Pension Schemes Bill

Lord Sentamu Excerpts

Thursday 5th February 2015 Lords Chamber

[Lord Newby]

My Lords, that is an extremely interesting question to which I do not have the answer. However, it has absolutely nothing to do with the amendment before the House, which is to do with whether the Government will give adequate guidance on the issue. The amendment is not about the detailed substance of the rules which are being dealt with not least via a series of discussions with the noble Baroness, as she said. Those discussions will continue. I will happily write to her and other noble Lords about these detailed issues but I stress that the purpose of the guidance—the point of this amendment—is to ensure that the guidance correctly reflects policy. That is what we have committed to do. We have explained how we are going to do it. We have met the noble Baroness’s perfectly sensible idea that we produce a specific leaflet to do it, and we will do that by the beginning of April.

As I explained, we have already had a number of discussions with the noble Baroness and have agreed to meet her after today and before the start of the Recess to continue our discussion on these important matters. I know that she is still unhappy about what the Government are doing with regard to the substance and some of the details of this issue. As I say, we are committed to making sure that we have the maximum degree of clarity. We are committed to having further negotiations with the noble Baroness to tease out—

[The Archbishop of York]

My Lords, if the Minister is assuring us that there will be information online and people will be able to understand everything, why cannot this amendment be put on the statute book so that there is a duty on the Treasury to inform people about this issue? For me the provision is so simply worded that I do not understand why it cannot be on the statute book.

[Lord Newby]

My Lords, we are not suggesting that this goes on the statute book because this requirement already exists. The FCA rules on the guidance providers already require guidance to be given in respect of benefits. All we are doing now is fleshing out how we intend those existing rules—which are in the FCA rulebook, or the FCA document which has gone to the organisations providing guidance—will work in respect of benefits and social care.

[The Archbishop of York]

Could the Minister explain in a clear way that a simple mind like mine would understand whether you are depriving yourself of assets when you take money out of an ISA and put it in a pension fund? How can I be confident that the guidance, which will come from somewhere else, will be more erudite than what I am hearing at the moment? I for one want to say, in this week when we have seen great difficulties in social care provision and when most people are worried about their social care and their pensions, that it seems that this particular bit of legislation actually puts a duty on the Treasury to ensure that it is the one that informs people of this.

[Lord Newby]

My Lords, for the third time, if you move money from your ISA to your pension pot, that is not a deprivation of asset. The Treasury is in charge of the guidance process.

Global Economy

Lord Sentamu Excerpts

Thursday 11th August 2011 Lords Chamber

[Lord Harrison]

My Lords, I am sorry that the Minister has had to break off his holiday reading of your Lordships’ European Union Select Committee’s Sovereign Credit Ratings report. I hope that he will return and study it when he is next on the beach, and reflect on some of the words from the noble Lord, Lord Oakeshott. These institutions exist but a healthier degree of scepticism might inform the City and, indeed, elsewhere to ensure that they are taken for what they are—an educated guess as to the future debt of sovereign nations.

Secondly, would the Minister consult his colleague on the business section about the regional growth fund, which I raised some months ago? I discovered and reported to your Lordships that it was unsuccessful at the moment, especially because of the £1 million bar required for small businesses to make application to that fund. My third point relates to the points made by the noble Baroness, Lady O’Cathain, in the European Sub-Committee B’s report on the single, internal market. Why do we not put greater effort into ensuring that the market comes to fruition, which would surely benefit UK companies perhaps more than any others within the 27 countries of the European Union?

[The Archbishop of York]

My Lords, I listened intently to the Minister but I did not hear in that Statement what the Government intend to do about inflation. The noble Baroness, Lady Thatcher, believed when she was in the other place that inflation was a danger to savings, to investment and to growth. Inflation is rising; what are the Government going to do to cure that particular problem and difficulty? Secondly, debt in the United Kingdom is not just government debt. The greatest difficulty we have is personal debt. When austerity measures are there to cure the national debt, is it ever wise to then encourage the ordinary person to go out and spend? How can that be right? They, too, ought to have austerity measures for themselves.

Finally, I have listened intently and what I constantly hear is that our difficulty is—and it comes again and again—the mess that we inherited from the last Government. Is that right? They certainly left a big debt, but it certainly was not just that. What about the role of the banks? They got us into a mess, and I never hear it said that the mess was caused not just by the last Government but by our financial institutions that left us in debt. Is it not time to put the blame not only on one foot but on both feet?

Investment Bank Special Administration Regulations 2011

Lord Sentamu Excerpts

Thursday 3rd February 2011 Lords Chamber

[Lord Myners]

I had almost concluded my speech but the noble Baroness’s intervention has provided me with an opportunity to carry on and say more. There are very talented people working in UK banking and some of them are among the world’s very best. They earn their remuneration. Sir Philip Hampton, the chairman of Royal Bank of Scotland, referred to a gangmaster culture in some of the banks. I put down a Question for the Minister on this subject, to which he gave his standard Answer on bank bonuses which I can now recite. Regardless of the Question I ask, I get the same Answer. Perhaps it will change at some point, but I am beginning to lose any great hope that the Minister will seek to answer the Questions that I ask him on these subjects.

[The Archbishop of York]

The noble Lord, Lord Myners, normally speaks with great sense and clarity on matters of money, but the question is not that banking is not an honourable profession. People who work in the banks are people of good will and good respect, and they do a very good job. The first question is about bonuses. People in this country find the bonus culture indefensible. The second question is about the gambling casinos around banking. Will they get rid of those gambling casinos? Many people say they do not like them. The question that the noble Lord asked the Minister about Lehman Brothers and deposit accounts in Germany illustrated the point. Some people say that that is not the honourable business of banking. Anybody who is having a go at banking is saying not that banking is not an honourable profession or that bankers are not very able people doing a good job but that these bonuses and the gambling casinos taint the entire profession of banking.

[Lord Myners]

I can only say that there are failures of agency functions here. The shareholders are not holding the boards to account, and the boards are not asking the right questions or building depth of talent. It may be that the Minister, with his great experience in this area, can share with us his thoughts about why banking has this problem of high bonuses. My father was a fisherman, and there was not a big bonus culture in fishing. There is no bonus culture in making ball bearings, in engineering or in the hospitality industry. I think the answer possibly lies with the work that the Independent Commission on Banking is doing. The Minister always treats anything I say positively with considerable scepticism and caution, but I repeat my strong endorsement of the creation of the Independent Commission on Banking. It may well raise some interesting perspectives on the points that have been made. I close by simply saying that I fully support the administrative orders being tabled today.

--- Later in debate ---

[Lord Sassoon]

My Lords, when we have a Project Merlin outcome to announce, the noble Lord will no doubt have every opportunity to cross-question me on these matters. I also note, just in case noble Lords missed it, that the noble Lord committed himself to that being his final intervention. He is certainly well below his batting average for interventions in my closing remarks but we will see whether he holds to it. I shall try not to provoke him. The only further thing that I wanted to say in response to the noble Lord was that, despite what I just said about banking and unfinished business on bonuses, I very much echo what he said about the importance of the City. Extraordinarily skilled work is done by many experts across the financial and business services in the City, and the City adds great value to the UK economy; we should not forget that.

I will respond to a couple of the points raised by my noble friend Lady Maddock. The supplier proposal adapts existing provisions in insolvency law, specifically within the Insolvency Act 1986. We are trying to ensure that, in the case of investment banks, those critical suppliers without whom the resolution of the investment bank cannot take place—the positions cannot be closed out—continue to supply. When we talk about 28 days, it is important that the supply is paid for but it is a question of whether it is paid for within the 28 days. The supplier can stop supplying if any charges in respect of the supply remain unpaid for more than 28 days, if the administrator consents to the termination, or if the supplier has the permission of the court. In that context, the definition of hardship will be left to the judgment of the court.

As regards the bar date, the critical protection is that sufficient time has to be allowed for publicity to be given to the fact that the investment bank has gone into special administration. There has to be sufficient time for affected clients to calculate and submit their claims and for practical difficulties in establishing claims to be sorted out. Therefore, I believe that there are sufficient protections in the regime.

The noble Lord, Lord Davies of Oldham, asked me a number of questions. I hope that I have dealt with the future-proofing and questions around the Financial Services Authority. Consumer protection will be fully taken into account in the architecture that we will propose to replace the Financial Services Authority. Central counterparties and the regulation of over-the-counter derivatives is an area which falls within the general heading that I addressed: namely, that we must work to achieve international and global solutions. I see some nodding and shaking of the head from the Benches opposite. That indicates that these things are not easy. We need to have a regime in place that is safe and appropriate for the markets in the UK, but equally we need to ensure that we have something consistent within the EU and the G20 framework as mechanisms which could provide safe solutions that might work against free investment flows. We have to ensure that this is not one of those issues where protectionism comes to the fore under the cloak of providing safe solutions. I absolutely take the point that the settlement of transactions is ongoing business in which the Government take an active part.

As regards how living wills fit with this new regime, recovery and resolution plans are again a core part of both our and the G20 authorities’ response to the “too big to fail” problem and will be required of all systemically important financial institutions. That is the critical definition in that context. It is not a question of an arbitrary definition that splits investment banks from other banks in the way that the noble Lord suggested might be the case.

On the protection of client assets, it is worth remembering that the FSA has set up a new client asset unit, which is a centre of excellence and expertise within the FSA, in further recognition of the important issues raised by the lessons learnt from Lehman. That further stresses the fact that although these instruments being put in place today are critical, they are in many respects only a part of a wider construct.

The first point that the noble Lord raised, but the last one which I should address, concerns the definition of fairness. The relevant provision is based on existing provisions in the Insolvency Act 1986 and the Financial Services and Markets Act 2000. “Fair” is the modern term for the previously used “just and equitable”. While I do not profess to be an expert on these matters, I am assured that the term “fair”—its use is based on a lot of case law defining “just and equitable”—is well defined under court rulings and will be well understood by those administering the special administration regime.

That has been a long response to a short but important debate.

[The Archbishop of York]

I did not clearly hear the noble Lord’s answer to the question of the noble Baroness, Lady Maddock, about the bar. Who will determine what sufficient time is? How would I know that as a client? Who will determine that it is sufficient?

[Lord Sassoon]

I thank the most reverend Primate for pressing me on that. The critical thing, as I said before, is not that some arbitrary time is laid down, because that will relate to the complexity of the individual administration case. The objective has to be for the administrator to fulfil his objectives. The principal objective that we are looking for is the return of the money as quickly as possible. That will be the objective that the administrator will be looking to fulfil, subject to these safeguards that I have tried to explain to make sure that absolutely everything is being done so that those with money at risk are informed and have time to calculate their claims. A date cannot be fixed in a way that applies to all circumstances, because, if so, there would be a backstop date that might disadvantage people in a simple administration.

Motion agreed.

National Insurance Contributions Bill

Lord Sentamu Excerpts

Wednesday 2nd February 2011 Lords Chamber

[The Archbishop of York]

My Lords, I, too, should like to pose to the Minister the questions that the noble Lord, Lord Myners, asked about whether charities will be covered by the NIC holiday for new businesses. Why not include them? Their inclusion might help their businesses and activities. Joe Public might also be getting a bit worried—possibly even bothered—by this because, during the general election, one group was saying that an increase in national insurance contributions would be a tax on jobs while another was saying that a VAT rise would be a tax on jobs. Now, people will be getting both. Can we be assured that jobs are not being doubly taxed, first by the VAT rise and now through national insurance contributions? It would be helpful if the Minister could assure us that this double taxation will not increase unemployment.

--- Later in debate ---

[Lord Sassoon]

My Lords, I will look to see how many non-trading charities have been created in past periods. However, the noble Lord is long on these questions about what might have been the case had we done the estimate on another basis. I will come on to the critical questions of what estimates have been produced in a minute, if he will permit me. I know he likes to come in on my responses to debates with more and more questions, and I shall try to answer some of the ones he asked me earlier.

The noble Lord, Lord Myners, and other noble Lords asked questions about the geographic extent of the holiday—of course we are delighted that Cornwall is included. However, London and other areas have been excluded. My noble friend Lord Newby admirably answered the question asked by the noble Lord, Lord Davies of Oldham, about London, so I would just refer him to what he already heard the noble Lord, Lord Newby, say.

The critical thing is that we are targeting the scheme, as a temporary measure, on providing assistance to those areas that are most reliant on public sector employment as we transition to a more sustainable model of economic growth. I appreciate that if we had a much more complex scheme, which we think would be disproportionate, we could pick out smaller areas. However, given the proportionality of the scheme and its administration, cost and complexity, the targeting we have done achieves the scheme’s main objectives and consciously excludes those areas that are not so dependent on public sector employment. It amuses me somewhat to note that in plenty of other contexts the Government are criticised for not targeting areas sufficiently and here we are targeting them on those areas where the transition is going to be most difficult.

The cost of extending the holiday to other regions, on the same basis that we have estimated the other costings, would be: £250 million for Greater London, £250 million for the south-east and £160 million for the east of England. These are not inconsiderable sums.

[The Archbishop of York]

Will the Minister assure us that he has done some research that tells him that Tower Hamlets and Hackney—boroughs that I knew when I was Bishop of Stepney—are not solely dependent on public services? Why are they not included?

[Lord Sassoon]

As I have tried to explain, the issue here is that we have to take broad areas of the country to make this workable. Otherwise, the scheme would be effectively unmanageable in the way that we want it. Some remarks have already been made about the cost of administering the scheme, and while of course there are boroughs in London that are very significantly deprived—and the noble Lord, Lord Myners, has raised questions about other parts of the country—we have had to work the design of the scheme around regional units. Therefore, as I have tried to explain and as my noble friend Lord Newby eloquently explained, the relatively benign employment conditions in London mean that we have had to take regions including London as a whole.

On the estimates of cost, I can reassure the noble Lord, Lord Myners. I do not talk about the Office for Budget Responsibility as an auditing body, although he might like me to do so. That is not what it does. The OBR has independently reviewed all the key figures and looked at the £940 million, the 800,000 employees and the 400,000 employers. I assure the noble Lord that, whatever term he likes to use, the OBR has put that through its machine—