Queen’s Speech

Lord Hunt of Wirral Excerpts

Monday 16th May 2022 Lords Chamber

[Lord Hunt of Wirral (Con)]

My Lords, I draw attention to my entry in the register of interests, particularly to my partnership in DAC Beachcroft and my role as senior independent director of LINK.

I want to focus today on competitiveness, although it is a pleasure to follow the noble Lord, Lord Bilimoria, with his compendium of ideas for how we can build stronger foundations for the long term. As we seek to emerge from the pandemic and deal with the immediate problems of economic stagnation, falling real incomes and the situation in Ukraine, it is vital that we look to the longer term.

I strongly agree with my noble friend Lord Forsyth about the dangers that lie ahead, but I welcome the financial services and markets Bill and the commitment by Ministers to require regulators to take account of the need to promote competitiveness, although I am fearful that this is all going to end up as another missed opportunity. As my noble friend the Minister stressed, we all recognise how vital financial services are to our economy. More needs to be done to ensure that the UK, and the London market in particular, not only maintains its position but advances it significantly.

The remarkable concentration of capital and expertise in the London market attracts business from right across the world. That capital and expertise is highly mobile, and the international insurance market is innately competitive. Consequently, our regulatory system—not only its statutory powers but its character—is inevitably a factor in both the perception and the reality of the UK as a place to do business. What is needed is not yet another reorganisation and rebranding of the regulators. The system of regulation created in the wake of the 2008 financial crisis is not fit for purpose and is not working in the best interests of the nation.

If, once this new legislation is on the statute book, the same people then turn up to the same offices and the same desks, with much the same powers and, all importantly, the same culture and attitudes, nothing will have been achieved. A profound change in culture is required, and transparent and generally accepted metrics must be in place to enable us to measure and scrutinise the true extent of that change.

Creating a competitiveness duty for the regulators in the UK is a core part of maintaining the UK as a leading global and international insurance and reinsurance market—but words are not enough. Our own Lords Industry and Regulators Committee, in its letter to the Economic Secretary on 6 April, rightly observed that the introduction of a competitiveness objective alone would not be sufficient to tackle concerns around the inflexible regulatory structure.

Success depends on establishing an approach to regulation that focuses on risk and sets the right rules for the right firms in the right way. That has to be accompanied by publicly disclosed performance criteria so that Ministers and Parliament can rightly hold regulators to account. This must include annual reporting against clear objectives. It should also include international benchmarking against other regulators. So there has to be real clarity within the Bill about delivery, setting out the parameters and reporting requirements in some detail, just to ensure that this is no tick-box exercise. This legislation is an ideal candidate for pre-legislative scrutiny. Ideally, this would be undertaken by Members of both Houses—all the expertise we have is already in place.

The Bill will seek to underpin the provision of cash across the UK. In my capacity as a director of LINK, I look forward to hearing more about that, and I am confident that the good work that has already been done will be fully acknowledged and built on.

In closing, I dare say that the Government will be able to muster sufficient support in another place for whatever they propose, but I implore my noble friend the Minister to take full advantage of the considerable expertise that is available in this House, sooner rather than later.