Financial Services (Implementation of Legislation) Bill [HL]

Lord Deben Excerpts

Committee: 1st sitting (Hansard): House of Lords
Tuesday 8th January 2019 Lords Chamber

[Lord Deben (Con)]

My Lords, I remind the House of my declaration in the register of interests, particularly my chairmanship of PIMFA, the organisation that represents independent financial advisers and wealth managers.

I have to disagree with the noble Lord, Lord Adonis, about the meaning and purpose of this amendment. But I have to say to my noble friend that one of the reasons for this amendment is that many of us are very concerned that the Treasury in particular should take very seriously the issues of the financial services sector and the contribution that it makes to the British economy. That seriousness has not always been evident.

Secondly, the European Commission has been very helpful in listening to the British applications and those of our colleagues in the rest of the European Union and, should we leave the European Union, which I trust will not happen, we would certainly expect to have at least as much access as we have on the present stage and certainly as much influence.

I am concerned because in the past we have sought to pass amendments that asked the Treasury to bear in mind important matters. For example, an amendment some years ago stated that the Treasury should insist that regulators bear in mind the need for savings in our society. That was pooh-poohed by the Government who said that it was entirely unnecessary and of course everybody knew that. The result has been that regulators have not taken that issue into account and indeed pointed out that the Government did not accept when it was suggested to them that saving as part of our society was important. So it is important to bring home to the Government the issues raised with this amendment.

I want to make two further points. First, this is a very competitive world. We need to have legislation if we are not a member of the European Union that enables us to continue to be as competitive as possible. This may not be exactly the right wording, but it carries that meaning. Secondly, small companies find much of the legislation not only burdensome but unnecessary—points that my noble friend Lord Leigh properly made. That is not because one wants lower levels of legislation.

At this point, I want to take serious objection to what the noble Lord, Lord Adonis, said. I happen to be a Conservative. I sit on the Conservative Benches and I have been a Conservative Minister for longer than almost anyone else. But I am very much in favour of this regulation. The industry that I am happy to work in is also very much in favour of sensible legislation because we do not like cowboys either. They produce extremely bad reputations. Nobody can be tougher about the fact that we need proper regulation. There is no question in these amendments that somehow or other we would lower the bar. That is not the issue.

I would agree about some of the remarks made about Singapore. I am deeply upset to have a Foreign Secretary who thinks that Britain should be compared to Singapore. Fundamentally, that is as about as helpful as suggesting that we should be like Liechtenstein. I am sorry, but it is not a sensible comparison for so many reasons, not least because of the autocratic Government of Singapore. I do not want to be associated with them as a comparison.

However, our financial services need proper regulation. We want regulation, but it has to be proper regulation within the context of our competition. Therefore, it is proper to say that we do not want regulation that either makes it more difficult for us to compete or lays a disproportionate burden on the shoulders of small companies. Those seem two such simple and reasonable things to suggest that, on this occasion, my noble friends here and I are helping the Government.

Ministers are always suspicious, particularly when I say that I am trying to help the Government, but I am, on this occasion, trying to help them. I am doing it in great difficulty because I do not like this Bill at all. I do not want to leave the European Union. It is more and more clear that leaving the European Union is barmy, and we are having to spend time talking about barmy things that will take two years and then go away. It is a pretty insulting thing for this House, but that is what we are having to do. So I ask Ministers please to take this seriously and not to take the view of the noble Lord, Lord Adonis, in the way that he put it, but merely to agree that the amendment is sensible. If the Government cannot give us that undertaking, I have to say that the financial services industry will be very suspicious. If the Government are not prepared to do at least as well as the European Union has done in negotiation and discussion, I will be very sad.

I hope that people notice just how good the Commission has been when they attack the European Union for bureaucracy and suchlike. It has been more open and more able to discuss, and more concerned about the issues than any of our governmental structures. We have to remind people that the European Union is more open, more willing to listen and more concerned to be there for industry than the Treasury has been in history, which is why this amendment has been tabled.

[Baroness Kramer]

My Lords, I have to say to the noble Lord, Lord Deben, that every alarm bell went off in my head when I heard the noble Lord, Lord Leigh, basically argue that this would be a route to get naked short selling on AIM. This is essentially a mechanism that will allow people to enter into contracts which they know if they had to fulfil they would be very unlikely to fulfil—talk about risk. That general underlying principle worries many of us who think that a less speculative financial services industry is, in the long run, much more sustainable than a far more speculative financial services industry. That is exactly the point. It is people selling short shares that they will not be able to buy if they are ever forced to close on the contract.

--- Later in debate ---

[Lord Deben (Con)]

I hope that my noble friend the Minister has listened carefully to the noble Lord, Lord Adonis, on this matter. We are faced with a real difficulty here. We have agreed to many kinds of legislation, of which this is only one, to protect ourselves against the extraordinarily damaging situation whereby we leave the European Union without a deal. One of the dangers, to which the noble Baroness, Lady Kramer, pointed, was that, if we are not careful, we will be so sure that something is not necessary that we will not look at it as carefully as we ought.

The reason I suggest that my noble friend take Amendment 7 and the amendments that we are now discussing very seriously is this: the whole purpose of Parliament is to make sure that we expose the full extent of decisions of the Executive; it is to curb the Executive in the sense that it ensures that things do not slip through with unintended results.

I am sure that the Government have every intention of using this legislation properly; I am in no way criticising them about that. However, it is true that decisions made primarily by civil servants, which are not open to public scrutiny, can be disastrous. Any of us who have been Ministers know that; we know that one of the most important, perhaps the most important, protection the public have—and the most important discipline that one has as a Minister—is that decisions have to be debated and discussed. My noble friend knows that in this House, where we have limited powers, it is still true that very often during Committee and Report terrible gaps have been shown in legislative proposals. These are gaps which, once they have been revealed, the Government are rapidly determined to fill: to change what they are proposing because they had not meant to have that result.

In those circumstances, it is difficult, is it not, to give these powers so totally to the bureaucratic system? That is so even if one imagines that Ministers themselves have no intention of delivering other than what is perfectly in line with these legislative requirements. Therefore, it is not unreasonable to suggest that there should in all circumstances be a public discussion. The Government’s usual response is, “We can’t possibly do this as there isn’t time”. I am prepared to accept that as a generality, but this is not to impose a long-winded system; it is merely to say that what is proposed shall have sufficient public exposure and discussion to enable people to see whether it is within the proper confines of the Bill or reaches beyond it.

Although I had to disagree with the noble Lord, Lord Adonis, on an earlier amendment and his view of it, this one seems to draw attention to a very real issue. My noble friend and I share a considerable desire that these circumstances shall never arise. He is in no position to share my further desire, which is that we shall not leave the European Union anyway—I have no idea what his personal views are but I know what his views have to be at the Dispatch Box. The public will become less and less enamoured with this whole unprofitable and unacceptable process. If the Government want to protect themselves, at least to some extent, it is extremely important to make sure that these matters are processed in public. If they were ever to come about, the Government would find that protecting and defending what they have done was extremely hard, but why not accept that some further process beyond that allowed for in this Bill would be a democratic help in circumstances which will, we hope, not occur?

[Baroness Bowles of Berkhamsted]

My Lords, I agreed with the amendments of Lord Adonis; I do not agree that they are not needed, even with Amendment 7. There is still the issue of sequencing in terms of what is and is not being done; Amendment 7 does not solve the cherry-picking point or various other things. I attach quite a lot of importance to the reports provided by subsections (8) and (9). In that context, I read the amendments that added in the Bank of England. The noble Lord has explained that in the sense of taking advice from the Bank of England. But when doing these transpositions, there are inevitably delegated acts and other associated things that will be done at the level of the regulators and will not even be contained in a statutory instrument. Therefore I thought it was right that the regulators reported how things are dealt with as well as the Treasury. I support the amendment but would add the PRA and the FCA. In that way, we get the full Treasury report through to the regulators, so that we see that we are all on the same page and where the tweaks, even within the available limits, are made. So I agree with the noble Lord.

As to whether Amendment 11A is needed, there is no harm in putting it there. The Secondary Legislation Scrutiny Committee and other committees will still be doing their part when the things come to them, so I see no reason not to give some work to the Treasury Select Committee.