Immigration (European Economic Area Nationals) (EU Exit) Order 2019

Lord Deben Excerpts

Monday 18th March 2019 Lords Chamber

[Baroness Ludford (LD)]

My Lords, I add to what my noble friend Lord Paddick said—it is the disjuncture and hypocrisy that upsets us. Of course, this is a one-way continuation of free movement. Many of us were extremely distressed when the Prime Minister cited the top reason for celebrating her ill-fated draft withdrawal agreement and political declaration last November; apparently, its top benefit was ending free movement. In fact, this is not happening—at least, not into the UK—and no consideration was given to the benefits of free movement for UK citizens in the rest of the EU. This instrument says nothing about those opportunities, which are being torn away from UK nationals. This will particularly affect young people and those of all ages who want to work or retire in the rest of the EU. It is the Government’s inconsistency which strikes such a difficult note.

Had I had the opportunity to ask my noble friends on the Front Bench, who know a great deal more about immigration law than I do, I may not have needed to ask this question, which concerns the difference between Articles 3 and 7, which I do not really understand. Article 3 is entitled:

“Grant of leave to EEA and Swiss nationals”.


Article 7 is entitled:

“Grant of leave by virtue of Appendix EU to the immigration rules”.


I simply do not understand the difference between those legal bases for extension of leave, as “EEA nationals” covers EU nationals as well. Perhaps the Minister could help me. That also spills over to the health charge, because Article 10, on exempting from the health charge, appears to apply only to those who acquire leave to enter or remain,

“by virtue of Appendix EU to the immigration rules”.

It does not appear to cover those who get leave under draft Article 3. As I say, it may just be that I do not understand how all this interacts, but perhaps the Minister can enlighten me.

[Lord Deben (Con)]

My Lords, I thank my noble friend for the careful and charming way in which she introduced this SI. But we had better remind ourselves what “free movement” actually means. It means that people can move from one part of the European Union to another—but in fact, of course, at some stage they have to have a job. You can remove them from one country to another if they do not have one. That is part of the arrangement.

My worry about this is that we say that we are ending free movement, but actually we have not included the one thing that is a perfectly proper restriction on free movement that we have had up to now. So we are removing the one thing that most people would find unacceptable, which is the mechanism whereby you make sure that people move around the European Union with a purpose and do not become a burden on a particular country they have chosen to go to. I find that bit really very peculiar. No doubt the Government have thought that all through, so we will hear exactly how it works.

Although I shall say this as politely as I possibly can, I think that this is a load of old nonsense. I really do think that the idea that we will grant these opportunities for the rest of Europe but are putting ourselves into a position in which none of these opportunities might be granted to any of our citizens seems to be one of the best examples of the fact that Brexit is a mechanism for shooting ourselves in the foot. The reason we are doing this in a one-sided way is exactly the same as with every other SI we have had: the only things we can do with SIs are the things that affect us, rather than anything in the rest of Europe that affects our people. What better exemplar of the stupidity of leaving the European Union can there be?

My noble friend is of course bound to defend the Government’s policy—although I have to say that I am not really sure what the Government’s policy now is. Indeed, I have not really been sure for some long time, and today it seems even less clear than it was yesterday. No doubt tomorrow it will be more opaque still. But the reality is that this SI displays the fundamental problem that, during the referendum campaign, a lot of promises were made. One of them was, as the noble Lord, Lord Paddick, said, that we would “take back control”. So we are taking back control to allow other people to travel into our country, but removing our right to travel into their countries. As a piece of control taking back, that seems somewhat limited in its attraction.

I often ask myself how I would speak on a platform if I was asked a question about these SIs. Indeed, it is a way I think when I look at what we are proposing on the climate change committee. I say to myself, “How would I explain that on a platform?” It is a useful thing for a long-term politician. So I am standing on a platform and somebody says, “Can I go to the rest of Europe like I have always done?” The answer is, “We don’t know, because we haven’t done a deal on that”. “Can my aunt, who happens to be French, come to Britain even if she hasn’t got a job?” The answer to that is probably yes. “How do they make sure she’s here for only three months if she doesn’t have to show her passport or have it stamped?” The answer is that they probably cannot. “Well, will they look out for her?” “No, we’ve agreed that there’s not going to be any looking out for people; it’s not going to be like that at all”.

How does that draw that into the same position as somebody who comes from the United States? Of course, that is entirely different; they have to show a passport and make the arrangements. I do not mind that, because we do not have a mutual arrangement with the United States—but at least we do not have a one-sided arrangement with the United States. At least we do not say that Americans can come here and do all these things and we have no willingness to go there.

I really got up to say to my noble friend how sorry I am that she has had to defend this SI—because it is indefensible. It is a nonsense. It is quite wrong to give other people the rights to enter our nation and say that that is taking back control, and it is quite wrong to give those rights without having previously arranged that we should have the same rights in the rest of Europe. To hide it behind the use of the phrase “free movement” is, of course, the really serious thing, because free movement has always been restricted. If the Government have not used those restrictions effectively, that has been the fault not of the European Union but of United Kingdom Governments of all denominations and types. So I say to my noble friend: okay, no doubt the SI will be passed, but do not think that it does any honour to this Government—and it certainly does no honour to Britain. I am getting more and more embarrassed at the way the rest of the world is seeing us.

[Viscount Waverley]

My Lords, following on from the point made about stamps in passports, and as a procedural point, would the Minister confirm that all persons exiting the UK are now properly registered as having left the UK? There was a point in recent times when that was not the case. There were stamps for entry, but I understand not for exiting. Clarification at an appropriate time would be helpful.

Financial Services (Gibraltar) (Amendment) (EU Exit) Regulations 2019

Lord Deben Excerpts

Tuesday 5th March 2019 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I will be exceedingly brief because, again, this falls into the category of necessary changes to regulation in order to keep a reasonable consistency in the relationship between the Gibraltarian and UK financial markets. I accept that but I have to say: poor Gibraltar.

There is a three-way relationship between Britain, Gibraltar and Spain. A recent tax treaty between the UK and Spain requires Gibraltarians sourcing their business primarily in Spain to pay Spanish taxes. I suspect that some in Gibraltar are slightly stunned by it but realise they have to accept it. The complexity of the relationship outside the EU is far from being resolved.

As the noble Baroness, Lady McIntosh of Pickering, said earlier, unfortunately impact statements only test the actual cost of a particular regulation and then compare it with what would happen if there was no regulation. They never compare the cost between implementing no deal and remaining in the EU. This is where the big number lies, not only for the UK, but very much for Gibraltar. So it is crucial to do anything we can at this point to try to minimise the impact. This regulation is a small part of it. I cannot see how the whole Brexit strategy—deal or no deal—can ever benefit Gibraltar or give it a future which is anything like as prosperous as the one it had in a remain context.

[Lord Deben (Con)]

My Lords, I want to ask a question which follows on from the intervention of the noble Lord, Lord Beith. First, I am still a little at a loss as to how these years work, compared with other SIs. I do not quite understand what would happen if we had a deal and a transitional period. The noble Lord raised something which needs to be explained.

Secondly, I agree with the noble Baroness, Lady Kramer, that it would be wrong to allow these two SIs to pass without reminding the House of the serious effects of Brexit on this particular connection of the United Kingdom. The more we talk about these and the more you unwind it, the more it becomes quite clear how ridiculous the whole process is. I know it is not suitable for my noble friend to comment on this, but I wish only that our Benches were filled with those who think that Brexit is good idea so that they could listen to the realities of what happens if you leave the European Union—let alone without a deal. As usual, none of them is present to listen to the serious effects of Brexit. It is rather like trying to talk about climate change. You never have the climate change deniers present to see what the science is actually about. The House might like to note the non-existence of those who think that Brexit is just a matter of getting there and doing it at once. The people who stand outside with little notices about the WTO clearly have never worked out what becoming dependent on WTO rules means.

Thirdly, of course we have to pass these two SIs. Without them, were we to leave the European Union without a deal, things would be even worse than they need be, but we must not do it thinking that this is going to make things easier. Gibraltar is a sharp instance of the damage that could be done. Will my noble friend explain a little more about the discussions that have been held with the Gibraltar Government and particularly his reference to the Gibraltar Government making their own arrangements should there be Brexit without a deal? What are these arrangements and how do they interrelate with this SI? I do not think that many Members of this House have detailed knowledge of the kinds of things which Gibraltar would have to do were we—and they—to leave the European Union without a deal. It would be helpful to the House if my noble friend would delineate what exactly it is that they have to do and what their powers and responsibilities are in parallel with the two SIs with which we are concerned this evening.

[Lord Tunnicliffe (Lab)]

My Lords, we have no objection to these two SIs, but I have two or three brief questions. The position is summed up in the Explanatory Memorandum to the first set of regulations, paragraph 7.21 of which surprised me. It states:

“The UK government will work closely with the government of Gibraltar to design a long-term permanent framework”.


My impression until I got to that sentence was that the provisions here would change the situation into a stable framework. I would be grateful if the Minister could give us a feel for the extent of difference between the UK system and the system in Gibraltar that means that this bespoke framework is needed, and particularly what will happen if it is not agreed by the end of 2020.

The Minister can respond in writing to my second comment if he would like to do so. I refer to the first bullet point in paragraph 7.15 on the second set of regulations. This is really a cry of anguish because one has slogged through so many of these SIs and has to read every one, and then one reads this final sentence:

“This framework will not apply to the automatic recognition procedure of resolution actions between the UK and Gibraltar”.


I do not have the faintest idea of what that means and not the faintest idea of how to find out what it means. I ask the Minister as a matter of sheer curiosity what it means, and I will accept a letter.

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[Lord Deben]

How can we make sure that the measures we take here in this House and in the other place and the measures taken in Gibraltar are in fact congruent? That is really quite important. Who is responsible for that connection so that we make sure that no part of it falls out of line? As my noble friend has said, mistakes do happen. Perhaps I could be told exactly how this is done.

[Lord Bates]

This happens predominantly through the Treasury. It is engaging with the Government of Gibraltar and of course with the Executive there to ensure that the process goes through. It is run through the Treasury at present, but obviously in careful consultation with the relevant regulators in both entities.

My noble friend asked whether we had consulted Gibraltar on the SIs, which is in part relevant to the previous point. Throughout the EU exit process the UK Government have been committed to engaging with the Government of Gibraltar. On the ministerial level that engagement has been largely structured through the Joint Ministerial Council on Gibraltar-EU negotiations. On contingency preparations, the Government of Gibraltar have indeed received both SIs very positively. There have been discussions at both the ministerial and the official level on the onshoring approach taken in the two SIs.

[Lord Deben]

I have one final point. What would happen if the Gibraltarians did not like what we are doing? Is it really that we are deciding it, they are doing it, and that is it? Alternatively, could they say, “Frankly, we would like it done in a different way”? I think it is quite important to know what the relationship with Gibraltar actually is.

[Lord Bates]

It is a very close relationship. How would Gibraltar react to the deliberations in this House? I hope that it would respect them as being the work of Parliament. However, we also realise the crucial importance of financial services to both entities and therefore we want to ensure that Gibraltarian firms can continue to access UK financial services and that UK firms—

[Lord Deben]

I am so sorry, but I should have declared my interest as the chairman of PIMFA.

[Lord Bates]

I thank my noble friend. Similarly, we want to ensure that UK financial services have access to the Gibraltar market as well.

The noble Baroness, Lady Kramer, commented on the recently signed tax treaty. The UK, Spain and Gibraltar have concluded a treaty to improve tax co-operation between them and secure the protection of their financial interests. The treaty provides rules for resolving tax residency conflicts and administrative co-operation. The UK signed the agreement as the state responsible for Gibraltar’s international relations. Whereas this means that the UK will ratify it in due course, the Government of Gibraltar will take forward all domestic legislation required for it to have effect in Gibraltar.

On the follow-up question the noble Lord, Lord Tunnicliffe, asked, on the status of the SIs in the event of a deal, I say that the two SIs will not be needed during an implementation period. He also asked about automatic recognition of resolution actions. The framework referred to relates to the jurisdiction controls in relation to winding-up proceedings. This will not apply to the recognition of the actions taken to resolve a failing bank without winding it up. No firms will qualify for automatic recognition. I hope that is clearer.

The noble Lord, Lord Tunnicliffe, also asked why we needed the long-term replacement framework. I think we dealt with that. Will the replacement framework be ready for 2020 and what will happen if it is not? Again, I think I dealt with that. The Treasury is working with the UK regulators and the Government of Gibraltar to design a replacement framework for 2020. Its implementation will depend on progress between both Governments on this framework. Crucially, we do not want to create a cliff edge in Gibraltar’s access to the UK in 2020. The Treasury has therefore included a temporary extension framework in the Financial Services (Gibraltar) (Amendment) (EU Exit) Regulations 2019. This will extend market access through a new negative SI by one year at a time from the end of 2020.

The noble Lord, Lord Deben, asked what would happen if the Gibraltarians did not like what we are doing. Gibraltar is content with our onshoring approach to the two SIs. To ensure a mirrored and functioning financial services regime, Gibraltar is onshoring its own financial services legislation in the event of no deal.

With those explanations, I again thank noble Lords who have taken part in this and beg to move these two SIs.

Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019

Lord Deben Excerpts

Monday 18th February 2019 Lords Chamber

[Lord Sharkey (LD)]

My Lords, the equivalence SI shares the same consolidated impact assessment with the next three SIs. I am grateful that this was published in advance of today’s debate and was available in good time in the Printed Paper Office. That is a significant and welcome improvement on last week’s lamentable performance. I would have preferred individual impact assessments, rather than this consolidated one. However, consolidation has the merit of making absolutely clear the unsatisfactory vagueness about the costs and benefits of these SIs and that this arises chiefly from the lack of consultation.

The summary sheet in the IA for this package of SIs notes that the likely cost for all of them is “Unknown: likely significant” in all three defined categories. The benefits are also unquantified, but are said to be “significant”. This rather dramatically illustrates the point made by the noble Lord, Lord Adonis, in his later amendments. There has been no real consultation on any of these instruments. This is unsatisfactory and is entirely the Government’s fault. Had the Treasury started preparing these entirely predictable SIs earlier, consultation would have been possible. Why has the Treasury left things until the last moment? Although I sympathise strongly with the spirit of the amendments in the name of the noble Lord, Lord Adonis, I hope he will not press the fatal ones to a vote as we would not support him in a Division. It is critical to the functioning of our financial services that we make the changes—no matter how unhappily—set out in these SIs.

I turn to the detail of the consolidated impact assessment. The first 40 paragraphs are clear, but some questions arise in subsequent paragraphs and apply generally to all the SIs. Paragraph 44 explains that,

“it has not been possible to discuss the impact of the full package of changes with firms as this impact assessment was being produced, and has therefore not been possible to produce a monetised estimate of their full impact at this stage”.

This is more than a pity: it is tantamount to a dereliction of duty. It would not be the case if the Treasury had started the process earlier. It has had plenty of time to do this: the deadline can hardly have come as a surprise.

Paragraph 50 acknowledges explicitly that the impact assessment,

“is not able to fully quantify the potential impact of these SIs on industry”.

It undertakes, as a result of this self-generated inability, that if these no-deal SIs come into effect in March,

“it will at the appropriate time complete further analysis considering all of the relevant SIs as a package”.

The word “appropriate” is very vague; what does it really mean? Does it mean, for example, in less than three months after a no-deal Brexit?

I do realise that the promised analysis is shutting the stable door long after the horse has bolted, and even longer after the horse gave notice that it would bolt. Nevertheless, Parliament should still have a chance to review the real impact of these SIs on industry. Could the Minister help the House with an explanation of the limits implied by “appropriate” and confirm that Parliament will be given an opportunity to debate the subsequent analysis?

[Lord Deben (Con)]

I wonder whether the noble Lord is being a little too kind to the Government. Is not the reason we have not had these figures—and we have not had them because we did not start to do the figuring early enough—that when you actually add up the figures you discover that the cost of Brexit is enormously greater than anybody has pretended, and therefore it is to the convenience of the Government and of those who want Brexit not to provide the figures? Does he know of any other occasion when the Government have proposed huge changes and not provided at least some estimate of the bill?

[Lord Sharkey]

I am grateful for that intervention. The short answer to the final question is: no, I do not. I shall try to be slightly less kind as I move on.

Paragraph 52 of the consolidated impact assessment notes that each of the SIs covered,

“contains provisions with indefinite effect and this is the majority of the content. For this reason, we have concluded that the standard 10 year appraisal period is appropriate”.

This seems to me an entirely perverse conclusion. Ten years is far too long for an appraisal of the effects of instruments containing such wide powers in a complex and critical field, which were produced in very great haste and which lack proper consultation or impact assessment. It would make more sense, and reduce any inadvertent harm, if we were to appraise after, say, two years. I am sure that if the industry were eventually consulted, it would agree with this timing. I would be grateful if the Minister would say why he is proposing 10 years for appraisal and what is wrong with two. Will he reassure the House that he will reconsider the timing of the appraisals? Perhaps he will write to us with his conclusions.

Finally, paragraph 73 of the consolidated impact assessment deals with the impact on the public sector:

“Where changes to the regulators’ rulebooks, or to EU technical standards, are required as a result of leaving the EU, the regulators intend to consult on these changes wherever possible”.


This “wherever possible” is alarming, especially in view of the Treasury’s failure to consult in the preparation of these SIs in the first place. Can the Minister give examples of situations in which it would not be possible to consult on the changes to the rulebooks or the technical standards?

[Lord Deben]

My Lords, I declare my interest as chairman of the organisation that represents financial advisers and those who manage other people’s money. I come back to the point that the noble Lord has raised. It is very difficult for the industry to understand why the Government have not found it possible to talk in a lot more detail about the costs that are going to be placed upon the industry. After all, the industry pays these costs.

I am a great believer in regulation: I think good regulation is very important. I do not like the way that people sometimes mix bad regulation with the need to have no regulation, but if we are to have good regulation, there are two very important elements. First, it must be clearly understood, and, secondly, the cost must be clearly adumbrated so that people can make proper provision. I agree with the noble Lord who spoke last that it is unacceptable that, first, we do not know in advance; secondly, we will not know until after we have passed these things; and, thirdly, we will have to wait 10 years until we know whether or not we got it right. I have enormous respect for my noble friend, as well as enormous concern, given the difficulties he faces.

[Lord Cormack (Con)]

Total sympathy.

[Lord Deben]

As much sympathy as one can possibly have. I can think of no other Minister I would be more sympathetic to, but I have to say to him that it is pretty difficult to think of another occasion on which a Minister has had to get up and tell the House that he does not know how much something is going to cost, he will not know how much it is going to cost, it is impossible to work out how much it is going to cost, we will not know until after it is all costed, and then we will not know for another decade. I do not think that the Minister will be a Minister in another decade.

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[Lord Adonis (Lab)]

Was the noble Lord in the House to hear the exchanges between the chair of Sub-Committee A and my noble friend Lord Rooker about a letter which apparently is going to be sent to the Treasury, but has not been made available to your Lordships, complaining about the way that consultation and impact assessments have been conducted? It came out only in the course of debate that this letter is in preparation: apparently, the chairs of the two Select Committees cannot agree on the terms of the letter, even though we are in the midst of debating literally dozens of these statutory instruments. Does he not think it would have been a good idea if we had had this letter before this debate? If the relevant authorities of the House are about to write to the Government fundamentally questioning the way that the Government have approached the process of consultation and assessing the impact of these regulations, surely it is not satisfactory for us to be considering these regulations in advance of the completion of that process.

[Lord Deben]

I was indeed in the House to hear that exchange. It was an amazing, remarkable exchange and another example of the total removal of this whole discussion from reality. It was so unusual that I left the House to recover some sense of sanity. First, it is obviously true that we should have had that letter. We thought that the letter, according to a senior member of the committee, had gone. We were then told by the chairman of the Joint Committee that it was almost gone, or nearly gone, or on the way to going. We did not understand whether it would go or whether it still had to be recovered and discussed. The fact of the matter is, I can think of no more appropriate role for the House of Lords than to tell the Treasury that it needs to be very much more precise and correct in its treatment of this House and of the other place. The answer is that it must at least give the figures, and to do that, it has to have a useful impact assessment, not one which is merely a matter of form.

[Lord Adonis]

My Lords, the noble Lord is a distinguished parliamentarian of long experience. Does he not worry that the tone of self-congratulation which we always adopt in this House for the way we conduct scrutiny and the excellence of our processes is coming under serious strain as a result of this no-deal regulation process? The earlier exchanges raise fundamental questions as to whether we are fit for purpose in the way that we are conducting this process ourselves. If it has taken us six months into this no-deal regulation process even to seek to agree an approach to the Government on how they should conduct consultations and impact assessments, does that not fundamentally question the whole process which we are ourselves adopting in holding the Government to account? Earlier a noble Lord made reference to horses bolting and stable doors being closed. Already 100 or so of the statutory instruments have bolted before the Select Committees of this House have been able to agree on what the procedure should be for considering them, let alone whether they are adequate in their own terms.

[Lord Deben]

I feel philosophically and religiously opposed to self-congratulation, so of course I will not suggest that we should congratulate ourselves. As I said earlier, it is quite clear that our processes do not admit the proper consideration of the issues being put before us. However, the second thing which is quite clear—and after this, I really will sit down—is that the world outside thinks that we are absolutely barmy and wonders what on earth Parliament as a whole is doing. The world outside has become less and less willing to accept that our system is fit for purpose. We all know that all political parties—I mean all of them—are not seen by the vast majority of the population as in any way reflecting what they think, want and expect. We are engaged in a serious situation, and one of the sadnesses is that, if we are trying to do the job as well as we can, we have to be involved in them. However, we are involved in them in a way which may well mean that we are ourselves part of the very situation which is undermining the whole reputation of this, the oldest of Parliaments.

[Lord Adonis]

My Lords, I have amendments down in respect of the later statutory instruments, and on the substance of this statutory instrument I do not have much to add to what we have heard so far from the two noble Lords. However, the earlier exchanges raise significant questions. I put on record my hope that when we have the next string of these statutory instruments on Wednesday, the chairs of the two sifting committees might address us on what their procedure will be in respect of the handling and processes of consultation and impact assessments for regulations. I hope that the letter which is to be sent can be agreed—apparently there is a dispute between the chairs of the two sifting committees—and sent tomorrow. It sounds urgently necessary that it should be agreed and sent; indeed, that should probably have happened six months ago, not now. At least we are shutting the stable door after only half the horses have bolted, which I suppose is better than after all of them have left. I put on record that if the letter can be agreed, it is important that it is circulated to your Lordships before the debates on Wednesday, because it will have an important bearing on our proceedings. It may even be possible to slightly shorten our proceedings as a result. I feel obliged to make a speech on each of these statutory instruments about the inadequate processes of consultation and impact assessment, but if the relevant committees of your Lordships’ House are making these points about all the statutory instruments and requiring the Government to improve their regime in respect of all of them, we will not have to go through this gruesome process, statutory instrument by statutory instrument.

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[Lord Lilley (Con)]

My Lords, I hope that the noble Lord, Lord Adonis, will not be shocked to hear that as I have wandered through the corridors of this place, I have heard some noble Lords expressing the view that they are a little tired of his obsession with the statutory instruments. I hope that he will not be even more shocked to know that I am coming to his defence. I think that he is doing an important job and is highlighting one of the great benefits of Brexit. He is bringing to our attention the fact that, after 45 years when we have had to accept these accumulating piles of statutory instruments with scarcely a debate, with no possibility of rejection—that is why there has been no debate—with no hope of altering or amending, which is why we have not, up to now, considered any of the statutory instruments, now, because of Brexit, we are able to do so because, to coin a phrase, we are taking back control of our laws. We should be grateful to the noble Lord for being a convert to this. There is more joy in heaven over one sinner that repents than over 99 just men who have no need of repentance—and I rejoice with him.

Along with the noble Baroness, I have the privilege of sitting on the Secondary Legislation Scrutiny Committee of your Lordships’ House, which goes through these regulations and changes to ensure that they accord with what they are supposed to accord with, to highlight any aspect of them which we think needs to be brought to the attention of the House and, if need be, to upgrade them. I have to say that it has been a revelation to me to see the scope, scale, detail and complexity of legislation which, in the past, has been implemented simply because it is EU legislation. Even if the whole House had rejected it, it would still have become the law of the land.

The noble Lord, Lord Adonis, is right to be concerned about several things. He is right to be concerned about consultation, because now consultation will matter. There will be some point in listening to what people think about statutory instruments because we will, in extremis, be able to reject them, and certainly to suggest to the Government that they might choose to do things differently, and it will be possible for them to do so.

The noble Lord is also right to point to the need for impact assessments and measures of cost. My noble friend Lord Deben—another great convert to Brexit—pointed out that these were important and suggested that the failure to cost these things was because the Treasury was anxious to hide them. I can tell him that today our committee considered one measure which concerned the European budget. We suggested that there should be a costing of that, because there would be a saving of between £10 billion and £12 billion net from no longer being part of the European Community if we leave without a withdrawal agreement on 29 March.

[Lord Deben]

I do not quite understand how we can know the net saving if we have not estimated the actual cost of any of these statutory instruments. That, surely, is the issue. Although we all understand my noble friend’s very amusing and charming way of putting it, many of us realise that the reason why we have these things in this form is that it gives us real equivalence. The problem we are now faced with is that we have fake equivalence. We decide what we want, but if others are not prepared to go along with it, our financial industry will be very much disadvantaged.

[Lord Lilley]

I am trying to get the full gist of my noble friend’s intervention, which was, first, that he seemed to think that the cost of all the statutory instruments which have not been costed—although many of them have—might somehow accumulate to anything approaching the £10 billion to £12 billion a year net contribution that we will save as a result of this one statutory instrument that we have been discussing in the Secondary Legislation Scrutiny Committee today, which will remove us from the EU budget. If he thinks that they are on that scale, I invite him to name one that might be worth £1 billion, for example. I suspect that he will not be able to do so.

My noble friend went on to talk about equivalence, which is important and can be valuable; that is the substance of this SI. It is worth the House remembering that equivalent regulation is not as important as superior regulation. It is far more important for this country to have good regulation—that is, the best in the world, which is not to say the most detailed or intrusive regulation but effective, appropriate, not-too-onerous regulation that ensures good quality of business. That has been the City’s great strength over the years. Better regulation than other countries has often been more important than identical regulation. The Eurodollar market is in London, not New York, because of bad regulation in America: Regulation Q, or whatever it was, drove all the business out of America. Our success in the trade in German state bonds was because the majority of it took place in London, due to our regulatory system being superior to the Germans’ before we introduced the single market and they had to improve theirs somewhat. Likewise, we carried out a high proportion of the trade in French equities because our regulatory system was superior, rather than identical, to that of France.

We should remember that the four great financial centres in the world—New York, Singapore, Hong Kong and London—all have something equivalent to each other and are great financial centres because they have in common common law and all the infrastructure built on that, such as legal and accounting processes, which make them flexible and desirable places to do business. In effect, they outpaced countries with different legal systems. We should welcome equivalence where appropriate but be very glad that we will not have to have regulation identical to that of our friends and partners on the continent. It is almost certainly beneficial to London to be a rule-maker, not a rule-taker.

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[Baroness Kramer]

Well, we also had MEPs, for whom I have great respect, and engaged broadly in the process.

One of my problems is that the equivalence SI we are dealing with today essentially puts, for the next 12 months, all relevant decisions on whether we remain equivalent or, as the EU makes changes, become equivalent in any new area into the hands of the Treasury alone. Not only does that not engage this House—I suppose you could consider the Chancellor to be involved—but it represents the most disengagement we have ever had at an absolutely critical time. If we leave the EU, how we behave on equivalence in the coming months will shape the context of any negotiation on the economic future of the UK, this being its most important economic sector and a major contributor to taxes and jobs. It is pivotal to the economy, yet the Treasury alone will make many of these key decisions. All we have for context are the comments in the political declaration. I will not repeat discussions we had earlier today, but those comments are exceedingly limited and give very little sense of direction.

To make matters almost worse, it is quite clear in the SI that, beyond that period, future decisions will be made through negative SIs—not through some policy framework in this House, engagement with your Lordships in broad debate or extensive consultation, but through the negative procedure. That will make it even harder for us to be engaged in the process. I can tell the noble Lord, Lord Lilley, that all the Brexit issues we are dealing with lead to the massive democratic deficit of great concern to many of us.

[Lord Deben]

Did the noble Baroness notice that my noble friend said, “I think we may have had influence”? Is it not true that we have been at the centre of these discussions and that the European Union is much more transparent and open when it comes to them than the British Government have ever been—certainly more so than the Government now propose to be under these statutory instruments?

[Baroness Kramer]

I can only agree. We have major transparency problems. I am working on the Trade Bill; it is unconscionable that we do not have available to us information that the EU would not only put automatically on a website but constantly report back on, with discussion between the Commission, the Council and the Parliament.

Let us set that aside so I can move on with this particular instrument. I reinforce the concerns about the impact assessment. I must say that the consolidated impact assessment discussed by my noble friend Lord Sharkey contains three pages dedicated exclusively to this SI—I am sure that the Minister will point that out—but anyone who cares to read it will discover that, although it is usefully descriptive, telling us a bit more about the instrument, what used to happen in the EU and what will happen under this instrument, it cannot be called three pages of impact assessment. It does not even attempt to monetise the impact and give us a sense of the costs and the value of the benefits—that is beyond it—and it never deals with the risks in any way. Never in my commercial life have I seen impact assessments that did not assess risk—but these do not even begin to do so.

That is very disappointing, particularly for the businesses which will be picking this up. They want to make sure that this SI goes through, because anything that reduces uncertainty in any area where there is not a cliff edge will be of great value to the relevant businesses—but, my goodness, they would have welcomed something much richer in terms of the discussion to give them some forward vision rather than one that just deals with the very short period of time that will immediately follow departure under a no-deal scenario. I find that very frustrating and a real weakness in the way in which impact assessments are being dealt with here.

That takes me to perhaps the last issue that I will address, which was touched on to some degree by my noble friend Lady Bowles. There is very little discussion in any of this about what I call reciprocity. In order for equivalence for the industry to be able to function without any kind of cliff edge in no deal, not only does the UK need to provide equivalence but the EU needs to grant equivalence as well. In many instances it has not done so, but it may do so in the future. My interpretation is that at the moment it is doing so only in areas where it thinks that not granting equivalence would cause financial instability, rather than looking at broader market access issues.

I take this as a real shot across the bows that we need to take on board, framing the EU intent as to where it will take future negotiations in this area. That is important and I am rather concerned that the Government do not deal with those kinds of issues in this impact assessment, because an honest discussion of that is crucial for businesses as they use the product and everything that we are printing to try to understand what the context is going forward. It has made me feel very gloomy that we will see a much more fragmented set of financial services. I am sure that London will remain a crucial global centre, but I can see the way in which the pattern is developing. It will have some very significant rivals that will take away very significant pieces of business. Over the long term that has real consequences for the UK.

In all that we have here there is one last issue which perhaps the Minister would address, because it could be my deficiency in reading all of this. At the moment we know that third countries operate, as it were, within the EU because the EU has granted them equivalence. As I understand it, the UK will be granting identical equivalence under this SI for the day that we leave if it is a no-deal scenario. But I am unclear about how many of those third countries are granting us reciprocal equivalence. Not only do we have questions about in which areas the EU is granting us third-country equivalence, I am not clear where we stand, for example, in terms of the US. Will we be granting the US equivalence using exactly the same pattern as that of the EU currently? It is not clear whether the US is granting us equivalence and on what terms—and that is just one of the many different countries with which we have built up a kind of network through mutual equivalence that has been established over the years.

Equivalence is extraordinarily complex. It is not a matter of a simple one-hour discussion about four or five easy to understand factors. It is exceedingly complex, it often comes with conditions and it may be limited in a whole variety of ways such as by time and by content. It may have many issues attached to it, and therefore negotiating new equivalence arrangements from scratch would concern me a great deal. I say that in particular because of what we have seen with some of the trade deals, where Liam Fox was absolutely confident that we could take existing trade deals between the EU and the 71 other countries with whom we had free trade agreements and roll them over. He has now been woken to the fact that most of those countries see this as an ideal opportunity to improve their position and to renegotiate. It has become a much slower, much more difficult and much more complex process. I want to try to understand where we are with our equivalence agreements, because potentially the situation is exactly the same. It is very different having an equivalence agreement to have access to the market in the UK from having access to a market of 500 million people. I do not know how many of these equivalence agreements are in play.

--- Later in debate ---

[Lord Deben]

The only suggestion I made was that the noble Lord might not be here in 10 years’ time. That is a very different comment.

[Lord Bates]

Perhaps the noble Lord was not aware that he and I served in the same Government 25 years ago. He was a personal hero of mine because he abolished the hated Cleveland County Council and returned it to the North Riding of Yorkshire, which was greeted with absolute acclamation. However, it was still not enough to get me past the 1997 general election, so I find myself here in your Lordships’ House. Indeed, the noble Lord, Lord Young, was there 40 years ago—so there is form.

My point is that the Treasury is accountable to Parliament. It is possible to question a Treasury Minister here in the House of Lords in the way that noble Lords could not question a Commissioner in the House of Lords, so I do not want us to run down that particular track. Nor do I want to overegg the situation and say that it is perfect. We are having to prudently prepare for a set of circumstances that nobody in this House wants but for which we need to prepare because the industry requires that assurance.

Let me try to deal with some of the specific points in this debate. The noble Baroness, Lady Kramer, asked what third countries will do to declare the UK equivalent. The Treasury and the regulators have been in close contact with third-country authorities, including the United States regulators. We expect to replicate all arrangements with third countries which are based on equivalence. The UK will have grandfathered all existing Commission decisions through the EU withdrawal Act, and there will be retained EU law—the point I referred to.

The noble Lord, Lord Tunnicliffe, asked about a no-deal scenario, and I have dealt with that.

The noble Baroness, Lady Kramer, asked why the negative resolution procedure is considered appropriate for equivalence. We went through this whole area. I will not repeat it, but, if the House will bear with me, it is good that the usual channels are here. As part of the EU withdrawal Act, there was intense discussion and debate about the correct process for considering the large body of regulation that would be coming onshore. A comprehensive system of scrutiny—involving sifting committees, the Joint Committee on Statutory Instruments and the Secondary Legislation Scrutiny Committee—was set out for your Lordships, and it has been working. I am sure that the noble Lord, Lord Adonis, will come back at a later stage to some of the debate we had, which was probably as interesting to me as it was to him as we listened to Sub-Committees A and B. But the reality is that that scrutiny work is going on through your Lordships’ House and is following exactly the process set out in the Act and agreed through the usual channels.

The noble Baroness, Lady Bowles, said that the legislation is hard to follow. The Government are committed to ensuring that the law is transparent and accessible. That is why the National Archives will publish online a collection of documents capturing the full body of EU law as it stands on exit day. It will also gradually incorporate retained direct EU legislation into the Government’s official legislation website, legislation.gov.uk. She also asked whether decisions will be reviewed every three years because of the forthcoming SI. The future Treasury SI deals with making sure that equivalence directions fit into part of the existing FSMA framework. It does not mean decisions will be reviewed every three years.

Further, the noble Baroness asked why the SIs are being undertaken in such a piecemeal way and wondered why changes cannot be assessed holistically. A number of legislative changes will be necessary to ensure that there is a functioning statute book on exit day. HM Treasury has been as open as possible about this legislation and the potential impact, particularly by publishing draft legislation in advance of laying, alongside explanatory policy decisions.

The noble Lord, Lord Sharkey, asked whether we could provide examples of consultation on proposed rule changes. The regulators have undertaken extensive consultations on the proposed changes to their rules and technical standards. However, the powers in the EU withdrawal Act allow them to proceed without consultation, where necessary, to ensure that the necessary regulations are in place for exit day.

Does relying heavily on secondary legislation leave room for departments to push through unpopular or controversial legislation? These are powers granted under scrutiny by the EU withdrawal Act, as I have already explained.

Let me turn to another point raised by the noble Lord, Lord Sharkey, and my noble friend Lord Deben. They asked why we have chosen a 10-year appraisal period. This is not about when we review the legislation; this is a technical issue about the period over which the costs are allocated. We have committed to further analysis and, if the SIs come into effect, we will need to consider what an appropriate time is, but it will be much less than 10 years.

The noble Lord, Lord Sharkey, asked about consulting and whether we would allow more than is quantified in the impact assessment. The limitations set out in the impact assessment would not be overcome by consultation at this stage. Firms need to consider all the changes made by these SIs, alongside the broader changes that occur at the point of exit, which cannot be known in advance.

The noble Baroness, Lady Bowles, asked why we have not mentioned the public in the commentary. Consumers benefit from both competition and financial stability. This instrument will allow the Government to have due regard to both.

The noble Lord, Lord Sharkey, asked why no one has come forward to provide transparency around the costs of Brexit. The impact assessments for these SIs focus solely on their direct impacts; the wider costs of Brexit were covered in the cross-government analysis.

When we talk about the costs of these SIs, which just bring onshore regulations that already exist, has anybody thought for a moment to consider what the costs would be if we did not have them ready by exit day? What would that mean for the financial services industry? It would be cataclysmic. It is absolutely the reason that the noble Lords, Lord Sharkey and Lord Tunnicliffe, were right to say that, while they recognise the need for scrutiny, they also recognise how important it is for the industry that we get these measures through.

I will come back to some of the other issues in later debates on this evening’s SIs.

Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019

Lord Deben Excerpts

Monday 11th February 2019 Lords Chamber

To briefly mention FICOD, I looked at this and thought, “My goodness, has that not been updated yet?” I seem to spend a lot of time trying to get it updated. I think we made some little tweaks somewhere. There were always deep suspicions that there was a double counting of capital in the European bancassurance model. I am not sure whether the Minister can reassure me whether we managed to get that loophole closed in the end, but I remember there was always muttering about some sort of foul play going on in the depths of the Treasury. Otherwise, again, the way the statutory instrument transposes over to the UK regime is as one would expect. I can only say that is the same for the insurance distribution. I spent some time on Solvency II because I want to set this record straight that it was not the fault of the EU.

[Lord Deben (Con)]

My Lords, I point out my declaration of interest, particularly as chairman of PIMFA, the wealth management and independent financial advisers organisation. My noble friend will know that these SIs are not very acceptable to me because they are based on a number of hypotheses that are quite difficult to deal with. I will not repeat what I have said before on that, but I just want to remind my noble friend of those facts. However, there are some particular ones that I am concerned about.

The first is that anyone who deals with these issues is concerned about costs. Once again, we have a new system that means there is more work for the financial regulators. Every time we talk about that, no one tells us how much it will cost and quite how it will be paid for. Each time my noble friend explains with charm and elegance that there is not an awful lot of cost just here and that the FCA and Prudential Regulation Authority are both happy that they will be able to deal with this within their present resources.

The trouble is that I have heard that so often now that I am not sure this really works. There does not seem to be a position in which we have added these costs up. I have a suspicion that if we are not careful we shall end up with a lot more costs. One of the issues about people saying how much we pay into the European Union and how much we get out of it is that we forget an awful lot of things which, if you do them together, are much less expensive than if you do them apart. When I was Minister of Health and Safety I remember how useful it was that there was only one authority that tested ladders. We did not all have to test them ourselves. I am afraid we are in that situation here. I would like my noble friend to tell me whether these bills have been added up and how they will be paid. What sort of assurances can he give us that we will not find ourselves with significantly greater regulatory costs as a result of this?

The second point I want to raise is, in a sense, to pick up something raised by the noble Earl, Lord Kinnoull, about gold-plating. I think he and I are on the same side here. I do not think we disagree, but it is terribly important to say that most of the gold-plating I have ever found has been put there by the British. Gold-plating is a mechanism that happens in our system particularly. Having been a Minister in these circumstances, I know how it happens. A civil servant arrives and says, “Minister, we thought that if you do it this way round then somebody could find this answer, and it would be better therefore if we make sure that we close off all possible ways of avoiding whatever it is we’re talking about. Better not leave it until we discover—better do it first”.

Therefore, almost all our regulations, way outside the financial services area, are much more expensive regarding time, regulation and the rest of it than many other European countries. So the noble Earl was right to say that quite a lot could be done here about the reduction of gold-plating, but we could do that anyway because this is our gold-plating. There is no advantage in leaving the European Union to do this. The sad thing is that we have not done it before, and how we have managed to organise it.

There may be some things that we can do that we could not otherwise, but that leads me to my third point, which worries me considerably. In dealing with each of these SIs the Minister used the fascinating phrase—I would love to know who produced it—that were we to leave the European Union without a deal we would no longer have to inform the other authorities in the European Union of what is happening here. However, it will be discretionary to whatever the British regulator is to share this information, if that would be sensible, regarding our own regulation.

I am worried about this word “discretion”. Who decides that the discretion will be used? Is it something that the Government will press on these regulators? What do we mean by using “discretion” if this were, in the particular circumstances, valuable to regulation? Do we mean merely to our own regulation, or that we will be in a friendly situation because the regulation of others nearby will have a great effect on us? Is this really a cover word for saying what we do now together, because we are in the same organisation, we will sort of do in the future but pretend we are not doing and call it “discretion”? It seems that is precisely what is really happening here. This is a mechanism of recognising the need to do things together, but not actually putting ourselves into a position in which we have to do things together. Therefore it will be much less good, we will have to do a good deal of it and it will be much less possible to run regulation properly.

The last of my four points is simply that we are now creating a whole new language in which quite a lot of words are used without any clear meaning. The one I want to press my noble friend on is “equivalence”. It is a very useful word but I suspect it does not mean anything very precise. When we want to say that we will not be difficult with our neighbours, that we will recognise that markets, particularly financial markets, are very much interlinked, then we talk about the search for equivalence—no doubt we shall use discretion to search for that equivalence. I would very much like to know exactly the definition of “equivalence” as used with reference to these three SIs, because it matters quite a lot. If my noble friend could answer my four relatively simple questions, I would be most pleased.

Offensive Weapons Bill

Lord Deben Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Wednesday 30th January 2019 Grand Committee

[Lord Deben (Con)]

I was here at our last meeting, when this issue was discussed. It has obviously caused us a great deal of misunderstanding and we have found it quite difficult to undo. I am concerned about the customers; I am not sure that they would understand it at all. Therefore, I hope that the Minister will agree to try to work this out in a way that the public can understand. Part of what we are trying to do is to make suitable controls. I was not able to be here earlier, but I have been here for this discussion. Even so, I am in the same position as I was when we talked about this before: I do not understand it wholly and I am not sure that the noble Baroness does, although she is very clever and often understands things when I do not. Clearly, we do not understand it, so is it possible for us to look at it again? If it means that it is better to be a seller from abroad than to be a seller at home, frankly I would not like to have to explain that on a platform to the public. I would find that difficult. In the end, we ought not to help people who are domiciled abroad in order to avoid paying taxes and who undermine people who are here paying taxes. I am not terribly keen on that and, again, I would not like to explain it on a platform. I always think this about the small “p” political things: if I were standing on a platform and someone asked me the question, could I give them an answer that would not mean that the hall threw rotten apples? I am afraid that this is rotten-apple time.

[Baroness Hamwee]

My Lords, I am grateful for that. I do not think that I would manage even to get as far as the rotten apples, because I would have bored the audience. It is not just the buyer who needs to be clear about this; it is the seller and everybody in the chain. There needs to be more clarity than I have obtained and I look forward to the meeting when we will discuss this further. I beg leave to withdraw the amendment.

Offensive Weapons Bill

Lord Deben Excerpts

Committee: 1st sitting (Hansard): House of Lords
Monday 28th January 2019 Grand Committee

[Baroness Newlove]

My Lords, I support both amendments. I totally agree with the noble Lord, Lord Kennedy, not just on the question of having a specific offence but on support within the community. In my previous role and going around the country, I saw women workers on their own selling alcohol and other quite serious items—corrosives and knives—where the employer put their staff in a predicament by not supporting them fully. When they go out of the shops, they are under further threat in their local communities from these groups of gangs, both girls and boys. So I support a specific offence to put that message right through, because workers do not feel that they are getting the right support. Even from the bigger businesses, I am concerned for workers who are scared to lose their jobs as well.

I also really agree with the noble Lord, Lord Paddick, about knives. It sends a message within the communities and the bigger employers who do not know every individual who works for them. It shows loyalty, as well. I am concerned about people who work in local shops, in their local communities, especially where they have security guards to protect the staff but they do not get the support through the law to protect the jobs they so need to feed their families.

[Lord Deben (Con)]

I hope my noble friend will listen carefully to what has been said, because there is an increase in the anger constantly found around the country. I do not want to get down to some of the reasons for that, but there is certainly an increase in anger. The sort of people who will be prevented from buying those products are, of course, those who are most likely to give way to anger. I have recently come from a meeting today in which a senior representative of one of our largest supermarkets said how much more there is now a problem with people who will not take the advice of the shop worker that this is not possible.

I really think the Government have to come to terms with the fact that we are a much less willing society. We are not a society that is prepared to go along with these things, as once was true. So although USDAW has had this campaign for a long time, it is more necessary now than it might have been 10, five or even two years ago. The circumstances we are facing at the moment are likely to make more people more angry, and therefore it will become more acceptable. Anger, and showing anger, on the roads or in shops is more accepted by society than it ever has been before—certainly in modern times.

I say to my noble friend that it may well be sensible to make the point specifically that we are asking, indeed insisting, that shop workers—I will not argue whether they are acting as law enforcement people or not—take a stand against people who, by their nature, are likely to be angry, to demand that the shop worker give way to them and to use intimidation for that purpose. I cannot think of a reason why you should not repeat it. I know what the Government often says—all Governments do—because I was a Minister for a very long time and I know I used to say it. I would say: “There is no need for this. We’ve got this and we’ve got that and we’ve got the other”. If it is not actually harmful, perhaps it is a good thing to put it in. I am not sure it is enough that other things cover it. If this reminds people that there is a specific protection for shop workers in this situation, where we asking them to take a stand, that is a valuable thing. I hope my noble friend will take it seriously.

[Lord Judge]

We are devising a system which will impose considerable burdens on sellers. The arguments in favour of this amendment are absolutely obvious. May I make a completely separate point, though? The amendment is brilliant legislation too, unlike the rest of the Bill. Here we have a clear statement of what act you have committed—obstructing the seller—and simultaneously the state of mind you are in: you are acting intentionally. Intention to obstruct is a perfectly clear, simple piece of legislation that anybody could understand. There is an argument that there are various ways those who work in shops can be protected, against violence and so on, but this is very limited in what it is seeking to address: obstructing somebody. In these circumstances, when the burden is so heavy on the seller, they ought to be protected.

--- Later in debate ---

[Lord Deben]

My Lords, I will hold the Committee for only one moment, but I very much agree with the arguments put forward by those who tabled this amendment. It seems that this is another example of saying, “We’ve got to do something, so let’s do this”. But “this” has failed. It does not work and is a disaster. There is no more stupid thing to do than to give young people short prison sentences. Countries throughout Europe have shown that it does not work and that other things do. I really am tired of people coming forward with the same answer to a problem, which does not work. Therefore, I very much hope that my noble friend will say that this Government will not go on with this kind of answer. It will take time, money and resources to make sure that we have something which works, and we should learn from other countries which have found a way through, instead of repeating a failed policy.

[The Earl of Listowel]

My Lords, I would like to follow what the noble Lord has said. We have seen what works in this country. Indeed, a Conservative Government set up the intermediate treatment centres. I think the noble Lord, Lord Elton, very much led this work 30 years ago. I worked in one of those centres at that time. There was a male social worker and a female teacher, so the children and young people saw a model of a man and a woman in co-operation together, being courteous and respectful towards one another. There were six boys, ranging from eight to 15. The eldest was mad about motorbikes and was just about to get on a mechanics course. I saw these boys sitting down together sewing, with the teacher’s help. If you make the right kind of intervention, you can really turn these young people’s lives around. To put this in historical context, perhaps I may take my hat off to the coalition Government, as we have reduced the number of children and young people in prison in this country by 71% over the last seven or so years.

We have been through this process before. I remember that about 10 or 15 years ago, there was an outcry about mobile phone theft and various pushes to be tough on crime and tough on the causes of crime, but really being tough on crime was putting more and more young people in custody. What did we see there? A boy who had just entered care, on his first or second day in a children’s home, was with a group of children and one of them stole a mobile phone. He ended up in court and there were no suitable places for him in custody, so he was placed in an insecure prison and ended up hanging himself within two days. His mother has been grieving for him ever since. As a trustee of a mental health service for adolescents, I know that adolescents become more and more interested in their peer group. So when you send a child off to one of our young offender institutions or secure training centres, you send them into a peer group where they will get the best information about how to join a gang or be destructive.

On some occasions it may be necessary to do that, if they are too dangerous. But leave it to the judges and magistrates to decide that; do not tie their hands. I know there will be exceptions, but I suggest to your Lordships that we do not want to tie the judiciary’s hands in this case, and having mandatory sentencing is not helpful.

I have been a trustee of the Michael Sieff Foundation, which was set up around the time of the Children Act 1989. I had the privilege of working for several years with Dr Eileen Vizard, a forensic child psychiatrist who worked with the NSPCC. She made the point that, once the criminal justice system gets children into the secure estate, they are likely to keep on coming back, and so we should try not to get them in there.

I share the conviction of all the noble Lords who have spoken in Committee today. I hope that the Minister can give us some comfort in his response.

Financial Services (Implementation of Legislation) Bill [HL]

Lord Deben Excerpts

Committee: 1st sitting (Hansard): House of Lords
Tuesday 8th January 2019 Lords Chamber

[Lord Deben (Con)]

My Lords, I remind the House of my declaration in the register of interests, particularly my chairmanship of PIMFA, the organisation that represents independent financial advisers and wealth managers.

I have to disagree with the noble Lord, Lord Adonis, about the meaning and purpose of this amendment. But I have to say to my noble friend that one of the reasons for this amendment is that many of us are very concerned that the Treasury in particular should take very seriously the issues of the financial services sector and the contribution that it makes to the British economy. That seriousness has not always been evident.

Secondly, the European Commission has been very helpful in listening to the British applications and those of our colleagues in the rest of the European Union and, should we leave the European Union, which I trust will not happen, we would certainly expect to have at least as much access as we have on the present stage and certainly as much influence.

I am concerned because in the past we have sought to pass amendments that asked the Treasury to bear in mind important matters. For example, an amendment some years ago stated that the Treasury should insist that regulators bear in mind the need for savings in our society. That was pooh-poohed by the Government who said that it was entirely unnecessary and of course everybody knew that. The result has been that regulators have not taken that issue into account and indeed pointed out that the Government did not accept when it was suggested to them that saving as part of our society was important. So it is important to bring home to the Government the issues raised with this amendment.

I want to make two further points. First, this is a very competitive world. We need to have legislation if we are not a member of the European Union that enables us to continue to be as competitive as possible. This may not be exactly the right wording, but it carries that meaning. Secondly, small companies find much of the legislation not only burdensome but unnecessary—points that my noble friend Lord Leigh properly made. That is not because one wants lower levels of legislation.

At this point, I want to take serious objection to what the noble Lord, Lord Adonis, said. I happen to be a Conservative. I sit on the Conservative Benches and I have been a Conservative Minister for longer than almost anyone else. But I am very much in favour of this regulation. The industry that I am happy to work in is also very much in favour of sensible legislation because we do not like cowboys either. They produce extremely bad reputations. Nobody can be tougher about the fact that we need proper regulation. There is no question in these amendments that somehow or other we would lower the bar. That is not the issue.

I would agree about some of the remarks made about Singapore. I am deeply upset to have a Foreign Secretary who thinks that Britain should be compared to Singapore. Fundamentally, that is as about as helpful as suggesting that we should be like Liechtenstein. I am sorry, but it is not a sensible comparison for so many reasons, not least because of the autocratic Government of Singapore. I do not want to be associated with them as a comparison.

However, our financial services need proper regulation. We want regulation, but it has to be proper regulation within the context of our competition. Therefore, it is proper to say that we do not want regulation that either makes it more difficult for us to compete or lays a disproportionate burden on the shoulders of small companies. Those seem two such simple and reasonable things to suggest that, on this occasion, my noble friends here and I are helping the Government.

Ministers are always suspicious, particularly when I say that I am trying to help the Government, but I am, on this occasion, trying to help them. I am doing it in great difficulty because I do not like this Bill at all. I do not want to leave the European Union. It is more and more clear that leaving the European Union is barmy, and we are having to spend time talking about barmy things that will take two years and then go away. It is a pretty insulting thing for this House, but that is what we are having to do. So I ask Ministers please to take this seriously and not to take the view of the noble Lord, Lord Adonis, in the way that he put it, but merely to agree that the amendment is sensible. If the Government cannot give us that undertaking, I have to say that the financial services industry will be very suspicious. If the Government are not prepared to do at least as well as the European Union has done in negotiation and discussion, I will be very sad.

I hope that people notice just how good the Commission has been when they attack the European Union for bureaucracy and suchlike. It has been more open and more able to discuss, and more concerned about the issues than any of our governmental structures. We have to remind people that the European Union is more open, more willing to listen and more concerned to be there for industry than the Treasury has been in history, which is why this amendment has been tabled.

[Baroness Kramer]

My Lords, I have to say to the noble Lord, Lord Deben, that every alarm bell went off in my head when I heard the noble Lord, Lord Leigh, basically argue that this would be a route to get naked short selling on AIM. This is essentially a mechanism that will allow people to enter into contracts which they know if they had to fulfil they would be very unlikely to fulfil—talk about risk. That general underlying principle worries many of us who think that a less speculative financial services industry is, in the long run, much more sustainable than a far more speculative financial services industry. That is exactly the point. It is people selling short shares that they will not be able to buy if they are ever forced to close on the contract.

--- Later in debate ---

[Lord Deben (Con)]

I hope that my noble friend the Minister has listened carefully to the noble Lord, Lord Adonis, on this matter. We are faced with a real difficulty here. We have agreed to many kinds of legislation, of which this is only one, to protect ourselves against the extraordinarily damaging situation whereby we leave the European Union without a deal. One of the dangers, to which the noble Baroness, Lady Kramer, pointed, was that, if we are not careful, we will be so sure that something is not necessary that we will not look at it as carefully as we ought.

The reason I suggest that my noble friend take Amendment 7 and the amendments that we are now discussing very seriously is this: the whole purpose of Parliament is to make sure that we expose the full extent of decisions of the Executive; it is to curb the Executive in the sense that it ensures that things do not slip through with unintended results.

I am sure that the Government have every intention of using this legislation properly; I am in no way criticising them about that. However, it is true that decisions made primarily by civil servants, which are not open to public scrutiny, can be disastrous. Any of us who have been Ministers know that; we know that one of the most important, perhaps the most important, protection the public have—and the most important discipline that one has as a Minister—is that decisions have to be debated and discussed. My noble friend knows that in this House, where we have limited powers, it is still true that very often during Committee and Report terrible gaps have been shown in legislative proposals. These are gaps which, once they have been revealed, the Government are rapidly determined to fill: to change what they are proposing because they had not meant to have that result.

In those circumstances, it is difficult, is it not, to give these powers so totally to the bureaucratic system? That is so even if one imagines that Ministers themselves have no intention of delivering other than what is perfectly in line with these legislative requirements. Therefore, it is not unreasonable to suggest that there should in all circumstances be a public discussion. The Government’s usual response is, “We can’t possibly do this as there isn’t time”. I am prepared to accept that as a generality, but this is not to impose a long-winded system; it is merely to say that what is proposed shall have sufficient public exposure and discussion to enable people to see whether it is within the proper confines of the Bill or reaches beyond it.

Although I had to disagree with the noble Lord, Lord Adonis, on an earlier amendment and his view of it, this one seems to draw attention to a very real issue. My noble friend and I share a considerable desire that these circumstances shall never arise. He is in no position to share my further desire, which is that we shall not leave the European Union anyway—I have no idea what his personal views are but I know what his views have to be at the Dispatch Box. The public will become less and less enamoured with this whole unprofitable and unacceptable process. If the Government want to protect themselves, at least to some extent, it is extremely important to make sure that these matters are processed in public. If they were ever to come about, the Government would find that protecting and defending what they have done was extremely hard, but why not accept that some further process beyond that allowed for in this Bill would be a democratic help in circumstances which will, we hope, not occur?

[Baroness Bowles of Berkhamsted]

My Lords, I agreed with the amendments of Lord Adonis; I do not agree that they are not needed, even with Amendment 7. There is still the issue of sequencing in terms of what is and is not being done; Amendment 7 does not solve the cherry-picking point or various other things. I attach quite a lot of importance to the reports provided by subsections (8) and (9). In that context, I read the amendments that added in the Bank of England. The noble Lord has explained that in the sense of taking advice from the Bank of England. But when doing these transpositions, there are inevitably delegated acts and other associated things that will be done at the level of the regulators and will not even be contained in a statutory instrument. Therefore I thought it was right that the regulators reported how things are dealt with as well as the Treasury. I support the amendment but would add the PRA and the FCA. In that way, we get the full Treasury report through to the regulators, so that we see that we are all on the same page and where the tweaks, even within the available limits, are made. So I agree with the noble Lord.

As to whether Amendment 11A is needed, there is no harm in putting it there. The Secondary Legislation Scrutiny Committee and other committees will still be doing their part when the things come to them, so I see no reason not to give some work to the Treasury Select Committee.

Migrant Crossings

Lord Deben Excerpts

Monday 7th January 2019 Lords Chamber

[Baroness Williams of Trafford]

France is bound by the same European provisions as us and by the 1951 convention. France is a safe country, whatever the people choosing to make the journey from France to here say, and a member of the EU, which so many people want to stay part of—although not me. Post-Brexit, if we get a deal, we will be bound by Dublin III and comply with its measures during the implementation period. Post-Brexit, we want a new system that looks something like the Dublin system, although it has weakened in the past couple of years, and meets our obligations as a country—which we have met for centuries —to act as a safe haven for people fleeing war-torn countries and persecution.

[Lord Deben (Con)]

My Lords, I want to return to the question asked by my noble friend about the two cutters taken from their operations. If they are not where they were, the people in these circumstances are not being stopped. Do we have some figures on the disadvantage now being obtained because we brought two cutters home? What kind of system do we have when we have to bring two cutters back from their essential work because there is nobody else here to deal with this issue? Frankly, it is not a terribly good situation.

[Baroness Williams of Trafford]

I want to assure my noble friend that this measure is not permanent. It is to deal with a sudden upsurge in the influx of people crossing the channel to come to this country. It is right to take cutters from elsewhere, but this operation is not by the UK alone. We are operating in cohort with our international partners but we do not want them here any longer than they need to be.

Brexit: Economic Effects

Lord Deben Excerpts

Wednesday 21st November 2018 Lords Chamber

[Lord Bates]

Both the noble Lord’s party and mine stood on a platform of honouring the people’s vote that took place in 2016. We are now on the brink of an agreement which can remove the uncertainty so that this country can move forward, and that is why we are supporting it.

[Lord Deben (Con)]

Would my noble friend reconsider that answer? After all, we had an election, and then two and half years later we decided that there was a chance for the people to have another vote on that. So merely to say that we have had a vote is not to say that we should never have a vote again. Is not the problem that the deal that has been done puts Britain into a significantly worse position than we are in as a member of the European Union?

[Lord Bates]

No, I do not accept that premise. If that were the case, we would not still be the number one location in Europe for foreign direct investments, or judged by Forbes to be the number one place to do business in 2018, which we are, and our exports would not be rising. The reality is that people want to remove the uncertainty, and to do that, we need to get behind this deal and get it done.

Immigration

Lord Deben Excerpts

Thursday 25th October 2018 Lords Chamber

[Baroness Williams of Trafford]

The noble Lord will know through our various conversations that some of the delays in children coming here are because we are awaiting information from other countries. I know he accepts that as a fair assessment of the situation. The full detail of the review being carried out of the structures and processes will be outlined in due course, so I will let him know when its actual terms of reference are ready.

[Lord Deben (Con)]

My Lords, first, I thank the Home Secretary for the tone of that reply and I say to my noble friend that we know her personal way of looking at these matters. But this is a matter of culture and we have had a great number of speeches and talks from politicians about immigration which, frankly, have been entirely unhelpful to the Home Office in dealing with people properly. That culture is our fault, as the political parties, because we have not stood up against the loud-mouthed, racist attitudes of so many people. We really need to talk differently.

Secondly, we have cut back on the staff in a way which means that the Home Office cannot do its job properly. My opposite number as chairman of the equivalent climate change committee in China was not able to come to a very important meeting between the two scientific sides, which advise the two Governments, because we could not get his visa through. His second-in-command only got through with a visa which came the night before he flew. It is thoroughly incompetent as well as unhappy, and we really need to face that.