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Sir Nicholas Lyell: I am grateful to the Minister for giving way. Does he accept that the Government must put up some money in connection with the tribunals? The industry has been required to put up the legal aid money and it covers most costs, but the Government's contribution must come out of the public purse. Can the Minister give an assurance that the exigencies of the public purse will not short-change what is properly required for the status and efficiency of the tribunal?

Mr. Timms: I can give the right hon. and learned Gentleman an assurance that it is the Government's objective to meet the expenditure necessary to deliver a tribunal with the stature that he described earlier. I am satisfied that we will be able to provide that.

Mr. Flight: Our amendments focus on three practical issues. They will need to be discussed further when the Bill reaches its Committee stage in the other place. Although the amendments do not relate to matters of high principle on which we would want to vote--and we shall therefore withdraw them--they all deal with practical issues on which our investigations and conversations with those concerned lead us to the conclusion that the Bill is not entirely satisfactory.

The issue of costs is in a different category, and I take note of the Minister's comments regarding the Burns committee. There is a wider issue still to be addressed--the ability of individuals fully to defend themselves, lest the legislation be undone as the result of a ruling by the European Court of Human Rights.

The crucial point is that the tribunal should be of top quality and adequately remunerated. Notwithstanding the Minister's comforting remarks, we have a genuine practical concern that the present arrangements may not provide for that. In anticipation of these matters being considered further in another place, I beg to ask leave to withdraw the amendments.

Mr. Deputy Speaker (Mr. Michael J. Martin): The question of withdrawing amendments does not arise. The only amendment that has been moved is Government amendment No. 115. The other amendments have been grouped with it for the purposes of debate.

Amendment agreed to.

Clause 10


Mr. Flight: I beg to move amendment No. 16, in page 4, line 35, leave out "may" and insert "shall".

Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 17, in page 4, line 35, after "conduct", insert

", in 2002 and every five years thereafter,".

1 Feb 2000 : Column 959

No. 18, in page 4, line 38, leave out

"A review may be limited by the Treasury to"

and insert--

"The Treasury may also require separate limited and independent reviews of".

No. 477, in page 4, line 41, leave out subsection (3).

No. 478, in page 5, line 10, leave out--

"appearing to the Treasury to be'.

Mr. Flight: This group of amendments covers particularly important territory. As the House knows, we tabled new clause 3 to address the matter in detail, but the amendments to clause 10 have the same effect.

As clause 10 stands, the Treasury may appoint an independent person to conduct a review of the economy, efficiency and effectiveness with which the FSA has used its resources in discharging its functions, but clause 10(3) qualifies that power by providing that the review may not deal with the merits of the FSA's general policy or principles in pursuing its regulatory objectives.

Our amendments require the Treasury to appoint an independent person in 2002 and every five years thereafter. The Treasury may also require separate, limited and independent reviews of such matters as it may specify. In essence, that is already covered in clause 10. The limitation in subsection (3) would be deleted. Finally, the definition of "independent" would be amended by deleting the subjective words

We have already touched on that in relation to attempts to reduce scope for judicial review.

It is important that there should be an automatic process of review of regulation. Had the Financial Services Act 1986 provided for that, there would have been a lot less hassle than we have had. Fewer amendments and less parliamentary time would have been needed, and there would have been fewer delays in bringing regulation up to date. For this undemocratic Government and for the industry, a review of regulation is an appropriate part of the process of checks and balances.

There is the pretence of a process of review under clause 10, but it will occur only at the behest of the Treasury and will not cover the most important territory. We feel strongly about the issue, which we discussed at length in Committee.

Mr. Beard: Does the hon. Gentleman agree that the greatest threat to the economy, efficiency and effectiveness of the FSA is the number of reviews that the Opposition would impose on it?

Mr. Flight: That sounds like an argument that totalitarian Governments have used. The review would be independent. The FSA would clearly have to participate in it, but it is more important that regulation should require proper accountability. The FSA spends an enormous amount of time doing the same thing vis-a-vis those that it regulates. I do not believe that that was a serious intervention. We view the matter as an important principle to be included in the Bill.

Mr. Tyrie: Clause 10 is important. As has been said repeatedly, the FSA is an unprecedentedly powerful institution. Clearly, we need to take a look at it after a few years, to see whether it is working properly.

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In the Government's draft Bill, there was no provision for any kind of review. After consultation, they introduced clause 10. However, the provision is nothing more than a mouse. Given last week's events, "mouse" is an appropriate description--

Mr. Flight: Or even rat.

7 pm

Mr. Tyrie: Worse still, the clause is a rat. Clause 10 is not worth having, and therefore we have to amend it.

Subsection (1) provides for an independent person

In other words, the independent person will consider only how the authority spends its money.

Subsection (2) is equally limiting. It grants the Treasury the power to specify the functions that the independent investigator may examine. He may wish to consider a particular function, but the Treasury may prevent him from doing so.

Subsection (3) expressly forbids the independent investigator from considering several broader issues. It states:

As if that is not enough, the independent reviewer will not necessarily be independent. As has already been said, subsection (7) states:

    "'Independent' means appearing to the Treasury to be independent".

That means as independent as the Treasury wishes the reviewer to be.

That does not constitute a serious commitment to review the Bill. We have therefore tabled amendments to try to provide for that.

The clause does not even guarantee that a review will take place at all, because subsection (1) states:

It does not say that the Treasury "must" appoint someone to undertake a review. The Opposition believe that a Bill that could so dramatically affect the biggest, most important and most successful industry in Britain in recent decades should be subject to independent review. That is the gravamen of the amendments.

In Committee, we presented proposals for defining "independent". We suggested that the Comptroller and Auditor General of the National Audit Office should conduct the review. Some technical problems with that suggestion were mentioned in Committee, but I shall not rehearse them now. Many representative bodies support the idea of appointing him, as do the Opposition. The Government did not explain clearly why that was not a sensible approach. It would give those who are being regulated confidence in the appointment of a genuinely independent reviewer.

Mr. David Kidney (Stafford): The Burns committee did not recommend that the Comptroller and Auditor General should undertake the reviews.

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Mr. Tyrie: I do not want to go through all the arguments that the Burns committee presented. The hon. Gentleman is right, and the point was made in Committee. However, the Burns committee said that that was its position provided that its recommendations on the compensation scheme were implemented. The Bill does not provide for implementation of such a scheme. Any reasonable person who reads the Burns committee report will conclude that it would now recommend amendments to clause 10.

Mr. Beard: Will the hon. Gentleman give way?

Mr. Tyrie: I shall not give way again. The hon. Gentleman's previous two interventions have been somewhat lacking in substance and I do not want his comments to detain the House.

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