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6 pm

Mr. Timms: We have had an interesting discussion, in which Conservative Members have presented some well-formed arguments. However, we are in a little difficulty in taking this debate forward, in the light of the

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report that my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) brought to the attention of the House a few moments ago, informing us that the shadow Chancellor had been sacked and replaced by the right hon. Member for Kensington and Chelsea (Mr. Portillo). Presumably, that change reflects, in no small measure, dissatisfaction on the part of the Leader of the Opposition with the policies being advanced by the--

Mr. Deputy Speaker: Order. I am loath to stop the Minister in full flow, but I have already ruled on that and I do not think that it is pertinent to the debate. He should address the new clause before the House.

Mr. Timms: I am grateful for that guidance, Mr. Deputy Speaker.

It is of course the case that any body exercising public functions is subject to judicial review when it behaves in a way that no reasonable comparable body would have behaved, and there is no provision in the Bill restricting anyone's right to seek judicial review of the FSA's decisions in appropriate circumstances. Some of the speeches by Conservative Members implied that there is. There is not. The High Court will of course always take into account such matters as whether there is an alternative remedy that should be exhausted before resorting to judicial review. Where an appropriate remedy is provided under the Bill--before the tribunal, say--it is plainly right to use it rather than wasting the High Court's time on something that has its own special remedy.

New clause 43 is unnecessary. One or two Conservative Members have fastened on particular clauses whose wording, they believe, would make it difficult for judicial review to be pursued. That matter should be dealt with in the debate on those clauses. New clause 43 does not advance the cause that they seek to make. It is unnecessary. Worse, it is unclear what the effect would be of including such a provision in the Bill. I understand that no other legislation contains such provision. Its absence does not impede judicial review elsewhere, and it would not in this case. Moreover, it would cause people to ask themselves whether judicial review could not be resorted to in connection with other legislation that did not contain such wording.

Sir Nicholas Lyell: I am very glad that the Minister recognises that, on Treasury matters, the lead should come from the shadow Treasury team, but the purpose of my intervention is to ask a question. Are we to understand that he is accepting that there should be the power of judicial review, that it should not be inhibited by the detailed wording of the Bill, and that he will look sympathetically at the individual points, many of which we have flagged up in the debate, to ascertain whether they could be improved?

Mr. Timms: No. I am saying that any body, including the FSA, exercising public functions is subject to judicial review, that nothing in the Bill impedes that, and that new clause 43 is not necessary and would have a damaging effect.

Sir Nicholas Lyell: I would agree with the Minister if he said that nothing ousts the jurisdiction of the court. However, does he accept that self-reference clauses,

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such as those that I referred to, definitely impede judicial review? They do not ultimately prevent it and, if the authority were to act in a way in which no reasonable authority could act, they would not oust it, but they certainly impede and restrict it.

Mr. Timms: In a debate on new clause 43, it is difficult to respond to a variety of points that relate to various parts of the Bill. I have said that, if we were to have a debate on those matters, we would need to do so in relation to amendments when we debate the parts of the Bill to which they relate. I am arguing that the new clause is unnecessary, and I do not believe that it helps with the case that Conservative Members have presented.

The amendments on reasonableness give me a further opportunity, beyond the opportunities that we had in Committee, to rehearse how the Bill already ensures that the FSA will act in a way that is reasonable, fair, open, accountable and proportionate--all of which I gladly sign up to, as invited to by the right hon. and learned Gentleman.

I have said that any body that exercises public functions is subject to judicial review where it behaves in a way that no reasonable comparable body would have behaved, but we have not relied on that alone. The FSA will also be subject to review, as appropriate, by the independent tribunal, the independent investigator, the competition regulators and the Government, and to public scrutiny through independent inquiries and reviews, or the appropriate parliamentary Committee.

However, the Bill does not impose abstract subjective requirements in the way envisaged by amendment No. 13. It makes clear, practical provisions to ensure that the authority acts in the way that one would expect of a responsible regulator.

First, the Bill gives the FSA clear objectives and principles which do not impose petty or bureaucratic requirements but provide practical guidance in the discharge of its functions. Secondly, the Bill requires the FSA to adopt key procedures, which will ensure that it acts fairly. Those procedures are backed up by an independent tribunal, an independent investigator and the requirements of the Human Rights Act 1998, which has brought the European convention on human rights into English law.

Thirdly, the Bill imposes clear disclosure and consultation requirements, which would require the FSA to consult on its regulating provisions and practices, to have regard to the representations that it receives and to provide feedback. Fourthly, the Bill imposes unprecedented accountability requirements on the FSA. Fifthly, the FSA will be required to have regard to the principle of proportionality. It will have to justify any costs that it imposes through its regulating provisions by publishing a cost-benefit analysis, and that analysis will now take into account the wider economic costs of its proposals.

That framework is not just an accident. It is the result of an unprecedented level of consultation and scrutiny by the Select Committee on the Treasury and the Treasury Joint Committee on Financial Services and Markets, and detailed consideration in Standing Committee, precisely in order to achieve the result that is intended by amendment No. 13. I willingly acknowledge the contribution that Conservative Members have made to

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that process. On the basis of that exercise and of the resulting improvements that have been made to the Bill, I hope that the Opposition will not feel it necessary to press their new clause.

Amendments Nos. 397 to 399 would also require the FSA and the Director General of Fair Trading to act reasonably in specifying particular information requirements. In the case of the FSA, that is information that it may require from an applicant for recognition under clause 264. In the case of the Director General of Fair Trading, it is information that he may require as part of his competition scrutiny function under clause 283.

As I have said several times, any body exercising public functions is subject to judicial review where it behaves in a way that no reasonable comparable body would have behaved. That applies just as much to the way that a body sets its information requirements as to any other exercise of its public functions.

There is, of course, a separate defence to default proceedings for anyone who has a reasonable excuse for refusing, or failing, to comply with the director general's requirements. However, on the issue of "relevance" in amendment No. 399, we have already said that we will consider further the need to include a relevance provision for the director general's information requirements. We also said in Committee that we would look again at the need to make reasonableness explicit in the way that duties and tasks must be carried out. That assurance stands. On the basis of that, and the additional look that we shall take at the matter, I hope that the Opposition will not feel it necessary to press amendments Nos. 397 to 399.

Mr. Flight: As the Minister just reminded us, we raised these issues extensively in Committee and we discussed the self-reference clauses that were specifically designed to limit the scope for judicial review. The FSA is constitutionally in a sense a totalitarian government of a particular economic sector in our economy. It is right and proper that there should be appropriate checks and balances of power.

I thank my right hon. and learned Friend the Member for North-East Bedfordshire (Sir N. Lyell) for his comments about amendment No. 13. Our lawyer friends gave us a tremendous amount of help on the Bill, but I drafted the amendment myself. It is key and right up-front. It would qualify how the authority should act in relation to discharging its duties. The Minister continues to undertake that he will consider the issue of reasonableness, but why has that not been done already? The amendment would cover the matter in one fell swoop.

New clause 43 raises the issue of judicial review. I am afraid that it is an issue that we wish to put to a vote. The new clause is fundamental to having the right checks and balances in the Bill.

Question put, That the clause be read a Second time:--

The House divided: Ayes 142, Noes 336.

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