Justice and Security Bill [Lords]

Debate between John McDonnell and Lord Tyrie

Monday 4th March 2013 Commons Chamber

[Mr Tyrie]

Well, I have one Front Bench aboard; that leaves another one. I do not see any movement just yet, but if I keep going for a couple more minutes, who knows? I might receive a response.

I think that it is in the interests of the Government to adopt this route, because it would bolster public confidence that the review and the reviewer were truly independent of the Government. My personal view is that five-yearly renewals, informed by a five-yearly review clause, should be satisfactory or at least adequate, but that is certainly the minimum that is required. What the Government have offered so far, which is just some reporting plus a five-yearly review, is clearly not enough. If they do not indicate that they are prepared to move this evening, I will vote against them. However, I hope very much that their lordships are also listening to the debate. They will have an opportunity to improve the new clause in a number of ways, and I hope that those will include the ways that I have suggested.

[John McDonnell]

I tabled new clause 9, which, as has been said, was debated in Committee. I congratulate Lawrence McNamara on his work—on the advice that he gave the House overall, and the evidence that he gave to the Joint Committee on Human Rights. He made a simple point. As we have seen tonight, this is an extremely contentious Bill concerning a contentious procedure, and it therefore warrants close monitoring. The best way of enabling that to happen is to establish a database at the earliest opportunity in order to ensure that the necessary information is recorded.

Lawrence McNamara made a fairly straightforward recommendation to the Committee. He suggested a template-form statement specifying the duration of open hearings and closed hearings, the number of witnesses heard in closed proceedings and the nature of those witnesses, the length of a closed judgment, and whether national security was an issue in the proceedings. The information whose collection is requested is not exactly highly controversial. The reason for requiring it is that it would inform the proposed review, and inform the wider media and the general public about the activities that were being undertaken as a result of the Bill. I am perplexed about why the Government did not simply accept that recommendation. Surely they would want to collect the information as well, in order to monitor their own legislation.

I welcome new clause 5. At least the Government are doing something about reporting. However, the report that they propose would be undertaken after 12 months of operation. I think that people need an ongoing database to which they can refer regularly, and which can be used when necessary to inform debates in the House and among the general public. The database would also feed into the review itself. It would enable a proper discussion to be held about whether the legislation was being implemented effectively, and about the scale of its implementation.

One of the arguments that we have heard tonight is that the CMPs will be used in only a small number of cases—15, according to the impact assessment, but that figure appeared to have been plucked out of the air when the Minister without Portfolio was interrogated further. Given the uncertainty about the import and breadth of the use of the legislation, there is obviously a need for an ongoing database to monitor the position, and that is all that the amendment does. For the life of me, I cannot understand why the Government are unwilling to accept it. I would expect a good Government to want to manage that information anyway.

With regard to the review, I wholeheartedly support the proposal for Joint Committee approval of the appointment. We had a similar discussion about the Bank of England, although without success, but the Treasury Committee was certainly successful with regard to the Office for Budget Responsibility. I suggest that this post is equally important and that, because the legislation is contentious, it is important that the person who reviews it has the full support of the House, and that could be secured by the Committee.

With regard to expiry and renewal, I remind Members that when the Prevention of Terrorism Act 2005 was introduced, we secured an annual debate on renewal. I cannot remember it being argued at the time that that was because the legislation did not have sufficient scrutiny in its early days. I know that it was introduced as emergency legislation, but subsequently there was fairly intense debate about whether it needed to be amended at different stages. The annual renewal was intended to give us an opportunity to see whether it was working effectively and to estimate the consequences for human rights, a critical debate that a number of us have engaged in year in, year out. It did not mean that there were any major amendments as such; it meant that Members of this House, and through them the general public, could satisfy themselves as to whether the legislation was operating in accordance with the original intentions. That is what an expiry and renewal clause would enable us to do. Again, I cannot for the life of me see that as contentious; it is simply another democratic fall-back or long-stop mechanism to ensure that we are fully consulted and that we are satisfied that the legislation has been implemented effectively.

On that basis, I will support the amendments tabled by Opposition Front Benchers and will not press new clause 9 to a Division, but I must express my disappointment that the Government have not gone very far in accommodating what I think would simply be an exercise in openness and transparency for a particularly contentious piece of legislation.

Bank of England (Appointment of Governor) Bill

Debate between John McDonnell and Lord Tyrie

Friday 6th July 2012 Commons Chamber

[John McDonnell]

That is a really useful advert—it might be one of the most constructive things said this morning.

I shall be as brief as I possibly can. The message contained in the Bill is that the appointment of the new, powerful post of Governor of the Bank of England should not be left solely to the Executive, and that Parliament, on behalf of the people, should also play a decisive role. The appointment is too important to be left in the hands of a single Minister.

[Mr Andrew Tyrie (Chichester) (Con)]

As the hon. Gentleman knows, his Bill has the support of the Treasury Committee—it is similar to the Committee’s proposals. The principle of greater parliamentary engagement that he is articulating is a strong one, but does he agree that it could be enacted in a number of ways? Does he also agree that we need flexibility from the Government on accomplishing that engagement while the Financial Services Bill is in the Lords?

[John McDonnell]

That is an incredibly constructive proposal, and I hope the Minister heard it. There are other ways of approaching this matter and we should be open to considering them. Yesterday, the Government entrusted the hon. Gentleman with a major inquiry—the inquiry Committee will comprise members of the Treasury Committee and Members of the other House. If the Government have the confidence in Treasury Committee members to undertake that inquiry, it should have the confidence in their having a decisive role in the appointment of a new Governor of the Bank of England. I therefore welcome the hon. Gentleman’s constructive comments.

May I thank Kate Emms, the Clerk, and Gordon Nardell QC for their assistance in drafting the Bill and the explanatory notes? I am extremely grateful for their assistance. The Bill amends the Bank of England Act 1998 to give effect exactly to the recommendation of the Treasury Committee from its report of October 2011 that the appointment of the Governor should be subject to the approval of the Treasury Committee.

Between the time of choosing the appointment of the Governor of the Bank of England as the subject of my private Member’s Bill and debating it, the world has changed somewhat. Last week’s revelations about the role of Barclays bank—and, more than likely, others—in the LIBOR scandal have given the Bill a new context, and there is a new significance in the appointment of the Governor of the Bank of England. Mervyn King will retire in the next year, and the new Governor will play a pivotal role in what, it is increasingly clear, will of necessity be a radical reform and reconstruction of our financial system.

Financial Services Bill

Debate between John McDonnell and Lord Tyrie

Monday 23rd April 2012 Commons Chamber

[John McDonnell]

I am not part of the charmed circle of the Treasury Committee, but I wish to add my congratulations to the hon. Member for Chichester (Mr Tyrie) and the members of the Committee on the work they have undertaken in examining the Bill as it has gone through the House.

I have tabled amendments 46, 47, 49 and 50, which seek to enhance the Treasury Committee’s role in the appointments of the Governor and deputy Governors of the Bank of England, and the chair and chief executive of the Financial Conduct Authority. I have done so because the background to this legislation is perhaps the most catastrophic failure of the Bank of England and the financial regulatory authorities that we have seen in 70 years. Their failure to predict or intervene effectively to ensure that the financial crisis was averted or dealt with adequately, speedily and effectively is there for all to behold. It has brought this country to its financial knees and into a recession that is turning into a depression, which is something we have not seen since the 1930s. The reasons for that have been evidenced today. New clause 1 would address part of the issue—namely, the lack of transparency of the old regime—but another element was the lack of accountability.

This legislation will create, in the Governor of the Bank of England, one of the most important roles in the country. The Financial Times editorial of Thursday 19 April stated:

“The central bank governor is not just some technocrat, but the most powerful unelected official in the country. His role has become more political since the crisis, not less, and will be even more sensitive when the BoE acquires new powers to avert financial crises. The next governor must win public acceptance and possess sharply honed political antennas. This might be harder for a foreigner.”

That last comment refers to the speculation about some of the candidates that the Government are considering.

In today’s Financial Times, the shadow Chancellor sets out his concerns about the range of powers and responsibilities that the new Governor will have, stating that only a superman or superwoman need apply, because the job will be so influential and will have such a wide range of roles and responsibilities. The Treasury Committee appreciated that fact very early on in the game, in its consideration of the new legislation. That is why, way back in November, it recommended that it should have a role in the appointment of this significant post. The Chancellor of the Exchequer argued against that proposition. I find it extraordinary that the Treasury Committee won the right to have a veto over the appointment of the chair of the Office for Budget Responsibility, yet failed to win a role in the appointment of the much more significant post of the Governor of the Bank of England. Indeed, it has no role in the appointment of the deputy governors, and no effective role in the appointment of the Financial Conduct Authority proposed in the Bill.

I genuinely thought that the Government were about to shift their stance on this matter, because, back in November 2011, the Treasury Committee stated strongly that it was not persuaded by the Chancellor’s refusal to grant it a role in the appointment. It went on:

“The power of veto with respect to the OBR was given to ensure the independence and accountability of that body. The Governor of the Bank’s independence from Government is crucial for his or her credibility. Given the vast responsibilities of the Governor, the case for this Committee to have a power of veto over the appointment or dismissal of the Governor is even stronger than it is with respect to the OBR. We therefore recommend that, in order to safeguard his or her independence, the Treasury Committee is given a statutory power of veto over the appointment and dismissal of the Governor of the Bank of England.”

I wholeheartedly supported that view. The Chancellor’s argument was that the Treasury Committee could not have such a role because the Governor was exercising an Executive function and should therefore be a Government appointee. That is an absolutely specious argument.

The legislation to give independence to the Bank of England went through the House, although I never supported it. That means that the Governor has more than an Executive function. The Bank is not an Executive arm of the Government. The Chancellor of the Exchequer and the Government cannot have it both ways. If they support the independence of the Bank of England from the Government, they must establish some other form of accountability to Parliament. If they do not believe that it is independent, and that it is simply an Executive arm of the Government, the Governor will be appointed directly by the Chancellor of the Exchequer. Even if that is the Government’s argument, the Chancellor of the Exchequer is still accountable to the House, so there must be some role that the House can play in advising him on the appointment of this important post.

My amendments would simply reassert the role of the Treasury Committee and thus Parliament itself in this vital range of decisions about appointments to key elements of the new structure proposed by the Government. Let me be frank. I agree with everything said about the role of the Treasury Committee Chairman and I agree that he needs to be called “right honourable” and the all the rest of it, but sometimes people are born great and sometimes people avoid greatness being thrust upon them. I do not know what negotiations went on, and it might well be that the negotiations were along the lines of, “We will not push for a veto on appointment as long as we can get some transparency and thus at least some element of accountability for that post to the Committee itself.” If that was the tenor of the negotiations with the Government—I happily allow the Treasury Committee Chairman to intervene to clarify it—I am afraid that the deal is not good enough.

What needs to be said very clearly by this House is that these are such significant appointments—particularly the Governor of the Bank of England but also the head of the Financial Services Authority in view of its key role in seeking to avoid further crises and in regulating this country’s financial services—that this House must have at least some say over the calibre of these persons.

[Mr Tyrie]

I can reassure the hon. Gentleman that the report does not reflect any back-room deals, but I would like to ask him a question. I am strongly sympathetic to the approach set out in his amendments. He needs to know that the Treasury Committee intends to hold pre-appointment hearings for these jobs in any case, including for the very senior jobs like that of the Governor, when he is identified. In the unlikely event that a nomination were challenged by the Committee, many would argue that the position of the person, even at nomination stage before he or she took up the appointment, would be untenable. In that case, does the hon. Gentleman not agree that the sensible thing for the Government to do is to engage with Parliament and with the Treasury Committee a little earlier in the appointments process?

[John McDonnell]

I wholeheartedly agree, but sometimes in relationships with the Government a line is drawn in the sand, which makes the right of veto sometimes crucial, particularly if there is a bloody-mindedness in the direction of policy making by the Chancellor when it comes to appointments to key posts. Although I take the gist of the hon. Gentleman’s argument and can see how the Treasury Committee could create a climate of opinion or produce a report that influences the appointment in a way that makes it impossible for a person to take it up because of the lack of credibility, I think there needs to be an even stronger role for the Treasury Committee and therefore Parliament in all these matters.

This is a crucial opportunity missed in respect of the Treasury Committee’s ability to influence the Government; in respect of the Government’s ability to demonstrate to this House a greater openness when it comes to the transparency of the operation of the Bank of England and of the new regulatory authorities; and in respect of the Government themselves in how they make appointments to these crucial positions.