Dormant Assets Bill [HL]

Debate between Baroness McIntosh of Hudnall and Baroness Kramer

Committee stage
Wednesday 23rd June 2021 Grand Committee

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)]

I have no requests to speak after the Minister, so I call the mover, the noble Baroness, Lady Kramer.

[Baroness Kramer (LD)]

I am grateful to everybody who has spoken. Obviously, the Minister is trying to give me some reassurance, but it has not taken me all the way, I have to confess. Although the additionality principle is in the Bill, it is there only in the context of shaping the work of the Big Lottery Fund; it is not there in the shape of a fundamental principle that applies, necessarily, if the Big Lottery Fund were to become one of several bodies managing distribution, for example, or if there were to be a different route for distribution. It is not sitting at that fundamental level; it is sitting at least one arm’s length away. So, I continue to have that concern.

I fully accept that the Minister has given some very good examples of additionality, but if she would care to look again at the GOV.UK website, to which I drew her attention when we were discussing some of these issues earlier in the week, it is a stretch to imagine that the additionality principle is applying to the £150 million from dormant bank and building society accounts involved in providing support to charities as a consequence of the Covid epidemic. Indeed, the way the Government discuss it—running it in with their own £750 million of additional funding—makes it very clear that they see this as a single programme, and express themselves very naturally and honestly in that way. There is a real question: do we say, “In extremis, forget the additionality principle”, in which case that ought to be acknowledged up front? Or do we say, “It’s always been a fairly weak principle and rather blurred; we have some good examples, but it is not something we are really going to press”? A lot of understanding needs to come from that.

When we go through a new Act, of course, Covid is at the front of our minds now, but I very much hope that in a matter of time it will not be and we will be back to normal procedures. We really need to know how the Bill will operate when it becomes an Act, because it will continue into that future period. So, I raised the issue of additionality and I think we could use some better answers. I absolutely still do not understand why it is not written in such a way that it applies to the government department’s actions. That is just beyond me, because I have certainly seen the Government draft similar constraints for other government departments in other areas, and I have certainly seen them accept amendments that do the same kind of thing. It just strikes me as a bit peculiar to see the way it has been handled here. I think all of us are concerned that it should be a tight ship and not a leaky one. Saying all that, I will, of course, withdraw my amendment.

Financial Services Bill

Debate between Baroness McIntosh of Hudnall and Baroness Kramer

Report stage
Wednesday 24th March 2021 Lords Chamber

[The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)]

My Lords, we have not as yet been able to restore contact with the noble Lord, Lord Holmes of Richmond. Should he reappear before the Minister speaks, I will try to call him, but for the time being he is not with us, so I call the noble Baroness, Lady Kramer.

[Baroness Kramer (LD)]

My Lords, I will follow my practice of trying to be brief and selective on Report. We have had absolutely brilliant speeches and I do not intend to repeat them.

Perhaps I can start by being helpful to the noble Baroness, Lady Noakes, and I speak as a fairly weather-worn commercial banker who dealt extensively with loans and risk. She will understand, therefore, that the PRA, as the regulator, in dealing with capital adequacy issues, looks at the loans that sit as assets on the bank’s books, but of course it does not stop there. It looks through that to the operational activities—to the activities and investment of the company to which the loan is made. That is why the terminology “investment” pins exactly what this amendment is intended to do, which is to make sure that the PRA does that look-through to investment. I do not think that any member of the PRA would have the slightest difficulty in understanding what this amendment is guiding them to carry out. They would see that it has genuine precision in it. I do not have a problem with the wording; the wording says what it should, it says what it means and it says what the PRA would understand and follow through.

Very briefly, I thank the Minister for the two “have regard” amendments that he has embedded in this group. To “have regard” to the climate change target of 2050 is a step forward, but we have to recognise that it is very light-touch and will not scare the horses. The noble Baroness, Lady Noakes, captured that rather well when she said that the two “have regard” amendments will do no harm. I do not think they change the landscape, but they give a little hint of a change in direction and I welcome that change in direction.

Like others, I am very frustrated that we have a PRA that is going to do stress tests to test the sufficiency of banks’ capital buffers to deal with the financial instability caused by climate change, but then seems to have taken almost the equivalent of a vow of passivity and will not then follow through and implement the consequential adjustments to capital adequacy ratios that would come from that exploration and examination of the buffers. I really do not understand going through the process and then saying, “But we will not learn from or implement the consequences of that work”.

I sometimes think, as I listen to the speeches, that there is a sense that this requirement to look at capital adequacy ratios is somehow novel or revolutionary. I sit on the Economic Affairs Committee and last week, we were privileged to hear from the noble Lord, Lord Turner of Ecchinswell. I hope I have pronounced that correctly. We were looking at quantitative easing issues and therefore it was a discussion of central banks, but the issue of climate change came up. I thought what he said was quite helpful in understanding how normalised the approach of challenging this issue through capital adequacy ratios is now becoming. He said that any role of central banks in relation to climate change is very much secondary to the fiscal and regulatory authorities—the same issue that I think was raised with reference to quotes from the noble Lord, Lord King—but that is an important statement. It is secondary to the fiscal and regulatory authorities because, of course, the relevant regulatory authority is the PRA. He went on to give an illustration by referring to coal:

“If banks go on lending to coal companies, they may end up with stranded assets on which they will make a loss. That will be bad for their capital ratio. I think that it is reasonable for the PRA to set higher capital ratios for anybody who is still lending to coal.”


I do not want to suggest that he was willing to go further than coal, but he was using it as an illustration. I think most of this House would very happily accept that that language needs to be extended across the full range of fossil fuels, certainly in requiring the PRA to do a review. So, I wanted to underscore that this is a normalised approach; this is where we will go, and where we will end up. Given that we have described climate change, absolutely correctly, as an emergency, a delay in getting to that appropriate application of capital adequacy is really serious.

I wanted to pick up the point made by the noble Baroness, Lady Noakes—that most loans are short or medium term. They are, but they are supporting longer-term projects. Of course, the duration of financing the project itself—the project they enable, the project they empower, the project they drive—has a much longer-term application. So, the fact that the loan itself is short term does not mean that it can be set aside as though it had no longer-term implications. It is merely the first step in an ongoing process, and once the process is started it is almost impossible to stop. Loans might be short term because people think they might get better terms and conditions or pricing in the future. The short-term issue is not applicable here; the urgency issue is.

We know that we face an emergency and that how we act in the future will have to be more draconian and dramatic, and have far greater collateral damage, than if we act early. It is crucial that the issues raised in Amendment 3—getting in place the plan, pattern and process for using capital adequacy ratios to tackle the financial instability that will come from allowing climate change-related activities to continue and grow—be dealt with now, and rapidly. If the Government do not recognise what we have been describing here and commit to this review of the whole issue of capital adequacy and climate change, I very much hope that my noble friend Lord Oates will press his amendment. The message is absolutely critical.

Trade Bill

Debate between Baroness McIntosh of Hudnall and Baroness Kramer

Committee stage & Committee: 4th sitting (Hansard) & Committee: 4th sitting (Hansard): House of Lords
Thursday 8th October 2020 Grand Committee

[Baroness Kramer (LD) [V]]

My Lords, I will be exceedingly brief. My noble friend Lord Purvis of Tweed has made the case and I am not able to better it. I just want to raise an underlying principle. I suspect that every Member of this House is very cautious of any power that enables the Government by regulation to change primary legislation of any kind. Where it is necessary to provide that power, there should generally be a principle that the time period is as short as possible and that power is as limited as possible. Otherwise, we begin to compromise the whole concept of primary legislation and the purpose and meaning of parliamentary legislation.

Three years is surely a perfectly adequate time to be able to make any implementing changes necessary as continuity agreements are negotiated and signed. The underlying principle is one that the House needs to pay attention to. Setting precedents allowing an entire Parliament to pass during which period powers are given to a Government to override primary legislation through regulation, even if it is in a constrained environment, is a principle that we must absolutely challenge.

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)]

The next speaker is the noble Lord, Lord Rooker. I will call him once more; if he does not appear, we will move on. No. I call the noble Lord, Lord Bassam of Brighton.