European Union (Withdrawal) Bill

Baroness Falkner of Margravine Excerpts

Report: 3rd sitting (Hansard): House of Lords
Wednesday 25th April 2018 Lords Chamber

[Lord Bridges of Headley (Con)]

My Lords, I make a small contribution, having been at the birth of the Bill—if one can be a midwife to a Bill. I always saw the purpose of the Bill as delivering the orderly withdrawal of this country from the European Union and ensuring that we have a coherent statute book on the day we leave. I do not want to detain your Lordships, but as I said at Second Reading and as I still believe, it is imperative that we get the balance right between the powers of the Executive and parliamentary sovereignty. As the noble Lord, Lord Lisvane, so rightly said and others have commented, if we take the view that the referendum vote was about Parliament taking back control, it hardly seems right that excessive control be given to Ministers of the Crown.

I had many misgivings about this issue, and I am most grateful to noble Lords, including the noble Lord, Lord Lisvane, for sparing the time to talk to me about it. I have considered it. Your Lordships need to consider it in the round—the round being all the other limitations that currently exist on Ministers—and, most importantly, the amendment my noble friend the Minister is making to this point, which I believe addresses many of the concerns. All I ask your Lordships at this point is to consider this: are the Government acting in a reasonable way to ensure they have the powers necessary to deliver a smooth and orderly Brexit? That is the simple question in my mind. I believe that the Minister has moved enough and that he should be given our support. I completely understand the views of the noble Lord, Lord Lisvane, and my noble friend Lord Cormack on this point. I fear we just differ now on how far the Government have moved.

[Baroness Falkner of Margravine (LD)]

My Lords, I chair the EU Financial Affairs Sub-Committee of this House. We have been having a lot of conversations with regulators about appropriateness, as the noble Lord, Lord Bridges, has rightly pointed out. But words matter. The distinction in legal terms between “appropriate” and “necessary” is quite profound if you are a regulator—both EU and UK regulators—that has a duty to put in place a workable legal framework. While I completely agree with most of what the noble Lord, Lord Lisvane, said, and I understand that he rightly wishes to bring power back to Parliament, there are instances where regulators need to adapt and to have legal certainty to adapt.

I will give the House one small example. I should say that I am speaking for myself as the chair of the committee because the committee has not come to a settled view on this, having had discussions very recently. But we are told that the amendment would lead to increased litigation and therefore legal uncertainty in relation to the meaning of “necessary”. This would impact a large number of different areas of financial services regulation. It may be hard to argue that it is strictly “necessary” to extend protections but if, for example, you take securities collateral held within the EU, absent an FTA—if we have to revert to WTO rules—we would need to treat collateral held by UK firms in EU systems in the same way as collateral held by UK firms in systems outside the EU. If you took away discretion from the Minister and you had to define this as “necessary”, you may have to restrict the protection to collateral held in UK systems only. That would put UK firms at a disadvantage.

Finally—this is slightly technical—redenominating values and thresholds from euros to sterling may be appropriate in a UK regime because most UK firms’ balance sheets are denominated in sterling. However, it could be argued that it is not “necessary” to do so ahead of the UK’s exit from the EU. Litigation would take time while the courts determined whether the Minister had acted under “necessary” or “appropriate”, but in financial crises time is not something regulators have at their disposal. I just ask noble Lords to bear that in mind. I have not come to a definitive view myself but it is important to put that on the record.

[Viscount Hailsham (Con)]

My Lords, I serve as the legal assessor to regulatory panels and in the course of that, we have to address the meaning of the word “necessary”. The panels that I work with, as a general proposition, have no difficulty in identifying the meaning of that word. It is also used as useful protection for people because it is a higher threshold than “appropriate”, “desirable” or a range of other words that are used. I say to the noble Baroness that in my experience as a regulator, “necessary” does not constitute a difficulty along the lines that she has suggested.

[Baroness Falkner of Margravine]

I completely accept the long experience that the noble Viscount, Lord Hailsham, has. I referred specifically to time in case there is a financial crisis. That is when regulators have to resolve institutions fairly quickly in co-operation with one another. That is a danger that we face at this point—10 years into the last one.

[Lord Bilimoria (CB)]

My Lords, I want to emphasise and back up what my noble friend Lord Lisvane has said. In essence, this “necessary” versus “appropriate” is about taking back control for Parliament. Since the referendum, we have seen the Government trying to bypass Parliament time and again. Starting with Article 50, Parliament was bypassed until that had to be taken to court. Going back to the Strathclyde review in 2015, we were told very clearly that it is a convention that this House does not challenge statutory instruments. So by agreeing to this “necessary” we are saying that they can be used but only if necessary.

The Government argue that they need the flexibility if it is appropriate to tidy things up. Who is taking the decision on whether something is appropriate? Today it is Theresa May as Prime Minister. Tomorrow it may be Jacob Rees-Mogg, Boris Johnson or Jeremy Corbyn. This is about the Government, the judiciary, the legislature and, without a written constitution, the very delicate balance that needs to be respected. We need to protect that, which is why we need this amendment; otherwise, we will keep hearing threats from Jacob Rees-Mogg saying that we are burning down this House. That is the wrong way to go. This is not about Henry VIII powers or the Government getting power; it is about power coming back to Parliament and actually giving power to the people.