Liaison Committee

Debate between Lord McFall of Alcluith and Lord Higgins

Monday 3rd April 2017 Lords Chamber

[Lord Higgins (Con)]

My Lords, the ad hoc committees are an excellent innovation, but as the noble Lord and the Liaison Committee know, the committee on which I happen to have the honour of serving, on personal service companies, did not receive co-operation from the Treasury Minister concerned, who did not allow his officials to appear and give evidence to us. I am sure that is completely wrong. Can I be assured that the House authorities will make it clear that we expect government officials to co-operate in our inquiries, not least because in this particular case the Government then adopted in a Budget many of the ideas we put forward but gave us absolutely no acknowledgement?

[The Senior Deputy Speaker]

My Lords, I thank all noble Lords for their comments, in particular the noble Baroness for her very positive ones.

The noble Lord, Lord Naseby, made the point about communication, but I have to disagree with him. If we had been looking at the press for the past three or four months, we would have seen the coverage that the many reports the House of Lords produced, not least on the EU, have had. I remember leaders in the Financial Times, the Guardian and the Telegraph on those reports. Is there more that we can do in this area? Yes, but we are looking at the communications strategy for getting this out, and a lot of hard work has been undertaken by staff in that area, which I would like to build on. I reassure the noble Lord that a lot of good work has been going on in that area.

The noble and right reverend Lord, Lord Harries, and the noble Lord, Lord Higgins, put recommendations in which were not accepted, but I recognise the point that the noble Lord, Lord Higgins, made about officials co-operating with the committee. The Liaison Committee will certainly look at that issue.

The noble Lord, Lord Campbell-Savours, mentioned the issue of a Member being abroad at the time of a meeting. That Member spoke to me before the meeting and I said to them that they should put their point of view into the committee. I incorporated that in the report I gave to the Liaison Committee.

To give your Lordships a bit more understanding of how we went about our business, there were 33 proposals, so we decided we would have two meetings. The first would look at all the proposals and condense them down to about 10 or 12. In that process, we combined a number of proposals. For example, the proposal of the noble Baroness, Lady Royall, whom I see in her place, was combined with the citizenship proposal, and the staff engaged with the individuals who had contributed these suggestions to get that number down. The result of those three weeks of intense negotiation was that we had nine proposals to consider at our second meeting.

I say very strongly that there was no political bias in the Liaison Committee report—no hint whatever. That must be a matter of public record. The Leader of the House was mentioned. It is not for me to decide whether the Leader of the House is on the committee or not, but I can say on reflection that the Leader of the House wanted one proposal to be considered for one of the ad hoc committees and it failed to be selected. So there was no influence from anyone, whether Liberal Democrats or the Leader of the House, and I can say today that, as long as I am chairing a committee of the House of Lords, I will not allow any political influence at all. That is a guarantee to noble Lords, and I hope that they take that on board.

Let us remind people that this is a very difficult exercise. The issue of staff capacity has to be taken into consideration. Noble Lords should remember that a review of committee staff is taking place in 2017-18, which I shall be chairing. I should like Members to contribute their points of view to the review, because with us exiting the EU and the EU committees eventually dissolving, there is an opportunity for us to consider that again. I will be taking that on board as we go along. So, yes, I want more engagement from Members.

When I got this job, I mentioned three themes: transparency, accountability and engagement. That applies with force to my chairmanship of the Liaison Committee and adopting any further enhancements of committee work, which I think we in the House of Lords should all be proud of. I commend the Motion.

Scotland Bill

Debate between Lord McFall of Alcluith and Lord Higgins

Monday 29th February 2016 Lords Chamber

[Lord McFall of Alcluith]

My Lords, the noble Lord tells us nothing new. I looked at that issue as well. I think I made the point in the last debate here that the two no-detriment principles are irreconcilable. We must try to work out the politics of that at a later date but there is absolutely no doubt of that. Professor David Bell in his submission and the work he did for the Economic Affairs Committee illustrated that very much. In fact, I sat for about three hours looking at that report from the IMF with David Bell and I thought I was back at university. After those three hours, I understood maybe 15% of the whole issue. It is hugely complex—we all agree on that.

I mentioned the issue of the safety net. This is a good deal from Her Majesty’s Treasury but after the five years there will be the review. What will the Treasury do at that time? That will depend on how the population looks then and what other political and economic factors are going on. I agree with individuals who say that this is a five-year or six-year proposal. At the end of the day, negotiations must start again. One thing I am interested in here is to see that we develop a narrative as a result of this fiscal framework which will ensure that the grievance mentality is abandoned. Some would say it will not be but there is a possibility of that happening. I will mention that later on in my speech.

For clarity’s sake, we see that the Scottish Parliament is supported by, as we said, shared UK resources from Barnett, its own tax revenues levied in Scotland, and a cash supplement from UK resources. That could possibly force all the parties in Scotland to go into what they are offering the Scottish electorate in terms of tax and spend. We have seen it already; today I read it in the Scotsman as I was coming down in the plane. For the first time, in many ways, we are getting on to the reality of devolution and have moved on from the process. Sadly, the Labour Party was very much involved there because it was mentioned that devolution was a process rather than an event. That got it wrong. As my old friend Tam Dalyell said, it was like a motorway without exits. Let us try to build the exits as a result of this fiscal framework.

We can go on indefinitely in asking who won the fiscal framework battle. Yes, the Treasury model is being used. We call it levels reduction. Yes, the UK is reimbursing Scotland for any money it would have received under the indexed per capita deduction in place. In effect, one side is happy saying, “The Treasury model is being used”. The other side is happy saying, “Yes, it is being used but we ain’t going to be disadvantaged because at the end of the day the per capita will be involved”. How far has that taken us? It has taken us five years down the road in terms of politics. We will have to come back and see how far it takes us down the road in terms of finance.

There is a big picture here as well, which nobody has mentioned. This will be the biggest ever transfer of powers to the Scottish Parliament. In fact, it will have as much autonomy as it had in 1707. It has demanded both good will and compromise to reach that position.

On that particular point, I commend the Government for their work in this area. However, in terms of the reporting of the fiscal framework, it could be helpful if the Government teased this issue out. The fiscal framework states that the Government will be required to produce reports on the implementation and operation of new powers in line with those produced under the Scotland Act 2010. Will this be done on an annual basis? If not, when will such reports be published? If we are to have an independent review, it should be set up very quickly and should not wait until the last minute, as we had to do with the fiscal framework now, where eight weeks of Smith translated itself into a secret cabal deciding it and then presenting it to us. We should have that transparency so that that independent commission can report to Parliament on an annual basis. By doing so, there will be transparency and individuals can look at it from the two no-detriment principles—particularly the second, of fairness to UK taxpayers.

This is a solution. Is it a neat solution? We can argue about that until the end of the day but there is a political momentum on this issue with the political parties in Scotland. The Government have responded to that. We wish them well in the negotiations.

[Lord Higgins]

I am most grateful to the noble Lord for giving way. We have had an extremely interesting debate on various aspects of the fiscal framework, but that is not actually what the amendment is crucially about: it is whether or not each House of Parliament should have an opportunity to approve it. That is what we are voting on. Despite all the technical discussion and so on which has been admirably set out and considered, the crucial issue is that the other place must have an opportunity to debate this. It would be absurd if the whole thing goes through without the House of Commons having debated it at all.

[Lord McFall of Alcluith]

My Lords, I take the noble Lord’s point on that but right at the beginning of my speech I made reference to all political parties in Scotland and to the leader of the Conservative Party in Scotland, whose idea this was, which was adopted by the Chancellor of the Exchequer, according to Professor Jim Gallagher. Some people are waiting to say that the unelected House of Lords is stopping a Bill which is in Scotland’s interests. So do we go with the intellectual case, which always appeals to me, or do we understand the politics in Scotland at this time? If we have a gap in this fiscal framework where this House can understand what is happening on a year-by-year basis, we should give the Government the benefit of the doubt on that issue because the political force is with all political parties in Scotland. I commend my speech on that point.

Bank of England and Financial Services Bill [HL]

Debate between Lord McFall of Alcluith and Lord Higgins

Monday 9th November 2015 Lords Chamber

[Lord Higgins (Con)]

My Lords, the noble Lord, Lord Davies of Oldham, is always modest, but on this occasion he is excessively so. I agree with my noble friend because the implication of putting the words “reasonable” and “reasonably” in these clauses is that somehow the National Audit Office would act unreasonably, and I do not believe that that is the case. Perhaps the Minister will tell us where else in the legislation governing the National Audit Office such clauses are applied. These are quite unnecessary words. It may well be that, given the more formal auditing functions of the National Audit Office, as against the value-for-money provisions, there might be some occasion when it is necessary to get hold of documents at an unreasonable time. I hope the Minister will respond to this and agree to delete the words which appear in the amendments.

[Lord McFall of Alcluith]

My Lords, I support the noble Lord, Lord Higgins, and the noble Baroness, Lady Noakes. I was a member of the Parliamentary Commission on Banking Standards which looked at the word “reasonable” and concluded that it is a lawyer’s word. If it is a lawyer’s word, it costs a lot of money, and if it costs a lot of money, it can obscure the truth. Let us get rid of it and invest the authority in the Comptroller and Auditor-General which will save everyone time and money.

--- Later in debate ---

[Lord Higgins]

I am having a slight problem with Amendment 14. It seems, effectively, simply to put back again the lines which the noble Lord seeks to leave out. That is to say, in each case it seems to say that the Comptroller will not question the merits of the policy objectives of the Bank.

[Lord McFall of Alcluith]

I did not quite pick up on the noble Lord’s point.

[Lord Higgins]

I will try again. Amendment 14 says,

“leave out from ‘section’ to end of line 28”,

which is concerned with the question of whether the Comptroller can question the merits of the policy objectives of the Bank, and which effectively says, “No; the NAO can’t”. However, Amendment 14, which I may have totally misunderstood, seems effectively to put it back in the same way, except with the addition of the words,

“including in relation to monetary policy”.

[Lord McFall of Alcluith]

In fact, the Comptroller and Auditor-General made it clear to me that he does not want to question the merits of the policy of the Bank, so if there is a misunderstanding there, we should sort it out, particularly when it comes to Report. However, that is certainly not the case, and he would not want to do that.

Amendment 18 deletes a provision which would apply Section 353A of the Financial Services and Markets Act 2000, which would restrict the ability of the Comptroller and Auditor-General fully and openly. As the Government have said on many other occasions, transparency is an essential ingredient of accountability. These amendments seek to ensure that the Bank is subject to a level of transparency necessary to ensure its proper management of its resources. Parliament and the taxpayers have the right to expect nothing less.

An article in the Financial Times at the weekend said that, globally today, central banks exercise unparalleled power and independence. Willem Buiter used to come before the Select Committee quite regularly and was a former member of the policy committee. He is now the chief economist at Citi and stated that presently, central banks,

“are punching well above their weight … This could lead to a backlash and to central banks losing their operational independence, even where this independence makes sense—in the design and conduct of monetary policy”.

When the former Governor King came before the Treasury Select Committee, which I chaired, he was very clear both in formal and informal settings that the integrity and credibility of the bank is essential if society is to have confidence in its monetary policy decisions. That being the case, the Bank should not be marking its own exam paper. It should be honest in its intentions and transparent in its actions, and it cannot tie the hands of the Comptroller and Auditor-General with the court holding a power of veto. In the short and even the long term, that does not serve the best intentions of the Bank or society. In that spirit, I beg to move.

--- Later in debate ---

[Lord McFall of Alcluith]

My Lords, I thank the Minister for his reply. He made a point about the Federal Reserve, in respect of which there is a huge amount of engagement in the United States at the moment. Congressional members are knocking it about like mad. The status of the Federal Reserve is more in question than that of the Bank of England—that is accepted here. The point of these amendments is to ensure that the status of the Bank is maintained and that its independence is not questioned. The analogy with the Federal Reserve is a bit off the mark on that issue.

As my noble friend Lord Davies said, the Government are in a pickle. There has to be a lot of consideration before Report. The noble Lord, Lord Young, made a point about facilitating engagement between the Comptroller and Auditor-General and the Bank of England. According to my information, they have met but there is still a gap. To give an example from my own experience, when I was chairman of the Treasury Committee I was approached by the Treasury to ensure that the Bank of England was audited. I said to them, “Do your own business: I am not doing it for you. Engage in it”. I notice that three distinguished former Permanent Secretaries are sat on the Benches. I do not know what you call a trio of Permanent Secretaries, but the noble Lords should not worry: it would have to be something complimentary. My question to the Minister is: are the Treasury the fly in the ointment at this stage?

The noble Baroness, Lady Noakes, said that the Bank of England should be audited and that it can be effective only if it is. We are here to ensure that that effectiveness is maintained. The noble Lord, Lord Higgins, talked about value for money and the NAO being independent. This arrangement could end up in a public squabble between the Bank and the NAO, and that is not going to serve anyone’s interest, particularly when it comes to parliamentary scrutiny. That does not serve the Bill. A lot of thinking needs to be done on this issue. The noble Lord also made a quite radical point about the value for money of forward guidance. The Comptroller and Auditor-General does not want to go near that. He has been very reasonable—I have used that word before—in his ambitions and it is important to see where he comes from on this issue.

The Minister talked about increasing transparency, but where will it increase?

[Lord Higgins]

The Minister has suggested that there was a compromise. It would not appear to be a compromise as far as the release of information is concerned. The Comptroller and Auditor-General appears to take the view that the Government’s position on that issue is unacceptable. Can we be sure that that is not taken as settled? We also need to consider the question of releasing information.

[Lord McFall of Alcluith]

There cannot be a compromise when the court has the veto at the end of the day and this has been public. We do not know where this is going to lead. I do not think there is a compromise at this stage.

Thinking off the top of my head—and I am in good company, because the Government are doing the same—given the need to bring people even further together, why can the Comptroller and Auditor-General not engage with the Governor of the Bank of England? Perhaps there could also be some third parties: wise heads such as the noble Lord, Lord Higgins, who has tremendous experience, and the former Permanent Secretaries. Why can they not sit down and say which areas the Comptroller and Auditor-General should have an opportunity to go over? Can we get that wise counsel before Report, so that we do not end up with a squabble? At the moment, there is a big gap between the governor and the Comptroller and Auditor-General that should be narrowed before Report. There is an opportunity to introduce a bit of common sense so that, on Report, we can all agree that the independence of the NAO and the Bank of England are important. Both institutions have a job to do in the best interests of the country, and the authority and integrity of both would thereby be increased. I seek the co-operation of the Minister in achieving a compromise before Report. I beg leave to withdraw the amendment.