Financial Services Bill

Lord Judd Excerpts

Report stage
Wednesday 24th March 2021 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, the noble Lord, Lord Oates, and the noble Baroness, Lady Hayman, eloquently introduced Amendment 3. There was much discussion on this matter in Committee but I still consider that such a review would place too heavy a burden, and a disproportionate one at that, on the PRA. I thank my noble friend the Minister for the diligent manner in which he has responded to noble Lords’ concerns about raising the importance of climate-change issues in the list of factors to which our regulators must have regard in making rules.

The Government’s credentials as global leaders in the movement away from reliance on fossil fuels are well established and will, I hope, be further enhanced by the G7 meetings and the COP 26 conference later this year. However, this should be kept in perspective and balanced against the need for economic recovery and the needs of industry. There is no point in pricing what remains of our steel industry out of the market if the result would be an increase in imports from countries which have not adopted energy policies as green as ours, especially if the impact on global emissions is negligible.

When I first read my noble friend Earl Howe’s amendments I was puzzled, because it seemed that he was giving with one hand and taking away with the other. I look forward to his clarification of how Amendments 43, 46, 47 and 49 net off against each other.

I am loath to saddle the regulators with increased obligations which go beyond the practices that they have already adopted. The letter from Sam Woods makes it clear that climate change is already an important consideration in the PRA’s supervision and regulation of banks and insurers, under its existing statutory objectives. Similarly, the letter from Nikhil Rathi makes it clear that the FCA is committed to helping market participants manage the risks in moving to a low-carbon economy and supports the commitment to match, at least, the ambition of the EU sustainable finance action plan in the UK. Since the FCA has already decided to recruit a director with specific responsibility for ESG matters, I do not think that Amendment 23, in the name of the noble Baroness, Lady Hayman, is necessary. The remit of the senior manager whom she suggests should be appointed would clash with that of the new director who is already in the process of being recruited.

Amendment 22, in the name of the noble Baroness, Lady Hayman, also goes too far and is too prescriptive. My noble friend the Minister was right when he said to the Committee, on 24 February, that

“it is important that we act carefully and rationally, consult appropriately with interested parties and therefore make progress in the right way.”

He was also right in stating that

“the changes the Bill enables serve to implement a number of vital reforms following the financial crisis. These reforms reinforce the safety and soundness of the UK financial system.”—[Official Report, 24/2/21; col. GC 224.]

Surely we should not amend the Bill in any way that might prevent us giving effect to updated prudential rules. I also agree that there is no evidence that greener means prudentially safer, at least not yet. Therefore, it is not clear that a regulator, whose primary objective is the safety and soundness of financial institutions, should be burdened with disproportionate climate obligations now, especially at a time when it is essential to maintain and enhance the competitiveness and attractiveness of the UK’s financial markets. With regard to individual regulators’ objectives and rule-making powers on climate change-related risks, the ABI recommends the need for holistic debate across stakeholders before adding new objectives to the remit of regulators, given the need to balance the various priorities. I believe that my noble friend’s amendments strike the right balance, and I will support them.

While I agree with the noble Baroness, Lady Bennett of Manor Castle, that biodiversity is important, I believe she wants to go a step too far in her Amendment 44 in adding this to the FCA’s “have regard to.” There are countless other policies that could be added, but too many will muddy the waters and distract the FCA from its efficient operation in performing its core duties and objectives.

[Lord Judd (Lab) [V]]

My Lords, these amendments, and this Bill, are crucial to the future of the United Kingdom. We have heard repeatedly in the arguments deployed of an interaction. There is the need for financial services to be successful and effective because they play such an important part in ensuring the well-being on which the rest of our society depends. That is beyond question. However, we know that they have implications, socially and beyond, for which they need regulation, and this has been well spelled out.

I shall focus on Amendments 3, 22, 23 and 44 in particular. Fossil fuels inevitably have considerable and extensive risks for the climate. There can be no argument about that. They have great implications in terms of climate change, and I am glad to see that Amendment 3 is grappling with this.

Amendment 22 deals with the point I have just made in that climate change poses risks to financial services. Therefore, it is essential to have the right arrangements in place to ensure that those risks are, if not eliminated, minimised.

Amendment 23 makes the point I have often felt strongly about in legislation: it is sometimes crucial to have a specific person carrying a specific responsibility for bringing together the various threads in the policy for which we are aiming and ensure their delivery. It is a good amendment.

I do not share the rather dismissive approach of the noble Viscount, Lord Trenchard, to Amendment 44. My view is that the noble Baroness, Lady Bennett of Manor Castle, deserves considerable commendation for having tabled this amendment. We have happily joined these UN conventions, and our diplomats have usually played a large part in bringing them about, but we sometimes lack the discipline to follow through with what they require of us. At this point in our consideration of the Bill, it is appropriate to talk about the convention and the undertakings we have thereby committed ourselves to on biodiversity. On that issue, I find myself dismayed by the position of the noble Viscount, Lord Trenchard, because we are surrounded by a major crisis. The biodiversity of the world is in danger of collapse, and the consequences have direct implications for the survival of humanity itself. There is urgency about this situation.

In conclusion, I simply make this point: I said that we wanted the financial services sector to be successful and effective, because we recognise its indispensability, but we also must recognise that on climate change, we are long past the age of rhetorical language and theoretical commitment. We have to demonstrate that we have the leverage and the arrangements in place to ensure delivery; if we do not ensure delivery on the measures we want to see to protect the climate, we will be party to a cruise towards catastrophe for the global community. It is vital to have these disciplines, and these amendments spell out how we can bring those disciplines to bear.

[Baroness Noakes (Con)]

My Lords, I shall speak mainly to Amendments 3 and 23 in this group.

On Amendment 3, I should say I am not generally in favour of littering legislation with reviews, though I confess to having tabled a few amendments of that nature myself in the past. More substantively, I think this particular amendment as drafted is a waste of time.

I can predict the outcome of the review if this amendment is passed. The PRA will find that banks do not hold any significant “investments”—the wording used in the amendment—in fossil fuel assets, whether linked to existing exploitation and production or to new exploration. So all the things mentioned in proposed subsection (2) of the amendment will be irrelevant.

Risk weighting applies to the assets that banks hold. Banks’ assets will largely be loans of various kinds. Banks do not normally invest in physical assets used by other companies, nor do they invest in shares in the companies that own the assets. Banking is fundamentally about lending and not investing.

The noble Lord, Lord Oates, cited the recent speech by the deputy governor talking about prudential regulation being risk-based, which indeed it is, but he failed to understand that he was talking to insurers at the time. They do have investments. This is a fundamental difference between banks and insurers—they have completely different balance sheets.

As I said in Committee, most borrowing by oil and gas companies will be generic—for example, by way of bond issuance or commercial paper—and by one of the companies in a group. It will not be hypothecated to individual assets or groups of assets. Money is fungible and cannot be linked to any specific use. Bank balance sheets might have some leasing arrangements that might be caught by this amendment, but my main point is that the amendment is fundamentally aimed at the wrong target and, therefore, amounts to not much more than virtue signalling.

European Council

Lord Judd Excerpts

Monday 2nd July 2018 Lords Chamber

[Baroness Evans of Bowes Park]

I certainly agree that we want discussion at all levels between the UK Government and Ireland. There has been good engagement at all levels and we want that to continue because, as I have said in numerous answers to questions, this is an absolutely critical issue. We both want to achieve a solution and we believe we can.

[Lord Judd (Lab)]

My Lords, as Ministers prepare to assemble at Chequers, is it not essential to remember what the Leader herself has stressed: the protection of the people of Britain? Terrorism, trafficking, crime and drugs are all international in character. It is not a matter of whether we reach an agreement on these matters; we have to reach an agreement. There cannot be an inter- regnum between our coming out and something being fixed. Something has to be fixed before we come out.

[Baroness Evans of Bowes Park]

I agree with the noble Lord. That is why the Prime Minister put such emphasis on it at the summit. Although not directly related to the summit, I point to the success of the special session of the Conference of the States Parties to the Chemical Weapons Convention, which happened last week, and the leadership that the UK showed in that area to get that very important agreement. It shows that we remain a critical voice in international fora and are continuing to lead in important areas on a global stage.

Salisbury Incident Update

Lord Judd Excerpts

Monday 12th March 2018 Lords Chamber

[Baroness Evans of Bowes Park]

I entirely agree with the noble Lord and echo his tribute to the people of Salisbury. We are all thinking of them; they are at the forefront of our minds, as is their safety.

[Lord Judd (Lab)]

My Lords, for some years at the turn of the century I was rapporteur to the Council of Europe on the conflict in Chechnya. May I say that what has happened here is all too characteristic of the ruthless techniques of the Russian authorities? Does the noble Baroness agree that it has become very clear that one of their methods of control is to create fear and anxiety? In that context, is there not a very strong case for re-examining other happenings of the same kind in this country in recent years?

[Baroness Evans of Bowes Park]

The noble Lord will know that of course the Government and the police are aware of other allegations, but I am afraid I cannot be drawn into them. The police obviously have operational independence to investigate criminal activity, and we do not direct police investigations. It is up to the police to decide whether to investigate, but I think that all of us believe that at the moment the focus should be on the events in Salisbury and making sure that we get to the bottom of that. We want to make sure that we deal with those who have carried out this appalling crime and that they are held to account.

European Union (Withdrawal) Bill

Lord Judd Excerpts

2nd reading (Hansard): House of Lords
Wednesday 31st January 2018 Lords Chamber

[Lord Judd (Lab)]

My Lords, that is a difficult speech to follow. It was powerful. I am very glad that the noble Lord concentrated on what the right reverend Prelate the Bishop of Leeds said yesterday, because that was a very challenging intervention as well. He talked about the issue of who we are, what kind of Britain we want to be and what kind of world we want to try to play our part in creating. I will add only one other issue alongside those. For me, it is an absolutely inescapable truth that from the moment we are born we are locked into an interdependent global community. The way we shall be judged by history is by the success we make of finding ways to meet that reality and to build institutions and methods of intergovernmental co-operation that enable us to face it. Climate change is a great example; security is another.

We have heard a great deal about the importance of the constitution. It is quite clear from this debate, if in no other way, that referenda and representative parliamentary democracy are not easy companions. I have always held that we in Parliament are the practitioners as well as the representatives, but that the constitution belongs to the people. From my experience of what we have been through in recent years I have come to the conclusion that the rare case for constitutional change to be proposed is in the context of a general election. That is a way to bring the whole system together, but we seem to have been busy building dual systems and then telling Parliament that its function is to deliver what comes through a referendum. That makes a nonsense of the concept of dynamic representative democracy. That is why the debate, discussion and search that goes on in processing the Bill—not the Bill itself; we have heard too much about how the Bill is important—is vital to our parliamentary heritage. It really will not do for Ministers to keep lecturing us on how our job is simply to get it through. It is not. It is to make sure that what it is doing is compatible with everything that this country has stood for.

Human rights are, of course, central to that. I have the joy—I think that is the right word to use—of serving on the EU Justice Sub-Committee, which my noble friend Lady Kennedy chairs. She spoke very powerfully about those issues today.

There are two issues that I would take above all others. The first is that the concept of citizenship matters deeply. By our referendum, we have removed European citizenship from countless numbers of people who thought they were enjoying what citizenship meant. That is a very grave thing to have happened. Therefore, one of the things that we must do in our deliberations in this House is make absolutely certain, if it can be done, that we have arrangements in place that will meet the challenge of restoring the rights that people thought they had.

The other issue is the European court. I have been horrified and dismayed in the work of the justice committee to hear and see more and more evidence of the gap between myths, rhetoric and populism on one side and reality on the other. Almost without exception, witness after witness to whom we have listened has said how indispensable the European court is. Over and again we have been given examples of the key part played by British lawyers in developing and strengthening European law—it is a tragedy that the British people do not understand this and have not been led to understand it. We are living in an interdependent world and we wanted to be part of an interdependent Europe. That required strong law in Europe and the British have been playing a huge part in that, so what are we doing walking away from it?

Whatever happens on the Bill, and I hope we will have some very demanding and searching debates, I hope we remember—to come back to the intervention yesterday by the right reverend Prelate—that we cannot escape from being members of an interdependent world. Our children and grandchildren will ask what we did towards devising the policies and arrangements to meet the challenges of an interdependent world or whether we walked away in the opposite direction with a preoccupation with what was immediately popular.

European Council

Lord Judd Excerpts

Monday 18th December 2017 Lords Chamber

[Baroness Evans of Bowes Park]

What I can do is read to my noble friend from the EU Council conclusions, which say:

“While an agreement on a future relationship can only be finalised and concluded once the United Kingdom has become a third country, the Union will be ready to engage in preliminary and preparatory discussions with the aim of identifying an overall understanding of the framework for the future relationship … Such an understanding should be elaborated in a political declaration accompanying and referred to in the Withdrawal Agreement”.

[Lord Judd (Lab)]

My Lords, meanwhile in the world as a whole, with all the challenges of climate change and the new political pressures that are at work, a gigantic migration problem is building up, which will make the challenges which we face at the moment seem small by comparison. In the midst of all our tactical preoccupations, what work is being done with our European allies to formulate a strategic policy towards how this issue of migration in the world is to be handled? How are we going to ensure that this is done effectively when we are deliberately moving to an arm’s-length relationship with those who share the burden in Europe?

European Council

Lord Judd Excerpts

Tuesday 14th March 2017 Lords Chamber

[Baroness Evans of Bowes Park]

We are working closely with our European partners. Of course, the Royal Navy has vessels in the Mediterranean, saving lives and assisting with the training of the Libyan coast-guard, for instance. We are providing 40 staff to Greece to support admissibility and interviewing of migrants, and sharing expertise to support Italy, and work by our National Crime Agency and Organised Immigration Crime Taskforce, in concert with our European counterparts, has seen us managing to arrest quite a number of individuals involved in smuggling in the past three months alone—and that remains a priority for us.

[Lord Judd (Lab)]

My Lords, the Prime Minister constantly emphasises that whatever our future we want to remain a main player in world affairs. Across the African continent there is the most appalling famine. How much time was spent at the Council discussing this and how Europe should respond, and how are we going to continue to co-operate with Europe in meeting this huge humanitarian challenge?

[Baroness Evans of Bowes Park]

The noble Baroness, Lady Symons, asked a similar question and I said that the famine was not on the formal agenda and that I would go back and check whether any discussions were had. I cannot give the noble Lord a definitive answer, but I have said that I will investigate. Of course, I also said that we were committed to doing what we can to help the countries affected, because it is an appalling humanitarian crisis.

Outcome of the European Union Referendum

Lord Judd Excerpts

Tuesday 5th July 2016 Lords Chamber

[Lord Judd (Lab)]

My Lords, I am very glad to follow such a challenging speech. The Lord Privy Seal, in introducing this debate, laid great emphasis on her desire to see us starting the task of restoring confidence, trust and the credibility of politics in general. Of course we must do that. It is, however, a huge task, because it is very difficult to estimate the scale of the damage done by the recent campaign, which included a false prospectus, a total lack of any thinking about what was to happen if there was a vote to come out, and the gay abandon with which so much of the prospectus was discarded when the result became known. That was almost deliberate sabotage of the whole concept of political responsibility.

I was able to go to some estates during the campaign. The estates had just lost any sense of being part of a political process, and here was a chance, whipped up by opportunists, to register their protest. That, of course, is what happened. We have to rebuild connections, not only with the estates but with a lot of people in society who feel that they are not part of the political process. It would be very difficult to say how badly betrayed many of our young people—among them the brightest and best—feel about what has happened. “Betrayed” is the right word. They feel that they were beginning to enjoy belonging to Europe, to enjoy the opportunities of working in Europe and of being in this wider community. They liked the sense of being part of an international community and they saw their hope being destroyed by what had happened. I asked myself how it contrasts with my formative political years, which were after the Second World War. What characterised the political debate then was that there was hope. People were thinking about what they were going to do for the future and how they would do it. There was a real political debate about that.

What is to be done? I suggest that in one sense the task remains very much as it has been for a long time. I have said in this House before—and I am sure I will be forgiven for saying again—that the first reality of existence in the modern world is to understand its total interdependence. In economics, we must find international solutions. We cannot find them on our own. We are not the centre and in control of a great British empire. That is long gone. We must find our way forward with the international community.

Then there is the single market. I have never understood how you can argue for a single market and not have the free movement of labour. It is not a single market if you do not have free movement. If we say that the free movement of labour is not possible for all sorts of social and other reasons, what are we thinking about compensatory policies rather than this blind shibboleth about the single market?

Take climate change: the consequences of climate change are accelerating all the time. There is no way we can solve those on our own. We must co-operate with others. Migration will itself be accentuated and speeded up by the effects of climate change. We are not on our own with health, either. Look at the concern and rushed emergency measures that had to be introduced when there was Ebola in west Africa. That is a melodramatic example, perhaps, but it is an example of the reality of the international interdependency in health.

I feel strongly about security as I care for the security of my own family and of my country—of course I do. Anyone working in the sphere of security will insist that we must appreciate how it has become an internationally interdependent issue. Security and terrorism are not national but international issues. People trafficking is an international issue. Crime has become internationalised. How can we deal with these issues if we are not co-operating with others?

As we go on with the Brexit arrangements, I want to hear the positive thinking by the Government about how we handle our part in the world. We should not just react but contribute to finding the way forward for the world community. We want to know more about what our strategic thinking is about NATO and about our relations with France, for example, with whom we have been building close relations, particularly in the maritime dimension.

We also want to know not just about numbers of migrants—how many can be accommodated and what control we have over immigration. That is to underestimate the significance of the whole issue. We must hear the positive thinking of the Government on how you enable the communities to which immigrants are coming in disproportionate numbers to absorb them. What are we doing about schooling, hospitals and housing in the areas where most of them come? This is the kind of positive thinking we need: we must know why and how we can do it better not as members of the European Union. How will we improve the situation? We must start hearing those arguments from the Government. I am very glad that the noble Lord, Lord Boswell, emphasised so trenchantly that the European Union committees of this House, which have gained such high significance and reputation in the world, will have a key part to play in overseeing the whole process.

Syria: UK Military Action

Lord Judd Excerpts

Wednesday 2nd December 2015 Lords Chamber

[Lord Judd (Lab)]

My Lords, as has been stressed in this debate, the responsibility of us all and of the Government is the safety and well-being of the British people—and, as has also become clear in this debate, the well-being of the Syrian people. Let us remember that more than 250,000 people have been killed in Syria and that, effectively, more than half of Syria’s citizens are displaced. Four million of them are refugees and 7 million are displaced people within their own country. Civilians are the worst affected by the battles due to, for example, indiscriminate barrel bombing on cities such as Aleppo.

We therefore have to ask how what we are proposing to do will help. It would be very dangerous and stupid to be doing something simply for the self-satisfaction of polishing our own consciences. We are dealing with cruel, horrible, calculating people. Whatever happens tonight in the Commons, there will be some wider ongoing issues. First, there is a battle throughout the world for hearts and minds, and we have to win that battle in minds. Impressionable, highly intelligent young people have to be won over to something worth while.

The second challenge is how the world sees us, and I do not think that we face up to it. We like to congratulate ourselves on how good we are at doing things. I have worked a great deal all over the world and I must say that an awful lot of intelligent people in the world see us as part of the problem, not part of the solution. The way that they look at us is as if to say, “We don’t want any more, thank you, to go on being managed by the traditional powers, being asked to fall into line with their solutions. We want to be part of taking responsibility and asking the outside world for what we see as appropriate support”. These are immense challenges to the future of foreign policy.

Consistency is also essential. If, as is absolutely right, with no doubts whatever, we condemn the beheadings, the brutality, the cruelty, the crucifixions and the rest, we have to be seen by young people, particularly those in the region, to speak out just as clearly about the lack of justice, when it occurs, the beheadings, the lashings and the cruel imprisonment in much of the Arab world.

In the immediate situation, part of our credibility depends on us recognising that we have to have a fully convincing and watertight case for whatever we do, not least militarily. The question that we have to ask ourselves is whether we have had a convincing call from those who are struggling for their freedom in Syria and convincing evidence that they are ready to provide the co-ordinated support from the ground that will be essential for bombing. I have never seen anywhere in the world where bombing on its own achieved anything. Co-ordination with ground activity is crucial. This was even true of the French resistance in the Second World War.

Have we thought through what we are doing? There will inevitably tend to be mission creep. I applaud what the noble Lord, Lord Cormack, said: if you wish the ends, you must wish the means. Have we thought this through and are we sure that we will provide all the means that may be necessary? How does it relate to an inclusive political solution? With a heavy heart, I have come to the conclusion that the case is not yet proved.

Syria: Foreign Affairs Committee Report

Lord Judd Excerpts

Thursday 26th November 2015 Lords Chamber

[Baroness Stowell of Beeston]

My Lords, to be clear, we are proposing military action to attack ISIL. However, we are saying that Assad cannot be part of the future of Syria, because for us ultimately to eradicate ISIL we will have to see a different regime in Syria. I say to the noble Lord, and partly in response to my noble friend Lord Dobbs, that Assad has been barbaric to his own people; he has used chemical weapons on his own people. That is why he cannot be part of a future, because there has to be a stability if we are to see a future that is safe for all of us, wherever we live in the world.

[Lord Judd (Lab)]

My Lords, the Prime Minister quoted in his Statement the words of Ban Ki-moon— that a missile can kill a terrorist but it takes good governance to win the battle. I suggest that good governance involves winning the battle for hearts and minds. What worries me about bombing without substantial demonstrations of support on the ground and without active military support on the ground is that it has an ugly tendency to play into the hands of the extremists, who can exploit it. It therefore seems to me very important if we are to go ahead—I am not against going ahead but I am very much in favour of going ahead from the strongest possible position—that we get very substantial, specific assurances from sufficient people with authority on the ground that they will provide the military support that is necessary.

[Baroness Stowell of Beeston]

My Lords, the extremists are already attacking us. That is why doing nothing is not an option. We are already in this country a target for ISIL. We know we are because we have been able to avoid at least seven attempts to launch a direct terrorist attack here in the UK. The noble Lord asks about the ground troops that are already in place in Syria. At the moment, they are starting to make progress in defeating ISIL. We have to be in there too because, together, we will be able to achieve the success that we need to achieve.

Fracking

Lord Judd Excerpts

Wednesday 11th March 2015 Lords Chamber

[Baroness Verma]

My Lords, we have made it clear that onshore exploration will be devolved.

[Lord Judd (Lab)]

My Lords—

[Lord Taverne (LD)]

My Lords—

[Lord Lawson of Blaby (Con)]

It is the turn of this side. Given that there is agreement—

[Lord Judd]

My Lords—

[The Lord Privy Seal (Baroness Stowell of Beeston) (Con)]

My Lords, if the noble Lord is not going to give way, it is actually the turn of the Labour Benches, and then I am sure that the House will want to hear from my noble friend Lord Lawson.

[Lord Judd]

My Lords, does the Minister agree that, while fracking may have a vital contribution to make to our economic future and our energy resources, we are not seeking to generate energy as an end in itself? We are seeking to generate energy to have a United Kingdom worth living in. The richness and preciousness of our countryside is one of the most invaluable assets of that society worth living in. Therefore, is not the Question asked by the noble Lord, Lord Greaves, absolutely fundamental to the kind of Britain that we want to live in?