Brexit: Financial Services (European Union Committee Report)

Lord Shutt of Greetland Excerpts

Thursday 9th February 2017 Lords Chamber

[Lord Shutt of Greetland (LD)]

My Lords, I too pay tribute to my noble friend Lady Falkner of Margravine, who has steered us through several of our deliberations over the last year or so. The report, like all those which come from our EU committees, is based on the evidence. What those of your Lordships who have not been on the committee are getting is what we have heard from other people and the questions that we have been able to put to them.

There is no doubt that financial services are a highly significant sector of the United Kingdom economy. We are told that they employ 1.1 million people, two-thirds of whom are outside London. It seems to me that 1.1 million jobs are likely to support 4 million United Kingdom citizens. On any basis that is significant, serious and important. I have three points to make in my contribution, which really concerns livelihoods. I will come to these in order because I want to speak of some of the people who came to see us.

First, on 19 October a man by the name of Simon Kirby, the Economic Secretary to Her Majesty’s Treasury, came to see us. The noble Lord, Lord Desai, asked him about clearing and said:

“We have had conflicting evidence about what will happen to clearing houses”.


The response from Simon Kirby was:

“There is a lot of noise about clearing. The whole of Europe, the UK included, would be worse off if that particular part of the financial services that London offers was dismantled and redistributed across Europe”.


In a further question, the noble Lord, Lord Desai, talked about clearing and Simon Kirby said:

“It is an element of the negotiations. Is it the most important element? Probably not, but it is … significant”.


That sounded complacent to me.

On 2 November we then had a visit from Xavier Rolet, the chief executive of the London Stock Exchange Group, and I quoted Simon Kirby’s evidence to him. We were aware that Xavier Rolet had earlier indicated that 100,000 jobs were at stake if clearing were to relocate. He confirmed that,

“we stand by our estimate of 100,000 jobs”.

When I pressed him a little further as to where these jobs were, he said that he would,

“provide a more detailed estimate”.

That was to happen “reasonably shortly” and so it did, in that on 11 November we had further written evidence sent from Xavier Rolet, together with an EY report that had been prepared for the Stock Exchange. He said that the report estimates that up to 232,000 combined financial and non-financial jobs throughout the UK could be lost. This was a detailed 44-page report, which sets out where those jobs are. Those 232,000 jobs suggest to me that we are talking about the livelihoods of 1 million people.

The last thing that we had was not presented to our committee but—as things keep moving—was the White Paper from Her Majesty’s Government on 1 February. Perhaps it is better to call it a grey book. In its section 8 on pages 42 and 43, there are a few paragraphs about financial services. Paragraph 8.25 says:

“In our new strategic partnership we will be aiming for the freest possible trade in financial services between the UK and EU Member States”.


So Simon Kirby’s complacency has now moved to an aim. Where is the determination? Will it come from the noble Baroness, Lady Neville-Rolfe, who I now congratulate on her new role?

Queen’s Speech

Lord Shutt of Greetland Excerpts

Wednesday 25th May 2016 Lords Chamber

[Lord Shutt of Greetland (LD)]

My Lords, I will refer to the 16 words in point 7 of the gracious Speech:

“To spread economic prosperity, my government will continue to support the development of a Northern Powerhouse”.

It was interesting to hear the Minister embrace this issue in his introduction earlier this afternoon. The supplement to the Queen’s Speech is an 85-page document with a preface by the Prime Minister but no mention of the northern powerhouse. The gracious Speech is then repeated, with 22 Bills in it to be introduced. But there is no Bill for the northern powerhouse. Reference is made to a Bill governing bus services, to the accountability of the police and to a national citizens’ service being put on a statutory footing, while the Minister referred to an infrastructure commission. However, we turn to page 73 in this enhanced document and we have a non-legislative brief and a couple of pages on the northern powerhouse, which go back to the words of the Queen’s Speech:

“my government will continue to support the development of a Northern Powerhouse”.

It lists several items of northern investment that are to be pursued, often concerning transport. But this is very much what Government believe is right for the north, rather than what they will do with the north and the people of the north. Not only that, but there is still a lack of definition. Where is the northern powerhouse? Who makes its decisions? Who is the chairman and who is on the board? Who is the auditor? Who holds the northern powerhouse to account? It does not look like devolution.

I think I know the answer to most of those questions: the present Chancellor of the Exchequer. He is the panjandrum of all. Is that a safe position for the northern powerhouse? Before the general election, many people did not think the money that was going to be allocated for international development would be safe, and we made certain it would be by having an Act enshrining the 0.7% figure. Should this Queen’s Speech not have announced a northern powerhouse Bill? Is the northern powerhouse safe given that, among the Government’s own people responsible for the northern powerhouse agenda, 97.5% of the DCLG civil servants are London-based? It is amazing that as part of joined-up government, the devolved bit of the Department for Business, Innovation and Skills—its office in Sheffield—is to be closed.

How can the north really be regenerated when so many cards are stacked against it? Look at smaller UK regions. Scotland has its own decision-making, with the splendid benefit of the Barnett formula; so it is with Wales and Northern Ireland. London has its own Assembly, but the northern powerhouse, as I have said before, is an aspiration, akin to the American dream. I put it to the Minister that the north cannot just be under the patronage of the present incumbent of No. 11 Downing Street. Missing from the gracious Speech was a northern powerhouse Bill to enshrine the work in the north. What happens if the current Chancellor moves off to pastures new, perhaps in foreign affairs? Where is the northern powerhouse then?

It seems to me that there should be a northern powerhouse Bill to define the north and set out the boundaries. I am quite happy, by the way, with the three northern regions: the North East, Yorkshire and the Humber, and the North West. If the Government want to be rather more radical and set up a parliament for the north so that there can be real involvement in decision-making—a north powered by its people—that would make a lot more sense and would be real devolution.

I end by commending the speech of and welcoming the right reverend Prelate the Bishop of Newcastle. I welcome her call for real resources for the northern powerhouse.

Queen’s Speech

Lord Shutt of Greetland Excerpts

Thursday 4th June 2015 Lords Chamber

[Lord Shutt of Greetland (LD)]

My Lords, today is allocated to discussing matters relating to business, economic affairs and transport. They are of course related. I want to speak about transport, and one specific area in relation to transport—railways. Even more specifically, I want to talk about the case for further electrification of our existing railways. Yes—infrastructure. By and large, it is not about legislation. I shall leave for a moment on one side the case for building HS2 and HS3.

Before I rise to the theme, I want to thank and congratulate the maiden speakers, the noble Lords, Lord King and Lord O’Neill of Gatley, and welcome the noble Lord, Lord O’Neill, to his ministerial task. I note that he referred to the northern powerhouse, and I have learnt from him today that it is more than just TransPennine. Geographically, at least, it includes the north-east. But what is the definition of northern powerhouse? It sounds like something that I would be rather in favour of, but what is it? What is the substance, or is it something akin to the American dream?

The UK has lagged behind the rest of Europe on electrification. The clear case is for clean-up, for a speedier and cheaper service once the capital costs have been dealt with, and because there will be scope for more trains. It is all well understood. Following the electrification of the east coast main line, completed as far back as 1991, there has been little further progress, or certainly not much progress in completed work. If we look at the period of the Government before last, from 1997 to 2010, electric wires were put up over only 8 miles from Crewe to Kidsgrove. In the last five years, it has not been hugely better, but 45 miles have been electrified, from Liverpool to Manchester and Liverpool to Wigan. However, there are plans and work is taking place.

The last Labour Government did announce plans in 2009, with the Great Western main line, hinting at the Midland main line and further electrification in the north-west of England. In 2010, perhaps understandably, several schemes that had not been started were stalled, only to be given the go-ahead later. I had the privilege of announcing in this House the Great Western electrification to Cardiff, back in 2011. It was a day when the noble Earl, Lord Attlee, was indisposed, and I had the task of announcing it there. In 2012, further electrification was announced, from Cardiff to Swansea, the Welsh valleys and the northern hub, which must be a friend of the northern powerhouse. Then there was the TransPennine line via Huddersfield to Leeds and York and the Midlands main line, Southampton to Nuneaton. Work is going on, but I learn that there have been delays.

What will the route mileage electrified become, in the period 2015 to 2020? Does the Minister think that there is any impediment to that tremendous list of electrification being achieved—and where next? The electrification plans should not stop at those announced in 2012 to 2014; electrification is a long process, and the electrifiers need keeping in business. Teams should not be disbanded, as happened years ago. There are many places, some gleams in the eye, along with other thoughts by planners, politicians and all-party parliamentary groups, as well as railwaymen. When the present announcements have been achieved, what will happen? Is the programme going to be kept rolling, particularly in terms of in-filling schemes? There are some major schemes, and I would not wish to stand up here without mentioning the Calder Valley line as one of many that come to mind.

Following on from earlier planning, the Government have a real chance of delivering significant electrification of our railways based on the present plans—but they must not stop.

Bank of England

Lord Shutt of Greetland Excerpts

Thursday 30th October 2014 Lords Chamber

[Lord Newby]

My Lords, whatever one can say about the history of constitutional change in the UK, it has not been characterised by great speed. While there is now considerable urgency in dealing with consequential constitutional change in both Scotland and the rest of the United Kingdom, it will require a commitment by many people across all parties to bring that about—which in the past has been conspicuously lacking.

[Lord Shutt of Greetland (LD)]

My Lords, if there is to be any change, would not the name “Bank of Britain” be more solid, simple and straightforward?

[Lord Newby]

It might be, my Lords, but as I said in my initial Answer, I suspect that there will not be any change.

Northern Ireland: Corporation Tax

Lord Shutt of Greetland Excerpts

Monday 18th March 2013 Lords Chamber

[Lord Newby]

I am not absolutely sure what the noble Lord is asking me to confirm because no decision has yet been taken on corporation tax and Northern Ireland. The Government are sympathetic to much of what has been said on the Silk report and are now in discussion, as he is aware, with the Government in Wales.

[Lord Shutt of Greetland]

My Lords, bearing in mind that it is the rebalancing of the Northern Ireland economy that is the reason for people being concerned about the rate of corporation tax, and that is why the joint ministerial group gathered, were there any other ideas that came from that group that would assist the rebalancing of the Northern Ireland economy?

[Lord Newby]

My Lords, a number of measures were announced in the Autumn Statement aimed at rebalancing, or rather promoting, the Northern Ireland economy, including another £132 million of capital expenditure, science and technology funding for the research partnership at Queen’s University and the slightly earlier decision to give the Northern Ireland Assembly decision-making powers over air passenger duty on long-haul flights.

Sovereign Grant Bill

Lord Shutt of Greetland Excerpts

Monday 3rd October 2011 Lords Chamber

[Lord Sassoon]

That the Bill be read a second time.

[Lord Shutt of Greetland]

My Lords, I have it in command from His Royal Highness the Prince of Wales to acquaint the House that his Royal Highness, having been informed of the purport of the Sovereign Grant Bill, has consented to place his prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, I am pleased to have the opportunity to introduce this important Bill and I look forward to our debate. It was clear from debates in another place that there is wide recognition of Her Majesty the Queen’s long and conscientious contribution to public life. It is vital that we continue to provide the Queen and the Royal Household with the finances to perform her official duties with dignity, but it is equally important to take this opportunity to modernise the current system for supporting the Royal Household.

The sovereign grant will replace the current three-grant system with a single consolidated payment. It will provide the household with flexibility to prioritise its use of resources in the most effective way. The level of the grant will usually be equivalent to 15 per cent of the profits made by the Crown Estate in the financial year two years earlier. That is, profits in the current financial year, 2011-12, will determine the level of the sovereign grant in 2013-14, the first year the new calculation method will be used. Of course, we cannot say with certainty what that profit will be, but the Crown Estate has indicated that it expects profits to be broadly the same as last year. That would mean a 2013-14 sovereign grant of about £34 million. That is in line with Royal Household expenditure in the five years between 2006 and 2010, which averaged about £34 million per year. However, that can be only a projection, so there are safeguards to ensure that the sovereign grant can be kept on a sustainable path.

First, the Bill would establish a sovereign reserve fund. Any unspent sovereign grant will be paid into the sovereign reserve at the end of the year, and could then be called upon in a subsequent year to cover a shortfall. Importantly, there will be a target limit on that reserve to avoid it rising above about half of the total expenditure in that year. If the sovereign reserve were to exceed that level, the royal trustees could intervene to reduce the sovereign grant to an appropriate level.

Secondly, the Bill provides for regular reviews to determine whether the percentage used in the formula, initially 15 per cent, remains appropriate. My right honourable friend the Chancellor of the Exchequer has already accepted the principle of some of the Opposition’s amendments on this matter. In response to those, the Bill now provides for the first review to happen in 2016 rather than 2019, as previously envisaged, and reviews will take place every five years thereafter instead of every seven. Any increase in the formula would require agreement from Parliament by affirmative orders.

Thirdly, there will be a cash underpin that will go some way to protect the monarch from dips in the profit of the Crown Estate. It is important to note that the royal trustees may override this underpin should there be sufficient funds in the reserve.

Because the sovereign grant is being brought into the Treasury estimate, it will be treated like other central government bodies. The Treasury will apply in-year controls on public expenditure to avoid waste, seek value for money and prohibit spending ahead of need. At the same time, we are improving accountability to Parliament for the spending of public money. From 2012, the National Audit Office will have full access and will become the statutory auditor for all the Royal Household’s use of the sovereign grant and the sovereign reserve. This is a significant step that should be welcomed.

The Bill is also an opportunity to modernise other aspects of current legislation. For example, under current arrangements, only a Duke of Cornwall receives financial support from the Duchy of Cornwall. The Bill will enable the Treasury to provide a grant to heirs to the throne who are not the Duke of Cornwall, to ensure that they can be supported to similar effect. A significant result of this modernisation is that, in effect, it enables female heirs to benefit from the Duchy of Cornwall.

In addition, the Bill repeals a number of parliamentary annuities that are currently payable to other members of the Royal Family to relieve expenditure incurred in connection with their official duties. These annuities have for many years been reimbursed on a voluntary basis to the Exchequer by Her Majesty from her Privy Purse. The Bill puts an end to this anachronism. Noble Lords will be aware that Her Majesty intends to continue to provide for these annuitants from her Privy Purse. Those arrangements were set out in a letter from Sir Alan Reid, Keeper of Her Majesty’s Privy Purse, to my right honourable friend the Chancellor of the Exchequer, which was placed in the Library on 30 June. There is no change to the parliamentary annuity paid to the Duke of Edinburgh, which will continue to be payable from the Consolidated Fund. I am sure that the House will welcome this simplification.

The Sovereign Grant Bill provides for a system of royal support that is modern, efficient and accountable. I beg to move.