Collective Investment Schemes (Temporary Recognition) and Central Counterparties (Transitional Provision) (Amendment) Regulations 2024

Baroness Kramer Excerpts

Monday 18th November 2024 Grand Committee

The amendments made by this instrument may be technical, but they are important in bringing the statute book up to date. Failing to make them could cause confusion about the relevance of EU law to domestic regulation. These SIs make technical changes that are necessary to ensure that our statute book remains up to date and adequately reflects the UK’s exit from the European Union. They also make important provision regarding the provision of services into the UK, either by ensuring that UK firms and investors can access the products and services that best suit their needs or by giving UK authorities appropriate control over when certain services can be provided. I hope that the Committee will join me in supporting these regulations, and I commend them to the Committee.

[Baroness Kramer (LD)]

My Lords, I will be relatively brief because these are highly technical instruments, but there are some comments that I would like to make.

I shall start with the collective investment schemes and central counterparties order and begin with collective investments schemes. I ran this one by my noble friend Lady Bowles of Berkhamsted, who is the ultimate guru in our party on collective investments schemes and, I suspect, one of the experts on them within the House, and her report was “It’s absolutely fine, let it go”, so I will happily take that position on the necessary tidy-up of the changes in the language for collective investment schemes.

However, the second part of that order is far more interesting and raises some questions, about not the language but the broader issue of central counterparties and the hint that this regulation may contain. Everyone in this Room understands that central counterparties became an instrument for countering the fallout of the 2008 financial crash when liquidity seized up across the financial services sector because, within that huge area of derivatives—I think derivatives outstanding typically exceed something like $60 trillion at any one time—the outside world did not know who owed what to whom and therefore who was at risk from which failure and whether there would be domino effect. Indeed, liquidity then seized up and we went from a contained financial crisis into a wholesale financial crisis. Now, vanilla transactions and derivative arrangements that go beyond the vanilla pass through central counterparties so that there is a middleman, if you like, that can hold the risk so that if one party fails, the counterparty takes the risk, not the person who holds the mirror transaction on the opposite side.

I think everyone has always recognised—I could quote Andy Haldane, but I have done it too often before—that, in a sense, the central counterparty is an accumulation of risk. One could almost think of it as an unexploded bomb. Serious levels of risk are contained with the central counterparty and, if anything goes awry, the shock to the financial system would be global. The Committee will know that many of the counterparties share common ownership. They may look like completely separate organisations, but they feed back and the same parties, in a sense, make up their various memberships and ownerships. Cross-contamination is always a huge risk when dealing with central counterparties.

It is obviously sensible now that, sadly, we have left the EU, that regulation which tied into EU directives should drop away, but I am concerned that this does not become an excuse for playing the game of regulatory arbitrage. We hear constantly about the significance of growth. I do not deny that, but I am concerned about the gradual understating of risk that sits alongside loosening and changing regulation to create the animal spirits that will create growth.

The potential to play a regulatory arbitrage game around central counterparties must be raised in this context. When we required recognition by more than one regulator—ESMA as well as its UK equivalent—we had the constraint of two sets of significant eyes looking at a particular situation. Now there is one set of eyes only. While we always acclaim the importance and, as I often hear, the great superiority of the British regulators in this area, I would very much like some assurances that there is at least some degree of oversight and monitoring in recognising the potential of trying to loosen up regulation around the central counterparties.

Both prior to our exit from the EU and today, the dominant European clearing house—one might say the dominant global one—was LCH. It is no longer called the London Clearing House and its party in Paris is now known as LCH Paris. It is still dependent for about a third of its clientele on recognition from ESMA. ESMA has given it temporary equivalence, but that could be adjusted or changed in future and there could be limitations on European institutions from doing more than a certain percentage of their clearing through LCH or other UK clearing houses. Can the Minister update us on that issue? Is there any sense that the steps we are taking could trigger a more adverse decision from ESMA in reference to UK-based CCPs?

I will very briefly deal with the insurance distribution regulations. Some in this Committee will know that I hate the concept of a regulatory perimeter whereby we regulate activities on one side but not on the other. I gather from the Explanatory Memorandum that some companies which were outside the regulatory perimeter will now be drawn inside it. That can be only a good thing, but there has always been a tendency for companies in the UK to game the regulatory perimeter. They grow to a size that puts them just outside sight of the regulation. Will a significant number of companies be affected by this adjustment in denominating the assets from euros to sterling? Will we see a cluster around the regulatory perimeter and have any concerns been triggered in looking at this set of changes?

[Baroness Neville-Rolfe (Con)]

My Lords, I take great pleasure in returning to the Front Bench to debate Treasury matters, albeit now in a shadow capacity. Although I do not have current interests to declare, I hope that my past experience as Commercial Secretary to the Treasury and as a member of the EU Financial Affairs Sub-Committee will stand me in good stead. Until 2022 I served as a non-executive director of a challenger bank and, of course, I have served in business more generally. I thank the Minister for her clear explanation of these two instruments and their obvious complexities. I am glad of the opportunity to work with her across the House and I look forward to hearing the answers to the observations made by the noble Baroness, Lady Kramer, especially about risk.

Our investment schemes and central counterparties are without question the backbone of the United Kingdom’s financial services industry. They enable our country to attract global capital, support pensions and, ultimately, benefit people and businesses up and down the country. As the Minister said, it is important that the rules and regulations are not needlessly bureaucratic. The removal of EU recognition is welcome. We now have domestic arrangements for oversight and I believe we should not be double-banking, so I am in a slightly different place to the noble Baroness, Lady Kramer, on that.

I wish to make two wider points. I am particularly grateful to the Minister for including a de minimis impact assessment with the first SI. I note that it has also been through the better regulation unit. I have always been a huge supporter of impact assessment and wider cost-benefit analysis of all legislation, but I have two questions. Can the Minister confirm that it is the policy of the new Government to require de minimis assessments of this kind on all SIs—unless the impact is negligible, as with the insurance distribution SI? She can perhaps answer for the Treasury today. I note from GOV.UK that her ministerial role also relates to business regulation more widely. Although she may need to write, I would appreciate a wider answer, as such a requirement would help deliver value for money across government and limit the negative effect on growth of new regulation.

My other concern is the glacial pace at which we are leaving the EU financial services regime behind. The collective investment SI provides for a year’s extension of a temporary regime. Although this may be well and good for the reasons the Minister has clearly explained, I have no idea when the UK will have completed the task of replacing EU financial services law with our own. I was trying to advance this process in 2017 when I was at the Treasury so that we would be ready when Brexit day arrived; as it happened, it did not arrive until January 2020. I believe the transition was well debated during the passage of the Financial Services and Markets Act 2023, but I have two other related questions. Do the Government, with the help of the regulators, have a plan for completing it and taking advantage of any new freedoms and simplifications that are now possible? Will the Minister agree to send me a list of the missing regulations and a timetable?

Although it is a demand, I mean that as a constructive question. Our financial services sector is so important to UK growth, and we need to make sure that these changes are completed, take effect and help our financial services sector, which has so much to contribute to UK growth, productivity and prosperity. Having said that, I am very happy to support the two sets of regulations.

Listed Investment Companies (Classification etc) Bill [HL]

Baroness Kramer Excerpts

2nd reading
Friday 15th November 2024 Lords Chamber

[Baroness Kramer (LD)]

My Lords, this House has heard from three experts, and it will now hear from a layman—I will be extremely brief. My position and that of these Benches is very strongly to support the Bill. As we have heard, especially from the noble Lord, Lord Hodgson, and my noble friend Lady Bowles, listed closed-end investment companies are absolutely fundamental to investments in longer-term, more illiquid activities exactly of the kind the Chancellor has discussed promoting.

I want to disabuse some of the conversation suggesting that the Bill actually increases risk. The Bill overturns an error in the existing regulatory arrangement that, in effect, forces a double-counting of costs for holistic closed-end investment companies, versus other kinds of funds. It is simply an error that has resulted from the complex layers of regulation and legislation.

Like others, I congratulate the Government on having very quickly taken some steps to bring in two SIs, and the FCA on having declared forbearance while the detail is worked through. The reality is, however, that we cannot let this drag on from day to day because it is having a very immediate impact. The noble Lord, Lord Hodgson, talked about new companies, but it is basically driving this industry out of the country. We have to act faster.

The two statutory instruments, the forbearance and the FCA were important steps forward, but are not sufficient as they have missed out some key elements. Those key elements need to be tackled immediately. The quickest way the Government could do it is to give fair weather to this Bill.

Whistleblowers

Baroness Kramer Excerpts

Monday 28th October 2024 Lords Chamber

Asked by

[Baroness Kramer]

To ask His Majesty’s Government what assessment they have made of the current capacity and efficacy of the law to provide confidentiality for whistleblowers and to protect them from retaliation.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)]

My Lords, whistleblowers play an important role in shining a light on wrongdoing in public life. They need confidence that they will be taken seriously and will have legal recourse if subjected to detriment or dismissal for making a protected disclosure. There are already day-one rights for workers, but we intend to strengthen whistleblowers’ protections.

[Baroness Kramer (LD)]

My Lords, whistleblowers who are defined as workers, and therefore protected by the existing law, still fail to win 96% of their cases in employment tribunals because of evidentiary requirements. They are financially ruined by cases that can drag on for years and, even if they win, their careers are destroyed because the tribunal does not acknowledge blacklisting. Will the Minister commit to an office of the whistleblower to ensure genuine protection for whistleblowers and proper investigation of tip-offs—to avoid a repeat of Horizon Post Office, Grenfell, financial mis-selling, Letby and Al Fayed, to name but a few?

[Baroness Jones of Whitchurch (Lab)]

The noble Baroness is absolutely right to raise those cases. We all take those issues very seriously, and we have debated them here in the Chamber on many occasions. There should not be a need for anybody to whistleblow; people should have their concerns taken seriously in the first place. This Government are absolutely determined, from the top, to make sure that people who have concerns at the workplace are able to raise them without the detriment to which the noble Baroness refers. With regard to an office for the whistleblower, there are a number of ideas around this. We are looking at the role and remit that such a body could have. There will be a need to look at the cost, role and function of a potential new body, but we are looking at all the ways we can ensure that whistleblowers are protected at the workplace, as they should be.

Company Directors: Identification

Baroness Kramer Excerpts

Wednesday 22nd May 2024 Lords Chamber

[Lord Johnson of Lainston (Con)]

I am delighted to say that the introduction of ID cards is not a component of this Question, as far as I am concerned. However, I should say that Companies House now will require electronic verification, so one will have to provide registered, nationally approved identity. One has to have one’s photograph taken. Importantly, to make life easier for businesses, we are going to have an effective digital system. So one has one login ID, however many directorships one has or companies one is involved in, whereby we can track people. For businesses and individuals, the system will be extremely simple.

[Baroness Kramer (LD)]

My Lords, one area where open registers and public registers do not exist is for companies in freeports. Have the Government taken another look at this set of issues? Of course, those companies also do not have the normal tax and customs checks over their various activities. Does the Minister intend to link up registers of freeports with Companies House?

[Lord Johnson of Lainston (Con)]

I beg to push back against the noble Baroness’s question. All companies in this country have to register and all have to go through similar processes. Freeports are no different and it is important to quash the idea that somehow there is a free-for-all in freeports. There are still checks. There is still our own English national law framework and all the other components that make sure that these are very exciting opportunities for companies which want to set up in this country. They cannot avoid their obligations. What they can do is profit from the opportunity.

Digital Markets, Competition and Consumers Bill

Baroness Kramer Excerpts

Report stage
Monday 11th March 2024 Lords Chamber

The noble Baroness, Lady Kramer, has been arguing vigorously for years that we need to go much further, that we need an office for whistleblowers—a fully independent oversight regime with a remit well beyond the competition field. I have hesitated before supporting such a proposal but, given where we are now, perhaps she is right. At the very least, we need an immediate review to find out whether she is.

[Baroness Kramer (LD)]

My Lords—

[Lord Kamall (Con)]

My Lords—

[Baroness Kramer (LD)]

Please.

[Lord Kamall (Con)]

I thank the noble Baroness. I am afraid that was the opposite of chivalry.

I want to speak to Amendment 153, tabled by the noble Lord, Lord Tyrie. He and I have had a number of conversations about this. I refer noble Lords to my interests as set out in the register. Having written about competition law at EU level and taken part in debates on competition issues in the European Parliament during my many years there, I was very torn between the merits appeal and the judicial review. I was tempted by the idea from my friend in the other place, the right honourable Robert Buckland, of possibly a time-limited merits appeal.

Many of us fell down on the side of judicial review because the small firms, the challenger firms, were asking for it. They believed that it was quicker and more effective. We hope that it will be. That is why many of us have supported this. But we have to ask: what if we are wrong? We do not have perfect information. What if judicial review takes longer than envisaged? Some noble Lords have said to me that the Joint Committee of Parliament that the noble Baroness, Lady Stowell, proposed would be much more effective in holding the CMA to account and ensuring that there is not a repetition of cases being restarted because they lost at JR. That argument has some merit.

However, we must take a step back and realise that, given that none of us has perfect information, we should be aware of the notion of unintended consequences. I have written about this a number of times over the years for think tanks. Often a well-intentioned government intervention that is supposed to make things better, which many people support at the time and that makes sense and looks like it will work does not turn out how it is supposed to but makes things worse.

In that spirit, I have been thinking about how we make better laws. How do we ensure that there are safeguards in place for unintended negative consequences? How do we make some redress to ensure that we change course, having thought that we were on the right course but having made things worse by not recognising the unintended consequences? In Committee, I said that I had considered tabling an amendment for a review after three or five years, or whatever. However, I am concerned that this would be seen as a loophole by the big companies, which would then hold off in order to show that JR was not working so that they could go back to merits appeal.

The noble Lord, Lord Tyrie, has solved that problem in many ways with Amendment 153. It is right that we have a review of all legislation to ensure that it has worked out as was intended and so that where there are unintended, unforeseen consequences, when it did not work as we had envisaged, we have those safeguards. A good way of doing that would be to have reviews of legislation such as the one that the noble Lord proposes here, to ensure that we could change course if it did not turn out how we intended.

I hope it will do. I hope judicial review will work. I hope it will be much quicker and we will have a much more competitive market. I hope the challengers will grow stronger, we will have more competition and see creative disruption and new challengers at every stage and consumers benefiting. Amendment 153 says, “Let’s make sure that we take stock to see whether legislation—particularly a Bill as important as this—works out as we want it to”. That is why I support Amendment 153.

--- Later in debate ---

Litigation funding raises issues that are worldwide. They are very similar, whether in continental Europe, the United States, Singapore or Australia, by way of illustration. These are covered in the report. I very much hope that the Ministry of Justice will find it useful and think of a way to tap into all the knowledge that the group has. What the answer is, what the principles are, I will not take your Lordships’ time up with, except to say that it may not be regulation. Regulation is not a universal success. There are other ways of doing things—maybe codes of conduct, maybe voluntary agreements. It is quite clear that this gives England and Wales, and the UK, an opportunity to show what we have always had: leadership in the law. We are known throughout the world for this. I very much welcome what the Lord Chancellor has done because it shows what a real leader he is.

[Baroness Kramer (LD)]

My Lords, I very much support Amendment 61 moved by my noble friend and colleague Lord Clement-Jones. I am very much a believer in equality of arms. The issue of exemplary damages speaks exactly to that. I hope very much that the Government will take that on board, because it is a fundamental principle that makes a great deal of practical difference as well when wrong has happened and when people seek redress.

I support the two amendments tabled by the noble Lord, Lord Tyrie. Briefly, on Amendment 153, regarding the five-year review, I had the privilege of serving under the noble Lord’s chairmanship on the Parliamentary Commission on Banking Standards. In many ways that was similar to this Bill, but our proposals were exceedingly radical. They required very substantial change by the financial services industry. We very much wanted them to be reviewed after a period of time. We did not manage to trap that into legislation; it did not happen. Instead, when issues became evident where we had made changes—for example, on presumptions of guilt and in areas where there was intense lobbying on ring-fencing and whatever else—changes happened but not in a coherent and sensible way that benefited from that overarching focus that we had had during the original review. That has been a real weakness. We finally have a new committee in this House, the Financial Services Regulation Committee, providing some accountability to regulators, but that is an issue that we would have picked up on much earlier had we been in the process of doing a comprehensive review. That underscores many of the points that have been made about this issue.

We live in changing times. The idea that things stand still and you can do everything piecemeal is really not appropriate. However, I will speak most on the issue of whistleblowing. I have not otherwise participated on the Bill but, when I see the word “whistleblowing”, I am afraid that I suddenly find myself lured on to the Benches.

I very much ask the Government to take this issue on board, because I agree with the noble Lord, Lord Tyrie, and others: we will never get to grips with wrongdoing in any of the areas covered by the Bill, particularly with all the new complexities and the constant change within the digital and competitive arena, until we have an effective whistleblowing regime. We need a system that leads to the follow-up of valid tips from whistleblowers. Currently, looking at different regulators in many different fields is clearly completely haphazard. Some tips are followed up, some are dismissed and some are ignored. Secondly, and just as importantly, we need a proper arrangement to protect whistleblowers from retaliation, so they will not suffer detriment by coming forward.

Our current system depends on the Public Interest Disclosure Act 1998, which was a Private Member’s Bill that was brought forward then as part of employment law. It was ground-breaking at the time but has long been shown to be utterly inadequate compared with more recent schemes, particularly in the United States. Those US schemes have had an astonishing success rate in disclosing wrongdoing, leading to prosecutions, convictions and financial penalties.

I will use an example not from the anti-trust field but from a field that I know best and with which many will be familiar—the Securities and Exchange Commission. Since it brought in its whistleblowing scheme in 2011 under the then new Dodd-Frank legislation, by the end of fiscal year 2022, it had received over 83,000 tips from whistleblowers and collected in excess of $6 billion in financial penalties. In fact, there has been so much activity in the following years that those numbers would be significantly higher if we brought them up to date.

It is also fair to assume that billions of dollars of wrongdoing have been deterred by the fear of disclosure under such an effective whistleblowing regime. Not just the SEC but a number of entities use whistle- blowing legislation within the financial field; the Commodity Futures Trading Commission—CFTC—is another example that has had the same kind of success as the SEC. I find it rather disturbing that the CFTC is now doing road trips in the UK to encourage whistleblowers who are aware of financial wrongdoing with any US connection to contact it directly. In fact, something close to a quarter of the cases it is currently pursuing have a UK-based whistleblower somewhere within them, because finance is so international. Now the people at the CFTC are very careful not to criticise any UK regulators, but it is not a compliment that they feel it is necessary to be here to get their independent message across to anyone who has come across wrong-doing, with a US connection, in the financial field.

The Public Interest Disclosure Act is inadequate for at least four reasons, some of which were mentioned by the noble Lord, Lord Tyrie. It does not require any follow-up on a tip, even if it is acknowledged to be valid. It covers only employees and not the many others, such as contractors or clients—all kinds of people come forward—who blow the whistle when they see wrongdoing. They are not covered at all and have zero protection at present. All it provides is anonymity for disclosures that are made to a prescribed group of people—basically, the regulators and MPs. Most whistleblowers are not anonymous; they will have raised issues with management, companies, employers, suppliers and clients. When they see something wrong, they do not instinctively think of themselves as whistleblowers in need of protection, and when they do, their identity is then known.

No regulator in the UK has ever acted to protect a whistleblower from retaliation. That retaliation is usually years spent in an employment tribunal or in the courts. For many whistleblowers, it is a loss of career. There is a wide scheme of informal blacklisting—we know of case after case. Many whistleblowers have to use their own resources because there is no legal aid to fight this process, so they run into financial ruin. You can imagine the mental health costs and the frequency with which families break down.

However, I have spoken to pretty much every UK regulator and typically—there are a few exceptions—they regard their own monitoring and supervision as entirely sufficient, with whistleblowing a mere marginal assistance. They also believe that whistleblowers should act out of duty and altruism, and not because there is protection from retaliation available or compensation for harm.

I have talked about the SEC and the CFTC and, prior to the Dodd-Frank legislation in the United States, which put in the strict whistleblowing rules and made them mandatory, US regulators had exactly the same attitude as the current UK regulators and the same failure to create a pattern of whistleblowing and to follow up cases. The change came with legislation.

In the sectors covered by the Bill, the rewards for wrongdoing are a huge temptation and require highly sophisticated expertise and knowledge. We can see why that is tough for a regulator to manage, unless it has a really effective whistleblowing programme. In its recent directive, the EU is now catching up with the United States in recognising whistleblowing as a key tool to expose wrongdoing early and to deter wrongful behaviour. It is time that we did the same.

I hope that the Minister takes back this message to those who are working on the reform of the whistleblowing framework, as it is really important. Sometimes one hears rumours that they are looking just to tweak existing legislation, but what is needed is a radical change that meets the needs and gives us the opportunity that an active whistleblowing community can deliver. I hope the Government will take on board that message.

[Lord Bassam of Brighton (Lab)]

My Lords, I promise that I am not going to stand for too long between this session and people’s desire to have supper. I have a few words to say, but I will try to keep them as brief as I can. This group of amendments deals with the interaction of the courts with regulation and redress, and we obviously support Amendment 61, in the name of the noble Lord, Lord Clement-Jones, on exemplary damages in class action cases. We will listen to the Minister’s explanation carefully and try to understand why the Government are continuing to resist this approach.

We recognise that government Amendment 62 is part of a wider initiative to put right the fallout from the Supreme Court judgment in the PACCAR case, which acted as an inhibition to litigation fee agreements that enable collective actions such as those involving the postmasters and postmistresses. If we have learned anything from Committee, it is that Ministers should live in dread of the experience of the former Lord Chief Justice, at all times. The noble and learned Lord, Lord Thomas, offered us some wise words on that occasion and I am glad—delighted, actually—to see the Government finally acting with some speed to bring forward a Bill from the Ministry of Justice that covers a wider range of cases than the current Clause 127 achieves. If the noble Lord, Lord Clement-Jones, had not quoted Alan Bates, I would have done, because I thought it was a ringing endorsement of what was necessary.

Perhaps I could task the Minister and tire him a little to put a bit more on the record about the detail, nature and extent of the short Bill when he sums up. Can he give us a clue about its introduction date?

Post Office Horizon Scandal: Compensation Payments

Baroness Kramer Excerpts

Monday 19th February 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

The government advice is that each individual claimant must submit his or her claim, and money is available to them to take legal and medical advice. That is part of the reason why we think that, of the 477 cases, we have 58 claims—because they are more complicated—quite rightly being put together by each claimant and their advisers. When these claims are submitted, we have guaranteed that we will action 90% of them within 40 days of receipt.

[Baroness Kramer (LD)]

My Lords, the noble and gallant Lord’s question was about not compensation but the issue of funding the correction of the software to the tune of £150 million. The entirely appropriate question is: why is Fujitsu not paying for the reworking of that software, rather than the Government and the taxpayer?

[Lord Offord of Garvel (Con)]

Perhaps I should have been clearer: the Government are funding this company, Post Office Ltd, to effectively commission a new system to replace Horizon. It might be reasonable to assume that it will not be Fujitsu that does the second system.

United Kingdom Internal Market Act 2020 (Services Exclusions) Regulations 2023

Baroness Kramer Excerpts

Wednesday 18th October 2023 Lords Chamber

I assure noble Lords that, following an extensive public consultation and engagement process, the instrument will ensure that the services exclusions in Schedule 2 to the UKIM Act are both appropriate and effective. The changes reflect how those services are currently provided and regulated in the UK. I commend the draft regulations to the House.

[Baroness Kramer (LD)]

My Lords, I was not involved with the legislation for the United Kingdom Internal Market Act 2020 and I have to admit that, even after reading the Explanatory Notes, much of this SI seemed to me more like a Rubik’s cube, so I was appreciative of the clarifications from the Minister.

To a non-expert like me, the SI appeared at first glance to be essentially technical tidying, but I can also see that it tangles with the underlying tensions between the UK Internal Market Act and the common frameworks—that is to say, the intergovernmental agreements that set out how the Governments of the UK nations will work together to manage regulatory divergence in policy areas that were formerly governed at EU level. That leads me to be a little concerned, at least, that the instrument before us received the formal consent only of the Welsh Government. I have no idea whether that is because of objections by Scotland and Northern Ireland, simple oversight or, perhaps, in the case of Northern Ireland, because its Assembly is unable to sit. Perhaps the Minister might expand on that and explain to us why that formal consent was not given, because on the surface it is certainly a little troubling. I remember warning some colleagues involved in the internal market Act when it was passed that it created the likelihood of confusion and tension between Westminster and the devolved authorities, so I am wondering whether this is an instance of that.

I am also trying to understand what the SI will do on a day-to-day basis for the workforces that it names and what the impact will be on their potential customers. I can understand the removing of the exclusions for financial services providers; I assume that it has a positive impact on competition. But I wonder if there was any consideration that it might have a detrimental impact on the provision of local services. We have always had a great problem in financial services stopping everything being either sucked into London or the major centres and in making sure there is local activity across the whole United Kingdom.

I am struggling to understand the consequences of amending social services exclusions. It is very hard to understand why the qualifications for someone who works in social services should differ and whether this reflects some deeper issues within social service provision.

But I am most mystified by the exclusions that have been introduced for what I will group together as qualified utility engineers. They are now excluded from mutual recognition and the non-discrimination principle. We are in a period where we know we have to focus on net zero. That creates dramatic change in the way energy is provided. There are issues of introducing insulation as rapidly as possible across the country and issues with utilities—for example, shortages of reservoirs and transport. All these individuals will apparently be excluded from mutual recognition and non-discrimination. Could the Minister explain what the day-to-day impact is of that exclusion decision?

I thank the Minister and once again apologise for my lack of familiarity with the underlying legislation. It would certainly help in some of these areas to have some further clarification.

[Baroness Blake of Leeds (Lab)]

My Lords, I thank the noble Baroness, Lady Kramer, for the image of a Rubik’s cube in looking at this legislation. I welcome the detail that has been provided; it has been very helpful and, as a result, I will keep my comments fairly brief. I thank the officials who have been involved in the process and the Minister for his detailed explanation.

The major concern I want to raise is that, despite the detailed consultation—I am very pleased to see the extent to which that was undertaken—it is troubling that consent was only achieved with Welsh Ministers and not Scottish Ministers. Obviously, the Written Ministerial Statement was laid before the Summer Recess, which was a significant time ago now, and I wondered whether there have been any more conversations between those bodies to seek further reassurance about the progress of this.

I have a specific question. The Scottish Government made a request in relation to heat network authorisations. Can I seek clarification that that has been incorporated into this SI?

I too would like to ask if the noble Earl is able to give us a more detailed explanation of why consent was not forthcoming. As we know, the Scottish Government did not consent to the UKIM Act. Could the Minister explain whether this is the reason? Has he had any explanation of the reasons? Is there a reflection of any concern with the content of the SI as a result? We obviously have to note the continued absence of the Northern Ireland Assembly and Executive. We want to explore with the Minister if that is seen as one of the reasons consent was not forthcoming.

This speaks to a broader concern, which we have expressed on many occasions, about the hoarding of power in Westminster. This is still seen as an issue. Perhaps the lack of progress on an agreement on a range of common frameworks with the devolved Administrations, and the failure to bring this forward, undermines the co-operative working with the DAs.

In terms of review, paragraph 14.1 of the Explanatory Memorandum mentions a review of the Act’s amendment powers, which “must take place” between the third and fifth anniversaries of the passing of the legislation. Could the Minister provide an update on this? Would it be reasonable to assume that there will be further review towards the end of the period stated? If this is the case, has work already begun to detail what further amendments might be required?

[The Earl of Minto (Con)]

I thank noble Lords for their valuable contributions to the debate on this instrument. I agree that it is a very technical SI, and I would like to answer some of the detailed questions properly in writing. I have a lot of the detail here, but I know that time is short, and we want to get on with it. A number of very valuable points have been made, and I will endeavour to answer them to the best of my ability.

The provisions of the UKIM Act naturally bring up historic opposition, but I hope that the legislation that we are looking to pass today will be considered on its own merits in relation to protecting the UK internal market. As a reminder, the instrument will enable the effective operation of services regulation in the UK by adding, amending and removing service sectors excluded from the market access principles in Part 2 of the UKIM Act to reflect current regulatory practice in the UK.

This instrument is a direct result of a public consultation and therefore a rare amendment to the exclusions list, following the intention to make the scope of the UKIM Act better support intra-UK trade. It continues to guarantee that services connected with the supply or production of gas and electricity can be regulated separately in the parts of the UK. This will ensure regulation, mainly in environmentally sensitive areas, can continue without the application of the UKIM Act’s market access principles maintaining how the service is provided or regulated in parts of the UK. It will also ensure the services excluded in Schedule 2 better reflect the UK’s circumstances post-EU exit by removing exclusions which are no longer necessary in this new context.

[Baroness Kramer (LD)]

Could I ask for clarification? If you are one of the relevant engineers, who is excluded, and you move, do you need to get another set of qualifications? I want to clarify that that is the way this has gone.

[The Earl of Minto (Con)]

I do not believe that that is the case, but I will confirm that.

On the issue of the devolved Administrations and consent, there was absolutely no intention to pass this SI without getting everybody’s consent. Our officials have worked continuously throughout this process with Ministers and officials to bring them along. It is extremely gratifying that the Welsh Government accepted everything. The situation in Scotland is slightly different. There was a fairly robust defence of why they did not want the UKIM Act in the first place. I think that has obviously had an impact. However, we have accepted some of the exclusions they wanted put in.

Small and Medium-sized Enterprises: Interest Rates

Baroness Kramer Excerpts

Wednesday 13th September 2023 Lords Chamber

[The Earl of Minto (Con)]

I am not aware that we have made any specific proposal with NatWest but, through the British Business Bank, with a base rate of 5.25%, SMEs can borrow at 6%. They will find it very hard to match that anywhere in the market.

[Baroness Kramer (LD)]

My Lords, community development financial institutions lent over £80 million last year to in excess of 3,000 small businesses, 90% of which had been turned down by a conventional lender. Will the Government finally grasp the nettle and incentivise the major commercial lenders to invest in CDFIs in order to provide lending to those small businesses that do not fit the portfolio of commercial banks, as they do in the United States?

[The Earl of Minto (Con)]

The noble Baroness makes a very good point. CDFIs have been extremely successful and, if one looks at the plethora of lending opportunities right now, it continues to broaden because of the new entrants into the market. We will certainly take it up with the major banks and see where we get.

Whistleblowing Framework

Baroness Kramer Excerpts

Tuesday 16th May 2023 Lords Chamber

Asked by

[Baroness Kramer]

To ask His Majesty’s Government whether the whistleblowing framework will include an assessment of the desirability of setting up an independent Office of the Whistleblower to deliver its objectives.

[The Minister of State, Department for Business and Trade (The Earl of Minto) (Con)]

My Lords, the Government recognise how valuable it is that whistleblowers are prepared to shine a light on wrongdoing and believe that they should be able to do so without fear of recriminations. The Government launched a review of the whistleblowing framework on 27 March this year. This will examine the effectiveness of the existing framework in meeting its intended objectives, which are to enable workers to come forward and speak up about wrongdoing and to protect those who do so against detriment and dismissal. The review will provide an up-to-date evidence base on whistleblowing.

[Baroness Kramer (LD)]

My Lords, the APPG for Whistleblowing, many Members of both Houses, scores of whistleblowers, significant legal counsel involved with whistleblowing, and even regulators in their evidence to the APPG have called for an office of the whistleblower. Will this review give full consideration to such an office —yes or no? If not, why not?