Bank of England and Financial Services Bill [HL]

Lord Davies of Oldham Excerpts

Wednesday 11th November 2015 Lords Chamber

[Lord Swinfen (Con)]

My Lords, the idea behind the amendment is estimable but purely to do with the environment. The Bank of England is purely to do with finance and I do not think that the two would make happy bedfellows. We should be able to find a better home for the Green Investment Bank than the Bank of England.

[Lord Davies of Oldham (Lab)]

My Lords, the Minister is faced with a rather challenging task here. First, he operates against a background where the Government’s record in recent months has caused great anxiety among all those concerned with improving the environment and reducing the threats of climate change. Here he faces a fairly significant issue—the Green Investment Bank. Of course, the additional complexity is that the bank is itself subject to other legislation under consideration. Irrespective of the merits of the amendment, I could understand if the Minister felt that this were really quite a challenging situation. I will try to find a way out for him as well, as the Liberal Democrat noble Lords emphasised their solutions.

We are not averse to privatising the bank but we are not very appreciative of the urgency of doing it at this time. Crucially, the question that emerged during the debates on the Enterprise Bill and have been identified again today is how the Government intend to maintain the bank’s mission. Of course, it is easy to privatise if one disregards the fundamental objectives of the foundation of the bank. We need to know how the Government intend to guarantee that the bank does not morph in private hands into a different sort of institution and bank. What is the Government’s answer to that? They may not be totally enamoured of the Royal Mail example. Of course, that is buttressed by regulatory standards that we have not so far seen adduced as far as the green bank is concerned.

It is obvious that the Minister must make some progress on this, otherwise the proposal the Government are putting forward elsewhere will occasion increased opposition from this side of the House. I am always in favour of helping Ministers, particularly when it involves them rather than the Opposition doing the work. I suggest that the Minister consults his colleagues in the business department concerned with the process on the green bank and, after those consultations, comes back on Report with a much clearer identification of the progress of the Government’s thoughts on the bank. At present, in the debates on either the Enterprise Bill or this one we have certainly not yet heard anything remotely convincing from the Government to give the assurances we need that if this bank, which has proven to be a successful initiative and is respected for its work, goes into the private sector it will not all too readily be led down paths that depart from its much-valued objectives.

[Lord Teverson]

As we are in Committee, I will briefly come back to the noble Lord opposite about whether the Bank of England or the PRA is the right organisation for this. The Green Investment Bank is the Green Investment—I emphasise—Bank, so it seems to me appropriate. I want to make clear that we are open to other suggestions to solve this, if the Government and Minister do not believe this is the best way.

For instance, I am involved in an organisation called Regen SW, which used to be a wholly owned subsidiary of the South-West of England Development Agency. It was privatised and is very successful. I am one of three trustees who look after it. If there were a hostile takeover by a non-green organisation, there are three of us who can exert power to make sure that the original aims of Regen SW are maintained. If something creative can be done in that way, I would be absolutely delighted and we would like to hear it.

[Lord Bridges of Headley]

My Lords, I thank the noble Baroness, Lady Kramer, and the noble Lord, Lord Teverson, for their extremely constructive remarks—and, indeed, the noble Lord, Lord Davies, who on Monday offered me sympathy for my position and today offered to be very constructive. Where do we go next? It is going to be very interesting.

[Lord Davies of Oldham]

My Lords, I would be prepared to exchange sides, if the Minister can arrange that.

[Lord Bridges of Headley]

The noble Lord can come and join us. I fully understand the intentions behind the amendment. Indeed, I have read the debate that took place last week with my noble friend Lady Neville-Rolfe on the Enterprise Bill, in which the noble Lord, Lord Teverson, set out his party’s position eloquently. I believe that all parties are agreed, as the noble Lord, Lord Teverson, and the noble Baroness, Lady Kramer, said, that the Green Investment Bank has been a real success story, and we need to build on that success. That is why the Government want to allow the Green Investment Bank to continue to go from strength to strength by moving it into private ownership. As part of our work to achieve this, it has become apparent that the existing legislation which governs the bank, the Enterprise and Regulatory Reform Act 2013, would very likely constitute government control over the bank and result in its remaining classified to the public sector. That is why, as the noble Lord and the noble Baroness said, the Government intend to repeal that legislation through an amendment to the Enterprise Bill, which will remove control and ensure that a privatised Green Investment Bank will have the freedom to borrow and raise capital without affecting public sector net debt.

I note, as my noble friend Lady Neville-Rolfe noted, the concern that the repeal would remove the Green Investment Bank’s statutory lock over its green mission, and that is where these amendments come in. The noble Baroness, Lady Kramer, eloquently drew a parallel with the privatisation of Royal Mail and its regulation by Ofcom, and whether the Government might replicate that kind of arrangement for the Green Investment Bank. First, there is a difference between regulating a company such as Royal Mail, which provides a public postal service and is a utility, much like energy or water, and the Green Investment Bank. As a country, we regulate mails as an industry, and the regulator for postal services, Ofcom, has designated Royal Mail to provide a universal postal service for the whole of United Kingdom, as set down by Parliament under statutory obligation. That means that, regardless of the nature of its ownership, for as long as Royal Mail holds the role of universal service provider, it must comply with specific regulatory conditions imposed upon its operations for the purpose of providing a universal postal service throughout the United Kingdom, as well as other regulatory conditions which apply to all postal operators in the market. If Royal Mail was not the designated universal service provider, its operations in the postal market would be subject only to those general market regulations that apply to all other postal operators.

The parallel here would be for the PRA to regulate the green investment market, could such a thing be defined. Not only would this amendment increase regulation at a time when the Government are trying to reduce it, but increasing regulatory costs in the sector would be likely to reduce overall green investment. I am sure that is not something that the noble Baroness, Lady Kramer, would wish. I must reiterate that the Government are implementing the repeal of legislation only as a necessary measure in allowing private capital into Green Investment Bank, reflecting advice from the Office for National Statistics. As I have said, to be classified to the private sector, an organisation cannot be subject to significant government control, and that includes control through excessive regulation. The decision on whether an organisation is classified to the public or private sector is made by the ONS on the basis of EU-wide rules. The ONS looks at all factors of control when deciding whether a corporation can be declassified from the public sector. If the Green Investment Bank was not free to change its articles because of public sector control, it would very likely remain classified to the public sector. Similarly, if the bank as a single entity were to be regulated in this way, it would still be likely to be considered as under public sector control, so this would not provide the solution that noble Lords are seeking.

The Government want to work constructively with noble Lords across the House to secure the future of the Green Investment Bank. I totally agree with the noble Baroness, Lady Kramer, that we need to work across government as a whole, and I shall make sure that all parts of the Treasury are aware of her remarks and see the debate. However, I hope that the noble Baroness, Lady Kramer, the noble Lord, Lord Teverson, and, should he so wish, the noble Lord, Lord Davies, will meet my noble friend Lady Neville-Rolfe at BIS to discuss this matter further. I hope that the noble Baroness will agree to withdraw the amendment.

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[Lord Carrington of Fulham]

I will come on to that in a moment; that is the second point I wish to make. The first point is that the power does exist for the PRA—and, indeed, the FCA—to be able to go and investigate what has happened inside a financial institution in very great depth and in very great detail.

The consequence of the reverse burden of proof would be to make the situation to which the noble Baroness referred even worse. An organisation which knows that there is individual liability where they have to prove that they did no wrong will have lawyers crawling all over them to make certain that at every move, nothing is recorded, nothing is said and nothing is minuted which would put them in a position where they could do anything other than deny all culpability. That is what would happen—and to some extent does happen. But I can reassure the House that destroying email trails is extraordinarily difficult. In most institutions, email trails survive through even the greatest attempts to wipe the hard drives clean. I can assure the noble Baroness that if the PRA wishes to find evidence and has the resources, the determination and the suspicion, it will find the evidence to bring the prosecutions it needs.

[Lord Davies of Oldham]

My Lords, this has been an excellent debate and the Minister has a great deal to which he needs to respond. It is little surprise that we have been exercised with these amendments, because they go to the very heart of people’s trust and confidence in the financial services industry.

I would suggest that perhaps one reason why this change has been effected by the Government is because of the lack of transparency in the government proceedings. That is why the controversy has arisen. None of us has been privy to the process whereby the Government produced this significant change to the senior managers and certification regime. Clearly, decisions have been taken behind the scenes and without consultation. I do not think that there is much of an email trail on either of those factors.

The fact is that the Government did not even consider that this might be much of a problem, and today’s debate identifies just why that is. I hope, therefore, that the Minister will be able to demonstrate the thought processes behind these changes. The age-old argument that it is not working in practice scarcely holds, because the SM&CR never had a chance to work in practice—so the Government will have to come out with a better argument than that. What advice did they get that convinced them that these changes were the best approach? Did an event occasion the change? Are the meetings that the Minister had on such a significant issue as these proposed changes on the public record?

We also need to consider the role of the regulators and how we can ensure that they are bold enough to spot when misconduct takes place. Has their job not been made harder by the fact that there will no longer be a duty on firms if they suspect wrongdoing? Can the Minister please go into some detail about how the Government propose to ensure that the regulators will be able to rule out ineffective management? We have had a refresher course today in just what ineffective management—and, indeed, corrupt management—has done in terms of damage to so many people’s lives. We ought not to forget that.

I hope that the Minister will be able to address these points in some detail. Of course, he has to take into context just what this debate has demonstrated: how difficult the issue is, but how fundamental it is to the welfare of our society. I expect the Minister to give a detailed response.

[Lord Bridges of Headley]

My Lords, it has been a very good debate and I thank all noble Lords who have spoken eloquently, and powerfully at times.

I start by taking a step back. As was mentioned by the noble Baroness, Lady Kramer, and many others, the financial crisis obviously exposed deep flaws in the functioning of parts of the financial services industry, with enormous consequences, as we all know, for the economy and people’s living standards. Since then we have also seen cases of malpractice and, at times, criminality—for example, attempts to manipulate benchmarks for personal gain. That is why, as the Chancellor said, the Government are entirely committed to ensuring that the UK financial services sector is the best regulated in the world with markets of unquestioned integrity and the highest standards of conduct. To that end the Government have made far-reaching reforms to financial regulation—reforms that form the backcloth of today’s debate and reforms that your Lordships know all too well.

I shall remind your Lordships of just a few. The Government have introduced a criminal offence of misconduct in the management of a bank. This means that senior managers who recklessly cause their institutions to fail may face a seven-year prison sentence. The UK’s regime for regulating the remuneration of senior staff who can pose risks to financial stability is now the toughest of any major financial centre. PRA-approved senior managers in banks will face deferral of a significant proportion of their remuneration for seven years, and possible clawback to their pay for up to 10 years where there is a material failure of risk management in their business.

These measures apply to exactly the individuals targeted by the amendment of the noble Lord, Lord Sharkey, and encourage the responsible management that he and of course we all wish senior staff in banks to display. To be clear, I am in complete sympathy with the outcomes that the amendment seeks to deliver. Before I turn to the senior managers regime in more detail, I make another point, which my noble friend Lord Hunt of Wirral made. To restore trust in financial services, strengthened regulation needs to be supported by industry action. That is why I welcome and wholeheartedly support the efforts by the financial sector to strengthen the culture and ethics of all staff. In particular, the Banking Standards Board, formed of the largest banks and building societies, is doing vital work. The fair and effective markets review established by the Chancellor is also prompting change. The review concluded that,

“markets require stronger collective processes for identifying and agreeing effective standards of good market practice”.

As a result, more than 30 firms from a broad cross-section of financial markets have combined to achieve these aims.

The extension of the senior managers and certification regime across the financial sector will support and reinforce all these initiatives to improve individual accountability and raise standards. As Andrew Bailey said,

“it creates the framework to establish effective responsibility within firms, while maintaining the role of the public authorities, the PRA and FCA, for supervising and enforcing the public interest”.

Under the current approved persons regime, the regulators can take action only against those individuals whom they pre-approve if they breach one of the statements of principle set out by the regulators—enforceable standards of conduct that apply on an individual level—or if they are knowingly concerned in activity that causes the firm to breach regulations. The range of approved persons covers significant influence functions, such as the chief executive and directors, and customer-dealing functions, such as sales staff. The new SM&CR focuses pre-approval activity much more closely on those at the top of the firm with enhanced powers for the regulators to impose conditions and time limits on these approvals. This is supported by an ongoing requirement for the firm to assess senior managers’ fitness and propriety annually. The regime requires these individuals to have statements of responsibilities to give absolute clarity about who is responsible for which parts of the firm. It will not be as impenetrable as the noble Baroness, Lady Kramer, said. Beneath the senior managers layer is the certification regime. This puts a statutory responsibility for ensuring the fitness and propriety of key staff below senior managers clearly on the firm both at the point of hiring and annually thereafter.

The new regime also enables the regulators to apply enforceable rules of conduct to all employees if the regulators judge that this will advance their objectives. For senior managers, this includes a rule on effective and responsible delegation, which addresses the “nothing to do with me” argument that the noble Lord, Lord McFall, eloquently talked about and the noble Lord, Lord Tunnicliffe, mentioned. The rule states:

“You must take reasonable steps to ensure that any delegation of your responsibilities is to an appropriate person and that you oversee the discharge of the delegated responsibility effectively”,

as well as requiring them to ensure that the area of the firm for which they are responsible can be controlled effectively.

Bank of England and Financial Services Bill [HL]

Lord Davies of Oldham Excerpts

Monday 9th November 2015 Lords Chamber

[Baroness Wheatcroft (Con)]

My Lords, listening to the debate this afternoon, it is clear that many have concerns about the power and influence of the Bank of England. However, I cannot help but feel that this amendment takes that concern a step too far. Much as I have great admiration for Mark Carney, I cannot imagine how he is expected to predict the effect of artificial intelligence. The duties we are putting on the Bank are already extremely far-reaching. The responsibilities now placed on the Financial Policy Committee are deep and will have a huge impact, but to ask it to range as far as this amendment is surely to demand something beyond common sense.

The role of ensuring financial stability is crucial. It means keeping our financial institutions on the straight and narrow, and watching out for problems. However, to ask for those decisions to be taken in the light of what may be happening 20 or 25 years from now is surely a step too far. The role of Government in thinking about such issues is clear, but we would be in very dangerous territory if we thought of the FPC as the arm of government to influence such decisions.

[Lord Davies of Oldham (Lab)]

My Lords, I would like to join in this debate because, although I respect the expertise of the noble Baroness who has just contributed, I am rather more in sympathy with the arguments of my noble friend Lady Worthington and the noble Baroness, Lady Kramer. I hear what was said about placing obligations on the Bank, but we should also appreciate that we have the benefit of the present governor—on whom I have not lavished many plaudits this afternoon as I was rather concerned about the future structure of the Bank, for which he will be responsible. Nevertheless, we all recognise the governor’s merits in taking a wider perspective on aspects of the economy than has perhaps been the case heretofore. Certainly, the speech that he made not so very long ago, in September, to Lloyd’s of London, in which he said that climate change is the “tragedy of the horizon”, ought to wake all of us with alarm, but also make us ask how we can adjust and make responsive our institutions to the anxieties that obviously flow from the developing and clearly established dangers of climate change.

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Moved by

[Lord Davies of Oldham]

9: Clause 9, page 7, line 12, leave out “reasonable”

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[Lord Davies of Oldham]

My Lords, I shall speak also to the other amendments in this group. I will be brief. If ever I were cast before the Lord Mayor’s Show, it is in moving this rather marginal amendment when a huge, significant debate on the relationship of the Audit Commission to this legislation will take place as soon as we finish debating these rather minor amendments. I shall keep my remarks necessarily brief on this because I want to hear the more weighty contributions that are likely to be made on more fundamental aspects of the relationship of the Audit Commission to this Bill.

I think I can anticipate the Minister’s response to these amendments, particularly when he is at his most constructive, as he has been today. He will say that “reasonably” is used to limit excess, that it is a common legislative tool and that I have been at Westminster long enough to recognise that. I do, but I make no apology for the fact that I have introduced these amendments centred on “reasonably” merely to get some locus with regard to the important consideration of the National Audit Office. The Bill will allow the National Audit Office to initiate value-for-money studies across the entire Bank, other than for the financial audit of the prudential regulation functions of the Bank. It ought to be compatible with the—I hesitate on this word—desubsidiarisation of the PRA. The National Audit Office will be able to conduct any value-for-money study and is not to be concerned with the merits of the Bank’s general policy. It will consult the Bank of England regarding any proposed study.

Our amendments deal only with the practical arrangements between the National Audit Office and the Bank. They do not try to deal with conflicts that may present themselves between the Court of Directors and the National Audit Office or the proposed means by which various resolutions could be achieved. Nor am I seeking in any way, shape or form to pre-empt the much more substantial debate which is to take place in a few moments. However, we had a harbinger of that debate in the contributions by the noble Lord, Lord Bichard, at Second Reading, and the chair of the National Audit Office, Sir Amyas Morse, has also spoken publicly about his concerns. The issue is made more sensitive because of the Bill’s general approach to oversight and scrutiny, which we have covered in a series of discussions today. The National Audit Office’s concern with regard to its work mirrors many of the worries that we have already expressed about the Bill in its current form.

I hope it will be recognised that I am not going to press these amendments today. I am not even going to ask the Minister to give much more than a cursory reply to them. They were tabled against the background that at Second Reading we had an expression of real concern about the role of the National Audit Office as conceived in the Bill, and I cannot wait for that debate to take place. I promise the Committee I will play, if any, a small, supportive role. I beg to move.

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[Lord Bridges of Headley]

My Lords, as my noble friend Lady Noakes said, the noble Lord, Lord Davies, is once again being incredibly modest and reasonable about his reasonableness amendment. I think the amendments merit a full response, so I hope he will forgive me. I will try my best, and I will pick up on the point made by the noble Lord, Lord McFall. I heed what he said about this in the past.

I shall set out the Government’s position. Clause 9 gives the Comptroller and Auditor-General a new role in the financial audit process of the Bank. The Comptroller and Auditor-General will be consulted on the appointment of the financial auditor and on the work programme that that auditor sets out to deliver. The Comptroller and Auditor-General will have the right to attend the relevant parts of the meetings of the Bank’s audit and risk committee. This is intended to assist the NAO in conducting value-for-money examinations of the Bank under Clause 11.

Clause 10 provides for increased public scrutiny in circumstances where a Treasury indemnity has been granted to the Bank, or to a company of the Bank. Fortunately, times when a Treasury indemnity is deemed necessary are rare, but it is right that where there is a direct risk to public funds the Treasury can require the Bank to prepare a financial report on any activities that have been indemnified, so that the extent of the risk to public funds can be assessed, and that this report is subject to review by the Comptroller and Auditor-General. I agree that in both of these contexts the question of access to information is critical. It is central to the ability of the Comptroller and Auditor-General, assisted by the National Audit Office, to carry out effectively the roles defined for him in the Bill. So I am pleased that the noble Lord, Lord Davies, has tabled the amendments and that the issue has been raised, but I am unable to accept them.

To address my noble friend Lord Higgins’s point, the language used in the Bill regarding the Comptroller and Auditor-General’s access to information mirrors the relevant wording from the National Audit Act 1983, which provides in Section 8 that,

“the Comptroller and Auditor General shall have a right of access at all reasonable times to all such documents as he may reasonably require, for carrying out any examination under section 6 or 7”,

in the National Audit Act,

“and shall be entitled to require from any person holding or accountable for any such document such information and explanation as are reasonably necessary for that purpose”.

As far as I am aware, the inclusion of requirements of “reasonableness” in this section has not created difficulties for the Comptroller and Auditor-General in the context of value-for-money examinations carried out in relation to other public bodies, and I see no reason why it should cause a problem now.

Some may argue that the Bank would be able to use this reasonableness requirement to delay examinations, but if the Bank did not comply with its obligations under this clause then the Comptroller and Auditor-General would be able to seek an injunction from the courts to enforce his rights. As such, it seems to me that the amendment is unnecessary, and I ask the noble Lord to withdraw it.

[Lord Davies of Oldham]

My Lords, I am not going to withdraw it without first expressing my enormous appreciation for the support from the government Benches for what I had regarded as modest amendments. The noble Baroness, Lady Noakes, often expressed herself with great vigour against any proposals that I put forward when we were in government, but today I have found some favour with her when I did not quite anticipate it. Obviously the noble Lord, Lord Higgins, is always reasonableness itself, so I knew that he would speak very well on this matter.

The issue was not so much that I did not think it was worth airing the question of reasonableness. I accept very much the Minister’s coherent and proper response to this very short debate, and I think that we very much appreciated the tone that he adopted. The reason why I was concerned about these amendments at this stage was against the background that they are immediately before what we all recognise is a pretty substantial issue regarding the Bill, and I know that others are going to present that argument with considerable force. It seemed only reasonable if on this occasion I couched my expressions in modest terms. I promise not to make a habit of that, and beg leave to withdraw the amendment.

Amendment 9 withdrawn.

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[Lord Davies of Oldham]

My Lords, I do not enjoy the role of opposition a great deal but, just for once, in the light of this debate I am glad that I am here this evening and not where the Minister is sitting. He has been presented with a very difficult situation. I assure him that it is not often that in this House we have not just the Official Opposition presenting a strong case on an issue but two very experienced Members on his own Benches—on this occasion, the noble Baroness, Lady Noakes, and the noble Lord, Lord Higgins—pressing the need for change in a Bill. The equally experienced—although more so in the other place than here—noble Lord, Lord Young, indicated that there has to be some way out and that it is time the Government pursued it. It certainly is.

What a mess the Government are in and what great difficulty, I am sure, the Minister will have in defending how they arrived at this ridiculous situation. Time is of the essence. Even if the Government stagger through this House without too much challenge—I am still not convinced about how sharp that challenge should be—the other place will consider this matter shortly and there will certainly be a great deal of difficulty down there unless change is effected. I accept what the noble Baroness, Lady Noakes, suggested: it is best to get it right in this House before Report, so the Minister does not have too much time.

[Lord Bridges of Headley]

My Lords, it is always nice to start off with some sympathy for my position from the noble Lord, Lord Davies. I thank all noble Lords who have spoken and made some very thoughtful contributions. I start by letting your Lordships know that detailed discussions are ongoing between the Bank, the NAO and the Treasury to find a way forward on this issue that all sides find acceptable. These discussions have not yet concluded but I hope to be able to update the Committee before Report.

I should like to set out the Government’s position and will address the amendments and the stand part debate relating to Clause 11 in one fell swoop. However, before I continue, I thank the noble Lord, Lord Bichard. He met me last week and talked me through the amendments that he had hoped to table for today. I thank him for engaging so constructively and I very much hope that that dialogue with me can continue, even if he is unable to contribute to this debate in Committee.

I begin by emphasising that by extending, for the first time, the NAO’s ability to conduct value-for-money reviews of the Bank, the Bill will deliver a significant increase in the transparency and accountability of the Bank to the public and Parliament. The Government are strongly of the view that enhancing the accountability of the Bank of England is in the public interest but it is also in the Bank’s interest—strengthening public trust in the Bank will only add to its credibility.

The issue of how the Bank uses public resources is long running, as my noble friend Lord Higgins said. There has been debate on it ever since the Bank was nationalised in 1946. While researching this debate, I came across correspondence on this issue from my grandfather, who happened to be a Permanent Secretary at the Treasury in 1946 and during the 1950s. So something in the Bridges genes means that we have to deal with these things, although I do not know quite know what that is.

Since the 1950s, the relationship between the Bank and the Government has clearly evolved. Now, we regard the independence of the central bank as critical to our economic security and prosperity. As the noble Lord, Lord McFall, said, independence has been an issue of debate not just here but elsewhere. As Ben Bernanke, a previous chair of the Board of Governors of the Federal Reserve System, said:

“A broad consensus has emerged among policymakers, academics, and other informed observers around the world that the goals of monetary policy should be established by the political authorities, but that the conduct of monetary policy in pursuit of those goals should be free from political control”.

As a number of your Lordships have said, today the Bank of England occupies unique territory in the foundation of the UK economy, and policy decisions by the Bank are of vital importance to everyone. To deliver its mandate effectively, it is essential that the Bank’s independent status is preserved.

The NAO also plays a vital role as Parliament’s auditor. Its own independence is crucial to ensuring that there is effective review of the effectiveness and efficiency of the public sector and for maximising public accountability. Parliament, and in particular the Public Accounts Committee, relies on the work of the NAO to scrutinise properly the value for money of taxpayer-funded activities. It is therefore important that the NAO be allowed to do its work in as unfettered a way as possible.

Bank of England and Financial Services Bill [HL]

Lord Davies of Oldham Excerpts

Monday 9th November 2015 Lords Chamber

[Lord Flight]

My Lords, I support the points made by the noble Lord, Lord Sharkey. If the number of independent directors on the court is reduced to seven, and is not far off being equal to the number of resident directors, I am not sure what role the court has. I also raise the point as to what should independent directors of the court be. What sort of people should be there and how should they be appointed? I was surprised when exploring this to be told that there was now a ruling that a member of the court must not be any NED of any form of bank. It seems that, by and large, NEDs on the boards of banks are, in today’s world, almost an extension of regulators. One of their prime governance tasks is to make sure that the banks are run properly, in accordance with regulatory requirements. I would have thought that the independent members of the court ought to be a cross-section of NEDs from banks and other financial institutions, and that to say, “Oh no, you mustn’t have anybody who is an NED of a bank because there is a conflict of interest”, is a complete misunderstanding of the role of the court.

Obviously, if the bank of the individual NED were being discussed, they could leave the room and behave as in the normal arrangements when any conflict of interest arises. However, I repeat: if the court is to do a useful job, it should have on it independent representatives who have first-hand experience of the banking system in this country.

[Lord Davies of Oldham (Lab)]

My Lords, I am grateful to the noble Lord, Lord Sharkey, not just for his amendment but for the arguments that he put forward, with which we have a great deal of sympathy. I still find it difficult to understand the Government’s case for reducing the number of the non-executive directors in the Bill from nine to seven. I am sure that this issue will run like a—I almost said a golden thread, but certainly a constant thread throughout our discussions because we are concerned about the issues of accountability and openness, as well as the effectiveness of the Bank. I know that the Government want to achieve all those objectives. At the moment, I am afraid we have not, despite the assiduous work of the Minister. I pay due regard to that and to the meetings we have had identifying aspects of the Government’s case. However, we are still not persuaded of the merits of this argument, although the Minister obviously thought that we would be, and we probably anticipated that we would be.

I am unclear as to why the Government want to reduce the number to seven; they must recognise that that will change the balance of the court. What is the argument for reducing this crucial number of non-executive directors? I hear what the noble Lord, Lord Flight, said about a certain qualification for non-executive directors, but he would be the first to recognise that we need on this body people with a breadth of experience and understanding, not just of banking issues but of the most fundamental aspects of the operation of the economy.

What seems to underpin the Government’s position is the view that plenty of academic evidence exists which indicates that smaller boards are preferable to the more extensive boards that obtained in a great deal of City institutions in the past. I am not against that consideration as I hold academics in some regard. I probably ought to, given the well-informed contribution of the noble Lord, Lord Eatwell, who discussed the preceding Bill to which this one obviously relates, so of course I respect academic opinion on size. However, unless the Government make their case with greater clarity than they have done so far, I am not prepared to accept that the Bank of England is exactly like any other City institution. It is not. It has responsibilities and duties that go beyond those of any other institution and because of that we have to look carefully at the balance of forces on the Bank’s board. I almost use the word “cavalier” with regard to what the Government are doing, although I am not sure that they are being cavalier. However, they are seeking to reduce the size of the court and are claiming that this is good practice on the basis of some fairly thin arguments. We want to see good practice on the part of the Bank. We are well aware that the present position is the product of the legislation that was taken through after the crisis. We are all well aware of the criticisms and failures that occurred during the 2007-08 financial and economic crisis. However, we do not believe that the Government’s proposition for the Bank is based on secure arguments or that it will result in improvements.

We would like to know how the Government reached their decision to reduce the number of executives while increasing the official side of the Bank. We are not sure what consultation was undertaken on these matters, what advice was taken or who the prime mover behind such a striking and significant change was. The Minister is working hard on the Bill. We value that and the expertise he brings to it. This is only a limited aspect of the whole issue of the accountability and effectiveness of the Bank. However, on this point, the Government have thus far not established their case. Therefore, Her Majesty’s Opposition broadly support the amendment in the name of the noble Lord, Lord Sharkey.

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Moved by

[Lord Davies of Oldham]

3: Clause 1, page 1, line 10, leave out “Treasury” and insert “Chancellor of the Exchequer”

[Lord Davies of Oldham]

My Lords, in moving Amendment 3, I shall speak also to Amendment 4. Amendment 3 would ensure that any alteration to the Court of Directors, and in particular the role of the deputy governor, would be the Chancellor’s responsibility, rather than Treasury’s, as stated in the Bill. Amendment 4 would require the Treasury to,

“publish in such a manner as it thinks fit the reasons for any changes to”,

the membership of the Court of Directors, and lay it before Parliament.

The House will recognise that these are not the most epoch-making amendments I have ever had occasion to advance, but they are a cunning device to give us the opportunity to explore further the Government’s position on guaranteeing that we have the necessary level of accountability, and to gain some real insight into the Bank’s decision-making operations and its relationship to the Treasury. The amendments are far from perfect but, as the House will appreciate, in Committee I am undertaking somewhat informally to withdraw any amendments that we table at this stage. I am sure the Minister will respond to them in his usual meticulous way in the context of the issues that arise, rather than the validity of the amendments themselves.

The Bill gives the Treasury the power, after consulting the governor, to add or alter the title of the deputy governor. This, along with the reduction of the number of non-executive directors from nine to seven, which we have just discussed, will alter the structure of the court. Also, under the Bill, alterations to the Court of Directors will be made in secondary rather than primary legislation. The amendments give the Minister an opportunity, which he will seize with enthusiasm, to place on record how this process will work in practice and what the Government consider to be the benefits of these alterations.

It is clear that accountability and transparency must be the cornerstone principles of any public institution, and that applies with great significance to the Bank, while at the same time recognising that the sensitivity of some decisions it has to take require special provision. It is crucial that we get the relationship right. These amendments were tabled in the context of the Government’s decision to make future changes in secondary rather than primary legislation. However, we consider, as evidenced by today’s discussions, that alterations to the Court of Directors are very significant indeed. The first amendment simply identifies that the Chancellor is the individual responsible for making the change. At least there would then be a clear line of accountability to Parliament, which we are not sure the Bill as drafted safeguards. Has the Minister envisaged who at the Treasury would be making such recommendations, if not the Chancellor? It must be unexceptional that we are stating that a clear line of responsibility runs through to the Chancellor.

We are not satisfied that this provision should come under secondary legislation. Following a meeting between the Minister, my noble friend Lord Tunnicliffe and me, the Minister wrote the following in a letter:

“I think I should start with the reassurance that the Government does not expect that the number or the title of Deputy Governors will be altered frequently”.

Nor do we, and we gain some reassurance from that letter. However, if it is an infrequent occurrence marked with some considerable experience, why is it proposed that it be dealt with in secondary legislation? In what circumstances does the Minister imagine such a change would be necessary, and why should it be made through secondary legislation?

--- Later in debate ---

[Lord Bridges of Headley]

My Lords, the noble Lord does himself a great injustice by saying that these amendments are not epoch-making. I see this process as a form of legislative acupuncture—not that I have ever gone through acupuncture, but I am reliably informed that every needle makes a difference. I am delighted to answer these points.

Clause 1 makes the deputy governor for markets and banking a member of the Court of Directors. Following the expansion of the Bank’s responsibilities through the Financial Services Act 2012, a deputy governor for markets and banking was appointed, as noble Lords will know, with responsibility for reshaping the Bank’s balance sheet, including ensuring robust risk-management practices. This important position, currently filled by Dame Minouche Shafik, is not a statutory member of court. This clause amends the Bank of England Act 1998 to make this position statutory, ensuring equal status for all the Bank’s deputy governors and simplifying the Bank’s governance structure.

In addition, Clause 1 provides enhanced flexibility to add or remove a deputy governor or to alter the title of a deputy governor. Correspondingly, it provides the ability to make changes to the composition of the court, the FPC, the MPC or the new PRC where a deputy governor is added or removed. It should be noted that this power will not permit the Treasury to remove a deputy governor or change his or her title while that deputy governor is in office. This is a measure to ensure flexibility for future need. The Government will be able, by order—a point I will return to—to adapt the size and shape of the court to bring in new expertise when necessary. Thus the Bank’s senior management team can be easily adjusted to meet future requirements.

The Bill also provides for the continued balance of internal and external members on the FPC, the MPC and the PRC. When a deputy governor is added or removed from a policy committee, the Bill enables a comparable change in the number of appointed members to that committee. In a little more detail, if one or more deputy governors is added to the FPC or the PRC, there may be an equal increase in the number of members appointed by the Chancellor. Similarly, if one or more deputy governors is removed from the FPC or the PRC, an equal number of members appointed by the Chancellor may be removed. The situation is comparable for the MPC. If one or more deputy governors is added to or removed from the MPC, then there may be an equal increase or decrease in the number of members appointed by the governor of the Bank. External expertise on these committees is important to ensure a range of views are considered. This provision is necessary to facilitate a diversity of opinion and counter the risk of groupthink.

The noble Lord raises a number of issues in the amendments and I will try to address them. The first issue is where the responsibility for adding, removing or altering the title of a deputy governor lies. In the Bill, this power is conferred on the Treasury rather than specifying, as the noble Lord’s amendment wishes, the Chancellor of the Exchequer. This does not mean that the Chancellor is not consulted. Obviously the Chancellor would be kept fully informed of anything as important as adding or removing a deputy governor, but where a more minor administrative change is made, such as the title of a deputy governor, it may be more appropriate for a junior Treasury Minister to take the lead. Retaining the existing drafting provides this element of flexibility but—I think this is the key point—the Chancellor remains accountable, whatever the phrasing of the Bill, to the public and to Parliament for the decisions and actions in his department.

Secondly, the noble Lord proposes that the Treasury should publish the reasons for making changes to the composition of the FPC, the MPC or the PRC. This gives me the opportunity to clarify the process of making changes to the membership of these bodies following a change to the deputy governors. If the need to alter, add or remove the position of a deputy governor is identified, the Treasury will discuss this with the governor of the Bank. The need for the change could initially be identified by either the Treasury or the Bank. If, following these discussions, the Treasury believes that the change is required, along with any associated changes to the membership of the MPC, the FPC and the PRC, the Treasury will present secondary legislation to Parliament. It will then be for Parliament, as the noble Lord said, to determine whether the change goes ahead. I therefore hope it is clear that Parliament plays a key role in this process. It is the ultimate decision-maker and, in passing an order on the membership of these committees, the Government will need to outline their reasoning to this House and the other place in order to pass our and their acute scrutiny and debate. It is in this context that the reasoning will inevitably be published.

In short, it seems that the noble Lord’s amendments, while worthy of debate, are unnecessary, and I hope that he will feel able to withdraw them.

[Lord Davies of Oldham]

As I indicated, my Lords, we tabled these amendments in order to clarify the thinking behind these proposals, and I am reassured on the crucial aspect that the answerability to Parliament is contained accurately within the Bill. It therefore gives me great pleasure to beg leave to withdraw the amendment.

Amendment 3 withdrawn.

Bank of England and Financial Services Bill [HL]

Lord Davies of Oldham Excerpts

Monday 26th October 2015 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, the House owes the Minister a degree of thanks for the effective and precise way in which he introduced the Bill, though I perhaps detected that, as this is a fairly modest Bill of only 30 clauses and four schedules and contains some measures of limited contention, he thought that this was a fairly straightforward exercise. As soon as my noble friend Lord Eatwell had made his contribution, however, the Minister probably realised that, in fact, there were going to be a series of challenges on some quite fundamental points. I am going to discuss those in some detail, but we all recognise that the great opportunities we have for following through the broad arguments put today are during the remaining stages of the Bill, on which we all will strive to be active. In my own party, the shadow Chancellor is carrying out a review of the very issues that have been commented upon in relation to this Bill, and my noble friend Lord McFall is due to serve on that committee, which will be chaired by David Blanchflower, formerly of the court of the Bank of England.

There have been a number of excellent contributions to the debate but I wish to acknowledge that of my noble friend Lord Eatwell, who has very considerable knowledge of these issues. He was unremitting in his trenchant criticism of certain aspects of the Bill. I assure the Minister that those issues will be presented further as we go along. In particular, questions of transparency and scrutiny have come out in this debate. I do not want to put words into the Minister’s mouth, but I hope he will accept that two key planks for the reforms the Government need to get right are in exactly these areas.

Furthermore, there were comments on the financial stability strategy and where the ultimate responsibility for that lies. Of course, this relates to the changes to the structure of the Bank and the new position of the Prudential Regulation Committee. We are bound to be interested in how effectively the Bank pursues financial stability strategies, against a background of its having to take some responsibility for the catastrophic failure that occurred in 2007-08.

There are two other areas that might have looked technical—the National Audit Office and the restrictive role envisaged for it in relation to the Bank—but it is quite clear from the comments of the noble Lord, Lord Bichard, that this idea will not be accepted in committee without the most vigorous debate. The Minister will also have noticed that several anxieties were expressed about the reverse burden of proof being abandoned before it had been significantly tried. We will certainly want to look at the Government’s reasoning behind that concept in the Bill.

Transparency and proper lines of accountability are key for any institution, particularly those whose decisions have such an impact on the public. They are also critical to the trust and confidence that people have in an institution. We need to ensure that the changes being made—particularly changes to the membership of the Court of Directors, the abolition of the Oversight Committee and the changed status of the Prudential Regulation Authority—meet those standards, a point made by my noble friends Lord Eatwell and Lord McFall, who made some trenchant comments on these matters.

On the Court of Directors, the Bill gives the Treasury the power, after consulting the governor, to remove or alter the title of deputy governor. That, along with the reduction in the number of non-executive directors on the court from nine to seven, will clearly alter its structure. The Bill also establishes that in future, alterations to the Court of Directors will no longer need to be done through primary legislation but will be subject to regulation. Who in the Treasury will determine the changes in relation to the deputy governor, and can the Minister outline how that decision will be taken? The Bill states that the Treasury can make changes to the Court of Directors after consulting the governor. Can the Minister say how that will work in practice, or be prepared to answer that fundamental issue in Committee?

Will the Minister go into more detail about the rationale behind the reduction in the number of non-executive directors on the court, and what does the Treasury regard as the benefits of this reduction? I would also be interested to hear why the Minister feels it is appropriate to make these changes through secondary rather than primary legislation.

Noble Lords also commented on the disappearance of the Oversight Committee, which the Bill intends to abolish, of course. It was established by the Financial Services Act 2012 in order to keep under review the Bank’s performance. As part of that, it may commission reviews and keep track of the delivery of any recommendations. The Government need to explain why they think they can dispense with that body, and how effectively its functions will be carried out in a different way. They will be transferred to the Court of Directors. However, Clause 4(3) states:

“The oversight functions of the court of directors (as defined by section 3A(2)) may be delegated to a sub-committee of the court consisting of 2 or more non-executive directors of the Bank.”

How on earth can this be removing a layer of governance, if the legislation gives enabling powers for another committee to be formed? There is an essential contradiction in the Government’s thinking on these issues. What safeguards are in place as a result of moving this committee in-house? Are the Government convinced that this will lead to self-evaluation, rather than some independent judgment? On the future make-up of the sub-committee for oversight, how far will oversight stretch if this function is being delegated to two non-executives? Previously, six non-executives were expected to perform that function. What prompted that change?

On the issue of transparency and oversight, the changes being made to the Prudential Regulation Authority and the reforms included in the Bill end the PRA’s subsidiary status and integrate its microprudential policy into the bank. The PRA board will be replaced by the Prudential Regulation Committee, which will be solely responsible for exercising the Bank’s functions as the PRA. We are concerned about whether this represents a downgrading, as it is no longer a freestanding committee, and we will want to explore that in Committee.

Turning to the financial stability strategy, the Bill moves the responsibility from the court to the Bank itself. What is unclear is how the various bodies that have previously been involved in developing this strategy will be affected by the proposed change. The Government’s impact assessment states:

“At present, the Bank’s financial stability strategy is set by the Court after consultation with the FPC … and HMT”.

It goes on to say:

“Making the Bank responsible for setting the strategy, and allowing the Court to delegate production of the strategy within the Bank”

—which is the essence of clause 5—

“will ensure that Court is responsible for the running of the Bank and that the Bank’s policy committees are responsible for making policy.”

We need to examine that further. Who in the Bank of England is responsible for producing the financial stability strategy? If it is the FPC, that needs to be made clearer than it is in the Bill.

The role of the MPC has been discussed in great detail as well, but I have a couple of technical points to make at this stage for the sake of clarity. The Bill makes changes to the make-up of the committee, the requirement on the number of meetings and the publication of minutes. Does the Minister anticipate that this will improve the MPC's work, and how? What prompted the change? More fundamentally, I ask the Minister how these alterations really succeed in terms of protecting consumers of banking services.

Then there is the crucial question of the operation of the National Audit Office. I do not need to repeat, but I fully support, the remarks made by the noble Lord, Lord Bichard. He is right that the quality of independence, which is critical to a successful and proper audit, may be compromised in the arrangements made in the Bill. The Minister will have to address that issue, too. It is quite clear that the National Audit Office will continue to have independence in determining a value-for-money programme within the framework proposed: it is for the Government to make sure that that framework guarantees that position.

The noble Lord, Lord Lawson, raised the crucial issue of how we hold banks and financial institutions responsible—in terms of personal responsibility, as he saw it. He also introduced the issue of ring-fencing, although I would imagine that as far as the Government are concerned that is also a fairly contentious measure. Nevertheless, the noble Lord, Lord Lawson, is quite right to raise that issue within the framework of this Bill. I hope that it, too, will be pursued in Committee.

A number of noble Lords—my noble friend Lord McFall and the noble Lords, Lord Flight and Lord Sharkey, and others—raised the question of why in replacing the approved persons regime the reverse burden of proof was being altered. We are by no means convinced of the arguments on that front as yet. The Minister will be asked to make those points clear in Committee.

A number of other issues were raised. The noble Lord, Lord Naseby, introduced the issue of the mutuals. We could not possibly deal with a Bill of this kind without paying attention to their significant role. The right reverend Prelate commented on credit unions. They, too, have their proper place for consideration in this Bill. My noble friend Lord McKenzie identified the anxieties about the progress with regard to pensions advice—in what is one of the most crucial years for this, but it is only the first or second of crucial years. It is quite clear that we are going to have to wrestle with this issue of adequate advice for those who are seeking to change their position with regard to pensions and annuities. They will need a great help on that. Finally, my noble friend Lady Worthington raised quite fundamental issues about the financial strategy being responsive to environmental risks. We surely would be remiss if we did not take that into account as well.

This has been a fascinating debate. The Minister does not have to reply to every point at this stage—we would be here for an unconscionable time if he did—and we have the delights of Committee, Report and Third Reading ahead of us before the Bill completes its passage. But if the Government think that the Bill is a relatively modest one, and even one with limited contentious issues within it, what has been established this evening is that it has much that we need to challenge them on.

--- Later in debate ---

[Lord Bridges of Headley]

My Lords, I am all in favour of transparency and am happy to meet the noble Lord to discuss those issues. I hope the noble Lord will forgive me for not giving a blanket commitment here and now, but I am more than happy to meet him. Transparency must be in the interests of everyone, as long as it is applied proportionately. I am acutely aware that the noble Lord has a lot of experience in this field, so he will forgive me for not agreeing to that request here and now.

I thank your Lordships for all your contributions today.

[Lord Davies of Oldham]

It would be helpful if the Minister, after reading the debate, and after his officials have looked at it and seen areas in which he could usefully enlighten us before the Committee stage, could write to the Members concerned. Everyone in the House would appreciate that.

[Lord Bridges of Headley]

I certainly will do so, my Lords. Communication between us all will be very fruitful as we proceed. There are many technical issues here that we cannot perhaps do justice to on the floor of the House. It would be good to meet beforehand. I should also extend my apologies to the noble Lord, Lord Davies, because I believe he was unable to come to the briefing we had on this Bill, but that is my fault, not his. I am entirely in favour of good communication.

Taxation: Capital Gains Tax

Lord Davies of Oldham Excerpts

Tuesday 7th July 2015 Lords Chamber

[Lord Bridges of Headley]

I hear what my noble friend is saying. However, I tread with extreme trepidation and say that decisions on that matter are for the Chancellor to announce at the Budget.

[Lord Davies of Oldham (Lab)]

My Lords, the House will have noted the Minister’s sensitivity about making comments on tomorrow’s Budget. That is not the kind of thing which inhibits the Chancellor, and therefore I am not inhibited either. I think he has made clear that he is not going to increase income tax or national insurance contributions. As the Minister said, it is unlikely that capital gains tax will be greatly affected, although he is not quite sure about that. Is it not quite clear that the Government’s strategy is in fact not to be fair about taxation but to be brutally unfair about welfare expenditure?

[Lord Bridges of Headley]

No, I reject that utterly, I am sorry to say, my Lords. As the noble Lord will know if he has read the Conservative Party manifesto, the Government are committed to cutting income tax for 30 million people, taking everyone who earns less than £12,500 out of income tax altogether. As I alluded to, we intend to surpass what we did in the previous Government and help businesses create more than 2 million new jobs. That is the best way to tackle poverty and disadvantage in this country.

Algorithmic Trading

Lord Davies of Oldham Excerpts

Monday 6th July 2015 Lords Chamber

[Lord Bridges of Headley]

The noble Lord speaks with a lot of experience on these matters, which are worthy of consideration. If he will forgive me, I would like to write to him on that point as it requires a detailed answer.

[Lord Davies of Oldham (Lab)]

My Lords, I hope that the Minister is not indulging in that degree of complacency—saying, “It’s all under control”—which the senior management of significant banks indulged in, and then found themselves taken to the cleaners by the operations of relatively lowly placed staff. One thinks particularly of UBS losing £1.7 billion from someone trading in this manner. The noble Lord must know that the technology of increased speed is widening the spread between buying and selling, and therefore gives an incentive to people operating at that level to take advantage.

[Lord Bridges of Headley]

My Lords, I am certainly not complacent. The noble Lord raises a good point, and I reiterate that the Government take the matter of regulating financial markets in their entirety very seriously and closely follow developments in these markets. As I said, investment firms and trading venues should ensure that robust measures are in place to prevent automated trading creating a disorderly market and being used for abusive purposes. The new rules under MiFID II will ensure that such measures are in place.

Deregulation Bill

Lord Davies of Oldham Excerpts

Tuesday 4th November 2014 Grand Committee

46: After Schedule 8, insert the following new Schedule—
“Road traffic legislation: use of vehicles in emergency response by NHS Traffic Management Act 20041 The Traffic Management Act 2004 is amended as follows.
2 In section 85 (prohibition of double parking etc), in subsection (3), for “for fire brigade, ambulance or police purposes” substitute “—
(a) for fire brigade or police purposes, or(b) for ambulance purposes or for the purpose of providing a response to an emergency at the request of an NHS ambulance service.“An NHS ambulance service” means—(a) an NHS trust or NHS foundation trust established under the National Health Service Act 2006 which has a function of providing ambulance services;(b) an NHS trust established under the National Health Service (Wales) Act 2006 which has a function of providing ambulance services;(c) the Scottish Ambulance Service Board.” 3 In section 86 (prohibition of parking at dropped footways etc), in subsection (4), for “for fire brigade, ambulance or police purposes” substitute “—
(a) for fire brigade or police purposes, or(b) for ambulance purposes or for the purpose of providing a response to an emergency at the request of an NHS ambulance service. “An NHS ambulance service” means—(a) an NHS trust or NHS foundation trust established under the National Health Service Act 2006 which has a function of providing ambulance services;(b) an NHS trust established under the National Health Service (Wales) Act 2006 which has a function of providing ambulance services;(c) the Scottish Ambulance Service Board.”Road Vehicles (Construction and Use) Regulations 1986 (S.I. 1986 /1078)4 The Road Vehicles (Construction and Use) Regulations 1986 are amended as follows.
5 In regulation 3(2) (interpretation), in the Table at the appropriate place insert—

“an NHS ambulance service

(a) an NHS trust or NHS foundation trust established under the National Health Service Act 2006 which has a function of providing ambulance services; (b) an NHS trust established under the National Health Service (Wales) Act 2006 which has a function of providing ambulance services; (c) the Scottish Ambulance Service Board.”

6 (1) Regulation 37 (audible warning instruments) is amended as follows.
(2) In paragraph (5)(a), omit “, ambulance”.
(3) After paragraph (5)(a) insert—
“(aza) used for ambulance purposes or for the purpose of providing a response to an emergency at the request of an NHS ambulance service;”.7 (1) Regulation 82 (restriction on width of loads) is amended as follows.
(2) In paragraph (10)(a), omit “, ambulance”.
(3) After paragraph (10)(a) (but before the “or”) insert—
“(aa) for ambulance purposes or for the purpose of providing a response to an emergency at the request of an NHS ambulance service;”.8 (1) Regulation 101 (parking in darkness) is amended as follows.
(2) In paragraph (2)(a), omit “ambulance”.
(3) After paragraph (2)(a) insert—
“(aa) being used for ambulance purposes or for the purpose of providing a response to an emergency at the request of an NHS ambulance service if compliance with those provisions would hinder or be likely to hinder the use of the vehicle for the purpose for which it is being used on that occasion;”.9 (1) Regulation 107 (leaving motor vehicles unattended) is amended as follows.
(2) In paragraph (2)(a), omit “ambulance,”.
(3) After paragraph (2)(a) (but before the “or”) insert—
“(aa) being used for ambulance purposes or for the purpose of providing a response to an emergency at the request of an NHS ambulance service;”.Road Vehicles Lighting Regulations 1989 (S.I. 1989/1796)10 The Road Vehicles Lighting Regulations 1989 are amended as follows.
11 (1) The Table in regulation 3(2) (which sets out the meaning of expressions used in the regulations) is amended as follows.
(2) In column 2, in paragraph (a) of the definition of “emergency vehicle”, omit “, ambulance”.
(3) In that definition, after paragraph (a) insert—

“(aza) a vehicle used for ambulance purposes or for the purpose of providing a response to an emergency at the request of an NHS ambulance service;”.

(4) At the appropriate place insert—

“An NHS ambulance service

(a) an NHS trust or NHS foundation trust established under the National Health Service Act 2006 which has a function of providing ambulance services; (b) an NHS trust established under the National Health Service (Wales) Act 2006 which has a function of providing ambulance services; (c) the Scottish Ambulance Service Board.”

12 (1) Regulation 11 (colour of light shown by lamps and reflectors) is amended as follows.
(2) Omit paragraph (2)(y)(iii).
(3) After paragraph (2)(y) insert—
“(z) reflected light from yellow or orange retro reflective material fitted to the rear of a vehicle—(i) used for ambulance purposes, or(ii) used for the purpose of providing a response to an emergency at the request of an NHS ambulance service.”13 In Part 2 of Schedule 17 (requirements relating to optional side retro reflectors), in the first column of the Table, below “Ambulance” (but in the same row) insert “The provision of a response to an emergency at the request of an NHS ambulance service but only in respect of a vehicle which is owned by the service or held by it under a lease or hire agreement”.
14 (1) Part 2 of Schedule 18 (requirements relating to optional rear retro reflectors) is amended as follows.
(2) The first sentence becomes paragraph 1.
(3) At the end of that paragraph insert “, subject to paragraphs 2 and 3.”
(4) The second sentence becomes paragraph 2.
(5) In that paragraph—
(a) omit “But”;(b) omit paragraph (c).(6) After paragraph 2 insert—
“3 The colour of rear retro reflectors fitted to—
(a) a vehicle used for ambulance purposes, or(b) a vehicle used for the purpose of providing a response to an emergency at the request of an NHS ambulance service,may be red, yellow or orange (or any combination), provided that, in the case mentioned in paragraph (b), the vehicle is owned by the NHS ambulance service or held by it under a lease or hire agreement.”Zebra, Pelican and Puffin Pedestrian Crossings Regulations and General Directions 1997 (S.I. 1997/2400)15 The Zebra, Pelican and Puffin Pedestrian Crossings Regulations and General Directions 1997 are amended as follows.
16 In regulation 3(1) (interpretation), at the appropriate place insert—
““an NHS ambulance service” means—(a) an NHS trust or NHS foundation trust established under the National Health Service Act 2006 which has a function of providing ambulance services;(b) an NHS trust established under the National Health Service (Wales) Act 2006 which has a function of providing ambulance services;(c) the Scottish Ambulance Service Board;”.17 (1) Regulation 12 (significance of vehicular light signals at Pelican crossings) is amended as follows.
(2) In paragraph (1)(e), omit “, ambulance, national blood service”.
(3) After paragraph (1)(e) insert—
“(eza) when a vehicle is being used for ambulance or national blood service purposes or for the purpose of providing a response to an emergency at the request of an NHS ambulance service and the observance of the prohibition conveyed by the steady amber or the red signal in accordance with sub-paragraph (c) or (d) would be likely to hinder the use of that vehicle for the purpose for which it is being used, then those sub-paragraphs shall not apply to the vehicle, and the steady amber and the red signal shall each convey the information that the vehicle may proceed beyond the stop line if the driver—(i) accords precedence to any pedestrian who is on that part of the carriageway which lies within the limits of the crossing or on a central reservation which lies between two crossings which do not form part of a system of staggered crossings; and(ii) does not proceed in a manner or at a time likely to endanger any person or any vehicle approaching or waiting at the crossing, or to cause the driver of any such vehicle to change its speed or course in order to avoid an accident;”.18 (1) Regulation 13 (significance of vehicular light signals at Puffin crossings) is amended as follows.
(2) In paragraph (1)(f), omit “, ambulance, national blood service”.
(3) After paragraph (1)(f) insert—
“(fa) when a vehicle is being used for ambulance or national blood service purposes or for the purpose of providing a response to an emergency at the request of an NHS ambulance service and the observance of the prohibition conveyed by the amber, red or red-with-amber signal in accordance with sub-paragraph (c), (d) or (e) would be likely to hinder the use of that vehicle for the purpose for which it is being used, then those sub-paragraphs shall not apply to the vehicle, and the red signal, red-with-amber and amber signals shall each convey the information that the vehicle may proceed beyond the stop line if the driver—(i) accords precedence to any pedestrian who is on that part of the carriageway which lies within the limits of the crossing or on a central reservation which lies between two crossings which do not form part of a system of staggered crossings; and(ii) does not proceed in a manner or at a time likely to endanger any person or any vehicle approaching or waiting at the crossing, or to cause the driver of any such vehicle to change its speed or course in order to avoid an accident;”.19 (1) Regulation 21 (stopping in controlled areas) is amended as follows.
(2) In paragraph (c), omit “, ambulance”.
(3) After paragraph (c) insert—
“(ca) when the vehicle is being used for ambulance purposes or for the purpose of providing a response to an emergency at the request of an NHS ambulance service; or”. Traffic Signs Regulations and General Directions 2002 (S.I. 2002/3113)20 The Traffic Signs Regulations and General Directions 2002 are amended as follows.
21 In regulation 4 (interpretation), at the appropriate place insert—
““an NHS ambulance service” means—(a) an NHS trust or NHS foundation trust established under the National Health Service Act 2006 which has a function of providing ambulance services; (b) an NHS trust established under the National Health Service (Wales) Act 2006 which has a function of providing ambulance services;(c) the Scottish Ambulance Service Board.”22 (1) Regulation 15 (keep right and kept left signs) is amended as follows.
(2) In paragraph (2)—
(a) omit “ambulance,”;(b) omit “, national blood service”.(3) After paragraph (2) insert—
“(2ZA) On an occasion where a vehicle is being used for ambulance or national blood service purposes or for the purpose of providing a response to an emergency at the request of an NHS ambulance service and the observance of the requirement specified in paragraph (1) would be likely to hinder the use of that vehicle for one of those purposes then, instead of that requirement, the requirement conveyed by the sign in question shall be that the vehicle shall not proceed beyond that sign in such a manner or at such a time as to be likely to endanger any person.”
23 (1) Regulation 26 (double white lines) is amended as follows.
(2) In paragraph (5)(b), omit “ambulance,”.
(3) After paragraph (5)(b) insert—
“(bza) to a vehicle for the time being used for ambulance purposes or for the purpose of providing a response to an emergency at the request of an NHS ambulance service;”.24 (1) Regulation 27 (zig zag lines) is amended as follows.
(2) In paragraph (3)(c), omit “ambulance,”.
(3) After paragraph (3)(c) insert—
“(ca) when the vehicle is being used for ambulance purposes or for the purpose of providing a response to an emergency at the request of an NHS ambulance service;”.25 (1) Regulation 36 (light signals) is amended as follows.
(2) In paragraph (1)(b)—
(a) omit “ambulance,”;(b) omit “, national blood service”.(3) After paragraph (1)(b) insert—
“(bza) when a vehicle is being used for ambulance or national blood service purposes or for the purpose of providing a response to an emergency at the request of an NHS ambulance service and the observance of the prohibition conveyed by the red signal in accordance with sub-paragraph (a) would be likely to hinder the use of that vehicle for the purpose for which it is being used, then sub-paragraph (a) shall not apply to the vehicle, and the red signal shall convey the prohibition that that vehicle shall not proceed beyond the stop line in a manner or at a time likely to endanger any person or to cause the driver of any vehicle proceeding in accordance with the indications of light signals operating in association with the signals displaying the red signal to change its speed or course in order to avoid an accident;”.26 (1) Schedule 19 (bus stop and bus stand clearways and box junctions) is amended as follows.
(2) In paragraph 4 (bus stop and bus stand clearways)—
(a) in paragraph (a), omit “ambulance,”;(b) after paragraph (a) insert—“(aza) a vehicle being used for ambulance purposes or for the purpose of providing a response to an emergency at the request of an NHS ambulance service;”. (3) In paragraph 9 (box junctions)—
(a) omit “ambulance,”;(b) omit “, national blood service”. (4) After paragraph 9 insert—
“10 When a vehicle is being used for ambulance or national blood service purposes or for the purpose of providing a response to an emergency at the request of an NHS ambulance service and the observance of the prohibition in paragraph 7(1) or 8 would be likely to hinder the use of that vehicle for the purpose for which it is being used, then that prohibition shall not apply to the driver of the vehicle.”

[Lord Davies of Oldham (Lab)]

I have a question about this new schedule. As noble Lords, including Ministers, will recognise, it is a fairly lengthy addition to the Bill. I can see entirely the argument for the exemption of emergency vehicles carrying out an essential role, and why they need to be absolved from certain legal constraints in order to carry out their duties. However, I have the anxiety that the Government have provided for all bodies related to the National Health Service and vehicles driven on their behalf, in Wales and Scotland and so on—but what about other vehicles which are driven in emergency circumstances? If, for example, an accident occurs at a football ground and a St John Ambulance immediately springs into action, because one is always present, I have no doubt at all that it would seek the help of the nearest hospital. It could well have a vehicle and be able to expedite the matter more effectively. Would the driver be breaking the law if he or she exceeded the limits in seeking to get a trauma patient to hospital as rapidly as possible in a clear emergency, similar to those to which public vehicles respond?

[Lord Gardiner of Kimble]

My Lords, the amendments are designed to ensure that the definitions of “ambulance” and the way in which ambulances are used include the new vehicles that might well be used. I think that I will need to write to the noble Lord to make sure that all his points—I will look in Hansard at what he has said—are covered precisely.

I may have some assistance coming my way. These amendments relate, as at the top of Amendment 46, to emergency response by the NHS. They are to ensure that—because of case law, where there has been a particular problem with paramedic motorbikes—this is about an emergency response by the NHS. The noble Lord raises an interesting point, particularly about people going to emergencies. However, this legislation is to ensure that those who come out in response from the NHS are properly protected.

[Lord Gardiner of Kimble]

My Lords, I understand that in practice this relates to a call which would be from an NHS ambulance only. My officials have speedily passed me a note on this. One may ask why these amendments do not cover, for instance, all private organisations responding to emergencies. Our priority in this legislation is to allow NHS ambulance services to provide emergency responses. Those private organisations which have arrangements with NHS ambulance services to be dispatched by them to emergencies will be covered. Bringing other types of vehicle purposes within speed exemptions is part of a wider piece of work being carried out by the Department for Transport in relation to its commencement of Section 19 of the Road Safety Act 2006. I am most grateful to the noble Lord and my noble friend for their comments which have given me the opportunity to provide clarity—I hope—on the matter.

[Lord Davies of Oldham]

The noble Lord has certainly clarified the matter. I only hope that if vehicles are brought into use in this way they will act with due promptness, as did the Minister’s officials in providing an answer to a rather tricky question. I apologise for not giving notice of it. However, we wanted to clarify that regular support services which are not National Health services—St John’s Ambulance is the obvious one that springs to mind—would without doubt be covered by the legislation as the Minister described it.

Amendment 46 agreed.

--- Later in debate ---

[Lord Davies of Oldham]

My Lords, this is a long schedule. The Minister will be relieved to hear that we are in broad agreement with it. However, we have some difficulties because some real consequences need to be considered. Our Amendments 61A and 61B would improve the schedule by introducing further transparency into the process of issuing exemption orders. I am concerned about the extent of the Government’s powers to introduce accessibility standards for rail vehicles, established by the Disability Discrimination Act 1995. We, in fact, introduced the first set of rail vehicle accessibility regulations in 1998. In 2005, I and one or two other noble Lords who are present in the Room, contributed to updating that Act by making it unlawful to discriminate against disabled people using public transport or transport facilities. We introduced minimum accessibility standards for all new carriages and light rail, and placed a requirement on rail operators to develop a disabled persons protection policy.

We are obviously proud of our record in government, and are concerned that it should be continued in the amendments to the legislation that this Bill represents. All new stock must be compliant with the regulations, and all vehicles that fall under their scope will have to be compliant by 2020. However, we recognise that some heritage systems use vehicles that can never be compliant in these terms, and they deserve exemption. The Government’s proposals would remove the requirement for exemption orders to be made by statutory instrument, thereby reducing the time it takes to issue an exemption.

We appreciate the principle of reducing the time it takes to issue such an exemption, but we are concerned that the Secretary of State’s power to limit exemptions could be undermined. Our amendments seek to ensure that the Secretary of State retains full freedom to impose conditions on exemption orders, such as on length, rather than just issue blanket exemptions. The Department for Work and Pensions figures show that more than one in five people with a disability has experienced difficulty using transport and, on several occasions at Question Time, disabled Peers have indicated that they still face some transport difficulties, not least when the trains are longer than the platforms at some halts, and the train does not stop where the ramp is provided. In any case, fewer than one-fifth of rail stations have full step-free access via lifts or ramps.

The House of Commons Transport Committee suggested last year that the department involved disability organisations and charities in prioritising stations for improvements in a future “access for all” programme. Ministers dismissed the views of disabled people by saying that that those organisations’ involvement would add little value.

In the context of our amendment, as we live longer, increasing numbers of us will be living with some kind of disability. It is therefore essential to adapt the public transport system and ensure that it fits the needs of disabled people. Amendment 61B requires the Secretary of State to,

“produce a report detailing the nature”,

of any exemptions issued,

“including the conditions or restrictions made as part of that order”,

and to publicise it.

Currently there are no requirements to publish any details when exemptions are issued; only the statutory instrument itself is published. How will this shift from a statutory instrument to an administrative regime make the documents more accessible and the process more open for a wider range of UK citizens? I do not say that they will not be—I am not accusing the Government of causing a deterioration in the position—but I seek some reassurance from the Minister that this has been fully considered in this fairly lengthy amendment to the schedule.

[Lord Gardiner of Kimble]

My Lords, first, I thank the noble Lord for his broad agreement on Part 7. I agree that we are dealing with some lengthy paperwork. We have made much progress in making rail vehicles more accessible to disabled people since accessibility standards were introduced in 1998—and rightly so. More than 8,100 rail vehicles now meet modern accessibility requirements, and the law requires all rail vehicles to be accessible by 2020. However, it is occasionally not appropriate, or proportionate, for those access standards to apply fully, so the Secretary of State retains the right to exempt specified vehicles from all, or parts, of them.

Originally, all such exemptions were made by statutory instrument. However, in 2008, the domestic rail vehicle accessibility regime covering mainline trains was replaced by an EU regime, whereby exemptions are issued administratively. As a result of implementation of the EU regime for mainline trains, the number of vehicles which remained within the scope of the domestic regime was reduced to just over one-quarter of those originally covered. These are the vehicles which are still subject to the use of statutory instruments for exemptions. Such vehicles include trams, underground, metro, airport people movers and even brand new vehicles for use on heritage railways. That brings the domestic regime more in line with the European regime, which the majority of vehicles are subject to, and is more proportionate than the current situation whereby, if sought, exemptions for the hundreds of trains serving Gatwick, Stansted and Birmingham airport stations would be subject to an administrative process, while any for the 17 small vehicles shuttling passengers between terminals would remain subject to a process involving statutory instruments.

I highlight to the Committee the fact that the vast majority of responses from stakeholders to the Government’s public consultation were in favour of these proposals. In particular, the Disabled Persons Transport Advisory Committee, the Government’s statutory adviser on the transport needs of disabled people, was involved as the proposals were developed and is strongly in favour of these changes. In this respect I am also pleased to note that the Delegated Powers and Regulatory Reform Committee is now of the view that these proposals have merits and finds the arguments for consistency with the European regime compelling.

The practical effect of this measure will be to shorten the period between when an application is made and the outcome is given, so reducing uncertainty for the rail industry. It will also reduce the resources required within government to handle each application. I emphasise that it will not reduce in any way the strength of argument that any applicant will need to make to justify an exemption; no exemptions will be granted in future that would not have been granted under the existing arrangements. I also assure the Committee that we will continue to consult the Disabled Persons Transport Advisory Committee, and others as necessary, on the merits of each application. The final decision on whether to grant an exemption will remain with Ministers, and the Government will continue to report annually to Parliament on the use of the exemption powers over the last year. This will allow Parliament to call Ministers to account if they feel that the powers have been used excessively or inappropriately.

Given the overwhelming support from stakeholders that this proposal received, we believe that this reform makes sense. Proceeding with this proposal will mean that applicants for exemption receive a decision sooner, so reducing uncertainty for them, and will reduce administrative burdens on government, but without lessening protection for disabled passengers, or reducing transparency on the use of exemption powers. That is why we have concerns about the noble Lord’s first amendment.

Turning to the noble Lord’s second amendment, the Government recognise that members of the public and Parliament will wish to know that the Secretary of State has used his powers to grant exemptions from the rail vehicle accessibility regulations. That is important. However, this amendment is unnecessary as transparency is already provided through two new routes, both of which will continue. First, the Equality Act 2010 already requires the Secretary of State to make an annual report to Parliament on the use of exemption powers. The Secretary of State will continue to report annually to Parliament on those exemption powers. This will enable Parliament to call Ministers to account. Furthermore, the department already publishes on its website details of applications received for exemptions, the outcome of consultation on the merits of each application and the outcome, including the exemption order itself, if granted.

I assure the Committee that the Government’s intention is that openness must continue. Although I understand the position that the noble Lord has taken, it is for those reasons that we feel his amendments are not necessary.

--- Later in debate ---

[Lord Gardiner of Kimble]

My Lords, I am extremely grateful to my noble friend. His experience is invaluable and I will certainly discuss this with officials so that we can come to a mutually satisfactory conclusion.

[Lord Davies of Oldham]

As ever, the noble Lord, Lord Skelmersdale, is to be congratulated on his eagle eye. We shall see that the Minister gives a satisfactory reply. I listened carefully to the Minister and was grateful for his remarks, which were reassuring. The Delegated Powers and Regulatory Reform Committee’s acceptance of the position was enough for me, so I assure the Committee that when the time comes I will not move my amendment.

Amendment 47 agreed.

--- Later in debate ---

If British citizens, crew or passengers, go on cruise liners, and they are lost, we should have someone responsible, like the Americans, to report to our authorities and then tell the relatives what happened, to the best of their knowledge. We do not have that at the moment so if we put all these things together, let us look at regulation. You can take it a bit further if you want but what we are choosing to do now by taking this right away is dangerous. It is bad for relatives. It does not tell us anything about the safety. It leaves it to the political judgment—and we are all politicians here. As we found with the “Marchioness”, the advice came from a department that had been guilty of the loss of that vessel, for which I had to apologise, so it was no surprise that it did not want an inquiry. This would make it easier for such departments. I am against the clause and I hope we delete it.

[Lord Davies of Oldham]

My Lords, those two powerful speeches have made the case that we wish to make from the Front Bench. We also hope to persuade my noble friend Lord Rooker than objecting to the clause itself is in fact a stronger position than his amendment. I hope the speeches have convinced a very significant number of Members of the Committee, perhaps even the Government, to think again, but they have also reduced the length of my speech because all the issues have been more than adequately covered.

I emphasise that the effect of the Government’s legislation would be to downgrade rights that are derived from a duty on the part of the Minister to a mere choice by him, which is the emphatic point that my noble friend Lord Prescott was making. There is an obvious flaw in the Government’s proposals. My noble friend has made his case already but I will show how much we on the Front Bench are concerned about this. It is not clear how the Secretary of State can be expected adequately to assess the existing evidence in order to suspect a miscarriage of justice without investigative help by the very accident investigation branch itself. As my noble friend Lord Prescott has indicated, there are very good reasons why the branch should be reluctant to participate in this. The work will now be undertaken by the branch only if the Secretary of State requests it because he already suspects a miscarriage of justice. That is a long shot in circumstances where he has no or very little evidence before him at that stage. In addition, reinvestigating might unearth difficult truths about the adequacy and focus of previous assessments by officials and the department when making the initial judgment. Any Minister should, of course, be able to process issues without fear or favour, but there is bound to be an inhibition when he is dependent on the department for certain facts.

The justification that Ministers have given for the change is entirely spurious. They have claimed that it is to safeguard the human rights of officers involved in accidents, whose careers could be undermined by an automatic investigation organised by the Minister. It might have that advantage, but it would block off new evidence to support future safety measures and which could tell families what really happened. We know, from the illustrations given today, two things from the “Derbyshire” inquiry. First, the families of those who were lost got to hear what had actually happened 20 years later, as opposed to the original depiction. Secondly, future safety measures were inaugurated by my noble friend in the department as a result of the evidence of why the ship had sunk.

I believe that the clause should be opposed and not stand part of the Bill.

[Lord Gardiner of Kimble]

My Lords, under the Merchant Shipping Act 1995, the Secretary of State is obliged to reopen a formal investigation either if new and important evidence that was not available at the time of the original investigation becomes known, or if there appear to be grounds to suspect a miscarriage of justice. For any other circumstances, the Secretary of State has a discretionary power to reopen an investigation. There is no time limitation on the current obligations to reopen a formal investigation. This is surely right and proper where there are grounds to suspect a miscarriage of justice, and the Bill most certainly does not seek to change this duty in any way. However, in other cases, the potential value of reopening a formal investigation in terms of enhancing safety for today’s mariners may—and I emphasise may—diminish with the passage of time after the loss of a ship.

The design of ships and their equipment, industry crewing and operating practices, continually change and develop. By the time that new and important evidence is found, these matters may be very different from those that applied at the time of an accident. That is not to say that one can draw a specific time limit on the usefulness of an inquiry. Each case is likely to be unique and should be considered on its own merits. This would be preferable to the current blanket imposition of a duty that may not always be beneficial for maritime safety, which is rightly our priority. Therefore, Clause 40 is drafted to enable the Secretary of State to take a considered view on the likely benefits of reopening a formal investigation in circumstances where new evidence comes to light. To be clear, a formal investigation, the subject of this clause, is very different from the safety investigations undertaken by the Marine Accident Investigation Branch. The noble Lords, Lord Rooker and Lord Prescott, mentioned that. The Marine Accident Investigation Branch’s sole objective is to determine the causes and circumstances of an accident to prevent a recurrence; it does not seek to apportion blame or liability. I re-emphasise that the clause does not affect these safety investigations, nor situations in which new and important evidence is found from accidents that have been subject only to a safety investigation. Of course, the Marine Accident Investigation Branch acts of its own decision.

In contrast, formal and reopened formal investigations are proceedings which, as well as probing the causes of an accident, can apportion liability and blame, censure ships’ officers, or cancel their certificates of competency. There have been four since 1997: a formal investigation into the loss of the “Marchioness”—the noble Lord, Lord Prescott, spoke very powerfully and with great experience of that tragedy—and reopened formal investigations into the “Derbyshire”, “Gaul” and “Trident”. The three reopened formal investigations all related to accidents that occurred prior to the establishment in 1989 of the Marine Accident Investigation Branch. With most accidents since then being subject to safety rather than formal investigations, increasingly any reopened formal investigation would relate to more historic accidents.

Deregulation Bill

Lord Davies of Oldham Excerpts

Monday 7th July 2014 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, I speak from the Back Benches because we have two excellent Front-Benchers who are concerned with the Bill. I find that my usual blissful state of either opening on legislation or winding up has now been reduced to a middle position in the debate, where everything I want to say has already been said and, if I make a mistake, there are enough people behind me to call me out. So it is with a degree of nervousness that I make a few short comments on the Bill.

We have serious reservations about the three main transport areas of the Bill. Those concerned with the regulation of taxis and minicabs, particularly the deregulation of minicabs, which my noble friend Lady Thornton identified a moment ago, raise serious risks for the public. We should recognise that people, particularly women, book minicabs for the security of the service being offered. That is being blown apart by the Bill. The cab firm could pass on the telephone call and engage another company. The person who has booked the cab will not have that surety, and it has the potential to let rogue drivers exploit the looseness in the Bill. There have been a few examples in recent years of dreadful things being carried out in cabs.

The Bill needs to be amended in that area. We should recognise that the black cab trade is worried about this situation. It is always worried about minicab competition and so it should be—minicab competition has the right to present a challenge—but we know that new technology, such as the Uber technology that is a source of great concern at present, is creating a situation whereby anybody can call a minicab at any time and minicabs will not suffer from the restrictions forced on them in the past. The black cab trade is central to safe, secure and proper transport in some of our cities, particularly London, and is admired all over the world, in all the world’s great cities. We should take threats to that seriously.

The second area we are concerned about is the banning of CCTV for parking enforcement. I have great sympathy with the Government in seeking to tackle a problem whereby the citizen receives a fine through the post, not having been aware that a charge has been laid, to which they have to make immediate return. We do not seem to have tackled this issue thoroughly or properly. On 10 June, the Government said that they had not reached a decision; on 17 June an amendment was made to the Bill in another place and was immediately translated into the Bill by a government majority.

There are real risks to road safety. There are risks at schools. There are risks in bus lanes, where drivers will chance it if they think they will not be surveyed. There are risks at bus stops. There are risks at yellow boxes on junctions. They are a good idea and have eased congestion, but a good idea is destroyed if one driver chances it and sits in that box and blocks the traffic. If the Government are open to persuasion that there should be exemptions to ending closed circuit TV prosecutions in these areas, those exemptions should be in the Bill and we will seek to achieve that.

The measure in the Bill on maritime accident investigation seems to us a miserable and mean little gesture on the part of the Government. The House will know that the most significant case in recent years involved the MV “Derbyshire”, which was lost in the South China Sea a few years ago with everybody on board—all 42 crew and two wives travelling—lost. There was always the suggestion, while nothing could be proved, that somebody had blundered and that the accident had occurred because seamanship was deficient. When the wreck was eventually identified, it became clear that the circumstances in which the vessel went down were nothing to do with error on the part of the crew or with their seamanship. The case was reopened thanks to great efforts by my noble friend Lord Prescott, who was Minister at the time and who had a long history with the seamen, and great pressure from the National Union of Seamen, which, together with international forces that came in to help, funded a great deal of the investigation. It is now suggested in the Bill that the Secretary of State should not be bothered to reopen such investigations except in specific circumstances.

Sea accidents are such that we should treat them with the greatest seriousness. We surely cannot have a Bill in which they are taken lightly. My noble friend Lord Rooker, in his excellent speech, identified this issue as one that did not add to the quality of the Bill. At least I have kept to time.

Extension of Franchise (House of Lords) Bill [HL]

Lord Davies of Oldham Excerpts

Friday 5th July 2013 Lords Chamber

[Lord Dubs]

Yes, my Lords, I was aware of it, but one has to arrive at a balance. Should I have said, “No, I am not prepared to accept the privilege of being here because I cannot vote in general elections”? My feeling is that it is better to get here and try to achieve the changes by using the arguments. I think that that applies to many of us. Even the noble Lord, I am sure, is not ecstatically happy about every aspect of our procedures here, but that did not stop him coming here and he is a very welcome Member of this House, even though I occasionally disagree with him.

[Lord Davies of Oldham]

How solicitous does my noble friend think returning officers and clerks in polling stations are about enforcing this position? Every time I have gone to vote in a local election that has coincided with a parliamentary vote, the returning officer has seemed oblivious to the fact and I have had to tell them, “Please don’t give me a vote for the parliamentary election because it is illegal”.

[Lord Dubs]

Well, I think that there is something in that, but, in the course of history, Members of this House have voted in general elections and that vote has been challenged.

--- Later in debate ---

[Lord Cormack]

My Lords, I am speaking in the gap, with permission. My noble friend made a significant point: we in this House are indeed all Members of Parliament. We are Members of the second Chamber and we have our own particular role and responsibilities. If we are allowed to vote, should we be allowed to stand for election to another place? I do not believe that we should. While I have the greatest possible personal admiration for the noble Lord, Lord Dubs, and while I disagree profoundly with the noble Lord, Lord Wills, for whom of course I also have admiration, I agree with him on this point. This measure should not commend itself to your Lordships’ House. We are an undying House—the current situation is that we are here for life—so we are part of Parliament. Although the next general election will be the first in my adult lifetime that I have not voted in, or indeed voted for myself in, I will still accept the privilege, look with reluctance at those going to the polling booths and with little reluctance at those who are knocking at doors, and know full well that, God willing, I will come back at the beginning of the new Parliament.

I understand the motivation of the noble Lord, Lord Dubs. I also understand the frustration of the noble and learned Lord, Lord Brown, although I must say that I was moved by his touching faith that a team of lawyers could come to a speedy conclusion on anything, but I find myself in disagreement with someone else for whom I have great regard. The essence of debate is that one can disagree, and I disagree profoundly with this minor measure. I will certainly seek to move amendments at future stages if the Bill is given a Second Reading today.

[Lord Davies of Oldham]

My Lords, has the noble Lord taken on board the very strong argument that has been put before the House today that we are clearly not Members of Parliament pari passu with the other place? To take the most obvious point, at the next general election a great deal will revolve around the conduct and direction of the economy, the comprehensive spending review and the proposals that affect our citizens so grievously in this time of great austerity, and yet this House has no power to affect that position. We will have influence, perhaps, and will debate the issue to a limited extent, but power we do not have. Yet that is the most cardinal of election decisions on which the nation will vote. That inequality is why there is a strong argument that we should have the right to vote in general elections.

[Lord Cormack]

There might be, according to the noble Lord, but I just do not agree with him. I could argue that Members of Parliament in the other place also have very little power. We need a rebalancing of the powers within our parliamentary system so that we do not have an overweening Executive. To paraphrase Dunning’s Motion, “The power of the Executive has increased, is increasing and ought to be diminished”. We can play our part in that by the influence that we wield in this place. Influence can be tantamount to power when we have the sort of people that we have in this place, with their great knowledge of economic affairs. I rest my case.