Committee of Selection

Debate between Lord Forsyth of Drumlean and Lord McFall of Alcluith

Thursday 13th May 2021 Lords Chamber

[Lord Forsyth of Drumlean (Con)]

My Lords, I do not wish to detain the House by repeating the arguments that my noble friend Lord Cormack has made and with which I agree completely. I certainly do not want to make any difficulty for my noble friend Lord Gardiner on his first day out, but I repeat one thing, to pay tribute to his predecessor, now our Lord Speaker, for the way in which he has worked to help the committees—and I know that from being a member of the committee of chairs which, as Deputy Lord Speaker, the present Lord Speaker initiated and which has been very helpful. I know that making a change in this place, as my noble friend is about to find out, is quite a fight against quite a formidable bureaucracy—and I think that great progress has been made.

However, I have a question for my noble friend. I find it quite difficult to understand, given that we are being asked to appoint a Committee of Selection and that those members have not actually been appointed, how they were able to make these recommendations and how they were able to meet. Are we going to adjourn while they meet and then bring forward these recommendations? I know that my noble friend will no doubt say that it is because of the changeover being changed to the beginning of the year, and everyone knew they were going to be reappointed, but I do not really think that that is good enough.

I agree with my noble friend Lord Cormack about the Conduct Committee. I certainly worry about its composition, because any committee that decided that Valuing Everyone—which I have done, so I have no interest to declare—should be made compulsory, when it was not made compulsory in the House of Commons, is quite extraordinary. How, when it deliberated, did that committee come to a conclusion that it would make it compulsory without considering what it would do in the event that people were unable to comply with that? My noble friend Lord Gardiner may very well say that the House approved that. I shall not detain your Lordships by explaining how little time we were given to approve and debate it; in fact, we were given little opportunity, in part because of the circumstances that we find ourselves in.

It is very worrying to me that the institution of the hybrid House is being used to ram things through without proper discussion. It is perfectly clear that there is something wrong with the composition of the Conduct Committee when they can make such ill-judged recommendations to this House, which have brought us into complete ridicule—not least in respect of the pursuit, which I believe is still continuing, of the noble Baroness, Lady Boothroyd. The commissioner was quoted in the newspapers—I assume misquoted—as saying that she would pursue this and that anyone who spoke to the newspapers would be in contempt of Parliament. That says to me that the stage is now laughing at the audience, and the country is laughing at us as a result. I regret the fact that we do not have an opportunity to consider the composition of that committee, because that committee has let the place down.

[The Lord Speaker (Lord McFall of Alcluith)]

I believe that the noble Baroness, Lady McIntosh of Pickering, would like to speak.

Privileges and Conduct Committee

Debate between Lord Forsyth of Drumlean and Lord McFall of Alcluith

Monday 3rd April 2017 Lords Chamber

[The Senior Deputy Speaker (Lord McFall of Alcluith)]

My Lords, in moving that the eighth report from the Committee for Privileges and Conduct be agreed, I will speak also to the third Motion in my name on the Order Paper amending the Code of Conduct. The eighth report covers three areas. First, it proposes minor changes to the Code of Conduct and the guide to the code to provide greater clarity for Members about what needs to be declared when speaking in the House. Secondly, it proposes an amendment to the guide to provide that when the commissioner upholds a complaint alleging non-declaration of a relevant interest, she should examine whether there were other possible instances of non-declaration of that interest in the four years preceding the complaint. Finally, it recommends that Members should register in the Register of Lords’ Interests if they are on the central Register of People with Significant Control and should list the companies or organisations in question.

[Lord Forsyth of Drumlean (Con)]

My Lords, I do not want to detain the House. First, I very much welcome this eighth report, but reading it made my brain hurt a little, and it is still hurting. The Senior Deputy Speaker said that there are minor changes to the code. Paragraph 7 of the report focuses on the word “might” in relation to where a declaration is required. Paragraph 11 of the Code of Conduct states:

“The test of relevant interest is whether the interest might be thought by a reasonable member of the public to influence the way in which a Member of the House of Lords discharges his or her parliamentary duties”.


I have always thought that “might” was a bit vague. Paragraph 7 of the report states:

“‘Might’ implies speculation as to whether an interest is relevant. ‘Would’ implies more certainty”.


I thought: excellent—that is absolutely right. But what is proposed is that the test of a relevant interest is therefore not whether a Member’s actions in Parliament will be influenced by the interest but whether a reasonable member of the public might think that this would be the case. In other words, one “might” has been removed but another remains. I ask the Senior Deputy Speaker to explain why, if the committee felt that “might” implies speculation and “would” implies more certainty, we did not get rid of all the “mights” and replace them with “woulds”.

[The Senior Deputy Speaker]

All I can say is that the challenge of the mighty noble Lord, Lord Forsyth, is too much for me here today. This was undertaken by the noble and learned Lord, Lord Brown of Eaton-under-Heywood, with the intention to make the code more consistent. In moving that, the committee accepted it at the time. I invite the House to agree the Motion, mindful of the comments of the noble Lord, Lord Forsyth. I will go back and ensure that his comments are taken on board when we finally produce the new code.

Scotland Bill

Debate between Lord Forsyth of Drumlean and Lord McFall of Alcluith

Monday 29th February 2016 Lords Chamber

[Lord McFall of Alcluith (Lab)]

My Lords, even if one were dozing during this debate, there would be no doubt how the House felt on the issue. I note the comment of the noble Lord, Lord Kerr, that the debate on the Barnett formula is lost. We must realise that situation. I shared a flat near Joel Barnett for many years. Joel never tired of telling me that the Barnett formula was introduced in 1978 to settle a relatively minor dispute in devolution so that he would get “them” off his back. He used a profane word that I will not use in this House. However, since 1978 that formula has stuck.

When I was in the other place, the noble Lord, Lord MacGregor, manfully defended the Treasury but still was very generous with the Barnett formula. The noble Lords, Lord Lang and Lord Forsyth, as Secretaries of State for Scotland, skilfully manoeuvred the Barnett formula in Scotland. I had to sit on the Opposition Benches and admire their chutzpah on that particular issue. That is the politics of the situation now. Sadly, in many ways the political bandwagon has moved on but the analytical one is behind it.

At the end of last week, the First Minister said that there was not a penny of detriment to Scotland. She spat that out but every Scottish party in the Scottish Parliament agreed with her. The noble Lord, Lord Forsyth, mentioned in adulatory terms Professor Jim Gallagher. I looked at Jim Gallagher’s blog at the weekend. I mentioned that every Scottish party was involved but he said that, in the event, with the fiscal framework,

“the politicians have come to a compromise: one suggested first, publicly at least, by the Scottish Conservative leader Ruth Davidson”.

She proposed this, and then the Chancellor, George Osborne, intervened and offered the Scottish Government a safety net for the first five years. That effectively delivers what the SNP Ministers asked for: namely, protection for their tax income in the event that Scottish population declines. That is the reality, so perhaps I am not being ungenerous in saying that maybe the right hand of the Conservative Party does not know what the left hand of the Conservative Party is doing.

[Lord Forsyth of Drumlean]

Speaking very much for the right hand of the Conservative Party, I think that perhaps the noble Lord did not hear the quote from Jim Gallagher. He said that the compromise the Treasury gave is that it handed over the money. That is what we are talking about: it is not a compromise.

[Lord McFall of Alcluith]

My Lords, the noble Lord tells us nothing new. I looked at that issue as well. I think I made the point in the last debate here that the two no-detriment principles are irreconcilable. We must try to work out the politics of that at a later date but there is absolutely no doubt of that. Professor David Bell in his submission and the work he did for the Economic Affairs Committee illustrated that very much. In fact, I sat for about three hours looking at that report from the IMF with David Bell and I thought I was back at university. After those three hours, I understood maybe 15% of the whole issue. It is hugely complex—we all agree on that.

I mentioned the issue of the safety net. This is a good deal from Her Majesty’s Treasury but after the five years there will be the review. What will the Treasury do at that time? That will depend on how the population looks then and what other political and economic factors are going on. I agree with individuals who say that this is a five-year or six-year proposal. At the end of the day, negotiations must start again. One thing I am interested in here is to see that we develop a narrative as a result of this fiscal framework which will ensure that the grievance mentality is abandoned. Some would say it will not be but there is a possibility of that happening. I will mention that later on in my speech.

For clarity’s sake, we see that the Scottish Parliament is supported by, as we said, shared UK resources from Barnett, its own tax revenues levied in Scotland, and a cash supplement from UK resources. That could possibly force all the parties in Scotland to go into what they are offering the Scottish electorate in terms of tax and spend. We have seen it already; today I read it in the Scotsman as I was coming down in the plane. For the first time, in many ways, we are getting on to the reality of devolution and have moved on from the process. Sadly, the Labour Party was very much involved there because it was mentioned that devolution was a process rather than an event. That got it wrong. As my old friend Tam Dalyell said, it was like a motorway without exits. Let us try to build the exits as a result of this fiscal framework.

We can go on indefinitely in asking who won the fiscal framework battle. Yes, the Treasury model is being used. We call it levels reduction. Yes, the UK is reimbursing Scotland for any money it would have received under the indexed per capita deduction in place. In effect, one side is happy saying, “The Treasury model is being used”. The other side is happy saying, “Yes, it is being used but we ain’t going to be disadvantaged because at the end of the day the per capita will be involved”. How far has that taken us? It has taken us five years down the road in terms of politics. We will have to come back and see how far it takes us down the road in terms of finance.

There is a big picture here as well, which nobody has mentioned. This will be the biggest ever transfer of powers to the Scottish Parliament. In fact, it will have as much autonomy as it had in 1707. It has demanded both good will and compromise to reach that position.

On that particular point, I commend the Government for their work in this area. However, in terms of the reporting of the fiscal framework, it could be helpful if the Government teased this issue out. The fiscal framework states that the Government will be required to produce reports on the implementation and operation of new powers in line with those produced under the Scotland Act 2010. Will this be done on an annual basis? If not, when will such reports be published? If we are to have an independent review, it should be set up very quickly and should not wait until the last minute, as we had to do with the fiscal framework now, where eight weeks of Smith translated itself into a secret cabal deciding it and then presenting it to us. We should have that transparency so that that independent commission can report to Parliament on an annual basis. By doing so, there will be transparency and individuals can look at it from the two no-detriment principles—particularly the second, of fairness to UK taxpayers.

This is a solution. Is it a neat solution? We can argue about that until the end of the day but there is a political momentum on this issue with the political parties in Scotland. The Government have responded to that. We wish them well in the negotiations.

--- Later in debate ---

[Lord Forsyth of Drumlean]

My Lords, I wanted to delete this clause entirely in Committee, and was persuaded that the approach being taken by the noble and learned Lord, Lord Hope, was perhaps more forensic and justified. I agree with the noble Lord, Lord Stephen, that half a loaf is better than no loaf. This is a very useful example, both in the original draft and the slightly grudging response from the Government, which we can discuss when we come to debate the Strathclyde review and the Government’s attitude towards the use of secondary legislation.

Our previous debate, when we spent 10 minutes arguing whether the House of Commons ought to be able to discuss the fiscal framework, to my mind underlined an Executive who are increasingly treating Parliament as the ornamental part of the constitution. That is very regrettable.

I thank my noble friend for at least moving as far as he has, but I would not want him to think that the Bill as it stands is in any way acceptable. I hope that on a future occasion we will have more opportunity to discuss the increasing use of secondary legislation. If it is not a Henry VIII clause, perhaps it is now a Queen Anne clause, in deference to the noble Lord, Lord McAvoy, who thinks that this is putting the Scottish Parliament in the same position as it was in 1707.

[Lord McFall of Alcluith]

Yet again, the noble Lord has got it wrong—it was me who said that. However, let us finish on a positive note tonight. First, I would like to thank the Delegated Powers Committee for its report, because it was very clear at the beginning that the Scotland Office provided a delegated powers memorandum, the explanation of which was inadequate. As a result of that, I thank the noble and learned Lord, Lord Hope, for tabling these amendments, and the noble Lord, Lord Norton of Louth, who made an excellent speech last time on the Henry VIII powers.

The Law Society of Scotland was mentioned, and Michael Clancy has been sitting in the box for many weeks, although he is not there tonight. He has been helping us—and I well remember taking over the shadow Home Affairs responsibility in the 1990s for the Labour Party, when Michael was helping one and all political parties. So I thank him, too.

As the noble Lord, Lord Forsyth, said, it is better to have half a loaf than none. It is important to say that the Government have not outlined totally why the consequential powers are required in Parts 1, 4, 5 and 6, in every other respect. Perhaps the Minister will at this stage give your Lordships’ House some indication of the type of saving powers that the Government expect to propose. As the noble and learned Lord, Lord Hope, said in Committee, if we are going to keep faith with what we are trying to achieve, the Government have to go that step further. With those comments, I commend the work that noble Lords have done and the response that the Government have given to the suggestions.

Scotland Bill

Debate between Lord Forsyth of Drumlean and Lord McFall of Alcluith

Wednesday 24th February 2016 Lords Chamber

[Lord McFall of Alcluith (Lab)]

My Lords, I thank the noble Lord, Lord Stephen, for speaking to the amendments. We are generally supportive of a number of them but, as my noble friend Lord McAvoy said earlier, the Labour Party’s aim is to ensure that the Bill gets on the statute book. It is with that realistic element in mind that we debate these issues. The noble Lord, Lord Forsyth, shakes his head, but he has been shaking his head all night—and for years—on this issue. It is important that we are constructive. I am proud that we have been constructive on this side in helping the Bill to become an Act, therefore ensuring that the relationship between the Scottish Parliament and the UK Parliament gets off on the best foot. I am sure that government Ministers will be on the same level as us on that sentiment.

We support Amendment 29, tabled by the noble and learned Lord, Lord Wallace, the noble Lord, Lord Stephen, my noble and learned friend Lord Davidson and my noble friend Lord McAvoy. The amendment would give the Scottish Parliament legislative competence for equality of opportunity relating to the Scottish functions of Scottish and cross-border public authorities, including non-executive appointments to public boards. It also clarifies that the Scottish Parliament’s power to modify the Equality Act 2010 is limited to making provision that enhances the protection and promotion of equal opportunities. Our Amendment 30 would amend Amendment 29 and give the Scottish Parliament the ability to set quotas for candidates at Scottish parliamentary and local elections. I also speak in support of Amendments 31 and 33, which we have co-signed with the noble and learned Lord, Lord Wallace, and the noble Lord, Lord Stephen.

I start by addressing Amendments 29, 31 and 33, which have been drafted by the Equality and Human Rights Commission. First, we place on record our thanks to the EHRC for its work and its continued support throughout the passage of the Bill. Taken together, these amendments have a significant impact on the Scottish Government’s ability to tackle inequality. As the noble Lord, Lord Stephen, has just said, the amendments will give the Scottish Parliament legislative competence in respect of equality of opportunity in Scottish and cross-border public authorities, including non-executive appointments to public boards. They clarify that changes to the Equality Act can only enhance the protection and promotion of equal opportunities, which at present is insufficiently clear.

They also ensure that the Scottish Parliament is not limited in its capacity to act in relation to non-executive appointments to public boards. Finally, they give the Scottish Parliament legislative competence over the public sector equality duty. The Minister stated in Committee that,

“devolving the duty itself is a step too far”. —[Official Report, 19/1/15; col. 674.]

However, he seemed to be arguing that this was more for bureaucratic reasons than anything else. If that is the case, I submit that the Government should look carefully at these amendments to see what can be done.

[Lord Forsyth of Drumlean]

The noble Lord is making a case for these amendments but, as I understand the Labour Party’s position, it is committed to ensuring that no amendments are made to the Bill. So why are we sitting here at 10.06 pm listening to advocacy for amendments which his party is determined should not actually get on to the statute book?

[Lord McFall of Alcluith]

Actually, I remember, at the beginning of the day, the noble Lord being very robust about Clause 1 and threatening to bring the house down; then he did not press his amendment. Why is he so vigorous at one stage and then so weak and wobbly-kneed? He should stay by his conviction and put the vote to the House, so that he can find out what their measure is. What is sauce for the goose— I will let him finish it.

The Minister mentioned in Committee that devolving the competence to the public sector itself would be a step too far. The Government should look at these amendments to see what can be done. We would like to think that the measured reason we have at this Dispatch Box could influence the Minister before the end of the day. That is why we are standing here, doing our public duty after 10 pm, and I am sure that I will get acclamation from all sides of the House for that.

I agree with the Minister that we must be cautious about creating excessive burdens on private and voluntary groups. I urge the Government not to simply dismiss the idea out of hand. There will clearly be challenges—we accept that—but these have to be weighed against the outcome of fundamentally altering our society’s approach to equality. Our Amendment 30, which takes the somewhat unusual step of amending an amendment, increases the scope of Amendment 29. As I have made clear, we support Amendment 29, but we believe it could go further. Indeed, it needs to go further to ensure that the Scottish Parliament reflects the society it represents.

Amendments 31 and 34 would require political parties to publish diversity information in relation to Scottish elections. Of course, transparency is important and we expect the Minister to agree with us in mentioning the initiative when it comes to pay. However, from experience we are aware that, despite this action, the problem remains a negative feature of our culture and society. Indeed, when it comes to pay, at the current rate of progress it will take nearly half a century for women to be paid the same as men. This demonstrates that we need to go further than Her Majesty’s Government are apparently prepared to go. The Scotland Bill provides a vehicle to do just that.

More can be done to promote gender equality in politics. In fact, the intent of Amendment 30 is to give the Scottish Parliament the ability to set quotas for candidates at Scottish parliamentary and local elections. Under the leadership of Kezia Dugdale, Labour has made substantial progress on this issue. Research from Women 50:50, which I thank for its continued support and guidance, revealed that 52% of the constituency Labour candidates and 50% of the Labour list candidates in the upcoming elections are women, compared with just 15% and 14% respectively for the Conservatives. So a determined and committed leadership shows what can be achieved by introducing candidate quotas. I hope that we can make this the norm across Scotland. It is an extension of the principles of the Smith commission since Smith advocated that the Scottish Parliament should have more autonomy over equality provisions in society. If they are good enough for the public bodies in Scotland, it is surely illogical to argue that we would not want the same for the Government who represent Scotland. Indeed, as Women 50:50 says:

“We need a fair number of women in parliament so that women’s lived experiences exist in policy-making. The system and the policies it creates disadvantage women if there are not enough women round the table to actually represent their views. It is crucial to democracy and to women across Scotland to be represented fully”.

This amendment, combined with amendments already referred to, would help to continue to challenge this fundamental disparity which we have in our political structures. With these amendments we invite Scottish society to play its part in bringing about the more equal, fair and inclusive society that everyone wishes for Scotland. We should hold our elected representatives to those same high standards. In accepting these amendments, the Government would bring about such parity. I hope that, even at this late hour, debating these issues can stimulate the Government to think differently and perhaps result in a changed outcome before we next meet next week. With that, I beg to move.

Scotland Bill

Debate between Lord Forsyth of Drumlean and Lord McFall of Alcluith

Tuesday 19th January 2016 Lords Chamber

[Lord McFall of Alcluith (Lab)]

Does the noble Lord not agree that one of the real problems a number of years ago was when they got rid of the local police stations and introduced a centralised call centre? Now you phone a central place in Scotland, which is unaware of the locality and the issues in it, and where there are complications with communications. I saw that when I was a Member along the road there. That was the start of the real problem, which led to this centralisation. The more we get back to local police stations and local reporting, so that we can go into our stations and report issues where they understand the local area, the better. We are on the wrong track.

[Lord Forsyth of Drumlean]

I entirely agree with the noble Lord. He is absolutely right. In my old constituency of Stirling, we used to have a police station in my own village; we had them in Balfron and elsewhere, but they have all disappeared. We now have two wildlife policemen who are going around trying to find someone to prosecute for something—without much success, I am told, and at vast expense. All of this is absolutely in the face of what local people say they want, which is local policing and local involvement. One of the great ironies of this whole devolution project is that it was supposed to be about returning power to local people, but the Scottish Parliament seems to have been absolutely concerned to centralise everything and to take a very authoritarian view.

This proposal to break up the British Transport Police —I am now on the amendment—is an absolute classic example of the failure of thinking which has brought such disaster to Scotland’s police force. British Transport Police has been there certainly since the 1850s, when it was realised that a railway would enable criminals to move around the country and that it was necessary to have a police force on the trains with the authority to act wherever its officers were. That system has worked brilliantly; it is one of the great success stories.

The truth of the matter is that the reason that the nationalists do not want to have the British Transport Police is because of the “B” in British Transport Police. Perhaps we could just call it something else—perhaps we could call it the “National Transport Police” —and then we could get agreement that it makes sense to have a cross-border force run on a cross-border basis. It has done the most brilliant work, not all of it publicised for obvious reasons, on drugs hauls that have been taken from trains at Glasgow that have come from the south, on the movement of terrorists and others who threaten us, and on the integration of the Glasgow underground with the London Underground and the whole of the transport system. The BTP is a group of people organised in four divisions—there is a Scottish division—who understand and have the expertise to deal with the intricacies of policing a transport system. That is a success, and for it to be smashed up would be crazy.

I know that the Minister will say that the amendment is unnecessary and the clause does not actually provide for the breaking up of the British Transport Police, but we know that that is what the Scottish Government intend to do. In doing so, they will undermine not just the security of people in Scotland, as the noble Lord, Lord Empey, said, but the security and enforcement of law in the United Kingdom as a whole. This is not a matter which should be subject to devolution; this is a matter of national, United Kingdom interest. I very much hope that the Government will drop it from the Bill. The rather throw-away line that we got from the Smith commission, which showed no understanding of what the British Transport Police has been doing, is, to say the least, a disappointment.

The fact that the Justice Minister in Scotland should announce that he wanted to get rid of the British Transport Police and integrate it into the Scottish police with no consultation whatsoever, and in the face of strong opposition from former commanders in Scotland, who actually did the job, but who are ignored, is unacceptable. I very much hope that the Government will feel able to accept the noble Lord’s amendment or, even better, drop the whole thing altogether.

Queen’s Speech

Debate between Lord Forsyth of Drumlean and Lord McFall of Alcluith

Monday 1st June 2015 Lords Chamber

[Lord McFall of Alcluith (Lab)]

My Lords, this will be a Parliament dominated by constitutional issues: the Scottish question, the European question and that of human rights. A casual approach to any of these could fatally undermine the union. If we are to learn anything from the situation in Scotland, it is that a sloppy approach from Westminster has resulted in a badly destabilised union, to the extent that the question we face today is: can the centre hold? Some would say that it is too late—that there comes a time when the decay of the political parties inevitably is followed by the decay of the power structures in which they function. We have to accept that in Scotland, the SNP largely has both the momentum and the trust of the Scottish electorate—so, as the noble Lord, Lord Forsyth, says, this is a precarious situation for the union. However, there is not an inevitability regarding independence.

In my anecdotal evidence from going around for the general election, I remember knocking on a door and saying to the woman that I was calling on behalf of the Labour Party. She said, “Oh, son”—by the way, that was the first compliment I got and I was happy to receive it—“we used to be Labour but the whole household, half a dozen of us, is now SNP. We’re going to give them a chance and I think that Nicola deserves as good a chance to get into 10 Downing Street as any of the others”. The unreality of the situation in Scotland hit me right in the face as a result of that. We—I speak here as the Labour Party, but it must apply to other opposition parties—have lost the capacity to converse with the electorate in Scotland. Permission for us to engage was denied by the electorate. From the Labour Party point of view, we have a cultural problem to resolve about how the party speaks and the way that it pitches its appeal to the electorate in Scotland. I guess that that goes for other opposition parties as well.

Despite the SNP being full of contradictions, its voice is dominant in Scotland. But let us not forget that 50% of the electorate there voted for the SNP and it secured 56 seats, while 50% of the electorate in Scotland voted for those parties that support the union and we have three seats. It is a very divided country but all is not lost. There is still a substantial majority in Scotland in favour of the union, yet we must address a number of important issues if we want to preserve it.

First, we need a serious, considered and engaging approach by the UK Government and the Westminster body politic. We should never repeat the folly of having a two and a half year referendum campaign without a backward glance, and allowing the positive case—yes—to be made for separation. We need to have a positive narrative for the union—not just something in the negative sense—and it has to be made robustly here.

Secondly, the UK Government need a single-focus devolution mechanism to replace the present fragmented structure, where there are six separate Whitehall centres for devolution policy. We have three Secretaries of State, the Department for Communities and Local Government, the constitutional group of the Cabinet Office and the Treasury’s devolution team. It is a recipe for disaster. The Labour Government, during their time in office, considered a Secretary of State for the nations and regions. They ducked that but it is time for the Government to look at that issue again.

The third issue is civic engagement across the entire countries and regions of the UK. Accompanying that there must be a structural road map to progress constitutional development. As others have said here, devolution policy has been ad hoc, piecemeal and rushed to the point of recklessness. Last Thursday, the Scotland Bill was published, based on the Smith recommendations. The core basis of this agreement has to be implemented. It was endorsed unanimously by all Scottish parties but it is clear that proposing further powers for Scotland creates a need to satisfy the desire for further devolution in England and Wales, and for the political reform of this Parliament. So there is an overwhelming case for a proper constitutional convention to examine carefully, and for the first time, UK-wide devolution implications.

The work of the former Political and Constitutional Reform Committee in the other place on a new Magna Carta points a way to options for reform. However, as one who was involved in the Scottish Constitutional Convention preceding the Scotland Act 1998, I say that it represented the best template for a constitutional convention. It brought together Labour, the Liberal Democrats, the Green Party, local authorities, the Scottish Trades Union Congress, the churches, the Federation of Small Businesses, ethnic minority representatives and the Scottish Women’s Development Forum. The only one absent from it was the Scottish National Party—and, sadly, it has thrived as a result. But that broad-based participation resulted in a report that formed the basis of the 1997 Labour Government White Paper, Scotland’s Parliament. The Scottish Constitutional Convention was very successful. It had a defined remit and covered all the angles which a proposal for a Parliament needed.

[Lord Forsyth of Drumlean]

While agreeing with the noble Lord on the need to have some sort of constitutional convention, surely he is not arguing that the asymmetric devolution which resulted in Scotland has led to success. It has led to the disastrous position that we are in now.

[Lord McFall of Alcluith]

The noble Lord always likes to look backwards. I am not going to engage in looking backwards. He should work with me and others to ensure we are forward looking, given that his speech said that the union is in a perilous state. I am sure that he will agree with that, so let us move on and be positive; let us not be negative.

Any idea that the latest round will provide an enduring settlement is illusory. If we are to achieve a proper balance, it will take a long time. That is why a constitutional convention representing the peoples of all parts of the United Kingdom is important. In that convention, a legitimate question will be: how much further can the UK go and remain stable? Is it the intention to maintain the political, social and economic union? If so, there is tricky terrain for us there, not least in the areas of tax, welfare and pensions.

The general election answered the question, “Who is to govern the United Kingdom for the next five years?”, but left open the question of whether there will still be a UK to be governed. If we do not realise the gravity of the constitutional situation facing the UK and do not adopt a serious, coherent, all-embracing, long-term approach, perhaps in five years there will not be a UK to be governed. That would be a tragedy for all the people of these islands, and we must do our best to ensure that it is not the case.

Financial Services (Banking Reform) Bill

Debate between Lord Forsyth of Drumlean and Lord McFall of Alcluith

Tuesday 8th October 2013 Lords Chamber

[Lord McFall of Alcluith (Lab)]

My Lords, it was, along with other Members, a privilege to be a member of the Parliamentary Commission on Banking Standards. I want to add a few words to what has been said. As a member of the commission whose view on this matter was for full separation, I signed up to the recommendation in order to have unanimity in the committee and because for the rest of us, with due deference to the most reverend Primate the Archbishop, it was an act of faith. That is what the recommendation from the committee was, because ring-fencing is at the moment theoretical. Without naming the person, I well remember someone on the Vickers commission saying to me, “John, we lost our nerve and advocated ring-fencing”. I do not want us to lose our nerve but I want us to be vigilant on this issue.

I well remember the evidence given to us by Paul Volcker who, noble Lords will remember, said, “I cannot really understand what the situation will be if you are the holding company which has authority over the ring-fence. If it comes to making a decision by that holding company’s executives about the future of the company, then the executives of the holding company will win over the decisions at the ring-fence”. At the end of the day, it is the holding company that matters. There is therefore something uneasy and illogical about this issue.

I also well remember another witness, not at the banking standards commission but elsewhere—Willem Buiter, when he was on the Monetary Policy Committee before he went to Citibank to be its chief economist—saying, “Remember that the half-life in the financial services industry is less than three years”. In other words, people will forget what has happened before. Having spent nine or 10 years as chairman of the Treasury Committee, all that I can say is that the banking industry is ever vigilant. If we sit back here for a four or five-year period and then return to the matter to see what has happened, the landscape will have changed completely. All that I would add to noble Lords’ comments is that if this House does not express that it has to be vigilant at all times, we are going to lose out and it could be to the disbenefit of ourselves as a Parliament and of society.

[Lord Forsyth of Drumlean (Con)]

My Lords, I did not speak at Second Reading because I could not stay for the wind-ups, but listened to most of that debate. I should like to press my noble friend on his logic. He says that we cannot have some body to police or check up on the regulator. I am very surprised that my noble friend Lord Blackwell, with whom I am normally absolutely on the same square on most issues, says that we must trust the regulator. There was a reason we got into this mess and, by the way, we still ought to have a proper inquiry into what the regulator was doing and how the crisis happened in the first place. The very last thing I feel like doing is trusting the regulator.

We have also seen the regulators going off to work for the banks at, no doubt very appropriately, very high salaries to help them with their compliance and operation of regulation. Let us face it, I am not sure where I stand on the notion that we should trust the regulator on this matter. Like the noble Lord, I was prepared to go along with ring-fencing but could not see how it could work. But it certainly is not going to work if you have very clever people in the banks and at the regulator, but no one is actually breathing down the regulator’s neck. That seems to be the lesson that we can learn with absolute clarity from the previous experience.

I have to say that my noble friend’s logic was, “We can’t possibly have the regulator being subject to second-guessing all the time. How are they going to be able to carry out the agreed policy?”. As has repeatedly been said in a number of speeches, this is an experiment because it is part of a compromise to try to get the banks reasonably on board and to proceed on the basis of consensus.

In my seven years—perhaps it was nine years—working in an investment bank, I learnt that investment bankers are extremely adept at getting between the wallpaper and the wall. If they can find a way to get around something, they will. That is their job and how they make money and resources. The notion that if we have ring-fencing there will not be lots of clever people finding very good schemes to get around the intention of it and that the regulator will stand up to them, especially if we are in a period of prosperity, flies in the face of the experience that we have had.

It is essential to have someone independent of the regulator looking at this relationship and seeing if it is working. They should report to Parliament, with Parliament ready to enforce separation if it is required. It is by putting their feet to the fire in this way that we can be sure that they realise that it is in their interests to make this ring-fence procedure work. Without that, it will not work and we will be back to where we were before you can say “renewed prosperity”.

My noble friend uncharacteristically showed a lack of logic in what he was saying. If he wants the House to commit itself to this policy, he needs to address this basic question of who will guard the guardians.