Autumn Budget 2024

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Monday 11th November 2024

(3 days, 1 hour ago)

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Baroness Liddell of Coatdyke Portrait Baroness Liddell of Coatdyke (Lab)
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My Lords, listening to the Benches opposite, from the comedy turn at the beginning and onwards, there is no recognition of how they managed to get the worst result in the party’s history at the last general election. It is because they crashed the economy; that is, purely and simply, at the core of things as we discuss this today. This was always going to be a difficult Budget, the first for a new Government and Chancellor after 14 years out of power. I can remember going into the Treasury in 1997 to find a bank of paper in the gloriously grand office that I was given. It was the identification of all the things that we did not know about. You do not know what you do not know until you walk into that office; that is the challenge the Chancellor has had to face in putting together this Budget.

The Budget’s understanding of the need for investment across both the public and private sectors is reassuring. The changes to the fiscal framework might not get people terribly excited, but that is a framework to encourage investment to modernise our country and make life easier for our citizens. It also sets out to match the modernisation that we have seen among our international competitors. Even before the Budget, the changed relationship with business leaders unlocked more than £60 billion of investment.

Turning around the economy comes at a cost, and sometimes it is painful. The alternative is to blight the future for so many of our citizens, and that is not acceptable. We have to ensure that the most vulnerable are protected. Like others, I want to see the “Get Britain Working” White Paper. Along with a number of Members in the House today, I serve on the Economic Affairs Committee. Some of the stuff that it is unveiling now in relation to poverty and people’s inability to get back into the labour market makes for very difficult reading.

Within the Chancellor’s Budget, we have seen an allocation of £240 million for 16 new trailblazer projects, aimed at getting people into work and in so doing reducing the benefit bill. I can remember something similar to that from when I was a Member of Parliament under the previous Labour Government. One of the changes made by the Chancellor is very special to me: keeping the promise to transfer the investment reserve fund into the Mineworkers’ Pension Scheme. I come from a community of miners; I lost my grandfather and two of my uncles to disease caused by working in the pits, so I was over the moon when I heard about that.

I turn to the situation in Scotland, where £3.4 billion is going to the Scottish Government through the Barnett formula. That was introduced in 1978 by Labour’s Chief Secretary to the Treasury, Joel Barnett, who went on to join this House. Now, all these years later, it has delivered to Scotland a record £47.7 billion from the Westminster Government. That is a sign of partnership. The First Minister was all lined up to condemn the Budget, wanting an end to austerity, and what did he get? The biggest bonus in history—and that is not the end of the story. An SNP-led committee has reported that it is deeply concerned about how Scottish Ministers are spending the country’s money. The lack of the medium-term and long-term planning that we are beginning to see here in the rest of the United Kingdom has never managed to surface in Scotland.

I can see why people are concerned about some of the measures in the Budget. They probably would not have been in it, had it not been for the state that the Chancellor acknowledged. That was at the heart of what had to be sorted out. We are at the beginning of a five-year term, and I can see the commitment of the Chancellor to things that I am interested in. Carbon capture and storage has always been very close to my heart. I am the president of the CCSA; we are promised increased investment in CCS and many other schemes.

This was going to be a difficult Budget. We know that we have to deal with some of the downsides of trying to get the economy right, but we have a Chancellor who is courageous and that gives us an opportunity to get this economy right.

Bank of England (Economic Affairs Committee Report)

Baroness Liddell of Coatdyke Excerpts
Thursday 2nd May 2024

(6 months, 2 weeks ago)

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Baroness Liddell of Coatdyke Portrait Baroness Liddell of Coatdyke (Lab)
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My Lords, I compliment the noble Lord, Lord Moynihan of Chelsea, for a very interesting maiden speech. I am sure that we will hear an awful lot more from him in the months and years that lie ahead.

I must start with a confession: I took the Bank of England Bill through the Commons in 1998 and now, more than 25 years later, I sit on the Economic Affairs Committee. It is good to be able to look and see how the Bank has performed such a dramatic change of role, but particularly at a time when, as the report says, there is a real opportunity for change and to ensure that issues are dealt with in a more modern and inclusive manner.

The decision to give the Bank operational independence had not been announced during the general election campaign. I, as the brand new Economic Secretary to the Treasury—a job that I had not been shadowing, given that I was a comparatively new MP, having come in in a by-election—heard of it for the first time when the Chancellor announced it to the governor and his Treasury civil servants. I overheard one of them say, “This is what it feels like to be governed”. It was quite a dramatic turnaround. Fortunately, I had a background as an economist and economic reporter for the BBC, so I knew a little bit about it, but I had to get up to speed—so I convinced my old friend Alistair Darling to go for a Thai curry that night. The advice that he gave me was, “Watch the DMO—setting up the Debt Management Office is probably the most difficult thing that you will have to do”. I think that he was proved right. I think that I and some of the civil servants who worked on it made mistakes, because we did not fully understand how the market worked. That is my confession.

We nevertheless took the legislation through, and the independence of the Back of England has been a very good success. There have been areas that have not worked out because of changing circumstances but, overall, it has ensured that political interference has more or less gone away—I will come back to that later. The Economic Affairs Committee is united in support for the preservation of that independence. There is, however, a recognition—as our chair, the noble Lord, Lord Bridges, pointed out—that public confidence in the Bank has fallen in the face of global and domestic instability, which has seen the Bank not meet the 2% target for inflation over the past two years. Errors in monetary policy have added to the shocks brought about by Covid, Ukraine and international instability, although the Bank is not the only central bank that is having to deal with these issues.

There are a number of issues that are needed to restore confidence in the Bank, and we outlined some of them, but I want to concentrate on the relationship between the Bank and the Treasury, which the noble Lord, Lord Bridges, mentioned in his opening speech. There are challenges of groupthink. At various stages of my career, I have been part of the groupthink, and sometimes you have to find mechanisms to break out of it. I also want to look at the work of Dr Bernanke, who was commissioned to look at forecasting and whose report was published, as we know, a few weeks ago. I was very interested in what the noble Baroness, Lady Lane-Fox, said about the concentration he put on computers. I am more or less technologically illiterate, but even I knew that any big, world famous institution really had to look at modernising its computer systems, and I am shocked that that did not happen at the Bank and that Bernanke found that the Bank was behind the rest of the world.

When the noble Lord, Lord Macpherson, gave evidence to the committee, he brought along the letter sent to the Bank of England setting out the responsibilities of the Bank by Gordon Brown, as Chancellor of the Exchequer. The letter was one page and about four short paragraphs long; enough to make it clear that, in return for operational independence, the Bank had to meet the inflation target. He then produced the current letter from Chancellor Hunt, which was many pages long and added a list of issues the Bank had to “have regard to”, as we heard earlier. I could be unkind and say that this is virtue signalling, but, frankly, it did look more like a press release than a commitment to monetary and fiscal stability. George Osborne likened the “have regard” issues to a Christmas tree, and he has a point. One of our witnesses pointed out that the structure of DNA is fewer than 900 words—much shorter than the Bank of England letter.

I contend that the “have regard” issue is a diversion from the core work of the Bank. The chair of the Court, David Roberts, when he gave evidence, drew attention to 31 “have regards” that the Bank had to take account of. It is the job of the Treasury to develop fiscal policy and the job of the Bank to concentrate on monetary policy. They should not be jammed together as if it is an unsatisfactory mix and the Treasury is the boss. There has to be an atmosphere, first, of challenge, and, secondly, of putting to the people who know what they are doing one side of the job, and the people who know what they are doing, the other side of the job. That way will give a sense of reality.

There has been a lot of talk about quantitative easing. It has made the Bank and the Treasury much more dependent, blurring monetary and fiscal policy, and that leads to the need for a memorandum of understanding between the two organisations to move forward. Like other noble Lords, I have to ask why the Chancellor has refused to make the deed of indemnity public. It would be very valuable to see that deed of indemnity.

Underpinning this is the risk of groupthink. We know that there has to be a close relationship between HMT and the Bank, but it has to be an arm’s-length exchange of views, rather than a dictatorial one, and it is beginning to look a little like a dictatorial one. I am not necessarily criticising the Treasury: I loved working in the Treasury and I am in awe of some of the officials I worked with—one or two of whom ended up as deputy governors of the Bank—but it is so important that that separation is remembered.

Finally, let me say that there needs to be a diversity of thought and culture within the Bank. Stephen King said that the Bank may be independent, but the Treasury casts a shadow over it. There has to be an independent review of how that can be addressed, and there should be, as Bernanke’s report and our report point out, a look at how other public appointments are made, looking for best practice. I think the number of non-executive directors on the Court of the Bank needs to be expanded, because you need challenge. Anybody who has run a reasonably big organisation knows how important challenge is, and there seems to have been an environment that limited the extent to which there could be challenge. I look forward to the future of the Bank. I think the claim for independence that comes out in the report, and came out in our witness statements, make it clear that it was the right decision at the right time.

King’s Speech

Baroness Liddell of Coatdyke Excerpts
Monday 13th November 2023

(1 year ago)

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Baroness Liddell of Coatdyke Portrait Baroness Liddell of Coatdyke (Lab)
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My Lords, this was a very lightweight gracious Speech, especially on critical aspects of the economy. I know we are in the run-up to the Chancellor’s Autumn Statement, but the Speech makes it look as if improving our economic performance is of secondary importance. My noble friend Lord Livermore was very precise on that. The Minister was very upbeat about the economy. He probably does not read the rebel magazine, the House, because the previous Chief Secretary to the Treasury pointed out in it how difficult the economic situation was. He said that the tax burden would rise to 37% next year and that debt interest spending in 2022-23 was £112 billion, more than 6% of GDP, which is higher than any other G7 nation. He stated:

“Those are the facts. They’re unpalatable facts, but they can’t be avoided”.


I think it was a missed opportunity not to have more in the King’s Speech, but I will move on and talk about energy now. I am sure the noble Baroness the Minister, who is to reply, wants this section to be about the annual licensing rounds in the North Sea. Well, it is—because it is a stunt, supposedly to trip up Labour. It fails to take into account that, just a fortnight ago, we had a major announcement on drilling for oil and gas in the North Sea. Labour will honour the licences that were granted at that time, but we will not issue any more, because of the climate change issues but also because it is a dwindling reserve.

I was a young economist for the trade union movement when it started, and the only claim to fame I have to put me with the Queen and Margaret Thatcher was that I could never go to a rig because they did not have any ladies’ toilets. I remember very well how difficult the environment is. But the way forward is about energy security. The new licences can achieve that, I suppose, but, as I pointed out, it is a dwindling reserve. The legislative stunt will do huge damage to the reputation of the UK in the run-up to the next COP. It is very unfortunate timing.

The noble Lord the Minister knows that I am president of the Carbon Capture and Storage Association. I will pay the Government a compliment: to thank them for the £20 billion that has been allocated to CCUS in the Spring Budget. It is much appreciated but, alongside the £20 billion, the industry has made a £1 billion capex investment and is ready to make substantial capex of £42 billion between now and 2035. My point to the Minister is that the Government need very rapidly to confirm the allocation of that funding as the funding envelope for future projects depends on it. The country’s future as a leader in the field is dependent on clarity. Without clarity, the project pipeline is at risk; so, if the Government want to ring-fence energy security, it is vital that these spending issues are addressed quickly. We have between six and 12 months to resolve these very difficult issues.

We have in the United Kingdom about one third of Europe’s storage capacity and we could develop a sector worth £30 billion in taxable revenues by 2050. Other countries are waiting in the wings. They are ready to move. A clear timetable of our own for driving the programme forward is absolutely essential if we are to realise this country’s true potential. Only today, the press was reporting on the progress being made in sustainable aviation fuel to protect developments such as this. The Government need to get a move on. CCUS will create 70,000 new jobs throughout the UK if the clusters model is realised and will protect 71,000 jobs in existing industry. There is no time to delay; this is an opportunity, and it would be a sin praying to heaven for vengeance if we did not get a move on and did something about it.

Queen’s Speech

Baroness Liddell of Coatdyke Excerpts
Thursday 4th June 2015

(9 years, 5 months ago)

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Baroness Liddell of Coatdyke Portrait Baroness Liddell of Coatdyke (Lab)
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My Lords, sometimes when I wander the corridors of this building, I feel a bit like my namesake, Alice Liddell, and I have a sense that I have wandered through the looking glass. I feel that when I see names such as those of my noble friend Lord Desai and the noble Lord, Lord Skidelsky, on the speakers list, when I pass my noble friend Lord Peston in the corridor and when I come in and hear the maiden speeches of the noble Lords, Lord O’Neill and Lord King. I am enough of a geek that the only autograph I ever asked for in my life was that of John Kenneth Galbraith, but I have managed to get out a bit more since then.

Many of the areas that I wish to cover have already been touched on, but I want to talk about growth, innovation and productivity.

The existing growth industry that I want to talk about is tourism. I suspect that some colleagues are saying, “She got the day wrong. Tourism was yesterday; we did culture yesterday”. The noble Lord, Lord Lee of Trafford, in his excellent speech yesterday referred to tourism as the Cinderella industry. I think that it is time to bring Cinderella to the ball, which means bringing it to the Treasury and to BIS. For too long it has languished in the Department for Culture, Media and Sport, yet it is one of our most successful growth industries. Inbound tourism is worth £24 billion a year to the UK economy and, indeed, it is continuing to break records at a time when domestic demand is softening. It is growing faster than many sectors of the economy, including manufacturing, construction and retail, yet we consign it to a department where it does not appear in the title and it does not even have a Minister. The Minister for Sport is presumably to do tourism at half-time. That is not good enough.

In terms of employment generation, a third of all UK jobs generated between 2010 and 2012 were in tourism. For politicians—I say this with a bit of guilt myself—the generation of jobs is the easiest part of growing the economy. Things such as zero-hours contracts help to grow jobs, but the hard bit is growing productivity, and some of that in the service sector has been drifting. It is interesting to look at how competitive the marketplace is for tourism. Australia spends £90 million a year on tourism, and £20 million alone on tourism from China. VisitBritain’s grant in aid for everything that it does is less than that.

I have a proposal to put to the Ministers on the Treasury Bench. It does not involve legislation—one thing on which I agree with the noble Baroness, Lady Noakes, is that we do not need more legislation. I believe that we need a machinery-of-government change. Tourism should be recognised as the third-largest service sector and it should be moved to BIS, where it would work together with our major inward investors in UKTI. That would get proper recognition for the one industry that can generate jobs not just in the northern powerhouse but in Cornwall, Galloway, Orkney and Shetland. It has the Heineken effect and it is time that we allowed it to grow up.

The other area that I want to talk about—innovation —was touched on by a number of noble Lords, not the least of whom was the noble Lord, Lord Newby. I declare an interest as a non-executive director of the Offshore Renewable Energy Catapult. The catapults were brought into being largely because of an idea from my noble friend Lord Mandelson, who asked Hermann Hauser to look at how we harnessed research and innovation and to make it into something commercial. There are now a number of catapults and in many instances they are proving extremely successful. The High Value Manufacturing Catapult has galvanised that sector and is doing extremely well. However, if you wish to innovate, you have to be prepared to have long lead times.

The area that, unashamedly, I am particularly interested in is offshore renewable energy and particularly offshore renewable wind. I am a Scot. We have two former Secretaries of State for Scotland sitting on the Front Bench, and I bet that the Barons whose statues are up there are glad that we are not here to talk about Scotland. The decline in the North Sea means that a skill shift needs be addressed rapidly to prevent employment dipping and those skills being lost to other markets. Offshore renewable energy is a classic area where that can be done. I want to say something to the noble Lord, Lord O’Neill, that I think will shock him: he will be used to the short term of industry but the short term of government is even more pernicious. If we are to change this industry, we have to invest now and invest for the long term.

Finally, I turn to productivity in general, about which there have been quite a few remarks in our discussion this morning. There is a very interesting pattern in the productivity dip in the United Kingdom. Is it not bizarre that here, with particularly liberalised labour markets, our productivity has not risen as fast as that of France, where it has gone up 2% and where the labour markets are particularly illiberal? One part of productivity is investment. Indeed, if we look at vehicle manufacturing, we see a significant increase in productivity because there is investment in technology, techniques, training and skills. The Minister talked about the significance of education in that regard. The other side of the coin is that in chemicals and pharmaceuticals, many of which are in that northern powerhouse, there is a dip in productivity. We have also had a dip in productivity in the financial services sector. The Minister is very good on acronyms—he gave us BRIC and MINT—and I would like to ask him to give us an acronym for productivity. We need something that we can coalesce around.

Solving this productivity problem is not a short-term but a long-term game, and I think that we need to take party politics out of it. We need to work together for the good of this country on issues such as productivity. The Finns do it wonderfully. They have a “Committee for the Good of Finland”. I think that we need a “Committee for the Good of Britain”. I cannot think of anyone better to convene it than the noble Lord and the noble Baroness on the Treasury Bench, but I challenge the Minister to come up with an acronym for it.

Queen’s Speech

Baroness Liddell of Coatdyke Excerpts
Wednesday 11th June 2014

(10 years, 5 months ago)

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Baroness Liddell of Coatdyke Portrait Baroness Liddell of Coatdyke (Lab)
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My Lords, my noble friend Lord Grocott knows me only too well. I would love to put in my tuppenceworth on Ukraine and the EU but I have a distinct sense that my country needs me at the moment—but maybe it thinks otherwise.

In his excellent contribution, the noble Lord, Lord Hennessy, said that there was a sense of a creeping estrangement within the United Kingdom, largely because of what was happening in Scotland. He is absolutely right and I had intended to raise his concept of a constitutional convention in the course of my remarks today. We have a situation in Scotland where there are now proposals from the three main parties on further devolution. The time is right to re-establish the Scottish constitutional convention to bring in civic Scotland, secular Scotland, religious Scotland and political Scotland together to look at how we move to the next stage of devolution. However, there are many other issues that we have to address and this sense of estrangement really troubles me.

In his excellent speech, my noble friend Lord Reid referred to something that has happened in the past 24 hours—a vicious attack on a young woman, Clare Lally, who had the temerity to voice the arguments for Scotland remaining in the United Kingdom. Part of the campaign against Ms Lally came from someone who, it turns out, is a special adviser to the First Minister, Alex Salmond, someone paid for by the taxpayer. Mr Gunn, a former journalist, has now apologised to Ms Lally but we now know that the social media campaign against her has been so vicious that she has been reduced to tears. She is the mother of two, one of whom is disabled, and she is a carer of the year. Sometimes when you hold high office you have to show leadership. The First Minister has to show leadership—he needs to sack this man. It is a test not only of Mr Salmond as First Minister but of Mr Salmond the man.

Some of us learnt today that JK Rowling has made a donation of £1 million to the no campaign. Set that against the £5.5 million donated to the yes campaign by a couple who won £161 million in the Euro lottery. The reason I mention Ms Rowling is that if anyone looks at the Twitter feed today they will be appalled. I cannot repeat some of the things that have been said. It contains words that I have never used nor ever will use. The politest—and I apologise to your Lordships’ if I cause offence—is where what purports to be a Scottish charity tweets that JK Rowling is a bitch for her Better Together campaign donation. This is a shame on my country and I am appalled. I urge the First Minister to stand up for the decent people of Scotland who will have nothing to do with this.

Turning to some of the other issues, I am not used to buying men’s magazines but I did buy GQ—partly to see what Mr Salmond had said about Vladimir Putin. However, I came across something even more interesting. Mr Salmond has said that, apart from going into monetary union with sterling, there is no plan B. In the GQ article he says that not only does he have a plan B but a plan C, D, E and F. Why are we not being told what plans B, C, D, E and F are? He was challenged two weeks ago to give his figures for the costs of starting up a new machinery of government in Scotland. He plucked out of the air the figure of £200 million. Well, tell that to the Department for Work and Pensions, which spent that much just on the pilot for universal credit. We need answers. It is insulting to the people of Scotland not to give us answers to these questions.

It has already been said by the three main parties that there will be no sterling union. Of course there will be no sterling union. It would be absurd for the rest of the UK to be prepared to bail out a foreign country, which is what Scotland would become, with a liability in its banking sector that is 12.5 times its GDP. I do not mis-speak: it is 12.5 times GDP. That would be barking mad. What is more, it would not be independence. The truly independent way is to have our own currency with our own monetary and fiscal policy and our own exchange rate. We need the truth and we need answers.

I would love to go on for longer, but come 18 September, I will be delighted if I do not have to raise this issue in your Lordships’ House again. I believe that the antipathy, anger, venom and bile that we are experiencing in this campaign, largely but not exclusively from the cybernats and from those in the yes campaign, is a sign that the people of Scotland realise that we are proud Scots who can make our contribution to the United Kingdom, have made our contribution to the United Kingdom and will, please God, continue to do so.

Financial Services (Banking Reform) Bill

Baroness Liddell of Coatdyke Excerpts
Tuesday 15th October 2013

(11 years, 1 month ago)

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Lord Glasman Portrait Lord Glasman (Lab)
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My Lords, I should like to speak in favour of the amendment moved by the noble Lord, Lord Sharkey. It is very important that we recognise the severity of the situation relating to the banks and precisely what happened in 2008. I commend the localism agenda of the Government in terms of politics, but I wait to see how the localism agenda applies to banking institutions and their restructuring. It is very important to see the four root causes of the crash.

The first is that it is not only the state that centralises power; it is also capital that centralises. There is a consistent tendency to oligopoly and then to monopoly, unless there are constraints on that. What we have seen, and what we continue to see, is that 80% of our banking still goes through the same failed institutions, and what we have is more of the same, rather than something distinctly different. What we have is a collapse of regional business investment, which is extremely harmful and manifests itself in two ways: in constraints on productivity on one side and, on the other, the extraordinary growth of payday lenders, as the banks cannot deal with local needs. So centralisation is one aspect of the crash, and a lack of accountability in the structures of the bank is the other. This is where I am very much in favour of what my noble friend Lord Eatwell says, with one proviso.

Relationality is crucial and, when there is representation of interests in the corporate governance of banks, you have a greater degree of honesty. If you look at the story with the Spanish banks and the German local banks, you find that the constraints on them were eased and they were, in fact, acting like normal profit-maximising banks. They had lost their regional commitment and got themselves involved in series of overextended loans, very similar to ours. I say to the noble Lord, Lord Flight, that that is not a condemnation of regional banks; it is a condemnation of the fact that they ceased to be regional.

One anecdote that crystallises the problem is the example of Northern Counties Permanent Building Society, which was established in 1850 and flourished through 150 years. It went through four depressions, grew and merged as a mutual in 1965—noble Lords will see where this story is going—with the Rock Building Society. It then became the Northern Rock Building Society, which did well until 1997, when it was demutualised. It became the fourth largest mortgage lender in the country and sponsored Newcastle United but it also, by the maximisation of returns, completely lost its asset. We do not need any symbolism here; Newcastle United Football Club used to be sponsored by Northern Rock and now it is sponsored by Wonga. That is the reality of the circumstance that you confront, and there is no virtue in that; it is of no benefit to anybody. There is centralisation, lack of accountability, recklessness and deceit. They are all part of the same story of being unable to hold anybody to account. Without incentives to virtue, unfortunately, you get incentives to vice. That was the system, and it is the system that we still have.

I want to speak for the logic and the virtue of the amendments proposed here. The first element is regionality. As I say, all the cases that my noble friend Lord Eatwell and the noble Lord, Lord Flight, referred to, concerning Germany and Spain and their regional banks, were due to those banks no longer being regional. When there is a constraint on the bank to lend within a prescribed geographic area, banks will flourish. We can see how effective that has been from the Sparkassen in Germany. I remember the noble Lord, Lord Flight, a while ago referring to the stability of the German system being based on its currency, but it is also based on the fact that there is a regional banking system that sustains business through ups and downs, and where there is a genuine local knowledge of what is going on in those businesses as well as a vocational work scheme.

The third part of this is the most important—that is, the representation of the skills and knowledge of the workforce and stakeholders in the corporate governance of the firm. This leads to a balance of interests that holds people accountable. I completely agree with my noble friend Lord Eatwell about the stress on regionality and relationships in the second part of the amendment; relational banking is absolutely essential. However, that implies local knowledge and the restoration of what we have lost, which is trust. So this is not a quick fix. I commend the work of the most reverend Primate the Archbishop of Canterbury in talking about a 10 to 15-year structure of reconstituting credit and trust in the nation. There will have to be a coalition between different stakeholders in doing so. But it is a terrible missed opportunity when we have an asset that has not been regionalised and has not been subject to proper balance of power in corporate governance, with no regional accountability in it to look at bad practice and correct it before it reaches the taxpayer. Above all, as the story of Northern Rock teaches time and again, if you maximise immediate returns on investment, you will lose the asset. There have to be constraints on that which allow capital to maintain its presence in areas and be a partner to business and families. In terms of regionality, relationships, stakeholder accountability and non-maximisation, this amendment holds the key to the establishment of the banking system that must come now.

Baroness Liddell of Coatdyke Portrait Baroness Liddell of Coatdyke (Lab)
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My Lords, I apologise to the Committee that I was not able to speak in the Second Reading debate, but I have followed the debate on this legislation very closely. I support my noble friend Lord Eatwell’s amendment but also wish to speak in support of some of the things discussed by the noble Lord, Lord Sharkey.

Airdrie Savings Bank is unique in Britain as it is the last mutual trustee savings bank in the country. I declare an interest as I have had an account there since I was six and my father also had an account there from the age of six. The difference between Airdrie Savings Bank and other banks is that it cannot offer the gizmos offered by the big high street banks. However, it offers a localised service that is completely trustworthy. There are no two ways about it: it has had its difficulties throughout the crisis, as has every part of the financial services industry. However, because it is unique, sometimes there is a risk that its needs are forgotten about. I ask the Minister to ask officials to look specifically at how an institution such as Airdrie Savings Bank can be protected. It is, indeed, a very venerable bank; my noble friend Lord McFall addressed an event at its 150th anniversary some eight or nine years ago. The bank is completely rooted in its community. The only perk its directors get is a fish supper once a month. There is no question of any extreme expenditure or remuneration being given to the bank’s directors.

I say to the noble Lord, Lord Flight, whose passion for financial literacy is well known in this House, that having a bank that is so extremely local means that financial literacy is not something we necessarily have to worry about. Indeed, it is located in a community that is largely financially excluded. Without Airdrie Savings Bank, many people would not have a bank account.

I have known the bank for many years. When I was Economic Secretary to the Treasury and Airdrie Savings Bank staff came down for a fiduciary interview with staff at the Bank of England, which was then in charge of regulation, there was a threat of a bribe being offered as Airdrie staff brought with them tins of shortbread. I can be extremely proud of Airdrie Savings Bank. As someone who, in various guises, has had to promote financial services in this country, there are not many other banks that I can be proud of. It would be a pity if, through this legislation and, for example, capital adequacy requirements, difficulties were put in the way of this superb institution. It is an old-fashioned institution but, frankly, would it not be a good idea if banking became boring and old-fashioned again?

Lord Higgins Portrait Lord Higgins (Con)
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My Lords, both these amendments have much to commend them. The point that I would like to pick up regarding Amendment 43 is the position of the banks in which the taxpayer has a large holding. Having bailed out a number of banks, it is extraordinary that the Government have stood back completely from any involvement at all in what those banks are doing. In the context of competition, which we are now discussing, there is a strong case for them to set an example. This would enable at least a degree of competition to be introduced at this stage without much delay.

Amendment 102 also has much to commend it. It suggests that the inquiry should look into a series of aspects with regard to banks such as the level of competition, the obstacles to it, other actions and so on. One should add to that a careful study of what the economies of scale in banking actually are, because I suspect the reality is that they do not exist to anywhere near the extent that the size of the banks at present would suggest. On the other hand, we would find that there were major diseconomies of scale, not least the enormous risks to which we have been exposed as a result of banks being the size that they are. We frequently say that they are not only too big to fail but too big to manage. It is clear that they are too big to manage, and that is a major diseconomy of scale.

If we are going to set up the kind of inquiry that the Opposition are advocating, which I would support, it needs to look at economies of scale in this context and consider whether—given that the banks seem to have been motivated as much by megalomania as by anything else—they are of an appropriate size or whether some consideration ought to be given to whether competition would be increased if they were broken up. It is curious that competition in this area has been, as far as I can see, in no way affected by this or any previous Government’s overall competition policy, which has simply not been applied here. If, as the noble Lord said just now, the major banks have probably 80% of the market—given that normally anything over 30% would be appropriate for an investigation—we need to look at that carefully.

The lack of competition is affecting two things: the supply of loans to consumers and small businesses in particular, and the price. It is clear that there is a serious lack of supply for businesses that are trying to get finance for expansion. Despite all the Government’s efforts, of which there have been a number, to increase the supply of loans to small businesses and others, the loans do not seem to be getting through to the people whom the Government would like to help.

As for the price, one has only to look at the cost of capital to banks and then at the amount that they are charging consumers to realise that the situation is lunatic. I wish my noble friend Lord Flight well because there must surely be scope for something to be done on that issue. The difference between the cost and the amount being charged is totally disproportionate. This came up earlier in Question Time, when my noble friend on the Front Bench replied that there is concern about the amount being charged by banks when compared with what is charged on payday loans and so on. A helpful and illuminating article in the press in the past few days brought out this point. I hope that one can get something done about that.

We have some way to go and noble Lords will no doubt wish to return to this matter on Report. I hope that we will then take a definite decision or, even more, that the Government will respond to the proposal for a study. However, this is only a study, and a number of other measures to which I have referred go wider than this. These measures could be taken now and have some effect on the appalling oligopolistic situation in the market at the moment.

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Banks must responsibly manage a whole range of conduct and compliance issues. My point is not that I am against trying to ensure that money-laundering is within the legislation. I am sure that money-laundering offences will be fully taken into account by the PRA when it implements the new regimes. My problem is that by mentioning them we have omitted to mention some other really important things which should definitely be covered.
Baroness Liddell of Coatdyke Portrait Baroness Liddell of Coatdyke
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My Lords, I found that to be a very interesting speech from the noble Baroness, Lady Noakes. She took up a point that I had been thinking about, but we come at the prevention of terrorism from a different point of view. I believe that with this legislation the prevention of terrorism interface would be through money-laundering. Certainly it could be wider than that in relation to sanctions regimes and so on, but the specific area of prevention of terrorism relates quite directly to the ability of organisations such as al-Qaeda to put money through the system, apparently cleanly. They hope—and are able to be fairly confident—that there would not be the rigorous review and analysis that there should be by sufficiently senior people within the banking system.

I do not have the knowledge and expertise of some of the excellent speeches that we have heard this afternoon, but I have an interest in legislating to prevent terrorism. It is a critical part of our banking system, and I am grateful to the noble Baroness for raising that. I hope that this is something that the Minister will look at.

The noble Viscount, Lord Trenchard, who I regret is not in his place, said something which I must admit prompted me to speak in support of the amendments of my noble friends. He spoke about the fact that we would seek to attract the best bankers, because they would be lured to places such as Singapore and Hong Kong and even increasingly to Shanghai. If a banker is sufficiently venal that he or she would chase the biggest pound, when bankers are not exactly paid the national minimum wage, rather than seeking to operate in an environment of the utmost integrity, then frankly I am not all that sure that we would want them in the British banking system. We have the ability through this legislation to underline our position as the greatest financial services centre in the world. It is specifically because of the venal attitude that we have seen that this economy and economies around the world were almost brought down.

I hope that in looking at the anti money-laundering aspects which my noble friends have raised in their amendments, the Government will think again about this. I do not think that there is a vast chasm here, and I do not take the view of the noble Lord, Lord Flight, who I often agree with, that there is far too much anti money-laundering legislation. Yes, that legislation can be profoundly irritating when you come up against it. There are an awful lot of things in life now that are profoundly irritating, such as having to put your toothpaste into a plastic bag at the airport. However, we live with them because we know why we have to.

Financial Services Bill

Baroness Liddell of Coatdyke Excerpts
Wednesday 18th July 2012

(12 years, 4 months ago)

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Lord Flight Portrait Lord Flight
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My Lords, everyone will be aware that the F:SMA included a key brief to the FSA to advance financial education. My observation is that pfeg and some of the other charities have done a reasonable job, and that certain banks such as RBS provide reasonable courses, but that still in our schools financial education is extremely mixed. If people have not had financial education at school, it is unrealistic to think that they will get it as adults when they need it. It is an absolute prerequisite of life today that children growing up should become what I will call financially literate. We all have to look after ourselves so much.

This amendment is not exactly what I would wish. I would like financial education to be part of the required curriculum in schools and I have asked a question on that matter in the past. However, I have put forward this probing amendment to see whether the Government have to offer rather more than we have at present in terms of making sure that there is universal financial education in our secondary schools.

Baroness Liddell of Coatdyke Portrait Baroness Liddell of Coatdyke
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My Lords, I have felt passionately about financial education for a long number of years and I support the probing amendment in the name of the noble Lord, Lord Flight. I first became interested in the issue in the late 1990s in the aftermath of the personal pensions mis-selling débâcle when many highly educated and sophisticated people were mis-sold products, largely because of the impenetrable nature of the language in the retail product being presented to them and, harking back to some of the issues raised in the previous debate, the less-than- adequate performance of some independent financial advisers.

Since then my concern has become even greater as we have seen more mis-selling scandals, such as payment protection insurance and inappropriate hedging instruments for small businesses against interest rate movements. Added to that, there is constant pressure on people to get involved in financial instruments at very great cost—everything from store cards through to payday loans. There should be a fundamental understanding on the part of people that when they take out something like a payday loan, it is not a printing error when the rate of interest is in four figures. It is there deliberately as a means of making money.

This issue comes up regularly. FSMA looked at it. Every time there is a debate on financial services, financial literacy is raised. It has become motherhood and apple pie. However, a point will come when we start to take this seriously. I was lucky enough to go to a school in an area that had a mutual bank, the Airdrie Savings Bank, which continues to exist as the last surviving mutual savings bank. It provided certain financial education in schools. I have to say that there was probably a subplot because I still have the little silver bank and I still retain a passbook for the Airdrie Savings Bank. I have no doubt that the Royal Bank of Scotland did exactly the same when it did its work in schools. That is laudable, but at the end of the day the issues are now too great to leave it to charitable and well meaning organisations. There is a need now, for the well-being of the citizenry as well as the well-being of our financial services sector, to put financial literacy firmly on the curriculum, and I would hope not just here in England but in Scotland as well. I support the amendment in the name of the noble Lord, Lord Flight.

Baroness Turner of Camden Portrait Baroness Turner of Camden
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My Lords, I support what my noble friend has just said. For a number of years, I was chair of the ombudsman council of the PIA, which later merged into the FSA. We used to discuss the reports from the ombudsman and one of the things which bothered us enormously was the level of illiteracy in financial services. We began to worry about this and to wonder what we could do about it. Eventually we set up a sort of panel of interested, qualified people who would talk to schools and so on to ensure that we were doing at least something to try to remedy what we saw was an enormous problem with regard to education. Therefore, I very much support what my noble friend has said. She is absolutely right. We did our best then, but we were taken over and I have no idea whether the FSA continued what we had begun. Certainly we wanted to do that and we did it and it was quite popular for quite a long time. I hope that this amendment is taken seriously by the Government because it is a very important issue.

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Lord Northbrook Portrait Lord Northbrook
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My Lords, I support the views of the noble Lord, Lord McFall, on split-level trusts. When I was a private client investment manager I came across these extraordinary products, which offered marvellous returns. Income shares were offering 8% and capital shares looked very exciting in the forecasts and prospectuses of what would happen if the market went up 5%, 10% or 20%. But the prospectuses did not say that if the market went down 5% or 10% your shares would be wiped out. It seems to me that, for all those vulnerable people, the FCA has to warn of the downside risks of these vehicles.

Baroness Liddell of Coatdyke Portrait Baroness Liddell of Coatdyke
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My Lords, I support my noble friend Lord McFall in this amendment but I greatly regret the fact that the amendment is necessary. One of the reasons for my regret is the appalling reputation that the financial services industry is earning now as a consequence of the events of the past few years. It is a vital industry for the United Kingdom. It was based initially on the probity of the United Kingdom, which now has to be seriously questioned. It should not be necessary to put into a Bill a duty of care on vulnerable people. It should be a matter of course.

When my noble friend Lady Hayter began this afternoon’s debate, she referred to the issues that have caused such convulsions in the past few months and have led to a serious loss of trust in financial services in general. It would come as no surprise that some particularly vulnerable people, especially the elderly, would nowadays prefer to put their money in a sock under the bed because it is about the only place where it is likely to be safe.

If we are going to restore the integrity of the financial services industry, we as a Parliament must be prepared to show that we are prepared to speak up for the vulnerable. Those of us whose careers have taken us into the other place have had to deal with constituency cases. Quite frankly, a number of times I have felt like sending for the police when I have had constituents in with instruments that they have been sold, which, in many cases, have taken their entire savings away from them. You get not just the City spivs who you see on television programmes but people who live in a community selling wholly unsuitable products.

I suspect that the Minister will say that this legislation is not necessary. I urge him to reconsider that. If we do not put the consumer back again at the heart of the financial services industry, we will lose the competitive advantage that I hope we still retain despite the events of the past few years. We have to overstate to convince people that their interests are at the heart of what this country stands for in terms of financial services regulation.

Lord Peston Portrait Lord Peston
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I support my noble friends, particularly my noble friend Lady Liddell. This takes us back to our earlier remarks today on the need for a professional body for the financial intermediary. I was very disappointed at the way in which the Government did not seem to recognise that as a matter of great concern. As I understand it, doctors have a professional body in the first place and, secondly, they have a code of conduct. Therefore, this sort of thing is not necessary for them because they know that that is how they have to behave. This is true of a number of other professions.

However, one group of people who claim to be professional—the financial intermediaries—have nothing like this at all. I think I am right in saying that there is no professional body whatever. The Government seem perfectly happy with that. They do not seem to see that they should at least encourage them to set up a professional body with a code of conduct, et cetera.

My noble friend Lady Liddell puts her finger on it when she says that we really should not be discussing this issue and that it should be taken for granted that the sort of things referred to by my noble friend Lord McFall could not happen. In a decent society, that should be the case. However, it is not the case. One of the great things about this House, until we are all thrown out, is that your Lordships accept their responsibilities, although our successors may not. It is important to draw attention to what responsibilities should exist in society. I believe that the Government should respond positively to my noble friend’s amendment.

Lord Sassoon Portrait Lord Sassoon
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My Lords, the debate on this group of amendments has been very interesting. However, it has some characteristics of straying into Second Reading territory because it has gone much wider, albeit over very important areas, into questions of broad mis-selling standards in the industry, which we have discussed already this afternoon. Therefore, I will not go over all the points that have been made but stick to the issues that are the focus of the specific amendment, subject only to one general point about the important questions raised by the noble Lord, Lord McFall of Alcluith, on proposed new Section 1C—on the consumer protection objective, which clearly goes to the heart of this—and his observations and questions on proposed new Section 1C(2)(e), which concerns the general principle of care.

One issue around the drafting that we should bear in mind is that the FCA will be responsible for the protection of retail consumers, but will also have a responsibility for wholesale markets, professional markets and counterparties. The reason behind the drafting of proposed new Section 1C(2)(e) is to make sure that it encompasses both the very strong duty of care that is due to individual consumers, on the one hand, and the fact that between professional counterparties the nature of the duty of care is very different. Indeed, in the terms of this particular principle, there may be no duty of care under this provision if the market is purely professional—it is very different from a consumer product market. It is important to understand that background to the discussion. However, these amendments are very much concerned with protection of the consumer.

Baroness Liddell of Coatdyke Portrait Baroness Liddell of Coatdyke
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There is some confusion in my mind about what the noble Lord is saying. He is talking about the responsibility and the environment of risk in wholesale markets as against retail markets. Even in wholesale markets, there is now a need for a duty of care. The noble Lord was managing director of financial regulation at the Treasury, so he will be aware that from the time of Barings onwards there has been an issue about the duty of care in the wholesale market, too. I am not saying that it should be equated across the board with the duty of care to consumers, but no one who has watched developments over the past few years can take a laissez-faire attitude to what is happening in wholesale markets.

Lord Sassoon Portrait Lord Sassoon
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I am not suggesting for one moment that there should be a laissez-faire attitude. I am merely pointing out that a very different set of parameters has to be used by the FSA, and will have to be used by the FCA, when dealing with different parts of the financial services market. To those who argued earlier that we should not lose caveat emptor, I point out that in professional-to-professional markets, of course there has to be a high degree of integrity. Recently we saw exactly what appears to have been going on in what are fundamentally professional markets. However, that is very different from the duty of care owed in the case that we are talking about, which is of selling products to vulnerable, disabled consumers. Wholly different considerations apply from those that apply in professional markets. I point that out because the noble Lord, Lord McFall of Alcluith, got into this broader question, and as background to the question that we need to come on to, which is whether it is appropriate to include amendments to highlight important issues about disability, ability and vulnerability that address consumer product markets.

Financial Services Bill

Baroness Liddell of Coatdyke Excerpts
Tuesday 26th June 2012

(12 years, 4 months ago)

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Lord Phillips of Sudbury Portrait Lord Phillips of Sudbury
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My Lords, I would like to make one comment on the amendment moved by the noble Lord, Lord Eatwell, and then make some comments on the remarks of the noble Lord, Lord Peston. On the way in which the amendment is drafted, I am not at all clear about how the notion of a supervisory committee fits with the language of new Section 9B of the Bank of England Act 1998 in Clause 3(1), which talks about the Financial Policy Committee being,

“a sub-committee of the court of directors of the Bank”.

I am a very long-in-the-tooth lawyer, and the normal language of sub-committees is to make them clearly subsidiary and subject to not just the oversight but the decision-making of the body of which they are a sub-committee. I put that to the Minister because we have enough confusion in the Bill already and, as has been mentioned, the name “supervisory committee” has many connotations from other jurisdictions that frustrate his desire to make this clearer.

Given that the issue of clarity and comprehensibility has been raised by the noble Lord, Lord Peston, and others, this is probably the only chance I have to add to that and ask my noble friend if he will take profoundly seriously the way in which the Bill is being put to us. I venture to suggest that not one Peer in 50, however learned or experienced they are, will be able to get their head around these 168 pages. It is not just those pages, of course, since they cross-refer to hundreds and hundreds of other pieces of statutory legislation and instruments.

I hope that my noble friend will take back the undertaking that I thought I got two years ago to the effect that where we had a Bill of this nature with, as I say, constant cross-references, those of us who wanted to get our heads around it would be given the legislation that was amended by the Bill, with the amendments shown on the face of that legislation so that we could relatively quickly—I use the word “relatively” advisedly—get our head around it. I have to tell noble Lords that if they go to the Library and pull down the 1998 statute, they will find that subsequent amendments have not been incorporated into it and they will have to go off elsewhere to find them. The whole thing is totally counterproductive to the work of this House. Most of us have neither secretaries nor research assistants of any sort. It really is scandalous—I use that word—that as legislators we are not assisted as far as possible to do our job effectively.

If the Minister is having sleepless nights, I urge him to look at subsections (1), (4) and (5) in new Section 9B, where the language is so—I nearly used an Anglo-Saxon expression, which would have been much more colourful—hyper-complicated. New Section 9B(1) says that this particular sub-committee is to be called,

“the ‘Financial Policy Committee’”.

However, new Section 9B(4) says,

“The court of directors must keep the procedures followed by the Committee under review”.

Given that the Bill has just said that the way to describe the new sub-committee is as the “Financial Policy Committee”, which committee is meant in subsection (4)? Then new Section 9B(5) says that:

“The court’s function under subsection (4) is to stand delegated to the sub-committee”,

which is not supposed to be referred to as that at all, so perhaps that is another sub-committee that we have not heard of and which is defined 63 pages later. And so it goes on. I do not know about anyone else, but I think that I have spent eight hours so far in trying to understand Clauses 5 and 6. I may be becoming an old f—no, I may be losing my sharpness, but I urge the Minister, not only with this Bill but with so many other Bills that we are called upon to deal with, to make the task for us legislators as readily accessible and easy as possibly can be.

Baroness Liddell of Coatdyke Portrait Baroness Liddell of Coatdyke
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My Lords, I am delighted that cleverer people than me have found this Bill incomprehensible, because I have real fears that we will get very lost in the detail of this Bill, and we will certainly get lost in the alphabet soup of acronyms contained within the Bill. However, I will return to the substantive issue.

The Bank of England is to be the pre-eminent financial services regulator. A regulator has to be transparent, consistent, and readily understood internationally. I would be delighted if, when the Minister replies, he will explain to us why it is necessary to vest such untrammelled power in the Governor of the Bank of England. The governor becomes much more powerful than the Prime Minister, who is, after all, only primus inter pares. The governor becomes completely unchallengeable. That is why the idea of a supervisory board in the amendment proposed by my noble friend is sensible.

I will not get tied up on titles. The court concept is anachronistic, and it is not readily understood by our main competitors. I am much more interested in the substance of supervision. One of the key elements of the work of the Bank of England as financial regulator will be to insist upon the best kind of corporate governance that we can get in our financial institutions. It should, therefore, be an example in itself in how it is governed. I have no confidence that that level of modern, transparent, corporate governance is in the model that is outlined in this Bill, as I understand it.

If people are tied up with the history of the Bank, which is long and distinguished, we can still have chaps running around in pink coats, and we can still have a wonderful collection of silver. However, at the end of the day, if we, as a nation, are to remain a leader in the financial services industry, we have to have a system of governance of our financial regulator that stands up to very tight scrutiny. I therefore urge the Minister, when he replies to this amendment, to give us some explanation as to why the Government have not come up with a model of corporate governance that gives that kind of confidence.

We will come to other elements when we talk about the role of the governor. I am extremely concerned about a repetition of what happened in the run-up to the run on Northern Rock. Some ill advised, perhaps unintentional, comments by the governor contributed to the run on that bank. We cannot allow ourselves to get into a situation where something like that could happen again.

Lord Stewartby Portrait Lord Stewartby
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My Lords, I do not want at any length to add to what many noble Lords have said, except to record that this is one of the most incomprehensible Bills that I have had business with. Several times I started on what I thought was a trail of decisions, and at the end of it I could not work out who did what and how they knew what they should do.

I have one small technical question for my noble friend that is along those lines. I know that “macro” means “long” in Greek. I do not know what is meant by “micro”—which means small—so far as it is applicable to prudential regulation. Is the micro bit about the size of the body being investigated or about the scale of the activities of the regulator? I am not at all clear about this. Having come across these terms “macro” and “micro” regulation, I found myself unable to work out what quite a lot of these fundamental things mean.

Unfortunately, under the old regime there was a lack of clarity about who did what and who was responsible. However, I am not sure that we are getting away from that, as we ought to. It is a difficulty, and I hope that my noble friend can shed a little light on it. Many who have spoken in this short debate have pointed out that the Bill is not very easy to follow, to put it mildly. I would strongly welcome anything that would make it easier.

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Lord Eatwell Portrait Lord Eatwell
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My Lords, I beg to move Amendment 7, which as noble Lords will see from the Marshalled List refers to the experience and knowledge of individuals appointed to the court; that the Chancellor should be satisfied that they have appropriate experience and knowledge; and that their presence would enhance the diversity of the composition of the court.

The immediate reaction to this amendment might be yes, of course, it is unnecessary; anyone who makes sensible appointments would do that sort of thing. However, if it is accepted, a statutory responsibility to ensure that the supervisory board or the court, whichever we have, has a diverse range of appropriate talents will be a crucial guideline that Chancellors must follow and when necessary justify.

The importance of this amendment lies in its combination of expertise and diversity. The crisis should have taught us all of the dangers of conventional wisdom. Conventional wisdom underpinned the decision-making in central banks and treasury departments throughout the world and Mr Greenspan’s confession of the way in which his decisions were distorted by a conventional view of risk analysis has already been cited by my noble friend Lord McFall. In building a successful court or supervisory board, we need the contrary, the awkward and the different to be part of the debate. This will not guarantee that we get it right but at least we will be more likely to than if we appoint a committee of well intentioned sound thinkers who all think the same way.

Diversity here is a reference to diversity of view of analysis and of opinion. There is no doubt that often diversity of view is correlated with other aspects of diversity, maybe of gender or of ethnicity. This is not what I am trying to get at here, it is diversity of view that I would like to suggest. It would be pointless, for example, to appoint a racially diverse, gender-diverse board, all of whose members happened to share the same analysis and views. The degree to which diversities are correlated will perhaps provide some guidance and inspiration for a Chancellor. This amendment is designed to be a permanent challenge to the Chancellor in the very important task that he or she has of deciding on the composition of the court and particularly the non-executive members of the court.

Baroness Liddell of Coatdyke Portrait Baroness Liddell of Coatdyke
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My Lords, I support Amendment 7. Looking at this amendment the casual observer might wonder why it is necessary. It makes perfect sense that you would not leave governance of the Bank of England—and therefore governance of the economy and our financial institutions—to a bunch of interested amateurs. Frankly, however, we have occasionally seen that happen with some of our financial institutions—we need only look at the trails of chaos over the years from banks such as Barings and onwards to the catastrophe of Lehman Brothers. If noble Lords wish to read a horror story they should read Michael Lewis’s The Big Short. I confess that I did not understand some of the complex derivatives being talked about until I read The Big Short, and I have spent most of my life in and around the world of economics.

It is critically important that there is a balance of knowledge, experience and expertise on the supervisory board, or whatever we choose to call it. It will need people with a wide range of competence, with experience ranging from macroeconomics to prudential regulation. It is a wide mix to put together.

The other side of the coin—a matter to which my noble friend referred—is diversity of opinion. In this case, as he pointed out, we are not talking about gender or ethnic diversity, although that would be very good to have. We heard an exchange within the past hour between two distinguished economists—my noble friends Lord Peston and Lord Eatwell—and there will undoubtedly be differences of view among any number of economists. I would love to throw behaviouralists into the mix of any supervisory board of the Bank of England. Quite apart from behavioural economics, it is how people react that can bring economic chaos.

The amendment may seem unnecessary because it is a no-brainer that you would seek to do this anyway. We have learnt along the way, however, that it is better to get such things written down. Then you will have a wee bit more of a chance of achieving them. I therefore support Amendment 7.

Lord Phillips of Sudbury Portrait Lord Phillips of Sudbury
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My Lords, I am afraid to say that I agree with the final remarks of the noble Baroness—it is a no-brainer.

I speak as a weary lawyer who is tired unto death of our legislation getting more and more prescriptive and complex as well as longer. If we cannot trust the Chancellor of the Exchequer to exercise sensible judgment in a matter of this kind then, frankly, he or she should not be Chancellor of the Exchequer. If, as it says in the amendment, the member has to add to diversity, what about integrity and independence? You could go on and on adding to and subtracting from the characteristics. I know that that is reflected in other parts of the 1998 Act but the amendment, for all its good intentions, is unnecessary and potentially disruptive.

If you want to play legalistics with this, you might ask what will happen if you have a full diversity of opinion on your board or court. Do you still have to add further diversity when you have got a full hand of diversity? As the provision is drafted here, you would. It is unpoliceable. For all those reasons, and despite its excellent intentions, I am against the amendment.

Financial Services Bill

Baroness Liddell of Coatdyke Excerpts
Monday 11th June 2012

(12 years, 5 months ago)

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Lord McFall of Alcluith Portrait Lord McFall of Alcluith
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My Lords, perhaps I may remind the House that Finance Bills in the other place are accorded the greatest status by being debated on the Floor of the House. If we are going to have equal status in terms of the scrutiny and examination of this Bill, the least we can do is send a message to the other place that we take this seriously, and that it has to be done on the Floor of the House.

Baroness Liddell of Coatdyke Portrait Baroness Liddell of Coatdyke
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My Lords, this should not go into Grand Committee, not least because of the historic significance of the past four years and what has happened to financial services—against the background of financial services as a major industry for this country—but also because this is a classic opportunity to showcase the wide range of expertise that is available in your Lordships’ House. This is not a Bill to be put into a corner and forgotten about. It deserves—and the public deserve to see us give—the kind of detailed scrutiny that legislation of this importance merits.

Lord Sassoon Portrait Lord Sassoon
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My Lords, I am a little surprised by this discussion, not because I do not think it is an important debate but there have been one or two interventions from noble Lords who unfortunately were not here to hear this point addressed during the debate.

First, this was not a decision of mine. I will do whatever the House wants. I was not asked whether I wanted to do it one way or another and I see arguments for doing it either in Grand Committee or on the Floor of the House. This was discussed through the usual channels. I have not seen this sort of discussion in anything I have been involved in. I believe that the usual channels go through these things very carefully, and they came up with an agreement on this that I certainly am prepared to accept.

I also heard the noble Lord, Lord Eatwell, and the noble Lord, Lord Barnett, who is not in his place at the moment, arguing during the debate that the Grand Committee was a better place to take this legislation. I think the noble Lord, Lord Eatwell, referred to the detailed scrutiny of the Bill establishing the Office for Budget Responsibility, on which I had the pleasure and the responsibility of leading. Indeed, that Bill was given very thorough, detailed scrutiny. It was a Bill of great importance—not as big as this Bill but it showed in a related area how effective the Grand Committee can be.

The Welfare Reform Bill can hardly be said to have been an unimportant Bill. What Bill of greater importance has this House considered in the past two years? Everything I have heard suggests that the scrutiny it got in Grand Committee actually worked extremely well, notwithstanding the understandable doubts there were about it.

I do not want to withdraw the Motion. It has been agreed by the usual channels, in which all these matters will have been debated, and I believe that we should stick with what the usual channels have agreed.

Scotland Bill

Baroness Liddell of Coatdyke Excerpts
Thursday 15th March 2012

(12 years, 8 months ago)

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Baroness Liddell of Coatdyke Portrait Baroness Liddell of Coatdyke
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The noble Lord, Lord Forsyth, has raised the issue of the legislative consent Motion and my noble friend Lord Foulkes has raised the issue of the timetable. We have also had within the process a consultation which concluded at the end of last week. At Second Reading we were told that one of the reasons for the truncated consultation process was to allow amendments to be brought forward at Report stage. However, there is a very short period of time between the Committee stage and the Report stage. I echo the points made by the noble Lord, Lord Forsyth, and my noble friend Lord Foulkes about this debate taking place on a Thursday and the final day of the Report stage taking place on the Wednesday before the Easter Recess

The whole process is in a muddle, and that is not the way to deal with a serious constitutional issue. I have the greatest respect for the noble and learned Lord, Lord Wallace of Tankerness, and I know that he would wish to be as straightforward with the House as he can be. I hope, too, that the Leader of the House, as the leader of the whole House, will not see this as some source of mischief but as an attempt to get to the bottom of what is happening.

Lord Browne of Ladyton Portrait Lord Browne of Ladyton
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My Lords, it is with some reluctance that I rise to speak but I think that my contribution will substantially meet the criteria that the Leader of the House has laid down for this debate.

I addressed the House at some length on the first day in Committee setting out the reasons why I thought it was important that we should conclude our scrutiny of the Bill and present it back to the other place ready to become legislation. That was on 26 January and I do not intend to repeat all the points I made on that occasion. Those who are interested can read for themselves that 45 minute contribution in the Official Report. However, I do wish to make one or two important points.

First, I rebut the suggestion that we are meeting on this Thursday to discuss this part of the Bill at the request of this part of the Opposition. I cannot speak for all of the Opposition, of course, but I have been privy to many conversations, getting uncomfortably close to the usual channels in your Lordships’ House, and never at any time in these discussions did I ask, or was I party to a request from the Opposition, that we should meet on a Thursday.

Noble Lords ought to remind themselves of the somewhat chequered history of the management of the Committee stage in this House. It was the great plan that this day would be devoted to a debate about referendums. It was broadly agreed because the consultation would be over and it was expected that the Government would be able to come to the Dispatch Box and indicate what their response to the consultation would be. There was a degree of consensus that went beyond the Front Benches that it was appropriate to handle the matter in that fashion. However, as has consistently happened with the Committee days of the Bill, we have been subject to other items of business being imposed on them. We have just had the same thing today. In fact, we lost a whole Committee day for this Bill because it was seized from us for ping- pong on the Welfare Reform Bill. I was assured that that would take only a couple of hours—at the time I laughed uproariously at that idea—but it took all day and we lost a whole day in Committee.

There was an attempt, to which I was a party, by those who want to see this matter proceed appropriately to manage the business in such a way that we would conclude it within the appropriate time. However, there was no agreement that we would sit on Thursdays. A lot of what has happened has been imposed on me and other Members of the House by the circumstances of the business of the House. I understand that it has to be managed and I do not want to be part of that process, but any suggestion that the Opposition requested Thursdays is not correct to my knowledge.