Financial Services and Markets Bill

Baroness Bennett of Manor Castle Excerpts

2nd reading
Tuesday 10th January 2023 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, having been in your Lordships’ House for a little over three years, I am now on my second financial services Bill, and I have to welcome the level of engagement we are seeing today. I was quite new when the last one happened, and it was in the depths of Covid, but the breadth and quality of debate was not an advertisement for the House. There seemed to be a view that financial services regulation could largely be left to the bankers, hedge fund managers and insurance brokers, yet already today we have heard from the noble Lord, Lord Forsyth of Drumlean, how anyone concerned with house prices should be looking to regulate the financial sector to prevent it being an accelerator of prices rather than a funder of secure, affordable homes. The most reverend Primate the Archbishop of Canterbury said that anyone who wants the banks actually to serve the real economy of small businesses, to which lending has effectively stopped, should be concerned with financial regulation; and of course, anyone who wants a liveable planet with a healthy natural world should be concerned with financial regulation, as the noble Baronesses, Lady Sheehan and Lady Hayman, among others, have highlighted.

We have a financialised economy, including everything from care homes to health provision, public transport to housing, tax dodging to serving oligarchs and plutocrats. Every Member of your Lordships’ House, whatever they regard as their speciality, whether it is alleviation of poverty or delivery of better health education, should be concerned with this Bill, and every member of the public should be concerned with this Bill. So I am going to agree for a second time with the noble Lord, Lord Forsyth, that the official Opposition would be letting the Government and the financial sector off the hook if our Committee stage was consigned to the murky obscurity of the Moses Room. That is, of course, perhaps unsurprising behaviour, given the Times report that the leaders of our official Opposition are heading off to Davos to send a message to the super-rich that Labour is the party of business.

Noble Lords might expect me to focus on nature and climate, but others, most notably the noble Baroness, Lady Sheehan, have already covered at length the “dismissive view” that this Bill takes of the very foundation of our economy, that on which every penny of our banks and every pound in a worker’s pocket depends: functioning ecosystems. But I shall take a more systemic and structural view: what is the financial sector for and what is the economy for? The economy should be in the service of a healthy, prosperous and sustainable society. The financial sector should be a tool for that type of economy, and this Bill should redirect our financial sector towards that. Instead, we have a primary objective of competitiveness. More finance is the aim—snatching it from other nations and growing what we have when we already have too much finance.

The noble Baroness, Lady Penn, in her introduction, proudly boasted that 2.3 million people are employed in the financial sector. We really need to change our thinking here. Human resource is a scarce resource and should be used well. A holder of a maths PhD creating the next complex financial instrument to break the global economy is not an example of it being used well. That person could be improving our health, securing our food supply or increasing the sum of human knowledge. Letting the financiers rip, seeking to lead a global race to the bottom on regulation, when lack of regulation is a huge threat to the security of us all, is heading 180 degrees in the wrong direction.

I could illustrate that point in many ways, but I am going to pick one example—the proposals on position limits in Schedule 2, on page 124 of the Bill. For those in the know, I mention the London Metal Exchange nickel debacle. Some might have read the recent European Economic and Social Committee cry from the heart about much greater regulation of food and commodity trading. As it and many others are identifying, that is a major factor in inflation, hitting every household in the UK and around the world today. A few are profiting while the rest of us pay.

Many commentators—among them I highlight Ann Pettifor, in the Financial Times and elsewhere—are suggesting that commodity derivatives could be the next big systemic risk, because they are so under-regulated. Global commodity markets involve an annual volume of at least $700 billion in buying and selling, with trillions in derivatives piled on to that.

Finally, if we grow the financial sector, we also grow corruption. The City of London is the global centre of corruption. If you do not want to believe me on that, I quote from a debate secured by my noble friend Lady Jones of Moulsecoomb. The noble Lord, Lord Evans of Weardale, chair of the Committee on Standards in Public Life, said that

“we have clearly, as a matter of policy, turned a blind eye to the perpetrators of corruption overseas using London for business”.—[Official Report, 13/10/2022; col. 156GC.]

If we grow the financial sector, we grow global corruption —that is the reality.