Lord Barnett
Main Page: Lord Barnett (Labour - Life peer)Department Debates - View all Lord Barnett's debates with the HM Treasury
(12 years ago)
Lords ChamberMy Lords, I rise to raise an important issue concerning the conduct of the Committee stage of the Bill. On 3 October—last Wednesday—I wrote to the noble Lord, Lord Sassoon, in these terms:
“The Wheatley study on the future of LIBOR has produced a series of conclusions with which the Labour Party is broadly in agreement. I congratulate both Martin Wheatley and his team for their achievement, and the Government for initiating this investigation.
I note from the statements of Treasury ministers, and from the Treasury website, that it is the Government’s intention to implement the Wheatley proposals by means of amendments to the Financial Services Bill. No such amendments have been tabled as of yesterday”.
That was 2 October, and indeed no amendments have been tabled as of today.
“I presume that such amendments will involve predominantly clauses that have not yet been debated (as suggested by reference to particular FSMA clauses in the Wheatley Report itself)”.
The Wheatley report refers to the first clause that we will debate today.
“However, it is possible that you will also need to introduce amendments to clauses already debated, in which case it would be entirely inappropriate to introduce such amendments at Report. Given the importance of these issues it is imperative that the House have the opportunity to debate these matters in the freedom of Committee, rather than under the constrained rules of the Report Stage.
May I therefore have your assurance that should the Government, as a consequence of the Libor scandal and of the recommendations in the Wheatley Report, plan to introduce amendments to clauses 1 to 5, or at some later stage, amendments to clauses at that time already debated, that you will re-commit the appropriate clauses, hence ensuring that the House of Lords has the scope for full debate”.
It has since become clear that the Government intend to introduce on Report all the entirely new material presaged in the Wheatley report. The noble Lord, Lord Sassoon, wrote to me on 2 October—the day before I wrote to him which was somewhat mysterious. He said:
“I do not believe that it is necessary to recommit the Bill, and see no reason why a substantive debate on the relevant clauses at Report stage would offer insufficient opportunity for scrutiny by the House.
Re-commitment would risk unnecessarily delaying the implementation of both these important reforms to LIBOR setting processes, and of the equally urgent reform of the UK’s financial regulation regime which we have been debating through the Committee sessions to date”.
The noble Lord’s reply does not take into account what I actually asked for. First, I was not asking for total recommitment. I was asking only for the clauses which deal with entirely new material from the Wheatley report to be recommitted. Secondly, I believe very strongly that with respect to financial regulation it is not an issue of quibbling about delay but of getting it right. These enormously complex matters deserve the iterative consideration which is possible only in Committee. I remind noble Lords that on Report they can speak only once. Thirdly, it is quite wrong to deny this House the opportunity to consider entirely new and complex material within a Committee setting. I would therefore ask the noble Lord, Lord Sassoon, to reconsider his rejection of my proposal that the relevant clauses be recommitted.
If he is unwilling to do that, perhaps I may make a constructive proposal. Either he or the Chief Whip, who unfortunately is not in her place, should give an assurance that the rules of Report will be relaxed for consideration of what might be called the “Wheatley” clauses when they are introduced.
I warmly agree with my noble friend on the Front Bench, and it gives me an opportunity to refer to the noble Lord, Lord Sassoon, himself. In the Recess I read with regret that he proposes to retire at the end of this year. He and I have had a few exchanges across the Floor and I will miss them, but I look forward to continuing with those exchanges until the end of the year.
Not only do I agree with my noble friend in the points he has made about the Bill, what is even more important is that the whole Bill should be dropped for the moment. There is no hurry for it and much of it will cause great damage to financial services in this country. As the noble Lord, in his new position, is no longer going to be quite so subservient to the Chancellor of the Exchequer, I certainly hope that he can tell us the truth, drop the Bill for the time being and, as my noble friend has suggested, come back to the House with a new one.
My Lords, I thought we were going to talk about some clauses on LIBOR, but we have now strayed, in the imaginative way that the noble Lord, Lord Barnett, does, into scrapping the Bill. I can assure the House that the Government intend to carry on with this Bill according to the timetable because it is vital that we get the financial regulatory architecture right. It is an architecture that failed us miserably in the financial crisis, so we will of course press on with the Bill.
As noble Lords know, LIBOR is the most significant interest rate benchmark used by the market—not just the UK market, but globally. It underpins contracts worth at least $300 trillion, so it is imperative that market confidence in the rate is restored quickly in order to ensure that, in the future, contributors to this benchmark act with greater integrity, promoting financial stability, legal certainty and business continuity. It is important to be clear about that. It is also important to be clear that the Government have not yet announced our response to the Wheatley review, so what the noble Lord, Lord Eatwell, raises is a somewhat hypothetical question at the moment. He notes correctly that my right honourable friend the Chancellor of the Exchequer has indicated that the Financial Services Bill is the Government’s preferred legislative vehicle to implement new policy arising from the review. Should the Government decide to accept Martin Wheatley’s recommendations in full, we anticipate that the clauses which would implement the review will indeed be debated at the Report stage of this Bill, and the draft clauses will be published in good time in advance of that date.
As noble Lords with longer experience of the House than me will well know, recommitment is an extremely unusual procedure. Notwithstanding what the noble Lord, Lord Eatwell, says, it would risk causing delay not only to these important reforms of the LIBOR setting processes but to the Bill itself. It is quite routinely the case that government amendments setting out new policy are tabled at the Report stage, and in this case, as the noble Lord has confirmed, there is broad cross-party consensus in favour of the policy. There has already been wide debate of the issues during the period when Mr Wheatley was carrying out his work. In the light of that, I believe that substantive debate on the relevant clauses at the Report stage will offer sufficient opportunity for scrutiny by the House, but I am sure that, in the normal way, the usual channels will consider the business of the House, as they always do. That is the appropriate way to carry this sort of thing forward.
This is a significant piece of legislation, which has already benefited from a very constructive approach to scrutiny from your Lordships’ House. We will do all we can to reinforce that debate including on any clauses we bring forward on LIBOR through, among other channels, briefing parliamentarians separately outside the formal debate. However, I suggest that for this afternoon it might be more productive to carry on with the sixth day of our scrutiny of the Bill.
My Lords, I, too, would like some assistance from my noble friend. It is not easy to understand, in large parts of this Bill, what it is trying to get at. I raise this under discussion of Clause 6 because that is what permits the transfer of regulation of consumer and small business credit from the Office of Fair Trading to the new Financial Conduct Authority.
I have had an approach about this from the Finance & Leasing Association. They told me that they do not seek an amendment to the Bill, rather a commitment by the Government to a sensible timetable, to ensure the Government get the rules right and avoid the loss of important consumer protections. This is because the Government have set a very ambitious target date of April 2014 for the creation of a new regime for credit regulation. They propose a twin-track approach which will include a slimmed-down version of the Consumer Credit Act with enhanced powers. The Government say they want to transfer as much as possible of the CCA and associated OFT guidance into this new rule book by April 2014. However the detail of the new rule book will not be consulted on until the second half of 2013, and the final rules will only be available in March 2014. This makes the implementation of an April 2014 date virtually impossible. I would be grateful for enlightenment and assistance from my noble friend.
My Lords, I always like to be enlightened. I agree with my noble friend and I have a tendency to agree with the noble Lord, Lord Sharkey. However on this occasion I do not. I must apologise to the Committee. This matter is no doubt explained somewhere in the huge volume of papers we received at the outset, including the two volumes of the Bill. I must have missed it. I thought I was relatively assiduous in looking at this Bill. No doubt the noble Lord, Lord Sassoon, will tell us where it is. I am sure the officials with whom the Government generally agree—although not on every subject in the world, I understand, and sometimes they even prosecute or suspend them—must have explained what the noble Lord has failed to tell us. I hope either the noble Lord himself or the noble Lord, Lord Sassoon, will explain it more fully. I for one do not understand it.
My Lords, although I agree with the noble Lord, Lord Sharkey, that it is enormously important that we improve the flow of funding to small firms, particularly given the complete failure of the Government’s attempts to improve the funding through banks to small firms, I believe that we should approach this proposal with great care. The problem with crowd funding is that crowds can often be subject to hysteria. We have seen hysterical funding levels in what might be deemed to be fashionable or popular companies: lastminute.com comes to mind, as does the recent launch of Facebook. In both cases, excessive hysteria associated with the popularity of the particular company led to investors losing quite a lot of money.
However in the SME sector, the fundamental problem for small investors is the risk to which they are exposed. They will necessarily have significantly less information than they would from a listed company. Given that lack of information, and the high mortality rate of small and medium-sized companies—thankfully they have a high birth-rate as well—it is likely to lead to a lot of not-very-well-off people losing significant sums of money.