Queen’s Speech — House of Lords, 2022-05-16
Topic: Domestic Commerce
Questions: 2050—I am just 100 years out. Even if we get to that, a lot of countries in the world will not. Two things follow from that. The first is that climate change will not be significantly improved. We in this country produce 1% of the world’s emissions, so if we have all the struggles and make the vast expenditures but other countries do not, we will not have achieved anything so far as climate change is concerned Secondly, if we have spent an enormous amount of money improving our electricity and getting it all done, our electricity will almost certainly be more expensive than it is in other countries. There is a danger we have to watch, as the heavy industrial users of electricity will build their factories in other countries, not in those that have spent all that money on this. We have the time to deal with this, but we have to be very careful that that is not the end result of what we do.
Sharon Bowles (Liberal Democrats, Centre to centre-left): My Lords, I identify with the comments on constitutional matters led by the noble and learned Lord, Lord Judge, on Thursday. During Brexit legislation much was made of requiring primary legislation for future policy change, but such assurances are worthless. We had disappearing assurances on an even shorter timescale with the Trade Act, which legislated independence of the Trade Remedies Authority. Liz Truss then changed the primary legislation to overturn the TRA’s very first decision—a disastrous start reputationally all round I turn to the financial services Bill. Most of its procedures were front-run in the Financial Services Act 2021. Noble Lords on all sides were concerned about inadequate scrutiny. The Government said in their consultation response that they want Parliament to scrutinise and, sadly, the authorities in this House refused a sub-committee for financial services. I am very ashamed of that Although there is neither appetite nor capacity to replicate the intense EU level of scrutiny, there is no denying that the environment and dialogue it fosters is a resource for regulators as well as legislators. I am now hearing that our regulators are struggling with it, overwhelmed by their new powers, retreating to hugger-mugger with international regulators more, rather than creating the specific design for the UK that the Minister spoke of Solvency II will be a test. It was the invention of the then UK regulator—the FSA—taken to Brussels so that our industry would not be disadvantaged by stricter requirements. The UK bludgeoned France and Germany into legislation they hated. The UK Government and regulator bludgeoned UK rapporteur MEPs to do their bidding despite our reservations. Omnibus II corrected some but not all of the highlighted mistakes, including adding the matching adjustment At the time, the UK regulator sought more inflexible language than the Treasury or the final wording I negotiated. Now the PRA is actively choosing the inflexible approach. The new legislation will need to give an economically constructive steer, with scrutiny deep and frequent enough to expose monolithic and legacy-based thinking. To coin a phrase, "It’s the economy, stupid"—and that applies to the balance of regulation. Legislation on audit reform has been relegated to draft, but various outstanding matters do not need legislation. Sir John Kingman said that the FRC should "promote brevity and comprehensibility in accounts and annual reports" Instead, we have flawed standards, compliance to short timetables and "dog killer" reports dropping through letterboxes. The FRC has somewhat reformed itself, but there are still rotten patches. The worst is the Endorsement Board offshoot, which is dominated by individuals sourced from standard setters defending their legacy positions, who are used to marking their own homework and putting standards above the law I am not alone thinking this; the former ICAEW president Martyn Jones said the same presenting a well-received paper at this month’s British Accounting and Finance Association’s audit and assurance conference. What is needed above all else is for true and fair view, going concern and profits recognised for distribution to be applied and verified as it stands now in primary legislation, not overridden or obfuscated by the tertiary legislation of accounting standards I defy anyone to read the endorsement criteria assessment of IFRS 17 by the Endorsement Board or listen to its discussions and not notice the legacy thinking and gobbledegook used to justify the unjustifiable. Letters and emails that are coming to light show that private discussions are also happening which should be public. It is ripe for judicial review, not least because directors are more exposed after Brexit Under EU law, IFRS had primary legislative status. Accounts prepared according to it were deemed safe, even if there were differences to true and fair. That is in the Moore opinion, so relied on by the FRC and BEIS. There is now no primary law relating to standards, only tertiary legislation under the 2019 regulations No. 685. Can the Minister explain what extra steps have been taken in the light of this added risk for directors if standards are wrong?