Financial Services (Miscellaneous) (Amendment) (EU Exit) (No. 3) Regulations 2019

Debate between Baroness Kramer and Lord Deben

Tuesday 1st October 2019 Lords Chamber

[Lord Deben (Con)]

My Lords, I remind the House of my declaration of interests, particularly my chairmanship of the association representing financial advisors.

I apologise to the House—but not to my noble friend, because he has not heard the comments that I have carried through all the debates on these statutory instruments. I would not like this statutory instrument to pass without us yet again making the point that this is rubbish. We should not be here. This is a nonsense. The more you read about it, the more you realise what a nonsense it is. The truth is that we are kindly giving other people the opportunity to do things that we have always done, and we will not be able to do them unless we are prepared to take the same rules as everyone else. So the whole thing is a nonsense. I am sorry that my noble friend the Minister has to present it. He will do so charmingly and nicely and will not be rude about it, but I do not want him to go without some people on this side of the House, as well as others, saying that we should not be here. We have spent hours and hours on debate. He very rightly thanked all the people who have helped him, but they should not have been wasting their time. We have spent an enormous amount of time doing something wholly deleterious to the United Kingdom. In the whole of my long life I cannot remember an occasion on which that has been so obvious.

This happens to be a worse Government than those who have preceded them in this situation, but the fact remains that we should not be here, because what is being proposed is bad for Britain. We are not taking back control; we are putting ourselves into a position in which other people will have control and we will have no say in it at all.

That is the first point about this very small and unimportant series of amendments. The second point is this: as the noble Baroness has so often said before and has said again today, it is utterly impossible for people to keep up with the minutiae, or with the very fact that the Government has had yet again to make changes. I noticed a very elegant phrase that my noble friend used: “Like all legislation, when we went through it again there were things that we needed to change”. Of course there are, if you keep on legislating entirely unnecessarily at great length in order to damage our country. That is what is so serious. Of course, it is true that we have found yet more examples. I imagine that the noble Baroness, Lady Bowles, with her considerable knowledge, will find some more, and we will go and tell the Government how nice it would be if they added all these other things.

The third reason I intervene is simply that the financial services industry is an important part of the United Kingdom’s economy; it does some very important things. Over many years, it has become respected throughout the world for its knowledge and under- standing. There have, of course, been occasions when things have gone wrong. I am the last person to defend that. But we have an established reputation throughout the world. I say to my noble friend the Minister that this is another example of us undermining that reputation for no good reason at all.

Of course, we will pass this and go through the motions yet again, but I resent having to spend good time on bad proposals. I resent it not just for myself, noble friends or noble Peers opposite; I resent it for all those decent civil servants who have spent their time not improving this country, not extending its influence, not making things better for Britain—but undermining it, in what I know they will have tried to make the least damaging way. The fundamental process is deeply damaging. I do not think that this House should pass these things without reminding the Government, including even so charming a Minister as we have, of the nonsense that we are engaged in.

[Baroness Kramer (LD)]

My Lords, I am going to add a few words of comment. I suspect that the noble Lord, Lord Deben, has said everything that I would love to have said but I will narrow down and make a few more detailed comments. I want to pick up again the issue of divergence that I raised earlier. I fully understand that these are on the whole very minor changes to the statutory instrument and we are certainly not going to oppose them. I can see that they are tidying up.

However, two things struck me, one of which was addressed by my noble friend Lady Bowles: that we end up with a different risk-free rate within the UK from that being used, essentially, within the EU. I suppose people will say that that is a version of taking back control. As far as I am concerned, it is once again a mechanism for trouble and regulatory arbitrage. I am slightly worried that it does not seem to be accompanied—perhaps I have missed this—by any kind of mechanism to make sure that there is a great deal of common thinking and consultation around an issue like that. Choosing a different risk-free rate can rock the markets dramatically, quite frankly, and one can see that in the wrong hands there is a potential danger for this to be used as a competitive tool rather than as a tool to provide financial stability. I am just concerned that nothing in this SI really addresses that issue, though it has had the virtue of drawing our attention to the fact that this now becomes a pretty major problem.

Financial Services (Gibraltar) (Amendment) (EU Exit) Regulations 2019

Debate between Baroness Kramer and Lord Deben

Tuesday 5th March 2019 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I will be exceedingly brief because, again, this falls into the category of necessary changes to regulation in order to keep a reasonable consistency in the relationship between the Gibraltarian and UK financial markets. I accept that but I have to say: poor Gibraltar.

There is a three-way relationship between Britain, Gibraltar and Spain. A recent tax treaty between the UK and Spain requires Gibraltarians sourcing their business primarily in Spain to pay Spanish taxes. I suspect that some in Gibraltar are slightly stunned by it but realise they have to accept it. The complexity of the relationship outside the EU is far from being resolved.

As the noble Baroness, Lady McIntosh of Pickering, said earlier, unfortunately impact statements only test the actual cost of a particular regulation and then compare it with what would happen if there was no regulation. They never compare the cost between implementing no deal and remaining in the EU. This is where the big number lies, not only for the UK, but very much for Gibraltar. So it is crucial to do anything we can at this point to try to minimise the impact. This regulation is a small part of it. I cannot see how the whole Brexit strategy—deal or no deal—can ever benefit Gibraltar or give it a future which is anything like as prosperous as the one it had in a remain context.

[Lord Deben (Con)]

My Lords, I want to ask a question which follows on from the intervention of the noble Lord, Lord Beith. First, I am still a little at a loss as to how these years work, compared with other SIs. I do not quite understand what would happen if we had a deal and a transitional period. The noble Lord raised something which needs to be explained.

Secondly, I agree with the noble Baroness, Lady Kramer, that it would be wrong to allow these two SIs to pass without reminding the House of the serious effects of Brexit on this particular connection of the United Kingdom. The more we talk about these and the more you unwind it, the more it becomes quite clear how ridiculous the whole process is. I know it is not suitable for my noble friend to comment on this, but I wish only that our Benches were filled with those who think that Brexit is good idea so that they could listen to the realities of what happens if you leave the European Union—let alone without a deal. As usual, none of them is present to listen to the serious effects of Brexit. It is rather like trying to talk about climate change. You never have the climate change deniers present to see what the science is actually about. The House might like to note the non-existence of those who think that Brexit is just a matter of getting there and doing it at once. The people who stand outside with little notices about the WTO clearly have never worked out what becoming dependent on WTO rules means.

Thirdly, of course we have to pass these two SIs. Without them, were we to leave the European Union without a deal, things would be even worse than they need be, but we must not do it thinking that this is going to make things easier. Gibraltar is a sharp instance of the damage that could be done. Will my noble friend explain a little more about the discussions that have been held with the Gibraltar Government and particularly his reference to the Gibraltar Government making their own arrangements should there be Brexit without a deal? What are these arrangements and how do they interrelate with this SI? I do not think that many Members of this House have detailed knowledge of the kinds of things which Gibraltar would have to do were we—and they—to leave the European Union without a deal. It would be helpful to the House if my noble friend would delineate what exactly it is that they have to do and what their powers and responsibilities are in parallel with the two SIs with which we are concerned this evening.

Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019

Debate between Baroness Kramer and Lord Deben

Monday 18th February 2019 Lords Chamber

[Baroness Kramer]

Well, we also had MEPs, for whom I have great respect, and engaged broadly in the process.

One of my problems is that the equivalence SI we are dealing with today essentially puts, for the next 12 months, all relevant decisions on whether we remain equivalent or, as the EU makes changes, become equivalent in any new area into the hands of the Treasury alone. Not only does that not engage this House—I suppose you could consider the Chancellor to be involved—but it represents the most disengagement we have ever had at an absolutely critical time. If we leave the EU, how we behave on equivalence in the coming months will shape the context of any negotiation on the economic future of the UK, this being its most important economic sector and a major contributor to taxes and jobs. It is pivotal to the economy, yet the Treasury alone will make many of these key decisions. All we have for context are the comments in the political declaration. I will not repeat discussions we had earlier today, but those comments are exceedingly limited and give very little sense of direction.

To make matters almost worse, it is quite clear in the SI that, beyond that period, future decisions will be made through negative SIs—not through some policy framework in this House, engagement with your Lordships in broad debate or extensive consultation, but through the negative procedure. That will make it even harder for us to be engaged in the process. I can tell the noble Lord, Lord Lilley, that all the Brexit issues we are dealing with lead to the massive democratic deficit of great concern to many of us.

[Lord Deben]

Did the noble Baroness notice that my noble friend said, “I think we may have had influence”? Is it not true that we have been at the centre of these discussions and that the European Union is much more transparent and open when it comes to them than the British Government have ever been—certainly more so than the Government now propose to be under these statutory instruments?

[Baroness Kramer]

I can only agree. We have major transparency problems. I am working on the Trade Bill; it is unconscionable that we do not have available to us information that the EU would not only put automatically on a website but constantly report back on, with discussion between the Commission, the Council and the Parliament.

Let us set that aside so I can move on with this particular instrument. I reinforce the concerns about the impact assessment. I must say that the consolidated impact assessment discussed by my noble friend Lord Sharkey contains three pages dedicated exclusively to this SI—I am sure that the Minister will point that out—but anyone who cares to read it will discover that, although it is usefully descriptive, telling us a bit more about the instrument, what used to happen in the EU and what will happen under this instrument, it cannot be called three pages of impact assessment. It does not even attempt to monetise the impact and give us a sense of the costs and the value of the benefits—that is beyond it—and it never deals with the risks in any way. Never in my commercial life have I seen impact assessments that did not assess risk—but these do not even begin to do so.

That is very disappointing, particularly for the businesses which will be picking this up. They want to make sure that this SI goes through, because anything that reduces uncertainty in any area where there is not a cliff edge will be of great value to the relevant businesses—but, my goodness, they would have welcomed something much richer in terms of the discussion to give them some forward vision rather than one that just deals with the very short period of time that will immediately follow departure under a no-deal scenario. I find that very frustrating and a real weakness in the way in which impact assessments are being dealt with here.

That takes me to perhaps the last issue that I will address, which was touched on to some degree by my noble friend Lady Bowles. There is very little discussion in any of this about what I call reciprocity. In order for equivalence for the industry to be able to function without any kind of cliff edge in no deal, not only does the UK need to provide equivalence but the EU needs to grant equivalence as well. In many instances it has not done so, but it may do so in the future. My interpretation is that at the moment it is doing so only in areas where it thinks that not granting equivalence would cause financial instability, rather than looking at broader market access issues.

I take this as a real shot across the bows that we need to take on board, framing the EU intent as to where it will take future negotiations in this area. That is important and I am rather concerned that the Government do not deal with those kinds of issues in this impact assessment, because an honest discussion of that is crucial for businesses as they use the product and everything that we are printing to try to understand what the context is going forward. It has made me feel very gloomy that we will see a much more fragmented set of financial services. I am sure that London will remain a crucial global centre, but I can see the way in which the pattern is developing. It will have some very significant rivals that will take away very significant pieces of business. Over the long term that has real consequences for the UK.

In all that we have here there is one last issue which perhaps the Minister would address, because it could be my deficiency in reading all of this. At the moment we know that third countries operate, as it were, within the EU because the EU has granted them equivalence. As I understand it, the UK will be granting identical equivalence under this SI for the day that we leave if it is a no-deal scenario. But I am unclear about how many of those third countries are granting us reciprocal equivalence. Not only do we have questions about in which areas the EU is granting us third-country equivalence, I am not clear where we stand, for example, in terms of the US. Will we be granting the US equivalence using exactly the same pattern as that of the EU currently? It is not clear whether the US is granting us equivalence and on what terms—and that is just one of the many different countries with which we have built up a kind of network through mutual equivalence that has been established over the years.

Equivalence is extraordinarily complex. It is not a matter of a simple one-hour discussion about four or five easy to understand factors. It is exceedingly complex, it often comes with conditions and it may be limited in a whole variety of ways such as by time and by content. It may have many issues attached to it, and therefore negotiating new equivalence arrangements from scratch would concern me a great deal. I say that in particular because of what we have seen with some of the trade deals, where Liam Fox was absolutely confident that we could take existing trade deals between the EU and the 71 other countries with whom we had free trade agreements and roll them over. He has now been woken to the fact that most of those countries see this as an ideal opportunity to improve their position and to renegotiate. It has become a much slower, much more difficult and much more complex process. I want to try to understand where we are with our equivalence agreements, because potentially the situation is exactly the same. It is very different having an equivalence agreement to have access to the market in the UK from having access to a market of 500 million people. I do not know how many of these equivalence agreements are in play.

Financial Services (Implementation of Legislation) Bill [HL]

Debate between Baroness Kramer and Lord Deben

Committee: 1st sitting (Hansard): House of Lords
Tuesday 8th January 2019 Lords Chamber

[Lord Deben (Con)]

My Lords, I remind the House of my declaration in the register of interests, particularly my chairmanship of PIMFA, the organisation that represents independent financial advisers and wealth managers.

I have to disagree with the noble Lord, Lord Adonis, about the meaning and purpose of this amendment. But I have to say to my noble friend that one of the reasons for this amendment is that many of us are very concerned that the Treasury in particular should take very seriously the issues of the financial services sector and the contribution that it makes to the British economy. That seriousness has not always been evident.

Secondly, the European Commission has been very helpful in listening to the British applications and those of our colleagues in the rest of the European Union and, should we leave the European Union, which I trust will not happen, we would certainly expect to have at least as much access as we have on the present stage and certainly as much influence.

I am concerned because in the past we have sought to pass amendments that asked the Treasury to bear in mind important matters. For example, an amendment some years ago stated that the Treasury should insist that regulators bear in mind the need for savings in our society. That was pooh-poohed by the Government who said that it was entirely unnecessary and of course everybody knew that. The result has been that regulators have not taken that issue into account and indeed pointed out that the Government did not accept when it was suggested to them that saving as part of our society was important. So it is important to bring home to the Government the issues raised with this amendment.

I want to make two further points. First, this is a very competitive world. We need to have legislation if we are not a member of the European Union that enables us to continue to be as competitive as possible. This may not be exactly the right wording, but it carries that meaning. Secondly, small companies find much of the legislation not only burdensome but unnecessary—points that my noble friend Lord Leigh properly made. That is not because one wants lower levels of legislation.

At this point, I want to take serious objection to what the noble Lord, Lord Adonis, said. I happen to be a Conservative. I sit on the Conservative Benches and I have been a Conservative Minister for longer than almost anyone else. But I am very much in favour of this regulation. The industry that I am happy to work in is also very much in favour of sensible legislation because we do not like cowboys either. They produce extremely bad reputations. Nobody can be tougher about the fact that we need proper regulation. There is no question in these amendments that somehow or other we would lower the bar. That is not the issue.

I would agree about some of the remarks made about Singapore. I am deeply upset to have a Foreign Secretary who thinks that Britain should be compared to Singapore. Fundamentally, that is as about as helpful as suggesting that we should be like Liechtenstein. I am sorry, but it is not a sensible comparison for so many reasons, not least because of the autocratic Government of Singapore. I do not want to be associated with them as a comparison.

However, our financial services need proper regulation. We want regulation, but it has to be proper regulation within the context of our competition. Therefore, it is proper to say that we do not want regulation that either makes it more difficult for us to compete or lays a disproportionate burden on the shoulders of small companies. Those seem two such simple and reasonable things to suggest that, on this occasion, my noble friends here and I are helping the Government.

Ministers are always suspicious, particularly when I say that I am trying to help the Government, but I am, on this occasion, trying to help them. I am doing it in great difficulty because I do not like this Bill at all. I do not want to leave the European Union. It is more and more clear that leaving the European Union is barmy, and we are having to spend time talking about barmy things that will take two years and then go away. It is a pretty insulting thing for this House, but that is what we are having to do. So I ask Ministers please to take this seriously and not to take the view of the noble Lord, Lord Adonis, in the way that he put it, but merely to agree that the amendment is sensible. If the Government cannot give us that undertaking, I have to say that the financial services industry will be very suspicious. If the Government are not prepared to do at least as well as the European Union has done in negotiation and discussion, I will be very sad.

I hope that people notice just how good the Commission has been when they attack the European Union for bureaucracy and suchlike. It has been more open and more able to discuss, and more concerned about the issues than any of our governmental structures. We have to remind people that the European Union is more open, more willing to listen and more concerned to be there for industry than the Treasury has been in history, which is why this amendment has been tabled.

[Baroness Kramer]

My Lords, I have to say to the noble Lord, Lord Deben, that every alarm bell went off in my head when I heard the noble Lord, Lord Leigh, basically argue that this would be a route to get naked short selling on AIM. This is essentially a mechanism that will allow people to enter into contracts which they know if they had to fulfil they would be very unlikely to fulfil—talk about risk. That general underlying principle worries many of us who think that a less speculative financial services industry is, in the long run, much more sustainable than a far more speculative financial services industry. That is exactly the point. It is people selling short shares that they will not be able to buy if they are ever forced to close on the contract.

Bank of England and Financial Services Bill [HL]

Debate between Baroness Kramer and Lord Deben

Wednesday 11th November 2015 Lords Chamber

[Lord Deben (Con)]

My Lords, I hope that the Government will think carefully about these proposals. I declare an interest, and therefore perhaps some knowledge of this, in the sense that I am chairman of the Association of Independent Professional Financial Advisers, am on the board of Castle Trust and also look after the Association of Mortgage Intermediaries, so this is an area in which I have a particular interest.

First, I say to the Committee that proper reporting is a crucial part of ensuring that we get changes in the world in which we live. Transparency has been brought to us partially because of the internet—we now expect to know and to be able to judge on what we know. I hope that the Government recognise that this is not an additional burden, because any financial business ought to be thinking about these things. It is not acceptable that people should carry on business without asking themselves, “Is what I do sustainable?”. If they do carry on business without thinking about that, it seems to me that it is not very good for the business. In other words, this is not a burden in the sense that we are asking business to do something that would not contribute to its own success; we are asking it to do something that is essential for its own success, and I am sorry that the industry itself has not come to the Government with its own scheme about how it should do that, because it is crucial for the future.

Secondly, when you talk to people in the financial world about these issues, they recognise them. Many of them are increasingly concerned that they should use their financial strength to promote and protect the future not only of their own businesses but of Britain, Europe and the whole globe. I think that there is a readiness to accept such a measure.

Thirdly, there is nothing that is as damaging in this area as a whole series of different ways of reporting different bits of information, so that people—sometimes without very good reason or sometimes with another agenda—can make false comparisons, because the comparisons are so difficult. It is in the interests of the industry that there should be some basic, simple and clear way of comparing one business with another.

The fourth thing that seems to me to be important is that we should recognise what a crucial role the financial services industries play in the promotion of sustainability. Choices that they make today will make a huge difference tomorrow; the choices that they make today will make an even bigger difference the day after tomorrow. We need thinking which is long term. I have been asked to speak at a whole series of meetings recently, put on not by those who are concerned with sustainable investment or socially responsible investment but by straightforward, ordinary investment businesses which believe that this is the route down which they have to go. We are not pushing people to do things that they do not want to do; we are making sure that what they do is comparable, usable and helpful. So this is an important measure for that purpose.

The last reason why I want to ask the Government to think seriously about this proposal is very simple: we need to think about these matters in every aspect of our lives. We cannot deal with the issues of climate change in particular or of environment more generally if we think that they are the perquisite of the Department of Energy and Climate Change, of Defra or even of the Department for Transport; this has to be part of what we do naturally, inevitably, all the time when we make decisions. We have to get into that mode and that mood. Therefore, I would hope that we were thinking of doing these things in a lot of other areas when we come to them.

However, we must make sure that people are not misled. I do not want to rub salt into the wounds, but the recent Volkswagen debacle reminds us how dangerous it is if we mismeasure. Measurement is a crucial part of making sure that people do things. If it is not measured, it is not done—we know that; if it is mismeasured, then it is done badly. We are trying here to suggest to the Government that ensuring that there is a sensible way of reporting what people are doing is a vital part of this legislation.

I commend to my noble friend the action of the Government on modern slavery. I do not think that there is any doubt that on all sides of the Chamber we have welcomed the Modern Slavery Act. What that Act does is tell people that they have to report what they have done to avoid modern slavery in their supply chain. That is very similar and parallel to what we are asking for here: to give the public, the campaigners and the people who care information which they deserve and ought to have.

I end by reminding my noble friend that a recent study done on behalf of the Navy discovered that there was very little difference in the way that people got information, and what they expected to get, between officers and men, men and women, and people based here in Britain and those based abroad. The one difference was between those under 30 and those over 30. Those who were under 30 expected to be able to know. This was done some years ago, so I suspect it is now those under 35, but the fact is that the internet generation does not understand why anybody does not understand that they want to know. If you ask people of that age, they do not understand why you—referring to me rather than my noble friend—do not expect information to be available. This is the world we live in.

I hope the Government will take these propositions very seriously. It may not be the right amendment and there are some bits of it that I think I would rewrite—all sorts of things might be improved, and the noble Lord who moved it on behalf of the noble Baroness would probably agree that we should settle for a different phraseology. However, we want to make sure that everybody making decisions in the financial services area recognises that they are making them in this context and reports them so that others can see that they have taken those decisions not lightly or for short-term reasons but in the context in which we all live—a world which is threatened by the most catastrophic danger that we have knowingly faced in our history.

[Baroness Kramer]

My Lords, I support the amendment in the name of the noble Baroness, Lady Worthington, and the comments of the noble Lords, Lord McFall and Lord Deben. The amendment addresses an issue which the Government now have to take seriously. The speech of the noble Lord, Lord Deben, reminded me of the old adage: “What you measure, you manage”. By measuring and reporting, which surely is not beyond any corporation of any size, we change the whole culture of short-termism which dominates at the moment throughout the financial services industry, and create the potential for many more players to start to look at the longer term and at issues of sustainability. Surely, when we have been doing so much to try to ensure financial stability, which is a long-term issue, backing that up with the kind of tools that are proposed in this amendment makes a great deal of sense.

I am very much a believer that one of the greatest risks that we face, if not the greatest risk, is climate change. However, we are also looking at a time when new technologies are disrupting the whole established structure, and we have to take that on board in some way. We are also looking at great population changes—migration and demographic changes—and this amendment seems to me to be rather good at highlighting that all those big, disruptive changes need to be captured to some extent in this reporting system.

I hope that the Government will take this seriously. I agree that no one takes particular pride in authorship of the language on these occasions, but this is about getting the principle properly embedded so that the Bank and the regulators can carry out their tasks in a way that deals not just with immediate risk but with the long term and encourage the financial services industry to play over that long-term arena as well. We have financial services businesses which are recognising the importance of long-term sustainability and are doing it exceedingly well, but it is very hard for them to communicate with potential investors when differences in reporting strategies and language make that communication so confused. Providing a level playing field in terms of reporting means that those who focus on this can get their message out and that investors to whom this is important can then shape their decisions based on that comparable information.

Infrastructure Bill [HL]

Debate between Baroness Kramer and Lord Deben

Monday 9th February 2015 Lords Chamber

[Lord Deben (Con)]

Before my noble friend leaves that point, I ask what arrangements are going to be made in relation to Wales and why it is done in this way.

[Baroness Kramer]

I will address my noble friend’s point in a moment if I may. We intend to commence Clauses 21 and 22 shortly after Royal Assent to provide legal certainty that licences are still required for the release of beavers into the wild. Now, these matters are devolved and I understand that Welsh Ministers are currently considering whether to make a similar amendment in relation to beavers in Wales.

Railways: Pacer Trains

Debate between Baroness Kramer and Lord Deben

Tuesday 9th December 2014 Lords Chamber

[Baroness Kramer]

My Lords, we are obviously anxious to phase out these Pacers rather than find them new homes. The noble Lord will be aware that we have orders from up and down the country for new rolling stock at significant levels; that includes the north—for example, on the east coast main line. An invitation to tender is coming very shortly in the new year. I cannot speak ahead of it, but I am reasonably confident that my noble friend will be happy.

[Lord Deben (Con)]

Does my noble friend accept that we in the east of England are extremely pleased that we have just had our first new trains since the beginning of time? Never before has anyone produced a new train for the east of England. Some people may rightly say, “Ah, but this is one of the most important scientific powerhouses of Britain”. Let us thank her and say that it would not have happened had it not been for privatisation.

Financial Services Bill

Debate between Baroness Kramer and Lord Deben

Tuesday 6th November 2012 Lords Chamber

[Lord Deben]

I merely suggest that in these detailed discussions, when we hear mainly from those who are very expert, it is as well to consider views from outside, from business as a whole. A trick which all businessmen know is that there are two ways in which you can control a committee. One is to have a very small committee mainly related to you, and the other is to have a very large committee in which you know very well that you can organise the dynamics. I am much impressed with the arguments of the noble Baroness, Lady Noakes, who has put her finger on a very important issue. I hope that the Government would accept that nowadays there is a good deal of expertise looking at these matters and the Tavistock Institute has much of it. I would be unhappy if we suggested that we knew better than its experience, over a very long time, of how best to do these things. I hope the Government will see this as a perfectly reasonable thing, a balanced situation. The noble Baroness, Lady Noakes, and I do not always agree on matters—indeed, there are lots we disagree on—but on this occasion, coming from my understanding of trying to run boards and companies, this would be a good thing to do and not to do it would seem a little perverse.

[Baroness Kramer]

My Lords, I cannot pretend to have the expertise on boards that the previous speakers have had and I do not want to repeat the very powerful arguments they have made; I merely add two quick comments. I think that the Minister will have understood from the debate that has gone on for much of today that there is still a general uneasiness over the amount of power that flows to the Governor of the Bank of England under this new framework. Here is a sensible way to put a bit more challenge into the system. I think that we all feel that a bit more challenge would be a good way in which to make sure that the governor has to do the thing that is the greatest check on any individual: to persuade others to go along with him. That is rather more necessary in an absolutely core function, one of financial stability and economic growth.

Secondly, we have all been somewhat concerned about the role of the FCA and the kind of status that the chief executive of the FCA may have in comparison to his peers in the regulatory family that falls more directly under the Bank of England. His role becomes a little more pivotal when you look at Amendment 4 and I suspect that that is no bad thing. It also makes sure that the FCA voice is heard rather more clearly and independently than it might have been without this amendment. I hope that the Minister will take all that on board.

--- Later in debate ---

[Lord Deben]

I am distressed that the Minister should feel that on the previous occasion I suggested that he would be other than magnanimous, for he is always magnanimous. I speak in his support because we have to be very careful about constantly adding all the good things that we might like to have taken into account in all circumstances. Financial stability in these circumstances is exactly what we should be saying first and we refer to the other, perfectly rightly, because it is necessary. I find it incredible that any committee, in any circumstance, would get up and say it thinks it is a frightfully good idea to have the stability of total sterility. I do not understand where the noble Lord, Lord Eatwell, really thinks that anybody would come to that conclusion. This seems a totally unnecessary amendment and I hope very much that the Minister will refuse it.

[Baroness Kramer]

My Lords, I feel positively disturbed by this amendment. I am far more concerned that ultimately we will have to resist the optimism and buy-in to “all is going well, let’s take the leash off”, and the erosion of regulation and structural protection. It is important that financial stability should be the primary objective for the Financial Policy Committee. It was important to add the economic growth objective to sit alongside it, but in a secondary role—to say that if the requirements for financial stability are met, the committee should make sure that, alongside and within that, economic growth has the chance to take place. That is an appropriate balance, which has been achieved by earlier amendments to this Bill.

To pull away that protection now and put us back exactly where we were—perhaps I may say, under the last Labour Government—would suggest that people have not learnt their lessons. That is the great fear: we have a crisis and people immediately react to counter the crisis. However, my goodness, our memory is short. As soon as times become good, it is very hard for a regulator to continue to impose constraint and manage risk. It is absolutely crucial that we make clear that this is meant to be a permanent feature of the Financial Policy Committee, not just a feature for now.