Economic Activity of Public Bodies (Overseas Matters) Bill

Debate between Baroness Noakes and Lord Thomas of Cwmgiedd

Committee stage
Tuesday 14th May 2024 Lords Chamber

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I will make three brief points from the view of a lawyer. An awful lot has been said very ably by previous speakers about the reasons why, particularly in relation to Amendment 27, there seems to be no disagreement. This has nothing to do with the politics of the Bill; it is to do with making certain that we make the lives of those who become members of the pension fund board acceptable. I do not want to say too much about the burdens of being on a board or being a trustee of a pension fund—I do not want to put people off—but we ought to legislate to make their life easier in an age where litigation risk is growing. This Bill adds to that litigation risk, which is the second factor that we should take into account. I will not go into Clause 5 now because we will come to it later, but we must take into account the extraordinary encouragement it gives to litigation.

Everyone seems agreed on the objective, particularly in Amendment 27, that financial risk and impact should be taken into account. It is baffling; it is bad legislation to rely on the words rather than to take two minutes to amend the Bill. I am sure this debate has cost more than the cost of putting the Bill right. It cannot possibly be about the parliamentary draftsmen’s pride. It is incomprehensible to me why we cannot put forward a short amendment to reduce litigation risk, make it more attractive to be a pension fund trustee and enable us all to go home a bit earlier.

[Baroness Noakes (Con)]

My Lords, the noble Baroness, Lady Drake, explained her Amendment 27 with great clarity, but I am afraid that I do not agree with her analysis of the problem, nor do I agree with the analysis of the noble and learned Lord, Lord Thomas of Cwmgiedd, for reasons which I will now explain.

Financial matters have been my stock in trade for well over half a century, since I left university. I have been trying to work out what these additional words, “risk” and “impact”, would add to the concept of financial value. The term financial value is not a term of art in my world, the accountancy world, but I think that it means something along the lines of the worth of something expressed in money terms. What something is worth can mean what it is realised for in a market transaction, or what it is worth in terms of the financial benefits it is evaluated to or expected to bring. I believe that neither “risk” nor “impact” add anything to the meaning of financial value.

I start with risk. Risk will affect value, so any determination of what something would fetch in a market or what benefits it would bring would of course take account of the risks when doing the calculations of financial value. This is just 101 of calculating things in financial terms. That is effectively why the DWP documents refer to risk. They do not refer to documents about risk as an adjunct to financial value; they are just encouraging the identification of risks, because that is a normal part of a balanced evaluation. While I do not think that the word risk does any particular harm to the concept of financial value, I do not think that the word is necessary.

I have struggled a bit more with working out what financial impact means. The only thing I could come up with was something like the evaluation of the net costs or benefits to be obtained from what is being acquired, but I cannot see what financial impact adds to the meaning of financial value. In this case, it would be positively confusing to add financial impact alongside financial value, because it might encourage somebody to litigate on the basis that there was a difference between financial value and impact, as Parliament clearly meant something other than financial value by the concept of financial impact. That would be a failure on our part to create certainty in our legislation.

I would also like to comment on Amendment 46A, from the noble Lord, Lord Collins, which is in this group. I expect he will be speaking to it a little later. I could not understand why the noble Lord has chosen UN-related documents to refer to when trying to put what he calls “established investment principles” into the Bill. The UK Government have already announced a series of actions that they have implemented in relation to the UN guiding principles on business and human rights, much of it already in legislation and unaffected by the Bill. In response to those principles, the relevant parts of our legal system are already in place, and we do not need to refer to a UN document to get any further on investment principles; they have already been interpreted by the UK Government.

Furthermore, we already have a perfectly good Stewardship Code in the UK, issued by the Financial Reporting Council, which deals with ESG matters. I do not believe the Bill alters that at all, so long as ESG principles do not acquire a territorial dimension.

UK Infrastructure Bank Bill [HL]

Debate between Baroness Noakes and Lord Thomas of Cwmgiedd

Committee stage & Lords Hansard - Part 2
Tuesday 14th June 2022 Lords Chamber

[Lord Thomas of Cwmgiedd (CB)]

My Lords, there are obviously different ways of trying to ensure two things. On one, expertise, my long experience of bankers has persuaded me that they are not the right people to be exclusively on this board. One needs someone with the expertise of addressing the objectives of the bank. That is critical. The second is to keep the union together and it is no use saying—I hope that we will not get this from the Minister, who has been so receptive to many points—“Don’t worry, we’ll all do the right thing”. I come from a school where if you all agree on what the right thing is, why do you not write it down?

That is really what I am saying: let us write down that you should have experts in the various areas central to the bank’s objective and make provision for those who live in the devolved nations to feel that the bank is acting in their interests. Here, the question of perception is critical. The idea that the Treasury carries on as before is, to my mind, not apposite in the current time. I would hope that the way in which I have phrased my amendment might be slightly more acceptable to the Treasury in that it would leave it with the decision while giving it objective standards. One can but hope.

[Baroness Noakes (Con)]

My Lords, I shall make just a couple of comments. I support the noble Baroness, Lady Kramer, on her Amendment 45, which requires there to be a majority of non-executives on the board. My noble friend the Minister will doubtless say that the UK Infrastructure Bank will have to comply with the UK governance code, and therefore it has to have a majority of non-executive directors. But any public body that is set up always has the provision that there is at least a majority of non-executive directors on the board. It would be good practice to replicate that for the appointments here, given that we are dealing with those appointments in statute anyway.

I am not attracted by having odd numbers on the board. If there had been a problem, it would have surfaced in the UK Corporate Governance Code before now. The plain fact is that if there ever is a situation where a board is split, no chairman will use a casting vote to push something through. Boards simply cannot operate on that sort of basis. Normally something is withdrawn, people regroup and compromise is reached. It is just not a problem in practice, so we do not need to reflect it in the Bill.

One thing I really want to do, I am afraid, is to disagree with the noble Lord, Lord Vaux of Harrowden, on giving appointment rights to First Ministers in the devolved Administrations. I completely accept that the devolved Administrations will want to feel involved but I prefer the formulation in the amendment of the noble and learned Lord, Lord Thomas of Cwmgiedd, which is about recognising that a knowledge base is important to have on the board. Another and more normal way of doing it is to have a consultation option available to take the views of the devolved Administrations.

However, it is really important to avoid having representatives on boards. It will destroy the collective nature of the board if you have people parachuted in from outside with their only virtue being that they were a political appointment. It is really important to preserve the nature of the board as being an area—picking up what is in these other amendments—to bring together the skills and experience necessary to have the right decision-making processes.

Professional Qualifications Bill [HL]

Debate between Baroness Noakes and Lord Thomas of Cwmgiedd

Committee stage
Wednesday 9th June 2021 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I asked the Government Whips’ Office to order the speakers as is normal in the Chamber when we do not have lists—that is to say, those who have tabled amendments are allowed to speak before those who simply wish to comment on them. I was advised that the list was issued late this morning.

The noble Lord, Lord Fox, may recall that I do not like purpose clauses. I believe that a Bill should be written in clear language and that its scope and impact should be readily understandable on its own terms. This Bill fails to meet that test, but I do not think that a purpose clause is the answer. Instead, we should focus on making sure that the Bill itself is fit for purpose. We have tabled a number of amendments aimed at doing this.

I also have a minor quibble with the drafting of Amendment 1. Subsection (2) refers to

“the independent process of defining the accreditation processes of the regulators.”

I believe that the independent processes which this Bill should protect go beyond mere definition of accreditation processes. We do not want any form of interference in the independent processes of regulators. This should be an enabling Bill which should unblock legal impediments to the recognition of overseas qualifications. It must steer clear of all the processes operated by regulators, not just of those defining accreditation.

I put my name down to speak because I recognised the Institute of Chartered Accountants’ provenance of Amendment 12 in the name of the noble Lord, Lord Palmer of Childs Hill. That is why I was keen for him to speak first. Amendment 9 in my name, in a later group, is slightly simpler, but on the same basic point. I realised a little too late that perhaps I should have asked to add my amendment to this group. The essence of Amendment 12 is to ensure that inappropriate burdens are not placed on regulators, as the noble Lord, Lord Palmer, has explained. I will not repeat those arguments. I will explain my own amendment when we reach it later.

This is a very real issue. The Government need to look at it again to ensure that their approach is reasonable in the context of what regulators could be compelled to do by the provisions of this Bill. As far as we can, we should seek to avoid any possibility that they could be compelled to do anything unreasonable, burdensome or otherwise inappropriate to their profession.

[Lord Thomas of Cwmgiedd (CB) [V]]

My Lords, I shall speak briefly in support of Amendment 1. Subject to the clear statement of the noble Baroness, Lady Noakes, it would be desirable to try to focus much more of this wide-ranging Bill. If that is not done, a provision to make clear that the independence of regulators is not in any way affected is of vital concern. The regulation of professions should be set by the structure ordained by Parliament—not by the Executive and then left to the regulators. If more precise provisions cannot be incorporated, Amendment 1 would have this vital effect of making clear the independence of the regulators.

In the case of the legal profession, it is convenient at this stage to raise two points about independence. First, the independence of the courts depends on the independence of lawyers, with their ability to challenge the powerful, particularly the Government. This can only be safeguarded by independent regulation within a structure set by Parliament. Given the position of the Executive in relation to the courts and the legal profession, it should not be the Lord Chancellor’s role to be involved in this in any shape or form. It is difficult to see, given the scope of the Legal Services Act, why these wide-ranging powers need to be given to the Lord Chancellor.