Restoration and Renewal

Lord Desai Excerpts

Wednesday 13th July 2022 Lords Chamber

[Lord Desai (Non-Afl)]

My Lords, when I was a schoolboy in India, we were told stories about the British Parliament. One of the stories, of course, was of how Guy Fawkes tried to blow the old Parliamentary building up. But then I heard that every year, there was an inspection—just on Guy Fawkes Night—to check whether Guy Fawkes was there or not. Obviously, given the state of this restoration report, I think they all expect Guy Fawkes to turn up only on Guy Fawkes Day to set fire to this place.

That is what traditionalists and romantics think our history is about. What we are suffering from is the fact that there are romantics and the so-called modernisers. The romantics want this place to be exactly as it was and not change anything, which is why we are talking about restoration.

This is a great building. It is a fantastic building, but I have always thought it utterly useless as a parliament chamber. All other parliament chambers you see in the world are much more modern than this: you have a proper seat of your own, a desk, computer facilities, meeting halls and decent catering. You do not have this very crowded place, where deliberately not everybody can find a seat. If there are 800 Members, God forbid that you may think you will get a seat—heavens! You are here not for sitting down but for the gorgeous decorations, history and all those sorts of things. Yes, the pandemic forced us into modernisation, but we are rapidly marching to restore all the old habits. We do not really like modernisation.

Obviously, this report will have to be agreed to because we have no alternative. I do not think any good will come out of it, because 15 years from now we will have another debate like this—I will not be there, because I was 83 last Sunday and I may not be alive—and discuss the same things: what different committees we have formed and whether the House of Commons is refusing to decant. Let us hope that, in the meantime, no Guy Fawkes has set fire to the basement—not so much for ourselves but for the staff who work here. They will pay the cost of our laziness, not us.

If I had any choice—thank God I do not—I would not have thought about anything other than not decanting but building another parliamentary building. At the start of the pandemic, I wrote a letter to the noble Baroness in charge of this thing and said we should start building a new parliamentary building while the pandemic was here so that we would have a building ready for occupation. Had we done something like that, we would all have decanted there, Commons and Lords, and restored this building as one of the most fantastic museums of British history, exposing it to the public and showing all the decorations. I quite agree that this is an incredible building, but a parliamentary building it is not. It is useless as a parliamentary building.

I was surprised to hear that when the restoration took place after the House of Commons Chamber was bombed during the war, it was insisted that the Commons Chamber be restored exactly as it was, so that it would always be overcrowded if everybody decided to turn up. I think this is the only country in the whole world that worships democracy but makes quite sure that the parliamentarians do not have a comfortable life. The parliamentarians love it, because they think not being comfortable is the great strength of British democracy. Being comfortable would absolutely corrupt us like all the Europeans, and we do not like the Europeans. Given that we made that mistake and are not going to move out of here—we may move out, but the Commons will not—all we can do is hope and pray that within the next 50 or 100 years we get this place fully restored and are able to do what is proposed by the noble Lord, Lord Blunkett, which is very important.

We really ought to think of Parliament in a different way, because our democracy is different. This Parliament was refurbished at a time when the franchise was only 10% of the population. Most people in the House of Commons were second sons of Peers, and the voting public were hardly more than 10%. We are in a very different situation now. We should use a much more consultative system whereby our citizens can communicate with us their preferences regarding our proposals and the legislation before us. How many people are aware of what we are discussing? We ought to be able to connect constantly with our citizens so that they can tell us their proposals. We should have a people’s budget in which people can tell us their preferences regarding taxes or expenditure. We do not know any of that, because we are not able to consult our citizens.

Let us concentrate on the positive aspects and, whatever we do for restoration, make this a more fit place for democracy than it has been so far. We know from what is going on in the selection of a new Prime Minister that we are not a very successful democracy.

Higher Education (Freedom of Speech) Bill

Lord Desai Excerpts

2nd reading
Tuesday 28th June 2022 Lords Chamber

[Lord Desai (Non-Afl)]

My Lords, I must apologise for going in and out of the Chamber while other noble Lords were speaking; I had not timetabled for all the business that happened between Oral Questions and the start of this debate.

I will first say that I happen to be a martyr in this struggle for academic freedom and freedom of speech. I was a lecturer at LSE in the academic year 1968-69, when at least two of my colleagues got sacked. Do not for a moment believe that we always had academic freedom in this country; nor should we believe that there is academic freedom in the United States, despite the first amendment and all that. The teacher who supervised me—whom I shall not name—had to leave the university overnight because of McCarthyism. He had to come to Oxford for shelter for a few years before he could go back to America. He was told, “Just leave the country and don’t ask any questions before you get called by the state legislature for your views.” He was an econometrician and a mathematical person; he was not even like me, someone with mixed thoughts. We must always ask for some protection.

Obviously, when you are old, you do not like what the young are doing; you think they are completely out of kilter and should be stopped from doing whatever they are doing. Notwithstanding that, I feel that there is a problem with academic freedom. From what I read in the newspapers, there is a problem with cancel culture. This clearly includes the idea that, if you discuss issues of gender or sex, there are bars to discussing those any further. It happened to me: I shall not name the person who stopped me, but when I was discussing International Women’s Day in a debate in your Lordships’ House and tried to make a distinction between people who are born women and those who have chosen to be women, someone immediately got up and said, “Stop this now; don’t go any further. You’re not allowed to go any further.” I thought that was all right and sat down. It did not really matter; I was not saying anything profoundly original.

I think there is a climate where there are certain topics which cannot be discussed. It used to be the case, again in the 1960s, with a man called Professor Eysenck who used to teach somewhere in south London that whenever he appeared at the LSE the most left-wing of the students used to want to prevent him from speaking. I was one of the few people saying: “Let him speak. Speaking does no harm to anybody. He is just expressing an opinion.”

The whole point is that people think speaking causes harm and speaking itself is an offence. This has happened with JK Rowling and the woman at Sussex who was a professor and had to leave.

I think there is a problem. Now, the question really is: does this Bill solve it or does it create other problems? I think that is a matter of detail; it is not a matter of principle. Even if it was true that academic freedom was beautifully protected and everything was fine, it would still not do any harm to have a law passed.

The question to examine is not whether the Bill is necessary but whether we can improve it so that it does more good than harm. It is our duty as the elderly House which has lots of talent in various ways: the people here who run universities, who have been to universities, who are free-thinking people. Let us get together and construct a solution to this problem which does as little harm as possible and as much good as possible.

I am somewhat worried about this thing about universities and foreign money. It almost looks to me like xenophobia, as if all foreign money is suspect and foreigners are not like us; therefore, they are not good enough. If they are giving money, why are they giving it?

I remember I had tutees from China in the great days of Mao. They came and I was able to subvert them. I thought that it was very good that they were there because I was able to tell them how they could think in a way independent of the way they were taught to think. I do not know what happened to them later on.

The fact that people from foreign countries with dubious prospects come to our universities is no problem. Our task is to make them think better, to think freely. Let us make quite sure that the universities satisfy the requirement of economic freedom and protect freedom of speech but, beyond that, let us not interfere too much and ask, “Why did you admit this man from Russia?” We normally give them peerages, but that is not always the right thing to do.

Our task is to make quite sure that our universities are safe to do what they want to do and people do not have to leave or resign or be blackballed just because they have a view which a noisy minority may not like. It is a Bill which we ought to improve and let us go ahead and improve it.

Elections Bill

Lord Desai Excerpts

Lords Hansard - Part 1 & Committee stage
Monday 28th March 2022 Lords Chamber

[Lord Wallace of Saltaire (LD)]

My Lords, I regret that the noble Lord, Lord True, is unable to be with us. I gather he is down with Covid, and I send him sympathies. I hope I have not caught it from him—we shall press on. This creates some further difficulties in completing the Bill, on which I hope I may briefly remark. We need to have some discussions between Committee and Report. I hope there will be some—time is short and they need to be fixed up very quickly. As many of us have remarked, the state of the Bill is unsatisfactory. We know that the Public Administration and Constitutional Affairs Committee said that the Bill was unfit for purpose as presented to the Lords. We have explored many areas already in Committee, such as overseas voting, which we debated late at night in our previous sitting, when it was quite clear that the Government did not have answers to a number of our questions. How that will be implemented if the Bill is passed is, to put it mildly, extremely unclear and probably very messy.

We all regret the missed opportunity of this Bill. It is clear that there will have to be another elections Bill within the next two to three years to achieve what the Law Commission proposed, which is a simplification and rationalisation of our electoral law. This Bill is not that.

This group of amendments deals with the tangle of voting rights left by imperial history and various other things, which the Government appear not to be concerned to rationalise. We have rights for Commonwealth citizens. We have had rights for EU citizens. We have no rights for long-term residents from the United States, which is extraordinary given the Conservative Party’s long feeling that we were closer to the United States than any other country.

My Amendment 152 is a probing one to spark a discussion on how we might think about rationalising the system. EU citizens resident in this country for a very long time—there are 100,000 French citizens in the London area alone, for example—have had the right to vote in British elections. Some would say that they should no longer have the right to vote in British parliamentary elections, but the case for the right to vote in British local elections for those who are resident here, pay council tax and contribute to other British taxes seems to me strong. As far as I am aware, the Government have no particular clear ideas on any of this.

Amendment 155 in the name of the noble Baroness, Lady Hayman, takes us to a recommendation of a number of reports that preceded the Bill: that we should move towards a residency requirement. That seems a rational suggestion. It has a clear principle, unlike the present situation. A residency requirement, at least for voting rights in local elections, would be a very sensible way forward. I am very sorry that it is not in the Bill as drafted.

The rationale for extending rights to overseas voters does not seem to go along with a refusal to recognise that the argument for extending the rights of residents to local voting ought to be considered in the same context, but, sadly, the Bill leaves that as tangled as before. Part of the problem is that the concept of UK citizenship is also a tangle of historical legacies and anomalies.

I find it odd that the Government are happy with this. Do they not consider that a wider reform with a clearer rationale for the changes proposed is now needed? Why is it not in the Bill? The passage of this Bill in its current form will require a successor Bill as soon as possible by this Government or their successor. I beg to move.

[Lord Desai (Non-Afl)]

My Lords, I speak on this amendment because, when I arrived here in 1965, I had an Indian passport and I was surprised when, during the 1966 election, someone said to me, “Have you voted yet?” I said that I did not know I had voting rights in this country. He said, “Get on with it and get yourself registered.” This explained to me that, in the UK, we were subjects, not citizens. It was as subjects of the monarch that we qualified. Since the monarch also ruled over the Empire, all subjects of the Empire were equally qualified to vote in the election.

As far as I remember, the notion of citizenship only came with our membership of the European Union. We began to talk of ourselves as citizens, and we had differently coloured passports and things like that. However, the muddle that the noble Lord referred to in moving his amendment is that we are not clear as to what entitles us to vote. Is it our status as subjects of an empire? Is it our status as local taxpayers, as used to be the case before the universal franchise came in? Is it residency? If there is ever another, better version of this Bill, perhaps the first part of it should clarify the status of an individual under which he or she is qualified to be a voter. Until the muddle is clarified, we will have to proceed with a compromised mish-mash of rights.

[Baroness Suttie (LD)]

My Lords, I also pass on my best wishes to the noble Lord, Lord True, for a speedy recovery. Having had it myself fairly recently, I can say that it is a horrible illness.

I want to move on to the question of Northern Ireland and speak in favour of Amendment 156 in my name, which the noble Baroness, Lady Ritchie of Downpatrick, has signed. It would ensure that EU citizens lawfully resident in Northern Ireland can continue to stand for election and vote in Northern Ireland district elections after the end of the Brexit transition period. It is primarily a probing amendment, however.

In the EU-UK withdrawal agreement, the UK Government committed, under Article 2.1 of the Northern Ireland protocol, to ensuring that certain equalities and human rights in Northern Ireland would continue to be protected after Brexit. Does the Minister—I appreciate that he is filling in at rather late notice—agree with the assessment of the Northern Ireland Human Rights Commission and the Equality Commission for Northern Ireland that the Bill as it stands risks stepping back from those commitments and may in fact be in breach of the UK’s obligations under Article 2.1 of the protocol? Will he undertake to set out, either in response to this amendment or in writing following this debate, the Government’s assessment of the relevant provisions of the Elections Bill in the context of their conformity with our commitments under Article 2.1 of the Northern Ireland protocol?

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[Lord Rennard (LD)]

In the six general elections since I have been a Member of this House, I have always found people to be very surprised that I was unable to cast a vote in them, even though I campaigned in all of them. They find it ironic that I have been campaigning for my party, and its predecessor the Liberal Party, for some 49 years, but I now no longer have a say on who will be the Prime Minister of the country.

Like the noble Lord, Lord Dubs, I am not an opponent of piecemeal reform of this House; I am actually rather in favour of radical reform, and quickly. However, if we had objected to piecemeal reform, this place would be the same as it was in the 19th century. All the progress on reform of your Lordships’ House has been piecemeal, and this amendment would also be an example of piecemeal reform. The principle of the amendment moved by the noble Lord, Lord Dubs, was debated extensively when it formed the basis of two recent Private Members’ Bills, and there was a clear logic to the proposition. The Parliament Acts of 1911 and 1949 ensured that Peers lost the power of an absolute veto on legislation, or to determine any financial measure. As Peers, we have no opportunity to vote at a general election to help decide who becomes Prime Minister. Therefore, in those debates on the Private Members’ Bills, I supported the principle of Peers being able to vote in general elections, but I also emphasised that it is not my party’s immediate priority. There are many measures in this Bill which may have considerable impact on future elections, but this is not one of them. As the noble Lord, Lord Horam, pointed out, if membership of the House were evenly distributed across 650 constituencies, there would, on average, be one extra voter on top of some 73,000 others. Therefore, it would be unlikely to make a great deal of difference to the election outcome—although it was of course Churchill who said that “one vote is enough”.

The issue we are debating is really one of principle. As an issue of principle, it is ironic, in my view and that of my party, for any Peer to argue for their right to vote in general elections without also arguing for the right of our country’s voters to have a say in who becomes a Member of this House. There are other priorities. Before we argue for our right to vote in general elections, we must address the problem of 9 million people being missing from or incorrectly recorded on the electoral registers. Our last debate showed that there is a real need to address major inconsistences in the right to be included in our electoral registers. For these reasons, we support this amendment but, while it is logical, it is not our priority.

[Lord Desai (Non-Afl)]

My Lords, one of the things which today’s debate has proved is that logic has never been the basis of enfranchisement in this country or of its constitution. The constitution is what it is because of the way it has developed. As far as the logic is concerned, let me try this. The weight of my vote to elect someone to the House of Commons may, theoretically, be one in 73,000, but in rejecting government legislation it is one in 800—or, given how many noble Lords are present, one in 400. When I was asked to come here, I had a choice. I could have said, “No, I am not coming to this place because I would lose my right to vote”. I chose to come here and that is a very big sacrifice because, as noble Lords have said, we are here for life. Of the 193 upper Houses to which the noble Lord, Lord Dubs, referred, not one is unelected, although maybe a few people in them are unelected. However, we are unelected and, therefore, we are here.

[Lord Dubs (Lab)]

I think the Canadian upper House is not elected.

[Lord Desai (Non-Afl)]

They follow us, which is quite nice; they are part of the Empire. I would rather that we be removed from here and replaced by elected Members—this is the futile movement for which I have fought all these years. However, the privilege of being legislators for life is so great that we must make a small sacrifice for it. Not being able to vote at a general election is one such small sacrifice.

[Baroness Quin (Lab)]

My Lords, I did not speak on the Bill on Second Reading, because I was not able to be present, although I have followed debates very closely on a number of issues. I would like to ask the Minister a couple of questions on this issue. My noble friend Lord Dubs, in his persuasive speech, certainly convinced me that it needs to be looked at in the light of two things in particular. First, he mentioned that Bishops were able to vote, which I was surprised at. That means Bishops who are Members of this House can vote in parliamentary elections.

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To allow people who are not citizens of this country to vote in our elections seems to me to simply devalue the whole idea of citizenship. Why should people who are not citizens vote in our elections? People should qualify for citizenship, as they can in the appropriate way, and then be allowed to vote. That treats citizenship as a valuable thing, which I believe it to be. Therefore, as the noble Lords, Lord Wallace and Lord Collins, have argued, we should look at this and give clarity to the whole idea of citizenship, which is what the amendment does. The noble Lord, Lord Green, has therefore performed a public service in moving this amendment, and I hope the Government will listen to what he says.

[Lord Desai (Non-Afl)]

My Lords, this is the third occasion on which I have had to say that, given the way our constitution is, it is obviously not an exercise in logic. The noble Lord, Lord Wallace, is right that the Bill should have been an occasion to sort out in a clear, straightforward, logical way what the qualifications are that give somebody a right to vote in this country. The right to vote in this country has been based on the principle of the Empire. In 1858, Queen Victoria’s declaration for the Indian empire, a very important document, said that she would treat all subjects of her Empire as equal. She meant that the people in this country were the same part of the Empire as people in India. One of the leading Indian nationalists in the 1870s described that as a Magna Carta for India.

Mahatma Gandhi fought in South Africa for the rights of indentured labourers on the grounds that, being Indian subjects of Queen Victoria, they had the same rights as the white settlers in South Africa. He did not get very much, but that was the principle on which he fought.

[Lord Green of Deddington (CB)]

I assume the noble Lord is aware that British citizens in India are not permitted to vote.

[Lord Desai (Non-Afl)]

I shall come to that; this is the beginning of a lecture that will take some time.

When I arrived here, I was the holder of an Indian passport. India had become a republic in 1950. Just as we recently saw in the exercise of persuading the Jamaicans not to become a republic, becoming a republic takes a Commonwealth country out of the reciprocity relationship because the country can then choose whether to give reciprocal rights. That is Jamaica’s choice, not ours.

We have to be aware that our original right to vote was as subjects—we are still subjects—of the Crown, and the whole notion that we are citizens is an entirely European import. We became citizens only when we joined the EU; we ceased to be citizens when we left. The notion of citizenship is not relevant. We are not a democracy: the Crown in Parliament is sovereign; people are not sovereign. That is the constitutional position. Noble Lords can challenge me if they wish.

I am not disputing the principle of what the noble Lord is proposing, because he has explained very clearly and patiently that there ought to be reciprocity or symmetry. The Commonwealth itself is an anomaly because it is not a symmetrical association of equal states. Her Majesty the Queen heads the Commonwealth because of her position as the Crown and she has asked the Commonwealth Heads of Government to agree that His Royal Highness Prince Charles will head the Commonwealth when he succeeds her. So the Head of the Commonwealth will always be the British monarch. The Commonwealth is not a society of equal nations; there is an asymmetry there.

We are not French; we are British. We do not believe in logic; we believe in convention, tradition and evolution, and therefore there is an anomaly. If the Government want to have a logical structure, let them bring a Bill that in the first clause defines who has the right to vote in this country and why, and who does not have the right to vote, despite being a resident, taxpayer or whatever. That exercise has not been carried out, and so we have an anomalous position. That is the beauty of the constitution—it is not a logical construct.

[Baroness Neville-Rolfe (Con)]

My Lords, I was sorry not to be able to speak at Second Reading. It is always a pleasure to follow the noble Lord, Lord Desai. Logic, clarity and lack of reciprocity call for Amendment 154, in the name of the noble Lord, Lord Green, to be taken seriously and for the questions he has raised to be answered. I look forward to hearing positively from my noble friend the Deputy Leader. I will not delay the House.

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How did those rights originate? The Representation of the People Act 1918 provided that only British subjects could register as electors; others, defined in the Act as “aliens”, were excluded from voting. However, the term “British subject” then included any person who owed allegiance to the Crown, regardless of the Crown territory in which he or she was born. In general terms, this included citizens who became Commonwealth citizens under the British Nationality Act 1981, as I mentioned. The Government gave assurances during the passage of that Act that the new definition of “British subject” would not alter the possession of civic rights and privileges, such as the right to vote.

[Lord Desai (Non-Afl)]

I just wanted to point out that the 1918 Act was passed especially in recognition of the fact that many people from the Empire had given their lives in the First World War.

Sue Gray Report

Lord Desai Excerpts

Monday 31st January 2022 Lords Chamber

[Baroness Evans of Bowes Park (Con)]

The Metropolitan Police put out a statement this afternoon in which it said it was working “at pace”, but it did not give a specific timescale. I am afraid that I cannot say more than that, but it has confirmed what it is investigating. It has had a lot of evidence from the Cabinet Office and is now working at pace to continue the investigation, but I am afraid I do not have a timescale.

[Lord Desai (Non-Afl)]

My Lords, does the noble Baroness agree that 10 Downing Street and the structure of the Prime Minister’s office is the poorest accommodation of any Prime Minister of the G7, the G20—or the G140? You cannot have a Prime Minister living in a flat with 50 or 60 people running around below, day and night. Not only do we need an office of the Prime Minister, but we need a dignified working environment away from the private home of the Prime Minister which does justice to the complexity of the work and to the dignity of the Prime Minister. We cannot have the Prime Minister living in a top-floor flat with people running around having parties in the evening. Whether he likes it or not, he will be blamed for it. That needs urgent reform. I know it sounds trivial.

[Noble Lords]

Question!

[Lord Desai (Non-Afl)]

I very much want the Prime Minister of the country to be properly housed.

[Baroness Evans of Bowes Park (Con)]

The noble Lord picks up some of the points made by Sue Gray—for instance, the use of the garden and No. 10 not being able to be made particularly Covid-secure. Some of the points he makes have been recognised. The report also finds that, while

“The number of staff working in No 10 Downing Street has steadily increased”


to the point that

“it is now more akin to a small Government Department… The structures that support the smooth operation … have not evolved sufficiently to meet the demands of this expansion.”

That is what we will look into trying to solve.

House of Lords: Governance

Lord Desai Excerpts

Wednesday 8th December 2021 Grand Committee

[Lord Desai (Non-Afl)]

My Lords, it has been a long day in this debate. I put my name down—

[The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)]

My Lords, there is a Division in the House. The Committee will adjourn for 10 minutes.

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[Lord Desai (Non-Afl)]

My Lords, I put my name down for this debate because I did not understand what the governance of this House was. I did not know that we were governed by anybody; I thought that we were self-governing. Since I came here 30 years ago nobody has stopped me doing anything, unless I said something in the Chamber that I was not supposed to say.

In a sense we are a peculiar organisation, as many noble Lords have said, because we are all grown up and we know far too much about governance, debate, protest and so on. I thought that this debate was what Lord Whitelaw a few years ago called “stirring up apathy”, in that nobody was really concerned about how many committees we have and what they do. I have never been bothered to know that. I only knew about the Chairmen of Committees because they stood up and said something after Oral Questions and we all had to pay attention. A very nice person called John MacKay—Lord Mackay of Ardbrecknish—was Chairman of Committees for a while, but sadly he died very young. Apart from having Chairmen of Committees, I do not know why we need any other officials.

The peculiar thing that we have heard about in this debate is that we had four committees but now there are going to be two. I presume that that is all right, because I have never taken any interest in what these committees do. They do not bother me and I do not bother them—that governance is best that governs the least. I thought that everything was all right as far as the governance of the House of Lords was concerned.

I have a final few complaints to make but only one is major. The Bishops’ Bar has somehow been abolished. It was the nicest thing about the House of Lords, but it has been abolished without anybody asking me whether it should be.

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[Lord Desai (Non-Afl)]

My Lords, I am very pleased that I shall go down in the record as a noble Lord who had to make a seven-minute speech and managed to stretch it out to 25 minutes, not through his own fault.

I was saying that I have never had the feeling that I was being governed by anybody, and that is the nice thing about your Lordships’ House. There are some useful people who do various useful things for us, but I do not think they are doing anything very much. Except, as I was saying before I was interrupted, I do not know what has happened to the Bishops’ Bar, which is one of the nicest things about this outfit. It has been taken off the map and become a vaccination centre. Nobody has explained to me why this happened. Why do we have to go into this not very satisfactory new arrangement in the main Dining Room? I should have liked at least one statement to be made by the Chairman of Committees or whoever is is responsible. When will we get the Bishops’ Bar back?

Let me say one thing about this topic. In a sense, we are such a collection of people that if you say, “Have you any complaints?”, we can think of many complaints. One constructive thing, which is not on the agenda but is very important and I have thought about for a long time, was referred to a little by the noble Lord, Lord Balfe. It is not a question that the Chairman of Committees can deal with, but I ask it anyway. It is on Peer poverty. I am very serious about this.

I know that there are people who come here out of a sense of public service and for whom the daily allowance is not adequate. These are people who come from outside London. They are very badly treated by the system. They have to have some permanent residence here if they come here from Scotland, Lancashire or wherever, and they have to pay for the weekends, when they are not getting any money for that. I have talked to people, but it is not the sort of topic you can raise in public, because the tabloids would laugh at you because we are all called “Lords”: how could Lords have any financial problems?

I do not know who deals with this, but at some stage somebody ought to put upa case that our allowance ought to compensate us for the expense of coming here. Being a London Peer, I am quite happy. I have my freedom pass and can take a bus, so I have no problems. I have a house here. But some people are seriously losing money. I know some women who had worked in social work and voluntary work and were chosen to come here, but they are out of pocket. I do not think we should allow that sort of thing.

If I was like that, who would I go to complain to in this place? I do not know. I actually do not know who I complain to about anything. For example, since coming back after the pandemic I have felt that the acoustics are not as good as they used to be in the main Chamber. I thought I was going deaf, but I have talked with four or five noble Lords and they are finding it difficult to hear. I do not know who to say that to.

Some useful things are needed but I am more or less happy with the way I am governed—or not governed. I am very grateful that other people want to volunteer for these things. I want to volunteer only for Chairman of Committees, which is a paid job, but I am not going to get it, so let it be.

Financial Services Bill

Lord Desai Excerpts

Committee stage
Monday 1st March 2021 Grand Committee

[Viscount Trenchard (Con) [V]]

My Lords, the noble Baroness, Lady Bowles of Berkhamsted, makes a good case for introducing skilled person reviews of the regulators in addition to the parliamentary oversight arrangements that I hope will be agreed satisfactorily. This transfers the boot to the other foot; the difficulty would be in deciding who could be skilled enough to assess the regulators. Would the costs ultimately be borne by the regulated firms?

In the first three years after the introduction of skilled person reviews by the regulators in 2014, fees paid for skilled person reviews, generally confined to a number of issues on parts of a firm’s business, or only one, amounted to more than £500 million. The cost of a review may amount to several hundred thousand pounds. The real cost in terms of diverted management time, legal costs and remediation activities is often much greater than the simple cost.

It is interesting that only some 8% of skilled person reviews have led to enforcement actions, even though many reviews at the time of launch were feared by firms as likely precursors to enforcement. The number of skilled person reviews commissioned by the PRA and FCA increased from 44 in 2017-18 to 51—or nearly one a week—in 2018-19. I worry that regular reviews of the regulators would be very expensive, in terms of money and time. As my noble friend Lady Neville-Rolfe often suggests, is this not a clear example of a case where an impact assessment should be undertaken before introducing a statutory requirement? I look forward to the views of other noble Lords and the Minister on this matter.

[Lord Desai (Non-Afl)]

My Lords, I very much welcome the amendment. I have been a Member of your Lordships’ House for 30 years. Throughout that time we have had one crisis after another in the financial markets. I have the impression that most of the time they have been due to ignorance by top people of how the market is changing and of the new products and challenges. When I first got here in 1991 we had the Baring Brothers crisis. There was no doubt that the people sitting in London had no idea what a derivatives market was, and nor did the Bank of England. Nobody knew that Nick Leeson was operating on the Yokohama stock exchange. Public information was available, but nobody in London knew where it was. Therefore, they completely missed it. We also had the BCCI crisis, but that was a pure, untechnical fraud. That is another matter.

Most importantly, I remember debating the legislation that set up the FSA. At that time we thought the problem was that self-regulation had failed in various sectors, and that these sectors were interdependent, so we had to have an overarching framework. We set it all up, but it did not help when the crisis occurred in 2008. I remember reading the report by Adair Turner—now the noble Lord, Lord Turner. He said that they had been told by the experts not to disturb the markets and to trust them. We were very impressed by that and trusted the markets, but they were wrong.

Obviously, the interesting point is that by then the market had so many new products, with fairly sophisticated probability models behind them, that it would have been necessary for the regulators to be constantly aware of new developments in this field to be one step ahead of where the market was. I will give a slightly technical example. Adair Turner said that they were told that the markets were efficient, and therefore we should try not to correct what the markets were doing. We now know that the people who believed the market efficiency hypothesis and all that—and who convinced the world—were using very simple normal or bell-shaped distribution to model movements in the stock market. While normal distribution is very easy and frequently used, it is not suitable for every occasion in the market. What we call fat-tailed distribution would have been better and predicted the crisis much sooner. But this is a technical matter.

The regulator might not know what is happening out there in the financial, economics field. It ought to be informed periodically where the knowledge has got to and where the products are. This is not something where the skilled person can necessarily come from the banking sector of one country or another. We might have to find a skilled person who knows how rapidly the market is changing, how new products are being developed, and how the nature of uncertainty itself is changing.

I believe that the amendment is very welcome. I will add one more thing. When I first read the Bill I was appalled that so much weight is being put on the FCA. I really feel that the FCA is not up to the task. I hope that after all this legislation, the Treasury review and so on we might get a better FCA, but I have grave doubts. If we are to have the FCA as it is right now, we urgently need a skilled person review, maybe not every five years but more frequently than that.

The noble Viscount, Lord Trenchard, referred to the cost. I can tell noble Lords that the cost of not doing this will be much more horrendous than the cost of doing it.

--- Later in debate ---

[Viscount Trenchard (Con) [V]]

[Inaudible]—Amendment 45 in the names of my noble friends Lady Noakes and Lord Holmes of Richmond, and of the noble Baroness, Lady Bowles of Berkhamsted. We are midway through the process of transitioning from the familiar Libor benchmarks, the replacements for which have become more necessary since banks’ funding patterns have changed following the financial crisis. My noble friend Lord Holmes already asked the Minister what he thinks about synthetic Libor. I would also be most interested to hear his reply on that.

The Investment Association welcomes the additional powers for the FCA in the Bill as it will be better able to manage the transition, which should help to mitigate the uncertainty for holders of derivative contracts. There is the additional uncertainty caused by the existence of only temporary equivalence between UK and EU benchmark regulations. It is to be hoped that the EU will soon adopt the European Council’s recommendation to extend the transitioning period for third-country benchmark administrators to the end of 2025.

My noble friend’s Amendments 44 and 45 would be helpful improvements to the Bill, by making it clear that changes to benchmarks made by the FCA will apply to contracts made under benchmarks being revised. Rightly, they offer a safe harbour protecting parties to such contracts from legal actions resulting from benchmark changes. It is encouraging, as I mentioned, that the Investment Association supports this part of the Bill and I welcome these powers being handed to the FCA. My noble friend’s amendments would improve and reduce the risks inherent in exercising these powers and I support them.

[Lord Desai (Non-Afl)]

My Lords, this is a technical matter and I have nothing to add to what was said by the noble Baroness, Lady Noakes. I am merely an academic but, when these things were going on, I wondered how people who swore by the free market could have had a cartel sitting in a little room, generating a rate of interest on which billions were based. Someday, somebody ought to explain to us how anybody could trust a cartel and hope that it will not be dishonest.

[Lord Blackwell (Con) [V]]

My Lords, I too support these amendments and welcome the fact that the Bill addresses these issues. While Libor may have been effective in the past, we all know that it was becoming an unviable way of setting rates and was subject to manipulation, in the way mentioned by the noble Lord, Lord Desai. It is therefore important that the regulators have taken a firm line in moving us on from Libor to other benchmarks. But, as my noble friend Lady Noakes set out, in doing that, there are lots of problems with continuity of contracts. The legislation is necessary to help address those issues and ensure that partners in contracts move together to a new common contract based on a synthetic Libor.

We have to recognise that no substitute for Libor will have exactly the same characteristics. There is no perfect substitute. Most contracts will be based on SONIA, the sterling overnight index average rate, but getting SONIA terms that have the same characteristics over time is not perfect, so there will be winners and losers. That is one reason why it is important that, to give certainty, the legislation requires the regulator to ensure that synthetic Libor interest rates are taken in the contracts as substituting for Libor for both parties.

As my noble friend Lady Noakes set out, however, some parties will not accept that. They will take the change in the contract as the basis to believe, argue or litigate that the contract has been abrogated. Some parties will be out of the money in a contract and it will simply serve their convenience to choose this method to abrogate the contract. Safe harbour is therefore an important secondary requirement. If banks are following the requirement of the regulator to stop using Libor, and following its instructions in substituting synthetic Libor, they cannot then be subject to litigation from counterparties claiming that, by following the instructions of the regulator, they have abrogated their contracts. This is an important thing for those contracts, which could, in particularly vulnerable contracts, involve vast sums of money.

The Government have launched a consultation on this, but I do not think that is a reason not to legislate in the timescale of this Bill. The problem has been known about for many months—indeed, years—and has been discussed. I do not believe the Government need a consultation to understand that there is a problem or that it must be dealt with. During the passage of this Bill, if not in these amendments then in the Government’s amendments, it is important for this to be incorporated into the Bill. Otherwise, the uncertainty will go on far too long. Libor will come to an end and these issues will present themselves. This Bill is the opportunity to address them.

In taking this issue seriously, can my noble friend the Minister commit that the Government will bring back amendments, or accept these amendments, during the passage of this Bill through the House?

Covid-19 Update

Lord Desai Excerpts

Tuesday 3rd November 2020 Lords Chamber

[Baroness Evans of Bowes Park (Con)]

I hope the noble Viscount will be pleased to know that, last week, we confirmed that we will join the global COVAX initiative, with the aim of expediting the discovery, manufacture and fair distribution of a vaccine to 1 billion people.

[Lord Desai (Lab) [V]]

Will the Government, at some stage, explain to the country how come we have the same mortality rate per million as the United States, yet while the United States has achieved a 33% growth of GDP quarterly in the third quarter, we are still in a recession? We have protected neither lives nor livelihoods. Can the Government not do better?

[Baroness Evans of Bowes Park (Con)]

I am not sure I heard everything the noble Lord said, so I will go back and check. I think he was talking about the economy, but if I have got that wrong, I apologise. We have put in place one of the most comprehensive economic responses of any country, with more than £200 billion of support. We have protected 12 million jobs through the furlough and self-employed schemes, and we will continue to provide all the support we can to businesses that are struggling at this time.

House of Lords (Hereditary Peers) (Abolition of By-Elections) Bill [HL]

Lord Desai Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Friday 13th March 2020 Lords Chamber

[Lord Desai (Lab)]

My Lords, we have a paradox here. I have been here since before the Lords reform Act was passed, so I was present at the creation of this anomaly. We have hereditary Peers arguing for democracy—for elected Peers—and we, the life Peers, are defending appointed Peers. That is an anomalous situation, so perhaps one of the hereditary Peers might table an amendment to my noble friend’s Bill to propose that, instead of what he proposes, we should remove all appointed life Peers. We would then have only 92 popularly elected Peers, which would solve the problem of the noble Lord, Lord Burns, at one stroke; instead of having 800 Peers, we will have only 92. That is perhaps an amendment I would vote for.

However, having been here at that time, I always thought that we were removing 750 hereditary Peers and keeping 90, but that the electorate in future replacement would remain exactly those 750 individuals who were alive then. As that electorate dwindles, nobody should be qualified to run for a vacancy. Those 750 were originally the electorate; if they have passed away, the election passes away. No child of an original hereditary Peer should be qualified to either vote or run in these by-elections. That is the original conservative spirit of this arrangement.

I hope that, among the 50 or 60 amendments that will be proposed by the side opposite, the two I propose will be adopted—first, that all appointed Peers are to be abolished or removed; and, secondly, that by-elections should be only from the survivors of the original 750 and nobody else.