Bank of England and Financial Services Bill [Lords]

Debate between Lord Jackson of Peterborough and Charles Walker

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 19th April 2016 Commons Chamber

[Mr Walker]

The hon. Gentleman makes a valid point. Banks are de-risking very aggressively at the moment and we need to inject some proportionality into their actions. I believe that the new clause will go some way towards achieving that.

New clause 9 inserts into the Bill a process of adjudication. If a politically exposed person believes that they are being treated unfairly—being denied access to banking services—they can take their concern or complaint to the FCA, which can then adjudicate. The FCA can decide whether banks are interpreting the directive over-aggressively and, if they are, levy a fine on them for doing so. The new clause has nothing to do with reducing accountability; it is about increasing proportionality, which is the right thing to do.

Why is new clause 9 needed? It is needed because it is clear that in interpreting the fourth money laundering directive, banks are making no distinction, when determining who is a politically exposed person, between PEPs drawn from the corruption hotbeds of Nigeria, Russia and parts of the subcontinent, and those drawn from developed democracies such as ours that have high levels of scrutiny and accountability.

[Mr Stewart Jackson (Peterborough) (Con)]

May I put on record the thanks of all of us in the House to my hon. Friend for his diligence, focus and tenacity in bringing this massively important issue to the attention of the Government and for what we hope will be a satisfactory conclusion today? Does he agree that the collateral damage of some of the precipitous action of the banks has been a big impact on people’s families and, as a corollary, their future credit worthiness?

[Mr Walker]

My hon. Friend makes a good point. As I said, the banks have acted very aggressively, and I shall return to that point in a few moments.

May I thank the Economic Secretary for her time and patience in dealing with this matter? I have been speaking to her about it for four months, and I admit that I have got a little over-excited on occasions. However, she has always maintained high levels of good humour and patience, for which I thank her. It is important to put that on the record.

At this late stage, without the intervention of new clause 9, the directive risks blighting the lives of decent people. They are not just people working in public life and service but, as my hon. Friend the Member for Peterborough (Mr Jackson) pointed out, their partners, spouses, children, parents, siblings and in-laws. The directive is not proportionate.

Even more worryingly, the directive covers the close associates of politically exposed persons. I am aware that one such close associate is a member of the press lobby. He had some problems with an individual savings account and was subject to close questioning by his bank. When he asked the person on the other end of the phone why the bank was conducting itself in such a way, the response was, “Because we understand that you are an associate of the Prime Minister.” Even the media are caught up in this directive, or rather the banks’ de-risking in preparation for its introduction.

The Financial Action Task Force, whose guidance underpins the directive and is repeatedly referred to in it, states:

“For close associates, examples include”—

the House needs to listen carefully to this because it is quite an odd paragraph—

“the following types of relationships: (known) (sexual) partners outside the family unit (e.g. girlfriends, boyfriends, mistresses); prominent members of the same political party, civil organisation”—

that could be the National Trust—

“labour or employee union as the PEP; business partners or associates, especially those that share (beneficial) ownership of legal entities with the PEP, or who are otherwise connected”.

My fear is that, without clear Government-backed FCA guidance, as provided for in new clause 9, the banks, in their rush to de-risk, will continue to draw on the work of the Financial Action Task Force. The Financial Action Task Force states in paragraph 37 of its 2013 guidance:

“there should be awareness that middle ranking and more junior officials could act on behalf of a PEP to circumvent…controls. These less prominent public functions could be appropriately taken into account as customer risk factors in the framework of the overall assessment of risks”.

Notification of Arrest of Members

Debate between Lord Jackson of Peterborough and Charles Walker

Wednesday 10th February 2016 Commons Chamber

[Mr Charles Walker (Broxbourne) (Con)]

In the previous Parliament, the Procedure Committee was asked to look into the existing protocols around the arrest of Members of Parliament. We started preliminary inquiries in early 2015, and this work laid the foundation for the inquiry we launched shortly after the general election.

The findings of the inquiry were unanimously endorsed by the Committee, which reported to the House in December. I know that our moderate and proportionate recommendations relating to the arrest of Members have created a great deal of faux sound and fury in various quarters. On Monday morning, I had to smile at the assertion by Kevin O’Sullivan, a Mirror journalist, on Sky Television, that

“they should very much be named because everyone else is… that’s always been the system. Once you are arrested, you can be named”.

That was an enlightening observation for two reasons: first, because it was completely wrong, and secondly and more interestingly, because it gave a revealing insight into the conduct of too many national newsrooms and their own morality when it comes to obtaining information from public officials.

I accept that the media have a job to do, and that includes making our lives difficult, so my greatest disappointment in the reporting on the Committee’s proposals is reserved for Sir Alistair Graham, the former chair of the Committee on Standards in Public Life. From his pejorative comments about our report, it is clear either that he has not read it or, if he has read it, that he has no appreciation of, or regard for, the law. I know that Sir Alistair’s time in the chair from 2004 to 2007 was not a happy one. During his three years in office, he felt deeply aggrieved that at no stage did the then Prime Minister, Tony Blair, agree to his repeated requests for a meeting. I accept that the then PM was perhaps churlish in his refusal to meet him, but I gently ask Sir Alistair to pursue his grievance with the former Prime Minister, as opposed to taking his frustrations out on the House of Commons, which had no hand in his disappointment. On a personal note, it is sad to see a distinguished former public servant and knight of the realm allowing himself to be turned into little more than a misinformed talking head.

Let me be absolutely clear: the Procedure Committee is not asking for Members of Parliament to receive special treatment in the eyes of the law. Such a request, if made, would be alien to the values of our Committee and to the wishes of our constituents. All of us on the Committee believe that the law should be applied equally to all citizens of the United Kingdom, but currently that is not the case in this House, where, in matters of policing and public order, the point of public notification occurs not at the point of charge, as is the case with our constituents, but at the point of arrest.

That process of notification puts the police and the House at odds with the Data Protection Act and, potentially, article 8 of the European convention on human rights. Regardless of how people feel about the application of data protection and ECHR laws, that exposes both this House and the police to legal challenge by a named Member of Parliament.

[Mr Stewart Jackson (Peterborough) (Con)]

Is it not the truth that this practice is an historical anachronism arising from the period of the titanic struggle between the monarchy and the legislature, when, at a time when the King would arbitrarily arrest Members of Parliament, it was quite proper for Parliament to be so advised of that happening? It has no place in a modern Parliament and a modern democracy.

[Mr Walker]

My hon. Friend makes a valid point, which I shall now go on to answer.

In brief, the House has five choices. Option 1, as set out in our report, is to ensure that the law of the land is applied equally to Members of Parliament as it is to our constituents. Option 2 is for the House to retain the status quo, thereby knowingly putting itself and the police on the wrong side of the law. Option 3 is for the Home Secretary to amend schedule 3 of the Data Protection Act 1998 to specifically exempt Members of Parliament from its universal protections, which in itself would create a precedent for a two-tier system tier of justice—the very thing our constituents do not want.

Option 4 is to amend primary legislation, so that the names of all suspects are released by the police at the point of arrest, not at the point of charge. Of course, that would be welcomed by the press, as it would aid it in its pursuit of celebrities and other people of interest, but it would be devastating for those tens of thousands of people who are arrested but never charged with any crime.

Option 5 is for the House to abandon privilege in respect of our parliamentary duties in the hope that no future despot would want to detain us from them on trumped-up political charges. Of course, if we follow that route, tonight’s entire debate would be a dead letter.

Construction Industry

Debate between Lord Jackson of Peterborough and Charles Walker

Tuesday 28th June 2011 Westminster Hall

[Mr Jackson]

If the hon. Lady will forgive me, I will not give way for the time being because I have quite a few points to make and others might wish to speak. I will let her in later.

It is not possible to design a system that delivers the same result in every part of the country, and the experts the hon. Gentleman mentioned will be disproved, I believe, by the impact. Six years’ matched funding for infrastructure, giving genuine fiscal power to local authorities, will deliver, using the market mechanism, the right kind of quality housing in the right place. None of us can prejudge that until we have seen it in action. The new homes bonus will work, based on a council tax band D of £1,414, and the Home Builders Federation projects that that will bring £1.2 billion into local authorities each year. That is income to the local economy of each authority that builds new homes, which can only be good, and it is 215,000 jobs.

The wider context of the Government’s construction policies is about rebalancing an over-reliance, in some parts of the country in particular, on the public sector, and trying to encourage, with tax policies and a regulatory regime, more private sector growth in jobs. We have already begun to see that. We are not steaming ahead with the creation of private sector jobs, but the trend is in the right direction, and I expect more jobs to be created in the construction industry.

[Mr Charles Walker in the Chair]

The Government’s plan for growth, published in March at the same time as the Budget, introduced significant changes that will help the construction industry. Of course, it makes a presumption in favour of sustainable development, and the wording was criticised for being opaque, but it is now in place and subject to consultation and discussion. The national planning policy framework is coming forward. I have some concerns about it. I am particularly mindful of the possibility of a watering down of the primacy of town centres over out-of-town shopping centres, and the Treasury needs to be mindful of it too. It is all very well creating Asdas and Tescos on the fringes of towns, but that effectively destroys the viability of niche retailers in town centres.

Generally, however, the national planning policy framework will de-clutter the governance of planning, which can only be good. The hon. Member for Liverpool, Walton is right that certainty and the ability to plan properly are absolutely integral to a successful construction industry. That is why this Government’s remit includes simplifying generic planning policy.

To my mind, we are not going fast enough in piloting local land auction models, but we are going in the right direction. Public land will be the first to be auctioned. There is a myth about the availability of land, and a lack of available land clearly contributed to the overheating of the housing market between 2006 and 2009. However, even in the south-east of England, only 12% of land is used for housing, and 10% is used across England as a whole.

The conversion of commercial premises to residential premises and a duty to co-operate would meet some of the objections made by the hon. Member for Derby North about regional spatial strategies. The Local Government Association and others, including KPMG in its report on regional governance, found that regional development agencies did not alleviate differences between regions, or even within regions. He will know that there is a world of difference between Rutland and Melton and inner-city Nottingham or Derby. We as a Government believe—I cannot speak for the Minister—that there are sub-regional economies that were not reflected in regional development agency boundaries. We believe that it is much more practical and flexible to consider a duty to co-operate, particularly in the development of infrastructure.

We are proceeding with a major infrastructure planning system overhaul and consulting on the liberalisation of use classes as a way forward, but the hon. Member for Ochil and South Perthshire (Gordon Banks) is absolutely right that the principal issue is mortgage finance and the capital available for the development of housing. None of us can deny that—it is absolutely the case—but he must concede that the Minister for Housing and Local Government, my right hon. Friend the Member for Welwyn Hatfield (Grant Shapps), did an extremely good job in raising with the Treasury the importance of not throwing the baby out with the bathwater in terms of the Financial Services Authority’s mortgage market review. Both the Chancellor and the Secretary of State for Business, Innovation and Skills are mindful that the FSA review must get the balance right. Without reckless spending, they must make available the mortgage moneys that young people need to buy their first property.

To give my own local authority a plug and pay tribute to it, Peterborough city council voted just last week to put £10 million aside for a local authority mortgage scheme. Without wanting to be too partisan, I must say that I am slightly disappointed that the Labour group on Peterborough city council has seen fit to call in that decision, which will delay the process of getting young people the finance that they need to buy property. Not everything that the previous Government did was wrong. The HomeBuy Direct scheme was good, and we have built on it pragmatically and practically with the Firstbuy scheme, which will put about £1 billion into the system and help 10,000 first-time buyers.

The other issue is the planning system. We cannot get away from the fact that the planning system in this country can be construed as dysfunctional. One hears anecdotes all the time. Developers bring an expensive, costed plan for the development of a few hundred houses to a planning department and an officer says, “Yes, that’s a good plan. We can run with that.” He leaves, and another officer comes in and says, “Hmm, I don’t really like the aesthetics. Will you do it again?” Time is money, and that takes an enormous amount of time. It is extremely frustrating, and it is not fair on shareholders or on the people who want to buy the new houses.

We must develop a way to break through the shroud of mystery around town planners, as we used to call them in the old days. They are a bit like hospital consultants: “Don’t question my professionalism on this.” However, it matters to economic growth and people’s jobs and livelihoods that planners expedite decisions. We must develop a way to incentivise them to get inherently viable projects off the ground. They must work much more closely with developers on things such as section 106 and focus on the affordability of individual projects. The evidence that has been presented shows that it is complex. Some supplementary planning documents for large-scale developments can take 18 months to two years. With core strategies, site allocation plans and consultation on local development frameworks, the process can be frustrating for developers. We must find a way to simplify the system.

A report by Michael Ball of Reading university, “The labour needs of extra housing output”, suggests that the costs associated with development control could be up to £3 billion a year. That is not acceptable if we are committed to a pro-growth agenda. Since January 2005, 3,250 pages of national planning policy guidance have been issued. The complexity and cost of development are significant. The hon. Member for Derby North made the point that the gross cost of regulation, the cost of construction and the market price of floor space are significantly greater in London and other UK cities than elsewhere.

I am being admonished by you, Mr Walker, to conclude my remarks, but I will say that we need to see construction policy holistically. We need to consider residential real estate investment trusts and what the Treasury can do to simplify them. We need to consider how EU procurement rules affect large-scale regeneration. We need to consider brownfield remediation to make it simpler for construction companies to build. We need to encourage special purpose vehicles through the tax system so that local authorities can work with developers. We need to push forward tax increment financing so that there is a fiscal incentive to regenerate town centres and other areas. We also need to concentrate on empty properties.

We must find a way to deal with land banking by people who hold land but will not release it—

[Mr Charles Walker (in the Chair)]

Order. We must find a way of concluding this speech as well, Mr Jackson.

[Mr Jackson]

I am happy to conclude my speech, Mr Walker, with three brief points. Developers must engage properly with local authorities and local planning authorities, and with politicians here in Westminster, to lobby hard for changes in the Budget next year. Mortgage providers must provide more flexible mortgage products. We must also concentrate on developing the right houses in the right places at the right price. There is a wider issue, which is not just a local issue of building.

My final point concerns apprenticeships. This Government have a good record on apprenticeships and announced 50,000 new apprenticeships in the Budget. That will be an integral part of growing and enhancing the construction sector.

[Mr Charles Walker (in the Chair)]

The Front-Bench spokesmen have about 10.5 minutes each.