Financial Services (Implementation of Legislation) Bill [HL] — House of Lords, 2018-12-04
Topic: Domestic Commerce
Sharon Bowles (Liberal Democrats, Centre to centre-left): My Lords, the Bill establishes a short-cut alternative to starting over again with primary legislation for provisions that are in the EU pipeline and in which the UK has already been engaged. It looks like a convenient scheme. However, I share the concerns raised by other noble Lords, although I agree that the legislation need to be implemented because the large majority of it—at least, what is in the schedule—completes the post-financial-crisis review of legislation I am sorry that we have not been given more guidance to what might be objectionable than the example of location policy. Once the short-cut onshoring of bits of legislation has happened, Parliament will be left with very little scope ever to come to grips with major financial services policy. That means that what we are doing now as a temporary measure will have permanent effects. It will all be delegated and in the hands of SIs and regulators—back to the Treasury and the regulatory officials who make up the rules in international consortiums. That, as I have said, is "delegate and deference", not parliamentary democracy. It is far worse than the scrutiny available in the EU. If we are taking back control, we ought to make sure that our scrutiny is as good as that of the EU The Bill is also difficult for me because there is the possibility of wide powers being used differently from non-legislative promises, and because precedents are being set that may then be used in other circumstances. Here, a precedent is set of bypassing primary legislation and piggybacking on somebody else’s scrutiny—for our largest industry. Of course, that may be the truth of Brexit There are some non-legislative assurances listed in paragraph 1.9 of the Treasury policy document, which has already been referenced, but I am not sure I find them reassuring. The first is that any method other than coming to Parliament will be used in preference. I do not see virtue in avoiding the scrutiny of Parliament. There is also a commitment to undertake extensive engagement and co-operation with key stakeholders. I do not decry that but—from experience—that does not seem to include Parliament. In the present circumstances, it is all the more important to consult Parliament when, by the Government’s own admission, this is a process that replaces the more detailed scrutiny of primary legislation I too have noted the provisions about preparing reports. I particularly noted, in subsection (8)(b), the report on the, "proposals for exercise of the powers", in the second year. Maybe that gives us something to expand on, because it is very important to have an overarching idea of the policy being pursued and the concerns that I have identified. But, as other noble Lords have perhaps already hinted, it is needed in advance of year one as well I accept that a no-deal Brexit is not quite what is planned, but, even so, everything that the Government have ever said about our relationship with the EU post Brexit has aimed at getting equivalence or better. If that breaks down because policy changes a great deal, I will accept it, but we must not find that we abandon equivalence by accident because we have made various incremental changes that, in EU eyes, could collectively destroy equivalence prospects without there having been explicit consent to that being what we wished to do. Moreover, as emphasis has been put on consultation with stakeholders, how can we know, whatever the current intention, that the Bill does not turn out to be a dilutors’ charter, because the specified legislation is now out there as an Aunt Sally at which interested parties may chance their arm? I have seen the gleam in the eyes of some in the City already In the all-Peers meeting last week with the Minister, the noble Lord, Lord Bates, and the Economic Secretary to the Treasury, John Glen MP, it was said that the words "corresponding, or similar" from Clause 1(l)(a) would not permit changing or deleting aspects of wider legislation not detailed in the specified items of EU financial services legislation. We inevitably got on to bankers’ bonuses as the example everyone knows, so although the schedule includes CRD5 on prudential regulation of banks, it would not, according to the analysis, open up change to the details in CRD4, which is where most of the bankers’ bonus information resides. It would be good for the Minister to confirm that understanding, as an example Developing that point further, and because there are some proportionality measures on remuneration for smaller businesses within the specified legislation, does it mean that proportionality measures could not be stretched by the UK to apply to larger businesses than the EU legislation intended? Given that, in my experience, the UK has not used all proportionality provisions—some of which I worked very hard to get—what is the policy on implementation of proportionality I could go through the list of legislation and ask lots more questions, but I will spare noble Lords with just one more example. Are the Government now in favour of extending the suspension of the clearing obligation for pension funds—a measure that I forced into the original legislation without any particular support? We should be told, because it could be that the Government do not want to do that and it could be crossed out with our being able to make a specific objection Why cannot the Government make a more fulsome policy report now of their key points and concerns? I accept that some things will change, but that does not detract from being given a grounding in where decisions are coming from More generally, the words "corresponding, or similar" are too wide. It may be possible to have a corresponding piece of legislation that is not similar. At the moment, I am veering towards suggesting that the provision should be "corresponding, and similar". The next part that concerns me is that EU legislation could be cherry picked. That may not be the intention, but the words, "or any of the provisions", allow that possibility. It is very permissive, covering from everything to nothing of a piece of specified EU legislation. I want to find ways to qualify that to ensure that the overall framework that could sustain the objective of equivalence is being retained, and is not disappeared by stealth or accident via statutory instrument. One way to deal with that might be for "corresponding, and similar" requirements to apply to the whole of a piece of legislation, rather than individual provisions, but I accept that we need some more tightly defined requirements for omissions that might be necessary Then I come to, "any adjustments the Treasury consider appropriate" In the meeting, we were told that new things cannot be created, but it is not entirely clear that the "corresponding, or similar" provision governs subsection (1)(b). I come back to my point that in this context there needs to be some kind of track record on the policy against which you can measure what is being done. The word "appropriate", which is the unfortunate and common construction used for delegated power, is usually employed when there is some policy context in the primary legislation. In the Bill, there is no policy context other than to pick, choose, change and avoid primary legislation I do not understand why it is necessary to have such broad powers for the completed specified legislation. It is known what was argued and it is in its final form. We will know what was lost and any changes that might need to be considered. Why can we not know them now Legislation that is not complete in the schedule is not new or surprising either: there have been years of consulting. I did some of it. By the time an EU proposal is published, before you go through any amendment provisions, it has been well consulted on. The Commission, other member states and many MEPs know the UK lines. I often used to get it from them before I ever got it from the Treasury. How about telling us what those lines are in respect of that legislation? They must exist. Again, that would give us a background against which we could measure what is intended. Without that, we are approving a procedure blind of policy, facts and principle. It is not sufficient to think that an affirmative procedure is enough to satisfy all those concerns.