Financial Services and Markets Bill

Debate between Lord Eatwell and Baroness Noakes

Committee stage
Tuesday 21st March 2023 Grand Committee

[Lord Eatwell (Lab)]

My Lords, on the point made by the noble Lord, Lord Holmes, surely these regulations are derived from the Financial Action Task Force. We would usurp international agreements if we modified our regulations in a way that was outwith the positions established by the FATF.

[Baroness Noakes (Con)]

I completely accept that we need to comply with the Financial Action Task Force regulations but, as we discovered the other day when we were discussing PEPs, the regulations we have in the UK have in some instances gone beyond what is actually required by the Financial Action Task Force. The issue with the KYC regulations is one of immense bureaucracy and great irritation for people to no particular end. It is worth looking again at whether the way we have drafted our regulations, to the extent they go beyond what we are required to do, has in turn led to more problems for individuals.

I am sure we have all had problems but I will share one with the Committee. My husband had a very small investment—way below the level at which it would have to be declared as one of my interests in your Lordships’ House—and there was periodic updating of the know your client regulations. Because of the way that firm’s forms were comprised, it refused to accept my noble friend Lady Neville-Rolfe’s signature attesting that the document was a fair copy, because she could not tick a particular box on the form. It was completely ludicrous.

That permeates the way many financial service institutions have come to apply these rules in practice. They have become highly bureaucratic, operated by people who probably have no common sense and possibly not even a brain. To go back to the regulations and see what is absolutely required and then follow it on through the FCA seems a really important thing.

Elections Bill

Debate between Lord Eatwell and Baroness Noakes

Lords Hansard - Part 2 & Committee stage
Thursday 17th March 2022 Lords Chamber

[Lord Eatwell (Lab)]

As I was saying to the noble Lord, an accurate study to achieve a careful assessment of the impact of any measure would have to take into account all the circumstances of the time. Over time, there will be a change in circumstances, and therefore the gross figures may appear as if there has been no impediment. However, if you disaggregate the components of the motivations to vote, it is difficult to believe that the introduction of a new requirement or impediment has a zero effect.

[Baroness Noakes (Con)]

Does the noble Lord believe that this will be a permanent or a temporary effect? As my noble friend Lord Hayward said, voter ID has existed in Northern Ireland for a very long time, introduced by the Labour Government. There has been no evidence of a reduction in voter turnout and, importantly, there is a higher degree of satisfaction with the integrity of elections in Northern Ireland than in England and Wales. I think we ought to ground ourselves in facts—not pilots or the studies by the Rowntree Foundation, but facts.

[Lord Eatwell (Lab)]

I think the noble Baroness would agree that the electoral issues in Northern Ireland are rather different from those in the rest of the United Kingdom.

As I have just said, studying a phenomenon over time requires a careful disaggregation of the effects. Looking at the gross numbers does not tell you anything. Specific studies which carefully disaggregate the impact of particular measures are necessary. I find it difficult to see how one can sustain the argument that introducing a particular impediment to vote will have a zero effect.

As I was about to say, at Second Reading the noble Lord, Lord True, in what I call precautionary mode, referred to locking your door to prevent burglaries even though your house has not been burgled. However, it is striking that if you go to the Isle of Sark, where there are no burglaries, no one locks the door. It is the presence of burglars that encourages people to lock their door. If the incidence of fraud is one, as the noble Lord, Lord Woolley, told us, and the cost now is £180 million, or whatever the number is, to prevent one occurrence, is that value for money?

Elections Bill

Debate between Lord Eatwell and Baroness Noakes

Lords Hansard - Part 2 & Committee stage
Thursday 10th March 2022 Lords Chamber

[Baroness Noakes (Con)]

At the end of the day, there is a requirement for Parliament to agree. That is an important part of the framework. It is not something the Executive can do alone. It would need to become a parliamentary approved statement and, as we discussed earlier, it must be approved by both Houses of Parliament.

My second point is that we should be absolutely clear that strategy and policy statements are not directions. No power of direction exists for the Electoral Commission, and Clause 14 does not create one. Noble Lords would be rightly concerned if Clause 14 created a power of direction in relation to the Electoral Commission. I think that the Electoral Commission was just plain wrong, in its written briefing, to claim that it would be subject to government direction as a result of Clause 14.

I regret to say that the noble Lord, Lord Butler of Brockwell, for whom I have the highest regard, was also wrong, when he spoke on the first group of amendments, to assert that this statement amounts to a direction. It does not. Directions are very clear in what they can force public bodies to do. This does not force anything. The only requirement, as we have heard, is in new Section 4B for the Government to “have regard to” the statement. We discussed that in the first group of amendments, and the noble and learned Lord, Lord Judge, has made some comments on the ineffectiveness of that, because it does not refer to other things which it could “have regard to”. It does not trump the commission’s statutory objectives; it does not compel the commission to do anything at all, or to take account of anything else.

We must keep all this in proportion. It is an additional thing for the Electoral Commission to take into account; it does not replace all the existing law relating to the commission. This is the formulation used for all existing regulators, and I believe it is the right approach to protect regulatory independence. As I said, no concerns have been expressed to date about the independence of any of the regulators subject to statements.

The important thing is that the commission has to report on what it has done in consequence of the statement. In practice, as we will see from the way in which the statements tend to align with what the independent regulators are doing, statements generally reinforce what those bodies are doing, and relatively new information beyond what would be included in the annual report comes as a result of those statements.

However, it is important that the independent regulator explain any divergence from the Government’s priorities as approved by Parliament. For example, if the Government said that their priority was to improve democratic participation, not just generally but for particular groups, we would want to know what the commission had done about that and whether it had had any impact. That really does not threaten independence.

I believe that transparency and accountability are what the strategic and policy statements are really all about, and why they are useful. One element is for the Government to be transparent about their policies and priorities, because they have to set them down, get them consulted on and then have them approved by both Houses of Parliament. The regulators then have to be transparent in reporting on what they have done in respect of those priorities—or whether they have done nothing at all. That allows them to be held to account by Parliament—in the case of the Electoral Commission, through the Speaker’s Committee. I hope noble Lords will see that this legislation is not the monster they have created in their own minds. In fact, it can be seen as a very positive development for improving transparency and accountability. I hope we will allow these clauses to stand part of the Bill.

[Lord Eatwell (Lab)]

My Lords, I regret that, like the noble Baroness, Lady Noakes, I was unable to attend the Second Reading debate. At the time I was on an aeroplane returning from work in the United States. However, I have read the full proceedings in Hansard with great care and I feel appropriately informed.

Moreover, some time spent in the United States has also given an added perspective on some of the measures in the Bill, for there is about it a definite odour of the Donald J Trump playbook. There is the whiff of voter suppression in the extra requirements being added for access to the franchise. There is a distinct stench of the politically partisan in the measures that undermine the independence of the Electoral Commission. But perhaps the strongest stink arises from changes in the franchise being imposed by the current majority party, without pre-legislative scrutiny or a Speaker’s Conference. This strikes at the foundations of our constitution, written and unwritten.

I predict that in due course, much as the late Enoch Powell predicted, Mr Johnson will be defeated in an election—and then there will be a, perhaps minor but none the less significant, online campaign claiming that the election was stolen or rigged. While it would be unfair to claim that the noble Lord, Lord True, had planted the seeds of such a threat to our democracy, he will have added a little natural fertiliser. In his speech introducing the Bill at Second Reading, he made much of the precautionary principle, and of taking steps to protect the integrity of elections from potential, if as yet hypothetical, threats. He did not, however, extend his precautionary principle to the measures in Clauses 14 and 15 that, as the Public Administration and Constitutional Affairs Committee stated, risk undermining public confidence in electoral outcomes by diminishing the independence of the Electoral Commission, both in perception and in reality.

As the late Lord Hailsham famously observed, this country is governed by an elected dictatorship. A Government with a substantial majority in the other place can do virtually what they please. That is why this House, with its, let us say, peculiar composition, has a particular responsibility to protect the constitution, written and unwritten, against partisan proposals by the governing party. Here, the discussion by the noble Baroness, Lady Noakes, of statements for regulators gives us a valuable insight, because, in this case, the statement is made by the regulated entity. It is as if one of the broadcasters could have a statement telling Ofcom to what it should have regard. The Secretary of State is a political figure. In the electoral arena, he is a regulated entity. He should not be in a position to provide advice of any sort to the regulator.

As the noble and learned Lord, Lord Judge, said at Second Reading,

“there is a constitutional necessity, in a system of democracy based on universal suffrage, that any electoral commission should be wholly and totally independent”.—[Official Report, 23/2/22; col. 239.]

By rejecting these clauses and affirming the independence of the Electoral Commission, this House will make a vital commitment to free and fair elections.