House of Lords (Hereditary Peers) Bill

Lord Bishop of St Albans Excerpts

Committee stage
Tuesday 1st April 2025 Lords Chamber

[Baroness Goldie (Con)]

My Lords, I have spoken sparingly on this Bill, wishing to speak only if I had something useful to say—a self-discipline which I note has not been practised universally during the course of the Bill. To summarise my position, the principle of hereditary Peers is unsustainable in 2025; the Bill should not be opposed; but the Bill has consequences for the functionality of this House.

I provided evidence at Second Reading that a hard-working, regularly attending cohort of hereditary Peers was making a valued contribution to this House. The noble and learned Baroness, Lady Butler-Sloss, confirmed the point eloquently in her contribution. My solution was to convert some of them into life Peers.

If I understand the position of the Government correctly, the valued contribution being made to the House by this hard-working core of hereditaries is not disputed. Nor do the Government seem to refute, in principle, the idea of a conversion to life Peers—according to Labour Back-Benchers, you achieve that by putting the names on a party list and submitting that for approval, as is current practice.

So, if we have agreement on the two main consequences of the Bill, what is the best way of finding a solution when it is this Bill that is creating the consequences? The “prepare a party list for conversion to life Peers” approach has, to me, two obvious failings. It takes no account of the Cross-Benchers, who are very valuable Members of this House precisely because they have no party-political affiliation and have to sign a statement to that effect. They cannot organise a party list. Secondly, surely we owe it to the hard-working hereditaries who have been turning up and doing their share of the heavy lifting to recognise that contribution as a House and offer a House solution to what is a one-off event? This abolition will not recur.

The sensible amendment in the name of my noble friend Lady Mobarik provides just that. That her amendment has drawn support from the noble Baronesses, Lady Foster of Aghadrumsee and Lady Jones of Moulsecoomb, and the noble and learned Baroness, Lady Butler-Sloss, speaks volumes for the common-sense desire across the House to find that elegant solution.

I had hoped that by this point conversations would have been taking place through usual channels to progress this solution, but it seems that this process has become constipated. If my noble friend’s amendment, with the authoritative support it has garnered, administers the necessary dose of laxative, it has my unqualified support.

Even the dogs on the street know that we have to come up with a solution. I hope the Government will sense the momentum behind this amendment, will become positive in their reading of the mood of the Committee, and will be prepared to come forward with something constructive.

[The Lord Bishop of St Albans]

My Lords, I will not detain the Committee for long. I find myself very much in sympathy with the intention of this amendment and particularly with what the noble Baroness, Lady Goldie, said a few moments ago.

Our tradition in this House is evolution, not revolution. We know the outstanding contribution that many of the hereditaries have made to our work. My concern is that in the ongoing work that we do, the sheer thousands of amendments that have been passed because of the detailed work that this House has done—I do not have the figures at hand—sorting out some complex but sometimes misguided Bills that have come to us, have often relied on some of the most expert, established and experienced Members of this House.

This amendment would not undermine the fundamental principle of the Bill. I think everybody in the Committee accepts that it has come because it was part of the election manifesto, and we want to work with that. But this would enable us to draw on the huge expertise and ensure that we can focus our abilities to keep doing our fundamental work. It would be only a temporary phase, and eventually the Bill would achieve what it wants to do. Meanwhile, I hope that His Majesty’s Government will look closely at this to see whether we can find a way through that draws on the best experience we can of the Members of your Lordships’ House as we take our work forward.

[Lord Moore of Etchingham (Non-Afl)]

My Lords, I very much endorse what the right reverend Prelate said in his—to use a religious word—irenic speech, which I hope will help. I think we all want to address this subject without prejudice and, if we do, I think we will see how strong this amendment is.

By the way, one of the objections to the hereditary Peers remaining in this House is that they are all men, but I notice that four noble Baronesses have put their name to this amendment. If it is good enough for them, it should be good enough for the rest of us.

In my career as an employer, I have sometimes had the misfortune to sack people, and to feel that I had to sack them. I am afraid that one sometimes gets into a situation when one is sacking people when, in order not to hurt their feelings, one keeps telling them how marvellous they are. Sometimes, reasonably enough, they ask, “Well, why are you sacking me, then?”, and it can be difficult to say. Usually, the reason is that actually you do not think they are very marvellous. This amendment teases out the real motive of the Government here. That is what we want to know. We are all agreed, and the Government themselves seem to be agreed, that the hereditary Peers are marvellous as individuals, which is all that is being proposed here—not the hereditary principle but the actual hereditary Peers. So what is it—why do they all have to go? If you press and press, the underlying thought that the Government cannot express is what people used to say in other prejudiced situations. They are saying, “We don’t like your sort”, and that is a bad way to make a law in this House.

Iranian Regime: British Citizens

Lord Bishop of St Albans Excerpts

Thursday 27th February 2025 Lords Chamber

[The Lord Bishop of St Albans]

My Lords, I thank my right reverend friend the Bishop of Chelmsford for tabling this debate and for the sensitive way in which she has introduced it. I add to hers my best wishes and prayers for the Foremans, their family and friends, and my thanks to the Minister and all those officials who are working so hard behind the scenes in the FCDO. I also extend my thanks to the ambassador in Tehran and to all those working at the embassy there. I am sure they are doing all they can to resolve this desperately sad situation.

Picking up on some of the comments that the noble Baroness, Lady Northover, has just made, I welcome the Government’s plan to create a special envoy for complex detention cases. Recent events have only highlighted the need for further support for British nationals detained overseas, and I look forward to hearing further details about this. The legal right to consular access promised in the Labour Party manifesto has already been referred to. When do the Government intend to introduce this? It would be an important, crucial step in strengthening the protection for British nationals detained abroad.

My colleague knows far better than me—indeed, she knows personally—the suffering of those under the Iran regime. In 2024, there were at least 901 executions, including 40 in a single week in December. There has been an increased number of women being executed. The use of the death penalty and of politically motivated executions is truly harrowing. Recently, I raised with His Majesty’s Government the cases of six Iranian men accused of “armed rebellion against the state”, all of whom have been sentenced to death. I also urge the Minister and his colleagues to do all they can to intervene in the cases of Behrouz Ehsani and Mehdi Hassani, who are at imminent risk of execution.

Broader issues of nuclear weapons and armaments are not my area of expertise at all, but what I have seen and heard recently regarding China’s support of Iran’s rearmament has caused me deep concern. An increasingly desperate Iranian regime is an increasingly dangerous one. It is facing civil unrest at home, the defeat of Hezbollah and setbacks because of Israel. It is critical that we take steps to prevent Iran’s nuclear escalation, including stricter sanctions on Iranian oil shipments to China.

I fully appreciate that the Minister may not be able to comment on some of the details of planned future sanctions or on the Foremans’ case. We understand that. I am grateful for all he is doing. I conclude by urging that we continue to do all we can as a nation to stand up for human rights, international law and, critically, democratic freedoms not only in Iran but in all those parts of the world where these are no longer found.

Israel and the Occupied Palestinian Territories

Lord Bishop of St Albans Excerpts

Monday 10th February 2025 Lords Chamber

[Lord Collins of Highbury (Lab)]

As my noble friend said, on 28 January, the Minister for Development announced that further £17 million in funding to ensure that healthcare, food and shelter reach tens of thousands of civilians and support vital infrastructure across the Occupied Territories and in neighbouring countries. We have also delivered life-saving UK-funded medical supplies via Jordanian helicopters, an operation supported by the UK military.

On UNRWA, the United Kingdom continues to lead international action to press for a resolution to this issue. On 31 January, the Foreign Secretary joined his French and German counterparts to call on Israel to abide by its international obligations. We are in close contact with the United Nations on next steps. The Foreign Secretary spoke to the UN Secretary-General on 30 January, and the Minister for Development spoke to the emergency relief co-ordinator, Tom Fletcher, on 24 January. It is my hope that I shall be meeting him tomorrow to reiterate the message in terms of access for humanitarian aid into the Occupied Territories.

[The Lord Bishop of St Albans]

Reports coming out of the country show the desperate need to get not only aid but medical supplies there. I pay tribute to His Majesty’s Government for all that they have done so far, but the issue is how we get aid and medical supplies in. In particular, reports are coming out that the Anglican-run al-Ahli Hospital is in a desperate state. What else can His Majesty’s Government do to ensure that we get medicine and supplies in there and to other medical facilities?

[Lord Collins of Highbury (Lab)]

The right reverend Prelate is right. The United Nations and other partners are continuing to monitor and update figures for the volumes and types of aid currently entering Gaza but, given that that is a key element of the ceasefire agreement, the UN can publicly share only overall truck figures for now. So we do not currently have the usual level of detailed information, but we will continue to work closely with trusted partners on the ground to understand how UK aid is being distributed. All UK delivery partners are required, as per our agreements with them, to collate this information, so we expect that in due course.

Lords Spiritual (Women) Act 2015 (Extension) Bill [HL]

Lord Bishop of St Albans Excerpts

2nd reading
Tuesday 10th September 2024 Lords Chamber

[The Lord Bishop of St Albans]

My Lords, I am grateful to the Minister for her opening remarks. I put on record my personal thanks and those of the Church to His Majesty’s Government for securing time to bring this Bill forward, and to the Opposition for giving their support to the proposal. I hope that this will be a relatively simple and straightforward piece of business and that we may not need to detain the House for too long.

The Bill, if passed, will extend the Lords Spiritual (Women) Act 2015, due to come to an end in 2025, for a further five years to 2030. In our view, this is a reasonable extension to a successful piece of legislation. Prior to the 2015 Act, the 26 bishops who sat in this House were determined by the Bishoprics Act 1878: the most reverend Primates the Archbishops of Canterbury and York, the right reverend Prelates the Bishops of London, Durham and Winchester, followed by the 21 longest-serving diocesan bishops in the Church of England.

The 2015 Act altered the operation of the 1878 Act, providing that, for the next 10 years, any time a vacancy arose among the 21 Lords spiritual whose places are determined by seniority, the vacancy would be filled by the most senior female diocesan bishop available, effectively allowing women to jump the queue ahead of men.

The General Synod approved legislation allowing women to become bishops only at the end of 2014. If the usual operation of the 1878 Act had continued, it would have been a considerable number of years before any female diocesan bishops—having had to wait a long time before they were able to take up these senior roles—had been able to enter this House. That was the rationale behind the introduction of the original 2015 Act, which we are now seeking, with the support of the Government, to extend for a further five years.

As a result of the original legislation passed in 2015, we now have six female diocesan bishops sitting as Lords spiritual in this House. Apart from the right reverend Prelate the Bishop of London, they have all come in under the existing Act. We have been able to benefit from the exceptional insights and wisdom of the likes of my right reverend friends the Bishops of Gloucester, Bristol, Chelmsford, Derby and, most recently, Newcastle. My right reverend friend the Bishop of Newcastle’s predecessor, Christine Hardman, whom I am sure many noble Lords will remember, became a bishop quite late in life. Had she had to wait in the queue, as per usual rules, she would never have come here at all. We are now awaiting the arrival of another woman, Debbie Sellin, Bishop of Peterborough, within the next few weeks.

To come to the point, which is the five-year extension of the Act, I think it prudent to confess that we in the Church have made slower progress than we had hoped when it came to ensuring that our senior clergy are representative of the diverse congregations we serve. This is true both of women and of ethnic and racial minorities. We do not yet have proportionate representation of female bishops on these Benches, or in our diocesan bishops. Were the provision in the Act to come to an end next year, as was the original plan, I fear we would not have achieved our goal of corrective action when it comes to the long delays to women’s ministry and appointments to senior positions within the Church of England.

At the time of the 2015 Act, the most reverend Primate the Archbishop of Canterbury commented that the duration of the Act’s provisions was a matter of judgment and that we could not entirely predict or foresee the pattern of appointments over the coming years. Unfortunately, that pattern has not consisted of as many female bishops as we had hoped, and we humbly ask this House to grant us a little longer to ensure that our excellent and qualified women bishops have enough time to overcome this barrier.

However, the pipeline is crucial. If you look at the statistics, the number of women incumbents in our parishes has been steadily increasing. The numbers of women archdeacons, cathedral deans and suffragan bishops are increasing. Like many professions, we have the problem of getting the pipeline right when making these changes. If the pipeline was going in a different direction, I would be very concerned. It is, at the moment, going in the right direction.

The view of the Church is that we intend this to be a one-off and do not anticipate needing a further extension to the Act, although of course we are at the service of this House. Personally, I strongly hope to see in five years a proportionate number of our female colleagues in post as diocesan bishops and in the pipeline for vacancies in this House, and the usual rules of the 1878 Act to resume.

NHS: General Medical Practitioners

Lord Bishop of St Albans Excerpts

Monday 20th November 2023 Lords Chamber

[Lord Evans of Rainow (Con)]

I completely agree with my noble friend. The 2022 GP patient survey showed that 72% of patients reported a good overall experience at their GP practices. GP practices that innovate tend to get better results in customer patient satisfaction.

[The Lord Bishop of St Albans]

My Lords, how many doctors, including GPs, have come from outside the UK in the last year for which we have records? What long-term plan is there to stop us relying on having to bring in doctors from countries that need them far more than we do because they are much poorer than here in the UK?

[Lord Evans of Rainow (Con)]

The right reverend Prelate the Bishop of St Albans asks an important question but the recovery plan introduced new measures to support international medical students, who make up more than half of all doctors in GP training, so if we were to stop those students coming over we would be in real trouble ourselves. On his wider point he is absolutely right, but it is not just GPs and doctors; it is also healthcare professionals in social services and elsewhere.

Democracy Denied (DPRRC Report)

Lord Bishop of St Albans Excerpts

Thursday 12th January 2023 Lords Chamber

[The Lord Bishop of St Albans]

My Lords, as has already been noted by other speakers in this debate, delegated legislation is indeed a necessary part of the process, but I echo the concerns about the increasing use of skeleton legislation, Henry VIII powers, disguised legislation and tertiary legislation. I support these two excellent reports that look at how we might limit the use of delegated legislation and address the culture that is now taking it for granted. Both committees highlighted very valid concern about the transfer of power from Parliament, with clear democratic oversight and public scrutiny, to instead ruling by Executive edict.

The past few years have been turbulent times, although probably if anybody looked back over any decade in the life of this nation they would see that there have always been turbulent things happening. Therefore, I guess it is easy to understand why the Executive may need to respond in unusual and challenging circumstances with delegated authority. However, it is absolutely crucial that this is done sparingly and in a transparent manner. The Government’s response to the pandemic is the classic example of this. Of course, there are times when a national emergency will demand that we fast-track legislation, or grant broad delegated powers, but those should be exceptional and rare cases. The Government must always recognise the importance and value of parliamentary scrutiny. What is concerning, as is brilliantly highlighted in these reports, is that the Government’s widening use of delegated legislation is not limited to emergencies but is now being used routinely.

We were promised by this Government that we would “take back control” by putting power back into the hands of the British people through Brexit, but it looks as though the opposite is in fact happening. The DPRRC report has described Brexit-related Bills as some of the “starkest examples” of disguised legislation. A year ago, the noble Lord, Lord Lisvane, who is speaking later in the debate, summed it up perfectly when he said:

“The real losers are our citizens.”—[Official Report, 6/1/22; col. 780.]


It is for them that we are standing here today, to appropriately scrutinise the laws that affect their daily lives. To take this away from them is to do all of us a great disservice.

His Majesty’s Government would be advised to think very carefully about the use of skeleton Bills, Henry VIII powers and so on, as they will have no grounds for complaining if a future Government of another political persuasion use the very same powers. If this becomes the norm, any Government will take it for granted that they can ignore scrutiny by Parliament. As a minimum, we need policies that have the support of both Houses and all parties and clear principles on what needs primary legislation and what can, in exceptional circumstances, be dealt with by delegated legislation. We also need to agree on more effective ways for Parliament to scrutinise things such as statutory instruments.

Parliamentary scrutiny is one of the core constitutional functions, and the Government need to have a willingness to be scrutinised, particularly on any matter relating to the rights of the individual: their privacy, security and right to speak or assemble. So, from these Benches, I reiterate our support for the recommendations of these reports and some of the interesting material that is now being produced by the Hansard Society—which we will need to look at when we have, I hope, more time and leisure—and express my grave concerns about the shifting balance of power from Parliament to the Executive.

Tributes

Lord Bishop of St Albans Excerpts

Tuesday 20th December 2022 Lords Chamber

Finally, on behalf of these Benches, I add our thanks to all the staff who are still with us. We wish them, and all noble Lords, a very happy Christmas and a safe and peaceful New Year.

[The Lord Bishop of St Albans]

My Lords, I will not detain the House for long but, on behalf of the Lords spiritual, we thank all those extraordinary staff who, through their dedication, have served us so well. I am thinking of the clerks, the doorkeepers, and the catering, security and domestic staff. We really could not function without them and the extraordinary level of professionalism and dedication that they bring.

I will not go through a list of people, although I highlight—because she was a huge help to me— Philippa Tudor and her extraordinary competence and professionalism. We on these Benches also extend our best wishes to the family and friends of Lee Barnes. We offer all those who have been mentioned today our best wishes as they move either into retirement or on to new challenges, and we wish them a very happy Christmas.

COP 27

Lord Bishop of St Albans Excerpts

Tuesday 15th November 2022 Lords Chamber

[Lord True (Con)]

Well, my Lords, we will use such diplomatic power as we have. I have discovered in life, at a relatively advanced age, that you may pour wisdom into many people’s ears but they will not necessarily listen. I think the whole House agrees with what my noble friend just said; it is essential that all nations step up to the plate. The best we can do—and I believe that we did it in Glasgow, and that the Prime Minister has done it at COP 27—is use the UK’s considerable diplomatic influence in partnership with our allies. For example, we are working on Just Energy action with South Africa and Indonesia, and we are working alongside other developed nations.

We must use our diplomatic power to the greatest extent possible and we must, by our exertions, set an example to the rest of the world. If I could tell your Lordships’ House that with a click of the fingers, I could change the policy of very powerful nations in other parts of the world, I would, but every time Ministers of this Government meet Ministers from high-polluting countries, we will certainly make that point.

[The Lord Bishop of St Albans]

My Lords, is the Minister able to confirm that the pledges for international climate finance are not being taken from the ODA budgets?

[Lord True (Con)]

My Lords, on the ODA budget, my right honourable friend the Prime Minister has made it very clear that he wishes to see a return to 0.7% as the target for overseas aid. That remains the position of the Government. As far as specific action and lines of finance are concerned, I am not in a position to say anything at the Dispatch Box. Again, I will contact the right reverend Prelate, but I remind the House that we are a world leader in development support. We spent more than £11 billion on overseas development aid in 2021. We remain committed to the International Development (Official Development Assistance Target) Act 2015 and to spending 0.7% of GNI once the fiscal situation allows. That has been made clear from the top of the Government.

Financial Services Bill

Lord Bishop of St Albans Excerpts

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

[Baroness Neville-Rolfe (Con)]

My Lords, I rise to speak on Amendment 33 in the name of the noble Lord, Lord Sikka, having studied the comments made in Committee and repeated today. I can understand his frustration with history in this area. In particular, I would highlight the long delay and prevarication by Lloyds and the then regulator in dealing with the HBOS scam, which led to the demise of a number of small businesses banking with HBOS’s corporate division in Reading. Maybe more transparency would have helped there but it was actually a failure by the bank itself and by the regulator, which I very much hope would not happen again today. I am still not entirely sure what eventually happened; I know that there were some high-profile convictions. Perhaps my noble friend the Minister could update us on that sorry tale. I share everyone’s wish to see a system where it could never happen again.

However, I always worry that bad cases make bad law. The cases being quoted are generally old, while the FCA’s powers have been strengthened over the years and the culture has changed so that it is now very pro-consumer. Moreover, as my noble friend the Deputy Leader of the House explained on 10 March, the FCA is an independent body and the power of Ministers to intervene is very circumscribed. I suspect we will come back to these issues in the next financial services Bill, so I would like to make two points today.

First, reports from the United States have to be treated with some care. It is a sad fact that, unlike our own regulatory authorities, the US ones are more than a little protectionist. They come down harder on foreign entities than their domestic ones and like to levy huge fines whenever they can. It is not a level playing field, unlike the UK, which is of course one of the reasons why investors like it here. Secondly, in the sort of cases we are talking about, Ministers—I speak from experience, first as a civil servant and secondly as a Minister at BEIS, DCMS and HM Treasury—act on advice, not as free-talking politicians. If they make a direction in an investigation, it will reflect a public policy need and that could be a confidential matter, such as security or a government interest. Once that is made public it might be difficult for those being investigated to get a fair hearing, which is unfortunate in itself and likely to lead to aborted prosecutions. Whichever party is in power, this would not be in the public interest. For all these reasons, I encourage those involved to withdraw their amendment today.

[The Lord Bishop of St Albans [V]]

My Lords, I will be brief in my support for this amendment. I am very grateful to the noble Lord, Lord Sikka, and the noble Baroness, Lady Bennett of Manor Castle, for speaking at great length. I therefore do not need to add a huge amount more, not least as I intend to go into a bit more detail on my concerns about transparency when speaking in support of Amendment 34, which touches on similar issues of accountability.

I am a little puzzled why the noble Baroness, Lady Neville-Rolfe, thinks that this is a case of bad cases making bad laws. It seems to me that there have been very considerable concerns in the past. Surely those ought to be investigated.

We are facing a real crisis of trust in public bodies at the moment, and I believe that this amendment will be a beneficial addition to this Financial Services Bill. In making provisions for an additional layer of transparency, it will act as an incentive against any possible interference; whether done formally or informally, it will still have that effect. The truth is that we do not know whether ministerial interference in FCA investigations has occurred, and positively stating either way is speculative.

Although I was not privy to the written response from the noble Earl, Lord Howe, which he promised to send to the noble Baroness, Lady Kramer, confirming whether there were provisions within the Ministerial Code to allow for interventions in FCA investigations, the assumption in Committee was that any attempt to steer an FCA investigation would constitute a breach of the Ministerial Code. That would require breaches of the Ministerial Code or other offences to be taken seriously, and not treated lightly or even dismissed. Last year, an inquiry found evidence that the Home Secretary had breached the Ministerial Code, yet the consequences extended little further than an apology. In February, it was revealed that the Health Secretary had acted unlawfully when his department failed to reveal details of contracts signed during the Covid-19 period. Just before Easter, we all started reading about allegations surrounding conflicts of interest in a former Prime Minister’s dealings with the financial services firm Greensill, and there have been concerns about the current Prime Minister’s dealings during his time at City Hall. It is vital that, if we are to rely on breaches of the Ministerial Code, they are given some teeth and have some effect.

I have no evidence, but it may be that no Minister has ever interfered in any FCA investigation, in any way. I sincerely hope that that is the case, but we cannot rule it out. If interferences have occurred, it would be doubtful to assume that investigations are always steered in the interests of consumers. Although provisions are in place to prevent misconduct, they should not discount the contribution that this important amendment can make in strengthening those rules and further disincentivising any possible ministerial interferences in FCA investigations. If Her Majesty’s Government have concerns about small parts of the wording here, I hope they come back with some improvements to ensure that the levels of transparency are clear to everybody, in every part of the system.

[Baroness Kramer (LD)]

My Lords, unfortunately, I did not bring with me a copy of the letter that the noble Earl, Lord Howe, kindly sent me in response to my question about the Ministerial Code. I expect that a copy is in the Library and available to everyone, but I am sure that the Minister will follow through. While reading the content was reassuring, I do not want it to be a distraction—it is one of the reasons that I have not signed this amendment—from the underlying issue of whether there is adequate transparency to act as the cleansing light that we need in an industry sector that will always be subject to misbehaviour. There is just too much money and opportunity, and an awful lot of power, washing through this industry. Insight, clarity and visibility are probably more important than in almost any other sector of our economy.

The noble Baroness, Lady Neville-Rolfe, talked as if all the misbehaviour was in the past, but we are talking about Greensill today and I have questions. I know that there are many task forces and investigations going on, but I still have no understanding of how a company with as many red flags against it as Greensill got through the accreditation process to enable it to participate in the CBILS. Other than writing to the British Business Bank—and I doubt that I will get an adequate answer—I am not sure what mechanism I can possibly use to get to the bottom of that. We do not have transparency in the areas where we need it.

I remember many conversations, in the midst of the 2008 financial crisis and subsequently, with regulators that were anxious not to rock the boat. The economy and industry were fragile enough, and they were disinclined to investigate. It is to that which I have always attributed the FCA’s inaction with regard to HBOS. I support the description of the HBOS crisis given by the noble Lord, Lord Sikka. It was purely by chance that the fraud—it was literally fraud that sent people to jail for 10 years—at HBOS was exposed. Thames Valley Police decided to investigate when all the regulators, the Serious Fraud Office and the most relevant and obvious police forces had refused. Part of that was due to a lack of resources, from the police forces’ perspective.

I do not think I have ever forgiven the Treasury for its actions in this regard. It cost £7 million for Thames Valley Police to investigate that fraud and it was never reimbursed that money. The fine, of about £45 million, went to the Treasury and was deliberately not shared with the police force. Had it been, it would have encouraged and enabled police forces around the country to be more acutely aware and engaged when there was evidence of fraudulent behaviour. Even today, the various companies that were defrauded have not yet been fully compensated. Nearly 14 years on, it has not been resolved. We have two more bodies now involved in trying to clean up that mess.

The other area that leaves me with great concern is that the response I always get when I raise issues around transparency and enforcement in financial services is: “We now have the senior managers regime.” I was on the Parliamentary Commission on Banking Standards, which drove a lot of the thinking that led to that regime, but, as we have often discussed in this House, it has been holed below the waterline by decisions of the FCA not to pursue senior executives. We know mostly about Barclays and Jes Staley—who had hired private investigators to track down a whistleblower—being fined but not declared unfit to hold his position. The fine was of a size that was more than made up by the bonuses he received in the following years, so it was pointless.

We have an underlying problem. It is not that the senior managers regime does not do some good—it establishes some procedures and processes—but it focuses on more junior people and does not hold people accountable at the senior level. With Greensill coming into the picture now and triggering a much wider discussion, I very much hope that the Government will take back the message that they have to sit the regulators and the various enforcement bodies down, and work out a way to make this system more effective. They are up against powerful forces and there is inequality of arms, but this industry has to be kept under oversight and control because, when it goes wrong, it takes a large part of our economy with it, as well as creating many individual victims.

--- Later in debate ---

[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.

[The Lord Bishop of St Albans [V]]

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?

Financial Services Bill

Lord Bishop of St Albans Excerpts

Committee stage
Wednesday 10th March 2021 Grand Committee

[The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)]

I call the next speaker, the Lord Bishop of St Albans, but I cannot hear anything. I wonder whether he might be on mute.

[The Lord Bishop of St Albans [V]]

My Lords, I apologise; I am so sorry.

I am glad to speak in support of Amendment 107 in the names of the noble Lord, Lord Sikka, and the noble Baroness, Lady Bennett of Manor Castle. Throughout the course of this debate, there have been a number of comments on the current functioning of the FCA, the scope of its remit and whether it is properly undertaking its duties.

As the noble Lord, Lord Sikka, pointed out, there have been occasions when financial misconduct has not been fully disclosed, and it is worrying that this may have been due to interventions from those within government. As we establish our new position in the world following Brexit and seek to build on our financial services sector, it is vital that we are known for our honesty and transparency throughout the world. Our future will depend on this. So surely the amendment is entirely uncontroversial. The FCA is meant to be an independent regulator, not a direct arm of the Government. Hence, if Ministers have sought to intervene in any sort of FCA work or investigation, it should be a matter of transparency and disclosed.

Recently, the FCA dropped its investigation into Lookers, arguing it had instead made its concerns clear relating to the

“historic culture, systems and controls”

of the group. Why the investigation was not carried out to the full remains unclear—certainly to me, despite trying to find out. I imagine that many, including me, find the FCA’s answer unsatisfactory. It does not give us the assurances that we would hope an independent regulator would give.

Some commentators have noted that the dropping of this investigation seemed to coincide rather conveniently with the FCA’s new rules relating to car finance, brought in at the end of January 2021. Yet even these changes fell short of a mis-sell, which would undoubtedly have cost the providers of finance billions—strongly hinted at by the FCA’s 2019 report into car finance.

How the FCA came to its decision was in-house, even if it was sometimes perplexing to those of us outside. Nevertheless, in this instance, for example—and in many others—what we do not know is whether there has been any direct ministerial intervention to steer the FCA into any specific course of action. Many people would like reassurances that any intervention should be made in the interests of all and for the common good, particularly in customers’ best interests.

The amendment, in shining a light on what happens behind the FCA’s closed doors, would be a valuable addition to the Financial Services Bill. It would help in a mission that I know many in this House share to create a more transparent, robust and, dare I even say, moral financial system that in the long run will benefit all of us. I hope that the Government will look closely at either the amendment or something similar as we return to the matter later during the passage of the Bill through your Lordships’ House.

[Baroness Kramer (LD)]

My Lords, I need to spend more time, frankly, trying to understand the amendment. I would be genuinely shocked if Ministers interfered with an investigation of any of the regulators—certainly the FCA, the body at the centre of the amendment. I am not sufficiently familiar, I confess, with the Ministerial Code, but if the code does not make that clear, it would seem absolutely necessary that it does.

I perfectly understand concerns about the effectiveness of the FCA as a regulator in dealing with wrongful behaviour. It needs to be much more aggressive and transparent. We have talked earlier in Grand Committee about the HBOS Reading fraud scandal. The FCA was finally pressured into commissioning a report from Promontory, then did not publish it—only a summary that did not reflect in any significant way the actual conclusions of the report. That was extremely disturbing. We have also talked about the FCA’s actions under the senior managers and certification regime against Jes Staley, chief executive of Barclays—