Dissolution and Calling of Parliament Bill

Lord Butler of Brockwell Excerpts

2nd reading
Tuesday 30th November 2021 Lords Chamber

[Lord Butler of Brockwell (CB)]

My Lords, I regret that I am going to share the self-satisfaction of the noble Lord, Lord Grocott. I believed from the outset that the 2011 Bill was misconceived. Partly through the not inconsiderable intervention of my noble friend Lord Pannick, who regrets that he cannot be here today, your Lordships’ House was twice persuaded to send the Bill back to the House of Commons for reconsideration. The concession eventually obtained was that the operation of the Act should be reviewed in 2020 by a Joint Committee. That was conducted under the chairmanship of the noble Lord, Lord McLoughlin, who I think I am right in saying should be congratulated on his birthday today.

The stated intention of the Fixed-term Parliaments Act was, as the noble Lord, Lord Newby, said, to ensure that the 2010 coalition lasted a full five years. But, with respect to the noble Lord, the Bill was not even sufficiently effective to do that. If either of the coalition parties had wanted to end the Parliament early, it is highly likely that, with the support of the Official Opposition, the necessary two-thirds majority in the Commons to bring the Parliament to an end would have been available.

A second aim of the Act was to remove from the Prime Minister the alleged advantage of being able to choose the timing of a general election. In my experience, the flexibility that Prime Ministers have is very limited in practice. No Prime Minister is likely to choose to put their Commons majority at risk before the last year of a Parliament unless they judge it essential in order to get their Government’s programme through. Experience also shows that, if the electorate sense that the Government are putting them to the trouble of a general election for opportunist reasons, they punish the party severely through the ballot box, as the intervention by the noble Lord, Lord Cormack, made clear. That is what Mrs May found in 2017.

I believe that the traditional arrangement by which the Prime Minister can ask the Queen to dissolve Parliament so that the Executive can seek a new mandate, in circumstances where they cannot rely on getting their programme through Parliament, is in the national interest. I therefore support this Bill. However, I greatly regret the inclusion of Clause 3. The noble Lord has argued that the Dissolution of Parliament is a matter properly dealt with by the electorate rather than the judiciary, but in my submission, this is a false argument. By the time the electorate have any say, Parliament will have been dissolved, the power will have been used and the Queen will have had to assent to it.

If the Bill gave a role to Parliament in the Prime Minister’s request for Dissolution, it would, as others have said, be a different matter. But the Bill does not allow any involvement by Parliament. Under the Bill, Dissolution is not something done by Parliament; like Prorogation, it is something done by the Executive to Parliament. Parliament does not authorise it or have any role in it. If the Executive misuse their power, in my view the exercise of that power should be subject to review by the courts.

But in this case, as has already been pointed out, there is an even more fundamental objection. Let us suppose that the Government do misuse the prerogative power in some way. All commentators agree that, at least in theory, such a situation could happen. What protection would exist if the courts cannot intervene? There is only one source of protection in that circumstance: the sovereign. The sovereign would have to refuse the Prime Minister’s request for Dissolution. That would require the sovereign to do what everyone agrees she should be protected from doing: intervening in party politics, and in the most contentious of circumstances. If it is necessary to have protection against the Prime Minister’s abuse of the power in this Bill, in my view it should be provided either by Parliament or the courts, not by the sovereign.

I end with a more general point. A recent article in the New Statesman, under the heading “Democracy’s Last Stand”, discussed how ex-President Trump’s attempt to subvert the result of a democratic election was thwarted by the courts. The article also pointed out how rapidly Hungary, Turkey and Brazil have seen their democracies strong-armed by repressive Governments. The article asked whether the United Kingdom’s constitutional safeguards are sufficient to prevent a slide in a similar direction. It reminded readers of the politically motivated Prorogation, the demonising of the courts and the BBC, and the attempts to override the findings of independent standards and appointments bodies. One could add the use of the Henry VIII powers to bypass Parliament’s scrutiny, highlighted by two Committees in your Lordships’ House last week, and now, the ouster clause in this Bill.

I suggest that those of us who value our democratic traditions must stand up against the Government’s attempts to remove oversight of their actions by Parliament and the courts. If Clause 3 is not amended, I shall vote against its inclusion in the Bill.

Security of Ministers’ Offices and Communications

Lord Butler of Brockwell Excerpts

Tuesday 29th June 2021 Lords Chamber

[Lord True (Con)]

My Lords, I cannot comment on the circumstances. The Department of Health inquiry, I would imagine, would look into all these matters, including who was and should be responsible for making the Secretary of State aware, if he was not aware, of this device.

[Lord Butler of Brockwell (CB)]

My Lords, the use by Ministers of private means of communication is dangerous on all sorts of grounds, and Ministers need good advice about that. Following on from the question of the noble Lord, Lord Wallace, is there a review of ministerial private use of the internet, so that departments can identify which parts of such correspondence are subject to FOI so that they can deal with FOI requests?

[Lord True (Con)]

My Lords, there is guidance. Obviously, guidance, as the noble Lord with his great experience will know, is reviewed from time to time. That is also the case in relation to FOI, on which I have already commented. The Cabinet Office responded to 92% of FOI requests within 20 working days. As to the boundaries, Ministers are also parliamentarians—MPs and Peers. There are distinctions between official classified information and the day-to-day management of a Minister’s life. One needs to be aware in office of those barriers and those responsibilities. I take note of what the noble Lord has said.

Finance Bill

Lord Butler of Brockwell Excerpts

2nd reading & Committee negatived & 3rd reading
Tuesday 8th June 2021 Lords Chamber

[Lord Butler of Brockwell (CB)]

It is a pleasure to follow the noble Lord, Lord Bridges, who chaired our sub-committee with great competence, and I shall have a word to say about that later. I start in the general area about which he was speaking. As we debate the Finance Bill today, I warmly welcome last week’s agreement by G7 Finance Ministers to work together, to ensure that all countries get their fair share of revenue from multinational corporations. I congratulate the Chancellor of the Exchequer on presiding over this achievement. However, while I do not want to rain on his parade, I cannot agree with him that this shows what the UK can do post Brexit, as he claimed.

To my mind, it shows two different things. The first, somewhat contrary to what the Chancellor claimed, is that international problems, such as the taxation of multinational corporations, can be addressed only by countries working together and by pooling part of their sovereignty. They cannot be solved by individual countries acting independently. The second lesson of the G7 Ministers’ agreement is that nothing happens until the United States decides that it should. This first step could not have been achieved without the United States giving a lead.

I turn now to the report of the Finance Bill Sub-Committee on the new powers of HMRC in the Finance Bill that we are debating today. I comment first on a quirk of our curious constitutional procedures. I joined this sub-committee at a late stage of its work. It seems to me that the report is a useful commentary on the powers in the Finance Bill, but our constitutional procedures prevent your Lordships’ House turning the committee’s conclusion into amendments to the Bill. There really is no reason of Commons financial privilege why the Lords should not be able to pass amendments relating to the fairness and proportionality of HMRC’s administration of the tax system. The only reason is that they happen to be contained in the Finance Bill. As a result, this sub-committee’s report turns into a mere commentary, which may influence the House of Commons if anyone there bothers to read it, but otherwise it is simply the basis of a conversation between the committee and the Government. That can be quite a useful conversation, since the main means by which your Lordships’ House can influence events is by persuading the Government. The committee has persuaded the Government on some of the issues in the report, but it is frustrating that, having debated this report, your Lordships’ House has no option other than to nod the Finance Bill through in the form in which it has reached us.

It was a privilege to serve on this sub-committee, which was superbly chaired by the noble Lord, Lord Bridges, and benefited from the participation of the chairman of the main Economic Affairs Committee, the noble Lord, Lord Forsyth. As the noble Lord, Lord Bridges, has said, the committee was very well served by the excellence of its clerks. We also had good co-operation from the Financial Secretary to the Treasury, Jesse Norman MP, senior members of HMRC, and representatives of professional associations affected by the Bill’s provisions.

On rereading the report, I feel that it perhaps comes across entirely as an indictment of HMRC. That may be inevitable, because the report concentrates on those powers in the Finance Bill that seem to the sub-committee excessive or not fully thought through. Speaking for myself—I speak with a Treasury background—I have considerable sympathy with HMRC, particularly in its task of dealing with schemes of tax avoidance and evasion, which are like a many-headed Hydra—as soon as HMRC hits one of the heads another pops up. Yet it is not difficult to feel that HMRC has been more zealous and effective in pursuing often innocent taxpayers, rather than those who have made a fortune from promoting avoidance schemes.

There have also been ongoing deficiencies in HMRC’s dealings with taxpayers, some of which HMRC acknowledges. The sub-committee received distressing evidence from victims of the loan charge to which the noble Lord, Lord Bridges, referred, not least about delays or failures in getting a response from HMRC when taxpayers have sought to achieve a settlement of their affairs.

A compelling account of the distress caused by HMRC’s handling of the loan charge was given in the BBC Radio 4 programme “File on 4”, to which the noble Lord, Lord Bridges, referred, and which I commend on its investigations into these issues. A recent edition of the programme dealt with a further scheme with some similarities to the loan charge, to which the noble Lord, Lord Bridges, also referred: the recruitment of staff through umbrella companies, which offer to save employers overheads in the form of national insurance contributions, holiday pay and employment regulations by offering recruitment in penny numbers, each too small to incur those overheads.

I know that IR35 has recently come into effect as a means of distinguishing between general and useful recruitment agencies and those set up for avoidance, but I echo the noble Lord, Lord Bridges, in asking the Minister whether there are signs that it is preventing the offering of services for avoidance purposes by umbrella companies with overseas directors who are difficult to pursue. It would be a tragedy if another version of the loan charge were to become established, which could cause distress for its victims for many years to come.

I end by commending HMRC and the Government on the detailed response the sub-committee received to the report we are debating. The Government’s response is that out of 24 main recommendations in the report, nine were accepted, six were partially accepted and nine were rejected—you might call it a score draw. A sceptic might say that it was the recommendations of general principle that tended to be accepted by the Government and the specific recommendations that were rejected. Nevertheless, there is evidence that the report served a useful purpose in challenging HMRC, and it was an honour to take part in preparing it.

Budget Statement

Lord Butler of Brockwell Excerpts

Friday 12th March 2021 Lords Chamber

[Lord Butler of Brockwell (CB) [V]]

My Lords, I congratulate the noble Lords, Lord Benyon, Lord Khan and Lord Cruddas, on their maiden speeches.

I make a single point on the proposed 1% pay increase for the National Health Service. I accept that to decelerate borrowing, the Government need to restrain their own wage costs. On the other hand, the public want to express their gratitude to the NHS. My conclusion is that the pay review body should determine ongoing NHS pay levels on what is necessary to recruit and retain staff, but there should be a one-off bonus to recognise the extraordinary demands of the last year on the NHS.

I have a specific suggestion. A one-off, tax-free bonus of £1,000 to all in the NHS would cost £1.3 billion. How should that be paid for? While many in the economy have suffered in the last year, the income of others has been maintained or even enhanced. A temporary 1% increase in the 40% higher rate of income tax would raise something over £1 billion, which would go a long way towards covering the bonus I have suggested.

Of course, I am well aware that the Government’s manifesto ruled out increases in income tax rates. However, in this exceptional situation, a one-off surcharge for this fiscal year to reward NHS employees would be acceptable to those in the higher tax ranges. If I may speak personally, it would certainly be acceptable to me. I hope that this suggestion might be considered.

Financial Services Bill

Lord Butler of Brockwell Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Thursday 28th January 2021 Lords Chamber

[Lord Butler of Brockwell (CB) [V]]

My Lords, it is a privilege to be the first to congratulate the noble Baroness, Lady Shafik, on her charming and hugely impressive maiden speech. This debate shows the House is fortunate to have the addition of not one but two real heavyweights to our number. I am sure I speak for the whole House when I welcome the noble Baroness and say that we look forward to her continuing to contribute her extensive expertise and experience—national and international—to the work of our House.

This is a large Bill and, in view of the significance of the financial services sector in the UK, a very important one. I declare my interests as set out in the register and as a former member of your Lordships’ EU Financial Affairs Sub-Committee—one who worked under the splendid leadership of the noble Baroness, Lady Falkner of Margravine.

Like the noble Lord, Lord Sharpe of Epsom, I want to direct my remarks to the part of the Bill relating to the regulation of investment firms, in particular, the EU markets in financial instruments directive, popularly known as MiFID. The current directive, MiFID II, came into force in the United Kingdom on 3 January 2018. Its provisions have been widely criticised, not only in the UK but throughout the EU, as excessively burdensome and not sufficiently distinguishing between market operators on grounds of size or function. Now the UK is responsible for its own regulation, which is welcome, but using the powers to be conferred by this Bill the Financial Conduct Authority will be able to introduce a more tailored approach under the title of an “investment firms prudential regime”. It is also welcome that the FCA has already circulated a discussion paper inviting comments on its approach.

One area in which MiFID II produced unforeseen adverse consequences—at least, unforeseen by its proponents, for it was foreseen by others—was the treatment of investment houses’ research costs. It was an aim of MiFID II to prevent the financing of research services from trading commissions, because it was believed that this would remove an incentive to unnecessary churning of investments as a means of providing funds for research. This was a laudable objective, but it was predicted during consultation on the directive that a complete ban on the commission-sharing regime would cause fund managers to cut their spending on research and benefit competitors outside the EU, who were not subject to similar restriction. It would also discourage new businesses seeking to establish themselves in the market. This has, indeed, been the result.

An alternative suggestion was that the aim of greater transparency could be achieved by disclosing to clients in advance fixed, budgeted amounts for research. This was adopted in MiFID but not considered sufficient in itself; further onerous reporting was required. This is but one example of the competitive burdens imposed by MiFID II. It is to be hoped that they will be mitigated in the UK’s new investment firms prudential regime, so as to combine transparency about costs with removing disadvantages suffered by UK firms in comparison with competitors in the United States and the Far East.

The FCA’s consultation on the new regime coincides with two other developments that are currently under way. One is the discussions being conducted with the EU, and due to be completed by April, about a new framework for equivalence between the UK and EU following Brexit. The second is that, like the UK, the EU is itself reviewing and preparing modifications to its regulatory regimes, covering not only MiFID but other matters covered by the Bill, such as the capital requirements directive implementing Basel III and the anti-money laundering directive. The UK’s discussions with the EU about equivalence are taking place on ground that is shifting beneath our feet. Such developments in regulation in the UK and the EU will, and inevitably should, continue as financial markets continue to develop.

If anything were needed to persuade both sides in the present UK-EU negotiations that it is in our mutual interest to work in close consultation with each other, it is a report last week that in the absence of UK trading platforms for derivatives being given EU market access, business in euro-denominated interest rate swaps fell sharply in London during the first fortnight in January. At the same time, it has doubled not in the EU financial hubs, where it also fell, but in New York. It is to be hoped that the EU can be persuaded that a restrictive approach to the UK is contrary to not only the UK’s interests but its own.

The United Kingdom has long been a leader in international financial regulation, as shown by our pivotal role in the 2007 financial crisis and its aftermath. We must see to it that this Bill and its implementation continues to allow that leadership, not only in the UK’s interests but, as the noble Baroness, Lady Shafik, said, in the world’s.

EU-UK Trade and Cooperation Agreement

Lord Butler of Brockwell Excerpts

Friday 8th January 2021 Lords Chamber

[Lord Butler of Brockwell (CB) [V]]

My Lords, I address my two minutes to prospects for the financial services sector, drawing attention to my interests in the register. Many have criticised the thinness of the agreement in respect of financial services, but the surprising thing is that so few cries of alarm have been heard from practitioners themselves. In the next three months, there are to be negotiations about access. Of course, we should not expect the EU to make thing easy. Paris and, particularly, Frankfurt have long aspired to challenge London’s supremacy, and this week the Governor of the Bank of England warned that becoming a rule-taker would be too high a price to pay for equivalence. Nevertheless, I am even more confident than my old friend the noble Lord, Lord Griffiths of Fforestfach, about the prospects for this sector.

First, the UK financial services sector is innovative. It offers a complex of services, an ecosystem that, combined with the asset of the English language, is difficult to replace. Secondly, the EU would find it difficult to discriminate against the UK in this field without also cutting itself off from other markets such as the United States. Thirdly, financial services are not like goods; they are not material items that can be identified and controlled as they cross borders. In the lead-up to Brexit, fewer jobs have been moved to Europe than pessimists predicted. It may be that a greater number of financial transactions will be conducted and taxed on the continent, to the cost of the UK Exchequer, but I believe that they will still be conducted by UK-based companies. In this area, as in others, the market is likely to decide. The test will be the quality of services that our financial services sector provides, and in this I believe that we can be confident.

European Union (Future Relationship) Bill

Lord Butler of Brockwell Excerpts

3rd reading & 2nd reading & Committee negatived & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard) & Committee negatived (Hansard): House of Lords
Wednesday 30th December 2020 Lords Chamber

[Lord Butler of Brockwell (CB) [V]]

My Lords, I have never made a secret of my regret that the 2016 referendum went the way it did. I hoped for some time that, when the implications became known, the British people would be given a second chance to vote and the result would go the other way. But I accepted long ago that the train had left the station and that we had to turn our attention and energies to negotiating a new relationship with our former partners. We now have the results of that negotiation.

I cannot agree with those who say, as some have, that this is a bad deal, on the grounds of the increase in bureaucratic controls on trade in goods, extra checks on exports of food and farmed products, and loss of access to development funding. They are not the results of the agreement; they are the inevitable results of the original decision to leave the European Union.

Like the noble Lord, Lord Leigh, I take a more favourable view of these negotiations than some previous speakers. They seem to me to have been skilful, firmly based on principle and with a surprisingly satisfactory outcome. We approached them not as a mendicant, but as an independent country with a great deal to offer, as indeed is the case. The United Kingdom is the fifth largest economy in the world. We are one of the world’s two leading financial centres. We have pioneering universities and research centres, as our leading role on the coronavirus vaccine has shown. We have a structure of law that is admired and relied on by businesses around the world. We have the great asset of the English language. These things are not going away and are not affected by Brexit.

My view is that we can greet this agreement not just with profound relief that it is much better than no deal, but with positivity about the opportunities that it presents for continued trade and co-operation with Europe. We can be justifiably proud of the civil servant negotiators, who worked so hard and with evident skill to achieve this outcome. I believe that they have shown themselves to be at least equal in resolution and ability to their EU counterparts.

This is of course not the end of the story, as the President of the European Union said in her moving words when the agreement was announced. There are important areas where there is need for further agreements and co-operation in our mutual interest but, when we vote on the Bill, I will support it, and not just with relief but with optimism.

Ministerial Code

Lord Butler of Brockwell Excerpts

Tuesday 24th November 2020 Lords Chamber

[Lord True (Con)]

Well, my Lords, my noble friend always asks his questions in a direct manner. I will not comment on any individual case, but it is certainly true that being at the top of a major department is a challenging role for Ministers and senior civil servants alike—and, frankly, I have not known many snowflakes in either of those capacities.

[Lord Butler of Brockwell (CB)]

My Lords, it would have been good if the Minister had condemned the terms of the question asked by the noble Lord, Lord Howard. Under this Prime Minister, the conduct of the Government and their Ministers has been criticised by the Supreme Court, the National Audit Office in relation to their conduct of procurement, the Commissioner for Public Appointments, the chair of the Committee on Standards in Public Life and the Prime Minister’s independent adviser on ministerial conduct. Do the Government take these criticisms seriously? If so, what proposals do they have to restore confidence in the probity of public life?

[Lord True (Con)]

My Lords, I do not agree that confidence in the probity of public life, as the noble Lord puts it, is destroyed. The Government take all criticism and comment seriously and reflect on all comment, positive and negative. That is the wise thing to do, and I am sure the Government will continue to do it.

Ministerial Code

Lord Butler of Brockwell Excerpts

Thursday 12th March 2020 Lords Chamber

[Lord Butler of Brockwell (CB)]

My Lords, when I saw that the noble Lord, Lord Tyler, had secured this debate—on which I congratulate him—I thought it would be incomplete without the participation of a former Cabinet Secretary. After all, we have been the guardians of this document down the years. Its origins were contemporaneous with the creation of the post of Cabinet Secretary. It was first intended by Sir Maurice Hankey not for Ministers but as a guide for officials on how to organise Cabinet and Cabinet committee business—Ministers probably never saw it. It was Prime Minister Attlee who extended it to Ministers, not so much to guide their behaviour as to increase their efficiency. Then, from the 1960s, under the title Questions of Procedure for Ministers, it hugely expanded. It has borne the footmarks of almost every ministerial scandal over the years, as well as other developments in our community. The noble Lord, Lord Hennessy, whom we miss today, was the one who found out about the document and waged a gallant campaign to have it published, which was successful when Prime Minister Major agreed to publish it in 1992. I was Cabinet Secretary at the time and I warned the Prime Minister that its publication would cause him and his successors trouble, which it duly has, but I do think it was right.

Now that Ministers have to be accountable for their behaviour not just to the Prime Minister but to the media and the public, it is right that there should be published standards to which they are expected to adhere. In my view, the availability of such standards in published form does contribute to the honesty of British public life. As has been said, this document has come into prominence again because of the allegations surrounding the behaviour of the Home Secretary, Priti Patel. Like others, I do not wish to comment on that case, of which I do not know the details, but I will conclude with two general points. The first is that, as the noble Lord, Lord Tyler, pointed out, the latest version of the code is dated August 2019, when the present Prime Minister came into office, and he says in his personal foreword:

“We must uphold the very highest standards of propriety … There must be no bullying and no harassment … The precious principles of public life enshrined in this document … must be honoured at all times, as must the political impartiality of our much admired civil service.”


Those words are very welcome, and we must assume that the Prime Minister means what he said.

My second point is that some media comments have suggested an absolutist application of the code. If a Minister has breached the code, they suggest, he or she must, for that reason, lose their post. That seems a clearly unreasonable approach. There must be, in this as in other things, a range of gravity in breaches of the code and then in the response to them. It is like school rules, and the code is like school rules. Some breaches will be so serious and so damaging to the community that they can be dealt with only by exclusion. Some will be less serious and can be dealt with by an uncomfortable interview with the head teacher and an undertaking about future behaviour.

I do not know whether the Home Secretary has breached the ministerial code and, if she has, the gravity of the breach, but if she has, I suggest that the consequences should depend on that question: what is the gravity of the breach? It should not be a binary decision. Pace the noble Lord, Lord Tyler, I believe that the Prime Minister must be the judge of that. The code is not a legal document; this is not a legal process. The final arbiter about the Government are the public, but the final arbiter about who should be members of the Government must be the Prime Minister who leads them.

Ministerial Code: Breaches

Lord Butler of Brockwell Excerpts

Monday 2nd March 2020 Lords Chamber

[Lord True]

No, my Lords, the allegation of a hitlist is false and has been denied. All in this House would agree that good government depends on all the elements of a ministry and a Government working well together. I had the privilege of working in the Civil Service as a special adviser in the past and I know that to be the case. This Government wholly respect the role of the Civil Service; they need the Civil Service to be free to give robust advice and there needs to be proper respect between all arms of government decision-making.

[Lord Butler of Brockwell (CB)]

My Lords, will the noble Lord clear up one point that was a little ambiguous in his answer to the Leader of the Opposition? I welcome the fact that, in line with the Ministerial Code, the Prime Minister has asked the Cabinet Office to establish the facts—that is clearly very important—but in answering the Leader of the Opposition, the noble Lord said that the Cabinet Office has been asked to inquire whether the Home Secretary has breached the code. However, there are also allegations that the code was breached when Ms Patel was in the Department for Employment and in DfID. Can he assure us that the inquiry will be wide-ranging and will cover that full range of complaints?

[Lord True]

My Lords, I used the term “Home Secretary” because the person engaged is Home Secretary, but where allegations of breach of the Ministerial Code has been made against a Minister, those allegations, from wherever, will be investigated.