David Frost
Baroness Noakes Excerpts(3 years, 10 months ago)
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Lord True
My Lords, I do not agree that there will be a difficulty. The announcement suggests that Mr Frost will take up his appointment around the end of August, and, as the noble Lord said, there will be a period of handover. Mr Frost will remain chief negotiator for the EU talks until agreement is reached, or until they end. That will remain his first priority. As I have already said, he will also be ready to answer to Select Committees of the House in that period.
Baroness Noakes (Con)
My Lords, does my noble friend agree that, when Mr Frost becomes a Peer, this House will be very lucky, because we will gain a new Member with huge experience—as my noble friend has outlined—and with complete dedication and commitment to the success of the UK outside the EU?
Beyond Brexit (European Union Committee Report)
Baroness Noakes Excerpts(4 years ago)
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Baroness Noakes (Con)
My Lords, I was a member of the EU Committee when this report was published and pay tribute, as other noble Lords have, to the leadership of the noble Lord, Lord Boswell, when he chaired the committee. The report was published last year against the backdrop of the previous Prime Minister struggling and failing to get Parliament to approve her withdrawal agreement. Parliament was working against us leaving the EU.
Last December the British people gave the Government a very clear mandate to get Brexit done. We now have a strong Prime Minister and a Parliament, at least in the other place, committed to delivering the will of the people. Inevitably, some of the committee’s recommendations have not stood the test of time.
We have now left the EU. The Government are working at speed on the long-term relationship with the EU, including a free trade agreement. They are committed to bringing this to a conclusion by the end of the year, and I was glad to hear my noble friend Lord True confirm last week that the Government have no intention of extending the transition period. There is clearly no time to spare in these negotiations.
This is the new context for parliamentary scrutiny. Parliament must of course still undertake its constitutional role of holding the Government to account, but in this new timescale it cannot realistically expect to be involved in the detailed negotiations of our long-term relationship with the EU. To that extent I regard the EU Committee’s proposals—for example, on its desired involvement in the workings of the joint committee—as time-expired. Let us focus on holding the Government to account on what they achieve in practice, rather than on the detailed steps for getting there.
Budget: Economic and Fiscal Outlook
Baroness Noakes Excerpts(4 years ago)
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Baroness Noakes (Con)
My Lords, let no one pretend that these Virtual Proceedings represent a meaningful opportunity to hold the Government to account. Until a couple of hours ago, we were told that we had just two minutes for Back-Bench speeches. Now it is a stunning three minutes. We have no opportunity at all to intervene. This is not accountability. This is a sham. The sooner we return to normal proceedings, without the excessive time-limiting that has been introduced, the better.
As it happens, the only thing I want to hold the Government to account on today is why on earth we are required to continue sending economic assessments to Brussels and why the Government have failed to repeal Section 5 of the 1993 Act. This Motion has always been a waste of time, as we have debated many times in the past. We have never had any interest in converging our economy with that of the EU; today, it is simply ludicrous. It is obvious that an assessment of our economy in the middle of a major global pandemic is, at best, an academic exercise. More importantly, as has been said, we have left the EU. The future trajectory of our economy may well be of interest to the EU, but we should not be involved in servile submissions to it.
This Motion would have been a waste of time even if the transition period were to be extended beyond 31 December this year. I am grateful to my noble friend the Minister for confirming that the Government remain resolute on no extension to that transition period. At one level, I just want to be done with these silly Motions but, more substantively, does the Minister agree that it would be massively to the UK’s disadvantage if, through an extension, we were exposed in any way to contributing to repairing the economic fallout from Covid-19 across the whole of Europe? Now is the time for the Government to concentrate on our own economy—nothing more, and nothing less.
European Union: Negotiations (European Union Committee Report)
Baroness Noakes Excerpts(4 years, 2 months ago)
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Baroness Noakes (Con)
My Lords, it will not surprise the House to find that I will not be echoing the sentiments of the noble Baronesses, Lady Hayter and Lady Ludford. I welcome the Government’s plans for a future relationship with the EU, as set out in their White Paper, and I particularly welcome my noble friend Lord True as the Minister in this debate; it is in very capable hands.
I could not be more proud of the approach that the Government are taking to our relationship with the EU. We have left behind us the servile acquiescence that characterised the first three years of negotiations with the EU after the referendum. In its place, we now have a confident Government who really believe in our future outside the EU and have the strong backing of the British people from last year’s general election.
In the Command Paper, the Government have set out their vision of
“friendly co-operation between sovereign equals”.
Those of us who strongly supported the UK’s exit from the EU are much heartened by both the content and the spirit of the Government’s position, and I look forward to my noble friend’s summary of the key elements of our policy when he winds up.
For me, the most important aspect is that we are seeking a comprehensive free trade agreement with the EU. We are one of the world’s largest economies, and we expect to be able to negotiate trade agreements with our trading partners on a basis of mutual respect on both sides. The EU is no different from any other trade counterparty in this respect. It is the same basis on which we should approach negotiations with other important trading partners, such as the USA.
Of course, that means that we do not want an association agreement and will not bind ourselves to the rules and mechanisms of the EU, whether for a level playing field or any other purpose. Our country did not vote to leave the EU in order to recreate the past relationship all over again. We especially did not vote to leave the EU to be bound to mirror any part of its regulatory environment in perpetuity. Dynamic alignment is a million miles from any reasonable interpretation of what the British people voted for in 2016.
Lord Lea of Crondall (Non-Afl)
Is the noble Baroness saying that she is advocating no deal?
Baroness Noakes
I will come on to that in a short while. I was saying that dynamic alignment is simply not what the British people voted for in 2016 or in last year’s general election. It is right that it forms no part of our approach to our longer-term relationship with the EU.
One symbol of being an independent nation again is fisheries. The EU seems to think it can recreate the existing quota arrangements, which are so disadvantageous to our home fishing industry. That simply cannot happen. The fishing industry may not be the most important contributor to the nation’s GDP, but it is symbolic of what it means to be a free nation: controlling our own waters and setting the rules by which we will be responsible conservators of our fishing stocks.
I am also completely behind the Government’s decision that we should not seek any extension of the transition period at the end of this year, even in the face of the current pandemic, which may well disrupt negotiations but does not present an excuse for not completing them. It is essential that we move to prepare for life without a comprehensive agreement if we do not make enough progress by the summer. I have never been afraid of trading on WTO terms and I will not start now.
All in all, I believe that the Government’s approach as set out in Command Paper 211 and as illuminated by the wonderful speech last month by Mr David Frost, our chief negotiator, is terrific. I hope that the House will support it.
I turn now to the other Motions before us, namely the Motion in the name of the noble Earl, Lord Kinnoull, on behalf of the EU Select Committee, and the amendment in the name of the noble Baroness, Lady Hayter. If I had to sum up both of these Motions, I would say that they are seeking to rerun battles that have already been fought and lost. I was absolutely amazed that the EU Committee managed to hang its first report on Section 29 of the EU withdrawal Act. I shall express no opinion on the validity of the argumentation around this as set out in chapter 1 of the report. It may well be technically accurate. I do not, however, believe that Section 29 was intended to be used for the purpose of requiring a debate on the negotiations on our longer-term relationship. I had understood that section to allow Parliament to raise important issues about EU legislation passed in the transition period and therefore applying to the UK while we do not have any representation in the EU.
Noble Lords will be aware that the terms of the 2020 withdrawal Act differed significantly from the version of the earlier Bill that was considered by the last Parliament. The earlier Bill required the approval of Parliament to the Government’s negotiating objectives, which themselves had to be consistent with the political declaration. It also required three-monthly reports to Parliament on the progress of negotiations. Those provisions were inserted in a doomed attempt to get the last Parliament to pass the withdrawal Bill. But since then, the general election has given a huge mandate to the Prime Minister to “Get Brexit done”. The provisions for involving Parliament in the negotiations were removed from the Bill which became law in January this year. The will of Parliament is now clear: these provisions of parliamentary scrutiny are neither necessary nor desirable; yet here we are with the EU Committee using Section 29 of the Act to achieve a debate on negotiating principles, and even calling for the Government to publish a comparative analysis of the political declaration and the Command Paper.
The political declaration has no legal force and, as the EU Committee’s report makes clear, neither the Government nor the EU are using the political declaration as the starting point for their negotiations. We have moved on. I respectfully suggest that the EU Committee does as well.
Lord Hannay of Chiswick (CB)
Will the noble Baroness explain why it is that she believes that the European Union is not behaving in a manner consistent with the political declaration when my noble friend’s report says quite explicitly that it is?
Baroness Noakes
I will say to the noble Lord only that it may have the headings of the political declaration but the content is significantly different in a number of places, as indeed was set out in the EU Committee’s report.
Baroness McIntosh of Pickering (Con)
I am following very closely what my noble friend has said. I understand that she has years of experience in a certain sector, but what does she fear about scrutinising a policy such as fisheries or agriculture, or a potential no deal where the consequences could be to decimate the sheep market in this country? She is a parliamentarian. What does she fear from scrutiny?
Baroness Noakes
My Lords, I fear nothing from scrutiny. I am making the point that Parliament has consciously removed provisions that were contained in an earlier Bill; the version of the withdrawal Act that is now the law of the land has no such provisions and has deliberately removed them. That, to me, expresses the will of Parliament that Parliament does not expect to be involved in the minutiae of the negotiations with the EU; it is simply that.
I suspect that what is driving a lot of this debate is the fact that the majority of Members of this House never favoured exiting the EU and continue to be of the remain persuasion. I am sure that that is true of the EU Committee. Having been a member of that committee, I am well aware of the balance of its membership. I have raised in your Lordships’ House before the point that, if this House is out of alignment with the opinion of the country at large, that is at best unhealthy; at worst, it could undermine support for this House’s continuation, at least as currently constituted. I believe that the House and its committees need to think very carefully about that.
To conclude, we should praise the Government’s approach to negotiations with the EU and then let them get on and deal with them.
Making Tax Digital for VAT (Economic Affairs Committee Report)
Baroness Noakes Excerpts(5 years ago)
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Baroness Noakes (Con)
My Lords, it is a pleasure to take part in this debate. It allows me to place on record my admiration for my noble friend Lord Forsyth’s insightful chairmanship of the Finance Bill Sub-Committee, in which I had the honour to take part. I fully support what my noble friend said on the engagement of Treasury Ministers in the sub-committee. It is little short of disgraceful for Ministers to obstruct this House from holding the Executive to account. It is also extremely discourteous. I hope that my noble friend the Minister will take back to the Treasury our extreme displeasure at the stance taken, in this instance, by the Financial Secretary.
Our two reports deal with different things, but they have a unifying theme of fairness—whether the HMRC’s powers treat taxpayers fairly and whether the plans to make tax digital for VAT are fair on small businesses. Noble Lords may note that our reports are careful to refer to “taxpayers”. We do not use the language of “customer”, which is used throughout the Government’s responses and has been used by HMRC and its predecessor bodies since the early 1990s, when it became fashionable for government departments to talk about their interactions with citizens using the language of customer service. I have never been convinced that “customer” language sits comfortably with organisations that have to enforce the law. Being a customer implies a consensual relationship; HMRC’s so-called customers have no choice whatever. The police and the courts do not talk about customers. HMRC’s top objective is, according to its plan, to maximise revenues due and bear down on avoidance and evasion. This is not appropriately described in customer language.
I turn to fairness. There are two aspects to fairness: substantive fairness and procedural fairness. Procedural fairness is at the heart of much that is in our reports. That is what our call for more safeguards and access to justice for taxpayers, as set out in our HMRC powers review, was about. Sadly but predictably, the Government have largely rejected our recommendations. Similarly with our report on Making Tax Digital, we called for concerns about the readiness of smaller businesses to be reflected in further time before implementation and for HMRC to do more to make it easier for small businesses. That, too, was rejected by the Government. Procedural fairness should be a hallmark of our tax system, but it is not clear that the Government share this ideal.
We also cover substantive fairness, in particular in relation to the loan charge legislation, which my noble friend Lord Forsyth explained. Substantive fairness is about how particular taxpayers or groups of taxpayers are treated in practice. The loan charge is a way of tackling tax avoidance and I certainly acknowledge that the Government are right to target that, including disguised remuneration schemes. What is much harder to accept is how the Government have tackled it. They have used retroactive legislation, taxing up to 20 years of income as if it were received in one lump sum on 5 April this year and with scant regard for the impact on individual taxpayers. The loan charge can catch taxpayers in a wide variety of circumstances. As we have heard, many were on low incomes and were put into umbrella schemes which they almost certainly did not fully understand. They just wanted to earn an income to support their families—an aspiration that our party normally applauds. Others were more aware that they were involved in a tax scheme, made appropriate disclosures in their tax returns and took comfort from the lack of challenge from HMRC over the years.
It was strongly represented to the committee that many individuals had no idea that further tax could be due. They spent the money that they received. They were not holding in reserve sums just in case a bill for 10 or 20 years of tax turned up; they believed that they did not need to. They are now overwhelmed by the debts that they are told they owe. It might well have been fair for HMRC to target the promoters of the schemes who profited from these unfortunate taxpayers, but many are out of reach and overseas. HMRC has instead targeted the little people.
I first raised whether this was fair for taxpayers last November, when we debated the Budget. I specifically asked my noble friend Lord Bates, who was then the Minister before he went walkabout, to go back to the Treasury after the debate and determine for himself whether it was fair. My noble friend duly wrote to me after the debate. The only time that fairness was mentioned in my noble friend’s two-page letter was when he said that,
“the Government believes it is unfair to the ordinary taxpayer to let anybody continue to benefit from contrived tax avoidance of this sort”.
A question whether something is fair was answered by saying what is unfair. This is a common HMRC and government tactic. In the Government’s March report to the other place on the loan charge, they avoided saying what was fair for some taxpayers by inverting the argument into what might be unfair for the totality of other taxpayers. That misses the point that fairness has a dimension which is taxpayer-centric.
The Government’s view seems to be that individual taxpayers can have no excuses for getting involved in schemes which avoid tax. My noble friend Lord Bates’s letter to me stated:
“It is an individual taxpayer’s responsibility to ensure the accuracy of their tax return and to understand the consequences of their decisions”.
That sounds like a simple proposition, but it is not realistic. There have been many studies of financial literacy in the UK, and all of them point to shocking levels of lack of financial knowledge. Over one-third cannot work out the impact of inflation; 16% do not know what the balance is on their bank statement; 40% cannot apply a discount to a price. Let us not kid ourselves about the competence of taxpayers.
I will bring this back to whether taxpayers are customers. Regulators are increasingly concerned about how businesses treat vulnerable customers. The Financial Conduct Authority claims that nearly half of the population is vulnerable in one or more ways at any one time. The FCA places responsibility on financial institutions to ensure that vulnerable customers are identified and then dealt with in a way which reflects the vulnerability. The onus is not on the customer to be able to make the right decisions. In their March loan charge report, the Government said:
“The government and HMRC takes the wellbeing of customers extremely seriously … HMRC’s teams are trained to identify and help vulnerable customers and, where appropriate, refer them to organisations such as Samaritans and Mind”.
Let that sink in. The Government’s solution is to refer people to the Samaritans. I am clear that if a bank said that that was its policy towards vulnerable customers, the FCA’s response would be immediate enforcement action.
The Government’s approach is particularly shocking against the background of a number of reported suicides, as referred to by my noble friend Lord Forsyth. These are people who are said to have been unable to cope with the consequences of the loan charge legislation. HMRC has referred itself to the Independent Office for Police Conduct in respect of one such case, which is a start, but neither the Government nor HMRC are facing up to the fact that the basic policy is not fair to some taxpayers and no amount of procedure such as helplines or extended payment terms will counter the harm that is being done.
I have spent a long time on the loan charge because I feel strongly that its lack of fairness is a blot on our tax system, but I also want to say a few words about Making Tax Digital. We all know that the future is digital and that digitisation has benefits for businesses and for government, but it is wrong for the Government to mandate digital solutions until it is clear that the vast majority of taxpayers can comply with ease and with minimal additional cost. That clarity simply does not exist, for all of the reasons that we set out in our report. We found that:
“HMRC is alone in its confidence that all one million businesses will be ready for Making Tax Digital for VAT in April 2019”.
I looked at last month’s edition of Economia—I do not expect noble Lords to know what Economia is, as it is the house magazine of the Institute of Chartered Accountants, of which I am a member. The latest survey it reported by the tax faculty of the institute found that only 28% of chartered accountants—this is only last month—believe that SMEs have a good awareness of Making Tax Digital and that only 22% think that they are well prepared. That is far too many businesses to put at risk. The top two concerns were the cost and administrative burden of implementation, followed by a lack of guidance from HMRC. This exactly mirrors the evidence that the sub-committee received. The next concern, at nearly 20%, was fear of software and technological change. Our evidence was that small and simple businesses did not need digital records for their own purposes. They are being forced on them by a dogmatic approach in the Treasury and HMRC. So far, Making Tax Digital has benefited only the software industry and professional accountants. We will find out over the next few months how much harm it does to the small businesses on which our economy depends.
I look forward to my noble friend’s reply to this debate. I hope that he does not merely repeat the Treasury’s refusal to face the difficult issues in our reports.
Bank of England and Financial Services Bill [HL]
Baroness Noakes Excerpts(8 years, 5 months ago)
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Lord Myners
My Lords, I also congratulate the Minister and the parties involved on finding a pragmatic and workable solution to a problem identified in earlier discussion in this House. I also echo the point made by the noble Lords, Lord Higgins and Lord McFall. Proposed new Section 7E starts:
“The Bank and the Comptroller must prepare and maintain a memorandum of understanding”.
There is no mention of the word “publication”, yet in proposed new subsection (2)(d) “publication” is used. On the face of it, the absence of “publication” from the beginning of the section is intentional. As such, that surely should be unacceptable. I therefore urge the Minister at some later stage to persuade his colleagues in the other place that “publication” should be included, and to give this House some reassurance now that it is his intention that the memorandum of understanding should be published. Otherwise, the public will not have the confidence that they seek in clarifying this issue.
Baroness Noakes (Con)
My Lords, the Comptroller and Auditor-General and the National Audit Office are in agreement with this, but I would like to clarify the effect of proposed new Section 7E(2)(d). It allows for the publication of views where a matter in dispute cannot be resolved. That implies that there would be no agreement as to whether a particular audit could take place. That allows the Bank of England a backdoor power of veto if the arrangements are such that there is a possibility that even a dispute resolution procedure, as provided for under proposed new paragraph (c), results in there not being agreement. Therefore, is it possible that the Bank could de facto operate a veto?
Lord Davies of Oldham
My Lords, the Opposition are of course glad that peace has broken out. As a token of that peace, I say how much I agree with the question asked by the noble Baroness, Lady Noakes, which I hope the Minister will address. Both at Second Reading and in Committee, the House was greatly exercised by the potential disagreement and difficulties that attended on the formulation of the Bill at that time, with these two tremendously significant institutions at loggerheads. The situation was not helped by the fact that the noble Lord, Lord Bichard, felt unable to contribute to our debate at that stage. We were all very anxious indeed about the position.
I hope that the Minister will answer quite straightforwardly the question asked by the noble Lord, Lord Higgins. I do not think that it is a question of whether there will be a publication, but of when. Whether it could be done in time for the process being considered while the Bill goes through the other place is a different matter. That certainly would be a great advantage and it ought to put pressure on the two bodies concerned to ensure that this memorandum of understanding is complete and published in short time.
On the more general issues, all parts of the House were greatly exercised by the position that developed as a result of the publication of the Bill. I am very glad to endorse the fact that peace has broken out, although on this occasion the Opposition did not have much to do with it.
Bank of England and Financial Services Bill [HL]
Baroness Noakes Excerpts(8 years, 6 months ago)
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Lord Sharkey
I thank the Minister for that response. There is no argument about the value of the CEO of the FCA being on the FPC. I fear that I was completely unconvinced by the argument that one more external member would make the FPC collapse into chaos and disorder; that seems a bit far-fetched.
The difference between us is whether the independence that the noble Lord maintains that the CEO of the FCA has is true independence. The test he seems to apply is simply that, well, the FCA itself is kind of independent, so she is obviously independent. In fact, the Minister did not mention my major concern, which is the influence that the Bank itself has over the CEO of the FCA. I give way to my former noble friend.
Baroness Noakes (Con)
My Lords, can the noble Lord explain why he thinks that the Bank has any influence whatever over the chief executive of the FCA? There are no provisions in statute that give any sense of influence, even, and I struggle to find where in practice you could point to where that influence could be deemed to exist.
Lord Sharkey
There are two partial answers to the noble Baroness’s question. The first is, as I mentioned, that the chief executive of the FCA can be summarily dismissed, presumably either at the instigation of the governor or at least with his permission and consultation—
Baroness Noakes
I ought to say two things to that. The chief executive of the FCA was not summarily sacked; as I understand it, he was informed that his contract would not be renewed, and there is a world of difference. As far as I am aware, there is no practical issue of the Governor of the Bank of England or any other senior official of the Bank of England having any locus in the decision whether to renew the chief executive’s contract. If the noble Lord has evidence of that, I should be happy to see it.
Lord Sharkey
The fine distinction between being summarily dismissed and not having his contract renewed temporarily escapes me, but I am sure that it will come to me. The point I am trying to make is that I believe that the Bank has influence over the CEO of the FCA. I was asking the Minister—because he did not deal with this—to explain why he clearly believes that it does not have influence over the head of the FCA.
I also point out, as I did in my initial speech, that the PRA itself can act to restrain and constrain the activities of the FCA, as I am sure the noble Baroness knows. The PRA is an organ of the Bank, so the actual independence of the FCA is somewhat compromised by that arrangement. That was the point that I was trying to make.
However, having said all that, and not being terribly convinced by the Minister’s arguments—I am sure that we will want to return to this later—in the mean time, I beg leave to withdraw the amendment.
Baroness Noakes
My Lords, the noble Lord, Lord Davies of Oldham, is being rather modest about these amendments. I think they are rather good. However, I do not understand why he has proposed amendments to Clauses 9 and 10 but not to new Section 7G introduced by Clause 11, which relates to the main value-for-money study power. Not being limited in the way that these amendments imply would be at least as important to the new powers introduced by Clause 11.
I hope the Minister’s reply is not cursory because this is quite an important point. We do not very often legislate on public audit matters. I can remember doing the Public Audit (Wales) Bill, and there was no restriction on the Comptroller and Auditor-General for Wales reasonably requiring certain information. Reasonable time was in the Bill, but not a requirement to demonstrate that he reasonably required the information. It seems to me that the more you try to constrain an auditor, the more you allow an organisation which is being audited to run rings around that auditor. Having been in the auditing profession, I feel rather strongly that we should not try to restrict auditors but should make it as easy as possible for them to get whatever information they want.
Lord Higgins (Con)
My Lords, the noble Lord, Lord Davies of Oldham, is always modest, but on this occasion he is excessively so. I agree with my noble friend because the implication of putting the words “reasonable” and “reasonably” in these clauses is that somehow the National Audit Office would act unreasonably, and I do not believe that that is the case. Perhaps the Minister will tell us where else in the legislation governing the National Audit Office such clauses are applied. These are quite unnecessary words. It may well be that, given the more formal auditing functions of the National Audit Office, as against the value-for-money provisions, there might be some occasion when it is necessary to get hold of documents at an unreasonable time. I hope the Minister will respond to this and agree to delete the words which appear in the amendments.
Baroness Kramer
My Lords, I will briefly join in the debate. We have two very highly regarded independent organisations—the Bank of England and the NAO. I say to the Government that it is unfortunate that legislation has come forward without resolving the relationship between the two of them. This House should not be in this position today, and neither should either of those two institutions. I very much hope that the Government will take the advice proffered and bring these various parties together to get a resolution here. Both are key institutions that need to have their independence appropriately protected.
In answer to the question asked by the noble Lord, Lord Higgins, the two lines about which he was concerned a moment ago, which are taken out and replaced by what he read as almost two identical lines, almost get to the crux of this matter. The amendment strengthens that assurance that the NAO and the Comptroller and Auditor-General do not in any way seek to question the merits of policy objectives. It is trying to make that absolutely clear by putting in a stronger statement to that extent. The problem the NAO has, as the noble Lord, Lord McFall, said, is that due to the way in which the language is now drafted, the Bank effectively now has a veto over which studies are undertaken. Frankly, that is, I think, unacceptable to every party.
We in Parliament depend very much on the NAO and the reports it provides to us. It is very important for us to be able to receive that information, knowing that it is impartial and independent, for us to be able to perform the role we play. All the discussions today have talked of the importance of oversight. While we very much respect the Bank of England, we are all incredibly conscious that it has made very serious mistakes in the past which have cost us dear, and that we all need to play a role in interacting and making sure that we understand and are appropriately taking on our responsibilities toward that institution. Frankly, it is very hard to see how we in this House or in the other place can do that without effective reporting from the NAO.
I hope that the Government will take this matter away for reconsideration because these are significant concerns. I take great heart in hearing from the noble Lord, Lord McFall, that the Federal Reserve board in the United States is one of the bodies on this globe that most asserts its independence and integrity. The Federal Reserve accepts a similar kind of oversight from the US Government Accountability Office, and it seems to me that we have a template there. If it works for the Federal Reserve, surely it can work for the Bank of England.
I hope that these amendments will be taken exceedingly seriously. While the noble Lord, Lord Bichard, is not in a position to speak himself, there are many in this House, including the noble Lord, Lord Higgins, and the noble Baroness, Lady Noakes, who will be able to appreciate the importance of the points that he would have made had he had the opportunity.
Baroness Noakes
My Lords, I support the amendments. I was deeply shocked to see that the Government proposed to give the Bank of England a veto over whether the Comptroller and Auditor-General could undertake a particular value-for-money study. I have believed for a long time that it has been an anomaly that the Bank of England has not been within the remit of the Comptroller and Auditor-General. I do not believe that any public body, however great and however independent, should be able to stand on that greatness and independence and say, “I do not want the National Audit Office or the Comptroller and Auditor-General to examine what I have been doing”. Public audit can be effective only when it is unfettered, and the concept of fettering the Comptroller and Auditor-General is, frankly, unacceptable.
Lord Higgins
My Lords, first, I express regret that I was not able to speak at Second Reading. I was preoccupied with the European Union Referendum Bill and other matters. However, I am certainly deeply concerned, as are other noble Lords, about the situation that now seems to have developed in the relationship between the Bank of England and the National Audit Office. I am sure that my noble friend was right in saying a moment or two ago that this ought to be resolved on Report. If necessary, that is what we will need to do.
I have a long history of involvement in this matter. I was much involved—this shows how long ago it was—when it was first suggested that the National Audit Office should carry out value-for-money investigations. However, it is very important to ensure that the NAO remains completely independent. I share the view expressed a moment ago that it would be wholly wrong for the NAO to have to get the permission of the people being investigated to carry out a review. I am extremely grateful to the noble Baroness, Lady Kramer, for explaining what I did not previously understand about the relationship between the amendment and the words being left out. I now understand the point that she made, which was extremely subtle, if I may say so.
Having said that, I am a little puzzled. I chaired the Treasury Select Committee for a decade or so and was succeeded by the noble Lord, Lord McFall. I was also a long-standing member of the Public Accounts Commission, which I chaired for some time. It is extremely important that we preserve the position of the NAO, and, as I said, I agree with those who say that it ought not to have to seek permission to carry out reviews.
I am just a little doubtful about what is meant by “policy”. This may turn out to be a rather fine line. For example, at the moment it seems to be the policy of the Bank, and indeed the governor, to give forward guidance on interest rates. That certainly needs inquiry as far as value for money is concerned, because the forecasts have been extraordinarily wrong on a number of occasions and a lot of people—for example, those renewing their mortgages—may have suffered considerably. In passing, I hope that the governor will reconsider whether that is an appropriate policy and perhaps no longer give forward guidance on interest rates.
The other points in relation to this matter have been made at Second Reading and in today’s debate. This is something that we have to resolve. We have to make sure that the relationship between the two bodies is maintained, otherwise the Comptroller and Auditor-General, very understandably, will have to think personally—the office of Comptroller and Auditor-General has always been a very personal one—about whether he can really operate in a situation where his independence is being questioned.
Bank of England and Financial Services Bill [HL]
Baroness Noakes Excerpts(8 years, 6 months ago)
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Baroness Kramer (LD)
My Lords, I completely support my noble friend Lord Sharkey in this. Although I greatly respect the noble Lord, Lord Flight, I hope that the House will resist his blandishments. I think non-executive directors of banks finding themselves on the Court of the Bank of England would be constantly facing conflicts of interest, and the public perception would be appalling—that the Bank had become the captive of the industry that it is there to regulate. That does not seem to be a sensible principle.
With the changes that are now proposed—for there to be five inside members, if you like, of the court and seven outside—the inside members would need to persuade only one outside member to join them to achieve stalemate. That is an unacceptable balance in any institution which is so important to the economic life of this country. If the argument cannot persuade more than one non-executive director, it cannot have the standing that would allow it to prevail.
Like my noble friend Lord Sharkey, I am still struggling to understand why this change is being made. The only reason that has been presented to me is the issue of transition. If there are only seven members of the board, for a period of time there could be an incoming and an outgoing member on the board at the same time. Perhaps that is a good practice; it sounds reasonably attractive. But for that to be the reason that the board should be reduced on a normalised basis to seven seems extraordinary. I also suggest that an outgoing member might be very hesitant to exercise their rights, knowing that they were about to depart the board. Transitional arrangements could be put into the Bill, and we would be quite supportive of the idea that there might be a period when an outgoing member of the court could remain on the board in certain roles, or perhaps even in a full role, for a brief transitional period to achieve the goals that the Minister is attempting to achieve.
I hope very much that we can resist this set of issues. The Bank of England is sufficiently important and outsiders are absolutely necessary. This House has made sure over the past several years that that is central to legislation and I think we will continue to hold to that importance.
Baroness Noakes (Con)
My Lords, I agree with the noble Baroness, Lady Kramer, that the Bank of England is an important institution but I am not sure that that importance needs to translate itself into how the court is constituted. The important activities of the Bank are carried out in what will be the three major committees: monetary policy, financial stability and prudential regulation. The activities carried out by the court are relatively few in number. The question then is: what size of court is going to be efficient for carrying out the functions it is there for?
The model that well serves both the plc community in this country and much of the public sector that is modelled on corporate lines is to have a majority of non-executives. That is being kept in here. I have never heard it suggested that the number of non-executives is somehow important to the quality of governance in plcs. Many have more than a bare majority of non-executive directors but a lot operate strictly within the rules to have just a bare majority. I have not seen any studies anywhere that the ratios have any correlation with the quality of governance that is capable of being exercised.
The noble Lord, Lord Davies, referred to the academic evidence that smaller boards are effective boards—that is one of the things that came out of Sir David Walker’s review into the governance of banks—and that committees should be 4:5 and boards 8:10 or something like that. That is because in a smaller organisation, all members can have a proper voice and there can be a proper discussion, whereas in large boards often it is relatively simple for an inner group to dominate the larger group. That is what the behavioural studies have shown.
Baroness Kramer
I respect the views of the noble Baroness, Lady Noakes, very much but is she saying that the current Court of the Bank of England is ineffective because it is too large, and that the effect has been that many of the non-executive directors are not having their voice heard? That is a very serious comment to lay on the table. If that is the case, we really need that evidence because we will want to effect a cure, if this is an answer to a board that the Government have essentially decided is ineffective.
Baroness Noakes
My Lords, I have absolutely no knowledge of how the Court of the Bank of England works and have not had that knowledge since 2000, when my tenure on the court ceased. At that time I think that we were a court of 16, of whom 13 were non-executives. I will not claim that we were a very effective board at that. All I am trying to say is that what the Government are proposing is perfectly sensible and in line with general corporate practices. It seems to be entirely defensible.
Lord Eatwell
My Lords, the Bill reeks of the feeling that non-executive directors are a nuisance. Everywhere, we find the role of the non-executive directors in the Bank being reduced. This simple numerical reduction is something like arguing about the number of angels who can dance on a pin. None the less, let us remember why legislation was brought to this House and argued for so forcibly by the noble Lord, Lord Deighton. It was because the Bank of England was seen to have significantly failed during the financial crisis: in particular, that the Bank of England had not had sufficient alternative voices or challenge within its decision-making process. That is what underlay the Financial Services Act of, let me remind the Committee, 2012—just three years ago. From its vesting date to today, that Act has been in force for about two and a half years. How, after that period, can it be decided that the experience of the Act and the structures put in place by it were misconceived? This seems to be simply an attempt for the Bank to return to business as usual, ex ante—before the financial crisis. If the size of the court is too large then that should be the subject of a careful review and the evidence should be presented to this House. That has not been done. Where is the evidence?
The noble Baroness, Lady Noakes, said that what the court does is of course not very much. I wonder whether she was listening to the noble Lord, Lord Bridges, just now when he said that the court is responsible for deciding delegation of powers within the Bank. That seems to me to be quite a lot. With respect, perhaps in the day of the noble Baroness the court did not do very much, but the 2012 Act was specifically designed to empower the court and to produce on it a variety of views and the potential for challenge. There is not much of an issue between seven and nine. The issue is: why is this being changed now? What was wrong in 2012 that is now to be righted and what evidence is there that the decisions which this House made in 2012 were misconceived?
Deregulation Bill
Baroness Noakes Excerpts(9 years, 3 months ago)
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Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I support Amendment 46A, as well as Amendments 46B, 46C to 46H and Amendment 46J in the group. In supporting this amendment, I pay tribute to my colleague, Sarah Teather MP. On 28 November, she secured a Private Member’s Bill, the Tenancies (Reform) Bill, to deal with the problems caused by retaliatory evictions. Sadly, some Members in the other place that day were landlords and did not share the ethos of the Bill, and they talked it out. It is a great privilege for me to support the essence of the Bill in this amendment and to help to protect vulnerable tenants.
This amendment is not about penalising conscientious landlords; nor is it about protecting bad tenants who do not respect the property that they are renting. It is about protecting the rights of both groups and giving security to tenants who, when reporting a fault which affects their ability to live happily in their home, will not dread an eviction notice landing on the doormat as a result. It will give a clear signal to those landlords who currently ignore the state of their properties that this is no longer acceptable and that, if they engage in a regular programme of maintenance, they are likely to have a much better relationship with their tenants. Costly tenancy turnover will be lower and they will be less likely to face expensive repair bills for major incidents, such as collapsed ceilings due to persistent leaks, later.
I am sure that we can all give examples of where tenants have lived with poorly maintained and damp properties but have been too afraid to report this to the landlord. They may have seen other tenants who complained suffer eviction. Such evictions put pressure on local authorities, housing associations and others in the rented sector, and cause expensive, temporary accommodation solutions. These are a potential burden on the council tax payer and bring misery and uncertainty to families and children.
I am grateful to Citizens Advice and Shelter for their tireless efforts to bring the plight of those who are suffering from the injustice of retaliatory evictions to the notice of a wider audience. These and similar organisations have done all that they can to alleviate the suffering and uncertainty of those affected in our communities. It is often those on the lowest incomes and with the least options who are the most penalised in the housing market. They frequently have no choice but to turn to the private sector for accommodation.
It is long overdue that we seek to protect this section of our community and to give them some security, as well as decent homes to live in and in which to bring up their children. At the same time, we must protect those landlords who are assiduous in maintaining their properties. Without these landlords there would be an extreme shortage of properties to let around our cities and countryside. This amendment is all about establishing and maintaining a balance between the tenant and the landlord, and I am pleased to support it.
Baroness Noakes (Con)
My Lords, I support the amendment to the amendment, moved by my noble friend Lord Howard. In principle, preventing retaliatory evictions is a very good idea for all the reasons that have been given by my noble friend and the noble Baroness. I want to focus on two aspects, one of which my noble friend raised in one of his amendments; that is, the 14-day limit provided for under subsection (2)(b)(i) of the new clause proposed under Amendment 46A. I query with my noble friend the Minister whether 14 days is a reasonable timeframe. I declare an extremely modest interest as a landlord of one property.
I just cast my mind to what might happen. I often go on holiday for more than 14 days. If, God forbid, one were ever in a dispute with a tenant—I have no current expectation that I would be in that position—it would be quite easy for a tenant seeking to make use of these provisions generally to cause trouble and to take advantage of one’s being out of the country and not being available for 14 days. As my noble friend’s amendment suggests, 28 days seems more reasonable on that basis.
The second thing I want to raise with the Minister is what would be an “adequate response”, as provided by subsection (2)(b)(ii) in the amendment, which is defined in subsection (3). I ask my noble friend the Minister: how will the adequacy of the response be judged? What is a “reasonable timescale” and who will judge what that is? I could not see in the amendments how any disputes about this process were capable of being dealt with. There needs to be certainty about how the processes will work. It is not entirely clear to me that a response can be quickly identified as being adequate or not, given the wording in subsection (3) of the amendment.
Lord Best (CB)
My Lords, I support this group of government amendments. I declare my interests as on the register, in particular as chair of the council of the Property Ombudsman, which handles complaints about property agents—traditionally about estate agents but today more about letting and managing agents in the private sector. I am grateful to Shelter and the British Property Federation for helpful briefings.
I want to address the concerns raised by some representatives of private landlords that this effort to end retaliatory evictions in private rented housing could become a charter for mischievous tenants to prolong their tenancies when they know that the landlord wants them to leave. I want to answer the question: could tenants raise spurious complaints about their property unnecessarily, unfairly or even maliciously, in order to frustrate their landlord and to secure an extra six months or so of occupation? If that was the outcome from that measure, it is argued that it would deter investment, put off potential buy-to-let landlords and slow the growth of this sector.
The private rented sector has more than doubled in size over recent years and we now have some 1.5 million private landlords. Properties that in times past would have been sold to home buyers have instead been snapped up by buy-to-let landlords. Some observers would welcome a slow-down in this shift from owner-occupation to private renting. However, outlawing retaliatory evictions seems very unlikely to put a break on this phenomenal growth. Only the minority of really hopeless—or actually criminal—landlords will be affected.
These measures will bite only where the landlord has not only ignored a request from the tenant for rectification of a serious problem but has also ignored the local authority when it has spelt out that the landlord is in breach of their legal duties. Local authorities will have to visit the property and be satisfied that there is a serious breach of the requirements and that the property is not safe and not free from grave health hazards. The council will then have to issue a formal improvement notice, not a simple hazard awareness notice. That is not an action that is taken lightly by local authorities and they will do so only if the landlord has failed to do anything to rectify the problem. Only after the whole process has been concluded and the landlord has done nothing will the tenant gain an extension to the tenancy. These are pretty extreme circumstances and it would take a truly obdurate or completely incompetent landlord to fail to do what is required by the council.
Nor can the Bill be used as a last-minute delay to hold up an eviction. If the tenant is challenging an eviction notice, they will have to prove that they made the complaint about conditions before the eviction notice was issued. The tenant will lose the ability to challenge the eviction notice if they do not do so within the two-month notice period, and the Bill specifically prohibits renters from raising any issues that are their own responsibility. Environmental health officers are well trained in assessing whether a defect has been exaggerated or manufactured by the tenant. Prior to serving formal notice, the landlord will be given time to address the problem, and proper law-abiding landlords will act before matters reach the stage of the local authority serving the improvement notice which would delay the eviction.
This measure can catch out the shameless landlord of a slum property seeking to remove a tenant who complains in order to find someone else who is prepared to tolerate extremely poor conditions, but it does not provide any help to the tenant who tries to use this as an opportunity to fend off a perfectly valid eviction notice. I think that it is a modest change in the law and there should be no anxieties that unscrupulous tenants can use it to make mischief. There may be some tweaks to be made to the small print which would improve the amendment, and I would not stand in the way of modest changes, but the core components of the measure represent a positive step forward. In combination with the other important new requirements in this set of amendments to enforce proper standards, this measure will support the process of driving out criminal landlords.
Regrettably, among the hundreds of thousands of new landlords in recent years, there are indeed some who lack not only competence but the financial resources to keep their properties in a decent condition, let alone to engage professional agents to manage the lettings for them. Frankly, these landlords are not up to the job, and if this measure flushes out even a handful of them, it will have been worth while. For the great majority of proper landlords these changes are good news because they target unfair competitors who undermine the reputation and the public’s perception of this very necessary sector. I strongly support this group of government amendments.