Financial Services Bill

Baroness Hayman Excerpts

Committee stage & Committee: 2nd sitting (Hansard) & Committee: 2nd sitting (Hansard): House of Lords
Wednesday 24th February 2021 Grand Committee

I hope that the Government are listening and will work with Peers on all sides of the House during the remaining stages of the Bill to ensure that we address these vital issues effectively. I beg to move.

[Baroness Hayman (CB) [V]]

My Lords, I declare my interests as set out in the register. It is a pleasure to follow the noble Lord, Lord Oates, who, both at Second Reading and today, has argued passionately and cogently about the need to remedy the absence from the Bill of any reference to the risks and opportunities that climate change presents to the financial services industry. I have tabled Amendments 14, 35, 75, 76 and 98 and added my name to Amendments 11, 12, 23, 48 and 89 in the names of the noble Lord, Lord Oates, and the noble Baroness, Lady Jones of Whitchurch.

As the noble Lord, Lord Oates, said, all the amendments in this group seek to put a climate change lens on the provisions of the Bill. There are various approaches, but the amendments focus, as he said, on ensuring that the regulators take into account climate-related risks when they are making the new rules and regulations proposed in the Bill. They seek to address the remit of the regulators and thus ensure that climate risk is considered at a systemic level.

The increase in firms reporting on such risks at an individual level is both necessary and welcome; however, there is a widely recognised and existential threat to our entire financial system from climate change. Last year, the Governor of the Bank of England, Andrew Bailey, said:

“Compared to the financial crisis and the pandemic, the risks from climate change are even bigger and more complex to manage.”


We need to ensure that those with the responsibility for financial stability at a macro level are assessing and reporting systemic climate risk as a core function.

On numerous occasions, the Government have recognised the integral role of our financial services industry in driving the change to a green economy, with an urgent focus on aligning investment with the objectives of the Paris Agreement and the Climate Change Act. Our amendments would put that into reality. The Chancellor spoke on 9 November about

“putting the full weight of private sector innovation, expertise and capital behind the critical global effort to tackle climate change and protect the environment”.—[Official Report, Commons, 9/11/20; col. 621.]

Yet, as has been said, this crucial piece of financial industry legislation remains totally silent, hence the importance of our debate on this group of amendments and the urgency, in this year of COP26 when our own domestic performance will be integral to the success of our global leadership, of making progress before the Bill leaves this House.

Turning to individual amendments, I have tabled Amendment 14, which, as the noble Lord, Lord Oates, says, addresses the same issues as his Amendments 11 and 12, but in a slightly less detailed way. The intention of Amendments 14 and 35 is to ensure that the FCA makes new prudential regulations for investment firms and that, before the PRA makes any new rules in relation to the capital requirements regulations, these regulators must have regard to the likely effect of those rules on the UK meeting its net-zero commitments. “Having regard” is an important issue and one to which, when this was debated in the other place, I sensed that the Government were not completely antagonistic, but took rather a St Augustine view—being happy to be made green, “but not yet”.

I see no reason whatever for awaiting the consultation on this issue, especially because when one reads the consultation document, apart from a few words in the foreword by the Minister, there is no reference to climate change and no request for views on it. Given the importance of the issue, this is something on which we should be making progress straightaway.

I am grateful for the support of the noble Lord, Lord Oates, and the noble Baronesses, Lady Altmann and Lady Bennett, for Amendment 75, which focuses on the current remit and governance provisions of the regulator. It proposes amending Schedule 1ZA to the Financial Services and Markets Act 2000, which deals with the constitution of the governing body of the FCA, and provides for the appointment of a board member with direct responsibility for climate change issues. This would enable a focused and strategic approach to be taken to climate change across the sector at the highest level of the regulator.

Essentially, the amendment requires the regulators to do what they have asked of the sector itself, because those are the same provisions that they now require financial institutions to comply with, and they replicate the senior management regime, which requires those institutions to appoint a board member responsible for identifying and managing financial risk from climate change, and reporting on it.

As part of the process to embed climate risk and the net-zero transition into investment and supervisory decisions, institutions are asked to

“embed the consideration of the financial risks from climate change in their governance arrangements”

and

“demonstrate an understanding of the distinctive elements of the financial risk from climate change and a sufficiently long-term view of the financial risks that can arise, beyond standard business planning horizons.”

That long-term view is particularly important, and there is no reason for the FCA not to take on this responsibility. The Bank of England itself has appointed an executive sponsor for climate-related risks, who is responsible for recommending to the governors the Bank’s strategy for addressing the risks that climate change poses to its objectives, and overseeing the implementation of that strategy. So I hope that, when he winds up, the Minister will be able to respond positively to this very limited but still important amendment.

Amendment 76 deals with the need to ensure that the regular mandatory reporting mechanisms for a sector-wide climate risk assessment provide for FSMA to be amended; the need for the PRA to provide a regular report on how it has evaluated exposure to climate risk; and the impacts that it would have on the stability of the United Kingdom financial system. That could form part of the annual reporting that the regulators are required to provide to the Treasury, and to Parliament via the Treasury Select Committee.

The amendment also provides that, as part of the reporting process, the PRA must seek advice from the climate change committee. It is important that we join the dots between the different bits of government, and ensure that a statutory body such as the climate change committee is integrated into the advice received by regulators and those responsible for economic stability.

My final amendment in this group is Amendment 98, which seeks to amend the Financial Services and Markets Act to insert a new FCA climate-related financial risk objective. While the regulators are moving forward with approaches necessary to address climate-related financial risks, such as through the UK Climate Financial Risk Forum, their statutory remit does not currently include a duty to consider the impact of climate change on the stability of the financial sector overall.

The theme running through this group of amendments is to seek to embed climate risk and the net-zero obligation into the financial system. This is one critical step towards doing that, by ensuring that they are embedded within the scope and remit of the regulators at every level.

Covid-19

Baroness Hayman Excerpts

Wednesday 23rd September 2020 Lords Chamber

[Baroness Evans of Bowes Park (Con)]

The noble Baroness is right about how incredibly important it is that we get messaging right. We are in a very complicated situation and everyone is doing their best. She is also right about concerns over mental health; for those with severe needs or in crisis, all NHS mental health providers have established 24/7 mental health crisis lines, and PHE has published its surveillance tracker to monitor the impacts of Covid-19 on the population’s mental health. These are proactive steps to help ensure that our response to the effects of the pandemic is shaped by emerging data. I am sure work such as that will help feed in as we think about messaging now and going forward.

[Baroness Hayman (CB) [V]]

My Lords, during the Statement yesterday the Prime Minister spoke of Parliament’s ability to

“take forward its business in a covid-secure way”.—[Official Report, Commons, 22/9/20; col. 798.]

Does the noble Baroness the Leader of the House recognise that there are grave concerns about how we are taking that business forward and the quality and effectiveness of current debate and scrutiny? As the noble Lord, Lord Newby, said, particularly concerning is the retrospective and often totally irrelevant nature of our scrutiny of statutory instruments which have been in force for weeks or months before they are ever considered in the House. In her response to the noble Lord, the noble Baroness did not seem to recognise that there was a problem. I urge her to read the words of the noble and learned Baroness, Lady Hale, and of her noble friend Lord Forsyth in the debate last Friday, and reconsider.

[Baroness Evans of Bowes Park (Con)]

I am sorry if the noble Baroness did not think I gave due weight to that response. As I have said, we are very concerned to ensure we have scrutiny. We have ensured that each SI has undergone full scrutiny, in line with the parent Act, and worked around the appropriate parliamentary procedures. At this point I also thank the House authorities for all the work they have done to help us ensure we are a Covid-secure workplace. I hope noble Lords, while finding it frustrating, will continue to appreciate that we are working in a hybrid way and doing remote voting in an attempt to make sure that as many noble Lords as possible can continue the important work we do in this House in scrutinising legislation.

Covid-19: Strategy

Baroness Hayman Excerpts

Tuesday 12th May 2020 Lords Chamber

[Baroness Evans of Bowes Park]

As I have said, the Home Office is working closely with the police on the guidance, and I am sure that it will update it through the NPCC and the College of Policing. As the noble Lord rightly says, fines will go up to £100, which will be lowered to £50 if paid within 14 days. As now, if members of the public do not follow the rules, the police can arrest individuals who are acting unlawfully and instruct people to go home, leave an area, disperse or impose fines.

It is worth reiterating to noble Lords that the vast majority of people are respecting the rules and what is happening. Only a very small minority is not doing so, and it is absolutely right that the police should have the tools at their disposal to deal with that minority.

[Baroness Hayman (CB)]

My Lords, I draw attention to my interests as set out in the register. Yesterday, when answering questions on the Statement, the Prime Minister spoke of the huge opportunities for cleaner, greener transport in the Government’s current proposals. Does the Leader of the House agree that, when looking ahead to the enormous investment that will be required to rebuild our shattered economy, we need not to try to replicate exactly what we had before but to take the opportunities to build better and to forge a greener, fairer and more sustainable economy for the future?

House of Lords: Appointments

Baroness Hayman Excerpts

Thursday 30th January 2020 Lords Chamber

[Earl Howe]

My Lords, as I said yesterday, the Government believe that it is important for citizens in all parts of the United Kingdom to feel connected to the legislature and politicians and for there to be trust in our democratic institutions. That is one reason why we have committed to establish the commission that I referred to. However, the issue of regional representation is almost certainly germane to any consideration of the role of this House.

[Baroness Hayman (CB)]

But, my Lords, would the Minister accept that there has been concern and support for reform of the role of the appointments commission, particularly putting it on a statutory basis and making explicit the criteria against which it judges applications? Does he accept that, at a time when we are trying to re-create trust in our institutions, the casuistry of the different criteria for assessing appointments to the Cross Benches and those nominated by the political parties causes problems regarding suitability and capacity to participate in the work of the House, and that it would be helpful to have very similar criteria for both sets of appointments?

[Earl Howe]

My Lords, I recognise the noble Baroness’s concern on this matter and I shall ensure that the points she makes are fully considered.

Business of the House

Baroness Hayman Excerpts

Wednesday 4th September 2019 Lords Chamber

[Lord True]

The Salisbury doctrine is very important for relations between the two Houses. It allows this House freedom to challenge and dissent on things that are not covered by the doctrine. If it is a manifesto measure or something that has been put before the people, this House must certainly defer, sometimes quickly.

Who put this proposition that we are told is coming up the Corridor to the people? Who actually published it? It was written by Sir Oliver Letwin and a few clever lawyers—perhaps some of them in this place—and put forward. What is the authority by which those people claim that this House should not only defer but defer to a guillotine to force it through? We will shortly come on to the amendment—

[Baroness Hayman (CB)]

I am grateful to the noble Lord. Is the authority not from the majority in the House of Commons last night?

[Lord True]

My Lords, if that argument had been put before this great House for 700 years—with the House told that every time a vote in the other place produced a majority it must be silent—this House would not have endured. This House has a right and a duty to respond. I believe that we should consider the matter of the guillotine separately. On this I agree with the noble Baroness opposite that the sensible thing is for an accommodation to be reached between the opposition party and the governing party, which must involve a lot of things, including acquiescing to this general election, about which we do not know whether they are keen. It is clear that the House of Commons is not functioning. In those circumstances, of course there would be no need for her guillotine and no need for our response—but that is certainly above my pay grade. That accommodation having not yet been reached is no excuse for her to come and present to the House something so exceptional, so draconian and so unprecedented, and then to complain when that gets an exceptional, unprecedented and possibly draconian response. If there is no guillotine Motion, I will shut up. But as long as this House is prevented—

Queen’s Speech

Baroness Hayman Excerpts

Tuesday 3rd September 2019 Lords Chamber

[Earl Howe]

My Lords, my noble friend Lord Young, to whom I too pay tribute for his exemplary service to this House and to the Government, has made clear that he has special personal reasons for taking the action that he has taken, and that he would not expect any of his colleagues to follow his example. I do not believe that I am misrepresenting him.

[Baroness Hayman (CB)]

My Lords, the noble Earl said that we were losing only a few sitting days. From that, should I conclude that the scheduled sitting days next week will actually take place? May I also ask him to reflect on the fact that sitting days are, as the noble Lord, Lord Foulkes, said, not the same as days on which Parliament is in session, when committees can sit and Parliament can be recalled? I am sure that I am not alone in remembering occasions when Parliament has sat during party conference season.

[Earl Howe]

My Lords, if the noble Baroness will allow, I think it is appropriate for me to leave it to my noble friend the Chief Whip to answer questions on the order of business this week and next. He will be making a business Statement immediately after Questions and it is right that we turn our attention to those matters at that point.

Lord Speaker: Powers

Baroness Hayman Excerpts

Thursday 31st January 2019 Lords Chamber

[Baroness Evans of Bowes Park]

Since July 2018 we have had 76 sitting days with Oral Questions and the Front Bench has had to intervene only 13 times.

[Baroness Hayman (CB)]

My Lords, is it not correct that, when the role of Lord Speaker was originally set up, a review after the term of office of the first Lord Speaker was envisaged? That review never took place. Is it not timely to look at the role of the Lord Speaker, in its entirety but including Question Time? While I hesitate to disagree with my successor, the noble Baroness the Leader of the House has just described how the Front Bench can assist self-regulation at Question Time. For many people—although we know that the Leader of the House is completely impartial—having a member of the Government assist the House in deciding who should speak does not feel good in a parliamentary democracy. That role could be undertaken by the Lord Speaker without undermining the principle of self-regulation.

Business of the House

Baroness Hayman Excerpts

Thursday 24th January 2019 Lords Chamber

[Lord Taylor of Holbeach (Con)]

My Lords, in the absence of my noble friend, I beg to move the Motion standing in her name on the Order Paper.

[Baroness Hayman (CB)]

My Lords, I apologise to the House for delaying it momentarily on this issue. Would the Chief Whip care to confirm—in case it arises in today’s debates—that the assertion that privy counsellors take precedence in debate in this House, or against other Members of the House when trying to intervene, is not in fact correct? Will he also confirm that this is a self-regulating House, where privy counsellors, unlike in the other House, take their turn with other Members?

[Lord Taylor of Holbeach]

I confirm what the noble Baroness has said. This is a House of Peers; we are all equal. There are two Benches which by tradition have been taken for privy counsellors, but they confer no additional status on those sitting on them, or any other privy counsellors who happen to be sitting in the House.

Strathclyde Review

Baroness Hayman Excerpts

Thursday 17th November 2016 Lords Chamber

[Baroness Evans of Bowes Park]

I thank the noble Lord for his comments and hear what he says. As I said, when we work constructively together, we are an extremely effective House.

[Baroness Hayman (CB)]

My Lords, like others, I am extremely grateful to the noble Baroness for her Statement and for the decision that has been made. I was delighted to hear that the noble Lord, Lord Strathclyde, has returned to his normal tranquillity and confidence in the House’s ability to behave rationally and in a mature fashion, which was uncharacteristically absent, I felt, in some of his report and the consequent discussions.

To return to the point made by the noble Lord, Lord Newby, the tenor of the debate following the tax credits issue was very much about the quality of the scrutiny that Parliament gives to secondary legislation. Although we all agree that in many instances we need primary legislation, in fact we have a great deal of secondary legislation and the challenge will be greater after the so-called great repeal Bill. Do not both Houses of Parliament need to look at how, together, they provide more effective scrutiny and greater challenge to the Executive? Will the noble Baroness consider again the suggestion made at the time that a Joint Committee of both Houses looking at ways to improve scrutiny could be very valuable?

[Baroness Evans of Bowes Park]

I thank the noble Baroness for her comments. She is absolutely right: we will face significant challenges with the amount of legislation, both primary and secondary, that will come to this House, and I am looking forward to working with the leadership across this House to ensure that we do the most effective job in helping to produce the best deal we can for this country. I am happy to take away her thoughts about scrutinising secondary legislation, and I will talk to colleagues in government.

House of Lords: Composition

Baroness Hayman Excerpts

Tuesday 24th May 2016 Lords Chamber

[Baroness Stowell of Beeston]

New appointments are a matter for the Prime Minister and I am not going to speculate on that. However, this is more complex than just a question of where we come from and where we live. One interesting thing in the data from which the noble Lord is quoting is that there are more Labour Peers than Conservative Peers with London addresses. As an example, I live in London but am from Beeston, just outside Nottingham. Although I do not represent Beeston, I like to think that I bring some knowledge and experience of where I was born and brought up, and I hope that that adds to my contributions in this House.

[Baroness Hayman (CB)]

My Lords, the noble Baroness the Leader pointed out that the Conservative manifesto said that there would be no comprehensive reform of this House during this Parliament. In so far as that is shorthand for not introducing a Bill for an elected House, it is very welcome to some of us. However, will she make it clear that it does not rule out sensible, incremental reform of your Lordships’ House, which means taking decisive action to reduce the numbers in this House?

[Baroness Stowell of Beeston]

I agree with the noble Baroness about incremental reform. As she knows, and as I have said before from this Dispatch Box, one of the great achievements in the last Parliament was the incremental reform which we brought in and which she led through her Private Member’s Bill. The other important reform was the facility for Peers in this House to retire—an approach that I very much support. Regarding further steps along that track, if there is broad consensus and we are able to attract cross-party agreement on further incremental reforms, I shall be interested in supporting that. Lady Perry is the most recent example of retirement, and her speech yesterday was a very good illustration of the power of retirement from your Lordships’ House.