Succession to Peerages and Baronetcies Bill [HL]

Lord Northbrook Excerpts

2nd reading
Friday 9th February 2024 Lords Chamber

Moved by

[Lord Northbrook]

That the Bill be now read a second time.

[Lord Northbrook (Con)]

My Lords, I preface my remarks by saying that the Bill has nothing to do with membership of your Lordships’ House. It concerns only the specialist topic of the arrangement for succession to hereditary peerages and baronetcies by making a small step towards modernity.

Noble Lords will be aware that in most cases, hereditary peerages can descend only through the male line. Thus, it follows that in some cases, where there is no male heir, the peerage dies out. I declare an interest as being in this situation: I have a very capable daughter who could inherit my title under this Bill. There are a few cases—mostly Scottish, like that of my noble friend Lord Lucas, or very ancient ones—where the Letters Patent specifically allow descent through a woman.

I know that some speakers, including my noble friend Lady Noakes, will ask why peerages should not now descend via the eldest child. I can only quote from a peerage expert, my noble friend Lord Fellowes of West Stafford, in his speech of 2015 on a similar Bill. He said that

“there have been several attempts to encourage some interest in the idea, but it never gets off the ground, and the reason is simple. An immediate change now to eldest child inheritance would mean that a great many men would be stripped of their courtesy titles and the names they have lived under for years, and so would their children. It would mean that the financial arrangements”,

especially trusts,

“that have been designed to protect a large number of families’ interests would be wrecked, and that those same families would be facing an intolerable position, dividing siblings and bringing real unhappiness”.

In 2015 my noble friend Lord Trefgarne, on the eldest child only being able to inherit the title, said

“the plain fact is that that proposition has been before Parliament on several occasions and has on each of those occasions failed to attract your Lordships’ support”.—[Official Report, 11/9/15; cols. 1618-21.]

If noble Lords feel that my noble friend Lord Fellowes’s sentiments are a bit melodramatic, I point out, more prosaically, that the stability of trust arrangements in particular have allowed great houses and estates to remain in the same hands. It gives the UK a huge advantage from a tourism viewpoint—unlike France, where the Napoleonic law means that equal division of assets on death has split family assets up, with the result that the privately owned stately home offerings for visitors are much more limited. Such a problem could occur if peerage descent went to the firstborn child only.

Turning to the subject of extinct peerages, I repeat the observation of my noble friend Lord Fellowes in the 2015 debate in relation to his wife’s family. He said that if the Bill were allowed to pass, the Kitchener title and others would be able to be revived, which I think is rather special for such a famous name. I am aware of Harriett Baldwin’s Bill on the matter in the other House, which will come to your Lordships in due course. While I will personally not seek to obstruct it, I believe a more gradual approach is required to get full approval in your Lordships’ House.

As I said in 2015, I understand that Section 14 of the Human Rights Act 1998 now makes it illegal to discriminate on the basis of sex where both sexes may perform the function required. This would apply to peerages. The noble Lord, Lord Pannick, mentioned to me at the time that if a legitimate female issue, where the peerage would otherwise become extinct, referred a case to the European Court of Human Rights, they could well have a chance of success. I would perfectly well understand if some heirs might wish to take this route.

In summary, while some noble Lords might believe that this Bill does not go far enough, peerage succession is a complex subject that needs to be tackled gradually, and I hope it will find favour with your Lordships. I beg to move.

--- Later in debate ---

[Lord Northbrook (Con)]

My Lords, I am grateful to all noble Lords who have taken part in this debate and to my noble friend the Minister for her detailed and interesting reply.

The general mood seemed to be not entirely in favour of the Bill, although my noble friend Lord Astor said it was a crucial step forward. My noble friend Lady Noakes fired away with two barrels, saying that it was “misogynistic” and that we should be focusing more on Private Members’ Bills on crime and immigration. I thought that is what the Government were meant to be doing. I see no harm in Private Members’ Bills as long as the Peer concerned declares an interest; the worst thing is when they bring forward a Bill and omit to declare that interest. I agree with my noble friend Lord Lucas, who said that Parliament is the only way in which the law can be changed.

I note the comments on Clause 3, which obviously needs to be considered carefully, and there were many criticisms of Clause 1(4), which I am happy to go away and consider. Otherwise, I beg to move.

Bill read a second time and committed to a Committee of the Whole House.

House of Lords (Hereditary Peers) (Abolition of By-Elections) Bill [HL]

Lord Northbrook Excerpts

2nd reading
Friday 3rd December 2021 Lords Chamber

[Lord Northbrook (Con)]

My Lords, I acknowledge the tenacity of the noble Lord, Lord Grocott, in promoting this Bill, and for reaching the age of 80 since we last debated it. It is for another day to discuss whether, in normal times, Private Member’s Bills which do not pass your Lordships’ House should have the same priority in the next Session. I do not like the decision to remove equal chances of any Private Member’s Bill succeeding in the ballot, by instead cherry-picking a group on a rather unfair basis without consultation with the House.

As my noble friend Lord Trenchard has already said, the Bill is a breach of a promise given in 1999. On June 22 that year, Lord Denham asked the following question of the Lord Chancellor:

“Just suppose that that House goes on for a very long time and the party opposite get fed up with it. If it wanted to get rid of those 92 before stage two came, and it hit on the idea of getting rid of them by giving them all life peerages … I believe that it would be a breach of the Weatherill agreement. Does the noble and learned Lord agree?”


The Lord Chancellor replied:

“I say quite clearly that … the position of the excepted Peers shall be addressed in phase two reform legislation.”—[Official Report, 22/6/1999; cols. 798-800.]


I also remind the House of the importance of the then Labour Lord Chancellor’s words on 30 March 1999:

“The amendment reflects a compromise negotiated between Privy Councillors on Privy Council terms and binding in honour on all those who have come to give it their assent.”—[Official Report, 30/3/1999; col. 207.]


For the hereditary Members of the House at that time, of which I was one, it was a vital part of the 1999 Act and a key condition for letting it make satisfactory progress through the House. Nothing could be clearer than a former Lord Chancellor’s words: that is why I believe that the Bill indeed breaches the Weatherill agreement and the House of Lords Act 1999, as does a current hereditary Labour Peer. I also believe that, as a matter of principle, such major constitutional reform should be implemented by government legislation rather than by a Private Member’s Bill.

[Lord Anderson of Swansea (Lab)]

Does the noble Lord agree with Lord Salisbury that that agreement was brought about by undue pressure and substantial threats at the time?

[Lord Northbrook (Con)]

No, I do not agree with that.

The current system for the election of the 92 can be fine-tuned. The change I would like to see is that all replacements should be elected by the whole House, which would give more logic to the Labour and Liberal by-elections in particular. Overall, the system controls the number of hereditary Peers to a fixed number and has produced good-quality replacements. The hereditary Peers are a strong link with the past, a golden thread that goes back to the first separate sitting of the House in 1544. Until relatively recently, in House of Lords terms, the House was entirely hereditary. By-elections provide a way into this House that is not dependent on prime ministerial patronage.

Since we last considered such a Bill from the noble Lord, Lord Grocott, the problem has been in controlling the number of life Peers—there have been no fewer than 62 new creations since the previous time we debated the Bill—and getting equal quality. I suggest that there should be elections among their numbers at each election to keep the total size of the House to, say, 500. To monitor quality, there should also be a statutory appointments commission whose verdict cannot not be overruled by the Government.

The Government’s response to the Burns committee report, which recommended limiting the size of the House by a different method, was not encouraging. It said:

“The Government does not … accept the Committee’s recommendation that the Prime Minister must now commit to a specific cap on numbers, and absolutely limiting appointments in line with the formula proposed”;


hence it appears there will be no limit on the size of the House. If and when the Labour Party gets back into power, as the noble Lord, Lord Anderson of Swansea, so rightly said, it will also have to appoint a considerable number of new Peers to get its legislation through, so the size of the House will keep increasing.

With regard to further reform, we have also been promised a constitutional rights and democracy commission. I believe that we should wait for what this produces before acting on any constitutional Private Member’s Bill. In summary, though, significant legislation to implement phase 2 Lords reform should be brought forward by the Government rather than by a Private Member’s Bill.

--- Later in debate ---

[Lord Northbrook (Con)]

I am very grateful to the noble Lord, Lord Grocott. Does he recall the passage in Alastair Campbell’s memoirs when he said that he could not believe that Viscount Cranborne was going to go along with this deal, as it was only going to end in tears for him?

[Lord Grocott (Lab)]

I am not sure that I understood that intervention. I have read most of Alastair Campbell’s memoirs—but I can tell the noble Lord what was going on in Downing Street in 1999, because I was working there. We were certainly worried to death about the whole of that legislative programme. Our clear manifesto commitment was to remove all the hereditaries, and we were prevented from doing that because we were told that the rest of the programme would be wrecked. If there are any noble Lords who have not picked up on that and understood it, will they please read it again in Hansard, or read the comments that the Marquess of Salisbury has made? Do us all a favour, please, and when or if we have this debate next year—if it fails this year, I shall bring it back, and that is not a threat but a promise—let us end the discussion about that. It is simply false, incorrect, wrong and absurd. I hope that I have made myself clear.

The other point that needs repeating, even though several—

Financial Services Bill

Lord Northbrook Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Thursday 28th January 2021 Lords Chamber

[Lord Northbrook (Con) [V]]

My Lords, putting the contribution of the UK’s financial services in context, according to a City/PwC paper in January 2020 they contributed £75.5 billion in tax revenue in 2019, employing about 1.1 million people. Overall, I support the Bill’s measures, which bolster the consistent use of international standards. This is crucial to reducing the unnecessary fragmentation of markets that impacts on consumers. I agree with the delegation of responsibility for financial firm requirements to the regulators, subject to an enhanced accountability framework and necessary parliamentary scrutiny.

The three main objectives stated in the Bill are entirely sensible. The Bill also amends existing laws on financial services in the 17 separate areas grouped by these three stated objectives.

My only criticism of the second objective is that, while it promotes openness to EU and overseas financial firms that come here, no attempt was made in the Brexit negotiations to obtain passporting rights from the EU as a quid pro quo. The Government seem to have believed that these should only now be negotiated—alas, when we have no bargaining tools left in other areas. The EU seems in no hurry to assist us. Can the Minister explain the logic in this?

I welcome the new regulatory regime proposed for non-systematically important investment firms. The Government rightly state that the existing regime for these institutions can be disproportionate, inappropriate and impose unnecessary burdens. The Bill would rightly allow the Financial Conduct Authority to introduce a tailored regime for such companies. The Government say that the UK regime will be flexible and is intended to achieve similar outcomes to the reform in the EU in 2021 but

“tailored to the specificities of the UK market.”—[Official Report, Commons, Financial Services Bill Committee, 17/11/20; col. 59.]

I welcome the Bill’s implementation of Basel III standards on banking supervision. Some member firms will have been working towards implementing the EU’s capital regulatory requirements, CRR II. How may the UK diverge from CRR II?

I also support the framework to wind down the Libor benchmark, as outlined in the Bill. Will the Minister urge the FCA to publish further detail on its replacement as soon as possible?

Can the Minister clarify how the Treasury intends to make equivalence decisions under the framework for the new overseas fund regime? Will the Government publish a regular report on the progress and results of negotiations for obtaining equivalence for UK firms in EU countries? I strongly support maintaining the effectiveness of the financial services framework and sound capital markets in Clauses 8 to 17.

During the rest of my contribution, I will focus on the unfortunate statistic of the rise in complaints to the FCA and cite two examples of regulatory failure. According to an FTAdviser article of February 2020, the number of complaints about the City watchdog jumped by more than 50% in 2019, primarily due to concern about the regulator’s supervision of the industry. The main driver behind the hike was the sharp increase in the number of complaints relating to the FCA’s advisory role—namely, failure to act on information and to spot a problem. In the same month, the FCA was reprimanded by the complaints commissioner, Antony Townsend. He wrote to the FCA board expressing serious concerns, branding the current situation at the watchdog “totally unacceptable”. This followed a previous report in 2019, where the complaints commissioner highlighted a

“lack of effective prompt action”

by the financial regulator, in a number of cases where advisers and consumers reported concerns about a fund.

The two individual examples of regulatory failure on which I will focus are London Capital & Finance and Beaufort Securities. In December 2020 an independent investigation into the FCA’s handling of the LCF mini-bond scandal rebuked the regulator for “significant gaps and weaknesses” in its policies and practices. The review found that the City watchdog had failed to properly regulate the now collapsed company. It warned that its handling of information about the business from third parties was “wholly deficient” and an

“egregious example of the FCA’s failure to fulfil its statutory objectives”

in regulating the company. The mini-bond provider collapsed in May 2019, owing more than £230 million and putting the funds of some 14,000 bondholders at risk.

The main highlights of the review were that, first, investors had not received enough protection from the regulatory regime, and, secondly, LCF had not been adequately supervised by the FCA. Most importantly, the review stated that the root causes of the FCA’s failure to regulate LCF were “significant gaps and weaknesses” in the policies and practices it implemented to analyse the business activities of regulated firms. It had allowed LCF to use its authorised status to promote

“risky, and potentially fraudulent, non-regulated investment products to unsophisticated retail investors”.

Although the regulator’s financial promotions team had raised concerns about LCF’s financial promotions on six occasions, the breaches did not result in a referral to the supervision or enforcement divisions. Lastly, the report said:

“FCA staff who reviewed materials submitted by LCF had not been trained sufficiently to analyse a firm’s financial information to detect indicators of fraud or other serious irregularity … Neither did the FCA appreciate the significance of an ever-growing number of red flags, which were indicative of serious irregularities in LCF’s business. This occurred at a time when LCF’s unregulated bond business was growing at a rapid pace and substantial funds were being invested by Bondholders.”


I do not have time to go through the case of Beaufort Securities with which there were many of the same problems, though in a number of cases, investors got their money back. Overall, I welcome the Bill.

Budget Statement

Lord Northbrook Excerpts

Wednesday 18th March 2020 Lords Chamber

[Lord Northbrook (Con)]

My Lords, it is always a pleasure to follow the interesting and entertaining viewpoints of the noble Lord, Lord Desai. I will talk first about the post-Budget emergency economic measures. Following the example of France and Portugal and the USA’s proposals yesterday, the Chancellor stated that he would do whatever it takes to get businesses through these difficult times. He unveiled a package of major assistance for companies and individuals: the £330 billion loan guarantee support and the £20 billion business assistance help—they are astonishing figures. I approve of the way the Chancellor said that:

“This is not a time for ideology and orthodoxy.”


First, I welcome the loan assistance package, with separate schemes for larger and smaller companies, but note other noble Lords’ concerns about the delay in banks processing these. For individuals, I commend the Chancellor’s decision to suspend mortgage payments for three months for those in difficulty. Secondly, I agree with the Government helping with companies’ fixed costs, again particularly with the larger and smaller company schemes regarding business rates relief, and with improved cash grants for smaller companies. Thirdly, I welcome the proposal to look at regulatory relaxation in sectors such as transport, airlines and airports. Finally, on these extra measures, I await the

“bold and ambitious employment package”,

which the Chancellor pledged to establish, having made a start with more generous statutory sick pay proposals.

I agree with many noble Lords that much more needs to be done. I was fascinated by the idea proposed by the noble Lord, Lord O’Neill, of helicopter money, which was supported by my noble friend Lord Lamont and the noble Lord, Lord Adonis, and put into historical perspective, regarding its use by other countries, by the noble Lord, Lord Razzall—I agree that there is less risk of inflation in doing it now. I agree with my noble friend Lord Leigh of Hurley that another simple route would be through the PAYE system.

I turn to the Chancellor’s original 2020 Budget, which I also welcomed. Even before such difficult circumstances, a different approach had to be taken after the election, especially to thank constituencies in the north and Midlands that elected Conservative MPs, wanting a new approach to improve their neglected infrastructure and business prospects. On monetary policy, I welcome the 0.5% base-rate cut, which is always a necessity in difficult economic times.

Moving on to fiscal matters, the Budget’s economic forecasts are now history, as the OBR’s estimates were completed before the Covid-19 outbreak really got going. Also, they assume that the Brexit negotiations are going to go entirely smoothly, with a “typical” trade deal with the EU. I ask the Minister to heed well the words of the noble Lord, Lord Adonis, on Brexit negotiation delay.

Economic growth, as predicted by the OBR for the Budget over the next five years, was not very exciting. Clearly, these figures will have to be revised substantially downwards. By way of comparison, the European Commission has revised its estimate for European GDP growth, now expecting a GDP contraction at 1% this year. Apparently—according to the Canadian National Post—unpublished internal estimates are more likely to indicate a contraction of 2.5%.

As many noble Lords have stated, the original Budget’s big spending boost over the period came in public sector net investment. Public sector spending is forecast to grow at 2.8%, twice as fast as the economy. Public sector net borrowing, excluding yesterday’s emergency measures, at its peak increases by 74% to nearly £67 billion by 2021-22. While this is a major increase, it is still a far cry from the huge figure inherited from Labour in 2010. In answering criticism from the Adam Smith Institute and the IEA, I maintain that while interest rates are low, this is the time to do this. Of course, as the IFS stated in its Budget review, the debt hike is vulnerable to changes in interest rates, inflation and economic growth. Obviously, the longer the Covid-19 outbreak continues, the worse the effect will be here. I also note that the fiscal rules framework will be reviewed in the autumn and doubtless tinkered with.

Looking at the figures in more detail, I welcome the initial £12 billion fiscal stimulation package, directly related to the outbreak, with £7 billion going to people and businesses. However, I am worried about liquidity problems for smaller companies; as I predicted, the £7 billion figure had to be expanded considerably due to the outbreak. The other £5 billion is going to the NHS—a good decision.

Turning to longer-term public net investment, I note the huge figure of £600 billion promised over the forecast period for gross public-sector investment but calculate the net figure at £451 billion. Can the Minister let me know about the major components that must be deducted to get to £451 billion? The big public investment figures mentioned for investment, R&D, new roads, the affordable homes programme, improving broadband, potholes, 70,000 new houses and a new building safety fund are all welcome, as long as they are properly implemented.

In other departments, I welcome the extra £6 billion of regular funding for the NHS, noting that it is in addition to the extra £34 billion over five years. I also welcome the announcement that the Government will give the NHS whatever it needs to fight the Covid-19 outbreak. Regarding the further education sector, I am sure that the Minister is as pleased as I am to see the further new capital promised to improve the condition of the further college estate. On the transport sector, I welcome the money to be invested in the transforming cities fund.

In summary, the OBR said that

“the Government has proposed the largest … fiscal loosening since the pre-election Budget of March 1992”.

All this money needs to be well spent.

House of Lords (Hereditary Peers) (Abolition of By-Elections) Bill [HL]

Lord Northbrook Excerpts

Report stage (Hansard): House of Lords
Friday 15th March 2019 Lords Chamber

Moved by

[Lord Northbrook]

2: Clause 1, at end insert “, and who thereby remain members of the House of Lords.”

[Lord Northbrook (Con)]

My Lords, I firmly support my noble friend Lord Cormack’s amendment but it needs a little tweaking. In moving Amendment 2 I will speak also to Amendments 16 and 31. I am amending my noble friend’s amendment because I believe, contrary to the Bill, that the current royal officeholders—the Earl Marshal and the Lord Great Chamberlain—and their successors should remain Members of the House of Lords.

The Earl Marshal is the eighth of the great offices of state. The Duke of Norfolk’s family has held that position since 1672, being responsible, as my noble friend Lord Cormack said, for organising major ceremonial occasions, the monarch’s coronation and state funerals. He also oversees the College of Arms. The Lord Great Chamberlain is the sixth of the great offices of state, having charge of the Palace of Westminster. The office goes back to William the Conqueror’s reign. It is quite right that these two royal officeholders should remain Members of the House of Lords due to the importance of their roles and duties. Amendment 16 would adjust the Bill’s wording to put that into effect.

Amendment 31 covers a slightly different situation. At the end of last year, I was pleased to see the noble Lord, Lord Carrington, elected as one of the 90 hereditary Peers through a by-election. However, when Her Majesty dies, the noble Lord will become the Lord Great Chamberlain, as the position rotates between different peerage families on the death of the sovereign. As a result, there will be a vacancy among the 90 excepted hereditary Peers. This situation is not covered by the new subsection (4) proposed by Clause 1(3), which refers only to,

“the death, retirement, resignation or expulsion of an excepted person”.

Hence I believe that in these circumstances, a by-election should be held. I beg to move.

[Lord Grocott]

My Lords, I fear that we may already be losing the dozen people I understand to be following this discussion in the country at large. I will try to expedite things. The retention of these two positions is completely anachronistic. Two hereditary positions remaining in perpetuity when they do not take part in events here is odd, particularly when we are trying to reduce the size of the House to 600. However, it is not germane to the Bill’s central purpose, which is to end by-elections, as the noble Lord, Lord Cormack, said. On those terms, I accept the amendment and hope that we can get on to Amendment 2A.

--- Later in debate ---

[Lord Elton (Con)]

My Lords, I wish to intervene very briefly to declare an interest as another hereditary Peer and to say that I have a close interest in what is happening here.

I want the House to be reformed. Reform is available in the form of the Burns report. Everybody has said that all we are looking for is stage 2 of reform. From my point of view, that is stage 2, and if that report were the basis for the second stage of reform, I would not resist this Bill. However, if it comes to a vote, I will vote against it because we have not got to stage 2. That reform was promised to me and 800 other Peers, and they gave up their privileges for no reward on the promise that we would remain here until stage 2 occurred. The most important element of that reform was, whatever form it took, the House would still be free to challenge effectively the national Government when that was required by circumstances. My resistance is temporary, and I wish that we could get on with the issue of reform.

[Lord Northbrook]

My Lords, I hope that this answers the point raised by the noble Lord, Lord Anderson of Swansea, who is not in his place. I remember well that in the original House of Lords Bill in 1999 we tried to get the amendment of my noble friend Lord Strathclyde added, but it was thrown out by the other place at the last minute. As other noble Lords have said, the non-statutory Appointments Commission, which was established in May 2000, has done a good job in connection with the non-political Peers.

[Lord Campbell-Savours]

My Lords, again, will the noble Lord declare an interest in this debate to help people outside understand where he is coming from?

[Lord Northbrook]

I apologise to the noble Lord, Lord Campbell-Savours. I declare an interest as a hereditary Peer.

The House of Commons Political and Constitutional Reform Committee report of October 2013 has an interesting section discussing that.

--- Later in debate ---

[Lord Northbrook]

My Lords, Professor Meg Russell of UCL’s Constitution Unit, who is an acknowledged expert on House of Lords matters, said that the non-statutory Appointments Commission,

“has helped to transform the Crossbenches into a more active place where members arrive better prepared, and there is now a clear distinction between independent and party peers. It has also been possible to use these appointments to somewhat improve the gender and ethnic balance in the chamber, and fill clear expertise/professional gaps”.

The noble Lord, Lord Jay of Ewelme, is reported to have told the committee that,

“by focusing on merit, quality and diversity, the Commission had helped to bring much-needed experience to the cross-benches”.

He added that,

“figures for gender diversity, ethnic minorities and disability on the cross-benches are considerably higher than among members of the House … as a whole”.

Some members of the committee, such as Meg Russell, argue that the non-statutory commission should be given more powers. I fear that this would not work. There are problems with its non-statutory basis. The noble Lord, Lord Howarth, in giving evidence said:

“While the existing Appointments Commission acts with scrupulous care and excellent judgement it is not satisfactory, to itself or anyone else, that it has no statutory basis, it invents its own remit and makes up its own rules as it goes along. There should be a statutory Appointments Commission, its task defined in general terms by Parliament and plain for the public to see”.


I agree, and believe that this amendment is important for the future appointments process.

I will make a few more general remarks. As the noble Lord, Lord Grocott, was saying, in 1999 the Lord Chancellor—the noble and learned Lord, Lord Irvine—replied:

“I say quite clearly that … the position of the excepted Peers shall be addressed in phase two reform legislation”.—[Official Report, 22/6/1999; cols. 798-800.]


He also said, in March 1999:

“The amendment reflects a compromise negotiated between Privy Councillors on Privy Council terms and binding in honour on all those who have come to give it their assent”.—[Official Report, 30/3/1999; col. 207.]


As the noble Lord, Lord Grocott, was Tony Blair’s Parliamentary Private Secretary, he must have been well aware of all this. To the hereditary peerage, it was a vital part of the 1999 Act and an additional reason to let it have satisfactory progress through the House.

[Lord Snape]

I appeal to the noble Lord not to try to rewrite history in the way that he is doing. Does he not recollect that the deal in 1999 to which he refers was done in such an underhand way that it led to the resignation of the Conservative leader of the Peers in this House? There was nothing particularly noble about it; rather the reverse.

[Lord Northbrook]

With respect to the noble Lord, I was not part of that deal so I cannot go into the detail of it. With reference to the Burns report, I have just seen that the Government do not accept the committee’s recommendation that the Prime Minister must now commit to a specific cap on numbers, absolutely limiting appointments in line with the formula proposed. Thus an important element of the Burns report is deemed to be invalid and the major reform which was promised for phase 2 is incomplete.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, it would be helpful if we could intervene from these Benches just once. I have to say that just at the moment I do not feel like a shadow Minister. I feel rather like Alice through the looking glass, as though I had fallen through a door and discovered myself—I will not say at the Mad Hatter’s tea party—somewhere in quite a different century.

On the so-called promise made in 1999, women of my age—or rather six months younger than me—were promised throughout their working lives that they would have a pension at the age of 60; they then discovered, unprepared, and without the money, that it would be 67. This House let that through, so it is quite possible to change what has been promised by an Act of Parliament. It is right to do it by an Act of Parliament rather than any other method, but let us not have any of this, when we consider what has been taken away from women. I am one of the very lucky ones—the last cohort of women who got their pension at 60, which was a long time ago—but a whole swathe of women have lost out.

Along with some colleagues, I met a group of Slovak MPs here in the House earlier this week. As very often when women politicians get together, we fell to discussing female representation in our various Parliaments. I have to say that they were completely mystified as to how this House—with the advantage of appointments and therefore not having to worry about whether the electors always choose equally—had not moved further towards female emancipation. I then pointed out that, with one exception, we had a caucus of 92 men who would always remain here because the system was that, when they left, they would be replaced by another man, and nothing that anyone else could do would alter that. They were a little mystified.

--- Later in debate ---

Moved by

[Lord Northbrook]

12: Clause 2, page 1, line 8, leave out subsections (2) and (3) and insert—
“(2) For section 2(3) to (5) substitute—“(3) Standing Orders must provide for—(a) the 90 people to be excepted for the duration of a Parliament; and(b) the Hereditary Peers Commission, at the beginning of each Parliament, to determine which holders of hereditary peerages should fill the 90 places provided for in subsection (2).(4) Schedule 1A makes provision about the Hereditary Peers Commission.””

[Lord Northbrook]

My Lords, Amendment 12 states that Standing Orders must provide for 90 people to be excepted for the duration of a Parliament and that a new organisation, a hereditary Peers commission, shall determine at the start of a Parliament which hereditary Peers shall fill the 90 places provided. The amendment also sets out how the commission should be launched immediately after the Bill becomes law, as well as its role in by-elections.

Amendments 32 and 33 set out alternative details of the proposed composition of the commission. Deciding this has given me some difficulty. It is not entirely clear in my mind how it should be made up—whether it should consist of Peers in the House of Lords, excepted Peers or hereditary Peers including those excluded from the House in 1999. For simplicity’s sake I have for now considered, as per Amendment 32, that the commission should,

“comprise two persons nominated by the leader of each political party”.

For the Cross-Bench elections there should be two Members from the Cross Benches, but, as an alternative, they could comprise two independent members of a non-statutory appointments commission. The amendment sets out that the procedure should be carried out at the start of each Parliament, with the first appointments being made immediately after the next general election.

Amendments 32 and 33 also set out criteria for selection. The commission must take account of party balance, age, interests, expertise, commitment to participate and regional representation. Importantly, the commission must ensure that the party balance among the hereditary Peers who are to be Members of the House helps to ensure that the overall party balance reflects the share of the vote secured by the main political parties at the general election. The hereditary Peers commission will also supervise any by-election that takes place during the course of a Parliament.

This amendment should help monitor the balance of the 90 hereditary Peers and goes some way to answering the criticisms of my noble friend Lord Cormack and the Campaign for an Effective Second Chamber that some of the political parties’ representation among the 90 excepted Peers does not reflect their electoral position in the other place. I beg to move.

[Viscount Trenchard (Con)]

My Lords, I am not sure that my noble friend’s amendment has got the wording precisely correct, but he is right to draw attention to the possibility of changing the Standing Orders. I have thought for a long time that the present Standing Orders providing for only the hereditary Peers to vote in the party bloc by-elections should be changed, on the basis that all Peers in this House are equal. From the beginning, the life Peers on the Cross Benches and the Conservative, Labour and Liberal Democrat Benches should have had a vote alongside their hereditary colleagues.

If that had been the case, there would certainly be a rather different feeling in this House about the obsession of the noble Lord, Lord Grocott, in pursuing this single-issue Bill. He has done it with great tenacity, for which I greatly admire him, but I am surprised that he thinks it proper to bring a single-issue Bill to your Lordships’ House that seeks to unpick a very firm agreement between the House of Lords and the Executive which was made in 1999. The agreement was that the hereditary Peers would remain until the House was properly reformed. It may be 20 years on—it may be 100 years on—but it would be absolutely wrong not to make proper progress in moving to a democratic House but simply to remove one important element of it which was part of the agreement from the beginning.

I do not often find myself in agreement with the noble Lord, Lord Adonis, but I felt today that he could not have put it better. I utterly and completely agree with everything he said. This is not a small issue. It is a fundamental issue that affects the relationship of your Lordships’ House with the Executive and the country. It is fundamentally important in the evolution of your Lordships’ House through hundreds of years of history, and to break the solemn and binding agreement made in 1999 with this piecemeal, cherry-picking piece of legislation would be very regrettable.

The amendment may not be quite right, but your Lordships’ House should look at revising the Standing Orders to remove the unfair difference between life Peers and hereditary Peers, so that all the life Peers in the party blocs could vote on the selection of new hereditaries. That would get rid of the most arcane and slightly ridiculous elections that take place on the Labour and Liberal Democrat Benches.

--- Later in debate ---

[Lord Mancroft]

I am most grateful to the noble Lord for reminding me of that, but I am afraid that he was referring to the speech I made on last year’s Bill. I did not speak at the Committee stage of this year’s Bill.

[Lord Northbrook]

My Lords, I am grateful to all those who have participated in the debate on this amendment, including the noble Earl, Lord Erroll, my noble friends Lord Howard of Rising, Lord Strathclyde and Lord Colgrain, and the noble Lord, Lord Adonis. I did not agree with his views, but they are interesting as usual. We have had civilised discussions with the noble and learned Lord, Lord Brown of Eaton-under-Heywood. I opposed his Bill and I am just trying to amend the existing system. I thank also my noble friend Lord Mancroft. There has been sufficient interest in this amendment that I should like to test the opinion of the House.

--- Later in debate ---

Moved by

[Lord Northbrook]

13: Clause 2, page 1, line 8, leave out subsections (2) and (3) and insert—
“(2) Section 2 is amended as follows.(3) At the beginning of subsection (3) insert “Subject to subsection (3A),”(4) After subsection (3) insert—“(3A) An excepted person elected to the House of Lords under subsection (4) after the House of Lords has passed a resolution that steps have been taken to implement paragraphs 29, 35, 50, and 51 of the Burns Report (fixed-term appointments) remains a member of the House of Lords for a period of 10 years beginning with the day on which they receive a Writ of Summons.(3B) In this section “Burns Report” means the report of the Lord Speaker’s committee on the size of the House of Lords, published on 31 October 2017.”(5) At the end of subsection (4)(b) insert “, or(c) a vacancy arises on the end of the 10 year period of an excepted person under subsection (3A),””

[Lord Northbrook]

My Lords, Amendment 13 is a refined version of the amendment I moved in Committee. It again suggests that once the Burns report has passed into law any excepted person will remain a Member of the House of Lords for 10, rather than 15, years after that date. Limiting the term to 10 years would help the pace of the reduction of the size of the House but would still keep the by-elections after the 10-year period. I am open to suggestion that they could cease when House of Lords reform is complete, including a review of its powers. I beg to move.

[Lord Strathclyde]

As I understand the amendment, and I am not sure I entirely understand it, my noble friend is trying to co-operate with the idea in the Burns report to reduce the total number. I have not looked at implementation or at paragraphs 29, 35, 50 and 51 of the Burns report, but I think the notion is that once the House of Lords has been reduced to a certain figure, hereditary Peers should not be part of that figure. If they leave after 10 years, however, presumably they will be replaced. I wonder whether my noble friend thinks that will help the reduction.

Earlier in the debate, a view was taken that if the overall size of the House reduced, the portion of hereditary Peers would increase. I agree. However, it would still be a lower proportion of the House than when the elections first took place in 2000 because the size of the House has increased so much. I hope the noble Lord, Lord Grocott, will find that reassuring.

--- Later in debate ---

[Lord Adonis]

I entirely agree. In so far as I understand what the amendment of the noble Lord, Lord Northbrook, does, I would not make any concessions to the Burns commission. While the House of Lords exists in its current absurd state, it is clearly sensible that new Members be appointed to it, and, frankly, more younger Members would be a good thing, as that would bring the House more into contact with life outside.

What is being engaged in at the moment is displacement activity. The real issue is not whether this House has 600, 700 or 800 Members; it is whether it is appointed and hereditary, and therefore fundamentally illegitimate, or whether it is elected, either directly or, if we had a proper federal system, perhaps like the Bundesrat in Germany, indirectly, and therefore directly relates to the people and/or the devolved institutions of the country, which are themselves elected. All this displacement activity, talking about Burns, about removing the hereditary Peers, about by-elections and, if I may say so to the noble Lord, about hereditary Peers commissions—that was a new idea to me; the latest one today—or about all the other tokenistic reforms that are put forward, is entirely beside the point.

[Lord Northbrook]

Perhaps I may quickly explain to the noble Lord the intention behind my amendment. Originally it referred to a period of 15 years for the appointment of newly elected hereditary Peers so as to put them on a par with the recommendations of the Burns report. That was not accepted, so I reduced the period to 10 years. The amendment might need retabling at Third Reading. If the Burns report is implemented, by-elections will fall altogether.

[Lord Adonis]

I am very grateful to the noble Lord for explaining the amendment. I now understand it and will hold in my mind the complex formula that he has just set out. However, my fundamental point is that it does not matter one whit whether this House has 600, 700 or 800 Members; it will be equally legitimate or illegitimate, whatever your view on how many it should have. Those are still very large numbers. I think it will function more effectively with its existing remit if it has a larger number of Members. That will mean that we have a steady flow of new appointments to the House, rather than drying up the appointments. However, all that is fundamentally beside the point. The current House of Lords is illegitimate. It will be just as illegitimate as the existing House, and arguably more so, if it is wholly nominated. The right thing is not to do any tinkering—either of the sort proposed by my noble friend Lord Grocott or any other variant—but to set up a constitutional convention and get to grips with fundamental reform, which, in the context of Brexit and the governance crisis across the United Kingdom at the moment, is long overdue.

--- Later in debate ---

[The Earl of Caithness]

My Lords, the noble Lord, Lord Grocott, once again mentioned my noble friend Lord Trefgarne and myself. I did put my name to a small number of amendments, but the noble Lord cannot accuse either my noble friend or me of filibustering by talking for far too long. We have talked very little, to make a short point. When the noble Lord accepted my amendment in Committee, I sat down immediately, as he will recall. I think he has forgotten one person who has prolonged the proceedings today, and that is the noble Lord, Lord Cormack.

[Lord Northbrook]

My Lords, I thank noble Lords for all their contributions to the debate on my amendment. I feel that it will need a bit of fine-tuning before Third Reading to account for the fact that by-elections will die if and when the Burns report is enacted. For the moment, I beg leave to withdraw my amendment.

Amendment 13 withdrawn.

--- Later in debate ---

Moved by

[Lord Northbrook]

14: Clause 2, page 1, line 8, leave out subsections (2) and (3) and insert—
“(2) In section 2, after subsection (4) insert—“(4A) Standing Orders must provide for future vacancies to be filled using a method which ensures that over time excepted hereditary peers are elected on a basis which retains a fair representation of hereditary peers representing Scotland, while over time reaching the same proportion of Northern Irish and Welsh excepted hereditary peers in relation to the total number of excepted hereditary peers as the proportion of MPs for Northern Ireland and Wales, in relation to the total number of MPs in the House of Commons.””

[Lord Northbrook]

My Lords, this amendment provides—

[Lord Strathclyde]

My Lords, may I just check to which amendment my noble friend is speaking? Is it Amendment 15, in the name of my noble friend Lord Cormack, or Amendment 16 in his own name?

[Lord Strathclyde]

All right. Thank you very much.

[Lord Northbrook]

My Lords, this amendment provides that,

“future vacancies … be filled using a method which ensures that over time excepted hereditary peers are elected on a basis which retains a fair representation of hereditary peers representing Scotland”—

I am grateful to the noble Lord, Lord Adonis, as I have used the word “maintaining”—

“while over time reaching the same proportion … in relation to the total number of excepted hereditary peers as the proportion of MPs for Northern Ireland and Wales”.

I am not going into extensive detail on it, as the noble Lord, Lord Rennard, has talked about, the unfair treatment of the Irish representative Peers or the Scottish Peers. In fact, there used to be 28 Irish Peers who sat for life on the part of Ireland. However, after what I hope was my erudite exposition, at this hour I am not going to detain the House. For Scotland, 16 Scottish Peers were elected under the Act of Union, and this was maintained until 1963.

The noble Lord, Lord Thomas of Gresford, said I had missed out the situation with Wales, so that is where there is a change in the amendment. He reminded me of the Act of Union of Wales of 1542—although I question that because research for Committee revealed that there were two Acts, of 1536 and 1543, and they should really be called the Laws in Wales Acts, which has been the legal title since 1948. To qualify for by-elections, their peerage would need to have Welsh connections, with priority, as for Scotland and Ireland, being given to those who use their main residence for the purpose of claiming expenses.

This is an excellent opportunity to redress the scarcity of hereditary Northern Ireland Peers and maintain the number of elected Scottish hereditary Peers. I beg to move.

--- Later in debate ---

[Lord Grocott]

My Lords, I am profoundly grateful for that intervention from the noble Lord, Lord Russell, which is one of the most effective contributions that we have heard in this long discussion. I stand now because we are close enough to 1.30, when we had agreed that this would finish, to move that debate on amendments be now adjourned.

[Lord Northbrook]

My Lords, I am thankful to all noble Lords who spoke. I beg leave to withdraw the amendment.

Amendment 14 withdrawn.

House of Lords (Hereditary Peers) (Abolition of By-Elections) Bill [HL]

Lord Northbrook Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Friday 7th September 2018 Lords Chamber

[Lord Trefgarne (Con)]

My Lords, I shall not detain your Lordships for more than a few moments. I am not opposed to House of Lords reform as a matter of principle. Indeed, back in 2012, when the Government introduced a reform Bill in the other place, I sat on the pre-legislative scrutiny committee and was not opposed to that in principle at all, but it did not get very far and failed in the House of Commons. Since then, here in your Lordships’ House, we have listened to the recommendations of the noble Lord, Lord Burns, to which I am not opposed either, but none of these considerations is taken into account in the Bill proposed by the noble Lord, Lord Grocott, which contravenes the undertakings given in 1999. Against that background, I beg to move the amendment.

[Lord Northbrook (Con)]

My Lords, I apologise to the House for having been unable to take part in Second Reading and the first day of Committee. I declare an interest as a hereditary Peer.

I agree with my noble friend Lord Trefgarne that important constitutional legislation should be brought forward by the Government rather than by a Private Member’s Bill. In June 1999, my noble friend Lord Denham asked the following Question of the Lord Chancellor:

“Just suppose that that House goes on for a very long time and the party opposite get fed up with it. If it wanted to get rid of those 92 before stage two came, and it hit on the idea of getting rid of them by giving them all life peerages … I believe that it would be a breach of the Weatherill agreement. Does the noble and learned Lord agree?”


The Labour Lord Chancellor, the noble and learned Lord, Lord Irvine of Lairg, said in reply that,

“I say quite clearly that … the position of the excepted Peers shall be addressed in phase two reform legislation”.—[Official Report, 22/6/1999; cols. 798-800.]

Nothing could be clearer than that. That is why I believe that this Bill indeed breaches the Weatherill agreement and the House of Lords Act 1999.

I remind the Committee of the importance of the Labour Lord Chancellor’s words in March 1999, when he said:

“The amendment reflects a compromise … between Privy Councillors on Privy Council terms and binding in honour on all those who have come to give it their assent”.—[Official Report, 30/3/1999; col. 207.]


As the noble Lord, Lord Grocott, was Tony Blair’s Parliamentary Private Secretary at the time, he must have been well aware of this. To the hereditary peerage, it was a vital part of the 1999 Act and a condition for letting it have satisfactory progress through the House.

I cannot understand why this area of the House needs reform when the by-elections have produced such capable replacements for the 90 such as the noble Lords, Lord Grantchester and Lord De Mauley, the noble Earl, Lord Cathcart, and the noble Viscount, Lord Younger of Leckie, all of whom are or have been on the Front Bench of their respective parties. It would seem more urgent to reform the life Peers system, which the Burns report proposes. The hereditary Peers are a strong link with the past, a thread that goes back to the 14th century. Until relatively recently, in House of Lords terms, the House was entirely hereditary. By-elections provide a way into this House that is not dependent on prime ministerial patronage.

[Lord Blunkett (Lab)]

My Lords, to address the issue that has been put before us and to avoid prevarication, there is a new phase 2: it is Burns. There may be a phase 3—who knows? If a Jeremy Corbyn-led Government were elected, there would a phase 3 which might disturb the Benches opposite slightly more than not having by-elections for hereditary Peers. Burns is a phase 2, and it has consequences. Unless the issue of hereditary Peers and by-elections is addressed in the way that my noble friend Lord Grocott proposes, it is not my party or the broader opposition who will find themselves in difficulty, it will be the Conservative Benches. I would like them to reflect on what would happen if we implemented Burns and this House were decanted in six years’ time, with the two things coming together, and the Conservatives were faced with hanging on to their hereditary Peers while losing their life Peers.

--- Later in debate ---

[Lord Northbrook]

My Lords, I rise to speak to Amendment 15 in this group, which provides that future vacancies shall be filled,

“using a method which ensures that over time excepted hereditary peers are elected on a basis which provides for a fair representation of hereditary peers representing Northern Ireland and Scotland”.

[Lord Grocott]

To save a lot of words, can the noble Lord just confirm that his amendment, if carried, would mean the continuation of by-elections for hereditary Peers, the precise matter that this Bill tries to deals with?

[Lord Northbrook]

I agree that I support the continuation of the by-elections, but this amendment is looking at the House of Lords Act 1999 and amending it accordingly.

[Lord True]

My Lords, for the record, I am not a hereditary Peer, nor do I favour the outcome that would follow the passage of this legislation in time, of an all-appointed House. We have many Bills in this House that are opposed, and we have seen a number of them attract far more public attention in recent weeks, where Bills have gone on for day after day in Committee. I do not think it is appropriate or reasonable to call fellow Peers who have a point of principle to put forward a “disgrace” or to say that one is “ashamed”. I am ashamed when I see in the House other people stand up and say that Members of this House have no right to put forward a point in principle. I raised reasonable objections to this Bill at Second Reading. There are strong objections to the Bill—in my view, it should be a government Bill and in terms of the proportionality effect, which I have described, and of the binding commitment in honour. All those arguments are reasonable, and there are others. I will not be silenced by people saying that I am a disgrace or that I bring disrepute on the House. What is our Parliament for if not to allow those who have a minority view to put it before this House?

[Lord Northbrook]

My Lords, if I may continue speaking to Amendment 15 about Scottish and Northern Irish Peers, let us consider the position in 1999 when, according to Dod’s Parliamentary Companion, the House had 785 Members in total. Of these, Dod’s labelled 85 as Scottish and no fewer than 67 as Northern Irish. The regional numbers of the current House of Commons show that, at the last election, there were 59 Scottish MPs elected and 18 Northern Irish MPs. On the same basis, there should be nine elected Northern Irish hereditary Peers and 11 Scottish ones. Current figures for the composition of the 90 hereditary Peers in the House show Scotland adequately represented but that Northern Irish Peers, on the above alternative comparisons, should number between three and eight, rather than the one Peer at present. I will give a brief historical background to support my argument—

[Lord Rennard]

My Lords, to save the time of the House, and perhaps to protect its reputation, can the noble Lord confirm that, if his argument on this amendment has merit, he will seek to test the opinion of the House and put in Tellers so that we can show our opinion? If, on the other hand, he is not going to test of the opinion of the House, or not put in Tellers and waste our time, surely he is accepting that his argument does not have real merit and he is simply trying to filibuster and defeat the Bill.

[Lord True]

Is the noble Lord’s view that no amendment should be put before this House unless it is put to a Division?

[Lord Northbrook]

I confirm to the noble Lord, Lord Rennard, that I wish to test the opinion of the House on this amendment.

[Lord Foulkes of Cumnock (Lab)]

What is a Northern Irish Peer and what is a Scottish Peer? Can the noble Lord define them?

[Lord Northbrook]

I have relied on figures from Dod’s Parliamentary Companion. The noble Lord makes a good point. There is one hereditary Peer on the Cross Benches, as I understand it, who lives in Northern Ireland. The complication, I think, is that there are some old Irish titles and people are living in England. I am looking at people living in Northern Ireland.

[Lord Foulkes of Cumnock]

Just to take an example, if a Peer lived in London but owned a huge chunk of Scotland—and there are a few of those—would he be a Scottish Peer?

[Lord Northbrook]

Yes, I think he could count as a Scottish Peer.

[Lord Cormack]

What about the redoubtable noble Countess, Lady Mar, who is loved in all parts of this House? Is she a Scottish Peer? She lives in Worcestershire.

[Lord Northbrook]

As I understand it, she has lived in Worcestershire for quite a long time—so I would have to check the figures from the House of Lords Library on that.

[The Earl of Caithness]

I think the answer to my noble friend Lord Cormack is that the noble Countess is a Peer of Scotland.

[Lord Northbrook]

I will give a brief historical background to support my argument. The Act of Union between the UK and Ireland in 1800 provided that the Peers of Ireland should elect 28 of their number, to be called Irish representative Peers, to sit for life on the part of Ireland in the House of Lords of the new United Kingdom. The fourth article of this Act of Union provides that,

“such act as shall be passed in the parliament of Ireland previous to the union, ‘to regulate the mode by which the’”,

representative Peers should be chosen,

“shall be incorporated in the acts of the respective parliaments”,

by which it was to be rectified.

The Irish Parliament passed such an Act, laying down in great detail how the original representative Peers and their successors were to be chosen. It laid down that the Irish temporal Peers were to meet at a stated time and place to elect 28 of their number, and each of the temporal Lords so chosen,

“shall be entitled to sit in the House of Lords during his life”.

Clearly a similar role is set out for a Peer chosen to fill a vacancy. This procedure continued unchanged until almost 100 years ago, when the Irish Free State was established. Crucially, the legislation that created this abolished the offices of the Lord Chancellor of Ireland and the Clerk of the Crown in Ireland, who was responsible under the Act of Union for carrying out important duties in connection with the election of Irish representative Peers.

In 1925, the UK Government were advised by their Attorney-General that this abolition demonstrated an intention to terminate the rights of Irish Peers to elect Irish representative Peers to fill vacancies as they arose. Expert legal opinion was obtained from two leading members of the UK Bar—namely, the future Lord Chancellor and the future Master of the Rolls—that the right of Irish Peers to elect representative Peers had survived and was unassailable. But the matter was not insisted on or carried through by the Irish Peers. Those already elected carried on serving for life, but no effort was made to replace those who died. While in 1925 the Attorney-General’s opinion could be justified for the south, it left Northern Ireland out in the cold.

[Lord Adonis]

I am trying to understand the significance of the point the noble Lord is making, because the figures that have been provided to me by the Library suggest that among the hereditary Peers—leaving aside the big problem we have about the lack of adequate representation of large parts of the United Kingdom among the life Peers—Scotland is overrepresented and Northern Ireland is appropriately represented. The figures that I have show that 10% of hereditary Peers are Scots, against 8% of the population at large. So I am not sure what the particular evil is against which he is seeking to protect the House.

[Lord Northbrook]

The noble Lord is correct on Scottish representation—I said earlier in my speech that the Scots were adequately represented. As I understood it, only one of the 92 was a Northern Irish Peer, and I wanted to see that process continued among both nationalities.

[Lord Thomas of Gresford (LD)]

Does the noble Lord agree that there is therefore a lacuna in the Act of Union of 1542 which incorporated Wales into the United Kingdom? Would he accept that Henry VIII powers should be put into this Act to amend that particular lacuna?

[Lord Northbrook]

Far be it from me to debate with the noble Lord, but as I understand it, the concept of representative Peers did not apply to Wales, while it did to Northern Ireland and Scotland.

[A noble Lord]

Should we not put it right?

--- Later in debate ---

[Lord Northbrook]

That is beyond the terms of my amendment.

The Peerage Act 1963 gave all hereditary Peers of Scotland the right to sit in the House of Lords, instead of requiring them to elect 16 of their number, as had been the case since the union with Scotland in 1707. But no similar measure was introduced for the Peers of Ireland.

We move on to 1965. A number of Irish Peers, led by the Earl of Antrim, petitioned the House of Lords for recognition of their rights to elect 28 representative Peers to sit in the House of Lords. This was referred to our Committee for Privileges. The committee concluded that as there was no longer one Ireland, the Act of Union 1800 provision for 28 representative Peers no longer applied. However, Lord Wilberforce, dissenting in part, made a crucial point. He said as follows: because the office of Lord Chancellor of Ireland, as well as other offices such as the Clerk of the Crown in Parliament, which enabled the election of Irish representative Peers, had been abolished in 1922, it made it impossible to follow the procedures laid down in the Act of Union 1800 for a replacement when one of them died.

The Committee for Privileges’ verdict, in my layman’s view, is unsatisfactory because it failed to recognise, first, that the Irish representative Peers represented the Peers of Ireland and not Ireland as a whole. As a result, any change in Ireland was irrelevant. It also ignored the continued existence of part of Ireland—Northern Ireland—in the United Kingdom. Lord Wilberforce also expressed doubts that an Act of such constitutional importance as the Act of Union with Ireland could be repealed by implication or obsolescence.

Returning to the Scottish peerage, I cannot fail to mention the challenge of the House of Lords Act 1999, which stated that there should be 16 Scottish hereditary Peers in perpetuity in the House of Lords and that their abolition was contrary to Article 22 of the Treaty of Union between England and Scotland.

This is therefore an excellent opportunity to redress the scarcity of elected hereditary Northern Ireland Peers and maintain the number of elected Scottish hereditary Peers.

[The Earl of Erroll]

I wish to say—very quickly, because we have just had a history lecture—that, under the Peerage Act 1963, hereditary Peeresses, Peers in their own right, could sit for the first time in the House of Lords. My mother was one of the 16 elected Scottish representative Peers to sit, and one of the first five hereditary Peeresses to sit in the House of Lords—so we did get a bit of female representation. The answer to the Wales question is that of course it was not a kingdom. The issue of the Scots Peers was around the merging of two kingdoms under a Scottish king.

--- Later in debate ---

Moved by

[Lord Northbrook]

15: Clause 1, page 1, line 4, leave out subsections (2) and (3) and insert—
“(2) In section 2, after subsection (4) insert—“(4A) Standing Orders must provide for future vacancies to be filled using a method which ensures that over time excepted hereditary peers are elected on a basis which provides for a fair representation of hereditary peers representing Northern Ireland and Scotland, over time reaching the same proportion in relation to the total number of excepted hereditary peers as the proportion of MPs for Northern Ireland, or Scotland, in relation to the total number of MPs in the House of Commons.””

[Lord Northbrook]

I wish to move this amendment formally.

--- Later in debate ---

Tabled by

[Lord Northbrook]

16: Clause 1, page 1, line 4, leave out subsections (2) and (3) and insert—
“(2) For section 2(3) to (5) substitute—“( ) Standing Orders must provide for—(a) the 90 people to be excepted for the duration of a Parliament; and(b) the Hereditary Peers Commission, at the beginning of each Parliament, to determine which holders of hereditary peerages should fill the 90 places provided for in subsection (2).(3) Schedule (Hereditary Peers Commission) makes provision about the Hereditary Peers Commission.””

[Lord Northbrook]

This amendment has already been debated but, with the leave of the Committee, I wish to speak to it because I was not here at that time.

[Noble Lords]

No!

[Lord Northbrook]

This point was not covered on the first day of Committee.

[Lord Grocott]

My Lords, perhaps I may offer a gentle suggestion to the noble Lord. I do not think that he is carrying the mood of the Committee in wishing to speak to Amendment 16, which was spoken to three months ago. The previous vote rather indicates that, whatever eloquent tactics he deploys, he is most unlikely to carry the Committee, and I suggest that we move on.

[Lord Northbrook]

I note what the noble Lord says. Actually, it was not covered on day one, but I take the mood of the Committee and shall not move the amendment.

Amendment 16 not moved.

Moved by

[Lord Northbrook]

16A: Clause 1, page 1, line 4, leave out subsections (2) and (3) and insert—
“(2) Section 2 is amended as follows.(3) At the beginning of subsection (3) insert “Subject to subsection (3A),”(4) After subsection (3) insert—“(3A) An excepted person elected to the House of Lords under subsection (4) after the House of Lords has passed a resolution that steps have been taken to implement paragraphs 29, 35, 39 and 48 to 51 of the Burns Report (fixed-term appointments) remains a member of the House of Lords for a period of 15 years beginning with the day on which they receive a Writ of Summons.(3B) In this section “Burns Report” means the report of the Lords Speaker's committee on the size of the House of Lords, published on 31 October 2017.”(5) At the end of subsection (4)(b) insert “, or(c) a vacancy arises on the end of the 15 year period of an excepted person under subsection (3A),””

[Lord Northbrook]

My Lords, as far as I am aware, this is a new amendment which has not been moved before. It suggests that any excepted person under the House of Lords Act would, once the Burns commission report has been adopted, remain a Member of the House for a fixed term of 15 years, as other Members will be after the Burns report is implemented. However, until the legislation changes, a by-election could still be held at the end of 15 years after the first hereditary Peer had been elected. I beg to move.

[The Earl of Erroll]

This amendment sounds quite sensible as it brings us into line with the spirit of the Burns report.

--- Later in debate ---

[Lord Adonis]

I am having some difficulty in understanding what the noble Lord’s amendment actually does. Can he explain to us in plain English what subsection (4) his amendment would do?

[Lord Northbrook]

Let us say that hereditary Peers operate after Burns in line with the 15-year term for life Peers, new hereditary Peers would be appointed for 15 years, and there would be a by-election at the end of that period of 15 years to replace them.

[Lord Adonis]

Can the noble Lord explain how that relates to Burns? My understanding is that the Burns report would reduce the size of the House. His amendment would not reduce the size of the House at all, would it? We would simply have an arbitrary 15-year re-election requirement for hereditary Peers. Or have I misunderstood him?

--- Later in debate ---

[Lord Northbrook]

The point is made. Maybe the amendment should be refined to say that once the Burns report has passed, the by-election procedure part of that falls.

[Lord Adonis]

So it is entirely in respect of those who come up for re-election at the end of the 15 years?

[Lord Northbrook]

I need to give that consideration.

Amendment 16A disagreed.

Moved by

[Lord Northbrook]

17: Clause 1, page 1, line 5, leave out from “than” to end of line 6 and insert “90 people at any one time shall be excepted from section 1; but anyone excepted as holder of the office of Earl Marshal or as performing the office of Lord Great Chamberlain shall not count towards that limit.”

[Lord Northbrook]

I am sorry to burden the House with my third amendment, but this is quite a serious point. I am quite surprised that the noble Lord, Lord Grocott, has eliminated the Lord Great Chamberlain and the Earl Marshal because these are royal officials. Contrary to what my noble friend Lord Cormack said, actually, when Her Majesty’s reign comes to an end, the role of the current Lord Great Chamberlain will go to a separate family altogether.

[Lord Cormack]

Yes, but the point is that neither the Earl Marshal nor the Lord Great Chamberlain are subject to by-election. That is the important point. The noble Lord, Lord Grocott, and I have discussed this, and he accepts that. There are 90 who are subject to by-elections but neither of these two great offices of state are. They will continue to pass, as they do, within the one family in respect of the Earl Marshal and two families in respect of the Lord Great Chamberlain until the end of time unless this House and Parliament should decree otherwise. They cannot fall victim to this particular Bill because they are not subject to by-election, so the amendment that my noble friend is about to move is redundant.

[Lord Northbrook]

Can the noble Lord explain to me why he put 92 in this Bill but 90 in the previous Bill? I do not understand that point.

[Lord Grocott]

I have no problem whatever with someone being called the Lord Great Chamberlain or anything else. I was intrigued to know that apparently the office would not go to the same family as currently occupies that role. I do not know whether any of our families might qualify, but so far I have heard nothing. The point is that I can see no reason whatever why these two offices of state, which perform ceremonial functions, need to be in the House of Lords in order to perform that function. At least one of them—two of them for most of the time—has been on permanent leave of absence, so their functions can clearly be carried out perfectly effectively whether or not they are Members of the House of Lords. Whether people can become Members of the House of Lords via heredity is the issue that we are considering.

--- Later in debate ---

[The Deputy Chairman of Committees (Baroness Henig) (Lab)]

Does the noble Lord wish to move his amendment?

[Lord Northbrook]

Yes. I beg to move my amendment.

[Lord Adonis]

I have learned more about the British constitution in the last five minutes than in many years. I had no idea about the arrangements for the rotation of the office of the Lord Great Chamberlain. I hope that whoever succeeds the present one has a more pronounceable name than the Marquess of Cholmondeley because the problem with holding receptions in the Cholmondeley Room is that nobody knows how to pronounce the name of the person after whom the room is named.

This is an issue with my noble friend’s Bill. I strongly object to my noble friend’s Bill because it entrenches a nominated House, which is his purpose—my noble friend wants to entrench a nominated House. He is not interested in a democratic House and he is not even interested in what the noble Lord, Lord Cormack, wants, which is incremental reform, although I notice that the noble Lord did not say what his next incremental reform would be. Maybe he might tell us in due course. Perhaps he does not want any further incremental reform.

--- Later in debate ---

[Lord Northbrook]

My Lords, we have had an interesting debate. It was not entirely connected to the amendment but that was not my doing. Having increased the number from 90 to 92, I wonder whether there is any implication for the Royal Family.

[Lord Mancroft (Con)]

I have listened to this exchange. I do not know about other noble Lords, but I am not clear on where exactly we have got to on this. My noble friend might well take the advice of the Benches opposite. I do not think that any of your Lordships is clear what the amendment or the Bill achieves and whether they cut across each other. If my noble friend will forgive me, the obvious solution is for him to withdraw his amendment at this stage but bring it back on Report, by which time the noble Lord, Lord Grocott, could have clarified the position. I hope that helps your Lordships.

[Lord Jones of Birmingham]

May I add to that? When you are in a hole, stop digging.

[Lord Northbrook]

I want to clarify the point about the Lord Great Chamberlain for the House. Historically, the position has been split between two or three families and changes on the death of the sovereign. I do not know how that works in connection with the amendment; I want to revisit that. At the moment, I beg leave to withdraw the amendment.

Amendment 17 withdrawn.

--- Later in debate ---

[Lord Snape]

On that point, would the noble Lord reflect that back in 1945, when the Attlee Government were elected by a very substantial majority, there were I think six hereditary Labour Peers in this place? The vast majority of the Liberal Democrats, who he complains about, were created by a Conservative Prime Minister during the coalition. It seems that his main source of complaint about political imbalance in this place is based on the fact that there would be a dilution of the centuries-old Conservative majority.

[Lord Northbrook]

Quite a few Lib Dem Peers were created under Tony Blair’s Government.

[Lord Snape]

I am not quite sure who is intervening on who here, but I was one of Tony Blair’s Peers. I remind the noble Lord that when Tony Blair was elected in 1997, with a very substantial majority indeed, much of the legislation in the early part of that first Parliament was blocked by the Tory majority in this House. “Tony’s cronies”, as they were known, pale into insignificance compared with the number of Peers created by David Cameron during his period. He said openly that this House should reflect the majority of the Government of the day in the House of Commons and behaved accordingly. We should have a bit less of this point from the noble Lord, Lord True. He should come back to reality and stick to his amendment.

Economy: Personal Savings

Lord Northbrook Excerpts

Thursday 12th July 2018 Lords Chamber

[Lord Northbrook (Con)]

My Lords, we should all be grateful to the noble Lord, Lord Leigh of Hurley, for raising this important topic for the House to discuss. We do so in the context of the ONS stating that the UK savings rate in 2017 was at its lowest since 1963. Conversely, the level of consumer debt is rising rapidly. The rating agency Fitch states, according to an article published by the Daily Telegraph in May, that UK households are borrowing more than they are saving for the first time since the late 1980s. According to the Association of Accounting Technicians ISA working group report of March 2018, household debt has increased by 7% over the last five years, including a 20% increase in consumer credit.

The Government deserve great praise for their encouragement of savings. However, one consequence of their very success in keeping inflation under control is that interest rates have also been very low. A consumer mentality may have developed for some to question the point of saving when they are getting such a low return on their money, particularly if they are fearful of putting money into the stock market. The four main areas I wish to cover where the Government are encouraging savings for those fortunate to have reasonable spare cash for the medium to long term are ISAs, National Savings & Investments—NS&I—self-invested pension schemes and, finally, the Help to Save scheme. Any criticisms of mine on these are not meant to be of the concept as a whole, but more about the complications that have developed over time.

ISAs are the child of the original PEP and TESSA schemes introduced by a Conservative Government in 1987 and 1990 and succeeded by ISAs. The Government deserve praise for raising the savings limit from the original £3,000 for a cash ISA and £7,000 for a stocks and shares ISA, to £20,000 a tax year for one or the other. These measures can be said to have simplified the ISA landscape and made ISAs more attractive. Unfortunately, other changes over the past 19 years have complicated the issue. Five extra types of ISA have been introduced, four of which have weaknesses as well as strengths.

First, there is the junior ISA. It is very important to encourage more children to adopt a savings habit, and having an account helps this. However, existing standard child savings accounts are not ordinarily subject to income tax anyway, because they would rarely produce enough income to exceed the personal savings allowance of £1,000 for 2018-19.

Secondly, there is the Help to Buy ISA. The scheme enables people saving for their first home to receive a 25% boost to their savings from the Government when they buy a property of £250,000 or less—£450,000 in London. According to HM Treasury, the Help to Buy ISA has helped over 106,000 property completions, and the average age of a first-time buyer in the scheme is 27, compared to a national first-time figure of 30, which indicates that it makes a real difference. However, there are weaknesses. To complicate matters, the scheme is due to be scrapped in 2019 and rolled into the lifetime ISA—which I will come on to—although subscribers can continue saving into their account until 2029. Help to Buy ISAs should lose “ISA” from their title to avoid confusion. This should be relatively straightforward, as there are already numerous other government house-buying schemes, such as equity loan and shared ownership, which do not have the ISA title associated with them. In addition, removing this from the ISA family would take away the confusion between investing in this and in a cash ISA.

Thirdly, the most complicated recent ISA is the lifetime ISA, as referred to by my noble friend Lady Altmann. It has its strengths. A LISA can be used to buy a saver’s first home or to save for later life. In addition, the Government will add a 25% bonus to the subscriber’s savings, up to a limit of £1,000 a year if the maximum £4,000 is saved. However, its weaknesses outweigh its strengths. The age restrictions are unnecessary and restrictive. Savers must be over 18 and under 40 to open a LISA, and cannot make contributions beyond the age of 50, so this can hardly be considered a lifetime investment. Savers cannot take their savings out of a LISA until they are over 60 unless they pay a punitive penalty, which is 25% if they withdraw money or transfer the lifetime ISA to another type of ISA before reaching the age of 60. As the FCA has repeatedly made clear, many investors wrongly believe that the 25% charge is just giving up the 25% bonus. However, as my noble friend Lady Altmann has already pointed out, the charge is equivalent to losing the whole government bonus and paying a further 6.25% charge on the investor contribution portion of the withdrawn sum. Overall, a lifetime ISA is probably not as effective in saving for later life as are most pensions. Although there is a bonus, there is no employer contribution or tax relief.

Fourthly, there is the innovative finance ISA. It has advantages: it provides increased choice to investors and has the potential to improve competition in the banking sector by diversifying the available sources of finance. But its weaknesses are also apparent: there are few products and consequently a low take-up. It could be replaced with an investment allowance, which would largely achieve the same objective. It could also be argued that it dilutes the ISA brand.

On National Savings & Investments, I refer to oral evidence given to the Treasury Select Committee in May by the NS&I chief executive. In the last reported financial year it raised £11.8 billion, which he said was about 10% of the total raised through NS&I and the gilts market. Interestingly, it now regards the Post Office as a rival, whereas in the old days all NS&I products were sold through it. NS&I has a useful role, but it is necessary to watch its interest rates. This is proven by its pensioner bonds, which were issued at a very generous rate of 4%, causing a stampede of people who wanted to invest in them. The new bonds now offer a rate of 2.25%, even though this is still very competitive by current interest rate standards.

In the area of pension fund savings I will look at two areas: tax relief on contributions and the change to annuity rules on withdrawals. Since 2011, the Government have decided to reduce the total lifetime allowance to SIPPs from £1.8 million to £1 million. “So what?”, you might say, as it still seems a large figure. But there are unintended long-term consequences. Individuals may well become more reliant on the state in the long term, adding extra pressure on the NHS in particular. I have also heard that doctors are retiring early simply to avoid breaching this limit, which also adds to pressure on the NHS. In the short term the reduction is saving the Government money on tax relief, but in the long term it will create an extra cost. If the Government cut back on the lifetime allowance further, as I suspect, I strongly believe that the amount of tax relief clawed back should be put towards the social care budget for pensioners; I am cribbing shamelessly an idea of my noble friend Lady Altmann.

The change in annuity rules was welcome. However—the Government cannot be held responsible for this except to flag it up more—some individuals have already failed to realise that if they withdraw more than a certain percentage of their funds, they could be clobbered with a tax charge of up to 45%. It has been a clever way to raise more tax, but again it may have long-term consequences. Pensioners could exhaust their own pension fund pot and become more reliant on the state. Overall, though, I approve of the change to the annuity rules, if investors take a sensible course of action to them.

The Help to Save scheme, which was mentioned by many other speakers, is a very good example of a new government initiative to promote personal savings by lower and middle-income groups. As many other speakers have said, around 16.8 million people have less than £100 in savings available to them at any time. I served as a member of the Financial Exclusion Committee, and I highly recommend our report of March 2017, which highlighted the background to the scheme. It will be open to 3.5 million adults in receipt of universal credit, and it works by providing a 50% government bonus on up to £50 of monthly savings into a Help to Save account. The bonus will be paid after two years, with an option to save for a further two years, which means that people can save up to £2,400 and benefit from additional government bonuses worth up to £1,200. Help to Save was welcomed by our witnesses, who also noted that matched funding schemes were one type of savings product that had been proven to work well.

Finally, one product feature also referred to in our report that has the potential to help those on low incomes is “jam-jarring”. This is a feature of a small number of accounts—chiefly offered by some credit unions and prepaid debit card products—whereby customers can automatically put aside amounts from their income into virtual “jam jars” for regular essential expenses such as rent and utility bills, preventing money set aside for one expense being used for another.

In summary, the Government have done much to encourage personal saving in a low-interest-rate environment. Indeed, the total figure given to our committee of all ISA savings had reached the very impressive figure of £8 billion at the time of our report. However, as indicated by the low savings ratio figure, this disguises the fact that a lot of people are not saving or are unable to save, and, as stated at the start of my speech, people are borrowing more than they are saving for the first time since the 1980s.

Class 4 National Insurance Contributions

Lord Northbrook Excerpts

Wednesday 15th March 2017 Lords Chamber

[Lord Young of Cookham]

I think I have already given that commitment: the support that we announced for local government in the Budget will go ahead and will not be affected by the announcement today.

[Lord Northbrook (Con)]

My Lords, I congratulate the Chancellor on his change of heart. I am sure that he is encouraged by yesterday’s debate here on the Budget and the contributions of my noble friends Lord Flight and Lady Altmann and the noble Lord, Lord Bilimoria, and others. I welcome this measure for self-employed business, but can the Minister make representations to the Chancellor on the subject of dividend tax changes, which will hit small incorporated businesses particularly hard, and also on the new proposed probate tax, which has not come in yet but which will affect current and potential Conservative voters in London in particular?

[Lord Young of Cookham]

I am grateful to my noble friend for drawing attention to the very good debate that we had yesterday on the Budget Statement. I will ensure that the Chancellor is aware of the views that were expressed by him and others, not just on the national insurance issue but also on probate and the changes to the dividend tax allowance. Whether it was my noble friend’s speech last night that caused the Chancellor to change his mind this morning, I am not quite so sure, but I am grateful for his support this evening.

House of Lords Act 1999 (Amendment) Bill [HL]

Lord Northbrook Excerpts

Committee: 1st sitting (Hansard): House of Lords
Friday 9th December 2016 Lords Chamber

[Lord Rennard]

If the noble Lord accepts the principle that representation here should be reflective of votes cast in the past election, I would welcome his support for that principle in the House of Commons also.

[Lord Northbrook (Con)]

My Lords, I apologise to the Committee for being unable to take part at Second Reading. I believe the Bill is unnecessary unless part of a full stage two reform, and breaches the undertaking that has already been referred to.

Contrary to the words of the noble Lord, Lord Anderson of Swansea, I maintain that by-elections produce very capable replacement Peers, such as the noble Lords, Lord Grantchester, Lord De Mauley and Lord Ashton of Hyde, the noble Earl, Lord Cathcart, and the noble Viscount, Lord Younger, all of whom are or have been on the Front Bench of their respective parties. In addition, the number of hereditaries is capped, unlike the number of life Peers. Surely it is this that needs attention, to be included in a total package of reform, which may indeed incorporate a change to the by-election system, but that should not happen until then.

The Campaign for an Effective Second Chamber does a lot of good work but the Bill makes the Chamber much less effective.

Bank of England and Financial Services Bill [HL]

Lord Northbrook Excerpts

Monday 26th October 2015 Lords Chamber

[Lord Northbrook (Con)]

My Lords, in general I welcome the Bill as it applies to the Bank of England, but in the second part of my speech I will say a few words about overregulation. As other speakers have stated, the Bill is split into three main parts. The first sets out the proposed changes to the Bank of England’s governance and procedures connected to its accountability. The second includes a number of provisions linked to the regulation of financial services, in particular the introduction of the SM&CR regime. The third contains provisions on the issuing of bank notes in Scotland and Northern Ireland.

What I like is that many of the Bill’s provisions linked to the governance and accountability of the Bank of England build on changes and suggestions announced by the Bank in 2014. The announcement was accompanied by two reports containing further details on the proposed changes—the Warsh review and the Bank of England’s own report. The Bill was in the Queen’s Speech, when the Government said that this would ensure that,

“the Bank is well positioned to fulfil its … role of overseeing monetary policy and financial stability”.

It will also ensure that the UK’s regulatory framework remains at the forefront of internationally agreed best practice standards.

Clauses 1 to 15 contain the proposed changes to the Bank of England’s governance, financial arrangements and prudential regulation. The Bill changes the membership of the court—it adds an additional deputy governor post. This has not been mentioned by other speakers, so I ask the Minister: what is the rationale behind that? As other speakers have said, the Bill also assigns the oversight functions to the whole court to operate more like a unitary board. The Financial Policy Committee becomes a committee of the Bank, rather than a sub-committee of the court.

The Bill also intends to clarify the Bank’s responsibilities for prudential regulation by ending the status of the PRA as a subsidiary of the Bank. I note the concerns raised by the noble Lord, Lord McFall, on that front. Instead, the Bill provides that the PRA is the Bank of England and creates a new Prudential Regulation Committee with responsibility for the Bank’s functions as the PRA.

The Monetary Policy Committee is also subject to change in the Bill. Generally, the MPC has worked pretty well in recent years, judged by the low level of inflation and of interest rates. The big move is in the timing of publication of the MPC’s minutes. It is proposed that they are now published as soon as is reasonably practical following a meeting. The MPC will meet fewer times in the year, changing from at least once a month to at least eight times a year. I do not really know what effect that will have, but it may be less or more valuable in these circumstances.

As other noble Lords mentioned, the Bill gives the National Audit Office the power to carry out examinations of the economy, efficiency and effectiveness with which the Bank uses its resources in discharging its functions. It also gives the Treasury power to carry out value-for- money reviews of the prudential regulation functions of the Bank. I disagree with other speakers; it seems to me that that is a sensible role for the NAO. Also, I like new Section 7D(3), in Clause 11, which says:

“An examination under this section is not to be concerned with the merits of the Bank’s general policy in pursuing the Bank’s objectives”.

Clause 3 gives the oversight functions previously delegated to the oversight sub-committee of the court to the full court. I note the comments from the noble Lord, Lord Eatwell, on this. I am slightly concerned about the reduction of the oversight committee’s role, although the Government say that it will simplify the way the Bank’s oversight functions operate.

Part 2 of the Bill makes a welcome change. Here I disagree with most other speakers. I think that the reverse burden of proof in situations of regulatory breach was a very bad idea: that you should be presumed guilty until proved innocent does not seem to go down well in many other areas of the law. The original regime meant that a senior manager responsible for certain areas of a firm’s business would be presumed accountable when regulatory requirements were contravened in that area. Now it will be necessary, quite rightly, for the regulators to prove that a senior manager has not taken reasonable steps to prevent that contravention to avoid being found guilty of misconduct.

SM&CR is due to come into force in March next year for financial services firms, defined as banks, other deposit-takers and those investment firms which are regulated by the PRA. The Bill extends the operation of SM&CR to cover all firms carrying out regulated activities under the Financial Services and Markets Act 2000. Part 2 also extends—which I welcome—the remit of the Government’s Pension Wise service to holders of annuities specified by the Treasury, so that it can deliver guidance to pensioners who will be eligible to sell their annuity income stream in 2017. I also welcome the duty that Part 2 imposes on the Bank to give the Treasury information about what action the Bank proposes to take if a particular bank fails, such as what impact the failure will have on the financial system and on public funds.

In the rest of my speech I have a few words to say about a paper produced by an organisation called New City Initiative, which supplies an independent expert voice in the debate on financial reform. Its intention is to restore society’s trust in the financial sector. I worked in the investment management sector until 2005.

The UK investment management industry generates about 1% of GDP and remains Europe’s leading centre for fund management. It earns an estimated £12 billion a year for the UK, and London is the hub of specialist boutique firms. The financial crash of 2008 was especially damaging. The serious long-term cost was, perhaps, the death of trust.

Extra regulation was clearly necessary, but the extent is open to debate. The UK SME asset management sector has traditionally been vibrant and grown strongly, but is now stagnating, because start-ups cannot afford the cost of increased regulation. A chart from the FCA shows how the number of new firms—approvals—declined from 230 in 2004 to between 150 and 170 in 2014.

Boutique asset and wealth management firms find compliance increasingly onerous. New financial regulations from the EU and UK are applied equally to the very biggest and smallest asset management firms, disregarding their ability to shoulder the consequent financial and legal burdens. If financial regulation is not imposed more proportionately on large and small asset management firms, New City Initiative is convinced that many fewer start-up firms will come to market. This arrest of competition will damage all, but especially the consumer, because choice will become more limited. The complexity of new regulations, and the potential punishment for infringement of them, pose massive obstacles to the growth of competition in the sector.

A new priesthood, called compliance officers, has emerged from the financial crash. Extra regulation is necessary, but as the regulatory regime continually evolves, becoming ever more complex, and the scale of potential punishments becomes so damaging to small firms, the temptation is for compliance officers to engage in gold-plating, to avoid any possibility of failure to comply. Their numbers—again according to the FCA—have more than doubled in the last 14 years.

I make a final point on banking regulation generally. Can the Minister say whether it is true—as I have read—that retail banks are going to be allowed to pay dividends to their investment banking operations?

Overall I welcome the Bill and wish it safe passage through the House.