Procurement Bill [HL]

Debate between Baroness Noakes and Baroness Neville-Rolfe

Consideration of Commons amendments
Monday 11th September 2023 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I have much sympathy with Motion 1A in this group, tabled by the noble Baroness, Lady Brinton, because I believe that treating the NHS as a special case in any area of public policy has the effect of insulating the NHS, which is a seriously underperforming organisation that desperately needs change.

Having said that, I am afraid I cannot support the noble Baroness’s amendments. Parliament has already decided, in the shape of the Health and Care Act 2022, that the NHS should be subject to a bespoke regime. In effect, the other place was asked to think about that again when this House sent the Procurement Bill there for consideration, and it has sent it back with its response—it wants to keep a bespoke regime for the NHS—so I think we have the answer to that. My noble friend the Minister has made clear that much work has already been done on the interface between the two regimes to make sure that nothing will fall through the cracks.

This boils down to a simple difference of view; the Government want to do it one way and the noble Baroness, Lady Brinton, wants to do it another way. I wonder whether this is really the kind of issue that should be the subject of a prolonged battle between the two Houses. I cannot see that there is a real point of principle here. Also, as my noble friend the Minister pointed out, implementation of that new system in the NHS is already quite a long way advanced and it would appear wasteful to try to undo all that.

I turn to Motion 4A in the name of the noble Baroness, Lady Hayman of Ullock. She has tabled a list of what she calls “priorities and principles” that Ministers must consider before publishing a national procurement policy statement. At first sight these look wholesome and unobjectionable, as one might expect. I have two main reasons for not supporting her amendment.

First, the amendment is unnecessary. Government Ministers and their officials are already focused on value for money, transparency, integrity and even, I say to my noble friend Lord Lansley, innovation. It is government policy to pursue innovation; it is already part of the day-to-day life of government. Many of these items are either implicitly or explicitly already in the law, either administrative law or general law. As has been pointed out, some already feature in the objectives for covered procurements. My noble friend the Minister explained all this in her introductory remarks. Thinking that the Government need a special list of things to think about, in statute, misunderstands the processes of government.

Secondly, the list of items always reflects today’s concerns and is not future-proofed. While some issues such as transparency seem like eternal issues, they were not always unambiguously so. Today’s obsessions with things such as environmental matters will, I predict, be overtaken by other issues of concern, whether Russia and Ukraine or something that we have not yet thought about. I am not clever enough to predict what those other things will be; I just know that the world changes and the orientation of government policy will change with it. The inclusion of a list runs a real risk of being overtaken by events, which is why it is not good legislative practice to put such lists in statute. I hope that both noble Baronesses will not feel it necessary to pursue their amendments and divide the House.

[Baroness Neville-Rolfe (Con)]

My Lords, I begin by sharing my appreciation for the number of incisive contributions we have heard in the course of this short debate. It is always a pleasure to debate these things here. Of course, they have now been reviewed in the other place, as my noble friend Lady Noakes said, and there was a long discussion, including a long Committee stage attended by my friend in the other place Alex Burghart. I particularly thank noble Lords for all the work that has gone into this across the House, including these important provisions.

My noble friend Lord Lansley is correct that the objective in Clause 12 applies to cover procurement. The NPPS clause allows an NPPS to cover all procurement, but in practice its scope will be determined by the contents of the statement. In my opening remarks I explained at some length the position on the coverage of the NHS. I will come back to one or two of the questions from the noble Baroness, Lady Brinton.

I particularly thank the noble Baroness, Lady Hayman, for all that she said. Concerning principles that need to be considered by Ministers in preparing the NPPS, these principles are already covered through other commitments and legislation, as I have already set out. The amendment is therefore not necessary, as my noble friend Lady Noakes said. In addition, our fundamental view is that the Government of the day should not be constrained by the Bill in their ability to prescribe something more specific. They are free to do so—and I think this is the charm of the Bill—through the NPPS rather than through primary legislation. The Bill is about clarity and simplicity, not layering rules on rules.

To understand how it works in practice, I refer my noble friend Lord Lansley—I think I have already discussed this with him—to the current non-statutory NPPS, which covers innovation and social value. Attempting to drive innovation, which I am as keen on as he is, in every single procurement will not always be relevant or proportionate. Our Bill drives innovation through, for example, our new competitive flexible procedure, pre-market engagement and our duty for contracting authorities to have regard to reducing barriers for SMEs—which will also benefit social enterprises, as the noble Earl, Lord Devon, referred to. Future NPPSs will also be subject to parliamentary scrutiny and consulted on as appropriate.

The consideration of environmental targets and objectives relating to social value in preparing the NPPS, and the other principles set out in this amendment, are duplicative and would render the Bill more complex and confusing for contracting authorities and suppliers. Singling out specific objectives for Ministers to consider will create the impression that they trump others, which could unduly constrain flexibility for a Government to set priorities in future, which they will do through the NPPS. This is a principle seen in other legislation, where you have framing legislation and then statutory guidance.

Finally, regarding environmental considerations—as highlighted in discussions during the REUL Bill debates, although perhaps I should not remind noble Lords of those as they took a long time—Ministers will now be under a legal duty to have due regard to the environmental principles policy statement when making policy, including the development of policies in accordance with the Bill.

On the NHS amendments championed by the noble Baroness, Lady Brinton, I am grateful for the meetings that we have had but I believe that they stem from a confusion. NHS bodies are contracting authorities and therefore already covered by the Bill; we had a good conversation about mixed contracts and so on, which I think was helpful to us both. It would be inappropriate to remove the power to make the provider selection regime regulations, especially given the benefits that they will bring to patients.

In response to a question about the definition of healthcare services, the scope of services in the PSR has been consulted on and will be further supported by reference to a list of common procurement vocabulary codes, set out clearly in the PSR regulations. An indicative list of those codes was included in DHSC’s recent consultation on the PSR.

The noble Baroness made a point about conflicts of interest. Our Bill strengthens existing legal duties on conflicts of interest and embeds greater transparency throughout the commercial life cycle. This has been welcomed and, I think, is important. Furthermore, the provider selection regime regulations will clearly set out provisions for the effective management of conflicts of interest. The PSR is designed to ensure transparency across all procurement decisions to which it applies, including how the decisions were made. This transparency will help ensure that there is proper scrutiny and accountability of decisions to award contracts for healthcare services.

Finally, an independently chaired panel will provide expert review and advice concerning decisions made under the PSR, helping to ensure that procurement processes are transparent, fair and proportionate. I very much hope that that additional information about our plans for the PSR will enable this debate about just how these two regimes, both of which have been discussed constructively and at length in this House, fit together, and that noble Lords feel able to support the government amendments and withdraw the amendments that they have put forward.

Procurement Bill [HL]

Debate between Baroness Noakes and Baroness Neville-Rolfe

Report stage
Monday 28th November 2022 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, Amendment 9 tabled by the noble friends Lady Noakes and Lord Moylan—whom I am very glad to see back in this place—seeks to preserve the rules which currently apply to public service collaborations at paragraph 2 and 3 of Schedule 2. It was also very good to hear from my noble friend Lord Greenhalgh with his extensive local government experience.

I agree that the Bill needs to preserve these rules but believe that we have already done so. Paragraph 1(2)—to which the noble Baroness referred—says that a contract is not exempted if the main purpose of the contract could reasonably be supplied under a different contract, and that contract would not itself be an exempted contract. This provision serves to close a loophole where contracts that are mixed—that is that they contain both exempted activities and not exempted activities—might be inappropriately exempted from the regime.

However, unlike the exemptions for specific activities, all types of goods, services and works contracts are capable of being exempted under the vertical and horizontal exemptions, so the second part of the test at Schedule 2(1)(2)(b) is not met. The contract would remain exempt.

While I believe that we have preserved the rules, the Bill needs to be better understood by users and stakeholders. My noble friend Lord Greenhalgh also made some good points about unnecessary tendering. I met the Local Government Association, as I was concerned about this provision, and my officials are engaging with it following its representations to reach a common understanding. They will come back to me with an amendment that could be put forward in the House of Commons to clarify this provision, should one prove necessary. It will take a bit of time. Accordingly, I ask my noble friend to withdraw the amendment.

[Baroness Noakes (Con)]

My Lords, I thank all noble Lords who have taken part in this short debate and those noble Lords who supported this amendment. I was delighted to hear what the Minister had to say, which was in the spirit of the quest for a good procurement system for this country that has permeated the way we have operated on this Bill to date. I am sure that the discussions with the Local Government Association will prove fruitful. On that basis, I beg leave to withdraw the amendment.

Procurement Bill [HL]

Debate between Baroness Noakes and Baroness Neville-Rolfe

Committee stage
Wednesday 26th October 2022 Grand Committee

[Baroness Noakes (Con)]

I feel obliged to pursue this issue just a little further. When I spoke to the amendment, I referenced the imbalance of power between contracting authorities and small and medium-sized enterprises, which was its focus. I understand the points that my noble friend is making about when there are parties on either side of the transaction with equal bargaining power, but it does not work like that when there is unequal bargaining power. I am not suggesting that Amendment 486 is a perfect answer to that, but I do not think my noble friend has addressed the point as it applies to SMEs. I know that is a theme that has run throughout our consideration of the Bill, but I want to record that I do not regard her response to my amendment as really getting to the heart of the problem.

[Baroness Neville-Rolfe (Con)]

I thank my noble friend for her intervention. I agree that we need to try to get at the issue of the balance of power; indeed, we were discussing it at my briefing meeting. I think it may be worth having a further discussion with the Government Office for Technology Transfer, because it needs to understand the importance of these small companies to innovation and how the kinds of decisions that they make on rights and intellectual property can make an important difference. I am grateful to her for raising that further point.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

To come back to how you do it, you can do things in guidance as well as in the Bill. I take the noble Lord’s point that consistency would be helpful, but I have explained that there can be difficulties. I will just add that transparency will be a fundamental pillar of the new regime, which I think we all support. Extended transparency requirements, a single digital platform and so on will mean that decisions and processes can be much more closely monitored in future.

[Baroness Noakes (Con)]

Could my noble friend help me on the legal effect of the Civil Service management rules? It is my understanding that they cannot actually be enforced in a court of law because it would act as a restraint on the individual’s ability to earn a living. So the rules might exist and there might be advisory bodies et cetera, but it has always been my understanding that they cannot actually be enforced in a court of law. I am not trying to speak for the amendment, but the advantage of it is that it creates a statutory basis for it to have legal effect.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

My Lords, this final group deals with amendments on VAT. The Government’s Amendment 536 simply broadens the notion of amounts payable to include amounts that have already been paid, as contracting authorities may be required to take into account expected or completed payments.

I turn to Amendments 537 and 538. With the agreement of the Committee—I have agreed this with my noble friend Lady Noakes, whose amendments they are—I will reply to her later.

[Baroness Noakes (Con)]

My gift to the Committee is not to make an extended speech on the subject of value added tax. I know that many noble Lords would like to hear that, but we have expedited procedure and my noble friend the Minister will respond instead.

[Baroness Neville-Rolfe (Con)]

I am very grateful to my noble friend Lady Noakes, who, as usual, has come to the rescue. She raised the question of whether VAT should be taken into account when calculating the value of a concession contract. I confirm that, when a contracting authority values a concession contract, it should calculate the maximum amount the supplier could expect to receive. I thank my noble friend for raising whether this policy intent is adequately covered in the current drafting of Clause 111 and will give this careful consideration ahead of Report.

My noble friend Lady Noakes also asks why the formulation

“any amount referable to VAT”

has been used in Clause 111(2). Amendment 538 proposes to remove the words

“a reference to any amount referable to”.

As I understand it, the amendment does not aim to change the effect of the clause. Rather, the intent is to rationalise the drafting. I assure noble Lords that the proposed edits have been carefully considered and the existing wording is thought to be better suited to achieving the desired policy outcome.

I therefore respectfully request that these amendments be withdrawn. I will move the other government amendments in my name but, before I sit down, I thank our Deputy Chair of Committees and the Committee for their patience and good humour with the large number of government amendments. We will try to keep up our good record of government engagement and do better on the number of amendments.

Procurement Bill [HL]

Debate between Baroness Noakes and Baroness Neville-Rolfe

Committee stage
Monday 24th October 2022 Grand Committee

[Baroness Neville-Rolfe (Con)]

I think we have made a bit of progress; I will not go down that rabbit hole or we will not make enough progress.

If I might, I turn to Amendments 306, 307, 308 and 320 tabled by the noble Lords, Lord Wallace, Lord Fox and Lord Hain. They would introduce new mandatory exclusion grounds in relation to offences of sanctions evasion, money laundering and failure to prevent bribery, and new discretionary exclusion grounds in relation to various financial and economic misconduct when the contracting authority has sufficient evidence in the absence of a conviction.

The mandatory grounds for exclusion cover the types of misconduct which raise only the most serious risks for contracting authorities. We have already strengthened the mandatory grounds significantly in comparison to the EU regime, but they cannot and should not cover every offence. On sanctions, the types of freezing orders referred to in the amendment are unlikely to be relevant to public contracts. On bribery and money laundering, we have included a range of mandatory exclusion grounds covering the most serious offences. This expands the scope of the offences covered in the EU regime to cover blackmail as well as bribery. However, I reassure noble Lords that the offences in question which are not listed as mandatory exclusion grounds are likely to be subject to discretionary exclusion, under the ground of professional misconduct. This will depend on the circumstances, but if the ground is met, contracting authorities could exclude the supplier.

As to the amendment to include financial and economic misconduct as a new discretionary exclusion ground, we have already explained to this Committee that the exclusion regime is not a substitute for a judicial process. I am not prepared to require contracting authorities to weigh up complex evidence of financial and economic misconduct in which they have no relevant experience. That is a key issue with the ambitious proposals described by the noble Lord, Lord Fox.

Amendments 323, 326 and 327, tabled by my noble friend Lady Noakes, concern the discretionary exclusion grounds for potential competition infringements and the test for when these apply. These exclusion grounds recognise that there may sometimes be evidence of competition infringements in the absence of a regulatory decision or ruling. It is critical that suppliers known to have been involved in collusion, bid-rigging and anti-competitive behaviour are held to account, given the fundamental importance of fair and open competition to procurement.

However, I reassure the Committee that these grounds should not be used to exclude suppliers merely because they are under investigation by the CMA or another regulator; there must be sufficient evidence that a breach of competition rules has occurred. I think my noble friend pointed out that the language used in the Explanatory Notes differs from that in the Bill. I am advised that this does not reflect a difference of policy or meaning. Authorities must “consider” that the conduct specified has occurred before determining that the exclusion ground applies. She went on to ask about why there were subjective tests in the discretionary grounds. I have to say that I had some difficulty in exactly following her logic in all this, and we may need to discuss these points further after Committee. The answer is because exclusion is a risk-based measure and a last resort, and suppliers are protected by a right to challenge the exclusion decisions because of the nature of those decisions.

[Baroness Noakes (Con)]

A moment ago my noble friend said, in respect of the amendment by the noble Lord, Lord Fox, that she did not want decision- makers trying to weigh up complex financial matters, but she somehow seems quite happy to have decision-makers weighing up equally complex matters scattered throughout Schedule 7 and in the discretionary exclusion grounds. I struggle to see the intellectual cohesion in the Government’s position.

[Baroness Neville-Rolfe (Con)]

I thank my noble friend for her further comments, which I will consider carefully. I myself feel strongly, as someone who has witnessed small construction companies being investigated by a competition authority that at the end of the day have been found completely innocent, that it would be difficult if they were not able to continue to engage in procurement during a long period of investigation. However, as she explained, we need to get right how we deal with the discretionary grounds and ensure that there is enough certainty so that authorities do not spend too much time going round in circles. We need to reflect further on the points that she has made. I think I slightly misunderstood the purport of her original amendment, so I look forward to discussing that with her. I thank the noble Lord, Lord Fox, for his intervention.

Health Protection (Coronavirus, Wearing of Face Coverings) (England) Regulations 2021

Debate between Baroness Noakes and Baroness Neville-Rolfe

Wednesday 1st December 2021 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, it is a pleasure and a surprise, as we are discussing an SI, to follow the noble Baronesses, Lady Thornton and Lady Brinton. Although I do not agree with much, I do agree that it is very helpful that we are discussing these SIs so quickly, so I thank my noble friend the Minister. I also agree that we must not put retail workers at risk, as we are in the process of discussing in our debates on the police Bill, and that air filtration systems can be valuable in many settings.

The background to this debate is that we have taken major steps to limit the impact of Covid-19, with 115 million vaccine doses now injected in arms across the country. The more vulnerable and elderly have received boosters now totalling over 18 million, and the race is on to double this quickly. This has been well done and we must all be grateful.

We now face the challenge of the omicron—I am told that is stressed like omega, if you studied Greek, which I did not—and I rise to offer modest support for, but also some concerns about, the new regulations on masks. In particular, I agree that it is right to limit their compulsory scope to transport, shops and services such as hairdressers and banks. I am less happy with the regulation on self-isolation, which is potentially much more onerous and lasts, as we have heard, not for three weeks but until 24 March. I have some questions for my noble friend the Minister.

First, how will all this end? What virulence criteria in relation to omicron will lead to the removal of the restrictions? Can this be done at speed like their imposition or, as we have seen before, will such regulations linger on?

Second—and I have a family interest here—can there be an opt-out from travel quarantine testing for those who have recently recovered from Covid and registered as such? This is very important for children at school, where the virus continues to spread fast. I know that the travel PCR requirements are not covered in these regulations, but I hope that the Minister will answer anyway and make sure that further regulations are clear. There is so much confusion.

I would like to record my belief that both sets of regulatory proposals have a serious defect: we do not have the benefit of an impact assessment or anything like it. It may be technically true that there is an exemption for rules lasting less than a year, but it is a highly unsatisfactory state of affairs. An assessment of the cost and economic impact of such measures is essential to good government and the future well-being of our country, and should inform all decisions such as these. Take the first instrument on masks; the analysis in Paragraph 12 of the Explanatory Memorandum is embarrassingly inadequate and does not even mention small business. What studies have the Government conducted into children wearing masks, the negative and the positive? What is the evidence that they will help with the infectious omicron variant?

Let us consider the second set of regulations. The new self-isolation controls will have a huge impact on work, schools, health, social care and other services, as case numbers rise and the “pingdemic” of last summer returns. They also deal a body blow to the already struggling transport industry, with billions wiped off its value since last week. Do the Government prepare proper assessments to inform their actions? I hope they do; they should summarise or publish them for debates such as these. Doing so would serve to limit overreaction. The last couple of days have been full of rumours of possible overreactions, such as masks being required in theatres and restaurants, and school plays and Christmas parties cancelled. Government spokesmen should be calming matters, not encouraging people to close things down.

We have been partly saved by vaccination, but we have encountered needless damage across the economy and society over the last two years, because of our lack of attention to economics. Saturday’s BBC coverage helped me to understand why. At his press conference, the Prime Minister was sensible and serious, but the lead commentary afterwards came from a member of one of the SAGE committees, Susan Michie. She is a professor of health psychology at UCL and a well-known communist, and she wanted to go much further. Why are there a number of psychologists on SAGE and not economists—although I think there is a leading statistician? Indeed, you might ask why communists are involved at all.

On my final point, perhaps my noble friend could say whether he and the Secretary of State, both of whom are more aware than their predecessors of the importance of growth and economics to the well-being of everyone in the country, might look at the composition of SAGE and add an economist or two, now it looks as though, sadly, Covid is continuing to be more extensive than we all hoped.

[Baroness Noakes (Con)]

My Lords, I first support what my noble friend Lady Neville-Rolfe said about impact assessments. In fact, I have tabled a Motion on a later coronavirus order regretting the lack of impact statements, which I look forward to debating with the Minister in due course.

I start by recording what Reuters reported today from a World Health Organization official. He said that, to date, most omicron cases have been “mild” and that there is no evidence yet of reduced vaccine effectiveness. On that basis, we may find that these orders have been overhasty and that we do not see an extension of them.

I will concentrate my remarks on the mask-wearing order, because I continue to believe that there is insufficient scientific evidence on which to base requirements for people to wear masks. Much attention was paid, a week or so ago, to a meta-analysis that was published in the British Medical Journal. Its headline was that masks showed a 53% cut in the transmission of infection. When one looks at the detail of that meta-analysis, the case falls apart. Of the large number of studies included, only six related to mask wearing, of which two had a critical and four had a moderate element of bias. Of those four, only one was a properly randomised trial and its results were inconclusive. There is no evidence that scientifically supports the wearing of masks.

I will not oppose this order and I hope it runs out in a few weeks’ time, but I hope that the Minister ensures that the right messaging is put out. I have heard that the noble Baronesses, Lady Thornton and Lady Brinton, want it extended, including to theatres. They may like to know that this is already happening. I reveal one of my hobbies by saying that, yesterday, I received emails from both the English National Opera and the Royal Opera House telling me that, as of yesterday, they were mandating masks. I have to put up with a mask for the sake of listening to Wagner, this weekend, but the messaging that this order relates only to shops, transport and the close personal services that were referred to earlier is not out there.

In addition, when I got back to my apartment block last night, the management company had splattered the place with “Masks now required”. I challenged that today and of course there is no legal basis for that prohibition, so I have asked it to remove or alter the messaging. Unless the Government give clear messages to the public at large that this is a very limited measure for very good reason, and there is no need for it to be extended further, it will carry on spreading like some kind of virus throughout all social activity. We must not let that happen.

Financial Services Bill

Debate between Baroness Noakes and Baroness Neville-Rolfe

3rd reading & Report stage
Monday 19th April 2021 Lords Chamber

[Baroness Neville-Rolfe (Con)]

I start by sharing the powerful words of my noble friend the Deputy Leader on the sudden loss of the noble Lord, Lord Judd, who contributed so very recently to this Bill and whom I remember well as an effective Minister of State at the FCO when I was a young civil servant. His death is a great loss.

As I understand it, Amendment 34 is designed to improve the culture of the financial services sector—a sentiment that I empathise with—although it would do so by adding an extra layer of regulation through a stakeholder supervisory board. I am against this for the FCA, the PRA and other regulators. I have substantial experience of regulation from my Civil Service past, as an executive and a non-executive of non-financial companies, as a Minister and, currently, as a non-executive of a small bank. In my judgment, adding an extra layer of board members without practical experience could have a perverse and negative effect.

For good outcomes, one needs clear, simple and outcome-based regulation, and company directors who take their responsibilities seriously and promote a good culture, with a focus on customers and protection, on risk and the good use of capital, on fraud and cyber, on the people who operate the business—from the top right down to the bottom—and on innovation and cost control. Above all, one needs directors who will challenge, get into the detail and be listened to.

I have been a non-exec for over 20 years and, until recently, there has not been enough attention paid to, or appreciation of, the challenge function and directors who challenge. Cases such as the HBOS scam, which we have been concerned about today, are the result. This needs to change, in terms of the selection of non-executives and with strong internal challenge in the executive structure of companies. This applies to financial services companies and more broadly.

An extra layer in the form of a supervisory board will not solve the problems of culture that have been highlighted. It risks introducing a further confusion of responsibility. To my mind it is, I am afraid, a bad idea.

[Baroness Noakes (Con)]

My Lords, I am sure that the noble Lord, Lord Sikka, will not be surprised to find that I do not support his Amendment 34. In particular, as a former director of a supervised bank, I do not recognise the regulatory capture that he majored on in Committee and again today. In my experience, the relationships are always challenging and, sometimes, worse than that.

I have two main reasons for opposing the amendment. First, a supervisory board sitting over the top of the existing regulators undermines a fundamental characteristic of regulation in the UK—namely, that regulators are independent. That means that they are independent of government, certainly, and of Parliament and anyone else who thinks that they might have an interest in what they do. They are certainly accountable for delivering against their objectives and expect to be scrutinised by Parliament, but they are autonomous bodies. This amendment runs against that.

Secondly, the regulators already have governance structures that oversee the work that the executives undertake. In the FCA, it is the FCA’s own board, which has a chairman and a majority of non-executive directors. I believe that the only executive on the FCA board is, in fact, its chief executive. In the case of the PRA, there is a Prudential Regulation Committee, which has Bank of England executives and outside members, and is chaired by the Governor of the Bank of England. More importantly, in governance terms, as the PRA is part of the Bank of England it is overseen by the Court of the Bank of England, which, again, is a largely non-executive body chaired by a non-executive, although it does have the governor and the deputy governors, including the head of the PRA.

Governance of the regulators is carried out in the way in which governance in the UK is normally done. It covers the very things mentioned in proposed new subsection (8), which is therefore duplicative. If there are concerns, they should be dealt with within the organisations concerned, without writing reports to Parliament. I believe in transparency, but there is a point at which transparency becomes counterproductive, and I am sure that this amendment is way beyond that point.

Accountability to Parliament takes many forms, a key one being the annual reports that are laid before Parliament, setting out the regulators’ performance against their objectives, which is required by existing statute. It really is difficult to see what added value this amendment would create.

The amendment is also deficient in a number of respects. Perhaps the most glaring is the reference to the “Executive Board” of the PRA and of the FCA. As far as I am aware, there is no such thing specified in legislation or the governance arrangements of either body. I believe that each regulator has an executive committee or equivalent, but they do not have an “Executive Board”, with a capital “E” and a capital “B”.

The amendment would require the exclusion from the supervisory board of anyone who might actually understand what the PRA and the FCA actually do. Proposed new subsection (5) would disqualify “current and past employees” not just of the FCA and the PRA but of any organisation that they supervise. I have never thought that ignorance was a good qualification to be a member of a board.

Proposed new subsection (10) talks about “open meetings” but does not explain what that means in practice. Proposed new subsection (11) says that all the supervisory boards papers must “be made publicly available”, but it seems to pay no heed to the need for confidentiality or data protection. I could go on. These are unnecessary and ill-thought-out proposals, and I hope that my noble friend the Minister will not accept them.

National Security and Investment Bill

Debate between Baroness Noakes and Baroness Neville-Rolfe

Report stage
Thursday 15th April 2021 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I have a number of amendments in this group, all of which would amend the annual reporting requirements. Some of them overlap with amendments that my noble friend has just spoken to. In particular, my Amendments 26 and 28 are similar to his Amendments 25 and 27. The difference is that my noble friend’s amendments ask for the average time to be given, whereas I ask for both the average and the maximum, because averages can be very misleading. However, we shall have some data, and I am sure that those can be used as a springboard for further examination of BEIS Ministers and officials, if either House wished to do that, so I shall not pursue those amendments.

Of my other amendments, Amendment 29 asks for differentiation between call-in notices issued for mandatory and for voluntary notifications. That is not given, and it is quite an important bit of information, which would be useful to enable us to see how important that mandatory notification route turns out to be. The other thing I have asked for is a focus on timing—the time between issuing the call-in notice and getting to the end of the process and giving the final notifications and the final orders. I continue to believe that those areas would be important for keeping an eye on how well the process is operating, especially as there are very long times available once the call-in notice is issued. Again, I am sure that questions can be tabled and Ministers can be interrogated in the usual way, so I am not worried about that. I am glad that my noble friend has moved towards more transparency, although he has perhaps not gone quite as far as I would have preferred.

Although I have not added my name to the amendment in the name of the noble Lord, Lord Grantchester, I think it is important for annual reporting to keep a focus on the resources dedicated to this, because the timing performance will be in part a reflection of whether adequate resources have been dedicated. Of course, giving numbers never gives an idea of the quality of resources, so that can only ever be an imperfect picture, but it is important for Parliament to have an opportunity to review and keep in focus the resources dedicated to the ISU processes. That is where the biggest impact is likely to be felt by businesses as they come up against the system. Well done for bringing in some transparency; a bit more would have been better.

[Baroness Neville-Rolfe (Con)]

My Lords, as I noted earlier, the administrative arrangements for consideration of deals referred to BEIS are incredibly important. This is a good Bill, but it must not be undermined by poor implementation, or UK plc will be cast in a bad light. As others have said in Committee, delays create cost and uncertainty, which can jeopardise beneficial takeovers or combinations. Deals in the 17 categories must be reviewed, but this must be done professionally and quickly.

I therefore welcome the Government’s amendments, and thank my noble friend the Minister, but I do not think they go far enough. At the least, I feel that he should also accept some or all of Amendments 28 to 31, tabled by my noble friend Lady Noakes—either in the Bill at Third Reading or through a commitment to add to guidance.

I have years of experience of being regulated, by the CMA and other anti-trust and investment authorities round the world, mainly in my former retail role. Good people, and good regulators, are both thorough—I know that has been a cause for concern right across the House—and timely. I can tell noble Lords that authorities use the set timeframes as a defence, and almost never, in my experience, report or publish ahead of the deadlines. So the timelines need to be clear, and, as argued by my noble friends Lady Noakes and Lord Lansley, and the noble Lord, Lord Fox, in the debate on Amendment 11, they need to be tight. They could perhaps also be shorter for smaller or struggling companies, which have more to lose. It would be helpful if my noble friend could have a look at that, if it is not already envisaged that we will take special care with those categories.

It is a worry that we are running out of time for the Bill in this legislative Session. As I have said, I supported the Bill at the start, and I am keen to get it on to the statute book, as I know the Government are as well.

In the light of discussion, I have four questions that probably go slightly wider than the annual report. Perhaps I could ask the Minister to respond either today or before Third Reading. My first question is whether in principle the Minister has the ability to consult on sensible arrangements on timeliness and timelines and put them into statutory guidance or whether a new power is needed, which is rather suggested by my noble friend Lord Leigh’s Amendment 36, which we will come on to.

Financial Services Bill

Debate between Baroness Noakes and Baroness Neville-Rolfe

Committee stage
Monday 8th March 2021 Grand Committee

[Baroness Noakes (Con)]

As I was saying, my Lords, of much greater importance are the plans that the Government have to support and promote the future growth of our financial services sector. The amendments on international competitiveness debated on our first day in Committee are far more important than EU equivalence.

[Baroness Neville-Rolfe (Con)]

My Lords, I am delighted to follow my noble friend Lady Noakes. Like her, I was struck by the comments of the Governor of the Bank of England, and I feel she has given us a welcome dose of reality this evening.

I speak as a member of the EU Committee and its Services Sub-Committee. We have wrestled long and hard on the vexed question of the granting of equivalence by the EU, including the important issue of reciprocity, highlighted by the noble Baroness, Lady Bowles. I want to make three points and ask one question.

First, once one has decided to leave the EU, it makes little sense to be tied to its rules and regulations—in effect, as the Governor of the Bank of England has said recently, thereby becoming a rule taker without being able to make any input to the new rules. So we will have to plough our own furrow on financial services. But that does not stop us agreeing equivalence arrangements in areas where there is strong mutual interest such as central counterparties, known as CCPs, already temporarily approved, and perhaps insurance. We have granted equivalence to European banks and other bodies, as has been said, and the prospect of maintaining that equivalence gives us some leverage.

Secondly, I do not see why we should necessarily refuse equivalence to third countries which do not have similar legal and supervisory standards. Flexibility is important if we are to welcome investors here, and they may have different yet adequate regimes, bringing in innovation and diversity of offer, which could be valuable in the UK. Trade in services is absolutely vital to the future of this country.

Thirdly, I can see the value of some form of reporting to Parliament, as proposed by the noble Lord, Lord Tunnicliffe, in Amendment 100 and my noble friend Lord Hodgson in Amendment 105—although in different ways. Even on the EU Committee, we have had the greatest difficulty extracting information on the progress of negotiations on financial services, partly because this is in the hands of the Treasury and its officials, while the main spokesman has been my noble friend Lord Frost, who has led our negotiations across the board with such tenacity.

My question is this. How does my noble friend the Deputy Leader feel about the balance between UK-owned banks and financial service operators and their EU competitors now that we have granted equivalence and the EU, in the main, has not? Am I right in thinking that a German bank such as Deutsche Bank, a Dutch bank such as Rabobank or a French asset management firm such as Amundi is regulated in its own country and less subject to UK regulator bureaucracy and aggressive enforcement of something like MiFID than its UK counterparts? Is there any sense in which it is privileged, and is this true also of smaller operators? Does this matter to UK plc?

United Kingdom Internal Market Bill

Debate between Baroness Noakes and Baroness Neville-Rolfe

Report stage & Report: 3rd sitting (Hansard) & Report: 3rd sitting (Hansard): House of Lords
Wednesday 25th November 2020 Lords Chamber

[Baroness Noakes (Con)]

My Lords, as the Minister knows, I am a strong supporter of the Bill and believe that it is important to allow the UK’s internal market to function, but I genuinely believe that the location of the office for the internal market is problematic. I fully support the OIM itself, as it will be essential to monitor the effectiveness of the UK’s internal market. However, the CMA is the wrong place for it at the wrong time.

It is the wrong place because monitoring the internal market is a radically different activity from the core functions of the CMA. To oversimplify, the CMA is focused on businesses which can and do behave badly on competition. By contrast, the office for the internal market will not target individual businesses or sectors; its targets will end up being the Administrations of the devolved nations or their regulators if they act in a way that undermines the internal market. Businesses trying to trade throughout the UK should be the beneficiaries of the OIM’s work, not the villains. Most of the CMA’s battles are fought on legal and economic analysis, which are often big battles with a lot at stake but a world apart from the kind of political battle in which CMA may find itself pitted against one of the devolved Administrations.

In Committee, I said that putting two different activities into a single organisation ran the risk of that organisation being a jack of all trades and master of none. Having thought about that further, it is potentially worse. If the CMA and the OIM get embroiled in long political feuds about restrictions on trade within the internal market, it could be very damaging to the CMA’s focus, which may take away from the attention it gives to its core competition-based work. We may end up throwing the baby out with the bath water. It is also the wrong time to put the OIM into the CMA, given the significant increase in size as it takes on additional activities following our departure from the EU. Organisations that try to take on too much and do too many things at once often end up achieving very little.

For those reasons, I support creating the office for the internal market as a separate body. I cannot, however, support the amendment in the name of the noble Baroness, Lady Bowles of Berkhamsted, because it has gone beyond the simple purpose of setting up an independent OIM and has strayed into state aid, with its own version of how that may be taken on in future. That goes too far.

[Baroness Neville-Rolfe (Con)]

My Lords, I support the main thrust of the amendment, as I explained in Committee when leading a debate on my amendment, for which there was considerable support across the House. There is a good case for establishing a UK office for the internal market, but the CMA is the wrong home, for all the reasons that my noble friend Lady Noakes articulated so well. The CMA operates with values—notably a deep suspicion of the good business can do and an aggressive approach to enforcement—that are not appropriate to the new office.

Subsections (1) and (2) of the proposed new clause come from an earlier amendment which, frustratingly, was not moved, and are on the right lines. However, the proposed subsection (3) is not sensible. If any of the devolved Administrations withhold consent for appointments on whatever grounds, the whole purpose of the new office could be stymied. One is reminded of President Trump and the World Trade Organization, when unexpected and unforeseen actions by an elected officeholder—in this case, the President—in an advanced and democratic country came close to wrecking the operations of a major component of the global economic order. We would be foolish voluntarily to run such a risk.

It may be argued that it is unlikely the devolved Administrations will act like President Trump or that this is an issue of the same order. I would retort that, five years ago, it was deemed impossible by all informed observers that a US President would act as he has towards the WTO. Life can contain surprises, and we act foolishly if we unnecessarily set up arrangements that risk being sabotaged.

Accordingly, I call on the Minister to agree to bring forward an amendment at Third Reading that incorporates proposed new subsections (1), (2) and (5) of Amendment 68A, which seem entirely sensible and widely supported. I regret that I cannot support Amendment 68A as it stands.

Trade Bill

Debate between Baroness Noakes and Baroness Neville-Rolfe

Committee stage
Tuesday 13th October 2020 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I will speak only to Amendment 70 in this group. We voted to leave the EU on 23 June 2016 and that has been confirmed several times. We have left the EU but are currently in a one-year implementation period, which expires at the end of this calendar year. I do not believe that any further implementation period is needed, and I particularly do not think that one is needed in the context of an agreement with the EU.

The amendment says it shall be an objective in negotiating a trade agreement with the EU to secure a further implementation period—clearly ignoring the fact that we have already legislated for no further implementation period. But, if there were any issues, they would be most likely to bear on people who are exporting under WTO terms after the end of this year. So the amendment is not going to achieve the effect of helping those with complex supply chains, because those with complex supply chains who are expecting the arrangements with the EU, as part of a free trade agreement, to deliver the certainty they require will be of a much smaller order of magnitude than in the context of having no deal. We know that the Government want to achieve a deal, but it is not yet clear that we will be able to do so—so I could never support Amendment 70.

[Baroness Neville-Rolfe (Con)]

My Lords, I rise as someone with many years of experience in supply chains, including just-in-time supply chains. This area is often a problem in trade agreements, and indeed in the operation of such free trade agreements. I remember all the difficulties affecting our shoppers when quotas and rows between the EU and China held up bras and shoes on the high seas—not perishable, but as important as chicken for many of us. Food is trickier than goods, as noble Lords will remember from strikes affecting Channel crossings and the Icelandic ash cloud.

The point I want to make is that EU exit, or any continuity or future trade agreements, are likely to lead to changes in supply chains. We should embrace this, and I am afraid that I am not convinced that we need Amendments 70 and 95.

My own view is that the combination of more border checks, whether we agree a deal on trade with the EU and EEA or not—that is the reality—will change trade flows. New FTAs will bring changes in tariff schedules, rules of origin and perhaps new provisions on standards. This could be a huge opportunity at home for British industries and parts of British agriculture, as buyers turn to home production to avoid the complexities. Of course, they will also face competition, but I know from experience as a business executive that competition makes business sharper and better.

There may be a need for some transitional arrangements in EU or other FTAs—fisheries is an obvious area—and even help for small firms wrestling with new checks. But we should not seek an additional transition period with the EU, as my noble friend Lady Noakes has just said. We should not try to preserve existing systems in aspic, however good the intentions of those debating this Bill today. We will do much better if we lead the way in embracing the opportunities of EU exit and of new trade agreements.

Pension Schemes Bill [HL]

Debate between Baroness Noakes and Baroness Neville-Rolfe

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Tuesday 30th June 2020 Lords Chamber

[Baroness Noakes]

I shall be brief. I indicated that I want to speak on these amendments because I am concerned about the impact that they would have on companies’ ordinary transactions. Part of the problem would be that there is no distinction between ordinary dividends and something that might be regarded as an excessive dividend.

The noble Lord, Lord Vaux, has taken the approach of saying that share buybacks are always less common and always have to be referred to the regulator but other distributions of capital by way of dividend are not. Life is never that simple; if you are sitting in a boardroom deciding on dividend policy, there is clearly an approach to ordinary ongoing dividends. Then there is what you do with surplus capital, which can go by way of either a special dividend or a share buyback. I do not know how this amendment could possibly differentiate between those.

When one gets into the detail of Amendment 51, which tries to set a level at which so-called ordinary dividends would trigger the potential interest of the regulator, we could potentially get into problems. I do not think that it would be healthy to have major uncertainty hanging over companies undertaking their ordinary approach to the distribution of profits alongside what might well already be a well-defined deficit repair plan with contributions already agreed with the pension trustees, and then have something on top be required to go to the Pensions Regulator. The definition of what the regulator should be interested in will end up with a lot of things being notified to the regulator that, frankly, cause no concern at all. I do not think that that is an efficient way to approach life.

[Baroness Neville-Rolfe [V]]

The noble Lord, Lord Vaux, has adapted his amendments to meet some of the concerns that we all expressed in Committee, for which I thank him, but I am afraid that I am still not happy with the two amendments that he has tabled. For example, nearly all pension schemes are in deficit. Amendment 50 would allow the Pensions Regulator basically to stop all buybacks, which is a matter not for this Bill but for a governance Bill—following proper review and consultation—because buybacks can be justified in some circumstances and we have not had a chance to debate that.

The coronavirus measures, with which a parallel was drawn, are unique and different—that has been made clear in parliamentary agreement to them—so it is better to leave the arrangements to ministerial discretion, as the noble Lord, Lord Vaux, suggested. We have to remember that, however good the regulator is, he or she introduces delay and uncertainty, so we need to make sure that the powers are used with care.

Consumer Rights Bill

Debate between Baroness Noakes and Baroness Neville-Rolfe

Monday 3rd November 2014 Grand Committee

[Baroness Neville-Rolfe]

I thank my noble friend for his clarification. He is right to say that the draft rules were constructed by a specialist working group. They will be subject to full public consultation in order to ensure that they strike the right balance, and that will obviously be undertaken well before these provisions come into effect on 1 October next year. Perhaps I may also say at this point that I have talked to the CBI and corresponded with the Law Society, with which I am extremely happy to have a meeting, as I think my noble friend suggested, so that we can go through some of the points that I am making in more detail.

A key safeguard in the Bill is that the CAT must certify that a representative is suitable to bring a collective action. This means, as has been said, a law firm, a claims management firm or a special purpose vehicle. These will not automatically be able to bring a claim, and the draft CAT rules provide for even more scrutiny of a proposed representative. It is appropriate for these requirements to be in the CAT rules so that they can be modified more easily or be made even more stringent if that is necessary. This will ensure an effective regime which promotes the interests of consumers. The Government also believe that the CAT, a specialist competition court which I know from my own experience, has a strong track record in dealing with consumer detriment in competition law, and is well placed to scrutinise each and every body that seeks to act as a representative. I do not share my noble friend’s concern, given my knowledge of the court and its specialist nature.

[Baroness Noakes]

Perhaps I may intervene on my noble friend on that one point. As I understand it, the CAT does not normally carry out this function, so as I have said, while I have the greatest respect for the work of the CAT and what it does in relation to competition law, I do not think that it has experience of establishing whether or not particular claimants for the action are representative. We are going into uncharted territory here, and that is why it is so important to get this absolutely right.

[Baroness Neville-Rolfe]

I thank my noble friend. She is absolutely right to say that we need to get this right. We will reflect further on the point, and of course we do have a fair amount of time to ensure that the right mix of expertise is in place. However, the Government have decided, I think for the right reasons, that the CAT is the place to house this function. The rules and regulations surrounding that are clearly important and will be, as I have just said, subject to public consultation.

The point has been made that it would be better to put all the eligibility requirements into the primary legislation, but of course no two cases will be the same. We are concerned that companies might seek out loopholes to avoid the restrictions, and therefore it feels appropriate for the CAT to have the discretion to consider each representative on a case-by-case basis. But, again, we can discuss this further.

These amendments would also prohibit the use of third-party litigation in collective action cases. It is appropriate for the CAT to scrutinise any funding arrangements that exist in a case to ensure that the claimant has sufficient funds to meet the defendant’s costs.

My noble friend Lady Noakes talked about the approach of the European Union to this subject. I believe that it has issued a recommendation for opt-in in collective redress. The recommendation suggested the adoption of an opt-in regime, but it accepted that for reasons of sound administration of justice, member states might want to introduce a different regime. Following our consultation and the evidence that we gathered, the Government believe that the present opt-in regime is—as I have said a number of times—not delivering effective redress. We therefore propose in the Bill to introduce an opt-out regime with safeguards.

My noble friend raised many understandable concerns. We have thought carefully about this. The Bill already contains restrictions on the financing of claims as it prohibits damages-based agreements and does not provide for a claimant to be able to recover any uplift in a conditional fee agreement. Therefore there is a need for claimants to have the option of accessing third-party funding so as to allow those who do not have a large reserve of funds or those who cannot persuade a law firm to act pro bono to be able to bring a collective action case in order to ensure redress for consumers.

Blocking access to such funding would result in a collective actions regime that is less effective. This would bar many organisations, including reputable consumer organisations such as Which?, from bringing cases as Parliament hoped in 2002. Restricting finance could also create a regime which was only accessible to large businesses. This would weaken private enforcement in competition law, which is of course not the Government’s wish or intention.

To return to the point made by my noble friend Lady Noakes on the CAT, its staff obviously includes High Court judges, who are used to dealing with a range of representatives and complex case management. However, I take the points she made and look forward perhaps to discussing those with the Law Society or with any others who wish to be involved in a meeting between now and Report.

I hope that my noble friend is reassured that we are aware of the concerns around introducing an opt-out regime. I look forward to further discussions, but I also ask that my noble friend withdraw the amendment.

[Baroness Noakes]

My Lords, I thank all noble Lords who have taken part in this brief debate on these very important provisions in the Bill. I am thankful in particular for the support that I received from my noble friends Lord Eccles and Lord Hunt on the amendments that I moved.

I say in passing that I find it curious that having an opt-in provision which resulted in only one action should be grounds for more legislation. It seems to me that there is very little consumer demand for that, although there may well be demand from representative bodies. I worry about whether we get the right balance in the law when we make law for representative bodies rather than ultimate consumers.

The issue comes down to what should be in the Bill. I understand what the Minister is saying about needing to have flexibility in due course and to leave discretion. My noble friend Lord Hodgson’s amendments did not change that; they merely proscribed certain categories of people from being authorised as representatives. It would still leave discretion with the tribunal, but would say, “In these circumstances you cannot do it”—so if you are a law firm involved in it, you cannot do it—rather than leave it to the discretion of the tribunal to work its way through whatever rules exist at the time. The draft rules, as my noble friend Lord Eccles said, are not very clear on that. They have rules about conflict of interest, but they are not absolutely clear what they are directing themselves at. They may well end up with precisely the right answers, but, equally, they could build their own precedence system which will end up with the wrong answer. That is the concern: that unless we are quite clear about prohibiting what we have observed elsewhere and do not wish to come here, we may end up with what we do not want.

However, I will not take up more of the Committee’s time today. Obviously, I need to revert to my noble friend Lord Hodgson of Astley Abbotts, who will certainly be looking forward to reading Hansard when he returns from abroad. I thank the Minister in particular for agreeing to a meeting with the Law Society and others who might be interested. There are genuine concerns about the nature of the provisions that are being introduced under Schedule 8, and we owe it to all to get those right. With that, I beg leave to withdraw the amendment.