UK Infrastructure Bank Bill [HL]

Lord Sharkey Excerpts

Committee stage & Lords Hansard - Part 1
Tuesday 14th June 2022 Lords Chamber

[Baroness Kramer (LD)]

My Lords, this group of amendments addresses two entirely different issues, as the noble Baroness, Lady Noakes, identified. I rather fear that in the minds of the Treasury they are the same issue, which is slightly unfortunate but will probably explain a great deal of our debate today.

I will first address Amendment 42 in the name of the noble Lord, Lord Holmes of Richmond, which I very much support. This would allow the Bank to

“borrow on the international capital markets”,

putting that on the face of the Bill. We have a very small bank set-up here with only £4.2 billion in risk capital, which means that, for years, it will be able to do relatively little and will have to do it in such a way as to get substantial commercial returns to build up its equity base. That will allow it to grow and do rather larger things—but, since this is an important instrument for the whole goal of levelling up, you would think that impact and the need to act rapidly would be at the forefront of the Government’s thinking.

Obviously, being able to go to the international capital markets to access capital in the way that the European Investment Bank and KfW in Germany do—that is very well established—would be important. Also, given that there will be a green purpose to much that the bank does, it is important to note that one of the biggest movers in providing green financing has been the decision of the European Investment Bank as it goes to the capital markets to raise climate and sustainability awareness bonds to jet-propel finance into those markets. It is utterly beyond me to understand why those powers have not been given to the UK Infrastructure Bank; perhaps the Minister will explain.

Almost more importantly, perhaps, I want to address the issues raised by the noble Baroness, Lady Noakes, and the noble Lord, Lord Teverson. I very much support his notion that we must find a way to incorporate the senior managers and certification regime. Frankly, it has been quite a weak straw in the hands of the FCA. I do not want to entertain folks here for too long by going through the instances in which the FCA should have used it but has declined to do so, or has used it very weakly; but at least it is something to make sure we have real responsibility sited where it should be in senior management.

I want to pick up a rather different issue, which was mentioned by the noble Baroness, Lady Noakes, only in passing: whistleblowing. I will talk about this in more depth in the group of amendments beginning with my Amendment 30 about the operational independence of this bank, but when we get later into the Bill we will find that a framework has been established allowing the shareholder—in other words, the Treasury and the Government—to give directions, both specific and general, to the bank. The framework elaborates on that but recognises that the board of directors of the bank may well look at these specific directions and wish to reject them. The grounds that may be given, not in a rejection but a “reservation notice” to the shareholders, include infringement of

“the requirements of propriety or regularity”

or various other things including on “value for money” or “strategic objectives” and so on; we can go into that later. In the two sections that I want to address, a reservation notice can be sent on grounds of infringement of “propriety or regularity”, or of being

“of questionable feasibility or … unethical”.

In that case, the shareholder—the Treasury, or the Government, in effect—can send a notice to the bank overriding its letter of reservation, forcing it to go ahead with the activity, even if it is considered by the bank to be unethical. The bank is supposed to provide a written direction, which, when you first read this, looks as though it will be published. However, very carefully written into the framework is the phrase

“published (unless the Shareholder has directed in writing to the Company that the matter must be kept confidential).”

I think we can guarantee that any direction that is unethical or infringes on propriety will come with an instruction to keep it confidential. At that point, for the public and Parliament to know, we rely on whistle- blowers.

That brings me to the point raised by the noble Baroness, Lady Noakes. First, directors are not covered by the Public Interest Disclosure Act anyway. Senior employees would be, but to have any protection to be able to blow the whistle they would have to go to a regulator to make a protected disclosure. There is no regulator, therefore there is no mechanism for protected disclosure.

I want noble Lords to understand the jeopardy in which those directors or senior executives might find themselves. I suspect they will have been asked to sign some version of a non-disclosure agreement—it has many different names; I always tussle with the Government, because it turns out they have done it under a different name, such as a confidentiality agreement, but it is the same thing. There is even some talk of extending the scope of the Official Secrets Act, which could creep into this as well. I also noticed that the directors—I am sure those who have been appointed are excellent people—really would be taking steps of jeopardy if they blew the whistle, because most are making their careers as advisers to government or as chairs or directors of government-related entities, so they have a great deal of jeopardy at hand.

If this is unregulated, there is no mechanism for disclosure, even where actions within the view of the directors or senior employees of the bank infringe on propriety or are unethical. I would like the Minister to explain why the Government decided that that framework should be in place. I should also like her confirmation of whether there are non-disclosure agreements or their equivalent. If she cannot at this moment, by the time we get to the group beginning with Amendment 30 she will have had the opportunity to consult the Box. It will be a yes or no answer. I am certain we must get an answer either way.

[Lord Sharkey (LD)]

My Lords, I will ask a brief question about regulation in the sense raised by the noble Baroness, Lady Noakes. Chapter 11 of the framework published by the Treasury says:

“Notwithstanding any exemptions that may apply to the Company, the Shareholder acknowledges that the provision of certain aspects of the Company’s activities may be subject to … the ‘FCA Rules’ or guidance or principles … the ‘PRA Rules’ or guidance or principles and … other applicable laws or regulations.”


Could the Minister help the Committee by saying what these “certain aspects” might be?

[Lord Tunnicliffe (Lab)]

My Lords, I rise to speak to these amendments, but I will make a general point about my approach to today’s debate. I find myself agreeing with a very high proportion of the amendments. We obviously want to hear from the Minister the extent to which the Government agree with them, but it seems that the issues we will face on Report will be about which of these amendments need to go into the Bill, rather than whether they are intrinsically sensible, which I think most of them are. I even venture into uneasy territory in this group by finding myself almost agreeing with the noble Baroness, Lady Noakes, again. I put it in slightly guarded terms—

--- Later in debate ---

[Lord Sharkey (LD)]

Perhaps I could ask again about which

“certain aspects of the Company’s activities may be subject to”

the FCA and PRA rules, as set out in the framework.

[Baroness Penn (Con)]

I will endeavour to also get back to the noble Lord during this Committee—but, if I do not, I will include my answer in my letter on his noble friend Lord Teverson’s question about what aspects of the senior managers regime we plan to apply to the bank.

UK Infrastructure Bank Bill [HL]

Lord Sharkey Excerpts

Committee stage & Lords Hansard - Part 2
Tuesday 14th June 2022 Lords Chamber

Moved by

[Lord Sharkey]

28: Clause 2, page 2, line 5, leave out subsections (6) and (7)
Member's explanatory statement
This would remove the ability of the Treasury to amend provisions in the Act relating to the Bank’s activities or the meaning of infrastructure.

[Lord Sharkey (LD)]

My Lords, I will speak briefly to all the amendments in the group. They are in my name and variously in the names of the noble Lord, Lord Vaux, and my noble friend Lady Kramer. I am very grateful for their support.

Amendment 28 would remove from Clause 2 the two Henry VIII subsections, subsections (6) and (7). These subsections allow subsections (4) and (5) to be amended without constraint and without meaningful parliamentary scrutiny.

Subsections (4) and (5) are at the heart of the Bill. The first sets out what the bank’s activities are to be; the second sets a non-exhaustive list of infrastructure for the purposes of the Bill. It is entirely proper that these two elements should be in the Bill. Taken together with the bank’s objectives, they set out government policy. Parliament is invited to debate and scrutinise these elements to consider modifying or otherwise amending them, which is what we are in the process of doing now. But we might be wasting our time: no matter what we say, resolve, add, subtract or amend, the Government can override all of it by using the Henry VIII powers in subsections (6) and (7).

The Government can change any the activities in any way and at any time they choose. They can change the meaning of “infrastructure” in any way and at any time they choose. They can do all this without meaningful parliamentary scrutiny. The suggested use of the affirmative procedure is emphatically not meaningful parliamentary scrutiny, and it is self-serving and disingenuous of the Government to pretend it is. Parliament almost never votes down affirmative SIs; it has done so four times in the last 50 years. It obviously cannot amend them. The plain fact is that the policy or policies embodied in the Bill can be changed by the two Henry VIII powers without constraint and without scrutiny by Parliament.

The Treasury’s delegated powers memorandum offers a kind of explanation for the inclusion of these powers, as it is obliged to do. The lead justification is:

“These powers will allow for the possibility that a future government may wish to change the emphasis of the Bank’s activities for policy reasons and may desire to alter the definitions to support this change”,


which is an unprecedentedly generous legislative text. The final justification for the inclusion of the powers is that it is “considered appropriate”—we heard “appropriate” used earlier in the debate—

“for the powers to take this form, as their whole purpose is to enable change to be made to the relevant aspects of the primary legislation for future policy reasons”.

That is exactly why these powers should not be in the Bill. Once again, they attempt to give the Executive power to make policy before they have decided what that policy is.

The memorandum makes it explicit that unspecified, unscrutinised and unscrutinisable changes to critical areas of policy can be made by the Executive. What is the point of discussing the bank’s activities and infrastructure if these can be changed without constraint and without any meaningful parliamentary scrutiny?

In three reports of the 2017-19 Session, the DPRRC considered the test of “appropriateness” for the use of Henry VIII powers. As I just said, the notion of “appropriateness” is the final justification given by the Treasury for the use of these powers. The Hansard Society, which I had the privilege of chairing for some years, summarised the relevant findings of the three DPRRC reports in its April 2022 Compendium of Legislative Standards for Delegating Powers in Primary Legislation. In paragraph 3.11 on page 18, it notes:

“Loosely drawn powers based on the subjective judgement of Ministers, such as the ‘appropriateness’ test, should be circumscribed in favour of a test based on ‘necessity’.”


There is no necessity here and the Government have advanced none.

In his contribution to the debate on the Queen’s Speech, the noble and learned Lord, Lord Judge, spoke forcefully about the need to address the balance of power between the legislature and the Executive, particularly in the use of Henry VIII powers. He concluded his speech by asking

“what is the point of us being here if, when we identify a serious constitutional problem, we never do anything about it except talk? We cannot keep doing that. I just want us to consider the possibility that the next time we have a Henry VIII clause in a Bill that has not been given careful explanation in advance, we chuck it out.”—[Official Report, 12/5/22; col. 130.]

The next line in Hansard reads: “Hear, hear!” This Bill is the next time. Our Amendment 28 would chuck out the Henry VIII powers.

Briefly, Amendments 33 and 34 are both probing amendments and deal with the statement of strategic priorities drawn up by the Treasury. It may be helpful if I deal first with Amendment 34, because this directly concerns whether the Treasury statement is meant to be permissive or directive. In Clause 3(5), the Bill says:

“The Bank must secure that its articles of association provide for the Bank”


to do two things: first,

“to publish and act in accordance with strategic plans which reflect the Treasury’s statement”,

and, secondly,

“to update those plans whenever the Treasury revises or replaces its statement.”

The force of the words “provide for” in the text was not immediately clear. Did it mean that the bank must amend its articles so as to allow the publication of strategic plans and to allow the bank to act in accordance with these plans if it so chose, or did “provide for” really mean “require”? In other words, was this provision enabling and permissive, or was it directive?

I discussed this question in a helpful meeting with the Minister yesterday, and she confirmed that “provide for” in this context was intended to mean “require”. This clarification makes the Treasury’s strategic statement extremely important. It imposes strategic choices on the bank. These strategic choices will determine what the bank actually does; for example, they could decide what weight is given to each of the bank’s two objectives and what weight to give to the bank’s four listed activities.

The Bill requires the Treasury’s strategic statement to be laid before Parliament, but that is the extent of Parliament’s involvement. Parliament will have no opportunity to contribute to the construction of the statement and no means of making productive comment on it. Given that the statement of strategic priorities will largely determine what the bank will actually do, this seems to be missing a trick by keeping Parliament at arm’s length.

It would be easy and, I believe, helpful to hear Parliament’s views on any strategic statement. Our Amendment 33 proposes a way of doing that by having the statement come before Parliament as an SI under the affirmative procedure. There may be other and better ways of involving Parliament that do not seem to trespass on the Treasury’s prerogatives and do not add complexity. The amendment aims simply to gauge the Government’s appetite for the closer involvement of Parliament in the strategic statement process. I beg to move Amendment 28.

[Lord Vaux of Harrowden (CB)]

My Lords, I will be very brief because the noble Lord, Lord Sharkey, has introduced these amendments eloquently, and I am not sure there is a huge amount to add.

This goes back to what we talked about in the previous group: too much power for the Treasury to change things at will. You cannot have meaningful operational independence if the mandate within which the bank works can be changed without scrutiny and safeguard. The noble Lord, Lord Sharkey, eloquently explained the limitations around the affirmative procedure; we all know about them. Something as fundamental as the basic objectives of the bank should be changed only following proper, full scrutiny using primary legislation. That should not be controversial; it should be fairly straightforward.

Amendment 33 adds an element of scrutiny that is currently missing to the statement of strategic priorities given by the Treasury to the bank. Those priorities are very important. I can understand that it is appropriate that there is some level of flexibility to those strategic priorities, but the idea that they can just be changed at will and filed with Parliament but with no scrutiny, discussion or review just seems wrong. Introducing the affirmative procedure for those makes sense to me.

--- Later in debate ---

[Viscount Younger of Leckie (Con)]

My Lords, these amendments are all connected to parliamentary scrutiny, particularly in cases where the Bill is creating delegated powers, as the noble Baroness, Lady Kramer, pointed out. I will come on to the specific amendments, but it is worth noting at the outset, bearing in mind her remarks, that the Delegated Powers and Regulatory Reform Committee has found no need to comment—in fact, there has been no comment whatever—on the four delegated powers taken in the Bill. Having said that, I will attempt to reassure her now that, along with previous pledges that a letter will be written on other matters, it may be that we can give more detailed reassurances in writing on these complex but important interrelationship issues concerning the bank and the framework document.

I believe that the intended purpose of Amendment 28 in the name of the noble Lord, Lord Sharkey, is to protect the operational independence of the bank and prevent the Treasury changing the bank’s focus in the future. There may, however, be instances where we need to update the definition of infrastructure or the bank’s functions to ensure that the bank can continue to fulfil its objectives as a long-lasting institution. Let me give an example in which the noble Baroness, Lady Bennett—I see she is in her place—may take some pleasure. New green infrastructure technologies may emerge in the future which we would want explicitly to include in the bank’s definition of infrastructure, to signal to the bank and the market that the bank can invest in these technologies.

Amendments 33 and 34 in the name of the noble Lord, Lord Sharkey, seek to strengthen parliamentary scrutiny of the bank’s strategic priorities and plans, which he outlined eloquently. Amendment 33 would require parliamentary approval for the strategic priorities of the bank, which the Treasury produces, before they come into effect. Although his amendment is certainly well intentioned—I listened very carefully to his remarks, as well as those of the noble Lord, Lord Vaux—I do not believe it is required as the Bill as drafted allows for parliamentary scrutiny of the bank’s strategic priorities by requiring a copy of the statement and any updates to be laid before Parliament.

There is a strong precedent for this already: the Bank of England Financial Policy Committee remit letter, the Financial Conduct Authority remit letter and the Ofwat strategic statements are all laid before, rather than approved by, Parliament. This is an appropriate level of oversight, particularly bearing in mind that the bank is a taxpayer-funded, government-backed institution.

Turning to Amendment 34, I would like to clarify the effect of the clause as drafted. It is necessary to read the clause as a whole, rather than just words in isolation, to interpret its effect:

“The Bank must secure that its articles of association provide for the Bank … to publish and act in accordance with strategic plans which reflect the Treasury’s statement”.


I listened very carefully to the remarks of the noble Lord, Lord Sharkey, and as he rightly said we had a detailed discussion of this issue outside this Chamber. However, in our opinion this is sufficient to ensure that the bank acts in accordance with Treasury steers. The bank’s articles must provide for it to do so, creating both the power and the expectation that it should, and being subject to the usual enforcement controls should it fail to do as provided by its articles. I realise that we may not entirely agree on this issue, but this is the response that I give today.

I listened carefully to the remarks from the noble Lord, Lord Davies of Brixton. I first apologise to him for the fact that I gather he has not had some answers to questions that he posed—I am rather mortified to hear that. I know that I have written a good few letters and I am sure my noble friend Lady Penn has as well, but may we look at which answers have not been given?

I will try to give the noble Lord a response anyway to the points that he raised, which were essentially asking what the bank’s relationship is to pension funds. The National Infrastructure Strategy, which announced the UKIB, also set out how there is a huge opportunity for pension funds to support the UK’s infrastructure ambitions. The bank’s policy design document—its blueprint, if you will—set out how the bank will help to structure deals to attract international investments and unlock capital from institutions such as pension finds. I hope that gives some sort of an answer but, again, I will read Hansard and get some further answers to the noble Lord, Lord Davies, if appropriate.

With that, I would be grateful if the noble Lord, Lord Sharkey, would feel able to withdraw his amendment.

[Lord Sharkey (LD)]

I thank everybody who has spoken in this short debate. I am of course disappointed that the Minister is disinclined to allow Parliament any meaningful contribution to the Treasury strategy statements. Laying them before Parliament is emphatically not a way of involving Parliament in any meaningful sense. I continue to believe that the bank would benefit from Parliament’s involvement, and we will continue to think of ways that that might be possible and acceptable to the Treasury.

I am even more disappointed by the Government’s insistence on the two Henry VIII clauses remaining in the Bill. The Minister, as I suspected he might, prayed in aid the DPRRC in his defence of the two powers, essentially on the basis that the DPRRC said nothing about them in its report. I would observe that sometimes even Homer nods. In its report of last November the DPRRC said:

“We will always deprecate the use of Henry VIII powers where they appear to have been included in a bill ‘just in case’”.


In this Bill, these two Henry VIII powers are explicitly there just in case—just in case this Government or a future Government want to adopt a different policy.

Between now and Report, we will want to consider how these very broad and unconstrained Henry VIII powers may be limited in scope or sharpened in purpose and application—and consider, of course, whether they should remain in the Bill at all. In the meantime, I beg leave to withdraw Amendment 28.

Amendment 28 withdrawn.

UK Infrastructure Bank Bill [HL]

Lord Sharkey Excerpts

Report stage
Monday 4th July 2022 Lords Chamber

Moved by

[Lord Sharkey]

2: Clause 2, page 1, line 13, leave out “and”
Member’s explanatory statement
This amendment seeks to probe whether the Bank would need to meet both objectives in the exercise of its activities.

[Lord Sharkey (LD)]

My Lords, Amendment 2 is a probing amendment so I can be very brief. Its purpose is to seek clarity on how the objectives of the bank will work together and to allow the Minister to put that clarification on the record.

We have discussed this informally with the Minister and her officials, and I am grateful for the time they gave us. Our questions were about whether the two basic objectives—tackling climate change and supporting regional and local economic growth—both needed to be met in any project. Is that what “and” means here in the Bill? In her letter to us of last Tuesday, the Minister responded:

“I can confirm that the Bill’s drafting does not mean that a project must meet both those objectives. The Bank can invest in projects which meet only one of these objectives, so long as supporting a project to deliver regional and local economic growth does not do any significant harm against the Bank’s climate objective.”


As far as it goes, that is clear and helpful; I look forward to the Minister putting it on the record in a moment.

However, it raises a couple of other issues. For example, does it work the other way round? Is it permissible to invest in a project to support the bank’s climate objectives as long as it does no significant harm against the bank’s regional and local economic growth objective? I assume that this is the case—I would be grateful for confirmation that it is. What does “significant” mean in these contexts? What criteria will be used to provide a threshold test for significance? Will each project carry an assessment of the harm that pursuing only one objective may cause to the other? Will any such assessments be published along with other details of the project? I look forward to the Minister’s reply and the arrival of complete clarity.

--- Later in debate ---

I hope that this goes some way towards addressing the concerns of noble Lords, although it does not seek to make changes to the Bill. I hope that the noble Lord, Lord Sharkey, can withdraw his amendment and that other noble Lords do not move theirs.

[Lord Sharkey (LD)]

My Lords, I thank the Minister for clarifying and putting on the record how the bank’s two objectives will work together. I beg leave to withdraw my amendment.

Amendment 2 withdrawn.

--- Later in debate ---

Moved by

[Lord Sharkey]

13: Clause 2, page 2, line 9, leave out subsection (7) and insert—
“(7) Regulations made under the powers set out in subsection (6) are subject to the “super affirmative procedure” as set out in subsections (8) to (15).(8) The Secretary of State must lay before Parliament—(a) a draft of the regulations, and(b) a document which explains the draft regulations.(9) Where a draft of the regulations is laid before Parliament under subsection (8), no statutory instrument containing the regulations may be laid before Parliament until after the expiry of the 30-day period.(10) The Secretary of State must request a committee of either House of Parliament whose remit includes infrastructure, economic growth, finance or climate change to report on the draft regulations within the 30-day period.(11) In preparing a draft statutory instrument containing the regulations, the Secretary of State must take account of—(a) any representations,(b) any resolution of either House of Parliament, and(c) any recommendations of a committee under subsection (10) made within the 30-day period with regard to the draft regulations.(12) If, after the 30-day period, the Secretary of State wishes to make regulations in the terms of the draft or a revised draft, he or she must lay before Parliament a statement—(a) stating whether any representations, resolutions or recommendations were made under subsection (11); (b) giving details of any representations, resolutions or recommendations so made; and(c) explaining any changes made in any revised draft of the regulations.(13) The Secretary of State may make a statutory instrument containing the regulations (whether or not revised) if, after the laying of the statement required under subsection (12), a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.(14) In this section, references to “the 30-day period” in relation to any draft regulations is to the period of 30 days beginning with the day on which the original draft regulations were laid before Parliament.(15) For the purposes of subsection (14) no account is to be taken of any time during which Parliament is dissolved or prorogued or during which either House is adjourned for more than four days.”Member's explanatory statement
This amendment seeks to provide Parliament with the opportunity for enhanced scrutiny of the regulations made under this section.

[Lord Sharkey (LD)]

My Lords, I shall speak also to Amendment 18. I am very grateful to the noble Lord, Lord Vaux, and my noble friend Lady Kramer for adding their names to both amendments and to the noble Lord, Lord Tunnicliffe, for adding his name to Amendment 18.

The Bill contains Henry VIII powers in Clause 2(6)(a) and (b). These powers would enable the Treasury to amend the activities of the bank and change the definition of infrastructure by regulations subject to the affirmative procedure. There is no constraint, the Treasury has carte blanche: it can add to, subtract from or modify any or all of the bank’s listed activities; it can change what counts as infrastructure by adding, subtracting or modifying. This would enable fundamental changes to be made to the bank’s operations without any meaningful parliamentary scrutiny. The Government have previously asserted, and may do so again today, that the affirmative procedure for SIs constitutes meaningful parliamentary scrutiny, but this is obviously not the case.

In its 2018 report, the Constitution Committee noted:

“Without a genuine risk of defeat, and no amendment possible, Parliament is doing little more than rubber-stamping the Government’s secondary legislation. This is constitutionally unacceptable.”


But there is a way of enhancing scrutiny of secondary legislation. This is the super-affirmative procedure, and our Amendment 13 would replace the affirmative procedure with this super-affirmative procedure. Erskine May, in Part 4, chapter 31.14, characterises this procedure as follows:

“The super-affirmative procedure provides both Houses with opportunities to comment on proposals for secondary legislation and to recommend amendments before orders for affirmative approval are brought forward in their final form … the power to amend the proposed instrument remains with the Minister: the two Houses and their committees can only recommend changes, not make them.”


During the passage of the recent Medicines and Medical Devices Act, the Minister, the noble Baroness, Lady Penn, very helpfully summarised the super-affirmative procedure as follows, saying

“that procedure would require an initial draft of the regulations to be laid before Parliament alongside an explanatory statement and that a committee must be convened to report on those draft regulations within 30 days of publication. Only after a minimum of 30 days following the publication of the initial draft regulations may the Secretary of State lay regulations, accompanied by a further published statement on any changes to the regulations. They must then be debated as normal in both Houses and approved by resolution.”—[Official Report, 19/10/20; col. GC 376.]

It was in that Bill that the House last voted to insert the super-affirmative procedure. There was widespread support from across the House—from Labour, from these Benches, from the Cross Benches and even from two extremely distinguished Conservative Peers. Prior to that, according to the Library, the last recorded insertion was by the Government themselves in October 2017 in what became the Financial Guidance and Claims Act.

When they are not doing it themselves, the Government traditionally put forward any or all of three routine objections to the use of the super-affirmative procedure. The first is that it is unnecessary because the use of the affirmative procedure provides sufficient parliamentary scrutiny. This is obviously untrue. The second routine objection is that the super-affirmative procedure is cumbersome. I take this to mean only that this procedure is more elaborate than the affirmative procedure; which is, of course, the whole point. It is necessarily more elaborate because it provides for actual scrutiny where the affirmative procedure does not. The third routine objection is that it all takes too long. This has force only if there is some imminent deadline, and there is none in this case.

In Committee, the noble Viscount, Lord Younger of Leckie, argued in favour of retaining the Henry VIII powers in Clause 2:

“There may, however, be instances where we need to update the definition of infrastructure or the bank’s functions to ensure that the bank can continue to fulfil its objectives as a long-lasting institution.”


He went on to give an example:

“New green infrastructure technologies may emerge in the future which we would want … to include in the bank’s definition of infrastructure, to signal to the bank and the market that the bank can invest in these technologies.”—[Official Report, 14/6/22; col. 1541.]


I am afraid that this is a very weak argument. The definitions of “infrastructure” in the Bill are not exhaustive, as the Minister has again said this afternoon. The bank could simply decide that it wanted to include new green technology and say so in an official press release. In any case, the Treasury could always direct the bank to include these new technologies and any such direction would be published. As things stand, the Henry VIII powers would enable the Minister to change both the bank’s activities and the definitions of infrastructure without constraint or meaningful parliamentary scrutiny. Our Amendment 13 would restore an element of parliamentary scrutiny; Parliament should not be bypassed.

--- Later in debate ---

[Baroness Penn (Con)]

My Lords, Amendment 13 in the name of the noble Lord, Lord Sharkey, seeks to make the bank’s delegated powers subject to the super-affirmative procedure. As indicated in Erskine May, the super-affirmative procedure has been deployed for secondary legislation where an exceptionally high degree of scrutiny is thought appropriate. This procedure has rarely been considered the appropriate one to prescribe in primary legislation; where it has, the relevant instances have tended to be of a particularly substantive and wide-ranging sort. The noble Lord, Lord Sharkey, gave us an example but I had another: the Legislative and Regulatory Reform Act 2006, where the super-affirmative procedure was used to regulate significant powers under which Ministers could amend legislation to remove regulatory burdens. It cannot be said that amending the bank’s activities or the definition of infrastructure reaches the threshold of requiring the super-affirmative procedure. I have noted comments from noble Lords, but I also draw to their attention the Delegated Powers and Regulatory Reform Committee’s response to the Bill, which stated:

“There is nothing in this Bill which we would wish to draw to the attention of the House.”


On the other amendment from the noble Lord, Lord Sharkey, in this group, Amendment 18 on the power of direction, I recognise that there has been some concern about the wording in the framework document in relation to the issuing of directions. In particular, there were concerns that the Treasury would be able to “gag” the bank. That is clearly not the intention, and I have taken away the wording in section 15 of the framework document to make it clear that Her Majesty’s Treasury is not able to prevent publication of a written direction or any reservation notice in respect of that direction.

It is incumbent on the Treasury to meet its obligation to publish the direction and any associated reservation notice as soon as appropriate. Of course, there can be circumstances in which the publication of a written direction or any associated reservation notice needs to be delayed for reasons of national security or commercial sensitivity. An example of this occurred, in relation to a similar power in a different circumstance, during the sale of British Steel Ltd, where the Secretary of State directed the Permanent Secretary to continue an indemnity with the official receiver but delayed publication during negotiations with Jingye, despite value-for-money uncertainties, as to publish at the time would likely have undermined the rescue deal due to commercial sensitivity concerns. However, I will be clear with the House that if publication of a written direction were to be delayed for reasons of commercial sensitivity or national security, we would ensure that it was sent to the chair of the Public Accounts Committee immediately and on a confidential basis.

I hope that I have addressed the points made by the noble Lord, Lord Sharkey. However, to be absolutely clear, and maybe to go further than I did in our previous discussions, we will amend the framework document to be clear that where a direction is issued, an accompanying reservation notice “must” be published—rather than “may”—and, to further clarify, the content of the direction and reservations must be published rather than the fact of their existence. I hope that that provides further reassurance to noble Lords on that matter.

The amendments to Clause 3 in the name of the noble and learned Lord, Lord Thomas, seek to ensure that the bank’s framework document is updated to reflect any strategic steer, and that any revised framework document will be laid in Parliament. In maintaining the bank’s framework document, the Treasury will follow the guidance set out in Managing Public Money. This guidance states that framework documents should

“be kept up to date as the partnership”—

between a department and its arm’s-length body—

“develops.”

The Treasury will update the bank’s framework document as needed to follow this guidance. As has already been noted, the Treasury is currently reviewing the framework document and will publish a new version once the Bill has passed, which will include changes brought about by this House; for example, the clarification which I mentioned earlier in relation to the bank’s ability to publish a reservation notice if the Treasury subsequently issues the bank with a direction, and, in reference to an earlier debate, the clarification of the second objective in local and regional growth relating to levelling up and regional inequalities.

On the publication of framework documents, Managing Public Money is clear. Any revised framework documents should be published and laid in Parliament. Further, the Chief Secretary to the Treasury laid a Written Ministerial Statement today where he set out that all departments should lay their framework documents in Parliament. This has put the question of publication beyond doubt.

On whether the bank’s framework document should be updated to reflect the content of the strategic steer, I think that in that respect I differ in opinion from the noble and learned Lord, Lord Thomas. Managing Public Money sets out that framework documents should contain information on purpose, governance and accountability, decision-making, and financial management. It does not specify that they should contain information on current policy steers or priorities.

The bank’s framework document and strategic steers fulfil very different purposes; the framework document providing an agreement to govern the relationship between the bank and the Treasury, and the strategic steer providing an opportunity for the Government of the day to provide steers on current priorities and policy emphases. That does not mean that there will never be circumstances in which the framework document is updated. I have already told the House that we will reflect on the wording in the framework document on the regional and local economic growth objective. However, I do not think that the framework document needs updating every time a strategic steer is issued. It should be updated only when necessary, to provide for continuity and to avoid creating unnecessary resource burdens. The noble and learned Lord, Lord Thomas, would be inventing a new process for the framework document, when there is already a process set out in Annex 7.2 of Managing Public Money.

On this, I also refer noble Lords to the strategic steer issued by the Chancellor in March. This provided a steer on priorities for the bank in light of the situation in Ukraine, and the recently concluded environment review, as well as other priorities for the bank to reflect in its first strategic plan. None of this information impacted the high-level framework under which the bank operates, as set out in the framework document, and therefore a mandatory update to the framework document would have been unnecessary. However, the strategic steer must be reflected in the bank’s strategic plans. This is provided for in the Bill.

Amendment 21 seeks to bring a consultation process on the use of some of the powers in the Bill with the devolved Administrations. I appreciate the intent, but this will cut directly across the negotiations that we are having with the devolved Administrations on the legislative consent process. This was brought up in Committee and I explained then that the normal practice is to bring forward any amendments required for a legislative consent Motion in the second House, which for this Bill would be the Commons. It would not be appropriate to accept this amendment until we have begun those negotiations with the devolved Administrations in earnest.

I hope that I can reassure noble Lords by saying that we have begun those discussions with the devolved Administrations in a positive fashion. Engagement with the devolved Administrations on the set-up of the bank was also positive. They all support the establishment of a national infrastructure bank. The bank has also been developing its own relationships with the devolved Administrations and their respective institutions, such as the Scottish National Investment Bank. The bank has now also completed deals in all four nations.

The tone and tenor of the bank’s relationships with the devolved Administrations and their respective institutions, and the way that the bank has gone about its business so far, give noble Lords in this House quite a bit of reassurance, I hope, about the collaborative approach that the bank has taken so far and intends to take in future. Therefore, I hope that the noble Lord, Lord Sharkey, feels able to withdraw Amendment 13.

[Lord Sharkey (LD)]

I thank the Minister for her response and thank all other noble Lords who spoke to Amendment 13. I detect a chillier wind from my right than I would have liked. Under those circumstances I can only repeat that the House will not have a substantive opportunity to scrutinise these important things. I regret that. The loss of both parliamentary authority and the ability to scrutinise what comes before us is a critical issue, which I have no doubt we will come back to in future Bills. In the meantime, I beg leave to withdraw Amendment 13.

Amendment 13 withdrawn.