Elections Bill

Baroness Noakes Excerpts

Lords Hansard - Part 1 & Committee stage
Thursday 10th March 2022 Lords Chamber

[Lord Lipsey (Lab)]

My Lords, when the noble Baroness, Lady Meacher, came into the Chamber, I do not think that she was expecting to have to move any amendments, and when I came into the Chamber, I certainly was not expecting to speak on any of them. But in a few sentences I would like to inject a broader perspective.

At the moment, we see a conflict between democracy and totalitarianism in Ukraine such as we have not experienced since the end of the Cold War. Democracy must win. But at this very perilous moment, the Government are introducing measures to shackle the independent Electoral Commission and put in its place the will of government Ministers. The Minister may say that they have no intention of doing anything naughty, but I would not trust him on that and, even if I did, I certainly would not trust every subsequent Government to go the same way. This is a disgraceful proposal. It undermines the democratic case that we are making to the world, and I hope that the Committee will have none of it.

[Baroness Noakes (Con)]

My Lords, this is the most extraordinary debate that I have ever taken part in, with the noble Baroness, Lady Meacher, first disowning the amendment in her name on the supplementary list of amendments and then moving it formally but not explaining what we are debating. I hope that the noble Baroness remains to withdraw her amendment at the end. Otherwise, we may be in a little trouble.

I was unable to take part at Second Reading on this Bill because I was not in the country, but I have of course read Hansard on that debate and I hope to take part in the remaining stages. I will not range as widely as the noble Lord, Lord Stunell, because I hope to say more about Clause 14 generally when we get to the stand part debate, where I think it would be most appropriate. But I will say a couple of things about the two amendments in the name of the noble Baroness, Lady Meacher, because neither of them is necessary.

Amendment 4A states that the Electoral Commission only needs to comply with the strategic and policy statement if it conforms with its own objectives. The amendment is unnecessary because the only requirement in new Section 4B in Clause 14 is for the commission to “have regard to” the statement. Nothing compels the commission to do anything specific as a result of the statement being published, and nothing in Clause 14 changes the requirement for the Electoral Commission not to do anything which conflicts with its statutory duties. In short, its regulatory independence is already protected by Clause 14.

I was somewhat mystified by Amendment A1 which removes the role and responsibilities from the strategic and policy statement. These strategic and policy statements merely set out what the Government’s priorities are and what the Government see as the role and responsibilities in relation to those priorities. It does not override the commission’s independence but gives guidance as to the Government’s priorities and of course those priorities will be approved by Parliament. Public bodies do not exist in a vacuum; they exist in a political context. The strategic and policy statements just give that context—nothing more, nothing less. Clause 14 does not impact on the independence of the Electoral Commission.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, this is an astonishing Bill. I understand why there was confusion at the start; I do not blame the noble Baroness, Lady Meacher, in any way and I hope no one else will, given what we are facing today.

This is an outrageous Bill in almost every way: a 171-page compendium of political bias. In the case of the Electoral Commission, I can understand why the Government are embarrassed. As I understand it, the commission pointed out the kind of money that the Conservative Party was getting and where it was getting it from. Given that we are now in the middle of a war in which the Russian state—Mr Putin and his cronies—are invading Ukraine, the fact that some of the money was coming from Russian sources must be an acute embarrassment to the noble Lord and his cronies. That is why they do not like the Electoral Commission.

We just have to look at what is in the news today about the Charity Commission. The story is that the Government are about to put in a Tory placeperson—a placeman, as it happens—as the chair of the Charity Commission, as they have done before. This is what they do, and it is happening throughout our public system. A Member of this House, who used to be a Labour MP, has been appointed to post after post because they supported the Government in the last election and supported the Vote Leave campaign. It is cronyism squared—cubed, probably.

The Liberal Democrats mentioned the Westminster Foundation for Democracy in a speech earlier. I used to be a board member of that foundation and am now on the executive of the Commonwealth Parliamentary Association. We are about to have a seminar, with representatives from all around the Commonwealth, at which we will be talking about good governance. How on earth can we try to put forward the idea that this so-called mother of Parliaments is an example of good governance if this Bill becomes an Act? We must do everything we can, not just to amend it but to scupper it.

Look at today’s amendments: after the two from the noble Baroness, Lady Meacher, we have over 100 government amendments. What on earth is going on with this legislation? We will soon be moving towards Prorogation and the Queen’s Speech. This Bill should be totally abandoned. In many ways we are wasting our time going through amendment after amendment; I do not think there is any prospect of the Bill moving forward.

I am a member of the Parliamentary Assembly of the Council of Europe and the Organization for Security and Co-operation in Europe Parliamentary Assembly. We go around monitoring elections in other countries and we see what happens. If there is no effective independent electoral commission in a country then we criticise that and say it is not a proper democracy. How can we properly participate and show face in these countries if this Bill becomes an Act? It is just outrageous.

I know the Minister has an impossible task. Those of us who have been in the House of Commons know the kind of debates that take place there. Regrettably, the House of Commons these days is not taking the time—it does not have the time—to examine 171 pages and all these amendments in detail, let alone their implications for our democracy. We are dealing here just with the Electoral Commission but there is a whole range of other issues, such as identification, which will make the opportunity for ordinary people to vote much more difficult.

As I say, the House of Commons has not given this legislation the kind of scrutiny that its Members ought to have done. They understand elections more than we do; they take part in them year by year, so they understand the implications of the Bill. We have a responsibility to go through the Bill line by line, but there is no way we can do that in the next couple of months. I hope that at some point—even if not now, it is inevitable that this is going to happen—the Minister will throw in the towel and say, “This is just not going to proceed”. If not, I warn him that we on this side of the House—and I think the Liberal Democrats are filled with the same kind of enthusiasm and determination, as are the Greens and, I suspect, a huge number of Cross-Benchers—will do everything we can to undermine and thwart the Bill and make sure that this abortion—no, that is not the right word.

Dissolution and Calling of Parliament Bill

Baroness Noakes Excerpts

Report stage
Wednesday 9th February 2022 Lords Chamber

[Lord Brown of Eaton-under-Heywood (CB)]

My Lords, I too attempted to darn this Bill in Committee and, indeed, spoke at Second Reading, and I too am opposed to this group of amendments. My core concern here is to safeguard my successors on the Bench and to avoid the risk of constitutional crisis, which would arise were there to be some future attempted legal challenge not as frivolous as that just indicated by the noble Lord, Lord Pannick, but something dressed up as an altogether more coherent attack on a Dissolution, such as the noble Lord, Lord Pannick, himself would be adept at managing.

Unlike the noble Lord, Lord Howard, but in common with the noble and learned Lord, Lord Hope of Craighead, and the noble Lord, Lord Beith, I do not think for an instant that the courts would ever actually reach the point of upholding such a challenge, even though, as the noble Lord, Lord Pannick, also says, things have undoubtedly moved on since the CCSU case. That, as it happens, was my very last case at the Bar, decades ago. Although it is very unlikely that such a challenge would succeed, it is very important to put in the Bill a provision that would provide the greatest possible discouragement to any mischievous person, instructing whosoever it may be, contemplating a challenge.

Clause 3 seems to me to be admirable for that purpose; it enables the courts to say, as Mr Justice Macpherson—a very old friend of mine, with whom I shared a room in chambers for decades—said in that case, “Chuck it out without more ado.” That is really the point made by the noble Lord, Lord Trevethin and Oaksey. That is the practical effect of Clause 3. It is not there, I would suggest, as revenge for Miller 2; nor does it—and this is the point made by the noble Lord, Lord Faulks—create a risk that this will be a template or precedent for the future. Its relevance here is purely in the context and to underline the fact that Dissolution is essentially a prerogative act, preserved even since CCSU. We should leave it there, discourage prospective litigants and reinforce the courts in a robust rejection of any attempt that would delay and disrupt, to some degree, a Dissolution process. Leave it there.

[Baroness Noakes (Con)]

My Lords, the noble Lord, Lord Butler of Brockwell, was kind enough to quote me from when I spoke in Committee on this. I want to underline that what I said was:

“I cannot conceive of any circumstances in which the involvement of the courts could ever be justified”.—[Official Report, 25/1/22; col. 227.]


That is the important point. What Clause 3 is trying to do is to put this question beyond doubt.

Without Clause 3, we potentially do not rule out the courts trying to get themselves involved in challenging the use of the royal prerogative, doubtless with the help of very clever lawyers such as the noble Lord, Lord Pannick. Indeed, in the noble Lord’s remarks just now, he rather wanted to keep the door open for noble Lords such as himself to encourage the courts to get involved in cases such as the use of the royal prerogative.

Our understanding before the introduction of the Fixed-term Parliaments Act was that the courts would not get involved in the use of the royal prerogative. Since then, there have been some surprising judgments—perhaps not surprising to the noble Lord, Lord Pannick—such as Miller 2, which have made many people doubtful about whether or not the settled understanding of where the courts would go was indeed that settled. That is what the noble Lord, Lord Pannick, has underlined for us today.

Dissolution and Calling of Parliament Bill

Baroness Noakes Excerpts

Committee stage
Tuesday 25th January 2022 Lords Chamber

The noble Baroness, Lady Taylor of Bolton, asked what would happen if there were a tied vote. I immediately agree that conventions and precedents are not as tight a constraint as statutory provision, but I am in no doubt that, if there were a tied vote, the Speaker of the day’s attention would be brought to the decision of Speaker Denison in 1867, when he said that major matters of public policy should be decided by a majority of the House, not “merely”—he used that word—on the casting vote of its presiding officer.

[Baroness Noakes (Con)]

My Lords, I do not often agree with the noble Lord, Lord Wallace of Saltaire, as he knows, but I did agree with his closing remarks on Second Reading:

“We should never take democracy for granted: it needs to be defended.”—[Official Report, 30/11/21; col. 1332.]


I absolutely agree, which is why it is important that the amendments in this group are not passed.

Sometimes, when people talk about democracy, they talk in terms of the role of Parliament or the separation of powers. But we must always remember that democracy is about the people—demos—who have power at the apex of our constitution and whom we have to defend. The most important players in our democracy are not Members of Parliament at Westminster but the voters up and down the land. The possibility of Parliament standing in the way of asking the people for their views on the way forward is fundamentally undemocratic, in my view.

These amendments are capable of depriving the people of their say in the future of the country. Furthermore, they could do harm at the very time that the views of the people, as expressed at the ballot box, are most needed and could have the greatest impact. Of course, if the Government of the day have a whopping majority, whether or not they have to pass a resolution in the other place will make very little difference to the outcome. It might perhaps add a few days of delay to the timing of a general election, but it would otherwise simply be a tiresome detail. But the amendment will make life difficult for minority Governments or Governments with small majorities, if they feel that they need to call an election.

At Second Reading, I spoke about the events of 2019 being one of my key reasons for supporting the Bill. It was plain that Parliament was dysfunctional. The Government could not get their chosen policies through the House due to a combination of the actions of the opposition parties and of some of our own Back-Benchers. A majority in the other place and indeed in your Lordships’ House—although that is not relevant to this amendment—was set upon frustrating the Government’s Brexit policies, but the Government could not call an election to settle that issue because they could not meet the two-thirds threshold of the Fixed-term Parliaments Act.

Of course, the Government eventually got their Early Parliamentary General Election Act through and, by then, the Labour Party had decided to support it. But we will never know whether it would have been possible for the Government to have reached the simple majorities required in these amendments at an earlier stage—but it is entirely possible that they would not have done so. A number of my party’s MPs had lost the Conservative Whip during those unhappy days and would not, therefore, have been able to stand as Conservative candidates if an election had been called. Would the turkeys really have voted for Christmas? I think not.

Many noble Lords in this House might choose to forget the result of the 2019 election because it was not to their taste, but I remind them that it was a resounding thumbs up for the Government’s Brexit policies, which Parliament was seeking to harass and destroy at the time. These amendments could well have prevented that decisive view of the country from being expressed at the time, and we would have been the poorer for it.

Minority Governments with small majorities but fractious Back-Benchers capable of frustrating a vote on a general election are not figments of my imagination; they are a real part of our political system. I say this especially to the Benches opposite because, if they have any hopes of again forming a Government, they need to reflect on whether a zombie Parliament could affect them as well. They might also reflect on whether the minority Wilson Government in 1974, which the noble Lord, Lord Beith, referred to in the debate on the earlier group of amendments, would also have resulted in an election. Is it absolutely clear that the Wilson minority Government could have called the second election in that year if he had had to cope with what this amendment would have landed him with? These amendments could be a very dangerous part of our constitutional arrangements and should be rejected.

[Lord Brown of Eaton-under-Heywood (CB)]

My Lords, I feel part of an endangered species: a Cross-Bencher who fully supports this government Bill. I would also like to go back to where we were before the ill-starred and ill-judged Fixed-term Parliaments Act.

I am against giving the Commons a veto, as proposed in Amendment 3 by my noble and learned friend Lord Judge, who is normally so sagacious but who is wrong on this occasion. This could lead to the same chaos, stasis and problem of September 2019, which the noble Baroness, Lady Noakes, has just outlined, when we subjected our Prime Minister—whatever you thought of him then or think of him now—to the humiliation of having to go cap in hand to Brussels to plead for an extension of time to achieve a policy flatly contrary to the one that he wished to put to the country. He could not get a two-thirds majority, and one seriously doubts whether he would have got a simple majority.

The Joint Committee that examined this legislation and reported in March 2021 made plain that, although a minority supported the view outlined by my noble and learned friend Lord Judge and the noble Lords, Lord Lansley and Lord Beith, the majority recognised the danger, which we should avoid at all costs, I respectfully contend.

As to the prerogative power, one can hardly overstress the difference between Prorogation and Dissolution. Prorogation—let one remind oneself—affects the cessation of Parliament and is anti-democratic in the sense that it thwarts the power of Parliament. Our governing, imperative, fundamental constitutional principle is the sovereignty of Parliament; Prorogation thwarts it and leaves the Executive for the duration in uncontrolled power. Dissolution—at the opposite end of the spectrum—is explicitly designed to give the electorate the opportunity to decide who should control our Executive. My noble and learned friend Lord Judge speaks of Dissolution eradicating the decision of the electorate last time around, ditching the democratic vote. Well, of course, in one sense you are getting rid of an existing Parliament, but you are inviting more up-to-date views on what the public—who, as the noble Baroness, Lady Noakes, said, really should be controlling all our processes—want and whether they approve the particular policies in the particular circumstances in which Dissolution is sought.

Of course, if you put the Commons in control, although you run into the sort of difficulties that the noble Baroness, Lady Noakes, rightly identified, you get rid of the problems that others seem to suggest arise under Clause 3 here. There is no question then, obviously, of the courts’ supervisory jurisdiction. But—and we will come to this point of debate later—I suggest you really do not need to introduce the chaos of a Commons vote in support of Dissolution in order to avoid the risk of introducing the courts into the whole business.

--- Later in debate ---

[Baroness Noakes (Con)]

My Lords, I will speak only on Clause 3 stand part and not on the more detailed amendments, because I am sure that my noble friend the Minister will reply in his careful way about how the wording was arrived at and what it is intended to do, as he did very carefully at Second Reading.

One does not have to be an expert on the constitution, which I am not, to know that judges should not interfere in politics, and decisions on calling elections are about as political as decisions ever get. I believe the Government are right to try to draft this Bill in such a way that the courts cannot interfere in that very political decision, and that is why I support Clause 3 standing part of the Bill.

The fact that the Government feel it necessary to include Clause 3 and draft it in such a complex way speaks volumes about how the judiciary has found many ways of getting involved in areas that would have seemed unthinkable only a few years ago, ones of which we would have assumed the courts would steer clear. The clause is necessary only because of the direction of travel taken by the courts in the way they have interpreted the areas they get involved in. I, for one, believe that we need no more surprises like the Miller judgments.

Clause 3 is confined to the specific and narrow issue of whether the prerogative power to dissolve Parliament is justiciable. I cannot conceive of any circumstances in which the involvement of the courts could ever be justified, and those who oppose Clause 3 have said that they cannot think of any either. Even the noble Lord, Lord Butler of Brockwell, who demonstrated the fertility of his imagination in the debate on an earlier group of amendments, could not come up with an example. We are legislating against shadows, against figments of the imagination.

The issue is about only the steps taken to allow a general election to be called. It is a very political decision. We cannot conceive of the courts ever getting involved in delaying an election, halting an election or even, as my noble friend Lord Faulks suggested, nullifying the result of a general election. It just seems too ludicrous a concept even to contemplate. However, we need it to be clear beyond peradventure in the law, and without this clause it may not be.

We need to get this into perspective. Clause 3 does not diminish the role of the courts in the constitution; it is about this one narrow area that before, when we simply rested on the prerogative, no one thought the courts could ever get involved in, but because of other developments in the law we now feel it necessary to be quite explicit about it.

[Lord Butler of Brockwell (CB)]

The noble Baroness and I agree that the circumstances in which this situation arises are unthinkable, so why should we have the dangerous precedent of this ouster clause in the Bill?

[Baroness Noakes (Con)]

We have it because it is just possible that the courts could find a way in. We have seen them getting involved in areas that we never thought they would get involved in before. That is a fact of the way the judiciary has moved in recent years, and it is why the clause is there.

I do not accept that the clause sets a dangerous precedent. It is about this one very narrow issue. It is not about an ouster clause that would be put in every statute that came before Parliament. Of course, Parliament must decide at the end of the day how it wants to frame its laws. It has the right to do that, and the courts can then interpret those laws, but I do not believe that this will be seen as a precedent for a more general use of ouster clauses. If it is, I am fairly sure that Parliament would not accept them. We should see this clause in the narrow concept in which it is drafted and not try to extend it beyond that.

[Lord Wallace of Saltaire (LD)]

My Lords, if we are talking about our tried and tested constitution, we should remember that in the 17th century it was Chief Justice Coke and his defence of the rule of law against the extent of the royal prerogative which led to the development of some of the ideas of constitutional democracy at least as much as Parliament. The rule of law is an essential part of the way we work.

I say to the noble Baroness, Lady Noakes, that we all know that this clause is in the Bill because of the judgment on Prorogation in 2019. I was interested to hear that the Minister’s definition of Prorogation did not in any sense suggest that that use of the power came within an accepted definition. Perhaps he will change his definition next time he comes.

The Minister has said that the importance of the Bill is to restore the status quo, but this ouster clause is not the restoration of the status quo. I agree with the noble and learned Lord, Lord Hope, that it opens a window to its use on other occasions, which would be highly undesirable. It is much more radical than Clause 2 in changing our customs and practices. If we want to maintain the status quo while changing it a little—

Dissolution and Calling of Parliament Bill

Baroness Noakes Excerpts

2nd reading
Tuesday 30th November 2021 Lords Chamber

[Baroness Noakes (Con)]

My Lords, in my time in your Lordships’ House, two periods stand out as painful memories, and both are addressed by the Bill. The first is of the period of coalition government between 2010 and 2015. While these Benches rejoiced at the end of the period of Labour rule, many of us found it hard to support the coalition wholeheartedly. In particular, the coalition agenda had a disproportionate focus on constitutional reform, which inevitably sapped energy away from more important things. I was very sorry to hear my noble friend Lord Young of Cookham, who is leaving his place at the moment, claiming some credit for that. Of course, there was Nick Clegg’s futile attempt to reform the House of Lords, which fortunately ran into the sand and never got past a Second Reading in the other place. The time of both Parliament and the country as a whole was wasted on a referendum on the alternative vote system. The wheels came off that when the British public had their say.

At the time, the Fixed-term Parliaments Act did not seem to be the worst of the constitutional measures that sailed under the convenience flag of the coalition, but its weaknesses emerged over time. As we have heard, it has produced only one five-year fixed-term Parliament, and that was in order to hard-wire the coalition in. Whether or not that was, on balance, a good thing for the country is a moot point at best. After 2015, we had two elections in less than five years—so the Act failed in its initial purpose.

The 2017 election was an act of self-harm by my own party—I freely admit that—but the second, in 2019, is the source of my second painful memory. Its final result, when it was finally called, was a triumph for democracy and the good sense of the British people, whose message was clear, and that included getting Brexit done. But the journey to that election was truly painful and laid bare the flaws of the Fixed-term Parliaments Act.

The requirement for a supermajority and the narrow path laid out for a no confidence Motion in the other place before an election could be called led to chaos in Parliament in 2019. The Government could not get their business through, could not call a general election and were harried at every turn by both Houses of Parliament, set on defying the outcome of the 2016 referendum. I still bear the scars of what happened in your Lordships’ House, as I am sure my noble friend the Minister does, and I certainly hope never to experience its like again in my remaining time here. For these reasons, the Bill has my wholehearted support. We must never again risk the mayhem of late 2019. That is why I fully support Clause 1, which removes the Fixed-term Parliaments Act from the statute book—it can be written out of our history.

The logical next step is to reinstate the status quo ante. As we have heard, Clause 2 does this through the revival of the royal prerogative. I believe that anything that diverts from that straightforward aim, including fettering the royal prerogative with parliamentary processes, runs the risk of unintended consequences. It is conceivable that a Government might not have a majority, could not get a vote through the other place and could be held to ransom, as they were in 2019, by a Parliament set on thwarting their will. That year showed us that the unthinkable can indeed happen. The previous system worked well for Governments of all parties, and I am confident that it will work well again. We should simply revive the royal prerogative and not invent something else around it.

I also support Clause 3 of the Bill, which expressly provides for non-justiciability. I do not believe that it should be seen as an ouster clause, because it is generally accepted that the likelihood of the courts challenging the monarch’s personal prerogative is very small. There should be nothing to oust. But a small likelihood is not a zero possibility, and recent judgments should make us wary of where the courts might want to go in future—we clearly cannot rule out future judicial activism. I believe that we should put that question beyond any doubt by enacting Clause 3.

The other place has already expressed its clear view on this short and simple Bill. When it debated it, it did so in the light of all the relevant issues that were surfaced by the excellent Joint Committee on the Fixed-term Parliaments Act, its report and the Government’s response. It also did so in the light of the points raised by the Public Administration and Constitutional Affairs Committee in the other place, and I do not believe that any new issues have been raised by your Lordships’ Constitution Committee in its recent report, although I look forward to hearing the noble Baroness, Lady Taylor of Bolton, in due course.

Your Lordships’ House is always entitled to ask the other place to think again, but I suggest very gently to noble Lords that doing so when the result is not likely to change is not a good use of your Lordships’ time. I hope that this House will not impede the Bill’s journey to Royal Assent.

Budget Statement

Baroness Noakes Excerpts

Wednesday 3rd November 2021 Grand Committee

[Baroness Noakes (Con)]

My Lords, I agree with my noble friend Lord Lamont and the noble Lord, Lord Fox, that this debate should have been held in the Chamber. Indeed, 10 years ago, when the noble Lord, Lord Davies of Oldham, and I were on our respective Front Benches, it never happened and never would have, not least because we would never have accepted a time-limited debate on something as important as the Budget.

I have a problem with this Budget: it does not feel at all Conservative. Low taxes, pro-enterprise measures and small government have all gone AWOL. I therefore struggle to be upbeat about it. The Budget is of course shaped by the choices that the Government made in responding to the Covid pandemic. The Government never published a proper cost-benefit analysis of their response to the pandemic, so there was no public debate about the right balance of measures that could have been taken.

One bright bit of news emerged last week in the shape of a leaked Cabinet Office document on the current Covid plan B, which fortunately has not been implemented. It shows that the Treasury is on the case in analysing the economic benefit, and it calculates that the cost would be up to £18 billion with very weak health benefits. It is a pity that the more careful analysis for which the Treasury is renowned was not more prominent in the last year and a half.

The economic impact of the Government’s Covid choices are now very visible. The lockdown tanked the economy and required extraordinary levels of support for individuals and businesses. That has left us with debt estimates of nearly 90% of GDP, albeit lower than previously forecast but still at levels that none of us expected to see in our lifetimes, especially under a Conservative Government. The OBR has estimated the long-term effects of scarring from Covid as a permanent loss of 2% of GDP.

The non-Covid outcomes also have to be paid for, with serious backlogs in health and education. The Government are pouring astonishing amounts into the NHS. The Department of Health and Social Care’s budget starts at around £140 billion and rises to nearly £190 billion. There is not a single word in the Red Book about efficiency or value for money in the NHS; the commentary is almost all about spending, which is how the NHS likes to frame the conversation. That cannot be the right approach to public expenditure, and I hope the Minister will assure me that the Treasury will not wait until the next spending review to tackle the black hole of NHS spending.

To pay for all this, we need serious growth in the economy. I am particularly concerned about the prospects of growth beyond the current bounce-back from Covid. As we have heard, the OBR forecasts that growth in the years beyond 2022 will fall below 2%, ending at 1.4% in 2026. Doubtless part of that is a result of the estimates of scarring, to which I have already referred, and one ray of hope is that there is still massive uncertainty about those estimates so it may not have such a dramatic effect. However, if the forecasts are right then we are creating an environment in which businesses will not prosper, the tax yield will decline and enterprise and investment will find no incentives in the UK, which will in turn lead to lower employment. We could be entering a downward spiral.

However, I simply do not believe the forecasts; if I believed them, I would be preparing to leave the country. The only thing that keeps me sane is a belief that the picture painted by the OBR is simply wrong—and not just in the scarring effects, whether from Covid or from Brexit. We know the OBR is resistant to dynamic forecasting, and that may account for some of it; the contribution of trade to GDP is “negligible”, and that feels wrong; and the OBR’s growth forecasts are at the bottom end of those by independent forecasters. So, I shall not be packing my bags just yet.

There were two good bits in the Budget speech. The first was the reduction in duty on champagne. As noble Lords may know, champagne is the dieter’s drink of choice for its low calorific content, so this is clearly consistent with the Government’s obesity strategy.

The second good bit has already been referred to by my noble friend Lord Lamont and read out in full by the noble Lord, Lord Eatwell, so I do not have to take up the Committee’s time by repeating it, but I remind noble Lords that it concludes that there are limits to government involvement in the economy. It was good to hear the Chancellor saying that. It was the most Conservative thing he said in his 34-page speech. I hope he means it, and that we can return to Budgets which reduce taxes, curtail the size of the state, reduce burdens on business and support the enterprise sector to grow and prosper.

Critical Benchmarks (References and Administrators’ Liability) Bill [HL]

Baroness Noakes Excerpts

3rd reading
Tuesday 2nd November 2021 Lords Chamber

[The Minister of State, Cabinet Office and the Treasury (Lord Agnew of Oulton) (Con)]

My Lords, I would like to make a few short remarks. The Bill builds on the Financial Services Act 2021, which gave the FCA powers to oversee the orderly wind-down of a critical benchmark, such as Libor. In particular, it allows the FCA to ensure the continued publication of a benchmark, using a synthetic methodology. The Bill plays a vital role in supporting a smooth and orderly wind-down of the Libor benchmark, by providing legal certainty for contracts that rely on Libor beyond the end of this year, and a narrow immunity for the administrator of Libor, where it is publishing synthetic Libor as required by the FCA.

It has been a privilege to have engaged in these discussions. I thank noble Lords for their rigorous examination of this highly technical Bill, both in formal debate and in the various technical briefing sessions that I have held. I am confident that the Bill has been thoroughly examined by the House. All those involved have brought significant experience and insight to this process.

I am particularly grateful to my noble friends Lady Noakes and Lord Blackwell for raising this important issue during the passage of the Financial Services Act earlier this year. Once again I put on record my thanks for their work on this matter.

In our discussions, we have covered the issue of the FCA’s methodology for the synthetic rate. We have considered the importance of legal certainty, which the Bill delivers, and we have highlighted the work that the FCA is doing on the wider Libor transition. This includes its work to ensure that synthetic methodology is fair and aligned with the global consensus.

We have talked about the work that the FCA has been doing alongside the Bank of England and the industry-led risk-free rate working group. This will support and encourage a voluntary transition away from Libor prior to the end of this year wherever possible—an effort which has been successful in significantly reducing the number of contracts that will need to rely on the synthetic rate both here in the UK and globally. Throughout, your Lordships have had a particular interest in protecting consumers and maintaining the integrity of UK financial markets.

As we have discussed, the UK has one of the most open, innovative and dynamic financial services sectors in the world. As the home of Libor, we have a unique and crucial role to play in minimising global financial stability risks and disruption to financial systems from the wind-down of Libor. The Bill forms part of a significant programme of work by the Government and the regulators to support the global market-led transition away from Libor. It supports the integrity of financial markets and consumer protection. In doing so, it underlines our reputation as a custodian of a global financial centre.

I conclude these brief remarks by thanking the Economic Secretary to the Treasury, his officials, and the clerks in the Public Bill Office, who have worked so diligently to support the passage of this Bill. I also thank FCA officials for the technical briefings that they have provided. I beg to move.

[Baroness Noakes (Con)]

My Lords, as I was so kindly namechecked by my noble friend, I will just say that I thank the Government very much for responding to the real concerns expressed by the financial services industry in respect of tough legacy Libor contracts. The Bill does not deliver everything that the industry wanted but it delivers a great deal, and I am very grateful to the Government.

Bill passed and sent to the Commons.

Critical Benchmarks (References and Administrators’ Liability) Bill [HL]

Baroness Noakes Excerpts

2nd reading
Wednesday 13th October 2021 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I declare my interests as recorded in the register and, in particular, my holdings in financial services companies, which could be affected by the Bill.

I welcome the Bill and thank the Government for responding to the very real issues that are raised by tough legacy contracts. I also thank the Minister and my honourable friend the Economic Secretary for arranging two very helpful briefing meetings for Peers. Before getting into my speech, I must say how much I am looking forward to the maiden speech of my noble friend Lord Altrincham, and I welcome him to the select group of noble Lords who speak on financial services matters.

When we considered the Financial Services Act 2021 earlier this year, I argued that we needed provisions beyond those contained in that Act to deal with tough legacy contracts. I tabled some amendments in Committee and on Report, none of which found favour with the Government. It was plain to me that legislation was needed to avoid disruption in financial markets, and I warned about the clock ticking down towards 31 December this year, when Libor ceases. I therefore rejoice that the Government have now seen the light, and I hope that this Bill can be speedily dealt with both here and in the other place.

In the previous Bill, I argued for two measures to deal with the tough legacy problem: a contract continuity provision and a safe harbour provision, as referred to by the noble Lord, Lord Sharkey. This is what the financial services industry said that it needed and what the responses to the Treasury’s consultation showed. The Bill provides for contract continuity but not safe harbour. If nothing else, that is regrettable for being out of line with the approach already taken under New York law, where a safe harbour has been provided.

As I understand it, the Government believe that they have drafted the continuity provisions in such a way that a safe harbour is not needed. The theory is that the continuity provided by the Bill should be watertight against any actions that arise from transition to synthetic Libor. There are concerns about this. Experience shows that legal challenges can and do emerge to legal drafting, even if that drafting is initially believed to be bombproof—whether in contract or statute law. No self-respecting lawyer would claim otherwise.

There is clearly a risk of litigation by parties who think that they have suffered from the transition to synthetic Libor or who could gain from being released from a contract. The risk of successful litigation may not be high, but there is a risk. This could be disruptive and costly. I hope that my noble friend agrees that it is important to avoid this.

The scale of the risk may well be difficult to quantify and will, of course, depend on the number and type of contracts that actually transition to synthetic Libor at the end of this year. There will, however, be clear winners and losers. As the noble Lord, Lord Sharkey, said, the new, synthetic rate will probably be higher than Libor—possibly by about 10 basis points. I spent some of our recent Recess acquiring new knowledge about the overnight interest swap rate and the ISDA five-year historic median credit adjustment spread. If nothing else, this shows that your Lordships’ House is a wonderful place for lifelong learning. Ten basis points may not be much on a retail mortgage but, on a large nominal in a commercial transaction, it could be a pretty big deal.

Last week, the Financial Conduct Authority provided us with a very helpful note on synthetic Libor. I fully accept that the FCA has consulted extensively and that there is general market acceptance that the methodology is the best that could be achieved for Libor-like rates. Nevertheless, there has not been a debate about the quantum of the difference between Libor and synthetic Libor and its impact on litigation risk. A question about quantum was tabled last week at a webinar arranged for the financial services industry together with the Treasury and the FCA, but that question was not selected for answer. This will be in the public domain at some stage and I believe it could increase the likelihood of litigation.

An important risk mitigant will be the clarity of the government messaging in relation to the impact of this Bill. I hope that my noble friend the Minister can be crystal clear on three points. First, the Government need to intend for the drafting of Clause 1 to have the same substantive effect as the New York legislation. In other words, the Government’s clear intention should be that the continuity drafting must be watertight in relation to litigation targeting the transition to the use of synthetic Libor.

Secondly, the Government need to be very clear that the ISDA credit adjustment spread—the main source of the difference between Libor and synthetic Libor—is set by the FCA, that it may well result in higher rates, and that it is out of the control of the parties to the contract.

Thirdly, with the strong encouragement of the Treasury, the FCA and the PRA, the industry has been actively transitioning contracts by agreement, generally using SONIA—with or without a credit adjustment spread or base rate. The FCA briefing note to which I referred said that they regarded these formulations as fair. Do the Government agree that these rates are fair, given that they may not be the same as the synthetic rates to be used for tough legacy contracts? It is just as important to avoid litigation on contracts transitioned by agreement as it is on those designated tough legacy contracts, especially as the draft scope from the FCA will potentially put a very large number of outstanding contracts into synthetic Libor for 2022 at least.

I will touch briefly on the fallback provisions in new Article 23FB. It is certainly welcome that contractually agreed fallbacks can continue, particularly where they have been negotiated in the clear knowledge that Libor would be ceasing. However, many contracts and other documents have fallback language which would be problematic if they were saved by Article 23FB. The risk-free rate working group, which has done splendid work on Libor during the last couple of years, highlighted formulations which used “cost of funds” as being problematic. The term sounds more straightforward than it is. There is no agreed method of computation for standard market practice. It is thus a rich source of potential disagreement between parties and, hence, of lengthy and costly litigation, which I am sure the Government will want to avoid. Can my noble friend say whether any contracts with cost of funds fallbacks are likely to stand, or is it expected that they will all be transitioned to synthetic Libor? The latter is clearly preferable, given the difficulty of applying that particular fallback.

Lastly, I want to raise the 10-year time limit on the use of synthetic Libor under the 2021 Act. The New York legislation does not have a time limit. I understand that it is widely believed that there will be a rump of contracts which will go beyond this period. Do the Government accept that some contracts will need a solution beyond 2031? If so, when do they expect to deal with these? I hope that we can avoid the brinkmanship that has characterised the timing of this Bill and some of the FCA decisions in the run-up to the deadline at the end of this year.

In conclusion, despite the concerns I have outlined, I am a big supporter of this Bill. I hope that it will become law as soon as possible and give the market the certainty it needs.

House of Lords Appointments Commission

Baroness Noakes Excerpts

Monday 6th September 2021 Lords Chamber

[Baroness Noakes (Con)]

My Lords, whether or not the Appointments Commission is made statutory or not is a sideshow. The real issue is whether the Prime Minister has the final say on appointments to your Lordships’ House, and whether he can therefore determine its size. I am clear that he should retain that power. Opinions from the commission on individual appointments or the size or composition of the House should never be binding on the Prime Minister or otherwise inhibit his actions.

Ironically, the commission itself has provided the best evidence for not changing the existing constitutional arrangements. Let us look at the commission’s record. For the last 20 or so years of its life, it has recommended the appointment of 74 new Cross-Bench Peers—how successful has that been? From the early days, it was clear that there was a desperate search for diversity, but the most important diversity—that of perspective and thought—seems to have been ignored. Not to put too fine a point on it, the Cross Benches have become more representative of metropolitan liberal groupthink. They cannot be relied upon to reflect the views of the British public. Our debates and votes on Brexit in 2019 are all the proof that is needed of that.

As my noble friend Lord Strathclyde has observed, this House has become a House of opposition to the Government. It is a no-brainer that the Prime Minister must tilt the balance back, even if that means increasing the size of the House. He should not have to wait for the opinions of a commission to do so.

Northern Ireland Protocol

Baroness Noakes Excerpts

Wednesday 21st July 2021 Lords Chamber

[Lord Frost (Con)]

My Lords, we have set out in the Command Paper the very high-level elements of the approach we wish to pursue. Of course, we want to discuss the detail with the European Union, including in many areas. What we are proposing is an extremely light-touch measure to allow trade to flow freely within the UK customs union and single market. We think that is a reasonable response to the situation that currently prevails.

[Baroness Noakes (Con)]

My Lords, I very much welcome my noble friend’s Statement and I hope the whole House will join me in praising his huge efforts to try to make our relationship with the EU work effectively. Does he agree that the guiding star should be what works for the citizens of Northern Ireland, and that if the EU could shift to a people-centric rather than a rules-centric approach, we could start to make some real progress?

[Lord Frost (Con)]

I very much agree with the thrust of my noble friend’s comments. The impact of the protocol on everyday lives in Northern Ireland is a significant part of the difficulty. Again, if one looks at the comments from the chair of Marks & Spencer, we see the risks to everyday life; for example, the risk of not being able to deliver supplies for Christmas under the current arrangements. I do not think that is what either the European Union or we actually want in this situation, and if we can focus on the practicalities and the reality of the situation and try to find a way through, we will all be the better for it.

Ministerial Code

Baroness Noakes Excerpts

Tuesday 27th April 2021 Lords Chamber

[Lord True (Con)]

My Lords, I believe the Prime Minister does and will conduct himself, as he has, in accordance with the principles of public life.

[Baroness Noakes (Con)]

My Lords, does my noble friend the Minister agree that while Westminster and the mainstream media are getting excited about things such as the decoration of the Prime Minister’s flat and who said what to whom in texts, away from the Westminster bubble, people are much more interested in getting their vaccinations, getting back together with their families and friends and getting the recovery of the economy under way?

[Lord True (Con)]

I do agree with my noble friend. The Prime Minister, in denying one of the more absurd allegations, made the same point. If I am allowed a personal comment: I have the privilege of having my second vaccination tomorrow thanks to a modern miracle of science. We should all be profoundly grateful for that and the way it has been carried through in this country.