Lord Barnett
Main Page: Lord Barnett (Labour - Life peer)Department Debates - View all Lord Barnett's debates with the HM Treasury
(12 years, 2 months ago)
Lords ChamberMy Lords, we are debating the Second Reading of a large Bill that is split into two parts to make it look smaller, I suppose—one containing the clauses and the other the schedules. When I first saw the Bill, I was reminded of days long gone when I took Finance Bills through both Houses. I was in opposition on Finance Bills to the noble Lord, Lord Lawson, and we debated them at great length over many years. We considered two Bills a year in my time—the second amending the first. I fear that that will happen again because Oppositions of all parties tend to choose the sexier points of a Bill to debate and leave the main parts undebated and unscrutinised. The situation is a bit better these days, in the sense that the House of Lords—although Finance Bills are money Bills, and this Bill is not—examines clauses in Select Committees, of which I have been a member. They do a good job, but it is very limited. The Commons does nothing at all about these matters.
The situation is not much improved these days, although I hope that this Bill will be a lot better because it has had a great deal of pre-legislative scrutiny. We have had Select Committees, Joint Committees, Command Papers and White Papers. In fact, there is so much paperwork attached to the Bill that I confess I have not read it all. I am sure that every other Member of the House who has spoken will have done so. I hope that the pre-legislative scrutiny will help, but despite all that, I hope I will be forgiven for believing—as with Finance Bills—that we might see in years to come a lot more Financial Services Bills that amend this one.
The Bill amends a number of Acts, not least the Bank of England Act that the right honourable Gordon Brown, as Chancellor, introduced to the House of Commons. At the time, I thought that it was not a bad Bill, apart from in one or two major areas. However, in practice, I had reservations. In an article in today’s Financial Times, John Gieve, a former senior Deputy Governor of the Bank of England, said:
“The debate so far has revolved around one fixed point: the assumption that no change is required in any respect to the … Monetary Policy Committee”.
He had obviously not read or heard my speeches over many years because, together with the noble Lord, Lord Peston, who is my noble friend and professional tutor, I tried to persuade the Chancellor at the Second Reading of that Bill—we also did so privately—that he needed to make a major change that has been referred to by a number of noble Lords, I think even in the excellent maiden speech of the noble Lord, Lord O’Donnell. There were three words in that Bill which should not have been there. The words were “subject to that”. They meant that the Monetary Policy Committee must look at the problem of inflation and only then—I repeat, only then—look at the major economic and financial problems that the country faced. I give notice to the noble Lord, Lord Sassoon, that we will try again—given that the Bank of England Act is referred to in the Bill—to remove those three small words.
The real question before us is whether the Bill will deal with the kind of crisis we had in 2008. A number of noble Lords have expressed doubts. The noble Lord, Lord Tugendhat, with whom I very much agreed, asked why on earth the Bank of England, of all places, should have huge powers such as those given to it by the Bill. After all, its past record would not normally justify giving it greater powers, yet that is what the Bill does in a big way. We are now going to have deputy governors of the Bank. All we are told is that the Bill is to avoid a repeat of the financial crises that we have had in the past. Perhaps I may express the hope that it will do that—but I doubt that it will because the plain fact is that part of the reason for the crisis, as the noble Lord, Lord Sassoon, mentioned, was what happened when Northern Rock was lending 120% mortgages. Auditors have been blamed. In my long-lost past when I was a junior auditor and before I became a senior partner, I often wondered how I would deal with an audit of major banks lending at this rate. Under their present terms, auditors could not deny them a certificate, and of course this Bill will not do anything about that.
I have a feeling that we have this the wrong way round in that this Bill should have come after the banking Bill. I ask myself whether all the new prudential regulations and new committees—the new Financial Policy Committee and the new Financial Conduct Authority—should have come up for discussion after the introduction of a banking Bill, which we are now going to have. Perhaps the Government will tell us when we will have that Bill and when it is likely to become an Act. It is urgently needed. I would not like to say that without such a Bill all the banks are going to be unable to cope with the sort of crisis that we met in 2008, and ultimately it may well be that without sufficient scrutiny, as I mentioned, that Bill will not achieve any kind of objective. Perhaps after nearly 48 years in one House or the other I have become overly cynical. Perhaps I have taken through too many Finance Bills and have debated finance and economics too often. I hope that I am not cynical but I fear that I am. It is very difficult to be confident that the great new structure brought in by this Bill is going to solve the problems that we are facing and meet the objectives clearly set out in the Bill.
I do not agree with noble Lords who said that they regret that the Bill is to be taken in Grand Committee. I find that Grand Committees provide closer and more detailed scrutiny of Bills. This is not the kind of Bill that is helped by being debated on the Floor of the House. Our House is a bit like the House of Commons in that only the sexier parts are debated at length, whereas in Grand Committee you can look at Bills more closely.
I look forward to the amendments that will be moved by me, my noble friend and many others. I hope that ultimately my worst hopes and excessive pessimism will not be met and that the Bill will emerge in a better form than it is in today.