Financial Services Bill

Viscount Trenchard Excerpts

Tuesday 3rd July 2012 Lords Chamber

[Viscount Trenchard]

As other noble Lords have said, all three amendments are well intentioned. I also welcome the Government’s intention to introduce a new objective for economic growth and employment. However, it is a pity that we are not contemplating the introduction of a requirement to have regard to international competitiveness. If you have regard to the international competitiveness of the marketplace, that will certainly serve the Government’s declared objective to support economic growth and employment.

I do not understand why it is believed that the maintenance of international competitiveness is synonymous with the discredited system of light-touch regulation. We should not abandon at this stage any attempt to reintroduce into the Bill, in more places than at present, at least a requirement—if not an objective, which is what ideally I would like to see—always to have regard to the maintenance of the competitiveness of the marketplace, because that is what drives growth, creates employment and has made London what it is today.

I understand that the FSA’s report on the failure of RBS suggests that the FSA’s need to have regard to international competitiveness was one reason for regulatory failure, but I humbly submit that I doubt that. I believe that you can always have regard to competitiveness while at the same time protecting the consumer and ensuring the stability of the marketplace.

On the three amendments, I am afraid that I am unable to support Amendment 35 in the name of my noble friend Lady Kramer because it sounds very much like the command economy. It would give too much of a planning role to the Financial Policy Committee, and I suggest that it would be very difficult to give that committee on the one hand an objective to achieve a stable and sustainable supply of finance, and on the other a duty to remove or reduce systemic risks that include unsustainable levels of leveraged debt or credit growth. To give that body responsibility both to maintain sustainable credit and to prevent unsustainable credit at the same time would mean that it had to decide exactly how much was going to be lent to every business up and down the land. I submit that this command economy-type interventionist role would be inappropriate, and certainly would not lead to maintaining the competitiveness of the marketplace.

As for the other two amendments, I have great sympathy with the amendment of the noble Lord, Lord Eatwell, who treats the growth objective as being equal with the stability objective. Although I am happy to support my noble friend’s objective, which subordinates the growth objective to the stability objective, I ask the Minister to explain in what circumstances he thinks the growth objective would have to be ignored.

Financial Services Bill

Viscount Trenchard Excerpts

Tuesday 26th June 2012 Lords Chamber

[Lord Flight]

My Lords, I am unclear as to what are the Government’s proposals, the Opposition’s proposals and even the Treasury Select Committee’s proposals. It strikes me that a great deal of complexity is made out of a situation which should be extremely straightforward. The Bank of England should have a board of directors—you can call it the court, if you like—composed of proper individuals independent of the Bank of England who have substantial experience in the financial services industry and who have all the powers of a board.

I am a commissioner of a minor regulator, the Guernsey Financial Services Commission, and we operate as a board controlled by non-executives to which the executive regulator is accountable and where the board has the power to fire the chief executive and the requirement to understand and be on top of every regulatory issue that is in the course of being addressed. I cannot see why the Bank of England should not have a board of that nature. Indeed, the court has a lot of the powers required to exercise that role. It is just that it has not done so for many years and has been an ornament.

We then have the question of what the FPC should do. Some have said that it will take over as the board that runs the Bank of England. However, it seems to me that the FPC should be a specialist body which focuses on the fundamental issue of what is going on in the banking industry and advises the board on financial stability; it should not be a substitute for or take over from a proper board of the Bank of England which covers all the issues. However, if there is a specialist body and a proper board in this structure, I cannot see what is wrong with it.

I also have to agree that, certainly between 2007 and 2008, the Bank of England did not exactly do very well. Much to my chagrin, it was really the ECB that managed to keep the banks and the City of London afloat, since the Bank of England, extraordinarily, did not recognise a major run on the banking system that was far greater than the one in 1974, which I also lived through. My reply on that point is that these bodies need to contain a majority of independent people. If the board or the FPC is not controlled by independents, then they will be in the control of the governor. Both bodies need independent people who can stand up to the establishment of the Bank of England.

I look forward to learning from the Minister precisely what the amendments mean. Solving the situation should not be particularly difficult but is actually a matter of common sense.

[Viscount Trenchard]

My Lords, I, too, share the nervousness of the noble Lord, Lord Eatwell, about the governance of the Bank of England, and I agree that the Bill is extremely complicated. I take my hat off to those who have worked hard on the Joint Committee. Their task was very much harder than the one that the noble Lord and I had—under the chairmanship of the noble Lord, Lord Burns, who is in his place—when we scrutinised the then Financial Services and Markets Bill some 12 or 13 years ago. This task is clearly much more difficult given that it does not attempt a total rewrite of that legislation. Although I am not sure whether the PRA or the FCA will be the continuing entity of the FSA, as I understand that two-thirds of the FSA personnel will be moving to the FCA, I believe that for most purposes the PRA will nevertheless be the continuing entity.

Although I understand why the noble Lord, Lord Eatwell, has moved his amendment, I am afraid that I am unable to support it. Like my noble friend Lord Flight, I believe that the situation is quite simple: the Bank of England has a perfectly good Court of Directors—a term which I think sounds rather good. Some of your Lordships may think that it sounds arcane and fusty but, on the other hand, it has a certain amount of gravitas. To change it to “supervisory board” would be very un-British. In my business life, I have come across many supervisory boards, in Holland and in Germany. In many cases, I find them semi-detached, rather remote and rather nervous to exercise their powers. If we were to adopt the term “supervisory board” it would give a weak impression—much weaker than the rather heavy-sounding Court of Directors gives. I do not think that there is no problem with the court’s name. However, I agree that its accountability needs to be strengthened, given the additional powers that the Bank will receive. Certainly, some changes need to be made to the governance of the Court of the Bank of England.

The noble Lord also referred to the asymmetry between the Monetary Policy Committee and the proposed Financial Stability Committee, in that the first is independent of the court, whereas the new Financial Stability Committee would be subordinate to the court. I do not think it necessary, in this connection, to strive for total symmetry, because the Monetary Policy Committee has a very specific responsibility, to set interest rates, which is a technical matter. It is essential that it continues to conduct its business in a transparent and independent way and to be composed of persons who are able to provide technical expertise in determining interest rates. The Financial Stability Committee will have a much broader remit. Regarding the oversight of our prudential regulation, both macro and micro, I do not quite understand why it is necessary that the two be so separated; it makes the structure more complicated than it need be. So I have sympathy with the noble Lord’s purpose, but I cannot agree that to replace the court with a supervisory board would be the right way to go.

[Lord Barnett]

My Lords, what we have heard so far exposes to me why, as I have said before, this is a non-party political Bill. I agree with everything that has been said so far. The noble Lord, Lord Flight, was very good. The way that this Bill is being managed is not the Minister’s fault—we should not have had a Bill in the first place. What an amount of paperwork; we are supposed to be becoming a world without paper, but I have left huge volumes of advisory papers behind in the office. I also have with me the Bill itself, of course, and various other documents. The management of this, as my noble friend said, has been outrageous. A few days ago we had four pages—as if the Bill and the amendments were not enough to read—of government amendments. Those were, I think, on page 3 of the paper. We have to read those as well as find out what all the committees, sub-committees, courts and directors, and God knows what else, are going to do. They are all going to be responsible for matters which, at the end of the day, the Chancellor will never give up. Indeed, we are told that the Treasury will be very involved with the various committees. We will come to that later.

For the moment, however, I would like the noble Lord, Lord Sassoon, to tell us why we removed the FSA. My understanding at the time of the Bank of England Bill was that Gordon Brown took away the FSA from the Bank of England precisely because he did not want to make the Bank as powerful as this legislation now proposes making it. Those powers are now much wider—the court of the Bank is being given much greater powers as well as various committees and sub-committees. The Bill proposes all sorts of things that we are supposed to understand. Frankly, I do not understand them. Will the noble Lord, Lord Sassoon, be able to explain the Bill rather than just read out his briefs? Perhaps he should send his briefs to us; that might be easier than listening to what they say. The whole thing is so complex. The powers of the Bank of England are now so huge that I assume that the Treasury and the Chancellor will never allow them to be used. Members of the Treasury itself are on various committees of the Bank. I do not know who is going to be responsible anywhere.

--- Later in debate ---

The Bill is, of course, generally silent on this issue of culture, probably because it is not easy to legislate for, and I sympathise with that. Any corporation faced with the same difficulty, however, would have in place a definition of the required cultural values, a set of working practices for inculcating them and a feedback mechanism for review. The Government should therefore encourage the Bank to act in exactly the same way as these large corporations with respect to culture and should say in this Bill at some point how they intend to give the Bank this encouragement.

[Viscount Trenchard]

My Lords, I had considerable sympathy with the amendment of the right reverend Prelate, which I found rather clearer and easier to understand than I did the explanation of the noble Lord, Lord Barnett. I am not convinced that appointing an additional two deputy governors is necessary because I believe these three sub-divisions of the Bank could be rationalised. However, appointing deputy governors will tend to make the governance of the Bank of England more rather than less level in that if you have a governor and one deputy, only one person comes close to challenging the governor’s authority. As proposed in the Bill, there will be three deputy governors, which will mean that the perception of the balance of power will be more level than before.

It is completely unnecessary for the governor to chair the Financial Stability Committee, because the governor chairs the court and the Financial Stability Committee is a sub-committee of the court. It is not right that the chairman of the court—that is, the governor—should also chair one of its own committees. That is highly illogical.

[Lord Turnbull]

I do not think that the governor chairs the court any longer.

[Viscount Trenchard]

I apologise to the noble Lord and I stand corrected. Perhaps the governor should chair the court. However, where possible, the deputy governors rather than the governor should chair the sub-committees.

[Lord Turnbull]

My Lords, I am not in favour of the amendments. First, there is the post of the deputy governor for prudential regulation. This is the old head of the FSA, in so far as it deals with macroprudential regulation, who is given the status of deputy governor in order to bring him into the councils of the bank. No extra posts or salaries are being created here. One might have been created by the creation of the FSA, but that is not here.

Secondly, as to the checks and balances on the governor, I do not think that a committee as important as either the NPC or the FPC being chaired by his deputy is a good way of exerting supervision of the governor. You cannot work for someone and supervise them at the same time.

At the moment, the governor chairs these committees and brings their thinking together; and, as we discussed earlier, there are other mechanisms around the court or the oversight committee—whatever it is called—that check the over-mighty power of the governor. Using one of his deputies to do this does not make sense.

Financial Services Bill

Viscount Trenchard Excerpts

Monday 11th June 2012 Lords Chamber

[Viscount Trenchard]

My Lords, I am grateful to my noble friend the Minister for introducing this important debate. I must first declare my interests in that I am employed by Mizuho International plc and am a non-executive director of two other financial services companies. I also wish to pay tribute to the excellent maiden speech of the noble Lord, Lord O’Donnell. If he becomes the next Governor of the Bank of England, I believe that we can easily dispense with all three deputy governor positions. In common with other noble Lords, I thank all those who served on the Joint Committee for their hard work and great contributions.

I believe that the financial regulatory arrangements that existed during the initial stages of the financial crisis were deficient in three principal ways. However, the crisis was not caused principally because the tripartite system in itself was deficient. As other noble Lords have commented, a regulator’s culture and judgment are more important than its architecture. First, there was no bank resolution mechanism in place. If the Banking Act 2009, which enabled the swift resolution of the Dunfermline Building Society insolvency, had been in place, it is likely that the Northern Rock situation would have been quickly and relatively painlessly resolved.

Secondly, the deposit protection scheme that applied was inadequate, because it was not a 100% scheme. If today’s scheme had been in place, there would not have been a bank run of such severity. Thirdly, although the Bank of England was charged with responsibility for financial stability, nobody was looking at the system as a whole. The Bank should have been given a power of direction over the FSA. Although I wholly accept my noble friend Lord Tugendhat’s observations on the Bank’s record as a regulator, I nevertheless believe that the body charged with financial stability should also have ultimate responsibility for regulating financial markets and their major participants.

In 2006, I was working in Brussels as the director-general of the European Fund and Asset Management Association. It is my recollection that at that time the FSA did not consider itself an activist, firm-specific regulator, even though most of its 300 bank supervision staff had come from the Bank of England. I felt that the FSA was more interested in attending conferences and engaging with other European regulators to discuss harmonisation of regulation than actively supervising the banks. It is also clear now that the levels of capital and liquidity required under the Basel I accord were completely inadequate.

I was privileged to serve on the Joint Committee on Financial Services and Markets under the inspired chairmanship of the noble Lord, Lord Burns, which scrutinised this Bill’s predecessor before its introduction to Parliament in 1999. Some of us believed that competition and the competitiveness of our financial markets should have been made an objective of the FSA rather than merely one of the principles to which it had to have regard. I welcome the fact that the FCA is given a competition objective in the Bill, but it is inadequate in that it falls short of a responsibility to maintain or enhance the competitiveness of the UK’s financial markets.

I am not persuaded that it was necessary to dismember the FSA in order to make our regulatory system fit for purpose. Besides, the Government are trying to reduce the number of public sector bodies with all their associated costs, boards of directors, et cetera. Some 2,000 firms will now have to report to two financial regulators, the PRA and the FCA, which will demand the provision of information—in part common to both, in part different—which will require an increase for all dual-regulated companies in compliance staff and commensurate costs.

It is interesting that we consider it appropriate to redesign our regulatory framework in this country at a time when the EU has just established a different regulatory framework based not on the twin-peaks system that we have adopted but divided between banks, securities markets and insurers, including pension providers. The matrix of reporting lines between the UK and the European regulators certainly raises the question of whether the Bank, the FCA or the PRA will have the necessary influence on any of the European regulators commensurate with the UK’s status as the world’s pre-eminent financial market.

I appreciate that a lead regulator system will be adopted and that a memorandum of understanding to be drawn up by the PRA and FCA will establish arrangements for co-ordination with each other and with the three European regulators. However, I worry that the complicated matrix of communication channels that will be established as a result not only increases the risk that some vital piece of information will not be passed correctly but also makes it more likely that there will be a great deal of duplication, which is expensive for the taxpayer and for the regulated firms, which will have to satisfy the myriad of regulators’ increasing hunger for ever more detailed and overlapping information on their businesses.

The draft MoU states that the FCA and the PRA will co-ordinate with each other on rule and policy-making, although my understanding is that very little scope remains for national regulators to make rules following the establishment of the three European sectoral regulators. As far as the 2,000 firms that will be dual-regulated are concerned, the draft MoU clearly anticipates a considerable amount of duplication. It provides for the establishment of supervisory colleges for individual firms and groups comprising members of both regulatory bodies. It is important that the Treasury should monitor the escalating costs and complexity of the regulatory system, having due regard to proportionality. The fastest growing departments in many financial institutions are compliance and IT, which certainly does not help the London markets maintain their international competitiveness. RSA Insurance has incurred a dramatic increase in regulatory fees, from less than £500,000 in 2007 to more than £9 million in 2011. As the CBI has urged, the new regulatory authorities should have as a specific objective the supporting of economic growth. There must be a joined-up approach between the FPC, PRA and FCA, and between them and the three European-level regulators.

However, as my noble friend the Minister has said, there is no best or perfect structure. If I recall correctly, he also said that the structure of the industry is at least as important as the regulatory structure. Today is not the day to debate the implementation of Sir John Vickers’ recommendations, but I should like to say that the current extremely difficult economic environment should lead the Government to do what they can to provide a stable and benevolent framework for our financial services industry, which directly employs more than 2 million people and accounts for some 20% of national income. The financial sector contributes more than £60 billion in tax revenue and its markets support more than 7 million jobs in UK-incorporated companies.

It is true that the existing single-regulator structure was not perfect either, so I do not advocate going back to it. There were difficulties in focusing clearly on prudential regulation, and pressure from consumer organisations inevitably tended to push consumer protection to the fore. Even if those difficulties could have been resolved without dismembering the FSA, we have moved on. What will be interesting is the extent to which the consumer agenda dominates the policies and strategy of the new European regulators which, as I mentioned, have not adopted the twin-peaks structure.

The European regulators and many in Europe believe that there will eventually be no need for national regulators except as local enforcement agencies and branch supervisors. In that case, all this complicated legislation may seem redundant in 10 years’ time. However, if the rapid fiscal integration now sought by the eurozone is realised, the European regulators may eventually become the regulators purely for the eurozone and our own regulators will be restored to an independent and equal status among the world's leading financial regulators.

The new architecture is fiendishly complicated. It will no doubt be reformed again before many years have passed, as national and global markets are evolving at an accelerating pace. However, some parts of the Bill need to be improved. In certain areas, the powers of the FCA are too restricted for it to live up to the expectations placed on it. For example, the provision that it must consult before issuing warning notices should perhaps be limited. Otherwise it may effectively be prevented from doing so. The measures on greater regulatory transparency and misleading promotions are to be welcomed. The FCA should be given a power to prevent hidden charges. The objective to promote competition should be extended to maintain the competitiveness of the United Kingdom’s markets, because this is surely as much in the interests of consumers as of taxpayers. The BBA has correctly stated that such a commitment would not conflict with the objective of ensuring that UK regulation is suitably robust and that it would send a strong signal that Britain was open for business if we were to commit to a competitive regulatory regime.

Why does the Minister consider it inappropriate to give the PRA a competition objective? At least the competition principle which exists in FSMA should be retained. After all, the FSA has recently stated that the regulation of capital markets has worked well. How will the FCA, the FPC and the PRA relate to the newly created Competition and Markets Authority?

I do not really like the name Prudential Regulation Authority because it does not make it clear that it is a regulator of financial institutions. It is surely sensible when something is reformed to give it a new name, but surely every regulator in the land is bound to exercise its functions in a prudential manner. However, I suspect that, increasingly, the PRA will be referred to as the Bank of England, of which it is indeed to be a part.

The FCA, in fulfilling its important consumer protection role, should also have regard to its impact on the real economy, as the FPC is required to do. As my noble friend Lady Wheatcroft has already commented on that, I ask the Minister to clarify the meaning of the regulatory principle to be applied by both regulators,

“that a burden or restriction which is imposed on a person, or on the carrying on of an activity, should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of that burden or restriction”.

That principle is very subjective and can be interpreted in many different ways: proportionate to the benefits—for whom? Considered in general terms, which are expected to result—by whom?

Another question identified by my noble friend Lady Noakes which needs to be closely considered is the diminished importance of the practitioner panel established under the FSMA, in particular the absence of any requirement on the PRA to establish a regular consultation mechanism such as the practitioner panel currently provides. I agree with the CBI that the FPC needs a more proactive focus on supporting economic growth. Clause 3(1) explains the financial stability strategy to be adopted by the Bank and the role of the FPC. Section 9C of the amended Bank of England Act 1998 lists the objectives of the FPC in subsections (1) to (7), but actually only subsections (1) and (2) are objectives. Subsections (3) to (7) contain parameters and principles to be followed by the committee in carrying out its two objectives. If a third objective, to promote growth, was included, the rather negative subsection (4) could be dispensed with.

The Bank of England’s new structure with three deputy governors is certainly rather complicated and the Treasury Select Committee has correctly identified the need to strengthen the Bank’s governance and accountability. I hope that your Lordships’ House will be able to improve the Bill to mitigate the difficulties in putting this complicated structure into practice and ensuring that the United Kingdom has a financial regulatory system which is fit for purpose and a degree of security through the unseen storms that lie ahead.

Economy: Government Policies

Viscount Trenchard Excerpts

Thursday 24th March 2011 Lords Chamber

[Viscount Trenchard]

My Lords, I am grateful to my noble friend Lord Lawson of Blaby for introducing the debate. Your Lordships' House is indeed fortunate to have this debate on the day following the Budget. In recent weeks and months your Lordships have spent an inordinate amount of time discussing tinkering with the constitution rather than concentrating on important, urgent matters such as the subject of my noble friend's Motion. It is good that we have an opportunity to redress the balance today.

I declare an interest in that I am employed by Mizuho International, the investment banking arm of the Mizuho Financial Group of Japan, but I speak in your Lordships' House in my personal capacity. Nevertheless, my employment circumstances—the fact that I also serve as a director of an investment company whose manager’s ultimate holding company is Prudential Financial of the United States and as a director of a chemical manufacturing company on Teesside, whose ultimate holding company is the Lotte Group of Korea, provide me with a basis to judge how attractive the United Kingdom is seen as a centre for investment by major foreign, financial and industrial groups. They will certainly welcome the Chancellor's decision to reduce the tax burden on controlled foreign companies.

My noble friend's Motion calls attention to,

“Government policies to promote enterprise, growth and the fundamental rebalancing of the economy”.

I believe that, in referring to rebalancing the economy, my noble friend means to rein in the bloated public sector in order to create the resurgence that we need in the private sector. The policies pursued by the previous Government produced more than 1 million new mainly unproductive jobs in the public sector but saw the loss of 1.7 million jobs in our already depleted manufacturing sector.

There are those who talk about rebalancing the economy between the financial and manufacturing sectors. They believe that the economy is a zero-sum game and that a withdrawal of resources from our flagship financial sector will assist the creation of a larger and more profitable manufacturing and industrial sector. I think that the reverse is the case. In order to nurture and build on our manufacturing base, it is essential to protect and preserve London's position as the leading global financial centre to ensure that innovative companies can obtain the funds that they need to grow; and that personal and corporate tax rates are low enough not to counterbalance the United Kingdom's other natural advantages over rival investment centres.

During the 11 years for which I worked for Kleinwort Benson in Japan, I was able to encourage Japanese companies to invest in the United Kingdom because of our relatively low tax rates, our sound and stable political system, a reliable accounting system, a respected legal system based on common law and our relatively benign regulatory regime. All those relative advantages have now been compromised to a greater or lesser extent.

The Chancellor's announcement that he will ask HMRC to find out the truth as to whether the application for the 50 per cent tax band is revenue-positive is welcome. The top rate will actually be 52 per cent from next month, and it is probably already counterproductive. It makes it too expensive for international companies to base their most talented employees in this country and adversely affects the competitiveness of our markets. However, I cannot help wondering whether HMRC’s study will be entirely objective. Far too much time and resources are now being wasted on the interplay between market participants and regulators. More importance is now placed on that than on the interaction between lenders and their clients. Senior executives of banks cancel meetings with their clients in order to be available at all times for the FSA, which is now overstepping the mark through its unwarranted incursions into matters such as the composition of subsidiary boards of directors and its unreasonably tough interpretation of capital adequacy rules.

I have some sympathy for the FSA, because besides its dismemberment it has been subjugated to the three new European level regulatory bodies: the EPA, the ESMA and the EOPA. I deeply regret that the previous Government acquiesced in the subordination of our regulatory regime to Brussels. The consequences, including the unnecessary and inappropriate regulation of hedge funds and, indeed, all alternative investment companies, are already having a negative effect on the promotion of enterprise and innovation in the financial sector, limiting the dispersal of risk among multiple players small enough to fail.

Financial markets are global, not European, and the new regulatory regime definitely hinders the City in playing the role that it should have in the promotion of cracks and enterprise in the wider economy. Do the Government fully understand just how serious the problem is, and what steps does my noble friend intend to take to mitigate its damaging consequences?

It is also crucial to ensure that the other formerly attractive features of United Kingdom markets are preserved and protected during a period when higher than optimum taxes need to be applied. I do not argue that lessons did not need to be learnt from the financial crisis, but bankers have been forced unfairly to take a disproportionate part of the blame. There is no evidence that we need more intrusive and more specific regulation. Rather, too much regulation lulls market participants into a false sense of security and tends to absolve them from responsibility for their actions. Will my noble friend bring his influence to bear on the Chancellor and persuade him to reverse the unfair attempt to exclude the banks from the welcome reduction in corporation tax through a further increase in the bank levy? That will do nothing to enable the banks to increase lending to SMEs, and it will have a negative effect on the competitiveness of British banks and of London as a financial centre.

Time does not permit me to comment on many of the other positive measures in the Budget. However, I ask the Minister two further questions. First, will he tell the House whether and when the Government will restore the personal allowance to all taxpayers, thus removing the disincentive caused by the 64 per cent effective band, which is of course widened by £1,200 by the new £600 increase in the personal allowance? Secondly, welcome though the 2 per cent reduction in corporation tax certainly is, will he set out a timetable for its further reduction to 20 per cent—or even the 15 per cent advocated by the Institute of Directors?

All in all, I congratulate the Chancellor on his pragmatic and courageous response to the critically high public sector deficit produced by the profligate and uncontrolled public spending policies pursued by the previous Government. The Chancellor is right to stick to his guns.

Finance (No. 2) Bill

Viscount Trenchard Excerpts

Monday 22nd November 2010 Lords Chamber

[Viscount Trenchard]

My Lords, with your Lordships’ leave, I will speak briefly in the gap. I congratulate my noble friend the Minister on introducing the Bill today. As he said, the Bill is entirely technical and enabling in nature. It is also, I fear, somewhat dull. That may be one reason why not many of your Lordships have chosen to add your names to the speakers list. However, my noble friend did not mention one point. A substantial part of the Bill is intended to replace technical aspects of our law with European law.

As my honourable friend Jacob Rees-Mogg pointed out in another place, Clauses 5, 6, 14, 18, 19, 20, 21, 22 and 23 are, in whole or in part, requirements of the European Union. Furthermore, related to what my noble friend Lord Newby said, the Explanatory Notes to the Bill provided by the Treasury offer in certain instances, as a reason for changing the law, merely the fact that it is necessary for United Kingdom law to conform to European law. It is disappointing that it seems irrelevant to consider in each case which has more merit. Other than that, I will not detain your Lordships; I just wanted to make that point, which my noble friend the Minister omitted to mention.