FSA Investigation into LIBOR

Debate between Lord Sassoon and Baroness O'Cathain

Thursday 28th June 2012 Lords Chamber

[Lord Sassoon]

My Lords, I am grateful to the noble and learned Lord. As I said, we have concerns about the question of directors, particularly directors of banks, to make sure that the regime is appropriate and tough enough. The regime for directors of banks, because of the special nature of their role, should be looked at on its own merits. That is why it is timely that the RBS report and consultation, going very much to this point, will be published next week by the Treasury. I hope that we will get a debate going about what is appropriate in terms of the special regime that might be appropriate for directors of failed banks if they are shown to have behaved negligently.

[Baroness O'Cathain]

My Lords, the Statement says that this was going on throughout 2005, 2006 and early 2007. Was it stopped in 2007, or has it been going on since then? I wonder whether it has been going on for another five years. If so, what do my Government propose that we should be doing? Can we actually believe these people?

[Lord Sassoon]

My Lords, on the particular case, the FSA report sets out what was going on. The important point for my noble friend is that the point of highlighting the dates which my noble friend gave was that this activity was going on before the financial crisis. It was going on in an atmosphere of greed in what were perceived to be the good times. When the financial crisis hit, the activity of the individuals at Barclays was motivated by something else, which was to do with the reputation and standing of Barclays in the market. The particular relevance of those earlier dates was to distinguish what then happened during the later period, in the financial crisis.

As the FSA and other regulators’ investigations go on, they will tell us more about the extent and duration of these activities. Given that the banks have been on warning of this for a period, I would like to think that they have taken significant steps to clean up their activity. We want to make sure that, as I have described with this ongoing review of the LIBOR system, the system is appropriate to the new market circumstances.

Public Service Pensions

Debate between Lord Sassoon and Baroness O'Cathain

Tuesday 20th December 2011 Lords Chamber

[Lord Lea of Crondall]

I echo the opening remark of the noble Baroness, Lady Kramer, in referring to the constructive nature of the recent negotiations, albeit at the eleventh hour. I hope that the Minister will take care in saying who represents 5 per cent of what. One minute he is talking about the total public sector negotiation and the next minute he picks out a statistic which is to do with the Civil Service. We ought to be very careful not to pick and mix in that particular way.

I hope that the Minister will comment on a general point: namely, now that we have reached where we have got to, it would be very useful for all of us to discourage people from going in for rhetoric such as many Members of the Minister’s party, both in this House and in the Commons, have indulged in. Their slogan can be summarised as, “Private sector employment is productive; public sector employment is unproductive”. It is not just the Daily Mail, the Daily Express, the Daily Telegraph and the Murdoch newspapers that say that—it is members of his own party in this House and the other House. I do not mean that anyone in this House tonight has said that, but it has been said on other occasions. Such comments are quite ridiculous. People will think that nurses and teachers are unproductive, and that hedge fund managers and second-hand car dealers are productive. Is it not time that, in a modern social democracy or mixed capitalist economy—I do not mind what you call it—we agreed that that is a ludicrous way of dividing people up?

That leads to the point that we must get on with improving pension provision in the private sector. The Adair Turner report on auto-enrolment has been stymied to some extent. Is it not important that we do not have a race for the bottom as regards pensions? I am glad that we have drawn back from that to some extent.

Am I not right in thinking that CPI has been selected instead of RPI because CPI has been growing more slowly in recent years? Would the Government have preferred CPI to RPI if it had been growing faster? I have been around for long enough to know that that is exactly how the Treasury thinks. I ask the Minister whether he agrees with me that there is a position in the final set of correspondence which refers to CPI plus 1.5 per cent or 1.6 per cent, and that that is the rationale for some of the arithmetic, which—understandably, given the Government’s predicament—is based on getting more in for the Treasury, hence the 3 per cent take-away.

Finally, is this not also the time to say, given the huge growth in pension pots for the top 0.1 per cent of people—which is scandalous and is getting up the nose of everyone in the country, apart from that 0.1 per cent—that the idea that we are all in this together is a bad joke, unless that issue is also addressed?

[Baroness O'Cathain]

My Lords—

[Lord Sassoon]

I am sorry—I thought there was a new and welcome procedure whereby Back-Benchers could answer questions on my behalf. That is an excellent idea, but it might require discussion before we do something so radical.

I should first be clear about the interesting analysis of the noble Lord, Lord Lea of Crondall, on how we have got to this point and what else we should be doing. When he talks about an eleventh-hour deal, it is worth reminding the House that the final deal was put on the table by the Government on 2 November. The agreement today is entirely in line with what was put on the table then, well ahead of the strike action on 30 November.

The question around CPI and RPI broadly relates to the nature of the deal whereby individual negotiations were carried out, scheme by scheme, around the level of benefit accrual and indexation rates. That is why we allowed considerable flexibility for the unions to vary the balance of factors within the total cost caps that were set. That is why a variety of different approaches was taken. There was considerable flexibility within the overall parameters set by the Treasury.

As to the question of what people in the private sector should be doing, perhaps we had better stick to public sector pensions, which are very important and should be what we are talking about.

[Baroness O'Cathain]

I must apologise to my noble friend for jumping up. It is just that I was slightly goaded by the noble Lord, Lord Lea of Crondall. I want to come back to him about the CPI versus RPI issue, because I have a pretty long memory, too. In the early stages of the Monetary Policy Committee and the Labour Government, there were endless discussions every month about the RPI. One of the reasons that the statisticians wanted to move to the CPI was so that they could get month-by-month comparisons with mainland Europe—the EU. That is exactly why it happened, and then it all started to go wrong. We should have a discussion off the Floor of the House and go to the Library to look at all that. It was fascinating stuff, and an enormous number of people wanted to go for the CPI, as opposed to the RPI.

Public Expenditure: Review of Commitments

Debate between Lord Sassoon and Baroness O'Cathain

Thursday 17th June 2010 Lords Chamber

[Lord Sassoon]

I thank my noble friend Lady Sharp. I was at Stonehenge last year and it is clearly one of the most inspiring sites in this country. However, we have to be realistic about the predicament in which the economy has been left by the previous Government. There are certain projects that we simply cannot afford and which do not represent good value for money. The £25 million Stonehenge visitor centre is one that fails the test.

[Baroness O'Cathain]

Can my noble friend confirm that the Department for Culture, Media and Sport has stated that, if it could get private funding for this, the project would go ahead? This is yet another important area. There is a lot of money sloshing around in the arts world, but it is directed to projects that are not as important as a good visitor centre at Stonehenge. By implication, I am sure that many people thought today that we were going to let Stonehenge crumble way. The stones are wonderful, but we are concerned about access and the visitor centre. It seems an awful lot of money to spend on a visitor centre.

[Lord Sassoon]

I am grateful to my noble friend Lady O’Cathain for pointing out the pressures within the DCMS budget, as there are within the budgets of other departments. Difficult decisions will have to be made in all departments. This could be a project—I do not know—where there may be a private sector solution.