Levelling-up and Regeneration Bill

Lord Hodgson of Astley Abbotts Excerpts

Committee stage
Thursday 20th April 2023 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

My Lords, I thank the noble Baroness, Lady Pinnock, for introducing her amendment. We agree with everything she has just said. I am also objecting to Clause 101 standing part of the Bill, because we are very concerned about the implications of this clause. We have also put down an amendment to probe whether guidance will be published on Clause 101, but our major concern is with the clause itself.

As we have heard from the noble Baroness, Clause 101 inserts new sections into the Town and Country Planning Act to provide for two new routes to apply for planning permission for the development of Crown land in England. In other words, we are talking about land where there is a Crown or Duchy interest. In the case of either route, the provisions in the clause will allow the appropriate authorities to apply for planning permission direct to the Secretary of State, rather than being subject to the same requirements and application processes as anyone else wishing to undertake development. In such circumstances, the Secretary of State must notify the local planning authority whether they intend to decide the application. If they decide to determine it themselves, they can approve it either conditionally, or unconditionally, or refuse it. They will also have to consult the local planning authority, to which the application would otherwise have been made, but the authority will have no right to veto it.

What does the policy paper that sits alongside the Bill say? It says that it is a means to

“provide a faster and more effective route for urgent and nationally important Crown development”.

That sounds all well and good, but, like the noble Baroness, Lady Pinnock, we are also concerned about the implications of introducing such an open-ended measure. This is regarding both removing appropriate and necessary limits on the exercise of executive power and denying communities a chance to express their views about development in their area and their ability to indicate either consent or opposition.

We fully appreciate that there will be emergency situations where it is necessary to speed up the planning application process for essential development. Off the top of my head, I can think of the Nightingale hospitals during the Covid pandemic. However, the broad scope of the provisions in the clause, which do not provide for any limit on the type of development that can be approved directly by the Secretary of State, or in what circumstances, means that they could be used for a much wider range of proposals.

This could include a number of circumstances, but I would like to focus on one in particular, as did the noble Baroness, Lady Pinnock. The Committee will know that the Government have opened centres to provide accommodation for asylum seekers and are looking to open further such centres. I would like to thank Asylum Matters, Medical Justice, the Helen Bamber Foundation and Ripon City of Sanctuary for their helpful briefings. The Government have, as the noble Baroness said, consistently sought to avoid public scrutiny of and consultation about the construction or operation of large-scale institutional facilities for asylum accommodation.

The Home Office has previously successfully opened such facilities on ex-military sites at Coltishall in Norfolk—which is now closed, despite an attempt to reopen it—Napier in Folkestone, which is still open, and Penally in Pembrokeshire, which is now also closed. It has further made attempts, despite local opposition, to construct or operate similar facilities in Barton Stacey, Hampshire, in a facility on the Yarl’s Wood Immigration Removal Centre site in Bedfordshire and, from April 2022, as was mentioned by the noble Baroness, at an ex-military base in the rural village of Linton-on-Ouse, North Yorkshire. All these projects have been the subject of intense controversy and, in the cases of Napier and Penally, legal challenge over the profound harm to people seeking asylum, as well as the lack of government consultation of local communities and the resulting impacts on community cohesion.

At both Yarl’s Wood and Linton-on-Ouse, pre-action correspondence was issued, and the developments were halted prior to judicial review. At Penally, the Secretary of State for Wales stated that he first had discussions with the Home Secretary about use of the site just nine days before it opened, and the local health board was informed three days prior. At Napier, the local council, local MP and local and district councillors wrote to the Home Office to protest that they had been given

“very little notice of the decision”

to open the barracks and that it was

“one they could not support”.

A similar lack of consultation occurred at Barton Stacey and at Yarl’s Wood. In the case of Napier, planning permission for the facility was initially secured under class Q emergency development rights for six months, subsequently extended to 12. The Secretary of State granted herself permission to use Napier Barracks for a further period of five years, without any public consultation, through the unusual procedure of using delegated legislation.

The Government’s approach has been criticised by your Lordships’ Secondary Legislation Scrutiny Committee, which raised concerns that the Town and Country Planning (Napier Barracks) Special Development Order 2021 had been laid while Parliament was in recess and that “insufficient information” had been provided by the Government about these developments.

After the fact, the Home Office ran a public “consultation” on the change of use of the site. But this cannot be considered a meaningful consultation, as it took place after permission had been extended. The planning statement that was issued at this time included a commitment to complete a statement of community involvement. This has still not been published, despite the consultation closing at the end of January last year. Perhaps the Minister could give an update on that.

In a judgment handed down on 24 June last year, the High Court ruled that the decision to grant planning permission for a further five years was unlawful. The judge ruled that there was a failure to have proper regard to the public sector equality duty and that the development raised

“very obvious issues … in particular relating to … potential victimisation and harassment … and the fostering of good relations”.

Lack of consultation by the Government has had serious effects on community cohesion in places where large-scale institutional sites have been contemplated. Last April, the Government announced their intention to move towards a system of large-scale permanent asylum accommodation centres in which to place people seeking asylum who would otherwise be destitute, while they await a decision on their claim. The flagship announcement of a facility to accommodate 1,500 people seeking asylum on the ex-RAF base at Linton-on-Ouse, which we have mentioned, was made without any reference at all to the local community, the parish council, the district council, the police and crime commissioner or local police and health services. An initial justification for this was that it was part of a bigger series of announcements.

Current planning laws and, in particular, the right of local residents to be heard on decisions which affect them have proved a barrier to government attempting to institute these large-scale accommodation facilities. Our concern is that the powers provided for in this clause are to facilitate the driving through of centres regardless of their impact on the people placed in them or the local communities in which they are situated. They allow government to totally bypass local councils on asylum accommodation. This is completely the wrong approach. We believe it should be a legal requirement to consult local authorities on asylum accommodation locations.

Appropriate safeguards must be added into the clause to ensure that there are limits to the use of these powers and that minimum requirements are in place to secure some measure of consent from affected local communities. Without a firm commitment that such safeguards will be introduced at a later stage, we believe that Clause 101 must be removed from the Bill.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I have not participated in this Bill so far. I arrived today thinking seriously about the matter of principle in the powers given to the Government by Clause 101, and with some sympathy for the ideas behind Amendments 257B and 258ZA. I am disappointed by the way in which both noble Baronesses have spoken to them, moving away from the principle of the way in which the Government have powers to a discussion about immigration policy and the use of asylum centres. That is a much narrower issue; it will come out of this, but it gets away from the principle of the Government having undue powers for whatever reason. Moving on to something highly controversial and difficult at this stage muddies the water in a way that is unhelpful for those of us who think that Clause 101 contains undesirable powers.

The noble Baroness referred to the Secondary Legislation Scrutiny Committee, which I chaired during the Napier barracks statements. We have seen the Government push the envelope, in particular during the pandemic. The noble Baroness, Lady Bakewell of Hardington Mandeville, will recall some of this as a former member of the committee. Things such as permitted developments were pushed out in response to the needs of the pandemic. I understand that; emergency statements needed to be taken and things needed to be done quickly.

We saw the impact of that in many ways, but most obviously in our having restaurants in the street, which was needed at the time because otherwise they would have had to close due to social distancing. We on the SLSC were content about this because there was a sunset clause built in. However, a year later it was removed by another piece of legislation. By two steps, the Government moved from one position to another with minimal scrutiny from your Lordships’ House and the other place. That is the issue I am interested in exploring in this clause, rather than involving ourselves in discussions about immigration, which will take us back to all sorts of difficult areas that will not help the development of the argument.

The Government said in response to our concerns about making these permitted developments permanent that we were semi-killjoys, trying to stop restaurants in the street and so on, but the reality is that they were controversial for mothers with buggies, pallet truck drivers, people with limited vision and, above all, people who lived above them—all of us talk rather louder and laugh a bit more when leaving a restaurant at 11 pm having had a few glasses of wine, so people found their children being kept awake and so on.

Democracy Denied (DPRRC Report)

Lord Hodgson of Astley Abbotts Excerpts

Thursday 12th January 2023 Lords Chamber

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, my term of office as the chairman of the Secondary Legislation Scrutiny Committee comes to an end in a couple of weeks, but over the past three and a half years I have had the chance to see, at first hand, some of the ways that, almost imperceptibly, the Government have been gaining power at the expense of the two Houses of Parliament. It is that process that forms the background to our report, Government by Diktat.

We have just heard a very powerful speech from my noble friend Lord Blencathra, the immediate past chairman of the Delegated Powers Committee, our sister committee. I support entirely the points he made and the views he expressed. The DPRRC plays a vital role in drawing the attention of the House to the weaknesses in proposed legislation. However, once the legislation has gone through, its work, inevitably, is done. At that point, it is the SLSC that has to consider, examine and, where necessary, draw the House’s attention to the real-life consequences of what has been passed. The SLSC is supported by expert, informed and very hard-working staff, who will examine some 600 to 700 regulations every year. As my noble friend Lord Blencathra said, each of these binds on every citizen of the country as firmly as any primary legislation.

If I may use a cinematic analogy, the DPRRC takes a snapshot; the SLSC is a cine camera, recording the changes that go on week by week, month by month, as the regulations are brought forward. We have been concerned that our cine camera has seen yet more changes since the time we produced Government by Diktat. We have produced two subsequent reports: What Next? The Growing Imbalance between Parliament and the Executive, which we published in April last year, and then Losing Impact: Why the Government’s Impact Assessment System is Failing Parliament and the Public in October. While these two reports will come to be debated another day, they do provide important contextual background to the issues that concern us in Government by Diktat.

The concerns of the SLSC can be grouped into two primary pieces. The first is the growing misuse of secondary legislation. Secondary legislation should be restricted to what it says on the tin: issues of secondary importance. But, increasingly, this is not the case. My noble friend referred to the long-running saga of Henry VIII powers, but recent years have seen increasing use of what have become known as framework or skeleton Bills—or, perhaps more accurately, framework or skeleton clauses in Bills. As we pointed out in our report, these skeleton clauses are so devoid of content that they leave the real, practical application of the law to a ministerial pen or to regulation.

Now, again as my noble friend said, there are understandable reasons why regulation has to be used in various places. Particularly in the area of technology, the rate of change is faster than the rather stately pace of primary legislation can encompass. Regulation has to fill the gap. That is understandable and entirely reasonable. Less attractive is the impression that the intellectual heavy lifting required to think the policy right through has too often been avoided in favour of essentially making it up as you go along. Even more worrying is the possibility that Ministers do not even wish to have detail in primary legislation, because of the embarrassment if it proves that the wrong choice has been made: much easier to reset the policy direction by using secondary legislation.

Nobody in your Lordships’ House could reasonably argue that secondary legislation is as effectively scrutinised as primary. In part, this is a question of time—witness the number of regulations we have—but, much more importantly, it is a question of process. Secondary legislation is unamendable: it can be passed or rejected but it cannot be amended. For this reason, neither House has proved keen to press the button marked “reject”—and, on the very rare occasions where your Lordships’ House has pressed the button, we have had almost immediately the constitutional equivalent of full-scale nuclear war.

As issues coming through secondary legislation become more and more fundamental, I fear that the existing scrutiny procedures are proving less than adequate for the increasing weight placed on them. That is the summary of the SLSC’s worry about the big picture, but at the same time there are some disturbing short-term trends about the way the Government are increasingly casual about providing the information required under existing statutory provisions which is necessary to enable the House to scrutinise in sufficient detail and hold the Government to account.

There are two major areas. The first is impact assessments. I shall give the House some indication of what this means. Every regulation that has an impact of more than £5 million is supposed to have an assessment tabled at the same time as the regulation is tabled. I shall cite a practical example to give a bit of colour. The House will recall the controversy around the Government’s decision to require the compulsory vaccination of care home staff in the latter part of the pandemic. The wisdom or otherwise of that policy is nothing to do with the Secondary Legislation Scrutiny Committee, but the decisions that lie behind it are, and they are of such importance for the Committee to draw them to the attention of the House. The two essential issues were how many care home staff were likely to resign as a result of being forced to be vaccinated, either because they had religious views about it or, in the case of women, because they had worries about their fertility, and the long-term issue of the knock-on effects for the social care system and hence for the health service. When the regulations were laid on 20 June there was no impact assessment. We asked the Minister to attend our meeting on 13 July. He did, and we explained to him our concerns about the lack of an impact assessment. He agreed that there should be one and undertook to publish it. He did, on 9 November, four months later. In the event, by that point the policy was done and dusted.

The second area that we are very concerned about is that there is a statutory requirement for every regulation to be subject to a post-implementation review. In evidence to our committee, Christopher Carr of the Better Regulation Executive said that now only between 25% and 40% of regulations are so subject. Post-implementation reviews reveal what happened when hope and expectation met reality, and they surely have to be an important part of improving government performance and holding the Government to account.

Finally, and importantly, there appears to be absolutely no process for sanctioning Governments where their performance falls below what is statutorily required. Not only is this treating Parliament with disdain, but it is undermining confidence in the process of government more widely. As my noble friend Lord Blencathra said, providing opportunity for wider public scrutiny and challenge leads to not only better legislation but better accepted legislation.

So what needs to be done? It is no good just moaning on. There are two things the Government can do. First, they need to stop justifying the present procedures by claiming that this House has to approve all regulations. Technically that is true, but when the alternative is constitutional nuclear warfare, it is hardly a fair and open-minded decision. The Government should be more honest about this when they come to discuss these processes. Thy should also cease to claim that changing scrutiny legislation procedures would result in the whole work of government being gummed up. That is not right. Many aspects of the present procedure work perfectly adequately. What is needed is some form of triaging process to sort the sheep from the goats, the very important from the less important and the unimportant. About two-thirds of regulations that the SLSC examines are entirely technical. They are concerned with changing processes, upping fees or fines to reflect inflation and so on. There is no real concern as far as that goes.

Secondly, for the bulk of the remaining regulations, there needs to be a proper grip on process, the weakness of which I have talked about, so supporting documents and regulations are tabled in a timely manner and only in the most exceptional circumstances are regulations rushed through. That would have a sufficiently uplifting and effective result on this section to justify continuing with what we have at present.

Thirdly, for that small number of skeleton clauses, a new procedure needs to be developed. How might this work? I quote from the DPRRC guidance to Parliament:

“Skeleton legislation should only be used in the most exceptional circumstances. Where the government decides that such exceptional circumstances apply, the delegated powers memorandum should make an explicit declaration (“a skeleton legislation declaration”) that the bill is a skeleton bill or clauses within a Bill are skeleton causes.”


That should trigger a new scrutiny procedure to be agreed by the two Houses of Parliament, a process in which the House of Commons must play the leading role. As my noble friend said, this is not a Lords versus Commons issue and the Government must not be allowed to get away with that. This is about the legislature, the two Houses of Parliament and their powers vis-à-vis the Executive, the Government. For that new procedure to be effective, I have little doubt that there will need to be a power to amend.

We read frequently of a decline in confidence in our system of government to deliver effective, thought-through solutions. We are discussing today ways in which the system has been performing less well than it should. Within a few weeks, your Lordships’ House will begin proceedings on the Retained EU Law (Revocation and Reform) Bill, by any standards the grandfather of skeleton Bills and Henry VIII powers. If I judge matters aright, there is a mood in your Lordships’ House to see whether this Bill can provide a focus point to discuss the various suggestions for improvement in scrutiny that have been made. I very much hope that His Majesty’s loyal Opposition and my noble friend the Leader of the House on behalf of the Government will be able to respond constructively to these concerns.

--- Later in debate ---

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, it was 12.09 pm when my noble friend Lord Blencathra got to his feet, and now it is not far short of 4.09 pm, so I shall be extremely brief. I begin by adding my thanks to the noble Lord, Lord Prentis, for his extremely splendid maiden speech, and I add my thanks to the clerks, to Christine Salmon Percival and the team at the SLSC. I thank all Members of the House who have spoken today. We have had some tremendous speeches, and a rich menu of suggestions and ways forward have been put forward for us to consider and reflect on. If the House will forgive me, I would particularly like to thank my fellow members of the SLSC who have taken the trouble to come along and speak today.

I was not surprised, but I was very pleased, at the degree of Back-Bench support from across the House. The road to constitutional reform will be rocky, long, steep and stony and it will be traversed only with a maximum degree of cross-party support from the Back Benches. It will be vital that we reach out to our similar-thinking colleagues in the House of Commons, again on a cross-party basis, or the slur that this is the unelected Lords trying to tell the elected Commons how to do their job will be game, set and match.

I say to the noble Lord, Lord Collins of Highbury, that I recognise what a difficult line he had to follow, with the seductive thought of government, perhaps, within a couple of years. As my noble friend Lord Blencathra said, he dealt with that well. I am delighted to hear his support for the recommendations. I think that he and his party hold an important key, to unlocking the way forward in this particular regard. Without wishing to flatter him, he has a particular responsibility and ability to make things happen, if he and his party so wish. So, we will be watching carefully what he thinks about this in a more measured way.

Finally, my noble friend, the Leader of the House is as ever a polished and practised parliamentarian. He does not give much away; he always gives a very well-thought-through performance, which I enjoy hearing. I am grateful to him for his reassurance about various aspects of impact assessments. I was also grateful for his undertaking to reflect on what we have been doing. As a background to that reflection, I remind him of Admiral Beatty’s saying at the Battle of Jutland. He said:

“Damn the torpedoes, full steam ahead”.


If that was the conclusion of his reflections—that we should go full steam ahead and damn the torpedoes—I think that would be a mistake.

Motion agreed.

Elections Bill

Lord Hodgson of Astley Abbotts Excerpts

Lords Hansard - Part 1 & Committee stage
Monday 28th March 2022 Lords Chamber

[Lord Scriven (LD)]

The noble Lord is just slightly ahead of me, because I was going to come on to that. I will answer his question, but I was just pointing out very clearly the inconsistencies in what happens at local level. I will then answer his question on the other issue with what I was going to say, because if the Bill passes in this form, we will have to consider that. Will the Minister explain in very simple terms, to somebody who is not an expert in elections but just an ordinary citizen, how that can be justified? There must be a sense of fairness as the basis for people voting at local elections.

On national issues, if the Bill passes, we could also be in the situation referred to by the noble Lord, Lord Grocott. Take somebody who has not been in this country for 50 or 60 years: they have no family here; they do not pay taxes here; they left when they were 18 and have never worked here. They will be able to vote. At the same time, there are some people who have been here for 20 or 30 years, who pay their taxes and work here, but because of their status, they cannot vote. Can the Minister explain how that would be perceived as fair and a good platform for our electoral process? It seems to me that this is an important matter. This is the whole basis on which people not just pay tax and are citizens but actually influence services and taxes that affect their very life by being resident here. But as the noble Lord, Lord Grocott, said, if the Bill passes, people who have not lived here for 50 years will have the right to vote and influence government policy, even though it does not directly affect them.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I wish to send my good wishes to my noble friend Lord True. I hope that if he has got Covid at all, he has it very mildly—he might think that preferable to another day on this Elections Bill Committee. I certainly wish him well, as I am sure we all do.

I made common cause with the noble Lord, Lord Wallace of Saltaire, on various occasions in the past, and I shall do so again when we get to Amendment 197 in group 6 on donations. However, I am afraid that I part company with him on this occasion, and I take a rather different—some might say old-fashioned—view.

I go back again to my Select Committee on Citizenship and Civic Engagement and some of the evidence that we got and lessons that we learned while going through that episode. As good citizens, we all have rights, but we have an equal and opposite number of responsibilities. Unless each of us understands the balance between those two things, our society might become fractured.

One of the things that most obsesses me about our modern society is the increasingly widely held view that to compromise is to show yourself as weak. Modern social media shows us with reinforcing messages that we are right—and we all want to be proved right—and has fed that view in a very bad way. But compromise is the oil that makes our society work, and without it, as I said, it will become fractured and tense. I am spending a few seconds on this because it shows what a highly complex matter it is to be involved in the detail of a country—the balance that needs to be struck and for which, for younger people, good citizenship education is really key and important.

--- Later in debate ---

[Baroness Scott of Bybrook (Con)]

Understood. Listening to the debate, two words have come out, and we will reflect those. One is “safeguarding”, and one is “transparency”, as the noble Baroness has just said. Those two things are important as we move forward with the Bill.

The provisions in Part 6 of the Elections Bill will introduce one of the most comprehensive “digital imprint” regimes operating in the world today; that is the positive thing. However, it is crucial to take a proportionate approach to the scope and application of the regime to ensure that it is enforceable and to avoid stifling political debate. It is for this reason that the Government do not support the noble Lord’s amendments, as we consider that they would introduce unreasonable burdens on campaigners and therefore risk restricting freedom of expression.

Due to the way some digital platforms are designed, it will not always be practical to display the imprint as part of the material itself—for example, in a text- based tweet where there is a strict character limit. Amendment 180A would not give campaigners the much-needed level of flexibility and therefore risks unreasonably hampering their ability to campaign on particular digital platforms. I have listened to the points made about new technology coming out; it is important that we keep an eye on that, so that if that is possible in the future—

[Lord Hodgson of Astley Abbotts (Con)]

I am not asking my noble friend to reply this evening, because this is a complicated question, but I think I heard the noble Lord, Lord Clement-Jones, say that the digital material would not have to have an imprint on itself and that it could refer you by a link to another page. If that is the case, we could have a situation where if you are retweeting things, you may get even further away from the reality of what is happening. It was also not clear to me, because of the Government’s reaction to an earlier amendment, whether a third-party campaigner had to disclose on their home page that they were registered as a third-party campaigner. I am not sure that I have the links quite right here. If the noble Lord, Lord Clement-Jones, was correct, perhaps my noble friend could unpick that when she writes to us after today. I am not asking her to reply to that now.

[Baroness Scott of Bybrook (Con)]

I take note of that and will make sure that my noble friend understands the unpicking of all of that.

I reassure the noble Lord, Lord Clement-Jones, that this flexibility does not amount to allowing campaigners to place the imprint wherever they want. Under our regime, campaigners would be required to ensure that their imprint is displayed as part of the material and only when this is not reasonably practical may the imprint be located elsewhere—as my noble friend said—but it must still be directly accessible from the campaigning material. Those who do not comply will be committing an offence.

Turning now to Amendment 194A, the Government are mindful that transparency requirements on campaigners remain proportionate and that they are not unduly discouraged from participating in public life. Candidates and registered campaigners already have to detail their electoral spending in their returns to returning officers and the Electoral Commission and provide invoices for payments over a certain amount. Invoices provided to the Electoral Commission are then made available for public scrutiny. The practicality and impact on campaigners of requiring them to submit more detailed invoices or receipts about digital activity would need to be looked at very carefully, as the detail provided is determined by the suppliers themselves and not necessarily by the recipient.

Similarly, in relation to Amendment 196A, the Government welcome the steps already taken by many social media companies in this area. We continue to keep transparency rules under review, but given the steps taken already by platforms such as Facebook, we do not propose to mandate centralised libraries of digital political content. Requiring all campaigners promoting paid political advertising to themselves maintain a library of those adverts with specified information for at least 10 years risks adding a significant and unreasonable administrative burden on campaigners, particularly smaller groups that rely on volunteers or groups that are established only for the lifetime of a particular election campaign. We know that some small campaigns happen and, in our opinion, keeping a library for 10 years would be unreasonable.

Elections Bill

Lord Hodgson of Astley Abbotts Excerpts

Lords Hansard - Part 2 & Committee stage
Monday 28th March 2022 Lords Chamber

[Lord Sikka (Lab)]

My Lords, I will speak to Amendment 212. It is a great pleasure to follow the noble Lord, Lord Wallace, and I also fully support the position taken by my noble friend Lady Hayman on this Bill. There are a number of amendments here which all have a common concern with preventing abuse and ensuring that there is a level playing field, and my amendment is a contribution to that. Amendment 212 seeks to end abuse of “permissible donors” and prevent the flow of foreign money into UK political parties.

The Political Parties, Elections and Referendums Act 2000 was really shaped by the Committee on Standards in Public Life’s fifth report, which was published in October 1998 under the chairmanship of Lord Neill of Bladen. In developing its recommendations, the committee invited evidence and considered the issue of foreign donations at some considerable length—chapter 5 of the report covers that. In its evidence to the committee, the Conversative Party stated:

“in the future we will not accept foreign donations.”

That appears on page 69 of the report. There was concern about abuse, and on page 74 the Neill committee report said:

“It is possible to imagine that a foreign corporation wishing to evade the underlying purpose of the provisions which we advocate might cause to be brought into being a UK subsidiary, the sole function of which would be to receive money from the foreign corporation and then channel it to the political party of its choice. This would clearly be an abuse of the system”.


That is a very powerful statement. The committee recommended that the legislation should consider:

“making it a criminal offence to attempt to evade or to render nugatory the statutory provisions limiting donations to those coming from ‘permissible sources’. It would, for example, be a crime for an individual in the United Kingdom, who did not, himself or herself, have the resources to make a large donation, to become a mere conduit pipe through which foreign money was channeled to a particular party.”

The legislation has been grossly circumvented and exploited. I will give a couple of examples of this—that is all I will have time for, although I am sure that the Ministers may be able to add more examples, given their experience and knowledge of the party. The first example relates to Lord Ashcroft, who was once upon a time a treasurer of the party. Around 2008 and 2009, I was asked by a number of media outlets to investigate his donations to the Conservative Party, which added up to £5,137,785. These donations were made by a company called Bearwood Corporate Services, a limited company registered in the UK. However, it never had sufficient profits to be able to pay the donations. My investigations uncovered a complex network of corporations behind it, and the aim of this network was to obfuscate the money trail.

The trail of money began with a company called Stargate Holdings Ltd, which was based in Belize and controlled by Lord Ashcroft. The moneys went in various packages from there to a UK-based company called Astraporta (UK) Ltd. From there, the moneys went to another company called Bearwood Holdings Ltd, and then from there to Bearwood Corporate Services Ltd, and then from there to the Conservative Party. The attempt was to disguise the origins. None of the companies disclosed the payment of political donations. They were all carefully constructed to ensure that they met the definition of a small company, because small companies do not need to disclose political donations. The UK companies involved in this chain either did not trade at all or had insufficient profits to enable them to make the donations. For all practical purposes, the moneys came from Belize and were finally handed over to the Conversative Party. I am sure that a lot of legal advice would have been taken in order to complete that particular route. Clearly, the moneys originated from abroad.

I reported the matter to the Electoral Commission. I told the commission that I was investigating it and what I had initially found. At the minutes of a meeting, the commission noted that it had heard from me. However, in the end, no action was taken by the Electoral Commission.

The second example, which has already been cited, relates to the company called Aquind. This company was incorporated in the UK in 2008, and over many years it remained dormant, but it has paid large sums of money to the Conservative Party. As recently as 2019-20—I have looked at its accounts—the company had no turnover. Indeed, it had no turnover at all at any time in its life. It never made any profit. So, the donations made by the company to the Conservative Party did not originate from any trade or profit in the UK; they obviously came from abroad. The company says that it is ultimately controlled from Luxembourg. I have not looked into who controls the Luxembourg entity, because there is not sufficient time, but I would be happy to take that assignment for the Conservative Party if it wished.

These two examples show how determined donors have been able to play our legal system and bypass it by carefully constructing transactions, and that is not helpful. My suggestion is that companies that make political donations should be able to make them only if they have sufficient realised profits. The term “realised profits” is well understood in the Companies Act. It is nothing new, so I am connecting to it. It generally means the company must generate profits that must result in cash or cash equivalent. If it is not trading, it cannot generate realised profits. This is a way of ensuring our legal system is not abused.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I put my name to Amendment 200 of the noble Lord, Lord Wallace, and I have Amendment 210 of my own. The noble Lord, Lord Wallace, has done most of the heavy lifting on Amendment 200, as he explained. I joined with him because I thought that, where we dealt with donations and national security risk, an additional power for the Electoral Commission—the fit and proper test—might be helpful. I tabled the amendment separately, and then, as the noble Lord explained, we wound them together so they are now one amendment.

The concept of a fit and proper test is well developed. Importantly, it lies at the heart of the powers of the Financial Conduct Authority and other financial regulators. It is important because it can put under the microscope the behaviour of individuals, not just a company itself. It has been found that, when people find that they themselves are going to go under the microscope as opposed to the company they work for, that tends to concentrate the mind rather wonderfully. The fit and proper test has a number of aspects to it that might usefully form part of the Electoral Commission’s armoury: honesty, integrity, reputation, competence and capability and financial soundness, all of which would be helpful for the Electoral Commission to have.

What I was seeking to do with the amendments here was propose a similar arrangement in respect of donations from overseas where there was a security risk. This amendment is not going to try and lay down what the fit and proper test should be in respect of this area, because that will need to be done specifically. I just gave the examples from the financial regulator to show the sorts of areas I think the Electoral Commission could usefully focus its activities on. This amendment, along with the broader amendment that the noble Lord, Lord Wallace, tabled, will give the Electoral Commission a full set of tools to police this important part of our national life.

I briefly turn to Amendment 210, which is also in this group. It is a probing amendment—it is not in a final form by any manner of means—but it would prohibit individuals or companies donating to registered political parties where they have been awarded government contracts of more than £100,000. The broad purposes would be to prevent conflicts of interest, to mitigate any appearance of impropriety relating to the awarding of an individual contract, and to contribute towards maintaining public trust and confidence after a number of scandals—Greensill springs to mind.

Business of the House

Lord Hodgson of Astley Abbotts Excerpts

Thursday 17th March 2022 Lords Chamber

[Lord Grocott (Lab)]

My Lords, just to reinforce what has already been said, may I say that the problem is simple and so is the solution? The problem is that the Government are trying to do too much in one parliamentary year, and it derives from the Queen’s Speech. In the 10 months, or however long it is, since the previous Queen’s Speech, too much legislation has been put into the package.

This is not a great issue; there is plenty of time available in this House for legislation. The Government have been having Thursdays since I do not know when, and we have been sitting early and sitting late. Discussions will now be well advanced on the content of the Government’s legislative programme beginning in May—we do not know, or at least I do not, which day in May—and the Leader of the House should be tackling her Cabinet colleagues and getting them to obtain a grip now. Recognising that the Commons can guillotine legislation, and so can process it much more quickly than we in this House can—that is one of our great strengths—it is a matter of judgment as to how much can be put through during a 12-month period.

As the Leader of the House knows, she has a responsibility not just to her party but to the House as a whole. I would like a reassurance from her that she is tackling her Cabinet colleagues and telling them that they are trying to pile too much into a year for this House. With our much looser timetable for discussing Bills as they go through—that is our strength—unless this is tackled now, we will face exactly the same problem in the next 12 months. This is my specific question: is the noble Baroness tackling her colleagues in the Commons? Is she the only Member of this House in the Cabinet these days? I have lost count. She nods her head. It is particularly important, then, that she take that responsibility, and on behalf of the House, I urge her to do so.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, before my noble friend replies, may I ask her to reflect on the fact that this is a self-regulating House, and a self-regulating House requires a degree of self-restraint—in the number of amendments tabled, the number degrouped, and the length of the speeches made in pursuit of them?

[Baroness Neville-Rolfe (Con)]

My Lords, I share the concern about issues of major importance being debated in the middle of the night. Last night the noble Baroness, Lady Sugg, moved a very important amendment. I was not able to speak, because there was not enough time, and we could not get answers about the implications of her proposal, because it was a late amendment. Where we have something fairly major like that, it is important that we do not just debate it in the middle of the night.

Financial Services Bill

Lord Hodgson of Astley Abbotts Excerpts

Committee stage
Wednesday 10th March 2021 Grand Committee

Moved by

[Lord Hodgson of Astley Abbotts]

108: After Clause 40, insert the following new Clause—
“Duty to take account of impacts on sustainable good work
(1) When undertaking duties and using powers under the Financial Services and Markets Act 2000, the FCA must take into account—(a) the impacts or potential impacts on sustainable good work in the United Kingdom as a consequence of the provision of financial services with particular regard to the evaluation of—(i) net gains in total employment;(ii) quality of work available;(iii) terms and conditions of work available;(iv) opportunities for training and reskilling;(b) the desirability of providing financial services and investment supporting the creation of sustainable good work across the United Kingdom; and(c) the desirability of advancing the international reputation of the United Kingdom for promoting inclusive and sustainable economic growth and decent work for all pursuant to the United Nationals Sustainable Development Goals.(2) The FCA must publish guidance to organisations providing financial services about fulfilment of the requirements specified in subsection (1)(a)(i) to (iv).(3) In this Act, “good work” means work which provides and promotes—(a) fair pay;(b) fair conditions;(c) equality and freedom from discrimination;(d) dignity;(e) autonomy of workers;(f) physical and mental wellbeing; (g) access to institutions and people who can represent workers’ interests;(h) participation of workers in determining and improving working conditions;(i) access to facilities for career guidance and training.”

[Lord Hodgson of Astley Abbotts (Con) [V]]

My Lords, I move Amendment 108 and speak to Amendments 109, 110 and 122, which, collectively, take us into a fresh policy area. I thank the noble Lord, Lord Knight of Weymouth, and the noble Baroness, Lady Bowles of Berkhamsted, for their support. Support is always welcome and cross-party support is doubly so when, as I say, we enter a new policy area.

I draw the attention of the Committee to my entry in the register of interests, which shows that I am the chairman of the Founder Circle of the Institute for the Future of Work. It is the research that I have seen undertaken by the IFOW that provides much of the background to and reasons for my tabling these amendments.

It is widely argued that there is a high and perhaps growing level of dissatisfaction with how our system of government operates—or perhaps some would say how it fails to deliver a fair distribution of economic and other advances. The result has been a series of what one might call “uprisings” against what is seen by many as the conventional establishment view; the Brexit vote in the UK and the election of President Trump in the US are but two examples. Although both those events are behind us, there will surely be aftershocks that will shape our society over the next decade or so.

--- Later in debate ---

[Earl Howe (Con)]

My Lords, I am grateful to my noble friend Lord Hodgson for directing the Committee’s attention to a set of issues that lie at the heart of the agenda for workers’ rights and social justice in the workplace. Let me begin by saying to him that the Government are committed to making the UK the best place in the world to work, and I found myself in considerable sympathy with a great deal of what he said about the connection between employee well-being, high-quality work and national prosperity.

The Government certainly have a role in furthering those ends, and I hope that my noble friend will agree that we have already made good progress in bringing forward measures that support our flexible labour market, while also ensuring the protection of workers’ rights, such as: banning the use of exclusivity clauses in zero-hours contracts; extending the right to a written statement of core terms of employment to all workers; closing a loophole whereby agency workers are employed on cheaper rates than permanent workers; introducing a right for agency workers to receive a key facts page when signing to a company; and quadrupling the maximum fine for employers who treat their workers badly.

The Government are committed to bringing forward measures to establish an employment framework that is fit for purpose and keeps pace with the needs of modern work practices, in due course. We are also committed to building back better from Covid-19. Alongside the Budget, we published our wider economic plan for significant investment in skills, infrastructure and innovation, in Build Back Better: Our Plan for Growth.

During the pandemic we have taken unprecedented action to protect jobs, most notably through the coronavirus job retention scheme—one of the most generous such schemes in the world. And from April 2021, the national living wage will increase by 2.2%, from £8.72 to £8.91, and will be extended to 23 and 24 year-olds for the first time. Taken together, these increases are likely to benefit around 2 million workers.

I fully appreciate that if we are to build back better, progress should be measured by more than just dry economic trends. However, most people would agree that a large part of human and civic well-being lies in people’s livelihoods, and I remind the Committee that in last week’s Budget the Chancellor set out his plan to protect the jobs and livelihoods of the British people.

Amendments 108, 109, and 110 would essentially require the FCA to have regard to “sustainable good work” when conducting their functions, and to embed this principle in the financial system as a whole. Financial services firms would then be required to apply the principle in all their activities, including investment decisions.

The FCA is responsible for a large number of firms and has been given three operational objectives: to protect consumers; to protect and enhance the integrity of the UK financial system; and to promote competition. So I am afraid I do not believe that the FCA is the right body for this function, given its current role, particularly as the issues go far beyond the subject of financial services.

Amendment 122 would require the FCA and the PRA to consider the impact of employee share schemes on sustainable economic growth. The Government want to support hard-working people to share in the success of the businesses for which they work. To encourage this, we offer several tax-advantaged employee share schemes. These provide a range of tax benefits to participating employees and businesses. We keep all employee share schemes under review, to ensure that they remain effective in these ways.

However, once again I do not believe that the UK’s financial services regulators are best placed to carry any changes forward. It is important that they remain focused on their core objectives. Giving them a diffuse set of objectives could undermine focus on consumer protection, financial stability and the sound functioning of financial markets. The body best placed to keep employee share schemes under review is the Government, and we see no need to impose this additional condition on the FCA and the PRA. So, while I am the first to acknowledge the importance of the matters that my noble friend has raised in this debate, I hope he will understand why I do not think it appropriate to amend the Bill in the way that he proposes.

[Lord Hodgson of Astley Abbotts (Con) [V]]

My Lords, I am exceptionally grateful to everybody who has taken part in this debate, including the noble Lord, Lord Knight of Weymouth, who was the first to raise the concept of building back better, which was later picked up by everybody, including my noble friend the Minister.

I am grateful to the noble Baroness, Lady Bowles, who always brings a degree of detailed and forensic expertise to these areas. Of course, I am well aware of her work with the employee share ownership association, as I am of the work of my noble friend Lord Holmes of Richmond on employee ownership trusts, which are critical. I share the interest of the noble Lord, Lord Tunnicliffe, in finding out the results of the consultation that is under way in this general area. It is not often that I find myself supported by the noble Baroness, Lady Bennett of Manor Castle, but I am glad to have her along for the ride. The noble Baroness, Lady Kramer, was certainly right to remind us all how fast everything is changing and that we need to make sure that we are not trying to tackle yesterday’s problems and failing to tackle tomorrow’s.

I am not surprised that my noble friend the Minister could not accept these amendments. He rightly emphasised the work that the Government have done both in employment generally and as a result of the pandemic. If he had accepted the amendments, I probably would have fainted with surprise and been unable to reply to the debate. However, this issue is not going to go away. The weakness of our present regulatory system is that it merely catches and tries to prosecute the bad. In this part of the century, given all the challenges we face, the system should be doing more than that; it should be encouraging the good. This is an area where good could be encouraged, and that would have a huge trickle- down effect on our society as a whole.

Perhaps I may leave noble Lords with a quote from Robert Kennedy, who said that GDP measures

“everything … except that which makes life worthwhile”.

I beg leave to withdraw the amendment.

Amendment 108 withdrawn.

Financial Services Bill

Lord Hodgson of Astley Abbotts Excerpts

Committee stage
Monday 8th March 2021 Grand Committee

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, in moving this amendment, I shall make comments that reflect in part on EU relations and therefore on the other two amendments in this group.

As the explanatory statement says, this is a probing amendment in order to discuss equivalence determinations and processes and the role of reciprocity. The amendment states:

“The Treasury may not make an equivalence decision unless it has determined that a third country has equivalent legal and supervisory standards, and it may not make a determination based only on agreement to make reciprocal determinations.”


Broadly speaking, the first part of the amendment restates the usual equivalence requirement, and in the second part I am hoping that the Minister can explain how equivalence through trade agreements or reciprocal equivalence agreements will work. Will those mechanisms be allowed to dilute the standard set through the usual requirement?

We have heard a lot about trying to get equivalence with the EU. My position has always been that it was a remote possibility without rule taking, or dynamic alignment as it has become called. It also seems to me that the way in which the UK wants to operate, with the regulator making rules that can be flexible, makes it more difficult, or even impossible, for the EU, and maybe some other jurisdictions, to agree equivalence. That is because it ends up not being about rules—because in the UK they will be able to flex and vary—but about supervisory equivalence, or, as the noble Viscount, Lord Trenchard, called it, the outcomes. That is more subjective, a matter of opinion and confidence in supervisors rather than an objective analysis of rules.

This reasoning also lies behind what some noble Lords may see as my obsession with getting more information out of supervisors and for regular independent reviews. How else are we, let alone another jurisdiction, going to know what really goes on? Even less demanding jurisdictions than the EU, such as Australia, once they have set up independent scrutiny of their own regulators, may begin to wonder what they know about ours.

Our regulators will say that they have good and friendly relationships with other regulators and that they are respected and so on—all the presentations that they have repeatedly given to committees about why there would be equivalence with the EU in the end. They have been wrong so far, and I am not holding my breath. The statutory instruments currently underpinning legislation will be progressively taken away. I am sure that the EU will read these debates where the Minister has repeatedly stated how FSMA will enable rules to change quickly and be made bespoke and that is why Parliament cannot be let in too much. One hopes that means that rules will change to close gaps and adapt to new types of business, but there is nothing anywhere that says that. It can easily be interpreted as an intention to ease here and there, just like the tailor if we eat a little too much.

I am not trying to be awkward. I have sat in discussions with the European Commission at a time when my committee was concerned that the EU was being too rigid on equivalence. I have had to explain that equivalence was sometimes—in fact, quite often—of mutual benefit. That instinct to have things fixed and controlled between member states ran through every piece of legislation in one never-ending grind, as elaborated correctly by the noble Viscount, Lord Trenchard, on the previous amendment, although we may come from opposite positions. Such an instinct is stronger in financial services than in any other sector because of the philosophical commitment to the euro, whether or not that is relevant. Yet, somehow, it is still hoped that the EU can work out how to deal with this squidgy balloon that defines UK financial services rules. All I am saying is that we have to recognise that if we want the squidgy balloon way and the outcomes way, there are consequences when it comes to equivalence decisions.

That is looking at it from the outside. The other side of it is the inside. What are our rules and supervisory standards that other countries will have to be equivalent to? How is that judgment to be made? Will it be a rule book by rule book comparison or will it really be mutual recognition of supervisors, and if so, based on what? How will that assessment be done? Will HMT agree reciprocal equivalence with anyone when it sees an opportunity for export of financial services and assumes that not much will be incoming back to the UK, or will UK standards be lowered to match those of incoming equivalent businesses from the third country? Will UK firms be allowed to drop standards when operating overseas? To come back to my amendment, will the Government allow weaker standards, through trade agreements and reciprocal equivalence agreements, and how will consumers and financial stability be protected?

The example of software being allowed for capital is a convenient one, although there are probably bigger things. I kept that out of EU legislation but the UK could not hold the line on that this time round. The US has also allowed it. Where does that put banking equivalence for us in relation to the US and, should it ever be on offer, the EU? What top-up supervision or other requirements will go on?

It will be clear that I am less obsessed by getting reports on the EU situation as required by Amendments 100 and 105—although I will happily read them and wonder what is new. I am more obsessed with what standard is really being required by the UK of other jurisdictions to permit equivalence by any route and, in turn, how that will reflect back into our own supervisory standards. I beg to move.

[Lord Hodgson of Astley Abbotts (Con) [V]]

My Lords, I have Amendment 105 in this group, which is also a probing amendment, and seeks to insert a new clause in the Bill about regulatory co-operation with the EU. In her Amendment 90 the noble Baroness, Lady Bowles, called for actions. Amendment 105, as the explanatory statement makes clear, is a reporting mechanism to report on progress towards or completion of an MoU with the EU on regular co-operation measures, which were envisaged under the trade and co-operation agreement between the UK and EU as regards financial services. The amendment flows from my chairmanship of the Secondary Legislation Scrutiny Committee of your Lordships’ House.

Last autumn, the committee considered a number of statutory instruments, which have granted equivalence to oversight and regulatory arrangements in the EU in the area of financial services. Mostly they were laid by the Treasury but some were laid by another departments. It was not clear to our committee whether the SIs were all part of a potential agreement with the EU or whether they were unilateral individual decisions. We wrote to John Glen, the Economic Secretary to the Treasury, as follows:

“Equivalence in relation to the regulation of financial services is an important aspect of our future relationship with the EU. In several of the instruments that we have considered, the UK appears to have granted equivalence indefinitely, while the EU has not yet completed its assessment of the UK’s equivalence (for example in relation to the regulatory regime for auditors) or has granted only time-limited equivalence (for example limited to 18 months in the case of the supervisory arrangements for central counterparties).”


Against this background, we asked for further and better particulars on three points:

“A list of the equivalence decisions made by the UK Government in the different areas of financial services regulation. Whether the EU has reciprocated and granted equivalence to the UK and its regulatory arrangements in these areas. Whether equivalence by the UK and EU has been granted indefinitely or is time limited.”


The reply on 7 January, which I referred to in my speech at Second Reading, was not a model of clarity and precision. Phrases like

“a package of equivalence decisions”

and “the majority of decisions” do not help critical analysis. The correspondence between the noble Lord, Lord Butler, and my noble friend Lord Agnew at Second Reading, which followed this and circulated among all who participated in that debate, seemed to follow the same generalist approach.

However, John Glen’s letter did make one thing clear, that

“there are no decisions made by the EU that have not been reciprocated by the UK.”

As such, to date, it has been a one-way street. That is not necessarily a bad thing, but Parliament and the country are entitled to, and should, know about the development of our relationship with this most significant and geographically proximate market in a sector of particular importance to the United Kingdom—hence my tabling this amendment.

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, I am delighted to follow my noble friend, and I thank him and the other authors of the amendments in this group.

This is a particularly appropriate moment to state that “taking back control” has possibly worked less successfully in the financial services sector than in any other since we left the European Union, with Amsterdam having overtaken us as the largest share-trading centre. There are generally understood to be four options for trade in financial services with the EU. First, there is passporting, which we enjoyed and was very beneficial not just to the London Stock Exchange but, I venture to add, other centres, such as Edinburgh, Leeds and other financial centres in the United Kingdom; it was the most seamless form of trade in financial services. Secondly, there is trade on World Trade Organization terms and, thirdly, free trade agreements, such as that agreed between the EU and Canada, although I am not convinced that it covers financial services or services as a whole. Finally, there is equivalence. If we are not able to revert to passporting, and I understand that we are not, that would be a good way forward. My understanding is that equivalence is where a decision is made by one state to recognise another state’s legal requirements for regulating a service, even though they may not be the same—so, clearly, it is not as good as passporting.

I very much enjoyed the introductory remarks of the noble Baroness, Lady Bowles, and I support each of the amendments in this group for differing reasons. Obviously we will not have the chance to hear from the noble Lord, Lord Tunnicliffe, until he speaks to his amendment, but all three of the amendments in this group would, I believe, further the case for equivalence with the European Union.

Time marches on, and we obviously realise that the trade and co-operation agreement with the European Union left out this major sector of financial services. So I take this opportunity to ask my noble friend the Minister to say, in summing up this debate, precisely where we are with the negotiations and whether we have any chance of reaching an agreement on equivalence under the circumstances and the further particulars as set out by my noble friend Lord Hodgson of Astley Abbotts. I find it deeply regrettable when our own Minister cannot answer three very simple questions in a letter so that our understanding is better. However, with those few remarks, I am minded to support Amendments 90, 100 and 105 for the reasons given.

Financial Services Bill

Lord Hodgson of Astley Abbotts Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Monday 22nd February 2021 Grand Committee

We do not believe that the amendment from the noble Lord, Lord Bridges, or others with similar intent are desirable or necessary. We appear to have more confidence than the noble Lord in the City’s ingenuity, creativity, sheer expertise and professionalism, and in our world-class regulators and current regulatory framework.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, this is the first time I have spoken in Committee, so I draw the Committee’s attention to my entry in the register. I will speak to my two amendments in this group. Amendment 87 is broadly drafted and follows on from the line of discussion and approach taken by my noble friend Lord Blackwell. By contrast, Amendment 106 is a highly specific focused proposal for improving the UK’s regulatory regime, on which I seek the Government’s response.

To take these in order, the purpose of Amendment 87 is to require the FCA and the PRA to take into account the impact on the UK’s competitiveness of any regulatory measures they seek to impose, and in particular, under proposed new subsection (2)(b), to assess the overall cost-benefit ratio of the UK’s compliance regime.

I know that even raising this issue risks one being labelled the money launderer’s or financial criminal’s friend. I plead not guilty to that, but I seek to ensure that our compliance regime is and remains cost effective. As evidence that I am not soft on financial crime, I draw the Committee’s attention to the fact that I have put my name to Amendment 84 in the name of the noble Baroness, Lady Bowles, which seeks to make failure to prevent financial crime a criminal offence, which we will discuss at a later date.

First, I want to consider culture. For too long it has tended to be argued that any money spent on compliance is money well spent. As business practices evolve so to, and quite rightly, should compliance practices, but no one has the responsibility to step back and consider whether some of the requirements of an earlier age remain effective and are still needed—so one has ever-increasing layers of regulation. Regulators are, by their very nature, risk averse. But somehow we have to create a climate in which we can find the right balance between a financial services industry which on the one hand might be seen as a system like the wild west, driving business away, and, on the other hand, a system so muscle-bound by regulation that the consequent time, expense and administrative hassle have an equally deterrent effect. It is to establish a formal mechanism to address this challenge that I have tabled Amendment 87.

We may well be told by my noble friend when he replies to this debate that the regulators are now well aware of this challenge. Of course, that is to be welcomed, but I question how far down that organisation this new mood or culture or approach has spread—and, no less importantly, how far it has spread into the compliance departments of the regulated firms. Too often, waving the regulatory stick has come to be seen as some sort of virility symbol.

The professional body, the Office for Professional Body Anti-Money Laundering Supervision, or OPBAS, in its latest annual report in March last year pointed out, in terms of disapproval, that 41% of professional bodies being supervised did not take any kind of enforcement action. No attempt was made to suggest what target figure was the right one; there was just the impression that not enough was being done and efforts and money spent must be increased. However, if you look at the list of professional bodies being supervised, it is not clear why many of them would need to take enforcement action except on the rarest of occasions. For example, one body being supervised is the Faculty Office of the Archbishop of Canterbury. I doubt that enforcement by the most reverend Primate the Archbishop of Canterbury needs to be a frequent event.

The second general point is that, too often, the attitude among regulators is, “What I have, I hold.” The House will have heard me before on several occasions speak about the poor cost-benefit ratio of the present suspicious activity report regimes, or SARs. Every year the number of SARs rises; in 2019, it reached 573,085, about 2,300 per working day. What use is made of these? The cost of all this to the regulated entities and so to consumers and clients is huge. Let us suggest that each SAR costs £250; that would create a total cost of £143 million for the sector, its customers and clients. Interestingly enough, that is almost exactly the same figure as the total money recovered by the National Crime Agency, cited in the same report, which was £150 million. Therefore, there is equality of cost, and there really seems little benefit at present.

However, to suggest that the system needs an overhaul and pandemonium breaks out. As the NCA report says,

“SARs intelligence has been instrumental”—


note the word “instrumental”—

“in locating sex offenders, tracing murder suspects, identifying subjects suspected of being involved in watching indecent images of children online and showing the movement of young women being trafficked into the UK to work in the sex industry.”

There is no mention at all of financial crime, but the clear inference is that if you wish to challenge the SARs regime, you are abetting these appalling crimes. No wonder that people are nervous about challenging the status quo.

Finally, all this feeds into the compliance departments of regulated firms. For the past 14 years, I have been the treasurer of the All-Party Group on Extraordinary Rendition. I remain extremely supportive of the group, but I would ask for a change, and I am pleased to say that the noble Baroness, Lady Kramer, has kindly agreed to take over. Accordingly, she will take over the bank account of the group and will assume signing authority. The fact that we are both politically exposed persons—PEPs—is causing enormous difficulty. It could be argued that the noble Baroness and I could use the APPG’s bank account for money laundering and financial crime generally, but the fact that we have fewer than 20 transactions per annum would suggest a limited scale for what we are going to do. However, it is clear that the noble Baroness and I will be faced with a paper trail of considerable proportions. It is this sort of mindless form filling and box ticking that is being repeated millions of times over and somebody, somewhere, needs to be charged with addressing this problem.

I turn finally to Amendment 106. It has the specific purpose of trying to improve London’s competitive position by removing, wherever possible, the obvious inequities, unfairnesses and inappropriateness of a one-size-fits-all approach by the regulators and creating in its place a regulative framework that is appropriate and effective as regards those to be regulated.

This amendment concerns the insurance sector, which is a key part of the UK’s financial services industry, and I have been helped with the wording of this amendment by the London Market Group. The group brokers in the main deals of sophisticated corporate clients, who have professional advisers at their disposal. As the FCA’s own wholesale insurance broker market study in 2019 demonstrated, these clients seek the services of a London market broker not because they are want to manage issues caused by information asymmetry—something that we have heard about already this afternoon—but because they recognise that the advanced expertise housed within broking firms can assist them in reaching the optimal outcome for their risk-management programmes. They are not consumers, but they need protection in the way that individual or less sophisticated corporate customers may do.

However, the FCA makes almost no distinction between the way it supervises the London market broker, active in the specialty markets in London, and the way it supervises a retail insurance broker dealing with an individual’s domestic and motor insurance requirements. Amendment 106 is drafted to ensure that that there are no regulatory loopholes that the mal-intentioned can exploit by those with malefic intentions. Proposed new subsection (2)(c) makes clear the distinction between retail and professional clients, while subsection (2)(d) asks whether the client has professional advisers and whether they are PRA or SCR regulated; and importantly, subsection (2)(e) covers any potential impact on the UK’s financial stability.

This amendment does not break new ground because the concept of the experienced investor is already well established. Those who qualify in this category can be offered opportunities to participate in new issues and refinancings with the minimum of fuss. Such a minimalist approach would never be appropriate for the general public. That is the approach the amendment adopts as regards the insurance industry. It makes a clear distinction between the different requirements of the professional and the general client. I hope that my noble friend will be able to give this amendment a fair wind.

[Lord Holmes of Richmond (Con) [V]]

My Lords, in participating with pleasure in this group of amendments, I declare my interests as set out in the register. I congratulate my noble friend Lord Blackwell on how he introduced the group and I agree with everything that he said—and indeed what is contained in the amendment tabled by my noble friend Lord Bridges.

I also endorse what my noble friend Lord Blackwell said on our view of the Basel framework, not least in terms of the issue of software. This is an excellent example of our move towards standards which really deliver, rather than standards which are perceived to be but are not necessarily higher or greater than other regulatory frameworks.

Parliamentary Voting System and Constituencies Bill

Lord Hodgson of Astley Abbotts Excerpts

Wednesday 16th February 2011 Lords Chamber

[Lord Beecham]

Not only that, my Lords, but he was a teller. The noble and learned Lord this morning quoted my noble and learned friend Lord Falconer and I should like to repay the compliment by quoting what the noble and learned Lord, Lord Lloyd, said on that occasion. He said:

“I hope we will vote once more against the Commons amendments. I hope more fervently that we may not have to do so again”.—[Official Report, 21/3/05; col. 23.]

Clearly, he would have been quite willing to do so again, had your Lordships’ House on that occasion not ultimately acceded to the views of the other place. The Leader of the House perhaps ought to rely on rather stronger support than that inadvertently offered by the noble and learned Lord.

I am utterly persuaded by the views of my noble friend Lord Rooker. There are many in this House on all sides who have been persuaded by the force of his logic. I certainly hope that your Lordships will, if necessary—and it seems to be necessary—again approve my noble friend’s amendment and again invite the other place to think seriously about the direction in which it is taking this country and its constitution.

[Lord Hodgson of Astley Abbotts]

My Lords, I shall make a brief intervention. I did not participate in the debate this morning, although I did so at Report, 10 days ago, in a way that I am afraid my noble friend found slightly disobliging. I also voted in a disobliging way then and again earlier today.

I found the amendment of the noble Lord, Lord Rooker, persuasive on four grounds. First, as he has said when he moved it, we should avoid setting or reinforcing the precedent that referenda should not have thresholds. I do not like referenda. We elect Members to go to the other place to take difficult decisions and I think that referenda that decide important issues of public policy with small turnouts are doubly undesirable. The second reason for supporting the noble Lord’s amendment is that it sets the binding, mandatory threshold at a level that would command public confidence. It is the stickability and credibility argument. A 40 per cent turnout, at which 21 per cent, or one in five, will have had to vote in favour, seems to strike the right balance. Thirdly, the amendment means that if there were to be, as I fear there will be, substantially differential turnouts in different parts of the country because of the different types of elections taking place—parliamentary elections, Assembly elections and, in London, no elections at all—those for whom the referendum goes in the wrong direction need to be assured that there has been a reasonable overall turnout. I think that 40 per cent is that right level. Finally, the amendment is not a fatal amendment because the referendum would become advisory if the turnout was below 40 per cent. Indeed, the amendment in the name of the noble Lord, Lord Elystan-Morgan, would not have had my support because it sought to tie the hands of the Government, as opposed to enabling them to have the opportunity to consider the advisability of proceeding, when we knew what the final turnout was.

The amendment is being put forward once again by the noble Lord, Lord Rooker, in his normal robust and combative way—and it is none the worse for that. The noble and learned Lord, Lord Falconer of Thoroton, in his more silky and persuasive form, sought to raise the debate to a higher level and has made remarks such as that the amendment is in line with our parliamentary democracy and high principles. I hope that he will forgive me if I say that, when I see how his party has changed its voting position in the other place, there may be high principle, but there must be at least a whiff of political opportunism around the other Chamber.

We have now asked the other place to think about this issue twice and we have had a clear answer twice—by 70 votes last night and by 79 this evening, if my mathematics are right. We have heard a powerful speech from the noble and learned Lord, Lord Lloyd of Berwick. Whatever the rights and wrongs of the amendment, he was right to tell us that we are discussing an issue that focuses narrowly on a matter that affects the other place alone. Therefore, while I continue to have considerable and very grave doubts about the course on which my Government are embarking, I am afraid that I have now concluded, after two disobliging votes, that the time has come for the Members of the elected Chamber to make a final decision, because they alone will have to live with the consequences of their deliberations.

[Lord Falconer of Thoroton]

My Lords, it is for your Lordships to imagine what happened to the noble Lord, Lord Hodgson of Astley Abbots, between approximately 1 pm this afternoon and that rather unimpressive speech.

[Noble Lords]

Oh!

[Lord Hodgson of Astley Abbotts]

I described the noble Lord as “silky”. I withdraw that immediately.

[Lord Falconer of Thoroton]

And I withdraw the word “unimpressive” and apologise to the noble Lord, Lord Hodgson.

There are two issues for your Lordships to consider. First, are your Lordships satisfied that the issue is important enough to be referred back? Secondly, has it been considered properly by the other place? On the first matter, we have had many debates on the issue, which has been described as the most important constitutional change since 1832. The Leader of the House talked about fair values for fair votes and other things like that. He did not deal—just as Mr Harper in the other place did not deal—with the issue of a derisory turnout leading to a fundamental change in our voting system. That is the importance of a threshold; that is why it matters; and that is why it is at the heart of what is left between your Lordships and the other place. It is for your Lordships to determine whether the issue is important. I certainly regard it as important, and it is not without significance that it is the last issue that stands between this House and the other place.

The second issue, which is the one most relied on by the Leader of the House and the noble Lord, Lord Hodgson of Astley Abbots, is: “Well, we’ve asked twice; now is the time to subside”. The amendment was first passed in your Lordships' House last Wednesday. It went to the Commons this afternoon. It was debated for another hour. I have not been able to access Hansard to read the debate. I have had a report from my noble friend Lord Rooker, which the House has also had, on what was said in the other place in the debate. This is an important constitutional Bill. It seems wrong that we should make our decision on this important issue on the basis of a debate that we cannot even read in Hansard, eight days after it was raised for the first time last Wednesday.

Noble Lords opposite shake their heads and say, “Let’s just ram this through now at this 11th hour”. It is for your Lordships to decide whether this is the right course for the House, whose role is not to overrule the other place but to make it think again, to say that debating it twice in one day, eight days after the amendment was tabled, is consideration enough of whether 13 per cent of the electorate voting for a fundamental change in our voting system that all noble Lords in this Chamber know would not be—

Interim Report: Leader's Group on Members Leaving the House

Lord Hodgson of Astley Abbotts Excerpts

Tuesday 16th November 2010 Lords Chamber

[Lord Hodgson of Astley Abbotts]

My Lords, perhaps I may add my congratulations to my noble friend Lord Hunt and the members of his committee on their very clear report which, as other noble Lords have said, is commendably brief and to the point. It contains a great deal of factual material from which no doubt each of us can find evidence to support our particular views or prejudices as the case may be. My particular view or prejudice concerns, first, the reputation of the House; secondly, the effectiveness of the House; and, to a much lesser extent, the number of Members of the House. I say that because, as many noble Lords have pointed out, the answer to that lies not here but with the activities of the party leadership.

I know that the House has important Second Reading business to conclude after this debate, so I will cut straight to the chase, and if the need for brevity makes me sound unusually brutal, I hope that noble Lords will forgive me. First, I entirely support the point made by my noble friend Lord Astor about the need for the self-regulatory framework to be followed. It is consonant with the way in which we have operated ourselves in the past and it enables us to keep control of our destiny. I strongly support that point of view.

That having been said, put simply, I am firmly of the view that there should be a compulsory retirement age for membership of your Lordships’ House. In my commercial experience, it is a hard and unpleasant but inevitable fact that mental agility and performance decline with age. The point and the rate of decline may vary, but decline there is, and it is difficult to argue that the list of compulsory retirement ages set out in paragraph 19 of the report is based entirely on prejudice against age. It is not, it is based on experience. There are additional examples not given by my noble friend. When the directors of public companies reach the age of 70, they are subject to compulsory annual re-election. Of course I accept that there will be hard cases and exceptions to the rule, but the outside world has found a compulsory retirement age to be of value, and I argue that your Lordships’ House cannot be an exception. For we are not just responsible for helping to run a company, a court or an ecclesiastical see, we are participating in the governance of our country, for which there can be no higher responsibility. Therefore the dignity of the House demands that each of us shuffles off the stage before we start dribbling into our All-Bran.

As to age, it seems to me that the age of 80 is pretty satisfactory, but if it is not to be 80, I would say 75 rather than 85. But I am afraid that I would go further because, like the noble Lord, Lord Tyler, I find it astonishing that, according to table 3 in the report, each year between 40 and 80 of our colleagues find it impossible to attend the House at all and take no part in our proceedings. I argued in my letter to my noble friend’s committee that there is a need for a cross-party committee to address what I call lack of interest. If noble Lords are inclined to ask me how I would define that, I have no precise answer, but I would reply that you will know it when you see it. Flexibility will be needed, of course. A hard definition would not address cases of, say, a noble Lord or noble Baroness who has been ill and perforce has been away for some time. But at root there needs to be an element of the famous phrase, “Use it or lose it”. If I were a director of a company and for 12 months one of my fellow directors did not turn up to any board meetings, I would ask the chairman exactly what role my fellow director was playing in the governance of the company. Again I would argue, particularly at the present time and given the cynicism among the public about Parliament and what goes on here, that the dignity and the reputation of the House demand it.

The process must be conducted with absolute dignity. The noble Lord, Lord Walton of Detchant, said much of what I want to say. It is not in our power to refuse club rights or the right to sit on the steps of the Throne: in effect, to refuse anything except the right to speak and vote in the House and its committees.

My noble friend Lord Hamilton put his finger on the issue of a financial settlement when he said that that would not be possible in the present circumstances. However, if in future years the financial sun rises a little, the proposals made by my noble friend Lord Alderdice may be worth revisiting. I accept the danger of this leading to nominal attendance and box ticking, but I argue that that risk is far less than the risk of doing nothing.

I take part in the Lord Speaker’s outreach programme, an excellent innovation, and I never fail to learn from my visits to schools. In one sense, the classes are like a mirror in which one can see a reflection of oneself and this great institution, often with slightly uncomfortable results. For the information of noble Lords who wish to see how we are seen, the most frequently remarked upon website is TheyWorkForYou.com. Many A-level students go there to see how we, in our individual ways, are performing our roles as members of the legislature of the United Kingdom. While one should not be guided only by the views of 18 year-olds, it is not easy to argue the case that the laws of our land can be made, in part, by men and women of very great age whose attendance at Parliament can be spasmodic to say the least. My private view is that unless the House grasps this issue, there is a danger of a press campaign, which could rapidly run out of control, to the detriment of all this House stands for and the reputation of the many Members who give so freely of their time.