Financial Services and Markets Bill

Lord Naseby Excerpts

Committee stage
Wednesday 1st March 2023 Grand Committee

[Lord Hunt of Kings Heath (Lab)]

My Lords, I have added my name to Amendment 160, the principal amendment in the name of the noble Lord, Lord Bridges, to show that there is support for him all round the Committee and to show the Government, too, that at some point the House of Lords is going to make its views known when it comes to voting on the Bill. It would be good to see the Government acknowledge that they are going to have to do something to strengthen the accountability of these arrangements.

My principal concern is about the integrity of Parliament and the more general issue of the accountability of so many of the regulators, public bodies and quangos that we have established, because I see them as an extension of the Executive, in many ways. They do functions which traditionally the Executive may themselves have done. We are talking about financial markets but a recent example of extraordinary behaviour is that of the Arts Council, in its perverse decision to try to destroy opera in this country by the abolition of English National Opera and the withdrawal of a huge grant from Welsh National Opera for touring, when the Arts Council’s mission is ostensibly that it is supposed to be encouraging the touring of such companies.

The Arts Council apparently did that because the then Culture Secretary, Nadine Dorries, said that she wanted more money to go out into the regions for levelling up. That was translated into the destruction of a centre of excellence which had been very committed to inclusivity. At that point, she denied that she had ever wanted ENO to do that, but the Arts Council remains unaccountable to Parliament for that action and Ministers say, “It is nothing to do with us”. We are left in a quagmire as to how to know, in the end, who was accountable for what seems, on the face of it, a crass decision.

My main experience is not in financial services but in the health service, which is awash with regulators, public bodies and quangos. I will name just three: NICE, NHS England and the Care Quality Commission. They have huge influence and power over the affairs of the National Health Service but it is very difficult to say that they are accountable to Parliament at all. If we seek to ask questions about their performance in questions or debates, or meetings with Ministers, we will be told, “That’s nothing to do with Ministers”.

When it comes to financial services, I am therefore at one with the noble Lord, Lord Bridges. It is surely in the interests of the United Kingdom, in any case, that our regulatory arrangements be seen to be of the first order. I agree with him when he talked about the balance. We want the regulators to be seen to be independent, and robustly so, because that adds to their credibility. We clearly want to avoid politicisation, because that would undermine the esteem in which they would be held nationally and internationally. However, we want them to be subject to not just proper scrutiny but accountability. So far, we have heard nothing from the Government to suggest that they understand that, or why the current arrangements will not be sufficient.

As the noble Lord said, this proposal will not duplicate the Treasury Select Committee. His point about the OBR was important, because the OBR has fulfilled an important function, but I do not think anyone has suggested that it has undermined the working of Parliament or any of its Select Committees; indeed, it has enhanced what they can do. I think he was making that point when he said that his amendments will not undermine the regulators’ independence. In many ways, I think they would enhance them. This is not going to cost much money compared to the benefit it would bring and, as he also said, it will not duplicate the work of the FCA and PRA.

There is an overwhelming case for supporting this measure, alongside the previous debate about the need for a much strengthened Select Committee to carry out work inside Parliament, as the noble Lord suggested. I very much hope that the Government will listen to what he has said.

[Lord Naseby (Con)]

My Lords, I have added my name to this amendment, which in my judgment is absolutely vital. On 8 February, I listened to the chairman of the City of London Corporation’s policy and resources committee; I will quote a couple of points that he made on that evening. He said:

“Faced with increasing global competition”


the UK needs

“a long-term sense of direction, a programme for government, regulators, and industry to act and sustain our global powerhouse status. As a country we need a renewed focus, to adjust our compass, to be the destination that incentivises investment, thrives with talent, and commands the competition. And we need ambition and focus to achieve these goals.”

He finished by saying that we need “the courage to change” in three areas. I will quote two, which are relevant to this amendment:

“Firstly, we need to reduce frictions. That means strengthening UK policy and regulation with an effective and coherent sustainable finance framework. Secondly, we need to nurture innovation. More creativity in the market will inspire better products, which will help attract capital, firms, and customers.”


The City wants confidence in scrutiny and the supervision of the regulator. I hope that my noble friend on the Front Bench will take note of the feelings of the City. I am sure that it would be more than happy to communicate directly with my noble friend and put some flesh on the summary that I have given.

[Lord Vaux of Harrowden (CB)]

My Lords, I, too, have added my name to the amendments in the name of the noble Lord, Lord Bridges. The noble Lord explained in detail the need for the amendments far better than I can, so I will be brief. I support the noble Lord’s every word but, rather than repeating what has been said, I will comment specifically on how this would complement rather than replace the parliamentary scrutiny that is also required.

We have had a lot of discussion so far in Committee about the need for strengthened parliamentary scrutiny and accountability of the performance of the regulators, with an extraordinary level of agreement on all sides— I hope that the Minister listened to that. I strongly supported the idea of creating a bicameral committee specifically for that purpose, as proposed by the noble Baroness, Lady Noakes. Having an independent office for financial regulatory accountability would greatly assist such a committee in carrying out its work. We heard on a previous day in Committee from the noble Baroness, Lady Bowles, who is probably the expert in such matters, and from others about the enormous volume of work that scrutiny of the financial regulators will involve. That is one reason why we need a parliamentary committee focused solely on this subject. Having available independently prepared and, importantly, non-political analysis of both the performance of the regulators and the regulations themselves would make the work of the parliamentary scrutiny committee, or committees, that much more effective, enabling the focus to be on areas where shortcomings were identified, rather than wading through unmanageable volumes of information trying to find those areas.

I therefore make the point that the Minister should not be tempted to see these amendments as an alternative to the enhancements to parliamentary scrutiny that we have already discussed. Rather, she should understand that they are an important element within the three legs required for effective scrutiny and accountability, which the noble Lord, Lord Bridges, has previously explained as being reporting, independent analysis and parliamentary accountability. All three aspects should be embraced. These amendments cover the second, but please do not think that they would replace the others.