Procurement Bill [HL]

Debate between Baroness Fookes and Baroness Neville-Rolfe

Committee stage
Monday 24th October 2022 Grand Committee

[Baroness Neville-Rolfe (Con)]

I think our intention is to try to get rid of the VIP lanes. I will take the point away but there is a committee sitting—it will unfortunately sit for a long time, no doubt—that is looking at a lot of these important issues, and at some of these lessons. It is doing things in phases, so hopefully we will begin to get some output soon. We have had the Boardman review and, as the Committee can hear, we have tried in this Bill to learn from that and not to have a preferential system. The point about non-discrimination and such things is in the same spirit. I will take away the point about spirit and what we are doing here, but we have some good things in the Bill. I have listened to what the Committee has said but also tried to convince your Lordships about what we are trying to do.

I am advised that Clause 41 would prevent VIP lanes, as regulators will set out in advance what direct awards are permitted and Parliament would not approve anything too wide-ranging—I am sure that is true. The other point is that the Bill’s provisions on conflicts, which I am sure we will come on to debate further, also help against VIP lanes. We have quite a lot of things going on here; obviously, I am worried about piling it on. Everybody is concerned, so they all come in with different suggestions for trying to improve things. But if you pile those one on the other, you end up with rules that are too burdensome and do not work too well.

On the issue of a review, I think my noble friend Lady Noakes referred to some sort of review clause at an earlier juncture. “Review” is something that one tends to write into Bills where you have a problem. Perhaps we can discuss this further before Report to see whether a review is the right thing or whether enough is going on to try to ensure that we are in a good place on the Covid front. I respectfully request that the various amendments are withdrawn, and I would like to move the government amendments in my name.

[The Deputy Chairman of Committees (Baroness Fookes) (Con)]

My Lords, I remind the Committee that, where amendments are grouped, only the first amendment is moved. The others must be moved or not moved as they are reached on the Marshalled List.

International Accounting Standards (Delegation of Functions) (EU Exit) Regulations 2021

Debate between Baroness Fookes and Baroness Neville-Rolfe

Tuesday 27th April 2021 Grand Committee

[Baroness Neville-Rolfe (Con)]

My Lords, it is a pleasure to follow the noble Lord, Lord Davies of Brixton. I agree that the decline of defined benefit schemes, which he outlined, is something to be regretted; they were extremely valuable to millions of employees but, sadly, action by both parties over many decades has led to their virtual demise. However, today’s debate is about the broader issue of international accounting standards, and I thank my noble friend the Minister for his explanation. I refer to my interests in the register as a director of Secure Trust Bank and Capita, and a shareholder in some international companies, including Tesco, where I served for many years, hence my knowledge of pensions, and lived through the introduction of international accounting standards.

As a supporter of free trade and the benefits of comparative advantage, I favour global standards, for the reasons the Minister highlighted. I also favour using UK strength in financial services to participate in the international standard-setting process for accounting conventions; we have done so for many years, and that has been beneficial. Now that we are out of the EU, it is essential that we play our part directly. There is, however, a major problem: an enduring fight between the proponents of prescription, often favoured by Brussels, and principles-based rules which are essentially meant to reflect common sense. I have always been in favour of the latter because I worry about burdens and costs, which always end up being passed on to the consumer.

I am also keen on learning from history, and I have two lessons for today and then a couple of questions on the regulations before us. The first lesson reflects the introduction of Sarbanes-Oxley in 2002 in the United States—a typical example of overreaction to a financial crisis. There had been a failure to enforce accounting rules properly in the case of Enron, WorldCom and others, but the correct response to that was to enforce the rules properly, not to make them excessively complicated. I know from direct experience that Sarbanes-Oxley stopped some companies listing in New York at the time and encouraged others to delist, admittedly with the welcome effect of boosting growth in London. The extraordinary prescriptions it introduced were costly and bureaucratic and yet it did not prevent the 2008 financial crisis. Remember: accounting standards affect most businesses of any size, not just financial services; some 15,000 are subject to them in the UK, according to the Minister’s helpful introduction.

The second lesson of history is the emerging evidence that economic growth, which is how we can make everyone better off, can be explained in part by the stripping away of impediments. There is a fabulous book on this subject, free from modern fashion, which I borrowed from the Lords Library: Barriers to Growth by Eric L Jones, published in 2020. It explores the slow dissolution of such barriers in English history. In brief, the book suggests that the increase in the rate of economic growth in recent centuries reflects the removal of institutional and environmental barriers that held it back before the Industrial Revolution and which were then progressively relaxed over the following centuries. This is not the occasion to set out the many fascinating strands of the thesis developed in the book, although I would commend the section on how tithes retarded increased productivity in agriculture. The essential point is that all ages have their concerns and obsessions which have as a major—perhaps the major—effect the retarding of economic growth. My concern is that, in our age, what I call bureaucratisation is such a failing, and that today’s SI is an example of it.

I am not really convinced that we need a quango to endorse international standards—this new UK Endorsement Board. I understand that it will enable us to make sure that international standards are not missing a vital dimension and to reflect UK stakeholders’ needs, as the Minister explained. However, when you create such a body it will find work to do; people will want to write strategies and have a work programme. It will have a comprehensive diversity programme, although I note that it will be served, on HR, IT and finance, by the FRC. I would have left the work with BEIS and its civil servants, some of whom are extremely talented and will no doubt be conducting the international negotiations on accounting standards. We have too many regulators.

We are, however, where we are today. I ask my noble friend, who I know takes a welcome interest in corporate governance, from a practical perspective to enlarge on the criteria he will set. Page 3 of the Explanatory Memorandum says:

“the Secretary of State retains the function to amend the criteria for determining whether the use of an IFRS is conducive to the long term public good of the UK.”

What sort of things are we talking about? My main concerns would be: first, relative UK competitiveness; secondly, simplicity and clarity, to the extent that that is possible; and, thirdly, sensible timing in the introduction of new IFR standards, with more flexibility where that is justified. In my experience, IFR standards, while welcome conceptually, have often come in at difficult times, been expensive in accountants’ fees and diverted management damagingly.

Will Ministers be able to control any of these things, or will they just be in the hands of the new body, the new chair—Pauline Wallace—and anyone she appoints? If so, how will we ensure that a common-sense business voice, including the voice of smaller business, is heard?

While I am on my feet, I take this opportunity to remind the Government of interest in this House about the nature of the audit and governance package which is now out for consultation. It would be extremely helpful to have an oral briefing from BEIS on this subject while there is still some time to influence the content.

[The Deputy Chairman of Committees (Baroness Fookes) (Con)]

I understand that the noble Baroness, Lady Bennett of Manor Castle, has withdrawn, so I call the noble Lord, Lord Sikka.