. This will allow the public and the industry a chance to comment. The FCA must have regard to any representations made to it during the consultation period. This framework can be used to set out any expectations regarding the behaviour of dashboard providers and, in this way, will supplement any conditions imposed on dashboard providers set out in regulations. I would argue that this is where we dot the “i”s and cross the “t”s, as the noble Baroness put it.
I note that the amendment also refers to revenue generated by both dashboard providers and third parties. It might not be necessary for me to do so but I want to reassure the Committee that all qualifying dashboard services, like the dashboard provided by the Money and Pension Service, will not be allowed to charge simply for consumers to see their own information. The provision of financial services and products by firms that are dashboard providers will remain subject to FCA regulation. Fundamentally, our aim in allowing multiple dashboards is only to give customers more options in accessing their information, not different information.
The mention of information should remind us that pension information is the lifeblood of a sustainable dashboard. Dashboards will work within the existing framework established by the general data protection regulation and the Data Protection Act 2018. Dashboard providers will be subject to penalties under these laws should they fail to meet required standards of consumer and data protection. One of the key principles in the design of the dashboard is that the individual will always be in control over who has access to their data. Qualifying dashboard service providers will not be able to see information about the individual’s pension rights.
The responsibility for the provision of accurate data falls on pension schemes. The Pensions Regulator will be responsible for ensuring occupational pension schemes’ compliance with requirements. The FCA will regulate personal and stakeholder pension schemes. Enforcement options, including fines, will be among the tools available to the regulators if requirements are not met.
The role of these regulators will be complemented by the Money and Pensions Service, which will establish and maintain the dashboard infrastructure. While it will not act as a regulator, it will work with the regulators to enable their compliance activity. It is also obliged, as part of its consumer protection function under the Financial Guidance and Claims Act, to report to the FCA where regulated persons are behaving in a manner detrimental to customers.
That leads me to the issue of redress. If an individual wishes to seek redress, any queries around possible incorrect information should be directed to the scheme in the first instance. Schemes are already required to have dispute resolution processes. To come back to a question asked earlier by the noble Baroness, Lady Sherlock, if people are not satisfied with the outcome of the internal dispute resolution procedure, they can take their case to the relevant ombudsman.
The amendment covers the need for regulations around assumptions, projections and comparison of costs and charges. I reiterate that we expect that the initial information provided on dashboards will be simple in the first phase. Adding further information, such as projected pension income and costs and charges, requires consideration on the delivery and consumer protection aspects of these proposals, as we have discussed. I am not ruling out the possibility of including such information, but the industry delivery group should be allowed to consider the implications fully and make its recommendations. To commit to regulations around possible assumptions and comparisons before then would be premature.
Of course, as the noble Baroness will be aware, individuals can already access information on costs and charges. The DWP has consulted on simpler annual benefits statements; the noble Baroness may like to know that it will publish a response on that subject in the spring. The consultation looks at the presentation of costs and charges and how projections are calculated. It acknowledged the crucial need for simpler statements to be consistent with the work on dashboards. We will consider how insights from the consultation can be incorporated into dashboards.
The noble Baronesses, Lady Drake and Lady Sherlock, emphasised the need for adequate consumer representation. The Money and Pensions Service has brought together an industry delivery group whose job it is to ensure that the design of pensions dashboards is informed by industry experts and consumer groups. Membership of its steering group was announced in September last year. It includes a strong representation of consumer groups, including representation from Which? and an independent representative with significant experience in consumer protection. There will also be opportunities for other consumer representatives to take part in working groups, which will help to ensure that the final design is on what information and features consumers value.
The noble Lord, Lord Sharkey, asked specifically about the need to include advertising on a dashboard. I can do no other than refer back to my earlier points. Rules on advertising are as those around any other incremental addition to the dashboard, and rules on the parameters around the use of data will be looked at very carefully. They will be developed by the Government in conjunction with the FCA, which will work with industry and consumer representatives on the delivery group to make sure that if we go down that path, it is with our eyes open and with the risks minimised. We will of course consult on any rules surrounding that issue.
I hope that I have given sufficient reassurance around consumer protection to show that the dashboard infrastructure will build on existing regulatory frameworks. That, with the need to keep dashboards simple, means that while I understand the rationale of the amendment, I consider it unnecessary. I hope that, on reflection, the noble Baroness will feel that she is comfortable in withdrawing her amendment.
My Lords, I thank the Minister for his response. As I said, this is a probing amendment but also an attempt to indicate a framework that could be constructive, perhaps in particular around some of those issues on which all noble Lords have spoken. It covers things such as advertising; it may be that the regulation that one would want around advertising is that there cannot be any of it, but that would still be a regulation to prohibit. I feel that there is a need for an explanation of this vision, somehow all in one place. Yes, a lot of it could be extracted from today’s debate and the reassurances that have been given. However, it would be much better at the very least if it was all put together, perhaps in an Explanatory Memorandum. I still tend to think that there should be something in the Bill, even if more dilute than what I have proposed.
I very much thank the noble Baroness, Lady Drake. This inequality of arms is extremely important. When it comes to FCA consultations, how many members of the public respond? I am not sure whether I am a member of the public, but I have done it from time to time, and I can tell your Lordships that, even for somebody like myself who is well used to this kind of thing, the way it is composed and constructive can be jolly difficult to get your head around. It can be difficult to get yourself organised to put it in, unless you happen to be an industry specialist who does these kinds of things all the time. I therefore very much doubt that you get members of the public responding; you may get some of the consumer organisations, but again, I doubt that they have the familiarity that is necessary always to be able to nail the point.
As was also suggested, there is a tendency with consultations to weigh the responses: X% says this, and Y% says that, and the ones who struggle and have difficulty, which is always on the consumer side, are outweighed. An awful lot of people with a financial interest from the industry side will respond. There needs to be a better mechanism for communicating with, if you like, the public and their representatives. One thing that could be done is for the FCA to obligingly inform Parliament when it is coming out with its consultations. I do not camp on the FCA’s website, looking for its consultations, and if I do not, I do not know how many members of the public will. This is a work in progress. I have to come back again on the costs.
(7 years, 6 months ago)
Lords ChamberMy Lords, the Government are about to take the momentous step of triggering Article 50. I never had any doubt about that happening. There is a White Paper, whose purpose is, as the Secretary of State said,
“to inform all the debates … in the coming two years”.—[Official Report, Commons, 2/2/17; col. 1219.]
For the mother of all negotiations we have 73 pages, much of it occupied by current fact analysis, graphs and explanatory boxes, but with no substantive guidance on how co-operation is envisaged to work. How it could work is not a negotiating tactic; it is the fundamental prospectus and it should not be secret.
As the saying goes, we are where we are. We do not know where we will end up, because, in the words that spring out from the White Paper, our future relationship is entirely,
“a matter for the negotiations”.
It says so in paragraph 2.10 on dispute resolution; in 8.31 on our Euratom relationship; in 8.45 on our new customs relationship; in 8.42 on our relationship with European agencies; and in 12.2 for the interim arrangements that we will rely on. The Irish border, financial services, scientific co-operation—the list goes on. Dependent on the results of those negotiations will be the interpretation of the word “possible” in the frequently used expressions of “frictionless and seamless as possible”, “freely as possible”, “as much as possible”, “close as possible” and “as much certainty as possible”.
It is worse than no certainty, because the Government have said that they will jump off the cliff into disordered uncertainty as their only alternative. I do not agree that the Government already have an incontestable mandate for that; this may also turn out to be the constitutional position. Nor will there be any certainty through early priorities because we are merely on the brink of swapping the EU’s “no negotiation before triggering” mantra for its standard negotiating one of “nothing is agreed until everything is agreed”. However, there could be one important certainty if the Government would confirm the acquired rights of EU citizens currently in the UK. Holding off is doing harm to the UK, in the NHS and elsewhere, so as a negotiating card it is bust—it is known and shown to have no value. At least grasp the fig leaf of decency now.
I declare a deep personal interest in Euratom because my late father, Percy Bowles, was arguably the foremost engineer of his time in atomic energy and particle accelerators. For UK purposes, the term “EU” includes Euratom in so far as context requires. Therefore, as it stands, the Bill might enable the Prime Minister to give notice, at the appropriate time, with regard to the Euratom legal entity. The question is when as well as whether that is appropriate. The Library note gives some arguments that it is not clear cut whether Euratom has to be included automatically in the Article 50 trigger. This gives the Government an opportunity and useful alternatives for transition, by not triggering Article 50 simultaneously with regard to Euratom. In this, it is the EU definitions that matter. Why not look before leaping and at least have some negotiation about the modalities under which there could be continuing membership of Euratom, having regard to the long liability timescales, which include eventual JET decommissioning? Even a short delay for Euratom might be helpful, given that the Dutch, French and German elections and summer holidays play the UK into Michel Barnier’s format of early talks being around the formulation of financial provisions. I cannot see why the UK would not keep this chance card when it keeps the useless EU migrants one.
There are amendments that I will support. The Government have made their own difficulties: there is inadequate information on how this is meant to work; the engineering, like a perpetual motion machine, is deeply suspect; and there is the needless closing off of options with their “not a jot or tittle of EU” approach. We did not need to be hog-tied in that way. In the end, you will have to cut some slack because you will be rumbled. Perpetual motion machines always are.
(8 years, 1 month ago)
Lords ChamberMy Lords, George Washington said in his farewell speech to Congress:
“’Tis folly in one Nation to look for disinterested favors from another”—
or, as I might put it from my experience, EU negotiations can be like the knife fight in “Butch Cassidy and the Sundance Kid”: there are no rules, no promises, and there is always a final twist.
There is no reason why our hand should be forced on Article 50 before the UK is completely ready, with a consensual approach; it is not in the national interest otherwise. Regrettably, intimidation, improper exclusion of UK representatives and all kinds of other illegal pressures and innuendos from institutions and the wider commentariat are not new tactics and one can expect them to be deployed on a much greater scale—but we must not give in. Additionally, it has always been impossible to conduct timely negotiations when major countries have been having elections. It is a recipe for prevarication and backtracking, often with long turnaround periods with no true mandate. If it holds up work on a directive, you can imagine what it would do to Brexit negotiations. We cannot have our two years wasted.
Right now, there are also battles for supremacy in Brussels over who fills the UK vacuum—Germany needing Poland, France cosying with Italy and Spain—who gets our agencies, whether protectionism will win, whether member states will assert themselves more strongly over the Commission, whether the Commission will stop being a proxy for the core member states, who in the Commission goes where, or moves, whether the Italian banking situation will smash apart legislative and state aid discipline, whether the French will see off the posted workers directive, and more.
Back here, response to the outcome of the referendum is more challenging and requires more oversight, because leave offered a false prospectus that no plan can fulfil. Some suggest that an EEA-type basis as a quick, temporary harbour, giving market access, is a solution. That brings into play the exact three conditions that were the headline reasons for the leave vote: budget contribution, free movement and control over laws. Many capitals see it as the ultimate humiliation for the UK and say that adjustments are not possible, but, being Europe, they also suggest a few, which are currently unacceptable but may be an opening to the variable geometry espoused by the noble Lord, Lord Maude.
In the UK, it has been argued that we can get a better deal than Norway or Switzerland because we are larger. That misunderstands the current state of mind of the EU 27; they are more wary of giving a good deal because we are larger. Frankfurt, Paris, Luxembourg, Amsterdam and Dublin aim to poach work from the City, but they fear an aggressive offshore UK. So threats of protectionist measures are fuelled by the balance of power in the Council minus us, by the need to satisfy the Parliament, which requires the socialist group on board, and by the perceived need to inflict pain to discourage other breakaways. Such actions may bring international opprobrium and indeed the reverse of the intended effect, but it is a known tendency.
Free movement is well flagged by the Government as an issue for negotiation, but we should look at budgets and laws as well. Repatriation of budget payments featured prominently in the referendum—I think that it was on a bus—and, even diminished to its proper size, it still features in debate. Nevertheless, there is a robust case that saving jobs through market access, especially highly paid ones in the City, can cover the cost of significant payments from tax take alone. Against that, there is a 15% hole in the EU budget when we leave, so there is some leverage there. The EU has already besmirched itself with external cash-not-migrant deals—not that I recommend them.
For both free movement and budget, the basis of any agreement can be free of subsequent unilateral change by the EU. That is not the same when you come to laws. Without the UK round the table, laws can change considerably and unilaterally. This is a problem more in some areas than others. We will not be there when the Commission discusses its pre-drafts with member state experts, nor to amend as texts go through the Council and Parliament, nor in the regulatory agencies that draft standards where currently we chair important working groups. There are many agencies beyond those in financial services, but the powers of the European supervisory authorities and UK influence within them has been an obsessive concern, even while we are so powerful within them. Are we now to become mere note takers?
I know what EU financial services law would have looked like without input from the UK. It is not a static situation and plots are already afoot to make changes. If we buy wholesale into a law-taking regime, at least in financial services, we may be buying a pig in a poke, passports or not. That is a problem that we must solve. It cannot be counteracted simply by channelling more resources through international bodies such as Basel, the FSB, IOSCO and the IAIS, which I observe are also unaccountable international bodies to which we send unelected people. For financial services, mutual recognition or equivalence provisions are another route but, as has been pointed out, the process is tricky and inherently political, and introducing more subjective conditions is already a talking point in Brussels. The question would be how far such changes would upset international relations with the US and whether that, and perhaps resolving the fears of an offshore UK, could give openings or a route to the variable geometry that has been described.
This is a small part of what we face and the plan seems to start from scratch. In some areas, our counterparts are not even just the EU, so never has “Act in haste, repent at leisure” been more relevant.
(8 years, 6 months ago)
Lords ChamberMy Lords, the noble Lord, Lord Wigley, has been trying to get in for some time.
(8 years, 7 months ago)
Lords ChamberMy Lords, I rise for the first time, deeply conscious of the honour that it is to serve in your Lordships’ House. I am grateful for the kind way in which noble Lords have received me, for the friendliness of all staff and for the elegant and discreet way in which the attendants and doorkeepers have steered me from uncertain manoeuvres. I thank the noble Lords who introduced me, my noble friends Lord McNally and Lady Falkner of Margravine, and all those who have enriched my life and learning, without whom I would not be here.
I hope to contribute to various deliberations drawing upon my experience from both strands of my career. The first strand was that of scientist, engineer and patent attorney for over 25 years, running a professional business and immersed in leading-edge technology. The second strand was nine years in the European Parliament, culminating in five years as chair of the Economic and Monetary Affairs Committee, facing a vast and profound agenda due to the financial and eurozone crisis.
Many noble Lords have long-standing experience of the conventions of your Lordships’ House, so I speak now with great respect. None the less, secondary or delegated legislation exists in other legislatures and I have been deeply involved in the establishment and scrutiny of European secondary legislation, while keeping a watchful eye on that of the United States. My somewhat unoriginal observation is that secondary legislation works well until you hit a problem: then it works rather badly and does not fail-safe.
Financial services legislation is highly delegated in most countries and Europe now has delegated Acts and regulatory technical standards, the latter also involving the European supervisory authorities. Scrutiny is by the European Parliament and the Council of member states; each can veto independently, but not amend. From that well-populated setting, and with your Lordships’ indulgence, I will elaborate three experiences that resonate with the wider debate around delegated legislation.
The first is that of overarching constraint. Europe has the ECJ’s Meroni constraint, which limits delegation of discretionary power. Despite debate, constraint has had useful benefits. It reduces the likelihood of secondary legislation doing extraordinarily large or unexpected things. But perhaps even more importantly, it fosters vigilance on how to frame the delegated power with objective, legislation-specific guidance: an important aid for transparency, benefiting individuals and businesses as well. In the context of the review of the noble Lord, Lord Strathclyde, I venture that greater vigilance over the framing of delegated power is a natural response to other curtailments, even if the drafting of that guidance will rarely seem as exciting as other amendments or may even upset the odd Sir Humphrey.
The second experience is the inability to amend. On the technical standards for the European Markets Infrastructure Regulation, EMIR, a committee stage motion to reject was carried. Only a couple of parts in a complex, interconnected proposal were wrong, but they were important parts affecting small and medium-sized business, and it also went against the grain of prior understandings. A subsequent plenary rejection would have meant deadlines missed and various embarrassments to be felt all round, so a clarifying interpretation was obtained from the European Commission and, although it was not as good as proper correction, the fact is that without corrective opportunity, secondary legislation risks being, if not second-rate, at least second-best legislation. I also extracted a commitment to consultation for future proceedings—effectively, a correction in advance opportunity—but it is still thought that limited corrective amendment has a place.
The third experience is of a scrutinising Chamber feeling conflicted, which also came to light in our EMIR adventure. The Council privately agreed about the identified problems, but it emerged that various member states were embarrassed to vote against technical standards that had been signed off by their national regulatory authorities—which is a story in itself. However, they were glad that the European Parliament could take responsibility for the remedy. Of course, the constructs are different, but this shows the usefulness of independent veto powers for separate Chambers.
Europe has travelled in the direction of fuller framing of delegated power and, in contrast, I cannot disguise consternation about the extent and scope of some of our delegated legislation. What I have read and heard in your Lordships’ House on this subject, as in all things, is thoughtful and has raised similar remedies to those that I favour. I do not see a single silver bullet, but constraint, guidance and corrective amendments are tools for avoiding secondary legislation becoming second-best.