Queen’s Speech

Baroness Noakes Excerpts

Monday 16th May 2022 Lords Chamber

[Baroness Noakes (Con)]

My Lords, it is a pleasure to follow my noble friend Lord Young. I agree with what he said on road pricing, although I suspect there will be several more Queen’s Speeches before that sees the light of day.

The gracious Speech contained a number of Bills designed to underpin growth in the economy, as a number of noble Lords have pointed out; I certainly support that aim. I also support the majority of the Bills, although some will need careful scrutiny. My litmus test for any legislative programme is that it should have less intervention by the state and more encouragement of private sector enterprise. At first sight, not all the planned Bills pass that test with flying colours.

Noble Lords will not be surprised to find that I warmly welcome the Brexit freedoms Bill. However, I have to say that I felt rather world-weary when the gracious Speech announced that business regulations

“will be repealed and reformed.”

We have heard all that before. Fundamentally, the business sector wants to be left to get on with the job of creating wealth and jobs. That means fewer regulators, fewer regulations and less invasive regulation. I shall be delighted if the Government really deliver a paradigm shift this time, but I am not holding my breath.

Creating growth in the economy is the only way to escape from the economic position in which we find ourselves. The Government’s policies on Covid have left us with significant levels of debt, as well as an NHS backlog that will be expensive to deal with. As we have heard, the Government’s task was made much harder by the emergence of high and persistent inflation. There was nothing in the Queen’s Speech on the impact of inflation on the cost of living, but more action will undoubtedly be needed.

My right honourable friend the Chancellor of the Exchequer has no easy options. Debt is already too high. Equally, the tax burden is far too high, and we need tax cuts rather than more taxes if we are to create an environment that encourages investment and growth. The Chancellor will be well aware that windfall taxes are not problem-free solutions, as they undermine our attractiveness as a destination for inward investment.

The Labour Government handed monetary policy over to the Bank of England 25 years ago and told it to keep inflation low. The Bank of England has failed in this core mission. Global central bank groupthink has kept quantitative easing in play for far too long, and loose monetary conditions have led to the inevitable rise in inflation and the spectre of a wage and price spiral, as a number of noble Lords have identified. The Governor of the Bank of England was tone-deaf when he suggested that people should not expect wage rises to cover inflation. He needs to get out more and understand how precarious the finances of many people in this country are.

Over the last 25 years the Bank has been loaded with many extra tasks. It has also accumulated extra objectives, the latest being to assist in the transition to net zero. It is perhaps not surprising that the Bank of England has lost its way. Central bank independence will be a policy failure in the UK if it continues to exist without proper accountability, and I suggest that the Government really need to start to focus on this.

This brings me to the financial services and markets Bill, which I am looking forward to scrutinising—although my noble friend Lady Penn may not welcome that. Those of us who took part in the last Financial Services Bill know that there is a big outstanding issue of securing proper parliamentary scrutiny of the actions of the Bank when it gets additional rule-making powers as part of the repatriation of powers from the EU. The Bank’s failure to deliver its core inflation mission highlights that we need a wider debate during the passage of the Bill about the accountability of the Bank and how best to achieve it. We cannot simply trust the Bank to get things right.

There were many things that should have been in the Queen’s Speech but were not. The one thing I particularly regret is the lack of commitment to a radical simplification of our ramshackle tax system, but in view of the advisory time limit, that will have to be a speech for another day.

Advanced Research and Invention Agency Bill

Baroness Noakes Excerpts

Report stage
Tuesday 14th December 2021 Lords Chamber

[Viscount Stansgate (Lab)]

My Lords, I rise to speak to Amendment 6, to which I added my name. This is a subject I raised at Second Reading, but I reassure the noble Baroness acting as the Whip that, on this occasion, she can relax; there is unlikely to be any need to interrupt me on the grounds that I have gone on too long, because I want to be very brief.

There are two reasons why ARIA should be subject to the Freedom of Information Act. The first is one of principle. Public bodies set up in statute should be subjected to the same FOI requirements as apply elsewhere. In this country, I submit that FOI legislation is an essential safeguard in the political world in which we now live. To reject this amendment will send a bad signal and set a bad precedent. I even suggest to the Minister that he may reconsider his view as and when he sits on these Benches in the future.

The second reason is practical. We do not want to allow ARIA to come to be viewed with public suspicion and distrust, especially as it has the right to fail, so being open about its work will be beneficial. If it turns out that it is not easy to discover what it is doing, public support for ARIA might be damaged, to the detriment of its wider role. It is not difficult to imagine circumstances in which a campaign is waged against ARIA for excessive secrecy, possibly utilising inaccurate information about it, and for public support to be damaged; nor, in my judgment, would making ARIA subject to freedom of information turn out to be an excessive practical burden. Moreover, if there are aspects of ARIA’s future work that turn out to be sensitive, the Government already have powers elsewhere in the Bill for the Secretary of State to intervene on grounds of national security.

I will leave my remarks there, but I strongly urge the acceptance of Amendment 6.

[Baroness Noakes (Con)]

My Lords, I spoke about the freedom of information aspects of these two amendments in Committee, and I repeat that I think it is reasonable to exclude ARIA from the freedom of information requirements.

I do not regard the Freedom of Information Act as malign, and I am sure my noble friend does not either. It is appropriate in many cases that our public bodies are opened up, but it is true that it is burdensome. That has been a constant complaint, and certain kinds of organisations attract lots of fishing expeditions which increase the burden, and this goes beyond what would be regarded as being reasonable.

In Committee, I quoted both Tony Blair—who, having introduced the Freedom of Information Act, had a Damascene conversion and did not regard it as a helpful thing in the end—and Professor Philip Bond, the Professor of Creativity and Innovation at the University of Manchester. Both of them highlighted the fundamental reason why ARIA should be free from the Freedom of Information Act: because the last thing our scientists need when looking at the next internet, or whatever it is, is to be overcome with excessive caution because they are worried about what would happen if their conversations had to be revealed through Freedom of Information Act requests. Creativity thrives in an environment where it is not subject to ex-post analysis.

The other reason why I wanted to speak this evening is that I do not understand why Amendments 6 and 7 have been positioned as they are in Clause 2. They seem to set up a conflict with the provisions of Schedule 3, which is introduced by Clause 9. I have not followed through the detailed drafting in respect of freedom of information, but I have followed it through in respect of the Public Contracts Regulations. Basically, Amendment 7 says that the regulations will apply to ARIA, while paragraph 17 of Schedule 3 says that the requirements do not apply to ARIA.

So, the effect of these amendments—and I believe the same is true of the freedom of information amendment, but I have not completely followed that through—is that one part of the Bill would say that the requirements do not apply, but the next part would say that they do apply. That does not seem to me a very clever way to write amendments or legislation, so I suggest that the amendments themselves are defective. Also, I think they are defective in drafting terms—in particular, the public contracts amendment does not mention the separate Scottish regulations, which are included in paragraph 17 of Schedule 3. Paragraphs 13 to 15 are much more complex than Amendment 6, so that may well not be as effective as noble Lords seem to suggest.

[Baroness Chapman of Darlington (Lab)]

My Lords, Labour tabled a combined version of Amendments 6 and 7 in Committee, and we welcome the re-tabling of the text by the noble Lord, Lord Clement-Jones. We debated FoI extensively at Second Reading, in Grand Committee and in private meetings with the Minister and his officials. Despite the strong feelings expressed, the Government have offered us absolutely nothing—not just on FoI but on transparency more generally.

The Government’s determination to keep ARIA’s projects and decision-making secret is worrying. This is a matter of principle: do they believe in transparency, or not? If they do, such a measure should be put in the Bill. If they do not, they have not really given us a sufficiently good explanation for their reluctance to do this. We believe that it is in ARIA’s best interests to have the benefit of engagement of the public through the use of FoI. Failing to do that is not going to stop ARIA’s activities becoming known; it will just happen in a less controlled manner and create more suspicion.

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Moved by

[Baroness Noakes (Con)]

15: Schedule 1, page 6, line 18, leave out “five” and insert “four”

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[Baroness Noakes (Con)]

My Lords, in moving Amendment 15, I will also speak to my Amendments 16 and 18 in this group. With these amendments, I am returning to the issue of governance of ARIA. We debated these or similar amendments in Committee, and I thought I would give my noble friend the Minister another chance to answer the issues that I raised.

Amendment 15 is directed at the maximum size of the ARIA board. In Committee, I explained that large boards are subject to weaknesses such as passive free-riding, dislocation and groupthink. While it is true that there is no magic formula determining the size at which boards become ineffective, studies generally agree that, once they get to 13 or 14, they do not work well.

Schedule 1 has no overall size constraint but does require a majority of non-executive directors. One way to constrain the size of the board is therefore to limit the number of potential executive directors. My Amendment 15 would limit those executive members to six, which implies a board size of 13, assuming that non-executives are appointed simply to achieve a bare majority. The current Bill would allow a board size of 15 with a full complement of seven executives.

In Committee, the Minister said that the Government believed that a size of 15 was

“in line with standard practice”.—[Official Report, 17/11/21; col. GC 103.]

It might well be standard practice for public bodies that BEIS creates, but I am sure that it is not in line with any of the literature on effective boards. I would hope that BEIS, in particular, would want to be at the forefront of best practice in this area.

Amendment 18 is about the executive/non-executive balance on the board, and I full support a majority of non-executive directors. I am concerned, however, that by allowing a quorum of half the members, as paragraph 10(2) does, a quorum could be achieved with only one non-executive member. My amendment requires a majority of non-executives for all board meetings, in order to ensure that important decisions are not taken by a dominant executive cadre.

My final amendment in this group, Amendment 16, would delete a power to pay pensions or gratuities to non-executive members, which I believe is drafting from another era and which keeps being repeated merely because it follows precedent. My noble friend the Minister said that the Government had no intention of using the power, but curiously then said that the Government wanted to retain it in the Bill. On the basis that the Government do not want to use the power, I hope my noble friend will now agree with me that it is time to read it its last rites.

Lastly, I will offer a comment on Amendment 17 in this group, tabled by the noble Lord, Lord Morse. I completely understand the thinking behind this amendment, but I believe we should be very wary of imposing this kind of legal straitjacket. We need ARIA to be the kind of place where high-quality people come to work. The concept of employment, which places a considerable fetter on life beyond ARIA, could well end up with exactly the wrong kind of people being attracted to work in ARIA. I agree with the earlier remarks of the noble Lord, Lord Broers, on this. I beg to move.

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I hope I have clearly illustrated the potentially damaging unintended consequences of placing such broad restrictions in legislation. I hope I have also assured noble Lords that ARIA will be required, as is any other arm’s-length body, to have clear and robust business appointments and conflict of interest policies in place. On the basis of the assurances that I have been able to provide, I request the noble Baroness to withdraw her amendment.

[Baroness Noakes (Con)]

My Lords, I thank those noble Lords who supported the amendments that I spoke to in this group. There was a small, select bunch of us, but it was a high-quality debate.

I am grateful to my noble friend the Minister for the further helpful explanation that he has now given in relation to my Amendments 15 and 18. I should say that I am thrilled that the Government are accepting my Amendment 16. It remains only for me to say thank you and beg leave to withdraw Amendment 15.

Amendment 15 withdrawn.

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Moved by

[Baroness Noakes]

16: Schedule 1, page 7, line 36, leave out paragraph (a)

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Moved by

[Baroness Noakes]

20: Schedule 1, page 10, line 22, after “may” insert “with the agreement of the Secretary of State”

[Baroness Noakes (Con)]

My Lords, we will all be relieved that we are on the final amendment of this Report stage.

Amendment 20 would have the effect of requiring the consent of the Secretary of State if ARIA seeks to use the powers in paragraph 17(2) of Schedule 1. These powers allow ARIA to borrow money, to acquire and dispose of land, to accept gifts, to form and participate in partnerships and joint ventures, and to form companies. I have no problem with these powers existing; they are useful techniques which are commonly used in research and development activities and scale-ups. I am, however, against public bodies taking on liabilities which are counted as public sector liabilities and which will end up being footed by taxpayers if they go wrong, without any controls. I am also wary of private sector counterparties, who may well be queuing up for a free ride on the public sector’s credit lines, knowing that they will be rewarded for success and may not have to pick up the tab for failure.

My noble friend the Minister replied to my amendment in Committee, saying that conditions would be attached to grant funding given under Clause 4 of the Bill, and that borrowing would have to meet stringent requirements set out in Managing Public Money. The Minister also said that any borrowing would have to be agreed with HM Treasury in advance. I accept that it is possible that this will work perfectly well, with ARIA agreeing to abide completely by whatever the Treasury and BEIS say. It is certainly likely to toe the line all the time that it is dependent on grant funding from BEIS.

My question to the Minister is based on a different scenario. Let us assume that BEIS has handed over the £500 million committed for this Parliament and that the Chancellor has said that there is no more money. We know that the power to wind up ARIA will kick in only after 10 years, so what does the Minister think will happen in the years between, say, 2024 and 2032, with no more grant money arriving? My guess is that borrowing money would become irresistible. Moreover, the value-for-money test in Managing Public Money will be very easy to satisfy, because the counterfactual of using public money will not exist. Complex structures that look like partnerships or joint ventures could actually be borrowing by another name—I have seen that all before.

That is why I believe it would be safer if this Bill embedded a consent requirement. A consent requirement might look rather heavy-handed at first sight, but it could easily be tempered by delegation arrangements which did not require all transactions to have to be sent to the Secretary of State for approval.

I look forward to hearing how the Government think they can keep control of an organisation which has unconstrained statutory powers once the Government have lost the lever of grant payments. If they are not certain that they can deal with all eventualities, I respectfully suggest to my noble friend that an amendment such as this one, or something similar, is needed. I beg to move.

[Baroness Chapman of Darlington (Lab)]

My Lords, this is a very interesting discussion initiated by the noble Baroness, Lady Noakes. At first, I thought she was suddenly getting into big state interference, but that is obviously not the case. It is curious why ARIA would need to be able to borrow money when it is being given a budget from the Government. Presumably the intention is not to give it the Government’s credit card also, because we will be underwriting the borrowing that takes place—I think. I am not quite sure on this; perhaps the Minister could explain some circumstances in which the borrowing of money would be needed and how that would be beneficial to ARIA.

On gifts, we are not quite clear what that is about. If the noble Baroness wanted to test the will of the House—I suspect that she does not want to, this evening—we would be interested in supporting that.

We really need to get some assurance from the Government, particularly on this issue of borrowing money.

[Lord Callanan (Con)]

Once again, I thank my noble friend Lady Noakes for her thoughtful and constructive contributions throughout the progress of the Bill so far. However, she will be disappointed to know, I am sure, that on the substance of her Amendment 20, I am not convinced that adding a legislative requirement for the Secretary of State to approve how these supplementary powers are exercised would be beneficial to ARIA’s effective function or enhance its accountability measures that are already in place.

On ARIA’s ability to borrow money, I recognise that this has been consistently raised throughout the passage of the Bill by my noble friend. I thank her for her previous probing amendments on this matter, which prompted an important conversation on the balance between ARIA’s activities and the appropriate government oversight. As I outlined in correspondence with my noble friend, any borrowing would be contingent on ARIA complying with the rules of Managing Public Money and subject to approval by Her Majesty’s Treasury.

ARIA’s allocation and delegation letters, which the CEO of ARIA will be duty-bound to adhere to, will confirm that ARIA will be subject to, and comply with, all Managing Public Money rules that relate to borrowing. Managing Public Money sets robust conditions on borrowing, and states:

“Public sector organisations may borrow from private sector sources only if the transaction delivers better value for money for the Exchequer as a whole.”


Ensuring that ARIA’s expenditure is made in accordance with Managing Public Money guidance, except for in certain agreed circumstances, will be a condition of the budget ARIA receives from BEIS in its allocation and delegation letters from the BEIS Permanent Secretary to ARIA’s CEO.

There is an expectation of a level of faith between the Government and their arm’s-length bodies. This understanding of trust, and all of ARIA’s freedoms and powers, will be balanced with a number of core accountability principles. The CEO will be ARIA’s delegated accounting officer and will be personally accountable to Parliament for the stewardship of ARIA’s resources, decision-making and financial management. This includes the Public Accounts Select Committee, which will, I am sure, take an interest in such matters. The BEIS Permanent Secretary, as principal accounting officer, will retain an important oversight role, and has the power to make arrangements to ensure they are satisfied that ARIA’s systems are adequate and its finances soundly managed. The Permanent Secretary may intervene if ARIA is significantly off track, and in the unlikely scenario that serious concerns are raised, or there is financial mismanagement, the CEO’s delegated accounting officer authority can be revoked. I hope my noble friend is reassured that the mechanisms here are well established and robust and that they will be enforced.

Moving on to ARIA’s ability to form partnerships, I believe that adding a Secretary of State approval to ARIA’s activities in this area would significantly hinder its effective operations. In designing ARIA, we have put emphasis on the agency operating with significant autonomy from government, and with freedom from standard bureaucracy. Forming partnerships, such as providing grant funding to a project with a university or a business, will be an essential part of ARIA’s daily operations. We expect the agency to contract with, commission and collaborate with a range of different actors for each of its research projects—indeed, that will be one of its core functions.

We have designed this agency to be led and run by experts with technological vision. It is vital that these individuals are free from arduous processes so that they can act quickly, decisively, with autonomy and with clear authority. We should trust ARIA to have discretion over how it forms those partnerships, and I believe that requiring it to engage in a central government approval process for each partnership sits squarely contrary to its aims and purpose.

Moving to ARIA’s ability to form companies and to form and participate in joint ventures, my department is currently in negotiations with Her Majesty’s Treasury about the exact clearance processes ARIA will undertake for each of these transactions. The detail will be set out in ARIA’s allocation and delegation letters, the conditions of which the CEO, as accounting officer, will be duty-bound to comply with. However, I assure my noble friend that all iterations of this delegation letter will include sufficient assurances that ARIA’s internal assessment processes and capability are sufficiently robust. Given that these arrangements may need to evolve in the future, it would not be appropriate for this to be mandated at this stage in the Bill.

On ARIA’s ability to accept gifts, there are already stringent conditions on this in Her Majesty’s Treasury’s Managing Public Money that ARIA would need to comply with. ARIA would consult BEIS about gifts, and HMT’s approval is explicitly required for any gift over £300,000. Gifts made would be recorded in ARIA’s accounts and gifts received would be recorded in a register. These rules will also be confirmed in ARIA’s allocations and delegations letter from the BEIS Permanent Secretary.

ARIA’s power to acquire and sell land would be exercised only in compliance with the Managing Public Money guidance, which sets controls on the below-market sale of land, will compel ARIA to take professional advice when disposing of land and property assets, and will mandate ARIA to include land in its asset register.

Furthermore, introducing a blanket statutory requirement for Secretary of State approval would leave ARIA with less freedom than comparable arm’s-length bodies such as UKRI, which is able to exercise supplementary powers related to accepting gifts and the buying and selling of land without a legislated approval from the Secretary of State.

I appreciate that my noble friend has significant expertise and interest in the areas of financial management and propriety, and we welcome that. However, adding a statutory requirement here would not add value or challenge beyond what is already well established and enforced through Managing Public Money. Furthermore, as I have set out, adding the requirement to the forming of partnerships would, I believe, be genuinely detrimental to ARIA’s agile, autonomous operations, which I know my noble friend is keen not to prejudice.

Before I conclude on this final group of amendments, I once again thank all noble Lords who have taken an interest in this Bill for their excellent and constructive contributions throughout our scrutiny. ARIA provides us with enormous opportunities. I have been delighted to take the Bill through this House and engage with colleagues on all sides, who have focused on the task of providing appropriate scrutiny with enthusiasm, ability and great skill.

[Baroness Noakes (Con)]

My Lords, I start by thanking again the noble Baroness, Lady Chapman of Darlington, for her support for my amendment. What the Minister has said in setting out in more detail how the various mechanisms work in the public sector to achieve de facto control over public bodies has been very useful. I hope he is right that this will work well in practice, and I completely accept his point that there has to be an element of trust and faith between BEIS and its public sector bodies. At the end of the day, this is a risk management decision on whether the balance has been set in the right place, given the particular circumstances of the public body.

I say to the Minister that I hope I shall never have to say, “I told you so”—I warn him that I have an elephantine memory. With that, it is late and time to withdraw my amendment.

Amendment 20 withdrawn.

Advanced Research and Invention Agency Bill

Baroness Noakes Excerpts

Committee stage
Monday 22nd November 2021 Grand Committee

[Viscount Stansgate (Lab)]

My Lords, first, I apologise for being late. I do not know whether amendments can be moved by Thameslink.

[Baroness Noakes (Con)]

Perhaps I might say to the noble Viscount that it is customary, if a noble Lord is not here for the commencement of a debate, for them to take no part in it at all. In the noble Viscount’s absence, the noble Baroness on his Front Bench formally moved his amendment so that a debate could take place—but that does not mean that he can take part in the debate.

[Viscount Stansgate (Lab)]

I found the noble Baroness’s comments in our last session very helpful and I learned a great deal—and now I have learned some more.

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[Viscount Stansgate (Lab)]

My Lords, I support my noble friend Lady Chapman and shall speak also to Amendment 32A, which, ironically, was the first amendment that I drafted. If there is any benefit to a signal failure on Thameslink, it is that by accident I turn out to be speaking to the very first amendment that I drafted. I pay tribute to the noble Baroness, Lady Noakes, because it was her who pointed out last week that the former Prime Minister had said that he regretted the Freedom of Information Act. Next time I see him, I shall gladly discuss that subject, but I think it tells you more about Prime Ministers than it does about the principle of freedom of information.

There are two and a half arguments in favour of this amendment. The first is the principle. We live in a parliamentary democracy—we live, incidentally, in a world in which we learn less and less about the Government, who can know more and more about us—and it is a good principle of public life that any new body should be subject to freedom of information. The half argument is that, if it is suggested by the Government that this will cause practical difficulties for ARIA, I am perfectly happy for them to bring forward their own amendment saying that at a later stage they can review the operation of the Freedom of Information Act to see whether it has turned out to be very difficult.

The other argument in favour of making it subject to freedom of information is this. This is a new body. It will be given a not insubstantial sum of public money. It will be doing things the nature of which none of us around this Committee Room knows. If it is thought to be too secretive about what it is doing and in no shape or form accountable to Parliament, apart from the odd appearance by the chair or chief executive in front of the Select Committee in another place, there is a risk that ARIA’s work and reputation could be damaged. Freedom of information would protect ARIA against that risk. That is the other argument I put to the Committee in favour of the amendment.

[Baroness Noakes (Con)]

My Lords, I spoke on this at Second Reading and quoted Tony Blair. Just to remind the Committee, he said that the Freedom of Information Act was

“utterly undermining of sensible government.”

I do not think it is, but I think anybody in the public sector will attest that it is often very burdensome and extremely costly to operate. It was looked at relatively recently by a group, led I think by the noble Lord, Lord Burns, and the conclusion was that on balance the law should remain as it is. But that does not mean that for every new body we should automatically apply the Freedom of Information Act requirements. The noble Baroness, Lady Chapman, was clear that if there was a case, the Opposition would support it.

It is worth looking at why an organisation such as ARIA might well be worthy of special consideration. Let us look further at what Tony Blair said:

“If you are trying to take a difficult decision and you’re weighing up the pros and cons, you have frank conversations … And if those conversations then are put out in a published form that afterwards are liable to be highlighted in particular ways, you are going to be very cautious.”


We do not want an organisation that is dragged into caution and risk aversion. We want one that is fully open internally to grappling with some very difficult issues.

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[Lord Browne of Ladyton (Lab)]

My Lords, Amendment 30 seeks to ensure that any grant made by ARIA is subject to the condition that the entity or asset supported may not be subject to a takeover for five years. I confess that, on reflection, this may more felicitously have been an amendment to Clause 2, which deals with the conditions of grants made by ARIA. As its tabling is for exploratory purposes, at least today, I do not think that matters, but if it comes back it will probably come back in a different form and as an amendment to a different clause.

On the first day of Grand Committee, the debate on the group of amendments led by Amendment 18 in the name of and moved by the noble Lord, Lord Lansley, took about 20 minutes, and the phrase “intellectual property” was used 37 times. Introducing the debate, the noble Lord described the group as being

“about the way in which ARIA acquires, creates, disposes of, retains and shares intellectual property”,—[Official Report, 17/11/21; col. GC 127.]

so it is not really a surprise that the phrase was picked up.

In some senses, it is a pity that this amendment was not grouped with the noble Lord’s amendments, because the concerns that have given rise to the need for this amendment were to some extent aired in that debate. The noble Lord, Lord Lansley, shared with us the extent to which there was concern in the United States that

“some of the public funding which has led to”

DARPA

“research has led to private as opposed to public gain.”—[Official Report, 17/11/21; col. GC 128.]

I share his concern about the extent to which we are creating such an opportunity, but more so about the extent to which such publicly funded research may lead to foreign, mainly US, private as opposed to British private or public gain.

Refinitiv data shows that, in the first half of 2021, buyout groups spent $45 billion snapping up companies in Britain—more than double the next-best first six months on record and almost 10% of the total $547 billion spent across the world. Am I to understand that British stocks’ discount to global peers is the deepest in more than three decades and that Brexit is one reason? I do not want to divert us into another debate, but Brexit is for good, not just for Christmas, so that situation may persist for a period.

On 17 November, reporting the Culture Secretary’s decision to announce a competition and national security investigation into the planned takeover of the British chip business Arm Holdings by the American multinational tech giant Nvidia, and coupling this with the recent news that Kwasi Kwarteng is investigating the proposed sales of defence suppliers Ultra Electronics and Meggitt to American suppliers on similar grounds, Ben Marlow, the chief City commentator of the Telegraph, wrote:

“For too long Britain has adopted a naive and unquestioning ‘help yourself’ approach to foreign takeovers. For a while it looked as though the … government would take an even more extreme laissez-faire approach as it sought to live up to its ‘Global Britain’ credentials but perhaps the penny has dropped in Westminster … It is a welcome shift in tone. Ministers routinely greet the sale of British companies to overseas buyers as a vote of confidence in this country’s prospects when it is nothing of the sort. It simply means foreign firms see the UK as easy pickings and an opportunity to make a quick buck. Hoisting a giant ‘for sale’ sign over your best and brightest companies is not sound industrial policy, it is an act of … self-harm.”


It will not be a surprise to anybody in your Lordships’ Committee that I am not used to quoting the Telegraph in debates or in support of my arguments. I do so because, in a sense, it may be a bit of an instruction to the Minister as to the attitude he ought to adopt to this issue. I do it because it may have more impact on the Minister.

I have tried twice now, in supplementaries to Questions in your Lordships’ House on these issues, to engage the Minister on what is actually happening in the United Kingdom to some of our best and brightest businesses and the effect it is having. I even quoted on one occasion the concerns of the Bank of England about the way these businesses are funded and the damage that this leveraged debt potentially poses to the economy of the United Kingdom in the long term, but he did not respond.

On another occasion, in relation to both the companies referred to in addition to Arm—Ultra Electronics and Meggitt—I pointed out that 85% of R&D in the defence industries in the United Kingdom is public money, and that the intellectual property of these businesses was in danger of leaving the United Kingdom, having been paid for by public money. That is exactly the issue that the noble Lord, Lord Lansley, raised, although he did so in a slightly different context, and exactly the concern I have.

On none of these previous occasions did the Minister bite. With respect to him, he deployed a slightly less complacent version of the words the Telegraph’s city correspondent pointed out, but he deployed them nevertheless.

I close my remarks in support of this amendment by thanking the Minister for his gracious invitation to me over the last few days to indicate to him what lay behind it so that he could, if possible, give me the reassurance I sought. I responded with an even shorter version of what I have said to your Lordships’ Committee today. I hope he has the reassurance that I and others seek about how we will protect the product of this new initiative from being raided by the predators of venture capital funds in particular. I conclude with the words the Telegraph uses, that

“the Americans wouldn’t allow it to happen so why should we?”

[Baroness Noakes (Con)]

My Lords, I am not as opposed to foreign takeovers as the noble Lord, Lord Browne, but I accept that there are some instances where this country is not well served by the ability of organisations outside the UK to cherry pick some of our best assets. The broad thrust is that foreign investment in the UK has been good for our economy—indeed, large amounts of our productive economy are owned by foreign businesses and they are an important part of the success of the UK economy—but I concede that there is a potential issue, especially when we deal with the kind of things we expect ARIA to fund.

However, I do not think the amendment works. It says that if ARIA gives a grant to an entity, it has to be subject to the condition that that entity cannot be taken over. That entity cannot give an undertaking that it cannot be taken over, because the people who will control who takes over an entity are the people who own the entity, which is not the same as the entity itself. While in some cases it might be a private company with two or three shareholders, which would probably be quite easy to deal with, if the shareholdings were much more dispersed it would probably be impossible to operationalise that sort of requirement. If there is a case, it needs another solution.

I also note that this is a bit of a sledgehammer. There could be very good reasons for an entity having the control over it changed. It could need greater access to capital to scale up whatever it has been looking at; it could have liquidity issues in taking its research and development to the next stage, before it even gets to scale up, and need the involvement of other partners; or it could just be that it makes sense to continue with whatever it has been looking at only if it is part of a larger organisation and subject to a merger or joint venture, where control would be ceded. If there is a problem, I do not think it can be met by this amendment.

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Moved by

[Baroness Noakes]

36A: After Clause 8, insert the following new Clause—
“Protection of ARIA’s independence
In exercising functions in respect of ARIA, the Secretary of State must have regard to the need to protect its independence.”Member’s explanatory statement
This new Clause would require the Secretary of State to have regard for the need to protect ARIA’s autonomy.

[Baroness Noakes (Con)]

My Lords, at the request of my noble friend Lady Neville-Rolfe and with the agreement of the Committee, I will move her amendment. My noble friend had hoped we would have a third Committee day and would go slowly today so that she could move it herself on Wednesday. However, she realised earlier this afternoon that that was not going to be the case, so I agreed to move it. I will be as brief as possible, because this is a relatively small point. The intention of the amendment is to underline the Government’s commitment to the independence of ARIA, and it requires the Secretary of State to protect the independence of ARIA.

My noble friend tabled the amendment because she heard the discussions on our first day in Committee about the purpose of ARIA and its mission, including whether it should be directed to act only in certain areas, particularly in relation to climate change. She was very concerned to ensure that the spirit of ARIA—that it should be unencumbered and able to think the unthinkable wherever it wants to pursue its issues—should be preserved.

Obviously, huge amounts of money are spent on research and development overall by the Government and by other organisations in the economy, all of which are subject to lots of different kinds of checks and balances, and controls and directions. But ARIA is supposed to be very different, and it would be easy to start altering the way in which it worked: for example, by attaching conditions to grants that are made to it, and by constraining or confining what it did, using the powers in the Bill. But ARIA is going to be a success only if it is genuinely independent of government, if it is not dancing to the Government’s tune in any sense, and if it is allowed to go wherever it wants in seeking new areas for research and innovation. I think the Committee understands that ARIA’s independence from government should be preserved.

So this very small amendment underlines the concepts that we believe underlie the creation of ARIA, and I hope that it will be helpful to the Government in enshrining its independence from government. I beg to move.

[Baroness Chapman of Darlington (Lab)]

I just want to make a quick observation about this. Obviously, we have argued to have climate as ARIA’s overriding priority, and we stand by that—but should that not be the case, this amendment would not cause any problems were it not for the fact that the Government were declining amendments on oversight and scrutiny. I do not think that the two are incompatible. You can have an independent agency, and we would not wish to have government interference, but there is no compromising of independence by allowing for freedom of information or some of the other measures that we have suggested.

[Lord Callanan (Con)]

I thank the noble Baroness, Lady Noakes, for her comments and for stepping so ably into the breach to represent my noble friend Lady Neville-Rolfe in her amendment. It is perfectly right that we have returned once again to the central issue of ARIA’s independence, because it is a core part of equipping it for its unique funding approach and for the distinct contribution that we expect it to make to the UK’s R&D landscape.

I support the ambition for the Secretary of State to be mindful of protecting ARIA’s independence in all its interactions with the organisations, where such interactions are required by the Secretary of State’s very limited functions. However, I differ with my noble friend on how we protect its independence in a practical way. I submit that it would be the accumulation of many small things—perhaps creeping influence over strategy, new mechanisms of oversight, or ever-increasing reporting demands on issues of political priority—that would be the arena in which ARIA’s independence would be compromised or lost.

My noble friend Lord Willetts, who is not in his place, spoke eloquently on Wednesday about the challenges he has experienced in trying to carve out space for new approaches in the current R&D system. At that stage, we also had a fairly extensive debate on the accumulated obligations placed on ARIA. We considered how those obligations might be balanced with this vital principle of independence, in the context of amendments which, I believe, would have diminished ARIA’s autonomy in a way that would have been entirely counterproductive. If we truly wish to safeguard ARIA’s independence, it is on those issues that we must look to do it, and there is no easy alternative.

I do not suggest that this is a moment to reopen that debate, but I submit that we cannot have this conversation on independence in an abstract way, divorced from consideration of the practical and operational ways in which it will or will not be given to ARIA. I am sure that there will be plentiful opportunities to discuss this important issue in future. I hope, on the basis of the reassurances I have been able to provide, that my noble friend will, on behalf of my noble friend Lady Neville-Rolfe, feel able to withdraw the amendment today.

[Baroness Noakes (Con)]

My Lords, let me thank all noble Lords who have spoken. I agree with the noble Baroness, Lady Chapman, that independence is not incompatible with the Freedom of Information Act and other aspects that are included in the proposition for ARIA in this Bill. However, I do not think that independence is compatible with prescribing that it should focus only on climate change. We will have to agree to differ on that point.

The point of this amendment was that the Secretary of State had to respect the independence of ARIA, not that everybody else had to respect that independence, and I am not sure that I got the ringing endorsement of the Secretary of State not interfering in ARIA. However, we have had a good debate, and I am sure that my noble friend Lady Neville-Rolfe will enjoy reading it in Hansard. With that, I beg leave to withdraw the amendment.

Amendment 36A withdrawn.

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[Lord Lansley (Con)]

My noble friend referred to the agreement having been shared with us, but I am not aware of having seen it or where it was shared with me.

[Baroness Noakes (Con)]

My noble friend also sent a letter to me following last week’s Committee; that was shared only with the noble Lord, Lord Browne of Ladyton. My noble friend’s department has form on not sharing widely with those in Committee when things are circulated. Can he go back to his department to ensure that all active members of the Committee get access to all the information circulated in response to its deliberations?

[Lord Callanan (Con)]

My apologies—we shared it with those who had contributed to the debate on the subject previously. In retrospect, we should perhaps have shared it more widely; we will now do so.

As my noble friend Lady Bloomfield set out last week, all four Administrations are equally committed to facilitating ARIA’s seamless operation throughout the UK. I hope that this will provide some comfort, in particular to the noble Baroness, Lady Randerson, who raised some important points on this issue at the time. My department will remain as ARIA’s sponsoring department to reflect the power of the UK Secretary of State, who alone has the power to fund ARIA through Clause 4 of the Bill. In our view, the accountability for that use of public money must therefore flow through the UK Government.

In addition to these protections for ARIA’s autonomy, the agreement provides an input mechanism from a new forum of science advisers to the four Administrations of the UK, directly to ARIA’s executive leadership. While there will be no obligation for ARIA specifically to respond to this input, the scientific challenges relevant to the policy priorities of all four Governments will be jointly communicated.

I appreciate that noble Lords have raised questions on how this will work in detail. At the moment this is necessarily a high-level document and clearly there is more work to do, at a working level, to flesh out this agreement between the UK Government and the devolved Administrations. This work is ongoing and will be the subject of further work in the months to come. However, as a result of it, Ministers in Scotland, Wales and Northern Ireland have all now given in-principle consent for the Bill on the basis of this approach. On that basis, I hope that noble Lords will similarly be able to support it. I beg to move.

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[Lord Fox (LD)]

My Lords, this is the last group of amendments in Committee, and it is probably just as well, because if the Minister has any more jelly babies I suspect he will go into a coma. We have established through both our useful meetings with him and Second Reading that the framework agreement is a crucial document to point the way to how ARIA will operate and its future relationships. Without knowledge of that document, we are being asked to approve all manner of clauses, as we just have, that set ARIA in motion before we know how it will operate—actually, before we know what it is.

With Amendment 47, my noble friend Lord Clement-Jones and I are offering the Minister an alternative to the Government’s magical mystery tour approach. Remember that this tour comes with a ticket price of £800 million of taxpayers’ money—and that is just the start. The Minister is loading us on to his metaphorical charabanc, ready to go who knows where, flat cap in place. The amendment is intended to remove some of that mystery. Thanks to it, before the vehicle can be put in gear, we must at least be told where we are going.

I have perhaps laboured that image a little much but, as I said, it is the last group. More prosaically, the amendment would require the Secretary of State to publish a copy of ARIA’s framework agreement before regulations can be made to commence the substantive parts of the Bill. It continues our theme of ensuring that Parliament has sight of, and an appropriate say in, the progress of this important institute, and it would do so without impeding ARIA’s progress or meddling with its future. In this way, the Minister can remove the mystery without harming the magic, so I beg to move.

[Baroness Noakes (Con)]

If ARIA does not exist until the Act is commenced, how can there be a framework agreement that involves ARIA being a party to the agreement to be tabled before the commencement of the Act?

[Lord Clement-Jones (LD)]

My Lords, I do not need to do very much more. My noble friend is finishing this symphony of a Bill Committee con brio, with metaphorical charabancs, mystery and magic. What more do we need at the end of a Bill stage?

I point out that the equivalent UKRI document of 2018 runs to 60 pages and 16 chapters. It covers a huge range of information: the purpose of UK research and innovation, its powers and duties, its aims, the partnership principles, and the responsibilities of the CEO. It then goes on to deal with devolution and relationships with other bodies, public appointments to UKRI, reviews of boards and committees, and so on. There is some really important content in the UKRI framework document, and I am sure that the ARIA document will not be very different. I very much hope that the Minister will reconsider the decision. On the arrival of the CEO, the Minister said that it followed the Treasury’s standard template. Even something in draft, which does not have to be agreed by the CEO, would seem fundamental to our understanding of what ARIA is going to do.

Advanced Research and Invention Agency Bill

Baroness Noakes Excerpts

Committee stage
Wednesday 17th November 2021 Grand Committee

Moved by

[Baroness Noakes]

2: Schedule 1, page 6, line 18, leave out paragraph (c)

[Baroness Noakes (Con)]

My Lords, in moving Amendment 2 I will speak also to Amendments 6, 8 and 10 in my name. These are all probing amendments that concern the governance of ARIA and its board, so I am dealing with much more mundane matters than we covered in the first group. There are a lot of different aspects in this group so I apologise in advance for taking a little time in my opening remarks.

Amendment 2 is about the size of the ARIA board. It deletes paragraph 2(2)(c), which allows between two and five executive members to be appointed to the board in addition to the chief executive and the chief financial officer. As with the governance arrangements relating to commercial boards, paragraph 2(4) requires there to be a majority of non-executive members. Therefore, the minimum size of the ARIA board will be twice the number of the executive members, plus one. If there are two additional executive members, the total number of executives would be four, the minimum number of non-executive members would be five, with a minimum board size of nine. If, however, the full complement of five additional executive members was appointed, the board would comprise seven executive members, with a minimum of eight non-executive members, making 15 in total. There is, however, no limit to the number of non-executive members and hence no upper limit on the size of the board.

I believe that this design is flawed and could result in an unwieldy and ineffective board. Some years ago, in the wake of the financial crisis, Sir David Walker produced a review of corporate governance in banks and other financial services entities. His report included an annexe, which dealt with optimum board and committee size, based on evidence from a number of sources. Sir David said that the optimum board size was between eight and 12, and that beyond 12 a board was prone to

“passive free riding, dislocation and ‘groupthink’”;

in particular, the likelihood of groupthink increased “exponentially” above 12.

I will quote some of the rationale for this:

“This importance of size is due to the cognitive limit to the number of individuals with whom any one person can maintain stable relationships, this limit is a direct function of relative neocortex size, and this in turn limits group size.”


My own direct experience of a number of boards in different sectors over the years is pretty much in line with the Walker report.

At Second Reading I emphasised the need to avoid groupthink in ARIA, and I hope the Government will look again at their design for ARIA’s board. Many listed companies have only the chief executive and the CFO as board members, which helps limit overall size and keep the board effective. Is it really necessary to have a minimum of any extra executive members? Why not just set an upper limit on the size of the board—at, say, 12—and let the rule on the majority of non-executives drive the remaining appointments?

Amendment 6 is designed to ensure that the culture of ARIA is kept away from the Civil Service and government, about which I also spoke at Second Reading. It states that non-executives cannot be either Ministers of the Crown or employed by a government department and paid out of public expenditure. There is a precedent for a prohibition on Ministers and civil servants in the Bank of England legislation which governs appointments to the Court of the Bank of England. It is now in the Bank of England Act 1998, and I have largely copied that drafting, although I have added a prohibition regarding positions held within the five years preceding the appointment. It is clearly important that the central bank is formally independent of government. In the case of ARIA, formal independence is not the issue; rather, it is very important to be independent of the prevailing mindset in Whitehall. I hope that the Minister will agree with me on that.

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[Lord Callanan (Con)]

I will write to the noble Lord with the legal details he requires.

[Baroness Noakes (Con)]

My Lords, I can probably help the noble Lord, Lord Fox. In the case of public corporations created by statute, it is quite common that they are the members. It is not usually drafted as if the board is a separate legal entity.

[Lord Fox (LD)]

The non-execs and execs, or just the non-execs?

[Baroness Noakes (Con)]

No, the members. The members are executive and non-executive, as defined. They comprise the body. That is quite normal in public sector formulations. While I referred to the board when I introduced my amendments, that is not set out in legislation because they are the members. In common parlance, I was talking about the creation of the board of the agency.

I thank noble Lords for their support and their contributions to this short debate, and I welcome the noble Lord, Lord Morse, to our deliberations. I heard what the Minister had to say. He has decided that there will be four executives and therefore a minimum board size of nine, but I do not think he really engaged with the substance of my arguments on why the potential for 15—or, indeed, more because the Bill does not limit the size of the board to 15—which was a little disappointing.

When the Minister dealt with whether or not there could be payments for pensions or gratuities to non-executives, he said that the Government do not intend to do that but are going to put it in anyway. Actually, this is really old drafting, which I can point to in many old statutes, which have not been used for many years, for very good reason, and there really is no need to carry on drafting in this way.

I could go on but I am not going to answer the individual points made by the Minister in response to my speech. I hope he will go away and read more carefully the content of the debate because I think there are some issues that he did not deal with in his reply, and I will certainly read his remarks more carefully when I see them in Hansard. I anticipate returning to some of these issues on Report. In the meantime, I beg leave to withdraw my amendment.

Amendment 2 withdrawn.

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[Baroness Noakes (Con)]

My Lords, I will comment on Amendment 4 in the name of the noble Baroness, Lady Randerson. We must not lose sight of the fact that the board is there to contribute to the total purpose or mission of the organisation, and we need to be very clear, when looking at getting those with some relationship to the devolved Administrations, precisely why they are there. I question whether there is a devolved dimension to, for example, the focus of ARIA or determinations about particular projects. These should transcend any issues that arise at the national level.

In addition, the amendment says that there should be

“a representative of the Welsh Government”.

I believe very strongly that boards should not have representatives of anybody on them. Board members should be selected because of their contribution to the totality. Indeed, if we look at examples of boards that do have individuals nominated either by or with the consent of the devolved Administrations, those people are never ever drafted as representatives. They are usually drafted as members who are appointed in a particular way. It is really important that we do not lose sight of the fact that we are trying to create a unitary board dedicated to the mission of the organisation. I query whether there needs to be input from the devolved nations to that process because of the nature of ARIA, but even if there were, I am absolutely clear that they should not be “representatives”.

Furthermore, if we look at the size of the board, which I addressed in the previous group of amendments, if there are four executives there are likely to be five non-executives, and that includes the chairman. So there would be a chairman, four executives and three people appointed who are in some ways related to the devolved Administrations—although none, under this formulation, representing England—but none, or perhaps one, appointed for the general skills and abilities they bring to the party. I hope that noble Lords will think carefully about whether it is appropriate in this instance to act in accordance with the way the noble Baroness’s amendment is drafted.

[Lord Ravensdale (CB)]

My Lords, as co-chair of the Midlands Engine APPG, I am very supportive of the levelling-up agenda and have a lot of sympathy with the amendments in the name of the noble Baroness, Lady Chapman. My only concern is the additional bureaucracy inherent in looking at the regional distribution of investment.

Building on the point made by the noble Viscount, Lord Stansgate, another lesson learned from DARPA was that the headquarters of DARPA was located away from many of the main research centres of the United States, which avoided the inevitable capture of research funding by institutions in a particular area and really encouraged the take-up of ideas from all parts of the country. I thank the Minister for writing to me on this but I hope that the Government will look further at how the location of the ARIA headquarters fits into the levelling-up agenda.

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[Baroness Noakes (Con)]

My Lords, I can probably help the noble Viscount. It is a shame that the noble Lord, Lord Morse, has not stayed with us. I think what I am about to say was referred to in the opening remarks of the noble Baroness, Lady Chapman.

Because the Comptroller and Auditor-General is specified as the person to examine, certify and report on the statement of accounts, the National Audit Act 1983 gives the Comptroller and Auditor-General the power to do value-for-money audits in the way that the National Audit Office does for all government and public departments. The power therefore already exists and there is no need for Amendment 11, as I think the noble Baroness herself conceded; it is simply not an issue. A power for the Comptroller and Auditor-General to carry out a value-for-money audit will exist and the audit will be carried out in the normal way that the National Audit Office undertakes its value-for-money audits.

[Lord Fox (LD)]

Again, this is an interesting group of amendments, and the noble Baroness, Lady Chapman, and the noble Lord, Lord Ravensdale, should be congratulated on tabling them. Bearing in mind what the noble Baroness, Lady Noakes, has just said, I was already planning to focus on Amendments 12, 13 and 14 and not to talk to Amendment 11, and that is probably a good idea.

However, I say to the noble Lord, Lord Browne, that I do not think his work was wasted because one way or another he has managed to uncover the fact that the Government have decided deliberately to exclude this requirement that they expect every other central government purchase to meet. The Minister has a serious question to answer as to why that is being left out.

Amendments 12, 13 and 14 cover an important issue. I do not think we need to underline, after the week or 10 days that we have just had, why it is in the interests of ARIA itself for it to be seen that there is no conflict and there are no issues around where the money is being spent. In a sense, these amendments or versions of them, will help ARIA in its own housekeeping. Of course, the Electoral Commission will register donors. As the noble Baroness, Lady Chapman says, we then need a list of all the companies and then to go to Companies House to find out who is registered as being in control of those companies. Making it easier also makes it clearer to the ARIA administration what it is dealing with.

I go back to the statutory instrument that we are not debating today, which talks about conflict of interest—so it is clearly relevant. It says that a member of ARIA must disclose any “relevant interests” promptly on appointment. The trouble with that is that I do not think that many people can consider their donations to be a relevant interest, but they are relevant with respect to an organisation of this nature. So something clearer needs to be spelled out, either in the statutory instrument or in the primary legislation. I would prefer it to be in the primary legislation.

When that is done, in listing the companies that are being supported, I suspect that the Minister is going to stand up, in the same way as he is going to stand up when we debate the freedom of information stuff, and say, “This work needs to be kept under wraps and kept secret”. There is a balance to run on this, and if there is an issue we need to find a third-party agency to scrutinise it on behalf of Parliament. But to hide specifically through national security or proprietorial security is wrong, because in that darkness—even if abuses are not happening—the perception of abuse will happen, which will harm ARIA before it even starts.

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Moved by

[Baroness Noakes]

17: Schedule 1, page 10, line 23, leave out paragraph (a)

[Baroness Noakes (Con)]

My Lords, I beg to move Amendment 17 and shall speak also to Amendment 20 in this group. These are probing amendments designed to explore the extent of the powers given to ARIA by virtue of paragraph 17 of Schedule 1. Sub-paragraph (1) of paragraph 17 says that ARIA can pretty well do what it likes, and this is expanded by some particular powers in sub-paragraph (2). The two I have focused on in my amendment are sub-paragraph (2)(a), which says that ARIA may borrow money, and sub-paragraph (2)(d), which allows ARIA to form and participate in partnerships and joint ventures.

My concern is that these powers will be used to create liabilities for the state and hence, ultimately, for taxpayers, beyond the resources that we were led to believe would be devoted to ARIA. As I remarked on Second Reading, there is a world of difference between placing a bet of £500 million or £800 million and underwriting someone else’s credit card. In the former case, there is the hope of winning very much more than the initial £500 million or £800 million, although, obviously, the possibility of losing the lot. In the latter case, there is the possibility of an unlimited amount of additional money being needed if the funds raised by the borrower failed to produce any return.

ARIA will be a public sector body in every sense of the term. It gets its money from the Treasury, it is subject to public sector audit and accountability arrangements and its key personnel are appointed by and paid in accordance with the directions of the Secretary of State. It is always accepted that the state stands behind public sector bodies. That has been the case for as long as I can remember. If they fail, their liabilities are underwritten by the state. That is why there is usually a raft of controls placed on those bodies, including restrictions on the power to borrow money. The Treasury has an obvious interest in ensuring that public sector bodies do not create uncontrolled demands on public finances and, as a public sector body, ARIA’s borrowing will, I believe, automatically score as public sector borrowing. Will the Treasury really allow that to happen without controls?

I have focused on the borrowing power in sub-paragraph (2)(a), but my comments apply also to the ability to participate in partnerships and joint ventures, which are often structured in a way that means liabilities can be left with one of the parties to the venture. Private-sector counterparties would be queueing up to enter into arrangements which could possibly leave the state with the requirement to pick up the bill for failure. Similar dangers also apply in relation to companies which are allowed to be formed under sub-paragraph (2)(e), but I failed to table its deletion for today’s debate. I am not against partnerships, companies or joint ventures; they all have a part to play in working with private sector organisations. What I am against is the ability of ARIA to enter into arrangements that impose potential financial burdens on government finances without any controls or consents being required.

As it stands, Schedule 1 might allow some ex post interventions once the Secretary of State became aware of things that cause financial concerns beyond the initial amounts of money committed to ARIA—£500 million by the end of this Parliament—but the main tool he has is an extremely blunt instrument because it is related to replacing the members of the board. Even here he is restricted, as under paragraph 6(3) he can sack non-executive members of the board on any grounds he “considers appropriate” but, to get rid of an executive member, his power under paragraph 5(2) is restricted to grounds of “national security”. The real villains are more likely to be the executives than the non-executives, but the Secretary of State’s powers to deal with those individuals are, perversely, concentrated on the non-executives.

The notes given to noble Lords on this side of the Committee for today’s groupings said that my amendments would limit ARIA’s novel funding mechanisms. That gives an insight into what these powers are about. They are positively designed to allow ARIA to go beyond the resource envelope that has been announced for it. Calling funding “novel” might sound progressive, innovative and all those good things that ARIA is said to be focused on, but to those of us who have been around financing for rather a long time, it just sounds like another way of doing things to get around rules and restrictions. That would be okay if there were not ultimately recourse to public funds, but the Bill does not require borrowing to be on a non-recourse basis. It leaves public finances at risk to an unspecified degree.

I look forward to hearing from my noble friend how she thinks this very real risk will be managed in practice and how the Government have concluded that ARIA’s powers are compatible with sound public finances. I beg to move.

[Baroness Chapman of Darlington (Lab)]

My Lords, I support the noble Baroness, Lady Noakes. I had not had the pleasure of hearing from her at such length as we have today, and I am very impressed by her contributions. The issue of borrowing money is a concern. There is clearly the potential for financial risk but also significant reputational risk when a level of borrowing might emerge that may seem unduly risky. I am concerned about that and interested in what the Minister will say to prevent that concern doing any damage to ARIA.

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[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, these amendments relate to ARIA’s supplementary funding powers—its ability to borrow and form and participate in partnerships and joint ventures. I will begin by clarifying some of the controls and rules that would govern ARIA exercising these powers and I hope I can find enough reassurance for my noble friend Lady Noakes here. She always starts a debate with a great deal of knowledge, so we always pay attention.

ARIA could only ever make use of a financial mechanism, such as borrowing, for the purpose of exercising its functions—to conduct scientific research and exploit and advance scientific knowledge. Any such activity would also be subject to conditions attached to grant funding provided by the Secretary of State under Clause 4. Any borrowing would also meet the stringent requirements and controls of HMT’s Managing Public Money, which sets conditions to ensure value for money. It would be agreed with Her Majesty’s Treasury in advance. This is part of a suite of non-legislative controls that exist on borrowing.

I also highlight that UKRI has the power to borrow. Mirroring that approach, it is reasonable for ARIA to have this full financial toolkit, as it may be appropriate for it to use in certain future circumstances. For example, one possible scenario in which borrowing may be useful would be if ARIA were to own a controlling stake in a subsidiary, which while partially government owned, aims to act with autonomy. Such an entity may want to borrow if purchasing a large capital asset, in order to resolve cash flow issues if an upfront payment were required.

On ARIA’s power to participate in partnerships and joint ventures, using this power ARIA could take an equity stake in a company forming around a new technology. This could provide a clear benefit in cases where the company is creating assets of strategic importance to the UK. On this point, I reassure the noble Lord, Lord Fox, that the National Security and Investment Act does indeed apply to all ARIA’s activities.

In another scenario, ARIA’s taking an equity stake in a company may help to crowd-in private sector interest, bringing in greater funding totals, lowering financial exposure and creating a clear pathway for the commercialisation of a technology. It is fundamental to the design of ARIA that it is able to innovate with different methods of funding high-risk research.

As I have made clear, appropriate checks are in place to ensure the Government can agree the details of any future borrowing activity, and the ability to engage in joint ventures will be an integral feature of ARIA’s full financial toolkit. I therefore see no reason the mechanisms available to ARIA should be limited through the Bill and I ask the noble Baroness to withdraw her amendment.

[Baroness Noakes (Con)]

My Lords, I thank all noble Lords who have taken part in the debate. I particularly thank the noble Baroness, Lady Chapman, not only for her kind words but for pointing out the reputational risk in addition to the financial risk. As an accountant, I tend to think of financial risk before anything else.

I should say to the noble Lord, Lord Fox, that I did not say that I was against joint ventures and partnerships; I said that they were fine and that it was just a question of the degree to which, through those mechanisms, additional liabilities could be taken on that would then end up on the public sector balance sheet. Often joint ventures and partnerships are structured in such a way that, through those vehicles, access to additional borrowing of various kinds, or quasi-borrowing, can then end up coming back. Those are the reasons why I was probing in relation to joint ventures and partnerships. I accept that in many types of arrangement they are a natural way to do business in this area.

I thank my noble friend the Minister for what she said. I think she said that conditions could be attached to grant funding—indeed, there is a sentence on that in the Explanatory Notes for whatever clause relates to grant funding, which I cannot remember at the moment—but no other details were provided on how that works. Is that prospective? Is it done every time that money is paid over? I do not understand how it will work. Once ARIA has got hold of the money and does not need any more grant funding at that point in time, what powers do the Government have over its further borrowing after that?

My noble friend also talked about managing public money. I do not have an encyclopaedic knowledge of that, but from memory I could not see how that related to the issue I was really raising—whether you can borrow money without Treasury consent, which is what is implied by the statute, with it ending up on the public balance sheet.

[Baroness Bloomfield of Hinton Waldrist (Con)]

Perhaps I could come back on that point. Any borrowing will be agreed with HMT in advance and will comply with the terms of managing public money, which requires that public sector organisations may borrow from the private sector only if the transaction delivers better value for money for the Exchequer as a whole.

[Baroness Noakes (Con)]

I think I understand what my noble friend is saying. It is then about seeing how managing public money bites on ARIA, which has an unconstrained power to borrow. I would like to think about that further, and perhaps my noble friend could explain alongside that how conditions attaching to grant funding work in practice. Who says what to whom, and when? Perhaps then I can understand the mechanics of that. I am sure that, if the Government have thought this through, she will be able to give me a comprehensive answer on how we are not letting ARIA go out into the world and bust the public sector borrowing requirement—even more than it is already bust. I beg leave to withdraw the amendment.

Amendment 17 withdrawn.

--- Later in debate ---

[Baroness Bloomfield of Hinton Waldrist (Con)]

Is that not the point?

[Baroness Noakes (Con)]

No.

--- Later in debate ---

[Baroness Noakes (Con)]

Can I ask my noble friend the Minister to ensure that when she comes back she explains the relationship between paragraph 17 in Schedule 1 and Clause 2, which sets up ARIA’s functions but seems to go beyond functions into things it can do? Paragraph 17 then comes and says again the things it can do. I find that confusing and that confusion may be shared by other noble Lords.

[Lord Lansley (Con)]

I am grateful to my noble friend. We are going to return to some of these issues and I beg leave to withdraw the amendment.

Professional Qualifications Bill [HL]

Baroness Noakes Excerpts

3rd reading
Wednesday 17th November 2021 Lords Chamber

I know that I speak for all of us when I express our gratitude to Dan Harris for his unending patience and excellent, detailed advice throughout the proceedings. I look forward to watching carefully the next steps being taken in the important areas that we have covered in this Bill.

[Baroness Noakes (Con)]

My Lords, while it is undeniably true that this is a better Bill leaving the House than when it arrived, in particular because of the addition of Clauses 14 and 15, it was never clear to me what problem the Bill was seeking to address and whether indeed it was necessary. My noble friend claimed that four benefits would flow from the Bill. If ever there was a case for post-legislative scrutiny to see whether those benefits in fact accrue, this is one of them, because I am less than clear that the considerable effort that my noble friend has had to put in to turning the ragbag of a Bill that arrived here into something that resembles a meaningful contribution to the area of professions was a good use of his time and that of his officials. As I say, I am quite clear that it is a better Bill, but whether the Bill was ever necessary is an open question.

[Lord Moynihan (Con)]

My Lords, on behalf of the British Association of Snowsport Instructors and all the winter sports organisations, which have taken a very active role and interest in the passage of this Bill, I thank the Minister for his consistent, collaborative and close support for the British winter sports federations, particularly with the newly-formed contacts in UK embassies, addressing issues such as work permits, local regulations and overt protectionism. We have taken one step forward as a result of the Bill being before this House, but that one step has been very much as a result of the efforts of my noble friend, for which many thanks.

Professional Qualifications Bill [HL]

Baroness Noakes Excerpts

Report stage
Tuesday 9th November 2021 Lords Chamber

[Lord Fox (LD)]

On the subject of Amendment 11, I have full sympathy with the point made by the noble Lord, Lord Lansley. If my noble friend Lord Purvis were to speak, he would remind the Committee that at the outset we were promised primary legislation for trade deals, and I am gratified that at least two noble Lords will be keeping an eye on the overall process.

In Committee, back in July, the very first amendment that we discussed, in my name and that of my noble friend Lord Purvis, was very similar to Amendment 15. Its purpose from the outset was to protect the autonomy of the regulators. In that respect we are both delighted that the Minister has listened and, through the process of discussion, has come up with Amendment 12. It does a lot of the heavy lifting in dealing with what I referred to earlier as the Trojan horse of suspicion.

In protecting regulatory authorities from Clauses 1, 3 and 4, the amendment very much creates a situation where they are allowed to go about their business in the way that we want. It is for that reason that I took the unusual step—at least, unusual for me—of countersigning the Government’s amendment, which clearly indicates our support from these Benches for what we see as a welcome and important addition to the Bill.

[Baroness Noakes (Con)]

My Lords, throughout our consideration of the Bill I have been critical of my noble friend the Minister and the Government for riding roughshod over regulatory autonomy, so I very much welcome Amendment 12 in his name and that of the noble Lord, Lord Fox.

I have a residual concern. While this protects the autonomy of regulators over whom they may admit to practise in their profession, there may still be a concern that significant costs will be loaded on to regulators from having to comply with the obligation to consider individuals or institutions overseas, because that is what has been negotiated as part of a trade treaty, which would result in a considerable cost for the predictable outcome of not approving those individuals or institutions, and those costs would inevitably be borne by UK professionals because there is nowhere else for costs to go. To some extent, therefore, I was unhappy with the formulation of Amendment 12. However, taking it in combination with the amendment that we have already considered relating to consultation with regulators, I have to hope that the Government would never proceed with regulations that imposed unreasonable burdens on UK-regulated professionals in the pursuit of something that would not be achievable, in terms of the recognition of individuals within an overseas profession. I think that taken together those amendments are okay, but I have a residual concern that burdens might end up on professionals.

--- Later in debate ---

I still think my schedule should be on the Bill, as it would be the best way of keeping it up to date, but I can tell the Minister that I will not push this to a vote. I will be asking at the end for permission to withdraw my amendment, so he need not go into great depths about why it is absolutely not necessary. However, I do ask for assurances that the list will be not only published but included as an agenda item for meetings of the forum and, importantly, that every organisation on that list will be invited to his forum. That would be a way of holding a grip over the list. I beg to move.

[Baroness Noakes (Con)]

My Lords, I think it was in the briefing before Second Reading that I first asked which regulators were covered by the Bill—one of those naive questions where you are often surprised by the answer that you get. My noble friend the Minister said he would write to me, which he duly did, and it was a surprise to other members of the committee when we got the letter—and things sort of went downhill after that. We had another version of the list, with more regulators on, and then a more definitive version that appeared more recently and is on the website.

For me, this struck at the competence with which the Bill was put together, and nothing that has happened has made me change my view that it was not put together in a competent way. But I am satisfied that the Government have done a very considerable amount of work to try to establish the scope of the Bill and to whom it applies, and are committed to keeping an updated list on the website. So I am happy with where we have ended up—but, my goodness, it has been an extraordinary journey.

[Baroness Blake of Leeds (Lab)]

I think we can all congratulate Members on their persistence on this issue and I have to tell noble Lords that my vocabulary has expanded at an enormous rate by being involved in the Bill. I have never heard the expression, “I am not assuaged” quite so often, but it clearly shows that we are moving in the right direction. As we have heard, there are still concerns and, given the lateness of the hour, I just want to add that with Amendment 18 we really feel that we would like to see statutory protection to ensure that the list is regularly maintained and updated. That is the question we have: we have achieved so much through the debate here, but how can we be reassured that the list will be kept updated and maintained, and how often will it happen? Because of our experience, we need a reassurance that the list will not be removed once the Bill has received Royal Assent. I will listen very carefully to the Minister’s reply.

Professional Qualifications Bill [HL]

Baroness Noakes Excerpts

Tuesday 9th November 2021 Lords Chamber

Before I sit down, I add my own words of good will towards Michael Clancy, in his present situation, that he may be restored to good health. I also thank him for the work he has done on the Bill, as he has done on so many others, to inform our discussions.

[Baroness Noakes (Con)]

My Lords, I do not normally intervene where devolved matters are concerned but I was so surprised to see the amendments tabled in this group that I felt I had to make some observations.

To start with Amendment 10 and Clause 7, I was very critical of Clause 7 in Committee, in that it was setting up an advice centre which I could not see the real need for. Nevertheless, if one is going to have one, it should be complete and accurate; the noble and learned Lord, Lord Hope of Craighead, has referred to that. The existing advice centre under EU law, which will be migrated into the one under this Bill, is certainly not complete and is therefore not accurate.

While I believe that the arrangements being made would benefit from scrutiny, I am not sure what the purpose of adding on a consent mechanism would be. The arrangements should be between BEIS and whoever is providing this advice centre to have complete and accurate information, and I do not think anybody needs to consent to that at all, because that is perfectly obvious. While I do not see any need to have that additional mechanism, it is good to have scrutiny on the centre’s input, but that can be done by informal means; it does not need the seeking and giving of consent.

Similarly, in the case of Amendment 10A in the name of the noble Baroness, Lady Blake, I could not see anything in Clause 9 which could possibly be incompatible with a common framework agreement for professional services, if and when one emerged. All it says is that if somebody in one part of the United Kingdom wishes to practice in another part of the United Kingdom, the regulators in the two parts have to give each other information about that individual. It seems that there would never be any circumstances, under any form of common framework, where that would not be an essential part of it.

Lastly, on Clause 14 and Amendment 14, I was also mystified, because Clause 14 seems to respect the devolution settlements. It specifically creates the national authority’s powers in relation to things that are within the devolution settlements, so I could not see what would be added by the arrangements that Amendment 14 seeks. I could not think of any tangible, practical reason for the devolved Administrations to want to get involved in those areas in the way in which this is drafted. For me, this is something of a mystification. It may be partly explained by the bad feeling left by the internal market Act, but I genuinely do not see an issue of substance here that noble Lords should be getting excited about.

[Baroness Randerson (LD)]

My Lords, the noble Baroness put her finger on it when she referred to the bad feeling engendered by the internal market Act. That has undermined confidence between the devolved Administrations and the UK Government. But there are also good, practical reasons why they need to be consulted. I support these amendments because it is absolutely crucial that, at the centre of this, the assistance centre truly represents the whole of the UK and can provide accurate information.

The history of this Bill is that the whole thing is a lot more complex than the UK Government originally thought. I think that the Minister would acknowledge that. The noble Baroness has played her part in pointing that out to the Government. It is not just a courtesy to seek consent. Things are different in different parts of the UK. I speak in this debate from the perspective of Wales, where our difference is partly underlined by language issues of significance. If you are looking at the clinical professions, or teaching, language is important in the delivery of those qualifications.

However, there is a key issue here in the interaction between this Bill and the United Kingdom Internal Market Act, which was designed to undercut devolved powers and which, despite some amendments, still has the power to do so. The UK Government deal internationally with what I am sure they see as the interests of the whole of the UK but, to give one example, the international trade deal with New Zealand provoked dismay in Wales because of the impact that it will have on Welsh sheep farmers. That may not be of direct relevance to this Bill, but it underlines the fact that, just because the UK Government are intending that it should benefit the UK, that does not mean that it will actually benefit the whole of the UK. The same applies with professional qualifications and the terms in which there could be an impact from an international trade deal on those qualifications.

The lack of legislative consent Motions is a symptom of the problem. Common frameworks are there and should be there to ensure harmonious working, but those of us speaking in this debate who are members of the Common Frameworks Scrutiny Committee—the noble and learned Lord, Lord Hope, my noble friend Lord Bruce and the noble Lord, Lord Foulkes, who was here earlier—know that common frameworks have been applied so far in a fairly haphazard manner in some situations, and therefore we cannot entirely rely on them yet. I am very pleased to see the amendments that relate to them, because that reinforces their importance in improving relationships between the Governments within the United Kingdom. Therefore, I support these amendments.

Advanced Research and Invention Agency Bill

Baroness Noakes Excerpts

2nd reading
Tuesday 2nd November 2021 Lords Chamber

[Baroness Noakes (Con)]

My Lords, it is always a pleasure to follow my noble friend Lady Neville-Rolfe. Like her, I support the Bill. My interest in research and development is not in the science per se but in its link to productivity and growth. I see it as a driver of economic gains and wealth creation and, as my noble friend said, that is important in the context of the economic situation we are facing.

Noble Lords will know that I am not a big-state person. My instincts are to keep government and the public sector well out of the way of the business of wealth creation. However, I back the Bill because I know we cannot rely on private sector enterprise or the research programmes of universities or elsewhere to optimise outcomes for UK plc. Of course there are some fabulous examples of successful research leading to genuinely world-beating and commercially successful products and services, but I do not believe that the UK has maximised the potential in and for our nation. So I am prepared to try another way. We should be thankful that Dominic Cummings was determined to create a UK version of the US ARPA. I know it is not fashionable to say that Dominic Cummings did anything of value but I believe he deserves credit for driving this idea forward.

I see ARIA as a once-in-a-generation opportunity to break out of the old way of doing things. As has been said, this means not only accepting failure but welcoming it. Traditional ways of thinking about how public money should be spent do not accommodate failure, and successful careers in public sector organisations rarely have failure in their foundations. ARIA has to be able to take much bigger risks than any normal public sector body would dare to take.

A crucial part of this is to ensure that the new agency is headed by outstanding people with vision and intellectual boldness. These people do not exist in large numbers. As other noble Lords have referred to, I know that the Government have been pursuing the key appointments of the first chief executive and first chairman, but I understand that the recruitment process for the chairman has been deliberately paused. I hope that my noble friend the Minister, when he winds up, will say something about where the Government have got to with these appointments and the timescale to which they are now working.

The composition of the whole board will also be important if ARIA is to operate outside the risk-averse culture of the public sector. I hope that, when the non-executives are appointed, the Government will focus on genuine diversity rather than ticking Equality Act boxes. Genuine diversity means people with diverse mindsets and thinking patterns, and it means people who reject groupthink. The worst possible thing would be a board that squashed risk-taking and innovation. To that end, I believe that the Government should not appoint any civil servants to the board—with the possible exception of the Chief Scientific Adviser, who is mandated under the Bill. I propose to explore that further in Committee.

Another crucial element is that we should not tie the organisation up in bureaucracy. For that reason, I fully support the exemption from the Freedom of Information Act. If noble Lords wish to pursue this in Committee, as I expect they will, I hope they will remember that Tony Blair, the architect of the freedom of information legislation, said that it was

“utterly undermining of sensible government”.

If it undermines sensible government, what would it do to a groundbreaking organisation such as ARIA? It does not bear thinking about.

I also reject the notion that the Government should be setting an overarching strategy for ARIA. What ARIA focuses on should be the product of the big brains that I hope the Government will be appointing to the organisation. It should not be forced into following the political thinking of the day. The Government have plenty of other opportunities to promote things on their own agenda. We have to set ARIA free in this important respect.

I shall want to explore in Committee whether ARIA should have the power to borrow money. An unconstrained borrowing power, as found in Schedule 1, is dangerous. I support the initial commitment of £800 million because it is limited. We can draw a circle around it and, at some stage—not too early—we can see whether the nation is getting value for money. A power to borrow money could allow it to increase its scale very significantly and, under the well-established doctrine of standing behind, that could leave taxpayers picking up a much bigger bill than £800 million. There is a big difference between placing an £800 million bet, which might produce nothing in return, and underwriting someone’s credit card.

I look forward to the Bill becoming law and to starting a new chapter in the UK’s exploitation of its talent and resources.

Professional Qualifications Bill [HL]

Baroness Noakes Excerpts

Committee stage
Tuesday 22nd June 2021 Lords Chamber

Moved by

[Baroness Noakes]

45: Clause 8, page 5, line 35, at end insert—
“(1A) Subsection (1) does not apply to a regulator of a regulated profession if—(a) the regulator oversees the regulation of a regulated profession carried out by another person or persons,(b) the regulator is satisfied that the information required by this section is available on the website of that other person or persons, and(c) the regulator’s website states where the information may be found.”Member’s explanatory statement
This makes provision for a regulator which does not regulate a profession directly but oversees the regulation carried out by other professional bodies.

[Baroness Noakes (Con)]

My Lords, in moving Amendment 45 I will speak also to Amendment 46 in my name. I shall also speak to Amendments 63 and 68 in this group, in the name of the noble Baroness, Lady Hayter of Kentish Town, to which I have added my name.

Amendments 45 and 46 both deal with the position of regulators that oversee the regulation of a regulated profession but do not carry out that regulation themselves. This typically arises where a regulator oversees a number of professional bodies, each of which provides qualifications for, and regulate those who practise, the profession. An example of this is the Financial Reporting Council, which oversees regulated auditors, but wholly or partly through the work done by several professional accountancy bodies. Those professional bodies qualify and regulate the accountants within their membership, not all of whom are regulated auditors. I will not attempt a technical description of the medical and dental professions, but the General Medical Council and the General Dental Council sit over the top of various other bodies and medical colleges to which individuals belong, and I suspect that similar issues arise.

Clause 8 requires the regulator to publish information on requirements to practise. My Amendment 45 is intended to ensure that, if the information is displayed on another website, the regulator need not gather and load up that information on its own website but can signpost where to find it. For example, the FRC could signpost information on the websites of the Institute of Chartered Accountants in England and Wales and the corresponding bodies in Ireland and Scotland, as well as the other bodies which have recognised audit qualifications. Anything else is just bureaucracy for the sake of it and is inefficient.

Clause 9 places a duty on a regulator to provide information to a regulator in another part of the UK. My Amendment 46 says that if someone else holds the information, they should seek to get the information provided by that other person. A regulator may have information about individuals in relation to the particular regulated profession but may not have information relating to the broader context of an individual’s membership of a professional body—for example, a full disciplinary or complaint record. Gathering information only for the purpose of sharing it with another UK regulator would again be duplicative and inefficient.

Since the amendments in this group were tabled, the noble Baroness, Lady Hayter, and I have received an extraordinary letter from the Minister that is relevant to all the amendments in this group. This was one of my noble friend’s Sunday missives, which we have all learned to love during the passage of this Bill. Noble Lords may recall that I initially asked for a list of the bodies covered by the Bill. I received a letter, dated 23 March, listing 160 regulated professions. The Minister said at the time that this was a list of the regulated professions that BEIS considered fell within the Bill’s definition. Last Sunday’s letter claimed that the earlier list was “indicative”—although he did not say that at the time—and a new list was attached. The new list has over 250 professions and nearly 60 regulators.

--- Later in debate ---

[Lord Grimstone of Boscobel (Con)]

I thank the noble Baroness for her comments. Of course, it goes without saying that I always listen to the noble Baroness’s comments very carefully and take them away for consideration. The best advice I can give her about what this Bill is about and what is covered is to refer her to the Explanatory Memorandum on the Bill.

[Baroness Noakes (Con)]

Well, my Lords, that rather took my breath away—and doubtless the breath of everyone else involved in this Committee. I am sure that my noble friend the Minister will want to reconsider his advice to the noble Baroness, Lady Hayter, on that point and perhaps write to her.

I certainly want to thank all noble Lords who have taken part in this debate, which has been an extremely important one. I pay tribute to my noble friend Lord Moynihan for his ingenuity in bringing forward the very real issues related to British ski instructors under BASI, but I do not think that they quite fit in this group of amendments. Nevertheless, it was good to have those issues raised again.

I will deal with my two amendments first. My noble friend said that the amendments were not necessary. I do not think he was listening to what I said about the accountancy, auditing and other related professions such as insolvency practitioners, what the noble Lord, Lord Patel, said about the medical profession, or what the noble and learned Lord, Lord Hope of Craighead, said about the legal profession in Scotland. People who understand about professions think that this is important.

My noble friend said that this is not necessary. Of course, it is not necessary: the burden of my argument was not that this is necessary but that it is not desirable to require regulators who do not, by the nature of what they are doing, hold lots of information, to duplicate that information within their systems and on their websites. I hope that my noble friend will look carefully at what other noble Lords have said. I am happy if he ignores me, but if he would listen to what other noble Lords have said on these issues, he will see that there are some very real problems in there. The fact that a regulator might need to point to what is on a professional regulator’s website or to information that a professional body has, rather than the regulator, does not seem to me to be an impediment, nor does it muddy up his precious concept that this Bill applies only to professions regulated by law. I therefore hope he will think about that again before we get to Report, because otherwise I think I shall probably bring these back at that stage.

We obviously had a lot of discussion on the list, and it is clear that it is still very much a work in progress, as my noble friend the Minister has said. I was really quite surprised to find the concept of some form of regulation being equal to professional qualifications. I never thought that this Bill was about an activity being regulated, but that now seems to have come within the purview of this Bill. It has changed for me the concept of what this Bill is supposed to be about.

I do not think the list is complete. For example, under “Professional business services and administrators of oaths” the only regulator that is cited is the Institute of Chartered Accountants in England and Wales. Actually, I did not know that chartered accountants were administrators of oaths, but I will bet you a penny to a pound that there are many other professional bodies that are regulated for the administration of oaths and it is not just the ICAEW. So we might say that even this latest list is perhaps not worth the paper that I have printed it out on.

It is not just about the completeness of the list; it actually goes to the heart of this Bill. BEIS did not consult on this Bill or any policy proposals. All it did was issue a rather strange call for evidence, some of the replies to which were really rather thin, and it then worked out its own policy and put out a statement of policy at the same time that it published the Bill. We have been aware for some time that a number of the professional bodies have been behind the pace on whether they are covered by the Bill and how it will affect them. Some are not even particularly well aware of it. My noble friend said that his officials were now reaching out to all these other bodies that they are now starting to bring within the net of the Bill, but that does not take the place of proper consultation on what is in this Bill, how it applies to a number of professional activities and whether we actually have a solution that is robust and deals with all the practical issues that arise with respect to professional bodies. As we have heard, each of the major professions has its own set of idiosyncrasies, and that is quite likely to continue.

My own view, and I think that of the noble Baroness, Lady Hayter, is that we will need a list on the face of the Bill for all the reasons that she said a few minutes ago. It is not enough to have a definition-based approach, and I was glad that my noble friend said that he would consider that further. We will return to all of these issues again at Report, but for now, I beg leave to withdraw the amendment.

Amendment 45 withdrawn.

--- Later in debate ---

Along with the other questions I have posed, I ask my noble friend to look favourably on the suggestion that we all have an opportunity to meet face to face under his chairmanship with the regulators in question, in order to have an idea of where we are heading with Clause 9 and how it relates to the rest of the Bill.

[Baroness Noakes (Con)]

My Lords, while I sought to amend Clause 9 in the last group of amendments to avoid unnecessary burdens resulting from it, I could not work out why it was needed. When I searched the documents accompanying the Bill, I could not find an explanation of why it is needed. It has not been needed, to date, for people who practise within the United Kingdom and I cannot conceive of the circumstances in which it would be needed going forward.

I ask my noble friend the Minister to explain specifically why Clause 9 is needed, rather than making generalisations such as, “If a regulator needs to have information, this facilitates the sharing of it”. What problem is Clause 9 trying to solve? That is what I am trying to get to the bottom of.

The impact statement relating to Clause 9 is pretty unsatisfactory. It seems to be based on one regulator alone answering a question, with some costs and benefits then being extrapolated from three or four regulators that answered a completely different question. This borders on the absurd, and I do not know how my noble friend the Minister managed to pluck up the courage to put his signature on the front page. If he can help me by explaining how he acquired the courage to sign off on the costs and benefits that accompany Clause 9, I am sure that that would be of value to the Committee.

[The Deputy Chairman of Committees (Baroness Fookes) (Con)]

The noble Baroness, Lady Blake of Leeds, has been forced to withdraw, owing to a connection problem—I am sure that we can all sympathise with that—so I call the Minister to reply.

--- Later in debate ---

[Lord Purvis of Tweed (LD)]

My Lords, we started Committee with an amendment in the name of my noble friend Lord Fox. It sought to establish at the very outset of the Bill the principle that nothing in it would have a negative impact on the autonomy of our regulators. I am glad that we are able to say—well, not quite “We told you so”, but certainly the fact is that we have learned little in Committee that has meant that the case is not even stronger, so reassurance needs to be provided in the Bill.

The powers in Clause 1 could be extensive when it comes to individual applications. The powers in Clause 4 could be forced on a regulator. The powers in Clause 3 could implement elements of trade agreements on regulators in all four parts of the United Kingdom with little scrutiny or accountability. In reverse order, on the trade side, during the debate on the previous group, the Minister sought to give the impression that the regulatory powers were needed to implement trade agreements and the professional qualifications elements of those agreements because, without those powers, we would not able to implement international agreements and therefore may need to act urgently. Clearly, I have not been following in Committee because, by definition, these regulators are statutory. If the Government’s statement that a treaty would be implemented by primary legislation is correct, that would be the vehicle—when that treaty is being implemented—to make changes to any of the legislation of those regulators. I simply cannot understand why a Henry VIII power is necessary for that.

On forcing the regulators to enter into mutual recognition agreements, if the Government are saying that this measure is purely enabling, there is a degree of merit in that. However, in Committee, we have heard that such enabling could go beyond and add extra pressure. In Clause 1, the powers on the application process are extensive. Whether we have a declarative statement at the outset or the protections that would be brought about by this amendment, there will have to be protections. If the Government genuinely want to avoid a situation where this Bill either must be paused or does not progress at all—my understanding is that the noble Lord, Lord Hunt, is absolutely correct that Bills starting in this place are not subject to the Parliament Act and that the Minister therefore has to be nicer to us—they must provide reassurance. That can happen now only through much greater detail about the organisations and regulators that will be impacted by this, as well as about certain areas of draft regulations along the lines of what the Government would really want to use these powers for. Without meaningful reassurances, this Bill has significant difficulties.

[Baroness Noakes (Con)]

My Lords, I need to say very little, other than that I support what the noble Baroness, Lady Hayter, and the noble Lord, Lord Purvis of Tweed, have said. I know my noble friend has heard the strength of feeling in Committee, about the importance of regulator autonomy. I think there is agreement in Committee, though not necessarily yet with my noble friend the Minister, that something needs to be in the Bill to recognise that.

I hope that by the time we get to Report, if indeed there is a Report stage on this Bill, the Government will have taken ownership of the issue, because I am afraid that if they do not the House will.

--- Later in debate ---

[Lord Palmer of Childs Hill (LD)]

My Lords, it is my great pleasure to speak here in the graveyard spot on this Bill to the amendments in my name. I thank the Minister for his letter of 20 June concerning the professions and regulators to which this Bill applies. It would have been a bit more helpful to have had it earlier.

It seems that BEIS has recognised the point I made in my amendments that the ICAEW and other accountancy professional bodies are in the scope of the Professional Qualifications Bill, owing to their role as recognised supervisory bodies for the purposes of statutory audit, insolvency, probate and administration of oaths. This has been referred to by many noble Lords from around the Chamber during the course of this Bill. As this addresses the point made in my amendments regarding the rationale for including the ICAEW, of which I am a member, in the scope of the legislation, I hope that the Minister will acknowledge when he replies that it helped to review the actual impact of the Bill, as his letter helped me in making this speech.

It feels like the Government are rushing through this legislation without having thought through the detail of the Bill and its consequences. Noble Lords are now having to try to fix this. For the list of regulators and professions affected by this Bill to have changed so substantially while the legislation is being scrutinised by your Lordships’ House does not help give certainty on such an important and wide-ranging legislative measure.

Between this Bill’s conclusion in the House of Lords and it eventually beginning to go through the lower Chamber—and eventually when it comes to Report—it is vital that BEIS takes stock of this legislation, reviews its intended and unintended consequences, and engages with those regulators and professional bodies in scope to iron out any remaining concerns. The noble Baroness, Lady Noakes, said earlier in this debate that there needs to be a pause to the Bill. There needs to be a certain something which does not just carry on as we are now.

A remaining concern—and my last words on this—is on the need for the regulation of accountants and tax advisers. At present, anyone can set themselves up to give this service—and maybe they should. I hope that the Government will consider whether any regulation in some form is required. After all, where pig farmers go, accountants should surely follow. I beg leave to move the amendment.

[Baroness Noakes (Con)]

My Lords, the noble Lord, Lord Palmer of Childs Hill, has tabled these amendments, which I know were suggested by the Institute of Chartered Accountants in England and Wales, so I felt somewhat obligated to speak on the amendment. I know that the ICAEW is pretty keen to be included in the Bill’s scope. As the noble Lord explained, its wish has been granted to some extent, but only for certain aspects where it regulates professions. The noble Lord’s amendments would actually go considerably further by making chartered accountancy a regulated profession. Amendment 64 names the ICAEW as the “chartered accountancy regulator”, thus relegating all the other chartered accountancy bodies to also-rans. If the noble Lord was even thinking about pressing his amendment, I would strongly oppose it. I hope that my noble friend the Minister will resist it.

The inclusion of chartered accountancy is not logical. The ICAEW already enters into mutual recognition agreements, so Clauses 3 and 4 would have no relevance whatever. I cannot believe that the Government would ever make a determination under Clause 2 that there is a problem with meeting a demand for accountants’ services. There is no shortage of accountants.

The ICAEW’s rather grandiose briefing to me said that it wanted to be in the Bill so that there could be

“a debate on the role of the profession in shaping global business practice, reporting and governance”.

In other words, the ICAEW wants to be seen as important. Legislation should not be used to support the egos of anybody, let alone professional bodies.

Right at the end of his remarks, the noble Lord, Lord Palmer of Childs Hill, raised whether the provision of accountancy and tax advisory services should be regulated. That is pure protectionism and not something I would ever support, even for my own profession of accountancy. I know that the noble Lord will not press his amendments, but if he does I hope that my noble friend the Minister will strongly resist them.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, my sister is not a chartered accountant, but she is an accountant. I do not know whether that is an interest to declare, but I should note that.

Unsurprisingly, I have a lot of sympathy with what the noble Baroness, Lady Noakes, said. In fact, when the noble Lord first raised the possibility of this with me, I was really interested, but we were both quite surprised that somebody actually wanted to be regulated. As someone who has worked very much on the consumer side, I have tried to get people regulated and on the whole they have resisted. However, that falls apart, because we have now discovered in the letter that the ICAEW will be there.

Earlier, I read out the note that I had had from the ICAEW as a result of the Minister’s letter on Sunday, saying that it seemed as if the Government were “rushing through the legislation”. I did not quote this, but I will say it now:

“Between this Bill’s conclusion in the House of Lords and it beginning to go through the lower chamber, it is vital that BEIS take stock of this legislation, review its intended – and unintended – consequences, and engage with those regulators and professional bodies in scope to iron out any remaining concerns.”


As I said on the previous group, I hope that we will use the time between now and Report, rather than between now and when the Bill arrives in the other House, but it sounds as though the ICAEW and the other accountancy bodies have not yet had a discussion with departmental officials. I hope that that can be put in hand. I hope the Minister will be able to confirm, although maybe not at this moment, that those meetings have taken place so that, as the ICAEW says, any intended or unintended consequences are fully understood and any problems can be ironed out. I look forward to hearing from the Minister that that will take place.

Professional Qualifications Bill [HL]

Baroness Noakes Excerpts

Committee stage
Monday 14th June 2021 Lords Chamber

We are talking about people’s lives and safety and the quality of our professional services, and I urge your Lordships’ House to back the call that Clause 3 not stand part of the Bill.

[Baroness Noakes (Con)]

My Lords, in last week’s Committee, we emphasised the need for the Bill, and not just the Government’s fine words, to recognise the autonomy of the regulated professions. If the Government really do intend to respect the independence of the regulated professions, it is quite difficult to see why Clause 3 is required.

If the Government sign a trade treaty that includes the recognition of qualifications, and if they do respect the autonomy of the professions, it is difficult to see why we need Clause 3 in addition to Clause 4. Many regulators already have powers to enter into recognition agreements for overseas regulated professions, and if they do not have them, Clause 4 is there to empower them to do so. As such, they either have the powers already or can acquire them by using an order under Clause 4, which seems to me to make Clause 3 redundant if—and only if—the Government do actually mean what they have been trying to tell us: that they respect the autonomy of the professions.

Put another way, there is no evidence before the House that Clause 3 is needed. When faced with an unnecessary clause, the right thing to do is remove it. The Delegated Powers and Regulatory Reform Committee, which other noble Lords have referred to, was highly critical of the Government’s taking of Henry VIII powers in the Bill, particularly in relation to Clause 3. There is very good reason for the Committee to agree with the DPRRC that Clause 3 should not stand part of the Bill.

I looked very carefully at my noble friend Lord Lansley’s Amendment 56 in this group, but I am not convinced that the existing distinction between what is in primary and what is in secondary legislation is sound. It means accepting that the EU’s use of regulations versus directives, and the use of statutory instruments to implement the EU law coming into our law as we left the EU, is a good basis going forward for determining the degree of parliamentary scrutiny that is required for any changes. Because of this, I cannot support my noble friend’s amendment.

[Lord Hunt of Kings Heath (Lab)]

As we are starting the second day of Committee, I declare my interest again as a member of the GMC board, although clearly, I am not speaking on its behalf.

I put my name to the noble Lord’s clause stand part Motion, and I was happy to do so, although I acknowledge that the noble Lord, Lord Lansley, has given a different and interesting perspective. Equally, I remind noble Lords that I have a sunset clause that we will debate next week. All of us are trying to get to grips with the same problem. The Minister brought some very welcome amendments last week and made some very welcome remarks about the Government’s wish to protect the autonomy of regulators. The issue is that, on any reading of the Bill, Clause 3 would seem to be able to override those protections. This is where we get to the heart of the Bill.

My noble friend Lord Davies was absolutely right: we have seen how the farmers are being dealt with over trade agreements, and it is pretty clear that the Government are willing to ditch a great deal in order to get a trade agreement. That is why it is no good having legislation that does not protect the professional autonomy of regulators. Does the Minister accept that, notwithstanding the warm words he has used, in the event of a trade agreement it will be perfectly possible to use this clause to override any of the protections in Clause 1?

If, as I think the Minister has to say, it will be possible, the question posed by noble Lords and the noble Baroness, Lady Noakes, then comes back: why do we have to have this clause at all? If we do have to have it, why is there not some protection within it that says that, notwithstanding the trade agreement, it cannot override the protection given in Clause 1? One way or another, before the Bill leaves your Lordships’ House, we have to tackle this head on.

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[The Deputy Chairman of Committees (Lord Lexden) (Con)]

My Lords, I have received requests to speak after the Minister from the noble Baroness, Lady Noakes, and the noble Lords, Lord Hunt of Kings Heath, Lord Purvis of Tweed and Lord Lansley.

[Baroness Noakes (Con)]

I will raise just two topics. The first is trust; the Minister regretted that the Committee did not trust the Government on this. We have to remember that when very wide legislation is placed on the statute book, it can be used by a later Government to its full extent, whatever the current Government intend—in this instance, in relation to regulator autonomy. We have plenty of examples of that; the most glaring at the moment is the legislation being used to cover the hundreds of statutory instruments on coronavirus restrictions. Very clear statements were made to both Houses of Parliament when that legislation went through about the circumstances in which it would be used. That has been completely ignored to cover the biggest deprivation of civil liberties in peacetime, for circumstances that the legislation was never intended to be used. The Committee is entitled to be entirely sceptical about very broad expressions in statute.

My second point relates to letters. I received one letter, yesterday at 5 pm, so I have not seen many of the letters which have been referred to. It is extremely difficult, when letters come out at 5 pm on a Sunday and we start the next Committee day the following working day, to have any chance of tracking down whether any letters have been issued. As far as I understand it, the Library does not operate in real time and there is no real-time way to interrogate how things are laid there—even if these letters were laid in the Library, which I have no idea about.

The reason Ministers write letters in Committee is that they have failed adequately to deal with an issue at that stage. When the Minister handled the last group of amendments last Wednesday, he said that he would answer it very briefly, as it was getting late, and would write. Whomever he addresses the letter to, when he writes, he is writing to the whole Committee, and it is only right and proper—and this always used to be the case—that all other Members taking part in the Committee get a copy of it. It is additionally laid in the Library so that the rest of the House has access to it.

We have lost sight of how to conduct our business properly—partly because hybrid proceedings make it more difficult for us to run things down completely in Committee, but there are always cases where you cannot run things down in Committee and have to rely on subsequent correspondence. The way the Minister’s civil servants are operating this letter-writing procedure is depriving the Committee of its ability to operate effectively.

[Lord Grimstone of Boscobel (Con)]

I thank my noble friend for those two comments and the spirit in which they are offered. I realise that my point about trust is not a personal matter in relation to me but the more general point my noble friend makes. On letters—I will not dwell on this too long—I think the short gap between the two stages of this Committee, and this Committee being on a Monday, was a particularly difficult practical point. The officials have literally been working day and night on this; that is why not all the letters were available until the end of Sunday. We copied all of them to Front-Bench spokesmen, but I take my noble friend’s point that in future, as well as putting them in the Library, it would be convenient for noble Lords if letters were copied to them—albeit sometimes, when there is such a restricted period between the two days of Committee, they may arrive later than any of us would wish.

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Moved by

[Baroness Noakes]

30: Clause 4, page 3, line 25, at end insert—
“(1A) Regulations made under subsection (1) may not require a regulator of a regulated profession to enter into a regulator recognition agreement.”Member’s explanatory statement
This is a probing amendment in connection with the extent of the rule making power.

[Baroness Noakes (Con)]

My Lords, Amendment 30 is a probing amendment on the abiding theme in our debates on this Bill, namely regulator autonomy.

Clause 4(1) says that regulations can be made

“for the purpose of, or in connection with, authorising a regulator … to enter into regulator recognition agreements.”

That seems pretty straightforward. Authorising a regulator to enter into a recognition agreement should not involve any element of compulsion, but I have learned to be wary of wide regulation-making powers.

My Amendment 30 seeks to make it clear that Clause 4 cannot be used to compel regulators to enter into recognition agreements. With this probing amendment, I am asking one simple question: are there any circumstances in which the power in Clause 4 could be used to force a regulator to enter into any recognition agreements?

Since tabling my amendment, I have seen the Government’s response of 3 June to the Delegated Powers and Regulatory Reform Committee, where they state that the power cannot

“be used to provide regulators with the ability to enter into regulator recognition agreements where they lack sufficient abilities”.

If my noble friend the Minister confirms today from the Dispatch Box that nothing in Clause 4 could compel a regulator to do anything it does not want to do, we will be able to dispense with my amendment fairly straightforwardly.

[Baroness Randerson (LD)]

My Lords, I am very pleased to speak in support of this amendment in the name of the noble Baroness, Lady Noakes. This issue is the crux of the independence of regulators. The situation is that not all regulators are equal: they do not all have the same legal powers; they do not all have the same clout; they do not all have the same capacity. For example, in the years between 2007 and 2016, the Nursing and Midwifery Council issued 46,257 decisions on international regulation, whereas the General Chiropractic Council issued 29. We are obviously not talking about a group of organisations that are equal in terms of their ability to withstand not just the letter of the law, but the thrust of government policy. Pressure from the Government can be a very powerful thing for an organisation. We also have to take into account the fact that some of the countries with which these international trade agreements will be signed will have regulators that are only now properly developing. Not only are all our regulators not equal, but in other countries, not all regulators are equal.

I draw the Minister’s attention to a set of statements in the impact assessment. He has often emphasised the independence of regulators, so can he therefore explain the contrast between two of its paragraphs? Paragraph 111 of the impact assessment says:

“The Bill contains a power to enable regulators to negotiate and agree Recognition Arrangements (RAs) with their overseas counterparts. The Bill does not require the negotiation of RAs”.


In paragraph 118, however, it says:

“The Bill contains a power to make regulations to implement the recognition of professional qualifications (RPQ) components of international agreements. These regulations could include the ability to bind regulators to implement the RPQ chapters of IAs as appropriate.”


Paragraph 111 says that they cannot be bound, whereas Paragraph 118 says, just as the noble Baroness, Lady Noakes, suggested, that regulations might trespass on the independence of regulators. I simply ask the Minister for clarification.

In his letter to me this weekend which, in the spirit of proceedings here, I read just after midnight, the Minister said that MRAs

“would not place obligations on regulators and instead encourage them to develop MRAs.”

Which is it? Are regulators to be truly and, in a wholesale way, independent and not subject to pressure, either direct or indirect, or are they to have their wings clipped potentially by regulations?

This amendment clarifies beyond doubt what I believe, from the Minister’s previous statements, is his favoured interpretation: that regulators would always be independent.

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[Lord Grimstone of Boscobel (Con)]

My Lords, I thank my noble friend Lady Noakes for this amendment to Clause 4. It is worth reminding ourselves of the essential difference between Clause 3 and Clause 4. Clause 3 provides a power for the Government to implement international agreements, including the professional qualification elements of free trade agreements and bespoke agreements on professional qualifications. These are agreed between the UK Government and international trade partners. Clause 4 provides a power for national authorities to authorise regulators to enter regulator recognition agreements. These are often bilateral agreements between UK regulators and their counterparts in other countries on professional qualifications that make it easier for professionals to obtain recognition in their respective jurisdictions. I think the comments made by the noble Baroness, Lady Randerson, referred mainly to Clause 3, when she looked at the impact assessment, rather than Clause 4, which of course is the subject of this amendment. Also, it is always a pleasure to hear from the noble Lord, Lord Davies. I welcome his comments.

I agree with the sentiment behind my noble friend’s amendment. Regulators must continue to have the ability to act in the best interests of their professions and the consumers of professional services. Clause 4 as introduced—I say this categorically—cannot be used to compel regulators to enter into reciprocal recognition agreements. It can only authorise them to do so, not oblige or compel. No circumstances can change this. I hope that reassures the noble Lord, Lord Purvis of Tweed, and others. It is not the Government’s policy to force regulators to enter into regulator recognition agreements. The decision to enter such an agreement must sit squarely with the regulators themselves. They are best placed to determine which recognition agreements would be most beneficial and to decide the terms of any agreements which they may enter.

I am sure that your Lordships recognise the value of recognition agreements and the importance of their creation being demand-led, regulator-led processes. Therefore, while I agree with the sentiment behind the amendment tabled by my noble friend Lady Noakes, I believe that the clause as drafted meets the objectives of it. With this reassurance, I hope that my noble friend feels able to withdraw her amendment.

[Baroness Noakes (Con)]

My Lords, I thank all noble Lords who have spoken on this amendment. I heard the noble Baroness, Lady Randerson, say that not all regulators were equal. That clearly is true, particularly in relation to overseas regulators. She highlighted that some were less well developed. There are some which simply come nowhere close to the standard which would induce a UK regulator to enter a mutual recognition agreement, and that is what we really need to protect. I also thank the noble Lord, Lord Davies of Brixton, for his support on this occasion. I hope that we may find lots of other opportunities in future to agree.

I think that my noble friend the Minister has given an unequivocal statement that this clause cannot be used to compel a regulator. That is what I was seeking to establish. I thank him for that and beg leave to withdraw my amendment.

Amendment 30 withdrawn.

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[Baroness Noakes (Con)]

My Lords, I am glad to have heard the noble Baroness, Lady Hayter, introduce her amendment. We both tabled our amendments in light of the British Dental Association’s comments, but we ended up drafting them rather differently. I thought that the noble Baroness, Lady Hayter, was drafting hers so that it would have to be approved by the UK regulator, rather than by the overseas regulator. I think that we are on the same page, and that my drafting is probably slightly more accurate, but let us not go there. It so confused those in the Public Bill Office that they tried to claim that there was a conflict between our amendments, and that we had to invoke something in the Standing Orders. I said that no, they were not in conflict, and could exist side by side perfectly well, but I now see that they are trying to address exactly the same issue.

The noble Baroness is right that a number of countries have a multitude of individual qualifications, some of which are good for the purposes of the regulated profession, and some which are not. There is a good example in this country: lots of bodies recognise accountants, but not all of them can be recognised as registered auditors; and there will be lots of examples beyond that. It is that point which we are trying to ensure is properly identified when dealing with Clause 4 and the position of the overseas regulation in relation to particular qualifications, and I hope that my noble friend the Minister will look on one or both of these amendments favourably.

[Baroness Randerson (LD)]

My Lords, Amendment 32A, in my name and that of my noble friend Lady Garden, would require the appropriate national authority to consult with higher education institutions and other training providers before making regulations under this clause. I declare an interest as chancellor of Cardiff University.

I asked a Written Question, answered by the noble Lord, Lord Callanan, in which I asked Her Majesty’s Government

“why higher education institutions and other providers of training for professional qualifications are not listed as stakeholders affected in the impact assessment for the Professional Qualifications Bill; whether higher education institutions or others …were consulted on the proposals in that Bill, and … what plans they have to consult such providers in the future.”

The Answer stated:

“The proposals in the Bill do not affect the UK qualifications or experience required to practise a profession. The Government ran a Call for Evidence on the recognition of professional qualifications … between August 2020 and October 2020, which was open to anyone with an interest in professional qualifications”,


and that there were, among others,

“26 responses from educators who provide training and higher education institutions.”

The Answer continued:

“Officials have met representatives from Universities UK to discuss proposals in the Professional Qualifications Bill and will continue to pursue an active programme of stakeholder engagement.”


So, having told me in the Answer that this Bill has no impact on HEIs and other trainers, the Government went on to say that the HEIs and trainers identified themselves in the public consultation as being concerned by, or interested in, this Bill. Following that, the Government have been in discussion with Universities UK at least. Will the Minister clarify whether the Government have also spoken to other training providers, not just the representatives of universities?

I have had correspondence from Universities UK, which says that, although its contact with the Government has been fairly constructive so far, it would be helpful to require the Government to consult with higher education providers as they strike regulator recognition agreements, given the importance of these agreements to certain sections of higher education. The potential impact on onshore recruitment of EU students on relevant courses should be monitored. Clearly, that is of importance because if you are doing away with the EU-established system, there will be an impact on the number of EU students coming to this country, potentially some of them afresh as they will want to get their qualifications here, but also on the top-up courses that our HEIs provide. It also says that it would be helpful to have frequent consultation and analysis-sharing between the Government and higher education providers to help ensure that the Bill benefits the range of bilateral agreements that could increase recruitment to higher education, rather than have a detrimental effect.

It is not the case that this Bill does not affect HEIs. It affects the number of foreign students applying to the UK on top-up courses, and, crucially, what the HEIs and other training providers teach. Depending on what they teach, it affects who they employ and how many of them they employ, so this has a deep impact on them. I urge the Minister to consider this very reasonable amendment. The Government have recognised the legitimate role of higher education—I hope they have consulted other trainers as well—so what reason could they have for rejecting such a sensible and modest amendment?

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[Baroness Blake of Leeds (Lab)]

Amendment 34 is in the name of my noble friend Lady Hayter, and I thank the noble Lord, Lord Palmer of Childs Hill, for signing it. The amendment would make changes to the Companies Act 2006 to allow the Financial Reporting Council—the current statutory regulator for audit—greater control and discretion over the acceptance of foreign auditors and foreign audit qualifications in the UK. The Institute of Chartered Accountants in England and Wales has said that these changes would fix a historic problem, as comparing and recognising qualifications between countries has been very difficult for the FRC. This is due to Section 1221 of the Companies Act 2006, which is highly prescriptive in terms of the degree of identity required between the UK standard and the foreign one. The ICAEW states that, in the last 30 years, the UK has recognised only two non-EU qualifications for audit and, post mergers in those countries, neither is the current version any more. Does the Minister think that this needs to change? Can she explain, without the amendment, exactly what changes the Government will propose?

Can the Minister also update the House on audit reform? In March the Government recommitted to a new authority and stated that

“legislation is needed in many areas to complete the task of remodelling the regulator and to establish the FRC’s successor body, the Audit, Reporting and Governance Authority (ARGA).”

However, this legislation was not mentioned in the Queen’s Speech and we are wondering why. When will it be brought forward? Will the changes suggested in Amendment 34 form part of the new Bill? I beg to move.

[Baroness Noakes (Con)]

My Lords, I support the thrust of Amendment 34 and it is good to see the Benches opposite getting involved in the exciting world of chartered accountancy and auditing. I remind the House that I am a member and former president of the ICAEW.

The wording of Section 1221 of the Companies Act 2006 is rather black and white. I understand that the Act is still the longest Bill that your Lordships’ House has ever considered, and I bear the scars of weeks and weeks in Grand Committee considering hundreds, if not thousands, of amendments. Despite all that effort, from memory I think that we did not focus on the wording of Section 1221, which is clearly a major failure of your Lordships’ legislative scrutiny.

I turn to the amendment. Section 1221 gives little scope for judgment where an overseas qualification is largely the same as a UK one for audit purposes but is not exactly the same. We heard that that has led to relatively few uses of that power. That contrasts with this Bill, where the formulation in relation to overseas qualification is “substantially the same”. I know that the noble Baroness, Lady Garden of Frognal, who is not in her place, queried the use of “substantially” on our first Committee day, but it seems to me that it gives an important element of flexibility to the Bill. Something like that would probably give an element of flexibility in the context of Section 1221 of the Companies Act 2006; indeed, I wonder whether a better formulation for that would be to use “substantially”—that is, to mirror the kind of wording that is used in respect of recognition of overseas qualifications in this Bill. The noble Baroness may like to consider that if she chooses to bring forward this amendment again on Report.

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[The Deputy Chairman of Committees (Baroness Barker) (LD)]

I have received a message from the noble Baroness, Lady Noakes, who wishes to speak.

[Baroness Noakes (Con)]

Could my noble friend the Minister explain why, in Clause 1, which we know will be applied largely to the medical professions—we are therefore dealing with patient safety—it is adequate for medical professions if

“a specified regulator of the specified regulated profession has made a determination that the overseas qualifications … demonstrate substantially the same knowledge and skills”,

but, somehow, a different standard is implied when the much more mundane activity of auditing is involved? I do not quite understand how the Minister can have one view of the medical professions and another of what happens in the accounting profession. Can she explain that contradiction?

[Baroness Bloomfield of Hinton Waldrist (Con)]

I do not agree that that is a contradiction. This would have the effect of weakening the standards in audit reform, which we are keen to prevent—so I do not agree with the premise of my noble friend’s question.

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[Baroness McIntosh of Pickering (Con)]

I will speak to two of the amendments in this group in the name of my noble friend Lord Lansley. My understanding is that the first, Amendment 34A, is already covered by most of the professions, which require people to take out professional indemnity and insurance before allowing them to practise. So I wonder why this amendment is required—although I understand it is a probing amendment. But there we are—I look forward to hearing what my noble friend has to say.

I have some sympathy with the amendment in the name of the noble Baroness, Lady Garden of Frognal. My understanding is that many practitioners, particularly legal practitioners, who work outside UK jurisdictions actually relate to English language clients, so the problem does not arise—but again, I look forward to hearing what my noble friend says in summing up.

My greatest concerns relate to Amendment 60A in the name of my noble friend Lord Lansley, and an incident which many in the Chamber may recall took place in the 1980s and 1990s, in which a gynaecologist, Richard Neale, was allowed to practise in this country, first in the Friarage Hospital, Northallerton, and then in other hospitals as well, even though he had been struck off the register in Canada, where his last known employment was. I took up the case with the GMC at the time and was assured that this would never happen again. But, as we have the Bill before us this afternoon, and as we have Amendment 60A as a probing amendment, I will ask the Minister: does he accept the assurance given by the GMC at that time? Can he put my mind at rest that this case could not happen again? I found it extraordinary that a gynaecologist—or indeed any medical professional—could be recruited without even a cursory phone call, ideally, or email to the last known place of work, which I think any diligent employer would undertake as minimum due diligence. Can my noble friend reassure me that there are provisions—if not in the Bill, then elsewhere—to ensure that this situation simply could not arise again?

[Baroness Noakes (Con)]

My Lords, my noble friend Lord Lansley has hit upon some important issues with his Amendments 34A and 60A. I am not 100% convinced by the drafting of either amendment, but the underlying issues are very important. On Amendment 34A, many regulated professions require indemnity insurance to be held by a professional, but I am not sure whether all regulated professions must have indemnity insurance. For example, I am not certain that farriers are required to have insurance. It is clearly sensible for any professional offering their services to have indemnity insurance, but it may not actually be required. My noble friend’s amendment rather implies that every single regulated professional has to have indemnity insurance.

Fitness to practise is rather different: it is a cornerstone of professions, in that only those of good standing are allowed to practise. Fitness to practise can be determined by a number of factors—some straightforwardly, such as criminal convictions, to which my noble friend referred in connection with the Disclosure and Barring Service. Others crucially depend on often quite subtle judgments within the context of particular professions: for example, whether an individual has the right degree of scepticism or can demonstrate that they exercise the right degree of professional care when undertaking their profession. These are really quite difficult areas of judgment. I could not see exactly how that fitted naturally into the scheme of this Bill. It would be difficult to say that there should be a condition relating to the judgment around fitness to practise. But I shall be interested in what the Minister has to say in response to these amendments.

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[Baroness Garden of Frognal (LD)]

My Lords, I have two very small amendments in this group, both taking us back to my unfavourite word, “substantially”. When we were discussing this last week, my main objection was that “substantially” always implies that something is missing. Last week it was applied to standards, and my argument then was that you cannot water down standards so should not use “substantially”. With these two amendments, my argument is that the word is completely unnecessary. In “substantially corresponds to”, “substantially” is a modifier and “corresponds to” is a modifier; you do not need them both, so I simply put this forward to ask if we can please neaten up the Bill by two words and take out “substantially” in both contexts.

[Baroness Noakes (Con)]

My Lords, I speak on Clause 7 standing part of the Bill, rather than on the detailed amendments in this group. We had a brief discussion about the advice centre on our first Committee day, when the Minister told us that the current UK Centre for Professional Qualifications does not cost very much, although he would not tell us how much. The UK set up the Centre for Professional Qualifications because it was required to by the EU, so I do not understand why BEIS has not looked long and hard at whether it needs to carry on funding it now that we have left. Just because people have occasionally found an item useful is not a sound rationale to carry on spending money on it. There has to be a demonstrated need, and nothing in the documents on the Bill has established this.

Until I got involved in the Bill, I had not heard of the centre. I have since visited the website and am doubtless going to be included in its statistics on hits next time it reports to the Minister how successful it is. I did not find it useful at all. I first wanted to know how I could come to the UK to practise as a registered auditor, but the website gave me no information at all. It does not have a global search facility, so I could not even work out whether the information was hidden somewhere on the website. When I said that I was a UK professional accountant seeking to practise abroad, again it had absolutely nothing to tell me.

I suspect that, if the centre disappeared from the web tonight, no one—but no one—would miss it. Most of what is on the website can easily be found with a search engine and a couple of extra clicks. It is not a treasure trove of information; it is very minimalist. The best thing that could be done with it is to put it to sleep, which is why I do not believe that Clause 7 should stand part of the Bill.

[Baroness McIntosh of Pickering (Con)]

I am delighted to speak in support of Amendment 39 from the noble Lord, Lord Foulkes, and I commend the remarks of my noble friend Lady Noakes, because it takes a brave person to say what she did. I look forward to hearing my noble friend Lady Bloomfield’s response from the Front Bench. I do not know whether I have the temerity to try the same, as a non-practising advocate, but I am tempted.

Amendment 39 is particularly important given the reasons that we debated in the short debate on Clauses 5 and 6 standing part of the Bill. Those reasons were raised again by the Law Society and the noble Lord, Lord Foulkes, who so eloquently moved Amendment 39: we need a tool to remove all barriers, or any whiff of a barrier, that might be in this place. It is important to take this opportunity to do that. I hope that my noble friend enthusiastically endorses Amendment 39 as a small but essential tool to enable those who might consider applying for their chosen profession to work in the United Kingdom to do so.

Another reason for this was given by the noble Lord, Lord Purvis, in summing up the last debate, who mentioned that we now have a Canada-style agreement. The briefing I have from the Law Society of England and Wales is rather discouraging:

“This model is yet to deliver a single MRA between the EU and Canada in the three years since it came into force … We feel Government impetus is necessary to achieve MRAs.”


Clause 7 is an essential part of the Bill. It is extremely important that we have an assistance centre and I welcome the fact that it is already up and running. It is even more important that it passes the Noakes test—that it is easy to use, fit for purpose and will embrace Amendment 39.

I am not going to speak at length, but I take this opportunity to support the amendment in the names of the noble Lord, Lord Foulkes, and the noble and learned Lord, Lord Hope of Craighead, on disclosure. I look forward to my noble friend’s response on that and to Clause 7 stand part.