(3 years, 4 months ago)
Lords ChamberMy 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.
My Lords, I will speak in support of Amendment 34, in the name of the noble Lord, Lord Sikka, which is an interesting contribution to the question of governance. I am keen that we find any ways that we can to speak into those organisational cultures that every industry adopts and promotes, and which sometimes lead to groupthink.
There are times when it takes someone from the outside to ask intelligent questions. I am reminded of Her Majesty the Queen asking the Bank of England why there had been a financial crash back in 2008, when many people in the industry, who were paid extraordinary amounts of money because of their supposed expertise, had not spotted that it was coming. I do not think that this is about inviting people who are ignorant to come on to boards; this is a question about whether there is a wider contribution that might be very useful and of help to thinking about issues of governance responsibility.
I will comment briefly on a further development in the FCA’s investigation into car finance, which I have referred to in the House in the past. Since the FCA introduced its new rules banning discretionary commission models in January 2021 and subsequently closed its investigations into Lookers, the car dealership firm, for possible mis-selling, it was revealed that the UK’s accounting watchdog, the Financial Reporting Council, was investigating accounting giant Deloitte for its role in auditing the very same Lookers that the FCA had only just ended its investigation into a few weeks earlier. The FCA never confirmed or dismissed whether there had been any mis-selling, remarking that it had made its concerns clear and did not intend to impose penalties on this FTSE 250 firm. However, the opening of a new investigation relating to Lookers raises questions about the thoroughness of the original FCA investigation: were all aspects investigated?
(3 years, 11 months ago)
Grand CommitteeI will not be following the same line of argument as the noble Baroness, Lady Jones. I remind noble Lords that the majority of the amendments in this group apply only to regulations made under Clause 2, which applies to continuity agreements only. All noble Lords who have the bogeyman of a trade deal with the United States in their minds when they make their speeches are barking up the wrong tree. These amendments would have nothing whatever to do with any trade treaty outside the continuity agreements.
This feels like Groundhog Day. Having just come through the Agriculture Bill, I see the same people making the same arguments. I have this nightmare that in every Bill going forward, for ever, the noble Lord, Lord Grantchester, the noble Baroness, Lady Jones, and a number of other noble Lords will be popping up with amendments in virtually the same form, whatever the basic content of the Bill, if they have half a chance of squeezing them into the long title.
These amendments go beyond food standards and all those things that so many impassioned words have been said about already into how food is produced. Noble Lords will be aware that, under WTO rules—they are our future in trading terms, if not our past—it is not allowed to mention food production methods without a scientific basis. That is one reason why the EU, and therefore the UK, has been in contravention of WTO rules. We need to come to terms with the fact that we are now living in the post-EU world where the WTO will be extremely important to us. I hope that my noble friend Lord Trenchard, who knows much more about the WTO than I do, will amplify that when he speaks later.
The noble Lords who have spoken know perfectly well what the UK Government’s stated policy is in relation to the standards that they are keen to see adopted in the way that the Government pursue business. UK law is aligned with EU law by virtue of retained law, so whatever trade agreements are entered into, it is not possible to import, for example, hormone-treated beef into the UK—even though there is actually no scientific basis for that, certainly on food safety grounds. Treaties do not and cannot change UK law. As I have said before, we do not customarily write every government policy into legislation. That would create a very cumbersome way of building up legislation.
Noble Lords have remarked in various ways how they think these policies need to be written into the Bill because they do not trust the Government or think that the Government are not sufficiently persuasive. They have often accompanied those remarks with a number of insults about either the Prime Minister or the Government in general. I have to say, it is not the approach of any Government involved in legislating to write into legislation things that appear to upset noble Lords on the Opposition Benches, or even on the Cross Benches. Noble Lords will be aware that, even if we wrote it into the Bill, it could easily be changed if the Government sought to change it in later legislation and Parliament agreed to that. As has already been mentioned, the straightforward electoral arithmetic now means that, with a majority of 80 in the other place, the Government’s policy can change. If we try to put anything into this Bill, it does not necessarily determine government policy for ever and a day, which is what noble Lords are trying to do.
The amendments in this group are not necessary and are, I believe, a waste of legislative time. I would fully expect the other place to reject them if they were pursued and passed on Report. I will speak in specific terms about one amendment only: Amendment 23. A number of noble Lords have referred to it as representing some kind of glorious compromise around the time of the previous Trade Bill. I will speak to it because my noble friend Lord Grimstone, the Minister, was not here at that time. He will have not been aware of the circumstances in which that amendment was put into the Bill.
We have to remember that, at that time, Parliament was barely functioning. It was more focused on resisting any form of Brexit in any way possible. Getting the Trade Bill through the House of Lords was an extremely difficult thing for my noble friend Lady Fairhead to try to achieve. Not to put it too mildly, the amendment that came forward was just an act of attempted appeasement to those noble Lords who were bent on obstructing anything related to Brexit. I say this to noble Lords: the world has changed. That amendment belonged in that era, and that era is behind us.
My Lords, I plan to say a few words on Amendment 20, moved by the noble Lord, Lord Grantchester. I am also sympathetic to Amendments 23, 25 and 26.
Food production and environmental standards, as well as the safety that they enshrine, are crucial to a healthy agricultural sector that seeks to mitigate the dangers arising from poor practices and the low-quality products they produce. Ensuring continuity has been a big priority for a number of Members. Issues surrounding the responsible administration of antibiotics to livestock, for example, are not national issues but global public health ones. Despite the Bill covering existing trading arrangements, we should not forget that the raison d’être for leaving the European Union was the assertion of our sovereignty. It is therefore right that the existing arrangements, conducted while we were in the EU, ought to be scrutinised by the relevant departments to ensure that the UK does not inadvertently undermine measures to achieve reductions in the risk of disease or contamination—or, indeed, targets for antibiotic reduction.
This by no means seeks to discredit trading arrangements made while we were in the EU, which I am confident already abide by the regulations set forth in Amendment 20. However, the scrutiny put forward in this amendment will guarantee this and ensure that the UK reinstates its commitments to the environment, food standards and a safe and healthy agriculture sector globally through its existing trading partners. I look forward to hearing what reassurances the Minister can give us on this group of amendments, particularly on whether there is some way in which the broad drift of what many of them try to get at can be brought back in the hope that we do not have to table specific amendments on Report.