Business and Planning Bill

Baroness Kramer Excerpts

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Monday 20th July 2020 Lords Chamber

[Lord German [V]]

My Lords, I support this amendment, tabled by my noble friend, because, put simply, it would do two things. First, it would put beyond doubt the protection which borrowers of bounce-back loans have against their lenders pursuing punitive action if they default. Secondly, given the relatively low take-up of these important loans, it would give reassurance to companies seeking to use the facility provided by the Government as essential finance to keep them in business and retain employment.

Companies may have been, or are, hesitant to take out these loans for a variety of reasons. For example, they might be worried about repayment, the ongoing viability of their business or whether they wish to continue trading. But to respond to these fears, the Government must assist by providing the maximum level of certainty on what happens if the borrower cannot repay the loan. The guarantee to the lenders is that the Government will bear the cost of defaulting. This is very welcome, but that guarantee is given to the lender and not to the borrower. There is some protection in place to prevent the lender taking further actions against the borrower, but the legislation before us takes away most of the ultimate protections for a borrower—to have recourse to the courts.

My noble friend has outlined these issues in great detail. I am grateful to her for the forensic manner in which she laid out the borrower protection arguments for this amendment. I will not repeat the detail on the missing protections that she has given.

Taking the two reasons I have outlined for supporting this amendment separately, on the first it is clear that many lenders, mostly large high-street banks, will already have banking arrangements with those who are seeking or have taken out these bounce-back loans. In Committee, I quoted examples of this relationship possibly being used to influence the behaviours of lenders. Put simply, they have financial power over their borrowers through that continuing relationship with them. Other lenders, many of them now trying to lend money under these schemes, have difficulty in getting their hands on the 0.5% interest cash that the Government have made available to lend, largely because the big banks will not funnel these funds through to them, on the “Why should we help our competitors?” principle. This means that the big banks will have a bounce-back loans advantage, most frequently with their existing customers.

On the second reason, the Government estimate that many more of these loans will be needed—perhaps four times as many—to protect small companies from going under, given the consequent unemployment that would cause. These loans need to provide protection for the borrower in a way which will not deter them from proceeding. The fallback of court protection from the poor behaviour of the lender provides a higher level of reassurance to borrowers, in line with the current legislation.

I share the Government’s hope that these loans can provide a lifeline to many companies. They are a very good response to the pandemic. This amendment would support the Government’s ambition and strengthen the case for businesses considering taking out these loans by removing the concern that default could lead to unfair sanctions being imposed on them.

[Baroness Kramer (LD) [V]]

My Lords, first, I thank the noble Baroness, Lady Penn, for her willingness to talk virtually to a number of us who have been focused on this issue; however, I came away from those discussions almost more confused than I went into them. This House will be aware that the financial regulators—certainly the FCA—do not regulate institutions but activities. One of the activities it cannot regulate is commercial lending, which is on the far side of what is generally called the regulatory perimeter. A slight sleight of hand is, to some extent, made available to sole traders, micro-companies and the very small end of small businesses so that they do merit some protection, that typically coming in the form of an appeal to the ombudsman. Although the ombudsman has very limited power to actually make sure that any remedy is effected, there is at least one to go to.

For companies that do not fall into this category—my noble friend Lady Bowles provided the detail, so I will not repeat it—there is no form of protection; the FCA has no standing. Therefore, when those companies are put into default and the banks come to collect on their debts, their only resort has been to the courts. Under this arrangement, that is now removed from those companies if they have taken out a bounce-back loan. I really do not understand why the ability to go to the courts to protest unfair treatment has been removed.

The Government have full knowledge that the FCA cannot act under these circumstances. I suppose that, occasionally, somebody in government will argue that the FCA can turn to the Senior Managers Regime, but, as we all know, having listened frequently to the testimony from Andrew Bailey, only in very rare instances would the regime apply. Indeed, the FCA has been very reluctant to use it, even in some very egregious cases; in fact, I would be interested to hear from the Minister the number of times the FCA has actually used it. It is not a workable mechanism for trying to force the banks to provide fair treatment to the larger end of SMEs if they go into default under their bounce- back loans.

The Bounce Back Loan Scheme is brilliant, but I am very concerned that it will end up with a stain on its character when, in 18 months’ or two years’ time, we have a chain of companies that are clearly being treated unfairly by the banks and both the Government and the regulators stand back and say, “There is nothing we can do. This was an unregulated activity, only contract law applied, and we have disallowed these companies’ ability to go to the courts to seek any form of redress”. Frankly, it is a tragedy and a scandal in the making.

I am not sure it has been made clear to companies that when they apply for bounce-back loans, it is caveat emptor and they will be without even the normal range of protections should they go into default. If I understand correctly, the Government have decided to disapply the right to turn to the courts as part of an enticement to the banks to participate in the Bounce Back Loan Scheme. I cannot believe that that concession should be given; and if it was asked for by the banks, I am even more worried because, as we know, the banks seek opportunities to make profit—that is the business they are in.

Perhaps the Minister is not that familiar with the RBS and GRG scandals. The GRG was a profit centre. The RBS staff who were part of the GRG were looking not only to get loans and interest repaid but to make an additional profit, particularly by seizing assets. Under the various contract terms, they could identify firms that would value those assets. The owners or borrowers could argue that the assets were being valued at well below market value, but had no means of enforcing that, and of course we know from the various reports that followed that it was not infrequently the reality that assets were valued very low, triggering the default, and months later, having been seized by the bank, were resold for multiples of the valuation.

The mechanisms that the banks use when they have the opportunity to put a company into default are frequently outside the boundaries of what any of us would consider fair and appropriate. I do not understand stripping away from companies any possible route to a remedy under those circumstances.

[Lord Stevenson of Balmacara [V]]

My Lords, my name is on this amendment, and I am in general support of the points powerfully made by the noble Baroness, Lady Bowles, in Committee and today, and by others who have spoken. They have made the main arguments, which I will not repeat.

The Government argue that the key driver for this initiative is to get the bounce-bank loans out to as many small businesses as want them and can use them, and to reduce barriers to that effect. I sympathise—it is very hard to be against that aim—but there are clearly risks here, as we have heard. While my concerns are not identical to those of the noble Baroness, Lady Bowles, they are very similar, and I would like to make three points on the issue.

First, there is general agreement that the Consumer Credit Act 1974 urgently needs bringing up to date, to be fit for purpose regarding the changed regulatory landscape of different lending practices and the tighter financial circumstances of the 2020s, now and post Covid-19. The current lender/borrower relationship envisaged under the Act does not work but, as others have said, it is very risky to remove all the court protections, and I sympathise with that.

Secondly, the Government have put on record the very tight constraints that they are putting on lenders who wish to engage with bounce-back loans, including banning fees, banning punitive interest and forbidding reach-through sanctions to personal assets such as houses and vehicles, but is that enough? There is a powerful tool in the Government’s armoury.

Thirdly, the 100% guarantee that we have been talking about is on the lender, not the borrower, but that gives the Government considerable powers which they say they will use to drive good behaviour. For me, the key question is whether, in removing access to the courts under the unfair trading clauses of the 1974 Act, the Government have put the bounce-back loan borrowers in a worse position than if they had left it all in place, or—as suggested in the amendment—just the affordability issue. It is a close call.

I would be very grateful if the Minister, when responding, could deal fully with the following points. First, will she confirm that the Government will undertake to overhaul the Consumer Credit Act 1974 in the near future, taking full account of the issues raised in this debate? Secondly, can she list concisely the limits on lenders’ ability under the bounce-back loan to penalise borrowers who are in default or otherwise transgress, irrespective of the amount of money borrowed, and the statutory and non-statutory opportunities for borrowers to protect themselves and their possessions if lenders attempt to penalise them absent the core protection of the 1974 Act?

Thirdly, can the Minister set out what she called “the steely determination” of the Government to use their power to reduce or cancel the 100% underwriting of loans made under the BBL scheme, if lenders transgress? This could be a very powerful weapon. It would be useful to know who will have the power to trigger certain sanctions, and how borrowers will be informed about the process. The noble Lord, Lord Carlile, suggested that an arbitration structure was needed, and he may well be right. If the Minister can confirm that these points are in play and give assurances on them, then I suggest that the noble Baroness, Lady Bowles, does not press her amendment to a vote this evening, as we will not support her.

--- Later in debate ---

[Baroness Kramer [V]]

My Lords, I will speak very briefly to government Amendment 54 to say thank you. The Government have made the amendment that was required by the mayoral development corporations and Transport for London to be able to hold virtual decision-making meetings and meetings which the public can attend. They have done what was needed, and I and many others are grateful.

It would be helpful if the Government could confirm that the relevant clause will come into effect on Royal Assent and no later than Royal Assent. This is also a request to the Government to amend the relevant flexibility regulations—SI 2020/392—as soon as possible after Royal Assent, and then bring those regulations into effect as soon as is practical, perhaps in less than the normal 21-day period, because that will ensure that the most use can be made of the new method of working that has been approved by this amendment. Again, my thanks.

[Lord Balfe [V]]

This legislation, which we are almost at the end of, is caused by the Covid crisis. It is, in many ways, a panic Bill, since we are trying to write things we may or may not succeed in.

I make two points. First, please let us not throw away environmental gains which mean a lot to communities, and particularly to residents. Many of them have fought for years to get decent standards for starting and ending developments and ending working days. Secondly, please keep it temporary: make sure that the provisions that we are told will lapse will do so in due course. I support what my noble friend Lord Lansley is doing, but I hope the criticisms aimed at local authorities for their slowness, often wrongly, are also taken on board by developers, who are sitting on massive land banks and need to get on with things. They did not need this legislation; they had been able to build hundreds of thousands of houses, but have not managed it, so let us keep a sense of perspective, and not throw the proverbial baby out with the legislative bathwater.

Business and Planning Bill

Baroness Kramer Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Monday 6th July 2020 Lords Chamber

[Baroness Kramer (LD) [V]]

My Lords, I will address a range of issues, all of them quite quickly. First, Section 78 of the Coronavirus Act 2020 failed to include Transport for London and at least some development agencies in its definition of local authorities. It has left these bodies with a legal minefield as they act through virtual decision meetings, and it is seriously complicating economic recovery. It should all be in scope of the Bill, so will the Minister use the Bill to correct what I assume was very much an oversight?

Secondly, so many firms I have talked to are afraid that, as they bring back their workforce and customers following government guidelines, they will still be sued if an employee or customer catches Covid. They have no faith in insurance policies after the fiasco with business interruption insurance, and they do not understand why the Government have not offered indemnity to employers who follow the guidelines. Will the Minister please respond to this issue?

Thirdly, civil society groups like Protect and WhistleblowersUK are being inundated with phone calls from employees who have witnessed furlough fraud or the bending of safety rules, and all of this will increase as more businesses open. HMRC has set a terrible precedent in closing its fraud phone hotline and telling people to do online reporting—which of course they do not because they do not trust it, and because the forms demand so much disclosure. Will the Minister guarantee today that the HSE will keep manning its safety reporting hotline so that we can be absolutely on top of any abuse?

Lastly, the Minister referred to bounce-back loans, and I join him in being delighted that over £30 billion has been loaned to companies under the scheme. However, he will know that very many of those who have applied have been turned down, not because they are unsuitable but because the banks who have dominated these loans have no wish to add to their balance sheets. The banks have chosen not to on-lend cheap money from the term-lending facility they have with the Bank of England to enable more diverse and other players to engage extensively in the bounce-back scheme.

The British Business Bank has been rapidly trying to accredit diverse organisations to participate in lending under the bounce-back scheme, but it is slow going. Will the Minister make sure that for the future we have a structure in place that means that, when a programme and scheme like this is being put forward, it does not put the banks, frankly, in the catbird seat and enable them to do what they have been doing, which is cherry picking the customers who get these loans and leaving a very large number, particularly of small companies, in significant difficulty?

Brexit: Withdrawal Agreement and Political Declaration

Baroness Kramer Excerpts

Thursday 6th December 2018 Lords Chamber

[Baroness Kramer (LD)]

My Lords, like many in this House, I see a no-deal Brexit as an extraordinary act of self-harm. In this House, discussion often focuses on the immediate impact—long border queues, stockpiling and chaotic airports—but although some of those are inevitable, they pale against the long-term consequences of living under WTO rules, which are no more than imperfect measures to limit some tariff barriers in some sectors.

It is a great sadness to me that after two years of negotiation, the May deal is not much better, frankly. When you read the political declaration, it is clear that it leaves the issue of frictionless trade completely unresolved. We see that in the backstop conundrum, in a sense. If it cannot be resolved, it will not resolve the frictionless trade problem for the economy at large. We are left with a situation where friction becomes part of our future relationship with the EU.

People talk a great deal about free trade deals, but only the largest companies are ever able to take advantage of them because they require a mountain of documentation and are extraordinarily complex. The suggestion that they are in many ways a panacea is misinformation that, frankly, is often presented to this House.

I recognise that a number of businesses have been sympathetic towards the May deal, but let us be honest as to why. It is because they see the transition arrangement embedded in it as a mechanism for delay. But it is not a delay to keep business, opportunity and jobs in the UK; it is a delay that enables them much more smoothly to transfer out of the UK those operations and jobs which will serve the 450 million people of the 27. If anybody has spent time talking with major companies and asked them about their investment plans in Europe for the next five or 10 years, they will all tell you that their overwhelming focus is to invest in the 27 money that, without Brexit, typically and historically would have come into the UK. It is an extraordinary act of self-damage. It is why the Bank of England scenarios talk about a reduction in openness. That is what Brexit is: a reduction in openness from a country that supposedly prides itself on being open. We are putting up huge barriers between ourselves and our major trading partner and hoping only marginally to reduce them with other countries around the world.

I want to raise an issue that seems seldom discussed in this House; that is, the crucial impact of Brexit in any form on our young people. I wonder why Brexiteers do not talk about it more often. At the heart of the Brexit plan is to remove from those young people their European citizenship and the rights and opportunities that go with it; for instance, the right to engage in a relationship with somebody else from the EU and being able to live near or with them—that essentially disappears. We have no right of residence. Young people who want to work abroad will never qualify for the various visas discussed, where one needs to earn £30,000—we assume that it will be reciprocal—to be able to work abroad. Very large companies want to hire young people who can work in any of their European offices, be they in Madrid, Paris or London. Why would you hire a young Brit when they need a visa for every one of those countries, whereas somebody hired from the 27 needs none? We are seeing that reflected in a drop in hiring that is happening now and impacting our young people already.

I have heard in this House a lot of people say, “We have to accept the May deal as the general compromise”. There was a brilliant letter in last Monday’s Financial Times written by John Ure, who is an associate professor at Hong Kong University. Decrying that approach, he quoted from the old nursery rhyme, suggesting that those who take that view are basically saying:

“Keep a-hold of nurse, for fear of finding something worse”.


This is the time to have courage. No deal is completely unacceptable; the May deal is completely unacceptable. When people say, “The British public are weary of Brexit; they just want it over”, that might be true for this minute, but when they face the consequences of Brexit and see the impact on their lives, that will be forgotten in a flash. There will be huge anger. They will turn to people in this House and the other and say, “When the facts were on the table, why did you deny me the chance to become familiar with those facts and then express my opinion again? Why did you take that from me and deny it to me?” If this House is concerned about anger, it should recognise the anger that will come from those who have to live with the consequences of any form of Brexit, knowing that they were denied the opportunity to express their views about their future and their country when information was on the table.

European Union (Withdrawal) Bill

Baroness Kramer Excerpts

2nd reading (Hansard): House of Lords
Wednesday 31st January 2018 Lords Chamber

[Baroness Kramer (LD)]

My Lords, it is intimidating, frankly, to hear the breadth of experience that has been brought to this debate, but I will do my best to speak from my much narrower experience. I spent the last couple of weeks heavily engaged in the anti-money laundering part of the Sanctions and Anti-Money Laundering Bill. That has very much shaped my whole approach to this Bill, because the premise of that anti-money laundering part was the powers that currently go through a democratic process at European level: the fourth anti-money laundering directive was subject to consultation, scrutiny, debates within the European Parliament and votes in Council. The whole thrust of that Bill was that those powers should be repatriated to the UK, transferred not to this Parliament to treat in a similar democratic manner with primary legislation but directly to Ministers to make their decisions and enact them simply through regulation. That was an extraordinary shift.

This House negotiated with the Government. There were people anxious about the issue, led by the Law Lords—or rather our specialists in constitutional law, such as the noble and learned Lord, Lord Judge—but it was much broader than that. The Government made significant amendments, but it took two votes in this House to take out of that Bill the clauses that gave Ministers the power to create criminal offences and sentences—in one part of the Bill with imprisonment for up to 10 years, in the other with imprisonment for up to two years—by regulation alone.

I do not know how the Government will deal with those issues when that Bill goes to the other place, but when we read the European Union (Withdrawal) Bill and we hear the Government say that they will use their Henry VIII powers in very narrow ways, largely for technicalities, we recognise exactly the language that we heard during the debates on the Sanctions and Anti-Money Laundering Bill, which in practice, in the eyes of almost everyone in this House, had a dramatically wide scope. In the case of that Bill, and I think this is illustrative, it was not just to achieve some immediate transposition of powers from Europe to the UK; the new system for exercising powers over anti-money laundering policy and frameworks was to be in perpetuity.

You can imagine that I take very seriously that part of Clause 9 in which the Government seek powers to change any piece of primary legislation, including the EU withdrawal Bill itself, and any of the limitations and constraints within it. It is with that hat on and with that concern that I will come to the Committee stage. I will be fighting particularly the Henry VIII powers to levy taxes, fees and charges, but I am sure that this House will tackle the issue far more broadly and recognise the significance of doing so.

In her opening speech, the noble Baroness, Lady Evans, talked about the importance of giving certainty. Who could disagree with that? It is critical. To me, though, certainty would mean that we knew what the Government’s plans were for the outcome of Brexit. The financial services sector, with which I am extensively engaged, has been denied even a position paper to outline what the Government’s preferred end position would be and to provide some sort of structure. That industry is part of the backbone of our economy.

We understand that there will be a transition period, largely a standstill, and that is welcome, but it is vital that individuals and businesses know now what it is meant to be a transition to. I talked last week to an inshore fisherman in Northern Ireland. He has to decide now whether to sell his boat because, following Brexit, all the good inshore fishing territories will be in southern Ireland and, if he does not sell his boat now, in a year or two it may be worth nothing. I talked to an architect, who told me that a Dutch client would like to engage him in a long-term development in the Netherlands. Will his qualifications be recognised? Will he be able to deliver his services from a UK base? He does not know, but he must decide now. A US company is seeking to do a five-year interest rate swap that it would normally clear through the London Clearing House, but will that be a valid swap in five years’ time or will the CCP with LCH be an unauthorised body, and will the company be in significant trouble with the regulatory authorities in the US? These are real decisions. Little companies, individuals and big companies alike have to be able to make decisions and act on contingency plans. For that, they must have clarity from the Government.

I realise that in a politically riven Government fudge is seen to have a great advantage, but we are at the point where that can be sustained no longer. I hope that the Government will see that certainty should apply not just to the measures in the Bill but to those broader issues as well. We must take the opportunity to use the Bill to make sure that people will be able to look at that final deal. The possible impacts on individuals, companies and people’s daily lives are across such a broad spectrum that surely, in a democracy, the people should have the final say.

Brexit Negotiations

Baroness Kramer Excerpts

Monday 11th December 2017 Lords Chamber

[Baroness Evans of Bowes Park]

As I have said, maintaining alignment means that we may have the same objectives but we may well want to do something in a different way. However, in discussing our future trading relationship, we should also understand that we are in a unique position with full regulatory alignment at this point. We want to maintain high standards going forward, so we believe this is an excellent basis for a strong future relationship.

[Baroness Kramer (LD)]

My Lords, perhaps I can ask the Minister for clarity. She talked about the situation going forward. Is it correct—I shall be glad for her to correct me if I am wrong—that the European Union has trade treaties, I think 58, with other countries, most of which include a most favoured nation clause so that any if offer of a trade treaty is made to a third party, such as the UK, similar terms have to be made available to every country on that most favoured nation list? Is that not the reason why the notion of Canada-plus-plus-plus becomes an extremely difficult challenge?

[Baroness Evans of Bowes Park]

We are discussing with our trade partners how to ensure continuity and provide certainty for businesses by transitionally adopting existing EU trade agreements. This will be a technical exercise rather than a renegotiation of existing terms. The Trade Bill will provide measures to ensure that agreements with third countries can carry over and be fully implemented within UK law.

European Union (Notification of Withdrawal) Bill

Baroness Kramer Excerpts

2nd reading (Hansard): House of Lords
Tuesday 21st February 2017 Lords Chamber

[Baroness Kramer (LD)]

My Lords, the noble Lord, Lord Lamont, said that he is very sympathetic to EU nationals in this country. However, he is perfectly happy for them to be used as a bargaining chip. Frankly, I do not think that is consistent with the view of this House or with British values.

Given the pressure of time, I will focus on the importance of giving people a second vote—that is, not a second vote on the original deal but a second vote that is a first vote on the final terms of exit from the European Union. I concur with those who have said that the June referendum gave the Government a mandate for Brexit but did not give them a mandate to choose the most extreme form of economic separation from the EU. It has been Theresa May’s choice and that of her Ministers to opt for a hard Brexit, leaving both the single market and the customs union.

I want to look at the impact of that decision by the May Government on just one sector of our economy—the financial services sector. This sector makes up 7% of the UK’s GDP, pays more than £75 billion a year to the Treasury and provides over 2 million jobs, most of them outside London. It is one of the few industries in which we are a global leader, clearing over 95% of the world’s $600 trillion a day in interest rate swaps, leading not just in traditional areas such as foreign exchange and specialist insurance, but also at the cutting edge of fintech. We damage financial services at our peril.

However, Theresa May and this Government have decided to walk out of the structures that underpin this sector. In reality, this industry is as enmeshed across the EU as a piece of crochet work. Under the May agenda, the UK will leave not only MiFID with its passporting freedoms, impacting Barclays, the American banks and many of the small players which want to grow, but also a whole raft of enabling arrangements from e-commerce used by crowdfunders across the EU and delegation powers that are essential to locating asset management in the UK, to access to skills, entrepreneurs and investment. That is why, salami slice by salami slice, financial institutions, big and small, are quietly rethinking their business models, negotiating leases, applying for licences and working on staff flexibility. They are making sure that they can operate outside the UK the businesses they have previously based wholly or overwhelmingly inside the UK. They are looking at front offices first—I hope the Treasury notes that that is where the big deals are booked and where the big tax revenue pay-off occurs—but where a front office moves, a back office is always at risk of following.

I commend the financial institutions that have chosen to speak out, such as the London Clearing House, which has been quite open that its clients are demanding that it moves transactions to New York, taking its ecosystem and over 100,000 jobs with it. The insurer Lloyd’s has been regretful but clear that it must have a major EU hub. Even little fintechs are considering second headquarters. For many in the industry, decision time is approaching. Given how long it takes to set up new operations, they need answers on what the UK-EU relationship will be—indeed, they need to know what the UK relationship with global regulators will be—not in two years’ time but in six months or less. I fear that by that point negotiations with the EU will barely have started, never mind finished.

The Government dismiss all these concerns by saying that the EU needs us more than we need it. However, I point out that where Frankfurt, Luxembourg and Dublin are unable to take business from the UK, New York will. Once out of the EU, the only advantage that the UK has over the US in European terms is a time difference. The specialist skills of London are already being transferred to New York. That is well under way.

The Government’s answer is that they will replace MiFID and the other regulatory structures that we have with the EU with forms of mutual recognition or joint supervision through equivalency agreements—bespoke, untried, long-term equivalency agreements, dozens of them of extraordinary complexity. Unfortunately, what once looked like a possible solution, though hard to achieve in the timeframe, now seems likely to founder on the Government’s insistence that they will not in any way engage with the European Court of Justice to adjudicate, even on a joint basis, the rules of agreements.

At this point, when we are being asked to consider triggering Article 50, the Government can tell us for certain only that a large part of one of our key industries, a major contributor to jobs, taxes and exports, is at risk. It has been put at risk not by Brexit but by the Government’s hard Brexit decisions and red lines. No one in this House or in the other place knows where in the range of outcomes the actual, final negotiated deal will fall. Will we remain one of the two great global financial centres of the world? Will we lose major activities such as clearing? Will we be reduced to just a substantial financial centre? If we do not know the answers for this sector, we do not know what the outcome will be for the economy as a whole.

I fully understand that for the Government the economy is low on the EU agenda compared to reducing immigration and removing any jurisdiction from the ECJ. I am pretty sure, however, that those are not the priorities of the British people. So let the people see the final Brexit deal, consider its consequences and decide on it. In two years we will have facts and reasonable clarity, not just speculation. Surely then is the time for the British people to have the final word.

Outcome of the European Union Referendum

Baroness Kramer Excerpts

Tuesday 5th July 2016 Lords Chamber

[Baroness Kramer (LD)]

My Lords, while politicians—I include myself in that group—talk, two parties try to sort out their leadership issues and the leadership candidates for the Tory party, of whom the winner will become Prime Minister, try to sort out what on earth their platform will be for negotiating with the EU, businesses are making decisions. They are not making short-term decisions on market movements today, tomorrow or next week; they are making decisions about their long-term future. So many businesses that I and others in this House have talked to recognise that everything they have heard from the Government suggests that they are not really interested in protecting them. The businesses I have talked to—I should be interested to find others that take a different view—are making their decisions based on access to the single market. Large companies and small—I talked again today with members of the Federation of Small Businesses—require that access to be able to export, which underpins their potential as companies. They are either direct exporters or in the supply chain and need access to the European market.

It is not just an issue of tariffs. They are concerned that as regulations diverge once we leave the single market, they will be required to run two sets of operations: one to meet UK regulations, one to meet EU regulations. It will require certification and documentation, and the estimate is that divergence in regulation is equivalent to a 10% tariff. That already threatens their viability as future exporters into the EU or their role in a supply chain.

They are making decisions now. We know from talking to the Institute of Directors and the FSB’s recent surveys that most companies have imposed a hiring freeze; it turns out that small businesses are actually cutting head count. Most of them have cancelled major contracts. They are deferring investment decisions. I have not heard of any foreign investor who is bringing significant money into the UK. We were the recipients of some of the largest amounts from foreign investment funds. They were behind our business, they countered our current account deficits but they are evaporating. Unless we get action very soon to counter this assumption that we must leave the single market, that process will continue. Companies will operate in their own best interests; that is their responsibility to their shareholders; that is what will happen.

I am fundamentally concerned because, like others, I see no way to square the circle of the leave promise to cut immigration significantly—which means ending freedom of movement—and retaining single market access. We certainly need to hear from those who led leave on how they intend to square that and, if they will not, for them to accept the consequences of the decisions that businesses are making. Businesses are not political creatures; they make their decisions based on what they see as the future of their company in the long term. Many of them are being driven to be more aggressive than ever as they cannot even get guarantees that the foreign staff they have today will be able to work in the UK. That is souring internal decision-making. Many of the senior management of our key businesses come from within the EU, and as they look at that instability, it becomes far more attractive to consider returning to continental Europe.

While I have a couple of minutes, I want to look at two areas. The first is the City. I sat on so many platforms in so many debates during the referendum campaign. To say that leave was insulting about the City would almost be an understatement, but the City is absolutely the heart of our economic viability as a nation. It funds the public services that we need in our country but which, as many have pointed out, have been incredibly inadequate. It is a major source of funding for the infrastructure, the new social housing, and the improvements in our schools and the NHS that we need.

A core of financial services in the City has been its role as the leading location for clearing financial trades. In 2014, London cleared nearly 50% of global interest rates and over-the-counter derivative transactions and nearly 40% of global foreign currency transactions. We are talking of amounts in the trillions in trading volumes. About a third of those were euro-denominated. The European Central Bank has already said that it wishes to ensure that clearing of euro-denominated instruments remains within the European Union, preferably within the eurozone. It was unable to enforce that because of the non-discrimination rules that are structured into the life of the European Union; those disappear the moment we leave. Because of the way that countries are now clearing all their trades on the same platforms in order to be able to net dollar trades, euro trades, yen trades, et cetera, if we lose euro clearing, we might as well lose dollar clearing and most of the rest of the clearing business.

Passporting is utterly dependent on being part of the single market in order to sell our services, but nobody, including the noble Lord, Lord Lawson, ever addresses the issue. I talk to the wholesale insurance industry. Its business is totally dependent on continental European institutional customers. I talk to the long-term asset managers. Their business is overwhelmingly with continental European entities. They will have no choice but to leave if passporting goes. People talk about other ways of doing business, such as equivalence and country-by-country licensing, but both of those require the movement of substantive operations into the EU area. The rules do not allow you to put up a brass plate and operate out of London, but require a substantial transfer of operations.

The last area I want to talk about in the minute I have left is the new world. I work a lot with financial technology companies. We are an absolute leader in this area. Young entrepreneurs come from all over Europe to set up in FinTech here in the UK, and they are terrified of the consequences. As the digital single market forms, they cannot afford to be outside it. Berlin is a serious rival to London. They desperately want to stay here, but they are looking at the realities, and funding has dried up for many of them. We have reports of venture capitalists that have Brexit clauses in their contracts pulling out of deals with companies over the last week. These companies recognise that if they do not move to be within the European family very rapidly, they may be unable to raise the finance which is totally necessary for their future. The very least the British Government could do is step in with the British Business Bank and replace that. There are so many specific issues, and if we ignore them and talk only in broad generalities, we will have no idea of what is coming and no way to cope with it.

Outcome of the EU Referendum

Baroness Kramer Excerpts

Monday 27th June 2016 Lords Chamber

[Lord Taylor of Holbeach (Con)]

My Lords, if we go round the House, it is actually the turn of the Liberal Benches.

[Baroness Kramer (LD)]

My Lords, I am very much concerned about some of the complacency that I am currently hearing from the Government. Since the noble Baroness the Leader of the House and others on the Conservative Benches have the opportunity for direct conversation with the collection of MPs, one of whom will be our future Prime Minister, would they convey this? The City is already making its decisions, as are major businesses. Most of them started planning for the contingency of leave months ago. Over the weekend, we have heard very clearly, and the CBI have confirmed, that many major firms have put on a hiring freeze. Others are now reassuring their shareholders that they have plans in place to be able to move significant parts of their operations to continental Europe or Ireland. If they do not hear a clear commitment, a cast-iron guarantee, in a matter of days—possibly weeks, but certainly not months—from that group from which the Prime Minister will come, that we will remain wholly in the single market, the decisions will become irreversible. Many already are and the remainder and many more will happen. Complacency is not safe.

[Baroness Stowell of Beeston]

I reject the noble Baroness’s description of this Government as complacent. What has been evident over the last few days in what was said by the Chancellor this morning, by the Prime Minister today and by the Governor of the Bank of England on Friday is that there are measures in place to provide some stability within the markets. The noble Baroness is of course right that businesses will take decisions now that could affect people. We need, through a range of methods, to make sure that we project to the world outside that Britain is in a strong position to weather this period of uncertainty arising from the referendum decision. We can do that, and do it with confidence, because of the steps that we have taken over the last few years to strengthen our economy and to make sure that we are ready for whatever decision that followed. I also say to the noble Baroness and to the House that we remain a member of the G7 and of the G20, and through those kind of forums we have an opportunity to project that very strong and confident message as well.

Royal Bank of Scotland

Baroness Kramer Excerpts

Wednesday 1st July 2015 Lords Chamber

[Lord Campbell-Savours (Lab)]

My Lords—

[Baroness Kramer (LD)]

My Lords—

[The Lord Privy Seal (Baroness Stowell of Beeston) (Con)]

My Lords, both opposition parties have already asked a question, but the Labour Party fielded its Front Bench first, so, arguably, it should be the noble Lord, Lord Campbell-Savours.

[Lord Ashton of Hyde]

That is not the prospect. Since the policy was announced, the shares have actually gone up. The independent advice we received from Rothschild said that giving a strong signal that it was ready for sale would help the share price. By letting some shares go now, the free float would increase and the benefit to the taxpayer would be increased. The Governor of the Bank of England concurred.

[Baroness Kramer]

My Lords, the Parliamentary Commission on Banking Standards specifically recommended exactly the study that my noble friend Lord Sharkey described because of the lack of diversity in the UK’s banking system. Given that report after report has identified lack of diversity and lack of local banks as the biggest barriers to securing both economic growth and financial stability, why did the Government specifically ignore diversity in the review that they carried out?

[Lord Ashton of Hyde]

My Lords, we have not ignored diversity. We are committed to increasing competition in banking to improve outcomes for consumers. The Government have an ambitious programme of reforms to increase competition in banking. This includes, for example, divesting both Williams & Glyn and TSB from RBS and Lloyds, creating a seven-day current account switch service, and delivering more data to enable customers to compare which bank is best for them—I could go on.

Financial Services Bill

Baroness Kramer Excerpts

Monday 18th June 2012 Lords Chamber

[Baroness Kramer]

My Lords, I speak as someone who is going to be going through this Bill in great detail. I assure the noble Lord, Lord Grocott, that I had no idea that this Motion was going down until today, so I am not part of any great conspiracy that he might imply. I looked at this legislation with the understanding that Grand Committee was not meant to be a second-rate or second citizen process but was one for dealing with highly technical Bills. Having tried to do an interview with the BBC on the latter parts of the Bill, I know that it is extremely technical. I assure the noble Lord that it passes the “eyes glazing over in agony” test. I have seen Grand Committee, thanks to the consumer insurance Bill, and seen how effective it is in being able to get and exchange a great deal of information very quickly on highly technical issues, so I would have supported the whole Bill being in Grand Committee.

I can understand the desire for some of the most prominent parts of the Bill to be debated in the Chamber as recognition of the level of concern following the financial and banking crisis of 2008 and the need to look again at the architecture of regulation—for some of those key issues to be addressed here. However, it is more in order to satisfy that kind of recognition of the level of concern rather than to give us almost the best practice for going through the Bill in detail, so splitting the Bill strikes me, as someone without much of an axe to grind in this matter, as a very appropriate mechanism and a sensible and practical one. That is how I have always viewed this House—as sensible and practical and willing to take on the issues simply as they are and to come to a solution. I spent time in the other place, where one might say that the principles are not the same—and I know that this House dislikes the kind of principles that the other place operates on.

[The Earl of Erroll]

My Lords, I can remember when the whole Grand Committee thing started, and the first assurance was that only non-controversial Bills would go to Grand Committee. The whole point was that in the old days—not that they are so very long ago—we used to divide on matters of principle in Committee, which meant that we tidied up on Report, and that was much more efficient. The challenge with Grand Committee is that it delays everything, and then we have a huge argument on Report that goes on interminably.

Then we have the problem with the limited rules on amending at Third Reading. Before, we would divide on principle in Committee and tidy up on Report, with half the length of debate. Then at Third Reading we would discuss things only when there had to be a final little adjustment because a mistake had been made. It was very unusual to put forward amendments at Third Reading, which is why they were so restricted. With the new procedure of going to Grand Committee, you can have wonderful debates but then you have to do it all over again on Report, which causes problems at Third Reading. We must either have yet another reading to tidy up before Third Reading or go back to dividing in Committee. We should remember that not only the person putting forward the amendment in Committee has the option to divide; anyone in the House can call a Division on an amendment that is proposed. So if noble Lords think that someone is wasting time by withdrawing an amendment in Committee to bring the whole thing back on Report, I suggest that someone stands up and calls for a Division.