Bank of England and Financial Services Bill [HL]

Debate between Lord Higgins and Baroness Noakes

Monday 9th November 2015 Lords Chamber

[Baroness Noakes]

My Lords, the noble Lord, Lord Davies of Oldham, is being rather modest about these amendments. I think they are rather good. However, I do not understand why he has proposed amendments to Clauses 9 and 10 but not to new Section 7G introduced by Clause 11, which relates to the main value-for-money study power. Not being limited in the way that these amendments imply would be at least as important to the new powers introduced by Clause 11.

I hope the Minister’s reply is not cursory because this is quite an important point. We do not very often legislate on public audit matters. I can remember doing the Public Audit (Wales) Bill, and there was no restriction on the Comptroller and Auditor-General for Wales reasonably requiring certain information. Reasonable time was in the Bill, but not a requirement to demonstrate that he reasonably required the information. It seems to me that the more you try to constrain an auditor, the more you allow an organisation which is being audited to run rings around that auditor. Having been in the auditing profession, I feel rather strongly that we should not try to restrict auditors but should make it as easy as possible for them to get whatever information they want.

[Lord Higgins (Con)]

My Lords, the noble Lord, Lord Davies of Oldham, is always modest, but on this occasion he is excessively so. I agree with my noble friend because the implication of putting the words “reasonable” and “reasonably” in these clauses is that somehow the National Audit Office would act unreasonably, and I do not believe that that is the case. Perhaps the Minister will tell us where else in the legislation governing the National Audit Office such clauses are applied. These are quite unnecessary words. It may well be that, given the more formal auditing functions of the National Audit Office, as against the value-for-money provisions, there might be some occasion when it is necessary to get hold of documents at an unreasonable time. I hope the Minister will respond to this and agree to delete the words which appear in the amendments.

--- Later in debate ---

[Baroness Noakes]

My Lords, I support the amendments. I was deeply shocked to see that the Government proposed to give the Bank of England a veto over whether the Comptroller and Auditor-General could undertake a particular value-for-money study. I have believed for a long time that it has been an anomaly that the Bank of England has not been within the remit of the Comptroller and Auditor-General. I do not believe that any public body, however great and however independent, should be able to stand on that greatness and independence and say, “I do not want the National Audit Office or the Comptroller and Auditor-General to examine what I have been doing”. Public audit can be effective only when it is unfettered, and the concept of fettering the Comptroller and Auditor-General is, frankly, unacceptable.

[Lord Higgins]

My Lords, first, I express regret that I was not able to speak at Second Reading. I was preoccupied with the European Union Referendum Bill and other matters. However, I am certainly deeply concerned, as are other noble Lords, about the situation that now seems to have developed in the relationship between the Bank of England and the National Audit Office. I am sure that my noble friend was right in saying a moment or two ago that this ought to be resolved on Report. If necessary, that is what we will need to do.

I have a long history of involvement in this matter. I was much involved—this shows how long ago it was—when it was first suggested that the National Audit Office should carry out value-for-money investigations. However, it is very important to ensure that the NAO remains completely independent. I share the view expressed a moment ago that it would be wholly wrong for the NAO to have to get the permission of the people being investigated to carry out a review. I am extremely grateful to the noble Baroness, Lady Kramer, for explaining what I did not previously understand about the relationship between the amendment and the words being left out. I now understand the point that she made, which was extremely subtle, if I may say so.

Having said that, I am a little puzzled. I chaired the Treasury Select Committee for a decade or so and was succeeded by the noble Lord, Lord McFall. I was also a long-standing member of the Public Accounts Commission, which I chaired for some time. It is extremely important that we preserve the position of the NAO, and, as I said, I agree with those who say that it ought not to have to seek permission to carry out reviews.

I am just a little doubtful about what is meant by “policy”. This may turn out to be a rather fine line. For example, at the moment it seems to be the policy of the Bank, and indeed the governor, to give forward guidance on interest rates. That certainly needs inquiry as far as value for money is concerned, because the forecasts have been extraordinarily wrong on a number of occasions and a lot of people—for example, those renewing their mortgages—may have suffered considerably. In passing, I hope that the governor will reconsider whether that is an appropriate policy and perhaps no longer give forward guidance on interest rates.

The other points in relation to this matter have been made at Second Reading and in today’s debate. This is something that we have to resolve. We have to make sure that the relationship between the two bodies is maintained, otherwise the Comptroller and Auditor-General, very understandably, will have to think personally—the office of Comptroller and Auditor-General has always been a very personal one—about whether he can really operate in a situation where his independence is being questioned.

Financial Services (Banking Reform) Bill

Debate between Lord Higgins and Baroness Noakes

Tuesday 15th October 2013 Lords Chamber

[Lord Higgins]

As I understand it, the Government are proposing to remove the provision that on demutualisation people had to have held the shares for two years beforehand. Is there not some argument in favour of that? Otherwise, if it seems possible that a demutualisation will take place, there will be a sudden rush for people to benefit and obtain a purely short-term gain, as against those who have invested in the mutual for some time.

[Baroness Noakes]

My Lords, I am probably one of the few Members of your Lordships’ House who does not wear rose-tinted spectacles when it comes to the mutual sector. I am usually filled with slight horror when people tell me that they are going to modernise this wonderful sector and I am not particularly interested in the fact that it was in the coalition agreement. That is because we have seen a major failure of the mutual sector in recent years—namely, in relation to the Co-op Bank—and the history of the building society sector is one of failed building societies. However, many of the things in these amendments are not terribly important. Electronic versions of documents and the like may well help to reduce the cost of servicing very large member bases. My only concern is the liberalisation of the amount of funding that building societies can have, which potentially exposes the sector to greater risks. I would want to be assured by my noble friend the Minister that the Prudential Regulation Authority has no intention of relaxing its normal prudential approach to building societies, as there is no evidence that given greater freedoms they will use them wisely.

Financial Services (Banking Reform) Bill

Debate between Lord Higgins and Baroness Noakes

Tuesday 15th October 2013 Lords Chamber

[Lord Higgins]

Those of us who have been through many legislative processes may be a little appalled to find that it takes 40 pages of amendments to establish a payments regulator. I wish to ask one or two simple questions. On whom will the cost of this regulation fall? Have we an estimate of what it is likely to be? The Minister referred to what I believe was the lamentable attempt to get rid of the cheque system. Will this proposal stand up if the cheque system is changed? As far as international transactions are concerned, will the regulator be concerned with payments which are made internationally?

[Baroness Noakes]

My Lords, my initial reaction to these new clauses was that they constituted a sledgehammer to crack a nut. It seems to me that creating another regulator in a territory which is well occupied by regulators is unnecessary in this case. To that extent I support the noble Lord, Lord Eatwell. One has only to look at government Amendment 60YYH to see that the new regulator will have to co-ordinate with the Bank of England, the FCA and the PRA. These bodies already have to co-ordinate among themselves for different purposes in any event. I think that the world is slightly going mad on this. My noble friend Lord Higgins asks who will pay for the regulator. Obviously, the people who will operate the payment systems will pay for the regulator. I suspect that this arrangement will be more expensive than the existing Payments Council system. I do not know how much more expensive it will be. I believe that we should be told what the costs are because they will inevitably end up being paid for by the businesses and individuals who use payments systems. There is no one else.

I have one question with two parts for my noble friend which relates to the powers in government Amendments 60S and 60T. One part relates to the power to require access to payment systems. I completely understand that. If you are to promote competition, you need powers to require access. The other relates to the variation of agreements relating to payment systems to take out anti-competitive elements in arrangements that have already been made. Both those measures could have financial consequences for those who operate payment systems. I do not object to the principle involved, but where in these 40 pages of amendments can I find the principles that the payments regulator has to use in deciding how he approaches those decisions? I assume that he cannot have unlimited discretion to decide who will pay for what and on what terms. However, there appear to be no basic financial principles underpinning this arrangement in the 40 pages of amendments, which seems to me a lacuna.

Marriage (Same Sex Couples) Bill

Debate between Lord Higgins and Baroness Noakes

Monday 17th June 2013 Lords Chamber

[Lord Higgins]

My Lords, two themes have run through the debate. On one there is almost universal agreement that we must seek to achieve equality. We also have to recognise that there are differences between the two forms of marriage. Having said that—and I am sorry that I do not carry the noble Lord, Lord Alli, with me—it seems to me that we need effectively to recognise both the need for equality and the point that I have just made. I led from the Front Bench on the Civil Partnership Bill, which was a great step forward. None the less, it is perhaps unfortunate that its terminology did not recognise the aspect of equality, and it has certainly not been recognised by the country as a whole. What we need, therefore, is some recognition that there are two forms of marriage. If we do that, marriage will appear on both sides of the equation, representing equality. As suggested in Amendment 34, we need to have traditional marriage on the one hand, and same-sex marriage on the other. If we do that, we can achieve both of the objectives we seek, and reconcile the differences which have otherwise been apparent in the debate. One hopes that both the gay community and the community as a whole will recognise the status of these two forms of marriage as equal. I see no reason why this can not be done.

[Baroness Noakes]

My Lords, normally I agree with everything my noble friend Lord Higgins says. I am in profound disagreement with him today. He has emphasised that he believes that marriages between same-sex couples and heterosexual couples are different. There are all kinds of marriages that are different: marriages between divorced people; marriages with and without children; death-bed marriages. However, we do not find different terms for those. Noble Lords need to ask themselves serious questions about why they wish to continue to emphasise sexual orientation in the names that they give certain statuses. By perpetuating giving a different name to marriage in the context of gay and lesbian people, we are wishing to continue to regard them as different from us. Inclusion is what this Bill is about, and what we should be about in society generally, because that is what will make us a stronger society.

Budget Responsibility and National Audit Bill [HL]

Debate between Lord Higgins and Baroness Noakes

Wednesday 1st December 2010 Grand Committee

[Lord Higgins]

My Lords, Clause 4 states:

“It is the duty of the Office to examine and report on the sustainability of the public finances”.

The amendment proposes to insert at the end of that passage,

“on the basis of section 1(2)(a) and (b)”,

which, as we have already discovered, state that the charter should set out,

“the Treasury’s objectives in relation to fiscal policy and policy for the management of the National Debt”,

and the means by which the Treasury is going to achieve that. It is important to refer back to the earlier passage to be clear about how the OBR will carry out its duties.

I still have considerable problems in understanding how it is going to look into these matters without also examining the Government’s economic policy—a matter that we spent a long time on in the previous Committee sitting. In the mean time, however, we have received a letter from the Minister commenting on that aspect. It is closely written and very condensed, and it deserves careful study. I presume that it is being placed in the Library so that it will be generally available.

[Baroness Noakes]

Is this a letter that only the noble Lord has received from my noble friend the Minister?

[Lord Peston]

We have all been given one. They are over there.

[Lord Higgins]

Has my noble friend now got a copy?

[Baroness Noakes]

Yes. This is an unorthodox way of distributing letters to Peers.

[Lord Higgins]

I presume that the Minister was seeking to be helpful to the Committee so that we should have it in advance of our discussion.

Budget Responsibility and National Audit Bill [HL]

Debate between Lord Higgins and Baroness Noakes

Monday 29th November 2010 Grand Committee

[Baroness Noakes]

I do not quite agree with my noble friend Lord Higgins on this. In particular, the prohibition in Amendment 7 on the Treasury making economic forecasts does not appear realistic. I know that we are concerned that there will be a recreation of the functionality that has now been transferred from the Treasury to the OBR, but the plain fact is that the Treasury has to consider whether to accept the forecasts. It may wish to disagree and, if it cannot do its own forecasts, how is it going to deal with that position? This is a very difficult area but I do not think that it would be right to legislate in this way.

My noble friend’s Amendment 38 made me look at Clause 8. This is a small point but I should be grateful for my noble friend’s comments. He suggested that the OBR need not send a copy of its report to the Treasury. Can he explain how this quango lays a document before Parliament? Does it not normally go through a government department to Parliament? It was always my understanding that documents were laid via Ministers, although I may be wrong.

[Lord Higgins]

Perhaps I may intervene for a moment before the Minister replies. Amendment 21 suggests that there should be a discussion between the Bank and the Treasury to agree the forecast. The noble Lord, Lord Turnbull, says that we want competition and so there may be two separate forecasts. That is fine but the two ought to be reconcilable, and in any event there should ultimately be a set of agreed forecasts which form the basis for the Government taking action. I do not think that you can have one set of policies on the monetary side being made on the basis of one forecast and fiscal decisions being made on the other. So far as concerns the point made by my noble friend Lady Noakes, it seems that the whole object of this exercise is to say that the Treasury shall not have its own forecasts and that the forecasts should be independent. However, I look forward to hearing what the Minister has to say.