Financial Services (Implementation of Legislation) Bill [HL]

Debate between Lord Adonis and Lord Hodgson of Astley Abbotts

Committee: 1st sitting (Hansard): House of Lords
Tuesday 8th January 2019 Lords Chamber

[Lord Hodgson of Astley Abbotts (Con)]

The noble Lord has already referred to the two-year sunset clause. Does he accept that in the short run, the imposition of the Brexit deadline will require things to be done quickly, and in those circumstances, if the sunset clause were shorter, would he be happier?

[Lord Adonis]

My Lords, the sunset clause is for two years, which is nearly half a Parliament. The fact that there is a sunset clause does not somehow legitimise everything that takes place in that period. There is no case for these provisions at all. Let us be clear that we are talking about further changes to the existing law; these are the provisions that are causing such difficulty for many of us in the House. We are prepared to grant the Minister powers to simply transpose existing provisions into UK law—indeed, I am not even sure that under the European Union (Withdrawal) Act he needs legal powers for that. The key issue here is that it all concerns further changes to the law. The statute book constantly needs to be capable of being updated; the whole purpose of Parliament is to debate further changes to the law, and we have established procedures which go back to time immemorial for doing that. They involve Second Reading, Committee, Report and Third Reading stages in both Houses of Parliament.

There is no reason whatever for subverting those principles simply because the Government are overloaded, which is essentially the argument at the moment. The answer is either not to make those changes in law, if effectively they can be made only by exercising powers by decree, or to create the necessary time to do so, which means the Government having the right priorities in what they put before Parliament. We always have to set priorities. As a former Minister, I know that what you do and do not put in the Queen’s Speech and the legislative programme is a matter of priorities. If necessary, the House must sit for longer.

Finally, if it comes down to whether this House should sit somewhat longer to debate major changes to the law of the land on financial services, I for one feel that it is our duty to sit here, debate these changes and not give the Government the power to legislate by decree. I hope that the noble Lord, Lord Hodgson of Astley Abbotts, feels the same because he has been responsible for financial services regulation in the past. That is effectively the power being granted here, potentially in significant areas that are not to do with simply transposing existing or in-flight European law into UK law. I am sorry to say this to the Minister, but the objections to the Bill are fundamental, not incremental. He may well find that, unless he can meet those objections, substantial parts of the Bill will be removed by the House on Report.

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[Lord Hodgson of Astley Abbotts]

My Lords, I have put my name to this amendment. My noble friend has raised an important point about Brexit itself and its implications for the regulatory regime. I do not propose to follow up on his technical discussion, but there is a wider point to be made. Here, I will draw on the remarks of the noble Baroness, Lady Kramer, who said that, in the two-year period during which the Bill provides powers, things will happen. We can set out our regulatory stall, but our strategy for regulation needs to become clearer during the two years in which the Act will be in effect.

It is important that the Government do some serious thinking about how this country will present itself to the world via its financial services as part and parcel of the new regime. Noble Lords will know that, for a number of years, I was a director of one of the self-regulatory organisations which governed the City before the passage of the Financial Services and Markets Act. A wise old bird once told us that we should think about it like a high jump. If you set the bar too low, everybody can clear it and you will attract to your market all sorts of undesirable characters and firms, and there will inevitably be failures and problems, which will damage your overall reputation and therefore you will lose your world standing. By contrast, if you set the bar so high that nobody can get over it without enormous cost, bureaucracy, time and difficulty, you may have a market relatively free of failure but it will have very many fewer participants. I encourage the Government to think about how we set that high-jump bar for regulations, given the comments my noble friend made in his opening remarks.

The only other point I want to make is this: regulation tends to be on an upward lockstep. For the most part, regulators do not have a reverse gear. Few regulators come along and say that, given that the world has changed, they no longer need the powers they have because they can do a perfectly satisfactory job without them. Rather, they are left with those powers, which then have to be enforced and have a cost. The commercial vessel then gets more and more barnacles and slows through the water, and it is never able to go in for a hull clean.

My remarks are not an argument against regulation per se. They urge the Government to have regular reviews of regulation to ensure that it is properly focused and achieves a worthwhile result.

[Lord Adonis]

My Lords, the longer the noble Lords, Lord Leigh and Lord Hodgson, spoke, the more concerned I became about their intentions in relation to the powers proposed in the Bill.

I fully accept the noble Lords’ perfectly reasonable intentions. We can have a debate on the right hygiene bar for the regulation of financial institutions—if Britain leaves the European Union, it will be a debate. The Foreign Secretary, Jeremy Hunt, opened it last week in his speech in Singapore, when he set out a vision of Britain being Singapore-on-sea, with a light-touch regulatory regime, offshore from Europe, ready to start competing—as I took it—on a lower bar. It perhaps will not be as low as the hygiene level mentioned by the noble Lord, Lord Hodgson, that starts to discredit us as a reputable financial centre, but he clearly wants it to be lower—he is a Tory, and generally speaking this is what Tories want. There is no great secret around what it is that the noble Lords, Lord Leigh and Lord Hodgson, want.

The crucial issue, however, is how the noble Lords’ intentions relate to the capacity of the Government, under this Bill, to effectively legislate by decree. If the Government want to make big changes in our regulatory regime, they should be debated openly and fully in this House and in the House of Commons. Indeed, if they are substantial departures from existing practice, the more difficult it will be to deliver paragraph (b) in the amendment, which states that,

“financial services regulations do not impose a disproportionate burden on small listed companies”.

That is all the more reason why they should go through the full and proper legislative procedures of this House: Second Reading, Committee, Report and Third Reading. That way, we can debate whether the hygiene level of the noble Lord, Lord Hodgson, is satisfactory. They make no argument whatever for giving the Government the power to rule by decree.

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[Lord Hodgson of Astley Abbotts]

For the Hansard writer, I did not say “hygiene”, I said “high jump”.

[Lord Adonis]

I did not hear the noble Lord across the Chamber, but it does not affect the point. He wants to vary the level of the bar—that is the issue. I do not object in principle: he has a right as a parliamentarian to put forward proposals for changing the level of the bar. However, I object strongly that the Government should be allowed to make those changes by decree, the power that is given to them by this Bill, but we will return to that on Report.

At the moment, the intentions of the European withdrawal Act are elaborately debated in this House, precisely to meet the objective rightly set out by my noble friend Lord Tunnicliffe: that there should be a transposing of European legislation to British law and any further changes to the law should be sufficient only to prevent, remedy or mitigate deficiencies in retained EU law. That is a limited objective which justifies the power of the Government to do this by Orders in Council. As soon as we get to much wider political objectives—the kind that the noble Lord has just set out and as set out by this amendment—it completely undercuts the justification for this Bill. The justification for this Bill should surely not be for major departures of this kind in the law and the regulatory regime to be made by Orders in Council rather than by the full, open and proper debate which is necessitated by introducing primary legislation.

National Citizen Service Bill [HL]

Debate between Lord Adonis and Lord Hodgson of Astley Abbotts

Report stage (Hansard): House of Lords
Wednesday 7th December 2016 Lords Chamber

[Lord Hodgson of Astley Abbotts]

My Lords, I was very pleased to add my name to the revised amendment of the noble Lord, Lord Faulkner. Along with most other Members of the Committee, I was astonished to find that the law of 1920, which was no doubt introduced with every good intention of preventing the exploitation of young people, failed to distinguish between working as an employee of Railtrack and volunteering to work unpaid on, say, the Bluebell Line. That seems to me a completely different activity. As we explored this issue a bit further, we found that a similar challenge exists with the canals and waterways because the Government—I cannot remember whether it was this Government or the last Labour Government—very creatively came up with the idea of moving the canals into a new charity: the Canal and River Trust. Free from the shackles of Treasury spending restrictions and with a one-off dowry, the charity now has to stand on its own two feet, both operationally and financially. Given the past shortage of funding, there is a huge backlog of maintenance. To tackle this, and to encourage local communities to take an interest in their local canal for all sorts of purposes such as recreation and running and cycling along the towpath, often in highly industrialised areas, the board of the charity has created local partnerships, which means that the bulk of the work is done by volunteers, many of whom are young people working in their holidays and at weekends.

As the noble Lord, Lord Faulkner, said, the Canal and River Trust, like the railway heritage groups, needs to obtain legal certainty and clarity on its responsibilities regarding the position of young volunteers who work on such activities. If their legal position is uncertain, or worse, I do not know what that means for health and safety and their insurance policies. It seems to me that is a serious problem. I cannot believe that somewhere in the fine print of the relevant insurance policy, it does not say that the policy is void if the policyholder is breaking the law. I cannot believe that an insurance policy will be valid in such a situation. If my noble friend is not able to accept the noble Lord’s amendment—glancing over his shoulder at his speaking notes, I think I can see that he is not going to accept it—I hope he will tell us how we can resolve this problem and give us a clear assurance that someone somewhere in government will be tasked with coming up with an answer to the problem, because it cannot be in the interests of NCS, the country or our local communities to have this situation continue. We must have the will to make sure that we sort it out.

[Lord Adonis (Non-Afl)]

My Lords, as a former Secretary of State for Transport, I have to say that until this debate took place this evening I was not even aware that this legal restriction was in place. I am sure that if there was a free vote in the House or indeed in the other place, there would be an overwhelming desire to see this situation change and be subject to proper regulation and health and safety requirements so that young people have the opportunity to volunteer and play their full part in these activities. I cannot think of anything more likely to engage the enthusiasm and wholehearted activity of young people, which is not often so easy to engage, particularly with boys, than not only railways but steam railways, which still hold a particular fascination. I am much more in favour of modern railways and high-speed ones but my noble friend is doing valiant work in keeping our heritage going strong. Of course, these heritage railways are present in all parts of the country. They are among the most exciting and well-visited tourist attractions and play a big part in local communities. This seems a thoroughly absurd and outdated constraint, which, with the wit of parliamentary draftsmen, I am sure it must be possible to find a way through.