Groceries Code Adjudicator Bill

Lord Myners Excerpts

Wednesday 13th March 2013 Lords Chamber

[Viscount Eccles]

My Lords, Members of the House who are present will not be surprised to hear that I regret these amendments made at the other end of the Corridor. I will be brief.

I am speaking as the only member of Her Majesty’s opposition. There is always cause for pausing to think about legislation per se, but when all three Front Benches agree, we can be pretty certain that they have not really thought the matter through—there is no need to and it goes on to automatic pilot. You can also be pretty certain that there will be one or two unintended consequences. My starting position would be, despite my noble friend’s clear and completely comprehensible explanation—the only sign of grace in it being the affirmative procedure—that there are already far too many circumstances in which state functionaries can raise administrative fines. In this case, the groceries code is working. There are 10 supermarkets in hot competition with each other, and they report on complaints and how they have been dealt with. So far, there has been no problem with the speed and accuracy with which these arguments have been settled.

However, that is not why we have these fines. It is because it is said that what is going on now is only the tip of the iceberg due to a climate of fear, which means that many other things go on that do not get attended to, and we therefore need a third party to create a triangular relationship—the adjudicator, who now needs the power to fine. My problem with that is that I very much doubt whether the climate of fear, if it exists, will disappear. If it does, and fines are imposed, one has to question whether it is sensible to put in a state-funded and mediated procedure involving 10 highly competitive supermarkets and their suppliers. When we get into that argument, everyone says, “We understand. We are talking not about Nestlé or Kellogg but the small and medium-sized suppliers. We are also”—this is where we come to the heart of the matter—“talking about the dairy industry”. I fully accept that that industry has significant problems. This is not the time to analyse them but I hope that we would have the opportunity to discuss this issue in much greater depth in this House at an early date. I hope that my noble friend on the Front Bench will promote the suggestion that we discuss the dairy industry in some depth and detail. The supermarkets want to sell as much milk, cheese and other products containing milk as they can. That is their interest. It is not in their gift to solve the dairy industry’s problems. It is wrong for us, as a Parliament, to put it about to a certain extent that if you have a grocery code adjudicator it will be a cure-all for some of the undoubted problems that exist, not least in the dairy industry.

My view is that because the code works pretty well, the investigations that come outside the present practices under the code and arrive with the adjudicator will prove to be intractable or unnecessary. I am pleased that I am not looking for the adjudicator to be busy. It is a misapprehension to think that a lot of the things going on out there will give the adjudicator the opportunity for fruitful investigation and fining. I am pleased that the order that is to come is to be affirmative. I guess from what my noble friend said that it should be with us for debate in about nine months. I hope that we debate it seriously.

Finally, if investigations and fines were to become the practice, grocery prices would rise. That would surely be an unintended consequence.

[Lord Myners]

My Lords, I support the Bill and the amendments the Minister has presented today. However, I am left pondering that if we have a situation here where we are concerned about a customer abusing a supplier, should we also not be alert to the issue in banking where we have suppliers potentially abusing customers? Should there not be a similar mechanism in place in which customers of banks, and I think here particularly of small businesses, have the right to appeal to an independent adjudicator about the treatment they are receiving from the banks? It is right that we should be concerned about a situation of customer abuse but the potential for supplier abuse in the banking industry, which is even more concentrated than the supermarket industry, is clearly higher.

I know this goes beyond the Minister’s brief and I do not for one minute expect him to give a detailed reply, but I suggest to your Lordships’ House that if we are seized by the importance of this Bill and believe that it is the right and proper thing to do, most of the arguments on which we have drawn apply with even greater force to the banking industry.

[Lord Knight of Weymouth]

My Lords, my noble friend Lord Myners made a similar very interesting point at Second Reading. It was interesting then and it is interesting now, but it is not a point I am going to dwell on and he will understand that. I am very sorry to disappoint the noble Viscount, Lord Eccles, that as the lead for Her Majesty’s Opposition I am not opposing more on this Bill but the Government have found the right way of doing things. They have taken a policy that was developed by the previous Labour Government and have bought it forward in legislation. As the Bill has gone through Parliament, they have listened to voices, including from Her Majesty’s Opposition, pressing for the adjudicator to have teeth from day one with the right to fine. I am delighted that they have given concessions. Even before the introduction in the House of Lords, following the BIS Select Committee and pressure from my own party, they removed the restriction on third parties, such as the National Farmers Union, from submitting evidence. Then we had a concession from the Government on powers to fine. We had argued that right from the outset.

I am absolutely delighted and I pay tribute to the Minister, Jo Swinson, and her colleagues, including the Minister, for listening to the arguments made in both Houses. I also pay tribute to my colleagues Ian Murray and Huw Irranca-Davies in the other place for the work they did on this Bill and take this opportunity to thank the noble Baroness, Lady Wilcox, for listening to our arguments on accountability when we were debating this Bill in the Lords. She most graciously conceded the points so that there will now be an annual report before Parliament. A final concession with an amendment in the Marshalled List today will see a move from a negative to an affirmative procedure around the level of fines. That, too, is extremely welcome.

I am delighted with the Government’s approach. I would like to see that repeated in many other ways across legislation. We are looking forward to the Queen’s Speech. Perhaps in that we can look forward to the Government having listened to Labour policy and brought it forward in legislation, and then listening to the Labour Party and changing things as they go through. We have not got everything we wanted—we believe that the code needs to remain a live document. The noble Viscount, Lord Eccles, made a good point about the possible abuse of power in the supply chain by Nestlé, Kellogg and other intermediaries. We have concerns about that. Commercial pressure and bullying in the supply chain that can drive down food standards and health and safety remain a concern, even with the code and this adjudicator. Recent scandals around horse meat, pressures from the horticulture industry to abolish the Agricultural Wages Board and ease immigration rules to drive down the cost of wages to meet the demands of supermarkets are all evidence that this is an extremely competitive industry where competition can at times lead to abusive behaviour.

On balance, we are very happy with this Bill. We support the amendments made in the other place and those before us this evening and we look forward to its speedy implementation.

Flooding: Defence Programme

Lord Myners Excerpts

Thursday 1st November 2012 Lords Chamber

[Lord De Mauley]

I very much agree with the noble Lord. I think I said earlier, but I will repeat, that our sympathies of course remain with our own people who have suffered this summer.

[Lord Myners]

My Lords, does the—

[Noble Lords]

Next Question.

Schmallenberg Virus

Lord Myners Excerpts

Thursday 1st November 2012 Lords Chamber

[Lord De Mauley]

If I may, I shall restrict my response to the Schmallenberg virus for these purposes. I assure noble Lords that the necessary funding has been made available particularly to carry out the testing which is so critical in this case.

[Lord Myners]

My Lords—

[Lord Soulsby of Swaffham Prior]

My Lords—

--- Later in debate ---

[Lord De Mauley]

Yes, my Lords. That is a topical suggestion, in view of the overnight reporting of the appearance of the virus in Northern Ireland. We are in very regular contact with the devolved Administrations, both through the Chief Veterinary Officer and at official level, exchanging information on our knowledge of the virus and our actions. Indeed, our deputy chief vet spoke yesterday to the Northern Ireland Chief Veterinary Officer about this specific case.

[Lord Myners]

I should declare that I know very little about the Schmallenberg virus, but I know that it is an insurable risk—as is flooding. I want to go back, therefore, to ask the Minister: will the Government take action to address the deficiencies of the Solvency II directive on insurance, which is significantly decreasing insurance capacity in the UK and forcing up premiums for people insuring themselves against the virus or, indeed, against flooding?

Public Bodies Bill [HL]

Lord Myners Excerpts

Wednesday 23rd March 2011 Lords Chamber

[Lord Marlesford]

My Lords, I have a great deal of sympathy with all three speeches that have just been made. I declare various interests. I am a farmer in Suffolk, but I have some background experience myself because I was for 12 years on the Countryside Commission under the brilliant chairmanship of the noble Lord, Lord Barber of Tewkesbury. I was for eight years on the Rural Development Commission, chaired by Lord Shuttleworth and then the noble Lord, Lord Vinson. They had different, important, functions. They were then amalgamated, which may have been doubtful. Both bodies gave independent advice to Ministers. Of course, the Countryside Agency, of which the noble Lord, Lord Cameron, was a distinguished chairman, fulfilled that role.

All that is left now, apart from the body that we are talking about, is Natural England, which has made the awful mistake of becoming a bit of a pressure group itself instead of being an objective adviser to government. As I tried to explain to your Lordships at Second Reading, there is a crucial difference between a pressure group and an advisory group to government. The advisory group is meant to give objective advice, particularly advice on the views of pressure groups. Pressure groups have a totally legitimate role. The CPRE was mentioned, and I was for five years its chairman; it was and is a very effective pressure group.

There is a real danger of a lack of rural interest and understanding. This was very noticeable under the previous Government. This Government are more naturally attuned, in many ways, to the countryside and rural matters. In that respect, the coalition is a particularly happy combination because Tories and Liberals have traditionally had a closer relationship to rural areas than has the Labour Party; it is just an historical fact. That is not meant to be a criticism of the Labour Party, it is just a comment on the historical evolution of our political system. It is important that this dimension should continue in one way or another. We have ACRE, which is a body arranged by counties. I was for some years the president of Suffolk ACRE. In fact, I am now the president of the Suffolk Preservation Society, which is a county branch of the CPRE.

I hope that the Minister will be able to answer some of the points that have been made and questions that have been asked. It is an important aspect of this country, and I would hate to feel that we were dependent on civil servants, many of whom are neither sympathetic to, nor have much understanding of, the issues which need to be dealt with.

[Lord Myners]

I have no interests to declare. I have never chaired a rural agency. I now understand why: the noble Lord, Lord Marlesford held most of those appointments. However, I speak as a Member of the Labour Benches and somebody with a strong association with a rural area, namely the county of Cornwall. I am disappointed that the Government are proposing to abolish the CRC, which has done a fine job in ensuring that rural matters receive appropriate attention and consideration from all parts of government. I witnessed that myself, as a junior Minister in the previous Government.

The move to urbanisation is a global phenomenon. We must address the weakening of the rural voice. We may talk about the national experience, but the issues confronting people living in rural areas are very different from those affecting metro-centred urban areas.

The Government and the leadership of oppositions tend largely to be populated by people whose relevant experience is much closer to that of the urban environment than the rural one. Moreover, quite frankly, the Minister must know that the savings to be made by doing this are minimal. I cannot believe that this proposal received any close consideration by the Government. It was simply another name added to a long list in which the macho challenge was to make that list as long as possible. I cannot credibly believe that a rural unit within Defra can possibly replicate the need which is currently being met by the CRC. We know that the civil servants working in this area recognise that they work primarily for the Government and Ministers. As the noble Lord, Lord Cameron, said, they will not show a robustness of view or a willingness to be outspoken and to challenge their senior colleagues or the Ministers in their department.

Why on earth are the Government doing this? Why on earth are a Government who, so the noble Lord, Lord Marlesford, tells us, speak for the rural community allowing this to happen? Further, I am deeply disappointed that the six Members of Parliament in the other place from Cornwall—three Conservatives and three Liberal Democrats—have been completely silent on this issue. I know that the people of Cornwall will be saddened if the CRC is abolished and will not be convinced that the Government proposals can possibly represent an appropriate response to address the silencing of rural communities.

Public Bodies Bill [HL]

Lord Myners Excerpts

Wednesday 9th March 2011 Lords Chamber

[Lord Newton of Braintree]

My Lords, before my noble friend replies with his characteristic clarity, perhaps I may be a seeker after truth. There has been reference to consultation. I am now left totally confused. I read the briefing note that I took off the e-mail only yesterday in respect of today's proceedings, which contains the following line:

“The Government will consult on its detailed proposals in the new year”.

I am aware of the elasticity of seasons in respect of Her Majesty's Government, whoever forms it, but this seems to be getting ridiculous. Are we consulting or are we waiting?

[Lord Myners]

Will the Minister assure the House that nothing in the proposals made by the Government in respect of these bodies will in any way inhibit the freedom of recommendation of the Independent Commission on Banking? It is widely recognised that one of the key issues in banking is inadequate competition. That is evident in returns on capital and operating margins which most business sectors would die for. Banking is characterised by poor customer service, low standards of innovation and very little customer movement from one bank to another—although, on the whole, customers express themselves to be very dissatisfied with the service they receive from their current bank. To put it simply, they do not particularly like their own bank, but they have no confidence that any other bank is any better.

I fully commend the Government’s proposals to establish the independent commissioner on banking. Together with the establishment of the Office of Budget Responsibility, they represent novel and important proposals from the Government which should enjoy the full support of the whole House. However, we cannot see the freedom of recommendation in some way enfeebled by the Government denuding the effectiveness of some of the responses which Sir John Vickers and the commissioners might recommend in terms of the process, should they also be seized by the inadequacies of competition in banking for individuals and small businesses in the United Kingdom.

Flooding: Cornwall

Lord Myners Excerpts

Wednesday 24th November 2010 Lords Chamber

[Lord Henley]

My Lords, I believe that the noble Baroness is referring to the help that we will provide to local authorities under the Flood and Water Management Act. I understand that they will receive some £21 million next year, due to phasing in, but thereafter it will be some £36 million. That will help local resilience forums, which are local authority-based, to do all the work that is necessary. We believe that the £8.1 billion that we are providing for capital work on floods is a pretty fair settlement in light of the deficit that we faced when we came into government. It represents only a very small reduction on what was available for the previous four years.

[Lord Myners]

My Lords—

[Noble Lords]

Time!

Queen's Speech

Lord Myners Excerpts

Wednesday 2nd June 2010 Lords Chamber

[Lord Myners]

My Lords, I begin by congratulating the noble Baroness, Lady Wilcox, on her appointment to government. This must be the first time in many decades—possibly ever—that part of the debate on the humble Address has been led by two people of Cornwall. I also compliment the noble Lord, Lord Henley, on his return to the government Benches.

This will be my last contribution from the Opposition Front Bench, as I move to the Back Benches to make room for colleagues more skilled in the art of politics and opposition. I should therefore like to use the occasion to express my appreciation to the noble Baroness, Lady Noakes, for the detailed focus she brought to shadowing me when I was in government. I should also like to record my thanks to the noble Lord, Lord Newby, who introduced great vision and wisdom to our debates. And of course I should like to register my most sincere gratitude to my noble friends for their patience and support over 18 months. Finally, like others, I look forward to welcoming Sir James Sassoon to the House and to the Benches opposite. His experience of the real world will be indispensible to his new colleagues.

I will focus my remarks today on matters relating to the economy, public finances and the financial sector, because everything else depends upon this. My colleague, my noble friend Lord Young of Norwood Green, will also speak to these subjects and other matters in his closing speech.

The Labour Party lost the general election. We need to reflect on the reasons for our failure and develop a set of coherent proposals which will appeal to the aspirations of the broader electorate. We should be proud of many of our achievements while in Government, but we need to recognise that jobs cannot be created by interminable meetings in the COBRA war room. Government needs to work with the grain of the private sector, creating a pro-enterprise context with the right incentives and rewards for success.

We now need to focus on the challenges and responsibilities of effective opposition. We will not oppose for the sake of it; nor should we oppose proposals from the Government which we would have made had we been re-elected. For instance, I do not see why we should take issue with the intention behind the Equitable Life Payments Scheme Bill or the Terrorist Asset-Freezing Bill, although we will of course scrutinise the detail.

We will be vigilant in our analysis of and response to government proposals which we judge to be unfair, damaging to essential public services or injurious to jobs and business. We are told that the Government's legislative programme will be based on the principles of freedom, fairness and responsibility. The Queen's Speech tells us nothing about how the new Government will resolve the inevitable tensions between those fine words. We will be testing the Government against those principles. The Queen’s Speech is where the “dignified” part of the constitution passes to the “efficient”. The Government have been clear that in their view, to cite the coalition document,

“The deficit reduction programme takes precedence over any of the other measures”.

The Opposition do not dissent from the view that there needs to be a clear path to sustainable government funding, including a significant reduction in the public sector deficit, but we question the timing and pace of the deficit reduction programme. The risks of moving too soon or too late are not symmetrical. Over-hasty action will push the economy back into recession and a ballooning rather than a contracting of the deficit. That was the view of the Liberal Democrats until three weeks ago.

The economy is showing signs of recovery from the global recession, supported by the previous Government’s stimulus package, but private sector consumption and investment are still too anaemic, in my judgment, to make up for a very sharp fiscal tightening. The output gap, or excess capacity, is already in excess of 5 per cent of GDP. Any contraction in aggregate demand will be reflected in increased unemployment, loss of people's homes and business failure.

It has been entirely right and proper in the circumstances that the Government continued to support economic activity through a targeted programme of expenditure designed to protect the most vulnerable and facilitate the return to growth. This should continue until the private sector demand and investment process recovers. Our action in that respect in 2008-09 achieved a considerable measure of success, particularly compared with the experience of Tory recessions in the 1980s and 1990s. The strategy that we followed was sensible and well within the Government’s financing capabilities. Real yields on gilts are below 1 per cent, and nominal yields are below 3.5 per cent. The ratio of gross debt to gross domestic product is below that of all our major competitors, and still below the long-term average for the UK. The average maturity of our debt is more than 14 years. The private sector is currently running a surplus that represents nearly nine-tenths of the fiscal deficit. We must not lose sight of the interaction between the private and public sectors in terms of deficits and surpluses.

Fiscal tightening will work only if it coincides with a robust private sector recovery. If that is not the case, the Government's action will drive the economy back into recession with an increasing public sector deficit. In such circumstances, dogma and intransigence will be pursued at very real cost to people's lives. Recovery cannot be taken for granted, particularly if the public and private sectors here and overseas are engaged in simultaneous and unco-ordinated balance sheet adjustments. It is incumbent on the new Government in this respect to follow the lead set by their predecessor in shaping and influencing international co-operation on economic management. The new Chancellor will have his first test this weekend at the G20 meeting. We look forward to receiving his report.

I referred earlier to the position that Liberal Democrats took during the election campaign on the need to eschew early or harsh spending cuts. Mr Nick Clegg, the Deputy Prime Minister, justified his change of position in supporting George Osborne's spending cuts, having opposed them during the election, by saying on the “Andrew Marr Show” on BBC1 on Sunday 23 May:

“I don’t think anybody could have anticipated quite how sharply the economic conditions in the Euro zone would have deteriorated, and the need to show that we are getting to grips with this”

the deficit—

“suddenly becomes much greater”.

I look forward to hearing the views of the noble Lords, Lord Desai and Lord Skidelsky, on this arrant nonsense. European economies—our principal export market—are weakening. Gilt yields have fallen, signalling a sense of heightened anxiety about growth and risk, as further evidenced by increased risk tendencies within the banking sector. Sterling is strengthening, yet our Deputy Prime Minister now believes that these circumstances justify the introduction of measures that will weaken demand and that are likely to be harsh and regressive in their impact on our economy and society.

The coalition Government need to spell out those parts of the economy that they have identified as the engines for growth in 2010-11. What will act as a catalyst for an improvement in the private sector? What will improve demand and investment when so many countries are in retrenchment? The Minister talked about a balanced economy. How do the Government intend to balance the economy? What do they intend to suppress in economic activity? What activities do the Government wish to see diminish in importance in our economy? It is certainly most odd that in these circumstances Mr Osborne should have chosen last week to give high priority to reducing business support schemes and that Mr Cable should have failed to make the case for business. Perhaps Mr Cable has concluded that he is powerless to challenge Mr Osborne.

The Minister referred to wasteful expenditure. We are all in favour of cutting waste, but cancelling 10,000 university places is not cutting waste; it is cutting our capacity for the future. Cancelling 40,000 jobs for young people under the Future Jobs Fund is not cutting waste; it is blighting prospects. Cutting child trust funds is hitting the poorest and has no impact on public expenditure, as the assets within those funds have to be retained within the banking system.

The noble Lord, Lord De Mauley, last week failed to provide any credible answers to questions from my noble friends Lord Eatwell and Lord Kinnock on the impact of the Government’s announcement on unemployment, business failures and the cost of breaking long-term contracts. The noble Lord said that today’s debate would afford ample opportunity for answers to those questions. I heard not a single answer from the Minister to those questions. It is my sincere hope that Ministers will provide answers in the closing speech or by letter to those participating in this debate. I have no doubt that the answers exist within the Treasury, although they were clearly not shared with the noble Lord, Lord De Mauley, ahead of last week’s debate. When I sat on the Benches opposite, I made real efforts in my closing speeches to answer questions raised in debate, and when I was unable to do so, I tried to answer them as fully as possible in correspondence with noble Lords who participated in the debate. If I was slow in replying, I could always rely on the noble Lord, Lord Marlesford, to chase me. I hope that Ministers participating in this debate will respect the House by following the same practice.

A core element in the Government’s legislative programme is the establishment of the Office for Budget Responsibility to provide confidence in the management of public finances. We must wait to see whether this is a triumph of spin over substance. The independence and credibility of the OBR is hardly helped by the suggestion that it will be able to provide independent and credible economic forecasts ahead of the Budget in three weeks’ time. The OBR’s wish to accommodate the Chancellor by agreeing to such a rushed piece of analysis does not auger well. I do not have concerns about or issues of principle with the OBR. It could possibly be a useful addition to transparency and accountability, although the IMF’s cool reaction to the proposal suggests that we should not raise our hopes. But I have questions of detail to which I seek answers. How will the OBR be staffed? Will it have its own independent forecasters, or will it rely on Treasury officials? What resources will be allocated to the OBR, and will they be determined by the Chancellor? What savings in Treasury costs will arrive with the establishment of the OBR? How much time will it have to review Budget proposals before it publishes its commentary on them on 22 June? Sir Alan Budd appears well qualified to chair the OBR, but he is a political appointee, made while the Tories were in opposition in 2009. Will OBR appointments be in accordance with best practice and in open competition, without ministerial or special adviser involvement? How much will Sir Alan and his colleagues be paid? Sir Alan has recently worked for a well-known hedge fund and speculator. Has he now terminated all links with this group, which is led by a well-known Tory donor, or is there an arrangement for him to return to the group on completing his appointment at the OBR? I ask the same question about Mr Geoffrey Dicks and Novus Capital. When did Sir Alan and Mr Dicks last advise their clients and associates on public finance issues? Have they had any contact with these firms since the election?

Critically, we will expect the legislation that establishes the OBR to make it clear that this body should be independent of the Treasury, fully accountable to Parliament, and transparent in its processes—including publishing minutes, as we did in respect of the Council for Financial Stability. The key word in the OBR’s title is “responsibility”. Let there be no doubt that the Chancellor must continue to take responsibility for tax and spending decisions. He cannot evade them or use the OBR, or Mr Danny Alexander, as a human shield. Sir Alan will need to be careful not to be drawn into politics.

The OBR has little time to prepare its economic forecast and review the proposals that the Chancellor will announce to the other place on 22 June. It is clear that we will see draconian cuts in expenditure that will include the front-line provision of critical services. Taxes, particularly VAT, will also rise. Tax bands will be frozen and benefits cancelled or reduced. Anticipation of these cuts is already sapping consumer confidence, and businesses are placing new investment on hold until they see how bad things are going to be.

We can, however, take some encouragement from the moderating influence of the Liberal Democrats, who are deeply embedded behind lines in the coalition, as already evidenced in the cancellation of plans for raising the threshold for inheritance tax and in the proposed changes to capital gains taxes to bring them closer to the income tax rates. We congratulate the Liberal Democrats on their influence on the Conservative Party in this respect. Raising tax thresholds and the capital gains tax rate is a well argued Liberal Democrat priority, although I note for the House that in previous Budgets we judged it important when in government to encourage capital investment and business creation through low rates of taxation on capital gains. I look forward to hearing the Government’s explanation of their thinking behind increasing capital gains tax rates. The Liberal Democrats made great play in their election pitch about closing tax loopholes and frustrating tax avoidance, particularly in the banking sector. Will Ministers confirm that this is a high-priority action for the new Government and let the House know the actions that they are taking?

Let me now spend a moment on the banking sector. I sense that the European banking sector is moving towards a very difficult space, with heightened risk manifesting itself in wider credit spreads and a reluctance to do business with an increasing number of professional counterparties. This is similar to, although not as extreme as, the conditions that prevailed in 2008. This new Government must now exercise great care if we are to avoid a further banking crisis. The Government have proposed establishing an independent commission to investigate the complex issues of separating retail and investment banking. I wonder whether Ministers can cite a single example of this factor having a bearing on the failure of any UK banking institution, and I look forward to the answer from the noble Lord, Lord Henley, to that question.

From my experience, the failures of RBS and others were down to poor credit judgment, poor management and poor governance. Universal banking was not a causative factor. Yet the establishment of this commission is causing the banking sector considerable alarm, as is Ministers’ talk of the Government forcing banks to lend regardless of their commercial judgments of risk. The uncertainty that is being created is leading banks to review their lending commitments until the Government are clear about their intentions. This contraction of credit is another force that pushes the economy back towards recession. Will Ministers tell us when we can expect a comprehensive statement on this commission, and their policy thinking behind obliging banks to lend?

It is unfortunate that the uncertainty created by the new commission must now mean that the Government are not in a position to realise the full value of the investment taxpayers have made in Lloyds Banking Group and RBS. The taxpayer currently has a substantial gain from the aggregate interventions made by the Treasury and the Bank of England in 2008-09—something well in excess of £10 billion of gain as a consequence of well structured programmes of intervention and support. UK Financial Investments had well developed plans to work towards sales, which I imagine must now be postponed while this review is carried out, with the risk that the opportunity for gain will pass.

Finally in respect of banking, the new Government have talked of robust action on bonuses. Can Ministers explain what they have in mind and how their thinking in this area and their proposed actions differ from the actions of the previous Government? Are they considering the introduction of a special tax or a higher rate of corporation tax for those banks, or some direct involvement in decisions about remuneration? If they are going to do this for the banks, will they do it for insurance companies, hedge funds and others who compete with the banks? There is complete uncertainty here because of the lack of clarity about the Government’s intention. The time has passed for the Government to be vague about this. We need clear statements if uncertainty is to be addressed.

The Government are also proposing changes to the structure of banking supervision. Their thinking here is confused and the wisdom of making wholesale changes to the regulatory architecture must be very questionable at a time when the world’s banking system is showing loss of confidence. The Government talk about bringing forward proposals to give the Bank of England control of macro-prudential regulation and oversight of micro-prudential regulation. When can we expect to see these proposals? Do they accord with the wishes and recommendations of the Bank of England? Does the Bank of England have the capability to perform these new roles or will people need to be recruited—possibly, ironically, from the FSA? When does oversight move to control? When does micro morph to macro?

In respect of macro-prudential regulation, will the Bank of England seek to influence market values of homes, property and businesses? Will it have powers to ration lending? How would those powers operate given the global nature of banking and financial markets? Will this macro-prudential regulation be co-ordinated with the work of the OBR? On these subjects, the Government are absolutely silent. How will the Bank manage the potential conflicts between its role in determining the price and availability of money, and its new responsibility for micro-regulation, where these two may move it in opposite directions? There is no clarity on these issues in the Government’s thinking at all. We look to the noble Lord, Lord Henley, to provide that clarity. I mentioned governance earlier. I hope that the new Government will continue to promote the cause of good governance and stewardship, and ensure that the UK continues to lead in this important area.

I have little time to comment on other matters in the Queen’s Speech, but I would express my general support for the intention to give all employees the right to request flexible working hours and the promotion of equal pay—two policies where the influence of the Liberal Democrats is again very clear. The same could be said for the enthusiasm with which the Government are proposing to focus on legislation to take action on climate change.

The Liberal Democrats endow the Government with a more caring complexion than would have been the case if the Conservatives had governed alone. The new Government are coming together impressively at ministerial level but the debate on the humble Address has already exposed Back-Bench tensions that will need to be managed.

For our part the Queen’s Speech contains a number of measures which we will wish to support, subject to detail. But there are other areas where thinking is simply flaky or reckless—areas where the interests of economic prosperity and stability are subserviated to dogma, blindness to risk and the hazards of foolish action. The Government can expect us to be unstinting in our opposition to such measures.

--- Later in debate ---

[Lord Henley]

That is a question that the noble Lord will have to put to the previous Government, who saw it rise to that level. I shall of course write to him in due course and, as I always do, put a copy of the letter in the Library.

The longer that we delay action on the deficit, the greater is the risk of that loss of market confidence. As I said, that would mean higher interest rates for all, stifling recovery and making challenges ahead even harder.

[Lord Myners]

I am grateful to the Minister for allowing me to ask just one small question. It is clear that the size of the deficit will be a function of the expected rate of economic recovery and growth; the two interplay. I believe that the Minister said that the OBR would make independent forecasts. Will he confirm that it will make economic forecasts as opposed to auditing or commenting on Treasury forecasts?

[Lord Henley]

The forecasts of the OBR, as I made clear, will be independent. It is for it to make those independent forecasts. I was trying to stress its independence. I shall write to the noble Lord on that in greater detail, but its independence was his principal concern. He will have a chance to see the first of those forecasts quite soon, as I understand that the first of them will be out before the Budget. If I am wrong about that, I shall let him know in due course.

One should also refer to the OECD’s recent economic report, which argues that a more rapid fiscal consolidation would help the recovery by leaving room for interest rates to remain lower for longer. That will support spending by households and by business. The importance of taking action this year is underlined by recent events in the eurozone. Failure to take action would put that recovery at risk.

I turn to questions asked about tax. Noble Lords mentioned CGT, income tax and tax avoidance—that was the noble Lord, Lord Oakeshott. We heard confessions from the noble Lord, Lord Desai, about his having to resign from the pre-1997 opposition Front Bench for his views about that. As I remember it—the noble Lord will no doubt correct me—he had to resign from the opposition Front Bench more than once.