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.

Global Minimum Corporate Tax Rate

Baroness Noakes Excerpts

Wednesday 14th April 2021 Lords Chamber

[Lord Agnew of Oulton (Con)]

I am not sure whether the noble Lord is referring to the move by the American Government to put forward their own propositions on international tax reform, but it is important to clarify that the US Government are following the G7 work that has been done on pillars 1 and 2. It is rather good news that they are engaging in a much more front-footed way than happened under the previous Administration.

[Baroness Noakes (Con)]

My Lords, I hope that my noble friend will agree that the suggestion from the US that the minimum tax rate might be as high as 21% has no chance of global agreement. However, do the Government think that there is any level at which a global deal might be done?

[Lord Agnew of Oulton (Con)]

I can only speculate on what that might be, but the important thing is to try to get as much harmonisation on rules for large multinational companies. That is why we were always keen on pillar 1, which ensures that the profits of large digital businesses are taxed in the countries where they make their sales. It is important because, as one of the largest economies in the world, we believe that these international companies should not be able to just come here and take all the advantages of the infrastructure that British taxpayers are contributing to the creation of.

Financial Services Bill

Baroness Noakes Excerpts

Report stage
Wednesday 14th April 2021 Lords Chamber

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to follow the Minister. In doing so, I declare my financial services interests as set out in the register. I would like to be the first to offer my support for Amendment 14 and what it seeks to achieve. I congratulate my noble friend on the decision to use the affirmative procedure to bring these powers into force.

I will now speak to Amendment 35 in my name. The thinking behind it is quite straightforward: financial exclusion has dogged our nation for decades, ruining individual lives and putting down potential. Solutions exist and thousands of people are working so hard in this area, but we need to do more and we need more innovation: hence the two elements in Amendment 35. It seeks to give the Bank of England—our central bank—a more significant role when it comes to financial exclusion. The Bank has an enviable brand, respected right across the UK and revered around the world. This brand could be well put towards solving the problem of financial exclusion.

The first part of Amendment 35 seeks to give the Financial Policy Committee of the Bank of England an objective to monitor financial exclusion. As noble Lords know, the FPC is responsible for financial stability in the UK. I believe there are 407 billion new reasons to take this opportunity to reconsider financial stability and include financial exclusion within the remit of the FPC.

The second limb of the amendment seeks to suggest the opportunity for the Bank to offer basic bank accounts to those who find themselves financially excluded. The take-up of bank accounts for those financially excluded is not just a measure of what is currently available from retail providers. The history of those individuals also plays a key part, so, again, the brand and the central place of the Bank could play a critical role here. If we considered some of those accounts potentially being digital accounts—perhaps central bank digital currency accounts or digital pound accounts—the Bank might play a critical role in addressing digital as well as financial exclusion.

The Old Lady of Threadneedle Street could be not just lender of last resort but potentially, through Amendment 35, provider of first support for those individuals en route to financial inclusion. Provider of first support is certainly worth a thought. Does the Minister agree?

[Baroness Noakes (Con)]

My Lords, I shall speak only in respect of Amendment 35. My noble friend’s amendment is very well intentioned, covering financial exclusion and basic bank accounts. Despite basic bank accounts having been in existence for nearly 20 years now, there remain problems with take-up. The know-your-customer rules, about which my noble friend Lord Holmes of Richmond raised concerns in Committee on this Bill, also make life difficult for individuals trying to access them. It is no secret that the banks regard basic bank accounts as a costly burden that they have to bear, which is probably at the heart of some of the issues.

--- Later in debate ---

[Lord Blackwell (Con) [V]]

My Lords, I should like to speak to Amendment 37A in my name and remind the House of my former interest as chairman of a regulated bank until the beginning of the year.

As the noble Baroness, Lady Bowles, set out, within the group there is a range of amendments that seek to serve the same purpose and there is a lot of common ground, as indeed there is in the letter of the Economic Secretary that was circulated today. All the amendments reflect a broad consensus, as expressed in previous stages of the Bill, that with the new rule-making powers post Brexit, there is a need to establish more formal parliamentary scrutiny. There has been consensus in the debate that scrutiny requires a committee charged with that role and appropriate technical support. I and others have made the case that that should involve a joint committee of both Houses, although that is not for this legislative stage.

There is also agreement in all these amendments that where regulators precede their regulation with a public consultation, the information should be provided to Parliament at the same time to allow time for it to comment and its views to be taken into account before the rules are finalised. There is also common ground that regulators should take note of Parliament’s views and respond in some form.

I therefore have some sympathy with the amendment, and Amendments 19 and 20, moved and spoken to by the noble Baroness, Lady Bowles, but I prefer mine because those amendments, particularly Amendment 20, are overly prescriptive on the nature of the information and the interaction between the regulator and a parliamentary committee. It should be up to the committee charged with this responsibility to set out exactly the information it wants and how it should interact, as a parliamentary, rather than legislative, matter.

My amendment also adds the requirement for Her Majesty’s Treasury to set the regulations through secondary legislation, to take note of the parliamentary scrutiny and to bring forward statutory instruments to change the secondary legislation that provides the legal framework for rule-making, which may be a necessary response to the comments made. That is also fully consistent with the Economic Secretary’s letter.

The big divide is between my amendment and Amendments 45 and 48, which introduce a requirement for parliamentary approval of rules before their introduction, other than in exceptional circumstances. Such a requirement would fundamentally change the relationship and role of regulators, originally established as independent, apolitical experts acting under parliamentary laws. Of course, regulators should be subject to scrutiny in their role but for Parliament to approve rules before they are enacted removes the independence of the regulators, effectively thereby making Parliament the operational rule-maker and those rules more subject to political views and intervention. We do not impose that ex-ante approval of rules on any other regulator in any other sector, so far as I know. I cannot imagine that our expert regulators in the financial services sector would be comfortable operating under those straits, whereby anything they did had to be pre-approved by Parliament.

The case for parliamentary oversight is unanswerable, but the proper regime is for Parliament to charge the regulators with independently operating the legal framework that it sets up, and then for Parliament to scrutinise how they operate those responsibilities and to change the legal framework if it wants to change the outcome, rather than Parliament seeking to supervise and approve the detailed rule-making on a day-to-day basis. Rather than wait for future legislation, I hope my noble friend the Minister will find it possible to support my amendment. Failing that, I hope the House will clearly reject Amendments 45 and 48 and the huge —and, in my view, undesirable—shift in the relationship between regulators and Parliament that they would represent. I look forward to my noble friend’s response.

[Baroness Noakes (Con)]

My Lords, I have added my name to Amendments 45 and 48 in the name of the noble Lord, Lord Eatwell. I also support the intent behind the amendments in the name of the noble Baroness, Lady Bowles of Berkhamsted, and I know that she too supports his amendments. As has been said, these amendments concern one of the key issues that emerged during scrutiny of the Bill: the parliamentary accountability of regulators and the scrutiny of their actions. As already noted, there was widespread agreement around the House at Second Reading and in Committee that Parliament should have a role in scrutinising the rules that the FCA and PRA may make under the new rule-making powers created by the Bill.

Of much greater importance will be what happens when the Government expand the rule-making powers of the FCA and the PRA, as they have outlined in their consultation document on the review of the financial regulation framework. What we do in the context of the Bill is clearly important in signalling what we expect in the context of a larger shift in rule-making powers, if that is what the Government decide to do following consultation. This is particularly important because the Government’s analysis of parliamentary scrutiny in their consultation document was not encouraging; it was largely a defence of the existing committee activities in each House, with no regard to the new circumstances created by the extensive new rule-making powers. The Government—somewhat surprisingly, given their excellent Brexit credentials—seem not to have taken on board that the scrutiny context has changed significantly with the repatriation of financial services regulatory powers from the EU. That context should drive how we see the way forward.

Since our debate in Committee, my noble friend Lord Howe has made available to us the texts of letters from the PRA and the FCA which broadly say that they will do whatever Parliament decides, which is only right and proper. I do not think the letters add much to the analysis of the issues we debated in Committee, but they nevertheless demonstrate a constructive willingness to co-operate with parliamentary scrutiny. When my noble friend responded to our debate in Committee, I was not filled with confidence that the Government really understand the dimensions of the issues around scrutiny and accountability in the context of these additional rule-making powers. I have seen the rather late-in-the-day letter from the Economic Secretary which landed in our email boxes this afternoon. I shall be kind and say that the direction of travel is positive, but we have not yet reached a satisfactory landing point for this debate. I expect we will continue to pursue this issue well beyond the passage of the Bill.

As my noble friend Lord Blackwell knows, I do not support his Amendment 37A because it is a rear-view mirror amendment. I strongly believe that Parliament should have the opportunity to get involved with the rules made by the FCA and the PRA in time to influence their final shape. It is not satisfactory to think that ex-post scrutiny is an effective mechanism for parliamentary involvement. I do not believe the independence of the PRA and the FCA is threatened by this intervention in how rules are made, given the context of the very significant new regulatory rule-making powers expected to be devolved to them. That is why I support the amendments in this group in the names of the noble Lord, Lord Eatwell, and the noble Baroness, Lady Bowles of Berkhamsted, which provide a much better basis for Parliament’s future involvement in additional rule-making powers.

[Lord Davies of Brixton (Lab) [V]]

My Lords, these amendments are all on the same broad theme. As the previous speaker mentioned, there is a broad consensus that something needs to be done to provide a formal role for parliamentary scrutiny in the work of financial regulators. I do not want to detain the House, but I will take the opportunity to emphasise points that I have made at earlier stages. The basic question, to me, is: who regulates the regulators? The question is why we should trust the regulators; the answer is openness and engagement. Clearly, we have a particular interest here but can, I believe, contribute massively to the work of the regulator.

For us to raise these issues is not to question the expertise or good will of the people who serve on the regulators’ boards or work in their offices. It is simply wrong to assume that, once appointed, they can be left to get on with the job. As is apparent in the debate, there is clear consensus about the need for scrutiny. That is not contested. Obviously, there are clear reasons why they would benefit—the expertise of this House is a factor—but my particular concern is to establish systems that minimise the risk of regulatory capture. This is the experience, widely found, whereby regulators tend to become dominated by the interests they regulate and not by public interest.

I emphasise that this is not about corruption; it is more, in my mind, a social and cultural problem. I do not think the concept, in theory, is contested. The answer is to strengthen and develop the widest possible involvement of all sorts of bodies in the work of the regulators. Clearly, Parliament has a particular role and these amendments explore possible approaches to it. I hope the Minister can say a bit more than what was in the letter. Does the Minister consider regulatory capture to be something that occurs, and where the systems that are established address it and minimise the risk?

--- Later in debate ---

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I speak in support of the amendments just proposed by the noble Lord, Lord Sharkey, which I have signed. One’s heart goes out to him—it must be very difficult to make a speech of this complexity and passion with all these breaks. Despite the technical difficulties, however, he has made the case for action very well, and as co-chair of the all-party parliamentary group on these issues he is very well briefed on the situation faced by these fellow citizens of ours, and the extra costs that they face. It is indeed a very difficult situation, and one hears a lot of despair when one talks to these people.

I am sure that when he responds the Minister will, as the noble Lord, Lord Sharkey, hinted, dwell at length on the numbers of this group in various categories. There is of course a debate on how the prisoners can be split up—I think that the only thing that we agree on is that the total is probably about 250,000. As with the noble Lord, Lord Sharkey, however, my argument is not about the numbers. Simply put, it is clear that a significant number of people, through no fault of their own, cannot exercise the choices about their mortgage that the rest of us can. While some would argue that this is the direct fault of the Government, I think that someone needs to take responsibility for providing a fair outcome for those who are in a position to take advantage of it.

As the noble Lord, Lord Sharkey, says, this group of amendments offers two options: one that focuses on what the FCA might do within the parameters set by the Bill and another—37B, a late amendment that we drafted for Report—that suggests that the Treasury might wish to take powers to act in the way that is most suitable for it. Both have merits, in their ways. As the noble Lord, Lord Sharkey, said, they have detailed implications that need to be followed through carefully. My preference would be for Amendment 37B, for the very good reasons set out by the noble Lord, Lord Sharkey. If, as he said he might, the noble Lord decides to test the opinion of the House, we will support him.

[Baroness Noakes (Con)]

My Lords, the amendments in this group are misconceived, for a number of reasons that I shall explain. I have much sympathy with the plight of mortgage prisoners, who find themselves in a difficult position as a result of taking on debt when market conditions and regulation allowed mortgage lending in ways that are not generally possible now. We have to remember that many of the borrowers we are talking about would not qualify for a mortgage in today’s environment, either because of the type of mortgage that they have or their own financial circumstances. This is not to blame them, but it is a relevant fact.

Mortgage prisoners are not the only groups who are facing financial problems. Covid-19 has brought financial stress for many individuals and families, and indeed the problems of mortgage prisoners may have increased during the pandemic. Any solutions for mortgage prisoners need to be put in the context of all who are facing debt problems, and we must be careful that solutions for one category of financial distress are fair and proportionate.

Covid-19 has also caused delays in the implementation of the FCA’s initial solution, which relaxed the regulatory affordability rules. We do not, therefore, know how effective those will be in solving the problems of mortgage prisoners, and we should be wary of leaping to further solutions until existing remedies have had time to take effect.

Although a number of statistics have been cited by the supporters of the amendments, hard data on the mortgage prisoner population are not readily available. This was underlined in last year’s report by the London School of Economics, and the FCA has never claimed to have a perfect picture. Although the report by the group UK Mortgage Prisoners purports to offer a definitive analysis, its membership is only a fraction of the number potentially within the mortgage prisoner net, so its report should be treated with appropriate caution. It is hard to make policy in this environment.

The amendments include a cap on standard variable rates—SVRs—for all mortgage prisoners with inactive or unregulated lenders, plus two approaches for making new fixed-rate deals available to those who are basically good payers. The proposal to cap SVRs responds to a fairly vociferous demand from lobby groups. Amendment 21 would cap SVR rates at 2 percentage points above base rate. The result would be a rate broadly aligned with the competitive rates available in the active mortgage market, but those rates are available only to low loan-to-value ratios, and to borrowers with the most robust financial profiles. The market rates for riskier high LTVs are probably twice that level, even if the personal financial profile of the borrower is resilient. In addition, there is not an unlimited supply of fixed-rate deals. Many lenders simply do not offer fixed-rate deals on high LTV loans, especially when combined with weaker personal financial profiles.

The amendment says that mortgage prisoners with inactive or unregulated lenders should have rates that are available only to other mortgage borrowers who have completely different loan and borrower characteristics, and it would apply to them even if they did have opportunities to switch mortgages, which the FCA estimates is roughly half the total population. It is unsurprising that the LSE did not recommend this, and noted that it could create market harm. The FCA’s own analysis, comparing the rates paid by mortgage prisoners who are stuck on SVRs and cannot switch, indicates that the real problem is only about 40 basis points, if the correct comparator is used. I do not accept the assertion of the noble Lord, Lord Sharkey, that that is an incorrect calculation. Those 40 basis points are no proper foundation for market intervention.

As the noble Lord, Lord Sharkey, explained, the proposals for the availability of fixed-rate mortgages for good payers in Amendments 21 and 37B take slightly different approaches. Amendment 21 says that FCA rules should

“make new fixed interest rate deals available to mortgage prisoners”,

while under Amendment 37B the Treasury must provide for them to be offered fixed-rate mortgages. Neither amendment says how this can be achieved.

In the case of Amendment 21, it would be a startling new direction for regulation if the FCA could tell regulated lenders that they were obliged to offer particular deals to people who by definition are not their own customers. As for Amendment 37B, clearly the Treasury will not itself be providing loans, as it is not in the business of retail lending. The Treasury also has no power to tell banks or building societies to make any particular loans. If either of the amendments resulted in regulated mortgage providers being told that they had to lend to certain groups of non-customers, the impact on the financial services industry would be chilling.

It might be possible for the Treasury to procure that regulated lenders offered fixed-rate deals if the Treasury itself guaranteed all or part of the debt, as it does for some first-time buyers. But that is not what Amendment 37B says, and it would not be a plain reading of the proposed new clause to cover such an intervention.

As if telling lenders what products they should offer and to whom were not bad enough, both amendments go on to try to cap the price of these fixed-rate deals. Amendment 21 would do this at a rate to be fixed by the FCA, using LTV ratios and average rates available to customers of active lenders. This ignores the basic fact of life that mortgage prisoners who have not remortgaged are not like other borrowers, and do not satisfy the lending criteria of most mortgage lenders—whether that is because the LTVs are too high or because the other financial characteristics of those borrowers place them outside the risk appetite of active lenders. For some borrower circumstances there is no market rate at all, and it is not right to assume otherwise.

--- Later in debate ---

[Baroness Noakes (Con)]

My Lords, at this late stage of the evening I shall not try to emulate the previous speaker’s length of contribution—indeed, I shall deliver a slightly shorter version of what I had originally intended to say. I speak in favour of Amendment 24, in the name of my noble friend Lady Neville-Rolfe.

Amendment 24 focuses on ex post analysis of the impact of changes introduced by the regulators or the Government. It therefore gives us a different lens on the impact that interventions have had in practice. My noble friend normally focuses on impact statements, which are ex ante evaluations and often suffer from highly questionable assumptions and confirmation bias. When we deal with ex post analysis, however, we can rely on outcomes and facts. That kind of analysis is really important when helping to shape policy going forward or correcting any mistakes in policy already introduced, so I support this amendment. I personally would not have gone for an annual report, because the ability to see the cumulative impact of changes is quite important but difficult to track in an annual report. However, a report is an extremely good idea.

The noble Lord, Lord Sharkey, has tried to add a consumer focus to the report that my noble friend Lady Neville-Rolfe has proposed. I think it is better focused on small business, innovation and competitiveness; to add consumer matters would dilute the focus of that report. I am not against a report on consumer protection but it would not help to stick it in the middle of something focusing on issues such as competitiveness.

The noble Baroness, Lady Bennett of Manor Castle, will not expect me to support her Amendment 37. The analysis we got from her and the noble Lord, Lord Sikka, seemed to be of a world I do not really recognise. I believe the financial services sector is a great success story for this country and makes a big contribution to our economy. A number of the things that noble Lords cited seemed to be clinging to an outdated bricks-and-mortar vision of what banking is really about; frankly, that is not the world we live in today. Just as we have seen that bricks-and-mortar retail is not the way forward, it will not be for banking either. We must not keep tying ourselves to the way things were in the past.

[Baroness Kramer (LD)]

My Lords, given the hour I shall also be very brief, but I have to say I rather like the amendments in this group. I like Amendment 24, as amended by Amendment 25—I do not care if it is a separate chapter. But it is quite dangerous to get tangled into issues around competitiveness without making sure there is a lens on consumer protection at the same time. Many small businesses fall into the consumer category in reality, certainly the micro end of small businesses.

What I like about this amendment is: what you measure, you manage. We are so constantly focused on change, new regulation and new rules, without ever going back and looking at the consequences of what we have done and trying to identify what worked, what did not and where the gaps are. It seems that this proposal goes absolutely in the right direction.

There is something interesting in Amendment 37 because one of the big questions that has never been answered is: how does our financial services industry impact on the real economy, in contrast to something much more circular within the financial services economy? I do not think that one is good and the other bad but they are very significant questions, particularly in a country where we have such a dominant investment banking culture, which does not necessarily provide a wide range of relevant services to a great deal of our economic base—particularly our small business base. There is a very interesting question wrapped up in all of that. The approach of saying “We need to look at this in a serious and consistent way, perhaps regularly” strikes me as important when feeding the strategy which then informs the way in which the regulator, the Treasury and the Government behave.

Post Brexit: Economic and Political Opportunities

Baroness Noakes Excerpts

Thursday 25th March 2021 Lords Chamber

[Lord Frost (Con)]

My Lords, I have, of course, read the full and thoughtful report produced by the noble Earl’s committee, which was published on Monday, on this question and many others. We think that it is right to establish the Government’s arrangements fully when the treaty is fully in force and ratified on both sides, which we hope will be very soon.

[Baroness Noakes (Con)]

My Lords, does the Minister agree that the noble Lord, Lord Rooker, should concentrate on outcomes, not process, and that he need look no further than the terrific work being done by my right honourable friend the Secretary of State for International Trade, with 66 trade deals already done and more still to come as evidence of how the Government are delivering opportunities for the UK now that we are out of the EU?

Financial Services Bill

Baroness Noakes Excerpts

Committee stage & Lords Hansard
Wednesday 3rd March 2021 Grand Committee

The OECD is not a radical campaigning group but very much a mainstream organisation. Its report recommends tougher laws to hold these enablers criminally liable, as we are aiming for here. Surely the Government must act. If they will not listen to the experts here in Grand Committee, maybe they will listen to this group and consider how the rest of the world sees this. The report also says that countries should create national strategies to deal with the problem of professional enablers. Perhaps in responding, the Minister can indicate whether the Government plan to follow this recommendation, if not now, perhaps through correspondence in the future.

[Baroness Noakes (Con)]

My Lords, this is a large group of amendments and I shall not comment on all of them. I had not intended to speak about Amendment 51A, to which the noble Lord, Lord Sikka, spoke a while ago, but the way in which he framed his comments has prompted me to do so. The noble Lord persistently used the term “trade associations” to describe the professional bodies that are involved in supervisory activities in relation to money laundering. I declare an interest as a member, and former president, of the largest of the professional bodies to which he referred, namely the Institute of Chartered Accountants in England and Wales.

The ICAEW does act as a regulatory body for its members in relation to money laundering, as it does in relation to other activities, but its members carry out as professionals. This activity is overseen by an independent regulatory board, which is chaired by a QC and has lay members on it. I fear that the noble Lord, Lord Sikka, has not presented the whole story on this—perhaps he did not know it; those who listened to his contribution ought to be aware that it is not the whole picture by any means.

My noble and learned friend Lord Garnier made a strong case for his new offence of failing to prevent an economic crime. He will know that there is considerable concern about the practical impacts of such an offence on the commercial world and that there was only a small majority in favour of a new offence when the Government consulted on it. I have no idea what is in the Economic Secretary’s letter, to which he referred, but I believe that the Government made a wise decision last year in referring the matter to the Law Commission for further study. We should await its findings. I understand that it is due to report by the end of this year; that is not a huge delay for something that could have significant consequences for a large part of the commercial world.

I support the idea behind Amendment 51 in the name of my noble friend Lord Holmes of Richmond, namely a review of the “know your customer” regulations. All noble Lords taking part in this Committee are PEPs—politically exposed persons—and I am sure that we have all bumped up against the ludicrous way in which some banks and other financial institutions act under the guise of their customer due diligence obligations. Looking again at this whole territory is definitely worth while.

Further, the UK’s money laundering rules were made in the EU. Now that we have left it, we have the opportunity to see whether the money laundering directives and regulations now embedded in our law are fit for purpose. The UK must remain committed to high standards in the fight against financial crime, but looking at the efficiency and effectiveness of the rules is entirely consistent with maintaining high standards.

The KYC rules are just one part of the money laundering rule set, and I would urge any review to go beyond KYC and look at the whole range of rules. For example, the SARs regime for suspicious activity reports is very burdensome for all involved, both the firms that make the reports and the regulators that receive them. In addition, there are restrictions on banks’ ability to communicate with each other about customers or potential customers, which increases costs and certainly reduces effectiveness. So, I urge my noble friend Lord Holmes to be even more ambitious in the review that he seeks.

Lastly, Amendment 96 in the name of the noble Baroness, Lady Kramer, seeks the establishment of a financial services whistleblower office. I wonder whether she has taken account of the changes made by the regulators to whistleblowing arrangements in regulated firms. Since early 2016, firms have had to have a nominated non-executive director as a whistleblowers champion—not responsible for whistleblowing but, effectively, for its oversight. Most firms align that specific required responsibility with the responsibilities of the audit committee chairman. In addition, the whistleblowing rules themselves were overhauled at the same time. I have not yet heard the noble Baroness speak to her amendment but I wonder whether the evidence base that she relied on as a background to her amendments pre-dates those new arrangements, and whether it would be wise to review how well the new arrangements are working in practice before creating yet another quango.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I have put my name to Amendment 84, in the name of the noble Baroness, Lady Bowles, so I am afraid I am going to disappoint my noble friend Lady Noakes. We are normally on the same side but I am afraid that, on this issue, we are not. Perhaps I can turn away her wrath somewhat by saying that I much supported her views on Amendment 51A, which is a worthy amendment but does not go nearly far enough. We need to look at the whole regime; looking at one part of it is not sufficient, a point I was trying to make on an amendment we debated on the first day in Committee.

Like my noble and learned friend Lord Garnier, I am grateful to the noble Baroness, Lady Penn, and to the Economic Secretary to the Treasury for their briefing and correspondence. I apologise that the briefing was cut short for me because I had a power cut. My computer therefore went down, but I am grateful for the letter that was received earlier today.

The issue of failure to prevent has been pretty widely forked over in the speeches on this group, so I want to make two pretty quick points. The first flows from my membership of the Committee in your Lordships’ House which undertook the post-legislative scrutiny of the Bribery Act. We reported in March 2019 and our report found that the Act was:

“an excellent piece of legislation which creates offences which are clear and all-embracing.”

We went on to say that

“the new offence of corporate failure to prevent bribery is regarded as particularly effective, enabling those in a position to influence a company’s manner of conducting business to ensure that it is ethical, and to take steps to remedy matters where it is not.”

In our report, we noted, as did the noble Lord, Lord Rooker, that it was as long ago as May 2016 that the then Prime Minister, David Cameron, called for a consultation on a new offence of failure to prevent economic crime. We also noted that when Ministers gave evidence to the bribery committee on 4 December 2018, now over two years ago,

“Mr Argar said: ‘We intend to publish our response to it [the consultation] next year,’ and Ben Wallace MP added: ‘The Solicitor-General and I are pretty keen that we explore further the failure to prevent in broader economic crime … We raised it at the last inter-ministerial government meeting’”.

He added that John Penrose, the Government’s anticorruption champion,

“and I are keen to see this.”

The responses to the government consultation, although unpublished, and those suggested by Mr Glen to be inconclusive, are not as inconclusive as all that. The staff of our committee were able to find a lot of the submissions, which were available on the websites of the respondents, and none that we could find opposed the extension of the failure to prevent offence. Indeed, many supported it.

That takes me to my second point: the road to hell is paved with good intentions. The Government said in May 2019 that the call for evidence had closed in March 2017 and a response “will be issued shortly”. So, what are we waiting for? The Government have been standing on the edge of the pool for over two years. Each time they seem ready to jump in, inertia overcomes them and another round of consultation begins—now with the Law Commission, for which I have the highest regard. When my noble friend comes to reply, it would be helpful if she could let the Committee know what angles the Law Commission is supposed to focus on in this latest review and, in particular, what angles it will examine that have not been extensively looked over during the past four years.

--- Later in debate ---

[Lord Davies of Brixton (Lab) [V]]

I want to say a few words at this late hour strongly in favour of Amendment 55 and mention the possibility of a wider-ranging debt jubilee. There is clearly a case for this amendment, and the same case can be made for a wider-ranging approach to relieving the burden that debt places on us all, not just on the individuals. Clearly it ruins lives and leads to much misery, but it also affects the rest of us: it acts as a drag on the economy and the recovery that we now so desperately need. Anything that we as a society can do to relieve the absolute burden of debt, the better.

The proposal in the amendment for a fair debt write-down is a welcome development to the debt relief scheme. The moral case for passing on some of the discount that currently goes to debt collection agencies is clear, and there is an advantage to the Treasury. The same case fundamentally applies to us as a whole. We need a more comprehensive package of debt cancellations, targeted at the household sector. We want a way of writing off debts, just as so many debts were written off in the financial sector 12 or 13 years ago. We were told then that some banks were too big to fail, because of the harm it would cause the economy. I argue that the challenges facing individuals, because of their debt, mean as much or even greater harm for us all.

The main argument today is that such a scheme, as well as relieving much individual misery, would provide a direct, targeted macroeconomic boost to the economy, exactly where it is needed, helping some of the most hard-up in our society. It will boost economic growth, and help those who have fallen into the misery of debt—and all of us.

[Baroness Noakes (Con)]

My Lords, I will offer a slightly different perspective on this. I understand the problems of overindebtedness among poor people, but I do not believe that Amendment 55 makes sense. If I understand the proposed scheme correctly and if a debt under a debt respite scheme is sold for less than its face value, the original borrower has to pay back only that lower amount plus 20%. Let us say that I buy a debt with a face value of £100, for which I pay £80. I can recoup £96, which is £80 plus 20% of £80. That might seem reasonable on a loan-by-loan basis but, in practice, loans are sold in groups or books.

To the extent that there is a market for debt respite scheme debts, the amount that a purchaser pays will take account of two main things—first, the likelihood that the debt will be repaid; and, secondly, the difference between the income receivable on the debt, if any, and the purchaser’s cost of funds.

Ministerial and other Maternity Allowances Bill

Baroness Noakes Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Thursday 25th February 2021 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I am sorry that the noble Baroness, Lady Barker, cannot bring herself, as a woman, to share in rejoicing that women will now be recognised in the Bill. There has been nothing in anything that any of us have said against trans people. This is about recognising that it is women’s place in society that also needs to be recognised alongside other groups.

I was going to make a speech saying that while I supported the amendment in the name of my noble friend Lord Lucas, I preferred to change “person” to “woman”. I continue to prefer that but, given my noble friend the Minister’s gracious intervention in accepting the amendment, I have binned that speech. I could not be happier that we now have agreement on amending the Bill. I thank my noble friend the Minister for the time and trouble that he has taken on this matter. He has shown outstanding leadership. While I regret that I added to the burdens of his office since tabling my amendment at Second Reading, I hope that he will share our satisfaction with the end result.

Since Second Reading on Monday, I, like the noble Lord, Lord Hunt, have been inundated with emails and messages thanking me and other noble Lords who spoke for taking part in the debate and saying things that they felt were becoming unacceptable to say in society. We have tapped into a huge well of unhappiness about how women have been eliminated from public discourse and policy. What the Government have done today will be warmly, probably ecstatically, welcomed but there is more to do. We are just at the beginning of the end of the elimination of women from public discourse and I look forward to the review that will follow. This is a great day for women and I feel privileged to have played a small part in it.

[Baroness Hayman (CB) [V]]

My Lords, I am glad to have had the opportunity, like the noble Baroness, Lady Noakes, to bin the speech that I was going to make and to welcome the Minister’s comments. I also was glad that the noble Baroness, Lady Barker, for whom I have huge respect and who has done an enormous amount, has courageously spoken out on issues of discrimination. I was glad to hear her speak and that the case that she has argued has been put forward and heard.

For me, the message that has come from this debate is that it is tremendously easy to find ourselves in a horrible and destructive polarisation whereby we feel that we have to be on one side of an argument, at an extreme, and where it is difficult to make accommodations, understand and work through how we do the task that the Equality Act sets out of balancing and calibrating conflicting—or at least not obviously easy to reconcile—rights.

I have not received a lot of correspondence since my speech on Monday but I have had three letters from trans men who were worried that their rights were being taken away by this change of language. That would have been a serious issue. It now appears, unlike the argument put forward originally, that the noble Lord, Lord Pannick, was right and that no rights would be taken away from people whose sex at birth was female but who transitioned and gave birth. That is important because however small a minority is, we should protect their rights and the services that we give them. It is easy to fall into the trap of thinking that one has to be on one side or another and it is not possible to accommodate in language—and language does matter—the subtleties of the issues raised. As I said at Second Reading, that process is not aided by legislating in haste. More consideration might not have got us into a situation in which people on both sides of this argument, if I may phrase it like that, have found themselves subject to abuse. I sometimes despair at the quality and cruelty of public discourse in current times.

I therefore take lessons out of this. I am an unreconstructed old feminist and of course I have been worried by some of the developments in language, and those seeping into issues regarding women’s spaces and women’s rights. That is not because I believe in any way that trans people are a threat to women. The noble Baroness, Lady Barker, is absolutely right about that. There is no evidence or reason to believe that. I firmly believe that we should accommodate, support and be kind and sensitive in our language to those people. However, I also believe that we have fallen from those standards in our services for women recently and that today is important for drawing that line in the sand.

Ministerial and other Maternity Allowances Bill

Baroness Noakes Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Monday 22nd February 2021 Lords Chamber

Moved by

[Baroness Noakes]

At end insert “but that this House regrets that the bill is drafted in a way which does not respect the fact that only women can be pregnant.”

[Baroness Noakes (Con)]

My Lords, I beg to move the amendment standing in my name on the Order Paper. This regrets that the drafting of the Bill does not respect the fact that only women can be pregnant. Before speaking to my amendment, I would like to assure my noble friend the Minister that, while I deplore the language of the Bill, I fully support its proximate aim, which is to allow my right honourable friend the Attorney-General to take paid maternity leave. I join my noble friend Lord True in wishing the Attorney-General well and that her baby is safely delivered.

I had expected to be given an advisory speaking time of more than six minutes in view of my regret Motion, but this is not a time-limited debate, so I shall be taking a little extra time anyway. I shall, of course, comply with the Companion. My noble friend Lady Scott need not bother to do that Whip thing of head swivelling and jumping up and down when I do go over six minutes.

My Motion is about the drafting of this Bill, but it is set within a broader context of the erasure of women in society. Those of us who care about the position of women have been increasingly concerned about the dilution of the 2010 Equality Act with its protected characteristic of sex, not gender, which should protect women. Some organisations, deliberately or carelessly, conflate sex and gender. The Office for National Statistics, for example, has dug itself into this hole for the upcoming census, with the likely result that inaccurate statistical data about women will come from that.

The Equality and Human Rights Commission, which should have been vigilant in guarding all the protected characteristics of the 2010 Act, has itself caused problems, and its guidance has led directly to a loss of single-sex spaces. The NHS, which in the past had to be forced to abandon mixed-sex wards, now routinely admits to women’s wards on the basis of self-identification, regardless of the needs or wishes of women. Prisons operate like this, too. And do not get me started on so-called gender-neutral toilets.

There is an increasing use of language that eliminates women, such as the ludicrous use by the World Health Organization of “people who menstruate”. Only two weeks ago, the Brighton and Sussex University Hospitals NHS Trust declared that “breastfeeding” was to be replaced with “chestfeeding”, and “mother” with “birthing parent.” That might go down well in woke Brighton, but it will appal men and women in mainstream Britain.

People who challenge this in public are often labelled transphobic, as JK Rowling discovered when she poked fun at the WHO and its use of “people who menstruate” and was then publicly vilified. There is no malice in wishing to maintain the biological facts of womanhood and the lived experience of women, which includes menstruation, childbirth and menopause. That view happily coexists with respect and concern for transgender people. I am proud of my own record on LGBT issues, both in your Lordships' House and in the organisations with which I have been involved, but I am not prepared to be erased as a woman.

Let me turn now to the drafting of this Bill. Clause 1(3) uses the language of “the person is pregnant” and

“the person has given birth to a child”.

It is a biological fact that only women can be pregnant and give birth. That is why laws that relate to maternity issues have in the past routinely been drafted using the words “woman”, “she” and “her”. It is not good enough to just say that we have gender-neutral drafting now. When Jack Straw, as Lord Chancellor, announced in 2007 that the Government would use gender-neutral drafting, the context was the long-standing interpretation rule that words referring to the masculine gender include the feminine. This was thought to be demeaning to women, although I personally never felt demeaned by it. The Statement made it clear that this was not intended to outlaw the use of particular genders where only one is involved. It was not intended to prevent women from being mothers. It is ironic that Jack Straw’s generous gesture towards equality has now been turned against women.

Just three years after the 2007 Statement, the Equality Act 2010 was passed. That clearly uses female terminology to define the protected characteristics of sex and pregnancy. On 12 December 2013, your Lordships' House had a debate on gender-neutral drafting. The Minister, my noble friend Lord Gardiner of Kimble, said: “The guidance”— that is, the guidance from parliamentary counsel—

“also recognises that there must be some flexibility and that there will be some Acts where only gender-specific drafting can be usefully applied. In a case where a person has to be of a particular gender—male or female—gender-neutral drafting does not require drafters to avoid referring to the gender. I think your Lordships would agree that that would be the case for legislation about maternity.”—[Official Report, 12/12/13; col. 1014.]

I say “hear, hear” to that.

As far as I can tell, there has not been a ministerial Statement since 2013 that reversed the clear understanding of what gender-neutral drafting was about. The Minister may well cite some more recent primary and secondary legislation that has departed from that clear understanding, but, as far as I am concerned, that has slipped through below the radar. We have to put a stop to the practice. If this Bill passes unamended, there will be yet another precedent on the statute book for the elimination of women.

When this Bill was considered in the other place, the Minister asserted:

“It is not the case that we could legally and correctly use the word “woman” in this piece of legislation”.—[Official Report, 11/2/21; col. 594.]


I respectfully say to the Minister that this is garbage. There is nothing illegal or incorrect about using the word “women’ in relation to pregnancy. The only thing that appears to prevent the use of the word “woman” is a reinterpretation, by stealth, of the gender-neutral drafting guidance. In my view, it would be entirely legal and certainly correct to use the word “woman” in this Bill. Parliamentary counsel should be reminded that at the end of the day it is Parliament, and not civil servants, that decides how our laws are written.

I have spoken before about your Lordships' House being seen from the outside as a metropolitan bubble. This Bill speaks the language of a metropolitan elite who is unconcerned about its impact on the majority of our society, who are women, or about the view of the overwhelming majority of our citizens that women exist.

This is not a party-political issue, but it grieves me that a Conservative Government, who are bravely standing against all sorts of nonsense that has infested our public life, are abandoning women.

I beg to move.

--- Later in debate ---

[Baroness Noakes (Con)]

My Lords, I thank all noble Lords who have supported my amendment. There have been some wonderful, strong speeches today, far too many for me to refer to individually. The Minister has been left in no doubt as to the strength of feeling on the matters raised by my amendment.

The vast majority of those taking part today supported my amendment, and I have had a number of messages during the course of this debate from other noble Lords offering their support. The Minister has absorbed the fact that many of us who have spoken have risked being targeted by activists as a result. It is not easy to support women nowadays.

We had 34 speakers on the list today, but I am sure that more would have spoken had they been aware of the issues. The plain fact is that the expedited process, coupled with the recess, meant that the majority of the House was not even aware that I had tabled my amendment, let alone seen the content of it, until well after the speakers’ list had closed. That is not good for the health of debate in your Lordships’ House, and I hope that the usual channels will look carefully at this going forward.

The Minister responded to the debate with his customary dignity, but I was disappointed on two counts. First, he did not agree to bring forward Government amendments to Committee on Thursday; I cannot say that I was surprised at that, but I was disappointed. Secondly, he did not agree to ensure that the recent gender-neutral drafting guidance, which has caused this problem, would be reviewed by Ministers and then by Parliament. We can do nothing in this House about revising the drafting guidance, although I am sure that we will be seeking to debate that further in due course, and my noble friend Lady Nicholson of Winterbourne raised that specifically.

So far as the Bill is concerned, we do have Committee on Thursday, and noble Lords across the House will want to speak to amendments which have already been tabled. Very little change to the Bill is required, and it would only add a day or so to the timetable for getting Royal Assent if that course were pursued. I have not given up hope that the Government will work with us, and I look forward to meeting the Minister with other noble Lords later this week.

If the Government will not work with us to amend the Bill—as I said, I hope they will—there is another potential obstacle to our ability to change the Bill in your Lordships’ House, namely the question of whether any vote would be whipped by our Front Benches. I cannot speak for other parties, but my party, in the other place, was given a free vote on this Bill, which is right and proper for an issue such as this. I very much hope that our Chief Whip will see the good sense of this on Thursday. With that, I will not seek the opinion of the House today and I beg leave to withdraw the amendment.

Amendment withdrawn.

Financial Services Bill

Baroness Noakes Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Thursday 28th January 2021 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I congratulate my noble friend Lord Hammond of Runnymede and the noble Baroness, Lady Shafik, on their excellent maiden speeches. I look forward to their future contributions in your Lordships’ House.

For the last nine years, I have largely sat on the sidelines on financial services legislation, as I was on the board of a major bank. Now liberated from that, I am enjoying putting my financial services legislation anorak back on. I remind the House of my financial interests, as declared in the register.

The Government have described this Bill as a portfolio Bill, which is a fancy name for what is not much more than a motley collection of topics that have little in common apart from fitting under a financial services umbrella. This Bill certainly gives us no strategic insights into the future of financial services. That said, I broadly welcome this Bill, as it deals with a number of items in a sensible, pragmatic way.

Financial services legislation is very complex. Since FiSMA was enacted over 20 years ago, there have been numerous revisions, some of which, such as the Financial Services Act 2012, were significant. Huge amounts of EU law have been imported and we can expect more changes as we embark upon our post-Brexit life. We are getting close to consolidation being essential if our financial services legislation is to be accessible. Can the Minister say whether the Government accept the need for consolidation?

My principal reservation about this Bill concerns the considerable new rule-making powers that are being conferred on the PRA and the FCA, and I agree with much of what other noble Lords have already said on this. I find it a bit odd that the Government have chosen to go down this route ahead of the outcome of the consultation on the future regulatory framework review, which is still open. This looks like another example of the Treasury mind being closed to challenge through consultation. We are somewhat used to this, but familiarity does not make it acceptable.

More substantively, the Government have made a good case for the rules to be set by the people with the best technical knowledge, but they have not, I am afraid, made a case for the quality or quantity of accountability alongside that. In particular, I am unpersuaded that adding a list of “have regards” against which the PRA or FCA must report when they consult on rules amounts to a significant addition to the accountability framework. The House will know that I have been steadfast in my commitment to our exit from the EU, but it was never my understanding that taking back control of our laws would mean less parliamentary control and oversight than before. The Bill proposes to hand significant rule-making powers to the PRA and the FCA without any noticeable Parliamentary oversight. Ad hoc scrutiny through the existing committees in both Houses is no substitute for regular and structured parliamentary involvement. I hope that the Government will engage with those of us who want to find a practical solution to this accountability deficit.

Before leaving this topic, I would say that we need to look carefully at the new “have regards” when we get to Committee. I share the exciting vision of the future prospects for financial services that my right honourable friend the Chancellor of the Exchequer outlined in his November statement, but I do not see that fully reflected in the Bill. Like many noble Lords who have spoken today, I believe that international competitiveness needs to be firmly embedded into our regulatory arrangements and the statutes that govern that. I particularly welcome my noble friend Lord Hammond’s enthusiasm for this, which goes a long way, I have to say, towards offsetting his lack of enthusiasm for Brexit in his former life.

Finally, on tough legacy contracts that use Libor, I completely support the powers in Clauses 14 and 15 that allow the FCA to make arrangements for legacy contracts. It is good that the Government have accepted the very real practical issues involved in dealing with a relatively small number of debt instruments. There are, however, two outstanding issues relating to continuity of contract and safe harbour. I know the Treasury is well aware of these issues. I will save arguing the detail of them until we get to Committee, but I expect to table amendments aimed at giving the UK equivalent protections to those being drafted for the US market.

Financial services are a major part of our economy and we must allow this sector to flourish now that we are unshackled from the EU. Strong regulation will remain essential but we need all players, regulators and industry alike, to build the UK as the undisputed leading global financial centre. I hope that the House will remember that as we scrutinise the Bill through its remaining stages.

House of Lords Appointments Commission

Baroness Noakes Excerpts

Tuesday 5th January 2021 Lords Chamber

[Baroness Noakes (Con)]

My Lords, it has been asserted that public confidence in your Lordships’ House has been lost because of the number of Members, but does my noble friend agree that there is no evidence for that and that therefore there is no need to change any of our arrangements, which work extremely well on an advisory basis, for the appointment of Peers to this House?

[Lord True (Con)]

Yes, I agree with my noble friend. I believe that the reputation of the House is weighed on many factors other than this. The behaviour of Members, including those recommended by the House of Lords Appointments Commission to sit on the Cross Benches, is one of the factors that the people who watch this House consider.

European Union (Future Relationship) Bill

Baroness Noakes Excerpts

3rd reading & 2nd reading & Committee negatived & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard) & Committee negatived (Hansard): House of Lords
Wednesday 30th December 2020 Lords Chamber

[Baroness Noakes (Con)]

My Lords, we are nearly there. Just one more sleep until we finally take back control of everything that we promised to the British people—control of our borders, money, laws, trade and fishing. This is indeed a deal and a Bill to celebrate.

I am appalled, though perhaps not surprised, at the amendments tabled in the names of the noble Baroness, Lady Hayter, and the noble Lord, Lord Newby. If we wanted examples of futile gestures that are out of touch with the will of the people we would need to look no further. Each catalogue of woe is expressed differently, but they are both drawn from the same well of distaste for what the people decided in 2016 and reiterated in last year’s decisive general election. If either of the amendments is approved, your Lordships’ House will simply confirm that it is living in the past and does not share the broad aspirations of the British people. The Government are delivering on those aspirations: a UK whose future is as a free-standing sovereign nation, taking its place in the global community and no longer yoked to an EU set upon ever-closer union.

We face a crisis in this House. This is nothing to do with the increased number of Peers, which some noble Lords got excited about last week, though I welcome more noble Lords with a commitment to our future outside the EU. The real crisis is that the House has lost touch with our nation. We often represent not much more than a metropolitan bubble, and we all know what happens to bubbles.

I had hoped that the whole House, including the Labour and Liberal Democrat Benches, would be singing the praises of my noble friend Lord Frost and my right honourable friend the Prime Minister for their relentless pursuit of a good deal for the UK. They inherited a botched job and have succeeded beyond all reasonable expectations. We owe them and their teams a great debt of gratitude that we go into 2021 with great trade prospects and, importantly, our head held high in the world. If the Benches opposite think that they could have done better and magicked away their shopping lists of complaints about the deal, I say that that is simply proof positive that they are still suffering from Brexit derangement syndrome.

This historic day is tinged with sadness at the departure of my noble friend Lord Cavendish of Furness, whose uplifting valedictory speech we heard earlier. He has been a steadfast supporter of all matters Brexit. We shall miss him.