Official Listing of Securities, Prospectus and Transparency (Amendment etc.) (EU Exit) Regulations 2019

Lord Adonis Excerpts

Monday 18th February 2019 Lords Chamber

Moved by

[Lord Adonis]

At the end insert “but this House regrets that no consultation was undertaken on this instrument despite the impact on businesses, particularly those involved in capital markets.”

[Lord Adonis (Lab)]

My Lords, perhaps also for the avoidance of doubt I should make it clear to the noble Lord, Lord Sharkey, that this is not a fatal amendment; it is a regret amendment. I have laid other amendments to the later statutory instruments.

The noble Lord, Lord Lilley, who made a fleeting appearance in our proceedings earlier, said that I have a reputation in the corridors of the House for being obsessive about these statutory instruments. I take that as an extreme compliment because, in my experience of politics, it is only the obsessive people who tend to get things done. Indeed, it is because of the Brexit and Eurosceptic obsessives, whose work goes back now 30 years, that we are in this mess to begin with. If it was not for obsessive anti-Europeans and Brexiters we would not be here. It is time for obsessive moderates like myself to start asserting ourselves. Unless the obsessive moderates assert themselves, the obsessive extremists, who seem to have taken charge of both our major political parties at the moment, will triumph. That is not in the national interest. I plead guilty to being an obsessive. I shall be obsessive about many more of these instruments, both this evening and for many days to come, because it is in the public interest that we are.

When the Minister, for whom I have great respect—I never cease to be astonished that he and the noble Lord, Lord Young, are still members of this Government as they are one of the most extremist Governments I have ever observed in my political lifetime—says that these regulations are necessary in order that we do not crash out with no deal, it is the Government of which he is a member that have a unilateral power to end no deal. This evening the Government could end the prospect of no deal by either making clear that they will apply for an extension of Article 50 or by using the power that they have to unilaterally revoke Article 50. For the noble Lord to try to cast on us the responsibility for a no-deal Brexit, which is entirely the creation of Her Majesty’s Government, is a true Alice in Wonderland situation.

--- Later in debate ---

[Lord Bridges of Headley (Con)]

I should declare an interest as I am an adviser to Banco Santander and take considerable interest in these matters. Is the noble Lord saying that the finance industry, including UK Finance, agrees with him that there has been no consultation whatever?

[Lord Adonis]

My Lords, there has been no public consultation. The bank to which the noble Lord is now an adviser may have been consulted. I do not know. He can perhaps tell us—because private sources of information are the main ones—whether it has been one of the organisations which have been engaged with privately by the Government.

[Lord Bridges of Headley]

I had not had direct contract with the Government on these matters. However, I shall read to the noble Lord a newsletter that has just come into my inbox from the CEO of UK Finance:

“We are working closely with members and partners with regard to onshoring, to emphasise continuity with EU law and to avoid sudden and unpredictable legal changes in the UK in light of a ‘no-deal’ outcome. We have to date assessed close to 40 legal instruments relating directly to financial services which have been published and/or laid in Parliament, with a handful more to come. We have also responded to a number of onshoring relating consultations issued by the Financial Conduct Authority … and the Bank of England”—


a point that I am sure the noble Lord will have heard Sam Woods make to the Select Committee in the other place last month. Therefore, what precisely does he mean when he says “no consultation”? Does he mean “no consultation” or “extensive engagement”?

[Lord Adonis]

I mean precisely what the Government themselves say in paragraph 10 of the Explanatory Memorandum of these regulations:

“HM Treasury has not undertaken a consultation on the instrument”.


That is what I mean.

[Lord Bridges of Headley]

The noble Lord needs to be very clear, because that paragraph then goes on to say that the Treasury,

“has engaged with relevant stakeholders on its approach to financial services legislation under the European Union (Withdrawal) Act 2018, including on this instrument, in order to familiarise them with the legislation ahead of laying”.

Therefore, there has been extensive engagement. Perhaps the noble Lord would be very precise on this matter.

[Lord Adonis]

My Lords, I read the words of paragraph 10 very precisely. Regarding the engagement with stakeholders, the noble Lord should be very careful about making himself a defence industry for the Treasury on these matters. The reality is that there has been engagement with stakeholders—it says so here. However, the only way that we will know about the engagement is if those who have been engaged with relay that to us. If they are fortunate enough to have former Ministers such as the noble Lord retained for these purposes, those people may tell the House via a circular route what has been happening. However, the way in which our parliamentary processes should work is that the consultation should be conducted formally and publicly, with the results being formally published and reported. That is not happening in the regime that is being set up at the moment.

The noble Lord is a former Minister in the Cabinet Office. It is the rules of the very department in which he was a Minister that require in all other circumstances, apart from these no-deal regulations, a formal 12-week public consultation. I am surprised that he should somehow think that it is adequate for that to be replaced by engagement with relevant stakeholders, undefined in paragraph 10.1. The noble Lord has aided the House greatly by starting to read out some of those who have been consulted with. There is no other way, apart from his intervention, in which we would have known who these stakeholders were. The way that this whole process is being conducted at the moment is utterly inadequate.

[Lord Bridges of Headley]

I am making the point that the noble Lord’s amendment—I am obsessive about these things—includes the words “no consultation”. This House should be absolutely aware that there has been plenty of engagement. I am sure that if he were to write to UK Finance and others, he would find out more. I totally accept the point that several on the Liberal Democrat Benches have made about the inadequacy of some of the processes. I was fully aware of that when we started and that point was well made. However, it is very important that when we have these debates we are very accurate. As far as I understand it—I have not been directly involved in this matter at all myself—there has been quite extensive engagement, so I would like the noble Lord to make that clear to the House.

[Lord Adonis]

My Lords, the noble Lord said that I should be precise and accurate. My amendment to the Motion says that,

“this House regrets that no consultation was undertaken on this instrument”.

Paragraph 10.1 of the Explanatory Memorandum in respect of these regulations says:

“HM Treasury has not undertaken a consultation on the instrument”.


Those are the exact words, so I cannot understand at all the point that the noble Lord is making. He is trying to excuse the fact that there has not been a consultation by saying that there has been a lesser form of engagement. However, that engagement is not a substitute for formal public consultation. Is he suggesting that it is an adequate substitute?

[Lord Bridges of Headley]

I am more than happy to rise on this point. Obviously I would much rather not be in this situation, having voted to remain, but, given the time that we have, I think that the Treasury has done an extremely good job with the level of consultation that it has undertaken, as have the regulatory bodies. I completely understand the desire of the noble Lord and others in this House to have proper scrutiny of this SI, but I just wish to make sure that all Members of this House are aware of the situation. The noble Lord is quite right that there has been no formal consultation but there has certainly been extensive engagement and it is very important that we make that clear.

[Lord Adonis]

I am grateful to the noble Lord for making that clear. However, perhaps I may also make it clear to him that the time we have available is down to the Government. It is not because of some extra-terrestrial force that has been at work; it is because of the Government that we are operating within these confines. It is therefore absolutely appropriate that noble Lords who do not accept that we should be in this straitjacket in the first place do not accept for a moment the point that the noble Lord has just made—that dispensing with normal parliamentary and government procedures in respect of consultation is satisfactory because we are limited for time.

--- Later in debate ---

[Lord Bates]

Again, I thank noble Lords for their contributions to this debate, which has been very useful and has focused on two themes, as will I. The first is about process, the second about the level of consultation or engagement. I will try to put some points on the record and address the specific technical points raised by the noble Baroness, Lady Bowles, and the noble Lord, Lord Tunnicliffe.

What we are doing here is onshoring the regulations that already exist, which have gone through a scrutiny process involving the European Commission and regulators in the EU, the European Parliament and our own House. We are onshoring those to the UK. These are exceptional circumstances; they are not normal circumstances in which we are doing it.

The criticism seems to be: why have we waited so long? It is worth putting on the record here that the powers by which we are undertaking this process were set out in some detail by the EU withdrawal Act. I think I said, wrongly, that there were only 10 hours of consideration about the Section 8 process. In fact there were 12 hours of consideration of this process, which was then adopted by both Houses of Parliament.

However, the EU withdrawal Act did not get its Royal Assent until 26 June. I tried to find out—given that the enabling power we had was available on 26 June last year—when the first of our SIs was laid under this process, given that the charge that has been made is that the Treasury has been somewhat dilatory in its approach. The first SI was laid on 16 July. That is not exactly a long gap between Royal Assent, having the power and actually beginning the process. We started debating these for the first time—the noble Lord, Lord Tunnicliffe, the noble Baroness, Lady Kramer, and many familiar faces will remember our first hour in the Moses Room talking about the broad principles—on 17 October, and we have been going more or less every week since then with new SIs coming through.

I want noble Lords, particularly my noble friend Lady Altmann, who I know has a great deal of expertise in this area, to feel reassured that what we are dealing with here are rules and regulations which the industry was already operating by, but under a different regulatory system, that we are now bringing onshore and applying fixes using powers and scrutiny that were set out by the EU withdrawal Act. In a timely process, we have brought that forward. I cannot claim that that will satisfy everybody, but it is worth putting that position on the record.

On whether it was consultation or engagement, in many ways we are discussing the words and phrases of it. What we are talking about here is not a normal consultation. I readily accept the point made by the noble Lord, Lord Adonis, that the rules on consultation are laid down by the Cabinet Office. As set out, they involve a particular process. That is why we are always very careful when we say “consultation” at the Dispatch Box; it has a particular formula attached to it. We might instead say “engagement”. We have consistently used the term “industry engagement” through this process. As came out in the contributions from the noble Earl, Lord Kinnoull, and my noble friend Lord Leigh, industry has been almost the wind in our sails, urging us to get on with this, because of the consequences of not having these safeguards in place, leading to a cliff edge. There has been a push. My noble friend Lord Bridges highlighted the report by Stephen Jones in his UK Finance newsletter. I see my noble friend Lady Wheatcroft in her place, so I hesitate to summarise it in this way, but in terms of the City there are effectively only two main bodies: there is UK Finance, which represents a substantial body of financial services, and TheCityUK. My noble friend Lord Bridges referred to UK Finance.

[Lord Adonis]

Everything that the Minister has said is based on the premise that we are dealing with a no-deal situation. All the bodies to which he has referred, given the choice between no deal, a deal and not having Brexit at all, would infinitely prefer having no Brexit or having a deal. The circumstances in which the Minister seeks to justify the use of what are essentially exceptional decree-making powers on the part of the Government are circumstances entirely of the Government’s own making.

[Lord Bates]

This is a separate debate. The noble Lord is moving his amendment, expressing regret from your Lordships’ House that there has been no consultation with industry on this measure. That is what his amendment says, as my noble friend Lord Bridges pointed out. I am not trying to raise the temperature to the same level as perhaps existed earlier in the Chamber; I am trying to maintain it at a level where we are focusing on the legitimate scrutiny which the noble Lord and the noble Lord, Lord Davies, are applying to this process. My noble friend Lord Bridges talked about UK Finance; I was about to quote TheCityUK.

--- Later in debate ---

[Lord Bates]

The official position here is that, under international trade law, we cannot favour some countries’ public bodies and not others. It is all or nothing. I take it that I may have other opportunities this evening—perhaps into early morning—to put on record the words of Miles Celic, chief executive of TheCityUK, and of the Investment Association, responding to the engagement which they have had with us. A lot of the issues which have been raised will come up again and I will respond to them then.

[Lord Adonis]

My Lords, the longer this debate has gone on, like so many of our debates on these no-deal regulations, the clearer the case has become for having this consultation. In the last 15 minutes, prompted by my noble friend Lord Tunnicliffe, a very important issue has arisen about the distinction between EEA and non-EEA states when it comes to the new listings and publications regime. The noble Baroness, Lady Kramer, brought up the exceedingly important policy point underlying it. This is not my area—my role is simply to facilitate the proper scrutiny by Parliament of these important changes to the law—but it has become ever clearer as this debate has gone on, let alone all the others we have had, why there should have been proper consultation.

Some noble Lords have said that these are exceptional circumstances. I repeat the point that, first, these are exceptional circumstances of the Government’s own making. We are not talking about acts of God here; these are acts of the Government and the Government could correct these acts. The second point was made by the noble Baroness, Lady Altmann, and is incredibly important. The precedents we are setting in the examination of the statutory instruments and the processes we require to put in place, given that we are going to have a cascade more—particularly if we do indeed Brexit at the end of this process, because we are going to have literally hundreds of these, year by year—will all be cited.

The noble Lord, Lord Bridges, says that it is all very well, we have engagement not consultation, and the noble Earl is relieved that his industry is not actually going to be trashed by this regulation, although there are many others that will do so in due course if we Brexit. He says that we should get on with it and that the people he knows are very grateful that they have at least had the opportunity to engage. I tell the House that, once these precedents start to be cited, we can wave goodbye to the normal Cabinet Office processes and procedures for conducting consultations. That is what will happen. That is what always happens once you start sliding down this kind of slippery slope.

The Minister quoted TheCityUK in respect of this instrument. It is important to understand TheCityUK. I have been reading its representations and what it thinks about how the Government have handled the Brexit process in relation to financial services. Shortly after the Brexit referendum, in September 2016, the same guy the Minister quoted said:

“While at this stage it is too early to talk about conclusions from the Brexit negotiations, access to the single market on terms that resemble, as closely as possible, the access the UK currently enjoys is the top of our list”.


That is what this organisation said.

Then, when the Government published the political declaration with the withdrawal agreement at the end of last year, which marked a significant retreat from the objectives that were set out before in terms of mutual recognition, TheCityUK said:

“Mutual recognition would have been the best way forward. It is regrettable and frustrating that this approach has been dropped before even making it to the negotiating table”.


That is what these vital sectors of our economy think about what is happening at the moment. The fact that they are clutching at the straws of having no-deal regulations in place that prevent catastrophe if we leave in five weeks’ time with no arrangement whatever with the EU is no excuse at all for the way this whole business is being handled and for the discarding of our normal processes and procedures.

I make no excuse for detaining the House at this hour. I would be very happy to carry on these debates with the Minister into the early hours if it would bring about change in government policy. He is normally very open to these matters, so maybe it is an invitation to keep going for a long period, because we might then get proper processes of consultation and engagement in place. As a poor substitute for that, I beg leave to test the opinion of the House.