Oral Answers to Questions

Debate between Matt Hancock and Jacob Rees-Mogg

Tuesday 18th June 2019 Commons Chamber

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

My constituent Max is aged eight and has Batten disease. He is one of only two sufferers of this disease who are not receiving the medicine that can improve their quality of life and keep them alive. Eleven other children in this country with Batten disease are receiving the drug, which is very effective but very expensive. The drug manufacturer has offered six months’ free supply to Max and the other person not getting it and has made other proposals to NHS England, which is currently refusing even to have meetings with the drug company to discuss how my constituent, this dying child, may receive the drugs he needs. Will my right hon. Friend intervene and use whatever reserve powers he has to ensure that my constituent gets this life-saving drug?

[Matt Hancock]

My hon. Friend speaks for the whole House about the need for these rare diseases to be given the attention they need so that sufferers such as Max can get the medicines if at all possible. As he knows following our meeting, the formal legal responsibilities lie with NHS England and NICE. I have raised this case, and that of others mentioned earlier, with the chief executive of NHS England and will raise it once again following this Question Time. We will do all we can to resolve this.

Data Protection Bill [Lords]

Debate between Matt Hancock and Jacob Rees-Mogg

3rd reading: House of Commons & Report stage: House of Commons
Wednesday 9th May 2018 Commons Chamber

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

Has this not been decided in the jewel of our legal system—that is to say, in front of a jury? Some people accused of things that would have been part of Leveson 2 have been acquitted, and a very few have been convicted, but once someone has been tried in front of a jury, it is fundamentally unfair, unjust and a question of double jeopardy if they are then brought before another tribunal and put once more on oath to repeat evidence that they have given before and then been acquitted for. It would be against British justice to proceed in that way.

[Matt Hancock]

The police inquiries and the prosecutions that followed were exhaustive, so much so that in 2015, the Director of Public Prosecutions said that the end had been reached of the need to inquire further into those criminal acts. Of course, the criminal acts were punished, and people were convicted and went to prison.

Crucially, the arrival of the internet has fundamentally changed the landscape. That was not addressed at the core of the first Leveson inquiry, but it must be addressed. Later this month we will publish our internet safety strategy, as I mentioned, in which we will set out the action we need to take to ensure that the online world is better policed. Many colleagues have raised with me huge concerns about online abuse and the inability to get redress. That is a significant challenge for the future, and we must address it.

However, the internet has also fundamentally undermined the business model of our printed press. Today’s core challenge is how to ensure a sustainable future for high-quality journalism that can hold the powerful to account. The rise of clickbait, disinformation and fake news is putting our whole democratic discourse at risk. This is an urgent problem that is shaking the foundations of democracies worldwide. Liberal democracies such as Britain cannot survive without the fourth estate, and the fourth estate is under threat like never before. These amendments would exacerbate that threat and undermine the work we are doing through the Cairncross review and elsewhere to support sustainable journalism.

The terms of reference of part 2 of the inquiry have already largely been met. Where action is needed, I do not back down from taking it. The culture that allowed phone hacking to become the norm has changed fundamentally and must stay that way. We have already seen reforms of police practices, with a new code of conduct for the College of Policing. As I said, we are discussing rules around disclosure. I can confirm that we have asked Her Majesty’s inspectorate of constabulary to undertake a new review of how police forces are adhering to new media relations guidance, as recommended by Sir Brian, and we will not hesitate to strengthen the rules further if that is needed.

Data Protection Bill [Lords]

Debate between Matt Hancock and Jacob Rees-Mogg

Money resolution: House of Commons & Programme motion: House of Commons
Monday 5th March 2018 Commons Chamber

[Matt Hancock]

I will happily respond to both points. Under the Bill, data must be deleted unless there are legitimate grounds for retaining it. The details of what is meant by legitimate grounds will be set out in recitals and then guidance from the Information Commissioner. This is one area in which the right to be forgotten, which has been long dreamt of and thought about, is now being legislated for, and the precise details of where it applies will be set out in guidance, as the Bill states only that there need to be legitimate grounds for retaining data.

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

Can we be certain that this right to be forgotten will not impede freedom of speech? I am thinking of Max Mosley, of course, and the information that came out on what he said in 1961, which is relevant and pertinent to current debates. We should do nothing that limits the right of a free press.

[Matt Hancock]

I wholeheartedly agree with my hon. Friend about not limiting the rights of the free press. He might be aware of amendments that were made in the other place on exactly that issue and that are supported by a number of Members of this House, including, notably, some who are also supported by Max Mosley. I think that we should remove those two provisions. The ability of our press properly to scrutinise is important and should not be undermined in the ways proposed, but I will come to that in more detail later.

The right to be forgotten is an important element of making sure that data is held appropriately and when there are legitimate grounds. The Bill also allows for data portability—a person’s right to transfer their data from one provider to another.

Bank of England (Appointment of Governor) Bill

Debate between Matt Hancock and Jacob Rees-Mogg

Friday 6th July 2012 Commons Chamber

[Jacob Rees-Mogg]

Does my hon. Friend agree with me that 10 days is a negligible amount of time to debate so important a constitutional change and that for a constitutional change of that magnitude, we would need the whole Session?

[Matthew Hancock]

I agree with my hon. Friend in one respect, which is that changing the separation between the Executive and the legislature that scrutinises them would have great constitutional implications. I ask Members to draw their own conclusions on the contrast between that and merely changing the form of appointment to one of the two Houses of the legislature. That is a matter simply within the legislature, rather than to do with the role of the Crown in Parliament, which is the basis of our constitutional monarchy.

Let me bring the debate down to more practical considerations. If the Treasury Committee were to reject the Government’s preferred choice of Governor, a small number of MPs would effectively have vetoed a Crown appointment. The whole House would not have made that rejection; a small number of MPs would have done so. I do not think that there is any precedent for such a challenge, whereby a small number of MPs who are not Ministers challenge, through the power vested in them, the authority of our Executive—at least not since the days of Charles I, and we all know how that turned out.

Where would the Bill leave the royal prerogative? That question needs to be addressed. What would it mean for the role of the Crown in Parliament? In this jubilee year, as we celebrate 60 glorious years of Her Majesty, these are questions to which we need answers. It is perhaps no coincidence that the original proponent of this broad constitutional change was himself an avowed republican, with a history of great hostility to the Crown’s role in government: Tony Benn. Indeed, I understand the heartfelt and strongly held republican position of the hon. Member for Hayes and Harlington. He does not contradict me, so I presume that is his position. The Bill directly challenges that question of parliamentary accountability.

The Governor of the Bank is already accountable to the Treasury Committee for his or her decisions on monetary policy and financial stability, but I turn to the question of the increasing role of the Bank, because there is no doubt that under the Financial Services Bill it will have a bigger role than hitherto. The separation of bank regulation from monetary policy is a flaw and a mistake that has had grievous consequences, not least because the banking system is the conduit for monetary policy’s impact on the real economy.

I therefore strongly and passionately support the relevant change in the Financial Services Bill, but it does not follow directly that, under it, the position of the Governor is stronger than hitherto, because up until and including today in matters of financial stability the Governor has been imperial within the Bank of England. Executive powers over the areas of financial stability for which the Bank is responsible are the sole responsibility of the Governor in person, accountable to the court of the Bank and to the Treasury Committee.

Under the new proposals, the Governor will chair the Financial Policy Committee, and it is in that committee, rather than in the individual, that powers over financial stability will be vested. So on matters of financial stability not only will there be accountability externally, but decision making will be conferred on a committee that the Governor chairs, rather than on the person of the Governor himself.

[Matthew Hancock]

I am grateful to the Financial Secretary to the Treasury for making that clear, and I agree wholeheartedly. In the debate about accountability under the Financial Services Bill, one fact often overlooked is that, whereas previously a power vested in the Bank of England involved a decision by the Governor alone, for which the Bank’s deputy governors would take collective responsibility, it will now formally involve a decision by a committee, of which the Governor will be chair. That is an important distinction. Despite concerns about increased power going to one individual, in fact the increased power goes to an institution, but the internal arrangements at the institution are being changed in order to reflect that increased power. That is why I strongly support the Financial Services Bill not only in principle but in the design of the system that we are discussing.

To whom would the Treasury Committee be accountable if it had this Executive power? In the words of Juvenal, “Who watches the watchmen?” Under this proposed amendment to the Bank of England Act 1998, the Treasury Committee could stall or reject the appointment of a perfectly qualified candidate for whatever reason it chose— perhaps, heaven forfend, even in order to raise the personal profile of a member of the Committee. Given the powerful investigations by Select Committees over recent months—for instance, into phone hacking—I am sure that we would all be sceptical about the idea that any member of a Select Committee could possibly try to change the way in which an inquiry went forward in order to raise their own personal profile. I am absolutely certain that that does not happen.

[Jacob Rees-Mogg]

In those circumstances, a Government who commanded a majority in the House of Commons would be able to overturn the Select Committee’s decision or replace its members so as to arrive at a different decision. If the Select Committee were wholly irrational, it could be fired by the rest of the House.

[Matthew Hancock]

I have a great deal of respect for the intellectual integrity of the supporters of the Bill, but they cannot have it both ways. They cannot argue both that the Bill would have no impact because a Government with a majority could force their decision through the House of Commons and that it would be very important in changing how things operate. If the Treasury Committee vetoed a proposed Governor and that decision was then overturned by a Government vote on the Floor of the House, in practice the direct consequence would be that the position of that proposed Governor would be completely undermined.

--- Later in debate ---

[Matthew Hancock]

Of course. The Government must command support for their programme from a majority of the House of Commons, but the Treasury Committee is voted for by Back Benchers, and as the two electorates are different we would not necessarily get the same result from both. The argument put forward by my hon. Friend the Member for North East Somerset—most of Somerset—(Jacob Rees-Mogg) is an argument for deadlock because it could lead to the Treasury Committee pushing one point of view and—because it is elected by a different electorate from those who support a Government—ending up with a contravening view being expressed on the Floor of the House. That is because the Bill would apply to the Treasury Select Committee or its successor body should its name be changed or its powers be passed to somebody else.

[Jacob Rees-Mogg]

If a Government command a majority in this House, they are in control of the Standing Orders, and therefore if a Select Committee made a wholly irrational decision, it would be completely open to them to find a way to change that Committee. It must always be true that the Floor of the House—the whole House—has command of any and every Committee of the House, but it would be an extreme circumstance for a Government to try to push through such a scheme.

[Matthew Hancock]

The argument appears to be that we should give the Treasury Committee a power of veto, unless the whole House disagrees with that veto. However, the majority in the House support the Government and it is the Government who initially propose who should be Governor, so the Government could never be overruled in extremis. To support a Bill in which the ultimate safeguard is the abolition of the Select Committee system is a little extreme.

--- Later in debate ---

[Matthew Hancock]

I agree strongly. We need to be vigilant and—dare I say it—humble about how little we know about the future, instead of making grand assertions that because something has not been a problem in the past, it will not be a problem in the future.

[Jacob Rees-Mogg]

I agree with my hon. Friend that there have been many occasions in history—a few of which I may quote later—when Governors have shown themselves to be hostile to Government policy, but I wonder whether that is an argument against independence of central banks, rather than against the ratification of the appointment of central bankers.

[Matthew Hancock]

My argument is in favour of the operational independence of central banks—“freedom in a framework”, if I may put it that way, or “constrained discretion”, as economists inelegantly call it. The argument is that the broad strategy should be agreed on and put in place. Within that strategy and agreed framework, independence allows the Bank of England—or the institution making operational decisions—to look past shorter-term considerations and the impact of their decisions on Twitter and the next day’s headlines, and thereby take the political cycle out of the political economy of a decision affecting the country over a long period.

My analysis of the past tells us something important about central banks now. The point is that they should never be forced to do the Government’s bidding in the areas delegated to them. As we saw in Weimar Germany and Zimbabwe, removing operational independence has significant risks. Although I respect the view of my hon. Friend the Member for North East Somerset that the so-called Ken and Eddie show resulted in a more effective monetary policy than that which was pursued after operational independence was granted in 1997, I do not agree that the previous structure was better, because the ability to look past the political cycle is of value.

[Jacob Rees-Mogg]

I wonder whether we sometimes try to perfect structures as against what actually works. The period of monetary policy from 1998 through, really, to 2010 was disastrous, and was responsible for some of the problems from which we are still suffering.

[Matthew Hancock]

I agree with my hon. Friend that money was too loose. In fact, the growth of bank balance sheets—and, therefore, the money supply—was running at up to 25% a year for several of the years leading up to the crisis. The problem of over-leverage and too rapid growth in broad money is one of the things we are now dealing with as banks try to deleverage. Mistakes were made, but I would not put that down to the independence of the Bank, not least because, in whatever structure, the appointment of the right person and a system to appoint them is crucial, and this debate is directly relevant to the Bill.

[Jacob Rees-Mogg]

I wonder whether one can draw any conclusions from appointments during this period, because Sir Alan Greenspan—with his honorary knighthood—in the United States, whose appointment was ratified by the Senate again and again, was probably one of the worst central bankers in history, and I need not tell my hon. Friend how central bankers were appointed in the United Kingdom.

[Matthew Hancock]

My hon. Friend anticipates a couple of the points I shall go into in more detail later.

--- Later in debate ---

[Matthew Hancock]

I am grateful to my hon. Friend, although I am slightly embarrassed by her eloquence. As she said in her speech, it matters to people that we get the management of the economy right. When it goes wrong, as it has in the past, that has a massive impact on our postbags. It is therefore right and proper for us who debate these issues in the House to devote a great deal of scrutiny to them.

The funding for lending scheme, which was announced last month, is a good example of how this works in practice. When interest rates are near zero, the connection between monetary and fiscal policy becomes even tighter. The ability to get low interest rates out into the real economy can depend on the use of the Government’s own balance sheet. The funding for lending scheme and the liquidity scheme, which I think is one of the most vital elements of our economic recovery, are a joint matter involving use of the Treasury’s balance sheet and the indemnity for the Bank of England, and Bank of England action in the markets, both between banks and in the context of the wider availability of debt. That is a clear indication of the requirement for not just operational independence, but a common strategy between the Governor of the Bank and the Government of the day.

Allowing banks to borrow from the Bank of England in order to lend directly into the real economy means having to ensure that the high rates paid by one bank to another because of the insecurity of, ultimately, their creditworthiness and the difficulty of accessing liquidity are not passed on to people who pay for mortgages or businesses that need to borrow to finance investment. Many businesses that have taken advantage of opportunities, and many mortgagees who have bought houses, are capable of repaying a loan directly at a decent interest rate that is worth while to them, but a margin is added because the banks cannot lend to each other at decent rates that are almost free of risk.

The involvement of the Government in liquidity is nothing new. It has not happened for about 15 years, but for several centuries before that, the Bank of England intervened in the provision of liquidity in the City through the discounted bill market. Liquidity was available to ordinary businesses, and indeed to people wanting to buy their homes, when it was supported by the Bank of England, normally as the “third name” on a bill, in order precisely to ensure that the monetary policy of the central Bank—whether independent or not—got into the real economy and did not end up stuck in the banking system, as happens too often today.

As the current Governor of the Bank of England said in his Mansion House speech,

“the long term nature of the lending and its pricing mean that the Bank could conduct such an operation only with the approval of the Government, as offered by the Chancellor…such a scheme would be a joint effort between Bank and Treasury.”

If, as set out in the Bill, the Treasury Committee could veto somebody who had a strategic agreement with the Government, and in their place ensure that only somebody who agreed with its strategy, and not the Government’s, went into the job, that would undermine this potential for joint working.

[Jacob Rees-Mogg]

I am very sympathetic to what my hon. Friend is saying, but if there were a recalcitrant, stubborn Governor who was not approved by a Select Committee, but was appointed directly by the Executive, and he dragged his heels and was very reluctant to allow an easing of monetary policy, how would a Government deal with that?

[Matthew Hancock]

That would be an example of where monetary policy and the wider economic policies of the Government were not working in tandem. The Minister explained the procedures for the removal of a Governor, and they require the proposal of the court—I think the strengthening of the court is important. There are procedures in place, therefore. It might be thought that a wider discussion of this point would not be in order, but the Bill is about getting rid of the Governor as well as the appointment of the Governor. My hon. Friend might therefore want to touch on that point in more detail later. I had not considered it, but it is important and it should be scrutinised properly and at length by somebody who has considered it more closely than I have.

As for the counter-factual, or what happens when the views of the central bank are at variance with those of the Government, the problem in the years running up to the crisis was not that the leadership of the Bank was too close to the Government, but that the voice of the Bank was being ignored by the Government for political reasons, hence the fact that the growth of the money supply was too fast and the subsequent difficulties in handling the crisis. This was pointed out by the Bank, and Sir Andrew Large made a speech making clear the problems of over-rapid growth of the money supply in 2004. He pointed to the dangers of supposedly benevolent innovations such as the rise of securitisation, and he asked whether that was causing problems that our Government should be addressing. There was no response from the Government of the day.

In May 2006, the current Governor warned that

“a potentially large social problem, with many households getting into difficulty with their debts, is materialising.”

He was in a position to know, because he had received in the post a piece of junk mail—a credit card application from a bank—and the literature said:

“We have the solution, Mervyn, for your bankruptcy.”

The bank in question did not realise that Sir Mervyn King was not bankrupt—and I certainly hope he would never be bankrupt. Indeed, there was a worse problem: one bank—RBS—sent a credit card to a—

--- Later in debate ---

[Matthew Hancock]

My hon. Friend makes the point well so I will not dwell on it. No doubt all Members who have a serious interest in the impact of the Bill are in the House. Those who do not want to come to the House to discuss it are perfectly at liberty not to do so; that demonstrates the amount of interest they have in the consideration of the matters before the House.

Given the scale of the change proposed in the Bill, it is vital that we look at what has happened in the rest of the world. I hope hon. Members will indulge me a moment as I do that. About one tenth of major countries involve their legislatures in the appointment of central bank governors. The United States has been mentioned. Japan, Croatia, Latvia, Armenia, Belarus, Georgia, Macedonia, Lithuania and the Ukraine are also examples of countries where the decision and the veto power are vested in the legislature. Nine out of 10 countries have broadly the set-up that we have. Of that list of countries, only two have financial systems of the same size and sophistication as the UK. They are the USA and Japan. The US system, which is comparable to the proposition in the Bill, has already been discussed.

When I looked a little more closely at the US system, I was surprised to find that in the entire history of the Federal Reserve since it was founded in 1913, not a single presidential nominee for the chairman of the board of the Federal Reserve has ever been rejected by the Senate. We heard the argument earlier from the hon. Member for Edmonton (Mr Love), a member of the Treasury Committee, that we should not worry, as the veto will never be used. It that is an argument for a change of constitutional significance, I do not know of a weaker one. The argument that we should change something of great importance because it is never used would not find much support.

The US Senate’s record in vetting all presidential nominations shows little evidence that elected representatives are any better than the Executive at rooting out views on economic policy. One of the people who was most frequently re-vetted and given a warm send-off by the Senate was Alan Greenspan, who served as chairman of the Fed from 1987 to 2006. He was reconfirmed five times, yet his final tenure at the Fed resulted in some of the most disastrous economic policy decisions in central banking history. He got it wrong on derivatives when he argued in 2005 that

“sophisticated approaches to measuring and managing risk are key factors underpinning the greater resilience of our largest financial institutions”.

He was wrong in thinking that the price that investors are prepared to pay is the only valid valuation of an asset. He was dogmatically opposed to action against financial bubbles, saying:

“Bubbles generally are perceptible only after the fact.”

He went on to admit that he got these things wrong when he told a congressional hearing in 2008, after the bubble had burst,

“I made a mistake in presuming that the self-interests of organizations, specifically banks . . . were such that they were . . . capable of protecting their own shareholders and their equity in the firms . . . I have found a flaw. . . I have been very distressed by that fact”.

The Senate failed in its job of vetoing people who would make great and grave economic policy mistakes. That stands as a great question that the Bill’s proponents need to answer. Why would the Treasury Committee be better than the Senate at rooting out people whose economic policy propositions are mistaken? I also use the other counter-factual, which is that the Senate has vetoed people who have a wide reputation for being excellent in their field. For instance, last year the Senate vetoed Patrick Diamond—who I am assured is no relation—a Nobel prize winner in economics. He was vetoed by the Republican Senators in retaliation for the Democrats refusing to reappoint a Bush nominee in 2008. Such political tit for tat, which led to a Nobel prize-winning economist not being allowed on to the Federal Reserve board, is a strong argument for rejecting the Bill.

[Jacob Rees-Mogg]

Is my hon. Friend saying that all Nobel prize-winning economists should be revered? Do not some of them disagree with the policy of Her Majesty’s Government?

[Matthew Hancock]

I am merely saying that Mr Patrick Diamond was a good candidate for that role. I am particularly concerned about the tit for tat political retaliation, which we do not want to bring into this system.

In Japan, in March 2008, the opposition party had a majority of seats in the upper house—this ties closely with the debate that we will be having in this very Chamber on Monday and Tuesday next week—and it rejected proposals by the Government to appoint a former Finance Minister as the Bank of Japan governor. That led to a 20-day period, at the height of the financial crisis, when Japan had no Governor of the central bank. It subsequently took two years to fill all the vacancies on the Bank of Japan policy board. That is evidence of what happens when there is a parliamentary veto. The argument that that would lead to more effective policy making has been roundly dismissed, but the argument that it would bring risks into policy making, and the risk of having no Governor at all, is strengthened by evidence in the US and Japan, the two biggest economies that have a similar process.

Finance (No. 4) Bill

Debate between Matt Hancock and Jacob Rees-Mogg

Monday 16th April 2012 Commons Chamber

[Jacob Rees-Mogg]

I am grateful to the hon. Gentleman for making that point, because I think the reduction from 50p to 45p will, in fact, raise revenue. I think the estimates are far too unambitious and that, actually, there will be an opportunity for the Government to go further in future. I am extremely encouraged that the Treasury is producing reports on what is the best level of higher rate tax.

On that point, the Government have yet again been right, brave and bold. It is, of course, marginally politically embarrassing in an age of austerity, when we are all in it together, to cut the higher rate of tax, but it is right to do so if that raises more tax for the country—it is right if that allows the Government to spend on the priorities that both they and the British people have. Yes, there may be unpleasant headlines and we may be mobbed up by the hon. Ladies and hon. Gentlemen on the Opposition Benches, but it was the right thing to do. Time will show that the 45p rate will end up raising more revenue, because rich people can leave the country and not pay tax, can decline drawing dividends from their companies and not pay tax, and can postpone taking revenue and not pay tax. It has been shown time and again that reducing rates results in higher rates of total income. The Government were right to introduce this measure, therefore.

[Matthew Hancock (West Suffolk) (Con)]

Does my hon. Friend agree that those who do not look at these dynamic effects of tax changes will always over-estimate the amount that a tax rise will generate, and therefore will always leave the nation’s finances in a mess, as amply demonstrated by the Labour party’s record?

[Jacob Rees-Mogg]

My hon. Friend is absolutely spot-on, because every single socialist Government this country has ever had have always left the country in a financial mess, as they believe that by squeezing the rich until the pips squeak they can get more revenue, when history shows that they cannot.

The success of the Government’s fiscal plan is shown day in, day out by the bond market. Interest rates on our 10-year gilts are just about 2%. When we look abroad—when we look to the continent—we see how quickly those rates can deteriorate for countries in which the markets lose confidence. The greatest tribute to this Government’s economic policy is what has been happening in the bond market.

We must thank our Liberal friends for another great measure in this Finance Bill: the raising of thresholds. That has, quite rightly, been adopted by Conservatives. It is sensible that people should not pay tax when they are on benefits. The higher the threshold can be raised so that we avoid this merry-go-round of tax and benefits, the better.